1439
HR 2491 EH
‘‘(1) USE OF ACTUARIAL SCIENCE.—The extent
and manner in which the State uses actuarial
science—
‘‘(A) to analyze and project health care ex-
penditures and utilization for individuals en-
rolled (or to be enrolled) in such an organiza-
tion under the MediGrant plan, and
‘‘(B) to develop capitation payment rates,
including a brief description of the general
methodologies used by actuaries.
‘‘(2) QUALIFICATIONS
OF
ORGANIZATIONS.—
The general qualifications (including any accredita-
tion, State licensure or certification, or provider net-
work standards) required by the State for participa-
tion of capitated health care organizations under the
MediGrant plan.
‘‘(3) DISSEMINATION
PROCESS.—The process
used by the State under subsection (b) and other-
wise to disseminate, before entering into contracts
with capitated health care organizations, actuarial
information to such organizations on the historical
fee-for-service costs (or, if not available, other recent
financial data associated with providing covered
services) and utilization associated with individuals
described in paragraph (1)(A).
1440
HR 2491 EH
‘‘(b) PUBLIC NOTICE AND COMMENT.—Under the
MediGrant plan the State shall provide a process for pro-
viding, before the beginning of each contract year—
‘‘(1) public notice of—
‘‘(A) the amounts of the capitation pay-
ments (if any) made under the plan for the con-
tract year preceding the public notice, and
‘‘(B)(i) the information described under
subsection (a)(1) with respect to capitation pay-
ments for the contract year involved or (ii) the
amounts of the capitation payments the State
expects to make for the contract year involved,
unless such information is designated as proprietary
and not subject to public disclosure under State law;
and
‘‘(2) an opportunity for receiving public com-
ment on the amounts and information for which no-
tice is provided under paragraph (1).
‘‘(c) DEFINITIONS.—In this title:
‘‘(1) CAPITATED
HEALTH
CARE
ORGANIZA-
TION.—The term ‘capitated health care organiza-
tion’ means a health maintenance organization or
any other entity (including a health insuring organi-
zation, managed care organization, prepaid health
plan, integrated service network, or similar entity)
1441
HR 2491 EH
which under State law is permitted to accept capita-
tion payments for providing (or arranging for the
provision of) a group of items and services including
at least inpatient hospital services and physicians’
services.
‘‘(2) CAPITATION PAYMENT.—The term ‘capita-
tion payment’ means, with respect to payment, pay-
ment on a prepaid capitation basis or any other risk
basis to an entity for the entity’s provision (or ar-
ranging for the provision) of a group of items and
services (including at least inpatient hospital services
and physicians’ services).
‘‘SEC. 2115. PREVENTING SPOUSAL IMPOVERISHMENT.
‘‘(a) SPECIAL TREATMENT FOR INSTITUTIONALIZED
SPOUSES.—
‘‘(1) SUPERSEDES OTHER PROVISIONS.—In de-
termining the eligibility for medical assistance of an
institutionalized spouse (as defined in subsection
(h)(1)), the provisions of this section supersede any
other provision of this title which is inconsistent
with them.
‘‘(2) DOES NOT AFFECT CERTAIN DETERMINA-
TIONS.—Except as this section specifically provides,
this section does not apply to—
1442
HR 2491 EH
‘‘(A) the determination of what constitutes
income or resources, or
‘‘(B) the methodology and standards for
determining and evaluating income and re-
sources.
‘‘(3) NO
APPLICATION
IN
COMMONWEALTHS
AND TERRITORIES.—This section shall only apply to
a State that is one of the 50 States or the District
of Columbia.
‘‘(b) RULES FOR TREATMENT OF INCOME.—
‘‘(1) SEPARATE TREATMENT OF INCOME.—Dur-
ing any month in which an institutionalized spouse
is in the institution, except as provided in paragraph
(2), no income of the community spouse shall be
deemed available to the institutionalized spouse.
‘‘(2) ATTRIBUTION OF INCOME.—In determin-
ing the income of an institutionalized spouse or com-
munity spouse for purposes of the post-eligibility in-
come determination described in subsection (d), ex-
cept as otherwise provided in this section and re-
gardless of any State laws relating to community
property or the division of marital property, the fol-
lowing rules apply:
‘‘(A) NON-TRUST PROPERTY.—Subject to
subparagraphs (C) and (D), in the case of in-
1443
HR 2491 EH
come not from a trust, unless the instrument
providing the income otherwise specifically pro-
vides—
‘‘(i) if payment of income is made
solely in the name of the institutionalized
spouse or the community spouse, the in-
come shall be considered available only to
that respective spouse;
‘‘(ii) if payment of income is made in
the names of the institutionalized spouse
and the community spouse, one-half of the
income shall be considered available to
each of them; and
‘‘(iii) if payment of income is made in
the names of the institutionalized spouse
or the community spouse, or both, and to
another person or persons, the income
shall be considered available to each spouse
in proportion to the spouse’s interest (or,
if payment is made with respect to both
spouses and no such interest is specified,
one-half of the joint interest shall be con-
sidered available to each spouse).
‘‘(B) TRUST PROPERTY.—In the case of a
trust—
1444
HR 2491 EH
‘‘(i) except as provided in clause (ii),
income shall be attributed in accordance
with the provisions of this title, and
‘‘(ii) income shall be considered avail-
able to each spouse as provided in the
trust, or, in the absence of a specific provi-
sion in the trust—
‘‘(I) if payment of income is
made solely to the institutionalized
spouse or the community spouse, the
income shall be considered available
only to that respective spouse;
‘‘(II) if payment of income is
made to both the institutionalized
spouse and the community spouse,
one-half of the income shall be consid-
ered available to each of them; and
‘‘(III) if payment of income is
made to the institutionalized spouse
or the community spouse, or both,
and to another person or persons, the
income shall be considered available to
each spouse in proportion to the
spouse’s interest (or, if payment is
made with respect to both spouses
1445
HR 2491 EH
and no such interest is specified, one-
half of the joint interest shall be con-
sidered available to each spouse).
‘‘(C) PROPERTY WITH NO INSTRUMENT.—
In the case of income not from a trust in which
there is no instrument establishing ownership,
subject to subparagraph (D), one-half of the in-
come shall be considered to be available to the
institutionalized spouse and one-half to the
community spouse.
‘‘(D) REBUTTING OWNERSHIP.—The rules
of subparagraphs (A) and (C) are superseded to
the extent that an institutionalized spouse can
establish, by a preponderance of the evidence,
that the ownership interests in income are other
than as provided under such subparagraphs.
‘‘(c) RULES FOR TREATMENT OF RESOURCES.—
‘‘(1) COMPUTATION
OF
SPOUSAL
SHARE
AT
TIME OF INSTITUTIONALIZATION.—
‘‘(A) TOTAL
JOINT
RESOURCES.—There
shall be computed (as of the beginning of the
first continuous period of institutionalization of
the institutionalized spouse)—
‘‘(i) the total value of the resources to
the extent either the institutionalized
1446
HR 2491 EH
spouse or the community spouse has an
ownership interest, and
‘‘(ii) a spousal share which is equal to
1⁄2 of such total value.
‘‘(B) ASSESSMENT.—At the request of an
institutionalized spouse or community spouse,
at the beginning of the first continuous period
of institutionalization of the institutionalized
spouse and upon the receipt of relevant docu-
mentation of resources, the State shall promptly
assess and document the total value described
in subparagraph (A)(i) and shall provide a copy
of such assessment and documentation to each
spouse and shall retain a copy of the assess-
ment for use under this section. If the request
is not part of an application for medical assist-
ance under this title, the State may, at its op-
tion as a condition of providing the assessment,
require payment of a fee not exceeding the rea-
sonable expenses of providing and documenting
the assessment. At the time of providing the
copy of the assessment, the State shall include
a notice indicating that the spouse will have a
right to a fair hearing under subsection (e)(2).
1447
HR 2491 EH
‘‘(2) ATTRIBUTION OF RESOURCES AT TIME OF
INITIAL
ELIGIBILITY
DETERMINATION.—In deter-
mining the resources of an institutionalized spouse
at the time of application for medical assistance
under this title, regardless of any State laws relating
to community property or the division of marital
property—
‘‘(A) except as provided in subparagraph
(B), all the resources held by either the institu-
tionalized spouse, community spouse, or both,
shall be considered to be available to the insti-
tutionalized spouse, and
‘‘(B) resources shall be considered to be
available to an institutionalized spouse, but only
to the extent that the amount of such resources
exceeds the amount computed under subsection
(f)(2)(A) (as of the time of application for med-
ical assistance).
‘‘(3) ASSIGNMENT OF SUPPORT RIGHTS.—The
institutionalized spouse shall not be ineligible by rea-
son of resources determined under paragraph (2) to
be available for the cost of care where—
‘‘(A) the institutionalized spouse has as-
signed to the State any rights to support from
the community spouse;
1448
HR 2491 EH
‘‘(B) the institutionalized spouse lacks the
ability to execute an assignment due to physical
or mental impairment but the State has the
right to bring a support proceeding against a
community spouse without such assignment; or
‘‘(C) the State determines that denial of
eligibility would work an undue hardship.
‘‘(4) SEPARATE
TREATMENT
OF
RESOURCES
AFTER ELIGIBILITY FOR MEDICAL ASSISTANCE ES-
TABLISHED.—During the continuous period in which
an institutionalized spouse is in an institution and
after the month in which an institutionalized spouse
is determined to be eligible for medical assistance
under this title, no resources of the community
spouse shall be deemed available to the institutional-
ized spouse.
‘‘(5) RESOURCES
DEFINED.—In this section,
the term ‘resources’ does not include—
‘‘(A) resources excluded under subsection
(a) or (d) of section 1613, and
‘‘(B) resources that would be excluded
under section 1613(a)(2)(A) but for the limita-
tion on total value described in such section.
‘‘(d) 
PROTECTING
INCOME
FOR
COMMUNITY
SPOUSE.—
1449
HR 2491 EH
‘‘(1) ALLOWANCES TO BE OFFSET FROM IN-
COME
OF
INSTITUTIONALIZED
SPOUSE.—After an
institutionalized spouse is determined or redeter-
mined to be eligible for medical assistance, in deter-
mining the amount of the spouse’s income that is to
be applied monthly to payment for the costs of care
in the institution, there shall be deducted from the
spouse’s monthly income the following amounts in
the following order:
‘‘(A) A personal needs allowance (described
in paragraph (6)(A)), in an amount not less
than the amount specified in paragraph (6)(C).
‘‘(B) A community spouse monthly income
allowance (as defined in paragraph (2)), but
only to the extent income of the institutional-
ized spouse is made available to (or for the ben-
efit of) the community spouse.
‘‘(C) A family allowance, for each family
member, equal to at least 1⁄3 of the amount by
which the amount described in paragraph
(3)(A)(i) exceeds the amount of the monthly in-
come of that family member.
‘‘(D) Amounts for incurred expenses for
medical or remedial care for the institutional-
ized spouse (as provided under paragraph (7)).
1450
HR 2491 EH
In subparagraph (C), the term ‘family member’ only
includes minor or dependent children, dependent
parents, or dependent siblings of the institutional-
ized or community spouse who are residing with the
community spouse.
‘‘(2) COMMUNITY
SPOUSE
MONTHLY
INCOME
ALLOWANCE DEFINED.—In this section (except as
provided in paragraph (5)), the ‘community spouse
monthly income allowance’ for a community spouse
is an amount by which—
‘‘(A) except as provided in subsection (e),
the minimum monthly maintenance needs allow-
ance (established under and in accordance with
paragraph (3)) for the spouse, exceeds
‘‘(B) the amount of monthly income other-
wise available to the community spouse (deter-
mined without regard to such an allowance).
‘‘(3) ESTABLISHMENT OF MINIMUM MONTHLY
MAINTENANCE NEEDS ALLOWANCE.—
‘‘(A) IN GENERAL.—Each State shall es-
tablish a minimum monthly maintenance needs
allowance for each community spouse which,
subject to subparagraph (B), is equal to or ex-
ceeds—
1451
HR 2491 EH
‘‘(i) 150 percent of 1⁄12 of the income
official poverty line (defined by the Office
of Management and Budget and revised
annually 
in 
accordance 
with 
section
673(2)) for a family unit of 2 members;
plus
‘‘(ii) an excess shelter allowance (as
defined in paragraph (4)).
A revision of the official poverty line referred to
in clause (i) shall apply to medical assistance
furnished during and after the second calendar
quarter that begins after the date of publication
of the revision.
‘‘(B) CAP ON MINIMUM MONTHLY MAINTE-
NANCE
NEEDS
ALLOWANCE.—The minimum
monthly maintenance needs allowance estab-
lished under subparagraph (A) may not exceed
$1,500 (subject to adjustment under sub-
sections (e) and (g)).
‘‘(4) 
EXCESS
SHELTER
ALLOWANCE
DE-
FINED.—In paragraph (3)(A)(ii), the term ‘excess
shelter allowance’ means, for a community spouse,
the amount by which the sum of—
‘‘(A) the spouse’s expenses for rent or
mortgage payment (including principal and in-
1452
HR 2491 EH
terest), taxes and insurance and, in the case of
a condominium or cooperative, required mainte-
nance charge, for the community spouse’s prin-
cipal residence, and
‘‘(B) the standard utility allowance (used
by the State under section 5(e) of the Food
Stamp Act of 1977) or, if the State does not
use such an allowance, the spouse’s actual util-
ity expenses,
exceeds 30 percent of the amount described in para-
graph (3)(A)(i), except that, in the case of a con-
dominium or cooperative, for which a maintenance
charge is included under subparagraph (A), any al-
lowance under subparagraph (B) shall be reduced to
the extent the maintenance charge includes utility
expenses.
‘‘(5) COURT
ORDERED
SUPPORT.—If a court
has entered an order against an institutionalized
spouse for monthly income for the support of the
community spouse, the community spouse monthly
income allowance for the spouse shall be not less
than the amount of the monthly income so ordered.
‘‘(6) PERSONAL NEEDS ALLOWANCE.—
‘‘(A) IN GENERAL.—The State MediGrant
plan must provide that, in the case of an insti-
1453
HR 2491 EH
tutionalized individual or couple described in
subparagraph (B), in determining the amount
of the individual’s or couple’s income to be ap-
plied monthly to payment for the cost of care
in an institution, there shall be deducted from
the monthly income (in addition to other allow-
ances otherwise provided under the plan) a
monthly personal needs allowance—
‘‘(i) which is reasonable in amount for
clothing and other personal needs of the
individual (or couple) while in an institu-
tion, and
‘‘(ii) which is not less (and may be
greater) than the minimum monthly per-
sonal needs allowance described in sub-
paragraph (C).
‘‘(B) INSTITUTIONALIZED INDIVIDUAL OR
COUPLE
DEFINED.—In this paragraph, the
term ‘institutionalized individual or couple’
means an individual or married couple—
‘‘(i) who is an inpatient (or who are
inpatients) in a medical institution or
nursing facility for which payments are
made under this title throughout a month,
and
1454
HR 2491 EH
‘‘(ii) who is or are determined to be
eligible for medical assistance under the
State MediGrant plan.
‘‘(C) MINIMUM
ALLOWANCE.—The mini-
mum monthly personal needs allowance de-
scribed in this subparagraph is $40 for an insti-
tutionalized individual and $80 for an institu-
tionalized couple (if both are aged, blind, or dis-
abled, and their incomes are considered avail-
able to each other in determining eligibility).
‘‘(7) TREATMENT OF INCURRED EXPENSES.—
With respect to the post-eligibility treatment of in-
come under this section, there shall be taken into ac-
count amounts for incurred expenses for medical or
remedial care that are not subject to payment by a
third party, including—
‘‘(A) medicare and other health insurance
premiums, deductibles, or coinsurance, and
‘‘(B) necessary medical or remedial care
recognized under State law but not covered
under the State MediGrant plan under this
title, subject to reasonable limits the State may
establish on the amount of these expenses.
‘‘(e) NOTICE AND HEARING.—
‘‘(1) NOTICE.—Upon—
1455
HR 2491 EH
‘‘(A) a determination of eligibility for med-
ical assistance of an institutionalized spouse, or
‘‘(B) a request by either the institutional-
ized spouse, or the community spouse, or a rep-
resentative acting on behalf of either spouse,
each State shall notify both spouses (in the case de-
scribed in subparagraph (A)) or the spouse making
the request (in the case described in subparagraph
(B)) of the amount of the community spouse month-
ly 
income 
allowance 
(described 
in 
subsection
(d)(1)(B)), of the amount of any family allowances
(described in subsection (d)(1)(C)), of the method
for computing the amount of the community spouse
resources allowance permitted under subsection (f),
and of the spouse’s right to a hearing under the
MediGrant plan respecting ownership or availability
of income or resources, and the determination of the
community spouse monthly income or resource al-
lowance.
‘‘(2) RESULTS OF HEARING.—
‘‘(A) REVISION
OF
MINIMUM
MONTHLY
MAINTENANCE
NEEDS
ALLOWANCE.—If either
such spouse establishes in a hearing under this
subsection that the community spouse needs in-
come, above the level otherwise provided by the
1456
HR 2491 EH
minimum monthly maintenance needs allow-
ance, due to exceptional circumstances resulting
in significant financial duress, there shall be
substituted, for the minimum monthly mainte-
nance needs allowance in subsection (d)(2)(A),
an amount adequate to provide such additional
income as is necessary.
‘‘(B) REVISION
OF
COMMUNITY
SPOUSE
RESOURCE ALLOWANCE.—If either such spouse
establishes in such a hearing that the commu-
nity spouse resource allowance (in relation to
the amount of income generated by such an al-
lowance) is inadequate to raise the community
spouse’s income to the minimum monthly main-
tenance needs allowance, there shall be sub-
stituted, for the community spouse resource al-
lowance under subsection (f)(2), an amount
adequate to provide such a minimum monthly
maintenance needs allowance.
‘‘(f) PERMITTING TRANSFER
OF RESOURCES
TO
COMMUNITY SPOUSE.—
‘‘(1) IN GENERAL.—An institutionalized spouse
may, without regard to any other provision of the
MediGrant plan to contrary, transfer an amount
equal to the community spouse resource allowance
1457
HR 2491 EH
(as defined in paragraph (2)), but only to the extent
the resources of the institutionalized spouse are
transferred to (or for the sole benefit of) the com-
munity spouse. The transfer under the preceding
sentence shall be made as soon as practicable after
the date of the initial determination of eligibility,
taking into account such time as may be necessary
to obtain a court order under paragraph (3).
‘‘(2) COMMUNITY
SPOUSE
RESOURCE
ALLOW-
ANCE DEFINED.—In paragraph (1), the ‘community
spouse resource allowance’ for a community spouse
is an amount (if any) by which—
‘‘(A) the greatest of—
‘‘(i) $12,000 (subject to adjustment
under subsection (g)), or, if greater (but
not to exceed the amount specified in
clause (ii)(II)) an amount specified under
the State plan,
‘‘(ii) the lesser of (I) the spousal
share computed under subsection (c)(1), or
(II) $60,000 (subject to adjustment under
subsection (g)),
‘‘(iii) the amount established under
subsection (e)(2); or
1458
HR 2491 EH
‘‘(iv) the amount transferred under a
court order under paragraph (3);
exceeds
‘‘(B) the amount of the resources other-
wise available to the community spouse (deter-
mined without regard to such an allowance).
‘‘(g) INDEXING DOLLAR AMOUNTS.—For services
furnished during a calendar year after 1989, the dollar
amounts specified in subsections (d)(3)(C), (f)(2)(A)(i),
and (f)(2)(A)(ii)(II) shall be increased by the same per-
centage as the percentage increase in the consumer price
index for all urban consumers (all items; U.S. city aver-
age) between September 1988 and the September before
the calendar year involved.
‘‘(h) DEFINITIONS.—In this section:
‘‘(1) The term ‘institutionalized spouse’ means
an individual—
‘‘(A)(i) who is in a medical institution or
nursing facility, or
‘‘(ii) at the option of the State (I) who
would be eligible under the MediGrant plan
under this title if they were in a medical insti-
tution, (II) with respect to whom there has
been a determination that but for the provision
of home or community-based services they
1459
HR 2491 EH
would require the level of care provided in a
hospital, nursing facility or intermediate care
facility for the mentally retarded the cost of
which could be reimbursed under the plan, and
(III) who will receive home or community-based
services pursuant the plan, and
‘‘(B) is married to a spouse who is not in
a medical institution or nursing facility;
but does not include any such individual who is not
likely to meet the requirements of subparagraph (A)
for at least 30 consecutive days.
‘‘(2) The term ‘community spouse’ means the
spouse of an institutionalized spouse.
‘‘SEC. 2116. CONSTRUCTION.
‘‘(a) NO FEDERAL ENTITLEMENT.—Nothing in this
title (including section 2112) shall be construed as creat-
ing an entitlement under Federal law in any individual
or category of individuals for medical assistance under a
MediGrant plan.
‘‘(b) STATE FLEXIBILITY IN BENEFITS, PROVIDER
PAYMENTS, GEOGRAPHICAL COVERAGE AREA, AND SE-
LECTION OF PROVIDERS.—Nothing in this title (other
than section 2111(b)) shall be construed as requiring a
State—
1460
HR 2491 EH
‘‘(1) to provide medical assistance for any par-
ticular items or services;
‘‘(2) subject to section 2111(c), to provide for
any payments with respect to any specific health
care providers or any level of payments for any serv-
ices;
‘‘(3) to provide for the same medical assistance
in all geographical areas or political subdivisions of
the State;
‘‘(4) to provide that the medical assistance
made available to any individual eligible for medical
assistance must not be less in amount, duration, or
scope than the medical assistance made available to
any other such individual; or
‘‘(5) to provide that any individual eligible for
medical assistance with respect to an item or service
may choose to obtain such assistance from any insti-
tution, agency, or person qualified to provide the
item or service.
‘‘(c) STATE FLEXIBILITY WITH RESPECT TO MAN-
AGED CARE.—Nothing in this title shall be construed—
‘‘(1) to limit a State’s ability to contract with,
on a capitated basis or otherwise, health care plans
or individual health care providers for the provision
or arrangement of medical assistance;
1461
HR 2491 EH
‘‘(2) to limit a State’s ability to contract with
health care plans or other entities for case manage-
ment services or for coordination of medical assist-
ance; or
‘‘(3) to restrict a State from establishing capi-
tation rates on the basis of competition among
health care plans or negotiations between the State
and one or more health care plans.
‘‘SEC. 2117. LIMITATIONS ON CAUSES OF ACTION.
‘‘(a) IN GENERAL.—Notwithstanding any other pro-
vision of this Act (including section 1130A), no person (in-
cluding an applicant, beneficiary, provider, or health plan)
shall have a cause of action under Federal law against
a State in relation to a State’s compliance (or failure to
comply) with the provisions of this title or of a MediGrant
plan.
‘‘(b) NO EFFECT ON STATE LAW.—Nothing in sub-
section (a) may be construed as affecting any actions
brought under State law.
‘‘PART C—PAYMENTS TO STATES
‘‘SEC. 2121. ALLOTMENT OF FUNDS AMONG STATES.
‘‘(a) ALLOTMENTS.—
‘‘(1) COMPUTATION.—The Secretary shall pro-
vide for the computation of State obligation and out-
1462
HR 2491 EH
lay allotments in accordance with this section for
each fiscal year beginning with fiscal year 1996.
‘‘(2) LIMITATION ON OBLIGATIONS.—
‘‘(A) IN
GENERAL.—Subject to subpara-
graph (B), the Secretary shall not enter into
obligations with any State under this title for a
fiscal year in excess of the obligation allotment
for that State for the fiscal year under para-
graph (4). The sum of such obligation allot-
ments for all States in any fiscal year (exclud-
ing amounts carried over under subparagraph
(B) and excluding changes in allotments ef-
fected under paragraph (4)(D)) shall not exceed
the aggregate limit on new obligation authority
specified in paragraph (3) for that fiscal year.
‘‘(B) ADJUSTMENTS.—
‘‘(i) CARRYOVER OF ALLOTMENT PER-
MITTED.—If the amount of obligations en-
tered into under this part with a State for
quarters in a fiscal year is less than the
amount of the obligation allotment under
this section to the State for the fiscal year,
the amount of the difference shall be added
to the amount of the State obligation allot-
1463
HR 2491 EH
ment otherwise provided under this section
for the succeeding fiscal year.
‘‘(ii) REDUCTION
FOR
POST-ENACT-
MENT
NEW
OBLIGATIONS
UNDER
TITLE
XIX IN FISCAL YEAR 1996.—The amount of
the obligation allotment otherwise provided
under this section for fiscal year 1996 for
a State shall be reduced by the amount of
the obligations entered into with respect to
the State under section 1903(a) after the
date of the enactment of this Act.
‘‘(3) AGGREGATE LIMIT ON NEW OBLIGATION
AUTHORITY.—
‘‘(A) IN GENERAL.—For purposes of this
subsection, subject to subparagraph (C), the
‘aggregate limit on new obligation authority’,
for a fiscal year, is the pool amount under sub-
section (b) for the fiscal year, divided by the
payout adjustment factor (described in subpara-
graph (B)) for the fiscal year.
‘‘(B) PAYOUT ADJUSTMENT FACTOR.—For
purposes of this subsection, the ‘payout adjust-
ment factor’—
‘‘(i) for fiscal year 1996 is .950,
‘‘(ii) for fiscal year 1997 is .986, and
1464
HR 2491 EH
‘‘(iii) for a subsequent fiscal year is
.998.
‘‘(C) TRANSITIONAL
ADJUSTMENT
FOR
PRE-ENACTMENT-OBLIGATION
OUTLAYS.—In
order to account for pre-enactment-obligation
outlays described in paragraph (4)(C)(iv), in
determining the aggregate limit on new obliga-
tion authority under subparagraph (A) for fis-
cal year 1996, the pool amount for such fiscal
year is equal to—
‘‘(i) the pool amount for such year,
reduced by
‘‘(ii) $24.624 billion.
‘‘(4) OBLIGATION ALLOTMENTS.—
‘‘(A) GENERAL RULE FOR 50 STATES AND
THE DISTRICT OF COLUMBIA.—Except as pro-
vided in this paragraph, the ‘obligation allot-
ment’ for any of the 50 States or the District
of Columbia for a fiscal year (beginning with
fiscal year 1997) is an amount that bears the
same ratio to the outlay allotment under sub-
section (c)(2) for such State or District (not
taking into account any adjustment due to an
election under paragraph (4)) for the fiscal year
as the ratio of—
1465
HR 2491 EH
‘‘(i) the aggregate limit on new obliga-
tion authority (less the total of the obliga-
tion allotments under subparagraph (B))
for the fiscal year, to
‘‘(ii) the pool amount (less the sum of
the outlay allotments for the territories)
for such fiscal year.
‘‘(B) TERRITORIES.—The obligation allot-
ment for each of the Commonwealths and terri-
tories for a fiscal year is the outlay allotment
for such Commonwealth or territory (as deter-
mined under subsection (c)(5)) for the fiscal
year divided by the payout adjustment factor
for the fiscal year (as defined in paragraph
(3)(B)).
‘‘(C) TRANSITIONAL
RULE
FOR
FISCAL
YEAR 1996.—
‘‘(i) IN
GENERAL.—The obligation
amount for fiscal year 1996 for any State
(including the District, a Commonwealth,
or territory) is determined according to the
formula: A=(B-C)/D, where—
‘‘(I) ‘A’ is the obligation amount
for such State;
1466
HR 2491 EH
‘‘(II) ‘B’ is the outlay allotment
of such State for fiscal year 1996, as
determined under subsection (c);
‘‘(III) ‘C’ is the amount of the
pre-enactment-obligation outlays (as
established for such State under
clause (ii)); and
‘‘(IV) ‘D’ is the payout adjust-
ment factor for such fiscal year (as
defined in paragraph (3)(B)).
‘‘(ii) 
PRE-ENACTMENT-OBLIGATION
OUTLAY AMOUNTS.—Within 30 days after
the date of the enactment of this title, the
Secretary shall estimate (based on the best
data available) and publish in the Federal
Register the amount of the pre-enactment-
obligation outlays (as defined in clause
(iv)) for each State (including the District,
Commonwealths, and territories). The total
of such amounts shall equal the dollar
amount specified in paragraph (3)(C)(ii).
‘‘(iii) AGREEMENT.—The submission
of a MediGrant plan by a State under this
title is deemed to constitute the State’s ac-
ceptance of the obligation allotment limita-
1467
HR 2491 EH
tions under this subsection (including the
formula for computing the amount of such
obligation allotment).
‘‘(iv) 
PRE-ENACTMENT-OBLIGATION
OUTLAYS
DEFINED.—In this subsection,
the term ‘pre-enactment-obligation outlays’
means, for a State, the outlays of the Fed-
eral Government that result from obliga-
tions that have been incurred under title
XIX with respect to the State before the
date of the enactment of this title, but for
which payments to States have not been
made as of such date of enactment.
‘‘(D) ADJUSTMENT TO REFLECT ADOPTION
OF
ALTERNATIVE
GROWTH
FORMULA.—Any
State that has elected an alternative growth
formula under subsection (c)(4) which increases
or decreases the dollar amount of an outlay al-
lotment for a fiscal year is deemed to have in-
creased or decreased, respectively, its obligation
amount for such fiscal year by the amount of
such increase or decrease.
‘‘(b) POOL OF AVAILABLE FUNDS.—
‘‘(1) IN GENERAL.—For purposes of this sec-
tion, the ‘pool amount’ under this subsection for—
1468
HR 2491 EH
‘‘(A) fiscal year 1996 is $95,662,990,500;
‘‘(B) fiscal year 1997 is $102,748,012,797;
‘‘(C) fiscal year 1998 is $107,268,354,400;
‘‘(D) 
fiscal 
year 
1999 
is
$111,826,877,512;
‘‘(E) fiscal year 2000 is $116,472,575,350;
‘‘(F) fiscal year 2001 is $121,311,325,403;
‘‘(G) fiscal year 2002 is $126,351,055,338;
and
‘‘(H) each subsequent fiscal year is the
pool amount under this paragraph for the pre-
vious fiscal year increased by the lesser of
4.1546 percent or the annual percentage in-
crease in the consumer price index for all urban
consumers (U.S. city average) for the 12-month
period ending in June before the beginning of
that subsequent fiscal year.
‘‘(2) NATIONAL MEDIGRANT GROWTH PERCENT-
AGE.—For purposes of this section for a fiscal year
(beginning with fiscal year 1997), the ‘national
MediGrant growth percentage’ is the percentage by
which—
‘‘(A) the pool amount under paragraph (1)
for the fiscal year, exceeds
1469
HR 2491 EH
‘‘(B) such pool amount for the previous
fiscal year.
‘‘(c) STATE OUTLAY ALLOTMENTS.—
‘‘(1) FISCAL YEAR 1996.—
‘‘(A) IN GENERAL.—For each of the 50
States and the District of Columbia, the
amount of the State outlay allotment under this
subsection for fiscal year 1996 is, subject to
paragraph (4), equal to—
‘‘(i) the total amount of Federal ex-
penditures made to the State under title
XIX for the 4 quarters in fiscal year 1994,
increased by
‘‘(ii) the percentage by which (I)
$95,529,490,500 (which represents the
total amount of outlay allotments for such
States and District for fiscal year 1996),
exceeds (II) $83,213,431,458 (which rep-
resents Federal medicaid expenditures for
such States and District for fiscal year
1994).
‘‘(B) COMPUTATION OF EXPENDITURES.—
The amount of Federal expenditures described
in subparagraph (A)(i) shall be computed, using
1470
HR 2491 EH
data reported on the HCFA Form 64 as of
September 1, 1995, based on—
‘‘(i) the amount reported on line 11,
or
‘‘(ii) on the amount reported on line 6
multiplied by the ratio of (I) the sum of
the amounts so reported on line 11 of such
Form for fiscal year 1994 for the 50
States and the District of Columbia, to
(II) the sum of the amounts so reported on
line 6 of such Form for fiscal year 1994
for such States and District,
whichever is greater.
‘‘(C) LIMITATION ON ADJUSTMENT.—The
amount computed under subparagraph (B)
shall not be subject to adjustment (based on
any subsequent disallowances or otherwise).
‘‘(2) COMPUTATION OF STATE OUTLAY ALLOT-
MENTS.—
‘‘(A) IN
GENERAL.—Subject to the suc-
ceeding provisions of this subsection, the
amount of the State outlay allotment under this
subsection for one of the 50 States and the Dis-
trict of Columbia for a fiscal year (beginning
1471
HR 2491 EH
with fiscal year 1997) is equal to the product
of—
‘‘(i) the needs-based amount deter-
mined under subparagraph (B) for the
State for the fiscal year, and
‘‘(ii) the scalar factor described in
subparagraph (C) for the fiscal year.
‘‘(B) NEEDS-BASED AMOUNT.—The needs-
based amount under this subparagraph for a
State for a fiscal year is equal to the product
of—
‘‘(i) the State’s aggregate expenditure
need for the fiscal year (as determined
under subsection (d)), and
‘‘(ii) the State’s old Federal medical
assistance percentage (as defined in section
2122(d)) for the previous fiscal year (or, in
the case of fiscal year 1997, the Federal
medical assistance percentage determined
under section 1905(b) for fiscal year
1996).
‘‘(C) SCALAR FACTOR.—The scalar factor
under this subparagraph for a fiscal year is
such proportion so that, when it is applied
under subparagraph (A)(ii) for the fiscal year
1472
HR 2491 EH
(taking into account the floors and ceilings
under paragraph (3)), the total of the outlay al-
lotments under this subsection for all the 50
States and the District of Columbia for the fis-
cal year (not taking into account any increase
in an outlay allotment for a fiscal year attrib-
utable to the election of an alternative growth
formula under paragraph (4)) is equal to the
amount by which (i) the pool amount for the
fiscal year (as determined under subsection
(b)), exceeds (ii) the sum of the outlay allot-
ments provided under paragraph (5) for the
Commonwealths and territories for the fiscal
year.
‘‘(3) FLOORS AND CEILINGS.—
‘‘(A) FLOORS.—In no case shall the
amount of the State outlay allotment under
paragraph (2) for a fiscal year be less than the
following:
‘‘(i) FLOOR
BASED
ON
PREVIOUS
YEAR’S OUTLAY ALLOTMENT.—Subject to
clause (ii)—
‘‘(I) FISCAL YEAR 1997.—For fis-
cal year 1997, 103.5 percent of the
amount of the State outlay allotment
1473
HR 2491 EH
under this subsection for fiscal year
1996.
‘‘(II) FISCAL
YEAR
1998.—For
fiscal year 1998, 103 percent of the
amount of the State outlay allotment
under this subsection for fiscal year
1997.
‘‘(III) FISCAL
YEAR
1999.—For
fiscal year 1999, 102.5 percent of the
amount of the State outlay allotment
under this subsection for fiscal year
1998.
‘‘(IV) 
SUBSEQUENT
FISCAL
YEARS.—For a fiscal year after 1999,
102 percent of the amount of the
State outlay allotment under this sub-
section for the previous fiscal year.
‘‘(ii) FLOOR BASED ON OUTLAY AL-
LOTMENT
GROWTH
RATE
IN
FIRST
YEAR.—Beginning with fiscal year 1998,
in the case of a State for which the outlay
allotment under this subsection for fiscal
year 1997 exceeded its outlay allotment
under this subsection for the previous fis-
cal year by—
1474
HR 2491 EH
‘‘(I) more than 120 percent of
the national MediGrant growth per-
centage for fiscal year 1997, 104 per-
cent of the amount of the State outlay
allotment under this subsection for
the previous fiscal year; or
‘‘(II) less than 120 percent (but
more than 75 percent) of the national
MediGrant growth percentage for fis-
cal year 1997, 103 percent of the
amount of the State outlay allotment
under this subsection for the previous
fiscal year.
‘‘(B) CEILINGS.—
‘‘(i) IN GENERAL.—In no case shall
the amount of the State outlay allotment
under paragraph (2) for a fiscal year be
greater than the product of—
‘‘(I) the State outlay allotment
under this subsection for the State for
the preceding fiscal year, and
‘‘(II) the factor specified in
clause (ii) (or, if applicable, in clause
(iii)) for the fiscal year.
1475
HR 2491 EH
‘‘(ii) FACTOR DESCRIBED.—The fac-
tor described in this clause for—
‘‘(I) fiscal year 1997 is 1.09, and
‘‘(II) each subsequent fiscal year
is 1.0533.
‘‘(iii) SPECIAL
RULE.—For a fiscal
year after fiscal year 1997, in the case of
a State (among the 50 States and the Dis-
trict of Columbia) that is one of the 10
States with the lowest Federal MediGrant
spending per resident-in-poverty rates (as
determined under clause (iv)) for the fiscal
year, the factor that shall be applied under
clause (i)(II) shall be the following:
‘‘(I) For each of fiscal years
1998 and 1999, 1.06.
‘‘(II) 
For 
fiscal 
year 
2000,
1.060657.
‘‘(III) For fiscal year 2001,
1.061488.
‘‘(IV) For any subsequent fiscal
year, 1.062319.
‘‘(iv) DETERMINATION
OF
FEDERAL
MEDIGRANT SPENDING PER RESIDENT-IN-
POVERTY RATE.—For purposes of clause
1476
HR 2491 EH
(iii), the ‘Federal MediGrant spending per
resident-in-poverty rate’ for a State for a
fiscal year is equal to—
‘‘(I) the State’s outlay allotment
under this subsection for the previous
fiscal year (determined without regard
to paragraph (4)), divided by
‘‘(II) the average annual number
of residents of the State in poverty
(as defined in subsection (d)(2)) with
respect to the fiscal year.
‘‘(4) ELECTION
OF
ALTERNATIVE
GROWTH
FORMULA.—
‘‘(A) ELECTION.—In order to reduce vari-
ations in increases in outlay allotments over
time, any of the 50 States or the District of Co-
lumbia may elect (by notice provided to the Sec-
retary by not later than April 1, 1996) to adopt
an alternative growth rate formula under this
paragraph for the determination of the State’s
outlay allotment in fiscal year 1996 and for the
increase in the amount of such allotment in
subsequent fiscal years.
‘‘(B) FORMULA.—The alternative growth
formula under this paragraph may be any for-
1477
HR 2491 EH
mula under which a portion of the State outlay
allotment for fiscal year 1996 under paragraph
(1) is deferred and applied to increase the
amount of its outlay allotment for one or more
subsequent fiscal years, so long as the total
amount of such increases for all such subse-
quent fiscal years does not exceed the amount
of the outlay allotment deferred from fiscal year
1996.
‘‘(5) COMMONWEALTHS
AND
TERRITORIES.—
The outlay allotment for each of the Commonwealths
and territories for a fiscal year is the maximum
amount that could have been certified under section
1108(c) with respect to the Commonwealth or terri-
tory for the fiscal year with respect to title XIX, if
the national MediGrant growth percentage (as deter-
mined under subsection (b)(2)) for the fiscal year
had been substituted (beginning with fiscal year
1997) for the percentage increase referred to in sec-
tion 1108(c)(1)(B).
‘‘(d) STATE AGGREGATE EXPENDITURE NEED DE-
TERMINED.—
‘‘(1) IN GENERAL.—For purposes of subsection
(c), the ‘State aggregate expenditure need’ for a
1478
HR 2491 EH
State for a fiscal year is equal to the product of the
following 4 factors:
‘‘(A) RESIDENTS IN POVERTY.—The aver-
age annual number of residents in poverty of
the State with respect to the fiscal year (as de-
termined under paragraph (2)).
‘‘(B) CASE MIX INDEX.—The average of
the case mix indexes for the State (as deter-
mined under paragraph (3)) for the 3 most re-
cent fiscal years for which data are available,
but in no case less than .9 or greater than 1.15.
‘‘(C) INPUT COST INDEX.—The average of
the input cost indexes for the State (as deter-
mined under paragraph (4)) for the 3 most re-
cent fiscal years for which data are available.
‘‘(D) NATIONAL AVERAGE SPENDING PER
RESIDENT IN POVERTY.—The national average
spending per resident in poverty (as determined
under paragraph (5)).
‘‘(2) RESIDENTS
IN
POVERTY.—In this sec-
tion—
‘‘(A) IN GENERAL.—The term ‘average an-
nual number of residents in poverty’ means,
with respect to a State and a fiscal year, the
average annual number of residents in poverty
1479
HR 2491 EH
(as defined in subparagraph (B)) in the State
(based on data made generally available by the
Bureau of the Census from the Current Popu-
lation Survey) for the most recent 3-calendar-
year period (ending before the fiscal year) for
which such data are available.
‘‘(B) RESIDENT IN POVERTY DEFINED.—
The term ‘resident in poverty’ means an indi-
vidual whose family income does not exceed the
poverty threshold (as such terms are defined by
the Office of Management and Budget and are
generally interpreted and applied by the Bureau
of the Census for the year involved).
‘‘(3) CASE MIX INDEX.—
‘‘(A) IN GENERAL.—In this subsection, the
‘case mix index’ for a State for a fiscal year is
equal to—
‘‘(i) the sum of—
‘‘(I) the projected per recipient
expenditures with respect to elderly
individuals in the State for the fiscal
year (determined under subparagraph
(B)),
‘‘(II) the projected per recipient
expenditures with respect to the blind
1480
HR 2491 EH
and disabled individuals in the State
for the fiscal year (determined under
subparagraph (C)), and
‘‘(III) the projected per recipient
expenditures with respect to other in-
dividuals in the State (determined
under subparagraph (D));
divided by—
‘‘(ii) the national average spending
per recipient determined under subpara-
graph (E) for the fiscal year involved.
‘‘(B) PROJECTED PER RECIPIENT EXPEND-
ITURES FOR THE ELDERLY.—For purposes of
subparagraph (A)(I)(i), the ‘projected per recip-
ient expenditures with respect to elderly individ-
uals’ in a State for a fiscal year is equal to the
product of—
‘‘(i) the national average per recipient
expenditures under this title in the 50
States and the District of Columbia for the
most recent fiscal year for which data are
available for individuals who are 65 years
of age or older, and
‘‘(ii) the proportion, of all individuals
who received medical assistance under this
1481
HR 2491 EH
title in the State in the most recent fiscal
year referred to in clause (i), that were in-
dividuals described in such clause.
‘‘(C) PROJECTED PER RECIPIENT EXPEND-
ITURES FOR THE BLIND AND DISABLED.—For
purposes of subparagraph (A)(i)(II), the ‘pro-
jected per recipient expenditures with respect to
blind and disabled individuals’ in a State for a
fiscal year is equal to the product of—
‘‘(i) the national average per recipient
expenditures under this title in the 50
States and the District of Columbia for the
most recent fiscal year for which data are
available for individuals who are eligible
for medical assistance because they are
blind or disabled and under 65 years of
age, and
‘‘(ii) the proportion, of all individuals
who received medical assistance under this
title in the State in the most recent fiscal
year referred to in clause (i), that were in-
dividuals described in such clause.
‘‘(D) PROJECTED
PER
RECIPIENT
EX-
PENDITURES
FOR
OTHER
INDIVIDUALS.—For
purposes of subparagraph (A)(i)(III), the ‘pro-
1482
HR 2491 EH
jected per recipient expenditures with respect to
other individuals’ in a State for a fiscal year is
equal to the product of—
‘‘(i) the national average per recipient
expenditures under this title in the 50
States and the District of Columbia for the
most recent fiscal year for which data are
available for individuals who are not de-
scribed in subparagraph (B)(i) or (C)(i),
and
‘‘(ii) the proportion, of all individuals
who received medical assistance under this
title in the State in the most recent fiscal
year referred to in clause (i), that were in-
dividuals described in such clause.
‘‘(E) NATIONAL AVERAGE SPENDING PER
RECIPIENT.—For purposes of this paragraph,
the ‘national average expenditures per recipient’
for a fiscal year is equal to the sum of—
‘‘(i) the product of (I) the national av-
erage described in subparagraph (B)(i),
and (II) the proportion, of all individuals
who received medical assistance under this
title in any of the 50 States or the District
of Columbia in the fiscal year referred to
1483
HR 2491 EH
in such subparagraph, who are described
in such subparagraph;
‘‘(ii) the product of (I) the national
average described in subparagraph (C)(i),
and (II) the proportion, of all individuals
who received medical assistance under this
title in any of the 50 States or the District
of Columbia in the fiscal year referred to
in such subparagraph, who are described
in such subparagraph; and
‘‘(iii) the product of (I) the national
average described in subparagraph (D)(i),
and (II) the proportion, of all individuals
who received medical assistance under this
title in any of the 50 States or the District
of Columbia in the fiscal year referred to
in such subparagraph, who are described
in such subparagraph.
‘‘(F) DETERMINATION OF NATIONAL AVER-
AGES AND PROPORTIONS.—
‘‘(i) IN GENERAL.—The national aver-
ages per recipient and the proportions re-
ferred to in clauses (i) and (ii), respec-
tively, of subparagraphs (B), (C), and (D)
and subparagraph (E) shall be determined
1484
HR 2491 EH
by the Secretary using the most recent
data available.
‘‘(ii) USE OF MEDICAID DATA.—If for
a fiscal year there is inadequate data to
compute such averages and proportions
based on expenditures and numbers of in-
dividuals 
receiving 
medical 
assistance
under this title, the Secretary may com-
pute such averages based on expenditures
and numbers of such individuals under
title XIX for the most recent fiscal year
for which data are available and, for this
purpose—
‘‘(I) any reference in subpara-
graph (B)(i) to ‘individuals 65 years
of age or older’ is deemed a reference
to ‘individuals whose eligibility for
medical assistance is based on being
65 years of age or older’,
‘‘(II) the reference in subpara-
graph (C)(i) to ‘and under 65 years of
age’ shall be considered to be deleted,
and
‘‘(III) individuals whose basis for
eligibility for medical assistance was
1485
HR 2491 EH
reported as unknown shall not be
counted as individuals under subpara-
graph (D)(i).
‘‘(4) INPUT COST INDEX.—
‘‘(A) IN
GENERAL.—In this section, the
‘input cost index’ for a State for a fiscal year
is the sum of—
‘‘(i) 0.15, and
‘‘(ii) 0.85 multiplied by the ratio of
(I) the annual average wages for hospital
employees in the State for the fiscal year
(as determined under subparagraph (B)),
to (II) the annual average wages for hos-
pital employees in the 50 States and the
District of Columbia for such year (as de-
termined under such subparagraph).
‘‘(B) DETERMINATION OF ANNUAL AVER-
AGE
WAGES
OF
HOSPITAL
EMPLOYEES.—The
Secretary shall provide for the determination of
annual average wages for hospital employees in
a State and, collectively, in the 50 States and
the District of Columbia for a fiscal year based
on the area wage index applicable to hospitals
under 1886(d)(2)(E) (or, if such index no
longer exists, a comparable index of hospital
1486
HR 2491 EH
wages) for discharges occurring during the fis-
cal year involved.
‘‘(5) NATIONAL AVERAGE SPENDING PER RESI-
DENT
IN
POVERTY.—For purposes of this sub-
section, the ‘national average spending per resident
in poverty’—
‘‘(A) for fiscal year 1997 is equal to—
‘‘(i) the sum (for each of the 50
States and the District of Columbia) of the
total of the Federal and State expenditures
under title XIX for calendar quarters in
fiscal year 1994, increased by the percent-
age specified in subsection (c)(1)(A)(ii), di-
vided by
‘‘(ii) the sum of the number of resi-
dents in poverty (as defined in paragraph
(2)(A)) for all of the 50 States and the
District of Columbia for fiscal year 1994;
‘‘(B) for a succeeding fiscal year is equal
to the national average spending per resident in
poverty under this paragraph for the preceding
fiscal year increased by the national MediGrant
growth percentage (as defined in subsection
(b)(2)) for the fiscal year involved.
1487
HR 2491 EH
‘‘(e) PUBLICATION OF OBLIGATION AND OUTLAY AL-
LOTMENTS.—
‘‘(1) NOTICE OF PRELIMINARY ALLOTMENTS.—
Not later than April 1 before the beginning of each
fiscal year (beginning with fiscal year 1997), the
Secretary shall initially compute, after consultation
with the Comptroller General, and publish in the
Federal Register notice of the proposed obligation
and outlay allotments for each State under this sec-
tion (not taking into account subsection (a)(2)(B))
for the fiscal year. The Secretary shall include in the
notice a description of the methodology and data
used in deriving such allotments for the year.
‘‘(2) REVIEW BY GAO.—The Comptroller Gen-
eral shall submit to Congress by not later than May
15 of each such fiscal year, a report analyzing such
allotments and the extent to which they comply with
the precise requirements of this section.
‘‘(3) NOTICE
OF
FINAL
ALLOTMENTS.—Not
later than July 1 before the beginning of each such
fiscal year, the Secretary, taking into consideration
the analysis contained in the report of the Comptrol-
ler General under paragraph (2), shall compute and
publish in the Federal Register notice of the final al-
lotments under this section (both taking into ac-
1488
HR 2491 EH
count and not taking into account subsection
(a)(2)(B)) for the fiscal year. The Secretary shall in-
clude in the notice a description of any changes in
such allotments from the initial allotments published
under paragraph (1) for the fiscal year and the rea-
sons for such changes. Once published under this
paragraph, the Secretary is not authorized to change
such allotments.
‘‘(4) GAO REPORT ON FINAL ALLOTMENTS.—
The Comptroller General shall submit to Congress
by not later than August 1 of each such fiscal year,
a report analyzing the final allotments under para-
graph (3) and the extent to which they comply with
the precise requirements of this section.
‘‘(f) SUPPLEMENTAL ALLOTMENT FOR EMERGENCY
HEALTH CARE SERVICES TO CERTAIN ALIENS.—
‘‘(1) IN GENERAL.—Notwithstanding the pre-
vious provisions of this section, the amount of the
State outlay allotment for a fiscal year for each sup-
plemental allotment eligible State shall be increased
by the amount of the supplemental outlay allotment
provided under paragraph (2) for the State for that
year. The amount of such increased allotment may
only be used for the purpose of providing medical as-
sistance for care and services for aliens described in
1489
HR 2491 EH
paragraph (1) of section 2123(e) and for which the
exception described in paragraph (2) of such section
applies. Section 2122(f)(3) shall apply to such as-
sistance in the same manner as it applies to medical
assistance described in such section.
‘‘(2) SUPPLEMENTAL OUTLAY ALLOTMENT.—
‘‘(A) IN GENERAL.—For purposes of para-
graph (1), the amount of the supplemental out-
lay allotment for a supplemental allotment eligi-
ble State for a fiscal year is equal to the supple-
mental allotment ratio (as defined in subpara-
graph (C)) multiplied by the supplemental pool
amount (specified in subparagraph (D)) for the
fiscal year.
‘‘(B) SUPPLEMENTAL ALLOTMENT ELIGI-
BLE STATE.—In this subsection, the term ‘sup-
plemental allotment eligible State’ means one of
the 12 States with the highest number of un-
documented aliens of all the States.
‘‘(C) 
SUPPLEMENTAL
ALLOTMENT
RATIO.—In this paragraph, the ‘supplemental
allotment ratio’ for a State is the ratio of—
‘‘(i) the number of undocumented
aliens for the State, to
1490
HR 2491 EH
‘‘(ii) the sum of such numbers for all
supplemental allotment eligible States.
‘‘(D) SUPPLEMENTAL POOL AMOUNT.—In
this 
paragraph, 
the 
‘supplemental 
pool
amount’—
‘‘(i) for each of fiscal years 1996
through 2002, is an amount so that, if the
amount were increased for each such fiscal
year beginning with fiscal year 1996 by the
national MediGrant growth percentage for
the year involved, the total of such
amounts for all such fiscal years would be
$3 billion; and
‘‘(ii) for a subsequent year is the sup-
plemental pool amount for the previous fis-
cal 
year 
increased 
by 
the 
national
MediGrant growth percentage for such
subsequent year.
‘‘(E) DETERMINATION OF NUMBER.—The
number of undocumented aliens in a State
under this paragraph shall be determined based
on estimates of the resident illegal alien popu-
lation residing in each State prepared by the
Statistics Division of the Immigration and Nat-
uralization Service as of October 1992 (or as of
1491
HR 2491 EH
such later date if such date is at least 1 year
before the beginning of the fiscal year involved).
‘‘(3) 
TREATMENT
FOR
OBLIGATION
PUR-
POSES.—For purposes of computing obligation allot-
ments under subsection (a)—
‘‘(A) the amount of the supplemental pool
amount for a fiscal year shall be added to the
pool amount under subsection (b) for that fiscal
year, and
‘‘(B) the amount supplemental allotment
to a State provided under paragraph (1) shall
be added to the outlay allotment of the State
for that fiscal year.
‘‘(4) SEQUENCE
OF
OBLIGATIONS.—For pur-
poses of carrying out this title, payments to a sup-
plemental allotment eligible State under section
2122 that are attributable to expenditures for medi-
cal assistance described in the second sentence of
paragraph (1) shall first be counted toward the sup-
plemental outlay allotment provided under this sub-
section, rather than toward the outlay allotment oth-
erwise provided under this section.
‘‘(g) SPECIAL ADJUSTMENTS
FOR FISCAL YEAR
1996.—Notwithstanding the previous provisions of this
section—
1493
HR 2491 EH
‘‘(A) an amount equal to 90 percent of the
amounts expended during such quarter for the
design, development, and installation of infor-
mation systems and for providing incentives to
promote the enforcement of medical support or-
ders, plus
‘‘(B) an amount equal to 75 percent of the
amounts expended during such quarter for
medical personnel, administrative support of
medical personnel, operation and maintenance
of information systems, modification of infor-
mation systems, quality assurance activities,
utilization review, medical and peer review,
anti-fraud activities, independent evaluations,
coordination of benefits, and meeting reporting
requirements under this title, plus
‘‘(C) an amount equal to 50 percent of so
much of the remainder of the amounts ex-
pended during such quarter as are expended by
the State in the administration of the State
plan.
‘‘(b) PAYMENT PROCESS.—
‘‘(1) QUARTERLY ESTIMATES.—Prior to the be-
ginning of each quarter, the Secretary shall estimate
the amount to which a State will be entitled under
1494
HR 2491 EH
subsection (a) for such quarter, such estimates to be
based on (A) a report filed by the State containing
its estimate of the total sum to be expended in such
quarter in accordance with the provisions of such
subsections, and stating the amount appropriated or
made available by the State and its political subdivi-
sions for such expenditures in such quarter, and if
such amount is less than the State’s proportionate
share of the total sum of such estimated expendi-
tures, the source or sources from which the dif-
ference is expected to be derived, and (B) such other
investigation as the Secretary may find necessary.
‘‘(2) PAYMENT.—
‘‘(A) IN
GENERAL.—The Secretary shall
then pay to the State, in such installments as
the Secretary may determine and in accordance
with section 6503(a) of title 31, United States
Code, the amount so estimated, reduced or in-
creased to the extent of any overpayment or
underpayment which the Secretary determines
was made under this section (or section 1903)
to such State for any prior quarter and with re-
spect to which adjustment has not already been
made under this subsection (or under section
1903(d)).
1495
HR 2491 EH
‘‘(B) TREATMENT
AS
OVERPAYMENTS.—
Expenditures for which payments were made to
the State under subsection (a) shall be treated
as an overpayment to the extent that the State
or local agency administering such plan has
been reimbursed for such expenditures by a
third party pursuant to the provisions of its
plan in compliance with section 2135.
‘‘(C) RECOVERY OF OVERPAYMENTS.—For
purposes of this subsection, when an overpay-
ment is discovered, which was made by a State
to a person or other entity, the State shall have
a period of 60 days in which to recover or at-
tempt to recover such overpayment before ad-
justment is made in the Federal payment to
such State on account of such overpayment.
Except as otherwise provided in subparagraph
(D), the adjustment in the Federal payment
shall be made at the end of the 60 days, wheth-
er or not recovery was made.
‘‘(D) 
NO
ADJUSTMENT
FOR
UNCOLLECTABLES.—In any case where the
State is unable to recover a debt which rep-
resents an overpayment (or any portion thereof)
made to a person or other entity on account of
1496
HR 2491 EH
such debt having been discharged in bankruptcy
or otherwise being uncollectable, no adjustment
shall be made in the Federal payment to such
State on account of such overpayment (or por-
tion thereof).
‘‘(3) FEDERAL SHARE OF RECOVERIES.—The
pro rata share to which the United States is equi-
tably entitled, as determined by the Secretary, of the
net amount recovered during any quarter by the
State or any political subdivision thereof with re-
spect to medical assistance furnished under the
State plan shall be considered an overpayment to be
adjusted under this subsection.
‘‘(4) TIMING
OF
OBLIGATION
OF
FUNDS.—
Upon the making of any estimate by the Secretary
under this subsection, any appropriations available
for payments under this section shall be deemed ob-
ligated.
‘‘(5) DISALLOWANCES.—In any case in which
the Secretary estimates that there has been an over-
payment under this section to a State on the basis
of a claim by such State that has been disallowed by
the Secretary under section 1116(d), and such State
disputes such disallowance, the amount of the Fed-
eral payment in controversy shall, at the option of
1497
HR 2491 EH
the State, be retained by such State or recovered by
the Secretary pending a final determination with re-
spect to such payment amount. If such final deter-
mination is to the effect that any amount was prop-
erly disallowed, and the State chose to retain pay-
ment of the amount in controversy, the Secretary
shall offset, from any subsequent payments made to
such State under this title, an amount equal to the
proper amount of the disallowance plus interest on
such amount disallowed for the period beginning on
the date such amount was disallowed and ending on
the date of such final determination at a rate (deter-
mined by the Secretary) based on the average of the
bond equivalent of the weekly 90-day treasury bill
auction rates during such period.
‘‘(c) APPLICABLE FEDERAL MEDICAL ASSISTANCE
PERCENTAGE DEFINED.—In this section, except as pro-
vided in subsection (f), the term ‘applicable Federal medi-
cal assistance percentage’ means, with respect to one of
the 50 States or the District of Columbia, at the State’s
or District’s option—
‘‘(1) the old Federal medical assistance percent-
age (as determined in subsection (d)), or
‘‘(2) the new Federal medical assistance per-
centage (as determined under subsection (e)) or, if
1498
HR 2491 EH
less, the old Federal medical assistance percentage
plus 10 percentage points.
‘‘(d) OLD FEDERAL MEDICAL ASSISTANCE PER-
CENTAGE.—
‘‘(1) IN GENERAL.—Except as provided in para-
graph (2) and subsection (f), the term ‘old Federal
medical assistance percentage’ for any State is 100
percent less the State percentage; and the State per-
centage is that percentage which bears the same
ratio to 45 percent as the square of the per capita
income of such State bears to the square of the per
capita income of the continental United States (in-
cluding Alaska) and Hawaii.
‘‘(2) LIMITATION ON RANGE.—In no case shall
the old Federal medical assistance percentage be less
than 50 percent or more than 83 percent.
‘‘(3) PROMULGATION.—The old Federal medical
assistance percentage for any State shall be deter-
mined and promulgated in accordance with the pro-
visions of section 1101(a)(8)(B).
‘‘(e) NEW FEDERAL MEDICAL ASSISTANCE PER-
CENTAGE DEFINED.—
‘‘(1) IN GENERAL.—
‘‘(A) TERM DEFINED.—Except as provided
in paragraph (3) and subsection (f), the term
1499
HR 2491 EH
‘new Federal medical assistance percentage’
means, for each of the 50 States and the Dis-
trict of Columbia, 100 percent reduced by the
product 0.39 and the ratio of—
‘‘(i)(I) for each of the 50 States, the
total taxable resources (TTR) ratio of the
State specified in subparagraph (B), or
‘‘(II) for the District of Columbia, the
per capita income ratio specified in sub-
paragraph (C),
to—
‘‘(ii) the aggregate expenditure need
ratio of the State or District, as described
in subparagraph (D).
‘‘(B) TOTAL
TAXABLE
RESOURCES
(TTR)
RATIO.—For 
purposes 
of 
subparagraph
(A)(i)(I), the total taxable resources (TTR)
ratio for each of the 50 States is—
‘‘(i) an amount equal to the most re-
cent 3-year average of the total taxable re-
sources (TTR) of the State, as determined
by the Secretary of the Treasury, divided
by
1500
HR 2491 EH
‘‘(ii) an amount equal to the sum of
the 3-year averages determined under
clause (i) for each of the 50 States.
‘‘(C) PER
CAPITA
INCOME
RATIO.—For
purposes of subparagraph (A)(i)(II), the per
capita income ratio of the District of Columbia
is—
‘‘(i) an amount equal to the most re-
cent 3-year average of the total personal
income of the District of Columbia, as de-
termined in accordance with the provisions
of section 1101(a)(8)(B), divided by
‘‘(ii) an amount equal to the total per-
sonal income of the continental United
States (including Alaska) and Hawaii, as
determined under section 1101(a)(8)(B).
‘‘(D) AGGREGATE
EXPENDITURE
NEED
RATIO.—For purposes of subparagraph (A),
with respect to each of the 50 States and the
District of Columbia for a fiscal year, the ag-
gregate expenditure need ratio is—
‘‘(i) the State aggregate expenditure
need (as defined in section 2121(d)) for
the State for the fiscal year, divided by
1501
HR 2491 EH
‘‘(ii) the such of such State aggregate
expenditure needs for the 50 States and
the District of Columbia for the fiscal year.
‘‘(2) LIMITATION ON RANGE.—Except as pro-
vided in subsection (f), the new Federal medical as-
sistance percentage shall in no case be less than 40
percent or greater than 83 percent.
‘‘(3) PROMULGATION.—The new Federal medi-
cal assistance percentage for any State shall be pro-
mulgated in a timely manner consistent with the
promulgation of the old Federal medical assistance
percentage under section 1101(a)(8)(B).
‘‘(f) SPECIAL RULES.—For purposes of this title—
‘‘(1) COMMONWEALTHS AND TERRITORIES.—In
the case of Puerto Rico, the Virgin Islands, Guam,
the Northern Mariana Islands, and American
Samoa, the old and new Federal medical assistance
percentages are 50 percent.
‘‘(2) INDIAN HEALTH SERVICE FACILITIES.—
‘‘(A) IN GENERAL.—The old and new Fed-
eral medical assistance percentages shall be 100
percent with respect to the amounts expended
as medical assistance for services which are re-
ceived through a facility described in subpara-
graph (B) of an Indian tribe or tribal organiza-
1502
HR 2491 EH
tion or through an Indian Health Service facil-
ity whether operated by the Indian Health
Service or by an Indian tribe or tribal organiza-
tion (as defined in section 4 of the Indian
Health Care Improvement Act).
‘‘(B) FACILITY DESCRIBED.—For purposes
of subparagraph (A), a facility described in this
subparagraph is a facility of an Indian tribe
if—
‘‘(i) the facility is located in a State
which, as of the date of the enactment of
this title, was not operating its State plan
under title XIX pursuant to a Statewide
waiver approved under section 1115,
‘‘(ii) the facility is not an Indian
Health Service facility,
‘‘(iii) the tribe owns at least 2 such
facilities, and
‘‘(iv) the tribe has at least 50,000
members (as of the date of the enactment
of this title).
‘‘(3) NO STATE MATCHING REQUIRED FOR CER-
TAIN EXPENDITURES.—In applying subsection (a)(1)
with respect to medical assistance provided to unlaw-
ful aliens pursuant to the exception specified in sec-
1503
HR 2491 EH
tion 2123(e)(2), payment shall be made for the
amount of such assistance without regard to any
need for a State match.
‘‘SEC. 2123. LIMITATION ON USE OF FUNDS; DISALLOW-
ANCE.
‘‘(a) IN GENERAL.—Funds provided to a State under
this title shall only be used to carry out the purposes of
this title.
‘‘(b) DISALLOWANCES
FOR
EXCLUDED
PROVID-
ERS.—
‘‘(1) IN GENERAL.—Payment shall not be made
to a State under this part for expenditures for items
and services furnished—
‘‘(A) by a provider who was excluded from
participation under title V, XVIII, or XX or
under this title pursuant to section 1128,
1128A, 1156, or 1842(j)(2), or
‘‘(B) under the medical direction or on the
prescription of a physician who was so excluded,
if the provider of the services knew or had rea-
son to know of the exclusion.
‘‘(2) EXCEPTION FOR EMERGENCY SERVICES.—
Paragraph (1) shall not apply to emergency items or
services, not including hospital emergency room serv-
ices.
1504
HR 2491 EH
‘‘(c) LIMITATIONS.—
‘‘(1) IN GENERAL.—No Federal financial assist-
ance is available for expenditures under the
MediGrant plan for—
‘‘(A) medically-related services for a quar-
ter to the extent such expenditures exceed 5
percent of the total expenditures under the plan
for the quarter; or
‘‘(B) total administrative expenses (other
than expenses described in paragraph (2) dur-
ing the first 8 quarters in which the plan is in
effect under this title) for quarters in a fiscal
year to the extent such expenditures exceed the
sum of $20,000,000 plus 10 percent of the total
expenditures under the plan for the year.
‘‘(2) ADMINISTRATIVE EXPENSES NOT SUBJECT
TO
LIMITATION.—The administrative expenses re-
ferred to in this paragraph are expenditures under
the MediGrant plan for the following activities:
‘‘(A) Quality assurance.
‘‘(B) The development and operation of the
certification program for nursing facilities and
intermediate care facilities for the mentally re-
tarded under section 2137(a)(2).
1505
HR 2491 EH
‘‘(C) Utilization review activities, including
medical activities and activities of peer review
organizations.
‘‘(D) Inspection and oversight of providers
and capitated health care organizations.
‘‘(E) Anti-fraud activities.
‘‘(F) Independent evaluations.
‘‘(G) Activities required to meet reporting
requirements under this title.
‘‘(d) TREATMENT OF THIRD PARTY LIABILITY.—No
payment shall be made to a State under this part for ex-
penditures for medical assistance provided for an individ-
ual under its MediGrant plan to the extent that a private
insurer (as defined by the Secretary by regulation and in-
cluding a group health plan (as defined in section 607(1)
of the Employee Retirement Income Security Act of
1974), a service benefit plan, and a health maintenance
organization) would have been obligated to provide such
assistance but for a provision of its insurance contract
which has the effect of limiting or excluding such obliga-
tion because the individual is eligible for or is provided
medical assistance under the plan.
‘‘(e) LIMITATION
ON PAYMENTS
TO EMERGENCY
SERVICES FOR NONLAWFUL ALIENS.—
1506
HR 2491 EH
‘‘(1) IN GENERAL.—Notwithstanding the pre-
ceding provisions of this section, except as provided
in paragraph (2), no payment may be made to a
State under this part for medical assistance fur-
nished to an alien who is not lawfully admitted for
permanent residence or otherwise permanently resid-
ing in the United States under color of law.
‘‘(2) EXCEPTION FOR EMERGENCY SERVICES.—
Payment may be made under this section for care
and services that are furnished to an alien described
in paragraph (1) only if—
‘‘(A) such care and services are necessary
for the treatment of an emergency medical con-
dition of the alien,
‘‘(B) such alien otherwise meets the eligi-
bility requirements for medical assistance under
the MediGrant plan (other than a requirement
of the receipt of aid or assistance under title
IV, supplemental security income benefits under
title XVI, or a State supplementary payment),
and
‘‘(C) such care and services are not related
to an organ transplant procedure.
‘‘(3) EMERGENCY
MEDICAL
CONDITION
DE-
FINED.—For purposes of this subsection, the term
1507
HR 2491 EH
‘emergency medical condition’ means a medical con-
dition (including emergency labor and delivery)
manifesting itself by acute symptoms of sufficient
severity (including severe pain) such that the ab-
sence of immediate medical attention could reason-
ably be expected to result in—
‘‘(A) placing the patient’s health in serious
jeopardy,
‘‘(B) serious impairment to bodily func-
tions, or
‘‘(C) serious dysfunction of any bodily
organ or part.
‘‘(f) LIMITATION ON PAYMENT FOR CERTAIN OUT-
PATIENT PRESCRIPTION DRUGS.—
‘‘(1) IN GENERAL.—No payment may be made
to a State under this part for medical assistance for
covered outpatient drugs (as defined in section
2175(i)(2)) of a manufacturer provided under the
MediGrant plan unless the manufacturer (as defined
in section 2175(i)(4)) of the drug—
‘‘(A) has entered into a MediGrant master
rebate agreement with the Secretary under sec-
tion 2175; and
‘‘(B) is complying with the provisions of
section 8126 of title 38, United States Code, in-
1508
HR 2491 EH
cluding the requirement of entering into a mas-
ter agreement with the Secretary of Veterans
Affairs under such section.
‘‘(2) CONSTRUCTION.—Nothing in this sub-
section shall be construed as requiring a State to
participate in the MediGrant master rebate agree-
ment under section 2175.
‘‘(3) 
EFFECT
OF
SUBSEQUENT
AMEND-
MENTS.—For purposes of paragraph (1)(B), in de-
termining whether a manufacturer is in compliance
with the requirements of section 8126 of title 38,
United States Code—
‘‘(A) the Secretary shall not take into ac-
count any amendments to such section that are
enacted after the enactment of title VI of the
Veterans Health Care Act of 1992; and
‘‘(B) a manufacturer is deemed to meet
such requirements if the manufacturer estab-
lishes to the satisfaction of the Secretary that
the manufacturer would comply (and has of-
fered to comply) with the provisions of section
8126 of title 38, United States Code (as in ef-
fect immediately after the enactment of the
Veterans Health Care Act of 1992) and would
have entered into an agreement under such sec-
1509
HR 2491 EH
tion (as such section was in effect at such
time), but for a legislative change in such sec-
tion after the date of the enactment of the Vet-
erans Health Care Act of 1992.
‘‘(g) LIMITATION ON PAYMENT FOR ABORTIONS.—
‘‘(1) IN GENERAL.—Payment shall not be made
to a State under this part for any amount expended
under the MediGrant plan to pay for any abortion
or to assist in the purchase, in whole or in part, of
health benefit coverage that includes coverage of
abortion.
‘‘(2) EXCEPTION.—Paragraph (1) shall not
apply to an abortion—
‘‘(A) if the pregnancy is the result of an
act of rape or incest, or
‘‘(B) in the case where a woman suffers
from a physical disorder, illness, or injury that
would, as certified by a physician, place the
woman in danger of death unless an abortion is
performed.
‘‘(h) LIMITATION
ON
PAYMENT
FOR
ASSISTING
DEATHS.—Payment shall not be made to a State under
this part for amounts expended under the MediGrant plan
to pay for, or to assist in the purchase, in whole or in
part, of health benefit coverage that includes payment for
1510
HR 2491 EH
any drug, biological product, or service which was fur-
nished for the purpose of causing, or assisting in causing,
the death, suicide, euthanasia, or mercy killing of a per-
son.
‘‘PART D—PROGRAM INTEGRITY AND QUALITY
‘‘SEC. 2131. USE OF AUDITS TO ACHIEVE FISCAL INTEGRITY.
‘‘(a) FINANCIAL AUDITS OF PROGRAM.—
‘‘(1) IN GENERAL.—Each MediGrant plan shall
provide for an annual audit of the State’s expendi-
tures from amounts received under this title, in com-
pliance with chapter 75 of title 31, United States
Code.
‘‘(2) VERIFICATION AUDITS.—If, after consulta-
tion with the State and the Comptroller General and
after a fair hearing, the Secretary determines that
a State’s audit under paragraph (1) was performed
in substantial violation of chapter 75 of title 31,
United States Code, the Secretary may—
‘‘(A) require that the State provide for a
verification audit in compliance with such chap-
ter, or
‘‘(B) conduct such a verification audit.
‘‘(3) AVAILABILITY OF AUDIT REPORTS.—With-
in 30 days after completion of each audit or verifica-
tion audit under this subsection, the State shall—
1511
HR 2491 EH
‘‘(A) provide the Secretary with a copy of
the audit report, including the State’s response
to any recommendations of the auditor, and
‘‘(B) make the audit report available for
public inspection in the same manner as pro-
posed MediGrant plan amendments are made
available under section 2105.
‘‘(b) FISCAL CONTROLS.—
‘‘(1) IN
GENERAL.—With respect to the ac-
counting and expenditure of funds under this title,
each State shall adopt and maintain such fiscal con-
trols, accounting procedures, and data processing
safeguards as the State deems reasonably necessary
to assure the fiscal integrity of the State’s activities
under this title.
‘‘(2) CONSISTENCY WITH GENERALLY ACCEPT-
ED
ACCOUNTING
PRINCIPLES.—Such controls and
procedures shall be generally consistent with gen-
erally accepted accounting principles as recognized
by the Governmental Accounting Standards Board
or the Comptroller General.
‘‘(c) AUDITS OF PROVIDERS.—Each MediGrant plan
shall provide that the records of any entity providing items
or services for which payment may be made under the plan
1512
HR 2491 EH
may be audited as necessary to ensure that proper pay-
ments are made under the plan.
‘‘SEC. 2132. FRAUD PREVENTION PROGRAM.
‘‘(a) ESTABLISHMENT.—Each MediGrant plan shall
provide for the establishment and maintenance of an effec-
tive program for the detection and prevention of fraud and
abuse by beneficiaries, providers, and others in connection
with the operation of the program.
‘‘(b) PROGRAM REQUIREMENTS.—The program es-
tablished pursuant to subsection (a) shall include at least
the following requirements:
‘‘(1) DISCLOSURE OF INFORMATION.—Any dis-
closing entity (as defined in section 1124(a)) receiv-
ing payments under the MediGrant plan shall com-
ply with the requirements of section 1124.
‘‘(2) SUPPLY
OF
INFORMATION.—An entity
(other than an individual practitioner or a group of
practitioners) that furnishes, or arranges for the fur-
nishing of, an item or service under the MediGrant
plan shall supply upon request specifically addressed
to the entity by the Secretary or the State agency
the information described in section 1128(b)(9).
‘‘(3) EXCLUSION.—
‘‘(A) IN GENERAL.—The MediGrant plan
shall exclude any specified individual or entity
1513
HR 2491 EH
from participation in the plan for the period
specified by the Secretary when required by the
Secretary to do so pursuant to section 1128 or
section 1128A, and provide that no payment
may be made under the plan with respect to
any item or service furnished by such individual
or entity during such period.
‘‘(B) AUTHORITY.—In addition to any
other authority, a State may exclude any indi-
vidual or entity for purposes of participating
under the MediGrant plan for any reason for
which the Secretary could exclude the individual
or entity from participation in a program under
title XVIII or under section 1128, 1128A, or
1866(b)(2).
‘‘(4) NOTICE.—The MediGrant plan shall pro-
vide that whenever a provider of services or any
other person is terminated, suspended, or otherwise
sanctioned or prohibited from participating under
the plan, the State agency responsible for admin-
istering the plan shall promptly notify the Secretary
and, in the case of a physician, the State medical li-
censing board of such action.
‘‘(5) 
ACCESS
TO
INFORMATION.—The
MediGrant plan shall provide that the State will pro-
1514
HR 2491 EH
vide information and access to certain information
respecting sanctions taken against health care prac-
titioners and providers by State licensing authorities
in accordance with section 2133.
‘‘SEC. 2133. INFORMATION CONCERNING SANCTIONS TAKEN
BY STATE LICENSING AUTHORITIES AGAINST
HEALTH CARE PRACTITIONERS AND PROVID-
ERS.
‘‘(a) INFORMATION REPORTING REQUIREMENT.—
The requirement referred to in section 2132(b)(5) is that
the State must provide for the following:
‘‘(1) INFORMATION REPORTING SYSTEM.—The
State must have in effect a system of reporting the
following information with respect to formal proceed-
ings (as defined by the Secretary in regulations)
concluded against a health care practitioner or entity
by any authority of the State (or of a political sub-
division thereof) responsible for the licensing of
health care practitioners (or any peer review organi-
zation or private accreditation entity reviewing the
services provided by health care practitioners) or en-
tities:
‘‘(A) Any adverse action taken by such li-
censing authority as a result of the proceeding,
including any revocation or suspension of a li-
1515
HR 2491 EH
cense (and the length of any such suspension),
reprimand, censure, or probation.
‘‘(B) Any dismissal or closure of the pro-
ceedings by reason of the practitioner or entity
surrendering the license or leaving the State or
jurisdiction.
‘‘(C) Any other loss of the license of the
practitioner or entity, whether by operation of
law, voluntary surrender, or otherwise.
‘‘(D) Any negative action or finding by
such authority, organization, or entity regard-
ing the practitioner or entity.
‘‘(2) ACCESS TO DOCUMENTS.—The State must
provide the Secretary (or an entity designated by the
Secretary) with access to such documents of the au-
thority described in paragraph (1) as may be nec-
essary for the Secretary to determine the facts and
circumstances concerning the actions and determina-
tions described in such paragraph for the purpose
of carrying out this Act.
‘‘(b) FORM OF INFORMATION.—The information de-
scribed in subsection (a)(1) shall be provided to the Sec-
retary (or to an appropriate private or public agency,
under suitable arrangements made by the Secretary with
respect to receipt, storage, protection of confidentiality,
1516
HR 2491 EH
and dissemination of information) in such a form and
manner as the Secretary determines to be appropriate in
order to provide for activities of the Secretary under this
Act and in order to provide, directly or through suitable
arrangements made by the Secretary, information—
‘‘(1) to agencies administering Federal health
care programs, including private entities administer-
ing such programs under contract,
‘‘(2) to licensing authorities described in sub-
section (a)(1),
‘‘(3) to State agencies administering or super-
vising the administration of State health care pro-
grams (as defined in section 1128(h)),
‘‘(4) to utilization and quality control peer re-
view organizations described in part B of title XI
and to appropriate entities with contracts under sec-
tion 1154(a)(4)(C) with respect to eligible organiza-
tions reviewed under the contracts,
‘‘(5) to State MediGrant fraud control units (as
defined in section 2134),
‘‘(6) to hospitals and other health care entities
(as defined in section 431 of the Health Care Qual-
ity Improvement Act of 1986), with respect to physi-
cians or other licensed health care practitioners that
have entered (or may be entering) into an employ-
1517
HR 2491 EH
ment or affiliation relationship with, or have applied
for clinical privileges or appointments to the medical
staff of, such hospitals or other health care entities
(and such information shall be deemed to be dis-
closed pursuant to section 427 of, and be subject to
the provisions of, that Act),
‘‘(7) to the Attorney General and such other
law enforcement officials as the Secretary deems ap-
propriate, and
‘‘(8) upon request, to the Comptroller General,
in order for such authorities to determine the fitness
of individuals to provide health care services, to pro-
tect the health and safety of individuals receiving
health care through such programs, and to protect
the fiscal integrity of such programs.
‘‘(c) CONFIDENTIALITY
OF
INFORMATION
PRO-
VIDED.—The Secretary shall provide for suitable safe-
guards for the confidentiality of the information furnished
under subsection (a). Nothing in this subsection shall pre-
vent the disclosure of such information by a party which
is otherwise authorized, under applicable State law, to
make such disclosure.
‘‘(d) APPROPRIATE COORDINATION.—The Secretary
shall provide for the maximum appropriate coordination
in the implementation of subsection (a) of this section and
1518
HR 2491 EH
section 422 of the Health Care Quality Improvement Act
of 1986.
‘‘SEC. 2134. STATE MEDIGRANT FRAUD CONTROL UNITS.
‘‘(a) IN GENERAL.—Each MediGrant plan shall pro-
vide for a State MediGrant fraud control unit described
in subsection (b) that effectively carries out the functions
and requirements described in such subsection, unless the
State demonstrates to the satisfaction of the Secretary
that the effective operation of such a unit in the State
would not be cost-effective because minimal fraud exists
in connection with the provision of covered services to eli-
gible individuals under the plan, and that beneficiaries
under the plan will be protected from abuse and neglect
in connection with the provision of medical assistance
under the plan without the existence of such a unit
‘‘(b) UNITS DESCRIBED.—For purposes of this sub-
section, the term ‘State MediGrant fraud control unit’
means a single identifiable entity of the State government
which meets the following requirements:
‘‘(1) ORGANIZATION.—The entity—
‘‘(A) is a unit of the office of the State At-
torney General or of another department of
State government which possesses statewide au-
thority to prosecute individuals for criminal vio-
lations;
1519
HR 2491 EH
‘‘(B) is in a State the constitution of which
does not provide for the criminal prosecution of
individuals by a statewide authority and has
formal procedures that—
‘‘(i) assure its referral of suspected
criminal violations relating to the program
under this title to the appropriate author-
ity or authorities in the State for prosecu-
tion, and
‘‘(ii) assure its assistance of, and co-
ordination with, such authority or authori-
ties in such prosecutions; or
‘‘(C) has a formal working relationship
with the office of the State Attorney General
and has formal procedures (including proce-
dures for its referral of suspected criminal vio-
lations to such office) which provide effective
coordination of activities between the entity and
such office with respect to the detection, inves-
tigation, and prosecution of suspected criminal
violations relating to the program under this
title.
‘‘(2) INDEPENDENCE.—The entity is separate
and distinct from any State agency that has prin-
1520
HR 2491 EH
cipal responsibilities for administering or supervising
the administration of the MediGrant plan.
‘‘(3) FUNCTION.—The entity’s function is con-
ducting a statewide program for the investigation
and prosecution of violations of all applicable State
laws regarding any and all aspects of fraud in con-
nection with any aspect of the provision of medical
assistance and the activities of providers of such as-
sistance under the MediGrant plan.
‘‘(4) REVIEW OF COMPLAINTS.—The entity has
procedures for reviewing complaints of the abuse
and neglect of patients of health care facilities which
receive payments under the MediGrant plan under
this title, and, where appropriate, for acting upon
such complaints under the criminal laws of the State
or for referring them to other State agencies for ac-
tion.
‘‘(5) OVERPAYMENTS.—The entity provides for
the collection, or referral for collection to a single
State agency, of overpayments that are made under
the MediGrant plan to health care providers and
that are discovered by the entity in carrying out its
activities.
‘‘(6) PERSONNEL.—The entity employs such
auditors, attorneys, investigators, and other nec-
1521
HR 2491 EH
essary personnel and is organized in such a manner
as is necessary to promote the effective and efficient
conduct of the entity’s activities.
‘‘SEC. 2135. RECOVERIES FROM THIRD PARTIES AND OTH-
ERS.
‘‘(a) THIRD PARTY LIABILITY.—Each MediGrant
plan shall provide for reasonable steps—
‘‘(1) to ascertain the legal liability of third par-
ties to pay for care and services available under the
plan, including the collection of sufficient informa-
tion to enable States to pursue claims against third
parties; and
‘‘(2) to seek reimbursement for medical assist-
ance provided to the extent legal liability is establish
where the amount expected to be recovered exceeds
the costs of the recovery.
‘‘(b) BENEFICIARY PROTECTION.—
‘‘(1) IN GENERAL.—Each MediGrant plan shall
provide that in the case of a person furnishing serv-
ices under the plan for which a third party may be
liable for payment—
‘‘(A) the person may not seek to collect
from the individual (or financially responsible
relative) payment of an amount for the service
1522
HR 2491 EH
more than could be collected under the plan in
the absence of such third party liability, and
‘‘(B) may not refuse to furnish services to
such an individual because of a third party’s
potential liability for payment for the service.
‘‘(2) PENALTY.—A MediGrant plan may pro-
vide for a reduction of any payment amount other-
wise due with respect to a person who furnishes
services under the plan in an amount equal to up to
three times the amount of any payment sought to be
collected by that person in violation of paragraph
(1)(A).
‘‘(c) GENERAL LIABILITY.—The State shall prohibit
any health insurer (including a group health plan as de-
fined in section 607 of the Employee Retirement Income
Security Act of 1974, a service benefit plan, or a health
maintenance organization), in enrolling an individual or
in making any payments for benefits to the individual or
on the individual’s behalf, from taking into account that
the individual is eligible for or is provided medical assist-
ance under a MediGrant plan for any State.
‘‘(d) ACQUISITION OF RIGHTS OF BENEFICIARIES.—
To the extent that payment has been made under a
MediGrant plan in any case where a third party has a
legal liability to make payment for such assistance, the
1523
HR 2491 EH
State shall have in effect laws under which, to the extent
that payment has been made under the plan for health
care items or services furnished to an individual, the State
is considered to have acquired the rights of such individual
to payment by any other party for such health care items
or services.
‘‘(e) ASSIGNMENT OF MEDICAL SUPPORT RIGHTS.—
The MediGrant plan shall provide for mandatory assign-
ment of rights of payment for medical support and other
medical care owed to recipients in accordance with section
2136.
‘‘(f) REQUIRED LAWS RELATING TO MEDICAL CHILD
SUPPORT.—
‘‘(1) 
IN
GENERAL.—Each 
State 
with 
a
MediGrant plan shall have in effect the following
laws:
‘‘(A) A law that prohibits an insurer from
denying enrollment of a child under the health
coverage of the child’s parent on the ground
that—
‘‘(i) the child was born out of wedlock,
‘‘(ii) the child is not claimed as a de-
pendent on the parent’s Federal income
tax return, or
1524
HR 2491 EH
‘‘(iii) the child does not reside with
the parent or in the insurer’s service area.
‘‘(B) In any case in which a parent is re-
quired by a court or administrative order to
provide health coverage for a child and the par-
ent is eligible for family health coverage
through an insurer, a law that requires such in-
surer—
‘‘(i) to permit such parent to enroll
under such family coverage any such child
who is otherwise eligible for such coverage
(without regard to any enrollment season
restrictions);
‘‘(ii) if such a parent is enrolled but
fails to make application to obtain cov-
erage of such child, to enroll such child
under such family coverage upon applica-
tion by the child’s other parent or by the
State agency administering the program
under this title or part D of title IV; and
‘‘(iii) not to disenroll (or eliminate
coverage of) such a child unless the insurer
is provided satisfactory written evidence
that—
1525
HR 2491 EH
‘‘(I) such court or administrative
order is no longer in effect, or
‘‘(II) the child is or will be en-
rolled in comparable health coverage
through another insurer which will
take effect not later than the effective
date of such disenrollment.
‘‘(C) In any case in which a parent is re-
quired by a court or administrative order to
provide health coverage for a child and the par-
ent is eligible for family health coverage
through an employer doing business in the
State, a law that requires such employer—
‘‘(i) to permit such parent to enroll
under such family coverage any such child
who is otherwise eligible for such coverage
(without regard to any enrollment season
restrictions);
‘‘(ii) if such a parent is enrolled but
fails to make application to obtain cov-
erage of such child, to enroll such child
under such family coverage upon applica-
tion by the child’s other parent or by the
State agency administering the program
under this title or part D of title IV; and
1526
HR 2491 EH
‘‘(iii) not to disenroll (or eliminate
coverage of) any such child unless—
‘‘(I) the employer is provided sat-
isfactory written evidence that such
court or administrative order is no
longer in effect, or the child is or will
be enrolled in comparable health cov-
erage which will take effect not later
than the effective date of such
disenrollment, or
‘‘(II) the employer has eliminated
family health coverage for all of its
employees; and
‘‘(iv) to withhold from such employ-
ee’s compensation the employee’s share (if
any) of premiums for health coverage (ex-
cept that the amount so withheld may not
exceed the maximum amount permitted to
be withheld under section 303(b) of the
Consumer Credit Protection Act), and to
pay such share of premiums to the insurer,
except that the Secretary may provide by
regulation for appropriate circumstances
under which an employer may withhold
1527
HR 2491 EH
less than such employee’s share of such
premiums.
‘‘(D) A law that prohibits an insurer from
imposing requirements on a State agency,
which has been assigned the rights of an indi-
vidual eligible for medical assistance under this
title and covered for health benefits from the
insurer, that are different from requirements
applicable to an agent or assignee of any other
individual so covered.
‘‘(E) A law that requires an insurer, in
any case in which a child has health coverage
through the insurer of a noncustodial parent—
‘‘(i) to provide such information to the
custodial parent as may be necessary for
the child to obtain benefits through such
coverage;
‘‘(ii) to permit the custodial parent
(or provider, with the custodial parent’s
approval) to submit claims for covered
services without the approval of the
noncustodial parent; and
‘‘(iii) to make payment on claims sub-
mitted in accordance with clause (ii) di-
1528
HR 2491 EH
rectly to such custodial parent, the pro-
vider, or the State agency.
‘‘(F) A law that permits the State agency
under this title to garnish the wages, salary, or
other employment income of, and requires with-
holding amounts from State tax refunds to, any
person who—
‘‘(i) is required by court or adminis-
trative order to provide coverage of the
costs of health services to a child who is el-
igible for medical assistance under this
title,
‘‘(ii) has received payment from a
third party for the costs of such services to
such child, but
‘‘(iii) has not used such payments to
reimburse, as appropriate, either the other
parent or guardian of such child or the
provider of such services,
to the extent necessary to reimburse the State
agency for expenditures for such costs under its
plan under this title, but any claims for current
or past-due child support shall take priority
over any such claims for the costs of such serv-
ices.
1529
HR 2491 EH
‘‘(2) DEFINITION.—For purposes of this sub-
section, the term ‘insurer’ includes a group health
plan, as defined in section 607(1) of the Employee
Retirement Income Security Act of 1974, a health
maintenance organization, and an entity offering a
service benefit plan.
‘‘(g) 
ESTATE
RECOVERIES
AND
LIENS
PER-
MITTED.—A State may take such actions as it considers
appropriate to adjust or recover from the individual or the
individual’s estate any amounts paid as medical assistance
to or on behalf of the individual under the MediGrant
plan, including through the imposition of liens against the
property or estate of the individual.
‘‘SEC. 2136. ASSIGNMENT OF RIGHTS OF PAYMENT.
‘‘(a) IN GENERAL.—For the purpose of assisting in
the collection of medical support payments and other pay-
ments for medical care owed to recipients of medical as-
sistance under the MediGrant plan, each MediGrant plan
shall—
‘‘(1) provide that, as a condition of eligibility
for medical assistance under the plan to an individ-
ual who has the legal capacity to execute an assign-
ment for himself, the individual is required—
‘‘(A) to assign the State any rights, of the
individual or of any other person who is eligible
1530
HR 2491 EH
for medical assistance under the plan and on
whose behalf the individual has the legal au-
thority to execute an assignment of such rights,
to support (specified as support for the purpose
of medical care by a court or administrative
order) and to payment for medical care from
any third party,
‘‘(B) to cooperate with the State (i) in es-
tablishing the paternity of such person (referred
to in subparagraph (A)) if the person is a child
born out of wedlock, and (ii) in obtaining sup-
port and payments (described in subparagraph
(A)) for himself and for such person, unless (in
either case) the individual is a pregnant woman
or the individual is found to have good cause
for refusing to cooperate as determined by the
State, and
‘‘(C) to cooperate with the State in identi-
fying, and providing information to assist the
State in pursuing, any third party who may be
liable to pay for care and services available
under the plan, unless such individual has good
cause for refusing to cooperate as determined
by the State; and
1531
HR 2491 EH
‘‘(2) provide for entering into cooperative ar-
rangements (including financial arrangements), with
any appropriate agency of any State (including, with
respect to the enforcement and collection of rights of
payment for medical care by or through a parent,
with a State’s agency established or designated
under section 454(3)) and with appropriate courts
and law enforcement officials, to assist the agency or
agencies administering the plan with respect to—
‘‘(A) the enforcement and collection of
rights to support or payment assigned under
this section, and
‘‘(B) any other matters of common con-
cern.
‘‘(b) USE OF AMOUNTS COLLECTED.—Such part of
any amount collected by the State under an assignment
made under the provisions of this section shall be retained
by the State as is necessary to reimburse it for medical
assistance payments made on behalf of an individual with
respect to whom such assignment was executed (with ap-
propriate reimbursement of the Federal Government to
the extent of its participation in the financing of such
medical assistance), and the remainder of such amount
collected shall be paid to such individual.
1532
HR 2491 EH
‘‘SEC. 2137. QUALITY ASSURANCE STANDARDS FOR NURS-
ING FACILITIES.
‘‘(a) STANDARDS FOR AND CERTIFICATION OF CER-
TAIN FACILITIES.—
‘‘(1) STANDARDS FOR FACILITIES.—
‘‘(A) IN GENERAL.—Each MediGrant plan
shall provide for the establishment and mainte-
nance of standards consistent with the contents
described in subparagraph (B) for nursing fa-
cilities which furnish services under the plan.
Such standards shall provide that nursing fa-
cilities must care for residents in such a man-
ner and in such an environment as will promote
maintenance or enhancement of the quality of
life of each resident.
‘‘(B) CONTENTS
OF
STANDARDS.—The
standards established for facilities under this
paragraph shall contain provisions relating to
the following items:
‘‘(i) The treatment of resident medical
records.
‘‘(ii) Policies, procedures, and bylaws
for operation.
‘‘(iii) Quality assurance systems.
1533
HR 2491 EH
‘‘(iv) Resident assessment procedures,
including care planning and outcome eval-
uation.
‘‘(v) The assurance of a safe and ade-
quate physical plant for the facility.
‘‘(vi) Qualifications for staff sufficient
to provide adequate care, as defined by the
State.
‘‘(vii) Utilization review.
‘‘(viii) The protection and enforce-
ment of resident rights described in para-
graph (2)(A).
‘‘(C) PROCESS
FOR
ESTABLISHMENT.—
The standards established by the State for fa-
cilities under this paragraph shall be promul-
gated either through the State’s legislative, reg-
ulatory, or other process, and may only take ef-
fect after the State has provided the public with
notice and an opportunity for comment.
‘‘(2) RESIDENTS’ RIGHTS.—
‘‘(A) IN
GENERAL.—The resident rights
described in this paragraph are the rights of
residents to the following:
1534
HR 2491 EH
‘‘(i) To exercise the individual’s rights
as a resident of the facility and as a citizen
or resident of the United States.
‘‘(ii) To receive notice of rights and
services.
‘‘(iii) To be protected against the mis-
use of resident funds.
‘‘(iv) To be provided privacy and con-
fidentiality.
‘‘(v) To voice grievances.
‘‘(vi) To examine the results of State
certification program inspections.
‘‘(vii) To refuse to perform services
for the facility.
‘‘(viii) To be provided privacy in com-
munications and to receive mail.
‘‘(ix) To have the facility provide im-
mediate access to any resident by any rep-
resentative of the certification program,
the resident’s individual physician, the
State long term care ombudsman, and any
person the resident has designated as a
visitor.
‘‘(x) To retain and use personal prop-
erty.
1535
HR 2491 EH
‘‘(xi) To be free from abuse, including
verbal, sexual, physical and mental abuse,
corporal punishment, and involuntary se-
clusion and not to have any physical or
chemical restraints imposed for purposes of
discipline or convenience unless required to
treat the resident’s medical symptoms.
‘‘(xii) To be provided with prior writ-
ten notice of a pending transfer or dis-
charge.
‘‘(xiii) To organize and participate in
resident groups in the facility and to have
family members meet in the facility with
the families of other residents in the facil-
ity.
‘‘(xiv) To participate in social, reli-
gious, and community activities that do not
interfere with the rights of other residents
in the facility.
‘‘(xv) To choose a personal attending
physician, to be fully informed in advance
about care and treatment, and (except with
respect to a resident adjudged incom-
petent) to participate in planning care and
1536
HR 2491 EH
treatment or changes in care and treat-
ment.
‘‘(xvi) 
To 
not 
have 
psycho-
pharmacologic drugs administered except
under the orders of a physician and as
part of a plan designed to eliminate or
modify the symptoms for which the drugs
are prescribed.
‘‘(B) RIGHTS
OF
INCOMPETENT
RESI-
DENTS.—In the case of a resident adjudged in-
competent under the laws of a State, the rights
of the resident under the MediGrant plan shall
devolve upon, and, to the extent judged nec-
essary by a court of competent jurisdiction, be
exercised by, the person appointed under State
law to act on the resident’s behalf.
‘‘(3) CERTIFICATION PROGRAM.—
‘‘(A) IN GENERAL.—Each MediGrant plan
shall provide for the establishment and oper-
ation of a program consistent with the require-
ments of subparagraph (B) for the certification
of nursing facilities which meet the standards
established under paragraph (1) and the decer-
tification of facilities which fail to meet such
standards.
1537
HR 2491 EH
‘‘(B) REQUIREMENTS FOR PROGRAM.—In
addition to any other requirements the State
may impose, in establishing and operating the
certification program under subparagraph (A),
the State shall ensure the following:
‘‘(i) The State shall ensure public ac-
cess (as defined by the State) to the cer-
tification program’s evaluations of partici-
pating 
facilities, 
including 
compliance
records and enforcement actions and other
reports by the State regarding the owner-
ship, compliance histories, and services
provided by certified facilities.
‘‘(ii) Not less often than every 4
years, the State shall audit its expendi-
tures under the program, through an en-
tity designated by the State which is not
affiliated with the program, as designated
by the State.
‘‘(b) INTERMEDIATE SANCTION AUTHORITY.—
‘‘(1) AUTHORITY.—In addition to any other au-
thority under State law, where a State determines
that a nursing facility which is certified for partici-
pation under the MediGrant plan no longer substan-
tially meets the requirements for such a facility
1538
HR 2491 EH
under this title and further determines that the fa-
cility’s deficiencies—
‘‘(A) immediately jeopardize the health and
safety of its residents, the State shall at least
provide for the termination of the facility’s cer-
tification for participation under the plan, or
‘‘(B) do not immediately jeopardize the
health and safety of its residents, the State
may, in lieu of providing for terminating the fa-
cility’s certification for participation under the
plan, provide lesser sanctions including one that
provides that no payment will be made under
the plan with respect to any individual admitted
to such facility after a date specified by the
State.
‘‘(2) NOTICE.—The State shall not make such
a decision with respect to a facility until the facility
has had a reasonable opportunity, following the ini-
tial determination that it no longer substantially
meets the requirements for such a facility under the
plan, to correct its deficiencies, and, following this
period, has been given reasonable notice and oppor-
tunity for a hearing.
‘‘(3) EFFECTIVENESS.—The State’s decision to
deny payment may be made effective only after such
1539
HR 2491 EH
notice to the public and to the facility as may be
provided for by the State, and its effectiveness shall
terminate (A) when the State finds that the facility
is in substantial compliance (or is making good faith
efforts to achieve substantial compliance) with the
requirements for such a facility under this title, or
(B) in the case described in paragraph (1)(B), with
the end of the eleventh month following the month
such decision is made effective, whichever occurs
first. If a facility to which clause (B) of the previous
sentence applies still fails to substantially meet the
provisions of the respective section on the date speci-
fied in such clause, the State shall terminate such
facility’s certification for participation under the
MediGrant plan effective with the first day of the
first month following the month specified in such
clause.
‘‘SEC. 2138. OTHER PROVISIONS PROMOTING PROGRAM IN-
TEGRITY.
‘‘(a) PUBLIC ACCESS TO SURVEY RESULTS.—Each
MediGrant plan shall provide that upon completion of a
survey of any health care facility or organization by a
State agency to carry out the plan, the agency shall make
public in readily available form and place the pertinent
1540
HR 2491 EH
findings of the survey relating to the compliance of the
facility or organization with requirements of law.
‘‘(b) RECORD KEEPING.—Each MediGrant plan shall
provide for agreements with persons or institutions provid-
ing services under the plan under which the person or in-
stitution agrees—
‘‘(1) to keep such records (including ledgers,
books, and original evidence of costs) as are nec-
essary to fully disclose the extent of the services pro-
vided to individuals receiving assistance under the
plan; and
‘‘(2) to furnish the State agency with such in-
formation regarding any payments claimed by such
person or institution for providing services under the
plan, as the State agency may from time to time re-
quest.
‘‘PART E—ESTABLISHMENT AND AMENDMENT OF
MEDIGRANT PLANS
‘‘SEC. 2151. SUBMITTAL AND APPROVAL OF MEDIGRANT
PLANS.
‘‘(a) SUBMITTAL.—As a condition of receiving fund-
ing under part C, each State shall submit to the Secretary
a MediGrant plan that meets the applicable requirements
of this title.
1541
HR 2491 EH
‘‘(b) APPROVAL.—Except as the Secretary may pro-
vide under section 2154, a MediGrant plan submitted
under subsection (a)—
‘‘(1) shall be approved for purposes of this title,
and
‘‘(2) shall be effective beginning with a calendar
quarter that is specified in the plan, but in no case
earlier than the first calendar quarter that begins at
least 60 days after the date the plan is submitted.
‘‘(c) APPROVAL
OF LEGISLATURE
FOR SUBMIT-
TAL.—In the case of a State which has a State allotment
under section 2121(c)(1) for fiscal year 1996 of more than
$10 billion, the State may not submit a MediGrant plan
under this section unless the State legislature, by law, has
specifically authorized such submittal.
‘‘SEC. 2152. SUBMITTAL AND APPROVAL OF PLAN AMEND-
MENTS.
‘‘(a) SUBMITTAL OF AMENDMENTS.—A State may
amend, in whole or in part, its MediGrant plan at any
time through transmittal of a plan amendment under this
section.
‘‘(b) APPROVAL.—Except as the Secretary may pro-
vide under section 2154, an amendment to a MediGrant
plan submitted under subsection (a)—
1542
HR 2491 EH
‘‘(1) shall be approved for purposes of this title,
and
‘‘(2) shall be effective as provided in subsection
(c).
‘‘(c) EFFECTIVE DATES FOR AMENDMENTS.—
‘‘(1) IN GENERAL.—Subject to the succeeding
provisions of this subsection, an amendment to
MediGrant plan shall take effect on one or more ef-
fective dates specified in the amendment.
‘‘(2) AMENDMENTS RELATING TO ELIGIBILITY
OR
BENEFITS.—Except as provided in paragraph
(4)—
‘‘(A) NOTICE
REQUIREMENT.—Any plan
amendment that eliminates or restricts eligi-
bility or benefits under the plan may not take
effect unless the State certifies that it has pro-
vided prior or contemporaneous public notice of
the change, in a form and manner provided
under applicable State law.
‘‘(B) TIMELY
TRANSMITTAL.—Any plan
amendment that eliminates or restricts eligi-
bility or benefits under the plan shall not be
effective for longer than a 60 day period unless
the amendment has been transmitted to the
Secretary before the end of such period.
1543
HR 2491 EH
‘‘(3) OTHER AMENDMENTS.—Subject to para-
graph (4), any plan amendment that is not described
in paragraph (2) becomes effective in a State fiscal
year may not remain in effect after the end of such
fiscal year (or, if later, the end of the 90-day period
on which it becomes effective) unless the amendment
has been transmitted to the Secretary.
‘‘(4) EXCEPTION.—The requirements of para-
graphs (2) and (3) shall not apply to a plan amend-
ment that is submitted on a timely basis pursuant
to a court order or an order of the Secretary.
‘‘SEC. 2153. PROCESS FOR STATE WITHDRAWAL FROM PRO-
GRAM.
‘‘(a) IN
GENERAL.—A State may rescind its
MediGrant plan and discontinue participation in the pro-
gram under this title at any time after providing—
‘‘(1) the public with 90 days prior notice in a
publication in one or more daily newspapers of gen-
eral circulation in the State or in any publication
used by the State to publish State statutes or rules,
and
‘‘(2) the Secretary with 90 days prior written
notice.
‘‘(b) EFFECTIVE DATE.—Such discontinuation shall
not apply to payments under part C for expenditures made
1544
HR 2491 EH
for items and services furnished under the MediGrant plan
before the effective date of the discontinuation.
‘‘(c) PRORATION OF ALLOTMENTS.—In the case of
any withdrawal under this section other than at the end
of a Federal fiscal year, notwithstanding any provision of
section 2121 to the contrary, the Secretary shall provide
for such appropriate proration of the application of allot-
ments under section 2121 as is appropriate.
‘‘SEC. 2154. SANCTIONS FOR SUBSTANTIAL NONCOMPLI-
ANCE.
‘‘(a) PROMPT REVIEW OF PLAN SUBMITTALS.—The
Secretary shall promptly review MediGrant plans and plan
amendments submitted under this part to determine if
they substantially comply with the requirements of this
title.
‘‘(b) DETERMINATIONS
OF
SUBSTANTIAL
NON-
COMPLIANCE.—
‘‘(1) AT TIME OF PLAN OR AMENDMENT SUB-
MITTAL.—
‘‘(A) IN GENERAL.—If the Secretary, dur-
ing the 30-day period beginning on the date of
submittal of a MediGrant plan or plan amend-
ment—
‘‘(i) determines that the plan or
amendment substantially violates (within
1545
HR 2491 EH
the meaning of subsection (c)) a require-
ment of this title, and
‘‘(ii) provides written notice of such
determination to the State,
the Secretary shall issue an order specifying
that the plan or amendment, insofar as it is in
substantial violation of such a requirement,
shall not be effective, except as provided in sub-
section (c), beginning at the end of a period of
not less than 30 days, or 120 days in the case
of the initial submission of the MediGrant plan)
specified in the order beginning on the date of
the notice of the determination.
‘‘(B) EXTENSION OF TIME PERIODS.—The
time periods specified in subparagraph (A) may
be extended by written agreement of the Sec-
retary and the State involved.
‘‘(2) VIOLATIONS
IN
ADMINISTRATION
OF
PLAN.—
‘‘(A) IN GENERAL.—If the Secretary deter-
mines, after reasonable notice and opportunity
for a hearing for the State, that in the adminis-
tration of a MediGrant plan there is a substan-
tial violation of a requirement of this title, the
Secretary shall provide the State with written
1546
HR 2491 EH
notice of the determination and with an order
to remedy such violation. Such an order shall
become effective prospectively, as specified in
the order, after the date of receipt of such writ-
ten notice. Such an order may include the with-
holding of funds, consistent with subsection (f),
for parts of the MediGrant plan affected by
such violation, until the Secretary is satisfied
that the violation has been corrected.
‘‘(B) EFFECTIVENESS.—If the Secretary
issues an order under paragraph (1), the order
shall become effective, except as provided in
subsection (c), beginning at the end of a period
(of not less than 30 days) specified in the order
beginning on the date of the notice of the deter-
mination to the State.
‘‘(C) TIMELINESS
OF
DETERMINATIONS
RELATING
TO
REPORT-BASED
COMPLIANCE.—
The Secretary shall make determinations under
this paragraph respecting violations relating to
information contained in an annual report
under section 2102, an independent evaluation
under section 2103, or an audit report under
section 2131 not later than 30 days after the
1547
HR 2491 EH
date of transmittal of the report or evaluation
to the Secretary.
‘‘(3) CONSULTATION
WITH
STATE.—Before
making a determination adverse to a State under
this section, the Secretary shall (within any time pe-
riods provided under this section)—
‘‘(A) reasonably consult with the State in-
volved,
‘‘(B) offer the State a reasonable oppor-
tunity to clarify the submission and submit fur-
ther information to substantiate compliance
with the requirements of this title, and
‘‘(C) reasonably consider any such clari-
fications and information submitted.
‘‘(4) JUSTIFICATION OF ANY INCONSISTENCIES
IN DETERMINATIONS.—If the Secretary makes a de-
termination under this section that is, in whole or in
part, inconsistent with any previous determination
issued by the Secretary under this title, the Sec-
retary shall include in the determination a detailed
explanation and justification for any such difference.
‘‘(5) SUBSTANTIAL VIOLATION DEFINED.—For
purposes of this title, a MediGrant plan (or amend-
ment to such a plan) or the administration of the
MediGrant plan is considered to ‘substantially vio-
1548
HR 2491 EH
late’ a requirement of this title if a provision of the
plan or amendment (or an omission from the plan
or amendment) or the administration of the plan—
‘‘(A) is material and substantial in nature
and effect, and
‘‘(B) is inconsistent with an express re-
quirement of this title.
A failure to meet a strategic objective or perform-
ance goal (as described in section 2101) shall not be
considered to substantially violate a requirement of
this title.
‘‘(c) STATE RESPONSE TO ORDERS.—
‘‘(1) STATE RESPONSE BY REVISING PLAN.—
‘‘(A) IN GENERAL.—Insofar as an order
under subsection (b)(1) relates to a substantial
violation by a MediGrant plan or plan amend-
ment, a State may respond (before the date the
order becomes effective) to such an order by
submitting a written revision of the plan or
plan amendment to substantially comply with
the requirements of this part.
‘‘(B) REVIEW OF REVISION.—In the case
of submission of such a revision, the Secretary
shall promptly review the submission and shall
1549
HR 2491 EH
withhold any action on the order during the pe-
riod of such review.
‘‘(C) SECRETARIAL RESPONSE.—The revi-
sion shall be considered to have corrected the
deficiency (and the order rescinded insofar as it
relates to such deficiency) unless the Secretary
determines and notifies the State in writing,
within 15 days after the date the Secretary re-
ceives the revision, that the plan or amendment,
as proposed to be revised, still substantially vio-
lates a requirement of this title. In such case
the State may respond by seeking reconsider-
ation or a hearing under paragraph (2).
‘‘(D) REVISION RETROACTIVE.—If the re-
vision provides for substantial compliance, the
revision may be treated, at the option of the
State, as being effective either as of the effec-
tive date of the provision to which it relates or
such later date as the State and Secretary may
agree.
‘‘(2) STATE RESPONSE BY SEEKING RECONSID-
ERATION
OR
AN
ADMINISTRATIVE
HEARING.—A
State may respond to an order under subsection (b)
by filing a request with the Secretary for—
1550
HR 2491 EH
‘‘(A) a reconsideration of the determina-
tion, pursuant to subsection (d)(1), or
‘‘(B) a review of the determination through
an administrative hearing, pursuant to sub-
section (d)(2).
In such case, the order shall not take effect before
the completion of the reconsideration or hearing.
‘‘(3) STATE RESPONSE BY CORRECTIVE ACTION
PLAN.—
‘‘(A) IN
GENERAL.—In the case of an
order described in subsection (b)(2) that relates
to a substantial violation in the administration
of the MediGrant plan, a State may respond to
such an order by submitting a corrective action
plan with the Secretary to correct deficiencies
in the administration of the plan which are the
subject of the order.
‘‘(B) REVIEW
OF
CORRECTIVE
ACTION
PLAN.—In such case, the Secretary shall with-
hold any action on the order for a period (not
to exceed 30 days) during which the Secretary
reviews the corrective action plan.
‘‘(C) SECRETARIAL RESPONSE.—The cor-
rective action plan shall be considered to have
corrected the deficiency (and the order re-
1551
HR 2491 EH
scinded insofar as it relates to such deficiency)
unless the Secretary determines and notifies the
State in writing, within 15 days after the date
the Secretary receives the corrective action
plan, that the State’s administration of the
MediGrant plan, as proposed to be corrected in
the plan, will still substantially violate a re-
quirement of this title. In such case the State
may respond by seeking reconsideration or a
hearing under paragraph (2).
‘‘(4) STATE
RESPONSE
BY
WITHDRAWAL
OF
PLAN AMENDMENT; FAILURE TO RESPOND.—Insofar
as an order relates to a substantial violation in a
plan amendment submitted, a State may respond to
such an order by withdrawing the plan amendment
and the MediGrant plan shall be treated as though
the amendment had not been made.
‘‘(d) ADMINISTRATIVE REVIEW AND HEARING.—
‘‘(1) RECONSIDERATION.—Within 30 days after
the date of receipt of a request under subsection
(b)(2)(A), the Secretary shall notify the State of the
time and place at which a hearing will be held for
the purpose of reconsidering the Secretary’s deter-
mination. The hearing shall be held not less than 20
days nor more than 60 days after the date notice of
1552
HR 2491 EH
the hearing is furnished to the State, unless the Sec-
retary and the State agree in writing to holding the
hearing at another time. The Secretary shall affirm,
modify, or reverse the original determination within
60 days of the conclusion of the hearing.
‘‘(2) ADMINISTRATIVE
HEARING.—Within 30
days after the date of receipt of a request under
subsection (b)(2)(B), an administrative law judge
shall schedule a hearing for the purpose of reviewing
the Secretary’s determination. The hearing shall be
held not less than 20 days nor more than 60 days
after the date notice of the hearing is furnished to
the State, unless the Secretary and the State agree
in writing to holding the hearing at another time.
The administrative law judge shall affirm, modify, or
reverse the determination within 60 days of the con-
clusion of the hearing.
‘‘(e) JUDICIAL REVIEW.—
‘‘(1) IN GENERAL.—A State which is dissatis-
fied with a final determination made by the Sec-
retary under subsection (d)(1) or a final determina-
tion of an administrative law judge under subsection
(d)(2) may, within 60 days after it has been notified
of such determination, file with the United States
court of appeals for the circuit in which the State
1553
HR 2491 EH
is located a petition for review of such determina-
tion. A copy of the petition shall be forthwith trans-
mitted by the clerk of the court to the Secretary
and, in the case of a determination under subsection
(d)(2), to the administrative law judge involved. The
Secretary (or judge involved) thereupon shall file in
the court the record of the proceedings on which the
final determination was based, as provided in section
2112 of title 28, United States Code.
‘‘(2) STANDARD FOR REVIEW.—The findings of
fact by the Secretary or administrative law judge, if
supported by substantial evidence, shall be conclu-
sive, but the court, for good cause shown, may re-
mand the case to the Secretary or judge to take fur-
ther evidence, and the Secretary or judge may there-
upon make new or modified findings of fact and may
modify a previous determination, and shall certify to
the court the transcript and record of the further
proceedings. Such new or modified findings of fact
shall likewise be conclusive if supported by substan-
tial evidence.
‘‘(3) JURISDICTION
OF
APPELLATE
COURT.—
The court shall have jurisdiction to affirm the action
of the Secretary or judge or to set it aside, in whole
or in part. The judgment of the court shall be sub-
1554
HR 2491 EH
ject to review by the Supreme Court of the United
States upon certiorari or certification as provided in
section 1254 of title 28, United States Code.
‘‘(f) WITHHOLDING OF FUNDS.—
‘‘(1) IN GENERAL.—Any order under this sec-
tion relating to the withholding of funds shall be ef-
fective not earlier than the effective date of the
order and shall only relate to the portions of a
MediGrant plan or administration thereof which sub-
stantially violate a requirement of this title. In the
case of a failure to meet a set-aside requirement
under section 2112, any withholding shall only apply
to the extent of such failure.
‘‘(2) SUSPENSION OF WITHHOLDING.—The Sec-
retary may suspend withholding of funds under
paragraph (1) during the period reconsideration or
administrative and judicial review is pending under
subsection (d) or (e).
‘‘(3) RESTORATION
OF
FUNDS.—Any funds
withheld under this subsection under an order shall
be immediately restored to a State—
‘‘(A) to the extent and at the time the
order is—
‘‘(i) modified or withdrawn by the
Secretary upon reconsideration,
1555
HR 2491 EH
‘‘(ii) modified or reversed by an ad-
ministrative law judge, or
‘‘(iii) set aside (in whole or in part) by
an appellate court; or
‘‘(B) when the Secretary determines that
the deficiency which was the basis for the order
is corrected;
‘‘(C) when the Secretary determines that
violation which was the basis for the order is
resolved or the amendment which was the basis
for the order is withdrawn; or
‘‘(D) at any time upon the initiative of the
Secretary.
‘‘SEC. 2155. SECRETARIAL AUTHORITY.
‘‘(a) NEGOTIATED AGREEMENT AND DISPUTE RESO-
LUTION.—
‘‘(1) NEGOTIATIONS.—Nothing in this part
shall be construed as preventing the Secretary and
a State from at any time negotiating a satisfactory
resolution to any dispute concerning the approval of
a MediGrant plan (or amendments to a MediGrant
plan) or the compliance of a MediGrant plan (in-
cluding its administration) with requirements of this
title.
1556
HR 2491 EH
‘‘(2) COOPERATION.—The Secretary shall act in
a cooperative manner with the States in carrying out
this title. In the event of a dispute between a State
and the Secretary, the Secretary shall, whenever
practicable, engage in informal dispute resolution ac-
tivities in lieu of formal enforcement or sanctions
under section 2154.
‘‘(b) LIMITATIONS ON DELEGATION OF DECISION-
MAKING AUTHORITY.—The Secretary may not delegate
(other than to the Administrator of the Health Care Fi-
nancing Administration) the authority to make determina-
tions or reconsiderations respecting the approval of
MediGrant plans (or amendments to such plans) or the
compliance of a MediGrant plan (including its administra-
tion) with requirements of this title. Such Administrator
may not further delegate such authority to any individual,
including any regional official of such Administration.
‘‘(c) 
REQUIRING
FORMAL
RULEMAKING
FOR
CHANGES IN SECRETARIAL ADMINISTRATION.—The Sec-
retary shall carry out the administration of the program
under this title only through a prospective formal rule-
making process, including issuing notices of proposed rule
making, publishing proposed rules or modifications to
rules in the Federal Register, and soliciting public com-
ment.
1557
HR 2491 EH
‘‘PART F—GENERAL PROVISIONS
‘‘SEC. 2171. DEFINITIONS.
‘‘(a) MEDICAL ASSISTANCE.—
‘‘(1) IN GENERAL.—For purposes of this title,
except as provided in paragraph (2), the term ‘medi-
cal assistance’ means payment of part or all the cost
of any of the following for eligible low-income indi-
viduals (as defined in subsection (b)) as specified
under the MediGrant plan:
‘‘(A) Inpatient hospital services.
‘‘(B) Outpatient hospital services.
‘‘(C) Physician services.
‘‘(D) Surgical services.
‘‘(E) Clinic services and other ambulatory
health care services.
‘‘(F) Nursing facility services.
‘‘(G) Intermediate care facility services for
the mentally retarded.
‘‘(H) Prescription drugs and biologicals.
‘‘(I) Over-the-counter medications.
‘‘(J) Laboratory and radiological services.
‘‘(K) Family planning services and sup-
plies.
‘‘(L) Inpatient mental health services, in-
cluding services furnished in a State-operated
1558
HR 2491 EH
mental hospital and including residential or
other 24-hour therapeutically planned struc-
tured services in the case of a child.
‘‘(M) Outpatient mental health services, in-
cluding services furnished in a State-operated
mental hospital and including community-based
services in the case of a child.
‘‘(N) Durable medical equipment and other
medically-related or remedial devices (such as
prosthetic devices, implants, eyeglasses, hearing
aids, dental devices, and adaptive devices).
‘‘(O) Disposable medical supplies.
‘‘(P) Home and community-based health
care services and related supportive services
(such as home health nursing services, home
health aide services, personal care, assistance
with activities of daily living, chore services, day
care services, respite care services, and training
for family members).
‘‘(Q) Community supported living arrange-
ments.
‘‘(R) Nursing care services (such as private
duty nursing care, nurse midwife services, res-
piratory care services, pediatric nurse services,
1559
HR 2491 EH
and advanced practice nurse services) in a
home, school, or other setting.
‘‘(S) Dental services.
‘‘(T) Inpatient substance abuse treatment
services and residential substance abuse treat-
ment services.
‘‘(U) Outpatient substance abuse treat-
ment services.
‘‘(V) Case management services.
‘‘(W) Care coordination services.
‘‘(X) Physical therapy, occupational ther-
apy, and services for individuals with speech,
hearing, and language disorders.
‘‘(Y) Hospice care.
‘‘(Z) Any other medical, diagnostic, screen-
ing, preventive, restorative, remedial, thera-
peutic, or rehabilitative services (whether in a
facility, home, school, or other setting) if recog-
nized by State law and if the service is—
‘‘(i) prescribed by or furnished by a
physician or other licensed or registered
practitioner within the scope of practice as
defined by State law,
1560
HR 2491 EH
‘‘(ii) performed under the general su-
pervision or at the direction of a physician,
or
‘‘(iii) furnished by a health care facil-
ity that is operated by a State or local gov-
ernment or is licensed under State law and
operating within the scope of the license.
‘‘(AA) Premiums for private health care
insurance coverage, including private long-term
care insurance coverage.
‘‘(BB) Medical transportation.
‘‘(CC) Medicare cost-sharing (as defined in
subsection (c)).
‘‘(DD) Enabling services (such as trans-
portation, translation, and outreach services)
designed to increase the accessibility of primary
and preventive health care services for eligible
low-income individuals.
‘‘(EE) Any other health care services or
items specified by the Secretary.
‘‘(2) EXCLUSION
OF
CERTAIN
PAYMENTS.—
Such term does not include the payment with re-
spect to care or services for—
1561
HR 2491 EH
‘‘(A) any individual who is an inmate of a
public institution (except as a patient in a State
psychiatric hospital); and
‘‘(B) any individual who is not an eligible
low-income individual.
‘‘(b) ELIGIBLE
LOW-INCOME
INDIVIDUAL.—The
term ‘eligible low-income individual’ means an individual
who has been determined eligible by the State for medical
assistance under the MediGrant plan and whose family in-
come (as determined under the plan) does not exceed a
percentage (specified in the MediGrant plan and not to
exceed 300 percent) of the poverty line for a family of
the size involved. In determining the amount of income
under the previous sentence, a State may exclude costs
incurred for medical care or other types of remedial care
recognized by the State.
‘‘(c) MEDICARE COST-SHARING.—For purposes of
this title, the term ‘medicare cost-sharing’ means any of
the following:
‘‘(1)(A) Premiums under section 1839.
‘‘(B) Premiums under section 1818 or 1818A.
‘‘(2) Coinsurance under title XVIII (including
coinsurance described in section 1813).
1562
HR 2491 EH
‘‘(3) Deductibles established under title XVIII
(including those described in section 1813 and sec-
tion 1833(b)).
‘‘(4) The difference between the amount that is
paid under section 1833(a) and the amount that
would be paid under such section if any reference to
‘80 percent’ therein were deemed a reference to ‘100
percent’.
‘‘(5) Premiums for enrollment of an individual
with an eligible organization under section 1876 or
with a MedicarePlus organization under part C of
title XVIII.
‘‘(d) ADDITIONAL DEFINITIONS.—For purposes of
this title:
‘‘(1) CHILD.—The term ‘child’ means an indi-
vidual under 19 years of age.
‘‘(2) POVERTY LINE DEFINED.—The term ‘pov-
erty line’ means the income official poverty line (as
defined by the Office of Management and Budget
and revised annually in accordance with section
673(2) of the Omnibus Budget Reconciliation Act of
1981).
‘‘(3) PREGNANT WOMAN.—The term ‘pregnant
woman’ includes a woman during the 60-day period
beginning on the last day of the pregnancy.
1563
HR 2491 EH
‘‘SEC. 2172. TREATMENT OF TERRITORIES.
‘‘Notwithstanding any other requirement of this title,
the Secretary may waive or modify any requirement of this
title with respect to the medical assistance program a
State other than the 50 States and the District of Colum-
bia, other than a waiver of—
‘‘(1) the applicable Federal medical assistance
percentage,
‘‘(2) the limitation on total payments in a fiscal
year to the amount of the allotment under section
2121(c), or
‘‘(3) the requirement that payment may be
made for medical assistance only with respect to
amounts expended by the State for care and services
described in paragraph (1) of section 2171(a) and
medically-related services (as defined in section
2112(e)(2)).
‘‘SEC. 2173. DESCRIPTION OF TREATMENT OF INDIAN
HEALTH SERVICE FACILITIES.
‘‘In the case of a State in which one or more facilities
of the Indian Health Service are located, the MediGrant
plan shall include a description of—
‘‘(1) what provision (if any) has been made for
payment for items and services furnished by such fa-
cilities, and
1564
HR 2491 EH
‘‘(2) the manner in which medical assistance for
low-income eligible individuals who are Indians will
be provided, as determined by the State in consulta-
tion with the appropriate Indian tribes and tribal or-
ganizations.
‘‘SEC. 2174. APPLICATION OF CERTAIN GENERAL PROVI-
SIONS.
‘‘The following sections in part A of title XI shall
apply to States under this title in the same manner as
they applied to a State under title XIX:
‘‘(1) Section 1101(a)(1) (relating to definition
of State).
‘‘(2) Section 1116 (relating to administrative
and judicial review), but only insofar as consistent
with the provisions of part C.
‘‘(3) Section 1124 (relating to disclosure of
ownership and related information).
‘‘(4) Section 1126 (relating to disclosure of in-
formation about certain convicted individuals).
‘‘(5) Section 1128B(d) (relating to criminal
penalties for certain additional charges).
‘‘(6) Section 1132 (relating to periods within
which claims must be filed).
1565
HR 2491 EH
‘‘SEC. 2175. MEDIGRANT MASTER DRUG REBATE AGREE-
MENTS.
‘‘(a) REQUIREMENT FOR MANUFACTURER TO ENTER
INTO AGREEMENT.—
‘‘(1) 
IN
GENERAL.—Pursuant 
to 
section
2123(f), in order for payment to be made to a State
under part C for medical assistance for covered out-
patient drugs of a manufacturer, the manufacturer
shall enter into and have in effect an MediGrant
master rebate agreement described in subsection (b)
with the Secretary on behalf of States electing to
participate in the agreement.
‘‘(2) STATE PARTICIPATION IN MASTER AGREE-
MENT OPTIONAL.—Nothing in this section shall be
construed to—
‘‘(A) require a State to participate in an
MediGrant master rebate agreement under this
section; or
‘‘(B) prohibit a State from entering into
an agreement with a manufacturer of covered
outpatient drugs (under such terms as the
State and manufacturer may agree upon) re-
garding the amount of payment for such drugs
under the MediGrant plan.
‘‘(3) COVERAGE
OF
DRUGS
NOT
COVERED
UNDER REBATE AGREEMENTS.—Nothing in this sec-
1566
HR 2491 EH
tion shall be construed to prohibit a State in its dis-
cretion from providing coverage under its MediGrant
plan of a covered outpatient drug for which no re-
bate agreement is in effect under this section.
‘‘(4) EFFECT ON EXISTING AGREEMENTS.—If a
State has a rebate agreement in effect with a manu-
facturer on the date of the enactment of this section
which provides for a minimum aggregate rebate
equal to or greater than the minimum aggregate re-
bate which would otherwise be paid under the
MediGrant master agreement under this section, at
the option of the State—
‘‘(A) such agreement shall be considered to
meet the requirements of the MediGrant master
rebate agreement; and
‘‘(B) the State shall be considered to have
elected to participate in the MediGrant master
rebate agreement.
‘‘(b) TERMS OF REBATE AGREEMENT.—
‘‘(1) PERIODIC
REBATES.—The MediGrant
master rebate agreement under this section shall re-
quire the manufacturer to provide, to the MediGrant
plan of each State participating in the agreement, a
rebate for a rebate period in an amount specified in
subsection (c) for covered outpatient drugs of the
1567
HR 2491 EH
manufacturer dispensed after the effective date of
the agreement, for which payment was made under
the plan for such period. Such rebate shall be paid
by the manufacturer not later than 30 days after the
date of receipt of the information described in para-
graph (2) for the period involved.
‘‘(2) STATE PROVISION OF INFORMATION.—
‘‘(A) STATE RESPONSIBILITY.—Each State
participating in the MediGrant master rebate
agreement shall report to each manufacturer
not later than 60 days after the end of each re-
bate period and in a form consistent with a
standard reporting format established by the
Secretary, information on the total number of
units of each dosage form and strength and
package size of each covered outpatient drug,
for which payment was made under the
MediGrant plan for the period, and shall
promptly transmit a copy of such report to the
Secretary.
‘‘(B) AUDITS.—A manufacturer may audit
the information provided (or required to be pro-
vided) under subparagraph (A). Adjustments to
rebates shall be made to the extent that infor-
1568
HR 2491 EH
mation indicates that utilization was greater or
less than the amount previously specified.
‘‘(3) MANUFACTURER PROVISION OF PRICE IN-
FORMATION.—
‘‘(A) IN
GENERAL.—Each manufacturer
which is subject to the MediGrant master re-
bate agreement under this section shall report
to the Secretary—
‘‘(i) not later than 30 days after the
last day of each rebate period under the
agreement (beginning on or after January
1, 1991), on the average manufacturer
price (as defined in subsection (i)(1)) and,
for single source drugs and innovator mul-
tiple source drugs, the manufacturer’s best
price (as defined in subsection (c)(1)(C))
for each covered outpatient drug for the
rebate period under the agreement, and
‘‘(ii) not later than 30 days after the
date of entering into an agreement under
this section, on the average manufacturer
price (as defined in subsection (i)(1)) as of
October 1, 1990, for each of the manufac-
turer’s covered outpatient drugs.
1569
HR 2491 EH
‘‘(B) VERIFICATION SURVEYS OF AVERAGE
MANUFACTURER
PRICE.—The Secretary may
survey wholesalers and manufacturers that di-
rectly distribute their covered outpatient drugs,
when necessary, to verify manufacturer prices
reported under subparagraph (A). The Sec-
retary may impose a civil monetary penalty in
an amount not to exceed $10,000 on a whole-
saler, manufacturer, or direct seller, if the
wholesaler, manufacturer, or direct seller of a
covered outpatient drug refuses a request for
information by the Secretary in connection with
a survey under this subparagraph. The provi-
sions of section 1128A (other than subsections
(a) (with respect to amounts of penalties or ad-
ditional assessments) and (b)) shall apply to a
civil money penalty under this subparagraph in
the same manner as such provisions apply to
a 
penalty 
or 
proceeding 
under 
section
1128A(a).
‘‘(C) PENALTIES.—
‘‘(i) FAILURE TO PROVIDE TIMELY IN-
FORMATION.—In the case of a manufac-
turer which is subject to the MediGrant
master rebate agreement that fails to pro-
1570
HR 2491 EH
vide information required under subpara-
graph (A) on a timely basis, the amount of
the penalty shall be $10,000 for each day
in which such information has not been
provided and such amount shall be paid to
the Treasury. If such information is not
reported within 90 days of the deadline im-
posed, the agreement shall be suspended
for services furnished after the end of such
90-day period and until the date such in-
formation is reported (but in no case shall
such suspension be for a period of less
than 30 days).
‘‘(ii) 
FALSE
INFORMATION.—Any
manufacturer which is subject to the
MediGrant master rebate agreement, or a
wholesaler or direct seller, that knowingly
provides false information under subpara-
graph (A) or (B) is subject to a civil
money penalty in an amount not to exceed
$100,000 for each item of false informa-
tion. Any such civil money penalty shall be
in addition to other penalties as may be
prescribed by law. The provisions of sec-
tion 1128A (other than subsections (a) and
1571
HR 2491 EH
(b)) shall apply to a civil money penalty
under this subparagraph in the same man-
ner as such provisions apply to a penalty
or proceeding under section 1128A(a).
‘‘(D) 
CONFIDENTIALITY
OF
INFORMA-
TION.—Notwithstanding any other provision of
law, information disclosed by manufacturers or
wholesalers under this paragraph or under an
agreement with the Secretary of Veterans Af-
fairs described in section 2123(f) is confidential
and shall not be disclosed by the Secretary or
the Secretary of Veterans Affairs or a State
agency (or contractor therewith) in a form
which discloses the identity of a specific manu-
facturer or wholesaler or the prices charged for
drugs by such manufacturer or wholesaler, ex-
cept—
‘‘(i) as the Secretary determines to be
necessary to carry out this section,
‘‘(ii) to permit the Comptroller Gen-
eral to review the information provided,
and
‘‘(iii) to permit the Director of the
Congressional Budget Office to review the
information provided.
1572
HR 2491 EH
‘‘(4) LENGTH OF AGREEMENT.—
‘‘(A) IN GENERAL.—The MediGrant mas-
ter rebate agreement under this section shall be
effective for an initial period of not less than 1
year and shall be automatically renewed for a
period of not less than one year unless termi-
nated under subparagraph (B).
‘‘(B) TERMINATION.—
‘‘(i) BY THE SECRETARY.—The Sec-
retary may provide for termination of the
MediGrant master rebate agreement with
respect to a manufacturer for violation of
the requirements of the agreement or other
good cause shown. Such termination shall
not be effective earlier than 60 days after
the date of notice of such termination. The
Secretary shall provide, upon request, a
manufacturer with a hearing concerning
such a termination, but such hearing shall
not delay the effective date of the termi-
nation. Failure of a State to provide any
advance notice of such a termination as re-
quired by regulation shall not affect the
State’s right to terminate coverage of the
1573
HR 2491 EH
drugs affected by such termination as of
the effective date of such termination.
‘‘(ii) BY A MANUFACTURER.—A man-
ufacturer may terminate its participation
in the MediGrant master rebate agreement
under this section for any reason. Any
such termination shall not be effective
until the calendar quarter beginning at
least 60 days after the date the manufac-
turer provides notice to the Secretary.
‘‘(iii) EFFECTIVENESS
OF
TERMI-
NATION.—Any termination under this sub-
paragraph shall not affect rebates due
under the agreement before the effective
date of its termination.
‘‘(iv) NOTICE
TO
STATES.—In the
case of a termination under this subpara-
graph, the Secretary shall provide notice of
such termination to the States within not
less than 30 days before the effective date
of such termination.
‘‘(v) APPLICATION TO TERMINATIONS
OF OTHER AGREEMENTS.—The provisions
of this subparagraph shall apply to the ter-
minations of master agreements described
1574
HR 2491 EH
in section 8126(a) of title 38, United
States Code.
‘‘(C) DELAY
BEFORE
REENTRY.—In the
case of any rebate agreement with a manufac-
turer under this section which is terminated,
another such agreement with the manufacturer
(or a successor manufacturer) may not be en-
tered into until a period of 1 calendar quarter
has elapsed since the date of the termination,
unless the Secretary finds good cause for an
earlier reinstatement of such an agreement.
‘‘(c) DETERMINATION OF AMOUNT OF REBATE.—
‘‘(1) BASIC
REBATE
FOR
SINGLE
SOURCE
DRUGS
AND
INNOVATOR
MULTIPLE
SOURCE
DRUGS.—
‘‘(A) IN GENERAL.—Except as provided in
paragraph (2), the amount of the rebate speci-
fied in this subsection with respect to a State
participating in the MediGrant master rebate
agreement for a rebate period (as defined in
subsection (i)(8)) with respect to each dosage
form and strength of a single source drug or
an innovator multiple source drug shall be equal
to the product of—
1575
HR 2491 EH
‘‘(i) the total number of units of each
dosage form and strength paid for under
the State plan in the rebate period (as re-
ported by the State); and
‘‘(ii) the greater of—
‘‘(I) the difference between the
average manufacturer price and the
best price (as defined in subparagraph
(C)) for the dosage form and strength
of the drug, or
‘‘(II) the minimum rebate per-
centage (specified in subparagraph
(B)) of such average manufacturer
price,
for the rebate period.
‘‘(B) MINIMUM
REBATE
PERCENTAGE.—
For purposes of subparagraph (A)(ii)(II), the
‘minimum rebate percentage’ is 15.1 percent.
‘‘(C) BEST
PRICE
DEFINED.—For pur-
poses of this section—
‘‘(i) IN
GENERAL.—The term ‘best
price’ means, with respect to a single
source drug or innovator multiple source
drug of a manufacturer, the lowest price
available from the manufacturer during the
1576
HR 2491 EH
rebate period to any wholesaler, retailer,
provider, health maintenance organization,
nonprofit entity, or governmental entity
within the United States, excluding—
‘‘(I) any prices charged on or
after October 1, 1992, to the Indian
Health Service, the Department of
Veterans Affairs, a State home receiv-
ing funds under section 1741 of title
38, United States Code, the Depart-
ment of Defense, the Public Health
Service, or a covered entity described
in section 340B(a)(4) of the Public
Health Service Act;
‘‘(II) any prices charged under
the Federal Supply Schedule of the
General Services Administration;
‘‘(III) any prices used under a
State pharmaceutical assistance pro-
gram; and
‘‘(IV) any depot prices and single
award contract prices, as defined by
the Secretary, of any agency of the
Federal Government.
1577
HR 2491 EH
‘‘(ii) SPECIAL RULES.—The term ‘best
price’—
‘‘(I) shall be inclusive of cash dis-
counts, free goods that are contingent
on any purchase requirement, volume
discounts, and rebates (other than re-
bates under this section);
‘‘(II) shall be determined without
regard to special packaging, labeling,
or identifiers on the dosage form or
product or package;
‘‘(III) shall not take into account
prices that are merely nominal in
amount; and
‘‘(IV) shall exclude rebates paid
under this section or any other re-
bates paid to a State participating in
the MediGrant master rebate agree-
ment.
‘‘(2) ADDITIONAL REBATE FOR SINGLE SOURCE
AND INNOVATOR MULTIPLE SOURCE DRUGS.—
‘‘(A) IN GENERAL.—The amount of the re-
bate specified in this subsection with respect to
a State participating in the MediGrant master
rebate agreement for a rebate period, with re-
1578
HR 2491 EH
spect to each dosage form and strength of a
single source drug or an innovator multiple
source drug, shall be increased by an amount
equal to the product of—
‘‘(i) the total number of units of such
dosage form and strength dispensed after
December 31, 1990, for which payment
was made under the MediGrant plan for
the rebate period; and
‘‘(ii) the amount (if any) by which—
‘‘(I) the average manufacturer
price 
for 
the 
dosage 
form 
and
strength of the drug for the period,
exceeds
‘‘(II) the average manufacturer
price for such dosage form and
strength for the calendar quarter be-
ginning July 1, 1990 (without regard
to whether or not the drug has been
sold or transferred to an entity, in-
cluding a division or subsidiary of the
manufacturer, after the first day of
such quarter), increased by the per-
centage by which the consumer price
index for all urban consumers (United
1579
HR 2491 EH
States city average) for the month be-
fore the month in which the rebate pe-
riod begins exceeds such index for
September 1990.
‘‘(B) TREATMENT OF SUBSEQUENTLY AP-
PROVED DRUGS.—In the case of a covered out-
patient drug approved by the Food and Drug
Administration after October 1, 1990, clause
(ii)(II) of subparagraph (A) shall be applied by
substituting ‘the first full calendar quarter after
the day on which the drug was first marketed’
for ‘the calendar quarter beginning July 1,
1990’ and ‘the month prior to the first month
of the first full calendar quarter after the day
on which the drug was first marketed’ for ‘Sep-
tember 1990’.
‘‘(3) REBATE FOR OTHER DRUGS.—
‘‘(A) IN GENERAL.—The amount of the re-
bate paid to a State participating in the
MediGrant master rebate agreement for a re-
bate period with respect to each dosage form
and strength of covered outpatient drugs (other
than single source drugs and innovator multiple
source drugs) shall be equal to the product of—
1580
HR 2491 EH
‘‘(i) the applicable percentage (as de-
scribed in subparagraph (B)) of the aver-
age manufacturer price for the dosage
form and strength for the rebate period,
and
‘‘(ii) the total number of units of such
dosage form and strength dispensed after
December 31, 1990, for which payment
was made under the MediGrant plan for
the rebate period.
‘‘(B) 
APPLICABLE
PERCENTAGE
DE-
FINED.—For purposes of subparagraph (A)(i),
the ‘applicable percentage’ is 11 percent.
‘‘(4) LIMITATION ON AMOUNT OF REBATE TO
AMOUNTS PAID FOR CERTAIN DRUGS.—Upon request
of a manufacturer of a covered outpatient drug for
which a majority of the estimated number of units
of such dosage form and strength that are subject
to rebates under this section were dispensed to inpa-
tients of nursing facilities (including drugs which are
exempt from the requirements of the MediGrant
master rebate agreement under this section under
subsection (h)(1)(B)), the Secretary shall limit the
amount of the rebate under this subsection with re-
spect to a dosage form and strength of the drug for
1581
HR 2491 EH
a rebate period to the amount paid under the
MediGrant plan with respect to such dosage form
and strength of the drug in the rebate period (with-
out consideration of any dispensing fees paid).
‘‘(d) LIMITATIONS
ON COVERAGE
OF DRUGS
BY
STATES PARTICIPATING IN MASTER AGREEMENT.—
‘‘(1) PERMISSIBLE
RESTRICTIONS.—A State
participating in the MediGrant master rebate agree-
ment under this section may—
‘‘(A) subject to prior authorization under
its MediGrant plan any covered outpatient drug
so long as any such prior authorization pro-
gram complies with the requirements of para-
graph (5); and
‘‘(B) exclude or otherwise restrict coverage
under its plan of a covered outpatient drug if—
‘‘(i) the prescribed use is not for a
medically accepted indication (as defined in
subsection (i)(5));
‘‘(ii) the drug is contained in the list
referred to in paragraph (2);
‘‘(iii) the drug is subject to such re-
strictions pursuant to the MediGrant mas-
ter rebate agreement or any agreement de-
scribed in subsection (a)(4); or
1582
HR 2491 EH
‘‘(iv) the State has excluded coverage
of the drug from its formulary established
in accordance with paragraph (4).
‘‘(2) LIST
OF
DRUGS
SUBJECT
TO
RESTRIC-
TION.—The following drugs or classes of drugs, or
their medical uses, may be excluded from coverage
or otherwise restricted by a State participating in
the MediGrant master rebate agreement:
‘‘(A) Agents when used for anorexia,
weight loss, or weight gain.
‘‘(B) Agents when used to promote fertil-
ity.
‘‘(C) Agents when used for cosmetic pur-
poses or hair growth.
‘‘(D) Agents when used for the sympto-
matic relief of cough and colds.
‘‘(E) Agents when used to promote smok-
ing cessation.
‘‘(F) Prescription vitamins and mineral
products, except prenatal vitamins and fluoride
preparations.
‘‘(G) Nonprescription drugs.
‘‘(H) Covered outpatient drugs which the
manufacturer seeks to require as a condition of
sale that associated tests or monitoring services
1583
HR 2491 EH
be purchased exclusively from the manufacturer
or its designee.
‘‘(I) Barbiturates.
‘‘(J) Benzodiazepines.
‘‘(3) ADDITIONS TO DRUG LISTINGS.—The Sec-
retary shall, by regulation, periodically update the
list of drugs or classes of drugs described in para-
graph (2), or their medical uses, which the Secretary
has determined to be subject to clinical abuse or in-
appropriate use.
‘‘(4) REQUIREMENTS
FOR
FORMULARIES.—A
State participating in the MediGrant master rebate
agreement may establish a formulary if the for-
mulary meets the following requirements:
‘‘(A) The formulary is developed by a com-
mittee consisting of physicians, pharmacists,
and other appropriate individuals appointed by
the Governor of the State.
‘‘(B) Except as provided in subparagraph
(C), the formulary includes the covered out-
patient drugs of any manufacturer which has
entered into and complies with the agreement
under subsection (a) (other than any drug ex-
cluded from coverage or otherwise restricted
under paragraph (2)).
1584
HR 2491 EH
‘‘(C) A covered outpatient drug may be ex-
cluded with respect to the treatment of a spe-
cific disease or condition for an identified popu-
lation (if any) only if, based on the drug’s label-
ing (or, in the case of a drug the prescribed use
of which is not approved under the Federal
Food, Drug, and Cosmetic Act but is a medi-
cally accepted indication, based on information
from the appropriate compendia described in
subsection (i)(5)), the excluded drug does not
have a significant, clinically meaningful thera-
peutic advantage in terms of safety, effective-
ness, or clinical outcome of such treatment for
such population over other drugs included in
the formulary and there is a written expla-
nation (available to the public) of the basis for
the exclusion.
‘‘(D) The State plan permits coverage of a
drug excluded from the formulary (other than
any drug excluded from coverage or otherwise
restricted under paragraph (2)) pursuant to a
prior authorization program that is consistent
with paragraph (5).
‘‘(E) The formulary meets such other re-
quirements as the Secretary may impose in
1585
HR 2491 EH
order to achieve program savings consistent
with protecting the health of program bene-
ficiaries.
A prior authorization program established by a State
under paragraph (5) is not a formulary subject to
the requirements of this paragraph.
‘‘(5) REQUIREMENTS OF PRIOR AUTHORIZATION
PROGRAMS.—The MediGrant plan of a State partici-
pating in the MediGrant master rebate agreement
may require, as a condition of coverage or payment
for a covered outpatient drug for which Federal fi-
nancial participation is available in accordance with
this section the approval of the drug before its dis-
pensing for any medically accepted indication (as de-
fined in subsection (i)(5)) only if the system provid-
ing for such approval—
‘‘(A) provides response by telephone or
other telecommunication device within 24 hours
of a request for prior authorization; and
‘‘(B) except with respect to the drugs on
the list referred to in paragraph (2), provides
for the dispensing of at least a 72-hour supply
of a covered outpatient prescription drug in an
emergency situation (as defined by the Sec-
retary).
1586
HR 2491 EH
‘‘(6) OTHER
PERMISSIBLE
RESTRICTIONS.—A
State participating in the MediGrant master rebate
agreement may impose limitations, with respect to
all such drugs in a therapeutic class, on the mini-
mum or maximum quantities per prescription or on
the number of refills, if such limitations are nec-
essary to discourage waste, and may address in-
stances of fraud or abuse by individuals in any man-
ner authorized under this Act.
‘‘(e) DRUG USE REVIEW.—
‘‘(1) IN GENERAL.—A State participating in the
MediGrant master rebate agreement may provide for
a drug use review program to educate physicians
and pharmacists to identify and reduce the fre-
quency of patterns of fraud, abuse, gross overuse, or
inappropriate or medically unnecessary care, among
physicians, pharmacists, and patients, or associated
with specific drugs or groups of drugs, as well as po-
tential and actual severe adverse reactions to drugs.
‘‘(2) APPLICATION OF STATE STANDARDS.—A
State with a drug use review program under this
subsection shall establish and operate the program
under such standards as it may establish.
‘‘(f) ELECTRONIC CLAIMS MANAGEMENT.—In ac-
cordance with chapter 35 of title 44, United States Code
1587
HR 2491 EH
(relating to coordination of Federal information policy),
the Secretary shall encourage each State to establish, as
its principal means of processing claims for covered out-
patient drugs under its MediGrant plan, a point-of-sale
electronic claims management system, for the purpose of
performing on-line, real time eligibility verifications,
claims data capture, adjudication of claims, and assisting
pharmacists (and other authorized persons) in applying
for and receiving payment.
‘‘(g) ANNUAL REPORT.—
‘‘(1) IN GENERAL.—Not later than May 1 of
each year, the Secretary shall transmit to the Com-
mittee on Finance of the Senate, the Committee on
Commerce of the House of Representatives, and the
Committee on Aging of the Senate a report on the
operation of this section in the preceding fiscal year.
‘‘(2) DETAILS.—Each report shall include infor-
mation on—
‘‘(A) ingredient costs paid under this title
for single source drugs, multiple source drugs,
and nonprescription covered outpatient drugs;
‘‘(B) the total value of rebates received
and number of manufacturers providing such
rebates;
1588
HR 2491 EH
‘‘(C) the effect of inflation on the value of
rebates required under this section;
‘‘(D) trends in prices paid under this title
for covered outpatient drugs; and
‘‘(E) Federal and State administrative
costs associated with compliance with the provi-
sions of this title.
‘‘(h) EXEMPTION FOR CAPITATED HEALTH CARE
ORGANIZATIONS, HOSPITALS, AND
NURSING
FACILI-
TIES.—
‘‘(1) IN GENERAL.—Except as provided in para-
graph (2), the requirements of the MediGrant mas-
ter rebate agreement under this section shall not
apply with respect to covered outpatient drugs dis-
pensed by or through—
‘‘(A) a capitated health care organization
(as defined in section 2114(c)(1)); or
‘‘(B) a hospital or nursing facility that dis-
penses covered outpatient drugs using a drug
formulary system and bills the State no more
than the hospital’s purchasing costs for covered
outpatient drugs.
‘‘(2) CONSTRUCTION
IN
DETERMINING
BEST
PRICE.—Nothing in paragraph (1) shall be con-
strued as excluding amounts paid by the entities de-
1589
HR 2491 EH
scribed in such paragraph for covered outpatient
drugs from the determination of the best price (as
defined in subsection (c)(1)(C)) for such drugs.
‘‘(i) DEFINITIONS.—In the section—
‘‘(1) AVERAGE
MANUFACTURER
PRICE.—The
term ‘average manufacturer price’ means, with re-
spect to a covered outpatient drug of a manufacturer
for a rebate period, the average price paid to the
manufacturer for the drug in the United States by
wholesalers for drugs distributed to the retail phar-
macy class of trade, after deducting customary
prompt pay discounts.
‘‘(2) COVERED OUTPATIENT DRUG.—Subject to
the exceptions in subparagraph (D), the term ‘cov-
ered outpatient drug’ means—
‘‘(A) of those drugs which are treated as
prescribed drugs for purposes of section
2171(a)(1)(H), a drug which may be dispensed
only upon prescription (except as provided in
paragraph (7)), and—
‘‘(i) which is approved as a prescrip-
tion drug under section 505 or 507 of the
Federal Food, Drug, and Cosmetic Act;
‘‘(ii)(I) which was commercially used
or sold in the United States before the
1590
HR 2491 EH
date of the enactment of the Drug Amend-
ments of 1962 or which is identical, simi-
lar, or related (within the meaning of sec-
tion 310.6(b)(1) of title 21 of the Code of
Federal Regulations) to such a drug, and
(II) which has not been the subject of a
final determination by the Secretary that it
is a ‘new drug’ (within the meaning of sec-
tion 201(p) of the Federal Food, Drug,
and Cosmetic Act) or an action brought by
the Secretary under section 301, 302(a),
or 304(a) of such Act to enforce section
502(f) or 505(a) of such Act; or
‘‘(iii)(I) which is described in section
107(c)(3) of the Drug Amendments of
1962 and for which the Secretary has de-
termined there is a compelling justification
for its medical need, or is identical, simi-
lar, or related (within the meaning of sec-
tion 310.6(b)(1) of title 21 of the Code of
Federal Regulations) to such a drug, and
(II) for which the Secretary has not issued
a notice of an opportunity for a hearing
under section 505(e) of the Federal Food,
Drug, and Cosmetic Act on a proposed
1591
HR 2491 EH
order of the Secretary to withdraw ap-
proval of an application for such drug
under such section because the Secretary
has determined that the drug is less than
effective for some or all conditions of use
prescribed, recommended, or suggested in
its labeling;
‘‘(B) a biological product, other than a
vaccine which—
‘‘(i) may only be dispensed upon pre-
scription,
‘‘(ii) is licensed under section 351 of
the Public Health Service Act, and
‘‘(iii) is produced at an establishment
licensed under such section to produce
such product;
‘‘(C) insulin certified under section 506 of
the Federal Food, Drug, and Cosmetic Act; and
‘‘(D) a drug which may be sold without a
prescription (commonly referred to as an ‘over-
the-counter drug’), if the drug is prescribed by
a physician (or other person authorized to pre-
scribe under State law).
‘‘(3) LIMITING DEFINITION.—The term ‘covered
outpatient drug’ does not include any drug, biologi-
1592
HR 2491 EH
cal product, or insulin provided as part of, or as in-
cident to and in the same setting as, any of the fol-
lowing (and for which payment may be made under
a MediGrant plan as part of payment for the follow-
ing and not as direct reimbursement for the drug):
‘‘(A) Inpatient hospital services.
‘‘(B) Hospice services.
‘‘(C) Dental services, except that drugs for
which the MediGrant plan authorizes direct re-
imbursement to the dispensing dentist are cov-
ered outpatient drugs.
‘‘(D) Physicians’ services.
‘‘(E) Outpatient hospital services.
‘‘(F) Nursing facility services and services
provided by an intermediate care facility for the
mentally retarded.
‘‘(G) Other laboratory and x-ray services.
‘‘(H) Renal dialysis services.
Such term also does not include any such drug or
product for which a National Drug Code number is
not required by the Food and Drug Administration
or a drug or biological used for a medical indication
which is not a medically accepted indication. Any
drug, biological product, or insulin excluded from the
definition of such term as a result of this paragraph
1593
HR 2491 EH
shall be treated as a covered outpatient drug for
purposes of determining the best price (as defined in
subsection (c)(1)(C)) for such drug, biological prod-
uct, or insulin.
‘‘(4) MANUFACTURER.—The term ‘manufac-
turer’ means, with respect to a covered outpatient
drug, the entity holding legal title to or possession
of the National Drug Code number for such drug.
‘‘(5) MEDICALLY ACCEPTED INDICATION.—The
term ‘medically accepted indication’ means any use
for a covered outpatient drug which is approved
under the Federal Food, Drug, and Cosmetic Act, or
the use of which is supported by one or more cita-
tions included or approved for inclusion in any of the
following compendia:
‘‘(A) American Hospital Formulary Service
Drug Information.
‘‘(B) United States Pharmacopeia-Drug
Information.
‘‘(C) American Medical Association Drug
Evaluations.
‘‘(D) The peer-reviewed medical literature.
‘‘(6) MULTIPLE
SOURCE
DRUG; INNOVATOR
MULTIPLE
SOURCE
DRUG; NONINNOVATOR
MUL-
TIPLE SOURCE DRUG; SINGLE SOURCE DRUG.—
1594
HR 2491 EH
‘‘(A) DEFINED.—
‘‘(i) MULTIPLE SOURCE DRUG.—The
term ‘multiple source drug’ means, with
respect to a rebate period, a covered out-
patient drug (not including any drug de-
scribed in paragraph (2)(D)) for which
there are 2 or more drug products which—
‘‘(I) are rated as therapeutically
equivalent (under the Food and Drug
Administration’s most recent publica-
tion of ‘Approved Drug Products with
Therapeutic 
Equivalence 
Evalua-
tions’),
‘‘(II) except as provided in sub-
paragraph (B), are pharmaceutically
equivalent and bioequivalent, as de-
fined in subparagraph (C) and as de-
termined by the Food and Drug Ad-
ministration, and
‘‘(III) are sold or marketed in
the State during the period.
‘‘(ii) INNOVATOR
MULTIPLE
SOURCE
DRUG.—The 
term 
‘innovator 
multiple
source drug’ means a multiple source drug
that was originally marketed under an
1595
HR 2491 EH
original new drug application or product li-
censing application approved by the Food
and Drug Administration.
‘‘(iii) 
NONINNOVATOR
MULTIPLE
SOURCE
DRUG.—The term ‘noninnovator
multiple source drug’ means a multiple
source drug that is not an innovator mul-
tiple source drug.
‘‘(iv) SINGLE
SOURCE
DRUG.—The
term ‘single source drug’ means a covered
outpatient drug which is produced or dis-
tributed under an original new drug appli-
cation approved by the Food and Drug Ad-
ministration, including a drug product
marketed by any cross-licensed producers
or distributors operating under the new
drug application or product licensing appli-
cation.
‘‘(B) 
EXCEPTION.—Subparagraph
(A)(i)(II) shall not apply if the Food and Drug
Administration changes by regulation the re-
quirement that, for purposes of the publication
described in subparagraph (A)(i)(I), in order
for drug products to be rated as therapeutically
equivalent, they must be pharmaceutically
1596
HR 2491 EH
equivalent and bioequivalent, as defined in sub-
paragraph (C).
‘‘(C) DEFINITIONS.—For purposes of this
paragraph—
‘‘(i) drug products are pharmaceuti-
cally equivalent if the products contain
identical amounts of the same active drug
ingredient in the same dosage form and
meet compendial or other applicable stand-
ards of strength, quality, purity, and iden-
tity;
‘‘(ii) drugs are bioequivalent if they do
not 
present 
a 
known 
or 
potential
bioequivalence problem, or, if they do
present such a problem, they are shown to
meet 
an 
appropriate 
standard 
of
bioequivalence; and
‘‘(iii) a drug product is considered to
be sold or marketed in a State if it appears
in a published national listing of average
wholesale prices selected by the Secretary,
if the listed product is generally available
to the public through retail pharmacies in
that State.
1597
HR 2491 EH
‘‘(7) 
NONPRESCRIPTION
DRUGS.—If 
the
MediGrant plan of a State participating in the
MediGrant master rebate agreement under this sec-
tion includes coverage of prescribed drugs as de-
scribed in section 2171(a)(1)(H) and permits cov-
erage of drugs which may be sold without a prescrip-
tion (commonly referred to as ‘over-the-counter’
drugs), if they are prescribed by a physician (or
other person authorized to prescribe under State
law), such a drug shall be regarded as a covered out-
patient drug for purposes of the State’s participation
in the agreement.
‘‘(8) REBATE PERIOD.—The term ‘rebate pe-
riod’ means, with respect to an agreement under
subsection (a), a calendar quarter or other period
specified by the Secretary with respect to the pay-
ment of rebates under such agreement.’’.
SEC. 16002. TERMINATION OF CURRENT PROGRAM AND
TRANSITION.
(a) TERMINATION OF CURRENT PROGRAM; LIMITA-
TION ON MEDICAID PAYMENTS IN FISCAL YEAR 1996.—
Title XIX of the Social Security Act is amended—
(1) by redesignating section 1931 as section
1932; and
1598
HR 2491 EH
(2) by inserting after section 1930 the following
new section:
‘‘TERMINATION OF MEDICAID PROGRAM; LIMITATION ON
NEW OBLIGATION AUTHORITY
‘‘SEC. 1931. (a) ELIMINATION OF INDIVIDUAL ENTI-
TLEMENT.—Effective on the date of the enactment of this
section—
‘‘(1) except as provided in subsection (b), the
Federal Government has no obligation to provide
payment with respect to items and services provided
under this title, and
‘‘(2) this title shall not be construed as provid-
ing for an entitlement, under Federal law in relation
to the Federal Government, in an individual or per-
son (including any provider) at the time of provision
or receipt of services.
‘‘(b) LIMITATION
ON OBLIGATION AUTHORITY.—
Notwithstanding any other provision of this title—
‘‘(1) 
POST-ENACTMENT, 
PRE-MEDIGRANT.—
Subject to paragraph (2), the Secretary is author-
ized to enter into obligations with any State under
this title for expenses incurred after the date of the
enactment of this Act and during fiscal year 1996,
but not in excess of the obligation allotment for that
State for fiscal year 1996 under section 2121(b)(4).
1599
HR 2491 EH
‘‘(2) NONE AFTER MEDIGRANT.—The Secretary
is not authorized to enter into any obligation with
any State under this title for expenses incurred on
or after the earlier of—
‘‘(A) October 1, 1996; or
‘‘(B) the first day of the first quarter on
which the State plan under title XXI is first ef-
fective.
‘‘(3) AGREEMENT.—A State’s submission of
claims for payment under section 1903 after the
date of the enactment of this title with respect to
which the limitation described in paragraph (1) ap-
plies is deemed to constitute the State’s acceptance
of the obligation limitation under such paragraph
(including the formula for computing the amount of
such obligation limitation).
‘‘(c) REQUIREMENT
FOR TIMELY SUBMITTAL
OF
CLAIMS.—No payment shall be made to a State under this
title with respect to an obligation incurred before the date
of the enactment of this section, unless the State has sub-
mitted to the Secretary, by not later than June 30, 1996,
a claim for Federal financial participation for expenses
paid by the State with respect to such obligations. Nothing
in subsection (a) or (b) shall be construed as affecting the
1600
HR 2491 EH
obligation of the Federal Government to pay claims de-
scribed in the previous sentence.’’.
(b) MEDICAID TRANSITION.—
(1) TREATMENT OF CERTAIN CAUSES OF AC-
TION.—No cause of action under title XIX of the
Social Security Act which seeks to require a State
to establish or maintain minimum payment rates
under such title and which has not become final as
of the date of the enactment of this Act shall be
brought or continued.
(2) 
TREATMENT
OF
CERTAIN
DISALLOW-
ANCES.—Notwithstanding any provision of law, in
the case where payment has been made under sec-
tion 1903(a) of the Social Security Act to a State
before October 1, 1995, and for which a disallow-
ance has not been taken as of such date (or, if so
taken, has not been completed by such date), the
Secretary of Health and Human Services shall dis-
continue the disallowance proceeding and, if such
disallowance has been taken as of the date of the en-
actment of this Act, any payment reductions effected
shall be rescinded and the payments returned to the
State.
(3) EXTENSION
OF
MORATORIUM.—Section
6408(a)(3) of the Omnibus Budget Reconciliation
1601
HR 2491 EH
Act of 1989, as amended by section 13642 of the
Omnibus Budget Reconciliation Act of 1993, is
amended by striking ‘‘December 31, 1995’’ and in-
serting ‘‘the first day of the first quarter on which
the MediGrant plan for the State of Michigan is
first effective under title XXI of such Act’’.
(c) NO APPLICATION OF PRIOR MEDICAID JUDG-
MENTS TO MEDIGRANT PROGRAM.—No judicial or admin-
istrative decision rendered regarding requirements im-
posed under title XIX of the Social Security Act with re-
spect to a State shall have any application to the
MediGrant plan of the State title XXI of such Act. A
State may, pursuant to the previous sentence, seek the
abrogation or modification of any such decision after the
date of termination of the State plan under title XIX of
such Act.
(d) TERMINATION OF PROGRAM FOR DISTRIBUTION
OF PEDIATRIC VACCINES
(1) IN GENERAL.—Subject to paragraph (2),
section 1928 of the Social Security Act (42 U.S.C.
1396s) is repealed, effective on the date of the en-
actment of this Act.
(2) TRANSITION.—(A) Such repeal shall not af-
fect the distribution of vaccines purchased and deliv-
1602
HR 2491 EH
ered to the States before the date of the enactment
of this Act.
(B) No vaccine may be purchased after such
date by the Federal Government or any State under
any contract under section 1928(d) of the Social Se-
curity Act.
(e) ANTI-FRAUD PROVISIONS.—
(1) IN GENERAL.—Section 1128(h)(1) of the
Social Security Act (42 U.S.C. 1320a–7(h)(1)) is
amended by inserting ‘‘or a MediGrant plan under
title XXI’’ after ‘‘title XIX’’.
(2) CONTINUED
ROLE
OF
INSPECTOR
GEN-
ERAL.—The Inspector General in the Department of
Health and Human Services shall have the same re-
sponsibilities and duties in relation to fraud and
abuse and related matters under the MediGrant pro-
gram under title XXI of the Social Security Act as
such Inspector General has had in relation to the
medicaid program under title XIX of such Act be-
fore the date of the enactment of this Act.
(f) FINAL EXTENSION OF MEDICAID WAIVER FOR
DAYTON AREA HEALTH PLAN.—Section 2 of Public Law
102–276, as amended by section 13644 of the Omnibus
Budget Reconciliation Act of 1993, is amended by striking
‘‘December 31, 1995’’ and inserting ‘‘the last day of the
1603
HR 2491 EH
last calendar quarter in which a State medicaid plan is
in effect in Ohio under title XIX of the Social Security
Act’’.
TITLE XVII—ABOLISHMENT OF
DEPARTMENT OF COMMERCE
SEC. 17001. SHORT TITLE.
This title may be cited as the ‘‘Department of Com-
merce Dismantling Act’’.
SEC. 17002. TABLE OF CONTENTS.
The table of contents for this title is as follows:
TITLE XVII—ABOLISHMENT OF DEPARTMENT OF COMMERCE
Sec. 17001. Short title.
Sec. 17002. Table of contents.
Subtitle A—Abolishment of Department of Commerce
Sec. 17101. Abolishment of Department of Commerce.
Sec. 17102. Resolution and termination of Department functions.
Sec. 17103. Responsibilities of the Director of the Office of Management and
Budget.
Sec. 17104. Office of Programs Resolution.
Sec. 17105. Personnel.
Sec. 17106. Plans and reports.
Sec. 17107. GAO audit and access to records.
Sec. 17108. Conforming amendments.
Sec. 17109. Privatization framework.
Sec. 17110. Priority placement programs for Federal employees affected by a
reduction in force attributable to this title.
Sec. 17111. Funding reductions for transferred functions.
Sec. 17112. Definitions.
Subtitle B—Disposition of Various Programs, Functions, and Agencies of
Department of Commerce
Sec. 17201. Abolishment of Economic Development Administration and trans-
fer of functions.
Sec. 17202. Technology Administration.
Sec. 17203. Reorganization of the Bureau of the Census.
Sec. 17204. Bureau of Economic Analysis.
Sec. 17205. Terminated functions of NTIA.
Sec. 17206. National Oceanic and Atmospheric Administration.
Sec. 17207. National Institute for Science and Technology.
Sec. 17208. Miscellaneous terminations; moratorium on program activities.
1604
HR 2491 EH
Sec. 17209. Effective date.
Subtitle C—Office of United States Trade Representative
CHAPTER 1—GENERAL PROVISIONS
Sec. 17301. Definitions.
CHAPTER 2—OFFICE OF UNITED STATES TRADE REPRESENTATIVE
SUBCHAPTER A—ESTABLISHMENT
Sec. 17311. Establishment of the Office.
Sec. 17312. Functions of the USTR.
SUBCHAPTER B—OFFICERS
Sec. 17321. Deputy Administrator of the Office.
Sec. 17322. Deputy United States Trade Representatives.
Sec. 17323. Assistant Administrators.
Sec. 17324. Director General for Export Promotion.
Sec. 17325. General Counsel.
Sec. 17326. Inspector General.
Sec. 17327. Chief Financial Officer.
SUBCHAPTER C—TRANSFERS TO THE OFFICE
Sec. 17331. Office of the United States Trade Representative.
Sec. 17332. Transfers from the Department of Commerce.
Sec. 17333. Trade and Development Agency.
Sec. 17334. Export-Import Bank.
Sec. 17335. Overseas Private Investment Corporation.
Sec. 17336. Consolidation of export promotion and financing activities.
Sec. 17337. Additional trade functions.
SUBCHAPTER D—ADMINISTRATIVE PROVISIONS
Sec. 17341. Personnel provisions.
Sec. 17342. Delegation and assignment.
Sec. 17343. Succession.
Sec. 17344. Reorganization.
Sec. 17345. Rules.
Sec. 17346. Funds transfer.
Sec. 17347. Contracts, grants, and cooperative agreements.
Sec. 17348. Use of facilities.
Sec. 17349. Gifts and bequests.
Sec. 17350. Working capital fund.
Sec. 17351. Service charges.
Sec. 17352. Seal of Office.
SUBCHAPTER E—RELATED AGENCIES
Sec. 17361. Interagency Trade Organization.
Sec. 17362. National Security Council.
Sec. 17363. International Monetary Fund.
SUBCHAPTER F—CONFORMING AMENDMENTS
Sec. 17371. Amendments to general provisions.
Sec. 17372. Repeals.
1605
HR 2491 EH
Sec. 17373. Conforming amendments relating to Executive Schedule positions.
SUBCHAPTER G—MISCELLANEOUS
Sec. 17381. Effective date.
Sec. 17382. Interim appointments.
Sec. 17383. Funding reductions resulting from reorganization.
Subtitle D—Patent and Trademark Office Corporation
Sec. 17401. Short title.
CHAPTER 1—PATENT AND TRADEMARK OFFICE
Sec. 17411. Establishment of Patent and Trademark Office as a corporation.
Sec. 17412. Powers and duties.
Sec. 17413. Organization and management.
Sec. 17414. Management Advisory Board.
Sec. 17415. Independence from Department of Commerce.
Sec. 17416. Trademark trial and appeal board.
Sec. 17417. Board of patent appeals and interferences.
Sec. 17418. Suits by and against the corporation.
Sec. 17419. Annual report of Commissioner.
Sec. 17420. Suspension or exclusion from practice.
Sec. 17421. Funding.
Sec. 17422. Audits.
Sec. 17423. Transfers.
CHAPTER 2—EFFECTIVE DATE; TECHNICAL AMENDMENTS
Sec. 17431. Effective date.
Sec. 17432. Technical and conforming amendments.
Subtitle E—Miscellaneous Provisions
Sec. 17501. References.
Sec. 17502. Exercise of authorities.
Sec. 17503. Savings provisions.
Sec. 17504. Transfer of assets.
Sec. 17505. Delegation and assignment.
Sec. 17506. Authority of director of the office of management and budget with
respect to functions transferred.
Sec. 17507. Certain vesting of functions considered transfers.
Sec. 17508. Availability of existing funds.
Sec. 17509. Definitions.
1606
HR 2491 EH
Subtitle A—Abolishment of
Department of Commerce
SEC. 17101. ABOLISHMENT OF DEPARTMENT OF COM-
MERCE.
(a) ABOLISHMENT OF DEPARTMENT.—The Depart-
ment of Commerce is abolished effective on the abolish-
ment date specified in subsection (c).
(b) TRANSFER
OF DEPARTMENT FUNCTIONS
TO
OMB.—Except as otherwise provided in this title, all func-
tions that immediately before the abolishment date speci-
fied in subsection (c) are authorized to be performed by
the Secretary of Commerce, any other officer or employee
of the Department acting in that capacity, or any agency
or office of the Department, are transferred to the Direc-
tor of the Office of Management and Budget effective on
that abolishment date.
(c) ABOLISHMENT DATE.—The abolishment date re-
ferred to in subsections (a) and (b) is the earlier of—
(1) the last day of the 6-month period begin-
ning on the date of the enactment of this Act; or
(2) September 30, 1996.
SEC. 17102. RESOLUTION AND TERMINATION OF DEPART-
MENT FUNCTIONS.
(a) RESOLUTION OF FUNCTIONS.—During the period
beginning on the date of enactment of this Act and ending
1607
HR 2491 EH
on the functions termination date specified in subsection
(c)—
(1) the disposition and resolution of functions
of the Department of Commerce shall be completed
in accordance with this title; and
(2) the Director shall resolve all functions that
are transferred to the Director under section
17101(b) and are not otherwise continued under this
title.
(b) TERMINATION
OF FUNCTIONS.—All functions
that are transferred to the Director under section
17101(b) that are not otherwise continued by this title
shall terminate on the functions termination date specified
in subsection (c).
(c) FUNCTIONS TERMINATION DATE.—The functions
termination date referred to in subsections (a) and (b) is
the last day of the 3-year period beginning on the date
of the enactment of this Act.
SEC. 17103. RESPONSIBILITIES OF THE DIRECTOR OF THE
OFFICE OF MANAGEMENT AND BUDGET.
The Director of the Office of Management and Budg-
et, acting through the Administrator of the Office of Pro-
grams Resolution, shall be responsible for the implementa-
tion of this subtitle, including—
1608
HR 2491 EH
(1) the administration and wind-up, during the
wind-up period, of all functions transferred to the
Director under section 17101(b);
(2) the administration and wind-up, during the
wind-up period, of any outstanding obligations of the
Federal Government under any programs terminated
by this title; and
(3) taking such other actions as may be nec-
essary to wind-up any outstanding affairs of the De-
partment of Commerce before the end of the wind-
up period.
SEC. 17104. OFFICE OF PROGRAMS RESOLUTION.
(a) ESTABLISHMENT OF OFFICE.—There is estab-
lished in the Office of Management and Budget an office
to be known as the Office of Programs Resolution.
(b) ADMINISTRATOR.—There shall be at the head of
the Office an Administrator who shall be appointed by the
President, by and with the advice and consent of the Sen-
ate. The Administrator shall receive compensation at the
rate prescribed for level III of the Executive Schedule
under section 5314 of title 5, United States Code. The
Administrator shall serve as principal adviser to the Direc-
tor on Government organization and reorganization mat-
ters, and shall report directly to the Director.
1609
HR 2491 EH
(c) FUNCTIONS.—The Administrator shall perform
such functions as are vested in the Administrator by this
title or delegated to the Administrator by the Director.
(d) AUTHORITIES
OF
THE ADMINISTRATOR.—For
purposes of performing the functions of the Administrator
under subsection (c) and subject to the availability of ap-
propriations, the Administrator may—
(1) enter into contracts;
(2) employ experts and consultants in accord-
ance with section 3109 of title 5, United States
Code, at rates for individuals not to exceed the per
diem rate equivalent to the rate for level IV of the
Executive Schedule; and
(3) utilize, on a reimbursable basis, the services,
facilities, and personnel of other Federal agencies.
(e) AUDITOR GENERAL.—
(1) IN GENERAL.—There shall be in the Office
an Auditor General, who shall be appointed by and
report to the Administrator.
(2) FUNCTIONS.—The Auditor General shall—
(A) conduct audits and investigations with
respect to activities of the Office; and
(B) submit to the Administrator and the
Director reports on the findings of those audits
and investigations.
1610
HR 2491 EH
(f) REORGANIZATION.—The Administrator may allo-
cate or reallocate among the officers of the Office any
function vested in the Administrator or the Office, and
may establish, consolidate, alter, or discontinue in the Of-
fice any organizational entities that were entities of the
Department of Commerce, as the Administrator considers
necessary or appropriate.
(g) ANNUAL AUTHORIZATION REQUIRED.—No sums
may be appropriated for any fiscal year for the Office ex-
cept as specifically authorized for that fiscal year by law.
SEC. 17105. PERSONNEL.
Effective on the abolishment date specified in section
17101(c), there are transferred to the Office all individ-
uals who—
(1) immediately before the abolishment date,
were officers or employees of the Department of
Commerce; and
(2) in their capacity as such an officer or em-
ployee, performed functions that are transferred to
the Director under section 17101(b).
SEC. 17106. PLANS AND REPORTS.
(a) INITIAL IMPLEMENTATION PLAN.—
(1) IN GENERAL.—Not later than 90 days after
the date of enactment of this Act, the Director shall
submit a report, through the President, to the Con-
1611
HR 2491 EH
gress specifying those actions taken and necessary to
be taken—
(A) to resolve those programs and func-
tions terminated on the date of enactment of
this Act; and
(B) to implement the additional transfers
and other program dispositions provided for in
this title.
(2) CONTENTS.—The report shall include—
(A) a description of the anticipated size
and composition of the Programs Resolution
Office,
(B) recommendations for additional legisla-
tion, if any, needed to reflect or otherwise to
implement the abolishments, transfers, termi-
nations, and other dispositions of programs and
functions under this title; and
(C) a description of actions planned and
taken to comply with limitations imposed by
this Act on future spending for continued func-
tions.
(b) ANNUAL STATUS REPORTS.—At the end of each
of the first, second, and third years following the date of
enactment of this Act, the Director shall submit a report,
through the President, to the Congress which—
1612
HR 2491 EH
(1) specifies the status and progress of actions
taken to implement this title and to wind-up the af-
fairs of the Department of Commerce by the func-
tions termination date specified in section 17102(c);
(2) includes a summary of reports submitted to
the Director under section 17104(e)(2)(B) during
the period covered by the report by the Auditor Gen-
eral of the Office;
(3) includes any recommendations the Director
may have for additional legislation; and
(4) describes actions taken to comply with limi-
tations imposed by this Act on future spending for
continued functions.
(c) GAO REPORTS.—Not later than 60 days after is-
suance of each report under subsections (a) and (b), the
Comptroller General of the United States shall submit to
the Congress a report which—
(1) evaluates the report under that subsection;
and
(2) includes any recommendations the Comp-
troller General considers appropriate.
SEC. 17107. GAO AUDIT AND ACCESS TO RECORDS.
(a) AUDIT OF PERSONS PERFORMING FUNCTIONS
PURSUANT TO THIS ACT.—All agencies, corporations, or-
ganizations, and other persons of any description which
1613
HR 2491 EH
under the authority of the United States perform any
function or activity pursuant to this title shall be subject
to audit by the Comptroller General of the United States
with respect to such function or activity.
(b) AUDIT OF PERSONS PROVIDING CERTAIN GOODS
OR SERVICES.—All persons and organizations which, by
contract, grant, or otherwise, provide goods or services to,
or receive financial assistance from, any agency or other
person performing functions or activities under or referred
to by this title shall be subject to audit by the Comptroller
General of the United States with respect to such provi-
sion of goods or services or receipt of financial assistance.
(c) PROVISIONS APPLICABLE
TO
AUDITS UNDER
THIS SECTION.—
(1) NATURE
AND
SCOPE
OF
AUDIT.—The
Comptroller General of the United States shall de-
termine the nature, scope, terms, and conditions of
audits conducted under this section.
(2) COORDINATION
WITH
OTHER
PROVISIONS
OF LAW.—The authority of the Comptroller General
of the United States under this section shall be in
addition to any audit authority available to the
Comptroller General under other provisions of this
title or any other law.
1614
HR 2491 EH
(3) RIGHTS
OF
ACCESS, EXAMINATION, AND
COPYING.—The Comptroller General of the United
States, and any duly authorized representative of the
Comptroller General, shall have access to, and the
right to examine and copy, all records and other re-
corded information in any form, and to examine any
property within the possession or control of any
agency or person which is subject to audit under this
section, which the Comptroller General considers rel-
evant to an audit conducted under this section.
(4) ENFORCEMENT OF RIGHT OF ACCESS.—The
right of access of the Comptroller General of the
United States to information under this section shall
be enforceable under section 716 of title 31, United
States Code.
(5) 
MAINTENANCE
OF
CONFIDENTIAL
RECORDS.—Section 716(e) of title 31, United States
Code, shall apply to information obtained by the
Comptroller General under this section.
SEC. 17108. CONFORMING AMENDMENTS.
(a) PRESIDENTIAL SUCCESSION.—Section 19(d)(1)
of title 3, United States Code, is amended by striking
‘‘Secretary of Commerce,’’.
1615
HR 2491 EH
(b) EXECUTIVE DEPARTMENTS.—Section 101 of title
5, United States Code, is amended by striking the follow-
ing item: ‘‘The Department of Commerce.’’.
(c) SECRETARY’S COMPENSATION.—Section 5312 of
title 5, United States Code, is amended by striking the
following item: ‘‘Secretary of Commerce.’’.
(d) COMPENSATION FOR POSITIONS AT LEVEL III.—
Section 5314 of title 5, United States Code, is amended—
(1) by striking the following item:
‘‘Under Secretary of Commerce, Under Secretary of
Commerce for Economic Affairs, Under Secretary of Com-
merce for Export Administration and Under Secretary of
Commerce for Travel and Tourism.’’;
(2) by striking the following item:
‘‘Under Secretary of Commerce for Oceans and At-
mosphere, the incumbent of which also serves as Adminis-
trator of the National Oceanic and Atmospheric Adminis-
tration.’’;
(3) by striking the following item:
‘‘Under Secretary of Commerce for Technology.’’;
and
(4) by adding at the end the following item:
‘‘Administrator, Office of Programs Resolution’’.
(e) COMPENSATION FOR POSITIONS AT LEVEL IV.—
Section 5315 of title 5, United States Code, is amended—
1616
HR 2491 EH
(1) by striking the following item:
‘‘Assistant Secretaries of Commerce (11).’’;
(2) by striking the following item:
‘‘General Counsel of the Department of Commerce.’’;
(3) by striking the following item:
‘‘Assistant Secretary of Commerce for Oceans and
Atmosphere, the incumbent of which also serves as Deputy
Administrator of the National Oceanic and Atmospheric
Administration.’’;
(4) by striking the following item:
‘‘Director, National Institute of Standards and Tech-
nology, Department of Commerce.’’;
(5) by striking the following item:
‘‘Inspector General, Department of Commerce.’’;
(6) by striking the following item:
‘‘Chief Financial Officer, Department of Com-
merce.’’; and
(7) in the item relating to the Bureau of the
Census, by striking ‘‘, Department of Commerce’’.
(f) COMPENSATION FOR POSITIONS AT LEVEL V.—
Section 5316 of title 5, United States Code, is amended—
(1) by striking the following item:
‘‘Director, United States Travel Service, Department
of Commerce.’’; and
(2) by striking the following item:
1617
HR 2491 EH
‘‘National Export Expansion Coordinator, Depart-
ment of Commerce.’’.
(g) INSPECTOR GENERAL ACT OF 1978.—The In-
spector General Act of 1978 (5 U.S.C. App.) is amend-
ed—
(1) in section 9(a)(1), by striking subparagraph
(B);
(2) in section 11(1), by striking ‘‘Commerce,’’;
and
(3) in section 11(2), by striking ‘‘Commerce,’’.
(h) EFFECTIVE DATE.—The amendments made by
this section shall be effective on the abolishment date spec-
ified in section 17101(c).
SEC. 17109. PRIVATIZATION FRAMEWORK.
(a) IN GENERAL.—The Office of Management and
Budget shall privatize each function designated for privat-
ization under subtitle B within 18 months of the date the
transfer of such function to the Office. The Office shall
pursue such forms of privatization arrangements as the
Office considers appropriate to best serve the interests of
the United States. If the Office is unable to privatize a
function within 18 months, the Office shall report its in-
ability to the Congress with its recommendations as to the
appropriate disposition of the function and its assets.
1618
HR 2491 EH
(b) ROLE OF THE FEDERAL GOVERNMENT.—No pri-
vatization arrangement made under subsection (a) shall
include any future role for, or accountability to, the Fed-
eral Government unless it is necessary to assure the con-
tinued accomplishment of a specific Federal objective. The
Federal role should be the minimum necessary to accom-
plish Federal objectives.
(c) ASSETS.—In privatizing a function, the Office of
Management and Budget shall take any action necessary
to preserve the value of the assets of a function during
the period the Office holds such assets and to continue
the performance of the function to the extent necessary
to preserve the value of the assets or to accomplish core
Federal objectives.
SEC. 17110. PRIORITY PLACEMENT PROGRAMS FOR FED-
ERAL EMPLOYEES AFFECTED BY A REDUC-
TION IN FORCE ATTRIBUTABLE TO THIS
TITLE.
(a) IN GENERAL.—Subchapter I of chapter 33 of title
5, United States Code, is amended by adding at the end
the following:
1619
HR 2491 EH
‘‘§ 3329b. Priority placement programs for employees
affected by a reduction in force attrib-
utable to the Department of Commerce
Dismantling Act
‘‘(a)(1) For the purpose of this section, the term ‘af-
fected agency’—
‘‘(A) except as provided in subparagraph (B),
means an Executive agency to which personnel are
transferred in connection with a transfer of function
under the Department of Commerce Dismantling
Act, and
‘‘(B) with respect to employees of the Depart-
ment of Commerce in general administration, the In-
spector General’s office, or the General Council’s of-
fice, or who provided overhead support to other com-
ponents of the Department on a reimbursable basis,
means all agencies to which functions of those em-
ployees are transferred under the Department of
Commerce Dismantling Act.
‘‘(2) This section applies with respect to any reduc-
tion in force that—
‘‘(A) occurs within 12 months after the date of
the enactment of this section; and
‘‘(B) is due to—
1620
HR 2491 EH
‘‘(i) the termination of any function of the
Department of Commerce or the Office of Pro-
grams Resolution, as the case may be; or
‘‘(ii) the agency’s having excess personnel
as a result of a transfer of function described
in paragraph (1), as determined by—
‘‘(I) the Administrator of the Office of
Programs Resolution, in the case of a
function transferred to the Office of Man-
agement and Budget; or
‘‘(II) the head of the agency, in the
case of any other function.
‘‘(b) As soon as practicable after the date of the en-
actment of this section, each affected agency shall estab-
lish an agencywide priority placement program to facili-
tate employment placement for employees who—
‘‘(1) are scheduled to be separated from service
due to a reduction in force described in subsection
(a)(2); or
‘‘(2) are separated from service due to such a
reduction in force.
‘‘(c)(1) Each agencywide priority placement program
shall include provisions under which a vacant position
shall not be filled by the appointment or transfer of any
individual from outside of that agency if—
1621
HR 2491 EH
‘‘(A) there is then available any individual de-
scribed in paragraph (2) who is qualified for the po-
sition; and
‘‘(B) the position—
‘‘(i) is at the same grade (or pay level) or
not more than 1 grade (or pay level) below that
of the position last held by such individual be-
fore placement in the new position; and
‘‘(ii) is within the same commuting area as
the individual’s last-held position (as referred to
in clause (i)) or residence.
‘‘(2) For purposes of an agencywide priority place-
ment program, an individual shall be considered to be de-
scribed in this paragraph if such individual’s most recent
performance evaluation was at least fully successful (or
the equivalent), and such individual is either—
‘‘(A) an employee of such agency who is sched-
uled to be separated, as described in subsection
(b)(1); or
‘‘(B) an individual who became a former em-
ployee of such agency as a result of a separation, as
described in subsection (b)(2).
‘‘(d)(1) Nothing in this section shall affect any prior-
ity placement program of the Department of Defense
1622
HR 2491 EH
which is in operation as of the date of the enactment of
this section.
‘‘(2) Nothing in this section shall impair placement
programs within agencies subject to reductions in force re-
sulting from causes other than the Department of Com-
merce Dismantling Act.
‘‘(e) An individual shall cease to be eligible to partici-
pate in a program under this section on the earlier of—
‘‘(1) the conclusion of the 12-month period be-
ginning on the date on which that individual first
became eligible to participate under subsection
(c)(2); or
‘‘(2) the date on which the individual declines
a bona fide offer (or if the individual does not act
on the offer, the last day for accepting such offer)
from the affected agency of a position described in
subsection (c)(1)(B).’’.
(b) TECHNICAL AND CONFORMING AMENDMENTS.—
(1) Title 5, United States Code, is amended by redesignat-
ing the second section which is designated as section 3329
as section 3329a.
(2) The table of sections for chapter 33 of title 5,
United States Code, is amended by striking the item relat-
ing to the second section which is designated as section
3329 and inserting the following:
1623
HR 2491 EH
‘‘3329a.
Government-wide list of vacant positions.
‘‘3329b.
Priority placement programs for employees affected by a reduction
in force attributable to the Department of Commerce Disman-
tling Act.’’.
SEC. 17111. FUNDING REDUCTIONS FOR TRANSFERRED
FUNCTIONS.
(a) FUNDING REDUCTIONS.—Except as provided in
subsection (b), for each fiscal year that begins on or after
the date of the enactment of this Act, the total amount
obligated or expended by the United States in performing
functions transferred under this title to the Director or
to the Office from the Department of Commerce, or any
of its officers or components, may not exceed 75 percent
of the total amount obligated or expended by the United
States in performing such functions for fiscal year 1995.
(b) EXCEPTIONS.—Subsection (a) shall not apply
to—
(1) functions transferred to the Director under
section 17203 (relating to the Bureau of the Cen-
sus); or
(2) obligations or expenditures incurred as a di-
rect consequence of the termination, transfer, or
other disposition of functions described in subsection
(a) pursuant to this title.
(c) RULE
OF CONSTRUCTION.—This section shall
take precedence over any other provision of law unless
1624
HR 2491 EH
such provision explicitly refers to this section and makes
an exception to it.
(d) RESPONSIBILITIES OF THE DIRECTOR.—The Di-
rector shall—
(1) ensure compliance with the requirements of
this section; and
(2) include in each report under sections 17106
(a) and (b) a description of actions taken to comply
with such requirements.
SEC. 17112. DEFINITIONS.
For purposes of this subtitle, the following definitions
apply:
(1) ADMINISTRATOR.—The term ‘‘Adminis-
trator’’ means the Administrator of the Office of
Programs Resolution.
(2) DIRECTOR.—The term ‘‘Director’’ means
the Director of the Office of Management and Budg-
et.
(3) OFFICE.—The term ‘‘Office’’ means the Of-
fice of Programs Resolution.
(4) WIND-UP PERIOD.—The term ‘‘wind-up pe-
riod’’ means the period beginning on the date of the
enactment of this Act and ending on the functions
termination date specified in section 17102(c).
1625
HR 2491 EH
Subtitle B—Disposition of Various
Programs, Functions, and Agen-
cies of Department of Com-
merce
SEC. 17201. ABOLISHMENT OF ECONOMIC DEVELOPMENT
ADMINISTRATION AND TRANSFER OF FUNC-
TIONS.
(a) IN GENERAL.—The Public Works and Economic
Development Act of 1965 (40 U.S.C. 3131 et seq.) is
amended by striking all after the first section and insert-
ing the following:
‘‘SEC. 2. ADMINISTRATOR DEFINED.
‘‘In this Act, the term ‘Administrator’ means the Ad-
ministrator of the Small Business Administration.
‘‘TITLE I—STATEMENT OF
PURPOSE
‘‘SEC. 101. FINDINGS AND DECLARATION.
‘‘(a) FINDINGS.—Congress finds that—
‘‘(1) the maintenance of the national economy
at a high level is vital to the best interests of the
United States, but that some of our regions, coun-
ties, and communities are suffering substantial and
persistent unemployment and underemployment that
cause hardship to many individuals and their fami-
lies, and waste invaluable human resources;
1626
HR 2491 EH
‘‘(2) to overcome this problem the Federal Gov-
ernment, in cooperation with the States, should help
areas and regions of substantial and persistent un-
employment and underemployment to take effective
steps in planning and financing their public works
and economic development;
‘‘(3) Federal financial assistance, including
grants for public works and development facilities to
communities, industries, enterprises, and individuals
in areas needing development should enable such
areas to help themselves achieve lasting improve-
ment and enhance the domestic prosperity by the es-
tablishment of stable and diversified local economies
and improved local conditions, if such assistance is
preceded by and consistent with sound, long-range
economic planning; and
‘‘(4) under the provisions of this Act, new em-
ployment opportunities should be created by develop-
ing and expanding new and existing public works
and other facilities and resources rather than by
merely transferring jobs from one area of the United
States to another.
‘‘(b) DECLARATION.—Congress declares that, in fur-
therance of maintaining the national economy at a high
level—
1627
HR 2491 EH
‘‘(1) the assistance authorized by this Act
should be made available to both rural and urban
areas;
‘‘(2) such assistance should be made available
for planning for economic development prior to the
actual occurrences of economic distress in order to
avoid such condition; and
‘‘(3) such assistance should be used for long-
term economic rehabilitation in areas where long-
term economic deterioration has occurred or is tak-
ing place.
‘‘TITLE II—GRANTS FOR PUBLIC
WORKS AND DEVELOPMENT
FACILITIES
‘‘SEC. 201. DIRECT AND SUPPLEMENTARY GRANTS.
‘‘(a) IN GENERAL.—Upon the application of any eli-
gible recipient, the Administrator may—
‘‘(1) make direct grants for the acquisition or
development of land and improvements for public
works, public service, or development facility usage,
and the acquisition, design and engineering, con-
struction, rehabilitation, alteration, expansion, or im-
provement of such facilities, including related ma-
chinery and equipment, within an area described in
section 502(a), if the Administrator finds that—
1628
HR 2491 EH
‘‘(A) the project for which financial assist-
ance is sought will directly or indirectly—
‘‘(i) tend to improve the opportunities,
in the area where such project is or will be
located, for the successful establishment or
expansion of industrial or commercial
plants or facilities;
‘‘(ii) otherwise assist in the creation
of additional long-term employment oppor-
tunities for such area; or
‘‘(iii) primarily benefit the long-term
unemployed and members of low-income
families;
‘‘(B) the project for which a grant is re-
quested will fulfill a pressing need of the area,
or part thereof, in which it is, or will be, lo-
cated; and
‘‘(C) the area for which a project is to be
undertaken has an approved investment strat-
egy as provided by section 503 and such project
is consistent with such strategy;
‘‘(2) make supplementary grants in order to en-
able the States and other entities within areas de-
scribed in section 502(a) to take maximum advan-
tage of designated Federal grant-in-aid programs (as