PROTECTIONS AGAINST FRAUD AND ABUSE.

SEC. 4707. PROTECTIONS AGAINST FRAUD AND ABUSE. (a) In General.—Section 1932 (42 U.S.C. 1396v) is further amended by adding at the end the following: “(d) Protections Against Fraud and Abuse.— “(1) Prohibiting affiliations with individuals debarred by federal agencies.— “(A) In general.—A managed care entity may not knowingly— “(i) have a person described in subparagraph (C) as a director, officer, partner, or person with beneficial ownership of more than 5 percent of the entity’s equity, or “(ii) have an employment, consulting, or other agreement with a person described in such subparagraph for the provision of items and services that are significant and material to the entity’s obligations under its contract with the State. “(B) Effect of noncompliance.—If a State finds that a managed care entity is not in compliance with clause (i) or (ii) of subparagraph (A), the State— “(i) shall notify the Secretary of such noncompliance; “(ii) may continue an existing agreement with the entity unless the Secretary (in consultation with the Inspector General of the Department of Health and Human Services) directs otherwise; and111 STAT. 502 “(iii) may not renew or otherwise extend the duration of an existing agreement with the entity unless the Secretary (in consultation with the Inspector General of the Department of Health and Human Services) provides to the State and to Congress a written statement describing compelling reasons that exist for renewing or extending the agreement. “(C) Persons described.—A person is described in this subparagraph if such person— “(i) is debarred, suspended, or otherwise excluded from participating in procurement activities under the Federal Acquisition Regulation or from participating in nonprocurement activities under regulations issued pursuant to Executive Order No. 12549 or under guidelines implementing such order; or “(ii) is an affiliate (as defined in such Act) of a person described in clause (i). “(2) Restrictions on marketing.— “(A) Distribution of materials.— “(i) In general.—A managed care entity, with respect to activities under this title, may not distribute directly or through any agent or independent contractor marketing materials within any State— “(I) without the prior approval of the State, and “(II) that contain false or materially misleading information. The requirement of subclause (I) shall not apply with respect to a State until such date as the Secretary specifies in consultation with such State. “(ii) Consultation in review of market materials.—In the process of reviewing and approving such materials, the State shall provide for consultation with a medical care advisory committee. “(B) Service market.—A managed care entity shall distribute marketing materials to the entire service area of such entity covered under the contract under section 1903(m) or section 1903(t)(3). “(C) Prohibition of tie-ins.—A managed care entity, or any agency of such entity, may not seek to influence an individual’s enrollment with the entity in conjunction with the sale of any other insurance. “(D) Prohibiting marketing fraud.—Each managed care entity shall comply with such procedures and conditions as the Secretary prescribes in order to ensure that, before an individual is enrolled with the entity, the individual is provided accurate oral and written information sufficient to make an informed decision whether or not to enroll. “(E) Prohibition of ‘cold-call’ marketing.—Each managed care entity shall not, directly or indirectly, conduct door-to-door, telephonic, or other ‘cold-call’ marketing of enrollment under this title. “(3) State conflict-of-interest safeguards in medicaid risk contracting.—A medicaid managed care organization may not enter into a contract with any State under section 111 STAT. 5031903(m) unless the State has in effect conflict-of-interest safeguards with respect to officers and employees of the State with responsibilities relating to contracts with such organizations or to the default enrollment process described in subsection (a)(4)(C)(ii) that are at least as effective as the Federal safeguards provided under section 27 of the Office of Federal Procurement Policy Act (41 U.S.C. 423), against conflicts of interest that apply with respect to Federal procurement officials with comparable responsibilities with respect to such contracts. “(4) Use of unique physician identifier for participating physicians.—Each medicaid managed care organization shall require each physician providing services to enrollees eligible for medical assistance under the State plan under this title to have a unique identifier in accordance with the system established under section 1173(b). “(e) Sanctions for Noncompliance.— “(1) Use of intermediate sanctions by the state to enforce requirements.— “(A) In general.—A State may not enter into or renew a contract under section 1903(m) unless the State has established intermediate sanctions, which may include any of the types described in paragraph (2), other than the termination of a contract with a medicaid managed care organization, which the State may impose against a medicaid managed care organization with such a contract, if the organization— “(i) fails substantially to provide medically necessary items and services that are required (under law or under such organization’s contract with the State) to be provided to an enrollee covered under the contract; “(ii) imposes premiums or charges on enrollees in excess of the premiums or charges permitted under this title; “(iii) acts to discriminate among enrollees on the basis of their health status or requirements for health care services, including expulsion or refusal to reenroll an individual, except as permitted by this title, or engaging in any practice that would reasonably be expected to have the effect of denying or discouraging enrollment with the organization by eligible individuals whose medical condition or history indicates a need for substantial future medical services; “(iv) misrepresents or falsifies information that is furnished— “(I) to the Secretary or the State under this title; or “(II) to an enrollee, potential enrollee, or a health care provider under such title; or “(v) fails to comply with the applicable requirements of section 1903(m)(2)(A)(x). The State may also impose such intermediate sanction against a managed care entity if the State determines that the entity distributed directly or through any agent or independent contractor marketing materials in violation of subsection (d)(2)(A)(i)(II).111 STAT. 504 “(B) Rule of construction.—Clause (i) of subparagraph (A) shall not apply to the provision of abortion services, except that a State may impose a sanction on any medicaid managed care organization that has a contract to provide abortion services if the organization does not provide such services as provided for under the contract. “(2) Intermediate sanctions.—The sanctions described in this paragraph are as follows: “(A) Civil money penalties as follows: “(i) Except as provided in clause (ii), (iii), or (iv), not more than $25,000 for each determination under paragraph (1)(A). “(ii) With respect to a determination under clause (iii) or (iv)(I) of paragraph (1)(A), not more than $100,000 for each such determination. “(iii) With respect to a determination under paragraph (1)(A)(ii), double the excess amount charged in violation of such subsection (and the excess amount charged shall be deducted from the penalty and returned to the individual concerned). “(iv) Subject to clause (ii), with respect to a determination under paragraph (1)(A)(iii), $15,000 for each individual not enrolled as a result of a practice described in such subsection. “(B) The appointment of temporary management— “(i) to oversee the operation of the medicaid managed care organization upon a finding by the State that there is continued egregious behavior by the organization or there is a substantial risk to the health of enrollees; or “(ii) to assure the health of the organization’s enrollees, if there is a need for temporary management while— “(I) there is an orderly termination or reorganization of the organization; or “(II) improvements are made to remedy the violations found under paragraph (1), except that temporary management under this subparagraph may not be terminated until the State has determined that the medicaid managed care organization has the capability to ensure that the violations shall not recur. “(C) Permitting individuals enrolled with the managed care entity to terminate enrollment without cause, and notifying such individuals of such right to terminate enrollment. “(D) Suspension or default of all enrollment of individuals under this title after the date the Secretary or the State notifies the entity of a determination of a violation of any requirement of section 1903(m) or this section. “(E) Suspension of payment to the entity under this title for individuals enrolled after the date the Secretary or State notifies the entity of such a determination and until the Secretary or State is satisfied that the basis for such determination has been corrected and is not likely to recur.111 STAT. 505 “(3) Treatment of chronic substandard entities.—In the case of a medicaid managed care organization which has repeatedly failed to meet the requirements of section 1903(m) and this section, the State shall (regardless of what other sanctions are provided) impose the sanctions described in subparagraphs (B) and (C) of paragraph (2). “(4) Authority to terminate contract.— “(A) In general.—In the case of a managed care entity which has failed to meet the requirements of this part or a contract under section 1903(m) or 1905(t)(3), the State shall have the authority to terminate such contract with the entity and to enroll such entity’s enrollees with other managed care entities (or to permit such enrollees to receive medical assistance under the State plan under this title other than through a managed care entity). “(B) Availability of hearing prior to termination of contract.—A State may not terminate a contract with a managed care entity under subparagraph (A) unless the entity is provided with a hearing prior to the termination. “(C) Notice and right to disenroll in cases of termination hearing.—A State may— “(i) notify individuals enrolled with a managed care entity which is the subject of a hearing to terminate the entity’s contract with the State of the hearing, and “(ii) in the case of such an entity, permit such enrollees to disenroll immediately with the entity without cause. “(5) Other protections for managed care entities against sanctions imposed by state.—Before imposing any sanction against a managed care entity other than termination of the entity’s contract, the State shall provide the entity with notice and such other due process protections as the State may provide, except that a State may not provide a managed care entity with a pre-termination hearing before imposing the sanction described in paragraph (2)(B).”. (b) Limitation on Availability of FFP for Use of Enrollment Brokers.—Section 1903(b) (42 U.S.C. 1396b(b)) is amended by adding at the end the following: “(4) Amounts expended by a State for the use an enrollment broker in marketing medicaid managed care organizations and other managed care entities to eligible individuals under this title shall be considered, for purposes of subsection (a)(7), to be necessary for the proper and efficient administration of the State plan but only if the following conditions are met with respect to the broker: “(A) The broker is independent of any such entity and of any health care providers (whether or not any such provider participates in the State plan under this title) that provide coverage of services in the same State in which the broker is conducting enrollment activities. “(B) No person who is an owner, employee, consultant, or has a contract with the broker either has any direct or indirect financial interest with such an entity or health care provider or has been excluded from participation in the program under this title or title XVIII or debarred by any Federal agency, or subject to a civil money penalty under this Act.”.111 STAT. 506 (c) Application of Disclosure Requirements to Managed Care Entities.—Section 1124(a)(2)(A) (42 U.S.C. 1320a–3(a)(2)(A)) is amended by inserting “a managed care entity, as defined in section 1932(a)(1)(B),” after “renal disease facility,”.