Sec. 2. Eliminating restrictions on physician referrals based on compensation
arrangements.
Sec. 3. Exceptions to ownership referral prohibitions.
Sec. 4. Change in definition of group practice.
Sec. 5. Delay in implementation of 1993 ownership referral changes until pro-
mulgation of final regulations.
Sec. 6. Exclusion of intraocular lenses, eyeglasses, and contact lenses.
Sec. 7. Permitting supervision of clinical laboratory services by pathologists who
are independent contractors.
Sec. 8. Effective date.
SEC. 2. ELIMINATING RESTRICTIONS ON PHYSICIAN RE-
FERRALS BASED ON COMPENSATION AR-
RANGEMENTS.
(a) IN GENERAL.—Section 1877(a)(2) of the Social
Security Act (42 U.S.C. 1395nn(a)(2)) is amended by
striking ‘‘is—’’ and all that follows through ‘‘equity,’’ and
inserting ‘‘is (except as provided in subsection (c)) an own-
ership or investment interest in the entity through eq-
uity,’’.
(b) CONFORMING AMENDMENTS.—Section 1877 of
such Act (42 U.S.C. 1395nn) is amended—
(1) in subsection (b)—
(A) in the heading, by striking ‘‘TO BOTH
OWNERSHIP
AND
COMPENSATION
ARRANGE-
MENT PROHIBITIONS’’; and
(B) by redesignating paragraph (4) as
paragraph (7);
(2) in subsection (c)—
(A) by amending the heading to read as
follows: ‘‘EXCEPTION FOR OWNERSHIP OR IN-
VESTMENT INTEREST
IN PUBLICLY TRADED
SECURITIES AND MUTUAL FUNDS’’; and
(B) in the matter preceding paragraph (1),
by striking ‘‘subsection (a)(2)(A)’’ and inserting
‘‘subsection (a)(2)’’;
(3) in subsection (d)—
(A) by striking the matter preceding para-
graph (1);
(B) in paragraph (3), by striking ‘‘para-
graph (1)’’ and inserting ‘‘paragraph (4)’’; and
(C) by redesignating paragraphs (1), (2),
and (3) as paragraphs (4), (5), and (6), respec-
tively, and by transferring and inserting such
paragraphs after paragraph (3) of subsection
(b);
(4) by striking subsection (e);
(5) in subsection (f)—
(A) in the matter preceding paragraph (1),
by striking ‘‘ownership, investment, and com-
pensation’’ and inserting ‘‘ownership and in-
vestment’’;
(B) in paragraph (2), by striking ‘‘sub-
section (a)(2)(A)’’ and all that follows through
‘‘subsection (a)(2)(B)),’’ and inserting ‘‘sub-
section (a)(2),’’; and
(C) in paragraph (2), by striking ‘‘or who
have such a compensation relationship with the
entity’’; and
(6) in subsection (h)—
(A) by striking paragraphs (1), (2), and
(3);
(B) in paragraph (4)(A), by striking clause
(iv); and
(C) in paragraph (4)(B), by striking
‘‘RULES.—’’ and all that follows through ‘‘(ii)
FACULTY’’ and inserting ‘‘RULES
FOR
FAC-
ULTY’’.
SEC. 3. EXCEPTIONS TO OWNERSHIP REFERRAL PROHIBI-
TIONS.
(a) REVISIONS TO EXCEPTION FOR IN-OFFICE AN-
CILLARY SERVICES.—
(1) REPEAL
OF
SITE-OF-SERVICE
REQUIRE-
MENT.—Section 1877 of the Social Security Act (42
U.S.C. 1395nn) is amended—
(A) by amending subparagraph (A) of sub-
section (b)(2) to read as follows:
‘‘(A) that are furnished personally by the
referring physician, personally by a physician
who is a member of the same group practice
as the referring physician, or personally by indi-
viduals who are under the general supervision
of the physician or of another physician in the
group practice, and’’; and
(B) by adding at the end of subsection (h)
the following new paragraph:
‘‘(7) GENERAL SUPERVISION.—An individual is
considered to be under the ‘general supervision’ of a
physician if the physician (or group practice of
which the physician is a member) is legally respon-
sible for the services performed by the individual and
for ensuring that the individual meets licensure and
certification requirements, if any, applicable under
other provisions of law, regardless of whether or not
the physician is physically present when the indi-
vidual furnishes an item or service.’’.
(2) CLARIFICATION OF TREATMENT OF PHYSI-
CIAN
OWNERS
OF
GROUP
PRACTICE.—Section
1877(b)(2)(B) 
of 
such 
Act 
(42 
U.S.C.
1395nn(b)(2)(B)) is amended by striking ‘‘or such
group practice.’’ and inserting ‘‘, such group prac-
tice, or the physician owners of such group prac-
tice.’’.
(3) 
CONFORMING
AMENDMENT.—Section
1877(b)(2) of such Act (42 U.S.C. 1395nn(b)(2)) is
amended by amending the heading to read as fol-
lows: ‘‘ANCILLARY SERVICES FURNISHED PERSON-
ALLY OR THROUGH GROUP PRACTICE’’.
(b) CLARIFICATION OF EXCEPTION FOR SERVICES
FURNISHED IN A RURAL AREA.—Section 1877(d)(2) of
such Act (42 U.S.C. 1395nn(d)(2)), before redesignation
and transfer as section 1877(b)(5) of such Act under sec-
tion 2(b)(3)(C), is amended by striking ‘‘substantially all’’
and inserting ‘‘not less than 75 percent’’.
SEC. 4. CHANGE IN DEFINITION OF GROUP PRACTICE.
Section 1877(h)(4) of the Social Security Act (42
U.S.C. 1395nn(h)(4)) is amended—
(1) in subparagraph (A), as amended by section
2(b)(6)(B)—
(A) by adding ‘‘and’’ at the end of clause
(iii);
(B) by redesignating clause (v) as clause
(iv) and by striking ‘‘, and’’ at the end and in-
serting a period, and
(C) by striking clause (vi); and
(2) by adding at the end the following new sub-
paragraph:
‘‘(C) MEMBER OF A GROUP.—A physician
is a ‘member’ of a group if the physician is an
owner or a bona fide employee, or both, of the
group.’’.
SEC. 5. DELAY IN IMPLEMENTATION OF 1993 OWNERSHIP
REFERRAL CHANGES UNTIL PROMULGATION
OF FINAL REGULATIONS.
Notwithstanding paragraphs (1) and (2) of section
13562(b) of the Omnibus Budget Reconciliation Act of
1993, the amendments made by section 13562(a) of such
Act shall not apply to any referrals made before the effec-
tive date of final regulations promulgated by the Secretary
of Health and Human Services to carry out such amend-
ments.
SEC. 
6. 
EXCLUSION 
OF 
INTRAOCULAR 
LENSES, 
EYE-
GLASSES, AND CONTACT LENSES.
Section 1877(h)(6)(H) of the Social Security Act (42
U.S.C. 1395nn(h)(6)(H)) is amended by inserting ‘‘, other
than intraocular lenses, eyeglasses, and contact lenses’’ be-
fore the period.
SEC. 7. PERMITTING SUPERVISION OF CLINICAL LABORA-
TORY SERVICES BY PATHOLOGISTS WHO ARE
INDEPENDENT CONTRACTORS.
Section 1877(b)(2) of the Social Security Act (42
U.S.C. 1395nn(b)(2)), as amended by section 3(a)(1)(A),
is amended by adding at the end the following: ‘‘In apply-
ing subparagraph (A) in the case of a pathologist who su-
pervises or directs the provision of clinical laboratory serv-
ices for a group practice, the pathologist is deemed to be
a member of (and in) such group practice.’’.