[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2650 Introduced in House (IH)]







106th CONGRESS
  1st Session
                                H. R. 2650

    To amend title XVIII of the Social Security Act to improve and 
              streamline the physician self-referral law.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             July 29, 1999

  Mr. Stark introduced the following bill; which was referred to the 
  Committee on Commerce, and in addition to the Committee on Ways and 
 Means, for a period to be subsequently determined by the Speaker, in 
   each case for consideration of such provisions as fall within the 
                jurisdiction of the committee concerned

_______________________________________________________________________

                                 A BILL


 
    To amend title XVIII of the Social Security Act to improve and 
              streamline the physician self-referral law.

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

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

    (a) Short Title.--This Act may be cited as the ``Medicare Physician 
Self-Referral Improvement Act of 1999'';
    (b) References to Social Security Act.--Except as otherwise 
expressly provided, whenever in this Act an amendment or repeal 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 a section or 
other provision of Social Security Act.
    (c) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title; references to Social Security Act; table of 
                            contents.
Sec. 2. Changes in exceptions for both ownership and compensation 
                            arrangements.
Sec. 3. Revision of exceptions for certain compensation arrangements.
Sec. 4. Revision of definitions.
Sec. 5. Change in reporting requirements.
Sec. 6. Advisory opinions.
Sec. 7. Effective date.

SEC. 2. CHANGES IN EXCEPTIONS FOR BOTH OWNERSHIP AND COMPENSATION 
              ARRANGEMENTS.

    (a) Inclusion of Durable Medical Equipment and Parenteral and 
Enteral Nutrients, Equipment, and Supplies in Exception for In-Office 
Ancillary Services.--Section 1877(b)(2) (42 U.S.C. 1395nn(b)(2)) is 
amended by striking ``In the case of'' and all that follows through 
``supplies)'' and inserting ``Subsection (a)(1) shall not apply in the 
case of designated health services''.
    (b) Modification of the Direct Supervision Requirement for In-
Office Ancillary Services.--Section 1877(b)(2)(A)(i) (42 U.S.C. 
1395nn(b)(2)(A)(i)) is amended by striking ``who are directly 
supervised by the physician or by another physician in the group 
practice'' and inserting ``who assume full and direct legal, financial, 
and professional responsibility for the services or items, or both, 
that are provided and who provide those services''.
    (c) Expansion of Prepaid Plan Exception.--Section 1877(b)(3) (42 
U.S.C. 1395nn(b)(3)) is amended--
            (1) in subparagraph (A), by inserting ``part C or'' before 
        ``section 1876''; and
            (2) by striking ``or'' at the end of subparagraph (C);
            (3) by striking the period at the end of subparagraph (D) 
        and inserting ``; and''; and
            (4) by adding at the end the following new subparagraph:
                    ``(E) that is a medicaid managed care organization 
                (as defined in section 1903(m)(1)(A)) to an individual 
                enrolled with the organization.''.
    (d) New Exception for Capitated Payments.--Section 1877(b) (42 
U.S.C. 1395nn(b)) is amended--
            (1) by redesignating paragraph (4) as paragraph (5); and
            (2) by inserting after paragraph (3) the following new 
        paragraph:
            ``(4) Other capitated payments.--Subsection (a)(1) shall 
        not apply in the case of a designated health service, if the 
        designated health service is included in the services for which 
        a physician or physician group is paid only on a capitated 
        basis by a health plan or insurer pursuant to a written 
        arrangement between the plan or insurer and the physician or 
        physician group in which the physician or physician group.''.
    (e) New Exception for Services Furnished in Communities With No 
Alternative Providers.--Section 1877(b) (42 U.S.C. 1395nn(b)), as 
amended by subsection (d), is further amended--
            (1) by redesignating paragraph (5) as paragraph (6); and
            (2) inserting after paragraph (4) the following new 
        paragraph:
            ``(5) No alternative providers in area.--In the case of a 
        designated health service furnished in any area with respect to 
        which the Secretary determines that individuals residing in the 
        area do not have reasonable access to such a designated health 
        service.''.
    (f) New Exception for Services Furnished in Ambulatory Surgical 
Centers.--Section 1877(b) (42 U.S.C. 1395nn(b)), as amended by 
subsections (d) and (e), is further amended--
            (1) by redesignating paragraph (6) as paragraph (7); and
            (2) inserting after paragraph (5) the following new 
        paragraph:
            ``(6) Services furnished in ambulatory surgical centers.--
        In the case of a designated health service furnished in an 
        ambulatory surgical center described in section 
        1832(a)(2)(F)(i).''.
    (g) New Exception for Services Furnished in a Hospice.--Section 
1877(b) (42 U.S.C. 1395nn(b)), as amended by subsections (d) through 
(g), is further amended--
            (1) by redesignating paragraph (8) as paragraph (9); and
            (2) inserting after paragraph (7) the following new 
        paragraph:
            ``(8) Services furnished by a hospice program.--In the case 
        of a designated health service furnished by a hospice program 
        under section 1861(dd)(2).''.
    (h) Conforming Amendments.--Paragraphs (3) and (9) of section 
1877(b) (42 U.S.C. 1395nn(b)), as previously redesignated by this 
section, are each amended by striking ``In the case of'' and inserting 
``Subsection (a)(1) shall not apply in the case of''.

SEC. 3. REVISION OF EXCEPTIONS FOR CERTAIN COMPENSATION ARRANGEMENTS.

    Section 1877 (42 U.S.C. 1395nn) is amended--
            (1) in subsection (a)(2)(B)--
                    (A) by striking ``except as provided in subsection 
                (e)(2),''; and
                    (B) by striking ``entity.'' and inserting ``entity 
                which does not meet the requirements of subsection 
                (e)(1).''; and
            (2) by amending subsection (e) to read as follows:
    ``(e) Requirements and Exceptions for Permissible Compensation 
Arrangements.--
            ``(1) In general.--The requirements under this paragraph 
        with respect to a compensation arrangement are as follows:
                    ``(A) The arrangement is in writing and is signed 
                by all parties to the arrangement.
                    ``(B) The arrangement is for a specified period of 
                time, which may be less than a year and may be renewed 
                any number of times if the terms of the arrangement and 
                the compensation for the same items or services do not 
                change.
                    ``(C) The arrangement must cover all of the items 
                and services to be provided by the physician or 
                immediate family member to the entity or, 
                alternatively, cross refer to any other agreements for 
                items or services between any of the parties.
                    ``(D) The arrangement is consistent with fair 
                market value.
                    ``(E) The arrangement must specify the compensation 
                that will be provided under the arrangement, which must 
                be set in advance, consistent with fair market value 
                and not determined in a manner that takes into account 
                the volume or value of any referrals, payments for 
                referrals for medical services that are not covered 
                under this title or title XIX, or other business 
                generated between the parties.
                    ``(F) The arrangement is commercially reasonable 
                and further the legitimate business purposes of the 
                parties.
                    ``(G) The arrangement meets such other requirements 
                as the Secretary may impose as needed to protect 
                against program or patient abuse.
            ``(2) Exceptions.--The following shall not be considered to 
        be a compensation arrangement described in subsection 
        (a)(2)(B):
                    ``(A) Physician recruitment.--In the case of 
                remuneration which is provided by a hospital to a 
                physician to induce the physician to relocate to the 
                geographic area served by the hospital in order to be a 
                member of the medical staff of the hospital, if--
                            ``(i) the physician is not required to 
                        refer patients to the hospital,
                            ``(ii) the amount of the remuneration under 
                        the arrangement is not determined in a manner 
                        that takes into account (directly or 
                        indirectly) the volume or value of any 
                        referrals by the referring physician, and
                            ``(iii) the arrangement meets such other 
                        requirements as the Secretary may impose by 
                        regulation as needed to protect against program 
                        or patient abuse.
                    ``(B) De minimis exception.--In the case of 
                remuneration in the form of items or services, not 
                including cash or cash equivalents, if--
                            ``(i) the remuneration does not exceed $50 
                        per gift and an aggregate of $300 per year, and
                            ``(ii) the remuneration is not determined 
                        in any way that takes into account the volume 
                        or value of the physician's referrals to the 
                        entity.''.

SEC. 4. REVISION OF DEFINITIONS.

    (a) Exclusion of Intraocular Lens, Eyeglasses, and Contact Lenses 
From Designated Health Services Subject to Prohibitions.--Section 
1877(h)(6)(H) (42 U.S.C. 1395nn(h)(6)(H)) is amended by striking the 
period at the end and inserting the following: ``, other than an 
intraocluar lens inserted during or subsequent to cataract surgery, 
eyeglasses, or contact lenses.''.
    (b) Change in Definition of Group Practice.--Section 1877(h)(4)(A) 
(42 U.S.C. 1395nn(h)(4)(A)) is amended by amending clause (vi) to read 
as follows:
                            ``(vi) in which the overhead expenses of 
                        and the income from the practice are 
                        distributed according to methods that indicate 
                        that the practice is a unified business.''.

SEC. 5. CHANGE IN REPORTING REQUIREMENTS.

    (a) Requirement.--Section 1877(f) (42 U.S.C. 1395nn(f)) is 
amended--
            (1) by striking ``shall provide the Secretary with'' and 
        inserting ``shall provide to the Secretary upon request for 
        purposes of an audit''; and
            (2) by striking the second sentence.
    (b) Sanctions.--Section 1877(g)(5) (42 U.S.C. 1395nn(g)(5)) is 
amended by striking all that follows ``Any person who is required, but 
fails,'' and inserting the following: ``to provide the Secretary upon 
request for purposes of an audit with information concerning the 
entity's ownership, investment, and compensation arrangements, 
including--
                    ``(A) the covered items and services provided by 
                the entity; and
                    ``(B) the names and unique physician identification 
                numbers of all physicians with an ownership or 
                investment interest (as described in subsection 
                (a)(2)(B)) in the entity, or who have such a 
                compensation relationship with the entity, or whose 
                immediate relatives have such an ownership or 
                investment interest or who have such a compensation 
                relationship with the entity,
        is subject to a civil money penalty at the Secretary's 
        discretion of not more than $10,000 for each day of non-
        compliance following a request by the Secretary for information 
        concerning such arrangements.''.

SEC. 6. ADVISORY OPINIONS.

    Section 1877(g)(6)(A) (42 U.S.C. 1395nn(g)(6)(A)) is amended by 
inserting before the period at the end of the first sentence the 
following: ``within 60 days after the date the Secretary receives a 
written request for such an advisory opinion''.

SEC. 7. EFFECTIVE DATE.

    The amendments made by this Act shall apply to referrals made on or 
after January 1, 2000.
                                 <all>