§231. SOCIAL SECURITY ACT CIVIL MONETARY PENALTIES.

Health Insurance Portability and Accountability Act of 1996

TITLE II—PREVENTING HEALTH CARE FRAUD AND ABUSE; ADMINISTRATIVE SIMPLIFICATION

(a) General Civil Monetary Penalties.—Section 1128A (42 U.S.C. 1320a-7a) is amended as follows:

(a)(1) In the third sentence of subsection (a), by striking ‘‘programs under title XVIII’’ and inserting ‘‘Federal health care programs (as defined in section 1128B(f)(1))’’.

(a)(2) In subsection (f)—

(a)(2)(A) by redesignating paragraph (3) as paragraph (4); and

(a)(2)(B) by inserting after paragraph (2) the following new paragraph:

‘‘(3) With respect to amounts recovered arising out of a claim under a Federal health care program (as defined in section 1128B(f)), the portion of such amounts as is determined to have been paid by the program shall be repaid to the program, and the portion of such amounts attributable to the amounts recovered under this section by reason of the amendments made by the Health Insurance Portability and Accountability Act of 1996 (as estimated by the Secretary) shall be deposited into the Federal Hospital Insurance Trust Fund pursuant to section 1817(k)(2)(C).’’.

(a)(3) In subsection (i)—

(a)(3)(A) in paragraph (2), by striking ‘‘title V, XVIII, XIX, or XX of this Act’’ and inserting ‘‘a Federal health care program (as defined in section 1128B(f))’’,

(a)(3)(B) in paragraph (4), by striking ‘‘a health insurance or medical services program under title XVIII or XIX of this Act’’ and inserting ‘‘a Federal health care program (as so defined)’’, and

(a)(3)(C) in paragraph (5), by striking ‘‘title V, XVIII, XIX, or XX’’ and inserting ‘‘a Federal health care program (as so defined)’’.

(a)(4) By adding at the end the following new subsection: ‘‘(m)(1) For purposes of this section, with respect to a Federal health care program not contained in this Act, references to the Secretary in this section shall be deemed to be references to the Secretary or Administrator of the department or agency with jurisdiction over such program and references to the Inspector General of the Department of Health and Human Services in this section shall be deemed to be references to the Inspector General of the applicable department or agency.

‘‘(2)(A) The Secretary and Administrator of the departments and agencies referred to in paragraph (1) may include in any action pursuant to this section, claims within the jurisdiction of other Federal departments or agencies as long as the following conditions are satisfied:

‘‘(i) The case involves primarily claims submitted to the Federal health care programs of the department or agency initiating the action.

‘‘(ii) The Secretary or Administrator of the department or agency initiating the action gives notice and an opportunity to participate in the investigation to the Inspector General of the department or agency with primary jurisdiction over the Federal health care programs to which the claims were submitted.

‘‘(B) If the conditions specified in subparagraph (A) are fulfilled, the Inspector General of the department or agency initiating the action is authorized to exercise all powers granted under the Inspector General Act of 1978 (5 U.S.C. App.) with respect to the claims submitted to the other departments or agencies to the same manner and extent as provided in that Act with respect to claims submitted to such departments or agencies.’’.

(b) Excluded Individual Retaining Ownership or Control Interest in Participating Entity.—Section 1128A(a) (42 U.S.C. 1320a-7a(a)) is amended—

(b)(1) by striking "or" at the end of paragraph (1)(D);

(b)(2) by striking ‘‘, or’’ at the end of paragraph (2) and inserting a semicolon;

(b)(3) by striking the semicolon at the end of paragraph (3) and inserting ‘‘; or’’; and

(b)(4) by inserting after paragraph (3) the following new paragraph:

‘‘(4) in the case of a person who is not an organization, agency, or other entity, is excluded from participating in a program under title XVIII or a State health care program in accordance with this subsection or under section 1128 and who, at the time of a violation of this subsection—

‘‘(A) retains a direct or indirect ownership or control interest in an entity that is participating in a program under title XVIII or a State health care program, and who knows or should know of the action constituting the basis for the exclusion; or

‘‘(B) is an officer or managing employee (as defined in section 1126(b)) of such an entity;’’.

(c) Modifications of Amounts of Penalties and Assessments.—Section 1128A(a) (42 U.S.C. 1320a-7a(a)), as amended by subsection (b), is amended in the matter following paragraph (4)—

(c)(1) by striking "$2,000" and inserting ‘‘$10,000’’;

(c)(2) by inserting ‘‘; in cases under paragraph (4), $10,000 for each day the prohibited relationship occurs’’ after ‘‘false or misleading information was given’’; and

(c)(3) by striking ‘‘twice the amount’’ and inserting ‘‘3 times the amount’’.

(d) Clarification of Level of Knowledge Required for Imposition of Civil Monetary Penalties.—

(d)(1) In general.—Section 1128A(a) (42 U.S.C. 1320a-7a(a)) is amended—

(d)(1)(A) in paragraphs (1) and (2), by inserting "knowingly" before "presents" each place it appears; and

(d)(1)(B) in paragraph (3), by striking "gives" and inserting ‘‘knowingly gives or causes to be given’’.

(d)(2) Definition of standard.—Section 1128A(i) (42 U.S.C. 1320a-7a(i)), as amended by subsection (h)(2), is amended by adding at the end the following new paragraph:

‘‘(7) The term 'should know' means that a person, with respect to information—

‘‘(A) acts in deliberate ignorance of the truth or falsity of the information; or

‘‘(B) acts in reckless disregard of the truth or falsity of the information, and no proof of specific intent to defraud is required.’’.

(e) Claim for Item or Service Based on Incorrect Coding or Medically UnnecessaryServices.—Section 1128A(a)(1) (42 U.S.C. 1320a-7a(a)(1)), as amended by subsection (b), is amended—

(e)(1) in subparagraph (A) by striking "claimed," and inserting ‘‘claimed, including any person who engages in a pattern or practice of presenting or causing to be presented a claim for an item or service that is based on a code that the person knows or should know will result in a greater payment to the person than the code the person knows or should know is applicable to the item or service actually provided,’’;

(e)(2) in subparagraph (C), by striking "or" at the end;

(e)(3) in subparagraph (D), by striking the semicolon and inserting ‘‘, or’’; and

(e)(4) by inserting after subparagraph (D) the following new subparagraph:

‘‘(E) is for a pattern of medical or other items or services that a person knows or should know are not medically necessary;’’.

(f) Sanctions Against Practitioners and Persons for Failure TO Comply With Statutory Obligations.—Section 1156(b)(3) (42 U.S.C. 1320c-5(b)(3)) is amended by striking ‘‘the actual or estimated cost’’ and inserting ‘‘up to $10,000 for each instance’’.

(g) Procedural Provisions.—Section 1876(i)(6) (42 U.S.C. 1395mm(i)(6)), as amended by section 215(a)(2), is amended by adding at the end the following new subparagraph:

‘‘(D) The provisions of section 1128A (other than subsections (a) and (b)) shall apply to a civil money penalty under subparagraph (B)(i) or (C)(i) in the same manner as such provisions apply to a civil money penalty or proceeding under section 1128A(a).’’.

(h) Prohibition Against Offering Inducements to Individuals Enrolled Under Programs or Plans.—

(h)(1) Offer of remuneration.—Section 1128A(a) (42 U.S.C. 1320a-7a(a)), as amended by subsection (b), is amended—

(h)(1)(A) by striking "or" at the end of paragraph (3);

(h)(1)(B) by striking the semicolon at the end of paragraph (4) and inserting ‘‘; or’’; and

(h)(1)(C) by inserting after paragraph (4) the following new paragraph:

‘‘(5) offers to or transfers remuneration to any individual eligible for benefits under title XVIII of this Act, or under a State health care program (as defined in section 1128(h)) that such person knows or should know is likely to influence such individual to order or receive from a particular provider, practitioner, or supplier any item or service for which payment may be made, in whole or in part, under title XVIII, or a State health care program (as so defined);’’.

(h)(2) Remuneration defined.—Section 1128A(i) (42 U.S.C. 1320a-7a(i)) is amended by adding at the end the following new paragraph:

‘‘(6) The term 'remuneration' includes the waiver of coinsurance and deductible amounts (or any part thereof), and transfers of items or services for free or for other than fair market value. The term 'remuneration' does not include—

‘‘(A) the waiver of coinsurance and deductible amounts by a person, if—

‘‘(i) the waiver is not offered as part of any advertisement or solicitation;

‘‘(ii) the person does not routinely waive coinsurance or deductible amounts; and

‘‘(iii) the person—

‘‘(I) waives the coinsurance and deductible amounts after determining in good faith that the individual is in financial need;

‘‘(II) fails to collect coinsurance or deductible amounts after making reasonable collection efforts; or

‘‘(III) provides for any permissible waiver as specified in section 1128B(b)(3) or in regulations issued by the Secretary;

‘‘(B) differentials in coinsurance and deductible amounts as part of a benefit plan design as long as the differentials have been disclosed in writing to all beneficiaries, third party payers, and providers, to whom claims are presented and as long as the differentials meet the standards as defined in regulations promulgated by the Secretary not later than 180 days after the date of the enactment of the Health Insurance Portability and Accountability Act of 1996; or

‘‘(C) incentives given to individuals to promote the delivery of preventive care as determined by the Secretary in regulations so promulgated.’’.

(i) Effective Date. (42 USC 1320a-7a) —The amendments made by this section shall apply to acts or omissions occurring on or after January 1, 1997.