SEC. 1619. EXCLUSION OF CERTAIN INDIVIDUALS AND ENTITIES FROM PARTICIPATION IN MEDICARE AND STATE HEALTH CARE PROGRAMS.

[a] In General- Section- 1128[c] of the Social Security Act, as previously amended by this division, is further amended--

[1] in the heading, by striking 'and Period' and inserting ', Period, and Effect'; and

[2] by adding at the end the following new paragraph:

'[4][A] For purposes of this Act, subject to subparagraph [C], the effect of exclusion is that no payment may be made by any Federal health care program [as defined in section 1128B[f]] with respect to any item or service furnished--

'[i] by an excluded individual or entity; or

'[ii] at the medical direction or on the prescription of a physician or other authorized individual when the person submitting a claim for such item or service knew or had reason to know of the exclusion of such individual.

'[B] For purposes of this section and sections 1128A and 1128B, subject to subparagraph [C], an item or service has been furnished by an individual or entity if the individual or entity directly or indirectly provided, ordered, manufactured, distributed, prescribed, or otherwise supplied the item or service regardless of how the item or service was paid for by a Federal health care program or to whom such payment was made.

'[C][i] Payment may be made under a Federal health care program for emergency items or services [not including items or services furnished in an emergency room of a hospital] furnished by an excluded individual or entity, or at the medical direction or on the prescription of an excluded physician or other authorized individual during the period of such individual's exclusion.

'[ii] In the case that an individual eligible for benefits under title XVIII or XIX submits a claim for payment for items or services furnished by an excluded individual or entity, and such individual eligible for such benefits did not know or have reason to know that such excluded individual or entity was so excluded, then, notwithstanding such exclusion, payment shall be made for such items or services. In such case the Secretary shall notify such individual eligible for such benefits of the exclusion of the individual or entity furnishing the items or services. Payment shall not be made for items or services furnished by an excluded individual or entity to an individual eligible for such benefits after a reasonable time [as determined by the Secretary in regulations] after the Secretary has notified the individual eligible for such benefits of the exclusion of the individual or entity furnishing the items or services.

'[iii] In the case that a claim for payment for items or services furnished by an excluded individual or entity is submitted by an individual or entity other than an individual eligible for benefits under title XVIII or XIX or the excluded individual or entity, and the Secretary determines that the individual or entity that submitted the claim took reasonable steps to learn of the exclusion and reasonably relied upon inaccurate or misleading information from the relevant Federal health care program or its contractor, the Secretary may waive repayment of the amount paid in violation of the exclusion to the individual or entity that submitted the claim for the items or services furnished by the excluded individual or entity. If a Federal health care program contractor provided inaccurate or misleading information that resulted in the waiver of an overpayment under this clause, the Secretary shall take appropriate action to recover the improperly paid amount from the contractor.'.