[Congressional Record Volume 143, Number 74 (Tuesday, June 3, 1997)]
[Extensions of Remarks]
[Pages E1082-E1084]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




   THE MEDICARE AND MEDICAID WASTE, FRAUD AND ABUSE WASTE PREVENTION 
                           AMENDMENTS OF 1997

                                 ______
                                 

                        HON. FORTNEY PETE STARK

                             of california

                    in the house of representatives

                         Tuesday, June 3, 1997

  Mr. STARK. Mr. Speaker, along with Mr. McDermott and Mr. Weygand, I 
am pleased to introduce the Medicare and Medicaid Fraud, Abuse and 
Waste Prevention Act of 1997, a bill that will implement the 
President's recent initiative to combat waste, fraud, and abuse in 
Medicare and Medicaid.
  Although I congratulate the Republicans for accepting many of the 
provisions within the administration's fraud bill, several provisions 
critical to the fight against health care fraud were not included in 
the budget Medicare package as proposed by Chairman Bill Thomas and 
should be made law.
  The U.S. taxpayer spends $191 billion each year to fund Medicare 
programs. However, $20 billion, or 10 percent, is lost to fraud. Too 
many health providers are putting their hands into the public trough. 
Too many individual physicians, nursing homes, and medical equipment 
dealers are overcharging the American taxpayer for alleged legitimate 
Medicare expenses.
  Health care fraud burdens the Nation with enormous financial costs, 
threatening the quality of health care, and endangering the long-term 
sustainability of the Medicare Program.
  Operation Restore Trust, a demonstration program of Health and Human 
Services, has recovered $23 for every $1 spent in their efforts to 
fight fraud. The program began 2 years ago in California, New York, 
Texas, and Florida, where large concentrations of Medicare recipients 
live. To date, the program has

[[Page E1083]]

identified $188 million owed to the Federal Government and led to 74 
criminal convictions.
  Why do we need these amendments to crack down on fraud and abuse in 
the Medicare system? It is to prevent scam artists from preying on 
vulnerable senior citizens.
  It is to prevent people like Dorothy and Barry Hultman of Connecticut 
from building a luxury, state-of-the-art home by scamming the system 
and overbilling Medicaid by $1.15 million for nonexistant or 
exaggerated costs.
  It is to prevent people like Vernon Will from filing for bankruptcy 
and discharging nearly $20 million in debts, while his nursing home 
closed in San Jose, CA, notifying 27 elderly residents that they had 1 
day to pack up and leave.
  It is to prevent a nursing home from collecting $5,000 for surgical 
tape for a patient, who somehow used 12.5 miles of this tape over a 6-
month period.
  It is to prevent drug traffickers identified by the FBI from 
targeting the health care system.
  Finally, it is to prevent the American taxpayer, vulnerable senior 
citizens, and the poor from being taken for a ride by scam artists. 
This bill would potentially save the American taxpayer billions of 
dollars.
  According to Secretary Shalala, the program's goals are threefold. 
First, the amendments make it difficult for fraudulent people to get 
into the system in the first place. Second, the amendments require 
providing Federal health care programs with Social Security numbers to 
track fraudulent or suspect invoices. Third, the amendments enact very 
strong penalties for those convicted of fraud.
  The first goal, making it difficult for a bad actor to enter into the 
system, and would permit the Secretary to refuse to accept or to 
terminate an agreement for Medicare if convicted of a felony.
  Under the second part of the bill, Medicare providers would be 
required to provide verified Social Security Numbers and employer 
identification numbers [EINs] for their practices and for any owners or 
managing employees.
  Lastly, the bill permits a court to impose very strong penalties for 
violations. The penalties include criminal and civil penalties and 
injunctions. Also, filing for bankruptcy would not discharge a debt to 
the United States under Medicare or Medicaid. Again, the goal is to 
deter those who would try to circumvent the law.
  By passing this bill we will accomplish three things. First, we will 
send a message to those who prey on the more vulnerable segments of our 
society. We will find them and punish them to the fullest extent of the 
law. Second, we will give new tools to those fighting health care fraud 
in helping them to ferret out corruption. Finally, we will reduce the 
corruption in the nearly $200 billion Medicare Program, saving money 
both in the short and the long run.
  I urge my fellow Members of Congress to join with me in passing this 
important piece of legislation. Together, we can combat waste, fraud, 
and abuse in Medicare and Medicaid.
  I refer my colleagues to the attached document, which provides a more 
detailed description of the bill.

 Medicare and Medicaid Fraud, Abuse, and Waste Prevention Amendment of 
                                  1997


                       Section-by-section Summary

       (Except as otherwise indicated, this bill amends provisions 
     of the Social Security Act.)

              TITLE I--ACCOUNTABILITY OF SERVICE PROVIDERS

                       Part A--Sanction Authority

     Sec. 101. Exclusion of Entity Controlled by Family Member of 
         a Sanctioned Individual.
       Section 101 amends section 1128 to authorize the Secretary 
     to exclude from participation in federal health care programs 
     (FHCPs), including Medicare and Medicaid, an entity owned or 
     controlled by an immediate family member of an excluded 
     individual. This will prevent an excluded individual from 
     circumventing the exclusion by transferring ownership or 
     control of a health care entity to a family member.
     Sec. 102. Civil Money Penalties (CMPS) for Kickbacks.
       Section 102 amends section 1128A to provide for civil 
     monetary penalties for kickback violations against FHCPs. 
     Current law authorizes only criminal penalties or exclusion 
     for those who violate the anti-kickback statute, and this 
     amendment will provide an intermediate remedy.
     Sec. 103. CMPs for Persons That Contract With Excluded 
         Individuals.
       Section 103 amends section 1128A to provide for CMPs 
     against a person arranging or contracting with an individual 
     or entity for the provision of items or services under a 
     FHCP, if the person knows or should know that the individual 
     or entity has been excluded from participation in the 
     program.
     Sec. 104. CMPs for Services Ordered or Prescribed by an 
         Excluded Individual or Entity.
       Section 104 amends section 1128A to authorize the Secretary 
     to exclude from FHCPs persons furnishing medical items or 
     services ordered or prescribed by an excluded individual or 
     entity, if the person furnishing the services knows or should 
     know of the exclusion.
     Sec. 105. CMPs for False Certification of Eligibility to 
         Receive Partial Hospitalization and Hospice Services.
       Section 105 amends section 1128A to provide for CMPs for 
     false certification of need for partial hospitalization or 
     hospice services. (This amendment expands the authority for 
     CMPs for false certification of need for home health services 
     enacted in P.L. 104-191, the Health Insurance Portability and 
     Accountability Act of 1996 (HIPAA).
     Sec. 106. Extension of Subpoena and Injunction Authority.
       Section 106 amends section 1128A to extend to the exclusion 
     authority under section 1128 the Secretary's authority to 
     enjoin violative acts and issue subpoenas requiring witnesses 
     to appear or produce testimony. This section also makes 
     clarifying amendments regarding the scope of authority 
     delegable to the Inspector General.
     Sec. 107. Kickback Penalties for Knowing Violations.
       Section 107 reverses the 1995 decision in Hanlester Network 
      v. Shalala, in which the U.S. Circuit Court of Appeals for 
     the 9th Circuit held that a determination of whether a 
     defendant acted ``willfully'' in violation of Medicare's 
     criminal provisions required proof by the government that the 
     defendant knew his actions violated a known legal duty as 
     opposed to knowing that his conduct was wrongful. The effect 
     of this decision was to place a very high burden of proof on 
     the government.
     Sec. 108. Elimination of Exception of Federal Employees 
         Health Benefits Program from Definition of Federal Health 
         Care Program.
       Section 108 amends section 1128B(f) to eliminate the 
     exclusion of the Federal Employees Health Benefit (FEHB) 
     Program from the definition of a Federal health care program.
     Sec. 109. Amounts of CMPs.
       Section 109 amends section 1842 to provide (by reference) 
     specific dollar amounts for CMPs that the Secretary currently 
     has authority to impose in response to a broad range of 
     violations.
     Sec. 110. Liability of Physicians in Specialty Hospitals.
       Section 110 amends section 1867(d) to authorize CMPs 
     against physicians who are on call to specialty hospitals and 
     who fail or refuse to appear within a reasonable time to 
     provide patients with medical screening examinations or 
     stabilizing treatments.
     Sec. 111. Expansion of Criminal Penalties for Kickbacks.
       Section 111 amends to section 1128B authorize the 
     imposition of criminal penalties upon persons violating 
     federal anti-kickback provisions with respect to private 
     health care benefit programs. This section also authorizes 
     the Attorney General to bring civil actions in U.S. District 
     Courts to impose civil penalties and treble damages upon 
     those violating anti-kickback provisions with respect to 
     Federal health care programs. Nothing in this bill is 
     intended to diminish the existing authority of any agency of 
     the U.S. Government to administer and enforce the criminal 
     laws of the United States.

                  Part B--Provider Enrollment Process

     Sec. 121. Requirements to Disclose Employer Identification 
         Numbers (EINs) and Social Security Numbers (SSNs).
       Section 121 amends sections 1124 and 1124A to authorize the 
     Secretary to require Medicare providers and suppliers to 
     provide social security numbers (SSNs) and employer 
     identification numbers (EINs) for their practices and for any 
     owners or managing employees. The Social Security 
     Administration will be required to verify and correct the 
     SSNs and EINs supplied under this requirement.
     Sec. 122. Fees for Agreements with Medicare Providers and 
         Suppliers.
       Section 122 amends section 1866 to authorize the Secretary 
     to charge fees to individuals and entities for costs relating 
     to their enrollment and reenrollment as Medicare providers or 
     suppliers.
     Sec. 123. Authority to Refuse to Enter into Medicare or 
         Medicaid Agreements with Individuals or Entities 
         Convicted of Felonies.
       Section 123 amends sections 1866(b)(2) and 1842 to 
     authorize the Secretary to refuse to enter into, or to 
     terminate or refuse to renew, a contract or agreement for the 
     provision of health care items or services under Medicare 
     with a person or entity that has been convicted of a felony. 
     This section amends section 1902(a)(23) to give State 
     Medicaid agencies authority to deny provider agreements to 
     persons or entities convicted of a felony.
     Sec. 124. Fees and Requirements for Issuance of Standard 
         Health Care Identifiers.
       Section 124 amends section 1173 to authorize the Secretary 
     to condition the issuance of standard unique health care 
     identifiers to individuals and entities furnishing health 
     care items and services (as provided for by section 262 of 
     HIPAA) on (1) provision of the individual's or entity's 
     SSN or EIN and (2) payment of a fee to cover the 
     Secretary's costs of issuing the identifier.

          TITLE II--PROVIDER REIMBURSEMENT AND RELATED MATTERS

                  Part A--Coverage and Payment Limits

     Sec. 201. No Home Health Benefits Based Solely on Drawing 
         Blood.
       Section 201 amends sections 1814(a)(2)(C) and 1835(a)(2)(A) 
     to eliminate the simple

[[Page E1084]]

     drawing of blood from a homebound individual, without the 
     need for other skilled nursing services, as a qualifying 
     event for Medicare home health benefits.
     Sec. 202. Monthly Certification for Hospice Care after First 
         Six Months.
       Section 202 amends section 1812(a)(4) to require monthly 
     (rather than a one-time) recertification of a hospice 
     Medicare patient as terminally ill after the patient has 
     received hospice services for over 6 months.
     Sec. 203. Payment for Home Hospice Care on Basis of 
         Geographic Location of Home.
       Section 203 amends section 1814(i)(2) to provide for 
     Medicare payment of hospice care furnished in an individual's 
     home based on the geographic location of the home (rather 
     than of the hospice).
     Sec. 204. Limitation on Hospice Care Liability for 
         Individuals Not in Fact Terminally Ill.
       Section 204 amends section 1879(g) to provide that Medicare 
     beneficiaries (or hospices) do not have to pay for hospice 
     care based on an incorrect diagnosis of terminal illness if 
     the beneficiary (or hospice) did not know, and could not 
     reasonably have been expected to know, that the diagnosis was 
     in error. As is the case under current practice for other 
     situations involving waiver of liability, a beneficiary has a 
     favorable presumption of ignorance, while a provider of 
     services does not.
     Sec. 205. Medicare Capital Asset Sales Price Equal to Book 
         Value.
       Section 205 amends section 1861(v)(1)(O) to set the value 
     of a capital asset (as recognized by Medicare) at the time of 
     change of ownership at the book value of the asset. The 
     section also applies this valuation to providers of services 
     other than hospitals and skilled nursing facilities, and 
     eliminates obsolete language referring to a return on 
     equity capital.
     Sec. 206. Repeal of Moratorium on Bad Debt Policy.
       Section 206 repeals section 4008(c) of the Omnibus Budget 
     Reconciliation Act of 1987, which prohibits the Secretary 
     from making changes in the requirements governing Medicare 
     payment for the bad debts of hospitals.

                     Part B--Bankruptcy Provisions

     Sec. 221. Application of Certain Provisions of the Bankruptcy 
         Code.
       Section 221(a) adds a new section 1143, which provides that 
     (1) the automatic stay of actions during the pendency of 
     bankruptcy proceedings does not apply to actions by the 
     Secretary or a State with respect to participation in 
     Medicare or Medicaid, including actions relating to program 
     exclusion, CMPs, recovery of overpayments, and denial of 
     claims; (2) debts owed to the United States or to a State for 
     an overpayment (except for an overpayment to a beneficiary) 
     or a penalty, fine, or assessment under Medicare, Medicaid, 
     or title XI are not dischargeable in bankruptcy; and (3) 
     repayment to the United States or to a State of a Medicare or 
     Medicaid debt, or for penalties, fines and assessments with 
     respect to a debtor's participation in Medicare or Medicaid 
     are considered final and not preferential transfers under the 
     Bankruptcy Code.
       Section 221(b) adds a new section 1894, which provides that 
     (1) bankruptcy courts must use Medicare rules for determining 
     whether claims by a debtor under the Medicare program are 
     payable, and the allowable amounts of such claims; (2) the 
     notice to creditors required under the Bankruptcy Code must 
     be provided, in the case of Medicare debt, to the Secretary 
     rather than a fiscal agent; and (3) a claim for payment under 
     Medicare cannot be considered a matured debt payable to the 
     bankruptcy estate until allowed by the Secretary.

   TITLE III--MEDICARE MENTAL HEALTH PARTIAL HOSPITALIZATION SERVICES

     Sec. 301. Services not to be furnished in residential 
         settings.
       Section 301 amends section 1861(ff)(3)(A) to eliminate 
     payments for partial hospitalization services in an 
     individual's home (including an institutional setting).
     Sec. 302. Additional Requirements for Community Mental Health 
         Centers.
       Section 302 amends section 1861(ff)(3)(B) to require 
     community mental health centers, as a condition of receiving 
     payments for partial hospitalization services, to serve a 
     substantial number of patients who are not eligible for 
     Medicare benefits, and to meet additional conditions the 
     Secretary may specify concerning the health and safety of 
     patients, or for the effective or efficient furnishing of 
     services.
     Sec. 303. Prospective Payment System.
       Section 303 amends sections 1833 and 1866 to authorize the 
     Secretary to develop a prospective payment system for partial 
     hospitalization services. The system is to provide for 
     appropriate payment levels for efficient centers and is to 
     take into account payment levels for similar services 
     furnished by other entities. Beneficiary coinsurance is 
     limited to 20 percent of the new payment basis.

                TITLE IV--MEDICARE RURAL HEALTH CLINICS

     Sec. 401. Per-Visit Payment Limits for Provider-Based 
         Clinics.
       Section 401 amends section 1833(f) to extend the current 
     per visit payment limits applicable to independent rural 
     health clinics to provider-based clinics (other than clinics 
     based in small rural hospitals with less than 50 beds).
     Sec. 402. Assurance of Quality Services.
       Section 402 amends section 1861(aa)(2)(I) to require 
     clinics to have a quality assurance and performance program 
     as specified by the Secretary.
     Sec. 403. Waiver of Certain Staffing Requirements Limited to 
         Clinics in Program.
       Section 403 amends section 1861(aa)(7)(B) to limit the 
     current authority for the Secretary to waive the requirement 
     that a clinic have a mid-level professional available at 
     least 50 percent of the time. The waiver will be applicable 
     only to clinics already providing services under Medicare, 
     and not to entities initially seeking Medicare certification.
     Sec. 404. Refinement of Shortage Area Requirements.
       Section 404 amends section 1861(aa)(2) to refine the 
     requirements concerning the area in which a clinic is 
     located. First, the section requires triennial 
     recertification that requirements are met. Second, the 
     Secretary has to find that there are insufficient numbers of 
     needed health care practitioners in the clinic's area. Third, 
     clinics that no longer meet the shortage area requirements 
     will be permitted to retain their designation only if the 
     Secretary determines that they are essential to the delivery 
     of primary care services that would otherwise be unavailable 
     in the area.
     Sec. 405. Decreased Beneficiary Cost Sharing for RHC 
         Services.
       Section 405 amends sections 1861(aa)(2) and 1833(aa)(3) to 
     lower beneficiary coinsurance for RHC services to 20 percent 
     of the per visit limit.
     Sec. 406. Prospective Payment System for RHC Services.
       Section 406 amends sections 1833 and 1861(aa)(2) to require 
     the Secretary to develop a prospective payment system for 
     rural health clinic services (to go into effect no later than 
     2001). The system may provide for adjustments for excessive 
     utilization, and is to be updated annually. Initially the 
     system is to result in aggregate payments approximately equal 
     to those under current law. Beneficiary coinsurance is 
     limited to 20 percent of the new payment basis.

     

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