[Congressional Bills 104th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3224 Introduced in House (IH)]







104th CONGRESS
  2d Session
                                H. R. 3224

  To improve Federal efforts to combat fraud and abuse against health 
                 care programs, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             March 29, 1996

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

_______________________________________________________________________

                                 A BILL


 
  To improve Federal efforts to combat fraud and abuse against health 
                 care programs, and for other purposes.

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

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Health Care Fraud 
and Abuse Prevention Act of 1996''.
    (b) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title; table of contents.
              TITLE I--COORDINATION OF FEDERAL ENFORCEMENT

Sec. 101. Federal enforcement by Inspectors General and Attorney 
                            General.
Sec. 102. State enforcement.
Sec. 103. Payments to States.
Sec. 104. Health Care Fraud and Abuse Control Account.
Sec. 105. Acceptance of gifts, bequests, and devises.
Sec. 106. Reimbursements of expenses and other payments to 
                            participating agencies.
Sec. 107. Account Payments Advisory Board.
Sec. 108. Establishment of health care fraud and abuse data base.
Sec. 109. Definitions.
Sec. 110. Effective date.
                  TITLE II--REVISIONS TO CRIMINAL LAW

Sec. 201. Definition of Federal health care offense.
Sec. 202. Health care fraud.
Sec. 203. Theft or embezzlement.
Sec. 204. False Statements.
Sec. 205. Bribery and graft.
Sec. 206. Illegal remuneration with respect to health care benefit 
                            programs.
Sec. 207. Obstruction of criminal investigations of health care 
                            offenses.
Sec. 208. Civil penalties for violations of Federal health care 
                            offenses.
Sec. 209. Injunctive relief relating to health care offenses.
Sec. 210. Authorized investigative demand procedures.
Sec. 211. Grand jury disclosure.
Sec. 212. Miscellaneous amendments to title 18, United States code.
     TITLE III--ANTI-FRAUD INITIATIVES UNDER MEDICARE AND MEDICAID

Sec. 301. Revision to current penalties.
Sec. 302. Solicitation and publication of modifications to existing 
                            safe harbors and new safe harbors; 
                            additional exception for certain 
                            discounting and managed care arrangements.
Sec. 303. Expediting implementation of payment adjustments for durable 
                            medical equipment based upon inherent 
                            reasonableness.
Sec. 304. Requiring annual notice to medicare beneficiaries of need to 
                            prevent fraud and abuse against medicare 
                            program.
Sec. 305. Requiring use of single provider number in submission of 
                            claims for payment under medicare and 
                            medicaid.
Sec. 306. Liability of carriers and fiscal intermediaries for claims 
                            submitted by excluded providers.
Sec. 307. Requiring fiscal intermediaries and carriers to use automated 
                            data processing equipment comparable to 
                            equipment used in private insurance 
                            business.
Sec. 308. Nondischargeability under bankruptcy code of amounts owed for 
                            overpayments.

              TITLE I--COORDINATION OF FEDERAL ENFORCEMENT

SEC. 101. FEDERAL ENFORCEMENT BY INSPECTORS GENERAL AND ATTORNEY 
              GENERAL.

    (a) Audits, Investigations, Inspections, and Evaluations.--
            (1) In general.--Except as provided in paragraph (2), the 
        Inspector General of each of the Department of Health and Human 
        Services, the Department of Defense, the Department of Labor, 
        the Office of Personnel Management, and the Department of 
        Veterans Affairs, and the Attorney General shall conduct 
        audits, civil and criminal investigations, inspections, and 
        evaluations relating to the prevention, detection, and control 
        of health care fraud and abuse in violation of any Federal law.
            (2) Limitation.--An Inspector General, other than the 
        Inspector General of the Department of Health and Human 
        Services, may not conduct any audit, investigation, inspection, 
        or evaluation under paragraph (1) with respect to health care 
        fraud or abuse under title V, XI, XVIII, XIX, or XX of the 
        Social Security Act.
    (b) Powers.--For purposes of carrying out duties and 
responsibilities under subsection (a), each Inspector General referred 
to in subsection (a) may exercise powers that are available to the 
Inspector General for purposes of audits, investigations, and other 
activities under the Inspector General Act of 1978 (5 U.S.C. App.).
    (c) Coordination and Review of Activities of Other Federal, State, 
and Local Agencies.--
            (1) Program.--The Inspector General and the Attorney 
        General shall--
                    (A) jointly establish, on the effective date 
                specified in section 110(a), a program to prevent, 
                detect, and control health care fraud and abuse in 
                violation of any Federal law, which takes into account 
                the activities of Federal, State, and local law 
                enforcement agencies, Federal and State agencies 
                responsible for the licensing and certification of 
                health care providers, and State agencies designated 
                under section 102(a)(1); and
                    (B) publish a description of the program in the 
                Federal Register, by not later than 180 days after the 
                date of the enactment of this Act.
            (2) Annual investigative plan.--Each Inspector General 
        referred to in subsection (a)(1) and the Attorney General shall 
        each develop an annual investigative plan for the prevention, 
        detection, and control of health care fraud and abuse in 
        accordance with the program established under paragraph (1).
    (d) Consultations.--Each of the Inspectors General referred to in 
subsection (a)(1) and the Attorney General shall regularly consult with 
each other, with Federal, State, and local law enforcement agencies, 
with Federal and State agencies responsible for the licensing and 
certification of health care providers, and with Health Care Fraud and 
Abuse Control Units, in order to assist in coordinating the prevention, 
detection, and control of health care fraud and abuse in violation of 
any federal law.

SEC. 102. STATE ENFORCEMENT.

    (a) Designation of State Agencies and Establishment of Health Care 
Fraud and Abuse Control Unit.--The Governor of each State--
            (1) shall, consistent with State law, designate agencies of 
        the State which conduct, supervise, and coordinate audits, 
        civil and criminal investigations, inspections, and evaluations 
        relating to the prevention, detection, and control of health 
        care fraud and abuse in violation of any Federal law in the 
        State; and
            (2) may establish and maintain in accordance with 
        subsection (b) a State agency to act as a Health Care Fraud and 
        Abuse Control Unit for purposes of this title.
    (b) Health Care Fraud and Abuse Control Unit Requirements.--A 
Health Care Fraud and Abuse Control Unit established by a State under 
subsection (a)(2) shall be a single identifiable entity of State 
government which is separate and distinct from any State agency with 
principal responsibility for the administration of health care 
programs, and which meets the following requirements:
            (1) The entity--
                    (A) is a unit of the office of the State Attorney 
                General or of another department of State government 
                that possesses statewide authority to prosecute 
                individuals for criminal violations;
                    (B) is in a State the constitution of which does 
                not provide for the criminal prosecution of individuals 
                by a statewide authority, and has formal procedures, 
                approved by the Secretary, that assure it will refer 
                suspected criminal violations relating to health care 
                fraud or abuse in violation of any Federal law to the 
                appropriate authority or authorities of the State for 
                prosecution and assure it will assist such authority or 
                authorities in such prosecutions; or
                    (C) has a formal working relationship with the 
                office of the State Attorney General or the appropriate 
                authority or authorities for prosecution and has formal 
                procedures (including procedures under which it will 
                refer suspected criminal violations to such office), 
                that provide effective coordination of activities 
                between the Health Care Fraud and Abuse Control Unit 
                and such office with respect to the detection, 
                investigation, and prosecution of suspected health care 
                fraud or abuse in violation of any Federal law.
            (2) The entity conducts a statewide program for the 
        investigation and prosecution of violations of all applicable 
        State laws regarding any and all aspects of health care fraud 
        and abuse under Federal law.
            (3) The entity has procedures for--
                    (A) reviewing complaints of the abuse or neglect of 
                patients of health care facilities in the State, and
                    (B) where appropriate, investigating and 
                prosecuting such complaints under the criminal laws of 
the State or for referring the complaints to other State or Federal 
agencies for action.
            (4) The entity provides for the collection, or referral for 
        collection to the appropriate agency, of overpayments that--
                    (A) are made under any federally funded or mandated 
                health care program required by this Act, and
                    (B) it discovers in carrying out its activities.
            (5) The entity employs attorneys, auditors, investigators, 
        and other necessary personnel, is organized in such a manner, 
        and provides sufficient resources, as is necessary to promote 
        the effective and efficient conduct of its activities.
    (c) Submission of Annual Plan.--Each Health Care Fraud and Abuse 
Control Unit may submit each year to the Inspector General and the 
Attorney General a plan for preventing, detecting, and controlling, 
consistent with the program established under section 101(c)(1), health 
care fraud and abuse in violation of any Federal law.
    (d) Approval of Annual Plan.--The Inspector General shall approve a 
plan submitted under subsection (c) by the Health Care Fraud and Abuse 
Control Unit of a State, unless the Inspector General establishes that 
the plan--
            (1) is inconsistent with the program established under 
        section 101(c)(1); or
            (2) will not enable the agencies of the State designated 
        under subsection (a)(1) to prevent, detect, and control health 
        care fraud and abuse in violation of any Federal law.
    (e) Reports.--Each Health Care Fraud and Abuse Control Unit shall 
submit to the Inspector General an annual report containing such 
information as the Inspector General determines to be necessary.
    (f) Semiannual Reports of Inspector General of Health and Human 
Services.--The Inspector General shall include in its semiannual 
reports to the Congress under section 5(a) of the Inspector General Act 
of 1978 (5 U.S.C. App.) an assessment of the Inspector General of the 
effectiveness of States in preventing, detecting, and controlling 
health care fraud and abuse.

SEC. 103. PAYMENTS TO STATES.

    (a) In General.--For each year for which a State has an annual plan 
approved under section 102(d), and subject to the availability of 
appropriations, the Inspector General shall pay to the State for each 
quarter an amount equal to 75 percent of the sums expended during the 
quarter by agencies designated by the Governor of the State under 
section 102(a)(1) in conducting activities described in that 
subsection.
    (b) Time of Payment.--The Inspector General shall make a payment 
under subsection (a) for a quarter by not later than 30 days after the 
end of the quarter.
    (c) Payments Are Additional.--Payments to a State under this 
subsection shall be in addition to any amounts paid under section 106.

SEC. 104. HEALTH CARE FRAUD AND ABUSE CONTROL ACCOUNT.

    (a) Establishment.--There is established on the books of the 
Treasury of the United States a separate account, which shall be known 
as the Health Care Fraud and Abuse Control Account. The Account shall 
consist of--
            (1) the Health Care Fraud and Abuse Expenses Subaccount; 
        and
            (2) the Health Care Fraud and Abuse Reserve Subaccount.
    (b) Expenses Subaccount.--
            (1) Contents.--The Expenses Subaccount consists of--
                    (A) amounts deposited under paragraph (2); and
                    (B) amounts transferred from the Reserve Subaccount 
                under subsection (c)(2).
            (2) Deposits.--Except as provided in subsection (c)(1), 
        there shall be deposited in the Expenses Subaccount all amounts 
        received by the United States as--
                    (A) fines imposed in cases involving a Federal 
                health care offense;
                    (B) civil penalties or damages (other than 
                restitution) in actions under section 3729 or 3730 of 
                title 31, United States Code (commonly referred to as 
                the ``False Claims Act''), that are based on claims 
                related to the provision of health care items and 
                services;
                    (C) administrative penalties under titles XI, 
                XVIII, and XIX of the Social Security Act;
                    (D) proceeds of seizures and forfeitures of 
                property for acts or omissions in violation of any 
                Federal law related to the provision of health care 
                items and services; and
                    (E) money and proceeds of property that are 
                accepted under section 105.
            (3) Use.--Amounts in the Expenses Subaccount shall be 
        available to the Inspector General and the Attorney General, 
        under such terms and conditions as the Inspector General and 
        the Attorney General jointly determine to be appropriate, for--
                    (A) paying expenses incurred by their respective 
                agencies in carrying out activities under section 101; 
                and
                    (B) making reimbursements to other Inspectors 
                General and Federal, State, and local agencies in 
                accordance with section 106.
    (c) Reserve Subaccount.--
            (1) Deposits.--An amount otherwise required under 
        subsection (b)(1) to be deposited in the Expenses Subaccount in 
        a fiscal year shall be deposited in the Reserve Subaccount, 
        if--
                    (A) the amount in the Expenses Subaccount is 
                greater than $500,000,000; and
                    (B) the deposit of that amount in the Expenses 
                Subaccount would result in the amount in the Expenses 
                Subaccount exceeding 110 percent of the total amount 
                deposited in the Expenses Subaccount in the preceding 
                fiscal year.
            (2) Transfers to expenses subaccount.--
                    (A) Estimation of shortfall.--Not later than the 
                first day of the last quarter of each fiscal year, the 
                Inspector General (in consultation with the Attorney 
                General) shall estimate whether sufficient amounts will 
                be available during such quarter in the Expenses 
                Subaccount for the uses described in subsection (b)(3).
                    (B) Transfer to cover shortfall.--If the Inspector 
                General estimates under subsection (a) that there will 
                not be available sufficient amounts in the Expenses 
                Subaccount during the last quarter of a fiscal year, 
                there shall be transferred from the Reserve Subaccount 
                to the Expenses Subaccount such amount as the Inspector 
                General estimates is required to ensure that sufficient 
                amounts are available in the Expenses Subaccount during 
                such quarter.
            (3) Limitation on amount carried over to succeeding fiscal 
        year.--There shall be transferred to the general fund of the 
        Treasury any amount remaining in the Reserve Subaccount at the 
        end of a fiscal year (after any transfer made under paragraph 
        (2)) in excess of 10 percent of the total amount authorized to 
        be deposited in the Expenses Subaccount (consistent with 
        paragraph (1)) during the fiscal year.
    (d) Annual Report to Congress.--Not later than 180 days after the 
end of each fiscal year (beginning with fiscal year 1997), the 
Secretary of Health and Human Services and the Attorney General shall 
submit a report to the Committee on Government Reform and Oversight of 
the House of Representatives and the Committee on Governmental Affairs 
of the Senate on the operations of the Account during the fiscal year, 
including a description of the deposits made into the Account and the 
payments made from the Account during the year.

SEC. 105. ACCEPTANCE OF GIFTS, BEQUESTS, AND DEVISES.

    The Attorney General or any Inspector General referred to in 
section 101(a) may accept, use, and dispose of gifts, bequests, or 
devises of services or property (real or personal), for the purpose of 
aiding or facilitating activities under this title regarding health 
care fraud and abuse. Gifts, bequests, or devises of money and proceeds 
from sales of other property received as gifts, bequests, or devises 
shall be deposited in the Account and shall be available for use in 
accordance with section 104(b)(3).

SEC. 106. REIMBURSEMENTS OF EXPENSES AND OTHER PAYMENTS TO 
              PARTICIPATING AGENCIES.

    (a) Reimbursement of Expenses of Federal Agencies.--The Inspector 
General and the Attorney General, subject to the availability of 
amounts in the Account, shall jointly and promptly reimburse Federal 
agencies for expenses incurred in carrying out section 101.
    (b) Payments to State and Local Law Enforcement Agencies.--The 
Inspector General and the Attorney General, subject to the availability 
of amounts in the Account, shall jointly and promptly pay to any State 
or local law enforcement agency that participated directly in any 
activity which led to deposits in the Account, or property the proceeds 
of which are deposited in the Account, an amount that reflects 
generally and equitably the participation of the agency in the 
activity.
    (c) Funds Used to Supplement Agency Appropriations.--It is intended 
that disbursements made from the Account to any Federal agency be used 
to increase and not supplant the recipient agency's appropriated 
operating budget.

SEC. 107. ACCOUNT PAYMENTS ADVISORY BOARD.

    (a) Establishment.--There is established the Account Payments 
Advisory Board, which shall make recommendations to the Inspector 
General and the Attorney General regarding the equitable allocation of 
payments from the Account.
    (b) Membership.--The Board shall consist of--
            (1) each of the Inspectors General referred to in section 
        101(a), other than the Inspector General of the Department of 
        Health and Human Services; and
            (2) 10 members appointed by the Inspector General of the 
        Department of Health and Human Services to represent Health 
        Care Fraud and Abuse Control Units, of whom one shall be 
        appointed--
                    (A) for each of the 10 regions established by the 
                Director of the Office of Management and Budget under 
                Office of Management and Budget Circular A-105, to 
                represent Units in that region; and
                    (B) from among individuals recommended by the heads 
                of those agencies in that region.
    (c) Terms.--The term of a Member of the Board appointed under 
subsection (b)(2) shall be 3 years, except that of such members first 
appointed 3 members shall serve an initial term of one year and 3 
members shall serve an initial term of 2 years, as specified by the 
Inspector General at the time of appointment.
    (d) Vacancies.--A vacancy on the Board shall be filled in the same 
manner in which the original appointment was made, except that an 
individual appointed to fill a vacancy occurring before the expiration 
of the term for which the individual is appointed shall be appointed 
only for the remainder of that term.
    (e) Chairperson and Bylaws.--The Board shall elect one of its 
members as chairperson and shall adopt bylaws.
    (f) Compensation and Expenses.--Members of the Board shall serve 
without compensation, except that the Inspector General may pay the 
expenses reasonably incurred by the Board in carrying out its functions 
under this section.
    (g) No Termination.--Section 14(a)(2) of the Federal Advisory 
Committee Act (5 U.S.C. App.) does not apply to the Board.

SEC. 108. ESTABLISHMENT OF HEALTH CARE FRAUD AND ABUSE DATA BASE.

    (a) In General.--The Secretary of Health and Human Services, in 
consultation with the Attorney General, shall establish a data base for 
the reporting of final adverse actions taken by a Government agency 
against health care providers, suppliers, or practitioners, or against 
health care benefit programs, in order to provide a central repository 
of such information to assist in the prevention, detection, and 
prosecution of health care fraud and abuse.
    (b) Reporting Information.--
            (1) In general.--For purposes of establishing and 
        maintaining the data base under this section, each Government 
        agency shall report any final adverse action taken against a 
        health care provider, supplier, or practitioner, or against a 
        health care benefit program, together with the information 
        described in paragraph (2).
            (2) Information to be reported.--The information referred 
        to in this paragraph is as follows:
                    (A) The name of any health care insurer, provider, 
                supplier, or practitioner or health care benefit 
                program which is the subject of the final adverse 
                action reported under paragraph (1).
                    (B) In the case of a final adverse action taken 
                against a health care provider, supplier, or 
                practitioner, the name (if known) of any health care 
                benefit program with which the insurer, provider, 
                supplier, or practitioner is affiliated or associated.
                    (C) The nature of the final adverse action.
                    (D) A description of the acts or omissions and 
                injuries upon which the final adverse action was based.
                    (E) Such other information as required by the 
                Secretary.
            (3) Confidentiality.--The Secretary shall establish 
        procedures to assure that in the submission of information 
        under this subsection the privacy of individuals receiving 
        health care services is appropriately protected.
            (4) Form and manner of reporting.--The information required 
        to be reported under this subsection shall be reported on a 
        monthly basis and in such form and manner as determined by the 
        Secretary. Such information shall first be required to be 
        reported on a date specified by the Secretary.
            (5) To whom reported.--The information required to be 
        reported under this subsection shall be reported to the 
        Secretary or such person or persons designated by the 
        Secretary.
    (c) Correction of Erroneous Information.--
            (1) Disclosure and correction.--The Secretary shall provide 
        for a procedure through which a person, to whom information 
        within the data base established under this section pertains, 
        may review that information and obtain the correction of errors 
        pertaining to that person.
            (2) Other corrections.--Each Government agency shall report 
        corrections of information already reported about any final 
        adverse action taken against a health care provider, supplier, 
        or practitioner, or a health care benefit program, in such form 
        and manner as required by the Secretary.
    (d) Access to Reported Information.--
            (1) Availability.--The information in this data base shall 
        be available to the public, Federal and State law enforcement 
        agencies, Federal and State government agencies, and health 
        care benefit programs pursuant to procedures established by the 
        Secretary and Attorney General.
            (2) Fees.--The Secretary may establish reasonable fees for 
        the disclosure of information in this data base.
    (e) Protection From Liability for Reporting.--No person may be held 
liable in any civil action with respect to reporting information 
required to be reported under this section, unless the information 
reported was false and the person had knowledge of the falsity of the 
information.
    (f) Definitions and Special Rules.--For purposes of this section:
            (1) The term ``final adverse action'' includes the 
        following:
                    (A) Civil judgments in Federal or State court 
                related to the delivery of a health care item or 
                service.
                    (B) Federal or State criminal convictions related 
                to the delivery of a health care item or service, as 
                determined in accordance with procedures applicable to 
                the exclusion of individuals and entities under section 
                1128(j) of the Social Security Act.
                    (C) Actions by State or Federal agencies 
                responsible for the licensing and certification of 
                health care providers, suppliers, and licensed health 
                care practitioners, including--
                            (i) formal or official actions, such as 
                        revocation or suspension of a license (and the 
                        length of any such suspension), reprimand, 
                        censure or probation;
                            (ii) any other loss of license of the 
                        provider, supplier, or practitioner, whether by 
                        operation of law, voluntary surrender or 
                        otherwise; or
                            (iii) any other negative action or finding 
                        by such State or Federal agency that is 
                        publicly available information.
                    (D) Exclusion from participation in Federal or 
                State health care programs.
                    (E) Any other actions as required by the Secretary.
            (2) The term ``Government agency'' includes--
                    (A) the Department of Justice;
                    (B) the Department of Health and Human Services;
                    (C) any other Federal agency that either 
                administers or provides payment for the delivery of 
                health care services, including (but not limited to) 
                the Department of Defense and the Department of 
                Veterans Affairs;
                    (D) State law enforcement agencies;
                    (E) State Medicaid fraud and abuse control units 
                described in section 1903(q) of the Social Security 
                Act; and
                    (F) State or Federal agencies responsible for the 
                licensing and certification of health care providers 
                and licensed health care practitioners.
            (3) The term ``health care benefit program'' has the 
        meaning given such term in section 1347(b) of title 18, United 
        States Code, as added by section 202(b).
            (4) The term ``health care provider'' means a provider of 
        services (as defined in section 1861(u) of the Social Security 
        Act) and any entity, including a health maintenance 
        organization or group medical practice, that provides health 
        care services (as specified by the Secretary in regulations).
            (5) The terms ``licensed health care practitioner'' and 
        ``practitioner'' mean, with respect to a State, an individual 
        who is licensed or otherwise authorized by the State to provide 
        health care services (or any individual who without authority 
        holds himself or herself out to be so licensed or authorized).
            (6) The term ``Secretary'' means the Secretary of Health 
        and Human Services.
            (7) The term ``supplier'' means a supplier of items and 
        services for which payment may be made under part B of title 
        XVIII of the Social Security Act.

SEC. 109. DEFINITIONS.

    In this title:
            (1) Account.--The term ``Account'' means the Health Care 
        Fraud and Abuse Control Account established by section 104(a).
            (2) Expenses subaccount.--The term ``Expenses Subaccount'' 
        means the Health Care Fraud and Abuse Expenses Subaccount of 
        the Account.
            (3) Federal health care offense.--The term ``Federal health 
        care offense'' has the meaning given such term in section 24(a) 
        of title 18, United States Code.
            (4) Health care fraud and abuse control unit.--The term 
        ``Health Care Fraud and Abuse Control Unit'' means such a unit 
        established by a State in accordance with section 102(b).
            (5) Inspector general.--Except as otherwise provided, the 
        term ``Inspector General'' means the Inspector General of the 
        Department of Health and Human Services.
            (6) Reserve subaccount.--The term ``Reserve Subaccount'' 
        means the Health Care Fraud and Abuse Reserve Subaccount of the 
        Account.

SEC. 110. EFFECTIVE DATE.

    (a) In General.--Except as provided in subsection (b), this title 
shall take effect after the expiration of the 180-day period which 
begins on the date of the enactment of this Act.
    (b) Development and Publication of Description of Program.--Section 
101(c)(1) shall take effect on the date of the enactment of this Act.

                  TITLE II--REVISIONS TO CRIMINAL LAW

SEC. 201. DEFINITION OF FEDERAL HEALTH CARE OFFENSE.

    (a) In General.--Chapter 2 of title 18, United States Code, is 
amended by adding at the end the following:
``Sec. 24. Definition of Federal health care offense
    ``(a) As used in this title, the term `Federal health care offense' 
means--
            ``(1) a violation of, or criminal conspiracy to violate 
        section 226, 227, 669, 1035, 1347, or 1518 of this title;
            ``(2) a violation of, or criminal conspiracy to violate 
        section 1128B of the Social Security Act (42 U.S.C. 1320a-7b);
            ``(3) a violation of, or criminal conspiracy to violate 
        section 201, 287, 371, 664, 666, 1001, 1027, 1341, 1343, or 
        1954 of this title, if the violation or conspiracy relates to a 
        health care benefit program;
            ``(4) a violation of, or criminal conspiracy to violate 
        section 411, 501, or 511 of the Employee Retirement Income 
        Security Act of 1974 (29 U.S.C. 1111; 29 U.S.C. 1131; 29 U.S.C. 
        1141), if the violation or conspiracy relates to a health care 
        benefit program; or
            ``(5) a violation of, or criminal conspiracy to violate, 
        section 3 of the Anti-Kickback Act of 1986 (41 U.S.C. 53), if 
        the violation or conspiracy relates to a health care benefit 
        program.
    ``(b) As used in this title, the term `health care benefit program' 
has the meaning given such term in section 1347(b) of this title.''.
    (b) Clerical Amendment.--The table of sections at the beginning of 
chapter 2 of title 18, United States Code, is amended by inserting 
after the item relating to section 23 the following new item:

``24. Definition relating to Federal health care offense defined.''.

SEC. 202. HEALTH CARE FRAUD.

    (a) In General.--Chapter 63 of title 18, United States Code, is 
amended by adding at the end the following:
``Sec. 1347. Health care fraud
    ``(a) Whoever, having devised or intending to devise a scheme or 
artifice, commits or attempts to commit an act in furtherance of or for 
the purpose of executing such scheme or artifice--
            ``(1) to defraud any health care benefit program; or
            ``(2) to obtain, by means of false or fraudulent pretenses, 
        representations, or promises, any of the money or property 
        owned by, or under the custody or control of, any health care 
        benefit program,
shall be fined under this title or imprisoned not more than 10 years, 
or both. If the violation results in serious bodily injury (as defined 
in section 1365 of this title), such person shall be fined under this 
title or imprisoned not more than 20 years, or both; and if the 
violation results in death, such person shall be fined under this 
title, or imprisoned for any term of years or for life, or both.
    ``(b) As used in this section, the term `health care benefit 
program' means any public or private plan or contract under which any 
medical benefit, item, or service is provided to any individual, and 
includes any individual or entity who is providing a medical benefit, 
item, or service for which payment may be made under the plan or 
contract.''.
    (b) Clerical Amendment.--The table of sections at the beginning of 
chapter 63 of title 18, United States Code, is amended by adding at the 
end the following:

``1347. Health care fraud.''.

SEC. 203. THEFT OR EMBEZZLEMENT.

    (a) In General.--Chapter 31 of title 18, United States Code, is 
amended by adding at the end the following:
``Sec. 669. Theft or embezzlement in connection with health care
    ``(a) Whoever embezzles, steals, or otherwise without authority 
willfully and unlawfully converts to the use of any person other than 
the rightful owner, or intentionally misapplies any of the moneys, 
funds, securities, premiums, credits, property, or other assets of a 
health care benefit program, shall be fined under this title or 
imprisoned not more than 10 years, or both.
    ``(b) As used in this section, the term `health care benefit 
program' has the meaning given such term in section 1347(b) of this 
title.''.
    (b) Clerical Amendment.--The table of sections at the beginning of 
chapter 31 of title 18, United States Code, is amended by adding at the 
end the following:

``669. Theft or embezzlement in connection with health care.''.

SEC. 204. FALSE STATEMENTS.

    (a) In General.--Chapter 47 of title 18, United States Code, is 
amended by adding at the end the following:
``Sec. 1035. False statements relating to health care matters
    ``(a) Whoever, in any matter involving a health care benefit 
program, knowingly and willfully falsifies, conceals, or covers up by 
any trick, scheme, or device a material fact, or makes any false, 
fictitious, or fraudulent statements or representations, or makes or 
uses any false writing or document knowing the same to contain any 
false, fictitious, or fraudulent statement or entry, shall be fined 
under this title or imprisoned not more than 5 years, or both.
    ``(b) As used in this section, the term `health care benefit 
program' has the meaning given such term in section 1347(b) of this 
title.''.
    (b) Clerical Amendment.--The table of sections at the beginning of 
chapter 47 of title 18, United States Code, is amended by adding at the 
end the following new item:

``1035. False statements relating to health care matters.''.

SEC. 205. BRIBERY AND GRAFT.

    (a) In General.--Chapter 11 of title 18, United States Code, is 
amended by adding at the end the following:
``Sec. 226. Bribery and graft in connection with health care
    ``(a) Whoever--
            ``(1) directly or indirectly, corruptly gives, offers, or 
        promises anything of value to a health care official, or offers 
        or promises to give anything of value to any other person, or 
        attempts to violate this subsection, with intent--
                    ``(A) to influence any of the health care 
                official's actions, decisions, or duties relating to a 
                health care benefit program;
                    ``(B) to influence such an official to commit or 
                aid in the committing, or collude in or allow, any 
                fraud, or make opportunity for the commission of any 
                fraud, on a health care benefit program; or
                    ``(C) to induce such an official to engage in any 
                conduct in violation of the lawful duty of such 
                official; or
            ``(2) being a health care official, directly or indirectly, 
        corruptly demands, seeks, receives, accepts, or agrees to 
        accept anything of value personally or for any other person or 
        entity, the giving of which violates paragraph (1) of this 
        subsection, or attempts to violate this subsection,
shall be fined under this title or imprisoned not more than 15 years, 
or both.
    ``(b) Whoever--
            ``(1) otherwise than as provided by law for the proper 
        discharge of any duty, directly or indirectly gives, offers, or 
        promises anything of value to a health care official, for or 
        because of any of the health care official's actions, 
        decisions, or duties relating to a health care benefit program, 
        or attempts to violate this subsection; or
            ``(2) being a health care official, otherwise than as 
        provided by law for the proper discharge of any duty, directly 
        or indirectly, demands, seeks, receives, accepts or agrees to 
        accept anything of value personally or for any other person or 
        entity, the giving of which violates paragraph (1) of this 
        subsection, or attempts to violate this subsection,
shall be fined under this title, or imprisoned not more than 2 years, 
or both.
    ``(c) As used in this section--
            ``(1) the term `health care official' means--
                    ``(A) an administrator, officer, trustee, 
                fiduciary, custodian, counsel, agent, or employee of 
                any health care benefit program;
                    ``(B) an officer, counsel, agent, or employee, of 
                an organization that provides services under contract 
                to any health care benefit program; or
                    ``(C) an official, employee, or agent of an entity 
                having regulatory authority over any health care 
                benefit program; and
            ``(2) the term `health care benefit program' has the 
        meaning given such term in section 1347(b) of this title.''.
    (b) Clerical Amendment.--The table of chapters at the beginning of 
chapter 11 of title 18, United States Code, is amended by adding at the 
end the following new item:

``226. Bribery and graft in connection with health care.''.

SEC. 206. ILLEGAL REMUNERATION WITH RESPECT TO HEALTH CARE BENEFIT 
              PROGRAMS.

    (a) In General.--Chapter 11 of title 18, United States Code, is 
amended by adding at the end the following:
``Sec. 227. Illegal remuneration with respect to health care benefit 
              programs
    ``(a) Whoever knowingly and willfully solicits or receives any 
remuneration (including any kickback, bribe, or rebate) directly or 
indirectly, overtly or covertly, in cash or in kind--
            ``(1) in return for referring any individual to a person 
        for the furnishing or arranging for the furnishing of any item 
        or service for which payment may be made in whole or in part by 
        any health care benefit program; or
            ``(2) in return for purchasing, leasing, ordering, or 
        arranging for or recommending purchasing, leasing, or ordering 
        any good, facility, service, or item for which payment may be 
        made in whole or in part by any health care benefit program, or 
        attempting to do so,
shall be fined under this title or imprisoned for not more than 5 
years, or both.
    ``(b) Whoever knowingly and willfully offers or pays any 
remuneration (including any kickback, bribe, or rebate) directly or 
indirectly, overtly, or covertly, in cash or in kind to any person to 
induce such person--
            ``(1) to refer an individual to a person for the furnishing 
        or arranging for the furnishing of any item or service for 
        which payment may be made in whole or in part by any health 
        benefit program; or
            ``(2) to purchase, lease, order, or arrange for or 
        recommend purchasing, leasing, or ordering any good, facility, 
        service, or item for which payment may be made in whole or in 
        part by any health benefit program or attempts to do so,
shall be fined under this title or imprisoned for not more than 5 
years, or both.
    ``(c) Subsections (a) and (b) shall not apply to--
            ``(1) a discount or other reduction in price obtained by a 
        provider of services or other entity under a health care 
        benefit program if the reduction in price is properly disclosed 
        and appropriately reflected in the costs claimed or charges 
        made by the provider or entity under a health care benefit 
        program;
            ``(2) any amount paid by an employer to an employee (who 
        has a bona fide employment relationship with such employer) for 
        employment in the provision of covered items or services if the 
        amount of the remuneration under the arrangement is consistent 
        with the fair market value of the services and is not 
        determined in a manner that takes into account (directly or 
        indirectly) the volume or value of any referrals;
            ``(3) any amount paid by a vendor of goods or services to a 
        person authorized to act as a purchasing agent for a group of 
        individuals or entities who are furnishing services reimbursed 
        under a health care benefit program if--
                    ``(A) the person has a written contract, with each 
                such individual or entity, which specifies the amount 
                to be paid the person, which amount may be a fixed 
                amount or a percentage of the value of the purchases 
                made by each such individual or entity under the 
                contract, and
                    ``(B) in the case of an entity that is a provider 
                of services (as defined in section 1861(u) of the 
                Social Security Act, the person discloses (in such form 
                and manner as the Secretary of Health and Human 
                Services requires) to the entity and, upon request, to 
                the Secretary the amount received from each such vendor 
                with respect to purchases made by or on behalf of the 
                entity;
            ``(4) a waiver of any coinsurance under part B of title 
        XVIII of the Social Security Act by a federally qualified 
        health care center with respect to an individual who qualifies 
        for subsidized services under a provision of the Public Health 
        Service Act; and
            ``(5) any payment practice specified by the Secretary of 
        Health and Human Services in regulations promulgated pursuant 
        to section 14(a) of the Medicare and Medicaid Patient and 
        Program Protection Act of 1987.
    ``(d) Any person injured in his business or property by reason of a 
violation of this section or section 226 of this title may sue therefor 
in any appropriate United States district court and shall recover 
threefold the damages such person sustains and the cost of the suit, 
including a reasonable attorney's fee.
    ``(e) As used in this section, `health care benefit program' has 
the meaning given such term in section 1347(b) of this title.''.
    (b) Clerical Amendment.--The table of sections at the beginning of 
chapter 11 of title 18, United States Code, is amended by adding at the 
end the following:

``227. Illegal remuneration with respect to health care benefit 
                            programs.''.
    (c) Conforming Amendment.--Section 1128B of the Social Security Act 
(42 U.S.C. 1320a-7b) is amended by striking subsection (b).

SEC. 207. OBSTRUCTION OF CRIMINAL INVESTIGATIONS OF HEALTH CARE 
              OFFENSES.

    (a) In General.--Chapter 73 of title 18, United States Code, is 
amended by adding at the end the following:
``Sec. 1518. Obstruction of criminal investigations of health care 
              offenses
    ``(a) Whoever willfully prevents, obstructs, misleads, delays or 
attempts to prevent, obstruct, mislead, or delay the communication of 
information or records relating to a violation of a health care offense 
to a criminal investigator shall be fined under this title or 
imprisoned not more than 5 years, or both.
    ``(b) As used in this section the term `health care offense' has 
the meaning given such term in section 24 of this title.
    ``(c) As used in this section the term `criminal investigator' 
means any individual duly authorized by a department, agency, or armed 
force of the United States to conduct or engage in investigations for 
prosecutions for violations of health care offenses.''.
    (b) Clerical Amendment.--The table of sections at the beginning of 
chapter 73 of title 18, United States Code, is amended by adding at the 
end the following new item:

``1518. Obstruction of criminal investigations of health care 
                            offenses.''.

SEC. 208. CIVIL PENALTIES FOR VIOLATIONS OF FEDERAL HEALTH CARE 
              OFFENSES.

    (a) In General.--Chapter 63 of title 18, United States Code, is 
amended by adding at the end the following:
``Sec. 1348. Civil penalties for violations of Federal health care 
              offenses
    ``The Attorney General may bring a civil action in the appropriate 
United States district court against any person who engages in conduct 
constituting a Federal health care offense, as that term is defined in 
section 24 of this title and, upon proof of such conduct by a 
preponderance of the evidence, such person shall be subject to a civil 
penalty of not more than 3 times the amount of compensation or proceeds 
which the person received or offered for the prohibited conduct. The 
imposition of a civil penalty under this section does not preclude any 
other criminal or civil statutory, common law, or administrative 
remedy, which is available by law to the United States or any other 
person.''.
    (b) Clerical Amendment.--The table of sections for chapter 63 of 
title 18, United States Code, is amended by adding at the end the 
following item:

``1348. Civil penalties for violations of Federal health care 
                            offenses.''.

SEC. 209. INJUNCTIVE RELIEF RELATING TO HEALTH CARE OFFENSES.

    (a) In General.--Section 1345(a)(1) of title 18, United States 
Code, is amended--
            (1) by striking ``or'' at the end of subparagraph (A);
            (2) by inserting ``or'' at the end of subparagraph (B); and
            (3) by adding at the end the following:
                    ``(C) committing or about to commit a Federal 
                health care offense (as defined in section 24 of this 
                title).''.
    (b) Freezing of Assets.--Section 1345(a)(2) of title 18, United 
States Code, is amended by inserting ``or a Federal health care offense 
(as defined in section 24)'' after ``title)''.

SEC. 210. AUTHORIZED INVESTIGATIVE DEMAND PROCEDURES.

    (a) In General.--Chapter 223 of title 18, United States Code, is 
amended by adding after section 3485 the following:
``Sec. 3486. Authorized investigative demand procedures
    ``(a) Authorization.--(1) In any investigation relating to 
functions set forth in paragraph (2), the Attorney General or the 
Attorney General's designee may issue in writing and cause to be served 
a summons compelling the attendance and testimony of witnesses and 
requiring the production of any records (including any books, papers, 
documents, electronic media, or other objects or tangible things), 
which may be relevant to an authorized law enforcement inquiry, that a 
person or legal entity may possess or have care, custody, or control. 
The attendance of witnesses and the production of records may be 
required from any place in any State or in any territory or other place 
subject to the jurisdiction of the United States at any designated 
place of hearing; except that a witness shall not be required to appear 
at any hearing more than 500 miles distant from the place where he was 
served with a subpoena. Witnesses summoned under this section shall be 
paid the same fees and mileage that are paid witnesses in the courts of 
the United States. A summons requiring the production of records shall 
describe the objects required to be produced and prescribe a return 
date within a reasonable period of time within which the objects can be 
assembled and made available.
    ``(2) Investigative demands utilizing an administrative summons are 
authorized for:
            ``(A) Any investigation with respect to any act or activity 
        constituting an offense involving a Federal health care offense 
        as that term is defined in section 24 of title 18, United 
        States Code.
            ``(B) Any investigation, with respect to violations of 
        sections 1073 and 1074 of title 18, United States Code, or in 
        which an individual has been lawfully charged with a Federal 
        offense and such individual is avoiding prosecution or custody 
        or confinement after conviction of such offense or attempt.
    ``(b) Service.--A subpoena issued under this section may be served 
by any person designated in the subpoena to serve it. Service upon a 
natural person may be made by personal delivery of the subpoena to him. 
Service may be made upon a domestic or foreign corporation or upon a 
partnership or other unincorporated association which is subject to 
suit under a common name, by delivering the subpoena to an officer, to 
a managing or general agent, or to any other agent authorized by 
appointment or by law to receive service of process. The affidavit of 
the person serving the subpoena entered on a true copy thereof by the 
person serving it shall be proof of service.
    ``(c) Enforcement.--In the case of contumacy by or refusal to obey 
a subpoena issued to any person, the Attorney General may invoke the 
aid of any court of the United States within the jurisdiction of which 
the investigation is carried on or of which the subpoenaed person is an 
inhabitant, or in which he carries on business or may be found, to 
compel compliance with the subpoena. The court may issue an order 
requiring the subpoenaed person to appear before the Attorney General 
to produce records, if so ordered, or to give testimony touching the 
matter under investigation. Any failure to obey the order of the court 
may be punished by the court as a contempt thereof. All process in any 
such case may be served in any judicial district in which such person 
may be found.
    ``(d) Immunity From Civil Liability.--Notwithstanding any Federal, 
State, or local law, any person, including officers, agents, and 
employees, receiving a summons under this section, who complies in good 
faith with the summons and thus produces the materials sought, shall 
not be liable in any court of any State or the United States to any 
customer or other person for such production or for nondisclosure of 
that production to the customer.''.
    (b) Clerical Amendment.--The table of sections at the beginning of 
chapter 223 of title 18, United States Code, is amended by inserting 
after the item relating to section 3485 the following new item:

``3486. Authorized investigative demand procedures.''.
    (c) Conforming Amendment.--Section 1510(b)(3)(B) of title 18, 
United States Code, is amended by inserting ``or a Federal Bureau of 
Investigation summons (issued under section 3486 of title 18),'' after 
``subpoena''.

SEC. 211. GRAND JURY DISCLOSURE.

    Section 3322 of title 18, United States Code, is amended--
            (1) by redesignating subsections (c) and (d) as subsections 
        (d) and (e), respectively; and
            (2) by inserting after subsection (b) the following:
    ``(c) A person who is privy to grand jury information concerning a 
health care offense--
            ``(1) received in the course of duty as an attorney for the 
        Government; or
            ``(2) disclosed under rule 6(e)(3)(A)(ii) of the Federal 
        Rules of Criminal Procedure;
may disclose that information to an attorney for the Government to use 
in any civil investigation or proceeding related to a Federal health 
care offense (as defined in section 24 of this title).''.

SEC. 212. MISCELLANEOUS AMENDMENTS TO TITLE 18, UNITED STATES CODE.

    (a) Laundering of Monetary Instruments.--Section 1956(c)(7) of 
title 18, United States Code, is amended by adding at the end thereof 
the following:
            ``(F) Any act or activity constituting an offense involving 
        a Federal health care offense as that term is defined in 
        section 24 of title 18, United States Code.''.
    (b) Enhanced Penalties.--Section 2326(2) of title 18, United States 
Code, is amended by striking ``sections that--'' and inserting ``or in 
the case of a Federal health care offense as that term is defined in 
section 24 of this title, that--''.
    (c) Authorization for Interception of Wire, Oral, or Electronic 
Communications.--Section 2516(1)(c) of title 18, United States Code, is 
amended--
            (1) by inserting ``section 226 (bribery and graft in 
        connection with health care), section 227 (illegal 
        remunerations)'' after ``section 224 (bribery in sporting 
        contests),''; and
            (2) by inserting ``section 1347 (health care fraud)'' after 
        ``section 1344 (relating to bank fraud),'' .
    (d) Definitions.--Section 1961(1) of title 18, United States Code, 
is amended--
            (1) by inserting ``sections 226 and 227 (relating to 
        bribery and graft, and illegal remuneration in connection with 
        health care)'' after ``section 224 (relating to sports 
        bribery),'';
            (2) by inserting ``section 669 (relating to theft or 
        embezzlement in connection with health care)'' after ``section 
        664 (relating to embezzlement from pension and welfare 
        funds),''; and
            (3) by inserting ``section 1347 (relating to health care 
        fraud)'' after ``section 1344 (relating to financial 
        institution fraud),''.
    (e) Criminal Forfeiture.--Section 982(a) of title 18, United States 
Code, is amended by adding at the end the following new paragraph:
            ``(6) The court in imposing sentence on a person convicted 
        of a Federal health care offense as defined in section 24 of 
        this title, shall order that the offender forfeit to the United 
        States any real or personal property constituting or derived 
        from proceeds that the offender obtained directly or indirectly 
        as the result of the offense.''.
    (f) Rewards for Information Leading to Prosecution and 
Conviction.--Section 3059(c)(1) of title 18, United States Code, is 
amended by inserting ``or furnishes information unknown to the 
Government relating to a possible prosecution of a Federal health care 
offense as defined in section 24 of this title, which results in a 
conviction'' before the period at the end.

     TITLE III--ANTI-FRAUD INITIATIVES UNDER MEDICARE AND MEDICAID

SEC. 301. REVISION TO CURRENT PENALTIES.

    (a) Permissive Exclusion of Individuals With Ownership or Control 
Interest in Sanctioned Entities.--Section 1128(b) of the Social 
Security Act (42 U.S.C. 1320a-7(b)) is amended by adding at the end the 
following new paragraph:
            ``(15) Individuals controlling a sanctioned entity.--Any 
        individual who has a direct or indirect ownership or control 
        interest of 5 percent or more, or an ownership or control 
        interest (as defined in section 1124(a)(3)) in, or who is an 
        officer, director, agent, or managing employee (as defined in 
        section 1126(b)) of, an entity--
                    ``(A) that has been convicted of any offense 
                described in subsection (a) or in paragraph (1), (2), 
                or (3) of this subsection;
                    ``(B) against which a civil monetary penalty has 
                been assessed under section 1128A; or
                    ``(C) that has been excluded from participation 
                under a program under title XVIII or under a State 
                health care program.''.
    (b) Imposition of Civil Monetary Penalty on Employer Billing for 
Services Furnished by Excluded Employee.--Section 1128A(a)(1) of the 
Social Security Act (42 U.S.C. 1320a-7a(a)(1)) is amended--
            (1) by striking ``or'' at the end of subparagraph (C);
            (2) by striking ``; or'' at the end of subparagraph (D) and 
        inserting ``, or''; and
            (3) by adding at the end the following new subparagraph:
                    ``(E) is for a medical or other item or service 
                furnished by an individual who is an employee or agent 
                of the person during a period in which such employee or 
                agent was excluded from the program under which the 
                claim was made on any of the grounds for exclusion 
                described in subparagraph (D);''.
    (c) Deposit of Penalties Into Health Care Fraud and Abuse Control 
Account.--Section 1128A(f)(3) of such Act (42 U.S.C. 1320a-7a(f)(3)) is 
amended by striking ``as miscellaneous receipts of the Treasury of the 
United States'' and inserting ``in the Health Care Fraud and Abuse 
Control Account established under section 104 of the Health Care Fraud 
and Abuse Prevention Act of 1996''.
    (d) Effective Date.--The amendments made by this section shall 
apply with respect to sanctions imposed for acts or omissions occurring 
on or after the date of the enactment of this Act.

SEC. 302. SOLICITATION AND PUBLICATION OF MODIFICATIONS TO EXISTING 
              SAFE HARBORS AND NEW SAFE HARBORS; ADDITIONAL EXCEPTION 
              FOR CERTAIN DISCOUNTING AND MANAGED CARE ARRANGEMENTS.

    (a) In General.--
            (1) Solicitation of proposals for safe harbors.--Not later 
        than one year after the date of the enactment of this Act and 
        not less than every 2 years thereafter, the Secretary of Health 
        and Human Services (hereafter in this title referred to as the 
        ``Secretary'') shall publish a notice in the 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; and
                    (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.
            (2) Publication of proposed modifications and proposed 
        additional safe harbors.--After considering the proposals 
        described in paragraph (1), the Secretary, in consultation with 
        the Attorney General, shall publish in the Federal Register 
        proposed modifications to existing safe 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 of the Department of 
        Health and Human Services (hereafter in this section referred 
        to as the ``Inspector General'') shall, in an annual report to 
        Congress or as part of the year-end semiannual report required 
        by section 5 of the Inspector General Act of 1978, describe the 
        proposals received under paragraph (1) and explain which 
        proposals were included in the publication described in 
        paragraph (2), which 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 ability of health care 
        facilities to provide services in medically underserved areas 
        or to medically underserved populations.
            (6) An increase or decrease in the cost to health care 
        programs operated or financed by the Federal, State, or local 
        governments.
            (7) An increase or decrease in the potential 
        overutilization of health care services.
            (8) The existence or nonexistence of any potential 
        financial benefit to a health care professional or provider 
        which may vary based on their decisions of--
                    (A) whether to order a health care item or service; 
                or
                    (B) whether to arrange for a referral of health 
                care items or services to a particular practitioner or 
                provider.
            (9) Any other factors the Secretary deems appropriate in 
        the interest of preventing fraud and abuse in health care 
        programs operated or financed by the Federal, State, or local 
        governments.
    (c) Exception to Anti-Kickback Prohibitions for Certain Discounting 
and Managed Care Arrangements.--
            (1) In general.--Section 1128B(b)(3) of the Social Security 
        Act (42 U.S.C. 1320a-7b(b)(3)) is amended--
                    (A) by striking ``and'' at the end of subparagraph 
                (D);
                    (B) by striking the period at the end of 
                subparagraph (E) and inserting ``; and''; and
                    (C) by adding at the end the following new 
                subparagraph:
            ``(F) any remuneration between an organization and an 
        individual or entity providing items or services, or a 
        combination thereof, pursuant to a written agreement between 
        the organization and the individual or entity if the 
        organization is an eligible organization under section 1876 or 
        if the written agreement places the individual or entity at 
        substantial financial risk for the cost or utilization of the 
        items or services, or a combination thereof, which the 
        individual or entity is obligated to provide, whether through a 
        withhold, capitation, incentive pool, per diem payment, or any 
        other similar risk arrangement which places the individual or 
        entity at substantial financial risk.''.
            (2) Effective date.--The amendments made by this subsection 
        shall apply to written agreements entered into on or after 
        January 1, 1997.

SEC. 303. EXPEDITING IMPLEMENTATION OF PAYMENT ADJUSTMENTS FOR DURABLE 
              MEDICAL EQUIPMENT BASED UPON INHERENT REASONABLENESS.

    The first sentence of section 1834(a)(10)(B) of the Social Security 
Act (42 U.S.C. 1395m(a)(10)(B)) is amended by striking the period and 
inserting the following: ``, except that (notwithstanding any provision 
of such paragraphs or this title) the Secretary shall make an 
adjustment in payment for an item under this subsection pursuant to 
this subparagraph through the issuance of an interim final regulation 
issued not later than 1 year after the Secretary initially proposes to 
make the adjustment.''.

SEC. 304. REQUIRING ANNUAL NOTICE TO MEDICARE BENEFICIARIES OF NEED TO 
              PREVENT FRAUD AND ABUSE AGAINST MEDICARE PROGRAM.

    (a) In General.--Section 1804(a) of the Social Security Act (42 
U.S.C. 1395b-2(a)) is amended--
            (1) by striking ``and'' at the end of paragraph (2);
            (2) by striking the period at the end of paragraph (3) and 
        inserting ``, and''; and
            (3) by inserting after paragraph (3) the following new 
        paragraph:
            ``(4) a description of the costs to the medicare program of 
        waste, fraud, and abuse, together with suggestions for steps 
        which medicare beneficiaries may take to help combat waste, 
        fraud, and abuse against the program, including the toll-free 
        telephone number operated by the Secretary and the Inspector 
        General of the Department of Health and Human Services for 
        reporting information on fraud and abuse against the program 
        and the potential availability of a reward for individuals 
        reporting information which leads to a criminal prosecution and 
        conviction for health care fraud under title 18, United States 
        Code.''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to the annual notice mailed under section 1804(a) of the Social 
Security Act for years beginning with 1997.

SEC. 305. REQUIRING USE OF SINGLE PROVIDER NUMBER IN SUBMISSION OF 
              CLAIMS FOR PAYMENT UNDER MEDICARE AND MEDICAID.

    (a) Use of Single Number Under Medicare; Including Documentation on 
Solvency and Fiscal Integrity.--Section 1842(r) of the Social Security 
Act (42 U.S.C. 1395u(r)) is amended to read as follows:
    ``(r)(1) Not later than 1 year after the date of the enactment of 
the Health Care Fraud and Abuse Prevention Act of 1996, the Secretary 
shall establish a system which provides for a unique identifier for 
each individual or entity who furnishes items or services for which 
payment may be made under this part.
    ``(2) The Secretary may not provide a unique identifier to an 
individual or entity under the system established under paragraph (1) 
unless the individual or entity submits such documentation relating to 
financial solvency and fiscal integrity as the Secretary may require to 
ensure that the issuance of the unique identifier to the individual or 
entity will not expose the program under this part to waste, fraud, and 
abuse, except that the Secretary may waive the application of this 
paragraph in the case of--
            ``(A) a provider of services (as defined in section 
        1861(u)); or
            ``(B) an individual or entity eligible to receive payment 
        for items or services furnished under this part on the basis of 
        licensure or authorization under State law (or the State 
        regulatory mechanism provided by State law) to furnish the 
        items or services.
    ``(3) No payment may be made under this title for any item or 
service furnished by an individual or entity unless the claim for 
payment with respect to the item or service includes the unique 
identifier provided to the individual or entity under the system 
established under paragraph (1).''.
    (b) Providing Medicare Number for Submission of Medicaid Claims.--
Section 1902(x) of such Act (42 U.S.C. 1396a(x)) is amended--
            (1) by striking ``(x)'' and inserting ``(x)(1)''; and
            (2) by adding at the end the following new paragraph:
    ``(2) If an individual or entity submitting a claim to the State 
for payment for providing medical assistance under the State plan has a 
unique identifier assigned by the Secretary pursuant to section 1842(r) 
for purposes of title XVIII, the individual or entity shall include the 
identifier with such claim.''.

SEC. 306. LIABILITY OF CARRIERS AND FISCAL INTERMEDIARIES FOR CLAIMS 
              SUBMITTED BY EXCLUDED PROVIDERS.

    (a) Reimbursement to Secretary for Amounts Paid to Excluded 
Providers.--
            (1) Requirement for fiscal intermediaries.--
                    (A) In general.--Section 1816 of the Social 
                Security Act (42 U.S.C. 1395h) is amended by adding at 
                the end the following new subsection:
    ``(l) An agreement with an agency or organization under this 
section shall require that such agency or organization reimburse the 
Secretary for any amounts paid for a service under this title which is 
furnished by an individual or entity during any period for which the 
individual or entity is excluded pursuant to section 1128, 1128A, 1156, 
or subsection (j)(2) from participation in the program under this 
title, if the amounts are paid after the Secretary notifies the agency 
or organization of the exclusion.''.
                    (B) Conforming amendment.--Section 1816(i) of such 
                Act (42 U.S.C. 1395h(i)) is amended by adding at the 
                end the following new paragraph:
    ``(4) Nothing in this subsection shall be construed to prohibit 
reimbursement by an agency or organization under subsection (l).''.
            (2) Requirement for carriers.--Section 1842(b)(3) of such 
        Act (42 U.S.C. 1395u(b)(3)) is amended--
                    (A) by striking ``and'' at the end of subparagraph 
                (I); and
                    (B) by inserting after subparagraph (I) the 
                following new subparagraph:
            ``(J) will reimburse the Secretary for any amounts paid for 
        an item or service under this part which is furnished by an 
        individual or entity during any period for which the individual 
        or entity is excluded pursuant to section 1128, 1128A, 1156, or 
        subsection (j)(2) from participation in the program under this 
        title, if the amounts are paid after the Secretary notifies the 
        carrier of the exclusion; and''.
    (b) Conforming Repeal of Mandatory Payment Rule.--Section 
1862(e)(2) of such Act (42 U.S.C. 1395y(e)(2)) is amended to read as 
follows:
    ``(2) No individual or entity may bill (or collect any amount from) 
any individual for any item or service for which payment is denied 
under paragraph (1). No person is liable for payment of any amounts 
billed for such an item or service in violation of the previous 
sentence. If an individual or entity knowingly and willfully bills (or 
collects an amount) for such an item or service in violation of such 
sentence, the Secretary may apply sanctions against the individual or 
entity in the same manner as the Secretary may apply sanctions against 
a physician in accordance with subsection (j)(2) in the same manner as 
such section applies with respect to a physician. Paragraph (4) of 
subsection (j) shall apply in this paragraph in the same manner as such 
paragraph applies to such section.''.

SEC. 307. REQUIRING FISCAL INTERMEDIARIES AND CARRIERS TO USE AUTOMATED 
              DATA PROCESSING EQUIPMENT COMPARABLE TO EQUIPMENT USED IN 
              PRIVATE INSURANCE BUSINESS.

    (a) In General.--
            (1) Requirement for fiscal intermediaries.--Section 
        1816(f)(2) of the Social Security Act (42 U.S.C. 1395h(f)(2)) 
        is amended--
                    (A) by striking ``and'' at the end of subparagraph 
                (A);
                    (B) by striking the period at the end of 
                subparagraph (B) and inserting ``; and''; and
                    (C) by adding at the end the following new 
                subparagraph:
            ``(C) in the case of an agency or organization which 
        processes claims for private insurance, a requirement that the 
        automated data processing equipment used by the agency or 
        organization in carrying out the agreement under this section 
        is as effective (or more effective) in detecting code 
        manipulations, unbundling, global service violations, double 
        billings, and other forms of waste, fraud, and abuse as the 
        equipment the agency or organization uses in processing claims 
        for private insurance.''.
            (2) Requirement for carriers.--Section 1842(b)(3) of such 
        Act (42 U.S.C. 1395u(b)(3)) is amended--
                    (A) by striking ``and'' at the end of subparagraph 
                (I); and
                    (B) by inserting after subparagraph (I) the 
                following new subparagraph:
            ``(J) if it processes claims for private insurance, will 
        use automated data processing equipment in carrying out the 
        contract that is as effective (or more effective) in detecting 
        code manipulations, unbundling, global service violations, 
        double billings, and other forms of waste, fraud, and abuse as 
        the equipment it uses in processing claims for private 
        insurance; and''.
    (b) Effective Date.--The amendments made by subsection (a) shall 
apply with respect to agreements with agencies and organizations under 
section 1816 of the Social Security Act and contracts with carriers 
under section 1842 of such Act for contract years beginning after the 
date of the enactment of this Act.

SEC. 308. NONDISCHARGEABILITY UNDER BANKRUPTCY CODE OF AMOUNTS OWED FOR 
              OVERPAYMENTS.

    (a) In General.--Section 523(a) of title 11, United States Code, is 
amended--
            (1) by striking the period at the end of paragraph (16) and 
        inserting ``; or''; and
            (2) by adding at the end the following new paragraph:
            ``(17) to the extent such debt is for amounts owed for 
        overpayments made under title XVIII of the Social Security 
        Act.''.
    (b) Applicability Under Chapter 13.--Section 1328(a)(2) of title 
11, United States Code, is amended by striking ``or (9)'' and inserting 
``(9), or (17)''.
    (c) Effective Date.--The amendments made by this section shall 
apply only with respect to cases commenced under title 11, United 
States Code, after the date of the enactment of this Act.
                                 <all>