1444
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-
1445
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.
1446
‘‘(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
1447
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
1448
‘‘(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.
1449
‘‘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.
1450
‘‘(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:
1451
‘‘(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.
1452
‘‘(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
1453
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.
1454
‘‘(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
1455
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
1456
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
1457
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.
1458
‘‘(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)—
1459
‘‘(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.
1460
‘‘(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
1461
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
1462
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
1463
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
1464
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-
1465
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
1466
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—
1467
‘‘(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-
1468
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
1469
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
1470
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-
1471
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,
1472
‘‘(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.
1473
‘‘(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.
1474
‘‘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
1475
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,
1476
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,
1477
‘‘(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—
1478
‘‘(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).
1479
‘‘(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.
1480
‘‘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
1481
‘‘(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 1132 (relating to periods within
which claims must be filed).
‘‘SEC. 2175. MEDIGRANT MASTER DRUG REBATE AGREE-
MENTS.
‘‘(a) REQUIREMENT FOR MANUFACTURER TO ENTER
INTO AGREEMENT.—
1482
‘‘(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-
tion shall be construed to prohibit a State in its dis-
cretion from providing coverage under its MediGrant
1483
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
manufacturer dispensed after the effective date of
the agreement, for which payment was made under
1484
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-
mation indicates that utilization was greater or
less than the amount previously specified.
1485
‘‘(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.
‘‘(B) VERIFICATION SURVEYS OF AVERAGE
MANUFACTURER
PRICE.—The Secretary may
survey wholesalers and manufacturers that di-
1486
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-
vide information required under subpara-
graph (A) on a timely basis, the amount of
the penalty shall be $10,000 for each day
1487
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
(b)) shall apply to a civil money penalty
under this subparagraph in the same man-
1488
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.
‘‘(4) LENGTH OF AGREEMENT.—
1489
‘‘(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
drugs affected by such termination as of
the effective date of such termination.
1490
‘‘(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
in section 8126(a) of title 38, United
States Code.
1491
‘‘(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—
‘‘(i) the total number of units of each
dosage form and strength paid for under
1492
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
rebate period to any wholesaler, retailer,
provider, health maintenance organization,
1493
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.
‘‘(ii) SPECIAL RULES.—The term ‘best
price’—
1494
‘‘(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-
spect to each dosage form and strength of a
single source drug or an innovator multiple
1525
(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.
1565
‘‘(A) the proposed district is of sufficient
size or population, and contains sufficient re-
sources, to foster economic development on a
scale involving more than a single area de-
scribed in section 502(a);
‘‘(B) the proposed district contains at least
1 area described in section 502(a);
‘‘(C) the proposed district contains 1 or
more areas described in section 502(a) or eco-
nomic development centers identified in an ap-
proved district investment strategy as having
sufficient size and potential to foster the eco-
nomic growth activities necessary to alleviate
the distress of the areas described in section
502(a) within the district; and
‘‘(D) the proposed district has a district
investment strategy which includes adequate
land use and transportation planning and con-
tains a specific program for district cooperation,
self-help, and public investment and is approved
by the State or States affected and by the Ad-
ministrator;
‘‘(2) designate as ‘economic development cen-
ters’, in accordance with such regulations as the Ad-