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SubtitleD

SubtitleD

Note: this is a hand enrollment pursuant to Public Law 105-32.

H.R.2015

One Hundred Fifth Congress

of the

United States of America

AT THE FIRST SESSION

Begun and held at the City of Washington on Tuesday,
the seventh day of January, one thousand nine hundred and
ninety-seven

An Act

Subtitle D–Anti-Fraud and Abuse
Provisions and

Improvements in
Protecting Program Integrity

CHAPTER 1–REVISIONS TO SANCTIONS FOR FRAUD AND
ABUSE

SEC. 4301. PERMANENT EXCLUSION FOR THOSE CONVICTED OF 3 HEALTH
CARE RELATED CRIMES.

Section 1128(c)(3) (42 U.S.C. 1320a-7(c)(3)) is amended– (1) in
subparagraph (A), by inserting “or in the case described in
subparagraph (G)” after “subsection (b)(12)”; (2) in subparagraphs
(B) and (D), by striking “In the case” and inserting “Subject to
subparagraph (G), in the case”; and (3) by adding at the end the
following new subparagraph: (G) In the case of an exclusion of an
individual under subsection (a) based on a conviction occurring on or
after the date of the enactment of this subparagraph, if the
individual has (before, on, or after such date) been convicted– (i)
on one previous occasion of one or more offenses for which an
exclusion may be effected under such subsection, the period of the
exclusion shall be not less than 10 years, or (ii) on 2 or more
previous occasions of one or more offenses for which an exclusion may
be effected under such subsection, the period of the exclusion shall
be permanent.”.

SEC. 4302. AUTHORITY TO REFUSE TO ENTER INTO MEDICARE AGREEMENTS WITH
INDIVIDUALS OR ENTITIES CONVICTED OF FELONIES.

(a) Medicare Part A.–Section 1866(b)(2) (42 U.S.C. 1395cc(b)(2))
is amended– (1) in subparagraph (B), by striking “or” at the end;
(2) in subparagraph (C), by striking the period at the end and
inserting “, or”; and (3) by adding at the end the following new
subparagraph: (D) has ascertained that the provider has been
convicted of a felony under Federal or State law for an offense which
the Secretary determines is detrimental to the best interests of the
program or program beneficiaries.”.

(b) Medicare Part B.–Section 1842(h) (42 U.S.C. 1395u(h)) is
amended by adding at the end the following new paragraph: (8) The
Secretary may refuse to enter into an agreement with a physician or
supplier under this subsection, or may terminate or refuse to renew
such agreement, in the event that such physician or supplier has been
convicted of a felony under Federal or State law for an offense which
the Secretary determines is detrimental to the best interests of the
program or program beneficiaries.”.

(c) Effective Date.–The amendments made by this section shall
take effect on the date of the enactment of this Act and apply to the
entry and renewal of contracts on or after such date.

SEC. 4303. EXCLUSION OF ENTITY CONTROLLED BY FAMILY MEMBER OF A
SANCTIONED INDIVIDUAL.

(a) In General.–Section 1128 (42 U.S.C. 1320a-7) is amended– (1)
in subsection (b)(8)(A)– (A) in clause (i), by striking “or” at the
end; (B) in clause (ii), by striking the dash at the end and
inserting “; or”; and (C) by inserting after clause (ii) the
following: (iii) who was described in clause (i) but is no longer so
described because of a transfer of ownership or control interest, in
anticipation of (or following) a conviction, assessment, or exclusion
described in subparagraph (B) against the person, to an immediate
family member (as defined in subsection (j)(1)) or a member of the
household of the person (as defined in subsection (j)(2)) who
continues to maintain an interest described in such clause–“; and
(2) by adding at the end the following new subsection: (j) Definition
of Immediate Family Member and Member of Household.–For purposes of
subsection (b)(8)(A)(iii): (1) The term `immediate family member’
means, with respect to a person– (A) the husband or wife of the
person; (B) the natural or adoptive parent, child, or sibling of the
person; (C) the stepparent, stepchild, stepbrother, or stepsister of
the person; (D) the father-, mother-, daughter-, son-, brother-, or
sister-in-law of the person; (E) the grandparent or grandchild of the
person; and (F) the spouse of a grandparent or grandchild of the
person.

(2) The term `member of the household’ means, with respect to any
person, any individual sharing a common abode as part of a single
family unit with the person, including domestic employees and others
who live together as a family unit, but not including a roomer or
boarder.”.

(b) Effective Date.–The amendments made by this section shall
take effect on the date that is 45 days after the date of the
enactment of this Act.

SEC. 4304. IMPOSITION OF CIVIL MONEY PENALTIES.

(a) Civil Money Penalties for Persons That Contract With Excluded
Individuals.–Section 1128A(a) (42 U.S.C. 1320a-7a(a)) is amended–
(1) in paragraph (4), by striking “or” at the end; (2) in paragraph
(5), by adding or” at the end; and (3) by inserting after paragraph
(5) the following new paragraph: (6) arranges or contracts (by
employment or otherwise) with an individual or entity that the person
knows or should know is excluded from participation in a Federal
health care program (as defined in section 1128B(f)), for the
provision of items or services for which payment may be made under
such a program;”.

(b) Civil Money Penalties for Kickbacks.– (1) Permitting
secretary to impose civil money penalty.– Section 1128A(a) (42
U.S.C. 1320a-7a(a)), as amended by subsection (a), is amended– (A)
in paragraph (5), by striking “or” at the end; (B) in paragraph (6),
by adding or” at the end; and (C) by adding after paragraph (6) the
following new paragraph: (7) commits an act described in paragraph
(1) or (2) of section 1128B(b);”.

(2) Description of civil money penalty applicable.–Section
1128A(a) (42 U.S.C. 1320a-7a(a)), as amended by paragraph (1), is
amended in the matter following paragraph (7)– (A) by striking
“occurs).” and inserting “occurs; or in cases under paragraph (7),
$50,000 for each such act).”; and (B) by inserting “after of such
claim” the following: (or, in cases under paragraph (7), damages of
not more than 3 times the total amount of remuneration offered, paid,
solicited, or received, without regard to whether a portion of such
remuneration was offered, paid, solicited, or received for a lawful
purpose)”.

(c) Effective Dates.– (1) Contracts with excluded persons.–The
amendments made by subsection (a) shall apply to arrangements and
contracts entered into after the date of the enactment of this Act.

(2) Kickbacks.–The amendments made by subsection (b) shall apply
to acts committed after the date of the enactment of this Act.

CHAPTER 2–IMPROVEMENTS IN PROTECTING PROGRAM
INTEGRITY

SEC. 4311. IMPROVING INFORMATION TO MEDICARE BENEFICIARIES.

(a) Inclusion of Information Regarding Medicare Waste, Fraud, and
Abuse in Annual Notice.– (1) In General.–Section 1804 (42 U.S.C.
1395b-2) is amended by adding at the end the following new
subsection: (c) The notice provided under subsection (a) shall
include– (1) a statement which indicates that because errors do
occur and because medicare fraud, waste, and abuse is a significant
problem, beneficiaries should carefully check any explanation of
benefits or itemized statement furnished pursuant to section 1806 for
accuracy and report any errors or questionable charges by calling the
toll-free phone number described in paragraph (4); (2) a statement of
the beneficiary’s right to request an itemized statement for medicare
items and services (as provided in section 1806(b)); (3) a
description of the program to collect information on medicare fraud
and abuse established under section 203(b) of the Health Insurance
Portability and Accountability Act of 1996; and (4) a toll-free
telephone number maintained by the Inspector General in the
Department of Health and Human Services for the receipt of complaints
and information about waste, fraud, and abuse in the provision or
billing of services under this title.”.

(2) Effective date.–The amendment made by this subsection shall
apply to notices provided on or after January 1, 1998.

(b) Clarification of Requirement To Provide Explanation of
Medicare Benefits.– (1) In general.–Title XVIII is amended by
inserting after section 1805 (as added by section 4022) the following
new section:

~
explanation of medicare benefits
~

Sec. 1806. (a) In General.–The Secretary shall furnish to each
individual for whom payment has been made under this title (or would
be made without regard to any deductible) a statement which– (1)
lists the item or service for which payment has been made and the
amount of such payment for each item or service; and (2) includes a
notice of the individual’s right to request an itemized statement (as
provided in subsection (b)).

(b) Request for Itemized Statement for Medicare Items and
Services.– (1) In general.–An individual may submit a written
request to any physician, provider, supplier, or any other person
(including an organization, agency, or other entity) for an itemized
statement for any item or service provided to such individual by such
person with respect to which payment has been made under this title.

(2) 30-day period to furnish statement.– (A) In general.–Not
later than 30 days after the date on which a request under paragraph
(1) has been made, a person described in such paragraph shall furnish
an itemized statement describing each item or service provided to the
individual requesting the itemized statement.

(B) Penalty.–Whoever knowingly fails to furnish an itemized
statement in accordance with subparagraph (A) shall be subject to a
civil money penalty of not more than $100 for each such failure. Such
penalty shall be imposed and collected in the same manner as civil
money penalties under subsection (a) of section 1128A are imposed and
collected under that section.

(3) Review of itemized statement.– (A) In general.–Not later
than 90 days after the receipt of an itemized statement furnished
under paragraph (1), an individual may submit a written request for a
review of the itemized statement to the Secretary.

(B) Specific allegations.–A request for a review of the itemized
statement shall identify– (i) specific items or services that the
individual believes were not provided as claimed, or (ii) any other
billing irregularity (including duplicate billing).

(4) Findings of secretary.–The Secretary shall, with respect to
each written request submitted under paragraph (3), determine whether
the itemized statement identifies specific items or services that
were not provided as claimed or any other billing irregularity
(including duplicate billing) that has resulted in unnecessary
payments under this title.

(5) Recovery of amounts.–The Secretary shall take all appropriate
measures to recover amounts unnecessarily paid under this title with
respect to a statement described in paragraph (4).”.

(2) Conforming amendment.–Subsection (a) of section 203 of the
Health Insurance Portability and Accountability Act of 1996 is
repealed.

(3) Effective dates.– (A) Statement by secretary.–Paragraph (1)
of section 1806(a) of the Social Security Act, as added by paragraph
(1), and the repeal made by paragraph (2) shall take effect on the
date of the enactment of this Act.

(B) Itemized statement.–Paragraph (2) of section 1806(a) and
section 1806(b) of the Social Security Act, as so added, shall take
effect not later than January 1, 1999.

SEC. 4312. DISCLOSURE OF INFORMATION AND SURETY BONDS.

(a) Disclosure of Information and Surety Bond Requirement for
Suppliers of Durable Medical Equipment.–Section 1834(a) (42 U.S.C.
1395m(a)) is amended by inserting after paragraph (15) the following
new paragraph: (16) Disclosure of information and surety bond.–The
Secretary shall not provide for the issuance (or renewal) of a
provider number for a supplier of durable medical equipment, for
purposes of payment under this part for durable medical equipment
furnished by the supplier, unless the supplier provides the Secretary
on a continuing basis– (A) with– (i) full and complete information
as to the identity of each person with an ownership or control
interest (as defined in section 1124(a)(3)) in the supplier or in any
subcontractor (as defined by the Secretary in regulations) in which
the supplier directly or indirectly has a 5 percent or more ownership
interest; and (ii) to the extent determined to be feasible under
regulations of the Secretary, the name of any disclosing entity (as
defined in section 1124(a)(2)) with respect to which a person with
such an ownership or control interest in the supplier is a person
with such an ownership or control interest in the disclosing entity;
and (B) with a surety bond in a form specified by the Secretary and
in an amount that is not less than $50,000.

The Secretary may waive the requirement of a bond under
subparagraph (B) in the case of a supplier that provides a comparable
surety bond under State law.”.

(b) Surety Bond Requirement for Home Health Agencies.– (1) In
general.–Section 1861(o) (42 U.S.C. 1395x(o)) is amended– (A) in
paragraph (6), by striking “and” at the end; (B) by redesignating
paragraph (7) as paragraph (8); (C) by inserting after paragraph (6)
the following new paragraph: (7) provides the Secretary on a
continuing basis with a surety bond in a form specified by the
Secretary and in an amount that is not less than $50,000; and”; and
(D) by adding at the end the following: The Secretary may waive the
requirement of a surety bond under paragraph (7) in the case of an
agency or organization that provides a comparable surety bond under
State law.”.

(2) Conforming amendments.–Section 1861(v)(1)(H) (42 U.S.C.
1395x(v)(1)(H)) is amended– (A) in clause (i), by striking “the
financial security requirement described in subsection (o)(7)” and
inserting “the surety bond requirement described in subsection (o)(7)
and the financial security requirement described in subsection
(o)(8)”; and (B) in clause (ii), by striking “the financial security
requirement described in subsection (o)(7) applies” and inserting
“the surety bond requirement described in subsection (o)(7) and the
financial security requirement described in subsection (o)(8) apply”.

(3) Reference to current disclosure requirement.–For additional
provisions requiring home health agencies to disclose information on
ownership and control interests, see section 1124 of the Social
Security Act (42 U.S.C. 1320a-3).

(c) Authorizing Application of Disclosure and Surety Bond
Requirements to Other Health Care Providers.–Section 1834(a)(16) (42
U.S.C. 1395m(a)(16)), as added by subsection (a), is amended by
adding at the end the following: The Secretary, at the Secretary’s
discretion, may impose the requirements of the first sentence with
respect to some or all providers of items or services under part A or
some or all suppliers or other persons (other than physicians or
other practitioners, as defined in section 1842(b)(18)(C)) who
furnish items or services under this part.”.

(d) Application to Comprehensive Outpatient Rehabilitation
Facilities (CORFs).–Section 1861(cc)(2) (42 U.S.C. 1395x(cc)(2)) is
amended– (1) in subparagraph (H), by striking “and” at the end; (2)
by redesignating subparagraph (I) as subparagraph (J); (3) by
inserting after subparagraph (H) the following new subparagraph: (I)
provides the Secretary on a continuing basis with a surety bond in a
form specified by the Secretary and in an amount that is not less
than $50,000; and”; and (4) by adding at the end the following flush
sentence: The Secretary may waive the requirement of a surety bond
under subparagraph (I) in the case of a facility that provides a
comparable surety bond under State law.”.

(e) Application to Rehabilitation Agencies.–Section 1861(p) (42
U.S.C. 1395x(p)) is amended– (1) in paragraph (4)(A)(v), by
inserting after “as the Secretary may find necessary,” the following:
and provides the Secretary on a continuing basis with a surety bond
in a form specified by the Secretary and in an amount that is not
less than $50,000,”, and (2) by adding at the end the following: The
Secretary may waive the requirement of a surety bond under paragraph
(4)(A)(v) in the case of a clinic or agency that provides a
comparable surety bond under State law.”.

(f) Effective Dates.– (1) Suppliers of durable medical
equipment.–The amendment made by subsection (a) shall apply to
suppliers of durable medical equipment with respect to such equipment
furnished on or after January 1, 1998.

(2) Home health agencies.–The amendments made by subsection (b)
shall apply to home health agencies with respect to services
furnished on or after January 1, 1998. The Secretary of Health and
Human Services shall modify participation agreements under section
1866(a)(1) of the Social Security Act (42 U.S.C. 1395cc(a)(1)) with
respect to home health agencies to provide for implementation of such
amendments on a timely basis.

(3) Other amendments.–The amendments made by subsections (c)
through (e) shall take effect on the date of the enactment of this
Act and may be applied with respect to items and services furnished
on or after January 1, 1998.

SEC. 4313. PROVISION OF CERTAIN IDENTIFICATION NUMBERS.

(a) Requirements To Disclose Employer Identification Numbers
(EINS) and Social Security Account Numbers (SSNs).–Section
1124(a)(1) (42 U.S.C. 1320a-3(a)(1)) is amended by inserting before
the period at the end the following: and supply the Secretary with
the both the employer identification number (assigned pursuant to
section 6109 of the Internal Revenue Code of 1986) and social
security account number (assigned under section 205(c)(2)(B)) of the
disclosing entity, each person with an ownership or control interest
(as defined in subsection (a)(3)), and any subcontractor in which the
entity directly or indirectly has a 5 percent or more ownership
interest.

(b) Other Medicare Providers.–Section 1124A (42 U.S.C. 1320a-3a)
is amended– (1) in subsection (a)– (A) in paragraph (1), by
striking “and” at the end; (B) in paragraph (2), by striking the
period at the end and inserting “; and”; and (C) by adding at the end
the following new paragraph: (3) including the employer
identification number (assigned pursuant to section 6109 of the
Internal Revenue Code of 1986) and social security account number
(assigned under section 205(c)(2)(B)) of the disclosing part B
provider and any person, managing employee, or other entity
identified or described under paragraph (1) or (2).”; and (2) in
subsection (c)(1), by inserting “(or, for purposes of subsection
(a)(3), any entity receiving payment)” after on an assignment-related
basis”.

(c) Verification by Social Security Administration (SSA).–Section
1124A (42 U.S.C. 1320a-3a), as amended by subsection (b), is
amended– (1) by redesignating subsection (c) as subsection (d); and
(2) by inserting after subsection (b) the following new subsection:
(c) Verification.– (1) Transmittal by hhs.–The Secretary shall
transmit– (A) to the Commissioner of Social Security information
concerning each social security account number (assigned under
section 205(c)(2)(B)), and (B) to the Secretary of the Treasury
information concerning each employer identification number (assigned
pursuant to section 6109 of the Internal Revenue Code of 1986),
supplied to the Secretary pursuant to subsection (a)(3) or section
1124(c) to the extent necessary for verification of such information
in accordance with paragraph (2).

(2) Verification.–The Commissioner of Social Security and the
Secretary of the Treasury shall verify the accuracy of, or correct,
the information supplied by the Secretary to such official pursuant
to paragraph (1), and shall report such verifications or corrections
to the Secretary.

(3) Fees for verification.–The Secretary shall reimburse the
Commissioner and Secretary of the Treasury, at a rate negotiated
between the Secretary and such official, for the costs incurred by
such official in performing the verification and correction services
described in this subsection.”.

(d) Report.–Before the amendments made by this section may become
effective, the Secretary of Health and Human Services shall submit to
Congress a report on steps the Secretary has taken to assure the
confidentiality of social security account numbers that will be
provided to the Secretary under such amendments.

(e) Effective Dates.– (1) Disclosure requirements.–The amendment
made by subsection (a) shall apply to the application of conditions
of participation, and entering into and renewal of contracts and
agreements, occurring more than 90 days after the date of submission
of the report under subsection (d).

(2) Other providers.–The amendments made by subsection (b) shall
apply to payment for items and services furnished more than 90 days
after the date of submission of such report.

SEC. 4314. ADVISORY OPINIONS REGARDING CERTAIN PHYSICIAN
SELF-REFERRAL PROVISIONS.

Section 1877(g) (42 U.S.C. 1395nn(g)) is amended by adding at the
end the following new paragraph: (6) Advisory opinions.– (A) In
general.–The Secretary shall issue written advisory opinions
concerning whether a referral relating to designated health services
(other than clinical laboratory services) is prohibited under this
section. Each advisory opinion issued by the Secretary shall be
binding as to the Secretary and the party or parties requesting the
opinion.

(B) Application of certain rules.–The Secretary shall, to the
extent practicable, apply the rules under subsections (b)(3) and
(b)(4) and take into account the regulations promulgated under
subsection (b)(5) of section 1128D in the issuance of advisory
opinions under this paragraph.

(C) Regulations.–In order to implement this paragraph in a timely
manner, the Secretary may promulgate regulations that take effect on
an interim basis, after notice and pending opportunity for public
comment.

(D) Applicability.–This paragraph shall apply to requests for
advisory opinions made after the date which is 90 days after the date
of the enactment of this paragraph and before the close of the period
described in section 1128D(b)(6).”.

SEC. 4315. REPLACEMENT OF REASONABLE CHARGE METHODOLOGY BY FEE
SCHEDULES.

(a) Application of Fee Schedule.–Section 1842 (42 U.S.C. 1395u)
is amended by adding at the end the following new subsection: (s)(1)
The Secretary may implement a statewide or other areawide fee
schedule to be used for payment of any item or service described in
paragraph (2) which is paid on a reasonable charge basis. Any fee
schedule established under this paragraph for such item or service
shall be updated each year by the percentage increase in the consumer
price index for all urban consumers (United States city average) for
the 12-month period ending with June of the preceding year, except
that in no event shall a fee schedule for an item described in
paragraph (2)(D) be updated before 2003.

(2) The items and services described in this paragraph are as
follows: (A) Medical supplies.

(B) Home dialysis supplies and equipment (as defined in section
1881(b)(8)).

(C) Therapeutic shoes.

(D) Parenteral and enteral nutrients, equipment, and supplies.

(E) Electromyogram devices (F) Salivation devices.

(G) Blood products.

(H) Transfusion medicine.”.

(b) Conforming Amendment.–Section 1833(a)(1) (42 U.S.C.
1395l(a)(1)) is amended– (A) by striking “and (P)” and inserting
“(P)”; and (B) by striking the semicolon at the end and inserting the
following: “, and (Q) with respect to items or services for which fee
schedules are established pursuant to section 1842(s), the amounts
paid shall be 80 percent of the lesser of the actual charge or the
fee schedule established in such section;”.

(c) Effective Dates.–The amendments made by this section to the
extent such amendments substitute fee schedules for reasonable
charges, shall apply to particular services as of the date specified
by the Secretary of Health and Human Services.

(d) Initial Budget Neutrality.–The Secretary, in developing a fee
schedule for particular services (under the amendments made by this
section), shall set amounts for the first year period to which the
fee schedule applies at a level so that the total payments under
title XVIII of the Social Security Act (42 U.S.C. 1395 et seq.) for
those services for that year period shall be approximately equal to
the estimated total payments if such fee schedule had not been
implemented.

SEC. 4316. APPLICATION OF INHERENT REASONABLENESS TO ALL PART B
SERVICES OTHER THAN PHYSICIANS’ SERVICES.

(a) In General.–Paragraphs (8) and (9) of section 1842(b) (42
U.S.C. 1395u(b)) are amended to read as follows: (8)(A)(i) The
Secretary shall by regulation– (I) describe 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 (II) provide in those cases for the
factors to be considered in determining an amount that is realistic
and equitable.

(ii) Notwithstanding the determination made in clause (i), the
Secretary may not apply factors that would increase or decrease the
payment under this part during any year for any particular item or
service by more than 15 percent from such payment during the
preceding year except as provided in subparagraph (B).

(B) The Secretary may make a determination under this subparagraph
that would result in an increase or decrease under subparagraph (A)
of more than 15 percent of the payment amount for a year, but only
if– (i) the Secretary’s determination takes into account the factors
described in subparagraph (C) and any additional factors the
Secretary determines appropriate, (ii) the Secretary’s determination
takes into account the potential impacts described in subparagraph
(D), and (iii) the Secretary complies with the procedural
requirements of paragraph (9).

(C) The factors described in this subparagraph are as follows: (i)
The programs established under this title and title XIX are the sole
or primary sources of payment for an item or service.

(ii) The payment amount does not reflect changing technology,
increased facility with that technology, or reductions in acquisition
or production costs.

(iii) The payment amount for an item or service under this part is
substantially higher or lower than the payment made for the item or
service by other purchasers.

(D) The potential impacts of a determination under subparagraph
(B) on quality, access, and beneficiary liability, including the
likely effects on assignment rates and participation rates.

(9)(A) The Secretary shall consult with representatives of
suppliers or other individuals who furnish an item or service before
making a determination under paragraph (8)(B) with regard to that
item or service.

(B) The Secretary shall publish notice of a proposed determination
under paragraph (8)(B) in the Federal Register– (i) specifying the
payment amount proposed to be established with respect to an item or
service, (ii) explaining the factors and data that the Secretary took
into account in determining the payment amount so specified, and
(iii) explaining the potential impacts described in paragraph (8)(D).

(C) After publication of the notice required by subparagraph (B),
the Secretary shall allow not less than 60 days for public comment on
the proposed determination.

(D)(i) Taking into consideration the comments made by the public,
the Secretary shall publish in the Federal Register a final
determination under paragraph (8)(B) with respect to the payment
amount to be established with respect to the item or service.

(ii) A final determination published pursuant to clause (i) shall
explain the factors and data that the Secretary took into
consideration in making the final determination.”.

(b) Conforming Amendment.–Section 1834(a)(10)(B) (42 U.S.C.

1395m(a)(10)(B)) is amended– (1) by striking “For covered items
furnished on or after January 1, 1991, the” and inserting “The”; (2)
by striking “(other than subparagraph (D))”; and (3) by striking “all
that follows payments under this subsection” and inserting a period.

(c) Effective Date.–The amendments made by this section shall
take effect on the date of the enactment of this Act.

SEC. 4317. REQUIREMENT TO FURNISH DIAGNOSTIC INFORMATION.

(a) Inclusion of Non-Physician Practitioners in Requirement To
Provide Diagnostic Codes for Physician Services.–Paragraphs (1) and
(2) of section 1842(p) (42 U.S.C. 1395u(p)) are each amended by
inserting “or practitioner specified in subsection (b)(18)(C)” after
by a physician”.

(b) Requirement To Provide Diagnostic Information When Ordering
Certain Items or Services Furnished by Another Entity.–Section
1842(p) (42 U.S.C. 1395u(p)), is amended by adding at the end the
following new paragraph: (4) In the case of an item or service
defined in paragraph (3), (6), (8), or (9) of subsection 1861(s)
ordered by a physician or a practitioner specified in subsection
(b)(18)(C), but furnished by another entity, if the Secretary (or
fiscal agent of the Secretary) requires the entity furnishing the
item or service to provide diagnostic or other medical information in
order for payment to be made to the entity, the physician or
practitioner shall provide that information to the entity at the time
that the item or service is ordered by the physician or
practitioner.”.

(c) Effective Date.–The amendments made by this section shall
apply to items and services furnished on or after January 1, 1998.

SEC. 4318. REPORT BY GAO ON OPERATION OF FRAUD AND ABUSE CONTROL
PROGRAM.

Section 1817(k)(6) (42 U.S.C. 1395i(k)(6)) is amended by inserting
“June 1, 1998, and” after “Not later than”.

SEC. 4319. COMPETITIVE BIDDING DEMONSTRATION PROJECTS.

(a) General Rule.–Part B of title XVIII (42 U.S.C. 1395j et seq.)
is amended by inserting after section 1846 the following new section:

SEC. 1847. DEMONSTRATION PROJECTS FOR COMPETITIVE ACQUISITION OF
ITEMS AND SERVICES.

(a) Establishment of Demonstration Project Bidding Areas.– (1) In
general.–The Secretary shall implement not more than 5 demonstration
projects under which competitive acquisition areas are established
for contract award purposes for the furnishing under this part of the
items and services described in subsection (d).

(2) Project requirements.–Each demonstration project under
paragraph (1)– (A) shall include such group of items and services as
the Secretary may prescribe, (B) shall be conducted in not more than
3 competitive acquisition areas, and (C) shall be operated over a
3-year period.

(3) Criteria for establishment of competitive acquisition
areas.–Each competitive acquisition area established under a
demonstration project implemented under paragraph (1)– (A) shall be,
or shall be within, a metropolitan statistical area (as defined by
the Secretary of Commerce), and (B) shall be chosen based on the
availability and accessibility of entities able to furnish items and
services, and the probable savings to be realized by the use of
competitive bidding in the furnishing of items and services in such
area.

(b) Awarding of Contracts in Areas.– (1) In general.–The
Secretary shall conduct a competition among individuals and entities
supplying items and services described in subsection (c) for each
competitive acquisition area established under a demonstration
project implemented under subsection (a).

(2) Conditions for awarding contract.–The Secretary may not award
a contract to any entity under the competition conducted pursuant to
paragraph (1) to furnish an item or service unless the Secretary
finds that the entity meets quality standards specified by the
Secretary that the total amounts to be paid under the contract are
expected to be less than the total amounts that would otherwise be
paid.

(3) Contents of contract.–A contract entered into with an entity
under the competition conducted pursuant to paragraph (1) is subject
to terms and conditions that the Secretary may specify.

(4) Limit on number of contractors.–The Secretary may limit the
number of contractors in a competitive acquisition area to the number
needed to meet projected demand for items and services covered under
the contracts.

(c) Expansion of Projects.– (1) Evaluations.–The Secretary shall
evaluate the impact of the implementation of the demonstration
projects on medicare program payments, access, diversity of product
selection, and quality. The Secretary shall make annual reports to
the Committees on Ways and Means and Commerce of the House of
Representatives and the Committee on Finance of the Senate on the
results of the evaluation described in the preceding sentence and a
final report not later than 6 months after the termination date
specified in subsection (e).

(2) Expansion.–If the Secretary determines from the evaluations
under paragraph (1) that there is clear evidence that any
demonstration project– (A) results in a decrease in Federal
expenditures under this title, and (B) does not reduce program
access, diversity of product selection, and quality under this title,
the Secretary may expand the project to additional competitive
acquisition areas.

(d) Services described.–The items and services to which this
section applies are all items and services covered under this part
(except for physicians’ services as defined in section 1861(s)(1))
that the Secretary may specify. At least one demonstration project
shall include oxygen and oxygen equipment.

(e) Termination.–Notwithstanding any other provision of this
section, all projects under this section shall terminate not later
than December 31, 2002.”.

(b) Items and Services To Be Furnished Only Through Competitive
Acquisition.–Section 1862(a) (42 U.S.C. 1395y(a)) is amended– (1)
by striking “or” at the end of paragraph (15), (2) by striking the
period at the end of paragraph (16) and inserting “; or”, and (3) by
inserting after paragraph (16) the following new paragraph: (17)
where the expenses are for an item or service furnished in a
competitive acquisition area (as established by the Secretary under
section 1847(a)) by an entity other than an entity with which the
Secretary has entered into a contract under section 1847(b) for the
furnishing of such an item or service in that area, unless the
Secretary finds that the expenses were incurred in a case of urgent
need, or in other circumstances specified by the Secretary.”.

(c) Study by GAO.–The Comptroller of the United States shall
study the effectiveness of the establishment of competitive
acquisition areas under section 1847(a) of the Social Security Act,
as added by this section.

SEC. 4320. PROHIBITING UNNECESSARY AND WASTEFUL MEDICARE PAYMENTS FOR
CERTAIN ITEMS.

Section 1861(v) (42 U.S.C. 1395x(v)) is amended by adding at the
end the following new paragraph: (8) Items unrelated to patient
care.–Reasonable costs do not include costs for the following– (i)
entertainment, including tickets to sporting and other entertainment
events; (ii) gifts or donations; (iii) personal use of motor
vehicles; (iv) costs for fines and penalties resulting from
violations of Federal, State, or local laws; and (v) education
expenses for spouses or other dependents of providers of services,
their employees or contractors.”.

SEC. 4321. NONDISCRIMINATION IN POST-HOSPITAL REFERRAL TO HOME HEALTH
AGENCIES AND OTHER ENTITIES.

(a) Notification of Availability of Home Health Agencies and Other
Entities As Part of Discharge Planning Process.–Section 1861(ee)(2)
(42 U.S.C. 1395x(ee)(2)) is amended– (1) in subparagraph (D), by
inserting before the period the following: , including the
availability of home health services through individuals and entities
that participate in the program under this title and that serve the
area in which the patient resides and that request to be listed by
the hospital as available”; and (2) by adding at the end the
following new subparagraph: (H) Consistent with section 1802, the
discharge plan shall– (i) not specify or otherwise limit the
qualified provider which may provide post-hospital home health
services, and (ii) identify (in a form and manner specified by the
Secretary) any entity to whom the individual is referred in which the
hospital has a disclosable financial interest (as specified by the
Secretary consistent with section 1866(a)(1)(S)) or which has such an
interest in the hospital.”.

(b) Maintenance and Disclosure of Information on Post-Hospital
Home Health Agencies and Other Entities.–Section 1866(a)(1) (42
U.S.C. 1395cc(a)(1)) is amended– (1) by striking “and” at the end of
subparagraph (Q), (2) by striking the period at the end of
subparagraph (R), and (3) by adding at the end the following new
subparagraph: (S) in the case of a hospital that has a financial
interest (as specified by the Secretary in regulations) in an entity
to which individuals are referred as described in section
1861(ee)(2)(H)(ii), or in which such an entity has such a financial
interest, or in which another entity has such a financial interest
(directly or indirectly) with such hospital and such an entity, to
maintain and disclose to the Secretary (in a form and manner
specified by the Secretary) information on– (i) the nature of such
financial interest, (ii) the number of individuals who were
discharged from the hospital and who were identified as requiring
home health services, and (iii) the percentage of such individuals
who received such services from such provider (or another such
provider).”.

(c) Disclosure of Information to the Public.–Title XI is amended
by inserting after section 1145 the following new section:

~ public disclosure of certain information on hospital
financial interest and referral patterns
~

Sec. 1146. The Secretary shall make available to the public, in a
form and manner specified by the Secretary, information disclosed to
the Secretary pursuant to section 1866(a)(1)(S).”.

(d) Effective Dates.– (1) The amendments made by subsection (a)
shall apply to discharges occurring on or after the date which is 90
days after the date of the enactment of this Act.

(2) The Secretary of Health and Human Services shall issue
regulations by not later than the date which is 1 year after the date
of the enactment of this Act to carry out the amendments made by
subsections (b) and (c) and such amendments shall take effect as of
such date (on or after the issuance of such regulations) as the
Secretary specifies in such regulations.

CHAPTER 3–CLARIFICATIONS AND TECHNICAL
CHANGES

SEC. 4331. OTHER FRAUD AND ABUSE RELATED PROVISIONS.

(a) Reference Correction.–(1) Section 1128D(b)(2)(D) (42 U.S.C.

1320a-7d(b)(2)(D)), as added by section 205 of the Health
Insurance Portability and Accountability Act of 1996, is amended by
striking “1128B(b)” and inserting “1128A(b)”.

(2) Section 1128E(g)(3)(C) (42 U.S.C. 1320a-7e(g)(3)(C)) is
amended by striking “Veterans’ Administration” and inserting
“Department of Veterans Affairs”.

(b) Language in Definition of Conviction.–Section 1128E(g)(5) (42
U.S.C. 1320a-7e(g)(5)), as inserted by section 221(a) of the Health
Insurance Portability and Accountability Act of 1996, is amended by
striking “paragraph (4)” and inserting “paragraphs (1) through (4)”.

(c) Implementation of Exclusions.–Section 1128 (42 U.S.C.
1320a-7) is amended– (1) in subsection (a), by striking “any program
under title XVIII and shall direct that the following individuals and
entities be excluded from participation in any State health care
program (as defined in subsection (h))” and inserting “any Federal
health care program (as defined in section 1128B(f))”; and (2) in
subsection (b), by striking “any program under title XVIII and may
direct that the following individuals and entities be excluded from
participation in any State health care program” and inserting “any
Federal health care program (as defined in section 1128B(f))”.

(d) Sanctions for Failure to Report.–Section 1128E(b) (42 U.S.C.
1320a-7e(b)), as inserted by section 221(a) of the Health Insurance
Portability and Accountability Act of 1996, is amended by adding at
the end the following: (6) Sanctions for failure to report.– (A)
Health plans.–Any health plan that fails to report information on an
adverse action required to be reported under this subsection shall be
subject to a civil money penalty of not more than $25,000 for each
such adverse action not reported. Such penalty shall be imposed and
collected in the same manner as civil money penalties under
subsection (a) of section 1128A are imposed and collected under that
section.

(B) Governmental agencies.–The Secretary shall provide for a
publication of a public report that identifies those Government
agencies that have failed to report information on adverse actions as
required to be reported under this subsection.”.

(e) Clarification of Treatment of Certain Waivers and Payments of
Premiums.–Section 1128A(i)(6) (42 U.S.C. 1320a-7a(i)(6)) is
amended– (1) in subparagraph (A)(iii)– (A) in subclause (I), by
adding or” at the end; (B) in subclause (II), by striking “or” at the
end; and (C) by striking subclause (III); (2) by redesignating
subparagraphs (B) and (C) as subparagraphs (C) and (D); and (3) by
inserting after subparagraph (A) the following: (B) any permissible
waiver as specified in section 1128B(b)(3) or in regulations issued
by the Secretary;”.

(f) Effective Dates.– (1) In general.–Except as provided in this
subsection, the amendments made by this section shall be effective as
if included in the enactment of the Health Insurance Portability and
Accountability Act of 1996.

(2) Federal health program.–The amendments made by subsection (c)
shall take effect on the date of the enactment of this Act.

(3) Sanction for failure to report.–The amendment made by
subsection (d) shall apply to failures occurring on or after the date
of the enactment of this Act.

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