[Congressional Bills 105th Congress]
[From the U.S. Government Publishing Office]
[S. 1788 Introduced in Senate (IS)]







105th CONGRESS
  2d Session
                                S. 1788

   To amend titles XI and XVIII of the Social Security Act to combat 
            waste, fraud, and abuse in the medicare program.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             March 17, 1998

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

_______________________________________________________________________

                                 A BILL


 
   To amend titles XI and XVIII of the Social Security Act to combat 
            waste, fraud, and abuse in the medicare program.

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

SECTION 1. SHORT TITLE; AMENDMENTS TO SOCIAL SECURITY ACT; TABLE OF 
              CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Medicare Fraud and 
Overpayment Act of 1998''.
    (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; amendments to Social Security Act; table of 
                            contents.
Sec. 2. No mark-up for drugs, biologicals, or parenteral nutrients.
Sec. 3. Mental health partial hospitalization services.
Sec. 4. Information requirements.
Sec. 5. Eliminate overpayments for epogen.
Sec. 6. Centers of excellence.
Sec. 7. Repeal of clarification concerning levels of knowledge required 
                            for imposition of civil monetary penalties.
Sec. 8. Repeal of expanded exception for risk-sharing contract to anti-
                            kickback provisions.
Sec. 9. Limiting the use of automatic stays and discharge in bankruptcy 
                            proceedings for provider liability for 
                            health care fraud.
Sec. 10. Administrative fees for medicare overpayment collection.

SEC. 2. NO MARK-UP FOR DRUGS, BIOLOGICALS, OR PARENTERAL NUTRIENTS.

    (a) In General.--Section 1842(o) (42 U.S.C. 1395u(o)), as added by 
section 4556(a) of the Balanced Budget Act of 1997, is amended to read 
as follows:
    ``(o)(1) If a physician's, supplier's, or any other person's bill 
or request for payment for services includes a charge for a drug, 
biological, or parenteral nutrient for which payment may be made under 
this part and the drug, biological, or parenteral nutrient is not paid 
on a cost or prospective payment basis as otherwise provided in this 
part, the payment amount established in this subsection for the drug, 
biological, or parenteral nutrient shall be the lowest of the 
following:
            ``(A) The actual acquisition cost, as defined in paragraph 
        (2), to the person submitting the claim for payment for the 
        drug, biological, or parenteral nutrient.
            ``(B) 95 percent of the average wholesale price of such 
        drug, biological, or parenteral nutrient, as determined by the 
        Secretary.
            ``(C) For payments for drugs, biologicals, or parenteral 
        nutrients furnished on or after January 1, 2000, the median 
        actual acquisition cost of all claims for payment for such 
        drugs, biologicals, or parenteral nutrients for the 12-month 
        period beginning July 1, 1998 (and adjusted, as the Secretary 
        determines appropriate, to reflect changes in the cost of such 
        drugs, biologicals, or parenteral nutrients due to inflation, 
        and such other factors as the Secretary determines 
        appropriate).
            ``(D) The amount otherwise determined under this part.
    ``(2) For purposes of paragraph (1)(A), the term `actual 
acquisition cost' means, with respect to such drugs, biologicals, or 
parenteral nutrients the cost of the drugs, biologicals, or parenteral 
nutrients based on the most economical case size in inventory on the 
date of dispensing or, if less, the most economical case size purchased 
within six months of the date of dispensing whether or not that 
specific drug, biological, or nutrient was furnished to an individual 
whether or not enrolled under this part. Such term includes appropriate 
adjustments, as determined by the Secretary, for all discounts, 
rebates, or any other benefit in cash or in kind (including travel, 
equipment, or free products). The Secretary shall include an additional 
payment for administrative, storage, and handling costs.
    ``(3)(A) No payment shall be made under this part for drugs, 
biologicals, or parenteral nutrients to a person whose bill or request 
for payment for such drugs, biologicals, or parenteral nutrients does 
not include a statement of the person's actual acquisition cost.
    ``(B) A person may not bill an individual enrolled under this 
part--
            ``(i) any amount other than the payment amount specified in 
        paragraph (1), (4), or (5) (plus any applicable deductible and 
        coinsurance amounts), or
            ``(ii) any amount for such drugs, biologicals, or 
        parenteral nutrients for which payment may not be made pursuant 
        to subparagraph (A).
    ``(C) If a person knowingly and willfully in repeated cases bills 
one or more individuals in violation of subparagraph (B), the Secretary 
may apply sanctions against that person in accordance with subsection 
(j)(2).
    ``(4) The Secretary may pay a reasonable dispensing fee (less the 
applicable deductible and coinsurance amounts) for drugs or biologicals 
to a licensed pharmacy approved to dispense drugs or biologicals under 
this part, if payment for such drugs or biologicals is made to the 
pharmacy.
    ``(5) The Secretary shall pay a reasonable amount (less the 
applicable deductible and coinsurance amounts) for the services 
associated with the furnishing of parenteral nutrients for which 
payment is determined under this subsection.''.
    (b) Effective Date.--The amendments made by subsection (a) apply to 
drugs, biologicals, and parenteral nutrients furnished on or after 
January 1, 1999.
    (c) Elimination of Report on Average Wholesale Price.--Section 4556 
of the Balanced Budget Act of 1997 is amended--
            (1) by striking subsection (c); and
            (2) by redesignating subsection (d) as subsection (c).

SEC. 3. MENTAL HEALTH PARTIAL HOSPITALIZATION SERVICES.

    (a) Limitation on Location of Provision of Services.--
            (1) In general.--Section 1861(ff)(2) (42 U.S.C. 
        1395x(ff)(2)) is amended in the matter following subparagraph 
        (I)--
                    (A) by striking ``and furnished'' and inserting 
                ``furnished''; and
                    (B) by inserting before the period the following: 
                ``, and furnished other than in a skilled nursing 
                facility or in an individual's home or other 
                residential setting''.
            (2) Effective date.--The amendments made by paragraph (1) 
        shall apply to partial hospitalization services furnished on or 
        after the first day of the sixth month beginning after the date 
        of the enactment of this Act.
    (b) Qualifications for Community Mental Health Centers.--Section 
1861(ff)(3)(B) (42 U.S.C. 1395x(ff)(3)(B)) is amended by striking 
``entity'' and all that follows and inserting the following: ``entity 
that--
            ``(i) provides the mental health services described in 
        paragraph (1) of section 1913(c) of the Public Health Service 
        Act;
            ``(ii) meets applicable licensing or certification 
        requirements for community mental health centers in the State 
        in which it is located; and
            ``(iii) meets such additional standards as the Secretary 
        shall specify to ensure (I) the health and safety of 
        individuals being furnished such services, (II) the effective 
        or efficient furnishing of such services, and (III) the 
        compliance of such entity with the criteria described in such 
        section.''.

SEC. 4. INFORMATION REQUIREMENTS.

    (a) Information From Group Health Plans.--Section 1862(b) is 
amended by adding at the end the following:
            ``(7) Information from group health plans.--
                    ``(A) Provision of information by group health 
                plans.--The administrator of a group health plan 
                subject to the requirements of paragraph (1) shall 
                provide to the Secretary such of the information 
                elements described in subparagraph (C) as the Secretary 
                specifies, and in such manner and at such times as the 
                Secretary may specify (but not more frequently than 
                four times per year), with respect to each individual 
                covered under the plan who is entitled to any benefits 
                under this title.
                    ``(B) Provision of information by employers and 
                employee organizations.--An employer (or employee 
                organization) that maintains or participates in a group 
                health plan subject to the requirements of paragraph 
                (1) shall provide to the administrator of the plan such 
                of the information elements required to be provided 
                under subparagraph (A), and in such manner and at such 
                times as the Secretary may specify, at a frequency 
                consistent with that required under subparagraph (A) 
                with respect to each individual described in 
                subparagraph (A) who is covered under the plan by 
                reason of employment with that employer or membership 
                in the organization.
                    ``(C) Information elements.--The information 
                elements described in this subparagraph are the 
                following:
                            ``(i) Elements concerning the individual.--
                                    ``(I) The individual's name.
                                    ``(II) The individual's date of 
                                birth.
                                    ``(III) The individual's sex.
                                    ``(IV) The individual's social 
                                security insurance number.
                                    ``(V) The number assigned by the 
                                Secretary to the individual for claims 
                                under this title.
                                    ``(VI) The family relationship of 
                                the individual to the person who has or 
                                had current or employment status with 
                                the employer.
                            ``(ii) Elements concerning the family 
                        member with current or former employment 
                        status.--
                                    ``(I) The name of the person in the 
                                individual's family who has current or 
                                former employment status with the 
                                employer.
                                    ``(II) That person's social 
                                security insurance number.
                                    ``(III) The number or other 
                                identifier assigned by the plan to that 
                                person.
                                    ``(IV) The periods of coverage for 
                                that person under the plan.
                                    ``(V) The employment status of that 
                                person (current or former) during those 
                                periods of coverage.
                                    ``(VI) The classes (of that 
                                person's family members) covered under 
                                the plan.
                            ``(iii) Plan elements.--
                                    ``(I) The items and services 
                                covered under the plan.
                                    ``(II) The name and address to 
                                which claims under the plan are to be 
                                sent.
                            ``(iv) Elements concerning the employer.--
                                    ``(I) The employer's name.
                                    ``(II) The employer's address.
                                    ``(III) The employer identification 
                                number of the employer.
                    ``(D) Use of identifiers.--The administrator of a 
                group health plan shall utilize a unique identifier for 
                the plan in providing information under subparagraph 
                (A) and in other transactions, as may be specified by 
                the Secretary, related to the provisions of this 
                subsection. The Secretary may provide to the 
                administrator the unique identifier described in the 
                preceding sentence.
                    ``(E) Penalty for noncompliance.--Any entity that 
                knowingly and willfully fails to comply with a 
                requirement imposed by the previous subparagraphs shall 
                be subject to a civil money penalty not to exceed 
                $1,000 for each incident of such failure. The 
                provisions of section 1128A (other than subsections (a) 
                and (b)) shall apply to a civil money penalty under the 
                previous sentence in the same manner as those 
                provisions apply to a penalty or proceeding under 
                section 1128A(a).''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
take effect 180 days after the date of enactment of this Act.

SEC. 5. ELIMINATE OVERPAYMENTS FOR EPOGEN.

    Section 1881(b)(11)(B)(ii) (42 U.S.C. 1395rr(b)(11)(B)(ii)) is 
amended--
            (1) in subclause (I)--
                    (A) by striking ``provided during 1994'' and 
                inserting ``provided before fiscal year 1999''; and
                    (B) by striking ``and'' at the end;
            (2) by redesignating subclause (II) as subclause (III);
            (3) by inserting after subclause (I) the following new 
        subclause:
                    ``(II) for erythropoietin provided during fiscal 
                year 1999, in an amount equal to $9 per thousand units 
                (rounded to the nearest 100 units), and''; and
            (4) in subclause (III), as so redesignated, by striking 
        ``year'' each place it occurs and inserting ``fiscal year''.

SEC. 6. CENTERS OF EXCELLENCE.

    (a) In General.--Title XVIII is amended by inserting after section 
1896 the following new section:

                        ``centers of excellence

    ``Sec. 1897. (a) In General.--The Secretary shall use a competitive 
process to contract with specific hospitals or other entities for 
furnishing services related to surgical procedures, and for furnished 
services (unrelated to surgical procedures) to hospital inpatients that 
the Secretary determines to be appropriate. Such services may include 
any services covered under this title that the Secretary determines to 
be appropriate, including post-hospital services.
    ``(b) Quality Standards.--Only entities that meet quality standards 
established by the Secretary shall be eligible to contract under this 
section. In considering quality, the Secretary shall take into account 
the quality, experience, and quantity of services of physicians who 
provide services in more than one entity. Contracting entities shall 
implement a quality improvement plan approved by the Secretary.
    ``(c) Payment.--Payment under this section shall be made on the 
basis of negotiated all-inclusive rates. The amount of payment made by 
the Secretary to an entity under this title for services covered under 
a contract shall be less than the aggregate amount of the payments that 
the Secretary would have otherwise made for the services.
    ``(d) Contract Period.--A contract period shall be 3 years (subject 
to renewal), as long as the entity continues to meet quality and other 
contractual standards.
    ``(e) Incentives for Use of Centers.--The Secretary may permit 
entities under a contract under this section to furnish additional 
services or waive beneficiary cost-sharing, subject to the approval of 
the Secretary.
    ``(f) Limit on Number of Centers.--The Secretary shall limit the 
number of centers in a geographic area to the number needed to meet 
projected demand for contracted services.''.
    (b) Effective Dates.--
            (1) The amendment made by subsection (a) applies to 
        services furnished on or after October 1, 1998.
            (2) By October 1, 1998, the Secretary shall enter into 
        contracts under the amendment made by subsection (a) for 
        coronary artery by-pass surgery and other heart procedures, 
        knee replacement surgery, and hip replacement surgery, in 
        geographic areas nationwide such that at least 20 percent of 
        the projected number of those procedures can be provided under 
        such contracts.

SEC. 7. REPEAL OF CLARIFICATION CONCERNING LEVELS OF KNOWLEDGE REQUIRED 
              FOR IMPOSITION OF CIVIL MONETARY PENALTIES.

    (a) Elimination of ``Knowing'' Standard.--Section 1128A(a) (42 
U.S.C. 1320a-7a(a)) is amended by striking ``knowingly'' in paragraphs 
(1), (2), and (3).
    (b) Elimination of Statutory Definition of ``Should Know''.--
Section 1128A(i) (42 U.S.C. 1320a-7a(i)) is amended by striking 
paragraph (7).
    (c) Effective Date.--The amendments made by this section shall 
apply to acts or omissions occurring on or after the date of the 
enactment of this Act.

SEC. 8. REPEAL OF EXPANDED EXCEPTION FOR RISK-SHARING CONTRACT TO ANTI-
              KICKBACK PROVISIONS.

    (a) In General.--Section 1128B(b)(3) (42 U.S.C. 1320a-7b(b)(3)) is 
amended--
            (1) by adding ``and'' at the end of subparagraph (D);
            (2) by striking ``; and'' at the end of subparagraph (E) 
        and inserting a period; and
            (3) by striking subparagraph (F).
    (b) Elimination of Report.--Subsection (b) of section 216 of the 
Health Insurance Portability and Accountability Act of 1996 is 
repealed.
    (c) Effective Dates.--(1) The amendments made by subsection (a) 
shall apply to remuneration provided on or after the date of the 
enactment of this Act, regardless of whether it is pursuant to an 
agreement or arrangement entered into before such date.
    (2) Subsection (b) shall take effect on the date of the enactment 
of this Act.

SEC. 9. LIMITING THE USE OF AUTOMATIC STAYS AND DISCHARGE IN BANKRUPTCY 
              PROCEEDINGS FOR PROVIDER LIABILITY FOR HEALTH CARE FRAUD.

    (a) Nonapplicability of Automatic Stay Provisions.--
            (1) In exclusion proceedings.--Section 1128 (42 U.S.C. 
        1320a-7), as amended by section 4303(a) of the Balanced Budget 
        Act of 1997, is amended by adding at the end the following new 
        subsection:
    ``(k) Nonapplicability of Bankruptcy Stay.--An exclusion imposed 
under this section or a proceeding seeking an exclusion under this 
section is not subject to the automatic stay under section 362(a) of 
title 11, United States Code.''.
            (2) In civil money penalty proceedings.--Section 1128A(a) 
        (42 U.S.C. 1320a-7a(a)) is amended by adding at the end the 
        following: ``An exclusion, penalty, or assessment imposed under 
        this section or a proceeding that seeks an exclusion, penalty, 
        or assessment under this section, is not subject to the 
        automatic stay under section 362(a) of title 11, United States 
        Code. Notwithstanding any other provision of law, amounts made 
        payable under this section are not dischargeable under any 
        provision of such title.''.
            (3) In recoupment under part a of medicare.--Section 
        1815(d) (42 U.S.C. 1395g(d)) is amended--
                    (A) by inserting ``(1)'' after ``(d)'', and
                    (B) by adding at the end the following:
    ``(2) The recoupment of an overpayment under this section is not 
subject to the automatic stay under section 362(a) of title 11, United 
States Code. Notwithstanding any other provision of law, amounts due to 
the Secretary under this section are not dischargeable under any 
provision of such title.''.
            (4) In recoupment under part b of medicare.--Section 
        1833(j) (42 U.S.C. 1395l(j)) is amended--
                    (A) by inserting ``(1)'' after``(j)'', and
                    (B) by adding at the end the following:
    ``(2) The recoupment of an overpayment under this section is not 
subject to the automatic stay under section 362(a) of title 11, United 
States Code. Notwithstanding any other provision of law, amounts due to 
the Secretary under this section are not dischargeable under any 
provision of such title.''.
            (5) In collection of overdue payments on scholarships and 
        loans.--Section 1892(a)(4) (42 U.S.C. 1395ccc(a)(4)) is amended 
        by adding at the end the following:
            ``(5) An exclusion imposed under paragraph (2)(C)(ii) or 
        (3)(B) is not subject to the automatic stay under section 
        362(a) of title 11, United States Code.''.
    (b) Nondischargability.--
            (1) In civil money penalty proceedings.--Section 1128A(a) 
        (42 U.S.C. 1320a-7a(a)), as amended by subsection (a)(2), is 
        further amended by adding at the end the following: 
        ``Notwithstanding any other provision of law, amounts made 
        payable under this section are not dischargeable under any 
        provision of such title.''.
            (2) In recoupment under part a of medicare.--Section 
        1815(d) (42 U.S.C. 1395g(d)(2)), as amended by subsection 
        (a)(3), is further amended by adding at the end the following:
    ``(3) Notwithstanding any other provision of law, amounts due to 
the Secretary under this section are not dischargeable under any 
provision of such title.''.
            (3) In recoupment under part b of medicare.--Section 
        1833(j) (42 U.S.C. 1395l(j)), as amended by subsection (a)(4), 
        is further amended by adding at the end the following: 
        ``Notwithstanding any other provision of law, amounts due to 
        the Secretary under this section are not dischargeable under 
        any provision of such title.''.
    (c) Effective Dates.--
            (1) The amendments made by subsection (a) shall apply to 
        bankruptcy petitions filed after the date of the enactment of 
        this Act.
            (2) The amendments made by subsection (b) shall apply on 
        and after the date of the enactment of this Act to any 
        proceeding which has not been completed as of such date.

SEC. 10. ADMINISTRATIVE FEES FOR MEDICARE OVERPAYMENT COLLECTION.

    (a) Administrative Fees for Providers of Services Under Part A.--
Section 1815(d) (42 U.S.C. 1395g(d)), as amended by section 9(a)(3), is 
amended by adding at the end the following new paragraph:
    ``(3)(A) Except as provided in subparagraph (B), if the payment of 
the excess described in paragraph (1) is not made (or effected by 
offset) within 30 days of the date of the determination, an 
administrative fee of 1 percent of the outstanding balance of the 
excess (after application of paragraph (1)), or such lower amount as an 
Administrative Law Judge may determine upon an appeal of the initial 
determination of the excess, shall be imposed on the provider, for 
deposit into the Trust Fund under this part.
    ``(B) The administrative fee shall be imposed under subparagraph 
(A) on a provider of services paid on a prospective basis only if such 
provider's cost report with respect to the payment determined to be in 
excess of the payment due under this part indicates that the provider's 
projected costs exceeded its actual costs by 30 percent or more.''.
    (b) Administrative Fees for Providers of Services or Other Persons 
Under Part B.--Section 1833(j) (42 U.S.C. 1395l(j)), as amended by 
section 9(a)(4), is amended by adding at the end the following new 
paragraph:
    ``(3) If the excess described in paragraph (1) is not made (or 
effected by offset) within 30 days of the date of the determination, an 
administrative fee of 1 percent of the outstanding balance of the 
excess (after application of paragraph (1)), or such lower amount as an 
Administrative Law Judge may determine upon an appeal of the initial 
determination of the excess, shall be imposed on the provider, or other 
person receiving the excess, for deposit into the Trust Fund under this 
part.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to final determinations made on or after the date of enactment of 
this Act.
                                 <all>