[Congressional Record Volume 145, Number 108 (Wednesday, July 28, 1999)]
[Senate]
[Pages S9533-S9541]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. HARKIN (for himself, Mr. Hollings, Mr. Biden, and Mr. 
        Graham):
  S. 1451. A bill to amend titles XI and XVIII of the Social Security 
Act to improve efforts to combat Medicare fraud, waste, and abuse; to 
the Committee on Finance.


                MEDICARE WASTE TAX REDUCTION ACT OF 1999

  Mr. HARKIN. Mr. President, today I am introducing with Senator 
Hollings, Senator Biden, and Senator Graham an important piece of 
legislation that will help to protect and preserve Medicare. The bill 
is entitled the Medicare Waste Tax Reduction Act of 1999.
  For over ten years now, I have worked to combat fraud, waste and 
abuse in the Medicare program. As Chairman and now Ranking Minority 
Member of the Senate Appropriations Subcommittee with oversight of the 
administration of Medicare, I've held hearing after hearing and 
released report after report documenting the extent of this problem. 
While virtually no one was paying attention to our effort for many 
years, we've succeeded in bringing greater attention and focus to this 
problem in recent years.
  Part of our effort has been to try to quantify the scope of the 
problem. Several years ago, the General Accounting Office reported that 
up to 10 percent of Medicare funds could be lost to fraud, waste and 
abuse each year. Many questioned that estimate as too large. They said 
the problem existed, but it wasn't nearly as big as 10 percent. A few 
years ago, the Inspector General conducted the first-ever detailed 
audit of Medicare payments. That Chief Financial Officer Act audit 
found that fully 14 percent of Medicare payments in 1996, or over $23 
billion, had been made improperly.
  To combat these substantial losses, we have put into place the 
reforms embodied in the Health Insurance Portability Act and the 
Balanced Budget Act. HCFA, the Inspector General and the Justice 
Department also have continued to aggressively use new authority to 
crack down on Medicare fraud, waste, and abuse. As a result, we have 
seen a dramatic decrease in these improper payments. According to the 
most recent Inspector General's report, improper payments had been 
reduced from $23.2 billion in 1996, to $20.3 billion in 1997, to $12.6 
billion in 1998.
  While I am very pleased with the successful efforts so far in 
combating fraud, waste, and abuse, that still amounts to a nearly $13 
billion annual ``waste tax'' on the American people. Now is not the 
time to rest on our laurels. We must now question, what is the best way 
to move forward and further cut this tax. I know there are no ``magic-
wand'' solutions--this is a complex problem with many components. But 
basically, you need four things: well thought out laws, adequate 
resources, effective implementation and the help of seniors and health 
providers. We've made progress on each of these fronts over the last 
couple of years, but much more remains to be done.

[[Page S9534]]

  Mr. President, we have many thousands of dedicated health providers 
who work very hard to improve the quality of life for all people. 
Through their efforts, Americans have the best quality health care in 
the world. But, unfortunately, there are a small minority of providers 
who take advantage of our health care system. This legislation is 
directly designed to deal with those situations. Further, it is clear 
that many mispayments to Medicare are the result of a simple lack of 
understanding of our often complex Medicare payment system. This 
legislation also addresses this problem by providing increased 
education and assistance for providers and by reducing the paperwork 
and administrative hassles that can often lead to innocent, but costly, 
billing errors.
  The primary goal of this legislation is simply this--to ensure that 
Medicare pays for all that it should pay for--and only what it should 
pay for.
  The Medicare Waste Tax Reduction Act I am introducing today will take 
a number of important steps to stop the continued ravaging of Medicare.
  This Bill for example, would direct HCFA to double and better target 
audits and reviews to detect and discourage mispayments. Currently only 
a tiny fraction of Medicare claims are reviewed before being paid and 
less than 2 percent of providers receive a comprehensive audit 
annually. We must have the ability to separate needed care from bill 
padding and abuse.
  Our bill would also give Medicare the authority to be a more prudent 
purchaser. As passed by the Senate, the Balanced Budget Act gave 
Medicare the authority to quickly reduce Part B payment rates (except 
those made for physician services) it finds to be grossly excessive 
when compared to rates paid by other government programs and the 
private sector. In conference, the provision was limited to reductions 
of no more than 15 percent. This bill would restore the original Senate 
language. In addition, to assure that Medicare gets the price it 
deserves given its status as by far the largest purchaser of medical 
supplies and equipment, Medicare would pay no more than any other 
government program for these items. Finally, overpayments for 
prescription drugs and biologicals would be eliminated by lowering 
Medicare's rate to the lowest of either the actual acquisition cost or 
83% of the wholesale cost.
  Our bill would also give the Secretary of Health and Human Services 
greater flexibility in contracting for claims processing and payment 
functions on behalf of Medicare beneficiaries and providers. It would 
update Medicare contracting procedures and bring it more in line with 
standard contracting procedures already used across the Federal 
Government and therefore allow Medicare the ability to get much better 
value for its contracting dollars.
  The Medicare Waste Tax reduction Act of 1999 would also ensure that 
Medicare does not pay for claims owed by other plans. Too often, 
Medicare pays claims that are owed by private insurers because it has 
no way of knowing a beneficiary is working and has private insurance 
that should pay first. This provision would reduce Medicare losses by 
requiring insurers to report any Medicare beneficiaries they insure. 
Also, Medicare would be given the authority to recover double the 
amount owed by insurers who purposely let Medicare pay claims they 
should have paid.
  Additionally, coordination between Medicare and private insurers 
would be strengthened. Often, those ripping off Medicare are also 
defrauding private health plans. Yet, too little information on fraud 
cases is shared between Medicare and private plans. In order to 
encourage better coordination, health plans and their employees could 
not be held liable for sharing information with Medicare regarding 
health care fraud as long as the information is not false, or the 
person providing the information had no reason to believe the 
information was false.
  Our bill would also expand the Medicare Senior Waste Patrol 
Nationwide. Seniors are our front line of defense against Medicare 
fraud, waste and abuse. However, too often, seniors don't have the 
information they need to detect and report suspected mistakes and 
fraud. By moving the Waste Patrol nationwide, implementing important 
BBA provisions and assuring seniors have access to itemized bills we 
will strike an important blow to Medicare waste.
  Another critical component of any successful comprehensive plan to 
cut the Medicare waste tax is to focus on prevention. Most of our 
efforts now look at finding and rectifying the problems after they 
occur. While this is important and we need to do even more of it, we 
all know that prevention is much more cost effective. The old adage ``A 
stitch in time saves nine'' was never more true. A major component of 
an enhanced prevention effort would be the provision of increased 
assistance and education for providers to comply with Medicare rules.
  Further, a great deal of the mis-payments made by Medicare are the 
result not of fraud or abuse, but of simple misunderstanding of 
Medicare billing rules by providers. Therefore, this bill provides $10 
million a year to fund a major expansion of assistance and education 
for providers on program integrity requirements. This bill would also 
ensure the reduction of paperwork and administrative hassle that could 
prove daunting to providers. Health professionals have to spend too 
much time completing paperwork and dealing with administrative hassles 
associated with Medicare and private health plans. In order to reduce 
this hassle and provide more time for patient care, the Institute of 
Medicine would be charged with developing a comprehensive plan by no 
later than June 1, 2000. Their recommendations are to include the 
streamlining of variations between Medicare and other payers.
  Mr. President, while we have made changes to medicare in attempts to 
extend its solvency thru the next decade, we urgently need to take 
other steps to protect and preserve the program for the long-term. We 
should enact the reforms in this bill to weed out waste, fraud and 
abuse as a first priority in this effort. I urge all my colleagues to 
review this proposal and hope that they will join me in working to pass 
it yet this year.
  Mr President, I also ask unanimous consent that the bill be printed 
in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1451

       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 
     Waste Tax Reduction Act of 1999''.
       (b) Table of Contents.--The table of contents of this Act 
     is as follows:

Sec. 1. Short title; table of contents.
Sec. 2. Increased medical reviews and antifraud activities.
Sec. 3. Oversight of home health agencies.
Sec. 4. No markup for drugs or biologicals.
Sec. 5. Ensuring that the medicare program does not reimburse claims 
              owed by other payers.
Sec. 6. Extension of subpoena and injunction authority.
Sec. 7. Civil monetary penalties for services ordered or prescribed by 
              an excluded individual or entity.
Sec. 8. Civil monetary penalties for false certification of eligibility 
              to receive partial hospitalization and hospice services.
Sec. 9. Application of certain provisions of the bankruptcy code.
Sec. 10. Improving private sector coordination in combatting health 
              care fraud.
Sec. 11. Fees for agreements with medicare providers and suppliers.
Sec. 12. Increased medicare compliance, education, and assistance for 
              health care providers.
Sec. 13. Paperwork and administrative hassle reduction.
Sec. 14. Clarification of application of sanctions to Federal health 
              care programs.
Sec. 15. Payments for durable medical equipment.
Sec. 16. Implementation of commercial claims auditing systems.
Sec. 17. Partial hospitalization payment reforms.
Sec. 18. Expansion of medicare senior waste patrol nationwide.
Sec. 19. Application of inherent reasonableness to all part B services 
              other than physicians' services.
Sec. 20. Standards regarding payment for certain orthotics and 
              prosthetics.
Sec. 21. Increased flexibility in contracting for medicare claims 
              processing.
Sec. 22. Exemption of Inspectors General from Paperwork Reduction Act 
              requirements.

     SEC. 2. INCREASED MEDICAL REVIEWS AND ANTIFRAUD ACTIVITIES.

       (a) In General.--Section 1893(d) of the Social Security Act 
     (42 U.S.C. 1395ddd(d)) is

[[Page S9535]]

     amended by inserting after paragraph (3) the following:
       ``(4) In the case of fiscal year 2000 and each subsequent 
     fiscal year, procedures to ensure that--
       ``(A) the number of medical reviews, utilization reviews, 
     and fraud reviews in a fiscal year of providers of services 
     and other individuals and entities furnishing items and 
     services for which payment may be made under this title is 
     equal to at least twice the number of such reviews that were 
     conducted in fiscal year 1999;
       ``(B) the number of provider cost reports audited in a 
     fiscal year is equal to at least--
       ``(i) 15 percent of those submitted by a home health agency 
     or a skilled nursing facility; and
       ``(ii) twice the number of such reports that were audited 
     in fiscal year 1999 for those submitted by any other provider 
     of services or any other individual or entity furnishing 
     items and services for which payment may be made under this 
     title; and
       ``(C) in determining which providers of services, 
     individuals, entities, or cost reports to review or audit, 
     priority is placed on providers, individuals, entities, and 
     areas that the Secretary determines are subject to abuse and 
     most likely to result in mispayment or overpayment 
     recoveries.''.
       (b) Increase in Appropriated Amounts for Medicare and 
     Medicaid Activities.--
       (1) In general.--Section 1817(k)(3)(A)(i) of the Social 
     Security Act (42 U.S.C. 1395i(k)(3)(A)(i)) is amended--
       (A) in subclause (II)--
       (i) by striking ``through 2003'' and inserting ``and 
     1999''; and
       (ii) by striking ``and'' at the end;
       (B) by redesignating subclause (III) as subclause (IV); and
       (C) by inserting after subclause (II) the following:
       ``(III) for each of the fiscal years 2000 through 2003, the 
     limit for the preceding fiscal year, increased by 25 percent; 
     and''.
       (2) Activities.--Section 1817(k)(3)(A)(ii) of the Social 
     Security Act (42 U.S.C. 1395i(k)(3)(A)(ii)) is amended--
       (A) in subclause (IV), by striking ``not less than 
     $110,000,000 and not more than $120,000,000'' and inserting 
     ``$160,000,000'';
       (B) in subclause (V), by striking ``not less than 
     $120,000,000 and not more than $130,000,000'' and inserting 
     ``$190,000,000'';
       (C) in subclause (VI), by striking ``not less than 
     $140,000,000 and not more than $150,000,000'' and inserting 
     ``$230,000,000''; and
       (D) in subclause (VII), by striking ``not less than 
     $150,000,000 and not more than $160,000,000'' and inserting 
     ``$260,000,000''.
       (c) Increase in Appropriated Amounts for Medicare Integrity 
     Program.--Section 1817(k)(4) of the Social Security Act (42 
     U.S.C. 1395i(k)(4)(B)) is amended--
       (1) in subparagraph (A), by striking ``such amounts as are 
     necessary to carry out the Medicare Integrity Program under 
     section 1893, subject to subparagraph (B) and to'' and 
     inserting ``the amount appropriated under subparagraph (B), 
     and such amount shall''; and
       (2) in subparagraph (B)--
       (A) in clause (iv), by striking ``such amount shall be not 
     less than $620,000,000 and not more than $630,000,000'' and 
     inserting ``$780,000,000'';
       (B) in clause (v), by striking ``such amount shall be not 
     less than $670,000,000 and not more than $680,000,000'' and 
     inserting ``$830,000,000'';
       (C) in clause (vi), by striking ``such amount shall be not 
     less than $690,000,000 and not more than $700,000,000'' and 
     inserting ``$850,000,000''; and
       (D) in clause (vii), by striking ``such amount shall be not 
     less than $710,000,000 and not more than $720,000,000'' and 
     inserting ``$870,000,000''.

     SEC. 3. OVERSIGHT OF HOME HEALTH AGENCIES.

       (a) Validation Surveys of Home Health Agencies.--Section 
     1891(c) of the Social Security Act (42 U.S.C. 1395bbb(c)) is 
     amended by adding at the end the following:
       ``(3)(A)(i) The Secretary shall conduct onsite surveys of a 
     representative sample of home health agencies in each State, 
     in a sufficient number to allow inferences about the 
     adequacies of each State's surveys conducted under this 
     subsection.
       ``(ii) A survey described in clause (i) shall be conducted 
     by the Secretary within 2 months of the date of the survey 
     conducted by the State and may be conducted concurrently with 
     the State survey.
       ``(iii) In conducting a survey described in clause (i), the 
     Secretary shall use the same survey protocols as the State is 
     required to use under this subsection.
       ``(iv) If, through a State survey, the State has determined 
     that a home health agency is in compliance with the 
     requirements specified in or pursuant to section 1861(o), 
     this section, or this title, but the Secretary determines 
     (after conducting the survey described in clause (i)) that 
     the facility does not meet such requirements, the Secretary's 
     determination as to the facility's noncompliance with such 
     requirements is binding and supersedes that of the State 
     survey.
       ``(B) With respect to each State, the Secretary shall 
     conduct surveys under subparagraph (A) each year with respect 
     to at least 5 percent of the number of home health agencies 
     surveyed by the State in the year, but in no case less than 5 
     home health agencies in the State.
       ``(C) If the Secretary finds, on the basis of such surveys, 
     that a State has failed to perform surveys as required under 
     this subsection or that a State's survey and certification 
     performance otherwise is not adequate, the Secretary shall 
     provide for an appropriate remedy, which may include the 
     training of survey teams in the State.
       ``(D) If the Secretary has reason to question the 
     compliance of a home health agency with any of the 
     requirements specified in or pursuant to section 1861(o), 
     this section, or this title, the Secretary may conduct a 
     survey of the agency and, on the basis of that survey, make 
     independent and binding determinations concerning the extent 
     to which the home health agency meets such requirements.''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall take effect on the date of enactment of this Act.

     SEC. 4. NO MARKUP FOR DRUGS OR BIOLOGICALS.

       (a) In General.--Section 1842(o) (42 U.S.C. 1395u(o)) 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 or biological for which payment may be made 
     under this part and the drug or biological 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 or biological 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 or biological.
       ``(B) 83 percent of the average wholesale price of such 
     drug or biological, as determined by the Secretary.
       ``(C) For payments for any drug or biological furnished on 
     or after January 1, 2001, the median actual acquisition cost 
     of all claims for payment for such drug or biological for the 
     12-month period beginning July 1, 1999 (and adjusted, as the 
     Secretary determines appropriate, to reflect changes in the 
     cost of such drug or biological 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 drug or 
     biological, the cost of the drug or biological based on the 
     most economical case size in inventory on the date of 
     dispensing or, if less, the most economical case size 
     purchased within 6 months of the date of dispensing whether 
     or not that specific drug or biological 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 any 
     drug or biological to a person whose bill or request for 
     payment for such drug or biological 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) or (4) (plus any applicable deductible and 
     coinsurance amounts), or
       ``(ii) any amount for such drug or biological for which 
     payment may not be made pursuant to subparagraph (A).
       ``(C) If a person knowingly and willfully in repeated cases 
     bills 1 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 
     any drug or biological to a licensed pharmacy approved to 
     dispense drugs or biologicals under this part, if payment for 
     such drug or biological is made to the pharmacy.''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to drugs or biologicals furnished on or after 
     January 1, 2000.
       (c) Elimination of Report on Average Wholesale Price.--
     Section 4556 of the Balanced Budget Act of 1997 is amended by 
     striking subsection (c).

     SEC. 5. ENSURING THAT THE MEDICARE PROGRAM DOES NOT REIMBURSE 
                   CLAIMS OWED BY OTHER PAYERS.

       (a) Information From Group Health Plans.--Section 1862(b) 
     of the Social Security Act (42 U.S.C. 1395y(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 that is subject to the 
     requirements of paragraph (1) shall provide the Secretary 
     with the information described in subparagraph (C) for each 
     individual covered under the plan who is entitled to any 
     benefits under this title. Such information shall be provided 
     in such manner and at such times as the Secretary may specify 
     (but in no case more frequently than 4 times per year).
       ``(B) Provision of information by employers and employee 
     organizations.--An employer (or employee organization) that 
     maintains or participates in a group health plan that is 
     subject to the requirements of paragraph (1) shall provide to 
     the administrator of the plan the information described in 
     subparagraph (C) for each individual covered

[[Page S9536]]

     under the plan who is entitled to any benefits under this 
     title. Such information shall be provided in such manner and 
     at such times as the Secretary may specify (but in no case 
     more frequently than 4 times per year).
       ``(C) Information.--The information described in this 
     subparagraph is as follows:
       ``(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 current or prior employment status with the 
     employer.

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

       ``(I) The name of the person in the individual's family who 
     has current or prior 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 employee) during those periods of coverage.
       ``(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.
       ``(III) The name, address, and tax identification number of 
     the plan sponsor.

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

       ``(I) The employer's name.
       ``(II) The employer's address.
       ``(III) The employer identification number of the employer.
       ``(IV) The tax identification number of the employer if 
     different than the number in clause (iii)(III).

       ``(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 individual or entity 
     that knowingly and willfully fails to comply with a 
     requirement imposed by this paragraph 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).
       ``(F) Group health plan defined.--In this paragraph, the 
     term `group health plan' has the meaning given such term in 
     paragraph (1)(A)(v).''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall take effect on January 1, 2000.

     SEC. 6. EXTENSION OF SUBPOENA AND INJUNCTION AUTHORITY.

       (a) Subpoena Authority.--Section 1128A(j)(1) of the Social 
     Security Act (42 U.S.C. 1320a-7a(j)(1)) is amended by 
     inserting ``and section 1128'' after ``with respect to this 
     section''.
       (b) Injunction Authority.--Section 1128A(k) of the Social 
     Security Act (42 U.S.C. 1320a-7a(k)) is amended by inserting 
     ``or an exclusion under section 1128,'' after ``subject to a 
     civil monetary penalty under this section,''.
       (c) Clarifying Amendments.--
       (1) In general.--Section 1128A(j)(1) of the Social Security 
     Act (42 U.S.C. 1320a-7a(j)(1)) is amended--
       (A) by inserting ``, except that, in so applying such 
     sections, any reference therein to the Commissioner of Social 
     Security or the Social Security Administration shall be 
     considered a reference to the Secretary or the Department of 
     Health and Human Services, respectively'' after ``with 
     respect to title II''; and
       (B) by striking the second sentence.
       (2) Authority.--Section 1128A(j)(2) of the Social Security 
     Act (42 U.S.C. 1320a-7a(j)(2)) is amended to read as follows:
       ``(2) The Secretary may delegate to the Inspector General 
     of the Department of Health and Human Services any or all 
     authority granted under this section or under section 
     1128.''.
       (d) Conforming Amendment.--Section 1128 of the Social 
     Security Act (42 U.S.C. 1320a-7) is amended by adding at the 
     end the following:
       ``(k) For provisions of law concerning the Secretary's 
     subpoena and injunction authority with respect to activities 
     under this section, see subsections (j) and (k) of section 
     1128A.''.

     SEC. 7. CIVIL MONETARY PENALTIES FOR SERVICES ORDERED OR 
                   PRESCRIBED BY AN EXCLUDED INDIVIDUAL OR ENTITY.

       (a) In General.--Section 1128A(a)(1) of the Social Security 
     Act (42 U.S.C. 1320a-7a(a)(1)) is amended--
       (1) in subparagraph (D)--
       (A) by inserting ``, ordered, or prescribed by such 
     person'' after ``other item or service furnished'';
       (B) by inserting ``(pursuant to this title or title 
     XVIII)'' after ``period in which the person was excluded'';
       (C) by striking ``pursuant to a determination by the 
     Secretary'' and all that follows through ``the provisions of 
     section 1842(j)(2)''; and
       (D) by striking ``or'' at the end;
       (2) by redesignating subparagraph (E) as subparagraph (F); 
     and
       (3) by adding after subparagraph (D) the following:
       ``(E) is for a medical or other item or service ordered or 
     prescribed by a person excluded (pursuant to this title or 
     title XVIII) from the program under which the claim was made, 
     and the person furnishing such item or service knows or 
     should know of such exclusion, or''.
       (b) Effective Date.--The amendments made by subsection (a) 
     shall apply to claims presented on or after the date of 
     enactment of this Act.

     SEC. 8. CIVIL MONETARY PENALTIES FOR FALSE CERTIFICATION OF 
                   ELIGIBILITY TO RECEIVE PARTIAL HOSPITALIZATION 
                   AND HOSPICE SERVICES.

       (a) In General.--Section 1128A(b)(3) of the Social Security 
     Act (42 U.S.C. 1320a-7a(b)(3)) is amended--
       (1) in subparagraph (A)(ii), by inserting ``, hospice care, 
     or partial hospitalization services'' after ``home health 
     services''; and
       (2) in subparagraph (B), by inserting ``, section 
     1814(a)(7) in the case of hospice care, or section 
     1835(a)(2)(F) in the case of partial hospitalization 
     services'' after ``home health services''.
       (b) Effective Date.--The amendments made by subsection (a) 
     shall apply to documents executed on or after the date of 
     enactment of this Act.

     SEC. 9. APPLICATION OF CERTAIN PROVISIONS OF THE BANKRUPTCY 
                   CODE.

       (a) Restricted Applicability of Bankruptcy Stay, Discharge, 
     and Preferential Transfer Provisions to Medicare and Medicaid 
     Debts.--Title XI of the Social Security Act (42 U.S.C. 1301 
     et seq.) is amended by inserting after section 1143 the 
     following:


       ``application of certain provisions of the bankruptcy code

       ``Sec. 1144. (a) Medicare- and Medicaid-Related Actions Not 
     Stayed by Bankruptcy Proceedings.--The commencement or 
     continuation of any action against a debtor under this title, 
     title XVIII, or title XIX (other than an action with respect 
     to health care services provided to the debtor under title 
     XVIII), including any action or proceeding to exclude or 
     suspend the debtor from program participation, assess civil 
     money penalties, recoup or set off overpayments, or deny or 
     suspend payment of claims shall not be subject to the 
     provisions of section 362(a) of title 11, United States Code.
       ``(b) Medicare- and Medicaid-Related Debt Not Dischargeable 
     in Bankruptcy.--A debt owed to the United States or to a 
     State for an overpayment under title XVIII or title XIX 
     (other than an overpayment for health care services provided 
     to the debtor under title XVIII), or for a penalty, fine, or 
     assessment under this title, title XVIII, or title XIX, shall 
     not be dischargeable under any provision of title 11, United 
     States Code.
       ``(c) Repayment of Certain Debts Considered Final.--
     Payments made to repay a debt to the United States or to a 
     State with respect to items or services provided, or claims 
     for payment made, under title XVIII or XIX (including 
     repayment of an overpayment (other than an overpayment for 
     health care services provided to the debtor under title 
     XVIII)), or to pay a penalty, fine, or assessment under this 
     title, title XVIII, or title XIX, shall be considered final 
     and not preferential transfers under section 547 of title 11, 
     United States Code.''.
       (b) Medicare Rules Applicable to Bankruptcy Proceedings.--
     Title XVIII of the Social Security Act (42 U.S.C. 1395 et 
     seq.) is amended by adding at the end the following:


           ``application of provisions of the bankruptcy code

       ``Sec. 1897. (a) Use of Medicare Standards and 
     Procedures.--Notwithstanding any provision of title 11, 
     United States Code, or any other provision of law, in the 
     case of claims by a debtor in bankruptcy for payment under 
     this title, the determination of whether the claim is 
     allowable, and of the amount payable, shall be made in 
     accordance with the provisions of this title and title XI.
       ``(b) Notice to Creditor of Bankruptcy Petitioner.--In the 
     case of a debt owed to the United States with respect to 
     items or services provided, or claims for payment made, under 
     this title (including a debt arising from an overpayment or a 
     penalty, fine, or assessment under title XI or this title), 
     the notices to the creditor of bankruptcy petitions, 
     proceedings, and relief required under title 11, United 
     States Code (including under section 342 of that title and 
     section 2002(j) of the Federal Rules of Bankruptcy 
     Procedure), shall be given to the Secretary. Provision of 
     such notice to a fiscal agent of the Secretary shall not be 
     considered to satisfy this requirement.
       ``(c) Turnover of Property to the Bankruptcy Estate.--For 
     purposes of section 542(b) of title 11, United States Code, a 
     claim for payment under this title shall not be considered to 
     be a matured debt payable to the estate of a debtor until 
     such claim has been allowed by the Secretary in accordance 
     with procedures under this title.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to petitions

[[Page S9537]]

     filed on or after the date of enactment of this Act.

     SEC. 10. IMPROVING PRIVATE SECTOR COORDINATION IN COMBATTING 
                   HEALTH CARE FRAUD.

       (a) In General.--Title XI of the Social Security Act (42 
     U.S.C. 1301 et seq.) is amended by inserting after section 
     1157 the following:


``IMPROVING PRIVATE SECTOR COORDINATION IN COMBATTING HEALTH CARE FRAUD

       ``Sec. 1157A. (a) In General.--Notwithstanding any other 
     provision of law, no health plan (as defined in section 
     1128C(c)), issuer of a health plan, or employee of a health 
     plan shall be held liable in any civil action with respect to 
     the provision of information regarding suspected health care 
     fraud, including Federal health care offenses (as defined in 
     section 24(a) of title 18, United States Code) to an 
     applicable individual unless such information is false and 
     the person providing it knew, or had reason to believe, that 
     such information was false.
       ``(b) Applicable Individual.--In subsection (a), the term 
     `applicable individual' means--
       ``(1) a Federal, State, or local law enforcement official 
     responsible for the investigation or prosecution of suspected 
     health care fraud offenses; or
       ``(2) an employee of a health plan or issuer of a health 
     plan.
       ``(c) Attorney's Fees.--Any health plan, issuer of a health 
     plan, or employee of a health plan against whom a civil 
     action is brought, and who is found to be entitled to 
     immunity from liability by reason of this section, shall be 
     entitled to recover reasonable attorney's fees and costs from 
     the person who brought the civil action.''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall take effect on the date of enactment of this Act.

     SEC. 11. FEES FOR AGREEMENTS WITH MEDICARE PROVIDERS AND 
                   SUPPLIERS.

       (a) Fees Related to Medicare Provider and Supplier 
     Enrollment and Reenrollment.--Section 1866 of the Social 
     Security Act (42 U.S.C. 1395cc) is amended by adding at the 
     end the following:
       ``(j) Enrollment Procedures and Fees.--
       ``(1) Enrollment of individuals and entities that are not 
     providers of services.--The Secretary may establish a 
     procedure for enrollment (and periodic reenrollment) of 
     individuals or entities that are not providers of services 
     subject to the provisions of subsection (a) but that furnish 
     health care items or services under this title.
       ``(2) Fees.--
       ``(A) In general.--The Secretary may impose fees for 
     initiation and renewal of provider agreements under 
     subsection (a) and for enrollment and periodic reenrollment 
     of other individuals and entities furnishing health care 
     items or services under this title under paragraph (1), in 
     amounts up to the full amount which the Secretary reasonably 
     estimates to be sufficient to cover the Secretary's costs 
     related to the process for initiating and reviewing such 
     agreements and enrollments.
       ``(B) Fees credited to special fund in treasury.--Fees 
     collected pursuant to this paragraph shall be credited to a 
     special fund of the United States Treasury, and shall remain 
     available until expended, to the extent and in such amounts 
     as provided in advance in appropriations Acts, for necessary 
     expenses for these purposes, including costs of establishing 
     and maintaining procedures and records systems, processing 
     applications, and conducting background investigations.''.
       (b) Clerical Amendment.--The heading of section 1866 of the 
     Social Security Act (42 U.S.C. 1395cc) is amended to read as 
     follows:


``agreements with providers of services and enrollment of other persons 
                         furnishing services''.

     SEC. 12. INCREASED MEDICARE COMPLIANCE, EDUCATION, AND 
                   ASSISTANCE FOR HEALTH CARE PROVIDERS.

       (a) Development of Plan.--Not later than 6 months after the 
     date of enactment of this Act, the Secretary of Health and 
     Human Services shall, in consultation with health care 
     provider representatives, develop and implement a 
     comprehensive plan of activities to--
       (1) maximize health care provider knowledge of medicare 
     program integrity requirements, including anti-fraud and 
     abuse laws and administrative actions;
       (2) assist health care providers with medicare program 
     integrity compliance, including educating such providers 
     regarding compliance activities and procedures of the Health 
     Care Financing Administration and the Inspector General of 
     the Department of Health and Human Services;
       (3) develop improved computer technology for health care 
     providers to both reduce their administrative hassles and 
     facilitate their compliance with medicare program 
     requirements, including physician evaluation and management 
     guidelines; and
       (4) otherwise improve compliance among health care 
     providers with rules and regulations under the medicare 
     program.
       (b) Funding.--Notwithstanding any other provision of law, 
     of the amounts appropriated under section 1817(k)(4) of the 
     Social Security Act (42 U.S.C. 1395i(k)(4)) for a fiscal 
     year, there shall be made available $10,000,000 in fiscal 
     year 2000 and such sums as are necessary in fiscal years 2001 
     through 2004 to carry out the purposes of this section.

     SEC. 13. PAPERWORK AND ADMINISTRATIVE HASSLE REDUCTION.

       (a) Study by Committee.--
       (1) Establishment.--Not later than 90 days after the date 
     of enactment of this Act, the Secretary of Health and Human 
     Services shall contract with the Institute of Medicine of the 
     National Academy of Sciences to establish a committee to 
     study medicare program administrative requirements that are 
     applicable to health care providers under such program.
       (2) Committee.--The committee described in paragraph (1) 
     shall be composed of--
       (A) at least 9 health care providers who participate in, 
     and have significant experience working with, the medicare 
     program;
       (B) experts in paperwork reduction; and
       (C) beneficiaries under the medicare program or their 
     representatives.
       (b) Recommendations.--The committee described in subsection 
     (a) shall develop recommendations regarding how paperwork and 
     administrative requirements under the medicare program can be 
     minimized in a manner that--
       (1) increases the time health care providers that are 
     subject to such requirements have to spend in direct patient 
     care; and
       (2) maintains medicare program integrity and compliance 
     with anti-fraud and abuse requirements.
     In developing such recommendations, the committee shall seek 
     to streamline variations in administrative and paperwork 
     requirements between the medicare program and other 
     government health programs and private health plans.
       (c) Report.--
       (1) In general.--Not later than June 1, 2000, the committee 
     described in subsection (a) shall submit a report to the 
     Secretary of Health and Human Services, the Committees on 
     Finance and Appropriations of the Senate and the Committees 
     on Ways and Means, Commerce, and Appropriations of the House 
     of Representatives.
       (2) Contents.--The report required under paragraph (1) 
     shall contain a detailed description of the matters studied 
     pursuant to subsection (a) and the recommendations developed 
     pursuant to subsection (b), including such legislation and 
     administrative actions as the committee considers 
     appropriate.
       (d) Authorization of Appropriations.--
       (1) In general.--There are authorized to be appropriated 
     $1,000,000 for fiscal year 2000 to carry out the purposes of 
     this section.
       (2) Availability.--Any sums appropriated under the 
     authorization contained in this subsection shall remain 
     available, without fiscal year limitation, until expended.

     SEC. 14. CLARIFICATION OF APPLICATION OF SANCTIONS TO FEDERAL 
                   HEALTH CARE PROGRAMS.

       (a) Coverage of Employment.--Section 1128 of the Social 
     Security Act (42 U.S.C. 1320a-7) is amended--
       (1) in subsection (a), in the matter preceding paragraph 
     (1), by inserting ``(including employment under)'' after 
     ``participation in''; and
       (2) in subsection (b), in the matter preceding paragraph 
     (1), by inserting ``(including employment under)'' after 
     ``participation in''.
       (b) Application Under Civil Money Penalty Authority.--
     Section 1128A of the Social Security Act (42 U.S.C. 1320a-7a) 
     is amended--
       (1) in subsection (a)(4), by striking ``program under title 
     XVIII or a State health care program'' and inserting 
     ``Federal health care program'' each place it appears;
       (2) in subsection (a)(5)--
       (A) by striking ``title XVIII of this Act, or under a State 
     health care program (as defined in section 1128(h))'' and 
     inserting ``a Federal health care program''; and
       (B) by striking ``title XVIII, or a State health care 
     program (as so defined)'' and inserting ``such program'';
       (3) in the last sentence of subsection (a), by striking 
     ``and to direct the appropriate State agency to exclude the 
     person from participation in any State health care program''; 
     and
       (4) in subsection (h), by striking ``State agency or 
     agencies administering or supervising the administration of 
     State health care programs (as defined in section 1128(h))'' 
     and inserting ``Federal or State agency or agencies 
     administering or supervising the administration of any 
     Federal health care program''.
       (c) Application of Waiver Provisions to Federal Health Care 
     Programs.--Section 1128 of the Social Security Act (42 U.S.C. 
     1320a-7) is amended--
       (1) in subsection (c)(3)(B), by striking ``upon the request 
     of a State'' and inserting ``upon the request of the director 
     of a Federal health care program'';
       (2) in subsection (d)(3)(B)(i)--
       (A) by striking ``State health care program'' and inserting 
     ``Federal health care program''; and
       (B) by striking ``State agency'' and inserting ``Federal or 
     State agency''; and
       (3) in subsection (d)(3)(B)(ii), by striking ``State health 
     care program'' and inserting ``Federal health care program 
     (other than under title XVIII)''.
       (d) Notice Provision Regarding Federal Health Care 
     Programs.--Section 1128 of the Social Security Act (42 U.S.C. 
     1320a-7) is amended--
       (1) in the heading of subsection (d), by striking ``to 
     State Agencies and Exclusion Under State Health Care 
     Programs'' and inserting ``and Exclusion Under Federal Health 
     Care Programs'';
       (2) in subsection (d)(1), by striking ``State'' and 
     inserting ``Federal'';
       (3) in subsection (d)(2)--

[[Page S9538]]

       (A) by striking ``State agency'' and inserting ``Federal or 
     State agency'' each place it appears; and
       (B) by striking ``State health care program'' and inserting 
     ``Federal health care program'' each place it appears;
       (4) in subsection (d)(3)(A), by striking ``State'' and 
     inserting ``Federal''; and
       (5) in subsection (g)(3)--
       (A) by striking ``State agency'' and inserting ``Federal or 
     State agency''; and
       (B) by striking ``State health care program'' and inserting 
     ``Federal health care program''.
       (e) Use of Definition of Federal Health Care Program and 
     Treatment of Federal Employees Health Benefits Program as a 
     Federal Health Care Program.--Section 1128B(f) of the Social 
     Security Act (42 U.S.C. 1320a-7b(f)) is amended--
       (1) in the matter preceding paragraph (1), by inserting 
     ``and sections 1128 and 1128A'' after ``this section''; and
       (2) in paragraph (1), by striking ``(other than the health 
     insurance program under chapter 89 of title 5, United States 
     Code)''.
       (f) Authority To Exclude From Federal Health Care Programs 
     Based on PRO Recommendations.--Section 1156(b)(1) of the 
     Social Security Act (42 U.S.C. 1320c-5(b)(1)) is amended--
       (1) in the second sentence, by striking ``eligibility to 
     provide services under this Act on a reimbursable basis'' and 
     inserting ``participation in any Federal health care program 
     (as defined in section 1128B(f))''; and
       (2) in the third sentence, by striking ``eligibility to 
     provide services on a reimbursable basis'' and inserting 
     ``participation in such programs''.
       (g) Effective Date.--
       (1) In general.--Subject to paragraph (2), the amendments 
     made by this section shall take effect on the date of 
     enactment of this Act.
       (2) Convictions under fehbp.--The amendment made by 
     subsection (e)(2) shall apply, with respect to convictions 
     under the health insurance program under chapter 89 of title 
     5, United States Code, to convictions that occur on or after 
     the date of enactment of this Act.

     SEC. 15. PAYMENTS FOR DURABLE MEDICAL EQUIPMENT.

       (a) In General.--Section 1834(a)(1) of the Social Security 
     Act (42 U.S.C. 1395m(a)(1)) is amended--
       (1) in subparagraph (B)--
       (A) in clause (i), by striking ``, or'' at the end and 
     inserting a semicolon; and
       (B) by inserting after clause (ii) the following:
       ``(iii) the least expensive amount that the supplier of the 
     item is paid by a Medicare+Choice organization for such item; 
     or
       ``(iv) the least expensive amount that the supplier of the 
     item is paid by any Federal health care program (as defined 
     in section 1128B(f)) for such item;''; and
       (2) by adding at the end the following:
       ``(E) Administrative costs.--
       ``(i) In general.--Except as provided in clause (ii), if--

       ``(I) the payment amount for an item is covered under 
     clauses (iii) or (iv) of subparagraph (B); and
       ``(II) the Secretary determines that the administrative 
     costs associated with billing and receiving reimbursement 
     from the Secretary for the item exceeds the administrative 
     costs associated with providing such item to a 
     Medicare+Choice organization or another Federal health care 
     program (as so defined);

     then the Secretary shall adjust the payment rate for such 
     item to reflect such excess.
       ``(ii) Limitation.--In no case may the payment rate for an 
     item that is adjusted under clause (i) exceed the payment 
     rate for such item determined in clauses (i) and (ii) of 
     subparagraph (B).
       ``(iii) Collection of information.--The Secretary shall 
     collect from durable medical equipment suppliers that receive 
     reimbursement under Federal health care programs (as so 
     defined) such information as the Secretary determines is 
     necessary in order to make the determination described in 
     clause (i)(II).''.
       (b) Effective Date.--The amendments made by subsection (a) 
     shall apply to items provided on or after January 1, 2000.

     SEC. 16. IMPLEMENTATION OF COMMERCIAL CLAIMS AUDITING 
                   SYSTEMS.

       (a) Commercial Claims Auditing Systems.--
       (1) In general.--Not later than 90 days after the date of 
     enactment of this Act, the Secretary shall require medicare 
     carriers to use commercial claims auditing systems in the 
     processing of claims under part B of the medicare program 
     under title XVIII of the Social Security Act (42 U.S.C. 1395j 
     et seq.) for the purpose of identifying billing errors and 
     abuses.
       (2) Supplement to other technology.--Commercial claims 
     auditing systems required under paragraph (1) shall be used 
     as a supplement to any other information technology used by 
     medicare carriers in processing claims under the medicare 
     program.
       (3) Uniformity.--In order to ensure uniformity in 
     processing claims under the medicare program, the Secretary 
     may require that medicare carriers utilize 1 or more common 
     commercial claims auditing systems, provided that the 
     selection of such system or systems by the Secretary shall 
     be--
       (A) after due consideration of competing alternative 
     systems; but
       (B) without regard to any provision of law that requires 
     the use of competitive procedures (as defined in section 4 of 
     the Office of Federal Procurement Policy Act (41 U.S.C. 403)) 
     or the publication of notice of proposed procurements.
       (4) Implementation.--Commercial claims auditing systems 
     required under paragraph (1) shall be implemented by all 
     medicare carriers by not later than 180 days after the date 
     of enactment of this Act.
       (b) Minimum Software Requirements.--Any commercial claims 
     auditing system required to be implemented pursuant to 
     subsection (a) shall, at a minimum--
       (1) be a commercial item;
       (2) surpass the capability of systems currently used in the 
     processing of claims under part B of the medicare program; 
     and
       (3) be modifiable to--
       (A) satisfy pertinent statutory requirements of the 
     medicare program; and
       (B) conform to policies of the Secretary regarding claims 
     processing under such program.
       (c) Disclosure.--
       (1) In general.--Except as provided in paragraph (2), 
     notwithstanding any other provision of law, any information 
     technology (or data related thereto) utilized by medicare 
     carriers in establishing a commercial claims auditing system 
     pursuant to subsection (a) shall not be subject to public 
     disclosure.
       (2) Authorized disclosure.--The Secretary may authorize the 
     public disclosure of the information described in paragraph 
     (1) if the Secretary determines that--
       (A) release of such information is in the public interest; 
     and
       (B) the information to be released is not protected from 
     disclosure under section 552(b) of title 5, United States 
     Code.
       (d) Definitions.--In this section--
       (1) Commercial claims auditing system.--The term 
     ``commercial claims auditing system'' means a commercial 
     specialized auditing system that includes edits which 
     identify inappropriately coded health care claims.
       (2) Commercial item.--The term ``commercial item'' has the 
     meaning given such term in section 4 of the Office of Federal 
     Procurement Policy Act (41 U.S.C. 403).
       (3) Information technology.--The term ``information 
     technology'' has the meaning given such term in subparagraphs 
     (A) and (B) of section 5002(3) of the Information Technology 
     Management Reform Act of 1996 (40 U.S.C. 1401(3)), were such 
     information technology to be acquired by an executive agency.
       (4) Medicare carrier.--The term ``medicare carrier'' means 
     an entity that has a contract with the Secretary pursuant to 
     section 1842(a) of the Social Security Act (42 U.S.C. 
     1395u(a)).
       (5) Secretary.--The term ``Secretary'' means the Secretary 
     of Health and Human Services.

     SEC. 17. PARTIAL HOSPITALIZATION PAYMENT REFORMS.

       (a) Limitation on Location of Provision of Services.--
       (1) In general.--Section 1861(ff)(2) of the Social Security 
     Act (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 ``, and furnished other than in a skilled 
     nursing facility or in an individual's personal residence'' 
     before the period.
       (2) Effective Date.--The amendments made by paragraph (1) 
     shall apply to partial hospitalization services furnished on 
     or after the first day of the third month beginning after the 
     date of enactment of this Act.
       (b) Qualifications for Community Mental Health Centers.--
     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 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 or requirements as 
     the Secretary may specify to ensure--
       ``(I) the health and safety of individuals being furnished 
     such services;
       ``(II) the effective or efficient furnishing of such 
     services (including protecting against fraud, waste, and 
     abuse); and
       ``(III) the compliance of such entity with the criteria 
     described in such section.''.
       (c) Reenrollment of Providers of CMHC Partial 
     Hospitalization Services.--
       (1) In general.--With respect to each community mental 
     health center that furnishes partial hospitalization services 
     for which payment is made under title XVIII of the Social 
     Security Act, the Secretary of Health and Human Services 
     shall provide for periodic recertification to ensure that the 
     provision of such services complies with section 1913(c) of 
     the Public Health Service Act.
       (2) Deadline for first recertification.--The first 
     recertification under paragraph (1) shall be completed not 
     later than 1 year after the date of enactment of this Act.
       (d) Prospective Payment System for Partial Hospitalization 
     Services.--
       (1) Establishment of system.--Section 1833 of the Social 
     Security Act (42 U.S.C. 1395l) is amended by inserting after 
     subsection (o) the following:

[[Page S9539]]

       ``(p)(1) The Secretary may establish by regulation a 
     prospective payment system for partial hospitalization 
     services provided by a community mental health center or by a 
     hospital to its outpatients. The system shall provide for 
     appropriate payment levels for efficient centers and 
     hospitals and take into account payment levels for similar 
     services furnished by other efficient entities.
       ``(2) A prospective payment system established pursuant to 
     paragraph (1) shall provide for payment amounts for--
       ``(A) the first year in which such system applies, at a 
     level so that, as estimated by the Secretary, the total 
     aggregate payments under this part (including payments 
     attributable to deductibles and coinsurance) for such year 
     are not greater than the total aggregate payments that would 
     have otherwise been made under this part if such system had 
     not been implemented (assuming full implementation of the 
     provisions contained in subsections (a) through (c) of 
     section 17 of the Medicare Waste Tax Reduction Act of 1999); 
     and
       ``(B) each subsequent year, in an amount equal to the 
     payment amount provided for under this paragraph for the 
     preceding year updated by the percentage increase in the 
     Consumer Price Index for all urban consumers (all items; 
     United States city average) for the 12-month period ending 
     with September of that preceding year.''.
       (2) Coinsurance.--Section 1866(a)(2)(A) of the Social 
     Security Act (42 U.S.C. 1395cc(a)(2)(A)) is amended by adding 
     at the end the following: ``In the case of services described 
     in section 1832(a)(2)(J), clause (ii) of the first sentence 
     of this subparagraph shall be applied by substituting the 
     payment basis established under section 1833(p) for the 
     reasonable charges.''.
       (3) Conforming amendments.--
       (A) Section 1832(a)(2) of the Social Security Act (42 
     U.S.C. 1395k(a)(2)) is amended--
       (i) in subparagraph (B), by striking ``or subparagraph 
     (I)'' and inserting ``, (I), or (J)''; and
       (ii) in subparagraph (J), by striking ``provided by a 
     community mental health center (as described in section 
     1861(ff)(2)(B))''.
       (B) Section 1833(a) of the Social Security Act (42 U.S.C. 
     1395l(a)) is amended--
       (i) in paragraph (2) in the matter preceding subparagraph 
     (A), by striking ``(H), and (I)'' and inserting ``(H), (I), 
     and (J)'';
       (ii) in paragraph (8), by striking ``and'' at the end;
       (iii) in paragraph (9), by striking the period at the end 
     and inserting ``; and''; and
       (iv) by adding at the end the following:
       ``(10) in the case of partial hospitalization services, 80 
     percent of the payment basis under the prospective payment 
     system established under section 1833(p).''.
       (4) Effective date.--The amendments made by paragraphs (2) 
     and (3) apply to services furnished on or after January 1 of 
     the first year that begins at least 6 months after the date 
     on which regulations are issued under section 1833(p) of the 
     Social Security Act (42 U.S.C. 1395l(p)) (as inserted by 
     paragraph (1)).

     SEC. 18. EXPANSION OF MEDICARE SENIOR WASTE PATROL 
                   NATIONWIDE.

       There are authorized to be appropriated $25,000,000 in 
     fiscal year 2000, and such sums as are necessary for fiscal 
     years 2001 through 2003, for the purpose of carrying out, and 
     expanding nationwide, the Health Care Anti-Fraud, Waste and 
     Abuse Community Volunteer Demonstration Projects conducted by 
     the Administration on Aging pursuant to the Omnibus 
     Consolidated Appropriations Act, 1997 (Public Law 104-208).

     SEC. 19. APPLICATION OF INHERENT REASONABLENESS TO ALL PART B 
                   SERVICES OTHER THAN PHYSICIANS' SERVICES.

       (a) Repeal of Certain Provisions of the Balanced Budget Act 
     of 1997.--
       (1) Repeal.--Section 4316 of the Balanced Budget Act of 
     1997 (Public Law 105-33; 111 Stat. 390), and the amendments 
     made by such section, are repealed effective August 5, 1997.
       (2) Applicability.--Effective August 5, 1997, the Social 
     Security Act shall be applied and administered as if section 
     4316 of the Balanced Budget Act of 1997 (Public Law 105-33; 
     111 Stat. 390), and the amendments made by such section, had 
     not been enacted.
       (b) Application of Inherent Reasonableness to All Part B 
     Services Other Than Physicians' Services.--
       (1) In general.--Section 1842(b)(8) of the Social Security 
     Act (42 U.S.C. 1395u(b)(8)) is amended to read as follows:
       ``(8) The Secretary shall describe by regulation the 
     factors to be used in determining the cases (of particular 
     items or services) in which the application of this part 
     (other than to physicians' services paid under section 1848) 
     results in the determination of an amount that, because of 
     its being grossly excessive or grossly deficient, is not 
     inherently reasonable, and provide in those cases for the 
     factors to be considered in establishing an amount that is 
     realistic and equitable.''.
       (2) Effective date.--The amendment made by this subsection 
     shall take effect August 5, 1997.

     SEC. 20. STANDARDS REGARDING PAYMENT FOR CERTAIN ORTHOTICS 
                   AND PROSTHETICS.

       (a) Standards.--
       (1) In general.--Section 1834(h)(1) of the Social Security 
     Act (42 U.S.C. 1395m(h)(1)) is amended by adding at the end 
     the following:
       ``(F) Establishment of standards for certain items.--
       ``(i) In general.--No payment shall be made for an 
     applicable item unless such item is provided by a qualified 
     practitioner or a qualified supplier under the system 
     established by the Secretary under clause (iii). For purposes 
     of the preceding sentence, if a qualified practitioner or a 
     qualified supplier contracts with an entity to provide an 
     applicable item, then no payment shall be made for such item 
     unless the entity is also a qualified supplier.
       ``(ii) Definitions.--In this subparagraph--

       ``(I) Applicable item.--The term `applicable item' means 
     orthotics and prosthetics that require education, training, 
     and experience to custom fabricate such item. Such term does 
     not include shoes and shoe inserts.
       ``(II) Qualified practitioner.--The term `qualified 
     practitioner' means a physician or health professional who--

       ``(aa) is specifically trained and educated to provide or 
     manage the provision of custom-designed, fabricated, 
     modified, and fitted orthotics and prosthetics, and is either 
     certified by the American Board for Certification in 
     Orthotics and Prosthetics, Inc., or is credentialed and 
     approved by a program that the Secretary determines, in 
     consultation with appropriate experts in orthotics and 
     prosthetics, has training and education standards that are 
     necessary to provide applicable items;
       ``(bb) is licensed in orthotics or prosthetics by the State 
     in which the applicable item is supplied; or
       ``(cc) has completed at least 10 years practice in the 
     provision of applicable items.

       ``(III) Qualified supplier.--The term `qualified supplier' 
     means any entity that is--

       ``(aa) accredited by the American Board for Certification 
     in Orthotics and Prosthetics, Inc.; or
       ``(bb) accredited and approved by a program that the 
     Secretary determines has accreditation and approval standards 
     that are essentially equivalent to those of such Board.
       ``(iii) System.--The Secretary, in consultation with 
     appropriate experts in orthotics and prosthetics, shall 
     establish a system under which the Secretary shall--

       ``(I) determine which items are applicable items and 
     formulate a list of such items;
       ``(II) review the applicable items billed under the coding 
     system established under this title; and
       ``(III) limit payment for applicable items pursuant to 
     clause (i).''.

       (2) Effective date.--The amendment made by paragraph (1) 
     shall apply to items provided on or after January 1, 2000.
       (b) Revision of Definition of Orthotics.--
       (1) In general.--Section 1861(s)(9) of the Social Security 
     Act (42 U.S.C. 1395x(s)(9)) is amended by inserting 
     ``(including such braces that are used in conjunction with, 
     or as components of, other medical or non-medical equipment 
     when provided by a qualified practitioner (as defined in 
     subclause (II) of section 1834(h)(1)(F))) or a qualified 
     supplier (as defined in subclause (III) of such section)'' 
     after ``braces''.
       (2) Effective date.--The amendment made by paragraph (1) 
     shall apply to items provided on or after January 1, 2000.

     SEC. 21. INCREASED FLEXIBILITY IN CONTRACTING FOR MEDICARE 
                   CLAIMS PROCESSING.

       (a) Carriers To Include Entities That Are Not Insurance 
     Companies.--Section 1842 of the Social Security Act (42 
     U.S.C. 1395u) is amended--
       (1) in subsection (a), in the matter preceding paragraph 
     (1), by striking ``with carriers'' and inserting ``with 
     agencies and organizations (in this section referred to as 
     `carriers')''; and
       (2) by striking subsection (f).
       (b) Secretarial Flexibility in Contracting for and in 
     Assigning Fiscal Intermediary and Carrier Functions.--
       (1) In general.--
       (A) Section 1816(a) of the Social Security Act (42 U.S.C. 
     1395h(a)) is amended to read as follows:
       ``(a)(1) The Secretary may enter into contracts with 
     agencies or organizations to perform any or all of the 
     following functions, or parts of those functions (or, to the 
     extent provided in a contract, to secure performance thereof 
     by other organizations) to--
       ``(A) determine (subject to the provisions of section 1878 
     and to such review by the Secretary as may be provided for by 
     the contracts) the amount of the payments required pursuant 
     to this part to be made to providers of services;
       ``(B) make payments described in subparagraph (A);
       ``(C) provide consultative services to institutions or 
     agencies to enable them to establish and maintain fiscal 
     records necessary for purposes of this part and otherwise to 
     qualify as providers of services;
       ``(D) serve as a center for, and communicate to individuals 
     entitled to benefits under this part and to providers of 
     services, any information or instructions furnished to the 
     agency or organization by the Secretary, and serve as a 
     channel of communication from individuals entitled to 
     benefits under this part and from providers of services to 
     the Secretary;
       ``(E) make such audits of the records of providers of 
     services as may be necessary to ensure that proper payments 
     are made under this part;
       ``(F) perform the functions described by subsection (d); 
     and

[[Page S9540]]

       ``(G) perform such other functions as are necessary to 
     carry out the purposes of this part.
       ``(2) As used in this title and title XI, the term `fiscal 
     intermediary' means an agency or organization with a contract 
     under this section.''.
       (B) Section 1816(b)(1)(A) of the Social Security Act (42 
     U.S.C. 1395h(b)(1)(A)) is amended by striking ``after 
     applying the standards, criteria, and procedures'' and 
     inserting ``after evaluating the ability of the agency or 
     organization to fulfill the contract performance 
     requirements''.
       (C) Section 1816(d) of the Social Security Act (42 U.S.C. 
     1395h(d)) is amended to read as follows:
       ``(d) Each provider of services shall have a fiscal 
     intermediary that--
       ``(1) acts as a single point of contact for the provider of 
     services under this part;
       ``(2) makes its services sufficiently available to meet the 
     needs of the provider of services; and
       ``(3) is responsible and accountable for arranging the 
     resolution of issues raised under this part by the provider 
     of services.''.
       (D) Section 1816(e) of the Social Security Act (42 U.S.C. 
     1395h(d)) is amended to read as follows:
       ``(e) The Secretary, in evaluating the performance of a 
     fiscal intermediary, may solicit comments from providers of 
     services.''.
       (E) Section 1816(f)(1) of the Social Security Act (42 
     U.S.C. 1395h(f)(1)) is amended to read as follows:
       ``(f)(1) With respect to performance requirements under 
     subsection (a), the Secretary may consult with--
       ``(A) Medicare+Choice organizations under part C of this 
     title;
       ``(B) providers of services and other persons who furnish 
     items or services for which payment may be made under this 
     title; and
       ``(C) organizations and agencies performing functions 
     necessary to carry out the purposes of this part.''.
       (F) Section 1842(b)(2) of the Social Security Act (42 
     U.S.C. 1395u(b)(2)) is amended--
       (i) in subparagraph (A)--

       (I) by inserting ``(i)'' before ``No such contract'';
       (II) by striking the second sentence and inserting the 
     following:

       ``(ii) With respect to performance requirements for 
     contracts under subsection (a), the Secretary may consult 
     with--
       ``(I) Medicare+Choice organizations under part C of this 
     title;
       ``(II) providers of services and other persons who furnish 
     items or services for which payment may be made under this 
     title; and
       ``(III) organizations and agencies performing functions 
     necessary to carry out the purposes of this part.'';

       (III) by striking the third sentence; and
       (IV) by striking the fourth sentence and inserting the 
     following:

       ``(iii) The Secretary may not require, as a condition of 
     entering into a contract under this section or under section 
     1871, that a carrier match data obtained other than in its 
     activities under this part with data used in the 
     administration of this part for purposes of identifying 
     situations in which section 1862(b) may apply.'';
       (ii) in subparagraph (B), in the matter preceding clause 
     (i), by striking ``establish standards'' and inserting 
     ``develop contract performance requirements''; and
       (iii) in subparagraph (D), by striking ``standards and 
     criteria'' each place it appears and inserting ``contract 
     performance requirements''.
       (2) Conforming amendments.--
       (A) Section 1816(b) of the Social Security Act (42 U.S.C. 
     1395h(b)) is amended--
       (i) in the matter preceding paragraph (1), by striking ``an 
     agreement'' and inserting ``a contract'';
       (ii) in paragraph (1)(B), by striking ``agreement'' and 
     inserting ``contract''; and
       (iii) in paragraph (2)(A), by striking ``agreement'' and 
     inserting ``contract''.
       (B) Section 1816(c) of the Social Security Act (42 U.S.C. 
     1395h(c)) is amended--
       (i) in paragraph (1)--

       (I) in the first sentence, by striking ``An agreement'' and 
     inserting ``A contract''; and
       (II) in the last sentence, by striking ``an agreement'' and 
     inserting ``a contract'';

       (ii) in paragraph (2)(A), in the matter preceding clause 
     (i)--

       (I) by striking ``agreement'' and inserting ``contract''; 
     and
       (II) by inserting ``that provides for making payments under 
     this part'' after ``this section'';

       (iii) in paragraph (2)(C), by striking ``hospital, rural 
     primary care hospital, skilled nursing facility, home health 
     agency, hospice program, comprehensive outpatient 
     rehabilitation facility, or rehabilitation agency'' and 
     inserting ``provider of services (as defined in section 
     1861(u))''; and
       (iv) in paragraph (3)(A)--

       (I) by striking ``agreement'' and inserting ``contract''; 
     and
       (II) by inserting ``that provides for making payments under 
     this part'' after ``this section''.

       (C) Section 1816(h) of the Social Security Act (42 U.S.C. 
     1395h(h)) is amended--
       (i) by striking ``An agreement'' and inserting ``A 
     contract''; and
       (ii) by striking ``the agreement'' each place it appears 
     and inserting ``the contract''.
       (D) Section 1816(i)(1) of the Social Security Act (42 
     U.S.C. 1395h(i)(1)) is amended by striking ``an agreement'' 
     and inserting ``a contract''.
       (E) Section 1816(j) of the Social Security Act (42 U.S.C. 
     1395h(j)) is amended in the matter preceding paragraph (1)--
       (i) by striking ``An agreement'' and inserting ``A 
     contract''; and
       (ii) by striking ``for home health services, extended care 
     services, or post-hospital extended care services''.
       (F) Section 1816(k) of the Social Security Act (42 U.S.C. 
     1395h(k)) is amended--
       (i) by striking ``An agreement'' and inserting ``A 
     contract''; and
       (ii) by inserting ``(as appropriate)'' after ``submit''.
       (G) Section 1816(l) of the Social Security Act (42 U.S.C. 
     1395h(l)) is amended by striking ``an agreement'' and 
     inserting ``a contract''.
       (H) Section 1842(a) of the Social Security Act (42 U.S.C. 
     1395u(a)) is amended--
       (i) in the matter preceding paragraph (1) (as amended by 
     subsection (a)(1))--

       (I) by striking ``carriers with which agreements'' and 
     inserting ``single contracts under section 1816 and this 
     section together, or separate contracts with eligible 
     agencies and organizations with which contracts''; and
       (II) by striking ``some or all of the following functions'' 
     and inserting ``any or all of the following functions, or 
     parts of those functions''; and

       (ii) in paragraph (3), by inserting ``(to and from 
     individuals enrolled under this part and to and from 
     physicians and other entities that furnish items and 
     services)'' after ``communication''.
       (I) Section 1842(b) of the Social Security Act (42 U.S.C. 
     1395u(b)(2)(C)) is amended--
       (i) in paragraph (2)(C), in the first sentence, by 
     inserting ``(as appropriate)'' after ``carriers'';
       (ii) in paragraph (3), in the matter preceding subparagraph 
     (A), by inserting ``(as appropriate)'' after ``contract'';
       (iii) in paragraph (7)(A), in the matter preceding clause 
     (i), by striking ``the carrier'' and inserting ``a carrier''; 
     and
       (iv) in paragraph (11)(A), in the matter preceding clause 
     (i), by inserting ``(as appropriate)'' after ``each 
     carrier''.
       (J) Section 1842(h) of the Social Security Act (42 U.S.C. 
     1395u(h)) is amended--
       (i) in paragraph (2), in the first sentence--

       (I) by striking ``an agreement'' and inserting ``a 
     contract''; and
       (II) by inserting ``(as appropriate)'' after ``shall'';

       (ii) in paragraph (3)(A), by striking ``an agreement'' and 
     inserting ``a contract'';
       (iii) in paragraph (3)(B), in the third sentence, by 
     striking ``agreements'' and inserting ``contracts'';
       (iv) in paragraph (5)(A), by inserting ``(as appropriate)'' 
     after ``carriers''; and
       (v) in paragraph (8)--

       (I) by striking ``an agreement'' and inserting ``a 
     contract''; and
       (II) by striking ``such agreement'' and inserting ``such 
     contract''.

       (c) Elimination of Special Provisions for Terminations of 
     Contracts.--
       (1) Section 1816 of the Social Security Act (42 U.S.C. 
     1395h) is amended--
       (A) in subsection (b), in the matter preceding paragraph 
     (1), by striking ``or renew'';
       (B) in subsection (c)(1), in the last sentence, by striking 
     ``or renewing''; and
       (C) by striking subsection (g).
       (2) Section 1842(b) of the Social Security Act (42 U.S.C. 
     1395u(b)(2)) is amended by striking paragraph (5).
       (d) Repeal of Fiscal Intermediary Requirements That Are Not 
     Cost-Effective.--Section 1816(f)(2) of the Social Security 
     Act (42 U.S.C. 1395h(f)(2)) is amended to read as follows:
       ``(2) The contract performance requirements described in 
     paragraph (1) shall include--
       ``(A) with respect to claims for services furnished under 
     this part by any provider of services (as defined in section 
     1861(u)) other than a hospital, whether such agency or 
     organization is able to process 75 percent of 
     reconsiderations within 60 days and 90 percent of 
     reconsiderations within 90 days; and''.
       (e) Repeal of Cost Reimbursement Requirements.--
       (1) Section 1816(c)(1) of the Social Security Act (42 
     U.S.C. 1395h(c)(1)) is amended--
       (A) in the first sentence--
       (i) by striking the comma after ``appropriate'' and 
     inserting ``and''; and
       (ii) by striking ``, and shall provide for payment'' and 
     all that follows before the period; and
       (B) by striking the second and third sentences.
       (2) Section 1842(c)(1) of the Social Security Act (42 
     U.S.C. 1395h(c)(1)) is amended--
       (A) in the first sentence--
       (i) by striking ``section shall provide'' and inserting 
     ``section may provide''; and
       (ii) by striking ``, and shall provide'' and all that 
     follows before the period; and
       (B) by striking the second and third sentences.
       (3) Section 2326 of the Deficit Reduction Act of 1984 (42 
     U.S.C. 1395h note) is amended by striking subsection (a).
       (f) Secretarial Flexibility With Respect to Renewing 
     Contracts and Transfer of Functions.--
       (1) Section 1816(c) of the Social Security Act (42 U.S.C. 
     1395h(c)) is amended by adding at the end the following:
       ``(4)(A) Except as provided in laws with general 
     applicability to Federal acquisition and procurement or in 
     subparagraph (B), the

[[Page S9541]]

     Secretary shall use competitive procedures when entering into 
     contracts under this section.
       ``(B)(i) The Secretary may renew a contract with a fiscal 
     intermediary under this section from term to term without 
     regard to section 5 of title 41, United States Code, or any 
     other provision of law requiring competition, if the fiscal 
     intermediary has met or exceeded the performance requirements 
     established in the current contract.
       ``(ii) Functions may be transferred among fiscal 
     intermediaries without regard to any provision of law 
     requiring competition. However, the Secretary shall ensure 
     that performance quality is considered in such transfers.''.
       (2) Section 1842(b)(1) of the Social Security Act (42 
     U.S.C. 1395u(b)(1)) is amended to read as follows:
       ``(b)(1)(A) Except as provided in laws with general 
     applicability to Federal acquisition and procurement or in 
     subparagraph (B), the Secretary shall use competitive 
     procedures when entering into contracts under this section.
       ``(B)(i) The Secretary may renew a contract with a carrier 
     under subsection (a) from term to term without regard to 
     section 5 of title 41, United States Code, or any other 
     provision of law requiring competition, if the carrier has 
     met or exceeded the performance requirements established in 
     the current contract.
       ``(ii) Functions may be transferred among carriers without 
     regard to any provision of law requiring competition. 
     However, the Secretary shall ensure that performance quality 
     is considered in such transfers.''.
       (g) Year 2000 Compliance.--
       (1) Section 1816(f)(2) of the Social Security Act (42 
     U.S.C. 1395h(f)(2)) (as amended by subsection (d)) is amended 
     by adding at the end the following:
       ``(B) a requirement that, by such time as the Secretary 
     considers reasonable, the information technology that is used 
     or acquired by the agency or organization to carry out its 
     responsibilities under this title (to the extent that the 
     Secretary finds such information technology is under the 
     control of such agency or organization)--
       ``(i) meets the definition of `Year 2000 compliant' under 
     the Federal Acquisition Regulation (concerning accurate 
     processing of date and time data (including calculating, 
     comparing, and sequencing) from, into, and between the 20th 
     and 21st centuries, and the years 1999 and 2000 and leap year 
     calculations) but without regard to whether the information 
     technology is being acquired; and
       ``(ii) meets such other criteria for Year 2000 compliance 
     as the Secretary considers appropriate.''.
       (2) Section 1842(b)(2)(A)(i) of the Social Security Act (42 
     U.S.C. 1395u(b)(2)(A)(i)) (as amended by subsection 
     (b)(1)(F)) is amended by striking the period and inserting 
     ``, including a requirement that, by such time as the 
     Secretary considers reasonable, the information technology 
     that is used or acquired by such carrier to carry out its 
     responsibilities under this title (to the extent that the 
     Secretary finds such information technology is under the 
     control of such carrier) meets--
       ``(I) the definition of `Year 2000 compliant' under the 
     Federal Acquisition Regulation (concerning accurate 
     processing of date and time data (including calculating, 
     comparing, and sequencing) from, into, and between the 20th 
     and 21st centuries, and the years 1999 and 2000 and leap year 
     calculations) but without regard to whether the information 
     technology is being acquired; and
       ``(II) such other criteria for Year 2000 compliance as the 
     Secretary considers appropriate.''.
       (h) Waiver of Competitive Requirements for Initial 
     Contracts.--Contracts that have periods that begin before or 
     during the 1-year period that begins on the first day of the 
     fourth calendar month that begins after the date of enactment 
     of this Act may be entered into under section 1816(a) or 
     1842(a) of the Social Security Act (42 U.S.C. 1395h(a) and 
     1395u(a)) without regard to any provision of law requiring 
     use of competitive procedures.
       (i) Effective Dates.--
       (1) The amendments made by subsection (c) apply to 
     contracts that have periods ending on or after the end of the 
     third calendar month that begins after the date of enactment 
     of this Act.
       (2) The amendments made by subsections (a), (b), (d), and 
     (e) apply to contracts that have periods beginning after the 
     third calendar month that begins after the date of enactment 
     of this Act.
       (3) The amendments made by subsection (f) apply to 
     contracts that have periods that begin after the end of the 
     1-year period specified in paragraph (1) of this subsection.
       (4) The amendment made by subsection (g) shall take effect 
     on the date of enactment of this Act.

     SEC. 22. EXEMPTION OF INSPECTORS GENERAL FROM PAPERWORK 
                   REDUCTION ACT REQUIREMENTS.

       (a) In General.--Chapter 35 of title 44, United States 
     Code, is amended by inserting after section 3502 the 
     following:

     ``Sec. 3502a. Exemption of any Office of Inspector General

       ``This chapter shall not apply with respect to any Office 
     of Inspector General established within an agency under the 
     Inspector General Act of 1978.''.
       (b) Table of Contents Amendment.--The table of contents of 
     chapter 35 of title 44, United States Code, is amended by 
     adding after the item relating to section 3502 the following 
     new item:

``3502a. Exemption of any Office of Inspector General.''.
       (c) Effective Date.--The amendments made by this section 
     shall take effect on the date of enactment of this Act.
                                 ______