[Congressional Bills 104th Congress]
[From the U.S. Government Publishing Office]
[S. 1088 Introduced in Senate (IS)]







104th CONGRESS
  1st Session
                                S. 1088

To provide for enhanced penalties for health care fraud, and for other 
                               purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                July 28 (legislative day, July 10), 1995

   Mr. Cohen introduced the following bill; which was read twice and 
                  referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL


 
To provide for enhanced penalties for health care fraud, 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 1995''.
    (b) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title; table of contents.
                TITLE I--FRAUD AND ABUSE CONTROL PROGRAM

Sec. 101. Fraud and abuse control program.
Sec. 102. Application of certain health anti-fraud and abuse sanctions 
                            to all fraud and abuse against any Federal 
                            health program.
Sec. 103. Health care fraud and abuse guidance.
      TITLE II--REVISIONS TO CURRENT SANCTIONS FOR FRAUD AND ABUSE

Sec. 201. Mandatory exclusion from participation in medicare and State 
                            health care programs.
Sec. 202. Establishment of minimum period of exclusion for certain 
                            individuals and entities subject to 
                            permissive exclusion from medicare and 
                            State health care programs.
Sec. 203. Permissive exclusion of individuals with ownership or control 
                            interest in sanctioned entities.
Sec. 204. Sanctions against practitioners and persons for failure to 
                            comply with statutory obligations.
Sec. 205. Intermediate sanctions for medicare health maintenance 
                            organizations.
Sec. 206. Effective date.
         TITLE III--ADMINISTRATIVE AND MISCELLANEOUS PROVISIONS

Sec. 301. Establishment of the health care fraud and abuse data 
                            collection program.
                   TITLE IV--CIVIL MONETARY PENALTIES

Sec. 401. Social Security Act civil monetary penalties.
                  TITLE V--AMENDMENTS TO CRIMINAL LAW

Sec. 501. Health care fraud.
Sec. 502. Forfeitures for Federal health care offenses.
Sec. 503. Injunctive relief relating to Federal health care offenses.
Sec. 504. Grand jury disclosure.
Sec. 505. False Statements.
Sec. 506. Obstruction of criminal investigations of Federal health care 
                            offenses.
Sec. 507. Theft or embezzlement.
Sec. 508. Laundering of monetary instruments.
Sec. 509. Authorized investigative demand procedures.
            TITLE VI--STATE HEALTH CARE FRAUD CONTROL UNITS

Sec. 601. State health care fraud control units.
              TITLE VII--MEDICARE BILLING ABUSE PREVENTION

Sec. 701. Implementation of General Accounting Office recommendations 
                            regarding medicare claims processing.
Sec. 702. Minimum software requirements.
Sec. 703. Disclosure.
Sec. 704. Review and modification of regulations.
Sec. 705. Definitions.
                TITLE I--FRAUD AND ABUSE CONTROL PROGRAM

SEC. 101. FRAUD AND ABUSE CONTROL PROGRAM.

    (a) Establishment of Program.--
            (1) In general.--Not later than January 1, 1996, the 
        Secretary of Health and Human Services (in this title referred 
        to as the ``Secretary''), acting through the Office of the 
        Inspector General of the Department of Health and Human 
        Services, and the Attorney General shall establish a program--
                    (A) to coordinate Federal, State, and local law 
                enforcement programs to control fraud and abuse with 
                respect to the delivery of and payment for health care 
                in the United States,
                    (B) to conduct investigations, audits, evaluations, 
                and inspections relating to the delivery of and payment 
                for health care in the United States,
                    (C) to facilitate the enforcement of the provisions 
                of sections 1128, 1128A, and 1128B of the Social 
                Security Act (42 U.S.C. 1320a-7, 1320a-7a, and 1320a-
                7b) and other statutes applicable to health care fraud 
                and abuse, and
                    (D) to provide for the modification and 
                establishment of safe harbors and to issue 
                interpretative rulings and special fraud alerts 
                pursuant to section 103.
            (2) Coordination with health plans.--In carrying out the 
        program established under paragraph (1), the Secretary and the 
        Attorney General shall consult with, and arrange for the 
        sharing of data with representatives of health plans.
            (3) Guidelines.--
                    (A) In general.--The Secretary and the Attorney 
                General shall issue guidelines to carry out the program 
                under paragraph (1). The provisions of sections 553, 
                556, and 557 of title 5, United States Code, shall not 
                apply in the issuance of such guidelines.
                    (B) Information guidelines.--
                            (i) In general.--Such guidelines shall 
                        include guidelines relating to the furnishing 
                        of information by health plans, providers, and 
                        others to enable the Secretary and the Attorney 
                        General to carry out the program (including 
                        coordination with health plans under paragraph 
                        (2)).
                            (ii) Confidentiality.--Such guidelines 
                        shall include procedures to assure that such 
                        information is provided and utilized in a 
                        manner that appropriately protects the 
                        confidentiality of the information and the 
                        privacy of individuals receiving health care 
                        services and items.
                            (iii) Qualified immunity for providing 
                        information.--The provisions of section 1157(a) 
                        of the Social Security Act (42 U.S.C. 1320c-
                        6(a)) (relating to limitation on liability) 
                        shall apply to a person providing information 
                        to the Secretary or the Attorney General in 
                        conjunction with their performance of duties 
                        under this section.
            (4) Investigators and other personnel.--In addition to any 
        other amounts authorized to be appropriated to the Secretary, 
        the Attorney General, the Director of the Federal Bureau of 
        Investigation, and the Inspectors General of the Departments of 
        Health and Human Services, Defense, Labor, and Veterans 
        Affairs, of the Office of Personnel Management, and of the 
        Railroad Retirement Board, for health care anti-fraud and abuse 
        activities for a fiscal year, there are authorized to be 
        appropriated additional amounts, from the Health Care Fraud and 
        Abuse Control described in subsection (b) of this
         section, as may be necessary to enable the Secretary, the 
Attorney General, and such Inspectors General to conduct investigations 
and audits of allegations of health care fraud and abuse and otherwise 
carry out the program established under paragraph (1) in a fiscal year.
            (5) Ensuring access to documentation.--The Inspector 
        General of the Department of Health and Human Services is 
        authorized to exercise such authority described in paragraphs 
        (3) through (9) of section 6 of the Inspector General Act of 
        1978 (5 U.S.C. App.) as necessary with respect to the 
        activities under the fraud and abuse control program 
        established under this subsection.
            (6) Authority of inspector general.--Nothing in this Act 
        shall be construed to diminish the authority of any Inspector 
        General, including such authority as provided in the Inspector 
        General Act of 1978 (5 U.S.C. App.).
    (b) Health Care Fraud and Abuse Control.--
            (1) Establishment.--
                    (A) In general.--There is hereby established the 
                Health Care Fraud and Abuse Control. There are hereby 
                appropriated to the Health Care Fraud and Abuse 
                Control--
                            (i) such gifts and bequests as may be made 
                        as provided in subparagraph (B);
                            (ii) such amounts as may be deposited in 
                        the Health Care Fraud and Abuse Control as 
                        provided in sections 501(b) and 502(b), and 
                        title XI of the Social Security Act; and
                            (iii) such amounts as are transferred to 
                        the Health Care Fraud and Abuse Control under 
                        subparagraph (C).
                    (B) Authorization to accept gifts.--The Health Care 
                Fraud and Abuse Control is authorized to accept on 
                behalf of the United States money gifts and bequests 
                made unconditionally to the Health Care Fraud and Abuse 
                Control, for the benefit of the Health Care Fraud and 
                Abuse Control or any activity financed through the 
                Health Care Fraud and Abuse Control.
                    (C) Transfer of amounts.--The Secretary of the 
                Treasury shall transfer to the Health Care Fraud and 
                Abuse Control, under rules similar to the rules in 
                section 9601 of the Internal Revenue Code of 1986, an 
                amount equal to the sum of the following:
                            (i) Criminal fines imposed in cases 
                        involving a Federal health care offense (as 
                        defined in section 982(a)(6)(B) of title 18, 
                        United States Code).
                            (ii) Administrative penalties and 
                        assessments imposed under titles XI, XVIII, and 
                        XIX of the Social Security Act (except as 
                        otherwise provided by law).
                            (iii) Amounts resulting from the forfeiture 
                        of property by reason of a Federal health care 
                        offense.
                            (iv) Penalties and damages imposed under 
                        the False Claims Act (31 U.S.C. 3729 et seq.), 
                        in cases involving claims related to the 
                        provision of health care items and services 
                        (other than funds awarded to a relator or for 
                        restitution).
            (2) General use of funds.--
                    (A) In general.--Amounts in the Health Care Fraud 
                and Abuse Control shall be available, as provided in 
                appropriation Acts, to cover the costs (including 
                equipment, salaries and benefits, and travel and 
                training) of the administration and operation of the 
                health care fraud and abuse control program established 
                under subsection (a), including the costs of--
                            (i) prosecuting health care matters 
                        (through criminal, civil, and administrative 
                        proceedings);
                            (ii) investigations;
                            (iii) financial and performance audits of 
                        health care programs and operations;
                            (iv) inspections and other evaluations; and
                            (v) provider and consumer education 
                        regarding compliance with the provisions of 
                        this title.
                    (B) Funds used to supplement agency 
                appropriations.--It is intended that disbursements made 
                from the Health Care Fraud and Abuse Control to any 
                Federal agency be used to increase and not supplant the 
                recipient agency's appropriated operating budget.
            (3) Additional use of funds by inspector general.--
                    (A) Reimbursements for investigations.--Amounts in 
                the Health Care Fraud and Abuse Control shall be 
                available, as provided in appropriation Acts, to the 
                Inspectors
                 General of the Departments of Health and Human 
Services, Defense, Labor, and Veterans Affairs, of the Office of 
Personnel Management, and of the Railroad Retirement Board, to receive 
and retain for current use reimbursement for the costs of conducting 
investigations, when such restitution is ordered by a court, 
voluntarily agreed to by the payer, or otherwise.
                    (B) Crediting.--Funds received by any such 
                Inspector General as reimbursement for costs of 
                conducting investigations shall be deposited to the 
                credit of the appropriation from which initially paid, 
                or to appropriations for similar purposes currently 
                available at the time of deposit, and shall remain 
                available for obligation for 1 year from the date of 
                the deposit of such funds.
            (4) Additional use of funds by state medicaid fraud control 
        units for investigation reimbursements.--Amounts in the Health 
        Care Fraud and Abuse Control shall be available, as provided in 
        appropriation Acts, to the various State medicaid fraud control 
        units to reimburse such units upon request to the Secretary for 
        the costs of the activities authorized under section 1903(q) of 
        the Social Security Act (42 U.S.C. 1396c(q).
            (5) Annual report.--The Secretary and the Attorney General 
        shall submit jointly an annual report to Congress on the amount 
        of revenue which is generated and disbursed by the Health Care 
        Fraud and Abuse Control in each fiscal year.
    (c) Health Plan Defined.--For purposes of this section, the term 
``health plan'' means a plan or program that provides health benefits, 
whether directly, through insurance, or otherwise, and includes--
            (1) a policy of health insurance;
            (2) a contract of a service benefit organization;
            (3) a membership agreement with a health maintenance 
        organization or other prepaid health plan; and
            (4) an employee welfare benefit plan or a multiple employer 
        welfare plan (as such terms are defined in section 3 of the 
        Employee Retirement Income Security Act of 1974 (29 U.S.C. 
        1002).

SEC. 102. APPLICATION OF CERTAIN HEALTH ANTI-FRAUD AND ABUSE SANCTIONS 
              TO FRAUD AND ABUSE AGAINST FEDERAL HEALTH PROGRAMS.

    (a) Crimes.--
            (1) Social security act.--Section 1128B of the Social 
        Security Act (42 U.S.C. 1320a-7b) is amended as follows:
                    (A) In the heading, by striking ``medicare or state 
                health care programs'' and inserting ``federal health 
                care programs''.
                    (B) In subsection (a)(1), by striking ``a program 
                under title XVIII or a State health care program (as 
                defined in section 1128(h))'' and inserting ``a Federal 
                health care program''.
                    (C) In subsection (a)(5), by striking ``a program 
                under title XVIII or a State health care program'' and 
                inserting ``a Federal health care program''.
                    (D) In the second sentence of subsection (a)--
                            (i) by striking ``a State plan approved 
                        under title XIX'' and inserting ``a Federal 
                        health care program'', and
                            (ii) by striking ``the State may at its 
                        option (notwithstanding any other provision of 
                        that title or of such plan)'' and inserting 
                        ``the administrator of such program may at its 
                        option (notwithstanding any other provision of 
                        such program)''.
                    (E) In subsection (b), by striking ``title XVIII or 
                a State health care program'' each place it appears and 
                inserting ``a Federal health care program''.
                    (F) In subsection (c), by inserting ``(as defined 
                in section 1128(h))'' after ``a State health care 
                program''.
                    (G) By adding at the end the following new 
                subsection:
    ``(f) For purposes of this section, the term `Federal health care 
program' means--
            ``(1) any plan or program that provides health benefits, 
        whether directly, through insurance, or otherwise, which is 
        funded, in whole or in part, by the United States Government; 
        or
            ``(2) any State health care program, as defined in section 
        1128(h).''.
            (2) Identification of community service opportunities.--
        Section 1128B of such Act (42 U.S.C. 1320a-7b) is further 
        amended by adding at the end the following new subsection:
    ``(g) The Secretary may--
            ``(1) in consultation with State and local health care 
        officials, identify opportunities for the satisfaction of 
        community service obligations that a court may impose upon the 
        conviction of an offense under this section, and
            ``(2) make information concerning such opportunities 
        available to Federal and State law enforcement officers and 
        State and local health care officials.''.
    (b) Effective Date.--The amendments made by this section shall take 
effect on January 1, 1996.

SEC. 103. HEALTH CARE FRAUD AND ABUSE GUIDANCE.

    (a) Solicitation and Publication of Modifications to Existing Safe 
Harbors and New Safe Harbors.--
            (1) In general.--
                    (A) Solicitation of proposals for safe harbors.--
                Not later than January 1, 1996, and not less than 
                annually thereafter, the Secretary shall publish a 
                notice in the Federal Register soliciting proposals, 
                which will be accepted during a 60-day period, for--
                            (i) modifications to existing safe harbors 
                        issued pursuant to section 14(a) of the 
                        Medicare and Medicaid Patient and Program 
                        Protection Act of 1987 (42 U.S.C. 1320a-7b 
                        note);
                            (ii) additional safe harbors specifying 
                        payment practices that shall not be treated as 
                        a criminal offense under section 1128B(b) of 
                        the Social Security Act (42 U.S.C. 1320a-7b(b)) 
                        and shall not serve as the basis for an 
                        exclusion under section 1128(b)(7) of such Act 
                        (42 U.S.C. 1320a-7(b)(7));
                            (iii) interpretive rulings to be issued 
                        pursuant to subsection (b); and
                            (iv) special fraud alerts to be issued 
                        pursuant to subsection (c).
                    (B) Publication of proposed modifications and 
                proposed additional safe harbors.--After considering 
                the proposals described in clauses (i) and (ii) of 
                subparagraph (A), 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.
                    (C) Report.--The Inspector General of the 
                Department of Health and Human Services (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 (5 U.S.C. App.), 
                describe the proposals received under clauses (i) and 
                (ii) of subparagraph (A) and explain which proposals 
                were included in the publication described in 
                subparagraph (B), which proposals were not included in 
                that publication, and the reasons for the rejection of 
                the proposals that were not included.
            (2) Criteria for modifying and establishing safe harbors.--
        In modifying and establishing safe harbors under paragraph 
        (1)(B), the Secretary may consider the extent to which 
        providing a safe harbor for the specified payment practice may 
        result in any of the following:
                    (A) An increase or decrease in access to health 
                care services.
                    (B) An increase or decrease in the quality of 
                health care services.
                    (C) An increase or decrease in patient freedom of 
                choice among health care providers.
                    (D) An increase or decrease in competition among 
                health care providers.
                    (E) An increase or decrease in the ability of 
                health care facilities to provide services in medically 
                underserved areas or to medically underserved 
                populations.
                    (F) An increase or decrease in the cost to Federal 
                health care programs (as defined in section 1128B(f) of 
                the Social Security Act (42 U.S.C. 1320a-7b(f)).
                    (G) An increase or decrease in the potential 
                overutilization of health care services.
                    (H) The existence or nonexistence of any potential 
                financial benefit to a health care professional or 
                provider which may vary based on their decisions of--
                            (i) whether to order a health care item or 
                        service; or
                            (ii) whether to arrange for a referral of 
                        health care items or services to a particular 
                        practitioner or provider.
                    (I) Any other factors the Secretary deems 
                appropriate in the interest of preventing fraud and 
                abuse in Federal health care programs (as so defined).
    (b) Interpretive Rulings.--
            (1) In general.--
                    (A) Request for interpretive ruling.--Any person 
                may present, at any time, a request to the Inspector 
                General for a statement of the Inspector General's 
                current interpretation of the meaning of a specific 
                aspect of the application of sections 1128A and 1128B 
                of the Social Security Act (42 U.S.C. 1320a-7a and 
                1320a-7b) (in this section referred to as an 
                ``interpretive ruling'').
                    (B) Issuance and effect of interpretive ruling.--
                            (i) In general.--If appropriate, the 
                        Inspector General shall in consultation with 
                        the Attorney General, issue an interpretive 
                        ruling not later than 90 days after receiving a 
                        request described in subparagraph (A). 
                        Interpretive rulings shall not have the force 
                        of law and shall be treated as an interpretive 
                        rule within the meaning of section 553(b) of 
                        title 5, United States Code. All interpretive 
                        rulings issued pursuant to this clause shall be 
                        published in the Federal Register or otherwise 
                        made available for public inspection.
                            (ii) Reasons for denial.--If the Inspector 
                        General does not issue an interpretive ruling 
                        in response to a request described in 
                        subparagraph (A), the Inspector General shall 
                        notify the requesting party of such decision 
                        not later than 60 days after receiving such a 
                        request and shall identify the reasons for such 
                        decision.
            (2) Criteria for interpretive rulings.--
                    (A) In general.--In determining whether to issue an 
                interpretive ruling under paragraph (1)(B), the 
                Inspector General may consider--
                            (i) whether and to what extent the request 
                        identifies an ambiguity within the language of 
                        the statute, the existing safe harbors, or 
                        previous interpretive rulings; and
                            (ii) whether the subject of the requested 
                        interpretive ruling can be adequately addressed 
                        by interpretation of the language of the 
                        statute, the existing safe harbor rules, or 
                        previous interpretive rulings, or whether the 
                        request would require a substantive ruling (as 
                        defined in section 552 of title 5, United 
                        States Code) not authorized under this 
                        subsection.
                    (B) No rulings on factual issues.--The Inspector 
                General shall not give an interpretive ruling on any 
                factual issue, including the intent of the parties or 
                the fair market value of particular leased space or 
                equipment.
    (c) Special Fraud Alerts.--
            (1) In general.--
                    (A) Request for special fraud alerts.--Any person 
                may present, at any time, a request to the Inspector 
                General for a notice which informs the public of 
                practices which the Inspector General considers to be 
                suspect or of particular concern under section 1128B(b) 
                of the Social Security Act (42 U.S.C. 1320a-7b(b)) (in 
                this subsection referred to as a ``special fraud 
                alert'').
                    (B) Issuance and publication of special fraud 
                alerts.--Upon receipt of a request described in 
                subparagraph (A), the Inspector General shall 
                investigate the subject matter of the request to 
                determine whether a special fraud alert should be 
                issued. If appropriate, the Inspector 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.
            (2) Criteria for special fraud alerts.--In determining 
        whether to issue a special fraud alert upon a request described 
        in paragraph (1), the Inspector General may consider--
                    (A) 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 
                subsection (a)(2); and
                    (B) the volume and frequency of the conduct that 
                would be identified in the special fraud alert.
      TITLE II--REVISIONS TO CURRENT SANCTIONS FOR FRAUD AND ABUSE

SEC. 201. MANDATORY EXCLUSION FROM PARTICIPATION IN MEDICARE AND STATE 
              HEALTH CARE PROGRAMS.

    (a) Individual Convicted of Felony Relating to Health Care Fraud.--
            (1) In general.--Section 1128(a) of the Social Security Act 
        (42 U.S.C. 1320a-7(a)) is amended by adding at the end the 
        following new paragraph:
            ``(3) Felony conviction relating to health care fraud.--Any 
        individual or entity that has been convicted after the date of 
        the enactment of the Health Care Fraud and Abuse Prevention Act 
        of 1995, under Federal or State law, in connection with the 
        delivery of a health care item or service or with respect to 
        any act or omission in a health care program (other than those 
        specifically described in paragraph (1)) operated by or 
        financed in whole or in part by any Federal, State, or local 
        government agency, of a criminal offense consisting of a felony 
        relating to fraud, theft, embezzlement, breach of fiduciary 
        responsibility, or other financial misconduct.''.
            (2) Conforming amendment.--Paragraph (1) of section 1128(b) 
        of such Act (42 U.S.C. 1320a-7(b)) is amended to read as 
        follows:
            ``(1) Conviction relating to fraud.--Any individual or 
        entity that has been convicted after the date of the enactment 
        of the Health Care Fraud and Abuse Prevention Act of 1995, 
        under Federal or State law--
                    ``(A) of a criminal offense consisting of a 
                misdemeanor relating to fraud, theft, embezzlement, 
                breach of fiduciary responsibility, or other financial 
                misconduct--
                            ``(i) in connection with the delivery of a 
                        health care item or service, or
                            ``(ii) with respect to any act or omission 
                        in a health care program (other than those 
                        specifically described in subsection (a)(1)) 
                        operated by or financed in whole or in part by 
                        any Federal, State, or local government agency; 
                        or
                    ``(B) of a criminal offense relating to fraud, 
                theft, embezzlement, breach of fiduciary 
                responsibility, or other financial misconduct with 
                respect to any act or omission in a program (other than 
                a health care program) operated by or financed in whole 
                or in part by any Federal, State, or local government 
                agency.''.
    (b) Individual Convicted of Felony Relating to Controlled 
Substance.--
            (1) In general.--Section 1128(a) of the Social Security Act 
        (42 U.S.C. 1320a-7(a)), as amended by subsection (a), is 
        amended by adding at the end the following new paragraph:
            ``(4) Felony conviction relating to controlled substance.--
        Any individual or entity that has been convicted after the date 
        of the enactment of the Health Care Fraud and Abuse Prevention 
        Act of 1995, under Federal or State law, of a criminal offense 
        consisting of a felony relating to the unlawful manufacture, 
        distribution, prescription, or dispensing of a controlled 
        substance.''.
            (2) Conforming amendment.--Section 1128(b)(3) of such Act 
        (42 U.S.C. 1320a-7(b)(3)) is amended--
                    (A) in the heading, by striking ``Conviction'' and 
                inserting ``Misdemeanor conviction''; and
                    (B) by striking ``criminal offense'' and inserting 
                ``criminal offense consisting of a misdemeanor''.

SEC. 202. ESTABLISHMENT OF MINIMUM PERIOD OF EXCLUSION FOR CERTAIN 
              INDIVIDUALS AND ENTITIES SUBJECT TO PERMISSIVE EXCLUSION 
              FROM MEDICARE AND STATE HEALTH CARE PROGRAMS.

    Section 1128(c)(3) of the Social Security Act (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.''.

SEC. 203. 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 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; or
                    ``(B) that has been excluded from participation 
                under a program under title XVIII or under a State 
                health care program.''.

SEC. 204. SANCTIONS AGAINST PRACTITIONERS AND PERSONS FOR FAILURE TO 
              COMPLY WITH STATUTORY OBLIGATIONS.

    (a) Minimum Period of Exclusion for Practitioners and Persons 
Failing To Meet Statutory Obligations.--
            (1) In general.--The second sentence of section 1156(b)(1) 
        of the Social Security Act (42 U.S.C. 1320c-5(b)(1)) is amended 
        by striking ``may prescribe)'' and inserting ``may prescribe, 
        except that such period may not be less than 1 year)''.
            (2) Conforming amendment.--Section 1156(b)(2) of such Act 
        (42 U.S.C. 1320c-5(b)(2)) is amended by striking ``shall 
        remain'' and inserting ``shall (subject to the minimum period 
        specified in the second sentence of paragraph (1)) remain''.
    (b) Repeal of ``Unwilling or Unable'' Condition for Imposition of 
Sanction.--Section 1156(b)(1) of the Social Security Act (42 U.S.C. 
1320c-5(b)(1)) is amended--
            (1) in the second sentence, by striking ``and determines'' 
        and all that follows through ``such obligations,''; and
            (2) by striking the third sentence.
SEC. 205. INTERMEDIATE SANCTIONS FOR MEDICARE HEALTH MAINTENANCE 
              ORGANIZATIONS.

    (a) Application of Intermediate Sanctions for Any Program 
Violations.--
            (1) In general.--Section 1876(i)(1) of the Social Security 
        Act (42 U.S.C. 1395mm(i)(1)) is amended by striking ``the 
        Secretary may terminate'' and all that follows and inserting 
        ``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 
                substantially inconsistent with the efficient and 
                effective administration of this section; or
                    ``(C) 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) of such Act (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) of 
        such Act (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 first provides the organization with 
        the reasonable 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) 
        and the organization fails to develop or implement such a plan;
            ``(B) in deciding whether to impose sanctions, the 
        Secretary considers aggravating factors such as whether an 
        entity has a history of deficiencies or has not taken action 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.--Section 1876(i)(6)(B) of such 
        Act (42 U.S.C. 1395mm(i)(6)(B)) is amended by striking the 
        second sentence.
    (b) Agreements With Peer Review Organizations.--
            (1) Requirement for written agreement.--Section 
        1876(i)(7)(A) of the Social Security Act (42 U.S.C. 
        1395mm(i)(7)(A)) is amended by striking ``an agreement'' and 
        inserting ``a written agreement''.
            (2) Development of model agreement.--Not later than July 1, 
        1996, the Secretary shall develop a model of the agreement that 
        an eligible organization with a risk-sharing contract under 
        section 1876 of the Social Security Act must enter into with an 
        entity providing peer review services with respect to services 
        provided by the organization under section 1876(i)(7)(A) of 
        such Act.
            (3) Report by gao.--
                    (A) Study.--The Comptroller General of the United 
                States shall conduct a study of the costs incurred by 
                eligible organizations with risk-sharing contracts 
                under section 1876(b) of such Act of complying with the 
                requirement of entering into a written agreement with 
                an entity providing peer review services with respect 
                to services provided by the organization, together with 
                an analysis of how information generated by such 
                entities is used by the Secretary to assess the quality 
                of services provided by such eligible organizations.
                    (B) Report to congress.--Not later than July 1, 
                1998, the Comptroller General shall submit a report to 
                the Committee on Ways and Means and the Committee on 
                Commerce of the House of Representatives and the 
                Committee on Finance and the Special Committee on Aging 
                of the Senate on the study conducted under subparagraph 
                (A).
    (c) Effective Date.--The amendments made by this section shall 
apply with respect to contract years beginning on or after January 1, 
1996.

SEC. 206. EFFECTIVE DATE.

    The amendments made by this part shall take effect January 1, 1996.

         TITLE III--ADMINISTRATIVE AND MISCELLANEOUS PROVISIONS

SEC. 301. ESTABLISHMENT OF THE HEALTH CARE FRAUD AND ABUSE DATA 
              COLLECTION PROGRAM.

    (a) General Purpose.--Not later than January 1, 1996, the Secretary 
(in this title referred to as the ``Secretary'') shall establish a 
national health care fraud and abuse data collection program for the 
reporting of final adverse actions (not including settlements in which 
no findings of liability have been made) against health care providers, 
suppliers, or practitioners as required by subsection (b), with access 
as set forth in subsection (c).
    (b) Reporting of Information.--
            (1) In general.--Each government agency and health plan 
        shall report any final adverse action (not including 
        settlements in which no findings of liability have been made) 
        taken against a health care provider, supplier, or 
        practitioner.
            (2) Information to be reported.--The information to be 
        reported under paragraph (1) includes:
                    (A) The name and TIN (as defined in section 
                7701(a)(41)) of any health care provider, supplier, or 
                practitioner who is the subject of a final adverse 
                action.
                    (B) The name (if known) of any health care entity 
                with which a health care provider, supplier, or 
                practitioner is affiliated or associated.
                    (C) The nature of the final adverse action and 
                whether such action is on appeal.
                    (D) A description of the acts or omissions and 
                injuries upon which the final adverse action was based, 
                and such other information as the Secretary determines 
                by regulation is required for appropriate 
                interpretation of information reported under this 
                section.
            (3) Confidentiality.--In determining what information is 
        required, the Secretary shall include procedures to assure that 
        the privacy of individuals receiving health care services is 
        appropriately protected.
            (4) Timing and form of reporting.--The information required 
        to be reported under this subsection shall be reported 
        regularly (but not less often than monthly) and in such form 
        and manner as the Secretary prescribes. 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.
    (c) Disclosure and Correction of Information.--
            (1) Disclosure.--With respect to the information about 
        final adverse actions (not including settlements in which no 
        findings of liability have been made) reported to the Secretary 
        under this section respecting a health care provider, supplier, 
        or practitioner, the Secretary shall, by regulation, provide 
        for--
                    (A) disclosure of the information, upon request, to 
                the health care provider, supplier, or licensed 
                practitioner, and
                    (B) procedures in the case of disputed accuracy of 
                the information.
            (2) Corrections.--Each Government agency and health plan 
        shall report corrections of information already reported about 
        any final adverse action taken against a health care provider, 
        supplier, or practitioner, in such form and manner that the 
        Secretary prescribes by regulation.
    (d) Access to Reported Information.--
            (1) Availability.--The information in this database shall 
        be available to Federal and State government agencies and 
        health plans pursuant to procedures that the Secretary shall 
        provide by regulation.
            (2) Fees for disclosure.--The Secretary may establish or 
        approve reasonable fees for the disclosure of information in 
        this database (other than with respect to requests by Federal 
        agencies). The amount of such a fee may not exceed the costs of 
        processing the requests for disclosure and of providing such 
        information. Such fees shall be available to the Secretary or, 
        in the Secretary's discretion to the agency designated under 
        this section to cover such costs.
    (e) Protection From Liability for Reporting.--No person or entity, 
including the agency designated by the Secretary in subsection (b)(5) 
shall be held liable in any civil action with respect to any report 
made as required by this section, without knowledge of the falsity of 
the information contained in the report.
    (f) Definitions and Special Rules.--For purposes of this section:
            (1)(A) The term ``final adverse action'' includes:
                    (i) Civil judgments against a health care provider 
                in Federal or State court related to the delivery of a 
                health care item or service.
                    (ii) Federal or State criminal convictions related 
                to the delivery of a health care item or service.
                    (iii) Actions by Federal or State 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, by 
                        operation of law, or
                            (III) any other negative action or finding 
                        by such Federal or State agency that is 
                        publicly available information.
                    (iv) Exclusion from participation in Federal or 
                State health care programs.
                    (v) Any other adjudicated actions or decisions that 
                the Secretary shall establish by regulation.
            (B) The term does not include any action with respect to a 
        malpractice claim.
            (2) The terms ``licensed health care practitioner'', 
        ``licensed 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).
            (3) 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, group medical practice, or any other entity 
        listed by the Secretary in regulation, that provides health 
        care services.
            (4) The term ``supplier'' means a supplier of health care 
        items and services described in section 1819(a) and (b), and 
        section 1861 of the Social Security Act.
            (5) The term ``Government agency'' shall include:
                    (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 Veterans' Administration.
                    (D) State law enforcement agencies.
                    (E) State medicaid fraud and abuse units.
                    (F) Federal or State agencies responsible for the 
                licensing and certification of health care providers 
                and licensed health care practitioners.
            (6) The term ``health plan'' has the meaning given such 
        term by section 101(c).
            (7) For purposes of paragraph (2), the existence of a 
        conviction shall be determined under paragraph (4) of section 
        1128(j) of the Social Security Act.
    (g) Conforming Amendment.--Section 1921(d) of the Social Security 
Act is amended by inserting ``and section 301 of the Health Care Fraud 
and Abuse Prevention Act of 1995'' after ``section 422 of the Health 
Care Quality Improvement Act of 1986''.

                   TITLE IV--CIVIL MONETARY PENALTIES

SEC. 401. SOCIAL SECURITY ACT CIVIL MONETARY PENALTIES.

    (a) General Civil Monetary Penalties.--Section 1128A of the Social 
Security Act (42 U.S.C. 1320a-7a) is amended as follows:
            (1) In the third sentence of subsection (a), by striking 
        ``programs under title XVIII'' and inserting ``Federal health 
        care programs (as defined in section 1128(f)(1))''.
            (2) In subsection (f)--
                    (A) by redesignating paragraph (3) as paragraph 
                (4); and
                    (B) by inserting after paragraph (2) the following 
                new paragraph:
            ``(3) With respect to amounts recovered arising out of a 
        claim under a Federal health care program (as defined in 
        section 1128B(f)), the portion of such amounts as is determined 
        to have been paid by the program shall be repaid to the 
        program, and the portion of such amounts attributable to the 
        amounts recovered under this section by reason of the 
        amendments made by the Health Care Fraud and Abuse Prevention 
        Act of 1995 (as estimated by the Secretary) shall be deposited 
        into the Health Care Fraud and Abuse Control established under 
        section 101(b) of such Act.''.
            (3) In subsection (i)--
                    (A) in paragraph (2), by striking ``title V, XVIII, 
                XIX, or XX of this Act'' and inserting ``a Federal 
                health care program (as defined in section 1128B(f))'',
                    (B) in paragraph (4), by striking ``a health 
                insurance or medical services program under title XVIII 
                or XIX of this Act'' and inserting ``a Federal health 
                care program (as so defined)'', and
                    (C) in paragraph (5), by striking ``title V, XVIII, 
                XIX, or XX'' and inserting ``a Federal health care 
                program (as so defined)''.
            (4) By adding at the end the following new subsection:
    ``(m)(1) For purposes of this section, with respect to a Federal 
health care program not contained in this Act, references to the 
Secretary in this section shall be deemed to be references to the 
Secretary or Administrator of the department or agency with 
jurisdiction over such program
 and references to the Inspector General of the Department of Health 
and Human Services in this section shall be deemed to be references to 
the Inspector General of the applicable department or agency.
    ``(2)(A) The Secretary and Administrator of the departments and 
agencies referred to in paragraph (1) may include in any action 
pursuant to this section, claims within the jurisdiction of other 
Federal departments or agencies as long as the following conditions are 
satisfied:
            ``(i) The case involves primarily claims submitted to the 
        Federal health care programs of the department or agency 
        initiating the action.
            ``(ii) The Secretary or Administrator of the department or 
        agency initiating the action gives notice and an opportunity to 
        participate in the investigation to the Inspector General of 
        the department or agency with primary jurisdiction over the 
        Federal health care programs to which the claims were 
        submitted.
    ``(B) If the conditions specified in subparagraph (A) are 
fulfilled, the Inspector General of the department or agency initiating 
the action is authorized to exercise all powers granted under the 
Inspector General Act of 1978 with respect to the claims submitted to 
the other departments or agencies to the same manner and extent as 
provided in that Act with respect to claims submitted to such 
departments or agencies.''.
    (b) Excluded Individual Retaining Ownership or Control Interest in 
Participating Entity.--Section 1128A(a) of the Social Security Act (42 
U.S.C. 1320a-7a(a)) is amended--
            (1) by striking ``or'' at the end of paragraph (1)(D);
            (2) by striking ``, or'' at the end of paragraph (2) and 
        inserting a semicolon;
            (3) by striking the semicolon at the end of paragraph (3) 
        and inserting ``; or''; and
            (4) by inserting after paragraph (3) the following new 
        paragraph:
            ``(4) in the case of a person who is not an organization, 
        agency, or other entity, is excluded from participating in a 
        program under title XVIII or a State health care program in 
        accordance with this subsection or under section 1128 and who, 
        at the time of a violation of this subsection, retains 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 or managing employee (as 
        defined in section 1126(b)) of, an entity that is participating 
        in a program under title XVIII or a State health care 
        program;''.
    (c) Modifications of Amounts of Penalties and Assessments.--Section 
1128A(a) of the Social Security Act (42 U.S.C. 1320a-7a(a)), as amended 
by subsection (b), is amended in the matter following paragraph (4)--
            (1) by striking ``$2,000'' and inserting ``$10,000'';
            (2) by inserting ``; in cases under paragraph (4), $10,000 
        for each day the prohibited relationship occurs'' after ``false 
        or misleading information was given''; and
            (3) by striking ``twice the amount'' and inserting ``3 
        times the amount''.
    (d) Claim for Item or Service Based on Incorrect Coding or 
Medically Unnecessary Services.--Section 1128A(a)(1) of the Social 
Security Act (42 U.S.C. 1320a-7a(a)(1)) is amended--
            (1) in subparagraph (A) by striking ``claimed,'' and 
        inserting ``claimed, including any person who engages in a 
        pattern or practice of presenting or causing to be presented a 
        claim for an item or service that is based on a code that the 
        person knows or has reason to know will result in a greater 
        payment to the person than the code the person knows or has 
        reason to know is applicable to the item or service actually 
        provided,'';
            (2) in subparagraph (C), by striking ``or'' at the end;
            (3) in subparagraph (D), by striking ``; or'' and inserting 
        ``, or''; and
            (4) by inserting after subparagraph (D) the following new 
        subparagraph:
                    ``(E) is for a medical or other item or service 
                that a person knows or has reason to know is not 
                medically necessary; or''.
    (e) Permitting Secretary To Impose Civil Monetary Penalty.--Section 
1128A(b) of the Social Security Act (42 U.S.C. 1320a-7a(a)) is amended 
by adding the following new paragraph:
            ``(3) Any person (including any organization, agency, or 
        other entity, but excluding a beneficiary as defined in 
        subsection (i)(5)) who the Secretary determines has violated 
        section 1128B(b) of this title shall be subject to a civil 
        monetary penalty of not more than $10,000 for each such 
        violation. In addition, such person shall be subject to an 
        assessment of not more than twice the total amount of the 
        remuneration offered, paid, solicited, or received in violation 
        of section 1128B(b). The total amount of remuneration subject 
        to an assessment shall be calculated without regard to whether 
        some portion thereof also may have been intended to serve a 
        purpose other than one proscribed by section 1128B(b).''.
    (f) Sanctions Against Practitioners and Persons for Failure To 
Comply With Statutory Obligations.--Section 1156(b)(3) of the Social 
Security Act (42 U.S.C. 1320c-5(b)(3)) is amended by striking ``the 
actual or estimated cost'' and inserting ``up to $10,000 for each 
instance''.
    (g) Procedural Provisions.--Section 1876(i)(6) of the Social 
Security Act (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).''.
    (h) Prohibition Against Offering Inducements to Individuals 
Enrolled Under Programs or Plans.--
            (1) Offer of remuneration.--Section 1128A(a) of the Social 
        Security Act (42 U.S.C. 1320a-7a(a)) is amended--
                    (A) by striking ``or'' at the end of paragraph 
                (1)(D);
                    (B) by striking ``, or'' at the end of paragraph 
                (2) and inserting a semicolon;
                    (C) by striking the semicolon at the end of 
                paragraph (3) and inserting ``; or''; and
                    (D) by inserting after paragraph (3) the following 
                new paragraph:
            ``(4) offers to or transfers remuneration to any individual 
        eligible for benefits under title XVIII of this Act, or under a 
        State health care program (as defined in section 1128(h)) that 
        such person knows or should know is likely to influence such 
        individual to order or receive from a particular provider, 
        practitioner, or supplier any item or service for which payment 
        may be made, in whole or in part, under title XVIII, or a State 
        health care program;''.
            (2) Remuneration defined.--Section 1128A(i) of such Act (42 
        U.S.C. 1320a-7a(i)) is amended by adding the following new 
        paragraph:
            ``(6) The term `remuneration' includes the waiver of 
        coinsurance and deductible amounts (or any part thereof), and 
        transfers of items or services for free or for other than fair 
        market value. The term `remuneration' does not include--
                    ``(A) the waiver of coinsurance and deductible 
                amounts by a person, if--
                            ``(i) the waiver is not offered as part of 
                        any advertisement or solicitation;
                            ``(ii) the person does not routinely waive 
                        coinsurance or deductible amounts; and
                            ``(iii) the person--
                                    ``(I) waives the coinsurance and 
                                deductible amounts after determining in 
                                good faith that the individual is in 
                                financial need;
                                    ``(II) fails to collect coinsurance 
                                or deductible amounts after making 
                                reasonable collection efforts; or
                                    ``(III) provides for any 
                                permissible waiver as specified in 
                                section 1128B(b)(3) or in regulations 
                                issued by the Secretary;
                    ``(B) differentials in coinsurance and deductible 
                amounts as part of a benefit plan design as long as the 
                differentials have been disclosed in writing to all 
                beneficiaries, third party payors, and providers, to 
                whom claims are presented and as long as the 
                differentials meet the standards as defined in 
                regulations promulgated by the Secretary not later than 
                180 days after the date of the enactment of the Health 
                Care Fraud and Abuse Prevention Act of 1995; or
                    ``(C) incentives given to individuals to promote 
                the delivery of preventive care as determined by the 
                Secretary in regulations so promulgated.''.
    (i) Effective Date.--The amendments made by this section shall take 
effect January 1, 1996.

                  TITLE V--AMENDMENTS TO CRIMINAL LAW

SEC. 501. HEALTH CARE FRAUD.

    (a) In General.--
            (1)  Fines and imprisonment for health care fraud 
        violations.--Chapter 63 of title 18, United States Code, is 
        amended by adding at the end the following new section:
``Sec. 1347. Health care fraud
    ``(a) Whoever knowingly and willfully executes, or attempts to 
execute, a scheme or artifice--
            ``(1) to defraud any health plan or other person, in 
        connection with the delivery of or payment for health care 
        benefits, items, or services; 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 plan, 
        or person in connection with the delivery of or payment for 
        health care benefits, items, or services;
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(g)(3) of this title), such person may be imprisoned for 
any term of years.
    ``(b) For purposes of this section, the term `health plan' has the 
same meaning given such term in section 101(c) of the Health Care Fraud 
and Abuse Prevention Act of 1995.''.
            (2) 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.''.
    (b) Criminal Fines Deposited in the Health Care Fraud and Abuse 
Control.--The Secretary of the Treasury shall deposit into the Health 
Care Fraud and Abuse Control established under section 101(b) an amount 
equal to the criminal fines imposed under section 1347 of title 18, 
United States Code (relating to health care fraud).

SEC. 502. FORFEITURES FOR FEDERAL HEALTH CARE OFFENSES.

    (a) In General.--Section 982(a) of title 18, United States Code, is 
amended by adding after paragraph (5) the following new paragraph:
    ``(6)(A) The court, in imposing sentence on a person convicted of a 
Federal health care offense, shall order the person to forfeit 
property, real or personal, that constitutes or is derived, directly or 
indirectly, from proceeds traceable to the commission of the offense.
    ``(B) For purposes of this paragraph, the term `Federal health care 
offense' means a violation of, or a criminal conspiracy to violate--
            ``(i) section 1347 of this title;
            ``(ii) section 1128B of the Social Security Act;
            ``(iii) sections 287, 371, 664, 666, 1001, 1027, 1341, 
        1343, 1920, or 1954 of this title if the violation or 
        conspiracy relates to health care fraud; and
            ``(iv) section 501 or 511 of the Employee Retirement Income 
        Security Act of 1974, if the violation or conspiracy relates to 
        health care fraud.''.
    (b) Property Forfeited Deposited in Health Care Fraud and Abuse 
Control.--The Secretary of the Treasury shall deposit into the Health 
Care Fraud and Abuse Control established under section 101(b) an amount 
equal to amounts resulting from forfeiture of property by reason of a 
Federal health care offense pursuant to section 982(a)(6) of title 18, 
United States Code.

SEC. 503. INJUNCTIVE RELIEF RELATING TO FEDERAL 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 new subparagraph:
                    ``(C) committing or about to commit a Federal 
                health care offense (as defined in section 982(a)(6)(B) 
                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 982(a)(6)(B))'' after ``title)''.

SEC. 504. 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 new 
        subsection:
    ``(c) A person who is privy to grand jury information concerning a 
Federal health care offense (as defined in section 982(a)(6)(B))--
            ``(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 investigation or civil proceeding relating to health care 
fraud.''.
SEC. 505. FALSE STATEMENTS.

    (a) In General.--Chapter 47, of title 18, United States Code, is 
amended by adding at the end the following new section:
``Sec. 1033. False statements relating to health care matters
    ``(a) Whoever, in any matter involving a health plan, 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) For purposes of this section, the term `health plan' has the 
same meaning given such term in section 101(c) of the Health Care Fraud 
and Abuse Prevention Act of 1995.''.
    (b) Clerical Amendment.--The table of sections at the beginning of 
chapter 47 of title 18, United States Code, in amended by adding at the 
end the following:

``1033. False statements relating to health care matters.''.
SEC. 506. OBSTRUCTION OF CRIMINAL INVESTIGATIONS OF FEDERAL HEALTH CARE 
              OFFENSES.

    (a) In General.--Chapter 73 of title 18, United States Code, is 
amended by adding at the end the following new section:
``Sec. 1518. Obstruction of criminal investigations of Federal health 
              care offenses
    ``(a) In General.--Whoever willfully prevents, obstructs, misleads, 
delays or attempts to prevent, obstruct, mislead, or delay the 
communication of information or records relating to a Federal health 
care offense to a criminal investigator shall be fined under this title 
or imprisoned not more than 5 years, or both.
    ``(b) Federal Health Care Offense.--As used in this section the 
term `Federal health care offense' has the same meaning given such term 
in section 982(a)(6)(B) of this title.
    ``(c) Criminal Investigator.--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:

``1518. Obstruction of Criminal Investigations of Federal Health Care 
                            Offenses.''.
SEC. 507. THEFT OR EMBEZZLEMENT.

    (a) In General.--Chapter 31 of title 18, United States Code, is 
amended by adding at the end the following new section:
``Sec. 669. Theft or embezzlement in connection with health care
    ``(a) In General.--Whoever willfully 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 plan, shall be fined under this 
title or imprisoned not more than 10 years, or both.
    ``(b) Health Plan.--As used in this section the term `health plan' 
has the same meaning given such term in section 101(c) of the Health 
Care Fraud and Abuse Prevention Act of 1995.''.
    (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. 508. LAUNDERING OF MONETARY INSTRUMENTS.

    Section 1956(c)(7) of title 18, United States Code, is amended by 
adding at the end the following new subparagraph:
                    ``(F) Any act or activity constituting an offense 
                involving a Federal health care offense as that term is 
                defined in section 982(a)(6)(B) of this title.''.

SEC. 509. AUTHORIZED INVESTIGATIVE DEMAND PROCEDURES.

    (a) In General.--Chapter 233 of title 18, United States Code, is 
amended by adding after section 3485 the following new section:
``Sec. 3486. Authorized investigative demand procedures
    ``(a) Authorization.--
            ``(1) In any investigation relating to functions set forth 
        in paragraph (2), the Attorney General or designee may issue in 
        writing and cause to be served a subpoena compelling 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. A custodian of records may be required to give 
        testimony concerning the production and authentication of such 
        records. 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; except that such production shall not be required more 
        than 500 miles distant from the place where the subpoena is 
        served. 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 subpoena 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 
        subpoena are authorized for any investigation with respect to 
        any act or activity constituting or involving health care 
        fraud, including a scheme or artifice--
                    ``(A) to defraud any health plan or other person, 
                in connection with the delivery of or payment for 
                health care benefits, items, or services; or
                    ``(B) 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 or, any health plan, or person in connection 
                with the delivery of or payment for health care 
                benefits, items, or services.
    ``(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 such 
person. Service may be made upon a domestic or foreign 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 such person 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 go 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 subpoena under this section, who complies in 
good faith with the subpoena 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.
    ``(e) Use in Action Against Individuals.--
            ``(1) Health information about an individual that is 
        disclosed under this section may not be used in, or disclosed 
        to any person for use in, any administrative, civil, or 
        criminal action or investigation directed against the 
        individual who is the subject of the information unless the 
        action or investigation arises out of and is directly related 
        to receipt of health care or payment for health care or action 
        involving a fraudulent claim related to health; or if 
        authorized by an appropriate order of a court of competent 
        jurisdiction, granted after application showing good cause 
        therefore.
            ``(2) In assessing good cause, the court shall weigh the 
        public interest and the need for disclosure against the injury 
        to the patient, to the physician-patient relationship, and to 
        the treatment services.
            ``(3) Upon the granting of such order, the court, in 
        determining the extent to which any disclosure of all or any 
        part of any record is necessary, shall impose appropriate 
        safeguards against unauthorized disclosure.
    ``(f) Health Plan.--As used in this section the term `health plan' 
has the same meaning given such term in section 101(c) of the Health 
Care Fraud and Abuse Prevention Act of 1995.''.
    (b) Clerical Amendment.--The table of sections for chapter 223 of 
title 18, United States Code, is amended by inserting after the item 
relating to section 3405 the following new item:
``Sec. 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 Department of 
Justice subpoena (issued under section 3486),'' after ``subpoena''.

            TITLE VI--STATE HEALTH CARE FRAUD CONTROL UNITS

SEC. 601. STATE HEALTH CARE FRAUD CONTROL UNITS.

    (a) Extension of Concurrent Authority To Investigate and Prosecute 
Fraud in Other Federal Programs.--Paragraph (3) of section 1903(q) of 
the Social Security Act (42 U.S.C. 1396b(q)) is amended--
            (1) by inserting ``(A)'' after ``in connection with''; and
            (2) by striking ``title.'' and inserting ``title; and (B) 
        upon the approval of the relevant Federal agency, any aspect of 
        the provision of health care services and activities of 
        providers of such services under any Federal health care 
        program (as defined in section 1128B(F)(1)).''.
    (b) Extension of Authority To Investigate and Prosecute Patient 
Abuse in Non-Medicaid Board and Care Facilities.--Paragraph (4) of 
section 1903(q) of the Social Security Act (42 U.S.C. 1396b(q)) is 
amended to read as follows:
            ``(4)(A) The entity has--
                    ``(i) procedures for reviewing complaints of abuse 
                or neglect of patients in health care facilities which 
                receive payments under the State plan under this title;
                    ``(ii) at the option of the entity, procedures for 
                reviewing complaints of abuse or neglect of patients 
                residing in board and care facilities; and
                    ``(iii) where appropriate, procedures for acting 
                upon such complaints under the criminal laws of the 
                State or for referring such complaints to other State 
                agencies for action.
            ``(B) For purposes of this paragraph, the term `board and 
        care facility' means a residential setting which receives 
        payment from or on behalf of two or more unrelated adults who 
        reside in such facility, and for whom one or both of the 
        following is provided:
                    ``(i) Nursing care services provided by, or under 
                the supervision of, a registered nurse, licensed 
                practical nurse, or licensed nursing assistant.
                    ``(ii) Personal care services that assist residents 
                with the activities of daily living, including personal 
                hygiene, dressing, bathing, eating, toileting, 
                ambulation, transfer, positioning, self-medication, 
                body care, travel to medical services, essential 
                shopping, meal preparation, laundry, and housework.''.

              TITLE VII--MEDICARE BILLING ABUSE PREVENTION

SEC. 701. IMPLEMENTATION OF GENERAL ACCOUNTING OFFICE RECOMMENDATIONS 
              REGARDING MEDICARE CLAIMS PROCESSING.

    (a) In General.--Not later than 90 days after the date of the 
enactment of this Act, the Secretary shall, by regulation, contract, 
change order, or otherwise, require medicare carriers to acquire 
commercial automatic data processing equipment (in this title referred 
to as ``ADPE'') meeting the requirements of section 702 to process 
medicare part B claims for the purpose of identifying billing code 
abuse.
    (b) Supplementation.--Any ADPE acquired in accordance with 
subsection (a) shall be used as a supplement to any other ADPE used in 
claims processing by medicare carriers.
    (c) Standardization.--In order to ensure uniformity, the Secretary 
may require that medicare carriers that use a common claims processing 
system acquire common ADPE in implementing subsection (a).
    (d) Implementation Date.--Any ADPE acquired in accordance with 
subsection (a) shall be in use by medicare carriers not later than 180 
days after the date of the enactment of this Act.

SEC. 702. MINIMUM SOFTWARE REQUIREMENTS.

    (a) In General.--The requirements described in this section are as 
follows:
            (1) The ADPE shall be a commercial item.
            (2) The ADPE shall surpass the capability of ADPE used in 
        the processing of medicare part B claims for identification of 
        code manipulation on the day before the date of the enactment 
        of this Act.
            (3) The ADPE shall be capable of being modified to--
                    (A) satisfy pertinent statutory requirements of the 
                medicare program; and
                    (B) conform to general policies of the Health Care 
                Financing Administration regarding claims processing.
    (b) Minimum Standards.--Nothing in this title shall be construed as 
preventing the use of ADPE which exceeds the minimum requirements 
described in subsection (a).

SEC. 703. DISCLOSURE.

    (a) In General.--Notwithstanding any other provision of law, and 
except as provided in subsection (b), any ADPE or data related thereto 
acquired by medicare carriers in accordance with section 701(a) shall 
not be subject to public disclosure.
    (b) Exception.--The Secretary may authorize the public disclosure 
of any ADPE or data related thereto acquired by medicare carriers in 
accordance with section 701(a) if the Secretary determines that--
            (1) release of such information is in the public interest; 
        and
            (2) the information to be released is not protected from 
        disclosure under section 552(b) of title 5, United States Code.

SEC. 704. REVIEW AND MODIFICATION OF REGULATIONS.

    Not later than 30 days after the date of the enactment of this Act, 
the Secretary shall order a review of existing regulations, guidelines, 
and other guidance governing medicare payment policies and billing code 
abuse to determine if revision of or addition to those regulations, 
guidelines, or guidance is necessary to maximize the benefits to the 
Federal Government of the use of ADPE acquired pursuant to section 701.

SEC. 705. DEFINITIONS.

    For purposes of this title--
            (1) The term ``automatic data processing equipment'' (ADPE) 
        has the same meaning as in section 111(a)(2) of the Federal 
        Property and Administrative Services Act of 1949 (40 U.S.C. 
        759(a)(2)).
            (2) The term ``billing code abuse'' means the submission to 
        medicare carriers of claims for services that include procedure 
        codes that do not appropriately describe the total services 
        provided or otherwise violate medicare payment policies.
            (3) The term ``commercial item'' has the same meaning as in 
        section 4(12) of the Office of Federal Procurement Policy Act 
        (41 U.S.C. 403(12)).
            (4) The term ``medicare part B'' means the supplementary 
        medical insurance program authorized under part B of title 
        XVIII of the Social Security Act (42 U.S.C. 1395j-1395w-4).
            (5) The term ``medicare carrier'' means an entity that has 
        a contract with the Health Care Financing Administration to 
        determine and make medicare payments for medicare part B 
        benefits payable on a charge basis and to perform other related 
        functions.
            (6) The term ``payment policies'' means regulations and 
        other rules that govern billing code abuses such as unbundling, 
        global service violations, double billing, and unnecessary use 
        of assistants at surgery.
            (7) The term ``Secretary'' means the Secretary of Health 
        and Human Services.
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