I

104TH CONGRESS

1ST SESSION H. R. 2530

To provide for deficit reduction and achieve a balanced budget by fiscal

year 2002.

IN THE HOUSE OF REPRESENTATIVES

OCTOBER 25, 1995

Mr. ORTON (for himself, Mr. STENHOLM, Mr. PETERSON of Minnesota, Mr.

CONDIT, Mr. PAYNE of Virginia, Mr. BROWDER, Mrs. LINCOLN, Mr.

BREWSTER, Mr. TANNER, Mr. BAESLER, Mr. MINGE, Mr. HALL of

Texas, Mr. HAYES, Mr. PETE GEREN of Texas, Mr. CRAMER, Mr. ROSE,

Mr. SISISKY, Mr. SABO, Mr. POSHARD, and Mr. ROEMER) introduced the

following bill; which was referred to the Committee on the Budget, and

in addition to the Committees on Agriculture, Banking and Financial

Services, Commerce, Economic and Educational Opportunities, Government Reform and Oversight, House Oversight, the Judiciary, National

Security, Resources, Rules, Transportation and Infrastructure, Veterans’

Affairs, and Ways and Means, for a period to be subsequently determined

by the Speaker, in each case for consideration of such provisions as fall

within the jurisdiction of the committee concerned

A BILL

To provide for deficit reduction and achieve a balanced

budget by fiscal year 2002.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

4 (a) SHORT TITLE.—This Act may be cited as the

5 ‘‘Common Sense Balanced Budget Act of 1995’’.
2

•HR 2530 IH

1 (b) TABLE OF CONTENTS.—

TITLE I—ENERGY, NATURAL RESOURCES AND ENVIRONMENT

Subtitle A—Energy

Sec. 1101. Privatization of uranium enrichment.

Sec. 1102. Making permanent Nuclear Regulatory Commission annual charges.

Sec. 1103. Cogeneration.

Sec. 1104. FEMA radiological emergency preparedness fees.

Subtitle B—Central Utah

Sec. 1121. Prepayment of certain repayment contracts between the United

States and the Central Utah Water Conservancy District.

Subtitle C—Army Corps of Engineers

Sec. 1131. Regulatory Program Fund.

Subtitle D—Helium Reserve

Sec. 1141. Sale of helium processing and storage facility.

Subtitle E—Territories

Sec. 1151. Termination of annual direct assistance to Northern Mariana Islands.

TITLE II—AGRICULTURAL PROGRAMS

Sec. 2001. Short title.

Subtitle A—Extension and Modification of Various Commodity Programs

Sec. 2101. Extension of loans, payments, and acreage reduction programs for

wheat through 2002.

Sec. 2102. Extension of loans, payments, and acreage reduction programs for

feed grains through 2002.

Sec. 2103. Extension of loans, payments, and acreage reduction programs for

cotton through 2002.

Sec. 2104. Extension of loans, payments, and acreage reduction programs for

rice through 2002.

Sec. 2105. Extension of loans and payments for oilseeds through 2002.

Sec. 2106. Increase in flex acres.

Sec. 2107. Reduction in 50/85 and 0/85 programs.

Subtitle B—Sugar

Sec. 2201. Extension and modification of sugar program.

Subtitle C—Peanuts

Sec. 2301. Extension of price support program for peanuts and related programs.

Sec. 2302. National poundage quotas and acreage allotments.

Sec. 2303. Sale, lease, or transfer of farm poundage quota.

Sec. 2304. Penalty for reentry of exported peanut products.

Sec. 2305. Price support program for peanuts.
3

•HR 2530 IH

Sec. 2306. Referendum regarding poundage quotas.

Sec. 2307. Regulations.

Subtitle D—Tobacco

Sec. 2401. Elimination of Federal budgetary outlays for tobacco programs.

Sec. 2402. Establishment of farm yield for Flue-cured tobacco based on individual farm production history.

Sec. 2403. Removal of farm reconstitution exception for Burley tobacco.

Sec. 2404. Reduction in percentage threshold for transfer of Flue-cured tobacco

quota in cases of disaster.

Sec. 2405. Expansion of types of tobacco subject to no net cost assessment.

Sec. 2406. Repeal of reporting requirements relating to export of tobacco.

Sec. 2407. Repeal of limitation on reducing national marketing quota for Fluecured and Burley tobacco.

Sec. 2408. Application of civil penalties under Tobacco Inspection Act.

Sec. 2409. Transfers of quota or allotment across county lines in a State.

Sec. 2410. Calculation of national marketing quota.

Sec. 2411. Clarification of authority to access civil money penalties.

Sec. 2412. Lease and transfer of farm marketing quotas for Burley tobacco.

Sec. 2413. Limitation on transfer of acreage allotments of other tobacco.

Sec. 2414. Good faith reliance on actions or advice of Department representatives.

Sec. 2415. Uniform forfeiture dates for Flue-cured and Burley tobacco.

Sec. 2416. Sale of Burley and Flue-cured tobacco marketing quotas for a farm

by recent purchasers.

Subtitle E—Planting Flexibility

Sec. 2501. Definitions.

Sec. 2502. Crop and total acreage bases.

Sec. 2503. Planting flexibility.

Sec. 2504. Farm program payment yields.

Sec. 2505. Application of provisions.

Subtitle F—Miscellaneous Provisions

Sec. 2601. Limitations on amount of deficiency payments and land diversion

payments.

Sec. 2602. Sense of Congress regarding certain Canadian trade practices.

TITLE III—COMMERCE

Sec. 3101. Spectrum auctions.

Sec. 3102. Federal Communications Commission fee collections

Sec. 3103. Auction of recaptured analog licenses.

Sec. 3104. Patent and trademark fees.

Sec. 3105. Repeal of authorization of transitional appropriations for the United

States Postal Service.

TITLE IV—TRANSPORTATION

Sec. 4101. Extension of railroad safety fees.

Sec. 4102. Permanent extension of vessel tonnage duties.

Sec. 4103. Sale of Governors Island, New York.

Sec. 4104. Sale of air rights.

TITLE V—HOUSING PROVISIONS
4

•HR 2530 IH

Sec. 5101. Reduction of section 8 annual adjustment factors for units without

tenant turnover.

Sec. 5102. Maximum mortgage amount floor for single family mortgage insurance.

Sec. 5103. Foreclosure avoidance and borrower assistance.

TITLE VI—INDEXATION AND MISCELLANEOUS ENTITLEMENTRELATED PROVISIONS

Sec. 6101. Consumer Price Index.

Sec. 6102. Reduction in title XX block grants to States for social services.

Sec. 6103. Matching rate requirement for title XX block grants to States for

social services.

Sec. 6104. Denial of unemployment insurance to certain high-income individuals.

Sec. 6105. Denial of unemployment insurance to individuals who voluntarily

leave military service.

TITLE VII—MEDICAID REFORM

Subtitle A—Per Capita Spending Limit

Sec. 7001. Limitation on expenditures recognized for purposes of Federal financial participation.

Subtitle B—Medicaid Managed Care

Sec. 7101. Permitting greater flexibility for States to enroll beneficiaries in

managed care arrangements.

Sec. 7102. Removal of barriers to provision of medicaid services through managed care.

Sec. 7103. Additional requirements for medicaid managed care plans.

Sec. 7104. Preventing fraud in medicaid managed care.

Sec. 7105. Assuring adequacy of payments to medicaid managed care plans and

providers.

Sec. 7106. Sanctions for noncompliance by eligible managed care providers.

Sec. 7107. Report on public health services.

Sec. 7108. Report on payments to hospitals.

Sec. 7109. Conforming amendments.

Sec. 7110. Effective date; status of waivers.

Subtitle C—Additional Reforms of Medicaid Acute Care Program

Sec. 7201. Permitting increased flexibility in medicaid cost-sharing.

Sec. 7202. Limits on required coverage of additional treatment services under

EPSDT.

Sec. 7203. Delay in application of new requirements.

Sec. 7204. Deadline on action on waivers.

Subtitle D—National Commission on Medicaid Restructuring

Sec. 7301. Establishment of commission.

Sec. 7302. Duties of commission.

Sec. 7303. Administration.

Sec. 7304. Authorization of appropriations.

Sec. 7305. Termination.

Subtitle E—Restrictions on Disproportionate Share Payments
5

•HR 2530 IH

Sec. 7401. Reforming disproportionate share payments under State medicaid

programs.

Subtitle F—Fraud Reduction

Sec. 7501. Monitoring payments for dual eligibles.

Sec. 7502. Improved identification systems.

TITLE VIII—MEDICARE

Sec. 8000. Short title; references in title.

Subtitle A—Medicare Choice Program

PART 1—INCREASING CHOICE UNDER THE MEDICARE PROGRAM

Sec. 8001. Increasing choice under medicare.

Sec. 8002. Medicare Choice program.

‘‘PART C—PROVISIONS RELATING TO MEDICARE CHOICE

‘‘Sec. 1851. Requirements for Medicare Choice organizations.

‘‘Sec. 1852. Requirements relating to benefits, provision of services, enrollment, and premiums.

‘‘Sec. 1853. Patient protection standards.

‘‘Sec. 1854. Provider-sponsored organizations.

‘‘Sec. 1855. Payments to Medicare Choice organizations.

‘‘Sec. 1856. Establishment of standards for Medicare Choice organizations

and products.

‘‘Sec. 1857. Medicare Choice certification.

‘‘Sec. 1858. Contracts with Medicare Choice organizations.

‘‘Sec. 1859. Demonstration project for high deductible/medisave products.

Sec. 8003. Reports.

Sec. 8004. Transitional rules for current medicare HMO program.

PART 2—SPECIAL RULES FOR MEDICARE CHOICE MEDICAL SAVINGS

ACCOUNTS

Sec. 8011. Medicare choice MSA’s.

Sec. 8012. Certain rebates excluded from gross income.

PART 3—SPECIAL ANTITRUST RULE FOR PROVIDER SERVICE NETWORKS

Sec. 8021. Application of antitrust rule of reason to provider service networks.

PART 4—COMMISSIONS

Sec. 8031. Medicare Payment Review Commission.

Sec. 8032. Commission on the Effect of the Baby Boom Generation on the

Medicare Program.

PART 5—PREEMPTION OF STATE ANTI-MANAGED CARE LAWS

Sec. 8041. Preemption of State law restrictions on managed care arrangements.

Sec. 8042. Preemption of State laws restricting utilization review programs.

Subtitle B—Provisions Relating to Regulatory Relief

PART 1—PROVISIONS RELATING TO PHYSICIAN FINANCIAL RELATIONSHIPS
6

•HR 2530 IH

Sec. 8101. Repeal of prohibitions based on compensation arrangements.

Sec. 8102. Revision of designated health services subject to prohibition.

Sec. 8103. Delay in implementation until promulgation of regulations.

Sec. 8104. Exceptions to prohibition.

Sec. 8105. Repeal of reporting requirements.

Sec. 8106. Preemption of State law.

Sec. 8107. Effective date.

PART 2—ANTITRUST REFORM

Sec. 8111. Publication of antitrust guidelines on activities of health plans.

Sec. 8112. Issuance of health care certificates of public advantage.

Sec. 8113. Study of impact on competition.

Sec. 8114. Antitrust exemption.

Sec. 8115. Requirements.

Sec. 8116. Definition.

PART 3—MALPRACTICE REFORM

SUBPART A—UNIFORM STANDARDS FOR MALPRACTICE CLAIMS.

Sec. 8121. Applicability.

Sec. 8122. Requirement for initial resolution of action through alternative dispute resolution.

Sec. 8123. Optional application of practice guidelines.

Sec. 8124. Treatment of noneconomic and punitive damages.

Sec. 8125. Periodic payments for future losses.

Sec. 8126. Treatment of attorney’s fees and other costs.

Sec. 8127. Uniform statute of limitations.

Sec. 8128. Special provision for certain obstetric services.

Sec. 8129. Jurisdiction of Federal courts.

Sec. 8130. Preemption.

SUBPART B—REQUIREMENTS FOR STATE ALTERNATIVE DISPUTE RESOLUTION

SYSTEMS (ADR)

Sec. 8131. Basic requirements.

Sec. 8132. Certification of State systems; applicability of alternative Federal

system.

Sec. 8133. Reports on implementation and effectiveness of alternative dispute

resolution systems.

SUBPART C—DEFINITIONS

Sec. 8141. Definitions.

PART 4—PAYMENT AREAS FOR PHYSICIANS’ SERVICES UNDER MEDICARE

Sec. 8151. Modification of payment areas used to determine payments for physicians’ services under medicare.

Subtitle C—Medicare Payments to Health Care Providers

PART 1—PROVISIONS AFFECTING ALL PROVIDERS

Sec. 8201. One-year freeze in payments to providers.

PART 2—PROVISIONS AFFECTING DOCTORS
7

•HR 2530 IH

Sec. 8211. Payments for physicians’ services.

PART 3—PROVISIONS AFFECTING HOSPITALS

Sec. 8221. Reduction in update for inpatient hospital services.

Sec. 8222. Elimination of formula-driven overpayments for certain outpatient

hospital services.

Sec. 8223. Establishment of prospective payment system for outpatient services.

Sec. 8224. Reduction in medicare payments to hospitals for inpatient capitalrelated costs.

Sec. 8225. Moratorium on PPS exemption for long-term care hospitals.

PART 4—PROVISIONS AFFECTING OTHER PROVIDERS

Sec. 8231. Revision of payment methodology for home health services.

Sec. 8232. Limitation of home health coverage under part A.

Sec. 8233. Reduction in fee schedule for durable medical equipment.

Sec. 8234. Nursing home billing.

Sec. 8235. Freeze in payments for clinical diagnostic laboratory tests.

PART 5—GRADUATE MEDICAL EDUCATION AND TEACHING HOSPITALS

Sec. 8241. Teaching hospital and graduate medical education trust fund.

Sec. 8242. Reduction in payment adjustments for indirect medical education.

Subtitle D—Provisions Relating to Medicare Beneficiaries

Sec. 8301. Part B premium.

Sec. 8302. Full cost of medicare part B coverage payable by high-income individuals.

Sec. 8303. Expanded coverage of preventive benefits.

Subtitle E—Medicare Fraud Reduction

Sec. 8401. Increasing beneficiary awareness of fraud and abuse.

Sec. 8402. Beneficiary incentives to report fraud and abuse.

Sec. 8403. Elimination of home health overpayments.

Sec. 8404. Skilled nursing facilities.

Sec. 8405. Direct spending for anti-fraud activities under medicare.

Sec. 8406. Fraud reduction demonstration project.

Sec. 8407. Report on competitive pricing.

Subtitle F—Improving Access to Health Care

PART 1—ASSISTANCE FOR RURAL PROVIDERS

SUBPART A—RURAL HOSPITALS

Sec. 8501. Sole community hospitals.

Sec. 8502. Clarification of treatment of EAC and RPC hospitals.

Sec. 8503. Establishment of rural emergency access care hospitals.

Sec. 8504. Classification of rural referral centers.

Sec. 8505. Floor on area wage index.

Sec. 8506. Medical education.

SUBPART B—RURAL PHYSICIANS AND OTHER PROVIDERS

Sec. 8511. Provider incentives.
8

•HR 2530 IH

Sec. 8512. National Health Service Corps loan repayments excluded from gross

income.

Sec. 8513. Telemedicine payment methodology.

Sec. 8514. Demonstration project to increase choice in rural areas.

PART 2—MEDICARE SUBVENTION

Sec. 8521. Medicare program payments for health care services provided in the

military health services system.

Subtitle G—Other Provisions

Sec. 8601. Extension and expansion of existing secondary payer requirements.

Sec. 8602. Repeal of medicare and medicaid coverage data bank.

Sec. 8603. Clarification of medicare coverage of items and services associated

with certain medical devices approved for investigational use.

Sec. 8604. Additional exclusion from coverage.

Sec. 8605. Extending medicare coverage of, and application of hospital insurance tax to, all State and local government employees.

Subtitle H—Monitoring Achievement of Medicare Reform Goals

Sec. 8701. Establishment of budgetary and program goals.

Sec. 8702. Medicare Reform Commission.

Subtitle I—Lock-Box Provisions for Medicare Part B Savings from Growth

Reductions

Sec. 8801. Establishment of Medicare Growth Reduction Trust Fund for part

B savings.

Subtitle J—Clinical Laboratories

Sec. 8901. Exemption of physician office laboratories.

TITLE IX—WELFARE REFORM

Sec. 9000. Amendment of the Social Security Act.

Subtitle A—Temporary Employment Assistance

Sec. 9101. State plan.

Subtitle B—Make Work Pay

Sec. 9201. Transitional medicaid benefits.

Sec. 9202. Notice of availability required to be provided to applicants and

former recipients of temporary family assistance, food stamps,

and medicaid.

Sec. 9203. Notice of availability of earned income tax credit and dependent care

tax credit to be included on W–4 form.

Sec. 9204. Advance payment of earned income tax credit through State demonstration programs.

Sec. 9205. Funding of child care services.

Sec. 9206. Certain Federal assistance includible in gross income.

Sec. 9207. Dependent care credit to be refundable; high-income taxpayers ineligible for credit.

Subtitle C—Work First
9

•HR 2530 IH

Sec. 9301. Work first program.

Sec. 9302. Regulations.

Sec. 9303. Applicability to States.

Subtitle D—Family Responsibility And Improved Child Support Enforcement

CHAPTER 1—ELIGIBILITY AND OTHER MATTERS CONCERNING TITLE IV–D

PROGRAM CLIENTS

Sec. 9401. State obligation to provide paternity establishment and child support

enforcement services.

Sec. 9402. Distribution of payments.

Sec. 9403. Due process rights.

Sec. 9404. Privacy safeguards.

CHAPTER 2—PROGRAM ADMINISTRATION AND FUNDING

Sec. 9411. Federal matching payments.

Sec. 9412. Performance-based incentives and penalties.

Sec. 9413. Federal and State reviews and audits.

Sec. 9414. Required reporting procedures.

Sec. 9415. Automated data processing requirements.

Sec. 9416. Director of CSE program; staffing study.

Sec. 9417. Funding for Secretarial assistance to State programs.

Sec. 9418. Reports and data collection by the Secretary.

CHAPTER 3—LOCATE AND CASE TRACKING

Sec. 9421. Central State and case registry.

Sec. 9422. Centralized collection and disbursement of support payments.

Sec. 9423. Amendments concerning income withholding.

Sec. 9424. Locator information from interstate networks.

Sec. 9425. Expanded Federal parent locator service.

Sec. 9426. Use of social security numbers.

CHAPTER 4—STREAMLINING AND UNIFORMITY OF PROCEDURES

Sec. 9431. Adoption of uniform State laws.

Sec. 9432. Improvements to full faith and credit for child support orders.

Sec. 9433. State laws providing expedited procedures.

CHAPTER 5—PATERNITY ESTABLISHMENT

Sec. 9441. Sense of the Congress.

Sec. 9442. Availability of parenting social services for new fathers.

Sec. 9443. Cooperation requirement and good cause exception.

Sec. 9444. Federal matching payments.

Sec. 9445. State laws concerning paternity establishment.

Sec. 9446. Outreach for voluntary paternity establishment.

CHAPTER 6—ESTABLISHMENT AND MODIFICATION OF SUPPORT ORDERS

Sec. 9451. National Child Support Guidelines Commission.

Sec. 9452. Simplified process for review and adjustment of child support orders.

CHAPTER 7—ENFORCEMENT OF SUPPORT ORDERS

Sec. 9461. Federal income tax refund offset.
10

•HR 2530 IH

Sec. 9462. Internal Revenue Service collection of arrears.

Sec. 9463. Authority to collect support from Federal employees.

Sec. 9464. Enforcement of child support obligations of members of the Armed

Forces.

Sec. 9465. Motor vehicle liens.

Sec. 9466. Voiding of fraudulent transfers.

Sec. 9467. State law authorizing suspension of licenses.

Sec. 9468. Reporting arrearages to credit bureaus.

Sec. 9469. Extended statute of limitation for collection of arrearages.

Sec. 9470. Charges for arrearages.

Sec. 9471. Denial of passports for nonpayment of child support.

Sec. 9472. International child support enforcement.

Sec. 9473. Seizure of lottery winnings, settlements, payouts, awards, and bequests, and sale of forfeited property, to pay child support arrearages.

Sec. 9474. Liability of grandparents for financial support of children of their

minor children.

Sec. 9475. Sense of the Congress regarding programs for noncustodial parents

unable to meet child support obligations.

CHAPTER 8—MEDICAL SUPPORT

Sec. 9481. Technical correction to ERISA definition of medical child support

order.

CHAPTER 9—FOOD STAMP PROGRAM REQUIREMENTS

Sec. 9491. Cooperation with child support agencies.

Sec. 9492. Disqualification for child support arrears.

CHAPTER 10—EFFECT OF ENACTMENT

Sec. 9498. Effective dates.

Sec. 9499. Severability.

Subtitle E—Teen Pregnancy And Family Stability

Sec. 9501. State option to deny temporary employment assistance for additional children.

Sec. 9502. Supervised living arrangements for minors.

Sec. 9503. National clearinghouse on adolescent pregnancy.

Sec. 9504. Required completion of high school or other training for teenage

parents.

Sec. 9505. Denial of Federal housing benefits to minors who bear children outof-wedlock.

Sec. 9506. State option to deny temporary employment assistance to minor parents.

Subtitle F—SSI Reform

Sec. 9601. Definition and eligibility rules.

Sec. 9602. Eligibility redeterminations and continuing disability reviews.

Sec. 9603. Additional accountability requirements.

Sec. 9604. Denial of SSI benefits by reason of disability to drug addicts and

alcoholics.
11

•HR 2530 IH

Sec. 9605. Denial of SSI benefits for 10 years to individuals found to have

fraudulently misrepresented residence in order to obtain benefits simultaneously in 2 or more States.

Sec. 9606. Denial of SSI benefits for fugitive felons and probation and parole

violators.

Sec. 9607. Reapplication requirements for adults receiving SSI benefits by reason of disability.

Sec. 9608. Reduction in unearned income exclusion.

Subtitle G—Food Assistance

CHAPTER 1—FOOD STAMP PROGRAM

Sec. 9701. Application of amendments.

Sec. 9702. Amendments to the Food Stamp Act of 1977.

Sec. 9703. Authority to establish authorization periods.

Sec. 9704. Specific period for prohibiting participation of stores based on lack

of business integrity.

Sec. 9705. Information for verifying eligibility for authorization.

Sec. 9706. Waiting period for stores that initially fail to meet authorization criteria.

Sec. 9707. Bases for suspensions and disqualifications.

Sec. 9708. Authority to suspend stores violating program requirements pending

administrative and judicial review.

Sec. 9709. Disqualification of retailers who are disqualified from the WIC program.

Sec. 9710. Permanent debarment of retailers who intentionally submit falsified

applications.

Sec. 9711. Expanded civil and criminal forfeiture for violations of the food

Stamp Act.

Sec. 9712. Expanded authority for sharing information provided by retailers.

Sec. 9713. Expanded definition of ‘‘coupon’’.

Sec. 9714. Doubled penalties for violating food stamp program requirements.

Sec. 9715. Mandatory claims collection methods.

Sec. 9716. Promoting expansion of electronic benefits transfer.

Sec. 9717. Reduction of basic benefit level.

Sec. 9718. 2-year freeze of standard deduction.

Sec. 9719. Pro-rating benefits after interruptions in participation.

Sec. 9720. Disqualification for participating in 2 or more States.

Sec. 9721. Disqualification relating to child support arrears.

Sec. 9722. State authorization to assist law enforcement officers in locating fugitive felons.

Sec. 9723. Work requirement for able-bodied recipients.

Sec. 9724. Coordination of employment and training programs.

Sec. 9725. Extending current claims retention rates.

Sec. 9726. Nutrition assistance for Puerto Rico.

Sec. 9727. Treatment of children living at home.

CHAPTER 2—COMMODITY DISTRIBUTION

Sec. 9751. Short title.

Sec. 9752. Availability of commodities.

Sec. 9753. State, local and private supplementation of commodities.

Sec. 9754. State plan.

Sec. 9755. Allocation of commodities to States.

Sec. 9756. Priority system for State distribution of commodities.
12

•HR 2530 IH

Sec. 9757. Initial processing costs.

Sec. 9758. Assurances; anticipated use.

Sec. 9759. Authorization of appropriations.

Sec. 9760. Commodity supplemental food program.

Sec. 9761. Commodities not income.

Sec. 9762. Prohibition against certain State charges.

Sec. 9763. Definitions.

Sec. 9764. Regulations.

Sec. 9765. Finality of determinations.

Sec. 9766. Relationship to other programs.

Sec. 9767. Settlement and adjustment of claims.

Sec. 9768. Repealers; amendments.

CHAPTER 3—OTHER PROGRAMS

Sec. 9781. Child and adult care food program. Sec. 9782. Resumption of discretionary funding for nutrition education and

training program.

Subtitle H—Treatment of Aliens

Sec. 9801. Extension of deeming of income and resources under TEA, SSI, and

food stamp programs.

Sec. 9802. Requirements for sponsor’s affidavits of support.

Sec. 9803. Extending requirement for affidavits of support to family-related

and diversity immigrants.

Subtitle I—Earned Income Tax Credit

Sec. 9901. Earned income tax credit denied to individuals not authorized to be

employed in the United States.

TITLE X—REDUCTIONS IN CORPORATE TAX SUBSIDIES AND

OTHER REFORMS

Sec. 10001. Short title.

Subtitle A—Tax Treatment of Expatriation

Sec. 10101. Revision of tax rules on expatriation.

Sec. 10102. Basis of assets of nonresident alien individuals becoming citizens

or residents.

Subtitle B—Modification to Earned Income Credit

Sec. 10201. Earned income tax credit denied to individuals with substantial

capital gain net income.

Subtitle C—Alternative Minimum Tax on Corporations Importing Products

into the United States at Artificially Inflated Prices

Sec. 10301. Alternative minimum tax on corporations importing products into

the United States at artificially inflated prices.

Subtitle D—Tax Treatment of Certain Extraordinary Dividends

Sec. 10401. Tax treatment of certain extraordinary dividends.

Subtitle E—Foreign Trust Tax Compliance

Sec. 10501. Improved information reporting on foreign trusts.

Sec. 10502. Modifications of rules relating to foreign trusts having one or more

United States beneficiaries.
13

•HR 2530 IH

Sec. 10503. Foreign persons not to be treated as owners under grantor trust

rules.

Sec. 10504. Information reporting regarding foreign gifts.

Sec. 10505. Modification of rules relating to foreign trusts which are not grantor trusts.

Sec. 10506. Residence of estates and trusts, etc.

Subtitle F—Limitation on Section 936 Credit

Sec. 10601. Limitation on section 936 credit.

TITLE XI—VETERANS’ AFFAIRS

Sec. 11001. Short title.

Subtitle A—Permanent Extension of Temporary Authorities

Sec. 11011. Authority to require that certain veterans agree to make

copayments in exchange for receiving health-care benefits.

Sec. 11012. Medical care cost recovery authority.

Sec. 11013. Income verification authority.

Sec. 11014. Limitation on pension for certain recipients of medicaid-covered

nursing home care.

Sec. 11015. Home loan fees.

Sec. 11016. Procedures applicable to liquidation sales on defaulted home loans

guaranteed by the Department of Veterans Affairs.

Subtitle B—Other Matters

Sec. 11021. Revised standard for liability for injuries resulting from Department of Veterans Affairs treatment.

Sec. 11022. Enhanced loan asset sale authority.

Sec. 11023. Withholding of payments and benefits.

Subtitle C—Health Care Eligibility Reform

Sec. 11031. Hospital care and medical services.

Sec. 11032. Extension of authority to priority health care for Persian Gulf veterans.

Sec. 11033. Prosthetics.

Sec. 11034. Management of health care.

Sec. 11035. Improved efficiency in health care resource management.

Sec. 11036. Sharing agreements for specialized medical resources.

Sec. 11037. Personnel furnishing shared resources.

TITLE XII—LEGISLATIVE BRANCH

Sec. 12101. Requirement that excess funds provided for official allowances of

Members of the House of Representatives be dedicated to deficit reduction.

TITLE XIII—MISCELLANEOUS PROVISIONS

Sec. 13101. Elimination of disparity between effective dates for military and civilian retiree cost-of-living adjustments for fiscal years 1996,

1997, and 1998.

Sec. 13102. Disposal of certain materials in National Defense Stockpile for deficit reduction.
14

•HR 2530 IH

Sec. 13103. Requirement that certain agencies prefund Government health benefits contributions for their annuitants.

Sec. 13104. Application of OMB Circular a–129.

Sec. 13105. 7-year extension of Hazardous Substance Superfund excise taxes.

TITLE XIV—BUDGET PROCESS PROVISIONS

CHAPTER 1—SHORT TITLE; PURPOSE

Sec. 14001. Short title.

Sec. 14002. Purpose.

CHAPTER 2—BUDGET ESTIMATES

Sec. 14051. Board of Estimates.

Subtitle B—Discretionary Spending Limits

Sec. 14101. Discretionary spending limits.

Sec. 14102. Technical and conforming changes.

Sec. 14103. Elimination of certain adjustments to discretionary spending limits.

Subtitle C—Pay-As-You-Go Procedures

Sec. 14201. Permanent extension of pay-as-you-go procedures; ten-year

scorekeeping.

Sec. 14202. Elimination of emergency exception.

Subtitle D—Miscellaneous

Sec. 14301. Technical correction.

Sec. 14302. Repeal of expiration date.

Subtitle E—Deficit Control

Sec. 14401. Deficit control.

Sec. 14402. Sequestration process.

Subtitle F—Line Item Veto

Sec. 14501. Line item veto authority.

Sec. 14502. Line item veto effective unless disapproved.

Sec. 14503. Definitions.

Sec. 14504. Congressional consideration of line item vetoes.

Sec. 14505. Report of the General Accounting Office.

Sec. 14506. Judicial review.

Subtitle G—Enforcing Points of Order

Sec. 14601. Points of order in the Senate.

Sec. 14602. Points of order in the House of Representatives.

Subtitle H—Deficit Reduction Lock-box

Sec. 14701. Deficit reduction lock-box provisions of appropriation measures.

Sec. 14702. Downward adjustments.

Sec. 14703. CBO tracking.
15

Title I, Subtitle A

•HR 2530 IH

Subtitle I—Emergency Spending; Baseline Reform; Continuing Resolutions

Reform

CHAPTER 1—EMERGENCY SPENDING

Sec. 14801. Establishment of budget reserve account.

Sec. 14802. Congressional budget process changes.

Sec. 14803. Reporting.

CHAPTER 2—BASELINE REFORM

Sec. 14851. The baseline.

Sec. 14852. The President’s budget.

Sec. 14853. The congressional budget.

Sec. 14854. Congressional Budget Office reports to committees.

CHAPTER 3—RESTRICTED USES OF CONTINUING RESOLUTIONS

Sec. 14871. Restrictions respecting continuing resolutions.

Subtitle J—Technical and Conforming Amendments

Sec. 14901. Amendments to the Congressional Budget and Impoundment Control Act of 1974.

Sec. 14902. Technical and conforming amendments to the Rules of the House

of representatives.

Sec. 14903. President’s budget.

Subtitle K—Truth in Legislating

Sec. 14951. Identity, sponsor, and cost of certain provisions required to be reported.

1 TITLE I—ENERGY, NATURAL

2 RESOURCES AND ENVIRONMENT

3 Subtitle A—Energy

4 SEC. 1101. PRIVATIZATION OF URANIUM ENRICHMENT.

5 (a) REFERENCE.—Except as otherwise expressly pro6 vided, whenever in this section an amendment or repeal

7 is expressed in terms of an amendment to, or repeal of,

8 a section or other provision, the reference shall be consid9 ered to be made to a section or other provision of the

10 Atomic Energy Act of 1954 (42 U.S.C. 2011 et seq.).
16

Title I, Subtitle A

•HR 2530 IH

1 (b) PRODUCTION FACILITY.—Paragraph v. of section

2 11 (42 U.S.C. 2014 v.) is amended by striking ‘‘or the

3 construction and operation of a uranium enrichment pro4 duction facility using Atomic Vapor Laser Isotope Separa5 tion technology’’.

6 (c) DEFINITIONS.—Section 1201 (42 U.S.C. 2297)

7 is amended—

8 (1) in paragraph (4), by inserting before the pe9 riod the following: ‘‘and any successor corporation

10 established through privatization of the Corpora11 tion’’;

12 (2) by redesignating paragraphs (10) through

13 (13) as paragraphs (14) through (17), respectively,

14 and by inserting after paragraph (9) the following

15 new paragraphs:

16 ‘‘(10) The term ‘low-level radioactive waste’ has

17 the meaning given such term in section 102(9) of

18 the Low-Level Radioactive Waste Policy Amend19 ments Act of 1985 (42 U.S.C. 2021b(9)).

20 ‘‘(11) The term ‘mixed waste’ has the meaning

21 given such term in section 1004(41) of the Solid

22 Waste Disposal Act (42 U.S.C. 6903(41)).

23 ‘‘(12) The term ‘privatization’ means the trans24 fer of ownership of the Corporation to private inves25 tors pursuant to chapter 25.
17

Title I, Subtitle A

•HR 2530 IH

1 ‘‘(13) The term ‘privatization date’ means the

2 date on which 100 percent of ownership of the Cor3 poration has been transferred to private investors.’’;

4 (3) by inserting after paragraph (17) (as redes5 ignated) the following new paragraph:

6 ‘‘(18) The term ‘transition date’ means July 1,

7 1993.’’; and

8 (4) by redesignating the unredesignated para9 graph (14) as paragraph (19).

10 (d) EMPLOYEES OF THE CORPORATION.—

11 (1) PARAGRAPH (2).—Paragraphs (1) and (2)

12 of section 1305(e) (42 U.S.C. 2297b–4(e)(1)(2)) are

13 amended to read as follows:

14 ‘‘(A) IN GENERAL.—It is the purpose of

15 this subsection to ensure that the privatization

16 of the Corporation shall not result in any ad17 verse effects on the pension benefits of employ18 ees at facilities that are operated, directly or

19 under contract, in the performance of the func20 tions vested in the Corporation.

21 ‘‘(B) APPLICABILITY OF EXISTING COL22 LECTIVE BARGAINING AGREEMENT.—The Cor23 poration shall abide by the terms of the collec24 tive bargaining agreement in effect on the pri25 vatization date at each individual facility.’’.
18

Title I, Subtitle A

•HR 2530 IH

1 (2) PARAGRAPH (4).—Paragraph (4) of section

2 1305(e) (42 U.S.C. 2297b–4(e)(4)) is amended—

3 (A) by striking ‘‘AND DETAILEES’’ in the

4 heading;

5 (B) by striking the first sentence;

6 (C) in the second sentence, by inserting

7 ‘‘from other Federal employment’’ after ‘‘trans8 fer to the Corporation’’; and

9 (D) by striking the last sentence.

10 (e) MARKETING AND CONTRACTING AUTHORITY.—

11 (1) MARKETING AUTHORITY.—Section 1401(a)

12 (42 U.S.C. 2297c(a)) is amended effective on the

13 privatization date (as defined in section 1201(13) of

14 the Atomic Energy Act of 1954)—

15 (A) by amending the subsection heading to

16 read ‘‘MARKETING AUTHORITY.—’’; and

17 (B) by striking the first sentence.

18 (2) TRANSFER OF CONTRACTS.—Section

19 1401(b) (42 U.S.C. 2297c(b)) is amended—

20 (A) in paragraph (2)(B), by adding at the

21 end the following: ‘‘The privatization of the

22 Corporation shall not affect the terms of, or the

23 rights or obligations of the parties to, any such

24 power purchase contract.’’; and

25 (B) by adding at the end the following:
19

Title I, Subtitle A

•HR 2530 IH

1 ‘‘(3) EFFECT OF TRANSFER.—

2 ‘‘(A) As a result of the transfer pursuant

3 to paragraph (1), all rights, privileges, and ben4 efits under such contracts, agreements, and

5 leases, including the right to amend, modify, ex6 tend, revise, or terminate any of such contracts,

7 agreements, or leases were irrevocably assigned

8 to the Corporation for its exclusive benefit.

9 ‘‘(B) Notwithstanding the transfer pursu10 ant to paragraph (1), the United States shall

11 remain obligated to the parties to the contracts,

12 agreements, and leases transferred pursuant to

13 paragraph (1) for the performance of the obli14 gations of the United States thereunder during

15 the term thereof. The Corporation shall reim16 burse the United States for any amount paid by

17 the United States in respect of such obligations

18 arising after the privatization date to the extent

19 such amount is a legal and valid obligation of

20 the Corporation then due.

21 ‘‘(C) After the privatization date, upon any

22 material amendment, modification, extension,

23 revision, replacement, or termination of any

24 contract, agreement, or lease transferred under

25 paragraph (1), the United States shall be re-
20

Title I, Subtitle A

•HR 2530 IH

1 leased from further obligation under such con2 tract, agreement, or lease, except that such ac3 tion shall not release the United States from

4 obligations arising under such contract, agree5 ment, or lease prior to such time.’’.

6 (3) PRICING.—Section 1402 (42 U.S.C. 2297c–

7 1) is amended to read as follows:

8 ‘‘SEC. 1402. PRICING.

9 ‘‘The Corporation shall establish prices for its prod10 ucts, materials, and services provided to customers on a

11 basis that will allow it to attain the normal business objec12 tives of a profitmaking corporation.’’.

13 (4) LEASING OF GASEOUS DIFFUSION FACILI14 TIES OF DEPARTMENT.—Effective on the privatiza15 tion date (as defined in section 1201(13) of the

16 Atomic Energy Act of 1954), section 1403 (42

17 U.S.C. 2297c–2) is amended by adding at the end

18 the following:

19 ‘‘(h) LOW-LEVEL RADIOACTIVE WASTE AND MIXED

20 WASTE.—

21 ‘‘(1) RESPONSIBILITY OF THE DEPARTMENT;

22 COSTS.—

23 ‘‘(A) With respect to low-level radioactive

24 waste and mixed waste generated by the Cor25 poration as a result of the operation of the fa-
21

Title I, Subtitle A

•HR 2530 IH

1 cilities and related property leased by the Cor2 poration pursuant to subsection (a) or as a re3 sult of treatment of such wastes at a location

4 other than the facilities and related property

5 leased by the Corporation pursuant to sub6 section (a) the Department, at the request of

7 the Corporation, shall—

8 ‘‘(i) accept for treatment or disposal

9 of all such wastes for which treatment or

10 disposal technologies and capacities exist,

11 whether within the Department or else12 where; and

13 ‘‘(ii) accept for storage (or ultimately

14 treatment or disposal) all such wastes for

15 which treatment and disposal technologies

16 or capacities do not exist, pending develop17 ment of such technologies or availability of

18 such capacities for such wastes.

19 ‘‘(B) All low-level wastes and mixed wastes

20 that the Department accepts for treatment,

21 storage, or disposal pursuant to subparagraph

22 (A) shall, for the purpose of any permits, li23 censes, authorizations, agreements, or orders

24 involving the Department and other Federal

25 agencies or State or local governments, be
22

Title I, Subtitle A

•HR 2530 IH

1 deemed to be generated by the Department and

2 the Department shall handle such wastes in ac3 cordance with any such permits, licenses, au4 thorizations, agreements, or orders. The De5 partment shall obtain any additional permits, li6 censes, or authorizations necessary to handle

7 such wastes, shall amend any such agreements

8 or orders as necessary to handle such wastes,

9 and shall handle such wastes in accordance

10 therewith.

11 ‘‘(C) The Corporation shall reimburse the

12 Department for the treatment, storage, or dis13 posal of low-level radioactive waste or mixed

14 waste pursuant to subparagraph (A) in an

15 amount equal to the Department’s costs but in

16 no event greater than an amount equal to that

17 which would be charged by commercial, State,

18 regional, or interstate compact entities for

19 treatment, storage, or disposal of such waste.

20 ‘‘(2) AGREEMENTS WITH OTHER PERSONS.—

21 The Corporation may also enter into agreements for

22 the treatment, storage, or disposal of low-level radio23 active waste and mixed waste generated by the Cor24 poration as a result of the operation of the facilities

25 and related property leased by the Corporation pur-
23

Title I, Subtitle A

•HR 2530 IH

1 suant to subsection (a) with any person other than

2 the Department that is authorized by applicable laws

3 and regulations to treat, store, or dispose of such

4 wastes.’’.

5 (5) LIABILITIES.—

6 (A) Subsection (a) of section 1406 (42

7 U.S.C. 2297c–5(a)) is amended—

8 (i) by inserting ‘‘AND PRIVATIZA9 TION’’ after ‘‘TRANSITION’’ in the heading;

10 and

11 (ii) by adding at the end the follow12 ing: ‘‘As of the privatization date, all liabil13 ities attributable to the operation of the

14 Corporation from the transition date to the

15 privatization date shall be direct liabilities

16 of the United States.’’.

17 (B) Subsection (b) of section 1406 (42

18 U.S.C. 2297c–5(b)) is amended—

19 (i) by inserting ‘‘AND PRIVATIZA20 TION’’ after ‘‘TRANSITION’’ in the heading;

21 and

22 (ii) by adding at the end the follow23 ing: ‘‘As of the privatization date, any

24 judgment entered against the Corporation

25 imposing liability arising out of the oper-
24

Title I, Subtitle A

•HR 2530 IH

1 ation of the Corporation from the transi2 tion date to the privatization date shall be

3 considered a judgment against the United

4 States.’’.

5 (C) Subsection (d) of section 1406 (42

6 U.S.C. 2297c–5(d)) is amended—

7 (i) by inserting ‘‘AND PRIVATIZA8 TION’’ after ‘‘TRANSITION’’ in the heading;

9 and

10 (ii) by striking ‘‘the transition date’’

11 and inserting ‘‘the privatization date (or,

12 in the event the privatization date does not

13 occur, the transition date)’’.

14 (6) TRANSFER OF URANIUM.—Title II (42

15 U.S.C. 2297 et seq.) is amended by redesignating

16 section 1408 as section 1409 and by inserting after

17 section 1407 the following:

18 ‘‘SEC. 1408. TRANSFER OF URANIUM.

19 ‘‘The Secretary may, before the privatization date,

20 transfer to the Corporation without charge raw uranium,

21 low-enriched uranium, and highly enriched uranium.’’.

22 (f) PRIVATIZATION OF THE CORPORATION.—

23 (1) ESTABLISHMENT OF PRIVATE CORPORA24 TION.—Chapter 25 (42 U.S.C. 2297d et seq.) is
25

Title I, Subtitle A

•HR 2530 IH

1 amended by adding at the end the following new sec2 tion:

3 ‘‘SEC. 1503. ESTABLISHMENT OF PRIVATE CORPORATION.

4 ‘‘(a) ESTABLISHMENT.—

5 ‘‘(1) IN GENERAL.—In order to facilitate pri6 vatization, the Corporation may provide for the es7 tablishment of a private corporation organized under

8 the laws of any of the several States. Such corpora9 tion shall have among its purposes the following:

10 ‘‘(A) To help maintain a reliable and eco11 nomical domestic source of uranium enrichment

12 services.

13 ‘‘(B) To undertake any and all activities as

14 provided in its corporate charter.

15 ‘‘(2) AUTHORITIES.—The corporation estab16 lished pursuant to paragraph (1) shall be authorized

17 to—

18 ‘‘(A) enrich uranium, provide for uranium

19 to be enriched by others, or acquire enriched

20 uranium (including low-enriched uranium de21 rived from highly enriched uranium);

22 ‘‘(B) conduct, or provide for conducting,

23 those research and development activities relat24 ed to uranium enrichment and related processes

25 and activities the corporation considers nec-
26

Title I, Subtitle A

•HR 2530 IH

1 essary or advisable to maintain itself as a com2 mercial enterprise operating on a profitable and

3 efficient basis;

4 ‘‘(C) enter into transactions regarding ura5 nium, enriched uranium, or depleted uranium

6 with—

7 ‘‘(i) persons licensed under section 53,

8 63, 103, or 104 in accordance with the li9 censes held by those persons;

10 ‘‘(ii) persons in accordance with, and

11 within the period of, an agreement for co12 operation arranged under section 123; or

13 ‘‘(iii) persons otherwise authorized by

14 law to enter into such transactions;

15 ‘‘(D) enter into contracts with persons li16 censed under section 53, 63, 103, or 104, for

17 as long as the corporation considers necessary

18 or desirable, to provide uranium or uranium en19 richment and related services;

20 ‘‘(E) enter into contracts to provide ura21 nium or uranium enrichment and related serv22 ices in accordance with, and within the period

23 of, an agreement for cooperation arranged

24 under section 123 or as otherwise authorized by

25 law; and
27

Title I, Subtitle A

•HR 2530 IH

1 ‘‘(F) take any and all such other actions as

2 are permitted by the law of the jurisdiction of

3 incorporation of the corporation.

4 ‘‘(3) TRANSFER OF ASSETS.—For purposes of

5 implementing the privatization, the Corporation may

6 transfer some or all of its assets and obligations to

7 the corporation established pursuant to this section,

8 including—

9 ‘‘(A) all of the Corporation’s assets, includ10 ing all contracts, agreements, and leases, in11 cluding all uranium enrichment contracts and

12 power purchase contracts;

13 ‘‘(B) all funds in accounts of the Corpora14 tion held by the Treasury or on deposit with

15 any bank or other financial institution;

16 ‘‘(C) all of the Corporation’s rights, duties,

17 and obligations, accruing subsequent to the pri18 vatization date, under the power purchase con19 tracts covered by section 1401(b)(2)(B); and

20 ‘‘(D) all of the Corporation’s rights, duties,

21 and obligations, accruing subsequent to the pri22 vatization date, under the lease agreement be23 tween the Department and the Corporation exe24 cuted by the Department and the Corporation

25 pursuant to section 1403.
28

Title I, Subtitle A

•HR 2530 IH

1 ‘‘(4) MERGER OR CONSOLIDATION.—For pur2 poses of implementing the privatization, the Cor3 poration may merge or consolidate with the corpora4 tion established pursuant to subsection (a)(1) if such

5 action is contemplated by the plan for privatization

6 approved by the President under section 1502(b).

7 The Board shall have exclusive authority to approve

8 such merger or consolidation and to take all further

9 actions necessary to consummate such merger or

10 consolidation, and no action by or in respect of

11 shareholders shall be required. The merger or con12 solidation shall be effected in accordance with, and

13 have the effects of a merger or consolidation under,

14 the laws of the jurisdiction of incorporation of the

15 surviving corporation, and all rights and benefits

16 provided under this title to the Corporation shall

17 apply to the surviving corporation as if it were the

18 Corporation.

19 ‘‘(5) TAX TREATMENT OF PRIVATIZATION.—

20 ‘‘(A) TRANSFER OF ASSETS OR MERGER.—

21 No income, gain, or loss shall be recognized by

22 any person by reason of the transfer of the Cor23 poration’s assets to, or the Corporation’s merg24 er with, the corporation established pursuant to
29

Title I, Subtitle A

•HR 2530 IH

1 subsection (a)(1) in connection with the privat2 ization.

3 ‘‘(B) CANCELLATION OF DEBT AND COM4 MON STOCK.—No income, gain, or loss shall be

5 recognized by any person by reason of any can6 cellation of any obligation or common stock of

7 the Corporation in connection with the privat8 ization.

9 ‘‘(b) OSHA REQUIREMENTS.—For purposes of the

10 regulation of radiological and nonradiological hazards

11 under the Occupational Safety and Health Act of 1970,

12 the corporation established pursuant to subsection (a)(1)

13 shall be treated in the same manner as other employers

14 licensed by the Nuclear Regulatory Commission. Any

15 interagency agreement entered into between the Nuclear

16 Regulatory Commission and the Occupational Safety and

17 Health Administration governing the scope of their respec18 tive regulatory authorities shall apply to the corporation

19 as if the corporation were a Nuclear Regulatory Commis20 sion licensee.

21 ‘‘(c) LEGAL STATUS OF PRIVATE CORPORATION.—

22 ‘‘(1) NOT FEDERAL AGENCY.—The corporation

23 established pursuant to subsection (a)(1) shall not

24 be an agency, instrumentality, or establishment of

25 the United States Government and shall not be a
30

Title I, Subtitle A

•HR 2530 IH

1 Government corporation or Government-controlled

2 corporation.

3 ‘‘(2) NO RECOURSE AGAINST UNITED

4 STATES.—Obligations of the corporation established

5 pursuant to subsection (a)(1) shall not be obliga6 tions of, or guaranteed as to principal or interest by,

7 the Corporation or the United States, and the obli8 gations shall so plainly state.

9 ‘‘(3) NO CLAIMS COURT JURISDICTION.—No ac10 tion under section 1491 of title 28, United States

11 Code, shall be allowable against the United States

12 based on the actions of the corporation established

13 pursuant to subsection (a)(1).

14 ‘‘(d) BOARD OF DIRECTOR’S ELECTION AFTER PUB15 LIC OFFERING.—In the event that the privatization is im16 plemented by means of a public offering, an election of

17 the members of the board of directors of the Corporation

18 by the shareholders shall be conducted before the end of

19 the 1-year period beginning the date shares are first of20 fered to the public pursuant to such public offering.

21 ‘‘(e) ADEQUATE PROCEEDS.—The Secretary of En22 ergy shall not allow the privatization of the Corporation

23 unless before the sale date the Secretary determines that

24 the estimated sum of the gross proceeds from the sale of

25 the Corporation will be an adequate amount.’’.
31

Title I, Subtitle A

•HR 2530 IH

1 (2) OWNERSHIP LIMITATIONS.—Chapter 25 (as

2 amended by paragraph (1)) is amended by adding at

3 the end the following new section:

4 ‘‘SEC. 1504. OWNERSHIP LIMITATIONS.

5 ‘‘(a) SECURITIES LIMITATION.—In the event that the

6 privatization is implemented by means of a public offering,

7 during a period of 3 years beginning on the privatization

8 date, no person, directly or indirectly, may acquire or hold

9 securities representing more than 10 percent of the total

10 votes of all outstanding voting securities of the Corpora11 tion.

12 ‘‘(b) APPLICATION.—Subsection (a) shall not apply—

13 ‘‘(1) to any employee stock ownership plan of

14 the Corporation,

15 ‘‘(2) to underwriting syndicates holding shares

16 for resale, or

17 ‘‘(3) in the case of shares beneficially held for

18 others, to commercial banks, broker-dealers, clearing

19 corporations, or other nominees.

20 ‘‘(c) No director, officer, or employee of the Corpora21 tion may acquire any securities, or any right to acquire

22 securities, of the Corporation—

23 ‘‘(1) in the public offering of securities of the

24 Corporation in the implementation of the privatiza25 tion,
32

Title I, Subtitle A

•HR 2530 IH

1 ‘‘(2) pursuant to any agreement, arrangement,

2 or understanding entered into before the privatiza3 tion date, or

4 ‘‘(3) before the election of directors of the Cor5 poration under section 1503(d) on any terms more

6 favorable than those offered to the general public.’’.

7 (3) EXEMPTION FROM LIABILITY.—Chapter 25

8 (as amended by paragraph (2)) is amended by add9 ing at the end the following new section:

10 ‘‘SEC. 1505. EXEMPTION FROM LIABILITY.

11 ‘‘(a) IN GENERAL.—No director, officer, employee, or

12 agent of the Corporation shall be liable, for money dam13 ages or otherwise, to any party if, with respect to the sub14 ject matter of the action, suit, or proceeding, such person

15 was fulfilling a duty, in connection with any action taken

16 in connection with the privatization, which such person in

17 good faith reasonably believed to be required by law or

18 vested in such person.

19 ‘‘(b) EXCEPTION.—The privatization shall be subject

20 to the Securities Act of 1933 and the Securities Exchange

21 Act of 1934. The exemption set forth in subsection (a)

22 shall not apply to claims arising under such Acts or under

23 the Constitution or laws of any State, territory, or posses24 sion of the United States relating to transactions in secu-
33

Title I, Subtitle A

•HR 2530 IH

1 rities, which claims are in connection with a public offer2 ing implementing the privatization.’’.

3 (4) RESOLUTION OF CERTAIN ISSUES.—Chap4 ter 25 (as amended by paragraph (3)) is amended

5 by adding at the end the following new section:

6 ‘‘SEC. 1506. RESOLUTION OF CERTAIN ISSUES.

7 ‘‘(a) CORPORATION ACTIONS.—Notwithstanding any

8 provision of any agreement to which the Corporation is

9 a party, the Corporation shall not be considered to be in

10 breach, default, or violation of any such agreement be11 cause of any provision of this chapter or any action the

12 Corporation is required to take under this chapter.

13 ‘‘(b) RIGHT TO SUE WITHDRAWN.—The United

14 States hereby withdraws any stated or implied consent for

15 the United States, or any agent or officer of the United

16 States, to be sued by any person for any legal, equitable,

17 or other relief with respect to any claim arising out of,

18 or resulting from, acts or omissions under this chapter.’’.

19 (5) APPLICATION OF PRIVATIZATION PRO20 CEEDS.—Chapter 25 (as amended by paragraph (4))

21 is amended by adding at the end the following new

22 section:

23 ‘‘SEC. 1507. APPLICATION OF PRIVATIZATION PROCEEDS.

24 ‘‘The proceeds from the privatization shall be in25 cluded in the budget baseline required by the Balanced
34

Title I, Subtitle A

•HR 2530 IH

1 Budget and Emergency Deficit Control Act of 1985 and

2 shall be counted as an offset to direct spending for pur3 poses of section 252 of such Act, notwithstanding section

4 257(e) of such Act.’’.

5 (6) CONFORMING AMENDMENT.—The table of

6 contents for chapter 25 is amended by inserting

7 after the item for section 1502 the following:

‘‘Sec. 1503. Establishment of private corporation.

‘‘Sec. 1504. Ownership limitations.

‘‘Sec. 1505. Exemption from liability.

‘‘Sec. 1506. Resolution of certain issues.

‘‘Sec. 1507. Application of privatization proceeds.’’.

8 (7) Section 193 (42 U.S.C. 2243) is amended

9 by adding at the end the following:

10 ‘‘(f) LIMITATION.—If the privatization of the United

11 States Enrichment Corporation results in the Corporation

12 being—

13 ‘‘(1) owned, controlled, or dominated by a for14 eign corporation or a foreign government, or

15 ‘‘(2) otherwise inimical to the common defense

16 or security of the United States,

17 any license held by the Corporation under sections 53 and

18 63 shall be terminated.’’.

19 (8) PERIOD FOR CONGRESSIONAL REVIEW.—

20 Section 1502(d) (42 U.S.C. 2297d–1(d)) is amended

21 by striking ‘‘less than 60 days after notification of

22 the Congress’’ and inserting ‘‘less than 60 days after
35

Title I, Subtitle A

•HR 2530 IH

1 the date of the report to Congress by the Comptrol2 ler General under subsection (c)’’.

3 (g) PERIODIC CERTIFICATION OF COMPLIANCE.—

4 Section 1701(c)(2) (42 U.S.C. 2297f(c)(2)) is amended by

5 striking ‘‘ANNUAL APPLICATION FOR CERTIFICATE OF

6 COMPLIANCE.—The Corporation shall apply at least annu7 ally to the Nuclear Regulatory Commission for a certifi8 cate of compliance under paragraph (1).’’ and inserting

9 ‘‘PERIODIC APPLICATION FOR CERTIFICATE OF COMPLI10 ANCE.—The Corporation shall apply to the Nuclear Regu11 latory Commission for a certificate of compliance under

12 paragraph (1) periodically, as determined by the Nuclear

13 Regulatory Commission, but not less than every 5 years.’’.

14 (h) LICENSING OF OTHER TECHNOLOGIES.—Sub15 section (a) of section 1702 (42 U.S.C. 2297f–1(a)) is

16 amended by striking ‘‘other than’’ and inserting ‘‘includ17 ing’’.

18 (i) CONFORMING AMENDMENTS.—

19 (1) REPEALS IN ATOMIC ENERGY ACT OF 1954

20 AS OF THE PRIVATIZATION DATE.—

21 (A) REPEALS.—As of the privatization

22 date (as defined in section 1201(13) of the

23 Atomic Energy Act of 1954), the following sec24 tions (as in effect on such privatization date) of

25 the Atomic Energy Act of 1954 are repealed:
36

Title I, Subtitle A

•HR 2530 IH

1 (i) Section 1202.

2 (ii) Sections 1301 through 1304.

3 (iii) Sections 1306 through 1316.

4 (iv) Sections 1404 and 1405.

5 (v) Section 1601.

6 (vi) Sections 1603 through 1607.

7 (B) CONFORMING AMENDMENT.—The

8 table of contents of such Act is amended by re9 pealing the items referring to sections repealed

10 by paragraph (1).

11 (2) STATUTORY MODIFICATIONS.—As of such

12 privatization date, the following shall take effect:

13 (A) For purposes of title I of the Atomic

14 Energy Act of 1954, all references in such Act

15 to the ‘‘United States Enrichment Corporation’’

16 shall be deemed to be references to the corpora17 tion established pursuant to section 1503 of the

18 Atomic Energy Act of 1954 (as added by sub19 section (f)(1)).

20 (B) Section 1018(1) of the Energy Policy

21 Act of 1992 (42 U.S.C. 2296b–7(1)) is amend22 ed by striking ‘‘the United States’’ and all that

23 follows through the period and inserting ‘‘the

24 corporation referred to in section 1201(4) of

25 the Atomic Energy Act of 1954.’’.
37

Title I, Subtitle A

•HR 2530 IH

1 (C) Section 9101(3) of title 31, United

2 States Code, is amended by striking subpara3 graph (N), as added by section 902(b) of Public

4 Law 102–486.

5 (3) REVISION OF SECTION 1305.—As of such

6 privatization date, section 1305 of the Atomic En7 ergy Act of 1954 (42 U.S.C 2297b–4) is amended—

8 (A) by repealing subsections (a), (b), (c),

9 and (d), and

10 (B) in subsection (e)—

11 (i) by striking the subsection designa12 tion and heading,

13 (ii) by redesignating paragraphs (1)

14 and (2) (as added by subsection (d)(1)) as

15 subsections (a) and (b) and by moving the

16 margins 2-ems to the left,

17 (iii) by striking paragraph (3), and

18 (iv) by redesignating paragraph (4)

19 (as amended by subsection (d)(2)) as sub20 section (c), and by moving the margins 2-

21 ems to the left.
38

Title I, Subtitle A

•HR 2530 IH

1 SEC. 1102. MAKING PERMANENT NUCLEAR REGULATORY

2 COMMISSION ANNUAL CHARGES.

3 Paragraph (3) of section 6101(a)(3) of the Omnibus

4 Budget Reconciliation Act of 1990 (42 U.S.C. 2214(a)(3))

5 is repealed.

6 SEC. 1103. COGENERATION.

7 Section 804(2)(B) of the National Energy Conserva8 tion Policy Act (42 U.S.C. 8287c(2)(B)) is amended by

9 striking ‘‘, excluding any cogeneration process for other

10 than a federally owned building or buildings or other fed11 erally owned facilities’’.

12 SEC. 1104. FEMA RADIOLOGICAL EMERGENCY PREPARED13 NESS FEES.

14 (a) IN GENERAL.—The Director of the Federal

15 Emergency Management Agency may assess and collect

16 fees applicable to persons subject to radiological emer17 gency preparedness regulations issued by the Director.

18 (b) REQUIREMENTS.—The assessment and collection

19 of fees by the Director under subsection (a) shall be fair

20 and equitable and shall reflect the full amount of costs

21 to the Agency of providing radiological emergency plan22 ning, preparedness, response, and associated services.

23 Such fees shall be assessed by the Director in a manner

24 which reflects the use of resources of the Agency for class25 es of regulated persons and the administrative costs of col26 lecting such fees.
39

Title I, Subtitle B

•HR 2530 IH

1 (c) AMOUNT OF FEES.—The aggregate amount of

2 fees assessed under subsection (a) in a fiscal year shall

3 approximate, but not be less than, 100 percent of the

4 amounts anticipated by the Director to be obligated for

5 the radiological emergency preparedness program of the

6 Agency for such fiscal year.

7 (d) DEPOSIT OF FEES IN TREASURY.—Fees received

8 pursuant to subsection (a) shall be deposited in the gen9 eral fund of the Treasury as offsetting receipts.

10 Subtitle B—Central Utah

11 SEC. 1121. PREPAYMENT OF CERTAIN REPAYMENT CON12 TRACTS BETWEEN THE UNITED STATES AND

13 THE CENTRAL UTAH WATER CONSERVANCY

14 DISTRICT.

15 The second sentence of section 210 of the Central

16 Utah Project Completion Act (106 Stat. 4624) is amended

17 to read as follows: ‘‘The Secretary of the Interior shall

18 allow for prepayment of the repayment contract between

19 the United States and the Central Utah Water Conser20 vancy District dated December 28, 1965, and supple21 mented on November 26, 1985, providing for repayment

22 of the municipal and industrial water delivery facilities for

23 which repayment is provided pursuant to such contract,

24 under such terms and conditions as the Secretary deems

25 appropriate to protect the interest of the United States,
40

Title I, Subtitle C

•HR 2530 IH

1 which shall be similar to the terms and conditions con2 tained in the supplemental contract that provided for the

3 prepayment of the Jordan Aqueduct dated October 28,

4 1993. The District shall exercise its right to prepayment

5 pursuant to this section by the end of fiscal year 2002.’’.

6 Subtitle C—Army Corps of

7 Engineers

8 SEC. 1131. REGULATORY PROGRAM FUND.

9 (a) ESTABLISHMENT.—There is established in the

10 Treasury of the United States the ‘‘Army Civil Works

11 Regulatory Program Fund’’ (hereinafter in this section re12 ferred to as the ‘‘Regulatory Program Fund’’) into which

13 shall be deposited fees collected by the Secretary of the

14 Army pursuant to subsection (b). Amounts deposited into

15 the Regulatory Program Fund are authorized to be appro16 priated to the Secretary of the Army to cover a portion

17 of the expenses incurred by the Department of the Army

18 in administering laws pertaining to the regulation of the

19 navigable waters of the United States, including wetlands.

20 (b) REGULATORY FEES.—

21 (1) COLLECTION.—Not later than 60 days after

22 the date of the enactment of this Act, the Secretary

23 of the Army shall establish fees for the evaluation of

24 commercial permit applications, for the recovery of

25 costs associated with the preparation of environ-
41

Title I, Subtitle D

•HR 2530 IH

1 mental impact statements required by the National

2 Environmental Policy Act of 1969, and for the re3 covery of costs associated with wetlands delineations

4 for major developments affecting wetlands. The Sec5 retary shall collect such fees and deposit amounts

6 collected pursuant to this paragraph into the Regu7 latory Program Fund.

8 (2) FEES.—The fees described in paragraph (1)

9 shall be established by the Secretary of the Army at

10 rates that will allow for the recovery of receipts at

11 amounts sufficient to cover the costs for which the

12 fees are established under paragraph (1).

13 Subtitle D—Helium Reserve

14 SEC. 1141. SALE OF HELIUM PROCESSING AND STORAGE

15 FACILITY.

16 (a) SHORT TITLE.—This section may be cited as the

17 ‘‘Helium Act of 1995’’.

18 (b) REFERENCES.—Except as otherwise expressly

19 provided, whenever in this section an amendment or repeal

20 is expressed in terms of an amendment to, or repeal of,

21 a section or other provision, the reference shall be consid22 ered to be made to a section or other provision of the He23 lium Act (50 U.S.C. 167 to 167n).

24 (c) AUTHORITY OF SECRETARY.—Sections 3, 4, and

25 5 are amended to read as follows:
42

Title I, Subtitle D

•HR 2530 IH

1 ‘‘SEC. 3. AUTHORITY OF SECRETARY.

2 ‘‘(a) EXTRACTION AND DISPOSAL OF HELIUM ON

3 FEDERAL LANDS.—(1) The Secretary may enter into

4 agreements with private parties for the recovery and dis5 posal of helium on Federal lands upon such terms and

6 conditions as he deems fair, reasonable and necessary. The

7 Secretary may grant leasehold rights to any such helium.

8 The Secretary may not enter into any agreement by which

9 the Secretary sells such helium other than to a private

10 party with whom the Secretary has an agreement for re11 covery and disposal of helium. Such agreements may be

12 subject to such rules and regulations as may be prescribed

13 by the Secretary.

14 ‘‘(2) Any agreement under this subsection shall be

15 subject to the existing rights of any affected Federal oil

16 and gas lessee. Each such agreement (and any extension

17 or renewal thereof) shall contain such terms and condi18 tions as deemed appropriate by the Secretary.

19 ‘‘(3) This subsection shall not in any manner affect

20 or diminish the rights and obligations of the Secretary and

21 private parties under agreements to dispose of helium pro22 duced from Federal lands in existence at the enactment

23 of the Helium Act of 1995 except to the extent that such

24 agreements are renewed or extended after such date.
43

Title I, Subtitle D

•HR 2530 IH

1 ‘‘(b) STORAGE, TRANSPORTATION, AND SALE.—The

2 Secretary is authorized to store, transport, and sell helium

3 only in accordance with this Act.

4 ‘‘(c) MONITORING AND REPORTING.—The Secretary

5 is authorized to monitor helium production and helium re6 serves in the United States and to periodically prepare re7 ports regarding the amounts of helium produced and the

8 quantity of crude helium in storage in the United States.

9 ‘‘SEC. 4. STORAGE AND TRANSPORTATION OF CRUDE

10 HELIUM.

11 ‘‘(a) STORAGE AND TRANSPORTATION.—The Sec12 retary is authorized to store and transport crude helium

13 and to maintain and operate existing crude helium storage

14 at the Bureau of Mines Cliffside Field, together with relat15 ed helium transportation and withdrawal facilities.

16 ‘‘(b) CESSATION OF PRODUCTION, REFINING, AND

17 MARKETING.—Effective one year after the date of enact18 ment of the Helium Act of 1995, the Secretary shall cease

19 producing, refining, and marketing refined helium and

20 shall cease carrying out all other activities relating to he21 lium which the Secretary was authorized to carry out

22 under this Act before the date of enactment of the Helium

23 Act of 1995, except those activities described in subsection

24 (a).
44

Title I, Subtitle D

•HR 2530 IH

1 ‘‘(c) DISPOSAL OF FACILITIES.—(1) Within one year

2 after the date of enactment of the Helium Act of 1995,

3 the Secretary shall dispose of all facilities, equipment, and

4 other real and personal property, together with all inter5 ests therein, held by the United States for the purpose

6 of producing, refining, and marketing refined helium. The

7 disposal of such property shall be in accordance with the

8 provisions of law governing the disposal of excess or sur9 plus properties of the United States.

10 ‘‘(2) All proceeds accruing to the United States by

11 reason of the sale or other disposal of such property shall

12 be treated as moneys received under this chapter for pur13 poses of section 6(f). All costs associated with such sale

14 and disposal (including costs associated with termination

15 of personnel) and with the cessation of activities under

16 subsection (b) shall be paid from amounts available in the

17 helium production fund established under section 6(f).

18 ‘‘(3) Paragraph (1) shall not apply to any facilities,

19 equipment, or other real or personal property, or any in20 terest therein, necessary for the storage and transpor21 tation of crude helium.

22 ‘‘(d) EXISTING CONTRACTS.—All contracts which

23 were entered into by any person with the Secretary for

24 the purchase by such person from the Secretary of refined

25 helium and which are in effect on the date of the enact-
45

Title I, Subtitle D

•HR 2530 IH

1 ment of the Helium Act of 1995 shall remain in force and

2 effect until the date on which the facilities referred to in

3 subsection (c) are disposed of. Any costs associated with

4 the termination of such contracts shall be paid from the

5 helium production fund established under section 6(f).

6 ‘‘SEC. 5. FEES FOR STORAGE, TRANSPORTATION AND WITH7 DRAWAL.

8 ‘‘Whenever the Secretary provides helium storage,

9 withdrawal, or transportation services to any person, the

10 Secretary is authorized and directed to impose fees on

11 such person to reimburse the Secretary for the full costs

12 of providing such storage, transportation, and withdrawal.

13 All such fees received by the Secretary shall be treated

14 as moneys received under this Act for purposes of section

15 6(f).’’.

16 (d) SALE OF CRUDE HELIUM.—Section 6 is amended

17 as follows:

18 (1) Subsection (a) is amended by striking out

19 ‘‘from the Secretary’’ and inserting ‘‘from persons

20 who have entered into enforceable contracts to pur21 chase an equivalent amount of crude helium from

22 the Secretary’’.

23 (2) Subsection (b) is amended by inserting

24 ‘‘crude’’ before ‘‘helium’’ and by adding the follow25 ing at the end thereof: ‘‘Except as may be required
46

Title I, Subtitle D

•HR 2530 IH

1 by reason of subsection (a), the Secretary shall not

2 make sales of crude helium under this section in

3 such amounts as will disrupt the market price of

4 crude helium.’’.

5 (3) Subsection (c) is amended by inserting

6 ‘‘crude’’ before ‘‘helium’’ after the words ‘‘Sales of’’

7 and by striking ‘‘together with interest as provided

8 in this subsection’’ and all that follows down

9 through the period at the end of such subsection and

10 inserting the following: ‘‘all funds required to be re11 paid to the United States as of October 1, 1994

12 under this section (hereinafter referred to as ‘repay13 able amounts’). The price at which crude helium is

14 sold by the Secretary shall not be less than the

15 amount determined by the Secretary as follows:

16 ‘‘(1) Divide the outstanding amount of such re17 payable amounts by the volume (in mcf) of crude he18 lium owned by the United States and stored in the

19 Bureau of Mines Cliffside Field at the time of the

20 sale concerned.

21 ‘‘(2) Adjust the amount determined under para22 graph (1) by the Consumer Price Index for years be23 ginning after December 31, 1994.’’.

24 (4) Subsection (d) is amended to read as fol25 lows:
47

Title I, Subtitle D

•HR 2530 IH

1 ‘‘(d) EXTRACTION OF HELIUM FROM DEPOSITS ON

2 FEDERAL LANDS.—All moneys received by the Secretary

3 from the sale or disposition of helium on Federal lands

4 shall be paid to the Treasury and credited against the

5 amounts required to be repaid to the Treasury under sub6 section (c) of this section.’’.

7 (5) Subsection (e) is repealed.

8 (6) Subsection (f) is amended by inserting

9 ‘‘(1)’’ after ‘‘(f)’’ and by adding the following at the

10 end thereof:

11 ‘‘(2) Within 7 days after the commencement of each

12 fiscal year after the disposal of the facilities referred to

13 in section 4(c), all amounts in such fund in excess of

14 $2,000,000 (or such lesser sum as the Secretary deems

15 necessary to carry out this Act during such fiscal year)

16 shall be paid to the Treasury and credited as provided in

17 paragraph (1). Upon repayment of all amounts referred

18 to in subsection (c), the fund established under this sec19 tion shall be terminated and all moneys received under this

20 Act shall be deposited in the Treasury as General Reve21 nues.’’.

22 (e) ELIMINATION OF STOCKPILE.—Section 8 is

23 amended to read as follows:
48

Title I, Subtitle D

•HR 2530 IH

1 ‘‘SEC. 8. ELIMINATION OF STOCKPILE.

2 ‘‘(a) REVIEW OF RESERVES.—Not later than Janu3 ary 1, 2014 the Secretary shall review the known helium

4 reserves in the United States and make a determination

5 as to the expected life of the domestic helium reserves

6 (other than federally owned helium stored at the Cliffside

7 Reservoir) at that time.

8 ‘‘(b) RESERVES BELOW 1 BCF IN 2014.—Not later

9 than January 1, 2014, if the Secretary determines that

10 domestic helium reserves (other than federally owned he11 lium stored at the Cliffside Reservoir) are less than 1 bil12 lion cubic feet (bcf), the Secretary shall commence making

13 sales of crude helium from helium reserves owned by the

14 United States in such amounts as may be necessary to

15 dispose of all such helium reserves in excess of 600 million

16 cubic feet (mcf) by January 1, 2019. The sales shall be

17 at such times and in such lots as the Secretary determines,

18 in consultation with the helium industry, necessary to

19 carry out this subsection. The price for all such sales, as

20 determined by the Secretary in consultation with the he21 lium industry, shall be such as will ensure repayment of

22 the amounts required to be repaid to the Treasury under

23 section 6(c) by the year 2019 with minimum market dis24 ruption. The date specified in this subsection for comple25 tion of such sales and for repayment of debt may be ex26 tended by the Secretary for a period of not to exceed 5
49

Title I, Subtitle D

•HR 2530 IH

1 additional years if necessary in order to assure repayment

2 of such debt with minimum market disruption.

3 ‘‘(c) RESERVES ABOVE 1 BCF IN 2014.—Not later

4 than January 1, 2014, if the Secretary determines that

5 domestic helium reserves (other than federally owned he6 lium stored at the Cliffside Reservoir) are more than 1

7 billion cubic feet (bcf), the Secretary shall commence mak8 ing sales of crude helium from helium reserves owned by

9 the United States in such amounts as may be necessary

10 to dispose of all such helium reserves in excess of 600 mil11 lion cubic feet (mcf) by January 1, 2024. The sales shall

12 be at such times and in such lots as the Secretary deter13 mines, in consultation with the helium industry, necessary

14 to carry out this subsection with minimum disruption of

15 the market for crude helium.

16 ‘‘(d) DISCOVERY OF ADDITIONAL RESERVES.—The

17 discovery of additional helium reserves after the year 2014

18 shall not affect the duty of the Secretary to make sales

19 of helium as provided in subsection (b) or (c), as the case

20 may be.’’.

21 (f) REPEAL OF AUTHORITY TO BORROW.—Sections

22 12 and 15 are repealed.
50

Title I, Subtitle E

•HR 2530 IH

1 Subtitle E—Territories

2 SEC. 1151. TERMINATION OF ANNUAL DIRECT ASSISTANCE

3 TO NORTHERN MARIANA ISLANDS.

4 (a) IN GENERAL.—No annual payment may be made

5 under section 701, 702, or 704 of the Covenant to Estab6 lish a Commonwealth of the Northern Mariana Islands in

7 Political Union with the United States of America (48

8 U.S.C. 1681 note), for any fiscal year beginning after Sep9 tember 30, 1995.

10 (b) ELIMINATION OF 7-YEAR EXTENSIONS.—

11 (1) IN GENERAL.—The Act of March 24, 1976

12 (90 Stat. 263; 16 U.S.C. 1681 note), is amended by

13 striking sections 3 and 4.

14 (2) CONFORMING CHANGES.—(A) Section 5 of

15 the Act of March 24, 1976 (90 Stat. 263; 16 U.S.C.

16 1681 note) is redesignated as section 3.

17 (B) Section 3 of such Act, as redesignated by

18 subparagraph (A) of this paragraph, is amended—

19 (i) by striking ‘‘agreement identified in

20 section 3 of this Act’’ and inserting ‘‘Agreement

21 of the Special Representatives on Future

22 United States Financial Assistance for the Gov23 ernment of the Northern Mariana Islands, exe24 cuted June 10, 1985, between the special rep25 resentative of the President of the United
51

Title II, Subtitle A

•HR 2530 IH

1 States and the special representatives of the

2 Governor of the Northern Mariana Islands’’;

3 and

4 (ii) by striking ‘‘Interior and Insular Af5 fairs’’ and inserting ‘‘Resources’’.

6 TITLE II—AGRICULTURAL

7 PROGRAMS

8 SEC. 2001. SHORT TITLE.

9 This title may be cited as the ‘‘Agricultural Reconcili10 ation Act of 1995’’.

11 Subtitle A—Extension and Modi12 fication of Various Commodity

13 Programs

14 SEC. 2101. EXTENSION OF LOANS, PAYMENTS, AND ACRE15 AGE REDUCTION PROGRAMS FOR WHEAT

16 THROUGH 2002.

17 (a) AGRICULTURAL ACT OF 1949.—Section 107B of

18 the Agricultural Act of 1949 (7 U.S.C. 1445b–3a) is

19 amended—

20 (1) in the section heading by striking ‘‘1995’’

21 and inserting ‘‘2002’’;

22 (2) in subsections (a)(1), (a)(4)(C), (b)(1),

23 (c)(1)(A), (c)(1)(B)(iii), (e)(1)(G), (e)(3)(A),

24 (e)(3)(C)(iii), (f)(1), (q), by striking ‘‘1995’’ each

25 place it appears and inserting ‘‘2002’’;
52

Title II, Subtitle A

•HR 2530 IH

1 (3) in the heading of subsection (c)(1)(B)(ii),

2 by striking ‘‘AND 1995’’ and inserting ‘‘THROUGH

3 2002’’;

4 (4) in subsection (c)(1)(B)(ii), by striking ‘‘and

5 1995’’ and inserting ‘‘through 2002’’;

6 (5) in subsection (c)(1)(E)(vii), by striking

7 ‘‘1997’’ and inserting ‘‘2002’’;

8 (6) in the heading of subsection (e)(1)(G), by

9 striking ‘‘1995’’ and inserting ‘‘2002’’; and

10 (7) in subsection (g)(1), by striking ‘‘and

11 1995’’ and inserting ‘‘through 2002’’.

12 (b) FOOD SECURITY WHEAT RESERVE.—Section

13 302(i) of the Food Security Wheat Reserve Act of 1980

14 (7 U.S.C. 1736f–1(i)) is amended by striking ‘‘1995’’ both

15 places it appears and inserting ‘‘2002’’.

16 (c) NONAPPLICABILITY OF CERTIFICATE REQUIRE17 MENTS.—Sections 379d through 379j of the Agricultural

18 Adjustment Act of 1938 (7 U.S.C. 1379d–1379j) shall not

19 be applicable to wheat processors or exporters during the

20 period June 1, 1996, through May 31, 2003.

21 (d) SUSPENSION OF LAND USE, WHEAT MARKETING

22 ALLOCATION, AND PRODUCER CERTIFICATE PROVI23 SIONS.—Sections 331 through 339, 379b, and 379c of the

24 Agricultural Adjustment Act of 1938 (7 U.S.C. 1331
53

Title II, Subtitle A

•HR 2530 IH

1 through 1339, 1379b, and 1379c) shall not be applicable

2 to the 1996 through 2002 crops of wheat.

3 (e) SUSPENSION OF CERTAIN QUOTA PROVISIONS.—

4 The joint resolution entitled ‘‘A joint resolution relating

5 to corn and wheat marketing quotas under the Agricul6 tural Adjustment Act of 1938, as amended’’, approved

7 May 26, 1941 (7 U.S.C. 1330 and 1340), shall not be

8 applicable to the crops of wheat planted for harvest in the

9 calendar years 1996 through 2002.

10 (f) NONAPPLICABILITY OF SECTION 107 OF AGRICUL11 TURAL ACT OF 1949.—Section 107 of the Agricultural Act

12 of 1949 (7 U.S.C. 1445a) shall not be applicable to the

13 1996 through 2002 crops of wheat.

14 SEC. 2102. EXTENSION OF LOANS, PAYMENTS, AND ACRE15 AGE REDUCTION PROGRAMS FOR FEED

16 GRAINS THROUGH 2002.

17 (a) AGRICULTURAL ACT OF 1949.—Section 105B of

18 the Agricultural Act of 1949 (7 U.S.C. 1444f) is amend19 ed—

20 (1) in the section heading, by striking ‘‘1995’’

21 and inserting ‘‘2002’’;

22 (2) in subsections (a)(1), (a)(4)(C), (a)(6),

23 (b)(1), (c)(1)(A), (c)(1)(B)(iii), (e)(1)(G), (e)(1)(H),

24 (e)(2)(H), (e)(3)(A), (e)(3)(C)(iii), (f)(1), (p)(1),
54

Title II, Subtitle A

•HR 2530 IH

1 (q)(1), and (r), by striking ‘‘1995’’ each place it ap2 pears and inserting ‘‘2002’’;

3 (3) in the heading of subsection (c)(1)(B)(ii),

4 by striking ‘‘AND 1995’’ and inserting ‘‘THROUGH

5 2002’’;

6 (4) in subsection (c)(1)(B)(ii), by striking ‘‘and

7 1995’’ and inserting ‘‘through 2002’’;

8 (5) in subsection (c)(1)(E)(vii), by striking

9 ‘‘1997’’ and inserting ‘‘2002’’;

10 (6) in the headings of subsections (e)(1)(G) and

11 (e)(1)(H), by striking ‘‘1995’’ both places it appears

12 and inserting ‘‘2002’’; and

13 (7) in subsection (g)(1), by striking ‘‘and

14 1995’’ and inserting ‘‘through 2002’’.

15 (b) RECOURSE LOAN PROGRAM FOR SILAGE.—Sec16 tion 403 of the Food Security Act of 1985 (7 U.S.C.

17 1444e–1) is amended by striking ‘‘1996’’ and inserting

18 ‘‘2002’’.

19 (c) NONAPPLICABILITY OF SECTION 105 OF AGRICUL20 TURAL ACT OF 1949.—Section 105 of the Agricultural Act

21 of 1949 (7 U.S.C. 1444b) shall not be applicable to the

22 1996 through 2002 crops of feed grains.
55

Title II, Subtitle A

•HR 2530 IH

1 SEC. 2103. EXTENSION OF LOANS, PAYMENTS, AND ACRE2 AGE REDUCTION PROGRAMS FOR COTTON

3 THROUGH 2002.

4 (a) EXTRA LONG STAPLE COTTON.—Section

5 103(h)(16) of the Agricultural Act of 1949 (7 U.S.C.

6 1444(h)(16)) is amended by striking ‘‘1996’’ and inserting

7 ‘‘2003’’.

8 (b) UPLAND COTTON.—Section 103B of the Agricul9 tural Act of 1949 (7 U.S.C. 1444–2) is amended—

10 (1) in the section heading, by striking ‘‘1997’’

11 and inserting ‘‘2002’’;

12 (2) in subsections (a)(1), (b)(1), (c)(1)(A),

13 (c)(1)(B)(ii), (c)(1)(D)(v)(II), and (o), by striking

14 ‘‘1997’’ each place it appears and inserting ‘‘2002’’;

15 (3) in the heading of subsection

16 (c)(1)(D)(v)(II), by striking ‘‘1997 CROPS’’ and in17 serting ‘‘2002 CROPS’’;

18 (4) in subsection (e)(1)(D), by striking ‘‘the

19 1997 crop’’ and inserting ‘‘each of the 1997 through

20 2002 crops’’;

21 (5) in subsections (e)(3)(A) and (f)(1), by strik22 ing ‘‘1995’’ each place it appears and inserting

23 ‘‘2002’’; and

24 (6) in subparagraphs (B)(i), (D)(i), (E)(i), and

25 (F)(i) of subsection (a)(5), by striking ‘‘1998’’ each

26 place it appears and inserting ‘‘2003’’.
56

Title II, Subtitle A

•HR 2530 IH

1 (c) COTTONSEED AND COTTONSEED OIL.—Section

2 203(b) of the Agricultural Act of 1949 (7 U.S.C.

3 1446d(b)) is amended by striking ‘‘1995’’ and inserting

4 ‘‘2002’’.

5 (d) AGRICULTURAL ADJUSTMENT ACT OF 1938.—

6 Section 374(a) of the Agricultural Adjustment Act of

7 1938 (7 U.S.C. 1374(a)) is amended by striking ‘‘1995’’

8 each place it appears and inserting ‘‘2002’’.

9 (e) SUSPENSION OF BASE ACREAGE ALLOTMENTS,

10 MARKETING QUOTAS, AND RELATED PROVISIONS.—Sec11 tions 342, 343, 344, 345, 346, and 377 of the Agricultural

12 Adjustment Act of 1938 (7 U.S.C. 1342–1346 and 1377)

13 shall not be applicable to any of the 1996 through 2002

14 crops of upland cotton.

15 (f) SUSPENSION OF MISCELLANEOUS COTTON PROVI16 SIONS.—Section 103(a) of the Agricultural Act of 1949

17 (7 U.S.C. 1444(a)) shall not be applicable to the 1996

18 through 2002 crops.

19 (g) PRELIMINARY ALLOTMENTS FOR 2003 CROP OF

20 UPLAND COTTON.—Notwithstanding any other provision

21 of law, the permanent State, county, and farm base acre22 age allotments for the 1977 crop of upland cotton, ad23 justed for any underplantings in 1977 and reconstituted

24 as provided in section 379 of the Agricultural Adjustment
57

Title II, Subtitle A

•HR 2530 IH

1 Act of 1938 (7 U.S.C. 1379), shall be the preliminary al2 lotments for the 2003 crop.

3 (h) COTTON CLASSIFICATION SERVICES.—The first

4 sentence of section 3a of the Act of March 3, 1927 (com5 monly known as the ‘‘Cotton Statistics and Estimates

6 Act’’) (chapter 337; 7 U.S.C. 473a), is amended by strik7 ing ‘‘1996’’ and inserting ‘‘2002’’.

8 SEC. 2104. EXTENSION OF LOANS, PAYMENTS, AND ACRE9 AGE REDUCTION PROGRAMS FOR RICE

10 THROUGH 2002.

11 Section 101B of the Agricultural Act of 1949 (7

12 U.S.C. 1441–2) is amended—

13 (1) in the section heading, by striking ‘‘1995’’

14 and inserting ‘‘2002’’;

15 (2) in subsections (a)(1), (a)(3), (b)(1),

16 (c)(1)(A), (c)(1)(B)(iii), (e)(3)(A), (f)(1), and (n),

17 by striking ‘‘1995’’ each place it appears and insert18 ing ‘‘2002’’;

19 (3) in subsection (a)(5)(D)(i), by striking

20 ‘‘1996’’ and inserting ‘‘2001’’;

21 (4) in the heading of subsection (c)(1)(B)(ii),

22 by striking ‘‘AND 1995’’ and inserting ‘‘THROUGH

23 2002’’;

24 (5) in subsection (c)(1)(B)(ii), by striking ‘‘and

25 1995’’ and inserting ‘‘through 2002’’;
58

Title II, Subtitle A

•HR 2530 IH

1 (6) in subsection (c)(1)(D)(v)(II), by striking

2 ‘‘1997’’ and inserting ‘‘2002’’; and

3 (7) in the heading of subsection

4 (c)(1)(D)(v)(II), by striking ‘‘1997 CROPS’’ and in5 serting ‘‘2002 CROPS’’.

6 SEC. 2105. EXTENSION OF LOANS AND PAYMENTS FOR OIL7 SEEDS THROUGH 2002.

8 Section 205 of the Agricultural Act of 1949 (7 U.S.C.

9 1446f) is amended—

10 (1) in the section heading, by striking ‘‘1995’’

11 and inserting ‘‘2002’’;

12 (2) in subsections (b), (c), (e)(1), and (n), by

13 striking ‘‘1995’’ each place it appears and inserting

14 ‘‘2002’’; and

15 (3) in subsections (c) and (h)(2), by striking

16 ‘‘1997’’ each places it appears and inserting ‘‘2002’’.

17 SEC. 2106. INCREASE IN FLEX ACRES.

18 (a) WHEAT.—Subsection (c)(1)(C)(ii) of section

19 107B of the Agricultural Act of 1949 (7 U.S.C. 1445b–

20 3a) is amended by striking ‘‘85 percent’’ and inserting

21 ‘‘85 percent (through the 1995 crop of wheat) and 77 per22 cent (for the 1996 through 2002 crops)’’.

23 (b) FEED GRAINS.—Subsection (c)(1)(C)(ii) of sec24 tion 105B of such Act (7 U.S.C. 1444f) is amended by

25 striking ‘‘85 percent’’ and inserting ‘‘85 percent (through
59

Title II, Subtitle A

•HR 2530 IH

1 the 1995 crop) and 77 percent (for the 1996 through 2002

2 crops)’’.

3 (c) UPLAND COTTON.—Subsection (c)(1)(C)(ii) of

4 section 103B of such Act (7 U.S.C. 1444–2) is amended

5 by striking ‘‘85 percent’’ and inserting ‘‘85 percent

6 (through the 1995 crop of upland cotton) and 77 percent

7 (for the 1996 through 2002 crops)’’.

8 (d) RICE.—Subsection (c)(1)(C)(ii) of section 101B

9 of such Act (7 U.S.C. 1441–2) is amended by striking ‘‘85

10 percent’’ and inserting ‘‘85 percent (through the 1995

11 crop of rice) and 77 percent (for the 1996 through 2002

12 crops)’’.

13 SEC. 2107. REDUCTION IN 50/85 AND 0/85 PROGRAMS.

14 (a) RICE.—Section 101B(c)(1)(D) of the Agricul15 tural Act of 1949 (7 U.S.C. 1441–2(c)(1)(D)) is amend16 ed—

17 (1) in the subparagraph heading, by striking

18 ‘‘50/85 PROGRAM’’ and inserting ‘‘50/80 PROGRAM’’;

19 and

20 (2) in clause (i), by striking ‘‘8 percent for each

21 of the 1991 through 1993 crops, and 15 percent for

22 each of the 1994 through 1997 crops’’ both places

23 it appears and inserting ‘‘20 percent for each of the

24 1996 through 2002 crops’’.
60

Title II, Subtitle A

•HR 2530 IH

1 (b) COTTON.—Section 103B(c)(1)(D) of such Act (7

2 U.S.C. 1444–2(c)(1)(D)) is amended—

3 (1) in the subparagraph heading, by striking

4 ‘‘50/85 PROGRAM’’ and inserting ‘‘50/80 PROGRAM’’;

5 and

6 (2) in clause (i), by striking ‘‘8 percent for each

7 of the 1991 through 1993 crops, and 15 percent for

8 each of the 1994 through 1997 crops’’ both places

9 it appears and inserting ‘‘20 percent for each of the

10 1996 through 2002 crops’’.

11 (c) FEED GRAINS.—Section 105B(c)(1)(E) of such

12 Act (7 U.S.C. 1444f(c)(1)(E)) is amended—

13 (1) in the subparagraph heading, by striking

14 ‘‘0/85 PROGRAM’’ and inserting ‘‘0/80 PROGRAM’’;

15 and

16 (2) in clause (i), by striking ‘‘8 percent for each

17 of the 1991 through 1993 crops, and 15 percent for

18 each of the 1994 through 1997 crops’’ both places

19 it appears and inserting ‘‘20 percent for each of the

20 1996 through 2002 crops’’.

21 (d) WHEAT.—Section 107B(c)(1)(E) of such Act (7

22 U.S.C. 1445–3a(c)(1)(E)) is amended—

23 (1) in the subparagraph heading, by striking

24 ‘‘0/85 PROGRAM’’ and inserting ‘‘0/80 PROGRAM’’;

25 and
61

Title II, Subtitle B

•HR 2530 IH

1 (2) in clause (i), by striking ‘‘8 percent for each

2 of the 1991 through 1993 crops, and 15 percent for

3 each of the 1994 through 1997 crops’’ both places

4 it appears and inserting ‘‘20 percent for each of the

5 1996 through 2002 crops’’.

6 (e) EFFECT OF AMENDMENTS ON PRIOR CROP

7 YEARS.—Sections 101B(c)(1)(D), 103B(c)(1)(D),

8 105B(c)(1)(E), and 107B(c)(1)(E) of the Agricultural Act

9 of 1949, as in effect on the day before the date of the

10 enactment of this Act, shall continue to apply with respect

11 to the 1991 through 1995 crops covered by such sections.

12 Subtitle B—Sugar

13 SEC. 2201. EXTENSION AND MODIFICATION OF SUGAR PRO14 GRAM.

15 (a) ASSURANCE OF SUGAR SUPPLY.—Section 206 of

16 the Agricultural Act of 1949 (7 U.S.C. 1446g, et seq.)

17 is amended to read as follows:

18 ‘‘SEC. 206. ASSURANCE OF SUGAR SUPPLY.

19 ‘‘(a) IN GENERAL.—The price of each crop of sugar

20 beets and sugarcane, respectively, shall be supported in

21 accordance with this section.

22 ‘‘(b) SUGARCANE.—Subject to subsection (d), the

23 Secretary shall support the price of domestically grown

24 sugarcane through loans at 18 cents per pound for raw

25 cane sugar.
62

Title II, Subtitle B

•HR 2530 IH

1 ‘‘(c) SUGAR BEETS.—Subject to subsection (d), the

2 Secretary shall support the price of each crop of domesti3 cally grown sugar beets through loans at the level provided

4 for refined beet sugar produced from the 1995 crop of do5 mestically grown sugar beets.

6 ‘‘(d) ADJUSTMENT IN SUPPORT LEVEL.—

7 ‘‘(1) DOWNWARD ADJUSTMENT IN SUPPORT

8 LEVEL.—

9 ‘‘(A) IN GENERAL.—The Secretary shall

10 decrease the support price of domestically

11 grown sugarcane and sugar beets from the

12 price determined for the preceding crop, as es13 tablished under this section, if negotiated re14 ductions in export subsidies and domestic sub15 sidies provided for sugar of the European

16 Union and other major sugar growing, produc17 ing, and exporting countries (‘major countries’)

18 in the aggregate exceed the commitments made

19 as part of the Uruguay Round Agreements.

20 ‘‘(B) EXTENT OF REDUCTION.—The Sec21 retary shall not reduce the support price under

22 this section below a level that provides an equal

23 measure of support to that provided by any

24 other major country or customs union based on

25 an examination of both domestic and export
63

Title II, Subtitle B

•HR 2530 IH

1 subsidies subject to reduction in the Agreement

2 on Agriculture referenced in 19 U.S.C.

3 3511(d)(2).

4 ‘‘(C) MAJOR COUNTRIES.—For purposes of

5 this subsection, the term ‘major countries’ in6 cludes all countries allocated a share of the tar7 iff rate quota for imported sugars and syrups

8 by the United States Trade Representative pur9 suant to additional U.S. note 5 of chapter 17

10 of the Harmonized Tariff Schedule, all coun11 tries of the European Union, and the People’s

12 Republic of China.

13 ‘‘(2) INCREASES IN SUPPORT LEVEL.—The Sec14 retary may increase the support level for each crop

15 of domestically grown sugarcane and sugar beets

16 from the level determined for the preceding crop

17 based on such factors as the Secretary determines

18 appropriate, including changes (during the 2 crop

19 years immediately preceding the crop year for which

20 the determination is made) in the cost of sugar

21 products, the cost of domestic sugar production, the

22 amount of any applicable assessments, and other

23 factors or circumstances that may adversely affect

24 domestic sugar production.

25 ‘‘(e) LOAN TYPE; PROCESSOR ASSURANCES.—
64

Title II, Subtitle B

•HR 2530 IH

1 ‘‘(1) IN GENERAL.—Subject to paragraph (2),

2 the Secretary shall carry out this section through

3 the use of recourse loans.

4 ‘‘(2) MODIFICATION.—During any fiscal year in

5 which the tariff rate quota for imports of sugar into

6 the United States is set at, or is increased to, a level

7 that exceeds the minimum level for such imports

8 committed to by the United States under the Agree9 ment on Agriculture contained in the Uruguay

10 Round of Agreements of the General Agreement on

11 Tariffs and Trade, the Secretary shall carry out this

12 section by making available nonrecourse loans. Any

13 recourse loan previously made available by the Sec14 retary under this section during such fiscal year

15 shall be modified by the Secretary into a

16 nonrecourse loan.

17 ‘‘(3) PROCESSOR ASSURANCES.—In order to ef18 fectively support the prices of sugar beets and sugar19 cane received by the producer, the Secretary shall

20 obtain from each processor that receives a loan

21 under this section such assurances as the Secretary

22 considers adequate that, if the Secretary is required

23 under paragraph (2) to make nonrecourse loans

24 available, or modify recourse loans into nonrecourse

25 loans, each producer served by the processor will re-
65

Title II, Subtitle B

•HR 2530 IH

1 ceive the appropriate minimum payment for sugar

2 beets and sugarcane delivered by the producer, as

3 determined by the Secretary.

4 ‘‘(f) ANNOUNCEMENTS.—In order to ensure the effi5 cient administration of the program under this section and

6 the effective support of the price of sugar, the Secretary

7 shall announce the type of loans available and the loan

8 rates for beet sugar and cane sugar for any fiscal year

9 under this section as far in advance as is practicable.

10 ‘‘(g) LOAN TERM.—

11 ‘‘(1) IN GENERAL.—Except as provided in para12 graph (2) and subsection (h), loans under this sec13 tion during any fiscal year shall be made available

14 not earlier than the beginning of the fiscal year and

15 shall mature at the end of 3 months.

16 ‘‘(2) EXTENSION.—The maturity of a loan

17 under this section may be extended for up to 2 addi18 tional 3-month periods, at the option of the bor19 rower, upon written request to the Commodity Cred20 it Corporation. The maturity of a loan may not be

21 extended under this paragraph beyond the end of

22 the fiscal year.

23 ‘‘(h) SUPPLEMENTARY LOANS.—Subject to sub24 section (d), the Secretary shall make available to eligible

25 processors price support loans with respect to sugar proc-
66

Title II, Subtitle B

•HR 2530 IH

1 essed from sugar beets and sugarcane harvested in the last

2 3 months of a fiscal year. Such loans shall mature at the

3 end of the fiscal year. The processor may repledge the

4 sugar as collateral for a price support loan in the subse5 quent fiscal year, except that the second loan shall—

6 ‘‘(1) be made at the loan rate in effect at the

7 time the second loan is made; and

8 ‘‘(2) mature in not more than 9 months less the

9 quantity of time that the first loan was in effect.

10 ‘‘(i) USE OF COMMODITY CREDIT CORPORATION.—

11 The Secretary shall use the funds, facilities, and authori12 ties of the Commodity Credit Corporation to carry out this

13 section.

14 ‘‘(j) MARKETING ASSESSMENTS.—The following as15 sessments shall be collected with respect to all sugar mar16 keted within the United States during the 1996 through

17 2003 fiscal years:

18 ‘‘(1) BEET SUGAR.—The first seller of beet

19 sugar produced from sugar beets or sugar beet mo20 lasses, or refined sugar refined outside of the United

21 States, shall remit to the Commodity Credit Cor22 poration a nonrefundable marketing assessment in

23 an amount equal to 1.1794 percent of the loan level

24 established under subsection (b) per pound of sugar

25 marketed.
67

Title II, Subtitle B

•HR 2530 IH

1 ‘‘(2) CANE SUGAR.—The first seller of raw cane

2 sugar produced from sugarcane or sugarcane molas3 ses, shall remit to the Commodity Credit Corpora4 tion a nonrefundable marketing assessment in an

5 amount equal to 1.1 percent of the loan level estab6 lished under subsection (b) per pound of sugar mar7 keted (including the transfer or delivery of the sugar

8 to a refinery for further processing or marketing).

9 ‘‘(3) COLLECTION.—

10 ‘‘(A) TIMING.—Marketing assessments re11 quired under this subsection shall be collected

12 and remitted to the Commodity Credit Corpora13 tion within 30 days of the date that the sugar

14 is marketed.

15 ‘‘(B) MANNER.—Subject to subparagraph

16 (A), marketing assessments shall be collected

17 under this subsection in the manner prescribed

18 by the Secretary and shall be nonrefundable.

19 ‘‘(4) PENALTIES.—If any person fails to remit

20 an assessment required by this subsection or fails to

21 comply with such requirements for recordkeeping or

22 otherwise as are required by the Secretary to carry

23 out this subsection, the person shall be liable to the

24 Secretary for a civil penalty up to an amount deter25 mined by multiplying—
68

Title II, Subtitle B

•HR 2530 IH

1 ‘‘(A) the quantity of sugar involved in the

2 violation; by

3 ‘‘(B) the loan level for the applicable crop

4 of sugarcane or sugar beets from which the

5 sugar is produced.

6 For the purposes of this paragraph, refined sugar

7 shall be treated as produced from sugar beets.

8 ‘‘(5) ENFORCEMENT.—The Secretary may en9 force this subsection in the courts of the United

10 States.

11 ‘‘(6) REGULATIONS.—The Secretary shall pro12 mulgate regulations to carry out this subsection.

13 ‘‘(k) INFORMATION REPORTING.—

14 ‘‘(1) DUTY OF PROCESSORS AND REFINERS TO

15 REPORT.—All sugarcane processors, cane sugar re16 finers, and sugar beet processors shall furnish the

17 Secretary, on a monthly basis, such information as

18 the Secretary may require to administer sugar pro19 grams, including the quantity of purchases of sugar20 cane, sugar beets, and sugar, and production, impor21 tation, distribution, and stock levels of sugar.

22 ‘‘(2) DUTY OF PRODUCERS TO REPORT.—In

23 order to efficiently and effectively carry out the pro24 gram under this section, the Secretary may require

25 a producer of sugarcane or sugar beets to report, in
69

Title II, Subtitle B

•HR 2530 IH

1 the manner prescribed by the Secretary, the produc2 er’s sugarcane or sugar beet yields and acres planted

3 to sugarcane or sugar beets, respectively.

4 ‘‘(3) PENALTY.—Any person willfully failing or

5 refusing to furnish the information, or furnishing

6 willfully any false information, shall be subject to a

7 civil penalty of not more than $10,000 for each such

8 violation.

9 ‘‘(4) MONTHLY REPORTS.—Taking into consid10 eration the information received under paragraph

11 (1), the Secretary shall publish on a monthly basis

12 composite data on production, imports, distribution,

13 and stock levels of sugar.

14 ‘‘(l) SUGAR ESTIMATES.—

15 ‘‘(1) DOMESTIC REQUIREMENT.—Before the be16 ginning of each fiscal year, the Secretary shall esti17 mate the domestic sugar requirement of the United

18 States equal to Total Estimated Disappearance

19 minus the quantity of sugar that will be available

20 from carry-in stocks.

21 ‘‘(2) TOTAL DISAPPEARANCE.—For the pur22 poses of this subsection, the term ‘‘Total Estimated

23 Disappearance’’ means the quantity of sugar, as es24 timated by the Secretary, that will be consumed in

25 the United States during the fiscal year (other than
70

Title II, Subtitle B

•HR 2530 IH

1 sugar imported for the production of polyhydric alco2 hol or to be refined and reexported in refined form

3 or in sugar containing products) plus the quantity of

4 sugar that would provide for adequate carryover

5 stocks.

6 ‘‘(3) QUARTERLY REESTIMATES.—The Sec7 retary shall make quarterly reestimates of sugar

8 consumption, stocks, production, and imports for a

9 fiscal year no later than the beginning of each of the

10 second through fourth quarters of the fiscal year.

11 ‘‘(m) DEFINITION OF MARKET.—For purposes of

12 this section, the term ‘market’ means to sell or otherwise

13 dispose of in commerce in the United States (including,

14 with respect to any integrated processor and refiner, the

15 movement of raw cane sugar into the refining process) and

16 deliver to a buyer.

17 ‘‘(n) CROPS.—This section shall be effective only for

18 the 1996 through 2002 crops of sugar beets and sugar19 cane.’’.

20 (b) CONFORMING AMENDMENT.—Part VII of subtitle

21 B of title III of the Agricultural Adjustment Act of 1938

22 (7 U.S.C. 1359aa et seq.) is repealed.
71

Title II, Subtitle C

•HR 2530 IH

1 Subtitle C—Peanuts

2 SEC. 2301. EXTENSION OF PRICE SUPPORT PROGRAM FOR

3 PEANUTS AND RELATED PROGRAMS.

4 (a) AGRICULTURAL ACT OF 1949.—Section 108B of

5 the Agricultural Act of 1949 (7 U.S.C. 1445c–3) is

6 amended—

7 (1) in the section heading, by striking ‘‘1997’’

8 and inserting ‘‘2002’’;

9 (2) in subsection (a)(1), (a)(2), (b)(1), and (h),

10 by striking ‘‘1997’’ each place it appears and insert11 ing ‘‘2002’’; and

12 (3) in subsection (g)(1), by striking ‘‘1997

13 crops’’ the first place it appears and inserting ‘‘2002

14 crops’’.

15 (b) AGRICULTURAL ADJUSTMENT ACT OF 1938.—

16 Part VI of subtitle B of title III of the Agricultural Ad17 justment Act of 1938 is amended—

18 (1) in section 358–1 (7 U.S.C. 1358–1)—

19 (A) in the section heading, by striking

20 ‘‘1997’’ and inserting ‘‘2002’’;

21 (B) in subsection (a)(3), by striking

22 ‘‘1990’’ and inserting ‘‘1990, for the 1991

23 through 1995 marketing years, and 1995, for

24 the 1996 through 2002 marketing years’’;

25 (C) in subsection (b)(1)(A)—
72

Title II, Subtitle C

•HR 2530 IH

1 (i) by striking ‘‘1997’’ and inserting

2 ‘‘2002’’; and

3 (ii) in clause (i), by inserting before

4 the semicolon the following: ‘‘, for the

5 1991 through 1995 marketing years, and

6 the 1995 marketing year, for the 1996

7 through 2002 marketing years’’; and

8 (D) in subsections (b)(1)(B), (b)(2)(A),

9 (b)(2)(C), (b)(3)(A), and (f), by striking

10 ‘‘1997’’ each place it appears and inserting

11 ‘‘2002’’;

12 (2) in section 358b (7 U.S.C. 1358b)—

13 (A) in the section heading, by striking

14 ‘‘1995’’ and inserting ‘‘2002’’; and

15 (B) in subsection (c), by striking ‘‘1995’’

16 and inserting ‘‘2002’’;

17 (3) in section 358c(d) (7 U.S.C. 1358c(d)), by

18 striking ‘‘1995’’ and inserting ‘‘2002’’; and

19 (4) in section 358e (7 U.S.C. 1359a)—

20 (A) in the section heading, by striking

21 ‘‘1997’’ and inserting ‘‘2002’’; and

22 (B) in subsection (i), by striking ‘‘1997’’

23 and inserting ‘‘2002’’.

24 (c) FOOD, AGRICULTURE, CONSERVATION, AND

25 TRADE ACT OF 1990.—Title VIII of the Food, Agri-
73

Title II, Subtitle C

•HR 2530 IH

1 culture, Conservation, and Trade Act of 1990 (Public Law

2 101–624; 104 Stat. 3459) is amended—

3 (1) in section 801 (104 Stat. 3459), by striking

4 ‘‘1995’’ and inserting ‘‘2002’’;

5 (2) in section 807 (104 Stat. 3478), by striking

6 ‘‘1995’’ and inserting ‘‘2002’’; and

7 (3) in section 808 (7 U.S.C. 1441 note), by

8 striking ‘‘1995’’ and inserting ‘‘2002’’.

9 SEC. 2302. NATIONAL POUNDAGE QUOTAS AND ACREAGE

10 ALLOTMENTS.

11 (a) ESTABLISHMENT.—Subsection (a)(1) of section

12 358–1 of the Agricultural Adjustment Act of 1938 (7

13 U.S.C. 1358–1) is amended to read as follows:

14 ‘‘(1) ESTABLISHMENT.—The national poundage

15 quota for peanuts for each of the 1991 through

16 2002 marketing years shall be established by the

17 Secretary at a level that is equal to the quantity of

18 peanuts (in tons) that the Secretary estimates will

19 be devoted in each such marketing year to domestic

20 edible and related uses. Beginning with the 1996

21 marketing year, the Secretary shall exclude seed

22 uses from the estimate of domestic edible and relat23 ed uses, but shall include the estimated quantity of

24 peanuts and peanut products to be imported into the
74

Title II, Subtitle C

•HR 2530 IH

1 United States for the marketing year for which the

2 quota is being established.’’.

3 (b) EXCLUSIONS FROM FARM POUNDAGE QUOTA.—

4 Subsection (b) of such section is amended—

5 (1) in paragraph (1)(B), by striking clauses (i)

6 and (ii) and inserting the following new clauses:

7 ‘‘(i) through the 1995 marketing year,

8 any increases for undermarketings from

9 previous years; or

10 ‘‘(ii) through the 2002 marketing

11 year, any increases resulting from the allo12 cation of quotas voluntarily released for 1

13 year under paragraph (7).’’; and

14 (2) in paragraph (3)(B), by striking clauses (i)

15 and (ii) and inserting the following new clauses:

16 ‘‘(i) through the 1995 marketing year,

17 any increases for undermarketings of

18 quota peanuts from previous years; or

19 ‘‘(ii) through the 2002 marketing

20 year, any increase resulting from the allo21 cation of quotas voluntarily released for 1

22 year under paragraph (7).’’.

23 (c) TEMPORARY QUOTA ALLOCATION.—Subsection

24 (b)(2) of such section is amended—
75

Title II, Subtitle C

•HR 2530 IH

1 (1) in subparagraph (A), by striking ‘‘subpara2 graph (B) and subject to’’; and

3 (2) by striking subparagraph (B) and inserting

4 the following new subparagraph:

5 ‘‘(B) TEMPORARY QUOTA ALLOCATION.—

6 ‘‘(i) ALLOCATION RELATED TO SEED

7 PEANUTS.—Temporary allocation of quota

8 pounds for the marketing year only in

9 which the crop is planted shall be made to

10 producers for each of the 1996 through

11 2002 marketing years as provided in this

12 subparagraph. The temporary quota alloca13 tion shall be equal to the pounds of seed

14 peanuts planted on the farm, as may be

15 adjusted under regulations prescribed by

16 the Secretary. The temporary allocation of

17 quota pounds under this paragraph shall

18 be in addition to the farm poundage quota

19 otherwise established under this subsection

20 and shall be credited for the applicable

21 marketing year only, in total to the pro22 ducer of the peanuts on the farm in a

23 manner prescribed by the Secretary.

24 ‘‘(ii) CONDITION ON ALLOCATION.—

25 The allocation of quota pounds to produc-
76

Title II, Subtitle C

•HR 2530 IH

1 ers under this subparagraph shall be per2 formed in such a manner so that such allo3 cation will not result in a net decrease in

4 the farm poundage quota for a farm in ex5 cess of 3 percent, after temporary seed

6 quota is added, from the basic farm quota

7 in 1996. Such decrease shall occur one

8 time only and shall be applicable to the

9 1996 marketing year only.

10 ‘‘(iii) TERM OF PROVISION.—Applica11 tion of this subparagraph may continue so

12 long as doing so does not result in in13 creased cost to the Commodity Credit Cor14 poration by displacement of quota peanuts

15 by additional peanuts in the domestic mar16 ket, increased losses in the Association

17 loan pools, or other such increases in cost.

18 ‘‘(iv) EFFECT OF OTHER REQUIRE19 MENTS.—Nothing in this section shall alter

20 or change in any way the requirements re21 garding the use of quota and additional

22 peanuts established by section 359a(b) of

23 the Agricultural Act of 1949 (7 U.S.C.

24 1359a(b)), as added by section 804 of the
77

Title II, Subtitle C

•HR 2530 IH

1 Food, Agriculture, Conservation, and

2 Trade Act of 1990.’’.

3 (d) QUOTA CONSIDERED PRODUCED.—Subsection

4 (b)(4) of such section is amended to read as follows:

5 ‘‘(4) QUOTA CONSIDERED PRODUCED.—

6 ‘‘(A) NATURAL DISASTER.—For purposes

7 of this subsection, the farm poundage quota

8 shall be considered produced on a farm if the

9 farm poundage quota was not produced on the

10 farm because of drought, flood, or any other

11 natural disaster, or any other condition beyond

12 the control of the producer, as determined by

13 the Secretary.

14 ‘‘(B) LEASE OR RELEASE OF QUOTA.—

15 Such farm poundage quota shall also be consid16 ered produced on a farm if the farm poundage

17 quota was either leased to another owner or op18 erator of a farm within the same county for

19 transfer to such farm for only 1 of the 3 mar20 keting years immediately preceding the market21 ing year for which the determination is being

22 made or the farm poundage quota was released

23 voluntarily under paragraph (7) for only 1 of

24 the 3 marketing years immediately preceding

25 the marketing year for which the determination
78

Title II, Subtitle C

•HR 2530 IH

1 is being made. The farm poundage quota leased

2 or released under this subparagraph shall be

3 considered produced for only 1 of the 3 market4 ing years immediately preceding the marketing

5 year for which the determination is being made.

6 The farm shall not receive considered produced

7 credit for more than 1 marketing year out of

8 the 3 immediately preceding marketing years

9 under the options in this subparagraph.’’.

10 (e) ALLOCATION OF QUOTAS REDUCED OR RE11 LEASED TO FARMS WITHOUT QUOTAS.—Subsection

12 (b)(6) of such section is amended to read as follows:

13 ‘‘(6) ALLOCATION OF QUOTAS REDUCED OR RE14 LEASED.—

15 ‘‘(A) IN GENERAL.—The total quantity of

16 the farm poundage quotas reduced or volun17 tarily released from farms in a State for any

18 marketing year under paragraphs 3 and (5)

19 shall be allocated under subparagraph (B), as

20 the Secretary may by regulation prescribe, to

21 other farms in the State on which peanuts were

22 produced in at least 2 of the 3 crop years im23 mediately preceding the year for which the allo24 cation is being made.
79

Title II, Subtitle C

•HR 2530 IH

1 ‘‘(B) SET-ASIDE FOR FARMS WITH NO

2 QUOTA.—The total amount of farm poundage

3 quota to be allocated in the State under sub4 paragraph (A) shall be allocated to farms in the

5 State for which no farm poundage quota was

6 established for the immediately preceding year’s

7 crop. The allocation to any such farm shall not

8 exceed the average farm production of peanuts

9 for the 3 immediately preceding years during

10 which peanuts were produced on the farm. Any

11 farm quota pounds remaining after allocation to

12 farms under this subparagraph shall be allo13 cated to farms in the State on which poundage

14 quotas were established for the immediately

15 preceding crop year.’’.

16 (f) TRANSFER OF ADDITIONAL PEANUTS.—Sub17 section (b) of such section is amended by striking para18 graphs (8) and (9) and inserting the following new para19 graph:

20 ‘‘(8) TRANSFER OF ADDITIONAL PEANUTS.—

21 Additional peanuts on a farm from which the quota

22 poundage was not harvested and marketed may be

23 transferred to the quota loan pool for pricing pur24 poses on such basis as the Secretary shall by regula25 tion provide, except that the poundage of such pea-
80

Title II, Subtitle C

•HR 2530 IH

1 nuts so transferred shall not exceed the difference in

2 the total peanuts meeting quality requirements for

3 domestic edible use as determined by the Secretary

4 marketed from the farm and the total farm pound5 age quota, excluding quota pounds transferred to the

6 farm in the fall. Peanuts transferred under this

7 paragraph shall be supported at a total of not less

8 than 70 percent of the quota support rate for the

9 marketing years in which such transfers occur and

10 such transfers for a farm shall not exceed 25 per11 cent of the total farm quota pounds, excluding

12 pounds transferred in the fall.’’.

13 SEC. 2303. SALE, LEASE, OR TRANSFER OF FARM POUND14 AGE QUOTA.

15 (a) TRANSFERS AUTHORIZED UNDER CERTAIN CIR16 CUMSTANCES.—Subsection (a) of section 358b of the Ag17 ricultural Adjustment Act of 1938 (7 U.S.C. 1358b) is

18 amended—

19 (1) in paragraph (1)—

20 (A) by striking ‘‘(including any applicable

21 under marketings)’’ both places it appears;

22 (B) in subparagraph (A), by striking

23 ‘‘undermarketings and’’; and

24 (C) by adding at the end the following new

25 sentences: ‘‘In the case of a fall transfer only,
81

Title II, Subtitle C

•HR 2530 IH

1 poundage quota from a farm may be leased to

2 another owner or operator of a farm within the

3 same county or to another owner or operator of

4 a farm in any other county within the State.

5 Fall transfers of quota pounds shall not affect

6 the farm quota history for the transferring or

7 receiving farm and shall not result in reducing

8 the farm poundage quota on the transferring

9 farm.’’;

10 (2) by striking paragraph (2) and inserting the

11 following new paragraph:

12 ‘‘(2) TRANSFERS TO OTHER SELF-OWNED

13 FARMS.—The owner or operator of a farm may

14 transfer all or any part of the farm poundage quota

15 for the farm to any other farm owned or controlled

16 by the owner or operator that is in the same county

17 or any other county within the same State and that

18 had a farm poundage quota for the preceding crop

19 year, if both the transferring and the receiving

20 farms were under the control of the owner or opera21 tor for at least 3 crop years prior to the crop year

22 in which the farm poundage quota is transferred.

23 Any farm poundage quota transferred under this

24 paragraph shall not result in any reduction in the

25 farm poundage quota for the transferring farm if
82

Title II, Subtitle C

•HR 2530 IH

1 sufficient acreage is planted on the receiving farm to

2 produce the quota pounds transferred.’’;

3 (3) in paragraph (3), by striking ‘‘(including

4 any applicable undermarketings)’’; and

5 (4) by adding at the end the following new

6 paragraph:

7 ‘‘(4) TRANSFERS BY SALE IN STATES HAVING

8 QUOTAS OF 10,000 TONS OR MORE.—Subject to such

9 terms and conditions as the Secretary may prescribe,

10 the owner, or operator with permission of the owner,

11 of any farm for which a farm quota has been estab12 lished and which is located in a State having a quota

13 of 10,000 tons or more may sell poundage quota to

14 any other eligible owner or operator of a farm within

15 the same State. The Secretary shall ensure that no

16 more than 15 percent of the total poundage quota

17 within a county as of January 1, 1996, is sold and

18 transferred in 1996 under this paragraph and that

19 no more than 5 percent of the quota pounds remain20 ing in a county as of January 1 in each of the next

21 4 years are sold and transferred in any such year.

22 Notwithstanding any other provision of this para23 graph, no more than 30 percent of the total pound24 age quota within a county may be sold and trans25 ferred. Quota pounds sold and transferred under
83

Title II, Subtitle C

•HR 2530 IH

1 this paragraph may not be leased or sold from the

2 farm to which transferred to another farm owner or

3 operator within the same State for a period of 5

4 years following the original transfer to the farm.’’.

5 (b) CONDITIONS.—Subsection (b) of such section is

6 amended—

7 (1) in paragraph (1), by inserting before the pe8 riod at the end the following: ‘‘, except that no such

9 agreement shall be necessary in the event of fall

10 lease, if the operator had the lienholder’s agreement

11 for a previous spring cash lease’’; and

12 (2) by striking paragraph (3) and inserting the

13 following new paragraph:

14 ‘‘(3) RECORD.—No transfer of the farm pound15 age quota shall be effective until a record thereof is

16 filed with the county committees of the counties

17 from which transferred and to which transferred and

18 the committees determine that the transfer complies

19 with this section.’’.

20 SEC. 2304. PENALTY FOR REENTRY OF EXPORTED PEANUT

21 PRODUCTS.

22 Section 358e(d)(6)(A) of the Agricultural Adjust23 ment Act of 1938 (7 U.S.C. 1359a(d)(6)(A)) is amended

24 by inserting ‘‘or peanut products manufactured from addi25 tional peanuts’’ after ‘‘any additional peanuts’’.
84

Title II, Subtitle C

•HR 2530 IH

1 SEC. 2305. PRICE SUPPORT PROGRAM FOR PEANUTS.

2 (a) SUPPORT RATES.—Subsection (a)(2) Section

3 108B of the Agricultural Act of 1949 (7 U.S.C. 1445c–

4 3) is amended—

5 (1) by striking ‘‘any increase’’ and inserting

6 ‘‘any increase or decrease’’; and

7 (2) by striking ‘‘, except that’’ and all that fol8 lows through ‘‘preceding crop’’ and inserting the fol9 lowing: ‘‘In no event shall the national average quota

10 support rate be increased by more than 5 percent of

11 the national average quota support rate for the pre12 ceding crop. In no event shall the national average

13 quota support rate be decreased by more than 5 per14 cent of the national average quota support rate for

15 the preceding crop.’’.

16 (b) SPECIAL RULE REGARDING NEW MEXICO

17 POOLS.—Subsection (c)(2)(A) of such section is amended

18 by inserting after the first sentence the following new sen19 tence: ‘‘Peanuts physically produced outside the State of

20 New Mexico shall not be eligible for entry into or partici21 pation in the New Mexico pools even though the farm on

22 which the peanuts are produced is considered to be a New

23 Mexican farm for administrative purposes.’’.

24 (c) LOSSES IN AREA QUOTA POOLS.—Subsection

25 (d)(2) of such section is amended—
85

Title II, Subtitle C

•HR 2530 IH

1 (1) by redesignating subparagraph (B) as sub2 paragraph (D);

3 (2) by inserting after subparagraph (A) the fol4 lowing new paragraphs:

5 ‘‘(B) REDUCTION OF GAINS OF OTHER

6 PRODUCERS IN SAME POOL.—If use of the au7 thority provided in subparagraph (A) is not suf8 ficient to cover losses in an area quota pool, the

9 additional losses shall be offset by reducing the

10 gain of any producer in such pool by the

11 amount of pool gains attributed to the same

12 producer from the sale of additional peanuts for

13 domestic and export edible use.

14 ‘‘(C) USE OF MARKETING ASSESSMENTS.—

15 If use of the authority provided in subpara16 graphs (A) and (B) is not sufficient to cover

17 losses in area quota pools, the Secretary shall

18 use funds collected under subsection (g) to off19 set such losses. At the end of each year, the

20 Secretary shall deposit in the Treasury those

21 funds collected under subsection (g) that the

22 Secretary determines are not required to cover

23 losses in area quota pools for that year.’’; and

24 (3) in subparagraph (D), as redesignated by

25 paragraph (1), by adding at the end the following
86

Title II, Subtitle C

•HR 2530 IH

1 new sentence: ‘‘This subparagraph shall apply only

2 to the extent that use of the authority provided in

3 subparagraphs (A), (B), and (C) is not sufficient to

4 cover losses in an area quota pool.’’.

5 (d) COMPLIANCE WITH QUALITY STANDARDS.—Sub6 section (f)(2) of such section is amended to read as fol7 lows:

8 ‘‘(2) EXPORTS AND OTHER PEANUTS.—The

9 Secretary shall require that all peanuts in the do10 mestic market, including peanuts imported into the

11 United States, meet all United States quality stand12 ards under Marketing Agreement No. 146 and that

13 importers of such peanuts fully comply with inspec14 tion, handling, storage, and processing requirements

15 implemented under Marketing Agreement No. 146.

16 The Secretary shall ensure that peanuts produced

17 for the export market meet quality, inspection, han18 dling, storage, and processing requirements under

19 Marketing Agreement No. 146.’’.

20 (e) ASSESSMENT RATES.—Subsection (g) of such

21 section is amended—

22 (1) in paragraph (1), by striking ‘‘1.15 per23 cent’’ the first place it appears and all that follows

24 through the period at the end of such paragraph and

25 inserting ‘‘and 1.2 percent for the 1996 through
87

Title II, Subtitle C

•HR 2530 IH

1 2002 crops, of the applicable support rate under this

2 subsection.’’;

3 (2) in paragraph (2)(A)(i)—

4 (A) by inserting ‘‘and’’ at the end of

5 subclause (II); and

6 (B) by striking subclauses (III) and (IV)

7 and inserting the following new subclause:

8 ‘‘(III) in the case of each of the

9 1996 through 2002 crops, .6 percent

10 of the applicable national average sup11 port rate;’’; and

12 (3) in paragraph (2)(A)(ii)—

13 (A) by striking ‘‘and’’ at the end of

14 subclause (I);

15 (B) in subclause (II), by striking ‘‘through

16 1997 crops’’ and inserting ‘‘and 1995 crops’’;

17 and

18 (C) by adding at the end the following new

19 subclause:

20 ‘‘(III) in the case of each of the

21 1996 through 2002 crops, .6 percent

22 of the applicable national average sup23 port rate; and’’.

24 (f) ASSESSMENT ON IMPORTS.—Subsection (g) of

25 such section is further amended—
88

Title II, Subtitle C

•HR 2530 IH

1 (1) by redesignating paragraphs (3), (4), (5),

2 and (6) as paragraphs (4), (5), (6), and (7), respec3 tively; and

4 (2) by inserting after paragraph (2) the follow5 ing new paragraph:

6 ‘‘(3) IMPORTS.—Each importer of peanuts pro7 duced outside of the United States and imported

8 into the United States after the date of the enact9 ment of this paragraph shall remit to the Commod10 ity Credit Corporation a nonrefundable marketing

11 assessment in an amount equal to the product ob12 tained by multiplying the number of pounds of pea13 nuts imported by the importer by 1.2 percent of the

14 national average support rate for additional pea15 nuts.’’.

16 SEC. 2306. REFERENDUM REGARDING POUNDAGE QUOTAS.

17 Section 358–1(d) of the Agricultural Adjustment Act

18 of 1938 (7 U.S.C. 13581(d)) is amended by striking para19 graph (1) and inserting the following new paragraph:

20 ‘‘(1) IN GENERAL.—Each calendar year, the

21 Secretary shall conduct a referendum of producers

22 engaged in the production of quota peanuts in the

23 calendar year in which the referendum is held to de24 termine whether the producers are in favor of or op25 posed to poundage quotas with respect to the crops
89

Title II, Subtitle C

•HR 2530 IH

1 of peanuts produced in the seven calendar years im2 mediately following the year in which the referen3 dum is held, except that, if as many as two-thirds

4 of the producers voting in any referendum vote in

5 favor of poundage quotas, no referendum shall be

6 held with respect to quotas for the next six years of

7 the period. In the case of the referendum required

8 in 1995, the Secretary shall conduct the referendum

9 as soon as practicable after the date of the enact10 ment of the Agricultural Reconciliation Act of 1995.

11 In the case of any referendum required in calendar

12 years 1996 through 2002, the Secretary shall con13 duct the referendum not later than December 15 of

14 the calendar year in which the referendum is re15 quired.’’.

16 SEC. 2307. REGULATIONS.

17 The Secretary of Agriculture shall issue such regula18 tions as are necessary to carry out this title and the

19 amendments made by this title. In issuing the regulations,

20 the Secretary—

21 (1) is encouraged to comply with subchapter II

22 of chapter 5 of title 5, United States Code;

23 (2) shall provide public notice through the Fed24 eral Register of any such proposed regulations; and
90

Title II, Subtitle D

•HR 2530 IH

1 (3) shall allow adequate time for written public

2 comment prior to the formulation and issuance of

3 any final regulations.

4 Subtitle D—Tobacco

5 SEC. 2401. ELIMINATION OF FEDERAL BUDGETARY OUT6 LAYS FOR TOBACCO PROGRAMS.

7 Section 106(g)(1) of the Agricultural Act of 1949 (7

8 U.S.C. 1445(g)(1)) is amended—

9 (1) by striking ‘‘1998’’ and inserting ‘‘2002’’;

10 and

11 (2) by inserting after ‘‘equal to’’ the following:

12 ‘‘a pro rata share of the total amount of the costs

13 of other Department of Agriculture programs related

14 to tobacco production or processing that are not re15 quired to be covered by user fees or by contributions

16 or assessments under section 106A(d)(1) or

17 106B(d)(1), but in no event less than’’.

18 SEC. 2402. ESTABLISHMENT OF FARM YIELD FOR FLUE19 CURED TOBACCO BASED ON INDIVIDUAL

20 FARM PRODUCTION HISTORY.

21 (a) METHOD OF DETERMINING FARM ACREAGE AL22 LOTMENTS.—Subsection (a) of section 317 of the Agricul23 tural Adjustment Act of 1938 (7 U.S.C. 1314c) is amend24 ed by striking paragraphs (2) through (8) and inserting

25 the following new paragraphs:
91

Title II, Subtitle D

•HR 2530 IH

1 ‘‘(2) FARM ACREAGE ALLOTMENTS.—The term

2 ‘farm acreage allotment’ for a tobacco farm, other

3 than a new tobacco farm, means the acreage allot4 ment determined by dividing the farm marketing

5 quota by the farm yield.

6 ‘‘(3) FARM YIELD.—The term ‘farm yield’

7 means the yield per acre for a farm determined ac8 cording to regulations issued by the Secretary and

9 which would be expected to result in a quality of to10 bacco acceptable to the tobacco trade.

11 ‘‘(4) FARM MARKETING QUOTA.—

12 ‘‘(A) IN GENERAL.—The term ‘farm mar13 keting quota’ for a farm for a marketing year

14 means a number that is equal to the number of

15 pounds of tobacco determined by multiplying—

16 ‘‘(i) the farm marketing quota for the

17 farm for the previous marketing year

18 (prior to any adjustment for

19 undermarketing or overmarketing); by

20 ‘‘(ii) the national factor.

21 ‘‘(B) ADJUSTMENT.—The farm marketing

22 quota determined under subparagraph (A) for a

23 marketing year shall be increased for

24 undermarketing or decreased for overmarketing

25 by the number of pounds by which marketings
92

Title II, Subtitle D

•HR 2530 IH

1 of tobacco from the farm during the immediate

2 preceding marketing year (if marketing quotas

3 were in effect for that year under the program

4 established by this section) is less than or ex5 ceeds the farm marketing quota for such year.

6 Notwithstanding the preceding sentence, the

7 farm marketing quota for a marketing year

8 shall not be increased under this subparagraph

9 for undermarketing by an amount in excess of

10 the farm marketing quota determined for the

11 farm for the immediately preceding year prior

12 to any increase for undermarketing or decrease

13 for overmarketing. If due to excess marketing

14 in the preceding marketing year, the farm mar15 keting quota for the marketing year is reduced

16 to zero pounds without reflecting the entire re17 duction required, the additional reduction shall

18 be made for the subsequent marketing year or

19 years.

20 ‘‘(5) NATIONAL FACTOR.—The term ‘national

21 factor’ for a marketing year means a number ob22 tained by dividing—

23 ‘‘(A) the national marketing quota (less

24 the reserve provided for under subsection (e));

25 by
93

Title II, Subtitle D

•HR 2530 IH

1 ‘‘(B) the sum of the farm marketing

2 quotas (prior to any adjustments for

3 undermarketing or overmarketing) for the im4 mediate preceding marketing year for all farms

5 for which marketing quotas for the kind of to6 bacco involved will be determined for such suc7 ceeding marketing year.’’.

8 (b) CONFORMING AMENDMENTS.—Such section is

9 further amended—

10 (1) in the first sentence of subsection (b), by

11 striking ‘‘and the national acreage allotment and na12 tional average yield goal for the 1965 crop of Flue13 cured tobacco,’’;

14 (2) in the first sentence of subsection (c), by

15 striking ‘‘and at the same time announce the na16 tional acreage allotment and national average yield

17 goal’’;

18 (3) in subsection (d)—

19 (A) in the sixth sentence, by striking ‘‘, na20 tional acreage allotment, and national average

21 yield goal’’;

22 (B) in the eighth sentence, by striking ‘‘,

23 national acreage allotment and national average

24 yield goal’’; and
94

Title II, Subtitle D

•HR 2530 IH

1 (C) in the ninth sentence, by striking ‘‘,

2 national acreage allotment, and national aver3 age goal are’’ and inserting ‘‘is’’;

4 (4) in subsection (e)—

5 (A) in the first sentence, by striking ‘‘No

6 farm acreage allotment or farm yield shall be

7 established’’ and inserting ‘‘A farm marketing

8 quota and farm yield shall not be established’’;

9 (B) in the second sentence, by striking

10 ‘‘acreage allotment’’ both places it appears and

11 inserting ‘‘marketing quota’’;

12 (C) in the second sentence, by striking

13 ‘‘acreage allotments’’ both places it appears and

14 inserting ‘‘marketing quotas’’; and

15 (D) in the last sentence, by striking ‘‘acre16 age allotment’’ and inserting ‘‘marketing

17 quota’’; and

18 (5) in subsection (g)—

19 (A) in paragraph (1), by striking ‘‘para20 graph (a)(8)’’ and inserting ‘‘subsection

21 (a)(4)’’; and

22 (B) in paragraph (3), by striking ‘‘sub23 section (a)(8)’’ and inserting ‘‘subsection

24 (a)(4)’’.
95

Title II, Subtitle D

•HR 2530 IH

1 (c) FARM MARKETING QUOTA REDUCTIONS.—Sub2 section (f) of such section is amended to read as follows:

3 ‘‘(f) CAUSES FOR FARM MARKETING QUOTA REDUC4 TION.—(1) When an acreage-poundage program is in ef5 fect for any kind of tobacco under this section, the farm

6 marketing quota next established for a farm shall be re7 duced by the amount of such kind of tobacco produced

8 on the farm—

9 ‘‘(A) which was marketed as having been pro10 duced on a different farm;

11 ‘‘(B) for which proof of disposition is not fur12 nished as required by the Secretary;

13 ‘‘(C) on acreage equal to the difference between

14 the acreage reported by the farm operator or a duly

15 authorized representative and the determined acre16 age for the farm; and

17 ‘‘(D) as to which any producer on the farm

18 filed, or aids, or acquiesces, in the filing of any false

19 report with respect to the production or marketing

20 of tobacco.

21 ‘‘(2) If the Secretary, through the local committee,

22 find that no person connected with a farm caused, aided,

23 or acquiesced in any irregularity described in paragraph

24 (1), the next established farm marketing quota shall not

25 be reduced under this subsection.
96

Title II, Subtitle D

•HR 2530 IH

1 ‘‘(3) The reduction required under this subsection

2 shall be in addition to any other adjustments made pursu3 ant to this section.

4 ‘‘(4) In establishing farm marketing quotas for other

5 farms owned by the owner displaced by acquisition of the

6 owner’s land by any agency, as provided in section 378

7 of this Act, increases or decreases in such farm marketing

8 quotas as provided in this section shall be made on ac9 count of marketings below or in excess of the farm mar10 keting quotas for the farm acquired by the agency.

11 ‘‘(5) Acreage allotments and farm marketing quotas

12 determined under this section may (except in the case of

13 kinds of tobacco not subject to section 316) be leased and

14 sold under the terms and conditions in section 316 of this

15 Act, except that any credit for undermarketing or charge

16 for overmarketing shall be attributed to the farm to which

17 transferred.’’.

18 (d) EFFECT OF AMENDMENTS ON CURRENT TO19 BACCO CROP.—Section 317 of the Agricultural Adjust20 ment Act of 1938 (7 U.S.C. 1314c), as in effect on the

21 day before the date of the enactment of this Act, shall

22 continue to apply with respect to the 1995 crop of Flue23 cured tobacco.
97

Title II, Subtitle D

•HR 2530 IH

1 SEC. 2403. REMOVAL OF FARM RECONSTITUTION EXCEP2 TION FOR BURLEY TOBACCO.

3 Section 379(a)(6) of the Agricultural Adjustment Act

4 of 1938 (7 U.S.C. 1379(a)(6)) is amended by striking ‘‘,

5 but this clause (6) shall not be applicable in the case of

6 burley tobacco’’.

7 SEC. 2404. REDUCTION IN PERCENTAGE THRESHOLD FOR

8 TRANSFER OF FLUE-CURED TOBACCO QUOTA

9 IN CASES OF DISASTER.

10 The second subsection (h) in section 316 of the Agri11 cultural Adjustment Act of 1938 (7 U.S.C. 1314b) is

12 amended by striking ‘‘90 percent’’ in paragraph (1)(A)

13 and inserting ‘‘80 percent’’.

14 SEC. 2405. EXPANSION OF TYPES OF TOBACCO SUBJECT TO

15 NO NET COST ASSESSMENT.

16 (a) NO NET COST TOBACCO FUND.—Section

17 106A(d)(1)(A) of the Agricultural Act of 1949 (7 U.S.C.

18 1445–1(d)(1)(A)) is amended—

19 (1) in clause (ii), by inserting after ‘‘Burley

20 quota tobacco’’ the following: ‘‘and cigar-type quota

21 tobacco’’; and

22 (2) in clause (iii)—

23 (A) in the matter preceding the subclauses,

24 by striking ‘‘Flue-cured or Burley tobacco’’ and

25 inserting ‘‘each kind of tobacco for which price
98

Title II, Subtitle D

•HR 2530 IH

1 support is made available under this Act, and

2 each kind of like tobacco,’’; and

3 (B) by striking subclause (II) and insert4 ing the following new subclause:

5 ‘‘(II) the sum of the amount of the

6 per pound producer contribution and pur7 chaser assessment (if any) for such kind of

8 tobacco payable under clauses (i) and (ii);

9 and’’.

10 (b) NO NET COST TOBACCO ACCOUNT.—Section

11 106B(d)(1) of the Agricultural Act of 1949 (7 U.S.C.

12 1445–2(d)(1)) is amended—

13 (1) in subparagraph (B), by inserting after

14 ‘‘Burley quota tobacco’’ the following: ‘‘and cigar15 type quota tobacco’’; and

16 (2) in subparagraph (C), by striking ‘‘Flue17 cured and Burley tobacco’’ and inserting ‘‘each kind

18 of tobacco for which price support is made available

19 under this Act, and each kind of like tobacco,’’.

20 (c) EFFECTIVE DATE.—The amendments made by

21 this section shall take effect 60 days after the date of the

22 enactment of this Act.
99

Title II, Subtitle D

•HR 2530 IH

1 SEC. 2406. REPEAL OF REPORTING REQUIREMENTS RELAT2 ING TO EXPORT OF TOBACCO.

3 Section 214 of the Tobacco Adjustment Act of 1983

4 (7 U.S.C. 509) is repealed.

5 SEC. 2407. REPEAL OF LIMITATION ON REDUCING NA6 TIONAL MARKETING QUOTA FOR FLUE7 CURED AND BURLEY TOBACCO.

8 (a) FLUE-CURED TOBACCO.—Section 317(a)(1) of

9 the Agricultural Adjustment Act of 1938 (7 U.S.C.

10 1314c(a)(1)) is amended by striking subparagraph (C).

11 (b) BURLEY TOBACCO.—Section 319(c)(3) of the Ag12 ricultural Adjustment Act of 1938 (7 U.S.C. 1314e(c)(3))

13 is amended by striking subparagraph (C).

14 SEC. 2408. APPLICATION OF CIVIL PENALTIES UNDER TO15 BACCO INSPECTION ACT.

16 Section 12 of the Tobacco Inspection Act (7 U.S.C.

17 511k) is amended—

18 (1) by inserting ‘‘(a) FINE FOR VIOLA19 TIONS.—’’ after ‘‘That any person’’; and

20 (2) by adding at the end the following new sub21 sections:

22 ‘‘(b) JURISDICTION.—The district courts of the

23 United States are vested with jurisdiction specifically to

24 enforce, and to prevent and restrain any person from vio25 lating, any rule or regulation issued under this Act.
100

Title II, Subtitle D

•HR 2530 IH

1 ‘‘(c) REFERRAL TO ATTORNEY GENERAL.—A civil

2 action authorized to be commenced under this section shall

3 be referred to the Attorney General for appropriate action,

4 except that the Secretary shall not be required to refer

5 to the Attorney General a violation of this Act, if the Sec6 retary believes that the administration and enforcement

7 of this Act would be adequately served by providing a suit8 able written notice or warning to the person who commit9 ted such violation or administrative action.

10 ‘‘(d) CIVIL PENALTIES AND ORDERS.—

11 ‘‘(1) CIVIL PENALTIES.—Any person who will12 fully violates any provision of this Act or any of the

13 regulations issued by the Secretary under this Act

14 may be assessed a civil penalty by the Secretary of

15 not less than $500 or more than $5,000 for each

16 such violation. Each violation shall be a separate of17 fense.

18 ‘‘(2) CEASE AND DESIST ORDERS.—In addition

19 to, or in lieu of, a civil penalty under paragraph (1),

20 the Secretary may issue an order requiring a person

21 to cease and desist from continuing any such viola22 tion.

23 ‘‘(3) NOTICE AND HEARING.—No penalty shall

24 be assessed or cease-and-desist order issued by the

25 Secretary under this subsection unless the person
101

Title II, Subtitle D

•HR 2530 IH

1 against whom the penalty is assessed or the order is

2 issued is given notice and opportunity for a hearing

3 before the Secretary with respect to such violation.

4 ‘‘(4) FINALITY.—The order of the Secretary as5 sessing a penalty or imposing a cease-and-desist

6 order under this subsection shall be final and conclu7 sive unless the affected person files an appeal of the

8 Secretary’s order with the appropriate district court

9 of the United States, in accordance with subsection

10 (e).

11 ‘‘(e) REVIEW BY DISTRICT COURT.—

12 ‘‘(1) COMMENCEMENT OF ACTION.—Any person

13 who has been determined to be in violation of this

14 Act, or against whom a civil penalty has been as15 sessed or a cease-and-desist order issued under sub16 section (d), may obtain review of the penalty or

17 order—

18 ‘‘(A) by filing, within the 30-day period be19 ginning on the date the penalty is assessed or

20 order issued, a notice of appeal in—

21 ‘‘(i) the district court of the United

22 States for the district in which the person

23 resides or conducts business; or

24 ‘‘(ii) the United States District Court

25 for the District of Columbia; and
102

Title II, Subtitle D

•HR 2530 IH

1 ‘‘(B) by sending, within the same period, a

2 copy of such notice by certified mail to the Sec3 retary.

4 ‘‘(2) RECORD.—The Secretary shall file

5 promptly in the appropriate court referred to in

6 paragraph (1), a certified copy of the record on

7 which the Secretary has determined that the person

8 had committed a violation.

9 ‘‘(3) STANDARD OF REVIEW.—A finding of the

10 Secretary under this section shall be set aside only

11 if such finding is found to be unsupported by sub12 stantial evidence.

13 ‘‘(f) FAILURE TO OBEY ORDERS.—Any person who

14 fails to obey a cease-and-desist order under this section

15 after such order has become final and unappealable, or

16 after the appropriate United States district court has en17 tered a final judgment in favor of the Secretary, shall be

18 subject to a civil penalty assessed by the Secretary, after

19 opportunity for hearing and for a judicial review under

20 the procedures specified in subsection (e), of not more

21 than $500 for each offense. Each day during which such

22 failure continues shall be considered as a separate viola23 tion of such order.

24 ‘‘(g) FAILURE TO PAY PENALTIES.—If any person

25 fails to pay an assessment of a civil penalty under this
103

Title II, Subtitle D

•HR 2530 IH

1 section after it has become a final and unappealable order,

2 or after the appropriate United States district court has

3 entered final judgment in favor of the Secretary, the Sec4 retary shall refer the matter to the Attorney General for

5 recovery of the amount assessed in the district court of

6 the United States for the district in which the person re7 sides or conducts business. In such action, the validity and

8 appropriateness of the final order imposing the civil pen9 alty shall not be subject to review.

10 ‘‘(h) ADDITIONAL REMEDIES.—The remedies pro11 vided in this section shall be in addition to, and not exclu12 sive of, other remedies that may be available.’’.

13 SEC. 2409. TRANSFERS OF QUOTA OR ALLOTMENT ACROSS

14 COUNTY LINES IN A STATE.

15 (a) TRANSFERS ALLOWED BY REFERENDUM.—

16 (1) FLUE-CURED TOBACCO.—Section 316(g) of

17 the Agricultural Adjustment Act of 1938 (7 U.S.C.

18 1314b(g)) is amended by adding at the end the fol19 lowing:

20 ‘‘(3) Notwithstanding paragraph (1), the Secretary

21 may permit the sale of a Flue-cured tobacco allotment or

22 quota from one farm in a State to any other farm in the

23 State if a majority of active Flue-cured tobacco producers

24 within the State approve of such sales by a state-wide ref25 erendum to be conducted by the Secretary.’’.
104

Title II, Subtitle D

•HR 2530 IH

1 (2) OTHER TOBACCO.—Section 318(b) of such

2 Act (7 U.S.C. 1314d(b)) is amended in the proviso

3 by inserting after ‘‘same State’’ the following: ‘‘and,

4 in the case of other kinds of tobacco, any such

5 transfer may be made to a farm in another county

6 in the same State if transfers of such type are ap7 proved by a majority of the active producers of that

8 kind of tobacco in the State who vote in a referen9 dum held on the subject’’.

10 (3) BURLEY TOBACCO.—Section 319(l) of such

11 Act (7 U.S.C. 1314e(l)) is amended by striking the

12 last sentence.

13 (b) SAME GROWER IN CONTIGUOUS COUNTIES.—

14 Section 379(b) of such Act (7 U.S.C. 1379(b)) is amended

15 by striking ‘‘Burley tobacco poundage quota’’ and insert16 ing ‘‘tobacco quota or allotment’’.

17 SEC. 2410. CALCULATION OF NATIONAL MARKETING

18 QUOTA.

19 (a) FLUE-CURED TOBACCO.—Section

20 317(a)(1)(B)(ii) of the Agricultural Adjustment Act of

21 1938 (7 U.S.C. 1314c(a)(1)(B)(ii)) is amended by insert22 ing before the semicolon the following: ‘‘, but excluding

23 any exports of unmanufactured tobacco counted under

24 clause (i)’’.
105

Title II, Subtitle D

•HR 2530 IH

1 (b) BURLEY TOBACCO.—Section 319(c)(3)(A)(ii) of

2 such Act (7 U.S.C. 1314e(l)) is amended by inserting be3 fore the semicolon the following: ‘‘, but excluding any ex4 ports of unmanufactured tobacco counted under clause

5 (i)’’.

6 (c) APPLICATION OF AMENDMENTS.—The amend7 ments made by this section shall apply with respect to the

8 1996 and subsequent crops of Flue-cured and Burley to9 bacco.

10 SEC. 2411. CLARIFICATION OF AUTHORITY TO ACCESS

11 CIVIL MONEY PENALTIES.

12 Section 314 of the Agricultural Adjustment Act of

13 1938 (7 U.S.C. 1314) is amended—

14 (1) by redesignating subsection (c) as sub15 section (d); and

16 (2) by inserting after subsection (b) the follow17 ing new subsection:

18 ‘‘(c) The failure by a person to comply with regula19 tions issued by the Secretary governing the marketing,

20 disposition, or handling of tobacco under this part shall

21 subject the person to a penalty at the rate provided in

22 subsection (a).’’.
106

Title II, Subtitle D

•HR 2530 IH

1 SEC. 2412. LEASE AND TRANSFER OF FARM MARKETING

2 QUOTAS FOR BURLEY TOBACCO.

3 Section 319(g) of the Agricultural Adjustment Act of

4 1938 (7 U.S.C. 1314e(g)) is amended—

5 (1) in paragraph (1), by striking ‘‘July 1’’ each

6 place it appears and inserting ‘‘September 1’’; and

7 (2) in paragraph (3)—

8 (A) by striking ‘‘within the three imme9 diately preceding crop years’’ in the first sen10 tence and inserting ‘‘during the current crop

11 year or either of the two immediately preceding

12 crop years’’; and

13 (B) by striking ‘‘July 1’’ in the second sen14 tence and inserting ‘‘September 1’’.

15 SEC. 2413. LIMITATION ON TRANSFER OF ACREAGE ALLOT16 MENTS OF OTHER TOBACCO.

17 Section 318(g) of the Agricultural Adjustment Act of

18 1938 (7 U.S.C. 1314d(g)) is amended by striking ‘‘ten

19 acres’’ and inserting ‘‘20 acres’’.

20 SEC. 2414. GOOD FAITH RELIANCE ON ACTIONS OR ADVICE

21 OF DEPARTMENT REPRESENTATIVES.

22 The Agricultural Adjustment Act of 1938 is amended

23 by inserting after section 314A (7 U.S.C. 1314–1) the fol24 lowing new section:
107

Title II, Subtitle D

•HR 2530 IH

1 ‘‘SEC. 315. GOOD FAITH RELIANCE ON ACTIONS OR ADVICE

2 OF DEPARTMENT REPRESENTATIVES.

3 ‘‘Notwithstanding any other provision of law, the per4 formance rendered in good faith by a person in good faith

5 in reliance upon action or advice of an authorized rep6 resentative of the Secretary may be accepted as meeting

7 the requirements of this part.’’.

8 SEC. 2415. UNIFORM FORFEITURE DATES FOR FLUE-CURED

9 AND BURLEY TOBACCO.

10 (a) SALE OR FORFEITURE OF FLUE-CURED TO11 BACCO ALLOTMENT OR QUOTA.—The first subsection (h)

12 of section 316 of the Agricultural Adjustment Act of 1938

13 (7 U.S.C. 1314b) is amended—

14 (1) in paragraph (1), by striking ‘‘before the

15 expiration of the eighteen month period beginning on

16 July 1 of the year in which such crop is planted’’

17 and inserting ‘‘before February 15 of the year after

18 the end of the marketing year for the planted crop’’;

19 and

20 (2) in paragraph (2), by striking ‘‘July 1’’ and

21 inserting ‘‘February 15’’.

22 (b) MANDATORY SALE OF FLUE-CURED TOBACCO

23 ALLOTMENT OR QUOTA.—Section 316A of such Act (7

24 U.S.C. 1314b–1) is amended—
108

Title II, Subtitle D

•HR 2530 IH

1 (1) in subsection (a), by striking ‘‘December 1

2 of the year’’ and inserting ‘‘February 15 of the

3 year’’; and

4 (2) in subsection (b), by striking ‘‘July 1’’ and

5 inserting ‘‘February 15’’.

6 (c) MANDATORY SALE OF BURLEY TOBACCO ALLOT7 MENT OR QUOTA.—Section 316B of such Act (7 U.S.C.

8 1314b–2) is amended—

9 (1) in subsection (a), by striking ‘‘December 1

10 of the year’’ and inserting ‘‘February 15 of the

11 year’’; and

12 (2) in subsection (c)(1), by striking ‘‘before the

13 expiration of the eighteen month period beginning on

14 July 1 of the year in which such crop is planted’’

15 and inserting ‘‘before February 15 of the year after

16 the end of the marketing year for the planted crop’’.

17 SEC. 2416. SALE OF BURLEY AND FLUE-CURED TOBACCO

18 MARKETING QUOTAS FOR A FARM BY RE19 CENT PURCHASERS.

20 The Agricultural Adjustment Act of 1938 is amended

21 by inserting after section 316B (7 U.S.C. 1314b–2) the

22 following new section:
109

Title II, Subtitle E

•HR 2530 IH

1 ‘‘SEC. 316C. AUTHORITY FOR RECENT PURCHASER OF A

2 FARM TO SELL BURLEY TOBACCO OR FLUE3 CURED TOBACCO MARKETING QUOTAS FOR

4 THE FARM.

5 ‘‘A new owner of a farm that has purchase history

6 of Burley tobacco or Flue-cured tobacco may sell the pur7 chased tobacco quota notwithstanding any limitations on

8 such a sale contained in this part if the sale is completed

9 not later than one year after the purchase date of the

10 farm.’’.

11 Subtitle E—Planting Flexibility

12 SEC. 2501. DEFINITIONS.

13 Section 502 of the Agricultural Act of 1949 (7 U.S.C.

14 1462) is amended by adding at the end the following:

15 ‘‘(4) ACREAGE CONSERVATION RESERVE, RE16 DUCED ACREAGE.—The terms ‘acreage conservation

17 reserve’ and ‘reduced acreage’ mean the number of

18 acres on a farm to be devoted to conservation uses

19 on the farm, which must be protected from weeds

20 and erosion. Such number shall be determined by

21 multiplying the specific crop acreage base for a crop

22 on the farm by the percentage acreage reduction re23 quired by the Secretary.

24 ‘‘(5) PERMITTED ACREAGE.—The term ‘per25 mitted acreage’ means the crop acreage base for a

26 program crop for the farm less the acreage conserva-
110

Title II, Subtitle E

•HR 2530 IH

1 tion reserve. If an acreage reduction program is not

2 in effect for a program crop, for purposes of admin3 istering this title, the permitted acreage of such a

4 crop on a farm shall be equal to the crop acreage

5 base for the crop for the farm.

6 ‘‘(6) PAYMENT ACREAGE.—The term ‘payment

7 acreage’ means the lesser of—

8 ‘‘(A) the number of acres planted and con9 sidered planted to an eligible crop, as deter10 mined in sections 503(c) and 504(b)(1), for

11 harvest within the permitted acreage; or

12 ‘‘(B) 77 percent of the crop acreage base

13 for the crop for the farm less the acreage con14 servation reserve.

15 ‘‘(7) RESOURCE-CONSERVING CROP.—The term

16 ‘resource-conserving crop’ means legumes, legume17 grass mixtures, legume-small grain mixtures, leg18 ume-grass-small grain mixtures, and experimental

19 and industrial crops, crops planted for special con20 servation practices, biomass production, intensive ro21 tational grazing, and non-legume crops, as deter22 mined by the Secretary, to satisfy program objec23 tives.

24 ‘‘(8) RESOURCE-CONSERVING CROP ROTA25 TION.—The term ‘resource-conserving crop rotation’
111

Title II, Subtitle E

•HR 2530 IH

1 means a crop rotation that includes at least one re2 source-conserving crop and that reduces erosion,

3 maintains or improves soil fertility and tilth, inter4 rupts pest cycles, or conserves water.

5 ‘‘(9) FARMING OPERATIONS AND PRACTICES.—

6 The term ‘farming operations and practices’ means

7 practices which include the integration of crops and

8 crop-plant variety selection, rotation practices, till9 age systems, soil conserving and soil building prac10 tices, nutrient management strategies, biological

11 control and integrated pest management strategies,

12 livestock production and management systems, ani13 mal waste management systems, water and energy

14 conservation measures, and health and safety consid15 erations.

16 ‘‘(10) INTEGRATED FARM MANAGEMENT

17 PLAN.—The term ‘integrated farm management

18 plan’ means a comprehensive, multiyear, site-specific

19 plan that meets the requirements of section 1451 of

20 the Food, Agriculture, Conservation, and Trade Act

21 of 1990 (7 U.S.C. 5822).

22 ‘‘(11) GRASS.—The term ‘grass’ means any pe23 rennial grasses commonly used for haying or graz24 ing.
112

Title II, Subtitle E

•HR 2530 IH

1 ‘‘(12) LEGUME.—The term ‘legume’ means any

2 forage legumes (such as alfalfa or clover) or any leg3 ume grown for use as a forage or green manure, but

4 not including any bean crop from which the seeds

5 are harvested.

6 ‘‘(13) SMALL GRAIN.—The term ‘small grain’

7 does not include malting barley or wheat, except for

8 wheat interplanted with other small grain crops for

9 nonhuman consumption.’’.

10 SEC. 2502. CROP AND TOTAL ACREAGE BASES.

11 Section 503 of the Agricultural Act of 1949 (7 U.S.C.

12 1463) is amended—

13 (1) in the section heading, by inserting ‘‘AND

14 TOTAL’’ after ‘‘CROP’’;

15 (2) at the end of subsection (a), by adding the

16 following new paragraph:

17 ‘‘(4) TOTAL ACREAGE BASE.—The total acreage

18 base for a farm shall equal the sum of the crop acre19 age bases established for program crops on the farm

20 that are enrolled in the acreage reduction programs

21 established by the Secretary.’’;

22 (3) in the heading for subsection (b) by adding

23 ‘‘OF CROP ACREAGE BASES’’ after ‘‘CALCULATION’’;

24 (4) in subsection (b)(2)—

25 (A) by striking ‘‘(A) IN GENERAL’’;
113

Title II, Subtitle E

•HR 2530 IH

1 (B) by striking ‘‘except as provided in sub2 paragraph (B),’’; and

3 (C) by striking subparagraph (B); and

4 (5) in subsection (c)(1), by striking ‘‘reduced

5 acreage’’ and inserting ‘‘acreage conservation re6 serve’’.

7 SEC. 2503. PLANTING FLEXIBILITY.

8 (a) SPECIFIED COMMODITIES.—Subsection (b) of

9 section 504 of the Agricultural Act of 1949 (7 U.S.C.

10 1464) is amended—

11 (1) in paragraph (1)—

12 (A) by striking ‘‘and’’ at the end of sub13 paragraph (D);

14 (B) by redesignating subparagraph (E) as

15 subparagraph (F); and

16 (C) by inserting the following new subpara17 graph after subparagraph (D):

18 ‘‘(E) any cover crop (including mainte19 nance of native cover) and summer fallow

20 which, as determined by the Secretary, will pro21 tect the land from weeds and erosion; and’’;

22 (2) by striking paragraph (2) and inserting the

23 following new paragraph:

24 ‘‘(2) LIMITATIONS ON CROPS.—
114

Title II, Subtitle E

•HR 2530 IH

1 ‘‘(A) IN GENERAL.—For purposes of this

2 section, the Secretary may restrict the planting

3 on a crop acreage base of any crop specified in

4 paragraph (1).

5 ‘‘(B) EFFECT OF ACREAGE REDUCTION

6 PROGRAM.—If an acreage reduction program is

7 in effect for any specific program crop, the Sec8 retary may limit the plantings of the specific

9 program crop for which there is an acreage re10 duction program in effect to no more than the

11 sum of—

12 ‘‘(i) the permitted acreage for the spe13 cific program crop for which there is an

14 acreage reduction program in effect; plus

15 ‘‘(ii) 23 percent of other crop acreage

16 bases which are included in the total acre17 age base for a farm.

18 ‘‘(C) MINIMUM PLANTING.—The Secretary

19 may require that, as a condition for eligibility

20 for loans, deficiency payments and any other

21 program benefits authorized by this Act, a min22 imum percentage not to exceed 50 percent of a

23 specific permitted acreage, be planted to the

24 specific program crop.’’; and
115

Title II, Subtitle E

•HR 2530 IH

1 (3) in paragraph (3) by striking ‘‘make a deter2 mination in each crop year of’’ and inserting ‘‘deter3 mine’’.

4 (b) LIMITATION ON PLANTINGS.—Subsection (c) of

5 such section is amended by striking paragraphs (1) and

6 (2) and inserting the following:

7 ‘‘The quantity of the total acreage base that may be

8 planted to program crops enrolled in an acreage reduction

9 program shall not exceed 100 percent of the total acreage

10 base, less the acreage conservation reserve for the farm.’’.

11 (c) PLANTINGS IN EXCESS OF PERMITTED ACRE12 AGE.—Subsection (d) of such section is amended to read

13 as follows:

14 ‘‘(d) PLANTINGS IN EXCESS OF PERMITTED ACRE15 AGE.—Notwithstanding any other provision of this Act,

16 except as provided in section 504(b)(2)(B), producers of

17 a program crop who are participating in the acreage re18 duction program for that crop shall be allowed to plant

19 that program crop in a quantity that exceeds the per20 mitted acreage for that crop without losing their eligibility

21 for loans or payments with respect to that crop if—

22 ‘‘(1) the acreage planted to that program crop

23 on the farm in excess of the permitted acreage for

24 that crop does not exceed the permitted acreage of

25 other program crops on the farm; and
116

Title II, Subtitle E

•HR 2530 IH

1 ‘‘(2) the producer agrees to a reduction in per2 mitted acreage for the other program crops produced

3 on the farm by a quantity equal to the

4 overplanting.’’.

5 (d) LOAN ELIGIBILITY.—Subsection (e) of such sec6 tion is amended to read as follows:

7 ‘‘(e) LOAN ELIGIBILITY.—Producers of a specific

8 program crop (referred to in this subsection as the ‘origi9 nal program crop’) who plant for harvest on the crop acre10 age base established for such original program crop an11 other program crop in accordance with this section and

12 who are participants in the program established for such

13 other program crop shall be eligible to receive loans or loan

14 deficiency payments for such other program crop on the

15 same terms and conditions as are provided to participants

16 in a acreage reduction program established for such other

17 program crop if the producers—

18 ‘‘(1) plant such other program crop in an

19 amount that does not exceed 100 percent of the per20 mitted acreage established for the original program

21 crop; and

22 ‘‘(2) agree to a reduction in the permitted acre23 age for the original program crop for the particular

24 crop year.’’.
117

Title II, Subtitle E

•HR 2530 IH

1 SEC. 2504. FARM PROGRAM PAYMENT YIELDS.

2 Section 505 of the Agricultural Act of 1949 (7 U.S.C.

3 1465) is amended to read as follows:

4 ‘‘SEC. 505. FARM PROGRAM PAYMENT YIELDS.

5 ‘‘(a) ESTABLISHMENT.—The Secretary shall provide

6 for the establishment of a farm program payment yield

7 for each farm for each program crop for each crop year

8 in accordance with subsection (b) or (c).

9 ‘‘(b) FARM PROGRAM PAYMENT YIELDS BASED ON

10 1995 CROP YEAR.—

11 ‘‘(1) IN GENERAL.—If the Secretary determines

12 that farm program payment yields shall be estab13 lished in accordance with this subsection, except as

14 provided in paragraph (2), the farm program pay15 ment yield for each of the 1996 through 2002 crop

16 years shall be the farm program payment yield for

17 the 1995 crop year for the farm.

18 ‘‘(2) ADDITIONAL YIELD PAYMENTS.—In the

19 case of each of the 1991 through 2002 crop years

20 for a commodity, if the farm program payment yield

21 for a farm is reduced more than 10 percent below

22 the farm program payment yield for the 1985 crop

23 year, the Secretary shall make available to producers

24 established price payments for the commodity in

25 such amount as the Secretary determines is nec26 essary to provide the same total return to producers
118

Title II, Subtitle E

•HR 2530 IH

1 as if the farm program payment yield had not been

2 reduced more than 10 percent below the farm pro3 gram payment yield for the 1985 crop year. The

4 payments shall be made available not later than the

5 time final deficiency payments are made.

6 ‘‘(3) NO YIELD AVAILABLE.—If no farm pro7 gram payment yield was established for the farm for

8 1995 crop, the farm program payment yield shall be

9 established on the basis of the average farm pro10 gram payment yield for the crop years for similar

11 farms in the area.

12 ‘‘(4) NATIONAL, STATE, OR COUNTY YIELDS.—

13 If the Secretary determines the action is necessary,

14 the Secretary may establish national, State, or coun15 ty program payment yields on the basis of—

16 ‘‘(A) historical yields, as adjusted by the

17 Secretary to correct for abnormal factors affect18 ing the yields in the historical period; or

19 ‘‘(B) the Secretary’s estimate of actual

20 yields for the crop year involved if historical

21 yield data is not available.

22 ‘‘(5) BALANCING YIELDS.—If national, State,

23 or county program payment yields are established,

24 the farm program payment yields shall balance to
119

Title II, Subtitle E

•HR 2530 IH

1 the national, State, or county program payment

2 yields.

3 ‘‘(c) DETERMINATION OF YIELDS.—

4 ‘‘(1) ACTUAL YIELDS.—With respect to the

5 1996 and subsequent crop years, the Secretary

6 may—

7 ‘‘(A) establish the farm program payment

8 yield as provided in subsection (a); or

9 ‘‘(B) establish a farm program payment

10 yield for any program crop for any farm on the

11 basis of the average of the yield per harvested

12 acre for the crop for the farm for each of the

13 5 crop years immediately preceding the crop

14 year, excluding the crop year with the highest

15 yield per harvested acre, the crop year with the

16 lowest yield per harvested acre, and any crop

17 year in which such crop was not planted on the

18 farm.

19 ‘‘(2) PRIOR YIELDS.—For purposes of the pre20 ceding sentence, the farm program payment yield for

21 the 1996 crop year and the actual yield per har22 vested acre with respect to the 1997 and subsequent

23 crop years shall be used in determining farm pro24 gram payment yields.
120

Title II, Subtitle E

•HR 2530 IH

1 ‘‘(3) REDUCTION LIMITATION.—Notwithstand2 ing any other provision of this subsection, for pur3 poses of establishing a farm program payment yield

4 for any program crop for any farm for the 1991 and

5 subsequent crop years, the farm program payment

6 yield for the 1986 crop year may not be reduced

7 more than 10 percent below the farm program pay8 ment yield for the farm for the 1985 crop year.

9 ‘‘(4) ADJUSTMENT OF YIELDS.—The county

10 committee, in accordance with regulations prescribed

11 by the Secretary, may adjust any farm program pay12 ment yield for any program crop for any farm if the

13 farm program payment yield for the crop on the

14 farm does not accurately reflect the productive po15 tential of the farm.

16 ‘‘(d) ASSIGNMENT OF YIELDS.—In the case of any

17 farm for which the actual yield per harvested acre for any

18 program crop referred to in subsection (c) for any crop

19 year is not available, the county committee may assign the

20 farm a yield for the crop for the crop year on the basis

21 of actual yields for the crop for the crop year on similar

22 farms in the area.

23 ‘‘(e) ACTUAL YIELD DATA.—

24 ‘‘(1) PROVISION.—The Secretary shall, under

25 such terms and conditions as the Secretary may pre-
121

Title II, Subtitle F

•HR 2530 IH

1 scribe, allow producers to provide to county commit2 tees data with respect to the actual yield for each

3 farm for each program crop.

4 ‘‘(2) MAINTENANCE.—The Secretary shall

5 maintain the data for at least 5 crop years after re6 ceipt in a manner that will permit the data to be

7 used, if necessary, in the administration of the com8 modity programs.’’.

9 SEC. 2505. APPLICATION OF PROVISIONS.

10 Section 509 of the Agricultural Act of 1949 (7 U.S.C.

11 1469) is amended to read as follows:

12 ‘‘SEC. 509. APPLICATION OF TITLE.

13 ‘‘Except as provided in section 406, this title shall

14 apply only with respect to the 1996 through 2002 crops.’’.

15 Subtitle F—Miscellaneous

16 Provisions

17 SEC. 2601. LIMITATIONS ON AMOUNT OF DEFICIENCY PAY18 MENTS AND LAND DIVERSION PAYMENTS.

19 Section 1001(1)(A) of the Food Security Act of 1985

20 (7 U.S.C. 1308(1)(A)) is amended by striking ‘‘$50,000’’

21 and inserting ‘‘$47,000’’.

22 SEC. 2602. SENSE OF CONGRESS REGARDING CERTAIN CA23 NADIAN TRADE PRACTICES.

24 (a) FINDINGS.—The Congress finds the following:
122

Title III

•HR 2530 IH

1 (1) On October 15, 1993, in response to a re2 quest from the National Potato Council, the Foreign

3 Agricultural Service of the Department of Agri4 culture listed several Canadian nontariff barriers

5 that violate the national treatment principle of the

6 General Agreement on Tariffs and Trade, including

7 the prohibition on bulk shipments, container size

8 limitations on processed products, and prohibitions

9 on consignment sales.

10 (2) Current Government-to-Government and di11 rect grower-to-grower discussions with Canada have

12 failed to result in changes in Canadian trade prac13 tices.

14 (b) SENSE OF CONGRESS.—It is the sense of the

15 Congress that the Secretary of Agriculture and the United

16 States Trade Representative should intensify efforts to re17 solve the Canadian potato trade concerns and begin to

18 consider formal action under the dispute resolution proce19 dures of the North American Free Trade Agreement or

20 the General Agreement on Tariffs and Trade.

21 TITLE III—COMMERCE

22 SEC. 3101. SPECTRUM AUCTIONS.

23 (a) EXTENSION AND EXPANSION OF AUCTION AU24 THORITY.—
123

Title III

•HR 2530 IH

1 (1) AMENDMENTS.—Section 309(j) of the Com2 munications Act of 1934 (47 U.S.C. 309(j)) is

3 amended—

4 (A) by striking paragraphs (1) and (2) and

5 inserting in lieu thereof the following:

6 ‘‘(1) GENERAL AUTHORITY.—If, consistent with

7 the obligations described in paragraph (6)(E), mutu8 ally exclusive applications are accepted for any ini9 tial license or construction permit which will involve

10 an exclusive use of the electromagnetic spectrum,

11 then the Commission shall grant such license or per12 mit to a qualified applicant through a system of

13 competitive bidding that meets the requirements of

14 this subsection.

15 ‘‘(2) EXEMPTIONS.—The competitive bidding

16 authority granted by this subsection shall not apply

17 to licenses or construction permits issued by the

18 Commission—

19 ‘‘(A) that, as the result of the Commission

20 carrying out the obligations described in para21 graph (6)(E), are not mutually exclusive;

22 ‘‘(B) for public safety radio services, in23 cluding non-Government uses that protect the

24 safety of life, health, and property and that are
124

Title III

•HR 2530 IH

1 not made commercially available to the public;

2 or

3 ‘‘(C) for initial licenses or construction

4 permits for new terrestrial digital television

5 services assigned by the Commission to existing

6 terrestrial broadcast licensees to replace their

7 current television licenses.’’; and

8 (B) by striking ‘‘1998’’ in paragraph (11)

9 and inserting ‘‘2002’’.

10 (2) CONFORMING AMENDMENT.—Subsection (i)

11 of section 309 of such Act is repealed.

12 (3) EFFECTIVE DATE.—The amendment made

13 by paragraph (1)(A) shall not apply with respect to

14 any license or permit for which the Federal Commu15 nications Commission has accepted mutually exclu16 sive applications on or before the date of enactment

17 of this Act.

18 (b) COMMISSION OBLIGATION TO MAKE ADDITIONAL

19 SPECTRUM AVAILABLE BY AUCTION.—

20 (1) IN GENERAL.—The Federal Communica21 tions Commission shall complete all actions nec22 essary to permit the assignment, by September 30,

23 2002, by competitive bidding pursuant to section

24 309(j) of the Communications Act of 1934 (47
125

Title III

•HR 2530 IH

1 U.S.C. 309(j)) of licenses for the use of bands of

2 frequencies that—

3 (A) individually span not less than 25

4 megahertz, unless a combination of smaller

5 bands can, notwithstanding the provisions of

6 paragraph (7) of such section, reasonably be ex7 pected to produce greater receipts;

8 (B) in the aggregate span not less than

9 100 megahertz;

10 (C) are located below 3 gigahertz; and

11 (D) have not, as of the date of enactment

12 of this Act—

13 (i) been designated by Commission

14 regulation for assignment pursuant to such

15 section; or

16 (ii) been identified by the Secretary of

17 Commerce pursuant to section 113 of the

18 National Telecommunications and Infor19 mation Administration Organization Act.

20 The Commission shall conduct the competitive

21 bidding for not less than one-half of such aggre22 gate spectrum by September 30, 2001.

23 (2) CRITERIA FOR REASSIGNMENT.—In making

24 available bands of frequencies for competitive bid-
126

Title III

•HR 2530 IH

1 ding pursuant to paragraph (1), the Commission

2 shall—

3 (A) seek to promote the most efficient use

4 of the spectrum;

5 (B) take into account the cost to incum6 bent licensees of relocating existing uses to

7 other bands of frequencies or other means of

8 communication;

9 (C) take into account the needs of public

10 safety radio services; and

11 (D) comply with the requirements of inter12 national agreements concerning spectrum allo13 cations.

14 (3) NOTIFICATION TO NTIA.—The Commission

15 shall notify the Secretary of Commerce if—

16 (A) the Commission is not able to provide

17 for the effective relocation of incumbent licens18 ees to bands of frequencies that are available to

19 the Commission for assignment; and

20 (B) the Commission has identified bands

21 of frequencies that are—

22 (i) suitable for the relocation of such

23 licensees; and

24 (ii) allocated for Federal Government

25 use, but that could be reallocated pursuant
127

Title III

•HR 2530 IH

1 to part B of the National Telecommuni2 cations and Information Administration

3 Organization Act (as amended by this

4 Act).

5 (c) IDENTIFICATION AND REALLOCATION OF FRE6 QUENCIES.—The National Telecommunications and Infor7 mation Administration Organization Act (47 U.S.C. 901

8 et seq.) is amended—

9 (1) in section 113, by adding at the end the fol10 lowing new subsection:

11 ‘‘(f) ADDITIONAL REALLOCATION REPORT.—If the

12 Secretary receives a notice from the Commission pursuant

13 to section 3001(b)(3) of the Seven-Year Balanced Budget

14 Reconciliation Act of 1995, the Secretary shall prepare

15 and submit to the President and the Congress a report

16 recommending for reallocation for use other than by Fed17 eral Government stations under section 305 of the 1934

18 Act (47 U.S.C. 305), bands of frequencies that are suit19 able for the uses identified in the Commission’s notice.’’;

20 (2) in section 114(a)(1), by striking ‘‘(a) or

21 (d)(1)’’ and inserting ‘‘(a), (d)(1), or (f)’’.

22 (d) COMPLETION OF C-BLOCK PCS AUCTION.—The

23 Federal Communications Commission shall commence the

24 Broadband Personal Communications Services C-Block

25 auction described in the Commission’s Sixth Report and
128

Title III

•HR 2530 IH

1 Order in DP Docket 93–253 (FCC 93–510, released July

2 18, 1995) not later than December 4, 1995. The Commis3 sion’s competitive bidding rules governing such auction,

4 as set forth in such Sixth Report and Order, are hereby

5 ratified and adopted as a matter of Federal law.

6 (e) MODIFICATION OF AUCTION POLICY TO PRE7 SERVE AUCTION VALUE OF SPECTRUM.—The voluntary

8 negotiation period for relocating fixed microwave licensees

9 to frequency bands other than those allocated for licensed

10 emerging technology services (including licensed personal

11 communications services), established by the Commis12 sion’s Third Report and Order in ET Docket No. 92–9,

13 shall expire one year after the date of acceptance by the

14 Commission of applications for such licensed emerging

15 technology services. The mandatory negotiation period for

16 relocating fixed microwave licensees to frequency bands

17 other than those allocated for licensed emerging tech18 nology services (including licensed personal communica19 tions services), established in such Third Report and

20 Order, shall expire two years after the date of acceptance

21 by the Commission of applications for such licensed

22 emerging technology services.

23 (f) IDENTIFICATION AND REALLOCATION OF

24 AUCTIONABLE FREQUENCIES.—The National Tele-
129

Title III

•HR 2530 IH

1 communications and Information Administration Organi2 zation Act (47 U.S.C. 901 et seq.) is amended—

3 (1) in section 113(b)—

4 (A) by striking the heading of paragraph

5 (1) and inserting ‘‘INITIAL REALLOCATION RE6 PORT’’;

7 (B) by inserting ‘‘in the first report re8 quired by subsection (a)’’ after ‘‘recommend for

9 reallocation’’ in paragraph (1);

10 (C) by inserting ‘‘or (3)’’ after ‘‘paragraph

11 (1)’’ each place it appears in paragraph (2);

12 and

13 (D) by inserting after paragraph (2) the

14 following new paragraph:

15 ‘‘(3) SECOND REALLOCATION REPORT.—In ac16 cordance with the provisions of this section, the Sec17 retary shall recommend for reallocation in the sec18 ond report required by subsection (a), for use other

19 than by Federal Government stations under section

20 305 of the 1934 Act (47 U.S.C. 305), a single fre21 quency band that spans not less than an additional

22 20 megahertz, that is located below 3 gigahertz, and

23 that meets the criteria specified in paragraphs (1)

24 through (5) of subsection (a).’’; and

25 (2) in section 115—
130

Title III

•HR 2530 IH

1 (A) in subsection (b), by striking ‘‘the re2 port required by section 113(a)’’ and inserting

3 ‘‘the initial reallocation report required by sec4 tion 113(a)’’; and

5 (B) by adding at the end the following new

6 subsection:

7 ‘‘(c) ALLOCATION AND ASSIGNMENT OF FRE8 QUENCIES IDENTIFIED IN THE SECOND REALLOCATION

9 REPORT.—With respect to the frequencies made available

10 for reallocation pursuant to section 113(b)(3), the Com11 mission shall, not later than 1 year after receipt of the

12 second reallocation report required by such section, pre13 pare, submit to the President and the Congress, and im14 plement, a plan for the allocation and assignment under

15 the 1934 Act of such frequencies. Such plan shall propose

16 the immediate allocation and assignment of all such fre17 quencies in accordance with section 309(j).’’.

18 SEC. 3102. FEDERAL COMMUNICATIONS COMMISSION FEE

19 COLLECTIONS

20 (a) APPLICATION FEES.—

21 (1) ADJUSTMENT OF APPLICATION FEE SCHED22 ULE.—Section 8(b) of the Communications Act of

23 1934 (47 U.S.C. 158(b)) is amended to read as fol24 lows:
131

Title III

•HR 2530 IH

1 ‘‘(b)(1) For fiscal year 1996 and each fiscal year

2 thereafter, the Commission shall, by regulation, modify

3 the application fees by proportionate increases or de4 creases so as to result in estimated total collections for

5 the fiscal year equal to—

6 ‘‘(A) $40,000,000; plus

7 ‘‘(B) an additional amount, specified in an ap8 propriation Act for the Commission for that fiscal

9 year to be collected and credited to such appropria10 tion, not to exceed the amount by which the nec11 essary expenses for the costs described in paragraph

12 (5) exceeds $40,000,000.

13 ‘‘(2) In making adjustments pursuant to this para14 graph the Commission may round such fees to the nearest

15 $5.00 in the case of fees under $100, or to the nearest

16 $20 in the case of fees of $100 or more. The Commission

17 shall transmit to the Congress notification of any adjust18 ment made pursuant to this paragraph immediately upon

19 the adoption of such adjustment.

20 ‘‘(3) The Commission is authorized to continue to col21 lect fees at the prior year’s rate until the effective date

22 of fee adjustments or amendments made pursuant to para23 graphs (1) and (4).

24 ‘‘(4) The Commission shall, by regulation, add, de25 lete, or reclassify services, categories, applications, or
132

Title III

•HR 2530 IH

1 other filings subject to application fees to reflect additions,

2 deletions, or changes in the nature of its services or au3 thorization of service processes as a consequence of Com4 mission rulemaking proceedings or changes in law.

5 ‘‘(5) Any modified fees established under paragraph

6 (4) shall be derived by determining the full-time equivalent

7 number of employees performing application activities, ad8 justed to take into account other expenses that are reason9 ably related to the cost of processing the application or

10 filing, including all executive and legal costs incurred by

11 the Commission in the discharge of these functions, and

12 other factors that the Commission determines are nec13 essary in the public interest. The Commission shall—

14 ‘‘(A) transmit to the Congress notification of

15 any proposed modification made pursuant to this

16 paragraph immediately upon adoption of such pro17 posal; and

18 ‘‘(B) transmit to the Congress notification of

19 any modification made pursuant to this paragraph

20 immediately upon adoption of such modification.

21 ‘‘(6) Increases or decreases in application fees made

22 pursuant to this subsection shall not be subject to judicial

23 review.’’.
133

Title III

•HR 2530 IH

1 (2) TREATMENT OF ADDITIONAL COLLEC2 TIONS.—Section 8(e) of such Act is amended to read

3 as follows:

4 ‘‘(e) Of the moneys received from fees authorized

5 under this section—

6 ‘‘(1) $40,000,000 shall be deposited in the gen7 eral fund of the Treasury to reimburse the United

8 States for amounts appropriated for use by the

9 Commission in carrying out its functions under this

10 Act; and

11 ‘‘(2) the remainder shall be deposited as an off12 setting collection in, and credited to, the account

13 providing appropriations to carry out the functions

14 of the Commission.’’.

15 (3) SCHEDULE OF APPLICATION FEES FOR

16 PCS.—The schedule of application fees in section

17 8(g) of such Act is amended by adding, at the end

18 of the portion under the heading ‘‘COMMON CARRIER

19 SERVICES’’, the following new item:

‘‘23. Personal communications services

‘‘a. Initial or new application ..................................................... 230

‘‘b. Amendment to pending application ..................................... 35

‘‘c. Application for assignment or transfer of control ................ 230

‘‘d. Application for renewal of license ........................................ 35

‘‘e. Request for special temporary authority .............................. 200

‘‘f. Notification of completion of construction ........................... 35

‘‘g. Request to combine service areas ......................................... 50’’.

20 (4) VANITY CALL SIGNS.—

21 (A) LIFETIME LICENSE FEES.—
134

Title III

•HR 2530 IH

1 (i) AMENDMENT.—The schedule of

2 application fees in section 8(g) of such Act

3 is further amended by adding, at the end

4 of the portion under the heading ‘‘PRIVATE

5 RADIO SERVICES’’, the following new item:

‘‘11. Amateur vanity call signs ..................................................... 150.00’’.

6 (ii) TREATMENT OF RECEIPTS.—Mon7 eys received from fees established under

8 the amendment made by this subsection

9 shall be deposited as an offsetting collec10 tion in, and credited to, the account pro11 viding appropriations to carry out the

12 functions of the Commission.

13 (B) TERMINATION OF ANNUAL REGU14 LATORY FEES.—The schedule of regulatory fees

15 in section 9(g) of such Act (47 U.S.C. 159(g))

16 is amended by striking the following item from

17 the fees applicable to the Private Radio Bureau:

‘‘Amateur vanity call-signs ........................................................................ 7’’.

18 (b) REGULATORY FEES.—

19 (1) EXECUTIVE AND LEGAL COSTS.—Section

20 9(a)(1) of the Communications Act of 1934 (47

21 U.S.C. 159(a)(1)) is amended by inserting before

22 the period at the end the following: ‘‘, and all execu23 tive and legal costs incurred by the Commission in

24 the discharge of these functions’’.
135

Title III

•HR 2530 IH

1 (2) ESTABLISHMENT AND ADJUSTMENT.—Sec2 tion 9(b) of such Act is amended—

3 (A) in paragraph (4)(B), by striking ‘‘90

4 days’’ and inserting ‘‘45 days’’; and

5 (B) by adding at the end the following new

6 paragraph:

7 ‘‘(5) EFFECTIVE DATE OF ADJUSTMENTS.—The

8 Commission is authorized to continue to collect fees

9 at the prior year’s rate until the effective date of fee

10 adjustments or amendments made pursuant to para11 graph (2) or (3).’’.

12 (3) REGULATORY FEES FOR SATELLITE TV OP13 ERATIONS.—The schedule of regulatory fees in sec14 tion 9(g) of such Act is amended, in the fees appli15 cable to the Mass Media Bureau, by inserting after

16 each of the items pertaining to construction permits

17 in the fees applicable to VHF commercial and UHF

18 commercial TV the following new item:

‘‘Terrestrial television satellite operations ................................................. 500’’.

19 (4) GOVERNMENTAL ENTITIES USE FOR COM20 MON CARRIER PURPOSES.—Section 9(h) of such Act

21 is amended by adding at the end the following new

22 sentence: ‘‘The exceptions provided by this sub23 section for governmental entities shall not be appli24 cable to any services that are provided on a commer25 cial basis in competition with another carrier.’’.
136

Title III

•HR 2530 IH

1 (5) INFORMATION REQUIRED IN CONNECTION

2 WITH ADJUSTMENT OF REGULATORY FEES.—Title I

3 of such Act is amended—

4 (A) in section 9, by striking subsection (i);

5 and

6 (B) by inserting after section 9 the follow7 ing new section:

8 ‘‘SEC. 10. ACCOUNTING SYSTEM AND ADJUSTMENT INFOR9 MATION.

10 ‘‘(a) ACCOUNTING SYSTEM REQUIRED.—The Com11 mission shall develop accounting systems for the purposes

12 of making the adjustments authorized by sections 8 and

13 9. The Commission shall annually prepare and submit to

14 the Congress an analysis of such systems and shall annu15 ally afford interested persons the opportunity to submit

16 comments concerning the allocation of the costs of per17 forming the functions described in section 8(a)(5) and

18 9(a)(1) in making such adjustments in the schedules re19 quired by sections 8 and 9.

20 ‘‘(b) INFORMATION REQUIRED IN CONNECTION

21 WITH ADJUSTMENT OF APPLICATION AND REGULATORY

22 FEES.—

23 ‘‘(1) SCHEDULE OF REQUESTED AMOUNTS.—

24 No later than May 1 of each calendar year, the

25 Commission shall prepare and transmit to the Com-
137

Title III

•HR 2530 IH

1 mittees of Congress responsible for the Commis2 sion’s authorization and appropriations a detailed

3 schedule of the amounts requested by the Presi4 dent’s budget to be appropriated for the ensuing fis5 cal year for the activities described in sections

6 8(a)(5) and 9(a)(1), allocated by bureaus, divisions,

7 and offices of the Commission.

8 ‘‘(2) EXPLANATORY STATEMENT.—If the Com9 mission anticipates increases in the application fees

10 or regulatory fees applicable to any applicant, li11 censee, or unit subject to payment of fees, the Com12 mission shall submit to the Congress by May 1 of

13 such calendar year a statement explaining the rela14 tionship between any such increases and either (A)

15 increases in the amounts requested to be appro16 priated for Commission activities in connection with

17 such applicants, licensees, or units subject to pay18 ment of fees, or (B) additional activities to be per19 formed with respect to such applicants, licensees, or

20 units.

21 ‘‘(3) DEFINITION.—For purposes of this sub22 section, the term ‘amount requested by the Presi23 dent’s budget’ shall include any adjustments to such

24 requests that are made by May 1 of such calendar

25 year. If any such adjustment is made after May 1,
138

Title III

•HR 2530 IH

1 the Commission shall provide such Committees with

2 updated schedules and statements containing the in3 formation required by this subsection within 10 days

4 after the date of any such adjustment.’’.

5 SEC. 3103. AUCTION OF RECAPTURED ANALOG LICENSES.

6 (a) LIMITATIONS ON TERMS OF ANALOG TELEVISION

7 LICENSES (‘‘REVERSION DATE’’).—The Commission shall

8 not renew any analog television license for a period that

9 extends beyond the earlier of December 31, 2005, or one

10 year after the date the Commission finds, based on annual

11 surveys conducted pursuant to subsection (b), that at least

12 95 percent of households in the United States have the

13 capability to receive and display video signals, other than

14 video signals transmitted pursuant to an analog television

15 license. After such date, the Commission shall not issue

16 any television licenses other than advanced television li17 censes.

18 (b) ANNUAL SURVEY.—The Secretary of Commerce

19 shall, each calendar year from 1998 to 2005, conduct a

20 survey to estimate the percentage of households in the

21 United States that have the capability to receive and dis22 play video signals other than signals transmitted pursuant

23 to an analog television license.

24 (c) SPECTRUM REVERSION.—The Commission shall

25 ensure that, as analog television licenses expire pursuant
139

Title III

•HR 2530 IH

1 to subsection (a), spectrum previously used for the broad2 cast of analog television signals is reclaimed and reallo3 cated in such manner as to maximize the deployment of

4 new services. Licensees for new services shall be selected

5 by competitive bidding. The Commission shall complete

6 the competitive bidding procedure by May 1, 2002.

7 (d) MINIMUM SERVICE OBLIGATION.—

8 (1) PROVISION OF CAPABILITY TO RECEIVE AD9 VANCED SERVICES.—The Commission shall, by regu10 lation, establish procedures to ensure that, within

11 the year prior to the reversion date defined in sub12 section (a), the advanced television licensees shall

13 provide each household with the capability to receive

14 and display video signals for advanced television

15 services if such household requests such capability.

16 (2) PROVISION OF NONSUBSCRIPTION SERV17 ICES.—Each advanced television service licensee

18 shall provide, for at least a minimum of 5 years

19 from the date identified in subsection (a), at least

20 one nonsubscription video service that meets or ex21 ceeds minimum technical standards established by

22 the Commission. In setting such minimum technical

23 standards, the Commission shall, to the extent tech24 nically feasible, ensure that picture and audio qual25 ity are at least as good as that provided to recipients
140

Title III

•HR 2530 IH

1 within the Grade B contour of an analog television

2 license. The Commission shall revoke the license of

3 any advanced television licensee who fails to meet

4 this condition of the license.

5 (e) DEFINITIONS.—As used in this section:

6 (1) The term ‘‘Commission’’ means the Federal

7 Communications Commission.

8 (2) The term ‘‘advanced television services’’

9 means television services provided using digital or

10 other advanced technology to enhance audio quality

11 and video resolution, as further defined in the Opin12 ion, Report, and Order of the Commission entitled

13 ‘‘Advanced Television Systems and Their Impact

14 Upon the Existing Television Service,’’ MM Docket

15 No. 87–268.

16 (3) The term ‘‘analog television licenses’’ means

17 licenses issued pursuant to 47 C.F.R. 73.682 et seq.

18 SEC. 3104. PATENT AND TRADEMARK FEES.

19 Section 10101 of the Omnibus Budget Reconciliation

20 Act of 1990 (35 U.S.C. 41 note) is amended—

21 (1) in subsection (a) by striking ‘‘1998’’ and in22 serting ‘‘2002’’;

23 (2) in subsection (b)(2) by striking ‘‘1998’’ and

24 inserting ‘‘2002’’; and

25 (3) in subsection (c)—
141

Title III

•HR 2530 IH

1 (A) by striking ‘‘through 1998’’ and insert2 ing ‘‘through 2002’’; and

3 (B) by adding at the end the following:

4 ‘‘(9) $119,000,000 in fiscal year 1999.

5 ‘‘(10) $119,000,000 in fiscal year 2000.

6 ‘‘(11) $119,000,000 in fiscal year 2001.

7 ‘‘(12) $119,000,000 in fiscal year 2002.’’.

8 SEC. 3105. REPEAL OF AUTHORIZATION OF TRANSITIONAL

9 APPROPRIATIONS FOR THE UNITED STATES

10 POSTAL SERVICE.

11 (a) IN GENERAL.—(1) Section 2004 of title 39,

12 United States Code, is repealed.

13 (2)(A) The table of sections for chapter 20 of such

14 title is amended by repealing the item relating to section

15 2004.

16 (B) Section 2003(e)(2) of such title is amended by

17 striking ‘‘sections 2401 and 2004’’ each place it appears

18 and inserting ‘‘section 2401’’.

19 (b) CLARIFICATION THAT LIABILITIES FORMERLY

20 PAID PURSUANT TO SECTION 2004 REMAIN LIABILITIES

21 PAYABLE BY THE POSTAL SERVICE.—Section 2003 of

22 title 39, United States Code, is amended by adding at the

23 end the following:

24 ‘‘(h) Liabilities of the former Post Office Department

25 to the Employees’ Compensation Fund (appropriations for
142

Title IV

•HR 2530 IH

1 which were authorized by former section 2004, as in effect

2 before the effective date of this subsection) shall be liabil3 ities of the Postal Service payable out of the Fund.’’.

4 TITLE IV—TRANSPORTATION

5 SEC. 4101. EXTENSION OF RAILROAD SAFETY FEES.

6 Subsection (e) of section 20115 of title 49, United

7 States Code, is repealed.

8 SEC. 4102. PERMANENT EXTENSION OF VESSEL TONNAGE

9 DUTIES.

10 (a) EXTENSION OF DUTIES.—Section 36 of the Act

11 of August 5, 1909 (36 Stat. 111; 46 App. U.S.C. 121),

12 is amended—

13 (1) by striking ‘‘for fiscal years 1991, 1992,

14 1993, 1994, 1995, 1996, 1997, 1998, and 2 cents

15 per ton not to exceed in the aggregate 10 cents per

16 tone in any one year, for each fiscal year there17 after’’; and

18 (2) by striking ‘‘for fiscal years 1991, 1992,

19 1993, 1994, 1995, 1996, 1997, 1998, and 6 cents

20 per ton, not to exceed 30 cents per ton for each fis21 cal year thereafter’’.

22 (b) CONFORMING AMENDMENT.—The Act entitled

23 ‘‘An Act concerning tonnage duties on vessels entering

24 otherwise than by sea’’, approved March 8, 1910 (36 Stat.

25 234; 46 App. U.S.C. 132), is amended by striking ‘‘for
143

Title IV

•HR 2530 IH

1 fiscal years 1991, 1992, 1993, 1994, 1995, 1996, 1997,

2 and 1998, and 2 cents per ton, not to exceed in the aggre3 gate 10 cents per ton in any 1 year, for each fiscal year

4 thereafter,’’.

5 SEC. 4103. SALE OF GOVERNORS ISLAND, NEW YORK.

6 (a) IN GENERAL.—Notwithstanding any other provi7 sion of law, the Administrator of General Services shall

8 dispose of by sale at fair market value all rights, title, and

9 interests of the United States in and to the land of, and

10 improvements to, Governors Island, New York.

11 (b) RIGHT OF FIRST REFUSAL.—Before a sale is

12 made under subsection (a) to any other parties, the State

13 of New York and the city of New York shall be given the

14 right of first refusal to purchase all or part of Governors

15 Island. Such right may be exercised by either the State

16 of New York or the city of New York or by both parties

17 acting jointly.

18 (c) PROCEEDS.—Proceeds from the disposal of Gov19 ernors Island under subsection (a) shall be deposited in

20 the general fund of the Treasury and credited as mis21 cellaneous receipts.

22 SEC. 4104. SALE OF AIR RIGHTS.

23 (a) IN GENERAL.—Notwithstanding any other provi24 sion of law, the Administrator of General Services shall

25 sell, at fair market value and in a manner to be deter-
144

Title IV

•HR 2530 IH

1 mined by the Administrator, the air rights adjacent to

2 Washington Union Station described in subsection (b), in3 cluding air rights conveyed to the Administrator under

4 subsection (d). The Administrator shall complete the sale

5 by such date as is necessary to ensure that the proceeds

6 from the sale will be deposited in accordance with sub7 section (c).

8 (b) DESCRIPTION.—The air rights referred to in sub9 section (a) total approximately 16.5 acres and are depicted

10 on the plat map of the District of Columbia as follows:

11 (1) Part of lot 172, square 720.

12 (2) Part of lots 172 and 823, square 720.

13 (3) Part of lot 811, square 717.

14 (c) PROCEEDS.—Before September 30, 1996, pro15 ceeds from the sale of air rights under subsection (a) shall

16 be deposited in the general fund of the Treasury and cred17 ited as miscellaneous receipts.

18 (d) CONVEYANCE OF AMTRAK AIR RIGHTS.—

19 (1) GENERAL RULE.—As a condition of future

20 Federal financial assistance, Amtrak shall convey to

21 the Administrator of General Services on or before

22 December 31, 1995, at no charge, all of the air

23 rights of Amtrak described in subsection (b).

24 (2) FAILURE TO COMPLY.—If Amtrak does not

25 meet the condition established by paragraph (1),
145

Title V

•HR 2530 IH

1 Amtrak shall be prohibited from obligating Federal

2 funds after March 1, 1996.

3 TITLE V—HOUSING PROVISIONS

4 SEC. 5101. REDUCTION OF SECTION 8 ANNUAL ADJUST5 MENT FACTORS FOR UNITS WITHOUT TEN6 ANT TURNOVER.

7 Paragraph (2)(A) of section 8(c) of the United States

8 Housing Act of 1937 (42 U.S.C. 1437f(c)(2)(A)) is

9 amended by striking the last sentence.

10 SEC. 5102. MAXIMUM MORTGAGE AMOUNT FLOOR FOR SIN11 GLE FAMILY MORTGAGE INSURANCE.

12 Subparagraph (A) of the first sentence of section

13 203(b)(2) of the National Housing Act (12 U.S.C.

14 1709(b)(2)(A)) is amended by striking ‘‘the greater of’’

15 and all that follows through ‘‘applicable size’’ and insert16 ing the following: ‘‘50 percent of the dollar amount limita17 tion determined under section 305(a)(2) of the Federal

18 Home Loan Mortgage Corporation Act (as adjusted annu19 ally under such section) for a residence of the applicable

20 size’’.

21 SEC. 5103. FORECLOSURE AVOIDANCE AND BORROWER AS22 SISTANCE.

23 (a) FORECLOSURE AVOIDANCE.—The last sentence

24 of section 204(a) of the National Housing Act (12 U.S.C.

25 1710(a)) is amended by inserting before the period the
146

Title V

•HR 2530 IH

1 following: ‘‘: And provided further, That the Secretary may

2 pay insurance benefits to the mortgagee to recompense the

3 mortgagee for its actions to provide an alternative to fore4 closure of a mortgage that is in default, which actions may

5 include such actions as special forbearance, loan modifica6 tion, and deeds in lieu of foreclosure, all upon such terms

7 and conditions as the mortgagee shall determine in the

8 mortgagee’s sole discretion within guidelines provided by

9 the Secretary, but which may not include assignment of

10 a mortgage to the Secretary: And provided further, That

11 for purposes of the preceding proviso, no action authorized

12 by the Secretary and no action taken, nor any failure to

13 act, by the Secretary or the mortgagee shall be subject

14 to judicial review’’.

15 (b) AUTHORITY TO ASSIST MORTGAGORS IN DE16 FAULT.—Section 230 of the National Housing Act (12

17 U.S.C. 1715u) is amended to read as follows:

18 ‘‘AUTHORITY TO ASSIST MORTGAGORS IN DEFAULT

19 ‘‘SEC. 230. (a) PAYMENT OF PARTIAL CLAIM.—The

20 Secretary may establish a program for payment of a par21 tial insurance claim to a mortgagee that agrees to apply

22 the claim amount to payment of a mortgage on a 1- to

23 4-family residence that is in default. Any such payment

24 under such program to the mortgagee shall be made in

25 the Secretary’s sole discretion and on terms and conditions

26 acceptable to the Secretary, except that—
147

Title V

•HR 2530 IH

1 ‘‘(1) the amount of the payment shall be in an

2 amount determined by the Secretary, which shall not

3 exceed an amount equivalent to 12 monthly mort4 gage payments and any costs related to the default

5 that are approved by the Secretary; and

6 ‘‘(2) the mortgagor shall agree to repay the

7 amount of the insurance claim to the Secretary upon

8 terms and conditions acceptable to the Secretary.

9 The Secretary may pay the mortgagee, from the appro10 priate insurance fund, in connection with any activities

11 that the mortgagee is required to undertake concerning

12 repayment by the mortgagor of the amount owed to the

13 Secretary.

14 ‘‘(b) ASSIGNMENT.—

15 ‘‘(1) PROGRAM AUTHORITY.—The Secretary

16 may establish a program for assignment to the Sec17 retary, upon request of the mortgagee, of a mort18 gage on a 1- to 4-family residence insured under this

19 Act.

20 ‘‘(2) PROGRAM REQUIREMENTS.—The Sec21 retary may accept assignment of a mortgage under

22 a program under this subsection only if—

23 ‘‘(A) the mortgage was in default;

24 ‘‘(B) the mortgagee has modified the mort25 gage to cure the default and provide for mort-
148

Title V

•HR 2530 IH

1 gage payments within the reasonable ability of

2 the mortgagor to pay at interest rates not ex3 ceeding current market interest rates; and

4 ‘‘(C) the Secretary arranges for servicing

5 of the assigned mortgage by a mortgagee

6 (which may include the assigning mortgagee)

7 through procedures that the Secretary has de8 termined to be in the best interests of the ap9 propriate insurance fund.

10 ‘‘(3) PAYMENT OF INSURANCE BENEFITS.—

11 Upon accepting assignment of a mortgage under the

12 program under this subsection, the Secretary may

13 pay insurance benefits to the mortgagee from the

14 appropriate insurance fund in an amount that the

15 Secretary determines to be appropriate, but which

16 may not exceed the amount necessary to compensate

17 the mortgagee for the assignment and any losses re18 sulting from the mortgage modification.

19 ‘‘(c) PROHIBITION OF JUDICIAL REVIEW.—No deci20 sion by the Secretary to exercise or forego exercising any

21 authority under this section shall be subject to judicial re22 view.’’.

23 (c) SAVINGS PROVISION.—Any mortgage for which

24 the mortgagor has applied to the Secretary of Housing

25 and Urban Development, before the date of the enactment
149

Title VI

•HR 2530 IH

1 of this Act, for assignment pursuant to section 230(b) of

2 the National Housing Act shall continue to be governed

3 by the provisions of such section, as in effect immediately

4 before such date of enactment.

5 (d) APPLICABILITY OF OTHER LAWS.—No provision

6 of the National Housing Act or any other law shall be

7 construed to require the Secretary of Housing and Urban

8 Development to provide an alternative to foreclosure for

9 mortgagees with mortgages on 1- to 4-family residences

10 insured by the Secretary under the National Housing Act,

11 or to accept assignments of such mortgages.

12 TITLE VI—INDEXATION AND MIS13 CELLANEOUS ENTITLEMENT14 RELATED PROVISIONS

15 SEC. 6101. CONSUMER PRICE INDEX.

16 (a) ADJUSTMENTS APPLICABLE TO INTERNAL REVE17 NUE CODE PROVISIONS.—

18 (1) IN GENERAL.—Paragraph (3) of section

19 1(f) of the Internal Revenue Code of 1986 (defining

20 cost-of-living adjustment) is amended by striking the

21 period at the end and inserting a comma and by in22 serting at the end the following flush material:

23 ‘‘reduced by the number of percentage points

24 determined under paragraph (8) for the cal-
150

Title VI

•HR 2530 IH

1 endar year for which such adjustment is being

2 determined.’’

3 (2) LIMITATION ON INCREASES.—Subsection (f)

4 of section 1 of such Code is amended by adding at

5 the end the following new paragraph:

6 ‘‘(8) LIMITATION ON INCREASES IN CPI.—

7 ‘‘(A) IN GENERAL.—The number of per8 centage points determined under this paragraph

9 for any calendar year is—

10 ‘‘(i) in the case of calendar years

11 1996, 1997, and 1998, 0.5 percentage

12 point, and

13 ‘‘(ii) in the case of calendar years

14 1999, 2000, 2001, and 2002, 0.3 percent15 age point.

16 ‘‘(B) COMPUTATION OF BASE TO REFLECT

17 LIMITATION.—The Secretary shall adjust the

18 number taken into account under paragraph

19 (3)(B) so that any increase which is not taken

20 into account by reason of subparagraph (A)

21 shall not be taken into account at any time so

22 as to allow such increase for any period.’’

23 (b) ADJUSTMENTS APPLICABLE TO CERTAIN ENTI24 TLEMENT PROGRAMS.—
151

Title VI

•HR 2530 IH

1 (1) IN GENERAL.—For purposes of determining

2 the amount of any cost-of-living adjustment which

3 takes effect for benefits payable after December 31,

4 1995, with respect to any benefit described in para5 graph (5)—

6 (A) any increase in the relevant index (de7 termined without regard to this subsection)

8 shall be reduced by the number of percentage

9 points determined under paragraph (2), and

10 (B) the amount of the increase in such

11 benefit shall be equal to the product of—

12 (i) the increase in the relevant index

13 (as reduced under subparagraph (A)), and

14 (ii) the average such benefit for the

15 preceding calendar year under the program

16 described in paragraph (5) which provides

17 such benefit.

18 (2) LIMITATION ON INCREASES.—

19 (A) IN GENERAL.—The number of percent20 age points determined under this paragraph for

21 any calendar year is—

22 (i) in the case of calendar years 1996,

23 1997, and 1998, 0.5 percentage point, and
152

Title VI

•HR 2530 IH

1 (ii) in the case of calendar years

2 1999, 2000, 2001, and 2002, 0.3 percent3 age point.

4 (B) COMPUTATION OF BASE TO REFLECT

5 LIMITATION.—Any increase which is not taken

6 into account by reason of subparagraph (A)

7 shall not be taken into account at any time so

8 as to allow such increase for any period.

9 (3) PARAGRAPH (1) TO APPLY ONLY TO COM10 PUTATION OF BENEFIT AMOUNTS.—Paragraph (1)

11 shall apply only for purposes of determining the

12 amount of benefits and not for purposes of deter13 mining—

14 (A) whether a threshold increase in the rel15 evant index has been met, or

16 (B) increases in amounts under other pro17 visions of law not described in paragraph (5)

18 which operate by reference to increases in such

19 benefits.

20 (4) DEFINITIONS.—For purposes of this sub21 section—

22 (A) COST-OF-LIVING ADJUSTMENT.—The

23 term ‘‘cost-of-living adjustment’’ means any ad24 justment in the amount of benefits described in
153

Title VI

•HR 2530 IH

1 paragraph (5) which is determined by reference

2 to changes in an index.

3 (B) INDEX.—

4 (i) INDEX.—The term ‘‘index’’ means

5 the Consumer Price Index and any other

6 index of price or wages.

7 (ii) RELEVANT INDEX.—The term

8 ‘‘relevant index’’ means the index on the

9 basis of which the amount of the cost-of10 living adjustment is determined.

11 (5) BENEFITS TO WHICH SUBSECTION AP12 PLIES.—For purposes of this subsection, the benefits

13 described in this paragraph are—

14 (A) old age, survivors, and disability insur15 ance benefits subject to adjustment under sec16 tion 215(i) of the Social Security Act (but the

17 limitation under paragraph (1) shall not apply

18 to supplemental security income benefits under

19 title XVI of such Act);

20 (B) retired and retainer pay subject to ad21 justment under section 1401a of title 10, Unit22 ed States Code;

23 (C) civil service retirement benefits under

24 section 8340 of title 5, United States Code, for25 eign service retirement benefits under section
154

Title VI

•HR 2530 IH

1 826 of the Foreign Service Act of 1980, Central

2 Intelligence Agency retirement benefits under

3 part J of the Central Intelligence Agency Re4 tirement Act of 1964 for certain employees, and

5 any other benefits under any similar provision

6 under any retirement system for employees of

7 the government of the United States;

8 (D) Federal workers’ compensation under

9 section 8146a of title 5, United States Code;

10 (E) benefits under section 3(a), 4(a), or

11 4(f) of the Railroad Retirement Act of 1974;

12 and

13 (F) benefits and expenditure limits under

14 title XVIII or XIX of the Social Security Act.

15 (6) BENEFIT.—For purposes of this section,

16 the term ‘‘benefit’’ includes a payment.

17 SEC. 6102. REDUCTION IN TITLE XX BLOCK GRANTS TO

18 STATES FOR SOCIAL SERVICES.

19 Section 2003(c) of the Social Security Act (42 U.S.C.

20 1397b(c)) is amended—

21 (1) by striking ‘‘and’’ at the end of paragraph

22 (4);

23 (2) in paragraph (5), by striking ‘‘fiscal year

24 after fiscal year 1989.’’ and inserting ‘‘of fiscal

25 years 1990 through 1995; and’’; and
155

Title VI

•HR 2530 IH

1 (3) by adding at the end the following:

2 ‘‘(6) $2,520,000,000 for fiscal year 1996 and

3 each succeeding fiscal year.’’.

4 SEC. 6103. MATCHING RATE REQUIREMENT FOR TITLE XX

5 BLOCK GRANTS TO STATES FOR SOCIAL

6 SERVICES.

7 Section 2002(a)(1) of the Social Security Act (42

8 U.S.C. 1397a(a)(1)) is amended by striking ‘‘Each State’’

9 and all that follows through the period and inserting the

10 following: ‘‘(A) Each State shall be entitled to payment

11 under this title for each fiscal year in an amount equal

12 to the lesser of—

13 ‘‘(i) 80 percent of the total amount expended by

14 the State during the fiscal year for services referred

15 to in subparagraph (B); or

16 ‘‘(ii) the allotment of the State for the fiscal

17 year.

18 ‘‘(B) A State to which a payment is made under this

19 title shall use the payment for services directed at the

20 goals set forth in section 2001, subject to the requirements

21 of this title.’’.

22 SEC. 6104. DENIAL OF UNEMPLOYMENT INSURANCE TO

23 CERTAIN HIGH-INCOME INDIVIDUALS.

24 (a) GENERAL RULE.—Subsection (a) of section 3304

25 of the Internal Revenue Code of 1986, as amended by sec-
156

Title VI

•HR 2530 IH

1 tion 10101, is further amended by striking ‘‘and’’ at the

2 end of paragraph (18), by redesignating paragraph (19)

3 as paragraph (20), and by inserting after paragraph (18)

4 the following new paragraph:

5 ‘‘(19) compensation shall not be payable to any

6 individual for any benefit year if the taxable income

7 of such individual for such individual’s most recent

8 taxable year ending before the beginning of such

9 benefit year exceeded $120,000; and’’.

10 (b) EFFECTIVE DATE.—

11 (1) IN GENERAL.—Except as provided in para12 graph (2), the amendment made by this section shall

13 apply to benefit years beginning after December 31,

14 1995.

15 (2) SPECIAL RULE.—In the case of any State

16 the legislature of which has not been in session for

17 at least 30 calendar days (whether or not successive)

18 between the date of the enactment of this Act and

19 December 31, 1995, the amendments made by this

20 section shall apply to benefit years beginning after

21 the day 30 calendar days after the first day on

22 which such legislature is in session on or after De23 cember 31, 1995.
157

Title VI

•HR 2530 IH

1 SEC. 6105. DENIAL OF UNEMPLOYMENT INSURANCE TO IN2 DIVIDUALS WHO VOLUNTARILY LEAVE MILI3 TARY SERVICE.

4 (a) GENERAL RULE.—Paragraph (1) of section

5 8521(a) of title 5, United States Code, is amended to read

6 as follows:

7 ‘‘(1) ‘Federal service’ means active service (not

8 including active duty in a reserve status unless for

9 a continuous period of 45 days or more) in the

10 armed forces or the commissioned corps of the Na11 tional Oceanic and Atmospheric Administration if

12 with respect to that service the individual—

13 ‘‘(A) was discharged or released under

14 honorable conditions,

15 ‘‘(B) did not resign or voluntarily leave the

16 service, and

17 ‘‘(C) was not discharged or released for

18 cause as defined by the Secretary of Defense;’’.

19 (b) EFFECTIVE DATE.—The amendment made by

20 subsection (a) shall apply in the case of a discharge or

21 release after the date of the enactment of this Act.
158

Title VII, Subtitle A

•HR 2530 IH

1 TITLE VII—MEDICAID REFORM

2 Subtitle A—Per Capita Spending

3 Limit

4 SEC. 7001. LIMITATION ON EXPENDITURES RECOGNIZED

5 FOR PURPOSES OF FEDERAL FINANCIAL PAR6 TICIPATION.

7 (a) IN GENERAL.—Title XIX of the Social Security

8 Act is amended—

9 (1) in section 1903(a), by striking ‘‘From’’ and

10 inserting ‘‘Subject to section 1931, from’’;

11 (2) by redesignating section 1931 as section

12 1932; and

13 (3) by inserting after section 1930 the following

14 new section:

15 ‘‘LIMITATION ON FEDERAL FINANCIAL PARTICIPATION

16 BASED ON PER BENEFICIARY SPENDING

17 ‘‘SEC. 1931. (a) IN GENERAL.—Subject to subsection

18 (e), the total amount of State expenditures for medical

19 assistance for which Federal financial participation may

20 be made under section 1903(a) for quarters in a fiscal

21 year (beginning with fiscal year 1997) may not exceed the

22 sum of the following:

23 ‘‘(1) NONDISABLED MEDICAID CHILDREN.—

24 The product of—
159

Title VII, Subtitle A

•HR 2530 IH

1 ‘‘(A) the number of full-year equivalent

2 nondisabled medicaid children (described in

3 subsection (b)(1)) in the State in the fiscal

4 year, and

5 ‘‘(B) the per capita medical assistance

6 limit established under subsection (c)(1) for

7 such category of individuals for the fiscal year.

8 ‘‘(2) NONDISABLED MEDICAID ADULTS.—The

9 product of—

10 ‘‘(A) the number of full-year equivalent

11 nondisabled medicaid adults (described in sub12 section (b)(2)) in the State in the fiscal year,

13 and

14 ‘‘(B) the per capita medical assistance

15 limit established under subsection (c)(1) for

16 such category individuals for the fiscal year.

17 ‘‘(3) NONDISABLED ELDERLY MEDICAID BENE18 FICIARIES.—The product of—

19 ‘‘(A) the number of full-year equivalent

20 nondisabled elderly medicaid beneficiaries (de21 scribed in subsection (b)(3)) in the State in the

22 fiscal year, and

23 ‘‘(B) the per capita medical assistance

24 limit established under subsection (c)(1) for

25 such category of individuals for the fiscal year.
160

Title VII, Subtitle A

•HR 2530 IH

1 ‘‘(4) DISABLED MEDICAID BENEFICIARIES.—

2 The product of—

3 ‘‘(A) the number of full-year equivalent

4 disabled medicaid beneficiaries (described in

5 subsection (b)(4)) in the State in the fiscal

6 year, and

7 ‘‘(B) the per capita medical assistance

8 limit established under subsection (c)(1) for

9 such category individuals for the fiscal year.

10 ‘‘(5) ADMINISTRATIVE EXPENDITURES.—The

11 product of—

12 ‘‘(A) the number of full-year equivalent

13 medicaid beneficiaries who are in any category

14 of beneficiaries in the State in the fiscal year,

15 and

16 ‘‘(B) the per capita limit established under

17 subsection (c)(1) for administrative expendi18 tures for the fiscal year.

19 This section shall not apply to expenditures for which no

20 Federal financial participation is available under this title.

21 ‘‘(b) DEFINITIONS RELATING TO CATEGORIES OF IN22 DIVIDUALS.—In this section:

23 ‘‘(1) NONDISABLED MEDICAID CHILDREN.—

24 The term ‘nondisabled medicaid child’ means an in25 dividual entitled to medical assistance under the
161

Title VII, Subtitle A

•HR 2530 IH

1 State plan under this title who is not disabled (as

2 such term is used under paragraph (4)) and is under

3 21 years of age.

4 ‘‘(2) NONDISABLED MEDICAID ADULTS.—The

5 term ‘nondisabled medicaid adult’ means an individ6 ual entitled to medical assistance under the State

7 plan under this title who is not disabled (as such

8 term is used under paragraph (4)) and is at least 21

9 years of age but under 65 years of age.

10 ‘‘(3) NONDISABLED ELDERLY MEDICAID BENE11 FICIARY.—The term ‘nondisabled medicaid adult’

12 means an individual entitled to medical assistance

13 under the State plan under this title who is not dis14 abled (as such term is used under paragraph (4))

15 and is at least 65 years of age.

16 ‘‘(4) DISABLED MEDICAID BENEFICIARIES.—

17 The term ‘disabled medicaid beneficiary’ means an

18 individual entitled to medical assistance under the

19 State plan under this title who is entitled to such as20 sistance solely on the basis of blindness or disability.

21 For purposes of this section, nondisabled medicaid chil22 dren, nondisabled medicaid adults, nondisabled elderly

23 medicaid beneficiaries, and disabled medicaid beneficiaries

24 each constitutes a separate category of medicaid bene25 ficiaries.
162

Title VII, Subtitle A

•HR 2530 IH

1 ‘‘(c) ESTABLISHMENT OF PER CAPITA LIMITS.—

2 ‘‘(1) IN GENERAL.—The Secretary shall estab3 lish for each State a per capita medical assistance

4 limit for each category of medicaid beneficiaries de5 scribed in subsection (b) and for administrative ex6 penditures for a fiscal year equal to the product of

7 the following:

8 ‘‘(A) PREVIOUS EXPENDITURES.—The av9 erage of the amount of the per capita match10 able medical assistance expenditures (deter11 mined under paragraph (2)(A)) for such cat12 egory (or the per capita matchable

13 adminstrative expenditures determined under

14 paragraph (2)(B)) for such State for each of

15 the 3 previous fiscal years.

16 ‘‘(B) INFLATION FACTOR.—The rolling 2-

17 year CPI increase factor (determined under

18 paragraph (3)(A)) for the fiscal year involved.

19 ‘‘(C) TRANSITIONAL ALLOWANCE.—The

20 transitional allowance factor (if any) applicable

21 under paragraph (3)(B) to such limit for the

22 previous fiscal year and for the fiscal year in23 volved.
163

Title VII, Subtitle A

•HR 2530 IH

1 ‘‘(2) PER CAPITA MATCHABLE MEDICAL ASSIST2 ANCE EXPENDITURES.—For purposes of this sec3 tion—

4 ‘‘(A) MEDICAL ASSISTANCE EXPENDI5 TURES.—The ‘per capita matchable medical as6 sistance expenditures’, for a category of medic7 aid beneficiaries for a State for a fiscal year, is

8 equal to—

9 ‘‘(i) the amount of expenditures for

10 which Federal financial participation is (or

11 may be) provided (consistent with this sec12 tion) to the State under paragraphs (1)

13 and (5) of section 1903(a) (other than ex14 penditures excluded under subsection (e))

15 with respect to medical assistance fur16 nished with respect to individuals in such

17 category during the fiscal year, divided by

18 ‘‘(ii) the number of full-year equiva19 lent individuals in such category in the

20 State in such fiscal year.

21 ‘‘(B) PER CAPITA MATCHABLE ADMINIS22 TRATIVE EXPENDITURES.—The ‘per capita

23 matchable administrative expenditures’, for a

24 State for a fiscal year, is equal to—
164

Title VII, Subtitle A

•HR 2530 IH

1 ‘‘(i) the amount of expenditures for

2 which Federal financial participation is (or

3 may be) provided (consistent with this sec4 tion) to the State under section 1903(a)

5 (under paragraphs (1) and (5) of such sec6 tion) during the fiscal year, divided by

7 ‘‘(ii) the number of full-year equiva8 lent individuals in any category of medic9 aid beneficiary in the State in such fiscal

10 year.

11 ‘‘(3) INCREASE FACTORS.—In this subsection—

12 ‘‘(A) ROLLING 2-YEAR CPI INCREASE FAC13 TOR.—The ‘rolling 2-year CPI increase factor’

14 for a fiscal year is 1 plus the percentage by

15 which—

16 ‘‘(i) the Secretary’s estimate of the

17 average value of the consumer price index

18 for all urban consumers (all items, U.S.

19 city average) for months in the particular

20 fiscal year, exceeds

21 ‘‘(ii) the average value of such index

22 for months in the 3 previous fiscal years.

23 ‘‘(B) TRANSITIONAL ALLOWANCE FAC24 TORS.—
165

Title VII, Subtitle A

•HR 2530 IH

1 ‘‘(i) FISCAL YEAR 1996.—The ‘transi2 tional allowance factor’ for fiscal year

3 1996—

4 ‘‘(I) for the category of non5 disabled medicaid children, is 1.051;

6 ‘‘(II) for the category of non7 disabled medicaid adults, is 1.067;

8 ‘‘(III) for the category of non9 disabled elderly medicaid beneficiaries

10 is 1.031;

11 ‘‘(IV) for the category of disabled

12 medicaid beneficiaries is 1.015; and

13 ‘‘(V) for administrative expendi14 tures is 1.046.

15 ‘‘(ii) SUBSEQUENT FISCAL YEARS FOR

16 NONDISABLED CHILDREN AND ADULTS

17 AND FOR DISABLED CATEGORIES.—The

18 ‘transitional allowance factor’ for the cat19 egories of nondisabled medicaid children,

20 nondisabled medicaid adults, and disabled

21 medicaid beneficiaries—

22 ‘‘(I) for fiscal year 1997 is 1.01,

23 and

24 ‘‘(II) for each subsequent fiscal

25 year is 1.0.
166

Title VII, Subtitle A

•HR 2530 IH

1 ‘‘(iii) SUBSEQUENT FISCAL YEARS

2 FOR THE ELDERLY AND ADMINISTRATIVE

3 EXPENDITURES.—The ‘transitional allow4 ance factor’ for the category of nondisabled

5 elderly medicaid beneficiaries and for ad6 ministrative expenditures for fiscal years

7 after fiscal year 1996 is 1.0.

8 ‘‘(4) NOTICE.—The Secretary shall notify each

9 State before the beginning of each fiscal year of the

10 per capita limits established under this subsection

11 for the State for the fiscal year.

12 ‘‘(d) SPECIAL RULES AND EXCEPTIONS.—For pur13 poses of this section, expenditures attributable to any of

14 the following shall not be subject to the limits established

15 under this section and shall not be taken into account in

16 establishing per capita medical assistance limits under

17 subsection (c)(1):

18 ‘‘(1) DSH.—Payment adjustments under sec19 tion 1923.

20 ‘‘(2) MEDICARE COST-SHARING.—Payments for

21 medical assistance for medicare cost-sharing (as de22 fined in section 1905(p)(3)).

23 ‘‘(3) SERVICES THROUGH IHS AND TRIBAL PRO24 VIDERS.—Payments for medical assistance for serv-
167

Title VII, Subtitle A

•HR 2530 IH

1 ices described in the last sentence of section

2 1905(b).

3 Nothing in this section shall be construed as applying any

4 limitation to expenditures for the purchase and delivery

5 of qualified pediatric vaccines under section 1928.

6 ‘‘(e) DEFINITIONS.—In this section, the term ‘medic7 aid beneficiary’ means an individual entitled to medical as8 sistance under the State plan under this title.

9 ‘‘(f) ESTIMATIONS AND NOTICE.—

10 ‘‘(1) IN GENERAL.—The Secretary shall—

11 ‘‘(A) establish a process for estimating the

12 limits established under subsection (a) for each

13 State at the beginning of each fiscal year and

14 adjusting such estimate during such year; and

15 ‘‘(B) notifying each State of the esti16 mations and adjustments referred to in sub17 paragraph (A).

18 ‘‘(2) DETERMINATION OF NUMBER OF FULL19 YEAR EQUIVALENT INDIVIDUALS.—For purposes of

20 this section, the number of full-year equivalent indi21 viduals in each category described in subsection (b)

22 for a State for a year shall be determined based on

23 actual reports submitted by the State to the Sec24 retary. In the case of individuals who were not enti25 tled to benefits under a State plan for the entire fis-
168

Title VII, Subtitle A

•HR 2530 IH

1 cal year (or are within a group of individuals for

2 only part of a fiscal year), the number shall take

3 into account only the portion of the year in which

4 they were so entitled or within such group. The Sec5 retary may audit such reports.

6 ‘‘(g) ANTI-GAMING ADJUSTMENT TO REFLECT

7 CHANGES IN ELIGIBILITY.—

8 ‘‘(1) REPORT ON PER CAPITA EXPENDI9 TURES.—If a State makes a change (on or after Oc10 tober 15, 1995) relating to eligibility for medical as11 sistance in its State plan that results in the addition

12 or deletion of individuals eligible for such assistance,

13 the State shall submit to the Secretary with such

14 change such information as the Secretary may re15 quire in order to carry out paragraph (2).

16 ‘‘(2) ADJUSTMENT FOR CERTAIN ADDITIONS.—

17 If a State makes a change described in paragraph

18 (1) that the Secretary believes will result in making

19 medical assistance available for additional individ20 uals (within a category described in subsection (b))

21 with respect to whom the Secretary estimates the

22 per capita average medical assistance expenditures

23 will be less the applicable per capita limit established

24 under subsection (c)(1) for such category, the Sec25 retary shall apply the per capita limits under such
169

Title VII, Subtitle A

•HR 2530 IH

1 subsection separately with respect to individuals who

2 are eligible for medical assistance without regard to

3 such addition and with respect to the individuals so

4 added.

5 ‘‘(3) ADJUSTMENT FOR CERTAIN DELETIONS.—

6 If a State makes a change described in paragraph

7 (1) that the Secretary believes will result in denial

8 of medical assistance for individuals (within a cat9 egory described in subsection (b)) with respect to

10 whom the Secretary estimates the per capita average

11 medical assistance expenditures is greater than the

12 applicable per capita limit established under sub13 section (c)(1) for such catetory, the Secretary shall

14 adjust the payment limits under subsection (a) to re15 flect any decrease in average per beneficiary expend16 itures that would result from such change.

17 ‘‘(h) TREATMENT OF STATES OPERATING UNDER

18 WAIVERS.—The Secretary shall provide for such adjust19 ments to the per capita limits under subsection (c) for a

20 fiscal year as may be appropriate to take into account the

21 case of States which either—

22 ‘‘(1) during any of the 3 previous fiscal years

23 was providing medical assistance to its residents

24 under a waiver granted under section 1115, section

25 1915, or other provision of law, and, in the fiscal
170

Title VII, Subtitle A

•HR 2530 IH

1 year involved is no longer providing such medical as2 sistance under such waiver; or

3 ‘‘(2) during any of the 3 previous fiscal years

4 was not providing medical assistance to its residents

5 under a waiver granted under section 1115, section

6 1915, or other provision of law, and, in the fiscal

7 year involved is providing such medical assistance

8 under such a waiver.’’.

9 (b) ENFORCEMENT-RELATED PROVISIONS.—

10 (1) ASSURING ACTUAL PAYMENTS TO STATES

11 CONSISTENT WITH LIMITATION.—Section 1903(d) of

12 such Act (42 U.S.C. 1396b(d)) is amended—

13 (A) in paragraph (2)(A), by striking ‘‘The

14 Secretary’’ and inserting ‘‘Subject to paragraph

15 (7), the Secretary’’, and

16 (B) by adding at the end the following new

17 paragraph:

18 ‘‘(7)(A) The Secretary shall take such steps as are

19 necessary to assure that payments under this subsection

20 for quarters in a fiscal year are consistent with the pay21 ment limits established under section 1931 for the fiscal

22 year. Such steps may include limiting such payments for

23 one or more quarters in a fiscal year based on—

24 ‘‘(i) an appropriate proportion of the payment

25 limits for the fiscal year involved, and
171

Title VII, Subtitle A

•HR 2530 IH

1 ‘‘(ii) numbers of individuals within each cat2 egory, as reported under subparagraph (B) for a re3 cent previous quarter.

4 ‘‘(B) Each State shall include, in its report filed

5 under paragraph (1)(A) for a calendar quarter—

6 ‘‘(i) the actual number of individuals within

7 each category described in section 1931(b) for the

8 second previous calendar quarter and (based on the

9 data available) for the previous calendar quarter,

10 and

11 ‘‘(ii) an estimate of such numbers for the cal12 endar quarter involved.’’.

13 (2) RESTRICTION ON AUTHORITY OF STATES TO

14 APPLY LESS RESTRICTIVE INCOME AND RESOURCE

15 METHODOLOGIES.—Section 1902(r)(2) of such Act

16 (42 U.S.C. 1396a(r)(2)) is amended by adding at

17 the end the following new subparagraph:

18 ‘‘(C) Subparagraph (A) shall not apply to plan

19 amendments made on or after October 15, 1995.’’.

20 (c) CONFORMING AMENDMENT.—Section 1903(i) of

21 such Act (42 U.S.C. 1396b(i)) is amended—

22 (1) by striking ‘‘or’’ at the end of paragraph

23 (14),

24 (2) by striking the period at the end of para25 graph (15) and inserting ‘‘; or’’, and
172

Title VII, Subtitle B

•HR 2530 IH

1 (3) by inserting after paragraph (15) the fol2 lowing:

3 ‘‘(16) in accordance with section 1931, with re4 spect to amounts expended to the extent they exceed

5 applicable limits established under section 1931(a).’’.

6 (d) EFFECTIVE DATE.—The amendments made by

7 this section shall apply to payments for calendar quarters

8 beginning on or after October 1, 1996.

9 Subtitle B—Medicaid Managed

10 Care

11 SEC. 7101. PERMITTING GREATER FLEXIBILITY FOR

12 STATES TO ENROLL BENEFICIARIES IN MAN13 AGED CARE ARRANGEMENTS.

14 (a) IN GENERAL.—Title XIX of the Social Security

15 Act (42 U.S.C. 1396 et seq.), as amended by section

16 7001(a), is amended—

17 (1) by redesignating section 1932 as section

18 1933; and

19 (2) by inserting after section 1931 the following

20 new section:

21 ‘‘STATE OPTIONS FOR ENROLLMENT OF BENEFICIARIES

22 IN MANAGED CARE ARRANGEMENTS

23 ‘‘SEC. 1932. (a) MANDATORY ENROLLMENT.—

24 ‘‘(1) IN GENERAL.—Subject to the succeeding

25 provisions of this section and notwithstanding para26 graphs (1), (10)(B), and (23) of section 1902(a), a
173

Title VII, Subtitle B

•HR 2530 IH

1 State may require an individual eligible for medical

2 assistance under the State plan under this title to

3 enroll with an eligible managed care provider as a

4 condition of receiving such assistance and, with re5 spect to assistance furnished by or under arrange6 ments with such provider, to receive such assistance

7 through the provider, if the following provisions are

8 met:

9 ‘‘(A) The provider meets the requirements

10 of section 1933.

11 ‘‘(B) The provider enters into a contract

12 with the State to provide services for the bene13 fit of individuals eligible for benefits under this

14 title under which prepaid payments to such pro15 vider are made on an actuarially sound basis.

16 ‘‘(C) There is sufficient capacity among all

17 providers meeting such requirements to enroll

18 and serve the individuals required to enroll with

19 such providers.

20 ‘‘(D) The individual is not a special needs

21 individual (as defined in subsection (c)).

22 ‘‘(E) The State—

23 ‘‘(i) permits an individual to choose

24 an eligible managed care provider—
174

Title VII, Subtitle B

•HR 2530 IH

1 ‘‘(I) from among not less than 2

2 medicaid managed care plans; or

3 ‘‘(II) between a medicaid man4 aged care plan and a primary care

5 case management provider;

6 ‘‘(ii) provides the individual with the

7 opportunity to change enrollment among

8 eligible managed care providers not less

9 than once annually and notifies the indi10 vidual of such opportunity not later than

11 60 days prior to the first date on which

12 the individual may change enrollment;

13 ‘‘(iii) establishes a method for estab14 lishing enrollment priorities in the case of

15 an eligible managed care provider that

16 does not have sufficient capacity to enroll

17 all such individuals seeking enrollment

18 under which individuals already enrolled

19 with the provider are given priority in con20 tinuing enrollment with the provider;

21 ‘‘(iv) establishes a default enrollment

22 process which meets the requirements de23 scribed in paragraph (2) and under which

24 any such individual who does not enroll

25 with an eligible managed care provider
175

Title VII, Subtitle B

•HR 2530 IH

1 during the enrollment period specified by

2 the State shall be enrolled by the State

3 with such a provider in accordance with

4 such process; and

5 ‘‘(v) establishes the sanctions provided

6 for in section 1934.

7 ‘‘(2) DEFAULT ENROLLMENT PROCESS RE8 QUIREMENTS.—The default enrollment process es9 tablished by a State under paragraph (1)(E)(iv)

10 shall—

11 ‘‘(A) provide that the State may not enroll

12 individuals with an eligible managed care pro13 vider which is not in compliance with the re14 quirements of section 1933; and

15 ‘‘(B) provide for an equitable distribution

16 of individuals among all eligible managed care

17 providers available to enroll individuals through

18 such default enrollment process, consistent with

19 the enrollment capacities of such providers.

20 ‘‘(b) REENROLLMENT OF INDIVIDUALS WHO REGAIN

21 ELIGIBILITY.—

22 ‘‘(1) IN GENERAL.—If an individual eligible for

23 medical assistance under a State plan under this

24 title and enrolled with an eligible managed care pro25 vider with a contract under subsection (a)(1)(B)
176

Title VII, Subtitle B

•HR 2530 IH

1 ceases to be eligible for such assistance for a period

2 of not greater than 2 months, the State may provide

3 for the automatic reenrollment of the individual with

4 the provider as of the first day of the month in

5 which the individual is again eligible for such assist6 ance.

7 ‘‘(2) CONDITIONS.—Paragraph (1) shall only

8 apply if—

9 ‘‘(A) the month for which the individual is

10 to be reenrolled occurs during the enrollment

11 period covered by the individual’s original en12 rollment with the eligible managed care pro13 vider;

14 ‘‘(B) the eligible managed care provider

15 continues to have a contract with the State

16 agency under subsection (a)(1)(B) as of the

17 first day of such month; and

18 ‘‘(C) the eligible managed care provider

19 complies with the requirements of section 1933.

20 ‘‘(3) NOTICE OF REENROLLMENT.—The State

21 shall provide timely notice to an eligible managed

22 care provider of any reenrollment of an individual

23 under this subsection.
177

Title VII, Subtitle B

•HR 2530 IH

1 ‘‘(c) SPECIAL NEEDS INDIVIDUALS DESCRIBED.—In

2 this section, a ‘special needs individual’ means any of the

3 following:

4 ‘‘(1) SPECIAL NEEDS CHILD.—An individual

5 who is under 19 years of age who —

6 ‘‘(A) is eligible for supplemental security

7 income under title XVI;

8 ‘‘(B) is described under section

9 501(a)(1)(D);

10 ‘‘(C) is a child described in section

11 1902(e)(3); or

12 ‘‘(D) is in foster care or is otherwise in an

13 out-of-home placement.

14 ‘‘(2) HOMELESS INDIVIDUALS.—An individual

15 who is homeless (without regard to whether the indi16 vidual is a member of a family), including—

17 ‘‘(A) an individual whose primary residence

18 during the night is a supervised public or pri19 vate facility that provides temporary living ac20 commodations; or

21 ‘‘(B) an individual who is a resident in

22 transitional housing.

23 ‘‘(3) MIGRANT AGRICULTURAL WORKERS.—A

24 migratory agricultural worker or a seasonal agricul25 tural worker (as such terms are defined in section
178

Title VII, Subtitle B

•HR 2530 IH

1 329 of the Public Health Service Act), or the spouse

2 or dependent of such a worker.

3 ‘‘(4) INDIANS.—An Indian (as defined in sec4 tion 4(c) of the Indian Health Care Improvement

5 Act (25 U.S.C. 1603(c))).’’.

6 (b) CONFORMING AMENDMENT.—Section

7 1902(a)(23) of such Act (42 U.S.C. 1396a(a)(23)) is

8 amended—

9 (1) in the matter preceding subparagraph (A),

10 by striking ‘‘subsection (g) and in section 1915’’ and

11 inserting ‘‘subsection (g), section 1915, and section

12 1931,’’; and

13 (2) in subparagraph (B)—

14 (A) by striking ‘‘a health maintenance or15 ganization, or a’’ and inserting ‘‘or with an eli16 gible managed care provider, as defined in sec17 tion 1933(g)(1), or’’.

18 SEC. 7102. REMOVAL OF BARRIERS TO PROVISION OF MED19 ICAID SERVICES THROUGH MANAGED CARE.

20 (a) REPEAL OF CURRENT BARRIERS.—Except as

21 provided in subsection (b), section 1903(m) of the Social

22 Security Act (42 U.S.C. 1396b(m)) is repealed on the date

23 of the enactment of this Act.

24 (b) EXISTING CONTRACTS.—In the case of any con25 tract under section 1903(m) of such Act which is in effect
179

Title VII, Subtitle B

•HR 2530 IH

1 on the day before the date of the enactment of this Act,

2 the provisions of such section shall apply to such contract

3 until the earlier of—

4 (1) the day after the date of the expiration of

5 the contract; or

6 (2) the date which is 1 year after the date of

7 the enactment of this Act.

8 (c) ELIGIBLE MANAGED CARE PROVIDERS DE9 SCRIBED.—Title XIX of such Act (42 U.S.C. 1396 et

10 seq.), as amended by sections 7001(a) and 7101(a), is

11 amended—

12 (1) by redesignating section 1933 as section

13 1934; and

14 (2) by inserting after section 1932 the following

15 new section:

16 ‘‘ELIGIBLE MANAGED CARE PROVIDERS

17 ‘‘SEC. 1933. (a) DEFINITIONS.—In this section, the

18 following definitions shall apply:

19 ‘‘(1) ELIGIBLE MANAGED CARE PROVIDER.—

20 The term ‘eligible managed care provider’ means—

21 ‘‘(A) a medicaid managed care plan; or

22 ‘‘(B) a primary care case management pro23 vider.

24 ‘‘(2) MEDICAID MANAGED CARE PLAN.—The

25 term ‘medicaid managed care plan’ means a health

26 maintenance organization, an eligible organization
180

Title VII, Subtitle B

•HR 2530 IH

1 with a contract under Section 1876, a provider spon2 sored network or any other plan which provides or

3 arranges for the provision of one or more items and

4 services to individuals eligible for medical assistance

5 under the State plan under this title in accordance

6 with a contract with the State under section

7 1932(a)(1)(B).

8 ‘‘(3) PRIMARY CARE CASE MANAGEMENT PRO9 VIDER.—

10 ‘‘(A) IN GENERAL.—The term ‘primary

11 care case management provider’ means a health

12 care provider that—

13 ‘‘(i) is a physician, group of physi14 cians, a Federally-qualified health center, a

15 rural health clinic, or an entity employing

16 or having other arrangements with physi17 cians that provides or arranges for the pro18 vision of one or more items and services to

19 individuals eligible for medical assistance

20 under the State plan under this title in ac21 cordance with a contract with the State

22 under section 1932(a)(1)(B);

23 ‘‘(ii) receives payment on a fee-for24 service basis (or, in the case of a Feder25 ally-qualified health center or a rural
181

Title VII, Subtitle B

•HR 2530 IH

1 health clinic, on a reasonable cost per en2 counter basis) for the provision of health

3 care items and services specified in such

4 contract to enrolled individuals;

5 ‘‘(iii) receives an additional fixed fee

6 per enrollee for a period specified in such

7 contract for providing case management

8 services (including approving and arrang9 ing for the provision of health care items

10 and services specified in such contract on

11 a referral basis) to enrolled individuals;

12 and

13 ‘‘(iv) is not an entity that is at risk.

14 ‘‘(B) AT RISK.—In subparagraph (A)(iv),

15 the term ‘at risk’ means an entity that—

16 ‘‘(i) has a contract with the State

17 under which such entity is paid a fixed

18 amount for providing or arranging for the

19 provision of health care items or services

20 specified in such contract to an individual

21 eligible for medical assistance under the

22 State plan and enrolled with such entity,

23 regardless of whether such items or serv24 ices are furnished to such individual; and
182

Title VII, Subtitle B

•HR 2530 IH

1 ‘‘(ii) is liable for all or part of the cost

2 of furnishing such items or services, re3 gardless of whether such cost exceeds such

4 fixed payment.

5 ‘‘(b) ENROLLMENT.—

6 ‘‘(1) NONDISCRIMINATION.—An eligible man7 aged care provider may not discriminate on the basis

8 of health status or anticipated need for services in

9 the enrollment, reenrollment, or disenrollment of in10 dividuals eligible to receive medical assistance under

11 a State plan under this title or by discouraging en12 rollment (except as permitted by this section) by eli13 gible individuals.

14 ‘‘(2) TERMINATION OF ENROLLMENT.—

15 ‘‘(A) IN GENERAL.—An eligible managed

16 care provider shall permit an individual eligible

17 for medical assistance under the State plan

18 under this title who is enrolled with the pro19 vider to terminate such enrollment for cause at

20 any time, and without cause during the 60-day

21 period beginning on the date the individual re22 ceives notice of enrollment, and shall notify

23 each such individual of the opportunity to ter24 minate enrollment under these conditions.
183

Title VII, Subtitle B

•HR 2530 IH

1 ‘‘(B) FRAUDULENT INDUCEMENT OR CO2 ERCION AS GROUNDS FOR CAUSE.—For pur3 poses of subparagraph (A), an individual termi4 nating enrollment with an eligible managed care

5 provider on the grounds that the enrollment

6 was based on fraudulent inducement or was ob7 tained through coercion shall be considered to

8 terminate such enrollment for cause.

9 ‘‘(C) NOTICE OF TERMINATION.—

10 ‘‘(i) NOTICE TO STATE.—

11 ‘‘(I) BY INDIVIDUALS.—Each in12 dividual terminating enrollment with

13 an eligible managed care provider

14 under subparagraph (A) shall do so

15 by providing notice of the termination

16 to an office of the State agency ad17 ministering the State plan under this

18 title, the State or local welfare agency,

19 or an office of an eligible managed

20 care provider.

21 ‘‘(II) BY PLANS.—Any eligible

22 managed care provider which receives

23 notice of an individual’s termination

24 of enrollment with such provider

25 through receipt of such notice at an
184

Title VII, Subtitle B

•HR 2530 IH

1 office of an eligible managed care pro2 vider shall provide timely notice of the

3 termination to the State agency ad4 ministering the State plan under this

5 title.

6 ‘‘(ii) NOTICE TO PLAN.—The State

7 agency administering the State plan under

8 this title or the State or local welfare agen9 cy which receives notice of an individual’s

10 termination of enrollment with an eligible

11 managed care provider under clause (i)

12 shall provide timely notice of the termi13 nation to such provider.

14 ‘‘(D) REENROLLMENT.—Each State shall

15 establish a process under which an individual

16 terminating enrollment under this paragraph

17 shall be promptly enrolled with another eligible

18 managed care provider and notified of such en19 rollment.

20 ‘‘(3) PROVISION OF ENROLLMENT MATERIALS

21 IN UNDERSTANDABLE FORM.—Each eligible man22 aged care provider shall provide all enrollment mate23 rials in a manner and form which may be easily un24 derstood by a typical adult enrollee of the provider
185

Title VII, Subtitle B

•HR 2530 IH

1 who is eligible for medical assistance under the State

2 plan under this title.

3 ‘‘(c) QUALITY ASSURANCE.—

4 ‘‘(1) ACCESS TO SERVICES.—Each eligible man5 aged care provider shall provide or arrange for the

6 provision of all medically necessary medical assist7 ance under this title which is specified in the con8 tract entered into between such provider and the

9 State under section 1932(a)(1)(B) for enrollees who

10 are eligible for medical assistance under the State

11 plan under this title.

12 ‘‘(2) TIMELY DELIVERY OF SERVICES.—Each

13 eligible managed care provider shall respond to re14 quests from enrollees for the delivery of medical as15 sistance in a manner which —

16 ‘‘(A) makes such assistance —

17 ‘‘(i) available and accessible to each

18 such individual, within the area served by

19 the provider, with reasonable promptness

20 and in a manner which assures continuity;

21 and

22 ‘‘(ii) when medically necessary, avail23 able and accessible 24 hours a day and 7

24 days a week; and
186

Title VII, Subtitle B

•HR 2530 IH

1 ‘‘(B) with respect to assistance provided to

2 such an individual other than through the pro3 vider, or without prior authorization, in the

4 case of a primary care case management pro5 vider, provides for reimbursement to the indi6 vidual (if applicable under the contract between

7 the State and the provider) if —

8 ‘‘(i) the services were medically nec9 essary and immediately required because of

10 an unforeseen illness, injury, or condition;

11 and

12 ‘‘(ii) it was not reasonable given the

13 circumstances to obtain the services

14 through the provider, or, in the case of a

15 primary care case management provider,

16 with prior authorization.

17 ‘‘(3) EXTERNAL INDEPENDENT REVIEW OF ELI18 GIBLE MANAGED CARE PROVIDER ACTIVITIES.—

19 ‘‘(A) REVIEW OF MEDICAID MANAGED

20 CARE PLAN CONTRACT.—

21 ‘‘(i) IN GENERAL.—Except as pro22 vided in subparagraph (B), each medicaid

23 managed care plan shall be subject to an

24 annual external independent review of the

25 quality and timeliness of, and access to,
187

Title VII, Subtitle B

•HR 2530 IH

1 the items and services specified in such

2 plan’s contract with the State under sec3 tion 1932(a)(1)(B). Such review shall spe4 cifically evaluate the extent to which the

5 medicaid managed care plan provides such

6 services in a timely manner.

7 ‘‘(ii) CONTENTS OF REVIEW.—An ex8 ternal independent review conducted under

9 this paragraph shall include the following:

10 ‘‘(I) a review of the entity’s medi11 cal care, through sampling of medical

12 records or other appropriate methods,

13 for indications of quality of care and

14 inappropriate utilization (including

15 overutilization) and treatment,

16 ‘‘(II) a review of enrollee inpa17 tient and ambulatory data, through

18 sampling of medical records or other

19 appropriate methods, to determine

20 trends in quality and appropriateness

21 of care,

22 ‘‘(III) notification of the entity

23 and the State when the review under

24 this paragraph indicates inappropriate
188

Title VII, Subtitle B

•HR 2530 IH

1 care, treatment, or utilization of serv2 ices (including overutilization), and

3 ‘‘(IV) other activities as pre4 scribed by the Secretary or the State.

5 ‘‘(iii) AVAILABILITY OF RESULTS.—

6 The results of each external independent

7 review conducted under this subparagraph

8 shall be available to participating health

9 care providers, enrollees, and potential en10 rollees of the medicaid managed care plan,

11 except that the results may not be made

12 available in a manner that discloses the

13 identity of any individual patient.

14 ‘‘(B) DEEMED COMPLIANCE.—

15 ‘‘(i) MEDICARE PLANS.—The require16 ments of subparagraph (A) shall not apply

17 with respect to a medicaid managed care

18 plan if the plan is an eligible organization

19 with a contract in effect under section

20 1876.

21 ‘‘(ii) PRIVATE ACCREDITATION.—

22 ‘‘(I) IN GENERAL.—The require23 ments of subparagraph (A) shall not

24 apply with respect to a medicaid man25 aged care plan if —
189

Title VII, Subtitle B

•HR 2530 IH

1 ‘‘(aa) the plan is accredited

2 by an organization meeting the

3 requirements described in clause

4 (iii); and

5 ‘‘(bb) the standards and

6 process under which the plan is

7 accredited meet such require8 ments as are established under

9 subclause (II), without regard to

10 whether or not the time require11 ment of such subclause is satis12 fied.

13 ‘‘(II) STANDARDS AND PROC14 ESS.—Not later than 180 days after

15 the date of the enactment of this Act,

16 the Secretary shall specify require17 ments for the standards and process

18 under which a medicaid managed care

19 plan is accredited by an organization

20 meeting the requirements of clause

21 (iii).

22 ‘‘(iii) ACCREDITING ORGANIZATION.—

23 An accrediting organization meets the re24 quirements of this clause if the organiza25 tion —
190

Title VII, Subtitle B

•HR 2530 IH

1 ‘‘(I) is a private, nonprofit orga2 nization;

3 ‘‘(II) exists for the primary pur4 pose of accrediting managed care

5 plans or health care providers; and

6 ‘‘(III) is independent of health

7 care providers or associations of

8 health care providers.

9 ‘‘(C) REVIEW OF PRIMARY CARE CASE

10 MANAGEMENT PROVIDER CONTRACT.—Each

11 primary care case management provider shall

12 be subject to an annual external independent

13 review of the quality and timeliness of, and ac14 cess to, the items and services specified in the

15 contract entered into between the State and the

16 primary care case management provider under

17 section 1932(a)(1)(B).

18 ‘‘(4) FEDERAL MONITORING RESPONSIBIL19 ITIES.—The Secretary shall review the external inde20 pendent reviews conducted pursuant to paragraph

21 (3) and shall monitor the effectiveness of the State’s

22 monitoring and followup activities required under

23 subparagraph (A) of paragraph (2). If the Secretary

24 determines that a State’s monitoring and followup

25 activities are not adequate to ensure that the re-
191

Title VII, Subtitle B

•HR 2530 IH

1 quirements of paragraph (2) are met, the Secretary

2 shall undertake appropriate followup activities to en3 sure that the State improves its monitoring and fol4 lowup activities.

5 ‘‘(5) PROVIDING INFORMATION ON SERVICES.—

6 ‘‘(A) REQUIREMENTS FOR MEDICAID MAN7 AGED CARE PLANS.—

8 ‘‘(i) INFORMATION TO THE STATE.—

9 Each medicaid managed care plan shall

10 provide to the State (at such frequency as

11 the Secretary may require), complete and

12 timely information concerning the follow13 ing:

14 ‘‘(I) The services that the plan

15 provides to (or arranges to be pro16 vided to) individuals eligible for medi17 cal assistance under the State plan

18 under this title.

19 ‘‘(II) The identity, locations,

20 qualifications, and availability of par21 ticipating health care providers.

22 ‘‘(III) The rights and responsibil23 ities of enrollees.

24 ‘‘(IV) The services provided by

25 the plan which are subject to prior au-
192

Title VII, Subtitle B

•HR 2530 IH

1 thorization by the plan as a condition

2 of coverage (in accordance with para3 graph (6)(A)).

4 ‘‘(V) The procedures available to

5 an enrollee and a health care provider

6 to appeal the failure of the plan to

7 cover a service.

8 ‘‘(VI) The performance of the

9 plan in serving individuals eligible for

10 medical assistance under the State

11 plan under this title.

12 ‘‘(ii) INFORMATION TO HEALTH CARE

13 PROVIDERS, ENROLLEES, AND POTENTIAL

14 ENROLLEES.—Each medicaid managed

15 care plan shall—

16 ‘‘(I) upon request, make the in17 formation described in clause (i) avail18 able to participating health care pro19 viders, enrollees, and potential enroll20 ees in the plan’s service area; and

21 ‘‘(II) provide to enrollees and po22 tential enrollees information regarding

23 all items and services that are avail24 able to enrollees under the contract

25 between the State and the plan that
193

Title VII, Subtitle B

•HR 2530 IH

1 are covered either directly or through

2 a method of referral and prior author3 ization.

4 ‘‘(B) REQUIREMENTS FOR PRIMARY CARE

5 CASE MANAGEMENT PROVIDERS.—Each pri6 mary care case management provider shall—

7 ‘‘(i) provide to the State (at such fre8 quency as the Secretary may require),

9 complete and timely information concern10 ing the services that the primary care case

11 management provider provides to (or ar12 ranges to be provided to) individuals eligi13 ble for medical assistance under the State

14 plan under this title;

15 ‘‘(ii) make available to enrollees and

16 potential enrollees information concerning

17 services available to the enrollee for which

18 prior authorization by the primary care

19 case management provider is required; and

20 ‘‘(iii) provide enrollees and potential

21 enrollees information regarding all items

22 and services that are available to enrollees

23 under the contract between the State and

24 the primary care case management pro25 vider that are covered either directly or
194

Title VII, Subtitle B

•HR 2530 IH

1 through a method of referral and prior au2 thorization.

3 ‘‘(iv) provide assurances that such en4 tities and their professional personnel are

5 licensed as required by State law and

6 qualified to provide case management serv7 ices, through methods such as ongoing

8 monitoring of compliance with applicable

9 requirements and providing information

10 and technical assistance.

11 ‘‘(C) REQUIREMENTS FOR BOTH MEDICAID

12 MANAGED CARE PLANS AND PRIMARY CARE

13 CASE MANAGEMENT PROVIDERS.—Each eligible

14 managed care provider shall provide the State

15 with aggregate encounter data for early and

16 periodic screening, diagnostic, and treatment

17 services under section 1905(r) furnished to in18 dividuals under 21 years of age. Any such data

19 provided may be audited by the State and the

20 Secretary.

21 ‘‘(6) TIMELINESS OF PAYMENT.—An eligible

22 managed care provider shall make payment to health

23 care providers for items and services which are sub24 ject to the contract under section 1931(a)(1)(B) and

25 which are furnished to individuals eligible for medi-
195

Title VII, Subtitle B

•HR 2530 IH

1 cal assistance under the State plan under this title

2 who are enrolled with the provider on a timely basis

3 and under the claims payment procedures described

4 in section 1902(a)(37)(A), unless the health care

5 provider and the eligible managed care provider

6 agree to an alternate payment schedule.

7 ‘‘(7) ADDITIONAL QUALITY ASSURANCE RE8 QUIREMENTS FOR MEDICAID MANAGED CARE

9 PLANS.—

10 ‘‘(A) CONDITIONS FOR PRIOR AUTHORIZA11 TION.—A medicaid managed care plan may re12 quire the approval of medical assistance for

13 nonemergency services before the assistance is

14 furnished to an enrollee only if the system pro15 viding for such approval—

16 ‘‘(i) provides that such decisions are

17 made in a timely manner, depending upon

18 the urgency of the situation; and

19 ‘‘(ii) permits coverage of medically

20 necessary medical assistance provided to

21 an enrollee without prior authorization in

22 the event of an emergency.

23 ‘‘(B) INTERNAL GRIEVANCE PROCE24 DURE.—Each medicaid managed care plan shall

25 establish an internal grievance procedure under
196

Title VII, Subtitle B

•HR 2530 IH

1 which a plan enrollee or a provider on behalf of

2 such an enrollee who is eligible for medical as3 sistance under the State plan under this title

4 may challenge the denial of coverage of or pay5 ment for such assistance.

6 ‘‘(C) USE OF UNIQUE PHYSICIAN IDENTI7 FIER FOR PARTICIPATING PHYSICIANS.—Each

8 medicaid managed care plan shall require each

9 physician providing services to enrollees eligible

10 for medical assistance under the State plan

11 under this title to have a unique identifier in

12 accordance with the system established under

13 section 1902(x).

14 ‘‘(D) PATIENT ENCOUNTER DATA.—

15 ‘‘(i) IN GENERAL.—Each medicaid

16 managed care plan shall maintain suffi17 cient patient encounter data to identify the

18 health care provider who delivers services

19 to patients and to otherwise enable the

20 State plan to meet the requirements of sec21 tion 1902(a)(27). The plan shall incor22 porate such information in the mainte23 nance of patient encounter data with re24 spect to such health care provider.
197

Title VII, Subtitle B

•HR 2530 IH

1 ‘‘(ii) COMPLIANCE.—A medicaid man2 aged care plan shall—

3 ‘‘(I) submit the data maintained

4 under clause (i) to the State; or

5 ‘‘(II) demonstrate to the State

6 that the data complies with managed

7 care quality assurance guidelines es8 tablished by the Secretary in accord9 ance with clause (iii).

10 ‘‘(iii) STANDARDS.—In establishing

11 managed care quality assurance guidelines

12 under clause (ii)(II), the Secretary shall

13 consider—

14 ‘‘(I) managed care industry

15 standards for—

16 ‘‘(aa) internal quality assur17 ance; and

18 ‘‘(bb) performance meas19 ures; and

20 ‘‘(II) any managed care quality

21 standards established by the National

22 Association of Insurance Commis23 sioners.

24 (E) PAYMENTS TO HOSPITALS.—A medic25 aid managed care plan shall—
198

Title VII, Subtitle B

•HR 2530 IH

1 ‘‘(i) provide the State with assurances

2 that payments for hospital services are rea3 sonable and adequate to meet the costs

4 which must be incurred by efficiently and

5 economically operated facilities in order to

6 provide such services to individuals en7 rolled with the plan under this title in con8 formity with applicable State and Federal

9 laws, regulations, and quality and safety

10 standards;

11 ‘‘(ii) report to the State at least annu12 ally—

13 ‘‘(I) the rates paid to hospitals

14 by the plan for items and services fur15 nished to such individuals,

16 ‘‘(II) an explanation of the meth17 odology used to compute such rates,

18 and

19 ‘‘(III) a comparison of such rates

20 with the rates used by the State to

21 pay for hospital services furnished to

22 individuals who are eligible for bene23 fits under the program established by

24 the State under this title but are not
199

Title VII, Subtitle B

•HR 2530 IH

1 enrolled in a medicaid managed care

2 plan; and

3 ‘‘(iii) if the rates paid by the plan are

4 lower than the rates paid by the State (as

5 described in clause (ii)(III)), an expla6 nation of why the rates paid by the plan

7 nonetheless meet the standard described in

8 clause (i).

9 ‘‘(d) DUE PROCESS REQUIREMENTS FOR ELIGIBLE

10 MANAGED CARE PROVIDERS.—

11 ‘‘(1) DENIAL OF OR UNREASONABLE DELAY IN

12 DETERMINING COVERAGE AS GROUNDS FOR HEAR13 ING.—If an eligible managed care provider—

14 ‘‘(A) denies coverage of or payment for

15 medical assistance with respect to an enrollee

16 who is eligible for such assistance under the

17 State plan under this title; or

18 ‘‘(B) fails to make any eligibility or cov19 erage determination sought by an enrollee or, in

20 the case of a medicaid managed care plan, by

21 a participating health care provider or enrollee,

22 in a timely manner, depending upon the ur23 gency of the situation, the enrollee or the health

24 care provider furnishing such assistance to the

25 enrollee (as applicable) may obtain a hearing
200

Title VII, Subtitle B

•HR 2530 IH

1 before the State agency administering the State

2 plan under this title in accordance with section

3 1902(a)(3), but only, with respect to a medicaid

4 managed care plan, after completion of the in5 ternal grievance procedure established by the

6 plan under subsection (c)(6)(B).

7 ‘‘(2) COMPLETION OF INTERNAL GRIEVANCE

8 PROCEDURE.—Nothing in this subsection shall re9 quire completion of an internal grievance procedure

10 if such procedure does not exist or if the procedure

11 does not provide for timely review of health needs

12 considered by the enrollee’s health care provider to

13 be of an urgent nature.

14 ‘‘(e) MISCELLANEOUS.—

15 ‘‘(1) PROTECTING ENROLLEES AGAINST THE

16 INSOLVENCY OF ELIGIBLE MANAGED CARE PROVID17 ERS AND AGAINST THE FAILURE OF THE STATE TO

18 PAY SUCH PROVIDERS.—Each eligible managed care

19 provider shall provide that an individual eligible for

20 medical assistance under the State plan under this

21 title who is enrolled with the provider may not be

22 held liable—

23 ‘‘(A) for the debts of the eligible managed

24 care provider, in the event of the provider’s in25 solvency;
201

Title VII, Subtitle B

•HR 2530 IH

1 ‘‘(B) for services provided to the individ2 ual—

3 ‘‘(i) in the event of the provider fail4 ing to receive payment from the State for

5 such services; or

6 ‘‘(ii) in the event of a health care pro7 vider with a contractual or other arrange8 ment with the eligible managed care pro9 vider failing to receive payment from the

10 State or the eligible managed care provider

11 for such services; or

12 ‘‘(C) for the debts of any health care pro13 vider with a contractual or other arrangement

14 with the provider to provide services to the indi15 vidual, in the event of the insolvency of the

16 health care provider.

17 ‘‘(2) TREATMENT OF CHILDREN WITH SPECIAL

18 HEALTH CARE NEEDS.—

19 ‘‘(A) IN GENERAL.—In the case of an en20 rollee of an eligible managed care provider who

21 is a child with special health care needs—

22 ‘‘(i) if any medical assistance specified

23 in the contract with the State is identified

24 in a treatment plan prepared for the en25 rollee by a program described in subpara-
202

Title VII, Subtitle B

•HR 2530 IH

1 graph (C), the eligible managed care pro2 vider shall provide (or arrange to be pro3 vided) such assistance in accordance with

4 the treatment plan either—

5 ‘‘(I) by referring the enrollee to a

6 pediatric health care provider who is

7 trained and experienced in the provi8 sion of such assistance and who has a

9 contract with the eligible managed

10 care provider to provide such assist11 ance; or

12 ‘‘(II) if appropriate services are

13 not available through the eligible man14 aged care provider, permitting such

15 enrollee to seek appropriate specialty

16 services from pediatric health care

17 providers outside of or apart from the

18 eligible managed care provider; and

19 ‘‘(ii) the eligible managed care pro20 vider shall require each health care pro21 vider with whom the eligible managed care

22 provider has entered into an agreement to

23 provide medical assistance to enrollees to

24 furnish the medical assistance specified in

25 such enrollee’s treatment plan to the ex-
203

Title VII, Subtitle B

•HR 2530 IH

1 tent the health care provider is able to

2 carry out such treatment plan.

3 ‘‘(B) PRIOR AUTHORIZATION.—An enrollee

4 referred for treatment under subparagraph

5 (A)(i)(I), or permitted to seek treatment out6 side of or apart from the eligible managed care

7 provider under subparagraph (A)(i)(II) shall be

8 deemed to have obtained any prior authoriza9 tion required by the provider.

10 ‘‘(C) CHILD WITH SPECIAL HEALTH CARE

11 NEEDS.—For purposes of subparagraph (A), a

12 child with special health care needs is a child

13 who is receiving services under—

14 ‘‘(i) a program administered under

15 part B or part H of the Individuals with

16 Disabilities Education Act;

17 ‘‘(ii) a program for children with spe18 cial health care needs under title V;

19 ‘‘(iii) a program under part B or part

20 D of title IV; or

21 ‘‘(iv) any other program for children

22 with special health care needs identified by

23 the Secretary.

24 ‘‘(3) PHYSICIAN INCENTIVE PLANS.—Each

25 medicaid managed care plan shall require that any
204

Title VII, Subtitle B

•HR 2530 IH

1 physician incentive plan covering physicians who are

2 participating in the medicaid managed care plan

3 shall meet the requirements of section 1876(i)(8).

4 ‘‘(4) INCENTIVES FOR HIGH QUALITY ELIGIBLE

5 MANAGED CARE PROVIDERS.—The Secretary and the

6 State may establish a program to reward, through

7 public recognition, incentive payments, or enrollment

8 of additional individuals (or combinations of such re9 wards), eligible managed care providers that provide

10 the highest quality care to individuals eligible for

11 medical assistance under the State plan under this

12 title who are enrolled with such providers. For pur13 poses of section 1903(a)(7), proper expenses in14 curred by a State in carrying out such a program

15 shall be considered to be expenses necessary for the

16 proper and efficient administration of the State plan

17 under this title.’’.

18 (d) CLARIFICATION OF APPLICATION OF FFP DE19 NIAL RULES TO PAYMENTS MADE PURSUANT TO MEDIC20 AID MANAGED CARE PLANS.—Section 1903(i) of such Act

21 (42 U.S.C. 1396b(i)) is amended by adding at the end

22 the following sentence: ‘‘Paragraphs (1)(A), (1)(B), (2),

23 (5), and (12) shall apply with respect to items or services

24 furnished and amounts expended by or through an eligible

25 managed care provider (as defined in section 1933(a)(1))
205

Title VII, Subtitle B

•HR 2530 IH

1 in the same manner as such paragraphs apply to items

2 or services furnished and amounts expended directly by

3 the State.’’.

4 (e) CLARIFICATION OF CERTIFICATION REQUIRE5 MENTS FOR PHYSICIANS PROVIDING SERVICES TO CHIL6 DREN AND PREGNANT WOMEN.—Section 1903(i)(12) of

7 such Act (42 U.S.C. 1396b(i)(12)) is amended —

8 (1) in subparagraph (A)(i), to read as follows:

9 ‘‘(i) is certified in family practice or

10 pediatrics by the medical specialty board

11 recognized by the American Board of Med12 ical Specialties for family practice or pedi13 atrics or is certified in general practice or

14 pediatrics by the medical specialty board

15 recognized by the American Osteopathic

16 Association,’’;

17 (2) in subparagraph (B)(i), to read as follows:

18 ‘‘(i) is certified in family practice or

19 obstetrics by the medical specialty board

20 recognized by the American Board of Med21 ical Specialties for family practice or ob22 stetrics or is certified in family practice or

23 obstetrics by the medical specialty board

24 recognized by the American Osteopathic

25 Association,’’; and
206

Title VII, Subtitle B

•HR 2530 IH

1 (3) in both subparagraphs (A) and (B) —

2 (A) by striking ‘‘or’’ at the end of clause

3 (v);

4 (B) by redesignating clause (vi) as clause

5 (vii); and

6 (C) by inserting after clause (v) the follow7 ing new clause:

8 ‘‘(vi) delivers such services in the

9 emergency department of a hospital par10 ticipating in the State plan approved under

11 this title, or’’.

12 SEC. 7103. ADDITIONAL REQUIREMENTS FOR MEDICAID

13 MANAGED CARE PLANS.

14 Section 1933 of the Social Security Act, as added by

15 section 7102(c)(2), is amended —

16 (1) by redesignating subsections (d) and (e) as

17 subsections (e) and (f), respectively; and

18 (2) by inserting after subsection (c) the follow19 ing new subsection:

20 ‘‘(d) ADDITIONAL REQUIREMENTS FOR MEDICAID

21 MANAGED CARE PLANS.—

22 ‘‘(1) DEMONSTRATION OF ADEQUATE CAPACITY

23 AND SERVICES.—

24 ‘‘(A) IN GENERAL.—Subject to subpara25 graph (C), each medicaid managed care plan
207

Title VII, Subtitle B

•HR 2530 IH

1 shall provide the State and the Secretary with

2 adequate assurances (as determined by the Sec3 retary) that the plan, with respect to a service

4 area —

5 ‘‘(i) has the capacity to serve the ex6 pected enrollment in such service area;

7 ‘‘(ii) offers an appropriate range of

8 services for the population expected to be

9 enrolled in such service area, including

10 transportation services and translation

11 services consisting of the principal lan12 guages spoken in the service area;

13 ‘‘(iii) maintains sufficient numbers of

14 providers of services included in the con15 tract with the State to ensure that services

16 are available to individuals receiving medi17 cal assistance and enrolled in the plan to

18 the same extent that such services are

19 available to individuals enrolled in the plan

20 who are not recipients of medical assist21 ance under the State plan under this title;

22 ‘‘(iv) maintains extended hours of op23 eration with respect to primary care serv24 ices that are beyond those maintained dur25 ing a normal business day;
208

Title VII, Subtitle B

•HR 2530 IH

1 ‘‘(v) provides preventive and primary

2 care services in locations that are readily

3 accessible to members of the community;

4 and

5 ‘‘(vi) provides information concerning

6 educational, social, health, and nutritional

7 services offered by other programs for

8 which enrollees may be eligible.

9 ‘‘(vii) complies with such other re10 quirements relating to access to care as the

11 Secretary or the State may impose.

12 ‘‘(B) PROOF OF ADEQUATE PRIMARY CARE

13 CAPACITY AND SERVICES.—Subject to subpara14 graph (C), a medicaid managed care plan that

15 contracts with a reasonable number of primary

16 care providers (as determined by the Secretary)

17 and whose primary care membership includes a

18 reasonable number (as so determined) of the

19 following providers will be deemed to have satis20 fied the requirements of subparagraph (A):

21 ‘‘(i) Rural health clinics, as defined in

22 section 1905(l)(1).

23 ‘‘(ii) Federally-qualified health cen24 ters, as defined in section 1905(l)(2)(B).
209

Title VII, Subtitle B

•HR 2530 IH

1 ‘‘(iii) Clinics which are eligible to re2 ceive payment for services provided under

3 title X of the Public Health Service Act.

4 ‘‘(C) SUFFICIENT PROVIDERS OF SPECIAL5 IZED SERVICES.—Notwithstanding subpara6 graphs (A) and (B), a medicaid managed care

7 plan may not be considered to have satisfied the

8 requirements of subparagraph (A) if the plan

9 does not have a sufficient number (as deter10 mined by the Secretary) of providers of special11 ized services, including perinatal and pediatric

12 specialty care, to ensure that such services are

13 available and accessible.

14 ‘‘(2) WRITTEN PROVIDER PARTICIPATION

15 AGREEMENTS FOR CERTAIN PROVIDERS.—Each

16 medicaid managed care plan that enters into a writ17 ten provider participation agreement with a provider

18 described in paragraph (1)(B) shall —

19 ‘‘(A) include terms and conditions that are

20 no more restrictive than the terms and condi21 tions that the medicaid managed care plan in22 cludes in its agreements with other participat23 ing providers with respect to —

24 ‘‘(i) the scope of covered services for

25 which payment is made to the provider;
210

Title VII, Subtitle B

•HR 2530 IH

1 ‘‘(ii) the assignment of enrollees by

2 the plan to the provider;

3 ‘‘(iii) the limitation on financial risk

4 or availability of financial incentives to the

5 provider;

6 ‘‘(iv) accessibility of care;

7 ‘‘(v) professional credentialing and

8 recredentialing;

9 ‘‘(vi) licensure;

10 ‘‘(vii) quality and utilization manage11 ment;

12 ‘‘(viii) confidentiality of patient

13 records;

14 ‘‘(ix) grievance procedures; and

15 ‘‘(x) indemnification arrangements be16 tween the plans and providers; and

17 ‘‘(B) provide for payment to the provider

18 on a basis that is comparable to the basis on

19 which other providers are paid.’’.

20 SEC. 7104. PREVENTING FRAUD IN MEDICAID MANAGED

21 CARE.

22 (a) IN GENERAL.—Section 1933 of the Social Secu23 rity Act, as added by section 7102(c)(2) and amended by

24 section 7103, is amended—
211

Title VII, Subtitle B

•HR 2530 IH

1 (1) by redesignating subsection (f) as sub2 section (g); and

3 (2) by inserting after subsection (e) the follow4 ing new subsection:

5 ‘‘(f) ANTI-FRAUD PROVISIONS.—

6 ‘‘(1) PROVISIONS APPLICABLE TO ELIGIBLE

7 MANAGED CARE PROVIDERS.—

8 ‘‘(A) PROHIBITING AFFILIATIONS WITH IN9 DIVIDUALS DEBARRED BY FEDERAL AGEN10 CIES.—

11 ‘‘(i) IN GENERAL.—An eligible man12 aged care provider may not knowingly—

13 ‘‘(I) have a person described in

14 clause (iii) as a director, officer, part15 ner, or person with beneficial owner16 ship of more than 5 percent of the

17 plan’s equity; or

18 ‘‘(II) have an employment, con19 sulting, or other agreement with a

20 person described in clause (iii) for the

21 provision of items and services that

22 are significant and material to the or23 ganization’s obligations under its con24 tract with the State.
212

Title VII, Subtitle B

•HR 2530 IH

1 ‘‘(ii) EFFECT OF NONCOMPLIANCE.—

2 If a State finds that an eligible managed

3 care provider is not in compliance with

4 subclause (I) or (II) of clause (i), the

5 State—

6 ‘‘(I) shall notify the Secretary of

7 such noncompliance;

8 ‘‘(II) may continue an existing

9 agreement with the provider unless

10 the Secretary (in consultation with the

11 Inspector General of the Department

12 of Health and Human Services) di13 rects otherwise; and

14 ‘‘(III) may not renew or other15 wise extend the duration of an exist16 ing agreement with the provider un17 less the Secretary (in consultation

18 with the Inspector General of the De19 partment of Health and Human Serv20 ices) provides to the State and to the

21 Congress a written statement describ22 ing compelling reasons that exist for

23 renewing or extending the agreement.
213

Title VII, Subtitle B

•HR 2530 IH

1 ‘‘(iii) PERSONS DESCRIBED.—A per2 son is described in this clause if such per3 son—

4 ‘‘(I) is debarred or suspended by

5 the Federal Government, pursuant to

6 the Federal acquisition regulation,

7 from Government contracting and

8 subcontracting;

9 ‘‘(II) is an affiliate (within the

10 meaning of the Federal acquisition

11 regulation) of a person described in

12 clause (i); or

13 ‘‘(III) is excluded from participa14 tion in any program under title XVIII

15 or any State health care program, as

16 defined in section 1128(h).

17 ‘‘(B) RESTRICTIONS ON MARKETING.—

18 ‘‘(i) DISTRIBUTION OF MATERIALS.—

19 ‘‘(I) IN GENERAL.—An eligible

20 managed care provider may not dis21 tribute marketing materials within

22 any State—

23 ‘‘(aa) without the prior ap24 proval of the State; and
214

Title VII, Subtitle B

•HR 2530 IH

1 ‘‘(bb) that contain false or

2 materially misleading informa3 tion.

4 ‘‘(II) PROHIBITION.—The State

5 may not enter into or renew a con6 tract with an eligible managed care

7 provider for the provision of services

8 to individuals enrolled under the State

9 plan under this title if the State de10 termines that the provider inten11 tionally distributed false or materially

12 misleading information in violation of

13 subclause (I)(bb).

14 ‘‘(ii) SERVICE MARKET.—An eligible

15 managed care provider shall distribute

16 marketing materials to the entire service

17 area of such provider.

18 ‘‘(iii) PROHIBITION OF TIE-INS.—An

19 eligible managed care provider, or any

20 agency of such provider, may not seek to

21 influence an individual’s enrollment with

22 the provider in conjunction with the sale of

23 any other insurance.

24 ‘‘(iv) PROHIBITING MARKETING

25 FRAUD.—Each eligible managed care pro-
215

Title VII, Subtitle B

•HR 2530 IH

1 vider shall comply with such procedures

2 and conditions as the Secretary prescribes

3 in order to ensure that, before an individ4 ual is enrolled with the provider, the indi5 vidual is provided accurate and sufficient

6 information to make an informed decision

7 whether or not to enroll.

8 ‘‘(2) PROVISIONS APPLICABLE ONLY TO MEDIC9 AID MANAGED CARE PLANS.—

10 ‘‘(A) STATE CONFLICT-OF-INTEREST SAFE11 GUARDS IN MEDICAID RISK CONTRACTING.—A

12 medicaid managed care plan may not enter into

13 a contract with any State under section

14 1932(a)(1)(B) unless the State has in effect

15 conflict-of-interest safeguards with respect to

16 officers and employees of the State with respon17 sibilities relating to contracts with such plans or

18 to the default enrollment process described in

19 section 1932(a)(1)(D)(iv) that are at least as

20 effective as the Federal safeguards provided

21 under section 27 of the Office of Federal Pro22 curement Policy Act (41 U.S.C. 423), against

23 conflicts of interest that apply with respect to

24 Federal procurement officials with comparable

25 responsibilities with respect to such contracts.
216

Title VII, Subtitle B

•HR 2530 IH

1 ‘‘(B) REQUIRING DISCLOSURE OF FINAN2 CIAL INFORMATION.—In addition to any re3 quirements applicable under section

4 1902(a)(27) or 1902(a)(35), a medicaid man5 aged care plan shall—

6 ‘‘(i) report to the State (and to the

7 Secretary upon the Secretary’s request)

8 such financial information as the State or

9 the Secretary may require to demonstrate

10 that—

11 ‘‘(I) the plan has the ability to

12 bear the risk of potential financial

13 losses and otherwise has a fiscally

14 sound operation;

15 ‘‘(II) the plan uses the funds

16 paid to it by the State and the Sec17 retary for activities consistent with

18 the requirements of this title and the

19 contract between the State and plan;

20 and

21 ‘‘(III) the plan does not place an

22 individual physician, physician group,

23 or other health care provider at sub24 stantial risk (as determined by the

25 Secretary) for services not provided by
217

Title VII, Subtitle B

•HR 2530 IH

1 such physician, group, or health care

2 provider, by providing adequate pro3 tection (as determined by the Sec4 retary) to limit the liability of such

5 physician, group, or health care pro6 vider, through measures such as stop

7 loss insurance or appropriate risk cor8 ridors;

9 ‘‘(ii) agree that the Secretary and the

10 State (or any person or organization des11 ignated by either) shall have the right to

12 audit and inspect any books and records of

13 the plan (and of any subcontractor) relat14 ing to the information reported pursuant

15 to clause (i) and any information required

16 to be furnished under section paragraphs

17 (27) or (35) of section 1902(a);

18 ‘‘(iii) make available to the Secretary

19 and the State a description of each trans20 action described in subparagraphs (A)

21 through (C) of section 1318(a)(3) of the

22 Public Health Service Act between the

23 plan and a party in interest (as defined in

24 section 1318(b) of such Act); and
218

Title VII, Subtitle B

•HR 2530 IH

1 ‘‘(iv) agree to make available to its

2 enrollees upon reasonable request —

3 ‘‘(I) the information reported

4 pursuant to clause (i); and

5 ‘‘(II) the information required to

6 be disclosed under sections 1124 and

7 1126.

8 ‘‘(C) ADEQUATE PROVISION AGAINST RISK

9 OF INSOLVENCY.—

10 ‘‘(i) ESTABLISHMENT OF STAND11 ARDS.—The Secretary shall establish

12 standards, including appropriate equity

13 standards, under which each medicaid

14 managed care plan shall make adequate

15 provision against the risk of insolvency.

16 ‘‘(ii) CONSIDERATION OF OTHER

17 STANDARDS.—In establishing the stand18 ards described in clause (i), the Secretary

19 shall consider solvency standards applica20 ble to eligible organizations with a risk21 sharing contract under section 1876.

22 (iii) MODEL CONTRACT ON SOL23 VENCY.—At the earliest practicable time

24 after the date of enactment of this section,

25 the Secretary shall issue guidelines and
219

Title VII, Subtitle B

•HR 2530 IH

1 regulations concerning solvency standards

2 for risk contracting entities and sub3 contractors of such risk contracting enti4 ties. Such guidelines and regulations shall

5 take into account characteristics that may

6 differ among risk contracting entities in7 cluding whether such an entity is at risk

8 for inpatient hospital services.

9 ‘‘(D) REQUIRING REPORT ON NET EARN10 INGS AND ADDITIONAL BENEFITS.—Each med11 icaid managed care plan shall submit a report

12 to the State and the Secretary not later than

13 12 months after the close of a contract year

14 containing —

15 ‘‘(i) the most recent audited financial

16 statement of the plan’s net earnings, in ac17 cordance with guidelines established by the

18 Secretary in consultation with the States,

19 and consistent with generally accepted ac20 counting principles; and

21 ‘‘(ii) a description of any benefits that

22 are in addition to the benefits required to

23 be provided under the contract that were

24 provided during the contract year to mem25 bers enrolled with the plan and entitled to
220

Title VII, Subtitle B

•HR 2530 IH

1 medical assistance under the State plan

2 under this title.’’.

3 SEC. 7105. ASSURING ADEQUACY OF PAYMENTS TO MEDIC4 AID MANAGED CARE PLANS AND PROVIDERS.

5 Title XIX of the Social Security Act, as amended by

6 sections 7001, 7101(a), and 7102(c), is further amend7 ed—

8 (1) by redesignating section 1934 as section

9 1935; and

10 (2) by inserting after section 1933 the following

11 new section:

12 ‘‘ASSURING ADEQUACY OF PAYMENTS TO MEDICAID

13 MANAGED CARE PLANS AND PROVIDERS

14 ‘‘SEC. 1934. As a condition of approval of a State

15 plan under this title, a State shall—

16 ‘‘(1) find, determine, and make assurances sat17 isfactory to the Secretary that—

18 ‘‘(A) the rates it pays medicaid managed

19 care plans for individuals eligible under the

20 State plan are reasonable and adequate to as21 sure access to services meeting professionally

22 recognized quality standards, taking into ac23 count—

24 ‘‘(i) the items and services to which

25 the rate applies,

26 ‘‘(ii) the eligible population, and
221

Title VII, Subtitle B

•HR 2530 IH

1 ‘‘(iii) the rate the State pays providers

2 for such items and services; and

3 ‘‘(B) the methodology used to adjust the

4 rate adequately reflects the varying risks associ5 ated with individuals actually enrolling in each

6 medicaid managed care plan; and

7 ‘‘(2) report to the Secretary, at least annually,

8 on—

9 ‘‘(A) the rates the States pays to medicaid

10 managed care plans, and

11 ‘‘(B) the rates medicaid managed care

12 plans pay for hospital services (and such other

13 information as medicaid managed care plans

14 are required to submit to the State pursuant to

15 section 1933(c)(5)(E).’’.

16 SEC. 7106. SANCTIONS FOR NONCOMPLIANCE BY ELIGIBLE

17 MANAGED CARE PROVIDERS.

18 (a) SANCTIONS DESCRIBED.—Title XIX of such Act

19 (42 U.S.C. 1396 et seq.), as previously amended, is fur20 ther amended —

21 (1) by redesignating section 1934 as section

22 1935; and

23 (2) by inserting after section 1934 the following

24 new section:
222

Title VII, Subtitle B

•HR 2530 IH

1 ‘‘SANCTIONS FOR NONCOMPLIANCE BY ELIGIBLE

2 MANAGED CARE PROVIDERS

3 ‘‘SEC. 1935. (a) USE OF INTERMEDIATE SANCTIONS

4 BY THE STATE TO ENFORCE REQUIREMENTS.—Each

5 State shall establish intermediate sanctions, which may in6 clude any of the types described in subsection (b) other

7 than the termination of a contract with an eligible man8 aged care provider, which the State may impose against

9 an eligible managed care provider with a contract under

10 section 1932(a)(1)(B) if the provider —

11 ‘‘(1) fails substantially to provide medically nec12 essary items and services that are required (under

13 law or under such provider’s contract with the

14 State) to be provided to an enrollee covered under

15 the contract, if the failure has adversely affected (or

16 has a substantial likelihood of adversely affecting)

17 the enrollee;

18 ‘‘(2) imposes premiums on enrollees in excess of

19 the premiums permitted under this title;

20 ‘‘(3) acts to discriminate among enrollees on

21 the basis of their health status or requirements for

22 health care services, including expulsion or refusal to

23 reenroll an individual, except as permitted by sec24 tions 1932 and 1933, or engaging in any practice

25 that would reasonably be expected to have the effect
223

Title VII, Subtitle B

•HR 2530 IH

1 of denying or discouraging enrollment with the pro2 vider by eligible individuals whose medical condition

3 or history indicates a need for substantial future

4 medical services;

5 ‘‘(4) misrepresents or falsifies information that

6 is furnished

7 ‘‘(A) to the Secretary or the State under

8 section 1932 or 1933; or

9 ‘‘(B) to an enrollee, potential enrollee, or a

10 health care provider under such sections; or

11 ‘‘(5) fails to comply with the requirements of

12 section 1876(i)(8).

13 ‘‘(b) INTERMEDIATE SANCTIONS.—The sanctions de14 scribed in this subsection are as follows:

15 ‘‘(1) Civil money penalties as follows:

16 ‘‘(A) Except as provided in subparagraph

17 (B), (C), or (D), not more than $25,000 for

18 each determination under subsection (a).

19 ‘‘(B) With respect to a determination

20 under paragraph (3) or (4)(A) of subsection

21 (a), not more than $100,000 for each such de22 termination.

23 ‘‘(C) With respect to a determination

24 under subsection (a)(2), double the excess

25 amount charged in violation of such subsection
224

Title VII, Subtitle B

•HR 2530 IH

1 (and the excess amount charged shall be de2 ducted from the penalty and returned to the in3 dividual concerned).

4 ‘‘(D) Subject to subparagraph (B), with

5 respect to a determination under subsection

6 (a)(3), $15,000 for each individual not enrolled

7 as a result of a practice described in such sub8 section.

9 ‘‘(2) The appointment of temporary manage10 ment to oversee the operation of the eligible man11 aged care provider and to assure the health of the

12 provider’s enrollees, if there is a need for temporary

13 management while—

14 ‘‘(A) there is an orderly termination or re15 organization of the eligible managed care pro16 vider; or

17 ‘‘(B) improvements are made to remedy

18 the violations found under subsection (a), ex19 cept that temporary management under this

20 paragraph may not be terminated until the

21 State has determined that the eligible managed

22 care provider has the capability to ensure that

23 the violations shall not recur.

24 ‘‘(3) Permitting individuals enrolled with the el25 igible managed care provider to terminate enroll-
225

Title VII, Subtitle B

•HR 2530 IH

1 ment without cause, and notifying such individuals

2 of such right to terminate enrollment.

3 ‘‘(c) TREATMENT OF CHRONIC SUBSTANDARD PRO4 VIDERS.—In the case of an eligible managed care provider

5 which has repeatedly failed to meet the requirements of

6 section 1932 or 1933, the State shall (regardless of what

7 other sanctions are provided) impose the sanctions de8 scribed in paragraphs (2) and (3) of subsection (b).

9 ‘‘(d) AUTHORITY TO TERMINATE CONTRACT.—In

10 the case of an eligible managed care provider which has

11 failed to meet the requirements of section 1932 or 1933,

12 the State shall have the authority to terminate its contract

13 with such provider under section 1932(a)(1)(B) and to en14 roll such provider’s enrollees with other eligible managed

15 care providers (or to permit such enrollees to receive medi16 cal assistance under the State plan under this title other

17 than through an eligible managed care provider).

18 ‘‘(e) AVAILABILITY OF SANCTIONS TO THE SEC19 RETARY.—

20 ‘‘(1) INTERMEDIATE SANCTIONS.—In addition

21 to the sanctions described in paragraph (2) and any

22 other sanctions available under law, the Secretary

23 may provide for any of the sanctions described in

24 subsection (b) if the Secretary determines that—
226

Title VII, Subtitle B

•HR 2530 IH

1 ‘‘(A) an eligible managed care provider

2 with a contract under section 1932(a)(1)(B)

3 fails to meet any of the requirements of section

4 1932 or 1933; and

5 ‘‘(B) the State has failed to act appro6 priately to address such failure.

7 ‘‘(2) DENIAL OF PAYMENTS TO THE STATE.—

8 The Secretary may deny payments to the State for

9 medical assistance furnished under the contract

10 under section 1932(a)(1)(B) for individuals enrolled

11 after the date the Secretary notifies an eligible man12 aged care provider of a determination under sub13 section (a) and until the Secretary is satisfied that

14 the basis for such determination has been corrected

15 and is not likely to recur.

16 ‘‘(f) DUE PROCESS FOR ELIGIBLE MANAGED CARE

17 PROVIDERS.—

18 ‘‘(1) AVAILABILITY OF HEARING PRIOR TO TER19 MINATION OF CONTRACT.—A State may not termi20 nate a contract with an eligible managed care pro21 vider under section 1932(a)(1)(B) unless the pro22 vider is provided with a hearing prior to the termi23 nation.

24 ‘‘(2) NOTICE TO ENROLLEES OF TERMINATION

25 HEARING.—A State shall notify all individuals en-
227

Title VII, Subtitle B

•HR 2530 IH

1 rolled with an eligible managed care provider which

2 is the subject of a hearing to terminate the provid3 er’s contract with the State of the hearing and that

4 the enrollees may immediately disenroll with the pro5 vider for cause.

6 ‘‘(3) OTHER PROTECTIONS FOR ELIGIBLE MAN7 AGED CARE PROVIDERS AGAINST SANCTIONS IM8 POSED BY STATE.—Before imposing any sanction

9 against an eligible managed care provider other than

10 termination of the provider’s contract, the State

11 shall provide the provider with notice and such other

12 due process protections as the State may provide,

13 except that a State may not provide an eligible man14 aged care provider with a pretermination hearing be15 fore imposing the sanction described in subsection

16 (b)(2).

17 ‘‘(4) IMPOSITION OF CIVIL MONETARY PEN18 ALTIES BY SECRETARY.—The provisions of section

19 1128A (other than subsections (a) and (b)) shall

20 apply with respect to a civil money penalty imposed

21 by the Secretary under subsection (b)(1) in the same

22 manner as such provisions apply to a penalty or pro23 ceeding under section 1128A.’’.

24 (b) CONFORMING AMENDMENT RELATING TO TERMI25 NATION OF ENROLLMENT FOR CAUSE.—Section
228

Title VII, Subtitle B

•HR 2530 IH

1 1933(b)(2)(B) of the Social Security Act, as added by this

2 part, is amended by inserting after ‘‘coercion’’ the follow3 ing: ‘‘, or pursuant to the imposition against the eligible

4 managed care provider of the sanction described in section

5 1935(b)(3),’’.

6 SEC. 7107. REPORT ON PUBLIC HEALTH SERVICES.

7 (a) IN GENERAL.—Not later than January 1, 1994,

8 the Secretary of Health and Human Services (in this sub9 title referred to as the ‘‘Secretary’’) shall report to the

10 Committee on Finance of the Senate and the Committee

11 on Commerce of the House of Representatives on the ef12 fect of risk contracting entities (as defined in section

13 1932(a)(3) of the Social Security Act) and primary care

14 case management entities (as defined in section

15 1932(a)(1) of such Act) on the delivery of and payment

16 for the services listed in subsection (f)(2)(C)(ii) of section

17 1932 of such Act.

18 (b) CONTENTS OF REPORT.—The report referred to

19 in subsection (a) shall include—

20 (1) information on the extent to which enrollees

21 with risk contracting entities and primary care case

22 management programs seek services at local health

23 departments, public hospitals, and other facilities

24 that provide care without regard to a patient’s abil25 ity to pay;
229

Title VII, Subtitle B

•HR 2530 IH

1 (2) information on the extent to which the fa2 cilities described in paragraph (1) provide services to

3 enrollees with risk contracting entities and primary

4 care case management programs without receiving

5 payment;

6 (3) information on the effectiveness of systems

7 implemented by facilities described in paragraph (1)

8 for educating such enrollees on services that are

9 available through the risk contracting entities or pri10 mary care case management programs with which

11 such enrollees are enrolled;

12 (4) to the extent possible, identification of the

13 types of services most frequently sought by such en14 rollees at such facilities; and

15 (5) recommendations about how to ensure the

16 timely delivery of the services listed in subsection

17 (f)(2)(C)(ii) of section 1931 of the Social Security

18 Act to enrollees of risk contracting entities and pri19 mary care case management entities and how to en20 sure that local health departments, public hospitals,

21 and other facilities are adequately compensated for

22 the provision of such services to such enrollees.

23 SEC. 7108. REPORT ON PAYMENTS TO HOSPITALS.

24 (a) IN GENERAL.—Not later than October 1 of each

25 year, beginning with October 1, 1996, the Secretary and
230

Title VII, Subtitle B

•HR 2530 IH

1 the Comptroller General shall analyze and submit a report

2 to the Committee on Finance of the Senate and the Com3 mittee on Commerce of the House of Representatives on

4 rates paid for hospital services under coordinated care pro5 grams described in section 1932 of the Social Security

6 Act.

7 (b) CONTENTS OF REPORT.—The information in the

8 report described in subsection (a) shall—

9 (1) be organized by State, type of hospital, type

10 of service, and

11 (2) include a comparison of rates paid for hos12 pital services under coordinated care programs with

13 rates paid for hospital services furnished to individ14 uals who are entitled to benefits under a State plan

15 under title XIX of the Social Security Act and are

16 not enrolled in such coordinated care programs.

17 (c) REPORTS BY STATES.—Each State shall transmit

18 to the Secretary, at such time and in such manner as the

19 Secretary determines appropriate, the information on hos20 pital rates submitted to such State under section

21 1932(b)(3)(P) of such Act.

22 SEC. 7109. CONFORMING AMENDMENTS.

23 (a) EXCLUSION OF CERTAIN INDIVIDUALS AND EN24 TITIES FROM PARTICIPATION IN PROGRAM.—Section
231

Title VII, Subtitle B

•HR 2530 IH

1 1128(b)(6)(C) of the Social Security Act (42 U.S.C.

2 1320a-7(b)(6)(C)) is amended—

3 (1) in clause (i), by striking ‘‘a health mainte4 nance organization (as defined in section 1903(m))’’

5 and inserting ‘‘an eligible managed care provider, as

6 defined in section 1933(a)(1),’’; and

7 (2) in clause (ii), by inserting ‘‘section 1115 or’’

8 after ‘‘approved under’’.

9 (b) STATE PLAN REQUIREMENTS.—Section 1902 of

10 such Act (42 U.S.C. 1396a) is amended—

11 (1) in subsection (a)(30)(C), by striking ‘‘sec12 tion 1903(m)’’ and inserting ‘‘section

13 1932(a)(1)(B)’’; and

14 (2) in subsection (a)(57), by striking ‘‘hospice

15 program, or health maintenance organization (as de16 fined in section 1903(m)(1)(A))’’ and inserting ‘‘or

17 hospice program’’;

18 (3) in subsection (e)(2)(A), by striking ‘‘or with

19 an entity described in paragraph (2)(B)(iii), (2)(E),

20 (2)(G), or

21 (6) of section 1903(m) under a contract de22 scribed in section 1903(m)(2)(A);

23 (4) in subsection (p)(2)—

24 (A) by striking ‘‘a health maintenance or25 ganization (as defined in section 1903(m))’’ and
232

Title VII, Subtitle B

•HR 2530 IH

1 inserting ‘‘an eligible managed care provider, as

2 defined in section 1933(a)(1),’’;

3 (B) by striking ‘‘an organization’’ and in4 serting ‘‘a provider’’; and

5 (C) by striking ‘‘any organization’’ and in6 serting ‘‘any provider’’; and

7 (5) in subsection (w)(1), by striking ‘‘sections

8 1903(m)(1)(A) and’’ and inserting ‘‘section’’.

9 (c) PAYMENT TO STATES.—Section

10 1903(w)(7)(A)(viii) of such Act (42 U.S.C.

11 1396b(w)(7)(A)(viii)) is amended to read as follows:

12 ‘‘(viii) Services of an eligible managed

13 care provider with a contract under section

14 1932(a)(1)(B).’’.

15 (d) USE OF ENROLLMENT FEES AND OTHER

16 CHARGES.—Section 1916 of such Act (42 U.S.C. 1396o)

17 is amended in subsections (a)(2)(D) and (b)(2)(D) by

18 striking ‘‘a health maintenance organization (as defined

19 in section 1903(m))’’ and inserting ‘‘an eligible managed

20 care provider, as defined in section 1933(a)(1),’’ each

21 place it appears.

22 (e) EXTENSION OF ELIGIBILITY FOR MEDICAL AS23 SISTANCE.—Section 1925(b)(4)(D)(iv) of such Act (42

24 U.S.C. 1396r-6(b)(4)(D)(iv)) is amended to read as fol25 lows:
233

Title VII, Subtitle B

•HR 2530 IH

1 ‘‘(iv) ENROLLMENT WITH ELIGIBLE

2 MANAGED CARE PROVIDER.—Enrollment of

3 the caretaker relative and dependent chil4 dren with an eligible managed care pro5 vider, as defined in section 1933(a)(1), less

6 than 50 percent of the membership (en7 rolled on a prepaid basis) of which consists

8 of individuals who are eligible to receive

9 benefits under this title (other than be10 cause of the option offered under this

11 clause). The option of enrollment under

12 this clause is in addition to, and not in lieu

13 of, any enrollment option that the State

14 might offer under subparagraph (A)(i)

15 with respect to receiving services through

16 an eligible managed care provider in ac17 cordance with sections 1932, 1933, and

18 1934.’’.

19 (f) ASSURING ADEQUATE PAYMENT LEVELS FOR OB20 STETRICAL AND PEDIATRIC SERVICES.—Section 1926(a)

21 of such Act (42 U.S.C. 1396r-7(a)) is amended in para22 graphs (1) and (2) by striking ‘‘health maintenance orga23 nizations under section 1903(m)’’ and inserting ‘‘eligible

24 managed care providers under contracts entered into

25 under section 1932(a)(1)(B)’’ each place it appears.
234

Title VII, Subtitle B

•HR 2530 IH

1 (g) PAYMENT FOR COVERED OUTPATIENT DRUGS.—

2 Section 1927(j)(1) of such Act (42 U.S.C. 1396r-8(j)(1))

3 is amended by striking ‘‘***Health Maintenance Organi4 zations, including those organizations that contract under

5 section 1903(m),’’ and inserting ‘‘health maintenance or6 ganizations and medicaid managed care plans, as defined

7 in section 1933(a)(2),’’.

8 (h) DEMONSTRATION PROJECTS TO STUDY EFFECT

9 OF ALLOWING STATES TO EXTEND MEDICAID COVERAGE

10 FOR CERTAIN FAMILIES.—Section 4745(a)(5)(A) of the

11 Omnibus Budget Reconciliation Act of 1990 (42 U.S.C.

12 1396a note) is amended by striking ‘‘(except section

13 1903(m)’’ and inserting ‘‘(except sections 1932, 1933, and

14 1934)’’.

15 SEC. 7110. EFFECTIVE DATE; STATUS OF WAIVERS.

16 (a) EFFECTIVE DATE.—Except as provided in sub17 section (b), the amendments made by this subtitle shall

18 apply to medical assistance furnished—

19 (1) during quarters beginning on or after Octo20 ber 1, 1996; or

21 (2) in the case of assistance furnished under a

22 contract described in section 7102(b), during quar23 ters beginning after the earlier of—

24 (A) the date of the expiration of the contract;

25 or
235

Title VII, Subtitle B

•HR 2530 IH

1 (B) the expiration of the 1-year period

2 which begins on the date of the enactment of

3 this Act.

4 (b) APPLICATION TO WAIVERS.—

5 (1) EXISTING WAIVERS.—If any waiver granted

6 to a State under section 1115 or 1915 of the Social

7 Security Act (42 U.S.C. 1315, 1396n) or otherwise

8 which relates to the provision of medical assistance

9 under a State plan under title XIX of the such Act

10 (42 U.S.C. 1396 et seq.), is in effect or approved by

11 the Secretary of Health and Human Services as of

12 the applicable effective date described in subsection

13 (a), the amendments made by this subtitle shall not

14 apply with respect to the State before the expiration

15 (determined without regard to any extensions) of the

16 waiver to the extent such amendments are inconsist17 ent with the terms of the waiver.

18 (2) SECRETARIAL EVALUATION AND REPORT

19 FOR EXISTING WAIVERS AND EXTENSIONS.—

20 (A) PRIOR TO APPROVAL.—On and after

21 the applicable effective date described in sub22 section (a), the Secretary, prior to extending

23 any waiver granted under section 1115 or 1915

24 of the Social Security Act (42 U.S.C. 1315,

25 1396n) or otherwise which relates to the provi-
236

Title VII, Subtitle B

•HR 2530 IH

1 sion of medical assistance under a State plan

2 under title XIX of the such Act (42 U.S.C.

3 1396 et seq.), shall—

4 (i) conduct an evaluation of—

5 (I) the waivers existing under

6 such sections or other provision of law

7 as of the date of the enactment of this

8 Act; and

9 (II) any applications pending, as

10 of the date of the enactment of this

11 Act, for extensions of waivers under

12 such sections or other provision of

13 law; and

14 (ii) submit a report to the Congress

15 recommending whether the extension of a

16 waiver under such sections or provision of

17 law should be conditioned on the State

18 submitting the request for an extension

19 complying with the provisions of sections

20 1932, 1933, and 1934 of the Social Secu21 rity Act (as added by this subtitle).

22 (B) DEEMED APPROVAL.—If the Congress

23 has not enacted legislation based on a report

24 submitted under subparagraph (A)(ii) within

25 120 days after the date such report is submit-
237

Title VII, Subtitle C

•HR 2530 IH

1 ted to the Congress, the recommendations con2 tained in such report shall be deemed to be ap3 proved by the Congress.

4 Subtitle C—Additional Reforms of

5 Medicaid Acute Care Program

6 SEC. 7201. PERMITTING INCREASED FLEXIBILITY IN MEDIC7 AID COST-SHARING.

8 (a) IN GENERAL.—Subsections (a)(3) and (b)(3) of

9 section 1916 of the Social Security Act (42 U.S.C. 1396o)

10 are amended by striking everything that follows ‘‘other

11 care and services’’ and inserting the following: ‘‘will be es12 tablished pursuant to a public schedule of charges and will

13 be adjusted to reflect the income, resources, and family

14 size of the individual provided the item or service.’’.

15 (b) EFFECTIVE DATE.—The amendments made by

16 subsection (a) shall apply to items and services furnished

17 on or after the first day of the first calendar quarter be18 ginning after the date of the enactment of this Act.

19 SEC. 7202. LIMITS ON REQUIRED COVERAGE OF ADDI20 TIONAL TREATMENT SERVICES UNDER

21 EPSDT.

22 (a) REGULATIONS.—The Secretary of Health and

23 Human Services shall define, by regulation promulgated

24 after consultation with States and organizations rep25 resenting health care providers, those treatment services
238

Title VII, Subtitle C

•HR 2530 IH

1 (in addition to those otherwise covered under a State plan

2 under title XIX of the Social Security Act) that must be

3 covered under section 1905(r)(5) of such Act.

4 (b) CONSTRUCTION.—Nothing in subsection (a) shall

5 be construed as limiting the scope of such treatment serv6 ices a State may cover under such section.

7 SEC. 7203. DELAY IN APPLICATION OF NEW REQUIRE8 MENTS.

9 (a) DELAY IN IMPLEMENTATION.—

10 (1) IN GENERAL.—Notwithstanding any other

11 provision of law, no change in law—

12 (A) which has the effect of imposing a re13 quirement on a State under a State plan under

14 title XIX of the Social Security Act, and

15 (B) with respect to the Secretary of Health

16 and Human Services is required to issue regula17 tions to carry out such requirement,

18 shall take effect until the date the Secretary promul19 gates such regulation as a final regulation.

20 (2) STATE OPTION.—Except as otherwise pro21 vided by the Secretary, a State may elect to have a

22 change in a law described in paragraph (1) apply

23 with respect to the State during the period (or por24 tion thereof) in which the change would have taken

25 effect but for paragraph (1).
239

Title VII, Subtitle C

•HR 2530 IH

1 (b) PROHIBITION OF CHANGES IN FINAL REGULA2 TIONS DURING A FISCAL YEAR.—

3 (1) IN GENERAL.—Except as provided in para4 graph (2), any change in a regulation of the Sec5 retary of Health and Human Services relating to the

6 medicaid program under title XIX of the Social Se7 curity Act shall not become effective until the begin8 ning of the fiscal year following the fiscal year in

9 which the change was promulgated.

10 (2) STATE OPTION.—Except as otherwise pro11 vided by the Secretary, a State may elect to have a

12 change in a regulation described in paragraph (1)

13 apply with respect to the State during the period (or

14 portion thereof) in which the change would have

15 taken effect but for paragraph (1).

16 (c) SENSE OF CONGRESS REGARDING FEDERAL PAY17 MENT FOR NEW MEDICAID MANDATES.—It is the sense

18 of Congress that if a State is required by future legislation

19 to provide for additional services, eligible individuals, or

20 otherwise incur additional costs under its medicaid pro21 gram under title XIX of the Social Security Act, the Fed22 eral Government shall provide for full payment of any such

23 additional costs for at least the first two years in which

24 such requirement applies.
240

Title VII, Subtitle C

•HR 2530 IH

1 SEC. 7204. DEADLINE ON ACTION ON WAIVERS.

2 (a) IN GENERAL.—In considering applications for

3 medicaid waivers—

4 (1) the application shall be deemed granted un5 less the Secretary of Health and Human Services,

6 within ninety days after the date of the submission

7 of the application of the Secretary, either denies the

8 application in writing or informs the applicant in

9 writing with respect to any additional information

10 which is needed in order to make a final determina11 tion with respect to the application, and

12 (2) after the date the Secretary receives such

13 additional information, the application shall be

14 deemed granted unless the Secretary within ninety

15 days of such date, denies such application.

16 (b) MEDICAID WAIVERS.—In this section, the term

17 ‘‘medicaid waiver’’ means the request of a State for a

18 waiver of a provision of title XIX of the Social Security

19 Act (or of another provision of law that applies to State

20 plans under such title), and includes such a waiver under

21 the authority of section 1115 or section 1915 of the Social

22 Security Act or under section 222 of the Social Security

23 Amendments of 1972 and section 402(a) of the Social Se24 curity Amendments of 1967.
241

Title VII, Subtitle D

•HR 2530 IH

1 Subtitle D—National Commission

2 on Medicaid Restructuring

3 SEC. 7301. ESTABLISHMENT OF COMMISSION.

4 (a) IN GENERAL.—There is hereby established the

5 National Commission on Medicaid Restructuring (in this

6 subtitle referred to as the ‘‘Commission’’).

7 (b) COMPOSITION.—The Commission shall be com8 posed as follows:

9 (1) 2 FEDERAL OFFICIALS.—The President

10 shall appoint 2 Federal officials, one of whom the

11 President shall designate as chairperson of the Com12 mission.

13 (2) 4 MEMBERS OF CONGRESS.—(A) The

14 Speaker of the House of Representatives shall ap15 point one Member of the House as a member.

16 (B) The minority leader of the House of Rep17 resentatives shall appoint one Member of the House

18 as a member.

19 (C) The majority leader of the Senate shall ap20 point one Member of the Senate as a member.

21 (D) The minority leader of the Senate shall ap22 point one Member of the Senate as a member.

23 (3) 6 STATE GOVERNMENT REPRESENTA24 TIVES.—(A) The majority leaders of the House of

25 Representatives and the Senate shall jointly appoint
242

Title VII, Subtitle D

•HR 2530 IH

1 3 individuals who are governors, State legislators, or

2 State medicaid officials.

3 (B) The minority leaders of the House of Rep4 resentatives and the Senate shall jointly appoint 3

5 individuals who are governors, State legislators, or

6 State medicaid officials.

7 (4) 6 EXPERTS.—(A) The majority leaders of

8 the House of Representatives and the Senate shall

9 jointly appoint 4 individuals who are not officials of

10 the Federal or State governments and who have ex11 pertise in a health-related field, such as medicine,

12 public health, or delivery and financing of health

13 care services.

14 (B) The President shall appoint 2 individuals

15 who are not officials of the Federal or State govern16 ments and who have expertise in a health-related

17 field, such as medicine, public health, or delivery and

18 financing of health care services.

19 (c) INITIAL APPOINTMENT.—Members of the Com20 mission shall first be appointed by not later than February

21 1, 1996.

22 (d) COMPENSATION AND EXPENSES.—

23 (1) COMPENSATION.—Each member of the

24 Commission shall serve without compensation.
243

Title VII, Subtitle D

•HR 2530 IH

1 (2) TRAVEL EXPENSES.—Members of the Com2 mission shall be allowed travel expenses, including

3 per diem in lieu of subsistence, at rates authorized

4 for employees of agencies under subchapter I of

5 chapter 57 of title 5, United States Code, while

6 away from their homes or regular places of business

7 in the performance of services for the Commission.

8 SEC. 7302. DUTIES OF COMMISSION.

9 (a) STUDY OF MEDICAID PROGRAM.—

10 (1) IN GENERAL.—The Commission shall study

11 and make recommendations to the Congress, the

12 President, and the Secretary regarding the need for

13 changes (in addition to the changes effected under

14 this title) in the laws and regulations regarding the

15 medicaid program under title XIX of the Social Se16 curity Act.

17 (2) SPECIFIC CONCERNS.—The Commission

18 shall specifically address each of the following:

19 (A) Changes needed to ensure adequate ac20 cess to health care for low-income individuals.

21 (B) Promotion of quality care.

22 (C) Deterrence of fraud and abuse.

23 (D) Providing States with additional flexi24 bility in implementing their medicaid plans.
244

Title VII, Subtitle D

•HR 2530 IH

1 (E) Methods of containing Federal and

2 State costs.

3 (b) REPORTS.—

4 (1) FIRST REPORT.—The Commission shall

5 issue a first report to Congress by not later than

6 December 31, 1996.

7 (2) SUBSEQUENT REPORTS.—The Commission

8 shall issue subsequent reports to Congress by not

9 later than December 31, 1997, and December 31,

10 1998.

11 SEC. 7303. ADMINISTRATION.

12 (a) APPOINTMENT OF STAFF.—

13 (1) EXECUTIVE DIRECTOR.—The Commission

14 shall have an Executive Director who shall be ap15 pointed by the Chairperson with the approval of the

16 Commission. The Executive Director shall be paid at

17 a rate not to exceed the rate of basic pay payable

18 for level III of the Executive Schedule.

19 (2) STAFF.—With the approval of the Commis20 sion, the Executive Director may appoint and deter21 mine the compensation of such staff as may be nec22 essary to carry out the duties of the Commission.

23 Such appointments and compensation may be made

24 without regard to the provisions of title 5, United

25 States Code, that govern appointments in the com-
245

Title VII, Subtitle D

•HR 2530 IH

1 petitive services, and the provisions of chapter 51

2 and subchapter III of chapter 53 of such title that

3 relate to classifications and the General Schedule

4 pay rates.

5 (3) CONSULTANTS.—The Commission may pro6 cure such temporary and intermittent services of

7 consultants under section 3109(b) of title 5, United

8 States Code, as the Commission determines to be

9 necessary to carry out the duties of the Commission.

10 (b) PROVISION OF ADMINISTRATIVE SUPPORT SERV11 ICES BY HHS.—Upon the request of the Commission, the

12 Secretary of Health and Human Services shall provide to

13 the Commission on a reimbursable basis such administra14 tive support services as the Commission may request.

15 SEC. 7304. AUTHORIZATION OF APPROPRIATIONS.

16 There are authorized to be appropriated to carry out

17 this subtitle $3,000,000 for fiscal year 1996, $4,000,000

18 for each of fiscal years 1997 and 1998, and $2,000,000

19 for fiscal year 1999.

20 SEC. 7305. TERMINATION.

21 The Commission shall terminate on December 31,

22 1998.
246

Title VII, Subtitle E

•HR 2530 IH

1 Subtitle E—Restrictions on

2 Disproportionate Share Payments

3 SEC. 7401. REFORMING DISPROPORTIONATE SHARE PAY4 MENTS UNDER STATE MEDICAID PROGRAMS.

5 (a) TARGETING PAYMENTS.—Section 1923 of the So6 cial Security Act (42 U.S.C.1396r–3) is amended—

7 (1) in subsection (a)(1)—

8 (A) by redesignating subparagraphs (A)

9 and (B) as clauses (i) and (ii),

10 (B) by striking ‘‘(1)’’ and inserting

11 ‘‘(1)(A)’’,

12 (C) in clause (i) (as so redesignated) by

13 striking ‘‘(b)(1)’’ and inserting ‘‘(b)(1)(A)’’,

14 and

15 (D) by adding at the end the following:

16 ‘‘(B) A State plan under this title shall not be consid17 ered to meet the requirement of section 1902(a)(13)(A)

18 (insofar as it requires payments to hospitals to take into

19 account the situation of hospitals that serve a dispropor20 tionate number of low-income patients with special needs),

21 as of July 1, 1996, unless the State has submitted to the

22 Secretary, by not later than such date, an amendment to

23 such plan that utilizes the definition of such hospitals

24 specified in subsection (b)(1)(B) in lieu of the definition

25 established by the State under subparagraph (a)(i).’’;
247

Title VII, Subtitle E

•HR 2530 IH

1 (2) in subsection (a)(2)(A)—

2 (A) by inserting ‘‘(i)’’ after ‘‘(2)(A)’’,

3 (B) by striking ‘‘paragraph (1)’’ and in4 serting ‘‘paragraph (1)(A)(i)’’, and

5 (C) by adding at the end the following:

6 ‘‘(ii) In order to be considered to have met such re7 quirement of section 1902(a)(13)(A) as of July 1, 1996,

8 the State must submit to the Secretary by not later than

9 April 1, 1996, the State plan amendment described in

10 paragraph (1)(B), consistent with subsection (c), effective

11 for inpatient hospital services furnished on or after July

12 1, 1996.’’;

13 (3) in subsection (b)—

14 (A) in the heading, by striking ‘‘HOS15 PITALS DEEMED DISPROPORTIONATE SHARE’’

16 and inserting ‘‘DISPROPORTIONATE SHARE

17 HOSPITALS’’,

18 (B) in paragraph (1)—

19 (i) by redesignating subparagraphs

20 (A) and (B) as clauses (i) and (ii),

21 (ii) by striking ‘‘(1) For purposes of

22 subsection (a)(1)’’ and inserting ‘‘(1)(A)

23 For purposes of subsection (a)(1)(A)’’, and

24 (iii) by adding at the end the follow25 ing:
248

Title VII, Subtitle E

•HR 2530 IH

1 ‘‘(B) For purposes of subsection (a)(1)(B), a hospital

2 that meets the requirements of subsection (d) is a dis3 proportionate share hospital only if—

4 ‘‘(i) in the case of a hospital that is not de5 scribed in subsection (d)(2)(A)(i), the hospital’s low6 income utilization rate (as defined in paragraph (3))

7 exceeds 25 percent; or

8 ‘‘(ii) in the case of a hospital that is described

9 in subsection (d)(2)(A)(i)—

10 ‘‘(I) the hospital meets the requirement of

11 clause (i), or

12 ‘‘(II) the hospital’s medicaid inpatient uti13 lization rate (as defined in paragraph (2)) ex14 ceeds 20 percent.’’;

15 (C) in paragraph (2) by striking ‘‘(1)(A)’’

16 and inserting ‘‘(1)’’,

17 (D) in paragraph (3) by striking ‘‘(1)(B)’’

18 and inserting ‘‘(1)’’, and

19 (E) by striking paragraph (4);

20 (4) in subsection (c)—

21 (A) in paragraph (2), by striking ‘‘sub22 paragraph (A) or (B) of subsection (b)(1)’’ and

23 inserting ‘‘clause (i) or (ii) of subsection

24 (b)(1)(A)’’,

25 (B) by striking paragraph (3), and
249

Title VII, Subtitle E

•HR 2530 IH

1 (C) in the matter following paragraph

2 (3)—

3 (i) by striking ‘‘(1)(B)’’ each place it

4 appears and inserting ‘‘(1)(A)(ii)’’, and

5 (ii) by striking ‘‘(2)(A)’’ each place it

6 appears and inserting ‘‘(2)(A)(i)’’ ; and

7 (5) in subsection (e)—

8 (A) in paragraph (1)(C), by striking

9 ‘‘meets the requirement of subsection (d)(3)’’

10 and inserting ‘‘makes payments under this sec11 tion only to hospitals described in subsection

12 (b)(1)(B)’’, and

13 (B) in paragraph (2)—

14 (i) by inserting ‘‘and’’ at the end of

15 subparagraph (B), and

16 (ii) by striking subparagraph (C).

17 (b) DIRECT PAYMENT BY STATE.—Section 1923(a)

18 of such Act (42 U.S.C. 1396r–4(a)), as amended by sub19 section (a), is further amended—

20 (1) in paragraph (1), by adding at the end the

21 following

22 ‘‘(C) A State plan under this title shall not be consid23 ered to meet the requirement of section 1902(a)(13)(A)

24 (insofar as it requires payments to hospitals to take into

25 account the situation of hospitals that serve a dispropor-
250

Title VII, Subtitle E

•HR 2530 IH

1 tionate number of low-income patients with special needs),

2 as of July 1, 1996, unless the State provides that any pay3 ments made under this section with respect to individuals

4 who are—

5 ‘‘(i) entitled to benefits under the State plan,

6 and

7 ‘‘(ii) enrolled with a health maintenance organi8 zation or other managed care plan,

9 are, at the option of the hospital, made directly to such

10 hospital by the State.’’; and

11 (2) in paragraph (2)(A)(ii), by striking ‘‘amend12 ment described in paragraph (1)(B)’’ and inserting

13 ‘‘amendments described in subparagraphs (B) and

14 (C) of paragraph (1)’’.

15 (c) ADJUSTMENT TO NATIONAL DSH LIMIT; STATE

16 ALLOCATIONS.—

17 (1) IN GENERAL.—Section 1923(f) (42 U.S.C.

18 1396r–4(f)) is amended—

19 (A) in paragraph (1)(B), by striking ‘‘for

20 a fiscal year’’ and all that follows and inserting

21 the following: ‘‘for—

22 ‘‘(i) each of fiscal years 1997 and

23 1998, is $6.5 billion,

24 ‘‘(ii) each of fiscal years 1999 and

25 2000, is $5.5 billion,
251

Title VII, Subtitle E

•HR 2530 IH

1 ‘‘(iii) each succeeding fiscal year is

2 $5.0 billion.’’;

3 (B) by striking subparagraphs (D) and (E)

4 of paragraph (1); and

5 (C) by amending paragraph (2) to read as

6 follows:

7 ‘‘(2) DETERMINATION OF STATE DSH ALLOT8 MENTS.—

9 ‘‘(A) IN GENERAL.—The State DSH allot10 ment for a fiscal year is equal to the State’s

11 share (as determined under subparagraph (B))

12 of the national DSH limit for the fiscal year es13 tablished under paragraph (1)(B).

14 ‘‘(B) STATE SHARE.—For purposes of sub15 paragraph (A), the ‘State share’ is equal to the

16 ratio of—

17 ‘‘(i) the total number low-income pa18 tient days (as defined in subparagraph

19 (C)) for all hospitals described in sub20 section (b)(1)(B) in the State for the fiscal

21 year, to

22 ‘‘(ii) the total number of such low-in23 come patient days for all such hospitals for

24 all States for the fiscal year.
252

Title VII, Subtitle E

•HR 2530 IH

1 The Secretary shall determine the State share

2 based on the Secretary’s best estimate of pa3 tient days and hospitals.

4 ‘‘(C) LOW-INCOME PATIENT DAY.—

5 ‘‘(i) IN GENERAL.—For purposes of

6 this paragraph, the term ‘low-income pa7 tient day’ means, for a hospital, a patient

8 day (as defined in clause (ii)) attributable

9 to an individual who either is eligible for

10 medical assistance under the State plan or

11 has no health insurance (or other source of

12 third party coverage) for services furnished

13 by the hospital.

14 ‘‘(ii) PATIENT DAYS DEFINED.—For

15 purposes of this subparagraph, the term

16 ‘patient day’ includes each day in which—

17 ‘‘(I) an individual (including a

18 new-born) is an inpatient in the hos19 pital, whether or not the individual is

20 in a specialized ward and whether or

21 not the individual remains in the hos22 pital for lack of suitable placement

23 elsewhere, and
253

Title VII, Subtitle F

•HR 2530 IH

1 ‘‘(II) an individual makes one or

2 more outpatient visits to the hos3 pital.’’.

4 (2) EFFECTIVE DATE.—The amendments made

5 by paragraph (1) shall apply to fiscal years begin6 ning with fiscal year 1997.

7 (d) EFFECTIVE DATE.—Except as provided in sub8 section (c)(2), the amendments made by this section shall

9 apply to payments to States under section 1903(a) of the

10 Social Security Act for payments to hospitals made under

11 State plans after—

12 (1) July 1, 1996, or

13 (2) in the case of a State with a State legisla14 ture that is not scheduled to have a regular legisla15 tive session in 1996, July 1, 1997.

16 Subtitle F—Fraud Reduction

17 SEC. 7501. MONITORING PAYMENTS FOR DUAL ELIGIBLES.

18 The Administrator of the Health Care Financing Ad19 ministration shall develop mechanisms to better monitor

20 and prevent inappropriate payments under the medicaid

21 program in the case of individuals who are dually eligible

22 for benefits under such program and under the medicare

23 program.
254

Title VIII

•HR 2530 IH

1 SEC. 7502. IMPROVED IDENTIFICATION SYSTEMS.

2 The Administrator of the Health Care Financing Ad3 ministration shall develop improved mechanisms, such as

4 picture identification documents and smart documents, to

5 provide methods of improved identification and tracking

6 of beneficiaries and providers that perpetrate fraud

7 against the medicaid program.

8 TITLE VIII—MEDICARE

9 SEC. 8000. SHORT TITLE; REFERENCES IN TITLE.

10 (a) SHORT TITLE OF TITLE.—This title may be cited

11 as the ‘‘Medicare Preservation Act of 1995’’.

12 (b) AMENDMENTS TO SOCIAL SECURITY ACT.—Ex13 cept as otherwise specifically provided, whenever in this

14 title an amendment is expressed in terms of an amend15 ment to or repeal of a section or other provision, the ref16 erence shall be considered to be made to that section or

17 other provision of the Social Security Act.

18 (c) REFERENCES TO OBRA.—In this title, the terms

19 ‘‘OBRA–1986’’, ‘‘OBRA–1987’’, ‘‘OBRA–1989’’,

20 ‘‘OBRA–1990’’, and ‘‘OBRA–1993’’ refer to the Omnibus

21 Budget Reconciliation Act of 1986 (Public Law 99–509),

22 the Omnibus Budget Reconciliation Act of 1987 (Public

23 Law 100–203), the Omnibus Budget Reconciliation Act

24 of 1989 (Public Law 101–239), the Omnibus Budget Rec25 onciliation Act of 1990 (Public Law 101–508), and the
255

Title VIII, Subtitle A

•HR 2530 IH

1 Omnibus Budget Reconciliation Act of 1993 (Public Law

2 103–66), respectively.

3 Subtitle A—Medicare Choice

4 Program

5 PART 1—INCREASING CHOICE UNDER THE

6 MEDICARE PROGRAM

7 SEC. 8001. INCREASING CHOICE UNDER MEDICARE.

8 (a) IN GENERAL.—Title XVIII is amended by insert9 ing after section 1804 the following new section:

10 ‘‘PROVIDING FOR CHOICE OF COVERAGE

11 ‘‘SEC. 1805. (a) CHOICE OF COVERAGE.—

12 ‘‘(1) IN GENERAL.—Subject to the provisions of

13 this section, every individual who is entitled to bene14 fits under part A and enrolled under part B shall

15 elect to receive benefits under this title through one

16 of the following:

17 ‘‘(A) THROUGH FEE-FOR-SERVICE SYS18 TEM.—Through the provisions of parts A and

19 B.

20 ‘‘(B) THROUGH A MEDICARE CHOICE

21 PRODUCT.—Through a Medicare Choice prod22 uct (as defined in paragraph (2)), which may

23 be—

24 ‘‘(i) a product offered by a provider25 sponsored organization,
256

Title VIII, Subtitle A

•HR 2530 IH

1 ‘‘(ii) a product offered by an organiza2 tion that is a union, Taft-Hartley plan, or

3 association, or

4 ‘‘(iii) a product providing for benefits

5 on a fee-for-service or other basis.

6 Such a product may be a high deductible/

7 medisave product (and a contribution into a

8 Medicare Choice medical savings account

9 (MSA)) under the demonstration project pro10 vided under section 1859.

11 ‘‘(2) MEDICARE CHOICE PRODUCT DEFINED.—

12 For purposes of this section and part C, the term

13 ‘Medicare Choice product’ means health benefits cov14 erage offered under a policy, contract, or plan by a

15 Medicare Choice organization (as defined in section

16 1851(a)) pursuant to and in accordance with a con17 tract under section 1858.

18 ‘‘(3) TERMINOLOGY RELATING TO OPTIONS.—

19 For purposes of this section and part C—

20 ‘‘(A) NON-MEDICARE-CHOICE OPTION.—An

21 individual who has made the election described

22 in paragraph (1)(A) is considered to have elect23 ed the ‘Non-Medicare Choice option’.

24 ‘‘(B) MEDICARE CHOICE OPTION.—An in25 dividual who has made the election described in
257

Title VIII, Subtitle A

•HR 2530 IH

1 paragraph (1)(B) to obtain coverage through a

2 Medicare Choice product is considered to have

3 elected the ‘Medicare Choice option’ for that

4 product.

5 ‘‘(b) SPECIAL RULES.—

6 ‘‘(1) RESIDENCE REQUIREMENT.—Except as

7 the Secretary may otherwise provide, an individual is

8 eligible to elect a Medicare Choice product offered by

9 a Medicare Choice organization only if the organiza10 tion in relation to the product serves the geographic

11 area in which the individual resides.

12 ‘‘(2) AFFILIATION REQUIREMENTS FOR CER13 TAIN PRODUCTS.—

14 ‘‘(A) IN GENERAL.—Subject to subpara15 graph (B), an individual is eligible to elect a

16 Medicare Choice product offered by a limited

17 enrollment Medicare Choice organization (as de18 fined in section 1852(c)(4)(D)) only if—

19 ‘‘(i) the individual is eligible under

20 section 1852(c)(4) to make such election,

21 and

22 ‘‘(ii) in the case of a Medicare Choice

23 organization that is a union sponsor or

24 Taft-Hartley sponsor (as defined in section

25 1852(c)(4)), the individual elected under
258

Title VIII, Subtitle A

•HR 2530 IH

1 this section a Medicare Choice product of2 fered by the sponsor during the first en3 rollment period in which the individual was

4 eligible to make such election with respect

5 to such sponsor.

6 ‘‘(B) NO REELECTION AFTER

7 DISENROLLMENT FOR CERTAIN PRODUCTS.—

8 An individual is not eligible to elect a Medicare

9 Choice product offered by a Medicare Choice

10 organization that is a union sponsor or Taft11 Hartley sponsor if the individual previously had

12 elected a Medicare Choice product offered by

13 the organization and had subsequently discon14 tinued to elect such a product offered by the or15 ganization.

16 ‘‘(c) PROCESS FOR EXERCISING CHOICE.—

17 ‘‘(1) IN GENERAL.—The Secretary shall estab18 lish a process through which elections described in

19 subsection (a) are made and changed, including the

20 form and manner in which such elections are made

21 and changed. Such elections shall be made or

22 changed only during coverage election periods speci23 fied under subsection (e) and shall become effective

24 as provided in subsection (f).
259

Title VIII, Subtitle A

•HR 2530 IH

1 ‘‘(2) EXPEDITED IMPLEMENTATION.—The Sec2 retary shall establish the process of electing coverage

3 under this section during the transition period (as

4 defined in subsection (e)(1)(B)) in such an expedited

5 manner as will permit such an election for Medicare

6 Choice products in an area as soon as such products

7 become available in that area.

8 ‘‘(3) COORDINATION THROUGH MEDICARE

9 CHOICE ORGANIZATIONS.—

10 ‘‘(A) ENROLLMENT.—Such process shall

11 permit an individual who wishes to elect a Med12 icare Choice product offered by a Medicare

13 Choice organization to make such election

14 through the filing of an appropriate election

15 form with the organization.

16 ‘‘(B) DISENROLLMENT.—Such process

17 shall permit an individual, who has elected a

18 Medicare Choice product offered by a Medicare

19 Choice organization and who wishes to termi20 nate such election, to terminate such election

21 through the filing of an appropriate election

22 form with the organization.

23 ‘‘(4) DEFAULT.—

24 ‘‘(A) INITIAL ELECTION.—
260

Title VIII, Subtitle A

•HR 2530 IH

1 ‘‘(i) IN GENERAL.—Subject to clause

2 (ii), an individual who fails to make an

3 election during an initial election period

4 under subsection (e)(1) is deemed to have

5 chosen the Non-Medicare Choice option.

6 ‘‘(ii) SEAMLESS CONTINUATION OF

7 COVERAGE.—The Secretary shall establish

8 procedures under which individuals who

9 are enrolled with a Medicare Choice orga10 nization at the time of the initial election

11 period and who fail to elect to receive cov12 erage other than through the organization

13 are deemed to have elected an appropriate

14 Medicare Choice product offered by the or15 ganization.

16 ‘‘(B) CONTINUING PERIODS.—An individ17 ual who has made (or deemed to have made) an

18 election under this section is considered to have

19 continued to make such election until such time

20 as—

21 ‘‘(i) the individual changes the elec22 tion under this section, or

23 ‘‘(ii) a Medicare Choice product is dis24 continued, if the individual had elected
261

Title VIII, Subtitle A

•HR 2530 IH

1 such product at the time of the discontinu2 ation.

3 ‘‘(5) AGREEMENTS WITH COMMISSIONER OF SO4 CIAL SECURITY TO PROMOTE EFFICIENT ADMINIS5 TRATION.—In order to promote the efficient admin6 istration of this section and the Medicare Choice

7 program under part C, the Secretary may enter into

8 an agreement with the Commissioner of Social Secu9 rity under which the Commissioner performs admin10 istrative responsibilities relating to enrollment and

11 disenrollment in Medicare Choice products under

12 this section.

13 ‘‘(d) PROVISION OF BENEFICIARY INFORMATION TO

14 PROMOTE INFORMED CHOICE.—

15 ‘‘(1) IN GENERAL.—The Secretary shall provide

16 for activities under this subsection to disseminate

17 broadly information to medicare beneficiaries (and

18 prospective medicare beneficiaries) on the coverage

19 options provided under this section in order to pro20 mote an active, informed selection among such op21 tions. Such information shall be made available on

22 such a timely basis (such as 6 months before the

23 date an individual would first attain eligibility for

24 medicare on the basis of age) as to permit individ-
262

Title VIII, Subtitle A

•HR 2530 IH

1 uals to elect the Medicare Choice option during the

2 initial election period described in subsection (e)(1).

3 ‘‘(2) USE OF NONFEDERAL ENTITIES.—The

4 Secretary shall, to the maximum extent feasible,

5 enter into contracts with appropriate non-Federal

6 entities to carry out activities under this subsection.

7 ‘‘(3) SPECIFIC ACTIVITIES.—In carrying out

8 this subsection, the Secretary shall provide for at

9 least the following activities in all areas in which

10 Medicare Choice products are offered:

11 ‘‘(A) INFORMATION BOOKLET.—

12 ‘‘(i) IN GENERAL.—The Secretary

13 shall publish an information booklet and

14 disseminate the booklet to all individuals

15 eligible to elect the Medicare Choice option

16 under this section during coverage election

17 periods.

18 ‘‘(ii) INFORMATION INCLUDED.—The

19 booklet shall include information presented

20 in plain English and in a standardized for21 mat regarding—

22 ‘‘(I) the benefits (including cost23 sharing) and premiums for the var24 ious Medicare Choice products in the

25 areas involved;
263

Title VIII, Subtitle A

•HR 2530 IH

1 ‘‘(II) the quality of such prod2 ucts, including consumer satisfaction

3 information; and

4 ‘‘(III) rights and responsibilities

5 of medicare beneficiaries under such

6 products.

7 ‘‘(iii) PERIODIC UPDATING.—The

8 booklet shall be updated on a regular basis

9 (not less often than once every 12 months)

10 to reflect changes in the availability of

11 Medicare Choice products and the benefits

12 and premiums for such products.

13 ‘‘(B) TOLL-FREE NUMBER.—The Secretary

14 shall maintain a toll-free number for inquiries

15 regarding Medicare Choice options and the op16 eration of part C.

17 ‘‘(C) GENERAL INFORMATION IN MEDI18 CARE HANDBOOK.—The Secretary shall include

19 information about the Medicare Choice option

20 provided under this section in the annual notice

21 of medicare benefits under section 1804.

22 ‘‘(e) COVERAGE ELECTION PERIODS.—

23 ‘‘(1) INITIAL CHOICE UPON ELIGIBILITY TO

24 MAKE ELECTION.—
264

Title VIII, Subtitle A

•HR 2530 IH

1 ‘‘(A) IN GENERAL.—In the case of an indi2 vidual who first becomes entitled to benefits

3 under part A and enrolled under part B after

4 the beginning of the transition period (as de5 fined in subparagraph (B)), the individual shall

6 make the election under this section during a

7 period (of a duration and beginning at a time

8 specified by the Secretary) at the first time the

9 individual both is entitled to benefits under part

10 A and enrolled under part B. Such period shall

11 be specified in a manner so that, in the case of

12 an individual who elects a Medicare Choice

13 product during the period, coverage under the

14 product becomes effective as of the first date on

15 which the individual may receive such coverage.

16 ‘‘(B) TRANSITION PERIOD DEFINED.—In

17 this subsection, the term ‘transition period’

18 means, with respect to an individual in an area,

19 the period beginning on the first day of the first

20 month in which a Medicare Choice product is

21 first made available to individuals in the area

22 and ending with the month preceding the begin23 ning of the first annual, coordinated election

24 period under paragraph (3).
265

Title VIII, Subtitle A

•HR 2530 IH

1 ‘‘(2) DURING TRANSITION PERIOD.—Subject to

2 paragraph (6)—

3 ‘‘(A) CONTINUOUS OPEN ENROLLMENT

4 INTO A MEDICARE CHOICE OPTION.—During

5 the transition period, an individual who is eligi6 ble to make an election under this section and

7 who has elected the non-Medicare Choice option

8 may change such election to a Medicare Choice

9 option at any time.

10 ‘‘(B) OPEN DISENROLLMENT BEFORE END

11 OF TRANSITION PERIOD.—During the transition

12 period, an individual who has elected a Medi13 care Choice option for a Medicare Choice prod14 uct may change such election to another Medi15 care Choice product or to the non-Medicare

16 Choice option.

17 ‘‘(3) ANNUAL, COORDINATED ELECTION PE18 RIOD.—

19 ‘‘(A) IN GENERAL.—Subject to paragraph

20 (5), each individual who is eligible to make an

21 election under this section may change such

22 election during annual, coordinated election pe23 riods.

24 ‘‘(B) ANNUAL, COORDINATED ELECTION

25 PERIOD.—For purposes of this section, the
266

Title VIII, Subtitle A

•HR 2530 IH

1 term ‘annual, coordinated election period’

2 means, with respect to a calendar year (begin3 ning with 1998), the month of October before

4 such year.

5 ‘‘(C) MEDICARE CHOICE HEALTH FAIR

6 DURING OCTOBER, 1996.—In the month of Octo7 ber, 1996, the Secretary shall provide for a na8 tionally coordinated educational and publicity

9 campaign to inform individuals, who are eligible

10 to elect Medicare Choice products, about such

11 products and the election process provided

12 under this section (including the annual, coordi13 nated election periods that occur in subsequent

14 years).

15 ‘‘(4) SPECIAL 90-DAY DISENROLLMENT OP16 TION.—

17 ‘‘(A) IN GENERAL.—In the case of the first

18 time an individual elects a Medicare Choice op19 tion under this section, the individual may dis20 continue such election through the filing of an

21 appropriate notice during the 90-day period be22 ginning on the first day on which the individ23 ual’s coverage under the Medicare Choice prod24 uct under such option becomes effective.
267

Title VIII, Subtitle A

•HR 2530 IH

1 ‘‘(B) EFFECT OF DISCONTINUATION OF

2 ELECTION.—An individual who discontinues an

3 election under this paragraph shall be deemed

4 at the time of such discontinuation to have

5 elected the Non-Medicare Choice option.

6 ‘‘(5) SPECIAL ELECTION PERIODS.—An individ7 ual may discontinue an election of a Medicare

8 Choice product offered by a Medicare Choice organi9 zation other than during an annual, coordinated

10 election period and make a new election under this

11 section if—

12 ‘‘(A) the organization’s or product’s certifi13 cation under part C has been terminated or the

14 organization has terminated or otherwise dis15 continued providing the product;

16 ‘‘(B) in the case of an individual who has

17 elected a Medicare Choice product offered by a

18 Medicare Choice organization, the individual is

19 no longer eligible to elect the product because

20 of a change in the individual’s place of resi21 dence or other change in circumstances (speci22 fied by the Secretary, but not including termi23 nation of membership in a qualified association

24 in the case of a product offered by a qualified

25 association or termination of the individual’s
268

Title VIII, Subtitle A

•HR 2530 IH

1 enrollment on the basis described in clause (i)

2 or (ii) section 1852(c)(3)(B));

3 ‘‘(C) the individual demonstrates (in ac4 cordance with guidelines established by the Sec5 retary) that—

6 ‘‘(i) the organization offering the

7 product substantially violated a material

8 provision of the organization’s contract

9 under part C in relation to the individual

10 and the product; or

11 ‘‘(ii) the organization (or an agent or

12 other entity acting on the organization’s

13 behalf) materially misrepresented the prod14 uct’s provisions in marketing the product

15 to the individual; or

16 ‘‘(D) the individual meets such other con17 ditions as the Secretary may provide.

18 ‘‘(f) EFFECTIVENESS OF ELECTIONS.—

19 ‘‘(1) DURING INITIAL COVERAGE ELECTION PE20 RIOD.—An election of coverage made during the ini21 tial coverage election period under subsection

22 (e)(1)(A) shall take effect upon the date the individ23 ual becomes entitled to benefits under part A and

24 enrolled under part B, except as the Secretary may
269

Title VIII, Subtitle A

•HR 2530 IH

1 provide (consistent with section 1838) in order to

2 prevent retroactive coverage.

3 ‘‘(2) DURING TRANSITION; 90-DAY

4 DISENROLLMENT OPTION.—An election of coverage

5 made under subsection (e)(2) and an election to dis6 continue a Medicare Choice option under subsection

7 (e)(4) at any time shall take effect with the first cal8 endar month following the date on which the election

9 is made.

10 ‘‘(3) ANNUAL, COORDINATED ELECTION PERIOD

11 AND MEDISAVE ELECTION.—An election of coverage

12 made during an annual, coordinated election period

13 (as defined in subsection (e)(3)(B)) in a year shall

14 take effect as of the first day of the following year.

15 ‘‘(4) OTHER PERIODS.—An election of coverage

16 made during any other period under subsection

17 (e)(5) shall take effect in such manner as the Sec18 retary provides in a manner consistent (to the extent

19 practicable) with protecting continuity of health ben20 efit coverage.

21 ‘‘(g) EFFECT OF ELECTION OF MEDICARE CHOICE

22 OPTION.—Subject to the provisions of section 1855(f),

23 payments under a contract with a Medicare Choice organi24 zation under section 1858(a) with respect to an individual

25 electing a Medicare Choice product offered by the organi-
270

Title VIII, Subtitle A

•HR 2530 IH

1 zation shall be instead of the amounts which (in the ab2 sence of the contract) would otherwise be payable under

3 parts A and B for items and services furnished to the indi4 vidual.

5 ‘‘(h) DEMONSTRATION PROJECTS.—The Secretary

6 shall conduct demonstration projects to test alternative

7 approaches to coordinated open enrollments in different

8 markets, including different annual enrollment periods

9 and models of rolling open enrollment periods. The Sec10 retary may waive previous provisions of this section in

11 order to carry out such projects.’’.

12 SEC. 8002. MEDICARE CHOICE PROGRAM.

13 (a) IN GENERAL.—Title XVIII is amended by redes14 ignating part C as part D and by inserting after part B

15 the following new part:

16 ‘‘PART C—PROVISIONS RELATING TO MEDICARE

17 CHOICE

18 ‘‘REQUIREMENTS FOR MEDICARE CHOICE ORGANIZATIONS

19 ‘‘SEC. 1851. (a) MEDICARE CHOICE ORGANIZATION

20 DEFINED.—In this part, subject to the succeeding provi21 sions of this section, the term ‘Medicare Choice organiza22 tion’ means a public or private entity that is certified

23 under section 1857 as meeting the requirements and

24 standards of this part for such an organization.
271

Title VIII, Subtitle A

•HR 2530 IH

1 ‘‘(b) ORGANIZED AND LICENSED UNDER STATE

2 LAW.—

3 ‘‘(1) IN GENERAL.—A Medicare Choice organi4 zation shall be organized and licensed under State

5 law to offer health insurance or health benefits cov6 erage in each State in which it offers a Medicare

7 Choice product.

8 ‘‘(2) EXCEPTION FOR UNION AND TAFT-HART9 LEY SPONSORS.—Paragraph (1) shall not apply to

10 an Medicare Choice organization that is a union

11 sponsor or Taft-Hartley sponsor (as defined in sec12 tion 1852(c)(4)).

13 ‘‘(3) EXCEPTION FOR PROVIDER-SPONSORED

14 ORGANIZATIONS.—Subject to paragraph (5), para15 graph (1) shall not apply to a Medicare Choice orga16 nization that is a provider-sponsored organization

17 (as defined in section 1854(a)).

18 ‘‘(4) EXCEPTION FOR QUALIFIED ASSOCIA19 TIONS.—Paragraph (1) shall not apply to a Medi20 care Choice organization that is a qualified associa21 tion (as defined in section 1852(c)(4)(B)).

22 ‘‘(5) LIMITATION.—Effective on and after Jan23 uary 1, 2000, paragraph (1) shall only apply (and

24 paragraph (3) shall no longer apply) to a Medicare

25 Choice organization in a State if the standards for
272

Title VIII, Subtitle A

•HR 2530 IH

1 licensure of the organization under the law of the

2 State are identical to the standards established

3 under section 1856(b).

4 ‘‘(c) PREPAID PAYMENT.—A Medicare Choice orga5 nization shall be compensated (except for deductibles, co6 insurance, and copayments) for the provision of health

7 care services to enrolled members by a payment which is

8 paid on a periodic basis without regard to the date the

9 health care services are provided and which is fixed with10 out regard to the frequency, extent, or kind of health care

11 service actually provided to a member.

12 ‘‘(d) ASSUMPTION OF FULL FINANCIAL RISK.—The

13 Medicare Choice organization shall assume full financial

14 risk on a prospective basis for the provision of the health

15 care services (other than hospice care) for which benefits

16 are required to be provided under section 1852(a)(1), ex17 cept that the organization—

18 ‘‘(1) may obtain insurance or make other ar19 rangements for the cost of providing to any enrolled

20 member such services the aggregate value of which

21 exceeds $5,000 in any year,

22 ‘‘(2) may obtain insurance or make other ar23 rangements for the cost of such services provided to

24 its enrolled members other than through the organi25 zation because medical necessity required their pro-
273

Title VIII, Subtitle A

•HR 2530 IH

1 vision before they could be secured through the orga2 nization,

3 ‘‘(3) may obtain insurance or make other ar4 rangements for not more than 90 percent of the

5 amount by which its costs for any of its fiscal years

6 exceed 115 percent of its income for such fiscal year,

7 and

8 ‘‘(4) may make arrangements with physicians

9 or other health professionals, health care institu10 tions, or any combination of such individuals or in11 stitutions to assume all or part of the financial risk

12 on a prospective basis for the provision of basic

13 health services by the physicians or other health pro14 fessionals or through the institutions.

15 In the case of a Medicare Choice organization that is a

16 union sponsor or Taft-Hartley sponsor (as defined in sec17 tion 1852(c)(4)) or a qualified association (as defined in

18 section 1852(c)(4)(B)), this subsection shall not apply

19 with respect to Medicare Choice products offered by such

20 organization and issued by an organization to which sub21 section (b)(1) applies or by a provider-sponsored organiza22 tion (as defined in section 1854(a)).

23 ‘‘(e) PROVISION AGAINST RISK OF INSOLVENCY.—

24 ‘‘(1) IN GENERAL.—Each Medicare Choice or25 ganization shall meet standards under section 1856
274

Title VIII, Subtitle A

•HR 2530 IH

1 relating to the financial solvency and capital ade2 quacy of the organization. Such standards shall take

3 into account the nature and type of Medicare Choice

4 products offered by the organization.

5 ‘‘(2) TREATMENT OF TAFT-HARTLEY SPON6 SORS.—An entity that is a Taft-Hartley sponsor is

7 deemed to meet the requirement of paragraph (1).

8 ‘‘(3) TREATMENT OF CERTAIN QUALIFIED AS9 SOCIATIONS.—An entity that is a qualified associa10 tion is deemed to meet the requirement of paragraph

11 (1) with respect to Medicare Choice products offered

12 by such association and issued by an organization to

13 which subsection (b)(1) applies or by a provider14 sponsored organization.

15 ‘‘(f) ORGANIZATIONS TREATED AS MEDICAREPLUS

16 ORGANIZATIONS DURING TRANSITION.—Any of the fol17 lowing organizations shall be considered to qualify as a

18 MedicarePlus organization for contract years beginning

19 before January 1, 1997:

20 ‘‘(1) HEALTH MAINTENANCE ORGANIZA21 TIONS.—An organization that is organized under the

22 laws of any State and that is a qualified health

23 maintenance organization (as defined in section

24 1310(d) of the Public Health Service Act), an orga25 nization recognized under State law as a health
275

Title VIII, Subtitle A

•HR 2530 IH

1 maintenance organization, or a similar organization

2 regulated under State law for solvency in the same

3 manner and to the same extent as such a health

4 maintenance organization.

5 ‘‘(2) LICENSED INSURERS.—An organization

6 that is organized under the laws of any State and—

7 ‘‘(A) is licensed by a State agency as an

8 insurer for the offering of health benefit cov9 erage, or

10 ‘‘(B) is licensed by a State agency as a

11 service benefit plan,

12 but only for individuals residing in an area in which

13 the organization is licensed to offer health insurance

14 coverage.

15 ‘‘(3) CURRENT RISK-CONTRACTORS.—An orga16 nization that is an eligible organization (as defined

17 in section 1876(b)) and that has a risk-sharing con18 tract in effect under section 1876 as of the date of

19 the enactment of this section.

20 ‘‘REQUIREMENTS RELATING TO BENEFITS, PROVISION OF

21 SERVICES, ENROLLMENT, AND PREMIUMS

22 ‘‘SEC. 1852. (a) BENEFITS COVERED.—

23 ‘‘(1) IN GENERAL.—Each Medicare Choice

24 product offered under this part shall provide benefits

25 for at least the items and services for which benefits

26 are available under parts A and B consistent with
276

Title VIII, Subtitle A

•HR 2530 IH

1 the standards for coverage of such items and serv2 ices applicable under this title.

3 ‘‘(2) ORGANIZATION AS SECONDARY PAYER.—

4 Notwithstanding any other provision of law, a Medi5 care Choice organization may (in the case of the

6 provision of items and services to an individual

7 under this part under circumstances in which pay8 ment under this title is made secondary pursuant to

9 section 1862(b)(2)) charge or authorize the provider

10 of such services to charge, in accordance with the

11 charges allowed under such law or policy—

12 ‘‘(A) the insurance carrier, employer, or

13 other entity which under such law, plan, or pol14 icy is to pay for the provision of such services,

15 or

16 ‘‘(B) such individual to the extent that the

17 individual has been paid under such law, plan,

18 or policy for such services.

19 ‘‘(3) SATISFACTION OF REQUIREMENT.—A

20 Medicare Choice product offered by a Medicare

21 Choice organization satisfies paragraph (1) with re22 spect to benefits for items and services if the follow23 ing requirements are met:

24 ‘‘(A) FEE FOR SERVICE PROVIDERS.—In

25 the case of benefits furnished through a pro-
277

Title VIII, Subtitle A

•HR 2530 IH

1 vider that does not have a contract with the or2 ganization, the product provides for at least the

3 dollar amount of payment for such items and

4 services as would otherwise be provided under

5 parts A and B.

6 ‘‘(B) PARTICIPATING PROVIDERS.—In the

7 case of benefits furnished through a provider

8 that has such a contract, the individual’s liabil9 ity for payment for such items and services

10 does not exceed (after taking into account any

11 deductible, which does not exceed any deduct12 ible under parts A and B) the lesser of the fol13 lowing:

14 ‘‘(i) NON-MEDICARE CHOICE LIABIL15 ITY.—The amount of the liability that the

16 individual would have had (based on the

17 provider being a participating provider) if

18 the individual had elected the non-Medi19 care Choice option.

20 ‘‘(ii) MEDICARE COINSURANCE AP21 PLIED TO PRODUCT PAYMENT RATES.—

22 The applicable coinsurance or copayment

23 rate (that would have applied under the

24 non-Medicare Choice option) of the pay25 ment rate provided under the contract.
278

Title VIII, Subtitle A

•HR 2530 IH

1 ‘‘(b) ANTIDISCRIMINATION.—A Medicare Choice or2 ganization may not deny, limit, or condition the coverage

3 or provision of benefits under this part based on the health

4 status, claims experience, receipt of health care, medical

5 history, or lack of evidence of insurability, of an individual.

6 ‘‘(c) GUARANTEED ISSUE AND RENEWAL.—

7 ‘‘(1) IN GENERAL.—Except as provided in this

8 subsection, a Medicare Choice organization shall

9 provide that at any time during which elections are

10 accepted under section 1805 with respect to a Medi11 care Choice product offered by the organization, the

12 organization will accept without restrictions individ13 uals who are eligible to make such election.

14 ‘‘(2) PRIORITY.—If the Secretary determines

15 that a Medicare Choice organization, in relation to

16 a Medicare Choice product it offers, has a capacity

17 limit and the number of eligible individuals who elect

18 the product under section 1805 exceeds the capacity

19 limit, the organization may limit the election of indi20 viduals of the product under such section but only

21 if priority in election is provided—

22 ‘‘(A) first to such individuals as have elect23 ed the product at the time of the determination,

24 and
279

Title VIII, Subtitle A

•HR 2530 IH

1 ‘‘(B) then to other such individuals in such

2 a manner that does not discriminate among the

3 individuals (who seek to elect the product) on a

4 basis described in subsection (b).

5 ‘‘(3) LIMITATION ON TERMINATION OF ELEC6 TION.—

7 ‘‘(A) IN GENERAL.—Subject to subpara8 graph (B), a Medicare Choice organization may

9 not for any reason terminate the election of any

10 individual under section 1805 for a Medicare

11 Choice product it offers.

12 ‘‘(B) BASIS FOR TERMINATION OF ELEC13 TION.—A Medicare Choice organization may

14 terminate an individual’s election under section

15 1805 with respect to a Medicare Choice product

16 it offers if—

17 ‘‘(i) any premiums required with re18 spect to such product are not paid on a

19 timely basis (consistent with standards

20 under section 1856 that provide for a

21 grace period for late payment of pre22 miums),

23 ‘‘(ii) the individual has engaged in

24 disruptive behavior (as specified in such

25 standards), or
280

Title VIII, Subtitle A

•HR 2530 IH

1 ‘‘(iii) the product is terminated with

2 respect to all individuals under this part.

3 Any individual whose election is so terminated

4 is deemed to have elected the Non-Medicare

5 Choice option (as defined in section

6 1805(a)(3)(A)).

7 ‘‘(C) ORGANIZATION OBLIGATION WITH

8 RESPECT TO ELECTION FORMS.—Pursuant to a

9 contract under section 1858, each Medicare

10 Choice organization receiving an election form

11 under section 1805(c)(2) shall transmit to the

12 Secretary (at such time and in such manner as

13 the Secretary may specify) a copy of such form

14 or such other information respecting the elec15 tion as the Secretary may specify.

16 ‘‘(4) SPECIAL RULES FOR LIMITED ENROLL17 MENT MEDICARE CHOICE ORGANIZATIONS.—

18 ‘‘(A) TAFT-HARTLEY SPONSORS.—

19 ‘‘(i) IN GENERAL.—Subject to sub20 paragraph (D), a Medicare Choice organi21 zation that is a Taft-Hartley sponsor (as

22 defined in clause (ii)) shall limit eligibility

23 of enrollees under this part for Medicare

24 Choice products it offers to individuals who

25 are entitled to obtain benefits through such
281

Title VIII, Subtitle A

•HR 2530 IH

1 products under the terms of an applicable

2 collective bargaining agreement.

3 ‘‘(ii) TAFT-HARTLEY SPONSOR.—In

4 this part and section 1805, the term ‘Taft5 Hartley sponsor’ means, in relation to a

6 group health plan that is established or

7 maintained by two or more employers or

8 jointly by one or more employers and one

9 or more employee organizations, the asso10 ciation, committee, joint board of trustees,

11 or other similar group of representatives of

12 parties who establish or maintain the plan.

13 ‘‘(B) QUALIFIED ASSOCIATIONS.—

14 ‘‘(i) IN GENERAL.—Subject to sub15 paragraph (D), a Medicare Choice organi16 zation that is a qualified association (as

17 defined in clause (iii)) shall limit eligibility

18 of individuals under this part for products

19 it offers to individuals who are members of

20 the association (or who are spouses of such

21 individuals).

22 ‘‘(ii) LIMITATION ON TERMINATION

23 OF COVERAGE.—Such a qualifying associa24 tion offering a Medicare Choice product to

25 an individual may not terminate coverage
282

Title VIII, Subtitle A

•HR 2530 IH

1 of the individual on the basis that the indi2 vidual is no longer a member of the asso3 ciation except pursuant to a change of

4 election during an open election period oc5 curring on or after the date of the termi6 nation of membership.

7 ‘‘(iii) QUALIFIED ASSOCIATION.—In

8 this part and section 1805, the term ‘quali9 fied association’ means an association, reli10 gious fraternal organization, or other orga11 nization (which may be a trade, industry,

12 or professional association, a chamber of

13 commerce, or a public entity association)

14 that the Secretary finds—

15 ‘‘(I) has been formed for pur16 poses other than the sale of any

17 health insurance and does not restrict

18 membership based on the health sta19 tus, claims experience, receipt of

20 health care, medical history, or lack of

21 evidence of insurability, of an individ22 ual,

23 ‘‘(II) does not exist solely or

24 principally for the purpose of selling

25 insurance, and
283

Title VIII, Subtitle A

•HR 2530 IH

1 ‘‘(III) has at least 1,000 individ2 ual members or 200 employer mem3 bers.

4 Such term includes a subsidiary or cor5 poration that is wholly owned by one or

6 more qualified organizations.

7 ‘‘(C) UNIONS.—

8 ‘‘(i) IN GENERAL.—Subject to sub9 paragraph (D), a union sponsor (as de10 fined in clause (ii)) shall limit eligibility of

11 enrollees under this part for Medicare

12 Choice products it offers to individuals who

13 are members of the sponsor and affiliated

14 with the sponsor through an employment

15 relationship with any employer or are the

16 spouses of such members.

17 ‘‘(ii) UNION SPONSOR.—In this part

18 and section 1805, the term ‘union sponsor’

19 means an employee organization in relation

20 to a group health plan that is established

21 or maintained by the organization other

22 than pursuant to a collective bargaining

23 agreement.

24 ‘‘(D) LIMITATION.—Rules of eligibility to

25 carry out the previous subparagraphs of this
284

Title VIII, Subtitle A

•HR 2530 IH

1 paragraph shall not have the effect of denying

2 eligibility to individuals on the basis of health

3 status, claims experience, receipt of health care,

4 medical history, or lack of evidence of insurabil5 ity.

6 ‘‘(E) LIMITED ENROLLMENT MEDICARE

7 CHOICE ORGANIZATION.—In this part and sec8 tion 1805, the term ‘limited enrollment Medi9 care Choice organization’ means a Medicare

10 Choice organization that is a union sponsor, a

11 Taft-Hartley sponsor, or a qualified association.

12 ‘‘(F) EMPLOYER, ETC.—In this paragraph,

13 the terms ‘employer’, ‘employee organization’,

14 and ‘group health plan’ have the meanings

15 given such terms for purposes of part 6 of sub16 title B of title I of the Employee Retirement In17 come Security Act of 1974.

18 ‘‘(d) SUBMISSION AND CHARGING OF PREMIUMS.—

19 ‘‘(1) IN GENERAL.—Each Medicare Choice or20 ganization shall file with the Secretary each year, in

21 a form and manner and at a time specified by the

22 Secretary—

23 ‘‘(A) the amount of the monthly premiums

24 for coverage under each Medicare Choice prod25 uct it offers under this part in each payment
285

Title VIII, Subtitle A

•HR 2530 IH

1 area (as determined for purposes of section

2 1855) in which the product is being offered;

3 and

4 ‘‘(B) the enrollment capacity in relation to

5 the product in each such area.

6 ‘‘(2) AMOUNTS OF PREMIUMS CHARGED.—The

7 amount of the monthly premium charged by a Medi8 care Choice organization for a Medicare Choice

9 product offered in a payment area to an individual

10 under this part shall be equal to the amount (if any)

11 by which—

12 ‘‘(A) the amount of the monthly premium

13 for the product for the period involved, as es14 tablished under paragraph (3) and submitted

15 under paragraph (1), exceeds

‘‘(B) 1 16 ⁄12 of the annual Medicare Choice

17 capitation rate specified in section 1855(b)(2)

18 for the area and period involved.

19 ‘‘(3) UNIFORM PREMIUM.—The premiums

20 charged by a Medicare Choice organization under

21 this part may not vary among individuals who reside

22 in the same payment area.

23 ‘‘(4) TERMS AND CONDITIONS OF IMPOSING

24 PREMIUMS.—Each Medicare Choice organization

25 shall permit the payment of monthly premiums on a
286

Title VIII, Subtitle A

•HR 2530 IH

1 monthly basis and may terminate election of individ2 uals for a Medicare Choice product for failure to

3 make premium payments only in accordance with

4 subsection (c)(3)(B).

5 ‘‘(5) RELATION OF PREMIUMS AND COST-SHAR6 ING TO BENEFITS.—In no case may the portion of

7 a Medicare Choice organization’s premium rate and

8 the actuarial value of its deductibles, coinsurance,

9 and copayments charged (to the extent attributable

10 to the minimum benefits described in subsection

11 (a)(1) and not counting any amount attributable to

12 balance billing) to individuals who are enrolled under

13 this part with the organization exceed the actuarial

14 value of the coinsurance and deductibles that would

15 be applicable on the average to individuals enrolled

16 under this part with the organization (or, if the Sec17 retary finds that adequate data are not available to

18 determine that actuarial value, the actuarial value

19 of the coinsurance and deductibles applicable on the

20 average to individuals in the area, in the State, or

21 in the United States, eligible to enroll under this

22 part with the organization, or other appropriate

23 data) and entitled to benefits under part A and en24 rolled under part B if they were not members of a

25 Medicare Choice organization.
287

Title VIII, Subtitle A

•HR 2530 IH

1 ‘‘(e) REQUIREMENT FOR ADDITIONAL BENEFITS,

2 PART B PREMIUM DISCOUNT REBATES, OR BOTH.—

3 ‘‘(1) REQUIREMENT.—

4 ‘‘(A) IN GENERAL.—Each Medicare Choice

5 organization (in relation to a Medicare Choice

6 product it offers) shall provide that if there is

7 an excess amount (as defined in subparagraph

8 (B)) for the product for a contract year, subject

9 to the succeeding provisions of this subsection,

10 the organization shall provide to individuals

11 such additional benefits (as the organization

12 may specify), a monetary rebate (paid on a

13 monthly basis) of the part B monthly premium,

14 or a combination thereof, in an total value

15 which is at least equal to the adjusted excess

16 amount (as defined in subparagraph (C)).

17 ‘‘(B) EXCESS AMOUNT.—For purposes of

18 this paragraph, the ‘excess amount’, for an or19 ganization for a product, is the amount (if any)

20 by which—

21 ‘‘(i) the average of the capitation pay22 ments made to the organization under this

23 part for the product at the beginning of

24 contract year, exceeds
288

Title VIII, Subtitle A

•HR 2530 IH

1 ‘‘(ii) the actuarial value of the mini2 mum benefits described in subsection

3 (a)(1) under the product for individuals

4 under this part, as determined based upon

5 an adjusted community rate described in

6 paragraph (5) (as reduced for the actuarial

7 value of the coinsurance and deductibles

8 under parts A and B).

9 ‘‘(C) ADJUSTED EXCESS AMOUNT.—For

10 purposes of this paragraph, the ‘adjusted excess

11 amount’, for an organization for a product, is

12 the excess amount reduced to reflect any

13 amount withheld and reserved for the organiza14 tion for the year under paragraph (3).

15 ‘‘(D) UNIFORM APPLICATION.—This para16 graph shall be applied uniformly for all enroll17 ees for a product in a service area.

18 ‘‘(E) CONSTRUCTION.—Nothing in this

19 subsection shall be construed as preventing a

20 Medicare Choice organization from providing

21 health care benefits that are in addition to the

22 benefits otherwise required to be provided under

23 this paragraph and from imposing a premium

24 for such additional benefits.
289

Title VIII, Subtitle A

•HR 2530 IH

1 ‘‘(2) LIMITATION ON AMOUNT OF PART B PRE2 MIUM DISCOUNT REBATE.—In no case shall the

3 amount of a part B premium discount rebate under

4 paragraph (1)(A) exceed, with respect to a month,

5 the amount of premiums imposed under part B (not

6 taking into account section 1839(b) (relating to pen7 alty for late enrollment) or 1839(h) (relating to af8 fluence testing)), for the individual for the month.

9 Except as provided in the previous sentence, a Medi10 care Choice organization is not authorized to provide

11 for cash or other monetary rebates as an inducement

12 for enrollment or otherwise.

13 ‘‘(3) STABILIZATION FUND.—A Medicare

14 Choice organization may provide that a part of the

15 value of an excess actuarial amount described in

16 paragraph (1) be withheld and reserved in the Fed17 eral Hospital Insurance Trust Fund and in the Fed18 eral Supplementary Medical Insurance Trust Fund

19 (in such proportions as the Secretary determines to

20 be appropriate) by the Secretary for subsequent an21 nual contract periods, to the extent required to sta22 bilize and prevent undue fluctuations in the addi23 tional benefits and rebates offered in those subse24 quent periods by the organization in accordance with

25 such paragraph. Any of such value of amount re-
290

Title VIII, Subtitle A

•HR 2530 IH

1 served which is not provided as additional benefits

2 described in paragraph (1)(A) to individuals electing

3 the Medicare Choice product in accordance with

4 such paragraph prior to the end of such periods,

5 shall revert for the use of such trust funds.

6 ‘‘(4) DETERMINATION BASED ON INSUFFICIENT

7 DATA.—For purposes of this subsection, if the Sec8 retary finds that there is insufficient enrollment ex9 perience (including no enrollment experience in the

10 case of a provider-sponsored organization) to deter11 mine an average of the capitation payments to be

12 made under this part at the beginning of a contract

13 period, the Secretary may determine such an aver14 age based on the enrollment experience of other con15 tracts entered into under this part.

16 ‘‘(5) ADJUSTED COMMUNITY RATE.—

17 ‘‘(A) IN GENERAL.—For purposes of this

18 subsection, subject to subparagraph (B), the

19 term ‘adjusted community rate’ for a service or

20 services means, at the election of a Medicare

21 Choice organization, either—

22 ‘‘(i) the rate of payment for that serv23 ice or services which the Secretary annu24 ally determines would apply to an individ25 ual electing a Medicare Choice product
291

Title VIII, Subtitle A

•HR 2530 IH

1 under this part if the rate of payment were

2 determined under a ‘community rating sys3 tem’ (as defined in section 1302(8) of the

4 Public Health Service Act, other than sub5 paragraph (C)), or

6 ‘‘(ii) such portion of the weighted ag7 gregate premium, which the Secretary an8 nually estimates would apply to such an in9 dividual, as the Secretary annually esti10 mates is attributable to that service or

11 services,

12 but adjusted for differences between the utiliza13 tion characteristics of the individuals electing

14 coverage under this part and the utilization

15 characteristics of the other enrollees with the

16 organization (or, if the Secretary finds that

17 adequate data are not available to adjust for

18 those differences, the differences between the

19 utilization characteristics of individuals select20 ing other Medicare Choice coverage, or individ21 uals in the area, in the State, or in the United

22 States, eligible to elect Medicare Choice cov23 erage under this part and the utilization char24 acteristics of the rest of the population in the
292

Title VIII, Subtitle A

•HR 2530 IH

1 area, in the State, or in the United States, re2 spectively).

3 ‘‘(B) SPECIAL RULE FOR PROVIDER-SPON4 SORED ORGANIZATIONS.—In the case of a Med5 icare Choice organization that is a provider6 sponsored organization, the adjusted community

7 rate under subparagraph (A) for a Medicare

8 Choice product may be computed (in a manner

9 specified by the Secretary) using data in the

10 general commercial marketplace or (during a

11 transition period) based on the costs incurred

12 by the organization in providing such a product.

13 ‘‘(f) RULES REGARDING PHYSICIAN PARTICIPA14 TION.—

15 ‘‘(1) PROCEDURES.—Each Medicare Choice or16 ganization shall establish reasonable procedures re17 lating to the participation (under an agreement be18 tween a physician and the organization) of physi19 cians under Medicare Choice products offered by the

20 organization under this part. Such procedures shall

21 include—

22 ‘‘(A) providing notice of the rules regard23 ing participation,
293

Title VIII, Subtitle A

•HR 2530 IH

1 ‘‘(B) providing written notice of participa2 tion decisions that are adverse to physicians,

3 and

4 ‘‘(C) providing a process within the organi5 zation for appealing adverse decisions, including

6 the presentation of information and views of the

7 physician regarding such decision.

8 ‘‘(2) CONSULTATION IN MEDICAL POLICIES.—A

9 Medicare Choice organization shall consult with phy10 sicians who have entered into participation agree11 ments with the organization regarding the organiza12 tion’s medical policy, quality, and medical manage13 ment procedures.

14 ‘‘(3) LIMITATIONS ON PHYSICIAN INCENTIVE

15 PLANS.—

16 ‘‘(A) IN GENERAL.—Each Medicare Choice

17 organization may not operate any physician in18 centive plan (as defined in subparagraph (B))

19 unless the following requirements are met:

20 ‘‘(i) No specific payment is made di21 rectly or indirectly under the plan to a

22 physician or physician group as an induce23 ment to reduce or limit medically necessary

24 services provided with respect to a specific

25 individual enrolled with the organization.
294

Title VIII, Subtitle A

•HR 2530 IH

1 ‘‘(ii) If the plan places a physician or

2 physician group at substantial financial

3 risk (as determined by the Secretary) for

4 services not provided by the physician or

5 physician group, the organization—

6 ‘‘(I) provides stop-loss protection

7 for the physician or group that is ade8 quate and appropriate, based on

9 standards developed by the Secretary

10 that take into account the number of

11 physicians placed at such substantial

12 financial risk in the group or under

13 the plan and the number of individ14 uals enrolled with the organization

15 who receive services from the physi16 cian or the physician group, and

17 ‘‘(II) conducts periodic surveys of

18 both individuals enrolled and individ19 uals previously enrolled with the orga20 nization to determine the degree of

21 access of such individuals to services

22 provided by the organization and sat23 isfaction with the quality of such serv24 ices.
295

Title VIII, Subtitle A

•HR 2530 IH

1 ‘‘(iii) The organization provides the

2 Secretary with descriptive information re3 garding the plan, sufficient to permit the

4 Secretary to determine whether the plan is

5 in compliance with the requirements of this

6 subparagraph.

7 ‘‘(B) PHYSICIAN INCENTIVE PLAN DE8 FINED.—In this paragraph, the term ‘physician

9 incentive plan’ means any compensation ar10 rangement between a Medicare Choice organiza11 tion and a physician or physician group that

12 may directly or indirectly have the effect of re13 ducing or limiting services provided with respect

14 to individuals enrolled with the organization

15 under this part.

16 ‘‘(4) EXCEPTION FOR CERTAIN FEE-FOR-SERV17 ICE PLANS.—The previous provisions of this sub18 section shall not apply in the case of a Medicare

19 Choice organization in relation to a Medicare Choice

20 product if the organization does not have agree21 ments between physicians and the organization for

22 the provision of benefits under the product.

23 ‘‘(g) PROVISION OF INFORMATION.—A Medicare

24 Choice organization shall provide the Secretary with such

25 information on the organization and each Medicare Choice
296

Title VIII, Subtitle A

•HR 2530 IH

1 product it offers as may be required for the preparation

2 of the information booklet described in section

3 1805(d)(3)(A).

4 ‘‘(h) COORDINATED ACUTE AND LONG-TERM CARE

5 BENEFITS UNDER A MEDICARE CHOICE PRODUCT.—

6 Nothing in this part shall be construed as preventing a

7 State from coordinating benefits under its medicaid pro8 gram under title XIX with those provided under a Medi9 care Choice product in a manner that assures continuity

10 of a full-range of acute care and long-term care services

11 to poor elderly or disabled individuals eligible for benefits

12 under this title and under such program.

13 ‘‘PATIENT PROTECTION STANDARDS

14 ‘‘SEC. 1853. (a) DISCLOSURE TO ENROLLEES.—A

15 Medicare Choice organization shall disclose in clear, accu16 rate, and standardized form, information regarding all of

17 the following for each Medicare Choice product it offers:

18 ‘‘(1) Benefits under the Medicare Choice prod19 uct offered, including exclusions from coverage.

20 ‘‘(2) Rules regarding prior authorization or

21 other review requirements that could result in

22 nonpayment.

23 ‘‘(3) Potential liability for cost-sharing for out24 of-network services.

25 ‘‘(4) The number, mix, and distribution of par26 ticipating providers.
297

Title VIII, Subtitle A

•HR 2530 IH

1 ‘‘(5) The financial obligations of the enrollee,

2 including premiums, deductibles, co-payments, and

3 maximum limits on out-of-pocket losses for items

4 and services (both in and out of network).

5 ‘‘(6) Statistics on enrollee satisfaction with the

6 product and organization, including rates of

7 reenrollment.

8 ‘‘(7) Enrollee rights and responsibilities, includ9 ing the grievance process provided under subsection

10 (f).

11 ‘‘(8) A statement that the use of the 911 emer12 gency telephone number is appropriate in emergency

13 situations and an explanation of what constitutes an

14 emergency situation.

15 ‘‘(9) A description of the organization’s quality

16 assurance program under subsection (d).

17 Such information shall be disclosed to each enrollee under

18 this part at the time of enrollment and at least annually

19 thereafter.

20 ‘‘(b) ACCESS TO SERVICES.—

21 ‘‘(1) IN GENERAL.—A Medicare Choice organi22 zation offering a Medicare Choice product may re23 strict the providers from whom the benefits under

24 the product are provided so long as—
298

Title VIII, Subtitle A

•HR 2530 IH

1 ‘‘(A) the organization makes such benefits

2 available and accessible to each individual elect3 ing the product within the product service area

4 with reasonable promptness and in a manner

5 which assures continuity in the provision of

6 benefits;

7 ‘‘(B) when medically necessary the organi8 zation makes such benefits available and acces9 sible 24 hours a day and 7 days a week;

10 ‘‘(C) the product provides for reimburse11 ment with respect to services which are covered

12 under subparagraphs (A) and (B) and which

13 are provided to such an individual other than

14 through the organization, if—

15 ‘‘(i) the services were medically nec16 essary and immediately required because of

17 an unforeseen illness, injury, or condition,

18 and

19 ‘‘(ii) it was not reasonable given the

20 circumstances to obtain the services

21 through the organization; and

22 ‘‘(D) coverage is provided for emergency

23 services (as defined in paragraph (5)) without

24 regard to prior authorization or the emergency
299

Title VIII, Subtitle A

•HR 2530 IH

1 care provider’s contractual relationship with the

2 organization.

3 ‘‘(2) MINIMUM PAYMENT LEVELS WHERE PRO4 VIDING POINT-OF-SERVICE COVERAGE.—If a Medi5 care Choice product provides benefits for items and

6 services (not described in paragraph (1)(C)) through

7 a network of providers and also permits payment to

8 be made under the product for such items and serv9 ices not provided through such a network, the pay10 ment level under the product with respect to such

11 items and services furnished outside the network

12 shall be at least 70 percent (or, if the effective cost13 sharing rate is 50 percent, at least 35 percent) of

14 the lesser of—

15 ‘‘(A) the payment basis (determined with16 out regard to deductibles and cost-sharing) that

17 would have applied for such items and services

18 under parts A and B, or

19 ‘‘(B) the amount charged by the entity fur20 nishing such items and services.

21 ‘‘(3) PROTECTION OF ENROLLEES FOR CERTAIN

22 OUT-OF-NETWORK SERVICES.—

23 ‘‘(A) PARTICIPATING PROVIDERS.—In the

24 case of physicians’ services or renal dialysis

25 services described in subparagraph (C) which
300

Title VIII, Subtitle A

•HR 2530 IH

1 are furnished by a participating physician or

2 provider of services or renal dialysis facility to

3 an individual enrolled with a Medicare Choice

4 organization under this section, the applicable

5 participation agreement is deemed to provide

6 that the physician or provider of services or

7 renal dialysis facility will accept as payment in

8 full from the organization the amount that

9 would be payable to the physician or provider of

10 services or renal dialysis facility under part B

11 and from the individual under such part, if the

12 individual were not enrolled with such an orga13 nization under this part.

14 ‘‘(B) NONPARTICIPATING PROVIDERS.—In

15 the case of physicians’ services described in sub16 paragraph (C) which are furnished by a

17 nonparticipating physician, the limitations on

18 actual charges for such services otherwise appli19 cable under part B (to services furnished by in20 dividuals not enrolled with a Medicare Choice

21 organization under this section) shall apply in

22 the same manner as such limitations apply to

23 services furnished to individuals not enrolled

24 with such an organization.
301

Title VIII, Subtitle A

•HR 2530 IH

1 ‘‘(C) SERVICES DESCRIBED.—The physi2 cians’ services or renal dialysis services de3 scribed in this subparagraph are physicians’

4 services or renal dialysis services which are fur5 nished to an enrollee of a Medicare Choice or6 ganization under this part by a physician, pro7 vider of services, or renal dialysis facility who is

8 not under a contract with the organization.

9 ‘‘(4) PROTECTION FOR NEEDED SERVICES.—A

10 Medicare Choice organization that provides covered

11 services through a network of providers shall provide

12 coverage of services provided by a provider that is

13 not part of the network if the service cannot be pro14 vided by a provider that is part of the network and

15 the organization authorized the service directly or

16 through referral by the primary care physician who

17 is designated by the organization for the individual

18 involved.

19 ‘‘(5) EMERGENCY SERVICES.—In this sub20 section, the term ‘emergency services’ means—

21 ‘‘(A) health care items and services fur22 nished in the emergency department of a hos23 pital, and

24 ‘‘(B) ancillary services routinely available

25 to such department,
302

Title VIII, Subtitle A

•HR 2530 IH

1 to the extent they are required to evaluate and treat

2 an emergency medical condition (as defined in para3 graph (6)) until the condition is stabilized.

4 ‘‘(6) EMERGENCY MEDICAL CONDITION.—In

5 paragraph (5), the term ‘emergency medical condi6 tion’ means a medical condition, the onset of which

7 is sudden, that manifests itself by symptoms of suf8 ficient severity, including severe pain, that a prudent

9 layperson, who possesses an average knowledge of

10 health and medicine, could reasonably expect the ab11 sence of immediate medical attention to result in—

12 ‘‘(A) placing the person’s health in serious

13 jeopardy,

14 ‘‘(B) serious impairment to bodily func15 tions, or

16 ‘‘(C) serious dysfunction of any bodily

17 organ or part.

18 ‘‘(7) PROTECTION AGAINST BALANCE BILL19 ING.—The limitations on billing that apply to a pro20 vider (including a physician) under parts A and B

21 in the case of an individual electing the non-Medi22 care Choice option shall apply to an individual who

23 elects the Medicare Choice option in the case of any

24 provider that (under the Medicare Choice option)

25 may bill the enrollee directly for services.
303

Title VIII, Subtitle A

•HR 2530 IH

1 ‘‘(c) CONFIDENTIALITY AND ACCURACY OF EN2 ROLLEE RECORDS.—Each Medicare Choice organization

3 shall establish procedures—

4 ‘‘(1) to safeguard the privacy of individually

5 identifiable enrollee information, and

6 ‘‘(2) to maintain accurate and timely medical

7 records for enrollees.

8 ‘‘(d) QUALITY ASSURANCE PROGRAM.—

9 ‘‘(1) IN GENERAL.—Each Medicare Choice or10 ganization must have arrangements, established in

11 accordance with regulations of the Secretary, for an

12 ongoing quality assurance program for health care

13 services it provides to such individuals.

14 ‘‘(2) ELEMENTS OF PROGRAM.—The quality as15 surance program shall—

16 ‘‘(A) stress health outcomes;

17 ‘‘(B) provide for the establishment of writ18 ten protocols for utilization review, based on

19 current standards of medical practice;

20 ‘‘(C) provide review by physicians and

21 other health care professionals of the process

22 followed in the provision of such health care

23 services;
304

Title VIII, Subtitle A

•HR 2530 IH

1 ‘‘(D) monitors and evaluates high volume

2 and high risk services and the care of acute and

3 chronic conditions;

4 ‘‘(E) evaluates the continuity and coordi5 nation of care that enrollees receive;

6 ‘‘(F) has mechanisms to detect both under7 utilization and overutilization of services;

8 ‘‘(G) after identifying areas for improve9 ment, establishes or alters practice parameters;

10 ‘‘(H) takes action to improve quality and

11 assesses the effectiveness of such action

12 through systematic follow-up;

13 ‘‘(I) makes available information on quality

14 and outcomes measures to facilitate beneficiary

15 comparison and choice of health coverage op16 tions (in such form and on such quality and

17 outcomes measures as the Secretary determines

18 to be appropriate);

19 ‘‘(J) is evaluated on an ongoing basis as to

20 its effectiveness; and

21 ‘‘(K) provide for external accreditation or

22 review, by a utilization and quality control peer

23 review organization under part B of title XI or

24 other qualified independent review organization,

25 of the quality of services furnished by the orga-
305

Title VIII, Subtitle A

•HR 2530 IH

1 nization meets professionally recognized stand2 ards of health care (including providing ade3 quate access of enrollees to services).

4 ‘‘(3) EXCEPTION FOR CERTAIN FEE-FOR-SERV5 ICE PLANS.—Paragraph (1) and subsection (c)(2)

6 shall not apply in the case of a Medicare Choice or7 ganization in relation to a Medicare Choice product

8 to the extent the organization provides for coverage

9 of benefits without restrictions relating to utilization

10 and without regard to whether the provider has a

11 contract or other arrangement with the plan for the

12 provision of such benefits.

13 ‘‘(4) TREATMENT OF ACCREDITATION.—The

14 Secretary shall provide that a Medicare Choice orga15 nization is deemed to meet the requirements of para16 graphs (1) and (2) of this subsection and subsection

17 (c) if the organization is accredited (and periodically

18 reaccredited) by a private organization under a proc19 ess that the Secretary has determined assures that

20 the organization meets standards that are no less

21 stringent than the standards established under sec22 tion 1856 to carry out this subsection and sub23 section (c).

24 ‘‘(e) COVERAGE DETERMINATIONS.—
306

Title VIII, Subtitle A

•HR 2530 IH

1 ‘‘(1) DECISIONS ON NONEMERGENCY CARE.—A

2 Medicare Choice organization shall make determina3 tions regarding authorization requests for non4 emergency care on a timely basis, depending on the

5 urgency of the situation.

6 ‘‘(2) APPEALS.—

7 ‘‘(A) IN GENERAL.—Appeals from a deter8 mination of an organization denying coverage

9 shall be decided within 30 days of the date of

10 receipt of medical information, but not later

11 than 60 days after the date of the decision.

12 ‘‘(B) PHYSICIAN DECISION ON CERTAIN

13 APPEALS.—Appeal decisions relating to a deter14 mination to deny coverage based on a lack of

15 medical necessity shall be made only by a physi16 cian.

17 ‘‘(C) EMERGENCY CASES.—Appeals from

18 such a determination involving a life-threaten19 ing or emergency situation shall be decided on

20 an expedited basis.

21 ‘‘(f) GRIEVANCES AND APPEALS.—

22 ‘‘(1) GRIEVANCE MECHANISM.—Each Medicare

23 Choice organization must provide meaningful proce24 dures for hearing and resolving grievances between

25 the organization (including any entity or individual
307

Title VIII, Subtitle A

•HR 2530 IH

1 through which the organization provides health care

2 services) and enrollees under this part.

3 ‘‘(2) APPEALS.—An enrollee with an organiza4 tion under this part who is dissatisfied by reason of

5 the enrollee’s failure to receive any health service to

6 which the enrollee believes the enrollee is entitled

7 and at no greater charge than the enrollee believes

8 the enrollee is required to pay is entitled, if the

9 amount in controversy is $100 or more, to a hearing

10 before the Secretary to the same extent as is pro11 vided in section 205(b), and in any such hearing the

12 Secretary shall make the organization a party. If the

13 amount in controversy is $1,000 or more, the indi14 vidual or organization shall, upon notifying the other

15 party, be entitled to judicial review of the Sec16 retary’s final decision as provided in section 205(g),

17 and both the individual and the organization shall be

18 entitled to be parties to that judicial review. In ap19 plying sections 205(b) and 205(g) as provided in

20 this subparagraph, and in applying section 205(l)

21 thereto, any reference therein to the Commissioner

22 of Social Security or the Social Security Administra23 tion shall be considered a reference to the Secretary

24 or the Department of Health and Human Services,

25 respectively.
308

Title VIII, Subtitle A

•HR 2530 IH

1 ‘‘(3) COORDINATION WITH SECRETARY OF

2 LABOR.—The Secretary shall consult with the Sec3 retary of Labor so as to ensure that the require4 ments of this subsection, as they apply in the case

5 of grievances referred to in paragraph (1) to which

6 section 503 of the Employee Retirement Income Se7 curity Act of 1974 applies, are applied in a manner

8 consistent with the requirements of such section

9 503.

10 ‘‘(g) INFORMATION ON ADVANCE DIRECTIVES.—

11 Each Medicare Choice organization shall meet the require12 ment of section 1866(f) (relating to maintaining written

13 policies and procedures respecting advance directives).

14 ‘‘(h) APPROVAL OF MARKETING MATERIALS.—

15 ‘‘(1) SUBMISSION.—Each Medicare Choice or16 ganization may not distribute marketing materials

17 unless—

18 ‘‘(A) at least 45 days before the date of

19 distribution the organization has submitted the

20 material to the Secretary for review, and

21 ‘‘(B) the Secretary has not disapproved the

22 distribution of such material.

23 ‘‘(2) REVIEW.—The standards established

24 under section 1856 shall include guidelines for the

25 review of all such material submitted and under
309

Title VIII, Subtitle A

•HR 2530 IH

1 such guidelines the Secretary shall disapprove such

2 material if the material is materially inaccurate or

3 misleading or otherwise makes a material misrepre4 sentation.

5 ‘‘(3) DEEMED APPROVAL (1-STOP SHOPPING).—

6 In the case of material that is submitted under para7 graph (1)(A) to the Secretary or a regional office of

8 the Department of Health and Human Services and

9 the Secretary or the office has not disapproved the

10 distribution of marketing materials under paragraph

11 (1)(B) with respect to a Medicare Choice product in

12 an area, the Secretary is deemed not to have dis13 approved such distribution in all other areas covered

14 by the product and organization.

15 ‘‘(4) PROHIBITION OF CERTAIN MARKETING

16 PRACTICES.—Each Medicare Choice organization

17 shall conform to fair marketing standards in relation

18 to Medicare Choice products offered under this part,

19 included in the standards established under section

20 1856. Such standards shall include a prohibition

21 against an organization (or agent of such an organi22 zation) completing any portion of any election form

23 under section 1805 on behalf of any individual.

24 ‘‘(i) ADDITIONAL STANDARDIZED INFORMATION ON

25 QUALITY, OUTCOMES, AND OTHER FACTORS.—
310

Title VIII, Subtitle A

•HR 2530 IH

1 ‘‘(1) IN GENERAL.—In addition to any other in2 formation required to be provided under this part,

3 each Medicare Choice organization shall provide the

4 Secretary (at a time, not less frequently than annu5 ally, and in an electronic, standardized form and

6 manner specified by the Secretary) such information

7 as the Secretary determines to be necessary, consist8 ent with this part, to evaluate the performance of

9 the organization in providing benefits to enrollees.

10 ‘‘(2) INFORMATION TO BE INCLUDED.—Subject

11 to paragraph (3), information to be provided under

12 this subsection shall include at least the following:

13 ‘‘(A) Information on the characteristics of

14 enrollees that may affect their need for or use

15 of health services and the determination of risk16 adjusted payments under section 1855.

17 ‘‘(B) Information on the types of treat18 ments and outcomes of treatments with respect

19 to the clinical health, functional status, and

20 well-being of enrollees.

21 ‘‘(C) Information on health care expendi22 tures and the volume and prices of procedures.

23 ‘‘(D) Information on the flexibility per24 mitted by plans to enrollees in their selection of

25 providers.
311

Title VIII, Subtitle A

•HR 2530 IH

1 ‘‘(3) SPECIAL TREATMENT.—The Secretary

2 may waive the provision of such information under

3 paragraph (2), or require such other information, as

4 the Secretary finds appropriate in the case of a

5 newly established Medicare Choice organization for

6 which such information is not available.

7 ‘‘(j) DEMONSTRATION PROJECTS.—The Secretary

8 shall provide for demonstration projects to determine the

9 effectiveness, cost, and impact of alternative methods of

10 providing comparative information about the performance

11 of Medicare Choice organizations and products and the

12 performance of medicare supplemental policies in relation

13 to such products. Such projects shall include information

14 about health care outcomes resulting from coverage under

15 different products and policies.

16 ‘‘PROVIDER-SPONSORED ORGANIZATIONS

17 ‘‘SEC. 1854. (a) PROVIDER-SPONSORED ORGANIZA18 TION DEFINED.—

19 ‘‘(1) IN GENERAL.—In this part, the term ‘pro20 vider-sponsored organization’ means a public or pri21 vate entity that (in accordance with standards estab22 lished under subsection (b)) is a provider, or group

23 of affiliated providers, that provides a substantial

24 proportion (as defined by the Secretary under such

25 standards) of the health care items and services
312

Title VIII, Subtitle A

•HR 2530 IH

1 under the contract under this part directly through

2 the provider or affiliated group of providers.

3 ‘‘(2) SUBSTANTIAL PROPORTION.—In defining

4 what is a ‘substantial proportion’ for purposes of

5 paragraph (1), the Secretary—

6 ‘‘(A) shall take into account the need for

7 such an organization to assume responsibility

8 for a substantial proportion of services in order

9 to assure financial stability and the practical

10 difficulties in such an organization integrating

11 a very wide range of service providers; and

12 ‘‘(B) may vary such proportion based upon

13 relevant differences among organizations, such

14 as their location in an urban or rural area.

15 ‘‘(3) AFFILIATION.—For purposes of this sub16 section, a provider is ‘affiliated’ with another pro17 vider if, through contract, ownership, or otherwise—

18 ‘‘(A) one provider, directly or indirectly,

19 controls, is controlled by, or is under common

20 control with the other,

21 ‘‘(B) each provider is a participant in a

22 lawful combination under which each provider

23 shares, directly or indirectly, substantial finan24 cial risk in connection with their operations,
313

Title VIII, Subtitle A

•HR 2530 IH

1 ‘‘(C) both providers are part of a con2 trolled group of corporations under section

3 1563 of the Internal Revenue Code of 1986, or

4 ‘‘(D) both providers are part of an affili5 ated service group under section 414 of such

6 Code.

7 ‘‘(4) CONTROL.—For purposes of paragraph

8 (3), control is presumed to exist if one party, di9 rectly or indirectly, owns, controls, or holds the

10 power to vote, or proxies for, not less than 51 per11 cent of the voting rights or governance rights of an12 other.

13 ‘‘(b) PREEMPTION OF STATE INSURANCE LICENSING

14 REQUIREMENTS.—

15 ‘‘(1) IN GENERAL.—This section supersedes

16 any State law which—

17 ‘‘(A) requires that a provider-sponsored or18 ganization meet requirements for insurers of

19 health services or health maintenance organiza20 tions doing business in the State with respect to

21 initial capitalization and establishment of finan22 cial reserves against insolvency, or

23 ‘‘(B) imposes requirements that would

24 have the effect of prohibiting the organization
314

Title VIII, Subtitle A

•HR 2530 IH

1 from complying with the applicable require2 ments of this part,

3 insofar as such the law applies to individuals en4 rolled with the organization under this part.

5 ‘‘(2) EXCEPTION FOR IDENTICAL STAND6 ARDS.—Paragraph (1) shall not apply with respect

7 to any State law to the extent that such law provides

8 the application of standards that are identical to the

9 standards established for provider-sponsored organi10 zations under this part.

11 ‘‘(3) CONSTRUCTION.—Nothing in this sub12 section shall be construed as affecting the operation

13 of section 514 of the Employee Retirement Income

14 Security Act of 1974.

15 ‘‘PAYMENTS TO MEDICARE CHOICE ORGANIZATIONS

16 ‘‘SEC. 1855. (a) PAYMENTS.—

17 ‘‘(1) IN GENERAL.—Under a contract under

18 section 1858 the Secretary shall pay to each Medi19 care Choice organization, with respect to coverage of

20 an individual under this part in a payment area for

21 a month, an amount equal to the monthly adjusted

22 Medicare Choice capitation rate (as provided under

23 subsection (b)) with respect to that individual for

24 that area.

25 ‘‘(2) ANNUAL ANNOUNCEMENT.—The Secretary

26 shall annually determine, and shall announce (in a
315

Title VIII, Subtitle A

•HR 2530 IH

1 manner intended to provide notice to interested par2 ties) not later than September 7 before the calendar

3 year concerned—

4 ‘‘(A) the annual Medicare Choice capita5 tion rate for each payment area for the year,

6 and

7 ‘‘(B) the factors to be used in adjusting

8 such rates under subsection (b) for payments

9 for months in that year.

10 ‘‘(3) ADVANCE NOTICE OF METHODOLOGICAL

11 CHANGES.—At least 45 days before making the an12 nouncement under paragraph (2) for a year, the

13 Secretary shall provide for notice to Medicare Choice

14 organizations of proposed changes to be made in the

15 methodology or benefit coverage assumptions from

16 the methodology and assumptions used in the pre17 vious announcement and shall provide such organi18 zations an opportunity to comment on such proposed

19 changes.

20 ‘‘(4) EXPLANATION OF ASSUMPTIONS.—In each

21 announcement made under paragraph (2) for a year,

22 the Secretary shall include an explanation of the as23 sumptions (including any benefit coverage assump24 tions) and changes in methodology used in the an25 nouncement in sufficient detail so that Medicare
316

Title VIII, Subtitle A

•HR 2530 IH

1 Choice organizations can compute monthly adjusted

2 Medicare Choice capitation rates for classes of indi3 viduals located in each payment area which is in

4 whole or in part within the service area of such an

5 organization.

6 ‘‘(b) MONTHLY ADJUSTED MEDICARE CHOICE CAPI7 TATION RATE.—

8 ‘‘(1) IN GENERAL.—For purposes of this sec9 tion, the ‘monthly adjusted Medicare Choice capita10 tion rate’ under this subsection, for a month in a

11 year for an individual in a payment area (specified

12 under paragraph (3)) and in a class (established

under paragraph (4)), is 1 13 ⁄12 of the annual Medicare

14 Choice capitation rate specified in paragraph (2) for

15 that area for the year, adjusted to reflect the actuar16 ial value of benefits under this title with respect to

17 individuals in such class compared to the national

18 average for individuals in all classes.

19 ‘‘(2) ANNUAL MEDICARE CHOICE CAPITATION

20 RATES.—

21 ‘‘(A) IN GENERAL.—For purposes of this

22 section, the annual Medicare Choice capitation

23 rate for a payment area for a year is equal to

24 the annual Medicare Choice capitation rate for

25 the area for the previous year (or, in the case
317

Title VIII, Subtitle A

•HR 2530 IH

1 of 1996, the average annual per capita rate of

2 payment described in section 1876(a)(1)(C) for

3 the area for 1995) increased by the per capita

4 growth rate for that area and year (as deter5 mined under subsection (c)).

6 ‘‘(B) SPECIAL RULES FOR 1996.—

7 ‘‘(i) FLOOR AT 85 PERCENT OF NA8 TIONAL AVERAGE.—In no case shall the

9 annual Medicare Choice capitation rate for

10 a payment area for 1996 be less than 85

11 percent of the national average of such

12 rates for such year for all payment areas

13 (weighted to reflect the number of medi14 care beneficiaries in each such area).

15 ‘‘(ii) REMOVAL OF MEDICAL EDU16 CATION AND DISPROPORTIONATE SHARE

17 HOSPITAL PAYMENTS FROM CALCULATION

18 OF ADJUSTED AVERAGE PER CAPITA

19 COST.—In determining the annual Medi20 care Choice capitation rate for 1996, the

21 average annual per capita rate of payment

22 described in section 1876(a)(1)(C) for

23 1995 shall be determined as though the

24 Secretary had excluded from such rate any

25 amounts which the Secretary estimated
318

Title VIII, Subtitle A

•HR 2530 IH

1 would have been payable under this title

2 during the year for—

3 ‘‘(I) payment adjustments under

4 section 1886(d)(5)(F) for hospitals

5 serving a disproportionate share of

6 low-income patients; and

7 ‘‘(II) the indirect costs of medical

8 education under section

9 1886(d)(5)(B) or for direct graduate

10 medical education costs under section

11 1886(h).

12 ‘‘(3) PAYMENT AREA DEFINED.—

13 ‘‘(A) IN GENERAL.—In this section, the

14 term ‘payment area’ means—

15 ‘‘(i) a metropolitan statistical area, or

16 ‘‘(ii) all areas of a State outside of such an

17 area.

18 ‘‘(B) SPECIAL RULE FOR ESRD BENE19 FICIARIES.—Such term means, in the case of

20 the population group described in paragraph

21 (5)(C), each State.

22 ‘‘(4) CLASSES.—

23 ‘‘(A) IN GENERAL.—For purposes of this

24 section, the Secretary shall define appropriate

25 classes of enrollees, consistent with paragraph
319

Title VIII, Subtitle A

•HR 2530 IH

1 (5), based on age, gender, welfare status, insti2 tutionalization, and such other factors as the

3 Secretary determines to be appropriate, so as to

4 ensure actuarial equivalence. The Secretary

5 may add to, modify, or substitute for such

6 classes, if such changes will improve the deter7 mination of actuarial equivalence.

8 ‘‘(B) RESEARCH.—The Secretary shall

9 conduct such research as may be necessary to

10 provide for greater accuracy in the adjustment

11 of capitation rates under this subsection. Such

12 research may include research into the addition

13 or modification of classes under subparagraph

14 (A). The Secretary shall submit to Congress a

15 report on such research by not later than Janu16 ary 1, 1997.

17 ‘‘(5) DIVISION OF MEDICARE POPULATION.—In

18 carrying out paragraph (4) and this section, the Sec19 retary shall recognize the following separate popu20 lation groups:

21 ‘‘(A) AGED.—Individuals 65 years of age

22 or older who are not described in subparagraph

23 (C).
320

Title VIII, Subtitle A

•HR 2530 IH

1 ‘‘(B) DISABLED.—Disabled individuals

2 who are under 65 years of age and not de3 scribed in subparagraph (C).

4 ‘‘(C) INDIVIDUALS WITH END STAGE

5 RENAL DISEASE.—Individuals who are deter6 mined to have end stage renal disease.

7 ‘‘(c) PER CAPITA GROWTH RATES.—

8 ‘‘(1) FOR 1996.—

9 ‘‘(A) IN GENERAL.—For purposes of this

10 section and subject to subparagraph (B), the

11 per capita growth rates for 1996, for a payment

12 area assigned to a service utilization cohort

13 under subsection (d), shall be the following:

14 ‘‘(i) BELOW AVERAGE SERVICE UTILI15 ZATION COHORT.—For areas assigned to

16 the below average service utilization cohort,

17 9.6 percent.

18 ‘‘(ii) ABOVE AVERAGE SERVICE UTILI19 ZATION COHORT.—For areas assigned to

20 the above average service utilization co21 hort, 4.8 percent.

22 ‘‘(iii) HIGHEST SERVICE UTILIZATION

23 COHORT.—For areas assigned to the high24 est service utilization cohort, 2.1 percent.
321

Title VIII, Subtitle A

•HR 2530 IH

1 ‘‘(B) BUDGET NEUTRAL ADJUSTMENT.—

2 The Secretary shall adjust the per capita

3 growth rates specified in subparagraph (A) for

4 all the areas by such uniform factor as may be

5 necessary to assure that the total capitation

6 payments under this section during 1996 are

7 the same as the amount such payments would

8 have been if the per capita growth rate for all

9 such areas for 1996 were equal to the national

10 average per capita growth rate, specified in

11 paragraph (3) for 1996.

12 ‘‘(2) FOR SUBSEQUENT YEARS.—

13 ‘‘(A) IN GENERAL.—For purposes of this

14 section and subject to subparagraph (B), the

15 Secretary shall compute a per capita growth

16 rate for each year after 1996, for each payment

17 area as assigned to a service utilization cohort

18 under subsection (d), consistent with the follow19 ing rules:

20 ‘‘(i) BELOW AVERAGE SERVICE UTILI21 ZATION COHORT SET AT 143 PERCENT OF

22 NATIONAL AVERAGE PER CAPITA GROWTH

23 RATE.—The per capita growth rate for

24 areas assigned to the below average service

25 utilization cohort for the year shall be 160
322

Title VIII, Subtitle A

•HR 2530 IH

1 percent of the national average per capita

2 growth rate for the year (as specified

3 under paragraph (3)).

4 ‘‘(ii) ABOVE AVERAGE SERVICE UTILI5 ZATION COHORT SET AT 80 PERCENT OF

6 NATIONAL AVERAGE PER CAPITA GROWTH

7 RATE.—The per capita growth rate for

8 areas assigned to the above average service

9 utilization cohort for the year shall be 80

10 percent of the national average per capita

11 growth rate for the year.

12 ‘‘(iii) HIGHEST SERVICE UTILIZATION

13 COHORT SET AT 40 PERCENT OF NATIONAL

14 AVERAGE PER CAPITA GROWTH RATE.—

15 The per capita growth rate for areas as16 signed to the highest service utilization co17 hort for the year shall be 35 percent of the

18 national average per capita growth rate for

19 the year.

20 ‘‘(B) AVERAGE PER CAPITA GROWTH RATE

21 AT NATIONAL AVERAGE TO ASSURE BUDGET

22 NEUTRALITY.—The Secretary shall compute per

23 capita growth rates for a year under subpara24 graph (A) in a manner so that the weighted av25 erage per capita growth rate for all areas for
323

Title VIII, Subtitle A

•HR 2530 IH

1 the year (weighted to reflect the number of

2 medicare beneficiaries in each area) is equal to

3 the national average per capita growth rate

4 under paragraph (3) for the year.

5 ‘‘(3) NATIONAL AVERAGE PER CAPITA GROWTH

6 RATES.—In this subsection, the ‘national average

7 per capita growth rate’ for—

8 ‘‘(A) 1996 is 6.0 percent,

9 ‘‘(B) 1997 is 6.0 percent,

10 ‘‘(C) 1998 is 6.0 percent,

11 ‘‘(D) 1999 is 5.5 percent,

12 ‘‘(E) 2000 is 5.5 percent,

13 ‘‘(F) 2001 is 5.5 percent,

14 ‘‘(G) 2002 is 5.5 percent, and

15 ‘‘(H) each subsequent year is 5.5 percent.

16 ‘‘(d) ASSIGNMENT OF PAYMENT AREAS TO SERVICE

17 UTILIZATION COHORTS.—

18 ‘‘(1) IN GENERAL.—For purposes of determin19 ing per capita growth rates under subsection (c) for

20 areas for a year, the Secretary shall assign each pay21 ment area to a service utilization cohort (based on

22 the service utilization index value for that area de23 termined under paragraph (2)) as follows:

24 ‘‘(A) BELOW AVERAGE SERVICE UTILIZA25 TION COHORT.—Areas with a service utilization
324

Title VIII, Subtitle A

•HR 2530 IH

1 index value of less than 1.00 shall be assigned

2 to the below average service utilization cohort.

3 ‘‘(B) ABOVE AVERAGE SERVICE UTILIZA4 TION COHORT.—Areas with a service utilization

5 index value of at least 1.00 but less than 1.20

6 shall be assigned to the above average service

7 utilization cohort.

8 ‘‘(C) HIGHEST SERVICE UTILIZATION CO9 HORT.—Areas with a service utilization index

10 value of at least 1.20 shall be assigned to the

11 highest service utilization cohort.

12 ‘‘(2) DETERMINATION OF SERVICE UTILIZATION

13 INDEX VALUES.—In order to determine the per cap14 ita growth rate for a payment area for each year

15 (beginning with 1996), the Secretary shall determine

16 for such area and year a service utilization index

17 value, which is equal to—

18 ‘‘(A) the annual Medicare Choice capita19 tion rate under this section for the area for the

20 year in which the determination is made (or, in

21 the case of 1996, the average annual per capita

22 rate of payment (described in section

23 1876(a)(1)(C)) for the area for 1995); divided

24 by
325

Title VIII, Subtitle A

•HR 2530 IH

1 ‘‘(B) the input-price-adjusted annual na2 tional Medicare Choice capitation rate (as de3 termined under paragraph (3)) for that area for

4 the year in which the determination is made.

5 ‘‘(3) DETERMINATION OF INPUT-PRICE-AD6 JUSTED RATES.—

7 ‘‘(A) IN GENERAL.—For purposes of para8 graph (2), the ‘input-price-adjusted annual na9 tional Medicare Choice capitation rate’ for a

10 payment area for a year is equal to the sum,

11 for all the types of medicare services (as classi12 fied by the Secretary), of the product (for each

13 such type) of—

14 ‘‘(i) the national standardized Medi15 care Choice capitation rate (determined

16 under subparagraph (B)) for the year,

17 ‘‘(ii) the proportion of such rate for

18 the year which is attributable to such type

19 of services, and

20 ‘‘(iii) an index that reflects (for that

21 year and that type of services) the relative

22 input price of such services in the area

23 compared to the national average input

24 price of such services.
326

Title VIII, Subtitle A

•HR 2530 IH

1 In applying clause (iii), the Secretary shall, sub2 ject to subparagraph (C), apply those indices

3 under this title that are used in applying (or

4 updating) national payment rates for specific

5 areas and localities.

6 ‘‘(B) NATIONAL STANDARDIZED MEDICARE

7 CHOICE CAPITATION RATE.—In this paragraph,

8 the ‘national standardized Medicare Choice

9 capitation rate’ for a year is equal to—

10 ‘‘(i) the sum (for all payment areas)

11 of the product of (I) the annual Medicare

12 Choice capitation rate for that year for the

13 area under subsection (b)(2), and (II) the

14 average number of medicare beneficiaries

15 residing in that area in the year; divided

16 by

17 ‘‘(ii) the total average number of med18 icare beneficiaries residing in all the pay19 ment areas for that year.

20 ‘‘(C) SPECIAL RULES FOR 1996.—In apply21 ing this paragraph for 1996—

22 ‘‘(i) medicare services shall be divided

23 into 2 types of services: part A services

24 and part B services;
327

Title VIII, Subtitle A

•HR 2530 IH

1 ‘‘(ii) the proportions described in sub2 paragraph (A)(ii) for such types of services

3 shall be—

4 ‘‘(I) for part A services, the ratio

5 (expressed as a percentage) of the av6 erage annual per capita rate of pay7 ment for the area for part A for 1995

8 to the total average annual per capita

9 rate of payment for the area for parts

10 A and B for 1995, and

11 ‘‘(II) for part B services, 100

12 percent minus the ratio described in

13 subclause (I);

14 ‘‘(iii) for the part A services, 70 per15 cent of payments attributable to such serv16 ices shall be adjusted by the index used

17 under section 1886(d)(3)(E) to adjust pay18 ment rates for relative hospital wage levels

19 for hospitals located in the payment area

20 involved;

21 ‘‘(iv) for part B services—

22 ‘‘(I) 66 percent of payments at23 tributable to such services shall be ad24 justed by the index of the geographic

25 area factors under section 1848(e)
328

Title VIII, Subtitle A

•HR 2530 IH

1 used to adjust payment rates for phy2 sicians’ services furnished in the pay3 ment area, and

4 ‘‘(II) of the remaining 34 percent

5 of the amount of such payments, 70

6 percent shall be adjusted by the index

7 described in clause (iii);

8 ‘‘(v) the index values shall be com9 puted based only on the beneficiary popu10 lation described in subsection (b)(5)(A).

11 The Secretary may continue to apply the rules

12 described in this subparagraph (or similar

13 rules) for 1997.

14 ‘‘(e) PAYMENT PROCESS.—

15 ‘‘(1) IN GENERAL.—Subject to section 1859(f),

16 the Secretary shall make monthly payments under

17 this section in advance and in accordance with the

18 rate determined under subsection (a) to the plan for

19 each individual enrolled with a Medicare Choice or20 ganization under this part.

21 ‘‘(2) ADJUSTMENT TO REFLECT NUMBER OF

22 ENROLLEES.—

23 ‘‘(A) IN GENERAL.—The amount of pay24 ment under this subsection may be retroactively

25 adjusted to take into account any difference be-
329

Title VIII, Subtitle A

•HR 2530 IH

1 tween the actual number of individuals enrolled

2 with an organization under this part and the

3 number of such individuals estimated to be so

4 enrolled in determining the amount of the ad5 vance payment.

6 ‘‘(B) SPECIAL RULE FOR CERTAIN EN7 ROLLEES.—

8 ‘‘(i) IN GENERAL.—Subject to clause

9 (ii), the Secretary may make retroactive

10 adjustments under subparagraph (A) to

11 take into account individuals enrolled dur12 ing the period beginning on the date on

13 which the individual enrolls with a Medi14 care Choice organization under a product

15 operated, sponsored, or contributed to by

16 the individual’s employer or former em17 ployer (or the employer or former employer

18 of the individual’s spouse) and ending on

19 the date on which the individual is enrolled

20 in the organization under this part, except

21 that for purposes of making such retro22 active adjustments under this subpara23 graph, such period may not exceed 90

24 days.
330

Title VIII, Subtitle A

•HR 2530 IH

1 ‘‘(ii) EXCEPTION.—No adjustment

2 may be made under clause (i) with respect

3 to any individual who does not certify that

4 the organization provided the individual

5 with the disclosure statement described in

6 section 1853(a) at the time the individual

7 enrolled with the organization.

8 ‘‘(f) PAYMENTS FROM TRUST FUND.—The payment

9 to a Medicare Choice organization under this section for

10 individuals enrolled under this part with the organization,

11 and payments to a Medicare Choice MSA under subsection

12 (f)(1)(B), shall be made from the Federal Hospital Insur13 ance Trust Fund and the Federal Supplementary Medical

14 Insurance Trust Fund in such proportion as the Secretary

15 determines reflects the relative weight that benefits under

16 part A and under part B represents of the actuarial value

17 of the total benefits under this title.

18 ‘‘(g) SPECIAL RULE FOR CERTAIN INPATIENT HOS19 PITAL STAYS.—In the case of an individual who is receiv20 ing inpatient hospital services from a subsection (d) hos21 pital (as defined in section 1886(d)(1)(B)) as of the effec22 tive date of the individual’s—

23 ‘‘(1) election under this part of a Medicare

24 Choice product offered by a Medicare Choice organi25 zation—
331

Title VIII, Subtitle A

•HR 2530 IH

1 ‘‘(A) payment for such services until the

2 date of the individual’s discharge shall be made

3 under this title through the Medicare Choice

4 product or Non-Medicare Choice option (as the

5 case may be) elected before the election with

6 such organization,

7 ‘‘(B) the elected organization shall not be

8 financially responsible for payment for such

9 services until the date after the date of the indi10 vidual’s discharge, and

11 ‘‘(C) the organization shall nonetheless be

12 paid the full amount otherwise payable to the

13 organization under this part; or

14 ‘‘(2) termination of election with respect to a

15 Medicare Choice organization under this part—

16 ‘‘(A) the organization shall be financially

17 responsible for payment for such services after

18 such date and until the date of the individual’s

19 discharge,

20 ‘‘(B) payment for such services during the

21 stay shall not be made under section 1886(d) or

22 by any succeeding Medicare Choice organiza23 tion, and

24 ‘‘(C) the terminated organization shall not

25 receive any payment with respect to the individ-
332

Title VIII, Subtitle A

•HR 2530 IH

1 ual under this part during the period the indi2 vidual is not enrolled.

3 ‘‘ESTABLISHMENT OF STANDARDS FOR MEDICARE

4 CHOICE ORGANIZATIONS AND PRODUCTS

5 ‘‘SEC. 1856. (a) INTERIM STANDARDS.—

6 ‘‘(1) IN GENERAL.—The Secretary shall issue

7 regulations regarding standards for Medicare Choice

8 organizations and products within 180 days after

9 the date of the enactment of this section. Such regu10 lations shall be issued on an interim basis, but shall

11 become effective upon publication and shall be effec12 tive through the end of 1999.

13 ‘‘(2) SOLICITATION OF VIEWS.—In developing

14 standards under this subsection relating to solvency

15 of Medicare Choice organizations, the Secretary shall

16 solicit the views of the American Academy of Actu17 aries.

18 ‘‘(3) EFFECT ON STATE REGULATIONS.—Regu19 lations under this subsection shall not preempt State

20 regulations for Medicare Choice organizations for

21 products not offered under this part.

22 ‘‘(b) PERMANENT STANDARDS.—

23 ‘‘(1) IN GENERAL.—The Secretary shall develop

24 permanent standards under this subsection.

25 ‘‘(2) CONSULTATION.—In developing standards

26 under this subsection, the Secretary shall consult
333

Title VIII, Subtitle A

•HR 2530 IH

1 with the National Association of Insurance Commis2 sioners, associations representing the various types

3 of Medicare Choice organizations, and medicare

4 beneficiaries.

5 ‘‘(3) EFFECTIVENESS.—The standards under

6 this subsection shall take effect for periods begin7 ning on or after January 1, 2000.

8 ‘‘(c) SOLVENCY.—In establishing interim and perma9 nent standards under this section relating to solvency of

10 organizations, the Secretary shall recognize the multiple

11 means of demonstrating solvency, including—

12 ‘‘(1) reinsurance purchased through a recog13 nized commerce company or through a capitive com14 pany owned directly or indirectly by 3 or more pro15 vider-sponsored organizations,

16 ‘‘(2) unrestricted surplus,

17 ‘‘(3) guarantees, and

18 ‘‘(4) letters of credit.

19 In such standards, the Secretary may treat as admitted

20 assets the assets used by a provider-sponsored organiza21 tion in delivering covered services.

22 ‘‘(d) APPLICATION OF NEW STANDARDS TO ENTI23 TIES WITH A CONTRACT.—In the case of a Medicare

24 Choice organization with a contract in effect under this

25 part at the time standards applicable to the organization
334

Title VIII, Subtitle A

•HR 2530 IH

1 under this section are changed, the organization may elect

2 not to have such changes apply to the organization until

3 the end of the current contract year (or, if there is less

4 than 6 months remaining in the contract year, until 1 year

5 after the end of the current contract year).

6 ‘‘(e) RELATION TO STATE LAWS.—The standards es7 tablished under this section shall supersede any State law.

8 The standard or regulation with respect to Medicare

9 Choice products which are offered by Medicare Choice or10 ganizations and are issued by organizations to which sec11 tion 1851(b)(1) applies, to the extent such law or regula12 tion is inconsistent with such standards.

13 ‘‘MEDICARE CHOICE CERTIFICATION

14 ‘‘SEC. 1857. (a) IN GENERAL.—

15 ‘‘(1) ESTABLISHMENT.—The Secretary shall es16 tablish a process for the certification of organiza17 tions and products offered by organizations as meet18 ing the applicable standards for Medicare Choice or19 ganizations and Medicare Choice products estab20 lished under section 1856.

21 ‘‘(2) INVOLVEMENT OF SECRETARY OF

22 LABOR.—Such process shall be established and oper23 ated in cooperation with the Secretary of Labor with

24 respect to union sponsors and Taft-Hartley spon25 sors.
335

Title VIII, Subtitle A

•HR 2530 IH

1 ‘‘(3) USE OF PRIVATE ACCREDITATION PROC2 ESSES.—

3 ‘‘(A) IN GENERAL.—The process under

4 this subsection shall, to the maximum extent

5 practicable, provide that Medicare Choice orga6 nizations and products that are licensed or cer7 tified through a qualified private accreditation

8 process that the Secretary finds applies stand9 ards that are no less stringent than the require10 ments of this part are deemed to meet the cor11 responding requirements of this part for such

12 an organization or product.

13 ‘‘(B) PERIODIC ACCREDITATION.—The use

14 of an accreditation under subparagraph (A)

15 shall be valid only for such period as the Sec16 retary specifies.

17 ‘‘(4) USER FEES.—The Secretary may impose

18 user fees on entities seeking certification under this

19 subsection in such amounts as the Secretary deems

20 sufficient to finance the costs of such certification.

21 ‘‘(b) NOTICE TO ENROLLEES IN CASE OF DECERTI22 FICATION.—If a Medicare Choice organization or product

23 is decertified under this section, the organization shall no24 tify each enrollee with the organization and product under

25 this part of such decertification.
336

Title VIII, Subtitle A

•HR 2530 IH

1 ‘‘(c) QUALIFIED ASSOCIATIONS.—In the case of Med2 icare Choice products offered by a Medicare Choice orga3 nization that is a qualified association (as defined in sec4 tion 1854(c)(4)(C)) and issued by an organization to

5 which section 1851(b)(1) applies or by a provider-spon6 sored organization (as defined in section 1854(a)), nothing

7 in this section shall be construed as limiting the authority

8 of States to regulate such products.

9 ‘‘CONTRACTS WITH MEDICARE CHOICE ORGANIZATIONS

10 ‘‘SEC. 1858. (a) IN GENERAL.—The Secretary shall

11 not permit the election under section 1805 of a Medicare

12 Choice product offered by a Medicare Choice organization

13 under this part, and no payment shall be made under sec14 tion 1856 to an organization, unless the Secretary has en15 tered into a contract under this section with an organiza16 tion with respect to the offering of such product. Such

17 a contract with an organization may cover more than one

18 Medicare Choice product. Such contract shall provide that

19 the organization agrees to comply with the applicable re20 quirements and standards of this part and the terms and

21 conditions of payment as provided for in this part.

22 ‘‘(b) ENROLLMENT REQUIREMENTS.—

23 ‘‘(1)(A) MINIMUM ENROLLMENT REQUIRE24 MENT.—Subject to subparagraphs (B) and (C), the

25 Secretary may not enter into a contract under this

26 section with a Medicare Choice organization (other
337

Title VIII, Subtitle A

•HR 2530 IH

1 than a union sponsor or Taft-Hartley sponsor) un2 less the organization has at least 5,000 individuals

3 (or 1,500 individuals in the case of an organization

4 that is a provider-sponsored organization) who are

5 receiving health benefits through the organization,

6 except that the standards under section 1856 may

7 permit the organization to have a lesser number of

8 beneficiaries (but not less than 500 in the case of

9 an organization that is a provider-sponsored organi10 zation) if the organization primarily serves individ11 uals residing outside of urbanized areas.

12 ‘‘(B) ALLOWING TRANSITION.—The Secretary

13 may waive the requirement of subparagraph (A)

14 during the first 3 contract years with respect to an

15 organization.

16 ‘‘(C) TREATMENT OF AREAS WITH LOW MAN17 AGED CARE PENETRATION.—The Secretary may

18 waive the requirement of subparagraph (A) in the

19 case of organizations operating in areas in which

20 there is a low proportion of medicare beneficiaries

21 who have made the Medicare Choice election.

22 ‘‘(2) REQUIREMENT FOR ENROLLMENT OF

23 NON-MEDICARE BENEFICIARIES.—

24 ‘‘(A) IN GENERAL.—Each Medicare Choice

25 organization with which the Secretary enters
338

Title VIII, Subtitle A

•HR 2530 IH

1 into a contract under this section shall have, for

2 the duration of such contract, an enrolled mem3 bership at least one-half of which consists of in4 dividuals who are not entitled to benefits under

5 this title or under a State plan approved under

6 title XIX.

7 ‘‘(B) EXCEPTION.—Subparagraph (A)

8 shall not apply to—

9 ‘‘(i) an organization that has been

10 certified by a national organization recog11 nized by the Secretary and has been found

12 to have met performance standards estab13 lished by the Secretary for at least 2 years,

14 or

15 ‘‘(ii) a provider-sponsored organiza16 tion for which commercial payments to

17 providers participating in the organization

18 exceed the payments to the organization

19 under this part.

20 ‘‘(C) MODIFICATION AND WAIVER.—The

21 Secretary may modify or waive the requirement

22 imposed by subparagraph (A)—

23 ‘‘(i) to the extent that more than 50

24 percent of the population of the area

25 served by the organization consists of indi-
339

Title VIII, Subtitle A

•HR 2530 IH

1 viduals who are entitled to benefits under

2 this title or under a State plan approved

3 under title XIX, or

4 ‘‘(ii) in the case of an organization

5 that is owned and operated by a govern6 mental entity, only with respect to a period

7 of three years beginning on the date the

8 organization first enters into a contract

9 under this section, and only if the organi10 zation has taken and is making reasonable

11 efforts to enroll individuals who are not en12 titled to benefits under this title or under

13 a State plan approved under title XIX.

14 ‘‘(D) ENFORCEMENT.—If the Secretary

15 determines that an organization has failed to

16 comply with the requirements of this para17 graph, the Secretary may provide for the sus18 pension of enrollment of individuals under this

19 part or of payment to the organization under

20 this part for individuals newly enrolled with the

21 organization, after the date the Secretary noti22 fies the organization of such noncompliance.

23 ‘‘(c) CONTRACT PERIOD AND EFFECTIVENESS.—

24 ‘‘(1) PERIOD.—Each contract under this sec25 tion shall be for a term of at least one year, as de-
340

Title VIII, Subtitle A

•HR 2530 IH

1 termined by the Secretary, and may be made auto2 matically renewable from term to term in the ab3 sence of notice by either party of intention to termi4 nate at the end of the current term.

5 ‘‘(2) TERMINATION AUTHORITY.—In accord6 ance with procedures established under subsection

7 (h), the Secretary may at any time terminate any

8 such contract or may impose the intermediate sanc9 tions described in an applicable paragraph of sub10 section (g) on the Medicare Choice organization if

11 the Secretary determines that the organization—

12 ‘‘(A) has failed substantially to carry out

13 the contract;

14 ‘‘(B) is carrying out the contract in a man15 ner inconsistent with the efficient and effective

16 administration of this part;

17 ‘‘(C) is operating in a manner that is not

18 in the best interests of the individuals covered

19 under the contract; or

20 ‘‘(D) no longer substantially meets the ap21 plicable conditions of this part.

22 ‘‘(3) EFFECTIVE DATE OF CONTRACTS.—The

23 effective date of any contract executed pursuant to

24 this section shall be specified in the contract.
341

Title VIII, Subtitle A

•HR 2530 IH

1 ‘‘(4) PREVIOUS TERMINATIONS.—The Secretary

2 may not enter into a contract with a Medicare

3 Choice organization if a previous contract with that

4 organization under this section was terminated at

5 the request of the organization within the preceding

6 five-year period, except in circumstances which war7 rant special consideration, as determined by the Sec8 retary.

9 ‘‘(5) NO CONTRACTING AUTHORITY.—The au10 thority vested in the Secretary by this part may be

11 performed without regard to such provisions of law

12 or regulations relating to the making, performance,

13 amendment, or modification of contracts of the

14 United States as the Secretary may determine to be

15 inconsistent with the furtherance of the purpose of

16 this title.

17 ‘‘(d) PROTECTIONS AGAINST FRAUD AND BENE18 FICIARY PROTECTIONS.—

19 ‘‘(1) INSPECTION AND AUDIT.—Each contract

20 under this section shall provide that the Secretary,

21 or any person or organization designated by the Sec22 retary—

23 ‘‘(A) shall have the right to inspect or oth24 erwise evaluate (i) the quality, appropriateness,

25 and timeliness of services performed under the
342

Title VIII, Subtitle A

•HR 2530 IH

1 contract and (ii) the facilities of the organiza2 tion when there is reasonable evidence of some

3 need for such inspection, and

4 ‘‘(B) shall have the right to audit and in5 spect any books and records of the Medicare

6 Choice organization that pertain (i) to the abil7 ity of the organization to bear the risk of poten8 tial financial losses, or (ii) to services performed

9 or determinations of amounts payable under the

10 contract.

11 ‘‘(2) ENROLLEE NOTICE AT TIME OF TERMI12 NATION.—Each contract under this section shall re13 quire the organization to provide (and pay for) writ14 ten notice in advance of the contract’s termination,

15 as well as a description of alternatives for obtaining

16 benefits under this title, to each individual enrolled

17 with the organization under this part.

18 ‘‘(3) DISCLOSURE.—

19 ‘‘(A) IN GENERAL.—Each Medicare Choice

20 organization shall, in accordance with regula21 tions of the Secretary, report to the Secretary

22 financial information which shall include the

23 following:
343

Title VIII, Subtitle A

•HR 2530 IH

1 ‘‘(i) Such information as the Sec2 retary may require demonstrating that the

3 organization has a fiscally sound operation.

4 ‘‘(ii) A copy of the report, if any, filed

5 with the Health Care Financing Adminis6 tration containing the information required

7 to be reported under section 1124 by dis8 closing entities.

9 ‘‘(iii) A description of transactions, as

10 specified by the Secretary, between the or11 ganization and a party in interest. Such

12 transactions shall include—

13 ‘‘(I) any sale or exchange, or

14 leasing of any property between the

15 organization and a party in interest;

16 ‘‘(II) any furnishing for consider17 ation of goods, services (including

18 management services), or facilities be19 tween the organization and a party in

20 interest, but not including salaries

21 paid to employees for services pro22 vided in the normal course of their

23 employment and health services pro24 vided to members by hospitals and

25 other providers and by staff, medical
344

Title VIII, Subtitle A

•HR 2530 IH

1 group (or groups), individual practice

2 association (or associations), or any

3 combination thereof; and

4 ‘‘(III) any lending of money or

5 other extension of credit between an

6 organization and a party in interest.

7 The Secretary may require that information re8 ported respecting an organization which con9 trols, is controlled by, or is under common con10 trol with, another entity be in the form of a

11 consolidated financial statement for the organi12 zation and such entity.

13 ‘‘(B) PARTY IN INTEREST DEFINED.—For

14 the purposes of this paragraph, the term ‘party

15 in interest’ means—

16 ‘‘(i) any director, officer, partner, or

17 employee responsible for management or

18 administration of a Medicare Choice orga19 nization, any person who is directly or in20 directly the beneficial owner of more than

21 5 percent of the equity of the organization,

22 any person who is the beneficial owner of

23 a mortgage, deed of trust, note, or other

24 interest secured by, and valuing more than

25 5 percent of the organization, and, in the
345

Title VIII, Subtitle A

•HR 2530 IH

1 case of a Medicare Choice organization or2 ganized as a nonprofit corporation, an in3 corporator or member of such corporation

4 under applicable State corporation law;

5 ‘‘(ii) any entity in which a person de6 scribed in clause (i)—

7 ‘‘(I) is an officer or director;

8 ‘‘(II) is a partner (if such entity

9 is organized as a partnership);

10 ‘‘(III) has directly or indirectly a

11 beneficial interest of more than 5 per12 cent of the equity; or

13 ‘‘(IV) has a mortgage, deed of

14 trust, note, or other interest valuing

15 more than 5 percent of the assets of

16 such entity;

17 ‘‘(iii) any person directly or indirectly

18 controlling, controlled by, or under com19 mon control with an organization; and

20 ‘‘(iv) any spouse, child, or parent of

21 an individual described in clause (i).

22 ‘‘(C) ACCESS TO INFORMATION.—Each

23 Medicare Choice organization shall make the in24 formation reported pursuant to subparagraph
346

Title VIII, Subtitle A

•HR 2530 IH

1 (A) available to its enrollees upon reasonable

2 request.

3 ‘‘(4) LOAN INFORMATION.—The contract shall

4 require the organization to notify the Secretary of

5 loans and other special financial arrangements which

6 are made between the organization and subcontrac7 tors, affiliates, and related parties.

8 ‘‘(f) ADDITIONAL CONTRACT TERMS.—The contract

9 shall contain such other terms and conditions not incon10 sistent with this part (including requiring the organization

11 to provide the Secretary with such information) as the

12 Secretary may find necessary and appropriate.

13 ‘‘(g) INTERMEDIATE SANCTIONS.—

14 ‘‘(1) IN GENERAL.—If the Secretary determines

15 that a Medicare Choice organization with a contract

16 under this section—

17 ‘‘(A) fails substantially to provide medi18 cally necessary items and services that are re19 quired (under law or under the contract) to be

20 provided to an individual covered under the con21 tract, if the failure has adversely affected (or

22 has substantial likelihood of adversely affecting)

23 the individual;
347

Title VIII, Subtitle A

•HR 2530 IH

1 ‘‘(B) imposes premiums on individuals en2 rolled under this part in excess of the premiums

3 permitted;

4 ‘‘(C) acts to expel or to refuse to re-enroll

5 an individual in violation of the provisions of

6 this part;

7 ‘‘(D) engages in any practice that would

8 reasonably be expected to have the effect of de9 nying or discouraging enrollment (except as

10 permitted by this part) by eligible individuals

11 with the organization whose medical condition

12 or history indicates a need for substantial fu13 ture medical services;

14 ‘‘(E) misrepresents or falsifies information

15 that is furnished—

16 ‘‘(i) to the Secretary under this part,

17 or

18 ‘‘(ii) to an individual or to any other

19 entity under this part;

20 ‘‘(F) fails to comply with the requirements

21 of section 1852(f)(3); or

22 ‘‘(G) employs or contracts with any indi23 vidual or entity that is excluded from participa24 tion under this title under section 1128 or

25 1128A for the provision of health care, utiliza-
348

Title VIII, Subtitle A

•HR 2530 IH

1 tion review, medical social work, or administra2 tive services or employs or contracts with any

3 entity for the provision (directly or indirectly)

4 through such an excluded individual or entity of

5 such services;

6 the Secretary may provide, in addition to any other

7 remedies authorized by law, for any of the remedies

8 described in paragraph (2).

9 ‘‘(2) REMEDIES.—The remedies described in

10 this paragraph are—

11 ‘‘(A) civil money penalties of not more

12 than $25,000 for each determination under

13 paragraph (1) or, with respect to a determina14 tion under subparagraph (D) or (E)(i) of such

15 paragraph, of not more than $100,000 for each

16 such determination, plus, with respect to a de17 termination under paragraph (1)(B), double the

18 excess amount charged in violation of such

19 paragraph (and the excess amount charged

20 shall be deducted from the penalty and returned

21 to the individual concerned), and plus, with re22 spect to a determination under paragraph

23 (1)(D), $15,000 for each individual not enrolled

24 as a result of the practice involved,
349

Title VIII, Subtitle A

•HR 2530 IH

1 ‘‘(B) suspension of enrollment of individ2 uals under this part after the date the Sec3 retary notifies the organization of a determina4 tion under paragraph (1) and until the Sec5 retary is satisfied that the basis for such deter6 mination has been corrected and is not likely to

7 recur, or

8 ‘‘(C) suspension of payment to the organi9 zation under this part for individuals enrolled

10 after the date the Secretary notifies the organi11 zation of a determination under paragraph (1)

12 and until the Secretary is satisfied that the

13 basis for such determination has been corrected

14 and is not likely to recur.

15 ‘‘(3) OTHER INTERMEDIATE SANCTIONS.—In

16 the case of a Medicare Choice organization for which

17 the Secretary makes a determination under sub18 section (c)(2) the basis of which is not described in

19 paragraph (1), the Secretary may apply the follow20 ing intermediate sanctions:

21 ‘‘(A) civil money penalties of not more

22 than $25,000 for each determination under

23 subsection (c)(2) if the deficiency that is the

24 basis of the determination has directly adversely

25 affected (or has the substantial likelihood of ad-
350

Title VIII, Subtitle A

•HR 2530 IH

1 versely affecting) an individual covered under

2 the organization’s contract;

3 ‘‘(B) civil money penalties of not more

4 than $10,000 for each week beginning after the

5 initiation of procedures by the Secretary under

6 subsection (h) during which the deficiency that

7 is the basis of a determination under subsection

8 (c)(2) exists; and

9 ‘‘(C) suspension of enrollment of individ10 uals under this part after the date the Sec11 retary notifies the organization of a determina12 tion under subsection (c)(2) and until the Sec13 retary is satisfied that the deficiency that is the

14 basis for the determination has been corrected

15 and is not likely to recur.

16 ‘‘(4) PROCEDURES FOR IMPOSING SANC17 TIONS.—The provisions of section 1128A (other

18 than subsections (a) and (b)) shall apply to a civil

19 money penalty under paragraph (1) or (2) in the

20 same manner as they apply to a civil money penalty

21 or proceeding under section 1128A(a).

22 ‘‘(h) PROCEDURES FOR IMPOSING SANCTIONS.—The

23 Secretary may terminate a contract with a Medicare

24 Choice organization under this section or may impose the

25 intermediate sanctions described in subsection (g) on the
351

Title VIII, Subtitle A

•HR 2530 IH

1 organization in accordance with formal investigation and

2 compliance procedures established by the Secretary under

3 which—

4 ‘‘(1) the Secretary provides the organization

5 with the opportunity to develop and implement a

6 corrective action plan to correct the deficiencies that

7 were the basis of the Secretary’s determination

8 under subsection (c)(2);

9 ‘‘(2) the Secretary shall impose more severe

10 sanctions on organizations that have a history of de11 ficiencies or that have not taken steps to correct de12 ficiencies the Secretary has brought to their atten13 tion;

14 ‘‘(3) there are no unreasonable or unnecessary

15 delays between the finding of a deficiency and the

16 imposition of sanctions; and

17 ‘‘(4) the Secretary provides the organization

18 with reasonable notice and opportunity for hearing

19 (including the right to appeal an initial decision) be20 fore imposing any sanction or terminating the con21 tract.

22 ‘‘DEMONSTRATION PROJECT FOR HIGH DEDUCTIBLE/

23 MEDISAVE PRODUCTS

24 ‘‘SEC. 1859. (a) PERMITTING DEMONSTRATION

25 PROJECTS.—
352

Title VIII, Subtitle A

•HR 2530 IH

1 ‘‘(1) IN GENERAL.—The Secretary shall permit,

2 on a demonstration project basis, the offering of

3 high deductible/medisave products under this part,

4 subject to the special rules provided under this sec5 tion.

6 ‘‘(2) LIMITATION ON NUMBER AND DURATION

7 OF PROJECTS.—The Secretary shall not permit

8 under this section the offering of more than 10 dem9 onstration projects and each such project shall not

10 exceed 7 years in duration.

11 ‘‘(b) HIGH DEDUCTIBLE/MEDISAVE PRODUCT DE12 FINED.—

13 ‘‘(1) IN GENERAL.—In this part, the term ‘high

14 deductible/medisave product’ means a Medicare

15 Choice product that—

16 ‘‘(A) provides reimbursement for at least

17 the items and services described in section

18 1852(a)(1) in a year but only after the enrollee

19 incurs countable expenses (as specified under

20 the product) equal to the amount of a deduct21 ible (described in paragraph (2));

22 ‘‘(B) counts as such expenses (for purposes

23 of such deductible) at least all amounts that

24 would have been payable under parts A and B

25 or by the enrollee if the enrollee had elected to
353

Title VIII, Subtitle A

•HR 2530 IH

1 receive benefits through the provisions of such

2 parts; and

3 ‘‘(C) provides, after such deductible is met

4 for a year and for all subsequent expenses for

5 benefits referred to in subparagraph (A) in the

6 year, for a level of reimbursement that is not

7 less than—

8 ‘‘(i) 100 percent of such expenses, or

9 ‘‘(ii) 100 percent of the amounts that

10 would have been paid (without regard to

11 any deductibles or coinsurance) under

12 parts A and B with respect to such ex13 penses,

14 whichever is less. Such term does not include

15 the Medicare Choice MSA itself or any con16 tribution into such account.

17 ‘‘(2) DEDUCTIBLE.—The amount of deductible

18 under a high deductible/medisave product—

19 ‘‘(A) for contract year 1997 shall be not

20 more than $10,000; and

21 ‘‘(B) for a subsequent contract year shall

22 be not more than the maximum amount of such

23 deductible for the previous contract year under

24 this paragraph increased by the national aver-
354

Title VIII, Subtitle A

•HR 2530 IH

1 age per capita growth rate under section

2 1855(c)(3) for the year.

3 If the amount of the deductible under subparagraph

4 (B) is not a multiple of $50, the amount shall be

5 rounded to the nearest multiple of $50.

6 ‘‘(c) SPECIAL RULES RELATING TO ENROLLMENT.—

7 The rule under section 1805 relating to election of medi8 care choice products shall apply to election of high deduct9 ible/medisave products offered under the demonstration

10 project under this section, except as follows:

11 ‘‘(1) SPECIAL RULE FOR CERTAIN ANNU12 ITANTS.—An individual is not eligible to elect a high

13 deductible/medisave product under section 1805 if

14 the individual is entitled to benefits under chapter

15 89 of title 5, United States Code, as an annuitant

16 or spouse of an annuitant.

17 ‘‘(2) TRANSITION PERIOD RULE.—During the

18 transition period (as defined in section

19 1805(e)(1)(B)), an individual who has elected a high

20 deductible/medisave product may not change such

21 election to a Medicare Choice product that is not a

22 high deductible/medisave product unless the individ23 ual has had such election in effect for 12 months.

24 ‘‘(3) NO 90-DAY DISENROLLMENT OPTION.—

25 Paragraph (4)(A) of section 1805(e) shall not apply
355

Title VIII, Subtitle A

•HR 2530 IH

1 to an individual who elects a high deductible/

2 medisave product.

3 ‘‘(4) TIMING OF ELECTION.—An individual may

4 elect a high deductible/medisave product only during

5 an annual, coordinated election period described in

6 section 1805(e)(3)(B) or during the month of Octo7 ber, 1996.

8 ‘‘(5) EFFECTIVENESS OF ELECTION.—An elec9 tion of coverage for a high deductible/medisave prod10 uct made in a year shall take effect as of the first

11 day of the following year.

12 ‘‘(d) SPECIAL RULES RELATING TO BENEFITS.—

13 ‘‘(1) IN GENERAL.—Paragraphs (1) and (3) of

14 section 1852(a) shall not apply to high deductible/

15 medisave products.

16 ‘‘(2) PREMIUMS.—

17 ‘‘(A) APPLICATION OF ALTERNATIVE PRE18 MIUM.—In applying section 1852(d)(2) in the

19 case of a high deductible/medisave product, in20 stead of the amount specified in subparagraph

21 (B) there shall be substituted the monthly ad22 justed Medicare Choice capitation rate specified

23 in section 1855(b)(1) for the individual and pe24 riod involved.
356

Title VIII, Subtitle A

•HR 2530 IH

1 ‘‘(B) CLASS ADJUSTED PREMIUMS.—Not2 withstanding section 1852(d)(3), a Medicare

3 Choice organization shall establish premiums

4 for any high deductible/medisave product it of5 fers in a payment area based on each of the

6 risk adjustment categories established for pur7 poses of determining the amount of the pay8 ment to Medicare Choice organizations under

9 section 1855(b)(1) and using the identical de10 mographic and other adjustments among such

11 categories as are used for such purposes.

12 ‘‘(C) REQUIREMENT FOR ADDITIONAL

13 BENEFITS NOT APPLICABLE.—Section

14 1852(e)(1)(A) shall not apply to a high deduct15 ible/medisave product.

16 ‘‘(e) ADDITIONAL DISCLOSURE.—In any disclosure

17 made pursuant to section 1853(a)(1) for a high deduct18 ible/medisave product, the disclosure shall include a com19 parison of benefits under such a product with benefits

20 under other Medicare Choice products.

21 ‘‘(f) SPECIAL RULES FOR INDIVIDUALS ELECTING

22 HIGH DEDUCTIBLE/MEDISAVE PRODUCT.—

23 ‘‘(1) IN GENERAL.—In the case of an individual

24 who has elected a high deductible/medisave product,

25 notwithstanding the provisions of section 1855—
357

Title VIII, Subtitle A

•HR 2530 IH

1 ‘‘(A) the amount of the payment to the

2 Medicare Choice organization offering the high

3 deductible/medisave product shall not exceed

4 the premium for the product, and

5 ‘‘(B) subject to paragraph (2), the dif6 ference between the amount of payment that

7 would otherwise be made and the amount of

8 payment to such organization shall be made di9 rectly into a Medicare Choice MSA established

10 (and, if applicable, designated) by the individual

11 under paragraph (2).

12 ‘‘(2) ESTABLISHMENT AND DESIGNATION OF

13 MEDICARE CHOICE MEDICAL SAVINGS ACCOUNT AS

14 REQUIREMENT FOR PAYMENT OF CONTRIBUTION.—

15 In the case of an individual who has elected coverage

16 under a high deductible/medisave product, no pay17 ment shall be made under paragraph (1)(B) on be18 half of an individual for a month unless the individ19 ual—

20 ‘‘(A) has established before the beginning

21 of the month (or by such other deadline as the

22 Secretary may specify) a Medicare Choice MSA

23 (as defined in section 137(b) of the Internal

24 Revenue Code of 1986), and
358

Title VIII, Subtitle A

•HR 2530 IH

1 ‘‘(B) if the individual has established more

2 than one Medicare Choice MSA, has designated

3 one of such accounts as the individual’s Medi4 care Choice MSA for purposes of this part.

5 Under rules under this section, such an individual

6 may change the designation of such account under

7 subparagraph (B) for purposes of this part.

8 ‘‘(3) LUMP SUM DEPOSIT OF MEDICAL SAVINGS

9 ACCOUNT CONTRIBUTION.—In the case of an indi10 vidual electing a high deductible/medisave product

11 effective beginning with a month in a year, the

12 amount of the contribution to the Medicare Choice

13 MSA on behalf of the individual for that month and

14 all successive months in the year shall be deposited

15 during that first month. In the case of a termination

16 of such an election as of a month before the end of

17 a year, the Secretary shall provide for a procedure

18 for the recovery of deposits attributable to the re19 maining months in the year.

20 ‘‘(g) SPECIAL CONTRACT RULES.—

21 ‘‘(1) ENROLLMENT REQUIREMENTS WAIVED.—

22 Subsection (b) of section 1858 shall not apply with

23 respect to a contract that relates only to one or more

24 high deductible/medisave products.
359

Title VIII, Subtitle A

•HR 2530 IH

1 ‘‘(2) EFFECTIVE DATE OF CONTRACTS.—In no

2 case shall a contract under section 1858 which pro3 vides for coverage under a high deductible/medisave

4 account be effective before January 1997 with re5 spect to such coverage.’’.

6 (b) CONFORMING REFERENCES TO PREVIOUS PART

7 C.—Any reference in law (in effect before the date of the

8 enactment of this Act) to part C of title XVIII of the So9 cial Security Act is deemed a reference to part D of such

10 title (as in effect after such date).

11 (c) USE OF INTERIM, FINAL REGULATIONS.—In

12 order to carry out the amendment made by subsection (a)

13 in a timely manner, the Secretary of Health and Human

14 Services may promulgate regulations that take effect on

15 an interim basis, after notice and pending opportunity for

16 public comment.

17 (d) ADVANCE DIRECTIVES.—Section 1866(f)(1) (42

18 U.S.C. 1395cc(f)(1)) is amended—

19 (1) in paragraph (1)—

20 (A) by inserting ‘‘1853(g),’’ after

21 ‘‘1833(s),’’, and

22 (B) by inserting ‘‘, Medicare Choice orga23 nization,’’ after ‘‘provider of services’’, and

24 (2) by adding at the end the following new

25 paragraph:
360

Title VIII, Subtitle A

•HR 2530 IH

1 ‘‘(4) Nothing in this subsection shall be construed to

2 require the provision of information regarding assisted

3 suicide, euthanasia, or mercy killing.’’.

4 (e) CONFORMING AMENDMENT.—Section

5 1866(a)(1)(O) (42 U.S.C. 1395cc(a)(1)(O)) is amended

6 by inserting before the semicolon at the end the following:

7 ‘‘and in the case of hospitals to accept as payment in full

8 for inpatient hospital services that are covered under this

9 title and are furnished to any individual enrolled under

10 part C with a Medicare Choice organization which does

11 not have a contract establishing payment amounts for

12 services furnished to members of the organization the

13 amounts that would be made as a payment in full under

14 this title if the individuals were not so enrolled’’.

15 SEC. 8003. REPORTS.

16 (a) ALTERNATIVE PAYMENT APPROACHES.—By not

17 later than 18 months after the date of the enactment of

18 this Act, the Secretary of Health and Human Services (in

19 this title referred to as the ‘‘Secretary’’) shall submit to

20 Congress a report on alternative provider payment ap21 proaches under the medicare program, including—

22 (1) combined hospital and physician payments

23 per admission,

24 (2) partial capitation models for subsets of

25 medicare benefits, and
361

Title VIII, Subtitle A

•HR 2530 IH

1 (3) risk-sharing arrangements in which the Sec2 retary defines the risk corridor and shares in gains

3 and losses.

4 Such report shall include recommendations for implement5 ing and testing such approaches and legislation that may

6 be required to implement and test such approaches.

7 (b) COVERAGE OF RETIRED WORKERS.—

8 (1) IN GENERAL.—The Secretary shall work

9 with employers and health benefit plans to develop

10 standards and payment methodologies to allow re11 tired workers to continue to participate in employer

12 health plans instead of participating in the medicare

13 program. Such standards shall also cover workers

14 covered under the Federal Employees Health Bene15 fits Program under chapter 89 of title 5, United

16 States Code.

17 (2) REPORT.—Not later than 18 months after

18 the date of the enactment of this Act, the Secretary

19 shall submit to Congress a report on the develop20 ment of such standards and payment methodologies.

21 The report shall include recommendations relating to

22 such legislation as may be necessary.

23 SEC. 8004. TRANSITIONAL RULES FOR CURRENT MEDICARE

24 HMO PROGRAM.

25 (a) TRANSITION FROM CURRENT CONTRACTS.—
362

Title VIII, Subtitle A

•HR 2530 IH

1 (1) LIMITATION ON NEW CONTRACTS.—The

2 Secretary of Health and Human Services (in this

3 section referred to as the ‘‘Secretary’’) shall not

4 enter into any risk-sharing or cost reimbursement

5 contract under section 1876 of the Social Security

6 Act with an eligible organization for any contract

7 year beginning on or after the date standards for

8 Medicare Choice organizations and products are first

9 established under section 1856(a) of such Act with

10 respect to Medicare Choice organizations that are in11 surers or health maintenance organizations unless

12 such a contract had been in effect under section

13 1876 of such Act for the organization for the pre14 vious contract year.

15 (2) TERMINATION OF CURRENT CONTRACTS.—

16 (A) RISK-SHARING CONTRACTS.—Notwith17 standing any other provision of law, the Sec18 retary shall not extend or continue any risk19 sharing contract with an eligible organization

20 under section 1876 of the Social Security Act

21 (for which a contract was entered into consist22 ent with paragraph (1)(A)) for any contract

23 year beginning on or after 1 year after the date

24 standards described in paragraph (1)(A) are es25 tablished.
363

Title VIII, Subtitle A

•HR 2530 IH

1 (B) COST REIMBURSEMENT CONTRACTS.—

2 The Secretary shall not extend or continue any

3 reasonable cost reimbursement contract with an

4 eligible organization under section 1876 of the

5 Social Security Act for any contract year begin6 ning on or after January 1, 1998.

7 (b) CONFORMING PAYMENT RATES UNDER RISK8 SHARING CONTRACTS.—Notwithstanding any other provi9 sion of law, the Secretary shall provide that payment

10 amounts under risk-sharing contracts under section

11 1876(a) of the Social Security Act for months in a year

12 (beginning with January 1996) shall be computed—

13 (1) with respect to individuals entitled to bene14 fits under both parts A and B of title XVIII of such

15 Act, by substituting payment rates under section

16 1855(a) of such Act for the payment rates otherwise

17 established under section 1876(a) of such Act, and

18 (2) with respect to individuals only entitled to

19 benefits under part B of such title, by substituting

20 an appropriate proportion of such rates (reflecting

21 the relative proportion of payments under such title

22 attributable to such part) for the payment rates oth23 erwise established under section 1876(a) of such

24 Act.
364

Title VIII, Subtitle A

•HR 2530 IH

1 For purposes of carrying out this paragraph for payment

2 for months in 1996, the Secretary shall compute, an3 nounce, and apply the payment rates under section

4 1855(a) of such Act (notwithstanding any deadlines speci5 fied in such section) in as timely a manner as possible

6 and may (to the extent necessary) provide for retroactive

7 adjustment in payments made not in accordance with such

8 rates.

9 PART 2—SPECIAL RULES FOR MEDICARE CHOICE

10 MEDICAL SAVINGS ACCOUNTS

11 SEC. 8011. MEDICARE CHOICE MSA’S.

12 (a) IN GENERAL.—Part III of subchapter B of chap13 ter 1 of the Internal Revenue Code of 1986 (relating to

14 amounts specifically excluded from gross income) is

15 amended by redesignating section 137 as section 138 and

16 by inserting after section 136 the following new section:

17 ‘‘SEC. 137. MEDICARE CHOICE MSA’S.

18 ‘‘(a) EXCLUSION.—Gross income shall not include

19 any payment to the Medicare Choice MSA of an individual

20 by the Secretary of Health and Human Services under

21 section 1859(f)(1)(B) of the Social Security Act.

22 ‘‘(b) MEDICARE CHOICE MSA.—For purposes of this

23 section—

24 ‘‘(1) MEDICARE CHOICE MSA.—The term ‘Medi25 care Choice MSA’ means a trust created or orga-
365

Title VIII, Subtitle A

•HR 2530 IH

1 nized in the United States exclusively for the pur2 pose of paying the qualified medical expenses of the

3 account holder, but only if the written governing in4 strument creating the trust meets the following re5 quirements:

6 ‘‘(A) Except in the case of a trustee-to7 trustee transfer described in subsection (d)(4),

8 no contribution will be accepted unless it is

9 made by the Secretary of Health and Human

10 Services under section 1859(f)(1)(B) of the So11 cial Security Act.

12 ‘‘(B) The trustee is a bank (as defined in

13 section 408(n)), an insurance company (as de14 fined in section 816), or another person who

15 demonstrates to the satisfaction of the Sec16 retary that the manner in which such person

17 will administer the trust will be consistent with

18 the requirements of this section.

19 ‘‘(C) No part of the trust assets will be in20 vested in life insurance contracts.

21 ‘‘(D) The assets of the trust will not be

22 commingled with other property except in a

23 common trust fund or common investment

24 fund.
366

Title VIII, Subtitle A

•HR 2530 IH

1 ‘‘(E) The interest of an individual in the

2 balance in his account is nonforfeitable.

3 ‘‘(F) Trustee-to-trustee transfers described

4 in subsection (d)(4) may be made to and from

5 the trust.

6 ‘‘(2) QUALIFIED MEDICAL EXPENSES.—

7 ‘‘(A) IN GENERAL.—The term ‘qualified

8 medical expenses’ means, with respect to an ac9 count holder, amounts paid by such holder—

10 ‘‘(i) for medical care (as defined in

11 section 213(d)) for the account holder, but

12 only to the extent such amounts are not

13 compensated for by insurance or otherwise,

14 or

15 ‘‘(ii) for long-term care insurance for

16 the account holder.

17 ‘‘(B) HEALTH INSURANCE MAY NOT BE

18 PURCHASED FROM ACCOUNT.—Subparagraph

19 (A)(i) shall not apply to any payment for insur20 ance.

21 ‘‘(3) ACCOUNT HOLDER.—The term ‘account

22 holder’ means the individual on whose behalf the

23 Medicare Choice MSA is maintained.
367

Title VIII, Subtitle A

•HR 2530 IH

1 ‘‘(4) CERTAIN RULES TO APPLY.—Rules similar

2 to the rules of subsections (g) and (h) of section 408

3 shall apply for purposes of this section.

4 ‘‘(c) TAX TREATMENT OF ACCOUNTS.—

5 ‘‘(1) IN GENERAL.—A Medicare Choice MSA is

6 exempt from taxation under this subtitle unless such

7 MSA has ceased to be a Medicare Choice MSA by

8 reason of paragraph (2). Notwithstanding the pre9 ceding sentence, any such MSA is subject to the

10 taxes imposed by section 511 (relating to imposition

11 of tax on unrelated business income of charitable,

12 etc. organizations).

13 ‘‘(2) ACCOUNT ASSETS TREATED AS DISTRIB14 UTED IN THE CASE OF PROHIBITED TRANSACTIONS

15 OR ACCOUNT PLEDGED AS SECURITY FOR LOAN.—

16 Rules similar to the rules of paragraphs (2) and (4)

17 of section 408(e) shall apply to Medicare Choice

18 MSA’s, and any amount treated as distributed under

19 such rules shall be treated as not used to pay quali20 fied medical expenses.

21 ‘‘(d) TAX TREATMENT OF DISTRIBUTIONS.—

22 ‘‘(1) INCLUSION OF AMOUNTS NOT USED FOR

23 QUALIFIED MEDICAL EXPENSES.—No amount shall

24 be included in the gross income of the account hold25 er by reason of a payment or distribution from a
368

Title VIII, Subtitle A

•HR 2530 IH

1 Medicare Choice MSA which is used exclusively to

2 pay the qualified medical expenses of the account

3 holder. Any amount paid or distributed from a Medi4 care Choice MSA which is not so used shall be in5 cluded in the gross income of such holder.

6 ‘‘(2) PENALTY FOR DISTRIBUTIONS NOT USED

7 FOR QUALIFIED MEDICAL EXPENSES IF MINIMUM

8 BALANCE NOT MAINTAINED.—

9 ‘‘(A) IN GENERAL.—The tax imposed by

10 this chapter for any taxable year in which there

11 is a payment or distribution from a Medicare

12 Choice MSA which is not used exclusively to

13 pay the qualified medical expenses of the ac14 count holder shall be increased by 50 percent of

15 the excess (if any) of—

16 ‘‘(i) the amount of such payment or

17 distribution, over

18 ‘‘(ii) the excess (if any) of—

19 ‘‘(I) the fair market value of the

20 assets in the Medicare Choice MSA as

21 of the close of the calendar year pre22 ceding the calendar year in which the

23 taxable year begins, over

24 ‘‘(II) an amount equal to 60 per25 cent of the deductible under the cata-
369

Title VIII, Subtitle A

•HR 2530 IH

1 strophic health plan covering the ac2 count holder as of January 1 of the

3 calendar year in which the taxable

4 year begins.

5 ‘‘(B) EXCEPTIONS.—Subparagraph (A)

6 shall not apply if the payment or distribution is

7 made on or after the date the account holder—

8 ‘‘(i) becomes disabled within the

9 meaning of section 72(m)(7), or

10 ‘‘(ii) dies.

11 ‘‘(C) SPECIAL RULES.—For purposes of

12 subparagraph (A)—

13 ‘‘(i) all Medicare Choice MSA’s of the

14 account holder shall be treated as 1 ac15 count,

16 ‘‘(ii) all payments and distributions

17 not used exclusively to pay the qualified

18 medical expenses of the account holder

19 during any taxable year shall be treated as

20 1 distribution, and

21 ‘‘(iii) any distribution of property

22 shall be taken into account at its fair mar23 ket value on the date of the distribution.

24 ‘‘(3) WITHDRAWAL OF ERRONEOUS CONTRIBU25 TIONS.—Paragraphs (1) and (2) shall not apply to
370

Title VIII, Subtitle A

•HR 2530 IH

1 any payment or distribution from a Medicare Choice

2 MSA to the Secretary of Health and Human Serv3 ices of an erroneous contribution to such MSA and

4 of the net income attributable to such contribution.

5 ‘‘(4) TRUSTEE-TO-TRUSTEE TRANSFERS.—

6 Paragraphs (1) and (2) shall not apply to any trust7 ee-to-trustee transfer from a Medicare Choice MSA

8 of an account holder to another Medicare Choice

9 MSA of such account holder.

10 ‘‘(5) COORDINATION WITH MEDICAL EXPENSE

11 DEDUCTION.—For purposes of section 213, any pay12 ment or distribution out of a Medicare Choice MSA

13 for qualified medical expenses shall not be treated as

14 an expense paid for medical care.

15 ‘‘(e) TREATMENT OF ACCOUNT AFTER DEATH OF

16 ACCOUNT HOLDER.—

17 ‘‘(1) TREATMENT IF DESIGNATED BENEFICIARY

18 IS SPOUSE.—

19 ‘‘(A) IN GENERAL.—In the case of an ac20 count holder’s interest in a Medicare Choice

21 MSA which is payable to (or for the benefit of)

22 such holder’s spouse upon the death of such

23 holder, such Medicare Choice MSA shall be

24 treated as a Medicare Choice MSA of such

25 spouse as of the date of such death.
371

Title VIII, Subtitle A

•HR 2530 IH

1 ‘‘(B) SPECIAL RULES IF SPOUSE NOT MED2 ICARE ELIGIBLE.—If, as of the date of such

3 death, such spouse is not entitled to benefits

4 under title XVIII of the Social Security Act,

5 then after the date of such death—

6 ‘‘(i) the Secretary of Health and

7 Human Services may not make any pay8 ments to such Medicare Choice MSA, other

9 than payments attributable to periods be10 fore such date,

11 ‘‘(ii) in applying subsection (b)(2)

12 with respect to such Medicare Choice

13 MSA, references to the account holder

14 shall be treated as including references to

15 any dependent (as defined in section 152)

16 of such spouse and any subsequent spouse

17 of such spouse, and

18 ‘‘(iii) in lieu of applying subsection

19 (d)(2), the rules of section 220(f)(2) shall

20 apply.

21 ‘‘(2) TREATMENT IF DESIGNATED BENEFICIARY

22 IS NOT SPOUSE.—In the case of an account holder’s

23 interest in a Medicare Choice MSA which is payable

24 to (or for the benefit of) any person other than such

25 holder’s spouse upon the death of such holder—
372

Title VIII, Subtitle A

•HR 2530 IH

1 ‘‘(A) such account shall cease to be a Med2 icare Choice MSA as of the date of death, and

3 ‘‘(B) an amount equal to the fair market

4 value of the assets in such account on such date

5 shall be includible—

6 ‘‘(i) if such person is not the estate of

7 such holder, in such person’s gross income

8 for the taxable year which includes such

9 date, or

10 ‘‘(ii) if such person is the estate of

11 such holder, in such holder’s gross income

12 for last taxable year of such holder.

13 ‘‘(f) REPORTS.—

14 ‘‘(1) IN GENERAL.—The trustee of a Medicare

15 Choice MSA shall make such reports regarding such

16 account to the Secretary and to the account holder

17 with respect to—

18 ‘‘(A) the fair market value of the assets in

19 such Medicare Choice MSA as of the close of

20 each calendar year, and

21 ‘‘(B) contributions, distributions, and other

22 matters,

23 as the Secretary may require by regulations.

24 ‘‘(2) TIME AND MANNER OF REPORTS.—The re25 ports required by this subsection—
373

Title VIII, Subtitle A

•HR 2530 IH

1 ‘‘(A) shall be filed at such time and in

2 such manner as the Secretary prescribes in

3 such regulations, and

4 ‘‘(B) shall be furnished to the account

5 holder—

6 ‘‘(i) not later than January 31 of the

7 calendar year following the calendar year

8 to which such reports relate, and

9 ‘‘(ii) in such manner as the Secretary

10 prescribes in such regulations.’’

11 (b) EXCLUSION OF MEDICARE CHOICE MSA’S FROM

12 ESTATE TAX.—Part IV of subchapter A of chapter 11 of

13 such Code is amended by adding at the end the following

14 new section:

15 ‘‘SEC. 2057. MEDICARE CHOICE MSA’S.

16 ‘‘For purposes of the tax imposed by section 2001,

17 the value of the taxable estate shall be determined by de18 ducting from the value of the gross estate an amount

19 equal to the value of any Medicare Choice MSA (as de20 fined in section 137(b)) included in the gross estate.’’

21 (c) TAX ON PROHIBITED TRANSACTIONS.—

22 (1) Section 4975 of such Code (relating to tax

23 on prohibited transactions) is amended by adding at

24 the end of subsection (c) the following new para25 graph:
374

Title VIII, Subtitle A

•HR 2530 IH

1 ‘‘(5) SPECIAL RULE FOR MEDICARE CHOICE

2 MSA’S.—An individual for whose benefit a Medicare

3 Choice MSA (within the meaning of section 137(b))

4 is established shall be exempt from the tax imposed

5 by this section with respect to any transaction con6 cerning such account (which would otherwise be tax7 able under this section) if, with respect to such

8 transaction, the account ceases to be a Medicare

9 Choice MSA by reason of the application of section

10 137(c)(2) to such account.’’

11 (2) Paragraph (1) of section 4975(e) of such

12 Code is amended to read as follows:

13 ‘‘(1) PLAN.—For purposes of this section, the

14 term ‘plan’ means—

15 ‘‘(A) a trust described in section 401(a)

16 which forms a part of a plan, or a plan de17 scribed in section 403(a), which trust or plan is

18 exempt from tax under section 501(a),

19 ‘‘(B) an individual retirement account de20 scribed in section 408(a),

21 ‘‘(C) an individual retirement annuity de22 scribed in section 408(b),

23 ‘‘(D) a medical savings account described

24 in section 220(d),
375

Title VIII, Subtitle A

•HR 2530 IH

1 ‘‘(E) a Medicare Choice MSA described in

2 section 137(b), or

3 ‘‘(F) a trust, plan, account, or annuity

4 which, at any time, has been determined by the

5 Secretary to be described in any preceding sub6 paragraph of this paragraph.’’

7 (d) FAILURE TO PROVIDE REPORTS ON MEDICARE

8 CHOICE MSA’S.—

9 (1) Subsection (a) of section 6693 of such Code

10 (relating to failure to provide reports on individual

11 retirement accounts or annuities) is amended to read

12 as follows:

13 ‘‘(a) REPORTS.—

14 ‘‘(1) IN GENERAL.—If a person required to file

15 a report under a provision referred to in paragraph

16 (2) fails to file such report at the time and in the

17 manner required by such provision, such person

18 shall pay a penalty of $50 for each failure unless it

19 is shown that such failure is due to reasonable

20 cause.

21 ‘‘(2) PROVISIONS.—The provisions referred to

22 in this paragraph are—

23 ‘‘(A) subsections (i) and (l) of section 408

24 (relating to individual retirement plans),
376

Title VIII, Subtitle A

•HR 2530 IH

1 ‘‘(B) section 220(h) (relating to medical

2 savings accounts), and

3 ‘‘(C) section 137(f) (relating to Medicare

4 Choice MSA’s).’’

5 (2) The section heading for section 6693 of

6 such Code is amended to read as follows:

7 ‘‘SEC. 6693. FAILURE TO FILE REPORTS ON INDIVIDUAL RE8 TIREMENT PLANS AND CERTAIN OTHER TAX9 FAVORED ACCOUNTS; PENALTIES RELATING

10 TO DESIGNATED NONDEDUCTIBLE CON11 TRIBUTIONS.’’

12 (e) CLERICAL AMENDMENTS.—

13 (1) The table of sections for part III of sub14 chapter B of chapter 1 of such Code is amended by

15 striking the last item and inserting the following:

‘‘Sec. 137. Medicare Choice MSA’s.

‘‘Sec. 138. Cross references to other Acts.’’

16 (2) The table of sections for subchapter B of

17 chapter 68 of such Code is amended by striking the

18 item relating to section 6693 and inserting the fol19 lowing new item:

‘‘Sec. 6693. Failure to file reports on individual retirement plans

and certain other tax-favored accounts; penalties relating to designated nondeductible contributions.’’

20 (3) The table of sections for part IV of sub21 chapter A of chapter 11 of such Code is amended by

22 adding at the end the following new item:

‘‘Sec. 2057. Medicare Choice MSA’s.’’
377

Title VIII, Subtitle A

•HR 2530 IH

1 (f) EFFECTIVE DATE.—The amendments made by

2 this section shall apply to taxable years beginning after

3 December 31, 1996.

4 SEC. 8012. CERTAIN REBATES EXCLUDED FROM GROSS IN5 COME.

6 (a) IN GENERAL.—Section 105 of the Internal Reve7 nue Code of 1986 (relating to amounts received under ac8 cident and health plans) is amended by adding at the end

9 the following new subsection:

10 ‘‘(j) CERTAIN REBATES UNDER SOCIAL SECURITY

11 ACT.—Gross income does not include any rebate received

12 under section 1852(e)(1)(A) of the Social Security Act

13 during the taxable year.’’

14 (b) EFFECTIVE DATE.—The amendment made by

15 subsection (a) shall apply to amounts received after the

16 date of the enactment of this Act.

17 PART 3—SPECIAL ANTITRUST RULE FOR

18 PROVIDER SERVICE NETWORKS

19 SEC. 8021. APPLICATION OF ANTITRUST RULE OF REASON

20 TO PROVIDER SERVICE NETWORKS.

21 (a) RULE OF REASON STANDARD.—In any action

22 under the antitrust laws, or under any State law similar

23 to the antitrust laws—

24 (1) the conduct of a provider service network in

25 negotiating, making, or performing a contract (in-
378

Title VIII, Subtitle A

•HR 2530 IH

1 cluding the establishment and modification of a fee

2 schedule and the development of a panel of physi3 cians), to the extent such contract is for the purpose

4 of providing health care services to individuals under

5 the terms of a Medicare Choice PSO product, and

6 (2) the conduct of any member of such network

7 for the purpose of providing such health care serv8 ices under such contract to such extent,

9 shall not be deemed illegal per se. Such conduct shall be

10 judged on the basis of its reasonableness, taking into ac11 count all relevant factors affecting competition, including

12 the effects on competition in properly defined markets.

13 (b) DEFINITIONS.—For purposes of subsection (a):

14 (1) ANTITRUST LAWS.—The term ‘‘antitrust

15 laws’’ has the meaning given it in subsection (a) of

16 the first section of the Clayton Act (15 U.S.C. 12),

17 except that such term includes section 5 of the Fed18 eral Trade Commission Act (15 U.S.C. 45) to the

19 extent that such section 5 applies to unfair methods

20 of competition.

21 (2) HEALTH CARE PROVIDER.—The term

22 ‘‘health care provider’’ means any individual or en23 tity that is engaged in the delivery of health care

24 services in a State and that is required by State law

25 or regulation to be licensed or certified by the State
379

Title VIII, Subtitle A

•HR 2530 IH

1 to engage in the delivery of such services in the

2 State.

3 (3) HEALTH CARE SERVICE.—The term ‘‘health

4 care service’’ means any service for which payment

5 may be made under a Medicare Choice PSO product

6 including services related to the delivery or adminis7 tration of such service.

8 (4) MEDICARE CHOICE PROGRAM.—The term

9 ‘‘Medicare Choice program’’ means the program

10 under part C of title XVIII of the Social Security

11 Act.

12 (5) MEDICARE CHOICE PSO PRODUCT.—The

13 term ‘‘Medicare Choice PSO product’’ means a Med14 icare Choice product offered by a provider-sponsored

15 organization under part C of title XVIII of the So16 cial Security Act.

17 (6) PROVIDER SERVICE NETWORK.—The term

18 ‘‘provider service network’’ means an organization

19 that—

20 (A) is organized by, operated by, and com21 posed of members who are health care providers

22 and for purposes that include providing health

23 care services,
380

Title VIII, Subtitle A

•HR 2530 IH

1 (B) is funded in part by capital contribu2 tions made by the members of such organiza3 tion,

4 (C) with respect to each contract made by

5 such organization for the purpose of providing

6 a type of health care service to individuals

7 under the terms of a Medicare Choice PSO

8 product—

9 (i) requires all members of such orga10 nization who engage in providing such type

11 of health care service to agree to provide

12 health care services of such type under

13 such contract,

14 (ii) receives the compensation paid for

15 the health care services of such type pro16 vided under such contract by such mem17 bers, and

18 (iii) provides for the distribution of

19 such compensation,

20 (D) has established, consistent with the re21 quirements of the Medicare Choice program for

22 provider-sponsored organizations, a program to

23 review, pursuant to written guidelines, the qual24 ity, efficiency, and appropriateness of treatment

25 methods and setting of services for all health
381

Title VIII, Subtitle A

•HR 2530 IH

1 care providers and all patients participating in

2 such product, along with internal procedures to

3 correct identified deficiencies relating to such

4 methods and such services,

5 (E) has established, consistent with the re6 quirements of the Medicare Choice program for

7 provider-sponsored organizations, a program to

8 monitor and control utilization of health care

9 services provided under such product, for the

10 purpose of improving efficient, appropriate care

11 and eliminating the provision of unnecessary

12 health care services,

13 (F) has established a management pro14 gram to coordinate the delivery of health care

15 services for all health care providers and all pa16 tients participating in such product, for the

17 purpose of achieving efficiencies and enhancing

18 the quality of health care services provided, and

19 (G) has established, consistent with the re20 quirements of the Medicare Choice program for

21 provider-sponsored organizations, a grievance

22 and appeal process for such organization de23 signed to review and promptly resolve bene24 ficiary or patient grievances and complaints.
382

Title VIII, Subtitle A

•HR 2530 IH

1 Such term may include a provider-sponsored organi2 zation.

3 (7) PROVIDER-SPONSORED ORGANIZATION.—

4 The term ‘‘provider-sponsored organization’’ means

5 a Medicare Choice organization under the Medicare

6 Choice program that is a provider-sponsored organi7 zation (as defined in section 1854(a)(1) of the Social

8 Security Act).

9 (8) STATE.—The term ‘‘State’’ has the mean10 ing given it in section 4G(2) of the Clayton Act (15

11 U.S.C. 15g(2)).

12 (c) ISSUANCE OF GUIDELINES.—Not later than 120

13 days after the date of the enactment of this Act, the Attor14 ney General and the Federal Trade Commission shall

15 issue jointly guidelines specifying the enforcement policies

16 and analytical principles that will be applied by the De17 partment of Justice and the Commission with respect to

18 the operation of subsection (a).

19 PART 4—COMMISSIONS

20 SEC. 8031. MEDICARE PAYMENT REVIEW COMMISSION.

21 (a) IN GENERAL.—Title XVIII, as amended by sec22 tion 8001(a), is amended by inserting after section 1805

23 the following new section:
383

Title VIII, Subtitle A

•HR 2530 IH

1 ‘‘MEDICARE PAYMENT REVIEW COMMISSION

2 ‘‘SEC. 1806. (a) ESTABLISHMENT.—There is hereby

3 established the Medicare Payment Review Commission (in

4 this section referred to as the ‘Commission’).

5 ‘‘(b) DUTIES.—

6 ‘‘(1) GENERAL DUTIES AND REPORTS.—The

7 Commission shall review, and make recommenda8 tions to Congress concerning, payment policies under

9 this title. By not later than June 1 of each year, the

10 Commission shall submit a report to Congress con11 taining an examination of issues affecting the medi12 care program, including the implications of changes

13 in health care delivery in the United States and in

14 the market for health care services on the medicare

15 program. The Commission may submit to Congress

16 from time to time such other reports as the Commis17 sion deems appropriate. The Secretary shall respond

18 to recommendations of the Commission in notices of

19 rulemaking proceedings under this title.

20 ‘‘(2) SPECIFIC DUTIES RELATING TO MEDICARE

21 CHOICE PROGRAM.—Specifically, the Commission

22 shall review, with respect to the Medicare Choice

23 program under part C—

24 ‘‘(A) the appropriateness of the methodol25 ogy for making payment to plans under such
384

Title VIII, Subtitle A

•HR 2530 IH

1 program, including the making of differential

2 payments and the distribution of differential

3 updates among different payment areas,

4 ‘‘(B) the appropriateness of the mecha5 nisms used to adjust payments for risk and the

6 need to adjust such mechanisms to take into ac7 count health status of beneficiaries,

8 ‘‘(C) the implications of risk selection both

9 among Medicare Choice organizations and be10 tween the Medicare Choice option and the non11 Medicare Choice option,

12 ‘‘(D) in relation to payment under part C,

13 the development and implementation of mecha14 nisms to assure the quality of care for those en15 rolled with Medicare Choice organizations,

16 ‘‘(E) the impact of the Medicare Choice

17 program on access to care for medicare bene18 ficiaries, and

19 ‘‘(F) other major issues in implementation

20 and further development of the Medicare Choice

21 program.

22 ‘‘(3) SPECIFIC DUTIES RELATING TO THE FEE23 FOR-SERVICE SYSTEM.—Specifically, the Commission

24 shall review payment policies under parts A and B,

25 including—
385

Title VIII, Subtitle A

•HR 2530 IH

1 ‘‘(A) the factors affecting expenditures for

2 services in different sectors, including the proc3 ess for updating hospital, physician, and other

4 fees,

5 ‘‘(B) payment methodologies; and

6 ‘‘(C) the impact of payment policies on ac7 cess and quality of care for medicare bene8 ficiaries.

9 ‘‘(4) SPECIFIC DUTIES RELATING TO INTER10 ACTION OF PAYMENT POLICIES WITH HEALTH CARE

11 DELIVERY GENERALLY.—Specifically the Commis12 sion shall review the effect of payment policies under

13 this title on the delivery of health care services

14 under this title and assess the implications of

15 changes in the health services market on the medi16 care program.

17 ‘‘(c) MEMBERSHIP.—

18 ‘‘(1) NUMBER AND APPOINTMENT.—The Com19 mission shall be composed of 15 members appointed

20 by the Comptroller General.

21 ‘‘(2) QUALIFICATIONS.—The membership of the

22 Commission shall include individuals with national

23 recognition for their expertise in health finance and

24 economics, actuarial science, health facility manage25 ment, health plans and integrated delivery systems,
386

Title VIII, Subtitle A

•HR 2530 IH

1 reimbursement of health facilities, physicians, and

2 other providers of services, and other related fields,

3 who provide a mix of different professionals, broad

4 geographic representation, and a balance between

5 urban and rural representatives, including physicians

6 and other health professionals, employers, third

7 party payors, individuals skilled in the conduct and

8 interpretation of biomedical, health services, and

9 health economics research and expertise in outcomes

10 and effectiveness research and technology assess11 ment. Such membership shall also include represent12 atives of consumers and the elderly.

13 ‘‘(3) CONSIDERATIONS IN INITIAL APPOINT14 MENT.—To the extent possible, in first appointing

15 members to the Commission the Comptroller Gen16 eral shall consider appointing individuals who (as of

17 the date of the enactment of this section) were serv18 ing on the Prospective Payment Assessment Com19 mission or the Physician Payment Review Commis20 sion.

21 ‘‘(4) TERMS.—

22 ‘‘(A) IN GENERAL.—The terms of mem23 bers of the Commission shall be for 3 years ex24 cept that the Comptroller General shall des-
387

Title VIII, Subtitle A

•HR 2530 IH

1 ignate staggered terms for the members first

2 appointed.

3 ‘‘(B) VACANCIES.—Any member appointed

4 to fill a vacancy occurring before the expiration

5 of the term for which the member’s predecessor

6 was appointed shall be appointed only for the

7 remainder of that term. A member may serve

8 after the expiration of that member’s term until

9 a successor has taken office. A vacancy in the

10 Commission shall be filled in the manner in

11 which the original appointment was made.

12 ‘‘(5) COMPENSATION.—While serving on the

13 business of the Commission (including traveltime), a

14 member of the Commission shall be entitled to com15 pensation at the per diem equivalent of the rate pro16 vided for level IV of the Executive Schedule under

17 section 5315 of title 5, United States Code; and

18 while so serving away from home and member’s reg19 ular place of business, a member may be allowed

20 travel expenses, as authorized by the Chairman of

21 the Commission. Physicians serving as personnel of

22 the Commission may be provided a physician com23 parability allowance by the Commission in the same

24 manner as Government physicians may be provided

25 such an allowance by an agency under section 5948
388

Title VIII, Subtitle A

•HR 2530 IH

1 of title 5, United States Code, and for such purpose

2 subsection (i) of such section shall apply to the Com3 mission in the same manner as it applies to the Ten4 nessee Valley Authority. For purposes of pay (other

5 than pay of members of the Commission) and em6 ployment benefits, rights, and privileges, all person7 nel of the Commission shall be treated as if they

8 were employees of the United States Senate.

9 ‘‘(6) CHAIRMAN; VICE CHAIRMAN.—The Comp10 troller General shall designate a member of the

11 Commission, at the time of appointment of the mem12 ber, as Chairman and a member as Vice Chairman

13 for that term of appointment.

14 ‘‘(7) MEETINGS.—The Commission shall meet

15 at the call of the Chairman.

16 ‘‘(d) DIRECTOR AND STAFF; EXPERTS AND CON17 SULTANTS.—Subject to such review as the Comptroller

18 General deems necessary to assure the efficient adminis19 tration of the Commission, the Commission may—

20 ‘‘(1) employ and fix the compensation of an Ex21 ecutive Director (subject to the approval of the

22 Comptroller General) and such other personnel as

23 may be necessary to carry out its duties (without re24 gard to the provisions of title 5, United States Code,

25 governing appointments in the competitive service);
389

Title VIII, Subtitle A

•HR 2530 IH

1 ‘‘(2) seek such assistance and support as may

2 be required in the performance of its duties from ap3 propriate Federal departments and agencies;

4 ‘‘(3) enter into contracts or make other ar5 rangements, as may be necessary for the conduct of

6 the work of the Commission (without regard to sec7 tion 3709 of the Revised Statutes (41 U.S.C. 5));

8 ‘‘(4) make advance, progress, and other pay9 ments which relate to the work of the Commission;

10 ‘‘(5) provide transportation and subsistence for

11 persons serving without compensation; and

12 ‘‘(6) prescribe such rules and regulations as it

13 deems necessary with respect to the internal organi14 zation and operation of the Commission.

15 ‘‘(e) POWERS.—

16 ‘‘(1) OBTAINING OFFICIAL DATA.—The Com17 mission may secure directly from any department or

18 agency of the United States information necessary

19 to enable it to carry out this section. Upon request

20 of the Chairman, the head of that department or

21 agency shall furnish that information to the Com22 mission on an agreed upon schedule.

23 ‘‘(2) DATA COLLECTION.—In order to carry out

24 its functions, the Commission shall collect and as25 sess information.
390

Title VIII, Subtitle A

•HR 2530 IH

1 ‘‘(A) utilize existing information, both pub2 lished and unpublished, where possible, collected

3 and assessed either by its own staff or under

4 other arrangements made in accordance with

5 this section,

6 ‘‘(B) carry out, or award grants or con7 tracts for, original research and experimen8 tation, where existing information is inad9 equate, and

10 ‘‘(C) adopt procedures allowing any inter11 ested party to submit information for the Com12 mission’s use in making reports and rec13 ommendations.

14 ‘‘(3) ACCESS OF GAO TO INFORMATION.—The

15 Comptroller General shall have unrestricted access

16 to all deliberations, records, and data of the Com17 mission, immediately upon request.

18 ‘‘(4) PERIODIC AUDIT.—The Commission shall

19 be subject to periodic audit by the General Account20 ing Office.

21 ‘‘(f) AUTHORIZATION OF APPROPRIATIONS.—

22 ‘‘(1) REQUEST FOR APPROPRIATIONS.—The

23 Commission shall submit requests for appropriations

24 in the same manner as the Comptroller General sub25 mits requests for appropriations, but amounts ap-
391

Title VIII, Subtitle A

•HR 2530 IH

1 propriated for the Commission shall be separate

2 from amounts appropriated for the Comptroller Gen3 eral.

4 ‘‘(2) AUTHORIZATION.—There are authorized to

5 be appropriated such sums as may be necessary to

6 carry out the provisions of this section. 60 percent

7 of such appropriation shall be payable from the Fed8 eral Hospital Insurance Trust Fund, and 40 percent

9 of such appropriation shall be payable from the Fed10 eral Supplementary Medical Insurance Trust

11 Fund.’’.

12 (b) ABOLITION OF PROPAC AND PPRC.—

13 (1) PROPAC.—

14 (A) IN GENERAL.—Section 1886(e) (42

15 U.S.C. 1395ww(e)) is amended—

16 (i) by striking paragraphs (2) and (6);

17 and

18 (ii) in paragraph (3), by striking ‘‘(A)

19 The Commission’’ and all that follows

20 through ‘‘(B)’’.

21 (B) CONFORMING AMENDMENT.—Section

22 1862 (42 U.S.C. 1395y) is amended by striking

23 ‘‘Prospective Payment Assessment Commis24 sion’’ each place it appears in subsection
392

Title VIII, Subtitle A

•HR 2530 IH

1 (a)(1)(D) and subsection (i) and inserting

2 ‘‘Medicare Payment Review Commission’’.

3 (2) PPRC.—

4 (A) IN GENERAL.—Title XVIII is amended

5 by striking section 1845 (42 U.S.C. 1395w–1).

6 (B) CONFORMING AMENDMENTS.—

7 (i) Section 1834(b)(2) (42 U.S.C.

8 1395m(b)(2)) is amended by striking

9 ‘‘Physician Payment Review Commission’’

10 and inserting ‘‘Medicare Payment Review

11 Commission’’.

12 (ii) Section 1842(b) (42 U.S.C.

13 1395u(b)) is amended by striking ‘‘Physi14 cian Payment Review Commission’’ each

15 place it appears in paragraphs (2)(C),

16 (9)(D), and (14)(C)(i) and inserting ‘‘Med17 icare Payment Review Commission’’.

18 (iii) Section 1848 (42 U.S.C.

19 1395w@4) is amended by striking ‘‘Physi20 cian Payment Review Commission’’ and in21 serting ‘‘Medicare Payment Review Com22 mission’’ each place it appears in para23 graph (2)(A)(ii), (2)(B)(iii), and (5) of

24 subsection (c), subsection (d)(2)(F), para25 graphs (1)(B), (3), and (4)(A) of sub-
393

Title VIII, Subtitle A

•HR 2530 IH

1 section (f), and paragraphs (6)(C) and

2 (7)(C) of subsection (g).

3 (c) EFFECTIVE DATE; TRANSITION.—

4 (1) IN GENERAL.—The Comptroller General

5 shall first provide for appointment of members to

6 the Medicare Payment Review Commission (in this

7 subsection referred to as ‘‘MPRC’’) by not later

8 than March 31, 1996.

9 (2) TRANSITION.—Effective on a date (not later

10 than 30 days after the date a majority of members

11 of the MPRC have first been appointed, the Pro12 spective Payment Assessment Commission (in this

13 subsection referred to as ‘‘ProPAC’’) and the Physi14 cian Payment Review Commission (in this subsection

15 referred to as ‘‘PPRC’’), and amendments made by

16 subsection (b), are terminated. The Comptroller

17 General, to the maximum extent feasible, shall pro18 vide for the transfer to the MPRC of assets and

19 staff of ProPAC and PPRC, without any loss of

20 benefits or seniority by virtue of such transfers.

21 Fund balances available to the ProPAC or PPRC

22 for any period shall be available to the MPRC for

23 such period for like purposes.

24 (3) CONTINUING RESPONSIBILITY FOR RE25 PORTS.—The MPRC shall be responsible for the
394

Title VIII, Subtitle A

•HR 2530 IH

1 preparation and submission of reports required by

2 law to be submitted (and which have not been sub3 mitted by the date of establishment of the MPRC)

4 by the ProPAC and PPRC, and, for this purpose,

5 any reference in law to either such Commission is

6 deemed, after the appointment of the MPRC, to

7 refer to the MPRC.

8 SEC. 8032. COMMISSION ON THE EFFECT OF THE BABY

9 BOOM GENERATION ON THE MEDICARE PRO10 GRAM.

11 (a) ESTABLISHMENT.—There is established a com12 mission to be known as the Commission on the Effect of

13 the Baby Boom Generation on the Medicare Program (in

14 this section referred to as the ‘‘Commission’’).

15 (b) DUTIES.—

16 (1) IN GENERAL.—The Commission shall—

17 (A) examine the financial impact on the

18 medicare program of the significant increase in

19 the number of medicare eligible individuals

20 which will occur beginning approximately dur21 ing 2010 and lasting for approximately 25

22 years, and

23 (B) make specific recommendations to the

24 Congress respecting a comprehensive approach

25 to preserve the medicare program for the period
395

Title VIII, Subtitle A

•HR 2530 IH

1 during which such individuals are eligible for

2 medicare.

3 (2) CONSIDERATIONS IN MAKING REC4 OMMENDATIONS.—In making its recommendations,

5 the Commission shall consider the following:

6 (A) The amount and sources of Federal

7 funds to finance the medicare program, includ8 ing the potential use of innovative financing

9 methods.

10 (B) The most efficient and effective man11 ner of administering the program, including the

12 appropriateness of continuing the enforcement

13 of medicare budget targets under section 8701

14 for fiscal years after fiscal year 2002 and the

15 appropriate long-term growth rates for con16 tributions electing coverage under Medicare

17 Choice under part C of title XVIII of such Act.

18 (C) Methods used by other nations to re19 spond to comparable demographic patterns in

20 eligibility for health care benefits for elderly

21 and disabled individuals.

22 (D) Modifying age-based eligibility to cor23 respond to changes in age-based eligibility

24 under the OASDI program.
396

Title VIII, Subtitle A

•HR 2530 IH

1 (E) Trends in employment-related health

2 care for retirees, including the use of medical

3 savings accounts and similar financing devices.

4 (c) MEMBERSHIP.—

5 (1) APPOINTMENT.—The Commission shall be

6 composed of 15 members appointed as follows:

7 (A) The President shall appoint 3 mem8 bers.

9 (B) The Majority Leader of the Senate

10 shall appoint, after consultation with the minor11 ity leader of the Senate, 6 members, of whom

12 not more than 4 may be of the same political

13 party.

14 (C) The Speaker of the House of Rep15 resentatives shall appoint, after consultation

16 with the minority leader of the House of Rep17 resentatives, 6 members, of whom not more

18 than 4 may be of the same political party.

19 (2) CHAIRMAN AND VICE CHAIRMAN.—The

20 Commission shall elect a Chairman and Vice Chair21 man from among its members.

22 (3) VACANCIES.—Any vacancy in the member23 ship of the Commission shall be filled in the manner

24 in which the original appointment was made and
397

Title VIII, Subtitle A

•HR 2530 IH

1 shall not affect the power of the remaining members

2 to execute the duties of the Commission.

3 (4) QUORUM.—A quorum shall consist of 8

4 members of the Commission, except that 4 members

5 may conduct a hearing under subsection (e).

6 (5) MEETINGS.—The Commission shall meet at

7 the call of its Chairman or a majority of its mem8 bers.

9 (6) COMPENSATION AND REIMBURSEMENT OF

10 EXPENSES.—Members of the Commission are not

11 entitled to receive compensation for service on the

12 Commission. Members may be reimbursed for travel,

13 subsistence, and other necessary expenses incurred

14 in carrying out the duties of the Commission.

15 (d) STAFF AND CONSULTANTS.—

16 (1) STAFF.—The Commission may appoint and

17 determine the compensation of such staff as may be

18 necessary to carry out the duties of the Commission.

19 Such appointments and compensation may be made

20 without regard to the provisions of title 5, United

21 States Code, that govern appointments in the com22 petitive services, and the provisions of chapter 51

23 and subchapter III of chapter 53 of such title that

24 relate to classifications and the General Schedule

25 pay rates.
398

Title VIII, Subtitle A

•HR 2530 IH

1 (2) CONSULTANTS.—The Commission may pro2 cure such temporary and intermittent services of

3 consultants under section 3109(b) of title 5, United

4 States Code, as the Commission determines to be

5 necessary to carry out the duties of the Commission.

6 (e) POWERS.—

7 (1) HEARINGS AND OTHER ACTIVITIES.—For

8 the purpose of carrying out its duties, the Commis9 sion may hold such hearings and undertake such

10 other activities as the Commission determines to be

11 necessary to carry out its duties.

12 (2) STUDIES BY GAO.—Upon the request of the

13 Commission, the Comptroller General shall conduct

14 such studies or investigations as the Commission de15 termines to be necessary to carry out its duties.

16 (3) COST ESTIMATES BY CONGRESSIONAL

17 BUDGET OFFICE.—

18 (A) Upon the request of the Commission,

19 the Director of the Congressional Budget Office

20 shall provide to the Commission such cost esti21 mates as the Commission determines to be nec22 essary to carry out its duties.

23 (B) The Commission shall reimburse the

24 Director of the Congressional Budget Office for

25 expenses relating to the employment in the of-
399

Title VIII, Subtitle A

•HR 2530 IH

1 fice of the Director of such additional staff as

2 may be necessary for the Director to comply

3 with requests by the Commission under sub4 paragraph (A).

5 (4) DETAIL OF FEDERAL EMPLOYEES.—Upon

6 the request of the Commission, the head of any Fed7 eral agency is authorized to detail, without reim8 bursement, any of the personnel of such agency to

9 the Commission to assist the Commission in carry10 ing out its duties. Any such detail shall not interrupt

11 or otherwise affect the civil service status or privi12 leges of the Federal employee.

13 (5) TECHNICAL ASSISTANCE.—Upon the re14 quest of the Commission, the head of a Federal

15 agency shall provide such technical assistance to the

16 Commission as the Commission determines to be

17 necessary to carry out its duties.

18 (6) USE OF MAILS.—The Commission may use

19 the United States mails in the same manner and

20 under the same conditions as Federal agencies and

21 shall, for purposes of the frank, be considered a

22 commission of Congress as described in section 3215

23 of title 39, United States Code.

24 (7) OBTAINING INFORMATION.—The Commis25 sion may secure directly from any Federal agency
400

Title VIII, Subtitle A

•HR 2530 IH

1 information necessary to enable it to carry out its

2 duties, if the information may be disclosed under

3 section 552 of title 5, United States Code. Upon re4 quest of the Chairman of the Commission, the head

5 of such agency shall furnish such information to the

6 Commission.

7 (8) ADMINISTRATIVE SUPPORT SERVICES.—

8 Upon the request of the Commission, the Adminis9 trator of General Services shall provide to the Com10 mission on a reimbursable basis such administrative

11 support services as the Commission may request.

12 (9) ACCEPTANCE OF DONATIONS.—The Com13 mission may accept, use, and dispose of gifts or do14 nations of services or property.

15 (10) PRINTING.—For purposes of costs relating

16 to printing and binding, including the cost of per17 sonnel detailed from the Government Printing Of18 fice, the Commission shall be deemed to be a com19 mittee of the Congress.

20 (f) REPORT.—Not later than May 1, 1997, the Com21 mission shall submit to Congress a report containing its

22 findings and recommendations regarding how to protect

23 and preserve the medicare program in a financially solvent

24 manner until 2030 (or, if later, throughout the period of

25 projected solvency of the Federal Old-Age and Survivors
401

Title VIII, Subtitle A

•HR 2530 IH

1 Insurance Trust Fund). The report shall include detailed

2 recommendations for appropriate legislative initiatives re3 specting how to accomplish this objective.

4 (g) TERMINATION.—The Commission shall terminate

5 60 days after the date of submission of the report required

6 in subsection (f).

7 (h) AUTHORIZATION OF APPROPRIATIONS.—There

8 are authorized to be appropriated $1,500,000 to carry out

9 this section. Amounts appropriated to carry out this sec10 tion shall remain available until expended.

11 PART 5—PREEMPTION OF STATE ANTI-MANAGED

12 CARE LAWS

13 SEC. 8041. PREEMPTION OF STATE LAW RESTRICTIONS ON

14 MANAGED CARE ARRANGEMENTS.

15 (a) LIMITATION ON RESTRICTIONS ON NETWORK

16 PLANS.—Effective as of January 1, 1997—

17 (1) a State may not prohibit or limit a carrier

18 or group health plan providing health coverage from

19 including incentives for enrollees to use the services

20 of participating providers;

21 (2) a State may not prohibit or limit such a

22 carrier or plan from limiting coverage of services to

23 those provided by a participating provider, except as

24 provided in section 1013;
402

Title VIII, Subtitle A

•HR 2530 IH

1 (3) a State may not prohibit or limit the nego2 tiation of rates and forms of payments for providers

3 by such a carrier or plan with respect to health cov4 erage;

5 (4) a State may not prohibit or limit such a

6 carrier or plan from limiting the number of partici7 pating providers;

8 (5) a State may not prohibit or limit such a

9 carrier or plan from requiring that services be pro10 vided (or authorized) by a practitioner selected by

11 the enrollee from a list of available participating pro12 viders or, except for services of a physician who spe13 cializes in obstetrics and gynecology, from requiring

14 enrollees to obtain referral in order to have coverage

15 for treatment by a specialist or health institution;

16 and

17 (6) a State may not prohibit or limit the cor18 porate practice of medicine.

19 (b) DEFINITIONS.—In this section:

20 (1) MANAGED CARE COVERAGE.—The term

21 ‘‘managed care coverage’’ means health coverage to

22 the extent the coverage is provided through a man23 aged care arrangement (as defined in paragraph (3))

24 that meets the applicable requirements of such sec25 tion.
403

Title VIII, Subtitle A

•HR 2530 IH

1 (2) PARTICIPATING PROVIDER.—The term

2 ‘‘participating provider’’ means an entity or individ3 ual which provides, sells, or leases health care serv4 ices as part of a provider network (as defined in

5 paragraph (4)).

6 (3) MANAGED CARE ARRANGEMENT.—The term

7 ‘‘managed care arrangement’’ means, with respect to

8 a group health plan or under health insurance cov9 erage, an arrangement under such plan or coverage

10 under which providers agree to provide items and

11 services covered under the arrangement to individ12 uals covered under the plan or who have such cov13 erage.

14 (4) PROVIDER NETWORK.—The term ‘‘provider

15 network’’ means, with respect to a group health plan

16 or health insurance coverage, providers who have en17 tered into an agreement described in paragraph (3).

18 SEC. 8042. PREEMPTION OF STATE LAWS RESTRICTING UTI19 LIZATION REVIEW PROGRAMS.

20 (a) IN GENERAL.—Effective January 1, 1997, no

21 State law or regulation shall prohibit or regulate activities

22 under a utilization review program (as defined in sub23 section (b)).

24 (b) UTILIZATION REVIEW PROGRAM DEFINED.—In

25 this section, the term ‘‘utilization review program’’ means
404

Title VIII, Subtitle B

•HR 2530 IH

1 a system of reviewing the medical necessity and appro2 priateness of patient services (which may include inpatient

3 and outpatient services) using specified guidelines. Such

4 a system may include preadmission certification, the appli5 cation of practice guidelines, continued stay review, dis6 charge planning, preauthorization of ambulatory proce7 dures, and retrospective review.

8 (c) EXEMPTION OF LAWS PREVENTING DENIAL OF

9 LIFESAVING MEDICAL TREATMENT PENDING TRANSFER

10 TO ANOTHER HEALTH CARE PROVIDER.—Nothing in this

11 subtitle shall be construed to invalidate any State law that

12 has the effect of preventing involuntary denial of life-pre13 serving medical treatment when such denial would cause

14 the involuntary death of the patient pending transfer of

15 the patient to a health care provider willing to provide

16 such treatment.

17 Subtitle B—Provisions Relating to

18 Regulatory Relief

19 PART 1—PROVISIONS RELATING TO PHYSICIAN

20 FINANCIAL RELATIONSHIPS

21 SEC. 8101. REPEAL OF PROHIBITIONS BASED ON COM22 PENSATION ARRANGEMENTS.

23 (a) IN GENERAL.—Section 1877(a)(2) (42 U.S.C.

24 1395nn(a)(2)) is amended by striking ‘‘is—’’ and all that

25 follows through ‘‘equity,’’ and inserting the following: ‘‘is
405

Title VIII, Subtitle B

•HR 2530 IH

1 (except as provided in subsection (c)) an ownership or in2 vestment interest in the entity through equity,’’.

3 (b) CONFORMING AMENDMENTS.—Section 1877 (42

4 U.S.C. 1395nn) is amended as follows:

5 (1) In subsection (b)—

6 (A) in the heading, by striking ‘‘TO BOTH

7 OWNERSHIP AND COMPENSATION ARRANGE8 MENT PROVISIONS’’ and inserting ‘‘WHERE FI9 NANCIAL RELATIONSHIP EXISTS’’; and

10 (B) by redesignating paragraph (4) as

11 paragraph (7).

12 (2) In subsection (c)—

13 (A) by amending the heading to read as

14 follows: ‘‘EXCEPTION FOR OWNERSHIP OR IN15 VESTMENT INTEREST IN PUBLICLY TRADED

16 SECURITIES AND MUTUAL FUNDS’’; and

17 (B) in the matter preceding paragraph (1),

18 by striking ‘‘subsection (a)(2)(A)’’ and inserting

19 ‘‘subsection (a)(2)’’.

20 (3) In subsection (d)—

21 (A) by striking the matter preceding para22 graph (1);

23 (B) in paragraph (3), by striking ‘‘para24 graph (1)’’ and inserting ‘‘paragraph (4)’’; and
406

Title VIII, Subtitle B

•HR 2530 IH

1 (C) by redesignating paragraphs (1), (2),

2 and (3) as paragraphs (4), (5), and (6), and by

3 transferring and inserting such paragraphs

4 after paragraph (3) of subsection (b).

5 (4) By striking subsection (e).

6 (5) In subsection (f)(2), as amended by section

7 152(a) of the Social Security Act Amendments of

8 1994—

9 (A) in the matter preceding paragraph (1),

10 by striking ‘‘ownership, investment, and com11 pensation’’ and inserting ‘‘ownership and in12 vestment’’;

13 (B) in paragraph (2), by striking ‘‘sub14 section (a)(2)(A)’’ and all that follows through

15 ‘‘subsection (a)(2)(B)),’’ and inserting ‘‘sub16 section (a)(2),’’; and

17 (C) in paragraph (2), by striking ‘‘or who

18 have such a compensation relationship with the

19 entity’’.

20 (6) In subsection (h)—

21 (A) by striking paragraphs (1), (2), and

22 (3);

23 (B) in paragraph (4)(A), by striking

24 clauses (iv) and (vi);
407

Title VIII, Subtitle B

•HR 2530 IH

1 (C) in paragraph (4)(B), by striking

2 ‘‘RULES.—’’ and all that follows through ‘‘(ii)

3 FACULTY’’ and inserting ‘‘RULES FOR FAC4 ULTY; and

5 (D) by adding at the end of paragraph (4)

6 the following new subparagraph:

7 ‘‘(C) MEMBER OF A GROUP.—A physician

8 is a ‘member’ of a group if the physician is an

9 owner or a bona fide employee, or both, of the

10 group.’’.

11 SEC. 8102. REVISION OF DESIGNATED HEALTH SERVICES

12 SUBJECT TO PROHIBITION.

13 (a) IN GENERAL.—Section 1877(h)(6) (42 U.S.C.

14 1395nn(h)(6)) is amended by striking subparagraphs (B)

15 through (K) and inserting the following:

16 ‘‘(B) Items and services furnished by a

17 community pharmacy (as defined in paragraph

18 (1)).

19 ‘‘(C) Magnetic resonance imaging and

20 computerized tomography services.

21 ‘‘(D) Outpatient physical therapy serv22 ices.’’.

23 (b) COMMUNITY PHARMACY DEFINED.—Section

24 1877(h) (42 U.S.C. 1395nn(h)), as amended by section
408

Title VIII, Subtitle B

•HR 2530 IH

1 8101(b)(6), is amended by inserting before paragraph (4)

2 the following new paragraph:

3 ‘‘(1) COMMUNITY PHARMACY.—The term ‘com4 munity pharmacy’ means any entity licensed or cer5 tified to dispense prescription drugs by the State in

6 which the entity is located (including an entity which

7 dispenses such drugs by mail order).’’.

8 (c) CONFORMING AMENDMENTS.—

9 (1) Section 1877(b)(2) (42 U.S.C.

10 1395nn(b)(2)) is amended in the matter preceding

11 subparagraph (A) by striking ‘‘services’’ and all that

12 follows through ‘‘supplies)—’’ and inserting ‘‘serv13 ices—’’.

14 (2) Section 1877(h)(5)(C) (42 U.S.C.

15 1395nn(h)(5)(C)) is amended—

16 (A) by striking ‘‘, a request by a radiolo17 gist for diagnostic radiology services, and a re18 quest by a radiation oncologist for radiation

19 therapy,’’ and inserting ‘‘and a request by a ra20 diologist for magnetic resonance imaging or for

21 computerized tomography’’, and

22 (B) by striking ‘‘radiologist, or radiation

23 oncologist’’ and inserting ‘‘or radiologist’’.
409

Title VIII, Subtitle B

•HR 2530 IH

1 SEC. 8103. DELAY IN IMPLEMENTATION UNTIL PROMULGA2 TION OF REGULATIONS.

3 (a) IN GENERAL.—Section 13562(b) of OBRA–1993

4 (42 U.S.C. 1395nn note) is amended—

5 (1) in paragraph (1), by striking ‘‘paragraph

6 (2)’’ and inserting ‘‘paragraphs (2) and (3)’’; and

7 (2) by adding at the end the following new

8 paragraph:

9 ‘‘(3) PROMULGATION OF REGULATIONS.—Not10 withstanding paragraphs (1) and (2), the amend11 ments made by this section shall not apply to any

12 referrals made before the effective date of final regu13 lations promulgated by the Secretary of Health and

14 Human Services to carry out such amendments.’’.

15 (b) EFFECTIVE DATE.—The amendments made by

16 subsection (a) shall take effect as if included in the enact17 ment of OBRA–1993.

18 SEC. 8104. EXCEPTIONS TO PROHIBITION.

19 (a) REVISIONS TO EXCEPTION FOR IN-OFFICE AN20 CILLARY SERVICES.—

21 (1) REPEAL OF SITE-OF-SERVICE REQUIRE22 MENT.—Section 1877 (42 U.S.C. 1395nn) is amend23 ed—

24 (A) by amending subparagraph (A) of sub25 section (b)(2) to read as follows:
410

Title VIII, Subtitle B

•HR 2530 IH

1 ‘‘(A) that are furnished personally by the

2 referring physician, personally by a physician

3 who is a member of the same group practice as

4 the referring physician, or personally by individ5 uals who are under the general supervision of

6 the physician or of another physician in the

7 group practice, and’’, and

8 (B) by adding at the end of subsection (h)

9 the following new paragraph:

10 ‘‘(7) GENERAL SUPERVISION.—An individual is

11 considered to be under the ‘general supervision’ of a

12 physician if the physician (or group practice of

13 which the physician is a member) is legally respon14 sible for the services performed by the individual and

15 for ensuring that the individual meets licensure and

16 certification requirements, if any, applicable under

17 other provisions of law, regardless of whether or not

18 the physician is physically present when the individ19 ual furnishes an item or service.’’.

20 (2) CLARIFICATION OF TREATMENT OF PHYSI21 CIAN OWNERS OF GROUP PRACTICE.—Section

22 1877(b)(2)(B) (42 U.S.C. 1395nn(b)(2)(B)) is

23 amended by striking ‘‘physician or such group prac24 tice’’ and inserting ‘‘physician, such group practice,

25 or the physician owners of such group practice’’.
411

Title VIII, Subtitle B

•HR 2530 IH

1 (3) CONFORMING AMENDMENT.—Section

2 1877(b)(2) (42 U.S.C. 1395nn(b)(2)) is amended by

3 amending the heading to read as follows: ‘‘ANCIL4 LARY SERVICES FURNISHED PERSONALLY OR

5 THROUGH GROUP PRACTICE.—’’.

6 (b) CLARIFICATION OF EXCEPTION FOR SERVICES

7 FURNISHED IN A RURAL AREA.—Paragraph (5) of section

8 1877(b) (42 U.S.C. 1395nn(b)), as transferred by section

9 8101(b)(3)(C), is amended by striking ‘‘substantially all’’

10 and inserting ‘‘not less than 75 percent’’.

11 (c) REVISION OF EXCEPTION FOR CERTAIN MAN12 AGED CARE ARRANGEMENTS.—Section 1877(b)(3) (42

13 U.S.C. 1395nn(b)(3)) is amended—

14 (1) in the heading by inserting ‘‘MANAGED

15 CARE ARRANGEMENTS’’ after ‘‘PREPAID PLANS’’;

16 (2) in the matter preceding subparagraph (A),

17 by striking ‘‘organization—’’ and inserting ‘‘organi18 zation, directly or through contractual arrangements

19 with other entities, to individuals enrolled with the

20 organization—’’;

21 (3) in subparagraph (A), by inserting ‘‘or part

22 C’’ after ‘‘section 1876’’;

23 (4) by striking ‘‘or’’ at the end of subparagraph

24 (C);
412

Title VIII, Subtitle B

•HR 2530 IH

1 (5) by striking the period at the end of sub2 paragraph (D) and inserting a comma; and

3 (6) by adding at the end the following new sub4 paragraphs:

5 ‘‘(E) with a contract with a State to pro6 vide services under the State plan under title

7 XIX (in accordance with section 1903(m)) or a

8 State MediGrant plan under title XXI; or

9 ‘‘(F) which—

10 ‘‘(i) provides health care items or

11 services directly or through one or more

12 subsidiary entities or arranges for the pro13 vision of health care items or services sub14 stantially through the services of health

15 care providers under contract with the or16 ganization, and

17 ‘‘(ii)(I) assumes financial risk for the

18 provision of health services through mecha19 nisms (such as capitation, risk pools, with20 holds, and per diem payments) or offers its

21 network of contract health providers to an

22 entity (including self-insured employers

23 and indemnity plans) which assumes finan24 cial risk for the provision of such health

25 services, or
413

Title VIII, Subtitle B

•HR 2530 IH

1 ‘‘(II) has in effect a written agree2 ment with the provider of services under

3 which the provider is at significant finan4 cial risk (whether through a withhold, capi5 tation, incentive pool, per diem payments,

6 or similar risk sharing arrangement) for

7 the cost or utilization of services that the

8 provider is obligated to provide.’’.

9 (d) NEW EXCEPTION FOR SHARED FACILITY SERV10 ICES.—

11 (1) IN GENERAL.—Section 1877(b) (42 U.S.C.

12 1395nn(b)), as amended by section 8101(b)(3)(C), is

13 amended—

14 (A) by redesignating paragraphs (4)

15 through (7) as paragraphs (5) through (8); and

16 (B) by inserting after paragraph (3) the

17 following new paragraph:

18 ‘‘(4) SHARED FACILITY SERVICES.—In the case

19 of a designated health service consisting of a shared

20 facility service of a shared facility—

21 ‘‘(A) that is furnished—

22 ‘‘(i) personally by the referring physi23 cian who is a shared facility physician or

24 personally by an individual directly em-
414

Title VIII, Subtitle B

•HR 2530 IH

1 ployed or under the general supervision of

2 such a physician,

3 ‘‘(ii) by a shared facility in a building

4 in which the referring physician furnishes

5 substantially all of the services of the phy6 sician that are unrelated to the furnishing

7 of shared facility services, and

8 ‘‘(iii) to a patient of a shared facility

9 physician; and

10 ‘‘(B) that is billed by the referring physi11 cian or a group practice of which the physician

12 is a member.’’.

13 (2) DEFINITIONS.—Section 1877(h) (42 U.S.C.

14 1395nn(h)), as amended by section 8101(b)(6) and

15 section 8102(b), is amended by inserting after para16 graph (1) the following new paragraph:

17 ‘‘(2) SHARED FACILITY RELATED DEFINI18 TIONS.—

19 ‘‘(A) SHARED FACILITY SERVICE.—The

20 term ‘shared facility service’ means, with re21 spect to a shared facility, a designated health

22 service furnished by the facility to patients of

23 shared facility physicians.

24 ‘‘(B) SHARED FACILITY.—The term

25 ‘shared facility’ means an entity that furnishes
415

Title VIII, Subtitle B

•HR 2530 IH

1 shared facility services under a shared facility

2 arrangement.

3 ‘‘(C) SHARED FACILITY PHYSICIAN.—The

4 term ‘shared facility physician’ means, with re5 spect to a shared facility, a physician (or a

6 group practice of which the physician is a mem7 ber) who has a financial relationship under a

8 shared facility arrangement with the facility.

9 ‘‘(D) SHARED FACILITY ARRANGEMENT.—

10 The term ‘shared facility arrangement’ means,

11 with respect to the provision of shared facility

12 services in a building, a financial arrange13 ment—

14 ‘‘(i) which is only between physicians

15 who are providing services (unrelated to

16 shared facility services) in the same build17 ing,

18 ‘‘(ii) in which the overhead expenses

19 of the facility are shared, in accordance

20 with methods previously determined by the

21 physicians in the arrangement, among the

22 physicians in the arrangement, and

23 ‘‘(iii) which, in the case of a corpora24 tion, is wholly owned and controlled by

25 shared facility physicians.’’.
416

Title VIII, Subtitle B

•HR 2530 IH

1 (e) NEW EXCEPTION FOR SERVICES FURNISHED IN

2 COMMUNITIES WITH NO ALTERNATIVE PROVIDERS.—

3 Section 1877(b) (42 U.S.C. 1395nn(b)), as amended by

4 section 8101(b)(3)(C) and subsection (d)(1), is amend5 ed—

6 (1) by redesignating paragraphs (5) through

7 (8) as paragraphs (6) through (9); and

8 (2) by inserting after paragraph (4) the follow9 ing new paragraph:

10 ‘‘(5) NO ALTERNATIVE PROVIDERS IN AREA.—

11 In the case of a designated health service furnished

12 in any area with respect to which the Secretary de13 termines that individuals residing in the area do not

14 have reasonable access to such a designated health

15 service for which subsection (a)(1) does not apply.’’.

16 (f) NEW EXCEPTION FOR SERVICES FURNISHED IN

17 AMBULATORY SURGICAL CENTERS.—Section 1877(b) (42

18 U.S.C. 1395nn(b)), as amended by section 8101(b)(3)(C),

19 subsection (d)(1), and subsection (e)(1), is amended—

20 (1) by redesignating paragraphs (6) through

21 (9) as paragraphs (7) through (10); and

22 (2) by inserting after paragraph (5) the follow23 ing new paragraph:

24 ‘‘(6) SERVICES FURNISHED IN AMBULATORY

25 SURGICAL CENTERS.—In the case of a designated
417

Title VIII, Subtitle B

•HR 2530 IH

1 health service furnished in an ambulatory surgical

2 center described in section 1832(a)(2)(F)(i).’’.

3 (g) NEW EXCEPTION FOR SERVICES FURNISHED IN

4 RENAL DIALYSIS FACILITIES.—Section 1877(b) (42

5 U.S.C. 1395nn(b)), as amended by section 8101(b)(3)(C),

6 subsection (d)(1), subsection (e)(1), and subsection (f), is

7 amended—

8 (1) by redesignating paragraphs (7) through

9 (10) as paragraphs (8) through (11); and

10 (2) by inserting after paragraph (6) the follow11 ing new paragraph:

12 ‘‘(7) SERVICES FURNISHED IN RENAL DIALYSIS

13 FACILITIES.—In the case of a designated health

14 service furnished in a renal dialysis facility under

15 section 1881.’’.

16 (h) NEW EXCEPTION FOR SERVICES FURNISHED IN

17 A HOSPICE.—Section 1877(b) (42 U.S.C. 1395nn(b)), as

18 amended by section 8101(b)(3)(C), subsection (d)(1), sub19 section (e)(1), subsection (f), and subsection (g), is

20 amended—

21 (1) by redesignating paragraphs (8) through

22 (11) as paragraphs (9) through (12); and

23 (2) by inserting after paragraph (7) the follow24 ing new paragraph:
418

Title VIII, Subtitle B

•HR 2530 IH

1 ‘‘(8) SERVICES FURNISHED BY A HOSPICE PRO2 GRAM.—In the case of a designated health service

3 furnished by a hospice program under section

4 1861(dd)(2).’’.

5 (i) NEW EXCEPTION FOR SERVICES FURNISHED IN

6 A COMPREHENSIVE OUTPATIENT REHABILITATION FA7 CILITY.—Section 1877(b) (42 U.S.C. 1395nn(b)), as

8 amended by section 8101(b)(3)(C), subsection (d)(1), sub9 section (e)(1), subsection (f), subsection (g), and sub10 section (h), is amended—

11 (1) by redesignating paragraphs (9) through

12 (12) as paragraphs (10) through (13); and

13 (2) by inserting after paragraph (8) the follow14 ing new paragraph:

15 ‘‘(9) SERVICES FURNISHED IN A COMPREHEN16 SIVE OUTPATIENT REHABILITATION FACILITY.—In

17 the case of a designated health service furnished in

18 a comprehensive outpatient rehabilitation facility (as

19 defined in section 1861(cc)(2)).’’.

20 (i) DEFINITION OF REFERRAL.—Section

21 1877(h)(5)(A) (42 U.S.C. 1395nn(h)(5)(A)) is amend22 ed—

23 (1) by striking ‘‘an item or service’’ and insert24 ing ‘‘a designated health service’’, and
419

Title VIII, Subtitle B

•HR 2530 IH

1 (2) by striking ‘‘the item or service’’ and insert2 ing ‘‘the designated health service’’.

3 SEC. 8105. REPEAL OF REPORTING REQUIREMENTS.

4 Section 1877 (42 U.S.C. 1395nn) is amended—

5 (1) by striking subsection (f); and

6 (2) by striking subsection (g)(5).

7 SEC. 8106. PREEMPTION OF STATE LAW.

8 Section 1877 (42 U.S.C. 1395nn) is amended by add9 ing at the end the following new subsection:

10 ‘‘(i) PREEMPTION OF STATE LAW.—This section pre11 empts State law to the extent State law is inconsistent

12 with this section.’’.

13 SEC. 8107. EFFECTIVE DATE.

14 Except as provided in section 8103(b), the amend15 ments made by this part shall apply to referrals made on

16 or after August 14, 1995, regardless of whether or not

17 regulations are promulgated to carry out such amend18 ments.

19 PART 2—ANTITRUST REFORM

20 SEC. 8111. PUBLICATION OF ANTITRUST GUIDELINES ON

21 ACTIVITIES OF HEALTH PLANS.

22 (a) IN GENERAL.—The Attorney General shall pro23 vide for the development and publication of explicit guide24 lines on the application of antitrust laws to the activities

25 of health plans. The guidelines shall be designed to facili-
420

Title VIII, Subtitle B

•HR 2530 IH

1 tate development and operation of plans, consistent with

2 the antitrust laws.

3 (b) REVIEW PROCESS.—The Attorney General shall

4 establish a review process under which the administrator

5 or sponsor of a health plan (or organization that proposes

6 to administer or sponsor a health plan) may submit a re7 quest to the Attorney General to obtain a prompt opinion

8 (but in no event later than 90 days after the Attorney

9 General receives the request) from the Department of Jus10 tice on the plan’s conformity with the Federal antitrust

11 laws.

12 SEC. 8112. ISSUANCE OF HEALTH CARE CERTIFICATES OF

13 PUBLIC ADVANTAGE.

14 (a) ISSUANCE AND EFFECT OF CERTIFICATE.—The

15 Attorney General, after consultation with the Secretary,

16 shall issue in accordance with this section a certificate of

17 public advantage to each eligible health care collaborative

18 activity that complies with the requirements in effect

19 under this section on or after the expiration of the 1-year

20 period that begins on the date of the enactment of this

21 Act (without regard to whether or not the Attorney Gen22 eral has promulgated regulations to carry out this section

23 by such date). Such activity, and the parties to such activ24 ity, shall not be liable under any of the antitrust laws for

25 conduct described in such certificate and engaged in by
421

Title VIII, Subtitle B

•HR 2530 IH

1 such activity if such conduct occurs while such certificate

2 is in effect.

3 (b) REQUIREMENTS APPLICABLE TO ISSUANCE OF

4 CERTIFICATES.—

5 (1) STANDARDS TO BE MET.—The Attorney

6 General shall issue a certificate to an eligible health

7 care collaborative activity if the Attorney General

8 finds that—

9 (A) the benefits that are likely to result

10 from carrying out the activity outweigh the re11 duction in competition (if any) that is likely to

12 result from the activity, and

13 (B) such reduction in competition is nec14 essary to obtain such benefits.

15 (2) FACTORS TO BE CONSIDERED.—

16 (A) WEIGHING OF BENEFITS AGAINST RE17 DUCTION IN COMPETITION.—For purposes of

18 making the finding described in paragraph

19 (1)(A), the Attorney General shall consider

20 whether the activity is likely—

21 (i) to maintain or to increase the

22 quality of health care by providing new

23 services not currently offered in the rel24 evant market,

25 (ii) to increase access to health care,
422

Title VIII, Subtitle B

•HR 2530 IH

1 (iii) to achieve cost efficiencies that

2 will be passed on to health care consumers,

3 such as economies of scale, reduced trans4 action costs, and reduced administrative

5 costs, that cannot be achieved by the provi6 sion of available services and facilities in

7 the relevant market,

8 (iv) to preserve the operation of

9 health care facilities located in underserved

10 geographical areas,

11 (v) to improve utilization of health

12 care resources, and

13 (vi) to reduce inefficient health care

14 resource duplication.

15 (B) NECESSITY OF REDUCTION IN COM16 PETITION.—For purposes of making the finding

17 described in paragraph (1)(B), the Attorney

18 General shall consider—

19 (i) the ability of the providers of

20 health care services that are (or likely to

21 be) affected by the health care collabo22 rative activity and the entities responsible

23 for making payments to such providers to

24 negotiate societally optimal payment and

25 service arrangements,
423

Title VIII, Subtitle B

•HR 2530 IH

1 (ii) the effects of the health care col2 laborative activity on premiums and other

3 charges imposed by the entities described

4 in clause (i), and

5 (iii) the availability of equally effi6 cient, less restrictive alternatives to achieve

7 the benefits that are intended to be

8 achieved by carrying out the activity.

9 (c) ESTABLISHMENT OF CRITERIA AND PROCE10 DURES.—Subject to subsections (d) and (e), not later than

11 1 year after the date of the enactment of this Act, the

12 Attorney General and the Secretary shall establish jointly

13 by rule the criteria and procedures applicable to the issu14 ance of certificates under subsection (a). The rules shall

15 specify the form and content of the application to be sub16 mitted to the Attorney General to request a certificate,

17 the information required to be submitted in support of

18 such application, the procedures applicable to denying and

19 to revoking a certificate, and the procedures applicable to

20 the administrative appeal (if such appeal is authorized by

21 rule) of the denial and the revocation of a certificate. Such

22 information may include the terms of the health care col23 laborative activity (in the case of an activity in existence

24 as of the time of the application) and implementation plan

25 for the collaborative activity.
424

Title VIII, Subtitle B

•HR 2530 IH

1 (d) ELIGIBLE HEALTH CARE COLLABORATIVE AC2 TIVITY.—To be an eligible health care collaborative activ3 ity for purposes of this section, a health care collaborative

4 activity shall submit to the Attorney General an applica5 tion that complies with the rules in effect under subsection

6 (c) and that includes—

7 (1) an agreement by the parties to the activity

8 that the activity will not foreclose competition by en9 tering into contracts that prevent health care provid10 ers from providing health care in competition with

11 the activity,

12 (2) an agreement that the activity will submit

13 to the Attorney General annually a report that de14 scribes the operations of the activity and information

15 regarding the impact of the activity on health care

16 and on competition in health care, and

17 (3) an agreement that the parties to the activity

18 will notify the Attorney General and the Secretary of

19 the termination of the activity not later than 30

20 days after such termination occurs.

21 (e) REVIEW OF APPLICATIONS FOR CERTIFICATES.—

22 Not later than 90 days after an eligible health care col23 laborative activity submits to the Attorney General an ap24 plication that complies with the rules in effect under sub25 section (c) and with subsection (d), the Attorney General
425

Title VIII, Subtitle B

•HR 2530 IH

1 shall issue or deny the issuance of such certificate. If, be2 fore the expiration of such 90-day period, the Attorney

3 General may extend the time for issuance for good cause.

4 (f) REVOCATION OF CERTIFICATE.—Whenever the

5 Attorney General finds that a health care collaborative ac6 tivity with respect to which a certificate is in effect does

7 not meet the standards specified in subsection (b), the At8 torney General shall revoke such certificate.

9 (g) WRITTEN REASONS; JUDICIAL REVIEW.—

10 (1) DENIAL AND REVOCATION OF CERTIFI11 CATES.—If the Attorney General denies an applica12 tion for a certificate or revokes a certificate, the At13 torney General shall include in the notice of denial

14 or revocation a statement of the reasons relied upon

15 for the denial or revocation of such certificate.

16 (2) JUDICIAL REVIEW.—

17 (A) AFTER ADMINISTRATIVE PROCEED18 ING.—(i) If the Attorney General denies an ap19 plication submitted or revokes a certificate is20 sued under this section after an opportunity for

21 hearing on the record, then any party to the

22 health care collaborative activity involved may

23 commence a civil action, not later than 60 days

24 after receiving notice of the denial or revoca25 tion, in an appropriate district court of the
426

Title VIII, Subtitle B

•HR 2530 IH

1 United States for review of the record of such

2 denial or revocation.

3 (ii) As part of the Attorney General’s an4 swer, the Attorney General shall file in such

5 court a certified copy of the record on which

6 such denial or revocation is based. The findings

7 of fact of the Attorney General may be set aside

8 only if found to be unsupported by substantial

9 evidence in such record taken as a whole.

10 (B) DENIAL OR REVOCATION WITHOUT AD11 MINISTRATIVE PROCEEDING.—If the Attorney

12 General denies an application submitted or re13 vokes a certificate issued under this section

14 without an opportunity for hearing on the

15 record, then any party to the health care col16 laborative activity involved may commence a

17 civil action, not later than 60 days after receiv18 ing notice of the denial or revocation, in an ap19 propriate district court of the United States for

20 de novo review of such denial or revocation.

21 (h) EXEMPTION.—A person shall not be liable under

22 any of the antitrust laws for conduct necessary—

23 (1) to prepare, agree to prepare, or attempt to

24 agree to prepare an application to request a certifi25 cate under this section, or
427

Title VIII, Subtitle B

•HR 2530 IH

1 (2) to attempt to enter into any health care col2 laborative activity with respect to which such a cer3 tificate is in effect.

4 (i) DEFINITIONS.—In this section:

5 (1) The term ‘‘certificate’’ means a certificate

6 of public advantage authorized to be issued under

7 subsection (a).

8 (2) The term ‘‘health care collaborative activ9 ity’’ means an agreement (whether existing or pro10 posed) between 2 or more providers of health care

11 services that is entered into solely for the purpose of

12 sharing in the provision and coordination of health

13 care services and that involves substantial integra14 tion and financial risk-sharing between the parties,

15 but does not include the exchanging of information,

16 the entering into of any agreement, or the engage17 ment in any other conduct that is not reasonably re18 quired to carry out such agreement.

19 (3) The term ‘‘health care services’’ includes

20 services related to the delivery or administration of

21 health care services.

22 (4) The term ‘‘liable’’ means liable for any civil

23 or criminal violation of the antitrust laws.

24 (5) The term ‘‘provider of health care services’’

25 means any individual or entity that is engaged in the
428

Title VIII, Subtitle B

•HR 2530 IH

1 delivery of health care services in a State and that

2 is required by State law or regulation to be licensed

3 or certified by the State to engage in the delivery of

4 such services in the State.

5 SEC. 8113. STUDY OF IMPACT ON COMPETITION.

6 The Attorney General, in consultation with the Chair7 man of the Federal Trade Commission, annually shall sub8 mit to the Congress a report as part of the annual budget

9 oversight proceedings concerning the Antitrust Division of

10 the Department of Justice. The report shall enable the

11 Congress to determine how enforcement of antitrust laws

12 is affecting the formation of efficient, cost-saving joint

13 ventures and if the certificate of public advantage proce14 dure set forth in section 8112 has resulted in undesirable

15 reduction in competition in the health care marketplace.

16 The report shall include an evaluation of the factors set

17 forth in paragraphs (2)(A) and (2)(B) of section 8112(b).

18 SEC. 8114. ANTITRUST EXEMPTION.

19 The antitrust laws shall not apply with respect to—

20 (1) the merger of, or the attempt to merge, 2

21 or more hospitals,

22 (2) a contract entered into solely by 2 or more

23 hospitals to allocate hospital services, or

24 (3) the attempt by only 2 or more hospitals to

25 enter into a contract to allocate hospital services,
429

Title VIII, Subtitle B

•HR 2530 IH

1 if each of such hospitals satisfies all of the requirements

2 of section 8115 at the time such hospitals engage in the

3 conduct described in paragraph (1), (2), or (3), as the case

4 may be.

5 SEC. 8115. REQUIREMENTS.

6 The requirements referred to in section 8114 are as

7 follows:

8 (1) The hospital is located outside of a city, or

9 in a city that has less than 150,000 inhabitants, as

10 determined in accordance with the most recent data

11 available from the Bureau of the Census.

12 (2) In the most recently concluded calendar

13 year, the hospital received more than 40 percent of

14 its gross revenue from payments made under Fed15 eral programs.

16 (3) There is in effect with respect to the hos17 pital a certificate issued by the Health Care Financ18 ing Administration specifying that such Administra19 tion has determined that Federal expenditures would

20 be reduced, consumer costs would not increase, and

21 access to health care services would not be reduced,

22 if the hospital and the other hospitals that requested

23 such certificate merge, or allocate the hospital serv24 ices specified in such request, as the case may be.
430

Title VIII, Subtitle B

•HR 2530 IH

1 SEC. 8116. DEFINITION.

2 For purposes of this subtitle, the term ‘‘antitrust

3 laws’’ has the meaning given such term in subsection (a)

4 of the first section of the Clayton Act (15 U.S.C. 12), ex5 cept that such term includes section 5 of the Federal

6 Trade Commission Act (15 U.S.C. 45) to the extent that

7 such section 5 applies with respect to unfair methods of

8 competition.

9 PART 3—MALPRACTICE REFORM

10 Subpart A—Uniform Standards for Malpractice

11 Claims

12 SEC. 8121. APPLICABILITY.

13 Except as provided in section 8131, this subpart shall

14 apply to any medical malpractice liability action brought

15 in a Federal or State court, and to any medical mal16 practice claim subject to an alternative dispute resolution

17 system, that is initiated on or after January 1, 1996.

18 SEC. 8122. REQUIREMENT FOR INITIAL RESOLUTION OF AC19 TION THROUGH ALTERNATIVE DISPUTE RES20 OLUTION.

21 (a) IN GENERAL.—

22 (1) STATE CASES.—A medical malpractice li23 ability action may not be brought in any State court

24 during a calendar year unless the medical mal25 practice liability claim that is the subject of the ac26 tion has been initially resolved under an alternative
431

Title VIII, Subtitle B

•HR 2530 IH

1 dispute resolution system certified for the year by

2 the Secretary under section 8132(a), or, in the case

3 of a State in which such a system is not in effect

4 for the year, under the alternative Federal system

5 established under section 8132(b).

6 (2) FEDERAL DIVERSITY ACTIONS.—A medical

7 malpractice liability action may not be brought in

8 any Federal court under section 1332 of title 28,

9 United States Code, during a calendar year unless

10 the medical malpractice liability claim that is the

11 subject of the action has been initially resolved

12 under the alternative dispute resolution system re13 ferred to in paragraph (1) that applied in the State

14 whose law applies in such action.

15 (3) CLAIMS AGAINST UNITED STATES.—

16 (A) ESTABLISHMENT OF PROCESS FOR

17 CLAIMS.—The Attorney General shall establish

18 an alternative dispute resolution process for the

19 resolution of tort claims consisting of medical

20 malpractice liability claims brought against the

21 United States under chapter 171 of title 28,

22 United States Code. Under such process, the

23 resolution of a claim shall occur after the com24 pletion of the administrative claim process ap-
432

Title VIII, Subtitle B

•HR 2530 IH

1 plicable to the claim under section 2675 of such

2 title.

3 (B) REQUIREMENT FOR INITIAL RESOLU4 TION UNDER PROCESS.—A medical malpractice

5 liability action based on a medical malpractice

6 liability claim described in subparagraph (A)

7 may not be brought in any Federal court unless

8 the claim has been initially resolved under the

9 alternative dispute resolution process estab10 lished by the Attorney General under such sub11 paragraph.

12 (b) INITIAL RESOLUTION OF CLAIMS UNDER

13 ADR.—For purposes of subsection (a), an action is ‘‘ini14 tially resolved’’ under an alternative dispute resolution

15 system if—

16 (1) the ADR reaches a decision on whether the

17 defendant is liable to the plaintiff for damages; and

18 (2) if the ADR determines that the defendant

19 is liable, the ADR reaches a decision on the amount

20 of damages assessed against the defendant.

21 (c) PROCEDURES FOR FILING ACTIONS.—

22 (1) NOTICE OF INTENT TO CONTEST DECI23 SION.—Not later than 60 days after a decision is is24 sued with respect to a medical malpractice liability

25 claim under an alternative dispute resolution system,
433

Title VIII, Subtitle B

•HR 2530 IH

1 each party affected by the decision shall submit a

2 sealed statement to a court of competent jurisdiction

3 indicating whether or not the party intends to con4 test the decision.

5 (2) DEADLINE FOR FILING ACTION.—A medical

6 malpractice liability action may not be brought by a

7 party unless—

8 (A) the party has filed the notice of intent

9 required by paragraph (1); and

10 (B) the party files the action in a court of

11 competent jurisdiction not later than 90 days

12 after the decision resolving the medical mal13 practice liability claim that is the subject of the

14 action is issued under the applicable alternative

15 dispute resolution system.

16 (3) COURT OF COMPETENT JURISDICTION.—

17 For purposes of this subsection, the term ‘‘court of

18 competent jurisdiction’’ means—

19 (A) with respect to actions filed in a State

20 court, the appropriate State trial court; and

21 (B) with respect to actions filed in a Fed22 eral court, the appropriate United States dis23 trict court.

24 (d) LEGAL EFFECT OF UNCONTESTED ADR DECI25 SION.—The decision reached under an alternative dispute
434

Title VIII, Subtitle B

•HR 2530 IH

1 resolution system shall, for purposes of enforcement by a

2 court of competent jurisdiction, have the same status in

3 the court as the verdict of a medical malpractice liability

4 action adjudicated in a State or Federal trial court. The

5 previous sentence shall not apply to a decision that is con6 tested by a party affected by the decision pursuant to sub7 section (c)(1).

8 SEC. 8123. OPTIONAL APPLICATION OF PRACTICE GUIDE9 LINES.

10 (a) DEVELOPMENT AND CERTIFICATION OF GUIDE11 LINES.—Each State may develop, for certification by the

12 Secretary, a set of specialty clinical practice guidelines,

13 based on recommended guidelines from national specialty

14 societies, to be updated annually. In the absence of rec15 ommended guidelines from such societies, each State may

16 develop such guidelines based on such criteria as the State

17 considers appropriate (including based on recommended

18 guidelines developed by the Agency for Health Care Policy

19 and Research).

20 (b) PROVISION OF HEALTH CARE UNDER GUIDE21 LINES.—Notwithstanding any other provision of law, in

22 any medical malpractice liability action arising from the

23 conduct of a health care provider or health care profes24 sional, if such conduct was in accordance with a guideline

25 developed by the State in which the conduct occurred and
435

Title VIII, Subtitle B

•HR 2530 IH

1 certified by the Secretary under subsection (a), the guide2 line—

3 (1) may be introduced by any party to the ac4 tion (including a health care provider, health care

5 professional, or patient); and

6 (2) if introduced, shall establish a rebuttable

7 presumption that the conduct was in accordance

8 with the appropriate standard of medical care, which

9 may only be overcome by the presentation of clear

10 and convincing evidence on behalf of the party

11 against whom the presumption operates.

12 SEC. 8124. TREATMENT OF NONECONOMIC AND PUNITIVE

13 DAMAGES.

14 (a) LIMITATION ON NONECONOMIC DAMAGES.—The

15 total amount of noneconomic damages that may be award16 ed to a claimant and the members of the claimant’s family

17 for losses resulting from the injury which is the subject

18 of a medical malpractice liability action may not exceed

19 $500,000, regardless of the number of parties against

20 whom the action is brought or the number of actions

21 brought with respect to the injury.

22 (b) NO AWARD OF PUNITIVE DAMAGES AGAINST

23 MANUFACTURER OF MEDICAL PRODUCT.—In the case of

24 a medical malpractice liability action in which the plaintiff

25 alleges a claim against the manufacturer of a medical
436

Title VIII, Subtitle B

•HR 2530 IH

1 product, no punitive or exemplary damages may be award2 ed against such manufacturer.

3 (c) JOINT AND SEVERAL LIABILITY FOR NON4 ECONOMIC DAMAGES.—The liability of each defendant for

5 noneconomic damages shall be several only and shall not

6 be joint, and each defendant shall be liable only for the

7 amount of noneconomic damages allocated to the defend8 ant in direct proportion to the defendant’s percentage of

9 responsibility (as determined by the trier of fact).

10 (d) USE OF PUNITIVE DAMAGE AWARDS FOR OPER11 ATION OF ADR SYSTEMS IN STATES.—

12 (1) IN GENERAL.—The total amount of any pu13 nitive damages awarded in a medical malpractice li14 ability action shall be paid to the State in which the

15 action is brought (or, in a case brought in Federal

16 court, in the State in which the health care services

17 that caused the injury that is the subject of the ac18 tion were provided), and shall be used by the State

19 solely to implement and operate the State alternative

20 dispute resolution system certified by the Secretary

21 under section 8132 (except as provided in paragraph

22 (2)).

23 (2) USE OF REMAINING AMOUNTS FOR PRO24 VIDER LICENSING AND DISCIPLINARY ACTIVITIES.—

25 If the amount of punitive damages paid to a State
437

Title VIII, Subtitle B

•HR 2530 IH

1 under paragraph (1) for a year is greater than the

2 State’s costs of implementing and operating the

3 State alternative dispute resolution system during

4 the year, the balance of such punitive damages paid

5 to the State shall be used solely to carry out activi6 ties to assure the safety and quality of health care

7 services provided in the State, including (but not

8 limited to)—

9 (A) licensing or certifying health care pro10 fessionals and health care providers in the

11 State; and

12 (B) carrying out programs to reduce mal13 practice-related costs for providers volunteering

14 to provide services in medically underserved

15 areas.

16 (3) MAINTENANCE OF EFFORT.—A State shall

17 use any amounts paid pursuant to paragraph (1) to

18 supplement and not to replace amounts spent by the

19 State for implementing and operating the State al20 ternative dispute resolution system or carrying out

21 the activities described in paragraph (2).

22 (e) DRUGS AND DEVICES.—

23 (1)(A) Punitive damages shall not be awarded

24 against a manufacturer or product seller of a drug

25 (as defined in section 201(g)(1) of the Federal
438

Title VIII, Subtitle B

•HR 2530 IH

1 Food, Drug, and Cosmetic Act (21 U.S.C.

2 321(g)(1)) or medical device (as defined in section

3 201(h) of the Federal Food, Drug, and Cosmetic

4 Act (21 U.S.C. 321(h)) which caused the claimant’s

5 harm where—

6 (i) such drug or device was subject to pre7 market approval by the Food and Drug Admin8 istration with respect to the safety of the for9 mulation or performance of the aspect of such

10 drug or device which caused the claimant’s

11 harm or the adequacy of the packaging or label12 ing of such drug or device, and such drug was

13 approved by the Food and Drug Administra14 tion; or

15 (ii) the drug is generally recognized as safe

16 and effective pursuant to conditions established

17 by the Food and Drug Administration and ap18 plicable regulations, including packaging and la19 beling regulations.

20 (B) Subparagraph (A) shall not apply in any

21 case in which the defendant, before or after pre22 market approval of a drug or device—

23 (i) intentionally and wrongfully withheld

24 from or misrepresented to the Food and Drug

25 Administration information concerning such
439

Title VIII, Subtitle B

•HR 2530 IH

1 drug or device required to be submitted under

2 the Federal Food, Drug, and Cosmetic Act (21

3 U.S.C. 301 et seq.) or section 351 of the Public

4 Health Service Act (42 U.S.C. 262) that is ma5 terial and relevant to the harm suffered by the

6 claimant, or

7 (ii) made an illegal payment to an official

8 or employee of the Food and Drug Administra9 tion for the purpose of securing or maintaining

10 approval of such drug or device.

11 (2) PACKAGING.—In a product liability action

12 for harm which is alleged to relate to the adequacy

13 of the packaging (or labeling relating to such pack14 aging) of a drug which is required to have tamper15 resistant packaging under regulations of the Sec16 retary of Health and Human Services (including la17 beling regulations related to such packaging), the

18 manufacturer of the drug shall not be held liable for

19 punitive damages unless the drug is found by the

20 court by clear and convincing evidence to be sub21 stantially out of compliance with such regulations.

22 SEC. 8125. PERIODIC PAYMENTS FOR FUTURE LOSSES.

23 (a) IN GENERAL.—In any medical malpractice liabil24 ity action in which the damages awarded for future eco25 nomic loss exceeds $100,000, a defendant may not be re-
440

Title VIII, Subtitle B

•HR 2530 IH

1 quired to pay such damages in a single, lump-sum pay2 ment, but may be permitted to make such payments on

3 a periodic basis. The periods for such payments shall be

4 determined by the court, based upon projections of when

5 such expenses are likely to be incurred.

6 (b) WAIVER.—A court may waive the application of

7 subsection (a) with respect to a defendant if the court de8 termines that it is not in the best interests of the plaintiff

9 to receive payments for damages on such a periodic basis.

10 SEC. 8126. TREATMENT OF ATTORNEY’S FEES AND OTHER

11 COSTS.

12 (a) REQUIRING PARTY CONTESTING ADR RULING

13 TO PAY ATTORNEY’S FEES AND OTHER COSTS.—

14 (1) IN GENERAL.—The court in a medical mal15 practice liability action shall require the party that

16 (pursuant to section 8122(c)(1)) contested the ruling

17 of the alternative dispute resolution system with re18 spect to the medical malpractice liability claim that

19 is the subject of the action to pay to the opposing

20 party the costs incurred by the opposing party under

21 the action, including attorney’s fees, fees paid to ex22 pert witnesses, and other litigation expenses (but not

23 including court costs, filing fees, or other expenses

24 paid directly by the party to the court, or any fees

25 or costs associated with the resolution of the claim
441

Title VIII, Subtitle B

•HR 2530 IH

1 under the alternative dispute resolution system), but

2 only if—

3 (A) in the case of an action in which the

4 party that contested the ruling is the claimant,

5 the amount of damages awarded to the party

6 under the action is less than the amount of

7 damages awarded to the party under the ADR

8 system; and

9 (B) in the case of an action in which the

10 party that contested the ruling is the defendant,

11 the amount of damages assessed against the

12 party under the action is greater than the

13 amount of damages assessed under the ADR

14 system.

15 (2) EXCEPTIONS.—Paragraph (1) shall not

16 apply if—

17 (A) the party contesting the ruling made

18 under the previous alternative dispute resolu19 tion system shows that—

20 (i) the ruling was procured by corrup21 tion, fraud, or undue means,

22 (ii) there was partiality or corruption

23 under the system,
442

Title VIII, Subtitle B

•HR 2530 IH

1 (iii) there was other misconduct under

2 the system that materially prejudiced the

3 party’s rights, or

4 (iv) the ruling was based on an error

5 of law;

6 (B) the party contesting the ruling made

7 under the alternative dispute resolution system

8 presents new evidence before the trier of fact

9 that was not available for presentation under

10 the ADR system;

11 (C) the medical malpractice liability action

12 raised a novel issue of law; or

13 (D) the court finds that the application of

14 such paragraph to a party would constitute an

15 undue hardship, and issues an order waiving or

16 modifying the application of such paragraph

17 that specifies the grounds for the court’s deci18 sion.

19 (3) LIMIT ON ATTORNEYS’ FEES PAID.—Attor20 neys’ fees that are required to be paid under para21 graph (1) by the contesting party shall not exceed

22 the amount of the attorneys’ fees incurred by the

23 contesting party in the action. If the attorneys’ fees

24 of the contesting party are based on a contingency

25 fee agreement, the amount of attorneys’ fees for
443

Title VIII, Subtitle B

•HR 2530 IH

1 purposes of the preceding sentence shall not exceed

2 the reasonable value of those services.

3 (4) RECORDS.—In order to receive attorneys’

4 fees under paragraph (1), counsel of record in the

5 medical malpractice liability action involved shall

6 maintain accurate, complete records of hours worked

7 on the action, regardless of the fee arrangement

8 with the client involved.

9 (b) CONTINGENCY FEE DEFINED.—As used in this

10 section, the term ‘‘contingency fee’’ means any fee for pro11 fessional legal services which is, in whole or in part, con12 tingent upon the recovery of any amount of damages,

13 whether through judgment or settlement.

14 SEC. 8127. UNIFORM STATUTE OF LIMITATIONS.

15 (a) IN GENERAL.—Except as provided in subsection

16 (b), no medical malpractice claim may be initiated after

17 the expiration of the 2-year period that begins on the date

18 on which the alleged injury that is the subject of such

19 claim was discovered, but in no event may such a claim

20 be initiated after the expiration of the 4-year period that

21 begins on the date on which the alleged injury that is the

22 subject of such claim occurred.

23 (b) EXCEPTION FOR MINORS.—In the case of an al24 leged injury suffered by a minor who has not attained 6

25 years of age, a medical malpractice claim may not be initi-
444

Title VIII, Subtitle B

•HR 2530 IH

1 ated after the expiration of the 2-year period that begins

2 on the date on which the alleged injury that is the subject

3 of such claim was discovered or should reasonably have

4 been discovered, but in no event may such a claim be initi5 ated after the date on which the minor attains 12 years

6 of age.

7 SEC. 8128. SPECIAL PROVISION FOR CERTAIN OBSTETRIC

8 SERVICES.

9 (a) IN GENERAL.—In the case of a medical mal10 practice claim relating to services provided during labor

11 or the delivery of a baby, if the health care professional

12 or health care provider against whom the claim is brought

13 did not previously treat the claimant for the pregnancy,

14 the trier of fact may not find that such professional or

15 provider committed malpractice and may not assess dam16 ages against such professional or provider unless the mal17 practice is proven by clear and convincing evidence.

18 (b) APPLICABILITY TO GROUP PRACTICES OR

19 AGREEMENTS AMONG PROVIDERS.—For purposes of sub20 section (a), a health care professional shall be considered

21 to have previously treated an individual for a pregnancy

22 if the professional is a member of a group practice whose

23 members previously treated the individual for the preg24 nancy or is providing services to the individual during
445

Title VIII, Subtitle B

•HR 2530 IH

1 labor or the delivery of a baby pursuant to an agreement

2 with another professional.

3 SEC. 8129. JURISDICTION OF FEDERAL COURTS.

4 Nothing in this subpart shall be construed to estab5 lish any jurisdiction over any medical malpractice liability

6 action in the district courts of the United States on the

7 basis of sections 1331 or 1337 of title 28, United States

8 Code.

9 SEC. 8130. PREEMPTION.

10 (a) IN GENERAL.—The provisions of this subpart

11 shall preempt any State law to the extent such law is in12 consistent with such provisions, except that the provisions

13 of this subpart shall not preempt any State law that pro14 vides for defenses or places limitations on a person’s liabil15 ity in addition to those contained in this part, places great16 er limitations on the amount of attorneys’ fees that can

17 be collected, or otherwise imposes greater restrictions than

18 those provided in this part.

19 (b) EFFECT ON SOVEREIGN IMMUNITY AND CHOICE

20 OF LAW OR VENUE.—Nothing in this subpart shall be

21 construed to—

22 (1) waive or affect any defense of sovereign im23 munity asserted by any State under any provision of

24 law;
446

Title VIII, Subtitle B

•HR 2530 IH

1 (2) waive or affect any defense of sovereign im2 munity asserted by the United States;

3 (3) affect the applicability of any provision of

4 the Foreign Sovereign Immunities Act of 1976;

5 (4) preempt State choice-of-law rules with re6 spect to claims brought by a foreign nation or a citi7 zen of a foreign nation; or

8 (5) affect the right of any court to transfer

9 venue or to apply the law of a foreign nation or to

10 dismiss a claim of a foreign nation or of a citizen

11 of a foreign nation on the ground in inconvenient

12 forum.

13 Subpart B—Requirements for State Alternative

14 Dispute Resolution Systems (ADR)

15 SEC. 8131. BASIC REQUIREMENTS.

16 (a) IN GENERAL.—A State’s alternative dispute reso17 lution system meets the requirements of this section if the

18 system—

19 (1) applies to all medical malpractice liability

20 claims under the jurisdiction of the courts of that

21 State;

22 (2) requires that a written opinion resolving the

23 dispute be issued not later than 6 months after the

24 date by which each party against whom the claim is

25 filed has received notice of the claim (other than in
447

Title VIII, Subtitle B

•HR 2530 IH

1 exceptional cases for which a longer period is re2 quired for the issuance of such an opinion), and that

3 the opinion contain—

4 (A) findings of fact relating to the dispute,

5 and

6 (B) a description of the costs incurred in

7 resolving the dispute under the system (includ8 ing any fees paid to the individuals hearing and

9 resolving the claim), together with an appro10 priate assessment of the costs against any of

11 the parties;

12 (3) requires individuals who hear and resolve

13 claims under the system to meet such qualifications

14 as the State may require (in accordance with regula15 tions of the Secretary);

16 (4) is approved by the State or by local govern17 ments in the State;

18 (5) with respect to a State system that consists

19 of multiple dispute resolution procedures—

20 (A) permits the parties to a dispute to se21 lect the procedure to be used for the resolution

22 of the dispute under the system, and

23 (B) if the parties do not agree on the pro24 cedure to be used for the resolution of the dis-
448

Title VIII, Subtitle B

•HR 2530 IH

1 pute, assigns a particular procedure to the

2 parties;

3 (6) provides for the transmittal to the State

4 agency responsible for monitoring or disciplining

5 health care professionals and health care providers

6 of any findings made under the system that such a

7 professional or provider committed malpractice, un8 less, during the 90-day period beginning on the date

9 the system resolves the claim against the profes10 sional or provider, the professional or provider

11 brings an action contesting the decision made under

12 the system; and

13 (7) provides for the regular transmittal to the

14 Administrator for Health Care Policy and Research

15 of information on disputes resolved under the sys16 tem, in a manner that assures that the identity of

17 the parties to a dispute shall not be revealed.

18 (b) APPLICATION OF MALPRACTICE LIABILITY

19 STANDARDS TO ALTERNATIVE DISPUTE RESOLUTION.—

20 The provisions of subpart A (other than section 8122)

21 shall apply with respect to claims brought under a State

22 alternative dispute resolution system or the alternative

23 Federal system in the same manner as such provisions

24 apply with respect to medical malpractice liability actions

25 brought in the State.
449

Title VIII, Subtitle B

•HR 2530 IH

1 SEC. 8132. CERTIFICATION OF STATE SYSTEMS; APPLICA2 BILITY OF ALTERNATIVE FEDERAL SYSTEM.

3 (a) CERTIFICATION.—

4 (1) IN GENERAL.—Not later than October 1 of

5 each year (beginning with 1995), the Secretary, in

6 consultation with the Attorney General, shall deter7 mine whether a State’s alternative dispute resolution

8 system meets the requirements of this subpart for

9 the following calendar year.

10 (2) BASIS FOR CERTIFICATION.—The Secretary

11 shall certify a State’s alternative dispute resolution

12 system under this subsection for a calendar year if

13 the Secretary determines under paragraph (1) that

14 the system meets the requirements of section 8131,

15 including the requirement described in section 8124

16 that punitive damages awarded under the system are

17 paid to the State for the uses described in such

18 section.

19 (b) APPLICABILITY OF ALTERNATIVE FEDERAL

20 SYSTEM.—

21 (1) ESTABLISHMENT AND APPLICABILITY.—

22 Not later than October 1, 1995, the Secretary, in

23 consultation with the Attorney General, shall estab24 lish by rule an alternative Federal ADR system for

25 the resolution of medical malpractice liability claims

26 during a calendar year in States that do not have
450

Title VIII, Subtitle B

•HR 2530 IH

1 in effect an alternative dispute resolution system

2 certified under subsection (a) for the year.

3 (2) REQUIREMENTS FOR SYSTEM.—Under the

4 alternative Federal ADR system established under

5 paragraph (1)—

6 (A) paragraphs (1), (2), (6), and (7) of

7 section 8131(a) shall apply to claims brought

8 under the system;

9 (B) if the system provides for the resolu10 tion of claims through arbitration, the claims

11 brought under the system shall be heard and

12 resolved by arbitrators appointed by the Sec13 retary in consultation with the Attorney Gen14 eral; and

15 (C) with respect to a State in which the

16 system is in effect, the Secretary may (at the

17 State’s request) modify the system to take into

18 account the existence of dispute resolution pro19 cedures in the State that affect the resolution

20 of medical malpractice liability claims.

21 (3) TREATMENT OF STATES WITH ALTER22 NATIVE SYSTEM IN EFFECT.—If the alternative Fed23 eral ADR system established under this subsection is

24 applied with respect to a State for a calendar year,

25 the State shall make a payment to the United States
451

Title VIII, Subtitle B

•HR 2530 IH

1 (at such time and in such manner as the Secretary

2 may require) in an amount equal to 110 percent of

3 the costs incurred by the United States during the

4 year as a result of the application of the system with

5 respect to the State.

6 SEC. 8133. REPORTS ON IMPLEMENTATION AND EFFEC7 TIVENESS OF ALTERNATIVE DISPUTE RESO8 LUTION SYSTEMS.

9 (a) IN GENERAL.—Not later than 5 years after the

10 date of the enactment of this Act, the Secretary shall pre11 pare and submit to the Congress a report describing and

12 evaluating State alternative dispute resolution systems op13 erated pursuant to this subpart and the alternative Fed14 eral system established under section 8132(b).

15 (b) CONTENTS OF REPORT.—The Secretary shall in16 clude in the report prepared and submitted under sub17 section (a)—

18 (1) information on—

19 (A) the effect of the alternative dispute

20 resolution systems on the cost of health care

21 within each State,

22 (B) the impact of such systems on the ac23 cess of individuals to health care within the

24 State, and
452

Title VIII, Subtitle B

•HR 2530 IH

1 (C) the effect of such systems on the qual2 ity of health care provided within the State; and

3 (2) to the extent that such report does not pro4 vide information on no-fault systems operated by

5 States as alternative dispute resolution systems pur6 suant to this part, an analysis of the feasibility and

7 desirability of establishing a system under which

8 medical malpractice liability claims shall be resolved

9 on a no-fault basis.

10 Subpart C—Definitions

11 SEC. 8141. DEFINITIONS.

12 As used in this part:

13 (1) ALTERNATIVE DISPUTE RESOLUTION SYS14 TEM.—The term ‘‘alternative dispute resolution sys15 tem’’ means a system that is enacted or adopted by

16 a State to resolve medical malpractice claims other

17 than through a medical malpractice liability action.

18 (2) CLAIMANT.—The term ‘‘claimant’’ means

19 any person who brings a health care liability action

20 and, in the case of an individual who is deceased, in21 competent, or a minor, the person on whose behalf

22 such an action is brought.

23 (3) CLEAR AND CONVINCING EVIDENCE.—The

24 term ‘‘clear and convincing evidence’’ is that meas25 ure or degree of proof that will produce in the mind
453

Title VIII, Subtitle B

•HR 2530 IH

1 of the trier of fact a firm belief or conviction as to

2 the truth of the allegations sought to be established,

3 except that such measure or degree of proof is more

4 than that required under preponderance of the evi5 dence, but less than that required for proof beyond

6 a reasonable doubt.

7 (4) ECONOMIC DAMAGES.—The term ‘‘economic

8 damages’’ means damages paid to compensate an in9 dividual for losses for hospital and other medical ex10 penses, lost wages, lost employment, and other pecu11 niary losses.

12 (5) HEALTH CARE PROFESSIONAL.—The term

13 ‘‘health care professional’’ means any individual who

14 provides health care services in a State and who is

15 required by State law or regulation to be licensed or

16 certified by the State to provide such services in the

17 State.

18 (6) HEALTH CARE PROVIDER.—The term

19 ‘‘health care provider’’ means any organization or

20 institution that is engaged in the delivery of health

21 care services in a State that is required by State law

22 or regulation to be licensed or certified by the State

23 to engage in the delivery of such services in the

24 State.
454

Title VIII, Subtitle B

•HR 2530 IH

1 (7) INJURY.—The term ‘‘injury’’ means any ill2 ness, disease, or other harm that is the subject of

3 a medical malpractice claim.

4 (8) MEDICAL MALPRACTICE LIABILITY AC5 TION.—The term ‘‘medical malpractice liability ac6 tion’’ means any civil action brought pursuant to

7 State law in which a plaintiff alleges a medical mal8 practice claim against a health care provider or

9 health care professional, but does not include any

10 action in which the plaintiff’s sole allegation is an

11 allegation of an intentional tort.

12 (9) MEDICAL MALPRACTICE CLAIM.—The term

13 ‘‘medical malpractice claim’’ means any claim relat14 ing to the provision of (or the failure to provide)

15 health care services or the use of a medical product,

16 without regard to the theory of liability asserted,

17 and includes any third-party claim, cross-claim,

18 counterclaim, or contribution claim in a medical

19 malpractice liability action.

20 (10) MEDICAL PRODUCT.—

21 (A) IN GENERAL.—The term ‘‘medical

22 product’’ means, with respect to the allegation

23 of a claimant, a drug (as defined in section

24 201(g)(1) of the Federal Food, Drug, and Cos25 metic Act (21 U.S.C. 321(g)(1)) or a medical
455

Title VIII, Subtitle B

•HR 2530 IH

1 device (as defined in section 201(h) of the Fed2 eral Food, Drug, and Cosmetic Act (21 U.S.C.

3 321(h)) if—

4 (i) such drug or device was subject to

5 premarket approval under section 505,

6 507, or 515 of the Federal Food, Drug,

7 and Cosmetic Act (21 U.S.C. 355, 357, or

8 360e) or section 351 of the Public Health

9 Service Act (42 U.S.C. 262) with respect

10 to the safety of the formulation or per11 formance of the aspect of such drug or de12 vice which is the subject of the claimant’s

13 allegation or the adequacy of the packag14 ing or labeling of such drug or device, and

15 such drug or device is approved by the

16 Food and Drug Administration; or

17 (ii) the drug or device is generally rec18 ognized as safe and effective under regula19 tions issued by the Secretary of Health

20 and Human Services under section 201(p)

21 of the Federal Food, Drug, and Cosmetic

22 Act (21 U.S.C. 321(p)).

23 (B) EXCEPTION IN CASE OF MISREPRE24 SENTATION OR FRAUD.—Notwithstanding sub25 paragraph (A), the term ‘‘medical product’’
456

Title VIII, Subtitle B

•HR 2530 IH

1 shall not include any product described in such

2 subparagraph if the claimant shows that the

3 product is approved by the Food and Drug Ad4 ministration for marketing as a result of with5 held information, misrepresentation, or an ille6 gal payment by manufacturer of the product.

7 (11) NONECONOMIC DAMAGES.—The term

8 ‘‘noneconomic damages’’ means damages paid to

9 compensate an individual for losses for physical and

10 emotional pain, suffering, inconvenience, physical

11 impairment, mental anguish, disfigurement, loss of

12 enjoyment of life, loss of consortium, and other

13 nonpecuniary losses, but does not include punitive

14 damages.

15 (12) PUNITIVE DAMAGES.—The term ‘‘punitive

16 damages’’ means compensation, in addition to com17 pensation for actual harm suffered, that is awarded

18 for the purpose of punishing a person for conduct

19 deemed to be malicious, wanton, willful, or exces20 sively reckless.
457

Title VIII, Subtitle B

•HR 2530 IH

1 PART 4—PAYMENT AREAS FOR PHYSICIANS’

2 SERVICES UNDER MEDICARE

3 SEC. 8151. MODIFICATION OF PAYMENT AREAS USED TO

4 DETERMINE PAYMENTS FOR PHYSICIANS’

5 SERVICES UNDER MEDICARE.

6 (a) IN GENERAL.—Section 1848(j)(2) (42 U.S.C.

7 1395w@4(j)(2)) is amended to read as follows:

8 ‘‘(2) FEE SCHEDULE AREA.—

9 ‘‘(A) GENERAL RULE.—Except as provided

10 in subparagraph (B), the term ‘fee schedule

11 area’ means, with respect to physicians’ services

12 furnished in a State, the State.

13 ‘‘(B) EXCEPTION FOR STATES WITH HIGH14 EST VARIATION AMONG AREAS.—In the case of

15 the 15 States with the greatest variation in cost

16 associated with physicians’ services among var17 ious geographic areas of the State (as deter18 mined by the Secretary in accordance with such

19 standards as the Secretary considers appro20 priate), the fee schedule area applicable with re21 spect to physicians’ services furnished in the

22 State shall be a locality used under section

23 1842(b) for purposes of computing payment

24 amounts for physicians’ services, except that

25 the Secretary shall revise the localities used
458

Title VIII, Subtitle C

•HR 2530 IH

1 under such section so that there are no more

2 than 5 such localities in any State.’’.

3 (b) BUDGET-NEUTRALITY REQUIREMENT.—The

4 Secretary of Health and Human Services shall carry out

5 the amendment made by subsection (a) in a manner which

6 ensures that the aggregate amount of payment made for

7 physicians’ services under part B of the medicare program

8 in any year does not exceed the aggregate amount of pay9 ment which would have been made for such services under

10 part B during the year if the amendment were not in ef11 fect.

12 (c) EFFECTIVE DATE.—The amendment made by

13 subsection (a) shall apply to physicians’ services furnished

14 on or after January 1, 1997.

15 Subtitle C—Medicare Payments to

16 Health Care Providers

17 PART 1—PROVISIONS AFFECTING ALL

18 PROVIDERS

19 SEC. 8201. ONE-YEAR FREEZE IN PAYMENTS TO PROVID20 ERS.

21 (a) FREEZE IN UPDATES.—

22 (1) IN GENERAL.—Notwithstanding any other

23 provision of law, except as otherwise provided in

24 paragraph (2), for purposes of determining the

25 amount to paid for an item or service under title
459

Title VIII, Subtitle C

•HR 2530 IH

1 XVIII of the Social Security Act, the percentage in2 crease in any economic index by which a payment

3 amount under title XVIII of the Social Security Act

4 is required to be increased during fiscal year 1996

5 shall be deemed to be zero.

6 (2) EXCEPTIONS.—Paragraph (1) shall not

7 apply to the determination of hospital-specific FTE

8 resident amounts under section 1886(h) of such Act.

9 (b) ECONOMIC INDEX.— The term ‘‘economic index’’

10 includes—

11 (1) the hospital market basket index (described

12 in section 1886(b)(3)(B)(iii) of the Social Security

13 Act),

14 (2) the medicare economic index (referred to in

15 the fourth sentence of section 1842(b)(3) of such

16 Act),

17 (3) the consumer price index for all urban con18 sumers (U.S. city average), and

19 (4) any other index used to adjust payment

20 amounts under title XVIII of such Act.

21 (c) EXTENSION OF PAYMENT FREEZE FOR SNFS

22 AND HHAS.—

23 (1) SKILLED NURSING FACILITIES.—

24 (A) NO CHANGE IN COST LIMITS.—Section

25 13503(a)(1) of OBRA–1993 is amended by
460

Title VIII, Subtitle C

•HR 2530 IH

1 striking ‘‘1994 and 1995’’ and inserting ‘‘1994,

2 1995, and 1996’’.

3 (B) DELAY IN UPDATES; NO CATCH UP.—

4 The last sentence of section 1888(a) (42 U.S.C.

5 1395yy(a)) is amended—

6 (i) by striking ‘‘1995’’ and inserting

7 ‘‘1996’’, and

8 (ii) by striking ‘‘subsection.’’ and in9 serting ‘‘subsection (except that such up10 dates may not take into account any

11 changes in the routine service costs of

12 skilled nursing facilities during cost report13 ing periods which began during fiscal year

14 1994, 1995, or 1996).’’.

15 (C) PROSPECTIVE PAYMENTS.—Section

16 13505(b) of OBRA–1993 is amended by strik17 ing ‘‘fiscal years 1994 and 1995’’ and inserting

18 ‘‘fiscal years 1994, 1995, and 1996’’.

19 (2) HOME HEALTH AGENCIES.—

20 (A) NO CHANGE IN COST LIMITS.—Section

21 13564(a)(1) of OBRA–1993 is amended by

22 striking ‘‘1996’’ and inserting ‘‘1997’’.

23 (B) DELAY IN UPDATES; NO CATCH UP.—

24 Section 1861(v)(1)(L)(iii) (42 U.S.C.

25 1395x(v)(1)(L)(iii)) is amended—
461

Title VIII, Subtitle C

•HR 2530 IH

1 (i) by striking ‘‘1996’’ and inserting

2 ‘‘1997’’, and

3 (ii) by adding at the end the follow4 ing: ‘‘In establishing limits under this sub5 paragraph, the Secretary may not take

6 into account any changes in the routine

7 service costs of the provision of services

8 furnished by home health agencies with re9 spect to cost reporting periods which began

10 on or after July 1, 1994, and before July

11 1, 1997.’’.

12 PART 2—PROVISIONS AFFECTING DOCTORS

13 SEC. 8211. PAYMENTS FOR PHYSICIANS’ SERVICES.

14 (a) ESTABLISHING UPDATE TO CONVERSION FACTOR

15 TO MATCH SPENDING UNDER SUSTAINABLE GROWTH

16 RATE.—

17 (1) IN GENERAL.—Section 1848(d)(2) (42

18 U.S.C. 1395ww(d)(2)) is amended to read as fol19 lows:

20 ‘‘(2) RECOMMENDATION OF UPDATE.—

21 ‘‘(A) IN GENERAL.—Not later than April

22 15 of each year (beginning with 1996), the Sec23 retary shall transmit to the Congress a report

24 that includes a recommendation on the appro25 priate update in the conversion factor for all
462

Title VIII, Subtitle C

•HR 2530 IH

1 physicians’ services (as defined in subsection

2 (f)(3)(A)) in the following year. In making the

3 recommendation, the Secretary shall consider—

4 ‘‘(i) the percentage change in the

5 medicare economic index (described in the

6 fourth sentence of section 1842(b)(3)) for

7 that year;

8 ‘‘(ii) such factors as enter into the

9 calculation of the update adjustment factor

10 as described in paragraph (3)(B); and

11 ‘‘(iii) access to services.

12 ‘‘(B) ADDITIONAL CONSIDERATIONS.—In

13 making recommendations under subparagraph

14 (A), the Secretary may also consider—

15 ‘‘(i) unexpected changes by physicians

16 in response to the implementation of the

17 fee schedule;

18 ‘‘(ii) unexpected changes in outlay

19 projections;

20 ‘‘(iii) changes in the quality or appro21 priateness of care;

22 ‘‘(iv) any other relevant factors not

23 measured in the resource-based payment

24 methodology; and
463

Title VIII, Subtitle C

•HR 2530 IH

1 ‘‘(v) changes in volume or intensity of

2 services.

3 ‘‘(C) COMMISSION REVIEW.—The Medicare

4 Payment Review Commission shall review the

5 report submitted under subparagraph (A) in a

6 year and shall submit to the Congress, by not

7 later than May 15 of the year, a report includ8 ing its recommendations respecting the update

9 in the conversion factor for the following year.’’.

10 (2) UPDATE.—Section 1848(d)(3) (42 U.S.C.

11 1395w@4(d)(3)) is amended to read as follows:

12 ‘‘(3) UPDATE.—

13 ‘‘(A) IN GENERAL.—Unless Congress oth14 erwise provides, subject to subparagraph (E),

15 for purposes of this section the update for a

16 year (beginning with 1997) is equal to the

17 product of—

18 ‘‘(i) 1 plus the Secretary’s estimate of

19 the percentage increase in the medicare

20 economic index (described in the fourth

21 sentence of section 1842(b)(3)) for the

22 year (divided by 100), and

23 ‘‘(ii) 1 plus the Secretary’s estimate of

24 the update adjustment factor for the year

25 (divided by 100),
464

Title VIII, Subtitle C

•HR 2530 IH

1 minus 1 and multiplied by 100.

2 ‘‘(B) UPDATE ADJUSTMENT FACTOR.—The

3 ‘update adjustment factor’ for a year is equal to

4 the quotient of—

5 ‘‘(i) the difference between (I) the

6 sum of the allowed expenditures for physi7 cians’ services furnished during each of the

8 years 1995 through the year involved and

9 (II) the sum of the amount of actual ex10 penditures for physicians’ services fur11 nished during each of the years 1995

12 through the previous year; divided by

13 ‘‘(ii) the Secretary’s estimate of al14 lowed expenditures for physicians’ services

15 furnished during the year.

16 ‘‘(C) DETERMINATION OF ALLOWED EX17 PENDITURES.—For purposes of subparagraph

18 (B), allowed expenditures for physicians’ serv19 ices shall be determined as follows (as esti20 mated by the Secretary):

21 ‘‘(i) In the case of allowed expendi22 tures for 1995, such expenditures shall be

23 equal to actual expenditures for services

24 furnished during the 12-month period end25 ing with June 30, 1995.
465

Title VIII, Subtitle C

•HR 2530 IH

1 ‘‘(ii) In the case of allowed expendi2 tures for 1996 and each subsequent year,

3 such expenditures shall be equal to allowed

4 expenditures for the previous year, in5 creased by the sustainable growth rate

6 under subsection (f) for the fiscal year

7 which begins during the year.

8 ‘‘(D) DETERMINATION OF ACTUAL EX9 PENDITURES.—For purposes of subparagraph

10 (B), the amount of actual expenditures for phy11 sicians’ services furnished during a year shall

12 be equal to the amount of expenditures for such

13 services during the 12-month period ending

14 with June of the previous year.

15 ‘‘(E) RESTRICTION ON VARIATION FROM

16 MEDICARE ECONOMIC INDEX.—Notwithstanding

17 the amount of the update adjustment factor de18 termined under subparagraph (B) for a year,

19 the update in the conversion factor under this

20 paragraph for the year may not be—

21 ‘‘(i) greater than 103 percent of 1

22 plus the Secretary’s estimate of the per23 centage increase in the medicare economic

24 index (described in the fourth sentence of
466

Title VIII, Subtitle C

•HR 2530 IH

1 section 1842(b)(3)) for the year (divided

2 by 100), minus 1 and multiplied by 100; or

3 ‘‘(ii) less than 91.75 percent of 1 plus

4 the Secretary’s estimate of the percentage

5 increase in the medicare economic index

6 (described in the fourth sentence of section

7 1842(b)(3)) for the year (divided by 100),

8 minus 1 and multiplied by 100.’’.

9 (3) EFFECTIVE DATE.—The amendments made

10 by this subsection shall apply to physicians’ services

11 furnished on or after January 1, 1997.

12 (b) REPLACEMENT OF VOLUME PERFORMANCE

13 STANDARD WITH SUSTAINABLE GROWTH RATE.—Section

14 1848(f) (42 U.S.C. 1395w@4(f)) is amended to read as

15 follows:

16 ‘‘(f) SUSTAINABLE GROWTH RATE.—

17 ‘‘(1) PROCESS FOR ESTABLISHING SUSTAIN18 ABLE GROWTH RATE OF INCREASE.—

19 ‘‘(A) SECRETARY’S RECOMMENDATION.—

20 By not later than April 15 of each year (begin21 ning with 1996), the Secretary shall transmit to

22 the Congress a recommendation on the sustain23 able growth rate for the fiscal year beginning in

24 such year. In making the recommendation, the
467

Title VIII, Subtitle C

•HR 2530 IH

1 Secretary shall confer with organizations rep2 resenting physicians and shall consider—

3 ‘‘(i) inflation,

4 ‘‘(ii) changes in numbers of enrollees

5 (other than private plan enrollees) under

6 this part,

7 ‘‘(iii) changes in the age composition

8 of enrollees (other than private plan enroll9 ees) under this part,

10 ‘‘(iv) changes in technology,

11 ‘‘(v) evidence of inappropriate utiliza12 tion of services,

13 ‘‘(vi) evidence of lack of access to nec14 essary physicians’ services, and

15 ‘‘(vii) such other factors as the Sec16 retary considers appropriate.

17 ‘‘(B) COMMISSION REVIEW.—The Medicare

18 Payment Review Commission shall review the

19 recommendation transmitted during a year

20 under subparagraph (A) and shall make its rec21 ommendation to Congress, by not later than

22 May 15 of the year, respecting the sustainable

23 growth rate for the fiscal year beginning in that

24 year.
468

Title VIII, Subtitle C

•HR 2530 IH

1 ‘‘(C) PUBLICATION OF SUSTAINABLE

2 GROWTH RATE.—The Secretary shall cause to

3 have the sustainable growth rate published in

4 the Federal Register, in the last 15 days of Oc5 tober of each calendar year (beginning with

6 1997), for the fiscal year beginning in that

7 year. The Secretary shall cause to have pub8 lished in the Federal Register, by not later than

9 January 1, 1997, the paragraph (2) for fiscal

10 year 1997.

11 ‘‘(2) SPECIFICATION OF GROWTH RATE.—

12 ‘‘(A) FISCAL YEAR 1996.—The sustainable

13 growth rate for all physicians’ services for fiscal

14 year 1996 shall be equal to the product of—

15 ‘‘(i) 1 plus the Secretary’s estimate of

16 the percentage change in the medicare eco17 nomic index for 1996 (described in the

18 fourth sentence of section 1842(b)(3)) (di19 vided by 100),

20 ‘‘(ii) 1 plus the Secretary’s estimate of

21 the percentage change (divided by 100) in

22 the average number of individuals enrolled

23 under this part (other than private plan

24 enrollees) from fiscal year 1995 to fiscal

25 year 1996,
469

Title VIII, Subtitle C

•HR 2530 IH

1 ‘‘(iii) 1 plus the Secretary’s estimate

2 of the projected percentage growth in real

3 gross domestic product per capita (divided

4 by 100) from fiscal year 1995 to fiscal

5 year 1996, and

6 ‘‘(iv) 1 plus the Secretary’s estimate

7 of the percentage change (divided by 100)

8 in expenditures for all physicians’ services

9 in fiscal year 1996 (compared with fiscal

10 year 1995) which will result from changes

11 in law (including the Common Sense Bal12 anced Budget Act of 1995), determined

13 without taking into account estimated

14 changes in expenditures due to changes in

15 the volume and intensity of physicians’

16 services or changes in expenditures result17 ing from changes in the update to the con18 version factor under subsection (d),

19 minus 1 and multiplied by 100.

20 ‘‘(B) SUBSEQUENT FISCAL YEARS.—The

21 sustainable growth rate for all physicians’ serv22 ices for fiscal year 1997 and each subsequent

23 fiscal year shall be equal to the product of—

24 ‘‘(i) 1 plus the Secretary’s estimate of

25 the percentage change in the medicare eco-
470

Title VIII, Subtitle C

•HR 2530 IH

1 nomic index for the fiscal year involved

2 (described in the fourth sentence of section

3 1842(b)(3)) (divided by 100),

4 ‘‘(ii) 1 plus the Secretary’s estimate of

5 the percentage change (divided by 100) in

6 the average number of individuals enrolled

7 under this part (other than private plan

8 enrollees) from the previous fiscal year to

9 the fiscal year involved,

10 ‘‘(iii) 1 plus the Secretary’s estimate

11 of the projected percentage growth in real

12 gross domestic product per capita (divided

13 by 100) from the previous fiscal year to

14 the fiscal year involved, and

15 ‘‘(iv) 1 plus the Secretary’s estimate

16 of the percentage change (divided by 100)

17 in expenditures for all physicians’ services

18 in the fiscal year (compared with the pre19 vious fiscal year) which will result from

20 changes in law, determined without taking

21 into account estimated changes in expendi22 tures due to changes in the volume and in23 tensity of physicians’ services or changes in

24 expenditures resulting from changes in the
471

Title VIII, Subtitle C

•HR 2530 IH

1 update to the conversion factor under sub2 section (d)(3),

3 minus 1 and multiplied by 100.

4 ‘‘(3) DEFINITIONS.—In this subsection:

5 ‘‘(A) SERVICES INCLUDED IN PHYSICIANS’

6 SERVICES.—The term ‘physicians’ services’ in7 cludes other items and services (such as clinical

8 diagnostic laboratory tests and radiology serv9 ices), specified by the Secretary, that are com10 monly performed or furnished by a physician or

11 in a physician’s office, but does not include

12 services furnished to a private plan enrollee.

13 ‘‘(B) PRIVATE PLAN ENROLLEE.—The

14 term ‘private plan enrollee’ means, with respect

15 to a fiscal year, an individual enrolled under

16 this part who has elected to receive benefits

17 under this title for the fiscal year through a

18 Medicare Choice product under part C or

19 through enrollment with an eligible organization

20 with a risk-sharing contract under section

21 1876.’’.

22 (c) ESTABLISHMENT OF SINGLE CONVERSION FAC23 TOR FOR 1996.—

24 (1) IN GENERAL.—Section 1848(d)(1) (42

25 U.S.C. 1395w@4(d)(1)) is amended—
472

Title VIII, Subtitle C

•HR 2530 IH

1 (A) by redesignating subparagraph (C) as

2 subparagraph (D); and

3 (B) by inserting after subparagraph (B)

4 the following new subparagraph:

5 ‘‘(C) SPECIAL RULE FOR 1996.—For

6 1996, the conversion factor under this sub7 section shall be $36.40 for all physicians’ serv8 ices.’’.

9 (2) CONFORMING AMENDMENTS.—Section 1848

10 (42 U.S.C. 1395w@4), as amended by paragraph

11 (1), is amended—

12 (A) by striking ‘‘(or factors)’’ each place it

13 appears in subsection (d)(1)(A) and

14 (d)(1)(D)(ii);

15 (B) in subsection (d)(1)(A), by striking ‘‘or

16 updates’’;

17 (C) in subsection (d)(1)(D)(ii), by striking

18 ‘‘(or updates)’’; and

19 (D) in subsection (i)(1)(C), by striking

20 ‘‘conversion factors’’ and inserting ‘‘the conver21 sion factor’’.
473

Title VIII, Subtitle C

•HR 2530 IH

1 PART 3—PROVISIONS AFFECTING HOSPITALS

2 SEC. 8221. REDUCTION IN UPDATE FOR INPATIENT HOS3 PITAL SERVICES.

4 (a) PPS HOSPITALS.—Section 1886(b)(3)(B)(i) (42

5 U.S.C. 1395ww(b)(3)(B)(i)) is amended—

6 (1) by amending subclause (XII) to read as fol7 lows:

8 ‘‘(XII) for each of the fiscal years 1997 through

9 2002, the market basket percentage increase minus

10 0.5 percentage point for hospitals in a rural area,

11 and the market basket percentage increase minus

12 1.5 percentage points for all other hospitals, and’’;

13 and

14 (2) in subclause (XIII), by striking ‘‘1998’’ and

15 inserting ‘‘2003’’.

16 (b) PPS-EXEMPT HOSPITALS.—

17 (1) IN GENERAL.—Section 1886(b)(3)(B)(ii)

18 (42 U.S.C. 1395ww(b)(3)(B)(ii)) is amended—

19 (A) in subclause (V)—

20 (i) by striking ‘‘thorugh 1997’’ and

21 inserting ‘‘through 1996’’, and

22 (ii) by striking ‘‘and’’ at the end;

23 (B) by redesignating subclause (VI) as

24 subclause (VII); and

25 (C) by inserting after subclause (V) the

26 following new subclause:
474

Title VIII, Subtitle C

•HR 2530 IH

1 ‘‘(VI) fiscal years 1997 through 2002, is the

2 market basket percentage increase minus 1.0 per3 centage point, and’’.

4 (2) CONFORMING AMENDMENT.—Section

5 1886(b)(3)(B) (42 U.S.C. 1395ww(b)(3)(B)) is

6 amended by striking clause (v).

7 SEC. 8222. ELIMINATION OF FORMULA-DRIVEN OVERPAY8 MENTS FOR CERTAIN OUTPATIENT HOSPITAL

9 SERVICES.

10 (a) AMBULATORY SURGICAL CENTER PROCE11 DURES.—Section 1833(i)(3)(B)(i)(II) (42 U.S.C.

12 1395l(i)(3)(B)(i)(II)) is amended—

13 (1) by striking ‘‘of 80 percent’’; and

14 (2) by striking the period at the end and insert15 ing the following: ‘‘, less the amount a provider may

16 charge as described in clause (ii) of section

17 1866(a)(2)(A).’’.

18 (b) RADIOLOGY SERVICES AND DIAGNOSTIC PROCE19 DURES.—Section 1833(n)(1)(B)(i)(II) (42 U.S.C.

20 1395l(n)(1)(B)(i)(II)) is amended—

21 (1) by striking ‘‘of 80 percent’’; and

22 (2) by striking the period at the end and insert23 ing the following: ‘‘, less the amount a provider may

24 charge as described in clause (ii) of section

25 1866(a)(2)(A).’’.
475

Title VIII, Subtitle C

•HR 2530 IH

1 (c) EFFECTIVE DATE.—The amendments made by

2 this section shall apply to services furnished during por3 tions of cost reporting periods occurring on or after Janu4 ary 1, 1996.

5 SEC. 8223. ESTABLISHMENT OF PROSPECTIVE PAYMENT

6 SYSTEM FOR OUTPATIENT SERVICES.

7 (a) IN GENERAL.—Section 1833(a)(2)(B) (42 U.S.C.

8 1395l(a)(2)(B)) is amended by striking ‘‘section 1886)—

9 ’’ and all that follows and inserting the following: ‘‘section

10 1886), an amount equal to a prospectively determined

11 payment rate established by the Secretary that provides

12 for payments for such items and services to be based upon

13 a national rate adjusted to take into account the relative

14 costs of furnishing such items and services in various geo15 graphic areas, except that for items and services furnished

16 during cost reporting periods (or portions thereof) in years

17 beginning with 1996, such amount shall be equal to 95

18 percent of the amount that would otherwise have been de19 termined;’’.

20 (b) ESTABLISHMENT OF PROSPECTIVE PAYMENT

21 SYSTEM.—Not later than July 1, 1995, the Secretary of

22 Health and Human Services shall establish the prospective

23 payment system for hospital outpatient services necessary

24 to carry out section 1833(a)(2)(B) of the Social Security

25 Act (as amended by subsection (a)).
476

Title VIII, Subtitle C

•HR 2530 IH

1 (c) EFFECTIVE DATE.—The amendment made by

2 subsection (a) shall apply to items and services furnished

3 on or after January 1, 1997.

4 SEC. 8224. REDUCTION IN MEDICARE PAYMENTS TO HOS5 PITALS FOR INPATIENT CAPITAL-RELATED

6 COSTS.

7 (a) PPS HOSPITALS.—Section 1886(g)(1)(A) (42

8 U.S.C. 1395ww(g)(1)(A)) is amended by striking ‘‘1995’’

9 and inserting ‘‘2002’’.

10 (b) PPS-EXEMPT HOSPITALS.—Section 1861(v)(1)

11 (42 U.S.C. 1395x(v)(1)) is amended by adding at the end

12 the following:

13 ‘‘(T) Such regulations shall provide that,

14 in determining the amount of the payments

15 that may be made under this title with respect

16 to the capital-related costs of inpatient hospital

17 services furnished by a hospital that is not a

18 subsection (d) hospital (as defined in section

19 1886(d)(1)(B)) or a subsection (d) Puerto Rico

20 hospital (as defined in section 1886(d)(9)(A)),

21 the Secretary shall reduce the amounts of such

22 payments otherwise established under this title

23 by 10 percent for payments attributable to por24 tions of cost reporting periods occurring during

25 each of the fiscal year 1996 through 2002.’’.
477

Title VIII, Subtitle C

•HR 2530 IH

1 SEC. 8225. MORATORIUM ON PPS EXEMPTION FOR LONG2 TERM CARE HOSPITALS.

3 (a) IN GENERAL.—Section 1886(d)(1)(B)(iv) (42

4 U.S.C. 1395ww(d)(1)(B)(iv)) is amended by striking

5 ‘‘Secretary)’’ and inserting ‘‘Secretary on or before Sep6 tember 30, 1995)’’.

7 (b) RECOMMENDATIONS ON APPROPRIATE STAND8 ARDS FOR LONG-TERM CARE HOSPITALS.—Not later

9 than 1 year after the date of the enactment of this Act,

10 the Secretary of Health and Human Services shall submit

11 to Congress recommendations for modifications to the

12 standards used by the Secretary to determine whether a

13 hospital (including a distinct part of another hospital) is

14 classified as a long-term care hospital for purposes of de15 termining the amount of payment to the hospital under

16 part A of the medicare program for the operating costs

17 of inpatient hospital services.

18 PART 4—PROVISIONS AFFECTING OTHER

19 PROVIDERS

20 SEC. 8231. REVISION OF PAYMENT METHODOLOGY FOR

21 HOME HEALTH SERVICES.

22 (a) ADDITIONS TO COST LIMITS.—Section

23 1861(v)(1)(L) (42 U.S.C. 1395x(v)(1)(L)) is amended by

24 adding at the end the following new clauses:

25 ‘‘(iv) For services furnished by home

26 health agencies for cost reporting periods
478

Title VIII, Subtitle C

•HR 2530 IH

1 beginning on or after October 1, 1996, the

2 Secretary shall provide for an interim sys3 tem of limits. Payment shall be the lower

4 of—

5 ‘‘(I) costs determined under the

6 preceding provisions of this subpara7 graph, or

8 ‘‘(II) an agency-specific per bene9 ficiary annual limit calculated from

10 the agency’s 12-month cost reporting

11 period ending on or after January 1,

12 1994 and on or before December 31,

13 1994 based on reasonable costs (in14 cluding non-routine medical supplies),

15 updated by the home health market

16 basket index. The per beneficiary limi17 tation shall be multiplied by the agen18 cy’s unduplicated census count of

19 Medicare patients for the year subject

20 to the limitation. The limitation shall

21 represent total Medicare reasonable

22 costs divided by the unduplicated cen23 sus count of Medicare patients.

24 ‘‘(v) For services furnished by home

25 health agencies for cost reporting periods
479

Title VIII, Subtitle C

•HR 2530 IH

1 beginning on or after October 1, 1996, the

2 following rules shall apply:

3 ‘‘(I) For new providers and those

4 providers without a 12-month cost re5 porting period ending in calendar year

6 1994, the per beneficiary limit shall

7 be equal to the mean of these limits

8 (or the Secretary’s best estimates

9 thereof) applied to home health agen10 cies as determined by the Secretary.

11 Home health agencies that have al12 tered their corporate structure or

13 name may not be considered new pro14 viders for payment purposes.

15 ‘‘(II) For beneficiaries who use

16 services furnished by more than one

17 home health agency, the per bene18 ficiary limitation shall be pro-rated

19 among agencies.

20 ‘‘(vi) Home health agencies whose cost

21 or utilization experience is below 125 per22 cent of the mean national or census region

23 aggregate per beneficiary cost or utilization

24 experience for 1994, or best estimates

25 thereof, and whose year-end reasonable
480

Title VIII, Subtitle C

•HR 2530 IH

1 costs are below the agency-specific per ben2 eficiary limit, shall receive payment equal

3 to 50 percent of the difference between the

4 agency’s reasonable costs and its limit for

5 fiscal years 1996, 1997, 1998, and 1999.

6 Such payments may not exceed 5 percent

7 of an agency’s aggregate Medicare reason8 able cost in a year.

9 ‘‘(vii) Effective January 1, 1997, or

10 as soon as feasible, the Secretary shall

11 modify the agency specific per beneficiary

12 annual limit described in clause (iv) to pro13 vide for regional or national variations in

14 utilization. For purposes of determining

15 payment under clause (iv), the limit shall

16 be calculated through a blend of 75 per17 cent of the agency-specific cost or utiliza18 tion experience in 1994 with 25 percent of

19 the national or census region cost or utili20 zation experience in 1994, or the Sec21 retary’s best estimates thereof.’’.

22 (b) USE OF INTERIM FINAL REGULATIONS.—The

23 Secretary shall implement the payment limits described in

24 section 1861(v)(1)(L)(iv) of the Social Security Act by

25 publishing in the Federal Register a notice of interim final
481

Title VIII, Subtitle C

•HR 2530 IH

1 payment limits by August 1, 1996 and allowing for a pe2 riod of public comments thereon. Payments subject to

3 these limits will be effective for cost reporting periods be4 ginning on or after October 1, 1996, without the necessity

5 for consideration of comments received, but the Secretary

6 shall, by Federal Register notice, affirm or modify the lim7 its after considering those comments.

8 (c) STUDIES.—The Secretary shall expand research

9 on a prospective payment system for home health agencies

10 that shall tie prospective payments to an episode of care,

11 including an intensive effort to develop a reliable case mix

12 adjuster that explains a significant amount of the

13 variances in costs. The Secretary shall develop such a sys14 tem for implementation in fiscal year 2000.

15 (d) PAYMENTS DETERMINED ON PROSPECTIVE

16 BASIS.—Title XVIII is amended by adding at the end the

17 following new section:

18 ‘‘PROSPECTIVE PAYMENT FOR HOME HEALTH SERVICES

19 ‘‘SEC. 1893. (a) Notwithstanding section 1861(v),

20 the Secretary shall, for cost reporting periods beginning

21 on or after fiscal year 2000, provide for payments for

22 home health services in accordance with a prospective pay23 ment system, which pays home health agencies on a per

24 episode basis, established by the Secretary.

25 ‘‘(b) Such a system shall include the following:
482

Title VIII, Subtitle C

•HR 2530 IH

1 ‘‘(1) Per episode rates under the system shall

2 be 15 percent less than those that would otherwise

3 occur under fiscal year 2000 Medicare expenditures

4 for home health services.

5 ‘‘(2) All services covered and paid on a reason6 able cost basis under the Medicare home health ben7 efit as of the date of the enactment of the Medicare

8 Enhancement Act of 1995, including medical sup9 plies, shall be subject to the per episode amount. In

10 defining an episode of care, the Secretary shall con11 sider an appropriate length of time for an episode

12 the use of services and the number of visits provided

13 within an episode, potential changes in the mix of

14 services provided within an episode and their cost,

15 and a general system design that will provide for

16 continued access to quality services. The per episode

17 amount shall be based on the most current audited

18 cost report data available to the Secretary.

19 ‘‘(c) The Secretary shall employ an appropriate case

20 mix adjuster that explains a significant amount of the var21 iation in cost.

22 ‘‘(d) The episode payment amount shall be adjusted

23 annually by the home health market basket index. The

24 labor portion of the episode amount shall be adjusted for
483

Title VIII, Subtitle C

•HR 2530 IH

1 geographic differences in labor-related costs based on the

2 most current hospital wage index.

3 ‘‘(e) The Secretary may designate a payment provi4 sion for outliers, recognizing the need to adjust payments

5 due to unusual variations in the type or amount of medi6 cally necessary care.

7 ‘‘(f) A home health agency shall be responsible for

8 coordinating all care for a beneficiary. If a beneficiary

9 elects to transfer to, or receive services from, another

10 home health agency within an episode period, the episode

11 payment shall be pro-rated between home health agen12 cies.’’.

13 SEC. 8232. LIMITATION OF HOME HEALTH COVERAGE

14 UNDER PART A.

15 (a) IN GENERAL.—Section 1812(a)(3) (42 U.S.C.

16 1395d(a)(3)) is amended by striking the semicolon and in17 serting ‘‘for up to 150 days during any spell of illness;’’.

18 (b) CONFORMING AMENDMENT.—Section 1812(b)

19 (42 U.S.C. 1395d(b)) is amended—

20 (1) by striking ‘‘or’’ at the end of paragraph

21 (2),

22 (2) by striking the period at the end of para23 graph (3) and inserting ‘‘; or’’, and

24 (3) by adding at the end the following new

25 paragraph:
484

Title VIII, Subtitle C

•HR 2530 IH

1 ‘‘(4) home health services furnished to the indi2 vidual during such spell after such services have

3 been furnished to the individual for 150 days during

4 such spell.’’.

5 (c) EXCLUSION OF ADDITIONAL PART B COSTS

6 FROM DETERMINATION OF PART B MONTHLY PRE7 MIUM.—Section 1839(a) (42 U.S.C. 1395r(a)) is amend8 ed—

9 (1) in the second sentence of paragraph (1), by

10 striking ‘‘enrollees.’’ and inserting ‘‘enrollees (except

11 as provided in paragraph (5)).’’; and

12 (2) by adding at the end the following new

13 paragraph:

14 ‘‘(5) In estimating the benefits and administrative

15 costs which will be payable from the Federal Supple16 mentary Medical Insurance Trust Fund for a year (begin17 ning with 1996), the Secretary shall exclude an estimate

18 of any benefits and costs attributable to home health serv19 ices for which payment would have been made under part

20 A during the year but for paragraph (4) of section

21 1812(b).’’.

22 (d) EFFECTIVE DATE.—The amendments made by

23 this subsection shall apply to spells of illness beginning

24 on or after October 1, 1995.
485

Title VIII, Subtitle C

•HR 2530 IH

1 SEC. 8233. REDUCTION IN FEE SCHEDULE FOR DURABLE

2 MEDICAL EQUIPMENT.

3 (a) IN GENERAL.—

4 (1) FREEZE IN UPDATE FOR COVERED

5 ITEMS.—Section 1834(a)(14) (42 U.S.C.

6 1395m(a)(14)) is amended—

7 (A) by striking ‘‘and’’ at the end of sub8 paragraph (A);

9 (B) in subparagraph (B)—

10 (i) by striking ‘‘a subsequent year’’

11 and inserting ‘‘1993, 1994, and 1995’’,

12 and

13 (ii) by striking the period at the end

14 and inserting ‘‘; and’’; and

15 (C) by adding at the end the following:

16 ‘‘(C) for each of the years 1996 through

17 2002, 0 percent; and

18 ‘‘(D) for a subsequent year, the percentage

19 increase in the consumer price index for all

20 urban consumers (U.S. urban average) for the

21 12-month period ending with June of the pre22 vious year.’’.

23 (2) UPDATE FOR ORTHOTICS AND PROSTHET24 ICS.—Section 1834(h)(4)(A)(iii) (42 U.S.C.

25 1395m(h)(4)(A)(iii)) is amended by striking ‘‘1994
486

Title VIII, Subtitle C

•HR 2530 IH

1 and 1995’’ and inserting ‘‘each of the years 1994

2 through 2002’’.

3 (b) OXYGEN AND OXYGEN EQUIPMENT.—Section

4 1834(a)(9)(C) (42 U.S.C. 1395m(a)(9)(C)) is amended—

5 (1) by striking ‘‘and’’ at the end of clause (iii);

6 (2) in clause (iv)—

7 (A) by striking ‘‘a subsequent year’’ and

8 inserting ‘‘1993, 1994, and 1995’’, and

9 (B) by striking the period at the end and

10 inserting ‘‘; and’’; and

11 (3) by adding at the end the following new

12 clause:

13 ‘‘(v) in 1996 and each subsequent

14 year, is 90 percent of the national limited

15 monthly payment rate computed under

16 subparagraph (B) for the item for the

17 year.’’.

18 SEC. 8234. NURSING HOME BILLING.

19 (a) PAYMENTS FOR ROUTINE SERVICE COSTS.—

20 (1) CLARIFICATION OF DEFINITION OF ROU21 TINE SERVICE COSTS.—Section 1888 (42 U.S.C.

22 1395yy) is amended by adding at the end the follow23 ing new subsection:

24 ‘‘(e) For purposes of this section, the ‘routine service

25 costs’ of a skilled nursing facility are all costs which are
487

Title VIII, Subtitle C

•HR 2530 IH

1 attributable to nursing services, room and board, adminis2 trative costs, other overhead costs, and all other ancillary

3 services (including supplies and equipment), excluding

4 costs attributable to covered non-routine services subject

5 to payment limits under section 1888A.’’.

6 (2) CONFORMING AMENDMENT.—Section 1888

7 (42 U.S.C. 1395yy) is amended in the heading by

8 inserting ‘‘AND CERTAIN ANCILLARY’’ after ‘‘SERV9 ICE’’.

10 (b) INCENTIVES FOR COST EFFECTIVE MANAGE11 MENT OF COVERED NONROUTINE SERVICES.—

12 (1) IN GENERAL.—Title XVIII is amended by

13 inserting after section 1888 the following new sec14 tion:

15 ‘‘INCENTIVES FOR COST-EFFECTIVE MANAGEMENT OF

16 COVERED NON-ROUTINE SERVICES OF SKILLED

17 NURSING FACILITIES

18 ‘‘SEC. 1888A. (a) DEFINITIONS.—For purposes of

19 this section:

20 ‘‘(1) COVERED NON-ROUTINE SERVICES.—The

21 term ‘covered non-routine services’ means post-hos22 pital extended care services consisting of any of the

23 following:

24 ‘‘(A) Physical or occupational therapy or

25 speech-language pathology services, or res26 piratory therapy.
488

Title VIII, Subtitle C

•HR 2530 IH

1 ‘‘(B) Prescription drugs.

2 ‘‘(C) Complex medical equipment.

3 ‘‘(D) Intravenous therapy and solutions

4 (including enteral and parenteral nutrients,

5 supplies, and equipment).

6 ‘‘(E) Radiation therapy.

7 ‘‘(F) Diagnostic services, including labora8 tory, radiology (including computerized tomog9 raphy services and imaging services), and pul10 monary services.

11 ‘‘(2) SNF MARKET BASKET PERCENTAGE IN12 CREASE.—The term ‘SNF market basket percentage

13 increase’ for a fiscal year means a percentage equal

14 to the percentage increase in routine service cost

15 limits for the year under section 1888(a).

16 ‘‘(3) STAY.—The term ‘stay’ means, with re17 spect to an individual who is a resident of a skilled

18 nursing facility, a period of continuous days during

19 which the facility provides extended care services for

20 which payment may be made under this title to the

21 individual during the individual’s spell of illness.

22 ‘‘(b) NEW PAYMENT METHOD FOR COVERED NON23 ROUTINE SERVICES.—

24 ‘‘(1) IN GENERAL.—Subject to subsection (c), a

25 skilled nursing facility shall receive interim pay-
489

Title VIII, Subtitle C

•HR 2530 IH

1 ments under this title for covered non-routine serv2 ices furnished to an individual during a cost report3 ing period beginning during a fiscal year (after fiscal

4 year 1996) in an amount equal to the reasonable

5 cost of providing such services in accordance with

6 section 1861(v). The Secretary may adjust such pay7 ments if the Secretary determines (on the basis of

8 such estimated information as the Secretary consid9 ers appropriate) that payments to the facility under

10 this paragraph for a cost reporting period would

11 substantially exceed the cost reporting period limit

12 determined under subsection (c)(1)(B).

13 ‘‘(2) RESPONSIBILITY OF SKILLED NURSING

14 FACILITY TO MANAGE BILLINGS.—

15 ‘‘(A) CLARIFICATION RELATING TO PART A

16 BILLING.—In the case of a covered non-routine

17 service furnished to an individual who (at the

18 time the service is furnished) is a resident of a

19 skilled nursing facility who is entitled to cov20 erage under section 1812(a)(2) for such service,

21 the skilled nursing facility shall submit a claim

22 for payment under this title for such service

23 under part A (without regard to whether or not

24 the item or service was furnished by the facility,

25 by others under arrangement with them made
490

Title VIII, Subtitle C

•HR 2530 IH

1 by the facility, under any other contracting or

2 consulting arrangement, or otherwise).

3 ‘‘(B) PART B BILLING.—In the case of a

4 covered non-routine service furnished to an in5 dividual who (at the time the service is fur6 nished) is a resident of a skilled nursing facility

7 who is not entitled to coverage under section

8 1812(a)(2) for such service but is entitled to

9 coverage under part B for such service, the

10 skilled nursing facility shall submit a claim for

11 payment under this title for such service under

12 part B (without regard to whether or not the

13 item or service was furnished by the facility, by

14 others under arrangement with them made by

15 the facility, under any other contracting or con16 sulting arrangement, or otherwise).

17 ‘‘(C) MAINTAINING RECORDS ON SERVICES

18 FURNISHED TO RESIDENTS.—Each skilled nurs19 ing facility receiving payments for extended

20 care services under this title shall document on

21 the facility’s cost report all covered non-routine

22 services furnished to all residents of the facility

23 to whom the facility provided extended care

24 services for which payment was made under

25 part A during a fiscal year (beginning with fis-
491

Title VIII, Subtitle C

•HR 2530 IH

1 cal year 1996) (without regard to whether or

2 not the services were furnished by the facility,

3 by others under arrangement with them made

4 by the facility, under any other contracting or

5 consulting arrangement, or otherwise).

6 ‘‘(c) RECONCILIATION OF AMOUNTS.—

7 ‘‘(1) LIMIT BASED ON PER STAY LIMIT AND

8 NUMBER OF STAYS.—

9 ‘‘(A) IN GENERAL.—If a skilled nursing fa10 cility has received aggregate payments under

11 subsection (b) for covered non-routine services

12 during a cost reporting period beginning during

13 a fiscal year in excess of an amount equal to

14 the cost reporting period limit determined

15 under subparagraph (B), the Secretary shall re16 duce the payments made to the facility with re17 spect to such services for cost reporting periods

18 beginning during the following fiscal year in an

19 amount equal to such excess. The Secretary

20 shall reduce payments under this subparagraph

21 at such times and in such manner during a fis22 cal year as the Secretary finds necessary to

23 meet the requirement of this subparagraph.

24 ‘‘(B) COST REPORTING PERIOD LIMIT.—

25 The cost reporting period limit determined
492

Title VIII, Subtitle C

•HR 2530 IH

1 under this subparagraph is an amount equal to

2 the product of—

3 ‘‘(i) the per stay limit applicable to

4 the facility under subsection (d) for the pe5 riod; and

6 ‘‘(ii) the number of stays beginning

7 during the period for which payment was

8 made to the facility for such services.

9 ‘‘(C) PROSPECTIVE REDUCTION IN PAY10 MENTS.—In addition to the process for reduc11 ing payments described in subparagraph (A),

12 the Secretary may reduce payments made to a

13 facility under this section during a cost report14 ing period if the Secretary determines (on the

15 basis of such estimated information as the Sec16 retary considers appropriate) that payments to

17 the facility under this section for the period will

18 substantially exceed the cost reporting period

19 limit for the period determined under this para20 graph.

21 ‘‘(2) INCENTIVE PAYMENTS.—

22 ‘‘(A) IN GENERAL.—If a skilled nursing fa23 cility has received aggregate payments under

24 subsection (b) for covered non-routine services

25 during a cost reporting period beginning during
493

Title VIII, Subtitle C

•HR 2530 IH

1 a fiscal year in an amount that is less than the

2 amount determined under paragraph (1)(B),

3 the Secretary shall pay the skilled nursing facil4 ity in the following fiscal year an incentive pay5 ment equal to 50 percent of the difference be6 tween such amounts, except that the incentive

7 payment may not exceed 5 percent of the aggre8 gate payments made to the facility under sub9 section (b) for the previous fiscal year (without

10 regard to subparagraph (B)).

11 ‘‘(B) INSTALLMENT INCENTIVE PAY12 MENTS.—The Secretary may make installment

13 payments during a fiscal year to a skilled nurs14 ing facility based on the estimated incentive

15 payment that the facility would be eligible to re16 ceive with respect to such fiscal year.

17 ‘‘(d) DETERMINATION OF FACILITY PER STAY

18 LIMIT.—

19 ‘‘(1) LIMIT FOR FISCAL YEAR 1997.—

20 ‘‘(A) IN GENERAL.—Except as provided in

21 subparagraph (B), the Secretary shall establish

22 separate per stay limits for hospital-based and

23 freestanding skilled nursing facilities for the 12-

24 month cost reporting period beginning during

25 fiscal year 1997 that are equal to the sum of—
494

Title VIII, Subtitle C

•HR 2530 IH

1 ‘‘(i) 50 percent of the facility-specific

2 stay amount for the facility (as determined

3 under subsection (e)) for the last 12-month

4 cost reporting period ending on or before

5 September 30, 1994, increased (in a

6 compounded manner) by the SNF market

7 basket percentage increase for fiscal years

8 1995 through 1997; and

9 ‘‘(ii) 50 percent of the average of all

10 facility-specific stay amounts for all hos11 pital-based facilities or all freestanding fa12 cilities (whichever is applicable) during the

13 cost reporting period described in clause

14 (i), increased (in a compounded manner)

15 by the SNF market basket percentage in16 crease for fiscal years 1995 through 1997.

17 ‘‘(B) FACILITIES NOT HAVING 1994 COST

18 REPORTING PERIOD.—In the case of a skilled

19 nursing facility for which payments were not

20 made under this title for covered non-routine

21 services for the last 12-month cost reporting pe22 riod ending on or before September 30, 1994,

23 the per stay limit for the 12-month cost report24 ing period beginning during fiscal year 1997
495

Title VIII, Subtitle C

•HR 2530 IH

1 shall be twice the amount determined under

2 subparagraph (A)(ii).

3 ‘‘(2) LIMIT FOR SUBSEQUENT FISCAL YEARS.—

4 The per stay limit for a skilled nursing facility for

5 a 12-month cost reporting period beginning during

6 a fiscal year after fiscal year 1997 is equal to the

7 per stay limit established under this subsection for

8 the 12-month cost reporting period beginning during

9 the previous fiscal year, increased by the SNF mar10 ket basket percentage increase for such subsequent

11 fiscal year minus 2 percentage points.

12 ‘‘(3) REBASING OF AMOUNTS.—

13 ‘‘(A) IN GENERAL.—The Secretary shall

14 provide for an update to the facility-specific

15 amounts used to determine the per stay limits

16 under this subsection for cost reporting periods

17 beginning on or after October 1, 1999, and

18 every 2 years thereafter.

19 ‘‘(B) TREATMENT OF FACILITIES NOT

20 HAVING REBASED COST REPORTING PERIODS.—

21 Paragraph (1)(B) shall apply with respect to a

22 skilled nursing facility for which payments were

23 not made under this title for covered non-rou24 tine services for the 12-month cost reporting

25 period used by the Secretary to update facility-
496

Title VIII, Subtitle C

•HR 2530 IH

1 specific amounts under subparagraph (A) in the

2 same manner as such paragraph applies with

3 respect to a facility for which payments were

4 not made under this title for covered non-rou5 tine services for the last 12-month cost report6 ing period ending on or before September 30,

7 1994.

8 ‘‘(e) DETERMINATION OF FACILITY-SPECIFIC STAY

9 AMOUNTS.—The ‘facility-specific stay amount’ for a

10 skilled nursing facility for a cost reporting period is the

11 sum of—

12 ‘‘(1) the average amount of payments made to

13 the facility under part A during the period which are

14 attributable to covered non-routine services fur15 nished during a stay (as determined on a per diem

16 basis); and

17 ‘‘(2) the Secretary’s best estimate of the aver18 age amount of payments made under part B during

19 the period for covered non-routine services furnished

20 to all residents of the facility to whom the facility

21 provided extended care services for which payment

22 was made under part A during the period (without

23 regard to whether or not the services were furnished

24 by the facility, by others under arrangement with

25 them made by the facility, under any other contract-
497

Title VIII, Subtitle C

•HR 2530 IH

1 ing or consulting arrangement, or otherwise), as es2 timated by the Secretary.

3 ‘‘(f) INTENSIVE NURSING OR THERAPY NEEDS.—

4 ‘‘(1) IN GENERAL.—In applying subsection (b)

5 to covered non-routine services furnished during a

6 stay beginning during a cost reporting period begin7 ning during a fiscal year (beginning with fiscal years

8 after fiscal year 1997) to a resident of a skilled

9 nursing facility who requires intensive nursing or

10 therapy services, the per stay limit for such resident

11 shall be the per stay limit developed under para12 graph (2) instead of the per stay limit determined

13 under subsection (d)(1)(A).

14 ‘‘(2) PER STAY LIMIT FOR INTENSIVE NEED

15 RESIDENTS.—Not later than June 30, 1997, the

16 Secretary, after consultation with the Medicare Pay17 ment Review Commission and skilled nursing facility

18 experts, shall develop and publish a per stay limit

19 for residents of a skilled nursing facility who require

20 intensive nursing or therapy services.

21 ‘‘(3) BUDGET NEUTRALITY.—The Secretary

22 shall adjust payments under subsection (b) in a

23 manner that ensures that total payments for covered

24 non-routine services under this section are not great25 er or less than total payments for such services
498

Title VIII, Subtitle C

•HR 2530 IH

1 would have been but for the application of para2 graph (1).

3 ‘‘(g) SPECIAL TREATMENT FOR SMALL SKILLED

4 NURSING FACILITIES.—This section shall not apply with

5 respect to a skilled nursing facility for which payment is

6 made for routine service costs during a cost reporting pe7 riod on the basis of prospective payments under section

8 1888(d).

9 ‘‘(h) EXCEPTIONS AND ADJUSTMENTS TO LIMITS.—

10 ‘‘(1) IN GENERAL.—The Secretary may make

11 exceptions and adjustments to the cost reporting

12 limits applicable to a skilled nursing facility under

13 subsection (c)(1)(B) for a cost reporting period, ex14 cept that the total amount of any additional pay15 ments made under this section for covered non-rou16 tine services during the cost reporting period as a

17 result of such exceptions and adjustments may not

18 exceed 5 percent of the aggregate payments made to

19 all skilled nursing facilities for covered non-routine

20 services during the cost reporting period (determined

21 without regard to this paragraph).

22 ‘‘(2) BUDGET NEUTRALITY.—The Secretary

23 shall adjust payments under subsection (b) in a

24 manner that ensures that total payments for covered

25 non-routine services under this section are not great-
499

Title VIII, Subtitle C

•HR 2530 IH

1 er or less than total payments for such services

2 would have been but for the application of para3 graph (1).

4 ‘‘(i) SPECIAL RULE FOR X-RAY SERVICES.—Before

5 furnishing a covered non-routine service consisting of an

6 X-ray service for which payment may be made under part

7 A or part B to a resident, a skilled nursing facility shall

8 consider whether furnishing the service through a provider

9 of portable X-ray service services would be appropriate,

10 taking into account the cost effectiveness of the service

11 and the convenience to the resident.’’.

12 (2) CONFORMING AMENDMENT.—Section

13 1814(b) (42 U.S.C. 1395f(b)) is amended in the

14 matter preceding paragraph (1) by striking ‘‘1813

15 and 1886’’ and inserting ‘‘1813, 1886, 1888, and

16 1888A’’.

17 SEC. 8235. FREEZE IN PAYMENTS FOR CLINICAL DIAG18 NOSTIC LABORATORY TESTS.

19 Section 1833(h)(2)(A)(ii)(IV) (42 U.S.C.

20 1395l(h)(2)(A)(ii)(IV)) is amended by striking ‘‘1994 and

21 1995’’ and inserting ‘‘1994 through 2002’’.
500

Title VIII, Subtitle C

•HR 2530 IH

1 PART 5—GRADUATE MEDICAL EDUCATION AND

2 TEACHING HOSPITALS

3 SEC. 8241. TEACHING HOSPITAL AND GRADUATE MEDICAL

4 EDUCATION TRUST FUND.

5 (a) TEACHING HOSPITAL AND GRADUATE MEDICAL

6 EDUCATION TRUST FUND.—The Social Security Act (42

7 U.S.C. 300 et seq.) is amended by adding at the end the

8 following title:

9 ‘‘TITLE XXI—TEACHING HOSPITAL AND

10 GRADUATE MEDICAL EDUCATION TRUST FUND

11 ‘‘PART A—ESTABLISHMENT OF FUND

12 ‘‘SEC. 2101. ESTABLISHMENT OF FUND.

13 ‘‘(a) IN GENERAL.—There is established in the

14 Treasury of the United States a fund to be known as the

15 Teaching Hospital and Graduate Medical Education Trust

16 Fund (in this title referred to as the ‘Fund’), consisting

17 of amounts transferred to the Fund under subsection (c),

18 amounts appropriated to the Fund pursuant to sub19 sections (d) and (e)(3), and such gifts and bequests as

20 may be deposited in the Fund pursuant to subsection (f).

21 Amounts in the Fund are available until expended.

22 ‘‘(b) EXPENDITURES FROM FUND.—Amounts in the

23 Fund are available to the Secretary for making payments

24 under section 2111.

25 ‘‘(c) TRANSFERS TO FUND.—
501

Title VIII, Subtitle C

•HR 2530 IH

1 ‘‘(1) IN GENERAL.—From the Federal Hospital

2 Insurance Trust Fund and the Federal Supple3 mentary Medical Insurance Trust Fund, the Sec4 retary shall, for fiscal year 1996 and each subse5 quent fiscal year, transfer to the Fund an amount

6 determined by the Secretary for the fiscal year in7 volved in accordance with paragraph (2).

8 ‘‘(2) DETERMINATION OF AMOUNTS.—For pur9 poses of paragraph (1), the amount determined

10 under this paragraph for a fiscal year is an estimate

11 by the Secretary of an amount equal to 75 percent

12 of the difference between—

13 ‘‘(A) the nationwide total of the amounts

14 that would have been paid under sections 1855

15 and 1876 during the year but for the operation

16 of section 1855(b)(2)(B)(ii); and

17 ‘‘(B) the nationwide total of the amounts

18 paid under such sections during the year.

19 ‘‘(3) ALLOCATION BETWEEN MEDICARE TRUST

20 FUNDS.—In providing for a transfer under para21 graph (1) for a fiscal year, the Secretary shall pro22 vide for an allocation of the amounts involved be23 tween part A and part B of title XVIII (and the

24 trust funds established under the respective parts)

25 as reasonably reflects the proportion of payments for
502

Title VIII, Subtitle C

•HR 2530 IH

1 the indirect costs of medical education and direct

2 graduate medical education costs of hospitals associ3 ated with the provision of services under each re4 spective part.

5 ‘‘(d) AUTHORIZATION OF APPROPRIATIONS.—There

6 are authorized to be appropriated to the Fund such sums

7 as may be necessary for each of the fiscal years 1996

8 through 2002.

9 ‘‘(e) INVESTMENT.—

10 ‘‘(1) IN GENERAL.—The Secretary of the

11 Treasury shall invest such amounts of the Fund as

12 such Secretary determines are not required to meet

13 current withdrawals from the Fund. Such invest14 ments may be made only in interest-bearing obliga15 tions of the United States. For such purpose, such

16 obligations may be acquired on original issue at the

17 issue price, or by purchase of outstanding obliga18 tions at the market price.

19 ‘‘(2) SALE OF OBLIGATIONS.—Any obligation

20 acquired by the Fund may be sold by the Secretary

21 of the Treasury at the market price.

22 ‘‘(3) AVAILABILITY OF INCOME.—Any interest

23 derived from obligations acquired by the Fund, and

24 proceeds from any sale or redemption of such obliga25 tions, are hereby appropriated to the Fund.
503

Title VIII, Subtitle C

•HR 2530 IH

1 ‘‘(f) ACCEPTANCE OF GIFTS AND BEQUESTS.—The

2 Fund may accept on behalf of the United States money

3 gifts and bequests made unconditionally to the Fund for

4 the benefit of the Fund or any activity financed through

5 the Fund.

6 ‘‘PART B—PAYMENTS TO TEACHING HOSPITALS

7 ‘‘SEC. 2111. FORMULA PAYMENTS TO TEACHING HOS8 PITALS.

9 ‘‘(a) IN GENERAL.—In the case of each teaching hos10 pital that in accordance with subsection (b) submits to the

11 Secretary a payment document for fiscal year 1996 or any

12 subsequent fiscal year, the Secretary shall make payments

13 for the year to the teaching hospital for the direct and

14 indirect costs of operating approved medical residency

15 training programs. Such payments shall be made from the

16 Fund, and shall be made in accordance with a formula

17 established by the Secretary.

18 ‘‘(b) PAYMENT DOCUMENT.—For purposes of sub19 section (a), a payment document is a document containing

20 such information as may be necessary for the Secretary

21 to make payments under such subsection to a teaching

22 hospital for a fiscal year. The document is submitted in

23 accordance with this subsection if the document is submit24 ted not later than the date specified by the Secretary, and

25 the document is in such form and is made in such manner
504

Title VIII, Subtitle C

•HR 2530 IH

1 as the Secretary may require. The Secretary may require

2 that information under this subsection be submitted to the

3 Secretary in periodic reports.’’.

4 (b) NATIONAL ADVISORY COUNCIL ON POST5 GRADUATE MEDICAL EDUCATION.—

6 (1) IN GENERAL.—There is established within

7 the Department of Health and Human Services an

8 advisory council to be known as the National Advi9 sory Council on Postgraduate Medical Education (in

10 this title referred to as the ‘‘Council’’).

11 (2) DUTIES.—The council shall provide advice

12 to the Secretary on appropriate policies for making

13 payments for the support of postgraduate medical

14 education in order to assure an adequate supply of

15 physicians trained in various specialities, consistent

16 with the health care needs of the United States.

17 (3) COMPOSITION.—

18 (A) IN GENERAL.—The Secretary shall ap19 point to the Council 15 individuals who are not

20 officers or employees of the United States. Such

21 individuals shall include not less than 1 individ22 ual from each of the following categories of in23 dividuals or entities:

24 (i) Organizations representing con25 sumers of health care services.
505

Title VIII, Subtitle C

•HR 2530 IH

1 (ii) Physicians who are faculty mem2 bers of medical schools, or who supervise

3 approved physician training programs.

4 (iii) Physicians in private practice who

5 are not physicians described in clause (ii).

6 (iv) Practitioners in public health.

7 (v) Advanced-practice nurses.

8 (vi) Other health professionals who

9 are not physicians.

10 (vii) Medical schools.

11 (viii) Teaching hospitals.

12 (ix) The Accreditation Council on

13 Graduate Medical Education.

14 (x) The American Board of Medical

15 Specialities.

16 (xi) The Council on Postdoctoral

17 Training of the American Osteopathic As18 sociation.

19 (xii) The Council on Podiatric Medical

20 Education of the American Podiatric Medi21 cal Association.

22 (B) REQUIREMENTS REGARDING REP23 RESENTATIVE MEMBERSHIP.—To the greatest

24 extent feasible, the membership of the Council

25 shall represent the various geographic regions
506

Title VIII, Subtitle C

•HR 2530 IH

1 of the United States, shall reflect the racial,

2 ethnic, and gender composition of the popu3 lation of the United States, and shall be broadly

4 representative of medical schools and teaching

5 hospitals in the United States.

6 (C) EX OFFICIO MEMBERS; OTHER FED7 ERAL OFFICERS OR EMPLOYEES.—The member8 ship of the Council shall include individuals des9 ignated by the Secretary to serve as members

10 of the Council from among Federal officers or

11 employees who are appointed by the President,

12 or by the Secretary (or by other Federal offi13 cers who are appointed by the President with

14 the advice and consent of the Senate). Individ15 uals designated under the preceding sentence

16 shall include each of the following officials (or

17 a designee of the official):

18 (i) The Secretary of Health and

19 Human Services.

20 (ii) The Secretary of Veterans Affairs.

21 (iii) The Secretary of Defense.

22 (4) CHAIR.—The Secretary shall, from among

23 members of the council appointed under paragraph

24 (3)(A), designate an individual to serve as the chair

25 of the council.
507

Title VIII, Subtitle C

•HR 2530 IH

1 (5) TERMINATION.—The Council terminates

2 December 31, 1999.

3 (c) REMOVE MEDICAL EDUCATION AND DISPROPOR4 TIONATE SHARE HOSPITAL PAYMENTS FROM CALCULA5 TION OF ADJUSTED AVERAGE PER CAPITA COST.—For

6 provision removing medical education and disproportion7 ate share hospital payments from calculation of payment

8 amounts for organizations paid on a capitated basis, see

9 section 1855(b)(2)(B)(ii).

10 (2) PAYMENTS TO HOSPITALS OF AMOUNTS AT11 TRIBUTABLE TO DSH.—Section 1886 (42 U.S.C.

12 1395ww) is amended by adding at the end the fol13 lowing new subsection:

14 ‘‘(j)(1) In addition to amounts paid under subsection

15 (d)(5)(F), the Secretary is authorized to pay hospitals

16 which are eligible for such payments for a fiscal year sup17 plemental amounts that do not exceed the limit provided

18 for in paragraph (2).

19 ‘‘(2) The sum of the aggregate amounts paid pursu20 ant to paragraph (1) for a fiscal year shall not exceed the

21 Secretary’s estimate of 75 percent of the amount of reduc22 tions in payments under section 1855 that are attributable

23 to the operation of subsection (b)(2)(B)(ii) of such sec24 tion.’’.
508

Title VIII, Subtitle D

•HR 2530 IH

1 SEC. 8242. REDUCTION IN PAYMENT ADJUSTMENTS FOR IN2 DIRECT MEDICAL EDUCATION.

3 (a) MODIFICATION REGARDING 6.8 PERCENT.—Sec4 tion 1886(d)(5)(B)(ii) (42 U.S.C. 1395ww(d)(5)(B)(ii)) is

5 amended—

6 (1) by striking ‘‘on or after October 1, 1988,’’

7 and inserting ‘‘on or after October 1, 1999,’’; and

8 (2) by striking ‘‘1.89’’ and inserting ‘‘1.68’’.

9 (b) SPECIAL RULE REGARDING FISCAL YEARS 1996

10 THROUGH 1998; MODIFICATION REGARDING 6 PER11 CENT.—Section 1886(d)(5)(B)(ii), as amended by para12 graph (1), is amended by adding at the end the following:

13 ‘‘In the case of discharges occurring on or after October

14 1, 1995, and before October 1, 1999, the preceding sen15 tence applies to the same extent and in the same manner

16 as the sentence applies to discharges occurring on or after

17 October 1, 1999, except that the term ‘1.68’ is deemed

18 to be 1.48.’’.

19 Subtitle D—Provisions Relating to

20 Medicare Beneficiaries

21 SEC. 8301. PART B PREMIUM.

22 (a) FREEZE IN PREMIUM FOR 1996.—Section

23 1839(e)(1) (42 U.S.C. 1395r(e)(1)) is amended—

24 (1) in subparagraph (A), by striking ‘‘December

25 1995’’ and inserting ‘‘December 1996’’; and
509

Title VIII, Subtitle D

•HR 2530 IH

1 (2) in subparagraph (B)(v), by striking ‘‘1995’’

2 and inserting ‘‘1995 and 1996’’.

3 (b) ESTABLISHING PREMIUM AT 25 PERCENT OF

4 PROGRAM COSTS THROUGH 2002.—Section

5 1839(e)(1)(A) (42 U.S.C. 1395r(e)(1)(A)) is amended by

6 striking ‘‘January 1999’’ and inserting ‘‘January 2003’’.

7 SEC. 8302. FULL COST OF MEDICARE PART B COVERAGE

8 PAYABLE BY HIGH-INCOME INDIVIDUALS.

9 (a) IN GENERAL.—Subchapter A of chapter 1 of the

10 Internal Revenue Code of 1986 is amended by adding at

11 the end thereof the following new part:

12 ‘‘PART VIII—SUPPLEMENTAL MEDICARE PART B

13 PREMIUMS FOR HIGH-INCOME INDIVIDUALS

‘‘Sec. 59B. Supplemental Medicare part B premium.

14 ‘‘SEC. 59B. SUPPLEMENTAL MEDICARE PART B PREMIUM.

15 ‘‘(a) REQUIREMENT TO PAY PREMIUM.—In the case

16 of an individual to whom this section applies for the tax17 able year, there is hereby imposed (in addition to any

18 other amount imposed by this subtitle) an amount equal

19 to the aggregate of the supplemental Medicare part B pre20 miums (if any) for months during such year that such in21 dividual is covered under Medicare part B.

22 ‘‘(b) INDIVIDUALS TO WHOM SECTION APPLIES.—

23 This section shall apply to any individual for any taxable

24 year if—
510

Title VIII, Subtitle D

•HR 2530 IH

1 ‘‘(1) such individual is covered under Medicare

2 part B for any month during such year, and

3 ‘‘(2) the modified adjusted gross income of the

4 taxpayer for such taxable year exceeds the threshold

5 amount.

6 ‘‘(c) SUPPLEMENTAL MEDICARE PART B PRE7 MIUM.—

8 ‘‘(1) IN GENERAL.—For purposes of subsection

9 (a), the supplemental Medicare part B premium for

10 any month is an amount equal to the excess of—

11 ‘‘(A) subject to adjustment under para12 graph (2), 200 percent of the monthly actuarial

13 rate for enrollees age 65 and over determined

14 under subsection 1839(a)(1) of the Social Secu15 rity Act for such month, over

16 ‘‘(B) the total monthly premium under sec17 tion 1839 of the Social Security Act (deter18 mined without regard to subsections (b) and (f)

19 of section 1839 of such Act).

20 ‘‘(2) ADJUSTING MONTHLY ACTUARIAL RATE

21 BY GEOGRAPHIC AREA.—

22 ‘‘(A) IN GENERAL.—In determining the

23 amount described in paragraph (1)(A) for an

24 individual residing in a premium area, the Sec25 retary shall adjust such amount for a year by
511

Title VIII, Subtitle D

•HR 2530 IH

1 a geographic adjustment factor established by

2 the Secretary which reflects the relative benefits

3 and administrative costs payable from the Fed4 eral Supplementary Medical Insurance Trust

5 Fund for services performed and related admin6 istrative costs incurred in the year with respect

7 to enrollees residing in such area compared to

8 the national average of such benefits and costs.

9 ‘‘(B) PREMIUM AREA.—In this paragraph,

10 a ‘premium area’ means a metropolitan statis11 tical area or the portion of a State outside of

12 any metropolitan statistical area.

13 ‘‘(d) PHASEIN.—

14 ‘‘(1) IN GENERAL.—If the modified adjusted

15 gross income of the taxpayer for any taxable year

16 exceeds the threshold amount by less than $50,000,

17 the amount imposed by this section for such taxable

18 year shall be an amount which bears the same ratio

19 to the amount which would (but for this subsection)

20 be imposed by this section for such taxable year as

21 such excess bears to $50,000. The preceding sen22 tence shall not apply to any individual whose thresh23 old amount is zero.
512

Title VIII, Subtitle D

•HR 2530 IH

1 ‘‘(2) PHASEIN RANGE FOR JOINT RETURNS.—

2 In the case of a joint return, paragraph (1) shall be

3 applied by substituting ‘$75,000’ for ‘$50,000’.

4 ‘‘(e) OTHER DEFINITIONS AND SPECIAL RULES.—

5 For purposes of this section—

6 ‘‘(1) THRESHOLD AMOUNT.—The term ‘thresh7 old amount’ means—

8 ‘‘(A) except as otherwise provided in this

9 paragraph, $50,000,

10 ‘‘(B) $75,000 in the case of a joint return,

11 and

12 ‘‘(C) zero in the case of a taxpayer who—

13 ‘‘(i) is married at the close of the tax14 able year but does not file a joint return

15 for such year, and

16 ‘‘(ii) does not live apart from his

17 spouse at all times during the taxable year.

18 ‘‘(2) MODIFIED ADJUSTED GROSS INCOME.—

19 The term ‘modified adjusted gross income’ means

20 adjusted gross income—

21 ‘‘(A) determined without regard to sections

22 135, 911, 931, and 933, and

23 ‘‘(B) increased by the amount of interest

24 received or accrued by the taxpayer during the

25 taxable year which is exempt from tax.
513

Title VIII, Subtitle D

•HR 2530 IH

1 ‘‘(3) JOINT RETURNS.—In the case of a joint

2 return—

3 ‘‘(A) the amount imposed by subsection (a)

4 shall be the sum of the amounts so imposed de5 termined separately for each spouse, and

6 ‘‘(B) subsections (a) and (d) shall be ap7 plied by taking into account the combined modi8 fied adjusted gross income of the spouses.

9 ‘‘(4) MEDICARE PART B COVERAGE.—An indi10 vidual shall be treated as covered under Medicare

11 part B for any month if a premium is paid under

12 part B of title XVIII of the Social Security Act for

13 the coverage of the individual under such part for

14 the month.

15 ‘‘(5) MARRIED INDIVIDUAL.—The determina16 tion of whether an individual is married shall be

17 made in accordance with section 7703.

18 ‘‘(f) COORDINATION WITH OTHER PROVISIONS.—

19 ‘‘(1) TREATMENT AS MEDICAL EXPENSE.—For

20 purposes of section 213, the supplemental Medicare

21 part B premium imposed by this section shall be

22 treated as an amount paid for insurance covering

23 medical care (as defined in section 213(d)).

24 ‘‘(2) TREATMENT UNDER SUBTITLE F.—For

25 purposes of subtitle F (other than section 6654), the
514

Title VIII, Subtitle D

•HR 2530 IH

1 supplemental Medicare part B premium imposed by

2 this section shall be treated as if it were a tax im3 posed by section 1.

4 ‘‘(3) NOT TREATED AS TAX FOR CERTAIN PUR5 POSES.—The supplemental Medicare part B pre6 mium imposed by this section shall not be treated as

7 a tax imposed by this chapter for purposes of deter8 mining—

9 ‘‘(A) the amount of any credit allowable

10 under this chapter, or

11 ‘‘(B) the amount of the minimum tax im12 posed by section 55.’’

13 (b) TRANSFERS TO SUPPLEMENTAL MEDICAL IN14 SURANCE TRUST FUND.—

15 (1) IN GENERAL.—There are hereby appro16 priated to the Supplemental Medical Insurance

17 Trust Fund amounts equivalent to the aggregate in18 crease in liabilities under chapter 1 of the Internal

19 Revenue Code of 1986 which is attributable to the

20 application of section 59B of such Code, as added by

21 this section.

22 (2) TRANSFERS.—The amounts appropriated

23 by paragraph (1) to the Supplemental Medical In24 surance Trust Fund shall be transferred from time

25 to time (but not less frequently than quarterly) from
515

Title VIII, Subtitle D

•HR 2530 IH

1 the general fund of the Treasury on the basis of es2 timates made by the Secretary of the Treasury of

3 the amounts referred to in paragraph (1). Any quar4 terly payment shall be made on the first day of such

5 quarter and shall take into account the portion of

6 the supplemental Medicare part B premium (as de7 fined in such section 59B) which is attributable to

8 months during such quarter. Proper adjustments

9 shall be made in the amounts subsequently trans10 ferred to the extent prior estimates were in excess

11 of or less than the amounts required to be trans12 ferred.

13 (c) REPORTING REQUIREMENTS.—

14 (1) Paragraph (1) of section 6050F(a) (relating

15 to returns relating to social security benefits) is

16 amended by striking ‘‘and’’ at the end of subpara17 graph (B) and by inserting after subparagraph (C)

18 the following new subparagraph:

19 ‘‘(D) the number of months during the cal20 endar year for which a premium was paid under

21 part B of title XVIII of the Social Security Act

22 for the coverage of such individual under such

23 part, and’’.

24 (2) Paragraph (2) of section 6050F(b) is

25 amended to read as follows:
516

Title VIII, Subtitle D

•HR 2530 IH

1 ‘‘(2) the information required to be shown on

2 such return with respect to such individual.’’

3 (3) Paragraph (1) of section 6050F(c) is

4 amended by striking ‘‘and’’ at the end of subpara5 graph (A), by striking the period at the end of sub6 paragraph (B) and inserting ‘‘, and’’, and by adding

7 at the end the following new subparagraph:

8 ‘‘(C) the Secretary of Health and Human

9 Services in the case of the information specified

10 in subsection (a)(1)(D).’’

11 (4) The heading for section 6050F is amended

12 by inserting ‘‘AND MEDICARE PART B COV13 ERAGE’’ before the period.

14 (5) The item relating to section 6050F in the

15 table of sections for subpart B of part III of sub16 chapter A of chapter 61 is amended by inserting

17 ‘‘and Medicare part B coverage’’ before the period.

18 (d) CLERICAL AMENDMENT.—The table of parts for

19 subchapter A of chapter 1 is amended by adding at the

20 end thereof the following new item:

‘‘Part VIII. Supplemental Medicare part B premiums for high-income individuals.’’

21 (e) EFFECTIVE DATE.—The amendments made by

22 this section shall apply to months after December 1995

23 in taxable years ending after December 31, 1995.
517

Title VIII, Subtitle D

•HR 2530 IH

1 SEC. 8303. EXPANDED COVERAGE OF PREVENTIVE BENE2 FITS.

3 (a) PROVIDING ANNUAL SCREENING MAMMOGRAPHY

4 FOR WOMEN OVER AGE 49.—Section 1834(c)(2)(A) (42

5 U.S.C. 1395m(c)(2)(A)) is amended—

6 (1) in clause (iv), by striking ‘‘but under 65

7 years of age,’’; and

8 (2) by striking clause (v).

9 (b) COVERAGE OF SCREENING PAP SMEAR AND PEL10 VIC EXAMS.—

11 (1) COVERAGE OF PELVIC EXAM; INCREASING

12 FREQUENCY OF COVERAGE OF PAP SMEAR.—Section

13 1861(nn) (42 U.S.C. 1395x(nn)) is amended—

14 (A) in the heading, by striking ‘‘Smear’’

15 and inserting ‘‘Smear; Screening Pelvic Exam’’;

16 (B) by striking ‘‘(nn)’’ and inserting

17 ‘‘(nn)(1)’’;

18 (C) by striking ‘‘3 years’’ and all that fol19 lows and inserting ‘‘3 years, or during the pre20 ceding year in the case of a woman described

21 in paragraph (3).’’; and

22 (D) by adding at the end the following new

23 paragraphs:

24 ‘‘(2) The term ‘screening pelvic exam’ means an pel25 vic examination provided to a woman if the woman in26 volved has not had such an examination during the preced-
518

Title VIII, Subtitle D

•HR 2530 IH

1 ing 3 years, or during the preceding year in the case of

2 a woman described in paragraph (3), and includes a clini3 cal breast examination.

4 ‘‘(3) A woman described in this paragraph is a

5 woman who—

6 ‘‘(A) is of childbearing age and has not had a

7 test described in this subsection during each of the

8 preceding 3 years that did not indicate the presence

9 of cervical cancer; or

10 ‘‘(B) is at high risk of developing cervical can11 cer (as determined pursuant to factors identified by

12 the Secretary).’’.

13 (2) WAIVER OF DEDUCTIBLE.—The first sen14 tence of section 1833(b) (42 U.S.C. 1395l(b)), as

15 amended by subsection (a)(2), is amended—

16 (A) by striking ‘‘and (5)’’ and inserting

17 ‘‘(5)’’; and

18 (B) by striking the period at the end and

19 inserting the following: ‘‘, and (6) such deduct20 ible shall not apply with respect to screening

21 pap smear and screening pelvic exam (as de22 scribed in section 1861(nn)).’’.

23 (3) CONFORMING AMENDMENTS.—(A) Section

24 1861(s)(14) (42 U.S.C. 1395x(s)(14)) is amended
519

Title VIII, Subtitle D

•HR 2530 IH

1 by inserting ‘‘and screening pelvic exam’’ after

2 ‘‘screening pap smear’’.

3 (B) Section 1862(a)(1)(F) (42 U.S.C.

4 1395y(a)(1)(F)) is amended by inserting ‘‘and

5 screening pelvic exam’’ after ‘‘screening pap smear’’.

6 (c) COVERAGE OF COLORECTAL SCREENING.—

7 (1) IN GENERAL.—Section 1834 (42 U.S.C.

8 1395m) is amended by inserting after subsection (c)

9 the following new subsection:

10 ‘‘(d) FREQUENCY AND PAYMENT LIMITS FOR

11 SCREENING FECAL-OCCULT BLOOD TESTS, SCREENING

12 FLEXIBLE SIGMOIDOSCOPIES, AND SCREENING

13 COLONOSCOPY.—

14 ‘‘(1) FREQUENCY LIMITS FOR SCREENING

15 FECAL-OCCULT BLOOD TESTS.—Subject to revision

16 by the Secretary under paragraph (4), no payment

17 may be made under this part for a screening fecal18 occult blood test provided to an individual for the

19 purpose of early detection of colon cancer if the test

20 is performed—

21 ‘‘(A) in the case of an individual under 65

22 years of age, more frequently than is provided

23 in a periodicity schedule established by the Sec24 retary for purposes of this subparagraph; or
520

Title VIII, Subtitle D

•HR 2530 IH

1 ‘‘(B) in the case of any other individual,

2 within the 11 months following the month in

3 which a previous screening fecal-occult blood

4 test was performed.

5 ‘‘(2) SCREENING FLEXIBLE SIGMOID6 OSCOPIES.—

7 ‘‘(A) PAYMENT AMOUNT.—The Secretary

8 shall establish a payment amount under section

9 1848 with respect to screening flexible

10 sigmoidoscopies provided for the purpose of

11 early detection of colon cancer that is consistent

12 with payment amounts under such section for

13 similar or related services, except that such

14 payment amount shall be established without

15 regard to subsection (a)(2)(A) of such section.

16 ‘‘(B) FREQUENCY LIMITS.—Subject to re17 vision by the Secretary under paragraph (4), no

18 payment may be made under this part for a

19 screening flexible sigmoidoscopy provided to an

20 individual for the purpose of early detection of

21 colon cancer if the procedure is performed—

22 ‘‘(i) in the case of an individual under

23 65 years of age, more frequently than is

24 provided in a periodicity schedule estab-
521

Title VIII, Subtitle D

•HR 2530 IH

1 lished by the Secretary for purposes of this

2 subparagraph; or

3 ‘‘(ii) in the case of any other individ4 ual, within the 59 months following the

5 month in which a previous screening flexi6 ble sigmoidoscopy was performed.

7 ‘‘(3) SCREENING COLONOSCOPY FOR INDIVID8 UALS AT HIGH RISK FOR COLORECTAL CANCER.—

9 ‘‘(A) PAYMENT AMOUNT.—The Secretary

10 shall establish a payment amount under section

11 1848 with respect to screening colonoscopy for

12 individuals at high risk for colorectal cancer (as

13 determined in accordance with criteria estab14 lished by the Secretary) provided for the pur15 pose of early detection of colon cancer that is

16 consistent with payment amounts under such

17 section for similar or related services, except

18 that such payment amount shall be established

19 without regard to subsection (a)(2)(A) of such

20 section.

21 ‘‘(B) FREQUENCY LIMIT.—Subject to revi22 sion by the Secretary under paragraph (4), no

23 payment may be made under this part for a

24 screening colonoscopy for individuals at high

25 risk for colorectal cancer provided to an individ-
522

Title VIII, Subtitle D

•HR 2530 IH

1 ual for the purpose of early detection of colon

2 cancer if the procedure is performed within the

3 47 months following the month in which a pre4 vious screening colonoscopy was performed.

5 ‘‘(C) FACTORS CONSIDERED IN ESTAB6 LISHING CRITERIA FOR DETERMINING INDIVID7 UALS AT HIGH RISK.—In establishing criteria

8 for determining whether an individual is at high

9 risk for colorectal cancer for purposes of this

10 paragraph, the Secretary shall take into consid11 eration family history, prior experience of can12 cer, a history of chronic digestive disease condi13 tion, and the presence of any appropriate recog14 nized gene markers for colorectal cancer.

15 ‘‘(4) REVISION OF FREQUENCY.—

16 ‘‘(A) REVIEW.—The Secretary shall review

17 periodically the appropriate frequency for per18 forming screening fecal-occult blood tests,

19 screening flexible sigmoidoscopies, and screen20 ing colonoscopy based on age and such other

21 factors as the Secretary believes to be pertinent.

22 ‘‘(B) REVISION OF FREQUENCY.—The Sec23 retary, taking into consideration the review

24 made under clause (i), may revise from time to

25 time the frequency with which such tests and
523

Title VIII, Subtitle D

•HR 2530 IH

1 procedures may be paid for under this sub2 section.’’.

3 (2) CONFORMING AMENDMENTS.—(A) Para4 graphs (1)(D) and (2)(D) of section 1833(a) (42

5 U.S.C. 1395l(a)) are each amended by striking

6 ‘‘subsection (h)(1),’’ and inserting ‘‘subsection (h)(1)

7 or section 1834(d)(1),’’.

8 (B) Clauses (i) and (ii) of section

9 1848(a)(2)(A) (42 U.S.C. 1395w–4(a)(2)(A)) are

10 each amended by striking ‘‘a service’’ and inserting

11 ‘‘a service (other than a screening flexible

12 sigmoidoscopy provided to an individual for the pur13 pose of early detection of colon cancer or a screening

14 colonoscopy provided to an individual at high risk

15 for colorectal cancer for the purpose of early detec16 tion of colon cancer)’’.

17 (C) Section 1862(a) (42 U.S.C. 1395y(a)) is

18 amended—

19 (i) in paragraph (1)—

20 (I) in subparagraph (E), by striking

21 ‘‘and’’ at the end;

22 (II) in subparagraph (F), by striking

23 the semicolon at the end and inserting ‘‘,

24 and’’; and
524

Title VIII, Subtitle D

•HR 2530 IH

1 (III) by adding at the end the follow2 ing new subparagraph:

3 ‘‘(G) in the case of screening fecal-occult blood

4 tests, screening flexible sigmoidoscopies, and screen5 ing colonoscopy provided for the purpose of early de6 tection of colon cancer, which are performed more

7 frequently than is covered under section 1834(d);’’;

8 and

9 (ii) in paragraph (7), by striking ‘‘para10 graph (1)(B) or under paragraph (1)(F)’’ and

11 inserting ‘‘subparagraphs (B), (F), or (G) of

12 paragraph (1)’’.

13 (d) PROSTATE CANCER SCREENING TESTS.—

14 (1) IN GENERAL.—Section 1861(s)(2) (42

15 U.S.C. 1395x(s)(2)) is amended—

16 (A) by striking ‘‘and’’ at the end of sub17 paragraph (N) and subparagraph (O); and

18 (B) by inserting after subparagraph (O)

19 the following new subparagraph:

20 ‘‘(P) prostate cancer screening tests (as defined

21 in subsection (oo)); and’’.

22 (2) TESTS DESCRIBED.—Section 1861 (42

23 U.S.C. 1395x) is amended by adding at the end the

24 following new subsection:
525

Title VIII, Subtitle D

•HR 2530 IH

1 ‘‘Prostate Cancer Screening Tests

2 ‘‘(oo) The term ‘prostate cancer screening test’

3 means a test that consists of a digital rectal examination

4 or a prostate-specific antigen blood test (or both) provided

5 for the purpose of early detection of prostate cancer to

6 a man over 40 years of age who has not had such a test

7 during the preceding year.’’.

8 (3) PAYMENT FOR PROSTATE-SPECIFIC ANTI9 GEN BLOOD TEST UNDER CLINICAL DIAGNOSTIC

10 LABORATORY TEST FEE SCHEDULES.—Section

11 1833(h)(1)(A) (42 U.S.C. 1395l(h)(1)(A)) is amend12 ed by inserting after ‘‘laboratory tests’’ the follow13 ing: ‘‘(including prostate cancer screening tests

14 under section 1861(oo) consisting of prostate-spe15 cific antigen blood tests)’’.

16 (4) CONFORMING AMENDMENT.—Section

17 1862(a) (42 U.S.C. 1395y(a)), as amended by sub18 section (c)(3)(C), is amended—

19 (A) in paragraph (1)—

20 (i) in subparagraph (F), by striking

21 ‘‘and’’ at the end,

22 (ii) in subparagraph (G), by striking

23 the semicolon at the end and inserting ‘‘,

24 and’’, and
526

Title VIII, Subtitle D

•HR 2530 IH

1 (iii) by adding at the end the follow2 ing new subparagraph:

3 ‘‘(H) in the case of prostate cancer screening

4 test (as defined in section 1861(oo)) provided for the

5 purpose of early detection of prostate cancer, which

6 are performed more frequently than is covered under

7 such section;’’; and

8 (B) in paragraph (7), by striking ‘‘or (G)’’

9 and inserting ‘‘(G), or (H)’’.

10 (e) DIABETES SCREENING BENEFITS.—

11 (1) DIABETES OUTPATIENT SELF-MANAGEMENT

12 TRAINING SERVICES.—

13 (A) IN GENERAL.—Section 1861(s)(2) (42

14 U.S.C. 1395x(s)(2)), as amended by subsection

15 (d)(1), is amended—

16 (i) by striking ‘‘and’’ at the end of

17 subparagraph (N);

18 (ii) by striking ‘‘and’’ at the end of

19 subparagraph (O); and

20 (iii) by inserting after subparagraph

21 (O) the following new subparagraph:

22 ‘‘(P) diabetes outpatient self-management train23 ing services (as defined in subsection (pp)); and’’.

24 (B) DEFINITION.—Section 1861 (42

25 U.S.C. 1395x), as amended by subsection
527

Title VIII, Subtitle D

•HR 2530 IH

1 (d)(2), is amended by adding at the end the fol2 lowing new subsection:

3 ‘‘DIABETES OUTPATIENT SELF-MANAGEMENT TRAINING

4 SERVICES

5 ‘‘(pp)(1) The term ‘diabetes outpatient self-manage6 ment training services’ means educational and training

7 services furnished to an individual with diabetes by or

8 under arrangements with a certified provider (as described

9 in paragraph (2)(A)) in an outpatient setting by an indi10 vidual or entity who meets the quality standards described

11 in paragraph (2)(B), but only if the physician who is man12 aging the individual’s diabetic condition certifies that such

13 services are needed under a comprehensive plan of care

14 related to the individual’s diabetic condition to provide the

15 individual with necessary skills and knowledge (including

16 skills related to the self-administration of injectable drugs)

17 to participate in the management of the individual’s condi18 tion.

19 ‘‘(2) In paragraph (1)—

20 ‘‘(A) a ‘certified provider’ is an individual or

21 entity that, in addition to providing diabetes out22 patient self-management training services, provides

23 other items or services for which payment may be

24 made under this title; and

25 ‘‘(B) an individual or entity meets the quality

26 standards described in this paragraph if the individ-
528

Title VIII, Subtitle D

•HR 2530 IH

1 ual or entity meets quality standards established by

2 the Secretary, except that the individual or entity

3 shall be deemed to have met such standards if the

4 individual or entity meets applicable standards origi5 nally established by the National Diabetes Advisory

6 Board and subsequently revised by organizations

7 who participated in the establishment of standards

8 by such Board, or is recognized by the American Di9 abetes Association as meeting standards for furnish10 ing the services.’’.

11 (C) CONSULTATION WITH ORGANIZATIONS

12 IN ESTABLISHING PAYMENT AMOUNTS FOR

13 SERVICES PROVIDED BY PHYSICIANS.—In es14 tablishing payment amounts under section

15 1848(a) of the Social Security Act for physi16 cians’ services consisting of diabetes outpatient

17 self-management training services, the Sec18 retary of Health and Human Services shall con19 sult with appropriate organizations, including

20 the American Diabetes Association, in deter21 mining the relative value for such services

22 under section 1848(c)(2) of such Act.

23 (2) BLOOD-TESTING STRIPS FOR INDIVIDUALS

24 WITH DIABETES.—
529

Title VIII, Subtitle D

•HR 2530 IH

1 (A) INCLUDING STRIPS AS DURABLE MEDI2 CAL EQUIPMENT.—Section 1861(n) (42 U.S.C.

3 1395x(n)) is amended by striking the semicolon

4 in the first sentence and inserting the following:

5 ‘‘, and includes blood-testing strips for individ6 uals with diabetes without regard to whether

7 the individual has Type I or Type II diabetes

8 (as determined under standards established by

9 the Secretary in consultation with the American

10 Diabetes Association);’’.

11 (2) PAYMENT FOR STRIPS BASED ON METH12 ODOLOGY FOR INEXPENSIVE AND ROUTINELY PUR13 CHASED EQUIPMENT.—Section 1834(a)(2)(A) (42

14 U.S.C. 1395m(a)(2)(A)) is amended—

15 (A) by striking ‘‘or’’ at the end of clause

16 (ii);

17 (B) by adding ‘‘or’’ at the end of clause

18 (iii); and

19 (C) by inserting after clause (iii) the fol20 lowing new clause:

21 ‘‘(iv) which is a blood-testing strip for

22 an individual with diabetes,’’.

23 (e) EFFECTIVE DATE.—The amendments made by

24 this section shall apply to items and services furnished on

25 or after January 1, 2001.
530

Title VIII, Subtitle E

•HR 2530 IH

1 Subtitle E—Medicare Fraud

2 Reduction

3 SEC. 8401. INCREASING BENEFICIARY AWARENESS OF

4 FRAUD AND ABUSE.

5 (a) BENEFICIARY OUTREACH EFFORTS.—The Sec6 retary of Health and Human Services (acting through the

7 Administrator of the Health Care Financing Administra8 tion and the Inspector General of the Department of

9 Health and Human Services) shall make ongoing efforts

10 (through public service announcements, publications, and

11 other appropriate methods) to alert individuals entitled to

12 benefits under the medicare program of the existence of

13 fraud and abuse committed against the program and the

14 costs to the program of such fraud and abuse, and of the

15 existence of the toll-free telephone line operated by the

16 Secretary to receive information on fraud and abuse com17 mitted against the program.

18 (b) CLARIFICATION OF REQUIREMENT TO PROVIDE

19 EXPLANATION OF MEDICARE BENEFITS.—The Secretary

20 shall provide an explanation of benefits under the medi21 care program with respect to each item or service for

22 which payment may be made under the program which

23 is furnished to an individual, without regard to whether

24 or not a deductible or coinsurance may be imposed against

25 the individual with respect to the item or service.
531

Title VIII, Subtitle E

•HR 2530 IH

1 (c) PROVIDER OUTREACH EFFORTS; PUBLICATION

2 OF FRAUD ALERTS.—

3 (1) SPECIAL FRAUD ALERTS.—

4 (A) IN GENERAL.—

5 (i) REQUEST FOR SPECIAL FRAUD

6 ALERTS.—Any person may present, at any

7 time, a request to the Secretary to issue

8 and publish a special fraud alert.

9 (ii) SPECIAL FRAUD ALERT DE10 FINED.—In this section, a ‘‘special fraud

11 alert’’ is a notice which informs the public

12 of practices which the Secretary considers

13 to be suspect or of particular concern

14 under the medicare program or a State

15 health care program (as defined in section

16 1128(h) of the Social Security Act).

17 (B) ISSUANCE AND PUBLICATION OF SPE18 CIAL FRAUD ALERTS.—

19 (i) INVESTIGATION.—Upon receipt of

20 a request for a special fraud alert under

21 subparagraph (A), the Secretary shall in22 vestigate the subject matter of the request

23 to determine whether a special fraud alert

24 should be issued. If appropriate, the Sec25 retary (in consultation with the Attorney
532

Title VIII, Subtitle E

•HR 2530 IH

1 General) shall issue a special fraud alert in

2 response to the request. All special fraud

3 alerts issued pursuant to this subpara4 graph shall be published in the Federal

5 Register.

6 (ii) CRITERIA FOR ISSUANCE.—In de7 termining whether to issue a special fraud

8 alert upon a request under subparagraph

9 (A), the Secretary may consider—

10 (I) whether and to what extent

11 the practices that would be identified

12 in the special fraud alert may result

13 in any of the consequences described

14 in subparagraph (C); and

15 (II) the extent and frequency of

16 the conduct that would be identified

17 in the special fraud alert.

18 (C) CONSEQUENCES DESCRIBED.—The

19 consequences described in this subparagraph

20 are as follows:

21 (i) An increase or decrease in access

22 to health care services.

23 (ii) An increase or decrease in the

24 quality of health care services.
533

Title VIII, Subtitle E

•HR 2530 IH

1 (iii) An increase or decrease in patient

2 freedom of choice among health care pro3 viders.

4 (iv) An increase or decrease in com5 petition among health care providers.

6 (v) An increase or decrease in the cost

7 to health care programs of the Federal

8 Government.

9 (vi) An increase or decrease in the po10 tential overutilization of health care serv11 ices.

12 (viii) Any other factors the Secretary

13 deems appropriate in the interest of pre14 venting fraud and abuse in health care

15 programs of the Federal Government.

16 (2) PUBLICATION OF ALL HCFA FRAUD ALERTS

17 IN FEDERAL REGISTER.—Each notice issued by the

18 Health Care Financing Administration which in19 forms the public of practices which the Secretary

20 considers to be suspect or of particular concern

21 under the medicare program or a State health care

22 program (as defined in section 1128(h) of the Social

23 Security Act) shall be published in the Federal Reg24 ister, without regard to whether or not the notice is
534

Title VIII, Subtitle E

•HR 2530 IH

1 issued by a regional office of the Health Care Fi2 nancing Administration.

3 SEC. 8402. BENEFICIARY INCENTIVES TO REPORT FRAUD

4 AND ABUSE.

5 (a) PROGRAM TO COLLECT INFORMATION ON FRAUD

6 AND ABUSE.—

7 (1) ESTABLISHMENT OF PROGRAM.—Not later

8 than 3 months after the date of the enactment of

9 this Act, the Secretary shall establish a program

10 under which the Secretary shall encourage individ11 uals to report to the Secretary information on indi12 viduals and entities who are engaging or who have

13 engaged in acts or omissions which constitute

14 grounds for the imposition of a sanction under sec15 tion 1128, section 1128A, or section 1128B of the

16 Social Security Act, or who have otherwise engaged

17 in fraud and abuse against the medicare program.

18 (2) PAYMENT OF PORTION OF AMOUNTS COL19 LECTED.—If an individual reports information to

20 the Secretary under the program established under

21 paragraph (1) which serves as the basis for the col22 lection by the Secretary or the Attorney General of

23 any amount of at least $100 (other than any

24 amount paid as a penalty under section 1128B of

25 the Social Security Act), the Secretary may pay a
535

Title VIII, Subtitle E

•HR 2530 IH

1 portion of the amount collected to the individual

2 (under procedures similar to those applicable under

3 section 7623 of the Internal Revenue Code of 1986

4 to payments to individuals providing information on

5 violations of such Code).

6 (b) PROGRAM TO COLLECT INFORMATION ON PRO7 GRAM EFFICIENCY.—

8 (1) ESTABLISHMENT OF PROGRAM.—Not later

9 than 3 months after the date of the enactment of

10 this Act, the Secretary shall establish a program

11 under which the Secretary shall encourage individ12 uals to submit to the Secretary suggestions on meth13 ods to improve the efficiency of the medicare pro14 gram.

15 (2) PAYMENT OF PORTION OF PROGRAM SAV16 INGS.—If an individual submits a suggestion to the

17 Secretary under the program established under

18 paragraph (1) which is adopted by the Secretary and

19 which results in savings to the program, the Sec20 retary may make a payment to the individual of

21 such amount as the Secretary considers appropriate.

22 SEC. 8403. ELIMINATION OF HOME HEALTH OVERPAY23 MENTS.

24 (a) REQUIRING BILLING AND PAYMENT TO BE

25 BASED ON SITE WHERE SERVICE FURNISHED.—Section
536

Title VIII, Subtitle E

•HR 2530 IH

1 1891 (42 U.S.C. 1395bbb) is amended by adding at the

2 end the following new subsection:

3 ‘‘(g) A home health agency shall submit claims for

4 payment for home health services under this title only on

5 the basis of the geographic location at which the service

6 is furnished.’’.

7 (b) EFFECTIVE DATE.—The amendment made by

8 subsection (a) shall apply to services furnished during cost

9 reporting periods beginning on or after October 1, 1995.

10 SEC. 8404. SKILLED NURSING FACILITIES.

11 (a) CLARIFICATION OF TREATMENT OF HOSPITAL

12 TRANSFERS.—

13 (1) IN GENERAL.—Section 1886(d)(5)(I) (42

14 U.S.C. 1395ww(d)(5)(I)) is amended by adding at

15 the end the following new clause:

16 ‘‘(iii) In making adjustments under clause (i) for

17 transfer cases, the Secretary shall treat as a transfer any

18 transfer to a hospital (without regard to whether or not

19 the hospital is a subsection (d) hospital), a unit thereof,

20 or a skilled nursing facility.’’.

21 (2) EFFECTIVE DATE.—The amendment made

22 by paragraph (1) shall apply to discharges occurring

23 on or after October 1, 1995.

24 (b) REQUIRING BILLING AND PAYMENT TO BE

25 BASED ON SITE WHERE SERVICE FURNISHED.—Section
537

Title VIII, Subtitle E

•HR 2530 IH

1 1819(b) (42 U.S.C. 1395i@3(b)) is amended by adding

2 at the end the following new paragraph:

3 ‘‘(8) SPECIAL RULE FOR BILLING AND PAY4 MENT.—A skilled nursing facility shall submit

5 claims for payment for services under this title

6 (whether such services are billed under part A or

7 part B) only on the basis of the geographic location

8 at which the service is furnished.’’.

9 SEC. 8405. DIRECT SPENDING FOR ANTI-FRAUD ACTIVITIES

10 UNDER MEDICARE.

11 (a) ESTABLISHMENT OF MEDICARE INTEGRITY PRO12 GRAM.—Title XVIII, as amended by section 8231(d), is

13 further amended by adding at the end the following new

14 section:

15 ‘‘MEDICARE INTEGRITY PROGRAM

16 ‘‘SEC. 1894. (a) ESTABLISHMENT OF PROGRAM.—

17 There is hereby established the Medicare Integrity Pro18 gram (hereafter in this section referred to as the ‘Pro19 gram’) under which the Secretary shall promote the integ20 rity of the medicare program by entering into contracts

21 in accordance with this section with eligible private entities

22 to carry out the activities described in subsection (b).

23 ‘‘(b) ACTIVITIES DESCRIBED.—The activities de24 scribed in this subsection are as follows:

25 ‘‘(1) Review of activities of providers of services

26 or other individuals and entities furnishing items
538

Title VIII, Subtitle E

•HR 2530 IH

1 and services for which payment may be made under

2 this title (including skilled nursing facilities and

3 home health agencies), including medical and utiliza4 tion review and fraud review (employing similar

5 standards, processes, and technologies used by pri6 vate health plans, including equipment and software

7 technologies which surpass the capability of the

8 equipment and technologies used in the review of

9 claims under this title as of the date of the enact10 ment of this section).

11 ‘‘(2) Audit of cost reports.

12 ‘‘(3) Determinations as to whether payment

13 should not be, or should not have been, made under

14 this title by reason of section 1862(b), and recovery

15 of payments that should not have been made.

16 ‘‘(4) Education of providers of services, bene17 ficiaries, and other persons with respect to payment

18 integrity and benefit quality assurance issues.

19 ‘‘(c) ELIGIBILITY OF ENTITIES.—An entity is eligible

20 to enter into a contract under the Program to carry out

21 any of the activities described in subsection (b) if—

22 ‘‘(1) the entity has demonstrated capability to

23 carry out such activities;

24 ‘‘(2) in carrying out such activities, the entity

25 agrees to cooperate with the Inspector General of
539

Title VIII, Subtitle E

•HR 2530 IH

1 the Department of Health and Human Services, the

2 Attorney General of the United States, and other

3 law enforcement agencies, as appropriate, in the in4 vestigation and deterrence of fraud and abuse in re5 lation to this title and in other cases arising out of

6 such activities;

7 ‘‘(3) the entity’s financial holdings, interests, or

8 relationships will not interfere with its ability to per9 form the functions to be required by the contract in

10 an effective and impartial manner; and

11 ‘‘(4) the entity meets such other requirements

12 as the Secretary may impose.

13 ‘‘(d) PROCESS FOR ENTERING INTO CONTRACTS.—

14 The Secretary shall enter into contracts under the Pro15 gram in accordance with such procedures as the Secretary

16 may by regulation establish, except that such procedures

17 shall include the following:

18 ‘‘(1) The Secretary shall determine the appro19 priate number of separate contracts which are nec20 essary to carry out the Program and the appropriate

21 times at which the Secretary shall enter into such

22 contracts.

23 ‘‘(2) The provisions of section 1153(e)(1) shall

24 apply to contracts and contracting authority under

25 this section, except that competitive procedures must
540

Title VIII, Subtitle E

•HR 2530 IH

1 be used when entering into new contracts under this

2 section, or at any other time considered appropriate

3 by the Secretary.

4 ‘‘(3) A contract under this section may be re5 newed without regard to any provision of law requir6 ing competition if the contractor has met or ex7 ceeded the performance requirements established in

8 the current contract.

9 ‘‘(e) LIMITATION ON CONTRACTOR LIABILITY.—The

10 Secretary shall by regulation provide for the limitation of

11 a contractor’s liability for actions taken to carry out a con12 tract under the Program, and such regulation shall, to the

13 extent the Secretary finds appropriate, employ the same

14 or comparable standards and other substantive and proce15 dural provisions as are contained in section 1157.

16 ‘‘(f) TRANSFER OF AMOUNTS TO MEDICARE ANTI17 FRAUD AND ABUSE TRUST FUND.—For each fiscal year,

18 the Secretary shall transfer from the Federal Hospital In19 surance Trust Fund and the Federal Supplementary Med20 ical Insurance Trust Fund to the Medicare Anti-Fraud

21 and Abuse Trust Fund under subsection (g) such amounts

22 as are necessary to carry out the activities described in

23 subsection (b). Such transfer shall be in an allocation as

24 reasonably reflects the proportion of such expenditures as25 sociated with part A and part B.
541

Title VIII, Subtitle E

•HR 2530 IH

1 ‘‘(g) MEDICARE ANTI-FRAUD AND ABUSE TRUST

2 FUND.—

3 ‘‘(1) ESTABLISHMENT.—

4 ‘‘(A) IN GENERAL.—There is hereby estab5 lished in the Treasury of the United States the

6 Anti-Fraud and Abuse Trust Fund (hereafter

7 in this subsection referred to as the ‘Trust

8 Fund’). The Trust Fund shall consist of such

9 gifts and bequests as may be made as provided

10 in subparagraph (B) and such amounts as may

11 be deposited in the Trust Fund as provided in

12 subsection (f), paragraph (3), and title XI.

13 ‘‘(B) AUTHORIZATION TO ACCEPT GIFTS

14 AND BEQUESTS.—The Trust Fund is author15 ized to accept on behalf of the United States

16 money gifts and bequests made unconditionally

17 to the Trust Fund, for the benefit of the Trust

18 Fund or any activity financed through the

19 Trust Fund.

20 ‘‘(2) INVESTMENT.—

21 ‘‘(A) IN GENERAL.—The Secretary of the

22 Treasury shall invest such amounts of the Fund

23 as such Secretary determines are not required

24 to meet current withdrawals from the Fund in

25 government account serial securities.
542

Title VIII, Subtitle E

•HR 2530 IH

1 ‘‘(B) USE OF INCOME.—Any interest de2 rived from investments under subparagraph (A)

3 shall be credited to the Fund.

4 ‘‘(3) AMOUNTS DEPOSITED INTO TRUST

5 FUND.—In addition to amounts transferred under

6 subsection (f), there shall be deposited in the Trust

7 Fund—

8 ‘‘(A) that portion of amounts recovered in

9 relation to section 1128A arising out of a claim

10 under title XVIII as remains after application

11 of subsection (f)(2) (relating to repayment of

12 the Federal Hospital Insurance Trust Fund or

13 the Federal Supplementary Medical Insurance

14 Trust Fund) of that section, as may be applica15 ble,

16 ‘‘(B) fines imposed under section 1128B

17 arising out of a claim under this title, and

18 ‘‘(C) penalties and damages imposed (other

19 than funds awarded to a relator or for restitu20 tion) under sections 3729 through 3732 of title

21 31, United States Code (pertaining to false

22 claims) in cases involving claims relating to pro23 grams under title XVIII, XIX, or XXI.

24 ‘‘(4) DIRECT APPROPRIATION OF FUNDS TO

25 CARRY OUT PROGRAM.—
543

Title VIII, Subtitle E

•HR 2530 IH

1 ‘‘(A) IN GENERAL.—There are appro2 priated from the Trust Fund for each fiscal

3 year such amounts as are necessary to carry

4 out the Medicare Integrity Program under this

5 section, subject to subparagraph (B).

6 ‘‘(B) AMOUNTS SPECIFIED.—The amount

7 appropriated under subparagraph (A) for a fis8 cal year is as follows:

9 ‘‘(i) For fiscal year 1996, such

10 amount shall be not less than

11 $430,000,000 and not more than

12 $440,000,000.

13 ‘‘(ii) For fiscal year 1997, such

14 amount shall be not less than

15 $490,000,000 and not more than

16 $500,000,000.

17 ‘‘(iii) For fiscal year 1998, such

18 amount shall be not less than

19 $550,000,000 and not more than

20 $560,000,000.

21 ‘‘(iv) For fiscal year 1999, such

22 amount shall be not less than

23 $620,000,000 and not more than

24 $630,000,000.
544

Title VIII, Subtitle E

•HR 2530 IH

1 ‘‘(v) For fiscal year 2000, such

2 amount shall be not less than

3 $670,000,000 and not more than

4 $680,000,000.

5 ‘‘(vi) For fiscal year 2001, such

6 amount shall be not less than

7 $690,000,000 and not more than

8 $700,000,000.

9 ‘‘(vii) For fiscal year 2002, such

10 amount shall be not less than

11 $710,000,000 and not more than

12 $720,000,000.

13 ‘‘(5) ANNUAL REPORT.—The Secretary shall

14 submit an annual report to Congress on the amount

15 of revenue which is generated and disbursed by the

16 Trust Fund in each fiscal year.’’.

17 (b) ELIMINATION OF FI AND CARRIER RESPONSIBIL18 ITY FOR CARRYING OUT ACTIVITIES SUBJECT TO PRO19 GRAM.—

20 (1) RESPONSIBILITIES OF FISCAL

21 INTERMEDIARIES UNDER PART A.—Section 1816

22 (42 U.S.C. 1395h) is amended by adding at the end

23 the following new subsection:

24 ‘‘(l) No agency or organization may carry out (or re25 ceive payment for carrying out) any activity pursuant to
545

Title VIII, Subtitle E

•HR 2530 IH

1 an agreement under this section to the extent that the ac2 tivity is carried out pursuant to a contract under the Med3 icare Integrity Program under section 1894.’’.

4 (2) RESPONSIBILITIES OF CARRIERS UNDER

5 PART B.—Section 1842(c) (42 U.S.C. 1395u(c)) is

6 amended by adding at the end the following new

7 paragraph:

8 ‘‘(6) No carrier may carry out (or receive payment

9 for carrying out) any activity pursuant to a contract under

10 this subsection to the extent that the activity is carried

11 out pursuant to a contract under the Medicare Integrity

12 Program under section 1894.’’.

13 (c) CONFORMING AMENDMENT.—Section

14 1128A(f)(3) (42 U.S.C. 1320a–7a(f)(3)) is amended by

15 striking ‘‘as miscellaneous receipts of the Treasury of the

16 United States’’ and inserting ‘‘in the Anti-Fraud and

17 Abuse Trust Fund established under section 1895(g)’’.

18 (d) DIRECT SPENDING FOR MEDICARE-RELATED AC19 TIVITIES OF INSPECTOR GENERAL.—Section 1894, as

20 added by subsection (a), is amended by adding at the end

21 the following new subsection:

22 ‘‘(h) DIRECT SPENDING FOR MEDICARE-RELATED

23 ACTIVITIES OF INSPECTOR GENERAL.—

24 ‘‘(1) IN GENERAL.—There are appropriated

25 from the Federal Hospital Insurance Trust Fund
546

Title VIII, Subtitle E

•HR 2530 IH

1 and the Federal Supplementary Medical Insurance

2 Trust Fund to the Inspector General of the Depart3 ment of Health and Human Services for each fiscal

4 year such amounts as are necessary to enable the

5 Inspector General to carry out activities relating to

6 the medicare program (as described in paragraph

7 (2)), subject to paragraph (3).

8 ‘‘(2) ACTIVITIES DESCRIBED.—The activities

9 described in this paragraph are as follows:

10 ‘‘(A) Prosecuting medicare-related matters

11 through criminal, civil, and administrative pro12 ceedings.

13 ‘‘(B) Conducting investigations relating to

14 the medicare program.

15 ‘‘(C) Performing financial and performance

16 audits of programs and operations relating to

17 the medicare program.

18 ‘‘(D) Performing inspections and other

19 evaluations relating to the medicare program.

20 ‘‘(E) Conducting provider and consumer

21 education activities regarding the requirements

22 of this title.

23 ‘‘(3) AMOUNTS SPECIFIED.—The amount ap24 propriated under paragraph (1) for a fiscal year is

25 as follows:
547

Title VIII, Subtitle E

•HR 2530 IH

1 ‘‘(A) For fiscal year 1996, such amount

2 shall be $130,000,000.

3 ‘‘(B) For fiscal year 1997, such amount

4 shall be $181,000,000.

5 ‘‘(C) For fiscal year 1998, such amount

6 shall be $204,000,000.

7 ‘‘(D) For each subsequent fiscal year, the

8 amount appropriated for the previous fiscal

9 year, increased by the percentage increase in

10 aggregate expenditures under this title for the

11 fiscal year involved over the previous fiscal year.

12 ‘‘(4) ALLOCATION OF PAYMENTS AMONG TRUST

13 FUNDS.—The appropriations made under paragraph

14 (1) shall be in an allocation as reasonably reflects

15 the proportion of such expenditures associated with

16 part A and part B.’’.

17 SEC. 8406. FRAUD REDUCTION DEMONSTRATION PROJECT.

18 (a) IN GENERAL.—Not later than July 1, 1996, the

19 Secretary of Health and Human Services (in this section

20 referred to as the ‘‘Secretary’’) shall establish not less

21 than three demonstration projects under which organiza22 tions with a contract under section 1816 or section 1842

23 of the Social Security Act—

24 (1) identify practitioners and providers whose

25 patterns of providing care to beneficiaries enrolled
548

Title VIII, Subtitle E

•HR 2530 IH

1 under title XVIII of the Social Security Act are con2 sistently outside the norm for other practitioners or

3 providers of the same category, class, or type, and

4 (2) experiment with ways of identifying fraudu5 lent claims submitted to the program established

6 under such title before they are paid.

7 (b) DURATION OF PROJECTS.—Each project estab8 lished under subsection (a) shall last for at least 18

9 months and shall focus on those categories, classes, or

10 types of providers and practitioners that have been identi11 fied by the Inspector General of the Department of Health

12 and Human Services as having a high incidence of fraud

13 and abuse.

14 (c) REPORT.—Not later than July 1, 1997, the Sec15 retary shall report to the Congress on the demonstration

16 projects established under subsection (a), and shall include

17 in the report an assessment of the effectiveness of, and

18 any recommended legislative changes based on, the

19 projects.

20 SEC. 8407. REPORT ON COMPETITIVE PRICING.

21 Not later than 1 year after the date of the enactment

22 of this Act, the Secretary of Health and Human Services

23 (acting through the Administrator of the Health Care Fi24 nancing Administration) shall submit to Congress a report

25 recommending legislative changes to the medicare pro-
549

Title VIII, Subtitle F

•HR 2530 IH

1 gram to enable the prices paid for items and services

2 under the medicare program to be established on a more

3 competitive basis.

4 Subtitle F—Improving Access to

5 Health Care

6 PART 1—ASSISTANCE FOR RURAL PROVIDERS

7 Subpart A—Rural Hospitals

8 SEC. 8501. SOLE COMMUNITY HOSPITALS.

9 (a) UPDATE.—Section 1886(b)(3)(B)(iv) (42 U.S.C.

10 1395ww(b)(3)(B)(iv)) is amended—

11 (A) in subclause (III), by striking ‘‘and’’ at

12 the end; and

13 (B) by striking subclause (IV) and insert14 ing the following:

15 ‘‘(IV) for each of the fiscal years 1996 through

16 2000, the market basket percentage increase minus

17 1 percentage points, and

18 ‘‘(V) for fiscal year 2001 and each subsequent

19 fiscal year, the applicable percentage increase under

20 clause (i).’’.

21 (b) STUDY OF IMPACT OF SOLE COMMUNITY HOS22 PITAL DESIGNATIONS.—

23 (1) STUDY.—The Medicare Payment Review

24 Commission shall conduct a study of the impact of

25 the designation of hospitals as sole community hos-
550

Title VIII, Subtitle F

•HR 2530 IH

1 pitals under the medicare program on the delivery of

2 health care services to individuals in rural areas, and

3 shall include in the study an analysis of the charac4 teristics of the hospitals designated as such sole

5 community hospitals under the program.

6 (2) REPORT.—Not later than 12 months after

7 the date a majority of the members of the Commis8 sion are first appointed, the Commission shall sub9 mit to Congress a report on the study conducted

10 under paragraph (1).

11 SEC. 8502. CLARIFICATION OF TREATMENT OF EAC AND

12 RPC HOSPITALS.

13 Paragraphs (1)(A) and (2)(A) of section 1820(i) (42

14 U.S.C. 1395i@4(i)) are each amended by striking the

15 semicolon at the end and inserting the following: ‘‘, or in

16 a State which the Secretary finds would receive a grant

17 under such subsection during a fiscal year if funds were

18 appropriated for grants under such subsection for the fis19 cal year;’’.

20 SEC. 8503. ESTABLISHMENT OF RURAL EMERGENCY AC21 CESS CARE HOSPITALS.

22 (a) ESTABLISHMENT.—

23 (1) IN GENERAL.—Section 1861 (42 U.S.C.

24 1395x) is amended by adding at the end the follow25 ing new subsection:
551

Title VIII, Subtitle F

•HR 2530 IH

1 ‘‘Rural Emergency Access Care Hospital; Rural

2 Emergency Access Care Hospital Services

3 ‘‘(oo)(1) The term ‘rural emergency access care hos4 pital’ means, for a fiscal year, a facility with respect to

5 which the Secretary finds the following:

6 ‘‘(A) The facility is located in a rural area (as

7 defined in section 1886(d)(2)(D)).

8 ‘‘(B) The facility was a hospital under this title

9 at any time during the 5-year period that ends on

10 the date of the enactment of this subsection.

11 ‘‘(C) The facility is in danger of closing due to

12 low inpatient utilization rates and operating losses,

13 and the closure of the facility would limit the access

14 to emergency services of individuals residing in the

15 facility’s service area.

16 ‘‘(D) The facility has entered into (or plans to

17 enter into) an agreement with a hospital with a par18 ticipation agreement in effect under section 1866(a),

19 and under such agreement the hospital shall accept

20 patients transferred to the hospital from the facility

21 and receive data from and transmit data to the facil22 ity.

23 ‘‘(E) There is a practitioner who is qualified to

24 provide advanced cardiac life support services (as de-
552

Title VIII, Subtitle F

•HR 2530 IH

1 termined by the State in which the facility is lo2 cated) on-site at the facility on a 24-hour basis.

3 ‘‘(F) A physician is available on-call to provide

4 emergency medical services on a 24-hour basis.

5 ‘‘(G) The facility meets such staffing require6 ments as would apply under section 1861(e) to a

7 hospital located in a rural area, except that—

8 ‘‘(i) the facility need not meet hospital

9 standards relating to the number of hours dur10 ing a day, or days during a week, in which the

11 facility must be open, except insofar as the fa12 cility is required to provide emergency care on

13 a 24-hour basis under subparagraphs (E) and

14 (F); and

15 ‘‘(ii) the facility may provide any services

16 otherwise required to be provided by a full-time,

17 on-site dietitian, pharmacist, laboratory techni18 cian, medical technologist, or radiological tech19 nologist on a part-time, off-site basis.

20 ‘‘(H) The facility meets the requirements appli21 cable to clinics and facilities under subparagraphs

22 (C) through (J) of paragraph (2) of section

23 1861(aa) and of clauses (ii) and (iv) of the second

24 sentence of such paragraph (or, in the case of the

25 requirements of subparagraph (E), (F), or (J) of
553

Title VIII, Subtitle F

•HR 2530 IH

1 such paragraph, would meet the requirements if any

2 reference in such subparagraph to a ‘nurse practi3 tioner’ or to ‘nurse practitioners’ were deemed to be

4 a reference to a ‘nurse practitioner or nurse’ or to

5 ‘nurse practitioners or nurses’); except that in deter6 mining whether a facility meets the requirements of

7 this subparagraph, subparagraphs (E) and (F) of

8 that paragraph shall be applied as if any reference

9 to a ‘physician’ is a reference to a physician as de10 fined in section 1861(r)(1).

11 ‘‘(2) The term ‘rural emergency access care hospital

12 services’ means the following services provided by a rural

13 emergency access care hospital and furnished to an indi14 vidual over a continuous period not to exceed 24 hours

15 (except that such services may be furnished over a longer

16 period in the case of an individual who is unable to leave

17 the hospital because of inclement weather):

18 ‘‘(A) An appropriate medical screening exam19 ination (as described in section 1867(a)).

20 ‘‘(B) Necessary stabilizing examination and

21 treatment services for an emergency medical condi22 tion and labor (as described in section 1867(b)).’’.

23 (2) REQUIRING RURAL EMERGENCY ACCESS

24 CARE HOSPITALS TO MEET HOSPITAL ANTI-DUMPING

25 REQUIREMENTS.—Section 1867(e)(5) (42 U.S.C.
554

Title VIII, Subtitle F

•HR 2530 IH

1 1395dd(e)(5)) is amended by striking

2 ‘‘1861(mm)(1))’’ and inserting ‘‘1861(mm)(1)) and

3 a rural emergency access care hospital (as defined in

4 section 1861(oo)(1))’’.

5 (b) COVERAGE AND PAYMENT UNDER PART B.—

6 (1) COVERAGE UNDER PART B.—Section

7 1832(a)(2) (42 U.S.C. 1395k(a)(2)) is amended—

8 (A) by striking ‘‘and’’ at the end of sub9 paragraph (I);

10 (B) by striking the period at the end of

11 subparagraph (J) and inserting ‘‘; and’’; and

12 (C) by adding at the end the following new

13 subparagraph:

14 ‘‘(K) rural emergency access care hospital

15 services (as defined in section 1861(oo)(2)).’’.

16 (2) PAYMENT BASED ON PAYMENT FOR OUT17 PATIENT RURAL PRIMARY CARE HOSPITAL SERV18 ICES.—

19 (A) IN GENERAL.—Section 1833(a)(6) (42

20 U.S.C. 1395l(a)(6)) is amended by striking

21 ‘‘services,’’ and inserting ‘‘services and rural

22 emergency access care hospital services,’’.

23 (B) PAYMENT METHODOLOGY DE24 SCRIBED.—Section 1834(g) (42 U.S.C.

25 1395m(g)) is amended—
555

Title VIII, Subtitle F

•HR 2530 IH

1 (i) in the heading, by striking ‘‘SERV2 ICES’’ and inserting ‘‘SERVICES AND

3 RURAL EMERGENCY ACCESS CARE HOS4 PITAL SERVICES’’; and

5 (ii) by adding at the end the following

6 new sentence: ‘‘The amount of payment for

7 rural emergency access care hospital serv8 ices provided during a year shall be deter9 mined using the applicable method pro10 vided under this subsection for determining

11 payment for outpatient rural primary care

12 hospital services during the year.’’.

13 (c) EFFECTIVE DATE.—The amendments made by

14 this section shall apply to fiscal years beginning on or

15 after October 1, 1995.

16 SEC. 8504. CLASSIFICATION OF RURAL REFERRAL CEN17 TERS.

18 (a) PROHIBITING DENIAL OF REQUEST FOR RECLAS19 SIFICATION ON BASIS OF COMPARABILITY OF WAGES.—

20 (1) IN GENERAL.—Section 1886(d)(10)(D) (42

21 U.S.C. 1395ww(d)(10)(D)) is amended—

22 (A) by redesignating clause (iii) as clause

23 (iv); and

24 (B) by inserting after clause (ii) the follow25 ing new clause:
556

Title VIII, Subtitle F

•HR 2530 IH

1 ‘‘(iii) Under the guidelines published by the Secretary

2 under clause (i), in the case of a hospital which is classi3 fied by the Secretary as a rural referral center under para4 graph (5)(C), the Board may not reject the application

5 of the hospital under this paragraph on the basis of any

6 comparison between the average hourly wage of the hos7 pital and the average hourly wage of hospitals in the area

8 in which it is located.’’.

9 (2) EFFECTIVE DATE.—Notwithstanding sec10 tion 1886(d)(10)(C)(ii) of the Social Security Act, a

11 hospital may submit an application to the Medicare

12 Geographic Classification Review Board during the

13 30-day period beginning on the date of the enact14 ment of this Act requesting a change in its classi15 fication for purposes of determining the area wage

16 index applicable to the hospital under section

17 1886(d)(3)(D) of such Act for fiscal year 1997, if

18 the hospital would be eligible for such a change in

19 its classification under the standards described in

20 section 1886(d)(10)(D) (as amended by paragraph

21 (1)) but for its failure to meet the deadline for appli22 cations under section 1886(d)(10)(C)(ii).

23 (b) CONTINUING TREATMENT OF PREVIOUSLY DES24 IGNATED CENTERS.—Any hospital classified as a rural re25 ferral center by the Secretary of Health and Human Serv-
557

Title VIII, Subtitle F

•HR 2530 IH

1 ices under section 1886(d)(5)(C) of the Social Security

2 Act for fiscal year 1994 shall be classified as such a rural

3 referral center for fiscal year 1996 and each subsequent

4 fiscal year.

5 SEC. 8505. FLOOR ON AREA WAGE INDEX.

6 (a) IN GENERAL.—For purposes of section

7 1886(d)(3)(E) of the Social Security Act for discharges

8 occurring on or after October 1, 1995, the area wage index

9 applicable under such section to any hospital which is not

10 located in a rural area (as defined in section

11 1886(d)(2)(D) of such Act) may not be less than the aver12 age of the area wage indices applicable under such section

13 to hospitals located in rural areas in the State in which

14 the hospital is located.

15 (b) BUDGET-NEUTRALITY IN IMPLEMENTATION.—

16 The Secretary of Health and Human Services shall make

17 any adjustments required under subsection (a) in a man18 ner which assures that the aggregate payments made

19 under section 1886(d) of the Social Security Act in a fiscal

20 year for the operating costs of inpatient hospital services

21 are not greater or less than those which would have been

22 made in the year without such adjustments.

23 SEC. 8506. MEDICAL EDUCATION.

24 (a) STATE AND CONSORTIUM DEMONSTRATION

25 PROJECTS.—
558

Title VIII, Subtitle F

•HR 2530 IH

1 (1) IN GENERAL.—

2 (A) PARTICIPATION OF STATES AND CON3 SORTIA.—The Secretary shall establish and

4 conduct a demonstration project to increase the

5 number and percentage of medical students en6 tering primary care practice relative to those

7 entering nonprimary care practice under which

8 the Secretary shall make payments in accord9 ance with paragraph (4)—

10 (i) to not more than 10 States for the

11 purpose of testing and evaluating mecha12 nisms to meet the goals described in sub13 section (b); and

14 (ii) to not more than 10 health care

15 training consortia for the purpose of test16 ing and evaluating mechanisms to meet

17 such goals.

18 (B) EXCLUSION OF CONSORTIA IN PAR19 TICIPATING STATES.—A consortia may not re20 ceive payments under the demonstration project

21 under subparagraph (A)(ii) if any of its mem22 bers is located in a State receiving payments

23 under the project under subparagraph (A)(i).

24 (2) APPLICATIONS.—
559

Title VIII, Subtitle F

•HR 2530 IH

1 (A) IN GENERAL.—Each State and consor2 tium desiring to conduct a demonstration

3 project under this subsection shall prepare and

4 submit to the Secretary an application, at such

5 time, in such manner, and containing such in6 formation as the Secretary may require to as7 sure that the State or consortium will meet the

8 goals described in subsection (b). In the case of

9 an application of a State, the application shall

10 include—

11 (i) information demonstrating that the

12 State has consulted with interested parties

13 with respect to the project, including State

14 medical associations, State hospital asso15 ciations, and medical schools located in the

16 State;

17 (ii) an assurance that no hospital con18 ducting an approved medical residency

19 training program in the State will lose

20 more than 10 percent of such hospital’s

21 approved medical residency positions in

22 any year as a result of the project; and

23 (iii) an explanation of a plan for eval24 uating the impact of the project in the

25 State.
560

Title VIII, Subtitle F

•HR 2530 IH

1 (B) APPROVAL OF APPLICATIONS.—A

2 State or consortium that submits an application

3 under subparagraph (A) may begin a dem4 onstration project under this subsection—

5 (i) upon approval of such application

6 by the Secretary; or

7 (ii) at the end of the 60-day period

8 beginning on the date such application is

9 submitted, unless the Secretary denies the

10 application during such period.

11 (C) NOTICE AND COMMENT.—A State or

12 consortium shall issue a public notice on the

13 date it submits an application under subpara14 graph (A) which contains a general description

15 of the proposed demonstration project. Any in16 terested party may comment on the proposed

17 demonstration project to the State or consor18 tium or the Secretary during the 30-day period

19 beginning on the date the public notice is is20 sued.

21 (3) SPECIFIC REQUIREMENTS FOR PARTICI22 PANTS.—

23 (A) REQUIREMENTS FOR STATES.—Each

24 State participating in the demonstration project

25 under this section shall use the payments pro-
561

Title VIII, Subtitle F

•HR 2530 IH

1 vided under paragraph (4) to test and evaluate

2 either of the following mechanisms to increase

3 the number and percentage of medical students

4 entering primary care practice relative to those

5 entering nonprimary care practice:

6 (i) USE OF ALTERNATIVE WEIGHTING

7 FACTORS.—

8 (I) IN GENERAL.—The State

9 may make payments to hospitals in

10 the State for direct graduate medical

11 education costs in amounts deter12 mined under the methodology pro13 vided under section 1886(h) of the

14 Social Security Act, except that the

15 State shall apply weighting factors

16 that are different than the weighting

17 factors otherwise set forth in section

18 1886(h)(4)(C) of the Social Security

19 Act.

20 (II) USE OF PAYMENTS FOR PRI21 MARY CARE RESIDENTS.—In applying

22 different weighting factors under

23 subclause (I), the State shall ensure

24 that the amount of payment made to

25 hospitals for costs attributable to pri-
562

Title VIII, Subtitle F

•HR 2530 IH

1 mary care residents shall be greater

2 than the amount that would have been

3 paid to hospitals for costs attributable

4 to such residents if the State had ap5 plied the weighting factors otherwise

6 set forth in section 1886(h)(4)(C) of

7 the Social Security Act.

8 (ii) PAYMENTS FOR MEDICAL EDU9 CATION THROUGH CONSORTIUM.—The

10 State may make payments for graduate

11 medical education costs through payments

12 to a health care training consortium (or

13 through any entity identified by such a

14 consortium as appropriate for receiving

15 payments on behalf of the consortium) that

16 is established in the State but that is not

17 otherwise participating in the demonstra18 tion project.

19 (B) REQUIREMENTS FOR CONSORTIUM.—

20 (i) IN GENERAL.—In the case of a

21 consortium participating in the demonstra22 tion project under this section, the Sec23 retary shall make payments for graduate

24 medical education costs through a health

25 care training consortium whose members
563

Title VIII, Subtitle F

•HR 2530 IH

1 provide medical residency training (or

2 through any entity identified by such a

3 consortium as appropriate for receiving

4 payments on behalf of the consortium).

5 (ii) USE OF PAYMENTS.—

6 (I) IN GENERAL.—Each consor7 tium receiving payments under clause

8 (i) shall use such funds to conduct ac9 tivities which test and evaluate mech10 anisms to increase the number and

11 percentage of medical students enter12 ing primary care practice relative to

13 those entering nonprimary care prac14 tice, and may use such funds for the

15 operation of the consortium.

16 (II) PAYMENTS TO PARTICIPAT17 ING PROGRAMS.—The consortium

18 shall ensure that the majority of the

19 payments received under clause (i) are

20 directed to consortium members for

21 primary care residency programs, and

22 shall designate for each resident as23 signed to the consortium a hospital

24 operating an approved medical resi25 dency training program for purposes
564

Title VIII, Subtitle F

•HR 2530 IH

1 of enabling the Secretary to calculate

2 the consortium’s payment amount

3 under the project. Such hospital shall

4 be the hospital where the resident re5 ceives the majority of the resident’s

6 hospital-based, nonambulatory train7 ing experience.

8 (4) ALLOCATION OF PORTION OF MEDICARE

9 GME PAYMENTS FOR ACTIVITIES UNDER PROJECT.—

10 Notwithstanding any provision of title XVIII of the

11 Social Security Act, the following rules apply with

12 respect to each State and each health care training

13 consortium participating in the demonstration

14 project established under this subsection during a

15 year:

16 (A) In the case of a State—

17 (i) the Secretary shall reduce the

18 amount of each payment made to hospitals

19 in the State during the year for direct

20 graduate medical education costs under

21 section 1886(h) of the Social Security Act

22 by 3 percent; and

23 (ii) the Secretary shall pay the State

24 an amount equal to the Secretary’s esti25 mate of the sum of the reductions made
565

Title VIII, Subtitle F

•HR 2530 IH

1 during the year under clause (i) (as ad2 justed by the Secretary in subsequent

3 years for over- or under-estimations in the

4 amount estimated under this subparagraph

5 in previous years).

6 (B) In the case of a consortium—

7 (i) the Secretary shall reduce the

8 amount of each payment made to hospitals

9 who are members of the consortium during

10 the year for direct graduate medical edu11 cation costs under section 1886(h) of the

12 Social Security Act by 3 percent; and

13 (ii) the Secretary shall pay the consor14 tium an amount equal to the Secretary’s

15 estimate of the sum of the reductions made

16 during the year under clause (i) (as ad17 justed by the Secretary in subsequent

18 years for over- or under-estimations in the

19 amount estimated under this subparagraph

20 in previous years).

21 (5) DURATION.—A demonstration project under

22 this subsection shall be conducted for a period not

23 to exceed 5 years. The Secretary may terminate a

24 project if the Secretary determines that the State or

25 consortium conducting the project is not in substan-
566

Title VIII, Subtitle F

•HR 2530 IH

1 tial compliance with the terms of the application ap2 proved by the Secretary.

3 (6) EVALUATIONS AND REPORTS.—

4 (A) EVALUATIONS.—Each State or consor5 tium participating in the demonstration project

6 shall submit to the Secretary a final evaluation

7 within 360 days of the termination of the State

8 or consortium’s participation and such interim

9 evaluations as the Secretary may require.

10 (B) REPORTS TO CONGRESS.—Not later

11 than 360 days after the first demonstration

12 project under this section begins, and annually

13 thereafter for each year in which such a project

14 is conducted, the Secretary shall submit a re15 port to Congress which evaluates the effective16 ness of the State and consortium activities con17 ducted under such projects and includes any

18 legislative recommendations determined appro19 priate by the Secretary.

20 (7) MAINTENANCE OF EFFORT.—Any funds

21 available for the activities covered by a demonstra22 tion project under this section shall supplement, and

23 shall not supplant, funds that are expended for simi24 lar purposes under any State, regional, or local pro25 gram.
567

Title VIII, Subtitle F

•HR 2530 IH

1 (b) GOALS FOR PROJECTS.—The goals referred to in

2 this subsection for a State or consortium participating in

3 the demonstration project under this section are as fol4 lows:

5 (1) The training of an equal number of physi6 cian and nonphysician primary care providers.

7 (2) The recruiting of residents for graduate

8 medical education training programs who received a

9 portion of undergraduate training in a rural area.

10 (3) The allocation of not less than 50 percent

11 of the training spent in a graduate medical residency

12 training program at sites at which acute care inpa13 tient hospital services are not furnished.

14 (4) The rotation of residents in approved medi15 cal residency training programs among practices

16 that serve residents of rural areas.

17 (5) The development of a plan under which,

18 after a 5-year transition period, not less than 50

19 percent of the residents who begin an initial resi20 dency period in an approved medical residency train21 ing program shall be primary care residents.

22 (c) DEFINITIONS.—In this section:

23 (1) APPROVED MEDICAL RESIDENCY TRAINING

24 PROGRAM.—The term ‘‘approved medical residency
568

Title VIII, Subtitle F

•HR 2530 IH

1 training program’’ has the meaning given such term

2 in section 1886(h)(5)(A) of the Social Security Act.

3 (2) HEALTH CARE TRAINING CONSORTIUM.—

4 The term ‘‘health care training consortium’’ means

5 a State, regional, or local entity consisting of at

6 least one of each of the following:

7 (A) A hospital operating an approved med8 ical residency training program at which resi9 dents receive training at ambulatory training

10 sites located in rural areas.

11 (B) A school of medicine or osteopathic

12 medicine.

13 (C) A school of allied health or a program

14 for the training of physician assistants (as such

15 terms are defined in section 799 of the Public

16 Health Service Act).

17 (D) A school of nursing (as defined in sec18 tion 853 of the Public Health Service Act).

19 (3) PRIMARY CARE.—The term ‘‘primary care’’

20 means family practice, general internal medicine,

21 general pediatrics, and obstetrics and gynecology.

22 (4) RESIDENT.—The term ‘‘resident’’ has the

23 meaning given such term in section 1886(h)(5)(H)

24 of the Social Security Act.
569

Title VIII, Subtitle F

•HR 2530 IH

1 (5) RURAL AREA.—The term ‘‘rural area’’ has

2 the meaning given such term in section

3 1886(d)(2)(D) of the Social Security Act.

4 Subpart B—Rural Physicians and Other Providers

5 SEC. 8511. PROVIDER INCENTIVES.

6 (a) ADDITIONAL PAYMENTS UNDER MEDICARE FOR

7 PHYSICIANS’ SERVICES FURNISHED IN SHORTAGE

8 AREAS.—

9 (1) INCREASE IN AMOUNT OF ADDITIONAL PAY10 MENT.—Section 1833(m) (42 U.S.C. 1395l(m)) is

11 amended by striking ‘‘10 percent’’ and inserting ‘‘20

12 percent’’.

13 (2) RESTRICTION TO PRIMARY CARE SERV14 ICES.—Section 1833(m) (42 U.S.C. 1395l(m)) is

15 amended by inserting after ‘‘physicians’ services’’

16 the following: ‘‘consisting of primary care services

17 (as defined in section 1842(i)(4))’’.

18 (3) EXTENSION OF PAYMENT FOR FORMER

19 SHORTAGE AREAS.—

20 (A) IN GENERAL.—Section 1833(m) (42

21 U.S.C. 1395l(m)) is amended by striking

22 ‘‘area,’’ and inserting ‘‘area (or, in the case of

23 an area for which the designation as a health

24 professional shortage area under such section is

25 withdrawn, in the case of physicians’ services
570

Title VIII, Subtitle F

•HR 2530 IH

1 furnished to such an individual during the 3-

2 year period beginning on the effective date of

3 the withdrawal of such designation),’’.

4 (B) EFFECTIVE DATE.—The amendment

5 made by subparagraph (A) shall apply to physi6 cians’ services furnished in an area for which

7 the designation as a health professional short8 age area under section 332(a)(1)(A) of the

9 Public Health Service Act is withdrawn on or

10 after January 1, 1996.

11 (4) REQUIRING CARRIERS TO REPORT ON SERV12 ICES PROVIDED.—Section 1842(b)(3) (42 U.S.C.

13 1395u(b)(3)) is amended—

14 (A) by striking ‘‘and’’ at the end of sub15 paragraph (I); and

16 (B) by inserting after subparagraph (I) the

17 following new subparagraph:

18 ‘‘(J) will provide information to the Secretary

19 not later than 30 days after the end of the contract

20 year on the types of providers to whom the carrier

21 made additional payments during the year for cer22 tain physicians’ services pursuant to section

23 1833(m), together with a description of the services

24 furnished by such providers during the year; and’’.

25 (5) STUDY.—
571

Title VIII, Subtitle F

•HR 2530 IH

1 (A) IN GENERAL.—The Secretary of

2 Health and Human Services shall conduct a

3 study analyzing the effectiveness of the provi4 sion of additional payments under part B of the

5 medicare program for physicians’ services pro6 vided in health professional shortage areas in

7 recruiting and retaining physicians to provide

8 services in such areas.

9 (B) REPORT.—Not later than 1 year after

10 the date of the enactment of this Act, the Sec11 retary shall submit to Congress a report on the

12 study conducted under subparagraph (A), and

13 shall include in the report such recommenda14 tions as the Secretary considers appropriate.

15 (6) EFFECTIVE DATE.—The amendments made

16 by paragraphs (1), (2), and (4) shall apply to physi17 cians’ services furnished on or after January 1,

18 1996.

19 (b) DEVELOPMENT OF MODEL STATE SCOPE OF

20 PRACTICE LAW.—

21 (1) IN GENERAL.—The Secretary of Health and

22 Human Services shall develop and publish a model

23 law that may be adopted by States to increase the

24 access of individuals residing in underserved rural

25 areas to health care services by expanding the serv-
572

Title VIII, Subtitle F

•HR 2530 IH

1 ices which non-physician health care professionals

2 may provide in such areas.

3 (2) DEADLINE.—The Secretary shall publish

4 the model law developed under paragraph (1) not

5 later than 1 year after the date of the enactment of

6 this Act.

7 SEC. 8512. NATIONAL HEALTH SERVICE CORPS LOAN RE8 PAYMENTS EXCLUDED FROM GROSS INCOME.

9 (a) IN GENERAL.—Part III of subchapter B of chap10 ter 1 of the Internal Revenue Code of 1986 (relating to

11 items specifically excluded from gross income) is amended

12 by redesignating section 137 as section 138 and by insert13 ing after section 136 the following new section:

14 ‘‘SEC. 137. NATIONAL HEALTH SERVICE CORPS LOAN RE15 PAYMENTS.

16 ‘‘(a) GENERAL RULE.—Gross income shall not in17 clude any qualified loan repayment.

18 ‘‘(b) QUALIFIED LOAN REPAYMENT.—For purposes

19 of this section, the term ‘qualified loan repayment’ means

20 any payment made on behalf of the taxpayer by the Na21 tional Health Service Corps Loan Repayment Program

22 under section 338B(g) of the Public Health Service Act.’’.

23 (b) CONFORMING AMENDMENT.—Paragraph (3) of

24 section 338B(g) of the Public Health Service Act is
573

Title VIII, Subtitle F

•HR 2530 IH

1 amended by striking ‘‘Federal, State, or local’’ and insert2 ing ‘‘State or local’’.

3 (c) CLERICAL AMENDMENT.—The table of sections

4 for part III of subchapter B of chapter 1 of the Internal

5 Revenue Code of 1986 is amended by striking the item

6 relating to section 137 and inserting the following:

‘‘Sec. 137. National Health Service Corps loan repayments.

‘‘Sec. 138. Cross references to other Acts.’’.

7 (d) EFFECTIVE DATE.—The amendments made by

8 this section shall apply to payments made under section

9 338B(g) of the Public Health Service Act after the date

10 of the enactment of this Act.

11 SEC. 8513. TELEMEDICINE PAYMENT METHODOLOGY.

12 The Secretary of Health and Human Services shall

13 establish a methodology for making payments under part

14 B of the medicare program for telemedicine services fur15 nished on an emergency basis to individuals residing in

16 an area designated as a health professional shortage area

17 (under section 332(a) of the Public Health Service Act).

18 SEC. 8514. DEMONSTRATION PROJECT TO INCREASE

19 CHOICE IN RURAL AREAS.

20 The Secretary of Health and Human Services (acting

21 through the Administrator of the Health Care Financing

22 Administration) shall conduct a demonstration project to

23 assess the advantages and disadvantages of requiring

24 Medicare Choice organizations under part C of title XVIII
574

Title VIII, Subtitle F

•HR 2530 IH

1 of the Social Security Act (as added by section 8002(a))

2 to market Medicare Choice products in certain under3 served areas which are near the standard service area for

4 such products.

5 PART 2—MEDICARE SUBVENTION

6 SEC. 8521. MEDICARE PROGRAM PAYMENTS FOR HEALTH

7 CARE SERVICES PROVIDED IN THE MILITARY

8 HEALTH SERVICES SYSTEM.

9 (a) PAYMENTS UNDER MEDICARE RISK CONTRACTS

10 PROGRAM.—

11 (1) CURRENT PROGRAM.—Section 1876 (42

12 U.S.C. 1395mm) is amended by adding at the end

13 the following new subsection:

14 ‘‘(k) Notwithstanding any other provision of this sec15 tion, a managed health care plan established by the Sec16 retary of Defense under chapter 55 of title 10, United

17 States Code, shall be considered an eligible organization

18 under this section, and the Secretary shall make payments

19 to such a managed health care plan during a year on be20 half of any individuals entitled to benefits under this title

21 who are enrolled in such a managed health care plan dur22 ing the year. Such payments shall be equal to 30 percent

23 of the amount otherwise paid to other eligible organiza24 tions under this section, and shall be made under similar

25 terms and conditions under which the Secretary makes
575

Title VIII, Subtitle F

•HR 2530 IH

1 payments to other eligible organizations with risk sharing

2 contracts under this section.’’.

3 (2) MEDICARE CHOICE PROGRAM.—Section

4 1855, as inserted by section 8002(a), by adding at

5 the end the following new subsection:

6 ‘‘(h) PAYMENTS TO MILITARY PROGRAM.—Notwith7 standing any other provision of this section, a managed

8 health care plan established by the Secretary of Defense

9 under chapter 55 of title 10, United States Code, shall

10 be considered a Medicare Choice organization under this

11 part, and the Secretary shall make payments to such a

12 managed health care plan during a year on behalf of any

13 individuals entitled to benefits under this title who are en14 rolled in such a managed health care plan during the year.

15 Such payments shall be equal to 30 percent of the amount

16 otherwise paid to other Medicare Choice organizations

17 under this section, and shall be made under similar terms

18 and conditions under which the Secretary makes payments

19 to other Medicare Choice organizations with contracts in

20 effect under this part.’’.

21 (b) TEMPORARY PROVISION FOR WAIVER OF PART

22 B PREMIUM PENALTY.—Section 1839 (42 U.S.C. 1395r)

23 is amended by adding at the end the following new sub24 section:
576

Title VIII, Subtitle F

•HR 2530 IH

1 ‘‘(h) The premium increase required by subsection

2 (b) shall not apply with respect to a person who is enrolled

3 with a managed care plan that is established by the Sec4 retary of Defense under chapter 55 of title 10, United

5 States Code, and is recognized as an eligible organization

6 pursuant to section 1855(h) or section 1876(k), if such

7 person first enrolled in such plan prior to January 1,

8 1998.’’.

9 (c) PAYMENTS UNDER PART A OF MEDICARE.—Sec10 tion 1814(c) (42 U.S.C. 1395f(c)) is amended—

11 (1) by redesignating the current matter as

12 paragraph (1); and

13 (2) by adding at the end the following new

14 paragraph:

15 ‘‘(2) Paragraph (1) shall not apply to services

16 provided by facilities of the uniformed services pur17 suant to chapter 55 of title 10, United States Code,

18 and subject to the provisions of section 1095 of such

19 title. With respect to such services, payments under

20 this title shall be made without regard to whether

21 the beneficiary under this title has paid the deduct22 ible and copayments amounts generally required by

23 this title.’’.

24 (d) PAYMENTS UNDER PART B OF MEDICARE.—Sec25 tion 1835(d) (42 U.S.C. 1395n(d)) is amended—
577

Title VIII, Subtitle F

•HR 2530 IH

1 (1) by redesignating the current matter as

2 paragraph (1); and

3 (2) by adding at the end the following new

4 paragraph:

5 ‘‘(2) Paragraph (1) shall not apply to services pro6 vided by facilities of the uniformed services pursuant to

7 chapter 55 of title 10, United States Code, and subject

8 to the provisions of section 1095 of such title. With respect

9 to such services, payments under this title shall be made

10 without regard to whether the beneficiary under this title

11 has paid the deductible and copayments amounts generally

12 required by this title.’’.

13 (e) CONFORMING AMENDMENTS TO THE THIRD

14 PARTY COLLECTION PROGRAM FOR MILITARY MEDICAL

15 FACILITIES.—(1) Section 1095(d) of title 10, United

16 States Code, is amended—

17 (A) by striking ‘‘XVIII or’’; and

18 (B) by striking ‘‘1395’’ and inserting ‘‘1396’’.

19 (2) Section 1095(h)(2) of such title is amended by

20 inserting after ‘‘includes’’ the following: ‘‘plans adminis21 tered under title XVIII of the Social Security Act (42

22 U.S.C. 1395 et seq.),’’.

23 (f) EFFECTIVE DATE.—The amendments made by

24 this section shall take effect at the end of the 30-day pe25 riod beginning on the date of the enactment of this Act.
578

Title VIII, Subtitle G

•HR 2530 IH

1 Subtitle G—Other Provisions

2 SEC. 8601. EXTENSION AND EXPANSION OF EXISTING SEC3 ONDARY PAYER REQUIREMENTS.

4 (a) DATA MATCH.—

5 (1) Section 1862(b)(5)(C) (42 U.S.C.

6 1395y(b)(5)(C)) is amended by striking clause (iii).

7 (2) Section 6103(l)(12) of the Internal Revenue

8 Code of 1986 is amended by striking subparagraph

9 (F).

10 (b) APPLICATION TO DISABLED INDIVIDUALS IN

11 LARGE GROUP HEALTH PLANS.—

12 (1) IN GENERAL.—Section 1862(b)(1)(B) (42

13 U.S.C. 1395y(b)(1)(B)) is amended—

14 (A) in clause (i), by striking ‘‘clause (iv)’’

15 and inserting ‘‘clause (iii)’’,

16 (B) by striking clause (iii), and

17 (C) by redesignating clause (iv) as clause

18 (iii).

19 (2) CONFORMING AMENDMENTS.—Paragraphs

20 (1) through (3) of section 1837(i) (42 U.S.C.

21 1395p(i)) and the second sentence of section

22 1839(b) (42 U.S.C. 1395r(b)) are each amended by

23 striking ‘‘1862(b)(1)(B)(iv)’’ each place it appears

24 and inserting ‘‘1862(b)(1)(B)(iii)’’.
579

Title VIII, Subtitle G

•HR 2530 IH

1 (c) EXPANSION OF PERIOD OF APPLICATION TO IN2 DIVIDUALS WITH END STAGE RENAL DISEASE.—Section

3 1862(b)(1)(C) (42 U.S.C. 1395y(b)(1)(C)) is amended—

4 (1) in the first sentence, by striking ‘‘12-

5 month’’ each place it appears and inserting ‘‘24-

6 month’’, and

7 (2) by striking the second sentence.

8 SEC. 8602. REPEAL OF MEDICARE AND MEDICAID COV9 ERAGE DATA BANK.

10 (a) IN GENERAL.—Section 1144 (42 U.S.C. 1320b–

11 14) is repealed.

12 (b) CONFORMING AMENDMENTS.—

13 (1) MEDICARE.—Section 1862(b)(5) (42 U.S.C.

14 1395y(b)(5)) is amended—

15 (A) in subparagraph (B), by striking

16 ‘‘under—’’ and all that follows through the end

17 and inserting ‘‘subparagraph (A) for purposes

18 of carrying out this subsection.’’, and

19 (B) in subparagraph (C)(i), by striking

20 ‘‘subparagraph (B)(i)’’ and inserting ‘‘subpara21 graph (B)’’.

22 (2) MEDICAID.—Section 1902(a)(25)(A)(i) (42

23 U.S.C. 1396a(a)(25)(A)(i)) is amended by striking

24 ‘‘including the use of’’ and all that follows through

25 ‘‘any additional measures’’.
580

Title VIII, Subtitle G

•HR 2530 IH

1 (3) ERISA.—Section 101(f) of the Employee

2 Retirement Income Security Act of 1974 (29 U.S.C.

3 1021(f)) is repealed.

4 (4) DATA MATCHES.—Section 552a(a)(8)(B) of

5 title 5, United States Code, is amended—

6 (A) by adding ‘‘; or’’ at the end of clause

7 (v),

8 (B) by striking ‘‘or’’ at the end of clause

9 (vi), and

10 (C) by striking clause (vii).

11 SEC. 8603. CLARIFICATION OF MEDICARE COVERAGE OF

12 ITEMS AND SERVICES ASSOCIATED WITH

13 CERTAIN MEDICAL DEVICES APPROVED FOR

14 INVESTIGATIONAL USE.

15 (a) COVERAGE.—Nothing in title XVIII of the Social

16 Security Act may be construed to prohibit coverage under

17 part A or part B of the medicare program of items and

18 services associated with the use of a medical device in the

19 furnishing of inpatient hospital services (as defined for

20 purposes of part A of the medicare program) solely on the

21 grounds that the device is not an approved device, if—

22 (1) the device is an investigational device; and

23 (2) the device is used instead of an approved

24 device.
581

Title VIII, Subtitle G

•HR 2530 IH

1 (b) CLARIFICATION OF PAYMENT AMOUNT.—Not2 withstanding any other provision of title XVIII of the So3 cial Security Act, the amount of payment made under the

4 medicare program for any item or service associated with

5 the use of an investigational device in the furnishing of

6 inpatient hospital services (as defined for purposes of part

7 A of the medicare program) may not exceed the amount

8 of the payment which would have been made under the

9 program for the item or service if the item or service were

10 associated with the use of an approved device.

11 (c) DEFINITIONS.—In this section—

12 (1) the term ‘‘approved device’’ means a medi13 cal device which has been approved for marketing

14 under pre-market approval under the Federal Food,

15 Drug, and Cosmetic Act or cleared for marketing

16 under a 510(k) notice under such Act; and

17 (2) the term ‘‘investigational device’’ means a

18 medical device (other than a device described in

19 paragraph (1)) which is approved for investigational

20 use under section 520(g) of the Federal Food, Drug,

21 and Cosmetic Act.

22 SEC. 8604. ADDITIONAL EXCLUSION FROM COVERAGE.

23 (a) IN GENERAL.—Section 1862(a) (42 U.S.C.

24 1395y(a)) is amended—
582

Title VIII, Subtitle G

•HR 2530 IH

1 (1) by striking ‘‘or’’ at the end of paragraph

2 (14),

3 (2) by striking the period at the end of para4 graph (15) and inserting ‘‘; or’’, and

5 (3) by inserting after paragraph (15) the fol6 lowing new paragraph:

7 ‘‘(16) where such expenses are for items or

8 services, or to assist in the purchase, in whole or in

9 part, of health benefit coverage that includes items

10 or services, for the purpose of causing, or assisting

11 in causing, the death, suicide, euthanasia, or mercy

12 killing of a person.’’.

13 (b) EFFECTIVE DATE.—The amendments made by

14 subsection (a) shall apply to payment for items and serv15 ices furnished on or after the date of the enactment of

16 this Act.

17 SEC. 8605. EXTENDING MEDICARE COVERAGE OF, AND AP18 PLICATION OF HOSPITAL INSURANCE TAX

19 TO, ALL STATE AND LOCAL GOVERNMENT

20 EMPLOYEES.

21 (a) IN GENERAL.—

22 (1) APPLICATION OF HOSPITAL INSURANCE

23 TAX.—Section 3121(u)(2) of the Internal Revenue

24 Code of 1986 is amended by striking subparagraphs

25 (C) and (D).
583

Title VIII, Subtitle G

•HR 2530 IH

1 (2) COVERAGE UNDER MEDICARE.—Section

2 210(p) of the Social Security Act (42 U.S.C. 410(p))

3 is amended by striking paragraphs (3) and (4).

4 (3) EFFECTIVE DATE.—The amendments made

5 by this subsection shall apply to services performed

6 after December 31, 1996.

7 (b) TRANSITION IN BENEFITS FOR STATE AND

8 LOCAL GOVERNMENT EMPLOYEES AND FORMER EM9 PLOYEES.—

10 (1) IN GENERAL.—

11 (A) EMPLOYEES NEWLY SUBJECT TO

12 TAX.—For purposes of sections 226, 226A, and

13 1811 of the Social Security Act, in the case of

14 any individual who performs services during the

15 calendar quarter beginning January 1, 1997,

16 the wages for which are subject to the tax im17 posed by section 3101(b) of the Internal Reve18 nue Code of 1986 only because of the amend19 ment made by subsection (a), the individual’s

20 medicare qualified State or local government

21 employment (as defined in subparagraph (B))

22 performed before January 1, 1997, shall be

23 considered to be ‘‘employment’’ (as defined for

24 purposes of title II of such Act), but only for

25 purposes of providing the individual (or another
584

Title VIII, Subtitle G

•HR 2530 IH

1 person) with entitlement to hospital insurance

2 benefits under part A of title XVIII of such Act

3 for months beginning with January 1997.

4 (B) MEDICARE QUALIFIED STATE OR

5 LOCAL GOVERNMENT EMPLOYMENT DE6 FINED.—In this paragraph, the term ‘‘medicare

7 qualified State or local government employ8 ment’’ means medicare qualified government

9 employment described in section 210(p)(1)(B)

10 of the Social Security Act (determined without

11 regard to section 210(p)(3) of such Act, as in

12 effect before its repeal under subsection (a)(2)).

13 (2) AUTHORIZATION OF APPROPRIATIONS.—

14 There are authorized to be appropriated to the Fed15 eral Hospital Insurance Trust Fund from time to

16 time such sums as the Secretary of Health and

17 Human Services deems necessary for any fiscal year

18 on account of—

19 (A) payments made or to be made during

20 such fiscal year from such Trust Fund with re21 spect to individuals who are entitled to benefits

22 under title XVIII of the Social Security Act

23 solely by reason of paragraph (1),

24 (B) the additional administrative expenses

25 resulting or expected to result therefrom, and
585

Title VIII, Subtitle G

•HR 2530 IH

1 (C) any loss in interest to such Trust

2 Fund resulting from the payment of those

3 amounts, in order to place such Trust Fund in

4 the same position at the end of such fiscal year

5 as it would have been in if this subsection had

6 not been enacted.

7 (3) INFORMATION TO INDIVIDUALS WHO ARE

8 PROSPECTIVE MEDICARE BENEFICIARIES BASED ON

9 STATE AND LOCAL GOVERNMENT EMPLOYMENT.—

10 Section 226(g) of the Social Security Act (42 U.S.C.

11 426(g)) is amended—

12 (A) by redesignating paragraphs (1)

13 through (3) as subparagraphs (A) through (C),

14 respectively,

15 (B) by inserting ‘‘(1)’’ after ‘‘(g)’’, and

16 (C) by adding at the end the following new

17 paragraph:

18 ‘‘(2) The Secretary, in consultation with State and

19 local governments, shall provide procedures designed to

20 assure that individuals who perform medicare qualified

21 government employment by virtue of service described in

22 section 210(a)(7) are fully informed with respect to (A)

23 their eligibility or potential eligibility for hospital insur24 ance benefits (based on such employment) under part A

25 of title XVIII, (B) the requirements for, and conditions
586

Title VIII, Subtitle G

•HR 2530 IH

1 of, such eligibility, and (C) the necessity of timely applica2 tion as a condition of becoming entitled under subsection

3 (b)(2)(C), giving particular attention to individuals who

4 apply for an annuity or retirement benefit and whose eligi5 bility for such annuity or retirement benefit is based on

6 a disability.’’

7 (c) TECHNICAL AMENDMENTS.—

8 (1) Subparagraph (A) of section 3121(u)(2) of

9 the Internal Revenue Code of 1986 is amended by

10 striking ‘‘subparagraphs (B) and (C),’’ and inserting

11 ‘‘subparagraph (B),’’.

12 (2) Subparagraph (B) of section 210(p)(1) of

13 the Social Security Act (42 U.S.C. 410(p)(1)) is

14 amended by striking ‘‘paragraphs (2) and (3).’’ and

15 inserting ‘‘paragraph (2).’’

16 (3) Section 218 of the Social Security Act (42

17 U.S.C. 418) is amended by striking subsection (n).

18 (4) The amendments made by this subsection

19 shall apply after December 31, 1996.
587

Title VIII, Subtitle H

•HR 2530 IH

1 Subtitle H—Monitoring Achieve2 ment of Medicare Reform Goals

3 SEC. 8701. ESTABLISHMENT OF BUDGETARY AND PROGRAM

4 GOALS.

5 (a) IN GENERAL.—The Secretary shall establish pro6 gram budgetary and program goals for the medicare pro7 gram consistent with this section.

8 (b) BUDGETARY GOALS.—The budgetary goal is to

9 restrict total outlays under the medicare program as fol10 lows:

11 (1) For fiscal year 1996, $173,500,000,000.

12 (2) For fiscal year 1997, $187,300,000,000.

13 (3) For fiscal year 1998, $200,800,000,000.

14 (4) For fiscal year 1999, $215,200,000,000.

15 (5) For fiscal year 2000, $220,500,000,000.

16 (6) For fiscal year 2001, $248,000,000,000.

17 (7) For fiscal year 2002, $267,100,000,000.

18 (c) PROGRAM GOALS.—The program goals shall be

19 consistent with the following:

20 (1) There should be an equitable distribution of

21 funds between per beneficiary spending on payments

22 to Medicare Choice organizations under part C of

23 the medicare program and on payments to providers

24 on a fee-for-service basis under parts A and B of the

25 program.
588

Title VIII, Subtitle H

•HR 2530 IH

1 (2) Payments to Medicare Choice organizations

2 should be established in a manner that promotes the

3 availability of Medicare Choice products in all re4 gions of the country and that permits such organiza5 tions to offer adequate coverage.

6 SEC. 8702. MEDICARE REFORM COMMISSION.

7 (a) ESTABLISHMENT.—There is established a com8 mission to be known as the Medicare Reform Commission

9 (in this section referred to as the ‘‘Commission’’).

10 (b) DUTIES.—

11 (1) IN GENERAL.—The Commission shall exam12 ine how the medicare program has met the budg13 etary and program goals established under section

14 8701.

15 (2) PERIODIC REPORTS.—

16 (A) IN GENERAL.—The Commission shall

17 issue a report on April 1, 1998, and on March

18 1 of every third subsequent year, on the status

19 of the medicare program in relation to the

20 budgetary and program goals specified in sec21 tion 8601.

22 (B) CONTENTS.—Each report shall include

23 the following information about the medicare

24 program in the most recent fiscal year and

25 projects for the succeeding 3 fiscal years:
589

Title VIII, Subtitle H

•HR 2530 IH

1 (i) The actuarial value of the tradi2 tional medicare benefit package.

3 (ii) The projected rate of growth of

4 outlays under the traditional medicare pro5 gram.

6 (iii) The ability of Medicare Choice or7 ganizations to offer an adequate benefit

8 package under part C of the medicare pro9 gram.

10 (iv) The extent of Medicare Choice

11 products made available to medicare bene12 ficiaries in the different regions of the

13 country.

14 (3) RECOMMENDATIONS.—

15 (A) IN GENERAL.—If a report under para16 graph (2) finds that any of the following prob17 lems exists, the Commission shall include rec18 ommendations to respond to the problem:

19 (i) The actuarial value of the tradi20 tional medicare benefit package exceeds

21 the payment rate under the Medicare

22 Choice program.

23 (ii) The rate of growth of the tradi24 tional medicare program under parts A

25 and B is projected to result in medicare
590

Title VIII, Subtitle H

•HR 2530 IH

1 outlays exceeding the outlay targets speci2 fied in section 8701.

3 (iii) The payments under the Medi4 care Choice program are not sufficient to

5 allow contractors to provide an adequate

6 benefit package.

7 (iv) The selection of Medicare Choice

8 products are limited or not available in

9 parts of the country.

10 (B) TYPES OF RECOMMENDATIONS.—The

11 recommendations provided under subparagraph

12 (A) may include—

13 (i) in response to the problem de14 scribed in subparagraph (A)(ii), reduction

15 in payments to providers under parts A

16 and B or an increase in cost sharing by

17 beneficiaries; and

18 (ii) in response to the problems de19 scribed in subparagraphs (A)(iii) and

20 (A)(iv), an adjustment to payment rates to

21 Medicare Choice organizations.

22 Such recommendations may not include any

23 change that is inconsistent with attaining the

24 outlay targets specified under section 8701.
591

Title VIII, Subtitle H

•HR 2530 IH

1 (4) PRESIDENTIAL RESPONSE.—If the Commis2 sion reports under this subsection that the goals es3 tablished in section 8701 are not met (or projects

4 that such goals will not be met during a 3-year pe5 riod), the President shall submit to Congress, within

6 90 days after the date of submission of the report,

7 specific legislative recommendations to correct the

8 problem. Such recommendations may include those

9 described in paragraph (3)(B) and may not include

10 any change that is inconsistent with attaining the

11 outlay targets specified under section 8701.

12 (5) CONGRESSIONAL CONSIDERATION.—

13 (A) IN GENERAL.—The President’s rec14 ommendations submitted under paragraph (4)

15 shall not apply unless a joint resolution (de16 scribed in subparagraph (B)) approving such

17 recommendations is enacted, in accordance with

18 the provisions of subparagraph (C), before the

19 end of the 60-day period beginning on the date

20 on which a report containing such recommenda21 tions is submitted by the President under para22 graph (4). For purposes of applying the preced23 ing sentence and subparagraphs (B) and (C),

24 the days on which either House of Congress is

25 not in session because of an adjournment of
592

Title VIII, Subtitle H

•HR 2530 IH

1 more than three days to a day certain shall be

2 excluded in the computation of a period.

3 (B) JOINT RESOLUTION OF APPROVAL.—A

4 joint resolution described in this subparagraph

5 means only a joint resolution which is intro6 duced within the 10-day period beginning on

7 the date on which the report described in sub8 paragraph (A) is submitted and—

9 (i) which does not have a preamble;

10 (ii) the matter after the resolving

11 clause of which is as follows: ‘‘That Con12 gress approves the recommendations of the

13 President under section 8702(b)(4) of the

14 Medicare Preservation Act, as submitted

15 by the President on lllllll.’’,

16 the blank space being filled in with the ap17 propriate date; and

18 (iii) the title of which is as follows:

19 ‘‘Joint resolution approving Presidential

20 recommendations submitted under section

21 8702(b)(4) of the Medicare Preservation

22 Act, as submitted by the President on

23 lllllll.’’, the blank space being

24 filled in with the appropriate date.
593

Title VIII, Subtitle H

•HR 2530 IH

1 (C) PROCEDURES FOR CONSIDERATION OF

2 RESOLUTION OF APPROVAL.—Subject to sub3 paragraph (D), the provisions of section 2908

4 (other than subsection (a)) of the Defense Base

5 Closure and Realignment Act of 1990 shall

6 apply to the consideration of a joint resolution

7 described in subparagraph (B) in the same

8 manner as such provisions apply to a joint reso9 lution described in section 2908(a) of such Act.

10 (D) SPECIAL RULES.—For purposes of ap11 plying subparagraph (C) with respect to such

12 provisions—

13 (i) any reference to the Committee on

14 Armed Services of the House of Represent15 atives shall be deemed a reference to the

16 Committee on Ways and Means and any

17 reference to the Committee on Armed

18 Services of the Senate shall be deemed a

19 reference to the Committee on Finance of

20 the Senate; and

21 (ii) any reference to the date on which

22 the President transmits a report shall be

23 deemed a reference to the date on which

24 the President submits the recommenda25 tions under paragraph (4).
594

Title VIII, Subtitle H

•HR 2530 IH

1 (c) MEMBERSHIP.—

2 (1) APPOINTMENT.—The Commission shall be

3 composed of 5 members appointed by the President,

4 of which 4 of whom are appointed from a list (of at

5 least 5 nominees) submitted by each of the following:

6 (A) The Speaker of the House of Rep7 resentatives.

8 (B) The Minority Leader of the House of

9 Representatives.

10 (C) The Majority Leader of the Senate.

11 (D) The Minority Leader of the Senate.

12 (2) TERM OF SERVICE.—Each member of the

13 Commission shall serve for a term of 3 years. Mem14 bers may be reappointed for additional terms.

15 (3) CHAIRMAN AND VICE CHAIRMAN.—The

16 Commission shall elect a Chairman and Vice Chair17 man from among its members.

18 (4) VACANCIES.—Any vacancy in the member19 ship of the Commission shall be filled in the manner

20 in which the original appointment was made and

21 shall not affect the power of the remaining members

22 to execute the duties of the Commission.

23 (5) QUORUM.—A quorum shall consist of 3

24 members of the Commission, except that 2 members

25 may conduct a hearing under subsection (e).
595

Title VIII, Subtitle H

•HR 2530 IH

1 (6) MEETINGS.—The Commission shall meet at

2 the call of its Chairman or a majority of its mem3 bers.

4 (7) COMPENSATION AND REIMBURSEMENT OF

5 EXPENSES.—Members of the Commission are not

6 entitled to receive compensation for service on the

7 Commission. Members may be reimbursed for travel,

8 subsistence, and other necessary expenses incurred

9 in carrying out the duties of the Commission.

10 (d) STAFF AND CONSULTANTS.—

11 (1) STAFF.—The Commission may appoint and

12 determine the compensation of such staff as may be

13 necessary to carry out the duties of the Commission.

14 Such appointments and compensation may be made

15 without regard to the provisions of title 5, United

16 States Code, that govern appointments in the com17 petitive services, and the provisions of chapter 51

18 and subchapter III of chapter 53 of such title that

19 relate to classifications and the General Schedule

20 pay rates.

21 (2) CONSULTANTS.—The Commission may pro22 cure such temporary and intermittent services of

23 consultants under section 3109(b) of title 5, United

24 States Code, as the Commission determines to be

25 necessary to carry out the duties of the Commission.
596

Title VIII, Subtitle H

•HR 2530 IH

1 (e) POWERS.—

2 (1) HEARINGS AND OTHER ACTIVITIES.—For

3 the purpose of carrying out its duties, the Commis4 sion may hold such hearings and undertake such

5 other activities as the Commission determines to be

6 necessary to carry out its duties.

7 (2) STUDIES BY GAO.—Upon the request of the

8 Commission, the Comptroller General shall conduct

9 such studies or investigations as the Commission de10 termines to be necessary to carry out its duties.

11 (3) COST ESTIMATES BY CONGRESSIONAL

12 BUDGET OFFICE.—

13 (A) Upon the request of the Commission,

14 the Director of the Congressional Budget Office

15 shall provide to the Commission such cost esti16 mates as the Commission determines to be nec17 essary to carry out its duties.

18 (B) The Commission shall reimburse the

19 Director of the Congressional Budget Office for

20 expenses relating to the employment in the of21 fice of the Director of such additional staff as

22 may be necessary for the Director to comply

23 with requests by the Commission under sub24 paragraph (A).
597

Title VIII, Subtitle H

•HR 2530 IH

1 (4) DETAIL OF FEDERAL EMPLOYEES.—Upon

2 the request of the Commission, the head of any Fed3 eral agency is authorized to detail, without reim4 bursement, any of the personnel of such agency to

5 the Commission to assist the Commission in carry6 ing out its duties. Any such detail shall not interrupt

7 or otherwise affect the civil service status or privi8 leges of the Federal employee.

9 (5) TECHNICAL ASSISTANCE.—Upon the re10 quest of the Commission, the head of a Federal

11 agency shall provide such technical assistance to the

12 Commission as the Commission determines to be

13 necessary to carry out its duties.

14 (6) USE OF MAILS.—The Commission may use

15 the United States mails in the same manner and

16 under the same conditions as Federal agencies and

17 shall, for purposes of the frank, be considered a

18 commission of Congress as described in section 3215

19 of title 39, United States Code.

20 (7) OBTAINING INFORMATION.—The Commis21 sion may secure directly from any Federal agency

22 information necessary to enable it to carry out its

23 duties, if the information may be disclosed under

24 section 552 of title 5, United States Code. Upon re25 quest of the Chairman of the Commission, the head
598

Title VIII, Subtitle H

•HR 2530 IH

1 of such agency shall furnish such information to the

2 Commission. In particular, the Administrator of the

3 Health Care Financing Administration and the Di4 rector of the Office of Management and Budget

5 shall provide the Commission with access to data for

6 the conduct of its work.

7 (8) ADMINISTRATIVE SUPPORT SERVICES.—

8 Upon the request of the Commission, the Adminis9 trator of General Services shall provide to the Com10 mission on a reimbursable basis such administrative

11 support services as the Commission may request.

12 (9) ACCEPTANCE OF DONATIONS.—The Com13 mission may accept, use, and dispose of gifts or do14 nations of services or property.

15 (10) PRINTING.—For purposes of costs relating

16 to printing and binding, including the cost of per17 sonnel detailed from the Government Printing Of18 fice, the Commission shall be deemed to be a com19 mittee of the Congress.

20 (f) AUTHORIZATION OF APPROPRIATIONS.—There

21 are authorized to be appropriated such sums as may be

22 necessary to carry out this section. Amounts appropriated

23 to carry out this section shall remain available until ex24 pended.
599

Title VIII, Subtitle I

•HR 2530 IH

1 Subtitle I—Lock-Box Provisions for

2 Medicare Part B Savings from

3 Growth Reductions

4 SEC. 8801. ESTABLISHMENT OF MEDICARE GROWTH RE5 DUCTION TRUST FUND FOR PART B SAVINGS.

6 Part B of title XVIII is amended by inserting after

7 section 1841 the following new section:

8 ‘‘MEDICARE GROWTH REDUCTION TRUST FUND

9 ‘‘SEC. 1841A. (a)(1) There is hereby created on the

10 books of the Treasury of the United States a trust fund

11 to be known as the ‘Federal Medicare Growth Reduction

12 Trust Fund’ (in this section referred to as the ‘Trust

13 Fund’). The Trust Fund shall consist of such gifts and

14 bequests as may be made as provided in section 201(i)(1)

15 and amounts appropriated under paragraph (2).

16 ‘‘(2) There are hereby appropriated to the Trust

17 Fund amounts equivalent to 100 percent of the Sec18 retary’s estimate of the reductions in expenditures under

19 this part that are attributable to the Medicare Preserva20 tion Act of 1995. The amounts appropriated by the pre21 ceding sentence shall be transferred from time to time (not

22 less frequently than monthly) from the general fund in the

23 Treasury to the Trust Fund.

24 ‘‘(3)(A) Subject to subparagraph (B), with respect to

25 monies transferred to the Trust Fund, no transfers, au-
600

Title VIII, Subtitle J

•HR 2530 IH

1 thorizations of appropriations, or appropriations are per2 mitted.

3 ‘‘(B) Beginning with fiscal year 2003, the Secretary

4 may expend funds in the Trust Fund to carry out this

5 title, but only to the extent provided by Congress in ad6 vance through a specific amendment to this section.

7 ‘‘(b) The provisions of subsections (b) through (e) of

8 section 1841 shall apply to the Trust Fund in the same

9 manner as they apply to the Federal Supplementary Medi10 cal Insurance Trust Fund, except that the Board of Trust11 ees and Managing Trustee of the Trust Fund shall be

12 composed of the members of the Board of Trustees and

13 the Managing Trustee, respectively, of the Federal Supple14 mentary Medical Insurance Trust Fund.’’.

15 Subtitle J—Clinical Laboratories

16 SEC. 8901. EXEMPTION OF PHYSICIAN OFFICE LABORA17 TORIES.

18 Section 353(d) of the Public Health Service Act (42

19 U.S.C. 263a(d)) is amended—

20 (1) by redesignating paragraphs (2), (3), and

21 (4) as paragraphs (3), (4), and (5) and by adding

22 after paragraph (1) the following:

23 ‘‘(2) EXEMPTION OF PHYSICIAN OFFICE LAB24 ORATORIES.—
601

Title VIII, Subtitle J

•HR 2530 IH

1 ‘‘(A) IN GENERAL.—Except as provided in

2 subparagraph (B), a clinical laboratory in a

3 physician’s office (including an office of a group

4 of physicians) which is directed by a physician

5 and in which examinations and procedures are

6 either performed by a physician or by individ7 uals supervised by a physician solely as an ad8 junct to other services provided by the physi9 cian’s office is exempt from this section.

10 ‘‘(B) EXCEPTION.—A clinical laboratory

11 described in subparagraph (A) is not exempt

12 from this section when it performs a pap smear

13 (Papanicolaou Smear) analysis.

14 ‘‘(C) DEFINITION.—For purposes of sub15 paragraph (A), the term ‘physician’ has the

16 same meaning as is prescribed for such term by

17 section 1861(r) of the Social Security Act (42

18 U.S.C. 1395x(r)).’’;

19 (2) in paragraph (3) (as so redesignated) by

20 striking ‘‘(3)’’ and inserting ‘‘(4)’’; and

21 (3) in paragraphs (4) and (5) (as so redesig22 nated) by striking ‘‘(2)’’ and inserting ‘‘(3)’’.
602

Title IX, Subtitle A

•HR 2530 IH

1 TITLE IX—WELFARE REFORM

2 SEC. 9000. AMENDMENT OF THE SOCIAL SECURITY ACT.

3 Except as otherwise expressly provided, wherever in

4 this title an amendment or repeal is expressed in terms

5 of an amendment to, or repeal of, a section or other provi6 sion, the reference shall be considered to be made to a

7 section or other provision of the Social Security Act.

8 Subtitle A—Temporary

9 Employment Assistance

10 SEC. 9101. STATE PLAN.

11 (a) IN GENERAL.—Title IV (42 U.S.C. 601 et seq.)

12 is amended by striking part A and inserting the following:

13 ‘‘PART A—TEMPORARY EMPLOYMENT

14 ASSISTANCE

15 ‘‘SEC. 400. APPROPRIATION.

16 ‘‘For the purpose of providing assistance to families

17 with needy children and assisting parents of children in

18 such families to obtain and retain private sector work to

19 the extent possible, and public sector or volunteer work

20 if necessary, through the Work First Employment Block

21 Grant program (hereafter in this title referred to as the

22 ‘Work First program’), there is hereby authorized to be

23 appropriated, and is hereby appropriated, for each fiscal

24 year a sum sufficient to carry out the purposes of this

25 part. The sums made available under this section shall be
603

Title IX, Subtitle A

•HR 2530 IH

1 used for making payments to States which have approved

2 State plans for temporary employment assistance.

3 ‘‘Subpart 1—State Plans for Temporary Employment

4 Assistance

5 ‘‘SEC. 401. ELEMENTS OF STATE PLANS.

6 ‘‘A State plan for temporary employment assistance

7 shall provide a description of the State program which car8 ries out the purpose described in section 400 and shall

9 meet the requirements of the following sections of this

10 subpart.

11 ‘‘SEC. 402. FAMILY ELIGIBILITY FOR TEMPORARY EMPLOY12 MENT ASSISTANCE.

13 ‘‘(a) IN GENERAL.—The State plan shall provide that

14 any family—

15 ‘‘(1) with 1 or more children (or any expectant

16 family, at the option of the State), defined as needy

17 by the State; and

18 ‘‘(2) which fulfills the conditions set forth in

19 subsection (b),

20 shall be eligible for cash assistance under the plan, except

21 as otherwise provided under this part.

22 ‘‘(b) INDIVIDUAL RESPONSIBILITY PLAN.—The

23 State plan shall provide that not later than 30 days after

24 the approval of the application for temporary employment

25 assistance, a parent qualifying for assistance shall execute
604

Title IX, Subtitle A

•HR 2530 IH

1 an individual responsibility plan as described in section

2 403. If a child otherwise eligible for assistance under this

3 part is residing with a relative other than a parent, the

4 State plan may require the relative to execute such a plan

5 as a condition of the family receiving such assistance.

6 ‘‘(c) LIMITATIONS ON ELIGIBILITY.—

7 ‘‘(1) LENGTH OF TIME.—

8 ‘‘(A) IN GENERAL.—Except as provided in

9 subparagraphs (B), (C), (D), and (E), the

10 State plan shall provide that the family of an

11 individual who, after attaining age 18 years (or

12 age 19 years, at the option of the State), has

13 received assistance under the plan for 60

14 months, shall no longer be eligible for cash as15 sistance under the plan.

16 ‘‘(B) HARDSHIP EXCEPTION.—With re17 spect to any family, the State plan shall not in18 clude in the determination of the 60-month pe19 riod under subparagraph (A) any month in

20 which—

21 ‘‘(i) at the option of the State, the

22 family includes an individual working 20

23 hours per week (or more, at the option of

24 the State);
605

Title IX, Subtitle A

•HR 2530 IH

1 ‘‘(ii) the family resides in an area

2 with an unemployment rate exceeding 8

3 percent; or

4 ‘‘(iii) the family is experiencing other

5 special hardship circumstances which make

6 it appropriate for the State to provide an

7 exemption for such month, except that the

8 total number of exemptions under this

9 clause for any month shall not exceed 15

10 percent of the number of families to which

11 the State is providing assistance under the

12 plan.

13 ‘‘(C) EXCEPTION FOR TEEN PARENTS.—

14 With respect to any family, the State plan shall

15 not include in the determination of the 60-

16 month period under subparagraph (A) any

17 month in which the parent—

18 ‘‘(i) is under age 18 (or age 19, at the

19 option of the State); and

20 ‘‘(ii) is making satisfactory progress

21 while attending high school or an alter22 native technical preparation school.

23 ‘‘(D) EXCEPTION FOR INDIVIDUALS EX24 EMPT FROM WORK REQUIREMENTS.—With re25 spect to any family, the State plan shall not in-
606

Title IX, Subtitle A

•HR 2530 IH

1 clude in the determination of the 60-month pe2 riod under subparagraph (A) any month in

3 which 1 or each of the parents—

4 ‘‘(i) is seriously ill, incapacitated, or

5 of advanced age;

6 ‘‘(ii)(I) except for a child described in

7 subclause (II), is responsible for a child

8 under age 1 year (or age 6 months, at the

9 option of the State), or

10 ‘‘(II) in the case of a 2nd or subse11 quent child born during such period, is re12 sponsible for a child under age 3 months;

13 ‘‘(iii) is pregnant in the 3rd trimester;

14 or

15 ‘‘(iv) is caring for a family member

16 who is ill or incapacitated.

17 ‘‘(E) EXCEPTION FOR CHILD-ONLY

18 CASES.—With respect to any child who has not

19 attained age 18 (or age 19, at the option of the

20 State) and who is eligible for assistance under

21 this part, but not as a member of a family oth22 erwise eligible for assistance under this part

23 (determined without regard to this paragraph),

24 the State plan shall not include in the deter25 mination of the 60-month period under sub-
607

Title IX, Subtitle A

•HR 2530 IH

1 paragraph (A) any month in which such child

2 has not attained such age.

3 ‘‘(F) OTHER PROGRAM ELIGIBILITY.—The

4 State plan shall provide that if a family is no

5 longer eligible for cash assistance under the

6 plan due to the imposition of the 60-month pe7 riod under subparagraph (A) or due to the im8 position of a penalty under subparagraph

9 (A)(ii) or (B)(ii) of section 403(e)(1)—

10 ‘‘(i) for purposes of determining eligi11 bility for any other Federal or federally as12 sisted program based on need, such family

13 shall continue to be considered eligible for

14 such cash assistance;

15 ‘‘(ii) for purposes of determining the

16 amount of assistance under any other Fed17 eral or federally assisted program based on

18 need, such family shall continue to be con19 sidered receiving such cash assistance; and

20 ‘‘(iii) the State may, at the option of

21 the State, after having assessed the needs

22 of the child or children of the family, pro23 vide for such needs with a voucher for such

24 family—
608

Title IX, Subtitle A

•HR 2530 IH

1 ‘‘(I) determined on the same

2 basis as the State would provide as3 sistance under the State plan to such

4 a family with 1 less individual,

5 ‘‘(II) designed appropriately to

6 pay third parties for shelter, goods,

7 and services received by the child or

8 children, and

9 ‘‘(III) payable directly to such

10 third parties.

11 ‘‘(2) TREATMENT OF INTERSTATE MIGRANTS.—

12 The State plan may apply to a category of families

13 the rules for such category under a plan of another

14 State approved under this part, if a family in such

15 category has moved to the State from the other

16 State and has resided in the State for less than 12

17 months.

18 ‘‘(3) INDIVIDUALS ON OLD-AGE ASSISTANCE OR

19 SSI INELIGIBLE FOR TEMPORARY EMPLOYMENT AS20 SISTANCE.—The State plan shall provide that no as21 sistance shall be furnished any individual under the

22 plan with respect to any period with respect to which

23 such individual is receiving old-age assistance under

24 the State plan approved under section 102 of title

25 I or supplemental security income under title XVI.
609

Title IX, Subtitle A

•HR 2530 IH

1 ‘‘(4) CHILDREN FOR WHOM FEDERAL, STATE,

2 OR LOCAL FOSTER CARE MAINTENANCE OR ADOP3 TION ASSISTANCE PAYMENTS ARE MADE.—A child

4 with respect to whom foster care maintenance pay5 ments or adoption assistance payments are made

6 under part E or under State or local law shall not,

7 for the period for which such payments are made, be

8 regarded as a needy child under this part, and such

9 child’s income and resources shall be disregarded in

10 determining the eligibility of the family of such child

11 for temporary employment assistance.

12 ‘‘(5) DENIAL OF ASSISTANCE FOR 10 YEARS TO

13 A PERSON FOUND TO HAVE FRAUDULENTLY MIS14 REPRESENTED RESIDENCE IN ORDER TO OBTAIN AS15 SISTANCE IN 2 OR MORE STATES.—The State plan

16 shall provide that no assistance will be furnished any

17 individual under the plan during the 10-year period

18 that begins on the date the individual is convicted in

19 Federal or State court of having made, a fraudulent

20 statement or representation with respect to the place

21 of residence of the individual in order to receive ben22 efits or services simultaneously from 2 or more

23 States under programs that are funded under this

24 part, title XIX, or the Food Stamp Act of 1977, or
610

Title IX, Subtitle A

•HR 2530 IH

1 benefits in 2 or more States under the supplemental

2 security income program under title XVI.

3 ‘‘(6) DENIAL OF ASSISTANCE FOR FUGITIVE

4 FELONS AND PROBATION AND PAROLE VIOLA5 TORS.—

6 ‘‘(A) IN GENERAL.—The State plan shall

7 provide that no assistance will be furnished any

8 individual under the plan for any period if dur9 ing such period the State agency has knowledge

10 that such individual is—

11 ‘‘(i) fleeing to avoid prosecution, or

12 custody or confinement after conviction,

13 under the laws of the place from which the

14 individual flees, for a crime, or an attempt

15 to commit a crime, which is a felony under

16 the laws of the place from which the indi17 vidual flees, or which, in the case of the

18 State of New Jersey, is a high mis19 demeanor under the laws of such State; or

20 ‘‘(ii) violating a condition of probation

21 or parole imposed under Federal or State

22 law.

23 ‘‘(B) EXCHANGE OF INFORMATION WITH

24 LAW ENFORCEMENT AGENCIES.—Notwithstand25 ing any other provision of law, the State plan
611

Title IX, Subtitle A

•HR 2530 IH

1 shall provide that the State shall furnish any

2 Federal, State, or local law enforcement officer,

3 upon the request of the officer, with the current

4 address of any recipient of assistance under the

5 plan, if the officer furnishes the agency with the

6 name of the recipient and notifies the agency

7 that—

8 ‘‘(i) such recipient—

9 ‘‘(I) is described in clause (i) or

10 (ii) of subparagraph (A); or

11 ‘‘(II) has information that is nec12 essary for the officer to conduct the

13 officer’s official duties; and

14 ‘‘(ii) the location or apprehension of

15 the recipient is within such officer’s official

16 duties.

17 ‘‘(d) DETERMINATION OF ELIGIBILITY.—

18 ‘‘(1) DETERMINATION OF NEED.—The State

19 plan shall provide that the State agency take into

20 consideration any income and resources of any indi21 vidual the State determines should be considered in

22 determining the need of the child or relative claim23 ing temporary employment assistance, subject to sec24 tion 407.
612

Title IX, Subtitle A

•HR 2530 IH

1 ‘‘(2) RESOURCE AND INCOME DETERMINA2 TION.—In determining the total resources and in3 come of the family of any needy child, the State plan

4 shall provide the following:

5 ‘‘(A) RESOURCES.—The State’s resource

6 limit, including a description of the policy deter7 mined by the State regarding any exclusion al8 lowed for vehicles owned by family members, re9 sources set aside for future needs of a child, in10 dividual development accounts, or other policies

11 established by the State to encourage savings.

12 ‘‘(B) FAMILY INCOME.—The extent to

13 which earned or unearned income is disregarded

14 in determining eligibility for, and amount of,

15 assistance.

16 ‘‘(C) CHILD SUPPORT.—The State’s policy,

17 if any, for determining the extent to which child

18 support received in excess of $50 per month on

19 behalf of a member of the family is disregarded

20 in determining eligibility for, and the amount

21 of, assistance.

22 ‘‘(D) CHILD’S EARNINGS.—The treatment

23 of earnings of a child living in the home.

24 ‘‘(E) EARNED INCOME TAX CREDIT.—The

25 State agency shall disregard any refund of Fed-
613

Title IX, Subtitle A

•HR 2530 IH

1 eral income taxes made to a family receiving

2 temporary employment assistance by reason of

3 section 32 of the Internal Revenue Code of

4 1986 (relating to earned income tax credit) and

5 any payment made to such a family by an em6 ployer under section 3507 of such Code (relat7 ing to advance payment of earned income cred8 it).

9 ‘‘(3) VERIFICATION SYSTEM.—The State plan

10 shall provide that information is requested and ex11 changed for purposes of income and eligibility ver12 ification in accordance with a State system which

13 meets the requirements of section 1137.

14 ‘‘SEC. 403. INDIVIDUAL RESPONSIBILITY PLAN.

15 ‘‘(a) ASSESSMENT.—The State agency responsible

16 for administering the State plan shall make an initial as17 sessment of the skills, prior work experience, and employ18 ability of each applicant for, or recipient of, assistance

19 under the State plan who—

20 ‘‘(1) has attained 18 years of age; or

21 ‘‘(2) has not completed high school or obtained

22 a certificate of high school equivalency, and is not

23 attending secondary school.

24 ‘‘(b) INDIVIDUAL RESPONSIBILITY PLANS.—
614

Title IX, Subtitle A

•HR 2530 IH

1 ‘‘(1) IN GENERAL.—On the basis of the assess2 ment made under subsection (a) with respect to an

3 individual, the State agency, in consultation with the

4 individual, shall develop an individual responsibility

5 plan for the individual, which—

6 ‘‘(A) shall provide that participation by the

7 individual in job search activities shall be a con8 dition of eligibility for assistance under the

9 State plan approved under part A, except dur10 ing any period for which the individual is em11 ployed full-time in an unsubsidized job in the

12 private sector;

13 ‘‘(B) sets forth an employment goal for the

14 individual and a plan for moving the individual

15 immediately into private sector employment;

16 ‘‘(C) sets forth the obligations of the indi17 vidual, which may include a requirement that

18 the individual attend school, maintain certain

19 grades and attendance, keep school age children

20 of the individual in school, immunize children,

21 attend parenting and money management class22 es, or do other things that will help the individ23 ual become and remain employed in the private

24 sector;
615

Title IX, Subtitle A

•HR 2530 IH

1 ‘‘(D) may require that the individual enter

2 the State program established under part F, if

3 the caseworker determines that the individual

4 will need education, training, job placement as5 sistance, wage enhancement, or other services

6 to become employed in the private sector;

7 ‘‘(E) shall provide that the individual

8 must—

9 ‘‘(i) assign to the State any rights to

10 support from any other person the individ11 ual may have in such individual’s own be12 half or in behalf of any other family mem13 ber for whom the individual is applying for

14 or receiving assistance; and

15 ‘‘(ii) cooperate with the State—

16 ‘‘(I) in establishing the paternity

17 of a child born out of wedlock with re18 spect to whom assistance is claimed,

19 and

20 ‘‘(II) in obtaining support pay21 ments for the individual and for a

22 child with respect to whom such as23 sistance is claimed, or in obtaining

24 any other payments or property due

25 the individual or the child,
616

Title IX, Subtitle A

•HR 2530 IH

1 unless (in either case) the individual is found to

2 have good cause for refusing to cooperate as de3 termined by the State agency in accordance

4 with standards prescribed by the Secretary,

5 which standards shall take into consideration

6 the best interests of the child on whose behalf

7 assistance is claimed.

8 ‘‘(F) to the greatest extent possible shall

9 be designed to move the individual into what10 ever private sector employment the individual is

11 capable of handling as quickly as possible, and

12 to increase the responsibility and amount of

13 work the individual is to handle over time;

14 ‘‘(G) shall describe what services the State

15 will provide the individual so that the individual

16 will be able to obtain and keep employment in

17 the private sector, and describe the job counsel18 ing and other services that will be provided by

19 the State; and

20 ‘‘(H) at the option of the State, may re21 quire the individual to undergo appropriate sub22 stance abuse treatment.

23 ‘‘(2) TIMING.—The State agency shall comply

24 with paragraph (1) with respect to an individual—
617

Title IX, Subtitle A

•HR 2530 IH

1 ‘‘(A) within 90 days (or, at the option of

2 the State, 180 days) after the effective date of

3 this part, in the case of an individual who, as

4 of such effective date, is a recipient of assist5 ance under the State plan approved under this

6 part; or

7 ‘‘(B) within 30 days (or, at the option of

8 the State, 90 days) after the individual is deter9 mined to be eligible for such assistance, in the

10 case of any other individual.

11 ‘‘(c) PROVISION OF PROGRAM AND EMPLOYMENT IN12 FORMATION.—The State shall inform all applicants for

13 and recipients of assistance under the State plan approved

14 under this part of all available services under the State

15 plan for which they are eligible.

16 ‘‘(d) REQUIREMENT THAT RECIPIENTS ENTER THE

17 WORK FIRST PROGRAM.—

18 ‘‘(1) IN GENERAL.—Beginning with fiscal year

19 2004, the State shall place recipients of assistance

20 under the State plan approved under this part, who

21 have not become employed in the private sector with22 in 1 year after signing an individual responsibility

23 plan, in the first available slot in the State program

24 established under part F, except as provided in

25 paragraph (2).
618

Title IX, Subtitle A

•HR 2530 IH

1 ‘‘(2) EXCEPTIONS.—A state may not be re2 quired to place a recipient of such assistance in the

3 State program established under part F if the recipi4 ent—

5 ‘‘(A) is ill, incapacitated, or of advanced

6 age;

7 ‘‘(B) has not attained 18 years of age;

8 ‘‘(C) is caring for a child or parent who is

9 ill or incapacitated; or

10 ‘‘(D) is enrolled in school or in educational

11 or training programs that will lead to private

12 sector employment.

13 ‘‘(e) PENALTIES.—

14 ‘‘(1) STATE NOT OPERATING A WORK FIRST OR

15 WORKFARE PROGRAM.—In the case of a State that

16 is not operating a program under part F or G:

17 ‘‘(A) FAILURE TO COMPLY WITH INDIVID18 UAL RESPONSIBILITY PLAN OR AGREEMENT OF

19 MUTUAL RESPONSIBILITY.—

20 ‘‘(i) PROGRESSIVE REDUCTIONS IN

21 ASSISTANCE FOR 1ST AND 2ND FAIL22 URES.—The amount of assistance other23 wise to be provided under the State plan

24 approved under this part to a family that

25 includes an individual who fails without
619

Title IX, Subtitle A

•HR 2530 IH

1 good cause to comply with an individual

2 responsibility plan (or, if the State has es3 tablished a program under subpart 1 of

4 part F and the individual is required to

5 participate in the program, an agreement

6 of mutual responsibility) signed by the in7 dividual (other than by reason of conduct

8 described in paragraph (2)) shall be re9 duced by—

10 ‘‘(I) 33 percent for the 1st such

11 act of noncompliance; or

12 ‘‘(II) 66 percent for the 2nd such

13 act of noncompliance.

14 ‘‘(ii) DENIAL OF ASSISTANCE FOR 3RD

15 FAILURE.—In the case of the 3rd such act

16 of noncompliance, the family of which the

17 individual is a member shall not thereafter

18 be eligible for assistance under the State

19 plan approved under this part.

20 ‘‘(iii) ACTS OF NONCOMPLIANCE.—

21 For purposes of this paragraph, a 1st act

22 of noncompliance by an individual contin23 ues for more than 1 calendar month shall

24 be considered a 2nd act of noncompliance,

25 and a 2nd act of noncompliance that con-
620

Title IX, Subtitle A

•HR 2530 IH

1 tinues for more than 3 calendar months

2 shall be considered a 3rd act of noncompli3 ance.

4 ‘‘(B) DENIAL OF ASSISTANCE TO ADULTS

5 REFUSING TO WORK, LOOK FOR WORK, OR AC6 CEPT A BONA FIDE OFFER OF EMPLOYMENT.—

7 ‘‘(i) REFUSAL TO WORK OR LOOK FOR

8 WORK.—If an unemployed individual who

9 has attained 18 years of age refuses to

10 work or look for work—

11 ‘‘(I) in the case of the 1st such

12 refusal, assistance under the State

13 plan approved under this part shall

14 not be payable with respect to the in15 dividual until the later of—

16 ‘‘(aa) a period of not less

17 than 6 months after the date of

18 the first such refusal; or

19 ‘‘(bb) the first date the indi20 vidual agrees to work or look for

21 work; or

22 ‘‘(II) in the case of the 2nd such

23 refusal, the family of which the indi24 vidual is a member shall not there25 after be eligible for assistance under
621

Title IX, Subtitle A

•HR 2530 IH

1 the State plan approved under this

2 part.

3 ‘‘(ii) REFUSAL TO ACCEPT A BONA

4 FIDE OFFER OF EMPLOYMENT.—If an un5 employed individual who has attained 18

6 years of age refuses to accept a bona fide

7 offer of employment, the family of which

8 the individual is a member shall not there9 after be eligible for assistance under the

10 State plan approved under this part.

11 ‘‘(2) OTHER STATES.—In the case of any other

12 State, the State shall reduce, by such amount as the

13 State considers appropriate, the amount of assist14 ance otherwise payable under the State plan ap15 proved under this part to a family that includes an

16 individual who fails without good cause to comply

17 with an individual responsibility plan signed by the

18 individual.

19 ‘‘SEC. 404. PAYMENT OF ASSISTANCE.

20 ‘‘(a) STANDARDS OF ASSISTANCE.—The State plan

21 shall specify standards of assistance, including—

22 ‘‘(1) the composition of the unit for which as23 sistance will be provided;
622

Title IX, Subtitle A

•HR 2530 IH

1 ‘‘(2) a standard, expressed in money amounts,

2 to be used in determining the need of applicants and

3 recipients;

4 ‘‘(3) a standard, expressed in money amounts,

5 to be used in determining the amount of the assist6 ance payment; and

7 ‘‘(4) the methodology to be used in determining

8 the payment amount received by assistance units.

9 ‘‘(b) LEVEL OF ASSISTANCE.—Except as otherwise

10 provided in this title, the State plan shall provide that—

11 ‘‘(1) the determination of need and the amount

12 of assistance for all applicants and recipients shall

13 be made on an objective and equitable basis; and

14 ‘‘(2) families of similar composition with similar

15 needs and circumstances shall be treated similarly.

16 ‘‘(c) CORRECTION OF PAYMENTS.—The State plan

17 shall provide that the State agency will promptly take all

18 necessary steps to correct any overpayment or

19 underpayment of assistance under such plan, including the

20 request for Federal tax refund intercepts as provided

21 under section 416.

22 ‘‘(d) OPTIONAL VOLUNTARY DIVERSION PRO23 GRAM.—The State plan shall, at the option of the State,

24 and in such part or parts of the State as the State may

25 select, provide that—
623

Title IX, Subtitle A

•HR 2530 IH

1 ‘‘(1) upon the recommendation of the case2 worker who is handling the case of a family eligible

3 for assistance under the State plan, the State shall,

4 in lieu of any other assistance under the State plan

5 to the family during a time period of not more than

6 3 months, make a lump-sum payment to the family

7 for the time period in an amount not to exceed—

8 ‘‘(A) the value of the monthly benefits that

9 would otherwise be provided to the family under

10 the State plan; multiplied by

11 ‘‘(B) the number of months in the time pe12 riod;

13 ‘‘(2) a lump-sum payment pursuant to subpara14 graph (A) shall not be made more than once to any

15 family; and

16 ‘‘(3) if, during a time period for which the

17 State has made a lump-sum payment to a family

18 pursuant to subparagraph (A), the family applies for

19 and (but for the lump-sum payment) would be eligi20 ble under the State plan for a monthly benefit that

21 is greater than the value of the monthly benefit

22 which would have been provided to the family under

23 the State plan at the time of the calculation of the

24 lump sum payment, then, notwithstanding subpara25 graph (A), the State shall, for that part of the time
624

Title IX, Subtitle A

•HR 2530 IH

1 period that remains after the family becomes eligible

2 for the greater monthly benefit, provide monthly

3 benefits to the family in an amount not to exceed—

4 ‘‘(A) the amount by which the value of the

5 greater monthly benefit exceeds the value of the

6 former monthly benefit, multiplied by the num7 ber of months in the time period; divided by

8 ‘‘(B) the whole number of months remain9 ing in the time period.’’.

10 ‘‘SEC. 405. OTHER PROGRAMS.

11 ‘‘(a) WORK FIRST PROGRAM; WORKFARE OR JOB

12 PLACEMENT VOUCHER PROGRAM.—The State plan shall

13 provide that the State has in effect and operation—

14 ‘‘(1) a work first program that meets the re15 quirements of part F; and

16 ‘‘(2) a workfare program that meets the re17 quirements of part G, or a job placement voucher

18 program that meets the requirements of part H, but

19 not both.

20 ‘‘(b) PROVISION OF POSITIONS AND VOUCHERS.—

21 The State plan shall provide that the State shall provide

22 a position in the workfare program established by the

23 State under part G, or a job placement voucher under the

24 job placement voucher program established by the State

25 under part H to any individual who, by reason of section
625

Title IX, Subtitle A

•HR 2530 IH

1 487(b), is prohibited from participating in the work first

2 program operated by the State, and shall not provide such

3 a position or such a voucher to any other individual.

4 ‘‘(c) PROVISION OF CASE MANAGEMENT SERV5 ICES.—The State plan shall provide that the State shall

6 provide to participants in such programs such case man7 agement services as are necessary to ensure the integrated

8 provision of benefits and services under such programs.

9 ‘‘(d) STATE CHILD SUPPORT AGENCY.—The State

10 plan shall—

11 ‘‘(1) provide that the State has in effect a plan

12 approved under part D and operates a child support

13 program in substantial compliance with such plan;

14 ‘‘(2) provide that the State agency administer15 ing the plan approved under this part shall be re16 sponsible for assuring that—

17 ‘‘(A) the benefits and services provided

18 under plans approved under this part and part

19 D are furnished in an integrated manner, in20 cluding coordination of intake procedures with

21 the agency administering the plan approved

22 under part D;

23 ‘‘(B) all applicants for, and recipients of,

24 temporary employment assistance are encour25 aged, assisted, and required (as provided under
626

Title IX, Subtitle A

•HR 2530 IH

1 section 403(b)(1)(E)(ii)) to cooperate in the es2 tablishment and enforcement of paternity and

3 child support obligations and are notified about

4 the services available under the State plan ap5 proved under part D; and

6 ‘‘(C) procedures require referral of pater7 nity and child support enforcement cases to the

8 agency administering the plan approved under

9 part D not later than 10 days after the applica10 tion for temporary employment assistance; and

11 ‘‘(3) provide for prompt notice (including the

12 transmittal of all relevant information) to the State

13 child support collection agency established pursuant

14 to part D of the furnishing of temporary employ15 ment assistance with respect to a child who has been

16 deserted or abandoned by a parent (including a child

17 born out-of-wedlock without regard to whether the

18 paternity of such child has been established).

19 ‘‘(e) CHILD WELFARE SERVICES AND FOSTER CARE

20 AND ADOPTION ASSISTANCE.—The State plan shall pro21 vide that the State has in effect—

22 ‘‘(1) a State plan for child welfare services ap23 proved under part B; and

24 ‘‘(2) a State plan for foster care and adoption

25 assistance approved under part E,
627

Title IX, Subtitle A

•HR 2530 IH

1 and operates such plans in substantial compliance with the

2 requirements of such parts.

3 ‘‘(f) REPORT OF CHILD ABUSE, ETC.—The State

4 plan shall provide that the State agency will—

5 ‘‘(1) report to an appropriate agency or official,

6 known or suspected instances of physical or mental

7 injury, sexual abuse or exploitation, or negligent

8 treatment or maltreatment of a child receiving as9 sistance under the State plan under circumstances

10 which indicate that the child’s health or welfare is

11 threatened thereby; and

12 ‘‘(2) provide such information with respect to a

13 situation described in paragraph (1) as the State

14 agency may have.

15 ‘‘(g) AVAILABILITY OF ASSISTANCE IN RURAL AREAS

16 OF STATE.—The State plan shall consider and address the

17 needs of rural areas in the State to ensure that families

18 in such areas receive assistance to become self-sufficient.

19 ‘‘(h) FAMILY PRESERVATION.—

20 ‘‘(1) IN GENERAL.—The State plan shall de21 scribe the efforts by the State to promote family

22 preservation and stability, including efforts—

23 ‘‘(A) to encourage fathers to stay home

24 and be a part of the family;
628

Title IX, Subtitle A

•HR 2530 IH

1 ‘‘(B) to keep families together to the ex2 tent possible; and

3 ‘‘(C) except to the extent provided in para4 graph (2), to treat 2-parent families and 1-par5 ent families equally with respect to eligibility

6 for assistance.

7 ‘‘(2) MAINTENANCE OF TREATMENT.—The

8 State may impose eligibility limitations relating spe9 cifically to 2-parent families to the extent such limi10 tations are no more restrictive than such limitations

11 in effect in the State plan in fiscal year 1995.

12 ‘‘SEC. 406. ADMINISTRATIVE REQUIREMENTS FOR STATE

13 PLAN.

14 ‘‘(a) STATEWIDE PLAN.—The State plan shall be in

15 effect in all political subdivisions of the State, and, if ad16 ministered by the subdivisions, be mandatory upon such

17 subdivisions. If such plan is not administered uniformly

18 throughout the State, the plan shall describe the adminis19 trative variations.

20 ‘‘(b) SINGLE ADMINISTRATING AGENCY.—The State

21 plan shall provide for the establishment or designation of

22 a single State agency to administer the plan or supervise

23 the administration of the plan.

24 ‘‘(c) FINANCIAL PARTICIPATION.—The State plan

25 shall provide for financial participation by the State in the
629

Title IX, Subtitle A

•HR 2530 IH

1 same manner and amount as such State participates

2 under title XIX, except that with respect to the sums ex3 pended for the administration of the State plan, the per4 centage shall be 50 percent.

5 ‘‘(d) REASONABLE PROMPTNESS.—The State plan

6 shall provide that all individuals wishing to make applica7 tion for temporary employment assistance shall have op8 portunity to do so, and that such assistance be furnished

9 with reasonable promptness to all eligible individuals.

10 ‘‘(e) AUTOMATED DATA PROCESSING SYSTEM.—The

11 State plan shall, at the option of the State, provide for

12 the establishment and operation of an automated state13 wide management information system designed effectively

14 and efficiently, to assist management in the administra15 tion of the State plan approved under this part, so as—

16 ‘‘(1) to control and account for—

17 ‘‘(A) all the factors in the total eligibility

18 determination process under such plan for as19 sistance, and

20 ‘‘(B) the costs, quality, and delivery of

21 payments and services furnished to applicants

22 for and recipients of assistance; and

23 ‘‘(2) to notify the appropriate officials for child

24 support, food stamp, and social service programs,

25 and the medical assistance program approved under
630

Title IX, Subtitle A

•HR 2530 IH

1 title XIX, whenever a recipient becomes ineligible for

2 such assistance or the amount of assistance provided

3 to a recipient under the State plan is changed.

4 ‘‘(f) DISCLOSURE OF INFORMATION.—The State plan

5 shall provide for safeguards which restrict the use or dis6 closure of information concerning applicants or recipients.

7 ‘‘(g) DETECTION OF FRAUD.—The State plan shall

8 provide, in accordance with regulations issued by the Sec9 retary, for appropriate measures to detect fraudulent ap10 plications for temporary employment assistance before the

11 establishment of eligibility for such assistance.

12 ‘‘Subpart 2—Administrative Provisions

13 ‘‘SEC. 411. APPROVAL OF PLAN.

14 ‘‘(a) IN GENERAL.—The Secretary shall approve a

15 State plan which fulfills the requirements under subpart

16 1 within 120 days of the submission of the plan by the

17 State to the Secretary.

18 ‘‘(b) DEEMED APPROVAL.—If a State plan has not

19 been rejected by the Secretary during the period specified

20 in subsection (a), the plan shall be deemed to have been

21 approved.

22 ‘‘SEC. 412. COMPLIANCE.

23 In the case of any State plan for temporary employ24 ment assistance which has been approved under section

25 411, if the Secretary, after reasonable notice and oppor-
631

Title IX, Subtitle A

•HR 2530 IH

1 tunity for hearing to the State agency administering or

2 supervising the administration of such plan, finds that in

3 the administration of the plan there is a failure to comply

4 substantially with any provision required by subpart 1 to

5 be included in the plan, the Secretary shall notify such

6 State agency that further payments will not be made to

7 the State (or in the Secretary’s discretion, that payments

8 will be limited to categories under or parts of the State

9 plan not affected by such failure) until the Secretary is

10 satisfied that such prohibited requirement is no longer so

11 imposed, and that there is no longer any such failure to

12 comply. Until the Secretary is so satisfied the Secretary

13 shall make no further payments to such State (or shall

14 limit payments to categories under or parts of the State

15 plan not affected by such failure).

16 ‘‘SEC. 413. PAYMENTS TO STATES.

17 ‘‘(a) COMPUTATION OF AMOUNT.—Subject to section

18 412, from the sums appropriated therefor, the Secretary

19 of the Treasury shall pay to each State which has an ap20 proved plan for temporary employment assistance, for

21 each quarter, beginning with the quarter commencing Oc22 tober 1, 1996, an amount equal to the Federal medical

23 assistance percentage (as defined in section 1905(b)) of

24 the expenditures by the State under such plan.
632

Title IX, Subtitle A

•HR 2530 IH

1 ‘‘(b) METHOD OF COMPUTATION AND PAYMENT.—

2 The method of computing and paying such amounts shall

3 be as follows:

4 ‘‘(1) The Secretary shall, prior to the beginning

5 of each quarter, estimate the amount to be paid to

6 the State for such quarter under the provisions of

7 subsection (a), such estimate to be based on—

8 ‘‘(A) a report filed by the State containing

9 its estimate of the total sum to be expended in

10 such quarter in accordance with the provisions

11 of such subsection and stating the amount ap12 propriated or made available by the State and

13 its political subdivisions for such expenditures

14 in such quarter, and if such amount is less than

15 the State’s proportionate share of the total sum

16 of such estimated expenditures, the source or

17 sources from which the difference is expected to

18 be derived;

19 ‘‘(B) records showing the number of needy

20 children in the State; and

21 ‘‘(C) such other information as the Sec22 retary may find necessary.

23 ‘‘(2) The Secretary of Health and Human Serv24 ices shall then certify to the Secretary of the Treas-
633

Title IX, Subtitle A

•HR 2530 IH

1 ury the amount so estimated by the Secretary of

2 Health and Human Services—

3 ‘‘(A) reduced or increased, as the case may

4 be, by any sum by which the Secretary of

5 Health and Human Services finds that the esti6 mate for any prior quarter was greater or less

7 than the amount which should have been paid

8 to the State for such quarter;

9 ‘‘(B) reduced by a sum equivalent to the

10 pro rata share to which the Federal Govern11 ment is equitably entitled, as determined by the

12 Secretary of Health and Human Services, of

13 the net amount recovered during any prior

14 quarter by the State or any political subdivision

15 thereof with respect to temporary employment

16 assistance furnished under the State plan; and

17 ‘‘(C) reduced by such amount as is nec18 essary to provide the appropriate reimburse19 ment to the Federal Government that the State

20 is required to make under section 457 out of

21 that portion of child support collections retained

22 by the State pursuant to such section,

23 except that such increases or reductions shall not be

24 made to the extent that such sums have been ap25 plied to make the amount certified for any prior
634

Title IX, Subtitle A

•HR 2530 IH

1 quarter greater or less than the amount estimated

2 by the Secretary of Health and Human Services for

3 such prior quarter.

4 ‘‘(c) METHOD OF PAYMENT.—The Secretary of the

5 Treasury shall thereupon, through the Fiscal Service of

6 the Department of the Treasury and prior to audit or set7 tlement by the General Accounting Office, pay to the

8 State, at the time or times fixed by the Secretary of

9 Health and Human Services, the amount so certified.

10 ‘‘SEC. 414. QUALITY ASSURANCE, DATA COLLECTION, AND

11 REPORTING SYSTEM.

12 ‘‘(a) QUALITY ASSURANCE.—

13 ‘‘(1) IN GENERAL.—Under the State plan, a

14 quality assurance system shall be developed based

15 upon a collaborative effort involving the Secretary,

16 the State, the political subdivisions of the State, and

17 assistance recipients, and shall include quantifiable

18 program outcomes related to self sufficiency in the

19 categories of welfare-to-work, payment accuracy, and

20 child support.

21 ‘‘(2) MODIFICATIONS TO SYSTEM.—As deemed

22 necessary, but not more often than every 2 years,

23 the Secretary, in consultation with the State, the po24 litical subdivisions of the State, and assistance re25 cipients, shall make appropriate changes in the de-
635

Title IX, Subtitle A

•HR 2530 IH

1 sign and administration of the quality assurance sys2 tem, including changes in benchmarks, measures,

3 and data collection or sampling procedures.

4 ‘‘(b) DATA COLLECTION AND REPORTING.—

5 ‘‘(1) IN GENERAL.—The State plan shall pro6 vide for a quarterly report to the Secretary regard7 ing the data described in paragraphs (2) and (3)

8 and such additional data needed for the quality as9 surance system. The data collection and reporting

10 system under this subsection shall promote account11 ability, continuous improvement, and integrity in the

12 State plans for temporary employment assistance

13 and Work First.

14 ‘‘(2) DISAGGREGATED DATA.—The State shall

15 collect the following data items on a monthly basis

16 from disaggregated case records of applicants for

17 and recipients of temporary employment assistance

18 from the previous month:

19 ‘‘(A) The age of adults and children (in20 cluding pregnant women).

21 ‘‘(B) Marital or familial status of cases:

22 married (2-parent family), widowed, divorced,

23 separated, or never married; or child living with

24 other adult relative.
636

Title IX, Subtitle A

•HR 2530 IH

1 ‘‘(C) The gender, race, educational attain2 ment, work experience, disability status (wheth3 er the individual is seriously ill, incapacitated,

4 or caring for a disabled or incapacitated child)

5 of adults.

6 ‘‘(D) The amount of cash assistance and

7 the amount and reason for any reduction in

8 such assistance. Any other data necessary to

9 determine the timeliness and accuracy of bene10 fits and welfare diversions.

11 ‘‘(E) Whether any member of the family

12 receives benefits under any of the following:

13 ‘‘(i) Any housing program.

14 ‘‘(ii) The food stamp program under

15 the Food Stamp Act of 1977.

16 ‘‘(iii) The Head Start programs car17 ried out under the Head Start Act.

18 ‘‘(iv) Any job training program.

19 ‘‘(F) The number of months since the most

20 recent application for assistance under the plan.

21 ‘‘(G) The total number of months for

22 which assistance has been provided to the fami23 lies under the plan.

24 ‘‘(H) The employment status, hours

25 worked, and earnings of individuals while re-
637

Title IX, Subtitle A

•HR 2530 IH

1 ceiving assistance, whether the case was closed

2 due to employment, and other data needed to

3 meet the work performance rate.

4 ‘‘(I) Status in Work First and workfare,

5 including the number of hours an individual

6 participated and the component in which the in7 dividual participated.

8 ‘‘(J) The number of persons in the assist9 ance unit and their relationship to the youngest

10 child. Nonrecipients in the household and their

11 relationship to the youngest child.

12 ‘‘(K) Citizenship status.

13 ‘‘(L) Shelter arrangement.

14 ‘‘(M) Unearned income (not including tem15 porary employment assistance), such as child

16 support, and assets.

17 ‘‘(N) The number of children who have a

18 parent who is deceased, incapacitated, or unem19 ployed.

20 ‘‘(O) Geographic location.

21 ‘‘(3) AGGREGATED DATA.—The State shall col22 lect the following data items on a monthly basis

23 from aggregated case records of applicants for and

24 recipients of temporary employment assistance from

25 the previous month:
638

Title IX, Subtitle A

•HR 2530 IH

1 ‘‘(A) The number of adults receiving as2 sistance.

3 ‘‘(B) The number of children receiving as4 sistance.

5 ‘‘(C) The number of families receiving as6 sistance.

7 ‘‘(D) The number of assistance units who

8 had their grants reduced or terminated and the

9 reason for the reduction or termination, includ10 ing sanction, employment, and meeting the time

11 limit for assistance).

12 ‘‘(E) The number of applications for as13 sistance; the number approved and the number

14 denied and the reason for denial.

15 ‘‘(4) LONGITUDINAL STUDIES.—The State shall

16 submit selected data items for a cohort of individ17 uals who are tracked over time. This longitudinal

18 sample shall be used for selected data items de19 scribed in paragraphs (2) and (3), as determined ap20 propriate by the Secretary.

21 ‘‘(c) ADDITIONAL DATA.—The report required by

22 subsection (b) for a fiscal year quarter shall also include

23 the following:
639

Title IX, Subtitle A

•HR 2530 IH

1 ‘‘(1) REPORT ON USE OF FEDERAL FUNDS TO

2 COVER ADMINISTRATIVE COSTS AND OVERHEAD.—A

3 statement of—

4 ‘‘(A) the percentage of the Federal funds

5 paid to the State under this part for the fiscal

6 year quarter that are used to cover administra7 tive costs or overhead; and

8 ‘‘(B) the total amount of State funds that

9 are used to cover such costs or overhead.

10 ‘‘(2) REPORT ON STATE EXPENDITURES ON

11 PROGRAMS FOR NEEDY FAMILIES.—A statement of

12 the total amount expended by the State during the

13 fiscal year quarter on programs for needy families,

14 with the amount spent on the program under this

15 part, and the purposes for which such amount was

16 spent, separately stated.

17 ‘‘(3) REPORT ON NONCUSTODIAL PARENTS PAR18 TICIPATING IN WORK ACTIVITIES.—The number of

19 noncustodial parents in the State who participated

20 in work activities during the fiscal year quarter.

21 ‘‘(4) REPORT ON CHILD SUPPORT COL22 LECTED.—The total amount of child support col23 lected by the State agency administering the State

24 plan under part D on behalf of a family receiving as25 sistance under this part.
640

Title IX, Subtitle A

•HR 2530 IH

1 ‘‘(5) REPORT ON CHILD CARE.—The total

2 amount expended by the State for child care under

3 this part, along with a description of the types of

4 child care provided, such as child care provided in

5 the case of a family that has ceased to receive assist6 ance under this part because of increased hours of,

7 or increased income from, employment, or in the

8 case of a family that is not receiving assistance

9 under this part but would be at risk of becoming eli10 gible for such assistance if child care was not pro11 vided.

12 ‘‘(6) REPORT ON TRANSITIONAL SERVICES.—

13 The total amount expended by the State for provid14 ing transitional services to a family that has ceased

15 to receive assistance under this part because of in16 creased hours of, or increased income from, employ17 ment, along with a description of such services.

18 ‘‘(d) COLLECTION PROCEDURES.—The Secretary

19 shall provide case sampling plans and data collection pro20 cedures as deemed necessary to make statistically valid es21 timates of plan performance.

22 ‘‘(e) VERIFICATION.—The Secretary shall develop

23 and implement procedures for verifying the quality of the

24 data submitted by the State, and shall provide technical

25 assistance, funded by the compliance penalties imposed
641

Title IX, Subtitle A

•HR 2530 IH

1 under section 412, if such data quality falls below accept2 able standards.

3 ‘‘SEC. 415. COMPILATION AND REPORTING OF DATA.

4 ‘‘(a) CURRENT PROGRAMS.—The Secretary shall, on

5 the basis of the Secretary’s review of the reports received

6 from the States under section 414, compile such data as

7 the Secretary believes necessary, and from time to time,

8 publish the findings as to the effectiveness of the programs

9 developed and administered by the States under this part.

10 The Secretary shall annually report to the Congress on

11 the programs developed and administered by each State

12 under this part.

13 ‘‘(b) RESEARCH, DEMONSTRATION AND EVALUA14 TION.—Of the amount specified under section 413(a), an

15 amount equal to 0.25 percent is authorized to be expended

16 by the Secretary to support the following types of re17 search, demonstrations, and evaluations:

18 ‘‘(1) STATE-INITIATED RESEARCH.—States may

19 apply for grants to cover 90 percent of the costs of

20 self-evaluations of programs under State plans ap21 proved under this part.

22 ‘‘(2) DEMONSTRATIONS.—

23 ‘‘(A) IN GENERAL.—The Secretary may

24 implement and evaluate demonstrations of inno25 vative and promising strategies to—
642

Title IX, Subtitle A

•HR 2530 IH

1 ‘‘(i) improve child well-being through

2 reductions in illegitimacy, teen pregnancy,

3 welfare dependency, homelessness, and

4 poverty;

5 ‘‘(ii) test promising strategies by non6 profit and for-profit institutions to increase

7 employment, earning, child support pay8 ments, and self-sufficiency with respect to

9 temporary employment assistance clients

10 under State plans; and

11 ‘‘(iii) foster the development of child

12 care.

13 ‘‘(B) ADDITIONAL PARAMETERS.—Dem14 onstrations implemented under this para15 graph—

16 ‘‘(i) may provide one-time capital

17 funds to establish, expand, or replicate

18 programs;

19 ‘‘(ii) may test performance-based

20 grant to loan financing in which programs

21 meeting performance targets receive grants

22 while programs not meeting such targets

23 repay funding on a pro-rated basis; and

24 ‘‘(iii) should test stategies in multiple

25 States and types of communities.
643

Title IX, Subtitle A

•HR 2530 IH

1 ‘‘(3) FEDERAL EVALUATIONS.—

2 ‘‘(A) IN GENERAL.—The Secretary shall

3 conduct research on the effects, benefits, and

4 costs of different approaches to operating wel5 fare programs, including an implementation

6 study based on a representative sample of

7 States and localities, documenting what policies

8 were adopted, how such policies were imple9 mented, the types and mix of services provided,

10 and other such factors as the Secretary deems

11 appropriate.

12 ‘‘(B) RESEARCH ON RELATED ISSUES.—

13 The Secretary shall also conduct research on is14 sues related to the purposes of this part, such

15 as strategies for moving welfare recipients into

16 the workforce quickly, reducing teen preg17 nancies and out-of-wedlock births, and provid18 ing adequate child care.

19 ‘‘(C) STATE REIMBURSEMENT.—The Sec20 retary may reimburse a State for any research21 related costs incurred pursuant to research con22 ducted under this paragraph.

23 ‘‘(D) USE OF RANDOM ASSIGNMENT.—

24 Evaluations authorized under this paragraph
644

Title IX, Subtitle A

•HR 2530 IH

1 should use random assignment to the maximum

2 extent feasible and appropriate.

3 ‘‘(4) REGIONAL INFORMATION CENTERS.—

4 ‘‘(A) IN GENERAL.—The Secretary shall

5 establish not less than 5, nor more than 7 re6 gional information centers located at major re7 search universities or consortiums of univer8 sities to ensure the effective implementation of

9 welfare reform and the efficient dissemination

10 of information about innovations, evaluation

11 outcomes, and training initiatives.

12 ‘‘(B) CENTER RESPONSIBILITIES.—The

13 Centers shall have the following functions:

14 ‘‘(i) Disseminate information about ef15 fective income support and related pro16 grams, along with suggestions for the rep17 lication of such programs.

18 ‘‘(ii) Research the factors that cause

19 and sustain welfare dependency and pov20 erty in the regions served by the respective

21 centers.

22 ‘‘(iii) Assist the States in the region

23 formulate and implement innovative pro24 grams and improvements in existing pro-
645

Title IX, Subtitle A

•HR 2530 IH

1 grams that help clients move off welfare

2 and become productive citizens.

3 ‘‘(iv) Provide training as appropriate

4 to staff of State agencies to enhance the

5 ability of the agencies to successfully place

6 Work First clients in productive employ7 ment or self-employment.

8 ‘‘(C) CENTER ELIGIBILITY TO PERFORM

9 EVALUATIONS.—The Centers may compete for

10 demonstration and evaluation contracts devel11 oped under this section.

12 ‘‘SEC. 416. COLLECTION OF OVERPAYMENTS FROM FED13 ERAL TAX REFUNDS.

14 ‘‘(a) IN GENERAL.—Upon receiving notice from a

15 State agency administering a plan approved under this

16 part that a named individual has been overpaid under the

17 State plan approved under this part, the Secretary of the

18 Treasury shall determine whether any amounts as refunds

19 of Federal taxes paid are payable to such individual, re20 gardless of whether such individual filed a tax return as

21 a married or unmarried individual. If the Secretary of the

22 Treasury finds that any such amount is payable, the Sec23 retary shall withhold from such refunds an amount equal

24 to the overpayment sought to be collected by the State

25 and pay such amount to the State agency.
646

Title IX, Subtitle A

•HR 2530 IH

1 ‘‘(b) REGULATIONS.—The Secretary of the Treasury

2 shall issue regulations, approved by the Secretary of

3 Health and Human Services, that provide—

4 ‘‘(1) that a State may only submit under sub5 section (a) requests for collection of overpayments

6 with respect to individuals—

7 ‘‘(A) who are no longer receiving tem8 porary employment assistance under the State

9 plan approved under this part,

10 ‘‘(B) with respect to whom the State has

11 already taken appropriate action under State

12 law against the income or resources of the indi13 viduals or families involved; and

14 ‘‘(C) to whom the State agency has given

15 notice of its intent to request withholding by

16 the Secretary of the Treasury from the income

17 tax refunds of such individuals;

18 ‘‘(2) that the Secretary of the Treasury will

19 give a timely and appropriate notice to any other

20 person filing a joint return with the individual whose

21 refund is subject to withholding under subsection

22 (a); and

23 ‘‘(3) the procedures that the State and the Sec24 retary of the Treasury will follow in carrying out

25 this section which, to the maximum extent feasible
647

Title IX, Subtitle A

•HR 2530 IH

1 and consistent with the specific provisions of this

2 section, will be the same as those issued pursuant to

3 section 464(b) applicable to collection of past-due

4 child support.’’.

5 (b) PAYMENTS TO PUERTO RICO.—Section

6 1108(a)(1) (42 U.S.C. 1308(a)(1)) is amended—

7 (1) in subparagraph (F), by striking ‘‘or’’; and

8 (2) by striking subparagraph (G) and inserting

9 the following:

10 ‘‘(G) $82,000,000 with respect to each of

11 fiscal years 1989 through 1995, or

12 ‘‘(H) $102,500,000 with respect to the fis13 cal year 1996 and each fiscal year thereafter;’’.

14 (c) CONFORMING AMENDMENTS RELATING TO COL15 LECTION OF OVERPAYMENTS.—

16 (1) Section 6402 of the Internal Revenue Code

17 of 1986 (relating to authority to make credits or re18 funds) is amended—

19 (A) in subsection (a), by striking ‘‘(c) and

20 (d)’’ and inserting ‘‘(c), (d), and (e)’’;

21 (B) by redesignating subsections (e)

22 through (i) as subsections (f) through (j), re23 spectively; and

24 (C) by inserting after subsection (d) the

25 following:
648

Title IX, Subtitle A

•HR 2530 IH

1 ‘‘(g) COLLECTION OF OVERPAYMENTS UNDER TITLE

2 IV–A OF THE SOCIAL SECURITY ACT.—The amount of

3 any overpayment to be refunded to the person making the

4 overpayment shall be reduced (after reductions pursuant

5 to subsections (c) and (d), but before a credit against fu6 ture liability for an internal revenue tax) in accordance

7 with section 416 of the Social Security Act (concerning

8 recovery of overpayments to individuals under State plans

9 approved under part A of title IV of such Act).’’.

10 (2) Section 552a(a)(8)(B)(iv)(III) of title 5,

11 United States Code, is amended by striking ‘‘section

12 464 or 1137 of the Social Security Act’’ and insert13 ing ‘‘section 416, 464, or 1137 of the Social Secu14 rity Act’’.

15 (d) EFFECTIVE DATES.—

16 (1) IN GENERAL.—Except as provided in para17 graph (2), the amendments made by this section

18 shall be effective with respect to calendar quarters

19 beginning on or after October 1, 1996.

20 (2) SPECIAL RULE.—In the case of a State that

21 the Secretary of Health and Human Services deter22 mines requires State legislation (other than legisla23 tion appropriating funds) in order to meet the re24 quirements imposed by the amendment made by

25 subsection (a), the State shall not be regarded as
649

Title IX, Subtitle B

•HR 2530 IH

1 failing to comply with the requirements of such

2 amendment before the first day of the first calendar

3 quarter beginning after the close of the first regular

4 session of the State legislature that begins after the

5 date of enactment of this Act. For purposes of this

6 paragraph, in the case of a State that has a 2-year

7 legislative session, each year of the session shall be

8 treated as a separate regular session of the State

9 legislature.

10 Subtitle B—Make Work Pay

11 SEC. 9201. TRANSITIONAL MEDICAID BENEFITS.

12 (a) STATE OPTION OF EXTENSION OF MEDICAID EN13 ROLLMENT FOR FORMER AFDC RECIPIENTS FOR 1 AD14 DITIONAL YEAR.—

15 (1) IN GENERAL.—Section 1925(b)(1) (42

16 U.S.C. 1396r–6(b)(1)) is amended by striking the

17 period at the end and inserting the following: ‘‘, and

18 that the State may, at its option, offer to each such

19 family the option of extending coverage under this

20 subsection for any of the first 2 succeeding 6-month

21 periods, in the same manner and under the same

22 conditions as the option of extending coverage under

23 this subsection for the first succeeding 6-month pe24 riod.’’.
650

Title IX, Subtitle B

•HR 2530 IH

1 (2) CONFORMING AMENDMENTS.—Section

2 1925(b) (42 U.S.C. 1396r–6(b)) is amended—

3 (A) in the heading, by striking ‘‘EXTEN4 SION’’ and inserting ‘‘EXTENSIONS’’;

5 (B) in the heading of paragraph (1), by

6 striking ‘‘REQUIREMENT’’ and inserting ‘‘IN

7 GENERAL’’;

8 (C) in paragraph (2)(B)(ii)—

9 (i) in the heading, by striking ‘‘PE10 RIOD’’ and inserting ‘‘PERIODS’’, and

11 (ii) by striking ‘‘in the period’’ and in12 serting ‘‘in any of the 6-month periods’’;

13 (D) in paragraph (3)(A), by striking ‘‘the

14 6-month period’’ and inserting ‘‘any 6-month

15 period’’;

16 (E) in paragraph (4)(A), by striking ‘‘the

17 extension period’’ and inserting ‘‘any extension

18 period’’; and

19 (F) in paragraph (5)(D)(i), by striking ‘‘is

20 a 3-month period’’ and all that follows and in21 serting the following: ‘‘is, with respect to a par22 ticular 6-month additional extension period pro23 vided under this subsection, a 3-month period

24 beginning with the 1st or 4th month of such ex25 tension period.’’.
651

Title IX, Subtitle B

•HR 2530 IH

1 (b) EFFECTIVE DATE.—The amendments made by

2 subsection (a) shall apply to calendar quarters beginning

3 on or after October 1, 1997, without regard to whether

4 or not final regulations to carry out such amendments

5 have been promulgated by such date.

6 SEC. 9202. NOTICE OF AVAILABILITY REQUIRED TO BE PRO7 VIDED TO APPLICANTS AND FORMER RECIPI8 ENTS OF TEMPORARY FAMILY ASSISTANCE,

9 FOOD STAMPS, AND MEDICAID.

10 (a) TEMPORARY FAMILY ASSISTANCE.—Section 406,

11 as added by the amendment made by section 9101(a) of

12 this Act, is amended by adding at the end the following:

13 ‘‘(h) NOTICE OF AVAILABILITY OF EITC.—The

14 State plan shall provide that the State agency referred to

15 in subsection (b) must provide written notice of the exist16 ence and availability of the earned income credit under

17 section 32 of the Internal Revenue Code of 1986 to—

18 ‘‘(1) any individual who applies for assistance

19 under the State plan, upon receipt of the applica20 tion; and

21 ‘‘(2) any individual whose assistance under the

22 State plan (or under the State plan approved under

23 part A of this title (as in effect before the effective

24 date of title IX of the Omnibus Budget Reconcili-
652

Title IX, Subtitle B

•HR 2530 IH

1 ation Act of 1995) is terminated, in the notice of

2 termination of benefits.’’.

3 (b) FOOD STAMPS.—Section 11(e) of the Food

4 Stamp Act of 1977 (7 U.S.C. 2020(e)) is amended—

5 (1) in paragraph (24) by striking ‘‘and’’ at the

6 end;

7 (2) in paragraph (25) by striking the period at

8 the end and inserting ‘‘; and’’; and

9 (3) by inserting after paragraph (25) the fol10 lowing:

11 ‘‘(26) that whenever a household applies for

12 food stamp benefits, and whenever such benefits are

13 terminated with respect to a household, the State

14 agency shall provide to each member of such house15 hold notice of—

16 ‘‘(A) the existence of the earned income

17 tax credit under section 32 of the Internal Rev18 enue Code of 1986; and

19 ‘‘(B) the fact that such credit may be ap20 plicable to such member.’’.

21 (c) MEDICAID.—Section 1902(a) (42 U.S.C.

22 1396a(a)) is amended—

23 (1) by striking ‘‘and’’ at the end of paragraph

24 (61);
653

Title IX, Subtitle B

•HR 2530 IH

1 (2) by striking the period at the end of para2 graph (62) and inserting ‘‘; and’’; and

3 (3) by inserting after paragraph (62) the fol4 lowing new paragraph:

5 ‘‘(63) provide that the State shall provide notice

6 of the existence and availability of the earned income

7 tax credit under section 32 of the Internal Revenue

8 Code of 1986 to each individual applying for medical

9 assistance under the State plan and to each individ10 ual whose eligibility for medical assistance under the

11 State plan is terminated.’’.

12 SEC. 9203. NOTICE OF AVAILABILITY OF EARNED INCOME

13 TAX CREDIT AND DEPENDENT CARE TAX

14 CREDIT TO BE INCLUDED ON W–4 FORM.

15 (a) IN GENERAL.—Section 11114 of the Omnibus

16 Budget Reconciliation Act of 1990 (26 U.S.C. 21 note),

17 relating to program to increase public awareness, is

18 amended by adding at the end the following new sentence:

19 ‘‘Such means shall include printing a notice of the avail20 ability of such credits on the forms used by employees to

21 determine the proper number of withholding exemptions

22 under chapter 24 of such Code.’’
654

Title IX, Subtitle B

•HR 2530 IH

1 SEC. 9204. ADVANCE PAYMENT OF EARNED INCOME TAX

2 CREDIT THROUGH STATE DEMONSTRATION

3 PROGRAMS.

4 (a) IN GENERAL.—Section 3507 of the Internal Rev5 enue Code of 1986 (relating to the advance payment of

6 the earned income tax credit) is amended by adding at

7 the end the following:

8 ‘‘(g) STATE DEMONSTRATIONS.—

9 ‘‘(1) IN GENERAL.—In lieu of receiving earned

10 income advance amounts from an employer under

11 subsection (a), a participating resident shall receive

12 advance earned income payments from a responsible

13 State agency pursuant to a State Advance Payment

14 Program that is designated pursuant to paragraph

15 (2).

16 ‘‘(2) DESIGNATIONS.—

17 ‘‘(A) IN GENERAL.—From among the

18 States submitting proposals satisfying the re19 quirements of paragraph (3), the Secretary (in

20 consultation with the Secretary of Health and

21 Human Services) may designate not more than

22 4 State Advance Payment Demonstrations.

23 States selected for the demonstrations may

24 have, in the aggregate, no more than 5 percent

25 of the total number of households participating

26 in the program under the Food Stamp program
655

Title IX, Subtitle B

•HR 2530 IH

1 in the immediately preceding fiscal year. Ad2 ministrative costs of a State in conducting a

3 demonstration under this section may be in4 cluded for matching under section 413(a) of the

5 Social Security Act and section 16(a) of the

6 Food Stamp Act of 1977.

7 ‘‘(B) WHEN DESIGNATION MAY BE

8 MADE.—Any designation under this paragraph

9 shall be made no later than December 31,

10 1996.

11 ‘‘(C) PERIOD FOR WHICH DESIGNATION IS

12 IN EFFECT.—

13 ‘‘(i) IN GENERAL.—Designations

14 made under this paragraph shall be effec15 tive for advance earned income payments

16 made after December 31, 1996, and before

17 January 1, 2000.

18 ‘‘(ii) SPECIAL RULES.—

19 ‘‘(I) REVOCATION OF DESIGNA20 TIONS.—The Secretary may revoke any

21 designation made under this paragraph if

22 the Secretary determines that the State is

23 not complying substantially with the pro24 posal described in paragraph (3) submitted

25 by the State.
656

Title IX, Subtitle B

•HR 2530 IH

1 ‘‘(II) AUTOMATIC TERMINATION OF DES2 IGNATIONS.—Any failure by a State to

3 comply with the reporting requirements de4 scribed in paragraphs (3)(F) and (3)(G)

5 shall have the effect of immediately termi6 nating the designation under this para7 graph and rendering paragraph (5)(A)(ii)

8 inapplicable to subsequent payments.

9 ‘‘(3) PROPOSALS.—No State may be designated

10 under paragraph (2) unless the State’s proposal for

11 such designation—

12 ‘‘(A) identifies the responsible State agen13 cy,

14 ‘‘(B) describes how and when the advance

15 earned income payments will be made by that

16 agency, including a description of any other

17 State or Federal benefits with which such pay18 ments will be coordinated,

19 ‘‘(C) describes how the State will obtain

20 the information on which the amount of ad21 vance earned income payments made to each

22 participating resident will be determined in ac23 cordance with paragraph (4),

24 ‘‘(D) describes how State residents who

25 will be eligible to receive advance earned income
657

Title IX, Subtitle B

•HR 2530 IH

1 payments will be selected, notified of the oppor2 tunity to receive advance earned income pay3 ments from the responsible State agency, and

4 given the opportunity to elect to participate in

5 the program,

6 ‘‘(E) describes how the State will verify, in

7 addition to receiving the certifications and

8 statement described in paragraph (7)(D)(iv),

9 the eligibility of participating residents for the

10 earned income tax credit,

11 ‘‘(F) commits the State to furnishing to

12 each participating resident by January 31 of

13 each year a written statement showing—

14 ‘‘(i) the name and taxpayer identifica15 tion number of the participating resident,

16 and

17 ‘‘(ii) the total amount of advance

18 earned income payments made to the par19 ticipating resident during the prior cal20 endar year,

21 ‘‘(G) commits the State to furnishing to

22 the Secretary by December 1 of each year a

23 written statement showing the name and tax24 payer identification number of each participat25 ing resident,
658

Title IX, Subtitle B

•HR 2530 IH

1 ‘‘(H) commits the State to treat any ad2 vance earned income payments as described in

3 paragraph (5) and any repayments of excessive

4 advance earned income payments as described

5 in paragraph (6),

6 ‘‘(I) commits the State to assess the devel7 opment and implementation of its State Ad8 vance Payment Program, including an agree9 ment to share its findings and lessons with

10 other interested States in a manner to be de11 scribed by the Secretary, and

12 ‘‘(J) is submitted to the Secretary on or

13 before June 30, 1996.

14 ‘‘(4) AMOUNT AND TIMING OF ADVANCE

15 EARNED INCOME PAYMENTS.—

16 ‘‘(A) AMOUNT.—

17 ‘‘(i) IN GENERAL.—The method for

18 determining the amount of advance earned

19 income payments made to each participat20 ing resident shall conform to the fullest ex21 tent possible with the provisions of sub22 section (c).

23 ‘‘(ii) SPECIAL RULE.—A State may,

24 at its election, apply the rules of subsection

25 (c)(2)(B) by substituting ‘between 60 per-
659

Title IX, Subtitle B

•HR 2530 IH

1 cent and 75 percent of the credit percent2 age in effect under section 32(b)(1) for an

3 individual with the corresponding number

4 of qualifying children’ for ‘60 percent of

5 the credit percentage in effect under sec6 tion 32(b)(1) for such an eligible individual

7 with 1 qualifying child’ in clause (i) and

8 ‘the same percentage (as applied in clause

9 (i))’ for ‘60 percent’ in clause (ii).

10 ‘‘(B) TIMING.—The frequency of advance

11 earned income payments may be determined on

12 the basis of the payroll periods of participating

13 residents, on a single statewide schedule, or on

14 any other reasonable basis prescribed by the

15 State in its proposal; however, in no event may

16 advance earned income payments be made to

17 any participating resident less frequently than

18 on a calendar-quarter basis.

19 ‘‘(5) PAYMENTS TO BE TREATED AS PAYMENTS

20 OF WITHHOLDING AND FICA TAXES.—

21 ‘‘(A) IN GENERAL.—For purposes of this

22 title, advance earned income payments during

23 any calendar quarter—
660

Title IX, Subtitle B

•HR 2530 IH

1 ‘‘(i) shall neither be treated as a pay2 ment of compensation nor be included in

3 gross income, and

4 ‘‘(ii) shall be treated as made out of—

5 ‘‘(I) amounts required to be de6 ducted by the State and withheld for

7 the calendar quarter by the State

8 under section 3401 (relating to wage

9 withholding),

10 ‘‘(II) amounts required to be de11 ducted for the calendar quarter under

12 section 3102 (relating to FICA em13 ployee taxes), and

14 ‘‘(III) amounts of the taxes im15 posed on the State for the calendar

16 quarter under section 3111 (relating

17 to FICA employer taxes),

18 as if the State had paid to the Secretary,

19 on the day on which payments are made to

20 participating residents, an amount equal to

21 such payments.

22 ‘‘(B) IF ADVANCE PAYMENTS EXCEED

23 TAXES DUE.—If for any calendar quarter the

24 aggregate amount of advance earned income

25 payments made by the responsible State agency
661

Title IX, Subtitle B

•HR 2530 IH

1 under a State Advance Payment Program ex2 ceeds the sum of the amounts referred to in

3 subparagraph (A)(ii) (without regard to para4 graph (6)(A)), each such advance earned in5 come payment shall be reduced by an amount

6 which bears the same ratio to such excess as

7 such advance earned income payment bears to

8 the aggregate amount of all such advance

9 earned income payments.

10 ‘‘(6) STATE REPAYMENT OF EXCESSIVE AD11 VANCE EARNED INCOME PAYMENTS.—

12 ‘‘(A) IN GENERAL.—Notwithstanding any

13 other provision of law, in the case of an exces14 sive advance earned income payment a State

15 shall be treated as having deducted and with16 held under section 3401 (relating to wage with17 holding), and as being required to pay to the

18 United States, the repayment amount during

19 the repayment calendar quarter.

20 ‘‘(B) EXCESSIVE ADVANCE EARNED IN21 COME PAYMENT.—For purposes of this section,

22 the term ‘excessive advance income payment’

23 means that portion of any advance earned in24 come payment that, when combined with other

25 advance earned income payments previously
662

Title IX, Subtitle B

•HR 2530 IH

1 made to the same participating resident during

2 the same calendar year, exceeds the amount of

3 earned income tax credit to which that partici4 pating resident is entitled under section 32 for

5 that year.

6 ‘‘(C) REPAYMENT AMOUNT.—For purposes

7 of this subsection, the term ‘repayment amount’

8 means an amount equal to 50 percent of the ex9 cess of—

10 ‘‘(i) excessive advance earned income

11 payments made by a State during a par12 ticular calendar year, over

13 ‘‘(ii) the sum of—

14 ‘‘(I) 4 percent of all advance

15 earned income payments made by the

16 State during that calendar year, and

17 ‘‘(II) the excessive advance

18 earned income payments made by the

19 State during that calendar year that

20 have been collected from participating

21 residents by the Secretary.

22 ‘‘(D) REPAYMENT CALENDAR QUARTER.—

23 For purposes of this subsection, the term ‘re24 payment calendar quarter’ means the second

25 calendar quarter of the third calendar year be-
663

Title IX, Subtitle B

•HR 2530 IH

1 ginning after the calendar year in which an ex2 cessive earned income payment is made.

3 ‘‘(7) DEFINITIONS.—For purposes of this sub4 section—

5 ‘‘(A) STATE ADVANCE PAYMENT PRO6 GRAM.—The term ‘State Advance Payment

7 Program’ means the program described in a

8 proposal submitted for designation under para9 graph (1) and designated by the Secretary

10 under paragraph (2).

11 ‘‘(B) RESPONSIBLE STATE AGENCY.—The

12 term ‘responsible State agency’ means the sin13 gle State agency that will be making the ad14 vance earned income payments to residents of

15 the State who elect to participate in a State Ad16 vance Payment Program.

17 ‘‘(C) ADVANCE EARNED INCOME PAY18 MENTS.—The term ‘advance earned income

19 payments’ means an amount paid by a respon20 sible State agency to residents of the State pur21 suant to a State Advance Payment Program.

22 ‘‘(D) PARTICIPATING RESIDENT.—The

23 term ‘participating resident’ means an individ24 ual who—
664

Title IX, Subtitle B

•HR 2530 IH

1 ‘‘(i) is a resident of a State that has

2 in effect a designated State Advance Pay3 ment Program,

4 ‘‘(ii) makes the election described in

5 paragraph (3)(D) pursuant to guidelines

6 prescribed by the State,

7 ‘‘(iii) certifies to the State the number

8 of qualifying children the individual has,

9 and

10 ‘‘(iv) provides to the State the certifi11 cations and statement described in sub12 sections (b)(1), (b)(2), (b)(3), and (b)(4)

13 (except that for purposes of this clause,

14 the term ‘any employer’ shall be sub15 stituted for ‘another employer’ in sub16 section (b)(3)), along with any other infor17 mation required by the State.’’.

18 (b) TECHNICAL ASSISTANCE.—The Secretaries of the

19 Treasury and Health and Human Services shall jointly en20 sure that technical assistance is provided to State Advance

21 Payment Programs and that these programs are rigor22 ously evaluated.

23 (c) ANNUAL REPORTS.—The Secretary shall issue

24 annual reports detailing the extent to which—
665

Title IX, Subtitle B

•HR 2530 IH

1 (1) residents participate in the State Advance

2 Payment Programs,

3 (2) participating residents file Federal and

4 State tax returns,

5 (3) participating residents report accurately the

6 amount of the advance earned income payments

7 made to them by the responsible State agency dur8 ing the year, and

9 (4) recipients of excessive advance earned in10 come payments repay those amounts.

11 The report shall also contain an estimate of the amount

12 of advance earned income payments made by each respon13 sible State agency but not reported on the tax returns of

14 a participating resident and the amount of excessive ad15 vance earned income payments.

16 (d) AUTHORIZATION OF APPROPRIATIONS.—For pur17 poses of providing technical assistance described in sub18 section (b), preparing the reports described in subsection

19 (c), and providing grants to States in support of des20 ignated State Advance Payment Programs, there are au21 thorized to be appropriated in advance to the Secretary

22 of the Treasury and the Secretary of Health and Human

23 Services a total of $1,400,000 for fiscal years 1997

24 through 2000.
666

Title IX, Subtitle B

•HR 2530 IH

1 SEC. 9205. FUNDING OF CHILD CARE SERVICES.

2 (a) REPEAL OF CHILD CARE PROGRAMS UNDER THE

3 CHILD CARE AND DEVELOPMENT BLOCK GRANT ACT

4 OF1990.—The Child Care and Development Block Grant

5 Act of 1990 (42 U.S.C. 9858 et seq.) is hereby repealed.

6 (b) FUNDING OF CHILD CARE SERVICES THROUGH

7 SOCIAL SERVICES BLOCK GRANT PROGRAM.—Title XX

8 (42 U.S.C. 1397–1397f) is amended by adding at the end

9 the following:

10 ‘‘SEC. 2008. CHILD CARE.

11 ‘‘(a) CONDITIONAL GRANT.—

12 ‘‘(1) IN GENERAL.—In addition to any payment

13 under section 2002 or 2007, the Secretary shall

14 make a grant to each State with a plan approved

15 under this section for a fiscal year in an amount

16 equal to the special allotment of the State for the

17 fiscal year.

18 ‘‘(2) LIMITATIONS ON AUTHORIZATION OF AP19 PROPRIATIONS.—For grants under this section,

20 there are authorized to be appropriated to the Sec21 retary not more than—

22 ‘‘(A) $1,400,000,000 for fiscal year 1997;

23 ‘‘(B) $1,450,000,000 for each of fiscal

24 years 1998, 1999, and 2000; and

25 ‘‘(C) $1,500,000,000 for each of fiscal

26 years 2001 and 2002.
667

Title IX, Subtitle B

•HR 2530 IH

1 ‘‘(b) STATE PLANS.—

2 ‘‘(1) CONTENT.—A plan meets the require3 ments of this paragraph if the plan—

4 ‘‘(A) identifies an appropriate State agency

5 to be the lead agency responsible for admin6 istering at the State level, and coordinating

7 with local governments, the activities of the

8 State pursuant to this section;

9 ‘‘(B) describes the activities the State will

10 carry out with funds provided under this sec11 tion;

12 ‘‘(C) provides assurances that the funds

13 provided under this section will be used to sup14 plement, not supplant, State and local funds as

15 well as Federal funds provided under any Act

16 and applied to child care activities in the State

17 during fiscal year 1989;

18 ‘‘(D) provides assurances that the State

19 will not expend more than 7 percent of the

20 funds provided to the States under this section

21 for the fiscal year for administrative expenses;

22 ‘‘(E) provides assurances that, in providing

23 child care assistance, the State will give priority

24 to families with low income and families living

25 in a low-income geographical area;
668

Title IX, Subtitle B

•HR 2530 IH

1 ‘‘(F) ensures that child care providers re2 imbursed under this section meet applicable

3 standards of State and local law;

4 ‘‘(G) provides assurances that the lead

5 agency will coordinate the use of funds provided

6 under this section with the use of other Federal

7 resources for child care provided under this Act,

8 and with other Federal, State, or local child

9 care and preschool programs operated in the

10 State;

11 ‘‘(H) provides for the establishment of

12 such fiscal and accounting procedures as may

13 be necessary to—

14 ‘‘(i) ensure a proper accounting of

15 Federal funds received by the State under

16 this section; and

17 ‘‘(ii) ensure the proper verification of

18 the reports submitted by the State under

19 subsection (f)(2);

20 ‘‘(I) provides assurances that the State will

21 not impose more stringent standards and licens22 ing or regulatory requirements on child care

23 providers receiving funds provided under this

24 section than those imposed on other child care

25 providers in the State;
669

Title IX, Subtitle B

•HR 2530 IH

1 ‘‘(J) provides assurances that the State

2 will not implement any policy or practice which

3 has the effect of significantly restricting paren4 tal choice by—

5 ‘‘(i) expressly or effectively excluding

6 any category of care or type of provider

7 within a category of care;

8 ‘‘(ii) limiting parental access to or

9 choices from among various categories of

10 care or types of providers; or

11 ‘‘(iii) excluding a significant number

12 of providers in any category of care; and

13 ‘‘(K) provides assurances that parents will

14 be informed regarding their options under this

15 section, including the option of receiving a child

16 care certificate or voucher.

17 ‘‘(2) FORM.—A State may submit a plan that

18 meets the requirements of paragraph (1) in the form

19 of amendments to the State plan submitted pursu20 ant to section 658E of the Child Care and Develop21 ment Block Grant Act of 1990, as in effect before

22 the effective date of section 9205 of the Omnibus

23 Budget Reconciliation Act of 1995.

24 ‘‘(3) APPROVAL.—Not later than 90 days after

25 the date the State submits a plan to the Secretary
670

Title IX, Subtitle B

•HR 2530 IH

1 under this subsection, the Secretary shall either ap2 prove or disapprove the plan. If the Secretary dis3 approves the plan, the Secretary shall provide the

4 State with an explanation and recommendations for

5 changes in the plan to gain approval.

6 ‘‘(c) SPECIAL ALLOTMENTS.—The special allotment

7 of a State for a fiscal year equals the amount that bears

8 the same ratio to the amount appropriated pursuant to

9 this section for the fiscal year, as the number of children

10 who have not attained 13 years of age and are residing

11 with families in the State bears to the total number of

12 such children in all States with plans approved under this

13 section for the fiscal year, determined on the basis of the

14 most recent data available from the Department of Com15 merce at the time the special allotment is determined.

16 ‘‘(d) PAYMENTS TO STATES.—

17 ‘‘(1) PAYMENTS.—

18 ‘‘(A) COMPUTATION OF AMOUNT.—From

19 the sums appropriated therefor, the Secretary

20 of the Treasury shall pay to each State which

21 has a plan approved under this section for a fis22 cal year, for each quarter, beginning with the

23 quarter commencing October 1, 1996, an

amount equal to 1 24 ⁄4 of the special allotment of

25 the State for the fiscal year.
671

Title IX, Subtitle B

•HR 2530 IH

1 ‘‘(B) METHOD OF COMPUTATION AND PAY2 MENT.—The method of computing and paying

3 such amounts shall be as follows:

4 ‘‘(i) ESTIMATE.—The Secretary shall,

5 before each quarter, estimate the amount

6 to be paid to the State for the quarter

7 under this section, based on a report filed

8 by the State containing the State’s esti9 mate of the total sum to be expended by

10 the State in such quarter in accordance

11 with subsection (e).

12 ‘‘(ii) CERTIFICATION.—The Secretary

13 of Health and Human Services shall then

14 certify to the Secretary of the Treasury the

15 amount so estimated by the Secretary of

16 Health and Human Services reduced or in17 creased, as the case may be, by any sum

18 by which the Secretary of Health and

19 Human Services finds that the estimate for

20 any prior quarter was greater or less than

21 the amount which should have been paid to

22 the State for such quarter, except that

23 such increases or reductions shall not be

24 made to the extent that such sums have

25 been applied to make the amount certified
672

Title IX, Subtitle B

•HR 2530 IH

1 for any prior quarter greater or less than

2 the amount estimated by the Secretary of

3 Health and Human Services for such prior

4 quarter.

5 ‘‘(iii) METHOD OF PAYMENT.—The

6 Secretary of the Treasury shall thereupon,

7 through the Fiscal Service of the Depart8 ment of the Treasury and prior to audit or

9 settlement by the General Accounting Of10 fice, pay to the State, at the time or times

11 fixed by the Secretary of Health and

12 Human Services, the amount so certified.

13 ‘‘(2) DEADLINE FOR EXPENDITURE OF FUNDS

14 BY STATES.—Except as provided in paragraph

15 (3)(A), each State to which funds are paid under

16 this section for a fiscal year shall expend such funds

17 in the fiscal year or in the immediately succeeding

18 fiscal year.

19 ‘‘(3) REDISTRIBUTION OF UNEXPENDED SPE20 CIAL ALLOTMENTS.—

21 ‘‘(A) REMITTANCE TO THE SECRETARY.—

22 Each State to which funds are paid under this

23 section for a fiscal year shall remit to the Sec24 retary that part of such funds which the State

25 intends not to, or does not, expend in the fiscal
673

Title IX, Subtitle B

•HR 2530 IH

1 year or in the immediately succeeding fiscal

2 year.

3 ‘‘(B) REDISTRIBUTION.—The Secretary

4 shall increase the special allotment of each

5 State with a plan approved under this part for

6 a fiscal year that does not remit any amount to

7 the Secretary for the fiscal year by an amount

8 equal to—

9 ‘‘(i) the aggregate of the amounts re10 mitted pursuant to subparagraph (A) for

11 the fiscal year; multiplied by

12 ‘‘(ii) the adjusted State share for the

13 fiscal year.

14 ‘‘(C) ADJUSTED STATE SHARE.—As used

15 in subparagraph (B)(ii), the term ‘adjusted

16 State share’ means, with respect to a fiscal

17 year—

18 ‘‘(i) the special allotment of the State

19 for the fiscal year (before any increase

20 under subparagraph (B)); divided by

21 ‘‘(ii)(I) the sum of the special allot22 ments of all States with plans approved

23 under this part for the fiscal year; minus
674

Title IX, Subtitle B

•HR 2530 IH

1 ‘‘(II) the aggregate of the amounts re2 mitted to the Secretary pursuant to sub3 paragraph (A) for the fiscal year.

4 ‘‘(e) USE OF FUNDS.—

5 ‘‘(1) IN GENERAL.—Funds provided under this

6 section shall be used to expand parent choices in se7 lecting child care, to address deficiencies in the sup8 ply of child care, and to expand and improve child

9 care services, with an emphasis on providing such

10 services to low-income families and geographical

11 areas. Subject to the approval of the Secretary,

12 States to which funds are paid under this section

13 shall use such funds to carry out child care pro14 grams and activities through cash grants, certifi15 cates, or contracts with families, or public or private

16 entities as the State determines appropriate. States

17 shall take parental preference into account to the

18 maximum extent possible in carrying out child care

19 programs.

20 ‘‘(2) SPECIFIC USES.—Each State to which

21 funds are paid under this section may expend such

22 funds for—

23 ‘‘(A) child care services for infants, sick

24 children, children with special needs, and chil25 dren of adolescent parents;
675

Title IX, Subtitle B

•HR 2530 IH

1 ‘‘(B) after-school and before-school pro2 grams and programs during nontraditional

3 hours for the children of working parents;

4 ‘‘(C) programs for the recruitment and

5 training of day care workers, including older

6 Americans;

7 ‘‘(D) grant and loan programs to enable

8 child care workers and providers to meet State

9 and local standards and requirements;

10 ‘‘(E) child care programs developed by

11 public and private sector partnerships;

12 ‘‘(F) State efforts to provide technical as13 sistance designed to help providers improve the

14 services offered to parents and children; and

15 ‘‘(G) other child care-related programs

16 consistent with the purpose of this section and

17 approved by the Secretary.

18 ‘‘(3) LIMITATIONS ON USE OF FUNDS.—A State

19 to which funds are paid under this section for a fis20 cal year shall use not less than 80 percent of such

21 funds to provide direct child care assistance to low22 income parents through child care certificates or

23 vouchers, contracts, or grants.

24 ‘‘(4) METHODS OF FUNDING.—Funds for child

25 care services under this title shall be for the benefit
676

Title IX, Subtitle B

•HR 2530 IH

1 of parents and shall be provided through child care

2 vouchers or certificates provided directly to parents

3 or through contracts or grants with public or private

4 providers.

5 ‘‘(5) PARENTAL RIGHTS OF CHOICE.—Any par6 ent who receives a child care certificate under this

7 title may use such certificate with any child care

8 provider, including those providers which have reli9 gious activities, if such provider is freely chosen by

10 the parent from among the available alternatives.

11 ‘‘(6) CHILD CARE CERTIFICATES.—

12 ‘‘(A) IN GENERAL.—For purposes of this

13 title, a child care certificate is a certificate is14 sued by a State directly to a parent or legal

15 guardian for use only as payment for child care

16 services in any child care facility eligible to re17 ceive funds under this Act.

18 ‘‘(B) REDEMPTION.—If the demand for

19 child care services of families qualified to re20 ceive such services from a State under this Act

21 exceeds the available supply of such services,

22 the State shall ration assistance to obtain such

23 services using procedures that do not disadvan24 tage parents using child care certificates, rel25 ative to other methods of financing, in either
677

Title IX, Subtitle B

•HR 2530 IH

1 the waiting period or the pecuniary value of

2 such services.

3 ‘‘(C) COMMENCEMENT OF CERTIFICATE

4 PROGRAM.—Beginning not later than 1 year

5 after the date of the enactment of this section,

6 each State that receives funds under this title

7 shall offer a child care certificate program in

8 accordance with this section.

9 ‘‘(D) AUTHORITY TO USE CHILD CARE

10 FUNDS FOR CERTIFICATE PROGRAM.—Each

11 State to which funds are paid under this title

12 may use the funds provided to the State under

13 this title which are required to be used for child

14 care activities to plan and establish the State’s

15 child care certificate program.

16 ‘‘(7) OPTION OF RECEIVING A CHILD CARE

17 CERTIFICATE.—Each parent or legal guardian who

18 receives assistance pursuant to this title shall be

19 provided with the option of enrolling their child with

20 an eligible child care provider that receives funds

21 through grants, contracts, or child care certificates

22 provided under this title. Such parent shall have the

23 right to use such certificates to purchase child care

24 services from an eligible provider of their choice. The

25 State shall ensure that parental preference is consid-
678

Title IX, Subtitle B

•HR 2530 IH

1 ered to the maximum extent possible in awarding

2 grants or contracts.

3 ‘‘(8) RIGHTS OF RELIGIOUS CHILD CARE PRO4 VIDERS.—Notwithstanding any other provision of

5 law, a religious child care provider who receives

6 funds under this Act may require adherence by em7 ployees to the religious tenets or teachings of the

8 provider.

9 ‘‘(9) ELIGIBLE CHILD CARE PROVIDERS.—Any

10 child care provider who meets applicable standards

11 of State and local law shall be eligible to receive

12 funds under this section. As used in this paragraph,

13 the term ‘child care provider’ includes—

14 ‘‘(A) proprietary for-profit entities, rel15 atives, informal day care homes, religious child

16 care providers, day care centers, and any other

17 entities that the State determines appropriate

18 subject to approval of the Secretary;

19 ‘‘(B) nonprofit organizations under sub20 sections (c) and (d) of section 501 of the Inter21 nal Revenue Code of 1986;

22 ‘‘(C) professional or employee associations;

23 ‘‘(D) consortia of small businesses; and
679

Title IX, Subtitle B

•HR 2530 IH

1 ‘‘(E) units of State and local governments,

2 and elementary, secondary, and post-secondary

3 educational institutions.

4 ‘‘(10) PROHIBITED USES.—Any State to which

5 funds are paid under this section may not use such

6 funds—

7 ‘‘(A) to satisfy any State matching require8 ment imposed under any Federal grant;

9 ‘‘(B) for the purchase or improvement of

10 land, or the purchase, construction, or perma11 nent improvement (other than minor remodel12 ing) of any building or other facility; or

13 ‘‘(C) to provide any service which the State

14 makes generally available to the residents of the

15 State without cost to such residents and with16 out regard to the income of such residents.

17 ‘‘(f) REPORTING REQUIREMENTS.—

18 ‘‘(1) NOTICE TO SECRETARY OF UNEXPENDED

19 FUNDS.—Each State which has not completely ex20 pended the funds paid to the State under this sec21 tion for a fiscal year in the fiscal year or the imme22 diately succeeding fiscal year shall notify the Sec23 retary of any amount not so expended.

24 ‘‘(2) STATE REPORTS ON USE OF FUNDS.—Not

25 later than 18 months after the date of the enact-
680

Title IX, Subtitle B

•HR 2530 IH

1 ment of this section, and each year thereafter, the

2 State shall prepare and submit to the Secretary, in

3 such form as the Secretary shall prescribe, a report

4 describing the State’s use of funds paid to the State

5 under this section, including—

6 ‘‘(A) the number, type, and distribution of

7 services and programs under this section;

8 ‘‘(B) the average cost of child care, by type

9 of provider;

10 ‘‘(C) the number of children serviced under

11 this section;

12 ‘‘(D) the average income and distribution

13 of incomes of the families being served;

14 ‘‘(E) efforts undertaken by the State pur15 suant to this section to promote and ensure

16 health and safety and improve quality; and

17 ‘‘(F) such other information as the Sec18 retary considers appropriate.

19 ‘‘(3) GUIDELINES FOR STATE REPORTS; CO20 ORDINATION WITH REPORTS UNDER SECTION

21 2006.—Within 6 months after the date of the enact22 ment of this section, the Secretary shall establish

23 guidelines for State reports under paragraph (2). To

24 the extent feasible, the Secretary shall coordinate

25 such reporting requirement with the reports required
681

Title IX, Subtitle B

•HR 2530 IH

1 under section 2006 and, as the Secretary deems ap2 propriate, with other reporting requirements placed

3 on States as a condition of receipt of other Federal

4 funds which support child care.

5 ‘‘(4) REPORTS BY THE SECRETARY.—

6 ‘‘(A) REPORTS TO THE CONGRESS OF SUM7 MARY OF STATE REPORTS.—The Secretary shall

8 annually summarize the information reported to

9 the Secretary pursuant to paragraph (2) and

10 provide such summary to the Congress.

11 ‘‘(B) REPORTS TO THE STATES ON EFFEC12 TIVE PRACTICES.—The Secretary shall annually

13 provide the States with a report on particularly

14 effective practices and programs supported by

15 funds paid to the State under this section,

16 which ensure the health and safety of children

17 in care, promote quality child care, and provide

18 training to all types of providers.

19 ‘‘(g) ADMINISTRATION AND ENFORCEMENT.—

20 ‘‘(1) ADMINISTRATION.—The Secretary shall—

21 ‘‘(A) coordinate all activities of the Depart22 ment of Health and Human Services relating to

23 child care, and, to the maximum extent prac24 ticable, coordinate such activities with similar

25 activities of other Federal entities;
682

Title IX, Subtitle B

•HR 2530 IH

1 ‘‘(B) collect, publish, and make available to

2 the public a listing of State child care standards

3 at least once every 3 years; and

4 ‘‘(C) provide technical assistance to assist

5 States to carry out this section, including as6 sistance on a reimbursable basis.

7 ‘‘(2) ENFORCEMENT.—

8 ‘‘(A) REVIEW OF COMPLIANCE WITH

9 STATE PLAN.—The Secretary shall review and

10 monitor State compliance with this section and

11 the plans approved under this section for the

12 State, and shall have the power to terminate

13 payments to the State in accordance with sub14 paragraph (B).

15 ‘‘(B) NONCOMPLIANCE.—

16 ‘‘(i) IN GENERAL.—If the Secretary,

17 after reasonable notice to a State and op18 portunity for a hearing, finds that—

19 ‘‘(I) there has been a failure by

20 the State to comply substantially with

21 any provision or requirement set forth

22 in the plan approved under this sec23 tion for the State; or

24 ‘‘(II) in the operation of any pro25 gram for which assistance is provided
683

Title IX, Subtitle B

•HR 2530 IH

1 under this section there is a failure by

2 the State to comply substantially with

3 any provision of this section;

4 the Secretary shall notify the State of the

5 findings and that no further payments may

6 be made to such State under this section

7 (or, in the case of noncompliance in the op8 eration of a program or activity, that no

9 further payments to the State will be made

10 with respect to such program or activity)

11 until the Secretary is satisfied that there

12 is no longer any such failure to comply or

13 that the noncompliance will be promptly

14 corrected.

15 ‘‘(ii) ADDITIONAL SANCTIONS.—In the

16 case of a finding of noncompliance made

17 pursuant to clause (i), the Secretary may,

18 in addition to imposing the sanctions de19 scribed in such subparagraph, impose the

20 other appropriate sanctions, including

21 recoupment of money improperly expended

22 for purposes prohibited or not authorized

23 by this section, and disqualification from

24 the receipt of financial assistance under

25 this section.
684

Title IX, Subtitle B

•HR 2530 IH

1 ‘‘(iii) NOTICE.—The notice required

2 under subparagraph (A) shall include a

3 specific identification of any additional

4 sanction being imposed under clause (ii).

5 ‘‘(C) ISSUANCE OF RULES.—The Secretary

6 shall establish by rule procedures for—

7 ‘‘(i) receiving, processing, and deter8 mining the validity of complaints concern9 ing any failure of a State to comply with

10 the State plan or any requirement of this

11 section; and

12 ‘‘(ii) imposing sanctions under this

13 subsection.

14 ‘‘SEC. 2009. CHILD CARE DURING PARTICIPATION IN EM15 PLOYMENT, EDUCATION, AND TRAINING; EX16 TENDED ELIGIBILITY.

17 ‘‘(a) CHILD CARE GUARANTEE.—

18 ‘‘(1) IN GENERAL.—Each State agency referred

19 to in section 2008(b)(1)(A) shall guarantee child

20 care in accordance with section 2008—

21 ‘‘(A) for any individual who is participat22 ing in an education or training activity (includ23 ing participation in a program established

24 under part G of title IV) if the State agency ap25 proves the activity and determines that the indi-
685

Title IX, Subtitle B

•HR 2530 IH

1 vidual is participating satisfactorily in the activ2 ity;

3 ‘‘(B) for each family with a dependent

4 child (as defined in section 413(a)(2)(E)) re5 quiring such care to the extent that such care

6 is determined by the State agency to be nec7 essary for an individual in the family to accept

8 employment or remain employed, including in a

9 community service job under part G of title IV;

10 and

11 ‘‘(C) to the extent that the State agency

12 determines that such care is necessary for the

13 employment of an individual, if the family of

14 which the individual is a member has ceased to

15 receive assistance under the State plan ap16 proved under part A of title IV by reason of in17 creased hours of, or income from, such employ18 ment, subject to paragraph (2) of this sub19 section.

20 ‘‘(2) LIMITATIONS ON ELIGIBILITY FOR TRANSI21 TIONAL CHILD CARE.—A family shall not be eligible

22 for child care under paragraph (1)(C)—

23 ‘‘(A) for more than 12 months after the

24 last month for which the family received assist25 ance described in such paragraph;
686

Title IX, Subtitle B

•HR 2530 IH

1 ‘‘(B) if the family did not receive such as2 sistance in at least 3 of the most recent 6

3 months in which the family received such assist4 ance;

5 ‘‘(C) if the family does not include a child

6 who is (or, if needy, would be) a dependent

7 child (within the meaning of section

8 413(a)(2)(E));

9 ‘‘(D) for any month beginning after the

10 caretaker relative (within the meaning of such

11 part) in the family has terminated his or her

12 employment without good cause; or

13 ‘‘(E) with respect to a child, for any month

14 beginning after the caretaker relative in the

15 family has refused to cooperate with the State

16 in establishing or enforcing the obligation of

17 any parent of the child to provide support for

18 the child, without good cause as determined by

19 the State agency in accordance with standards

20 prescribed by the Secretary which shall take

21 into consideration the best interests of the

22 child.

23 ‘‘(b) STATE ENTITLEMENT TO PAYMENTS.—Each

24 State with a plan approved under section 2008 shall be
687

Title IX, Subtitle B

•HR 2530 IH

1 entitled to receive from the Secretary for any fiscal year

2 an amount equal to—

3 ‘‘(1) the total amount expended by the State to

4 carry out subsection (a) during the fiscal year; mul5 tiplied by

6 ‘‘(2) the Federal medical assistance percentage

7 (as defined in the last sentence of section 1118).’’.

8 (c) EFFECTIVE DATE.—The amendments and re9 peals made by this section shall take effect on October

10 1, 1996.

11 SEC. 9206. CERTAIN FEDERAL ASSISTANCE INCLUDIBLE IN

12 GROSS INCOME.

13 (a) IN GENERAL.—Part II of subchapter B of chap14 ter 1 of the Internal Revenue Code of 1986 (relating to

15 items specifically included in gross income) is amended by

16 adding at the end the following new section:

17 ‘‘SEC. 91. CERTAIN FEDERAL ASSISTANCE.

18 ‘‘(a) IN GENERAL.—Gross income shall include an

19 amount equal to the specified Federal assistance received

20 by the taxpayer during the taxable year.

21 ‘‘(b) SPECIFIED FEDERAL ASSISTANCE.—For pur22 poses of this section—

23 ‘‘(1) IN GENERAL.—The term ‘specified Federal

24 assistance’ means—
688

Title IX, Subtitle B

•HR 2530 IH

1 ‘‘(A) assistance provided under a State

2 plan approved under part A of title IV of the

3 Social Security Act (relating to temporary em4 ployment assistance program),

5 ‘‘(B) assistance provided under any food

6 stamp program, and

7 ‘‘(C) supplemental security income benefits

8 under title XVI of the Social Security Act (in9 cluding supplemental security income benefits

10 of the type described in section 1616 of such

11 Act or section 212 of Public Law 93-66).

12 ‘‘(2) SPECIAL RULE.—In the case of assistance

13 provided under a program described in subsection

14 (d)(2), such term shall include only the assistance

15 required to be provided under section 21 or 22 (as

16 the case may be) of the Food Stamp Act of 1977.

17 ‘‘(c) INDIVIDUALS SUBJECT TO TAX.—For purposes

18 of this section—

19 ‘‘(1) TEMPORARY EMPLOYMENT ASSISTANCE

20 PROGRAM.—Assistance described in subsection

21 (b)(1)(A) shall be treated as received by the relative

22 with whom the dependent child is living (within the

23 meaning of section 406(c) of the Social Security

24 Act).
689

Title IX, Subtitle B

•HR 2530 IH

1 ‘‘(2) FOOD STAMPS.—In the case of assistance

2 described in subsection (b)(1)(B)—

3 ‘‘(A) IN GENERAL.—Except as provided in

4 subparagraph (B), such assistance shall be

5 treated as received ratably by each of the indi6 viduals taken into account in determining the

7 amount of such assistance for the benefit of

8 such individuals.

9 ‘‘(B) ASSISTANCE TO CHILDREN TREATED

10 AS RECEIVED BY PARENTS, ETC.—The amount

11 of assistance which would (but for this subpara12 graph) be treated as received by a child shall be

13 treated as received as follows:

14 ‘‘(i) If there is an includible parent,

15 such amount shall be treated as received

16 by the includible parent (or if there is

17 more than 1 includible parent, as received

18 ratably by each includible parent).

19 ‘‘(ii) If there is no includible parent

20 and there is an includible grandparent,

21 such amount shall be treated as received

22 by the includible grandparent (or if there

23 is more than 1 includible grandparent, as

24 received ratably by each includible grand25 parent).
690

Title IX, Subtitle B

•HR 2530 IH

1 ‘‘(iii) If there is no includible parent

2 or grandparent, such amount shall be

3 treated as received ratably by each includ4 ible adult.

5 ‘‘(C) DEFINITIONS.—For purposes of sub6 paragraph (B)—

7 ‘‘(i) CHILD.—The term ‘child’ means

8 any individual who has not attained age 16

9 as of the close of the taxable year. Such

10 term shall not include any individual who

11 is an includible parent of a child (as de12 fined in the preceding sentence).

13 ‘‘(ii) ADULT.—The term ‘adult’ means

14 any individual who is not a child.

15 ‘‘(iii) INCLUDIBLE.—The term ‘in16 cludible’ means, with respect to any indi17 vidual, an individual who is included in de18 termining the amount of assistance paid to

19 the household which includes the child.

20 ‘‘(iv) PARENT.—The term ‘parent’ in21 cludes the stepfather and stepmother of

22 the child.

23 ‘‘(v) GRANDPARENT.—The term

24 ‘grandparent’ means any parent of a par25 ent of the child.
691

Title IX, Subtitle B

•HR 2530 IH

1 ‘‘(d) FOOD STAMP PROGRAM.—For purposes of sub2 section (b), the term ‘food stamp program’ means—

3 ‘‘(1) the food stamp program (as defined in sec4 tion 3(h) of the Food Stamp Act of 1977), and

5 ‘‘(2) the portion of the program under sections

6 21 and 22 of such Act which provides food assist7 ance.’’

8 (b) REPORTING.—

9 (1) IN GENERAL.—Subpart B of part III of

10 subchapter A of chapter 61 of such Code is amended

11 by adding at the end the following new section:

12 ‘‘SEC. 6050Q. PAYMENTS OF CERTAIN FEDERAL ASSIST13 ANCE.

14 ‘‘(a) REQUIREMENT OF REPORTING.—The appro15 priate official shall make a return, according to the forms

16 and regulations prescribed by the Secretary, setting

17 forth—

18 ‘‘(1) the aggregate amount of specified Federal

19 assistance paid to any individual during any cal20 endar year, and

21 ‘‘(2) the name, address, and TIN of such indi22 vidual.

23 ‘‘(b) STATEMENTS TO BE FURNISHED TO PERSONS

24 WITH RESPECT TO WHOM INFORMATION IS REQUIRED.—

25 Every person required to make a return under subsection
692

Title IX, Subtitle B

•HR 2530 IH

1 (a) shall furnish to each individual whose name is required

2 to be set forth in such return a written statement show3 ing—

4 ‘‘(1) the aggregate amount of payments made

5 to the individual which are required to be shown on

6 such return, and

7 ‘‘(2) the name of the agency making the pay8 ments.

9 The written statement required under the preceding sen10 tence shall be furnished to the individual on or before Jan11 uary 31 of the year following the calendar year for which

12 the return under subsection (a) was required to be made.

13 ‘‘(c) DEFINITIONS AND SPECIAL RULE.—For pur14 poses of this section—

15 ‘‘(1) APPROPRIATE OFFICIAL.—The term ‘ap16 propriate official’ means—

17 ‘‘(A) in the case of specified Federal as18 sistance described in section 91(b)(1)(A), the

19 head of the State agency administering the plan

20 under which such assistance is provided,

21 ‘‘(B) in the case of specified Federal as22 sistance described in section 91(b)(1)(B), the

23 head of the State agency administering the pro24 gram under which such assistance is provided,

25 and
693

Title IX, Subtitle B

•HR 2530 IH

1 ‘‘(C) in the case of specified Federal assist2 ance described in section 91(b)(1)(C), the Sec3 retary of Health and Human Services.

4 ‘‘(2) SPECIFIED FEDERAL ASSISTANCE.—The

5 term ‘specified Federal assistance’ has the meaning

6 given such term by section 91(b).

7 ‘‘(3) AMOUNTS TREATED AS PAID.—The rules

8 of section 91(c) shall apply for purposes of deter9 mining to whom specified Federal assistance is

10 paid.’’

11 (2) PENALTIES.—

12 (A) Subparagraph (B) of section

13 6724(d)(1) of such Code is amended by redesig14 nating clauses (ix) through (xiv) as clauses (x)

15 through (xv), respectively, and by inserting

16 after clause (viii) the following new clause:

17 ‘‘(ix) section 6050Q (relating to pay18 ments of certain Federal assistance),’’.

19 (B) Paragraph (2) of section 6724(d) of

20 such Code is amended by redesignating sub21 paragraphs (Q) through (T) as subparagraphs

22 (R) through (U), respectively, and by inserting

23 after subparagraph (P) the following new sub24 paragraph:
694

Title IX, Subtitle B

•HR 2530 IH

1 ‘‘(Q) section 6050Q(b) (relating to pay2 ments of certain Federal assistance),’’.

3 (c) TEMPORARY EMPLOYMENT ASSISTANCE PRO4 GRAM, SUPPLEMENTAL SECURITY INCOME, AND FOOD

5 STAMP BENEFITS NOT TAKEN INTO ACCOUNT FOR PUR6 POSES OF THE EARNED INCOME TAX CREDIT.—Section

7 32 of the Internal Revenue Code of 1986 (relating to the

8 earned income tax credit), is amended by adding at the

9 end the following new subsection:

10 ‘‘(k) ADJUSTED GROSS INCOME DETERMINED WITH11 OUT REGARD TO CERTAIN FEDERAL ASSISTANCE.—For

12 purposes of this section, adjusted gross income shall be

13 determined without regard to any amount which is includ14 ible in gross income solely by reason of section 91.’’

15 (d) CLERICAL AMENDMENTS.—

16 (1) The table of sections for part II of sub17 chapter B of chapter 1 of such Code is amended by

18 adding at the end the following new item:

‘‘Sec. 91. Certain Federal assistance.’’

19 (2) The table of sections for subpart B of part

20 III of subchapter A of chapter 61 of such Code is

21 amended by adding at the end the following new

22 item:

‘‘Sec. 6050Q. Payments of certain Federal assistance.’’

23 (e) EFFECTIVE DATE.—The amendments made by

24 this section shall apply to benefits received after December
695

Title IX, Subtitle B

•HR 2530 IH

1 31, 1995, except that the amendment made by subsection

2 (c) shall apply to taxable years beginning after such date.

3 SEC. 9207. DEPENDENT CARE CREDIT TO BE REFUNDABLE;

4 HIGH-INCOME TAXPAYERS INELIGIBLE FOR

5 CREDIT.

6 (a) CREDIT TO BE REFUNDABLE.—

7 (1) IN GENERAL.—Section 21 of the Internal

8 Revenue Code of 1986 (relating to expenses for

9 household and dependent care services necessary for

10 gainful employment) is hereby moved to subpart C

11 of part IV of subchapter A of chapter 1 of such

12 Code (relating to refundable credits) and inserted

13 after section 34.

14 (2) TECHNICAL AMENDMENTS.—

15 (A) Section 35 of such Code is redesig16 nated as section 36.

17 (B) Section 21 of such Code is redesig18 nated as section 35.

19 (C) Paragraph (1) of section 35(a) of such

20 Code (as redesignated by subparagraph (B)) is

21 amended by striking ‘‘this chapter’’ and insert22 ing ‘‘this subtitle’’.

23 (D) Subparagraph (C) of section 129(a)(2)

24 of such Code is amended by striking ‘‘section

25 21(e)’’ and inserting ‘‘section 35(e)’’.
696

Title IX, Subtitle B

•HR 2530 IH

1 (E) Paragraph (2) of section 129(b) of

2 such Code is amended by striking ‘‘section

3 21(d)(2)’’ and inserting ‘‘section 35(d)(2)’’.

4 (F) Paragraph (1) of section 129(e) of

5 such Code is amended by striking ‘‘section

6 21(b)(2)’’ and inserting ‘‘section 35(b)(2)’’.

7 (G) Subsection (e) of section 213 of such

8 Code is amended by striking ‘‘section 21’’ and

9 inserting ‘‘section 35’’.

10 (H) Paragraph (2) of section 1324(b) of

11 title 31, United States Code, is amended by in12 serting before the period ‘‘, or from section 35

13 of such Code’’.

14 (I) The table of sections for subpart C of

15 part IV of subchapter A of chapter 1 of such

16 Code is amended by striking the item relating

17 to section 35 and inserting the following:

‘‘Sec. 35. Expenses for household and dependent care services

necessary for gainful employment.

‘‘Sec. 36. Overpayments of tax.’’.

18 (J) The table of sections for subpart A of

19 such part IV is amended by striking the item

20 relating to section 21.

21 (b) HIGHER-INCOME TAXPAYERS INELIGIBLE FOR

22 CREDIT.—Subsection (a) of section 35 of such Code, as

23 redesignated by subsection (a), is amended by adding at

24 the end the following new paragraph:
697

Title IX, Subtitle C

•HR 2530 IH

1 ‘‘(3) PHASEOUT OF CREDIT FOR HIGHER-IN2 COME TAXPAYERS.—The amount of the credit which

3 would (but for this paragraph) be allowed by this

4 section shall be reduced (but not below zero) by an

5 amount which bears the same ratio to such amount

6 of credit as the excess of the taxpayer’s adjusted

7 gross income for the taxable year over $60,000 bears

8 to $20,000. Any reduction determined under the

9 preceding sentence which is not a multiple of $10

10 shall be rounded to the nearest multiple of $10.’’.

11 (c) EFFECTIVE DATE.—The amendments made by

12 this section shall apply to taxable years beginning after

13 December 31, 1996.

14 Subtitle C—Work First

15 SEC. 9301. WORK FIRST PROGRAM.

16 (a) ESTABLISHMENT AND OPERATION OF PRO17 GRAM.—Title IV (42 U.S.C. 601 et seq.) is amended by

18 striking part F and inserting the following:

19 ‘‘Part F—Work First Program

20 ‘‘SEC. 481. STATE ROLE.

21 ‘‘(a) PROGRAM REQUIREMENTS.—Any State may es22 tablish and operate a work first program that meets the

23 following requirements:

24 ‘‘(1) OBJECTIVE.—The objective of the pro25 gram is for each program participant to find and
698

Title IX, Subtitle C

•HR 2530 IH

1 hold a full-time unsubsidized paid job, and for this

2 goal to be achieved in a cost-effective fashion.

3 ‘‘(2) METHOD.—The method of the program is

4 to connect recipients of assistance under the State

5 plan approved under part A with the private sector

6 labor market as soon as possible and offer them the

7 support and skills necessary to remain in the labor

8 market. Each component of the program should be

9 permeated with an emphasis on employment and

10 with an understanding that minimum wage jobs are

11 a stepping stone to more highly paid employment.

12 The program shall provide recipients with education,

13 training, job search and placement, wage

14 supplementation, temporary subsidized jobs, or such

15 other services that the State deems necessary to help

16 a recipient obtain private sector employment.

17 ‘‘(3) JOB CREATION.—The creation of jobs,

18 with an emphasis on private sector jobs, shall be a

19 component of the program and shall be a priority for

20 each State office with responsibilities under the pro21 gram.

22 ‘‘(4) FORMS OF ASSISTANCE.—The State shall

23 provide assistance to participants in the program in

24 the form of education, training, job placement serv25 ices (including vouchers for job placement services),
699

Title IX, Subtitle C

•HR 2530 IH

1 work supplementation programs, temporary sub2 sidized job creation, job counseling, assistance in es3 tablishing microenterprises, or other services to pro4 vide individuals with the support and skills necessary

5 to obtain and keep employment in the private sector.

6 ‘‘(5) 2-YEAR LIMITATION ON PARTICIPATION.—

7 The program shall comply with section 487(b).

8 ‘‘(6) AGREEMENTS OF MUTUAL RESPONSIBIL9 ITY.—

10 ‘‘(A) IN GENERAL.—The State agency

11 shall develop an agreement of mutual respon12 sibility for each program participant, which will

13 be an individualized comprehensive plan, devel14 oped by the team and the participant, to move

15 the participant into a full-time unsubsidized

16 job. The agreement should detail the education,

17 training, or skills that the individual will be re18 ceiving to obtain a full-time unsubsidized job,

19 and the obligations of the individual.

20 ‘‘(B) HOURS OF PARTICIPATION REQUIRE21 MENT.—The agreement shall provide that the

22 individual shall participate in activities in ac23 cordance with the agreement for—

24 ‘‘(i) not fewer than 20 hours per week

25 during fiscal years 1997 and 1998;
700

Title IX, Subtitle C

•HR 2530 IH

1 ‘‘(ii) not fewer than 25 hours per

2 week during fiscal year 1999; and

3 ‘‘(iii) not fewer than 30 hours per

4 week thereafter.

5 ‘‘(7) CASELOAD PARTICIPATION RATES.—The

6 program shall comply with section 488.

7 ‘‘(8) NONDISPLACEMENT.—The program may

8 not be operated in a manner that results in—

9 ‘‘(A) the displacement of a currently em10 ployed worker or position by a program partici11 pant;

12 ‘‘(B) the replacement of an employee who

13 has been terminated with a program partici14 pant; or

15 ‘‘(C) the replacement of an individual who

16 is on layoff from the same position given to a

17 program participant or any equivalent position.

18 ‘‘(b) ANNUAL REPORTS.—

19 ‘‘(1) COMPLIANCE WITH PERFORMANCE MEAS20 URES.—Each State that operates a program under

21 this part shall submit to the Secretary annual re22 ports that compare the achievements of the program

23 with the performance-based measures established

24 under section 488(c).
701

Title IX, Subtitle C

•HR 2530 IH

1 ‘‘(2) COMPLIANCE WITH PARTICIPATION

2 RATES.—Each State that operates a program under

3 this part for a fiscal year shall submit to the Sec4 retary a report on the participation rate of the State

5 for the fiscal year.

6 ‘‘SEC. 482. REVAMPED JOBS PROGRAM.

7 ‘‘A State that establishes a program under this part

8 may operate a program similar to the program known as

9 the ‘GAIN Program’ that has been operated by Riverside

10 County, California, under Federal law in effect imme11 diately before the date this part first applies to the State

12 of California.

13 ‘‘SEC. 483. USE OF PLACEMENT COMPANIES.

14 ‘‘(a) IN GENERAL.—A State that establishes a pro15 gram under this part may enter into contracts with private

16 companies (whether operated for profit or not for profit)

17 for the placement of participants in the program in posi18 tions of full-time employment, preferably in the private

19 sector, for wages sufficient to eliminate the need of such

20 participants for cash assistance.

21 ‘‘(b) REQUIRED CONTRACT TERMS.—Each contract

22 entered into under this section with a company shall meet

23 the following requirements:

24 ‘‘(1) PROVISION OF JOB READINESS AND SUP25 PORT SERVICES.—The contract shall require the
702

Title IX, Subtitle C

•HR 2530 IH

1 company to provide, to any program participant who

2 presents to the company a voucher issued under sub3 section (d) intensive personalized support and job

4 readiness services designed to prepare the individual

5 for employment and ensure the continued success of

6 the individual in employment.

7 ‘‘(2) PAYMENTS.—

8 ‘‘(A) IN GENERAL.—The contract shall

9 provide for payments to be made to the com10 pany with respect to each program participant

11 who presents to the company a voucher issued

12 under subsection (d).

13 ‘‘(B) STRUCTURE.—The contract shall

14 provide for the majority of the amounts to be

15 paid under the contract with respect to a pro16 gram participant, to be paid after the company

17 has placed the participant in a position of full18 time employment and the participant has been

19 employed in the position for such period of not

20 less than 5 months as the State deems appro21 priate.

22 ‘‘(c) COMPETITIVE BIDDING REQUIRED.—Contracts

23 under this section shall be awarded only after competitive

24 bidding.
703

Title IX, Subtitle C

•HR 2530 IH

1 ‘‘(d) VOUCHERS.—The State shall issue a voucher to

2 each program participant whose agreement of mutual re3 sponsibility provides for the use of placement companies

4 under this section, indicating that the participant is eligi5 ble for the services of such a company.

6 ‘‘SEC. 484. TEMPORARY SUBSIDIZED JOB CREATION.

7 ‘‘A State that establishes a program under this part

8 may establish a program similar to the program known

9 as ‘JOBS Plus’ that has been operated by the State of

10 Oregon under Federal law in effect immediately before the

11 date this part first applies to the State of Oregon.

12 ‘‘SEC. 485. MICROENTERPRISE.

13 ‘‘(a) GRANTS AND LOANS TO NONPROFIT ORGANIZA14 TIONS FOR THE PROVISION OF TECHNICAL ASSISTANCE,

15 TRAINING, AND CREDIT TO LOW INCOME ENTRE16 PRENEURS.—A State that establishes a program under

17 this part may make grants and loans to nonprofit organi18 zations to provide technical assistance, training, and credit

19 to low income entrepreneurs for the purpose of establish20 ing microenterprises.

21 ‘‘(b) MICROENTERPRISE DEFINED.—For purposes of

22 this subsection, the term ‘microenterprise’ means a com23 mercial enterprise which has 5 or fewer employees, 1 or

24 more of whom owns the enterprise.
704

Title IX, Subtitle C

•HR 2530 IH

1 ‘‘SEC. 486. WORK SUPPLEMENTATION PROGRAM.

2 ‘‘(a) IN GENERAL.—A State that establishes a pro3 gram under this part may institute a work

4 supplementation program under which the State, to the

5 extent it considers appropriate, may reserve the sums that

6 would otherwise be payable under the State plan approved

7 under part A to participants in the program and use the

8 sums instead for the purpose of providing and subsidizing

9 jobs for the participants (as described in subsection

10 (c)(3)(A) and (B)), as an alternative to providing such as11 sistance to the participants.

12 ‘‘(b) STATE FLEXIBILITY.—

13 ‘‘(1) Nothing in this part, or in any State plan

14 approved under part A, shall be construed to prevent

15 a State from operating (on such terms and condi16 tions and in such cases as the State may find to be

17 necessary or appropriate) a work supplementation

18 program in accordance with this section and section

19 484 (as in effect immediately before the date this

20 part first applies to the State).

21 ‘‘(2) Notwithstanding any other provision of

22 law, a State may adjust the levels of the standards

23 of need under the State plan as the State determines

24 to be necessary and appropriate for carrying out a

25 work supplementation program under this section.
705

Title IX, Subtitle C

•HR 2530 IH

1 ‘‘(3) Notwithstanding any other provision of

2 law, a State operating a work supplementation pro3 gram under this section may provide that the need

4 standards in effect in those areas of the State in

5 which the program is in operation may be different

6 from the need standards in effect in the areas in

7 which the program is not in operation, and the State

8 may provide that the need standards for categories

9 of recipients may vary among such categories to the

10 extent the State determines to be appropriate on the

11 basis of ability to participate in the work

12 supplementation program.

13 ‘‘(4) Notwithstanding any other provision of

14 law, a State may make such further adjustments in

15 the amounts of assistance provided under the plan

16 to different categories of recipients (as determined

17 under paragraph (3)) in order to offset increases in

18 benefits from needs-related programs (other than

19 the State plan approved under part A) as the State

20 determines to be necessary and appropriate to fur21 ther the purposes of the work supplementation pro22 gram.

23 ‘‘(5) In determining the amounts to be reserved

24 and used for providing and subsidizing jobs under
706

Title IX, Subtitle C

•HR 2530 IH

1 this section as described in subsection (a), the State

2 may use a sampling methodology.

3 ‘‘(6) Notwithstanding any other provision of

4 law, a State operating a work supplementation pro5 gram under this section, may reduce or eliminate the

6 amount of earned income to be disregarded under

7 the State plan as the State determines to be nec8 essary and appropriate to further the purposes of

9 the work supplementation program.

10 ‘‘(c) RULES RELATING TO SUPPLEMENTED JOBS.—

11 ‘‘(1) A work supplementation program operated

12 by a State under this section may provide that any

13 individual who is an eligible individual (as deter14 mined under paragraph (2)) shall take a supple15 mented job (as defined in paragraph (3)) to the ex16 tent that supplemented jobs are available under the

17 program. Payments by the State to individuals or to

18 employers under the work supplementation program

19 shall be treated as expenditures incurred by the

20 State for temporary employment assistance under

21 part A except as limited by subsection (d).

22 ‘‘(2) For purposes of this section, an eligible in23 dividual is an individual who is in a category which

24 the State determines should be eligible to participate

25 in the work supplementation program, and who
707

Title IX, Subtitle C

•HR 2530 IH

1 would, at the time of placement in the job involved,

2 be eligible for assistance under an approved State

3 plan if the State did not have a work

4 supplementation program in effect.

5 ‘‘(3) For purposes of this subsection, a supple6 mented job is—

7 ‘‘(A) a job provided to an eligible individ8 ual by the State or local agency administering

9 the State plan under part A; or

10 ‘‘(B) a job provided to an eligible individ11 ual by any other employer for which all or part

12 of the wages are paid by the State or local

13 agency.

14 A State may provide or subsidize under the program

15 any job which the State determines to be appro16 priate.

17 ‘‘(d) COST LIMITATION.—The amount of the Federal

18 payment to a State under section 413 for expenditures in19 curred in making payments to individuals and employers

20 under a work supplementation program under this sub21 section shall not exceed an amount equal to the amount

22 which would otherwise be payable under such section if

23 the family of each individual employed in the program es24 tablished in the State under this section had received the

25 maximum amount of assistance providable under the State
708

Title IX, Subtitle C

•HR 2530 IH

1 plan to such a family with no income (without regard to

2 adjustments under subsection (b) of this section) for the

3 lesser of—

4 ‘‘(1) 9 months; or

5 ‘‘(2) the number of months in which the indi6 vidual was employed in the program.

7 ‘‘(e) RULES OF INTERPRETATION.—

8 ‘‘(1) This section shall not be construed as re9 quiring the State or local agency administering the

10 State plan to provide employee status to an eligible

11 individual to whom the State or local agency pro12 vides a job under the work supplementation program

13 (or with respect to whom the State or local agency

14 provides all or part of the wages paid to the individ15 ual by another entity under the program), or as re16 quiring any State or local agency to provide that an

17 eligible individual filling a job position provided by

18 another entity under the program be provided em19 ployee status by the entity during the first 13 weeks

20 the individual fills the position.

21 ‘‘(2) Wages paid under a work supplementation

22 program shall be considered to be earned income for

23 purposes of any provision of law.

24 ‘‘(f) PRESERVATION OF MEDICAID ELIGIBILITY.—

25 Any State that chooses to operate a work supplementation
709

Title IX, Subtitle C

•HR 2530 IH

1 program under this section shall provide that any individ2 ual who participates in the program, and any child or rel3 ative of the individual (or other individual living in the

4 same household as the individual) who would be eligible

5 for assistance under the State plan approved under part

6 A if the State did not have a work supplementation pro7 gram, shall be considered individuals receiving assistance

8 under the State plan approved under part A for purposes

9 of eligibility for medical assistance under the State plan

10 approved under title XIX.

11 ‘‘SEC. 487. PARTICIPATION RULES.

12 ‘‘(a) IN GENERAL.—Except as provided in subsection

13 (b), a State that establishes a program under this part

14 may require any individual receiving assistance under the

15 State plan approved under part A to participate in the

16 program.

17 ‘‘(b) 2-YEAR LIMITATION ON PARTICIPATION.—

18 ‘‘(1) IN GENERAL.—Except as provided in para19 graph (2), an individual may not participate in a

20 State program established under this part if the in21 dividual has participated in the State program es22 tablished under this part for 24 months after the

23 date the individual first signed an agreement of mu24 tual responsibility under this part, excluding any

25 month during which the individual worked for an av-
710

Title IX, Subtitle C

•HR 2530 IH

1 erage of at least 25 hours per week in a private sec2 tor job.

3 ‘‘(2) AUTHORITY TO ALLOW REPEAT PARTICI4 PATION.—

5 ‘‘(A) IN GENERAL.—Subject to subpara6 graph (B) of this paragraph, a State may allow

7 an individual who, by reason of paragraph (1),

8 would be prohibited from participating in the

9 State program established under this part to

10 participate in the program for such additional

11 period or periods as the State determines ap12 propriate.

13 ‘‘(B) LIMITATION ON PERCENTAGE OF RE14 PEAT PARTICIPANTS.—

15 ‘‘(i) IN GENERAL.—Except as pro16 vided in clause (ii) of this subparagraph,

17 the number of individuals allowed under

18 subparagraph (A) to participate during a

19 program year in a State program estab20 lished under this part shall not exceed—

21 ‘‘(I) 10 percent of the total num22 ber of individuals who participated in

23 the State program established under

24 this part or the State program estab-
711

Title IX, Subtitle C

•HR 2530 IH

1 lished under part H during the imme2 diately preceding program year; or

3 ‘‘(II) in the case of fiscal year

4 2004 or any succeeding fiscal year, 15

5 percent of such total number of indi6 viduals.

7 ‘‘(ii) AUTHORITY TO INCREASE LIMI8 TATION.—

9 ‘‘(I) PETITION.—A State may re10 quest the Secretary to increase to not

11 more than 15 percent the percentage

12 limitation imposed by clause (i)(I) for

13 a fiscal year before fiscal year 2004.

14 ‘‘(II) AUTHORITY TO GRANT RE15 QUEST.—The Secretary may approve

16 a request made pursuant to subclause

17 (I) if the Secretary deems it appro18 priate. The Secretary shall develop

19 recommendations on the criteria that

20 should be applied in evaluating re21 quests under subclause (I).

22 ‘‘SEC. 488. CASELOAD PARTICIPATION RATES; PERFORM23 ANCE MEASURES.

24 ‘‘(a) PARTICIPATION RATES.—
712

Title IX, Subtitle C

•HR 2530 IH

1 ‘‘(1) REQUIREMENT.—A State that operates a

2 program under this part shall achieve a participation

3 rate for the following fiscal years of not less than

4 the following percentage:

‘‘Fiscal year: Percentage:

1997 ......................................................................................... 20

1998 ......................................................................................... 24

1999 ......................................................................................... 28

2000 ......................................................................................... 32

2001 ......................................................................................... 36

2002 ......................................................................................... 40

2003 or later ............................................................................ 52.

5 ‘‘(2) PARTICIPATION RATE DEFINED.—

6 ‘‘(A) IN GENERAL.—As used in this sub7 section, the term ‘participation rate’ means,

8 with respect to a State and a fiscal year, an

9 amount equal to—

10 ‘‘(i) the average monthly number of

11 individuals who, during the fiscal year,

12 participate in the State program estab13 lished under this part or (if applicable)

14 part G or H; divided by

15 ‘‘(ii) the average monthly number of

16 individuals who are not described in sec17 tion 402(c)(1)(D) and for whom an indi18 vidual responsibility plan is in effect under

19 section 403 during the fiscal year.

20 ‘‘(B) SPECIAL RULE.—For each of the 1st

21 12 months after an individual ceases to receive
713

Title IX, Subtitle C

•HR 2530 IH

1 assistance under a State plan approved under

2 part A by reason of having become employed

3 for more than 25 hours per week in an

4 unsubsidized job in the private sector, the indi5 vidual shall be considered to be participating in

6 the State program established under this part,

7 and to be an adult recipient of such assistance,

8 for purposes of subparagraph (A).

9 ‘‘(3) STATE COMPLIANCE REPORTS.—Each

10 State that operates a program under this part for a

11 fiscal year shall submit to the Secretary a report on

12 the participation rate of the State for the fiscal year.

13 ‘‘(4) EFFECT OF FAILURE TO MEET PARTICIPA14 TION RATES.—

15 ‘‘(A) IN GENERAL.—If a State reports that

16 the State has failed to achieve the participation

17 rate required by paragraph (1) for the fiscal

18 year, the Secretary may make recommendations

19 for changes in the State program established

20 under this part and (if the State has estab21 lished a program under part G) the State pro22 gram established under part G. The State may

23 elect to follow such recommendations, and shall

24 demonstrate to the Secretary how the State will

25 achieve the required participation rates.
714

Title IX, Subtitle C

•HR 2530 IH

1 ‘‘(B) SECOND CONSECUTIVE FAILURE.—

2 Notwithstanding subparagraph (A), if a State

3 fails to achieve the participation rate required

4 by paragraph (1) for 2 consecutive fiscal years,

5 the Secretary may—

6 ‘‘(i) require the State to make

7 changes in the State program established

8 under this part and (if the State has estab9 lished a program under part G) the State

10 program established under part G; and

11 ‘‘(ii) reduce by 5 percent the amount

12 otherwise payable to the State under sec13 tion 413.

14 ‘‘(b) PERFORMANCE STANDARDS.—The Secretary

15 shall develop standards to be used to measure the effec16 tiveness of the programs established under this part and

17 part G in moving recipients of assistance under the State

18 plan approved under part A into full-time unsubsidized

19 employment.

20 ‘‘(c) PERFORMANCE-BASED MEASURES.—

21 ‘‘(1) ESTABLISHMENT.—The Secretary shall, by

22 regulation, establish measures of the effectiveness of

23 the State programs established under this part and

24 under part G in moving recipients of assistance

25 under the State plan approved under part A into
715

Title IX, Subtitle C

•HR 2530 IH

1 full-time unsubsidized employment, based on the

2 performance of such programs.

3 ‘‘(2) ANNUAL COMPLIANCE REPORTS.—Each

4 State that operates a program under this part shall

5 submit to the Secretary annual reports that compare

6 the achievements of the program with the perform7 ance-based measures established under paragraph

8 (1).

9 ‘‘SEC. 489. FEDERAL ROLE.

10 ‘‘(a) APPROVAL OF STATE PLANS.—

11 ‘‘(1) IN GENERAL.—Within 60 days after the

12 date a State submits to the Secretary a plan that

13 provides for the establishment and operation of a

14 work first program that meets the requirements of

15 section 481, the Secretary shall approve the plan.

16 ‘‘(2) AUTHORITY TO EXTEND APPROVAL DEAD17 LINE.—The 60-day deadline established in para18 graph (1) with respect to a State may be extended

19 in accordance with an agreement between the Sec20 retary and the State.

21 ‘‘(b) PERFORMANCE-BASED MEASURES.—The Sec22 retary shall, by regulation, establish measures of the effec23 tiveness of the State program established under this part

24 and (if the State has established a program under part

25 G) the State program established under part G in moving
716

Title IX, Subtitle C

•HR 2530 IH

1 recipients of assistance under the State plan approved

2 under part A into full-time unsubsidized employment,

3 based on the performance of such programs.

4 ‘‘(c) EFFECT OF FAILURE TO MEET PARTICIPATION

5 RATES.—

6 ‘‘(1) IN GENERAL.—If a State reports that the

7 State has failed to achieve the participation rate re8 quired by section 488 for the fiscal year, the Sec9 retary may make recommendations for changes in

10 the State program established under this part and

11 (if the State has established a program under part

12 G) the State program established under part G. The

13 State may elect to follow such recommendations, and

14 shall demonstrate to the Secretary how the State

15 will achieve the required participation rates.

16 ‘‘(2) SECOND CONSECUTIVE FAILURE.—Not17 withstanding paragraph (1), if the State has failed

18 to achieve the participation rates required by section

19 488 for 2 consecutive fiscal years, the Secretary may

20 require the State to make changes in the State pro21 gram established under this part and (if the State

22 has established a program under part G) the State

23 program established under part G.
717

Title IX, Subtitle C

•HR 2530 IH

1 ‘‘Part G—Workfare Program

2 ‘‘SEC. 490. ESTABLISHMENT AND OPERATION OF PROGRAM.

3 ‘‘(a) IN GENERAL.—A State that establishes a work

4 first program under part F may establish and carry out

5 a workfare program that meets the requirements of this

6 part, unless the State has established a job placement

7 voucher program under part H.

8 ‘‘(b) OBJECTIVE.—The objective of the workfare pro9 gram is for each program participant to find and hold a

10 full-time unsubsidized paid job, and for this goal to be

11 achieved in a cost-effective fashion.

12 ‘‘(c) CASE MANAGEMENT TEAMS.—The State shall

13 assign to each program participant a case management

14 team that shall meet with the participant and assist the

15 participant to choose the most suitable workfare job under

16 subsection (e), (f), or (g) and to eventually obtain a full17 time unsubsidized paid job.

18 ‘‘(d) PROVISION OF JOBS.—The State shall provide

19 each participant in the program with a community service

20 job that meets the requirements of subsection (e) or a sub21 sidized job that meets the requirements of subsection (f)

22 or (g).

23 ‘‘(e) COMMUNITY SERVICE JOBS.—

24 ‘‘(1) IN GENERAL.—Except as provided in para25 graphs (2) and (3), each participant shall work for

26 not fewer than 30 hours per week (or, at the option
718

Title IX, Subtitle C

•HR 2530 IH

1 of the State, 20 hours per week during fiscal years

2 1997 and 1998, not fewer than 25 hours per week

3 during fiscal year 1999, not fewer than 30 hours per

4 week during fiscal years 2000 and 2001, and not

5 fewer than 35 hours per week thereafter) in a com6 munity service job, and be paid at a rate which is

7 not greater than 75 percent (or, at the option of the

8 State, 100 percent) of the maximum amount of as9 sistance that may be provided under the State plan

10 approved under part A to a family of the same size

11 and composition with no income.

12 ‘‘(2) EXCEPTION.—(A) If the participant has

13 obtained unsubsidized part-time employment in the

14 private sector, the State shall provide the participant

15 with a part-time community service job.

16 ‘‘(B) If the State provides a participant a part17 time community service job under subparagraph (A),

18 the State shall ensure that the participant works for

19 not fewer than 30 hours per week.

20 ‘‘(3) WAGES NOT CONSIDERED EARNED IN21 COME.—Wages paid under a workfare program shall

22 not be considered to be earned income for purposes

23 of any provision of law.
719

Title IX, Subtitle C

•HR 2530 IH

1 ‘‘(4) COMMUNITY SERVICE JOB DEFINED.—For

2 purposes of this section, the term ‘community serv3 ice job’ means—

4 ‘‘(A) a job provided to a participant by the

5 State administering the State plan under part

6 A; or

7 ‘‘(B) a job provided to a participant by any

8 other employer for which all or part of the

9 wages are paid by the State.

10 A State may provide or subsidize under the program

11 any job which the State determines to be appro12 priate.

13 ‘‘(f) TEMPORARY SUBSIDIZED JOB CREATION.—A

14 State that establishes a workfare program under this part

15 may establish a program similar to the program operated

16 by the State of Oregon, which is known as ‘JOBS Plus’.

17 ‘‘(g) WORK SUPPLEMENTATION PROGRAM.—

18 ‘‘(1) IN GENERAL.—A State that establishes a

19 workfare program under this part may institute a

20 work supplementation program under which the

21 State, to the extent it considers appropriate, may re22 serve the sums that would otherwise be payable to

23 participants in the program as a community service

24 minimum wage and use the sums instead for the
720

Title IX, Subtitle C

•HR 2530 IH

1 purpose of providing and subsidizing private sector

2 jobs for the participants.

3 ‘‘(2) EMPLOYER AGREEMENT.—An employer

4 who provides a private sector job to a participant

5 under paragraph (1) shall agree to provide to the

6 participant an amount in wages equal to the poverty

7 threshold for a family of three.

8 ‘‘(h) JOB SEARCH REQUIREMENT.—The State shall

9 require each participant to spend a minimum of 5 hours

10 per week on activities related to securing unsubsidized

11 full-time employment in the private sector.

12 ‘‘(i) DURATION OF PARTICIPATION.—

13 ‘‘(1) IN GENERAL.—Except as provided in para14 graph (2), an individual may not participate for

15 more than 2 years in a workfare program under this

16 part.

17 ‘‘(2) AUTHORITY TO ALLOW REPEATED PAR18 TICIPATION.—

19 ‘‘(A) IN GENERAL.—Subject to subpara20 graph (B), a State may allow an individual

21 who, by reason of paragraph (1), would be pro22 hibited from participating in the State program

23 established under this part to participate in the

24 program for such additional period or periods

25 as the State determines appropriate.
721

Title IX, Subtitle C

•HR 2530 IH

1 ‘‘(B) LIMITATION ON PERCENTAGE OF RE2 PEAT PARTICIPANTS.—

3 ‘‘(i) IN GENERAL.—Except as pro4 vided in clause (ii), the number of individ5 uals allowed under subparagraph (A) to

6 participate during a program year in a

7 State program established under this part

8 shall not exceed 10 percent of the total

9 number of individuals who participated in

10 the program during the immediately pre11 ceding program year.

12 ‘‘(ii) AUTHORITY TO INCREASE LIMI13 TATION.—

14 ‘‘(I) PETITION.—A State may re15 quest the Secretary to increase the

16 percentage limitation imposed by

17 clause (i) to not more than 15 per18 cent.

19 ‘‘(II) AUTHORITY TO GRANT RE20 QUEST.—The Secretary may approve

21 a request made pursuant to subclause

22 (I) if the Secretary deems it appro23 priate. The Secretary shall develop

24 recommendations on the criteria that
722

Title IX, Subtitle C

•HR 2530 IH

1 should be applied in evaluating re2 quests under subclause (I).

3 ‘‘(j) USE OF PLACEMENT COMPANIES.—A State that

4 establishes a workfare program under this part may enter

5 into contracts with private companies (whether operated

6 for profit or not for profit) for the placement of partici7 pants in the program in positions of full-time employment,

8 preferably in the private sector, for wages sufficient to

9 eliminate the need of such participants for cash assistance

10 in accordance with section 483.

11 ‘‘(k) MAXIMUM OF 3 COMMUNITY SERVICE JOBS.—

12 A program participant may not receive more than 3 com13 munity service jobs under the program.

14 ‘‘Part H—Job Placement Voucher Program

15 ‘‘SEC. 490A. JOB PLACEMENT VOUCHER PROGRAM.

16 ‘‘A State that is not operating a workfare program

17 under part G may establish a job placement voucher pro18 gram that meets the following requirements:

19 ‘‘(1) The program shall offer each program par20 ticipant a voucher which the participant may use to

21 obtain employment in the private sector.

22 ‘‘(2) An employer who receives a voucher issued

23 under the program from an individual may redeem

24 the voucher at any time after the individual has been

25 employed by the employer for 6 months, unless an-
723

Title IX, Subtitle C

•HR 2530 IH

1 other employee of the employer was displaced by the

2 employment of the individual.

3 ‘‘(3) Upon presentation of a voucher by an em4 ployer to the State agency responsible for the admin5 istration of the program, the State agency shall pay

6 to the employer an amount equal to 50 percent of

7 the total amount of assistance provided under the

8 State plan approved under part A to the family of

9 which the individual is a member for the most recent

10 12 months for which the family was eligible for such

11 assistance.’’.

12 (c) FUNDING.—Section 413(a), as added by section

13 9101(a) of this Act, is amended—

14 (1) by striking ‘‘Subject to’’ and inserting the

15 following:

16 ‘‘(1) IN GENERAL.—Subject to’’; and

17 (2) by inserting after and below the end the fol18 lowing:

19 ‘‘(2) WORK FIRST AND OTHER PROGRAMS.—(A)

20 Each State that is operating a program in accord21 ance with a plan approved under part F and a pro22 gram in accordance with part G or H shall be enti23 tled to payments under paragraph (3) for any fiscal

24 year in an amount equal to the sum of the applicable

25 percentages (specified in such paragraph) of its ex-
724

Title IX, Subtitle C

•HR 2530 IH

1 penditures to carry out such programs (subject to

2 limitations prescribed by or pursuant to such parts

3 or this part on expenditures that may be included

4 for purposes of determining payment under para5 graph (3)), but such payments for any fiscal year in

6 the case of any State may not exceed the limitation

7 determined under subparagraph (B) with respect to

8 the State.

9 ‘‘(B) The limitation determined under this sub10 paragraph with respect to a State for any fiscal year

11 is the amount that bears the same ratio to the

12 amount specified in subparagraph (C) for such fiscal

13 year as the average monthly number of adult recipi14 ents (as defined in subparagraph (D)) in the State

15 in the preceding fiscal year bears to the average

16 monthly number of such recipients in all the States

17 for such preceding year.

18 ‘‘(C)(i) The amount specified in this subpara19 graph is—

20 ‘‘(I) $1,600,000,000 for fiscal year 1997;

21 ‘‘(II) $1,600,000,000 for fiscal year 1998;

22 ‘‘(III) $1,900,000,000 for fiscal year 1999;

23 ‘‘(IV) $2,500,000,000 for fiscal year 2000;

24 and
725

Title IX, Subtitle C

•HR 2530 IH

1 ‘‘(V) $3,200,000,000 for fiscal year 2001;

2 and

3 ‘‘(VI) $4,700,000,000 for fiscal year 2002;

4 and

5 ‘‘(VII) the amount determined under

6 clause (ii) for fiscal year 2003 and each suc7 ceeding fiscal year.

8 ‘‘(ii) The amount determined under this clause

9 for a fiscal year is the product of the following:

10 ‘‘(I) The amount specified in this subpara11 graph for the immediately preceding fiscal year.

12 ‘‘(II) 1.00 plus the percentage (if any) by

13 which—

14 ‘‘(aa) the average of the Consumer

15 Price Index (as defined in section 1(f)(5)

16 of the Internal Revenue Code of 1986) for

17 the most recent 12-month period for which

18 such information is available; exceeds

19 ‘‘(bb) the average of the Consumer

20 Price Index (as so defined) for the 12-

21 month period ending on June 30 of the

22 2nd preceding fiscal year.

23 ‘‘(III) The amount that bears the same

24 ratio to the amount specified in this subpara25 graph for the immediately preceding fiscal year
726

Title IX, Subtitle C

•HR 2530 IH

1 as the number of individuals whom the Sec2 retary estimates will participate in programs

3 operated under part F, G, or H during the fis4 cal year bears to the total number of individuals

5 who participated in such programs during such

6 preceding fiscal year.

7 ‘‘(D) For purposes of this paragraph, the term

8 ‘adult recipient’ in the case of any State means an

9 individual other than a dependent child (unless such

10 child is the custodial parent of another dependent

11 child) whose needs are met (in whole or in part)

12 with assistance provided under the State plan ap13 proved under this part.

14 ‘‘(E) For purposes of subparagraph (D), the

15 term ‘dependent child’ means a needy child (i) who

16 has been deprived of parental support or care by

17 reason of the death, continued absence from the

18 home (other than absence occasioned solely by rea19 son of the performance of active duty in the uni20 formed services of the United States), or physical or

21 mental incapacity of a parent, and who is living with

22 his father, mother, grandfather, grandmother, broth23 er, sister, stepfather, stepmother, stepbrother, step24 sister, uncle, aunt, first cousin, nephew, or niece, in

25 a place of residence maintained by one or more of
727

Title IX, Subtitle C

•HR 2530 IH

1 such relatives as his or their own home, and (ii) who

2 is (I) under the age of eighteen, or (II) at the option

3 of the State, under the age of nineteen and a full4 time student in a secondary school (or in the equiva5 lent level of vocational or technical training), if, be6 fore he attains age nineteen, he may reasonably be

7 expected to complete the program of such secondary

8 school (or such training).

9 ‘‘(F) For purposes of subparagraph (E), the

10 term ‘relative with whom any dependent child is liv11 ing’ means the individual who is one of the relatives

12 specified in subparagraph (E) and with whom such

13 child is living (within the meaning of such sub14 section) in a place of residence maintained by such

15 individual (himself or together with any one or more

16 of the other relatives so specified) as his (or their)

17 own home.

18 ‘‘(3)(A) In lieu of any payment under para19 graph (1) therefor, the Secretary shall pay to each

20 State that is operating a program in accordance

21 with a plan approved under part F and a program

22 in accordance with part G or H, with respect to ex23 penditures by the State to carry out such programs,

24 an amount equal to—
728

Title IX, Subtitle C

•HR 2530 IH

1 ‘‘(i) with respect to so much of such ex2 penditures in a fiscal year as do not exceed the

3 State’s expenditures in the fiscal year 1987

4 with respect to which payments were made to

5 such State from its allotment for such fiscal

6 year pursuant to part C of this title as then in

7 effect, 90 percent; and

8 ‘‘(ii) with respect to so much of such ex9 penditures in a fiscal year as exceed the amount

10 described in clause (i)—

11 ‘‘(I) 50 percent, in the case of expend12 itures for administrative costs made by a

13 State in operating such programs for such

14 fiscal year (other than the personnel costs

15 for staff employed full-time in the oper16 ation of such program) and the costs of

17 transportation and other work-related sup18 portive services; and

19 ‘‘(II) 60 percent or the Federal medi20 cal assistance percentage (as defined in the

21 last sentence of section 1118), whichever is

22 the greater, in the case of expenditures

23 made by a State in operating such pro24 grams for such fiscal year (other than for

25 costs described in subclause (I)).
729

Title IX, Subtitle C

•HR 2530 IH

1 ‘‘(B) With respect to the amount for which pay2 ment is made to a State under subparagraph (A)(i),

3 the State’s expenditures for the costs of operating

4 such programs may be in cash or in kind, fairly eval5 uated.

6 ‘‘(C) Not more than 10 percent of the amount

7 payable to a State under this paragraph for a quar8 ter may be for expenditures made during the quarter

9 with respect to program participants who are not eli10 gible for assistance under the State plan approved

11 under this part.’’.

12 (d) SECRETARY’S SPECIAL ADJUSTMENT FUND.—

13 Section 413(a), as added by section 9101(a) of this Act,

14 is amended by adding at the end the following:

15 ‘‘(4) SECRETARY’S SPECIAL ADJUSTMENT

16 FUND.—(A) There shall be available to the Sec17 retary from the amount appropriated for payments

18 under paragraph (2) for States’ programs under

19 parts F and G for fiscal year 1996, $300,000,000

20 for special adjustments to States’ limitations on

21 Federal payments for such programs.

22 ‘‘(B) A State may, not later than March 1 and

23 September 1 of each fiscal year, submit to the Sec24 retary a request to adjust the limitation on pay25 ments under this section with respect to its program
730

Title IX, Subtitle C

•HR 2530 IH

1 under part F (and, in fiscal years after 1997) its

2 program under part G for the following fiscal year.

3 The Secretary shall only consider such a request

4 from a State which has, or which demonstrates con5 vincingly on the basis of estimates that it will, sub6 mit allowable claims for Federal payment in the full

7 amount available to it under paragraph (2) in the

8 current fiscal year and obligated 95 percent of its

9 full amount in the prior fiscal year. The Secretary

10 shall by regulation prescribe criteria for the equi11 table allocation among the States of Federal pay12 ments pursuant to adjustments of the limitations re13 ferred to in the preceding sentence in the case where

14 the requests of all States that the Secretary finds

15 reasonable exceed the amount available, and, within

16 30 days following the dates specified in this para17 graph, will notify each State whether one or more

18 of its limitations will be adjusted in accordance with

19 the State’s request and the amount of the adjust20 ment (which may be some or all of the amount re21 quested).

22 ‘‘(C) The Secretary may adjust the limitation

23 on Federal payments to a State for a fiscal year

24 under paragraph (2), and upon a determination by

25 the Secretary that (and the amount by which) a
731

Title IX, Subtitle C

•HR 2530 IH

1 State’s limitation should be raised, the amount spec2 ified in such paragraph shall be considered to be so

3 increased for the following fiscal year.

4 ‘‘(D) The amount made available under sub5 paragraph (A) for special adjustments shall remain

6 available to the Secretary until expended. That

7 amount shall be reduced by the sum of the adjust8 ments approved by the Secretary in any fiscal year,

9 and the amount shall be increased in a fiscal year

10 by the amount by which all States’ limitations under

11 paragraph (2) of this subsection and section 2008

12 for a fiscal year exceeded the sum of the Federal

13 payments under such provisons of law for such fiscal

14 year, but for fiscal years after 1997, such amount

15 at the end of such fiscal year shall not exceed

16 $400,000,000.’’.

17 (e) CONFORMING AMENDMENTS.—

18 (1) Section 1115(b)(2)(A) (42 U.S.C.

19 1315(b)(2)(A)) is amended by striking ‘‘, and

20 402(a)(19) (relating to the work incentive pro21 gram)’’.

22 (2) Section 1108 (42 U.S.C. 1308) is amend23 ed—
732

Title IX, Subtitle C

•HR 2530 IH

1 (A) in subsection (a), by striking ‘‘or, in

2 the case of part A of title IV, section 403(k)’’;

3 and

4 (B) in subsection (d), by striking ‘‘(exclu5 sive of any amounts on account of services and

6 items to which, in the case of part A of such

7 title, section 403(k) applies)’’.

8 (3) Section 1902(a)(10)(A)(i)(I) (42 U.S.C.

9 1396a(a)(19)(A)(i)(I)) is amended—

10 (A) by striking ‘‘402(a)(37), 406(h), or’’;

11 and

12 (B) by striking ‘‘482(e)(6)’’ and inserting

13 ‘‘486(f)’’.

14 (4) Section 1928(a)(1) (42 U.S.C. 1396s(a)(1))

15 is amended by striking ‘‘482(e)(6)’’ and inserting

16 ‘‘486(f)’’.

17 (f) INTENT OF THE CONGRESS.—The Congress in18 tends for State activities under section 484 of the Social

19 Security Act (as added by the amendment made by section

20 9301(a) of this Act) to emphasize the use of the funds

21 that would otherwise be used to provide individuals with

22 assistance under part A of title IV of the Social Security

23 Act and with food stamp benefits under the Food Stamp

24 Act of 1977, to subsidize the wages of such individuals

25 in temporary jobs.
733

Title IX, Subtitle C

•HR 2530 IH

1 (g) SENSE OF THE CONGRESS.—It is the sense of

2 the Congress that States should target individuals who

3 have not attained 25 years of age for participation in the

4 program established by the State under part F of title IV

5 of the Social Security Act (as added by the amendment

6 made by section 9301(a) of this section) in order to break

7 the cycle of welfare dependency.

8 SEC. 9302. REGULATIONS.

9 The Secretary of Health and Human Services shall

10 prescribe such regulations as may be necessary to imple11 ment the amendments made by this subtitle.

12 SEC. 9303. APPLICABILITY TO STATES.

13 (a) STATE OPTION TO ACCELERATE APPLICABIL14 ITY.—If a State formally notifies the Secretary of Health

15 and Human Services that the State desires to accelerate

16 the applicability to the State of the amendments made by

17 this subtitle, the amendments shall apply to the State on

18 and after such earlier date as the State may select.

19 (b) STATE OPTION TO DELAY APPLICABILITY UNTIL

20 WAIVERS EXPIRE.—The amendments made by this sub21 title shall not apply to a State with respect to which there

22 is in effect a waiver issued under section 1115 of the So23 cial Security Act for the State program established under

24 part F of title IV of such Act, until the waiver expires,

25 if the State formally notifies the Secretary of Health and
734

Title IX, Subtitle D

•HR 2530 IH

1 Human Services that the State desires to so delay such

2 effective date.

3 (c) AUTHORITY OF THE SECRETARY OF HEALTH

4 AND HUMAN SERVICES TO DELAY APPLICABILITY TO A

5 STATE.—If a State formally notifies the Secretary of

6 Health and Human Services that the State desires to

7 delay the applicability to the State of the amendments

8 made by this title, the amendments shall apply to the

9 State on and after any later date agreed upon by the Sec10 retary and the State.

11 Subtitle D—Family Responsibility

12 And Improved Child Support

13 Enforcement

14 CHAPTER 1—ELIGIBILITY AND OTHER

15 MATTERS CONCERNING TITLE IV–D

16 PROGRAM CLIENTS

17 SEC. 9401. STATE OBLIGATION TO PROVIDE PATERNITY ES18 TABLISHMENT AND CHILD SUPPORT EN19 FORCEMENT SERVICES.

20 (a) STATE LAW REQUIREMENTS.—Section 466(a)

21 (42 U.S.C. 666(a)) is amended by inserting after para22 graph (11) the following:

23 ‘‘(12) USE OF CENTRAL CASE REGISTRY AND

24 CENTRALIZED COLLECTIONS UNIT.—Procedures

25 under which—
735

Title IX, Subtitle D

•HR 2530 IH

1 ‘‘(A) every child support order established

2 or modified in the State on or after October 1,

3 1998, is recorded in the central case registry

4 established in accordance with section 454A(e);

5 and

6 ‘‘(B) child support payments are collected

7 through the centralized collections unit estab8 lished in accordance with section 454B—

9 ‘‘(i) on and after October 1, 1998,

10 under each order subject to wage withhold11 ing under section 466(b); and

12 ‘‘(ii) on and after October 1, 1999,

13 under each other order required to be re14 corded in such central case registry under

15 this paragraph or section 454A(e), except

16 as provided in subparagraph (C); and

17 ‘‘(C)(i) parties subject to a child support

18 order described in subparagraph (B)(ii) may

19 opt out of the procedure for payment of support

20 through the centralized collections unit (but not

21 the procedure for inclusion in the central case

22 registry) by filing with the State agency a writ23 ten agreement, signed by both parties, to an

24 alternative payment procedure; and
736

Title IX, Subtitle D

•HR 2530 IH

1 ‘‘(ii) an agreement described in clause (i)

2 becomes void whenever either party advises the

3 State agency of an intent to vacate the agree4 ment.’’.

5 (b) STATE PLAN REQUIREMENTS.—Section 454 (42

6 U.S.C. 654) is amended—

7 (1) by striking paragraph (4) and inserting the

8 following:

9 ‘‘(4) provide that such State will undertake—

10 ‘‘(A) to provide appropriate services under

11 this part to—

12 ‘‘(i) each child with respect to whom

13 an assignment is effective under section

14 403(b)(1)(E)(i), 471(a)(17), or 1912 (ex15 cept in cases where the State agency deter16 mines, in accordance with paragraph (25),

17 that it is against the best interests of the

18 child to do so); and

19 ‘‘(ii) each child not described in clause

20 (i)—

21 ‘‘(I) with respect to whom an in22 dividual applies for such services; and

23 ‘‘(II) (on and after October 1,

24 1998) each child with respect to

25 whom a support order is recorded in
737

Title IX, Subtitle D

•HR 2530 IH

1 the central State case registry estab2 lished under section 454A, regardless

3 of whether application is made for

4 services under this part; and

5 ‘‘(B) to enforce the support obligation es6 tablished with respect to the custodial parent of

7 a child described in subparagraph (A) unless

8 the parties to the order which establishes the

9 support obligation have opted, in accordance

10 with section 466(a)(12)(C), for an alternative

11 payment procedure.’’; and

12 (2) in paragraph (6)—

13 (A) by striking subparagraph (A) and in14 serting the following:

15 ‘‘(A) services under the State plan shall be

16 made available to nonresidents on the same

17 terms as to residents;’’;

18 (B) in subparagraph (B)—

19 (i) by inserting ‘‘on individuals not re20 ceiving assistance under part A’’ after

21 ‘‘such services shall be imposed’’; and

22 (ii) by inserting ‘‘but no fees or costs

23 shall be imposed on any absent or custo24 dial parent or other individual for inclusion
738

Title IX, Subtitle D

•HR 2530 IH

1 in the central State registry maintained

2 pursuant to section 454A(e)’’; and

3 (C) in each of subparagraphs (B), (C), and

4 (D)—

5 (i) by indenting such subparagraph

6 and aligning its left margin with the left

7 margin of subparagraph (A); and

8 (ii) by striking the final comma and

9 inserting a semicolon.

10 (c) CONFORMING AMENDMENTS.—

11 (1) Section 452(g)(2)(A) (42 U.S.C.

12 652(g)(2)(A)) is amended by striking ‘‘454(6)’’ each

13 place it appears and inserting ‘‘454(4)(A)(ii)’’.

14 (2) Section 454(23) (42 U.S.C. 654(23)) is

15 amended, effective October 1, 1998, by striking ‘‘in16 formation as to any application fees for such services

17 and’’.

18 (3) Section 466(a)(3)(B) (42 U.S.C.

19 666(a)(3)(B)) is amended by striking ‘‘in the case of

20 overdue support which a State has agreed to collect

21 under section 454(6)’’ and inserting ‘‘in any other

22 case’’.

23 (4) Section 466(e) (42 U.S.C. 666(e)) is

24 amended by striking ‘‘or (6)’’.
739

Title IX, Subtitle D

•HR 2530 IH

1 SEC. 9402. DISTRIBUTION OF PAYMENTS.

2 (a) DISTRIBUTIONS THROUGH STATE CHILD SUP3 PORT ENFORCEMENT AGENCY TO FORMER ASSISTANCE

4 RECIPIENTS.—Section 454(5) (42 U.S.C. 654(5)) is

5 amended—

6 (1) in subparagraph (A)—

7 (A) by striking section 402(a)(26) is effec8 tive,’’ and inserting ‘‘section 403(b)(1)(E)(i) is

9 effective, except as otherwise specifically pro10 vided in section 464 or 466(a)(3),’’; and

11 (B) by striking ‘‘except that’’ and all that

12 follows through the semicolon; and

13 (2) in subparagraph (B), by striking ‘‘, except’’

14 and all that follows through ‘‘medical assistance’’.

15 (b) DISTRIBUTION TO A FAMILY CURRENTLY RE16 CEIVING TEMPORARY EMPLOYMENT ASSISTANCE.—Sec17 tion 457 (42 U.S.C. 657) is amended—

18 (1) by striking subsection (a) and redesignating

19 subsection (b) as subsection (a);

20 (2) in subsection (a) (as so redesignated)—

21 (A) in the matter preceding paragraph (2),

22 to read as follows:

23 ‘‘(a) IN THE CASE OF A FAMILY RECEIVING TEA.—

24 Amounts collected under this part during any month as

25 support of a child who is receiving assistance under part

26 A (or a parent or caretaker relative of such a child) shall
740

Title IX, Subtitle D

•HR 2530 IH

1 (except in the case of a State exercising the option under

2 subsection (b)) be distributed as follows:

3 ‘‘(1) an amount equal to the amount that will

4 be disregarded pursuant to section 402(d)(2)(C)

5 shall be taken from each of—

6 ‘‘(A) the amounts received in a month

7 which represent payments for that month; and

8 ‘‘(B) the amounts received in a month

9 which represent payments for a prior month

10 which were made by the absent parent in that

11 prior month;

12 and shall be paid to the family without affecting its

13 eligibility for assistance or decreasing any amount

14 otherwise payable as assistance to such family dur15 ing such month;’’;

16 (B) in paragraph (4), by striking ‘‘or (B)’’

17 and all that follows through the period and in18 serting ‘‘; then (B) from any remainder,

19 amounts equal to arrearages of such support

20 obligations assigned, pursuant to part A, to any

21 other State or States shall be paid to such

22 other State or States and used to pay any such

23 arrearages (with appropriate reimbursement of

24 the Federal Government to the extent of its
741

Title IX, Subtitle D

•HR 2530 IH

1 participation in the financing); and then (C)

2 any remainder shall be paid to the family.’’; and

3 (3) by inserting after subsection (a) (as so re4 designated) the following new subsection:

5 ‘‘(b) ALTERNATIVE DISTRIBUTION IN CASE OF FAM6 ILY RECEIVING TEA.—In the case of a State electing the

7 option under this subsection, amounts collected as de8 scribed in subsection (a) shall be distributed as follows:

9 ‘‘(1) an amount equal to the amount that will

10 be disregarded pursuant to section 402(d)(2)(C)

11 shall be taken from each of—

12 ‘‘(A) the amounts received in a month

13 which represent payments for that month; and

14 ‘‘(B) the amounts received in a month

15 which represent payments for a prior month

16 which were made by the absent parent in that

17 prior month;

18 and shall be paid to the family without affecting its

19 eligibility for assistance or decreasing any amount

20 otherwise payable as assistance to such family dur21 ing such month;

22 ‘‘(2) second, from any remainder, amounts

23 equal to the balance of support owed for the current

24 month shall be paid to the family;
742

Title IX, Subtitle D

•HR 2530 IH

1 ‘‘(3) third, from any remainder, amounts equal

2 to arrearages of such support obligations assigned,

3 pursuant to part A, to the State making the collec4 tion shall be retained and used by such State to pay

5 any such arrearages (with appropriate reimburse6 ment of the Federal Government to the extent of its

7 participation in the financing);

8 ‘‘(4) fourth, from any remainder, amounts

9 equal to arrearages of such support obligations as10 signed, pursuant to part A, to any other State or

11 States shall be paid to such other State or States

12 and used to pay any such arrearages (with appro13 priate reimbursement of the Federal Government to

14 the extent of its participation in the financing); and

15 ‘‘(5) fifth, any remainder shall be paid to the

16 family.’’.

17 (c) DISTRIBUTION TO A FAMILY NOT RECEIVING

18 TEA.—Section 457(c) (42 U.S.C. 657(c)) is amended to

19 read as follows:

20 ‘‘(c) DISTRIBUTIONS IN CASE OF FAMILY NOT RE21 CEIVING TEA.—Amounts collected by a State agency

22 under this part during any month as support of a child

23 who is not receiving assistance under part A (or of a par24 ent or caretaker relative of such a child) shall (subject to
743

Title IX, Subtitle D

•HR 2530 IH

1 the remaining provisions of this section) be distributed as

2 follows:

3 ‘‘(1) first, amounts equal to the total of such

4 support owed for such month shall be paid to the

5 family;

6 ‘‘(2) second, from any remainder, amounts

7 equal to arrearages of such support obligations for

8 months during which such child did not receive as9 sistance under part A shall be paid to the family;

10 ‘‘(3) third, from any remainder, amounts equal

11 to arrearages of such support obligations assigned to

12 the State making the collection pursuant to part A

13 shall be retained and used by such State to pay any

14 such arrearages (with appropriate reimbursement of

15 the Federal Government to the extent of its partici16 pation in the financing); and

17 ‘‘(4) fourth, from any remainder, amounts

18 equal to arrearages of such support obligations as19 signed to any other State pursuant to part A shall

20 be paid to such other State or States, and used to

21 pay such arrearages, in the order in which such ar22 rearages accrued (with appropriate reimbursement

23 of the Federal Government to the extent of its par24 ticipation in the financing).’’.
744

Title IX, Subtitle D

•HR 2530 IH

1 (d) DISTRIBUTION TO A CHILD RECEIVING ASSIST2 ANCE UNDER TITLE IV–E.—Section 457(d) (42 U.S.C.

3 657(d)) is amended, in the matter preceding paragraph

4 (1), by striking ‘‘Notwithstanding the preceding provisions

5 of this section, amounts’’ and inserting the following:

6 ‘‘(d) DISTRIBUTIONS IN CASE OF A CHILD RECEIV7 ING ASSISTANCE UNDER TITLE IV–E.—Amounts’’.

8 (e) REGULATIONS.—The Secretary of Health and

9 Human Services shall promulgate regulations under part

10 A of title IV of the Social Security Act, establishing stand11 ards applicable to States electing the alternative formula

12 under section 457(b) of such Act for distribution of collec13 tions on behalf of families receiving temporary employ14 ment assistance, designed to minimize irregular monthly

15 payments to such families.

16 (f) CLERICAL AMENDMENTS.—Section 454 (42

17 U.S.C. 654) is amended—

18 (1) in paragraph (11)—

19 (A) by striking ‘‘(11)’’ and inserting

20 ‘‘(11)(A)’’; and

21 (B) by inserting after the semicolon ‘‘and’’;

22 and

23 (2) by redesignating paragraph (12) as sub24 paragraph (B) of paragraph (11).

25 (g) EFFECTIVE DATES.—
745

Title IX, Subtitle D

•HR 2530 IH

1 (1) IN GENERAL.—Except as otherwise pro2 vided in this subsection, the amendments made by

3 this section shall become effective on October 1,

4 1996.

5 (2) FAMILY NOT RECEIVING TEA.—The amend6 ment made by subsection (c) shall become effective

7 on October 1, 1999.

8 (3) SPECIAL RULES.—

9 (A) APPLICABILITY.—A State may elect to

10 have the amendments made by any subsection

11 of this section become effective only with re12 spect to child support cases beginning on or

13 after the effective date of such subsection.

14 (B) DELAYED IMPLEMENTATION.—A State

15 may elect to have the amendments made by this

16 section (other than subsection (c)) become ef17 fective on a date later than October 1, 1996,

18 which date shall coincide with the operation of

19 the single statewide automated data processing

20 and information retrieval system required by

21 section 454A of the Social Security Act (as

22 added by section 9415(a)(2) of this Act) and

23 the State centralized collection unit required by

24 section 454B of the Social Security Act (as

25 added by section 9422(b) of this Act).
746

Title IX, Subtitle D

•HR 2530 IH

1 SEC. 9403. DUE PROCESS RIGHTS.

2 (a) IN GENERAL.—Section 454 (42 U.S.C. 654), as

3 amended by section 9402(f) of this Act, is amended by

4 inserting after paragraph (11) the following new para5 graph:

6 ‘‘(12) provide for procedures to ensure that—

7 ‘‘(A) individuals who are applying for or

8 receiving services under this part, or are parties

9 to cases in which services are being provided

10 under this part—

11 ‘‘(i) receive notice of all proceedings in

12 which support obligations might be estab13 lished or modified; and

14 ‘‘(ii) receive a copy of any order estab15 lishing or modifying a child support obliga16 tion, or (in the case of a petition for modi17 fication) a notice of determination that

18 there should be no change in the amount

19 of the child support award, within 14 days

20 after issuance of such order or determina21 tion;

22 ‘‘(B) individuals applying for or receiving

23 services under this part have access to a fair

24 hearing that meets standards established by the

25 Secretary and ensures prompt consideration

26 and resolution of complaints (but the resort to
747

Title IX, Subtitle D

•HR 2530 IH

1 such procedure shall not stay the enforcement

2 of any support order); and

3 ‘‘(C) individuals adversely affected by the

4 establishment or modification of (or, in the case

5 of a petition for modification, the determination

6 that there should be no change in) a child sup7 port order shall be afforded not less than 30

8 days after the receipt of the order or determina9 tion to initiate proceedings to challenge such

10 order or determination;’’.

11 (b) EFFECTIVE DATE.—The amendment made by

12 subsection (a) shall become effective on October 1, 1997.

13 SEC. 9404. PRIVACY SAFEGUARDS.

14 (a) STATE PLAN REQUIREMENT.—Section 454 (42

15 U.S.C. 454) is amended—

16 (1) by striking ‘‘and’’ at the end of paragraph

17 (23);

18 (2) by striking the period at the end of para19 graph (24) and inserting ‘‘; and’’; and

20 (3) by adding after paragraph (24) the follow21 ing:

22 ‘‘(25) will have in effect safeguards applicable

23 to all sensitive and confidential information handled

24 by the State agency designed to protect the privacy

25 rights of the parties, including—
748

Title IX, Subtitle D

•HR 2530 IH

1 ‘‘(A) safeguards against unauthorized use

2 or disclosure of information relating to proceed3 ings or actions to establish paternity, or to es4 tablish or enforce support;

5 ‘‘(B) prohibitions on the release of infor6 mation on the whereabouts of one party to an7 other party against whom a protective order

8 with respect to the former party has been en9 tered; and

10 ‘‘(C) prohibitions on the release of infor11 mation on the whereabouts of one party to an12 other party if the State has reason to believe

13 that the release of the information may result

14 in physical or emotional harm to the former

15 party.’’.

16 (b) EFFECTIVE DATE.—The amendment made by

17 subsection (a) shall become effective on October 1, 1997.

18 CHAPTER 2—PROGRAM ADMINISTRATION

19 AND FUNDING

20 SEC. 9411. FEDERAL MATCHING PAYMENTS.

21 (a) INCREASED BASE MATCHING RATE.—Section

22 455(a)(2) (42 U.S.C. 655(a)(2)) is amended to read as

23 follows:

24 ‘‘(2) The applicable percent for a quarter for

25 purposes of paragraph (1)(A) is—
749

Title IX, Subtitle D

•HR 2530 IH

1 ‘‘(A) for fiscal year 1997, 69 percent,

2 ‘‘(B) for fiscal year 1998, 72 percent, and

3 ‘‘(C) for fiscal year 1999 and succeeding

4 fiscal years, 75 percent.’’.

5 (b) MAINTENANCE OF EFFORT.—Section 455 (42

6 U.S.C. 655) is amended—

7 (1) in subsection (a)(1), in the matter preced8 ing subparagraph (A), by striking ‘‘From’’ and in9 serting ‘‘Subject to subsection (c), from’’; and

10 (2) by inserting after subsection (b) the follow11 ing new subsection:

12 ‘‘(c) MAINTENANCE OF EFFORT.—Notwithstanding

13 the provisions of subsection (a), total expenditures for the

14 State program under this part for fiscal year 1997 and

15 each succeeding fiscal year, reduced by the percentage

16 specified for such fiscal year under subsection (a)(2)(A),

17 (B), or (C)(i), shall not be less than such total expendi18 tures for fiscal year 1996, reduced by 66 percent.’’.

19 SEC. 9412. PERFORMANCE-BASED INCENTIVES AND PEN20 ALTIES.

21 (a) INCENTIVE ADJUSTMENTS TO FEDERAL MATCH22 ING RATE.—Section 458 (42 U.S.C. 658) is amended to

23 read as follows:

24 ‘‘INCENTIVE ADJUSTMENTS TO MATCHING RATE

25 ‘‘SEC. 458. (a) INCENTIVE ADJUSTMENT.—(1) IN

26 GENERAL.—In order to encourage and reward State child
750

Title IX, Subtitle D

•HR 2530 IH

1 support enforcement programs which perform in an effec2 tive manner, the Federal matching rate for payments to

3 a State under section 455(a)(1)(A), for each fiscal year

4 beginning on or after October 1, 1998, shall be increased

5 by a factor reflecting the sum of the applicable incentive

6 adjustments (if any) determined in accordance with regu7 lations under this section with respect to Statewide pater8 nity establishment and to overall performance in child sup9 port enforcement.

10 ‘‘(2) STANDARDS.—(A) IN GENERAL.—The Sec11 retary shall specify in regulations—

12 ‘‘(i) the levels of accomplishment, and rates of

13 improvement as alternatives to such levels, which

14 States must attain to qualify for incentive adjust15 ments under this section; and

16 ‘‘(ii) the amounts of incentive adjustment that

17 shall be awarded to States achieving specified ac18 complishment or improvement levels, which amounts

19 shall be graduated, ranging up to—

20 ‘‘(I) 5 percentage points, in connection

21 with Statewide paternity establishment; and

22 ‘‘(II) 10 percentage points, in connection

23 with overall performance in child support en24 forcement.
751

Title IX, Subtitle D

•HR 2530 IH

1 ‘‘(B) LIMITATION.—In setting performance stand2 ards pursuant to subparagraph (A)(i) and adjustment

3 amounts pursuant to subparagraph (A)(ii), the Secretary

4 shall ensure that the aggregate number of percentage

5 point increases as incentive adjustments to all States do

6 not exceed such aggregate increases as assumed by the

7 Secretary in estimates of the cost of this section as of

8 June 1995, unless the aggregate performance of all States

9 exceeds the projected aggregate performance of all States

10 in such cost estimates.

11 ‘‘(3) DETERMINATION OF INCENTIVE ADJUST12 MENT.—The Secretary shall determine the amount (if

13 any) of incentive adjustment due each State on the basis

14 of the data submitted by the State pursuant to section

15 454(15)(B) concerning the levels of accomplishment (and

16 rates of improvement) with respect to performance indica17 tors specified by the Secretary pursuant to this section.

18 ‘‘(4) FISCAL YEAR SUBJECT TO INCENTIVE ADJUST19 MENT.—The total percentage point increase determined

20 pursuant to this section with respect to a State program

21 in a fiscal year shall apply as an adjustment to the appli22 cable percent under section 455(a)(2) for payments to

23 such State for the succeeding fiscal year.

24 ‘‘(5) RECYCLING OF INCENTIVE ADJUSTMENT.—A

25 State shall expend in the State program under this part
752

Title IX, Subtitle D

•HR 2530 IH

1 all funds paid to the State by the Federal Government

2 as a result of an incentive adjustment under this section.

3 ‘‘(b) MEANING OF TERMS.—For purposes of this sec4 tion—

5 ‘‘(1) the term ‘Statewide paternity establish6 ment percentage’ means, with respect to a fiscal

7 year, the ratio (expressed as a percentage) of—

8 ‘‘(A) the total number of out-of-wedlock

9 children in the State under one year of age for

10 whom paternity is established or acknowledged

11 during the fiscal year, to

12 ‘‘(B) the total number of children born out

13 of wedlock in the State during such fiscal year;

14 and

15 ‘‘(2) the term ‘overall performance in child sup16 port enforcement’ means a measure or measures of

17 the effectiveness of the State agency in a fiscal year

18 which takes into account factors including—

19 ‘‘(A) the percentage of cases requiring a

20 child support order in which such an order was

21 established;

22 ‘‘(B) the percentage of cases in which child

23 support is being paid;

24 ‘‘(C) the ratio of child support collected to

25 child support due; and
753

Title IX, Subtitle D

•HR 2530 IH

1 ‘‘(D) the cost-effectiveness of the State

2 program, as determined in accordance with

3 standards established by the Secretary in regu4 lations.’’.

5 (b) ADJUSTMENT OF PAYMENTS UNDER PART D OF

6 TITLE IV.—Section 455(a)(2) (42 U.S.C. 655(a)(2)), as

7 amended by section 9411(a) of this Act, is amended—

8 (1) by striking the period at the end of sub9 paragraph (C)(ii) and inserting a comma; and

10 (2) by adding after and below subparagraph

11 (C), flush with the left margin of the subsection, the

12 following:

13 ‘‘increased by the incentive adjustment factor (if any) de14 termined by the Secretary pursuant to section 458.’’.

15 (c) CONFORMING AMENDMENTS.—Section 454(22)

16 (42 U.S.C. 654(22)) is amended—

17 (1) by striking ‘‘incentive payments’’ the first

18 place it appears and inserting ‘‘incentive adjust19 ments’’; and

20 (2) by striking ‘‘any such incentive payments

21 made to the State for such period’’ and inserting

22 ‘‘any increases in Federal payments to the State re23 sulting from such incentive adjustments’’.

24 (d) CALCULATION OF IV–D PATERNITY ESTABLISH25 MENT PERCENTAGE.—(1) Section 452(g)(1) (42 U.S.C.
754

Title IX, Subtitle D

•HR 2530 IH

1 652(g)(1)) is amended in the matter preceding subpara2 graph (A) by inserting ‘‘its overall performance in child

3 support enforcement is satisfactory (as defined in section

4 458(b) and regulations of the Secretary), and’’ after

5 ‘‘1994,’’.

6 (2) Section 452(g)(2) (42 U.S.C. 652(g)(2)) is

7 amended—

8 (A) in subparagraph (A), in the matter preced9 ing clause (i)—

10 (i) by striking ‘‘paternity establishment

11 percentage’’ and inserting ‘‘IV–D paternity es12 tablishment percentage’’; and

13 (ii) by striking ‘‘(or all States, as the case

14 may be)’’;

15 (B) in subparagraph (A)(i), by striking ‘‘during

16 the fiscal year’’;

17 (C) in subparagraph (A)(ii)(I), by striking ‘‘as

18 of the end of the fiscal year’’ and inserting ‘‘in the

19 fiscal year or, at the option of the State, as of the

20 end of such year’’;

21 (D) in subparagraph (A)(ii)(II), by striking ‘‘or

22 (E) as of the end of the fiscal year’’ and inserting

23 ‘‘in the fiscal year or, at the option of the State, as

24 of the end of such year’’;

25 (E) in subparagraph (A)(iii)—
755

Title IX, Subtitle D

•HR 2530 IH

1 (i) by striking ‘‘during the fiscal year’’;

2 and

3 (ii) by striking ‘‘and’’ at the end; and

4 (F) in the matter following subparagraph (A)—

5 (i) by striking ‘‘who were born out of wed6 lock during the immediately preceding fiscal

7 year’’ and inserting ‘‘born out of wedlock’’;

8 (ii) by striking ‘‘such preceding fiscal

9 year’’ both places it appears and inserting ‘‘the

10 preceding fiscal year’’; and

11 (iii) by striking ‘‘or (E)’’ the second place

12 it appears.

13 (3) Section 452(g)(3) (42 U.S.C. 652(g)(3)) is

14 amended—

15 (A) by striking subparagraph (A) and redesig16 nating subparagraphs (B) and (C) as subparagraphs

17 (A) and (B), respectively;

18 (B) in subparagraph (A), as redesignated, by

19 striking ‘‘the percentage of children born out-of-wed20 lock in the State’’ and inserting ‘‘the percentage of

21 children in the State who are born out of wedlock

22 or for whom support has not been established’’; and

23 (C) in subparagraph (B), as redesignated—
756

Title IX, Subtitle D

•HR 2530 IH

1 (i) by inserting ‘‘and overall performance

2 in child support enforcement’’ after ‘‘paternity

3 establishment percentages’’; and

4 (ii) by inserting ‘‘and securing support’’

5 before the period.

6 (e) REDUCTION OF PAYMENTS UNDER PART D OF

7 TITLE IV.—

8 (1) NEW REQUIREMENTS.—Section 455 (42

9 U.S.C. 655) is amended by inserting after sub10 section (b) the following:

11 ‘‘(c)(1) If the Secretary finds, with respect to a State

12 program under this part in a fiscal year beginning on or

13 after October 1, 1997—

14 ‘‘(A)(i) on the basis of data submitted by a

15 State pursuant to section 454(15)(B), that the State

16 program in such fiscal year failed to achieve the IV–

17 D paternity establishment percentage (as defined in

18 section 452(g)(2)(A)) or the appropriate level of

19 overall performance in child support enforcement (as

20 defined in section 458(b)(2)), or to meet other per21 formance measures that may be established by the

22 Secretary, or

23 ‘‘(ii) on the basis of an audit or audits of such

24 State data conducted pursuant to section

25 452(a)(4)(C), that the State data submitted pursu-
757

Title IX, Subtitle D

•HR 2530 IH

1 ant to section 454(15)(B) is incomplete or unreli2 able; and

3 ‘‘(B) that, with respect to the succeeding fiscal

4 year—

5 ‘‘(i) the State failed to take sufficient cor6 rective action to achieve the appropriate per7 formance levels as described in subparagraph

8 (A)(i) of this paragraph, or

9 ‘‘(ii) the data submitted by the State pur10 suant to section 454(15)(B) is incomplete or

11 unreliable,

12 the amounts otherwise payable to the State under this

13 part for quarters following the end of such succeeding fis14 cal year, prior to quarters following the end of the first

15 quarter throughout which the State program is in compli16 ance with such performance requirement, shall be reduced

17 by the percentage specified in paragraph (2).

18 ‘‘(2) The reductions required under paragraph (1)

19 shall be—

20 ‘‘(A) not less than 6 nor more than 8 percent,

21 or

22 ‘‘(B) not less than 8 nor more than 12 percent,

23 if the finding is the second consecutive finding made

24 pursuant to paragraph (1), or
758

Title IX, Subtitle D

•HR 2530 IH

1 ‘‘(C) not less than 12 nor more than 15 per2 cent, if the finding is the third or a subsequent con3 secutive such finding.

4 ‘‘(3) For purposes of this subsection, section 405(d),

5 and section 452(a)(4), a State which is determined as a

6 result of an audit to have submitted incomplete or unreli7 able data pursuant to section 454(15)(B), shall be deter8 mined to have submitted adequate data if the Secretary

9 determines that the extent of the incompleteness or

10 unreliability of the data is of a technical nature which does

11 not adversely affect the determination of the level of the

12 State’s performance.’’.

13 (2) CONFORMING AMENDMENTS.—

14 (A) Section 452(a)(4) (42 U.S.C.

15 652(a)(4)) is amended by striking ‘‘403(h)’’

16 each place such term appears and inserting

17 ‘‘455(c)’’.

18 (B) Subsections (d)(3)(A), (g)(1), and

19 (g)(3)(A) of section 452 (42 U.S.C. 652) are

20 each amended by striking ‘‘403(h)’’ and insert21 ing ‘‘455(c)’’.

22 (f) EFFECTIVE DATES.—

23 (1) INCENTIVE ADJUSTMENTS.—(A) The

24 amendments made by subsections (a), (b), and (c)
759

Title IX, Subtitle D

•HR 2530 IH

1 shall become effective October 1, 1997, except to the

2 extent provided in subparagraph (B).

3 (B) Section 458 of the Social Security Act, as

4 in effect prior to the enactment of this section, shall

5 be effective for purposes of incentive payments to

6 States for fiscal years prior to fiscal year 1999.

7 (2) PENALTY REDUCTIONS.—(A) The amend8 ments made by subsection (d) shall become effective

9 with respect to calendar quarters beginning on and

10 after the date of enactment of this Act.

11 (B) The amendments made by subsection (e)

12 shall become effective with respect to calendar quar13 ters beginning on and after the date one year after

14 the date of enactment of this Act.

15 SEC. 9413. FEDERAL AND STATE REVIEWS AND AUDITS.

16 (a) STATE AGENCY ACTIVITIES.—Section 454 (42

17 U.S.C. 654) is amended—

18 (1) in paragraph (14), by striking ‘‘(14)’’ and

19 inserting ‘‘(14)(A)’’;

20 (2) by redesignating paragraph (15) as sub21 paragraph (B) of paragraph (14); and

22 (3) by inserting after paragraph (14) the fol23 lowing new paragraph:

24 ‘‘(15) provide for—
760

Title IX, Subtitle D

•HR 2530 IH

1 ‘‘(A) a process for annual reviews of and

2 reports to the Secretary on the State program

3 under this part, which shall include such infor4 mation as may be necessary to measure State

5 compliance with Federal requirements for expe6 dited procedures and timely case processing,

7 using such standards and procedures as are re8 quired by the Secretary, under which the State

9 agency will determine the extent to which such

10 program is in conformity with applicable re11 quirements with respect to the operation of

12 State programs under this part (including the

13 status of complaints filed under the procedure

14 required under paragraph (12)(B)); and

15 ‘‘(B) a process of extracting from the

16 State automated data processing system and

17 transmitting to the Secretary data and calcula18 tions concerning the levels of accomplishment

19 (and rates of improvement) with respect to ap20 plicable performance indicators (including IV–D

21 paternity establishment percentages and overall

22 performance in child support enforcement) to

23 the extent necessary for purposes of sections

24 452(g) and 458.’’.
761

Title IX, Subtitle D

•HR 2530 IH

1 (b) FEDERAL ACTIVITIES.—Section 452(a)(4) (42

2 U.S.C. 652(a)(4)) is amended to read as follows:

3 ‘‘(4)(A) review data and calculations transmit4 ted by State agencies pursuant to section

5 454(15)(B) on State program accomplishments with

6 respect to performance indicators for purposes of

7 section 452(g) and 458, and determine the amount

8 (if any) of penalty reductions pursuant to section

9 455(c) to be applied to the State;

10 ‘‘(B) review annual reports by State agencies

11 pursuant to section 454(15)(A) on State program

12 conformity with Federal requirements; evaluate any

13 elements of a State program in which significant de14 ficiencies are indicated by such report on the status

15 of complaints under the State procedure under sec16 tion 454(12)(B); and, as appropriate, provide to the

17 State agency comments, recommendations for addi18 tional or alternative corrective actions, and technical

19 assistance; and

20 ‘‘(C) conduct audits, in accordance with the

21 government auditing standards of the United States

22 Comptroller General—

23 ‘‘(i) at least once every 3 years (or more

24 frequently, in the case of a State which fails to

25 meet requirements of this part, or of regula-
762

Title IX, Subtitle D

•HR 2530 IH

1 tions implementing such requirements, concern2 ing performance standards and reliability of

3 program data) to assess the completeness, reli4 ability, and security of the data, and the accu5 racy of the reporting systems, used for the cal6 culations of performance indicators specified in

7 subsection (g) and section 458;

8 ‘‘(ii) of the adequacy of financial manage9 ment of the State program, including assess10 ments of—

11 ‘‘(I) whether Federal and other funds

12 made available to carry out the State pro13 gram under this part are being appro14 priately expended, and are properly and

15 fully accounted for; and

16 ‘‘(II) whether collections and disburse17 ments of support payments and program

18 income are carried out correctly and are

19 properly and fully accounted for; and

20 ‘‘(iii) for such other purposes as the Sec21 retary may find necessary;’’.

22 (c) EFFECTIVE DATE.—The amendments made by

23 this section shall be effective with respect to calendar

24 quarters beginning on or after the date one year after en25 actment of this section.
763

Title IX, Subtitle D

•HR 2530 IH

1 SEC. 9414. REQUIRED REPORTING PROCEDURES.

2 (a) ESTABLISHMENT.—Section 452(a)(5) (42 U.S.C.

3 652(a)(5)) is amended by inserting ‘‘, and establish proce4 dures to be followed by States for collecting and reporting

5 information required to be provided under this part, and

6 establish uniform definitions (including those necessary to

7 enable the measurement of State compliance with the re8 quirements of this part relating to expedited processes and

9 timely case processing) to be applied in following such pro10 cedures’’ before the semicolon.

11 (b) STATE PLAN REQUIREMENT.—Section 454 (42

12 U.S.C. 654), as amended by section 9404(a) of this Act,

13 is amended—

14 (1) by striking ‘‘and’’ at the end of paragraph

15 (24);

16 (2) by striking the period at the end of para17 graph (25) and inserting ‘‘; and’’; and

18 (3) by adding after paragraph (25) the follow19 ing:

20 ‘‘(26) provide that the State shall use the defi21 nitions established under section 452(a)(5) in col22 lecting and reporting information as required under

23 this part.’’.
764

Title IX, Subtitle D

•HR 2530 IH

1 SEC. 9415. AUTOMATED DATA PROCESSING REQUIRE2 MENTS.

3 (a) REVISED REQUIREMENTS.—(1) Section 454(16)

4 (42 U.S.C. 654(16)) is amended—

5 (A) by striking ‘‘, at the option of the State,’’;

6 (B) by inserting ‘‘and operation by the State

7 agency’’ after ‘‘for the establishment’’;

8 (C) by inserting ‘‘meeting the requirements of

9 section 454A’’ after ‘‘information retrieval system’’;

10 (D) by striking ‘‘in the State and localities

11 thereof, so as (A)’’ and inserting ‘‘so as’’;

12 (E) by striking ‘‘(i)’’; and

13 (F) by striking ‘‘(including’’ and all that follows

14 and inserting a semicolon.

15 (2) Part D of title IV (42 U.S.C. 651–669) is amend16 ed by inserting after section 454 the following new section:

17 ‘‘AUTOMATED DATA PROCESSING

18 ‘‘SEC. 454A. (a) IN GENERAL.—In order to meet the

19 requirements of this section, for purposes of the require20 ment of section 454(16), a State agency shall have in op21 eration a single statewide automated data processing and

22 information retrieval system which has the capability to

23 perform the tasks specified in this section, and performs

24 such tasks with the frequency and in the manner specified

25 in this part or in regulations or guidelines of the Sec26 retary.
765

Title IX, Subtitle D

•HR 2530 IH

1 ‘‘(b) PROGRAM MANAGEMENT.—The automated sys2 tem required under this section shall perform such func3 tions as the Secretary may specify relating to management

4 of the program under this part, including—

5 ‘‘(1) controlling and accounting for use of Fed6 eral, State, and local funds to carry out such pro7 gram; and

8 ‘‘(2) maintaining the data necessary to meet

9 Federal reporting requirements on a timely basis.

10 ‘‘(c) CALCULATION OF PERFORMANCE INDICA11 TORS.—In order to enable the Secretary to determine the

12 incentive and penalty adjustments required by sections

13 452(g) and 458, the State agency shall—

14 ‘‘(1) use the automated system—

15 ‘‘(A) to maintain the requisite data on

16 State performance with respect to paternity es17 tablishment and child support enforcement in

18 the State; and

19 ‘‘(B) to calculate the IV–D paternity es20 tablishment percentage and overall performance

21 in child support enforcement for the State for

22 each fiscal year; and

23 ‘‘(2) have in place systems controls to ensure

24 the completeness, and reliability of, and ready access

25 to, the data described in paragraph (1)(A), and the
766

Title IX, Subtitle D

•HR 2530 IH

1 accuracy of the calculations described in paragraph

2 (1)(B).

3 ‘‘(d) INFORMATION INTEGRITY AND SECURITY.—The

4 State agency shall have in effect safeguards on the integ5 rity, accuracy, and completeness of, access to, and use of

6 data in the automated system required under this section,

7 which shall include the following (in addition to such other

8 safeguards as the Secretary specifies in regulations):

9 ‘‘(1) POLICIES RESTRICTING ACCESS.—Written

10 policies concerning access to data by State agency

11 personnel, and sharing of data with other persons,

12 which—

13 ‘‘(A) permit access to and use of data only

14 to the extent necessary to carry out program re15 sponsibilities;

16 ‘‘(B) specify the data which may be used

17 for particular program purposes, and the per18 sonnel permitted access to such data; and

19 ‘‘(C) ensure that data obtained or disclosed

20 for a limited program purpose is not used or

21 redisclosed for another, impermissible purpose.

22 ‘‘(2) SYSTEMS CONTROLS.—Systems controls

23 (such as passwords or blocking of fields) to ensure

24 strict adherence to the policies specified under para25 graph (1).
767

Title IX, Subtitle D

•HR 2530 IH

1 ‘‘(3) MONITORING OF ACCESS.—Routine mon2 itoring of access to and use of the automated sys3 tem, through methods such as audit trails and feed4 back mechanisms, to guard against and promptly

5 identify unauthorized access or use.

6 ‘‘(4) TRAINING AND INFORMATION.—The State

7 agency shall have in effect procedures to ensure that

8 all personnel (including State and local agency staff

9 and contractors) who may have access to or be re10 quired to use sensitive or confidential program data

11 are fully informed of applicable requirements and

12 penalties, and are adequately trained in security pro13 cedures.

14 ‘‘(5) PENALTIES.—The State agency shall have

15 in effect administrative penalties (up to and includ16 ing dismissal from employment) for unauthorized ac17 cess to, or disclosure or use of, confidential data.’’.

18 (3) REGULATIONS.—Section 452 (42 U.S.C. 652) is

19 amended by adding at the end the following:

20 ‘‘(j) The Secretary shall prescribe final regulations

21 for implementation of the requirements of section 454A

22 not later than 2 years after the date of the enactment of

23 this subsection.’’.

24 (4) IMPLEMENTATION TIMETABLE.—Section

25 454(24) (42 U.S.C. 654(24)), as amended by sections
768

Title IX, Subtitle D

•HR 2530 IH

1 9404(a)(2) and 9414(b)(1) of this Act, is amended to read

2 as follows:

3 ‘‘(24) provide that the State will have in effect

4 an automated data processing and information re5 trieval system—

6 ‘‘(A) by October 1, 1995, meeting all re7 quirements of this part which were enacted on

8 or before the date of enactment of the Family

9 Support Act of 1988; and

10 ‘‘(B) by October 1, 1999, meeting all re11 quirements of this part enacted on or before the

12 date of enactment of the Omnibus Budget Rec13 onciliation Act of 1995 (but this provision shall

14 not be construed to alter earlier deadlines speci15 fied for elements of such system), except that

16 such deadline shall be extended by 1 day for

17 each day (if any) by which the Secretary fails

18 to meet the deadline imposed by section 452(j)

19 of this Act;’’.

20 (b) SPECIAL FEDERAL MATCHING RATE FOR DE21 VELOPMENT COSTS OF AUTOMATED SYSTEMS.—Section

22 455(a) (42 U.S.C. 655(a)) is amended—

23 (1) in paragraph (1)(B)—

24 (A) by striking ‘‘90 percent’’ and inserting

25 ‘‘the percent specified in paragraph (3)’’;
769

Title IX, Subtitle D

•HR 2530 IH

1 (B) by striking ‘‘so much of’’; and

2 (C) by striking ‘‘which the Secretary’’ and

3 all that follows and inserting ‘‘, and’’; and

4 (2) by adding at the end the following new

5 paragraph:

6 ‘‘(3)(A) The Secretary shall pay to each State, for

7 each quarter in fiscal year 1996, 90 percent of so much

8 of State expenditures described in subparagraph (1)(B) as

9 the Secretary finds are for a system meeting the require10 ments specified in section 454(16), or meeting such re11 quirements without regard to clause (D) thereof.

12 ‘‘(B)(i) The Secretary shall pay to each State, for

13 each quarter in fiscal years 1997 through 2001, the per14 centage specified in clause (ii) of so much of State expend15 itures described in subparagraph (1)(B) as the Secretary

16 finds are for a system meeting the requirements specified

17 in section 454(16) and 454A, subject to clause (iii).

18 ‘‘(ii) The percentage specified in this clause, for pur19 poses of clause (i), is the higher of—

20 ‘‘(I) 80 percent, or

21 ‘‘(II) the percentage otherwise applicable to

22 Federal payments to the State under subparagraph

23 (A) (as adjusted pursuant to section 458).’’.
770

Title IX, Subtitle D

•HR 2530 IH

1 (c) CONFORMING AMENDMENT.—Section 123(c) of

2 the Family Support Act of 1988 (102 Stat. 2352; Public

3 Law 100–485) is repealed.

4 (d) ADDITIONAL PROVISIONS.—For additional provi5 sions of section 454A, as added by subsection (a) of this

6 section, see the amendments made by sections 9421,

7 9422(c), and 9433(d) of this Act.

8 SEC. 9416. DIRECTOR OF CSE PROGRAM; STAFFING STUDY.

9 (a) REPORTING TO SECRETARY.—Section 452(a) (42

10 U.S.C. 652(a)) is amended in the matter preceding para11 graph (1) by striking ‘‘directly’’.

12 (b) STAFFING STUDIES.—

13 (1) SCOPE.—The Secretary of Health and

14 Human Services shall, directly or by contract, con15 duct studies of the staffing of each State child sup16 port enforcement program under part D of title IV

17 of the Social Security Act. Such studies shall include

18 a review of the staffing needs created by require19 ments for automated data processing, maintenance

20 of a central case registry and centralized collections

21 of child support, and of changes in these needs re22 sulting from changes in such requirements. Such

23 studies shall examine and report on effective staffing

24 practices used by the States and on recommended

25 staffing procedures.
771

Title IX, Subtitle D

•HR 2530 IH

1 (2) FREQUENCY OF STUDIES.—The Secretary

2 shall complete the first staffing study required under

3 paragraph (1) by October 1, 1997, and may conduct

4 additional studies subsequently at appropriate inter5 vals.

6 (3) REPORT TO THE CONGRESS.—The Sec7 retary shall submit a report to the Congress stating

8 the findings and conclusions of each study conducted

9 under this subsection.

10 SEC. 9417. FUNDING FOR SECRETARIAL ASSISTANCE TO

11 STATE PROGRAMS.

12 Section 452 (42 U.S.C. 652), as amended by section

13 9415(a)(3) of this Act, is amended by adding at the end

14 the following new subsection:

15 ‘‘(k) FUNDING FOR FEDERAL ACTIVITIES ASSISTING

16 STATE PROGRAMS.—(1) There shall be available to the

17 Secretary, from amounts appropriated for fiscal year 1996

18 and each succeeding fiscal year for payments to States

19 under this part, the amount specified in paragraph (2) for

20 the costs to the Secretary for—

21 ‘‘(A) information dissemination and technical

22 assistance to States, training of State and Federal

23 staff, staffing studies, and related activities needed

24 to improve programs (including technical assistance

25 concerning State automated systems);
772

Title IX, Subtitle D

•HR 2530 IH

1 ‘‘(B) research, demonstration, and special

2 projects of regional or national significance relating

3 to the operation of State programs under this part;

4 and

5 ‘‘(C) operation of the Federal Parent Locator

6 Service under section 453, to the extent such costs

7 are not recovered through user fees.

8 ‘‘(2) The amount specified in this paragraph for a

9 fiscal year is the amount equal to a percentage of the re10 duction in Federal payments to States under part A on

11 account of child support (including arrearages) collected

12 in the preceding fiscal year on behalf of children receiving

13 assistance under State plans approved under part A in

14 such preceding fiscal year (as determined on the basis of

15 the most recent reliable data available to the Secretary

16 as of the end of the third calendar quarter following the

17 end of such preceding fiscal year), equal to—

18 ‘‘(A) 1 percent, for the activities specified in

19 subparagraphs (A) and (B) of paragraph (1); and

20 ‘‘(B) 2 percent, for the activities specified in

21 subparagraph (C) of paragraph (1).’’.

22 SEC. 9418. REPORTS AND DATA COLLECTION BY THE SEC23 RETARY.

24 (a) ANNUAL REPORT TO CONGRESS.—(1) Section

25 452(a)(10)(A) (42 U.S.C. 652(a)(10)(A)) is amended—
773

Title IX, Subtitle D

•HR 2530 IH

1 (A) by striking ‘‘this part;’’ and inserting ‘‘this

2 part, including—’’; and

3 (B) by adding at the end the following indented

4 clauses:

5 ‘‘(i) the total amount of child support

6 payments collected as a result of services

7 furnished during such fiscal year to indi8 viduals receiving services under this part;

9 ‘‘(ii) the cost to the States and to the

10 Federal Government of furnishing such

11 services to those individuals; and

12 ‘‘(iii) the number of cases involving

13 families—

14 ‘‘(I) who became ineligible for as15 sistance under a State plan approved

16 under part A during a month in such

17 fiscal year; and

18 ‘‘(II) with respect to whom a

19 child support payment was received in

20 the same month;’’.

21 (2) Section 452(a)(10)(C) (42 U.S.C. 652(a)(10)(C))

22 is amended—

23 (A) in the matter preceding clause (i)—

24 (i) by striking ‘‘with the data required

25 under each clause being separately stated for
774

Title IX, Subtitle D

•HR 2530 IH

1 cases’’ and inserting ‘‘separately stated for (1)

2 cases’’;

3 (ii) by striking ‘‘cases where the child was

4 formerly receiving’’ and inserting ‘‘or formerly

5 received’’;

6 (iii) by inserting ‘‘or 1912’’ after

7 ‘‘471(a)(17)’’; and

8 (iv) by inserting ‘‘(2)’’ before ‘‘all other’’;

9 (B) in each of clauses (i) and (ii), by striking

10 ‘‘, and the total amount of such obligations’’;

11 (C) in clause (iii), by striking ‘‘described in’’

12 and all that follows and inserting ‘‘in which support

13 was collected during the fiscal year;’’;

14 (D) by striking clause (iv); and

15 (E) by redesignating clause (v) as clause (vii),

16 and inserting after clause (iii) the following new

17 clauses:

18 ‘‘(iv) the total amount of support col19 lected during such fiscal year and distrib20 uted as current support;

21 ‘‘(v) the total amount of support col22 lected during such fiscal year and distrib23 uted as arrearages;

24 ‘‘(vi) the total amount of support due

25 and unpaid for all fiscal years; and’’.
775

Title IX, Subtitle D

•HR 2530 IH

1 (3) Section 452(a)(10)(G) (42 U.S.C. 652(a)(10)(G))

2 is amended by striking ‘‘on the use of Federal courts

3 and’’.

4 (4) Section 452(a)(10) (42 U.S.C. 652(a)(10)) is

5 amended by striking all that follows subparagraph (I).

6 (b) DATA COLLECTION AND REPORTING.—Section

7 469 (42 U.S.C. 669) is amended—

8 (1) by striking subsections (a) and (b) and in9 serting the following:

10 ‘‘(a) The Secretary shall collect and maintain, on a

11 fiscal year basis, up-to-date statistics, by State, with re12 spect to services to establish paternity and services to es13 tablish child support obligations, the data specified in sub14 section (b), separately stated, in the case of each such

15 service, with respect to—

16 ‘‘(1) families (or dependent children) receiving

17 assistance under State plans approved under part A

18 (or E); and

19 ‘‘(2) families not receiving such assistance.

20 ‘‘(b) The data referred to in subsection (a) are—

21 ‘‘(1) the number of cases in the caseload of the

22 State agency administering the plan under this part

23 in which such service is needed; and

24 ‘‘(2) the number of such cases in which the

25 service has been provided.’’; and
776

Title IX, Subtitle D

•HR 2530 IH

1 (2) in subsection (c), by striking ‘‘(a)(2)’’ and

2 inserting ‘‘(b)(2)’’.

3 (c) EFFECTIVE DATE.—The amendments made by

4 this section shall be effective with respect to fiscal year

5 1996 and succeeding fiscal years.

6 CHAPTER 3—LOCATE AND CASE

7 TRACKING

8 SEC. 9421. CENTRAL STATE AND CASE REGISTRY.

9 Section 454A, as added by section 9415(a)(2) of this

10 Act, is amended by adding at the end the following:

11 ‘‘(e) CENTRAL CASE REGISTRY.—(1) IN GEN12 ERAL.—The automated system required under this section

13 shall perform the functions, in accordance with the provi14 sions of this subsection, of a single central registry con15 taining records with respect to each case in which services

16 are being provided by the State agency (including, on and

17 after October 1, 1998, each order specified in section

18 466(a)(12)), using such standardized data elements (such

19 as names, social security numbers or other uniform identi20 fication numbers, dates of birth, and case identification

21 numbers), and containing such other information (such as

22 information on case status) as the Secretary may require.

23 ‘‘(2) PAYMENT RECORDS.—Each case record in the

24 central registry shall include a record of—
777

Title IX, Subtitle D

•HR 2530 IH

1 ‘‘(A) the amount of monthly (or other periodic)

2 support owed under the support order, and other

3 amounts due or overdue (including arrears, interest

4 or late payment penalties, and fees);

5 ‘‘(B) the date on which or circumstances under

6 which the support obligation will terminate under

7 such order;

8 ‘‘(C) all child support and related amounts col9 lected (including such amounts as fees, late payment

10 penalties, and interest on arrearages);

11 ‘‘(D) the distribution of such amounts collected;

12 and

13 ‘‘(E) the birth date of the child for whom the

14 child support order is entered.

15 ‘‘(3) UPDATING AND MONITORING.—The State agen16 cy shall promptly establish and maintain, and regularly

17 monitor, case records in the registry required by this sub18 section, on the basis of—

19 ‘‘(A) information on administrative actions and

20 administrative and judicial proceedings and orders

21 relating to paternity and support;

22 ‘‘(B) information obtained from matches with

23 Federal, State, or local data sources;

24 ‘‘(C) information on support collections and dis25 tributions; and
778

Title IX, Subtitle D

•HR 2530 IH

1 ‘‘(D) any other relevant information.

2 ‘‘(f) DATA MATCHES AND OTHER DISCLOSURES OF

3 INFORMATION.—The automated system required under

4 this section shall have the capacity, and be used by the

5 State agency, to extract data at such times, and in such

6 standardized format or formats, as may be required by

7 the Secretary, and to share and match data with, and re8 ceive data from, other data bases and data matching serv9 ices, in order to obtain (or provide) information necessary

10 to enable the State agency (or Secretary or other State

11 or Federal agencies) to carry out responsibilities under

12 this part. Data matching activities of the State agency

13 shall include at least the following:

14 ‘‘(1) DATA BANK OF CHILD SUPPORT OR15 DERS.—Furnish to the Data Bank of Child Support

16 Orders established under section 453(h) (and update

17 as necessary, with information including notice of

18 expiration of orders) minimal information (to be

19 specified by the Secretary) on each child support

20 case in the central case registry.

21 ‘‘(2) FEDERAL PARENT LOCATOR SERVICE.—

22 Exchange data with the Federal Parent Locator

23 Service for the purposes specified in section 453.

24 ‘‘(3) TEMPORARY EMPLOYMENT ASSISTANCE

25 PROGRAM AND MEDICAID AGENCIES.—Exchange
779

Title IX, Subtitle D

•HR 2530 IH

1 data with State agencies (of the State and of other

2 States) administering the programs under part A

3 and title XIX, as necessary for the performance of

4 State agency responsibilities under this part and

5 under such programs.

6 ‘‘(4) INTRA- AND INTERSTATE DATA

7 MATCHES.—Exchange data with other agencies of

8 the State, agencies of other States, and interstate

9 information networks, as necessary and appropriate

10 to carry out (or assist other States to carry out) the

11 purposes of this part.’’.

12 SEC. 9422. CENTRALIZED COLLECTION AND DISBURSE13 MENT OF SUPPORT PAYMENTS.

14 (a) STATE PLAN REQUIREMENT.—Section 454 (42

15 U.S.C. 654), as amended by sections 9404(a) and 9414(b)

16 of this Act, is amended—

17 (1) by striking ‘‘and’’ at the end of paragraph

18 (25);

19 (2) by striking the period at the end of para20 graph (26) and inserting ‘‘; and’’; and

21 (3) by adding after paragraph (26) the follow22 ing new paragraph:

23 ‘‘(27) provide that the State agency, on and

24 after October 1, 1998—
780

Title IX, Subtitle D

•HR 2530 IH

1 ‘‘(A) will operate a centralized, automated

2 unit for the collection and disbursement of child

3 support under orders being enforced under this

4 part, in accordance with section 454B; and

5 ‘‘(B) will have sufficient State staff (con6 sisting of State employees), and (at State op7 tion) contractors reporting directly to the State

8 agency to monitor and enforce support collec9 tions through such centralized unit, including

10 carrying out the automated data processing re11 sponsibilities specified in section 454A(g) and

12 to impose, as appropriate in particular cases,

13 the administrative enforcement remedies speci14 fied in section 466(c)(1).’’.

15 (b) ESTABLISHMENT OF CENTRALIZED COLLECTION

16 UNIT.—Part D of title IV (42 U.S.C. 651–669) is amend17 ed by adding after section 454A the following new section:

18 ‘‘CENTRALIZED COLLECTION AND DISBURSEMENT OF

19 SUPPORT PAYMENTS

20 ‘‘SEC. 454B. (a) IN GENERAL.—In order to meet the

21 requirement of section 454(27), the State agency must op22 erate a single centralized, automated unit for the collection

23 and disbursement of support payments, coordinated with

24 the automated data system required under section 454A,

25 in accordance with the provisions of this section, which

26 shall be—
781

Title IX, Subtitle D

•HR 2530 IH

1 ‘‘(1) operated directly by the State agency (or

2 by two or more State agencies under a regional co3 operative agreement), or by a single contractor re4 sponsible directly to the State agency; and

5 ‘‘(2) used for the collection and disbursement

6 (including interstate collection and disbursement) of

7 payments under support orders in all cases being en8 forced by the State pursuant to section 454(4).

9 ‘‘(b) REQUIRED PROCEDURES.—The centralized col10 lections unit shall use automated procedures, electronic

11 processes, and computer-driven technology to the maxi12 mum extent feasible, efficient, and economical, for the col13 lection and disbursement of support payments, including

14 procedures—

15 ‘‘(1) for receipt of payments from parents, em16 ployers, and other States, and for disbursements to

17 custodial parents and other obligees, the State agen18 cy, and the State agencies of other States;

19 ‘‘(2) for accurate identification of payments;

20 ‘‘(3) to ensure prompt disbursement of the cus21 todial parent’s share of any payment; and

22 ‘‘(4) to furnish to either parent, upon request,

23 timely information on the current status of support

24 payments.’’.
782

Title IX, Subtitle D

•HR 2530 IH

1 (c) USE OF AUTOMATED SYSTEM.—Section 454A, as

2 added by section 9415(a)(2) of this Act and as amended

3 by section 9421 of this Act, is amended by adding at the

4 end the following new subsection:

5 ‘‘(g) CENTRALIZED COLLECTION AND DISTRIBUTION

6 OF SUPPORT PAYMENTS.—The automated system re7 quired under this section shall be used, to the maximum

8 extent feasible, to assist and facilitate collections and dis9 bursement of support payments through the centralized

10 collections unit operated pursuant to section 454B,

11 through the performance of functions including at a mini12 mum—

13 ‘‘(1) generation of orders and notices to em14 ployers (and other debtors) for the withholding of

15 wages (and other income)—

16 ‘‘(A) within two working days after receipt

17 (from the directory of New Hires established

18 under section 453(i) or any other source) of no19 tice of and the income source subject to such

20 withholding; and

21 ‘‘(B) using uniform formats directed by

22 the Secretary;

23 ‘‘(2) ongoing monitoring to promptly identify

24 failures to make timely payment; and
783

Title IX, Subtitle D

•HR 2530 IH

1 ‘‘(3) automatic use of enforcement mechanisms

2 (including mechanisms authorized pursuant to sec3 tion 466(c)) where payments are not timely made.’’.

4 (d) EFFECTIVE DATE.—The amendments made by

5 this section shall become effective on October 1, 1998.

6 SEC. 9423. AMENDMENTS CONCERNING INCOME WITH7 HOLDING.

8 (a) MANDATORY INCOME WITHHOLDING.—(1) Sec9 tion 466(a)(1) (42 U.S.C. 666(a)(1)) is amended to read

10 as follows:

11 ‘‘(1) INCOME WITHHOLDING.—(A) UNDER OR12 DERS ENFORCED UNDER THE STATE PLAN.—Proce13 dures described in subsection (b) for the withholding

14 from income of amounts payable as support in cases

15 subject to enforcement under the State plan.

16 ‘‘(B) UNDER CERTAIN ORDERS PREDATING

17 CHANGE IN REQUIREMENT.—Procedures under

18 which all child support orders issued (or modified)

19 before October 1, 1996, and which are not otherwise

20 subject to withholding under subsection (b), shall be21 come subject to withholding from wages as provided

22 in subsection (b) if arrearages occur, without the

23 need for a judicial or administrative hearing.’’.

24 (2) Section 466(a)(8) (42 U.S.C. 666(a)(8)) is re25 pealed.
784

Title IX, Subtitle D

•HR 2530 IH

1 (3) Section 466(b) (42 U.S.C. 666(b)) is amended—

2 (A) in the matter preceding paragraph (1), by

3 striking ‘‘subsection (a)(1)’’ and inserting ‘‘sub4 section (a)(1)(A)’’;

5 (B) in paragraph (5), by striking all that fol6 lows ‘‘administered by’’ and inserting ‘‘the State

7 through the centralized collections unit established

8 pursuant to section 454B, in accordance with the re9 quirements of such section 454B.’’;

10 (C) in paragraph (6)(A)(i)—

11 (i) by inserting ‘‘, in accordance with time12 tables established by the Secretary,’’ after

13 ‘‘must be required’’; and

14 (ii) by striking ‘‘to the appropriate agency’’

15 and all that follows and inserting ‘‘to the State

16 centralized collections unit within 5 working

17 days after the date such amount would (but for

18 this subsection) have been paid or credited to

19 the employee, for distribution in accordance

20 with this part.’’;

21 (D) in paragraph (6)(A)(ii), by inserting ‘‘be in

22 a standard format prescribed by the Secretary, and’’

23 after ‘‘shall’’; and

24 (E) in paragraph (6)(D)—
785

Title IX, Subtitle D

•HR 2530 IH

1 (i) by striking ‘‘employer who discharges’’

2 and inserting ‘‘employer who—(A) discharges’’;

3 (ii) by relocating subparagraph (A), as des4 ignated, as an indented subparagraph after and

5 below the introductory matter;

6 (iii) by striking the period at the end; and

7 (iv) by adding after and below subpara8 graph (A) the following new subparagraph:

9 ‘‘(B) fails to withhold support from wages,

10 or to pay such amounts to the State centralized

11 collections unit in accordance with this sub12 section.’’.

13 (b) CONFORMING AMENDMENT.—Section 466(c) (42

14 U.S.C. 666(c)) is repealed.

15 (c) DEFINITION OF TERMS.—The Secretary shall

16 promulgate regulations providing definitions, for purposes

17 of part D of title IV of the Social Security Act, for the

18 term ‘‘income’’ and for such other terms relating to in19 come withholding under section 466(b) of such Act as the

20 Secretary may find it necessary or advisable to define.

21 SEC. 9424. LOCATOR INFORMATION FROM INTERSTATE

22 NETWORKS.

23 Section 466(a) (42 U.S.C. 666(a)), as amended by

24 section 9423(a)(2) of this Act, is amended by inserting

25 after paragraph (7) the following:
786

Title IX, Subtitle D

•HR 2530 IH

1 ‘‘(8) LOCATOR INFORMATION FROM INTER2 STATE NETWORKS.—Procedures ensuring that the

3 State will neither provide funding for, nor use for

4 any purpose (including any purpose unrelated to the

5 purposes of this part), any automated interstate net6 work or system used to locate individuals—

7 ‘‘(A) for purposes relating to the use of

8 motor vehicles; or

9 ‘‘(B) providing information for law en10 forcement purposes (where child support en11 forcement agencies are otherwise allowed access

12 by State and Federal law),

13 unless all Federal and State agencies administering

14 programs under this part (including the entities es15 tablished under section 453) have access to informa16 tion in such system or network to the same extent

17 as any other user of such system or network.’’.

18 SEC. 9425. EXPANDED FEDERAL PARENT LOCATOR SERV19 ICE.

20 (a) EXPANDED AUTHORITY TO LOCATE INDIVIDUALS

21 AND ASSETS.—Section 453 (42 U.S.C. 653) is amended—

22 (1) in subsection (a), by striking all that follows

23 ‘‘subsection (c))’’ and inserting the following:
787

Title IX, Subtitle D

•HR 2530 IH

1 ‘‘, for the purpose of establishing parentage, establishing,

2 setting the amount of, modifying, or enforcing child sup3 port obligations—

4 ‘‘(1) information on, or facilitating the discov5 ery of, the location of any individual—

6 ‘‘(A) who is under an obligation to pay

7 child support;

8 ‘‘(B) against whom such an obligation is

9 sought; or

10 ‘‘(C) to whom such an obligation is owed,

11 including such individual’s social security num12 ber (or numbers), most recent residential ad13 dress, and the name, address, and employer

14 identification number of such individual’s em15 ployer; and

16 ‘‘(2) information on the individual’s wages (or

17 other income) from, and benefits of, employment (in18 cluding rights to or enrollment in group health care

19 coverage); and

20 ‘‘(3) information on the type, status, location,

21 and amount of any assets of, or debts owed by or

22 to, any such individual.’’; and

23 (2) in subsection (b)—

24 (A) in the matter preceding paragraph (1),

25 by striking ‘‘social security’’ and all that follows
788

Title IX, Subtitle D

•HR 2530 IH

1 through ‘‘absent parent’’ and inserting ‘‘infor2 mation specified in subsection (a)’’; and

3 (B) in paragraph (2), by inserting before

4 the period ‘‘, or from any consumer reporting

5 agency (as defined in section 603(f) of the Fair

6 Credit Reporting Act (15 U.S.C. 1681a(f))’’;

7 (3) in subsection (e)(1), by inserting before the

8 period ‘‘, or by consumer reporting agencies’’.

9 (b) REIMBURSEMENT FOR DATA FROM FEDERAL

10 AGENCIES.—Section 453(e)(2) (42 U.S.C. 653(e)(2)) is

11 amended in the fourth sentence by inserting before the

12 period ‘‘in an amount which the Secretary determines to

13 be reasonable payment for the data exchange (which

14 amount shall not include payment for the costs of obtain15 ing, compiling, or maintaining the data)’’.

16 (c) ACCESS TO CONSUMER REPORTS UNDER FAIR

17 CREDIT REPORTING ACT.—(1) Section 608 of the Fair

18 Credit Reporting Act (15 U.S.C. 1681f) is amended—

19 (A) by striking ‘‘, limited to’’ and inserting ‘‘to

20 a governmental agency (including the entire

21 consumer report, in the case of a Federal, State, or

22 local agency administering a program under part D

23 of title IV of the Social Security Act, and limited

24 to’’; and
789

Title IX, Subtitle D

•HR 2530 IH

1 (B) by striking ‘‘employment, to a govern2 mental agency’’ and inserting ‘‘employment, in the

3 case of any other governmental agency)’’.

4 (2) REIMBURSEMENT FOR REPORTS BY STATE

5 AGENCIES AND CREDIT BUREAUS.—Section 453 (42

6 U.S.C. 653) is amended by adding at the end the following

7 new subsection:

8 ‘‘(g) The Secretary is authorized to reimburse costs

9 to State agencies and consumer credit reporting agencies

10 the costs incurred by such entities in furnishing informa11 tion requested by the Secretary pursuant to this section

12 in an amount which the Secretary determines to be rea13 sonable payment for the data exchange (which amount

14 shall not include payment for the costs of obtaining, com15 piling, or maintaining the data).’’.

16 (d) DISCLOSURE OF TAX RETURN INFORMATION.—

17 (1) Section 6103(1)(6)(A)(ii) of the Internal Revenue

18 Code of 1986 is amended by striking ‘‘, but only if’’ and

19 all that follows and inserting a period.

20 (2) Section 6103(1)(8)(A) of the Internal Revenue

21 Code of 1986 is amended by inserting ‘‘Federal,’’ before

22 ‘‘State or local’’.

23 (e) TECHNICAL AMENDMENTS.—

24 (1) Sections 452(a)(9), 453(a), 453(b), 463(a),

25 and 463(e) (42 U.S.C. 652(a)(9), 653(a), 653(b),
790

Title IX, Subtitle D

•HR 2530 IH

1 663(a), and 663(e)) are each amended by inserting

2 ‘‘Federal’’ before ‘‘Parent’’ each place it appears.

3 (2) Section 453 (42 U.S.C. 653) is amended in

4 the heading by adding ‘‘FEDERAL’’ before ‘‘PAR5 ENT’’.

6 (f) NEW COMPONENTS.—Section 453 (42 U.S.C.

7 653), as amended by subsection (c)(2) of this section, is

8 amended by adding at the end the following:

9 ‘‘(h) DATA BANK OF CHILD SUPPORT ORDERS.—

10 ‘‘(1) IN GENERAL.—Not later than October 1,

11 1998, In order to assist States in administering

12 their State plans under this part and parts A, F,

13 and G, and for the other purposes specified in this

14 section, the Secretary shall establish and maintain in

15 the Federal Parent Locator Service an automated

16 registry to be known as the Data Bank of Child

17 Support Orders, which shall contain abstracts of

18 child support orders and other information described

19 in paragraph (2) on each case in each State central

20 case registry maintained pursuant to section

21 454A(e), as furnished (and regularly updated), pur22 suant to section 454A(f), by State agencies admin23 istering programs under this part.

24 ‘‘(2) CASE INFORMATION.—The information re25 ferred to in paragraph (1), as specified by the Sec-
791

Title IX, Subtitle D

•HR 2530 IH

1 retary, shall include sufficient information (including

2 names, social security numbers or other uniform

3 identification numbers, and State case identification

4 numbers) to identify the individuals who owe or are

5 owed support (or with respect to or on behalf of

6 whom support obligations are sought to be estab7 lished), and the State or States which have estab8 lished or modified, or are enforcing or seeking to es9 tablish, such an order.

10 ‘‘(i) DIRECTORY OF NEW HIRES.—

11 ‘‘(1) IN GENERAL.—Not later than October 1,

12 1998, In order to assist States in administering

13 their State plans under this part and parts A, F,

14 and G, and for the other purposes specified in this

15 section, the Secretary shall establish and maintain in

16 the Federal Parent Locator Service an automated

17 directory to be known as the directory of New Hires,

18 containing—

19 ‘‘(A) information supplied by employers on

20 each newly hired individual, in accordance with

21 paragraph (2); and

22 ‘‘(B) information supplied by State agen23 cies administering State unemployment com24 pensation laws, in accordance with paragraph

25 (3).
792

Title IX, Subtitle D

•HR 2530 IH

1 ‘‘(2) EMPLOYER INFORMATION.—

2 ‘‘(A) INFORMATION REQUIRED.—Subject

3 to subparagraph (D), each employer shall fur4 nish to the Secretary, for inclusion in the direc5 tory established under this subsection, not later

6 than 10 days after the date (on or after Octo7 ber 1, 1998) on which the employer hires a new

8 employee (as defined in subparagraph (C)), a

9 report containing the name, date of birth, and

10 social security number of such employee, and

11 the employer identification number of the em12 ployer.

13 ‘‘(B) REPORTING METHOD AND FOR14 MAT.—The Secretary shall provide for trans15 mission of the reports required under subpara16 graph (A) using formats and methods which

17 minimize the burden on employers, which shall

18 include—

19 ‘‘(i) automated or electronic trans20 mission of such reports;

21 ‘‘(ii) transmission by regular mail;

22 and

23 ‘‘(iii) transmission of a copy of the

24 form required for purposes of compliance
793

Title IX, Subtitle D

•HR 2530 IH

1 with section 3402 of the Internal Revenue

2 Code of 1986.

3 ‘‘(C) EMPLOYEE DEFINED.—For purposes

4 of this paragraph, the term ‘employee’ means

5 any individual subject to the requirement of

6 section 3402(f)(2) of the Internal Revenue Code

7 of 1986.

8 ‘‘(D) PAPERWORK REDUCTION REQUIRE9 MENT.—As required by the information re10 sources management policies published by the

11 Director of the Office of Management and

12 Budget pursuant to section 3504(b)(1) of title

13 44, United States Code, the Secretary, in order

14 to minimize the cost and reporting burden on

15 employers, shall not require reporting pursuant

16 to this paragraph if an alternative reporting

17 mechanism can be developed that either relies

18 on existing Federal or State reporting or en19 ables the Secretary to collect the needed infor20 mation in a more cost-effective and equally ex21 peditious manner, taking into account the re22 porting costs on employers.

23 ‘‘(E) CIVIL MONEY PENALTY ON NON24 COMPLYING EMPLOYERS.—(i) Any employer

25 that fails to make a timely report in accordance
794

Title IX, Subtitle D

•HR 2530 IH

1 with this paragraph with respect to an individ2 ual shall be subject to a civil money penalty, for

3 each calendar year in which the failure occurs,

4 of the lesser of $500 or 1 percent of the wages

5 or other compensation paid by such employer to

6 such individual during such calendar year.

7 ‘‘(ii) Subject to clause (iii), the provisions

8 of section 1128A (other than subsections (a)

9 and (b) thereof) shall apply to a civil money

10 penalty under clause (i) in the same manner as

11 they apply to a civil money penalty or proceed12 ing under section 1128A(a).

13 ‘‘(iii) Any employer with respect to whom

14 a penalty under this subparagraph is upheld

15 after an administrative hearing shall be liable to

16 pay all costs of the Secretary with respect to

17 such hearing.

18 ‘‘(3) EMPLOYMENT SECURITY INFORMATION.—

19 ‘‘(A) REPORTING REQUIREMENT.—Each

20 State agency administering a State unemploy21 ment compensation law approved by the Sec22 retary of Labor under the Federal Unemploy23 ment Tax Act shall furnish to the Secretary of

24 Health and Human Services extracts of the re25 ports to the Secretary of Labor concerning the
795

Title IX, Subtitle D

•HR 2530 IH

1 wages and unemployment compensation paid to

2 individuals required under section 303(a)(6), in

3 accordance with subparagraph (B).

4 ‘‘(B) MANNER OF COMPLIANCE.—The ex5 tracts required under subparagraph (A) shall be

6 furnished to the Secretary of Health and

7 Human Services on a quarterly basis, with re8 spect to calendar quarters beginning on and

9 after October 1, 1996, by such dates, in such

10 format, and containing such information as re11 quired by that Secretary in regulations.

12 ‘‘(j) DATA MATCHES AND OTHER DISCLOSURES.—

13 ‘‘(1) VERIFICATION BY SOCIAL SECURITY AD14 MINISTRATION.—(A) The Secretary shall transmit

15 data on individuals and employers maintained under

16 this section to the Social Security Administration to

17 the extent necessary for verification in accordance

18 with subparagraph (B).

19 ‘‘(B) The Social Security Administration shall

20 verify the accuracy of, correct or supply to the ex21 tent necessary and feasible, and report to the Sec22 retary, the following information in data supplied by

23 the Secretary pursuant to subparagraph (A):

24 ‘‘(i) the name, social security number, and

25 birth date of each individual; and
796

Title IX, Subtitle D

•HR 2530 IH

1 ‘‘(ii) the employer identification number of

2 each employer.

3 ‘‘(2) CHILD SUPPORT LOCATOR MATCHES.—For

4 the purpose of locating individuals for purposes of

5 paternity establishment and establishment and en6 forcement of child support, the Secretary shall—

7 ‘‘(A) match data in the directory of New

8 Hires against the child support order abstracts

9 in the Data Bank of Child Support Orders not

10 less often than every 2 working days; and

11 ‘‘(B) report information obtained from

12 such a match to concerned State agencies oper13 ating programs under this part not later than

14 2 working days after such match.

15 ‘‘(3) DATA MATCHES AND DISCLOSURES OF

16 DATA IN ALL REGISTRIES FOR TITLE IV PROGRAM

17 PURPOSES.—The Secretary shall—

18 ‘‘(A) perform matches of data in each com19 ponent of the Federal Parent Locator Service

20 maintained under this section against data in

21 each other such component (other than the

22 matches required pursuant to paragraph (1)),

23 and report information resulting from such

24 matches to State agencies operating programs

25 under this part and parts A, F, and G; and
797

Title IX, Subtitle D

•HR 2530 IH

1 ‘‘(B) disclose data in such registries to

2 such State agencies,

3 to the extent, and with the frequency, that the Sec4 retary determines to be effective in assisting such

5 States to carry out their responsibilities under such

6 programs.

7 ‘‘(k) FEES.—

8 ‘‘(1) FOR SSA VERIFICATION.—The Secretary

9 shall reimburse the Commissioner of Social Security,

10 at a rate negotiated between the Secretary and the

11 Commissioner, the costs incurred by the Commis12 sioner in performing the verification services speci13 fied in subsection (j).

14 ‘‘(2) FOR INFORMATION FROM SESAS.—The

15 Secretary shall reimburse costs incurred by State

16 employment security agencies in furnishing data as

17 required by subsection (j)(3), at rates which the Sec18 retary determines to be reasonable (which rates shall

19 not include payment for the costs of obtaining, com20 piling, or maintaining such data).

21 ‘‘(3) FOR INFORMATION FURNISHED TO STATE

22 AND FEDERAL AGENCIES.—State and Federal agen23 cies receiving data or information from the Secretary

24 pursuant to this section shall reimburse the costs in25 curred by the Secretary in furnishing such data or
798

Title IX, Subtitle D

•HR 2530 IH

1 information, at rates which the Secretary determines

2 to be reasonable (which rates shall include payment

3 for the costs of obtaining, verifying, maintaining,

4 and matching such data or information).

5 ‘‘(l) RESTRICTION ON DISCLOSURE AND USE.—Data

6 in the Federal Parent Locator Service, and information

7 resulting from matches using such data, shall not be used

8 or disclosed except as specifically provided in this section.

9 ‘‘(m) RETENTION OF DATA.—Data in the Federal

10 Parent Locator Service, and data resulting from matches

11 performed pursuant to this section, shall be retained for

12 such period (determined by the Secretary) as appropriate

13 for the data uses specified in this section.

14 ‘‘(n) INFORMATION INTEGRITY AND SECURITY.—The

15 Secretary shall establish and implement safeguards with

16 respect to the entities established under this section de17 signed to—

18 ‘‘(1) ensure the accuracy and completeness of

19 information in the Federal Parent Locator Service;

20 and

21 ‘‘(2) restrict access to confidential information

22 in the Federal Parent Locator Service to authorized

23 persons, and restrict use of such information to au24 thorized purposes.
799

Title IX, Subtitle D

•HR 2530 IH

1 ‘‘(o) LIMIT ON LIABILITY.—The Secretary shall not

2 be liable to either a State or an individual for inaccurate

3 information provided to a component of the Federal Par4 ent Locator Service section and disclosed by the Secretary

5 in accordance with this section.’’.

6 (g) CONFORMING AMENDMENTS.—

7 (1) TO PART D OF TITLE IV OF THE SOCIAL SE8 CURITY ACT.—Section 454(8)(B) (42 U.S.C.

9 654(8)(B)) is amended to read as follows:

10 ‘‘(B) the Federal Parent Locator Service

11 established under section 453;’’.

12 (2) TO FEDERAL UNEMPLOYMENT TAX ACT.—

13 Section 3304(16) of the Internal Revenue Code of

14 1986 is amended—

15 (A) by striking ‘‘Secretary of Health, Edu16 cation, and Welfare’’ each place such term ap17 pears and inserting ‘‘Secretary of Health and

18 Human Services’’;

19 (B) in subparagraph (B), by striking

20 ‘‘such information’’ and all that follows and in21 serting ‘‘information furnished under subpara22 graph (A) or (B) is used only for the purposes

23 authorized under such subparagraph;’’;

24 (C) by striking ‘‘and’’ at the end of sub25 paragraph (A);
800

Title IX, Subtitle D

•HR 2530 IH

1 (D) by redesignating subparagraph (B) as

2 subparagraph (C); and

3 (E) by inserting after subparagraph (A)

4 the following new subparagraph:

5 ‘‘(B) wage and unemployment compensa6 tion information contained in the records of

7 such agency shall be furnished to the Secretary

8 of Health and Human Services (in accordance

9 with regulations promulgated by such Sec10 retary) as necessary for the purposes of the di11 rectory of New Hires established under section

12 453(i) of the Social Security Act, and’’.

13 (3) TO STATE GRANT PROGRAM UNDER TITLE

14 III OF THE SOCIAL SECURITY ACT.—Section 303(a)

15 (42 U.S.C. 503(a)) is amended—

16 (A) by striking ‘‘and’’ at the end of para17 graph (8);

18 (B) by striking the period at the end of

19 paragraph (9) and inserting ‘‘; and’’; and

20 (C) by adding after paragraph (9) the fol21 lowing new paragraph:

22 ‘‘(10) The making of quarterly electronic re23 ports, at such dates, in such format, and containing

24 such information, as required by the Secretary of

25 Health and Human Services under section 453(i)(3),
801

Title IX, Subtitle D

•HR 2530 IH

1 and compliance with such provisions as such Sec2 retary may find necessary to ensure the correctness

3 and verification of such reports.’’.

4 SEC. 9426. USE OF SOCIAL SECURITY NUMBERS.

5 (a) STATE LAW REQUIREMENT.—Section 466(a) (42

6 U.S.C. 666(a)), as amended by section 9401(a) of this

7 Act, is amended by inserting after paragraph (12) the fol8 lowing:

9 ‘‘(13) SOCIAL SECURITY NUMBERS RE10 QUIRED.—Procedures requiring the recording of so11 cial security numbers—

12 ‘‘(A) of both parties on marriage licenses

13 and divorce decrees; and

14 ‘‘(B) of both parents, on birth records and

15 child support and paternity orders.’’.

16 (b) CLARIFICATION OF FEDERAL POLICY.—Section

17 205(c)(2)(C)(ii) (42 U.S.C. 405(c)(2)(C)(ii)) is amended

18 by striking the third sentence and inserting ‘‘This clause

19 shall not be considered to authorize disclosure of such

20 numbers except as provided in the preceding sentence.’’.
802

Title IX, Subtitle D

•HR 2530 IH

1 CHAPTER 4—STREAMLINING AND

2 UNIFORMITY OF PROCEDURES

3 SEC. 9431. ADOPTION OF UNIFORM STATE LAWS.

4 Section 466(a) (42 U.S.C. 666(a)), as amended by

5 sections 9401(a) and 9426(a) of this Act, is amended in6 serting after paragraph (13) the following:

7 ‘‘(14) INTERSTATE ENFORCEMENT.—(A) ADOP8 TION OF UIFSA.—Procedures under which the State

9 adopts in its entirety (with the modifications and ad10 ditions specified in this paragraph) not later than

11 January 1, 1997, and uses on and after such date,

12 the Uniform Interstate Family Support Act, as ap13 proved by the National Conference of Commissioners

14 on Uniform State Laws in August, 1992.

15 ‘‘(B) EXPANDED APPLICATION OF UIFSA.—The

16 State law adopted pursuant to subparagraph (A)

17 shall be applied to any case—

18 ‘‘(i) involving an order established or modi19 fied in one State and for which a subsequent

20 modification is sought in another State; or

21 ‘‘(ii) in which interstate activity is required

22 to enforce an order.

23 ‘‘(C) JURISDICTION TO MODIFY ORDERS.—The

24 State law adopted pursuant to subparagraph (A) of

25 this paragraph shall contain the following provision
803

Title IX, Subtitle D

•HR 2530 IH

1 in lieu of section 611(a)(1) of the Uniform Inter2 state Family Support Act described in such subpara3 graph (A):

4 ‘‘ ‘(1) the following requirements are met:

5 ‘‘ ‘(i) the child, the individual obligee, and

6 the obligor—

7 ‘‘ ‘(I) do not reside in the issuing

8 State; and

9 ‘‘ ‘(II) either reside in this State or

10 are subject to the jurisdiction of this State

11 pursuant to section 201; and

12 ‘‘ ‘(ii) (in any case where another State is

13 exercising or seeks to exercise jurisdiction to

14 modify the order) the conditions of section 204

15 are met to the same extent as required for pro16 ceedings to establish orders; or’.

17 ‘‘(D) SERVICE OF PROCESS.—The State law

18 adopted pursuant to subparagraph (A) shall recog19 nize as valid, for purposes of any proceeding subject

20 to such State law, service of process upon persons

21 in the State (and proof of such service) by any

22 means acceptable in another State which is the initi23 ating or responding State in such proceeding.

24 ‘‘(E) COOPERATION BY EMPLOYERS.—The

25 State law adopted pursuant to subparagraph (A)
804

Title IX, Subtitle D

•HR 2530 IH

1 shall provide for the use of procedures (including

2 sanctions for noncompliance) under which all entities

3 in the State (including for-profit, nonprofit, and gov4 ernmental employers) are required to provide

5 promptly, in response to a request by the State

6 agency of that or any other State administering a

7 program under this part, information on the employ8 ment, compensation, and benefits of any individual

9 employed by such entity as an employee or contrac10 tor.’’.

11 SEC. 9432. IMPROVEMENTS TO FULL FAITH AND CREDIT

12 FOR CHILD SUPPORT ORDERS.

13 Section 1738B of title 28, United States Code, is

14 amended—

15 (1) in subsection (a)(2), by striking ‘‘subsection

16 (e)’’ and inserting ‘‘subsections (e), (f), and (i)’’;

17 (2) in subsection (b), by inserting after the 2nd

18 undesignated paragraph the following:

19 ‘‘ ‘child’s home State’ means the State in which

20 a child lived with a parent or a person acting as par21 ent for at least six consecutive months immediately

22 preceding the time of filing of a petition or com23 parable pleading for support and, if a child is less

24 than six months old, the State in which the child

25 lived from birth with any of them. A period of tem-
805

Title IX, Subtitle D

•HR 2530 IH

1 porary absence of any of them is counted as part of

2 the six-month period.’’;

3 (3) in subsection (c), by inserting ‘‘by a court

4 of a State’’ before ‘‘is made’’;

5 (4) in subsection (c)(1), by inserting ‘‘and sub6 sections (e), (f), and (g)’’ after ‘‘located’’;

7 (5) in subsection (d)—

8 (A) by inserting ‘‘individual’’ before ‘‘con9 testant’’; and

10 (B) by striking ‘‘subsection (e)’’ and in11 serting ‘‘subsections (e) and (f)’’;

12 (6) in subsection (e), by striking ‘‘make a modi13 fication of a child support order with respect to a

14 child that is made’’ and inserting ‘‘modify a child

15 support order issued’’;

16 (7) in subsection (e)(1), by inserting ‘‘pursuant

17 to subsection (i)’’ before the semicolon;

18 (8) in subsection (e)(2)—

19 (A) by inserting ‘‘individual’’ before ‘‘con20 testant’’ each place such term appears; and

21 (B) by striking ‘‘to that court’s making the

22 modification and assuming’’ and inserting ‘‘with

23 the State of continuing, exclusive jurisdiction

24 for a court of another State to modify the order

25 and assume’’;
806

Title IX, Subtitle D

•HR 2530 IH

1 (9) by redesignating subsections (f) and (g) as

2 subsections (g) and (h), respectively;

3 (10) by inserting after subsection (e) the follow4 ing:

5 ‘‘(f) RECOGNITION OF CHILD SUPPORT ORDERS.—

6 If one or more child support orders have been issued in

7 this or another State with regard to an obligor and a child,

8 a court shall apply the following rules in determining

9 which order to recognize for purposes of continuing, exclu10 sive jurisdiction and enforcement:

11 ‘‘(1) If only one court has issued a child sup12 port order, the order of that court must be recog13 nized.

14 ‘‘(2) If two or more courts have issued child

15 support orders for the same obligor and child, and

16 only one of the courts would have continuing, exclu17 sive jurisdiction under this section, the order of that

18 court must be recognized.

19 ‘‘(3) If two or more courts have issued child

20 support orders for the same obligor and child, and

21 only one of the courts would have continuing, exclu22 sive jurisdiction under this section, an order issued

23 by a court in the current home State of the child

24 must be recognized, but if an order has not been is-
807

Title IX, Subtitle D

•HR 2530 IH

1 sued in the current home State of the child, the

2 order most recently issued must be recognized.

3 ‘‘(4) If two or more courts have issued child

4 support orders for the same obligor and child, and

5 none of the courts would have continuing, exclusive

6 jurisdiction under this section, a court may issue a

7 child support order, which must be recognized.

8 ‘‘(5) The court that has issued an order recog9 nized under this subsection is the court having con10 tinuing, exclusive jurisdiction.’’;

11 (11) in subsection (g) (as so redesignated)—

12 (A) by striking ‘‘PRIOR’’ and inserting

13 ‘‘MODIFIED’’; and

14 (B) by striking ‘‘subsection (e)’’ and in15 serting ‘‘subsections (e) and (f)’’;

16 (12) in subsection (h) (as so redesignated)—

17 (A) in paragraph (2), by inserting ‘‘includ18 ing the duration of current payments and other

19 obligations of support’’ before the comma; and

20 (B) in paragraph (3), by inserting ‘‘arrears

21 under’’ after ‘‘enforce’’; and

22 (13) by adding at the end the following:

23 ‘‘(i) REGISTRATION FOR MODIFICATION.—If there is

24 no individual contestant or child residing in the issuing

25 State, the party or support enforcement agency seeking
808

Title IX, Subtitle D

•HR 2530 IH

1 to modify, or to modify and enforce, a child support order

2 issued in another State shall register that order in a State

3 with jurisdiction over the nonmovant for the purpose of

4 modification.’’.

5 SEC. 9433. STATE LAWS PROVIDING EXPEDITED PROCE6 DURES.

7 (a) STATE LAW REQUIREMENTS.—Section 466 (42

8 U.S.C. 666) is amended—

9 (1) in subsection (a)(2), in the first sentence, to

10 read as follows: ‘‘Expedited administrative and judi11 cial procedures (including the procedures specified in

12 subsection (c)) for establishing paternity and for es13 tablishing, modifying, and enforcing support obliga14 tions.’’; and

15 (2) by adding after subsection (b) the following

16 new subsection:

17 ‘‘(c) EXPEDITED PROCEDURES.—The procedures

18 specified in this subsection are the following:

19 ‘‘(1) ADMINISTRATIVE ACTION BY STATE AGEN20 CY.—Procedures which give the State agency the au21 thority (and recognize and enforce the authority of

22 State agencies of other States), without the necessity

23 of obtaining an order from any other judicial or ad24 ministrative tribunal (but subject to due process

25 safeguards, including (as appropriate) requirements
809

Title IX, Subtitle D

•HR 2530 IH

1 for notice, opportunity to contest the action, and op2 portunity for an appeal on the record to an inde3 pendent administrative or judicial tribunal), to take

4 the following actions relating to establishment or en5 forcement of orders:

6 ‘‘(A) GENETIC TESTING.—To order genetic

7 testing for the purpose of paternity establish8 ment as provided in section 466(a)(5).

9 ‘‘(B) DEFAULT ORDERS.—To enter a de10 fault order, upon a showing of service of proc11 ess and any additional showing required by

12 State law—

13 ‘‘(i) establishing paternity, in the case

14 of any putative father who refuses to sub15 mit to genetic testing; and

16 ‘‘(ii) establishing or modifying a sup17 port obligation, in the case of a parent (or

18 other obligor or obligee) who fails to re19 spond to notice to appear at a proceeding

20 for such purpose.

21 ‘‘(C) SUBPOENAS.—To subpoena any fi22 nancial or other information needed to estab23 lish, modify, or enforce an order, and to sanc24 tion failure to respond to any such subpoena.
810

Title IX, Subtitle D

•HR 2530 IH

1 ‘‘(D) ACCESS TO PERSONAL AND FINAN2 CIAL INFORMATION.—To obtain access, subject

3 to safeguards on privacy and information secu4 rity, to the following records (including auto5 mated access, in the case of records maintained

6 in automated data bases):

7 ‘‘(i) records of other State and local

8 government agencies, including—

9 ‘‘(I) vital statistics (including

10 records of marriage, birth, and di11 vorce);

12 ‘‘(II) State and local tax and rev13 enue records (including information

14 on residence address, employer, in15 come and assets);

16 ‘‘(III) records concerning real

17 and titled personal property;

18 ‘‘(IV) records of occupational and

19 professional licenses, and records con20 cerning the ownership and control of

21 corporations, partnerships, and other

22 business entities;

23 ‘‘(V) employment security

24 records;
811

Title IX, Subtitle D

•HR 2530 IH

1 ‘‘(VI) records of agencies admin2 istering public assistance programs;

3 ‘‘(VII) records of the motor vehi4 cle department; and

5 ‘‘(VIII) corrections records; and

6 ‘‘(ii) certain records held by private

7 entities, including—

8 ‘‘(I) customer records of public

9 utilities and cable television compa10 nies; and

11 ‘‘(II) information (including in12 formation on assets and liabilities) on

13 individuals who owe or are owed sup14 port (or against or with respect to

15 whom a support obligation is sought)

16 held by financial institutions (subject

17 to limitations on liability of such enti18 ties arising from affording such ac19 cess).

20 ‘‘(E) INCOME WITHHOLDING.—To order

21 income withholding in accordance with sub22 section (a)(1) and (b) of section 466.

23 ‘‘(F) CHANGE IN PAYEE.—(In cases where

24 support is subject to an assignment under sec25 tion 403(b)(1)(E)(i), 471(a)(17), or 1912, or to
812

Title IX, Subtitle D

•HR 2530 IH

1 a requirement to pay through the centralized

2 collections unit under section 454B) upon pro3 viding notice to obligor and obligee, to direct

4 the obligor or other payor to change the payee

5 to the appropriate government entity.

6 ‘‘(G) SECURE ASSETS TO SATISFY ARREAR7 AGES.—For the purpose of securing overdue

8 support—

9 ‘‘(i) to intercept and seize any peri10 odic or lump-sum payment to the obligor

11 by or through a State or local government

12 agency, including—

13 ‘‘(I) unemployment compensa14 tion, workers’ compensation, and

15 other benefits;

16 ‘‘(II) judgments and settlements

17 in cases under the jurisdiction of the

18 State or local government; and

19 ‘‘(III) lottery winnings;

20 ‘‘(ii) to attach and seize assets of the

21 obligor held by financial institutions;

22 ‘‘(iii) to attach public and private re23 tirement funds in appropriate cases, as de24 termined by the Secretary; and
813

Title IX, Subtitle D

•HR 2530 IH

1 ‘‘(iv) to impose liens in accordance

2 with paragraph (a)(4) and, in appropriate

3 cases, to force sale of property and dis4 tribution of proceeds.

5 ‘‘(H) INCREASE MONTHLY PAYMENTS.—

6 For the purpose of securing overdue support, to

7 increase the amount of monthly support pay8 ments to include amounts for arrearages (sub9 ject to such conditions or restrictions as the

10 State may provide).

11 ‘‘(I) SUSPENSION OF DRIVERS’ LI12 CENSES.—To suspend drivers’ licenses of indi13 viduals owing past-due support, in accordance

14 with subsection (a)(16).

15 ‘‘(2) SUBSTANTIVE AND PROCEDURAL RULES.—

16 The expedited procedures required under subsection

17 (a)(2) shall include the following rules and author18 ity, applicable with respect to all proceedings to es19 tablish paternity or to establish, modify, or enforce

20 support orders:

21 ‘‘(A) LOCATOR INFORMATION; PRESUMP22 TIONS CONCERNING NOTICE.—Procedures

23 under which—

24 ‘‘(i) the parties to any paternity or

25 child support proceedings are required
814

Title IX, Subtitle D

•HR 2530 IH

1 (subject to privacy safeguards) to file with

2 the tribunal before entry of an order, and

3 to update as appropriate, information on

4 location and identity (including Social Se5 curity number, residential and mailing ad6 dresses, telephone number, driver’s license

7 number, and name, address, and telephone

8 number of employer); and

9 ‘‘(ii) in any subsequent child support

10 enforcement action between the same par11 ties, the tribunal shall be authorized, upon

12 sufficient showing that diligent effort has

13 been made to ascertain such party’s cur14 rent location, to deem due process require15 ments for notice and service of process to

16 be met, with respect to such party, by de17 livery to the most recent residential or em18 ployer address so filed pursuant to clause

19 (i).

20 ‘‘(B) STATEWIDE JURISDICTION.—Proce21 dures under which—

22 ‘‘(i) the State agency and any admin23 istrative or judicial tribunal with authority

24 to hear child support and paternity cases

25 exerts statewide jurisdiction over the par-
815

Title IX, Subtitle D

•HR 2530 IH

1 ties, and orders issued in such cases have

2 statewide effect; and

3 ‘‘(ii) (in the case of a State in which

4 orders in such cases are issued by local ju5 risdictions) a case may be transferred be6 tween jurisdictions in the State without

7 need for any additional filing by the peti8 tioner, or service of process upon the re9 spondent, to retain jurisdiction over the

10 parties.’’.

11 (c) EXCEPTIONS FROM STATE LAW REQUIRE12 MENTS.—Section 466(d) (42 U.S.C. 666(d)) is amend13 ed—

14 (1) by striking ‘‘(d) If’’ and inserting the fol15 lowing:

16 ‘‘(d) EXEMPTIONS FROM REQUIREMENTS.—

17 ‘‘(1) IN GENERAL.—Subject to paragraph (2),

18 if’’; and

19 (2) by adding at the end the following new

20 paragraph:

21 ‘‘(2) NONEXEMPT REQUIREMENTS.—The Sec22 retary shall not grant an exemption from the re23 quirements of—

24 ‘‘(A) subsection (a)(5) (concerning proce25 dures for paternity establishment);
816

Title IX, Subtitle D

•HR 2530 IH

1 ‘‘(B) subsection (a)(10) (concerning modi2 fication of orders);

3 ‘‘(C) subsection (a)(12) (concerning re4 cording of orders in the central State case reg5 istry);

6 ‘‘(D) subsection (a)(13) (concerning re7 cording of Social Security numbers);

8 ‘‘(E) subsection (a)(14) (concerning inter9 state enforcement); or

10 ‘‘(F) subsection (c) (concerning expedited

11 procedures), other than paragraph (1)(A) there12 of (concerning establishment or modification of

13 support amount).’’.

14 (d) AUTOMATION OF STATE AGENCY FUNCTIONS.—

15 Section 454A, as added by section 9415(a)(2) of this Act

16 and as amended by sections 9421 and 9422(c) of this Act,

17 is amended by adding at the end the following new sub18 section:

19 ‘‘(h) EXPEDITED ADMINISTRATIVE PROCEDURES.—

20 The automated system required under this section shall

21 be used, to the maximum extent feasible, to implement any

22 expedited administrative procedures required under sec23 tion 466(c).’’.
817

Title IX, Subtitle D

•HR 2530 IH

1 CHAPTER 5—PATERNITY ESTABLISHMENT

2 SEC. 9441. SENSE OF THE CONGRESS.

3 It is the sense of the Congress that social services

4 should be provided in hospitals to women who have become

5 pregnant as a result of rape or incest.

6 SEC. 9442. AVAILABILITY OF PARENTING SOCIAL SERVICES

7 FOR NEW FATHERS.

8 Section 466(a) (42 U.S.C. 666(a)), as amended by

9 sections 9401(a), 9426(a), and 9431 of this Act, is amend10 ed by inserting after paragraph (14) the following:

11 ‘‘(15) Procedures for providing new fathers

12 with positive parenting counseling that stresses the

13 importance of paying child support in a timely man14 ner, in accordance with regulations prescribed by the

15 Secretary.’’.

16 SEC. 9443. COOPERATION REQUIREMENT AND GOOD CAUSE

17 EXCEPTION.

18 (a) IN GENERAL.—Section 454 (42 U.S.C. 654) is

19 amended—

20 (1) by striking ‘‘and’’ at the end of paragraph

21 (23);

22 (2) by striking the period at the end of para23 graph (24) and inserting ‘‘; and’’; and

24 (3) by inserting after paragraph (24) the fol25 lowing:
818

Title IX, Subtitle D

•HR 2530 IH

1 ‘‘(25) provide that the State agency administer2 ing the plan under this part—

3 ‘‘(A) will make the determination specified

4 under paragraph (4), as to whether an individ5 ual is cooperating with efforts to establish pa6 ternity and secure support (or has good cause

7 not to cooperate with such efforts) for purposes

8 of the requirements of sections 403(b)(1)(E)(i)

9 and 1912;

10 ‘‘(B) will advise individuals, both orally

11 and in writing, of the grounds for good cause

12 exceptions to the requirement to cooperate with

13 such efforts;

14 ‘‘(C) will take the best interests of the

15 child into consideration in making the deter16 mination whether such individual has good

17 cause not to cooperate with such efforts;

18 ‘‘(D)(i) will make the initial determination

19 as to whether an individual is cooperating (or

20 has good cause not to cooperate) with efforts to

21 establish paternity within 10 days after such in22 dividual is referred to such State agency by the

23 State agency administering the program under

24 part A of title XIX;
819

Title IX, Subtitle D

•HR 2530 IH

1 ‘‘(ii) will make redeterminations as to co2 operation or good cause at appropriate inter3 vals; and

4 ‘‘(iii) will promptly notify the individual,

5 and the State agencies administering such pro6 grams, of each such determination and redeter7 mination;

8 ‘‘(E) with respect to any child born on or

9 after the date 10 months after enactment of

10 this provision, will not determine (or redeter11 mine) the mother (or other custodial relative) of

12 such child to be cooperating with efforts to es13 tablish paternity unless such individual fur14 nishes—

15 ‘‘(i) the name of the putative father

16 (or fathers); and

17 ‘‘(ii) sufficient additional information

18 to enable the State agency, if reasonable

19 efforts were made, to verify the identity of

20 the person named as the putative father

21 (including such information as the putative

22 father’s present address, telephone num23 ber, date of birth, past or present place of

24 employment, school previously or currently

25 attended, and names and addresses of par-
820

Title IX, Subtitle D

•HR 2530 IH

1 ents, friends, or relatives able to provide

2 location information, or other information

3 that could enable service of process on

4 such person), and

5 ‘‘(F)(i) (where a custodial parent who was

6 initially determined not to be cooperating (or to

7 have good cause not to cooperate) is later deter8 mined to be cooperating or to have good cause

9 not to cooperate) will immediately notify the

10 State agencies administering the programs

11 under part A of title XIX that this eligibility

12 condition has been met; and

13 ‘‘(ii) (where a custodial parent was initially

14 determined to be cooperating (or to have good

15 cause not to cooperate)) will not later determine

16 such individual not to be cooperating (or not to

17 have good cause not to cooperate) until such in18 dividual has been afforded an opportunity for a

19 hearing.’’.

20 (b) MEDICAID AMENDMENTS.—Section 1912(a) (42

21 U.S.C. 1396k(a)) is amended—

22 (1) in paragraph (1)(B), by inserting ‘‘(except

23 as provided in paragraph (2))’’ after ‘‘to cooperate

24 with the State’’;
821

Title IX, Subtitle D

•HR 2530 IH

1 (2) in subparagraphs (B) and (C) of paragraph

2 (1) by striking ‘‘, unless’’ and all that follows and

3 inserting a semicolon; and

4 (3) by redesignating paragraph (2) as para5 graph (5), and inserting after paragraph (1) the fol6 lowing new paragraphs:

7 ‘‘(2) provide that the State agency will imme8 diately refer each applicant or recipient requiring

9 paternity establishment services to the State agency

10 administering the program under part D of title IV;

11 ‘‘(3) provide that an individual will not be re12 quired to cooperate with the State, as provided

13 under paragraph (1), if the individual is found to

14 have good cause for refusing to cooperate, as deter15 mined in accordance with standards prescribed by

16 the Secretary, which standards shall take into con17 sideration the best interests of the individuals in18 volved—

19 ‘‘(A) to the satisfaction of the State agency

20 administering the program under part D, as de21 termined in accordance with section 454(25),

22 with respect to the requirements to cooperate

23 with efforts to establish paternity and to obtain

24 support (including medical support) from a par25 ent; and
822

Title IX, Subtitle D

•HR 2530 IH

1 ‘‘(B) to the satisfaction of the State agen2 cy administering the program under this title,

3 with respect to other requirements to cooperate

4 under paragraph (1);

5 ‘‘(4) provide that (except as provided in para6 graph (5)) an applicant requiring paternity estab7 lishment services (other than an individual presump8 tively eligible pursuant to section 1920) shall not be

9 eligible for medical assistance under this title until

10 such applicant—

11 ‘‘(i) has furnished to the agency admin12 istering the State plan under part D of title IV

13 the information specified in section 454(25)(E);

14 or

15 ‘‘(ii) has been determined by such agency

16 to have good cause not to cooperate; and

17 ‘‘(5) provide that the provisions of paragraph

18 (4) shall not apply with respect to an applicant—

19 ‘‘(i) if such agency has not, within 10 days

20 after such individual was referred to such agen21 cy, provided the notification required by section

22 454(25)(D)(iii), until such notification is re23 ceived); and

24 ‘‘(ii) if such individual appeals a deter25 mination that the individual lacks good cause
823

Title IX, Subtitle D

•HR 2530 IH

1 for noncooperation, until after such determina2 tion is affirmed after notice and opportunity for

3 a hearing.’’.

4 (c) EFFECTIVE DATE.—The amendments made by

5 this section shall be effective with respect to applications

6 filed in or after the first calendar quarter beginning 10

7 months or more after the date of the enactment of this

8 Act (or such earlier quarter as the State may select) for

9 assistance under a State plan approved under part A of

10 title IV of the Social Security Act or for medical assistance

11 under a State plan approved under title XIX of such Act.

12 SEC. 9444. FEDERAL MATCHING PAYMENTS.

13 (a) INCREASED BASE MATCHING RATE.—Section

14 455(a)(2) (42 U.S.C. 655(a)(2)) is amended to read as

15 follows:

16 ‘‘(2) The applicable percent for a quarter for

17 purposes of paragraph (1)(A) is—

18 ‘‘(A) for fiscal year 1996, 69 percent;

19 ‘‘(B) for fiscal year 1997, 72 percent; and

20 ‘‘(C) for fiscal year 1998 and succeeding

21 fiscal years, 75 percent.’’.

22 (b) MAINTENANCE OF EFFORT.—Section 455 (42

23 U.S.C. 655) is amended—
824

Title IX, Subtitle D

•HR 2530 IH

1 (1) in subsection (a)(1), in the matter preced2 ing subparagraph (A), by striking ‘‘From’’ and in3 serting ‘‘Subject to subsection (c), from’’; and

4 (2) by inserting after subsection (b) the follow5 ing:

6 ‘‘(c) MAINTENANCE OF EFFORT.—Notwithstanding

7 subsection (a), total expenditures for the State program

8 under this part for fiscal year 1996 and each succeeding

9 fiscal year, reduced by the percentage specified for such

10 fiscal year under subparagraph (A), (B), or (C)(i) of para11 graph (2), shall not be less than such total expenditures

12 for fiscal year 1995, reduced by 66 percent.’’.

13 SEC. 9445. STATE LAWS CONCERNING PATERNITY ESTAB14 LISHMENT.

15 (a) STATE LAWS REQUIRED.—Section 466(a)(5) (42

16 U.S.C. 666(a)(5)) is amended—

17 (1) by striking ‘‘(5)’’ and inserting the follow18 ing:

19 ‘‘(5) PROCEDURES CONCERNING PATERNITY ES20 TABLISHMENT.—’’;

21 (2) in subparagraph (A)—

22 (A) by striking ‘‘(A)(i)’’ and inserting the

23 following:
825

Title IX, Subtitle D

•HR 2530 IH

1 ‘‘(A) ESTABLISHMENT PROCESS AVAIL2 ABLE FROM BIRTH UNTIL AGE EIGHTEEN.—

3 (i)’’; and

4 (B) by indenting clauses (i) and (ii) so

5 that the left margin of such clauses is 2 ems to

6 the right of the left margin of paragraph (4);

7 (3) in subparagraph (B)—

8 (A) by striking ‘‘(B)’’ and inserting the

9 following:

10 ‘‘(B) PROCEDURES CONCERNING GENETIC

11 TESTING.—(i)’’;

12 (B) in clause (i), as redesignated, by in13 serting before the period ‘‘, where such request

14 is supported by a sworn statement (I) by such

15 party alleging paternity setting forth facts es16 tablishing a reasonable possibility of the req17 uisite sexual contact of the parties, or (II) by

18 such party denying paternity setting forth facts

19 establishing a reasonable possibility of the

20 nonexistence of sexual contact of the parties;’’;

21 (C) by inserting after and below clause (i)

22 (as redesignated) the following new clause:

23 ‘‘(ii) Procedures which require the State

24 agency, in any case in which such agency orders

25 genetic testing—
826

Title IX, Subtitle D

•HR 2530 IH

1 ‘‘(I) to pay costs of such tests, subject

2 to recoupment (where the State so elects)

3 from the putative father if paternity is es4 tablished; and

5 ‘‘(II) to obtain additional testing in

6 any case where an original test result is

7 disputed, upon request and advance pay8 ment by the disputing party.’’;

9 (4) by striking subparagraphs (C) and (D) and

10 inserting the following:

11 ‘‘(C) PATERNITY ACKNOWLEDGMENT.—(i)

12 Procedures for a simple civil process for volun13 tarily acknowledging paternity under which the

14 State must provide that, before a mother and a

15 putative father can sign an acknowledgment of

16 paternity, the putative father and the mother

17 must be given notice, orally, in writing, and in

18 a language that each can understand, of the al19 ternatives to, the legal consequences of, and the

20 rights (including, if 1 parent is a minor, any

21 rights afforded due to minority status) and re22 sponsibilities that arise from, signing the ac23 knowledgment.

24 ‘‘(ii) Such procedures must include a hos25 pital-based program for the voluntary acknowl-
827

Title IX, Subtitle D

•HR 2530 IH

1 edgment of paternity focusing on the period im2 mediately before or after the birth of a child.

3 ‘‘(iii) Such procedures must require the

4 State agency responsible for maintaining birth

5 records to offer voluntary paternity establish6 ment services.

7 ‘‘(iv) The Secretary shall prescribe regula8 tions governing voluntary paternity establish9 ment services offered by hospitals and birth

10 record agencies. The Secretary shall prescribe

11 regulations specifying the types of other entities

12 that may offer voluntary paternity establish13 ment services, and governing the provision of

14 such services, which shall include a requirement

15 that such an entity must use the same notice

16 provisions used by, the same materials used by,

17 provide the personnel providing such services

18 with the same training provided by, and evalu19 ate the provision of such services in the same

20 manner as, voluntary paternity establishment

21 programs of hospitals and birth record agen22 cies.

23 ‘‘(v) Such procedures must require the

24 State and those required to establish paternity

25 to use only the affidavit developed under section
828

Title IX, Subtitle D

•HR 2530 IH

1 452(a)(7) for the voluntary acknowledgment of

2 paternity, and to give full faith and credit to

3 such an affidavit signed in any other State.

4 ‘‘(D) STATUS OF SIGNED PATERNITY AC5 KNOWLEDGMENT.—(i) Procedures under which

6 a signed acknowledgment of paternity is consid7 ered a legal finding of paternity, subject to the

8 right of any signatory to rescind the acknowl9 edgment within 60 days.

10 ‘‘(ii)(I) Procedures under which, after the

11 60-day period referred to in clause (i), a signed

12 acknowledgment of paternity may be challenged

13 in court only on the basis of fraud, duress, or

14 material mistake of fact, with the burden of

15 proof upon the challenger, and under which the

16 legal responsibilities (including child support

17 obligations) of any signatory arising from the

18 acknowledgment may not be suspended during

19 the challenge, except for good cause shown.

20 ‘‘(II) Procedures under which, after the

21 60-day period referred to in clause (i), a minor

22 who signs an acknowledgment of paternity

23 other than in the presence of a parent or court24 appointed guardian ad litem may rescind the
829

Title IX, Subtitle D

•HR 2530 IH

1 acknowledgment in a judicial or administrative

2 proceeding, until the earlier of—

3 ‘‘(aa) attaining the age of majority; or

4 ‘‘(bb) the date of the first judicial or

5 administrative proceeding brought (after

6 the signing) to establish a child support

7 obligation, visitation rights, or custody

8 rights with respect to the child whose pa9 ternity is the subject of the acknowledg10 ment, and at which the minor is rep11 resented by a parent, guardian ad litem, or

12 attorney.’’;

13 (5) by striking subparagraph (E) and inserting

14 the following:

15 ‘‘(E) BAR ON ACKNOWLEDGMENT RATIFI16 CATION PROCEEDINGS.—Procedures under

17 which no judicial or administrative proceedings

18 are required or permitted to ratify an unchal19 lenged acknowledgment of paternity.’’;

20 (6) by striking subparagraph (F) and inserting

21 the following:

22 ‘‘(F) ADMISSIBILITY OF GENETIC TESTING

23 RESULTS.—Procedures—

24 ‘‘(i) requiring that the State admit

25 into evidence, for purposes of establishing
830

Title IX, Subtitle D

•HR 2530 IH

1 paternity, results of any genetic test that

2 is—

3 ‘‘(I) of a type generally acknowl4 edged, by accreditation bodies des5 ignated by the Secretary, as reliable

6 evidence of paternity; and

7 ‘‘(II) performed by a laboratory

8 approved by such an accreditation

9 body;

10 ‘‘(ii) that any objection to genetic

11 testing results must be made in writing not

12 later than a specified number of days be13 fore any hearing at which such results may

14 be introduced into evidence (or, at State

15 option, not later than a specified number

16 of days after receipt of such results); and

17 ‘‘(iii) that, if no objection is made, the

18 test results are admissible as evidence of

19 paternity without the need for foundation

20 testimony or other proof of authenticity or

21 accuracy.’’; and

22 (7) by adding after subparagraph (H) the

23 following new subparagraphs:
831

Title IX, Subtitle D

•HR 2530 IH

1 ‘‘(I) NO RIGHT TO JURY TRIAL.—Proce2 dures providing that the parties to an action to

3 establish paternity are not entitled to jury trial.

4 ‘‘(J) TEMPORARY SUPPORT ORDER BASED

5 ON PROBABLE PATERNITY IN CONTESTED

6 CASES.—Procedures which require that a tem7 porary order be issued, upon motion by a party,

8 requiring the provision of child support pending

9 an administrative or judicial determination of

10 parentage, where there is clear and convincing

11 evidence of paternity (on the basis of genetic

12 tests or other evidence).

13 ‘‘(K) PROOF OF CERTAIN SUPPORT AND

14 PATERNITY ESTABLISHMENT COSTS.—Proce15 dures under which bills for pregnancy, child16 birth, and genetic testing are admissible as evi17 dence without requiring third-party foundation

18 testimony, and shall constitute prima facie evi19 dence of amounts incurred for such services and

20 testing on behalf of the child.

21 ‘‘(L) WAIVER OF STATE DEBTS FOR CO22 OPERATION.—At the option of the State, proce23 dures under which the tribunal establishing pa24 ternity and support has discretion to waive

25 rights to all or part of amounts owed to the
832

Title IX, Subtitle D

•HR 2530 IH

1 State (but not to the mother) for costs related

2 to pregnancy, childbirth, and genetic testing

3 and for public assistance paid to the family

4 where the father cooperates or acknowledges

5 paternity before or after genetic testing.

6 ‘‘(M) STANDING OF PUTATIVE FATHERS.—

7 Procedures ensuring that the putative father

8 has a reasonable opportunity to initiate a pater9 nity action.’’.

10 (b) NATIONAL PATERNITY ACKNOWLEDGMENT AFFI11 DAVIT.—Section 452(a)(7) (42 U.S.C. 652(a)(7)) is

12 amended by inserting ‘‘, and develop an affidavit to be

13 used for the voluntary acknowledgment of paternity which

14 shall include the social security account number of each

15 parent’’ before the semicolon.

16 (c) TECHNICAL AMENDMENT.—Section 468 (42

17 U.S.C. 668) is amended by striking ‘‘a simple civil process

18 for voluntarily acknowledging paternity and’’.

19 SEC. 9446. OUTREACH FOR VOLUNTARY PATERNITY ESTAB20 LISHMENT.

21 (a) STATE PLAN REQUIREMENT.—Section 454(23)

22 (42 U.S.C. 654(23)) is amended by adding at the end the

23 following new subparagraph:

24 ‘‘(C) publicize the availability and encour25 age the use of procedures for voluntary estab-
833

Title IX, Subtitle D

•HR 2530 IH

1 lishment of paternity and child support through

2 a variety of means, which—

3 ‘‘(i) include distribution of written

4 materials at health care facilities (includ5 ing hospitals and clinics), and other loca6 tions such as schools;

7 ‘‘(ii) may include pre-natal programs

8 to educate expectant couples on individual

9 and joint rights and responsibilities with

10 respect to paternity (and may require all

11 expectant recipients of assistance under

12 part A to participate in such pre-natal pro13 grams, as an element of cooperation with

14 efforts to establish paternity and child sup15 port);

16 ‘‘(iii) include, with respect to each

17 child discharged from a hospital after birth

18 for whom paternity or child support has

19 not been established, reasonable follow-up

20 efforts (including at least one contact of

21 each parent whose whereabouts are known,

22 except where there is reason to believe

23 such follow-up efforts would put mother or

24 child at risk), providing—
834

Title IX, Subtitle D

•HR 2530 IH

1 ‘‘(I) in the case of a child for

2 whom paternity has not been estab3 lished, information on the benefits of

4 and procedures for establishing pater5 nity; and

6 ‘‘(II) in the case of a child for

7 whom paternity has been established

8 but child support has not been estab9 lished, information on the benefits of

10 and procedures for establishing a

11 child support order, and an applica12 tion for child support services;’’.

13 (b) ENHANCED FEDERAL MATCHING.—Section

14 455(a)(1)(C) (42 U.S.C. 655(a)(1)(C)) is amended—

15 (1) by inserting ‘‘(i)’’ before ‘‘laboratory costs’’,

16 and

17 (2) by inserting before the semicolon ‘‘, and (ii)

18 costs of outreach programs designed to encourage

19 voluntary acknowledgment of paternity’’.

20 (c) EFFECTIVE DATES.—(1) The amendments made

21 by subsection (a) shall become effective October 1, 1997.

22 (2) The amendments made by subsection (b) shall be

23 effective with respect to calendar quarters beginning on

24 and after October 1, 1996.
835

Title IX, Subtitle D

•HR 2530 IH

1 CHAPTER 6—ESTABLISHMENT AND

2 MODIFICATION OF SUPPORT ORDERS

3 SEC. 9451. NATIONAL CHILD SUPPORT GUIDELINES COM4 MISSION.

5 (a) ESTABLISHMENT.—There is hereby established a

6 commission to be known as the ‘‘National Child Support

7 Guidelines Commission’’ (in this section referred to as the

8 ‘‘Commission’’).

9 (b) GENERAL DUTIES.—The Commission shall de10 velop a national child support guideline for consideration

11 by the Congress that is based on a study of various guide12 line models, the benefits and deficiencies of such models,

13 and any needed improvements.

14 (c) MEMBERSHIP.—

15 (1) NUMBER; APPOINTMENT.—

16 (A) IN GENERAL.—The Commission shall

17 be composed of 12 individuals appointed jointly

18 by the Secretary of Health and Human Services

19 and the Congress, not later than January 15,

20 1997, of which—

21 (i) 2 shall be appointed by the Chair22 man of the Committee on Finance of the

23 Senate, and 1 shall be appointed by the

24 ranking minority member of the Commit25 tee;
836

Title IX, Subtitle D

•HR 2530 IH

1 (ii) 2 shall be appointed by the Chair2 man of the Committee on Ways and Means

3 of the House of Representatives, and 1

4 shall be appointed by the ranking minority

5 member of the Committee; and

6 (iii) 6 shall be appointed by the Sec7 retary of Health and Human Services.

8 (B) QUALIFICATIONS OF MEMBERS.—

9 Members of the Commission shall have exper10 tise and experience in the evaluation and devel11 opment of child support guidelines. At least 1

12 member shall represent advocacy groups for

13 custodial parents, at least 1 member shall rep14 resent advocacy groups for noncustodial par15 ents, and at least 1 member shall be the direc16 tor of a State program under part D of title IV

17 of the Social Security Act.

18 (2) TERMS OF OFFICE.—Each member shall be

19 appointed for a term of 2 years. A vacancy in the

20 Commission shall be filled in the manner in which

21 the original appointment was made.

22 (d) COMMISSION POWERS, COMPENSATION, ACCESS

23 TO INFORMATION, AND SUPERVISION.—The first sentence

24 of subparagraph (C), the first and third sentences of sub25 paragraph (D), subparagraph (F) (except with respect to
837

Title IX, Subtitle D

•HR 2530 IH

1 the conduct of medical studies), clauses (ii) and (iii) of

2 subparagraph (G), and subparagraph (H) of section

3 1886(e)(6) of the Social Security Act shall apply to the

4 Commission in the same manner in which such provisions

5 apply to the Prospective Payment Assessment Commis6 sion.

7 (e) REPORT.—Not later than 2 years after the ap8 pointment of members, the Commission shall submit to

9 the President, the Committee on Ways and Means of the

10 House of Representatives, and the Committee on Finance

11 of the Senate, a recommended national child support

12 guideline and a final assessment of issues relating to such

13 a proposed national child support guideline.

14 (f) TERMINATION.—The Commission shall terminate

15 6 months after the submission of the report described in

16 subsection (e).

17 SEC. 9452. SIMPLIFIED PROCESS FOR REVIEW AND ADJUST18 MENT OF CHILD SUPPORT ORDERS.

19 (a) IN GENERAL.—Section 466(a)(10) (42 U.S.C.

20 666(a)(10)) is amended to read as follows:

21 ‘‘(10) PROCEDURES FOR MODIFICATION OF

22 SUPPORT ORDERS.—

23 ‘‘(A)(i) Procedures under which—

24 ‘‘(I) every 3 years, at the request of

25 either parent subject to a child support
838

Title IX, Subtitle D

•HR 2530 IH

1 order, the State shall review and, as appro2 priate, adjust the order in accordance with

3 the guidelines established under section

4 467(a) if the amount of the child support

5 award under the order differs from the

6 amount that would be awarded in accord7 ance with such guidelines, without a re8 quirement for any other change in cir9 cumstances; and

10 ‘‘(II) upon request at any time of ei11 ther parent subject to a child support

12 order, the State shall review and, as appro13 priate, adjust the order in accordance with

14 the guidelines established under section

15 467(a) based on a substantial change in

16 the circumstances of either such parent.

17 ‘‘(ii) Such procedures shall require both

18 parents subject to a child support order to be

19 notified of their rights and responsibilities pro20 vided for under clause (i) at the time the order

21 is issued and in the annual information ex22 change form provided under subparagraph (B).

23 ‘‘(B) Procedures under which each child

24 support order issued or modified in the State

25 after the effective date of this subparagraph
839

Title IX, Subtitle D

•HR 2530 IH

1 shall require the parents subject to the order to

2 provide each other with a complete statement of

3 their respective financial condition annually on

4 a form which shall be established by the Sec5 retary and provided by the State. The Secretary

6 shall establish regulations for the enforcement

7 of such exchange of information.’’.

8 CHAPTER 7—ENFORCEMENT OF SUPPORT

9 ORDERS

10 SEC. 9461. FEDERAL INCOME TAX REFUND OFFSET.

11 (a) CHANGED ORDER OF REFUND DISTRIBUTION

12 UNDER INTERNAL REVENUE CODE.—Section 6402(c) of

13 the Internal Revenue Code of 1986 is amended by striking

14 the 3rd sentence.

15 (b) ELIMINATION OF DISPARITIES IN TREATMENT

16 OF ASSIGNED AND NON-ASSIGNED ARREARAGES.—(1)

17 Section 464(a) (42 U.S.C. 664(a)) is amended—

18 (A) by striking ‘‘(a)’’ and inserting ‘‘(a) OFF19 SET AUTHORIZED.—’’;

20 (B) in paragraph (1)—

21 (i) in the first sentence, by striking ‘‘which

22 has been assigned to such State pursuant to

23 section 402(a)(26) or section 471(a)(17)’’; and
840

Title IX, Subtitle D

•HR 2530 IH

1 (ii) in the second sentence, by striking ‘‘in

2 accordance with section 457 (b)(4) or (d)(3)’’

3 and inserting ‘‘as provided in paragraph (2)’’;

4 (C) in paragraph (2), to read as follows:

5 ‘‘(2) The State agency shall distribute amounts

6 paid by the Secretary of the Treasury pursuant to

7 paragraph (1)—

8 ‘‘(A) in accordance with section 457(a)(4)

9 or (d)(3), in the case of past-due support as10 signed to a State pursuant to section

11 403(b)(1)(E)(i) or 471(a)(17); and

12 ‘‘(B) to or on behalf of the child to whom

13 the support was owed, in the case of past-due

14 support not so assigned.’’;

15 (D) in paragraph (3)—

16 (i) by striking ‘‘or (2)’’ each place it ap17 pears; and

18 (ii) in subparagraph (B), by striking

19 ‘‘under paragraph (2)’’ and inserting ‘‘on ac20 count of past-due support described in para21 graph (2)(B)’’.

22 (2) Section 464(b) (42 U.S.C. 664(b)) is

23 amended—

24 (A) by striking ‘‘(b)(1)’’ and inserting ‘‘(b)

25 REGULATIONS.—’’; and
841

Title IX, Subtitle D

•HR 2530 IH

1 (B) by striking paragraph (2).

2 (3) Section 464(c) (42 U.S.C. 664(c)) is

3 amended—

4 (A) by striking ‘‘(c)(1) Except as provided

5 in paragraph (2), as’’ and inserting ‘‘(c) DEFI6 NITION.—As’’; and

7 (B) by striking paragraphs (2) and (3).

8 (c) EFFECTIVE DATE.—The amendments made by

9 this section shall become effective October 1, 1999.

10 SEC. 9462. INTERNAL REVENUE SERVICE COLLECTION OF

11 ARREARS.

12 (a) AMENDMENT TO INTERNAL REVENUE CODE.—

13 Section 6305(a) of the Internal Revenue Code of 1986 is

14 amended—

15 (1) in paragraph (1), by inserting ‘‘except as

16 provided in paragraph (5)’’ after ‘‘collected’’;

17 (2) by striking ‘‘and’’ at the end of paragraph

18 (3);

19 (3) by striking the period at the end of para20 graph (4) and inserting a comma;

21 (4) by adding after paragraph (4) the following

22 new paragraph:

23 ‘‘(5) no additional fee may be assessed for ad24 justments to an amount previously certified pursu-
842

Title IX, Subtitle D

•HR 2530 IH

1 ant to such section 452(b) with respect to the same

2 obligor.’’; and

3 (5) by striking ‘‘Secretary of Health, Edu4 cation, and Welfare’’ each place it appears and in5 serting ‘‘Secretary of Health and Human Services’’.

6 (b) EFFECTIVE DATE.—The amendments made by

7 this section shall become effective October 1, 1997.

8 SEC. 9463. AUTHORITY TO COLLECT SUPPORT FROM FED9 ERAL EMPLOYEES.

10 (a) CONSOLIDATION AND STREAMLINING OF AU11 THORITIES.—

12 (1) Section 459 (42 U.S.C. 659) is amended in

13 the caption by inserting ‘‘INCOME WITHHOLDING,’’

14 before ‘‘GARNISHMENT’’.

15 (2) Section 459(a) (42 U.S.C. 659(a)) is

16 amended—

17 (A) by striking ‘‘(a)’’ and inserting ‘‘(a)

18 CONSENT TO SUPPORT ENFORCEMENT.—

19 (B) by striking ‘‘section 207’’ and insert20 ing ‘‘section 207 of this Act and 38 U.S.C.

21 5301’’; and

22 (C) by striking all that follows ‘‘a private

23 person,’’ and inserting ‘‘to withholding in ac24 cordance with State law pursuant to subsections

25 (a)(1) and (b) of section 466 and regulations of
843

Title IX, Subtitle D

•HR 2530 IH

1 the Secretary thereunder, and to any other legal

2 process brought, by a State agency administer3 ing a program under this part or by an individ4 ual obligee, to enforce the legal obligation of

5 such individual to provide child support or ali6 mony.’’.

7 (3) Section 459(b) (42 U.S.C. 659(b)) is

8 amended to read as follows:

9 ‘‘(b) CONSENT TO REQUIREMENTS APPLICABLE TO

10 PRIVATE PERSON.— Except as otherwise provided herein,

11 each entity specified in subsection (a) shall be subject,

12 with respect to notice to withhold income pursuant to sub13 section (a)(1) or (b) of section 466, or to any other order

14 or process to enforce support obligations against an indi15 vidual (if such order or process contains or is accompanied

16 by sufficient data to permit prompt identification of the

17 individual and the moneys involved), to the same require18 ments as would apply if such entity were a private per19 son.’’.

20 (4) Section 459(c) (42 U.S.C. 659(c)) is redes21 ignated and relocated as paragraph (2) of subsection

22 (f), and is amended—

23 (A) by striking ‘‘responding to interrog24 atories pursuant to requirements imposed by

25 section 461(b)(3)’’ and inserting ‘‘taking ac-
844

Title IX, Subtitle D

•HR 2530 IH

1 tions necessary to comply with the requirements

2 of subsection (A) with regard to any individ3 ual’’; and

4 (B) by striking ‘‘any of his duties’’ and all

5 that follows and inserting ‘‘such duties.’’.

6 (5) Section 461 (42 U.S.C. 661) is amended by

7 striking subsection (b), and section 459 (42 U.S.C.

8 659) is amended by inserting after subsection (b)

9 (as added by paragraph (3) of this subsection) the

10 following:

11 ‘‘(c) DESIGNATION OF AGENT; RESPONSE TO NOTICE

12 OR PROCESS.—(1) The head of each agency subject to the

13 requirements of this section shall—

14 ‘‘(A) designate an agent or agents to receive or15 ders and accept service of process; and

16 ‘‘(B) publish (i) in the appendix of such regula17 tions, (ii) in each subsequent republication of such

18 regulations, and (iii) annually in the Federal Reg19 ister, the designation of such agent or agents, identi20 fied by title of position, mailing address, and tele21 phone number.’’.

22 (6) Section 459 (42 U.S.C. 659) is amended by

23 striking subsection (d) and by inserting after sub24 section (c)(1) (as added by paragraph (5) of this

25 subsection) the following:
845

Title IX, Subtitle D

•HR 2530 IH

1 ‘‘(2) Whenever an agent designated pursuant to para2 graph (1) receives notice pursuant to subsection (a)(1) or

3 (b) of section 466, or is effectively served with any order,

4 process, or interrogatories, with respect to an individual’s

5 child support or alimony payment obligations, such agent

6 shall—

7 ‘‘(A) as soon as possible (but not later than fif8 teen days) thereafter, send written notice of such no9 tice or service (together with a copy thereof) to such

10 individual at his duty station or last-known home

11 address;

12 ‘‘(B) within 30 days (or such longer period as

13 may be prescribed by applicable State law) after re14 ceipt of a notice pursuant to subsection (a)(1) or (b)

15 of section 466, comply with all applicable provisions

16 of such section 466; and

17 ‘‘(C) within 30 days (or such longer period as

18 may be prescribed by applicable State law) after ef19 fective service of any other such order, process, or

20 interrogatories, respond thereto.’’.

21 (7) Section 461 (42 U.S.C. 661) is amended by

22 striking subsection (c), and section 459 (42 U.S.C.

23 659) is amended by inserting after subsection (c) (as

24 added by paragraph (5) and amended by paragraph

25 (6) of this subsection) the following:
846

Title IX, Subtitle D

•HR 2530 IH

1 ‘‘(d) PRIORITY OF CLAIMS.—In the event that a gov2 ernmental entity receives notice or is served with process,

3 as provided in this section, concerning amounts owed by

4 an individual to more than one person—

5 ‘‘(1) support collection under section 466(b)

6 must be given priority over any other process, as

7 provided in section 466(b)(7);

8 ‘‘(2) allocation of moneys due or payable to an

9 individual among claimants under section 466(b)

10 shall be governed by the provisions of such section

11 466(b) and regulations thereunder; and

12 ‘‘(3) such moneys as remain after compliance

13 with subparagraphs (A) and (B) shall be available to

14 satisfy any other such processes on a first-come,

15 first-served basis, with any such process being satis16 fied out of such moneys as remain after the satisfac17 tion of all such processes which have been previously

18 served.’’.

19 (8) Section 459(e) (42 U.S.C. 659(e)) is

20 amended by striking ‘‘(e)’’ and inserting the follow21 ing:

22 ‘‘(e) NO REQUIREMENT TO VARY PAY CYCLES.—’’.

23 (9) Section 459(f) (42 U.S.C. 659(f)) is amend24 ed by striking ‘‘(f)’’ and inserting the following:

25 ‘‘(f) RELIEF FROM LIABILITY.—(1)’’.
847

Title IX, Subtitle D

•HR 2530 IH

1 (10) Section 461(a) (42 U.S.C. 661(a)) is re2 designated and relocated as section 459(g), and is

3 amended—

4 (A) by striking ‘‘(g)’’ and inserting the fol5 lowing:

6 ‘‘(g) REGULATIONS.—’’; and

7 (B) by striking ‘‘section 459’’ and insert8 ing ‘‘this section’’.

9 (11) Section 462 (42 U.S.C. 662) is amended

10 by striking subsection (f), and section 459 (42

11 U.S.C. 659) is amended by inserting the following

12 after subsection (g) (as added by paragraph (10) of

13 this subsection):

14 ‘‘(h) MONEYS SUBJECT TO PROCESS.—(1) Subject to

15 subsection (i), moneys paid or payable to an individual

16 which are considered to be based upon remuneration for

17 employment, for purposes of this section—

18 ‘‘(A) consist of—

19 ‘‘(i) compensation paid or payable for per20 sonal services of such individual, whether such

21 compensation is denominated as wages, salary,

22 commission, bonus, pay, allowances, or other23 wise (including severance pay, sick pay, and in24 centive pay);
848

Title IX, Subtitle D

•HR 2530 IH

1 ‘‘(ii) periodic benefits (including a periodic

2 benefit as defined in section 228(h)(3)) or other

3 payments—

4 ‘‘(I) under the insurance system es5 tablished by title II;

6 ‘‘(II) under any other system or fund

7 established by the United States which

8 provides for the payment of pensions, re9 tirement or retired pay, annuities, depend10 ents’ or survivors’ benefits, or similar

11 amounts payable on account of personal

12 services performed by the individual or any

13 other individual;

14 ‘‘(III) as compensation for death

15 under any Federal program;

16 ‘‘(IV) under any Federal program es17 tablished to provide ‘black lung’ benefits;

18 or

19 ‘‘(V) by the Secretary of Veterans Af20 fairs as pension, or as compensation for a

21 service-connected disability or death (ex22 cept any compensation paid by such Sec23 retary to a former member of the Armed

24 Forces who is in receipt of retired or re25 tainer pay if such former member has
849

Title IX, Subtitle D

•HR 2530 IH

1 waived a portion of his retired pay in order

2 to receive such compensation); and

3 ‘‘(iii) worker’s compensation benefits paid

4 under Federal or State law; but

5 ‘‘(B) do not include any payment—

6 ‘‘(i) by way of reimbursement or otherwise,

7 to defray expenses incurred by such individual

8 in carrying out duties associated with his em9 ployment; or

10 ‘‘(ii) as allowances for members of the uni11 formed services payable pursuant to chapter 7

12 of title 37, United States Code, as prescribed

13 by the Secretaries concerned (defined by section

14 101(5) of such title) as necessary for the effi15 cient performance of duty.’’.

16 (12) Section 462(g) (42 U.S.C. 662(g)) is re17 designated and relocated as section 459(i) (42

18 U.S.C. 659(i)).

19 (13)(A) Section 462 (42 U.S.C. 662) is amend20 ed—

21 (i) in subsection (e)(1), by redesignating

22 subparagraphs (A), (B), and (C) as clauses (i),

23 (ii), and (iii); and
850

Title IX, Subtitle D

•HR 2530 IH

1 (ii) in subsection (e), by redesignating

2 paragraphs (1) and (2) as subparagraphs (A)

3 and (B).

4 (B) Section 459 (42 U.S.C. 659) is amended by

5 adding at the end the following:

6 ‘‘(j) DEFINITIONS.—For purposes of this sec7 tion—’’.

8 (C) Subsections (a) through (e) of section 462

9 (42 U.S.C. 662), as amended by subparagraph (A)

10 of this paragraph, are relocated and redesignated as

11 paragraphs (1) through (4), respectively of section

12 459(j) (as added by subparagraph (B) of this para13 graph, (42 U.S.C. 659(j)), and the left margin of

14 each of such paragraphs (1) through (4) is indented

15 2 ems to the right of the left margin of subsection

16 (i) (as added by paragraph (12) of this subsection).

17 (b) CONFORMING AMENDMENTS.—

18 (1) TO PART D OF TITLE IV.—Sections 461 and

19 462 (42 U.S.C. 661), as amended by subsection (a)

20 of this section, are repealed.

21 (2) TO TITLE 5, UNITED STATES CODE.—Sec22 tion 5520a of title 5, United States Code, is amend23 ed, in subsections (h)(2) and (i), by striking ‘‘sec24 tions 459, 461, and 462 of the Social Security Act

25 (42 U.S.C. 659, 661, and 662)’’ and inserting ‘‘sec-
851

Title IX, Subtitle D

•HR 2530 IH

1 tion 459 of the Social Security Act (42 U.S.C.

2 659)’’.

3 (c) MILITARY RETIRED AND RETAINER PAY.—(1)

4 DEFINITION OF COURT.—Section 1408(a)(1) of title 10,

5 United States Code, is amended—

6 (A) by striking ‘‘and’’ at the end of subpara7 graph (B);

8 (B) by striking the period at the end of sub9 paragraph (C) and inserting ‘‘; and’’; and

10 (C) by adding after subparagraph (C) the fol11 lowing new paragraph:

12 ‘‘(D) any administrative or judicial tribu13 nal of a State competent to enter orders for

14 support or maintenance (including a State

15 agency administering a State program under

16 part D of title IV of the Social Security Act).’’;

17 (2) DEFINITION OF COURT ORDER.—Section

18 1408(a)(2) of such title is amended by inserting ‘‘or a

19 court order for the payment of child support not included

20 in or accompanied by such a decree or settlement,’’ before

21 ‘‘which—’’.

22 (3) PUBLIC PAYEE.—Section 1408(d) of such title is

23 amended—

24 (A) in the heading, by striking ‘‘to spouse’’ and

25 inserting ‘‘to (or for benefit of)’’; and
852

Title IX, Subtitle D

•HR 2530 IH

1 (B) in paragraph (1), in the first sentence, by

2 inserting ‘‘(or for the benefit of such spouse or

3 former spouse to a State central collections unit or

4 other public payee designated by a State, in accord5 ance with part D of title IV of the Social Security

6 Act, as directed by court order, or as otherwise di7 rected in accordance with such part D)’’ before ‘‘in

8 an amount sufficient’’.

9 (4) RELATIONSHIP TO PART D OF TITLE IV.—Sec10 tion 1408 of such title is amended by adding at the end

11 the following new subsection:

12 ‘‘(j) RELATIONSHIP TO OTHER LAWS.—In any case

13 involving a child support order against a member who has

14 never been married to the other parent of the child, the

15 provisions of this section shall not apply, and the case

16 shall be subject to the provisions of section 459 of the

17 Social Security Act.’’.

18 (d) EFFECTIVE DATE.—The amendments made by

19 this section shall become effective 6 months after the date

20 of the enactment of this Act.

21 SEC. 9464. ENFORCEMENT OF CHILD SUPPORT OBLIGA22 TIONS OF MEMBERS OF THE ARMED FORCES.

23 (a) AVAILABILITY OF LOCATOR INFORMATION.—

24 (1) MAINTENANCE OF ADDRESS INFORMA25 TION.—The Secretary of Defense shall establish a
853

Title IX, Subtitle D

•HR 2530 IH

1 centralized personnel locator service that includes

2 the address of each member of the Armed Forces

3 under the jurisdiction of the Secretary. Upon re4 quest of the Secretary of Transportation, addresses

5 for members of the Coast Guard shall be included in

6 the centralized personnel locator service.

7 (2) TYPE OF ADDRESS.—

8 (A) RESIDENTIAL ADDRESS.—Except as

9 provided in subparagraph (B), the address for

10 a member of the Armed Forces shown in the lo11 cator service shall be the residential address of

12 that member.

13 (B) DUTY ADDRESS.—The address for a

14 member of the Armed Forces shown in the loca15 tor service shall be the duty address of that

16 member in the case of a member—

17 (i) who is permanently assigned over18 seas, to a vessel, or to a routinely

19 deployable unit; or

20 (ii) with respect to whom the Sec21 retary concerned makes a determination

22 that the member’s residential address

23 should not be disclosed due to national se24 curity or safety concerns.
854

Title IX, Subtitle D

•HR 2530 IH

1 (3) UPDATING OF LOCATOR INFORMATION.—

2 Within 30 days after a member listed in the locator

3 service establishes a new residential address (or a

4 new duty address, in the case of a member covered

5 by paragraph (2)(B)), the Secretary concerned shall

6 update the locator service to indicate the new ad7 dress of the member.

8 (4) AVAILABILITY OF INFORMATION.—The Sec9 retary of Defense shall make information regarding

10 the address of a member of the Armed Forces listed

11 in the locator service available, on request, to the

12 Federal Parent Locator Service.

13 (b) FACILITATING GRANTING OF LEAVE FOR AT14 TENDANCE AT HEARINGS.—

15 (1) REGULATIONS.—The Secretary of each

16 military department, and the Secretary of Transpor17 tation with respect to the Coast Guard when it is

18 not operating as a service in the Navy, shall pre19 scribe regulations to facilitate the granting of leave

20 to a member of the Armed Forces under the juris21 diction of that Secretary in a case in which—

22 (A) the leave is needed for the member to

23 attend a hearing described in paragraph (2);

24 (B) the member is not serving in or with

25 a unit deployed in a contingency operation (as
855

Title IX, Subtitle D

•HR 2530 IH

1 defined in section 101 of title 10, United States

2 Code); and

3 (C) the exigencies of military service (as

4 determined by the Secretary concerned) do not

5 otherwise require that such leave not be grant6 ed.

7 (2) COVERED HEARINGS.—Paragraph (1) ap8 plies to a hearing that is conducted by a court or

9 pursuant to an administrative process established

10 under State law, in connection with a civil action—

11 (A) to determine whether a member of the

12 Armed Forces is a natural parent of a child; or

13 (B) to determine an obligation of a mem14 ber of the Armed Forces to provide child sup15 port.

16 (3) DEFINITIONS.—For purposes of this sub17 section:

18 (A) The term ‘‘court’’ has the meaning

19 given that term in section 1408(a) of title 10,

20 United States Code.

21 (B) The term ‘‘child support’’ has the

22 meaning given such term in section 462 of the

23 Social Security Act (42 U.S.C. 662).

24 (c) PAYMENT OF MILITARY RETIRED PAY IN COM25 PLIANCE WITH CHILD SUPPORT ORDERS.—
856

Title IX, Subtitle D

•HR 2530 IH

1 (1) DATE OF CERTIFICATION OF COURT

2 ORDER.—Section 1408 of title 10, United States

3 Code, is amended—

4 (A) by redesignating subsection (i) as sub5 section (j); and

6 (B) by inserting after subsection (h) the

7 following new subsection (i):

8 ‘‘(i) CERTIFICATION DATE.—It is not necessary that

9 the date of a certification of the authenticity or complete10 ness of a copy of a court order or an order of an adminis11 trative process established under State law for child sup12 port received by the Secretary concerned for the purposes

13 of this section be recent in relation to the date of receipt

14 by the Secretary.’’.

15 (2) PAYMENTS CONSISTENT WITH ASSIGN16 MENTS OF RIGHTS TO STATES.—Section 1408(d)(1)

17 of such title is amended by inserting after the first

18 sentence the following: ‘‘In the case of a spouse or

19 former spouse who, pursuant to section

20 403(b)(1)(E)(i) of the Social Security Act, assigns

21 to a State the rights of the spouse or former spouse

22 to receive support, the Secretary concerned may

23 make the child support payments referred to in the

24 preceding sentence to that State in amounts consist25 ent with that assignment of rights.’’.
857

Title IX, Subtitle D

•HR 2530 IH

1 (3) ARREARAGES OWED BY MEMBERS OF THE

2 UNIFORMED SERVICES.—Section 1408(d) of such

3 title is amended by adding at the end the following

4 new paragraph:

5 ‘‘(6) In the case of a court order or an order of an

6 administrative process established under State law for

7 which effective service is made on the Secretary concerned

8 on or after the date of the enactment of this paragraph

9 and which provides for payments from the disposable re10 tired pay of a member to satisy the amount of child sup11 port set forth in the order, the authority provided in para12 graph (1) to make payments from the disposable retired

13 pay of a member to satisy the amount of child support

14 set forth in a court order or an order of an administrative

15 process established under State law shall apply to payment

16 of any amount of child support arrearages set forth in that

17 order as well as to amounts of child support that currently

18 become due.’’.

19 SEC. 9465. MOTOR VEHICLE LIENS.

20 Section 466(a)(4) (42 U.S.C. 666(a)(4)) is amend21 ed—

22 (1) by striking ‘‘(4) Procedures’’ and inserting

23 the following:

24 ‘‘(4) LIENS.—

25 ‘‘(A) IN GENERAL.—Procedures’’; and
858

Title IX, Subtitle D

•HR 2530 IH

1 (2) by adding at the end the following new sub2 paragraph:

3 ‘‘(B) MOTOR VEHICLE LIENS.—Procedures

4 for placing liens for arrears of child support on

5 motor vehicle titles of individuals owing such

6 arrears equal to or exceeding two months of

7 support, under which—

8 ‘‘(i) any person owed such arrears

9 may place such a lien;

10 ‘‘(ii) the State agency administering

11 the program under this part shall system12 atically place such liens;

13 ‘‘(iii) expedited methods are provided

14 for—

15 ‘‘(I) ascertaining the amount of

16 arrears;

17 ‘‘(II) affording the person owing

18 the arrears or other titleholder to con19 test the amount of arrears or to ob20 tain a release upon fulfilling the sup21 port obligation;

22 ‘‘(iv) such a lien has precedence over

23 all other encumbrances on a vehicle title

24 other than a purchase money security in25 terest; and
859

Title IX, Subtitle D

•HR 2530 IH

1 ‘‘(v) the individual or State agency

2 owed the arrears may execute on, seize,

3 and sell the property in accordance with

4 State law.’’.

5 SEC. 9466. VOIDING OF FRAUDULENT TRANSFERS.

6 Section 466(a) (42 U.S.C. 666(a)), as amended by

7 sections 9401(a), 9426(a), 9431, and 9442 of this Act,

8 is amended by inserting after paragraph (15) the follow9 ing:

10 ‘‘(16) FRAUDULENT TRANSFERS.—Procedures

11 under which—

12 ‘‘(A) the State has in effect—

13 ‘‘(i) the Uniform Fraudulent Convey14 ance Act of 1981,

15 ‘‘(ii) the Uniform Fraudulent Trans16 fer Act of 1984, or

17 ‘‘(iii) another law, specifying indicia of

18 fraud which create a prima facie case that

19 a debtor transferred income or property to

20 avoid payment to a child support creditor,

21 which the Secretary finds affords com22 parable rights to child support creditors;

23 and

24 ‘‘(B) in any case in which the State knows

25 of a transfer by a child support debtor with re-
860

Title IX, Subtitle D

•HR 2530 IH

1 spect to which such a prima facie case is estab2 lished, the State must—

3 ‘‘(i) seek to void such transfer; or

4 ‘‘(ii) obtain a settlement in the best

5 interests of the child support creditor.’’.

6 SEC. 9467. STATE LAW AUTHORIZING SUSPENSION OF LI7 CENSES.

8 Section 466(a) (42 U.S.C. 666(a)), as amended by

9 sections 9401(a), 9426(a), 9431, 9442, and 9466 of this

10 Act, is amended by inserting after paragraph (16) the fol11 lowing:

12 ‘‘(17) AUTHORITY TO WITHHOLD OR SUSPEND

13 LICENSES.—Procedures under which the State has

14 (and uses in appropriate cases) authority (subject to

15 appropriate due process safeguards) to withhold or

16 suspend, or to restrict the use of driver’s licenses,

17 and professional and occupational licenses of individ18 uals owing overdue child support or failing, after re19 ceiving appropriate notice, to comply with subpoenas

20 or warrants relating to paternity or child support

21 proceedings.’’.

22 SEC. 9468. REPORTING ARREARAGES TO CREDIT BUREAUS.

23 Section 466(a)(7) (42 U.S.C. 666(a)(7)) is amended

24 to read as follows:
861

Title IX, Subtitle D

•HR 2530 IH

1 ‘‘(7) REPORTING ARREARAGES TO CREDIT BU2 REAUS.—(A) Procedures (subject to safeguards pur3 suant to subparagraph (B)) requiring the State to

4 report periodically to consumer reporting agencies

5 (as defined in section 603(f) of the Fair Credit Re6 porting Act (15 U.S.C. 1681a(f)) the name of any

7 absent parent who is delinquent by 90 days or more

8 in the payment of support, and the amount of over9 due support owed by such parent.

10 ‘‘(B) Procedures ensuring that, in carrying out

11 subparagraph (A), information with respect to an

12 absent parent is reported—

13 ‘‘(i) only after such parent has been af14 forded all due process required under State law,

15 including notice and a reasonable opportunity

16 to contest the accuracy of such information;

17 and

18 ‘‘(ii) only to an entity that has furnished

19 evidence satisfactory to the State that the en20 tity is a consumer reporting agency.’’.

21 SEC. 9469. EXTENDED STATUTE OF LIMITATION FOR COL22 LECTION OF ARREARAGES.

23 (a) AMENDMENTS.—Section 466(a)(9) (42 U.S.C.

24 666(a)(9)) is amended—
862

Title IX, Subtitle D

•HR 2530 IH

1 (1) by striking ‘‘(9) Procedures’’ and inserting

2 the following:

3 ‘‘(9) LEGAL TREATMENT OF ARREARS.—

4 ‘‘(A) FINALITY.—Procedures’’;

5 (2) by redesignating subparagraphs (A), (B),

6 and (C) as clauses (i), (ii), and (iii), respectively,

7 and by indenting each of such clauses 2 additional

8 ems to the right; and

9 (3) by adding after and below subparagraph

10 (A), as redesignated, the following new subpara11 graph:

12 ‘‘(B) STATUTE OF LIMITATIONS.—Proce13 dures under which the statute of limitations on

14 any arrearages of child support extends at least

15 until the child owed such support is 30 years of

16 age.’’.

17 (b) APPLICATION OF REQUIREMENT.—The amend18 ment made by this section shall not be read to require

19 any State law to revive any payment obligation which had

20 lapsed prior to the effective date of such State law.

21 SEC. 9470. CHARGES FOR ARREARAGES.

22 (a) STATE LAW REQUIREMENT.—Section 466(a) (42

23 U.S.C. 666(a)), as amended by sections 9401(a), 9426(a),

24 9431, 9442, 9466, and 9467 of this Act, is amended by

25 inserting after paragraph (17) the following:
863

Title IX, Subtitle D

•HR 2530 IH

1 ‘‘(18) CHARGES FOR ARREARAGES.—Proce2 dures providing for the calculation and collection of

3 interest or penalties for arrearages of child support,

4 and for distribution of such interest or penalties col5 lected for the benefit of the child (except where the

6 right to support has been assigned to the State).’’.

7 (b) REGULATIONS.—The Secretary of Health and

8 Human Services shall establish by regulation a rule to re9 solve choice of law conflicts arising in the implementation

10 of the amendment made by subsection (a).

11 (c) CONFORMING AMENDMENT.—Section 454(21)

12 (42 U.S.C. 654(21)) is repealed.

13 (d) EFFECTIVE DATE.—The amendments made by

14 this section shall be effective with respect to arrearages

15 accruing on or after October 1, 1998.

16 SEC. 9471. DENIAL OF PASSPORTS FOR NONPAYMENT OF

17 CHILD SUPPORT.

18 (a) HHS CERTIFICATION PROCEDURE.—

19 (1) SECRETARIAL RESPONSIBILITY.—Section

20 452 (42 U.S.C. 652), as amended by sections

21 9415(a)(3) and 9417 of this Act, is amended by

22 adding at the end the following new subsection:

23 ‘‘(l) CERTIFICATIONS FOR PURPOSES OF PASSPORT

24 RESTRICTIONS.—
864

Title IX, Subtitle D

•HR 2530 IH

1 ‘‘(1) IN GENERAL.—Where the Secretary re2 ceives a certification by a State agency in accord3 ance with the requirements of section 454(28) that

4 an individual owes arrearages of child support in an

5 amount exceeding $5,000 or in an amount exceeding

6 24 months’ worth of child support, the Secretary

7 shall transmit such certification to the Secretary of

8 State for action (with respect to denial, revocation,

9 or limitation of passports) pursuant to section

10 9471(b) of the Omnibus Budget Reconciliation Act

11 of 1995.

12 ‘‘(2) LIMIT ON LIABILITY.—The Secretary shall

13 not be liable to an individual for any action with re14 spect to a certification by a State agency under this

15 section.’’.

16 (2) STATE CSE AGENCY RESPONSIBILITY.—Sec17 tion 454 (42 U.S.C. 654), as amended by sections

18 9404(a), 9414(b), and 9422(a) of this Act, is

19 amended—

20 (A) by striking ‘‘and’’ at the end of para21 graph (26);

22 (B) by striking the period at the end of

23 paragraph (27) and inserting ‘‘; and’’; and

24 (C) by adding after paragraph (27) the fol25 lowing new paragraph:
865

Title IX, Subtitle D

•HR 2530 IH

1 ‘‘(28) provide that the State agency will have in

2 effect a procedure (which may be combined with the

3 procedure for tax refund offset under section 464)

4 for certifying to the Secretary, for purposes of the

5 procedure under section 452(l) (concerning denial of

6 passports) determinations that individuals owe ar7 rearages of child support in an amount exceeding

8 $5,000 or in an amount exceeding 24 months’ worth

9 of child support, under which procedure—

10 ‘‘(A) each individual concerned is afforded

11 notice of such determination and the con12 sequences thereof, and an opportunity to con13 test the determination; and

14 ‘‘(B) the certification by the State agency

15 is furnished to the Secretary in such format,

16 and accompanied by such supporting docu17 mentation, as the Secretary may require.’’.

18 (b) STATE DEPARTMENT PROCEDURE FOR DENIAL

19 OF PASSPORTS.—

20 (1) IN GENERAL.—The Secretary of State,

21 upon certification by the Secretary of Health and

22 Human Services, in accordance with section 452(l)

23 of the Social Security Act, that an individual owes

24 arrearages of child support in excess of $5,000, shall

25 refuse to issue a passport to such individual, and
866

Title IX, Subtitle D

•HR 2530 IH

1 may revoke, restrict, or limit a passport issued pre2 viously to such individual.

3 (2) LIMIT ON LIABILITY.—The Secretary of

4 State shall not be liable to an individual for any ac5 tion with respect to a certification by a State agency

6 under this section.

7 (c) EFFECTIVE DATE.—This section and the amend8 ments made by this section shall become effective October

9 1, 1996.

10 SEC. 9472. INTERNATIONAL CHILD SUPPORT ENFORCE11 MENT.

12 (a) SENSE OF THE CONGRESS THAT THE UNITED

13 STATES SHOULD RATIFY THE UNITED NATIONS CON14 VENTION OF 1956.—It is the sense of the Congress that

15 the United States should ratify the United Nations Con16 vention of 1956.

17 (b) TREATMENT OF INTERNATIONAL CHILD SUP18 PORT CASES AS INTERSTATE CASES.—Section 454 (42

19 U.S.C. 654), as amended by sections 9404(a), 9414(b),

20 9422(a), and 9471(a)(2) of this Act, is amended—

21 (1) by striking ‘‘and’’ at the end of paragraph

22 (27);

23 (2) by striking the period at the end of para24 graph (28) and inserting ‘‘; and’’; and
867

Title IX, Subtitle D

•HR 2530 IH

1 (3) by inserting after paragraph (28) the fol2 lowing:

3 ‘‘(29) provide that the State must treat inter4 national child support cases in the same manner as

5 the State treats interstate child support cases.’’.

6 SEC. 9473. SEIZURE OF LOTTERY WINNINGS, SETTLEMENTS,

7 PAYOUTS, AWARDS, AND BEQUESTS, AND

8 SALE OF FORFEITED PROPERTY, TO PAY

9 CHILD SUPPORT ARREARAGES.

10 Section 466(a) (42 U.S.C. 666(a)), as amended by

11 sections 9401(a), 9426(a), 9431, 9442, 9466, 9467, and

12 9470(a) of this Act, is amended by inserting after para13 graph (18) the following:

14 ‘‘(19) Procedures, in addition to other income

15 withholding procedures, under which a lien is im16 posed against property with the following effect:

17 ‘‘(A) The person required to make a pay18 ment under a policy of insurance or a settle19 ment of a claim made with respect to the policy

20 shall—

21 ‘‘(i) suspend the payment until an in22 quiry is made to and a response received

23 from the agency as to whether the person

24 otherwise entitled to the payment owes a

25 child support arrearage; and
868

Title IX, Subtitle D

•HR 2530 IH

1 ‘‘(ii) if there is such an arrearage,

2 withhold from the payment the lesser of

3 the amount of the payment or the amount

4 of the arrearage, and pay the amount with5 held to the agency for distribution.

6 ‘‘(B) The payor of any amount pursuant to

7 an award, judgment, or settlement in any ac8 tion brought in Federal or State court shall—

9 ‘‘(i) suspend the payment of the

10 amount until an inquiry is made to and a

11 response is received from the agency as to

12 whether the person otherwise entitled to

13 the payment owes a child support arrear14 age; and

15 ‘‘(ii) if there is such an arrearage,

16 withhold from the payment the lesser of

17 the amount of the payment or the amount

18 of the arrearage, and pay the amount with19 held to the agency for distribution.

20 ‘‘(C) If the State seizes property forfeited

21 to the State by an individual by reason of a

22 criminal conviction, the State shall—

23 ‘‘(i) hold the property until an inquiry

24 is made to and a response is received from
869

Title IX, Subtitle D

•HR 2530 IH

1 the agency as to whether the individual

2 owes a child support arrearage; and

3 ‘‘(ii) if there is such an arrearage, sell

4 the property and, after satisfying the

5 claims of all other private or public claim6 ants to the property and deducting from

7 the proceeds of the sale the attendant costs

8 (such as for towing, storage, and the sale),

9 pay the lesser of the remaining proceeds or

10 the amount of the arrearage directly to the

11 agency for distribution.

12 ‘‘(D) Any person required to make a pay13 ment in respect of a decedent shall—

14 ‘‘(i) suspend the payment until an in15 quiry is made to and a response received

16 from the agency as to whether the person

17 otherwise entitled to the payment owes a

18 child support arrearage; and

19 ‘‘(ii) if there is such an arrearage,

20 withhold from the payment the lesser of

21 the amount of the payment or the amount

22 of the arrearage, and pay the amount with23 held to the agency for distribution.’’.
870

Title IX, Subtitle D

•HR 2530 IH

1 SEC. 9474. LIABILITY OF GRANDPARENTS FOR FINANCIAL

2 SUPPORT OF CHILDREN OF THEIR MINOR

3 CHILDREN.

4 Section 466(a) (42 U.S.C. 666(a)), as amended by

5 sections 9401(a), 9426(a), 9431, 9442, 9466, 9467,

6 9470(a), and 9473 of this Act, is amended by inserting

7 after paragraph (19) the following:

8 ‘‘(20) Procedures under which each parent of

9 an individual who has not attained 18 years of age

10 is liable for the financial support of any child of the

11 individual to the extent that the individual is unable

12 to provide such support. The preceding sentence

13 shall not apply to the State if the State plan explic14 itly provides for such inapplicability.’’.

15 SEC. 9475. SENSE OF THE CONGRESS REGARDING PRO16 GRAMS FOR NONCUSTODIAL PARENTS UN17 ABLE TO MEET CHILD SUPPORT OBLIGA18 TIONS.

19 It is the sense of the Congress that the States should

20 develop programs, such as the program of the State of

21 Wisconsin known as the ‘‘Children’s First Program’’, that

22 are designed to work with noncustodial parents who are

23 unable to meet their child support obligations.
871

Title IX, Subtitle D

•HR 2530 IH

1 CHAPTER 8—MEDICAL SUPPORT

2 SEC. 9481. TECHNICAL CORRECTION TO ERISA DEFINITION

3 OF MEDICAL CHILD SUPPORT ORDER.

4 (a) IN GENERAL.—Section 609(a)(2)(B) of the Em5 ployee Retirement Income Security Act of 1974 (29

6 U.S.C. 1169(a)(2)(B)) is amended—

7 (1) by striking ‘‘issued by a court of competent

8 jurisdiction’’;

9 (2) by striking the period at the end of clause

10 (ii) and inserting a comma; and

11 (3) by adding, after and below clause (ii), the

12 following:

13 ‘‘if such judgment, decree, or order (I) is issued

14 by a court of competent jurisdiction or (II) is

15 issued by an administrative adjudicator and has

16 the force and effect of law under applicable

17 State law.’’.

18 (b) EFFECTIVE DATE.—

19 (1) IN GENERAL.—The amendments made by

20 this section shall take effect on the date of the en21 actment of this Act.

22 (2) PLAN AMENDMENTS NOT REQUIRED UNTIL

23 JANUARY 1, 1996.—Any amendment to a plan re24 quired to be made by an amendment made by this

25 section shall not be required to be made before the
872

Title IX, Subtitle D

•HR 2530 IH

1 first plan year beginning on or after January 1,

2 1996, if—

3 (A) during the period after the date before

4 the date of the enactment of this Act and be5 fore such first plan year, the plan is operated

6 in accordance with the requirements of the

7 amendments made by this section, and

8 (B) such plan amendment applies retro9 actively to the period after the date before the

10 date of the enactment of this Act and before

11 such first plan year.

12 A plan shall not be treated as failing to be operated

13 in accordance with the provisions of the plan merely

14 because it operates in accordance with this para15 graph.

16 CHAPTER 9—FOOD STAMP PROGRAM

17 REQUIREMENTS

18 SEC. 9491. COOPERATION WITH CHILD SUPPORT AGENCIES.

19 Section 6 of the Food Stamp Act of 1977 (7 U.S.C.

20 2015) is amended adding at the end the following:

21 ‘‘(i) CUSTODIAL PARENT’S COOPERATION WITH

22 CHILD SUPPORT AGENCIES.—

23 ‘‘(1) IN GENERAL.—At the option of a State

24 agency, subject to paragraphs (2) and (3), no natu25 ral or adoptive parent or other individual (collec-
873

Title IX, Subtitle D

•HR 2530 IH

1 tively referred to in this subsection as ‘the individ2 ual’) who is living with and exercising parental con3 trol over a child under the age of 18 who has an ab4 sent parent shall be eligible to participate in the food

5 stamp program unless the individual cooperates with

6 the State agency administering the program estab7 lished under part D of title IV of the Social Security

8 Act (42 U.S.C. 651 et seq.)—

9 ‘‘(A) in establishing the paternity of the

10 child (if the child is born out of wedlock); and

11 ‘‘(B) in obtaining support for—

12 ‘‘(i) the child; or

13 ‘‘(ii) the individual and the child.

14 ‘‘(2) GOOD CAUSE FOR NONCOOPERATION.—

15 Paragraph (1) shall not apply to the individual if

16 good cause is found for refusing to cooperate, as de17 termined by the State agency in accordance with

18 standards prescribed by the Secretary in consulta19 tion with the Secretary of Health and Human Serv20 ices. The standards shall take into consideration cir21 cumstances under which cooperation may be against

22 the best interests of the child.

23 ‘‘(3) FEES.—Paragraph (1) shall not require

24 the payment of a fee or other cost for services pro-
874

Title IX, Subtitle D

•HR 2530 IH

1 vided under part D of title IV of the Social Security

2 Act (42 U.S.C. 651 et seq.).

3 ‘‘(j) NON-CUSTODIAL PARENT’S COOPERATION WITH

4 CHILD SUPPORT AGENCIES.—

5 ‘‘(1) IN GENERAL.—At the option of a State

6 agency, subject to paragraphs (2) and (3), a puta7 tive or identified non-custodial parent of a child

8 under the age of 18 (referred to in this subsection

9 as ‘the individual’) shall not be eligible to participate

10 in the food stamp program if the individual refuses

11 to cooperate with the State agency administering the

12 program established under part D of title IV of the

13 Social Security Act (42 U.S.C. 651 et seq.)—

14 ‘‘(A) in establishing the paternity of the

15 child (if the child is born out of wedlock); and

16 ‘‘(B) in providing support for the child.

17 ‘‘(2) REFUSAL TO COOPERATE.—

18 ‘‘(A) GUIDELINES.—The Secretary, in con19 sultation with the Secretary of Health and

20 Human Services, shall develop guidelines on

21 what constitutes a refusal to cooperate under

22 paragraph (1).

23 ‘‘(B) PROCEDURES.—The State agency

24 shall develop procedures, using guidelines devel25 oped under subparagraph (A), for determining
875

Title IX, Subtitle D

•HR 2530 IH

1 whether an individual is refusing to cooperate

2 under paragraph (1).

3 ‘‘(3) FEES.—Paragraph (1) shall not require

4 the payment of a fee or other cost for services pro5 vided under part D of title IV of the Social Security

6 Act (42 U.S.C. 651 et seq.).

7 ‘‘(4) PRIVACY.—The State agency shall provide

8 safeguards to restrict the use of information col9 lected by a State agency administering the program

10 established under part D of title IV of the Social Se11 curity Act (42 U.S.C. 651 et seq.) to purposes for

12 which the information is collected.’’.

13 SEC. 9492. DISQUALIFICATION FOR CHILD SUPPORT AR14 REARS.

15 Section 6 of the Food Stamp Act of 1977 (7 U.S.C.

16 2015), as amended by section 9491 of this Act, is amend17 ed by adding at the end the following:

18 ‘‘(k) DISQUALIFICATION FOR CHILD SUPPORT AR19 REARS.—

20 ‘‘(1) IN GENERAL.—At the option of a State

21 agency, except as provided in paragraph (2), no indi22 vidual shall be eligible to participate in the food

23 stamp program as a member of any household dur24 ing any month that the individual is delinquent in
876

Title IX, Subtitle D

•HR 2530 IH

1 any payment due under a court order for the sup2 port of a child of the individual.

3 ‘‘(2) EXCEPTIONS.—Paragraph (1) shall not

4 apply if—

5 ‘‘(A) a court is allowing the individual to

6 delay payment; or

7 ‘‘(B) the individual is complying with a

8 payment plan approved by a court or the State

9 agency designated under part D of title IV of

10 the Social Security Act (42 U.S.C. 651 et seq.)

11 to provide support for the child of the individ12 ual.’’.

13 CHAPTER 10—EFFECT OF ENACTMENT

14 SEC. 9498. EFFECTIVE DATES.

15 (a) IN GENERAL.—Except as otherwise specifically

16 provided (but subject to subsections (b) and (c))—

17 (1) provisions of this title requiring enactment

18 or amendment of State laws under section 466 of

19 the Social Security Act, or revision of State plans

20 under section 454 of such Act, shall be effective with

21 respect to periods beginning on and after October 1,

22 1996; and

23 (2) all other provisions of this title shall become

24 effective upon enactment.
877

Title IX, Subtitle D

•HR 2530 IH

1 (b) GRACE PERIOD FOR STATE LAW CHANGES.—The

2 provisions of this title shall become effective with respect

3 to a State on the later of—

4 (1) the date specified in this title, or

5 (2) the effective date of laws enacted by the leg6 islature of such State implementing such provisions,

7 but in no event later than the first day of the first cal8 endar quarter beginning after the close of the first regular

9 session of the State legislature that begins after the date

10 of enactment of this Act. For purposes of the previous

11 sentence, in the case of a State that has a 2-year legisla12 tive session, each year of such session shall be deemed to

13 be a separate regular session of the State legislature.

14 (c) GRACE PERIOD FOR STATE CONSTITUTIONAL

15 AMENDMENT.—A State shall not be found out of compli16 ance with any requirement enacted by this title if it is

17 unable to comply without amending the State constitution

18 until the earlier of—

19 (1) the date one year after the effective date of

20 the necessary State constitutional amendment, or

21 (2) the date five years after enactment of this

22 title.

23 SEC. 9499. SEVERABILITY.

24 If any provision of this title or the application thereof

25 to any person or circumstance is held invalid, the invalid-
878

Title IX, Subtitle E

•HR 2530 IH

1 ity shall not affect other provisions or applications of this

2 title which can be given effect without regard to the invalid

3 provision or application, and to this end the provisions of

4 this title shall be severable.

5 Subtitle E—Teen Pregnancy And

6 Family Stability

7 SEC. 9501. STATE OPTION TO DENY TEMPORARY EMPLOY8 MENT ASSISTANCE FOR ADDITIONAL CHIL9 DREN.

10 (a) IN GENERAL.—Section 402(d)(1), as added by

11 section 9101(a) of this Act, is amended—

12 (1) by striking ‘‘(1) DETERMINATION OF

13 NEED.—’’ and inserting the following:

14 ‘‘(1) DETERMINATION OF NEED.—

15 ‘‘(A) IN GENERAL.—’’; and

16 (2) by adding at the end the following:

17 ‘‘(B) OPTIONAL DENIAL OF ASSISTANCE

18 TO FAMILIES HAVING ADDITIONAL CHILDREN

19 WHILE RECEIVING ASSISTANCE.—At the option

20 of the State, the State plan may provide that—

21 ‘‘(i)(I) a child shall not be considered

22 a needy child if the child is born (other

23 than as a result of rape or incest) to a

24 member of a family—
879

Title IX, Subtitle E

•HR 2530 IH

1 ‘‘(aa) while the family was a re2 cipient of assistance under the State

3 plan; or

4 ‘‘(bb) during the 6-month period

5 ending with the date the family ap6 plied for such assistance; and

7 ‘‘(II) if the value of assistance to a

8 family under the State plan approved

9 under this part is reduced by reason of

10 subclause (I), each member of the family

11 shall be considered to be receiving such as12 sistance for purposes of eligibility for medi13 cal assistance under the State plan ap14 proved under title XIX for so long as as15 sistance to the family under the State plan

16 approved under this part would otherwise

17 not be so reduced; and

18 ‘‘(ii) if the State exercises the option,

19 the State may provide the family with

20 vouchers, in amounts not exceeding the

21 amount of any such reduction in assist22 ance, that may be used only to pay for

23 particular goods and services specified by

24 the State as suitable for the care of the
880

Title IX, Subtitle E

•HR 2530 IH

1 child of the parent (such as diapers, cloth2 ing, or school supplies).’’.

3 (b) EFFECTIVE DATE.—The amendment made by

4 subsection (a) of this section shall take effect in the same

5 manner as the amendment made by section 9101(a) takes

6 effect.

7 SEC. 9502. SUPERVISED LIVING ARRANGEMENTS FOR MI8 NORS.

9 (a) IN GENERAL.—Section 402(c), as added by sec10 tion 9101(a) of this Act, is amended by adding at the end

11 the following:

12 ‘‘(8) SUPERVISED LIVING ARRANGEMENTS FOR

13 MINORS.—The State plan shall provide that—

14 ‘‘(A) except as provided in subparagraph

15 (B), in the case of any individual who is under

16 age 18 and has never married, and who has a

17 needy child in his or her care (or is pregnant

18 and is eligible for temporary employment assist19 ance under the State plan)—

20 ‘‘(i) such individual may receive such

21 assistance for the individual and such child

22 (or for herself in the case of a pregnant

23 woman) only if such individual and child

24 (or such pregnant woman) reside in a

25 place of residence maintained by a parent,
881

Title IX, Subtitle E

•HR 2530 IH

1 legal guardian, or other adult relative of

2 such individual as such parent’s, guard3 ian’s, or adult relative’s own home; and

4 ‘‘(ii) such assistance (where possible)

5 shall be provided to the parent, legal

6 guardian, or other adult relative on behalf

7 of such individual and child; and

8 ‘‘(B)(i) in the case of an individual de9 scribed in clause (ii)—

10 ‘‘(I) the State agency shall assist such

11 individual in locating an appropriate adult12 supervised supportive living arrangement

13 taking into consideration the needs and

14 concerns of the individual, unless the State

15 agency determines that the individual’s

16 current living arrangement is appropriate,

17 and thereafter shall require that the indi18 vidual (and child, if any) reside in such liv19 ing arrangement as a condition of the con20 tinued receipt of assistance under the plan

21 (or in an alternative appropriate arrange22 ment, should circumstances change and the

23 current arrangement cease to be appro24 priate), or
882

Title IX, Subtitle E

•HR 2530 IH

1 ‘‘(II) if the State agency is unable,

2 after making diligent efforts, to locate any

3 such appropriate living arrangement, the

4 State agency shall provide for comprehen5 sive case management, monitoring, and

6 other social services consistent with the

7 best interests of the individual (and child)

8 while living independently (as determined

9 by the State agency); and

10 ‘‘(ii) for purposes of clause (i), an individ11 ual is described in this clause if—

12 ‘‘(I) such individual has no parent or

13 legal guardian of his or her own who is liv14 ing and whose whereabouts are known;

15 ‘‘(II) no living parent or legal guard16 ian of such individual allows the individual

17 to live in the home of such parent or

18 guardian;

19 ‘‘(III) the State agency determines

20 that the physical or emotional health of

21 such individual or any needy child of the

22 individual would be jeopardized if such in23 dividual and such needy child lived in the

24 same residence with such individual’s own

25 parent or legal guardian; or
883

Title IX, Subtitle E

•HR 2530 IH

1 ‘‘(IV) the State agency otherwise de2 termines (in accordance with regulations

3 issued by the Secretary) that it is in the

4 best interest of the needy child to waive

5 the requirement of subparagraph (A) with

6 respect to such individual.’’.

7 (b) EFFECTIVE DATE.—The amendment made by

8 subsection (a) of this section shall take effect in the same

9 manner as the amendment made by section 9101(a) takes

10 effect.

11 SEC. 9503. NATIONAL CLEARINGHOUSE ON ADOLESCENT

12 PREGNANCY.

13 (a) IN GENERAL.—Title XX (42 U.S.C. 1397–

14 1397f), as amended by section 9205(b) of this Act, is

15 amended by adding at the end the following:

16 ‘‘SEC. 2010. NATIONAL CLEARINGHOUSE ON ADOLESCENT

17 PREGNANCY.

18 ‘‘(a) NATIONAL CLEARINGHOUSE ON ADOLESCENT

19 PREGNANCY.—

20 ‘‘(1) ESTABLISHMENT.—The responsible Fed21 eral officials shall establish, through grant or con22 tract, a national center for the collection and provi23 sion of programmatic information and technical as24 sistance that relates to adolescent pregnancy preven25 tion programs, to be known as the ‘National Clear-
884

Title IX, Subtitle E

•HR 2530 IH

1 inghouse on Adolescent Pregnancy Prevention Pro2 grams’.

3 ‘‘(2) FUNCTIONS.—The national center estab4 lished under paragraph (1) shall serve as a national

5 information and data clearinghouse, and as a train6 ing, technical assistance, and material development

7 source for adolescent pregnancy prevention pro8 grams. Such center shall—

9 ‘‘(A) develop and maintain a system for

10 disseminating information on all types of ado11 lescent pregnancy prevention programs and on

12 the state of adolescent pregnancy prevention

13 program development, including information

14 concerning the most effective model programs;

15 ‘‘(B) develop and sponsor a variety of

16 training institutes and curricula for adolescent

17 pregnancy prevention program staff;

18 ‘‘(C) identify model programs representing

19 the various types of adolescent pregnancy pre20 vention programs;

21 ‘‘(D) develop technical assistance materials

22 and activities to assist other entities in estab23 lishing and improving adolescent pregnancy

24 prevention programs;
885

Title IX, Subtitle E

•HR 2530 IH

1 ‘‘(E) develop networks of adolescent preg2 nancy prevention programs for the purpose of

3 sharing and disseminating information; and

4 ‘‘(F) conduct such other activities as the

5 responsible Federal officials find will assist in

6 developing and carrying out programs or activi7 ties to reduce adolescent pregnancy.

8 ‘‘(b) FUNDING.—The responsible Federal officials

9 shall make grants to eligible entities for the establishment

10 and operation of a National Clearinghouse on Adolescent

11 Pregnancy Prevention Programs under subsection (a) so

12 that in the aggregate the expenditures for such grants do

13 not exceed $2,000,000 for fiscal year 1996, $4,000,000

14 for fiscal year 1997, $8,000,000 for fiscal year 1998, and

15 $10,000,000 for fiscal year 1999 and each subsequent fis16 cal year.

17 ‘‘(c) DEFINITIONS.—As used in this section:

18 ‘‘(1) ADOLESCENTS.—The term ‘adolescents’

19 means youth who are ages 10 through 19.

20 ‘‘(2) ELIGIBLE ENTITY.—The term ‘eligible en21 tity’ means a partnership that includes—

22 ‘‘(A) a local education agency, acting on

23 behalf of one or more schools, together with
886

Title IX, Subtitle E

•HR 2530 IH

1 ‘‘(B) one or more community-based organi2 zations, institutions of higher education, or

3 public or private agencies or organizations.

4 ‘‘(3) ELIGIBLE AREA.—The term ‘eligible area’

5 means a school attendance area in which—

6 ‘‘(A) at least 75 percent of the children are

7 from low-income families as that term is used

8 in part A of title I of the Elementary and Sec9 ondary Education Act of 1965; or

10 ‘‘(B) the number of children receiving as11 sistance under a State plan approved under

12 part A of title IV of this Act is substantial as

13 determined by the responsible Federal officials;

14 or

15 ‘‘(C) the unmarried adolescent birth rate is

16 high, as determined by the responsible Federal

17 officials.

18 ‘‘(4) SCHOOL.—The term ‘school’ means a pub19 lic elementary, middle, or secondary school.

20 ‘‘(5) RESPONSIBLE FEDERAL OFFICIALS.—The

21 term ‘responsible Federal officials’ means the Sec22 retary of Education, the Secretary of Health and

23 Human Services, and the Chief Executive Officer of

24 the Corporation for National and Community Serv25 ice.’’.
887

Title IX, Subtitle E

•HR 2530 IH

1 (b) EFFECTIVE DATE.—The amendment made by

2 this section shall become effective January 1, 1996.

3 SEC. 9504. REQUIRED COMPLETION OF HIGH SCHOOL OR

4 OTHER TRAINING FOR TEENAGE PARENTS.

5 (a) IN GENERAL.—Section 403(b)(1)(D), as added

6 by section 9101(a) of this Act, is amended—

7 (1) by inserting ‘‘(i)’’ after ‘‘(D)’’; and

8 (2) by adding at the end the following:

9 ‘‘(ii) in the case of a client who is a custo10 dial parent who is under age 18 (or age 19, at

11 the option of the State), has not successfully

12 completed a high-school education (or its equiv13 alent), and is required to participate in the

14 Work First program (including an individual

15 who would otherwise be exempt from participa16 tion in the program), shall provide that—

17 ‘‘(I) such parent participate in—

18 ‘‘(aa) educational activities di19 rected toward the attainment of a

20 high school diploma or its equivalent

21 on a full-time (as defined by the edu22 cational provider) basis; or

23 ‘‘(bb) an alternative educational

24 or training program on a full-time (as

25 defined by the provider) basis; and
888

Title IX, Subtitle E

•HR 2530 IH

1 ‘‘(II) child care be provided in accordance

2 with section 2009 with respect to the family.’’.

3 (b) STATE OPTION TO PROVIDE ADDITIONAL INCEN4 TIVES AND PENALTIES TO ENCOURAGE TEEN PARENTS

5 TO COMPLETE HIGH SCHOOL AND PARTICIPATE IN

6 PARENTING ACTIVITIES.—

7 (1) STATE PLAN.—Section 403(b)(1)(D), as

8 amended by subsection (a) of this section, is amend9 ed by adding at the end the following:

10 ‘‘(iii) at the option of the State, may pro11 vide that the client who is a custodial parent or

12 pregnant woman who is under age 19 (or age

13 21, at the option of the State) participate in a

14 program of monetary incentives and penalties

15 which—

16 ‘‘(I) may, at the option of the State,

17 require full-time participation by such cus18 todial parent or pregnant woman in sec19 ondary school or equivalent educational ac20 tivities, or participation in a course or pro21 gram leading to a skills certificate found

22 appropriate by the State agency or

23 parenting education activities (or any com24 bination of such activities and secondary

25 education);
889

Title IX, Subtitle E

•HR 2530 IH

1 ‘‘(II) shall require that the needs of

2 such custodial parent or pregnant woman

3 be reviewed and the program assure that,

4 either in the initial development or revision

5 of such individual’s individual responsibil6 ity plan, there will be included a descrip7 tion of the services that will be provided to

8 the client and the way in which the pro9 gram and service providers will coordinate

10 with the educational or skills training ac11 tivities in which the client is participating;

12 ‘‘(III) shall provide monetary incen13 tives (to be treated as assistance under the

14 State plan) for more than minimally ac15 ceptable performance of required edu16 cational activities;

17 ‘‘(IV) shall provide penalties (which

18 may be those required by subsection (e) or,

19 with the approval of the Secretary, other

20 monetary penalties that the State finds will

21 better achieve the objectives of the pro22 gram) for less than minimally acceptable

23 performance of required activities;

24 ‘‘(V) shall provide that when a mone25 tary incentive is payable because of the
890

Title IX, Subtitle E

•HR 2530 IH

1 more than minimally acceptable perform2 ance of required educational activities by a

3 custodial parent, the incentive be paid di4 rectly to such parent, regardless of wheth5 er the State agency makes payment of as6 sistance under the State plan directly to

7 such parent; and

8 ‘‘(VI) for purposes of any other Fed9 eral or federally-assisted program based on

10 need, shall not consider any monetary in11 centive paid under the State plan as in12 come in determining a family’s eligibility

13 for or amount of benefits under such pro14 gram, and if assistance is reduced by rea15 son of a penalty under this clause, such

16 other program shall treat the family in17 volved as if no such penalty has been ap18 plied.’’.

19 (c) EFFECTIVE DATE.—The amendments made by

20 this section shall take effect in the same manner as the

21 amendment made by section 9101(a) takes effect.
891

Title IX, Subtitle E

•HR 2530 IH

1 SEC. 9505. DENIAL OF FEDERAL HOUSING BENEFITS TO MI2 NORS WHO BEAR CHILDREN OUT-OF-WED3 LOCK.

4 (a) PROHIBITION OF ASSISTANCE.—Notwithstanding

5 any other provision of law, a household whose head of

6 household is an individual who has borne a child out-of7 wedlock before attaining 18 years of age may not be pro8 vided Federal housing assistance for a dwelling unit until

9 attaining such age, unless—

10 (1) after the birth of the child—

11 (A) the individual marries an individual

12 who has been determined by the relevant State

13 to be the biological father of the child; or

14 (B) the biological parent of the child has

15 legal custody of the child and marries an indi16 vidual who legally adopts the child;

17 (2) the individual is a biological and custodial

18 parent of another child who was not born out-of19 wedlock; or

20 (3) eligibility for such Federal housing assist21 ance is based in whole or in part on any disability

22 or handicap of a member of the household.

23 (b) DEFINITIONS.—For purposes of this section, the

24 following definitions shall apply:

25 (1) COVERED PROGRAM.—The term ‘‘covered

26 program’’ means—
892

Title IX, Subtitle E

•HR 2530 IH

1 (A) the program of rental assistance on be2 half of low-income families provided under sec3 tion 8 of the United States Housing Act of

4 1937 (42 U.S.C. 1437f);

5 (B) the public housing program under title

6 I of the United States Housing Act of 1937 (42

7 U.S.C. 1437 et seq.);

8 (C) the program of rent supplement pay9 ments on behalf of qualified tenants pursuant

10 to contracts entered into under section 101 of

11 the Housing and Urban Development Act of

12 1965 (12 U.S.C. 1701s);

13 (D) the program of interest reduction pay14 ments pursuant to contracts entered into by the

15 Secretary of Housing and Urban Development

16 under section 236 of the National Housing Act

17 (12 U.S.C. 1715z–1);

18 (E) the program for mortgage insurance

19 provided pursuant to sections 221(d) (3) or (4)

20 of the National Housing Act (12 U.S.C.

21 1715l(d)) for multifamily housing for low- and

22 moderate-income families;

23 (F) the rural housing loan program under

24 section 502 of the Housing Act of 1949 (42

25 U.S.C. 1472);
893

Title IX, Subtitle E

•HR 2530 IH

1 (G) the rural housing loan guarantee pro2 gram under section 502(h) of the Housing Act

3 of 1949 (42 U.S.C. 1472(h));

4 (H) the loan and grant programs under

5 section 504 of the Housing Act of 1949 (42

6 U.S.C. 1474) for repairs and improvements to

7 rural dwellings;

8 (I) the program of loans for rental and co9 operative rural housing under section 515 of

10 the Housing Act of 1949 (42 U.S.C. 1485);

11 (J) the program of rental assistance pay12 ments pursuant to contracts entered into under

13 section 521(a)(2)(A) of the Housing Act of

14 1949 (42 U.S.C. 1490a(a)(2)(A));

15 (K) the loan and assistance programs

16 under sections 514 and 516 of the Housing Act

17 of 1949 (42 U.S.C. 1484, 1486) for housing for

18 farm labor;

19 (L) the program of grants and loans for

20 mutual and self-help housing and technical as21 sistance under section 523 of the Housing Act

22 of 1949 (42 U.S.C. 1490c);

23 (M) the program of grants for preservation

24 and rehabilitation of housing under section 533
894

Title IX, Subtitle E

•HR 2530 IH

1 of the Housing Act of 1949 (42 U.S.C.

2 1490m); and

3 (N) the program of site loans under sec4 tion 524 of the Housing Act of 1949 (42

5 U.S.C. 1490d).

6 (2) COVERED PROJECT.—The term ‘‘covered

7 project’’ means any housing for which Federal hous8 ing assistance is provided that is attached to the

9 project or specific dwelling units in the project.

10 (3) FEDERAL HOUSING ASSISTANCE.—The term

11 ‘‘Federal housing assistance’’ means—

12 (A) assistance provided under a covered

13 program in the form of any contract, grant,

14 loan, subsidy, cooperative agreement, loan or

15 mortgage guarantee or insurance, or other fi16 nancial assistance; or

17 (B) occupancy in a dwelling unit that is—

18 (i) provided assistance under a cov19 ered program; or

20 (ii) located in a covered project and

21 subject to occupancy limitations under a

22 covered program that are based on income.

23 (4) STATE.—The term ‘‘State’’ means the

24 States of the United States, the District of Colum25 bia, the Commonwealth of Puerto Rico, the Com-
895

Title IX, Subtitle E

•HR 2530 IH

1 monwealth of the Northern Mariana Islands, Guam,

2 the Virgin Islands, American Samoa, and any other

3 territory or possession of the United States.

4 (c) LIMITATIONS ON APPLICABILITY.—Subsection

5 (a) shall not apply to Federal housing assistance provided

6 for a household pursuant to an application or request for

7 such assistance made by such household before the effec8 tive date of this Act if the household was receiving such

9 assistance on the effective date of this Act.

10 SEC. 9506. STATE OPTION TO DENY TEMPORARY EMPLOY11 MENT ASSISTANCE TO MINOR PARENTS.

12 (a) IN GENERAL.—Section 402(d)(1), as added by

13 section 9101(a) of this Act and as amended by section

14 9501(a) of this Act, is amended by adding at the end the

15 following:

16 ‘‘(C) OPTIONAL DENIAL OF ASSISTANCE

17 TO MINOR PARENTS.—At the option of the

18 State, the State plan may provide that—

19 ‘‘(i)(I) in determining the need of a

20 family, the State may disregard the needs

21 of any family member who is a parent and

22 has not attained 18 years of age or such

23 lesser age as the State may prescribe; and

24 ‘‘(II) if the value of the assistance

25 provided to a family under the State plan
896

Title IX, Subtitle E

•HR 2530 IH

1 approved under this part is reduced by

2 reason of subclause (I), each member of

3 the family shall be considered to be receiv4 ing such assistance for purposes of eligi5 bility for medical assistance under the

6 State plan approved under title XIX for so

7 long as such assistance under the State

8 plan approved under this part would other9 wise not be so reduced; and

10 ‘‘(ii) if the State exercises the option, the

11 State may provide the family with vouchers, in

12 amounts not exceeding the value of any such re13 duction in assistance, that may be used only to

14 pay for—

15 ‘‘(I) particular goods and services

16 specified by the State as suitable for the

17 care of the child of the parent (such as

18 diapers, clothing, or cribs); and

19 ‘‘(II) the costs associated with a ma20 ternity home, foster home, or other adult21 supervised supportive living arrangement

22 in which the parent and the child live.’’.

23 (b) EFFECTIVE DATE.—The amendment made by

24 subsection (a) shall take effect in the same manner in
897

Title IX, Subtitle F

•HR 2530 IH

1 which the amendment made by section 9101(a) takes ef2 fect.

3 Subtitle F—SSI Reform

4 SEC. 9601. DEFINITION AND ELIGIBILITY RULES.

5 (a) DEFINITION OF CHILDHOOD DISABILITY.—Sec6 tion 1614(a)(3) (42 U.S.C. 1382c(a)(3)) is amended—

7 (1) in subparagraph (A), by striking ‘‘An indi8 vidual’’ and inserting ‘‘Except as provided in sub9 paragraph (C), an individual’’;

10 (2) in subparagraph (A), by striking ‘‘(or, in

11 the case of an individual under the age of 18, if he

12 suffers from any medically determinable physical or

13 mental impairment of comparable severity)’’;

14 (3) by redesignating subparagraphs (C) through

15 (H) as subparagraphs (D) through (I), respectively;

16 (4) by inserting after subparagraph (B) the fol17 lowing new subparagraph:

18 ‘‘(C) An individual under the age of 18 shall be con19 sidered disabled for the purposes of this title if that indi20 vidual has a medically determinable physical or mental im21 pairment, which results in marked and severe functional

22 limitations, and which can be expected to result in death

23 or which has lasted or can be expected to last for a contin24 uous period of not less than 12 months.’’; and
898

Title IX, Subtitle F

•HR 2530 IH

1 (5) in subparagraph (F), as so redesignated by

2 paragraph (3) of this subsection, by striking ‘‘(D)’’

3 and inserting ‘‘(E)’’.

4 (b) CHANGES TO CHILDHOOD SSI REGULATIONS.—

5 (1) MODIFICATION TO MEDICAL CRITERIA FOR

6 EVALUATION OF MENTAL AND EMOTIONAL DIS7 ORDERS.—The Commissioner of Social Security

8 shall modify sections 112.00C.2. and

9 112.02B.2.c.(2) of appendix 1 to subpart P of part

10 404 of title 20, Code of Federal Regulations, to

11 eliminate references to maladaptive behavior in the

12 domain of personal/behavorial function.

13 (2) DISCONTINUANCE OF INDIVIDUALIZED

14 FUNCTIONAL ASSESSMENT.—The Commissioner of

15 Social Security shall discontinue the individualized

16 functional assessment for children set forth in sec17 tions 416.924d and 416.924e of title 20, Code of

18 Federal Regulations.

19 (c) EFFECTIVE DATE; REGULATIONS; APPLICATION

20 TO CURRENT RECIPIENTS.—

21 (1) IN GENERAL.—The amendments made by

22 subsections (a) and (b) shall apply to applicants for

23 benefits for months beginning on or after the date

24 of the enactment of this Act, without regard to
899

Title IX, Subtitle F

•HR 2530 IH

1 whether regulations have been issued to implement

2 such amendments.

3 (2) REGULATIONS.—The Commissioner of So4 cial Security shall issue such regulations as the

5 Commissioner determines to be necessary to imple6 ment the amendments made by subsections (a) and

7 (b) not later than 60 days after the date of the en8 actment of this Act.

9 (3) APPLICATION TO CURRENT RECIPIENTS.—

10 (A) ELIGIBILITY DETERMINATIONS.—Not

11 later than 1 year after the date of the enact12 ment of this Act, the Commissioner of Social

13 Security shall redetermine the eligibility of any

14 individual under age 18 who is receiving supple15 mental security income benefits based on a dis16 ability under title XVI of the Social Security

17 Act as of the date of the enactment of this Act

18 and whose eligibility for such benefits may ter19 minate by reason of the amendments made by

20 subsection (a) or (b). With respect to any rede21 termination under this subparagraph—

22 (i) section 1614(a)(4) of the Social

23 Security Act (42 U.S.C. 1382c(a)(4)) shall

24 not apply;
900

Title IX, Subtitle F

•HR 2530 IH

1 (ii) the Commissioner of Social Secu2 rity shall apply the eligibility criteria for

3 new applicants for benefits under title XVI

4 of such Act;

5 (iii) the Commissioner shall give such

6 redetermination priority over all continuing

7 eligibility reviews and other reviews under

8 such title; and

9 (iv) such redetermination shall be

10 counted as a review or redetermination

11 otherwise required to be made under sec12 tion 208 of the Social Security Independ13 ence and Program Improvements Act of

14 1994 or any other provision of title XVI of

15 the Social Security Act.

16 (B) GRANDFATHER PROVISION.—The

17 amendments made by subsections (a) and (b),

18 and the redetermination under subparagraph

19 (A), shall only apply with respect to the benefits

20 of an individual described in subparagraph (A)

21 for months beginning on or after January 1,

22 1997.

23 (C) NOTICE.—Not later than 90 days after

24 the date of the enactment of this Act, the Com25 missioner of Social Security shall notify an indi-
901

Title IX, Subtitle F

•HR 2530 IH

1 vidual described in subparagraph (A) of the

2 provisions of this paragraph.

3 SEC. 9602. ELIGIBILITY REDETERMINATIONS AND CON4 TINUING DISABILITY REVIEWS.

5 (a) CONTINUING DISABILITY REVIEWS RELATING TO

6 CERTAIN CHILDREN.—Section 1614(a)(3)(H) (42 U.S.C.

7 1382c(a)(3)(H)), as so redesignated by section 9601(a)(3)

8 of this Act, is amended—

9 (1) by inserting ‘‘(i)’’ after ‘‘(H)’’; and

10 (2) by adding at the end the following new

11 clause:

12 ‘‘(ii)(I) Not less frequently than once every 3 years,

13 the Commissioner shall review in accordance with para14 graph (4) the continued eligibility for benefits under this

15 title of each individual who has not attained 18 years of

16 age and is eligible for such benefits by reason of an im17 pairment (or combination of impairments) which may im18 prove (or, which is unlikely to improve, at the option of

19 the Commissioner).

20 ‘‘(II) A parent or guardian of a recipient whose case

21 is reviewed under this clause shall present, at the time

22 of review, evidence demonstrating that the recipient is,

23 and has been, receiving treatment, to the extent consid24 ered medically necessary and available, of the condition
902

Title IX, Subtitle F

•HR 2530 IH

1 which was the basis for providing benefits under this

2 title.’’.

3 (b) DISABILITY ELIGIBILITY REDETERMINATIONS

4 REQUIRED FOR SSI RECIPIENTS WHO ATTAIN 18 YEARS

5 OF AGE.—

6 (1) IN GENERAL.—Section 1614(a)(3)(H) (42

7 U.S.C. 1382c(a)(3)(H)), as so redesignated by sec8 tion 9601(a)(3) of this Act and as amended by sub9 section (a) of this section, is amended by adding at

10 the end the following new clause:

11 ‘‘(iii) If an individual is eligible for benefits under this

12 title by reason of disability for the month preceding the

13 month in which the individual attains the age of 18 years,

14 the Commissioner shall redetermine such eligibility—

15 ‘‘(I) during the 1-year period beginning on the

16 individual’s 18th birthday; and

17 ‘‘(II) by applying the criteria used in determin18 ing the initial eligibility for applicants who have at19 tained the age of 18 years.

20 With respect to a redetermination under this clause, para21 graph (4) shall not apply and such redetermination shall

22 be considered a substitute for a review or redetermination

23 otherwise required under any other provision of this sub24 paragraph during that 1-year period.’’.
903

Title IX, Subtitle F

•HR 2530 IH

1 (2) CONFORMING REPEAL.—Section 207 of the

2 Social Security Independence and Program Improve3 ments Act of 1994 (42 U.S.C. 1382 note; 108 Stat.

4 1516) is hereby repealed.

5 (c) CONTINUING DISABILITY REVIEW REQUIRED FOR

6 LOW BIRTH WEIGHT BABIES.—Section 1614(a)(3)(H)

7 (42 U.S.C. 1382c(a)(3)(H)), as so redesignated by section

8 9601(a)(3) of this Act and as amended by subsections (a)

9 and (b) of this section, is amended by adding at the end

10 the following new clause:

11 ‘‘(iv)(I) Not later than 12 months after the birth of

12 an individual, the Commissioner shall review in accordance

13 with paragraph (4) the continuing eligibility for benefits

14 under this title by reason of disability of such individual

15 whose low birth weight is a contributing factor material

16 to the Commissioner’s determination that the individual

17 is disabled.

18 ‘‘(II) A review under subclause (I) shall be considered

19 a substitute for a review otherwise required under any

20 other provision of this subparagraph during that 12-

21 month period.

22 ‘‘(III) A parent or guardian of a recipient whose case

23 is reviewed under this clause shall present, at the time

24 of review, evidence demonstrating that the recipient is,

25 and has been, receiving treatment, to the extent consid-
904

Title IX, Subtitle F

•HR 2530 IH

1 ered medically necessary and available, of the condition

2 which was the basis for providing benefits under this

3 title.’’.

4 (d) EFFECTIVE DATE.—The amendments made by

5 this section shall apply to benefits for months beginning

6 on or after the date of the enactment of this Act, without

7 regard to whether regulations have been issued to imple8 ment such amendments.

9 SEC. 9603. ADDITIONAL ACCOUNTABILITY REQUIREMENTS.

10 (a) TIGHTENING OF REPRESENTATIVE PAYEE RE11 QUIREMENTS.—

12 (1) CLARIFICATION OF ROLE.—Section

13 1631(a)(2)(B)(ii) (42 U.S.C. 1383(a)(2)(B)(ii)) is

14 amended by striking ‘‘and’’ at the end of subclause

15 (II), by striking the period at the end of subclause

16 (IV) and inserting ‘‘; and’’, and by adding after

17 subclause (IV) the following new subclause:

18 ‘‘(V) advise such person through the notice of

19 award of benefits, and at such other times as the

20 Commissioner of Social Security deems appropriate,

21 of specific examples of appropriate expenditures of

22 benefits under this title and the proper role of a rep23 resentative payee.’’.

24 (2) DOCUMENTATION OF EXPENDITURES RE25 QUIRED.—
905

Title IX, Subtitle F

•HR 2530 IH

1 (A) IN GENERAL.—Subparagraph (C)(i) of

2 section 1631(a)(2) (42 U.S.C. 1383(a)(2)) is

3 amended to read as follows:

4 ‘‘(C)(i) In any case where payment is made to a rep5 resentative payee of an individual or spouse, the Commis6 sioner of Social Security shall—

7 ‘‘(I) require such representative payee to docu8 ment expenditures and keep contemporaneous

9 records of transactions made using such payment;

10 and

11 ‘‘(II) implement statistically valid procedures

12 for reviewing a sample of such contemporaneous

13 records in order to identify instances in which such

14 representative payee is not properly using such pay15 ment.’’.

16 (B) CONFORMING AMENDMENT WITH RE17 SPECT TO PARENT PAYEES.—Clause (ii) of sec18 tion 1631(a)(2)(C) (42 U.S.C. 1383(a)(2)(C))

19 is amended by striking ‘‘Clause (i)’’ and insert20 ing ‘‘Subclauses (II) and (III) of clause (i)’’.

21 (3) EFFECTIVE DATE.—The amendments made

22 by this subsection shall apply to benefits paid after

23 the date of the enactment of this Act.

24 (b) DEDICATED SAVINGS ACCOUNTS.—
906

Title IX, Subtitle F

•HR 2530 IH

1 (1) IN GENERAL.—Section 1631(a)(2)(B) (42

2 U.S.C. 1383(a)(2)(B)) is amended by adding at the

3 end the following:

4 ‘‘(xiv) Notwithstanding clause (x), the Commissioner

5 of Social Security may, at the request of the representative

6 payee, pay any lump sum payment for the benefit of a

7 child into a dedicated savings account that could only be

8 used to purchase for such child—

9 ‘‘(I) education and job skills training;

10 ‘‘(II) special equipment or housing modifica11 tions or both specifically related to, and required by

12 the nature of, the child’s disability; and

13 ‘‘(III) appropriate therapy and rehabilitation.’’.

14 (2) DISREGARD OF TRUST FUNDS.—Section

15 1613(a) (42 U.S.C. 1382b(a)) is amended—

16 (A) by striking ‘‘and’’ at the end of para17 graph (10),

18 (B) by striking the period at the end of

19 paragraph (11) and inserting ‘‘; and’’, and

20 (C) by inserting after paragraph (11) the

21 following:

22 ‘‘(12) all amounts deposited in, or interest cred23 ited to, a dedicated savings account described in sec24 tion 1631(a)(2)(B)(xiv).’’.
907

Title IX, Subtitle F

•HR 2530 IH

1 (3) EFFECTIVE DATE.—The amendments made

2 by this subsection shall apply to payments made

3 after the date of the enactment of this Act.

4 SEC. 9604. DENIAL OF SSI BENEFITS BY REASON OF DIS5 ABILITY TO DRUG ADDICTS AND ALCOHOL6 ICS.

7 (a) IN GENERAL.—Section 1614(a)(3) (42 U.S.C.

8 1382c(a)(3)), as amended by section 9601(a)(3) of this

9 Act, is amended by adding at the end the following:

10 ‘‘(J) Notwithstanding subparagraph (A), an individ11 ual shall not be considered to be disabled for purposes of

12 this title if alcoholism or drug addiction would (but for

13 this subparagraph) be a contributing factor material to

14 the Commissioner’s determination that the individual is

15 disabled.’’.

16 (b) CONFORMING AMENDMENTS.—

17 (1) Section 1611(e) (42 U.S.C. 1382(e)) is

18 amended by striking paragraph (3).

19 (2) Section 1613(a)(12) (42 U.S.C.

20 1382b(a)(12)) is amended by striking

21 ‘‘1631(a)(2)(B)(xiv)’’ and inserting

22 ‘‘1631(a)(2)(B)(xiii)’’.

23 (3) Section 1631(a)(2)(A)(ii) (42 U.S.C.

24 1383(a)(2)(A)(ii)) is amended—

25 (A) by striking ‘‘(I)’’; and
908

Title IX, Subtitle F

•HR 2530 IH

1 (B) by striking subclause (II).

2 (4) Section 1631(a)(2)(B) (42 U.S.C.

3 1383(a)(2)(B)) is amended—

4 (A) by striking clause (vii);

5 (B) in clause (viii), by striking ‘‘(ix)’’ and

6 inserting ‘‘(viii)’’;

7 (C) in clause (ix)—

8 (i) by striking ‘‘(viii)’’ and inserting

9 ‘‘(vii)’’; and

10 (ii) in subclause (II), by striking all

11 that follows ‘‘15 years’’ and inserting a pe12 riod;

13 (D) in clause (xiii)—

14 (i) by striking ‘‘(xii)’’ and inserting

15 ‘‘(xi)’’; and

16 (ii) by striking ‘‘(xi)’’ and inserting

17 ‘‘(x)’’;

18 (E) in clause (xiv) (as added by section

19 9603(b)(1) of this Act), by striking ‘‘(x)’’ and

20 inserting ‘‘(ix)’’; and

21 (F) by redesignating clauses (viii) through

22 (xiv) as clauses (vii) through (xiii), respectively.

23 (5) Section 1631(a)(2)(D)(i)(II) (42 U.S.C.

24 1383(a)(2)(D)(i)(II)) is amended by striking all that

25 follows ‘‘$25.00 per month’’ and inserting a period.
909

Title IX, Subtitle F

•HR 2530 IH

1 (6) Section 1634 (42 U.S.C. 1383c) is amended

2 by striking subsection (e).

3 (7) Section 201(c)(1) of the Social Security

4 Independence and Program Improvements Act of

5 1994 (42 U.S.C. 425 note) is amended—

6 (A) by striking ‘‘—’’ and all that follows

7 through ‘‘(A)’’ the 1st place such term appears;

8 (B) by striking ‘‘and’’ the 3rd place such

9 term appears;

10 (C) by striking subparagraph (B);

11 (D) by striking ‘‘either subparagraph (A)

12 or subparagraph (B)’’ and inserting ‘‘the pre13 ceding sentence’’; and

14 (E) by striking ‘‘subparagraph (A) or (B)’’

15 and inserting ‘‘the preceding sentence’’.

16 (c) EFFECTIVE DATE.—The amendments made by

17 this section shall take effect on October 1, 1995, and shall

18 apply with respect to months beginning on or after such

19 date.

20 (d) FUNDING OF CERTAIN PROGRAMS FOR DRUG

21 ADDICTS AND ALCOHOLICS.—Out of any money in the

22 Treasury of the United States not otherwise appropriated,

23 the Secretary of the Treasury shall pay to the Director

24 of the National Institute on Drug Abuse—
910

Title IX, Subtitle F

•HR 2530 IH

1 (1) $95,000,000, for each of fiscal years 1997,

2 1998, 1999, and 2000, for expenditure through the

3 Federal Capacity Expansion Program to expand the

4 availability of drug treatment; and

5 (2) $5,000,000 for each of fiscal years 1997,

6 1998, 1999, and 2000 to be expended solely on the

7 medication development project to improve drug

8 abuse and drug treatment research.

9 SEC. 9605. DENIAL OF SSI BENEFITS FOR 10 YEARS TO INDI10 VIDUALS FOUND TO HAVE FRAUDULENTLY

11 MISREPRESENTED RESIDENCE IN ORDER TO

12 OBTAIN BENEFITS SIMULTANEOUSLY IN 2 OR

13 MORE STATES.

14 Section 1614(a) (42 U.S.C. 1382c(a)) is amended by

15 adding at the end the following:

16 ‘‘(5) An individual shall not be considered an eligible

17 individual for purposes of this title during the 10-year pe18 riod beginning on the date the individual is found by a

19 State to have made, or is convicted in Federal or State

20 court of having made, a fraudulent statement or represen21 tation with respect to the place of residence of the individ22 ual in order to receive benefits simultaneously from 2 or

23 more States under programs that are funded under part

24 A of title IV, or title XIX of this Act, the consolidated

25 program of food assistance under chapter 2 of subtitle E
911

Title IX, Subtitle F

•HR 2530 IH

1 of title XIV of the Omnibus Budget Reconciliation Act of

2 1995, or the Food Stamp Act of 1977 (as in effect before

3 the effective date of such chapter), or benefits in 2 or more

4 States under the supplemental security income program

5 under title XVI of this Act.’’.

6 SEC. 9606. DENIAL OF SSI BENEFITS FOR FUGITIVE FELONS

7 AND PROBATION AND PAROLE VIOLATORS.

8 (a) IN GENERAL.—Section 1611(e) (42 U.S.C.

9 1382(e)), as amended by section 9604(b)(1) of this Act,

10 is amended by inserting after paragraph (2) the following:

11 ‘‘(3) A person shall not be an eligible individual

12 or eligible spouse for purposes of this title with re13 spect to any month if, throughout the month, the

14 person is—

15 ‘‘(A) fleeing to avoid prosecution, or cus16 tody or confinement after conviction, under the

17 laws of the place from which the person flees,

18 for a crime, or an attempt to commit a crime,

19 which is a felony under the laws of the place

20 from which the person flees, or which, in the

21 case of the State of New Jersey, is a high mis22 demeanor under the laws of such State; or

23 ‘‘(B) violating a condition of probation or

24 parole imposed under Federal or State law.’’.
912

Title IX, Subtitle F

•HR 2530 IH

1 (b) EXCHANGE OF INFORMATION WITH LAW EN2 FORCEMENT AGENCIES.—Section 1631(e) of such Act (42

3 U.S.C. 1383(e)) is amended by inserting after paragraph

4 (3) the following:

5 ‘‘(4) Notwithstanding any other provision of law, the

6 Commissioner shall furnish any Federal, State, or local

7 law enforcement officer, upon the request of the officer,

8 with the current address of any recipient of benefits under

9 this title, if the officer furnishes the agency with the name

10 of the recipient and notifies the agency that—

11 ‘‘(A) the recipient—

12 ‘‘(i) is fleeing to avoid prosecution, or cus13 tody or confinement after conviction, under the

14 laws of the place from which the person flees,

15 for a crime, or an attempt to commit a crime,

16 which is a felony under the laws of the place

17 from which the person flees, or which, in the

18 case of the State of New Jersey, is a high mis19 demeanor under the laws of such State;

20 ‘‘(ii) is violating a condition of probation or

21 parole imposed under Federal or State law; or

22 ‘‘(iii) has information that is necessary for

23 the officer to conduct the officer’s official du24 ties;
913

Title IX, Subtitle F

•HR 2530 IH

1 ‘‘(B) the location or apprehension of the recipi2 ent is within the official duties of the officer; and

3 ‘‘(C) the request is made in the proper exercise

4 of such duties.’’.

5 SEC. 9607. REAPPLICATION REQUIREMENTS FOR ADULTS

6 RECEIVING SSI BENEFITS BY REASON OF DIS7 ABILITY.

8 (a) IN GENERAL.—Section 1614(a)(3)(H) (42 U.S.C.

9 1382c(a)(3)(H)), as so redesignated by section 9601(a)(3)

10 of this Act and as amended by section 9602 of this Act,

11 is amended by adding at the end the following:

12 ‘‘(v) In the case of an individual who has attained

13 18 years of age and for whom a determination has been

14 made of eligibility for a benefit under this title by reason

15 of disability, the following applies:

16 ‘‘(I) Subject to the provisions of this clause, the

17 determination of eligibility is effective for the 3-year

18 period beginning on the date of the determination,

19 and the eligibility of the individual lapses unless a

20 determination of continuing eligibility is made before

21 the end of such period, and before the end of each

22 subsequent 3-year period. This subclause ceases to

23 apply to the individual upon the individual attaining

24 65 years of age. This subclause does not apply to

25 the individual if the individual has an impairment
914

Title IX, Subtitle F

•HR 2530 IH

1 that is not expected to improve (or a combination of

2 impairments that are not expected to improve).

3 ‘‘(II) With respect to a determination under

4 subclause (I) of whether the individual continues to

5 be eligible for the benefit (in this clause referred to

6 as a ‘redetermination’), the Commissioner may not

7 make the redetermination unless the individual sub8 mits to the Commissioner an application requesting

9 the redetermination. If such an application is sub10 mitted, the Commissioner shall make the redeter11 mination. This subclause is subject to subclause (V).

12 ‘‘(III) If as of the date on which this clause

13 takes effect the individual has been receiving the

14 benefit for three years or less, the first period under

15 subclause (I) for the individual is deemed to end on

16 the expiration of the period beginning on the date

17 on which this clause takes effect and continuing

18 through a number of months equal to 12 plus a

19 number equal to 36 minus the number of months

20 the individual has been receiving the benefit.

21 ‘‘(IV) If as of the date on which this clause

22 takes effect the individual has been receiving the

23 benefit for five years or less, but for more than three

24 years, the first period under subclause (I) for the in25 dividual is deemed to end on the expiration of the
915

Title IX, Subtitle F

•HR 2530 IH

1 1-year period beginning on the date on which this

2 clause takes effect.

3 ‘‘(V) If as of the date on which this clause

4 takes effect the individual has been receiving the

5 benefit for more than five years, the Commissioner

6 shall make redeterminations under subclause (I) and

7 may not require the individual to submit applica8 tions for the redeterminations. The first 3-year pe9 riod under subclause (I) for the individual is deemed

10 to begin upon the expiration of the period beginning

11 on the date on which this clause takes effect and

12 ending upon the termination of a number of years

13 equal to the lowest number (greater than zero) that

14 can be obtained by subtracting the number of years

15 that the individual has been receiving the benefit

16 from a number that is a multiple of three.

17 ‘‘(VI) If the individual first attains 18 years of

18 age on or after the date on which this clause takes

19 effect, the first 3-year period under subclause (I) for

20 the individual is deemed to end on the date on which

21 the individual attains such age.

22 ‘‘(VII) Not later than one year prior to the date

23 on which a determination under subclause (I) ex24 pires, the Commissioner shall (except in the case of

25 an individual to whom subclause (V) applies) provide
916

Title IX, Subtitle F

•HR 2530 IH

1 to the individual a written notice explaining the ap2 plicability of this clause to the individual, including

3 an explanation of the effect of failing to submit the

4 application. If the individual submits the application

5 not later than 180 days prior to such date and the

6 Commissioner does not make the redetermination

7 before such date, the Commissioner shall continue to

8 provide the benefit pending the redetermination and

9 shall publish in the Federal Register a notice that

10 the Commissioner was unable to make the redeter11 mination by such date.

12 ‘‘(VIII) If the individual fails to submit the ap13 plication under subclause (II) by the end of the ap14 plicable period under subclause (I), the individual

15 may apply for a redetermination. The Commissioner

16 shall make the redetermination for the individual

17 only after making redeterminations for individuals

18 for whom eligibility has not lapsed pursuant to

19 subclause (I).’’.

20 (b) LIMITATIONS ON AUTHORIZATION OF APPRO21 PRIATIONS.—For redeterminations of eligibility pursuant

22 to section 1614(a)(3)(H)(v) of the Social Security Act,

23 there are authorized to be appropriated to the Commis24 sioner of Social Security not more than $100,000,000 for

25 fiscal years 1996 through 2000.
917

Title IX, Subtitle G

•HR 2530 IH

1 (c) EFFECTIVE DATE.—The amendment made by

2 subsection (a) takes effect upon the expiration of the 9-

3 month period beginning on the date of the enactment of

4 this Act.

5 SEC. 9608. REDUCTION IN UNEARNED INCOME EXCLUSION.

6 (a) IN GENERAL.—Section 1612(b)(3)(A) (42 U.S.C.

7 1382a(b)(3)(A)) is amended by striking ‘‘$20’’ and insert8 ing ‘‘$15’’.

9 (b) EFFECTIVE DATE.—The amendment made by

10 subsection (a) shall apply to benefits for months beginning

11 after December 31, 1995.

12 Subtitle G—Food Assistance

13 CHAPTER 1—FOOD STAMP PROGRAM

14 SEC. 9701. APPLICATION OF AMENDMENTS.

15 The amendments made by this chapter shall not

16 apply with respect to certification periods beginning before

17 the effective date of this chapter.

18 SEC. 9702. AMENDMENTS TO THE FOOD STAMP ACT OF 1977.

19 (a) CERTIFICATION PERIOD.—(1) Section 3(c) of the

20 Food Stamp Act of 1977 (7 U.S.C. 2012(c)) is amended

21 to read as follows:

22 ‘‘(c) ‘Certification period’ means the period specified

23 by the State agency for which households shall be eligible

24 to receive authorization cards, except that such period

25 shall be—
918

Title IX, Subtitle G

•HR 2530 IH

1 ‘‘(1) 24 months for households in which all

2 adult members are elderly or disabled; and

3 ‘‘(2) not more than 12 months for all other

4 households.’’.

5 (2) Section 6(c)(1)(C) of the Food Stamp Act of

6 1977 (7 U.S.C. 2015(c)(1)(C)) is amended—

7 (A) in clause (ii) by adding ‘‘and’’ at the end;

8 (B) in clause (iii) by striking ‘‘; and’’ at the end

9 and inserting a period; and

10 (C) by striking clause (iv).

11 (b) ENERGY ASSISTANCE COUNTED AS INCOME.—

12 (1) LIMITING EXCLUSION.—Section 5(d)(11) of

13 the Food Stamp Act of 1977 (7 U.S.C. 2014(d)(11))

14 is amended—

15 (A) by striking ‘‘(A) under any Federal

16 law, or (B)’’; and

17 (B) by inserting before the comma at the

18 end the following: ‘‘, except that no benefits

19 provided under the State program under part A

20 of title IV of the Social Security Act (42 U.S.C.

21 601 et seq.) shall be excluded under this

22 clause’’.

23 (2) CONFORMING AMENDMENTS.—
919

Title IX, Subtitle G

•HR 2530 IH

1 (A) Section 5(e) of the Food Stamp Act of

2 1977 (7 U.S.C. 2014(e)) is amended by striking

3 the ninth through the twelfth sentences.

4 (B) Section 5(k)(2) of the Food Stamp Act

5 of 1977 (7 U.S.C. 2014(k)(2)) is amended by

6 striking subparagraph (C) and redesignating

7 subparagraphs (D) through (H) as subpara8 graphs (C) through (G), respectively.

9 (C) Section 5(k) of the Food Stamp Act of

10 1977 (7 U.S.C. 2014(k)) is amended by adding

11 at the end the following:

12 ‘‘(4) For purposes of subsection (d)(1), any payments

13 or allowances made under any Federal or State law for

14 the purposes of energy assistance shall be treated as

15 money payable directly to the household.’’.

16 (D) Section 2605(f) of the Low-Income

17 Home Energy Assistance Act of 1981 (42

18 U.S.C. 8634(f)) is amended—

19 (i) in paragraph (1), by striking ‘‘food

20 stamps’’;

21 (ii) by striking ‘‘(f)(1) Notwithstand22 ing’’ and inserting ‘‘(f) Notwithstanding’’;

23 and

24 (iii) by striking paragraph (2).
920

Title IX, Subtitle G

•HR 2530 IH

1 (c) EXCLUSION OF CERTAIN JTPA INCOME.—Sec2 tion 5 of the Food Stamp Act of 1977 (7 U.S.C. 2014)

3 is amended—

4 (1) in subsection (d)—

5 (A) by striking ‘‘and (16)’’ and inserting

6 ‘‘(16)’’; and

7 (B) by inserting before the period at the

8 end the following: ‘‘, and (17) income received

9 under the Job Training Partnership Act (29

10 U.S.C. 1501 et seq.) by a household member

11 who is less than 19 years of age’’; and

12 (2) in subsection (l), by striking ‘‘under section

13 204(b)(1)(C)’’ and all that follows and inserting

14 ‘‘shall be considered earned income for purposes of

15 the food stamp program.’’.

16 (d) EXCLUSION OF LIFE INSURANCE POLICIES.—

17 Section 5(g) of the Food Stamp Act of 1977 (7 U.S.C.

18 2014(g)) is amended by adding at the end the following:

19 ‘‘(6) The Secretary shall exclude from financial re20 sources the cash value of any life insurance policy owned

21 by a member of a household.’’.

22 (e) IN-TANDEM EXCLUSIONS FROM INCOME.—Sec23 tion 5 of the Food Stamp Act of 1977 (7 U.S.C. 2014)

24 is amended by adding at the end the following:
921

Title IX, Subtitle G

•HR 2530 IH

1 ‘‘(n) Whenever a Federal statute enacted after the

2 date of the enactment of this Act excludes funds from in3 come for purposes of determining eligibility, benefit levels,

4 or both under State plans approved under part A of title

5 IV of the Social Security Act, then such funds shall be

6 excluded from income for purposes of determining eligi7 bility, benefit levels, or both, respectively, under the food

8 stamp program of households all of whose members re9 ceive benefits under a State plan approved under part A

10 of title IV of the Social Security Act.’’.

11 SEC. 9703. AUTHORITY TO ESTABLISH AUTHORIZATION

12 PERIODS.

13 Section 9(a)(1) of the Food Stamp Act of 1977 (7

14 U.S.C. 2018(a)(1)) is amended by adding at the end the

15 following: ‘‘The Secretary is authorized to issue regula16 tions establishing specific time periods during which au17 thorization to accept and redeem coupons under the food

18 stamp program shall be valid.’’.

19 SEC. 9704. SPECIFIC PERIOD FOR PROHIBITING PARTICIPA20 TION OF STORES BASED ON LACK OF BUSI21 NESS INTEGRITY.

22 Section 9(a)(1) of the Food Stamp Act of 1977 (7

23 U.S.C. 2018(a)(1)), as amended by section 9703, is

24 amended by adding at the end the following: ‘‘The Sec25 retary is authorized to issue regulations establishing spe-
922

Title IX, Subtitle G

•HR 2530 IH

1 cific time periods during which a retail food store or

2 wholesale food concern that has an application for ap3 proval to accept and redeem coupons denied or that has

4 such an approval withdrawn on the basis of business integ5 rity and reputation cannot submit a new application for

6 approval. Such periods shall reflect the severity of business

7 integrity infractions that are the basis of such denials or

8 withdrawals.’’.

9 SEC. 9705. INFORMATION FOR VERIFYING ELIGIBILITY FOR

10 AUTHORIZATION.

11 Section 9(c) of the Food Stamp Act of 1977 (7

12 U.S.C. 2018(c)) is amended—

13 (1) in the first sentence by inserting ‘‘, which

14 may include relevant income and sales tax filing doc15 uments,’’ after ‘‘submit information’’ ; and

16 (2) by inserting after the first sentence the fol17 lowing: ‘‘The regulations may require retail food

18 stores and wholesale food concerns to provide writ19 ten authorization for the Secretary to verify all rel20 evant tax filings with appropriate agencies and to

21 obtain corroborating documentation from other

22 sources in order that the accuracy of information

23 provided by such stores and concerns may be

24 verified.’’.
923

Title IX, Subtitle G

•HR 2530 IH

1 SEC. 9706. WAITING PERIOD FOR STORES THAT INITIALLY

2 FAIL TO MEET AUTHORIZATION CRITERIA.

3 Section 9(d) of the Food Stamp Act of 1977 (7

4 U.S.C. 2018(d)) is amended by adding at the end the fol5 lowing: ‘‘Regulations issued pursuant to this Act shall pro6 hibit a retail food store or wholesale food concern that has

7 an application for approval to accept and redeem coupons

8 denied because it does not meet criteria for approval estab9 lished by the Secretary in regulations from submitting a

10 new application for six months from the date of such

11 denial.’’.

12 SEC. 9707. BASES FOR SUSPENSIONS AND DISQUALIFICA13 TIONS.

14 Section 12(a) of the Food Stamp Act of 1977 (7

15 U.S.C. 2021(a)) is amended by adding at the end the fol16 lowing: ‘‘Regulations issued pursuant to this Act shall pro17 vide criteria for the finding of violations and the suspen18 sion or disqualification of a retail food store or wholesale

19 food concern on the basis of evidence which may include,

20 but is not limited to, facts established through on-site in21 vestigations, inconsistent redemption data, or evidence ob22 tained through transaction reports under electronic benefit

23 transfer systems.’’.
924

Title IX, Subtitle G

•HR 2530 IH

1 SEC. 9708. AUTHORITY TO SUSPEND STORES VIOLATING

2 PROGRAM REQUIREMENTS PENDING ADMIN3 ISTRATIVE AND JUDICIAL REVIEW.

4 (a) Section 12(a) of the Food Stamp Act of 1977 (7

5 U.S.C. 2021(a)), as amended by section 9707, is amended

6 by adding at the end the following: ‘‘Such regulations may

7 establish criteria under which the authorization of a retail

8 food store or wholesale food concern to accept and redeem

9 coupons may be suspended at the time such store or con10 cern is initially found to have committed violations of pro11 gram requirements. Such suspension may coincide with

12 the period of a review as provided in section 14. The Sec13 retary shall not be liable for the value of any sales lost

14 during any suspension or disqualification period.’’.

15 (b) Section 14(a) of the Food Stamp Act of 1977 (7

16 U.S.C. 2023(a)) is amended—

17 (1) in the first sentence by inserting ‘‘sus18 pended,’’ before ‘‘disqualified or subjected’’;

19 (2) in the fifth sentence by inserting before the

20 period at the end the following: ‘‘, except that in the

21 case of the suspension of a retail food store or

22 wholesale food concern pursuant to section 12(a),

23 such suspension shall remain in effect pending any

24 administrative or judicial review of the proposed dis25 qualification action, and the period of suspension
925

Title IX, Subtitle G

•HR 2530 IH

1 shall be deemed a part of any period of disqualifica2 tion which is imposed.’’; and

3 (3) by striking the last sentence.

4 SEC. 9709. DISQUALIFICATION OF RETAILERS WHO ARE

5 DISQUALIFIED FROM THE WIC PROGRAM.

6 Section 12 of the Food Stamp Act of 1977 (7 U.S.C.

7 2021) is amended by adding at the end the following:

8 ‘‘(g) The Secretary shall issue regulations providing

9 criteria for the disqualification of approved retail food

10 stores and wholesale food concerns that are otherwise dis11 qualified from accepting benefits under the Special Sup12 plemental Nutrition Program for Women, Infants and

13 Children (WIC) authorized under section 17 of the Child

14 Nutrition Act of 1966. Such disqualification—

15 ‘‘(1) shall be for the same period as the dis16 qualification from the WIC Program;

17 ‘‘(2) may begin at a later date; and

18 ‘‘(3) notwithstanding section 14 of this Act,

19 shall not be subject to administrative or judicial re20 view.’’.
926

Title IX, Subtitle G

•HR 2530 IH

1 SEC. 9710. PERMANENT DEBARMENT OF RETAILERS WHO

2 INTENTIONALLY SUBMIT FALSIFIED APPLI3 CATIONS.

4 Section 12 of the Food Stamp Act of 1977 (7 U.S.C.

5 2021), as amended by section 9709, is amended by adding

6 at the end the following:

7 ‘‘(h) The Secretary shall issue regulations providing

8 for the permanent disqualification of a retail food store

9 or wholesale food concern that is determined to have

10 knowingly submitted an application for approval to accept

11 and redeem coupons which contains false information

12 about one or more substantive matters which were the

13 basis for providing approval. Any disqualification imposed

14 under this subsection shall be subject to administrative

15 and judicial review pursuant to section 14, but such dis16 qualification shall remain in effect pending such review.’’.

17 SEC. 9711. EXPANDED CIVIL AND CRIMINAL FORFEITURE

18 FOR VIOLATIONS OF THE FOOD STAMP ACT.

19 (a) FORFEITURE OF ITEMS EXCHANGED IN FOOD

20 STAMP TRAFFICKING.—Section 15(g) of the Food Stamp

21 Act of 1977 (7 U.S.C. 2024(g)) is amended by striking

22 ‘‘or intended to be furnished’’.

23 (b) CIVIL AND CRIMINAL FORFEITURE.—Section 15

24 of the Food Stamp Act of 1977 (7 U.S.C. 2024)) is

25 amended by adding at the end the following:
927

Title IX, Subtitle G

•HR 2530 IH

1 ‘‘(h)(1) CIVIL FORFEITURE FOR FOOD STAMP BENE2 FIT VIOLATIONS.—

3 ‘‘(A) Any food stamp benefits and any property,

4 real or personal—

5 ‘‘(i) constituting, derived from, or traceable

6 to any proceeds obtained directly or indirectly

7 from, or

8 ‘‘(ii) used, or intended to be used, to com9 mit, or to facilitate,

10 the commission of a violation of subsection (b) or

11 subsection (c) involving food stamp benefits having

12 an aggregate value of not less than $5,000, shall be

13 subject to forfeiture to the United States.

14 ‘‘(B) The provisions of chapter 46 of title 18,

15 United States Code, relating to civil forfeitures shall

16 extend to a seizure or forfeiture under this sub17 section, insofar as applicable and not inconsistent

18 with the provisions of this subsection.

19 ‘‘(2) CRIMINAL FORFEITURE FOR FOOD STAMP BEN20 EFIT VIOLATIONS.—

21 ‘‘(A)(i) Any person convicted of violating sub22 section (b) or subsection (c) involving food stamp

23 benefits having an aggregate value of not less than

24 $5,000, shall forfeit to the United States, irrespec25 tive of any State law—
928

Title IX, Subtitle G

•HR 2530 IH

1 ‘‘(I) any food stamp benefits and any prop2 erty constituting, or derived from, or traceable

3 to any proceeds such person obtained directly or

4 indirectly as a result of such violation; and

5 ‘‘(II) any food stamp benefits and any of

6 such person’s property used, or intended to be

7 used, in any manner or part, to commit, or to

8 facilitate the commission of such violation.

9 ‘‘(ii) In imposing sentence on such person, the

10 court shall order that the person forfeit to the

11 United States all property described in this sub12 section.

13 ‘‘(B) All food stamp benefits and any property

14 subject to forfeiture under this subsection, any sei15 zure and disposition thereof, and any administrative

16 or judicial proceeding relating thereto, shall be gov17 erned by subsections (b), (c), (e), and (g) through

18 (p) of section 413 of the Comprehensive Drug Abuse

19 Prevention and Control Act of 1970 (21 U.S.C.

20 853), insofar as applicable and not inconsistent with

21 the provisions of this subsection.

22 ‘‘(3) APPLICABILITY.—This subsection shall not

23 apply to property specified in subsection (g) of this sec24 tion.
929

Title IX, Subtitle G

•HR 2530 IH

1 ‘‘(4) RULES.—The Secretary may prescribe such

2 rules and regulations as may be necessary to carry out

3 this subsection.’’.

4 SEC. 9712. EXPANDED AUTHORITY FOR SHARING INFORMA5 TION PROVIDED BY RETAILERS.

6 (a) Section 205(c)(2)(C)(iii) of the Social Security

7 Act (42 U.S.C. 405(c)(2)(C)(iii)) (as amended by section

8 316(a) of the Social Security Administrative Reform Act

9 of 1994 (Public Law 103–296; 108 Stat. 1464) is amend10 ed—

11 (1) by inserting in the first sentence of

12 subclause (II) after ‘‘instrumentality of the United

13 States’’ the following: ‘‘, or State government offi14 cers and employees with law enforcement or inves15 tigative responsibilities, or State agencies that have

16 the responsibility for administering the Special Sup17 plemental Nutrition Program for Women, Infants

18 and Children (WIC)’’;

19 (2) by inserting in the last sentence of

20 subclause (II) immediately after ‘‘other Federal’’ the

21 words ‘‘or State’’; and

22 (3) by inserting ‘‘or a State’’ in subclause (III)

23 immediately after ‘‘United States’’.

24 (b) Section 6109(f)(2) of the Internal Revenue Code

25 of 1986 (26 U.S.C. 6109(f)(2)) (as added by section
930

Title IX, Subtitle G

•HR 2530 IH

1 316(b) of the Social Security Administrative Reform Act

2 of 1994 (Public Law 103–296; 108 Stat. 1464)) is amend3 ed—

4 (1) by inserting in subparagraph (A) after ‘‘in5 strumentality of the United States’’ the following: ‘‘,

6 or State government officers and employees with law

7 enforcement or investigative responsibilities, or State

8 agencies that have the responsibility for administer9 ing the Special Supplemental Nutrition Program for

10 Women, Infants and Children (WIC)’’;

11 (2) in the last sentence of subparagraph (A) by

12 inserting ‘‘or State’’ after ‘‘other Federal’’; and

13 (3) in subparagraph (B) by inserting ‘‘or a

14 State’’ after ‘‘United States’’.

15 SEC. 9713. EXPANDED DEFINITION OF ‘‘COUPON’’.

16 Section 3(d) of the Food Stamp Act of 1977 (7

17 U.S.C. 2012(d)) is amended by striking ‘‘or type of certifi18 cate’’ and inserting ‘‘type of certificate, authorization

19 cards, cash or checks issued of coupons or access devices,

20 including, but not limited to, electronic benefit transfer

21 cards and personal identification numbers’’.

22 SEC. 9714. DOUBLED PENALTIES FOR VIOLATING FOOD

23 STAMP PROGRAM REQUIREMENTS.

24 Section 6(b)(1) of the Food Stamp Act of 1977 (7

25 U.S.C. 2015(b)(1)) is amended—
931

Title IX, Subtitle G

•HR 2530 IH

1 (1) in clause (i)—

2 (A) by striking ‘‘six months’’ and inserting

3 ‘‘1 year’’; and

4 (B) by adding ‘‘and’’ at the end; and

5 (2) striking clauses (ii) and (iii) and inserting

6 the following:

7 ‘‘(ii) permanently upon—

8 ‘‘(I) the second occasion of any such deter9 mination; or

10 ‘‘(II) the first occasion of a finding by a

11 Federal, State, or local court of the trading of

12 a controlled substance (as defined in section

13 102 of the Controlled Substances Act (21

14 U.S.C. 802)), firearms, ammunition, or explo15 sives for coupons.’’.

16 SEC. 9715. MANDATORY CLAIMS COLLECTION METHODS.

17 (a) Section 11(e)(8) of the Food Stamp Act of 1977

18 (7 U.S.C. 2020(e)(8)) is amended by inserting ‘‘or refunds

19 of Federal taxes as authorized pursuant to 31 U.S.C.

20 3720A’’ before the semicolon at the end.

21 (b) Section 13(d) of the Food Stamp Act of 1977

22 (7 U.S.C. 2022(d)) is amended—

23 (1) by striking ‘‘may’’ and inserting ‘‘shall’’;

24 and
932

Title IX, Subtitle G

•HR 2530 IH

1 (2) by inserting ‘‘or refunds of Federal taxes as

2 authorized pursuant to 31 U.S.C. 3720A’’ before the

3 period at the end.

4 (c) Section 6103(1) of the Internal Revenue Code (26

5 U.S.C. 6103(1)) is amended—

6 (1) by striking ‘‘officers and employees’’ in

7 paragraph (10)(A) and inserting ‘‘officers, employ8 ees or agents, including State agencies’’; and

9 (2) by striking ‘‘officers and employees’’ in

10 paragraph (10)(B) and inserting ‘‘officers, employ11 ees or agents, including State agencies’’.

12 SEC. 9716. PROMOTING EXPANSION OF ELECTRONIC BENE13 FITS TRANSFER.

14 Section 7(i) of the Food Stamp Act of 1977 (7 U.S.C.

15 2016(i)(1)) is amended—

16 (1) by amending paragraph (1) to read:

17 ‘‘(1)(A) State agencies are encouraged to implement

18 an on-line electronic benefit transfer system in which

19 household benefits determined under section 8(a) are is20 sued from and stored in a central data bank and electroni21 cally accessed by household members at the point-of-sale.

22 ‘‘(B) Subject to paragraph (2), a State agency is au23 thorized to procure and implement an electronic benefit

24 transfer system under the terms, conditions, and design

25 that the State agency deems appropriate.
933

Title IX, Subtitle G

•HR 2530 IH

1 ‘‘(C) The Secretary shall, upon request of a State

2 agency, waive any provision of this subsection prohibiting

3 the effective implementation of an electronic benefit trans4 fer system consistent with the purposes of this Act. The

5 Secretary shall act upon any request for such a waiver

6 within 90 days of receipt of a complete application.’’;

7 (2) in paragraph (2), by striking ‘‘for the ap8 proval’’; and

9 (3) in paragraph (3), by striking ‘‘the Secretary

10 shall not approve such a system unless’’ and insert11 ing ‘‘the State agency shall ensure that’’.

12 SEC. 9717. REDUCTION OF BASIC BENEFIT LEVEL.

13 Section 3(o) of the Food Stamp Act of 1977 (7

14 U.S.C. 2012(o)) is amended—

15 (1) by striking ‘‘and (11)’’ and inserting

16 ‘‘(11)’’;

17 (2) in clause (11) by inserting ‘‘through Octo18 ber 1, 1994’’ after ‘‘each October 1 thereafter’’; and

19 (3) by inserting before the period at the end the

20 following:

21 ‘‘, and (12) on October 1, 1995, and on each October 1

22 thereafter, adjust the cost of such diet to reflect 100 per23 cent of the cost, in the preceding June (without regard

24 to any previous adjustment made under this clause or

25 clauses (4) through (11) of this subsection) and round the
934

Title IX, Subtitle G

•HR 2530 IH

1 result to the nearest lower dollar increment for each

2 household size’’.

3 SEC. 9718. 2-YEAR FREEZE OF STANDARD DEDUCTION.

4 The second sentence of section 5(e)(4) (7 U.S.C.

5 2014(e)(4)) is amended by inserting ‘‘, except October 1,

6 1995, and October 1, 1996’’ after ‘‘thereafter’’.

7 SEC. 9719. PRO-RATING BENEFITS AFTER INTERRUPTIONS

8 IN PARTICIPATION.

9 Section 8(c)(2)(B) of the Food Stamp Act of 1977

10 (7 U.S.C. 2017(c)(2)(B)) is amended by striking ‘‘of more

11 than one month’’.

12 SEC. 9720. DISQUALIFICATION FOR PARTICIPATING IN 2 OR

13 MORE STATES.

14 Section 6 of the Food Stamp Act of 1977 (7 U.S.C.

15 2015), as amended by sections 9491 and 9492, is amend16 ed by adding at the end the following:

17 ‘‘(l) DISQUALIFICATION FOR PARTICIPATING IN 2 OR

18 MORE STATES.—An individual shall be ineligible to par19 ticipate in the food stamp program as a member of any

20 household during a 10-year period beginning on the date

21 the individual is found by a State to have made, or is con22 victed in Federal or State court of having made, a fraudu23 lent statement or representation with respect to the place

24 of residence of the individual to receive benefits simulta25 neously from 2 or more States under—
935

Title IX, Subtitle G

•HR 2530 IH

1 ‘‘(1) the food stamp program;

2 ‘‘(2) a State program funded under part A of

3 title IV of the Social Security Act (42 U.S.C. 601

4 et seq.) or under title XIX of the Act (42 U.S.C.

5 1396 et seq.); or

6 ‘‘(3) the supplemental security income program

7 under title XVI of the Act (42 U.S.C. 1381 et

8 seq.).’’.

9 SEC. 9721. DISQUALIFICATION RELATING TO CHILD SUP10 PORT ARREARS.

11 Section 6 of the Food Stamp Act of 1977 (7 U.S.C.

12 2015), as amended by sections 9491, 9492, and 9720, is

13 amended by adding at the end the following:

14 ‘‘(m) DISQUALIFICATION FOR CHILD SUPPORT AR15 REARS.—

16 ‘‘(1) IN GENERAL.—At the option of a State

17 agency, except as provided in paragraph (2), no indi18 vidual shall be eligible to participate in the food

19 stamp program as a member of any household dur20 ing any month that the individual is delinquent in

21 any payment due under a court order for the sup22 port of a child of the individual.

23 ‘‘(2) EXCEPTIONS.—Paragraph (1) shall not

24 apply if—
936

Title IX, Subtitle G

•HR 2530 IH

1 ‘‘(A) a court is allowing the individual to

2 delay payment; or

3 ‘‘(B) the individual is complying with a

4 payment plan approved by a court or the State

5 agency designated under part D of title IV of

6 the Social Security Act (42 U.S.C. 651 et seq.)

7 to provide support for the child of the individ8 ual.’’.

9 SEC. 9722. STATE AUTHORIZATION TO ASSIST LAW EN10 FORCEMENT OFFICERS IN LOCATING FUGI11 TIVE FELONS.

12 Section 11(e)(8)(B) of the Food Stamp Act of 1977

13 (7 U.S.C. 2020(e)(8)(B)) is amended by striking ‘‘Act,

14 and’’ and inserting ‘‘Act or of locating a fugitive felon (as

15 defined by a State), and’’.

16 SEC. 9723. WORK REQUIREMENT FOR ABLE-BODIED RECIPI17 ENTS.

18 (a) IN GENERAL.—Section 6 of the Food Stamp Act

19 of 1977 (7 U.S.C. 2015), as amended by sections 9491,

20 9492, 9720, and 9721, is amended by adding at the end

21 the following:

22 ‘‘(n) WORK REQUIREMENT.—

23 ‘‘(1) DEFINITION OF WORK PROGRAM.—In this

24 subsection, the term ‘work program’ means—
937

Title IX, Subtitle G

•HR 2530 IH

1 ‘‘(A) a program under the Job Training

2 Partnership Act (29 U.S.C. 1501 et seq.);

3 ‘‘(B) a program under section 236 of the

4 Trade Act of 1974 (19 U.S.C. 2296); or

5 ‘‘(C) a program of employment or training

6 operated or supervised by a State or local gov7 ernment, as determined appropriate by the Sec8 retary.

9 ‘‘(2) WORK REQUIREMENT.—No individual

10 shall be eligible to participate in the food stamp pro11 gram as a member of any household if, during the

12 preceding 12 months, the individual received food

13 stamp benefits for not less than 6 months during

14 which the individual did not—

15 ‘‘(A) work 20 hours or more per week,

16 averaged monthly;

17 ‘‘(B) participate in a workfare program

18 under section 20 or a comparable State or local

19 workfare program;

20 ‘‘(C) participate in and comply with the re21 quirements of an approved employment and

22 training program under subsection (d)(4); or

23 ‘‘(D) participate in and comply with the

24 requirements of a work program for 20 hours

25 or more per week.
938

Title IX, Subtitle G

•HR 2530 IH

1 ‘‘(3) EXCEPTION.—Paragraph (2) shall not

2 apply to an individual if the individual is—

3 ‘‘(A) under 18 or over 50 years of age;

4 ‘‘(B) medically certified as physically or

5 mentally unfit for employment;

6 ‘‘(C) a parent or other member of a house7 hold with a dependent child under 18 years of

8 age; or

9 ‘‘(D) otherwise exempt under subsection

10 (d)(2).

11 ‘‘(4) WAIVER.—

12 ‘‘(A) IN GENERAL.—The Secretary may

13 waive the applicability of paragraph (2) to any

14 group of individuals in the State if the Sec15 retary makes a determination that the area in

16 which the individuals reside—

17 ‘‘(i) has an unemployment rate of over

18 8 percent; or

19 ‘‘(ii) does not have a sufficient num20 ber of jobs to provide employment for the

21 individuals.

22 ‘‘(B) REPORT.—The Secretary shall report

23 the basis for a waiver under subparagraph (A)

24 to the Committee on Agriculture of the House

25 of Representatives and the Committee on Agri-
939

Title IX, Subtitle G

•HR 2530 IH

1 culture, Nutrition, and Forestry of the Sen2 ate.’’.

3 (b) WORK AND TRAINING PROGRAMS.—Section

4 6(d)(4) of the Food Stamp Act of 1977 (7 U.S.C.

5 2015(d)(4)) is amended by adding at the end the follow6 ing:

7 ‘‘(O) REQUIRED PARTICIPATION IN WORK

8 AND TRAINING PROGRAMS.—A State agency

9 shall provide an opportunity to participate in

10 the employment and training program under

11 this paragraph to any individual who would oth12 erwise become subject to disqualification under

13 subsection (i).

14 ‘‘(P) COORDINATING WORK REQUIRE15 MENTS.—

16 ‘‘(i) IN GENERAL.—Notwithstanding

17 any other provision of this paragraph, a

18 State agency that meets the participation

19 requirements of clause (ii) may operate the

20 employment and training program of the

21 State for individuals who are members of

22 households receiving allotments under this

23 Act as part of a program operated by the

24 State under part F of title IV of the Social
940

Title IX, Subtitle G

•HR 2530 IH

1 Security Act (42 U.S.C. 681 et seq.), sub2 ject to the requirements of the Act.

3 ‘‘(ii) PARTICIPATION REQUIRE4 MENTS.—A State agency may exercise the

5 option under clause (i) if the State agency

6 provides an opportunity to participate in

7 an approved employment and training pro8 gram to an individual who is—

9 ‘‘(I) subject to subsection (i);

10 ‘‘(II) not employed at least an

11 average of 20 hours per week;

12 ‘‘(III) not participating in a

13 workfare program under section 20

14 (or a comparable State or local pro15 gram); and

16 ‘‘(IV) not subject to a waiver

17 under subsection (i)(4).’’.

18 (c) ENHANCED EMPLOYMENT AND TRAINING PRO19 GRAM.—Section 16(h)(1) of the Food Stamp Act of 1977

20 (7 U.S.C. 2025(h)(1)) is amended—

21 (1) in subparagraph (A), by striking

22 ‘‘$75,000,000 for each of the fiscal years 1991

23 through 1995’’ and inserting ‘‘$150,000,000 for

24 each of fiscal years 1996 through 2000’’;
941

Title IX, Subtitle G

•HR 2530 IH

1 (2) by striking subparagraphs (B), (C), (E),

2 and (F);

3 (3) by redesignating subparagraph (D) as sub4 paragraph (B); and

5 (4) in subparagraph (B) (as redesignated by

6 paragraph (3)), by striking ‘‘for each’’ and all that

7 follows through ‘‘of $60,000,000’’ and inserting ‘‘,

8 the Secretary shall allocate funding’’.

9 SEC. 9724. COORDINATION OF EMPLOYMENT AND TRAIN10 ING PROGRAMS.

11 Section 8(d) of the Food Stamp Act of 1977 (7

12 U.S.C. 2019(d)) is amended—

13 (1) by striking ‘‘(d) A household’’ and inserting

14 the following:

15 ‘‘(d) NONCOMPLIANCE WITH OTHER WELFARE OR

16 WORK PROGRAMS.—

17 ‘‘(1) IN GENERAL.—A household’’; and

18 (2) by inserting ‘‘or a work requirement under

19 a welfare or public assistance program’’ after ‘‘as20 sistance program’’; and

21 (3) by adding at the end the following:

22 ‘‘(2) WORK REQUIREMENT.—If a household

23 fails to comply with a work requirement under a

24 State program funded under part A of title IV of the
942

Title IX, Subtitle G

•HR 2530 IH

1 Social Security Act (42 U.S.C. 601 et seq.), for the

2 duration of the reduction—

3 ‘‘(A) the household may not receive an in4 creased allotment as the result of a decrease in

5 the income of the household to the extent that

6 the decrease is the result of a penalty imposed

7 for the failure to comply; and

8 ‘‘(B) the State agency may reduce the al9 lotment of the household by not more than 25

10 percent.’’.

11 SEC. 9725. EXTENDING CURRENT CLAIMS RETENTION

12 RATES.

13 Section 16(a) of the Food Stamp Act of 1977 (7

14 U.S.C. 2025(a)) is amended by striking ‘‘September 30,

15 1995’’ each place it appears and inserting ‘‘September 30,

16 2002’’.

17 SEC. 9726. NUTRITION ASSISTANCE FOR PUERTO RICO.

18 Section 19(a)(1)(A) of the Food Stamp Act of 1977

19 (7 U.S.C. 2028(a)(1)(A)) is amended—

20 (1) by striking ‘‘1994, and’’ and inserting

21 ‘‘1994,’’; and

22 (2) by inserting ‘‘and $1,143,000,000 for fiscal

23 year 1996,’’ before ‘‘to finance’’.
943

Title IX, Subtitle G

•HR 2530 IH

1 SEC. 9727. TREATMENT OF CHILDREN LIVING AT HOME.

2 The second sentence of section 3(i) of the Food

3 Stamp Act of 1977 (7 U.S.C. 2012(i)) is amended by

4 striking ‘‘(who are not themselves parents living with their

5 children or married and living with their spouses)’’.

6 CHAPTER 2—COMMODITY DISTRIBUTION

7 SEC. 9751. SHORT TITLE.

8 This chapter may be cited as the ‘‘Commodity Dis9 tribution Act of 1995’’.

10 SEC. 9752. AVAILABILITY OF COMMODITIES.

11 (a) Notwithstanding any other provision of law, the

12 Secretary of Agriculture (hereinafter in this chapter re13 ferred to as the ‘‘Secretary’’) is authorized during fiscal

14 years 1996 through 2000 to purchase a variety of nutri15 tious and useful commodities and distribute such commod16 ities to the States for distribution in accordance with this

17 chapter.

18 (b) In addition to the commodities described in sub19 section (a), the Secretary may expend funds made avail20 able to carry out the section 32 of the Act of August 24,

21 1935 (7 U.S.C. 612c), which are not expended or needed

22 to carry out such section, to purchase, process, and dis23 tribute commodities of the types customarily purchased

24 under such section to the States for distribution in accord25 ance to this chapter.
944

Title IX, Subtitle G

•HR 2530 IH

1 (c) In addition to the commodities described in sub2 sections (a) and (b), agricultural commodities and the

3 products thereof made available under clause (2) of the

4 second sentence of section 32 of the Act of August 24,

5 1935 (7 U.S.C. 612c), may be made available by the Sec6 retary to the States for distribution in accordance with

7 this chapter.

8 (d) In addition to the commodities described in sub9 sections (a), (b), and (c), commodities acquired by the

10 Commodity Credit Corporation that the Secretary deter11 mines, in the discretion of the Secretary, are in excess of

12 quantities needed to—

13 (1) carry out other domestic donation pro14 grams;

15 (2) meet other domestic obligations;

16 (3) meet international market development and

17 food aid commitments, and

18 (4) carry out the farm price and income sta19 bilization purposes of the Agricultural Adjustment

20 Act of 1938, the Agricultural Act of 1949, and the

21 Commodity Credit Corporation Charter Act; shall be

22 made available by the Secretary, without charge or

23 credit for such commodities, to the States for dis24 tribution in accordance with this chapter.
945

Title IX, Subtitle G

•HR 2530 IH

1 (e) During each fiscal year, the types, varieties, and

2 amounts of commodities to be purchased under this chap3 ter shall be determined by the Secretary. In purchasing

4 such commodities, except those commodities purchased

5 pursuant to section 9760, the Secretary shall, to the ex6 tent practicable and appropriate, make purchases based

7 on—

8 (1) agricultural market conditions;

9 (2) the preferences and needs of States and dis10 tributing agencies; and

11 (3) the preferences of the recipients.

12 SEC. 9753. STATE, LOCAL AND PRIVATE SUPPLEMENTATION

13 OF COMMODITIES.

14 (a) The Secretary shall establish procedures under

15 which State and local agencies, recipient agencies, or any

16 other entity or person may supplement the commodities

17 distributed under this chapter for use by recipient agen18 cies with nutritious and wholesome commodities that such

19 entities or persons donate for distribution, in all or part

20 of the State, in addition to the commodities otherwise

21 made available under this chapter.

22 (b) States and eligible recipient agencies may use—

23 (1) the funds appropriated for administrative

24 cost under section 9759(b);
946

Title IX, Subtitle G

•HR 2530 IH

1 (2) equipment, structures, vehicles, and all

2 other facilities involved in the storage, handling, or

3 distribution of commodities made available under

4 this chapter; and

5 (3) the personnel, both paid or volunteer, in6 volved in such storage, handling, or distribution; to

7 store, handle or distribute commodities donated for

8 use under subsection (a).

9 (c) States and recipient agencies shall continue, to

10 the maximum extent practical, to use volunteer workers,

11 and commodities and other foodstuffs donated by chari12 table and other organizations, in the distribution of com13 modities under this chapter.

14 SEC. 9754. STATE PLAN.

15 (a) A State seeking to receive commodities under this

16 chapter shall submit a plan of operation and administra17 tion every four years to the Secretary for approval. The

18 plan may be amended at any time, with the approval of

19 the Secretary.

20 (b) The State plan, at a minimum, shall—

21 (1) designate the State agency responsible for

22 distributing the commodities received under this

23 chapter;

24 (2) set forth a plan of operation and adminis25 tration to expeditiously distribute commodities under
947

Title IX, Subtitle G

•HR 2530 IH

1 this chapter in quantities requested to eligible recipi2 ent agencies in accordance with sections 9756 and

3 9760;

4 (3) set forth the standards of eligibility for re5 cipient agencies; and

6 (4) set forth the standards of eligibility for indi7 vidual or household recipients of commodities, which

8 at minimum shall require—

9 (A) individuals or households to be com10 prised of needy persons; and

11 (B) individual or household members to be

12 residing in the geographic location served by

13 the distributing agency at the time of applica14 tion for assistance.

15 (c) The Secretary shall encourage each State receiv16 ing commodities under this chapter to establish a State

17 advisory board consisting of representatives of all inter18 ested entities, both public and private, in the distribution

19 of commodities received under this chapter in the State.

20 (d) A State agency receiving commodities under this

21 chapter may—

22 (1)(A) enter into cooperative agreements with

23 State agencies of other States to jointly provide

24 commodities received under this chapter to eligible
948

Title IX, Subtitle G

•HR 2530 IH

1 recipient agencies that serve needy persons in a sin2 gle geographical area which includes such States; or

3 (B) transfer commodities received under this

4 chapter to any such eligible recipient agency in the

5 other State under such agreement; and

6 (2) advise the Secretary of an agreement en7 tered into under this subsection and the transfer of

8 commodities made pursuant to such agreement.

9 SEC. 9755. ALLOCATION OF COMMODITIES TO STATES.

10 (a) In each fiscal year, except for those commodities

11 purchased under section 9760, the Secretary shall allocate

12 the commodities distributed under this chapter as follows:

13 (1) 60 percent of such total value of commod14 ities shall be allocated in a manner such that the

15 value of commodities allocated to each State bears

16 the same ratio to 60 percent of such total value as

17 the number of persons in households within the

18 State having incomes below the poverty line bears to

19 the total number of persons in households within all

20 States having incomes below such poverty line. Each

21 State shall receive the value of commodities allocated

22 under this paragraph.

23 (2) 40 percent of such total value of commod24 ities shall be allocated in a manner such that the

25 value of commodities allocated to each State bears
949

Title IX, Subtitle G

•HR 2530 IH

1 the same ratio to 40 percent of such total value as

2 the average monthly number of unemployed persons

3 within the State bears to the average monthly num4 ber of unemployed persons within all States during

5 the same fiscal year. Each State shall receive the

6 value of commodities allocated to the State under

7 this paragraph.

8 (b)(1) The Secretary shall notify each State of the

9 amount of commodities that such State is allotted to re10 ceive under subsection (a) or this subsection, if applicable.

11 Each State shall promptly notify the Secretary if such

12 State determines that it will not accept any or all of the

13 commodities made available under such allocation. On

14 such a notification by a State, the Secretary shall reallo15 cate and distribute such commodities in a manner the Sec16 retary deems appropriate and equitable. The Secretary

17 shall further establish procedures to permit States to de18 cline to receive portions of such allocation during each fis19 cal year in a manner the State determines is appropriate

20 and the Secretary shall reallocate and distribute such allo21 cation as the Secretary deems appropriate and equitable.

22 (2) In the event of any drought, flood, hurricane, or

23 other natural disaster affecting substantial numbers of

24 persons in a State, county, or parish, the Secretary may

25 request that States unaffected by such a disaster consider
950

Title IX, Subtitle G

•HR 2530 IH

1 assisting affected States by allowing the Secretary to re2 allocate commodities from such unaffected State to States

3 containing areas adversely affected by the disaster.

4 (c) Purchases of commodities under this chapter shall

5 be made by the Secretary at such times and under such

6 conditions as the Secretary determines appropriate within

7 each fiscal year. All commodities so purchased for each

8 such fiscal year shall be delivered at reasonable intervals

9 to States based on the allocations and reallocations made

10 under subsections (a) and (b), and or carry out section

11 9760, not later than December 31 of the following fiscal

12 year.

13 SEC. 9756. PRIORITY SYSTEM FOR STATE DISTRIBUTION OF

14 COMMODITIES.

15 (a) In distributing the commodities allocated under

16 subsections (a) and (b) of section 9755, the State agency,

17 under procedures determined by the State agency, shall

18 offer, or otherwise make available, its full allocation of

19 commodities for distribution to emergency feeding organi20 zations.

21 (b) If the State agency determines that the State will

22 not exhaust the commodities allocated under subsections

23 (a) and (b) of section 9755 through distribution to organi24 zations referred to in subsection (a), its remaining alloca25 tion of commodities shall be distributed to charitable insti-
951

Title IX, Subtitle G

•HR 2530 IH

1 tutions described in section 9763(3) not receiving com2 modities under subsection (a).

3 (c) If the State agency determines that the State will

4 not exhaust the commodities allocated under subsections

5 (a) and (b) of section 9755 through distribution to organi6 zations referred to in subsections (a) and (b), its remain7 ing allocation of commodities shall be distributed to any

8 eligible recipient agency not receiving commodities under

9 subsections (a) and (b).

10 SEC. 9757. INITIAL PROCESSING COSTS.

11 The Secretary may use funds of the Commodity

12 Credit Corporation to pay the costs of initial processing

13 and packaging of commodities to be distributed under this

14 chapter into forms and in quantities suitable, as deter15 mined by the Secretary, for use by the individual house16 holds or eligible recipient agencies, as applicable. The Sec17 retary may pay such costs in the form of Corporation18 owned commodities equal in value to such costs. The Sec19 retary shall ensure that any such payments in kind will

20 not displace commercial sales of such commodities.

21 SEC. 9758. ASSURANCES; ANTICIPATED USE.

22 (a) The Secretary shall take such precautions as the

23 Secretary deems necessary to ensure that commodities

24 made available under this chapter will not displace com25 mercial sales of such commodities or the products thereof.
952

Title IX, Subtitle G

•HR 2530 IH

1 The Secretary shall submit to the Committee on Agri2 culture of the House of Representatives and the Commit3 tee on Agriculture, Nutrition, and Forestry of the Senate

4 by December 31, 1997, and not less than every two years

5 thereafter, a report as to whether and to what extent such

6 displacements or substitutions are occurring.

7 (b) The Secretary shall determine that commodities

8 provided under this chapter shall be purchased and dis9 tributed only in quantities that can be consumed without

10 waste. No eligible recipient agency may receive commod11 ities under this chapter in excess of anticipated use, based

12 on inventory records and controls, or in excess of its ability

13 to accept and store such commodities.

14 SEC. 9759. AUTHORIZATION OF APPROPRIATIONS.

15 (a) PURCHASE OF COMMODITIES.—To carry out this

16 chapter, there are authorized to be appropriated

17 $260,000,000 for each of the fiscal years 1996 through

18 2000 to purchase, process, and distribute commodities to

19 the States in accordance with this chapter.

20 (b) ADMINISTRATIVE FUNDS.—

21 (1) There are authorized to be appropriated

22 $40,000,000 for each of the fiscal years 1996

23 through 2000 for the Secretary to make available to

24 the States for State and local payments for costs as25 sociated with the distribution of commodities by eli-
953

Title IX, Subtitle G

•HR 2530 IH

1 gible recipient agencies under this chapter, excluding

2 costs associated with the distribution of those com3 modities distributed under section 9760. Funds ap4 propriated under this paragraph for any fiscal year

5 shall be allocated to the States on an advance basis

6 dividing such funds among the States in the same

7 proportions as the commodities distributed under

8 this chapter for such fiscal year are allocated among

9 the States. If a State agency is unable to use all of

10 the funds so allocated to it, the Secretary shall re11 allocate such unused funds among the other States

12 in a manner the Secretary deems appropriate and

13 equitable.

14 (2)(A) A State shall make available in each fis15 cal year to eligible recipient agencies in the State

16 not less than 40 percent of the funds received by the

17 State under paragraph (1) for such fiscal year, as

18 necessary to pay for, or provide advance payments

19 to cover, the allowable expenses of eligible recipient

20 agencies for distributing commodities to needy per21 sons, but only to the extent such expenses are actu22 ally so incurred by such recipient agencies.

23 (B) As used in this paragraph, the term ‘‘allow24 able expenses’’ includes—
954

Title IX, Subtitle G

•HR 2530 IH

1 (i) costs of transporting, storing, handling,

2 repackaging, processing, and distributing com3 modities incurred after such commodities are

4 received by eligible recipient agencies;

5 (ii) costs associated with determinations of

6 eligibility, verification, and documentation;

7 (iii) costs of providing information to per8 sons receiving commodities under this chapter

9 concerning the appropriate storage and prepa10 ration of such commodities; and

11 (iv) costs of recordkeeping, auditing, and

12 other administrative procedures required for

13 participation in the program under this chapter.

14 (C) If a State makes a payment, using State

15 funds, to cover allowable expenses of eligible recipi16 ent agencies, the amount of such payment shall be

17 counted toward the amount a State must make

18 available for allowable expenses of recipient agencies

19 under this paragraph.

20 (3) States to which funds are allocated for a

21 fiscal year under this subsection shall submit finan22 cial reports to the Secretary, on a regular basis, as

23 to the use of such funds. No such funds may be

24 used by States or eligible recipient agencies for costs

25 other than those involved in covering the expenses
955

Title IX, Subtitle G

•HR 2530 IH

1 related to the distribution of commodities by eligible

2 recipient agencies.

3 (4)(A) Except as provided in subparagraph (B),

4 to be eligible to receive funds under this subsection,

5 a State shall provide in cash or in kind (according

6 to procedures approved by the Secretary for certify7 ing these in-kind contributions) from non-Federal

8 sources a contribution equal to the difference be9 tween—

10 (i) the amount of such funds so received;

11 and

12 (ii) any part of the amount allocated to the

13 State and paid by the State—

14 (I) to eligible recipient agencies; or

15 (II) for the allowable expenses of such

16 recipient agencies; for use in carrying out

17 this chapter.

18 (B) Funds allocated to a State under this sec19 tion may, upon State request, be allocated before

20 States satisfy the matching requirement specified in

21 subparagraph (A), based on the estimated contribu22 tion required. The Secretary shall periodically rec23 oncile estimated and actual contributions and adjust

24 allocations to the State to correct for overpayments

25 and underpayments.
956

Title IX, Subtitle G

•HR 2530 IH

1 (C) Any funds distributed for administrative

2 costs under section 9760(b) shall not be covered by

3 this paragraph.

4 (5) States may not charge for commodities

5 made available to eligible recipient agencies, and

6 may not pass on to such recipient agencies the cost

7 of any matching requirements, under this chapter.

8 (c) VALUE OF COMMODITIES.—The value of the com9 modities made available under subsections (c) and (d) of

10 section 9752, and the funds of the Corporation used to

11 pay the costs of initial processing, packaging (including

12 forms suitable for home use), and delivering commodities

13 to the States shall not be charged against appropriations

14 authorized by this section.

15 SEC. 9760. COMMODITY SUPPLEMENTAL FOOD PROGRAM.

16 (a) From the funds appropriated under section

17 9759(a), $94,500,000 shall be used for each fiscal year

18 to purchase and distribute commodities to supplemental

19 feeding programs serving woman, infants, and children or

20 elderly individuals (hereinafter in this section referred to

21 as the ‘‘commodity supplemental food program’’), or serv22 ing both groups wherever located.

23 (b) Not more than 20 percent of the funds made

24 available under subsection (a) shall be made available to

25 the States for State and local payments of administrative
957

Title IX, Subtitle G

•HR 2530 IH

1 costs associated with the distribution of commodities by

2 eligible recipient agencies under this section. Administra3 tive costs for the purposes of the commodity supplemental

4 food program shall include, but not be limited to, expenses

5 for information and referral, operation, monitoring, nutri6 tion education, start-up costs, and general administration,

7 including staff, warehouse and transportation personnel,

8 insurance, and administration of the State or local office.

9 (c)(1) During each fiscal year the commodity supple10 mental food program is in operation, the types, varieties,

11 and amounts of commodities to be purchased under this

12 section shall be determined by the Secretary, but, if the

13 Secretary proposes to make any significant changes in the

14 types, varieties, or amounts from those that were available

15 or were planned at the beginning of the fiscal year the

16 Secretary shall report such changes before implementation

17 to the Committee on Agriculture of the House of Rep18 resentatives and the Committee on Agriculture, Nutrition,

19 and Forestry of the Senate.

20 (2) Notwithstanding any other provision of law, the

21 Commodity Credit Corporation shall, to the extent that

22 the Commodity Credit Corporation inventory levels per23 mit, provide not less than 9,000,000 pounds of cheese and

24 not less than 4,000,000 pounds of nonfat dry milk in each

25 of the fiscal years 1996 through 2000 to the Secretary.
958

Title IX, Subtitle G

•HR 2530 IH

1 The Secretary shall use such amounts of cheese and non2 fat dry milk to carry out the commodity supplemental food

3 program before the end of each fiscal year.

4 (d) The Secretary shall, in each fiscal year, approve

5 applications of additional sites for the program, including

6 sites that serve only elderly persons, in areas in which the

7 program currently does not operate, to the full extent that

8 applications can be approved within the appropriations

9 available for the program for the fiscal year and without

10 reducing actual participation levels (including participa11 tion of elderly persons under subsection (e)) in areas in

12 which the program is in effect.

13 (e) If a local agency that administers the commodity

14 supplemental food program determines that the amount

15 of funds made available to the agency to carry out this

16 section exceeds the amount of funds necessary to provide

17 assistance under such program to women, infants, and

18 children, the agency, with the approval of the Secretary,

19 may permit low-income elderly persons (as defined by the

20 Secretary) to participate in and be served by such pro21 gram.

22 (f)(1) If it is necessary for the Secretary to pay a

23 significantly higher than expected price for one or more

24 types of commodities purchased under this section, the

25 Secretary shall promptly determine whether the price is
959

Title IX, Subtitle G

•HR 2530 IH

1 likely to cause the number of persons that can be served

2 in the program in a fiscal year to decline.

3 (2) If the Secretary determines that such a decline

4 would occur, the Secretary shall promptly notify the State

5 agencies charged with operating the program of the de6 cline and shall ensure that a State agency notify all local

7 agencies operating the program in the State of the decline.

8 (g) Commodities distributed to States pursuant to

9 this section shall not be considered in determining the

10 commodity allocation to each State under section 9755 or

11 priority of distribution under section 9756.

12 SEC. 9761. COMMODITIES NOT INCOME.

13 Notwithstanding any other provision of law, commod14 ities distributed under this chapter shall not be considered

15 income or resources for purposes of determining recipient

16 eligibility under any Federal, State, or local means-tested

17 program.

18 SEC. 9762. PROHIBITION AGAINST CERTAIN STATE

19 CHARGES.

20 Whenever a commodity is made available without

21 charge or credit under this chapter by the Secretary for

22 distribution within the States to eligible recipient agencies,

23 the State may not charge recipient agencies any amount

24 that is in excess of the State’s direct costs of storing, and

25 transporting to recipient agencies the commodities minus
960

Title IX, Subtitle G

•HR 2530 IH

1 any amount the Secretary provides the State for the costs

2 of storing and transporting such commodities.

3 SEC. 9763. DEFINITIONS.

4 As used in this chapter:

5 (1) The term ‘‘average monthly number of un6 employed persons’’ means the average monthly num7 ber of unemployed persons within a State in the

8 most recent fiscal year for which such information is

9 available as determined by the Bureau of Labor Sta10 tistics of the Department of Labor.

11 (2) The term ‘‘elderly persons’’ means individ12 uals 60 years of age or older.

13 (3) The term ‘‘eligible recipient agency’’ means

14 a public or nonprofit organization that admin15 isters—

16 (A) an institution providing commodities to

17 supplemental feeding programs serving women,

18 infants, and children or serving elderly persons,

19 or serving both groups;

20 (B) an emergency feeding organization;

21 (C) a charitable institution (including hos22 pitals and retirement homes and excluding

23 penal institutions) to the extent that such insti24 tution serves needy persons;
961

Title IX, Subtitle G

•HR 2530 IH

1 (D) a summer camp for children, or a

2 child nutrition program providing food service;

3 (E) a nutrition project operating under the

4 Older Americans Act of 1965, including such

5 projects that operate a congregate nutrition site

6 and a project that provides home-delivered

7 meals; or

8 (F) a disaster relief program; and that has

9 been designated by the appropriate State agen10 cy, or by the Secretary, and approved by the

11 Secretary for participation in the program es12 tablished under this chapter.

13 (4) The term ‘‘emergency feeding organization’’

14 means a public or nonprofit organization that ad15 ministers activities and projects (including the activi16 ties and projects of a charitable institution, a food

17 bank, a food pantry, a hunger relief center, a soup

18 kitchen, or a similar public or private nonprofit eligi19 ble recipient agency) providing nutrition assistance

20 to relieve situations of emergency and distress

21 through the provision of food to needy persons, in22 cluding low-income and unemployed persons.

23 (5) The term ‘‘food bank’’ means a public and

24 charitable institution that maintains an established

25 operation involving the provision of food or edible
962

Title IX, Subtitle G

•HR 2530 IH

1 commodities, or the products thereof, to food pan2 tries, soup kitchens, hunger relief centers, or other

3 food or feeding centers that, as an integral part of

4 their normal activities, provide meals or food to feed

5 needy persons on a regular basis.

6 (6) The term ‘‘food pantry’’ means a public or

7 private nonprofit organization that distributes food

8 to low-income and unemployed households, including

9 food from sources other than the Department of

10 Agriculture, to relieve situations of emergency and

11 distress.

12 (7) The term ‘‘needy persons’’ means—

13 (A) individuals who have low incomes or

14 who are unemployed, as determined by the

15 State (in no event shall the income of such indi16 vidual or household exceed 185 percent of the

17 poverty line);

18 (B) households certified as eligible to par19 ticipate in the food stamp program under the

20 Food Stamp Act of 1977 (7 U.S.C. 2011 et

21 seq.); or

22 (C) individuals or households participating

23 in any other Federal, or federally assisted,

24 means-tested program.
963

Title IX, Subtitle G

•HR 2530 IH

1 (8) The term ‘‘poverty line’’ has the same

2 meaning given such term in section 673(2) of the

3 Community Services Block Grant Act (42 U.S.C.

4 9902(2)).

5 (9) The term ‘‘soup kitchen’’ means a public

6 and charitable institution that, as integral part of its

7 normal activities, maintains an established feeding

8 operation to provide food to needy homeless persons

9 on a regular basis.

10 SEC. 9764. REGULATIONS.

11 (a) The Secretary shall issue regulations within 120

12 days to implement this chapter.

13 (b) In administering this chapter, the Secretary shall

14 minimize, to the maximum extent practicable, the regu15 latory, recordkeeping, and paperwork requirements im16 posed on eligible recipient agencies.

17 (c) The Secretary shall as early as feasible but not

18 later than the beginning of each fiscal year, publish in the

19 Federal Register a nonbinding estimate of the types and

20 quantities of commodities that the Secretary anticipates

21 are likely to be made available under the commodity dis22 tribution program under this chapter during the fiscal

23 year.

24 (d) The regulations issued by the Secretary under

25 this section shall include provisions that set standards
964

Title IX, Subtitle G

•HR 2530 IH

1 with respect to liability for commodity losses for the com2 modities distributed under this chapter in situations in

3 which there is no evidence of negligence or fraud, and con4 ditions for payment to cover such losses. Such provisions

5 shall take into consideration the special needs and cir6 cumstances of eligible recipient agencies.

7 SEC. 9765. FINALITY OF DETERMINATIONS.

8 Determinations made by the Secretary under this

9 chapter and the facts constituting the basis for any dona10 tion of commodities under this chapter, or the amount

11 thereof, when officially determined in conformity with the

12 applicable regulations prescribed by the Secretary, shall

13 be final and conclusive and shall not be reviewable by any

14 other officer or agency of the Government.

15 SEC. 9766. RELATIONSHIP TO OTHER PROGRAMS.

16 (a) Section 4(b) of the Food Stamp Act of 1977 (7

17 U.S.C. 2013(b)) shall not apply with respect to the dis18 tribution of commodities under this chapter.

19 (b) Except as otherwise provided in section 9757,

20 none of the commodities distributed under this chapter

21 shall be sold or otherwise disposed of in commercial chan22 nels in any form.

23 SEC. 9767. SETTLEMENT AND ADJUSTMENT OF CLAIMS.

24 (a) The Secretary may—
965

Title IX, Subtitle G

•HR 2530 IH

1 (1) determine the amount of, settle, and adjust

2 any claim arising under this chapter; and

3 (2) waive such a claim if the Secretary deter4 mines that to do so will serve the purposes of this

5 chapter.

6 (b) Nothing contained in this section shall be con7 strued to diminish the authority of the Attorney General

8 of the United States under section 516 of title 28, United

9 States Code, to conduct litigation on behalf of the United

10 States.

11 SEC. 9768. REPEALERS; AMENDMENTS.

12 (a) REPEALER.—The Emergency Food Assistance

13 Act of 1983 (7 U.S.C. 612c note) is repealed.

14 (b) AMENDMENTS.—

15 (1) The Hunger Prevention Act of 1988 (7

16 U.S.C. 612c note) is amended—

17 (A) by striking section 110; and

18 (B) by striking section 502.

19 (2) The Commodity Distribution Reform Act

20 and WIC Amendments of 1987 (7 U.S.C. 612c note)

21 is amended by striking section 4.

22 (3) The Charitable Assistance and Food Bank

23 Act of 1987 (7 U.S.C. 612c note) is amended by

24 striking section 3.
966

Title IX, Subtitle G

•HR 2530 IH

1 (4) The Food Security Act of 1985 (7 U.S.C.

2 612c note) is amended—

3 (A) by striking section 1562(a) and section

4 1571; and

5 (B) in section 1562(d), by striking ‘‘sec6 tion 4 of the Agricultural and Consumer Pro7 tection Act of 1973’’ and inserting ‘‘section

8 9752 of the Commodity Distribution Act of

9 1995’’.

10 (5) The Agricultural and Consumer Protection

11 Act of 1973 (7 U.S.C. 612c note) is amended—

12 (A) in section 4(a), by striking ‘‘institu13 tions (including hospitals and facilities caring

14 for needy infants and children), supplemental

15 feeding programs serving women, infants and

16 children or elderly persons, or both, wherever

17 located, disaster areas, summer camps for chil18 dren,’’;

19 (B) in subsection 4(c), by striking ‘‘the

20 Emergency Food Assistance Act of 1983’’ and

21 inserting ‘‘the Commodity Distribution Act of

22 1995’’; and

23 (C) by striking section 5.
967

Title IX, Subtitle G

•HR 2530 IH

1 (6) The Food, Agriculture, Conservation, and

2 Trade Act of 1990 (7 U.S.C. 612c note) is amended

3 by striking section 1773(f).

4 CHAPTER 3—OTHER PROGRAMS

5 SEC. 9781. CHILD AND ADULT CARE FOOD PROGRAM.

6 (a) PAYMENTS TO SPONSOR EMPLOYEES.—Para7 graph (2) of the last sentence of section 17(a) of the Na8 tional School Lunch Act (42 U.S.C. 1766(a)) is amend9 ed—

10 (1) by striking ‘‘and’’ at the end of subpara11 graph (B);

12 (2) by striking the period at the end of sub13 paragraph (C) and inserting ‘‘; and’’; and

14 (3) by adding at the end the following:

15 ‘‘(D) in the case of a family or group day

16 care home sponsoring organization that employs

17 more than 1 employee, the organization does

18 not base payments to an employee of the orga19 nization on the number of family or group day

20 care homes recruited, managed, or monitored.’’.

21 (b) IMPROVED TARGETING OF DAY CARE HOME RE22 IMBURSEMENTS.—

23 (1) RESTRUCTURED DAY CARE HOME REIM24 BURSEMENTS.—Section 17(f)(3) of the National

25 School Lunch Act is amended by striking ‘‘(3)(A)
968

Title IX, Subtitle G

•HR 2530 IH

1 Institutions’’ and all that follows through the end of

2 subparagraph (A) and inserting the following:

3 ‘‘(3) REIMBURSEMENT OF FAMILY OR GROUP

4 DAY CARE HOME SPONSORING ORGANIZATIONS.—

5 ‘‘(A) REIMBURSEMENT FACTOR.—

6 ‘‘(i) IN GENERAL.—An institution

7 that participates in the program under this

8 section as a family or group day care home

9 sponsoring organization shall be provided,

10 for payment to a home of the organization,

11 reimbursement factors in accordance with

12 this subparagraph for the cost of obtaining

13 and preparing food and prescribed labor

14 costs involved in providing meals under

15 this section.

16 ‘‘(ii) TIER I FAMILY OR GROUP DAY

17 CARE HOMES.—

18 ‘‘(I) DEFINITION.—In this para19 graph, the term ‘tier I family or group

20 day care home’ means—

21 ‘‘(aa) a family or group day

22 care home that is located in a ge23 ographic area, as defined by the

24 Secretary based on census data,

25 in which at least 50 percent of
969

Title IX, Subtitle G

•HR 2530 IH

1 the children residing in the area

2 are members of households whose

3 incomes meet the eligibility

4 standards for free or reduced

5 price meals under section 9;

6 ‘‘(bb) a family or group day

7 care home that is located in an

8 area served by a school enrolling

9 elementary students in which at

10 least 50 percent of the total num11 ber of children enrolled are cer12 tified eligible to receive free or

13 reduced price school meals under

14 this Act or the Child Nutrition

15 Act of 1966 (42 U.S.C. 1771 et

16 seq.); or

17 ‘‘(cc) a family or group day

18 care home that is operated by a

19 provider whose household meets

20 the eligibility standards for free

21 or reduced price meals under sec22 tion 9 and whose income is veri23 fied by a sponsoring organization

24 under regulations established by

25 the Secretary.
970

Title IX, Subtitle G

•HR 2530 IH

1 ‘‘(II) REIMBURSEMENT.—Except

2 as provided in subclause (III), a tier

3 I family or group day care home shall

4 be provided reimbursement factors

5 under this clause without a require6 ment for documentation of the costs

7 described in clause (i), except that re8 imbursement shall not be provided

9 under this subclause for meals or sup10 plements served to the children of a

11 person acting as a family or group

12 day care home provider unless the

13 children meet the eligibility standards

14 for free or reduced price meals under

15 section 9.

16 ‘‘(III) FACTORS.—Except as pro17 vided in subclause (IV), the reim18 bursement factors applied to a home

19 referred to in subclause (II) shall be

20 the factors in effect on the date of en21 actment of this subclause.

22 ‘‘(IV) ADJUSTMENTS.—The re23 imbursement factors under this sub24 paragraph shall be adjusted on Au25 gust 1, 1996, July 1, 1997, and each
971

Title IX, Subtitle G

•HR 2530 IH

1 July 1 thereafter, to reflect changes in

2 the Consumer Price Index for food at

3 home for the most recent 12-month

4 period for which the data are avail5 able. The reimbursement factors

6 under this subparagraph shall be

7 rounded to the nearest lower cent in8 crement and based on the unrounded

9 adjustment for the preceding 12-

10 month period.

11 ‘‘(iii) TIER II FAMILY OR GROUP DAY

12 CARE HOMES.—

13 ‘‘(I) IN GENERAL.—

14 ‘‘(aa) FACTORS.—Except as

15 provided in subclause (II), with

16 respect to meals or supplements

17 served under this clause by a

18 family or group day care home

19 that does not meet the criteria

20 set forth in clause (ii)(I), the re21 imbursement factors shall be $1

22 for lunches and suppers, 40 cents

23 for breakfasts, and 20 cents for

24 supplements.
972

Title IX, Subtitle G

•HR 2530 IH

1 ‘‘(bb) ADJUSTMENTS.—The

2 factors shall be adjusted on July

3 1, 1997, and each July 1 there4 after, to reflect changes in the

5 Consumer Price Index for food at

6 home for the most recent 12-

7 month period for which the data

8 are available. The reimbursement

9 factors under this item shall be

10 rounded down to the nearest

11 lower cent increment and based

12 on the unrounded adjustment for

13 the preceding 12-month period.

14 ‘‘(cc) REIMBURSEMENT.—A

15 family or group day care home

16 shall be provided reimbursement

17 factors under this subclause with18 out a requirement for docu19 mentation of the costs described

20 in clause (i), except that reim21 bursement shall not be provided

22 under this subclause for meals or

23 supplements served to the chil24 dren of a person acting as a fam25 ily or group day care home pro-
973

Title IX, Subtitle G

•HR 2530 IH

1 vider unless the children meet the

2 eligibility standards for free or

3 reduced price meals under section

4 9.

5 ‘‘(II) OTHER FACTORS.—A fam6 ily or group day care home that does

7 not meet the criteria set forth in

8 clause (ii)(I) may elect to be provided

9 reimbursement factors determined in

10 accordance with the following require11 ments:

12 ‘‘(aa) CHILDREN ELIGIBLE

13 FOR FREE OR REDUCED PRICE

14 MEALS.—In the case of meals or

15 supplements served under this

16 subsection to children who are

17 members of households whose in18 comes meet the eligibility stand19 ards for free or reduced price

20 meals under section 9, the family

21 or group day care home shall be

22 provided reimbursement factors

23 set by the Secretary in accord24 ance with clause (ii)(III).
974

Title IX, Subtitle G

•HR 2530 IH

1 ‘‘(bb) INELIGIBLE CHIL2 DREN.—In the case of meals or

3 supplements served under this

4 subsection to children who are

5 members of households whose in6 comes do not meet the eligibility

7 standards, the family or group

8 day care home shall be provided

9 reimbursement factors in accord10 ance with subclause (I).

11 ‘‘(III) INFORMATION AND DE12 TERMINATIONS.—

13 ‘‘(aa) IN GENERAL.—If a

14 family or group day care home

15 elects to claim the factors de16 scribed in subclause (II), the

17 family or group day care home

18 sponsoring organization serving

19 the home shall collect the nec20 essary income information, as de21 termined by the Secretary, from

22 any parent or other caretaker to

23 make the determinations speci24 fied in subclause (II) and shall

25 make the determinations in ac-
975

Title IX, Subtitle G

•HR 2530 IH

1 cordance with rules prescribed by

2 the Secretary.

3 ‘‘(bb) CATEGORICAL ELIGI4 BILITY.—In making a determina5 tion under item (aa), a family or

6 group day care home sponsoring

7 organization may consider a child

8 participating in or subsidized

9 under, or a child with a parent

10 participating in or subsidized

11 under, a federally or State sup12 ported child care or other benefit

13 program with an income eligi14 bility limit that does not exceed

15 the eligibility standard for free or

16 reduced price meals under section

17 9 to be a child who is a member

18 of a household whose income

19 meets the eligibility standards

20 under section 9.

21 ‘‘(cc) FACTORS FOR CHIL22 DREN ONLY.—A family or group

23 day care home may elect to re24 ceive the reimbursement factors

25 prescribed under clause (ii)(III)
976

Title IX, Subtitle G

•HR 2530 IH

1 solely for the children participat2 ing in a program referred to in

3 item (bb) if the home elects not

4 to have income statements col5 lected from parents or other care6 takers.

7 ‘‘(IV) SIMPLIFIED MEAL COUNT8 ING AND REPORTING PROCEDURES.—

9 The Secretary shall prescribe sim10 plified meal counting and reporting

11 procedures for use by a family or

12 group day care home that elects to

13 claim the factors under subclause (II)

14 and by a family or group day care

15 home sponsoring organization that

16 serves the home. The procedures the

17 Secretary prescribes may include 1 or

18 more of the following:

19 ‘‘(aa) Setting an annual per20 centage for each home of the

21 number of meals served that are

22 to be reimbursed in accordance

23 with the reimbursement factors

24 prescribed under clause (ii)(III)

25 and an annual percentage of the
977

Title IX, Subtitle G

•HR 2530 IH

1 number of meals served that are

2 to be reimbursed in accordance

3 with the reimbursement factors

4 prescribed under subclause (I),

5 based on the family income of

6 children enrolled in the home in a

7 specified month or other period.

8 ‘‘(bb) Placing a home into 1

9 of 2 or more reimbursement cat10 egories annually based on the

11 percentage of children in the

12 home whose households have in13 comes that meet the eligibility

14 standards under section 9, with

15 each such reimbursement cat16 egory carrying a set of reim17 bursement factors such as the

18 factors prescribed under clause

19 (ii)(III) or subclause (I) or fac20 tors established within the range

21 of factors prescribed under clause

22 (ii)(III) and subclause (I).

23 ‘‘(cc) Such other simplified

24 procedures as the Secretary may

25 prescribe.
978

Title IX, Subtitle G

•HR 2530 IH

1 ‘‘(V) MINIMUM VERIFICATION

2 REQUIREMENTS.—The Secretary may

3 establish any necessary minimum ver4 ification requirements.’’.

5 (2) SPONSOR PAYMENTS.—Section 17(f)(3)(B)

6 of the National School Lunch Act is amended—

7 (A) by striking the period at the end of the

8 second sentence and all that follows through the

9 end of the subparagraph and inserting the fol10 lowing:‘‘, except that the adjustment that other11 wise would occur on July 1, 1996, shall be

12 made on August 1, 1996. The maximum allow13 able levels for administrative expense payments

14 shall be rounded to the nearest lower dollar in15 crement and based on the unrounded adjust16 ment for the preceding 12-month period.’’;

17 (B) by striking ‘‘(B)’’ and inserting

18 ‘‘(B)(i)’’; and

19 (C) by adding at the end the following new

20 clause:

21 ‘‘(ii) The maximum allowable level of administrative

22 expense payments shall be adjusted by the Secretary—

23 ‘‘(I) to increase by 7.5 percent the monthly pay24 ment to family or group day care home sponsoring

25 organizations both for tier I family or group day
979

Title IX, Subtitle G

•HR 2530 IH

1 care homes and for those tier II family or group day

2 care homes for which the sponsoring organization

3 administers a means test as provided under subpara4 graph (A)(iii); and

5 ‘‘(II) to decrease by 7.5 percent the monthly

6 payment to family or group day care home sponsor7 ing organizations for family or group day care

8 homes that do not meet the criteria for tier I homes

9 and for which a means test is not administered.’’.

10 (3) GRANTS TO STATES TO PROVIDE ASSIST11 ANCE TO FAMILY OR GROUP DAY CARE HOMES.—

12 Section 17(f)(3) of the Act is amended by adding at

13 the end the following:

14 ‘‘(D) GRANTS TO STATES TO PROVIDE AS15 SISTANCE TO FAMILY OR GROUP DAY CARE

16 HOMES.—

17 ‘‘(i) IN GENERAL.—

18 ‘‘(I) RESERVATION.—From

19 amounts made available to carry out

20 this section, the Secretary shall re21 serve $5,000,000 of the amount made

22 available for fiscal year 1996.

23 ‘‘(II) PURPOSE.—The Secretary

24 shall use the funds made available

25 under subclause (I) to provide grants
980

Title IX, Subtitle G

•HR 2530 IH

1 to States for the purpose of provid2 ing—

3 ‘‘(aa) assistance, including

4 grants, to family and day care

5 home sponsoring organizations

6 and other appropriate organiza7 tions, in securing and providing

8 training, materials, automated

9 data processing assistance, and

10 other assistance for the staff of

11 the sponsoring organizations; and

12 ‘‘(bb) training and other as13 sistance to family and group day

14 care homes in the implementation

15 of the amendments to subpara16 graph (A) made by section

17 574(b)(1) of the Family Self-Suf18 ficiency Act of 1995.

19 ‘‘(ii) ALLOCATION.—The Secretary

20 shall allocate from the funds reserved

21 under clause (i)(II)—

22 ‘‘(I) $30,000 in base funding to

23 each State; and

24 ‘‘(II) any remaining amount

25 among the States, based on the num-
981

Title IX, Subtitle G

•HR 2530 IH

1 ber of family day care homes partici2 pating in the program in a State in

3 1994 as a percentage of the number

4 of all family day care homes partici5 pating in the program in 1994.

6 ‘‘(iii) RETENTION OF FUNDS.—Of the

7 amount of funds made available to a State

8 for a fiscal year under clause (i), the State

9 may retain not to exceed 30 percent of the

10 amount to carry out this subparagraph.

11 ‘‘(iv) ADDITIONAL PAYMENTS.—Any

12 payments received under this subpara13 graph shall be in addition to payments

14 that a State receives under subparagraph

15 (A) (as amended by section 134(b)(1) of

16 the Family Self-Sufficiency Act of 1995).’’.

17 (4) PROVISION OF DATA.—Section 17(f)(3) of

18 the National School Lunch Act (as amended by

19 paragraph (3)) is further amended by adding at the

20 end the following:

21 ‘‘(E) PROVISION OF DATA TO FAMILY OR

22 GROUP DAY CARE HOME SPONSORING ORGANI23 ZATIONS.—

24 ‘‘(i) CENSUS DATA.—The Secretary

25 shall provide to each State agency admin-
982

Title IX, Subtitle G

•HR 2530 IH

1 istering a child and adult care food pro2 gram under this section data from the

3 most recent decennial census survey or

4 other appropriate census survey for which

5 the data are available showing which areas

6 in the State meet the requirements of sub7 paragraph (A)(ii)(I)(aa). The State agency

8 shall provide the data to family or group

9 day care home sponsoring organizations lo10 cated in the State.

11 ‘‘(ii) SCHOOL DATA.—

12 ‘‘(I) IN GENERAL.—A State

13 agency administering the program

14 under this section shall annually pro15 vide to a family or group day care

16 home sponsoring organizations that

17 request the data, a list of schools

18 serving elementary school children in

19 the State in which at least 50 percent

20 of the children enrolled are certified to

21 receive free or reduced price meals.

22 State agencies administering the

23 school lunch program under this Act

24 or the school breakfast program under

25 the Child Nutrition Act of 1966 (42
983

Title IX, Subtitle G

•HR 2530 IH

1 U.S.C. 1771 et seq.) shall collect such

2 data annually and provide such data

3 on a timely basis to the State agency

4 administering the program under this

5 section.

6 ‘‘(II) USE OF DATA FROM PRE7 CEDING SCHOOL YEAR.—In determin8 ing for a fiscal year or other annual

9 period whether a home qualifies as a

10 tier I family or group day care home

11 under subparagraph (A)(ii)(I), the

12 State agency administering the pro13 gram under this section, and a family

14 or group day care home sponsoring

15 organization, shall use the most cur16 rent available data at the time of the

17 determination.

18 ‘‘(iii) DURATION OF DETERMINA19 TION.—For purposes of this section, a de20 termination that a family or group day

21 care home is located in an area that quali22 fies the home as a tier I family or group

23 day care home (as the term is defined in

24 subparagraph (A)(ii)(I)), shall be in effect

25 for 3 years (unless the determination is
984

Title IX, Subtitle G

•HR 2530 IH

1 made on the basis of census data, in which

2 case the determination shall remain in ef3 fect until more recent census data are

4 available) unless the State agency deter5 mines that the area in which the home is

6 located no longer qualifies the home as a

7 tier I family or group day care home.’’.

8 (5) CONFORMING AMENDMENTS.—Section 17(c)

9 of the National School Lunch Act is amended by in10 serting ‘‘except as provided in subsection (f)(3),’’

11 after ‘‘For purposes of this section,’’ each place it

12 appears in paragraphs (1), (2), and (3).

13 (c) DISALLOWING MEAL CLAIMS.—The fourth sen14 tence of section 17(f)(4) of the National School Lunch Act

15 is amended by inserting ‘‘(including institutions that are

16 not family or group day care home sponsoring organiza17 tions)’’ after ‘‘institutions’’.

18 (d) ELIMINATION OF STATE PAPERWORK AND OUT19 REACH BURDEN.—Section 17 of the National School

20 Lunch Act is amended by striking subsection (k) and in21 serting the following:

22 ‘‘(k) TRAINING AND TECHNICAL ASSISTANCE.—A

23 State participating in the program established under this

24 section shall provide sufficient training, technical assist25 ance, and monitoring to facilitate effective operation of the
985

Title IX, Subtitle G

•HR 2530 IH

1 program. The Secretary shall assist the State in develop2 ing plans to fulfill the requirements of this subsection.’’.

3 (e) EFFECTIVE DATE.—

4 (1) IN GENERAL.—Except as provided in para5 graph (2), the amendments made by this section

6 shall become effective on the date of enactment of

7 this Act.

8 (2) IMPROVED TARGETING OF DAY CARE HOME

9 REIMBURSEMENTS.—The amendments made by

10 paragraphs (1), (3), and (4) of subsection (b) shall

11 become effective on August 1, 1996.

12 (3) IMPLEMENTATION.—The Secretary of Agri13 culture shall issue regulations to implement the

14 amendments made by paragraphs (1), (2), (3), and

15 (4) of subsection (b) and the provisions of section

16 17(f)(3)(C) of the National School Lunch Act (42

17 U.S.C. 1766(f)(3)(C)) not later than February 1,

18 1996. If such regulations are issued in interim form,

19 final regulations shall be issued not later than Au20 gust 1, 1996.

21 SEC. 9782. RESUMPTION OF DISCRETIONARY FUNDING FOR

22 NUTRITION EDUCATION AND TRAINING PRO23 GRAM.

24 Section 19(i)(2)(A) of the Child Nutrition Act of

25 1966 (42 U.S.C. 1788(i)(2)(A)) is amended—
986

Title IX, Subtitle H

•HR 2530 IH

1 (1) by striking ‘‘Out of’’ and all that follows

2 through ‘‘and $10,000,000’’ and inserting ‘‘To carry

3 out the provisions of this section, there is hereby au4 thorized to be appropriated not to exceed

5 $10,000,000’’; and

6 (2) by striking the last sentence.

7 Subtitle H—Treatment of Aliens

8 SEC. 9801. EXTENSION OF DEEMING OF INCOME AND RE9 SOURCES UNDER TEA, SSI, AND FOOD STAMP

10 PROGRAMS.

11 (a) IN GENERAL.—Except as provided in subsections

12 (b) and (c), in applying sections 407 and 1621 of the So13 cial Security Act and section 5(i) of the Food Stamp Act

14 of 1977, the period in which each respective section other15 wise applies with respect to an alien shall be extended

16 through the date (if any) on which the alien becomes a

17 citizen of the United States (under chapter 2 of title III

18 of the Immigration and Nationality Act).

19 (b) EXCEPTION.—Subsection (a) shall not apply to

20 an alien if—

21 (1) the alien has been lawfully admitted to the

22 United States for permanent residence, has attained

23 75 years of age, and has resided in the United

24 States for at least 5 years;

25 (2) the alien—
987

Title IX, Subtitle H

•HR 2530 IH

1 (A) is a veteran (as defined in section 101

2 of title 38, United States Code) with a dis3 charge characterized as an honorable discharge,

4 (B) is on active duty (other than active

5 duty for training) in the Armed Forces of the

6 United States, or

7 (C) is the spouse or unmarried dependent

8 child of an individual described in subparagraph

9 (A) or (B);

10 (3) the alien is the subject of domestic violence

11 by the alien’s spouse and a divorce between the alien

12 and the alien’s spouse has been initiated through the

13 filing of an appropriate action in an appropriate

14 court; or

15 (4) there has been paid with respect to the self16 employment income or employment of the alien, or

17 of a parent or spouse of the alien, taxes under chap18 ter 2 or chapter 21 of the Internal Revenue Code

19 of 1986 in each of 20 different calendar quarters.

20 (c) HOLD HARMLESS FOR MEDICAID ELIGIBILITY.—

21 Subsection (a) shall not apply with respect to determina22 tions of eligibility for benefits under a State plan approved

23 under part A of title IV of the Social Security Act or under

24 the supplemental income security program under title XVI

25 of such Act but only insofar as such determinations pro-
988

Title IX, Subtitle H

•HR 2530 IH

1 vide for eligibility for medical assistance under title XIX

2 of such Act.

3 (d) RULES REGARDING INCOME AND RESOURCE

4 DEEMING UNDER TEA PROGRAM.—Subpart 1 of part A

5 of title IV of the Social Security Act, as added by section

6 9101(a) of this Act, is amended by adding at the end the

7 following:

8 ‘‘SEC. 407. ATTRIBUTION OF SPONSOR’S INCOME AND RE9 SOURCES TO ALIEN.

10 ‘‘(a) For purposes of determining eligibility for and

11 the amount of assistance under a State plan approved

12 under this part for an individual who is an alien lawfully

13 admitted for permanent residence or otherwise perma14 nently residing in the United States under color of law

15 (including any alien who is lawfully present in the United

16 States as a result of the application of the provisions of

17 section 207(c) of the Immigration and Nationality Act (or

18 of section 203(a)(7) of such Act prior to April 1, 1980),

19 or as a result of the application of the provisions of section

20 208 or 212(d)(5) of such Act), the income and resources

21 of any person who (as a sponsor of such individual’s entry

22 into the United States) executed an affidavit of support

23 or similar agreement with respect to such individual, and

24 the income and resources of the sponsor’s spouse, shall

25 be deemed to be the unearned income and resources of
989

Title IX, Subtitle H

•HR 2530 IH

1 such individual (in accordance with subsections (b) and

2 (c)) for a period of three years after the individual’s entry

3 into the United States, except that this section is not ap4 plicable if such individual is a dependent child and such

5 sponsor (or such sponsor’s spouse) is the parent of such

6 child.

7 ‘‘(b)(1) The amount of income of a sponsor (and his

8 spouse) which shall be deemed to be the unearned income

9 of an alien for any month shall be determined as follows:

10 ‘‘(A) the total amount of earned and unearned

11 income of such sponsor and such sponsor’s spouse

12 (if such spouse is living with the sponsor) shall be

13 determined for such month;

14 ‘‘(B) the amount determined under subpara15 graph (A) shall be reduced by an amount equal to

16 the sum of—

17 ‘‘(i) the lesser of (I) 20 percent of the total

18 of any amounts received by the sponsor and his

19 spouse in such month as wages or salary or as

20 net earnings from self-employment, plus the full

21 amount of any costs incurred by them in pro22 ducing self-employment income in such month,

23 or (II) $175;

24 ‘‘(ii) the cash needs standard established

25 by the State under its plan for a family of the
990

Title IX, Subtitle H

•HR 2530 IH

1 same size and composition as the sponsor and

2 those other individuals living in the same house3 hold as the sponsor who are claimed by him as

4 dependents for purposes of determining his

5 Federal personal income tax liability but whose

6 needs are not taken into account in making a

7 determination under section 402(d);

8 ‘‘(iii) any amounts paid by the sponsor (or

9 his spouse) to individuals not living in such

10 household who are claimed by him as depend11 ents for purposes of determining his Federal

12 personal income tax liability; and

13 ‘‘(iv) any payments of alimony or child

14 support with respect to individuals not living in

15 such household.

16 ‘‘(2) The amount of resources of a sponsor (and his

17 spouse) which shall be deemed to be the resources of an

18 alien for any month shall be determined as follows:

19 ‘‘(A) the total amount of the resources (deter20 mined as if the sponsor were applying for assistance

21 under the State plan approved under this part) of

22 such sponsor and such sponsor’s spouse (if such

23 spouse is living with the sponsor) shall be deter24 mined; and
991

Title IX, Subtitle H

•HR 2530 IH

1 ‘‘(B) the amount determined under subpara2 graph (A) shall be reduced by $1,500.

3 ‘‘(c)(1) Any individual who is an alien and whose

4 sponsor was a public or private agency shall be ineligible

5 for assistance under a State plan approved under this part

6 during the period of three years after his or her entry into

7 the United States, unless the State agency administering

8 such plan determines that such sponsor either no longer

9 exists or has become unable to meet such individual’s

10 needs; and such determination shall be made by the State

11 agency based upon such criteria as it may specify in the

12 State plan, and upon such documentary evidence as it may

13 therein require. Any such individual, and any other indi14 vidual who is an alien (as a condition of his or her eligi15 bility for assistance under a State plan approved under

16 this part during the period of three years after his or her

17 entry into the United States), shall be required to provide

18 to the State agency administering such plan such informa19 tion and documentation with respect to his sponsor as may

20 be necessary in order for the State agency to make any

21 determination required under this section, and to obtain

22 any cooperation from such sponsor necessary for any such

23 determination. Such alien shall also be required to provide

24 to the State agency such information and documentation
992

Title IX, Subtitle H

•HR 2530 IH

1 as it may request and which such alien or his sponsor pro2 vided in support of such alien’s immigration application.

3 ‘‘(2) The Secretary shall enter into agreements with

4 the Secretary of State and the Attorney General whereby

5 any information available to them and required in order

6 to make any determination under this section will be pro7 vided by them to the Secretary (who may, in turn, make

8 such information available, upon request, to a concerned

9 State agency), and whereby the Secretary of State and

10 Attorney General will inform any sponsor of an alien, at

11 the time such sponsor executes an affidavit of support or

12 similar agreement, of the requirements imposed by this

13 section.

14 ‘‘(d) Any sponsor of an alien, and such alien, shall

15 be jointly and severally liable for an amount equal to any

16 overpayment of assistance under the State plan made to

17 such alien during the period of three years after such

18 alien’s entry into the United States, on account of such

19 sponsor’s failure to provide correct information under the

20 provisions of this section, except where such sponsor was

21 without fault, or where good cause of such failure existed.

22 Any such overpayment which is not repaid to the State

23 or recovered in accordance with the procedures generally

24 applicable under the State plan to the recoupment of over25 payments shall be withheld from any subsequent payment
993

Title IX, Subtitle H

•HR 2530 IH

1 to which such alien or such sponsor is entitled under any

2 provision of this Act.

3 ‘‘(e)(1) In any case where a person is the sponsor

4 of two or more alien individuals who are living in the same

5 home, the income and resources of such sponsor (and his

6 spouse), to the extent they would be deemed the income

7 and resources of any one of such individuals under the

8 preceding provisions of this section, shall be divided into

9 two or more equal shares (the number of shares being the

10 same as the number of such alien individuals) and the in11 come and resources of each such individual shall be

12 deemed to include one such share.

13 ‘‘(2) Income and resources of a sponsor (and his

14 spouse) which are deemed under this section to be the in15 come and resources of any alien individual in a family

16 shall not be considered in determining the need of other

17 family members except to the extent such income or re18 sources are actually available to such other members.

19 ‘‘(f) The provisions of this section shall not apply

20 with respect to any alien who is—

21 ‘‘(1) admitted to the United States as a result

22 of the application, prior to April 1, 1980, of the pro23 visions of section 203(a)(7) of the Immigration and

24 Nationality Act;
994

Title IX, Subtitle H

•HR 2530 IH

1 ‘‘(2) admitted to the United States as a result

2 of the application, after March 31, 1980, of the pro3 visions of section 207(c) of such Act;

4 ‘‘(3) paroled into the United States as a refugee

5 under section 212(d)(5) of such Act;

6 ‘‘(4) granted political asylum by the Attorney

7 General under section 208 of such Act; or

8 ‘‘(5) a Cuban and Haitian entrant, as defined

9 in section 501(e) of the Refugee Education Assist10 ance Act of 1980 (Public Law 96–422).’.

11 SEC. 9802. REQUIREMENTS FOR SPONSOR’S AFFIDAVITS OF

12 SUPPORT.

13 (a) IN GENERAL.—Title II of the Immigration and

14 Nationality Act is amended by inserting after section 213

15 the following new section:

16 ‘‘REQUIREMENTS FOR SPONSOR’S AFFIDAVIT OF SUPPORT

17 ‘‘SEC. 213A. (a) ENFORCEABILITY.—

18 ‘‘(1) IN GENERAL.—No affidavit of support

19 may be accepted by the Attorney General or by any

20 consular officer to establish that an alien is not ex21 cludable under section 212(a)(4) unless such affida22 vit is executed as a contract—

23 ‘‘(A) which is legally enforceable against

24 the sponsor by the Federal Government, by a

25 State, or by any political subdivision of a State,

26 providing cash benefits under a public cash as-
995

Title IX, Subtitle H

•HR 2530 IH

1 sistance program (as defined in subsection

2 (f)(2)), but not later than 5 years after the date

3 the alien last receives any such cash benefit;

4 and

5 ‘‘(B) in which the sponsor agrees to submit

6 to the jurisdiction of any Federal or State court

7 for the purpose of actions brought under sub8 section (e)(2).

9 ‘‘(2) EXPIRATION OF LIABILITY.—Such con10 tract shall only apply with respect to cash benefits

11 described in paragraph (1)(A) provided to an alien

12 before the earliest of the following:

13 ‘‘(A) CITIZENSHIP.—The date the alien be14 comes a citizen of the United States under

15 chapter 2 of title III.

16 ‘‘(B) VETERAN.—The first date the alien

17 is described in section 9801(b)(2)(A) of the

18 Omnibus Budget Reconciliation Act of 1995.

19 ‘‘(C) PAYMENT OF SOCIAL SECURITY

20 TAXES.—The first date as of which the condi21 tion described in section 9801(b)(4) of the Om22 nibus Budget Reconciliation Act of 1995 is met

23 with respect to the alien.

24 ‘‘(3) NONAPPLICATION DURING CERTAIN PERI25 ODS.—Such contract also shall not apply with re-
996

Title IX, Subtitle H

•HR 2530 IH

1 spect to cash benefits described in paragraph (1)(A)

2 provided during any period in which the alien is de3 scribed in section 9801(b)(2)(B) or 9801(b)(2)(C) of

4 the Omnibus Budget Reconciliation Act of 1995.

5 ‘‘(b) FORMS.—Not later than 90 days after the date

6 of enactment of this section, the Attorney General, in con7 sultation with the Secretary of State and the Secretary

8 of Health and Human Services, shall formulate an affida9 vit of support consistent with the provisions of this sec10 tion.

11 ‘‘(c) NOTIFICATION OF CHANGE OF ADDRESS.—

12 ‘‘(1) REQUIREMENT.—The sponsor shall notify

13 the Federal Government and the State in which the

14 sponsored alien is currently resident within 30 days

15 of any change of address of the sponsor during the

16 period specified in subsection (a)(1)(A).

17 ‘‘(2) ENFORCEMENT.—Any person subject to

18 the requirement of paragraph (1) who fails to satisfy

19 such requirement shall be subject to a civil penalty

20 of—

21 ‘‘(A) not less than $250 or more than

22 $2,000, or

23 ‘‘(B) if such failure occurs with knowledge

24 that the sponsored alien has received any bene25 fit under any means-tested public benefits pro-
997

Title IX, Subtitle H

•HR 2530 IH

1 gram, not less than $2,000 or more than

2 $5,000.

3 ‘‘(d) REIMBURSEMENT OF GOVERNMENT EX4 PENSES.—

5 ‘‘(1) REQUEST FOR REIMBURSEMENT.—

6 ‘‘(A) IN GENERAL.—Upon notification that

7 a sponsored alien has received any cash benefits

8 described in subsection (a)(1)(A), the appro9 priate Federal, State, or local official shall re10 quest reimbursement by the sponsor in the

11 amount of such cash benefits.

12 ‘‘(B) REGULATIONS.—The Attorney Gen13 eral, in consultation with the Secretary of

14 Health and Human Services, shall prescribe

15 such regulations as may be necessary to carry

16 out subparagraph (A).

17 ‘‘(2) INITIATION OF ACTION.—If within 45 days

18 after requesting reimbursement, the appropriate

19 Federal, State, or local agency has not received a re20 sponse from the sponsor indicating a willingness to

21 commence payments, an action may be brought

22 against the sponsor pursuant to the affidavit of sup23 port.

24 ‘‘(3) FAILURE TO ABIDE BY REPAYMENT

25 TERMS.—If the sponsor fails to abide by the repay-
998

Title IX, Subtitle H

•HR 2530 IH

1 ment terms established by such agency, the agency

2 may, within 60 days of such failure, bring an action

3 against the sponsor pursuant to the affidavit of sup4 port.

5 ‘‘(4) LIMITATION ON ACTIONS.—No cause of

6 action may be brought under this subsection later

7 than 5 years after the date the alien last received

8 any cash benefit described in subsection (a)(1)(A).

9 ‘‘(f) DEFINITIONS.—For the purposes of this section:

10 ‘‘(1) SPONSOR.—The term ‘sponsor’ means an

11 individual who—

12 ‘‘(A) is a citizen or national of the United

13 States or an alien who is lawfully admitted to

14 the United States for permanent residence;

15 ‘‘(B) is 18 years of age or over; and

16 ‘‘(C) is domiciled in any State.

17 ‘‘(2) PUBLIC CASH ASSISTANCE PROGRAM.—

18 The term ‘public cash assistance program’ means a

19 program of the Federal Government or of a State or

20 political subdivision of a State that provides direct

21 cash assistance for the purpose of income mainte22 nance and in which the eligibility of an individual,

23 household, or family eligibility unit for cash benefits

24 under the program, or the amount of such cash ben25 efits, or both are determined on the basis of income,
999

Title IX, Subtitle H

•HR 2530 IH

1 resources, or financial need of the individual, house2 hold, or unit. Such term does not include any pro3 gram insofar as it provides medical, housing, edu4 cation, job training, food, or in-kind assistance or

5 social services.’’.

6 (b) CLERICAL AMENDMENT.—The table of contents

7 of such Act is amended by inserting after the item relating

8 to section 213 the following:

‘‘Sec. 213A. Requirements for sponsor’s affidavit of support.’’.

9 (c) EFFECTIVE DATE.—Subsection (a) of section

10 213A of the Immigration and Nationality Act, as inserted

11 by subsection (a) of this section, shall apply to affidavits

12 of support executed on or after a date specified by the

13 Attorney General, which date shall be not earlier than 60

14 days (and not later than 90 days) after the date the Attor15 ney General formulates the form for such affidavits under

16 subsection (b) of such section 213A.

17 SEC. 9803. EXTENDING REQUIREMENT FOR AFFIDAVITS OF

18 SUPPORT TO FAMILY-RELATED AND DIVER19 SITY IMMIGRANTS.

20 (a) IN GENERAL.—Section 212(a)(4) of the Immi21 gration and Nationality Act (8 U.S.C. 1182(a)(4)) is

22 amended to read as follows:

23 ‘‘(4) PUBLIC CHARGE AND AFFIDAVITS OF SUP24 PORT.—
1000

Title IX, Subtitle H

•HR 2530 IH

1 ‘‘(A) PUBLIC CHARGE.—Any alien who, in

2 the opinion of the consular officer at the time

3 of application for a visa, or in the opinion of

4 the Attorney General at the time of application

5 for admission or adjustment of status, is likely

6 at any time to become a public charge is exclud7 able.

8 ‘‘(B) AFFIDAVITS OF SUPPORT.—Any im9 migrant who seeks admission or adjustment of

10 status as any of the following is excludable un11 less there has been executed with respect to the

12 immigrant an affidavit of support pursuant to

13 section 213A:

14 ‘‘(i) As an immediate relative (under

15 section 201(b)(2)).

16 ‘‘(ii) As a family-sponsored immigrant

17 under section 203(a) (or as the spouse or

18 child under section 203(d) of such an im19 migrant).

20 ‘‘(iii) As the spouse or child (under

21 section 203(d)) of an employment-based

22 immigrant under section 203(b).

23 ‘‘(iv) As a diversity immigrant under

24 section 203(c) (or as the spouse or child
1001

Title IX, Subtitle I

•HR 2530 IH

1 under section 203(d) of such an immi2 grant).’’.

3 (b) EFFECTIVE DATE.—The amendment made by

4 subsection (a) shall apply to aliens with respect to whom

5 an immigrant visa is issued (or adjustment of status is

6 granted) after the date specified by the Attorney General

7 under section 9802(c)

8 Subtitle I—Earned Income Tax

9 Credit

10 SEC. 9901. EARNED INCOME TAX CREDIT DENIED TO INDI11 VIDUALS NOT AUTHORIZED TO BE EM12 PLOYED IN THE UNITED STATES..

13 (a) IN GENERAL.—Section 32(c)(1) of the Internal

14 Revenue Code of 1986 (relating to individuals eligible to

15 claim the earned income tax credit) is amended by adding

16 at the end the following new subparagraph:

17 ‘‘(F) IDENTIFICATION NUMBER REQUIRE18 MENT.—The term ‘eligible individual’ does not

19 include any individual who does not include on

20 the return of tax for the taxable year—

21 ‘‘(i) such individual’s taxpayer identi22 fication number, and

23 ‘‘(ii) if the individual is married (with24 in the meaning of section 7703), the tax-
1002

Title IX, Subtitle I

•HR 2530 IH

1 payer identification number of such indi2 vidual’s spouse.’’

3 (b) SPECIAL IDENTIFICATION NUMBER.—Section 32

4 of such Code is amended by adding at the end the follow5 ing new subsection:

6 ‘‘(l) IDENTIFICATION NUMBERS.—Solely for pur7 poses of subsections (c)(1)(F) and (c)(3)(D), a taxpayer

8 identification number means a social security number is9 sued to an individual by the Social Security Administra10 tion (other than a social security number issued pursuant

11 to clause (II) (or that portion of clause (III) that relates

12 to clause (II)) of section 205(c)(2)(B)(i) of the Social Se13 curity Act).’’

14 (c) EXTENSION OF PROCEDURES APPLICABLE TO

15 MATHEMATICAL OR CLERICAL ERRORS.—Section

16 6213(g)(2) of such Code (relating to the definition of

17 mathematical or clerical errors) is amended by striking

18 ‘‘and’ at the end of subparagraph (D), by striking the pe19 riod at the end of subparagraph (E) and inserting a

20 comma, and by inserting after subparagraph (E) the fol21 lowing new subparagraphs:

22 ‘‘(F) an omission of a correct taxpayer

23 identification number required under section 32

24 (relating to the earned income tax credit) to be

25 included on a return, and
1003

Title X, Subtitle A

•HR 2530 IH

1 ‘‘(G) an entry on a return claiming the

2 credit under section 32 with respect to net

3 earnings from self-employment described in sec4 tion 32(c)(2)(A) to the extent the tax imposed

5 by section 1401 (relating to self-employment

6 tax) on such net earnings has not been paid.’’

7 (d) EFFECTIVE DATE.—The amendments made by

8 this section shall apply to taxable years beginning after

9 December 31, 1995.

10 TITLE X—REDUCTIONS IN COR11 PORATE TAX SUBSIDIES AND

12 OTHER REFORMS

13 SEC. 10001. SHORT TITLE.

14 This title may be cited as the ‘‘Revenue Reconcili15 ation Act of 1995’’.

16 Subtitle A—Tax Treatment of

17 Expatriation

18 SEC. 10101. REVISION OF TAX RULES ON EXPATRIATION.

19 (a) IN GENERAL.—Subpart A of part II of sub20 chapter N of chapter 1 of the Internal Revenue Code of

21 1986 is amended by inserting after section 877 the follow22 ing new section:

23 ‘‘SEC. 877A. TAX RESPONSIBILITIES OF EXPATRIATION.

24 ‘‘(a) GENERAL RULES.—For purposes of this sub25 title—
1004

Title X, Subtitle A

•HR 2530 IH

1 ‘‘(1) MARK TO MARKET.—Except as provided in

2 subsection (f)(2), all property held by an expatriate

3 immediately before the expatriation date shall be

4 treated as sold at such time for its fair market

5 value.

6 ‘‘(2) RECOGNITION OF GAIN OR LOSS.—In the

7 case of any sale under paragraph (1)—

8 ‘‘(A) notwithstanding any other provision

9 of this title, any gain arising from such sale

10 shall be taken into account for the taxable year

11 of the sale unless such gain is excluded from

12 gross income under part III of subchapter B,

13 and

14 ‘‘(B) any loss arising from such sale shall

15 be taken into account for the taxable year of

16 the sale to the extent otherwise provided by this

17 title, except that section 1091 shall not apply

18 (and section 1092 shall apply) to any such loss.

19 ‘‘(3) ELECTION TO CONTINUE TO BE TAXED AS

20 UNITED STATES CITIZEN.—

21 ‘‘(A) IN GENERAL.—If an expatriate elects

22 the application of this paragraph with respect

23 to any property—
1005

Title X, Subtitle A

•HR 2530 IH

1 ‘‘(i) this section (other than this para2 graph) shall not apply to such property,

3 but

4 ‘‘(ii) such property shall be subject to

5 tax under this title in the same manner as

6 if the individual were a United States

7 citizen.

8 ‘‘(B) LIMITATION ON AMOUNT OF ESTATE,

9 GIFT, AND GENERATION-SKIPPING TRANSFER

10 TAXES.—The aggregate amount of taxes im11 posed under subtitle B with respect to any

12 transfer of property by reason of an election

13 under subparagraph (A) shall not exceed the

14 amount of income tax which would be due if the

15 property were sold for its fair market value im16 mediately before the time of the transfer or

17 death (taking into account the rules of sub18 section (a)(2)).

19 ‘‘(C) REQUIREMENTS.—Subparagraph (A)

20 shall not apply to an individual unless the indi21 vidual—

22 ‘‘(i) provides security for payment of

23 tax in such form and manner, and in such

24 amount, as the Secretary may require,
1006

Title X, Subtitle A

•HR 2530 IH

1 ‘‘(ii) consents to the waiver of any

2 right of the individual under any treaty of

3 the United States which would preclude as4 sessment or collection of any tax which

5 may be imposed by reason of this para6 graph, and

7 ‘‘(iii) complies with such other re8 quirements as the Secretary may prescribe.

9 ‘‘(D) ELECTION.—An election under sub10 paragraph (A) shall apply only to the property

11 described in the election and, once made, shall

12 be irrevocable.

13 ‘‘(b) EXCLUSION FOR CERTAIN GAIN.—The amount

14 which would (but for this subsection) be includible in the

15 gross income of any individual by reason of subsection (a)

16 shall be reduced (but not below zero) by $600,000.

17 ‘‘(c) PROPERTY TREATED AS HELD.—For purposes

18 of this section, except as otherwise provided by the Sec19 retary, an individual shall be treated as holding—

20 ‘‘(1) all property which would be includible in

21 his gross estate under chapter 11 if such individual

22 were a citizen or resident of the United States (with23 in the meaning of chapter 11) who died at the time

24 the property is treated as sold,
1007

Title X, Subtitle A

•HR 2530 IH

1 ‘‘(2) any other interest in a trust which the in2 dividual is treated as holding under the rules of sub3 section (f)(1), and

4 ‘‘(3) any other interest in property specified by

5 the Secretary as necessary or appropriate to carry

6 out the purposes of this section.

7 ‘‘(d) EXCEPTIONS.—The following property shall not

8 be treated as sold for purposes of this section:

9 ‘‘(1) UNITED STATES REAL PROPERTY INTER10 ESTS.—Any United States real property interest (as

11 defined in section 897(c)(1)), other than stock of a

12 United States real property holding corporation

13 which does not, on the expatriation date, meet the

14 requirements of section 897(c)(2).

15 ‘‘(2) INTEREST IN CERTAIN RETIREMENT

16 PLANS.—

17 ‘‘(A) IN GENERAL.—Any interest in a

18 qualified retirement plan (as defined in section

19 4974(c)), other than any interest attributable to

20 contributions which are in excess of any limita21 tion or which violate any condition for tax22 favored treatment.

23 ‘‘(B) FOREIGN PENSION PLANS.—

24 ‘‘(i) IN GENERAL.—Under regulations

25 prescribed by the Secretary, interests in
1008

Title X, Subtitle A

•HR 2530 IH

1 foreign pension plans or similar retirement

2 arrangements or programs.

3 ‘‘(ii) LIMITATION.—The value of prop4 erty which is treated as not sold by reason

5 of this subparagraph shall not exceed

6 $500,000.

7 ‘‘(e) DEFINITIONS.—For purposes of this section—

8 ‘‘(1) EXPATRIATE.—The term ‘expatriate’

9 means—

10 ‘‘(A) any United States citizen who relin11 quishes his citizenship, or

12 ‘‘(B) any long-term resident of the United

13 States who—

14 ‘‘(i) ceases to be a lawful permanent

15 resident of the United States (within the

16 meaning of section 7701(b)(6)), or

17 ‘‘(ii) commences to be treated as a

18 resident of a foreign country under the

19 provisions of a tax treaty between the

20 United States and the foreign country and

21 who does not waive the benefits of such

22 treaty applicable to residents of the foreign

23 country.

24 An individual shall not be treated as an expatriate

25 for purposes of this section by reason of the individ-
1009

Title X, Subtitle A

•HR 2530 IH

1 ual relinquishing United States citizenship before attaining the age of 181 2 ⁄2 if the individual has been

3 a resident of the United States (as defined in section

4 7701(b)(1)(A)(ii)) for less than 5 taxable years be5 fore the date of relinquishment.

6 ‘‘(2) EXPATRIATION DATE.—The term ‘expa7 triation date’ means—

8 ‘‘(A) the date an individual relinquishes

9 United States citizenship, or

10 ‘‘(B) in the case of a long-term resident of

11 the United States, the date of the event de12 scribed in clause (i) or (ii) of paragraph (1)(B).

13 ‘‘(3) RELINQUISHMENT OF CITIZENSHIP.—A

14 citizen shall be treated as relinquishing his United

15 States citizenship on the earliest of—

16 ‘‘(A) the date the individual renounces his

17 United States nationality before a diplomatic or

18 consular officer of the United States pursuant

19 to paragraph (5) of section 349(a) of the Immi20 gration and Nationality Act (8 U.S.C.

21 1481(a)(5)),

22 ‘‘(B) the date the individual furnishes to

23 the United States Department of State a signed

24 statement of voluntary relinquishment of

25 United States nationality confirming the per-
1010

Title X, Subtitle A

•HR 2530 IH

1 formance of an act of expatriation specified in

2 paragraph (1), (2), (3), or (4) of section 349(a)

3 of the Immigration and Nationality Act (8

4 U.S.C. 1481(a) (1)–(4)),

5 ‘‘(C) the date the United States Depart6 ment of State issues to the individual a certifi7 cate of loss of nationality, or

8 ‘‘(D) the date a court of the United States

9 cancels a naturalized citizen’s certificate of nat10 uralization.

11 Subparagraph (A) or (B) shall not apply to any indi12 vidual unless the renunciation or voluntary relin13 quishment is subsequently approved by the issuance

14 to the individual of a certificate of loss of nationality

15 by the United States Department of State.

16 ‘‘(4) LONG-TERM RESIDENT.—

17 ‘‘(A) IN GENERAL.—The term ‘long-term

18 resident’ means any individual (other than a

19 citizen of the United States) who is a lawful

20 permanent resident of the United States in at

21 least 8 taxable years during the period of 15

22 taxable years ending with the taxable year dur23 ing which the sale under subsection (a)(1) is

24 treated as occurring. For purposes of the pre25 ceding sentence, an individual shall not be
1011

Title X, Subtitle A

•HR 2530 IH

1 treated as a lawful permanent resident for any

2 taxable year if such individual is treated as a

3 resident of a foreign country for the taxable

4 year under the provisions of a tax treaty be5 tween the United States and the foreign coun6 try and does not waive the benefits of such

7 treaty applicable to residents of the foreign

8 country.

9 ‘‘(B) SPECIAL RULE.—For purposes of

10 subparagraph (A), there shall not be taken into

11 account—

12 ‘‘(i) any taxable year during which

13 any prior sale is treated under subsection

14 (a)(1) as occurring, or

15 ‘‘(ii) any taxable year prior to the tax16 able year referred to in clause (i).

17 ‘‘(f) SPECIAL RULES APPLICABLE TO BENE18 FICIARIES’ INTERESTS IN TRUST.—

19 ‘‘(1) DETERMINATION OF BENEFICIARIES’ IN20 TEREST IN TRUST.—For purposes of this section—

21 ‘‘(A) GENERAL RULE.—A beneficiary’s in22 terest in a trust shall be based upon all relevant

23 facts and circumstances, including the terms of

24 the trust instrument and any letter of wishes or

25 similar document, historical patterns of trust
1012

Title X, Subtitle A

•HR 2530 IH

1 distributions, and the existence of and functions

2 performed by a trust protector or any similar

3 advisor.

4 ‘‘(B) SPECIAL RULE.—The remaining in5 terests in the trust not determined under sub6 paragraph (A) to be held by any beneficiary

7 shall be allocated first to the grantor, if a bene8 ficiary, and then to other beneficiaries under

9 rules prescribed by the Secretary similar to the

10 rules of intestate succession.

11 ‘‘(C) CONSTRUCTIVE OWNERSHIP.—If a

12 beneficiary of a trust is a corporation, partner13 ship, trust, or estate, the shareholders, part14 ners, or beneficiaries shall be deemed to be the

15 trust beneficiaries for purposes of this section.

16 ‘‘(D) TAXPAYER RETURN POSITION.—A

17 taxpayer shall clearly indicate on its income tax

18 return—

19 ‘‘(i) the methodology used to deter20 mine that taxpayer’s trust interest under

21 this section, and

22 ‘‘(ii) if the taxpayer knows (or has

23 reason to know) that any other beneficiary

24 of such trust is using a different methodol-
1013

Title X, Subtitle A

•HR 2530 IH

1 ogy to determine such beneficiary’s trust

2 interest under this section.

3 ‘‘(2) DEEMED SALE IN CASE OF TRUST INTER4 EST.—If an individual who is an expatriate is treat5 ed under paragraph (1) as holding an interest in a

6 trust for purposes of this section—

7 ‘‘(A) the individual shall not be treated as

8 having sold such interest,

9 ‘‘(B) such interest shall be treated as a

10 separate share in the trust, and

11 ‘‘(C)(i) such separate share shall be treat12 ed as a separate trust consisting of the assets

13 allocable to such share,

14 ‘‘(ii) the separate trust shall be treated as

15 having sold its assets immediately before the ex16 patriation date for their fair market value and

17 as having distributed all of its assets to the in18 dividual as of such time, and

19 ‘‘(iii) the individual shall be treated as hav20 ing recontributed the assets to the separate

21 trust.

22 Subsection (a)(2) shall apply to any income, gain, or

23 loss of the individual arising from a distribution de24 scribed in subparagraph (C)(ii).
1014

Title X, Subtitle A

•HR 2530 IH

1 ‘‘(g) TERMINATION OF DEFERRALS, ETC.—On the

2 date any property held by an individual is treated as sold

3 under subsection (a), notwithstanding any other provision

4 of this title—

5 ‘‘(1) any period during which recognition of in6 come or gain is deferred shall terminate, and

7 ‘‘(2) any extension of time for payment of tax

8 shall cease to apply and the unpaid portion of such

9 tax shall be due and payable at the time and in the

10 manner prescribed by the Secretary.

11 ‘‘(h) RULES RELATING TO PAYMENT OF TAX.—

12 ‘‘(1) IMPOSITION OF TENTATIVE TAX.—

13 ‘‘(A) IN GENERAL.—If an individual is re14 quired to include any amount in gross income

15 under subsection (a) for any taxable year, there

16 is hereby imposed, immediately before the expa17 triation date, a tax in an amount equal to the

18 amount of tax which would be imposed if the

19 taxable year were a short taxable year ending

20 on the expatriation date.

21 ‘‘(B) DUE DATE.—The due date for any

22 tax imposed by subparagraph (A) shall be the

23 90th day after the expatriation date.

24 ‘‘(C) TREATMENT OF TAX.—Any tax paid

25 under subparagraph (A) shall be treated as a
1015

Title X, Subtitle A

•HR 2530 IH

1 payment of the tax imposed by this chapter for

2 the taxable year to which subsection (a) applies.

3 ‘‘(2) DEFERRAL OF TAX.—The payment of any

4 tax attributable to amounts included in gross income

5 under subsection (a) may be deferred to the same

6 extent, and in the same manner, as any tax imposed

7 by chapter 11, except that the Secretary may extend

8 the period for extension of time for paying tax under

9 section 6161 to such number of years as the Sec10 retary determines appropriate.

11 ‘‘(3) RULES RELATING TO SECURITY INTER12 ESTS.—

13 ‘‘(A) ADEQUACY OF SECURITY INTER14 ESTS.—In determining the adequacy of any se15 curity to be provided under this section, the

16 Secretary may take into account the principles

17 of section 2056A.

18 ‘‘(B) SPECIAL RULE FOR TRUST.—If a

19 taxpayer is required by this section to provide

20 security in connection with any tax imposed by

21 reason of this section with respect to the hold22 ing of an interest in a trust and any trustee of

23 such trust is an individual citizen of the United

24 States or a domestic corporation, such trustee

25 shall be required to provide such security upon
1016

Title X, Subtitle A

•HR 2530 IH

1 notification by the taxpayer of such

2 requirement.

3 ‘‘(i) COORDINATION WITH ESTATE AND GIFT

4 TAXES.—If subsection (a) applies to property held by an

5 individual for any taxable year and—

6 ‘‘(1) such property is includible in the gross es7 tate of such individual solely by reason of section

8 2107, or

9 ‘‘(2) section 2501 applies to a transfer of such

10 property by such individual solely by reason of sec11 tion 2501(a)(3),

12 then there shall be allowed as a credit against the addi13 tional tax imposed by section 2101 or 2501, whichever is

14 applicable, solely by reason of section 2107 or 2501(a)(3)

15 an amount equal to the increase in the tax imposed by

16 this chapter for such taxable year by reason of this

17 section.

18 ‘‘(j) REGULATIONS.—The Secretary shall prescribe

19 such regulations as may be necessary or appropriate to

20 carry out the purposes of this section, including regula21 tions to prevent double taxation by ensuring that—

22 ‘‘(1) appropriate adjustments are made to basis

23 to reflect gain recognized by reason of subsection (a)

24 and the exclusion provided by subsection (b),
1017

Title X, Subtitle A

•HR 2530 IH

1 ‘‘(2) no interest in property is treated as held

2 for purposes of this section by more than one tax3 payer, and

4 ‘‘(3) any gain by reason of a deemed sale under

5 subsection (a) of an interest in a corporation, part6 nership, trust, or estate is reduced to reflect that

7 portion of such gain which is attributable to an in8 terest in a trust which a shareholder, partner, or

9 beneficiary is treated as holding directly under sub10 section (f)(1)(C).

11 ‘‘(k) CROSS REFERENCE.—

‘‘For income tax treatment of individuals who terminate United States citizenship, see section

7701(a)(47).’’

12 (b) DEFINITION OF TERMINATION OF UNITED

13 STATES CITIZENSHIP.—Section 7701(a) of the Internal

14 Revenue Code of 1986 is amended by adding at the end

15 the following new paragraph:

16 ‘‘(47) TERMINATION OF UNITED STATES CITI17 ZENSHIP.—An individual shall not cease to be treat18 ed as a United States citizen before the date on

19 which the individual’s citizenship is treated as relin20 quished under section 877A(e)(3).’’

21 (c) CONFORMING AMENDMENTS.—

22 (1) Section 877 of the Internal Revenue Code

23 of 1986 is amended by adding at the end the follow24 ing new subsection:
1018

Title X, Subtitle A

•HR 2530 IH

1 ‘‘(f) APPLICATION.—This section shall not apply to

2 any individual who relinquishes (within the meaning of

3 section 877A(e)(3)) United States citizenship on or after

4 February 6, 1995.’’

5 (2) Section 2107(c) of such Code is amended by

6 adding at the end the following new paragraph:

7 ‘‘(3) CROSS REFERENCE.—For credit against

8 the tax imposed by subsection (a) for expatriation

9 tax, see section 877A(i).’’

10 (3) Section 2501(a)(3) of such Code is amended

11 by adding at the end the following new flush

12 sentence:

13 ‘‘For credit against the tax imposed under this sec14 tion by reason of this paragraph, see section

15 877A(i).’’

16 (4) Section 6851 of such Code is amended by

17 striking subsection (d) and by redesignating sub18 section (e) as subsection (d).

19 (5) Paragraph (10) of section 7701(b) of such

20 Code is amended by adding at the end the following

21 new sentence: ‘‘This paragraph shall not apply to

22 any long-term resident of the United States who is

23 an expatriate (as defined in section 877A(e)(1)).’’

24 (d) CLERICAL AMENDMENT.—The table of sections

25 for subpart A of part II of subchapter N of chapter 1
1019

Title X, Subtitle A

•HR 2530 IH

1 of the Internal Revenue Code of 1986 is amended by in2 serting after the item relating to section 877 the following

3 new item:

‘‘Sec. 877A. Tax responsibilities of expatriation.’’

4 (e) EFFECTIVE DATE.—

5 (1) IN GENERAL.—The amendments made by

6 this section shall apply to expatriates (within the

7 meaning of section 877A(e) of the Internal Revenue

8 Code of 1986, as added by this section) whose expa9 triation date (as so defined) occurs on or after Feb10 ruary 6, 1995.

11 (2) DUE DATE FOR TENTATIVE TAX.—The due

12 date under section 877A(h)(1)(B) of such Code shall

13 in no event occur before the 90th day after the date

14 of the enactment of this Act.

15 SEC. 10102. BASIS OF ASSETS OF NONRESIDENT ALIEN IN16 DIVIDUALS BECOMING CITIZENS OR RESI17 DENTS.

18 (a) IN GENERAL.—Part IV of subchapter O of chap19 ter 1 of the Internal Revenue Code of 1986 (relating to

20 special rules for gain or loss on disposition of property)

21 is amended by redesignating section 1061 as section 1062

22 and by inserting after section 1060 the following new

23 section:
1020

Title X, Subtitle A

•HR 2530 IH

1 ‘‘SEC. 1061. BASIS OF ASSETS OF NONRESIDENT ALIEN INDI2 VIDUALS BECOMING CITIZENS OR RESI3 DENTS.

4 ‘‘(a) GENERAL RULE.—If a nonresident alien individ5 ual becomes a citizen or resident of the United States,

6 gain or loss on the disposition of any property held on

7 the date the individual becomes such a citizen or resident

8 shall be determined by substituting, as of the applicable

9 date, the fair market value of such property (on the appli10 cable date) for its cost basis.

11 ‘‘(b) EXCEPTION FOR DEPRECIATION.—Any deduc12 tion under this chapter for depreciation, depletion, or am13 ortization shall be determined without regard to the appli14 cation of this section.

15 ‘‘(c) DEFINITIONS AND SPECIAL RULES.—For pur16 poses of this section—

17 ‘‘(1) APPLICABLE DATE.—The term ‘applicable

18 date’ means, with respect to any property to which

19 subsection (a) applies, the earlier of—

20 ‘‘(A) the date the individual becomes a citi21 zen or resident of the United States, or

22 ‘‘(B) the date the property first becomes

23 subject to tax under this subtitle by reason of

24 being used in a United States trade or business

25 or by reason of becoming a United States real
1021

Title X, Subtitle A

•HR 2530 IH

1 property interest (within the meaning of section

2 897(c)(1)).

3 ‘‘(2) RESIDENT.—The term ‘resident’ does not

4 include an individual who is treated as a resident of

5 a foreign country under the provisions of a tax trea6 ty between the United States and a foreign country

7 and who does not waive the benefits of such treaty

8 applicable to residents of the foreign country.

9 ‘‘(3) TRUSTS.—A trust shall not be treated as

10 an individual.

11 ‘‘(4) ELECTION NOT TO HAVE SECTION

12 APPLY.—An individual may elect not to have this

13 section apply solely for purposes of determining gain

14 with respect to any property. Such election shall

15 apply only to property specified in the election and,

16 once made, shall be irrevocable.

17 ‘‘(5) SECTION ONLY TO APPLY ONCE.—This

18 section shall apply only with respect to the first time

19 the individual becomes either a citizen or resident of

20 the United States.

21 ‘‘(d) REGULATIONS.—The Secretary shall prescribe

22 regulations for purposes of this section, including regula23 tions—
1022

Title X, Subtitle A

•HR 2530 IH

1 ‘‘(1) for application of this section in the case

2 of property which consists of a direct or indirect in3 terest in a trust, and

4 ‘‘(2) providing look-thru rules in the case of any

5 indirect interest in any United States real property

6 interest (within the meaning of section 897(c)(1)) or

7 property used in a United States trade or business.’’

8 (b) CONFORMING AMENDMENT.—The table of sec9 tions for part IV of subchapter O of chapter 1 of the Inter10 nal Revenue Code of 1986 is amended by striking the item

11 relating to section 1061 and inserting the following new

12 items:

‘‘Sec. 1061. Basis of assets of nonresident alien individuals becoming citizens or residents.

‘‘Sec. 1062. Cross references.’’

13 (c) EFFECTIVE DATE.—The amendments made by

14 this section shall apply to dispositions after the date of

15 the enactment of this Act, and to any disposition occurring

16 on or before such date to which section 877A of the Inter17 nal Revenue Code of 1986 (as added by section 611) ap18 plies.
1023

Title X, Subtitle B

•HR 2530 IH

1 Subtitle B—Modification to Earned

2 Income Credit

3 SEC. 10201. EARNED INCOME TAX CREDIT DENIED TO INDI4 VIDUALS WITH SUBSTANTIAL CAPITAL GAIN

5 NET INCOME.

6 (a) IN GENERAL.—Paragraph (2) of section 32(i) of

7 the Internal Revenue Code of 1986 (relating to denial of

8 credit for individuals having excessive investment income)

9 is amended—

10 (1) by striking ‘‘and’’ at the end of subpara11 graph (B),

12 (2) by striking the period at the end of sub13 paragraph (C) and inserting ‘‘, and’’, and

14 (3) by adding at the end the following new sub15 paragraph:

16 ‘‘(D) capital gain net income for the tax17 able year.’’

18 (b) EFFECTIVE DATE.—The amendment made by

19 this section shall apply to taxable years beginning after

20 December 31, 1995.
1024

Title X, Subtitle C

•HR 2530 IH

1 Subtitle C—Alternative Minimum

2 Tax on Corporations Importing

3 Products into the United States

4 at Artificially Inflated Prices

5 SEC. 10301. ALTERNATIVE MINIMUM TAX ON CORPORA6 TIONS IMPORTING PRODUCTS INTO THE

7 UNITED STATES AT ARTIFICIALLY INFLATED

8 PRICES.

9 (a) IN GENERAL.—Subchapter A of chapter 1 of the

10 Internal Revenue Code of 1986 (relating to determination

11 of tax liability) is amended by adding at the end the fol12 lowing new part:

13 ‘‘PART VIII—ALTERNATIVE MINIMUM TAX ON

14 CORPORATIONS IMPORTING PRODUCTS

15 INTO THE UNITED STATES AT ARTIFICIALLY

16 INFLATED PRICES

‘‘Sec. 59B. Alternative minimum tax on corporations importing products into

the United States at artificially inflated prices.

17 ‘‘SEC. 59B. ALTERNATIVE MINIMUM TAX ON CORPORA18 TIONS IMPORTING PRODUCTS INTO THE

19 UNITED STATES AT ARTIFICIALLY INFLATED

20 PRICES.

21 ‘‘(a) IMPOSITION OF TAX.—In the case of a corpora22 tion to which this section applies, there is hereby imposed
1025

Title X, Subtitle C

•HR 2530 IH

1 an alternative minimum tax equal to 4 percent of net busi2 ness receipts of the corporation for the taxable year.

3 ‘‘(b) TAXPAYERS TO WHICH SECTION APPLIES.—

4 This section shall apply to any corporation, foreign or do5 mestic, if—

6 ‘‘(1) gross sales in the United States during the

7 tax year of parts or products manufactured by the

8 corporation, or any subsidiary or affiliate controlled

9 by the corporation, exceeded $10,000,000,

10 ‘‘(2) during that same tax year parts or prod11 ucts manufactured by the corporation, or any sub12 sidiary or affiliate controlled by the corporation, with

13 a customs value in excess of $10,000,000 were im14 ported into the United States, and

15 ‘‘(3) its tax obligation under this section ex16 ceeds its total tax obligation under all other sections

17 of the Internal Revenue Code of 1986.

18 ‘‘(c) CREDIT FOR TAXES PAID.—There shall be a

19 nonrefundable credit against the taxes owed under this

20 section equal to the total of all other taxes paid by the

21 corporation under the Internal Revenue Code of 1986.

22 ‘‘(d) DEFINITIONS.—For purposes of this section:

23 ‘‘(1) NET BUSINESS RECEIPTS.—The term ‘net

24 business receipts’ means the value of all parts or

25 products sold in the United States, excluding—
1026

Title X, Subtitle C

•HR 2530 IH

1 ‘‘(A) the value of parts or products sold for

2 export,

3 ‘‘(B) expenses paid for parts or products

4 produced in the United States,

5 ‘‘(C) expenses paid for services performed

6 in the United States, and

7 ‘‘(D) amounts paid for income, sales or use

8 taxes imposed by any State, or political subdivi9 sion thereof, or by the District of Columbia,

10 Puerto Rico, Guam or the Virgin Islands.

11 ‘‘(2) SUBSIDIARY OR AFFILIATE CONTROLLED

12 BY THE CORPORATION.—An entity shall be consid13 ered to be a ‘subsidiary or affiliate controlled by the

14 corporation’ if the corporation owns 5 percent or

15 more of any class of stock of the entity or if the cor16 poration exercises control over a majority of the

17 board of directors of the entity.’’

18 (b) CLERICAL AMENDMENT.—The table of parts for

19 such subchapter A is amended by adding at the end there20 of the following new item:

‘‘Part VIII. Alternative minimum tax on corporations importing

products into the United States at artificially inflated prices.’’

21 (c) EFFECTIVE DATE.—The amendments made by

22 this section shall apply to taxable years beginning after

23 December 31, 1995.
1027

Title X, Subtitle D

•HR 2530 IH

1 Subtitle D—Tax Treatment of

2 Certain Extraordinary Dividends

3 SEC. 10401. TAX TREATMENT OF CERTAIN EXTRAORDINARY

4 DIVIDENDS.

5 (a) TREATMENT OF EXTRAORDINARY DIVIDENDS IN

6 EXCESS OF BASIS.—Paragraph (2) of section 1059(a) of

7 the Internal Revenue Code of 1986 (relating to corporate

8 shareholder’s basis in stock reduced by nontaxed portion

9 of extraordinary dividends) is amended to read as follows:

10 ‘‘(2) AMOUNTS IN EXCESS OF BASIS.—If the

11 nontaxed portion of such dividends exceeds such

12 basis, such excess shall be treated as gain from the

13 sale or exchange of such stock for the taxable year

14 in which the extraordinary dividend is received.’’

15 (b) TREATMENT OF REDEMPTIONS WHERE OPTIONS

16 INVOLVED.—Paragraph (1) of section 1059(e) of such

17 Code (relating to treatment of partial liquidations and

18 non-pro rata redemptions) is amended to read as follows:

19 ‘‘(1) TREATMENT OF PARTIAL LIQUIDATIONS

20 AND CERTAIN REDEMPTIONS.—Except as otherwise

21 provided in regulations—

22 ‘‘(A) REDEMPTIONS.—In the case of any

23 redemption of stock—
1028

Title X, Subtitle D

•HR 2530 IH

1 ‘‘(i) which is part of a partial liquida2 tion (within the meaning of section 302(e))

3 of the redeeming corporation,

4 ‘‘(ii) which is not pro rata as to all

5 shareholders, or

6 ‘‘(iii) which would not have been

7 treated (in whole or in part) as a dividend

8 if any options had not been taken into ac9 count under section 318(a)(4),

10 any amount treated as a dividend with respect

11 to such redemption shall be treated as an ex12 traordinary dividend to which paragraphs (1)

13 and (2) of subsection (a) apply without regard

14 to the period the taxpayer held such stock. In

15 the case of a redemption described in clause

16 (iii), only the basis in the stock redeemed shall

17 be taken into account under subsection (a).

18 ‘‘(B) REORGANIZATIONS, ETC.—An ex19 change described in section 356(a)(1) which is

20 treated as a dividend under section 356(a)(2)

21 shall be treated as a redemption of stock for

22 purposes of applying subparagraph (A).’’

23 (c) EFFECTIVE DATES.—
1029

Title X, Subtitle D

•HR 2530 IH

1 (1) IN GENERAL.—The amendments made by

2 this section shall apply to distributions after May 3,

3 1995.

4 (2) TRANSITION RULE.—The amendments

5 made by this section shall not apply to any distribu6 tion made pursuant to the terms of—

7 (A) a written binding contract in effect on

8 May 3, 1995, and at all times thereafter before

9 such distribution, or

10 (B) a tender offer outstanding on May 3,

11 1995.

12 (3) CERTAIN DIVIDENDS NOT PURSUANT TO

13 CERTAIN REDEMPTIONS.—In determining whether

14 the amendment made by subsection (a) applies to

15 any extraordinary dividend other than a dividend

16 treated as an extraordinary dividend under section

17 1059(e)(1) of the Internal Revenue Code of 1986

18 (as amended by this Act), paragraphs (1) and (2)

19 shall be applied by substituting ‘‘September 13,

20 1995’’ for ‘‘May 3, 1995’’.
1030

Title X, Subtitle E

•HR 2530 IH

1 Subtitle E—Foreign Trust Tax

2 Compliance

3 SEC. 10501. IMPROVED INFORMATION REPORTING ON FOR4 EIGN TRUSTS.

5 (a) IN GENERAL.—Section 6048 of the Internal Rev6 enue Code of 1986 (relating to returns as to certain for7 eign trusts) is amended to read as follows:

8 ‘‘SEC. 6048. INFORMATION WITH RESPECT TO CERTAIN

9 FOREIGN TRUSTS.

10 ‘‘(a) NOTICE OF CERTAIN EVENTS.—

11 ‘‘(1) GENERAL RULE.—On or before the 90th

12 day (or such later day as the Secretary may pre13 scribe) after any reportable event, the responsible

14 party shall provide written notice of such event to

15 the Secretary in accordance with paragraph (2).

16 ‘‘(2) CONTENTS OF NOTICE.—The notice re17 quired by paragraph (1) shall contain such informa18 tion as the Secretary may prescribe, including—

19 ‘‘(A) the amount of money or other prop20 erty (if any) transferred to the trust in connec21 tion with the reportable event, and

22 ‘‘(B) the identity of the trust and of each

23 trustee and beneficiary (or class of bene24 ficiaries) of the trust.
1031

Title X, Subtitle E

•HR 2530 IH

1 ‘‘(3) REPORTABLE EVENT.—For purposes of

2 this subsection—

3 ‘‘(A) IN GENERAL.—The term ‘reportable

4 event’ means—

5 ‘‘(i) the creation of any foreign trust

6 by a United States person,

7 ‘‘(ii) the transfer of any money or

8 property (directly or indirectly) to a for9 eign trust by a United States person, in10 cluding a transfer by reason of death, and

11 ‘‘(iii) the death of a citizen or resident

12 of the United States if—

13 ‘‘(I) the decedent was treated as

14 the owner of any portion of a foreign

15 trust under the rules of subpart E of

16 part I of subchapter J of chapter 1,

17 or

18 ‘‘(II) any portion of a foreign

19 trust was included in the gross estate

20 of the decedent.

21 ‘‘(B) EXCEPTIONS.—

22 ‘‘(i) FAIR MARKET VALUE SALES.—

23 Subparagraph (A)(ii) shall not apply to

24 any transfer of property to a trust in ex25 change for consideration of at least the fair
1032

Title X, Subtitle E

•HR 2530 IH

1 market value of the transferred property.

2 For purposes of the preceding sentence,

3 consideration other than cash shall be

4 taken into account at its fair market value

5 and the rules of section 679(a)(3) shall

6 apply.

7 ‘‘(ii) PENSION AND CHARITABLE

8 TRUSTS.—Subparagraph (A) shall not

9 apply with respect to a trust which is—

10 ‘‘(I) described in section

11 404(a)(4) or 404A, or

12 ‘‘(II) determined by the Sec13 retary to be described in section

14 501(c)(3).

15 ‘‘(4) RESPONSIBLE PARTY.—For purposes of

16 this subsection, the term ‘responsible party’

17 means—

18 ‘‘(A) the grantor in the case of the cre19 ation of an inter vivos trust,

20 ‘‘(B) the transferor in the case of a report21 able event described in paragraph (3)(A)(ii)

22 other than a transfer by reason of death, and

23 ‘‘(C) the executor of the decedent’s estate

24 in any other case.
1033

Title X, Subtitle E

•HR 2530 IH

1 ‘‘(b) UNITED STATES GRANTOR OF FOREIGN

2 TRUST.—

3 ‘‘(1) IN GENERAL.—If, at any time during any

4 taxable year of a United States person, such person

5 is treated as the owner of any portion of a foreign

6 trust under the rules of subpart E of part I of sub7 chapter J of chapter 1, such person shall be respon8 sible to ensure that—

9 ‘‘(A) such trust makes a return for such

10 year which sets forth a full and complete ac11 counting of all trust activities and operations

12 for the year, the name of the United States

13 agent for such trust, and such other informa14 tion as the Secretary may prescribe, and

15 ‘‘(B) such trust furnishes such information

16 as the Secretary may prescribe to each United

17 States person (i) who is treated as the owner of

18 any portion of such trust or (ii) who receives

19 (directly or indirectly) any distribution from the

20 trust.

21 ‘‘(2) TRUSTS NOT HAVING UNITED STATES

22 AGENT.—

23 ‘‘(A) IN GENERAL.—If the rules of this

24 subsection apply to any foreign trust, the deter25 mination of amounts required to be taken into
1034

Title X, Subtitle E

•HR 2530 IH

1 account with respect to such trust by a United

2 States person under the rules of subpart E of

3 part I of subchapter J of chapter 1 shall be de4 termined by the Secretary in the Secretary’s

5 sole discretion from the Secretary’s own knowl6 edge or from such information as the Secretary

7 may obtain through testimony or otherwise.

8 ‘‘(B) UNITED STATES AGENT REQUIRED.—

9 The rules of this subsection shall apply to any

10 foreign trust to which paragraph (1) applies un11 less such trust agrees (in such manner, subject

12 to such conditions, and at such time as the Sec13 retary shall prescribe) to authorize a United

14 States person to act as such trust’s limited

15 agent solely for purposes of applying sections

16 7602, 7603, and 7604 with respect to—

17 ‘‘(i) any request by the Secretary to

18 examine records or produce testimony re19 lated to the proper treatment of amounts

20 required to be taken into account under

21 the rules referred to in subparagraph (A),

22 or

23 ‘‘(ii) any summons by the Secretary

24 for such records or testimony.
1035

Title X, Subtitle E

•HR 2530 IH

1 The appearance of persons or production of

2 records by reason of a United States person

3 being such an agent shall not subject such per4 sons or records to legal process for any purpose

5 other than determining the correct treatment

6 under this title of the amounts required to be

7 taken into account under the rules referred to

8 in subparagraph (A). A foreign trust which ap9 points an agent described in this subparagraph

10 shall not be considered to have an office or a

11 permanent establishment in the United States,

12 or to be engaged in a trade or business in the

13 United States, solely because of the activities of

14 such agent pursuant to this subsection.

15 ‘‘(C) OTHER RULES TO APPLY.—Rules

16 similar to the rules of paragraphs (2) and (4)

17 of section 6038A(e) shall apply for purposes of

18 this paragraph.

19 ‘‘(c) REPORTING BY UNITED STATES BENEFICIARIES

20 OF FOREIGN TRUSTS.—

21 ‘‘(1) IN GENERAL.—If any United States per22 son receives (directly or indirectly) during any tax23 able year of such person any distribution from a for24 eign trust, such person shall make a return with re25 spect to such trust for such year which includes—
1036

Title X, Subtitle E

•HR 2530 IH

1 ‘‘(A) the name of such trust,

2 ‘‘(B) the aggregate amount of the distribu3 tions so received from such trust during such

4 taxable year, and

5 ‘‘(C) such other information as the Sec6 retary may prescribe.

7 ‘‘(2) INCLUSION IN INCOME IF RECORDS NOT

8 PROVIDED.—If adequate records are not provided to

9 the Secretary to determine the proper treatment of

10 any distribution from a foreign trust, such distribu11 tion shall be treated as an accumulation distribution

12 includible in the gross income of the distributee

13 under chapter 1. To the extent provided in regula14 tions, the preceding sentence shall not apply if the

15 foreign trust elects to be subject to rules similar to

16 the rules of subsection (b)(2)(B).

17 ‘‘(d) SPECIAL RULES.—

18 ‘‘(1) DETERMINATION OF WHETHER UNITED

19 STATES PERSON RECEIVES DISTRIBUTION.—For

20 purposes of this section, in determining whether a

21 United States person receives a distribution from a

22 foreign trust, the fact that a portion of such trust

23 is treated as owned by another person under the

24 rules of subpart E of part I of subchapter J of chap25 ter 1 shall be disregarded.
1037

Title X, Subtitle E

•HR 2530 IH

1 ‘‘(2) DOMESTIC TRUSTS WITH FOREIGN ACTIVI2 TIES.—To the extent provided in regulations, a trust

3 which is a United States person shall be treated as

4 a foreign trust for purposes of this section and sec5 tion 6677 if such trust has substantial activities, or

6 holds substantial property, outside the United

7 States.

8 ‘‘(3) TIME AND MANNER OF FILING INFORMA9 TION.—Any notice or return required under this sec10 tion shall be made at such time and in such manner

11 as the Secretary shall prescribe.

12 ‘‘(4) MODIFICATION OF RETURN REQUIRE13 MENTS.—The Secretary is authorized to suspend or

14 modify any requirement of this section if the Sec15 retary determines that the United States has no sig16 nificant tax interest in obtaining the required infor17 mation.’’

18 (b) INCREASED PENALTIES.—Section 6677 of such

19 Code (relating to failure to file information returns with

20 respect to certain foreign trusts) is amended to read as

21 follows:
1038

Title X, Subtitle E

•HR 2530 IH

1 ‘‘SEC. 6677. FAILURE TO FILE INFORMATION WITH RESPECT

2 TO CERTAIN FOREIGN TRUSTS.

3 ‘‘(a) CIVIL PENALTY.—In addition to any criminal

4 penalty provided by law, if any notice or return required

5 to be filed by section 6048—

6 ‘‘(1) is not filed on or before the time provided

7 in such section, or

8 ‘‘(2) does not include all the information re9 quired pursuant to such section or includes incorrect

10 information,

11 the person required to file such notice or return shall pay

12 a penalty equal to 35 percent of the gross reportable

13 amount. If any failure described in the preceding sentence

14 continues for more than 90 days after the day on which

15 the Secretary mails notice of such failure to the person

16 required to pay such penalty, such person shall pay a pen17 alty (in addition to the amount determined under the pre18 ceding sentence) of $10,000 for each 30-day period (or

19 fraction thereof) during which such failure continues after

20 the expiration of such 90-day period.

21 ‘‘(b) SPECIAL RULES FOR RETURNS UNDER SEC22 TION 6048(b).—In the case of a return required under

23 section 6048(b)—

24 ‘‘(1) the United States person referred to in

25 such section shall be liable for the penalty imposed

26 by subsection (a), and
1039

Title X, Subtitle E

•HR 2530 IH

1 ‘‘(2) subsection (a) shall be applied by sub2 stituting ‘5 percent’ for ‘35 percent’.

3 ‘‘(c) GROSS REPORTABLE AMOUNT.—For purposes

4 of subsection (a), the term ‘gross reportable amount’

5 means—

6 ‘‘(1) the gross value of the property involved in

7 the event (determined as of the date of the event)

8 in the case of a failure relating to section 6048(a),

9 ‘‘(2) the gross value of the portion of the trust’s

10 assets at the close of the year treated as owned by

11 the United States person in the case of a failure re12 lating to section 6048(b)(1), and

13 ‘‘(3) the gross amount of the distributions in

14 the case of a failure relating to section 6048(c).

15 ‘‘(d) REASONABLE CAUSE EXCEPTION.—No penalty

16 shall be imposed by this section on any failure which is

17 shown to be due to reasonable cause and not due to willful

18 neglect. The fact that a foreign jurisdiction would impose

19 a civil or criminal penalty on the taxpayer (or any other

20 person) for disclosing the required information is not rea21 sonable cause.

22 ‘‘(e) DEFICIENCY PROCEDURES NOT TO APPLY.—

23 Subchapter B of chapter 63 (relating to deficiency proce24 dures for income, estate, gift, and certain excise taxes)
1040

Title X, Subtitle E

•HR 2530 IH

1 shall not apply in respect of the assessment or collection

2 of any penalty imposed by subsection (a).’’

3 (c) CONFORMING AMENDMENTS.—

4 (1) Paragraph (2) of section 6724(d) of such

5 Code is amended by striking ‘‘or’’ at the end of sub6 paragraph (S), by striking the period at the end of

7 subparagraph (T) and inserting ‘‘, or’’, and by in8 serting after subparagraph (T) the following new

9 subparagraph:

10 ‘‘(U) section 6048(b)(1)(B) (relating to

11 foreign trust reporting requirements).’’

12 (2) The table of sections for subpart B of part

13 III of subchapter A of chapter 61 of such Code is

14 amended by striking the item relating to section

15 6048 and inserting the following new item:

‘‘Sec. 6048. Information with respect to certain foreign trusts.’’

16 (3) The table of sections for part I of sub17 chapter B of chapter 68 of such Code is amended

18 by striking the item relating to section 6677 and in19 serting the following new item:

‘‘Sec. 6677. Failure to file information with respect to certain foreign trusts.’’

20 (d) EFFECTIVE DATES.—

21 (1) REPORTABLE EVENTS.—To the extent re22 lated to subsection (a) of section 6048 of the Inter23 nal Revenue Code of 1986, as amended by this sec-
1041

Title X, Subtitle E

•HR 2530 IH

1 tion, the amendments made by this section shall

2 apply to reportable events (as defined in such section

3 6048) occurring after the date of the enactment of

4 this Act.

5 (2) GRANTOR TRUST REPORTING.—To the ex6 tent related to subsection (b) of such section 6048,

7 the amendments made by this section shall apply to

8 taxable years of United States persons beginning

9 after the date of the enactment of this Act.

10 (3) REPORTING BY UNITED STATES BENE11 FICIARIES.—To the extent related to subsection (c)

12 of such section 6048, the amendments made by this

13 section shall apply to distributions received after the

14 date of the enactment of this Act.

15 SEC. 10502. MODIFICATIONS OF RULES RELATING TO FOR16 EIGN TRUSTS HAVING ONE OR MORE UNITED

17 STATES BENEFICIARIES.

18 (a) TREATMENT OF TRUST OBLIGATIONS, ETC.—

19 (1) Paragraph (2) of section 679(a) of the In20 ternal Revenue Code of 1986 is amended by striking

21 subparagraph (B) and inserting the following:

22 ‘‘(B) TRANSFERS AT FAIR MARKET

23 VALUE.—To any transfer of property to a trust

24 in exchange for consideration of at least the fair

25 market value of the transferred property. For
1042

Title X, Subtitle E

•HR 2530 IH

1 purposes of the preceding sentence, consider2 ation other than cash shall be taken into ac3 count at its fair market value.’’

4 (2) Subsection (a) of section 679 of such Code

5 (relating to foreign trusts having one or more Unit6 ed States beneficiaries) is amended by adding at the

7 end the following new paragraph:

8 ‘‘(3) CERTAIN OBLIGATIONS NOT TAKEN INTO

9 ACCOUNT UNDER FAIR MARKET VALUE EXCEP10 TION.—

11 ‘‘(A) IN GENERAL.—In determining wheth12 er paragraph (2)(B) applies to any transfer by

13 a person described in clause (ii) or (iii) of sub14 paragraph (C), there shall not be taken into ac15 count—

16 ‘‘(i) any obligation of a person de17 scribed in subparagraph (C), and

18 ‘‘(ii) to the extent provided in regula19 tions, any obligation which is guaranteed

20 by a person described in subparagraph (C).

21 ‘‘(B) TREATMENT OF PRINCIPAL PAY22 MENTS ON OBLIGATION.—Principal payments

23 by the trust on any obligation referred to in

24 subparagraph (A) shall be taken into account

25 on and after the date of the payment in deter-
1043

Title X, Subtitle E

•HR 2530 IH

1 mining the portion of the trust attributable to

2 the property transferred.

3 ‘‘(C) PERSONS DESCRIBED.—The persons

4 described in this subparagraph are—

5 ‘‘(i) the trust,

6 ‘‘(ii) any grantor or beneficiary of the

7 trust, and

8 ‘‘(iii) any person who is related (with9 in the meaning of section 643(i)(3)) to any

10 grantor or beneficiary of the trust.’’

11 (b) EXEMPTION OF TRANSFERS TO CHARITABLE

12 TRUSTS.—Subsection (a) of section 679 of such Code is

13 amended by striking ‘‘section 404(a)(4) or 404A’’ and in14 serting ‘‘section 6048(a)(3)(B)(ii)’’.

15 (c) OTHER MODIFICATIONS.—Subsection (a) of sec16 tion 679 of such Code is amended by adding at the end

17 the following new paragraphs:

18 ‘‘(4) SPECIAL RULES APPLICABLE TO FOREIGN

19 GRANTOR WHO LATER BECOMES A UNITED STATES

20 PERSON.—

21 ‘‘(A) IN GENERAL.—If a nonresident alien

22 individual has a residency starting date within

23 5 years after directly or indirectly transferring

24 property to a foreign trust, this section and sec25 tion 6048 shall be applied as if such individual
1044

Title X, Subtitle E

•HR 2530 IH

1 transferred to such trust on the residency start2 ing date an amount equal to the portion of such

3 trust attributable to the property transferred by

4 such individual to such trust in such transfer.

5 ‘‘(B) TREATMENT OF UNDISTRIBUTED IN6 COME.—For purposes of this section, undistrib7 uted net income for periods before such individ8 ual’s residency starting date shall be taken into

9 account in determining the portion of the trust

10 which is attributable to property transferred by

11 such individual to such trust but shall not oth12 erwise be taken into account.

13 ‘‘(C) RESIDENCY STARTING DATE.—For

14 purposes of this paragraph, an individual’s resi15 dency starting date is the residency starting

16 date determined under section 7701(b)(2)(A).

17 ‘‘(5) OUTBOUND TRUST MIGRATIONS.—If—

18 ‘‘(A) an individual who is a citizen or resi19 dent of the United States transferred property

20 to a trust which was not a foreign trust, and

21 ‘‘(B) such trust becomes a foreign trust

22 while such individual is alive,

23 then this section and section 6048 shall be applied

24 as if such individual transferred to such trust on the

25 date such trust becomes a foreign trust an amount
1045

Title X, Subtitle E

•HR 2530 IH

1 equal to the portion of such trust attributable to the

2 property previously transferred by such individual to

3 such trust. A rule similar to the rule of paragraph

4 (4)(B) shall apply for purposes of this paragraph.’’

5 (d) MODIFICATIONS RELATING TO WHETHER TRUST

6 HAS UNITED STATES BENEFICIARIES.—Subsection (c) of

7 section 679 of such Code is amended by adding at the

8 end the following new paragraphs:

9 ‘‘(3) CERTAIN UNITED STATES BENEFICIARIES

10 DISREGARDED.—A beneficiary shall not be treated

11 as a United States person in applying this section

12 with respect to any transfer of property to foreign

13 trust if such beneficiary first became a United

14 States person more than 5 years after the date of

15 such transfer.

16 ‘‘(4) TREATMENT OF FORMER UNITED STATES

17 PERSONS.—To the extent provided by the Secretary,

18 for purposes of this subsection, the term ‘United

19 States person’ includes any person who was a

20 United States person at any time during the exist21 ence of the trust.’’

22 (e) TECHNICAL AMENDMENT.—Subparagraph (A) of

23 section 679(c)(2) of such Code is amended to read as fol24 lows:
1046

Title X, Subtitle E

•HR 2530 IH

1 ‘‘(A) in the case of a foreign corporation,

2 such corporation is a controlled foreign corpora3 tion (as defined in section 957(a)),’’.

4 (f) REGULATIONS.—Section 679 of such Code is

5 amended by adding at the end the following new sub6 section:

7 ‘‘(d) REGULATIONS.—The Secretary shall prescribe

8 such regulations as may be necessary or appropriate to

9 carry out the purposes of this section.’’

10 (g) EFFECTIVE DATE.—The amendments made by

11 this section shall apply to transfers of property after Feb12 ruary 6, 1995.

13 SEC. 10503. FOREIGN PERSONS NOT TO BE TREATED AS

14 OWNERS UNDER GRANTOR TRUST RULES.

15 (a) GENERAL RULE.—

16 (1) Subsection (f) of section 672 of the Internal

17 Revenue Code of 1986 (relating to special rule where

18 grantor is foreign person) is amended to read as fol19 lows:

20 ‘‘(f) SUBPART NOT TO RESULT IN FOREIGN OWNER21 SHIP.—

22 ‘‘(1) IN GENERAL.—Notwithstanding any other

23 provision of this subpart, this subpart shall apply

24 only to the extent such application results in an

25 amount being currently taken into account (directly
1047

Title X, Subtitle E

•HR 2530 IH

1 or through 1 or more entities) under this chapter in

2 computing the income of a citizen or resident of the

3 United States or a domestic corporation.

4 ‘‘(2) EXCEPTIONS.—

5 ‘‘(A) CERTAIN REVOCABLE AND IRREV6 OCABLE TRUSTS.—

7 ‘‘(i) IN GENERAL.—Except as pro8 vided in clause (ii), paragraph (1) shall not

9 apply to any trust if—

10 ‘‘(I) the power to revest abso11 lutely in the grantor title to the trust

12 property is exercisable solely by the

13 grantor without the approval or con14 sent of any other person or with the

15 consent of a related or subordinate

16 party who is subservient to the grant17 or, or

18 ‘‘(II) the only amounts distribut19 able from such trust (whether income

20 or corpus) during the lifetime of the

21 grantor are amounts distributable to

22 the grantor or the spouse of the

23 grantor.

24 ‘‘(ii) EXCEPTION.—Clause (i) shall

25 not apply to any trust which has a bene-
1048

Title X, Subtitle E

•HR 2530 IH

1 ficiary who is a United States person to

2 the extent such beneficiary has made

3 transfers of property by gift (directly or in4 directly) to a foreign person who is the

5 grantor of such trust. For purposes of the

6 preceding sentence, any gift shall not be

7 taken into account to the extent such gift

8 is excluded from taxable gifts under sec9 tion 2503(b).

10 ‘‘(B) COMPENSATORY TRUSTS.—Except as

11 provided in regulations, paragraph (1) shall not

12 apply to any portion of a trust distributions

13 from which are taxable as compensation for

14 services rendered.

15 ‘‘(3) SPECIAL RULES.—Except as otherwise

16 provided in regulations prescribed by the Sec17 retary—

18 ‘‘(A) a controlled foreign corporation (as

19 defined in section 957) shall be treated as a do20 mestic corporation for purposes of paragraph

21 (1), and

22 ‘‘(B) paragraph (1) shall not apply for

23 purposes of applying part III of subchapter G

24 (relating to foreign personal holding companies)

25 and part VI of subchapter P (relating to treat-
1049

Title X, Subtitle E

•HR 2530 IH

1 ment of certain passive foreign investment com2 panies).

3 ‘‘(4) RECHARACTERIZATION OF PURPORTED

4 GIFTS.—In the case of any transfer directly or indi5 rectly from a partnership or foreign corporation

6 which the transferee treats as a gift or bequest, the

7 Secretary may recharacterize such transfer in such

8 circumstances as the Secretary determines to be ap9 propriate to prevent the avoidance of the purposes of

10 this subsection.

11 ‘‘(5) REGULATIONS.—The Secretary shall pre12 scribe such regulations as may be necessary or ap13 propriate to carry out the purposes of this sub14 section, including regulations providing that para15 graph (1) shall not apply in appropriate cases.’’

16 (2) The last sentence of subsection (c) of sec17 tion 672 of such Code is amended by inserting ‘‘sub18 section (f) and’’ before ‘‘sections 674’’.

19 (b) CREDIT FOR CERTAIN TAXES.—Paragraph (2) of

20 section 665(d) of such Code is amended by adding at the

21 end the following new sentence: ‘‘Under rules or regula22 tions prescribed by the Secretary, in the case of any for23 eign trust of which the settlor or another person would

24 be treated as owner of any portion of the trust under sub25 part E but for section 672(f), the term ‘taxes imposed on
1050

Title X, Subtitle E

•HR 2530 IH

1 the trust’ includes the allocable amount of any income,

2 war profits, and excess profits taxes imposed by any for3 eign country or possession of the United States on the

4 settlor or such other person in respect of trust gross in5 come.’’

6 (c) DISTRIBUTIONS BY CERTAIN FOREIGN TRUSTS

7 THROUGH NOMINEES.—

8 (1) Section 643 of such Code is amended by

9 adding at the end the following new subsection:

10 ‘‘(h) DISTRIBUTIONS BY CERTAIN FOREIGN TRUSTS

11 THROUGH NOMINEES.—For purposes of this part, any

12 amount paid to a United States person which is derived

13 directly or indirectly from a foreign trust of which the

14 payor is not the grantor shall be deemed in the year of

15 payment to have been directly paid by the foreign trust

16 to such United States person.’’

17 (2) Section 665 of such Code is amended by

18 striking subsection (c).

19 (d) EFFECTIVE DATE.—

20 (1) IN GENERAL.—Except as provided by para21 graph (2), the amendments made by this section

22 shall take effect on the date of the enactment of this

23 Act.
1051

Title X, Subtitle E

•HR 2530 IH

1 (2) EXCEPTION FOR CERTAIN TRUSTS.—The

2 amendments made by this section shall not apply to

3 any trust—

4 (A) which is treated as owned by the

5 grantor or another person under section 676 or

6 677 (other than subsection (a)(3) thereof) of

7 the Internal Revenue Code of 1986, and

8 (B) which is in existence on September 19,

9 1995.

10 The preceding sentence shall not apply to the por11 tion of any such trust attributable to any transfer to

12 such trust after September 19, 1995.

13 (e) TRANSITIONAL RULE.—If—

14 (1) by reason of the amendments made by this

15 section, any person other than a United States per16 son ceases to be treated as the owner of a portion

17 of a domestic trust, and

18 (2) before January 1, 1997, such trust becomes

19 a foreign trust, or the assets of such trust are trans20 ferred to a foreign trust,

21 no tax shall be imposed by section 1491 of the Internal

22 Revenue Code of 1986 by reason of such trust becoming

23 a foreign trust or the assets of such trust being trans24 ferred to a foreign trust.
1052

Title X, Subtitle E

•HR 2530 IH

1 SEC. 10504. INFORMATION REPORTING REGARDING FOR2 EIGN GIFTS.

3 (a) IN GENERAL.—Subpart A of part III of sub4 chapter A of chapter 61 of the Internal Revenue Code of

5 1986 is amended by inserting after section 6039E the fol6 lowing new section:

7 ‘‘SEC. 6039F. NOTICE OF GIFTS RECEIVED FROM FOREIGN

8 PERSONS.

9 ‘‘(a) IN GENERAL.—If the value of the aggregate for10 eign gifts received by a United States person (other than

11 an organization described in section 501(c) and exempt

12 from tax under section 501(a)) during any taxable year

13 exceeds $10,000, such United States person shall furnish

14 (at such time and in such manner as the Secretary shall

15 prescribe) such information as the Secretary may pre16 scribe regarding each foreign gift received during such

17 year.

18 ‘‘(b) FOREIGN GIFT.—For purposes of this section,

19 the term ‘foreign gift’ means any amount received from

20 a person other than a United States person which the re21 cipient treats as a gift or bequest. Such term shall not

22 include any qualified transfer (within the meaning of sec23 tion 2503(e)(2)).

24 ‘‘(c) PENALTY FOR FAILURE TO FILE INFORMA25 TION.—
1053

Title X, Subtitle E

•HR 2530 IH

1 ‘‘(1) IN GENERAL.—If a United States person

2 fails to furnish the information required by sub3 section (a) with respect to any foreign gift within

4 the time prescribed therefor (including extensions)—

5 ‘‘(A) the tax consequences of the receipt of

6 such gift shall be determined by the Secretary

7 in the Secretary’s sole discretion from the Sec8 retary’s own knowledge or from such informa9 tion as the Secretary may obtain through testi10 mony or otherwise, and

11 ‘‘(B) such United States person shall pay

12 (upon notice and demand by the Secretary and

13 in the same manner as tax) an amount equal to

14 5 percent of the amount of such foreign gift for

15 each month for which the failure continues (not

16 to exceed 25 percent of such amount in the ag17 gregate).

18 ‘‘(2) REASONABLE CAUSE EXCEPTION.—Para19 graph (1) shall not apply to any failure to report a

20 foreign gift if the United States person shows that

21 the failure is due to reasonable cause and not due

22 to willful neglect.

23 ‘‘(d) REGULATIONS.—The Secretary shall prescribe

24 such regulations as may be necessary or appropriate to

25 carry out the purposes of this section.’’
1054

Title X, Subtitle E

•HR 2530 IH

1 (b) CLERICAL AMENDMENT.—The table of sections

2 for such subpart is amended by inserting after the item

3 relating to section 6039E the following new item:

‘‘Sec. 6039F. Notice of large gifts received from foreign persons.’’

4 (c) EFFECTIVE DATE.—The amendments made by

5 this section shall apply to amounts received after the date

6 of the enactment of this Act in taxable years ending after

7 such date.

8 SEC. 10505. MODIFICATION OF RULES RELATING TO FOR9 EIGN TRUSTS WHICH ARE NOT GRANTOR

10 TRUSTS.

11 (a) MODIFICATION OF INTEREST CHARGE ON ACCU12 MULATION DISTRIBUTIONS.—Subsection (a) of section

13 668 of the Internal Revenue Code of 1986 (relating to

14 interest charge on accumulation distributions from foreign

15 trusts) is amended to read as follows:

16 ‘‘(a) GENERAL RULE.—For purposes of the tax de17 termined under section 667(a)—

18 ‘‘(1) INTEREST DETERMINED USING

19 UNDERPAYMENT RATES.—The interest charge deter20 mined under this section with respect to any dis21 tribution is the amount of interest which would be

22 determined on the partial tax computed under sec23 tion 667(b) for the period described in paragraph

24 (2) using the rates and the method under section

25 6621 applicable to underpayments of tax.
1055

Title X, Subtitle E

•HR 2530 IH

1 ‘‘(2) PERIOD.—For purposes of paragraph (1),

2 the period described in this paragraph is the period

3 which begins on the date which is the applicable

4 number of years before the date of the distribution

5 and which ends on the date of the distribution.

6 ‘‘(3) APPLICABLE NUMBER OF YEARS.—For

7 purposes of paragraph (2)—

8 ‘‘(A) IN GENERAL.—The applicable num9 ber of years with respect to a distribution is the

10 number determined by dividing—

11 ‘‘(i) the sum of the products described

12 in subparagraph (B) with respect to each

13 undistributed income year, by

14 ‘‘(ii) the aggregate undistributed net

15 income.

16 The quotient determined under the preceding

17 sentence shall be rounded under procedures

18 prescribed by the Secretary.

19 ‘‘(B) PRODUCT DESCRIBED.—For pur20 poses of subparagraph (A), the product de21 scribed in this subparagraph with respect to

22 any undistributed income year is the product

23 of—

24 ‘‘(i) the undistributed net income for

25 such year, and
1056

Title X, Subtitle E

•HR 2530 IH

1 ‘‘(ii) the sum of the number of taxable

2 years between such year and the taxable

3 year of the distribution (counting in each

4 case the undistributed income year but not

5 counting the taxable year of the distribu6 tion).

7 ‘‘(4) UNDISTRIBUTED INCOME YEAR.—For pur8 poses of this subsection, the term ‘undistributed in9 come year’ means any prior taxable year of the trust

10 for which there is undistributed net income, other

11 than a taxable year during all of which the bene12 ficiary receiving the distribution was not a citizen or

13 resident of the United States.

14 ‘‘(5) DETERMINATION OF UNDISTRIBUTED NET

15 INCOME.—Notwithstanding section 666, for pur16 poses of this subsection, an accumulation distribu17 tion from the trust shall be treated as reducing pro18 portionately the undistributed net income for prior

19 taxable years.

20 ‘‘(6) PERIODS BEFORE 1996.—Interest for the

21 portion of the period described in paragraph (2)

22 which occurs before January 1, 1996, shall be deter23 mined—

24 ‘‘(A) by using an interest rate of 6 percent,

25 and
1057

Title X, Subtitle E

•HR 2530 IH

1 ‘‘(B) without compounding until January

2 1, 1996.’’

3 (b) ABUSIVE TRANSACTIONS.—Section 643(a) of

4 such Code is amended by inserting after paragraph (6)

5 the following new paragraph:

6 ‘‘(7) ABUSIVE TRANSACTIONS.—The Secretary

7 shall prescribe such regulations as may be necessary

8 or appropriate to carry out the purposes of this part,

9 including regulations to prevent avoidance of such

10 purposes.’’

11 (c) TREATMENT OF USE OF TRUST PROPERTY.—

12 (1) IN GENERAL.—Section 643 of such Code

13 (relating to definitions applicable to subparts A, B,

14 C, and D) is amended by adding at the end the fol15 lowing new subsection:

16 ‘‘(i) USE OF FOREIGN TRUST PROPERTY.—For pur17 poses of subparts B, C, and D—

18 ‘‘(1) GENERAL RULE.—If a foreign trust makes

19 a loan of cash or marketable securities directly or in20 directly to—

21 ‘‘(A) any grantor or beneficiary of such

22 trust who is a United States person, or

23 ‘‘(B) any United States person not de24 scribed in subparagraph (A) who is related to

25 such grantor or beneficiary,
1058

Title X, Subtitle E

•HR 2530 IH

1 the amount of such loan shall be treated as a dis2 tribution by such trust to such grantor or bene3 ficiary (as the case may be).

4 ‘‘(2) USE OF OTHER PROPERTY.—Except as

5 provided in regulations prescribed by the Secretary,

6 any direct or indirect use of trust property (other

7 than cash or marketable securities) by a person re8 ferred to in subparagraph (A) or (B) of paragraph

9 (1) shall be treated as a distribution to the grantor

10 or beneficiary (as the case may be) equal to the fair

11 market value of the use of such property. The Sec12 retary may prescribe regulations treating a loan

13 guarantee by the trust as a use of trust property

14 equal to the value of the guarantee.

15 ‘‘(3) DEFINITIONS AND SPECIAL RULES.—For

16 purposes of this subsection—

17 ‘‘(A) CASH.—The term ‘cash’ includes for18 eign currencies and cash equivalents.

19 ‘‘(B) RELATED PERSON.—

20 ‘‘(i) IN GENERAL.—A person is relat21 ed to another person if the relationship be22 tween such persons would result in a dis23 allowance of losses under section 267 or

24 707(b). In applying section 267 for pur25 poses of the preceding sentence, section
1059

Title X, Subtitle E

•HR 2530 IH

1 267(c)(4) shall be applied as if the family

2 of an individual includes the spouses of the

3 members of the family.

4 ‘‘(ii) ALLOCATION OF USE.—If any

5 person described in paragraph (1)(B) is re6 lated to more than one person, the grantor

7 or beneficiary to whom the treatment

8 under this subsection applies shall be de9 termined under regulations prescribed by

10 the Secretary.

11 ‘‘(C) EXCLUSION OF TAX-EXEMPTS.—The

12 term ‘United States person’ does not include

13 any entity exempt from tax under this chapter.

14 ‘‘(D) TRUST NOT TREATED AS SIMPLE

15 TRUST.—Any trust which is treated under this

16 subsection as making a distribution shall be

17 treated as not described in section 651.

18 ‘‘(4) SUBSEQUENT TRANSACTIONS REGARDING

19 LOAN PRINCIPAL.—If any loan is taken into account

20 under paragraph (1), any subsequent transaction be21 tween the trust and the original borrower regarding

22 the principal of the loan (by way of complete or par23 tial repayment, satisfaction, cancellation, discharge,

24 or otherwise) shall be disregarded for purposes of

25 this title.’’
1060

Title X, Subtitle E

•HR 2530 IH

1 (2) TECHNICAL AMENDMENT.—Paragraph (8)

2 of section 7872(f) of such Code is amended by in3 serting ‘‘, 643(i),’’ before ‘‘or 1274’’ each place it

4 appears.

5 (d) EFFECTIVE DATES.—

6 (1) INTEREST CHARGE.—The amendment made

7 by subsection (a) shall apply to distributions after

8 the date of the enactment of this Act.

9 (2) ABUSIVE TRANSACTIONS.—The amendment

10 made by subsection (b) shall take effect on the date

11 of the enactment of this Act.

12 (3) USE OF TRUST PROPERTY.—The amend13 ment made by subsection (c) shall apply to—

14 (A) loans of cash or marketable securities

15 after September 19, 1995, and

16 (B) uses of other trust property after De17 cember 31, 1995.

18 SEC. 10506. RESIDENCE OF ESTATES AND TRUSTS, ETC.

19 (a) TREATMENT AS UNITED STATES PERSON.—

20 (1) IN GENERAL.—Paragraph (30) of section

21 7701(a) of the Internal Revenue Code of 1986 is

22 amended by striking subparagraph (D) and by in23 serting after subparagraph (C) the following:

24 ‘‘(D) any estate or trust if—
1061

Title X, Subtitle E

•HR 2530 IH

1 ‘‘(i) a court within the United States

2 is able to exercise primary supervision over

3 the administration of the estate or trust,

4 and

5 ‘‘(ii) in the case of a trust, one or

6 more United States fiduciaries have the

7 authority to control all substantial deci8 sions of the trust.’’

9 (2) CONFORMING AMENDMENT.—Paragraph

10 (31) of section 7701(a) of such Code is amended to

11 read as follows:

12 ‘‘(31) FOREIGN ESTATE OR TRUST.—The term

13 ‘foreign estate’ or ‘foreign trust’ means any estate or

14 trust other than an estate or trust described in sec15 tion 7701(a)(30)(D).’’

16 (3) EFFECTIVE DATE.—The amendments made

17 by this subsection shall apply—

18 (A) to taxable years beginning after De19 cember 31, 1996, or

20 (B) at the election of the trustee of a

21 trust, to taxable years ending after the date of

22 the enactment of this Act.

23 Such an election, once made, shall be irrevocable.

24 (b) DOMESTIC TRUSTS WHICH BECOME FOREIGN

25 TRUSTS.—
1062

Title X, Subtitle F

•HR 2530 IH

1 (1) IN GENERAL.—Section 1491 of such Code

2 (relating to imposition of tax on transfers to avoid

3 income tax) is amended by adding at the end the fol4 lowing new flush sentence:

5 ‘‘If a trust which is not a foreign trust becomes a foreign

6 trust, such trust shall be treated for purposes of this sec7 tion as having transferred, immediately before becoming

8 a foreign trust, all of its assets to a foreign trust.’’

9 (2) PENALTY.—Section 1494 of such Code is

10 amended by adding at the end the following new

11 subsection:

12 ‘‘(c) PENALTY.—In the case of any failure to file a

13 return required by the Secretary with respect to any trans14 fer described in section 1491, the person required to file

15 such return shall be liable for the penalties provided in

16 section 6677 in the same manner as if such failure were

17 a failure to file a return under section 6048(a).’’

18 (3) EFFECTIVE DATE.—The amendments made

19 by this subsection shall take effect on the date of the

20 enactment of this Act.

21 Subtitle F—Limitation on Section

22 936 Credit

23 SEC. 10601. LIMITATION ON SECTION 936 CREDIT.

24 (a) GENERAL RULE.—Paragraph (4) of section

25 936(a) of the Internal Revenue Code of 1986 (relating to
1063

Title X, Subtitle F

•HR 2530 IH

1 Puerto Rico and possession tax credit) is amended by re2 designating subparagraphs (B) and (C) as subparagraphs

3 (C) and (D), respectively, and by striking subparagraph

4 (A) and inserting the following new subsections:

5 ‘‘(A) CREDIT FOR ACTIVE BUSINESS IN6 COME.—The amount of the credit determined

7 under paragraph (1)(A) for any taxable year

8 shall not exceed 60 percent of the aggregate

9 amount of the possession corporation’s qualified

10 possession wages for such taxable year.

11 ‘‘(B) CREDIT FOR INVESTMENT INCOME.—

12 ‘‘(i) IN GENERAL.—If—

13 ‘‘(I) the QPSII assets of the pos14 session corporation for any taxable

15 year, exceed

16 ‘‘(II) 80 percent of such posses17 sion corporation’s qualified tangible

18 business investment for such taxable

19 year,

20 the credit determined under paragraph

21 (1)(B) for such taxable year shall be re22 duced by the amount determined under

23 clause (ii).

24 ‘‘(ii) AMOUNT OF REDUCTION.—The

25 reduction determined under this clause for
1064

Title X, Subtitle F

•HR 2530 IH

1 any taxable year is an amount which bears

2 the same ratio to the credit determined

3 under paragraph (1)(B) for such taxable

4 year (determined without regard to this

5 subparagraph) as—

6 ‘‘(I) the excess determined under

7 clause (i), bears to

8 ‘‘(II) the QPSII assets of the

9 possession corporation for such tax10 able year.’’

11 (b) PHASEDOWN OF CREDIT.—The table contained

12 in clause (ii) of section 936(a)(4)(C) of such Code, as re13 designated by subsection (a), is amended to read as fol14 lows:

‘‘In the case of taxable The

years beginning in: percentage is:

1994 ..................................................... 60

1995 ..................................................... 55

1996 ..................................................... 40

1997 ..................................................... 20

1998 and thereafter ............................. 0.’’

15 (c) DEFINITIONS AND SPECIAL RULES.—Subsection

16 (i) of section 936 of such Code is amended to read as fol17 lows:

18 ‘‘(i) DEFINITIONS AND SPECIAL RULES RELATING

19 TO LIMITATIONS OF SUBSECTION (a)(4).—

20 ‘‘(1) QUALIFIED POSSESSION WAGES.—For

21 purposes of this section—
1065

Title X, Subtitle F

•HR 2530 IH

1 ‘‘(A) IN GENERAL.—The term ‘qualified

2 possession wages’ means wages paid or incurred

3 by the possession corporation during the tax4 able year to any employee for services per5 formed in a possession of the United States,

6 but only if such services are performed while

7 the principal place of employment of such em8 ployee is within such possession.

9 ‘‘(B) LIMITATION ON AMOUNT OF WAGES

10 TAKEN INTO ACCOUNT.—

11 ‘‘(i) IN GENERAL.—The amount of

12 wages which may be taken into account

13 under subparagraph (A) with respect to

14 any employee for any taxable year shall

15 not exceed the contribution and benefit

16 base determined under section 230 of the

17 Social Security Act for the calendar year

18 in which such taxable year begins.

19 ‘‘(ii) TREATMENT OF PART-TIME EM20 PLOYEES, ETC.—If—

21 ‘‘(I) any employee is not em22 ployed by the possession corporation

23 on a substantially full-time basis at all

24 times during the taxable year, or
1066

Title X, Subtitle F

•HR 2530 IH

1 ‘‘(II) the principal place of em2 ployment of any employee with the

3 possession corporation is not within a

4 possession at all times during the tax5 able year,

6 the limitation applicable under clause (i)

7 with respect to such employee shall be the

8 appropriate portion (as determined by the

9 Secretary) of the limitation which would

10 otherwise be in effect under clause (i).

11 ‘‘(C) TREATMENT OF CERTAIN EMPLOY12 EES.—The term ‘qualified possession wages’

13 shall not include any wages paid to employees

14 who are assigned by the employer to perform

15 services for another person, unless the principal

16 trade or business of the employer is to make

17 employees available for temporary periods to

18 other persons in return for compensation. All

19 possession corporations treated as 1 corporation

20 under paragraph (4) shall be treated as 1 em21 ployer for purposes of the preceding sentence.

22 ‘‘(D) WAGES.—

23 ‘‘(i) IN GENERAL.—Except as pro24 vided in clause (ii), the term ‘wages’ has

25 the meaning given to such term by sub-
1067

Title X, Subtitle F

•HR 2530 IH

1 section (b) of section 3306 (determined

2 without regard to any dollar limitation

3 contained in such section). For purposes of

4 the preceding sentence, such subsection (b)

5 shall be applied as if the term ‘United

6 States’ included all possessions of the

7 United States.

8 ‘‘(ii) SPECIAL RULE FOR AGRICUL9 TURAL LABOR AND RAILWAY LABOR.—In

10 any case to which subparagraph (A) or (B)

11 of paragraph (1) of section 51(h) applies,

12 the term ‘wages’ has the meaning given to

13 such term by section 51(h)(2).

14 ‘‘(2) QPSII ASSETS.—For purposes of this sec15 tion—

16 ‘‘(A) IN GENERAL.—The QPSII assets of a

17 possession corporation for any taxable year is

18 the average of the amounts of the possession

19 corporation’s qualified investment assets as of

20 the close of each quarter of such taxable year.

21 ‘‘(B) QUALIFIED INVESTMENT ASSETS.—

22 The term ‘qualified investment assets’ means

23 the aggregate adjusted bases of the assets

24 which are held by the possession corporation

25 and the income from which qualifies as quali-
1068

Title X, Subtitle F

•HR 2530 IH

1 fied possession source investment income. For

2 purposes of the preceding sentence, the ad3 justed basis of any asset shall be its adjusted

4 basis as determined for purposes of computing

5 earnings and profits.

6 ‘‘(3) QUALIFIED TANGIBLE BUSINESS INVEST7 MENT.—For purposes of this section—

8 ‘‘(A) IN GENERAL.—The qualified tangible

9 business investment of any possession corpora10 tion for any taxable year is the average of the

11 amounts of the possession corporation’s quali12 fied possession investments as of the close of

13 each quarter of such taxable year.

14 ‘‘(B) QUALIFIED POSSESSION INVEST15 MENTS.—The term ‘qualified possession invest16 ments’ means the aggregate adjusted bases of

17 tangible property used by the possession cor18 poration in a possession of the United States in

19 the active conduct of a trade or business within

20 such possession. For purposes of the preceding

21 sentence, the adjusted basis of any property

22 shall be its adjusted basis as determined for

23 purposes of computing earnings and profits.

24 ‘‘(4) RELOCATED BUSINESSES.—

25 ‘‘(A) IN GENERAL.—In determining—
1069

Title X, Subtitle F

•HR 2530 IH

1 ‘‘(i) the possession corporation’s quali2 fied possession wages for any taxable year,

3 and

4 ‘‘(ii) the possession corporation’s

5 qualified tangible business investment for

6 such taxable year,

7 there shall be excluded all wages and all quali8 fied possession investments which are allocable

9 to a disqualified relocated business.

10 ‘‘(B) DISQUALIFIED RELOCATED BUSI11 NESS.—For purposes of subparagraph (A), the

12 term ‘disqualified relocated business’ means any

13 trade or business commenced by the possession

14 corporation after October 12, 1995, or any ad15 dition after such date to an existing trade or

16 business of such possession corporation un17 less—

18 ‘‘(i) the possession corporation cer19 tifies that the commencement of such trade

20 or business or such addition will not result

21 in a decrease in employment at an existing

22 business operation located in the United

23 States, and

24 ‘‘(ii) there is no reason to believe that

25 such commencement or addition was done
1070

Title X, Subtitle F

•HR 2530 IH

1 with the intention of closing down oper2 ations of an existing business located in

3 the United States.

4 ‘‘(5) ELECTION TO COMPUTE CREDIT ON CON5 SOLIDATED BASIS.—

6 ‘‘(A) IN GENERAL.—Any affiliated group

7 may elect to treat all possession corporations

8 which would be members of such group but for

9 section 1504(b)(4) as 1 corporation for pur10 poses of this section. The credit determined

11 under this section with respect to such 1 cor12 poration shall be allocated among such posses13 sion corporations in such manner as the Sec14 retary may prescribe.

15 ‘‘(B) ELECTION.—An election under sub16 paragraph (A) shall apply to the taxable year

17 for which made and all succeeding taxable years

18 unless revoked with the consent of the Sec19 retary.

20 ‘‘(6) TREATMENT OF CERTAIN TAXES.—Not21 withstanding subsection (c), if—

22 ‘‘(A) the credit determined under sub23 section (a)(1) for any taxable year is limited

24 under subsection (a)(4), and
1071

Title X, Subtitle F

•HR 2530 IH

1 ‘‘(B) the possession corporation has paid

2 or accrued any taxes of a possession of the

3 United States for such taxable year which are

4 treated as not being income, war profits, or ex5 cess profits taxes paid or accrued to a posses6 sion of the United States by reason of sub7 section (c), such possession corporation shall be

8 allowed a deduction for such taxable year equal

9 to the portion of such taxes which are allocable

10 (on a pro rata basis) to taxable income of the

11 possession corporation the tax on which is not

12 offset by reason of the limitations of subsection

13 (a)(4). In determining the credit under sub14 section (a) and in applying the preceding sen15 tence, taxable income shall be determined with16 out regard to the preceding sentence.

17 ‘‘(7) POSSESSION CORPORATION.—The term

18 ‘possession corporation’ means a domestic corpora19 tion for which the election provided in subsection (a)

20 is in effect.’’

21 (d) MINIMUM TAX TREATMENT.—Clause (iii) of sec22 tion 56(g)(4)(C) of such Code is amended by adding at

23 the end thereof the following subclauses:

24 ‘‘(III) SEPARATE APPLICATION

25 OF FOREIGN TAX CREDIT LIMITA-
1072

Title X, Subtitle F

•HR 2530 IH

1 TIONS.—In determining the alter2 native minimum foreign tax credit,

3 section 904(d) shall be applied as if

4 dividends from a corporation eligible

5 for the credit provided by section 936

6 were a separate category of income re7 ferred to in a subparagraph of section

8 904(d)(1).

9 ‘‘(IV) COORDINATION WITH LIMI10 TATION ON 936 CREDIT.—Any ref11 erence in this clause to a dividend re12 ceived from a corporation eligible for

13 the credit provided by section 936

14 shall be treated as a reference to the

15 portion of any such dividend for which

16 the dividends received deduction is

17 disallowed under clause (i) after the

18 application of clause (ii)(I).’’

19 (e) EFFECTIVE DATE.—The amendments made by

20 this section shall apply to taxable years beginning after

21 December 31, 1995.
1073

Title XI, Subtitle A

•HR 2530 IH

1 TITLE XI—COMMITTEE ON

2 VETERANS’ AFFAIRS

3 SEC. 11001. SHORT TITLE.

4 This title may be cited as the ‘‘Veterans Reconcili5 ation Act of 1995’’.

6 Subtitle A—Permanent Extension

7 of Temporary Authorities

8 SEC. 11011. AUTHORITY TO REQUIRE THAT CERTAIN VET9 ERANS AGREE TO MAKE COPAYMENTS IN EX10 CHANGE FOR RECEIVING HEALTH-CARE BEN11 EFITS.

12 Section 8013 of the Omnibus Budget Reconciliation

13 Act of 1990 (38 U.S.C. 1710 note) is amended by striking

14 out subsection (e).

15 SEC. 11012. MEDICAL CARE COST RECOVERY AUTHORITY.

16 Section 1729(a)(2)(E) of title 38, United States

17 Code, is amended by striking out ‘‘before October 1,

18 1998,’’.

19 SEC. 11013. INCOME VERIFICATION AUTHORITY.

20 Section 5317 of title 38, United States Code, is

21 amended by striking out subsection (g).
1074

Title XI, Subtitle B

•HR 2530 IH

1 SEC. 11014. LIMITATION ON PENSION FOR CERTAIN RECIPI2 ENTS OF MEDICAID-COVERED NURSING

3 HOME CARE.

4 Section 5503(f) of title 38, United States Code, is

5 amended by striking out paragraph (7).

6 SEC. 11015. HOME LOAN FEES.

7 Section 3729(a) of title 38, United States Code, is

8 amended—

9 (1) in paragraph (4), by striking out ‘‘and be10 fore October 1, 1998’’; and

11 (2) in paragraph (5)(C), by striking out ‘‘, and

12 before October 1, 1998’’.

13 SEC. 11016. PROCEDURES APPLICABLE TO LIQUIDATION

14 SALES ON DEFAULTED HOME LOANS GUAR15 ANTEED BY THE DEPARTMENT OF VETERANS

16 AFFAIRS.

17 Section 3732(c)(11) of title 38, United States Code,

18 is amended by striking out paragraph (11).

19 Subtitle B—Other Matters

20 SEC. 11021. REVISED STANDARD FOR LIABILITY FOR INJU21 RIES RESULTING FROM DEPARTMENT OF

22 VETERANS AFFAIRS TREATMENT.

23 (a) REVISED STANDARD.—Section 1151 of title 38,

24 United States Code, is amended—

25 (1) by designating the second sentence as sub26 section (c);
1075

Title XI, Subtitle B

•HR 2530 IH

1 (2) by striking out the first sentence and insert2 ing in lieu thereof the following:

3 ‘‘(a) Compensation under this chapter and depend4 ency and indemnity compensation under chapter 13 of this

5 title shall be awarded for a qualifying additional disability

6 of a veteran or the qualifying death of a veteran in the

7 same manner as if such disability or death were service8 connected.

9 ‘‘(b)(1) For purposes of this section, a disability or

10 death is a qualifying additional disability or a qualifying

11 death only if the disability or death—

12 ‘‘(A) was caused by Department health care

13 and was a proximate result of—

14 ‘‘(i) negligence on the part of the Depart15 ment in furnishing the Department health care;

16 or

17 ‘‘(ii) an event not reasonably foreseeable;

18 or

19 ‘‘(B) was incurred as a proximate result of the

20 provision of training and rehabilitation services by

21 the Secretary (including by a service-provider used

22 by the Secretary for such purpose under section

23 3115 of this title) as part of an approved rehabilita24 tion program under chapter 31 of this title.
1076

Title XI, Subtitle B

•HR 2530 IH

1 ‘‘(2) For purposes of this section, the term ‘Depart2 ment health care’ means hospital care, medical or surgical

3 treatment, or an examination that is furnished under any

4 law administered by the Secretary to a veteran by a De5 partment employee or in a Department facility (as defined

6 in section 1701(3)(A) of this title).

7 ‘‘(3) A disability or death of a veteran which is the

8 result of the veteran’s willful misconduct is not a qualify9 ing disability or death for purposes of this section.’’; and

10 (3) by adding at the end the following:

11 ‘‘(d) Effective with respect to injuries, aggravations

12 of injuries, and deaths occurring after September 30,

13 2002, a disability or death is a qualifying additional dis14 ability or a qualifying death for purposes of this section

15 (notwithstanding the provisions of subsection (b)(1)) if the

16 disability or death—

17 ‘‘(1) was the result of Department health care;

18 or

19 ‘‘(2) was the result of the pursuit of a course

20 of vocational rehabilitation under chapter 31 of this

21 title.’’.

22 (b) CONFORMING AMENDMENTS.—Subsection (c) of

23 such section, as designated by subsection (a)(1), is amend24 ed—
1077

Title XI, Subtitle B

•HR 2530 IH

1 (1) by striking out ‘‘, aggravation,’’ both places

2 it appears; and

3 (2) by striking out ‘‘sentence’’ and inserting in

4 lieu thereof ‘‘subsection’’.

5 (c) EFFECTIVE DATE.—The amendments made by

6 this section shall apply to any administrative or judicial

7 determination of eligibility for benefits under section 1151

8 of title 38, United States Code, based on a claim that is

9 received by the Secretary on or after October 1, 1995, in10 cluding any such determination based on an original appli11 cation or an application seeking to reopen, revise, recon12 sider, or otherwise readjudicate any claim for benefits

13 under section 1151 of that title or any predecessor provi14 sion of law.

15 SEC. 11022. ENHANCED LOAN ASSET SALE AUTHORITY.

16 Section 3720(h)(2) of title 38, United States Code,

17 is amended by striking out ‘‘December 31, 1995’’ and in18 serting in lieu thereof ‘‘September 30, 1996’’.

19 SEC. 11023. WITHHOLDING OF PAYMENTS AND BENEFITS.

20 (a) NOTICE REQUIRED IN LIEU OF CONSENT OR

21 COURT ORDER.—Section 3726 of title 38, United States

22 Code, is amended by striking out ‘‘unless’’ and all that

23 follows and inserting in lieu thereof the following: ‘‘unless

24 the Secretary provides such veteran or surviving spouse

25 with notice by certified mail with return receipt requested
1078

Title XI, Subtitle B

•HR 2530 IH

1 of the authority of the Secretary to waive the payment

2 of indebtedness under section 5302(b) of this title. If the

3 Secretary does not waive the entire amount of the liability,

4 the Secretary shall then determine whether the veteran or

5 surviving spouse should be released from liability under

6 section 3713(b) of this title. If the Secretary determines

7 that the veteran or surviving spouse should not be released

8 from liability, the Secretary shall notify the veteran or sur9 viving spouse of that determination and provide a notice

10 of the procedure for appealing that determination, unless

11 the Secretary has previously made such determination and

12 notified the veteran or surviving spouse of the procedure

13 for appealing the determination.’’.

14 (b) CONFORMING AMENDMENT.—Section 5302(b) of

15 such title is amended by inserting ‘‘with return receipt re16 quested’’ after ‘‘certified mail’’.

17 (c) EFFECTIVE DATE.—The amendments made by

18 this section shall apply with respect to any indebtedness

19 to the United States arising pursuant to chapter 37 of

20 title 38, United States Code, before, on, or after the date

21 of the enactment of this Act.
1079

Title XI, Subtitle C

•HR 2530 IH

1 Subtitle C—Health Care Eligibility

2 Reform

3 SEC. 11031. HOSPITAL CARE AND MEDICAL SERVICES.

4 (a) ELIGIBILITY FOR CARE.—Section 1710(a) of title

5 38, United States Code, is amended by striking out para6 graphs (1) and (2) and inserting the following:

7 ‘‘(a)(1) The Secretary shall, to the extent and in the

8 amount provided in advance in appropriations Acts for

9 these purposes, provide hospital care and medical services,

10 and may provide nursing home care, which the Secretary

11 determines is needed to any veteran—

12 ‘‘(A) with a compensable service-connected dis13 ability;

14 ‘‘(B) whose discharge or release from active

15 military, naval, or air service was for a compensable

16 disability that was incurred or aggravated in the line

17 of duty;

18 ‘‘(C) who is in receipt of, or who, but for a sus19 pension pursuant to section 1151 of this title (or

20 both a suspension and the receipt of retired pay),

21 would be entitled to disability compensation, but

22 only to the extent that such veteran’s continuing eli23 gibility for such care is provided for in the judgment

24 or settlement provided for in such section;

25 ‘‘(D) who is a former prisoner of war;
1080

Title XI, Subtitle C

•HR 2530 IH

1 ‘‘(E) of the Mexican border period or of World

2 War I;

3 ‘‘(F) who was exposed to a toxic substance, ra4 diation, or environmental hazard, as provided in sub5 section (e); and

6 ‘‘(G) who is unable to defray the expenses of

7 necessary care as determined under section 1722(a)

8 of this title.

9 ‘‘(2) In the case of a veteran who is not described

10 in paragraph (1), the Secretary may, to the extent re11 sources and facilities are available and subject to the pro12 visions of subsection (f), furnish hospital care, medical

13 services, and nursing home care which the Secretary deter14 mines is needed.’’.

15 (b) CONFORMING AMENDMENTS.—(1) Section

16 1710(e) of such title is amended—

17 (A) in paragraph (1), by striking out ‘‘hospital

18 care and nursing home care’’ in subparagraphs (A),

19 (B), and (C) and inserting in lieu thereof ‘‘hospital

20 care, medical services, and nursing home care’’;

21 (B) in paragraph (2), by inserting ‘‘and medical

22 services’’ after ‘‘Hospital and nursing home care’’;

23 and
1081

Title XI, Subtitle C

•HR 2530 IH

1 (C) by striking out ‘‘subsection (a)(1)(G) of

2 this section’’ each place it appears and inserting in

3 lieu thereof ‘‘subsection (a)(1)(F)’’.

4 (2) Chapter 17 of such title is amended—

5 (A) by redesignating subsection (g) of section

6 1710 as subsection (h); and

7 (B) by transferring subsection (f) of section

8 1712 of such title to section 1710 so as to appear

9 after subsection (f), redesignating such subsection as

10 subsection (g), and amending such subsection by

11 striking out ‘‘section 1710(a)(2) of this title’’ in

12 paragraph (1) and inserting in lieu thereof ‘‘sub13 section (a)(2) of this section’’.

14 (3) Section 1712 of such title is amended—

15 (A) by striking out subsections (a) and (i); and

16 (B) by redesignating subsections (b), (c), (d),

17 (h) and (j), as subsections (a), (b), (c), (d), and (e),

18 respectively.

19 SEC. 11032. EXTENSION OF AUTHORITY TO PRIORITY

20 HEALTH CARE FOR PERSIAN GULF VETER21 ANS.

22 Section 1710(e)(3) of title 38, United States Code,

23 is amended by striking out ‘‘December 31, 1995’’ and in24 serting in lieu thereof ‘‘December 31, 1998’’.
1082

Title XI, Subtitle C

•HR 2530 IH

1 SEC. 11033. PROSTHETICS.

2 (a) ELIGIBILITY FOR PROSTHETICS.—Section

3 1701(6)(A)(i) of title 38, United States Code, is amend4 ed—

5 (1) by striking out ‘‘(in the case of a person

6 otherwise receiving care or services under this chap7 ter)’’ and ‘‘(except under the conditions described in

8 section 1712(a)(5)(A) of this title),’’;

9 (2) by inserting ‘‘(in the case of a person other10 wise receiving care or services under this chapter)’’

11 before ‘‘wheelchairs,’’; and

12 (3) by inserting ‘‘except that the Secretary may

13 not furnish sensori-neural aids other than in accord14 ance with guidelines which the Secretary shall pre15 scribe,’’ after ‘‘reasonable and necessary,’’.

16 (b) REGULATIONS.—Not later than 30 days after the

17 date of the enactment of this Act, the Secretary of Veter18 ans Affairs shall prescribe the guidelines required by the

19 amendments made by subsection (a) and shall furnish a

20 copy of those guidelines to the Committees on Veterans’

21 Affairs of the Senate and House of Representatives.

22 SEC. 11034. MANAGEMENT OF HEALTH CARE.

23 (a) IN GENERAL.—(1) Chapter 17 of title 38, United

24 States Code, is amended by inserting after section 1704

25 the following new sections:
1083

Title XI, Subtitle C

•HR 2530 IH

1 ‘‘§ 1705. Management of health care: patient enroll2 ment system

3 ‘‘(a) In managing the provision of hospital care and

4 medical services under section 1710(a)(1) of this title, the

5 Secretary, in accordance with regulations the Secretary

6 shall prescribe, shall establish and operate a system of an7 nual patient enrollment. The Secretary shall manage the

8 enrollment of veterans in accordance with the following

9 priorities, in the order listed:

10 ‘‘(1) Veterans with service-connected disabilities

11 rated 30 percent or greater.

12 ‘‘(2) Veterans who are former prisoners of war

13 and veterans with service connected disabilities rated

14 10 percent or 20 percent.

15 ‘‘(3) Veterans who are in receipt of increased

16 pension based on a need of regular aid and attend17 ance or by reason of being permanently housebound

18 and other veterans who are catastrophically disabled.

19 ‘‘(4) Veterans not covered by paragraphs (1)

20 through (3) who are unable to defray the expenses

21 of necessary care as determined under section

22 1722(a) of this title.

23 ‘‘(5) All other veterans eligible for hospital care,

24 medical services, and nursing home care under sec25 tion 1710(a)(1) of this title.
1084

Title XI, Subtitle C

•HR 2530 IH

1 ‘‘(b) In the design of an enrollment system under

2 subsection (a), the Secretary—

3 ‘‘(1) shall ensure that the system will be man4 aged in a manner to ensure that the provision of

5 care to enrollees is timely and acceptable in quality;

6 ‘‘(2) may establish additional priorities within

7 each priority group specified in subsection (a), as

8 the Secretary determines necessary; and

9 ‘‘(3) may provide for exceptions to the specified

10 priorities where dictated by compelling medical rea11 sons.

12 ‘‘§ 1706. Management of health care: other require13 ments

14 ‘‘(a) In managing the provision of hospital care and

15 medical services under section 1710(a) of this title, the

16 Secretary shall, to the extent feasible, design, establish

17 and manage health care programs in such a manner as

18 to promote cost-effective delivery of health care services

19 in the most clinically appropriate setting.

20 ‘‘(b) In managing the provision of hospital care and

21 medical services under section 1710(a) of this title, the

22 Secretary—

23 ‘‘(1) may contract for hospital care and medical

24 services when Department facilities are not capable
1085

Title XI, Subtitle C

•HR 2530 IH

1 of furnishing such care and services economically,

2 and

3 ‘‘(2) shall make such rules and regulations re4 garding acquisition procedures or policies as the Sec5 retary considers appropriate to provide such needed

6 care and services.

7 ‘‘(c) In managing the provision of hospital care and

8 medical services under section 1710(a) of this title, the

9 Secretary shall ensure that the Department maintains its

10 capacity to provide for the specialized treatment and reha11 bilitative needs of disabled veterans described in section

12 1710(a) of this title (including veterans with spinal cord

13 dysfunction, blindness, amputations, and mental illness)

14 within distinct programs or facilities of the Department

15 that are dedicated to the specialized needs of those veter16 ans in a manner that (1) affords those veterans reasonable

17 access to care and services for those specialized needs, and

18 (2) ensures that overall capacity of the Department to pro19 vide such services is not reduced below the capacity of the

20 Department, nationwide, to provide those services, as of

21 the date of the enactment of this section.

22 ‘‘(d) In managing the provision of hospital care and

23 medical services under section 1710(a) of this title, the

24 Secretary shall ensure that any veteran with a service-con25 nected disability is provided all benefits under this chapter
1086

Title XI, Subtitle C

•HR 2530 IH

1 for which that veteran was eligible before the date of the

2 enactment of this section.’’.

3 (2) The table of sections at the beginning of chapter

4 17 of such title is amended by inserting after the item

5 relating to section 1704 the following new items:

‘‘1705. Management of health care: patient enrollment system.

‘‘1706. Management of health care: other requirements.’’.

6 (b) CONFORMING AMENDMENTS TO SECTION

7 1703.—(1) Section 1703 of such title is amended—

8 (A) by striking out subsections (a) and (b); and

9 (B) in subsection (c) by—

10 (i) striking out ‘‘(c)’’, and

11 (ii) striking out ‘‘this section, sections’’

12 and inserting in lieu thereof ‘‘sections 1710,’’.

13 (2)(A) The heading of such section is amended to

14 read as follows:

15 ‘‘§ 1703. Annual report on furnishing of care and

16 services by contract’’.

17 (B) The item relating to such section in the table of

18 sections at the beginning of chapter 17 of such title is

19 amended to read as follows:

‘‘1703. Annual report on furnishing of care and services by contract.’’.
1087

Title XI, Subtitle C

•HR 2530 IH

1 SEC. 11035. IMPROVED EFFICIENCY IN HEALTH CARE RE2 SOURCE MANAGEMENT.

3 (a) REPEAL OF SUNSET PROVISION.—Section 204 of

4 the Veterans Health Care Act of 1992 (Public Law 102-

5 585; 106 Stat. 4950) is repealed.

6 (b) COST RECOVERY.—Title II of such Act is further

7 amended by adding at the end the following new section:

8 ‘‘SEC. 207. AUTHORITY TO BILL HEALTH-PLAN CONTRACTS.

9 ‘‘(a) RIGHT TO RECOVER.—In the case of a primary

10 beneficiary (as described in section 201(2)(B)) who has

11 coverage under a health-plan contract, as defined in sec12 tion 1729(i)(1)(A) of title 38, United States Code, and

13 who is furnished care or services by a Department medical

14 facility pursuant to this title, the United States shall have

15 the right to recover or collect charges for such care or

16 services from such health-plan contract to the extent that

17 the beneficiary (or the provider of the care or services)

18 would be eligible to receive payment for such care or serv19 ices from such health-plan contract if the care or services

20 had not been furnished by a department or agency of the

21 United States. Any funds received from such health-plan

22 contract shall be credited to funds that have been allotted

23 to the facility that furnished the care or services.

24 ‘‘(b) ENFORCEMENT.—The right of the United

25 States to recover under such a beneficiary’s health-plan

26 contract shall be enforceable in the same manner as that
1088

Title XI, Subtitle C

•HR 2530 IH

1 provided by subsections (a)(3), (b), (c)(1), (d), (f), (h),

2 and (i) of section 1729 of title 38, United States Code.’’.

3 SEC. 11036. SHARING AGREEMENTS FOR SPECIALIZED MED4 ICAL RESOURCES.

5 (a) REPEAL OF SECTION 8151.—(1) Subchapter IV

6 of chapter 81 of title 38, United States Code, is amend7 ed—

8 (A) by striking out section 8151; and

9 (B) by redesignating sections 8152, 8153,

10 8154, 8155, 8156, 8157, and 8158 as sections 8151,

11 8152, 8153, 8154, 8155, 8156, and 8157, respec12 tively.

13 (2) The table of sections at the beginning of chapter

14 81 is amended—

15 (A) by striking out the item relating to section

16 8151; and

17 (B) by revising the items relating to sections

18 8152, 8153, 8154, 8155, 8156, 8157, and 8158 to

19 reflect the redesignations by paragraph (1)(B).

20 (b) REVISED AUTHORITY FOR SHARING AGREE21 MENTS.—Section 8152 of such title, as redesignated by

22 subsection (a)(1)(B), is amended—

23 (1) in subsection (a)(1)(A)—
1089

Title XI, Subtitle C

•HR 2530 IH

1 (A) by striking out ‘‘specialized medical re2 sources’’ and inserting in lieu thereof ‘‘health3 care resources’’; and

4 (B) by striking out ‘‘other’’ and all that

5 follows through ‘‘medical schools’’ and inserting

6 in lieu thereof ‘‘any medical school, health-care

7 provider, health-care plan, insurer, or other en8 tity or individual’’;

9 (2) in subsection (a)(2) by striking out ‘‘only’’

10 and all that follows through ‘‘are not’’ and inserting

11 in lieu thereof ‘‘if such resources are not, or would

12 not be,’’;

13 (3) in subsection (b), by striking out ‘‘reciprocal

14 reimbursement’’ in the first sentence and all that

15 follows through the period at the end of that sen16 tence and inserting in lieu thereof ‘‘payment to the

17 Department in accordance with procedures that pro18 vide appropriate flexibility to negotiate payment

19 which is in the best interest of the Government.’’;

20 (4) in subsection (d), by striking out ‘‘preclude

21 such payment, in accordance with—’’ and all that

22 follows through ‘‘to such facility therefor’’ and in23 serting in lieu thereof ‘‘preclude such payment to

24 such facility for such care or services’’;
1090

Title XI, Subtitle C

•HR 2530 IH

1 (5) by redesignating subsection (e) as sub2 section (f); and

3 (6) by inserting after subsection (d) the follow4 ing new subsection (e):

5 ‘‘(e) The Secretary may make an arrangement that

6 authorizes the furnishing of services by the Secretary

7 under this section to individuals who are not veterans only

8 if the Secretary determines—

9 ‘‘(1) that such an arrangement will not result

10 in the denial of, or a delay in providing access to,

11 care to any veteran at that facility; and

12 ‘‘(2) that such an arrangement—

13 ‘‘(A) is necessary to maintain an accept14 able level and quality of service to veterans at

15 that facility; or

16 ‘‘(B) will result in the improvement of

17 services to eligible veterans at that facility.’’.

18 (c) CROSS-REFERENCE AMENDMENTS.—(1) Section

19 8110(c)(3)(A) of such title is amended by striking out

20 ‘‘8153’’ and inserting in lieu thereof ‘‘8152’’.

21 (2) Subsection (b) of section 8154 of such title (as

22 redesignated by subsection (a)(1)(B)) is amended by strik23 ing out ‘‘section 8154’’ and inserting in lieu thereof ‘‘sec24 tion 8153’’.
1091

Title XI, Subtitle C

•HR 2530 IH

1 (3) Section 8156 of such title (as redesignated by

2 subsection (a)(1)(B)) is amended—

3 (A) in subsection (a), by striking out ‘‘section

4 8153(a)’’ and inserting in lieu thereof ‘‘section

5 8152(a)’’; and

6 (B) in subsection (b)(3), by striking out ‘‘sec7 tion 8153’’ and inserting in lieu thereof ‘‘section

8 8152’’.

9 (4) Subsection (a) of section 8157 of such title (as

10 redesignated by subsection (a)(1)(B)) is amended—

11 (A) in the matter preceding paragraph (1), by

12 striking out ‘‘section 8157’’ and ‘‘section 8153(a)’’

13 and inserting in lieu thereof ‘‘section 8156’’ and

14 ‘‘section 8152(a)’’, respectively; and

15 (B) in paragraph (1), by striking out ‘‘section

16 8157(b)(4)’’ and inserting in lieu thereof ‘‘section

17 8156(b)(4)’’.

18 SEC. 11037. PERSONNEL FURNISHING SHARED RESOURCES.

19 Section 712(b)(2) of title 38, United States Code, is

20 amended—

21 (1) by striking out ‘‘the sum of—’’ and insert22 ing in lieu thereof ‘‘the sum of the following:’’;

23 (2) by capitalizing the first letter of the first

24 word of each of subparagraphs (A) and (B);
1092

Title XIII

•HR 2530 IH

1 (3) by striking out ‘‘; and’’ at the end of sub2 paragraph (A) and inserting in lieu thereof a period;

3 and

4 (4) by adding at the end the following:

5 ‘‘(C) The number of such positions in the

6 Department during that fiscal year held by per7 sons involved in providing health-care resources

8 under section 8111 or 8152 of this title.’’.

9 TITLE XII—LEGISLATIVE

10 BRANCH

11 SEC. 12101. REQUIREMENT THAT EXCESS FUNDS PROVIDED

12 FOR OFFICIAL ALLOWANCES OF MEMBERS

13 OF THE HOUSE OF REPRESENTATIVES BE

14 DEDICATED TO DEFICIT REDUCTION.

15 Of the funds made available in any appropriation Act

16 for fiscal year 1996 or any succeeding fiscal year for the

17 official expenses allowance, the clerk hire allowance, or the

18 official mail allowance of a Member of the House of Rep19 resentatives, any amount that remains unobligated at the

20 end of such fiscal year shall be transferred to the Deficit

21 Reduction Fund established by Executive Order 12858

22 (58 Fed. Reg. 42185). Any amount so transferred shall

23 be in addition to the amounts specified in section 2(b) of

24 such order, but shall be subject to the requirements and

25 limitations set forth in sections 2(c) and 3 of such order.
1093

Title XIII

•HR 2530 IH

1 TITLE XIII—MISCELLANEOUS

2 PROVISIONS

3 SEC. 13101. ELIMINATION OF DISPARITY BETWEEN EFFEC4 TIVE DATES FOR MILITARY AND CIVILIAN RE5 TIREE COST-OF-LIVING ADJUSTMENTS FOR

6 FISCAL YEARS 1996, 1997, AND 1998.

7 (a) CONFORMANCE WITH SCHEDULE FOR CIVIL

8 SERVICE COLAS.—Subparagraph (B) of section

9 1401a(b)(2) of title 10, United States Code, is amended—

10 (1) by striking out ‘‘THROUGH 1998’’ the first

11 place it appears and all that follows through ‘‘In the

12 case of’’ the second place it appears and inserting in

13 lieu thereof ‘‘THROUGH 1996.—In the case of’’;

14 (2) by striking ‘‘of 1994, 1995, 1996, or 1997’’

15 and inserting in lieu thereof ‘‘of 1993, 1994, or

16 1995’’; and

17 (3) by striking out ‘‘September’’ and inserting

18 in lieu thereof ‘‘March’’.

19 (b) REPEAL OF PRIOR CONDITIONAL ENACTMENT.—

20 Section 8114A(b) of Public Law 103–335 (108 Stat.

21 2648) is repealed.
1094

Title XIII

•HR 2530 IH

1 SEC. 13102. DISPOSAL OF CERTAIN MATERIALS IN NA2 TIONAL DEFENSE STOCKPILE FOR DEFICIT

3 REDUCTION.

4 (a) DISPOSALS REQUIRED.—(1) During fiscal year

5 1996, the President shall dispose of all cobalt contained

6 in the National Defense Stockpile that, as the date of the

7 enactment of this Act, is authorized for disposal under any

8 law (other than this Act).

9 (2) In addition to the disposal of cobalt under para10 graph (1), the President shall dispose of additional quan11 tities of cobalt and quantities of aluminum, ferro colum12 bium, germanium, palladium, platinum, and rubber con13 tained in the National Defense Stockpile so as to result

14 in receipts to the United States in amounts equal to—

15 (A) $21,000,000 during the fiscal year ending

16 September 30, 1996;

17 (B) $338,000,000 during the five-fiscal year pe18 riod ending on September 30, 2000; and

19 (C) $649,000,000 during the seven-fiscal year

20 period ending on September 30, 2002.

21 (3) The President is not required to include the dis22 posal of the materials identified in paragraph (2) in an

23 annual materials plan for the National Defense Stockpile.

24 Disposals made under this section may be made without

25 consideration of the requirements of an annual materials

26 plan.
1095

Title XIII

•HR 2530 IH

1 (b) LIMITATION ON DISPOSAL QUANTITY.—The total

2 quantities of materials authorized for disposal by the

3 President under subsection (a)(2) may not exceed the

4 amounts set forth in the following table:

Authorized Stockpile Disposals

Material for disposal Quantity

Aluminum ............................................................................. 62,881 short tons

Cobalt .................................................................................... 42,482,323 pounds contained

Ferro Columbium .................................................................. 930,911 pounds contained

Germanium ........................................................................... 68,207 kilograms

Palladium .............................................................................. 1,264,601 troy ounces

Platinum ............................................................................... 452,641 troy ounces

Rubber .................................................................................. 125,138 long tons

5 (c) DEPOSIT OF RECEIPTS.—Notwithstanding sec6 tion 9 of the Strategic and Critical Materials Stock Piling

7 Act (50 U.S.C. 98h), funds received as a result of the dis8 posal of materials under subsection (a)(2) shall be depos9 ited into the general fund of the Treasury for the purpose

10 of deficit reduction.

11 (d) RELATIONSHIP TO OTHER DISPOSAL AUTHOR12 ITY.—The disposal authority provided in subsection (a)(2)

13 is new disposal authority and is in addition to, and shall

14 not affect, any other disposal authority provided by law

15 regarding the materials specified in such subsection.

16 (e) TERMINATION OF DISPOSAL AUTHORITY.—The

17 President may not use the disposal authority provided in

18 subsection (a)(2) after the date on which the total amount

19 of receipts specified in subparagraph (C) of such sub20 section is achieved.
1096

Title XIII

•HR 2530 IH

1 (f) DEFINITION.—The term ‘‘National Defense

2 Stockpile’’ means the National Defense Stockpile provided

3 for in section 4 of the Strategic and Critical Materials

4 Stock Piling Act (50 U.S.C. 98c).

5 SEC. 13103. REQUIREMENT THAT CERTAIN AGENCIES

6 PREFUND GOVERNMENT HEALTH BENEFITS

7 CONTRIBUTIONS FOR THEIR ANNUITANTS.

8 (a) DEFINITIONS.—For the purpose of this section—

9 (1) the term ‘‘agency’’ means any agency or

10 other instrumentality within the executive branch of

11 the Government, the receipts and disbursements of

12 which are not generally included in the totals of the

13 budget of the United States Government submitted

14 by the President;

15 (2) the term ‘‘health benefits plan’’ means, with

16 respect to an agency, a health benefits plan, estab17 lished by or under Federal law, in which employees

18 or annuitants of such agency may participate;

19 (3) the term ‘‘health-benefits coverage’’ means

20 coverage under a health benefits plan;

21 (4) an individual shall be considered to be an

22 ‘‘annuitant of an agency’’ if such individual is enti23 tled to an annuity, under a retirement system estab24 lished by or under Federal law, by virtue of—
1097

Title XIII

•HR 2530 IH

1 (A) such individual’s service with, and sep2 aration from, such agency; or

3 (B) being the survivor of an annuitant

4 under subparagraph (A) or of an individual who

5 died while employed by such agency; and

6 (5) the term ‘‘Office’’ means the Office of Per7 sonnel Management.

8 (b) PREFUNDING REQUIREMENT.—

9 (1) IN GENERAL.—Effective as of October 1,

10 1996, each agency shall be required to prepay the

11 Government contributions which are or will be re12 quired in connection with providing health-benefits

13 coverage for annuitants of such agency.

14 (2) REGULATIONS.—The Office shall prescribe

15 such regulations as may be necessary to carry out

16 this section. The regulations shall be designed to en17 sure at least the following:

18 (A) Amounts paid by each agency shall be

19 sufficient to cover the amounts which would

20 otherwise be payable by such agency (on a

21 ‘‘pay-as-you-go’’ basis), on or after the applica22 ble effective date under paragraph (1), on be23 half of—

24 (i) individuals who are annuitants of

25 the agency as of such effective date; and
1098

Title XIII

•HR 2530 IH

1 (ii) individuals who are employed by

2 the agency as of such effective date, or

3 who become employed by the agency after

4 such effective date, after such individuals

5 have become annuitants of the agency (in6 cluding their survivors).

7 (B)(i) For purposes of determining any

8 amounts payable by an agency—

9 (I) this section shall be treated as if

10 it had taken effect at the beginning of the

11 20-year period which ends on the effective

12 date applicable under paragraph (1) with

13 respect to such agency; and

14 (II) in addition to any amounts pay15 able under subparagraph (A), each agency

16 shall also be responsible for paying any

17 amounts for which it would have been re18 sponsible, with respect to the 20-year pe19 riod described in subclause (I), in connec20 tion with any individuals who are annu21 itants or employees of the agency as of the

22 applicable effective date under paragraph

23 (1).

24 (ii) Any amounts payable under this sub25 paragraph for periods preceding the applicable
1099

Title XIII

•HR 2530 IH

1 effective date under paragraph (1) shall be pay2 able in equal installments over the 20-year pe3 riod beginning on such effective date.

4 (c) FASB STANDARDS.—Regulations under sub5 section (b) shall be in conformance with the provisions of

6 standard 106 of the Financial Accounting Standards

7 Board, issued in December 1990.

8 (d) CLARIFICATION.—Nothing in this section shall be

9 considered to permit or require duplicative payments on

10 behalf of any individuals.

11 (e) DRAFT LEGISLATION.—The Office shall prepare

12 and submit to Congress any draft legislation which may

13 be necessary in order to carry out this section.

14 SEC. 13104. APPLICATION OF OMB CIRCULAR A–129.

15 The provisions of Office of Management and Budget

16 Circular No. A–129, relating to policies for Federal credit

17 programs and non-tax receivables, as in effect on the date

18 of enactment of this Act, shall apply as provided in that

19 circular.

20 SEC. 13105. 7-YEAR EXTENSION OF HAZARDOUS SUBSTANCE

21 SUPERFUND EXCISE TAXES.

22 (a) EXTENSION OF HAZARDOUS SUBSTANCE

23 SUPERFUND FINANCING RATE.—Subsection (e) of section

24 4611 of the Internal Revenue Code of 1986 is amended

25 to read as follows:
1100

Title XIII

•HR 2530 IH

1 ‘‘(e) APPLICATION OF HAZARDOUS SUBSTANCE

2 SUPERFUND FINANCING RATE.—The Hazardous Sub3 stance Superfund financing rate under this section shall

4 apply after December 31, 1986, and before January 1,

5 2003.’’

6 (b) EXTENSION OF REPAYMENT DEADLINE FOR

7 SUPERFUND BORROWING.—Subparagraph (B) of section

8 9507(d)(3) of such Code is amended by striking ‘‘Decem9 ber 31, 1995’’ and inserting ‘‘December 31, 2002’’.

10 (c) EFFECTIVE DATE.—The amendments made by

11 this section shall take effect on January 1, 1996.

12 TITLE XIV—BUDGET PROCESS

13 PROVISIONS

14 CHAPTER 1—SHORT TITLE; PURPOSE

15 SEC. 14001. SHORT TITLE.

16 This title may be cited as the ‘‘Balanced Budget En17 forcement Act of 1995’’.

18 SEC. 14002. PURPOSE.

19 The purpose of this title is to enforce a path toward

20 a balanced budget by fiscal year 2002 and to make Fed21 eral budget process more honest and open.

22 CHAPTER 2—BUDGET ESTIMATES

23 SEC. 14051. BOARD OF ESTIMATES.

24 (a) ESTABLISHMENT.—There is established a Board

25 of Estimates.
1101

Title XIII

•HR 2530 IH

1 (b) DUTIES OF THE BOARD.—(1) On the dates speci2 fied in section 254, the Board shall issue a report to the

3 President and the Congress which states whether it has

4 chosen (with no modification)—

5 (A) the sequestration preview report for the

6 budget year submitted by OMB under section

7 254(d) of the Balanced Budget and Emergency Def8 icit Control Act of 1985 or the report for that year

9 submitted by CBO under that section; and

10 (B) the final sequestration report for the budg11 et year submitted by OMB under section 254(g) of

12 the Balanced Budget and Emergency Deficit Control

13 Act of 1985 or the report for that year submitted

14 by CBO under that section;

15 that shall be used for purposes of the Balanced Budget

16 and Emergency Deficit Control Act of 1985, chapter 11

17 of title 31, United States Code, and section 403 of the

18 Congressional Budget Act of 1974. In making its choice,

19 the Board shall choose the report that, in its opinion, is

20 the more accurate.

21 (2) At any time the Board may change the list of

22 major estimating assumptions to be used by OMB and

23 CBO in preparing their sequestration preview reports.

24 (c) MEMBERSHIP.—
1102

Title XIII

•HR 2530 IH

1 (1) NUMBER AND APPOINTMENT.—The Board

2 shall be composed of 5 members, the chairman of

3 the Board of Governors of the Federal Reserve Sys4 tem and 4 other members to be appointed by the

5 President as follows:

6 (A) One from a list of at least 5 individ7 uals nominated for such appointment by the

8 Speaker of the House of Representatives.

9 (B) One from a list of at least 5 individ10 uals nominated for such appointment by the

11 majority leader of the Senate.

12 (C) One from a list of at least 5 individ13 uals nominated for such appointment by the mi14 nority leader of the House of Representatives.

15 (D) One from a list of at least 5 individ16 uals nominated for such appointment by the mi17 nority leader of the Senate.

18 No member appointed by the President may be an

19 officer or employee of any government. A vacancy in

20 the Board shall be filled in the manner in which the

21 original appointment was made.

22 (2) CONTINUATION OF MEMBERSHIP.—If any

23 member of the Board appointed by the President be24 comes an officer or employee of a government, he

25 may continue as a member of the Board for not
1103

Title XIII

•HR 2530 IH

1 longer than the 30-day period beginning on the date

2 he becomes such an officer or employee.

3 (3) TERMS.—(A) Members shall be appointed

4 for terms of 4 years.

5 (B) Any member appointed to fill a vacancy oc6 curring before the expiration of the term for which

7 his predecessor was appointed shall be appointed

8 only for the remainder of such term. A member may

9 serve after the expiration of his term until his suc10 cessor has taken office.

11 (4) BASIC PAY.—Members of the Board shall

12 serve without pay.

13 (5) QUORUM.—Three members of the Board

14 shall constitute a quorum but a lesser number may

15 hold hearings.

16 (6) CHAIRMAN.—The Chairman of the Board

17 shall be chosen annually by its members.

18 (7) MEETINGS.—The Board shall meet at the

19 call of the Chairman or a majority of its members.

20 (d) DIRECTOR AND STAFF.—

21 (1) APPOINTMENT.—The Board shall have a

22 Director who shall be appointed by the members of

23 the Board. Subject to such rules as may be pre24 scribed by the Board, the Director may appoint and
1104

Title XIII

•HR 2530 IH

1 fix the pay of such personnel as the Director consid2 ers appropriate.

3 (2) APPLICABILITY OF CERTAIN CIVIL SERVICE

4 LAWS.—The Director and staff of the Board may be

5 appointed without regard to the provisions of title 5,

6 United States Code, governing appointments in the

7 competitive service, and may be paid without regard

8 to the provisions of chapter 51 and subchapter III

9 of chapter 53 of such title relating to classification

10 and General Schedule pay rates, except that no indi11 vidual so appointed may receive pay in excess of the

12 annual rate of basic pay payable for GS–18 of the

13 General Schedule.

14 (3) STAFF OF FEDERAL AGENCIES.—Upon re15 quest of the Board, the head of any Federal agency

16 is authorized to detail, on a reimbursable basis, any

17 of the personnel of such agency to the Board to as18 sist the Board in carrying out its duties, notwith19 standing section 202(a) of the Legislative Reorga20 nization Act of 1946 (2 U.S.C. 72a(a)).

21 (e) POWERS.—

22 (1) HEARINGS AND SESSIONS.—The Board

23 may, for the purpose of carrying out its duties, hold

24 such hearings, sit and act at such times and places,
1105

Title XIII

•HR 2530 IH

1 take such testimony, and receive such evidence, as it

2 considers appropriate.

3 (2) OBTAINING OFFICIAL DATA.—The Board

4 may secure directly from any department or agency

5 of the United States information necessary to enable

6 it to carry out its duties. Upon request of the Chair7 man of the Board, the head of such department or

8 agency shall furnish such information to the Board.

9 (3) ADMINISTRATIVE SUPPORT SERVICES.—The

10 Administrator of General Services shall provide to

11 the Board on a reimbursable basis such administra12 tive support services as the Board may request.

13 (f) DEFINITIONS.—As used in this section:

14 (1) The term ‘‘Board’’ refers to the Board of

15 Estimates established by subsection (a).

16 (2) The term ‘‘CBO’’ refers to the Director of

17 the Congressional Budget Office.

18 (3) The term ‘‘OMB’’ refers to the Director of

19 the Office of Management and Budget.

20 Subtitle B—Discretionary

21 Spending Limits

22 SEC. 14101. DISCRETIONARY SPENDING LIMITS.

23 (a) LIMITS.—Section 601(a)(2) of the Congressional

24 Budget Act of 1974 is amended by striking subparagraphs

25 (A), (B), (C), (D), and (F), by redesignating subpara-
1106

Title XIII

•HR 2530 IH

1 graph (E) as subparagraph (A) and by striking ‘‘and’’ at

2 the end of that subparagraph, and by inserting after sub3 paragraph (A) the following new subparagraphs:

4 ‘‘(B) with respect to fiscal year 1996,

5 $498,113,000,000 in new budget authority and

6 $536,600,000,000 in outlays;

7 ‘‘(C) with respect to fiscal year 1997,

8 $497,200,000,000 in new budget authority and

9 $530,200,000,000 in outlays;

10 ‘‘(D) with respect to fiscal year 1998,

11 $496,700,000,000 in new budget authority and

12 $526,100,000,000 in outlays;

13 ‘‘(E) with respect to fiscal year 1999,

14 $495,700,000,000 in new budget authority and

15 $524,200,000,000 in outlays;

16 ‘‘(F) with respect to fiscal year 2000,

17 $497,700,000,000 in new budget authority and

18 $523,300,000,000 in outlays;

19 ‘‘(G) with respect to fiscal year 2001,

20 $506,700,000,000 in new budget authority and

21 $529,500,000,000 in outlays; and

22 ‘‘(H) with respect to fiscal year 2002,

23 $509,700,000,000 in new budget authority and

24 $529,500,000,000 in outlays.’’.
1107

Title XIII

•HR 2530 IH

1 (b) COMMITTEE ALLOCATIONS AND ENFORCE2 MENT.—Section 602 of the Congressional Budget Act of

3 1974 is amended—

4 (1) in subsection (c), by striking ‘‘1995’’ and

5 inserting ‘‘2002’’ and by striking its last sentence;

6 and

7 (2) in subsection (d), by striking ‘‘1992 TO

8 1995’’ in the side heading and inserting ‘‘1995 TO

9 2002’’ and by striking ‘‘1992 through 1995’’ and in10 serting ‘‘1995 through 2002’’.

11 (c) FIVE-YEAR BUDGET RESOLUTIONS.—Section

12 606 of the Congressional Budget Act of 1974 is amend13 ed—

14 (1) in subsection (a), by striking ‘‘for fiscal

15 year 1992, 1993, 1994, or 1995’’; and

16 (2) in subsection (d)(1), by striking ‘‘for fiscal

17 years 1992, 1993, 1994, and 1995’’ and by striking

18 ‘‘(i) and (ii)’’.

19 (d) EFFECTIVE DATE REPEALER.—(1) Section 607

20 of the Congressional Budget Act of 1974 is repealed.

21 (2) The item relating to section 607 in the table of

22 contents set forth in section 1(b) of the Congressional

23 Budget and Impoundment Control Act of 1974 is re24 pealed.
1108

Title XIII

•HR 2530 IH

1 (e) SEQUESTRATION REGARDING CRIME TRUST

2 FUND.—(1) Section 251A(b)(1) of the Balanced Budget

3 and Emergency Deficit Control Act of 1985 is amended

4 by striking subparagraphs (B), (C), and (D) and its last

5 sentence and inserting the following:

6 ‘‘(B) For fiscal year 1996,

7 $2,227,000,000.

8 ‘‘(C) For fiscal year 1997, $3,846,000,000.

9 ‘‘(D) For fiscal year 1998,

10 $4,901,000,000.

11 ‘‘(E) For fiscal year 1999,

12 $5,639,000,000.

13 ‘‘(F) For fiscal year 2000,

14 $6,225,000,000.

15 ‘‘The appropriate levels of new budget authority are

16 as follows: for fiscal year 1996, $4,087,000,000; for

17 fiscal year 1997, $5,000,000,000; for fiscal year

18 1998, $5,500,000,000; for fiscal year 1999,

19 $6,500,000,000; for fiscal year 2000,

20 $6,500,000,000.’’.

21 (2) The last two sentences of section 310002 of the

22 Violent Crime Control and Law Enforcement Act of 1994

23 (42 U.S.C. 14212) are repealed.
1109

Title XIII

•HR 2530 IH

1 SEC. 14102. TECHNICAL AND CONFORMING CHANGES.

2 (a) GENERAL STATEMENT.—Section 250(b) of the

3 Balanced Budget and Emergency Deficit Control Act of

4 1985 is amended by striking the first sentence and insert5 ing the following: ‘‘This part provides for the enforcement

6 of deficit reduction through discretionary spending limits

7 and pay-as-you-go requirements for fiscal years 1995

8 through 2002.’’.

9 (b) DEFINITIONS.—Section 250(c) of the Balanced

10 Budget and Emergency Deficit Control Act of 1985 is

11 amended—

12 (1) by striking paragraph (6) and inserting the

13 following:

14 ‘‘(6) The term ‘budgetary resources’ means new

15 budget authority, unobligated balances, direct spend16 ing authority, and obligation limitations.’’;

17 (2) in paragraph (9), by striking ‘‘1992’’ and

18 inserting ‘‘1996’’; and

19 (3) in paragraph (14), by striking ‘‘1995’’ and

20 inserting ‘‘2002’’.

21 SEC. 14103. ELIMINATION OF CERTAIN ADJUSTMENTS TO

22 DISCRETIONARY SPENDING LIMITS.

23 Section 251 of the Balanced Budget and Emergency

24 Deficit Control Act of 1985 is amended—

25 (1) in the side heading of subsection (a), by

26 striking ‘‘1991–1998’’ and inserting ‘‘1995–2002’’;
1110

Title XIII

•HR 2530 IH

1 (2) in the first sentence of subsection (b)(1), by

2 striking ‘‘1992, 1993, 1994, 1995, 1996, 1997 or

3 1998’’ and inserting ‘‘1995, 1996, 1997, 1998,

4 1999, 2000, 2001, or 2002’’ and by striking

5 ‘‘through 1998’’ and inserting ‘‘through 2002’’;

6 (3) in subsection (b)(1), by striking subpara7 graphs (B) and (C) and by striking ‘‘the following:’’

8 and all that follows through ‘‘The adjustments’’ and

9 inserting ‘‘the following: the adjustments’’;

10 (4) in subsection (b)(2), by striking ‘‘1991,

11 1992, 1993, 1994, 1995, 1996, 1997, or 1998’’ and

12 inserting ‘‘1995, 1996, 1997, 1998, 1999, 2000,

13 2001, or 2002’’ and by striking ‘‘through 1998’’ and

14 inserting ‘‘through 2002’’; and

15 (5) by repealing subsection (b)(2).

16 Subtitle C—Pay-As-You-Go

17 Procedures

18 SEC. 14201. PERMANENT EXTENSION OF PAY-AS-YOU-GO

19 PROCEDURES; TEN-YEAR SCOREKEEPING.

20 (a) TEN-YEAR SCOREKEEPING.—Section 252 of the

21 Balanced Budget and Emergency Deficit Control Act of

22 1985 is amended—

23 (1) in the side heading of subsection (a), by

24 striking ‘‘FISCAL YEARS 1992–1998’’; and
1111

Title XIII

•HR 2530 IH

1 (2) in subsection (d), by striking ‘‘each fiscal

2 year through fiscal year 1998’’ each place it appears

3 and inserting ‘‘each of the 10 succeeding fiscal years

4 following enactment of any direct spending or re5 ceipts legislation’’.

6 (b) REPEAL OF EMERGENCIES.—Section 252(e) of

7 the Balanced Budget and Emergency Deficit Control Act

8 of 1985 is repealed.

9 (c) PAY-AS-YOU-GO SCORECARD.—Upon enactment

10 of this Act, the Director of the Office of Management and

11 Budget shall reduce the balances of direct spending and

12 receipts legislation applicable to each fiscal year under sec13 tion 252 of the Balanced Budget and Emergency Deficit

14 Control Act of 1985 by an amount equal to the net deficit

15 reduction achieved through the enactment of this Act of

16 direct spending and receipts legislation for that year.

17 (d) PAY-AS-YOU-GO POINT OF ORDER.—Section 311

18 of the Congressional Budget Act of 1974 is amended by

19 redesignating subsection (c) as subsection (d) and by in20 serting after subsection (b) the following new subsection:

21 ‘‘(d) PAY-AS-YOU-GO POINT OF ORDER.—It shall

22 not be in order in the House of Representatives or the

23 Senate to consider any bill, joint resolution, amendment,

24 motion, or conference report that would increase the defi25 cit above the maximum deficit amount set forth in section
1112

Title XIII

•HR 2530 IH

1 253 for the budget year or any of the 9 succeeding fiscal

2 years after the budget year, as measured by the sum of

3 all applicable estimates of direct spending and receipts leg4 islation applicable to that fiscal year.’’.

5 SEC. 14202. ELIMINATION OF EMERGENCY EXCEPTION.

6 (a) SEQUESTRATION.—Section 252(b)(1) of the Bal7 anced Budget and Emergency Deficit Control Act of 1985

8 is amended by striking subparagraph (B), by striking the

9 dash after ‘‘from’’, and by striking ‘‘(A)’’.

10 (b) TECHNICAL CHANGE.—Section 252(c) of the Bal11 anced Budget and Emergency Deficit Control Act of 1985

12 is amended by inserting ‘‘in the manner described in sec13 tion 256.’’ after ‘‘accounts’’ the first place it appears and

14 by striking the remainder of the subsection.

15 Subtitle D—Miscellaneous

16 SEC. 14301. TECHNICAL CORRECTION.

17 Section 258 of the Balanced Budget and Emergency

18 Deficit Control Act of 1985, entitled ‘‘Modification of

19 Presidential Order’’, is repealed.

20 SEC. 14302. REPEAL OF EXPIRATION DATE.

21 (a) EXPIRATION.—Section 275 of the Balanced

22 Budget and Emergency Deficit Control Act of 1985 is

23 amended by repealing subsection (b) and by redesignating

24 subsection (c) as subsection (b).
1113

Title XIII

•HR 2530 IH

1 (b) EXPIRATION.—Section 14002(c)(3) of the Omni2 bus Budget Reconciliation Act of 1993 (2 U.S.C. 900

3 note; 2 U.S.C. 665 note) is repealed.

4 Subtitle E—Deficit Control

5 SEC. 14401. DEFICIT CONTROL.

6 (a) DEFICIT CONTROL.—Part D of the Balanced

7 Budget and Emergency Deficit Control Act of 1985 is

8 amended to read as follows:

9 ‘‘Part D—Deficit Control

10 ‘‘SEC. 261. ESTABLISHMENT OF DEFICIT TARGETS.

11 ‘‘The deficit targets are as follows:

‘‘Fiscal year Deficit (in billions of dollars)

1996 ................................................ 179.2

1997 ................................................ 160.4

1998 ................................................ 132.5

1999 ................................................ 111.0

2000 ................................................ 85.3

2001 ................................................ 41.0

2002 ................................................ 0

12 The deficit target for each fiscal year after 2002 shall be

13 zero.

14 ‘‘SEC. 262. SPECIAL DEFICIT MESSAGE BY PRESIDENT.

15 ‘‘(a) SPECIAL MESSAGE.—If the OMB sequestration

16 preview report submitted under section 254(d) indicates

17 that deficit for the budget year or any outyear will exceed

18 the applicable deficit target, or that the actual deficit tar19 get in the most recently completed fiscal year exceeded the

20 applicable deficit target, the budget submitted under sec21 tion 1105(a) of title 31, United States Code, shall include
1114

Title XIII

•HR 2530 IH

1 a special deficit message that includes proposed legislative

2 changes to offset the net deficit impact of the excess iden3 tified by that OMB sequestration preview report for each

4 such year through any combination of:

5 ‘‘(1) Reductions in outlays.

6 ‘‘(2) Increases in revenues.

7 ‘‘(3) Increases in the deficit targets, if the

8 President submits a written determination that, be9 cause of economic or programmatic reasons, only

10 some or none of the excess should be offset.

11 ‘‘(b) INTRODUCTION OF PRESIDENT’S PACKAGE.—

12 Within 10 days after the President submitted a special

13 deficit message, the text referred to in subsection (a) shall

14 be introduced as a joint resolution in the House of Rep15 resentatives by the chairman of its Committee on the

16 Budget and in the Senate by the chairman of its Commit17 tee on the Budget. If the chairman fails to do so, after

18 the 10th day the resolution may be introduced by any

19 Member of the House of Representatives or the Senate,

20 as the case may be. A joint resolution introduced under

21 this subsection shall be referred to the Committee on the

22 Budget of the House of Representatives or the Senate, as

23 the case may be.
1115

Title XIII

•HR 2530 IH

1 ‘‘SEC. 263. CONGRESSIONAL ACTION REQUIRED.

2 ‘‘(a) IN GENERAL.—The requirements of this section

3 shall be in effect for any year in which the OMB seques4 tration preview report submitted under section 254(d) in5 dicates that the deficit for the budget year or any outyear

6 will exceed the applicable deficit target.

7 ‘‘(b) REQUIREMENTS FOR SPECIAL BUDGET RESO8 LUTION IN THE HOUSE.—The Committee on the Budget

9 in the House shall report not later than March 15 a joint

10 resolution, either as a separate section of the joint resolu11 tion on the budget reported pursuant to section 301 of

12 the Congressional Budget Act of 1974 or as a separate

13 resolution, that includes reconciliation instructions in14 structing the appropriate committees of the House and

15 Senate to report changes in laws within their jurisdiction

16 to offset any excess in the deficit identified in the OMB

17 sequestration preview report submitted under section

18 254(d) as follows:

19 ‘‘(1) Reductions in outlays.

20 ‘‘(2) Increases in revenues.

21 ‘‘(3) Increases in the deficit targets, except that

22 any increase in those targets may not be greater

23 than the increase included in the special reconcili24 ation message submitted by the President.

25 ‘‘(c) PROCEDURE IF HOUSE BUDGET COMMITTEE

26 FAILS TO REPORT REQUIRED RESOLUTION.—
1116

Title XIII

•HR 2530 IH

1 ‘‘(1) AUTOMATIC DISCHARGE OF HOUSE BUDG2 ET COMMITTEE.—In the event that the House Com3 mittee on the Budget fails to report a resolution

4 meeting the requirements of subsection (b), the com5 mittee shall be automatically discharged from fur6 ther consideration of the joint resolution reflecting

7 the President’s recommendations introduced pursu8 ant to section 5(b), and the joint resolution shall be

9 placed on the appropriate calendar.

10 ‘‘(2) CONSIDERATION BY HOUSE OF DIS11 CHARGED RESOLUTION.—Ten days after the House

12 Committee on the Budget has been discharged under

13 paragraph (1), any member may move that the

14 House proceed to consider the resolution. Such mo15 tion shall be highly privileged and not debatable. It

16 shall not be in order to consider any amendment to

17 the resolution except amendments which are ger18 mane and which do not change the net deficit im19 pact of the resolution. Consideration of such resolu20 tion shall be pursuant to the procedures set forth

21 in section 305 of the Congressional Budget Act of

22 1974 and subsection (d).

23 ‘‘(d) CONSIDERATION BY THE HOUSE OF REP24 RESENTATIVES.—(1) It shall not be in order in the House

25 of Representatives to consider a joint resolution on the
1117

Title XIII

•HR 2530 IH

1 budget unless that joint resolution fully addresses the en2 tirety of any excess of the deficit targets as identified in

3 the OMB sequestration preview report submitted under

4 section 254(d) through reconciliation instructions requir5 ing spending reductions, or changes in the deficit targets.

6 ‘‘(2) If the joint resolution on the budget proposes

7 to eliminate or offset less than the entire excess for budget

8 year and any subsequent fiscal years, then the Committee

9 on the Budget shall report a separate resolution increasing

10 the deficit targets for each applicable year by the full

11 amount of the excess not offset or eliminated. It shall not

12 be in order to consider any joint resolution on the budget

13 that does not offset the full amount of the excess until

14 the House of Representatives has agreed to the resolution

15 directing the increase in the deficit targets.

16 ‘‘(e) TRANSMITTAL TO SENATE.—If a joint resolution

17 passes the House pursuant to subsection (d), the Clerk

18 of the House of Representatives shall cause the resolution

19 to be engrossed, certified, and transmitted to the Senate

20 within one calendar day of the day on which the resolution

21 is passed. The resolution shall be referred to the Senate

22 Committee on the Budget.

23 ‘‘(f) REQUIREMENTS FOR SPECIAL BUDGET RESOLU24 TION IN THE SENATE.—The Committee on the Budget in

25 the Senate shall report not later than April 1 a joint reso-
1118

Title XIII

•HR 2530 IH

1 lution, either as a separate section of a budget resolution

2 reported pursuant to section 301 of the Congressional

3 Budget Act of 1974 or as a separate resolution, that shall

4 include reconciliation instructions instructing the appro5 priate committees of the House and Senate to report

6 changes in laws within their jurisdiction to offset any ex7 cess through any combination of:

8 ‘‘(1) Reductions in outlays.

9 ‘‘(2) Increases in revenues.

10 ‘‘(3) Increases in the deficit targets, except that

11 any increase in those targets may not be greater

12 than the increase included in the special reconcili13 ation message submitted by the President.

14 ‘‘(g) PROCEDURE IF SENATE BUDGET COMMITTEE

15 FAILS TO REPORT REQUIRED RESOLUTION.—

16 ‘‘(1) AUTOMATIC DISCHARGE OF SENATE BUDG17 ET COMMITTEE.—In the event that the Senate Com18 mittee on the Budget fails to report a resolution

19 meeting the requirements of subsection (f), the com20 mittee shall be automatically discharged from fur21 ther consideration of the joint resolution reflecting

22 the President’s recommendations introduced pursu23 ant to section 5(b), and the joint resolution shall be

24 placed on the appropriate calendar.
1119

Title XIII

•HR 2530 IH

1 ‘‘(2) CONSIDERATION BY SENATE OF DIS2 CHARGED RESOLUTION.—Ten days after the Senate

3 Committee on the Budget has been discharged under

4 paragraph (1), any member may move that the Sen5 ate proceed to consider the resolution. Such motion

6 shall be privileged and not debatable. Consideration

7 of such resolution shall be pursuant to the proce8 dures set forth in section 305 of the Congressional

9 Budget Act of 1974 and subsection (h).

10 ‘‘(h) CONSIDERATION BY SENATE.—(1) It shall not

11 be in order in the Senate to consider a joint resolution

12 on the budget unless that joint resolution fully addresses

13 the entirety of any excess of the deficit targets as identi14 fied in the OMB sequestration report submitted under sec15 tion 254(d) through reconciliation instructions requiring

16 deficit reductions, or changes in the deficit targets.

17 ‘‘(2) If the joint resolution on the budget proposes

18 to eliminate or offset less than the entire overage of a

19 budget year, then the Committee on the Budget shall re20 port a resolution increasing the deficit target by the full

21 amount of the overage not eliminated. It shall not be in

22 order to consider any joint resolution on the budget that

23 does not offset the entire amount of the overage until the

24 Senate has agreed to the resolution directing the increase

25 in the deficit targets.
1120

Title XIII

•HR 2530 IH

1 ‘‘(i) CONFERENCE REPORTS MUST FULLY ADDRESS

2 DEFICIT EXCESS.—It shall not be in order in the House

3 of Representatives or the Senate to consider a conference

4 report on a joint resolution on the budget unless that con5 ference report fully addresses the entirety of any excess

6 identified by the OMB sequestration preview report sub7 mitted pursuant to section 254(d) through reconciliation

8 instructions requiring deficit reductions, or changes in the

9 deficit targets.

10 ‘‘SEC. 264. COMPREHENSIVE SEQUESTRATION.

11 ‘‘(a) SEQUESTRATION BASED ON BUDGET-YEAR

12 SHORTFALL.—The amount to be sequestered for the

13 budget year is the amount (if any) by which deficit exceeds

14 the cap for that year under section 261 or the amount

15 that the actual deficit in the preceding fiscal year exceeded

16 the applicable deficit target.

17 ‘‘(b) SEQUESTRATION.—Within 15 days after Con18 gress adjourns to end a session and on May 15, there shall

19 be a sequestration to reduce the amount of deficit in the

20 current policy baseline and to repay any deficit excess in

21 the most recently completed fiscal year by the amounts

22 specified in subsection (b). The amount required to be se23 questered shall be achieved by reducing each spending ac24 count (or activity within an account) by the uniform per25 centage necessary to achieve that amount.’’.
1121

Title XIII

•HR 2530 IH

1 (c) CONFORMING CHANGES.—(1) The table of sec2 tions set forth in section 200 of the Balanced Budget and

3 Emergency Deficit Control Act of 1985 is amended by

4 striking the items relating to part D and inserting the fol5 lowing:

‘‘Sec. 261. Establishment of deficit targets.

‘‘Sec. 262. Special deficit message by President.

‘‘Sec. 263. Congressional action required.

‘‘Sec. 264. Comprehensive sequestration.’’.

6 (2) Section 250(c) of the Balanced Budget and

7 Emergency Deficit Control Act of 1985 is amended by in8 serting ‘‘or in part D’’ after ‘‘As used in this part’’.

9 SEC. 14402. SEQUESTRATION PROCESS.

10 (a) ESTIMATING ASSUMPTIONS, REPORTS, AND OR11 DERS.—Sections 254, 255, and 256 of the Balanced

12 Budget and Emergency Deficit Control Act of 1985 are

13 amended to read as follows:

14 ‘‘SEC. 254. ESTIMATING ASSUMPTIONS, REPORTS, AND OR15 DERS.

16 ‘‘(a) TIMETABLE.—The timetable with respect to this

17 part for any budget year is as follows:

Date: Action to be completed:

Dec. 31 .......................................... OMB and CBO sequestration preview

reports submitted to Board.

Jan. 15 .......................................... Board selects sequestration preview

report.

The President’s budget submission OMB publishes sequestration preview

report.

May 1 ............................................ OMB and CBO sequestration reports

submitted to Board.

5 days later .................................... Board selected midsession sequestration report.

May 15 .......................................... President issues sequestration order.
1122

Title XIII

•HR 2530 IH

Date: Action to be completed:

August 29 ...................................... President’s midsession review; notification regarding military personnel.

Within 10 days after end of session.OMB and CBO final budget year sequestration reports submitted to

Board.

5 days later .................................... Board selects final sequestration report; President issues sequestration

order.

1 ‘‘(b) SUBMISSION AND AVAILABILITY OF REPORTS.—

2 Each report required by this section shall be submitted,

3 in the case of CBO, to the House of Representatives, the

4 Senate, OMB, and the Board and, in the case of OMB,

5 to the House of Representatives, the Senate, the Presi6 dent, and the Board on the day it is issued. On the follow7 ing day a notice of the report shall be printed in the Fed8 eral Register.

9 ‘‘(c) EXCHANGE OF PRELIMINARY CURRENT POLICY

10 BASELINES.—On December 15 or 3 weeks after Congress

11 adjourns to end a session, whichever is later, OMB and

12 CBO shall exchange their preliminary current policy base13 lines for the budget-year session starting in January.

14 ‘‘(d) SEQUESTRATION PREVIEW REPORTS.—

15 ‘‘(1) REPORTING REQUIREMENT.—On Decem16 ber 31 or 2 weeks after exchanging preliminary cur17 rent policy baselines, whichever is later, OMB and

18 CBO shall each submit a sequestration preview re19 port.

20 ‘‘(2) CONTENTS.—Each preview report shall set

21 forth the following:
1123

Title XIII

•HR 2530 IH

1 ‘‘(A) MAJOR ESTIMATING ASSUMPTIONS.—

2 The major estimating assumptions for the cur3 rent year, the budget year, and the outyears,

4 and an explanation of them.

5 ‘‘(B) CURRENT POLICY BASELINE.—A de6 tailed display of the current policy baseline for

7 the current year, the budget year, and the out8 years, with an explanation of changes in the

9 baseline since it was last issued that includes

10 the effect of policy decisions made during the

11 intervening period and an explanation of the

12 differences between OMB and CBO for each

13 item set forth in the report.

14 ‘‘(C) DEFICITS.—Estimates for the most

15 recently completed fiscal year, the budget year,

16 and each subsequent year through fiscal year

17 2002 of the deficits or surpluses in the current

18 policy baseline.

19 ‘‘(D) DISCRETIONARY SPENDING LIMITS.—

20 Estimates for the current year and each subse21 quent year through 2002 of the applicable dis22 cretionary spending limits for each category and

23 an explanation of any adjustments in such lim24 its under section 251.
1124

Title XIII

•HR 2530 IH

1 ‘‘(E) SEQUESTRATION OF DISCRETIONARY

2 ACCOUNTS.—Estimates of the uniform percent3 age and the amount of budgetary resources to

4 be sequestered from discretionary programs

5 given the baseline level of appropriations, and if

6 the President chooses to exempt some or all

7 military personnel from sequestration, the effect

8 of that decision on the percentage and amounts.

9 ‘‘(F) PAY-AS-YOU-GO SEQUESTRATION RE10 PORTS.—The preview reports shall set forth, for

11 the current year and the budget year, estimates

12 for each of the following:

13 ‘‘(i) The amount of net deficit in14 crease or decrease, if any, calculated under

15 section 252(b).

16 ‘‘(ii) A list identifying each law en17 acted and sequestration implemented after

18 the date of enactment of this section in19 cluded in the calculation of the amount of

20 deficit increase or decrease and specifying

21 the budgetary effect of each such law.

22 ‘‘(iii) The sequestration percentage or

23 (if the required sequestration percentage is

24 greater than the maximum allowable per25 centage for medicare) percentages nec-
1125

Title XIII

•HR 2530 IH

1 essary to eliminate a deficit increase under

2 section 252(c).

3 ‘‘(G) REQUIREMENTS FOR THE DEFICIT.—

4 An estimate of the amount of deficit reduction,

5 if any, to be achieved for the budget year and

6 the current year necessary to comply with the

7 deficit targets or to repay any deficit excess in

8 the preceding fiscal year.

9 ‘‘(H) DEFICIT SEQUESTRATION.—Esti10 mates of the uniform percentage and the

11 amount of comprehensive sequestration of

12 spending programs that will be necessary under

13 section 264.

14 ‘‘(I) AMOUNT OF CHANGE IN DEFICIT PRO15 JECTIONS.—Amounts that deficit projections

16 for the current year and the budget year have

17 changed as a result of changes in economic and

18 technical assumptions occurring after the enact19 ment of the Omnibus Budget Reconciliation Act

20 of 1995.

21 ‘‘(e) SELECTION OF OFFICIAL SEQUESTRATION PRE22 VIEW REPORT.—On January 15 or 2 weeks after receiving

23 the OMB and CBO sequestration preview reports, which24 ever is later, the Board shall choose either the OMB or

25 CBO sequestration preview report as the official report for
1126

Title XIII

•HR 2530 IH

1 purposes of this Act. The Board shall add to the chosen

2 report an analysis of which reports submitted in previous

3 years have proven to be more accurate and recommenda4 tions about methods of improving the accuracy of future

5 reports. That report shall be set forth, without change,

6 in the budget submitted by the President under section

7 1105(a) of title 31, United States Code, for the budget

8 year.

9 ‘‘(f) AGREEING ON EARLIER DATES.—The Chairman

10 of the Board may set earlier dates for subsections (c), (d),

11 and (e) if OMB and CBO concur.

12 ‘‘(g) NOTIFICATION REGARDING MILITARY PERSON13 NEL.—On or before August 29, the President shall notify

14 the Congress of the manner in which he intends to exercise

15 flexibility with respect to military personnel accounts

16 under section 251(a)(3).

17 ‘‘(h) FINAL SEQUESTRATION REPORTS.—

18 ‘‘(1) REPORTING REQUIREMENT.—Not later

19 than 10 days following the end of a budget-year ses20 sion, OMB and CBO shall each submit a final se21 questration report. On May 1 of each year, OMB

22 and CBO shall each submit a midyear sequestration

23 report for the current year.

24 ‘‘(2) CONTENTS.—Each such report shall be

25 based upon laws enacted through the date of the re-
1127

Title XIII

•HR 2530 IH

1 port and shall set forth all the information and esti2 mates required of a sequestration preview report re3 quired by subsections (d)(2)(D) through (H). In ad4 dition, that report shall include—

5 ‘‘(A) for each account to be sequestered,

6 the baseline level of sequestrable budgetary re7 sources and the resulting reductions in new

8 budget authority and outlays; and

9 ‘‘(B) the effects of sequestration on the

10 level of outlays for each fiscal year through

11 2002.

12 ‘‘(i) SELECTION OF OFFICIAL FINAL SEQUESTRA13 TION REPORT.—Not later than 5 days after receiving the

14 final OMB and CBO sequestration reports, the Board

15 shall choose either the OMB or CBO final sequestration

16 report as the official report for purposes of this Act, and

17 shall issue a report stating that decision and making any

18 comments that the Board chooses.

19 ‘‘(j) PRESIDENTIAL ORDER.—(1) On the day that the

20 Board chooses a final sequestration report, the President

21 shall issue an order fully implementing without change all

22 sequestrations required by—

23 ‘‘(A) the final sequestration report that requires

24 the lesser amount of discretionary sequestration

25 under section 250; and
1128

Title XIII

•HR 2530 IH

1 ‘‘(B) the final sequestration report that requires

2 the lesser total amount of deficit sequestration under

3 section 264.

4 The order shall be effective on issuance and shall be issued

5 only if sequestration is required.

6 ‘‘(2)(A) If both the CBO and OMB final sequestra7 tion reports require a sequestration of discretionary pro8 grams, and the Board chooses the report requiring the

9 greater sequestration, then a positive amount equal to the

10 difference between the CBO and OMB estimates of discre11 tionary new budget authority for the budget year shall be

12 subtracted from the budget-year column and added to the

13 column for the first outyear of the discretionary scorecard

14 under section 107 as though that amount had been en15 acted in the next session of Congress.

16 ‘‘(B) If one final sequestration report requires a se17 questration of discretionary programs and the Board

18 chooses that report, then an amount equal to the dif19 ference between that report’s estimate of discretionary

20 new budget authority for the budget year and the discre21 tionary funding limit for that year shall be subtracted

22 from the budget-year column and added to column for the

23 first outyear of the discretionary scorecard under section

24 107 as though that amount had been enacted in the next

25 session of Congress.
1129

Title XIII

•HR 2530 IH

1 ‘‘(k) USE OF MAJOR ESTIMATING ASSUMPTIONS AND

2 SCOREKEEPING CONVENTIONS.—In the estimates, projec3 tions, and reports under subsections (c) and (d), CBO and

4 OMB shall use the best and most recent estimating as5 sumptions available. In all other reports required by this

6 section and in all estimates or calculations required by this

7 Act, CBO and OMB shall use—

8 ‘‘(1) current-year and budget-year discretionary

9 funding limits chosen by the Board and the esti10 mates chosen by the Board of the deficit reduction

11 necessary to comply with the deficit targets in the

12 budget year;

13 ‘‘(2) in estimating the effects of bills and dis14 cretionary regulations, the major estimating assump15 tions most recently chosen by the Board, except to

16 the extent that they must be altered to reflect actual

17 results occurring or measured after the Board’s

18 choice; and

19 ‘‘(3) scorekeeping conventions determined after

20 consultation among the House and Senate Commit21 tees on the Budget, CBO, and OMB.

22 In applying the two previous sentences, the major estimat23 ing assumptions and other calculations required by this

24 Act that are included in the statement of managers accom25 panying the conference report on this Act shall be consid-
1130

Title XIII

•HR 2530 IH

1 ered, for all purposes of this Act, to be the report of the

2 Board chosen under subsection (e) for fiscal year 1993.

3 ‘‘(l) BILL COST ESTIMATES.—Within 10 days after

4 the enactment of any discretionary appropriations, direct

5 spending, or receipts legislation, CBO and OMB shall

6 transmit to each other, the Board, and to the Congress

7 an estimate of the budgetary effects of that law, following

8 the estimating requirements of this section. Those esti9 mates may not change after the 10-day period except—

10 ‘‘(1) to the extent those estimates are subsumed

11 within (and implicitly changed by) the estimates

12 made in preparation of a new baseline under sub13 sections (c), (d), and (h);

14 ‘‘(2) to reflect a choice of the Board regarding

15 an official set of estimates under subsections (l) and

16 (n); and

17 ‘‘(3) to correct clerical errors or errors in the

18 application of this Act.

19 ‘‘SEC. 255. EXEMPT PROGRAMS AND ACTIVITIES.

20 ‘‘The following budget accounts, activities within ac21 counts, or income shall be exempt from sequestration—

22 ‘‘(1) net interest;

23 ‘‘(2) deposit insurance and pension benefit

24 guarantees;
1131

Title XIII

•HR 2530 IH

1 ‘‘(3) all payments to trust funds from excise

2 taxes or other receipts or collections properly cred3 itable to those trust funds;

4 ‘‘(4) offsetting receipts and collections;

5 ‘‘(5) all payments from one Federal direct

6 spending budget account to another Federal budget

7 account; all intragovernmental funds including those

8 from which funding is derived primarily from other

9 Government accounts;

10 ‘‘(6) expenses to the extent they result from

11 private donations, bequests, or voluntary contribu12 tions to the Government;

13 ‘‘(7) nonbudgetary activities, including but not

14 limited to—

15 ‘‘(A) credit liquidating and financing ac16 counts;

17 ‘‘(B) the Pension Benefit Guarantee Cor18 poration Trust Funds;

19 ‘‘(C) the Thrift Savings Fund;

20 ‘‘(D) the Federal Reserve System; and

21 ‘‘(E) appropriations for the District of Co22 lumbia to the extent they are appropriations of

23 locally raised funds;

24 ‘‘(8) payments resulting from Government in25 surance, Government guarantees, or any other form
1132

Title XIII

•HR 2530 IH

1 of contingent liability, to the extent those payments

2 result from contractual or other legally binding com3 mitments of the Government at the time of any se4 questration;

5 ‘‘(9) the following accounts, which largely fulfill

6 requirements of the Constitution or otherwise make

7 payments to which the Government is committed—

8 Administration of Territories, Northern Mari9 ana Islands Covenant grants (14–0412–0–1–806);

10 Bureau of Indian Affairs, miscellaneous pay11 ments to Indians (14–2303–0–1–452);

12 Bureau of Indian Affairs, miscellaneous trust

13 funds, tribal trust funds (14–9973–0–7–999);

14 Claims, defense;

15 Claims, judgments, and relief act (20–1895–0–

16 1–806);

17 Compact of Free Association, economic assist18 ance pursuant to Public Law 99–658 (14–0415–0–

19 1–806);

20 Compensation of the President (11–0001–0–1–

21 802);

22 Customs Service, miscellaneous permanent ap23 propriations (20–9992–0–2–852);

24 Eastern Indian land claims settlement fund

25 (14–2202–0–1–806)
1133

Title XIII

•HR 2530 IH

1 Farm Credit System Financial Assistance Cor2 poration, interest payments (20–1850–0–1–351);

3 Internal Revenue collections of Puerto Rico

4 (20–5737–0–2–852);

5 Panama Canal Commission, operating expenses

6 and capital outlay (95–5190–0–2–403);

7 Payments of Vietnam and USS Pueblo pris8 oner-of-war claims (15–0104–0–1–153);

9 Payments to copyright owners (03–5175–0–2–

10 376);

11 Payments to the United States territories, fiscal

12 assistance (14–0418–0–1–801);

13 Salaries of Article III judges;

14 Soldier’s and Airmen’s Home, payment of

15 claims (84–8930–0–7–705);

16 Washington Metropolitan Area Transit Author17 ity, interest payments (46–0300–0–1–401).

18 ‘‘(10) the following noncredit special, revolving,

19 or trust-revolving funds—

20 Coinage profit fund (20–5811–0–2–803);

21 Exchange Stabilization Fund (20–4444–0–3–

22 155);

23 Foreign Military Sales trust fund (11–82232–

24 0–7–155);
1134

Title XIII

•HR 2530 IH

1 ‘‘(11)(A) any amount paid as regular unemploy2 ment compensation by a State from its account in

3 the Unemployment Trust Fund (established by sec4 tion 904(a) of the Social Security Act);

5 ‘‘(B) any advance made to a State from the

6 Federal unemployment account (established by sec7 tion 904(g) of such Act) under title XII of such Act

8 and any advance appropriated to the Federal unem9 ployment account pursuant to section 1203 of such

10 Act;

11 ‘‘(C) any payment made from the Federal Em12 ployees Compensation Account (as established under

13 section 909 of such Act) for the purpose of carrying

14 out chapter 85 of title 5, United States Code, and

15 funds appropriated or transferred to or otherwise

16 deposited in such Account;

17 ‘‘(12) the earned income tax credit (payments

18 to individuals pursuant to section 32 of the Internal

19 Revenue Code of 1986);

20 ‘‘(13) the uranium enrichment program; and

21 ‘‘(14) benefits payable under the old-age, survi22 vors, and disability insurance program established

23 under title II of the Social Security Act.

24 ‘‘SEC. 256. GENERAL AND SPECIAL SEQUESTRATION RULES.

25 ‘‘(a) PERMANENT SEQUESTRATION OF DEFICIT.—
1135

Title XIII

•HR 2530 IH

1 ‘‘(1) The purpose of any sequestration under

2 this Act is to ensure deficit reduction in the budget

3 year and all subsequent fiscal years, so that the

4 budget-year cap in section 262 is not exceeded.

5 ‘‘(2) Obligations in sequestered spending ac6 counts shall be reduced in the fiscal year in which

7 a sequestration occurs and in all succeeding fiscal

8 years. Notwithstanding any other provision of this

9 section, after the first deficit sequestration, any later

10 sequestration shall reduce spending outlays by an

11 amount in addition to, rather than in lieu of, the re12 duction in spending outlays in place under the exist13 ing sequestration or sequestrations.

14 ‘‘(b) UNIFORM PERCENTAGES.—

15 ‘‘(1) In calculating the uniform percentage ap16 plicable to the sequestration of all spending pro17 grams or activities under section 266 the

18 sequestrable base for spending programs and activi19 ties is the total budget-year level of outlays for those

20 programs or activities in the current policy baseline

21 minus—

22 ‘‘(A) those budget-year outlays resulting

23 from obligations incurred in the current or

24 prior fiscal years, and
1136

Title XIII

•HR 2530 IH

1 (B) those budget-year outlays resulting

2 from exemptions under section 253.

3 ‘‘(2) For any direct spending program in

4 which—

5 ‘‘(A) outlays pay for entitlement benefits,

6 (B) a budget-year sequestration takes ef7 fect after the 1st day of the budget year, and

8 ‘‘(C) that delay reduces the amount of en9 titlement authority that is subject to sequestra10 tion in the budget year,

11 the uniform percentage otherwise applicable to the

12 sequestration of that program in the budget year

13 shall be increased as necessary to achieve the same

14 budget-year outlay reduction in that program as

15 would have been achieved had there been no delay.

16 ‘‘(3) If the uniform percentage otherwise appli17 cable to the budget-year sequestration of a program

18 or activity is increased under paragraph (2), then it

19 shall revert to the uniform percentage calculated

20 under paragraph (1) when the budget year is com21 pleted.

22 ‘‘(c) GENERAL RULES FOR SEQUESTRATION.—

23 ‘‘(1) INDEFINITE AUTHORITY.—Except as oth24 erwise provided, sequestration in accounts for which

25 obligations are indefinite shall be taken in a manner
1137

Title XIII

•HR 2530 IH

1 to ensure that obligations in the fiscal year of a se2 questration and succeeding fiscal years are reduced,

3 from the level that would actually have occurred, by

4 the applicable sequestration percentage or percent5 ages.

6 ‘‘(2) CANCELLATION OF BUDGETARY RE7 SOURCES.—Budgetary resources sequestered from

8 any account other than an entitlement trust, special,

9 or revolving fund account shall revert to the Treas10 ury and be permanently canceled or repealed.

11 ‘‘(3) INDEXED BENEFIT PAYMENTS.—If, under

12 any entitlement program—

13 ‘‘(A) benefit payments are made to persons

14 or governments more frequently than once a

15 year, and

16 ‘‘(B) the amount of entitlement authority

17 is periodically adjusted under existing law to re18 flect changes in a price index,

19 then for the first fiscal year to which a sequestration

20 order applies, the benefit reductions in that program

21 accomplished by the order shall take effect starting

22 with the payment made at the beginning of January

23 or 7 weeks after the order is issued, whichever is

24 later. For the purposes of this subsection, Veterans
1138

Title XIII

•HR 2530 IH

1 Compensation shall be considered a program that

2 meets the conditions of the preceding sentence.

3 ‘‘(4) PROGRAMS, PROJECTS, OR ACTIVITIES.—

4 Except as otherwise provided, the same percentage

5 sequestration shall apply to all programs, projects,

6 and activities within a budget account (with pro7 grams, projects, and activities as delineated in the

8 appropriation Act or accompanying report for the

9 relevant fiscal year covering that account, or for ac10 counts not included in appropriation Acts, as delin11 eated in the most recently submitted President’s

12 budget).

13 ‘‘(5) IMPLEMENTING REGULATIONS.—Adminis14 trative regulations or similar actions implementing

15 the sequestration of a program or activity shall be

16 made within 120 days of the effective date of the se17 questration of that program or activity.

18 ‘‘(6) DISTRIBUTION FORMULAS.—To the extent

19 that distribution or allocation formulas differ at dif20 ferent levels of budgetary resources within an ac21 count, program, project, or activity, a sequestration

22 shall be interpreted as producing a lower total ap23 propriation, with that lower appropriation being obli24 gated as though it had been the pre-sequestration

25 appropriation and no sequestration had occurred.
1139

Title XIII

•HR 2530 IH

1 ‘‘(7) CONTINGENT FEES.—In any account for

2 which fees charged to the public are legally deter3 mined by the level of appropriations, fees shall be

4 charged on the basis of the presequestration level of

5 appropriations.

6 ‘‘(d) NON-JOBS PORTION OF AFDC.—Any seques7 tration order shall accomplish the full amount of any re8 quired reduction in payments for the non-jobs portion of

9 the aid to families with dependant children program under

10 the Social Security Act by reducing the Federal reim11 bursement percentage (for the fiscal year involved) by

12 multiplying that reimbursement percentage, on a State13 by-State basis, by the uniform percentage applicable to the

14 sequestration of nonexempt direct spending programs or

15 activities.

16 ‘‘(e) JOBS PORTION OF AFDC.—

17 ‘‘(1) FULL AMOUNT OF SEQUESTRATION RE18 QUIRED.—Any sequestration order shall accomplish

19 the full amount of any required reduction of the job

20 opportunities and basic skills training program

21 under section 402(a)(19), and part F of title VI, of

22 the Social Security Act, in the manner specified in

23 this subsection. Such an order may not reduce any

24 Federal matching rate pursuant to section 403(l) of

25 the Social Security Act.
1140

Title XIII

•HR 2530 IH

1 ‘‘(2) NEW ALLOTMENT FORMULA.—

2 ‘‘(A) GENERAL RULE.—Notwithstanding

3 section 403(k) of the Social Security Act, each

4 State’s percentage share of the amount avail5 able after sequestration for direct spending pur6 suant to section 403(l) of such Act shall be

7 equal to that percentage of the total amount

8 paid to the States pursuant to such section

9 403(l) for the prior fiscal year that is rep10 resented by the amount paid to such State pur11 suant to such section 403(l) for the prior fiscal

12 year, except that a State may not be allotted an

13 amount under this subparagraph that exceeds

14 the amount that would have been allotted to

15 such State pursuant to such section 403(k) had

16 the sequestration not been in effect.

17 ‘‘(B) REALLOTMENT OF AMOUNTS RE18 MAINING UNALLOTTED AFTER APPLICATION OF

19 GENERAL RULE.—Any amount made available

20 after sequestration for direct spending pursuant

21 to section 403(l) of the Social Security Act that

22 remains unallotted as a result of subparagraph

23 (A) of this paragraph shall be allotted among

24 the States in proportion to the absolute dif25 ference between the amount allotted, respec-
1141

Title XIII

•HR 2530 IH

1 tively, to each State as a result of such sub2 paragraph and the amount that would have

3 been allotted to such State pursuant to section

4 403(k) of such Act had the sequestration not

5 been in effect, except that a State may not be

6 allotted an amount under this subparagraph

7 that results in a total allotment to the State

8 under this paragraph of more than the amount

9 that would have been allotted to such State

10 pursuant to such section 403(k) had the seques11 tration not been in effect.

12 ‘‘(f) CHILD SUPPORT ENFORCEMENT PROGRAM.—

13 Any sequestration order shall accomplish the full amount

14 of any required reduction in payments under sections 455

15 and 458 of the Social Security Act by reducing the Fed16 eral matching rate for State administrative costs under

17 the program, as specified (for the fiscal year involved) in

18 section 455(a) of such Act, to the extent necessary to re19 duce such expenditures by that amount.

20 ‘‘(g) COMMODITY CREDIT CORPORATION.—

21 ‘‘(1) EFFECTIVE DATE.—For the Commodity

22 Credit Corporation, the date on which a sequestra23 tion order takes effect in a fiscal year shall vary for

24 each crop of a commodity. In general, the sequestra25 tion order shall take effect when issued, but for each
1142

Title XIII

•HR 2530 IH

1 crop of a commodity for which 1-year contracts are

2 issued as an entitlement, the sequestration order

3 shall take effect with the start of the sign-up period

4 for that crop that begins after the sequestration

5 order is issued. Payments for each contract in such

6 a crop shall be reduced under the same terms and

7 conditions.

8 ‘‘(2) DAIRY PROGRAM.—(A) As the sole means

9 of achieving any reduction in outlays under the milk

10 price-support program, the Secretary of Agriculture

11 shall provide for a reduction to be made in the price

12 received by producers for all milk produced in the

13 United States and marketed by producers for com14 mercial use. That price reduction (measured in cents

15 per hundredweight of milk marketed) shall occur

16 under subparagraph (A) of section 201(d)(2) of the

17 Agricultural Act of 1949 (7 U.S.C. 1446(d)(2)(A)),

18 shall begin on the day any sequestration order is is19 sued, and shall not exceed the aggregate amount of

20 the reduction in outlays under the milk price-support

21 program, that otherwise would have been achieved

22 by reducing payments made for the purchase of milk

23 or the products of milk under this subsection during

24 that fiscal year.
1143

Title XIII

•HR 2530 IH

1 ‘‘(3) EFFECT OF DELAY.—For purposes of sub2 section (b)(1), the sequestrable base for the Com3 modity Credit Corporation is the budget-year level of

4 gross outlays resulting from new budget authority

5 that is subject to reduction under paragraphs (1)

6 and (2), and subsection (b)(2) shall not apply.

7 ‘‘(4) CERTAIN AUTHORITY NOT TO BE LIM8 ITED.—Nothing in this Act shall restrict the Cor9 poration in the discharge of its authority and re10 sponsibility as a corporation to buy and sell com11 modities in world trade, or limit or reduce in any

12 way any appropriation that provides the Corporation

13 with funds to cover its net realized losses.

14 ‘‘(h) EXTENDED UNEMPLOYMENT COMPENSA15 TION.—(1) A State may reduce each weekly benefit pay16 ment made under the Federal-State Extended Unemploy17 ment Compensation Act of 1970 for any week of unem18 ployment occurring during any period with respect to

19 which payments are reduced under any sequestration

20 order by a percentage not to exceed the percentage by

21 which the Federal payment to the State under section 204

22 of such Act is to be reduced for such week as a result

23 of such order.

24 ‘‘(2) A reduction by a State in accordance with sub25 paragraph (A) shall not be considered as a failure to fulfill
1144

Title XIII

•HR 2530 IH

1 the requirements of section 3304(a)(11) of the Internal

2 Revenue Code of 1986.

3 ‘‘(i) FEDERAL EMPLOYEES HEALTH BENEFITS

4 FUND.—For the Federal Employees Health Benefits

5 Fund, a sequestration order shall take effect with the next

6 open season. The sequestration shall be accomplished by

7 annual payments from that Fund to the General Fund of

8 the Treasury. Those annual payments shall be financed

9 solely by charging higher premiums. For purposes of sub10 section (b)(1), the sequestrable base for the Fund is the

11 budget-year level of gross outlays resulting from claims

12 paid after the sequestration order takes effect, and sub13 section (b)(2) shall not apply.

14 ‘‘(j) FEDERAL HOUSING FINANCE BOARD.—Any se15 questration of the Federal Housing Finance Board shall

16 be accomplished by annual payments (by the end of each

17 fiscal year) from that Board to the general fund of the

18 Treasury, in amounts equal to the uniform sequestration

19 percentage for that year times the gross obligations of the

20 Board in that year.

21 ‘‘(k) FEDERAL PAY.—

22 ‘‘(1) IN GENERAL.—Except as provided in sec23 tion 10(b)(3), new budget authority to pay Federal

24 personnel from direct spending accounts shall be re25 duced by the uniform percentage calculated under
1145

Title XIII

•HR 2530 IH

1 section 264, as applicable, but no sequestration

2 order may reduce or have the effect of reducing the

3 rate of pay to which any individual is entitled under

4 any statutory pay system (as increased by any

5 amount payable under section 5304 of title 5, Unit6 ed States Code, or section 302 of the Federal Em7 ployees Pay Comparability Act of 1990) or the rate

8 of any element of military pay to which any individ9 ual is entitled under title 37, United States Code, or

10 any increase in rates of pay which is scheduled to

11 take effect under section 5303 of title 5, United

12 States Code, section 1009 of title 37, United States

13 Code, or any other provision of law.

14 ‘‘(2) DEFINITIONS.—For purposes of this sub15 section:

16 ‘‘(A) The term ‘statutory pay system’ shall

17 have the meaning given that term in section

18 5302(1) of title 5, United States Code.

19 ‘‘(B) The term ‘elements of military pay’

20 means—

21 ‘‘(i) the elements of compensation of

22 members of the uniformed services speci23 fied in section 1009 of title 37, United

24 States Code,
1146

Title XIII

•HR 2530 IH

1 ‘‘(ii) allowances provided members of

2 the uniformed services under sections 403a

3 and 405 of such title, and

4 ‘‘(iii) cadet pay and midshipman pay

5 under section 203(c) of such title.

6 ‘‘(C) The term ‘uniformed services’ shall

7 have the meaning given that term in section

8 101(3) of title 37, United States Code.

9 ‘‘(l) GUARANTEED STUDENT LOANS.—(A) For all

10 student loans under part B of title IV of the Higher Edu11 cation Act of 1965 made on or after the date of a seques12 tration, the origination fees shall be increased by a uni13 form percentage sufficient to produce the dollar savings

14 in student loan programs for the fiscal year of the seques15 tration required by section 264, and all subsequent origi16 nation fees shall be increased by the same percentage, not17 withstanding any other provision of law.

18 ‘‘(B) The origination fees to which paragraph (A) ap19 plies are those specified in sections 428H(f)(1) and 438(c)

20 of that Act.

21 ‘‘(m) INSURANCE PROGRAMS.—Any sequestration in

22 a Federal program that sells insurance contracts to the

23 public (including the Federal Crop Insurance Fund, the

24 National Insurance Development Fund, the National

25 Flood Insurance Fund, insurance activities of the Over-
1147

Title XIII

•HR 2530 IH

1 seas Private Insurance Corporation, and Veterans’ life in2 surance programs) shall be accomplished by annual pay3 ments from the insurance fund or account to the general

4 fund of the Treasury. The amount of each annual payment

5 by each such fund or account shall be the amount received

6 by the fund or account by increasing premiums on con7 tracts entered into after the date a sequestration order

8 takes effect by the uniform sequestration percentage, and

9 premiums shall be increased accordingly.

10 ‘‘(n) MEDICAID.—The November 15th estimate of

11 medicaid spending by States shall be the base estimate

12 from which the uniform percentage reduction under any

13 sequestration, applied across-the-board by State, shall be

14 made. Succeeding Federal payments to States shall reflect

15 that reduction. The Health Care Financing Administra16 tion shall reconcile actual medicaid spending for each fis17 cal year with the base estimate as reduced by the uniform

18 percentage, and adjust each State’s grants as soon as

19 practicable, but no later than 100 days after the end of

20 the fiscal year to which the base estimate applied, to com21 ply with the sequestration order.

22 ‘‘(o) MEDICARE.—

23 ‘‘(1) TIMING OF APPLICATION OF REDUC24 TIONS.—
1148

Title XIII

•HR 2530 IH

1 ‘‘(A) IN GENERAL.—Except as provided in

2 subparagraph (B), if a reduction is made in

3 payment amounts pursuant to a sequestration

4 order, the reduction shall be applied to payment

5 for services furnished after the effective date of

6 the order. For purposes of the previous sen7 tence, in the case of inpatient services furnished

8 for an individual, the services shall be consid9 ered to be furnished on the date of the individ10 ual’s discharge from the inpatient facility.

11 ‘‘(B) PAYMENT ON THE BASIS OF COST

12 REPORTING PERIODS.—In the case in which

13 payment for services of a provider of services is

14 made under title XVIII of the Social Security

15 Act on a basis relating to the reasonable cost

16 incurred for the services during a cost reporting

17 period of the provider, if a reduction is made in

18 payment amounts pursuant to a sequestration

19 order, the reduction shall be applied to payment

20 for costs for such services incurred at any time

21 during each cost reporting period of the pro22 vider any part of which occurs after the effec23 tive date of the order, but only (for each such

24 cost reporting period) in the same proportion as
1149

Title XIII

•HR 2530 IH

1 the fraction of the cost reporting period that oc2 curs after the effective date of the order.

3 ‘‘(2) NO INCREASE IN BENEFICIARY CHARGES

4 IN ASSIGNMENT-RELATED CASES.—If a reduction in

5 payment amounts is made pursuant to a sequestra6 tion order for services for which payment under part

7 B of title XVIII of the Social Security Act is made

8 on the basis of an assignment described in section

9 1842(b)(3)(B)(ii), in accordance with section

10 1842(b)(6)(B), or under the procedure described in

11 section 1870(f)(1) of such Act, the person furnishing

12 the services shall be considered to have accepted

13 payment of the reasonable charge for the services,

14 less any reduction in payment amount made pursu15 ant to a sequestration order, as payment in full.

16 ‘‘(p) POSTAL SERVICE FUND.—Any sequestration of

17 the Postal Service Fund shall be accomplished by annual

18 payments from that Fund to the General Fund of the

19 Treasury, and the Postmaster General of the United

20 States shall have the duty to make those payments during

21 the fiscal year to which the sequestration order applies

22 and each succeeding fiscal year. The amount of each an23 nual payment shall be—

24 ‘‘(1) the uniform sequestration percentage,

25 times
1150

Title XIII

•HR 2530 IH

1 ‘‘(2) the estimated gross obligations of the

2 Postal Service Fund in that year other than those

3 obligations financed with an appropriation for reve4 nue foregone for that year.

5 Any such payment for a fiscal year shall be made as soon

6 as possible during the fiscal year, except that it may be

7 made in installments within that year if the payment

8 schedule is approved by the Secretary of the Treasury.

9 Within 30 days after the sequestration order is issued, the

10 Postmaster General shall submit to the Postal Rate Com11 mission a plan for financing the annual payment for that

12 fiscal year and publish that plan in the Federal Register.

13 The plan may assume efficiencies in the operation of the

14 Postal Service, reductions in capital expenditures, in15 creases in the prices of services, or any combination, but

16 may not assume a lower Fund surplus or higher Fund

17 deficit and must follow the requirements of existing law

18 governing the Postal Service in all other respects. Within

19 30 days of the receipt of that plan, the Postal Rate Com20 mission shall approve the plan or modify it in the manner

21 that modifications are allowed under current law. If the

22 Postal Rate Commission does not respond to the plan

23 within 30 days, the plan submitted by the Postmaster

24 General shall go into effect. Any plan may be later revised
1151

Title XIII

•HR 2530 IH

1 by the submission of a new plan to the Postal Rate Com2 mission, which may approve or modify it.

3 ‘‘(q) POWER MARKETING ADMINISTRATIONS AND

4 T.V.A.—Any sequestration of the Department of Energy

5 power marketing administration funds or the Tennessee

6 Valley Authority fund shall be accomplished by annual

7 payments from those funds to the General Fund of the

8 Treasury, and the administrators of those funds shall have

9 the duty to make those payments during the fiscal year

10 to which the sequestration order applies and each succeed11 ing fiscal year. The amount of each annual payment by

12 a fund shall be—

13 ‘‘(1) the uniform sequestration percentage,

14 times

15 ‘‘(2) the estimated gross obligations of the fund

16 in that year.

17 Any such payment for a fiscal year shall be made as soon

18 as possible during the fiscal year, except that it may be

19 made in installments within that year if the payment

20 schedule is approved by the Secretary of the Treasury. An21 nual payments by a fund may be financed by reductions

22 in costs required to produce the presequester amount of

23 power (but those reductions shall not include reductions

24 in the amount of power supplied by the fund), by reduc25 tions in capital expenditures, by increases in rates, or by
1152

Title XIII

•HR 2530 IH

1 any combination, but may not be financed by a lower fund

2 surplus or a higher fund deficit and must follow the re3 quirements of existing law governing the fund in all other

4 respects. The administrator of a fund or the TVA Board

5 is authorized to take the actions specified above in order

6 to make the annual payments to the Treasury.

7 ‘‘(r) VETERANS’ HOUSING LOANS.—(1) For all hous8 ing loans guaranteed, insured, or made under chapter 37

9 of title 38, United States Code, on or after the date of

10 a sequestration, the origination fees shall be increased by

11 a uniform percentage sufficient to produce the dollar sav12 ings in veterans’ housing programs for the fiscal year of

13 the sequestration required by section 264, and all subse14 quent origination fees shall be increased by the same per15 centage, notwithstanding any other provision of law.

16 ‘‘(2) The origination fees to which paragraph (1) ap17 plies are those referred to in section 3729 of title 38, Unit18 ed States Code.’’.

19 (b) CONFORMING CHANGES.—(1) The item relating

20 to section 254 in the table of sections set forth in section

21 200 of the Balanced Budget and Emergency Deficit Con22 trol Act of 1985 is amended to read as follows:

‘‘Sec. 254. Estimating assumptions, reports, and orders.’’.

23 (2) The item relating to section 256 in the table of

24 sections set forth in section 200 of the Balanced Budget
1153

Title XIII

•HR 2530 IH

1 and Emergency Deficit Control Act of 1985 is amended

2 to read as follows:

‘‘Sec. 256. General and special sequestration rules.’’.

3 (c) Within 30 days after the date of enactment of

4 this Act, the Director of the Office of Management and

5 Budget and the Director of the Congressional Budget Of6 fice shall each issue a report that includes projections of

7 Federal spending, revenues, and deficits as a result of en8 actment of this Act and setting forth the economic and

9 technical assumptions used to make those projections.

10 Subtitle F—Line Item Veto

11 SEC. 14501. LINE ITEM VETO AUTHORITY.

12 (a) IN GENERAL.—Notwithstanding the provisions of

13 part B of title X of the Congressional Budget and Im14 poundment Control Act of 1974, and subject to the provi15 sions of this section, the President may rescind all or part

16 of the dollar amount of any discretionary budget authority

17 specified in an appropriation Act for fiscal year 1996 or

18 conference report or joint explanatory statement accom19 panying a conference report on the Act, or veto any tar20 geted tax benefit provision in this reconciliation Act, if the

21 President—

22 (1) determines that—

23 (A) such rescission or veto would help re24 duce the Federal budget deficit;
1154

Title XIII

•HR 2530 IH

1 (B) such rescission or veto will not impair

2 any essential Government functions; and

3 (C) such rescission or veto will not harm

4 the national interest; and

5 (2) notifies the Congress of such rescission or

6 veto by a special message not later than 10 calendar

7 days (not including Sundays) after the date of the

8 enactment of an appropriation Act providing such

9 budget authority, or of this reconciliation Act in the

10 case of a targeted tax benefit.

11 (b) DEFICIT REDUCTION.—In each special message,

12 the President may also propose to reduce the appropriate

13 discretionary spending limit set forth in section 601(a)(2)

14 of the Congressional Budget Act of 1974 by an amount

15 that does not exceed the total amount of discretionary

16 budget authority rescinded by that message.

17 (c) SEPARATE MESSAGES.—The President shall sub18 mit a separate special message under this section for each

19 appropriation Act and for this reconciliation Act.

20 (d) LIMITATION.—No special message submitted by

21 the President under this section may change any prohibi22 tion or limitation of discretionary budget authority set

23 forth in any appropriation Act.

24 (e) SPECIAL RULE FOR PREVIOUSLY ENACTED AP25 PROPRIATION ACTS.—Notwithstanding subsection (a)(2),
1155

Title XIII

•HR 2530 IH

1 in the case of any unobligated discretionary budget au2 thority provided by any appropriation Act for fiscal year

3 1996 that is enacted before the date of the enactment of

4 this Act, the President may rescind all or part of that dis5 cretionary budget authority under the terms of this sub6 title if the President notifies the Congress of such rescis7 sion by a special message not later than 10 calendar days

8 (not including Sundays) after the date of the enactment

9 of this Act.

10 SEC. 14502. LINE ITEM VETO EFFECTIVE UNLESS DIS11 APPROVED.

12 (a) IN GENERAL.—

13 (1) Any amount of budget authority rescinded

14 under this subtitle as set forth in a special message

15 by the President shall be deemed canceled unless,

16 during the period described in subsection (b), a re17 scission/receipts disapproval bill making available all

18 of the amount rescinded is enacted into law.

19 (2) Any provision of law vetoed under this sub20 title as set forth in a special message by the Presi21 dent shall be deemed repealed unless, during the pe22 riod described in subsection (b), a rescission/receipts

23 disapproval bill restoring that provision is enacted

24 into law.
1156

Title XIII

•HR 2530 IH

1 (b) CONGRESSIONAL REVIEW PERIOD.—The period

2 referred to in subsection (a) is—

3 (1) a congressional review period of 20 calendar

4 days of session, beginning on the first calendar day

5 of session after the date of submission of the special

6 message, during which Congress must complete ac7 tion on the rescission/receipts disapproval bill and

8 present such bill to the President for approval or

9 disapproval;

10 (2) after the period provided in paragraph (1),

11 an additional 10 days (not including Sundays) dur12 ing which the President may exercise his authority

13 to sign or veto the rescission/receipts disapproval

14 bill; and

15 (3) if the President vetoes the rescission/re16 ceipts disapproval bill during the period provided in

17 paragraph (2), an additional 5 calendar days of ses18 sion after the date of the veto.

19 (c) SPECIAL RULE.—If a special message is transmit20 ted by the President under this subtitle and the last ses21 sion of the Congress adjourns sine die before the expira22 tion of the period described in subsection (b), the rescis23 sion or veto, as the case may be, shall not take effect.

24 The message shall be deemed to have been retransmitted

25 on the first Monday in February of the succeeding Con-
1157

Title XIII

•HR 2530 IH

1 gress and the review period referred to in subsection (b)

2 (with respect to such message) shall run beginning after

3 such first day.

4 SEC. 14503. DEFINITIONS.

5 As used in this subtitle:

6 (1) The term ‘‘rescission/receipts disapproval

7 bill’’ means a bill which only disapproves, in whole,

8 rescissions of discretionary budget authority or only

9 disapproves vetoes of targeted tax benefits in a spe10 cial message transmitted by the President under this

11 subtitle and—

12 (A)(i) in the case of a special message re13 garding rescissions, the matter after the enact14 ing clause of which is as follows: ‘‘That Con15 gress disapproves each rescission of discre16 tionary budget authority of the President as

17 submitted by the President in a special message

18 on llll.’’, the blank space being filled in

19 with the appropriate date and the public law to

20 which the message relates; and

21 (ii) in the case of a special message re22 garding vetoes of targeted tax benefits, the

23 matter after the enacting clause of which is as

24 follows: ‘‘That Congress disapproves each veto

25 of targeted tax benefits of the President as sub-
1158

Title XIII

•HR 2530 IH

1 mitted by the President in a special message on

2 llll.’’, the blank space being filled in with

3 the appropriate date and the public law to

4 which the message relates; and

5 (B) the title of which is as follows: ‘‘A bill

6 to disapprove the recommendations submitted

7 by the President on llll.’’, the blank

8 space being filled in with the date of submission

9 of the relevant special message and the public

10 law to which the message relates.

11 (2) The term ‘‘calendar days of session’’ shall

12 mean only those days on which both Houses of Con13 gress are in session.

14 (3) The term ‘‘targeted tax benefit’’ means any

15 provision of this reconciliation Act determined by the

16 President to provide a Federal tax deduction, credit,

17 exclusion, preference, or other concession to 100 or

18 fewer beneficiaries. Any partnership, limited partner19 ship, trust, or S corporation, and any subsidiary or

20 affiliate of the same parent corporation, shall be

21 deemed and counted as a single beneficiary regard22 less of the number of partners, limited partners,

23 beneficiaries, shareholders, or affiliated corporate en24 tities.
1159

Title XIII

•HR 2530 IH

1 (4) The term ‘‘appropriation Act’’ means any

2 general or special appropriation Act for fiscal year

3 1996, and any Act or joint resolution making sup4 plemental, deficiency, or continuing appropriations

5 for fiscal year 1996.

6 SEC. 14504. CONGRESSIONAL CONSIDERATION OF LINE

7 ITEM VETOES.

8 (a) PRESIDENTIAL SPECIAL MESSAGE.—Whenever

9 the President rescinds any budget authority as provided

10 in this subtitle or vetoes any provision of law as provided

11 in this subtitle, the President shall transmit to both

12 Houses of Congress a special message specifying—

13 (1) the amount of budget authority rescinded or

14 the provision vetoed;

15 (2) any account, department, or establishment

16 of the Government to which such budget authority

17 is available for obligation, and the specific project or

18 governmental functions involved;

19 (3) the reasons and justifications for the deter20 mination to rescind budget authority or veto any

21 provision pursuant to this subtitle;

22 (4) to the maximum extent practicable, the esti23 mated fiscal, economic, and budgetary effect of the

24 rescission or veto; and
1160

Title XIII

•HR 2530 IH

1 (5) all actions, circumstances, and consider2 ations relating to or bearing upon the rescission or

3 veto and the decision to effect the rescission or veto,

4 and to the maximum extent practicable, the esti5 mated effect of the rescission upon the objects, pur6 poses, and programs for which the budget authority

7 is provided.

8 (b) TRANSMISSION OF MESSAGES TO HOUSE AND

9 SENATE.—

10 (1) Each special message transmitted under

11 this subtitle shall be transmitted to the House of

12 Representatives and the Senate on the same day,

13 and shall be delivered to the Clerk of the House of

14 Representatives if the House is not in session, and

15 to the Secretary of the Senate if the Senate is not

16 in session. Each special message so transmitted shall

17 be referred to the appropriate committees of the

18 House of Representatives and the Senate. Each such

19 message shall be printed as a document of each

20 House.

21 (2) Any special message transmitted under this

22 subtitle shall be printed in the first issue of the Fed23 eral Register published after such transmittal.

24 (c) INTRODUCTION OF RESCISSION/RECEIPTS DIS25 APPROVAL BILLS.—The procedures set forth in subsection
1161

Title XIII

•HR 2530 IH

1 (d) shall apply to any rescission/receipts disapproval bill

2 introduced in the House of Representatives not later than

3 the third calendar day of session beginning on the day

4 after the date of submission of a special message by the

5 President under this subtitle.

6 (d) CONSIDERATION IN THE HOUSE OF REPRESENT7 ATIVES.—

8 (1) The committee of the House of Representa9 tives to which a rescission/receipts disapproval bill is

10 referred shall report it without amendment, and with

11 or without recommendation, not later than the

12 eighth calendar day of session after the date of its

13 introduction. If the committee fails to report the bill

14 within that period, it is in order to move that the

15 House discharge the committee from further consid16 eration of the bill. A motion to discharge may be

17 made only by an individual favoring the bill (but

18 only after the legislative day on which a Member an19 nounces to the House the Member’s intention to do

20 so). The motion is highly privileged. Debate thereon

21 shall be limited to not more than one hour, the time

22 to be divided in the House equally between a pro23 ponent and an opponent. The previous question shall

24 be considered as ordered on the motion to its adop25 tion without intervening motion. A motion to recon-
1162

Title XIII

•HR 2530 IH

1 sider the vote by which the motion is agreed to or

2 disagreed to shall not be in order.

3 (2) After a rescission/receipts disapproval bill is

4 reported or the committee has been discharged from

5 further consideration, it is in order to move that the

6 House resolve into the Committee of the Whole

7 House on the State of the Union for consideration

8 of the bill. All points of order against the bill and

9 against consideration of the bill are waived. The mo10 tion is highly privileged. The previous question shall

11 be considered as ordered on that motion to its adop12 tion without intervening motion. A motion to recon13 sider the vote by which the motion is agreed to or

14 disagreed to shall not be in order. During consider15 ation of the bill in the Committee of the Whole, the

16 first reading of the bill shall be dispensed with. Gen17 eral debate shall proceed without intervening motion,

18 shall be confined to the bill, and shall not exceed two

19 hours equally divided and controlled by a proponent

20 and an opponent of the bill. No amendment to the

21 bill is in order, except any Member may move to

22 strike the disapproval of any rescission or rescissions

23 of budget authority or any proposed repeal of a tar24 geted tax benefit, as applicable, if supported by 49

25 other Members. At the conclusion of the consider-
1163

Title XIII

•HR 2530 IH

1 ation of the bill for amendment, the Committee shall

2 rise and report the bill to the House. The previous

3 question shall be considered as ordered on the bill

4 and amendments thereto to final passage without in5 tervening motion. A motion to reconsider the vote on

6 passage of the bill shall not be in order.

7 (3) Appeals from the decisions of the Chair re8 lating to the application of the rules of the House

9 of Representatives to the procedure relating to a bill

10 described in subsection (a) shall be decided without

11 debate.

12 (4) It shall not be in order to consider more

13 than one bill described in subsection (c) or more

14 than one motion to discharge described in paragraph

15 (1) with respect to a particular special message.

16 (5) Consideration of any rescission/receipts dis17 approval bill under this subsection is governed by

18 the rules of the House of Representatives except to

19 the extent specifically provided by the provisions of

20 this subtitle.

21 (e) CONSIDERATION IN THE SENATE.—

22 (1) Any rescission/receipts disapproval bill re23 ceived in the Senate from the House shall be consid24 ered in the Senate pursuant to the provisions of this

25 subtitle.
1164

Title XIII

•HR 2530 IH

1 (2) Debate in the Senate on any rescission/re2 ceipts disapproval bill and debatable motions and ap3 peals in connection therewith, shall be limited to not

4 more than ten hours. The time shall be equally di5 vided between, and controlled by, the majority leader

6 and the minority leader or their designees.

7 (3) Debate in the Senate on any debatable mo8 tions or appeal in connection with such bill shall be

9 limited to one hour, to be equally divided between,

10 and controlled by the mover and the manager of the

11 bill, except that in the event the manager of the bill

12 is in favor of any such motion or appeal, the time

13 in opposition thereto shall be controlled by the mi14 nority leader or his designee. Such leaders, or either

15 of them, may, from the time under their control on

16 the passage of the bill, allot additional time to any

17 Senator during the consideration of any debatable

18 motion or appeal.

19 (4) A motion to further limit debate is not de20 batable. A motion to recommit (except a motion to

21 recommit with instructions to report back within a

22 specified number of days not to exceed one, not

23 counting any day on which the Senate is not in ses24 sion) is not in order.

25 (f) POINTS OF ORDER.—
1165

Title XIII

•HR 2530 IH

1 (1) It shall not be in order in the Senate to

2 consider any rescission/receipts disapproval bill that

3 relates to any matter other than the rescission of

4 budget authority or veto of the provision of law

5 transmitted by the President under this subtitle.

6 (2) It shall not be in order in the Senate to

7 consider any amendment to a rescission/receipts dis8 approval bill.

9 (3) Paragraphs (1) and (2) may be waived or

10 suspended in the Senate only by a vote of three11 fifths of the members duly chosen and sworn.

12 SEC. 14505. REPORT OF THE GENERAL ACCOUNTING OF13 FICE.

14 On January 6, 1997, the Comptroller General shall

15 submit a report to each House of Congress which provides

16 the following information:

17 (1) A list of each proposed Presidential rescis18 sion of discretionary budget authority and veto of a

19 targeted tax benefit submitted through special mes20 sages for fiscal year 1996, together with their dollar

21 value, and an indication of whether each rescission

22 of discretionary budget authority or veto of a tar23 geted tax benefit was accepted or rejected by Con24 gress.
1166

Title XIII

•HR 2530 IH

1 (2) The total number of proposed Presidential

2 rescissions of discretionary budget authority and ve3 toes of a targeted tax benefit submitted through spe4 cial messages for fiscal year 1996, together with

5 their total dollar value.

6 (3) The total number of Presidential rescissions

7 of discretionary budget authority or vetoes of a tar8 geted tax benefit submitted through special mes9 sages for fiscal year 1996 and approved by Con10 gress, together with their total dollar value.

11 (4) A list of rescissions of discretionary budget

12 authority initiated by Congress for fiscal year 1996,

13 together with their dollar value, and an indication of

14 whether each such rescission was accepted or re15 jected by Congress.

16 (5) The total number of rescissions of discre17 tionary budget authority initiated and accepted by

18 Congress for fiscal year 1996, together with their

19 total dollar value.

20 SEC. 14506. JUDICIAL REVIEW.

21 (a) EXPEDITED REVIEW.—

22 (1) Any Member of Congress may bring an ac23 tion, in the United States District Court for the Dis24 trict of Columbia, for declaratory judgment and in-
1167

Title XIII

•HR 2530 IH

1 junctive relief on the ground that any provision of

2 this subtitle violates the Constitution.

3 (2) A copy of any complaint in an action

4 brought under paragraph (1) shall be promptly de5 livered to the Secretary of the Senate and the Clerk

6 of the House of Representatives, and each House of

7 Congress shall have the right to intervene in such

8 action.

9 (3) Any action brought under paragraph (1)

10 shall be heard and determined by a three-judge

11 court in accordance with section 2284 of title 28,

12 United States Code.

13 (4) Nothing in this section or in any other law

14 shall infringe upon the right of the House of Rep15 resentatives to intervene in an action brought under

16 paragraph (1) without the necessity of adopting a

17 resolution to authorize such intervention.

18 (b) APPEAL TO SUPREME COURT.—Notwithstanding

19 any other provision of law, any order of the United States

20 District Court for the District of Columbia which is issued

21 pursuant to an action brought under paragraph (1) of sub22 section (a) shall be reviewable by appeal directly to the

23 Supreme Court of the United States. Any such appeal

24 shall be taken by a notice of appeal filed within 10 days

25 after such order is entered; and the jurisdictional state-
1168

Title XIII

•HR 2530 IH

1 ment shall be filed within 30 days after such order is en2 tered. No stay of an order issued pursuant to an action

3 brought under paragraph (1) of subsection (a) shall be

4 issued by a single Justice of the Supreme Court.

5 (c) EXPEDITED CONSIDERATION.—It shall be the

6 duty of the District Court for the District of Columbia

7 and the Supreme Court of the United States to advance

8 on the docket and to expedite to the greatest possible ex9 tent the disposition of any matter brought under sub10 section (a).

11 Subtitle G—Enforcing Points of

12 Order

13 SEC. 14601. POINTS OF ORDER IN THE SENATE.

14 (a) WAIVER.—The second sentence of section 904(c)

15 of the Congressional Budget Act of 1974 is amended by

16 inserting ‘‘303(a),’’ after ‘‘302(f),’’, by inserting ‘‘311(c),’’

17 after ‘‘311(a),’’, by inserting ‘‘606(b),’’ after ‘‘601(b),’’,

18 and by inserting ‘‘253(d), 253(h), 253(i),’’ before

19 ‘‘258(a)(4)(C)’’.

20 (b) APPEALS.—The third sentence of section 904(c)

21 of the Congressional Budget Act of 1974 is amended by

22 inserting ‘‘303(a),’’ after ‘‘302(f),’’, by inserting ‘‘311(c),’’

23 after ‘‘311(a),’’, by inserting ‘‘606(b),’’ after ‘‘601(b),’’,

24 and by inserting ‘‘253(d), 253(h), 253(i),’’ before

25 ‘‘258(a)(4)(C)’’.
1169

Title XIII

•HR 2530 IH

1 SEC. 14602. POINTS OF ORDER IN THE HOUSE OF REP2 RESENTATIVES.

3 Section 904 of the Congressional Budget Act of 1974

4 is amended by redesignating subsection (d) as subsection

5 (e) and by inserting after subsection (c) the following new

6 subsection:

7 ‘‘(d) In the House of Representatives, a separate vote

8 shall be required on that part of any resolution or order

9 that makes in order the waiver of any points of order re10 ferred to in subsection (c).’’.

11 Subtitle H—Deficit Reduction

12 Lock-box

13 SEC. 14701. DEFICIT REDUCTION LOCK-BOX PROVISIONS OF

14 APPROPRIATION MEASURES.

15 (a) DEFICIT REDUCTION LOCK-BOX PROVISIONS.—

16 Title III of the Congressional Budget Act of 1974 is

17 amended by adding at the end the following new section:

18 ‘‘DEFICIT REDUCTION LOCK-BOX PROVISIONS OF

19 APPROPRIATION BILLS

20 ‘‘SEC. 314. (a) Any appropriation bill that is being

21 marked up by the Committee on Appropriations (or a sub22 committee thereof) of either House shall contain a line

23 item entitled ‘Deficit Reduction Lock-box’.

24 ‘‘(b) Whenever the Committee on Appropriations of

25 either House reports an appropriation bill, that bill shall
1170

Title XIII

•HR 2530 IH

1 contain a line item entitled ‘Deficit Reduction Account’

2 comprised of the following:

3 ‘‘(1) Only in the case of any general appropria4 tion bill containing the appropriations for Treasury

5 and Postal Service (or resolution making continuing

6 appropriations (if applicable)), an amount equal to

7 the amounts by which the discretionary spending

8 limit for new budget authority and outlays set forth

9 in the most recent OMB sequestration preview re10 port pursuant to section 601(a)(2) exceed the sec11 tion 602(a) allocation for the fiscal year covered by

12 that bill.

13 ‘‘(2) Only in the case of any general appropria14 tion bill (or resolution making continuing appropria15 tions (if applicable)), an amount not to exceed the

16 amount by which the appropriate section 602(b) al17 location of new budget authority exceeds the amount

18 of new budget authority provided by that bill (as re19 ported by that committee), but not less than the

20 sum of reductions in budget authority resulting from

21 adoption of amendments in the committee which

22 were designated for deficit reduction.

23 ‘‘(3) Only in the case of any bill making supple24 mental appropriations following enactment of all

25 general appropriation bills for the same fiscal year,
1171

Title XIII

•HR 2530 IH

1 an amount not to exceed the amount by which the

2 section 602(a) allocation of new budget authority ex3 ceeds the sum of all new budget authority provided

4 by appropriation bills enacted for that fiscal year

5 plus that supplemental appropriation bill (as re6 ported by that committee).

7 ‘‘(c) It shall not be in order for the Committee on

8 Rules of the House of Representatives to report a resolu9 tion that restricts the offering of amendments to any ap10 propriation bill adjusting the level of budget authority con11 tained in a Deficit Reduction Account.

12 ‘‘(d) Whenever a Member of either House of Congress

13 offers an amendment (whether in subcommittee, commit14 tee, or on the floor) to an appropriation bill to reduce

15 spending, that reduction shall be placed in the deficit re16 duction lock-box unless that Member indicates that it is

17 to be utilized for another program, project, or activity cov18 ered by that bill. If the amendment is agreed to and the

19 reduction was placed in the deficit reduction lock-box, then

20 the line item entitled ‘Deficit Reduction Lock-box’ shall

21 be increased by the amount of that reduction. Any amend22 ment pursuant to this subsection shall be in order even

23 if amendment portions of the bill are not read for amend24 ment with respect to the Deficit Reduction Lock-box.
1172

Title XIII

•HR 2530 IH

1 ‘‘(e) It shall not be in order in the House of Rep2 resentatives or the Senate to consider a conference report

3 or amendment of the Senate that modifies any Deficit Re4 duction Lock-box provision that is beyond the scope of

5 that provision as so committed to the conference commit6 tee.

7 ‘‘(f) It shall not be in order to offer an amendment

8 increasing the Deficit Reduction Lock-box Account unless

9 the amendment increases rescissions or reduces appropria10 tions by an equivalent or larger amount, except that it

11 shall be in order to offer an amendment increasing the

12 amount in the Deficit Reduction Lock-box by the amount

13 that the appropriate 602(b) allocation of new budget au14 thority exceeds the amount of new budget authority pro15 vided by that bill.

16 ‘‘(g) It shall not be in order for the Committee on

17 Rules of the House of Representatives to report a resolu18 tion which waives subsection (c).’’.

19 (b) CONFORMING AMENDMENT.—The table of con20 tents set forth in section 1(b) of the Congressional Budget

21 and Impoundment Control Act of 1974 is amended by in22 serting after the item relating to section 313 the following

23 new item:

‘‘Sec. 314. Deficit reduction lock-box provisions of appropriation measures.’’.
1173

Title XIII

•HR 2530 IH

1 SEC. 14702. DOWNWARD ADJUSTMENTS.

2 (a) DOWNWARD ADJUSTMENTS.—The discretionary

3 spending limit for new budget authority for any fiscal year

4 set forth in section 601(a)(2) of the Congressional Budget

5 Act of 1974, as adjusted in strict conformance with sec6 tion 251 of the Balanced Budget and Emergency Deficit

7 Control Act of 1985, shall be reduced by the amount of

8 budget authority transferred to the Deficit Reduction

9 Lockbox for that fiscal year under section 314 of the

10 Budget Control and Impoundment Act of 1974. The ad11 justed discretionary spending limit for outlays for that fis12 cal year and each outyear as set forth in such section

13 601(a)(2) shall be reduced as a result of the reduction

14 of such budget authority, as calculated by the Director of

15 the Office of Management and Budget based upon such

16 programmatic and other assumptions set forth in the joint

17 explanatory statement of managers accompanying the con18 ference report on that bill. All such reductions shall occur

19 within ten days of enactment of any appropriations bill.

20 (b) DEFINITION.—As used in this section, the term

21 ‘‘appropriation bill’’ means any general or special appro22 priation bill, and any bill or joint resolution making sup23 plemental, deficiency, or continuing appropriations.

24 (c) RESCISSION.—Funds in the Deficit Reduction

25 Lockbox shall be rescinded upon reductions in discre26 tionary limits pursuant to subsection (a).
1174

Title XIII

•HR 2530 IH

1 SEC. 14703. CBO TRACKING.

2 Section 202 of the Congressional Budget Act of 1974

3 is amended by adding at the end the following new sub4 section:

5 ‘‘(i) SCOREKEEPING.—To facilitate compliance by the

6 Committee on Appropriations with section 314, the Office

7 shall score all general appropriation measures (including

8 conference reports) as passed by the House of Representa9 tives, as passed the Senate and as enacted into law. The

10 scorecard shall include amounts contained in the Deficit

11 Reduction Lock-Box. The chairman of the Committee on

12 Appropriations of the House of Representatives or the

13 Senate, as the case may be, shall have such scorecard pub14 lished in the Congressional Record.’’.

15 Subtitle I—Emergency Spending;

16 Baseline Reform; Continuing

17 Resolutions Reform

18 CHAPTER 1—EMERGENCY SPENDING

19 SEC. 14801. ESTABLISHMENT OF BUDGET RESERVE AC20 COUNT.

21 (a) ESTABLISHMENT.—A budget reserve account

22 (hereinafter in this section referred to as the ‘‘account’’)

23 shall be established for the purpose of setting aside ade24 quate funding for natural disasters and national security

25 emergencies.
1175

Title XIII

•HR 2530 IH

1 (b) PRIOR APPROPRIATION REQUIRED.—The ac2 count shall consist of such sums as may be provided in

3 advance in appropriation Acts for a particular fiscal year.

4 (c) RESTRICTION ON USE OF FUNDS.—(1) Notwith5 standing any other provision of law, the amounts in the

6 account shall not be available for other than emergency

7 funding requirements for particular natural disasters or

8 national security emergencies so designated by Acts of

9 Congress.

10 (2) Funds in the account that are not obligated dur11 ing the fiscal year for which they are appropriated may

12 only be used for deficit reduction purposes.

13 (d) NEW POINT OF ORDER.—(1) Title IV of the Con14 gressional Budget Act of 1974 is amended by adding at

15 the end the following new section:

16 ‘‘POINT OF ORDER REGARDING EMERGENCIES

17 ‘‘SEC. 408. It shall not be in order in the House of

18 Representatives or the Senate to consider any bill or joint

19 resolution, or amendment thereto or conference report

20 thereon, containing an emergency designation for purposes

21 of section 251(b)(2)(D) or 252(e) of the Balanced Budget

22 and Emergency Deficit Control Act of 1985 if it also pro23 vides an appropriation or direct spending for any other

24 item or contains any other matter, but that bill or joint

25 resolution, amendment, or conference report may contain

26 rescissions of budget authority or reductions of direct
1176

Title XIII

•HR 2530 IH

1 spending, or that amendment may reduce amounts for

2 that emergency.’’.

3 (2) The table of contents set forth in section 1(b) of

4 the Congressional Budget and Impoundment Control Act

5 of 1974 is amended by inserting after the item relating

6 to section 407 the following new item:

‘‘Sec. 408. Point of order regarding emergencies.’’.

7 SEC. 14802. CONGRESSIONAL BUDGET PROCESS CHANGES.

8 (a) CONTENTS OF JOINT RESOLUTIONS ON THE

9 BUDGET.—Section 301(a) of the Congressional Budget

10 Act of 1974 is amended by redesignating paragraphs (6)

11 and (7) as paragraphs (7) and (8), respectively, and by

12 inserting after paragraph (5) the following new paragraph:

13 ‘‘(6) total new budget authority and total

14 budget outlays for emergency funding requirements

15 for natural disasters and national security emer16 gencies to be included in a budget reserve account;’’.

17 (b) SECTION 602 ALLOCATIONS.—(1) Section 602 of

18 the Congressional Budget Act of 1974 is amended by add19 ing at the end the following new subsection:

20 ‘‘(f) COMMITTEE SPENDING ALLOCATIONS AND

21 SUBALLOCATIONS FOR BUDGET RESERVE ACCOUNT.—

22 ‘‘(1) ALLOCATIONS.—The joint explanatory

23 statement accompanying a conference report on a

24 budget resolution shall include allocations, consistent

25 with the resolution recommended in the conference
1177

Title XIII

•HR 2530 IH

1 report, of the appropriate levels (for each fiscal year

2 covered by that resolution) of total new budget au3 thority and outlays to the Committee on Appropria4 tions of each House for emergency funding require5 ments for natural disasters and national security

6 emergencies to be included in a budget reserve

7 account.

8 ‘‘(2) SUBALLOCATIONS.—As soon as practicable

9 after a budget resolution is agreed to, the Commit10 tee on Appropriations of each House (after consult11 ing with the Committee on Appropriations of the

12 other House) shall suballocate each amount allocated

13 to it for the budget year under paragraph (1) among

14 its subcommittees. Each Committee on Appropria15 tions shall promptly report to its House

16 suballocations made or revised under this

17 paragraph.’’.

18 (2) Section 602(c) of the Congressional Budget Act

19 of 1974 is amended by inserting ‘‘or subsection (f)(1)’’

20 after ‘‘subsection (a)’’ and by inserting ‘‘or subsection

21 (f)(2)’’ after ‘‘subsection (b)’’.

22 SEC. 14803. REPORTING.

23 Not later than November 30, 1996, and at annual

24 intervals thereafter, the Director of the Office of Manage25 ment and Budget shall submit a report to each House of
1178

Title XIII

•HR 2530 IH

1 Congress listing the amounts of money expended from the

2 budget reserve account established under section 1 for the

3 fiscal year ending during that calendar year for each natu4 ral disaster and national security emergency.

5 CHAPTER 2—BASELINE REFORM

6 SEC. 14851. THE BASELINE.

7 (a) The second sentence of section 257(c) of the Bal8 anced Budget and Emergency Deficit Control Act of 1985

9 is amended—

10 (1) by inserting ‘‘but only for the purpose of

11 adjusting the discretionary spending limits set forth

12 in section 601(a)(2) of the Congressional Budget

13 Act of 1974’’ after ‘‘for inflation as specified in

14 paragraph (5)’’; and

15 (2) by inserting ‘‘but only for the purpose of

16 adjusting the discretionary spending limits set forth

17 in section 601(a)(2) of the Congressional Budget

18 Act of 1974’’ after ‘‘to offset pay absorption and for

19 pay annualization as specified in paragraph (4)’’.

20 (b) Section 1109(a) of title 31, United States Code,

21 is amended by adding after the first sentence the following

22 new sentence: ‘‘These estimates shall not include an ad23 justment for inflation for programs and activities subject

24 to discretionary appropriations.’’.
1179

Title XIII

•HR 2530 IH

1 SEC. 14852. THE PRESIDENT’S BUDGET.

2 (a) Paragraph (5) of section 1105(a) of title 31,

3 United States Code, is amended to read as follows:

4 ‘‘(5) except as provided in subsection (b) of this

5 section, estimated expenditures and appropriations

6 for the current year and estimated expenditures and

7 proposed appropriations the President decides are

8 necessary to support the Government in the fiscal

9 year for which the budget is submitted and the 4 fis10 cal years following that year;’’.

11 (b) Section 1105(a)(6) of title 31, United States

12 Code, is amended by inserting ‘‘current fiscal year and

13 the’’ before ‘‘fiscal year’’.

14 (c) Section 1105(a)(12) of title 31, United States

15 Code, is amended by striking ‘‘and’’ at the end of subpara16 graph (A), by striking the period and inserting ‘‘; and’’

17 at the end of subparagraph (B), and by adding at the end

18 the following new subparagraph:

19 ‘‘(C) the estimated amount for the same activ20 ity (if any) in the current fiscal year.’’.

21 (d) Section 1105(a)(18) of title 31, United States

22 Code, is amended by inserting ‘‘new budget authority

23 and’’ before ‘‘budget outlays’’.

24 (e) Section 1105(a) of title 31, United States Code,

25 is amended by adding at the end the following new para26 graph:
1180

Title XIII

•HR 2530 IH

1 ‘‘(30) a comparison of levels of estimated ex2 penditures and proposed appropriations for each

3 function and subfunction in the current fiscal year

4 and the fiscal year for which the budget is submit5 ted, along with the proposed increase or decrease of

6 spending in percentage terms for each function and

7 subfunction.’’.

8 SEC. 14853. THE CONGRESSIONAL BUDGET.

9 Section 301(e) of the Congressional Budget Act of

10 1974 is amended by—

11 (1) inserting after the second sentence the fol12 lowing: ‘‘The starting point for any deliberations in

13 the Committee on the Budget of each House on the

14 joint resolution on the budget for the next fiscal year

15 shall be the estimated level of outlays for the current

16 year in each function and subfunction. Any increases

17 or decreases in the congressional budget for the next

18 fiscal year shall be from such estimated levels.’’; and

19 (2) striking paragraph (8) and redesignating

20 paragraphs (9) and (10) as paragraphs (10) and

21 (11), respectively, and by inserting after paragraph

22 (7) the following new paragraphs:

23 ‘‘(8) a comparison of levels for the current fis24 cal year with proposed spending and revenue levels

25 for the subsequent fiscal years along with the pro-
1181

Title XIII

•HR 2530 IH

1 posed increase or decrease of spending in percentage

2 terms for each function and subfunction; and

3 ‘‘(9) information, data, and comparisons indi4 cating the manner in which and the basis on which,

5 the committee determined each of the matters set

6 forth in the joint resolution;’’.

7 SEC. 14854. CONGRESSIONAL BUDGET OFFICE REPORTS TO

8 COMMITTEES.

9 (a) The first sentence of section 202(f)(1) of the Con10 gressional Budget Act of 1974 is amended to read as fol11 lows: ‘‘On or before February 15 of each year, the Direc12 tor shall submit to the Committees on the Budget of the

13 House of Representatives and the Senate a report for the

14 fiscal year commencing on October 1 of that year with

15 respect to fiscal policy, including (A) alternative levels of

16 total revenues, total new budget authority, and total out17 lays (including related surpluses and deficits) compared

18 to comparable levels for the current year and (B) the levels

19 of tax expenditures under existing law, taking into account

20 projected economic factors and any changes in such levels

21 based on proposals in the budget submitted by the Presi22 dent for such fiscal year.’’.

23 (b) Section 202(f)(1) of the Congressional Budget

24 Act of 1974 is amended by inserting after the first sen25 tence the following new sentence: ‘‘That report shall also
1182

Title XIII

•HR 2530 IH

1 include a table on sources of spending growth in total

2 mandatory spending for the budget year and the ensuing

3 4 fiscal years, which shall include changes in outlays at4 tributable to the following: cost-of-living adjustments;

5 changes in the number of program recipients; increases

6 in medical care prices, utilization and intensity of medical

7 care; and residual factors.’’.

8 (c) Section 308(a)(1) of the Congressional Budget

9 Act of 1974 is amended—

10 (1) in subparagraph (C), by inserting ‘‘, and

11 shall include a comparison of those levels to com12 parable levels for the current fiscal year’’ before ‘‘if

13 timely submitted’’; and

14 (2) by striking ‘‘and’’ at the end of subpara15 graph (C), by striking the period and inserting ‘‘;

16 and’’ at the end of subparagraph (D), and by adding

17 at the end the following new subparagraph:

18 ‘‘(E) comparing the levels in existing pro19 grams in such measure to the estimated levels

20 for the current fiscal year.’’

21 (d) Title IV of the Congressional Budget Act of 1974

22 is amended by adding at the end the following new section:

23 ‘‘GAO REPORTS TO BUDGET COMMITTEES

24 (a) ‘‘SEC. 408. On or before January 15 of each year,

25 the Comptroller General, after consultation with appro26 priate committees of the House of Representatives and
1183

Title XIII

•HR 2530 IH

1 Senate, shall submit to the Congress a report listing all

2 programs, projects, and activities that fall within the defi3 nition of direct spending under section 250(c)(8) of the

4 Balanced Budget and Emergency Deficit Control Act of

5 1985.’’.

6 (b) CONFORMING AMENDMENT.—The table of con7 tents set forth in section 1(b) of the Congressional Budget

8 and Impoundment Control Act of 1974 is amended by in9 serting after the item relating to section 407 the following

10 new item:

‘‘Sec. 408. GAO reports to budget committees.’’.

11 CHAPTER 3—RESTRICTED USES OF

12 CONTINUING RESOLUTIONS

13 SEC. 14871. RESTRICTIONS RESPECTING CONTINUING RES14 OLUTIONS.

15 (a) Rule XXI of the Rules of the House of Represent16 atives is amended by adding at the end thereof the follow17 ing new clause:

18 ‘‘9. (a) Any item of appropriation set forth in any

19 joint resolution continuing appropriations, or amendment

20 thereto, shall not exceed the rate it would have been at

21 assuming the continuation of current law.

22 ‘‘(b) It shall not be in order in the House to consider

23 any joint resolution continuing appropriations, or amend24 ment thereto, which changes existing law.’’.
1184

Title XIII

•HR 2530 IH

1 (b) The amendment made by subsection (a) shall only

2 apply to joint resolutions continuing appropriations for fis3 cal year 1996 or any subsequent fiscal year.

4 Subtitle J—Technical and

5 Conforming Amendments

6 SEC. 14901. AMENDMENTS TO THE CONGRESSIONAL BUDG7 ET AND IMPOUNDMENT CONTROL ACT OF

8 1974.

9 (a) DEFINITION OF BUDGET AUTHORITY.—Para10 graph (2) of section 3 of the Congressional Budget and

11 Impoundment Control Act of 1974, the second time it ap12 pears, is amended by inserting ‘‘in any form’’ after ‘‘prom13 issory notes’’, by inserting at the end of subparagraph (A)

14 the following new sentence: ‘‘Such term excludes trans15 actions classified as means of financing.’’, and by striking

16 ‘‘With respect to’’ and all that follows through ‘‘retirement

17 account, any’’ and inserting ‘‘Any’’, by inserting after sub18 paragraph (B) the following:

19 ‘‘(C) RELATIONSHIP TO ENTITLEMENT AU20 THORITY.—For purposes of titles III and IV,

21 all references to budget authority shall be con22 sidered to include the amount of budget author23 ity estimated to be needed to fund entitlement

24 provisions under existing or proposed law, and

25 all legislation increasing (or decreasing) the
1185

Title XIII

•HR 2530 IH

1 level of entitlement authority under existing law

2 shall be considered to provide (or decrease) new

3 budget authority in that amount.’’,

4 and by redesignating the next subparagraph accordingly.

5 (b) DEFINITION OF ENTITLEMENT AUTHORITY.—

6 Paragraph (9) of section 3 of the Congressional Budget

7 and Impoundment Control Act of 1974 is amended by

8 striking ‘‘spending authority described by section

9 401(c)(2)(C)’’ and inserting the following: ‘‘, and the term

10 ‘entitlement program’ refers to, any provision of law that

11 has the effect of requiring the Government to make net

12 payments (including intragovernmental payments) regard13 less of the amount of budget authority that may be avail14 able to make those payments. Those terms shall include

15 amounts estimated to be required under provisions of law

16 that depend on the fulfillment of non-legislative conditions

17 or are indefinite as to amount or timing. Except as pro18 vided in the next sentence, if a provision of law that other19 wise requires the Government to make net payments is

20 directly or indirectly limited by any other provision of law

21 to an amount of available budget authority, then entitle22 ment authority does not exist. Subchapter II of chapter

23 13 of title 31, United States Code, and the sequestration

24 provisions of the Balanced Budget and Emergency Deficit

25 Control Act of 1985 shall not be considered provisions of
1186

Title XIII

•HR 2530 IH

1 law that limit entitlement authority to the amount of avail2 able budget authority.’’

3 (c) DEFINITION OF MEANS OF FINANCING.—Section

4 3 of the Congressional Budget and Impoundment Control

5 Act of 1974 is amended by adding at the end the following

6 new paragraph:

7 ‘‘(11) The term ‘means of financing’ means the

8 financial transactions of the Government that con9 sist of exchanges of money or monetary proxies of

10 equal value and therefore are not counted as obliga11 tions, outlays, or revenues, such as net Federal bor12 rowing from the public in any form, debt redemp13 tion, seignorage on coins and profits from the sale

14 of gold, and changes in outstanding check or other

15 monetary credits, including write-offs.’’.

16 (d) CBO STUDIES.—Section 202(h) of the Congres17 sional Budget Act of 1974 is amended by striking ‘‘out18 lays, credit authority,’’ and inserting ‘‘outlays’’.

19 (e) REQUIRED CONTENTS OF BUDGET RESOLU20 TION.—Section 301(a) of the Congressional Budget Act

21 of 1974 is amended by striking ‘‘planning levels’’, by strik22 ing ‘‘two’’ and inserting ‘‘four’’, by striking ‘‘, budget out23 lays, direct loan obligations, and primary loan guarantee

24 commitments’’ both places it appears and inserting ‘‘and

25 outlays’’, by striking paragraphs (5), (6) and (7), by strik-
1187

Title XIII

•HR 2530 IH

1 ing the semicolon at the end of paragraph (4) and insert2 ing a period, by inserting ‘‘and’’ after the semicolon at

3 the end of paragraph (3), and by striking the last sen4 tence.

5 (f) TECHNICAL CORRECTION TO SECTION 301(e).—

6 Section 301(e) of the Congressional Budget Act of 1974

7 is amended by inserting ‘‘new’’ before ‘‘budget authority’’

8 in the second sentence.

9 (g) COMMITTEE ALLOCATIONS AND

10 SUBALLOCATIONS.—Section 602(a)(1)(B) of the Congres11 sional Budget Act of 1974 is amended by striking ‘‘com12 mittee.’’ and inserting ‘‘committee, except that new budget

13 authority and outlays for entitlement programs funded

14 through annual appropriations shall be allocated and

15 scored both to the Committee on Appropriations and to

16 the committee that authorized such programs.’’.

17 (h) COMMITTEE ALLOCATIONS.—Section 302 of the

18 Congressional Budget Act of 1974 is amended to read as

19 follows:

20 ‘‘COMMITTEE ALLOCATIONS

21 ‘‘SEC. 302. (a) REPORTS BY COMMITTEES.—As soon

22 as practicable after a joint resolution on the budget is en23 acted—

24 ‘‘(1) the Committee on Appropriations of each

25 House shall, after consulting with the Committee on

26 Appropriations of the other House—
1188

Title XIII

•HR 2530 IH

1 ‘‘(A) subdivide among its subcommittees

2 the allocation of budget outlays, new budget au3 thority, and new credit authority allocated to it

4 in the joint budget resolution;

5 ‘‘(B) further subdivide the amount with re6 spect to each such subcommittee between con7 trollable amounts and all other amounts; and

8 ‘‘(2) every other committee of the House and

9 Senate to which an allocation was made in such

10 joint budget resolution shall, after consulting with

11 the committee or committees of the other House to

12 which all or part of its allocation was made—

13 ‘‘(A) subdivide such allocation among its

14 subcommittees or among programs over which

15 it has jurisdiction; and

16 ‘‘(B) further subdivide the amount with re17 spect to each subcommittee or program between

18 controllable amounts and all other amounts.

19 Each such committee shall promptly report to its

20 House the subdivisions made by it pursuant to this

21 subsection.

22 ‘‘(b) POINT OF ORDER.—It shall not be in order in

23 the House of Representatives or the Senate to consider

24 any bill or resolution, or amendment thereto, providing—

25 ‘‘(1) new budget authority for a fiscal year;
1189

Title XIII

•HR 2530 IH

1 ‘‘(2) new spending authority as described in

2 section 401(c)(2) for a fiscal year; or

3 ‘‘(3) new credit authority for a fiscal year;

4 within the jurisdiction of any committee which has re5 ceived an appropriate allocation of such authority pursu6 ant to section 301(a)(6) for such fiscal year, unless and

7 until such committee makes the allocation of subdivisions

8 required by subsection (a), in connection with the most

9 recently enacted joint resolution on the budget for such

10 fiscal year.

11 ‘‘(c) SUBSEQUENT JOINT RESOLUTIONS.—In the

12 case of a joint resolution on the budget referred to in sec13 tion 304, the subdivisions under subsection (a) shall be

14 required only to the extent necessary to take into account

15 revisions made in the most recently enacted joint resolu16 tion on the budget.

17 ‘‘(d) ALTERATION OF ALLOCATIONS.—At any time

18 after a committee reports the subdivision required to be

19 made under subsection (a), such committee may report to

20 its House an alteration of such subdivision. Any alteration

21 of such subdivision must be consistent with any actions

22 already taken by its House on legislation within the com23 mittee’s jurisdiction.

24 ‘‘(e) LEGISLATION SUBJECT TO POINT OF ORDER.—

25 After enactment of a joint resolution on the budget for
1190

Title XIII

•HR 2530 IH

1 a fiscal year, it shall not be in order in the House of Rep2 resentatives or the Senate to consider any bill, resolution,

3 or amendment providing new budget authority for such

4 fiscal year, new entitlement authority effective during such

5 fiscal year, or new credit authority for such fiscal year,

6 or any conference report on any such bill or resolution,

7 if—

8 ‘‘(1) the enactment of such bill or resolution as

9 reported;

10 ‘‘(2) the adoption and enactment of such

11 amendment; or

12 ‘‘(3) the enactment of such bill or resolution in

13 the form recommended in such conference report;

14 would cause the appropriate allocation made pursuant to

15 section 301(a)(6) or subdivision made under subsection

16 (a) of this section for such fiscal year of new discretionary

17 budget authority, new entitlement authority, or new credit

18 authority, to be exceeded.

19 ‘‘(f) DETERMINATIONS BY BUDGET COMMITTEES.—

20 For purposes of this section, the levels of new budget au21 thority, spending authority as described in section

22 401(c)(2), outlays and new credit authority for a fiscal

23 year, shall be determined on the basis of estimates made

24 by the Committee on the Budget of the House of Rep25 resentatives or the Senate, as the case may be.’’.
1191

Title XIII

•HR 2530 IH

1 (i) COST ESTIMATES AND SCOREKEEPING RE2 PORTS.—Section 308 of the Congressional Budget Act of

3 1974 is amended—

4 (1) in its title, by striking ‘‘, NEW SPENDING

5 AUTHORITY, OR NEW CREDIT AUTHORITY,’’;

6 (2) by striking ‘‘, new spending authority de7 scribed in section 401(c)(2), or new credit author8 ity,’’ the 3 times it appears;

9 (3) in subsection (a), by striking ‘‘in the reports

10 submitted’’, by inserting ‘‘302(a) or’’ before

11 ‘‘302(b)’’, in paragraph (1)(B) by striking ‘‘spending

12 authority’’ and everything that follows through

13 ‘‘401(c)(2) which is’’ and inserting ‘‘budget author14 ity’’ and by striking ‘‘annual appropriations’’ and in15 serting ‘‘annual discretionary appropriations’’, and

16 in paragraph (1)(C) by striking ‘‘such budget au17 thority’’ and all that follows through ‘‘loan guaran18 tee commitments’’ and inserting ‘‘new budget au19 thority, outlays, or revenues’’; and

20 (4) in subsection (c), by adding ‘‘and’’ at the

21 end of paragraph (1), by striking ‘‘period;’’ and in22 serting ‘‘period.’’ at the end of paragraph (2), and

23 by striking paragraphs (3), (4), and (5).
1192

Title XIII

•HR 2530 IH

1 (j) TECHNICAL CORRECTION TO SECTION 312.—Sec2 tion 312 of the Congressional Budget Act of 1974 is

3 amended by inserting ‘‘(a)’’ after ‘‘312.’’.

4 (k) CONSIDERATION OF LEGISLATION THAT HAS

5 NOT BEEN REPORTED.—Section 312 of the Congres6 sional Budget Act of 1974 is amended by inserting at the

7 end the following:

8 ‘‘(c) CONSIDERATION OF LEGISLATION THAT HAS

9 NOT BEEN REPORTED.—In the House of Representatives,

10 any point of order under title III or IV that would lie

11 against consideration of a bill or joint resolution as re12 ported by a committee shall also lie against a motion to

13 consider legislation respecting which no report has been

14 filed.’’

15 (l) CONFORMING AMENDMENTS TO SECTION 313.—

16 Section 313 of the Congressional Budget Act of 1974 is

17 amended by striking ‘‘or section 258C’’ and everything

18 that follows through ‘‘Deficit Control Act of 1985’’, by

19 striking ‘‘; and (F)’’ and everything that follows through

20 ‘‘310(g)’’, by redesignating the second subsection (c) and

21 subsection (d) as subsections (d) and (e), respectively, and

22 by striking ‘‘or (b)(1)(F),’’.

23 (m) BORROWING AND CONTRACT AUTHORITY.—Sec24 tion 401 of the Congressional Budget Act of 1974 is

25 amended
1193

Title XIII

•HR 2530 IH

1 (1) in subsection (a), by striking ‘‘new spending

2 authority described in subsection (c)(2)(A) or (B)’’

3 both times it appears and inserting ‘‘borrowing au4 thority or contract authority’’;

5 (2) by repealing subsections (b) and (c) and by

6 redesignating subsection (d) as subsection (b); and

7 (3) in subsection (b) (as redesignated), by strik8 ing ‘‘Subsections (a) and (b)’’ and inserting ‘‘Sub9 section (a)’’, by inserting ‘‘non-interest’’ before ‘‘re10 ceipts’’ in paragraph (1)(B), by repealing paragraph

11 (2), and by redesignating paragraph (3) as para12 graph (2).

13 (n) CREDIT AUTHORITY.—Section 402(a) of the Con14 gressional Budget Act of 1974 is amended by inserting

15 before the period the following: ‘‘, except that this provi16 sion shall not apply with respect to programs that, as of

17 August 15, 1992, provide credit authority as an entitle18 ment’’.

19 SEC. 14902. TECHNICAL AND CONFORMING AMENDMENTS

20 TO THE RULES OF THE HOUSE OF REP21 RESENTATIVES.

22 (a) MISCELLANEOUS CONFORMING AMENDMENT.—

23 Clause 4(h) of rule X of the Rules of the House of Rep24 resentatives is amended by striking ‘‘or section 602 (in

25 the case of fiscal years 1991 through 1995)’’.
1194

Title XIII

•HR 2530 IH

1 (b) REPEALER.—Rule XLIX of the Rules of the

2 House of Representatives is repealed.

3 SEC. 14903. PRESIDENT’S BUDGET.

4 (a) DEFINITIONS.—Section 1101 of title 31, United

5 States Code, is amended by adding at the end the follow6 ing:

7 ‘‘(3) ‘Expenditures’ has the same meaning as

8 the term ‘outlays’ in the Balanced Budget and

9 Emergency Deficit Control Act of 1985.

10 ‘‘(4) All other terms used herein or in the docu11 ments prepared hereunder shall have the meanings

12 set forth in the Balanced Budget and Emergency

13 Deficit Control Act of 1985.’’.

14 (b) BYRD AMENDMENT.—Section 1103 of title 31,

15 United States Code, is amended by striking ‘‘commitment

16 that budget’’ and inserting ‘‘commitment that, starting

17 with fiscal year 2002,’’.

18 (c) PRESIDENT’S BUDGET SUBMISSION.—Section

19 1105(a) of title 31, United States Code, is amended—

20 (1) in the first sentence by striking ‘‘On or

21 after the first Monday in January but not later than

22 the first Monday in February of each year’’ and in23 serting ‘‘On or before the first Monday in February

24 or the 21st calendar day beginning after the date

25 the Board of Estimates issues a report to the Presi-
1195

Title XIII

•HR 2530 IH

1 dent under section 254 of the Balanced Budget and

2 Emergency Deficit Control Act of 1985’’;

3 (2) in paragraph (15) by striking ‘‘section

4 301(a)(1)–(5)’’ and inserting ‘‘section 301(a)(1)–

5 (4);

6 (3) in paragraph (16) by striking ‘‘section

7 3(a)(3)’’ and inserting ‘‘section 3(3)’’; and

8 (4) by adding at the end the following new

9 paragraph:

10 ‘‘(32) an analysis of the financial condition of

11 Government-sponsored enterprises and the financial

12 exposure of the Government, if any, posed by

13 them.’’.

14 (d) USE OF OFFICIAL ESTIMATES.—Section 1105(f)

15 of title 31, United States Code, is amended by inserting

16 at the end the following new sentence: ‘‘That budget shall

17 be consistent with the discretionary funding limit and the

18 direct spending and receipts deficit reduction requirement

19 for that year chosen by the Board of Estimates and shall

20 be based upon the major estimating assumptions chosen

21 by that Board.’’.
1196

Title XIII

•HR 2530 IH

1 Subtitle K—Truth in Legislating

2 SEC. 14951. IDENTITY, SPONSOR, AND COST OF CERTAIN

3 PROVISIONS REQUIRED TO BE REPORTED.

4 (a) IDENTITY, SPONSOR, AND COST.—Clause 4 of

5 rule X of the Rules of the House of Representatives is

6 amended by adding at the end thereof the following:

7 ‘‘(j)(1) Except as provided by subparagraph (2), the

8 report or joint explanatory statement accompanying each

9 bill or joint resolution of a public character reported by

10 a committee or committee of conference shall contain, in

11 plain and understandable language—

12 ‘‘(A) an identification of each provision (if any)

13 of the bill or joint resolution which benefits only 10

14 or fewer beneficiaries in any one of the following cat15 egories: persons, corporations, partnerships, institu16 tions, organizations, transactions, events, items of

17 property, projects, civil subdivisions within one or

18 more States, or issuances of bonds;

19 ‘‘(B) the name of each beneficiary of such pro20 vision;

21 ‘‘(C) the name of any Member or Members who

22 sponsored the inclusion of each such provision and

23 an indication of each such provision requested by

24 any agency, instrumentality, or officer of the United

25 States; and
1197

Title XIII

•HR 2530 IH

1 ‘‘(D) an estimate by the Congressional Budget

2 Office or the Joint Committee on Taxation, which3 ever is appropriate, of the costs which would be in4 curred in carrying out such provision or any loss in

5 revenues resulting from such provision for the fiscal

6 year for which costs or loss in revenues, as the case

7 may be, first occurs and each of the next 5 fiscal

8 years.

9 ‘‘(2)(A) Subparagraph (1) shall not apply with re10 spect to any provision of a bill or joint resolution or of

11 a conference report on a bill or joint resolution if the bene12 ficiary of such provision is the United States or any agen13 cy or instrumentality thereof.

14 ‘‘(B) Subparagraph (1)(D) shall not apply with re15 spect to any provision of a bill or joint resolution or of

16 a conference report on a bill or joint resolution if the costs

17 which would be incurred in carrying out such provision

18 or any loss in revenues resulting from such provision are

19 identified clearly in the report or joint explanatory state20 ment accompanying such bill or joint resolution.

21 ‘‘(3) It shall not be in order to consider any such bill

22 or joint resolution in the House if the report or joint ex23 planatory statement of the committee or committee of con24 ference which reported that bill or joint resolution does

25 not comply with subparagraph (1). The requirements of
1198

Title XIII

•HR 2530 IH

1 subparagraph (1) may be waived only upon a separate vote

2 directed solely to that subject.’’.

3 (b) EFFECTIVE DATE.—The amendment made by

4 subsection (a) shall apply to bills and joint resolutions re5 ported by a committee of the House of Representatives

6 after the date of enactment of this Act.

Æ