[Federal Register Volume 59, Number 183 (Thursday, September 22, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-23415]


[[Page Unknown]]

[Federal Register: September 22, 1994]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Office of Inspector General

42 CFR Part 1003

RIN 0991-AA44

 

Medicare and State Health Care Programs: Fraud and Abuse, Civil 
Money Penalties and Intermediate Sanctions for Certain Violations by 
Health Maintenance Organizations and Competitive Medical Plans

AGENCY: Office of Inspector General (OIG), HHS

ACTION: Correction to final regulations.

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SUMMARY: This document corrects technical errors that appeared in 42 
CFR part 1003 of the final rule published in the Federal Register on 
July 15, 1994 (59 FR 36072). Specifically, the final rule set forth the 
Secretary's authority to impose sanctions and civil money penalties on 
health maintenance organizations, competitive medical plans and other 
prepaid health plans contracting under Medicare and Medicaid. This 
correction notice sets forth the corrected text for Secs. 1003.100, 
1003.103 and 1003.106, some of which was inadvertently omitted or 
amended.

EFFECTIVE DATE: September 22, 1994.

FOR FURTHER INFORMATION CONTACT: Joel J. Schaer, (202) 619-0089

SUPPLEMENTARY INFORMATION:

Background

    On July 15, 1994, we published a final rule implementing sections 
9312(c)(2), 9312(f) and 9434(b) of Public Law 99-509, section 7 of 
Public Law 100-93, section 4014 of Public Law 100-203, sections 224 and 
411(k) of Public Law 100-360, and section 6411(d)(3) of Public Law 101-
239. These provisions broadened the Secretary's authority to impose 
intermediate sanctions and civil money penalties on health maintenance 
organizations (HMOs), competitive medical plans and other prepaid 
health plans contracting under Medicare or Medicaid that (1) 
substantially fail to provide an enrolled individual with required 
medically necessary items and services; (2) engage in certain 
marketing, enrollment, reporting or claims payment abuses; or (3) in 
the case of Medicare risk-contracting plans, employ or contract with, 
either directly or indirectly, an individual or entity excluded from 
participation in Medicare.

Need for Correction

    As published, portions of the final regulations addressing 
Secs. 1003.100, 1003.103 and 1003.106 contained technical errors that 
inadvertently amended and omitted existing regulations text.

Correction of Publication

    Accordingly, the final regulations published on July 15, 1994 (59 
FR 36072) amending Secs. 1003.100, 1003.103 and 1003.106 are corrected 
as follows:

PART 1003--CIVIL MONEY PENALTIES AND ASSESSMENTS

    A. On page 36085, in the third column, instruction paragraph 1. and 
the authority citation following it are corrected to read as follows:
    1. The authority citation for part 1003 is revised to read as 
follows:

    Authority: 42 U.S.C. 1302, 1320a-7,1320a-7a, 1320b-10, 1395u(j), 
1395u(k), 1395dd(d)(1), 1395mm, 1395ss(d), 1396b(m), 11131(c) and 
11137(b)(2).

    B. Beginning on page 36085, in the third column, instruction 
paragraph 2. and the text of Sec. 1003.100 on page 36086 in the first 
column are corrected to read as follows:
    2. Section 1003.100 is amended by revising paragraph (a); 
republishing paragraph (b) introductory text and paragraph (b)(1) 
introductory text; revising paragraphs (b)(1)(v) and (b)(1)(vi); and 
adding a new paragraph (b)(1)(vii) to read as follows:


Sec. 1003.100  Basis and purpose.

    (a) Basis. This part implements sections 1128, 1128(c), 1128A, 
1140, 1842(j), 1842(k), 1876(i)(6), 1882(d), and 1903(m)(5) of the 
Social Security Act, and sections 421(c) and 427(b)(2) of Public Law 
99-660 (42 U.S.C. 1320a-7, 1320a-7a, 1320a-7(c), 1320b-10, 1395mm, 
1395ss(d), 1395u(j), 1395u(k), 1396b(m), 11131(c) and 11137(b)(2)).
    (b) Purpose. This part--
    (1) Provides for the imposition of money penalties and, as 
applicable, assessments against persons who--
* * * * *
    (v) Misuse certain Medicare and Social Security program words, 
letters, symbols and emblems;
    (vi) Violate a requirement of section 1867 of the Act or 
Sec. 489.24 of this title; or
    (vii) Substantially fail to provide an enrollee with required 
medically necessary items and services, or engage in certain marketing, 
enrollment, reporting, claims payment, employment or contracting 
abuses.
* * * * *
    C. On page 36086, in the second column, instruction paragraph 5. 
and the text of Sec. 1003.103 in the second and third columns are 
corrected to read as follows:
    5. Section 1003.103 is amended by revising paragraph (a) and by 
adding a new paragraph (f) to read as follows:


Sec. 1003.103  Amount of penalty.

    (a) Except as provided in paragraphs (b) through (f) of this 
section, the OIG may impose a penalty of not more than $2,000 for each 
item or service that is subject to a determination under Sec. 1003.102.
* * * * *
    (f)(1) The OIG may, in addition to or in lieu of other remedies 
available under law, impose a penalty of up to $25,000 for each 
determination by HCFA that a contracting organization has--
    (i) Failed substantially to provide an enrollee with required 
medically necessary items and services and the failure adversely 
affects (or has the likelihood of adversely affecting) the enrollee;
    (ii) Imposed premiums on enrollees in excess of amounts permitted 
under section 1876 or title XIX of the Act;
    (iii) Acted to expel or to refuse to re-enroll a Medicare 
beneficiary in violation of the provisions of section 1876 of the Act 
and for reasons other than the beneficiary's health status or 
requirements for health care services;
    (iv) Misrepresented or falsified information furnished to an 
individual or any other entity under section 1876 or section 1903(m) of 
the Act; or
    (v) Failed to comply with the requirements of section 1876(g)(6)(A) 
of the Act regarding prompt payment of claims.
    (2) The OIG may, in addition to or in lieu of other remedies 
available under law, impose a penalty of up to $25,000 for each 
determination by HCFA that a contracting organization with a contract 
under section 1876 of the Act--
    (i) Employs or contracts with individuals or entities excluded, 
under section 1128 or section 1128A of the Act, from participation in 
Medicare for the provision of health care, utilization review, medical 
social work, or administrative services; or
    (ii) Employs or contracts with any entity for the provision of 
services (directly or indirectly) through an excluded individual or 
entity.
    (3) The OIG may, in addition to or in lieu of other remedies 
available under law, impose a penalty of up to $100,000 for each 
determination that a contracting organization has--
    (i) Misrepresented or falsified information to the Secretary under 
section 1876 of the Act or to the State under section 1903(m) of the 
Act; or
    (ii) Acted to expel or to refuse to re-enroll a Medicaid recipient 
because of the individual's health status or requirements for health 
care services, or engaged in any practice that would reasonably be 
expected to have the effect of denying or discouraging enrollment 
(except as permitted by section 1876 or section 1903(m) of the Act) 
with the contracting organization by Medicare beneficiaries and 
Medicaid recipients whose medical condition or history indicates a need 
for substantial future medical services.
    (4) If enrolles are charged more than the allowable premium, the 
OIG will impose an additional penalty equal to double the amount of 
excess premium charged by the contracting organization. The excess 
premium amount will be deducted from the penalty and returned to the 
enrollee.
    (5) The OIG will impose an additional $15,000 penalty for each 
individual not enrolled when HCFA determines that a contracting 
organization has committed a violation described in paragraph 
(f)(3)(ii) of this section.
    (6) For purposes of paragraph (f) of this section, a violation is 
each incident where a person has committed an act listed in 
Sec. 417.500(a) or Sec. 434.67(a) of this title, or failed to comply 
with a requirement set forth in Sec. 434.80(c) of this title.
    D. Beginning on page 36086, in the third column, instruction 
paragraph 6. and the text of Sec. 1003.106 on page 36087 are corrected 
to read as follows:
    6. Section 1003.106 is amended by adding a new paragraph (a)(5); 
redesignating paragraph (d) as paragraph (e) and republishing it; and 
adding a new paragraph (d) to read as follows:


Sec. 1003.106  Determinations regarding the amount of the penalty and 
assessment.

    (a) Amount of penalty. * * *
    (5) In determining the appropriate amount of any penalty in 
accordance with Sec. 1003.103(f), the OIG will consider as 
appropriate--
    (i) The nature and scope of the required medically necessary item 
or service not provided and the circumstances under which it was not 
provided;
    (ii) The degree of culpability of the contracting organization;
    (iii) The seriousness of the adverse effect that resulted or could 
have resulted from the failure to provide required medically necessary 
care;
    (iv) The harm which resulted or could have resulted from the 
provision of care by a person that the contracting organization is 
expressly prohibited, under section 1876(i)(6) or section 1903(p)(2) of 
the Act, from contracting with or employing;
    (v) The harm which resulted or could have resulted from the 
contracting organization's expulsion or refusal to re-enroll a Medicare 
beneficiary or Medicaid recipient;
    (vi) The nature of the misrepresentation or fallacious information 
furnished by the contracting organization to the Secretary, State, 
enrollee or other entity under section 1876 or section 1903(m) of the 
Act;
    (vii) The history of prior offenses by the contracting organization 
or principals of the contracting organization, including whether, at 
any time prior to determination of the current violation or violations, 
the contracting organization or any of its principals were convicted of 
a criminal charge or were held liable for civil or administrative 
sanctions in connection with a program covered by this part or any 
other public or private program of payment for medical services; and
    (viii) Such other matters as justice may require.
* * * * *
    (d) In considering the factors listed in paragraph (a)(5) of this 
section, for violations subject to a determination under 
Sec. 1003.103(f), the following circumstances are to be considered, as 
appropriate, in determining the amount of any penalty--
    (1) Nature and circumstances of the incident.
    (i) It would be considered a mitigating circumstance if, where more 
than one violation exists, the appropriate items or services not 
provided were--
    (A) Few in number, or
    (B) Of the same type and occurred within a short period of time.
    (ii) It would be considered an aggravating circumstance if such 
items or services were of several types and occurred over a lengthy 
period of time, or if there were many such items or services (or the 
nature and circumstances indicate a pattern of such items or services 
not being provided).
    (2) Degree of culpability. It would be considered a mitigating 
circumstance if the violation was the result of an unintentional, 
unrecognized error, and corrective action was taken promptly after 
discovery of the error.
    (3) Failure to provide required care. It would be considered an 
aggravating circumstance if the failure to provide required care was 
attributable to an individual or entity that the contracting 
organization is expressly prohibited by law from contracting with or 
employing.
    (4) Use of excluded individuals. It would be considered an 
aggravating factor if the contracting organization knowingly or 
routinely engages in the prohibited practice of contracting or 
employing, either directly or indirectly, individuals or entities 
excluded from the Medicare program under section 1128 or section 1128A 
of the Act.
    (5) Routine practices. It would be considered an aggravating factor 
if the contracting organization knowingly or routinely engages in any 
discriminatory or other prohibited practice which has the effect of 
denying or discouraging enrollment by individuals whose medical 
condition or history indicates a need for substantial future medical 
services.
    (6) Prior offenses. It would be considered an aggravating 
circumstance if at any time prior to determination of the current 
violation or violations, the contracting organization or any of its 
principals was convicted on criminal charges or held liable for civil 
or administrative sanctions in connection with a program covered by 
this part or any other public or private program of payment for medical 
services. The lack of prior liability for criminal, civil, or 
administrative sanctions by the contracting organization, or the 
principals of the contracting organization, would not necessarily be 
considered a mitigating circumstance in determining civil money penalty 
amounts.
    (e) (1) The standards set forth in this section are binding, except 
to the extent that their application would result in imposition of an 
amount that would exceed limits imposed by the United States 
Constitution.
    (2) The amount imposed will not be less than the approximate amount 
required to fully compensate the United States, or any State, for its 
damages and costs, tangible and intangible, including but not limited 
to the costs attributable to the investigation, prosecution, and 
administrative review of the case.
    (3) Nothing in this section will limit the authority of the 
Department to settle any issue or case as provided by Sec. 1003.126, or 
to compromise any penalty and assessment as provided by Sec. 1003.128.

    Dated: September 13, 1994.
June Gibbs Brown,
Inspector General.
[FR Doc. 94-23415 Filed 9-21-94; 8:45 am]
BILLING CODE 4150-04-P