I

103D CONGRESS

1ST SESSION H. R. 237

To increase access to health care services for individuals in rural areas,

and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

JANUARY 5, 1993

Mr. LAROCCO introduced the following bill; which was referred jointly to the

Committees on Ways and Means, Energy and Commerce, and the Judiciary

A BILL

To increase access to health care services for individuals

in 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; TABLE OF CONTENTS.

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

5 ‘‘Rural Health Care Access Improvement Act of 1993’’.

6 (b) TABLE OF CONTENTS.—The table of contents of

7 this Act is as follows:

Sec. 1. Short title; table of contents.

TITLE I—PROVISIONS RELATING TO PHYSICIANS’ SERVICES

Subtitle A—Incentives Under Medicare

Sec. 101. Elimination of medicare payment reductions for new doctors and

practitioners for services furnished in any rural area.
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Sec. 102. No medicare secondary payor denial based on failure to complete

questionnaire.

Sec. 103. Limitations on use of extrapolation.

Sec. 104. Limitation on carrier user fees.

Sec. 105. Including physician input in annual carrier performance reviews.

Sec. 106. Appeals of carrier violations.

Sec. 107. Review of medical necessity denials in rural areas by physicians in

same specialty.

Sec. 108. Clarification of permissible substitute billing arrangements for physicians’ services under the medicare and medicaid programs.

Sec. 109. Repeal of PRO precertification requirement for certain surgical procedures performed in rural areas.

Subtitle B—Increasing Number of Physicians Practicing in Rural Areas

Sec. 111. Deduction for medical school education loan interest incurred by physicians serving in medically underserved rural areas.

Sec. 112. Determination of greatest shortage of health professionals with respect to assignment of members of National Health Service

Corps.

Subtitle C—Expansion of Exceptions to Limitations on Physician SelfReferrals

Sec. 121. Changes in exceptions.

Sec. 122. Study and report on changes in costs.

Sec. 123. Effective date.

TITLE II—PROVISIONS RELATING TO HOSPITALS

Sec. 201. Holding rural hospitals harmless from reductions in medicare payments for capital-related costs resulting from prospective payment methodology.

Sec. 202. Extension of rural referral center classification.

Sec. 203. Antitrust exemption for certain rural hospitals.

TITLE III—MISCELLANEOUS PROVISIONS

Subtitle A—Administrative Simplification

Sec. 301. Requirements for health benefit plans.

Sec. 302. Requirements for health service providers.

Sec. 303. Health claims clearinghouses.

Sec. 304. Standards relating to electronic claims processing.

Sec. 305. Excise tax on premiums received on group health plans which do not

meet certain requirements.

Sec. 306. Application of requirements to medicare and medicaid programs.

Subtitle B—Other Provisions

Sec. 311. Telecommunications demonstration program for trauma care in rural

areas.

Sec. 312. Primary care nursing clinics in rural areas.

Sec. 313. Identification, assessment, and reduction of paperwork burden associated with health care services.
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1 TITLE I—PROVISIONS RELATING

2 TO PHYSICIANS’ SERVICES

3 Subtitle A—Incentives Under

4 Medicare

5 SEC. 101. ELIMINATION OF MEDICARE PAYMENT REDUC6 TIONS FOR NEW DOCTORS AND PRACTITION7 ERS FOR SERVICES FURNISHED IN ANY

8 RURAL AREA.

9 (a) IN GENERAL.—

10 (1) PAYMENTS TO PHYSICIANS.—The second

11 sentence of section 1848(a)(4) of the Social Security

12 Act (42 U.S.C. 1395w–4(a)(4)) is amended—

13 (A) by striking ‘‘or services’’ and inserting

14 ‘‘, services’’; and

15 (B) by inserting before the period at the

16 end the following: ‘‘, or services furnished in a

17 rural area (as so defined) by (or under the su18 pervision of, or incident to services of) a physi19 cian described in section 1861(r)(1)’’.

20 (2) PAYMENTS TO OTHER PRACTITIONERS.—

21 Section 1842(b)(4)(F)(i) of such Act (42 U.S.C.

22 1395u(b)(4)(F)(i)) is amended—

23 (A) by striking ‘‘and other than services’’

24 and inserting ‘‘, services’’; and
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1 (B) by striking ‘‘area)’’ and inserting the

2 following: ‘‘area, or services furnished in a rural

3 area (as so defined) by (or under the super4 vision of, or incident to services of) a physician

5 described in section 1861(r)(1))’’.

6 (b) EFFECTIVE DATE.—The amendments made by

7 subsection (a) shall apply to services furnished after 1993.

8 SEC. 102. NO MEDICARE SECONDARY PAYOR DENIAL

9 BASED ON FAILURE TO COMPLETE QUES10 TIONNAIRE.

11 (a) IN GENERAL.—Section 1862(b)(2) of the Social

12 Security Act (42 U.S.C. 1395y(b)(2)) is amended by add13 ing at the end the following new subparagraph:

14 ‘‘(C) TREATMENT OF QUESTIONNAIRES.—

15 The Secretary shall not fail to make payment

16 under subparagraph (A) based upon the failure

17 of an individual to complete a questionnaire

18 concerning the existence of a primary plan.

19 However, any such payment remains condi20 tional (as provided under subparagraph (B)).’’.

21 (b) EFFECTIVE DATE.—The amendment made by

22 subsection (a) shall apply to services furnished on or after

23 January 1, 1994.
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1 SEC. 103. LIMITATIONS ON USE OF EXTRAPOLATION.

2 (a) IN GENERAL.—Section 1842(c) of the Social Se3 curity Act (42 U.S.C. 1395u(c)) is amended by adding at

4 the end the following new paragraph:

5 ‘‘(4) In carrying out its contract under subsection

6 (b)(3) with respect to physicians’ services—

7 ‘‘(A) the carrier may use extrapolation in order

8 to identify claims for which payment may be dis9 allowed;

10 ‘‘(B) the carrier may not recoup or offset pay11 ment amounts based on extrapolation if the physi12 cian requests that disallowed claims be identified in13 dividually; and

14 ‘‘(C) no refund, offset assessment, penalties, or

15 interest shall accrue with respect to a claim that is

16 disallowed until the date the administrative appeals

17 process has been completed.’’.

18 (b) EFFECTIVE DATE.—The amendment made by

19 subsection (a) shall apply to services furnished on or after

20 January 1, 1994.

21 SEC. 104. LIMITATION ON CARRIER USER FEES.

22 (a) IN GENERAL.—Section 1842(c) of the Social Se23 curity Act (42 U.S.C. 1395u(c)), as amended by section

24 103(a), is further amended by adding at the end the fol25 lowing new paragraph:
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1 ‘‘(5) Neither a carrier nor the Secretary may impose

2 a fee under this title—

3 ‘‘(A) for the filing of a claim relating to physi4 cians’ services,

5 ‘‘(B) for an error in filing a claim relating to

6 physicians’ services or for such a claim which is de7 nied,

8 ‘‘(C) for any appeal under this title with respect

9 to physicians’ services,

10 ‘‘(D) for applying for (or obtaining) a unique

11 identifier under subsection (r), or

12 ‘‘(E) for responding to inquiries respecting phy13 sicians’ services or for providing information with re14 spect to medical review of such services.’’.

15 (b) EFFECTIVE DATE.—The amendment made by

16 subsection (a) shall apply to services furnished on or after

17 January 1, 1994.

18 SEC. 105. INCLUDING PHYSICIAN INPUT IN ANNUAL CAR19 RIER PERFORMANCE REVIEWS.

20 (a) IN GENERAL.—Section 1842(b)(2) of the Social

21 Security Act (42 U.S.C. 1395u(b)(2)) is amended—

22 (1) in the second sentence of subparagraph (A),

23 by inserting ‘‘(including the reduction of administra24 tive burdens on physicians furnishing services for
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1 which payment is made under this part)’’ after ‘‘con2 tract obligations under this section’’, and

3 (2) by adding at the end the following new sub4 paragraph:

5 ‘‘(D) In applying the standards and criteria estab6 lished under subparagraph (A), the Secretary shall con7 sider any evaluations (with respect to such standards and

8 criteria) submitted by medical societies representing physi9 cians who are served by the carrier.’’.

10 (b) EFFECTIVE DATE.—The amendment made by

11 subsection (a) shall apply to services furnished on or after

12 January 1, 1994.

13 SEC. 106. APPEALS OF CARRIER VIOLATIONS.

14 (a) IN GENERAL.—Section 1842(b)(2) of the Social

15 Security Act (42 U.S.C. 1395u(b)(2)), as amended by sec16 tion 105(a)(2), is further amended by adding at the end

17 the following new subparagraph:

18 ‘‘(E) The Secretary shall provide that any individual

19 (including a physician) who—

20 ‘‘(i) is aggrieved by the failure of a carrier to

21 carry out policies established under this part, wheth22 er established through the carrier manual, regional

23 office transmittals, central office transmittals, or

24 other means, and
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1 ‘‘(ii) establishes that the individual has (or, in

2 the case of a failure affecting more than one individ3 ual, the individuals affected by the failure have) suf4 fered damages aggregating at least $500 as a result

5 of the failure,

6 may obtain a hearing before the Secretary respecting such

7 failure. If a carrier is found to have such a failure, the

8 Secretary shall order the carrier to compensate the ag9 grieved individuals for such failure.’’.

10 (b) EFFECTIVE DATE.—The amendment made by

11 subsection (a) shall apply to services furnished on or after

12 January 1, 1994.

13 SEC. 107. REVIEW OF MEDICAL NECESSITY DENIALS IN

14 RURAL AREAS BY PHYSICIANS IN SAME SPE15 CIALTY.

16 Section 1842(b)(2) of the Social Security Act (42

17 U.S.C. 1395u(b)(2)), as amended by sections 105(a)(2)

18 and 106(a), is further amended by adding at the end the

19 following new subparagraph:

20 ‘‘(F) In the contract under subsection (c), the Sec21 retary shall require each carrier, in the case of a decision

22 to deny payment for physicians’ services provided in a

23 rural area (as defined in section 18869d)(2)(D)) under

24 section 1862(a)(1), to provide for review of the decision
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1 by a physician in the same medical specialty as the medi2 cal specialty of the physician who provided the services.’’.

3 SEC. 108. CLARIFICATION OF PERMISSIBLE SUBSTITUTE

4 BILLING ARRANGEMENTS FOR PHYSICIANS’

5 SERVICES UNDER THE MEDICARE AND MED6 ICAID PROGRAMS.

7 (a) MEDICARE PROGRAM.—

8 (1) IN GENERAL.—Clause (D) of section

9 1842(b)(6) of the Social Security Act (42 U.S.C.

10 1395u(b)(6)) is amended to read as follows: ‘‘(D)(i)

11 payment may be made to a physician for physicians’

12 services (and services incident to such services) to be

13 provided by a second physician on a reciprocal basis

14 to individuals who are patients of the first physician

15 if (I) the first physician is unavailable to provide the

16 services, (II) the services are not provided by the

17 second physician over a continuous period of longer

18 than 60 days, and (III) the claim form submitted to

19 the carrier includes the second physician’s unique

20 identifier (provided under the system established

21 under subsection (r)) and indicates that the claim

22 meets the requirements of this clause for payment to

23 the first physician; and (ii) payment may be made

24 to a physician for physicians’ services (and services

25 incident to such services) which that physician pays
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1 a second physician on a per diem or other fee-for2 time basis to provide to individuals who are patients

3 of the first physician if (I) the first physician is un4 available to provide the services, (II) the services are

5 not provided by the second physician over a continu6 ous period of longer than 90 days (or such longer

7 period as the Secretary may provide), and (III) the

8 claim form submitted to the carrier includes the sec9 ond physician’s unique identifier (provided under the

10 system established under subsection (r)) and indi11 cates that the claim meets the requirements of this

12 clause for payment to the first physician’’.

13 (2) EFFECTIVE DATE.—The amendment made

14 by paragraph (1) shall apply to services furnished on

15 or after the first day of the first month beginning

16 more than 60 days after the date of the enactment

17 of this Act.

18 (b) MEDICAID PROGRAM.—

19 (1) IN GENERAL.—Section 1902(a)(32)(C) of

20 the Social Security Act (42 U.S.C. 1396a(a)(32)(C))

21 is amended to read as follows:

22 ‘‘(C) payment may be made to a physician

23 for services furnished by a substitute physician

24 under the circumstances described in subpara25 graph (D) of section 1842(b)(6), except that,
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1 for purposes of this subparagraph, any ref2 erence in such subparagraph to ‘a carrier’ or

3 ‘the system established under subsection (r)’ is

4 deemed a reference to the State (or other fiscal

5 agent under the State plan) and to the system

6 established under subsection (x) of this section,

7 respectively.’’.

8 (2) EFFECTIVE DATE.—(A) The amendment

9 made by paragraph (1) shall apply to services fur10 nished on or after the date of the enactment of this

11 Act.

12 (B) Until the first day of the first calendar

13 quarter beginning more than 60 days after the date

14 the Secretary of Health and Human Services estab15 lishes the physician identifier system under section

16 1902(x) of the Social Security Act, the requirement

17 under section 1902(a)(32)(C) of such Act that a

18 claim form submitted must include the second physi19 cian’s unique identifier is deemed to be satisfied if

20 the claim form identifies (in a manner specified by

21 the Secretary of Health and Human Services) the

22 second physician.
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1 SEC. 109. REPEAL OF PRO PRECERTIFICATION REQUIRE2 MENT FOR CERTAIN SURGICAL PROCEDURES

3 PERFORMED IN RURAL AREAS.

4 (a) IN GENERAL.—Section 1164(b) of the Social Se5 curity Act (42 U.S.C. 1320c–13(b)) is amended by adding

6 at the end the following new paragraph:

7 ‘‘(5) EXCEPTION FOR PROCEDURES PER8 FORMED IN RURAL AREAS.—No surgical procedure

9 performed in a rural area (as defined in section

10 1886(d)(2)(D)) shall be covered under this section.’’.

11 (b) EFFECTIVE DATE.—The amendment made by

12 subsection (a) shall apply to services furnished on or after

13 January 1, 1994.

14 Subtitle B—Increasing Number of

15 Physicians Practicing in Rural

16 Areas

17 SEC. 111. DEDUCTION FOR MEDICAL SCHOOL EDUCATION

18 LOAN INTEREST INCURRED BY PHYSICIANS

19 SERVING IN MEDICALLY UNDERSERVED

20 RURAL AREAS.

21 (a) IN GENERAL.—Paragraph (1) of section 163(h)

22 of the Internal Revenue Code of 1986 (relating to dis23 allowance of deduction for personal interest) is amended

24 by striking ‘‘and’’ at the end of subparagraph (D), by re25 designating subparagraph (E) as subparagraph (F), and
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1 by inserting after subparagraph (D) the following new

2 subparagraph:

3 ‘‘(E) any qualified medical education loan

4 interest (within the meaning of paragraph (5)),

5 and’’.

6 (b) QUALIFIED MEDICAL EDUCATION LOAN INTER7 EST DEFINED.—Subsection (h) of section 163 of such

8 Code is amended by redesignating paragraph (5) as para9 graph (6) and by inserting after paragraph (4) the follow10 ing new paragraph:

11 ‘‘(5) QUALIFIED MEDICAL EDUCATION LOAN IN12 TEREST.—

13 ‘‘(A) IN GENERAL.—The term ‘qualified

14 medical education loan interest’ means inter15 est—

16 ‘‘(i) which is on a medical education

17 loan of a physician,

18 ‘‘(ii) which is paid or accrued by such

19 physician, and

20 ‘‘(iii) which accrues during the pe21 riod—

22 ‘‘(I) such physician is providing

23 primary care (including internal medi24 cine, pediatrics, obstetrics/gynecology,

25 family medicine, and osteopathy) to
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1 residents of a medically underserved

2 rural area, and

3 ‘‘(II) such physician’s principal

4 place of abode is in such area.

5 ‘‘(B) MEDICAL EDUCATION LOAN.—The

6 term ‘medical education loan’ means indebted7 ness incurred to pay the individual’s—

8 ‘‘(i) qualified tuition and related ex9 penses (as defined in section 117(b)) in10 curred for the medical education of such

11 individual, or

12 ‘‘(ii) reasonable living expenses while

13 away from home in order to attend an edu14 cational institution described in section

15 170(b)(1)(A)(ii) for the medical education

16 of such individual.

17 ‘‘(C) PHYSICIAN.—For purposes of sub18 paragraph (A), the term ‘physician’ has the

19 meaning given such term by section 1861(r)(1)

20 of the Social Security Act.

21 ‘‘(D) MEDICALLY UNDERSERVED RURAL

22 AREA.—The term ‘medically underserved rural

23 area’ means any rural area which is a medically

24 underserved area (as defined in section 330(b)

25 or 1302(7) of the Public Health Service Act).’’.
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1 (c) EFFECTIVE DATE.—The amendments made by

2 this section shall apply to taxable years ending after the

3 date of the enactment of this Act.

4 SEC. 112. DETERMINATION OF GREATEST SHORTAGE OF

5 HEALTH PROFESSIONALS WITH RESPECT TO

6 ASSIGNMENT OF MEMBERS OF NATIONAL

7 HEALTH SERVICE CORPS.

8 (a) IN GENERAL.—Section 333A(b) of the Public

9 Health Service Act (42 U.S.C. 254f–1(b)) is amended by

10 adding at the end the following paragraph:

11 ‘‘(3) The ratio of the estimated number of

12 medically underserved individuals residing in the

13 health professional shortage area involved to the ag14 gregate population of all health professional shortage

15 areas.’’.

16 (b) EFFECTIVE DATE.—The amendment made by

17 subsection (a) shall apply to assignments of members of

18 the National Health Service Corps that are made on or

19 after the date of the enactment of this Act.

20 Subtitle C—Expansion of Excep21 tions to Limitations on Physi22 cian Self-Referrals

23 SEC. 121. CHANGES IN EXCEPTIONS.

24 (a) HEALTH MAINTENANCE ORGANIZATIONS AND

25 MANAGED CARE PLANS.—Paragraph (3) of section
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1 1877(b) of the Social Security Act is amended to read as

2 follows:

3 ‘‘(3) HEALTH MAINTENANCE ORGANIZATIONS

4 AND MANAGED CARE PLANS.—

5 ‘‘(A) HEALTH MAINTENANCE ORGANIZA6 TIONS.—In the case of services furnished by a

7 health maintenance organization to an individ8 ual enrolled with the health maintenance orga9 nization, including services furnished by—

10 ‘‘(i) an eligible organization (as de11 fined in section 1876(b));

12 ‘‘(ii) an organization described in sec13 tion 1833(a)(1)(A);

14 ‘‘(iii) an organization receiving pay15 ments on a prepaid basis under a dem16 onstration project under section 402(a) of

17 the Social Security Amendments of 1967

18 or under section 222(a) of the Social Secu19 rity Amendments of 1972; and

20 ‘‘(iv) any other entity designated by

21 the Secretary as a health maintenance or22 ganization for purposes of this subpara23 graph.

24 ‘‘(B) CERTAIN MANAGED CARE PLANS.—In

25 the case of services furnished by a managed
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1 care plan (as defined by the Secretary) to an

2 individual enrolled under the plan if—

3 ‘‘(i) the plan selectively contracts with

4 physicians and with providers of des5 ignated health services; and

6 ‘‘(ii) under the plan physicians bear a

7 significant financial risk for the cost of

8 designated health services furnished upon

9 referral.’’.

10 (b) EXCEPTION FOR SHARED FACILITY SERVICES.—

11 Section 1877 of such Act is amended—

12 (1) in subsection (b), by redesignating para13 graphs (3), (4), and (5) as paragraphs (4), (6), and

14 (7), respectively, and by inserting after paragraph

15 (2) the following new paragraph:

16 ‘‘(3) SHARED FACILITY SERVICES.—

17 ‘‘(A) IN GENERAL.—In the case of shared

18 facility services of a shared facility—

19 ‘‘(i) that are furnished—

20 ‘‘(I) personally by the referring

21 physician who is a shared facility phy22 sician or personally by an individual

23 supervised by such a physician or by

24 another shared facility physician and
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1 employed under the shared facility ar2 rangement,

3 ‘‘(II) by a shared facility in a

4 building in which the referring physi5 cian furnishes physician’s services un6 related to the furnishing of shared fa7 cility services, and

8 ‘‘(III) to a patient of a shared fa9 cility physician;

10 ‘‘(ii) that are billed by the referring

11 physician or by an entity that is wholly

12 owned by such physician; and

13 ‘‘(iii) with respect to the referral for

14 which the disclosure requirements of sub15 paragraph (B) are met.

16 ‘‘(B) CONFLICT OF INTEREST DISCLOSURE

17 REQUIREMENTS.—A shared facility meets the

18 disclosure requirements of this subparagraph,

19 with respect to a referral of an individual for

20 the furnishing of shared facility services, if at

21 the time of the referral (and before the provi22 sion of shared facility services under the refer23 ral) and in a form and manner specified by the

24 Secretary—
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1 ‘‘(i) the individual (I) is given infor2 mation on the financial relationship be3 tween the referring physician and the

4 shared facility, and (II) is informed that a

5 list of alternative providers (if any) that

6 are available to provide such services will

7 be given upon request,

8 ‘‘(ii) the individual is given, upon re9 quest, a list of alternative providers (if

10 any) that are available to provide such

11 services, and

12 ‘‘(iii) the individual is informed that

13 (I) the individual has the option to use any

14 of the alternative providers and (II) the re15 ferring physician will not treat the individ16 ual differently if an alternative provider is

17 selected to provide the designated health

18 services.

19 ‘‘(C) CONSTRUCTION.—Nothing in sub20 paragraph (B) shall be construed to limit the

21 information that a shared facility or shared fa22 cility physician may provide to an individual.’’;

23 and

24 (2) in subsection (h), by adding at the end the

25 following new paragraph:
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1 ‘‘(8) SHARED FACILITY RELATED DEFINI2 TIONS.—

3 ‘‘(A) SHARED FACILITY SERVICES.—The

4 term ‘shared facility services’ means, with re5 spect to a shared facility, a type of service

6 which is furnished by the facility to patients of

7 shared facility physicians.

8 ‘‘(B) SHARED FACILITY.—The term

9 ‘shared facility’ means an entity that furnishes

10 shared facility services under a shared facility

11 arrangement.

12 ‘‘(C) SHARED FACILITY PHYSICIAN.—The

13 term ‘shared facility physician’ means, with re14 spect to a shared facility, a physician who has

15 a financial relationship under a shared facility

16 arrangement with the facility.

17 ‘‘(D) SHARED FACILITY ARRANGEMENT.—

18 The term ‘shared facility arrangement’ means,

19 with respect to the provision of a type of service

20 by a shared facility in a building, a financial ar21 rangement—

22 ‘‘(i) which is only between physicians

23 who are providing services (unrelated to

24 shared facility services) in the same build25 ing,
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1 ‘‘(ii) which makes one or more of the

2 shared facility physicians responsible for

3 the provision of shared facility services by

4 the facility,

5 ‘‘(iii) in which the overhead expenses

6 of the facility are shared, in accordance

7 with methods previously determined by the

8 physicians in the arrangement, among the

9 physicians in the arrangement, and

10 ‘‘(iv) which, in the case of a corpora11 tion, is wholly owned and controlled by

12 shared facility physicians.’’.

13 (c) EXCEPTION FOR VALUABLE COMMUNITY SERV14 ICES.—Section 1877(b) of such Act is further amended

15 by inserting after paragraph (4), as redesignated by sub16 section (b)(1), the following new paragraph:

17 ‘‘(5) VALUABLE COMMUNITY SERVICES.—

18 ‘‘(A) IN GENERAL.—In the case of services

19 furnished by an entity to individuals in a com20 munity if the Secretary determines that—

21 ‘‘(i) individuals in the community will

22 be deprived of adequate health care serv23 ices without an exception under this para24 graph for the entity and the services, and
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1 ‘‘(ii) the requirements of subpara2 graph (B) are met.

3 ‘‘(B) REQUIREMENTS.—The requirements

4 of this subparagraph for an exception under

5 subparagraph (A), for the furnishing of des6 ignated health services by an entity, are as fol7 lows:

8 ‘‘(i) EQUAL INVESTMENT OPPOR9 TUNITY.—(I) Individuals who are not re10 ferring physicians must be given a bona

11 fide opportunity to invest in the entity on

12 the same terms that are offered to refer13 ring physicians.

14 ‘‘(II) The terms on which investment

15 interests are offered to physicians must not

16 be related to the past or expected volume

17 of referrals or other business from the phy18 sicians.

19 ‘‘(III) The return on investment for

20 interested investors must be tied to the in21 vestor’s equity in the entity and not be re22 lated to the volume of referrals attributable

23 to the investor.

24 ‘‘(IV) There is no requirement that

25 any interested or other investor make re-
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1 ferrals to the entity or otherwise generate

2 business as a condition for remaining an

3 investor.

4 ‘‘(V) The entity must not loan funds

5 or guarantee a loan for interested investors

6 or physicians in a position to refer to the

7 entity.

8 ‘‘(VI) The entity must not market or

9 furnish its items or services to interested

10 investors differently from other investors.

11 ‘‘(ii) PROHIBITION OF

12 NONCOMPETITION CLAUSES.—Investment

13 contracts must not include a

14 ‘noncompetition clause’ that prevents phy15 sicians or interested investors from invest16 ing in other entities furnishing such serv17 ices.

18 ‘‘(iii) DISCLOSURE REQUIREMENTS.—

19 (I) The disclosure requirements of para20 graph (3)(B) must be met.

21 ‘‘(II) The financial relationship with

22 the referring physician must be disclosed,

23 when required, to any third-party payor.

24 ‘‘(iv) INTERNAL UTILIZATION RE25 VIEW.—There must be in operation an in-
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1 ternal utilization review program to ensure

2 that physicians who are interested inves3 tors do not exploit their patients in any

4 way through inappropriate utilization or

5 otherwise.

6 ‘‘(C) REVIEW.—In the case of any excep7 tion provided an entity under this paragraph,

8 the Secretary shall periodically review the entity

9 to determine if the requirements of subpara10 graph (B) continue to be met.

11 ‘‘(D) TERMINATION OF EXCEPTION.—The

12 Secretary shall, after notice and opportunity for

13 a hearing, terminate an exception granted an

14 entity under this paragraph if the Secretary de15 termines that—

16 ‘‘(i) there was a misrepresentation of

17 material fact in the application for the ex18 ception; or

19 ‘‘(ii) the entity has failed to comply

20 substantially with the requirements of sub21 paragraph (B).

22 ‘‘(E) COMMUNITY DEFINED.—In this para23 graph, the term ‘community’ means—

24 ‘‘(i) part or all of a metropolitan sta25 tistical area (or equivalent area), or
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1 ‘‘(ii) a county (or equivalent area)

2 outside such a metropolitan statistical area

3 (or equivalent area).’’.

4 (d) EXCEPTION FOR HOSPITALS.—Subparagraph (A)

5 of subsection (d)(3) of such section is amended to read

6 as follows:

7 ‘‘(A) at the time the services are furnished,

8 the hospital has a participation agreement in

9 effect under section 1866, and’’.

10 SEC. 122. STUDY AND REPORT ON CHANGES IN COSTS.

11 The Secretary of Health and Human Services shall

12 conduct a study in order to estimate the changes in aggre13 gate costs for designated health services, under the medi14 care program and other health plans, which will result

15 from the implementation of the amendments made by this

16 subtitle. Not later than 2 years after the date of the enact17 ment of this Act the Secretary shall submit to Congress

18 a report on such study.

19 SEC. 123. EFFECTIVE DATE.

20 (a) IN GENERAL.—Subject to subsection (b), the

21 amendments made by this subtitle shall apply with respect

22 to a referral by a physician made on or after the first day

23 of the first month beginning 6 months after the date of

24 the enactment of this Act.
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1 (b) TIME-LIMITED EXCEPTION FOR CURRENT FI2 NANCIAL RELATIONSHIPS.—

3 (1) IN GENERAL.—Subject to paragraph (3),

4 the amendments made by this subtitle shall not

5 apply in the case of a patient referral with respect

6 to which a prohibited financial relationship (de7 scribed in paragraph (2)) existed as of the date of

8 the enactment of this Act if, at the time of the refer9 ral (and before the receipt of services under the re10 ferral), the patient is provided information on the

11 prohibited financial relationship. Such information

12 shall be disclosed in the same manner information

13 must be disclosed under section 1877(b)(3)(B) of

14 the Social Security Act (as amended by this sub15 title). If such information is not so provided, the re16 ferral shall be subject to such amendments (as pro17 vided in subsection (a)).

18 (2) PROHIBITED FINANCIAL RELATIONSHIP.—A

19 prohibited financial relationship described in this

20 paragraph is a financial relationship described in

21 subsection (a)(2) of section 1877 of the Social Secu22 rity Act for which an exception described in sub23 section (b), (c), (d), or (e) of such section (as

24 amended by this subtitle) does not apply.
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1 (3) TIME LIMIT.—Paragraph (1) shall only

2 apply to referrals made before the first day of the

3 first month beginning 4 years after the date of the

4 enactment of this Act.

5 TITLE II—PROVISIONS

6 RELATING TO HOSPITALS

7 SEC. 201. HOLDING RURAL HOSPITALS HARMLESS FROM

8 REDUCTIONS IN MEDICARE PAYMENTS FOR

9 CAPITAL-RELATED COSTS RESULTING FROM

10 PROSPECTIVE PAYMENT METHODOLOGY.

11 (a) IN GENERAL.—Section 1886(g)(1)(B) of the So12 cial Security Act (42 U.S.C. 1395ww(g)(1)(B)) is amend13 ed—

14 (1) by striking ‘‘and’’ at the end of clause (iii);

15 (2) by striking the period at the end of clause

16 (iv) and inserting ‘‘, and’’; and

17 (3) by adding at the end the following new

18 clause:

19 ‘‘(v) shall provide that the amount of payment

20 made under the system in a cost reporting period to

21 any hospital located in a rural area (as defined in

22 subsection (d)(2)(D)) shall be based on reasonable

23 costs (as defined in section 1861(v)) or on the meth24 odology used to determine the amount of payment

25 for other hospitals, as elected by the hospital, except
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1 that the method elected by the hospital shall apply

2 to at least 3 consecutive cost reporting periods.’’.

3 (b) EFFECTIVE DATE.—The amendment made by

4 subsection (a) shall apply to portions of cost reporting pe5 riods or discharges (as the case may be) occurring on or

6 after October 1, 1991.

7 SEC. 202. EXTENSION OF RURAL REFERRAL CENTER CLAS8 SIFICATION.

9 (a) EXTENSION THROUGH FISCAL YEAR 1994.—Sec10 tion 6003(d) of the Omnibus Budget Reconciliation Act

11 of 1989 (42 U.S.C. 1395ww note) is amended by striking

12 ‘‘October 1, 1992’’ and inserting ‘‘October 1, 1994’’.

13 (b) REPEAL OF SPECIAL TREATMENT FOR REFER14 RAL CENTERS.—

15 (1) IN GENERAL.—Effective October 1, 1994,

16 section 1886(d)(5) of the Social Security Act (42

17 U.S.C. 1395ww(d)(5)) is amended by striking sub18 paragraph (C).

19 (2) EXCEPTION FOR DETERMINING DISPROPOR20 TIONATE SHARE PAYMENTS.—Section

21 1886(d)(5)(F)(iv) of such Act (42 U.S.C.

22 1395ww(d)(5)(F)(iv)) is amended by striking ‘‘sub23 paragraph (C),’’ each place it appears in subclauses

24 (IV) and (V) and inserting the following: ‘‘subpara25 graph (C) (or, for cost reporting periods beginning
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1 on or after October 1, 1994, would be so classified

2 if such subparagraph were in effect for such a cost

3 reporting period, or was so classified under such

4 subparagraph for the most recent cost reporting pe5 riod before such date),’’.

6 SEC. 203. ANTITRUST EXEMPTION FOR CERTAIN RURAL

7 HOSPITALS.

8 (a) IN GENERAL.—The antitrust laws shall not apply

9 with respect to—

10 (1) the combination of, or the attempt to com11 bine, 2 or more hospitals,

12 (2) a contract entered into solely by 2 or more

13 hospitals to allocate hospital services, or

14 (3) the attempt by only 2 or more hospitals to

15 enter into a contract to allocate hospital services,

16 if each of such hospitals satisfies all of the requirements

17 of subsection (b) at the time such hospitals engage in the

18 conduct described in paragraph (1), (2), or (3), as the case

19 may be.

20 (b) REQUIREMENTS DESCRIBED.—The requirements

21 referred to in subsection (a) are as follows:

22 (1) The hospital is located outside of a city, or

23 in a city that has less than 125,000 inhabitants, as

24 determined in accordance with the most recent data

25 available from the Bureau of the Census.
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1 (2) In the most recently concluded calendar

2 year, the hospital received more than 40 percent of

3 its gross revenue from payments made under Fed4 eral programs.

5 (3) There is in effect with respect to the hos6 pital a certificate issued by the Health Care Financ7 ing Administration specifying that such Administra8 tion has determined that Federal expenditures would

9 be reduced, and consumer costs would not increase,

10 if the 2 or more hospitals that request such certifi11 cate merge, or allocate the hospital services specified

12 in such request, as the case may be.

13 (c) DEFINITION.—For purposes of this section, the

14 term ‘‘antitrust laws’’ has the meaning given such term

15 in subsection (a) of the first section of the Clayton Act

16 (15 U.S.C. 12), except that such term includes section 5

17 of the Federal Trade Commission Act (15 U.S.C. 45) to

18 the extent that such section 5 applies with respect to un19 fair methods of competition.
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1 TITLE III—MISCELLANEOUS

2 PROVISIONS

3 Subtitle A—Administrative

4 Simplification

5 SEC. 301. REQUIREMENTS FOR HEALTH BENEFIT PLANS.

6 (a) IN GENERAL.—Each health benefit plan (as de7 fined in subsection (b)) shall, with respect to individuals

8 entitled to benefits under the plan—

9 (1) issue to each such individual who is residing

10 in the United States a health claims card that meets

11 the requirements of section 304(a);

12 (2) provide to the health claims clearinghouse

13 assigned to each such individual under section

14 303(c)(1) information, in an electronic form consist15 ent with standards established under section 304(b),

16 on—

17 (A) the eligibility of the individual for ben18 efits under the plan, and

19 (B) the benefits of the individual under the

20 plan; and

21 (3) accept the determinations of clean claims

22 made by the health claims clearinghouse under sec23 tion 303(e) for the individual.

24 (b) HEALTH BENEFIT PLAN DEFINED.—
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1 (1) IN GENERAL.—In this subtitle, the term

2 ‘‘health benefit plan’’ means, except as provided in

3 paragraphs (2) through (4), any public or private

4 entity or program that provides for payments for

5 health care services, including—

6 (A) a group health plan (as defined in sec7 tion 605 of the Employee Retirement Income

8 Security Act of 1974), a health plan of a mul9 tiple employer welfare association, and a health

10 plan of trustees of a fund established by one or

11 more employers or labor organizations (or com12 bination thereof), and

13 (B) any other health insurance arrange14 ment, including any arrangement consisting of

15 a hospital or medical expense incurred policy or

16 certificate, hospital or medical service plan con17 tract, or health maintenance organization sub18 scriber contract.

19 (2) PLANS EXCLUDED.—Such term does not in20 clude—

21 (A) accident-only, credit, or disability in22 come insurance;

23 (B) coverage issued as a supplement to li24 ability insurance;
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1 (C) an individual making payment on the

2 individual’s own behalf (or on behalf of a rel3 ative or other individual) for deductibles, coin4 surance, or services not covered under a health

5 benefit plan; and

6 (D) such other plans as the Secretary may

7 determine, because of the limitation of benefits

8 to a single type or kind of health care, such as

9 dental services or hospital indemnity plans, or

10 other reasons should not be subject to the re11 quirements of this section.

12 (3) PLANS INCLUDED.—Such term includes—

13 (A) worker’s compensation or similar in14 surance, and

15 (B) automobile medical-payment insurance.

16 (c) OTHER DEFINITIONS.—In this subtitle:

17 (1) CLEAN CLAIM.—The term ‘‘clean claim’’

18 means a request for payment under a health benefits

19 plan if the request has no defect or impropriety (in20 cluding any lack of any required substantiating doc21 umentation) or particular circumstance requiring

22 special treatment that prevents timely payment from

23 being made on the request under the plan.

24 (2) HEALTH CLAIMS CLEARINGHOUSE.—The

25 terms ‘‘health claims clearinghouse’’ and ‘‘clearing-
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1 house’’ mean an entity with a contract under section

2 303 to perform functions as a clearinghouse under

3 that section.

4 (3) SECRETARY.—The term ‘‘Secretary’’ means

5 the Secretary of Health and Human Services.

6 (4) UNITED STATES.—The term ‘‘United

7 States’’ means the 50 States and the District of Co8 lumbia.

9 (d) EFFECTIVE DATE.—The requirements of sub10 section (a) shall apply to plans as of a date specified by

11 the Secretary, which date shall be not later than 27

12 months after the date of the enactment of this Act.

13 SEC. 302. REQUIREMENTS FOR HEALTH SERVICE PROVID14 ERS.

15 (a) SUBMISSION OF CLAIMS.—

16 (1) IN GENERAL.—Each health service provider

17 which furnishes services in the United States for

18 which payment may be made under a health benefit

19 plan shall submit any claim for payment for such

20 services—

21 (A) only to the health claims clearinghouse

22 to which it is assigned, and

23 (B) only in a form and manner consistent

24 with standards established under section

25 304(b).
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1 (2) ENFORCEMENT.—

2 (A) CIVIL MONEY PENALTY.—

3 (i) IN GENERAL.—In the case of a

4 health service provider that submits a

5 claim in violation of paragraph (1), the

6 provider is subject to a civil money penalty

7 of not to exceed $100 (or, if greater, the

8 amount of the claim) for each such viola9 tion. The provisions of section 1128A of

10 the Social Security Act (other than the

11 first and second sentences of subsection (a)

12 and subsection (b)) shall apply to a civil

13 money penalty under this subparagraph in

14 the same manner as such provisions apply

15 to a penalty or proceeding under section

16 1128A(a) of such Act.

17 (ii) SUNSET.—No civil money penalty

18 may be imposed under clause (i) for sub19 mission of any claim on or after the date

20 that is 63 months after the date of the en21 actment of this Act.

22 (B) DENIAL OF PAYMENT UNDER MEDI23 CARE AND MEDICAID PROGRAMS.—In the case

24 of a health service provider that submits a

25 claim for services furnished under the medicare
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1 program or medicaid program in violation of

2 paragraph (1), no payment shall be made under

3 such program for such services.

4 (3) HEALTH SERVICE PROVIDER DEFINED.—In

5 this subsection, the term ‘‘health service provider’’

6 includes a provider of services (as defined in section

7 1861(u) of the Social Security Act), physicians, sup8 pliers, and other persons furnishing health care serv9 ices for which benefits may be made available under

10 a health benefit plan.

11 (4) EFFECTIVE DATE.—The requirements of

12 paragraph (1) shall apply to providers for claims

13 submitted on or after a date specified by the Sec14 retary, which date shall be not later than 27 months

15 after the date of the enactment of this Act.

16 (b) UNIFORM HOSPITAL REPORTING.—Each hos17 pital, as a requirement under a participation agreement

18 under section 1866(a) of the Social Security Act for each

19 cost reporting period beginning during or after fiscal year

20 1994, shall provide for the reporting of information to the

21 Secretary with respect to any hospital care provided in a

22 uniform manner consistent with standards established by

23 the Secretary to carry out section 4007(c) of the Omnibus

24 Budget Reconciliation Act of 1987.
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1 SEC. 303. HEALTH CLAIMS CLEARINGHOUSES.

2 (a) DESIGNATION OF CLEARINGHOUSE AREAS.—For

3 purposes of carrying out this section, the Secretary shall

4 designate within the continental United States areas en5 compassing approximately 5 million residents each. To the

6 extent practicable, the areas shall be reasonably contig7 uous with State boundaries. Each such area, and each of

8 the States of Alaska and Hawaii, is referred to in this

9 section as a ‘‘clearinghouse area’’.

10 (b) CONTRACTS WITH HEALTH CLAIMS CLEARING11 HOUSES.—

12 (1) IN GENERAL.—Taking into account the con13 siderations listed in paragraph (2), the Secretary

14 shall enter into a contract with a public or private

15 organization to perform the functions of a health

16 claims clearinghouse described in subsections (d)

17 and (e) for residents and providers in each clearing18 house area. The Secretary shall enter into a single

19 and separate contract with respect to each such

20 area. The Secretary shall first enter into such con21 tracts by not later than 2 years after the date of the

22 enactment of this Act.

23 (2) CONSIDERATIONS.—In selecting among or24 ganizations to perform the functions of a health

25 claims clearinghouse in an area, the Secretary shall

26 consider at least the following:
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1 (A) The price to be charged by the organi2 zation for services performed by the organiza3 tion under the contract, including the price per

4 claim processed.

5 (B) The organization’s ability to process,

6 and experience in processing, claims on a timely

7 and accurate basis and to perform other func8 tions of such a clearinghouse.

9 (C) The organization’s experience in proc10 essing claims with respect to the various health

11 service providers in the area.

12 (3) TERMS OF CONTRACTS.—

13 (A) IN GENERAL.—Contracts under this

14 subsection shall be for a period, not to exceed

15 3 years, specified by the Secretary. The Sec16 retary may terminate such contract, at any

17 time after appropriate notice and opportunity

18 for correction, if the Secretary determines that

19 the organization has substantially failed to

20 carry out the contract.

21 (B) CHARGES FOR SERVICES.—A health

22 claims clearinghouse may impose reasonable

23 charges, consistent with the terms of its con24 tract and subsections (d) and (e), for the per-
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1 formance of required functions under such sub2 sections.

3 (c) ASSIGNMENT OF RESIDENTS AND PROVIDERS TO

4 HEALTH CLAIMS CLEARINGHOUSES.—For purposes of

5 carrying out this subtitle—

6 (1) RESIDENTS.—Each individual entitled to

7 benefits under a health benefits plan and who has a

8 principal residence in a geographic area shall be as9 signed to the clearinghouse for that area.

10 (2) PROVIDERS.—Each health service provider

11 shall be assigned to the clearinghouse for the area

12 in which the provider is located or provides services.

13 (3) EXCEPTIONS.—The Secretary may permit

14 individuals and health service providers to be as15 signed to clearinghouses other than those otherwise

16 provided under this subsection in such cases as the

17 Secretary may specify.

18 (4) EFFECTIVE DATE.—Individuals and provid19 ers shall first be assigned to clearinghouses under

20 this subsection by not later than 2 years after the

21 date of the enactment of this Act.

22 (d) CLEARINGHOUSE REQUIRED FUNCTIONS RELAT23 ING TO ELIGIBILITY AND BENEFIT VERIFICATION.—

24 (1) ELIGIBILITY AND BENEFIT VERIFICA25 TION.—
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1 (A) IN GENERAL.—As set forth in its con2 tract with the Secretary, each health claims

3 clearinghouse for an area shall verify, with re4 spect to residents assigned to the clearinghouse,

5 inquiries from health service providers who have

6 furnished or are furnishing health services to

7 such residents concerning—

8 (i) the health benefit plan (or plans)

9 under which the residents are covered, and

10 (ii) the benefits under such a plan.

11 (B) INTER-CLEARINGHOUSE VERIFICATION

12 PROCESS.—In addition, in the case of a service

13 furnished to an individual assigned to another

14 clearinghouse—

15 (i) the clearinghouse serving the pro16 vider shall forward inquiries described in

17 subparagraph (A) on behalf of the provider

18 to the clearinghouse serving the individual,

19 and

20 (ii) the clearinghouse serving the indi21 vidual shall respond to the inquiry through

22 the clearinghouse serving the provider.

23 The Secretary may provide for such inter-clear24 inghouse electronic network as may expedite ac25 tivities under this subparagraph.
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1 (2) FORM OF INQUIRY.—Each clearinghouse

2 shall be capable of accepting inquiries under this

3 subsection in a variety of electronic and other forms,

4 including—

5 (A) through electronic transmission of in6 formation on the uniform health claims card (in

7 a manner similar to that for verification of

8 credit card purchases),

9 (B) through the use of a touch-tone tele10 phone line, and

11 (C) through the use of a computer modem.

12 The clearinghouse shall also provide, for an addi13 tional fee, for the acceptance of inquiries in a

14 nonelectronic form.

15 (3) FORM OF RESPONSE.—Each clearinghouse

16 shall be capable of responding to such inquiries

17 under this subsection in a variety of electronic and

18 other forms, including—

19 (A) through modem transmission of infor20 mation,

21 (B) through computer synthesized voice

22 communication, and

23 (C) through transmission of information to

24 a facsimile (fax) machine.
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1 The clearinghouse shall also provide, for an addi2 tional fee, for the response to inquiries in a

3 nonelectronic form.

4 (4) LIMITATION ON FEES.—A clearinghouse

5 may not impose a fee for the acceptance or response

6 to an inquiry under this subsection except where the

7 acceptance or response is in a nonelectronic form.

8 (e) CLEARINGHOUSE REQUIRED FUNCTIONS RELAT9 ING TO RECEIPT AND PROCESSING OF CLAIMS FOR BENE10 FITS.—

11 (1) PROCESSING OF CLAIMS.—

12 (A) IN GENERAL.—As set forth in its con13 tract with the Secretary, each clearinghouse

14 serving residents of an area shall—

15 (i) receive claims for benefits under

16 health benefit plans for such residents;

17 (ii) process the claims to determine if

18 they are clean claims (as defined in section

19 301(c)(1));

20 (iii) if a claim is not a clean claim, no21 tify the person submitting the claim (I)

22 that payment is not authorized for the

23 claim, (II) of the reasons for the denial,

24 and (III) concerning the process available

25 for the appeal of such determination; and
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1 (iv) if a claim is a clean claim—

2 (I) notify the person submitting

3 the claim that payment may be made

4 for the claim and the amount that is

5 payable under the plan and the

6 amount that is payable by the bene7 ficiary as cost-sharing with respect to

8 the provider and service, and

9 (II) notify the plan (or plans) lia10 ble for payment with respect to the

11 claim, of the submission and approval

12 of the claim (and provide the plan

13 with such additional information with

14 respect to the person submitting the

15 claim and the services under the claim

16 as may be required for payment to be

17 made on the claim).

18 (B) INTER-CLEARINGHOUSE VERIFICATION

19 PROCESS.—In addition, in the case of a service

20 furnished to an individual assigned to another

21 clearinghouse—

22 (i) the clearinghouse serving the pro23 vider shall forward claims described in sub24 paragraph (A) on behalf of the provider to
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1 the clearinghouse serving the individual for

2 processing, and

3 (ii) the clearinghouse serving the indi4 vidual shall respond to the claim through

5 the clearinghouse serving the provider.

6 The Secretary may provide for such inter-clear7 inghouse electronic network as may expedite ac8 tivities under this subparagraph.

9 (2) FORM OF CLAIM.—Each clearinghouse shall

10 be capable of accepting claims under this subsection

11 in an electronic form, including through electronic

12 modem transmission. Each clearinghouse also shall

13 provide, for an additional fee, for the acceptance of

14 claims submitted on a uniform nonelectronic claims

15 form.

16 (3) PROCESSING OF CLAIM.—For each claim

17 submitted by health service provider for care fur18 nished to an individual, the clearinghouse shall de19 termine—

20 (A) if the claim is in proper form and the

21 individual is covered under a health benefit

22 plan,

23 (B) if so, whether under such plan the in24 dividual is entitled to benefits with respect to

25 that provider and that care, and
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1 (C) any preconditions, such as prior au2 thorization, that may exist for payment to be

3 made for such care and, to the extent specified

4 by the Secretary, whether such preconditions

5 have been met.

6 (4) RESPONSE.—Each clearinghouse shall be

7 capable of responding to such inquiries in a variety

8 of electronic forms, including—

9 (A) through modem transmission of infor10 mation, and

11 (B) through transmission of information to

12 a facsimile (fax) machine.

13 The clearinghouse also shall provide, for an addi14 tional fee, for the response to claims in a

15 nonelectronic form.

16 (f) OPTIONAL PAYMENT FUNCTIONS.—

17 (1) IN GENERAL.—Under a contractual ar18 rangement between a health benefit plan and a

19 clearinghouse, each clearinghouse may make pay20 ment of cleans claims received by the clearinghouse

21 for beneficiaries under the plan in return for pay22 ment from the plan. Any such contract shall be

23 made only on commercially reasonable terms, includ24 ing (if appropriate for non-Federal health plans) the

25 provision of a bonds or other assurances of payment
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1 of the clearinghouse by the health benefit plan. If

2 the clearinghouse enters into such a contractual ar3 rangement with a health benefit plan, the clearing4 house may not refuse to enter into such an arrange5 ment with other health benefit plans that can meet

6 the same (or comparable) commercial terms as

7 under the previous arrangement.

8 (2) AUTHORIZATION.—The Secretary is author9 ized to enter into contractual arrangements with

10 clearinghouses to carry out the activities described in

11 paragraph (1) with respect to the medicare program.

12 SEC. 304. STANDARDS RELATING TO ELECTRONIC CLAIMS

13 PROCESSING.

14 (a) UNIFORM HEALTH CLAIMS CARDS.—

15 (1) IN GENERAL.—The Secretary shall establish

16 standards consistent with this subsection respecting

17 the form and information to be contained on uni18 form health claims cards (for purposes of section

19 301(a)(1)).

20 (2) ELECTRONIC.—

21 (A) IN GENERAL.—Subject to subpara22 graph (B), the card shall be in a form similar

23 to that of credit cards and shall have, encoded

24 in electronic form—
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1 (i) the identity of the individual (using

2 the Social Security account number of the

3 individual or, in the case of an infant or

4 other individual to whom such a number

5 has not been issued, such a Social Security

6 account number of a parent or guardian or

7 other number as the Secretary shall speci8 fy), and

9 (ii) the health claims clearinghouse to

10 which the individual is assigned under sec11 tion 303(c).

12 (B) USE OF ELECTRONIC READ-AND13 WRITE CARDS.—The Secretary may provide for

14 cards in a electronic form that permit informa15 tion on the card to be readily changed. Such in16 formation may include information relating to

17 the health coverage status of the individual and

18 the medical history of the individual.

19 (3) ADDITIONAL INFORMATION.—The card

20 shall include such additional information, in elec21 tronic or other form, as the Secretary may require

22 to carry out the purposes of this subtitle. In addi23 tion, the health benefit plan issuing the card may in24 clude such additional information on the card as the
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1 plan desires, subject to such limitations as the Sec2 retary may provide.

3 (4) ASSURING CONFIDENTIALITY OF INFORMA4 TION.—In establishing standards under this sub5 section, the Secretary shall include a requirement

6 that, to the greatest extent possible, information on

7 an individual’s medical condition or medical history

8 shall be treated in a confidential manner.

9 (b) UNIFORM CLAIMS DATA SET.—

10 (1) IN GENERAL.—The Secretary shall establish

11 standards with respect to the type and form of sub12 stantiating documentation that—

13 (A) health claims clearinghouse may re14 quire in order for a claim for benefits to be ac15 cepted for processing, and

16 (B) claims for benefits under such plans

17 may be required to provide in order to be treat18 ed as clean claims and to obtain payment.

19 (2) SCOPE OF DATA SET.—The standards

20 under this subsection are intended to cover substan21 tially most claims that are filed under health benefit

22 plans. Such data set need not include all elements

23 that may potentially be required to be reported

24 under utilization review provisions of plans.
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1 (3) CONSISTENCY WITH ELECTRONIC MEDICAL

2 RECORDS.—In establishing standards under this

3 subsection, the Secretary shall assure that the

4 standards—

5 (A) are consistent with standards being de6 veloped for the maintenance of electronic medi7 cal records, and

8 (B) would permit data elements from such

9 medical records to be the elements which are

10 transmitted for purposes of electronic submis11 sion of claims.

12 (4) UNIFORM, UNIQUE PROVIDER IDENTIFICA13 TION CODES.—In establishing standards under this

14 subsection, the Secretary shall provide for a unique

15 identifier for each health service provider (as defined

16 in section 302(a)(3)) that submits claims for pay17 ment to health benefit plans.

18 (5) UNIFORM DIAGNOSTIC AND PROCEDURE

19 CODES.—In establishing standards under this sub20 section, the Secretary shall develop a single, uniform

21 coding system for diagnostic and procedure codes.

22 (c) FREE SOFTWARE TO PROVIDERS.—The Secretary

23 shall provide for the development, and shall make available

24 without charge to health service providers, such computer

25 software as will enable the providers—
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1 (1) to make inquiries, and receive responses,

2 electronically respecting the eligibility and benefits of

3 an individual under health benefit plans,

4 (2) to submit claims and to receive verification

5 of claims status electronically, and

6 (3) in the case of hospitals to submit uniform

7 reports.

8 (d) ADJUSTMENTS FOR RURAL PROVIDERS.—In es9 tablishing standards under this section, the Secretary shall

10 provide for such exceptions and adjustments as are nec11 essary to take into account the circumstances faced by

12 health service providers in rural areas and the need to en13 sure the availability of health services to individuals resid14 ing in such areas.

15 (e) DEADLINE.—The Secretary shall first provide for

16 the standards for uniform health claims cards under sub17 section (a) and for the standards for uniform claims data

18 set under subsection (b) and shall develop (and make

19 available) the software under subsection (c) by not later

20 than 18 months after the date of the enactment of this

21 Act.
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1 SEC. 305. EXCISE TAX ON PREMIUMS RECEIVED ON GROUP

2 HEALTH PLANS WHICH DO NOT MEET CER3 TAIN REQUIREMENTS.

4 (a) IN GENERAL.—Chapter 47 of the Internal Reve5 nue Code of 1986 (relating to taxes on group health plans)

6 is amended by adding at the end thereof the following new

7 section:

8 ‘‘SEC. 5000A. FAILURE TO SATISFY CERTAIN STANDARDS

9 FOR GROUP HEALTH PLANS.

10 ‘‘(a) IN GENERAL.—

11 ‘‘(1) TAX.—In the case of any group health

12 plan, there is hereby imposed a tax on the failure of

13 such person to meet at any time during any taxable

14 year the applicable requirements of section 301 of

15 the Rural Health Care Access Improvement Act of

16 1993.

17 ‘‘(2) DETERMINATION OF VIOLATIONS.—The

18 Secretary of Health and Human Services shall de19 termine whether any person meets the requirements

20 of such section.

21 ‘‘(3) SUNSET.—

22 ‘‘(A) IN GENERAL.—No tax may be im23 posed under this subsection for—

24 ‘‘(i) a violation of section 301(a)(1) of

25 the Rural Health Care Access Improve26 ment Act of 1993 with respect to individ-
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1 uals who first become entitled to benefits

2 under the group health plan on or after

3 the sunset date (as defined in subpara4 graph (B));

5 ‘‘(ii) a failure to provide under section

6 301(a)(2) of such Act information on or

7 after the sunset date; and

8 ‘‘(iii) a failure to accept under section

9 301(a)(3) of such Act a determination of a

10 health claims clearinghouse made on or

11 after the sunset date.

12 ‘‘(B) SUNSET DATE.—For purposes of

13 subparagraph (A), the term ‘sunset date’ means

14 the date that is 63 months after the date of the

15 enactment of this section.

16 ‘‘(b) AMOUNT OF TAX.—

17 ‘‘(1) IN GENERAL.—The amount of tax imposed

18 by subsection (a) by reason of 1 or more failures

19 during a taxable year shall be equal to 25 percent

20 of the gross premiums received during such taxable

21 year with respect to all group health plans issued by

22 the person on whom such tax is imposed.

23 ‘‘(2) GROSS PREMIUMS.—For purposes of para24 graph (1), gross premiums shall include any consid-
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1 eration received with respect to any group health

2 plan.

3 ‘‘(3) CONTROLLED GROUPS.—For purposes of

4 paragraph (1)—

5 ‘‘(A) CONTROLLED GROUP OF CORPORA6 TIONS.—All corporations which are members of

7 the same controlled group of corporations shall

8 be treated as 1 person. For purposes of the pre9 ceding sentence, the term ‘controlled group of

10 corporations’ has the meaning given to such

11 term by section 1563(a), except that—

12 ‘‘(i) ‘more than 50 percent’ shall be

13 substituted for ‘at least 80 percent’ each

14 place it appears in section 1563(a)(1), and

15 ‘‘(ii) the determination shall be made

16 without regard to subsections (a)(4) and

17 (e)(3)(C) of section 1563.

18 ‘‘(B) PARTNERSHIPS, PROPRIETORSHIPS,

19 ETC., WHICH ARE UNDER COMMON CONTROL.—

20 Under regulations prescribed by the Secretary,

21 all trades or business (whether or not incor22 porated) which are under common control shall

23 be treated as 1 person. The regulations pre24 scribed under this subparagraph shall be based
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1 on principles similar to the principles which

2 apply in the case of subparagraph (A).

3 ‘‘(c) LIMITATION ON TAX.—

4 ‘‘(1) TAX NOT TO APPLY WHERE FAILURE NOT

5 DISCOVERED EXERCISING REASONABLE DILI6 GENCE.—No tax shall be imposed by subsection (a)

7 with respect to any failure for which it is established

8 to the satisfaction of the Secretary that the person

9 on whom the tax is imposed did not know, and exer10 cising reasonable diligence would not have known,

11 that such failure existed.

12 ‘‘(2) TAX NOT TO APPLY WHERE FAILURES

13 CORRECTED WITHIN 30 DAYS.—No tax shall be im14 posed by subsection (a) with respect to any failure

15 if—

16 ‘‘(A) such failure was due to reasonable

17 cause and not to willful neglect, and

18 ‘‘(B) such failure is corrected during the

19 30-day period beginning on the 1st date any of

20 the persons on whom the tax is imposed knew,

21 or exercising reasonable diligence would have

22 known, that such failure existed.

23 ‘‘(3) WAIVER BY SECRETARY.—In the case of a

24 failure which is due to reasonable cause and not to

25 willful neglect, the Secretary may waive part or all
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1 of the tax imposed by subsection (a) to the extent

2 that the payment of such tax would be excessive rel3 ative to the failure involved.

4 ‘‘(d) GROUP HEALTH PLAN DEFINED.—For pur5 poses of this section, the term ‘group health plan’ has the

6 meaning given such term in section 5000(b)(1).’’.

7 (b) NONDEDUCTIBILITY OF TAX.—Paragraph (6) of

8 section 275(a) of such Code (relating to nondeductibility

9 of certain taxes) is amended by inserting ‘‘47,’’ after

10 ‘‘46,’’.

11 (c) CLERICAL AMENDMENTS.—The table of sections

12 for such chapter 47 is amended by adding at the end

13 thereof the following new item:

‘‘Sec. 5000A. Failure to satisfy certain standards for group health

plans.’’.

14 (d) EFFECTIVE DATES.—

15 (1) IN GENERAL.—The amendments made by

16 subsections (a) and (c) shall take effect on the date

17 of the enactment of this Act.

18 (2) NONDEDUCTIBILITY OF TAX.—The amend19 ment made by subsection (b) shall apply to taxable

20 years beginning after December 31, 1994.

21 SEC. 306. APPLICATION OF REQUIREMENTS TO MEDICARE

22 AND MEDICAID PROGRAMS.

23 (a) APPLICATION TO MEDICARE PROGRAM.—The

24 Secretary shall provide, in regulations promulgated to
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1 carry out title XVIII of the Social Security Act, that iden2 tification cards issued under that title and the claims proc3 ess provided under that title are modified to the extent

4 required to conform to the requirements of section 304

5 for health benefits plans as of the applicable effective

6 dates under this subtitle, so that hospitals, and other pro7 viders of services, as well as physicians and other providers

8 of medical and other services need not maintain a separate

9 billing system in order to submit claims under the medi10 care program.

11 (b) APPLICATION TO STATE MEDICAID PLANS.—As

12 a condition for the approval of State plans under title XIX

13 of the Social Security Act, effective as of the applicable

14 effective dates under this subtitle, each such plan shall

15 provide, in accordance with regulations of the Secretary,

16 that identification cards issued under the plan and the

17 claims process provided under the plan are modified to the

18 extent required to conform to the requirements of section

19 304 for health benefits plans, so that hospitals, and other

20 providers of services, as well as physicians and other pro21 viders of medical and other services need not maintain a

22 separate billing system in order to submit claims under

23 the medicaid program.
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1 Subtitle B—Other Provisions

2 SEC. 311. TELECOMMUNICATIONS DEMONSTRATION PRO3 GRAM FOR TRAUMA CARE IN RURAL AREAS.

4 Section 1204 of the Public Health Service Area (42

5 U.S.C. 300d-3) is amended—

6 (1) by redesignating subsection (c) as sub7 section (d); and

8 (2) by inserting after subsection (b) the follow9 ing new subsection:

10 ‘‘(c) DEMONSTRATION PROGRAM REGARDING TELE11 COMMUNICATIONS.—

12 ‘‘(1) LINKAGES FOR RURAL FACILITIES.—

13 Projects under subsection (a)(1) shall include dem14 onstration projects to establish telecommunications

15 between rural medical facilities and medical facilities

16 that have expertise or equipment that can be utilized

17 by the rural facilities through the telecommuni18 cations.

19 ‘‘(2) MODES OF COMMUNICATIONS.—The Sec20 retary shall ensure that the telecommunications

21 technologies demonstrated under paragraph (1) in22 clude interactive video telecommunications, static

23 video imaging transmitted through the telephone

24 system, and facsimiles transmitted through such sys25 tem.’’.
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1 SEC. 312. PRIMARY CARE NURSING CLINICS IN RURAL

2 AREAS.

3 Part C of title VII of the Public Health Service Act

4 (42 U.S.C. 293j et seq.) is amended—

5 (1) by redesignating section 752 as section 753;

6 and

7 (2) by inserting after section 751 the following

8 new section:

9 ‘‘Subpart VII—Provision of Primary Care Services in

10 Rural Areas

11 ‘‘SEC. 752. PROVISION OF PRIMARY CARE SERVICES IN

12 RURAL AREAS.

13 ‘‘(a) AUTHORIZATION TO USE AMOUNTS.—The Sec14 retary may use not to exceed $5,000,000, out of amounts

15 appropriated to carry out programs under this part, in

16 each of the fiscal years 1994 through 1996 to award

17 grants to public or private schools of nursing for the estab18 lishment of clinics that shall be administered by such

19 schools.

20 ‘‘(b) APPLICATION.—A school desiring to receive a

21 grant under subsection (a) shall prepare and submit to

22 the Secretary, an application at such time, in such form,

23 and containing such information as the Secretary may re24 quire.

25 ‘‘(c) USE OF GRANTS.—Amounts received under

26 grants awarded under subsection (a) shall be used to—
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1 ‘‘(1) establish clinics, to be run and staffed by

2 the faculty and students of such grantee school, to

3 provide primary care services in medically under4 served rural areas or in areas on or within 50 miles

5 of Indian country (as defined in section 1151 of title

6 18, United States Code);

7 ‘‘(2) provide for all aspects of clinical training

8 program development, faculty enhancement and stu9 dent scholarships in a manner that would benefit the

10 clinic established under paragraph (1); and

11 ‘‘(3) carry out any other activities determined

12 appropriate by the Secretary.

13 ‘‘(d) DESIGN.—The clinics established under sub14 section (c)(1) shall be designed to provide nursing stu15 dents with a structured clinical experience that is similar

16 in nature to that provided by residency training programs

17 for physicians.’’.

18 SEC. 313. IDENTIFICATION, ASSESSMENT, AND REDUCTION

19 OF PAPERWORK BURDEN ASSOCIATED WITH

20 HEALTH CARE SERVICES.

21 Section 3505 of title 44, United States Code, is

22 amended—

23 (1) by striking ‘‘and’’ at the end of paragraph

24 (5);
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1 (2) by striking the period at the end of para2 graph (6) and inserting ‘‘; and’’; and

3 (3) by adding at the end the following:

4 ‘‘(7) within 6 months after the date of the en5 actment of the Rural Health Care Access Improve6 ment Act of 1993, in consultation with the Secretary

7 of Health and Human Services, shall—

8 ‘‘(A) identify, inventory, and assess the

9 burden of federally conducted or sponsored in10 formation collection requests associated with

11 the delivery of health care services; and

12 ‘‘(B) for each of the fiscal years 1994,

13 1995, 1996, 1997, 1998, and 1999, establish a

14 goal for reducing the burden described in sub15 paragraph (A) existing at the end of the preced16 ing fiscal year by not less than 5 percent

17 through more effective use of information re18 sources management, regulatory flexibility, and

19 other means.’’.

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