Calendar No. 428

103D CONGRESS

2D SESSION S. 2109

A BILL

To amend the Public Health Service Act and the

and for other purposes.education of primary care health professionals,and vulnerable populations in the training andof, and payment to, entities serving underservedhealth centers, and to facilitate the involvementother protections for such networks, plans, andpopulations, to provide certain financial andnew sites to serve underserved and vulnerableto expand their capacity and develop and operateplans, to permit federally-assisted health centersment of community-based health networks andprovision of financial support for the developserved and vulnerable populations through thecare and related services for medically underpanded access to comprehensive primary healthSocial Security Act to provide improved and exMAY 16, 1994

Read the second time and placed on the calendar
II

Calendar No. 428

103D CONGRESS

2D SESSION S. 2109

To amend the Public Health Service Act and the Social Security Act to

provide improved and expanded access to comprehensive primary health

care and related services for medically underserved and vulnerable populations through the provision of financial support for the development

of community-based health networks and plans, to permit federally-assisted health centers to expand their capacity and develop and operate

new sites to serve underserved and vulnerable populations, to provide

certain financial and other protections for such networks, plans, and

health centers, and to facilitate the involvement of, and payment to,

entities serving underserved and vulnerable populations in the training

and education of primary care health professionals, and for other purposes.

IN THE SENATE OF THE UNITED STATES

MAY 12 (legislative day, MAY 2), 1994

Mr. HOLLINGS (for himself, Mrs. MURRAY, Mr. BOREN, Mr. COCHRAN, Ms.

MIKULSKI, Mr. INOUYE, Mr. HATCH, and Ms. MOSELEY-BRAUN) introduced the following bill; which was read the first time

MAY 16, 1994

Read the second time and placed on the calendar

A BILL

To amend the Public Health Service Act and the Social

Security Act to provide improved and expanded access

to comprehensive primary health care and related services for medically underserved and vulnerable populations

through the provision of financial support for the devel-
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opment of community-based health networks and plans,

to permit federally-assisted health centers to expand their

capacity and develop and operate new sites to serve

underserved and vulnerable populations, to provide certain financial and other protections for such networks,

plans, and health centers, and to facilitate the involvement of, and payment to, entities serving underserved

and vulnerable populations in the training and education

of primary care health professionals, 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; FINDINGS.

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

5 ‘‘Access to Community Health Care Act of 1994’’.

6 (b) FINDINGS.—Congress finds the following:

7 (1) Efforts to assure universal coverage for

8 comprehensive health care benefits are a vitally im9 portant part of achieving effective national health

10 care reform.

11 (2) The provision of universal insurance cov12 erage, while vitally important, will not alone address

13 the critical needs of the estimated 43,000,000 Amer14 icans who are underserved by the current health

15 care system, and who lack access to the most basic

16 health services.
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1 (3) Access to, and coordination of, health care

2 is especially difficult for those Americans who live in

3 underserved rural and inner-city communities or who

4 are members of other vulnerable groups, including

5 migratory and seasonal agricultural workers, persons

6 who are homeless, those with HlV infection, those

7 who suffer from substance addiction, high-risk preg8 nant women, infants and children, immigrants and

9 refugees, and individuals with disabilities.

10 (4) The consequences of poor access to, and

11 lack of coordination of, health care among the un12 derserved is evidenced by elevated infant and child13 hood illness and mortality rates, over-utilization of

14 emergency rooms and other inappropriate providers

15 for primary care services, and hospitalization rates

16 for preventable conditions that are significantly

17 higher than the national average.

18 (5) Efforts to provide increased access to, and

19 coordinate the delivery of, vital primary health care

20 and related services for underserved and vulnerable

21 Americans will not only contribute to improved

22 health status, but will also reduce unnecessary care

23 and the overall costs of health care.

24 (6) Essential community providers, such as the

25 community and migrant health centers, collectively
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1 referred to as health centers, which serve more than

2 7,000,000 needy Americans, provide an effective and

3 proven model for extending access to all underserved

4 and vulnerable Americans.

5 (7) Support for the development and operation

6 of new and expanded sites served by the health cen7 ters and similar primary health care providers, is

8 needed to extend access to comprehensive primary

9 health care services for the millions of Americans

10 who remain unserved or underserved.

11 (8) As managed care has achieved recognition

12 as a means of organizing and paying for health care

13 for many Americans, there is a need to assure that

14 such arrangements develop in a manner that is re15 sponsive to the needs of underserved people and

16 communities. Of particular importance is the devel17 opment of community-based networks of health cen18 ters and other essential community providers that

19 offer high quality care to individuals and that en20 deavor to both contain costs and reduce unnecessary

21 or inappropriate uses of high-cost services.

22 (9) Essential community providers such as

23 health centers and community-based networks serv24 ing such populations must be afforded certain pro25 tections from full financial risk for the cost of serv-
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1 ing such populations and communities. Protections

2 are needed because underserved populations typically

3 require more frequent and intensive care, and be4 cause reduced use of higher-cost inpatient, emer5 gency and specialty care will depend on the in6 creased provision of primary care as well as related

7 and enabling services.

8 (10) Health centers and community-based net9 works that participate in arrangements which

10 produce savings of grant funds or increased revenues

11 that will be used to further expand or improve serv12 ices to medically underserved populations should be

13 afforded protection from anti-kickback laws.

14 (11) Health centers, community-based networks

15 and other essential community providers of com16 prehensive primary care services to the underserved

17 provide the most appropriate locations and condi18 tions for educating and training primary health care

19 professionals, and should be centrally involved in

20 such education and training efforts.

21 SEC. 2. GRANTS FOR THE DEVELOPMENT AND OPERATION

22 OF HEALTH CENTERS AND COMMUNITY

23 HEALTH NETWORKS AND HEALTH PLANS.

24 (a) SERVICES AUTHORIZED AT SCHOOLS AND OTHER

25 APPROPRIATE LOCATIONS.—Section 330(a) of the Public
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1 Health Service Act (42 U.S.C. 254c(a)) is amended by in2 serting after ‘‘provides’’ the following: ‘‘at appropriate lo3 cations, that may include schools and other sites’’.

4 (b) ENABLING AND OUTREACH SERVICES.—Section

5 330(a) of such Act (42 U.S.C. 254c(a)) (as amended by

6 subsection (a)), is further amended—

7 (1) in paragraph (5), by striking ‘‘and’’ at the

8 end thereof;

9 (2) in paragraph (6)—

10 (A) by inserting ‘‘the services of outreach

11 workers and others to determine, or assist in

12 determining, the eligibility of individuals to re13 ceive services and benefits under Federal, State

14 and local health programs, and to assist such

15 individuals in enrolling in such programs, and

16 other’’ before ‘‘patient case’’; and

17 (B) by adding ‘‘and’’ at the end thereof;

18 and

19 (3) by inserting after paragraph (6) the follow20 ing new paragraph:

21 ‘‘(7) enabling services (defined as those services

22 that are not otherwise described in this subsection)

23 that promote access to necessary health and other

24 human and social services, and that increase the ca25 pacity of individuals to utilize the items and services
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1 included as covered benefits under Federal, State,

2 and local health programs;’’.

3 (c) COMMUNITY HEALTH SERVICE NETWORKS AND

4 PLANS.—Section 330 of such Act (42 U.S.C. 254c) is

5 amended by adding at the end thereof the following sub6 section:

7 ‘‘(l)(1) The Secretary may make a grant to one or

8 more community health centers that receive grants under

9 subsection (d)(l)(A), or to one or more federally qualified

10 health centers as defined in Section 1861(aa)(4) of the

11 Social Security Act, to support the development of a com12 munity health service network or plan as defined in para13 graph (3). Assistance received under a grant under this

14 subsection may be used to pay for the—

15 ‘‘(A) cost associated with the development of

16 the network or plan as a corporate entity, including

17 planning and needs assessments, and the cost associ18 ated with the development of appropriate contractual

19 agreements between the participating providers and

20 the network or plan;

21 ‘‘(B) cost associated with the development of

22 the internal management for the network or plan, as

23 well as the cost associated with the development of

24 financial, legal, clinical, information systems (exclu25 sive of systems that the Secretary determines are in-
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1 formation highways), billing and reporting systems

2 for the network or plan;

3 ‘‘(C) cost associated with the development of

4 additional sites that will assure or enhance the pro5 vision and accessibility of primary health care and

6 enabling services to medically underserved popu7 lations, and residents of health professional shortage

8 areas;

9 ‘‘(D) cost associated with the recruitment,

10 training, and compensation of health professionals

11 and administrative staff;

12 ‘‘(E) acquisition, expansion, modernization of

13 facilities, conversion of unneeded hospital facilities to

14 facilities that will assure or enhance the provision

15 and accessibility of primary health care and enabling

16 services, as well as construction of new facilities and

17 purchase of major equipment (including equipment

18 necessary for support of external and internal infor19 mation systems);

20 ‘‘(F) amount of any reserves that are required

21 for furnishing services on a prepaid basis; and

22 ‘‘(G) such other costs as are necessary to as23 sure that the network or plan will be ready to as24 sume operational status by the end of the planning

25 and development phase.
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1 ‘‘(2) The Secretary may make grants to support the

2 operation of community health service networks or plans

3 that received assistance under paragraph (1) for planning

4 and development and that meet the requirements of sub5 paragraphs (A) and (B) of paragraph (3). The costs for

6 which a grant may be made include, the costs described

7 in paragraph (1), and the otherwise unreimbursed costs

8 of furnishing services described in subsection (a) (except

9 for the costs of inpatient hospital services, extended care

10 facility services and long-term physical medicine) to medi11 cally underserved populations and residents of health pro12 fessional shortage areas and other hard-to-reach popu13 lations.

14 ‘‘(3)(A) For purposes of this section:

15 ‘‘(i) The term ‘community health service net16 work’ means a consortium of health care providers

17 that meets the following requirements:

18 ‘‘(I) The consortium is a public or non19 profit private entity whose principal purpose is,

20 with respect to the items and services that are

21 described in subsection (a), to provide all or a

22 portion of such items and services to a signifi23 cant number of individuals who are members of

24 a medically underserved population or popu25 lations, residents of health professional shortage
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1 areas and other hard-to-reach populations in

2 the network service area.

3 ‘‘(II) The participation of health care pro4 viders in the consortium is governed by a writ5 ten agreement to which each of the participat6 ing providers is a party.

7 ‘‘(ii) The term ‘community health service plan’

8 means a health plan that meets the following condi9 tions:

10 ‘‘(I) The health plan is a public or non11 profit private entity, as defined in section

12 1903(m)(2)(A) of the Social Security Act,

13 whose principal purpose is, with respect to the

14 items and services that are described in sub15 section (a), to provide all or a portion of the

16 items and services to a significant number of

17 individuals who are members of a medically un18 derserved population or populations, residents

19 of health professional shortage areas in the

20 plan’s service area, and other hard-to-reach

21 populations in the plan’s service area.

22 ‘‘(II) The participation of health care pro23 viders in the health plan is governed by a writ24 ten agreement to which each of the participat25 ing providers is a party.
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1 ‘‘(B) A community health service network or plan

2 shall—

3 ‘‘(i) be governed by individuals a majority of

4 whom are registered patients of the network or plan

5 or are representatives of the entities described in

6 clause (iv)(I), or a combination of such individuals;

7 ‘‘(ii) assure the provision of services through

8 participating providers (who may provide services di9 rectly or through contract) in accordance with all of

10 the requirements of subsection (e)(3) except sub11 paragraph (G);

12 ‘‘(iii) be reasonable in size to accomplish the ob13 jectives of this subsection;

14 ‘‘(iv) include as participating providers (unless

15 such provider(s) decline to participate)—

16 ‘‘(I) at a minimum, all entities providing

17 health services under grants under this section

18 or sections 329 or 340, and other federally

19 qualified health centers certified in accordance

20 with section 1861(aa)(4) of the Social Security

21 Act in the service area of the plan or network;

22 ‘‘(II) a reasonable number and combina23 tion (to ensure that services will be comprehen24 sive and accessible) of—
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1 ‘‘(aa) public or nonprofit private enti2 ties that are entities providing health serv3 ices under grants under sections 340A,

4 1001 or title XXIII, title V of the Social

5 Security Act, title V of the Indian Health

6 Care Improvement Act, and the Indian

7 Self-Determination Act;

8 ‘‘(bb) rural health clinics certified in

9 accordance with Section 1861 (aa)(2) of

10 the Social Security Act; and

11 ‘‘(cc) local and State public health

12 agencies;

13 that collectively provide primary health and en14 abling services to residents of the network or

15 plan service area; and

16 ‘‘(III) at the option of the network or plan,

17 any other public or private entity that provides

18 primary health, enabling services or supple19 mental health services to the population served

20 by the network or plan; and

21 ‘‘(v) ensure that each participating provider

22 agrees to provide services regardless of an individ23 ual’s ability to pay.

24 ‘‘(4)(A) No grant may be made under paragraphs (1)

25 or (2) unless an application therefore is submitted to, and
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1 approved by, the Secretary. Such an application shall be

2 submitted in such form and manner and shall contain such

3 information as the Secretary shall prescribe, including—

4 ‘‘(i) with respect to applications for planning

5 and development, the information required by sub6 section (c)(4) and a demonstration of how the appli7 cant will meet all requirements of paragraph (3) by

8 the end of the period of support under paragraph

9 (1); and

10 ‘‘(ii) with respect to applications for operations,

11 the information required by subsection (e).

12 ‘‘(B) In evaluating applications submitted under sub13 paragraph (A), the Secretary shall consider—

14 ‘‘(i) the extent to which the applicant proposes

15 to provide or expand the provision of services de16 scribed in subsection (a) in a manner that is coordi17 nated and assures accessibility of service to medi18 cally underserved populations and health profes19 sional shortage areas and which will otherwise meet

20 the requirements of paragraph (3) when the network

21 or plan assumes operational status;

22 ‘‘(ii) the relative need of the populations and

23 areas proposed to be served for the services proposed

24 to be provided;
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1 ‘‘(iii) whether the proposed network or plan de2 scribed in the application is reasonable in size and

3 capacity;

4 ‘‘(iv) whether the proposed network or plan will

5 address such other needs of the medically under6 served population or populations and health profes7 sional shortage areas to be served as the applicant

8 or the Secretary may identify;

9 ‘‘(v) evidence of State and local support for the

10 network or plan; and

11 ‘‘(vi) whether the proposed budget to support

12 the network or plan, is reasonable and justified, tak13 ing into account other sources of support for the

14 proposed network or plan and considering whether

15 levels of support previously received from other

16 sources have been maintained.

17 ‘‘(5) Not more than two grants may be made under

18 this subsection for planning and developing the same net19 work or plan.’’.

20 (d) FLEXIBLE AUTHORITY.—Section 330 of such Act

21 (42 U.S.C. 254c) (as amended by subsection (c)) is fur22 ther amended by adding at the end thereof the following

23 new subsection:

24 ‘‘(m)(1) The Secretary may make grants to public

25 and nonprofit private entities that meet all of the require-
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1 ments of subsection (l), except for paragraph (3)(B)(i)

2 and such other requirements of that subsection as the Sec3 retary may decide for good cause to waive, for the purpose

4 of planning, developing and operating health networks and

5 health plans as the Secretary determines will provide or

6 enhance the provision and accessibility of the services that

7 are described in subsection (a) to medically underserved

8 populations and health professional shortage areas in the

9 service area of the network or plan.

10 ‘‘(2) An application for a planning and development

11 grant under paragraph (1) must meet the requirements

12 of subsection (l)(4)(A)(i) and an application for an oper13 ations grant under paragraph (1) must meet the require14 ments of subsection (l)(4)(A)(ii).

15 ‘‘(3)(A) In evaluating applications submitted under

16 paragraph (2), the Secretary will consider the factors de17 scribed in subsection (l)(4)(B).

18 ‘‘(B) The Secretary may not approve an application

19 for a grant under this subsection unless the Secretary de20 termines that the network or plan involved will at a mini21 mum assure significant community involvement. For pur22 poses of this subsection, the term ‘significant community

23 involvement’ is demonstrated if the health network, or

24 health plan—
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1 ‘‘(i) is governed by a board of directors, at least

2 one-third of the members of which are registered pa3 tients or representatives of entities described in sub4 section (l)(3)(B)(iv)(I), or a combination of such in5 dividuals; or

6 ‘‘(ii) has established a patient advisory council,

7 composed of representative registered patients of the

8 network or plan, through which registered patients

9 are able to directly participate in decisions that in10 fluence the character and implementation of pro11 grams of the network or plan.

12 The Secretary shall give priority to applicants that meet

13 the requirements of clause (i) over applicants that meet

14 the requirements of clause (ii).

15 ‘‘(4) Not more than two grants may be made under

16 this subsection for planning and developing the same

17 health network or health plan.

18 ‘‘(5) Assistance received under a grant under para19 graph (1) for the planning and development of a health

20 network or health plan may be used to pay the costs de21 scribed in subsection (l)(1). Assistance received under a

22 grant under paragraph (1) for the operation of such a

23 health network or health plan may be used to pay the costs

24 described in subsection (l)(2).’’.

25 (e) AUTHORIZATION OF APPROPRIATIONS.—
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1 (1) IN GENERAL.—Section 330(g)(1)(A) of

2 such Act (42 U.S.C. 254c(g)(1)(A)) is amended by

3 striking ‘‘$440,000,000’’ and all that follows

4 through the end thereof and inserting the following:

5 ‘‘$925,000,000 for fiscal year 1995, $1,425,000,000

6 for fiscal year 1996, $1,625,000,000 for fiscal year

7 1997, $1,725,000,000 for fiscal year 1998,

8 $1,725,000,000 for fiscal year 1999,

9 $1,725,000,000 for fiscal year 2000, and not less

10 than $1,725,000,000 for each of the fiscal years

11 2001 through 2005. The preceding sentence con12 stitutes budget authority in advance of appropria13 tions acts and represents the obligation of the Fed14 eral government to provide funding for payments in

15 the amounts, and for the fiscal years specified under

16 this section. Such levels shall not be subject to offset

17 or reprogramming for any reason.’’.

18 (2) PLANNING AND OPERATING HEALTH NET19 WORKS AND PLANS.—Section 330(g)(1) of such Act

20 (42 U.S.C. 254c(g)(1)) is amended by adding at the

21 end thereof the following new subparagraph:

22 ‘‘(C)(i) For the purpose of making grants for activi23 ties authorized under subsection (m), the Secretary may

24 expend an amount not to exceed 15 percent of the amount

25 appropriated under subparagraph (A) for any fiscal year
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1 that is in excess of $625,000,000. The authority of the

2 Secretary to make grants for such activities is effective

3 for any fiscal year only to such extent or in such amounts

4 exceeding $625,000,000 as are provided for in appropria5 tion Acts.

6 ‘‘(ii) For the purpose of making grants under sub7 sections (c) and (d) the Secretary shall expend not less

8 than $625,000,000 for each fiscal year.

9 ‘‘(iii) In determining the level of funding to set aside

10 for grants under subsections (c) and (d) in excess of

11 $625,000,000, the Secretary shall increase such amount

12 by such sums as are necessary to ensure that individual

13 recipients of grants under such subsections have funding

14 each fiscal year in amounts adequate to—

15 ‘‘(I) repay loans that have been made to such

16 recipients under Farmers Home Administration pro17 grams, under section 330A of this Act, or under any

18 other Federal program, or any other loans with re19 spect to which the Secretary has authorized the use

20 of funds budgeted in accordance with this section for

21 repayment; and

22 ‘‘(II) to cover the full cost of providing all pri23 mary health care, enabling services, and appropriate

24 supplemental health services.’’.
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1 (f) FUNDING PREFERENCES.—Section 330(k) of

2 such Act (42 U.S.C. 254c(k)) is amended—

3 (1) by inserting ‘‘(1)’’ after the subsection des4 ignation; and

5 (2) by adding at the end thereof the following

6 new paragraph:

7 ‘‘(2) In making grants under this section, the Sec8 retary shall give preference as follows:

9 ‘‘(A) As between an application for a grant

10 under subsection (l) to plan, develop, or operate a

11 community health service network or plan and an

12 application for a grant under subsection (m) to plan,

13 develop, or operate a health network or plan serving

14 the same medically underserved population, the Sec15 retary shall give preference to the applicant that is

16 or will be a community health service plan or net17 work in accordance with subsection (l).

18 ‘‘(B) As between two or more applications

19 under subsection (m) to serve the same medically

20 underserved population, preference shall be given to

21 applicants that include as participating providers the

22 greatest number of entities providing health services

23 under grants under section 329, this section and

24 section 340.’’.
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1 (g) MISCELLANEOUS AND CONFORMING AMEND2 MENTS.—

3 (1) APPLICATION.—Section 330(c) of such Act

4 (42 U.S.C. 254c(c)) is amended—

5 (A) in paragraph (1)—

6 (i) in the matter preceding subpara7 graph (A), by striking ‘‘loans) and shall in8 clude—’’ and inserting a period; and

9 (ii) by striking subparagraphs (A)

10 through (D); and

11 (B) by adding at the end thereof the fol12 lowing new paragraph:

13 ‘‘(4) No grant may be made under paragraph (1) un14 less an application therefor is submitted to and approved

15 by, the Secretary. Such an application shall be submitted

16 in such form and manner and contain such information

17 as the Secretary may prescribe, and shall include—

18 ‘‘(A) an assessment of the need that the popu19 lation proposed to be served by the community

20 health center for which the project is undertaken has

21 for enabling services, primary health services, sup22 plemental health services, and environmental health

23 services;
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1 ‘‘(B) the design of a community health center

2 program for such population based on such assess3 ment;

4 ‘‘(C) efforts to secure, within the proposed

5 catchment area of such center, financial and profes6 sional assistance and support for the project; and

7 ‘‘(D) initiation and encouragement of continu8 ing community involvement in the development and

9 operation of the project.’’.

10 (2) DEMONSTRATION OF SUPPORT.—

11 (A) Section 330(e)(2) of such Act (42

12 U.S.C. 254c(e)(2)) is amended—

13 (i) in the first sentence, by striking

14 ‘‘subparagraph (A) or (B) of’’;

15 (ii) in the first sentence, by striking

16 ‘‘for a community health center’’ and all

17 that follows through ‘‘Such an application

18 shall also’’ in the second sentence and in19 serting ‘‘shall’’; and

20 (iii) by adding at the end thereof the

21 following new sentence: ‘‘An application for

22 a grant under subparagraph (B) of sub23 section (d)(1) must demonstrate how the

24 entity will meet all of the requirements of
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1 subsection (e)(3) by the end of the period

2 of support under such subsection.’’.

3 (B) Section 330(e)(3) of such Act (42

4 U.S.C. 254c(e)(3)) is amended by adding at the

5 end thereof the following new sentence: ‘‘The

6 Secretary may not approve an application under

7 subsection (d)(1)(B) unless the Secretary deter8 mines that the entity will meet all of the re9 quirements of this paragraph by the end of the

10 period of support under such subsection.’’.

11 (3) FACILITIES.—Section 330(e)(6) of such Act

12 (42 U.S.C. 254c(e)(6)) is amended—

13 (A) by striking ‘‘(c) or (d)’’ and inserting

14 ‘‘(c), (d) or (l)’’; and

15 (B) by inserting ‘‘network or plan’’ after

16 ‘‘community health center’’.

17 (4) CONFORMING AMENDMENTS.—Section 330

18 of such Act (42 U.S.C. 254c) is amended—

19 (A) in subsection (f)—

20 (i) in paragraph (1), by striking

21 ‘‘(e)(2)’’ and inserting ‘‘(e)(3)’’; and

22 (ii) by adding at the end thereof the

23 following new paragraph:

24 ‘‘(3) The Secretary may award (by grant or contract)

25 funds to nonprofit private entities to support the costs of
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1 developing and implementing, on a national basis, joint

2 purchasing arrangements and other projects designed to

3 reduce the operational costs of recipients of grants under

4 this section.’’; and

5 (B) in paragraphs (1) and (2) of sub6 section (i), by striking ‘‘subsection (d)’’ and in7 serting ‘‘under this section’’.

8 SEC. 3. ESTABLISHING A PROGRAM OF LOANS AND LOAN

9 GUARANTEES.

10 (a) PROGRAM OF LOANS AND LOAN GUARANTEES.—

11 Subpart I of part D of title III of the Public Health Serv12 ice Act (42 U.S.C. 254b et seq.) is amended by adding

13 at the end thereof the following new section:

14 ‘‘SEC. 330A. FEDERAL LOAN AND LOAN GUARANTEE PRO15 GRAM.

16 ‘‘(a) LOANS AND LOAN GUARANTEES.—

17 ‘‘(1) IN GENERAL.—From the fund established

18 under subsection (b), the Secretary may make loans,

19 and guarantee the payment of principal and interest

20 to Federal and non-Federal lenders for loans, to any

21 public or nonprofit private entity that receives a

22 grant under sections 329, 330, or 340 for projects

23 for—

24 ‘‘(A) the acquisition, modernization, expan25 sion or construction of facilities, or the conver-
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1 sion of unneeded hospital facilities to facilities

2 that will assure or enhance the provision and

3 accessibility of primary health care and ena4 bling services to medically underserved popu5 lations;

6 ‘‘(B) the purchase of major equipment, in7 cluding equipment necessary for the support of

8 external and internal information systems;

9 ‘‘(C) the establishment of reserves required

10 for furnishing services on a prepaid basis; and

11 ‘‘(D) such other capital costs as the Sec12 retary may determine are necessary to enable

13 the grant recipient to achieve the objectives of

14 section 329, 330 or 340, as applicable.

15 ‘‘(2) PREFERENCES AND PRIORITIES.—

16 ‘‘(A) PREFERENCE.—In making loans and

17 loan guarantees under this section, the Sec18 retary shall give preference to applications sub19 mitted by community health centers that have

20 received grants under section 330(d)(1)(A) and

21 community health service networks or plans

22 that have received grants under section 330(l).

23 ‘‘(B) PRIORITY.—In making loans and

24 loan guarantees under this section, the Sec25 retary shall give priority to applications for
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1 projects for the renovation and modernization

2 of medical facilities necessary to prevent or

3 eliminate safety hazards, avoid noncompliance

4 with licensure or accreditation standards, or

5 projects to replace obsolete facilities.

6 ‘‘(C) CONSTRUCTION OF NEW BUILD7 INGS.—The Secretary may make loans or loan

8 guarantees for the construction of new build9 ings only if the Secretary determines that ap10 propriate facilities are not available through ac11 quiring, modernizing, expanding, or converting

12 existing buildings, or that construction of new

13 buildings will cost less.

14 ‘‘(3) INTEREST SUBSIDIES.—The Secretary

15 may pay, to the holder of a loan made to any recipi16 ent of a grant under sections 329, 330, or 340, for

17 and on behalf of the project for which the loan was

18 made, amounts sufficient to reduce, up to 75 percent

19 the net effective interest rate otherwise payable on

20 such loan, if the Secretary finds that without such

21 assistance the project could not be undertaken.

22 ‘‘(4) TOTAL COVERAGE OF COSTS.—The prin23 cipal amount of a loan directly made or guaranteed

24 under this section may, when added to any other as25 sistance provided under section 329, 330, or 340,
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1 cover up to 100 percent of the costs of the project

2 for which any such assistance is provided.

3 ‘‘(5) LIMITATION.—The cumulative total of the

4 principal of the loans outstanding at any time with

5 respect to which guarantees have been issued, or

6 which have been directly made, under this section

7 may not exceed limitations as may be specified in

8 appropriation Acts.

9 ‘‘(6) APPROVAL AND TERMS AND CONDI10 TIONS.—

11 ‘‘(A) APPROVAL OF GUARANTEES.—The

12 Secretary may not approve a loan guarantee for

13 a project under this section unless the Sec14 retary determines that the terms, conditions,

15 security (if any), and schedule and amount of

16 repayments with respect to the loan are suffi17 cient to protect the financial interests of the

18 United States and are otherwise reasonable.

19 ‘‘(B) TERMS AND CONDITIONS.—Guaran20 tees of loans under this section shall be subject

21 to such further terms and conditions as the

22 Secretary determines to be necessary to assure

23 that the purposes of this section will be

24 achieved.

25 ‘‘(7) LOAN REQUIREMENTS.—
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1 ‘‘(A) IN GENERAL.—The Secretary may

2 approve a loan under this section only if—

3 ‘‘(i) the Secretary is reasonably satis4 fied that the applicant for the project for

5 which the loan would be made will be able

6 to make payments of principal and interest

7 thereon when due; and

8 ‘‘(ii) the applicant provides the Sec9 retary with reasonable assurances that

10 there will be available to the applicant such

11 additional funds as may be necessary to

12 complete the project or undertaking with

13 respect to which such loan is requested.

14 ‘‘(B) OTHER REQUIREMENTS.—Any loan

15 made under this section shall—

16 ‘‘(i) have such security;

17 ‘‘(ii) have such maturity date;

18 ‘‘(iii) be repayable in such install19 ments;

20 ‘‘(iv) bear interest at a rate com21 parable to the rate of interest prevailing on

22 the date the loan is made, minus any inter23 est subsidy made in accordance with para24 graph (3); and
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1 ‘‘(v) be subject to such other terms

2 and conditions (including provisions for re3 covery in case of default), as the Secretary

4 determines to be necessary to carry out the

5 purposes of this section and sections 329,

6 330 and 340, as applicable, while ade7 quately protecting the financial interests of

8 the United States.

9 ‘‘(C) WAIVER OF RIGHT OF RECOVERY.—

10 The Secretary may, for good cause but with due

11 regard to the financial interests of the United

12 States, waive any right of recovery which the

13 Secretary has by reason of the failure of a bor14 rower to make payments of principal of and in15 terest on a loan made under this subsection, ex16 cept that if such loan is sold and guaranteed,

17 any such waiver shall have no effect upon the

18 Secretary’s guarantee of timely payment of

19 principal and interest.

20 ‘‘(b) LOAN AND LOAN GUARANTEE FUND.—

21 ‘‘(1) ESTABLISHMENT.—There is established in

22 the Treasury a loan and loan guarantee fund (here23 after in this subsection referred to as the ‘‘fund’’)

24 which shall be available as may be specified from

25 time to time in appropriations Acts to enable the
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1 Secretary to make loans, loan guarantees, payment

2 of interest subsidies and such other actions as au3 thorized under subsection (a). There shall also be

4 deposited in the fund amounts received by the Sec5 retary in connection with loans and loan guarantees

6 under this section and other property or assets de7 rived by the Secretary from operations respecting

8 such loans and loan guarantees, including any

9 money derived from the sale of assets.

10 ‘‘(2) AUTHORIZATION OF APPROPRIATIONS.—

11 There are authorized to be appropriated

12 $100,000,000 for each of the fiscal years 1995

13 through 2005, and such additional amounts as may

14 be necessary to provide the sums required for the

15 fund. The preceding sentence constitutes budget au16 thority in advance of appropriations Acts and rep17 resents the obligation of the Federal Government to

18 provide funding for payments in the amounts and

19 for the fiscal years authorized under this section.

20 ‘‘(c) DEFAULT.—

21 ‘‘(1) IN GENERAL.—The Secretary may take

22 such action as may be necessary to prevent a default

23 on a loan made or guaranteed under subsection (a),

24 including the waiver of regulatory conditions, defer25 ral of loan payments, renegotiation of loans, and the
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1 expenditure of funds for technical and consultative

2 assistance, for the temporary payment of the inter3 est and principal on such a loan, and for other pur4 poses.

5 ‘‘(2) FORECLOSURE.—The Secretary may take

6 such action, consistent with State law respecting

7 foreclosure procedures, as the Secretary deems ap8 propriate to protect the interest of the United States

9 in the event of a default on a loan made or guaran10 teed under subsection (a), including selling real

11 property pledged as security for such a loan or loan

12 guarantee and for a reasonable period of time taking

13 possession of, holding, and using real property

14 pledged as security for such a loan or loan guaran15 tee.

16 ‘‘(d) APPLICATIONS.—No loan or loan guarantee may

17 be made under this section unless an application is sub18 mitted to and approved by the Secretary. The application

19 shall be in the form and manner and contain such infor20 mation as the Secretary may prescribe, and if the project

21 is for the construction, conversion, expansion, or mod22 ernization of a facility, the application shall at a minimum

23 meet the requirements of section 330(e)(1).

24 ‘‘(e) RIGHT OF RECOVERY.—
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1 ‘‘(1) IN GENERAL.—If any facility with respect

2 to which a loan or loan guarantee was made under

3 this section, or with respect to which a grant was

4 made under section 329, 330, or 340, for the con5 struction, acquisition, expansion, or modernization,

6 shall at any time within 20 years after completion—

7 ‘‘(A) be sold or transferred to any entity

8 which is not eligible for assistance under section

9 329, 330 or 340 or which is not approved by

10 the Secretary as a transferee; or

11 ‘‘(B) cease to be a public or nonprofit en12 tity that is eligible for assistance under section

13 329, 330 or 340;

14 the United States shall be entitled to recover from

15 the recipient of the grant, loan, or loan guarantee,

16 the purchaser or transferee, the amount of the

17 grant, loan, or loan guarantee plus interest. This

18 right of recovery shall not constitute a lien on any

19 facility with respect to which a grant was made

20 under sections 329, 330, 340, or with respect to

21 which funds have been paid under this section.

22 ‘‘(2) WAIVER.—Notwithstanding paragraph (1),

23 the Secretary shall subordinate or waive the right of

24 recovery and any other Federal interest that may be

25 derived by virtue of a loan or loan guarantee under
32

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1 this section, or a grant under section 329, 330, or

2 340, to support the construction, acquisition, mod3 ernization, expansion, or conversion of a facility or

4 other capital project authorized under this section,

5 where the facility is being used as security for a new

6 loan that will support improvements to the facility,

7 construction of new primary health care facilities or

8 improvements of health services described in section

9 330(a) to medically underserved populations, or

10 where the facility is being sold in order to finance

11 the acquisition or construction of another facility

12 which will be used for the purposes authorized by

13 section 329, 330 or 340, if the Secretary obtains an

14 equivalent right of recovery or interest in the new

15 facility.’’.

16 (b) TAX EXEMPTION FOR STATE AND LOCAL BONDS

17 NOT AFFECTED BY LOAN GUARANTEES.—Section

18 149(b)(3)(A) of the Internal Revenue Code of 1986 is

19 amended—

20 (1) in clause (ii), by striking ‘‘or’’ at the end

21 thereof;

22 (2) in clause (iii), by striking the period and in23 serting ‘‘, or’’; and

24 (3) by adding at the end thereof the following

25 new clause:
33

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1 ‘‘(iv) any guarantee by the Loan and

2 Loan Guarantee Fund pursuant to section

3 330A of the Public Health Service Act.’’.

4 SEC. 4. AMENDMENTS TO THE MIGRANT HEALTH CENTERS

5 AND HEALTH CARE FOR THE HOMELESS PRO6 GRAM AUTHORITIES.

7 (a) ENABLING AND OUTREACH SERVICES.—

8 (1) MIGRANT HEALTH CENTERS.—Section

9 329(a)(1) of the Public Health Service Act (42

10 U.S.C. 254b(a)(1)) is amended—

11 (A) in the matter preceding subparagraph

12 (A), by inserting after ‘‘entities provides’’ the

13 following: ‘‘at appropriate locations, which may

14 include schools and other sites’’;

15 (B) in subparagraph (G), by striking

16 ‘‘and’’ at the end thereof;

17 (C) in subparagraph (H)—

18 (i) by inserting after the subpara19 graph designation the following: ‘‘the serv20 ices of outreach workers and others to de21 termine, or assist in determining, the eligi22 bility of individuals to receive services and

23 benefits under Federal, State, and local

24 health programs, and to assist such indi-
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1 viduals in enrolling in such programs, and

2 other’’; and

3 (ii) by adding ‘‘and’’ at the end there4 of; and

5 (D) by inserting after subparagraph (H),

6 the following new subparagraph:

7 ‘‘(I) enabling services (defined as services

8 that are not otherwise described in this sub9 section) that promote access to necessary health

10 and other human and social services, and that

11 increase the capacity of individuals to utilize the

12 items and services that are included as covered

13 benefits under Federal, State, or local health

14 programs,’’.

15 (2) HOMELESS HEALTH SERVICES.—Section

16 340(i) of such Act (42 U.S.C. 256(i)) is amended—

17 (A) in paragraph (1)—

18 (i) in subparagraph (B), by adding

19 ‘‘and’’ at the end thereof;

20 (ii) in subparagraph (C), by striking

21 ‘‘; or’’ and inserting a period; and

22 (iii) by striking subparagraph (D);

23 and

24 (B) in paragraph (2), to read as follows:
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1 ‘‘(2) A grant may include the acquisition, expansion,

2 or modernization of existing buildings, and the construc3 tion of new buildings (if the Secretary determines that ap4 propriate facilities are not available through the acquisi5 tion, expansion or modernization of existing buildings, or

6 that construction of a new building will cost less).’’.

7 (3) DEFINITIONS.—Section 340(r) of such Act

8 (42 U.S.C. 256(r)) is amended—

9 (A) in paragraph (1), by adding ‘‘, supple10 mental health services and enabling services’’

11 before ‘‘substance abuse services’’; and

12 (B) in paragraph (6), to read as follows:

13 ‘‘(6) The terms ‘primary health services’, ‘sup14 plemental health services’ and ‘enabling services’

15 shall have the same meanings given such terms in

16 section 330(a).’’.

17 (b) AUTHORIZATION OF APPROPRIATIONS.—

18 (1) MIGRANT HEALTH CENTERS.—Section

19 329(h)(1)(A) of such Act (42 U.S.C. 254b(h)(1)(A))

20 is amended by striking ‘‘$48,500,000’’ and all that

21 follows through the end thereof and inserting the

22 following: ‘‘$100,000,000 for fiscal year 1995,

23 $110,000,000 for fiscal year 1996, $120,000,000 for

24 fiscal year 1997, $130,000,000 for fiscal year 1998,

25 $140,000,000 for fiscal year 1999, $150,000,000 for
36

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1 fiscal year 2000, and not less than $150,000,000 for

2 each of the fiscal years 2001 through 2005. The

3 preceding sentence constitutes budget authority in

4 advance of appropriations Acts and represents the

5 obligation of the Federal Government to provide

6 funding for payments in the amounts, and for the

7 fiscal years specified under this section. Such levels

8 shall not be subject to offset or reprogramming for

9 any reason.’’.

10 (2) HOMELESS HEALTH SERVICES.—Section

11 340(q)(1) of such Act (42 U.S.C. 256(q)(1)) is

12 amended by striking ‘‘$70,000,000’’ and all that fol13 lows through the end thereof and inserting the fol14 lowing: ‘‘$100,000,000 for fiscal year 1995,

15 $110,000,000 for fiscal year 1996, $120,000,000 for

16 fiscal year 1997, $130,000,000 for fiscal year 1998,

17 $140,000,000 for fiscal year 1999, $150,000,000 for

18 fiscal year 2000, and not less than $150,000,000 for

19 each of the fiscal years 2001 through 2005. The

20 preceding sentence constitutes budget authority in

21 advance of appropriations Acts and represents the

22 obligation of the Federal Government to provide

23 funding for payments in the amounts, and for the

24 fiscal years specified under this section. Such levels
37

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1 shall not be subject to offset or reprogramming for

2 any reason.’’.

3 SEC. 5. EXPANDING THE NATIONAL HEALTH SERVICE

4 CORPS.

5 (a) ADDITIONAL FUNDING FOR CORPS PROGRAMS.—

6 Section 338(a) of the Public Health Service Act (42

7 U.S.C. 254k(a)) is amended—

8 (1) by redesignating paragraph (2) as para9 graph (3); and

10 (2) by inserting after paragraph (1), the follow11 ing new paragraph:

12 ‘‘(2)(A) For the purpose of carrying out this para13 graph, there are authorized to be appropriated

14 $50,000,000 for fiscal year 1995, $100,000,000 for fiscal

15 year 1996, and $200,000,000 for each of the fiscal years

16 1997 through 2000. The preceding sentence constitutes

17 budget authority in advance of appropriations Acts and

18 represents the obligation of the Federal Government to

19 provide funding for payments in the amounts, and for the

20 fiscal years, specified under this section. Such levels shall

21 not be subject to offset or reprogramming for any reason.

22 ‘‘(B) The authorizations of appropriations established

23 in subparagraph (A) are in addition to the authorizations

24 of appropriations in paragraph (1).
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1 ‘‘(C) Of the amounts appropriated under subpara2 graph (A), the Secretary shall reserve such amounts as

3 may be necessary to ensure that, of the aggregate number

4 of individuals who are participants in the Scholarship Pro5 gram under section 338A, or in the Loan Repayment Pro6 gram under section 338B, the total number who are being

7 educated as nurses or are serving as nurses, respectively,

8 is increased to 20 percent.

9 ‘‘(D) Notwithstanding section 333(a)(3) and the pri10 orities stated in section 333A for approval of applications

11 for the assignment of Corps members, to the extent that

12 additional funds appropriated pursuant to subparagraph

13 (A) increases the number of individuals participating in

14 the Scholarship Program under section 338A and in the

15 Loan Repayment Program under section 338B over the

16 number of individuals participating in such programs in

17 fiscal year 1994, the Secretary shall give preference in as18 signing those individuals to applicants that serve a health

19 professional shortage area and receive grants to provide

20 health services and enabling services under section 329,

21 330 or 340 (including, but not limited to, networks and

22 plans awarded funds under section 330) and other feder23 ally qualified health centers as defined in section

24 1861(aa)(4) of the Social Security Act.’’.
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1 SEC. 6. FACILITATING THE PARTICIPATION OF COMMUNITY

2 PROVIDERS IN HEALTH PROFESSIONS TRAIN3 ING.

4 (a) PREFERENCE FOR CERTAIN HEALTH PROFES5 SIONS PROGRAM APPLICANTS.—Section 791(a)(1) of the

6 Public Health Service Act (42 U.S.C. 295j(a)(1)) is

7 amended—

8 (1) by inserting after ‘‘or 767,’’ the following:

9 ‘‘or under sections 777 and 778, in addition to pref10 erences stated in such sections,’’; and

11 (2) by striking subparagraphs (A) and (B) and

12 inserting the following new subparagraphs:

13 ‘‘(A) is (or is a co-applicant with) an entity

14 that receives support under section 329, 330, or

15 340, or that is certified as a federally qualified

16 health center under section 1861(aa)(4) of the

17 Social Security Act; and

18 ‘‘(B) either—

19 ‘‘(i) has a high rate for placing grad20 uates in practice settings having the prin21 ciple focus of serving residents of medically

22 underserved communities; or

23 ‘‘(ii) during the 2-year period preced24 ing the fiscal year for which such an award

25 is sought, has achieved a significant in-
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1 crease in the rate of placing graduates in

2 such settings.’’.

3 (b) PREFERENCE FOR CERTAIN NURSE TRAINING

4 PROGRAM APPLICANTS.—Section 860(e)(1)(A) of such

5 Act (42 U.S.C. 298b–7(e)(1)(A)) is amended—

6 (1) by striking ‘‘821, 822, 830, and 831’’ and

7 inserting ‘‘820(b), 820(c), 821, 822, 827, 830, and

8 831’’;

9 (2) by striking clauses (i) and (ii) and inserting

10 the following new clauses:

11 ‘‘(i) is (or is a co-applicant with) an

12 entity that receives support under section

13 329, 330, or 340, or that is certified as a

14 federally qualified health center under sec15 tion 1861(aa)(4) of the Social Security

16 Act; and

17 ‘‘(ii) either—

18 ‘‘(I) has a high rate for placing

19 graduates in practice settings having

20 the principle focus of serving residents

21 of medically underserved communities;

22 or

23 ‘‘(II) during the 2-year period

24 preceding the fiscal year for which

25 such an award is sought, has achieved
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1 a significant increase in the rate of

2 placing graduates in such settings.’’.

3 (c) PAYMENT FOR DIRECT COSTS OF GRADUATE

4 MEDICAL EDUCATION.—Section 1886(h)(4)(E) of the So5 cial Security Act (42 U.S.C. 1395ww(h)(4)(E)) is amend6 ed by striking ‘‘that setting.’’ and inserting the following:

7 ‘‘that setting (or, in the case of activities performed at

8 a federally qualified health center described in section

9 1861(aa)(4), if the hospital incurs any of the costs for the

10 training program at such center and reimburses the center

11 for any of the costs of the program that the center in12 curs).’’.

13 (d) PAYMENT FOR INDIRECT COSTS OF GRADUATE

14 MEDICAL EDUCATION.—Section 1886(d)(5)(B)(iv) of the

15 Social Security Act (42 U.S.C. 1395ww(d)(5)(B)(iv)), as

16 amended by section 13506 of the Omnibus Budget Rec17 onciliation Act of 1993, is amended—

18 (1) by striking ‘‘entity receiving a grant’’ and

19 all that follows through ‘‘control of the hospital’’ and

20 inserting ‘‘federally qualified health center described

21 in section 1861(aa)(4)’’;

22 (2) by striking ‘‘all, or substantially all, of the

23 costs’’ and inserting ‘‘any of the costs’’; and
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1 (3) by striking ‘‘residents)’’ and inserting ‘‘resi2 dents and reimburses the center for any of the costs

3 of the program that the center incurs)’’.

4 (e) CLARIFYING ALLOWABILITY OF COSTS.—Section

5 1833(a)(3) of the Social Security Act (42 U.S.C.

6 1395l(a)(3)) is amended by inserting after words ‘‘fur7 nishing such services’’ the following: ‘‘(including, without

8 limitation, all costs associated with participation in an ap9 proved medical residency training program)’’.

10 (f) EFFECTIVE DATE.—The amendments made by

11 subsections (c), (d), and (e) shall apply to services fur12 nished during cost reporting periods beginning on or after

13 October 1, 1994.

14 SEC. 7. PROVIDING SAFEGUARDS FOR RURAL HEALTH

15 CLINICS AND FEDERALLY QUALIFIED

16 HEALTH CENTERS IN MEDICAID DEMONSTRA17 TIONS.

18 (a) FREEDOM OF CHOICE.—Section 1115(a)(1) of

19 the Social Security Act (42 U.S.C. 1315(a)(1)) is amend20 ed by inserting after ‘‘or 1902’’ the following: ‘‘(other than

21 sections 1902(a)(13)(E), 1902(a)(10)(A), and

22 1902(a)(23) insofar as they require the provision of, pay23 ment for, and allow freedom of choice to select the pro24 vider of, the care and services described in section

25 1905(a)(2)(B) and (C))’’.
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1 (b) NO AUTHORITY TO WAIVE COMPLIANCE.—Sec2 tion 1115(a)(2) of such Act (42 U.S.C. 1315(a)(2)) is

3 amended by inserting before the period the following: ‘‘,

4 except that this paragraph shall not provide authority for

5 the Secretary to waive compliance by a State with the re6 quirements of section 1903(m)(2)(A)(ix) or 1903(m)(3)’’.

7 (c) WAIVERS.—Section 1915(b) of such Act (42

8 U.S.C. 1396n(b)) is amended—

9 (1) in the first sentence, by striking

10 ‘‘1905(a)(2)(C)’’ and inserting ‘‘1905(a)(2)(B) and

11 (C)’’; and

12 (2) in the last sentence, by inserting before the

13 period the following: ‘‘or under section

14 1905(a)(2)(B) and (C)’’.

15 (d) PAYMENTS TO STATES.—Section 1903(m) of

16 such Act (42 U.S.C. 1396b(m)) is amended:

17 (1) in paragraph (2)(G), by inserting ‘‘or is an

18 entity primarily owned and controlled by such grant19 ee or grantees,’’ after ‘‘Public Health Service Act’’;

20 and

21 (2) by inserting after paragraph (2) the follow22 ing new paragraph:

23 ‘‘(3) Notwithstanding sections 1115 and 1915(b), in

24 the event that a State agency contracts with an entity de25 scribed in paragraph (2)(A) or an entity similar to such
44

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1 entity, such State agency, upon receiving an offer to pro2 vide health care services from a rural health clinic or a

3 federally qualified health center operating in the same geo4 graphic area as such entity, shall enter into a contract

5 with such clinic or center for the provision of all health

6 care services referred to in such offer and, unless the clinic

7 or center elects otherwise, the payment made by the State

8 to such clinic or center for services described in section

9 1905(a)(2) (B) and (C) to the individuals proposed to be

10 served in the clinic’s or center’s offer shall be made at

11 the rates of payment specified in section

12 1902(a)(13)(E).’’.

13 (e) CONFORMING AMENDMENTS.—

14 (1) STATE PLANS.—Section 1902(e)(2)(A) of

15 such Act (42 U.S.C. 1396a(e)(2)(A)) is amended by

16 inserting ‘‘(or an entity primarily owned and con17 trolled by a grantee or grantees described in para18 graph (2)(G))’’ after ‘‘(2)(G)’’.

19 (2) STATE PAYMENTS.—Section

20 1903(m)(2)(F)(i) of such Act (42 U.S.C.

21 1396b(m)(2)(F)(i)) is amended by inserting ‘‘(or an

22 entity primarily owned and controlled by a grantee

23 or grantees described in subparagraph (G))’’ after

24 ‘‘(G)’’.
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1 SEC. 8. PROVIDING SAFE HARBOR FOR CERTAIN COLLABO2 RATIVE EFFORTS THAT BENEFIT MEDICALLY

3 UNDERSERVED PERSONS.

4 Section 1128B(b)(3) of the Social Security Act (42

5 U.S.C. 1320a–7b(b)(3)) is amended—

6 (1) in subparagraph (D), by striking ‘‘and’’ at

7 the end thereof;

8 (2) in subparagraph (E), by striking the period

9 and inserting ‘‘; and’’; and

10 (3) by adding at the end thereof the following

11 new subparagraph:

12 ‘‘(F) any remuneration paid by or to a recipient

13 or subrecipient of Federal grant funds under or in

14 connection with an arrangement for the procurement

15 of goods or services by the recipient or subrecipient,

16 the referral of patients, or the lease or purchase of

17 space or equipment, if—

18 ‘‘(i) the arrangement is in writing and

19 signed by the parties;

20 ‘‘(ii) the arrangement will result in the

21 savings of Federal grant funds or increased rev22 enues to the recipient or subrecipient that will

23 be used to increase the availability or accessibil24 ity of services to a medically underserved popu25 lation served by the recipient or subrecipient or

26 an improvement in the quality of services to
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1 such population: Provided, that the recipient or

2 subrecipient may seek a prior determination

3 from the Public Health Service that the re4 quirement of this clause is met and, if the re5 cipient or subrecipient does so, Public Health

6 Service approval shall be conclusive and binding

7 on the Federal Government;

8 ‘‘(iii) the arrangement will not result in

9 private inurement to any current employees or

10 members of the Board of Directors of the recip11 ient or subrecipient, or to agents of the recipi12 ent or subrecipient who were involved in rec13 ommending or negotiating the arrangement;

14 ‘‘(iv) with respect to an arrangement under

15 which a recipient or subrecipient is procuring

16 goods or services, the provider of the goods or

17 services is the only provider able to supply such

18 goods or services, or the recipient or sub19 recipient has engaged in a competitive process

20 to procure the goods or services that meets the

21 requirements for competition under Federal

22 grant awards;

23 ‘‘(v) with respect to an arrangement for a

24 referral of patients, the arrangement will assure

25 that all patients covered or affected by the ar-
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1 rangement are advised that they may request a

2 referral to any person or entity of their choos3 ing, subject to appropriate contractual limita4 tions under which the recipient or subrecipient

5 may operate as a health plan or as a contract

6 health plan provider and such limitations as the

7 patient may be under as an enrollee of a health

8 plan; and

9 ‘‘(vi) with respect to an arrangement for a

10 referral of patients, the arrangement will not

11 interfere with the discretion of health profes12 sionals to refer patients in a manner they be13 lieve will most appropriately deal with a pa14 tient’s particular circumstances, subject to ap15 propriate contractual limitations under which

16 the recipient or subrecipient may operate as a

17 health plan or as a contract health plan pro18 vider and such limitations as the patient may

19 be under as an enrollee of a health plan.

20 With respect to any arrangement that does not meet the

21 requirements of subparagraph (F), paragraphs (1) and (2)

22 shall not apply when the recipient or subrecipient of Fed23 eral grant funds has applied to the Secretary for approval

24 of the arrangement and the Secretary, after consultation

25 with the Department of Health and Human Services Of-
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1 fice of Inspector General, has approved the arrangement

2 based upon a finding that the arrangement will produce

3 a substantial benefit to a medically underserved popu4 lation that outweighs the arrangement’s failure to fully

5 satisfy all of the requirements of such subparagraph. For

6 any arrangement existing on the date of enactment of the

7 Access to Community Health Care Act of 1994, that in8 volves a recipient or subrecipient of Federal grant funds

9 that does not meet the requirements of subparagraph (F)

10 and would subject the recipient or subrecipient to criminal

11 penalties under paragraphs (1) or (2), the recipient or

12 subrecipient shall be immune from criminal prosecution

13 under paragraph (1) or (2), except that such immunity

14 shall only apply if, not later than 6 months after such date

15 of enactment, the arrangement is terminated or amended

16 to conform to the requirements of subparagraph (F). For

17 purposes of this paragraph, a ‘recipient’ shall mean a pub18 lic or nonprofit private entity that receives a grant or co19 operative agreement under the Public Health Service Act

20 or under title V of this Act. For purposes of this section,

21 a ‘subrecipient’ shall mean a public or nonprofit private

22 entity that performs substantive work under a grant or

23 cooperative agreement under the Public Health Service

24 Act or under title V of this Act to a recipient.’’.
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Æ

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