[Congressional Record Volume 145, Number 86 (Thursday, June 17, 1999)]
[Senate]
[Pages S7219-S7226]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Ms. COLLINS (for herself, Mr. Durbin, and Mr. Grassley):
  S. 1231. A bill to amend title XVIII of the Social Security Act to 
establish additional provisions to combat waste, fraud, and abuse 
within the Medicare Program, and for other purposes; to the Committee 
on Finance.


         medicare fraud prevention and enforcement act of 1999

  Ms. COLLINS. Mr. President, on behalf of myself and my distinguished 
colleagues Senator Durbin and Senator Grassley, I rise today to 
introduce the Medicare Fraud Prevention and Enforcement Act of 1999. 
Both of these Senators have been leaders in the fight against Medicare 
fraud.
  This bill will help solve an almost $13 billion problem. According to 
the HHS Inspector General, waste, fraud, abuse, and other improper 
payments drained about that much from the Medicare Trust Fund in fiscal 
year 1998. Fraud and abuse not only compromise the solvency of the 
Medicare program but also, in some cases, directly affect the quality 
of care delivered to the 38 million older and disabled Americans who 
depend upon this program. Although this legislation will not prevent 
all of the waste, fraud, and abuse that now plagues Medicare, it 
represents an important step toward a solution to a problem that 
threatens the financial integrity of this vital social program.
  Unfortunately, there is no line item in the budget called ``Medicare 
Waste, Fraud and Abuse'' that we can simply cut to eliminate this 
insidious problem. It is a complicated, difficult challenge to plug the 
holes that make Medicare at high risk for fraud and abuse.
  In May 1997, the Permanent Subcommittee on Investigations, which I 
chair, started an extensive investigation of the Medicare program. So 
far, my Subcommittee has held three hearings in an effort to expose 
fraud and abuse within Medicare.
  As the Subcommittee's hearings revealed, we are now seeing a 
dangerous and growing problem with Medicare fraud. Career criminals and 
bogus providers with no background in health care are increasingly 
entering the system with the sole purpose of stealing hard-earned 
taxpayer dollars from the Medicare Trust Fund. Only tough deterrents 
can prevent these unscrupulous providers from entering the Medicare 
system. At the same time, however, we must be careful not to make entry 
into the Medicare program so difficult that the process deters 
legitimate health care providers. We owe it to the American public to 
strike this crucial balance.
  During a Subcommittee hearing earlier last year, we heard testimony 
describing egregious examples of fraud committed by unscrupulous health 
care providers. For example, two physicians who submitted in excess of 
$690,000 in fraudulent Medicare claims listed nothing more than a 
Brooklyn laundromat as their office location. We were also told that 
over $6 million in Medicare funds were sent to durable medical 
equipment companies that provided no services; one of these companies 
even listed a fictitious address that would have placed the firm in the 
middle of a runway at the Miami International Airport.
  While the number of unscrupulous providers in the Medicare program is 
very small relative to the number of honest providers, these criminals 
nevertheless are able to steal millions of dollars from Medicare, 
wreaking financial havoc on the program. This fraud contributes to the 
tremendous increase in health care expenditures and adversely affects 
the quality of health care given to our nation's elderly and disabled.
  In response to the serious problems identified through my 
Subcommittee's investigation, Senator Durbin, Senator Grassley, and I 
are introducing legislation designed to prevent waste, fraud, and abuse 
by strengthening the Medicare enrollment process, expanding certain 
standards of participation, and reducing erroneous payments. Among 
other things, this legislation gives additional enforcement tools to 
the federal law enforcement agencies pursuing health care criminals.
  One of the most important steps this bill takes is to prevent scam 
artists and criminals from securing the provider numbers that permit 
them to gain access to the Medicare system. Specifically, this bill 
requires background investigations to be conducted on all new providers 
to prevent career criminals from getting involved with Medicare in the 
first place. In addition, this bill requires site inspections of new 
durable medical equipment suppliers and community mental health

[[Page S7220]]

centers prior to their being given a provider number. This will help 
close the system to those who apply for a provider number from a bogus 
or nonexistent location. Together, these provisions are designed to 
make it more difficult for unscrupulous individuals to obtain a 
Medicare provider number and begin submitting fraudulent claims.
  This legislation also requires community mental health centers to 
meet applicable certification or licensing requirements in their state 
before they are issued a provider number, and requires the Secretary of 
Health and Human Services to establish additional standards for such 
centers to participate in the Medicare system.

  In September of last year, Health Care Financing Administration 
Administrator Nancy-Ann DeParle acknowledged the extensive fraud 
associated with community mental health centers as she announced a 10-
point plan to curb abuses within this program. I applaud Administrator 
DeParle for taking a step in the right direction, but we can go 
further.
  Our legislation requires each agency that bills Medicare on behalf of 
physicians or provider groups to register with HCFA and receive a 
unique registration number. Many billing companies receive a percentage 
of the claims they submit that are paid by Medicare. Unethical 
companies, therefore, have a financial incentive to inflate the cost or 
number of claims submitted. Because billing companies do not have a 
Medicare provider number, however, it is difficult for HCFA to sanction 
or exclude them from billing Medicare. Hence, there is little to deter 
unscrupulous billing companies from submitting inflated claims. This 
bill makes all companies accountable for their billings through a 
uniform registration system.
  This legislation also provides that Medicare contractors should be 
held financially accountable for any amounts they improperly pay to 
excluded providers 60 or more days after being notified of the 
exclusion. There have been numerous instances in which a Medicare 
contractor has continued to pay a provider after HCFA had excluded the 
provider from participating in the program. As a result, excluded 
providers have sometimes continued to receive unauthorized payments due 
to the negligence of contractors.
  Why should American taxpayers swallow the cost of improper payments 
when a contractor has been specifically told not to pay a particular 
provider and yet continues to do so? This bill would help deter such 
negligence. I realize, however, that this is a complex issue and that 
this accountability provision may require further refinement.
  Under our legislation, providers also would be required to refund 
overpayments even if they filed for bankruptcy, if the overpayments 
were incurred through fraudulent means. This money would then be 
deposited into the Medicare Trust Fund. Some bad actors have used 
bankruptcy as a shield against repaying Medicare. Essentially, 
unscrupulous individuals steal literally hundreds of thousands of 
dollars from the Medicare program, hide or spend it quickly, and then 
file for bankruptcy protection when they are caught, leaving the 
Medicare Trust Fund in debt. With this bill, we intend to close this 
loophole.
  Another provision of this legislation aims to halt trafficking in 
provider numbers. The bill makes it a felony to knowingly, purchase, 
sell, or distribute Medicare beneficiary or provider numbers with the 
intent to defraud. Our investigation revealed that there is a growing 
problem with unscrupulous providers using ``recruiters'' to 
fraudulently obtain Medicare beneficiary identification numbers, 
thereafter using these numbers to bill for services never delivered. 
This problem must be stopped.
  Our legislation will also grant much needed statutory law enforcement 
authority to qualified special agents of the Department of Health and 
Human Service's Office of Inspector General. Even though one of their 
major responsibilities is to enforce federal criminal laws, these 
special agents have no statutory authority to carry firearms, make 
arrests, or execute search warrants. The office now operates under a 
temporary Memorandum of Understanding with the Department of Justice.

  This lack of full law enforcement authority jeopardizes the safety of 
HHS-OIG special agents and witnesses under their protection. As my 
Subcommittee's hearings have demonstrated, more and more career 
criminals are becoming involved in health care fraud; this increases 
the potential danger to the agents charged with investigating these 
crimes. It is time for Congress to spell out the law enforcement 
authorities of the HHS Office of Inspector General in a more permanent 
way.
  I am very pleased that Senator Grassley, who has been a leader in the 
fight against Medicare fraud, waste, and abuse, has agreed to be an 
original cosponsor of our legislation. Senator Durbin and I have 
incorporated into our legislation a valuable proposal that Senator 
Grassley sponsored, namely requiring the use of Universal Product 
Numbers (``UPNs'') on claims forms for reimbursement under the Medicare 
program. Senator Grassley, and a bi-partisan coalition, introduced this 
concept as a freestanding bill, S.256, which I cosponsored earlier this 
year.
  These provisions of our legislation would require that a UPN that 
uniquely identifies the item would be affixed by the manufacturer to 
medical equipment and supplies. The UPNs would be based on 
commercially-accepted identification standards, however, customized 
equipment would not be required to comply with this requirement. 
Senator Durbin and I believe that this proposal is complementary to our 
package of reforms and strengthens the legislation we are introducing 
today.
  Mr. President, the bill we are introducing today represents our 
concrete commitment to improve the Medicare program by providing 
additional tools that are needed to combat the extensive waste, fraud, 
and abuse that plague our nation's most important health care program. 
The unscrupulous individuals who commit Medicare fraud drive legitimate 
providers out of business, cost taxpayers vast sums of money, deliver 
substandard services and equipment, and endanger our elderly by not 
providing needed services.
  We must use common sense and cost-effective solutions to curtail the 
spreading infection of fraud that threatens the vitality of Medicare. 
Yet, we must do more. We have a serious responsibility to older 
Americans across the country and to the nation's taxpayers to protect 
the Medicare program. We urge our colleagues to join us in this bi-
partisan effort to strengthen and improve the Medicare program.
  Thank you, Mr. President, and I ask unanimous consent that the bill, 
a section-by-section analysis of the bill, and four letters endorsing 
the legislation be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                S. 1231

       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 ``Medicare 
     Fraud Prevention and Enforcement Act of 1999''.
       (b) Table of Contents.--The table of contents for this Act 
     is as follows:

Sec. 1. Short title; table of contents.
Sec. 2. Site inspections and background checks.
Sec. 3. Registration of billing agencies.
Sec. 4. Expanded access to the health integrity protection database 
              (HIPDB).
Sec. 5. Liability of medicare carriers and fiscal intermediaries for 
              claims submitted by excluded providers.
Sec. 6. Community mental health centers.
Sec. 7. Limiting the use of automatic stays and discharge in bankruptcy 
              proceedings for provider liability for health care fraud.
Sec. 8. Illegal distribution of a medicare or medicaid beneficiary 
              identification or provider number.
Sec. 9. Treatment of certain Social Security Act crimes as Federal 
              health care offenses.
Sec. 10. Authority of Office of Inspector General of the Department of 
              Health and Human Services.
Sec. 11. Universal Product Numbers on Claims Forms for Reimbursement 
              Under the Medicare program.

     SEC. 2. SITE INSPECTIONS AND BACKGROUND CHECKS.

       (a) Site Inspections for DME Suppliers, Community Mental 
     Health Centers, and Other Provider Groups.--Title XVIII of 
     the Social Security Act (42 U.S.C. 1395 et seq.) is amended 
     by adding at the end the following:

[[Page S7221]]

``SITE INSPECTIONS FOR DME SUPPLIERS, COMMUNITY MENTAL HEALTH CENTERS, 
                       AND OTHER PROVIDER GROUPS

       ``Sec. 1897. (a) Site Inspections.--
       ``(1) In general.--The Secretary shall conduct a site 
     inspection for each applicable provider (as defined in 
     paragraph (2)) that applies for a provider number in order to 
     provide items or services under this title. Such site 
     inspection shall be in addition to any other site inspection 
     that the Secretary would otherwise conduct with regard to an 
     applicable provider.
       ``(2) Applicable provider defined.--
       ``(A) In general.--Except as provided in subparagraph (B), 
     in this section, the term `applicable provider' means--
       ``(i) a supplier of durable medical equipment (including 
     items described in section 1834(a)(13));
       ``(ii) a supplier of prosthetics, orthotics, or supplies 
     (including items described in paragraphs (8) and (9) of 
     section 1861(s));
       ``(iii) a community mental health center; or
       ``(iv) any other provider group, as determined by the 
     Secretary.
       ``(B) Exception.--In this section, the term `applicable 
     provider' does not include--
       ``(i) a physician that provides durable medical equipment 
     (as described in subparagraph (A)(i)) or prosthetics, 
     orthotics, or supplies (as described in subparagraph (A)(ii)) 
     to an individual as incident to an office visit by such 
     individual; or
       ``(ii) a hospital that provides durable medical equipment 
     (as described in subparagraph (A)(i)) or prosthetics, 
     orthotics, or supplies (as described in subparagraph (A)(ii)) 
     to an individual as incident to an emergency room visit by 
     such individual.
       ``(b) Standards and Requirements.--In conducting the site 
     inspection pursuant to subsection (a), the Secretary shall 
     ensure that the site being inspected is in full compliance 
     with all the conditions and standards of participation and 
     requirements for obtaining medicare billing privileges under 
     this title.
       ``(c) Time.--The Secretary shall conduct the site 
     inspection for an applicable provider prior to the issuance 
     of a provider number to such provider.
       ``(d) Timely Review.--The Secretary shall provide for 
     procedures to ensure that the site inspection required under 
     this section does not unreasonably delay the issuance of a 
     provider number to an applicable provider.''.
       (b) Background Checks.--Title XVIII of the Social Security 
     Act (42 U.S.C. 1395 et seq.) (as amended by subsection (a)) 
     is amended by adding at the end the following:


                          ``BACKGROUND CHECKS

       ``Sec. 1898. (a) Background Check Required.--Except as 
     provided in subsection (b), the Secretary shall conduct a 
     background check on any individual or entity that applies to 
     the Secretary for a provider number for the purpose of 
     furnishing any item or service under this title. In 
     performing the background check, the Secretary shall--
       ``(1) conduct the background check before issuing a 
     provider number to an individual or entity;
       ``(2) include a search of criminal records in the 
     background check; and
       ``(3) provide for procedures that ensure the background 
     check does not unreasonably delay the issuance of a provider 
     number to an eligible individual or entity.
       ``(b) Use of State Licensing Procedure.--The Secretary may 
     use the results of a State licensing procedure as a 
     background check under subsection (a) if the State licensing 
     procedure meets the requirements of subsection (a).
       ``(c) Attorney General Required To Provide Information.--
       ``(1) In general.--Upon request of the Secretary, the 
     Attorney General shall provide the criminal background check 
     information referred to in subsection (a)(2) to the 
     Secretary.
       ``(2) Restriction on use of disclosed information.--The 
     Secretary may only use the information disclosed under 
     subsection (a) for the purpose of carrying out the 
     Secretary's responsibilities under this title.
       ``(d) Refusal To Issue Provider Number.--
       ``(1) Authority.--In addition to any other remedy available 
     to the Secretary, the Secretary may refuse to issue a 
     provider number to an individual or entity if the Secretary 
     determines, after a background check conducted under this 
     section, that such individual or entity has a history of acts 
     that indicate issuance of a provider number to such 
     individual or entity would be detrimental to the best 
     interests of the program or program beneficiaries. Such acts 
     may include, but are not limited to--
       ``(A) any bankruptcy;
       ``(B) any act resulting in a civil judgment against such 
     individual or entity; or
       ``(C) any felony conviction under Federal or State law.
       ``(2) Reporting of refusal to issue provider number to the 
     health integrity protection database (hipdb).--A 
     determination to refuse to issue a provider number to an 
     individual or entity as a result of a background check 
     conducted under this section shall be reported to the health 
     integrity protection database established under section 1128E 
     in accordance with the procedures for reporting final adverse 
     actions taken against a health care provider, supplier, or 
     practitioner under that section.''.
       (c) Regulations; Effective Date.--
       (1) Regulations.--Not later than 1 year after the date of 
     enactment of this Act, the Secretary of Health and Human 
     Services shall promulgate such regulations as are necessary 
     to implement the amendments made by subsections (a) and (b).
       (2) Effective date.--The amendments made by subsections (a) 
     and (b) shall apply to applications received by the Secretary 
     of Health and Human Services on or after January 1, 2000.
       (d) Use of Medicare Integrity Program Funds.--The Secretary 
     of Health and Human Services may use funds appropriated or 
     transferred for purposes of carrying out the medicare 
     integrity program established under section 1893 of the 
     Social Security Act (42 U.S.C. 1395ddd) to carry out the 
     provisions of sections 1897 and 1898 of that Act (as added by 
     subsections (a) and (b)).

     SEC. 3. REGISTRATION OF BILLING AGENCIES.

       (a) Registration of Billing Agencies and Individuals.--
     Title XVIII of the Social Security Act (42 U.S.C. 1395 et 
     seq.) (as amended by section 2(b)) is amended by adding at 
     the end the following:


           ``REGISTRATION OF BILLING AGENCIES AND INDIVIDUALS

       ``Sec. 1899. (a) Registration.--The Secretary shall 
     establish procedures for the registration of all applicable 
     persons.
       ``(b) Required Application.--Each applicable person shall 
     submit a registration application to the Secretary at such 
     time, in such manner, and accompanied by such information as 
     the Secretary may require.
       ``(c) Identification Number.--If the Secretary approves an 
     application submitted under subsection (b), the Secretary 
     shall assign a unique identification number to the applicable 
     person.
       ``(d) Requirement.--Every claim for reimbursement under 
     this title that is compiled and submitted by an applicable 
     person shall contain the identification number that is 
     assigned to the applicable person pursuant to subsection (c).
       ``(e) Timely Review.--The Secretary shall provide for 
     procedures that ensure the timely consideration and 
     determination regarding approval of applications under this 
     section.
       ``(f) Definition of Applicable Person.--In this section, 
     the term `applicable person' means an individual or an entity 
     that compiles and submits claims for reimbursement under this 
     title to the Secretary on behalf of any individual or 
     entity.''.
       (b) Permissive Exclusion.--Section 1128(b) of the Social 
     Security Act (42 U.S.C. 1320a-7(b)) is amended by adding at 
     the end the following:
       ``(16) Fraud by applicable person.--An applicable person 
     (as defined in section 1899(f)) that the Secretary determines 
     knowingly submitted or caused to be submitted a claim for 
     reimbursement under title XVIII that the applicable person 
     knows or should know is false or fraudulent.''.
       (c) Regulations; Effective Date.--
       (1) Regulations.--Not later than 1 year after the date of 
     enactment of this Act, the Secretary of Health and Human 
     Services shall promulgate such regulations as are necessary 
     to implement the amendment made by subsections (a) and (b).
       (2) Effective date.--The amendment made by subsections (a) 
     and (b) shall take effect on January 1, 2000.

     SEC. 4. EXPANDED ACCESS TO THE HEALTH INTEGRITY PROTECTION 
                   DATABASE (HIPDB).

       (a) In General.--Section 1128E(d)(1) of the Social Security 
     Act (42 U.S.C. 1320a-7e(d)(1)) is amended to read as follows:
       ``(1) Availability.--The information in the database 
     maintained under this section shall be available to--
       ``(A) Federal and State government agencies and health 
     plans, and any health care provider, supplier, or 
     practitioner entering an employment or contractual 
     relationship with an individual or entity who could 
     potentially be the subject of a final adverse action, where 
     the contract involves the furnishing of items or services 
     reimbursed by 1 or more Federal health care programs 
     (regardless of whether the individual or entity is paid by 
     the programs directly, or whether the items or services are 
     reimbursed directly or indirectly through the claims of a 
     direct provider); and
       ``(B) utilization and quality control peer review 
     organizations and accreditation entities as defined by the 
     Secretary, including but not limited to organizations 
     described in part B of title XI and in section 
     1154(a)(4)(C).''.
       (b) Criminal Penalty for Misuse of Information.--Section 
     1128B(b) of the Social Security Act (42 U.S.C. 1320a-7b(b)) 
     is amended by adding at the end the following:
       ``(4) Whoever knowingly uses information maintained in the 
     health integrity protection database maintained in accordance 
     with section 1128E for a purpose other than a purpose 
     authorized under that section shall be imprisoned for not 
     more than 3 years or fined under title 18, United States 
     Code, or both.''.
       (c) Effective Date.--The amendments made by this section 
     shall take effect on the date of enactment of this Act.

     SEC. 5. LIABILITY OF MEDICARE CARRIERS AND FISCAL 
                   INTERMEDIARIES FOR CLAIMS SUBMITTED BY EXCLUDED 
                   PROVIDERS.

       (a) Reimbursement to the Secretary for Amounts Paid to 
     Excluded Providers.--
       (1) Requirements for fiscal intermediaries.--

[[Page S7222]]

       (A) In general.--Section 1816 of the Social Security Act 
     (42 U.S.C. 1395h) is amended by adding at the end the 
     following:
       ``(m) An agreement with an agency or organization under 
     this section shall require that such agency or organization 
     reimburse the Secretary for any amounts paid by the agency or 
     organization for a service under this title which is 
     furnished by an individual or entity during any period for 
     which the individual or entity is excluded, pursuant to 
     section 1128, 1128A, or 1156, from participation in the 
     health care program under this title if the amounts are paid 
     after the 60-day period beginning on the date the Secretary 
     provides notice of the exclusion to the agency or 
     organization, unless the payment was made as a result of 
     incorrect information provided by the Secretary or the 
     individual or entity excluded from participation has 
     concealed or altered their identity.''.
       (B) Conforming amendment.--Section 1816(i) of the Social 
     Security Act (42 U.S.C. 1395h(i)) is amended by adding at the 
     end the following:
       ``(4) Nothing in this subsection shall be construed to 
     prohibit reimbursement by an agency or organization pursuant 
     to subsection (m).''.
       (2) Requirements for carriers.--Section 1842(b)(3) of the 
     Social Security Act (42 U.S.C. 1395u(b)(3)) is amended--
       (A) by striking ``and'' at the end of subparagraph (I); and
       (B) by inserting after subparagraph (I) the following:
       ``(J) will reimburse the Secretary for any amounts paid by 
     the carrier for an item or service under this part which is 
     furnished by an individual or entity during any period for 
     which the individual or entity is excluded, pursuant to 
     section 1128, 1128A, or 1156, from participation in the 
     health care program under this title if the amounts are paid 
     after the 60-day period beginning on the date the Secretary 
     provides notice of the exclusion to the carrier, unless the 
     payment was made as a result of incorrect information 
     provided by the Secretary or the individual or entity 
     excluded from participation has concealed or altered their 
     identity; and''.
       (b) Conforming Repeal of Mandatory Payment Rule.--Section 
     1862(e) of the Social Security Act (42 U.S.C. 1395y(e)) is 
     amended--
       (1) in paragraph (1)(B), by striking ``and when the 
     person'' and all that follows through ``person)''; and
       (2) by amending paragraph (2) to read as follows:
       ``(2) No individual or entity may bill (or collect any 
     amount from) any individual for any item or service for which 
     payment is denied under paragraph (1). No individual is 
     liable for payment of any amounts billed for such an item or 
     service in violation of the preceding sentence.''.
       (c) Effective Date.--
       (1) In general.--The amendments made by this section shall 
     apply to claims for payment submitted on or after the date of 
     enactment of this Act.
       (2) Contract modification.--The Secretary of Health and 
     Human Services shall take such steps as may be necessary to 
     modify contracts and agreements entered into, renewed, or 
     extended prior to the date of enactment of this Act to 
     conform such contracts or agreements to the provisions of 
     this section.

     SEC. 6. COMMUNITY MENTAL HEALTH CENTERS.

       (a) In General.--Section 1861(ff)(3)(B) of the Social 
     Security Act (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 community mental health services 
     specified in paragraph (1) of section 1913(c) of the Public 
     Health Service Act;
       ``(ii) meets applicable certification or licensing 
     requirements for community mental health centers in the State 
     in which it is located;
       ``(iii) provides a significant share of its services to 
     individuals who are not eligible for benefits under this 
     title; and
       ``(iv) meets such additional standards or requirements for 
     obtaining medicare billing privileges as the Secretary may 
     specify to ensure--
       ``(I) the health and safety of beneficiaries receiving such 
     services; or
       ``(II) the furnishing of such services in an effective and 
     efficient manner.''.
       (b) Restriction.--Section 1861(ff)(3)(A) of the Social 
     Security Act (42 U.S.C. 1395x(ff)(3)(A)) is amended by 
     inserting ``other than in an individual's home or in an 
     inpatient or residential setting'' before the period.
       (c) Effective Date.--The amendments made by this section 
     shall apply to items and services furnished after the sixth 
     month that begins after the date of enactment of this Act.

     SEC. 7. LIMITING THE DISCHARGE OF DEBTS IN BANKRUPTCY 
                   PROCEEDINGS IN CASES WHERE A HEALTH CARE 
                   PROVIDER OR A SUPPLIER ENGAGES IN FRAUDULENT 
                   ACTIVITY.

       (a) In General.--
       (1) Civil monetary penalties.--Section 1128A(a) of the 
     Social Security Act (42 U.S.C. 1320a-7a(a)) is amended by 
     adding at the end the following: ``Notwithstanding any other 
     provision of law, amounts made payable under this section are 
     not dischargeable under section 727, 1141, 1228(a) or (b), or 
     1328 of title 11, United States Code, or any other provision 
     of such title.''.
       (2) Recovery of overpayment to providers of services under 
     part a of medicare.--Section 1815(d) of the Social Security 
     Act (42 U.S.C. 1395g(d)) is amended--
       (A) by inserting ``(1)'' after ``(d)''; and
       (B) by adding at the end the following:
       ``(2) Notwithstanding any other provision of law, amounts 
     due to the Secretary under this section are not dischargeable 
     under section 727, 1141, 1228(a) or (b), or 1328 of title 11, 
     United States Code, or any other provision of such title if 
     the overpayment was the result of fraudulent activity, as may 
     be defined by the Secretary.''.
       (3) Recovery of overpayment of benefits under part b of 
     medicare.--Section 1833(j) of the Social Security Act (42 
     U.S.C. 1395l(j)) is amended--
       (A) by inserting ``(1)'' after ``(j)''; and
       (B) by adding at the end the following:
       ``(2) Notwithstanding any other provision of law, amounts 
     due to the Secretary under this section are not dischargeable 
     under section 727, 1141, 1228(a) or (b), or 1328 of title 11, 
     United States Code, or any other provision of such title if 
     the overpayment was the result of fraudulent activity, as may 
     be defined by the Secretary.''.
       (4) Collection of past-due obligations arising from breach 
     of scholarship and loan contract.--Section 1892(a) of the 
     Social Security Act (42 U.S.C. 1395ccc(a)) is amended by 
     adding at the end the following:
       ``(5) Notwithstanding any other provision of law, amounts 
     due to the Secretary under this section are not dischargeable 
     under section 727, 1141, 1228(a) or (b), or 1328 of title 11, 
     United States Code, or any other provision of such title.''.
       (b) Effective Date.--The amendments made by subsection (a) 
     shall apply to bankruptcy petitions filed after the date of 
     enactment of this Act.

     SEC. 8. ILLEGAL DISTRIBUTION OF A MEDICARE OR MEDICAID 
                   BENEFICIARY IDENTIFICATION OR PROVIDER NUMBER.

       Section 1128B(b) of the Social Security Act (42 U.S.C. 
     1320a-7b(b)), as amended by section 4(b), is amended by 
     adding at the end the following:
       ``(5) Whoever knowingly, intentionally, and with the intent 
     to defraud purchases, sells or distributes, or arranges for 
     the purchase, sale, or distribution of 2 or more medicare or 
     medicaid beneficiary identification numbers or provider 
     numbers shall be imprisoned for not more than 3 years or 
     fined under title 18, United States Code (or, if greater, an 
     amount equal to the monetary loss to the Federal and any 
     State government as a result of such acts), or both.''.

     SEC. 9. TREATMENT OF CERTAIN SOCIAL SECURITY ACT CRIMES AS 
                   FEDERAL HEALTH CARE OFFENSES.

       (a) In General.--Section 24(a) of title 18, United States 
     Code, is amended--
       (1) by striking the period at the end of paragraph (2) and 
     inserting ``; or''; and
       (2) by adding at the end the following:
       ``(3) section 1128B of the Social Security Act (42 U.S.C. 
     1320a-7b).''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall take effect on the date of enactment of this Act and 
     apply to acts committed on or after the date of enactment of 
     this Act.

     SEC. 10. AUTHORITY OF OFFICE OF INSPECTOR GENERAL OF THE 
                   DEPARTMENT OF HEALTH AND HUMAN SERVICES.

       (a) Authority.--Notwithstanding any other provision of law, 
     upon designation by the Inspector General of the Department 
     of Health and Human Services, any criminal investigator of 
     the Office of Inspector General of such department may, in 
     accordance with guidelines issued by the Secretary of Health 
     and Human Services and approved by the Attorney General, 
     while engaged in activities within the lawful jurisdiction of 
     such Inspector General--
       (1) obtain and execute any warrant or other process issued 
     under the authority of the United States;
       (2) make an arrest without a warrant for--
       (A) any offense against the United States committed in the 
     presence of such investigator; or
       (B) any felony offense against the United States, if such 
     investigator has reasonable cause to believe that the person 
     to be arrested has committed or is committing that felony 
     offense; and
       (3) exercise any other authority necessary to carry out the 
     authority described in paragraphs (1) and (2).
       (b) Funds.--The Office of Inspector General of the 
     Department of Health and Human Services may receive and 
     expend funds that represent the equitable share from the 
     forfeiture of property in investigations in which the Office 
     of Inspector General participated, and that are transferred 
     to the Office of Inspector General by the Department of 
     Justice, the Department of the Treasury, or the United States 
     Postal Service. Such equitable sharing funds shall be 
     deposited in a separate account and shall remain available 
     until expended.

     SEC.   . UNIVERSAL PRODUCT NUMBERS ON CLAIMS FORMS FOR 
                   REIMBURSEMENT UNDER THE MEDICARE PROGRAM.

       (A) (a) Accommodation of UPNS on Medicare Claims Forms.--
     Not later than February 1, 2001, all claims forms developed 
     or used by the Secretary of Health and Human Services for 
     reimbursement under the medicare program under title XVIII of 
     the Social Security Act (42 U.S.C. 1395 et seq.) shall 
     accommodate the use of universal product numbers for a UPN 
     covered item.
       (b) Requirement for Payment of Claims.--Title XVIII of the 
     Social Security Act (42 U.S.C. 1395 et seq.) is amended by 
     adding at the end the following:

[[Page S7223]]

                   ``use of universal product numbers

       ``Sec. 1897. (a) In General.--No payment shall be made 
     under this title for any claim for reimbursement for any UPN 
     covered item unless the claim contains the universal product 
     number of the UPN covered item.
       ``(b) Definitions.--In this section:
       ``(1) UPN covered item.--
       ``(A) In general.--Except as provided in subparagraph (B), 
     the term `UPN covered item' means--
       ``(i) a covered item as that term is defined in section 
     1834(a)(13);
       ``(ii) an item described in paragraph (8) and (9) of 
     section 1861(s);
       ``(iii) an item described in paragraph (5) of section 1861 
     (s); and
       ``(iv) any other item for which payment is made under this 
     title that the Secretary determines to be appropriate.
       ``(B) Exclusion.--The term `UPN covered item' does not 
     include a customized item for which payment is made under 
     this title.
       ``(2) Universal product number.--The term `universal 
     product number' means a number that is--
       ``(A) affixed by the manufacturer to each individual UPN 
     covered item that uniquely identifies the item at each 
     packaging level; and
       ``(B) based on commercially acceptable identification 
     standards such as, but not limited to, standards established 
     by the Uniform Code Council-International Article Numbering 
     System or the Health Industry Business Communication 
     Council.''
       (c) Development and Implementation of Procedures.--
       (1) Information included in UPN.--The Secretary of Health 
     and Human Services, in consultation with manufacturers and 
     entities with appropriate expertise, shall determine the 
     relevant descriptive information appropriate for inclusion in 
     a universal product number for a UPN covered item.
       (2) Review of procedure.--From the information obtained by 
     the use of universal product numbers on claims for 
     reimbursement under the medicare program, the Secretary of 
     Health and Human Services, in consultation with interested 
     parties, shall periodically review the UPN covered items 
     billed under the Health Care Financing Administration Common 
     Procedure Coding System and adjust such coding system to 
     ensure that functionally equivalent UPN covered items are 
     billed and reimbursed under the same codes.
       (d) Effective Date.--The amendment made by subsection (b) 
     shall apply to claims for reimbursement submitted on and 
     after February 1, 2002.
       (B) Study and Reports to Congress.
       (a) Study.--The Secretary of Health and Human Services 
     shall conduct a study on the results of the implementation of 
     the provisions in subsections (a) and (c) of section 2 and 
     the amendment to the Social Security Act in subsection (b) of 
     that section.
       (b) Reports.--
       (1) Progress report.--Not later than 6 months after the 
     date of enactment of this Act, the Secretary of Health and 
     Human Services shall submit a report to Congress that 
     contains a detailed description of the progress of the 
     matters studied pursuant to subsection (a).
       (2) Implementation.--Not later than 18 months after the 
     date of enactment of this Act, and annually thereafter for 3 
     years, the Secretary of Health and Human Services shall 
     submit a report to Congress that contains a detailed 
     description of the results of the study conducted pursuant to 
     subsection (a), together with the Secretary's recommendations 
     regarding the use of universal product numbers and the use of 
     data obtained from the use of such numbers.
       (C) Defintions.
       In this Act:
       (1) UPN covered item.--The term `UPN covered item' has the 
     meaning given such term in section 1897(b)(1) of the Social 
     Security Act (as added by section 2(b)).
       (2) Universal product number.--The term `universal product 
     number' has the meaning given such term in section 1897(b)(2) 
     of the Social Security Act (as added by section 2(b)).
       (D) Authorization of Appropriations.
       The are authorized to be appropriated such sums as may be 
     necessary for the purpose of carrying out the provisions in 
     subsections (a) and (c) of section 2, section 3, and section 
     1897 of the Social Security Act (as added by section 2(b)).
                                  ____


   Medicare Fraud Prevention and Enforcement Act of 1999--Section-by-
                            Section Summary

       Sec. 1: Short Title: ``Medicare Fraud Prevention and 
     Enforcement Act of 1999''.
       Sec. 2: Site Inspections and Background Checks
       Requires the Health Care Financing Administration (HCFA) to 
     conduct a site inspection prior to issuing a provider number 
     for all new providers of durable medical equipment, 
     prosthetics, orthotics or supplies, community mental health 
     services, or any other provider group deemed necessary by the 
     Secretary.
       Requires site inspections to include, at a minimum, 
     verification of compliance with all established standards of 
     enrollment relating to a particular provider type.
       Requires background checks on all new providers prior to 
     issuing a provider number. the background check shall include 
     a criminal history background check. Grants the Secretary the 
     authority to substitute state licensing procedures for 
     background checks if it is determined that a State's 
     procedures have the same substantive requirements.
       Requires the Attorney General to provide criminal 
     background information to the Secretary regarding individuals 
     applying for a Medicare provider number. The Secretary may 
     only use this information for determining eligibility for 
     participation in the Medicare program.
       The Secretary may decline to issue a provider number if the 
     Secretary determines, after a background check, that the 
     applicant has a history of acts that the Secretary determines 
     would be detrimental to the best interests of the program or 
     its beneficiaries.
       The Secretary shall report all decisions to refuse a 
     provider number as a result of a background check to the 
     Health Integrity Protection Database.
       HCFA may use Medicare Integrity Program funds to cover the 
     costs of conducting the site visits and background 
     investigations.
       A physician or hospital that provides durable medical 
     equipment, prosthetics, orthotics or supplies incident to an 
     office visit or emergency room visit is exempt from the site 
     visit requirement.
       Explanation: Currently, site inspections and background 
     checks are random and typically only occur in certain areas 
     of the country and on certain types of providers. Mandating 
     site inspections and background checks would significantly 
     enhance the ability of HCFA to keep ``bad apples'' from 
     entering the program. Site inspections must do more than 
     simply verify that a business actually exists at a particular 
     location; they must ensure that the entity meets or exceeds 
     the established participation standards related to their 
     speciality.
       Sec. 3: Registration of Billing Agencies
       Requires agencies that bill Medicare on behalf of 
     physicians or provider groups to register with HCFA.
       Requires HCFA to assign a unique registration number to 
     each billing agency.
       Requires that every claim submitted by a billing agency to 
     Medicare for reimbursement include the agency's unique 
     registration number.
       Allows the Secretary to exclude a billing agency from 
     participating in the Medicare program if it knowingly submits 
     a false or fraudulent claim.
       Explanation: This provision would require HCFA to assign a 
     unique identifying number (similar to a provider number) to 
     each company which would then allow Medicare to sanction or 
     exclude these companies (and principal owners) from billing 
     Medicare. Federal law enforcement agencies have received 
     several allegations involving cases in which billing 
     companies that bill Medicare on behalf of providers submitted 
     fraudulent (upcoded/unbundled/fictitious) claims for payment. 
     Many billing companies receive a percentage of all claims 
     paid by Medicare; therefore, these companies have a financial 
     incentive to inflate the cost or number of claims submitted. 
     This occurs both with and without the knowledge of the 
     provider. Because these billing companies do not have a 
     Medicare provider number (they bill using the particular 
     physician's provider number), HCFA is currently unable to 
     sanction or exclude the companies from billing Medicare.
       Sec. 4: Expand Access to the Health Integrity Protection 
     Database (HIPDB)
       Allows any entity that bills Medicare to query the HIPDB 
     before hiring or initiating a contractual relationship with a 
     health care provider.
       HIPDB is intended to provide a ``one stop shop'' data base 
     for public information on the imposition of health care 
     sanctions. Includes information such as health care-related 
     criminal convictions, civil judgments, exclusions, and 
     adverse license or certification actions.
       Abuse of the information in the HIPDB is a federal felony. 
     Whoever knowingly uses information maintained in the database 
     for unauthorized purposes shall be imprisoned for not more 
     than 3 years or fined under title 18, United States Code, 
     or both.
       Currently, the HIPDB is only available to government 
     investigators and health care plans.
       Explanation: Expanding access to HIPDB for those entities 
     that bill Medicare will allow for better tracking and 
     accountability of individuals who have received an adverse 
     action; therefore, allowing the employer to make a more 
     informed hiring decision.
       Sec. 5. Contractor Payments to Excluded Providers
       Requires a Medicare contractor to reimburse the Secretary 
     for any amounts paid by HCFA for claims submitted by excluded 
     providers 60 days after the Secretary has provided notice of 
     the exclusion, unless the payment was made as a result of 
     incorrect information provided by the Secretary or the 
     individual or entity excluded from participation has 
     concealed or altered their identity.
       Prevents an excluded provider from directly billing a 
     Medicare beneficiary.
       Explanation: There have been numerous instances in which 
     Medicare contractors have continued to pay providers after 
     HCFA had excluded the provider from participating in the 
     program. As a result, excluded individuals and entities have 
     continued to receive Medicare payments due to the negligence 
     of contractor personnel. Instead of draining the Medicare 
     Trust Fund, Medicare contractors should be held financially 
     accountable for any amounts they improperly pay to excluded 
     providers 60 days after they have been notified of the 
     exclusion unless the payment was made as a result of 
     incorrect information by HHS or the excluded provider 
     intentionally concealed or altered its identity so

[[Page S7224]]

     that the contractor could not have known the provider was 
     excluded. By making Medicare contractors liable for such 
     erroneous payments, they will be encouraged to exert greater 
     diligence when reviewing new provider applications and paying 
     claims.
       Sec. 6. Community Mental Health Centers (CMHC)
       CMHCs must meet applicable certification or licensing 
     requirements of the state in which they are located before 
     they are issued a provider number.
       CMHCs cannot serve only Medicare patients.
       CMHCs must meet additional standards of participation to be 
     established by the Secretary before they are issued a 
     provider number.
       Explanation: This provision is designed to ensure that 
     fraudulent or fly-by-night companies are not allowed to 
     participate in the CMHC program. Recent subcommittee hearings 
     have highlighted the rampant fraud within the CMHC program. 
     CMHCs are paid by Medicare to provide partial hospitalization 
     services to patients that would otherwise have to be admitted 
     for inpatient psychiatric treatment. The program has grown 
     from about $30 million in 1993 to more than $350 million in 
     1997. Of the approximately 1,500 CMHCs nationwide, more than 
     250 of these centers are located in the State of Florida. On-
     site visits to these facilities in Florida by HCFA personnel 
     revealed that many CMHCs did not meet the criteria for a 
     Medicare provider number, numerous patients did not meet 
     eligibility criteria, and many centers were using non-
     licensed staff to furnish non-therapeutic services. In 
     essence, Medicare was paying for adult daycare, which is not 
     allowed.
       Sec. 7: Bankruptcy Protection
       Provides that any overpayment which is the result of 
     fraudulent activity is not dischargeable through the 
     bankruptcy process.
       Provides that any civil monetary penalty or collection of 
     past-due obligations arising from breach of a scholarship and 
     loan contract are not dischargeable through the bankruptcy 
     process.
       Explanation: Under current law, health care providers and 
     suppliers can use bankruptcy as a shield against recovery of 
     Medicare overpayments. A provider or supplier can assert that 
     any overpayment due to the Medicare program is discharged and 
     does not survive the bankruptcy proceeding. Under this 
     proposal, a provider or supplier would be liable to refund 
     overpayments even in bankruptcy if the provider obtained the 
     overpayment by fraudulent means. This money would eventually 
     be deposited into the Medicare Trust Fund. Additionally, any 
     civil monetary penalties levied or past-due obligations 
     arising from breach of a contract entered into pursuant to 
     the National Health Services Corp Scholarship Program, the 
     Physician Shortage Area Scholarship Program, or the Health 
     Education Assistance Loan Program, are not dischargable.
       Sec. 8: Illegal Distribution of a Medicare or Medicaid 
     Provider Number or Beneficiary Identification Number
       This provision makes it a felony for a person to knowingly, 
     intentionally, and with the intent to defraud, purchase, 
     sell, or distribute two or more Medicare or Medicaid 
     beneficiary identification numbers or provider numbers.
       An individual convicted under this seciton shall be fined 
     under Title 18 of the United States Code or, whichever is 
     greater, an amount equal to the monetary loss to the 
     Government, or imprisoned for not more than 3 years, or both.
       Explanation: There are no specific statutes that prohibit 
     the purchase, sale or distribution of a Medicare or Medicaid 
     provider number or beneficiary identification (billing) 
     number. This provision would address the growing trend of 
     unscrupulous providers using ``recruiters'' to fraudulently 
     obtain beneficiary identification numbers in order to bill 
     for bogus services. In addition, this provision will provide 
     penalties for individuals who ``steal'' legitimate provider 
     numbers and then submit fraudulent claims.
       Sec. 9: Define Certain Crimes as Health Care Offenses
       Defines criminal violations of the Medicare/Medicaid 
     statutes under section 1128B of the Social Security Act 
     (including the illegal sale or distribution of a Medicare 
     provider number or beneficiary identification number) as 
     ``federal health care offenses''.
       Explanation: The Health Insurance Portability and 
     Accountability Act (HIPAA) established several enforcement 
     tools for deterring health care related crime, including 
     authority for injunctive relief, streamlined investigative 
     demand and subpoena procedures, and property forfeitures. 
     These remedies were made applicable to all ``Federal health 
     care offenses''. In identifying these criminal provisions, 
     however, some criminal provisions (i.e., kickbacks, false 
     certifications, and overcharging beneficiaries) were 
     inadvertently omitted. This provision defines the 
     aforementioned crimes as well as the offenses enumerated in 
     Section 8 (Illegal Distribution of a Medicare or Medicaid 
     beneficiary identification or provider number) of this bill 
     as Federal health care offenses.
       Sec. 10: Authority of Inspector General for the Department 
     of Health and Human Services (HHS)
       Gives criminal investigators within HHS' Office of 
     Inspector General the authority to:
       Obtain and execute warrants;
       Arrest without warrant if--a crime committed against the 
     United States is committed in their presence; or the 
     investigator reasonably believes a felony offense has been 
     committed.
       Share in forfeited assets when pursuing a joint 
     investigation with another law enforcement agency.
       The authority provided under this section shall be carried 
     out in accordance with guidelines approved by the Attorney 
     General.
       Exercise those authorities necessary to carry out those 
     functions.
       Explanation: The lack of full law enforcement authority 
     jeopardizes the safety of HHS-OIG agents and witnesses under 
     their protection. HHS-OIG agents currently exercise limited 
     law enforcement authority under a special deputation issued 
     by the Department of Justice through the U.S. Marshals 
     Office. This special deputation allows HHS-OIG agents to 
     exercise only limited law enforcement powers. All HHS-OIG 
     agents receive nine weeks of specialized training at the 
     Federal Law Enforcement Training Center. This is the same 
     training required by the United States Marshal Service, 
     United States Secret Service, and numerous other federal law 
     enforcement agencies. More and more career criminals are 
     becoming involved in health care fraud; this increases the 
     potential danger for those agents charged with investigating 
     these crimes. Both the Federal Law Enforcement Officers 
     Association as well as the Fraternal Order of Police support 
     this provision.
       Sec. 11: Universal Product Numbers on Claims Forms for 
     Reimbursement
       Requires that all Medicare claims forms accommodate a 
     Universal Product Number (UPN) no later than February 1, 
     2001, in order to receive reimbursement under the Medicare 
     program. The UPN requirement would apply to all durable 
     medical equipment and supplies, orthotics and prosthetics, 
     except for any customized items, billed under the Medicare 
     program.
       The Secretary, in consultation with manufacturers and 
     entities with appropriate expertise, shall determine the 
     relevant descriptive information appropriate for inclusion in 
     a UPN.
       The Secretary, in consultation with interested parties, 
     shall review information obtained by the use of UPNs on 
     claims forms and shall adjust the Common Procedure Coding 
     System (Medicare's current coding system) to ensure that 
     functionally equivalent UPN covered items are billed and 
     reimbursed under the same codes.
       The UPN shall be based upon, but not limited to, 
     commercially acceptable identification standards established 
     by the Uniform Code Council-International Article Numbering 
     System or the Health Industry Business Communications 
     Council. The two Councils are not-for-profit organizations 
     that are currently used by the industry to establish and 
     issue bar codes, but should a similar entity develop, the 
     Secretary retains the discretion to use this as well.
       No payments shall be made for claims forms not containing 
     UPNs submitted after February 1, 2002. This grace period 
     provides manufacturers that are not currently using UPNs time 
     to adjust to this new reimbursement system.
       The Secretary shall report to Congress no later than 6 
     months after the date of enactment of this Act on the 
     progress of implementing UPNs on claims forms.
       The Secretary shall report 18 months after the date of 
     enactment and annually thereafter for 3 years a detailed 
     description of the results of using the UPN for 
     reimbursement.
       Explanation: Currently, HCFA does not know which products 
     it is purchasing. The only identification that is reflected 
     on the claims form is a billing code. The billing code for 
     each individual product can cover a wide range of items. For 
     example, GAO determined that one single Medicare code is used 
     for more than 200 different urological catheters and the 
     wholesale price range of the catheters varies from $1 to $18. 
     The use of a UPN would specifically identify the item and, 
     thus, reduce the likelihood of ``upcoding'' and combat fraud 
     and abuse in the Medicare program.
                                  ____

                                                   Health Industry


                                     Distributors Association,

                                 Alexandria, VA, February 8, 1999.
     Hon. Susan Collins,
     Chair, Permanent Subcommittee on Investigations,
     Committee on Governmental Affairs, Washington, DC.
       Dear Madam Chairwoman: On behalf of the Health Industry 
     Distributors Association (HIDA), I applaud you for 
     introducing the Medicare Fraud Prevention and Enforcement 
     Act. HIDA is the national trade association of home care 
     companies and medical products distribution firms. Created in 
     1902, HIDA represents over 700 companies with approximately 
     2500 locations nationwide. HIDA Members provide value-added 
     distribution services to virtually every hospital, 
     physician's office, nursing facility, clinic, and other 
     health care sites across the country, as well as to a growing 
     number of home care patients.
       As a professional trade association, HIDA wholeheartedly 
     supports the rigorous enforcement of laws that ensure that 
     Medicare pays reasonable reimbursement amounts for medically 
     necessary items and services on behalf of Medicare 
     beneficiaries. HIDA has long advocated the responsible 
     administration of the Medicare program, and has repeatedly 
     identified specific abusive or illegal practices occurring in 
     the marketplace to assist the government's anti-fraud 
     efforts. HIDA has also assisted in the development of

[[Page S7225]]

     additional targeted policies designed to aid the government 
     in the administration of the Medicare Program.
       The Medicare Fraud Prevention and Enforcement Act is needed 
     to support the integrity of the Medicare Program. HIDA has 
     advocated more stringent standards for Medicare Part B 
     durable medical equipment, prosthetic, orthotic and supply 
     (DMEPOS) providers for a number of years. HIDA believes that 
     that the current Medicare DMEPOS supplier standards are 
     simply insufficient. Importantly, it is not just the de 
     minimus nature of the standards that is deficient, but also 
     the process Medicare uses to determine whether a provider 
     actually meets those standards. The site visits and increased 
     provider scrutiny included in your bill will address our 
     concerns.
       By enacting this bill, Medicare will realize an immediate 
     benefit by ensuring that beneficiaries receive DMEPOS 
     services only from legitimate firms. Unscrupulous providers 
     will never have an opportunity to engage in abusive behavior 
     because they will never be able to bill the Medicare program 
     on behalf of beneficiaries. Consequently, these increased 
     standards and enforcement tools will significantly contribute 
     to reducing fraud and abuse in the Medicare program. For 
     these reasons HIDA strongly supports the Medicare Fraud 
     Prevention and Enforcement Act.
       Again, thank you for introducing this important bill. 
     Please contact Ms. Erin H. Bush, HIDA's Associate Director of 
     Governmental Relations (703) 838-6110 if we can be of any 
     assistance.
           Sincerely,
                                             Cara C. Bachenheimer,
     Vice President.
                                  ____



                               Pedorthic Footwear Association,

                                     Columbia, MD, April 27, 1999.
     Hon. Susan Collins,
     U.S. Senate, Chair, Government Affairs Permanent Subcommittee 
         on Investigations, Washington, DC.
       Dear Senator Collins: The Pedorthic Footwear Association 
     (PFA) applauds your leadership and ongoing efforts to combat 
     fraud and abuse in the Medicare program. Your legislation, 
     ``The Medicare Fraud Prevention & Enforcement Act of 1999,'' 
     is encouraging as a positive step forward to strengthen 
     current law and further protect both patients and providers.
       PFA strongly shares your concern that only qualified 
     entities should be able to participate and provide health 
     care services to the nation's Medicare patient population. In 
     an effort to protect patients and provide HCFA with improved 
     control of its supplies, PFA greatly appreciates your 
     leadership and introduction of legislation to address these 
     important public policy issues.
       The PFA, founded in 1958, is a not-for-profit organization 
     representing professionals in the field of pedorthics--the 
     design, manufacture, modification and fit of footwear, 
     including foot orthoses, to alleviate foot problems caused by 
     disease, overuse, congenital defect or injury. Pedorthists 
     are one of the four professionals recognized by Congress as 
     suppliers of the Therapeutic Shoes for Diabetics benefit.
       Shoes are simply apparel for most people, but for 
     individuals with severe diabetic foot disease, shoes are a 
     part of their treatment plan. As such, PFA supports all 
     efforts to ensure that these patients are treated and 
     provided services by qualified individuals. Thank you for 
     your efforts to enhance HCFA's overall ability to accomplish 
     its mission of protecting the health of the patient and the 
     integrity of the Medicare program.
           Sincerely,
                                     Roger Marzano, C.P.O, C.Ped.,
     President.
                                  ____

                                         The American Occupational


                                    Therapy Association, Inc.,

                                       Bethesda, MD, May 21, 1999.
     Hon. Susan Collins,
     Chair, Permanent Subcommittee on Investigations, Senate 
         Governmental Affairs Committee, Washington, DC.
       Dear Madam Chairman: On behalf of the 60,000 occupational 
     therapists, occupational therapy assistants, and students who 
     are members of the American Occupational Therapy Association, 
     I want to express support for your Medicare Fraud Prevention 
     and Enforcement Act of 1999.
       As providers whose services are covered under both Parts A 
     and B of the Medicare program, our members are well aware of 
     the importance of assuring that the program is well-run, 
     appropriately administered and monitored and that high 
     standards of quality are maintained, including assurance of 
     the use of qualified personnel.
       Your efforts to require scrutiny of new providers can be an 
     important element of an overall improvement in the Medicare 
     program. We are also pleased that your bill recognizes the 
     validity of state licensure as a proxy for background checks.
       Thank you for your efforts to promote quality, efficient 
     services under Medicare.
           Sincerely,

                                         Christina A. Metzler,

                                                         Director,
     Federal Affairs Department.
                                  ____



                                                         AARP,

                                    Washington, DC, June 17, 1999.
     Hon. Susan M. Collins,
     Chair,
     Governmental Affairs Permanent Subcommittee, on 
         Investigations, U.S. Senate, Washington, DC.
       Dear Madam Chair: AARP commends you and your colleague, 
     Sen. Richard Durbin, for introducing the ``Medicare Fraud 
     Prevention and Enforcement Act of 1999.'' Fraud and abuse 
     remain serious problems in the Medicare program that drain 
     valuable funds which could otherwise be used to help 
     strengthen the program for current and future beneficiaries. 
     Your legislation's focus on deterrence is constructive and 
     should significantly improve Medicare's ability to stop fraud 
     by unscrupulous providers before it happens.
       The provisions in your bill to require site inspections and 
     background checks of certain providers, to require billing 
     agencies to register with the Health Care Financing 
     Administration, to allow entities billing Medicare to access 
     the Health Integrity Protection Database, and to make it a 
     felony to distribute provider or beneficiary identification 
     numbers are powerful tools that should make those intent on 
     defrauding the Medicare program think twice before attempting 
     to do so.
       As we move to strengthen Medicare's ability to identify and 
     eliminate fraud, it is important to do this judiciously so 
     that the vast majority of providers--who are honest and 
     intent on following the rules--are not burdened. The 
     provisions of your bill appear reasonable and seem to reflect 
     this critical balance. While fraud and abuse cannot be 
     completely eliminated, it can be significantly reduced. Your 
     bill will help in this effort.
       AARP is pleased to have the opportunity to comment on this 
     legislation and we appreciate the work you and Sen. Durbin 
     have done to reduce the effect of fraud and abuse on the 
     Medicare program and its beneficiaries. We look forward to 
     continuing to work with you and your colleagues in the House 
     and Senate on a bipartisan basis to find effective ways to 
     address this issue.
       If you have any questions, please feel free to contact me 
     or have your staff contact Michele Kimball of the AARP 
     Federal Affairs Health Team at 202-434-3772.
           Sincerely,
                                                  Horace B. Deets,
                                               Executive Director.

  Mr. DURBIN. Mr. President, in summary, I am proud to be a cosponsor 
of this bipartisan legislation. I am also proud to be a member of the 
Permanent Subcommittee on Investigations of the Governmental Affairs 
Committee, which Senator Collins chairs. This has been one of the best 
assignments I have had in the Senate because Senator Collins is not 
afraid to tackle tough issues. We have gone after the issue of food 
safety with fascinating hearings which I believe will lead to improving 
America's food supply and really protecting America's families.
  She has shown extraordinary courage in addressing this issue of 
Medicare fraud. Frankly, it took a very good investigative team and her 
determination to bring us to this moment where this legislation is 
being introduced.
  Mr. President, 39 million Americans rely on Medicare. If you have a 
parent or grandparent who is elderly or disabled, they may view 
Medicare as their health insurance plan. Without it, think where 
America would be if elderly people and disabled folks had to rely on 
their own resources to pay for their medical care.
  We pay a great deal of money each year in America to keep Medicare, 
this health insurance plan, solvent and working; about $218 billion a 
year. What Senator Collins is addressing is the fact that we know for a 
fact that each year we waste anywhere from $13 billion to $21 billion a 
year. You say: How does that happen? Is it a matter of the bureaucrats 
moving the paper around, and they get it wrong? No, for the most part, 
it comes down to people who are setting out to intentionally defraud 
the Government, and they are so good at it, we lose at least $35 
million a day--a day--to these smoothies, these swindlers, these con 
artists who prey upon the Medicare system as an open pot of money they 
can reach into and grab.
  When Senator Collins' investigators went out, they found that some of 
the people who claimed to be providing medical services and medical 
equipment do not even exist. The addresses they gave, when we traced 
them, turned out, if they were true addresses, would be smack dab in 
the middle of a runway at the Miami International Airport, and no one 
checked up on it. Year after year, we send out money automatically to 
these folks without verification.
  The legislation I am introducing with Senator Collins will really put 
some teeth in the law and say we are not going to tolerate this 
anymore. The

[[Page S7226]]

money that is being taken out of this program is at the expense of the 
elderly and disabled and certainly at the expense of America's 
taxpayers.
  Can I give one illustration of this? Nursing homes provide care for 
elderly people who suffer from incontinency. It is something which 
happens to many older folks. Nursing homes are supposed to provide 
adult diapers for seniors who find themselves in this predicament. 
However, one of the groups that we discovered decided they would try to 
invent a way to bill the Federal Government for these 30-cent diapers 
that are needed for elderly people, so they changed the name of the 
diaper to ``female urinary collection device'' and billed the Federal 
Government $8 an item: a 30-cent diaper, billed them $8--clearly 
fraudulent, taking money right out of the Treasury, money that, 
frankly, should be there for the real needs of senior citizens.
  The stories go on and on. With this bill, we try to step forward and 
say we are going to put an end to it or at least reduce it 
dramatically. We are going to create incentives for people who take the 
time, as many seniors should with the help of their families, to go 
through their medical bills. Really, that is the first line of defense. 
When a senior under Medicare receives a medical bill, I know it has to 
be a challenge--it is for me and I am an attorney--they should go 
through it page by page and look for things that do not make sense. 
When they discover these things and call into the hotline under 
Medicare, we can many times track down abuses and fraud and help not 
only that senior, but every senior and Americans in general.
  I salute the Senator from Maine. Her leadership on this issue is 
absolutely essential.
                                 ______