II

104TH CONGRESS

1ST SESSION S. 806

To amend the Public Health Service Act to provide grants to entities in

rural areas that design and implement innovative approaches to improve

the availability and quality of health care in such rural areas, and

for other purposes.

IN THE SENATE OF THE UNITED STATES

MAY 16 (legislative day, MAY 15), 1995

Mr. HATFIELD introduced the following bill; which was read twice and

referred to the Committee on Finance

A BILL

To amend the Public Health Service Act to provide grants

to entities in rural areas that design and implement

innovative approaches to improve the availability and

quality of health care in such rural areas, and for other

purposes.

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.

4 This Act may be cited as the ‘‘Rural Health Improve5 ment Act of 1995’’.
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1 SEC. 2. RURAL HEALTH EXTENSION NETWORKS.

2 Title XVII of the Public Health Service Act (42

3 U.S.C. 300u et seq.) is amended by adding at the end

4 thereof the following new section:

5 ‘‘SEC. 1709. RURAL HEALTH EXTENSION NETWORKS.

6 ‘‘(a) GRANTS.—The Secretary, acting through the

7 Health Resources and Services Administration, may

8 award competitive grants to eligible entities to enable such

9 entities to facilitate the development of networks among

10 rural and urban health care providers to preserve and

11 share health care resources and enhance the quality and

12 availability of health care in rural areas. Such networks

13 may be statewide or regionalized in focus.

14 ‘‘(b) ELIGIBLE ENTITIES.—To be eligible to receive

15 a grant under subsection (a) an entity shall—

16 ‘‘(1)(A) be a rural health extension network

17 that meets the requirements of subsection (c); or

18 ‘‘(B) be an Area Health Education Center Pro19 gram;

20 ‘‘(2) prepare and submit to the Secretary an

21 application at such time, in such form and contain22 ing such information as the Secretary may require;

23 and

24 ‘‘(3) meets such other requirements as the Sec25 retary determines appropriate.
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1 ‘‘(c) NETWORKS.—For purposes of subsection (b)(1),

2 a rural health extension network shall be an association

3 or consortium of three or more rural health care providers,

4 and may include one or more urban health care provider,

5 for the purposes of applying for a grant under this section

6 and using amounts received under such grant to provide

7 the services described in subsection (d).

8 ‘‘(d) SERVICES.—

9 ‘‘(1) IN GENERAL.—An entity that receives a

10 grant under subsection (a) shall use amounts re11 ceived under such grant to—

12 ‘‘(A) provide education and community de13 cisionmaking support for health care providers

14 in the rural areas served by the network;

15 ‘‘(B) utilize existing health care provider

16 education programs, including but not limited

17 to, the program for area health education cen18 ters under section 781, to provide educational

19 services to health care providers and trainees

20 including, but not limited to, physicians, nurses

21 and nursing students in the areas served by the

22 network;

23 ‘‘(C) make appropriately trained facil24 itators available to health care providers located

25 in the areas served by the network to assist
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1 such providers in developing cooperative ap2 proaches to health care in such area;

3 ‘‘(D) facilitate linkage building through the

4 organization of discussion and planning groups

5 and the dissemination of information concern6 ing the health care resources where available,

7 within the area served by the network;

8 ‘‘(E) support telecommunications and con9 sultative projects to link rural hospitals and

10 other health care providers, and urban or ter11 tiary hospitals in the areas served by the net12 work; or

13 ‘‘(F) carry out any other activity deter14 mined appropriate by the Secretary.

15 ‘‘(2) EDUCATION.—In carrying out activities

16 under paragraph (1)(B), an entity shall support the

17 development of an information and resource sharing

18 system, including elements targeted towards high

19 risk populations and focusing on health promotion,

20 to facilitate the ability of rural health care providers

21 to have access to needed health care information.

22 Such activities may include the provision of training

23 to enable individuals to serve as coordinators of

24 health education programs in rural areas.
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1 ‘‘(3) COLLECTION AND DISSEMINATION OF

2 DATA.—The chief executive officer of a State shall

3 designate a State agency that shall be responsible

4 for collecting and regularly disseminating informa5 tion concerning the activities of the rural health ex6 tension networks in that State.

7 ‘‘(e) MATCHING REQUIREMENT.—An entity that re8 ceives a grant under subsection (a) shall make available

9 (directly or through donations from public or private enti10 ties), non-Federal contributions towards the costs of the

11 operations of the network in an amount equal to the

12 amount of the grant.

13 ‘‘(f) AUTHORIZATION OF APPROPRIATIONS.—There

14 are authorized to be appropriated to carry out this section,

15 $10,000,000 for each of the fiscal years 1996 through

16 1999.

17 ‘‘(g) DEFINITION.—As used in this section and sec18 tion 1710, the term ‘rural health care providers’ means

19 health care professionals and hospitals located in rural

20 areas. The Secretary shall ensure that for purposes of this

21 definition, rural areas shall include any area that meets

22 any applicable Federal or State definition of rural area.

23 ‘‘(h) RELATION TO OTHER LAWS.—

24 ‘‘(1) IN GENERAL.—Notwithstanding any provi25 sion of the antitrust laws, it shall not be considered
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1 a violation of the antitrust laws for entities to de2 velop and operate networks in accordance with this

3 section.

4 ‘‘(2) DEFINITION.—For purposes of this sub5 section, the term ‘antitrust laws’ means—

6 ‘‘(A) the Act entitled ‘An Act to protect

7 trade and commerce against unlawful restraints

8 and monopolies’, approved July 2, 1890, com9 monly known as the ‘Sherman Act’ (26 Stat.

10 209; chapter 647; 15 U.S.C. 1 et seq.);

11 ‘‘(B) the Federal Trade Commission Act,

12 approved September 26, 1914 (38 Stat. 717;

13 chapter 311; 15 U.S.C. 41 et seq.);

14 ‘‘(C) the Act entitled ‘An Act to supple15 ment existing laws against unlawful restraints

16 and monopolies, and for other purposes’, ap17 proved October 15, 1914, commonly known as

18 the ‘Clayton Act’ (38 Stat. 730; chapter 323;

19 15 U.S.C. 12 et seq.; 18 U.S.C. 402, 660,

20 3285, 3691; 29 U.S.C. 52, 53);

21 ‘‘(D) the Act of June 19, 1936, commonly

22 known as the Robinson-Patman Antidiscrimina23 tion Act (15 U.S.C. 13 et seq.); and
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1 ‘‘(E) any State antitrust laws that would

2 prohibit the activities described in paragraph

3 (1).’’.

4 SEC. 3. RURAL MANAGED CARE COOPERATIVES.

5 Title XVII of the Public Health Service Act (42

6 U.S.C. 300u et seq.) as amended by section 2 is further

7 amended by adding at the end thereof the following new

8 section:

9 ‘‘SEC. 1710. RURAL MANAGED CARE COOPERATIVES.

10 ‘‘(a) GRANTS.—The Secretary, acting through the

11 Health Resources and Services Administration, may

12 award competitive grants to eligible entities to enable such

13 entities to develop and administer cooperatives in rural

14 areas that will establish an effective case management and

15 reimbursement system designed to support the economic

16 viability of essential public or private health services, fa17 cilities, health care systems and health care resources in

18 such rural areas.

19 ‘‘(b) ELIGIBLE ENTITIES.—To be eligible to receive

20 a grant under subsection (a) an entity shall—

21 ‘‘(1) prepare and submit to the Secretary an

22 application at such time, in such form and contain23 ing such information as the Secretary may require,

24 including a description of the cooperative that the
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1 entity intends to develop and operate using grant

2 funds; and

3 ‘‘(2) meet such other requirements as the Sec4 retary determines appropriate.

5 ‘‘(c) COOPERATIVES.—

6 ‘‘(1) IN GENERAL.—Amounts provided under a

7 grant awarded under subsection (a) shall be used to

8 establish and operate a cooperative made up of all

9 types of health care providers, hospitals, primary ac10 cess hospitals, other alternate rural health care fa11 cilities, physicians, rural health clinics, rural nurse

12 practitioners and physician assistant practitioners,

13 public health departments and others located in, but

14 not restricted to, the rural areas to be served by the

15 cooperative.

16 ‘‘(2) BOARD OF DIRECTORS.—A cooperative es17 tablished under paragraph (1) shall be administered

18 by a board of directors elected by the members of

19 the cooperative, a majority of whom shall represent

20 rural providers from the local community and in21 clude representatives from the local community.

22 Such members shall serve at the pleasure of such

23 members.

24 ‘‘(3) EXECUTIVE DIRECTOR.—The members of

25 a cooperative established under paragraph (1) shall
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1 elect an executive director who shall serve as the

2 chief operating officer of the cooperative. The execu3 tive director shall be responsible for conducting the

4 day to day operation of the cooperative including—

5 ‘‘(A) maintaining an accounting system for

6 the cooperative;

7 ‘‘(B) maintaining the business records of

8 the cooperative;

9 ‘‘(C) negotiating contracts with provider

10 members of the cooperative; and

11 ‘‘(D) coordinating the membership and

12 programs of the cooperative.

13 ‘‘(4) REIMBURSEMENTS.—

14 ‘‘(A) NEGOTIATIONS.—A cooperative es15 tablished under paragraph (1) shall facilitate

16 negotiations among member health care provid17 ers and third party payors concerning the rates

18 at which such providers will be reimbursed for

19 services provided to individuals for which such

20 payors may be liable.

21 ‘‘(B) AGREEMENTS.—Agreements reached

22 under subparagraph (A) shall be binding on the

23 members of the cooperative.

24 ‘‘(C) EMPLOYERS.—Employer entities may

25 become members of a cooperative established
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1 under paragraph (a) in order to provide,

2 through a member third party payor, health in3 surance coverage for its employees. Deductibles

4 shall only be charged to employees covered

5 under such insurance if such employees receive

6 health care services from a provider that is not

7 a member of the cooperative if similar services

8 would have been available from a member pro9 vider.

10 ‘‘(D) MALPRACTICE INSURANCE.—A coop11 erative established under subsection (a) shall be

12 responsible for identifying and implementing an

13 affordable malpractice insurance program that

14 shall include a requirement that such coopera15 tive assume responsibility for the payment of a

16 portion of the malpractice insurance premium

17 of providers members.

18 ‘‘(5) MANAGED CARE AND PRACTICE STAND19 ARDS.—A cooperative established under paragraph

20 (1) shall establish joint case management and pa21 tient care practice standards programs that health

22 care providers that are members of such cooperative

23 must meet to be eligible to participate in agreements

24 entered into under paragraph (4). Such standards

25 shall be developed by such provider members and
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1 shall be subject to the approval of a majority of the

2 board of directors. Such programs shall include cost

3 and quality of care guidelines including a require4 ment that such providers make available

5 preadmission screening, selective case management

6 services, joint patient care practice standards devel7 opment and compliance and joint utilization review.

8 ‘‘(6) CONFIDENTIALITY.—

9 ‘‘(A) IN GENERAL.—Patients records,

10 records of peer review, utilization review, and

11 quality assurance proceedings conducted by the

12 cooperative should be considered confidential

13 and protected from release outside of the coop14 erative. The provider members of the coopera15 tive shall be indemnified by the cooperative for

16 the good faith participation by such members in

17 such the required activities.

18 ‘‘(B) QUALITY DATA.—Notwithstanding

19 any other provision of law, quality data ob20 tained by a hospital or other member of a coop21 erative in the normal course of the operations

22 of the hospital or member shall be immune

23 from discovery regardless of whether such data

24 is used for purposes other than peer review or
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1 is disclosed to other members of the cooperative

2 involved.

3 ‘‘(d) LINKAGES.—A cooperative shall create linkages

4 among member health care providers, employers, and

5 payors for the joint consultation and formulation of the

6 types, rates, costs, and quality of health care provided in

7 rural areas served by the cooperative.

8 ‘‘(e) MATCHING REQUIREMENT.—An entity that re9 ceives a grant under subsection (a) shall make available

10 (directly or through donations from public or private enti11 ties), non-Federal contributions towards the costs of the

12 operations of the network in an amount equal to the

13 amount of the grant.

14 ‘‘(f) AUTHORIZATION OF APPROPRIATIONS.—There

15 are authorized to be appropriated to carry out this section,

16 $15,000,000 for each of the fiscal years 1996 through

17 1999.

18 ‘‘(g) RELATION TO OTHER LAWS.—

19 ‘‘(1) IN GENERAL.—Notwithstanding any provi20 sion of the antitrust laws, it shall not be considered

21 a violation of the antitrust laws for entities to de22 velop and operate cooperatives in accordance with

23 this section.

24 ‘‘(2) DEFINITION.—For purposes of this sub25 section, the term ‘antitrust laws’ means—
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1 ‘‘(A) the Act entitled ‘An Act to protect

2 trade and commerce against unlawful restraints

3 and monopolies’, approved July 2, 1890, com4 monly known as the ‘Sherman Act’ (26 Stat.

5 209; chapter 647; 15 U.S.C. 1 et seq.);

6 ‘‘(B) the Federal Trade Commission Act,

7 approved September 26, 1914 (38 Stat. 717;

8 chapter 311; 15 U.S.C. 41 et seq.);

9 ‘‘(C) the Act entitled ‘An Act to supple10 ment existing laws against unlawful restraints

11 and monopolies, and for other purposes’, ap12 proved October 15, 1914, commonly known as

13 the ‘Clayton Act’ (38 Stat. 730; chapter 323;

14 15 U.S.C. 12 et seq.; 18 U.S.C. 402, 660,

15 3285, 3691; 29 U.S.C. 52, 53); and

16 ‘‘(D) the Act of June 19, 1936, commonly

17 known as the Robinson-Patman Antidiscrimina18 tion Act (15 U.S.C. 13 et seq.); and

19 ‘‘(E) any State antitrust laws that would

20 prohibit the activities described in paragraph

21 (1).’’.

22 SEC. 4. RURAL MENTAL HEALTH OUTREACH GRANTS.

23 Subpart 3 of part B of title V of the Public Health

24 Service Act (42 U.S.C. 290cc–11 et seq.) is amended by

25 adding at the end thereof the following new section:
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1 ‘‘SEC. 520C. RURAL MENTAL HEALTH OUTREACH GRANTS.

2 ‘‘(a) IN GENERAL.—The Secretary may award com3 petitive grants to eligible entities to enable such entities

4 to develop and implement a plan for mental health out5 reach programs in rural areas.

6 ‘‘(b) ELIGIBLE ENTITIES.—To be eligible to receive

7 a grant under subsection (a) an entity shall—

8 ‘‘(1) prepare and submit to the Secretary an

9 application at such time, in such form and contain10 ing such information as the Secretary may require,

11 including a description of the activities that the en12 tity intends to undertake using grant funds; and

13 ‘‘(2) meet such other requirements as the Sec14 retary determines appropriate.

15 ‘‘(c) PRIORITY.—In awarding grants under sub16 section (a), the Secretary shall give priority to applications

17 that place emphasis on mental health services for the el18 derly or children. Priority shall also be given to applica19 tions that involve relationships between the applicant and

20 rural managed care cooperatives.

21 ‘‘(d) MATCHING REQUIREMENT.—An entity that re22 ceives a grant under subsection (a) shall make available

23 (directly or through donations from public or private enti24 ties), non-Federal contributions towards the costs of the

25 operations of the network in an amount equal to the

26 amount of the grant.
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1 ‘‘(e) AUTHORIZATION OF APPROPRIATIONS.—There

2 are authorized to be appropriated to carry out this section,

3 $5,000,000 for each of the fiscal years 1996 through

4 1999.’’.

5 SEC. 5. AREA HEALTH EDUCATION CENTERS.

6 Section 746(a) of the Public Health Service Act (42

7 U.S.C. 293j(a)) is amended by adding at the end thereof

8 the following new paragraph:

9 ‘‘(4) STIPENDS.—

10 ‘‘(A) The Secretary may make award

11 grants under this section to rural communities

12 to enable such communities to provide stipends

13 to physicians, nurses, nurse practitioners, physi14 cian assistants, and other health professional

15 trainees to encourage such individuals to pro16 vide health care services in such rural commu17 nities. In addition, the Secretary may award

18 grants under this section to rural communities

19 to enable such communities to provide stipends

20 to physicians, nurses, nurse practitioners, physi21 cian assistants, and other health professionals

22 that are practicing in rural areas to retain such

23 individuals in such areas.

24 ‘‘(B) A community that receives a grant

25 under subparagraph (A) shall make available
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1 (directly or through donations from public or

2 private entities), non-Federal contributions to3 wards the costs of the operations of the network

4 in an amount equal to the amount of the

5 grant.’’.

6 SEC. 6. NONREFUNDABLE CREDIT FOR CERTAIN PRIMARY

7 HEALTH SERVICES PROVIDERS.

8 (a) IN GENERAL.—Subpart A of part IV of sub9 chapter A of chapter 1 of the Internal Revenue Code of

10 1986 (relating to nonrefundable personal credits) is

11 amended by inserting after section 22 the following new

12 section:

13 ‘‘SEC. 23. PRIMARY HEALTH SERVICES PROVIDERS.

14 ‘‘(a) ALLOWANCE OF CREDIT.—There shall be al15 lowed as a credit against the tax imposed by this chapter

16 for the taxable year an amount equal to the product of—

17 ‘‘(1) the number of months during such taxable

18 year—

19 ‘‘(A) during which the taxpayer is a quali20 fied primary health services provider, and

21 ‘‘(B) which are within the taxpayer’s man22 datory service period, and

23 ‘‘(2) $1,000 ($500 in the case of a qualified

24 practitioner who is not a physician).
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1 ‘‘(b) QUALIFIED PRIMARY HEALTH SERVICES PRO2 VIDER.—For purposes of this section, the term ‘qualified

3 primary health services provider’ means, with respect to

4 any month, any qualified practitioner who—

5 ‘‘(1) has in effect a certification by the Bureau

6 as a provider of primary health services and such

7 certification is, when issued, for a health profes8 sional shortage area in which the qualified practi9 tioner is commencing the providing of primary

10 health services,

11 ‘‘(2) is providing primary health services full

12 time in the health professional shortage area identi13 fied in such certification, and

14 ‘‘(3) has not received a scholarship under the

15 National Health Service Corps Scholarship Program

16 or any loan repayments under the National Health

17 Service Corps Loan Repayment Program.

18 For purposes of paragraph (2) and subsection (e)(3), a

19 provider shall be treated as providing services in a health

20 professional shortage area when such area ceases to be

21 such an area if it was such an area when the provider

22 commenced providing services in the area.

23 ‘‘(c) MANDATORY SERVICE PERIOD.—For purposes

24 of this section, the term ‘mandatory service period’ means

25 the period of 60 consecutive calendar months beginning
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1 with the first month the taxpayer is a qualified primary

2 health services provider. A taxpayer shall not have more

3 than 1 mandatory service period.

4 ‘‘(d) DEFINITIONS AND SPECIAL RULES.—For pur5 poses of this section—

6 ‘‘(1) BUREAU.—The term ‘Bureau’ means the

7 Bureau of Primary Health Care, Health Resources

8 and Services Administration of the United States

9 Public Health Service.

10 ‘‘(2) QUALIFIED PRACTITIONER.—The term

11 ‘qualified practitioner’ means a physician, a physi12 cian assistant, a nurse practitioner, or a certified

13 nurse-midwife.

14 ‘‘(3) PHYSICIAN.—The term ‘physician’ has the

15 meaning given to such term by section 1861(r) of

16 the Social Security Act.

17 ‘‘(4) PHYSICIAN ASSISTANT; NURSE PRACTI18 TIONER.—The terms ‘physician assistant’ and ‘nurse

19 practitioner’ have the meanings given to such terms

20 by section 1861(aa)(5) of the Social Security Act.

21 ‘‘(5) CERTIFIED NURSE-MIDWIFE.—The term

22 ‘certified nurse-midwife’ has the meaning given to

23 such term by section 1861(gg)(2) of the Social Secu24 rity Act.
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1 ‘‘(6) PRIMARY HEALTH SERVICES.—The term

2 ‘primary health services’ has the meaning given such

3 term by section 330(b)(1) of the Public Health Serv4 ice Act.

5 ‘‘(7) HEALTH PROFESSIONAL SHORTAGE

6 AREA.—The term ‘health professional shortage area’

7 has the meaning given such term by section

8 332(a)(1)(A) of the Public Health Service Act.

9 ‘‘(e) RECAPTURE OF CREDIT.—

10 ‘‘(1) IN GENERAL.—If there is a recapture

11 event during any taxable year, then—

12 ‘‘(A) no credit shall be allowed under sub13 section (a) for such taxable year and any suc14 ceeding taxable year, and

15 ‘‘(B) the tax of the taxpayer under this

16 chapter for such taxable year shall be increased

17 by an amount equal to the product of—

18 ‘‘(i) the applicable percentage, and

19 ‘‘(ii) the aggregate unrecaptured cred20 its allowed to such taxpayer under this sec21 tion for all prior taxable years.

22 ‘‘(2) APPLICABLE RECAPTURE PERCENTAGE.—

23 ‘‘(A) IN GENERAL.—For purposes of this

24 subsection, the applicable recapture percentage

25 shall be determined from the following table:
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‘‘If the recapture The applicable recapevent occurs during: true percentage is:

Months 1–24 .............................................. 100

Months 25–36 ............................................ 75

Months 37–48 ............................................ 50

Months 49–60 ............................................ 25

Month 61 or thereafter .............................. 0.

1 ‘‘(B) TIMING.—For purposes of subpara2 graph (A), month 1 shall begin on the first day

3 of the mandatory service period.

4 ‘‘(3) RECAPTURE EVENT DEFINED.—

5 ‘‘(A) IN GENERAL.—For purposes of this

6 subsection, the term ‘recapture event’ means

7 the failure of the taxpayer to be a qualified pri8 mary health services provider for any month

9 during the taxpayer’s mandatory service period.

10 ‘‘(B) SECRETARIAL WAIVER.—The Sec11 retary, in consultation with the Secretary of

12 Health and Human Services, may waive any re13 capture event caused by extraordinary cir14 cumstances.

15 ‘‘(4) NO CREDITS AGAINST TAX; MINIMUM

16 TAX.—Any increase in tax under this subsection

17 shall not be treated as a tax imposed by this chapter

18 for purposes of determining the amount of any cred19 it under subpart A, B, or D of this part or for pur20 poses of section 55.’’

21 (b) CLERICAL AMENDMENT.—The table of sections

22 for subpart A of part IV of subchapter A of chapter 1
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1 of such Code is amended by inserting after the item relat2 ing to section 22 the following new item:

‘‘Sec. 23. Primary health services providers.’’

3 (c) EFFECTIVE DATE.—The amendments made by

4 this section shall apply to taxable years beginning after

5 December 31, 1995.

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