[Congressional Record Volume 141, Number 12 (Friday, January 20, 1995)]
[Senate]
[Pages S1283-S1289]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


                         ADDITIONAL STATEMENTS

                                 ______


                      HEALTH CARE FRAUD PREVENTION

 Mr. COHEN. Mr. President, yesterday I introduced S. 245, the Health 
Care Fraud Prevention Act of 1995. It was inadvertently not printed in 
the Record at the conclusion of my remarks. I therefore ask that a copy 
of the bill be printed in today's Record.
  The bill follows:
                                 S. 245

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

     SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

       (a) Short Title.--This Act may be cited as the ``Health 
     Care Fraud Prevention Act of 1995''.
       (b) Table of Contents.--The table of contents of this Act 
     is as follows:

Sec. 1. Short title; table of contents.

           TITLE I--ALL-PAYER FRAUD AND ABUSE CONTROL PROGRAM

Sec. 101. All-payer fraud and abuse control program.
Sec. 102. Application of certain Federal health anti-fraud and abuse 
              sanctions to fraud and abuse against any health plan.
Sec. 103. Health care fraud and abuse guidance.
Sec. 104. Reporting of fraudulent actions under medicare.

      TITLE II--REVISIONS TO CURRENT SANCTIONS FOR FRAUD AND ABUSE

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

         TITLE III--ADMINISTRATIVE AND MISCELLANEOUS PROVISIONS

Sec. 301. Establishment of the health care fraud and abuse data 
              collection program.

                   TITLE IV--CIVIL MONETARY PENALTIES

Sec. 401. 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. Voluntary disclosure program.
Sec. 507. Obstruction of criminal investigations of Federal health care 
              offenses.
Sec. 508. Theft or embezzlement.
Sec. 509. Laundering of monetary instruments.

      TITLE VI--PAYMENTS FOR STATE HEALTH CARE FRAUD CONTROL UNITS

Sec. 601. Establishment of State fraud units.
Sec. 602. Requirements for State fraud units.
Sec. 603. Scope and purpose.
Sec. 604. Payments to States.
           TITLE I--ALL-PAYER FRAUD AND ABUSE CONTROL PROGRAM

     SEC. 101. ALL-PAYER FRAUD AND ABUSE CONTROL PROGRAM.

       (a) Establishment of Program.--
       (1) In general.--Not later than January 1, 1996, the 
     Secretary of Health and Human Services (in this title 
     referred to as the ``Secretary''), acting through the Office 
     of the Inspector General of the Department of Health and 
     Human Services, and the Attorney General shall establish a 
     program--
       (A) to coordinate Federal, State, and local law enforcement 
     programs to control fraud and abuse with respect to the 
     delivery of and payment for health care in the United States,
       (B) to conduct investigations, audits, evaluations, and 
     inspections relating to the delivery of and payment for 
     health care in the United States,
       (C) to facilitate the enforcement of the provisions of 
     sections 1128, 1128A, and 1128B of the Social Security Act 
     and other statutes applicable to health care fraud and abuse, 
     and
       (D) to provide for the modification and establishment of 
     safe harbors and to issue interpretative rulings and special 
     fraud alerts pursuant to section 103.
       (2) Coordination with health plans.--In carrying out the 
     program established under paragraph (1), the Secretary and 
     the Attorney General shall consult with, and arrange for the 
     sharing of data with representatives of health plans.
       (3) Regulations.--
       (A) In general.--The Secretary and the Attorney General 
     shall by regulation establish standards to carry out the 
     program under paragraph (1).
       (B) Information standards.--
       (i) In general.--Such standards shall include standards 
     relating to the furnishing of information by health plans, 
     providers, and others to enable the Secretary and the 
     Attorney General to carry out the program (including 
     coordination with health plans under paragraph (2)).
       (ii) Confidentiality.--Such standards shall include 
     procedures to assure that such information is provided and 
     utilized in a manner that appropriately protects the 
     confidentiality of the information and the privacy of 
     individuals receiving health care services and items.
       (iii) Qualified immunity for providing information.--The 
     provisions of section 1157(a) of the Social Security Act 
     (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.
       (C) Disclosure of ownership information.--
       (i) In general.--Such standards shall include standards 
     relating to the disclosure of ownership information described 
     in clause (ii) by any entity providing health care services 
     and items.
       (ii) Ownership information described.--The ownership 
     information described in this clause includes--

       (I) a description of such items and services provided by 
     such entity;
       (II) the names and unique physician identification numbers 
     of all physicians with a financial relationship (as defined 
     in section 
     [[Page S1284]] 1877(a)(2) of the Social Security Act) with 
     such entity;
       (III) the names of all other individuals with such an 
     ownership or investment interest in such entity; and
       (IV) any other ownership and related information required 
     to be disclosed by such entity under section 1124 or section 
     1124A of the Social Security Act, except that the Secretary 
     shall establish procedures under which the information 
     required to be submitted under this subclause will be reduced 
     with respect to health care provider entities that the 
     Secretary determines will be unduly burdened if such entities 
     are required to comply fully with this subclause.

       (4) Authorization of appropriations for investigators and 
     other personnel.--In addition to any other amounts authorized 
     to be appropriated to the Secretary, the Attorney General, 
     the Director of the Federal Bureau of Investigation, and the 
     Inspectors General of the Departments of Defense, Labor, and 
     Veterans Affairs and of the Office of Personnel Management, 
     for health care anti-fraud and abuse activities for a fiscal 
     year, there are authorized to be appropriated additional 
     amounts, from the Health Care Fraud and Abuse Account 
     described in subsection (b) of this section, as may be 
     necessary to enable the Secretary, the Attorney General, and 
     such Inspectors General to conduct investigations and audits 
     of allegations of health care fraud and abuse and otherwise 
     carry out the program established under paragraph (1) in a 
     fiscal year.
       (5) Ensuring access to documentation.--The Inspector 
     General of the Department of Health and Human Services is 
     authorized to exercise the authority described in paragraphs 
     (4) and (5) of section 6 of the Inspector General Act of 1978 
     (relating to subpoenas and administration of oaths) with 
     respect to the activities under the all-payer fraud and abuse 
     control program established under this subsection to the same 
     extent as such Inspector General may exercise such 
     authorities to perform the functions assigned by such Act.
       (6) Authority of inspector general.--Nothing in this Act 
     shall be construed to diminish the authority of any Inspector 
     General, including such authority as provided in the 
     Inspector General Act of 1978.
       (7) Health plan defined.--For the purposes of this 
     subsection, the term ``health plan'' shall have the meaning 
     given such term in section 1128(i) of the Social Security 
     Act.
       (b) Health Care Fraud and Abuse Control Account.--
       (1) Establishment.--
       (A) In general.--There is hereby established an account to 
     be known as the ``Health Care Fraud and Abuse Control 
     Account'' (in this section referred to as the ``Anti-Fraud 
     Account''). The Anti-Fraud Account shall consist of--
       (i) such gifts and bequests as may be made as provided in 
     subparagraph (B);
       (ii) such amounts as may be deposited in the Anti-Fraud 
     Account as provided in subsection (a)(4), sections 5441(b) 
     and 5442(b), and title XI of the Social Security Act; and
       (iii) such amounts as are transferred to the Anti-Fraud 
     Account under subparagraph (C).
       (B) Authorization to accept gifts.--The Anti-Fraud Account 
     is authorized to accept on behalf of the United States money 
     gifts and bequests made unconditionally to the Anti-Fraud 
     Account, for the benefit of the Anti-Fraud Account or any 
     activity financed through the Anti-Fraud Account.
       (C) Transfer of amounts.--
       (i) In general.--The Secretary of the Treasury shall 
     transfer to the Anti-Fraud Account an amount equal to the sum 
     of the following:

       (I) Criminal fines imposed in cases involving a Federal 
     health care offense (as defined in section 982(a)(6)(B) of 
     title 18, United States Code).

       (ii) Administrative penalties and assessments imposed under 
     titles XI, XVIII, and XIX of the Social Security Act (except 
     as otherwise provided by law).
       (iii) Amounts resulting from the forfeiture of property by 
     reason of a Federal health care offense.
       (iv) Penalties and damages imposed under the False Claims 
     Act (31 U.S.C. 3729 et seq.), in cases involving claims 
     related to the provision of health care items and services 
     (other than funds awarded to a relator or for restitution).
       (2) Use of funds.--
       (A) In general.--Amounts in the Anti-Fraud Account shall be 
     available to carry out the health care fraud and abuse 
     control program established under subsection (a) (including 
     the administration of the program), and may be used to cover 
     costs incurred in operating the program, including costs 
     (including equipment, salaries and benefits, and travel and 
     training) of--
       (i) prosecuting health care matters (through criminal, 
     civil, and administrative proceedings);
       (ii) investigations;
       (iii) financial and performance audits of health care 
     programs and operations;
       (iv) inspections and other evaluations; and
       (v) provider and consumer education regarding compliance 
     with the provisions of this title.
       (B) Funds used to supplement agency appropriations.--It is 
     intended that disbursements made from the Anti-Fraud Account 
     to any Federal agency be used to increase and not supplant 
     the recipient agency's appropriated operating budget.
       (3) Annual report.--The Secretary and the Attorney General 
     shall submit jointly an annual report to Congress on the 
     amount of revenue which is generated and disbursed by the 
     Anti-Fraud Account in each fiscal year.
       (4) Use of funds by inspector general.--
       (A) Reimbursements for Investigations.--The Inspector 
     General is authorized to receive and retain for current use 
     reimbursement for the costs of conducting investigations, 
     when such restitution is ordered by a court, voluntarily 
     agreed to by the payer, or otherwise.
       (B) Crediting.--Funds received by the Inspector General or 
     the Inspectors General of the Departments of Defense, Labor, 
     and Veterans Affairs and of the Office of Personnel 
     Management, 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 their deposit.

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

       (a) Crimes.--
       (1) Social security act.--Section 1128B of the Social 
     Security Act (42 U.S.C. 1320a-7b) is amended as follows:
       (A) In the heading, by adding at the end the following: 
     ``or health plans''.
       (B) In subsection (a)(1)--
       (i) by striking ``title XVIII or'' and inserting ``title 
     XVIII,'', and
       (ii) by adding at the end the following: ``or a health plan 
     (as defined in section 1128(i)),''.
       (C) In subsection (a)(5), by striking ``title XVIII or a 
     State health care program'' and inserting ``title XVIII, a 
     State health care program, or a health plan''.
       (D) In the second sentence of subsection (a)--
       (i) by inserting after ``title XIX'' the following: ``or a 
     health plan'', and
       (ii) by inserting after ``the State'' the following: ``or 
     the plan''.
       (2) Identification of community service opportunities.--
     Section 1128B of such Act (42 U.S.C. 1320a-7b) is further 
     amended by adding at the end the following new subsection:
       ``(f) 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) Health Plan Defined.--Section 1128 of the Social 
     Security Act (42 U.S.C. 1320a-7) is amended by redesignating 
     subsection (i) as subsection (j) and by inserting after 
     subsection (h) the following new subsection:
       ``(i) Health Plan Defined.--For purposes of sections 1128A 
     and 1128B, the term `health plan' means a plan that provides 
     health benefits, whether through directly, through insurance, 
     or otherwise, and includes a policy of health insurance, a 
     contract of a service benefit organization, or a membership 
     agreement with a health maintenance organization or other 
     prepaid health plan, and also includes an employee welfare 
     benefit plan or a multiple employer welfare plan (as such 
     terms are defined in section 3 of the Employee Retirement 
     Income Security Act of 1974).''.
       (c) Effective Date.--The amendments made by this section 
     shall take effect on January 1, 1996.

     SEC. 103. HEALTH CARE FRAUD AND ABUSE GUIDANCE.

       (a) Solicitation and Publication of Modifications to 
     Existing Safe Harbors and New Safe Harbors.--
       (1) In general.--
       (A) Solicitation of proposals for safe harbors.--Not later 
     than January 1, 1996, and not less than annually thereafter, 
     the Secretary shall publish a notice in the Federal Register 
     soliciting proposals, which will be accepted during a 60-day 
     period, for--
       (i) modifications to existing safe harbors issued pursuant 
     to section 14(a) of the Medicare and Medicaid Patient and 
     Program Protection Act of 1987 (42 U.S.C. 1320a-7b note);
       (ii) additional safe harbors specifying payment practices 
     that shall not be treated as a criminal offense under section 
     1128B(b) of the Social Security Act the (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 state 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 (hereafter in this section referred 
     to as the 
     [[Page S1285]] ``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 Government 
     health care programs.
       (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 Government 
     health care programs.
       (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 
     (hereafter 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 in response to 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 
     provision 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 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 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)) (hereafter 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 in 
     consultation with the Attorney General, 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. 104. REPORTING OF FRAUDULENT ACTIONS UNDER MEDICARE.

       Not later than 1 year after the date of the enactment of 
     this Act, the Secretary shall establish a program through 
     which individuals entitled to benefits under the medicare 
     program may report to the Secretary on a confidential basis 
     (at the individual's request) instances of suspected 
     fraudulent actions arising under the program by providers of 
     items and services under the program.
      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 Fraud.--
       (1) In general.--Section 1128(a) of the Social Security Act 
     (42 U.S.C. 1320a-7(a)) is amended by adding at the end the 
     following new paragraph:
       ``(3) Felony conviction relating to fraud.--Any individual 
     or entity that has been convicted after the date of the 
     enactment of the Health Care Fraud Prevention Act of 1995, 
     under Federal or State law, in connection with the delivery 
     of a health care item or service or with respect to any act 
     or omission in a 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.--Section 1128(b)(1) of such Act 
     (42 U.S.C. 1320a-7(b)(1)) 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''.
       (b) Individual Convicted of Felony Relating to Controlled 
     Substance.--
       (1) In general.--Section 1128(a) of the Social Security Act 
     (42 U.S.C. 1320a-7(a)), as amended by subsection (a), is 
     amended by adding at the end the following new paragraph:
       ``(4) Felony conviction relating to controlled substance.--
     Any individual or entity that has been convicted after the 
     date of the enactment of the Health Care Fraud Prevention Act 
     of 1995, under Federal or State law, of a criminal offense 
     consisting of a felony relating to the unlawful manufacture, 
     distribution, prescription, or dispensing of a controlled 
     substance.''.
       (2) Conforming amendment.--Section 1128(b)(3) of such Act 
     (42 U.S.C. 1320a-7(b)(3)) is amended--
       (A) in the heading, by striking ``Conviction'' and 
     inserting ``Misdemeanor conviction''; and
       (B) by striking ``criminal offense'' and inserting 
     ``criminal offense consisting of a misdemeanor''.

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

       Section 1128(c)(3) of the Social Security Act (42 U.S.C. 
     1320a-7(c)(3)) is amended by adding at the end the following 
     new subparagraphs:
       ``(D) In the case of an exclusion of an individual or 
     entity under paragraph (1), (2), or (3) of subsection (b), 
     the period of the exclusion shall be 3 years, unless the 
     Secretary determines in accordance with published regulations 
     that a shorter period is appropriate because of mitigating 
     circumstances or that a longer period is appropriate because 
     of aggravating circumstances.
       ``(E) In the case of an exclusion of an individual or 
     entity under subsection (b)(4) or (b)(5), the period of the 
     exclusion shall not be less than the period during which the 
     individual's or entity's license to provide health care is 
     revoked, suspended, or surrendered, or the individual or the 
     entity is excluded or suspended from a Federal or State 
     health care program.
       ``(F) In the case of an exclusion of an individual or 
     entity under subsection (b)(6)(B), the period of the 
     exclusion shall be not less than 1 year.''.

     SEC. 203. PERMISSIVE EXCLUSION OF INDIVIDUALS WITH OWNERSHIP 
                   OR CONTROL INTEREST IN SANCTIONED ENTITIES.

       Section 1128(b) of the Social Security Act (42 U.S.C. 
     1320a-7(b)) is amended by adding at the end the following new 
     paragraph:
       ``(15) Individuals controlling a sanctioned entity.--Any 
     individual who has a direct or indirect ownership or control 
     interest of 5 percent or more, or an ownership or control 
     interest (as defined in section 1124(a)(3)) in, or who is an 
     officer, director, agent, 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;
       ``(B) against which a civil monetary penalty has been 
     assessed under section 1128A; or
       ``(C) that has been excluded from participation under a 
     program under title XVIII or under a State health care 
     program.''.
     [[Page S1286]] SEC. 204. SANCTIONS AGAINST PRACTITIONERS AND 
                   PERSONS FOR FAILURE TO COMPLY WITH STATUTORY 
                   OBLIGATIONS.

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

     SEC. 205. INTERMEDIATE SANCTIONS FOR MEDICARE HEALTH 
                   MAINTENANCE ORGANIZATIONS.

       (a) Application of Intermediate Sanctions for Any Program 
     Violations.--
       (1) In general.--Section 1876(i)(1) of the Social Security 
     Act (42 U.S.C. 1395mm(i)(1)) is amended by striking ``the 
     Secretary may terminate'' and all that follows and inserting 
     the following: ``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 inconsistent 
     with the efficient and effective administration of this 
     section; or
       ``(C) no longer substantially meets the applicable 
     conditions of subsections (b), (c), (e), and (f).''.
       (2) Other intermediate sanctions for miscellaneous program 
     violations.--Section 1876(i)(6) of such Act (42 U.S.C. 
     1395mm(i)(6)) is amended by adding at the end the following 
     new subparagraph:
       ``(C) In the case of an eligible organization for which the 
     Secretary makes a determination under paragraph (1) the basis 
     of which is not described in subparagraph (A), the Secretary 
     may apply the following intermediate sanctions:
       ``(i) Civil money penalties of not more than $25,000 for 
     each determination under paragraph (1) if the deficiency that 
     is the basis of the determination has directly adversely 
     affected (or has the substantial likelihood of adversely 
     affecting) an individual covered under the organization's 
     contract.
       ``(ii) Civil money penalties of not more than $10,000 for 
     each week beginning after the initiation of procedures by the 
     Secretary under paragraph (9) during which the deficiency 
     that is the basis of a determination under paragraph (1) 
     exists.
       ``(iii) Suspension of enrollment of individuals under this 
     section after the date the Secretary notifies the 
     organization of a determination under paragraph (1) and until 
     the Secretary is satisfied that the deficiency that is the 
     basis for the determination has been corrected and is not 
     likely to recur.''.
       (3) Procedures for imposing sanctions.--Section 1876(i) of 
     such Act (42 U.S.C. 1395mm(i)) is amended by adding at the 
     end the following new paragraph:
       ``(9) The Secretary may terminate a contract with an 
     eligible organization under this section or may impose the 
     intermediate sanctions described in paragraph (6) on the 
     organization in accordance with formal investigation and 
     compliance procedures established by the Secretary under 
     which--
       ``(A) the Secretary provides the organization with the 
     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);
       ``(B) in deciding whether to impose sanctions, the 
     Secretary considers aggravating factors such as whether an 
     entity has a history of deficiencies or has not taken action 
     to correct deficiencies the Secretary has brought to their 
     attention;
       ``(C) there are no unreasonable or unnecessary delays 
     between the finding of a deficiency and the imposition of 
     sanctions; and
       ``(D) the Secretary provides the organization with 
     reasonable notice and opportunity for hearing (including the 
     right to appeal an initial decision) before imposing any 
     sanction or terminating the contract.''.
       (4) Conforming amendments.--Section 1876(i)(6)(B) of such 
     Act (42 U.S.C. 1395mm(i)(6)(B)) is amended by striking the 
     second sentence.
       (b) Agreements With Peer Review Organizations.--
       (1) Requirement for written agreement.--Section 
     1876(i)(7)(A) of the Social Security Act (42 U.S.C. 
     1395mm(i)(7)(A)) is amended by striking ``an agreement'' and 
     inserting ``a written agreement''.
       (2) Development of model agreement.--Not later than July 1, 
     1996, the Secretary shall develop a model of the agreement 
     that an eligible organization with a risk-sharing contract 
     under section 1876 of the Social Security Act must enter into 
     with an entity providing peer review services with respect to 
     services provided by the organization under section 
     1876(i)(7)(A) of such Act.
       (3) Report by gao.--
       (A) Study.--The Comptroller General of the United States 
     shall conduct a study of the costs incurred by eligible 
     organizations with risk-sharing contracts under section 
     1876(b) of such Act of complying with the requirement of 
     entering into a written agreement with an entity providing 
     peer review services with respect to services provided by the 
     organization, together with an analysis of how information 
     generated by such entities is used by the Secretary to assess 
     the quality of services provided by such eligible 
     organizations.
       (B) Report to congress.--Not later than July 1, 1998, the 
     Comptroller General shall submit a report to the Committee on 
     Ways and Means and the Committee on Energy and Commerce of 
     the House of Representatives and the Committee on Finance and 
     the Special Committee on Aging of the Senate on the study 
     conducted under subparagraph (A).
       (c) Effective Date.--The amendments made by this section 
     shall apply with respect to contract years beginning on or 
     after January 1, 1996.

     SEC. 206. EFFECTIVE DATE.

       The amendments made by this part shall take effect January 
     1, 1996.
         TITLE III--ADMINISTRATIVE AND MISCELLANEOUS PROVISIONS

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

       (a) General Purpose.--Not later than January 1, 1996, the 
     Secretary shall establish a national health care fraud and 
     abuse data collection program for the reporting of final 
     adverse actions (not including settlements in which no 
     findings of liability have been made) against health care 
     providers, suppliers, or practitioners as required by 
     subsection (b), with access as set forth in subsection (c).
       (b) Reporting of Information.--
       (1) In general.--Each government agency and health plan 
     shall report any final adverse action (not including 
     settlements in which no findings of liability have been made) 
     taken against a health care provider, supplier, or 
     practitioner.
       (2) Information to be reported.--The information to be 
     reported under paragraph (1) includes:
       (A) The name of any health care provider, supplier, or 
     practitioner who is the subject of a final adverse action.
       (B) The name (if known) of any health care entity with 
     which a health care provider, supplier, or practitioner is 
     affiliated or associated.
       (C) The nature of the final adverse action.
       (D) A description of the acts or omissions and injuries 
     upon which the final adverse action was based, and such other 
     information as the Secretary determines by regulation is 
     required for appropriate interpretation of information 
     reported under this section.
       (3) Confidentiality.--In determining what information is 
     required, the Secretary shall include procedures to assure 
     that the privacy of individuals receiving health care 
     services is appropriately protected.
       (4) Timing and form of reporting.--The information required 
     to be reported under this subsection shall be reported 
     regularly (but not less often than monthly) and in such form 
     and manner as the Secretary prescribes. Such information 
     shall first be required to be reported on a date specified by 
     the Secretary.
       (5) To whom reported.--The information required to be 
     reported under this subsection shall be reported to the 
     Secretary.
       (c) Disclosure and Correction of Information.--
       (1) Disclosure.--With respect to the information about 
     final adverse actions (not including settlements in which no 
     findings of liability have been made) reported to the 
     Secretary under this section respecting a health care 
     provider, supplier, or practitioner, the Secretary shall, by 
     regulation, provide for--
       (A) disclosure of the information, upon request, to the 
     health care provider, supplier, or licensed practitioner, and
       (B) procedures in the case of disputed accuracy of the 
     information.
       (2) Corrections.--Each Government agency and health plan 
     shall report corrections of information already reported 
     about any final adverse action taken against a health care 
     provider, supplier, or practitioner, in such form and manner 
     that the Secretary prescribes by regulation.
       (d) Access to Reported Information.--
       (1) Availability.--The information in this database shall 
     be available to Federal and State government agencies and 
     health plans pursuant to procedures that the Secretary shall 
     provide by regulation.
       (2) Fees for disclosure.--The Secretary may establish or 
     approve reasonable fees for the disclosure of information in 
     this database. The amount of such a fee may not exceed the 
     costs of processing the requests for disclosure and of 
     providing such information. Such fees shall be available to 
     the Secretary or, in the Secretary's discretion to the agency 
     designated under this section to cover such costs.
       (e) Protection From Liability for Reporting.--No person or 
     entity, including the agency designated by the Secretary in 
     subsection (b)(5) shall be held liable in any civil 
     [[Page S1287]] 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) The term ``final adverse action'' includes:
       (A) Civil judgments against a health care provider in 
     Federal or State court related to the delivery of a health 
     care item or service.
       (B) Federal or State criminal convictions related to the 
     delivery of a health care item or service.
       (C) Actions by Federal or State agencies responsible for 
     the licensing and certification of health care providers, 
     suppliers, and licensed health care practitioners, 
     including--
       (i) formal or official actions, such as revocation or 
     suspension of a license (and the length of any such 
     suspension), reprimand, censure or probation,
       (ii) any other loss of license of the provider, supplier, 
     or practitioner, by operation of law, or
       (iii) any other negative action or finding by such Federal 
     or State agency that is publicly available information.
       (D) Exclusion from participation in Federal or State health 
     care programs.
       (E) Any other adjudicated actions or decisions that the 
     Secretary shall establish by regulation.
       (2) The terms ``licensed health care practitioner'', 
     ``licensed practitioner'', and ``practitioner'' mean, with 
     respect to a State, an individual who is licensed or 
     otherwise authorized by the State to provide health care 
     services (or any individual who, without authority holds 
     himself or herself out to be so licensed or authorized).
       (3) The term ``health care provider'' means a provider of 
     services as defined in section 1861(u) of the Social Security 
     Act, and any entity, including a health maintenance 
     organization, group medical practice, or any other entity 
     listed by the Secretary in regulation, that provides health 
     care services.
       (4) The term ``supplier'' means a supplier of health care 
     items and services described in section 1819(a) and (b), and 
     section 1861 of the Social Security Act.
       (5) The term ``Government agency'' shall include:
       (A) The Department of Justice.
       (B) The Department of Health and Human Services.
       (C) Any other Federal agency that either administers or 
     provides payment for the delivery of health care services, 
     including, but not limited to the Department of Defense and 
     the Veterans' Administration.
       (D) State law enforcement agencies.
       (E) State medicaid fraud and abuse units.
       (F) Federal or State agencies responsible for the licensing 
     and certification of health care providers and licensed 
     health care practitioners.
       (6) The term ``health plan'' has the meaning given to such 
     term by section 1128(i) of the Social Security Act.
       (7) For purposes of paragraph (2), the existence of a 
     conviction shall be determined under paragraph (4) of section 
     1128(j) of the Social Security Act.
       (g) Conforming Amendment.--Section 1921(d) of the Social 
     Security Act is amended by inserting ``and section 301 of the 
     Health Care Fraud Prevention Act of 1995'' after ``section 
     422 of the Health Care Quality Improvement Act of 1986''.
                   TITLE IV--CIVIL MONETARY PENALTIES

     SEC. 401. CIVIL MONETARY PENALTIES.

       (a) General Civil Monetary Penalties.--Section 1128A of the 
     Social Security Act (42 U.S.C. 1320a-7a) is amended as 
     follows:
       (1) In subsection (a)(1), by inserting ``or of any health 
     plan (as defined in section 1128(i)),'' after ``subsection 
     (i)(1)),''.
       (2) In subsection (f)--
       (A) by redesignating paragraph (3) as paragraph (4); and
       (B) by inserting after paragraph (2) the following new 
     paragraphs:
       ``(3) With respect to amounts recovered arising out of a 
     claim under a health plan, the portion of such amounts as is 
     determined to have been paid by the plan shall be repaid to 
     the plan, and the portion of such amounts attributable to the 
     amounts recovered under this section by reason of the 
     amendments made by the Health Care Fraud Prevention Act of 
     1995 (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 inserting ``or under a health 
     plan'' before the period at the end, and
       (B) in paragraph (5), by inserting ``or under a health 
     plan'' after ``or XX''.
       (b) Excluded Individual Retaining Ownership or Control 
     Interest in Participating Entity.--Section 1128A(a) of the 
     Social Security Act (42 U.S.C. 1320a-7a(a)) is amended--
       (1) by striking ``or'' at the end of paragraph (1)(D);
       (2) by striking ``, or'' at the end of paragraph (2) and 
     inserting a semicolon;
       (3) by striking the semicolon at the end of paragraph (3) 
     and inserting ``; or''; and
       (4) by inserting after paragraph (3) the following new 
     paragraph:
       ``(4) in the case of a person who is not an organization, 
     agency, or other entity, is excluded from participating in a 
     program under title XVIII or a State health care program in 
     accordance with this subsection or under section 1128 and 
     who, at the time of a violation of this subsection, retains a 
     direct or indirect ownership or control interest of 5 percent 
     or more, or an ownership or control interest (as defined in 
     section 1124(a)(3)) in, or who is an officer, director, 
     agent, or managing employee (as defined in section 1126(b)) 
     of, an entity that is participating in a program under title 
     XVIII or a State health care program;''.
       (c) Modifications of Amounts of Penalties and 
     Assessments.--Section 1128A(a) of the Social Security Act (42 
     U.S.C. 1320a-7a(a)), as amended by subsection (b), is amended 
     in the matter following paragraph (4)--
       (1) by striking ``$2,000'' and inserting ``$10,000'';
       (2) by inserting ``; in cases under paragraph (4), $10,000 
     for each day the prohibited relationship occurs'' after 
     ``false or misleading information was given''; and
       (3) by striking ``twice the amount'' and inserting ``3 
     times the amount''.
       (d) Claim for Item or Service Based on Incorrect Coding or 
     Medically Unnecessary Services.--Section 1128A(a)(1) of the 
     Social Security Act (42 U.S.C. 1320a-7a(a)(1)) is amended--
       (1) in subparagraph (A) by striking ``claimed,'' and 
     inserting the following: ``claimed, including any person who 
     repeatedly presents or causes to be presented a claim for an 
     item or service that is based on a code that the person knows 
     or should know will result in a greater payment to the person 
     than the code the person knows or should know is applicable 
     to the item or service actually provided,'';
       (2) in subparagraph (C), by striking ``or'' at the end;
       (3) in subparagraph (D), by striking ``; or'' and inserting 
     ``, or''; and
       (4) by inserting after subparagraph (D) the following new 
     subparagraph:
       ``(E) is for a medical or other item or service that a 
     person repeatedly knows or should know is not medically 
     necessary; or''.
       (e) Permitting Secretary To Impose Civil Monetary 
     Penalty.--Section 1128A(b) of the Social Security Act (42 
     U.S.C. 1320a-7a(a)) is amended by adding the following new 
     paragraph:
       ``(3) Any person (including any organization, agency, or 
     other entity, but excluding a beneficiary as defined in 
     subsection (i)(5)) who the Secretary determines has violated 
     section 1128B(b) of this title shall be subject to a civil 
     monetary penalty of not more than $10,000 for each such 
     violation. In addition, such person shall be subject to an 
     assessment of not more than twice the total amount of the 
     remuneration offered, paid, solicited, or received in 
     violation of section 1128B(b). The total amount of 
     remuneration subject to an assessment shall be calculated 
     without regard to whether some portion thereof also may have 
     been intended to serve a purpose other than one proscribed by 
     section 1128B(b).''.
       (f) Sanctions Against Practitioners and Persons for Failure 
     to Comply with Statutory Obligations.--Section 1156(b)(3) of 
     the Social Security Act (42 U.S.C. 1320c-5(b)(3)) is amended 
     by striking ``the actual or estimated cost'' and inserting 
     the following: ``up to $10,000 for each instance''.
       (g) Procedural Provisions.--Section 1876(i)(6) of such Act 
     (42 U.S.C. 1395mm(i)(6)) is further amended by adding at the 
     end the following new subparagraph:
       ``(D) The provisions of section 1128A (other than 
     subsections (a) and (b)) shall apply to a civil money penalty 
     under subparagraph (A) or (B) in the same manner as they 
     apply to a civil money penalty or proceeding under section 
     1128A(a).''.
       (h) Effective Date.--The amendments made by this section 
     shall take effect January 1, 1996.
       (i) Prohibition Against Offering Inducements to Individuals 
     Enrolled Under Programs or Plans.--
       (1) Offer of remuneration.--Section 1128A(a) of the Social 
     Security Act (42 U.S.C. 1320a-7a(a)) is amended--
       (A) by striking ``or'' at the end of paragraph (1)(D);
       (B) by striking ``, or'' at the end of paragraph (2) and 
     inserting a semicolon;
       (C) by striking the semicolon at the end of paragraph (3) 
     and inserting ``; or''; and
       (D) by inserting after paragraph (3) the following new 
     paragraph:
       ``(4) offers to or transfers remuneration to any individual 
     eligible for benefits under title XVIII of this Act, or under 
     a State health care program (as defined in section 1128(h)) 
     that such person knows or should know is likely to influence 
     such individual to order or receive from a particular 
     provider, practitioner, or supplier any item or service for 
     which payment may be made, in whole or in part, under title 
     XVIII, or a State health care program;''.
       (2) Remuneration defined.--Section 1128A(i) of such Act (42 
     U.S.C. 1320a-7a(i)) is amended by adding the following new 
     paragraph:
       ``(6) The term `remuneration' includes the waiver of 
     coinsurance and deductible amounts (or any part thereof), and 
     transfers of items or services for free or for other than 
     fair market value. The term `remuneration' does not include--
       ``(A) the waiver of coinsurance and deductible amounts by a 
     person, if--
       ``(i) the waiver is not offered as part of any 
     advertisement or solicitation;
       ``(ii) the person does not routinely waive coinsurance or 
     deductible amounts; and
     [[Page S1288]]   ``(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 third party payors to 
     whom claims are presented and as long as the differentials 
     meet the standards as defined in regulations promulgated by 
     the Secretary; or
       ``(C) incentives given to individuals to promote the 
     delivery of preventive care as determined by the Secretary in 
     regulations.''.
                  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 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 shall 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 1128(i) 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--
       ``(i) is used in the commission of the offense if the 
     offense results in a financial loss or gain of $50,000 or 
     more; or
       ``(ii) constitutes or is derived from proceeds traceable to 
     the commission of the offense.
       ``(B) For purposes of this paragraph, the term `Federal 
     health care offense' means a violation of, or a criminal 
     conspiracy to violate--
       ``(i) section 1347 of this title;
       ``(ii) section 1128B of the Social Security Act;
       ``(iii) sections 287, 371, 664, 666, 1001, 1027, 1341, 
     1343, 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:
       ``(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:
       ``(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:

     ``Sec. 1033. False statements relating to health care matters

       ``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) Clerical Amendment.--The table of sections at the 
     beginning of chapter 47 of title 18, United State Code, in 
     amended by adding at the end the following:

``1033. False statements relating to health care matters.''.
     SEC. 506. VOLUNTARY DISCLOSURE PROGRAM.

       In consultation with the Attorney General of the United 
     States, the Secretary of Health and Human Services shall 
     publish proposed regulations not later than 9 months after 
     the date of enactment of this Act, and final regulations not 
     later than 18 months after such date of enactment, 
     establishing a program of voluntary disclosure that would 
     facilitate the enforcement of sections 1128A and 1128B of the 
     Social Security Act (42 U.S.C. 1320a-7a and 1320a-7b) and 
     other relevant provisions of Federal law relating to health 
     care fraud and abuse. Such program should promote and provide 
     incentives for disclosures of potential violations of such 
     sections and provisions by providing that, under certain 
     circumstances, the voluntary disclosure of wrongdoing would 
     result in the imposition of penalties and punishments less 
     substantial than those that would be assessed for the same 
     wrongdoing if voluntary disclosure did not occur.

     SEC. 507. OBSTRUCTION OF CRIMINAL INVESTIGATIONS OF FEDERAL 
                   HEALTH CARE OFFENSES.

       (a) In General.--Chapter 73 of title 18, United States 
     Code, is amended by adding at the end the following new 
     section:

     ``Sec. 1518. Obstruction of Criminal Investigations of 
       Federal Health Care Offenses.

       ``(a) In General.--Whoever willfully prevents, obstructs, 
     misleads, delays or attempts to prevent, obstruct, mislead, 
     or delay the communication of information or records relating 
     to a Federal health care offense to a criminal investigator 
     shall be fined under this title or imprisoned not more than 5 
     years, or both.
       ``(b) Federal Health Care Offense.--As used in this section 
     the term `Federal health care offense' has the same meaning 
     given such term in section 982(a)(6)(B) of this title.
       ``(c) Criminal Investigator.--As used in this section the 
     term `criminal investigator' means any individual duly 
     authorized by a department, agency, or armed force of the 
     United States to conduct or engage in investigations for 
     prosecutions for violations of health care offenses.''.
       (b) Clerical Amendment.--The table of sections at the 
     beginning of chapter 73 of title 18, United State Code, in 
     amended by adding at the end the following:

``1518. Obstruction of Criminal Investigations of Federal Health Care 
              Offenses.''.
     SEC. 508. 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 care benefit program, shall be fined under this title 
     or imprisoned not more than 10 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.''.
       (b) Clerical Amendment.--The table of sections at the 
     beginning of chapter 31 of title 18, United State Code, in 
     amended by adding at the end the following:

``669. Theft or Embezzlement in Connection with Health Care.''.
     SEC. 509. 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:
     [[Page S1289]]   ``(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.''.
      TITLE VI--PAYMENTS FOR STATE HEALTH CARE FRAUD CONTROL UNITS

     SEC. 601. ESTABLISHMENT OF STATE FRAUD UNITS.

       (a) Establishment of Health Care Fraud and Abuse Control 
     Unit.--The Governor of each State shall, consistent with 
     State law, establish and maintain in accordance with 
     subsection (b) a State agency to act as a Health Care Fraud 
     and Abuse Control Unit for purposes of this part.
       (b) Definition.--In this section, a ``State Fraud Unit'' 
     means a Health Care Fraud and Abuse Control Unit designated 
     under subsection (a) that the Secretary certifies meets the 
     requirements of this part.

     SEC. 602. REQUIREMENTS FOR STATE FRAUD UNITS.

       (a) In General.--The State Fraud Unit must--
       (1) be a single identifiable entity of the State 
     government;
       (2) be separate and distinct from any State agency with 
     principal responsibility for the administration of any 
     Federally-funded or mandated health care program;
       (3) meet the other requirements of this section.
       (b) Specific Requirements Described.--The State Fraud Unit 
     shall--
       (1) be a Unit of the office of the State Attorney General 
     or of another department of State government which possesses 
     statewide authority to prosecute individuals for criminal 
     violations;
       (2) if it is in a State the constitution of which does not 
     provide for the criminal prosecution of individuals by a 
     statewide authority and has formal procedures, (A) assure its 
     referral of suspected criminal violations to the appropriate 
     authority or authorities in the State for prosecution, and 
     (B) assure its assistance of, and coordination with, such 
     authority or authorities in such prosecutions; or
       (3) have a formal working relationship with the office of 
     the State Attorney General or the appropriate authority or 
     authorities for prosecution and have formal procedures 
     (including procedures for its referral of suspected criminal 
     violations to such office) which provide effective 
     coordination of activities between the Fraud Unit and such 
     office with respect to the detection, investigation, and 
     prosecution of suspected criminal violations relating to any 
     Federally-funded or mandated health care programs.
       (c) Staffing Requirements.--The State Fraud Unit shall--
       (1) employ attorneys, auditors, investigators and other 
     necessary personnel; and
       (2) be organized in such a manner and provide sufficient 
     resources as is necessary to promote the effective and 
     efficient conduct of State Fraud Unit activities.
       (d) Cooperative Agreements; Memoranda of Understanding.--
     The State Fraud Unit shall have cooperative agreements with--
       (1) Federally-funded or mandated health care programs;
       (2) similar Fraud Units in other States, as exemplified 
     through membership and participation in the National 
     Association of Medicaid Fraud Control Units or its successor; 
     and
       (3) the Secretary.
       (e) Reports.--The State Fraud Unit shall submit to the 
     Secretary an application and an annual report containing such 
     information as the Secretary determines to be necessary to 
     determine whether the State Fraud Unit meets the requirements 
     of this section.
       (f) Funding Source; Participation in All-Payer Program.--In 
     addition to those sums expended by a State under section 
     604(a) for purposes of determining the amount of the 
     Secretary's payments, a State Fraud Unit may receive funding 
     for its activities from other sources, the identity of which 
     shall be reported to the Secretary in its application or 
     annual report. The State Fraud Unit shall participate in the 
     all-payer fraud and abuse control program established under 
     section 101.

     SEC. 603. SCOPE AND PURPOSE.

       The State Fraud Unit shall carry out the following 
     activities:
       (1) The State Fraud Unit shall conduct a statewide program 
     for the investigation and prosecution (or referring for 
     prosecution) of violations of all applicable state laws 
     regarding any and all aspects of fraud in connection with any 
     aspect of the administration and provision of health care 
     services and activities of providers of such services under 
     any Federally-funded or mandated health care programs;
       (2) The State Fraud Unit shall have procedures for 
     reviewing complaints of the abuse or neglect of patients of 
     facilities (including patients in residential facilities and 
     home health care programs) that receive payments under any 
     Federally-funded or mandated health care programs, and, where 
     appropriate, to investigate and prosecute such complaints 
     under the criminal laws of the State or for referring the 
     complaints to other State agencies for action.
       (3) The State Fraud Unit shall provide for the collection, 
     or referral for collection to the appropriate agency, of 
     overpayments that are made under any Federally-funded or 
     mandated health care program and that are discovered by the 
     State Fraud Unit in carrying out its activities.

     SEC. 604. PAYMENTS TO STATES.

       (a) Matching Payments to States.--Subject to subsection 
     (c), for each year for which a State has a State Fraud Unit 
     approved under section 602(b) in operation the Secretary 
     shall provide for a payment to the State for each quarter in 
     a fiscal year in an amount equal to the applicable percentage 
     of the sums expended during the quarter by the State Fraud 
     Unit.
       (b) Applicable Percentage Defined.--
       (1) In general.--In subsection (a), the ``applicable 
     percentage'' with respect to a State for a fiscal year is--
       (A) 90 percent, for quarters occurring during the first 3 
     years for which the State Fraud Unit is in operation; or
       (B) 75 percent, for any other quarters.
       (2) Treatment of states with medicaid fraud control 
     units.--In the case of a State with a State medicaid fraud 
     control in operation prior to or as of the date of the 
     enactment of this Act, in determining the number of years for 
     which the State Fraud Unit under this part has been in 
     operation, there shall be included the number of years for 
     which such State medicaid fraud control unit was in 
     operation.
       (c) Limit on Payment.--Notwithstanding subsection (a), the 
     total amount of payments made to a State under this section 
     for a fiscal year may not exceed the amounts as authorized 
     pursuant to section 1903(b)(3) of the Social Security Act.
     

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