[Congressional Record Volume 144, Number 29 (Tuesday, March 17, 1998)]
[Senate]
[Pages S2125-S2127]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. MOYNIHAN:
  S. 1788. A bill to amend titles XI and XVIII of the Social Security 
Act to combat waste, fraud, and abuse in the medicare program; to the 
Committee on Finance.


             the medicare fraud and overpayment act of 1998

  Mr. MOYNIHAN. Mr. President, I ask unanimous consent that the text of 
the bill be printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1788

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

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

       (a) Short Title.--This Act may be cited as the ``Medicare 
     Fraud and Overpayment Act of 1998''.
       (b) Amendments to Social Security Act.--Except as otherwise 
     specifically provided, whenever in this Act an amendment is 
     expressed in terms of an amendment to or repeal of a section 
     or other provision, the reference shall be considered to be 
     made to that section or other provision of the Social 
     Security Act.
       (c) Table of Contents.--The table of contents of this Act 
     is as follows:

Sec. 1. Short title; amendments to Social Security Act; table of 
              contents.
Sec. 2. No mark-up for drugs, biologicals, or parenteral nutrients.
Sec. 3. Mental health partial hospitalization services
Sec. 4. Information requirements.
Sec. 5. Eliminate overpayments for epogen.
Sec. 6. Centers of excellence.
Sec. 7. Repeal of clarification concerning levels of knowledge required 
              for imposition of civil monetary penalties.
Sec. 8. Repeal of expanded exception for risk-sharing contract to anti-
              kickback provisions.
Sec. 9. Limiting the use of automatic stays and discharge in bankruptcy 
              proceedings for provider liability for health care fraud.
Sec. 10. Administrative fees for medicare overpayment collection.

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

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

     SEC. 3. MENTAL HEALTH PARTIAL HOSPITALIZATION SERVICES

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

     SEC. 4. INFORMATION REQUIREMENTS.

       (a) Information from Group Health Plans.--Section 1862(b) 
     is amended by adding at the end the following:
       ``(7) Information from group health plans.--
       ``(A) Provision of information by group health plans.--The 
     administrator of a group health plan subject to the 
     requirements of paragraph (1) shall provide to the Secretary 
     such of the information elements described in subparagraph 
     (C) as the Secretary specifies, and in such manner and at 
     such times as the Secretary may specify (but not more 
     frequently than four times per year), with respect to each 
     individual covered under the plan who is entitled to any 
     benefits under this title.
       ``(B) Provision of information by employers and employee 
     organizations.--An employer (or employee organization) that 
     maintains or participates in a group health plan subject to 
     the requirements of paragraph (1) shall provide to the 
     administrator of the plan such of the information elements 
     required to be provided under subparagraph (A), and in such 
     manner and at such times as the Secretary may specify, at a 
     frequency consistent with that required under subparagraph 
     (A) with respect to each individual described in subparagraph 
     (A) who is covered under the plan by reason of employment 
     with that employer or membership in the organization.
       ``(C) Information elements.--The information elements 
     described in this subparagraph are the following:
       ``(i) Elements concerning the individual.--

       ``(I) The individual's name.
       ``(II) The individual's date of birth.
       ``(III) The individual's sex.
       ``(IV) The individual's social security insurance number.
       ``(V) The number assigned by the Secretary to the 
     individual for claims under this title.
       ``(VI) The family relationship of the individual to the 
     person who has or had current or employment status with the 
     employer.

       ``(ii) Elements concerning the family member with current 
     or former employment status.--

       ``(I) The name of the person in the individual's family who 
     has current or former employment status with the employer.
       ``(II) That person's social security insurance number.
       ``(III) The number or other identifier assigned by the plan 
     to that person.
       ``(IV) The periods of coverage for that person under the 
     plan.
       ``(V) The employment status of that person (current or 
     former) during those periods of coverage.

[[Page S2126]]

       ``(VI) The classes (of that person's family members) 
     covered under the plan.

       ``(iii) Plan elements.--

       ``(I) The items and services covered under the plan.
       ``(II) The name and address to which claims under the plan 
     are to be sent.

       ``(iv) Elements concerning the employer.--

       ``(I) The employer's name.
       ``(II) The employer's address.
       ``(III) The employer identification number of the employer.

       ``(D) Use of identifiers.--The administrator of a group 
     health plan shall utilize a unique identifier for the plan in 
     providing information under subparagraph (A) and in other 
     transactions, as may be specified by the Secretary, related 
     to the provisions of this subsection. The Secretary may 
     provide to the administrator the unique identifier described 
     in the preceding sentence.
       ``(E) Penalty for noncompliance.--Any entity that knowingly 
     and willfully fails to comply with a requirement imposed by 
     the previous subparagraphs shall be subject to a civil money 
     penalty not to exceed $1,000 for each incident of such 
     failure. The provisions of section 1128A (other than 
     subsections (a) and (b)) shall apply to a civil money penalty 
     under the previous sentence in the same manner as those 
     provisions apply to a penalty or proceeding under section 
     1128A(a).''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall take effect 180 days after the date of enactment of 
     this Act.

     SEC. 5. ELIMINATE OVERPAYMENTS FOR EPOGEN.

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

     SEC. 6. CENTERS OF EXCELLENCE.

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


                        ``centers of excellence

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

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

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

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

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

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

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

     SEC. 10. ADMINISTRATIVE FEES FOR MEDICARE OVERPAYMENT 
                   COLLECTION.

       (a) Administrative Fees for Providers of Services Under 
     Part A.--Section 1815(d) (42 U.S.C. 1395g(d)), as amended by 
     section 9(a)(3), is amended by adding at the end the 
     following new paragraph:
       ``(3)(A) Except as provided in subparagraph (B), if the 
     payment of the excess described in paragraph (1) is not made 
     (or effected by offset) within 30 days of the date of the 
     determination, an administrative fee of 1 percent

[[Page S2127]]

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