PRINTER'S NO. 1108
No. 973 Session of 2005
INTRODUCED BY CAPPELLI, BASTIAN, BELFANTI, BENNINGHOFF, BOYD,
CALTAGIRONE, CRAHALLA, FRANKEL, GEIST, GINGRICH, GOOD,
GOODMAN, HARPER, HARRIS, HENNESSEY, MILLARD, PICKETT,
SCAVELLO, SOLOBAY, E. Z. TAYLOR, TIGUE, YOUNGBLOOD AND
TURZAI, MARCH 15, 2005
REFERRED TO COMMITTEE ON HEALTH AND HUMAN SERVICES,
MARCH 15, 2005
AN ACT
1 Amending the act of June 13, 1967 (P.L.31, No.21), entitled "An
2 act to consolidate, editorially revise, and codify the public
3 welfare laws of the Commonwealth," further providing for
4 freedom of choice and nondiscrimination, for restrictions on
5 provider charges and payments, for provider prohibited acts
6 and civil and criminal penalties, for venue and limitations
7 on actions, for access to records by the Attorney General and
8 for duty to report fraud or abuse and immunity.
9 The General Assembly of the Commonwealth of Pennsylvania
10 hereby enacts as follows:
11 Section 1. Sections 1401, 1405, 1406 and 1407 of the act of
12 June 13, 1967 (P.L.31, No.21), known as the Public Welfare Code,
13 added July 10, 1980 (P.L.493, No.105), are amended to read:
14 Section 1401. Definitions.--The following words and phrases
15 when used in this article shall have, unless the context clearly
16 indicates otherwise, the meanings given to them in this section:
17 "Claim" means any communication, whether oral, written,
18 electronic, magnetic or otherwise, that is used as a basis for
19 obtaining payment or funding under the medical assistance
1 program, regardless of whether the communication is submitted to
2 the department or its fiscal intermediary or to an insurer,
3 managed care organization or other person or entity that the
4 department has designated, selected or contracted to furnish
5 services or to pay providers who furnish services.
6 "Eligible person" means anyone who lawfully receives or holds
7 a medical assistance eligibility identification card from the
8 department.
9 "Health services corporation" means a nonprofit hospital plan
10 corporation or a nonprofit professional health service plan
11 corporation approved under Pennsylvania law.
12 "Managed care organization" means a health maintenance
13 organization organized and regulated under the act of December
14 29, 1972 (P.L.1701, No.364), known as the "Health Maintenance
15 Organization Act," or a risk-assuming preferred provider
16 organization or exclusive provider organization, organized and
17 regulated under the act of May 17, 1921 (P.L.682, No.284), known
18 as "The Insurance Company Law of 1921," a health care insurer or
19 primary care case manager as defined by the Social Security Act
20 (49 Stat. 620, 42 U.S.C. § 1396t(1)(2)), a provider service
21 network, or any other public or private organization that
22 provides or arranges for medical assistance by agreement with
23 the department.
24 "Medical assistance" means medical services, care, supplies,
25 equipment or other items rendered to eligible persons under
26 Articles IV and V of this act.
27 "Medical assistance program" means the services funded and
28 operations administered by the department or the State plan for
29 medical assistance established under Articles IV and V of this
30 act.
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1 "Medical facility" means a licensed or approved hospital,
2 skilled nursing facility, intermediate care facility, clinic,
3 shared health facility, pharmacy, laboratory or other medical
4 institution.
5 "Medically unnecessary or inadequate services or merchandise"
6 means services or merchandise which are unnecessary or
7 inadequate as determined by medical professionals engaged by the
8 department who are competent in a pertinent field within the
9 practice of medicine.
10 "Practitioner" means any medical doctor, doctor of
11 osteopathy, dentist, optometrist, podiatrist, chiropractor or
12 other medical professional personnel licensed by the
13 Commonwealth or by any other state who is authorized to
14 participate in the medical assistance program.
15 "Provider" means any individual [or medical facility], person
16 or entity which signs an agreement with the department to
17 participate in the medical assistance program, including, but
18 not limited to, licensed practitioners, pharmacies, hospitals,
19 nursing homes, clinics, home health agencies [and], medical
20 purveyors[.], firms, partnerships, groups, associations,
21 fiduciaries, management companies, medical facilities and
22 managed care organizations, as well as employes of a provider,
23 which participate in the medical assistance program to furnish
24 care, services, supplies, equipment or other items.
25 "Purveyor" means any person other than a practitioner, who,
26 directly or indirectly, engages in the business of supplying to
27 patients any medical supplies, equipment or services for which
28 reimbursement under the program is received, including, but not
29 limited to, clinical laboratory services or supplies, x-ray
30 laboratory services or supplies, inhalation therapy services or
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1 equipment, ambulance services, sick room supplies, physical
2 therapy services or equipment and orthopedic or surgical
3 appliances or supplies.
4 "Recipient" means an eligible person who requests or receives
5 medical assistance from a participating provider.
6 "Shared health facility" means an entity which provides the
7 services of three or more health care practitioners, two or more
8 of whom are practicing within different professions, in one
9 physical location. To meet this definition, the practitioners
10 must share any of the following: common waiting areas, examining
11 rooms, treatment rooms, equipment, supporting staff or common
12 records. In addition, to meet this definition, at least one
13 practitioner must receive payment on a fee-for-services basis,
14 and payments under the medical assistance program to any person
15 or entity providing services or merchandise at the location must
16 exceed thirty thousand dollars ($30,000) per year. "Shared
17 health facility" does not mean or include any licensed or
18 approved hospital facility, a skilled nursing facility,
19 intermediate care facility, public health clinics, or any entity
20 organized or operating as a facility wherein ambulatory medical
21 services are provided by an organized group of practitioners all
22 of whom practice the same profession pursuant to an arrangement
23 between such group and a health services corporation or a
24 Federally approved health maintenance organization operating
25 under Pennsylvania law, and where a health services corporation
26 or a health maintenance organization is reimbursed on a prepaid
27 capitation basis for the provision of health care services under
28 the medical assistance program.
29 Section 1405. Freedom of Choice and Nondiscrimination.--(a)
30 A recipient of medical assistance benefits shall, in all cases,
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1 have the freedom to obtain medical services from whichever
2 participating provider or providers he so chooses; however, the
3 participating provider so chosen is free to accept or reject the
4 recipient as a patient.
5 (b) Once a provider has elected to participate in the
6 medical assistance program and has signed an agreement with the
7 department, [such providers] the provider shall not refuse to
8 render services to any recipient on the basis of sex, race,
9 creed, color, national origin, age or handicap.
10 Section 1406. Restrictions on Provider Charges and
11 Payments.--(a) All payments made to providers under the medical
12 assistance program shall constitute full reimbursement to the
13 provider for covered services rendered. Providers may not seek
14 or request supplemental or additional payments from recipients
15 for covered services unless authorized by law or regulation; nor
16 may a provider charge a recipient for other services to
17 supplement a covered service paid for by the department under
18 the medical assistance program. However, nothing in this act
19 shall preclude charges for uncovered services rendered to a
20 recipient.
21 (b) Charges made to the department under the medical
22 assistance program by a provider for covered services or items
23 furnished shall not exceed, in any case, the usual and customary
24 charges made to the general public by such provider for the same
25 services or items.
26 Section 1407. Provider Prohibited Acts, Criminal Penalties
27 and Civil Remedies.--(a) It shall be unlawful for any person or
28 entity to:
29 (1) Knowingly or intentionally present for allowance or
30 payment any false or fraudulent claim or cost report for
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1 furnishing services or merchandise under medical assistance, or
2 to knowingly present for allowance or payment any claim or cost
3 report for medically unnecessary services or merchandise under
4 medical assistance, or to knowingly submit false information,
5 for the purpose of obtaining greater compensation than that to
6 which he is legally entitled for furnishing services or
7 merchandise under medical assistance, or to knowingly submit
8 false information for the purpose of obtaining authorization for
9 furnishing services or merchandise under medical assistance.
10 (2) Solicit or receive or to offer or pay any remuneration,
11 including any kickback, bribe or rebate, directly or indirectly,
12 in cash or in kind from or to any person or entity in connection
13 with the furnishing of services or merchandise for which payment
14 may be in whole or in part under the medical assistance program
15 or in connection with referring an individual to a person or
16 entity for the furnishing or arranging for the furnishing of any
17 services or merchandise for which payment may be made in whole
18 or in part under the medical assistance program.
19 (3) Submit a duplicate claim for care, services, supplies
20 [or], equipment or other items for which the provider has
21 already received or claimed reimbursement from any source.
22 (4) Submit a claim for care, services, supplies [or],
23 equipment or other items which were not rendered to a recipient.
24 (5) Submit a claim for care, services, supplies [or],
25 equipment or other items which includes costs or charges not
26 related to such care, services, supplies [or], equipment or
27 other items rendered to the recipient.
28 (6) Submit a claim or refer a recipient to another provider
29 by referral, order or prescription, for care, services, supplies
30 [or], equipment or other items which are not documented in the
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1 record in the prescribed manner and are of little or no benefit
2 to the recipient, are below the accepted medical treatment
3 standards, or are unneeded by the recipient.
4 (7) Submit a claim which misrepresents the description of
5 care, services, supplies [or], equipment or other items
6 dispensed or provided; the dates of services; the identity of
7 the recipient; the identity of the attending, prescribing or
8 referring practitioner; or the identity of the actual provider.
9 (8) Submit a claim for reimbursement for [a] care, service,
10 [charge or item] supplies, equipment, charges or other items at
11 a fee or charge which is higher than the provider's usual and
12 customary charge to the general public for the same care,
13 service, supplies, equipment or [item] other items.
14 (9) Submit a claim for [a] care, service, supplies,
15 equipment or [item] other items which [was] were not rendered by
16 the provider.
17 (10) Dispense, render or provide [a] care, service,
18 supplies, equipment or [item] other items without a
19 practitioner's written order and the consent of the recipient,
20 except in emergency situations, or submit a claim for [a] care,
21 service, supplies, equipment or [item] other items which [was]
22 were dispensed[,] or provided without the consent of the
23 recipient, except in emergency situations.
24 (11) Except in emergency situations, dispense, render or
25 provide [a] care, service, supplies, equipment or [item] other
26 items to a patient claiming to be a recipient without making a
27 reasonable effort to ascertain by verification through a current
28 medical assistance identification card, that the person or
29 patient is, in fact, a recipient who is eligible on the date of
30 service and without another available medical resource.
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1 (12) Enter into an agreement, combination or conspiracy to
2 obtain or aid another to obtain reimbursement or payments for
3 which there is not entitlement.
4 (13) Make a false statement in the application for
5 enrollment as a provider.
6 (14) Commit any of the prohibited acts described in section
7 1403(d)(1), (2), (4) and (5).
8 (15) Make or cause to be made a misrepresentation or
9 omission of a material fact in any record required to be
10 retained by the provider under the medical assistance program.
11 (b) (1) A person or entity who violates any provision of
12 subsection (a), excepting subsection (a)(11), is guilty of a
13 felony of the third degree for each such violation with a
14 maximum penalty of [fifteen thousand dollars ($15,000)] fifty
15 thousand dollars ($50,000) if the defendant is an individual and
16 two hundred fifty thousand dollars ($250,000) if the defendant
17 is an entity and seven years imprisonment. A violation of
18 subsection (a) shall be deemed to continue so long as the course
19 of conduct or the defendant's complicity therein continues; the
20 offense is committed when the course of conduct or complicity of
21 the defendant therein is terminated in accordance with the
22 provisions of 42 Pa.C.S. § 5552(d) (relating to other offenses).
23 Whenever any person has been previously convicted in any state
24 or Federal court of conduct that would constitute a violation of
25 subsection (a), a subsequent allegation, indictment or
26 information under subsection (a) shall be classified as a felony
27 of the second degree with a maximum penalty of twenty-five
28 thousand dollars ($25,000) and ten years imprisonment.
29 (2) In addition to the penalties provided under subsection
30 (b), the trial court shall order any person convicted under
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1 subsection (a):
2 (i) to repay the amount of the excess benefits or payments
3 plus interest on that amount at the maximum legal rate from the
4 date payment was made by the Commonwealth under the medical
5 assistance program to the date repayment is made to the
6 [Commonwealth] appropriate entity under the medical assistance
7 program;
8 (ii) to pay an amount not to exceed threefold the amount of
9 excess benefits or payments.
10 (3) Any person or entity convicted under subsection (a)
11 shall be ineligible to participate in the medical assistance
12 program for a period of five years from the date of conviction.
13 The department shall notify any provider so convicted that the
14 provider agreement is terminated for five years, and the
15 provider is entitled to a hearing on the sole issue of identity.
16 If the conviction is set aside on appeal, the termination shall
17 be lifted.
18 (4) The Attorney General and the district attorneys of the
19 several counties shall have concurrent authority to institute
20 criminal proceedings under the provisions of this section.
21 (5) As used in this section the following words and phrases
22 shall have the following meanings:
23 "Conviction" means a verdict of guilty, a guilty plea, or a
24 plea of nolo contendere in the trial court.
25 "Medically unnecessary or inadequate services or merchandise"
26 [means services or merchandise which are unnecessary or
27 inadequate as determined by medical professionals engaged by the
28 department who are competent in the same or similar field within
29 the practice of medicine.] shall have the meaning given to it in
30 section 1401.
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1 (c) (1) If the department determines that a provider has
2 committed any prohibited act or has failed to satisfy any
3 requirement under section 1407(a), it shall have the authority
4 to immediately terminate, upon notice to the provider, the
5 provider agreement and to institute a civil suit against such
6 provider in the court of common pleas for twice the amount of
7 excess benefits or payments plus legal interest from the date
8 the violation or violations occurred. The department shall have
9 the authority to use statistical sampling methods to determine
10 the appropriate amount of restitution due from the provider.
11 (2) Providers who are terminated from participation in the
12 medical assistance program for any reason shall be prohibited
13 from owning, arranging for, rendering or ordering any service
14 for medical assistance recipients during the period of
15 termination. In addition, such provider may not receive, during
16 the period of termination, reimbursement in the form of direct
17 payments from the department under the medical assistance
18 program or indirect payments of medical assistance funds in the
19 form of salary, shared fees, contracts, kickbacks or rebates
20 from or through any participating provider.
21 (3) Notice of any action taken by the department against a
22 provider pursuant to clauses (1) and (2) will be forwarded by
23 the department to the Medicaid Fraud Control Unit of the
24 [Department of Justice] Office of Attorney General and to the
25 appropriate licensing board of the Department of State for
26 appropriate action, if any. In addition, the department will
27 forward to the Medicaid Fraud Control Unit of the [Department of
28 Justice] Office of Attorney General and the appropriate
29 Pennsylvania licensing board of the Department of State any
30 cases of suspected provider fraud.
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1 Section 2. Section 1411 of the act, added July 10, 1980
2 (P.L.493, No.105) and repealed in part December 20, 1982
3 (P.L.1409, No.326), is amended to read:
4 Section 1411. Venue and Limitations on Actions.--Any civil
5 actions or criminal prosecutions brought pursuant to this act
6 for violations hereof shall be commenced within five years of
7 the date the violation or violations occur. In addition, any
8 such actions or prosecutions may be brought in any county where
9 the offender has an office or place of business or where [claims
10 and payments are processed by the Commonwealth] the department
11 is located or where authorized by the Rules of the Pennsylvania
12 Supreme Court.
13 Section 3. This act shall take effect in 60 days.
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