Authorizing Statute

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PUBLIC LAW 104-191wAUG. 21, 1996

HEALTH INSURANCE PORTABILITY AND
ACCOUNTABILITY ACT OF 1996

110 STAT. 1936

PUBLIC LAW 104-191--AUG. 21, 1996

Public Law 104-191
104th Congress
An Act
Aug. 21, 1996
[H.R. 3103]

Health Insurance
ortability and
ccountability
Act of 1996.
42 USC 201 note.

~

To amend the Internal Revenue Code of 1986 to improve portability and continuity
of health insurance coverage in the group and individual markets, to combat
waste, fraud, and abuse in health insurance and health care delivery, to promote
the use of medical savings accounts, to improve access to long-term care services
and coverage, to simplify the administration of health insurance, and for other
purposes.

Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) SHORT TITLE.--This Act may be cited as the "Health Insurance Portability and Accountability Act of 1996".
(b) TABLE OF CONTENTS.--The table of contents of this Act
is as follows:
Sec. 1. Short title; table of contents.
TITLE I--HEALTH CARE ACCESS, PORTABILITY, AND RENEWABILITY
Subtitle A--Group Market Rules
PART 1--PORTABILITY, ACCESS, AND RENEWABILITY REQUIREMENTS
Sec. 101. Through the Employee Retirement Income Security Act of 1974.
"PART 7--GRouP HEALTH PLAN PORTABILITY, ACCESS, AND RENEWABILITY
REQUIREMENTS
"Sec. 701. Increased portability through limitation on preexisting condition exclusions.
"Sec. 702. Prohibiting discrimination against individual participants and beneficiaries based on health status.
"Sec. 703. Guaranteed renewability in mu]tiemp]oyer plans and multiple employer welfare arrangements.
"Sec. 704. Preemption; State flexibility; construction.
"Sec. 705. Special rules relating to group health plans.
"Sec. 706. Definitions.
"Sec. 707. Regulations.".
Sec. 102. Through the Public Health Service Act,
"TITLE XXVII--ASSURING PORTABILITY, AVAILABILITY, AND
RENEWABILITY OF HEALTH INSURANCE CO~RAGE
"PART A--GRoUP I~IARKET REFORMS

.... Subpart 1--Portability, Access, and Renewability Requirements
"Sec. 2701. Increased portability through limitation on preexisting condition
exclusions.
"Sec. 2702. Prohibiting discrimination against individual participants and
beneficiaries based on h~alth status.
"Subpart 2--Provisions Applicable Only to Health Insurance Issuers
"Sec. 2711. Guaranteed availability of coverage for employers in the group
market.

P~LIC LAW 104-191--AUG. 21, 1996

110 STAT. 1937

"Sec. 2712. Guaranteed renewability of coverage for employers in the group
market.
"Sec. 2713. Disclosure of information,
"Subpart 3--Exclusion of Plans; Enforcement; Preemption
"Sec. 2721, Exclusion of certain plans.
"Sec. 2722. Enforcement.
"Sec. 2723. Preemption; State flexibility; construction,
"PART C--DEFINITIONS; MISCELLANEOUS PROVISIONS
2791. Definitions.
"Sec. 2792. Regulations.".
Sec. 103. Reference to implementation through the Internal Revenue Code of 1986.
Sec. 104. Assuring coordination.
~Sec.

Subtitle B--Individual Market Rules
Sec. 111, Amendment to Public Health Service Act.
’~PART B--INDMDUAL MARKET RULES
"Sec. 2741, Guaranteed availability of individual health insurance coverage to
certain individuals with prior group coverage.
"Sec. 2742. Guaranteed renewability of individual health insurance coverage.
"Sec. 2743. Certification of coverage.
"Sec. 2744. State flexibility in individual market reforms.
"Sec. 2745. Enforcement.
"Sec. 2746. Preemption.
"Sec. 2747. General exceptions.".
Subtitle C--General and Miscellaneous Provisions
Sec. 191. Health coverage availability studies.
Sec, 192. Report on Medicare reimbursement of telemedicine.
Sec. 193. AHowing federally-qualified HMOs to offer high deductible plans.
Sec. 194. Volunteer services provided by health professl"onals at free clinics.
Sec. 195. Findings; severability.
TITLE iI--PREVENTING t-[EALTH CARE FRAUD AND ABUSE;
ADMINISTRATIVE SIMPLIFICATION; MEDICAL LIABILITY REFORM
Sec. 200. References in title.
Subtitle A--Fraud and Abuse Control Program
Sec. 201. Fraud and abuse control program.
Sec. 202. Medicare integrity program.
Sed. 203. Beneficiary incentive programs.
Sec. 204. Application of certain health antifraud and abuse sanctions to fraud and
abuse against Federal health care programs.
Sec. 205. Guidance regarding application of health care fraud and abuse sanctions.
Subtitle B--Revisions to Current Sanctions for Fraud and Abuse
Sec. 211. Mandatory exclusion from participation in Medicare and State health
care programs.
Sec. 212, Establishment of minimum period of exclusion for certain individuals and
entities subject to permissive exclusion from Medicare and State health
care programs.
Sec. 213. Permissive exclusion of individuals with ownership or control interest in
sanctioned entities.
Sec. 214. Sanctions against practitioners and persons for failure to comply with
statutory obligations.
Sec. 215. Intermediate sanctions for Medicare health maintenance organizations.
Sec. 216. Additional exception to anti-ldckback penalties for risk-sharing arrangements.
Sec. 217. Criminal penalty for fraudulent disposition of assets in order to obtain
medicaid benefits.
Sec. 218. Effective date.
Subtitle C--Data Collection
Sec. 221. Establishment of the health care fraud and abuse data collection
program.
Subtitle D--Civil Monetary Penalties
Sec. 231. Social Security Act civil monetary penalties.

110 STAT. 1992

PUBLIC LAW 104-191--AUG. 21, 1996

Subtitle A--Fraud and Abuse Control
Program
SEC. 201. FRAUD AND ABUSE CONTROL PROGRAM.
(a) ESTABLISHMENT OF PROGRAM.--Title XI (42 U.S.C. 1301
et seq.) is amended by inserting after section 1128B the following
new section:
"FRAUD AND ABUSE CONTROL PROGRAM
42 USC 1320a7c.

"SEC. 1128C. (a) ESTABLISHMENT OF PROGRAM.-"(1) IN GENERAL.--Not later than January 1, 1997, the
Secretary, acting through the Office of the Inspector General
of the Department of Health and Human Services, and the
Attorney General shall establish a program-"(A) to coordinate Federal, State, and local law enforcement programs to control fraud and abuse with respect
to health plans,
"(B) to conduct investigations, audits, evaluations, and
inspections relating to the delivery of and payment for
health care in the United States,
"(C) to facilitate the enforcement of the provisiohs of
sections 1128, 1128A, and 1128B and other statutes
applicable to health care fraud and abuse,
"(D) to provide for the modification and establishment
of safe harbors and to issue advisory opinions and special
fraud alerts pursuant to section 1128D, and
"(E) to provide for the reporting and disclosure of certain final adverse actions against health care providers,
suppliers, or practitioners pursuant to the data collection
system established under section 1128E.
"(2) COORDINATION WITH HEALTH PLANS.--In carrying out

the program established under paragraph (1), the Secretary
and the Attorney General shall consult with, and arrange for
the sharing of data with representatives of health plans.
"(3) GUIDELINES.-"(A) IN GENERAL.--The Secretary and the Attorney
General shall issue guidelines to carry out the program
under paragraph (1). The provisions of sections 553, 556,
and 557 of title 5, United States Code, shall not apply
in the issuance of such guidelines.
"(B) INFORMATION GUIDELINES.-"(i) IN GENERAL.--Such guidelines shall include
guidelines relating to the furnishing of information
by health plans, providers, and others to enable the
Secretary and the Attorney General to carry out the
program (including coordination with health plans
under paragraph (2)).
"(ii) CONFIDENTIALITY.--Such guidelines shall
include procedures to assure that such information
is provided and utilized in a. manner that appropriately
protects the confidentiality of the information and the
privacy of individuals receiving health care services
and items.
"(iii) QUALIFIED IMMUNITY FOR PROVIDING
INFORMATION.--The provisions of section 1157(a) (relat-

PUBLIC LAW 104-191--AUG. 21, 1996

110 STAT. 1993

ing to limitation on liability) shall apply to a person
providing information to the Secretary or the Attorney
General in conjunction with their performance of duties
under this section.
"(4) ENSURING ACCESS TO DOCUMENTATION.wThe Inspector
General of the Department of Health and Human Services
is authorized to exercise such authority described in paragraphs
(3) through (9) of section 6 of the Inspector General Act of
1978 (5 U.S.C. App.) as necessary with respect to the activities
under the fraud and abuse control program established under
this subsection.
"(5) AUTHORITY Of INSPECTOR GENEaaL.--Nothing in this
Act shall be construed to diminish the authority of any Inspector General, including such authority as provided in the Inspector General Act of 1978 (5 U.S.C. App.).
"(b) ADDITIONAL USE OF FUNDS BY INSPECTOR GENERAL.w
"(1) REIMBURSEMENTS FOR INVESTIGATIONS.--The Inspector
General of the Department of Health and Human Services
is authorized to receive and retain for current use reimbursement for the costs of conducting investigations and audits and
for monitoring compliance plans when such costs are ordered
by a court, voluntarily agreed to by the payor, or otherwise.
"(2) CREDITING.--Funds received by the Inspector General
under paragraph (1) as reimbursement for costs of conducting
investigations shall be deposited to the credit of the appropriation from which initially paid, or to appropriations for similar
purposes currently available at the time of deposit, and shall
remain available for obligation for 1 year from the date of
the deposit of such funds.
"(C) HEALTH PLAN DEFINED.---For purposes of this section, the
term ~health plan’ means a plan or program that provides health
benefits, whether directly, through insurance, or otherwise, and
includes"(1) a policy of health insurance;
"(2) a contract of a service benefit organization; and
"(3) a membership agreement with a health maintenance
organization or other prepaid health plan.".
(b) ESTABLISHMENT Of HEALTH CARE FRAUD AND ABUSE CONTROL ACCOUNT IN FEDERAL HOSPITAL INSURANCE TRUST FUND.Section 1817 (42 U.S.C. 1395i) is amended by adding at the end
the following new subsection:
"(k) HEALTH CARE FRAUD AND ABUSE CONTROL ACCOUNT.--

"(1) ESTABLISHMENT.--There is hereby established in the
Trust Fund an expenditure account to be known as the ’Health
Care Fraud and Abuse Control Account’ (in this subsection
referred to as the ’Account’).
"(2) APPROPRIATED AMOUNTS TO TRUST FUND.--

"(A) IN GENERAL.--There are hereby appropriated to
the Trust Fund-"(i) such gifts and bequests as may be made as
provided in subparagraph (B);
"(ii) such amounts as may be deposited in the
Trust Fund as provided in sections 242(b) and 249(c)
of the Health Insurance Portability and Accountability
Act of 1996, and title XI; and
"(iii) such amounts as are transferred to the Trust
Fund under subparagraph (C).

ii0 STAT. 1994

PUBLIC LAW 104-191--AUG. 21, 1996
"(B) AUTHORIZATION TO ACCEPT GIFTS.--The Trust
Fund is authorized to accept on behalf of the United States
money gifts and bequests made unconditionally to the Trust
Fund, for the benefit of the Account or any activity financed
through the Account.
"(C) TRANSFER Of AMOUNTS.--The Managing Trustee
shall transfer to the Trust Fund, under rules similar to
the rules in section 9601 of the Internal Revenue Code
of 1986, an amount equal to the sum of the following:
"(i) Criminal fines recovered in cases involving
a Federal health care offense (as defined in section
982(a)(6)(B) of title 18, United States Code).
"(ii) Civil monetary penalties and assessments
imposed in health care cases, including amounts recovered under titles XI, XVIII, and XIX, and chapter
38 of title 31, United States Code (except as otherwise
provided by law).
"(iii) Amounts resulting from the forfeiture of property by reason of a Federal health care offense.
"(iv) Penalties and damages obtained and otherwise creditable to miscellaneous receipts of the general
fund of the Treasury obtained under sections 3729
through 3733 of title 31, United States Code (known
as the False Claims Act), in cases involving claims
related to the provision of health care items and services (other than funds awarded to a relator, for restitution or otherwise authorized by law).
"(D) APPLICAWION.--Nothing in subparagraph (C)(iii)
shall be construed to limit the availability of recoveries
and forfeitures obtained under title I of the Employee
Retirement Income Security Act of 1974 for the purpose
of providing equitable or remedial relief for employee welfare benefit plans, and for participants and beneficiaries
under such plans, as authorized under such title.
"(3) APPROPRIATED AMOUNTS TO ACCOUNT FOR FRAUD AND
ABUSE CONTROL PROGRAM, ETC.-"(A) DEPARTMENTS Of HEALTH AND HUMAN SERVICES
AND JUSTICE.--

"(i) IN GENERAL.--There are hereby appropriated
to the Account from the Trust Fund such sums as
the Secretary and the Attorney General certify are
necessary to carry out the purposes described in
subparagraph (C), to be available without further
appropriation, in an amount not to exceed-"(I) for fiscal year 1997, $104,000,000,
"(II) for each of the fiscal years 1998 through
2003, th~ limit for the preceding fiscal year,
increased by 15 percent; and
"(III) for each fiscal year after fiscal year 2003,
the limit for fiscal year 2003.
"(ii) MEDICARE AND MEDICAID ACTMTIES.--For
each fiscal year, of the amount appropriated in clause
(i), the following amounts shall be available only for
the purposes of the activities of the Office of the Inspector General of the Department of Health and Human
Services with respect to the Medicare and medicaid
programs--

PUBLIC LAW 104-191--AUG. 21, 1996

110 STAT. 1995

"(I) for fiscal year 1997, not less than
$60,000,000 and not more than $70,000,000;
"(II) for fiscal year 1998, not less than
$80,000,000 and not more than $90,000,000;
"(III) for fiscal year 1999, not less than
$90,000,000 and not more than $100,000,000;
"(IV) for fiscal year 2000, not less than
$110,000,000 and not more than $120,000,000;
"(V) for fiscal year 2001, not less than
$120,000,000 and not more than $130,000,000;
"(VI) for fiscal year 2002, not less than
$140,000,000 and not more than $150,000,000; and
"(VII) for each fiscal year after fiscal year
2002, not less than $150,000,000 and not more
than $160,000,000,
"(B) FEDERAL BUREAU OF INVESTIGATION.~There are

hereby appropriated from the general fund of the United
States Treasury and hereby appropriated to the Account
for transfer to the Federal Bureau of Investigation to carry
out the purposes described in subparagraph (C), to be available without further appropriation-"(i) for fiscal year 1997, $47,000,000;
"(ii) for fiscal year 1998, $56,000,000;
"(iii) for fiscal year 1999, $66,000,000;
"(iv) for fiscal year 2000, $76~000,000;
"(v) for fiscal year 2001, $88,000,000;
"(vi) for fiscal year 2002, $101,000,000; and
"(vii) for each fiscal year after fiscal year 2002,
$114,000,000.
"(C) USE Of FUNDS.--The purposes described in this
subparagraph are to cover the costs (including equipment,
salaries and benefits, and travel and training) of the
administration and operation of the health care fraud and
abuse control program established under section 1128C(a),
including the costs of-"(i) prosecuting health care matters (through criminal, civil, and administrative proceedings);
"(ii) investigations;
"(iii) financial and performance audits of health
care programs and operations;
"(iv) inspections and other evaluations; and
"(v) provider and consumer education regarding
compliance with the provisions of title XI.
"(4) APPROPRIATED AMOUNTS TO ACCOUNT FOR MEDICARE
INTEGRITY PROGRAM.--

"(A) IN GENERAL.--There are hereby appropriated to
the Account from the Trust Fund for each fiscal year such
amounts as are necessary to carry out the Medicare Integrity Program under section 1893, subject to subparagraph
(B) and to be available without further appropriation.
"(B) AMOUNTS SPECIFIED.--The amount appropriated
under subparagraph (A) for a fiscal year is as follows:
"(i) For fiscal year 1997, such amount shall be
not less than $430,000,000 and not more than
$440,000,000.