[105th Congress Public Law 266]
[From the U.S. Government Printing Office]


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[DOCID: f:publ266.105]


[[Page 111 STAT. 2363]]

Public Law 105-266
105th Congress

                                 An Act


 
     To amend chapter 89 of title 5, United States Code, to improve 
 administration of sanctions against unfit health care providers under 
      the Federal Employees Health Benefits Program, and for other 
            purposes. <<NOTE: Oct. 19, 1998 -  [H.R. 1836]>> 

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled, <<NOTE: Federal 
Employees Health Care Protection Act of 1998.>> 

SECTION 1. SHORT TITLE. <<NOTE: 5 USC 8901 note.>> 

    This Act may be cited as the ``Federal Employees Health Care 
Protection Act of 1998''.

SEC. 2. DEBARMENT AND OTHER SANCTIONS.

    (a) Amendments.--Section 8902a of title 5, United States Code, is 
amended--
            (1) in subsection (a)--
                    (A) in paragraph (1)--
                          (i) by striking ``and'' at the end of 
                      subparagraph (B);
                          (ii) by striking the period at the end of 
                      subparagraph (C) and inserting ``; and''; and
                          (iii) by adding at the end the following:
            ``(D) the term `should know' means that a person, with 
        respect to information, acts in deliberate ignorance of, or in 
        reckless disregard of, the truth or falsity of the information, 
        and no proof of specific intent to defraud is required;''; and
                    (B) in paragraph (2)(A), by striking ``subsection 
                (b) or (c)'' and inserting ``subsection (b), (c), or 
                (d)'';
            (2) in subsection (b)--
                    (A) by striking ``The Office of Personnel Management 
                may bar'' and inserting ``The Office of Personnel 
                Management shall bar''; and
                    (B) by amending paragraph (5) to read as follows:
            ``(5) Any provider that is currently debarred, suspended, or 
        otherwise excluded from any procurement or nonprocurement 
        activity (within the meaning of section 2455 of the Federal 
        Acquisition Streamlining Act of 1994).'';
            (3) by redesignating subsections (c) through (i) as 
        subsections (d) through ( j), respectively, and by inserting 
        after subsection (b) the following:

    ``(c) The Office may bar the following providers of health care 
services from participating in the program under this chapter:
            ``(1) Any provider--
                    ``(A) whose license to provide health care services 
                or supplies has been revoked, suspended, restricted, or 
                not renewed, by a State licensing authority for reasons 
                relating

[[Page 111 STAT. 2364]]

                to the provider's professional competence, professional 
                performance, or financial integrity; or
                    ``(B) that surrendered such a license while a formal 
                disciplinary proceeding was pending before such an 
                authority, if the proceeding concerned the provider's 
                professional competence, professional performance, or 
                financial integrity.
            ``(2) Any provider that is an entity directly or indirectly 
        owned, or with a control interest of 5 percent or more held, by 
        an individual who has been convicted of any offense described in 
        subsection (b), against whom a civil monetary penalty has been 
        assessed under subsection (d), or who has been debarred from 
        participation under this chapter.
            ``(3) Any individual who directly or indirectly owns or has 
        a control interest in a sanctioned entity and who knows or 
        should know of the action constituting the basis for the 
        entity's conviction of any offense described in subsection (b), 
        assessment with a civil monetary penalty under subsection (d), 
        or debarment from participation under this chapter.
            ``(4) Any provider that the Office determines, in connection 
        with claims presented under this chapter, has charged for health 
        care services or supplies in an amount substantially in excess 
        of such provider's customary charge for such services or 
        supplies (unless the Office finds there is good cause for such 
        charge), or charged for health care services or supplies which 
        are substantially in excess of the needs of the covered 
        individual or which are of a quality that fails to meet 
        professionally recognized standards for such services or 
        supplies.
            ``(5) Any provider that the Office determines has committed 
        acts described in subsection (d).

Any determination under paragraph (4) relating to whether a charge for 
health care services or supplies is substantially in excess of the needs 
of the covered individual shall be made by trained reviewers based on 
written medical protocols developed by physicians. In the event such a 
determination cannot be made based on such protocols, a physician in an 
appropriate specialty shall be consulted.'';
            (4) in subsection (d) (as so redesignated by paragraph (3)) 
        by amending paragraph (1) to read as follows:
            ``(1) in connection with claims presented under this 
        chapter, that a provider has charged for a health care service 
        or supply which the provider knows or should have known 
        involves--
                    ``(A) an item or service not provided as claimed;
                    ``(B) charges in violation of applicable charge 
                limitations under section 8904(b); or
                    ``(C) an item or service furnished during a period 
                in which the provider was debarred from participation 
                under this chapter pursuant to a determination by the 
                Office under this section, other than as permitted under 
                subsection (g)(2)(B);'';
            (5) in subsection (f ) (as so redesignated by paragraph (3)) 
        by inserting after ``under this section'' the first place it 
        appears the following: ``(where such debarment is not 
        mandatory)'';
            (6) in subsection (g) (as so redesignated by paragraph 
        (3))--
                    (A) by striking ``(g)(1)'' and all that follows 
                through the end of paragraph (1) and inserting the 
                following:

[[Page 111 STAT. 2365]]

    ``(g)(1)(A) <<NOTE: Regulations.>>  Except as provided in 
subparagraph (B), debarment of a provider under subsection (b) or (c) 
shall be effective at such time and upon such reasonable notice to such 
provider, and to carriers and covered individuals, as shall be specified 
in regulations prescribed by the Office. Any such provider that is 
debarred from participation may request a hearing in accordance with 
subsection (h)(1).

    ``(B) Unless the Office determines that the health or safety of 
individuals receiving health care services warrants an earlier effective 
date, the Office shall not make a determination adverse to a provider 
under subsection (c)(5) or (d) until such provider has been given 
reasonable notice and an opportunity for the determination to be made 
after a hearing as provided in accordance with subsection (h)(1).'';
                    (B) in paragraph (3)--
                          (i) by inserting ``of debarment'' after 
                      ``notice''; and
                          (ii) by adding at the end the following: ``In 
                      the case of a debarment under paragraph (1), (2), 
                      (3), or (4) of subsection (b), the minimum period 
                      of debarment shall not be less than 3 years, 
                      except as provided in paragraph (4)(B)(ii).'';
                    (C) in paragraph (4)(B)(i)(I) by striking 
                ``subsection (b) or (c)'' and inserting ``subsection 
                (b), (c), or (d)''; and
                    (D) by striking paragraph (6);
            (7) in subsection (h) (as so redesignated by paragraph (3)) 
        by striking ``(h)(1)'' and all that follows through the end of 
        paragraph (2) and inserting the following:

    ``(h)(1) Any provider of health care services or supplies that is 
the subject of an adverse determination by the Office under this section 
shall be entitled to reasonable notice and an opportunity to request a 
hearing of record, and to judicial review as provided in this subsection 
after the Office renders a final decision. The Office shall grant a 
request for a hearing upon a showing that due process rights have not 
previously been afforded with respect to any finding of fact which is 
relied upon as a cause for an adverse determination under this section. 
Such hearing shall be conducted without regard to subchapter II of 
chapter 5 and chapter 7 of this title by a hearing officer who shall be 
designated by the Director of the Office and who shall not otherwise 
have been involved in the adverse determination being 
appealed. <<NOTE: Regulation.>> A request for a hearing under this 
subsection shall be filed within such period and in accordance with such 
procedures as the Office shall prescribe by regulation.

    ``(2) Any provider adversely affected by a final decision under 
paragraph (1) made after a hearing to which such provider was a party 
may seek review of such decision in the United States District Court for 
the District of Columbia or for the district in which the plaintiff 
resides or has his or her principal place of business by filing a notice 
of appeal in such court within 60 days after the date the decision is 
issued, and by simultaneously sending copies of such notice by certified 
mail to the Director of the Office and to the Attorney 
General. <<NOTE: Records.>> In answer to the appeal, the Director of the 
Office shall promptly file in such court a certified copy of the 
transcript of the record, if the Office conducted a hearing, and other 
evidence upon which the findings and decision complained of are 
based. <<NOTE: Courts.>> The court shall have power to enter, upon the 
pleadings and evidence of record, a judgment affirming, modifying, or

[[Page 111 STAT. 2366]]

setting aside, in whole or in part, the decision of the Office, with or 
without remanding the case for a rehearing. The district court shall not 
set aside or remand the decision of the Office unless there is not 
substantial evidence on the record, taken as whole, to support the 
findings by the Office of a cause for action under this section or 
unless action taken by the Office constitutes an abuse of discretion.''; 
and
            (8) in subsection (i) (as so redesignated by paragraph 
        (3))--
                    (A) by striking ``subsection (c)'' and inserting 
                ``subsection (d)''; and
                    (B) by adding at the end the following: ``The amount 
                of a penalty or assessment as finally determined by the 
                Office, or other amount the Office may agree to in 
                compromise, may be deducted from any sum then or later 
                owing by the United States to the party against whom the 
                penalty or assessment has been levied.''.

    (b) Effective Date.-- <<NOTE: 5 USC 8902a note.>> 
            (1) In general.--Except as provided in paragraph (2), the 
        amendments made by this section shall take effect on the date of 
        the enactment of this Act.
            (2) <<NOTE: Applicability.>> Exceptions.--(A) Paragraphs 
        (2), (3), and (5) of section 8902a(c) of title 5, United States 
        Code, as amended by subsection (a)(3), shall apply only to the 
        extent that the misconduct which is the basis for debarment 
        under paragraph (2), (3), or (5), as applicable, occurs after 
        the date of the enactment of this Act.
            (B) Paragraph (1)(B) of section 8902a(d) of title 5, United 
        States Code, as amended by subsection (a)(4), shall apply only 
        with respect to charges which violate section 8904(b) of such 
        title for items or services furnished after the date of the 
        enactment of this Act.
            (C) Paragraph (3) of section 8902a(g) of title 5, United 
        States Code, as amended by subsection (a)(6)(B), shall apply 
        only with respect to debarments based on convictions occurring 
        after the date of the enactment of this Act.

SEC. 3. MISCELLANEOUS AMENDMENTS RELATING TO THE HEALTH BENEFITS PROGRAM 
            FOR FEDERAL EMPLOYEES.

    (a) Definition of a Carrier.--Paragraph (7) of section 8901 of title 
5, United States Code, is amended by striking ``organization;'' and 
inserting ``organization and an association of organizations or other 
entities described in this paragraph sponsoring a health benefits 
plan;''.
    (b) Service Benefit Plan.--Paragraph (1) of section 8903 of title 5, 
United States Code, is amended by striking ``plan,'' and inserting 
``plan, which may be underwritten by participating affiliates licensed 
in any number of States,''.
    (c) Preemption.--Section 8902(m) of title 5, United States Code, is 
amended by striking ``(m)(1)'' and all that follows through the end of 
paragraph (1) and inserting the following:
    ``(m)(1) The terms of any contract under this chapter which relate 
to the nature, provision, or extent of coverage or benefits (including 
payments with respect to benefits) shall supersede and preempt any State 
or local law, or any regulation issued thereunder, which relates to 
health insurance or plans.''.

[[Page 111 STAT. 2367]]

SEC. 4. <<NOTE: 5 USC 8901 note.>> CONTINUED HEALTH INSURANCE COVERAGE 
            FOR CERTAIN INDIVIDUALS.

    (a) Enrollment in Chapter 89 Plan.--For purposes of chapter 89 of 
title 5, United States Code, any period of enrollment--
            (1) in a health benefits plan administered by the Federal 
        Deposit Insurance Corporation before the termination of such 
        plan on or before January 2, 1999; or
            (2) subject to subsection (c), in a health benefits plan 
        (not under chapter 89 of such title) with respect to which the 
        eligibility of any employees or retired employees of the Board 
        of Governors of the Federal Reserve System terminates on or 
        before January 2, 1999,

shall be deemed to be a period of enrollment in a health benefits plan 
under chapter 89 of such title.
    (b) Continued Coverage.--(1) Subject to subsection (c), any 
individual who, on or before January 2, 1999, is enrolled in a health 
benefits plan described in subsection (a)(1) or (2) may enroll in an 
approved health benefits plan under chapter 89 of title 5, United States 
Code, either as an individual or for self and family, if, after taking 
into account the provisions of subsection (a), such individual--
            (A) meets the requirements of such chapter for eligibility 
        to become so enrolled as an employee, annuitant, or former 
        spouse (within the meaning of such chapter); or
            (B) would meet those requirements if, to the extent such 
        requirements involve either retirement system under such title 
        5, such individual satisfies similar requirements or provisions 
        of the Retirement Plan for Employees of the Federal Reserve 
        System.

Any <<NOTE: Guidelines.>>  determination under subparagraph (B) shall be 
made under guidelines which the Office of Personnel Management shall 
establish in consultation with the Board of Governors of the Federal 
Reserve System.

    (2) Subject to subsection (c), any individual who, on or before 
January 2, 1999, is entitled to continued coverage under a health 
benefits plan described in subsection (a)(1) or (2) shall be deemed to 
be entitled to continued coverage under section 8905a of title 5, United 
States Code, but only for the same remaining period as would have been 
allowable under the health benefits plan in which such individual was 
enrolled on or before January 2, 1999, if--
            (A) such individual had remained enrolled in such plan; and
            (B) such plan did not terminate, or the eligibility of such 
        individual with respect to such plan did not terminate, as 
        described in subsection (a).

    (3) Subject to subsection (c), any individual (other than an 
individual under paragraph (2)) who, on or before January 2, 1999, is 
covered under a health benefits plan described in subsection (a)(1) or 
(2) as an unmarried dependent child, but who does not then qualify for 
coverage under chapter 89 of title 5, United States Code, as a family 
member (within the meaning of such chapter) shall be deemed to be 
entitled to continued coverage under section 8905a of such title, to the 
same extent and in the same manner as if such individual had, on or 
before January 2, 1999, ceased to meet the requirements for being 
considered an unmarried dependent child of an enrollee under such 
chapter.

[[Page 111 STAT. 2368]]

    (4) Coverage under chapter 89 of title 5, United States Code, 
pursuant to an enrollment under this section shall become effective on 
January 3, 1999 or such earlier date as established by the Office of 
Personnel Management after consultation with the Federal Deposit 
Insurance Corporation or the Board of Governors of the Federal Reserve 
System, as appropriate.
    (c) Eligibility for FEHBP Limited to Individuals Losing Eligibility 
Under Former Health Plan.--Nothing in subsection (a)(2) or any paragraph 
of subsection (b) (to the extent such paragraph relates to the plan 
described in subsection (a)(2)) shall be considered to apply with 
respect to any individual whose eligibility for coverage under such plan 
does not involuntarily terminate on or before January 2, 1999.
    (d) Transfers to the Employees Health Benefits Fund.--The Federal 
Deposit Insurance Corporation and the Board of Governors of the Federal 
Reserve System shall transfer to the Employees Health Benefits Fund 
under section 8909 of title 5, United States Code, amounts determined by 
the Director of the Office of Personnel Management, after consultation 
with the Federal Deposit Insurance Corporation and the Board of 
Governors of the Federal Reserve System, to be necessary to reimburse 
the Fund for the cost of providing benefits under this section not 
otherwise paid for by the individuals covered by this section. The 
amounts so transferred shall be held in the Fund and used by the Office 
of Personnel Management in addition to amounts available under section 
8906(g)(1) of such title.
    (e) Administration and Regulations.--The Office of Personnel 
Management--
            (1) shall administer the provisions of this section to 
        provide for--
                    (A) a period of notice and open enrollment for 
                individuals affected by this section; and
                    (B) no lapse of health coverage for individuals who 
                enroll in a health benefits plan under chapter 89 of 
                title 5, United States Code, in accordance with this 
                section; and
            (2) may prescribe regulations to implement this section.

SEC. 5. FULL DISCLOSURE IN HEALTH PLAN CONTRACTS. <<NOTE: 5 USC 8902 
            note.>> 

    The Office of Personnel Management shall encourage carriers offering 
health benefits plans described by section 8903 or section 8903a of 
title 5, United States Code, with respect to contractual arrangements 
made by such carriers with any person for purposes of obtaining 
discounts from providers for health care services or supplies furnished 
to individuals enrolled in such plan, to seek assurance that the 
conditions for such discounts are fully disclosed to the providers who 
grant them.

SEC. 6. PROVISIONS RELATING TO CERTAIN PLANS THAT HAVE 
            DISCONTINUED THEIR PARTICIPATION IN FEHBP.

    (a) Authority to Readmit.--
            (1) In general.--Chapter 89 of title 5, United States Code, 
        is amended by inserting after section 8903a the following:

``Sec. 8903b. Authority to readmit an employee organization plan

    ``(a) In the event that a plan described by section 8903(3) or 8903a 
is discontinued under this chapter (other than in the circumstance 
described in section 8909(d)), that discontinuation

[[Page 111 STAT. 2369]]

shall be disregarded, for purposes of any determination as to that 
plan's eligibility to be considered an approved plan under this chapter, 
but only for purposes of any contract year later than the third contract 
year beginning after such plan is so discontinued.
    ``(b) A contract for a plan approved under this section shall 
require the carrier--
            ``(1) to demonstrate experience in service delivery within a 
        managed care system (including provider networks) throughout the 
        United States; and
            ``(2) if the carrier involved would not otherwise be subject 
        to the requirement set forth in section 8903a(c)(1), to satisfy 
        such requirement.''.
            (2) Conforming amendment.--The analysis for chapter 89 of 
        title 5, United States Code, is amended by inserting after the 
        item relating to section 8903a the following:

``8903b. Authority to readmit an employee organization plan.''.

            (3) Applicability.-- <<NOTE: 5 USC 8903b note.>> 
                    (A) In general.--The amendments made by this 
                subsection shall apply as of the date of the enactment 
                of this Act, including with respect to any plan which 
                has been discontinued as of such date.
                    (B) Transition rule.--For purposes of applying 
                section 8903b(a) of title 5, United States Code (as 
                amended by this subsection) with respect to any plan 
                seeking to be readmitted for purposes of any contract 
                year beginning before January 1, 2000, such section 
                shall be applied by substituting ``second contract 
                year'' for ``third contract year''.

    (b) Treatment of the Contingency Reserve of a Discontinued Plan.--
            (1) In general.--Subsection (e) of section 8909 of title 5, 
        United States Code, is amended by striking ``(e)'' and inserting 
        ``(e)(1)'' and by adding at the end the following:

    ``(2) Any crediting required under paragraph (1) pursuant to the 
discontinuation of any plan under this chapter shall be completed by the 
end of the second contract year beginning after such plan is so 
discontinued.
    ``(3) <<NOTE: Regulations. Applicability.>> The Office shall 
prescribe regulations in accordance with which this subsection shall be 
applied in the case of any plan which is discontinued before being 
credited with the full amount to which it would otherwise be entitled 
based on the discontinuation of any other plan.''.
            (2) <<NOTE: 5 USC 8909 note.>> Transition rule.--In the case 
        of any amounts remaining as of the date of the enactment of this 
        Act in the contingency reserve of a discontinued plan, such 
        amounts shall be disposed of in accordance with section 8909(e) 
        of title 5, United States Code, as amended by this subsection, 
        by--
                    (A) the deadline set forth in section 8909(e) of 
                such title (as so amended); or
                    (B) if later, the end of the 6-month period 
                beginning on such date of enactment.

SEC. 7. MAXIMUM PHYSICIANS COMPARABILITY ALLOWANCE PAYABLE.

    (a) In General.--Paragraph (2) of section 5948(a) of title 5, United 
States Code, is amended by striking ``$20,000'' and inserting 
``$30,000''.
    (b) <<NOTE: 5 USC 5948 note.>> Authority to Modify Existing 
Agreements.--

[[Page 111 STAT. 2370]]

            (1) In general.--Any service agreement under section 5948 of 
        title 5, United States Code, which is in effect on the date of 
        the enactment of this Act may, with respect to any period of 
        service remaining in such agreement, be modified based on the 
        amendment made by subsection (a).
            (2) Limitation.--A modification taking effect under this 
        subsection in any year shall not cause an allowance to be 
        increased to a rate which, if applied throughout such year, 
        would cause the limitation under section 5948(a)(2) of such 
        title (as amended by this section), or any other applicable 
        limitation, to be exceeded.

    (c) <<NOTE: 5 USC 5948 note.>> Rule of Construction.--Nothing in 
this section shall be considered to authorize additional or supplemental 
appropriations for the fiscal year in which occurs the date of the 
enactment of this Act.

SEC. 8. CLARIFICATION RELATING TO SECTION 8902(k).

    Section 8902(k) of title 5, United States Code, is amended--
            (1) by redesignating paragraph (2) as paragraph (3); and
            (2) by inserting after paragraph (1) the following:

    ``(2) Nothing in this subsection shall be considered to preclude a 
health benefits plan from providing direct access or direct payment or 
reimbursement to a provider in a health care practice or profession 
other than a practice or profession listed in paragraph (1), if such 
provider is licensed or certified as such under Federal or State law.''.

    Approved October 19, 1998.

LEGISLATIVE HISTORY--H.R. 1836:
---------------------------------------------------------------------------

HOUSE REPORTS: No. 105-374 (Comm. on Government Reform and Oversight).
SENATE REPORTS: No. 105-257 (Comm. on Governmental Affairs).
CONGRESSIONAL RECORD:
                                                        Vol. 143 (1997):
                                    Nov. 4, considered and passed House.
                                                        Vol. 144 (1998):
                                    Sept. 30, considered and passed 
                                        Senate, amended.
                                    Oct. 5, House concurred in Senate 
                                        amendments.

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