I

103D CONGRESS

1ST SESSION H. R. 2494

To amend the Internal Revenue Code of 1986 and title XVIII of the Social

Security Act to establish a program of assistance for essential community

providers of health care services, to establish a program to update and

maintain the infrastructure requirements of safety net hospitals, and

to require States to develop plans for the allocation and review of expenditures for the capital-related costs of health care services.

IN THE HOUSE OF REPRESENTATIVES

JUNE 23, 1993

Mr. STARK (for himself, Mr. GIBBONS, Mr. DE LUGO, Mr. MCDERMOTT, Mr.

MORAN, Mr. FOGLIETTA, Mr. OWENS, Mrs. CLAYTON, Miss COLLINS of

Michigan, and Mr. SCOTT) introduced the following bill; which was referred jointly to the Committees on Ways and Means and Energy and

Commerce

A BILL

To amend the Internal Revenue Code of 1986 and title

XVIII of the Social Security Act to establish a program

of assistance for essential community providers of health

care services, to establish a program to update and maintain the infrastructure requirements of safety net hospitals, and to require States to develop plans for the

allocation and review of expenditures for the capitalrelated costs of health care services.

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

2 This Act may be cited as the ‘‘Essential Health

3 Facilities Investment Act of 1993’’.

4 TITLE I—ESSENTIAL ACCESS

5 COMMUNITY HOSPITAL PRO6 GRAM

7 SEC. 101. REVISIONS TO CURRENT PROGRAM.

8 (a) EXPANSION OF CURRENT PROGRAM TO ALL

9 STATES.—Section 1820(a)(1) of the Social Security Act

10 (42 U.S.C. 1395i–4(a)(1)) is amended by striking ‘‘not

11 more than 7’’.

12 (b) INCREASE IN AUTHORIZATION OF APPROPRIA13 TIONS.—Section 1820(k) of such Act (42 U.S.C. 1395i–

14 4(k)) is amended—

15 (1) by striking ‘‘1990, 1991, and 1992’’ and in16 serting ‘‘1994 through 1998’’;

17 (2) by amending paragraph (1) to read as fol18 lows:

19 ‘‘(1) $50,000,000 for grants to States under

20 subsection (a)(1) and grants to States and units of

21 local government under section 1821(a)(1); and’’;

22 and

23 (3) in paragraph (2), by striking

24 ‘‘$15,000,000’’ and inserting ‘‘$40,000,000’’.

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

26 subsections (a) and (b) shall take effect October 1, 1994.
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1 SEC. 102. EXTENSION OF PROGRAM TO NETWORKS OF ES2 SENTIAL COMMUNITY PROVIDERS.

3 (a) IN GENERAL.—Part A of title XVIII of the Social

4 Security Act (42 U.S.C. 1395 et seq.) is amended by add5 ing at the end the following new section:

6 ‘‘ASSISTANCE FOR ESSENTIAL COMMUNITY PROVIDERS

7 ‘‘SEC. 1821. (a) ESTABLISHMENT OF PROGRAM.—

8 There is hereby established a program under which the

9 Secretary—

10 ‘‘(1) shall make grants to States and units of

11 local government to carry out the activities described

12 in subsection (d)(1); and

13 ‘‘(2) shall make grants to eligible hospitals and

14 facilities (or consortia of hospitals and facilities) to

15 carry out the activities described in subsection

16 (d)(2).

17 ‘‘(b) ELIGIBILITY OF STATES AND COMMUNITIES

18 FOR GRANTS.—

19 ‘‘(1) REQUIREMENTS FOR APPLICATION.—Sub20 ject to paragraph (2), a State or unit of local gov21 ernment is eligible to receive a grant under sub22 section (a)(1) only if the State or unit of local gov23 ernment submits to the Secretary, at such time and

24 in such form as the Secretary may require, an appli25 cation containing such information and assurances
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1 as the Secretary may require, together with assur2 ances that the State or unit of local government—

3 ‘‘(A) has developed, or is in the process of

4 developing, a community health plan that—

5 ‘‘(i) provides for the creation of a

6 community health network (as defined in

7 subsection (f)) in the State or locality,

8 ‘‘(ii) promotes the integration of the

9 delivery of health care services in the State

10 or locality,

11 ‘‘(iii) improves access to hospital and

12 other services (including primary care serv13 ices) for urban residents in the State or lo14 cality, and

15 ‘‘(iv) in the case of a plan of a unit

16 of local government, is approved by the

17 State;

18 ‘‘(B) has developed (or intends to develop)

19 the plan described in subparagraph (A) in con20 sultation with appropriate State and community

21 hospital associations, public hospitals, and pri22 mary care associations; and

23 ‘‘(C) has designated, or is in the process of

24 designating, nonprofit or public hospitals and

25 facilities located in the State or locality as es-
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1 sential community providers within such com2 munity health networks (with the approval of

3 the State in the case of designations by units

4 of local government).

5 ‘‘(2) COORDINATION BETWEEN STATE AND

6 LOCAL RECIPIENTS.—A unit of local government

7 may not receive a grant under subsection (a)(1) if

8 it is located in a State receiving a grant under such

9 subsection, except that a unit of local government lo10 cated in an urban area (as defined in section

11 1886(d)(2)(D)) in such a State may receive such a

12 grant with the approval of the State.

13 ‘‘(c) ELIGIBILITY OF HOSPITALS, FACILITIES, AND

14 CONSORTIA FOR GRANTS.—

15 ‘‘(1) IN GENERAL.—A hospital or facility is eli16 gible to receive a grant under subsection (a)(2) only

17 if the hospital or facility—

18 ‘‘(A) is located in a State or locality receiv19 ing a grant under subsection (a)(1);

20 ‘‘(B) is designated as an essential commu21 nity provider by the State or unit of local gov22 ernment or is a member of a community health

23 network;

24 ‘‘(C) submits an application to the State or

25 unit of local government at such time and con-
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1 taining such information and assurances as the

2 Secretary may require; and

3 ‘‘(D) has received certification by the State

4 or unit of local government that the receiving of

5 such grant by the hospital or facility is consist6 ent with the community health plan of the

7 State or unit or local government and that the

8 State or unit of local government has approved

9 the application submitted under subparagraph

10 (C).

11 ‘‘(2) TREATMENT OF CONSORTIA.—A consor12 tium of hospitals or facilities each of which is part

13 of the same community health network is eligible to

14 receive a grant under subsection (a)(2) if each of its

15 members would individually be eligible to receive

16 such a grant.

17 ‘‘(d) ACTIVITIES FOR WHICH GRANT MAY BE

18 USED.—

19 ‘‘(1) GRANTS TO STATES OR LOCAL GOVERN20 MENTS.—A State or unit of local government shall

21 use a grant received under subsection (a)(1) to carry

22 out activities relating to planning and implementing

23 its community health plan.

24 ‘‘(2) GRANTS TO HOSPITALS, FACILITIES, AND

25 CONSORTIA.—A hospital or facility shall use a grant
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1 received under subsection (a)(2) to finance the costs

2 it incurs in becoming part of a community health

3 network and in serving as part of such a network,

4 including costs related to—

5 ‘‘(A) the development of primary care serv6 ice sites;

7 ‘‘(B) the development of integrated infor8 mation, billing, and reporting systems;

9 ‘‘(C) planning and needs assessments;

10 ‘‘(D) the recruitment and training and

11 health professionals and administrative staff;

12 and

13 ‘‘(E) conducting health promotion outreach

14 activities for medically underserved populations

15 in its service area.

16 ‘‘(e) DESIGNATION OF ESSENTIAL COMMUNITY PRO17 VIDERS.—A State or unit of local government may des18 ignate a hospital or facility as an essential community pro19 vider only if—

20 ‘‘(1) the hospital or facility is a member of (or

21 is in the process of becoming a member of) a com22 munity health network (as defined in subsection (f));

23 ‘‘(2) in the case of a facility other than a hos24 pital—
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1 ‘‘(A) the facility is a Federally-qualified

2 health center (as defined in section

3 1861(aa)(4)), or

4 ‘‘(B) the facility would be a Federally5 qualified health center but for its failure to

6 meet the requirement described in section

7 329(f)(2)(G)(i) of the Public Health Service Act

8 or the requirement described in section

9 330(e)(3)(G)(i) of such Act (relating to the

10 composition of the facility’s governing board),

11 but only if the facility provides assurances to

12 the State or unit of local government that con13 sumers have significant input into the govern14 ance of the facility; and

15 ‘‘(3) in the case of a hospital—

16 ‘‘(A) the hospital is designated as an es17 sential access community hospital by the Sec18 retary under section 1820(i)(1),

19 ‘‘(B) the hospital is designated as a rural

20 primary care hospital by the Secretary under

21 section 1820(i)(2),

22 ‘‘(C) the hospital is described in section

23 1886(d)(5)(F)(i)(II), or

24 ‘‘(D) the hospital receives an additional

25 payment amount under section 1886(d)(5)(F)
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1 based on the formula described in clause (vii)(I)

2 of such section.

3 ‘‘(f) COMMUNITY HEALTH NETWORK DEFINED.—In

4 this section, the term ‘community health network’ means

5 a public or nonprofit entity that meets the following

6 requirements:

7 ‘‘(1) The entity provides primary care services

8 and acute care services to a medically underserved

9 community (as defined in section 799(6) of the Pub10 lic Health Service Act) in the entity’s service area,

11 either directly through its members or through con12 tracts with other entities (under such limited cir13 cumstances as the Secretary may permit in regula14 tions).

15 ‘‘(2) The entity consists of —

16 ‘‘(A) at least one hospital that is located in

17 an urban area (as defined in section

18 1886(d)(2)(D)) and that has been designated

19 as an essential community provider under sub20 section (e);

21 ‘‘(B) at least 3 facilities (other than hos22 pitals) that have been designated as essential

23 community providers under subsection (e); and
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1 ‘‘(C) at the election of the entity’s mem2 bers, any other entities that provide primary

3 care or other health care services.

4 ‘‘(3) The members of the entity have entered

5 into an agreement under which—

6 ‘‘(A) each member agrees to provide appro7 priate emergency and medical support services

8 to other members,

9 ‘‘(B) each member agrees to accept refer10 rals from other members,

11 ‘‘(C) each hospital member has arrange12 ments to provide staff privileges to physicians

13 providing care for other members, and

14 ‘‘(D) each member has in effect (or is in

15 the process of establishing) agreements with

16 other members to share in the member’s com17 munication system, including (where appro18 priate) the electronic sharing of patient data,

19 medical records, and billing services.

20 ‘‘(g) LIMIT ON AMOUNT OF GRANT TO HOSPITAL OR

21 FACILITY.—A grant made to a hospital or facility under

22 subsection (a)(2) may not exceed $200,000, except that

23 the total amount of a grant awarded to a consortia of hos24 pitals or facilities under such subsection may not exceed

25 $1,000,000.’’.
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1 (b) FUNDING FOR GRANTS TO HOSPITALS THROUGH

2 CURRENT EACH PROGRAM.—Section 1820(k) of the So3 cial Security Act (42 U.S.C. 1395i–4(k)) is amended—

4 (1) in the heading, by striking ‘‘APPROPRIA5 TIONS’’ and inserting ‘‘APPROPRIATIONS FOR EACH

6 PROGRAM AND ESSENTIAL COMMUNITY PROVIDER

7 PROGRAM’’;

8 (2) by striking ‘‘and’’ at the end of paragraph

9 (1);

10 (3) by striking the period at the end of para11 graph (2) and inserting ‘‘; and’’; and

12 (4) by adding at the end the following new

13 paragraph:

14 ‘‘(3) $80,000,000 for grants to hospitals under

15 section 1821(a)(2).’’.

16 (c) INCLUDING INTERNS AND RESIDENTS PROVIDING

17 SERVICES AT ESSENTIAL COMMUNITY PROVIDERS IN DE18 TERMINING PAYMENT FOR INDIRECT COSTS OF MEDICAL

19 EDUCATION.—Section 1886(d)(5)(B) of the Social Secu20 rity Act (42 U.S.C. 1395ww(d)(5)(B)) is amended by add21 ing at the end the following new clause:

22 ‘‘(v) In determining such adjustment, the Sec23 retary shall count services of interns and residents

24 under a medical residency training program that is

25 conducted at a facility designated as an essential
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1 community provider under section 1821, but only

2 if—

3 ‘‘(A) the hospital is designated as an es4 sential community provider under such section;

5 ‘‘(B) the hospital incurs all, or substan6 tially all, of the costs of the training program;

7 and

8 ‘‘(C) the facility is a member of a commu9 nity health network (as described in section

10 1821(f)) to which the hospital belongs.’’.

11 (d) EFFECTIVE DATE.—The amendments made by

12 this section shall take effect October 1, 1993.

13 SEC. 103. STUDY OF EFFECTIVENESS OF PROGRAMS.

14 (a) STUDY.—The Secretary of Health and Human

15 Services shall conduct a study of the effectiveness of the

16 essential access community hospital program under sec17 tion 1820 of the Social Security Act and the program for

18 assistance for essential community providers under section

19 1821 of such Act (as added by section 102(b)) in increas20 ing the access of medically underserved populations to pri21 mary health care and other health care services.

22 (b) REPORT.—Not later than 2 years after the date

23 of the enactment of this Act, the Secretary of Health and

24 Human Services shall submit a report to Congress on the

25 study conducted under subsection (a).
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1 TITLE II—CAPITAL FINANCING

2 ASSISTANCE FOR SAFETY NET

3 PROVIDERS

4 Subtitle A—Amendments of

5 Internal Revenue Code of 1986

6 SEC. 201. GROSS RECEIPTS TAX ON HOSPITALS.

7 (a) IN GENERAL.—Subchapter A of chapter 1 of the

8 Internal Revenue Code of 1986 is amended by adding at

9 the end the following new part:

10 ‘‘PART VII—HOSPITAL CAPITAL FINANCING

11 ASSISTANCE TAX

‘‘Sec. 59B. Imposition of tax.

12 ‘‘SEC. 59B. IMPOSITION OF TAX.

13 ‘‘(a) GENERAL RULE.—In addition to any other tax

14 imposed by this subtitle, there is hereby imposed a tax

15 of 0.5 percent of the hospital gross receipts of any person

16 for the taxable year.

17 ‘‘(b) HOSPITAL GROSS RECEIPTS.—For purposes of

18 this section, the term ‘hospital gross receipts’ means gross

19 receipts received or accrued during the taxable year from

20 the operation of any hospital, other than payments re21 ceived under a State plan for medical assistance under

22 title XIX of the Social Security Act.

23 ‘‘(c) PERSON.—The term ‘person’ includes persons

24 exempt from tax under section 501(a), the United States,
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1 any State or political subdivision thereof, the District of

2 Columbia, and any agency or instrumentality of the fore3 going.

4 ‘‘(d) NOT TREATED AS TAX FOR CERTAIN PUR5 POSES.—The taxes imposed by this section shall not be

6 treated as taxes imposed by this chapter for purposes of

7 determining—

8 ‘‘(1) the amount of any credit allowable under

9 this chapter, or

10 ‘‘(2) the amount of the minimum tax imposed

11 by section 55.’’

12 (b) TAXES INCLUDED IN ESTIMATED TAX.—Sub13 paragraph (A) of section 6655(g)(1) of such Code is

14 amended by striking ‘‘plus’’ at the end of clause (iii), by

15 redesignating clause (iv) as clause (v), and by inserting

16 after clause (iii) the following new clause:

17 ‘‘(iv) the tax imposed by section 59B,

18 plus’’.

19 (c) CLERICAL AMENDMENT.—The table of parts for

20 subchapter A of chapter 1 of such Code is amended by

21 adding at the end thereof the following new item:

‘‘Part VII. Hospital capital financing assistance tax.’’

22 (d) EFFECTIVE DATE.—The amendments made by

23 this section shall apply to taxable years beginning after

24 September 30, 1993.
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1 Subtitle B—Capital Financing

2 Assistance for Safety Net Providers

3 SEC. 211. ESTABLISHMENT OF CAPITAL FINANCING ASSIST4 ANCE PROGRAM.

5 (a) IN GENERAL.—The Social Security Act is amend6 ed by adding at the end the following new title:

7 ‘‘TITLE XXI—CAPITAL FINANC8 ING ASSISTANCE FOR SAFETY

9 NET PROVIDERS.

10 ‘‘Subtitle A—General Provisions

11 ‘‘PAYMENTS TO HOSPITALS AND FACILITIES

12 ‘‘SEC. 2101. (a) IN GENERAL.—The Secretary, with

13 the approval of the Capital Financing Trust Fund Board

14 of Trustees described in section 2104(d) (hereafter in this

15 title referred to as the ‘Trust Fund Board’), shall make

16 payments during fiscal years 1994 through 1998, from

17 amounts in the Capital Financing Trust Fund established

18 under section 2104(a) (hereafter in this title referred to

19 as the ‘Trust Fund’), for capital financing assistance to

20 eligible hospitals and facilities whose applications for as21 sistance have been approved under this title.

22 ‘‘(b) GENERAL ELIGIBILITY REQUIREMENTS FOR

23 ASSISTANCE.—

24 ‘‘(1) REQUIREMENTS FOR HOSPITALS.—
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1 ‘‘(A) IN GENERAL.—A hospital shall be

2 generally eligible for capital financing assist3 ance under this title if the hospital—

4 ‘‘(i) is designated as an essential ac5 cess community hospital by the Secretary

6 under section 1820(i)(1);

7 ‘‘(ii) is designated as a rural primary

8 care hospital by the Secretary under sec9 tion 1820(i)(2);

10 ‘‘(iii) is described in section

11 1886(d)(5)(F)(i)(II); or

12 ‘‘(iv) receives an additional payment

13 amount under section 1886(d)(5)(F) based

14 on the formula described in clause (vii)(I)

15 of such section.

16 ‘‘(B) OWNERSHIP REQUIREMENTS.—In

17 order to qualify for assistance under this title,

18 a hospital must—

19 ‘‘(i) be owned or operated by a unit of

20 State or local government;

21 ‘‘(ii) be a quasi-public corporation, de22 fined as a private, nonprofit corporation or

23 public benefit corporation which is formally

24 granted one or more governmental powers

25 by legislative action through (or is other-
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1 wise partially funded by) the State legisla2 ture, city or county council; or

3 ‘‘(iii) be a private nonprofit hospital

4 which has contracted with, or is otherwise

5 funded by, a governmental agency to pro6 vide health care services to low income in7 dividuals not eligible for assistance under

8 title XVIII or title XIX of this Act, where

9 revenue from such contracts constitute at

10 least 10 percent of the hospital’s operating

11 revenues over the prior 3 fiscal years.

12 ‘‘(2) REQUIREMENTS FOR NON-HOSPITAL FA13 CILITIES.—A facility that is not a hospital shall be

14 generally eligible for capital financing assistance

15 under this title if the facility is designated as an es16 sential community provider under section 1821.

17 ‘‘(c) MEETING ADDITIONAL SPECIFIC CRITERIA.—

18 Hospitals and facilities that are generally eligible for as19 sistance under this title under subsection (b) may apply

20 for the specific programs described in this title and must

21 meet any additional criteria for participation in such pro22 grams.

23 ‘‘(d) ASSISTANCE AVAILABLE.—Capital financing as24 sistance available under this title shall include loan guar25 antees, interest rate subsidies, matching loans and direct
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1 grants. Hospitals and facilities determined to be generally

2 eligible for assistance under this title may apply for and

3 receive more than one type of assistance under this title.

4 ‘‘APPLICATION FOR ASSISTANCE

5 ‘‘SEC. 2102. (a) IN GENERAL.—No hospital or facil6 ity may receive assistance for a qualifying project under

7 this title unless the hospital or facility—

8 ‘‘(1) has filed with the Secretary, in a form and

9 manner specified by the Secretary, with the advice

10 and approval of the Trust Fund Board (as described

11 in section 2104(d)), an application for assistance

12 under this title;

13 ‘‘(2) establishes in its application (for its most

14 recent cost reporting period) that it meets the cri15 teria for general eligibility under this title;

16 ‘‘(3) includes a description of the project, in17 cluding the community in which it is located, and

18 describes utilization and services characteristics of

19 the project and the hospital or facility, and the pa20 tient population that is to be served;

21 ‘‘(4) provides assurances that the undertaking

22 of the project is in conformity with the State’s cap23 ital allocation plan established pursuant to section

24 1890;

25 ‘‘(5) describes the extent to which the project is

26 intended to include the financial participation of
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1 State and local governments, and all other sources

2 of financing sought for the project; and

3 ‘‘(6) establishes, to the satisfaction of the Sec4 retary and the Trust Fund Board, that the project

5 meets the additional criteria for each type of capital

6 financing assistance for which it is applying.

7 ‘‘(b) CRITERIA FOR APPROVAL.—The Secretary, with

8 the approval of the Trust Fund Board, shall determine

9 for each application for assistance under this title—

10 ‘‘(1) whether the hospital or facility meets the

11 general eligibility criteria under section 2101(b);

12 ‘‘(2) whether the hospital or facility meets the

13 specific eligibility criteria of each type of assistance

14 for which it has applied, including whether the hos15 pital or facility meets any criteria for priority con16 sideration for the type of assistance for which it has

17 applied;

18 ‘‘(3) whether the capital project for which as19 sistance is being requested is a qualifying project

20 under this title; and

21 ‘‘(4) whether funds are available, pursuant to

22 the limitations of each program, to fully fund the re23 quest for assistance.

24 ‘‘(c) PRIORITY OF APPLICATIONS.—In addition to

25 meeting the criteria otherwise described in this title, at
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1 the discretion of the Trust Fund Board, the Secretary

2 shall give preference to those qualifying projects that—

3 ‘‘(1)(A) are necessary to bring safety net facili4 ties into compliance with accreditation standards or

5 fire and life safety, seismic, or other related Federal,

6 State or local regulatory standards;

7 ‘‘(B) improve the provision of essential services

8 such as emergency medical and trauma services,

9 AIDS and infectious disease, perinatal, burn, pri10 mary care, and other services which the Trust

11 Fund’s Board may designate; or

12 ‘‘(C) will result in the provision of access to es13 sential health services (as designated by the Board

14 of the Trust Fund) to indigent and other needy per15 sons within the hospital’s or facility’s service area

16 that would otherwise be unavailable;

17 ‘‘(2) include specific anticipated State or local

18 governmental or other non-Federal assurances of fi19 nancial support;

20 ‘‘(3) are unlikely to be financed without the as21 sistance provided under this title; and

22 ‘‘(4) are conducted by entities designated as es23 sential community providers under section 1821.

24 ‘‘(d) SUBMISSION OF APPLICATIONS.—Applications

25 under this Act shall be submitted to the Secretary through
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1 the Trust Fund Board. If two or more applicants join in

2 the project, the application shall be submitted by all par3 ticipating hospitals and facilities jointly. Such applications

4 shall set forth all of the descriptions, plans, specifications,

5 and assurances as required by this Act and contain other

6 such information as the Trust Fund Board shall require.

7 ‘‘(e) OPPORTUNITY FOR APPEAL.—The Trust Fund

8 Board shall afford a hospital or facility applying for a loan

9 guarantee under this section an opportunity for a hearing

10 if the guarantee is denied.

11 ‘‘(f) APPLICATIONS FOR AMENDMENTS.—Amend12 ment of an approved application shall be subject to ap13 proval in the same manner as an original application.

14 ‘‘PUBLIC SERVICE RESPONSIBILITIES

15 ‘‘SEC. 2103. (a) IN GENERAL.—Any hospital or facil16 ity accepting capital financing assistance under this title

17 shall agree—

18 ‘‘(1) to make the services of the facility or por19 tion thereof to be constructed, acquired, or modern20 ized available to all persons the construction, acqui21 sition, or modernization is intended to serve (as

22 identified in the hospital’s or facility’s application

23 under this title and the State’s capital allocation

24 plan established under section 1890); and
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1 ‘‘(2) to provide a significant volume of services

2 to persons unable to pay therefore, consistent with

3 other provisions of this Act.

4 ‘‘(b) ENFORCEMENT.—The Director of the Office of

5 Civil Rights of the Department of Health and Human

6 Services shall be given the power to enforce the public

7 service responsibilities described in this section.

8 ‘‘CAPITAL FINANCING TRUST FUND

9 ‘‘SEC. 2104. (a) CREATION OF TRUST FUND.—There

10 is established in the Treasury of the United States a trust

11 fund to be known as the Capital Financing Trust Fund,

12 consisting of such amounts as may be appropriated or

13 credited to such Trust Fund as provided in this section.

14 ‘‘(b) TRANSFERS TO TRUST FUND.—There are here15 by appropriated to the Trust Fund amounts equivalent to

16 the taxes received in the Treasury under section 59B of

17 the Internal Revenue Code of 1986 (relating to hospital

18 capital financing assistance tax).

19 ‘‘(c) EXPENDITURES FROM TRUST FUND.—Amounts

20 in the Trust Fund shall be available only—

21 ‘‘(1) for making expenditures to carry out this

22 title;

23 ‘‘(2) for grants to non-hospital facilities and

24 consortia under section 1821(a)(2) for fiscal years

25 1994 through 1998, except that not more than
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1 $80,000,000 may be available for such grants for

2 any fiscal year; and

3 ‘‘(3) for providing grants to States under sec4 tion 1890(d) for carrying out capital allocation

5 plans.

6 ‘‘(d) BOARD OF TRUSTEES; COMPOSITION; MEET7 INGS; DUTIES.—

8 ‘‘(1) IN GENERAL.—There shall be created a

9 Capital Financing Trust Fund Board of Trustees

10 composed of the Secretary of Health and Human

11 Services, the Secretary of the Treasury, the Assist12 ant Secretary for Health, and the Administrator of

13 the Health Care Financing Administration (all serv14 ing in their ex officio capacities), and 5 public mem15 bers who shall be appointed for 4 year terms by the

16 President, from the following categories—

17 ‘‘(A) one chief health officer from a State;

18 ‘‘(B) one chief executive officer of a hos19 pital or facility that meets the general eligibility

20 criteria of this title;

21 ‘‘(C) one representative of the financial

22 community; and

23 ‘‘(D) two additional public or consumer

24 representatives.
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1 ‘‘(2) DUTIES.—The Board of Trustees shall

2 meet no less than quarterly and shall have the re3 sponsibility to approve implementing regulations, to

4 establish criteria, and to recommend and approve ex5 penditures by the Secretary under the programs set

6 forth in this title.

7 ‘‘(3) MANAGING TRUSTEE.—The Secretary of

8 the Treasury shall serve as the Managing Trustee of

9 the Trust Fund, and shall be responsible for the in10 vestment of funds. The provisions of subsections (b)

11 through (e) of section 1817 shall apply to the Trust

12 Fund and the Managing Trustee of the Trust Fund

13 in the same manner as they apply to the Federal

14 Hospital Insurance Trust Fund and the Managing

15 Trustee of that Trust Fund.

16 ‘‘ADMINISTRATION

17 ‘‘SEC. 2105. (a) IN GENERAL.—The Administrator

18 of the Health Care Financing Administration shall serve

19 as Secretary of the Board of Trustees and shall administer

20 the programs under this title.

21 ‘‘(b) LIMITATION ON ADMINISTRATIVE EXPENSES.—

22 Not more than 5 percent of the funds annually appro23 priated to the Trust Fund may be available for adminis24 tration of the Trust Fund or programs under this title.
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1 ‘‘ASSISTANCE FOR PUERTO RICO AND OTHER

2 COMMONWEALTHS AND TERRITORIES

3 ‘‘SEC. 2106. (a) IN GENERAL.—

4 ‘‘(1) AMOUNT OF ALLOCATION.—Notwithstand5 ing any other provision of this title, there shall be

6 allocated from the Capital Financing Trust Fund for

7 each of the fiscal years 1994 through 1998 a total

8 of $25,000,000 for assistance under this title for

9 hospitals and facilities located in the Commonwealth

10 of Puerto Rico, the Commonwealth of the Northern

11 Mariana Islands, Guam, the Virgin Islands, and

12 American Samoa.

13 ‘‘(2) REALLOCATION OF AMOUNTS NOT EX14 PENDED.—To the extent that any funds allocated

15 under paragraph (1) to hospitals and facilities de16 scribed in such paragraph for a year are not ex17 pended for assistance under this title, such funds

18 shall be made available for assistance under this title

19 during the year for hospitals and facilities not de20 scribed in such paragraph.

21 ‘‘(b) LIMIT ON AMOUNT AVAILABLE FOR GRANTS.—

22 Of the total amount allocated from the Capital Financing

23 Trust Fund during a year for assistance for hospitals and

24 facilities described in subsection (a), not more than 40%

25 may be used for grants under subtitle E.
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1 ‘‘Subtitle B—Loan Guarantees

2 ‘‘PROVISION OF LOAN GUARANTEES TO SAFETY NET

3 PROVIDERS

4 ‘‘SEC. 2110. (a) IN GENERAL.—Subject to the an5 nual limitation on the allotment from the Trust Fund de6 scribed in section 2112(a), the Capital Financing Trust

7 Fund will provide a Federal guarantee of loan repayment,

8 including guarantees of repayment of refinancing loans,

9 to non-Federal lenders making loans to qualified hospitals

10 and facilities for replacement (either by construction or

11 acquisition), modernization, and renovation projects and

12 capital equipment acquisitions.

13 ‘‘(b) PURPOSES.—The loan guarantee program shall

14 be designed by the Trust Fund Board with the goal of

15 rebuilding and maintaining the essential health services of

16 hospitals and facilities eligible for assistance under this

17 title.

18 ‘‘ELIGIBLE LOANS

19 ‘‘SEC. 2111. (a) IN GENERAL.—Loan guarantees

20 under this subtitle are available for loans made to qualify21 ing hospitals and facilities for replacement facilities, the

22 modernization and renovation of existing facilities, and

23 capital equipment acquisitions.

24 ‘‘(b) LOAN GUARANTEE MUST BE ESSENTIAL TO

25 BOND FINANCING.—Qualifying hospitals and facilities
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1 must demonstrate that a Federal loan guarantee is essen2 tial to obtaining bond financing from non-Federal lenders

3 at a reasonably affordable rate of interest.

4 ‘‘(c) ADDITIONAL ELIGIBILITY CRITERIA FOR LOAN

5 GUARANTEES.—In order to qualify for assistance under

6 this subtitle, a hospital or facility must meet the following

7 criteria:

8 ‘‘(1) The hospital or facility must demonstrate

9 evidence of an ability to meet debt service.

10 ‘‘(2) The assistance, when considered with other

11 resources available to the project, is necessary and

12 will restore, maintain, or improve the financial or

13 physical soundness of the hospital or facility.

14 ‘‘(3) The applicant agrees to assume the public

15 service responsibilities described in section 2103.

16 ‘‘(4) The project is being operated and man17 aged (or will be operated and managed) in accord18 ance with a management-improvement-and-operating

19 plan which is designed to reduce the operating costs

20 of the project, which has been approved by the Trust

21 Fund Board, and which includes—

22 ‘‘(A) a detailed maintenance schedule;

23 ‘‘(B) a schedule for correcting any past de24 ficiencies in maintenance, repairs, and replace25 ments;
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1 ‘‘(C) a plan to upgrade the project to meet

2 cost-effective energy efficiency standards pre3 scribed by the Trust Fund Board;

4 ‘‘(D) a plan to improve financial and man5 agement control systems;

6 ‘‘(E) a detailed annual operating budget

7 taking into account such standards for operat8 ing costs in the area as may be determined by

9 the Trust Fund Board; and

10 ‘‘(F) such other requirements as the Trust

11 Fund Board may determine.

12 ‘‘(5) The application includes stringent provi13 sions for continued State or local support of the pro14 gram, both with respect to operating and financial

15 capital.

16 ‘‘(6) The terms, conditions, maturity, security

17 (if any), and schedule and amount of repayments

18 with respect to the loan are sufficient to protect the

19 financial interests of the United States and are oth20 erwise reasonable and in accord with regulation, in21 cluding a determination that the rate of interest

22 does not exceed such annual percentage on the prin23 cipal obligation outstanding as the Trust Fund

24 Board determines to be reasonable, taking into ac25 count the range of interest rates prevailing in the
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1 private market for similar loans and the risks as2 sumed by the United States.

3 ‘‘(7) The hospital or facility must meet such

4 other additional criteria as the Secretary may im5 pose.

6 ‘‘(e) STATE OR LOCAL PARTICIPATION.—Projects in

7 which State or local governmental entities participate in

8 the form of first guarantees of part or all of the total loan

9 value shall be given a preference for loan guarantees under

10 this subtitle.

11 ‘‘GUARANTEE ALLOTMENTS

12 ‘‘SEC. 2112. (a) IN GENERAL.—Not more than

13 $150,000,000 shall be annually allocated from the Trust

14 Fund for purposes of the loan guarantee program estab15 lished by this subtitle.

16 ‘‘(b) LOAN GUARANTEES FOR RURAL HOSPITALS

17 AND FACILITIES.—At least 10 percent of the dollar value

18 of loan guarantees made under this program during any

19 given year shall be allocated for eligible rural hospitals and

20 facilities, to the extent a sufficient number of applications

21 made by such hospitals and facilities is approved.

22 ‘‘(c) SPECIAL RULE FOR REFINANCING LOANS.—Not

23 more than 20 percent of the amount allocated each year

24 to the loan guarantee program established by this subtitle

25 may be allocated to guarantee refinancing loans during the

26 year.
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1 ‘‘TERMS AND CONDITIONS OF LOAN GUARANTEES

2 ‘‘SEC. 2113. (a) IN GENERAL.—The principle

3 amount of the guaranteed loan, when added to any Fed4 eral grant assistance made under this title, may not exceed

5 95 percent of the total value of the project, including land.

6 ‘‘(b) GUARANTEES PROVIDED MAY NOT SUPPLANT

7 OTHER FUNDS.—Guarantees provided under this subtitle

8 Act may not be used to supplant other forms of State or

9 local support.

10 ‘‘(c) RIGHT TO RECOVER FUNDS.—The United

11 States shall be entitled to recover from any applicant the

12 amount of payments made pursuant to any loan guarantee

13 under this subtitle, unless the Trust Fund Board for good

14 cause waives its right of recovery, and, upon making any

15 such payment, the United States shall be subrogated to

16 all of the rights of the recipients of the payments with

17 respect to which the guarantee was made.

18 ‘‘(d) MODIFICATION OF TERMS.—Loan guarantees

19 made under this subtitle shall be subject to further terms

20 and conditions as the Trust Fund Board determines to

21 be necessary to assure that the purposes of this Act will

22 be achieved, and any such terms and conditions may be

23 modified by the Trust Fund Board to the extent that it

24 determines such modifications to be consistent with the

25 financial interest of the United States.
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1 ‘‘(e) TERMS ARE INCONTESTABLE ABSENT FRAUD

2 OR MISREPRESENTATION.—Any loan guarantee made by

3 the Trust Fund Board pursuant to this subtitle shall be

4 incontestable in the hands of an applicant on whose behalf

5 such guarantee is made, and as to any person who makes

6 or contracts to make a loan to such applicant in reliance

7 thereon, except for fraud or misrepresentation on the part

8 of such applicant or other person.

9 ‘‘PREMIUMS FOR LOAN GUARANTEES

10 ‘‘SEC. 2114. (a) IN GENERAL.—The Trust Fund

11 Board shall determine a reasonable loan insurance pre12 mium which shall be charged for loan guarantees under

13 this subtitle, taking into account the availability of the re14 serves created under section 2112. Premium charges shall

15 be payable in cash to the Trust Fund (either in full upon

16 issuance or annually in advance). In addition to the pre17 mium charge herein provided for, the Trust Fund is au18 thorized to charge and collect such amount as it may deem

19 reasonable for the appraisal of a property or project of20 fered for insurance and for the inspection of such property

21 or project.

22 ‘‘(b) PAYMENT IN ADVANCE.—In the event that the

23 principal obligation of any loan accepted for insurance

24 under this subtitle is paid in full prior to the maturity

25 date, the Trust Fund Board is authorized in its discretion

26 to require the payment by the borrower of an adjusted
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•HR 2494 IH

1 premium charge in such amount as the Board determines

2 to be equitable, but not in excess of the aggregate amount

3 of the premium charges that the hospital or facility would

4 otherwise have been required to pay if the loan had contin5 ued to be insured until maturity date.

6 ‘‘(c) TRUST FUND BOARD MAY WAIVE PREMIUMS.—

7 The Trust Fund Board may in its discretion partially or

8 totally waive premiums charged for loan insurance under

9 this section for financially distressed hospitals and facili10 ties (as described by the Secretary).

11 ‘‘PROCEDURES IN THE EVENT OF LOAN DEFAULT

12 ‘‘SEC. 2115. (a) PAYMENT OF INSURANCE AFTER

13 DEFAULT.—

14 ‘‘(1) TRANSFER OF RIGHTS AND INTERESTS.—

15 The failure of the borrower hospital or facility to

16 make payment due under or provided by the terms

17 of a loan insured under this subtitle shall be consid18 ered in default under such loan and, if such default

19 continues for a period of 30 days, the lender shall

20 be entitled to receive the benefits of the insurance as

21 hereinafter provided, upon assignment, transfer, and

22 delivery to the Trust Fund Board, within a period

23 and in accordance with rules and regulations to be

24 prescribed by the Trust Fund Board of—

25 ‘‘(A) all rights and interests arising under

26 the loan in default;
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1 ‘‘(B) all claims of the lender against the

2 borrower or others, arising out of the loan

3 transactions;

4 ‘‘(C) all policies of title or other insurance

5 or surety bonds or other guarantees and any

6 and all claims thereunder;

7 ‘‘(D) any balance of the loan not advanced

8 to the borrower;

9 ‘‘(E) any cash or assets held by the lender,

10 or to which it is entitled, as deposits made for

11 the account of the borrower and which have not

12 been applied in reduction of the principal of the

13 loan indebtedness; and

14 ‘‘(F) all records, documents, books, papers,

15 and accounts relating to the mortgage trans16 action.

17 ‘‘(2) PAYMENTS BY TRUST FUND.—Upon an

18 assignment, transfer, and delivery described in para19 graph (1), the obligation of the borrower to pay the

20 premium charges for the loan insurance shall cease,

21 and the Trust Fund shall, subject to the cash ad22 justment provided for in subsection (d), issue to the

23 lender a certificate of claim as provided in sub24 section (b), and debentures having total face value

25 equal to the original principal face amount of the
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•HR 2494 IH

1 loan plus such amount as the borrower may have

2 paid for taxes, special assessments, and water rates,

3 which are liens prior to the mortgage; insurance on

4 the assets; and reasonable expenses for the comple5 tion and preservation of the assets and any loan in6 surance premiums paid after default, less the sum

7 of—

8 ‘‘(A) that part of the amount of the prin9 cipal obligation that has been repaid by the bor10 rower,

11 ‘‘(B) an amount equivalent to 1 percent of

12 the unpaid amount of such principal obligation,

13 and

14 ‘‘(C) any net income received by the lender

15 from the assets.

16 ‘‘(3) OPTION TO FORECLOSE.—

17 ‘‘(A) IN GENERAL.—In the event of a de18 fault under the loan the lender may, at its op19 tion and in accordance with the regulations of,

20 and in a period of time to be determined by the

21 Trust Fund Board, proceed to foreclose on and

22 obtain possession of or otherwise acquire such

23 assets from the borrower after default, and re24 ceive the benefits of the insurance as herein

25 provided, upon—
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1 ‘‘(i) the prompt conveyance to the

2 Trust Fund of title to the assets which

3 meets the requirements of the rules and

4 regulations of the Trust Fund Board in

5 force at the time the loan was insured and

6 which is evidenced in the manner pre7 scribed by such rules and regulations; and

8 ‘‘(ii) the assignment to the Trust

9 Fund of all claims of the lender against

10 the borrower or others, arising out of the

11 loan transaction or foreclosure proceedings,

12 except such claims that may have been re13 leased with the consent of the Trust Fund

14 Board.

15 ‘‘(B) REPEAL OF OBLIGATION TO PAY PRE16 MIUM.—Upon such conveyance and assignment,

17 the obligation of the borrower to pay the pre18 mium charges for insurance shall cease and the

19 borrower shall be entitled to receive the benefits

20 of the insurance as provided in this subsection,

21 except that in such event the 1 percent deduc22 tion set out above shall not apply.

23 ‘‘(b) CERTIFICATE OF CLAIM; DIVISION OF EXCESS

24 PROCEEDS.—
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1 ‘‘(1) VALUE OF CERTIFICATE.—The certificate

2 of claim issued under this section shall be for an

3 amount which the Trust Fund Board determines to

4 be sufficient, when added to the face value of the de5 bentures issued and the cash adjustment paid to the

6 lender, to equal the amount which the lender would

7 have received if, on the date of the assignment,

8 transfer and delivery to the Trust Fund provided for

9 in subsection (a) of this section, the mortgagor had

10 extinguished the mortgage indebtedness by payment

11 in full of all obligations under the loan and a reason12 able amount for necessary expenses incurred by the

13 lender in connection with the default proceedings, or

14 the acquisition of the mortgaged assets otherwise,

15 and the conveyance thereof to the Trust Fund. Each

16 such certificate of claim shall provide that there

17 shall accrue to the holder of such certificate with re18 spect to the face amount of such certificate, an in19 crement at the rate of 3 percent per annum which

20 shall not be compounded.

21 ‘‘(2) TREATMENT OF EXCESS.—If the net

22 amount realized from the mortgage, and all claims

23 in connection therewith, so assigned, transferred,

24 and delivered, and from the assets covered by such

25 mortgage and all claims in connection with such as-
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1 sets, after deducting all expenses incurred by the

2 Trust Fund in handling, dealing with, acquiring title

3 to, and disposing of such mortgage and assets and

4 in collecting such claims, exceeds the face value of

5 the debentures issued and the case adjustment paid

6 to the mortgagee plus all interest paid on such de7 bentures, such excess shall be divided as follows:

8 ‘‘(A) If such excess is greater than the

9 total amount payable under the certificate of

10 claim issued in connection with such assets, the

11 Trust Fund shall pay to the holder of such cer12 tificate the full amount so payable, and any ex13 cess remaining thereafter shall be retained by

14 the Trust Fund and credited to the loan insur15 ance program of the Trust Fund.

16 ‘‘(B) If such excess is equal to or less than

17 the total amount payable under such certificate

18 of claim, the Trust Fund Board shall pay to the

19 holder of such certificate the full amount of

20 such excess.

21 ‘‘(c) ACQUISITION OF ASSETS BY CONVEYANCE OR

22 FORECLOSURE.—

23 ‘‘(1) IN GENERAL.—The Trust Fund Board is

24 authorized to—
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1 ‘‘(A) acquire possession of and title to any

2 assets, covered by a mortgage insured under

3 this section and assigned to it, by voluntary

4 conveyance in extinguishment of the mortgage

5 indebtedness, or

6 ‘‘(B) institute proceeding for foreclosure on

7 the assets covered by any such insured mort8 gage and prosecute such proceedings to conclu9 sion.

10 ‘‘(2) BIDDING PROCEDURES AT FORE11 CLOSURE.—The Trust Fund Board at any sale

12 under foreclosure may, in its discretion, for the pro13 tection of the Trust Fund, bid any sum up to but

14 not in excess of the total unpaid indebtedness se15 cured by the mortgage plus taxes, insurance, fore16 closure costs, fees, and other expenses, and may be17 come the purchaser of the assets at such sale. In de18 termining the amount to be bid, the Trust Fund

19 Board shall act consistently with its duties.

20 ‘‘(3) PAYMENT OF EXPENSES.—The Trust

21 Fund Board is authorized to pay from the Trust

22 Fund such sums as may be necessary to defray such

23 taxes, insurance, costs, fees, and other expenses in

24 connection with the acquisition or foreclosure of as25 sets under this section.
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1 ‘‘(4) EXERCISE OF RIGHTS PENDING ACQUISI2 TION.—Pending such acquisition by voluntary con3 veyance or by foreclosure, the Trust Fund Board is

4 authorized, with respect to any mortgage assigned to

5 it under the provisions of subsection (a), to exercise

6 all the rights of a mortgagee under such mortgage,

7 including the right to sell such a mortgage, and to

8 take such action and advance such sums as may be

9 necessary to preserve or protect the lien of such

10 mortgage.

11 ‘‘(d) HANDLING AND DISPOSAL OF ASSETS; SETTLE12 MENT OF CLAIMS.—

13 ‘‘(1) PAYMENT FOR CERTAIN EXPENSES.—Not14 withstanding any other provisions of law relating to

15 the acquisition, handling, or disposal of real and

16 other property by the United States, the Trust Fund

17 Board shall also have power, for the protection of

18 the interests of the Trust Fund, to pay out of the

19 Trust Fund all expenses or charges in connection

20 with, and to deal with, complete, reconstruct, rent,

21 renovate, modernize, insure, make contracts for the

22 management of, or establish suitable agencies for

23 the management of, or sell for cash or credit or lease

24 in its discretion, any assets acquired by it under this

25 section.
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1 ‘‘(2) SETTLEMENT OF CLAIMS.—Notwithstand2 ing any other provision of law, the Trust Fund

3 Board shall also have the power to pursue to final

4 collection by way of compromise or otherwise all

5 claims assigned and transferred to it in connection

6 with the assignment, transfer, and delivery provided

7 for in this section, and at any time, upon default, to

8 foreclose or refrain from foreclosing on any assets

9 secured by any mortgage assigned and transferred

10 to or held by it.

11 ‘‘(3) LIMITATIONS ON AUTHORITY.—Sub12 sections (a) and (b) shall not be construed to apply

13 to any contract for hazard insurance, or to any pur14 chase or contract for services or supplies on account

15 of such assets if the amount thereof does not exceed

16 $1,000.

17 ‘‘Subtitle C—Interest Rate

18 Subsidies

19 ‘‘PROVISION OF INTEREST RATE SUBSIDIES

20 ‘‘SEC. 2121. (a) IN GENERAL.—The Secretary, with

21 the approval of the Trust Fund Board, shall make avail22 able interest subsidies to reduce the cost of financing

23 qualifying projects.

24 ‘‘(b) PURPOSES.—The interest subsidy program shall

25 provide a partial Federal subsidy of debt service payment
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1 for financing replacement (whether by construction or ac2 quisition), modernization, and renovation projects or cap3 ital equipment acquisitions by undertaking the issuance of

4 bonds.

5 ‘‘ELIGIBLE LOANS

6 ‘‘SEC. 2122. (a) IN GENERAL.—Qualifying hospitals

7 and facilities should have issued or plan to issue bonds

8 for capital projects or be responsible for paying debt serv9 ice on general obligation or revenue bonds issued on the

10 qualifying hospital’s or facility’s behalf. To be eligible,

11 bonds must have been issued after December 31, 1992.

12 ‘‘(b) NON-FEDERAL PARTICIPATION REQUIRE13 MENT.—In order to obtain assistance under this subtitle,

14 a hospital or facility must receive assistance from non15 Federal sources in an amount not less than the amount

16 of the assistance provided under this subtitle.

17 ‘‘ALLOTMENT OF SUBSIDIES

18 ‘‘SEC. 2123. (a) IN GENERAL.—Interest subsidy

19 grants will be made in the amount of 3 percent for qualify20 ing non-Federal loans.

21 ‘‘(b) QUALIFYING FEDERAL LOANS MADE UNDER

22 THIS ACT.—Interest subsidy grants in an amount of up

23 to 5 percent will be made for qualifying Federal loans

24 made under this title if it is determined by the Trust Fund

25 Board that the project would not be otherwise financially

26 feasible.
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1 ‘‘(c) RESERVE FOR RURAL HOSPITALS AND FACILI2 TIES.—At least 10 percent of the total value of all interest

3 subsidies awarded in any given year shall be awarded to

4 rural hospitals and facilities, provided that a sufficient

5 number of applications are approved.

6 ‘‘(d) LIMITATION ON AMOUNT OF SUBSIDIES

7 AWARDED IN A GIVEN STATE.—The aggregate value of

8 interest subsidies made to hospitals and facilities in any

9 State in a given year shall not exceed 25 percent of the

10 total value of all interest subsidies made during that year.

11 ‘‘(e) AMOUNT ALLOCATED FROM TRUST FUND.—

12 The Trust Fund Board shall make available $220,000,000

13 annually for interest subsidies under this subtitle.

14 ‘‘TERMS AND CONDITIONS FOR SUBSIDIES

15 ‘‘SEC. 2124. (a) STATE OR LOCAL PARTICIPATION.—

16 State or local participation in an amount equal to not less

17 than the Federal subsidy is required.

18 ‘‘(b) ISSUANCE OF FEDERAL COMMITMENTS.—Suc19 cessful applicants will receive a Federal commitment of in20 terest subsidy grant. Applicants will then have 12 months

21 to finalize financing arrangements before unobligated

22 funds would be returned to the subsidy program pool. A

23 commitment, when issued, shall be valid for as long as

24 a hospital or facility continues to meet the eligibility quali25 fications of this title.
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1 ‘‘SUBSIDIES FOR LOAN REFINANCING

2 ‘‘SEC. 2125. In addition to providing interest rate

3 subsidies for new loans, the Trust Fund may provide sub4 sidies to assist in refinancing if the hospital or facility

5 presently lacks permanent financing at an affordable cur6 rent market rate.

7 ‘‘Subtitle D—Direct Matching

8 Loans

9 ‘‘PROVISION OF MATCHING LOANS

10 ‘‘SEC. 2131. (a) IN GENERAL.—The Secretary, with

11 the approval of the Trust Fund Board, shall provide direct

12 matching loans to qualified hospitals and facilities unable

13 otherwise to obtain essential financing.

14 ‘‘(b) PURPOSES.—The purpose of this subtitle is to

15 provide qualifying hospitals and facilities with direct

16 matching loans for essential replacement (whether by con17 struction or acquisition), modernization, and renovation

18 projects and capital equipment acquisitions. These loans

19 are to be primarily provided for the funding of smaller

20 projects where the transaction costs of securing financing

21 from other sources may be disproportionately onerous in

22 relationship to the amounts financed.

23 ‘‘ELIGIBLE PROJECTS

24 ‘‘SEC. 2132. (a) IN GENERAL.—Qualified applicants

25 may seek a project loan of up to $50,000,000. Not more
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1 than 75 percent of the cost of the project may come from

2 Federal sources.

3 ‘‘(b) EXCEPTION FOR FINANCIALLY DISTRESSED AP4 PLICANTS.—The Trust Fund Board shall have the discre5 tion to waive the 25 percent match requirement for finan6 cially distressed hospitals and facilities (as described by

7 the Secretary).

8 ‘‘ALLOTMENT OF LOANS

9 ‘‘SEC. 2133. (a) IN GENERAL.—The Trust Fund

10 Board shall make available $200,000,000 in direct match11 ing loans annually. Funded projects should be divided be12 tween projects designed to achieve compliance with accred13 itation standards, life safety code, and other certification

14 standards, and those related to the provision of new serv15 ices.

16 ‘‘(b) RESERVE FOR RURAL HOSPITALS AND FACILI17 TIES.—No less than 10 percent of the total value of loans

18 made under the program shall be made to rural hospitals

19 and facilities, if there are a sufficient number of approved

20 applications from such hospitals and facilities.

21 ‘‘TERMS AND CONDITIONS OF LOANS

22 ‘‘SEC. 2134. (a) GENERAL TERM.—Loans will be

23 made for a period equal to the construction period plus

24 up to 39 years amortization.

25 ‘‘(b) INTEREST RATE.—The interest rate will be a

26 market rate determined by the Trust Fund Board to be
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1 the most recent applicable index for revenue bonds, based

2 on the index published by the Bond Buyer and such other

3 information as the Board finds appropriate.

4 ‘‘USE OF LOANS FOR REFINANCING

5 ‘‘SEC. 2135. In addition to providing loans for new

6 projects, the Trust Fund Board may grant loans under

7 this subtitle to refinance existing loans if the hospital or

8 facility has been unable to secure permanent financing at

9 an affordable current market rate, except that the amount

10 of assistance provided under this subtitle during a year

11 for refinancing existing loans may not exceed 20 percent

12 of the total amount made available for assistance under

13 this subtitle for the year.

14 ‘‘CREATION OF REVOLVING FUND

15 ‘‘SEC. 2136. In addition to the new amounts made

16 available each year, all loan repayments made by hospitals

17 and facilities shall be held in a revolving fund that may

18 be used for additional loans.

19 ‘‘LOAN DEFAULT.

20 ‘‘SEC. 2137. (a) IN GENERAL.—The failure of the

21 borrower hospital or facility to make payment due under

22 or provided by the terms of a loan granted under this sub23 title shall be considered a default under such loan and,

24 if such default continues for a period of 30 days, the Trust

25 Fund Board shall have the right to begin collection pro26 ceedings against the borrower.
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1 ‘‘(b) PRIORITY OF FEDERAL INTEREST.—In the case

2 of default, the United States shall be paid prior to State

3 or local bonds.

4 ‘‘(c) SETTLEMENT OF CLAIMS.—Notwithstanding

5 any other provision of law, the Trust Fund Board shall

6 have the power to pursue to final collection by way of com7 promise or otherwise all claims assigned and transferred

8 to the Trust Fund in connection with an assignment,

9 transfer, and delivery and at any time, upon default, to

10 foreclose or refrain from foreclosing on any assets secured

11 by any defaulted loan held by the Trust Fund.

12 ‘‘Subtitle E—Grants for Urgent

13 Capital Needs

14 ‘‘PROVISION OF GRANTS

15 ‘‘SEC. 2141. (a) IN GENERAL.—The Secretary, with

16 the approval of the Trust Fund Board, shall make direct

17 grants to qualified hospitals and facilities with urgent cap18 ital needs.

19 ‘‘(b) PURPOSES.—Direct grants shall be available to

20 eligible hospitals and facilities for 3 types of projects:

21 ‘‘(1) Emergency certification and licensure

22 grants would be available to eligible hospitals and fa23 cilities that are threatened with closure or loss of ac24 creditation or certification of a facility or of essential

25 services as a result of life or safety code violations
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1 or similar facility or equipment failures. Such grants

2 would provide limited funding for repair and renova3 tion or capital equipment acquisition where failure to

4 fund would disrupt the provision of essential public

5 health services such as emergency care.

6 ‘‘(2) Emergency grants would be available for

7 capital renovation, expansion, or replacement

8 (whether by construction or acquisition) necessary to

9 the maintenance or expansion of essential safety and

10 health services such as obstetrics, perinatal, emer11 gency and trauma, primary care and preventive

12 health services.

13 ‘‘(3) Planning grants would be available to

14 qualified hospitals and facilities requiring pre-ap15 proval assistance related to management and finance

16 in order to apply for loans, loan guarantees, and in17 terest subsidies under this Act.

18 ‘‘(c) PRIORITY TO FINANCIALLY DISTRESSED PRO19 VIDERS.—Priority for direct grants under this section

20 would be given to financially distressed hospitals and fa21 cilities (as described by the Secretary).

22 ‘‘(d) APPLICATION PROCESS.—The Secretary, with

23 the approval of the Trust Fund Board, shall create an

24 expedited application process for direct grants.
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1 ‘‘(e) AMOUNT ALLOCATED FROM TRUST FUND.—

2 The Trust Fund Board shall annually allocate

3 $400,000,000 from the Trust Fund for grants under this

4 subtitle.

5 ‘‘ELIGIBLE PROJECTS

6 ‘‘SEC. 2142. (a) MATCHING GRANTS.—

7 ‘‘(1) LIMITATION ON AMOUNT.—Grants for cap8 ital expenditures by qualified hospitals and facilities

9 will be limited to $25,000,000.

10 ‘‘(2) MATCHING REQUIREMENT.—At least half

11 of the projects funded in a year must receive at least

12 50 percent of their funding from State or local

13 sources. The remaining projects funded during the

14 year could be financed up to 90 percent with a com15 bination of Federal grants and loans.

16 ‘‘(3) RESERVATION FOR RURAL APPLICANTS.—

17 No less than 10 percent of the grant funds in any

18 given year would be reserved for rural applicants,

19 provided that a sufficient number of applications are

20 approved.

21 ‘‘(b) PLANNING GRANTS.—Applicants who can dem22 onstrate general qualification for the direct matching loan,

23 loan guarantee, or interest subsidy programs under this

24 title or eligibility for mortgage insurance under section

25 242 of the National Housing Act will be eligible for a

26 grant of up to $500,000 to assist in implementation of
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1 key budgetary and financial systems as well as manage2 ment and governance restructuring.’’.

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

4 subsection (a) shall take effect October 1, 1993.

5 SEC. 212. ADJUSTMENT TO PAYMENTS FOR CAPITAL-RE6 LATED COSTS UNDER MEDICARE.

7 (a) IN GENERAL.—Section 1886(g)(1)(B) of the So8 cial Security Act (42 U.S.C. 1395ww(g)(1)(B)) is amend9 ed—

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

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

12 (iv) and inserting ‘‘, and’’; and

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

14 clause:

15 ‘‘(v) shall provide for adjustments to take into

16 account the extent to which capital-related costs in17 curred by a hospital are costs with respect to which

18 the hospital received financial assistance under title

19 XXI.’’.

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

21 subsection (a) shall apply to cost reporting periods begin22 ning on or after October 1, 1994.
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1 SEC. 213. TAX EXEMPT STATUS OF FEDERALLY GUARAN2 TEED STATE OR LOCAL BONDS.

3 (a) IN GENERAL.—Section 149(b)(3)(A) of the Inter4 nal Revenue Code of 1986 is amended—

5 (1) in clause (ii), by striking ‘‘or’’;

6 (2) in clause (iii), by striking the period at the

7 end and inserting ‘‘, or’’; and

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

9 clause:

10 ‘‘(iv) any guarantee by the Capital Fi11 nancing Trust Fund pursuant to title XXI

12 of the Social Security Act.’’.

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

14 subsection (a) shall take effect on October 1, 1993.

15 TITLE III—CAPITAL

16 ALLOCATION PLANS

17 SEC. 301. REQUIRING STATE REVIEW MECHANISMS AS A

18 CONDITION OF PAYMENT FOR CAPITAL-RE19 LATED COSTS UNDER MEDICARE.

20 (a) IN GENERAL.—Section 1862(a) of the Social Se21 curity Act (42 U.S.C. 1395y(a)) is amended—

22 (1) by striking ‘‘or’’ at the end of paragraph

23 (15);

24 (2) by striking the period at the end of para25 graph (16) and inserting ‘‘; or’’; and
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1 (3) by inserting after paragraph (16) the fol2 lowing new paragraph:

3 ‘‘(17) with respect to expenses for capital-relat4 ed costs (as defined in section 1886(g)(1)(C)) in5 curred during a year (beginning with 1995) where—

6 ‘‘(A) such expenses are incurred in a State

7 that does not have a capital allocation plan ap8 proved by the Secretary under section 1890, or

9 ‘‘(B) the State notifies the Secretary that

10 such expenses were incurred in violation of the

11 State’s capital allocation plan under such sec12 tion.’’.

13 (b) CAPITAL ALLOCATION PLANS DESCRIBED.—Title

14 XVIII of the Social Security Act (42 U.S.C. 1395 et seq.)

15 is amended by inserting after section 1889 the following

16 new section:

17 ‘‘CAPITAL ALLOCATION PLANS

18 ‘‘SEC. 1890. (a) APPROVAL BY SECRETARY.—

19 ‘‘(1) IN GENERAL.—For purposes of section

20 1862(a)(17), the Secretary shall approve the capital

21 allocation plan of a State for a fiscal year if the

22 Governor of the State provides the Secretary with

23 information and assurances necessary for the Sec24 retary to find that the plan meets the requirements

25 of this section.
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1 ‘‘(2) TERMINATION OR EXTENSION OF AP2 PROVAL PERMITTED.—Notwithstanding paragraph

3 (1), the Secretary may—

4 ‘‘(A) terminate the approval of a plan

5 under this section for a fiscal year if the Sec6 retary determines during the year that the plan

7 is not substantially in compliance with this sec8 tion; or

9 ‘‘(B) extend the approval of a plan under

10 this section (on a conditional basis) for an addi11 tional period not to exceed 12 months.

12 ‘‘(b) REQUIREMENTS.—

13 ‘‘(1) IN GENERAL.—A State’s capital allocation

14 plan meets the requirements of this section if—

15 ‘‘(A) except as provided in paragraph (2),

16 the Governor designates a single agency of the

17 State government as the State review agency

18 for the development of the plan;

19 ‘‘(B) the Governor designates a single

20 agency of the State government as the State re21 view agency for the enforcement of the plan;

22 ‘‘(C) all capital expenditures of health care

23 services in the State (except as provided in

24 paragraph (4)) are subject to review and ap-
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1 proval under the plan (in accordance with sub2 section (c));

3 ‘‘(D) the State review agency determines

4 whether capital expenditures are in accordance

5 with the plan using the criteria specified in sub6 section (c) and notifies the Secretary if it deter7 mines that any capital expenditures subject to

8 the plan are not in accordance with the plan;

9 and

10 ‘‘(E) the State review agency provides the

11 Secretary with assurances that the agency is

12 enforcing the plan.

13 ‘‘(2) PERMITTING USE OF REGIONAL REVIEW

14 AGENCIES.—Notwithstanding paragraph (1)(A), a

15 Governor may designate a regional review agency to

16 develop the capital allocation plan for capital ex17 penditures of health care services in a geographic re18 gion in the State, but only if—

19 ‘‘(A) each such geographic region has a

20 population of at least 500,000;

21 ‘‘(B) if the region includes any portion of

22 a metropolitan statistical area, the region in23 cludes all of such metropolitan statistical area;

24 and
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1 ‘‘(C) each such regional review agency in

2 the State—

3 ‘‘(i) is a nonprofit corporation or a

4 public regional planning body or single

5 unit of local government,

6 ‘‘(ii) is governed by a board a major7 ity of the members of which are consumers

8 or purchasers of health care services in the

9 region, and

10 ‘‘(iii) has resource allocation and plan11 ning in the region as its primary purpose.

12 ‘‘(3) PERMITTING USE OF MULTISTATE REVIEW

13 AGENCIES.—The Governors of 2 or more contiguous

14 States may designate a single review agency to carry

15 out the requirements of this section with respect to

16 capital expenditures of health care services in such

17 States, but only if such agency meets the require18 ments described in paragraph (2) for regional review

19 agencies.

20 ‘‘(4) SPECIAL TREATMENT OF SERVICES IN

21 RURAL AREAS PERMITTED.—

22 ‘‘(A) IN GENERAL.—A capital allocation

23 plan need not provide for review of expenditures

24 for services provided in rural areas in a State
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1 if the State has developed a rural health plan

2 that meets the requirements of this paragraph.

3 ‘‘(B) REQUIREMENTS FOR RURAL HEALTH

4 PLAN.—A rural health plan must—

5 ‘‘(i) meet criteria developed by the

6 Secretary;

7 ‘‘(ii) have as its major focus the as8 surance of access to health care services by

9 low density rural populations in the State;

10 and

11 ‘‘(iii) address at least—

12 ‘‘(I) the regionalization of serv13 ices,

14 ‘‘(II) alternatives to traditional

15 facilities,

16 ‘‘(III) the development of new or17 ganizational forms, and

18 ‘‘(IV) the needs for special emer19 gency and other health-services-relat20 ed transportation needs.

21 ‘‘(c) CONTENTS OF PLAN DESCRIBED.—

22 ‘‘(1) REQUIREMENTS RELATING TO ALLOCA23 TION OF CAPITAL.—

24 ‘‘(A) IN GENERAL.—Each capital alloca25 tion plan under this subsection shall—
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1 ‘‘(i) be developed consistent with cri2 teria developed by the Secretary;

3 ‘‘(ii) be designed to assure that the

4 needs of the State’s residents for health

5 care services are met;

6 ‘‘(iii) include occupancy targets for in7 patient hospital facilities;

8 ‘‘(iv) include utilization targets for

9 services subject to review under the plan;

10 and

11 ‘‘(v) provide an opportunity for formal

12 review and comment before becoming final.

13 ‘‘(B) SPECIFICS.—Each capital allocation

14 plan must—

15 ‘‘(i) assure access to hospital facilities;

16 ‘‘(ii) identify which facilities (and

17 parts of facilities) would be closed in order

18 to reach the occupancy and utilization tar19 gets for health care services;

20 ‘‘(iii) provide for regionalization of

21 services, where appropriate; and

22 ‘‘(iv) address—

23 ‘‘(I) the special needs and cir24 cumstances of hospitals receiving an

25 additional payment under section
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1 1886(d)(5)(F), Federally-qualified

2 health centers, and other institutions

3 and facilities that receive special as4 sistance for providing services to low5 income individuals and other individ6 uals in medically underserved commu7 nities (as defined in section 799(6) of

8 the Public Health Service Act), and

9 ‘‘(II) the provision of trauma

10 care.

11 ‘‘(2) REQUIREMENTS RELATING TO REVIEW.—

12 ‘‘(A) IN GENERAL.—The capital allocation

13 plan shall—

14 ‘‘(i) require the review of any pro15 posed expenditures for capital expenditures

16 in excess of $1,000,000 in the area covered

17 by the plan;

18 ‘‘(ii) permit the review of expenditures

19 in the area covered by the plan that are

20 not described in clause (i); and

21 ‘‘(iii) provide that a review shall take

22 into consideration at least the following

23 criteria:

24 ‘‘(I) The relationship of the pro25 posed capital expenditure to the plan.
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1 ‘‘(II) The need that the popu2 lation to be served has for the pro3 posed services, equipment, or facility

4 provided by the capital expenditure.

5 ‘‘(III) The availability of alter6 native, less costly, or more effective

7 methods for providing such services.

8 ‘‘(IV) The impact of the proposed

9 expenditure on the quality of care and

10 the costs of health care services pro11 vided to such population.

12 ‘‘(V) The impact of the proposed

13 expenditure on the utilization of the

14 applicant’s other capital resources.

15 ‘‘(VI) The extent to which the

16 proposed services, equipment, or facil17 ity shall eliminate unnecessary or du18 plicative services.

19 ‘‘(VII) The extent to which the

20 proposed services, equipment, or facil21 ity will be available to all residents of

22 the area, regardless of their ability to

23 pay for the use of such services,

24 equipment, or facility.
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1 ‘‘(B) SPECIAL RULES FOR DETERMINING

2 AMOUNT OF EXPENDITURES.—In determining

3 the amount of proposed expenditures for a cap4 ital project for purposes of subparagraph (A)(i),

5 there shall be included—

6 ‘‘(i) the cost of any studies, surveys,

7 designs, plans, working drawings, specifica8 tions, and other activities essential to the

9 acquisition, improvement, expansion, or re10 placement of the capital project with re11 spect to which the expenditure is made;

12 and

13 ‘‘(ii) any proposed expenditures for

14 other capital projects which are found by

15 the review agency to be fundamentally re16 lated to the capital project in question (in

17 accordance with criteria developed by the

18 State using guidelines established by the

19 Secretary).

20 ‘‘(C) PROCEDURAL REQUIREMENTS.—The

21 capital allocation plan shall meet requirements

22 relating to procedures for review as follows:

23 ‘‘(i) Reviews must be performed under

24 a regular schedule that provides that appli25 cations relating to expenditures for similar
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1 capital projects will be considered at the

2 same time, and that provides an oppor3 tunity for additional applicants to seek ap4 proval for carrying out a capital project if

5 the review agency determines (based on the

6 application of an initial sponsor of such a

7 project) that an expenditure for such a

8 project would be appropriate under the

9 plan.

10 ‘‘(ii) The determinations of the review

11 must be made in public meetings.

12 ‘‘(iii) If local review agencies are es13 tablished under subsection (a)(2), the

14 State review agency must take the results

15 of reviews by such agencies into account.

16 ‘‘(iv) The State review agency must

17 make provision for access by the general

18 public to all applications for review and for

19 written findings of its reviews that state

20 the basis for agency determinations.

21 ‘‘(v) The State review agency must

22 hold at least one public hearing if re23 quested by persons directly affected by the

24 review.
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1 ‘‘(vi) Any decision of the State review

2 agency to approve or not to approve a pro3 posed capital expenditure must be based

4 solely on the agency’s review and the

5 record created by the review.

6 ‘‘(vii) An application for a proposed

7 capital expenditure must include a time8 table for completing the project for which

9 the expenditure is proposed, and any ap10 proval of such an expenditure shall be

11 withdrawn if the State review agency finds

12 that the applicant was not making a good

13 faith effort to meet the timetable or to oth14 erwise meet any applicable condition for

15 approval.

16 ‘‘(viii) The allocation plan must pro17 vide either for an appeals mechanism (con18 sistent with the State’s administrative pro19 cedures act) or for an appeal before an en20 tity (other than the State review agency)

21 designated by the Governor.

22 ‘‘(d) FUNDING ASSISTANCE TO STATES.—

23 ‘‘(1) IN GENERAL.—The Secretary shall make,

24 in each fiscal year beginning with fiscal year 1994

25 from the allotment under paragraph (2) for the
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1 State, a grant to each State with an approved cap2 ital allocation plan under this section in an amount

3 equal to 75 percent of the operating costs of carry4 ing out the plan in the State in the fiscal year.

5 Grants under this paragraph shall be payable from

6 the Capital Financing Trust Fund under section

7 2104.

8 ‘‘(2) AMOUNT OF ALLOTMENT.—The amount of

9 an allotment to each State is equal to the sum of—

10 ‘‘(A) the product of $0.70 and the number

11 of individuals residing in the State who do not

12 reside in an area under the jurisdiction of a re13 gional review agency (as established by the

14 State under subsection (b)(2)); and

15 ‘‘(B) the product of $1.00 and the number

16 of individuals residing in the State who reside

17 in an area under the jurisdiction of a regional

18 review agency.

19 ‘‘(e) DEFINITIONS.—In this subsection:

20 ‘‘(1) The term ‘Governor’ means the chief exec21 utive officer of a State, or his designee.

22 ‘‘(2) The term ‘capital expenditure’ means an

23 expenditure which—
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1 ‘‘(A) under generally accepted accounting

2 principles, is not properly chargeable as an ex3 pense of operation and maintenance; or

4 ‘‘(B) is made to obtain by lease or com5 parable arrangement any facility thereof or any

6 equipment for a facility or part.

7 ‘‘(3) The term ‘rural area’ has the meaning

8 given such term in section 1886(d)(2)(D).’’.

9 (c) EFFECT ON ANTITRUST LAWS.—

10 (1) IN GENERAL.—For purposes of the anti11 trust laws—

12 (A) the establishment by a State of a cap13 ital allocation plan under section 1890 of the

14 Social Security Act (as added by subsection (b))

15 shall be considered as affirmative State policy

16 with respect to individuals and entities in the

17 State providing health care services subject to

18 the plan; and

19 (B) the enforcement by a State of such a

20 plan shall be considered as active State super21 vision with respect to such individuals and enti22 ties.

23 (2) ANTITRUST LAWS DEFINED.—In paragraph

24 (1), the term ‘‘antitrust laws’’ has the meaning

25 given it in subsection (a) of the first sections of the
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1 Clayton Act (15 U.S.C. 12(a)), except that such

2 term includes—

3 (A) section 5 of the Federal Trade Com4 mission Act (15 U.S.C. 45) to the extent such

5 section applies to unfair methods of competi6 tion; and

7 (B) any State law similar to the antitrust

8 laws.

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