130
‘‘(1) PRIMARY
CARE
CASE
MANAGEMENT
PRO-
GRAM.—The term ‘primary care case management
program’ means a program operated by a State
agency under which such State agency enters into
contracts with primary care case management enti-
ties for the provision of health care items and serv-
ices which are specified in such contracts and the
provision of case management services to individuals
who are—
‘‘(A) eligible for medical assistance under
the State plan,
‘‘(B) enrolled with such primary care case
management entities, and
‘‘(C) entitled to receive such specified
health care items and services and case man-
agement services only as approved and ar-
ranged for, or provided, by such entities.
‘‘(2) PRIMARY CARE CASE MANAGEMENT EN-
TITY.—The term ‘primary care case management
entity’ means a health care provider which—
‘‘(A) must be a physician, group of physi-
cians, a Federally qualified health center, a
rural health clinic, or an entity employing or
having other arrangements with physicians op-
erating under a contract with a State to provide
131
services under a primary care case management
program,
‘‘(B) receives payment on a fee for service
basis (or, in the case of a Federally qualified
health center or a rural health clinic, on a rea-
sonable cost per encounter basis) for the provi-
sion of health care items and services specified
in such contract to enrolled individuals,
‘‘(C) receives an additional fixed fee per
enrollee for a period specified in such contract
for providing case management services (includ-
ing approving and arranging for the provision
of health care items and services specified in
such contract on a referral basis) to enrolled in-
dividuals, and
‘‘(D) is not an entity that is at risk (as de-
fined in paragraph (4)) for such case manage-
ment services.
‘‘(3) RISK
CONTRACTING
ENTITY.—The term
‘risk contracting entity’ means an entity which has
a contract with the State agency (or a health insur-
ing organization described in subsection (n)(2))
under which the entity—
‘‘(A) provides or arranges for the provision
of health care items or services which are speci-
132
fied in such contract to individuals eligible for
medical assistance under the State plan, and
‘‘(B) is at risk (as defined in paragraph
(4)) for part or all of the cost of such items or
services furnished to individuals eligible for
medical assistance under such plan.
‘‘(4) AT RISK.—The term ‘at risk’ means an
entity which—
‘‘(A) has a contract with the State agency
under which such entity is paid a fixed amount
for providing or arranging for the provision of
health care items or services specified in such
contract to an individual eligible for medical as-
sistance under the State plan and enrolled with
such entity, regardless of whether such items or
services are furnished to such individual, and
‘‘(B) is liable for all or part of the cost of
furnishing such items or services, regardless of
whether such cost exceeds such fixed payment.
‘‘(5) FEDERALLY
QUALIFIED
HEALTH
CEN-
TER.—The term ‘Federally qualified health center’
means a Federally qualified health center as defined
in section 1905(l)(2)(B).
133
‘‘(6) RURAL HEALTH CLINIC.—The term ‘rural
health clinic’ means a rural health clinic as defined
in section 1905(l)(1).
‘‘(b) GENERAL REQUIREMENTS
FOR RISK CON-
TRACTING ENTITIES.—
‘‘(1) ORGANIZATION.—A risk contracting entity
meets the requirements of this section only if such
entity—
‘‘(A)(i) is a qualified health maintenance
organization as defined in section 1310(d) of
the Public Health Service Act, as determined by
the Secretary pursuant to section 1312 of such
Act; or
‘‘(ii) is described in subparagraph (C), (D),
(E), (F), or (G) of subsection (e)(4);
‘‘(B) is a Federally qualified health center
or a rural health clinic which has made ade-
quate provision against the risk of insolvency
(pursuant to the guidelines and regulations is-
sued by the Secretary under this section), and
ensures that individuals eligible for medical as-
sistance under the State plan are not held liable
for such entity’s debts in case of such entity’s
insolvency; or
134
‘‘(C) is an entity which meets all applicable
State licensing requirements and has made ade-
quate provision against the risk of insolvency
(pursuant to the guidelines and regulations is-
sued by the Secretary under this section), and
ensures that individuals eligible for medical as-
sistance under the State plan are not held liable
for such entity’s debts in case of such entity’s
insolvency.
‘‘(2) GUARANTEES OF ENROLLEE ACCESS.—A
risk contracting entity meets the requirements of
this section only if—
‘‘(A) the geographic locations, hours of op-
eration, patient to staff ratios, and other rel-
evant characteristics of such entity are suffi-
cient to afford individuals eligible for medical
assistance under the State plan access to such
entities that is at least equivalent to the access
to health care providers that would be available
to such individuals if such individuals were not
enrolled with such entity;
‘‘(B) such entity has reasonable and ade-
quate hours of operation, including 24-hour
availability of—
135
‘‘(i)(I) treatment for an unforeseen ill-
ness, injury, or condition of an individual
eligible for medical assistance under the
State plan and enrolled with such entity;
or
‘‘(II) referral to other health care pro-
viders for such treatment; and
‘‘(ii) other information, as determined
by the Secretary or the State; and
‘‘(C) such entity complies with such other
requirements relating to access to care as the
Secretary or the State may impose.
‘‘(3) CONTRACT WITH STATE AGENCY.—A risk
contracting entity meets the requirements of this
section only if such entity has a written contract
with the State agency which provides—
‘‘(A) that the entity will comply with all
applicable provisions of this section, that the
State has the right to penalize the entity for
failure to comply with such requirements and to
terminate the contract in accordance with sub-
section (j), and that the entity will be subject
to penalties imposed by the Secretary under
subsection (i) for failure to comply with such
requirements;
136
‘‘(B) for a payment methodology based on
experience rating or another actuarially sound
methodology approved by the Secretary, which
guarantees (as demonstrated by such models or
formulas as the Secretary may approve) that—
‘‘(i) payments to the entity under the
contract shall not exceed an amount equal
to 100 percent of the costs (which shall in-
clude administrative costs and which may
include costs for inpatient hospital services
that would have been incurred in the ab-
sence of such contract) that would have
been incurred by the State agency in the
absence of the contract; and
‘‘(ii) the financial risk for inpatient
hospital services is limited to an extent es-
tablished by the State;
‘‘(C) that the Secretary and the State (or
any person or organization designated by ei-
ther) shall have the right to audit and inspect
any books and records of the entity (and of any
subcontractor) that pertain—
‘‘(i) to the ability of the entity (or a
subcontractor) to bear the risk of potential
financial losses; or
137
‘‘(ii) to services performed or deter-
minations of amounts payable under the
contract;
‘‘(D) that in the entity’s enrollment,
reenrollment, or disenrollment of individuals eli-
gible for medical assistance under the State
plan and eligible to enroll, reenroll, or disenroll
with the entity pursuant to the contract, the en-
tity will not discriminate among such individ-
uals on the basis of such individuals’ health sta-
tus or requirements for health care services;
‘‘(E)(i) individuals eligible for medical as-
sistance under the State plan who have enrolled
with the entity are permitted to terminate such
enrollment without cause as of the beginning of
the first calendar month (or in the case of an
entity described in subsection (e)(4), as of the
beginning of the first enrollment period) follow-
ing a full calendar month after a request is
made for such termination;
‘‘(ii) that when an individual has relocated
outside the entity’s service area, and the entity
has been notified of the relocation, services
(within reasonable limits) furnished by a health
care provider outside the service area will be re-
138
imbursed either by the entity or by the State
agency; and
‘‘(iii) for written notification of each such
individual’s right to terminate enrollment,
which shall be provided at the time of such indi-
vidual’s enrollment, and, in the case of a child
with special health care needs as defined in sub-
section (e)(1)(B)(ii), at the time the entity iden-
tifies such a child;
‘‘(F) in the case of services immediately re-
quired to treat an unforeseen illness, injury, or
condition, of an individual eligible for medical
assistance under the State plan and enrolled
with the entity—
‘‘(i) that such services shall not be
subject to a preapproval requirement; and
‘‘(ii) where such services are furnished
by a health care provider other than the
entity, for reimbursement of such provider
either by the entity or by the State agency;
‘‘(G) for disclosure of information in ac-
cordance with subsection (h) and section 1124;
‘‘(H) that any physician incentive plan op-
erated by the entity meets the requirements of
section 1876(i)(8);
139
‘‘(I) for maintenance of sufficient patient
encounter data to identify the physician who de-
livers services to patients;
‘‘(J) that the entity will comply with the
requirement of section 1902(w) with respect to
each enrollee;
‘‘(K) that the entity will implement a
grievance system, inform enrollees in writing
about how to use such grievance system, ensure
that grievances are addressed in a timely man-
ner, and report grievances to the State at inter-
vals to be determined by the State;
‘‘(L) that contracts between the entity and
each subcontractor of such entity will require
each subcontractor—
‘‘(i) to cooperate with the entity in the
implementation of its internal quality as-
surance program under paragraph (4) and
adhere to the standards set forth in the
quality 
assurance 
program, 
including
standards with respect to access to care,
facilities in which patients receive care,
and availability, maintenance, and review
of medical records;
140
‘‘(ii) to cooperate with the Secretary,
the State agency and any contractor to the
State in monitoring and evaluating the
quality and appropriateness of care pro-
vided to enrollees as required by Federal or
State laws and regulations; and
‘‘(iii) where applicable, to adhere to
regulations and program guidance with re-
spect to reporting requirements under sec-
tion 1905(r);
‘‘(M) that, where the State deems it nec-
essary to ensure the timely provision to enroll-
ees 
of 
the 
services 
listed 
in 
subsection
(f)(2)(C)(ii), the State may arrange for the pro-
vision of such services by health care providers
other than the entity and may adjust its pay-
ments to the entity accordingly;
‘‘(N) that the entity and the State will
comply with guidelines and regulations issued
by the Secretary with respect to procedures for
marketing and information that must be pro-
vided to individuals eligible for medical assist-
ance under the State plan;
‘‘(O) that the entity must provide pay-
ments to hospitals for inpatient hospital serv-
141
ices furnished to infants who have not attained
the age of 1 year, and to children who have not
attained the age of 6 years and who receive
such services in a disproportionate share hos-
pital, in accordance with paragraphs (2) and
(3) of section 1902(s);
‘‘(P) that the entity shall report to the
State, at such time and in such manner as the
State shall require, on the rates paid for hos-
pital services (by type of hospital and type of
service) furnished to individuals enrolled with
the entity;
‘‘(Q) detailed information regarding the
relative responsibilities of the entity and the
State, for providing (or arranging for the provi-
sion of), and making payment for, the following
items and services:
‘‘(i) immunizations;
‘‘(ii) the purchase of vaccines;
‘‘(iii) lead screening and treatment
services;
‘‘(iv) screening and treatment for tu-
berculosis;
‘‘(v) screening and treatment for, and
preventive services related to, sexually
142
transmitted diseases, including HIV infec-
tion;
‘‘(vi) screening, diagnostic, and treat-
ment services required under section
1905(r);
‘‘(vii) family planning services;
‘‘(viii) services prescribed under—
‘‘(I) an Individual Education
Plan or Individualized Family Service
Plan under part B or part H of the
Individuals with Disabilities Edu-
cation Act; and
‘‘(II) any other individual plan of
care or treatment developed under
this title or title V;
‘‘(ix) transportation needed to obtain
services to which the enrollee is entitled
under the State plan or pursuant to an in-
dividual plan of care or treatment de-
scribed in subclauses (I) and (II) of clause
(viii); and
‘‘(x) such other services as the Sec-
retary may specify;
‘‘(R) detailed information regarding the
procedures for coordinating the relative respon-
143
sibilities of the entity and the State to ensure
prompt delivery of, compliance with any appli-
cable reporting requirements related to, and ap-
propriate record keeping with respect to, the
items and services described in subparagraph
(Q); and
‘‘(S) such other provisions as the Secretary
may require.
‘‘(4) INTERNAL QUALITY ASSURANCE.—A risk
contracting entity meets the requirements of this
section only if such entity has in effect a written in-
ternal quality assurance program which includes a
systematic process to achieve specified and measur-
able goals and objectives for access to, and quality
of, care, which—
‘‘(A) identifies the organizational units re-
sponsible for performing specific quality assur-
ance functions, and ensures that such units are
accountable to the governing body of the entity
and that such units have adequate supervision,
staff, and other necessary resources to perform
these functions effectively,
‘‘(B) if any quality assurance functions are
delegated to other entities, ensures that the risk
contracting entity remains accountable for all
144
quality assurance functions and has mecha-
nisms to ensure that all quality assurance ac-
tivities are carried out,
‘‘(C) includes methods to ensure that phy-
sicians and other health care professionals
under contract with the entity are licensed or
certified as required by State law, or are other-
wise qualified to perform the services such phy-
sicians and other professionals provide, and
that these qualifications are ensured through
appropriate credentialing and recredentialing
procedures,
‘‘(D) provides for continuous monitoring of
the delivery of health care, through—
‘‘(i) identification of clinical areas to
be monitored, including immunizations,
prenatal care, services required under sec-
tion 1905(r), and other appropriate clinical
areas, to reflect care provided to enrollees
eligible for medical assistance under the
State plan,
‘‘(ii) use of quality indicators and
standards for assessing the quality and ap-
propriateness of care delivered, and the
availability and accessibility of all services
145
for which the entity is responsible under
such entity’s contract with the State,
‘‘(iii) use of epidemiological data or
chart review, as appropriate, and patterns
of care overall,
‘‘(iv) patient surveys, spot checks, or
other appropriate methods to determine
whether—
‘‘(I) enrollees are able to obtain
timely appointments with primary
care providers and specialists, and
‘‘(II) 
enrollees 
are 
otherwise
guaranteed access and care as pro-
vided under paragraph (2),
‘‘(v) provision of written information
to health care providers and other person-
nel on the outcomes, quality, availability,
accessibility, and appropriateness of care,
and
‘‘(vi) implementation of corrective ac-
tions,
‘‘(E) includes standards for timely enrollee
access to information and care which at a mini-
mum shall incorporate standards used by the
State or professional or accreditation bodies for
146
facilities furnishing perinatal and neonatology
care and other forms of specialized medical and
surgical care,
‘‘(F) includes standards for the facilities in
which patients receive care,
‘‘(G) includes standards for managing and
treating medical conditions prevalent among
such entity’s enrollees eligible for medical as-
sistance under the State plan,
‘‘(H) includes mechanisms to ensure that
enrollees eligible for medical assistance under
the State plan receive services for which the en-
tity is responsible under the contract which are
consistent with standards established by the ap-
plicable professional societies or government
agencies,
‘‘(I) includes standards for the availability,
maintenance, and review of medical records
consistent with generally accepted medical prac-
tice,
‘‘(J) provides for dissemination of quality
assurance procedures to health care providers
under contract with the entity, and
‘‘(K) meets any other requirements pre-
scribed by the Secretary or the State.
147
‘‘(c) GENERAL REQUIREMENTS FOR PRIMARY CARE
CASE MANAGEMENT PROGRAMS.—A primary care case
management program implemented by a State under this
section shall—
‘‘(1) provide that each primary care case man-
agement entity participating in such program has a
written contract with the State agency,
‘‘(2) include methods for selection and monitor-
ing of participating primary care case management
entities to ensure—
‘‘(A) that the geographic locations, hours
of operation, patient to staff ratio, and other
relevant characteristics of such entities are suf-
ficient to afford individuals eligible for medical
assistance under the State plan access to such
entities that is at least equivalent to the access
to health care providers that would be available
to such individuals if such individuals were not
enrolled with such entity,
‘‘(B) that such entities and their profes-
sional personnel are licensed as required by
State law and qualified to provide case manage-
ment services, through methods such as ongo-
ing monitoring of compliance with applicable re-
148
quirements and providing information and tech-
nical assistance, and
‘‘(C) that such entities—
‘‘(i) provide timely and appropriate
primary care to such enrollees consistent
with standards established by applicable
professional 
societies 
or 
governmental
agencies, or such other standards pre-
scribed by the Secretary or the State, and
‘‘(ii) where other items and services
are determined to be medically necessary,
give timely approval of such items and
services and referral to appropriate health
care providers,
‘‘(3) provide that no preapproval shall be re-
quired for emergency health care items or services,
and
‘‘(4) permit individuals eligible for medical as-
sistance under the State plan who have enrolled with
a primary care case management entity to terminate
such enrollment without cause not later than the be-
ginning of the first calendar month following a full
calendar month after the request is made for such
termination.
149
‘‘(d) EXEMPTIONS FROM STATE PLAN REQUIRE-
MENTS.—A State plan may permit or require an individ-
ual eligible for medical assistance under such plan to en-
roll with a risk contracting entity or a primary care case
management entity without regard to the requirements set
forth in the following paragraphs of section 1902(a):
‘‘(1) Paragraph (1) (concerning statewideness).
‘‘(2) Paragraph (10)(B) (concerning com-
parability of benefits), to the extent benefits not in-
cluded in the State plan are provided.
‘‘(3) Paragraph (23) (concerning freedom of
choice of provider), except with respect to services
described in section 1905(a)(4)(C) and except as re-
quired under subsection (e).
‘‘(e) STATE OPTIONS WITH RESPECT TO ENROLL-
MENT AND DISENROLLMENT.—
‘‘(1) MANDATORY ENROLLMENT.—
‘‘(A) IN GENERAL.—Except as provided in
subparagraph (B), a State plan may require an
individual eligible for medical assistance under
such plan to enroll with a risk contracting en-
tity or a primary care case management entity
only if the individual is permitted a choice with-
in a reasonable service area (as defined by the
State)—
150
‘‘(i) between or among 2 or more risk
contracting entities,
‘‘(ii) among a risk contracting entity
and a primary care case management pro-
gram, or
‘‘(iii) among primary care case man-
agement entities.
‘‘(B) SPECIAL NEEDS CHILDREN.—
‘‘(i) IN GENERAL.—A State may not
require a child with special health care
needs (as defined in clause (ii)) to enroll
with a risk contracting entity or a primary
care case management entity.
‘‘(ii) DEFINITION.—For purposes of
this subparagraph, the term ‘child with
special health care needs’ refers to an indi-
vidual eligible for supplemental security in-
come under title XVI, a child described
under section 501(a)(1)(D), or a child de-
scribed in section 1902(e)(3).
‘‘(2) REENROLLMENT
OF
INDIVIDUALS
WHO
REGAIN ELIGIBILITY.—In the case of an individual
who—
‘‘(A) in a month is eligible for medical as-
sistance under the State plan and enrolled with
151
a risk contracting entity with a contract under
this section,
‘‘(B) in the next month (or next 2 months)
is not eligible for such medical assistance, but
‘‘(C) in the succeeding month is again eli-
gible for such benefits,
the State agency (subject to subsection (b)(3)(E))
may enroll the individual for that succeeding month
with such entity, if the entity continues to have a
contract with the State agency under this sub-
section.
‘‘(3) DISENROLLMENT.—
‘‘(A) RESTRICTIONS ON DISENROLLMENT
WITHOUT CAUSE.—Except as provided in sub-
paragraph (C), a State plan may restrict the
period in which individuals enrolled with risk
contracting entities described in paragraph (4)
may terminate such enrollment without cause to
the first month of each period of enrollment (as
defined in subparagraph (B)), but only if the
State provides notification, at least once during
each such enrollment period, to individuals en-
rolled with such entity of the right to terminate
such enrollment and the restriction on the exer-
cise of this right. Such restriction shall not
152
apply to requests for termination of enrollment
for cause.
‘‘(B) PERIOD OF ENROLLMENT.—For pur-
poses of this paragraph, the term ‘period of en-
rollment’ means—
‘‘(i) a period not to exceed 6 months
in duration, or
‘‘(ii) a period not to exceed 1 year in
duration, in the case of a State that, on
the effective date of this paragraph, had in
effect a waiver under section 1115 of re-
quirements under this title under which
the State could establish a 1-year mini-
mum period of enrollment with risk con-
tracting entities.
‘‘(C) SPECIAL NEEDS CHILDREN.—A State
may not restrict disenrollment of a child with
special health care needs (as defined in para-
graph (1)(B)(ii)).
‘‘(4) ENTITIES ELIGIBLE FOR DISENROLLMENT
RESTRICTIONS.—A risk contracting entity described
in this paragraph is—
‘‘(A) a qualified health maintenance orga-
nization as defined in section 1310(d) of the
Public Health Service Act,
153
‘‘(B) an eligible organization with a con-
tract under section 1876,
‘‘(C) an entity that is receiving (and has
received during the previous 2 years) a grant of
at least $100,000 under section 329(d)(1)(A)
or 330(d)(1) of the Public Health Service Act,
‘‘(D) an entity that—
‘‘(i) received a grant of at least
$100,000 under section 329(d)(1)(A) or
section 330(d)(1) of the Public Health
Service Act in the fiscal year ending June
30, 1976, and has been a grantee under ei-
ther such section for all periods after that
date, and
‘‘(ii) provides to its enrollees, on a
prepaid capitation or other risk basis, all
of the services described in paragraphs (1),
(2), (3), (4)(C), and (5) of section 1905(a)
(and the services described in section
1905(a)(7), to the extent required by sec-
tion 1902(a)(10)(D)),
‘‘(E) an entity that is receiving (and has
received during the previous 2 years) at least
$100,000 (by grant, subgrant, or subcontract)
154
under the Appalachian Regional Development
Act of 1965,
‘‘(F) a nonprofit primary health care en-
tity located in a rural area (as defined by the
Appalachian Regional Commission)—
‘‘(i) which received in the fiscal year
ending June 30, 1976, at least $100,000
(by grant, subgrant, or subcontract) under
the Appalachian Regional Development Act
of 1965, and
‘‘(ii) which, for all periods after such
date, either has been the recipient of a
grant, subgrant, or subcontract under such
Act or has provided services on a prepaid
capitation or other risk basis under a con-
tract with the State agency initially en-
tered into during a year in which the entity
was the recipient of such a grant,
subgrant, or subcontract,
‘‘(G) an entity that had contracted with
the State agency prior to 1970 for the provi-
sion, on a prepaid risk basis, of services (which
did not include inpatient hospital services) to
individuals eligible for medical assistance under
the State plan,
155
‘‘(H) a program pursuant to an undertak-
ing described in subsection (n)(3) in which at
least 25 percent of the membership enrolled on
a prepaid basis are individuals who—
‘‘(i) are not insured for benefits under
part B of title XVIII or eligible for medical
assistance under the State plan, and
‘‘(ii) (in the case of such individuals
whose prepayments are made in whole or
in part by any government entity) had the
opportunity at the time of enrollment in
the program to elect other coverage of
health care costs that would have been
paid in whole or in part by any govern-
mental entity,
‘‘(I) an entity that, on the date of enact-
ment of this provision, had a contract with the
State agency under a waiver under section 1115
or 1915(b) and was not subject to a require-
ment under this title to permit disenrollment
without cause, or
‘‘(J) an entity that has a contract with the
State agency under a waiver under section
1915(b)(5).
‘‘(f) STATE MONITORING AND EXTERNAL REVIEW.—
156
‘‘(1) STATE GRIEVANCE PROCEDURE.—A State
contracting with a risk contracting entity or a pri-
mary care case management entity under this sec-
tion shall provide for a grievance procedure for
enrollees of such entity with at least the following
elements:
‘‘(A) A toll-free telephone number for en-
rollee questions and grievances.
‘‘(B) Periodic notification of enrollees of
their rights with respect to such entity or
program.
‘‘(C) Periodic sample reviews of grievances
registered with such entity or program or with
the State.
‘‘(D) Periodic survey and analysis of en-
rollee satisfaction with such entity or program,
including 
interviews 
with 
individuals 
who
disenroll from the entity or program.
‘‘(2) STATE MONITORING OF QUALITY AND AC-
CESS.—
‘‘(A) RISK
CONTRACTING
ENTITIES.—A
State contracting with a risk contracting entity
under this section shall provide for ongoing
monitoring of such entity’s compliance with the
requirements of subsection (b), including com-
157
pliance with the requirements of such entity’s
contract under subsection (b)(3), and shall un-
dertake appropriate followup activities to ensure
that any problems identified are rectified and
that compliance with the requirements of sub-
section (b) and the requirements of the contract
under subsection (b)(3) is maintained.
‘‘(B) PRIMARY CARE CASE MANAGEMENT
ENTITIES.—A State electing to implement a
primary care case management program shall
provide for ongoing monitoring of the pro-
gram’s compliance with the requirements of
subsection (c) and shall undertake appropriate
followup activities to ensure that any problems
identified are rectified and that compliance with
subsection (c) is maintained.
‘‘(C) SERVICES.—
‘‘(i) IN
GENERAL.—The State shall
establish procedures (in addition to those
required under subparagraphs (A) and
(B)) to ensure that the services listed in
clause (ii) are available in a timely manner
to an individual enrolled with a risk con-
tracting entity or a primary care case man-
agement entity. Where necessary to ensure
158
the timely provision of such services, the
State shall arrange for the provision of
such services by health care providers
other than the risk contracting entity or
the primary care case management entity
in which an individual is enrolled.
‘‘(ii) SERVICES LISTED.—The services
listed in this clause are—
‘‘(I) prenatal care;
‘‘(II) immunizations;
‘‘(III) lead screening and treat-
ment;
‘‘(IV) prevention, diagnosis and
treatment of tuberculosis, sexually
transmitted diseases (including HIV
infection), and other communicable
diseases; and
‘‘(V) such other services as the
Secretary may specify.
‘‘(iii) REPORT.—The procedures re-
ferred to in clause (i) shall be described in
an annual report to the Secretary provided
by the State.
‘‘(3) EXTERNAL INDEPENDENT REVIEW.—
159
‘‘(A) IN GENERAL.—Except as provided in
paragraph (4), a State contracting with a risk
contracting entity under this section shall pro-
vide for an annual external independent review
of the quality and timeliness of, and access to,
the items and services specified in such entity’s
contract with the State agency. Such review
shall be conducted by a utilization control and
peer review organization with a contract under
section 1153 or another organization unaffili-
ated with the State government or with any
risk contracting entity and approved by the
Secretary.
‘‘(B) CONTENTS OF REVIEW.—An external
independent review conducted under this para-
graph shall include the following:
‘‘(i) A review of the entity’s medical
care, through sampling of medical records
or other appropriate methods, for indica-
tions of quality of care and inappropriate
utilization (including overutilization) and
treatment.
‘‘(ii) A review of enrollee inpatient
and ambulatory data, through sampling of
medical records or other appropriate meth-
160
ods, to determine trends in quality and ap-
propriateness of care.
‘‘(iii) Notification of the entity and
the State when the review under this para-
graph indicates inappropriate care, treat-
ment, or utilization of services (including
overutilization).
‘‘(iv) Other activities as prescribed by
the Secretary or the State.
‘‘(C) AVAILABILITY.—The results of each
external independent review conducted under
this paragraph shall be available to the public
consistent with the requirements for disclosure
of information contained in section 1160.
‘‘(4) DEEMED
COMPLIANCE
WITH
EXTERNAL
INDEPENDENT QUALITY OF CARE REVIEW REQUIRE-
MENTS.—
‘‘(A) IN
GENERAL.—The Secretary may
deem the State to have fulfilled the requirement
for independent external review of quality of
care with respect to an entity which has been
accredited by an organization described in sub-
paragraph (B) and approved by the Secretary.
161
‘‘(B) ACCREDITING
ORGANIZATION.—An
accrediting organization described in this sub-
paragraph must—
‘‘(i) exist for the primary purpose of
accrediting coordinated care organizations;
‘‘(ii) be governed by a group of indi-
viduals representing health care providers,
purchasers, regulators, and consumers (a
minority of which shall be representatives
of health care providers);
‘‘(iii) have substantial experience in
accrediting coordinated care organizations,
including an organization’s internal quality
assurance program;
‘‘(iv) be independent of health care
providers or associations of health care
providers;
‘‘(v) be a nonprofit organization; and
‘‘(vi) have an accreditation process
which meets requirements specified by the
Secretary.
‘‘(5) 
FEDERAL
MONITORING
RESPONSIBIL-
ITIES.—The Secretary shall review the external inde-
pendent reviews conducted pursuant to paragraph
(3) and shall monitor the effectiveness of the State’s
162
monitoring and followup activities required under
subparagraph (A) of paragraph (2). If the Secretary
determines that a State’s monitoring and followup
activities are not adequate to ensure that the re-
quirements of paragraph (2) are met, the Secretary
shall undertake appropriate followup activities to en-
sure that the State improves its monitoring and fol-
lowup activities.
‘‘(g) PARTICIPATION
OF FEDERALLY QUALIFIED
HEALTH CENTERS AND RURAL HEALTH CLINICS.—
‘‘(1) IN GENERAL.—Each risk contracting en-
tity shall, with respect to each electing essential
community provider (as defined in paragraph (5))
located within the plan’s service area, either—
‘‘(A) enter into a written provider partici-
pation agreement (described in paragraph (2))
with the provider, or
‘‘(B) enter into a written agreement under
which the plan shall make payment to the pro-
vider in accordance with paragraph (3).
‘‘(2) PARTICIPATION
AGREEMENT.—A partici-
pation agreement between a risk contracting entity
and an electing essential community provider under
this subsection shall provide that the entity agrees to
treat the provider in accordance with terms and con-
163
ditions at least as favorable as those that are appli-
cable to other participating providers with the risk
contracting entity with respect to each of the follow-
ing:
‘‘(A) The scope of services for which pay-
ment is made by the entity to the provider.
‘‘(B) The rate of payment for covered care
and services.
‘‘(C) The availability of financial incentives
to participating providers.
‘‘(D) Limitations on financial risk provided
to other participating providers.
‘‘(E) Assignment of enrollees to participat-
ing providers.
‘‘(F) Access by the provider’s patients to
providers in medical specialties or subspecialties
participating in the plan.
‘‘(3) PAYMENTS FOR PROVIDERS WITHOUT PAR-
TICIPATION AGREEMENTS.—Payment in accordance
with this paragraph is payment based on payment
methodologies and rates used under the applicable
Medicare payment methodology and rates (or the
most closely applicable methodology under such pro-
gram as the Secretary of Health and Human Serv-
ices specifies in regulations).
164
‘‘(4) ELECTION.—
‘‘(A) IN GENERAL.—In this subsection, the
term ‘electing essential community provider’
means, with respect to a risk contracting entity,
an essential community provider that elects this
subpart to apply to the entity.
‘‘(B) FORM
OF
ELECTION.—An election
under this paragraph shall be made in a form
and manner specified by the Secretary, and
shall include notice to the risk contracting en-
tity involved. Such an election may be made an-
nually with respect to an entity, except that the
entity and provider may agree to make such an
election on a more frequent basis.
‘‘(5) PROVIDERS
DESCRIBED.—The categories
of providers and organizations described in this sub-
section are as follows:
‘‘(A) MIGRANT HEALTH CENTERS.—A re-
cipient or subrecipient of a grant under section
329 of the Public Health Service Act.
‘‘(B) COMMUNITY
HEALTH
CENTERS.—A
recipient or subrecipient of a grant under sec-
tion 330 of the Public Health Service Act.
165
‘‘(C) HOMELESS PROGRAM PROVIDERS.—A
recipient or subrecipient of a grant under sec-
tion 340 of the Public Health Service Act.
‘‘(D) PUBLIC HOUSING PROVIDERS.—A re-
cipient or subrecipient of a grant under section
340A of the Public Health Service Act.
‘‘(E) FAMILY PLANNING CLINICS.—A re-
cipient or subrecipient of a grant under title X
of the Public Health Service Act.
‘‘(F) INDIAN HEALTH PROGRAMS.—A serv-
ice unit of the Indian Health Service, a tribal
organization, or an urban Indian program, as
defined in the Indian Health Care Improvement
Act.
‘‘(G) AIDS 
PROVIDERS
UNDER
RYAN
WHITE
ACT.—A public or private nonprofit
health care provider that is a recipient or sub-
recipient of a grant under title XXIII of the
Public Health Service Act.
‘‘(H) MATERNAL AND CHILD HEALTH PRO-
VIDERS.—A public or private nonprofit entity
that provides prenatal care, pediatric care, or
ambulatory services to children, including chil-
dren with special health care needs, and that
166
receives funding for such care or services under
title V of the Social Security Act.
‘‘(I) FEDERALLY QUALIFIED HEALTH CEN-
TER; RURAL
HEALTH
CLINIC.—A Federally-
qualified health center or a rural health clinic
(as such terms are defined in section 1861(aa)).
‘‘(6) SUBRECIPIENT
DEFINED.—In this sub-
section, the term ‘subrecipient’ means, with respect
to a recipient of a grant under a particular author-
ity, an entity that—
‘‘(A) is receiving funding from such a
grant under a contract with the principal recipi-
ent of such a grant, and
‘‘(B) meets the requirements established to
be a recipient of such a grant.
‘‘(7) SUNSET OF REQUIREMENT.—The require-
ments of this subsection shall only apply to risk con-
tracting entities during calendar years 1995 through
2000.
‘‘(h) TRANSACTIONS WITH PARTIES IN INTEREST.—
‘‘(1) IN GENERAL.—Each risk contracting en-
tity which is not a qualified health maintenance or-
ganization (as defined in section 1310(d) of the
Public Health Service Act) must report to the State
and, upon request, to the Secretary, the Inspector
167
General of the Department of Health and Human
Services, and the Comptroller General of the United
States a description of transactions between the en-
tity and a party in interest (as defined in section
1318(b) of such Act), including the following trans-
actions:
‘‘(A) Any sale or exchange, or leasing of
any property between the entity and such a
party.
‘‘(B) Any furnishing for consideration of
goods, services (including management serv-
ices), or facilities between the entity and such
a party, but not including salaries paid to em-
ployees for services provided in the normal
course of their employment.
‘‘(C) Any lending of money or other exten-
sion of credit between the entity and such a
party.
The State or the Secretary may require that infor-
mation reported with respect to a risk contracting
entity which controls, or is controlled by, or is under
common control with, another entity be in the form
of a consolidated financial statement for the risk
contracting entity and such entity.
168
‘‘(2) AVAILABILITY
OF
INFORMATION.—Each
risk contracting entity shall make the information
reported pursuant to paragraph (1) available to its
enrollees upon reasonable request.
‘‘(i) REMEDIES FOR FAILURE TO COMPLY.—
‘‘(1) IN GENERAL.—If the Secretary determines
that a risk contracting entity or a primary care case
management entity—
‘‘(A) fails substantially to provide services
required under section 1905(r), when such an
entity is required to do so, or provide medically
necessary items and services that are required
to be provided to an individual enrolled with
such an entity, if the failure has adversely af-
fected (or has substantial likelihood of adversely
affecting) the individual;
‘‘(B) imposes premiums on individuals en-
rolled with such an entity in excess of the pre-
miums permitted under this title;
‘‘(C) acts to discriminate among individ-
uals in violation of the provision of subsection
(b)(3)(D), including expulsion or refusal to
reenroll an individual or engaging in any prac-
tice that would reasonably be expected to have
the effect of denying or discouraging enrollment
169
(except as permitted by this section) by eligible
individuals with the entity whose medical condi-
tion or history indicates a need for substantial
future medical services;
‘‘(D) misrepresents or falsifies information
that is furnished—
‘‘(i) to the Secretary or the State
under this section; or
‘‘(ii) to an individual or to any other
entity under this section; or
‘‘(E) fails to comply with the requirements
of section 1876(i)(8),
the Secretary may provide, in addition to any other
remedies available under law, for any of the rem-
edies described in paragraph (2).
‘‘(2) ADDITIONAL
REMEDIES.—The remedies
described in this paragraph are—
‘‘(A) civil money penalties of not more
than $25,000 for each determination under
paragraph (1), or, with respect to a determina-
tion under subparagraph (C) or (D)(i) of such
paragraph, of not more than $100,000 for each
such determination, plus, with respect to a de-
termination under paragraph (1)(B), double the
excess amount charged in violation of such
170
paragraph (and the excess amount charged
shall be deducted from the penalty and returned
to the individual concerned), and plus, with re-
spect to a determination under paragraph
(1)(C), $15,000 for each individual not enrolled
as a result of a practice described in such para-
graph, or
‘‘(B) denial of payment to the State for
medical assistance furnished by a risk contract-
ing entity or a primary care case management
entity under this section for individuals enrolled
after the date the Secretary notifies the entity
of a determination under paragraph (1) and
until the Secretary is satisfied that the basis for
such determination has been corrected and is
not likely to recur.
The provisions of section 1128A (other than sub-
sections (a) and(b)) shall apply to a civil money pen-
alty under subparagraph (A) in the same manner as
such provisions apply to a penalty or proceeding
under section 1128A(a).
‘‘(j) TERMINATION OF CONTRACT BY STATE.—Any
State which has a contract with a risk contracting entity
or a primary care case management entity may terminate
171
such contract if such entity fails to comply with the terms
of such contract or any applicable provision of this section.
‘‘(k) FAIR HEARING.—Nothing in this section shall
affect the rights of an individual eligible to receive medical
assistance under the State plan to obtain a fair hearing
under section 1902(a)(3) or under applicable State law.
‘‘(l) DISPROPORTIONATE SHARE HOSPITALS.—Noth-
ing in this section shall affect any requirement on a State
to comply with section 1923.
‘‘(m) REFERRAL PAYMENTS.—For 1 year following
the date on which individuals eligible for medical assist-
ance under the State plan in a service area are required
to enroll with a risk contracting entity or a primary care
case management entity, Federally qualified health cen-
ters and rural health centers located in such service area
or providing care to such enrollees, shall receive a fee for
educating such enrollees about the availability of services
from the risk contracting entity or primary care case man-
agement entity with which such enrollees are enrolled.
‘‘(n) SPECIAL RULES.—
‘‘(1) NONAPPLICABILITY
OF
CERTAIN
PROVI-
SIONS TO CERTAIN RISK CONTRACTING ENTITIES.—
In the case of any risk contracting entity which—
172
‘‘(A)(i) is an individual physician or a phy-
sician group practice of less than 50 physicians,
and
‘‘(ii) is not described in paragraphs (A)
and (B) of subsection (b)(1), and
‘‘(B) is at risk only for the health care
items and services directly provided by such en-
tity,
paragraphs (3)(K), (3)(L), (3)(O), (3)(P), and (4)
of subsection (b), and paragraph (3) of subsection
(f), shall not apply to such entity.
‘‘(2) EXCEPTION
FROM
DEFINITION
OF
RISK
CONTRACTING ENTITY.—For purposes of this sec-
tion, the term ‘risk contracting entity’ shall not in-
clude a health insuring organization which was used
by a State before April 1, 1986, to administer a por-
tion of the State plan of such State on a statewide
basis.
‘‘(3) NEW
JERSEY.—The rules under section
1903(m)(6) as in effect on the day before the effec-
tive date of this section shall apply in the case of an
undertaking by the State of New Jersey (as de-
scribed in such section 1903(m)(6)).
‘‘(o) CONTINUATION
OF CERTAIN COORDINATED
CARE PROGRAMS.—The Secretary may provide for the
177
eligible for benefits under this title until the end
of the month following the month in which such
individual would (but for this paragraph) lose
such eligibility because of excess income and re-
sources, if the individual is enrolled with a risk
contracting entity or primary care case manage-
ment entity (as those terms are defined in sec-
tion 1933(a)).’’.
(d) ENHANCED MATCH RELATED TO QUALITY RE-
VIEW.—Section 1903(a)(3)(C) of such Act (42 U.S.C.
1396b(a)(3)(C)) is amended—
(1) by striking ‘‘organization or by’’ and insert-
ing ‘‘organization, by’’; and
(2) by striking ‘‘section 1152, as determined by
the Secretary,’’ and inserting ‘‘section 1152, as de-
termined by the Secretary, or by another organiza-
tion approved by the Secretary which is unaffiliated
with the State government or with any risk contract-
ing entity (as defined in section 1933(a)(3)),’’.
(e) ACCUMULATION OF RESERVES BY CERTAIN EN-
TITIES.—Any organization referred to in section 329, 330,
or 340, of the Public Health Service Act which has con-
tracted with a State agency as a risk contracting entity
under section 1933(g)(3)(A) of the Social Security Act
may accumulate reserves with respect to payments made
178
to such organization under section 1933(g)(3)(C) of such
Act.
(f) CONFORMING AMENDMENTS.—
(1) Section 1128(b)(6)(C)(i) of such Act (42
U.S.C. 1320a–7(b)(6)(C)(i)) is amended by striking
‘‘health maintenance organization’’ and inserting
‘‘risk contracting entity’’.
(2) Section 1902(a)(23) of such Act (42 U.S.C.
1396a(a)(23)) is amended by striking ‘‘primary
care-case management system (described in section
1915(b)(1)), a health maintenance organization,’’
and inserting ‘‘primary care case management pro-
gram (as defined in section 1933(a)(1)), a risk con-
tracting entity (as defined in section 1933(a)(3)),’’.
(3) Section 1902(a)(30)(C) of such Act (42
U.S.C. 1396a(a)(30)(C)) is amended by striking
‘‘use a utilization’’ and all that follows through
‘‘with the results’’ and inserting ‘‘provide for inde-
pendent review and quality assurance of entities with
contracts under section 1933, in accordance with
subsection (f) of such section 1933, with the
results’’.
(4) Section 1902(a)(57) of such Act (42 U.S.C.
1396a(a)(57)) is amended by striking ‘‘or health
maintenance organization (as defined in section
179
1903(m)(1)(A))’’ and inserting ‘‘risk contracting en-
tity, or primary care case management entity (as de-
fined in section 1933(a))’’.
(5) Section 1902(a) of such Act (42 U.S.C.
1396a), as amended by section 321(a), is amend-
ed—
(A) by striking ‘‘and’’ at the end of para-
graph (62);
(B) by striking the period at the end of
paragraph (63) and inserting ‘‘; and’’; and
(C) by adding at the end the following new
paragraphs:
‘‘(64) at State option, provide for a primary
care case management program in accordance with
section 1933; and
‘‘(65) at State option, provide for a program
under which the State contracts with risk contract-
ing entities in accordance with section 1933.’’.
(6) Section 1902(p)(2) of such Act (42 U.S.C.
1396a(p)(2)) is amended by striking ‘‘health mainte-
nance organization (as defined in section 1903(m))’’
and inserting ‘‘risk contracting entity (as defined in
section 1933(a)(3))’’.
(7) Section 1902(w) of such Act (42 U.S.C.
1396a(w)) is amended—
180
(A) in paragraph (1), by striking ‘‘section
1903(m)(1)(A)’’ 
and 
inserting 
‘‘section
1933(a)(3)’’, and
(B) in paragraph (2)(E)—
(i) by striking ‘‘health maintenance
organization’’ and inserting ‘‘risk contract-
ing entity’’, and
(ii) by striking ‘‘organization’’ and in-
serting ‘‘entity’’.
(8) Section 1903(k) of such Act (42 U.S.C.
1396b(k)) is amended by striking ‘‘health mainte-
nance organization which meets the requirements of
subsection (m) of this section’’ and inserting ‘‘risk
contracting entity which meets the requirements of
section 1933’’.
(9) Section 1903(w)(7)(A)(viii) of such Act (42
U.S.C. 1396b(w)(7)(A)(viii)) is amended by striking
‘‘health maintenance organizations (and other orga-
nizations with contracts under section 1903(m))’’
and inserting ‘‘risk contracting entities with con-
tracts under section 1933’’.
(10) Section 1905(a) of such Act (42 U.S.C.
1396d(a)) is amended, in the matter preceding
clause (i), by inserting ‘‘(which may be on a prepaid
capitation or other risk basis)’’ after ‘‘payment’’.
181
(11) Section 1916(b)(2)(D) of such Act (42
U.S.C. 1396o(b)(2)(D)) is amended by striking
‘‘health maintenance organization (as defined in sec-
tion 1903(m))’’ and inserting ‘‘risk contracting en-
tity (as defined in section 1933(a)(3))’’.
(12) Section 1925(b)(4)(D)(iv) of such Act (42
U.S.C. 1396r–6(b)(4)(D)(iv)) is amended—
(A) in the heading, by striking ‘‘HMO’’
and inserting ‘‘RISK CONTRACTING ENTITY’’,
(B) by striking ‘‘health maintenance orga-
nization (as defined in section 1903(m)(1)(A))’’
and inserting ‘‘risk contracting entity (as de-
fined in section 1933(a)(3)’’, and
(C) by striking ‘‘health maintenance orga-
nization in accordance with section 1903(m)’’
and inserting ‘‘risk contracting entity in accord-
ance with section 1933’’.
(13) Paragraphs (1) and (2) of section 1926(a)
of such Act (42 U.S.C. 1396r–7(a)) are each amend-
ed by striking ‘‘health maintenance organizations
under section 1903(m)’’ and inserting ‘‘risk con-
tracting entities under section 1933’’.
(14) Section 1927(j)(1) of such Act (42 U.S.C.
1396r–8(j)(1)) is amended by striking ‘‘ * * *
Health Maintenance Organizations, including those
182
organizations that contract under section 1903(m)’’
and inserting ‘‘risk contracting entities (as defined
in section 1933(a)(3))’’.
(g) EFFECTIVE DATE.—The amendments made by
this section shall become effective with respect to calendar
quarters beginning on or after January 1, 1995.
PART 4—LIMITATIONS ON FUNDING OF
ABORTION SERVICES UNDER MEDICAID
SEC. 341. LIMITATIONS ON FUNDING OF ABORTION SERV-
ICES UNDER MEDICAID.
Title XIX of the Social Security Act (42 U.S.C. 1396
et seq.), as amended by sections 311(a)(1), 321(b), and
331(a)(2), is further amended by redesignating section
1934 as section 1935 and by inserting after section 1933
the following new section:
‘‘LIMITATIONS ON FUNDING OF ABORTION SERVICES
‘‘SEC. 1934. (a) None of the funds authorized by this
title may be used to provide abortions, except to prevent
the death of the mother.
‘‘(b) Nothing in this title shall be construed—
‘‘(1) to require any State to pay for abortions,
except those necessary to prevent the death of the
mother, or
‘‘(2) to require any health plan or other entity
to provide abortions in order to participate in any
program authorized by this title, or
183
‘‘(3) to authorize any State to impose such a
requirement for participation in any program au-
thorized by this title.’’.
TITLE IV—CONTAINING HEALTH
CARE COSTS
Subtitle A—Medical Malpractice
Liability Reform
PART 1—GENERAL PROVISIONS
SEC. 401. FEDERAL REFORM OF MEDICAL MALPRACTICE
LIABILITY ACTIONS.
(a) APPLICABILITY.—This subtitle shall apply with
respect to any medical malpractice liability claim and to
any medical malpractice liability action brought in any
State or Federal court, except that this subtitle—
(1) shall not apply to a claim or action for dam-
ages arising from a vaccine-related injury or death
to the extent that title XXI of the Public Health
Service Act applies to the claim or action, and
(2) it shall not apply to a claim or action for
damages brought pursuant to subtitle C of title VII.
(b) PREEMPTION.—The provisions of this subtitle
shall preempt any State law to the extent such law is in-
consistent with the limitations contained in such provi-
sions. The provisions of this subtitle shall not preempt any
State law that provides for defenses or places limitations
184
on a person’s liability in addition to those contained in
this subtitle or otherwise imposes greater restrictions than
those provided in this subtitle.
(c) EFFECT ON SOVEREIGN IMMUNITY AND CHOICE
OF LAW OR VENUE.—Nothing in subsection (b) shall be
construed to—
(1) waive or affect any defense of sovereign im-
munity asserted by any State under any provision of
law;
(2) waive or affect any defense of sovereign im-
munity asserted by the United States;
(3) affect the applicability of any provision of
the Foreign Sovereign Immunities Act of 1976;
(4) preempt State choice-of-law rules with re-
spect to claims brought by a foreign nation or a citi-
zen of a foreign nation; or
(5) affect the right of any court to transfer
venue or to apply the law of a foreign nation or to
dismiss a claim of a foreign nation or of a citizen
of a foreign nation on the ground of inconvenient
forum.
(d) FEDERAL COURT JURISDICTION NOT ESTAB-
LISHED ON FEDERAL QUESTION GROUNDS.—Nothing in
this subtitle shall be construed to establish any jurisdiction
in the district courts of the United States over medical
185
malpractice liability actions on the basis of section 1331
or 1337 of title 28, United States Code.
SEC. 402. DEFINITIONS.
As used in this subtitle:
(1) ALTERNATIVE DISPUTE RESOLUTION SYS-
TEM; ADR.—The term ‘‘alternative dispute resolution
system’’ or ‘‘ADR’’ means a system established
under this subtitle that provides for the resolution of
medical malpractice liability claims in a manner
other than through medical malpractice liability ac-
tions.
(2) CLAIMANT.—The term ‘‘claimant’’ means
any person who alleges a medical malpractice liabil-
ity claim, and any person on whose behalf such a
claim is alleged, including the decedent in the case
of an action brought through or on behalf of an
estate.
(3) CLEAR AND CONVINCING EVIDENCE.—The
term ‘‘clear and convincing evidence’’ is that meas-
ure or degree of proof that will produce in the mind
of the trier of fact a firm belief or conviction as to
the truth of the allegations sought to be established,
except that such measure or degree of proof is more
than that required under preponderance of the evi-
186
dence, but less than that required for proof beyond
a reasonable doubt.
(4) ECONOMIC DAMAGES.—The term ‘‘economic
damages’’ means damages paid to compensate an in-
dividual for hospital and other medical expenses, lost
wages, lost employment, and other pecuniary losses.
(5) HEALTH CARE PROFESSIONAL.—The term
‘‘health care professional’’ means any individual who
provides health care services in a State and who is
required by the laws or regulations of the State to
be licensed or certified by the State to provide such
services in the State.
(6) HEALTH
CARE
PROVIDER.—The term
‘‘health care provider’’ means any organization or
institution that is engaged in the delivery of health
care services in a State and that is required by the
laws or regulations of the State to be licensed or cer-
tified by the State to engage in the delivery of such
services in the State.
(7) INJURY.—The term ‘‘injury’’ means any ill-
ness, disease, or other harm that is the subject of
a medical malpractice liability action or a medical
malpractice liability claim.
(8) MEDICAL
MALPRACTICE
LIABILITY
AC-
TION.—The term ‘‘medical malpractice liability ac-
187
tion’’ means a civil action brought in a State or Fed-
eral court against a health care provider or health
care professional in which the plaintiff alleges a
medical malpractice liability claim, but does not in-
clude any action in which the plaintiff’s sole allega-
tion is an allegation of an intentional tort.
(9) 
MEDICAL
MALPRACTICE
LIABILITY
CLAIM.—The term ‘‘medical malpractice liability
claim’’ means a claim in which the claimant alleges
that injury was caused by the provision of (or the
failure to provide) health care services or the use of
a medical product.
(10) MEDICAL PRODUCT.—
(A) IN
GENERAL.—The term ‘‘medical
product’’ means, with respect to the allegation
of a claimant, a drug (as defined in section
201(g)(1) of the Federal Food, Drug, and Cos-
metic Act (21 U.S.C. 321(g)(1)) or a medical
device (as defined in section 201(h) of the Fed-
eral Food, Drug, and Cosmetic Act (21 U.S.C.
321(h)) if—
(i) such drug or device was subject to
premarket approval under section 505,
507, or 515 of the Federal Food, Drug,
and Cosmetic Act (21 U.S.C. 355, 357, or
188
360e) or section 351 of the Public Health
Service Act (42 U.S.C. 262) with respect
to the safety of the formulation or per-
formance of the aspect of such drug or de-
vice which is the subject of the claimant’s
allegation or the adequacy of the packag-
ing or labeling of such drug or device, and
such drug or device is approved by the
Food and Drug Administration; or
(ii) the drug or device is generally rec-
ognized as safe and effective under regula-
tions issued by the Secretary of Health
and Human Services under section 201(p)
of the Federal Food, Drug, and Cosmetic
Act (21 U.S.C. 321(p)).
(B) EXCEPTION
IN
CASE
OF
MISREPRE-
SENTATION OR FRAUD.—Notwithstanding sub-
paragraph (A), the term ‘‘medical product’’
shall not include any product described in such
subparagraph if the claimant shows that the
product is approved by the Food and Drug Ad-
ministration for marketing as a result of with-
held information, misrepresentation, or an ille-
gal payment by manufacturer of the product.
189
(C) EXCEPTION IN THE CASE OF ABOR-
TION-INDUCING
DRUGS
AND
DEVICES.—Not-
withstanding subparagraph (A), the term ‘‘med-
ical product’’ shall not include any drug or de-
vice which is used as a contraceptive or abor-
tifacient and which has as one of its known ef-
fects the interference with implantation of a
fertilized human ovum or embryo or the termi-
nation of pregnancy after implantation with in-
tent other than to produce a live birth.
(11) 
NONECONOMIC
DAMAGES.—The 
term
‘‘noneconomic damages’’ means damages paid to
compensate an individual for physical and emotional
pain, suffering, inconvenience, physical impairment,
mental anguish, disfigurement, loss of enjoyment of
life, loss of consortium, and other nonpecuniary
losses, but does not include punitive damages.
(12) PUNITIVE
DAMAGES; EXEMPLARY
DAM-
AGES.—The terms ‘‘punitive damages’’ and ‘‘exem-
plary damages’’ mean compensation, in addition to
compensation for actual harm suffered, that is
awarded for the purpose of punishing a person for
conduct deemed to be malicious, wanton, willful, or
excessively reckless.
190
(13) 
SECRETARY.—The 
term 
‘‘Secretary’’
means the Secretary of Health and Human Services.
(14) STATE.—The term ‘‘State’’ means each of
the several States, the District of Columbia, the
Commonwealth of Puerto Rico, the Virgin Islands,
Guam, and American Samoa.
SEC. 403. EFFECTIVE DATE.
(a) IN GENERAL.—Except as provided in subsection
(b) and section 417(c), this subtitle shall apply with re-
spect to claims accruing or actions brought on or after
the expiration of the 3-year period that begins on the date
of the enactment of this Act.
(b) EXCEPTION FOR STATES REQUESTING EARLIER
IMPLEMENTATION OF REFORMS.—
(1) APPLICATION.—A State may submit an ap-
plication to the Secretary requesting the early imple-
mentation of this subtitle with respect to claims or
actions brought in the State.
(2) DECISION BY SECRETARY.—The Secretary
shall issue a response to a State’s application under
paragraph (1) not later than 90 days after receiving
the application. If the Secretary determines that the
State meets the requirements of this subtitle at the
time of submitting its application, the Secretary
shall approve the State’s application, and this sub-
191
title shall apply with respect to actions brought in
the State on or after the expiration of the 90-day
period that begins on the date the Secretary issues
the response. If the Secretary denies the State’s ap-
plication, the Secretary shall provide the State with
a written explanation of the grounds for the deci-
sion.
PART 2—MEDICAL MALPRACTICE AND PRODUCT
LIABILITY REFORM
SEC. 411. REQUIREMENT FOR INITIAL RESOLUTION OF AC-
TION THROUGH ALTERNATIVE DISPUTE RES-
OLUTION.
(a) IN GENERAL.—
(1) STATE CASES.—A medical malpractice li-
ability action may not be brought in any State court
during a calendar year unless the medical mal-
practice liability claim that is the subject of the ac-
tion has been initially resolved under an alternative
dispute resolution system certified for the year by
the Secretary under section 422(a), or, in the case
of a State in which such a system is not in effect
for the year, under the alternative Federal system
established under section 422(b).
(2) FEDERAL DIVERSITY ACTIONS.—A medical
malpractice liability action may not be brought in
192
any Federal court under section 1332 of title 28,
United States Code, during a calendar year unless
the medical malpractice liability claim that is the
subject of the action has been initially resolved
under the alternative dispute resolution system re-
ferred to in paragraph (1) that applied in the State
whose law applies in such action.
(3) CLAIMS AGAINST UNITED STATES.—
(A) ESTABLISHMENT
OF
PROCESS
FOR
CLAIMS.—The Attorney General shall establish
an alternative dispute resolution process for the
resolution of tort claims consisting of medical
malpractice liability claims brought against the
United States under chapter 171 of title 28,
United States Code. Under such process, the
resolution of a claim shall occur after the com-
pletion of the administrative claim process ap-
plicable to the claim under section 2675 of such
title.
(B) REQUIREMENT FOR INITIAL RESOLU-
TION UNDER PROCESS.—A medical malpractice
liability action based on a medical malpractice
liability claim described in subparagraph (A)
may not be brought in any Federal court unless
the claim has been initially resolved under the
193
alternative dispute resolution process estab-
lished by the Attorney General under such sub-
paragraph.
(b) INITIAL
RESOLUTION
OF
CLAIMS
UNDER
ADR.—For purposes of subsection (a), an action is ‘‘ini-
tially resolved’’ under an alternative dispute resolution
system if—
(A) the ADR reaches a decision on wheth-
er the defendant is liable to the plaintiff for
damages; and
(B) if the ADR determines that the de-
fendant is liable, the ADR reaches a decision on
the amount of damages assessed against the de-
fendant.
(c) PROCEDURES FOR FILING ACTIONS.—
(1) NOTICE
OF
INTENT
TO
CONTEST
DECI-
SION.—Not later than 60 days after a decision is is-
sued with respect to a medical malpractice liability
claim under an alternative dispute resolution system,
each party affected by the decision shall submit a
sealed statement to a court of competent jurisdiction
indicating whether or not the party intends to con-
test the decision.
194
(2) DEADLINE FOR FILING ACTION.—A medical
malpractice liability action may not be brought by a
party unless—
(A) the party has filed the notice of intent
required by paragraph (1); and
(B) the party files the action in a court of
competent jurisdiction not later than 90 days
after the decision resolving the medical mal-
practice liability claim that is the subject of the
action is issued under the applicable alternative
dispute resolution system.
(3) COURT
OF
COMPETENT
JURISDICTION.—
For purposes of this subsection, the term ‘‘court of
competent jurisdiction’’ means—
(A) with respect to actions filed in a State
court, the appropriate State trial court; and
(B) with respect to actions filed in a Fed-
eral court, the appropriate United States dis-
trict court.
(d) LEGAL EFFECT OF UNCONTESTED ADR DECI-
SION.—The decision reached under an alternative dispute
resolution system shall, for purposes of enforcement by a
court of competent jurisdiction, have the same status in
the court as the verdict of a medical malpractice liability
action adjudicated in a State or Federal trial court. The
195
previous sentence shall not apply to a decision that is con-
tested by a party affected by the decision pursuant to sub-
section (c)(1).
SEC. 412. CALCULATION AND PAYMENT OF DAMAGES.
(a) LIMITATION ON NONECONOMIC DAMAGES.—The
total amount of noneconomic damages that may be award-
ed to a claimant and the members of the claimant’s family
for losses resulting from the injury which is the subject
of a medical malpractice liability action may not exceed
$250,000, regardless of the number of parties against
whom the action is brought or the number of actions
brought with respect to the injury.
(b) TREATMENT OF PUNITIVE DAMAGES.—
(1) BASIS FOR RECOVERY.—Punitive or exem-
plary damages shall not be awarded in a medical
malpractice liability action unless the claimant es-
tablishes by clear and convincing evidence that the
injury suffered was the direct result of conduct
manifesting a malicious, wanton, willful, or exces-
sively reckless disregard of the safety of others.
(2) NO
AWARD
AGAINST
MANUFACTURER
OF
MEDICAL PRODUCT.—In the case of a medical mal-
practice liability action in which the plaintiff alleges
a claim against the manufacturer of a medical prod-
196
uct, no punitive or exemplary damages may be
awarded against such manufacturer.
(3) PAYMENTS TO STATE FOR MEDICAL QUAL-
ITY ASSURANCE ACTIVITIES.—
(A) IN GENERAL.—Any punitive or exem-
plary damages awarded in a medical mal-
practice liability action shall be paid to the
State in which the action is brought or, in a
case brought in Federal court, in the State in
which the health care services that caused the
injury that is the subject of the action were
provided.
(B) ACTIVITIES
DESCRIBED.—A State
shall use amounts paid pursuant to subpara-
graph (A) to carry out activities to assure the
safety and quality of health care services pro-
vided in the State, including (but not limited
to)—
(i) licensing or certifying health care
professionals and health care providers in
the State;
(ii) operating alternative dispute reso-
lution systems;
(iii) carrying out public education pro-
grams relating to medical malpractice and
197
the availability of alternative dispute reso-
lution systems in the State; and
(iv) carrying out programs to reduce
malpractice-related costs for retired provid-
ers or other providers volunteering to pro-
vide services in medically underserved
areas.
(C) MAINTENANCE OF EFFORT.—A State
shall use any amounts paid pursuant to sub-
paragraph (A) to supplement and not to replace
amounts spent by the State for the activities
described in subparagraph (B).
(c) PERIODIC PAYMENTS FOR FUTURE LOSSES.—
(1) GENERAL
RULE.—In any medical mal-
practice liability action in which the damages award-
ed for future economic loss exceeds $100,000, a de-
fendant may not be required to pay such damages
in a single, lump-sum payment, but shall be per-
mitted to make such payments periodically based on
when the damages are found likely to occur, as such
payments are determined by the court.
(2) WAIVER.—A court may waive the applica-
tion of paragraph (1) with respect to a defendant if
the court determines that it is not in the best inter-
198
ests of the plaintiff to receive payments for damages
on such a periodic basis.
SEC. 413. REQUIRING PARTY CONTESTING ADR RULING TO
PAY ATTORNEY’S FEES AND OTHER COSTS.
(a) IN GENERAL.—The court in a medical mal-
practice liability action shall require the party that (pursu-
ant to section 411(c)(1)) contested the ruling of the alter-
native dispute resolution system with respect to the medi-
cal malpractice liability claim that is the subject of the
action to pay to the opposing party the costs incurred by
the opposing party under the action, including attorney’s
fees, fees paid to expert witnesses, and other litigation ex-
penses (but not including court costs, filing fees, or other
expenses paid directly by the party to the court, or any
fees or costs associated with the resolution of the claim
under the alternative dispute resolution system), but only
if—
(1) in the case of an action in which the party
that contested the ruling is the claimant, the amount
of damages awarded to the party under the action
does not exceed the amount of damages awarded to
the party under the ADR system by at least 10 per-
cent; and
(2) in the case of an action in which the party
that contested the ruling is the defendant, the
199
amount of damages assessed against the party under
the action is not at least 10 percent less than the
amount of damages assessed under the ADR system.
(b) EXCEPTIONS.—Subsection (a) shall not apply
if—
(1) the party contesting the ruling made under
the previous alternative dispute resolution system
shows that—
(A) the ruling was procured by corruption,
fraud, or undue means,
(B) there was partiality or corruption
under the system,
(C) there was other misconduct under the
system that materially prejudiced the party’s
rights, or
(D) the ruling was based on an error of
law;
(2) the party contesting the ruling made under
the alternative dispute resolution system presents
new evidence before the trier of fact that was not
available for presentation under the ADR system;
(3) the medical malpractice liability action
raised a novel issue of law; or
(4) the court finds that the application of such
paragraph to a party would constitute an undue
200
hardship, and issues an order waiving or modifying
the application of such paragraph that specifies the
grounds for the court’s decision.
(c) REQUIREMENT FOR PERFORMANCE BOND.—The
court in a medical malpractice liability action shall require
the party that (pursuant to section 411(c)(1)) contested
the ruling of the alternative dispute resolution system with
respect to the medical malpractice liability claim that is
the subject of the action to post a performance bond (in
such amount and consisting of such funds and assets as
the court determines to be appropriate), except that the
court may waive the application of such requirement to
a party if the court determines that the posting of such
a bond is not necessary to ensure that the party shall meet
the requirements of this subsection to pay the opposing
party the costs incurred by the opposing party under the
action.
(d) LIMIT ON ATTORNEY’S FEES PAID.—Attorneys’
fees that are required to be paid under subsection (a) by
the contesting party shall not exceed the amount of the
attorneys’ fees incurred by the contesting party in the ac-
tion. If the attorneys’ fees of the contesting party are
based on a contingency fee agreement, the amount of at-
torneys’ fees for purposes of the preceding sentence shall
not exceed the reasonable value of those services.
201
(e) RECORDS.—In order to receive attorneys’ fees
under subsection (a), counsel of record in the medical mal-
practice liability action involved shall maintain accurate,
complete records of hours worked on the action, regardless
of the fee arrangement with the client involved.
(f) CONTINGENCY FEE DEFINED.—As used in this
section, the term ‘‘contingency fee’’ means any fee for pro-
fessional legal services which is, in whole or in part, con-
tingent upon the recovery of any amount of damages,
whether through judgment or settlement.
SEC. 414. JOINT AND SEVERAL LIABILITY FOR NON-
ECONOMIC DAMAGES.
A defendant may be held severally but not jointly lia-
ble in a medical malpractice action for noneconomic dam-
ages. A person found liable for such damages in any such
action may be found liable, if at all, only for those dam-
ages directly attributable to the person’s proportionate
share of fault or responsibility for the injury, and may
not be found liable for damages attributable to the propor-
tionate share of fault or responsibility of any other person
(without regard to whether that person is a party to the
action) for the injury, including any person bringing the
action.
202
SEC. 415. STATUTE OF LIMITATIONS.
A medical malpractice liability claim may not be
brought after the expiration of the 7-year period that be-
gins on the date the alleged injury that is the subject of
the claim occurred. If the commencement of such an ac-
tion is stayed or enjoined, the running of the statute of
limitations under this section shall be suspended for the
period of the stay or injunction.
SEC. 416. UNIFORM STANDARD FOR DETERMINING NEG-
LIGENCE.
A defendant in a medical malpractice liability action
may not be found to have acted negligently unless the de-
fendant’s conduct at the time of providing the health care
services that are the subject of the action was not reason-
able.
SEC. 417. SPECIAL PROVISION FOR CERTAIN OBSTETRIC
SERVICES.
(a) IMPOSITION OF HIGHER STANDARD OF PROOF.—
In the case of a medical malpractice liability claim relating
to services provided during labor or the delivery of a baby,
if the health care professional against whom the claim is
brought did not previously treat the individual alleged to
have been injured for the pregnancy, the trier of fact may
not find that the defendant committed malpractice and
may not assess damages against the health care profes-
203
sional unless the malpractice is proven by clear and con-
vincing evidence.
(b) APPLICABILITY
TO
GROUP
PRACTICES
OR
AGREEMENTS AMONG PROVIDERS.—For purposes of sub-
section (a), a health care professional shall be considered
to have previously treated an individual for a pregnancy
if the professional is a member of a group practice whose
members previously treated the individual for the preg-
nancy or is providing services to the individual during
labor or the delivery of a baby pursuant to an agreement
with another health care professional.
(c) EFFECTIVE DATE.—This section shall apply with
respect to claims accruing or actions brought on or after
the expiration of the 2-year period that begins on the date
of the enactment of this Act.
PART 3—REQUIREMENTS FOR STATE ALTER-
NATIVE 
DISPUTE 
RESOLUTION 
SYSTEMS
(ADR)
SEC. 421. BASIC REQUIREMENTS.
(a) IN GENERAL.—A State’s alternative dispute reso-
lution system meets the requirements of this section if the
system—
(1) applies to all medical malpractice liability
claims under the jurisdiction of the courts of that
State;
204
(2) requires that a written opinion resolving the
dispute be issued not later than 6 months after the
date by which each party against whom the claim is
filed has received notice of the claim (other than in
exceptional cases for which a longer period is re-
quired for the issuance of such an opinion), and that
the opinion contain—
(A) findings of fact relating to the dispute,
and
(B) a description of the costs incurred in
resolving the dispute under the system (includ-
ing any fees paid to the individuals hearing and
resolving the claim), together with an appro-
priate assessment of the costs against any of
the parties;
(3) requires individuals who hear and resolve
claims under the system to meet such qualifications
as the State may require (in accordance with regula-
tions of the Secretary);
(4) is approved by the State or by local govern-
ments in the State;
(5) with respect to a State system that consists
of multiple dispute resolution procedures—
205
(A) permits the parties to a dispute to se-
lect the procedure to be used for the resolution
of the dispute under the system, and
(B) if the parties do not agree on the pro-
cedure to be used for the resolution of the dis-
pute, assigns a particular procedure to the par-
ties;
(6) provides for the transmittal to the State
agency responsible for monitoring or disciplining
health care professionals and health care providers
of any findings made under the system that such a
professional or provider committed malpractice, un-
less, during the 90-day period beginning on the date
the system resolves the claim against the profes-
sional or provider, the professional or provider
brings an action contesting the decision made under
the system; and
(7) provides for the regular transmittal to the
Administrator for Health Care Policy and Research
of information on disputes resolved under the sys-
tem, in a manner that assures that the identity of
the parties to a dispute shall not be revealed.
(b) APPLICATION
OF
MALPRACTICE
LIABILITY
STANDARDS TO ALTERNATIVE DISPUTE RESOLUTION.—
The provisions of part 2 shall apply with respect to claims
206
brought under a State alternative dispute resolution sys-
tem or the alternative Federal system in the same manner
as such provisions apply with respect to medical mal-
practice liability actions brought in the State.
SEC. 422. CERTIFICATION OF STATE SYSTEMS; APPLICABIL-
ITY OF ALTERNATIVE FEDERAL SYSTEM.
(a) CERTIFICATION.—
(1) IN GENERAL.—Not later than October 1 of
each year (beginning with 1995), the Secretary, in
consultation with the Attorney General, shall deter-
mine whether a State’s alternative dispute resolution
system meets the requirements of this part for the
following calendar year.
(2) BASIS FOR CERTIFICATION.—The Secretary
shall certify a State’s alternative dispute resolution
system under this subsection for a calendar year if
the Secretary determines under paragraph (1) that
the system meets the requirements of section 421.
(b) APPLICABILITY OF ALTERNATIVE FEDERAL SYS-
TEM.—
(1) ESTABLISHMENT
AND
APPLICABILITY.—
Not later than October 1, 1995, the Secretary, in
consultation with the Attorney General, shall estab-
lish by rule an alternative Federal ADR system for
the resolution of medical malpractice liability claims
207
during a calendar year in States that do not have
in effect an alternative dispute resolution system
certified under subsection (a) for the year.
(2) REQUIREMENTS FOR SYSTEM.—Under the
alternative Federal ADR system established under
paragraph (1)—
(A) paragraphs (1), (2), (6), and (7) of
section 421(a) shall apply to claims brought
under the system;
(B) if the system provides for the resolu-
tion of claims through arbitration, the claims
brought under the system shall be heard and
resolved by arbitrators appointed by the Sec-
retary in consultation with the Attorney Gen-
eral; and
(C) with respect to a State in which the
system is in effect, the Secretary may (at the
State’s request) modify the system to take into
account the existence of dispute resolution pro-
cedures in the State that affect the resolution
of medical malpractice liability claims.
(3) TREATMENT
OF
STATES
WITH
ALTER-
NATIVE SYSTEM IN EFFECT.—If the alternative Fed-
eral ADR system established under this subsection is
applied with respect to a State for a calendar year—
208
(A) the State shall reimburse the United
States (at such time and in such manner as the
Secretary may require) for the costs incurred
by the United States during the year as a result
of the application of the system with respect to
the State; and
(B) notwithstanding any other provision of
law, no funds may be paid to the State (or to
any unit of local government in the State) or to
any entity in the State pursuant to the Public
Health Service Act.
SEC. 423. REPORTS ON IMPLEMENTATION AND EFFECTIVE-
NESS OF ALTERNATIVE DISPUTE RESOLU-
TION SYSTEMS.
(a) IN GENERAL.—Not later than 5 years after the
date of the enactment of this Act, the Secretary shall pre-
pare and submit to the Congress a report describing and
evaluating State alternative dispute resolution systems op-
erated pursuant to this part and the alternative Federal
system established under section 422(b).
(b) CONTENTS OF REPORT.—The Secretary shall in-
clude in the report prepared and submitted under sub-
section (a)—
(1) information on—
209
(A) the effect of the alternative dispute
resolution systems on the cost of health care
within each State,
(B) the impact of such systems on the ac-
cess of individuals to health care within the
State, and
(C) the effect of such systems on the qual-
ity of health care provided within the State; and
(2) to the extent that such report does not pro-
vide information on no-fault systems operated by
States as alternative dispute resolution systems pur-
suant to this part, an analysis of the feasibility and
desirability of establishing a system under which
medical malpractice liability claims shall be resolved
on a no-fault basis.
PART 4—OTHER PROVISIONS RELATING TO
MEDICAL MALPRACTICE LIABILITY
SEC. 431. PERMITTING STATE PROFESSIONAL SOCIETIES
TO PARTICIPATE IN DISCIPLINARY ACTIVI-
TIES.
(a) ROLE OF PROFESSIONAL SOCIETIES.—Notwith-
standing any other provision of State or Federal law, a
State agency responsible for the conduct of disciplinary
actions for a type of health care practitioner may enter
into agreements with State or county professional societies
210
of such type of health care practitioner to permit such so-
cieties to participate in the licensing of such health care
practitioner, and to review any health care malpractice ac-
tion, health care malpractice claim or allegation, or other
information concerning the practice patterns of any such
health care practitioner. Any such agreement shall comply
with subsection (b).
(b) REQUIREMENTS OF AGREEMENTS.—Any agree-
ment entered into under subsection (a) for licensing activi-
ties or the review of any health care malpractice action,
health care malpractice claim or allegation, or other infor-
mation concerning the practice patterns of a health care
practitioner shall provide that—
(1) the health care professional society conducts
such activities or review as expeditiously as possible;
(2) after the completion of such review, such so-
ciety shall report its findings to the State agency
with which it entered into such agreement;
(3) the conduct of such activities or review and
the reporting of such findings be conducted in a
manner which assures the preservation of confiden-
tiality of health care information and of the review
process; and
(4) no individual affiliated with such society is
liable for any damages or injury directly caused by
211
the individual’s actions in conducting such activities
or review.
(c) AGREEMENTS NOT MANDATORY.—Nothing in
this section may be construed to require a State to enter
into agreements with societies described in subsection (a)
to conduct the activities described in such subsection.
(d) EFFECTIVE DATE.—This section shall take effect
2 years after the date of the enactment of this Act.
SEC. 432. STUDY OF INCENTIVES TO ENCOURAGE VOL-
UNTARY SERVICE BY PHYSICIANS.
(a) STUDY.—The Secretary shall conduct a study
analyzing the existence and effectiveness of incentives
adopted by State and local governments, insurers, medical
societies, and other entities to encourage physicians
(whether practicing or retired) to volunteer to provide
health care services in medically underserved areas.
(b) REPORTS.—(1) Not later than 1 year after the
date of the enactment of this Act, the Secretary shall sub-
mit an interim report to Congress on the study conducted
under subsection (a), together with the Secretary’s rec-
ommendations for actions to increase the number of physi-
cians volunteering to provide health care services in medi-
cally underserved areas.
(2) Not later than 5 years after the date of the enact-
ment of this Act, the Secretary shall submit a final report
212
to the Congress on the study conducted under subsection
(a) (taking into account the effects of this subtitle on the
incidence and costs of medical malpractice), together with
the Secretary’s recommendations for actions to increase
the number of physicians volunteering to provide health
care services in medically underserved areas.
SEC. 433. REQUIREMENTS FOR RISK MANAGEMENT PRO-
GRAMS.
(a) REQUIREMENTS FOR PROVIDERS.—Each State
shall require each health care professional and health care
provider providing services in the State to participate in
a risk management program to prevent and provide early
warning of practices which may result in injuries to pa-
tients or which otherwise may endanger patient safety.
(b) REQUIREMENTS
FOR INSURERS.—Each State
shall require each entity which provides health care profes-
sional or provider liability insurance to health care profes-
sionals and health care providers in the State to—
(1) establish risk management programs based
on data available to such entity or sanction pro-
grams of risk management for health care profes-
sionals and health care providers provided by other
entities; and
(2) require each such professional or provider,
as a condition of maintaining insurance, to partici-
213
pate in one program described in paragraph (1) at
least once in each 3-year period.
(c) EFFECTIVE DATE.—This section shall take effect
2 years after the date of the enactment of this Act.
SEC. 434. GRANTS FOR MEDICAL SAFETY PROMOTION.
(a) RESEARCH ON MEDICAL INJURY PREVENTION
AND COMPENSATION.
(1) IN GENERAL.—The Secretary shall make
grants for the conduct of basic research in the pre-
vention of and compensation for injuries resulting
from health care professional or health care provider
malpractice, and research of the outcomes of health
care procedures.
(2) PREFERENCE FOR RESEARCH ON CERTAIN
ACTIVITIES.—In making grants under paragraph
(1), the Secretary shall give preference to applica-
tions for grants to conduct research on the behavior
of health care providers and health care profes-
sionals in carrying out their professional duties and
of other participants in systems for compensating in-
dividuals injured by medical malpractice, the effects
of financial and other incentives on such behavior,
the determinants of compensation system outcomes,
and the costs and benefits of alternative compensa-
tion policy options.
214
(3) APPLICATION.—The Secretary may not
make a grant under paragraph (1) unless an appli-
cant submits an application to the Secretary at such
time, in such form, in such manner, and containing
such information as the Secretary may require.
(b) GRANTS FOR LICENSING AND DISCIPLINARY AC-
TIVITIES.—
(1) IN GENERAL.—The Secretary shall make
grants to States to assist States in improving the
State’s ability to license and discipline health care
professionals.
(2) USES FOR GRANTS.—A State may use a
grant awarded under subsection (a) to develop and
implement improved mechanisms for monitoring the
practices of health care professionals or for conduct-
ing disciplinary activities.
(3) TECHNICAL
ASSISTANCE.—The Secretary
shall provide technical assistance to States receiving
grants under paragraph (1) to assist them in evalu-
ating their medical practice acts and procedures and
to encourage the use of efficient and effective early
warning systems and other mechanisms for detecting
practices which endanger patient safety and for dis-
ciplining health care professionals.
215
(4) APPLICATIONS.—The Secretary may not
make a grant under paragraph (1) unless the appli-
cant submits an application to the Secretary at such
time, in such form, in such manner, and containing
such information as the Secretary shall require.
(c) GRANTS FOR PUBLIC EDUCATION PROGRAMS.—
(1) IN GENERAL.—The Secretary shall make
grants to States and to local governments, private
nonprofit organizations, and health professional
schools (as defined in paragraph (3)) for—
(A) educating the general public about the
appropriate use of health care and realistic ex-
pectations of medical intervention;
(B) educating the public about the re-
sources and role of health care professional li-
censing and disciplinary boards in investigating
claims of incompetence or health care mal-
practice; and
(C) developing programs of faculty train-
ing and curricula for educating health care pro-
fessionals in quality assurance, risk manage-
ment, and medical injury prevention.
(2) APPLICATIONS.—The Secretary may not
make a grant under paragraph (1) unless the appli-
cant submits an application to the Secretary at such
216
time, in such form, in such manner, and containing
such information as the Secretary shall require.
(3) 
HEALTH
PROFESSIONAL
SCHOOL
DE-
FINED.—In paragraph (1), the term ‘‘health profes-
sional school’’ means a school of nursing (as defined
in section 853(2) of the Public Health Service Act)
or a school or program under section 799(1) of such
Act.
(d) AUTHORIZATION
OF APPROPRIATIONS.—There
are authorized to be appropriated not more than
$15,000,000 for each of the first 5 fiscal years beginning
on or after the date of the enactment of this Act for grants
under this section.
Subtitle B—Treatment of Certain
Activities Under the Antitrust
Laws
SEC. 451. EXEMPTION FROM ANTITRUST LAWS FOR CER-
TAIN COMPETITIVE AND COLLABORATIVE
ACTIVITIES.
(a) EXEMPTION DESCRIBED.—An activity relating to
the provision of health care services shall be exempt from
the antitrust laws if—
(1) the activity is within one of the categories
of safe harbors described in section 452;
217
(2) the activity is within an additional safe har-
bor designated by the Attorney General under sec-
tion 453; or
(3) the activity is specified in and in compliance
with the terms of a certificate of review issued by
the Attorney General under section 454 and the ac-
tivity occurs—
(A) while the certificate is in effect, or
(B) in the case of a certificate issued dur-
ing the 2-year period beginning on the date of
the enactment of this Act, at any time on or
after the first day of the 2-year period that
ends on the date the certificate takes effect.
(b) AWARD OF ATTORNEY’S FEES AND COSTS OF
SUIT.—
(1) IN GENERAL.—If any person brings an ac-
tion alleging a claim under the antitrust laws and
the activity on which the claim is based is found by
the court to be exempt from such laws under sub-
section (a), the court shall, at the conclusion of the
action—
(A) award to a substantially prevailing
claimant the cost of suit attributable to such
claim, including a reasonable attorney’s fee, or
218
(B) award to a substantially prevailing
party defending against such claim the cost of
such suit attributable to such claim, including
reasonable attorney’s fee, if the claim, or the
claimant’s conduct during litigation of the
claim, was frivolous, unreasonable, without
foundation, or in bad faith.
(2) OFFSET
IN
CASES
OF
BAD
FAITH.—The
court may reduce an award made pursuant to para-
graph (1) in whole or in part by an award in favor
of another party for any part of the cost of suit (in-
cluding a reasonable attorney’s fee) attributable to
conduct during the litigation by any prevailing party
that the court finds to be frivolous, unreasonable,
without foundation, or in bad faith.
SEC. 452. SAFE HARBORS.
The following activities are safe harbors for purposes
of section 451(a)(1):
(1) COMBINATIONS
WITH
MARKET
SHARE
BELOW
THRESHOLD.—Activities relating to health
care services of any combination of health care pro-
viders if the number of each type or specialty of pro-
vider in question does not exceed 20 percent of the
total number of such type or specialty of provider in
the relevant market area.
219
(2) ACTIVITIES OF MEDICAL SELF-REGULATORY
ENTITIES.—
(A) IN
GENERAL.—Subject to subpara-
graph (B), any activity of a medical self-regu-
latory entity relating to standard setting or
standard enforcement activities that are de-
signed to promote the quality of health care
provided to patients.
(B) EXCEPTION.—No activity of a medical
self-regulatory entity may be deemed to fall
under the safe harbor established under this
paragraph if the activity is conducted for pur-
poses of financial gain.
(3) PARTICIPATION IN SURVEYS.—The partici-
pation of a provider of health care services in a writ-
ten survey of the prices of services, reimbursement
levels, or the compensation and benefits of employ-
ees and personnel, but only if—
(A) the survey is conducted by a third
party, such as a purchaser of health care serv-
ices, governmental entity, institution of higher
education, or trade association;
(B) the information provided by partici-
pants in the survey is based on prices charged,
reimbursements received, or compensation and
220
benefits paid prior to the third month preceding
the month in which the information is provided;
and
(C) if the results of the survey are dissemi-
nated, the results are aggregated in a manner
that ensures that no recipient of the results
may identify the prices charged, reimbursement
received, or compensation and benefits paid by
any particular provider.
(4) JOINT VENTURES FOR HIGH TECHNOLOGY
AND COSTLY EQUIPMENT AND SERVICES.—Any ac-
tivity of a health care cooperative venture relating to
the purchase, operation, or marketing of high tech-
nology or other expensive medical equipment, or the
provision of high cost or complex services, but only
if the number of participants in the venture does not
exceed the lowest number needed to support the ven-
ture. Other providers may be included in the ven-
ture, but only if such other providers could not pur-
chase, operate, or market such equipment or provide
a competing service either alone or through the for-
mation of a competing venture.
(5) HOSPITAL MERGERS.—Activities relating to
a merger of 2 hospitals if, during the 3-year period
preceding the merger, one of the hospitals had an
221
average of 150 or fewer operational beds and an av-
erage daily inpatient census of less than 50 percent
of such beds.
(6) JOINT PURCHASING ARRANGEMENTS.—Any
joint purchasing arrangement among health care
providers if—
(A) the purchases under the arrangement
represent less than 35 percent of the total sales
of the product or service purchased in the rel-
evant market; and
(B) the cost of the products and services
purchased jointly accounts for less than 20 per-
cent of the total revenues from all products or
services sold by each participant in the joint
purchasing arrangement.
(7) NEGOTIATIONS.—Activities consisting of
good faith negotiations to carry out any activity—
(A) described in this section,
(B) within an additional safe harbor des-
ignated by the Attorney General under section
453,
(C) that is the subject of an application for
a certificate of review under section 454, or
(D) that is deemed a submission of a noti-
fication under section 455(a)(2)(B),
222
without regard to whether such an activity is carried
out.
SEC. 453. DESIGNATION OF ADDITIONAL SAFE HARBORS.
(a) IN GENERAL.—
(1) SOLICITATION OF PROPOSALS.—Not later
than 30 days after the date of the enactment of this
Act, the Attorney General shall publish a notice in
the Federal Register soliciting proposals for addi-
tional safe harbors.
(2) REVIEW AND REPORT ON PROPOSED SAFE
HARBORS.—Not later than 180 days after the date
of the enactment of this Act, the Attorney General
(in consultation with the Secretary of Health and
Human Services and the Chair of the Federal Trade
Commission) shall—
(A) review the proposed safe harbors sub-
mitted under paragraph (1); and
(B) submit a report to Congress describing
the proposals to be included in the publication
of additional safe harbors described in para-
graph (3) and the proposals that are not to be
so included, together with explanations there-
fore.
(3) PUBLICATION OF ADDITIONAL SAFE HAR-
BORS.—Not later than 180 days after the date of
223
the enactment of this Act, the Attorney General (in
consultation with the Secretary of Health and
Human Services and the Chair of the Federal Trade
Commission) shall publish in the Federal Register
proposed additional safe harbors for purposes of sec-
tion 451(a)(2) for providers of health care services.
Not later than 180 days after publishing such pro-
posed safe harbors in the Federal Register, the At-
torney General shall issue final rules establishing
such safe harbors.
(b) CRITERIA FOR SAFE HARBORS.—In establishing
safe harbors under subsection (a), the Attorney General
shall take into account the following:
(1) The extent to which a competitive or col-
laborative activity will accomplish any of the follow-
ing:
(A) An increase in access to health care
services.
(B) The enhancement of the quality of
health care services.
(C) The establishment of cost efficiencies
that will be passed on to consumers, including
economies of scale and reduced transaction and
administrative costs.
224
(D) An increase in the ability of health
care facilities to provide services in medically
underserved areas or to medically underserved
populations.
(E) An improvement in the utilization of
health care resources or the reduction in the in-
efficient duplication of the use of such re-
sources.
(2) Whether the designation of an activity as a
safe harbor under subsection (a) will result in the
following outcomes:
(A) Health plans and other health care in-
surers, consumers of health care services, and
health care providers will be better able to ne-
gotiate payment and service arrangements
which will reduce costs to consumers.
(B) Taking into consideration the charac-
teristics of the particular purchasers and pro-
viders involved, competition will not be unduly
restricted.
(C) Equally efficient and less restrictive al-
ternatives do not exist to meet the criteria de-
scribed in paragraph (1).
225
(D) The activity will not unreasonably
foreclose competition by denying competitors a
necessary element of competition.
SEC. 454. CERTIFICATES OF REVIEW.
(a) ESTABLISHMENT OF PROGRAM.—In consultation
with the Secretary and the Chair, the Attorney General
shall (not later than 180 days after the date of the enact-
ment of this Act) issue certificates of review in accordance
with this section for providers of health care services and
advise and assist any person with respect to applying for
such a certificate of review.
(b) PROCEDURES FOR APPLICATION FOR CERTIFI-
CATE.—
(1) FORM; CONTENT.—To apply for a certifi-
cate of review, a person shall submit to the Attorney
General a written application which—
(A) specifies the activities relating to the
provision of health care services which satisfy
the criteria described in section 453(b) and
which will be included in the certificate; and
(B) is in a form and contains any informa-
tion, including information pertaining to the
overall market in which the applicant operates,
required by rule or regulation promulgated
under section 457.
226
(2) PUBLICATION OF NOTICE IN FEDERAL REG-
ISTER.—Within 10 days after an application submit-
ted under paragraph (1) is received by the Attorney
General, the Attorney General shall publish in the
Federal Register a notice that announces that an
application for a certificate of review has been sub-
mitted, identifies each person submitting the appli-
cation, and describes the conduct for which the ap-
plication is submitted.
(3) ESTABLISHMENT OF PROCEDURES FOR IS-
SUANCE OF CERTIFICATE.—In consultation with the
Chair and the Secretary, the Attorney General shall
establish procedures to be used in applying for and
in determining whether to approve an application for
a certificate of review under this subtitle. Under
such procedures the Attorney General shall approve
an application if the Attorney General determines
that the activities to be covered under the certificate
will satisfy the criteria described in section 453(b)
for additional safe harbors designated under such
section and that the benefits of the issuance of the
certificate will outweigh any disadvantages that may
result from reduced competition.
(4) TIMING FOR DECISION ON APPLICATION.—
227
(A) IN GENERAL.—Within 90 days after
the Attorney General receives an application for
a certificate of review, the Attorney General
shall determine whether the applicant’s health
care market activities are in accordance with
the procedures described in paragraph (3). If
the Attorney General, with the concurrence of
the Secretary, determines that such procedures
are met, the Attorney General shall issue to the
applicant a certificate of review. The certificate
of review shall specify—
(i) the health care market activities to
which the certificate applies,
(ii) the person to whom the certificate
of review is issued, and
(iii) any terms and conditions the At-
torney General or the Secretary deems nec-
essary to assure compliance with the appli-
cable procedures described in paragraph
(3).
(B) APPLICATIONS DEEMED APPROVED.—
If the Attorney General does not reject an ap-
plication before the expiration of the 90-period
beginning on the date the Attorney General re-
ceives the application, the Attorney General
228
shall be deemed to have approved the applica-
tion and to have issued a certificate of review
relating to the applicant’s health care market
activities covered under the application.
(5) EXPEDITED ACTION.—If the applicant indi-
cates a special need for prompt disposition, the At-
torney General and the Secretary may expedite ac-
tion on the application, except that no certificate of
review may be issued within 30 days of publication
of notice in the Federal Register under subsection
(b)(2).
(6) ACTIONS UPON DENIAL.—
(A) NOTIFICATION.—If the Attorney Gen-
eral denies in whole or in part an application
for a certificate, the Attorney General shall no-
tify the applicant of the Attorney General’s de-
termination and the reasons for it.
(B) REQUEST
FOR
RECONSIDERATION.—
An applicant may, within 30 days of receipt of
notification that the application has been denied
in whole or in part, request the Attorney Gen-
eral to reconsider the determination. The Attor-
ney General, with the concurrence of the Sec-
retary, shall notify the applicant of the deter-
229
mination upon reconsideration within 30 days
of receipt of the request.
(C) RETURN OF DOCUMENTS.—If the At-
torney General denies an application for the is-
suance of a certificate of review and thereafter
receives from the applicant a request for the re-
turn of documents submitted by the applicant
in connection with the application for the cer-
tificate, the Attorney General and the Secretary
shall return to the applicant, not later than 30
days after receipt of the request, the documents
and all copies of the documents available to the
Attorney General and the Secretary, except to
the extent that the information has been made
public under an exception to the rule against
public 
disclosure 
described 
in 
subsection
(g)(2)(B).
(7) FRAUDULENT
PROCUREMENT.—A certifi-
cate of review shall be void ab initio with respect to
any health care market activities for which the cer-
tificate was procured by fraud.
(c) AMENDMENT
AND REVOCATION
OF CERTIFI-
CATES.—
(1) NOTIFICATION
OF
CHANGES.—Any appli-
cant who receives a certificate of review—
230
(A) shall promptly report to the Attorney
General any change relevant to the matters
specified in the certificate; and
(B) may submit to the Attorney General
an application to amend the certificate to re-
flect the effect of the change on the conduct
specified in the certificate.
(2) AMENDMENT TO CERTIFICATE.—An appli-
cation for an amendment to a certificate of review
shall be treated as an application for the issuance of
a certificate. The effective date of an amendment
shall be the date on which the application for the
amendment is submitted to the Attorney General.
(3) REVOCATION.—
(A) GROUNDS FOR REVOCATION.—In ac-
cordance with this paragraph, the Attorney
General may revoke in whole or in part a cer-
tificate of review issued under this section. The
following shall be considered grounds for the
revocation of a certificate:
(i) After the expiration of the 2-year
period beginning on the date a person’s
certificate is issued, the activities of the
person have not substantially accomplished
231
the purposes for the issuance of the certifi-
cate.
(ii) The person has failed to comply
with any of the terms or conditions im-
posed under the certificate by the Attorney
General or the Secretary under subsection
(b)(4).
(iii) The activities covered under the
certificate no longer satisfy the criteria set
forth in section 453(b).
(B) REQUEST FOR COMPLIANCE INFORMA-
TION.—If the Attorney General or Secretary
has reason to believe that any of the grounds
for revocation of a certificate of review de-
scribed in subparagraph (A) may apply to a
person holding the certificate, the Attorney
General shall request such information from
such person as the Attorney General or the Sec-
retary deems necessary to resolve the matter of
compliance. Failure to comply with such request
shall be grounds for revocation of the certificate
under this paragraph.
(C) PROCEDURES
FOR
REVOCATION.—If
the Attorney General or the Secretary deter-
mines that any of the grounds for revocation of
232
a certificate of review described in subpara-
graph (A) apply to a person holding the certifi-
cate, or that such person has failed to comply
with a request made under subparagraph (B),
the Attorney General shall give written notice of
the determination to such person. The notice
shall include a statement of the circumstances
underlying, and the reasons in support of, the
determination. In the 60-day period beginning
30 days after the notice is given, the Attorney
General shall revoke the certificate or modify it
as the Attorney General or the Secretary deems
necessary to cause the certificate to apply only
to activities that meet the procedures for the is-
suance of certificates described in subsection
(b)(2).
(D) 
INVESTIGATION
AUTHORITY.—For
purposes of carrying out this paragraph, the
Attorney General may conduct investigations in
the same manner as the Attorney General con-
ducts investigations under section 3 of the Anti-
trust Civil Process Act, except that no civil in-
vestigative demand may be issued to a person
to whom a certificate of review is issued if such
person is the target of such investigation.
233
(d) REVIEW OF DETERMINATIONS.—
(1) AVAILABILITY OF REVIEW FOR CERTAIN AC-
TIONS.—If the Attorney General denies, in whole or
in part, an application for a certificate of review or
for an amendment to a certificate, or revokes or
modifies a certificate pursuant to paragraph (3), the
applicant or certificate holder (as the case may be)
may, within 30 days of the denial or revocation,
bring an action in any appropriate district court of
the United States to set aside the determination on
the ground that such determination is erroneous
based on the preponderance of the evidence.
(2) NO
OTHER
REVIEW
PERMITTED.—Except
as provided in paragraph (1), no action by the At-
torney General or the Secretary pursuant to this
subtitle shall be subject to judicial review.
(3) EFFECT
OF
REJECTED
APPLICATION.—If
the Attorney General denies, in whole or in part, an
application for a certificate of review or for an
amendment to a certificate, or revokes or amends a
certificate, neither the negative determination nor
the statement of reasons therefore shall be admissi-
ble in evidence, in any administrative or judicial pro-
ceeding, concerning any claim under the antitrust
laws.
234
(e) PUBLICATION
OF DECISIONS.—The Attorney
General shall publish a notice in the Federal Register on
a timely basis of each decision made with respect to an
application for a certificate of review under this section
or the amendment or revocation of such a certificate, in
a manner that protects the confidentiality of any propri-
etary information relating to the application.
(f) ANNUAL REPORTS.—Every person to whom a cer-
tificate of review is issued shall submit to the Attorney
General an annual report, in such form and at such time
as the Attorney General may require, that contains any
necessary updates to the information required under sub-
section (b) and a description of the activities of the holder
under the certificate during the preceding year.
(g) RESTRICTIONS ON DISCLOSURE OF INFORMA-
TION.—
(1) WAIVER
OF
DISCLOSURE
REQUIREMENTS
UNDER
ADMINISTRATIVE
PROCEDURE
ACT.—Infor-
mation submitted by any person in connection with
the issuance, amendment, or revocation of a certifi-
cate of review shall be exempt from disclosure under
section 552 of title 5, United States Code.
(2) RESTRICTIONS
ON
DISCLOSURE
OF
COM-
MERCIAL OR FINANCIAL INFORMATION.—
235
(A) IN GENERAL.—Except as provided in
subparagraph (B), no officer or employee of the
United States shall disclose commercial or fi-
nancial information submitted in connection
with the issuance, amendment, or revocation of
a certificate of review if the information is priv-
ileged or confidential and if disclosure of the in-
formation would cause harm to the person who
submitted the information.
(B) 
EXCEPTIONS.—Subparagraph 
(A)
shall not apply with respect to information dis-
closed—
(i) upon a request made by the Con-
gress or any committee of the Congress,
(ii) in a judicial or administrative pro-
ceeding, subject to appropriate protective
orders,
(iii) with the consent of the person
who submitted the information,
(iv) in the course of making a deter-
mination with respect to the issuance,
amendment, or revocation of a certificate
of review, if the Attorney General deems
disclosure of the information to be nec-
236
essary in connection with making the de-
termination,
(v) in accordance with any require-
ment imposed by a statute of the United
States, or
(vi) in accordance with any rule or
regulation promulgated under subsection
(i) permitting the disclosure of the infor-
mation to an agency of the United States
or of a State on the condition that the
agency will disclose the information only
under 
the 
circumstances 
specified 
in
clauses (i) through (v).
(3) PROHIBITION AGAINST USE OF INFORMA-
TION TO SUPPORT OR ANSWER CLAIMS UNDER ANTI-
TRUST LAWS.—Any information disclosed in an ap-
plication for a certificate of review under this section
shall only be admissible into evidence in a judicial or
administrative proceeding for the sole purpose of es-
tablishing that a person is entitled to the protections
provided by such a certificate.
237
SEC. 455. NOTIFICATIONS PROVIDING REDUCTION IN CER-
TAIN PENALTIES UNDER ANTITRUST LAW
FOR 
HEALTH 
CARE 
COOPERATIVE 
VEN-
TURES.
(a) NOTIFICATIONS DESCRIBED.—
(1) SUBMISSION
OF
NOTIFICATION
BY
VEN-
TURE.—Any party to a health care cooperative ven-
ture, acting on such venture’s behalf, may, not later
than 90 days after entering into a written agreement
to form such venture or not later than 90 days after
the date of the enactment of this Act, whichever is
later, file with the Attorney General a written notifi-
cation disclosing—
(A) the identities of the parties to such
venture,
(B) the nature and objectives of such ven-
ture, and
(C) such additional information as the At-
torney General may require by regulation.
(2) ACTIVITIES DEEMED SUBMISSION OF NOTI-
FICATION.—The following health care cooperative
ventures shall be deemed to have filed a written noti-
fication with respect to the venture under paragraph
(1):
(A) SUBMISSION
OF
APPLICATION
FOR
CERTIFICATE OF REVIEW.—Any health care co-
243
(B) TIMING OF PROTECTIONS.—The pro-
tections described in this subsection shall apply
to the venture that is the subject of a notifica-
tion under subsection (a)(1) as of the earlier
of—
(i) the date of the publication in the
Federal Register of the notice published
with respect to the notification; or
(ii) if such notice is not published dur-
ing the period required under subsection
(a)(4), the expiration of the 30-day period
that begins on the date the Attorney Gen-
eral receives any necessary information re-
quired to be submitted under subsection
(a)(1) or any additional information re-
quired by the Attorney General under sub-
section (a)(3)(A).
(2) APPLICABILITY
OF
RULE
OF
REASON
STANDARD.—In any action under the antitrust laws,
the conduct of any person which is within the scope
of a notification filed under subsection (a) shall not
be deemed illegal per se, but shall be judged on the
basis of its reasonableness, taking into account all
relevant factors affecting competition, including, but
279
‘‘(A) a geographic area in which there are
6 or fewer individuals residing per square mile,
‘‘(B) a health professional shortage area
(as defined in section 332(a)(1)(A) of the Pub-
lic Health Service Act),
‘‘(C) an area which is determined by the
Secretary of Health and Human Services as
equivalent to an area described in subparagraph
(A) and which is designated by the Bureau of
the Census as not urbanized, or
‘‘(D) a community that is certified as un-
derserved by the Secretary for purposes of par-
ticipation in the rural health clinic program
under title XVIII of the Social Security Act.
‘‘(3) PHYSICIAN.—The term ‘physician’ has the
meaning given to such term by section 1861(r) or
the Social Security Act.
‘‘(4) PHYSICIAN
ASSISTANT; NURSE
PRACTI-
TIONER.—The terms ‘physician assistant’ and ‘nurse
practitioner’ have the meanings given to such terms
by section 1861(aa)(5) of the Social Security Act.
‘‘(5) PRIMARY HEALTH SERVICES PROVIDER.—
The term ‘primary health services provider’ means a
provider of primary health services (as defined in
section 330(b)(1) of the Public Health Service Act).
286
terest’ means an amount which bears the same ratio
to the interest paid on qualified educational loans
during the taxable year by an individual performing
services under a qualified rural medical practice
agreement as—
‘‘(A) the number of months during the tax-
able year during which such services were per-
formed, bears to
‘‘(B) the number of months in the taxable
year.
‘‘(2) DOLLAR
LIMITATION.—The aggregate
amount which may be treated as qualified medical
education interest for any taxable year with respect
to an individual shall not exceed $5,000.
‘‘(3) QUALIFIED
RURAL
MEDICAL
PRACTICE
AGREEMENT.—For purposes of this subsection—
‘‘(A) IN
GENERAL.—The term ‘qualified
rural medical practice agreement’ means a writ-
ten agreement between an individual and an ap-
plicable rural community under which the indi-
vidual agrees—
‘‘(i) in the case of a medical doctor,
upon completion of the individual’s resi-
dency (or internship if no residency is re-
quired), or
287
‘‘(ii) in the case of a registered nurse,
nurse practitioner, or physician’s assistant,
upon completion of the education to which
the qualified education loan relates, to per-
form full-time services as such a medical
professional in the applicable rural commu-
nity for a period of 24 consecutive months.
An individual and an applicable rural com-
munity may elect to have the agreement
apply for 36 consecutive months rather
than 24 months.
‘‘(B) SPECIAL RULE FOR COMPUTING PE-
RIODS.—An individual shall be treated as meet-
ing the 24- or 36-consecutive month require-
ment under subparagraph (A) if, during each
12-consecutive month period within either such
period, the individual performs full-time services
as a medical doctor, registered nurse, nurse
practitioner, or physician’s assistant, whichever
applies, in the applicable rural community dur-
ing 9 of the months in such 12-consecutive
month period. For purposes of this subsection,
an individual meeting the requirements of the
preceding sentence shall be treated as perform-
ing services during the entire 12-month period.