[Congressional Bills 104th Congress]
[From the U.S. Government Publishing Office]
[S. 1858 Introduced in Senate (IS)]







104th CONGRESS
  2d Session
                                S. 1858

 To provide for improved coordination, communication, and enforcement 
            related to health care fraud, waste, and abuse.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             June 11, 1996

  Mr. Graham (for himself, Mr. Baucus, and Mr. Pryor) introduced the 
following bill; which was read twice and referred to the Committeee on 
                                Finance

_______________________________________________________________________

                                 A BILL


 
 To provide for improved coordination, communication, and enforcement 
            related to health care fraud, waste, and abuse.

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

SECTION 1. SHORT TITLE; REFERENCES IN ACT; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Medicare Antifraud 
Act of 1996''.
    (b) Amendments to Social Security Act.--Except as otherwise 
specifically provided, whenever in this Act an amendment is expressed 
in terms of an amendment to, or repeal of, a section or other 
provision, the reference shall be considered to be made to that section 
or other provision of the Social Security Act.
    (c) Table of Contents.--The table of contents of this Act is as 
follows:

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

Sec. 101. Fraud and abuse control program.
Sec. 102. Medicare benefit integrity system.
Sec. 103. Application of certain health antifraud and abuse sanctions 
                            to fraud and abuse against Federal health 
                            programs.
Sec. 104. Health care fraud and abuse provider guidance.
Sec. 105. Medicare/medicaid beneficiary protection program.
Sec. 106. Ensuring the integrity of the Federal Hospital Insurance 
                            Trust Fund.
      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. Sanctions against providers for excessive fees or prices.
Sec. 206. Applicability of the Bankruptcy Code to program sanctions.
Sec. 207. Intermediate sanctions for medicare health maintenance 
                            organizations.
Sec. 208. Liability of medicare carriers and fiscal intermediaries and 
                            States for claims submitted by excluded 
                            providers.
Sec. 209. Effective date.
         TITLE III--ADMINISTRATIVE AND MISCELLANEOUS PROVISIONS

Sec. 301. Establishment of the health care fraud and abuse data 
                            collection program.
Sec. 302. Inspector General access to national practitioner data bank.
Sec. 303. Corporate whistleblower program.
Sec. 304. Home health billing, payment, and cost limit calculation to 
                            be based on site where service is 
                            furnished.
Sec. 305. Application of inherent reasonableness.
Sec. 306. Clarification of time and filing limitations.
Sec. 307. Clarification of liability of third party administrators.
Sec. 308. Clarification of payment amounts to medicare.
Sec. 309. Increased flexibility in contracting for medicare claims 
                            processing.
                   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, audits, or 
                            inspections 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/MEDICAID BILLING ABUSE PREVENTION

Sec. 701. Uniform medicare/medicaid application process.
Sec. 702. Standards for uniform claims.
Sec. 703. Unique provider identification code.
Sec. 704. Use of new procedures.
Sec. 705. Nondischargeability of certain medicare debts.

                TITLE I--FRAUD AND ABUSE CONTROL PROGRAM

SEC. 101. FRAUD AND ABUSE CONTROL PROGRAM.

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

                   ``fraud and abuse control program

    ``Sec. 1128C. (a) Establishment of Program.--
            ``(1) In general.--Not later than January 1, 1997, 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 health plans,
                    ``(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 and other 
                statutes applicable to health care fraud and abuse,
                    ``(D) to provide for the modification and 
                establishment of safe harbors and to issue advisory 
                opinions and special fraud alerts pursuant to section 
                104 of the Medicare Antifraud Act of 1996, and
                    ``(E) to provide for the reporting and disclosure 
                of certain final adverse actions against health care 
                providers, suppliers, or practitioners pursuant to the 
                data collection system established under section 301 of 
                such Act.
            ``(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.--Guidelines issued under 
                        subparagraph (A) 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.--Guidelines issued 
                        under subparagraph (A) 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) 
                        (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) 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.
            ``(5) Authority of inspector general.--Nothing in this Act 
        shall be construed to diminish the authority of any Inspector 
        General, including such authority as is provided in the 
        Inspector General Act of 1978 (5 U.S.C. App.).
    ``(b) Additional Use of Funds by Inspector General.--
            ``(1) Reimbursements for investigations.--The Inspector 
        General of the Department of Health and Human Services is 
        authorized to receive and retain for current use reimbursement 
        for the costs of conducting investigations and audits and for 
        monitoring compliance plans when such costs are ordered by a 
        court, voluntarily agreed to by the payor, or otherwise.
            ``(2) Crediting.--Funds received by the Inspector General 
        under paragraph (1) 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.
    ``(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; and
            ``(3) a membership agreement with a health maintenance 
        organization or other prepaid health plan.''.
    (b) Establishment of Health Care Fraud and Abuse Control Account in 
Federal Hospital Insurance Trust Fund.--Section 1817 (42 U.S.C. 1395i) 
is amended by adding at the end the following new subsection:
    ``(k) Health Care Fraud and Abuse Control Account.--
            ``(1) Establishment.--There is hereby established in the 
        Trust Fund an expenditure account to be known as the `Health 
        Care Fraud and Abuse Control Account' (in this subsection 
        referred to as the `Account').
            ``(2) Appropriated amounts to trust fund.--
                    ``(A) In general.--There are hereby appropriated to 
                the Trust Fund--
                            ``(i) such gifts and bequests as may be 
                        made as provided in subparagraph (B);
                            ``(ii) such amounts as may be deposited in 
                        the Trust Fund as provided in title XI; and
                            ``(iii) such amounts as are transferred to 
                        the Trust Fund under subparagraph (C).
                    ``(B) Authorization to accept gifts.--The Trust 
                Fund is authorized to accept, on behalf of the United 
                States, money gifts and bequests made unconditionally 
                to the Trust Fund, for the benefit of the Account or 
                any activity financed through the Account.
                    ``(C) Transfer of amounts.--The Managing Trustee 
                shall transfer to the Trust Fund, 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 recovered in cases 
                        involving a Federal health care offense (as 
                        defined in section 982(a)(6)(B) of title 18, 
                        United States Code).
                            ``(ii) Civil monetary penalties and 
                        assessments imposed in health care cases, 
                        including amounts recovered under titles XI, 
                        XVIII, and XIX, and chapter 38 of title 31, 
                        United States Code (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 obtained and 
                        otherwise creditable to miscellaneous receipts 
                        of the general fund of the Treasury obtained 
                        under sections 3729 through 3733 of title 31, 
                        United States Code (known as the False Claims 
                        Act), in cases involving claims related to the 
                        provision of health care items and services 
                        (other than funds awarded to a relator, for 
                        restitution or otherwise authorized by law).
            ``(3) Appropriated amounts to account for fraud and abuse 
        control program, etc.--
                    ``(A) Departments of health and human services and 
                justice.--
                            ``(i) In general.--There are hereby 
                        appropriated to the Account from the Trust Fund 
                        such sums as the Secretary and the Attorney 
                        General certify are necessary to carry out the 
                        purposes described in subparagraph (C), to be 
                        available without further appropriation, in an 
                        amount not to exceed--
                                    ``(I) for fiscal year 1997, 
                                $104,000,000;
                                    ``(II) for each of the fiscal years 
                                1998 through 2003, the limit for the 
                                preceding fiscal year, increased by 15 
                                percent; and
                                    ``(III) for each fiscal year after 
                                fiscal year 2003, the limit for fiscal 
                                year 2003.
                            ``(ii) Medicare and medicaid activities.--
                        For each fiscal year, of the amount 
                        appropriated in clause (i), the following 
                        amounts shall be available only for the 
                        purposes of the activities of the Office of the 
                        Inspector General of the Department of Health 
                        and Human Services with respect to the medicare 
                        and medicaid programs--
                                    ``(I) for fiscal year 1997, not 
                                less than $60,000,000 and not more than 
                                $70,000,000;
                                    ``(II) for fiscal year 1998, not 
                                less than $80,000,000 and not more than 
                                $90,000,000;
                                    ``(III) for fiscal year 1999, not 
                                less than $90,000,000 and not more than 
                                $100,000,000;
                                    ``(IV) for fiscal year 2000, not 
                                less than $110,000,000 and not more 
                                than $120,000,000;
                                    ``(V) for fiscal year 2001, not 
                                less than $120,000,000 and not more 
                                than $130,000,000;
                                    ``(VI) for fiscal year 2002, not 
                                less than $140,000,000 and not more 
                                than $150,000,000; and
                                    ``(VII) for each fiscal year after 
                                fiscal year 2002, not less than 
                                $150,000,000 and not more than 
                                $160,000,000.
                    ``(B) Federal bureau of investigation.--There are 
                hereby appropriated from the general fund of the United 
                States Treasury and hereby appropriated to the Account 
                for transfer to the Federal Bureau of Investigation to 
                carry out the purposes described in subparagraph (C), 
                to be available without further appropriation--
                            ``(i) for fiscal year 1997, $47,000,000;
                            ``(ii) for fiscal year 1998, $56,000,000;
                            ``(iii) for fiscal year 1999, $66,000,000;
                            ``(iv) for fiscal year 2000, $76,000,000;
                            ``(v) for fiscal year 2001, $88,000,000;
                            ``(vi) for fiscal year 2002, $101,000,000; 
                        and
                            ``(vii) for each fiscal year after fiscal 
                        year 2002, $114,000,000.
                    ``(C) Use of funds.--The purposes described in this 
                subparagraph are to cover the costs (including 
                equipment, salaries, benefits, travel, and training) of 
                the administration and operation of the health care 
                fraud and abuse control program established under 
                section 1128C(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 
                        title XI.
            ``(4) Appropriated amounts to account for medicare benefit 
        integrity system.--
                    ``(A) In general.--There are hereby appropriated to 
                the Account from the Trust Fund for each fiscal year 
                such amounts as are necessary to carry out the Medicare 
                Benefit Integrity System under section 1889, subject to 
                subparagraph (B), to be available without further 
                appropriation.
                    ``(B) Amounts specified.--The amount appropriated 
                under subparagraph (A) for a fiscal year is as follows:
                            ``(i) For fiscal year 1997, such amount 
                        shall be not less than $430,000,000 and not 
                        more than $440,000,000.
                            ``(ii) For fiscal year 1998, such amount 
                        shall be not less than $490,000,000 and not 
                        more than $500,000,000.
                            ``(iii) For fiscal year 1999, such amount 
                        shall be not less than $550,000,000 and not 
                        more than $560,000,000.
                            ``(iv) For fiscal year 2000, such amount 
                        shall be not less than $620,000,000 and not 
                        more than $630,000,000.
                            ``(v) For fiscal year 2001, such amount 
                        shall be not less than $670,000,000 and not 
                        more than $680,000,000.
                            ``(vi) For fiscal year 2002, such amount 
                        shall be not less than $690,000,000 and not 
                        more than $700,000,000.
                            ``(vii) For each fiscal year after fiscal 
                        year 2002, such amount shall be not less than 
                        $710,000,000 and not more than $720,000,000.
            ``(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, and the 
        justification for such disbursements, by the Account in each 
fiscal year.''.

SEC. 102. MEDICARE BENEFIT INTEGRITY SYSTEM.

    Part C of title XVIII (42 U.S.C. 1395 et seq.) is amended by 
inserting after section 1888 the following new section:

                 ``medicare benefit integrity contracts

    ``Sec. 1889. (a) Authority To Contract.--
            ``(1) In general.--In order to improve the effectiveness of 
        benefit quality assurance activities relating to programs under 
        this title, and to enhance the Secretary's capability of 
        carrying out program safeguard functions and related education 
        activities to avoid the improper expenditure of assets of the 
        Federal Hospital Insurance Trust Fund and the Federal 
        Supplementary Medical Insurance Trust Fund, the Secretary shall 
        enter into contracts with organizations or other entities 
        having demonstrated the capability to carry out one or more 
        benefit quality assurance activities. The provisions of 
        sections 1816 and 1842 shall be inapplicable to contracts under 
        this section.
            ``(2) Number of contracts.--The Secretary shall determine 
        the number of separate contracts which are necessary to 
        achieve, with the maximum degree of efficiency and cost-
        effectiveness, the objectives of this section. The Secretary 
        may enter into contracts under this section at such time or 
        times as are appropriate so long as not later than the fiscal 
        year beginning October 1, 1998, and for each fiscal year 
        thereafter, there are in effect contracts that, considered 
        collectively, provide for benefit quality assurance activities 
        with respect to all payments under this title.
    ``(b) Contract Requirements.--A benefit quality assurance contract 
entered into under subsection (a) must provide for one or more benefit 
quality assurance program activities. Each such contract shall include 
an agreement by the contractor to cooperate with the Inspector General 
of the Department of Health and Human Services, and the Attorney 
General, and other law enforcement agencies, as appropriate, in the 
investigation and deterrence of fraud and abuse in relation to this 
title and in other cases arising out of the activities described in 
such section, and shall contain such other provisions as the Secretary 
finds necessary or appropriate to achieve the purposes of this part. 
The provisions of section 1153(e)(1) shall apply to contracts and 
contracting authority under this section, except that competitive 
procedures must be used when entering into new contracts under this 
section, or at any other time when it is in the best interests of the 
United States. A contract under this section may be renewed from term 
to term without regard to any provision of law requiring competition if 
the contractor has met or exceeded the performance requirements 
established in the current contract.
    ``(c) Limitations.--
            ``(1) In general.--In carrying out this section, the 
        Secretary may not enter into a contract with an organization or 
        other entity if the Secretary determines that such 
        organization's or entity's financial holdings, interests, or 
        relationships would interfere with its ability to perform the 
        functions to be required by the contract in an effective and 
        impartial manner.
            ``(2) Limitation of liability.--The Secretary shall by 
        regulation provide for the limitation of a contractor's 
        liability for actions taken to carry out a contract under this 
        section, and such regulations shall, to the extent the 
        Secretary finds appropriate, employ the same or comparable 
        standards and other substantive and procedural provisions as 
        are contained in section 1157.''.

SEC. 103. APPLICATION OF CERTAIN HEALTH ANTIFRAUD AND ABUSE SANCTIONS 
              TO FRAUD AND ABUSE AGAINST FEDERAL HEALTH PROGRAMS.

    (a) Crimes.--
            (1) Social security act.--Section 1128B (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 (as defined in subsection (f))''.
                    (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 (as defined 
                in subsection (f))''.
                    (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 (as defined in subsection 
                        (f))''; 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)--
                            (i) by striking ``and willfully'' each 
                        place it appears;
                            (ii) by striking ``$25,000'' each place it 
                        appears and inserting ``$50,000'';
                            (iii) by striking ``title XVIII or a State 
                        health care program'' each place it appears and 
                        inserting ``Federal health care program (as 
                        defined in subsection (f))'';
                            (iv) in paragraph (1) in the matter 
                        preceding subparagraph (A), by striking 
                        ``kind--'' and inserting ``kind with intent to 
                        be influenced--'';
                            (v) in paragraph (1)(A), by striking ``in 
                        return for referring'' and inserting ``to 
                        refer'';
                            (vi) in paragraph (1)(B), by striking ``in 
                        return for purchasing, leasing, ordering, or 
                        arranging for or recommending'' and inserting 
                        ``to purchase, lease, order, or arrange for or 
                        recommend'';
                            (vii) in paragraph (2) in the matter 
                        preceding subparagraph (A), by striking ``to 
                        induce such person'' and inserting ``with 
                        intent to influence such person'';
                            (viii) by adding at the end of paragraphs 
                        (1) and (2) the following sentence: ``A 
                        violation exists under this paragraph if one or 
                        more purposes of the remuneration is unlawful 
                        under this paragraph.'';
                            (ix) by redesignating paragraph (3) as 
                        paragraph (4);
                            (x) in paragraph (4) (as redesignated) in 
                        the matter preceding subparagraph (A), by 
                        striking ``Paragraphs (1) and (2)'' and 
                        inserting ``Paragraphs (1), (2), and (3)''; and
                            (xi) by inserting after paragraph (2) the 
                        following new paragraph:
    ``(3)(A) The Attorney General may bring an action in the district 
courts to impose upon any person who carries out any activity in 
violation of this subsection a civil penalty of not less than $25,000 
and not more than $50,000 for each such violation, plus three times the 
total remuneration offered, paid, solicited, or received.
    ``(B) A violation exists under this paragraph if one or more 
purposes of the remuneration is unlawful, and the damages shall be the 
full amount of such remuneration.
    ``(C) Section 3731 of title 31, United States Code, and the Federal 
Rules of Civil Procedure shall apply to actions brought under this 
paragraph.
    ``(D) The provisions of this paragraph do not affect the 
availability of other criminal and civil remedies for such 
violations.''.
                    (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 
                subsections:
    ``(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).
    ``(g)(1) The Inspector General of the departments and agencies with 
a Federal health care program may conduct an investigation or audit 
relating to violations of this section and claims within the 
jurisdiction of other Federal departments or agencies if the following 
conditions are satisfied:
            ``(A) The investigation or audit involves primarily claims 
        submitted to the Federal health care programs of the department 
        or agency conducting the investigation or audit.
            ``(B) The Inspector General of the department or agency 
        conducting the investigation or audit gives notice and an 
        opportunity to participate in the investigation or audit to the 
        Inspector General of the department or agency with primary 
        jurisdiction over the Federal health care programs to which the 
        claims were submitted.
    ``(2) If the conditions specified in paragraph (1) are fulfilled, 
the Inspector General of the department or agency conducting the 
investigation or audit may exercise all powers granted under the 
Inspector General Act of 1978 (5 U.S.C. App.) 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.''.
            (2) Identification of community service opportunities.--
        Section 1128B (42 U.S.C. 1320a-7b), as amended by paragraph 
        (1), is amended by adding at the end the following new 
        subsection:
    ``(h) 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, 1997.

SEC. 104. HEALTH CARE FRAUD AND ABUSE PROVIDER 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, 1997, 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 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 120 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 120 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.

SEC. 105. MEDICARE/MEDICAID BENEFICIARY PROTECTION PROGRAM.

    (a) Establishment of Program.--Not later than January 1, 1997, the 
Secretary (through the Administrator of the Health Care Financing 
Administration and the Inspector General of the Department of Health 
and Human Services) shall establish the Medicare/Medicaid Beneficiary 
Protection Program. Under such program the Secretary shall--
            (1) educate medicare and medicaid beneficiaries regarding--
                    (A) medicare and medicaid program coverage;
                    (B) fraudulent and abusive practices;
                    (C) medically unnecessary health care items and 
                services; and
                    (D) substandard health care items and services;
            (2) identify and publicize fraudulent and abusive practices 
        with respect to the delivery of health care items and services; 
        and
            (3) establish a procedure for the reporting of fraudulent 
        and abusive health care providers, practitioners, claims, 
        items, and services to appropriate law enforcement and payer 
        agencies.
    (b) Recognition and Publication of Contributions.--The program 
established by the Secretary under this section shall recognize and 
publicize significant contributions made by individual health care 
patients toward the combating of health care fraud and abuse.
    (c) Dissemination of Information.--The Secretary shall provide for 
the broad dissemination of information regarding the Medicare/Medicaid 
Beneficiary Protection Program.

SEC. 106. ENSURING THE INTEGRITY OF THE FEDERAL HOSPITAL INSURANCE 
              TRUST FUND.

    (a) Determination.--Prior to the end of each fiscal year, the 
Secretary of Health and Human Services (in this section referred to as 
the ``Secretary'') and the Attorney General shall jointly determine--
            (1) the portion of the costs charged during such fiscal 
        year to any account established within the Federal Hospital 
        Insurance Trust Fund under title XVIII of the Social Security 
        Act (42 U.S.C. 1395 et seq.) to combat health care waste, 
        fraud, and abuse, which do not relate to the administration of 
        the medicare program; and
            (2) the amount of funds deposited into such account of such 
        trust fund during such fiscal year that were attributable to 
        enforcement activities that were intended to combat health care 
        waste, fraud, and abuse, which do not relate to the 
        administration of the medicare program.
    (b) Certification.--If the portion determined under paragraph (1) 
of subsection (a) exceeds the amount determined under paragraph (2) of 
such subsection, the Secretary and the Attorney General shall certify 
to the Secretary of the Treasury the amount, which shall be equal to 
the amount of such excess, which should be transferred from the General 
Fund of the Treasury to such trust fund, in order to ensure that such 
trust fund is fully reimbursed for any expenditures made from the 
account described in subsection (a) that are not related to the 
administration of the medicare program under title XVIII of the Social 
Security Act.
    (c) Transfer of Funds.--The Secretary of the Treasury shall 
transfer to such trust fund from the General Fund of the Treasury, out 
of any funds in the General Fund that are not otherwise appropriated, 
an amount equal to the amount certified under subsection (b).

      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) (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 Medicare Antifraud Act of 1996, 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) 
        (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 Medicare Antifraud Act of 1996, 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) (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 Medicare Antifraud Act of 1996, 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) (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) (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 
paragraph (4) or (5) of subsection (b), 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) (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 (as defined in subsection (h)).''.

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) 
        (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) (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) (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. SANCTIONS AGAINST PROVIDERS FOR EXCESSIVE FEES OR PRICES.

    Section 1128(b)(6)(A) (42 U.S.C. 1320a-7(b)(6)(A)) is amended--
            (1) by inserting ``(as specified by the Secretary in 
        regulations)'' after ``substantially in excess of such 
        individual's or entity's usual charges''; and
            (2) by striking ``(or, in applicable cases, substantially 
        in excess of such individual's or entity's costs)'' and 
        inserting ``, costs or fees''.

SEC. 206. APPLICABILITY OF THE BANKRUPTCY CODE TO PROGRAM SANCTIONS.

    (a) Exclusion of Individuals and Entities From Participation in 
Federal Health Care Programs.--Section 1128 (42 U.S.C. 1320a-7) is 
amended by adding at the end the following new subsection:
    ``(j) Applicability of Bankruptcy Provisions.--An exclusion imposed 
under this section is not subject to the automatic stay imposed under 
section 362 of title 11, United States Code.''.
    (b) Civil Monetary Penalties.--Section 1128A(a) (42 U.S.C. 1320a-
7a(a)) is amended by adding at the end the following sentence: ``An 
exclusion imposed under this subsection is not subject to the automatic 
stay imposed under section 362 of title 11, United States Code, and any 
penalties and assessments imposed under this section shall be 
nondischargeable under the provisions of such title.''.
    (c) Offset of Payments to Individuals.--Section 1892(a)(4) (42 
U.S.C. 1395ccc(a)(4)) is amended by adding at the end the following 
sentence: ``An exclusion imposed under paragraph (2)(C)(ii) or 
paragraph (3)(B) is not subject to the automatic stay imposed under 
section 362 of title 11, United States Code.''.

SEC. 207. INTERMEDIATE SANCTIONS FOR MEDICARE HEALTH MAINTENANCE 
              ORGANIZATIONS.

    (a) Application of Intermediate Sanctions for Program Violations.--
            (1) In general.--Section 1876(i)(1) (42 U.S.C. 
        1395mm(i)(1)) is amended by striking ``the Secretary may 
        terminate'' and all that follows and inserting ``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) (42 U.S.C. 1395mm(i)(6)) is 
        amended by adding at the end the following new subparagraph:
    ``(C) In the case of an eligible organization for which the 
Secretary makes a determination under paragraph (1), the basis of which 
is not described in subparagraph (A), the Secretary may apply the 
following intermediate sanctions:
            ``(i) Civil money penalties of not more than $25,000 for 
        each determination under paragraph (1) if the deficiency that 
        is the basis of the determination has directly adversely 
        affected (or has the substantial likelihood of adversely 
        affecting) an individual covered under the organization's 
        contract.
            ``(ii) Civil money penalties of not more than $10,000 for 
        each week beginning after the initiation of procedures by the 
        Secretary under paragraph (9) during which the deficiency that 
        is the basis of a determination under paragraph (1) exists.
            ``(iii) Suspension of enrollment of individuals under this 
        section after the date the Secretary notifies the organization 
        of a determination under paragraph (1) and until the Secretary 
        is satisfied that the deficiency that is the basis for the 
determination has been corrected and is not likely to recur.''.
            (3) Procedures for imposing sanctions.--Section 1876(i) (42 
        U.S.C. 1395mm(i)) is amended by adding at the end the following 
        new paragraph:
    ``(9) The Secretary may terminate a contract with an eligible 
organization under this section or may impose the intermediate 
sanctions described in paragraph (6) on the organization in accordance 
with formal investigation and compliance procedures established by the 
Secretary under which--
            ``(A) the Secretary 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) (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) (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, 
        1997, 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 (42 U.S.C. 1395mm) 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 (42 U.S.C. 1395mm(i)(7)(A)).
            (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 of such Act (42 U.S.C. 1395mm(b)) 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).

SEC. 208. LIABILITY OF MEDICARE CARRIERS AND FISCAL INTERMEDIARIES AND 
              STATES FOR CLAIMS SUBMITTED BY EXCLUDED PROVIDERS.

    (a) Reimbursement to the Secretary for Amounts Paid to Excluded 
Providers.--
            (1) Requirements for fiscal intermediaries.--
                    (A) In general.--Section 1816 (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, directed, or prescribed by an individual or entity during 
any period for which the individual or entity is excluded pursuant to 
section 1128, 1128A, or 1156, 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) (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) Requirements for carriers.--Section 1842(b)(3) (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, 
        directed, or prescribed by an individual or entity during any 
        period for which the individual or entity is excluded pursuant 
        to section 1128, 1128A, or 1156 from participation in the 
        program under this title, if the amounts are paid after the 
        Secretary notifies the carrier of the exclusion; and''.
            (3) Requirements for states.--Section 1902(a)(39) (42 
        U.S.C. 1396a(a)(39)) is amended by striking the semicolon at 
        the end and inserting ``, and provide further for reimbursement 
        to the Secretary of any payments made under the plan for any 
        item or service furnished, directed, or prescribed by the 
        excluded individual or entity during such period, after the 
        Secretary notifies the State of such exclusion;''.
    (b) Conforming Repeal of Mandatory Payment Rule.--Section 
1862(e)(2) (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.''.

SEC. 209. EFFECTIVE DATE.

    The amendments made by this title shall take effect January 1, 
1997.

         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, 1997, 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), and shall 
maintain a database of the information collected under this section.
    (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 the following:
                    (A) The name and TIN (as defined in section 
                7701(a)(41) of the Internal Revenue Code of 1986) 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, who is the subject of a final adverse 
                action, 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 of Health and Human Services (in 
        this section referred to 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 with respect to 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 the database 
        maintained under this section shall be available to Federal and 
        State government agencies, health plans, and the public 
        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 
        such database (other than with respect to requests by Federal 
        agencies). The amount of such a fee may be sufficient to 
        recover the full costs of carrying out the provisions of this 
        section, including reporting, disclosure, and administration. 
        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 
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) Final adverse action.--
                    (A) In general.--The term ``final adverse action'' 
                includes the following:
                            (i) Civil judgments against a health care 
                        provider or practitioner 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, or 
                                the right to apply for or renew a 
                                license of the provider, supplier, or 
                                practitioner, whether by operation of 
                                law, voluntary surrender, 
                                nonrenewability, or otherwise, 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 (as 
                        defined in section 1128B(f) and 1128(h), 
                        respectively).
                            (v) Any other adjudicated actions or 
                        decisions that the Secretary shall establish by 
                        regulation.
                    (B) Exclusion.--The term does not include any 
                action with respect to a malpractice claim.
                    (C) Special rule.--For purposes of this paragraph, 
                the existence of a conviction shall be determined under 
                section 1128(i) of the Social Security Act (42 U.S.C. 
                1320a-7(i)).
            (2) Licensed health care practitioner.--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) Health care provider.--The term ``health care 
        provider'' means a provider of services as defined in section 
        1861(u) of the Social Security Act (42 U.S.C. 1395x(u)), and 
        any person or 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) Supplier.--The term ``supplier'' means a supplier of 
        health care items and services described in subsections (a) and 
        (b) of section 1819, and section 1861 of the Social Security 
        Act (42 U.S.C. 1395i-3 (a) and (b), and 1395x).
            (5) Government agency.--The term ``Government agency'' 
        shall include the following:
                    (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) Health plan.--The term ``health plan'' has the meaning 
        given such term by section 1128C(c) of the Social Security Act, 
        as added by section 101(a) of this Act.
    (g) Conforming Amendment.--Section 1921(d) (42 U.S.C. 1396r-2(d)) 
is amended by inserting ``and section 301 of the Medicare Antifraud Act 
of 1996'' after ``section 422 of the Health Care Quality Improvement 
Act of 1986''.

SEC. 302. INSPECTOR GENERAL ACCESS TO NATIONAL PRACTITIONER DATA BANK.

    Section 427 of the Health Care Quality Improvement Act of 1986 (42 
U.S.C. 11137) is amended--
            (1) in subsection (a), by adding at the end the following 
        sentence: ``Information reported under this part shall also be 
        made available, upon request, to the Inspector General of the 
        Departments of Health and Human Services, Defense, and Labor, 
        the Office of Personnel Management, and the Railroad Retirement 
        Board.''; and
            (2) by amending subsection (b)(4) to read as follows:
            ``(4) Fees.--The Secretary may impose fees for the 
        disclosure of information under this part sufficient to recover 
        the full costs of carrying out the provisions of this part, 
        including reporting, disclosure, and administration, except 
        that a fee may not be imposed for requests made by the 
        Inspector General of the Department of Health and Human 
        Services. Such fees shall remain available to the Secretary 
        (or, in the Secretary's discretion, to the agency designated in 
        section 424(b)) until expended.''.

SEC. 303. CORPORATE WHISTLEBLOWER PROGRAM.

    Title XI (42 U.S.C. 1301 et seq.), as amended by section 101(a), is 
amended by inserting after section 1128C the following new section:

                   ``corporate whistleblower program

    ``Sec. 1128D. (a) Establishment of Program.--The Secretary, through 
the Inspector General of the Department of Health and Human Services, 
shall establish a procedure whereby corporations, partnerships, and 
other legal entities specified by the Secretary, may voluntarily 
disclose instances of unlawful conduct and seek to resolve liability 
for such conduct through means specified by the Secretary.
    ``(b) Limitation.--No person may bring an action under section 
3730(b) of title 31, United States Code, if, on the date of filing--
            ``(1) the matter set forth in the complaint has been 
        voluntarily disclosed to the United States by the proposed 
        defendant and the defendant has been accepted into the 
        voluntary disclosure program established pursuant to subsection 
        (a); and
            ``(2) any new information provided in the complaint under 
        such section does not add substantial grounds for additional 
        recovery beyond those encompassed within the scope of the 
        voluntary disclosure.''.

SEC. 304. HOME HEALTH BILLING, PAYMENT, AND COST LIMIT CALCULATION TO 
              BE BASED ON SITE WHERE SERVICE IS FURNISHED.

    (a) Conditions of Participation.--Section 1891 (42 U.S.C. 1395bbb) 
is amended by adding at the end the following new subsection:
    ``(g) A home health agency shall submit claims for payment of home 
health services under this title only on the basis of the geographic 
location at which the service is furnished, as determined by the 
Secretary.''.
    (b) Wage Adjustment.--Section 1861(v)(1)(L)(iii) (42 U.S.C. 
1395x(v)(1)(L)(iii)) is amended by striking ``agency is located'' and 
inserting ``service is furnished''.

SEC. 305. APPLICATION OF INHERENT REASONABLENESS.

    (a) In General.--Section 1834(a)(10)(B) (42 U.S.C. 1395m(a)(10)(B)) 
is amended--
            (1) in the first sentence, by striking ``apply the 
        provisions'' and all that follows through the period and 
        inserting ``describe by regulation the factors to be used in 
        determining the cases (or particular items) in which the 
        application of this subsection results in the determination of 
        an amount that, by reason of its being grossly excessive or 
        grossly deficient, is not inherently reasonable, and to provide 
        in such cases for the factors that will be considered 
in establishing an amount that is realistic and equitable.''; and
            (2) in the second sentence, by striking ``applying such 
        provisions'' and inserting ``applying the previous provisions 
        of this subsection''.
    (b) Conforming Amendment.--Section 1834(i) (42 U.S.C. 1395m(i)) is 
amended by adding at the end the following new paragraph:
            ``(3) Adjustment for inherent reasonableness.--The 
        provisions of subsection (a)(10)(B) shall apply to payment for 
        surgical dressings under this subsection.''.

SEC. 306. CLARIFICATION OF TIME AND FILING LIMITATIONS.

    (a) In General.--Section 1862(b)(2)(B) (42 U.S.C. 1395y(b)(2)(B)) 
is amended by adding at the end the following new clause:
                            ``(v) Time, filing, and related provisions 
                        under primary plan.--Requirements under a 
                        primary plan as to the filing of a claim, time 
                        limitations for the filing of a claim, 
                        information not maintained by the Secretary, or 
                        notification or pre-admission review, shall not 
                        apply to a claim by the United States under 
                        clause (ii) or (iii).''.
    (b) Effective Date.--The amendment made by subsection (a) applies 
to items and services furnished after 1990.

SEC. 307. CLARIFICATION OF LIABILITY OF THIRD PARTY ADMINISTRATORS.

    (a) In General.--Section 1862(b)(2)(B)(ii) (42 U.S.C. 
1395y(b)(2)(B)(ii)) is amended by inserting ``, or which determines 
claims under the primary plan'' after ``primary plan''.
    (b) Claims Between Parties Other Than the United States.--Section 
1862(b)(2)(B) (42 U.S.C. 1395y(b)(2)(B)), as amended by section 306(a) 
of this Act, is amended by adding at the end the following new clause:
                            ``(vi) Claims between parties other than 
                        the united states.--A claim by the United 
                        States under clause (ii) or (iii) shall not 
                        preclude claims between other parties.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to items and services furnished after 1990.

SEC. 308. CLARIFICATION OF PAYMENT AMOUNTS TO MEDICARE.

    (a) In General.--Section 1862(b)(2)(B)(i) (42 U.S.C. 
1395y(b)(2)(B)(i)) is amended to read as follows:
                            ``(i) Repayment required.--
                                    ``(I) In general.--Any payment 
                                under this title, with respect to any 
                                item or service for which payment by a 
                                primary plan is required under the 
                                preceding provisions of this 
                                subsection, shall be conditioned on 
                                reimbursement to the appropriate Trust 
                                Fund established by this title when 
                                notice or other information is received 
                                that payment for that item or service 
                                has been or should have been made under 
                                those provisions. If reimbursement is 
                                not made to the appropriate Trust Fund 
                                before the expiration of the 60-day 
                                period that begins on the date such 
                                notice or other information is 
                                received, the Secretary may charge 
                                interest (beginning with the date on 
                                which the notice or other information 
                                is received) on the amount of the 
                                reimbursement until reimbursement is 
                                made (at a rate determined by the 
                                Secretary in accordance with 
                                regulations of the Secretary of the 
                                Treasury applicable to charges for late 
                                payments).
                                    ``(II) Determination of amount 
                                owed.--The amount owed by a primary 
                                plan under the first sentence of 
                                subclause (I) is the lesser of the full 
                                primary payment required (if that 
                                amount is readily determinable) and the 
                                amount paid under this title for that 
                                item or service.''.
    (b) Conforming and Technical Amendments.--
            (1) Subparagraphs (A)(i)(I) and (B)(i) of section 
        1862(b)(1) (42 U.S.C. 1395y(b)(1)) are each amended by 
        inserting ``(or eligible to be covered)'' after ``covered''.
            (2) Section 1862(b)(1)(C)(ii) (42 U.S.C. 
        1395y(b)(1)(C)(ii)) is amended by striking ``covered by such 
        plan''.
            (3) The matter in section 1862(b)(2)(A) (42 U.S.C. 
        1395y(b)(2)(A)) preceding clause (i) is amended by striking ``, 
        except as provided in subparagraph (B),''.
    (c) Effective Date.--The amendments made by this section shall 
apply to items and services furnished after 1990.

SEC. 309. INCREASED FLEXIBILITY IN CONTRACTING FOR MEDICARE CLAIMS 
              PROCESSING.

    (a) Carriers To Include Entities That Are Not Insurance 
Companies.--The matter in section 1842(a) (42 U.S.C. 1395u(a)) 
preceding paragraph (1) is amended by striking ``with carriers'' and 
inserting ``with agencies and organizations (referred to as 
carriers)''.
    (b) Repeal.--Section 1842(f) (42 U.S.C. 1395u(f)) is repealed.

                   TITLE IV--CIVIL MONETARY PENALTIES

SEC. 401. SOCIAL SECURITY ACT CIVIL MONETARY PENALTIES.

    (a) General Civil Monetary Penalties.--Section 1128A (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 1128B(f))''.
            (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 Medicare Antifraud Act of 1996 (as 
        estimated by the Secretary) shall be deposited into the Health 
        Care Fraud and Abuse Control Account 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 primarily involves 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 (5 U.S.C. App.) 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) (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) Employer Billing for Services Furnished, Directed, or 
Prescribed by an Excluded Employee.--Section 1128A(a)(1) (42 U.S.C. 
1320a-7a(a)(1)), as amended by subsection (b), is amended--
            (1) by striking ``or'' at the end of subparagraph (C);
            (2) by striking the semicolon 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, directed, or prescribed 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);''.
    (d) Civil Money Penalties for Items or Services Furnished, 
Directed, or Prescribed by an Excluded Individual.--Section 
1128A(a)(1)(D) (42 U.S.C. 1320a-7a(a)(1)(D)) is amended by inserting 
``, directed, or prescribed'' after ``furnished''.
    (e) Modifications of Amounts of Penalties and Assessments.--Section 
1128A(a) (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''.
    (f) Claim for Item or Service Based on Incorrect Coding or 
Medically Unnecessary Services.--Section 1128A(a)(1) (42 U.S.C. 1320a-
7a(a)(1)), as amended by subsection (c), 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 (D), by striking ``or'' at the end;
            (3) in subparagraph (E), by striking the semicolon and 
        inserting ``, or''; and
            (4) by inserting after subparagraph (E) the following new 
        subparagraph:
                    ``(F) is for a medical or other item or service 
                that a person knows or has reason to know is not 
                medically necessary;''.
    (g) Permitting Secretary To Impose Civil Monetary Penalty for 
Kickback Violations.--Section 1128A(b) (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).''.
    (h) Sanctions Against Practitioners and Persons for Failure To 
Comply With Statutory Obligations.--Section 1156(b)(3) (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''.
    (i) Procedural Provisions.--Section 1876(i)(6) (42 U.S.C. 
1395mm(i)(6)), as amended by section 207(a)(2), is 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).''.
    (j) Prohibition Against Offering Inducements to Individuals 
Enrolled Under Programs or Plans.--
            (1) Offer of remuneration.--Section 1128A(a) (42 U.S.C. 
        1320a-7a(a)), as amended by subsection (b), is amended--
                    (A) by striking ``, or'' at the end of paragraph 
                (3) and inserting a semicolon;
                    (B) by striking the semicolon at the end of 
                paragraph (4) and inserting ``; or''; and
                    (C) by inserting after paragraph (4) the following 
                new paragraph:
            ``(5) 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 (as so defined);''.
            (2) Remuneration defined.--Section 1128A(i) (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 
                Medicare Antifraud Act of 1996; or
                    ``(C) incentives given to individuals to promote 
                the delivery of preventive care as determined by the 
                Secretary in regulations so promulgated.''.
    (k) Effective Date.--The amendments made by this section shall take 
effect January 1, 1997.

                  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 1128C(c) of the Social Security 
Act.''.
            (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 Account.--The Secretary of the Treasury shall deposit into the 
Health Care Fraud and Abuse Control Account 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) section 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 Account.--The Secretary of the Treasury shall deposit into the 
Health Care Fraud and Abuse Control Account 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. 1035. 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 1128C(c) of the Social Security 
Act.''.
    (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:

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

SEC. 506. OBSTRUCTION OF CRIMINAL INVESTIGATIONS, AUDITS, OR 
              INSPECTIONS 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, audits, or 
              inspections 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 Federal agent or employee involved in an 
investigation, audit, inspection, or other activity related to such an 
offense, 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, audits, or inspections 
                            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 1128C(c) of the Social 
Security Act.''.
    (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 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 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 1128C(c) of the Social 
Security Act.''.
    (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 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 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.--Section 1903(q)(3) (42 U.S.C. 
1396b(q)(3)) is amended--
            (1) by inserting ``(A)'' after ``in connection with''; and
            (2) by striking ``title.'' and inserting ``title; and (B) 
        in cases where the entity's function is also described by 
        subparagraph (A), and 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(b)(1)).''.
    (b) Extension of Authority To Investigate and Prosecute Patient 
Abuse in Non-Medicaid Board and Care Facilities.--Section 1903(q)(4) 
(42 U.S.C. 1396b(q)(4)) 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) 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/MEDICAID BILLING ABUSE PREVENTION

SEC. 701. UNIFORM MEDICARE/MEDICAID APPLICATION PROCESS.

    Not later than 1 year after the date of the enactment of this Act, 
the Secretary of Health and Human Services (in this title referred to 
as the ``Secretary'') shall establish procedures and a uniform 
application form for use by any individual or entity that seeks to 
participate in the programs under titles XVIII and XIX of the Social 
Security Act (42 U.S.C. 1395 et seq.; 42 U.S.C. 1396 et seq.). The 
procedures established shall include the following:
            (1) Execution of a standard authorization form by all 
        individuals and entities prior to submission of claims for 
        payment which shall include the social security number of the 
        beneficiary and the TIN (as defined in section 7701(a)(41) of 
        the Internal Revenue Code of 1986) of any health care provider, 
        supplier, or practitioner providing items or services under the 
        claim.
            (2) Assumption of responsibility and liability for all 
        claims submitted.
            (3) A right of access by the Secretary to provider records 
        relating to items and services rendered to beneficiaries of 
        such programs.
            (4) Retention of source documentation.
            (5) Provision of complete and accurate documentation to 
        support all claims for payment.
            (6) A statement of the legal consequences for the 
        submission of false or fraudulent claims for payment.

SEC. 702. STANDARDS FOR UNIFORM CLAIMS.

    (a) Establishment of Standards.--Not later than 1 year after the 
date of the enactment of this Act, the Secretary shall establish 
standards for the form and submission of claims for payment under the 
medicare program under title XVIII of the Social Security Act (42 
U.S.C. 1395 et seq.) and the medicaid program under title XIX of such 
Act (42 U.S.C. 1396 et seq.).
    (b) Ensuring Provider Responsibility.--In establishing standards 
under subsection (a), the Secretary, in consultation with appropriate 
agencies including the Department of Justice, shall include such 
methods of ensuring provider responsibility and accountability for 
claims submitted as necessary to control fraud and abuse.
    (c) Use of Electronic Media.--The Secretary shall develop specific 
standards which govern the submission of claims through electronic 
media in order to control fraud and abuse in the submission of such 
claims.

SEC. 703. UNIQUE PROVIDER IDENTIFICATION CODE.

    (a) Establishment of System.--Not later than 1 year after the date 
of the enactment of this Act, the Secretary shall establish a system 
which provides for the issuance of a unique identifier code for each 
individual or entity furnishing items or services for which payment may 
be made under title XVIII or XIX of the Social Security (42 U.S.C. 1395 
et seq.; 1396 et seq.), and the notation of such unique identifier 
codes on all claims for payment.
    (b) Application Fee.--The Secretary shall require an individual 
applying for a unique identifier code under subsection (a) to submit a 
fee in an amount determined by the Secretary to be sufficient to cover 
the cost of investigating the information on the application and the 
individual's suitability for receiving such a code.

SEC. 704. USE OF NEW PROCEDURES.

    No payment may be made under either title XVIII or XIX of the 
Social Security Act (42 U.S.C. 1395 et seq.; 42 U.S.C. 1396 et seq.) 
for any item or service furnished by an individual or entity unless the 
requirements of sections 702 and 703 are satisfied.

SEC. 705. NONDISCHARGEABILITY OF CERTAIN MEDICARE DEBTS.

    (a) Payment to Providers.--Section 1815(d) (42 U.S.C. 1395g(d)) is 
amended by adding at the end thereof the following new sentence: 
``Notwithstanding any other provision of law, amounts due to the 
program under this subsection are not dischargeable under any provision 
of title 11, United States Code.''.
    (b) Payment of Benefits.--Section 1833(j) (42 U.S.C. 1395l(j)) is 
amended by adding at the end thereof the following new sentence: 
``Notwithstanding any other provision of law, amounts due to the 
program under this subsection are not dischargeable under any provision 
of title 11, United States Code.''.
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