H. R. 2015—229
1876 and who are entitled to part A or with a
Medicare+Choice organization under part C. The
amount of such a payment shall equal the applicable
percentage of the product of—
‘‘(I) the aggregate approved amount (as defined
in subparagraph (B)) for that period; and
‘‘(II) the fraction of the total number of
inpatient-bed days (as established by the Sec-
retary) during the period which are attributable
to such enrolled individuals.
‘‘(ii) APPLICABLE
PERCENTAGE.—For purposes of
clause (i), the applicable percentage is—
‘‘(I) 20 percent in 1998,
‘‘(II) 40 percent in 1999,
‘‘(III) 60 percent in 2000, and
‘‘(IV) 80 percent in 2001, and
‘‘(V) 100 percent in 2002 and subsequent years.
‘‘(iii) 
SPECIAL
RULE
FOR
HOSPITALS
UNDER
REIMBURSEMENT SYSTEM.—The Secretary shall estab-
lish rules for the application of this subparagraph to
a hospital reimbursed under a reimbursement system
authorized under section 1814(b)(3) in the same man-
ner as it would apply to the hospital if it were not
reimbursed under such section.’’.
SEC. 4625. PERMITTING PAYMENT TO NONHOSPITAL PROVIDERS.
(a) IN GENERAL.—Section 1886 (42 U.S.C. 1395ww), as amended
by section 4421(a), is amended by adding at the end the following:
‘‘(k) PAYMENT TO NONHOSPITAL PROVIDERS.—
‘‘(1) IN GENERAL.—For cost reporting periods beginning on
or after October 1, 1997, the Secretary may establish rules
for payment to qualified nonhospital providers for their direct
costs of medical education, if those costs are incurred in the
operation of an approved medical residency training program
described in subsection (h). Such rules shall specify the
amounts, form, and manner in which such payments will be
made and the portion of such payments that will be made
from each of the trust funds under this title.
‘‘(2) QUALIFIED NONHOSPITAL PROVIDERS.—For purposes of
this subsection, the term ‘qualified nonhospital providers’
means—
‘‘(A) a Federally qualified health center, as defined
in section 1861(aa)(4);
‘‘(B) a rural health clinic, as defined in section
1861(aa)(2);
‘‘(C) Medicare+Choice organizations; and
‘‘(D) such other providers (other than hospitals) as
the Secretary determines to be appropriate.’’.
(b) PROHIBITION ON DOUBLE PAYMENTS.—Section 1886(h)(3)(B)
(42 U.S.C. 1395ww(h)(3)(B)) is amended by adding at the end the
following:
‘‘The Secretary shall reduce the aggregate approved amount
to the extent payment is made under subsection (k) for residents
included in the hospital’s count of full-time equivalent resi-
dents.’’.
H. R. 2015—230
SEC. 4626. INCENTIVE PAYMENTS UNDER PLANS FOR VOLUNTARY
REDUCTION IN NUMBER OF RESIDENTS.
(a) IN GENERAL.—Section 1886(h) (42 U.S.C. 1395ww(h)) is
amended by adding at the end the following new paragraph:
‘‘(6) INCENTIVE
PAYMENT
UNDER
PLANS
FOR
VOLUNTARY
REDUCTION IN NUMBER OF RESIDENTS.—
‘‘(A) IN GENERAL.—In the case of a voluntary residency
reduction plan for which an application is approved under
subparagraph (B), subject to subparagraph (F), each hos-
pital which is part of the qualifying entity submitting the
plan shall be paid an applicable hold harmless percentage
(as specified in subparagraph (E)) of the sum of—
‘‘(i) the amount (if any) by which—
‘‘(I) the amount of payment which would have
been made under this subsection if there had been
a 5-percent reduction in the number of full-time
equivalent residents in the approved medical edu-
cation training programs of the hospital as of June
30, 1997, exceeds
‘‘(II) the amount of payment which is made
under this subsection, taking into account the
reduction in such number effected under the reduc-
tion plan; and
‘‘(ii) the amount of the reduction in payment under
subsection (d)(5)(B) for the hospital that is attributable
to the reduction in number of residents effected under
the plan below 95 percent of the number of full-time
equivalent residents in such programs of the hospital
as of June 30, 1997.
The determination of the amounts under clauses (i) and
(ii) for any year shall be made on the basis of the provisions
of this title in effect on the application deadline date for
the first calendar year to which the reduction plan applies.
‘‘(B) APPROVAL OF PLAN APPLICATIONS.—The Secretary
may not approve the application of an qualifying entity
unless—
‘‘(i) the application is submitted in a form and
manner specified by the Secretary and by not later
than November 1, 1999,
‘‘(ii) the application provides for the operation of
a plan for the reduction in the number of full-time
equivalent residents in the approved medical residency
training programs of the entity consistent with the
requirements of subparagraph (D);
‘‘(iii) the entity elects in the application the period
of residency training years (not greater than 5) over
which the reduction will occur;
‘‘(iv) the entity will not reduce the proportion of
its residents in primary care (to the total number
of residents) below such proportion as in effect as of
the applicable time described in subparagraph (D)(v);
and
‘‘(v) the Secretary determines that the application
and the entity and such plan meet such other require-
ments as the Secretary specifies in regulations.
‘‘(C) QUALIFYING ENTITY.—For purposes of this para-
graph, any of the following may be a qualifying entity:
H. R. 2015—231
‘‘(i) Individual hospitals operating one or more
approved medical residency training programs.
‘‘(ii) Two or more hospitals that operate such pro-
grams and apply for treatment under this paragraph
as a single qualifying entity.
‘‘(iii) A qualifying consortium (as described in sec-
tion 4628 of the Balanced Budget Act of 1997).
‘‘(D) RESIDENCY REDUCTION REQUIREMENTS.—
‘‘(i) INDIVIDUAL HOSPITAL APPLICANTS.—In the case
of a qualifying entity described in subparagraph (C)(i),
the number of full-time equivalent residents in all
the approved medical residency training programs
operated by or through the entity shall be reduced
as follows:
‘‘(I) If the base number of residents exceeds
750 residents, by a number equal to at least 20
percent of such base number.
‘‘(II) Subject to subclause (IV), if the base num-
ber of residents exceeds 600 but is less than 750
residents, by 150 residents.
‘‘(III) Subject to subclause (IV), if the base
number of residents does not exceed 600 residents,
by a number equal to at least 25 percent of such
base number.
‘‘(IV) In the case of a qualifying entity which
is described in clause (v) and which elects treat-
ment under this subclause, by a number equal
to at least 20 percent of the base number.
‘‘(ii) JOINT APPLICANTS.—In the case of a qualifying
entity described in subparagraph (C)(ii), the number
of full-time equivalent residents in the aggregate for
all the approved medical residency training programs
operated by or through the entity shall be reduced
as follows:
‘‘(I) Subject to subclause (II), by a number
equal to at least 25 percent of the base number.
‘‘(II) In the case of such a qualifying entity
which is described in clause (v) and which elects
treatment under this subclause, by a number equal
to at least 20 percent of the base number.
‘‘(iii) CONSORTIA.—In the case of a qualifying entity
described in subparagraph (C)(iii), the number of full-
time equivalent residents in the aggregate for all the
approved medical residency training programs oper-
ated by or through the entity shall be reduced by
a number equal to at least 20 percent of the base
number.
‘‘(iv) MANNER
OF
REDUCTION.—The reductions
specified under the preceding provisions of this
subparagraph for a qualifying entity shall be below
the base number of residents for that entity and shall
be fully effective not later than the 5th residency train-
ing year in which the application under subparagraph
(B) is effective.
‘‘(v) ENTITIES PROVIDING ASSURANCE OF INCREASE
IN PRIMARY CARE RESIDENTS.—An entity is described
in this clause if—
H. R. 2015—232
‘‘(I) the base number of residents for the entity
is less than 750 or the entity is described in
subparagraph (C)(ii); and
‘‘(II) the entity represents in its application
under subparagraph (B) that it will increase the
number of full-time equivalent residents in pri-
mary care by at least 20 percent (from such num-
ber included in the base number of residents) by
not later than the 5th residency training year in
which the application under subparagraph (B) is
effective.
If a qualifying entity fails to comply with the represen-
tation described in subclause (II) by the end of such
5th residency training year, the entity shall be subject
to repayment of all amounts paid under this paragraph,
in accordance with procedures established to carry out
subparagraph (F).
‘‘(vi) BASE NUMBER OF RESIDENTS DEFINED.—For
purposes of this paragraph, the term ‘base number
of residents’ means, with respect to a qualifying entity
(or its participating hospitals) operating approved
medical residency training programs, the number of
full-time equivalent residents in such programs (before
application of weighting factors) of the entity as of
the most recent residency training year ending before
June 30, 1997, or, if less, for any subsequent residency
training year that ends before the date the entity
makes application under this paragraph.
‘‘(E) APPLICABLE
HOLD
HARMLESS
PERCENTAGE.—For
purposes of subparagraph (A), the ‘applicable hold harmless
percentage’ for the—
‘‘(i) first and second residency training years in
which the reduction plan is in effect, 100 percent,
‘‘(ii) third such year, 75 percent,
‘‘(iii) fourth such year, 50 percent, and
‘‘(iv) fifth such year, 25 percent.
‘‘(F) PENALTY FOR NONCOMPLIANCE.—
‘‘(i) IN GENERAL.—No payment may be made under
this paragraph to a hospital for a residency training
year if the hospital has failed to reduce the number
of full-time equivalent residents (in the manner
required under subparagraph (D)) to the number
agreed to by the Secretary and the qualifying entity
in approving the application under this paragraph with
respect to such year.
‘‘(ii) INCREASE IN NUMBER OF RESIDENTS IN SUBSE-
QUENT YEARS.—If payments are made under this para-
graph to a hospital, and if the hospital increases the
number of full-time equivalent residents above the
number of such residents permitted under the reduc-
tion plan as of the completion of the plan, then, as
specified by the Secretary, the entity is liable for repay-
ment to the Secretary of the total amounts paid under
this paragraph to the entity.
H. R. 2015—233
‘‘(G) TREATMENT OF ROTATING RESIDENTS.—In applying
this paragraph, the Secretary shall establish rules regard-
ing the counting of residents who are assigned to institu-
tions the medical residency training programs in which
are not covered under approved applications under this
paragraph.’’.
(b) RELATION TO DEMONSTRATION PROJECTS AND AUTHORITY.—
(1) Section 1886(h)(6) of the Social Security Act, added
by subsection (a), other than subparagraph (F)(ii) thereof, shall
not apply to any residency training program with respect to
which a demonstration project described in paragraph (3) has
been approved by the Health Care Financing Administration
as of May 27, 1997.
(2) Effective May 27, 1997, the Secretary of Health and
Human Services is not authorized to approve any demonstration
project described in paragraph (3) for any residency training
year beginning before July 1, 2006.
(3) A demonstration project described in this paragraph
is a project that primarily provides for additional payments
under title XVIII of the Social Security Act in connection with
a reduction in the number of residents in a medical residency
training program.
(c) INTERIM, FINAL REGULATIONS.—In order to carry out the
amendment made by subsection (a) in a timely manner, the Sec-
retary of Health and Human Services may first promulgate regula-
tions, that take effect on an interim basis, after notice and pending
opportunity for public comment, by not later than 6 months after
the date of the enactment of this Act.
SEC. 4627. MEDICARE SPECIAL REIMBURSEMENT RULE FOR PRIMARY
CARE COMBINED RESIDENCY PROGRAMS.
(a) IN GENERAL.—Section 1886(h)(5)(G) of the Social Security
Act (42 U.S.C. 1395ww(h)(5)(G)) is amended—
(1) in clause (i), by striking ‘‘and (iii)’’ and inserting ‘‘,
(iii), and (iv)’’; and
(2) by adding at the end the following:
‘‘(iv) SPECIAL
RULE
FOR
CERTAIN
PRIMARY
CARE
COMBINED RESIDENCY PROGRAMS.—(I) In the case of
a resident enrolled in a combined medical residency
training program in which all of the individual pro-
grams (that are combined) are for training a primary
care resident (as defined in subparagraph (H)), the
period of board eligibility shall be the minimum num-
ber of years of formal training required to satisfy the
requirements for initial board eligibility in the longest
of the individual programs plus one additional year.
‘‘(II) A resident enrolled in a combined medical
residency training program that includes an obstetrics
and gynecology program shall qualify for the period
of board eligibility under subclause (I) if the other
programs such resident combines with such obstetrics
and gynecology program are for training a primary
care resident.’’.
(b) EFFECTIVE DATE.—The amendments made by subsection
(a) apply to combined medical residency training programs in effect
for residency years beginning on or after July 1, 1997.
H. R. 2015—234
SEC. 4628. DEMONSTRATION PROJECT ON USE OF CONSORTIA.
(a) IN GENERAL.—The Secretary of Health and Human Services
(in this section referred to as the ‘‘Secretary’’) shall establish a
demonstration project under which, instead of making payments
to teaching hospitals pursuant to section 1886(h) of the Social
Security Act, the Secretary shall make payments under this section
to each consortium that meets the requirements of subsection (b)
and that applies to be included under the project.
(b) QUALIFYING CONSORTIA.—For purposes of subsection (a),
a consortium meets the requirements of this subsection if the
consortium is in compliance with the following:
(1) The consortium consists of a teaching hospital with
one or more approved medical residency training programs
and one or more of the following entities:
(A) A school of allopathic medicine or osteopathic medi-
cine.
(B) Another teaching hospital, which may be a chil-
dren’s hospital.
(C) A Federally qualified health center.
(D) A medical group practice.
(E) A managed care entity.
(F) An entity furnishing outpatient services.
(G) Such other entity as the Secretary determines to
be appropriate.
(2) The members of the consortium have agreed to partici-
pate in the programs of graduate medical education that are
operated by the entities in the consortium.
(3) With respect to the receipt by the consortium of pay-
ments made pursuant to this section, the members of the
consortium have agreed on a method for allocating the pay-
ments among the members.
(4) The consortium meets such additional requirements
as the Secretary may establish.
(c) AMOUNT AND SOURCE OF PAYMENT.—The total of payments
to a qualifying consortium for a fiscal year pursuant to subsection
(a) shall not exceed the amount that would have been paid under
section 1886 (h) or (k) of the Social Security Act for the teaching
hospital (or hospitals) in the consortium. Such payments shall be
made in such proportion from each of the trust funds established
under title XVIII of such Act as the Secretary specifies.
SEC. 4629. RECOMMENDATIONS ON LONG-TERM POLICIES REGARDING
TEACHING HOSPITALS AND GRADUATE MEDICAL EDU-
CATION.
(a) IN GENERAL.—The Medicare Payment Advisory Commission
(established under section 1805 of the Social Security Act and
in this section referred to as the ‘‘Commission’’) shall examine
and develop recommendations on whether and to what extent medi-
care payment policies and other Federal policies regarding teaching
hospitals and graduate medical education should be changed. Such
recommendations shall include recommendations regarding each
of the following:
(1) Possible methodologies for making payments for grad-
uate medical education and the selection of entities to receive
such payments. Matters considered under this paragraph shall
include—
H. R. 2015—235
(A) issues regarding children’s hospitals and approved
medical residency training programs in pediatrics, and
(B) whether and to what extent payments are being
made (or should be made) for training in the nursing and
other allied health professions.
(2) Federal policies regarding international medical grad-
uates.
(3) The dependence of schools of medicine on service-gen-
erated income.
(4) Whether and to what extent the needs of the United
States regarding the supply of physicians, in the aggregate
and in different specialties, will change during the 10-year
period beginning on October 1, 1997, and whether and to what
extent any such changes will have significant financial effects
on teaching hospitals.
(5) Methods for promoting an appropriate number, mix,
and geographical distribution of health professionals.
(b) CONSULTATION.—In conducting the study under subsection
(a), the Commission shall consult with the Council on Graduate
Medical Education and individuals with expertise in the area of
graduate medical education, including—
(1) deans from allopathic and osteopathic schools of medi-
cine;
(2) chief executive officers (or equivalent administrative
heads) from academic health centers, integrated health care
systems, approved medical residency training programs, and
teaching hospitals that sponsor approved medical residency
training programs;
(3) chairs of departments or divisions from allopathic and
osteopathic schools of medicine, schools of dentistry, and
approved medical residency training programs in oral surgery;
(4) individuals with leadership experience from representa-
tive fields of non-physician health professionals;
(5) individuals with substantial experience in the study
of issues regarding the composition of the health care workforce
of the United States; and
(6) individuals with expertise in health care payment poli-
cies.
(c) REPORT.—Not later than 2 years after the date of the enact-
ment of this Act, the Commission shall submit to the Congress
a report providing its recommendations under this section and
the reasons and justifications for such recommendations.
SEC. 4630. STUDY OF HOSPITAL OVERHEAD AND SUPERVISORY PHYSI-
CIAN COMPONENTS OF DIRECT MEDICAL EDUCATION
COSTS.
(a) IN GENERAL.—The Secretary of Health and Human Services
shall conduct a study with respect to—
(1) variations among hospitals in the hospital overhead
and supervisory physician components of their direct medical
education costs taken into account under section 1886(h) of
the Social Security Act, and
(2) the reasons for such variations.
(b) REPORT.—Not later than 1 year after the date of the enact-
ment of this Act, the Secretary shall report the results of the
study conducted under subsection (a) to the appropriate committees
of Congress, including recommendations for legislation reducing
H. R. 2015—236
variations described in subsection (a) that the Secretary finds
inappropriate.
CHAPTER 3—PROVISIONS RELATING TO MEDICARE
SECONDARY PAYER
SEC. 4631. PERMANENT EXTENSION AND REVISION OF CERTAIN
SECONDARY PAYER PROVISIONS.
(a) APPLICATION TO DISABLED INDIVIDUALS IN LARGE GROUP
HEALTH PLANS.—
(1) 
IN
GENERAL.—Section 
1862(b)(1)(B) 
(42 
U.S.C.
1395y(b)(1)(B)) is amended—
(A) in clause (i), by striking ‘‘clause (iv)’’ and inserting
‘‘clause (iii)’’;
(B) by striking clause (iii); and
(C) by redesignating clause (iv) as clause (iii).
(2) CONFORMING AMENDMENTS.—Paragraphs (1) through (3)
of section 1837(i) (42 U.S.C. 1395p(i)) and the second sentence
of section 1839(b) (42 U.S.C. 1395r(b)) are each amended by
striking ‘‘1862(b)(1)(B)(iv)’’ each place it appears and inserting
‘‘1862(b)(1)(B)(iii)’’.
(b) INDIVIDUALS WITH END STAGE RENAL DISEASE.—Section
1862(b)(1)(C) (42 U.S.C. 1395y(b)(1)(C)) is amended—
(1) in the last sentence by striking ‘‘October 1, 1998’’ and
inserting ‘‘the date of enactment of the Balanced Budget Act
of 1997’’; and
(2) by adding at the end the following: ‘‘Effective for items
and services furnished on or after the date of enactment of
the Balanced Budget Act of 1997, (with respect to periods
beginning on or after the date that is 18 months prior to
such date), clauses (i) and (ii) shall be applied by substituting
‘30-month’ for ‘12-month’ each place it appears.’’.
(c) IRS-SSA-HCFA DATA MATCH.—
(1) SOCIAL SECURITY ACT.—Section 1862(b)(5)(C) (42 U.S.C.
1395y(b)(5)(C)) is amended by striking clause (iii).
(2) INTERNAL REVENUE CODE.—Section 6103(l)(12) of the
Internal Revenue Code of 1986 is amended by striking subpara-
graph (F).
SEC. 4632. CLARIFICATION OF TIME AND FILING LIMITATIONS.
(a) 
EXTENSION
OF
CLAIMS
FILING
PERIOD.—Section
1862(b)(2)(B) (42 U.S.C. 1395y(b)(2)(B)) is amended by adding at
the end the following new clause:
‘‘(v) CLAIMS-FILING PERIOD.—Notwithstanding any
other time limits that may exist for filing a claim
under an employer group health plan, the United
States may seek to recover conditional payments in
accordance with this subparagraph where the request
for payment is submitted to the entity required or
responsible under this subsection to pay with respect
to the item or service (or any portion thereof) under
a primary plan within the 3-year period beginning
on the date on which the item or service was fur-
nished.’’.
(b) EFFECTIVE DATE.—The amendments made by this section
apply to items and services furnished on or after the date of the
enactment of this Act.
H. R. 2015—237
SEC. 4633. PERMITTING RECOVERY AGAINST THIRD PARTY ADMINIS-
TRATORS.
(a) PERMITTING RECOVERY AGAINST THIRD PARTY ADMINISTRA-
TORS
OF
PRIMARY
PLANS.—Section 1862(b)(2)(B)(ii) (42 U.S.C.
1395y(b)(2)(B)(ii)) is amended—
(1) by striking ‘‘under this subsection to pay’’ and inserting
‘‘(directly, as a third-party administrator, or otherwise) to make
payment’’; and
(2) by adding at the end the following: ‘‘The United States
may not recover from a third-party administrator under this
clause in cases where the third-party administrator would not
be able to recover the amount at issue from the employer
or group health plan and is not employed by or under contract
with the employer or group health plan at the time the action
for recovery is initiated by the United States or for whom
it provides administrative services due to the insolvency or
bankruptcy of the employer or plan.’’.
(b) 
CLARIFICATION
OF
BENEFICIARY
LIABILITY.—Section
1862(b)(1) (42 U.S.C. 1395y(b)(1)) is amended by adding at the
end the following new subparagraph:
‘‘(F) 
LIMITATION
ON
BENEFICIARY
LIABILITY.—An
individual who is entitled to benefits under this title and
is furnished an item or service for which such benefits
are incorrectly paid is not liable for repayment of such
benefits under this paragraph unless payment of such bene-
fits was made to the individual.’’.
(c) EFFECTIVE DATE.—The amendments made by this section
apply to items and services furnished on or after the date of the
enactment of this Act.
CHAPTER 4—OTHER PROVISIONS
SEC. 4641. PLACEMENT OF ADVANCE DIRECTIVE IN MEDICAL RECORD.
(a) 
IN
GENERAL.—Section 
1866(f)(1)(B) 
(42 
U.S.C.
1395cc(f)(1)(B)) is amended by striking ‘‘in the individual’s medical
record’’ and inserting ‘‘in a prominent part of the individual’s cur-
rent medical record’’.
(b) EFFECTIVE DATE.—The amendment made by subsection (a)
shall apply to provider agreements entered into, renewed, or
extended on or after such date (not later than 1 year after the
date of the enactment of this Act) as the Secretary of Health
and Human Services specifies.
SEC. 4642. INCREASED CERTIFICATION PERIOD FOR CERTAIN ORGAN
PROCUREMENT ORGANIZATIONS.
Section 1138(b)(1)(A)(ii) (42 U.S.C. 1320b–8(b)(1)(A)(ii)) is
amended by striking ‘‘two years’’ and inserting ‘‘2 years (4 years
if the Secretary determines appropriate for an organization on
the basis of its past practices)’’.
SEC. 4643. OFFICE OF THE CHIEF ACTUARY IN THE HEALTH CARE
FINANCING ADMINISTRATION.
Section 1117 (42 U.S.C. 1317) is amended—
(1) in the heading, by inserting ‘‘AND CHIEF ACTUARY’’ after
‘‘THE ADMINISTRATOR’’;
(2) by inserting ‘‘(a)’’ before ‘‘The Administrator’’; and
(3) by adding at the end the following: