[Congressional Bills 105th Congress]
[From the U.S. Government Publishing Office]
[S. 945 Introduced in Senate (IS)]







105th CONGRESS
  1st Session
                                 S. 945

     To eliminate waste, fraud, and abuse in the medicaid program.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             June 20, 1997

Mr. Breaux (for himself and Mr. Graham) introduced the following bill; 
     which was read twice and referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL


 
     To eliminate waste, fraud, and abuse in the medicaid program.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Medicaid Waste, Fraud, and Abuse 
Control Act of 1997''.

SEC. 2. BAN ON SPENDING FOR NONHEALTH RELATED ITEMS.

    Section 1903(i) of the Social Security Act (42 U.S.C. 1396b(i)) is 
amended--
            (1) in paragraphs (2) and (15), by striking the period at 
        the end and inserting ``; or'';
            (2) in paragraphs (10)(B), (11), and (13), by adding ``or'' 
        at the end; and
            (3) by inserting after paragraph (15), the following:
            ``(16) with respect to any amount expended for roads, 
        bridges, stadiums, or any other item or service not covered 
        under a State plan under this title.''.

SEC. 3. DISCLOSURE OF INFORMATION AND SURETY BOND REQUIREMENT FOR 
              SUPPLIERS OF DURABLE MEDICAL EQUIPMENT.

    (a) Requirement.--Section 1902(a) of the Social Security Act (42 
U.S.C. 1396a(a)), as in effect on July 1, 1997, is amended--
            (1) by striking ``and'' at the end of paragraph (62);
            (2) by striking the period at the end of paragraph (63) and 
        inserting ``; and''; and
            (3) by inserting after paragraph (63) the following:
            ``(64) provide that the State shall not issue or renew a 
        provider number for a supplier of medical assistance consisting 
        of durable medical equipment, as defined in section 1861(n), 
        for purposes of payment under this part for such assistance 
        that is furnished by the supplier, unless the supplier provides 
        the State agency on a continuing basis with--
                    ``(A)(i) full and complete information as to the 
                identity of each person with an ownership or control 
                interest (as defined in section 1124(a)(3)) in the 
                supplier or in any subcontractor (as defined by the 
                Secretary in regulations) in which the supplier 
                directly or indirectly has a 5 percent or more 
                ownership interest; and
                    (ii) to the extent determined to be feasible under 
                regulations of the Secretary, the name of any 
                disclosing entity (as defined in section 1124(a)(2)) 
                with respect to which a person with such an ownership 
                or control interest in the supplier is a person with 
                such an ownership or control interest in the disclosing 
                entity; and
                    ``(B) a surety bond in a form specified by the 
                State and in an amount that is not less than 
                $50,000.''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to suppliers of medical assistance consisting of durable medical 
equipment furnished on or after January 1, 1998.

SEC. 4. SURETY BOND REQUIREMENT FOR HOME HEALTH AGENCIES.

    (a) In General.--Section 1905(a)(7) of the Social Security Act (42 
U.S.C. 1396d(a)(7) is amended by inserting ``, provided that the agency 
or organization providing such services provides the State agency on a 
continuing basis with a surety bond in a form specified by the State 
and in an amount that is not less than $50,000'' after ``services''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to home health agencies with respect to services furnished on or 
after January 1, 1998.

SEC. 5. CONFLICT OF INTEREST SAFEGUARDS.

    Section 1902(a)(4) of the Social Security Act (42 U.S.C. 
1396a(a)(4)) is amended to read as follows:
            ``(4) provide--
                    ``(A) such methods of administration (including 
                methods relating to the establishment and maintenance 
                of personnel standards on a merit basis, except that 
                the Secretary shall exercise no authority with respect 
                to the selection, tenure of office, and compensation of 
                any individual employed in accordance with such 
                methods, and including provision for utilization of 
                professional medical personnel in the administration 
                and, where administered locally, supervision of 
                administration of the plan) as are found by the 
                Secretary to be necessary for the proper and efficient 
                operation of the plan;
                    ``(B) for the training and effective use of paid 
                subprofessional staff, with particular emphasis on the 
                full-time or part-time employment of recipients and 
                other persons of low income, as community service 
                aides, in the administration of the plan and for the 
                use of nonpaid or partially paid volunteers in a social 
                service volunteer program in providing services to 
                applicants and recipients and in assisting any advisory 
                committees established by the State agency; and
                    ``(C) that each State or local officer or employee, 
                or independent contractor--
                            ``(i) who is responsible for the 
                        expenditure of substantial amounts of funds 
                        under the State plan, or who is responsible for 
                        administering the State plan under this title, 
                        each individual who formerly was such an 
                        officer, employee, or independent contractor, 
                        and each partner of such an officer, employee, 
                        or independent contractor shall be prohibited 
                        from committing any act, in relation to any 
                        activity under the plan, the commission of 
                        which, in connection with any activity 
                        concerning the United States Government, by an 
                        officer or employee of the United States 
                        Government, an individual who was such an 
                        officer or employee, or a partner of such an 
                        officer or employee is prohibited by section 
                        207 or 208 of title 18, United States Code; and
                            ``(ii) who is responsible for selecting, 
                        awarding, or otherwise obtaining items and 
                        services under the State plan shall be subject 
                        to safeguards against conflicts of interest 
                        that are at least as stringent as the 
                        safeguards that apply under section 27 of the 
                        Office of Federal Procurement Policy Act (41 
                        U.S.C. 423) to persons described in subsection 
                        (a)(2) of such section of that Act;''.

SEC. 6. AUTHORITY TO REFUSE TO ENTER INTO MEDICAID AGREEMENTS WITH 
              INDIVIDUALS OR ENTITIES CONVICTED OF FELONIES.

    Section 1902(a)(23) of the Social Security Act (42 U.S.C. 
1396a(a)(23)) is amended to read as follows:
            ``(23) provide that--
                    ``(A) any individual eligible for medical 
                assistance (including drugs) may obtain such assistance 
                from any institution, agency, community pharmacy, or 
                person, qualified to perform the service or services 
                required (including an organization which provides such 
                services, or arranges for their availability, on a 
                prepayment basis), who undertakes to provide him such 
                services; and
                    ``(B) an enrollment of an individual eligible for 
                medical assistance in a primary care case-management 
                system (described in section 1915(b)(1)), a health 
                maintenance organization, or a similar entity shall not 
                restrict the choice of the qualified person from whom 
                the individual may receive services under section 
                1905(a)(4)(C),
        except as provided in subsection (g) and in section 1915, 
        except in the case of Puerto Rico, the Virgin Islands, and 
        Guam, and except that nothing in this paragraph shall be 
        construed as requiring a State to provide medical assistance 
        for items or services furnished by a person or entity convicted 
        of a felony under Federal or State law for an offense which 
the State agency determines is inconsistent with the best interest of 
beneficiaries under the State plan;''.

SEC. 7. PROHIBITING AFFILIATIONS BY MANAGED CARE ENTITIES WITH 
              INDIVIDUALS DEBARRED BY FEDERAL AGENCIES.

    Section 1903(m) of the Social Security Act (42 U.S.C. 1396b(m)) is 
amended by adding at the end the following:
    ``(7)(A) An entity with a contract under this subsection may not 
knowingly--
            ``(i) have a person or entity described in subparagraph (C) 
        as a director, officer, partner, or person with beneficial 
        ownership of more than 5 percent of the entity's equity; or
            ``(ii) have an employment, consulting, or other agreement 
        with a person or entity described in such subparagraph for the 
        provision of items and services that are significant and 
        material to the entity's obligations under its contract with 
        the State.
    ``(B) If a State finds that an entity is not in compliance with 
clause (i) or (ii) of subparagraph (A), the State--
            ``(i) shall notify the Secretary of such noncompliance;
            ``(ii) may continue an existing agreement with the entity 
        unless the Secretary (in consultation with the Inspector 
        General of the Department of Health and Human Services) directs 
        otherwise; and
            ``(iii) may not renew or otherwise extend the duration of 
        an existing agreement with the entity unless the Secretary (in 
        consultation with the Inspector General of the Department of 
        Health and Human Services) provides to the State and to the 
        Congress a written statement describing compelling reasons that 
        exist for renewing or extending the agreement.
    ``(C) A person or entity is described in this subparagraph if such 
person or entity--
            ``(i) is debarred, suspended, or excluded under any Federal 
        procurement or nonprocurement program or activity, as provided 
        for in the Federal Acquisition Streamlining Act of 1994 (Public 
        Law 103-355; 108 Stat. 3243); or
            ``(ii) is an affiliate (within the meaning of the Federal 
        acquisition regulation) of a person described in subparagraph 
        (A).''.

SEC. 8. MODIFICATION OF MMIS REQUIREMENTS.

    (a) In General.--Section 1903(r) of the Social Security Act (42 
U.S.C. 1396b(r)) is amended to read as follows:
    ``(r) Medicaid Management Information Systems (MMIS).--
            ``(1) In general.--In order to receive payments under 
        subsection (a) for use of automated data systems in 
        administration of the State plan under this title, a State must 
        have in operation mechanized claims processing and information 
        retrieval systems that meet the requirements described in 
        paragraph (2) and that the Secretary has found--
                    ``(A) are adequate to provide efficient, 
                economical, and effective administration of such State 
                plan;
                    ``(B) are compatible with the claims processing and 
                information retrieval systems used in the 
                administration of title XVIII, and for this purpose--
                            ``(i) have a uniform identification coding 
                        system for providers, other payees, and 
                        beneficiaries under this title or title XVIII;
                            ``(ii) provide liaison between States and 
                        carriers and intermediaries with agreements 
                        under title XVIII to facilitate timely exchange 
                        of appropriate data; and
                            ``(iii) provide for the exchange of data 
                        between the States and the Secretary with 
                        respect to persons sanctioned under this title 
                        or title XVIII;
                    ``(C) are capable of providing accurate and timely 
                data;
                    ``(D) are designed to receive provider claims in 
                standard formats to the extent specified by the 
                Secretary; and
                    ``(E) provide for electronic transmission of claims 
                data in the format specified by the Secretary and 
                consistent with the Medicaid Statistical Information 
                System (MSIS) (including detailed individual enrollee 
                encounter data and other information that the Secretary 
                may find necessary).
            ``(2) Requirements.--In order to meet the requirements of 
        this subsection, mechanized claims processing and information 
        retrieval systems must meet the following requirements:
                    ``(A) The systems must be capable of developing 
                provider, physician, and patient profiles which are 
                sufficient to provide specific information as to the 
                use of covered types of services and items, including 
                prescribed drugs.
                    ``(B) The State must provide that information on 
                probable fraud or abuse which is obtained from, or 
                developed by, the systems, is made available to the 
                State's medicaid fraud control unit (if any) certified 
                under subsection (q) of this section.
                    ``(C) The systems must meet all performance 
                standards and other requirements for initial approval 
                developed by the Secretary.''.
    (b) Conforming Amendments.--Section 1902(a)(25)(A)(ii) of the 
Social Security Act (42 U.S.C. 1396a(a)(25)(A)(ii)) is amended to read 
as follows:
                            ``(ii) the submission to the Secretary of a 
                        plan (subject to approval by the Secretary) for 
                        pursuing claims against such third parties, 
                        which plan shall be integrated with, and be 
                        monitored as a part of the Secretary's review 
                        of, the State's mechanized claims processing 
                        and information retrieval system under section 
                        1903(r);''.

SEC. 9. PUBLIC PROCESS FOR DEVELOPING STATE PLAN AMENDMENTS AND WAIVER 
              SUBMISSIONS.

    Section 1902(a) of the Social Security Act (42 U.S.C. 1396a(a)), as 
amended by section 2, is amended--
            (1) by striking ``and'' at the end of paragraph (63);
            (2) by striking the period at the end of paragraph (64) and 
        inserting ``; and''; and
            (3) by inserting after paragraph (64) the following:
            ``(65) provide for a process for development of amendments 
        to the State plan and for waiver submissions that affords an 
        opportunity for review and comment (in addition to any such 
        opportunity provided through the State's legislative process) 
        to interested persons and groups, including beneficiaries, 
        providers, federally authorized State planning councils, Indian 
        tribes, tribal organizations, Indian Health Service facilities, 
        and urban Indian health organizations, and that a summary of 
        comments submitted by entities established by Federal law shall 
        be forwarded to the Secretary along with the State plan 
        amendment.''.

SEC. 10. MONITORING PAYMENTS FOR DUAL ELIGIBLES.

    The Administrator of the Health Care Financing Administration 
shall--
            (1) develop mechanisms to better monitor and prevent 
        inappropriate payments under the medicaid program under title 
        XIX of the Social Security Act (42 U.S.C. 1396 et seq.) in the 
        case of individuals who are dually eligible for benefits under 
        such program and under the medicare program under title XVIII 
        of such Act (42 U.S.C. 1395 et seq.);
            (2) study the use of case management or care coordination 
        in order to improve the appropriateness of care, quality of 
        care, and cost effectiveness of care for individuals who are 
        dually eligible for benefits under such programs; and
            (3) work with the States to ensure better care coordination 
        for dual eligibles and make recommendations to Congress as to 
        any statutory changes that would not compromise beneficiary 
        protections and that would improve or facilitate such care.

SEC. 11. BENEFICIARY AND PROGRAM PROTECTION AGAINST WASTE, FRAUD, AND 
              ABUSE.

    Section 1902(a) of the Social Security Act (42 U.S.C. 1396a(a)), as 
amended by section 9, is amended--
            (1) by striking ``and'' at the end of paragraph (64);
            (2) by striking the period at the end of paragraph (65) and 
        inserting ``; and''; and
            (3) by inserting after paragraph (65) the following:
            ``(66) provide programs--
                    ``(A) to ensure program integrity, protect and 
                advocate on behalf of individuals, and to report to the 
                State data concerning beneficiary concerns and 
                complaints and instances of beneficiary abuse or 
                program waste or fraud by managed care plans operating 
                in the State under contact with the State agency;
                    ``(B) to provide assistance to beneficiaries, with 
                particular emphasis on the families of special needs 
                children and persons with disabilities to--
                            ``(i) explain the differences between 
                        managed care and fee-for-service plans;
                            ``(ii) clarify the coverage for such 
                        beneficiaries under any managed care plan 
                        offered under the State plan under this title;
                            ``(iii) explain the implications of the 
                        choices between competing plans;
                            ``(iv) assist such beneficiaries in 
                        understanding their rights under any managed 
                        care plan offered under the State plan, 
                        including their right to--
                                    ``(I) access and benefits;
                                    ``(II) nondiscrimination;
                                    ``(III) grievance and appeal 
                                mechanisms; and
                                    ``(IV) change plans, as designated 
                                in the State plan; and
                            ``(v) exercise the rights described in 
                        clause (iv); and
                    ``(C) to collect and report to the State data on 
                the number of complaints or instances identified under 
                subparagraph (A) and to report to the State annually on 
                any systematic problems in the implementation of 
                managed care entities contracting with the State under 
                the State plan under this title.''.

SEC. 12. STATE MEDICAID FRAUD CONTROL UNITS.

    (a) Extension of Concurrent Authority To Investigate and Prosecute 
Fraud in Other Federal Programs.--Section 1903(q)(3) of the Social 
Security Act (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) 
        upon the approval of the relevant Federal agency, any aspect of 
        the provision of health care services and activities of 
        providers of such services under any Federal health care 
        program (as defined in section 1128B(f)(1)), if the suspected 
        fraud or violation of law is primarily related to the State 
        plan under this title or the program under title XVIII.''.
    (b) Extension of Authority To Investigate and Prosecute Patient 
Abuse in Medicaid Board and Care Facilities.--Section 1903(q)(4) of 
such Act (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) where appropriate, procedures for acting 
                upon such complaints under the criminal laws of the 
                State or for referring such complaints to other State 
                agencies for action.
            ``(B) For purposes of this paragraph, the term `board and 
        care facility' means a residential setting which receives 
        payment from or on behalf of two or more unrelated adults who 
        reside in such facility, and for whom one or both of the 
        following is provided:
                    ``(i) Nursing care services provided by, or under 
                the supervision of, a registered nurse, licensed 
                practical nurse, or licensed nursing assistant.
                    ``(ii) Personal care services that assist residents 
                with the activities of daily living, including personal 
                hygiene, dressing, bathing, eating, toileting, 
                ambulation, transfer, positioning, self-medication, 
                body care, travel to medical services, essential 
                shopping, meal preparation, laundry, and housework.''.

SEC. 13. APPLICATION OF CERTAIN PROVISIONS OF THE BANKRUPTCY CODE.

    (a) Restricted Applicability of Bankruptcy Stay, Discharge, and 
Preferential Transfer Provisions to Medicare and Medicaid Debts.--Title 
XI of the Social Security Act (42 U.S.C. 1301 et seq.) is amended by 
inserting after section 1143 the following new section:

       ``application of certain provisions of the bankruptcy code

    ``Sec. 1144. (a) Medicaid-Related Actions Not Stayed by Bankruptcy 
Proceedings.--The commencement or continuation of any action against a 
debtor under this title or title XIX relating to the medicaid program 
under title XIX, including any action or proceeding to exclude or 
suspend the debtor from program participation, assess civil money 
penalties, recoup or set off overpayments, or deny or suspend payment 
of claims shall not be subject to the provisions of section 362(a) of 
title 11, United States Code.
    ``(b) Medicaid-Related Debt Not Dischargeable in Bankruptcy.--A 
debt owed to the United States or to a State for an overpayment under 
title XIX, or for a penalty, fine, or assessment under this title or 
title XIX relating to the medicaid program under title XIX, shall not 
be dischargeable under any provision of title 11, United States Code.
    ``(c) Repayment of Certain Debts Considered Final.--Payments made 
to repay a debt to the United States or to a State with respect to 
items or services provided, or claims for payment made, under title XIX 
(including repayment of an overpayment, or to pay a penalty, fine, or 
assessment under this title or title XIX relating to the medicaid 
program under title XIX, shall be considered final and not preferential 
transfers under section 547 of title 11, United States Code.''.
    (b) Conforming Amendments.--
            (1) Section 1128 of such Act (42 U.S.C. 1320a-7) is amended 
        by adding at the end the following:
    ``(j) Nonapplicability of Bankruptcy Stay.--An exclusion imposed 
under this section or a proceeding seeking an exclusion under this 
section relating to the medicaid program under title XIX is not subject 
to the automatic stay under section 362 of title 11, United States 
Code.''.
            (2) Section 1128A(a) of the Social Security Act (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 relating to the medicaid program 
        under title XIX is not subject to the automatic stay under 
        section 362 of title 11, United States Code. Notwithstanding 
        any other provision of law, amounts due under this section 
        relating to the medicaid program under title XIX are not 
        dischargeable under any provision of title 11, United States 
        Code.''.

SEC. 14. EFFECTIVE DATE.

    (a) In General.--Except as otherwise specifically provided, the 
provisions of and amendments made by this Act shall apply with respect 
to State programs under title XIX of the Social Security Act (42 U.S.C. 
1396 et seq.) on and after October 1, 1997.
    (b) Extension for State Law Amendment.--In the case of a State plan 
under title XIX of the Social Security Act which the Secretary of 
Health and Human Services determines requires State legislation in 
order for the plan to meet the additional requirements imposed by the 
amendments made by this Act, the State plan shall not be regarded as 
failing to comply with the requirements of this subtitle solely on the 
basis of its failure to meet these additional requirements before the 
first day of the first calendar quarter beginning after the close of 
the first regular session of the State legislature that begins after 
the date of the enactment of this Act. For purposes of the previous 
sentence, in the case of a State that has a 2-year legislative session, 
each year of the session is considered to be a separate regular session 
of the State legislature.
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