Medicare and Medicaid Program; Civil Money Penalties, Assessments, Exclusions, and Related Appeals Procedures

DEPARTMENT OF HEALTH AND HUMAN SERVICES

Health Care Financing Administration

42 CFR Parts 400, and 402

[HCFA-6135-FC]

Medicare and Medicaid Program; Civil Money Penalties,

Assessments, Exclusions, and Related Appeals Procedures

AGENCY: Health Care Financing Administration (HCFA), HHS.

ACTION: Final rule with comment period.

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SUMMARY: This rule establishes procedures for imposing civil money

penalties, assessments, and exclusions for certain violations of the

Medicare and Medicaid programs. The regulations also provide for

hearings and appeals when those penalties, assessments, and exclusions

are imposed. These procedures are based on the procedures that the

Office of the Inspector General has promulgated for the civil money

penalties, assessments, and exclusions. These regulations are designed

to protect program beneficiaries from unfit health care practitioners

and to otherwise improve antifraud provisions under the Medicare and

Medicaid Acts.

DATES: These regulations are effective on January 13, 1999. Comments

must be received by February 12, 1999.

FOR FURTHER INFORMATION CONTACT: Joel Cohen, (410) 786-3349

ADDRESSES: Mail written comments (1 original and 3 copies) to the

following address: Health Care Financing Administration, Department of

Health and Human Services, Attention: HCFA-6135-FC, PO Box 26676,

Baltimore, MD 21207-0519.

If you prefer, you may deliver your written comments (1 original

and 3 copies) to one of the following addresses:

Room 309-G, Hubert H. Humphrey Building, 200 Independence Avenue, SW.,

Washington, DC 20201, or

Room C5-09-26, 7500 Security Boulevard, Baltimore, MD 21244-1850

Comments may also be submitted electronically to the following e-

mail address: [email protected] For e-mail comment procedures, see

the beginning of SUPPLEMENTARY INFORMATION. For further information on

ordering copies of the Federal Register containing this document and on

electronic access, see the beginning of SUPPLEMENTARY INFORMATION.

Electronically submitted comments will be available for public

inspection at the Independence Avenue address below.

SUPPLEMENTARY INFORMATION:

E-Mail, Comments, Procedures, Availability of Copies, and

Electronic Access

E-mail comments must include the full name and address of the

sender and must be submitted to the referenced address to be

considered. All comments must be incorporated in the e-mail message

because we may not be able to access attachments.

Because of staffing and resource limitations, we cannot accept

comments by facsimile (FAX) transmission. In commenting, please refer

to file code HCFA-0047-P and the specific section or sections of the

proposed rule. Both electronic and written comments received by the

time and date indicated above will be available for public inspection

as they are received, generally beginning approximately 3 weeks after

publication of a document, in Room 309-G of the Department's offices at

200 Independence Avenue, SW., Washington, DC, on Monday through Friday

of each week from 8:30 a.m. to 5 p.m. (phone: (202) 690-7890).

Electronic and legible written comments will also be posted, along with

this proposed rule, at the following web site: http://aspe.os.dhhs.gov/

admnsimp/.

Copies: To order copies of the Federal Register containing this

document, send your request to: New Orders, Superintendent of

Documents, P.O. Box 371954, Pittsburgh, PA 15250-7954. Specify the date

of the issue requested and enclose a check or money order payable to

the Superintendent of Documents, or enclose your Visa or Master Card

number and expiration date. Credit card orders can also be placed by

calling the order desk at (202) 512-1800 or by faxing to (202) 512-

2250. The cost for each copy is $8. As an alternative, you can view and

photocopy the Federal Register document at most libraries designated as

Federal Depository Libraries and at many other public and academic

libraries throughout the country that receive the Federal Register.

This Federal Register document is also available from the Federal

Register online database through GPO Access, a service of the U.S.

Government Printing Office. Free public access is available on a Wide

Area Information Server (WAIS) through the Internet and via

asynchronous dial-in. Internet users can access the database by using

the World Wide Web, http://www.access.gpo.gov/nara/, by using local

WAIS client software, or by telnet to swais.access.gpo.gov, then login

as guest (no password required). Dial-in users should use

communications software and modem to call (202) 512-1661; type swais,

then login as guest (no password required).

I. Background

In 1981, the Congress added section 1128A to the Social Security

Act (the Act) (section 2105 of Pub.L. 97-35) to authorize the Secretary

of Health and Human Services to impose civil money penalties and

assessments on certain health care facilities, health care

practitioners, and other suppliers under the Medicare and Medicaid

programs. Civil money penalties and assessments provide an alternative

enforcement tool for agencies to establish compliance with legal and

program standards and are in addition to potential criminal

proceedings.

Since 1981, the Congress has significantly increased both the

number and the types of circumstances under which the Secretary may

impose civil money penalties. Some of the civil money penalty

authorities address fraud, misrepresentation, or falsification while

others address noncompliance with programmatic or regulations

requirements. The Secretary has delegated the authority for these

provisions to either the Office of Inspector General (OIG) or HCFA (58

FR 52967, October 20, 1994). Under this delegation of authority, the

OIG has the authority to impose civil money penalties and prosecute

cases involving civil money penalties and assessments that were

delegated to HCFA if HCFA and the OIG jointly determine it to be

[[Page 68688]]

in the interest of economy, efficiency, or effective coordination of

activities.

On October 31, 1994, the Social Security Amendments of 1994 (Pub.

L. 103-432) were enacted. This law repealed several statutory

provisions providing for civil money penalties and established

additional civil money penalty provisions. On August 21, 1996, the

Health Insurance Portability and Accountability Act of 1996 (Pub. L.

104-191) was enacted. This law provides for higher maximum civil money

penalties ($10,000 instead of $2,000) for certain of the violations and

also increased the assessments that can be imposed for those

violations.

Most of the specific statutory provisions authorizing civil money

penalties also permit the Secretary of Health and Human Services (or

his or her designee) to impose an assessment in addition to the civil

money penalty. An assessment is an additional monetary payment in lieu

of damages sustained by HHS or a State agency. The maximum amount of

the assessment varies according to the civil money penalty (from $1,000

to $25,000) and is not more than three times the amount claimed for

each service upon which the civil money penalty was based. Also, for

many statutory violations, the Secretary of Health and Human Services

or his or her designee may exclude the individual or entity violating

the statute from participating in a Federal health care program for

certain specific periods of time. A Federal health care program is

defined in section 1128B of the Act (42 U.S.C. 1320(a)-7b) as ``any

plan or program that provides health benefits, whether directly,

through insurance, or otherwise, which is funded directly, in whole or

in part, by the United States Government (other than the health

insurance program under chapter 89 of title 5, United States Code); or

* * * any State health care program as defined in section 1128(h) of

the Social Security Act.''

The regulations currently governing civil money penalties,

assessments, and civil money penalty-related exclusions are contained

in 42 CFR part 1003. Procedures for hearings and appeals of civil money

penalties, assessments, and exclusions are in 42 CFR part 1005.

II. Regulations Revisions

This final rule with comment period duplicates in substance 42 CFR

part 1003 for most of the civil money penalties and related assessments

that have been delegated to HCFA. Other rules concerning civil money

penalties and assessment authorities that have been delegated to HCFA,

such as those imposed for violations by long term care facilities and

clinical laboratories, have already been codified in the Code of

Federal Regulations. Civil money penalties and assessments that were

added by the Balanced Budget Act of 1997 (BBA), Pub. L. 105-33 (August

5, 1997) and that are delegated to HCFA in the future will be added to

the Code of Federal Regulations through another Federal Register

document, as will the specific rules concerning the exclusions that

HCFA is authorized to impose.

Although we are not addressing the civil money penalties and

assessments added by the BBA in this regulation, it is important to

recognize the impact of the BBA on certain provisions of this

regulation. Section 4507 of the BBA permits a physician or practitioner

to enter into private contracts with Medicare beneficiaries for

services furnished on or after January 1, 1998. If a physician or

practitioner enters into a private contract, he or she has ``opted

out'' of the Medicare program for two years for all covered items or

services furnished to Medicare beneficiaries. A beneficiary who enters

into a private contract agrees to waive the right to Medicare payment

for services rendered by the physician or practitioner and to pay the

physician or practitioner without regard to any limits that would

otherwise apply to what the physician or practitioner could charge. We

are clarifying here that physicians and practitioners who enter into

valid private contracts will not be subject to civil money penalties

and assessments under this regulation unless they knowingly and

willfully violate the terms of the private agreement. In particular,

physicians and practitioners will not be subject to penalties and

assessments pursuant to section 1834(c)(4) of the Social Security Act,

which provides for sanctions against physicians who charge in excess of

the limiting charge, or section 1848(g)(4) of the Act, which imposes

sanctions on physicians and practitioners who violate the mandatory

submission of claims requirement of the statute.

The civil money penalties to which this rule pertains include those

that apply to Medicare payments or billings as ``assignment''

violations; violations involving the failure to provide information or

improperly providing information; violations of charge or service

limits; and violations of Medigap and Medicare Select requirements.

This rule adds a new part to chapter IV of title 42 of the Code of

Federal Regulations. This new part is part 402 and is entitled Civil

Money Penalties, Assessments and Exclusions. We are dividing the part

into three subparts for the present: Subpart A-General Requirements;

Subpart B-Civil Money Penalties and Assessments; and Subpart C-

Exclusions (which is reserved for future use).

Subpart A contains the statutory authorities for most of the civil

money penalties, assessments, and exclusions that the Secretary has

delegated to HCFA. The remainder of the subpart contains the general

requirements and procedures that are common to the imposition of civil

money penalties, assessments, and exclusions. These procedures are

based on the OIG regulations in 42 CFR part 1003.

Under the Secretary's delegation, some authorities will be enforced

by the Office of Inspector General, even though similar penalties,

applicable under other statutes, are delegated to HCFA. For instance,

two of the statutory citations that subject violators to potential

sanctions (section 1842(p)(3)(A) and 1848(g)(1)(B)) authorize HCFA to

impose various penalties for abusive practices involving bills or

requests for payment that are not made on an assignment-related basis.

We note that the OIG has the comparable authority under section 1128A

of the Act to impose civil money penalties for those abusive practices

in cases where payment is requested on an assignment-related basis.

Although the OIG penalties are not listed in this section, we want to

make clear that individuals involved in abusive billing practices are

subject to penalties, whether or not the claim is submitted on an

assignment-related basis.

Subpart B includes procedures specific to the imposition of civil

money penalties and assessments. These rules are also based on those

the OIG uses in 42 CFR part 1003.

Our regulations are based on those in part 1003 but are organized

somewhat differently in order to be able to, in the future, include all

our rules regarding exclusions in more detail. The organization will

also make the regulations easier to understand and to find. The

organizational changes are not substantive; they change neither the

procedures nor the extent of the regulations' applicability.

Although the OIG regulations generally refer to the OIG as the

government entity implementing a given function, our new regulations

will refer to ``HCFA or OIG'' as the government agent.

Another purely technical departure from the OIG regulations is our

inclusion of a description of all the statutory citations. HCFA is

revising its rules to include a description of all pertinent statutory

citations in a

[[Page 68689]]

particular section, rather than using a long list of citations (by

number only) in the ``Authority'' paragraph that currently appears in

each part or subpart in title 42 of the Code of Federal Regulations.

The descriptions, of course, also include the new authorities that are

not in the existing OIG rules. We also make several editorial changes

and clarifying changes designed to make the language clearer to the

public.

The regulations provisions in this rule do not revise any

procedures or rights currently available to any person on whom we may

impose a civil money penalty, assessment, or exclusion. The procedures

we will follow also remain the same.

III. Impact Analysis

Consistent with the Regulatory Flexibility Act (RFA) (5 U.S.C. 601

through 612), we prepare a regulatory flexibility analysis unless we

certify that a rule will not have a significant economic impact on a

substantial number of small entities. For purposes of the RFA, all

health care providers and suppliers of services (except some individual

physicians) are considered to be small entities. Individuals and States

are not included in the definition of a small entity.

In addition, section 1102(b) of the Act requires us to prepare a

regulatory impact analysis if a rule may have a significant impact on

the operations of a substantial number of small rural hospitals. Such

an analysis must conform to the provisions of section 604 of the RFA.

For purposes of section 1102(b) of the Act, we define a small rural

hospital as a hospital that is located outside of a Metropolitan

Statistical Area and has fewer than 50 beds.

As indicated above, the provisions in this final rule with comment

period provide HCFA (and the OIG) with regulations to implement the

statutory authorities to levy civil money penalties and assessments

against providers and physicians and other suppliers of services. The

civil money penalties to which this rule pertains include those that

apply to Medicare payments or billings as ``assignment'' violations;

violations involving the failure to provide information or the improper

provision of information; violations of charge or service limits; and

violations of Medigap and Medicare Select requirements. Most of these

authorities rested solely with the OIG until October 1994; there are

also a few new authorities, which are included in the new part 402.

These new authorities do not materially expand or increase the overall

impact of civil money penalty oversight activities. This final rule

basically transfers the existing civil money penalty functional

responsibility (along with the new authorities) for assuring compliance

with programatic and/or regulations violations (versus fraud,

misrepresentation, and falsification types of violations, which remain

with the OIG) from the OIG to HCFA. It is expected that no significant

economic impact will be imposed on a substantial number of small

business entities as a result of this action.

For this reason, any new economic effect of these regulations

should be minimal, affecting only those that have engaged in prohibited

behavior contained in the authorities put in place on or after October

31, 1994; the economic effect of the already existing authorities is

not new and is also minimal because of the relatively few violators

involved. We believe the majority of the persons and entities subject

to these regulations do not commit the violations discussed in these

regulations. Those providers, physicians, and suppliers that are not

currently in compliance with existing and new authorities will be

subject to more vigorous enforcement of these provisions of the CMP

oversight activity and may experience a significant economic impact as

a result of such violations. However, the population subject to such

actions is reasonably believed to be a very minor portion of the total

population of providers, physicians and other suppliers. Moreover,

small rural hospitals are not expected to be appreciably affected by

this final rule. In addition, there are minimal costs and savings to

the government.

For these reasons, we are not preparing analyses for either the RFA

or section 1102(b) of the Act because we have determined, and we

certify, that this rule will not have a significant economic impact on

a substantial number of small entities or a significant impact on the

operations of a substantial number of small rural hospitals.

In accordance with the provisions of Executive Order 12866, this

regulation was reviewed by the Office of Management and Budget.

IV. Response to Comments

Because of the large number of items of correspondence we normally

receive on Federal Register documents published for comment, we are not

able to acknowledge or respond to them individually. We will consider

all comments we receive by the date and time specified in the ``DATES''

section of this preamble and will respond to the comments in the

preamble to any subsequent Federal Register document.

V. Waiver of Proposed Rulemaking

We ordinarily publish a notice of proposed rulemaking in the

Federal Register and invite prior public comment on proposed rules. The

notice of proposed rulemaking includes a reference to the legal

authority under which the rule is proposed and the terms and substances

of the proposed rule or a description of the subjects and issues

involved. This procedure can be waived, however, if an agency finds

good cause that a notice-and-comment procedure is impracticable,

unnecessary, or contrary to the public interest and incorporates a

statement of the finding and its reasons in the rule issued.

It would be contrary to the public interest to delay the

publication of these rules pending completion of the usual notice and

comment procedures. The delay would be contrary to the public interest

because HCFA would not be able to utilize fully civil money penalties

and assessments as tools to encourage compliance with certain

provisions of the Medicare Act as the Congress intended. These

provisions are designed to discourage entities from engaging in

fraudulent and abusive behavior. According to the General Accounting

Office's report, Vulnerable Payers Lose Billions to Fraud and Abuse

(GAO/HRD-92-69), costs of health care fraud and abuse are estimated to

be ten percent of our total health care spending. The Medicare trust

funds and the public are significantly harmed by these abusive

practices, and we find that further delaying the use of these sanctions

pending the end of a public comment period would be contrary to the

public's interest.

We also believe it is unnecessary to delay publication of these

final rules pending completion of a notice and comment period. We are

adopting the OIG's procedures and policies as our own and are not

revising the rights of persons to whom the provisions pertain. Over the

years, the Department of Health and Human Services has published the

substance of the OIG's regulations in proposed rules that solicited

comment and responded to those comments in final rules (55 FR 12205,

April 2, 1990; 57 FR 3298, January 29, 1992). The procedures in this

rule do not differ significantly from the OIG rules and we believe it

is redundant to, in effect, propose rules that are already contained in

the Code of Federal Regulations.

Finally, a delay of publication of the final rule is unnecessary

because all of

[[Page 68690]]

the specific civil money penalties are required by the current statute.

Thus, the one significant addition to the OIG rules, the addition of

the new authorities, is not discretionary and we would not be able to

change these authorities in the regulations in response to public

comment.

Accordingly, we find good cause for waiving the prior notice-and-

comment procedure as unnecessary and contrary to the public interest.

List of Subjects in 42 CFR Part 402

Administrative practice and procedure, Health facilities, Health

professions, Medicaid, Medicare, Penalties.

42 CFR chapter IV is amended as set forth below:

PART 400--[AMENDED]

A. Part 400 is amended as follows:

1. The authority citation continues to read as follows:

Authority: Secs. 1102 and 1871 of the Social Security Act (42

U.S.C. 1302 and 1395hh) and 44 U.S.C. Chapter 35.

2. Section 400.200 is amended by adding, in alphabetical order, a

definition for ``DAB'' to read as follows:

Sec. 400.200 General definitions.

* * * * *

DAB stands for Departmental Appeals Board.

* * * * *

B. A new part 402 is added to read as follows:

PART 402--CIVIL MONEY PENALTIES, ASSESSMENTS, AND EXCLUSIONS

Subpart A--General Provisions

Secs.

402.1 Basis and scope.

402.3 Definitions.

402.5 Right to a hearing before the final determination.

402.7 Notice of proposed determination.

402.9 Failure to request a hearing.

402.11 Notice to other agencies and other entities.

402.13 Penalty, assessment, and exclusion not exclusive.

402.15 Collateral estoppel.

402.17 Settlement.

402.19 Hearings and appeals.

402.21 Judicial review.

Subpart B--Penalties and Assessments

Secs.

402.105 Amount of penalty.

402.107 Amount of assessment.

402.109 Statistical sampling.

402.111 Factor consideration determinations regarding the amount of

penalties and assessments.

402.113 When a penalty and assessment are collectible.

402.115 Collection of assessment and penalty.

Subpart C--Exclusions [Reserved]

Authority: Secs. 1102 and 1871 of the Social Security Act (42

U.S.C. 1302 and 1395hh).

Subpart A--General Provisions

Sec. 402.1 Basis and scope.

(a) Basis. This part is based on the sections of the Act that are

specified in paragraph (c) of this section.

(b) Scope. This part--

(1) Provides for the imposition of civil money penalties,

assessments, and exclusions against persons that violate the provisions

of the Act specified in paragraph (c), (d), or (e) of this section; and

(2) Sets forth the appeal rights of persons subject to penalties,

assessments, or exclusion and the procedures for reinstatement

following exclusion.

(c) Civil money penalties. HCFA or OIG may impose civil money

penalties against any person or other entity specified in paragraphs

(c)(1) through (c)(30) of this section under the identified section of

the Act. The authorities that also permit imposition of an assessment

or exclusion are noted in the applicable paragraphs.

(1) Sections 1833(h)(5)(D) and 1842(j)(2)--Any person that

knowingly and willfully, and on a repeated basis, bills for a clinical

diagnostic laboratory test, other than on an assignment-related basis.

This provision includes tests performed in a physician's office but

excludes tests performed in a rural health clinic. (This violation may

also include an assessment and cause exclusion.)

(2) Section 1833(i)(6)--Any person that knowingly and willfully

presents, or causes to be presented, a bill or request for payment for

an intraocular lens inserted during or after cataract surgery for which

the Medicare payment rate includes the cost of acquiring the class of

lens involved.

(3) Section 1833(q)(2)(B)--Any entity that knowingly and willfully

fails to provide information about a referring physician, including the

physician's name and unique physician identification number for the

referring physician, when seeking payment on an unassigned basis. (This

violation, if it occurs in repeated cases, may also cause an

exclusion.)

(4) Sections 1834(a)(11)(A) and 1842(j)(2)--Any durable medical

equipment supplier that knowingly and willfully charges for a covered

service that is furnished on a rental basis after the rental payments

may no longer be made (except for maintenance and servicing) as

provided in section 1834(a)(7)(A). (This violation may also include an

assessment and cause exclusion.)

(5) Sections 1834(a)(18)(B) and 1842(j)(2)--Any nonparticipating

durable medical equipment supplier that knowingly and willfully, in

violation of section 1834(a)(18)(A), fails to make a refund to Medicare

beneficiaries for a covered service for which payment is precluded due

to an unsolicited telephone contact from the supplier. (This violation

may also include an assessment and cause exclusion.)

(6) Sections 1834(b)(5)(C) and 1842(j)(2)--Any nonparticipating

physician or supplier that knowingly and willfully charges a Medicare

beneficiary more than the limiting charge, as specified in section

1834(b)(5)(B), for radiologist services. (This violation may also

include an assessment and cause exclusion.)

(7) Sections 1834(c)(4)(C) and 1842(j)(2)--Any nonparticipating

physician or supplier that knowingly and willfully charges a Medicare

beneficiary more than the limiting charge, as specified in section

1834(c)(4)(B), for mammography screening. (This violation may also

include an assessment and cause exclusion.)

(8) Sections 1834(h)(3) and 1842(j)(2)--Any supplier of prosthetic

devices, orthotics, and prosthetics that knowingly and willfully

charges for a covered prosthetic device, orthotic, or prosthetic that

is furnished on a rental basis after the rental payment may no longer

be made (except for maintenance and servicing). (This violation may

also include an assessment and cause exclusion.)

(9) Section 1834(j)(2)(A)(iii)--Any supplier of durable medical

equipment, including a supplier of prosthetic devices, prosthetics,

orthotics, or supplies, that knowingly and willfully distributes a

certificate of medical necessity in violation of section

1834(j)(2)(A)(i) or fails to provide the information required under

section 1834(j)(2)(A)(ii).

(10) Sections 1834(j)(4) and 1842(j)(2)--

(i) Any supplier of durable medical equipment, including a supplier

of prosthetic devices, prosthetics, orthotics, or supplies, that

knowingly and willfully fails to make refunds in a timely manner to

Medicare beneficiaries for services billed other than on an assignment-

related basis if--

(A) The supplier does not possess a Medicare supplier number;

[[Page 68691]]

(B) The service is denied in advance under section 1834(a)(15); or

(C) The service is determined not to be medically necessary or

reasonable.

(ii) These violations may also include an assessment and cause

exclusion.

(11) Sections 1842(b)(18)(B) and 1842(j)(2)--Any practitioner

specified in section 1842(b)(18)(C) (physician assistants, nurse

practitioners, clinical nurse specialists, certified registered nurse

anesthetists, certified nurse-midwives, clinical social workers, and

clinical psychologists) or other person that knowingly and willfully

bills or collects for any services by the practitioners on other than

an assignment-related basis. (This violation may also include an

assessment and cause exclusion.)

(12) Sections 1842(k) and 1842(j)(2)--Any physician who knowingly

and willfully presents, or causes to be presented, a claim or bill for

an assistant at cataract surgery performed on or after March 1, 1987

for which payment may not be made because of section 1862(a)(15). (This

violation may also include an assessment and cause exclusion.)

(13) Sections 1842(l)(3) and 1842(j)(2)--Any nonparticipating

physician who does not accept payment on an assignment-related basis

and who knowingly and willfully fails to refund on a timely basis any

amounts collected for services that are not reasonable or medically

necessary or are of poor quality, in accordance with section

1842(l)(1)(A). (This violation may also include an assessment and cause

exclusion.)

(14) Sections 1842(m)(3) and 1842(j)(2)--(i) Any nonparticipating

physician, who does not accept payment for an elective surgical

procedure on an assignment-related basis and whose charge is at least

$500, who knowingly and willfully fails to--

(A) Disclose the information required by section 1842(m)(1)

concerning charges and coinsurance amounts; and

(B) Refund on a timely basis any amount collected for the procedure

in excess of the charges recognized and approved by the Medicare

program.

(ii) This violation may also include an assessment and cause

exclusion.

(15) Sections 1842(n)(3) and 1842(j)(2)--Any physician who

knowingly and willfully, in repeated cases, bills one or more

beneficiaries, for purchased diagnostic tests, any amount other than

the payment amount specified in section 1842(n)(1)(A) or section

1842(n)(1)(B). (This violation may also include an assessment and cause

exclusion.)

(16) Section 1842(p)(3)(A)--Any physician who knowingly and

willfully fails promptly to provide the appropriate diagnosis code or

codes upon request by HCFA or a carrier on any request for payment or

bill not submitted on an assignment-related basis for any service

furnished by the physician. (This violation, if it occurs in repeated

cases, may also cause exclusion.)

(17) Sections 1848(g)(1)(B) and 1842(j)(2)--

(i) Any nonparticipating physician, supplier, or other person that

furnishes physicians' services and does not accept payment on an

assignment-related basis, that--

(A) Knowingly and willfully bills or collects in excess of the

limiting charge (as defined in section 1848(g)(2)) on a repeated basis;

or

(B) Fails to make an adjustment or refund on a timely basis as

required by section 1848(g)(1)(A)(iii) or (iv).

(ii) These violations may also include an assessment and cause

exclusion.

(18) Section 1848(g)(3)(B) and 1842(j)(2)--Any person that

knowingly and willfully bills for State plan approved physicians'

services, as defined in section 1848(j)(3), on other than an

assignment-related basis for a Medicare beneficiary who is also

eligible for Medicaid (these individuals include qualified Medicare

beneficiaries). This provision applies to services furnished on or

after April 1, 1990. (This violation may also include an assessment and

cause exclusion.)

(19) Section 1848(g)(4)(B)(ii), 1842(p)(3), and 1842(j)(2)(A)--

(i) Any physician, supplier, or other person (except any person

that has been excluded from the Medicare program) that, for services

furnished after September 1, 1990, knowingly and willfully--

(A) Fails to submit a claim on a standard claim form for services

provided for which payment is made under Part B on a reasonable charge

or fee schedule basis; or

(B) Imposes a charge for completing and submitting the standard

claims form.

(ii) These violations, if they occur in repeated cases, may also

cause exclusion.

(20) Section 1862(b)(5)(C)--Any employer (other than a Federal or

other governmental agency) that, before October 1, 1998, willfully or

repeatedly fails to provide timely and accurate information requested

relating to an employee's group health insurance coverage.

(21) Section 1862(b)(6)(B)--Any entity that knowingly, willfully,

and repeatedly--

(i) Fails to complete a claim form relating to the availability of

other health benefit plans in accordance with section 1862(b)(6)(A); or

(ii) Provides inaccurate information relating to the availability

of other health benefit plans on the claim form.

(22) Section 1877(g)(5)--Any person that fails to report

information required by HHS under section 1877(f) concerning ownership,

investment, and compensation arrangements. (This violation may also

include an assessment and cause exclusion.)

(23) Sections 1879(h), 1834(a)(18), and 1842(j)(2)--

(i) Any durable medical equipment supplier, including a supplier of

prosthetic devices, prosthetics, orthotics, or supplies, that knowingly

and willfully fails to make refunds in a timely manner to Medicare

beneficiaries for services billed on an assignment-related basis if--

(A) The supplier did not possess a Medicare supplier number;

(B) The service is denied in advance under section 1834(a)(15) of

the Act; or

(C) The service is determined not to be payable under section

1834(a)(17)(b) because of unsolicited telephone contacts.

(ii) These violations may also include an assessment and cause

exclusion.

(24) Section 1882(a)(2)--Any person that issues a Medicare

supplemental policy that has not been approved by the State regulatory

program or does not meet Federal standards on and after the effective

date in section 1882(p)(1)(C). (This violation may also include an

assessment and cause exclusion.)

(25) Section 1882(p)(8)--Any person that sells or issues Medicare

supplemental policies, on or after July 30, 1992, that fail to conform

to the NAIC or Federal standards established under section 1882(p).

(This violation may also include an assessment and cause exclusion.)

(26) Section 1882(p)(9)(C)--

(i) Any person that sells a Medicare supplemental policy and--

(A) Fails to make available for sale the core group of basic

benefits when selling other Medicare supplemental policies with

additional benefits; or

(B) Fails to provide the individual, before the sale of the policy,

an outline of coverage describing the benefits provided by the policy.

(ii) These violations may also include an assessment and cause

exclusion.

(27) Section 1882(q)(5)(C)--

(i) Any person that fails to--

(A) Suspend a Medicare supplemental policy at the policyholder's

request, if

[[Page 68692]]

the policyholder applies for and is determined eligible for medical

assistance, and the policyholder provides notice within 90 days of the

eligibility determination; or

(B) Automatically reinstate the policy as of the date of

termination of medical assistance if the policyholder loses eligibility

for medical assistance and the policyholder provides notice within 90

days of loss of eligibility.

(ii) These violations may also include an assessment and cause

exclusion.

(28) Section 1882(r)(6)(A)--Any person that fails to provide

refunds or credits as required by section 1882(r)(1)(B). (This

violation may also include an assessment and cause exclusion.)

(29) Section 1882(s)(3)--

(i) Any issuer of a Medicare supplemental policy that--

(A) Does not waive any time periods applicable to preexisting

conditions, waiting periods, elimination periods, or probationary

periods if the time periods were already satisfied under a preceding

Medicare supplemental policy; or

(B) Denies a policy, conditions the issuance or effectiveness of

the policy, or discriminates in the pricing of the policy based on

health status or other criteria as specified in section 1882(s)(2)(A).

(ii) These violations may also include an assessment and cause

exclusion.

(30) Section 1882(t)(2)--

(i) Any issuer of a Medicare supplemental policy that--

(A) Fails substantially to provide medically necessary services to

enrollees seeking the services through the issuer's network of

entities;

(B) Imposes premiums on enrollees in excess of the premiums

approved by the State;

(C) Acts to expel an enrollee for reasons other than nonpayment of

premiums; or

(D) Does not provide each enrollee at the time of enrollment with

the specific information provided in section 1882(t)(1)(E)(i) or fails

to obtain a written acknowledgment from the enrollee of receipt of the

information (as required by section 1882(t)(1)(E)(ii)).

(ii) These violations may also include an assessment and cause

exclusion.

(d) Assessments. HCFA or OIG may impose assessments in addition to

civil money penalties for violations of the following statutory

sections:

(1) Section 1833: Paragraph (h)(5)(D).

(2) Section 1834: Paragraphs (a)(11)(A), (a)(18)(B), (b)(5)(C),

(c)(4)(C), (h)(3), and (j)(4).

(3) Section 1842: Paragraphs (k), (l)(3), (m)(3), and (n)(3).

(4) Section 1848: Paragraph (g)(1)(B).

(5) Section 1877: Paragraph (g)(5).

(6) Section 1879: Paragraph (h).

(7) Section 1882: Paragraphs (a)(2), (p)(8), (p)(9)(C), (q)(5)(C),

(r)(6)(A), (s)(3), and (t)(2).

(e) Exclusions. (1) HCFA or OIG may exclude any person from

participation in the Medicare program on the basis of any of the

following violations of the statute:

(i) Section 1833: Paragraphs (h)(5)(D) and, in repeated cases,

(q)(2)(B).

(ii) Section 1834: Paragraphs (a)(11)(A), (a)(18)(B), (b)(5)(C),

(c)(4)(C), (h)(3), and (j)(4).

(iii) Section 1842: Paragraphs (b)(18)(B), (k), (l)(3), (m)(3),

(n)(3), and, in repeated cases, (p)(3)(B).

(iv) Section 1848: Paragraphs (g)(1)(B), (g)(3)(B), and, in

repeated cases, (g)(4)(B)(ii).

(v) Section 1877: Paragraph (g)(5).

(vi) Section 1879: Paragraph (h).

(vii) Section 1882: Paragraphs (a)(2), (p)(8), (p)(9)(C),

(q)(5)(C), (r)(6)(A), (s)(3), and (t)(2).

(2) HCFA or OIG must exclude from participation in the Medicare

program any of the following, under the identified section of the Act:

(i) Section 1834(a)(17)(C)--Any supplier of durable medical

equipment and supplies that are covered under section 1834(a)(13) that

knowingly contacts Medicare beneficiaries by telephone regarding the

furnishing of covered services in violation of section 1834(a)(17)(A)

and whose conduct establishes a pattern of prohibited contacts as

described under section 1834(a)(17)(A).

(ii) Section 1834(h)(3)--Any supplier of prosthetic devices,

orthotics, and prosthetics that knowingly contacts Medicare

beneficiaries by telephone regarding the furnishing of prosthetic

devices, orthotics, or prosthetics in the same manner as in the

violation under section 1834(a)(17)(A) and whose conduct establishes a

pattern of prohibited contacts in the same manner as described in

section 1834(a)(17)(C).

(f) Responsible persons. (1) If HCFA or OIG determines that more

than one person is responsible for any of the violations described in

paragraph (c) or paragraph (d) of this section, it may impose a civil

money penalty or a civil money penalty and assessment against any one

of those persons or jointly and severally against two or more of those

persons. However, the aggregate amount of the assessments collected may

not exceed the amount that could be assessed if only one person were

responsible.

(2) A principal is liable for penalties and assessments for the

actions of his or her agent acting within the scope of the agency.

(g) Time limits. Neither HCFA nor OIG initiates an action to impose

a civil money penalty, assessment, or proceeding to exclude a person

from participation in the Medicare program unless it begins the action

within 6 years from the date on which the claim was presented, the

request for payment was made, or the incident occurred.

Sec. 402.3 Definitions.

For purposes of this part:

Assessment means the amount described in Sec. 402.107 and includes

the plural of that term.

Assignment-related basis means that the claim submitted by a

physician, supplier or other person is paid on the basis of an

assignment, whereby the physician, supplier or other person agrees to

accept the Medicare payment as payment in full for the services

furnished to the beneficiary and is precluded from charging the

beneficiary more than the deductible and coinsurance based upon the

approved Medicare fee amount. Additional obligations, including

obligations to make refunds in certain circumstances, are established

at section 1842(b)(3) of the Act.

Claim means an application for payment for a service for which the

Medicare or Medicaid program may pay.

Covered means that a service is described as reasonable and

necessary for the diagnosis or treatment of illness or injury or to

improve the functioning of a malformed body member. A service is not

covered if it is specifically identified as excluded from Medicare Part

B coverage or is not a defined Medicare Part B benefit.

Exclusion means the temporary or permanent barring of a person or

other entity from participation in the Medicare or State health care

program and that services furnished or ordered by that person are not

paid for under either program.

General Counsel means the General Counsel of HHS or his or her

designees.

Knowingly or knowingly and willfully means that a person, with

respect to information--

(1) Has actual knowledge of the information;

(2) Acts in deliberate ignorance of the truth or falsity of the

information; or

(3) Acts in reckless disregard of the truth or falsity of the

information; and

(4) No proof of specific intent is required.

Medicare supplemental policy means a policy guaranteeing that a

health plan will pay a policyholder's coinsurance and deductible and

will cover other

[[Page 68693]]

limitations on payment imposed under title XVIII of the Act and will

provide additional health plan or non-Medicare coverage for services up

to a predefined benefit limit.

NAIC stands for the National Association of Insurance

Commissioners.

Nonparticipating describes a physician, supplier, or other person

(excluding any provider of services) that, at the time of furnishing

the services to Medicare Part B beneficiaries, is not a participating

physician or supplier.

Participating describes a physician or supplier (excluding any

provider of services) that, before the beginning of any given year,

enters into an agreement with HHS that provides that the physician or

supplier will accept payment under the Medicare program on an

assignment-related basis for all services furnished to Medicare Part B

beneficiaries.

Penalty means the amount described in Sec. 402.105 and includes the

plural of that term.

Person means an individual, trust or estate, partnership,

corporation, professional association or corporation, or other entity,

public or private.

Physicians' services means the following Medicare covered

professional services:

(1) Surgery, consultation, home, office and institutional calls,

and other professional services performed by physicians.

(2) Services and supplies furnished ``incident to'' a physician's

professional services.

(3) Outpatient physical and occupational therapy services.

(4) Diagnostic x-ray tests and other diagnostic tests (excluding

clinical diagnostic laboratory tests).

(5) X-ray, radium, and radioactive isotope therapy, including

materials and services of technicians.

(6) Antigens prepared by a physician.

Radiologist service means radiology services performed only by, or

under the direction of, a physician who is certified, or eligible to be

certified, by the American Board of Radiology or for whom radiology

services account for at least 50 percent of the total amount of charges

made under part B of title XVIII of the Act.

Request for payment means an application submitted by a person to

any person for payment for a service.

Respondent means the person upon which HCFA or OIG has imposed, or

proposes to impose, a civil money penalty, assessment, or exclusion.

Service includes--

(1) Any item, device, medical supply, or service claimed to have

been furnished to a patient and listed in an itemized claim for program

payment; or

(2) In the case of a claim based on costs, any entry or omission in

a cost report, books of account or other documents supporting the

claim.

State includes the District of Columbia, Puerto Rico, the Virgin

Islands, Guam, American Samoa, the Northern Mariana Islands, and the

Trust Territory of the Pacific Islands.

Timely basis means that the adjustment to a bill or a refund is

considered ``on a timely basis'' if the physician, supplier, or other

person makes the adjustment or refund to the appropriate party no later

than 30 days after the date the physician, supplier, or other person is

notified by the Medicare Part B contractor of the violation and the

requirement to refund any excess collections.

Sec. 402.5 Right to a hearing before the final determination.

HCFA or OIG does not make a determination adverse to any person

under this part until the person has been given a written notice and

opportunity for the determination to be made on the record after a

hearing at which the person is entitled to be represented by counsel,

to present witnesses, and to cross-examine witnesses against the

person.

Sec. 402.7 Notice of proposed determination.

(a) If HCFA or OIG proposes a penalty and, as applicable, an

assessment, or proposes to exclude a respondent from participation in

Medicare in accordance with this part, it sends the respondent written

notice of its intent by certified mail, return receipt requested. The

notice includes the following information:

(1) Reference to the statutory basis or bases for the penalty,

assessment, exclusion, or any combination, as applicable.

(2)(i) A description of the claims, requests for payment, or

incidents with respect to which the penalty, assessment, and exclusion

are proposed; or

(ii) If HCFA or OIG is relying upon statistical sampling to project

the number and types of claims or requests for payment and the dollar

amount, a description of the claims and requests for payment comprising

the sample and a brief description of the statistical sampling

technique HCFA or OIG used.

(3) The reason why the claims, requests for payment, or incidents

are subject to a penalty and assessment.

(4) The amount of the proposed penalty and of any proposed

assessment.

(5) Any mitigating or aggravating circumstances that HCFA or OIG

considered when it determined the amount of the proposed penalty and

any applicable assessment.

(6) Information concerning response to the notice, including--

(i) A specific statement of the respondent's right to a hearing;

and

(ii) A statement that failure to request a hearing within 60 days

renders the proposed determination final and permits the imposition of

the proposed penalty and any assessment.

(iii) A statement that the debt may be collected through an

administrative offset.

(7) In the case of a respondent that has an agreement under section

1866 of the Act, notice that imposition of an exclusion may result in

termination of the provider's agreement in accordance with section

1866(b)(2)(C) of the Act.

Sec. 402.9 Failure to request a hearing.

(a) If the respondent does not request a hearing within 60 days of

receipt of the notice of proposed determination specified in

Sec. 402.7, any civil money penalty, assessment, or exclusion becomes

final and HCFA or OIG may impose the proposed penalty, assessment, or

exclusion, or any less severe penalty, assessment, or suspension.

(b) HCFA or OIG notifies the respondent by certified mail, return

receipt requested, of any penalty, assessment, or exclusion that has

been imposed and of the means by which the respondent may satisfy the

judgment.

(c) The respondent has no right to appeal a penalty, assessment, or

exclusion for which he or she has not requested a hearing.

Sec. 402.11 Notice to other agencies and other entities.

(a) Whenever a penalty, assessment, or exclusion becomes final,

HCFA or OIG notifies the following organizations and entities about the

action and the reasons for it:

(1) The appropriate State or local medical or professional

association.

(2) The appropriate peer review organization.

(3) As appropriate, the State agency responsible for the

administration of each State health care program (Medicaid, the

Maternal and Child Health Services Block Grant Program, and the Social

Services Block Grant Program).

(4) The appropriate Medicare carrier or fiscal intermediary.

(5) The appropriate State or local licensing agency or organization

(including the Medicare and Medicaid State survey agencies).

[[Page 68694]]

(6) The long-term care ombudsman.

(b) For exclusions, HCFA or OIG also notifies the public and

specifies the effective date.

Sec. 402.13

Penalty, assessment, and exclusion not exclusive.

Penalties, assessments, and exclusions imposed under this part are

in addition to any other penalties prescribed by law.

Sec. 402.15

Collateral estoppel.

(a) When a final determination that the respondent presented or

caused to be presented a claim or request for payment falling within

the scope of Sec. 402.1 has been rendered in any proceeding in which

the respondent was a party and had an opportunity to be heard, the

respondent is bound by that determination in any proceeding under this

part.

(b) A person who has been convicted (whether upon a verdict after

trial or upon a plea of guilty or nolo contendere) of a Federal crime

charging fraud or false statements is barred from denying the essential

elements of the criminal offense if the proceedings under this part

involve the same transactions.

Sec. 402.17

Settlement.

HCFA or OIG has exclusive authority to settle any issues or case,

without the consent of the ALJ or the Secretary, at any time before a

final decision by the Secretary. Thereafter, the General Counsel has

the exclusive authority.

Sec. 402.19

Hearings and appeals.

The hearings and appeals procedures set forth in part 1005 of

chapter V of this title are available to any person that receives an

adverse determination under this part. For an appeal of a civil money

penalty, assessment, or exclusion imposed under this part, either HCFA

or OIG may represent the government in the hearing and appeals process.

Sec. 402.21

Judicial review.

After exhausting all available administrative remedies, a

respondent may seek judicial review of a penalty, assessment, or

exclusion that has become final. The respondent may seek review only

with respect to a penalty, assessment, or exclusion with respect to

which the respondent filed an exception under Sec. 1005.21(c) of this

title unless the court excuses the failure or neglect to urge the

exception in accordance with section 1128A(e) of the Act because of

extraordinary circumstances.

Subpart B--Civil Money Penalties and Assessments

Sec. 402.105

Amount of penalty.

(a) $2,000. Except as provided in paragraphs (b) through (f) of

this section, HCFA or OIG may impose a penalty of not more than $2,000

for each service, bill, or refusal to issue a timely refund that is

subject to a determination under this part and for each incident

involving the knowing, willful, and repeated failure of an entity

furnishing a service to submit a properly completed claim form or to

include on the claim form accurate information regarding the

availability of other health insurance benefit plans

(Sec. 402.1(c)(21)).

(b) $1,000. HCFA or OIG may impose a penalty of not more than

$1,000 for the following:

(1) Per certificate of medical necessity knowingly and willfully

distributed to physicians on or after December 31, 1994 that--

(i) Contains information concerning the medical condition of the

patient; or

(ii) Fails to include cost information.

(2) Per individual about whom information is requested, for willful

or repeated failure of an employer to respond to an intermediary or

carrier about coverage of an employee or spouse under the employer's

group health plan (Sec. 402.1(c)(20)).

(c) $5,000. HCFA or OIG may impose a penalty of not more than

$5,000 for each violation resulting from the following:

(1) The failure of a Medicare supplemental policy issuer, on a

replacement policy, to waive any time periods applicable to pre-

existing conditions, waiting periods, elimination periods, or

probationary periods that were satisfied under a preceding policy

(Sec. 402.1(c)(29)); and

(2) Any issuer of any Medicare supplemental policy denying a

policy, conditioning the issuance or effectiveness of the policy, or

discriminating in the pricing of the policy based on health status or

other criteria as specified in section 1882(s)(2)(A).

(Sec. 402.1(c)(29)).

(d) $10,000. (1) HCFA or OIG may impose a penalty of not more than

$10,000 for each day that reporting entity ownership arrangements is

late (Sec. 402.1(c)(22)).

(2) HCFA or OIG may impose a penalty of not more than $10,000 for

the following violations that occur on or after January 1, 1997:

(i) Knowingly and willfully, and on a repeated basis, billing for a

clinical diagnostic laboratory test, other than on an assignment-

related basis (Sec. 402.1(c)(1)).

(ii) By any durable medical equipment supplier, knowingly and

willfully charging for a covered service that is furnished on a rental

basis after the rental payments may no longer be made (except for

maintenance and servicing) as provided in section 1834(a)(7)(A)

(Sec. 402.1(c)(4)).

(iii) By any durable medical equipment supplier, knowingly and

willfully, in violation of section 1834(a)(18)(A), failing to make a

refund to Medicare beneficiaries for a covered service for which

payment is precluded due to an unsolicited telephone contact from the

supplier (Sec. 402.1(c)(5)).

(iv) By any nonparticipating physician or supplier, knowingly and

willfully charging a Medicare beneficiary more than the limiting

charge, as specified in section 1834(b)(5)(B), for radiologist services

(Sec. 402.1(c)(6)).

(v) By any nonparticipating physician or supplier, knowingly and

willfully charging a Medicare beneficiary more than the limiting

charge, as specified in section 1834(c)(3), for mammography screening

(Sec. 402.1(c)(7)).

(vi) By any supplier of prosthetic devices, orthotics, and

prosthetics, knowingly and willfully charging for a covered prosthetic

device, orthotic, or prosthetic that is furnished on a rental basis

after the rental payment may no longer be made (except for maintenance

and servicing) (Sec. 401.2(c)(8)).

(vii) By any supplier of durable medical equipment, including a

supplier of prosthetic devices, prosthetics, orthotics, or supplies,

knowingly and willfully failing to make refunds in a timely manner to

Medicare beneficiaries for services billed other than on an assigned-

related basis if--

(A) The supplier does not possess a Medicare supplier number;

(B) The service is denied in advance; or

(C) The service is determined not to be medically necessary or

reasonable (Sec. 402.1(c)(10)).

(viii) Knowingly and willfully billing or collecting for any

services on other than an assignment-related basis for practitioners

specified in section 1842(b)(18)(B) (Sec. 402.1(c)(11)).

(xix) By any physician, knowingly and willfully presenting, or

causing to be presented, a claim or bill for an assistant at cataract

surgery performed on or after March 1, 1987 for which payment may not

be made because of section 1862(a)(15) (Sec. 402.1(c)(12)).

(x) By any nonparticipating physician who does not accept payment

on an

[[Page 68695]]

assignment-related basis, knowingly and willfully failing to refund on

a timely basis any amounts collected for services that are not

reasonable or medically necessary or are of poor quality, in accordance

with section 1842(l)(1)(A) (Sec. 402.1(c)(13)).

(xi) By any nonparticipating physician, who does not accept payment

for an elective surgical procedure on an assignment-related basis and

whose charge is at least $500, knowingly and willfully failing to--

(A) Disclose the information required by section 1842(m)(1)

concerning charges and coinsurance amounts; and

(B) Refund on a timely basis any amount collected for the procedure

in excess of the charges recognized and approved by the Medicare

program (Sec. 402.1(c)(14)).

(xii) By any physician, in repeated cases, knowingly and willfully

billing one or more beneficiaries, for purchased diagnostic tests, any

amount other than the payment amount specified in section 1842(n)(1)(A)

or section 1842(n)(1)(B) (Sec. 402.1(c)(15)).

(xiii) By any nonparticipating physician, supplier, or other person

that furnishes physicians' services and does not accept payment on an

assignment-related basis--

(A) Knowingly and willfully billing or collecting in excess of the

limiting charge (as defined in section 1843(g)(2)) on a repeated basis;

or

(B) Failing to make an adjustment or refund on a timely basis as

required by section 1848(g)(1)(A)(iii) or (iv) (Sec. 402.1(c)(17)).

(xiv) Knowingly and willfully billing for State plan approved

physicians' services on other than an assignment-related basis for a

Medicare beneficiary who is also eligible for Medicaid

(Sec. 402.1(c)(18)).

(xv) By any supplier of durable medical equipment, including a

supplier of prosthetic devices, prosthetics, orthotics, or supplies,

knowingly and willfully failing to make refunds in a timely manner to

Medicare beneficiaries for services billed on an assignment-related

basis if--

(A) The supplier did not possess a Medicare supplier number;

(B) The service is denied in advance; or

(C) The service is determined not to be medically necessary or

reasonable (Sec. 402.1(c)(23)).

(e) $15,000. HCFA or OIG may impose a penalty of not more than

$15,000 if the seller of a Medicare supplemental policy is not the

issuer, for each violation described in paragraphs (f)(2) and (f)(3) of

this section (Sec. 402.1 (c)(25) and (c)(26)).

(f) $25,000. HCFA or OIG may impose a penalty of not more than

$25,000 for each of the following violations:

(1) Issuance of a Medicare supplemental policy that has not been

approved by an approved State regulatory program or does not meet

Federal standards on and after the effective date in section

1882(p)(1)(C) of the Act (Sec. 402.1(c)(23)).

(2) Sale or issuance after July 30, 1992, of a Medicare

supplemental policy that fails to conform with the NAIC or Federal

standards established under section 1882(p) of the Act

(Sec. 402.1(c)(25)).

(3) Failure to make the core group of basic benefits available for

sale when selling other Medicare supplemental plans with additional

benefits (Sec. 402.1(c)(26)).

(4) Failure to provide, before sale of a Medicare supplemental

policy, an outline of coverage describing the benefits provided by the

policy (Sec. 402.1(c)(26)).

(5) Failure of an issuer of a policy to suspend or reinstate a

policy, based on the policy holder's request, during entitlement to or

upon loss of eligibility for medical assistance (Sec. 402.1(c)(27)).

(6) Failure to provide refunds or credits for Medicare supplemental

policies as required by section 1882(r)(1)(B) (Sec. 402.1(c)(28)).

(7) By an issuer of a Medicare supplemental policy--

(i) Substantial failure to provide medically necessary services to

enrollees seeking the services through the issuer's network of

entities;

(ii) Imposition of premiums on enrollees in excess of the premiums

approved by the State;

(iii) Action to expel an enrollee for reasons other than nonpayment

of premiums; or

(iv) Failure to provide each enrollee, at the time of enrollment,

with the specific information provided in section 1882(t)(1)(E)(i) or

failure to obtain a written acknowledgment from the enrollee of receipt

of the information (as required by section 1882(t)(1)(E)(ii)) (section

1882(t)(2)).

Sec. 402.107

Amount of assessment.

A person subject to civil money penalties specified in

Sec. 402.1(c) may be subject, in addition, to an assessment. An

assessment is a monetary payment in lieu of damages sustained by HHS or

a State agency.

(a) The assessment may not be more than twice the amount claimed

for each service that was a basis for the civil money penalty, except

for the violations specified in paragraph (b) of this section that

occur before January 1, 1997.

(b) For the violations specified in this paragraph occurring after

January 1, 1997, the assessment may not be more than three times the

amount claimed for each service that was the basis for a civil money

penalty. The violations are the following:

(1) Knowingly and willfully billing, and on a repeated basis, for a

clinical diagnostic laboratory test, other than on an assignment-

related basis (Sec. 402.1(c)(1)).

(2) By any durable medical equipment supplier, knowingly and

willfully charging for a covered service that is furnished on a rental

basis after the rental payments may no longer be made (except for

maintenance and servicing) as provided in section 1834(a)(7)(A)

(Sec. 402.1(c)(4)).

(3) By any durable medical equipment supplier, knowingly and

willfully failing, in violation of section 1834(a)(18)(A), to make a

refund to Medicare beneficiaries for a covered service for which

payment is precluded due to an unsolicited telephone contact from the

supplier (Sec. 402.1(c)(5)).

(4) By any nonparticipating physician or supplier, knowingly and

willfully charging a Medicare beneficiary more than the limiting

charge, as specified in section 1834(b)(5)(B), for radiologist services

(Sec. 402.1(c)(6)).

(5) By any nonparticipating physician or supplier, knowingly and

willfully charging a Medicare beneficiary more than the limiting charge

as specified in section 1834(c)(3), for mammography screening

(Sec. 402.1(c)(7)).

(6) By any supplier of prosthetic devices, orthotics, and

prosthetics, knowingly and willfully charging for a covered prosthetic

device, orthotic, or prosthetic that is furnished on a rental basis

after the rental payment may no longer be made (except for maintenance

and servicing) (Sec. 401.2(c)(8)).

(7) By any supplier of durable medical equipment, including a

supplier of prosthetic devices, prosthetics, orthotics, or supplies,

knowingly and willfully failing to make refunds in a timely manner to

Medicare beneficiaries for services billed other than on an assignment-

related basis if--

(i) The supplier does not possess a Medicare supplier number;

(ii) The service is denied in advance; or

(iii) The service is determined not to be medically necessary or

reasonable (Sec. 402.1(c)(10)).

[[Page 68696]]

(8) Knowingly and willfully billing or collecting for any services

on other than an assignment-related basis for practitioners specified

in section 1842(b)(18)(B) (Sec. 402.1(c)(11)).

(9) By any physician, knowingly and willfully presenting, or

causing to be presented, a claim or bill for an assistant at cataract

surgery performed on or after March 1, 1987 for which payment may not

be made because of section 1862(a)(15) (Sec. 402.1(c)(12)).

(10) By any nonparticipating physician who does not accept payment

on an assignment-related basis, knowingly and willfully failing to

refund on a timely basis any amounts collected for services that are

not reasonable or medically necessary or are of poor quality, in

accordance with section 1842(l)(1)(A) (Sec. 402.1(c)(13)).

(11) By any nonparticipating physician, who does not accept payment

for an elective surgical procedure on an assignment-related basis and

whose charge is at least $500, knowingly and willfully failing to--

(i) Disclose the information required by section 1842(m)(1)

concerning charges and coinsurance amounts; and

(ii) Refund on a timely basis any amount collected for the

procedure in excess of the charges recognized and approved by the

Medicare program (Sec. 402.1(c)(14)).

(12) By any physician, in repeated cases, knowingly and willfully

billing one or more beneficiaries, for purchased diagnostic tests, any

amount other than the payment amount specified in section 1842(n)(1)(A)

or section 1842(n)(1)(B) (Sec. 402.1(c)(15)).

(13) By any nonparticipating physician, supplier, or other person

that furnishes physicians' services and does not accept payment on an

assignment-related basis--

(i) Knowingly and willfully billing or collecting in excess of the

limiting charge (as defined in section 1843(g)(2)) on a repeated basis;

or

(ii) Failing to make an adjustment or refund on a timely basis as

required by section 1848(g)(1)(A) (iii) or (iv) (Sec. 402.1(c)(17)).

(14) Knowingly and willfully billing for State plan approved

physicians' services on other than an assignment-related basis for a

Medicare beneficiary who is also eligible for Medicaid

(Sec. 402.1(c)(18)).

(15) By any supplier of durable medical equipment, including

suppliers of prosthetic devices, prosthetics, orthotics, or supplies,

knowingly and willfully failing to make refunds in a timely manner to

Medicare beneficiaries for services billed on an assignment-related

basis if--

(i) The supplier did not possess a Medicare supplier number;

(ii) The service is denied in advance; or

(iii) The service is determined not to be medically necessary or

reasonable (Sec. 402.1(c)(23)).

Sec. 402.109

Statistical sampling.

(a) Purpose. HCFA or OIG may introduce the results of a statistical

sampling study to show the number and amount of claims subject to

sanction under this part that the respondent presented or caused to be

presented.

(b) Prima facie evidence. The results of the statistical sampling

study, if based upon an appropriate sampling and computed by valid

statistical methods, constitute prima facie evidence of the number and

amount of claims or requests for payment subject to sanction under

Sec. 402.1.

(c) Burden of proof. Once HCFA or OIG has made a prima facie case,

the burden is on the respondent to produce evidence reasonably

calculated to rebut the findings of the statistical sampling study.

HCFA or OIG then has the opportunity to rebut this evidence.

Sec. 402.111

Factors considered in determinations regarding the amount of

penalties and assessments.

(a) Basic factors. In determining the amount of any penalty or

assessment, HCFA or OIG takes into account the following:

(1) The nature of the claim, request for payment, or information

given and the circumstances under which it was presented or given.

(2) The degree of culpability, history of prior offenses, and

financial condition of the person submitting the claim or request for

payment or giving the information.

(3) The resources available to the person submitting the claim or

request for payment or giving the information.

(4) Such other matters as justice may require.

(b) Criteria to be considered. As guidelines for taking into

account the factors listed in paragraph (a) of this section, HCFA or

OIG considers the following circumstances:

(1) Aggravating circumstances of the incident. An aggravating

circumstance is any of the following:

(i) The services or incidents were of several types, occurring over

a lengthy period of time.

(ii) There were many of these services or incidents or the nature

and circumstances indicate a pattern of claims or requests for payment

for these services or a pattern of incidents.

(iii) The amount claimed or requested for these services was

substantial.

(iv) Before the incident or presentation of any claim or request

for payment subject to imposition of a civil money penalty, the

respondent was held liable for criminal, 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.

(v) There is proof that a respondent engaged in wrongful conduct,

other than the specific conduct upon which liability is based, relating

to government programs or in connection with the delivery of a health

care service. (The statute of limitations governing civil money penalty

proceedings does not apply to proof of other wrongful conduct as an

aggravating circumstance.)

(2) Mitigating circumstances. The following circumstances are

mitigating circumstances:

(i) All the services or incidents subject to a civil money penalty

were few in number and of the same type, occurred within a short period

of time, and the total amount claimed or requested for the services was

less than $1,000.

(ii) The claim or request for payment for the service was the

result of an unintentional and unrecognized error in the process of

presenting claims or requesting payment and the respondent took

corrective steps promptly after discovering the error.

(iii) Imposition of the penalty or assessment without reduction

would jeopardize the ability of the respondent to continue as a health

care provider.

(3) Other matters as justice may require. Other circumstances of an

aggravating or mitigating nature are taken into account if, in the

interests of justice, they require either a reduction of the penalty or

assessment or an increase in order to ensure the achievement of the

purposes of this part.

(c) Effect of aggravating or mitigating circumstances. In

determining the amount of the penalty and assessment to be imposed for

every service or incident subject to a determination under

Sec. 402.1(c)--

(1) If there are substantial or several mitigating circumstances,

the aggregate amount of the penalty and assessment is set at an amount

sufficiently below the maximum permitted by Secs. 402.105(a) and

402.107 to reflect that fact.

(2) If there are substantial or several aggravating circumstances,

the aggregate

[[Page 68697]]

amount of the penalty and assessment is set at an amount at or

sufficiently close to the maximum permitted by Secs. 402.105(a) and

402.107 to reflect that fact.

(d)(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 is not 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 limits the authority of HCFA or OIG to

settle any issue or case as provided by Sec. 402.19 or to compromise

any penalty and assessment as provided by Sec. 402.115.

Sec. 402.113 When a penalty and assessment are collectible.

A civil money penalty and assessment become collectible after the

earliest of the following:

(a) Sixty days after the respondent receives HCFA's or OIG's notice

of proposed determination under Sec. 402.7, if the respondent has not

requested a hearing before an ALJ.

(b) Immediately after the respondent abandons or waives his or her

appeal right at any administrative level.

(c) Thirty days after the respondent receives the ALJ's decision

imposing a civil money penalty or assessment under Sec. 1005.20(d) of

this title, if the respondent has not requested a review before the

DAB.

(d) If the DAB grants an extension of the period for requesting the

DAB's review, the day after the extension expires if the respondent has

not requested the review.

(e) Immediately after the ALJ's decision denying a request for a

stay of the effective date under Sec. 1005.22(b) of this title.

(f) If the ALJ grants a stay under Sec. 1005.22(b) of this title,

immediately after the judicial ruling is completed.

(g) Sixty days after the respondent receives the DAB's decision

imposing a civil money penalty if the respondent has not requested a

stay of the decision under Sec. 1005.22(b) of this title.

Sec. 402.115 Collection of penalty or assessment.

(a) Once a determination by HHS has become final, HCFA is

responsible for the collection of any penalty or assessment.

(b) The General Counsel may compromise a penalty or assessment

imposed under this part, after consultation with HCFA or OIG, and the

Federal government may recover the penalty or assessment in a civil

action brought in the United States district court for the district

where the claim was presented or where the respondent resides.

(c) The United States or a State agency may deduct the amount of a

penalty and assessment when finally determined, or the amount agreed

upon in compromise, from any sum then or later owing to the respondent.

(d) Matters that were raised or that could have been raised in a

hearing before an ALJ or in an appeal under section 1128A(e) of the Act

may not be raised as a defense in a civil action by the United States

to collect a penalty under this part.

Subpart C--Exclusions [Reserved]

(Catalog of Federal Domestic Assistance Program No. 93.773,

Medicare--Hospital Insurance; Program No. 93.774, Medicare--

Supplementary Medical Insurance Program; and Program No. 93.778,

Medical Assistance Program)

Dated: July 7, 1998.

Nancy-Ann Min De Parle,

Administrator, Health Care Financing Administration.

[FR Doc. 98-33010 Filed 12-11-98; 8:45 am]

BILLING CODE 4120-01-P