299
Title III, Subtitle D
(C) by striking paragraphs (14) and (15).
(4) Section 1902(a)(32)(D) is amended by
striking ‘‘before October 1, 1994’’.
(5) Section 1902(a) (42 U.S.C. 1396a(a)) is
amended—
(A) in paragraph (11)(B)—
(i) by inserting ‘‘and’’ before ‘‘(ii)’’,
and
(ii) by striking ‘‘to the individual
under section 1903, and (iii) providing for
coordination of information and education
on pediatric vaccinations and delivery of
immunization services’’ and inserting ‘‘to
him under section 1903’’;
(B) in paragraph (11)(C), by striking ‘‘,
including the provision of information and edu-
cation on pediatric vaccinations and the delivery
of immunization services,’’ and
(C) in paragraph (43)(A), by striking ‘‘and
the need for age-appropriate immunizations
against vaccine-preventable diseases’’.
(6) Section 1905(r)(1) (42 U.S.C. 1396d(r)(1))
is amended—
(A) in subparagraph (A)(i), by striking
‘‘and, with respect to immunizations under sub-
300
Title III, Subtitle D
paragraph (B)(iii), in accordance with the
schedule referred to in section 1928(c)(2)(B)(i)
for pediatric vaccines’’; and
(B) in subparagraph (B)(iii), by striking
‘‘(according to the schedule referred to in sec-
tion 1928(c)(2)(B)(i) for pediatric vaccines)’’.
(b) ESTABLISHMENT
OF ALTERNATIVE DELIVERY
PROGRAMS.—
(1) IN GENERAL.—At the request of a State,
the Secretary of Health and Human Services shall
negotiate and enter into contracts with manufactur-
ers of listed pediatric vaccines (which manufacturers
have 
entered 
into 
agreements 
under 
section
1902(a)(32)(D) of the Social Security Act) or with
other licensed distributors of such vaccines to pro-
vide for the delivery of such vaccines under a re-
placement vaccine delivery program described in sec-
tion 1902(a)(32)(D) of the Social Security Act or
under an alternative delivery program described in
paragraph (2).
(2) ALTERNATIVE DELIVERY PROGRAM.—An al-
ternative delivery program described in this para-
graph is a program operated by a State under which
listed pediatric vaccines are distributed through the
manufacturer (or other licensed distributor) to indi-
301
Title III, Subtitle D
viduals and entities providing such vaccines under
the State plan under title XIX of the Social Security
Act and other providers of vaccines to children who
are in families eligible for premium assistance under
part A of title XXI of such Act if the providers are
registered to participate in the program and if the
State demonstrates that the operation of the pro-
gram under this paragraph will not result in greater
delivery costs or additional purchases of vaccine
than would have resulted under the program de-
scribed in section 1902(a)(32)(D) of such Act.
(3) LISTED PEDIATRIC VACCINE.—In this sub-
section, the term ‘‘listed pediatric vaccine’’ means a
pediatric vaccine contained on the list established
(and periodically reviewed and as appropriate re-
vised) by the Advisory Committee on Immunization
Practices (an advisory committee established by the
Secretary, acting through the Director of the Cen-
ters for Disease Control and Prevention).
(4) LIMITATION ON PAYMENT.—Section 1903(i)
of the Social Security Act (42 U.S.C. 1396b(i)), as
amended by subsection (a)(3) and section 2002(b),
is amended—
(A) by striking ‘‘or’’ at the end of para-
graph (13),
302
Title IV
(B) by striking the period at the end of
paragraph (14) and inserting ‘‘; or’’, and
(C) by inserting after paragraph (14) the
following:
‘‘(15) with respect to amounts expended for a
listed pediatric vaccine (as defined in paragraph (3)
of section 3303(b) of the Bipartisan Health Care
Reform Act of 1994) if the amounts exceed the ap-
plicable price negotiated under a contract entered
into under subsection (b) of such section.’’.
TITLE IV—ACCESS
IMPROVEMENTS
TABLE OF CONTENTS OF TITLE
Subtitle A—Expanding Access in Underserved Areas
Sec. 4001. Community health authorities demonstration projects.
Sec. 4002. Health center program amendments.
Subtitle B—Improved Access in Rural Areas
PART 1—GRANTS TO ENCOURAGE COMMUNITY RURAL HEALTH NETWORKS
Sec. 4101. Assistance for development of access plans for chronically under-
served areas.
Sec. 4102. Technical assistance grants for networks.
Sec. 4103. Development grants for networks.
Sec. 4104. Definitions.
PART 2—INCENTIVES FOR HEALTH PROFESSIONALS TO PRACTICE IN RURAL
AREAS
Subpart A—National Health Service Corps Program
Sec. 4111. National Health Service Corps loan repayments excluded from gross
income.
Sec. 4112. Modification in criteria for designation as health professional short-
age area.
Sec. 4113. Other provisions regarding national health service corps.
Subpart B—Incentives Under Other Programs
303
Title IV
Sec. 4121. Extension of additional payment under medicare for physicians’
services furnished in former shortage areas.
Sec. 4122. Refinement of geographic adjustment factor for medicare physicians’
services.
Sec. 4123. Development of model State scope of practice law.
PART 3—ASSISTANCE FOR INSTITUTIONAL PROVIDERS
Subpart A—Community and Migrant Health Centers
Sec. 4131. Community and migrant health centers.
Subpart B—Emergency Medical Systems
Sec. 4141. Emergency medical services.
Sec. 4142. Grants to States regarding aircraft for transporting rural victims of
medical emergencies.
Subpart C—Assistance to Rural Providers Under Medicare
Sec. 4151. Amendments to essential access community hospital (EACH) pro-
gram under medicare.
Sec. 4152. Rural emergency access care hospitals described.
Sec. 4153. Coverage of and payment for services.
Sec. 4154. Effective date.
Subpart D—Demonstration Projects to Encourage Primary
Care and Rural-Based Graduate Medical Education
Sec. 4161. State and consortium demonstration projects.
Sec. 4162. Goals for projects.
Sec. 4163. Definitions.
PART 4—HOSPITAL AFFILIATED PRIMARY CARE CENTER
Sec. 4171. Hospital-affiliated primary care centers.
Subtitle C—Academic Health Centers
Sec. 4201. Study of payments for medical education at sites other than hos-
pitals.
Sec. 4202. Study of funding needs of health professions schools.
Subtitle D—United States-Mexico Border Health Commission
Sec. 4301. Agreement to establish binational commission.
Sec. 4302. Duties.
Sec. 4303. Other authorized functions.
Sec. 4304. Membership.
Sec. 4305. Regional offices.
Sec. 4306. Reports.
Sec. 4307. Definitions.
304
Title IV, Subtitle A
Subtitle A—Expanding Access in
Underserved Areas
SEC. 
4001. 
COMMUNITY 
HEALTH 
AUTHORITIES 
DEM-
ONSTRATION PROJECTS.
(a) IN GENERAL.—Title XIX of the Social Security
Act, as amended by sections 3001(a) and 3201(a)(2), is
amended—
(1) by redesignating section 1933 as section
1934; and
(2) by inserting after section 1932 the following
new section:
‘‘COMMUNITY HEALTH AUTHORITIES DEMONSTRATION
PROJECTS
‘‘SEC. 1933. (a) IN GENERAL.—In order to test the
effectiveness of various innovative health care delivery ap-
proaches through the operation of community health au-
thorities, the Secretary shall operate a program under
which States establish projects to demonstrate the effec-
tiveness of such approaches in providing access to cost-
effective preventive and primary care and related services
for various areas and populations, including low-income
residents of medically underserved areas or for medically
underserved populations. A State may operate more than
one such project.
‘‘(b) SELECTION OF STATE PROJECTS.—
305
Title IV, Subtitle A
‘‘(1) IN GENERAL.—A State is eligible to par-
ticipate in the program, and establish a demonstra-
tion project, under this section only if—
‘‘(A) the State submits to the Secretary an
application, at such time and in such form as
the Secretary may require, for participation in
the program; and
‘‘(B) the Secretary finds that—
‘‘(i) the application contains assur-
ances that the State will support the devel-
opment of a community health authority
that meets the requirements of this sec-
tion,
‘‘(ii) the community health authority
will meet the requirements for such an au-
thority under subsection (c),
‘‘(iii) the State provides sufficient as-
surances that the demonstration project of
a community health authority meets (or,
when operational, will meet) the require-
ments of subsection (d), and
‘‘(iv) the State will comply with the
requirements of subsections (g) and (h).
‘‘(2) CONTENTS OF APPLICATION.—Each appli-
cation submitted under paragraph (1) for a dem-
306
Title IV, Subtitle A
onstration project shall include at least the follow-
ing:
‘‘(A) A description of the proposed commu-
nity health authority and of the area or popu-
lation that the authority will serve.
‘‘(B) A demonstration that the CHA will
serve at least one geographic area or population
group that is designated as medically under-
served under section 330 of the Public Health
Service Act or as having a shortage of health
professionals under section 332 of such Act.
‘‘(C) An assessment of the area’s or popu-
lation’s need for services and an assurance that
the services of the CHA will be responsive to
those needs.
‘‘(D) A list of the items and services to be
furnished by the CHA under the project, bro-
ken down by those items and services that are
treated as medical assistance under the State
plan under this title and other items and serv-
ices that will be provided by the CHA (either
directly or through coordination with other
entities).
‘‘(E) An assurance that the CHA has en-
tered into (or plans to enter into) written par-
307
Title IV, Subtitle A
ticipation agreements with a sufficient number
of providers to enable the CHA to furnish all of
such items and services to enrolled individuals.
‘‘(F) An assurance that the State plan
under this title will provide payment to the au-
thority in accordance with subsection (e).
‘‘(G) Evidence of support and assistance
from other State agencies with responsibility for
providing or supporting the provision of preven-
tive and primary care services to underserved
and at-risk populations.
‘‘(H) A proposed budget for the CHA.
‘‘(3) PERIOD OF APPROVAL.—Each project ap-
proved under this section shall be approved for a pe-
riod of not less than 3 years, subject to renewal for
subsequent periods unless such approval is with-
drawn for cause by the Secretary or at the request
of the State.
‘‘(c) COMMUNITY HEALTH AUTHORITY (CHA) DE-
FINED.—In this section, the terms ‘community health au-
thority’ and ‘CHA’ mean a nonprofit entity that meets the
following requirements:
‘‘(1) The entity serves (or will serve at the time
it becomes operational under a project) a geographic
308
Title IV, Subtitle A
area or population group that includes those
designated—
‘‘(A) under section 330 of the Public
Health Service Act as medically underserved, or
‘‘(B) under section 332 of such Act as a
health professions shortage area.
‘‘(2) The entity enrolls—
‘‘(A) individuals and families who are med-
icaid-eligible;
‘‘(B) within the limits of its available re-
sources and capacity, other individuals who
have incomes below 200 percent of the Federal
official poverty level; and
‘‘(C) within the limits of its available re-
sources and capacity, other individuals and
families who are able to pay the costs of enroll-
ment.
‘‘(3) Through its participating providers, the
entity provides or, through contracts, arranges for
the provision of (or, by the time it become oper-
ational, will so provide or arrange for the provision
of) at least preventive services, primary care serv-
ices, inpatient and outpatient hospital services, and
any other service provided by a participating pro-
309
Title IV, Subtitle A
vider for which payment may be made under the
State plan under this title to enrolled individuals.
‘‘(4) The entity must include (to the maximum
extent practicable) as participating providers any of
the following providers that furnish services provided
by (or arranged by) the entity that are located in or
serve the area or population to be covered:
‘‘(A) Federally-qualified health centers.
‘‘(B) Rural health clinics.
‘‘(C) Local public health agencies that fur-
nish such services.
‘‘(D) A hospital (or other provider of inpa-
tient or outpatient hospital services) which has
a participation agreement in effect with the
State under its plan under this title, which is
located in or serving the area or population to
be served.
‘‘(5) The entity may include as participating
providers other providers (which may include private
physicians or group practice offices, other commu-
nity clinics, limited service providers (such as pre-
natal clinics), and health professionals teaching pro-
grams (such as area health educational centers))
and take other appropriate steps, to the extent need-
ed to assure that the network is reasonable in size
310
Title IV, Subtitle A
and able to provide (or arrange for the provision of)
the services it proposes to furnish to its enrollees.
‘‘(6) The entity must maintain written agree-
ments with each participating provider under which
the provider agrees to participate in the CHA and
agrees to accept payment from the CHA as payment
in full for services furnished to individuals enrolled
with the CHA.
‘‘(7) Under the written agreements described in
paragraph (6), if a majority of the board of directors
of the entity has determined that a participating
provider is failing to meet any of the requirements
of the participation agreement, the board may termi-
nate the provider’s participation agreement in ac-
cordance with the following requirements:
‘‘(A) Subject to subparagraph (B), prior to
any termination of a provider’s participation
agreement, the provider shall be entitled to 30
days prior notice, a reasonable opportunity to
correct any deficiencies, and an opportunity for
a full and fair hearing conducted by the entity
to dispute the reasons for termination. The pro-
vider shall be entitled to appeal the board of di-
rectors’ decision directly to a committee consist-
311
Title IV, Subtitle A
ing of representatives of all of the entity’s par-
ticipating providers.
‘‘(B) If a majority of the board of directors
of the entity determines that the continued par-
ticipation of a provider presents an immediate
threat to the health and safety of patients or a
substantial risk of improper diversion of funds,
the board may suspend the provider’s participa-
tion agreement (including the receipt of funds
under the agreement) for a period of up to 60
days. During this period, the entity shall take
steps to ensure that patients who were assigned
to or cared for by the suspended provider are
appropriately assigned or referred to alternative
participating providers. The suspended provider
shall be entitled to a hearing within the period
of the suspension to show cause why the sus-
pension should be lifted and its participation
agreement restored. If dissatisfied with the
board’s decision, the provider shall be entitled
to appeal the decision directly to a committee
consisting of representatives of all of the enti-
ty’s participating providers.
‘‘(C) For all other disputes between the en-
tity and its participating providers (including
312
Title IV, Subtitle A
disputes over the amounts due or interim rates
to be paid to a provider), the entity shall pro-
vide an opportunity for a full and fair hearing.
‘‘(8) The entity must be governed by a board of
directors that includes representatives of the partici-
pating providers and, as appropriate, other health
professionals, civic or business leaders, elected offi-
cials, and residents of the area or population served.
Not less than 51 percent of such board shall be com-
posed of individuals who are enrolled in the CHA
and who are representatives of the community
served.
‘‘(d) DEMONSTRATION PROJECT REQUIREMENTS.—
The requirements of this subsection, with respect to a
demonstration project of a CHA under this section, are
as follows:
‘‘(1)(A) All services furnished by the CHA
under the project shall be available and accessible to
all enrolled individuals and, except as provided in
subparagraph (B), must be available without regard
to an individual’s ability to pay for such services.
‘‘(B) A CHA shall prepare a schedule of dis-
counts to be applied to the payment of premiums by
individuals who are not medicaid-eligible individuals
313
Title IV, Subtitle A
which shall be adjusted on the basis of the individ-
ual’s ability to pay.
‘‘(2) The CHA shall take appropriate steps to
emphasize the provision of preventive and primary
care services, and shall ensure that each enrolled in-
dividual is assigned to a primary care physician (to
the greatest extent appropriate and feasible), except
that the CHA shall establish a process through
which an enrolled individual may be assigned to an-
other primary care physician for good cause shown.
‘‘(3) The CHA must make reasonable efforts to
reduce the unnecessary or inappropriate use of hos-
pital or other high-cost services through an emphasis
on preventive and primary care services, the imple-
mentation of utilization review or other appropriate
methods.
‘‘(4) The State must regularly provide the CHA
with information on other medical, health, and relat-
ed benefits that may be available to individuals en-
rolled with the CHA under programs other than the
State plan under this title, and the CHA must pro-
vide its enrolled individuals with enrollment informa-
tion and other non-cash assistance to assist them in
obtaining such benefits.
314
Title IV, Subtitle A
‘‘(5) The State and the CHA must meet such
financial standards and requirements and reporting
requirements as the Secretary specifies and must
prepare and submit to the Secretary an annual inde-
pendent financial audit conducted in accordance with
requirements specified by the Secretary.
‘‘(6) In collaboration with the State, the CHA
must adopt and use community-oriented, patient-re-
sponsive quality assurance and control systems in
accordance with requirements specified by the Sec-
retary. Such systems must include at least an ongo-
ing quality assurance program that measures
consumer satisfaction with the care provided under
the network, stresses improved health outcomes, and
operates a community health status improvement
process that identifies and investigates community
health problems and implements measures designed
to remedy them.
‘‘(e) CAPITATION PAYMENTS.—
‘‘(1) IN
GENERAL.—Under a demonstration
project under this section, the State shall enter into
an annual contract with the CHA under which the
State shall make monthly payments to the CHA for
covered services furnished through the CHA to indi-
viduals entitled to medical assistance under this title
315
Title IV, Subtitle A
in the amount specified in paragraph (2). Payment
shall be made at the beginning of each month on the
basis of estimates of the amounts payable and
amounts subsequently paid are subject to adjust-
ment to reflect the amounts by which previous pay-
ments were greater or less than the amount of pay-
ments that should have been made.
‘‘(2) AMOUNT OF CAPITATION PAYMENT.—The
amount of a monthly payment under paragraph (1)
during a contract year, shall be not less than 1⁄12 of
the product of—
‘‘(A)(i) the average per capita amounts ex-
pended under this title under the State plan for
covered services to be furnished under the dem-
onstration project for similar Medicaid-eligible
individuals for the most recent 12-month period
ending before the date of the enactment of this
section, increased by (ii) the percentage change
in the consumer price index for all urban con-
sumers (all items; U.S. city average) during the
period that begins upon the expiration of such
12-month period and ends upon the expiration
of the most recent 12-month period ending be-
fore the first month of the contract year for
316
Title IV, Subtitle A
which complete financial data on such index is
available, and
‘‘(B) the number of Medicaid-eligible indi-
viduals enrolled under the project as of the
15th day of the month prior to the first month
of the contract year (or, in the case of the first
year for which a contract is in effect under this
subsection, the CHA’s reasonable estimate of
the number of such individuals who will be en-
rolled in the project as of the 15th day of such
month).
‘‘(f) ADDITIONAL STATE ASSISTANCE
FOR PLAN-
NING, DEVELOPMENT, AND OPERATIONS.—
‘‘(1) IN GENERAL.—Subject to paragraph (2),
in addition to the payments under subsection (e),
demonstration projects approved under this section
are eligible to have approved expenditures described
in paragraph (3) treated, for purposes of section
1903(a)(7), as expenditures found necessary by the
Secretary for the proper and efficient administration
of the State plan under this title.
317
Title IV, Subtitle A
‘‘(2) SPECIAL RULES.—
‘‘(A) LIMITATION WITH RESPECT TO ANY
COMMUNITY
HEALTH
AUTHORITY.—The total
amount of expenditures with respect to any
CHA that may be treated as expenditures for
medical assistance under paragraph (1) for any
12-month period shall not exceed $250,000.
‘‘(B) 
LIMITATION
ON
NUMBER
OF
YEARS.—The number of 12-month periods for
which expenditures are treated as expenditures
for medical assistance under paragraph (1) for
a CHA shall not exceed—
‘‘(i) 2 for expenditures for planning
and development assistance, described in
paragraph (3)(A), and
‘‘(ii) 2 for expenditures for oper-
ational assistance, described in paragraph
(3)(B).
‘‘(C) 
NO
RESULTING
REDUCTION
IN
AMOUNTS PROVIDED UNDER PHSA GRANTS.—
No grant to a CHA or one of its participating
providers under the Public Health Service Act
or this Act may be reduced on the ground that
activities of the CHA that are considered ap-
proved expenditures under paragraph (3) are
318
Title IV, Subtitle A
activities for which the CHA or the participat-
ing providers received funds under such Act.
‘‘(3) 
APPROVED
EXPENDITURES.—The 
ap-
proved expenditures described in this paragraph are
as follows:
‘‘(A) PLANNING AND DEVELOPMENT.—Ex-
penditures for planning and development with
respect to a CHA, including—
‘‘(i) developing internal management,
legal and financial and clinical, informa-
tion, and reporting systems for the CHA,
and carrying out other operating activities
of the CHA;
‘‘(ii) recruiting, training and com-
pensating management staff of the CHA
and, as appropriate and necessary, man-
agement and clinical staff of any partici-
pating provider;
‘‘(iii) purchasing essential equipment
and acquiring, modernizing, expanding, or
(if cost-effective) renovating facilities for
the CHA and for participating providers
(including amortization costs and payment
of interest on loans); and
319
Title IV, Subtitle A
‘‘(iv) entering into arrangements to
obtain or participate in emerging medical
technologies, including telemedicine.
‘‘(B) OPERATIONS.—Expenditures in sup-
port of the operations of a CHA, including—
‘‘(i) the ongoing management of the
CHA, including daily program administra-
tion, recordkeeping and reporting, assur-
ance of proper financial management (in-
cluding billings and collections) and over-
sight of program quality;
‘‘(ii) developing and operating systems
to enroll eligible individuals in the CHA;
‘‘(iii) data collection, in collaboration
with the State medicaid agency and the
State health department, designed to
measure changes in patient access to care,
the quality of care furnished, and patient
health status, and health care outcomes;
‘‘(iv) ongoing community outreach
and community education to all residents
of the area or population served, to pro-
mote the enrollment of eligible individuals
and the appropriate utilization of health
services by such individuals;
320
Title IV, Subtitle A
‘‘(v) the establishment of necessary
reserves or purchase of stop-loss coverage;
and
‘‘(vi) activities relating to health pro-
fessions training, including residency train-
ing at participating provider sites.
‘‘(g) ADDITIONAL REQUIREMENTS.—
‘‘(1) MANDATORY ENROLLMENT OF MEDICAID-
ELIGIBLE INDIVIDUALS.—Notwithstanding any pro-
vision of section 1903(m), a State participating in a
demonstration project under this section may, until
December 31, 1997, require that each medicaid-eli-
gible resident in the service area of a CHA operating
under the project is not eligible to receive any medi-
cal assistance under the State plan that may be ob-
tained through enrollment with the CHA unless the
individual receives such assistance through enroll-
ment with the CHA.
‘‘(2) CONTINUED
ENTITLEMENT
TO
ADDI-
TIONAL BENEFITS.—In the case of a medicaid-eligi-
ble individual enrolled with a CHA under a dem-
onstration project under this section, the individual
shall remain entitled to medical assistance for serv-
ices which are not covered services under the project,
until December 31, 1997.
321
Title IV, Subtitle A
‘‘(3) HMO-RELATED REQUIREMENTS.—A CHA
under this section shall be deemed to meet the re-
quirements of section 1903(m) (subject to paragraph
(1)) in the same manner as an entity listed under
section 1903(m)(2)(G).
‘‘(4) OUTSTATIONING ELIGIBILITY WORKERS.—
Under the project, the State may (in addition to
meeting the requirements of section 1902(a)(55)
until December 31, 1997) provide for, or pay the
reasonable costs of, stationing eligibility workers at
appropriate service sites under the project, and may
permit medicaid-eligible individuals to be enrolled
under the State plan at such a CHA or at such a
site.
‘‘(5) PURCHASE
OF
STOP-LOSS
COVERAGE.—
The State shall ensure that the CHA has purchased
stop-loss coverage to protect against default on its
obligations under the project. If an entity otherwise
qualified to serve as a CHA is prohibited under
State law from purchasing such coverage, the State
shall waive the application of such law to the extent
necessary to permit the entity to purchase such cov-
erage.
‘‘(h) EVALUATION AND REPORTING.—
322
Title IV, Subtitle A
‘‘(1) CHA.—Each CHA in a State with a dem-
onstration project approved under this section shall
prepare and submit to the State an annual report on
its activities during the previous year.
‘‘(2) STATE.—Taking into account the reports
submitted pursuant to paragraph (1), each State
with a demonstration project approved under this
section shall prepare and submit to the Secretary an
annual evaluation of its activities and services under
this section. Such evaluation shall include an analy-
sis of the effectiveness of the project in providing
cost-effective health care to enrolled individuals.
‘‘(3) REPORT TO CONGRESS.—Not later than
June 30, 1997, the Secretary shall submit to Con-
gress a report on the demonstration projects con-
ducted under this section. Such report shall include
an analysis of the effectiveness of such projects in
providing cost-effective health care for the areas or
populations served.
‘‘(i) COLLABORATION IN ADMINISTRATION.—In car-
rying out this section, the Secretary shall assure the high-
est possible level of collaboration between the Health Care
Financing Administration and the Public Health Service.
Such collaboration may include (if appropriate and fea-
sible) any of the following:
323
Title IV, Subtitle A
‘‘(1) The provision by the Public Health Service
of new or increased grant support to eligible entities
participating in a CHA, in order to expand the avail-
ability of services (particularly preventive and pri-
mary care services).
‘‘(2) The placement of health professionals at
eligible locations and collaboration with Federally-
assisted health professions training programs located
in or near the areas served by community health
authorities.
‘‘(3) The provision of technical and other non-
financial assistance.
‘‘(j) DEFINITIONS.—In this section:
‘‘(1) MEDICAID-ELIGIBLE
INDIVIDUAL.—The
term ‘medicaid-eligible individual’ means an individ-
ual described in section 1902(a)(10)(A) and entitled
to medical assistance under the State plan.
‘‘(2) PARTICIPATING
PROVIDER.—The term
‘participating provider’ means, with respect to a
CHA, a provider that has entered into an agreement
with the CHA for the provision of covered services
under a project under this section.
‘‘(3) PREVENTIVE AND PRIMARY CARE SERV-
ICES.—‘Preventive’ and ‘primary’ services include
those services described in section 1905(l)(2)(A) and
324
Title IV, Subtitle A
included 
as 
Federally 
qualified 
health 
center
services.’’.
(b) EXCEPTION TO ANTI-KICKBACK LAW.—Section
1128B(b)(3) of such Act (42 U.S.C. 1320a-7b(b)(3)) is
amended—
(1) by striking ‘‘and’’ at the end of subpara-
graph (D),
(2) by striking the period at the end of sub-
paragraph (E) and inserting ‘‘; and’’, and
(3) by adding at the end the following new sub-
paragraph:
‘‘(F) any remuneration paid, or received,
by a Federally qualified health center, rural
health clinic, or other entity which is a partici-
pating provider under a demonstration project
under section 1933 as part of an arrangement
for the procurement of goods or services or the
referral of patients or the lease or purchase of
space or equipment.’’.
(c) TRANSITION.—A premium subsidy eligible indi-
vidual may use premium assistance certificates issued
under title XXI of the Social Security Act to purchase
qualified health coverage offered by a community health
authority that complies with the requirements for a carrier
under title I.
325
Title IV, Subtitle A
(d) EFFECTIVE DATE.—The amendments made by
this section shall take effect on the date of the enactment
of this Act.
SEC. 4002. HEALTH CENTER PROGRAM AMENDMENTS.
(a) AUTHORIZATION OF GRANTS FOR NETWORK DE-
VELOPMENT.—
(1) MIGRANT HEALTH CENTERS.—
(A) IN
GENERAL.—Section 329 of the
Public Health Service Act (42 U.S.C. 254b) is
amended by adding at the end the following:
‘‘(j)(1) The Secretary may make a grant, to an entity
receiving a grant under this section or to a group of such
entities, to support the planning and development of
health service networks (as defined in paragraph (3))
which will serve high impact areas, medically underserved
areas, or medically underserved populations within the
area they serve (or propose to serve).
‘‘(2) A grant under this subsection for the planning
and development of a health service network may be used
for the following costs:
‘‘(A) The costs of developing the network cor-
porate entity, including planning and needs assess-
ment.
‘‘(B) The costs of developing internal manage-
ment for the network, as well as costs of developing
326
Title IV, Subtitle A
legal, financial, clinical, information, billing, and re-
porting systems, and other costs necessary to
achieve operational status.
‘‘(C) The costs of recruitment, training, and
compensation of management staff of the network
and, as appropriate and necessary, the management
and clinical staff of any participating provider.
‘‘(D) The costs of developing additional primary
health and related service sites, including costs relat-
ed to purchase of essential equipment, acquisition,
modernization, expansion, or, if cost-effective, con-
struction of facilities.
‘‘(3) In this subsection, the term ‘health service net-
work’ means a nonprofit private entity that—
‘‘(A) through its participating providers (which
may provide services directly or through contract)
assures the provision of primary health and related
services and, as appropriate, supplemental health
services to residents of the high impact area or
medically underserved area or members of the medi-
cally underserved population covered by the network,
‘‘(B) includes, as participating providers, at
least all recipients of grants under this section or
section 330, 340, or 340A that provide primary
health and related services to the residents of the
327
Title IV, Subtitle A
area it serves (or proposes to serve), and that may
include, at the entity’s option, any other providers of
primary health or supplemental health services to
residents of the high impact area or medically un-
derserved area or members of the medically under-
served population covered by the network, but only
if such participating providers agree to provide serv-
ices without regard to an individual’s ability to pay,
and
‘‘(C) is governed by individuals a majority of
whom are patients, employees, or board members of
its participating providers that receive grants under
this section or section 330, 340, or 340A.’’.
(B) 
CONFORMING
CHANGE.—Section
329(h)(1)(A) 
of 
such 
Act 
(42 
U.S.C.
254b(h)(1)(A)) is amended by inserting ‘‘and
subsection (j)’’ after ‘‘through (e)’’.
(2) COMMUNITY
HEALTH
CENTERS.—Section
330 of such Act (42 U.S.C. 254c) is amended by
adding at the end the following:
‘‘(l)(1) The Secretary may make a grant, to an entity
receiving a grant under this section or to a group of such
entities, to support the planning and development of
health service networks (as defined in section 329(j)(3))
which will serve high impact areas, medically underserved
328
Title IV, Subtitle A
areas, or medically underserved populations within the
area they serve (or propose to serve).
‘‘(2) A grant under this subsection for the planning
and development of a health service network may be used
for the costs described in section 329(j)(2).’’.
(3) EFFECTIVE DATE.—The amendments made
by this subsection shall take effect on the date of the
enactment of this Act.
(b) REGULATIONS DEFINING MEDICALLY UNDER-
SERVED POPULATIONS AND FRONTIER AREAS.—Within 1
year after the date of the enactment of this Act, the Sec-
retary of Health and Human Services shall promulgate
regulations that define medically underserved populations
and frontier areas for purposes of title III of the Public
Health Service Act.
(c) EXTENSION OF AUTHORIZATION OF APPROPRIA-
TIONS.—For extension of authorization of appropriations
for migrant health centers and community health centers,
see section 4131.
329
Title IV, Subtitle B
Subtitle B—Improved Access in
Rural Areas
PART 1—GRANTS TO ENCOURAGE COMMUNITY
RURAL HEALTH NETWORKS
SEC. 4101. ASSISTANCE FOR DEVELOPMENT OF ACCESS
PLANS FOR CHRONICALLY UNDERSERVED
AREAS.
(a) AVAILABILITY OF FINANCIAL ASSISTANCE TO IM-
PLEMENT ACTION PLANS TO INCREASE ACCESS.—
(1) IN GENERAL.—The Secretary shall provide
grants (in amounts determined in accordance with
paragraph (3)) over a 3-year period to an eligible
State for the development of plans to increase access
to health care services during such period for resi-
dents of areas in the State that are designated as
chronically underserved areas in accordance with
subsection (b).
(2) ELIGIBILITY REQUIREMENTS.—A State is
eligible to receive grants under this section if the
State submits to the Secretary (at such time and in
such form as the Secretary may require) assurances
that the State has developed (or is in the process of
developing) a plan to increase the access of residents
of a chronically underserved area to health care serv-
ices that meets the requirements of subsection (c),
330
Title IV, Subtitle B
together with such other information and assurances
as the Secretary may require.
(3) AMOUNT OF ASSISTANCE.—
(A) IN
GENERAL.—Subject to subpara-
graph (B), the amount of assistance provided to
a State under this subsection with respect to
any plan during a 3-year period shall be equal
to—
(i) for the first year of the period, an
amount equal to 100 percent of the
amounts expended by the State during the
year to implement the plan described in
paragraph (1) (as reported to the Sec-
retary in accordance with such require-
ments as the Secretary may impose);
(ii) for the second year of the period,
an amount equal to 50 percent of the
amounts expended by the State during the
year to implement the plan; and
(iii) for the third year of the period,
an amount equal to 33 percent of the
amounts expended by the State during the
year to implement the plan.
(B) AGGREGATE
PER
PLAN
LIMIT.—The
amount of assistance provided to a State under
331
Title IV, Subtitle B
this subsection with respect to any plan may
not exceed $100,000 during any year of the 3-
year period for which the State receives assist-
ance.
(b) DESIGNATION OF AREAS.—
(1) DESIGNATION BY GOVERNOR.—In accord-
ance with the guidelines developed under paragraph
(2), the Governor of a State may designate an area
in the State as a chronically underserved area for
purposes of this section upon the request of a local
official of the area or upon the Governor’s initiative.
(2) GUIDELINES FOR DESIGNATION.—
(A) DEVELOPMENT BY SECRETARY.—Not
later than 1 year after the date of the enact-
ment of this Act, the Secretary shall develop
guidelines for the designation of areas as chron-
ically underserved areas under this section.
(B) FACTORS CONSIDERED IN DEVELOP-
MENT
OF
GUIDELINES.—In developing guide-
lines under paragraph (1), the Secretary shall
consider the following factors:
(i) Whether the area (or a significant
portion of the area)—
(I) is designated as a health pro-
fessional shortage area (under section
332
Title IV, Subtitle B
332(a) of the Public Health Service
Act), or meets the criteria for des-
ignation as such an area; or
(II) was previously designated as
such an area or previously met such
criteria for an extended period prior
to the designation of the area under
this section (in accordance with cri-
teria established by the Secretary).
(ii) The availability and adequacy of
health care providers and facilities for resi-
dents of the area.
(iii) The extent to which the availabil-
ity of assistance under other Federal and
State programs has failed to alleviate the
lack of access to health care services for
residents of the area.
(iv) The percentage of residents of the
area whose income is at or below the pov-
erty level.
(v) The percentage of residents of the
area who are age 65 or older.
(vi) The existence of cultural or geo-
graphic barriers to access to health care
333
Title IV, Subtitle B
services in the area, including weather con-
ditions.
(3) REVIEW BY SECRETARY.—No designation
under paragraph (1) shall take effect under this sec-
tion unless the Secretary—
(A) has been notified of the proposed des-
ignation; and
(B) has not, within 60 days after the date
of receipt of the notice, disapproved the des-
ignation.
(4) PERIOD OF DESIGNATION.—A designation
under this section shall be effective during a period
specified by the Governor of not longer than 3 years.
The Governor may extend the designation for addi-
tional 3-year periods, except that a State may not
receive assistance under subsection (a)(3) for
amounts expended during any such additional peri-
ods.
(c) REQUIREMENTS FOR STATE ACCESS PLANS.—A
State plan to increase the access of residents of chronically
underserved areas to health care services meets the re-
quirements of this section if the Secretary finds that the
plan was developed with the participation of health care
providers and facilities and residents of the area that is
334
Title IV, Subtitle B
the subject of the plan, together with such other require-
ments as the Secretary may impose.
(d) AUTHORIZATION
OF APPROPRIATIONS.—There
are authorized to be appropriated for assistance under this
section $10,000,000 for each of the first 3 fiscal years
beginning after the date on which the Secretary develops
guidelines for the designation of areas as chronically un-
derserved areas under subsection (b)(2).
SEC. 4102. TECHNICAL ASSISTANCE GRANTS FOR NET-
WORKS.
(a) IN GENERAL.—The Secretary shall make funds
available under this section to provide technical assistance
(including information regarding eligibility for other Fed-
eral programs) and advice for entities described in sub-
section (b) seeking to establish or enhance a community
rural health network in an underserved rural area.
(b) ENTITIES ELIGIBLE TO RECEIVE FUNDS.—The
following entities are eligible to receive funds for technical
assistance under this section:
(1) An entity receiving a grant under section
4103.
(2) A State or unit of local government.
(3) An entity providing health care services (in-
cluding health professional education services) in the
area involved.
335
Title IV, Subtitle B
(c) USE OF FUNDS.—
(1) IN GENERAL.—Funds made available under
this section may be used—
(A) for planning a community health net-
work and the submission of the plan for the
network to the Secretary under section 4103(c)
(subject to the limitation described in para-
graph (2));
(B) to provide assistance in conducting
community-based needs and prioritization, iden-
tifying existing regional health resources, and
developing networks, utilizing existing local pro-
viders and facilities where appropriate;
(C) to provide advice on obtaining the
proper balance of primary and secondary facili-
ties for the population served by the network;
(D) to provide assistance in coordinating
arrangements for tertiary care;
(E) to provide assistance in recruitment
and retention of health care professionals;
(F) to provide assistance in coordinating
the delivery of emergency services with the pro-
vision of other health care services in the area
served by the network;
336
Title IV, Subtitle B
(G) to provide assistance in coordinating
arrangements for mental health and substance
abuse treatment services; and
(H) to provide information regarding the
area or proposed network’s eligibility for Fed-
eral and State assistance for health care-related
activities, together with information on funds
available through private sources.
(2) LIMITATION ON AMOUNT AVAILABLE FOR
DEVELOPMENT OF NETWORK.—The amount of fi-
nancial assistance available for activities described in
paragraph (1) may not exceed $50,000 and may not
be available for a period of time exceeding 1 year.
(d) USE OF RURAL HEALTH OFFICES.—In carrying
out this section with respect to entities in rural areas, the
Secretary shall make funds available through—
(1) not more than 10 regional centers acting as
clearinghouses for the distribution of such funds;
and
(2) State Offices of Rural Health, or any com-
bination of such centers and Offices.
(e) AUTHORIZATION
OF APPROPRIATIONS.—There
are authorized to be appropriated $10,000,000 for each
of fiscal years 1996 and 1997 and $30,000,000 for each
of fiscal years 1998 through 2000 to carry out this sec-
337
Title IV, Subtitle B
tion. Amounts appropriated under this section shall be
available until expended.
SEC. 4103. DEVELOPMENT GRANTS FOR NETWORKS.
(a) IN GENERAL.—The Secretary shall provide finan-
cial assistance to eligible entities in order to provide for
the development and implementation of community rural
health networks.
(b) ELIGIBLE ENTITIES.—
(1) IN GENERAL.—An entity is eligible to re-
ceive financial assistance under this section only if
the entity—
(A) is (i) based in a rural area or (ii) is
described in paragraph (2), (3), or (4) of sec-
tion 4102(b),
(B) is undertaking to develop and imple-
ment a community rural health network in an
underserved rural area (or underserved rural
areas) with the active participation of at least
3 health care providers or facilities in the area,
and
(C) has consulted with the local govern-
ments of the area to be served by the network
and with individuals who reside in the area.
(2) COORDINATION WITH PROVIDERS OUTSIDE
OF AREA PERMITTED.—Nothing in this section shall
338
Title IV, Subtitle B
be construed as preventing an entity that coordi-
nates the delivery of services in an underserved rural
area with an entity outside the area from qualifying
for financial assistance under this section, or as pre-
venting an entity consisting of a consortia of mem-
bers located in adjoining States from qualifying for
such assistance.
(3) PERMITTING
ENTITIES
NOT
RECEIVING
FUNDING FOR DEVELOPMENT OF PLAN TO RECEIVE
FUNDING FOR IMPLEMENTATION.—An entity that is
eligible to receive financial assistance under this sec-
tion may receive assistance to carry out activities de-
scribed in subsection (c)(1)(B) notwithstanding that
the entity does not receive assistance to carry out
activities described in subsection (c)(1)(A).
(c) USE OF FUNDS.—
(1) IN
GENERAL.—Financial assistance made
available to eligible entities under this section may
be used only—
(A) for the development of a community
health network and the submission of the plan
for the network to the Secretary; and
(B) after the Secretary approves the plan
for the network, for activities to implement the
network, including (but not limited to)—
339
Title IV, Subtitle B
(i) establishing information systems,
including telecommunications,
(ii) recruiting health care providers,
(iii) providing services to enable indi-
viduals to have access to health care serv-
ices, including transportation and language
interpretation services (including interpre-
tation services for the hearing-impaired),
and
(iv) establishing and operating a com-
munity health advisor program described
in paragraph (2).
(2) COMMUNITY HEALTH ADVISOR PROGRAM.—
(A) PROGRAM DESCRIBED.—In paragraph
(1), a ‘‘community health advisor program’’ is
a program under which community health advi-
sors carry out the following activities:
(i) Collaborating efforts with health
care providers and related entities to facili-
tate the provision of health services and
health-related social services.
(ii) Providing public education on
health promotion and disease prevention
and efforts to facilitate the use of available
340
Title IV, Subtitle B
health services and health-related social
services.
(iii) Providing health-related counsel-
ing.
(iv) Making referrals for available
health services and health-related social
services.
(v) Improving the ability of individ-
uals to use health services and health-
related social services under Federal,
State, and local programs through assist-
ing individuals in establishing eligibility
under the programs.
(vi) Providing outreach services to in-
form the community of the availability of
the services provided under the program.
(B) COMMUNITY
HEALTH
ADVISOR
DE-
FINED.—In subparagraph (A), the term ‘‘com-
munity health advisor’’ means, with respect to
a community health advisor program, an
individual—
(i) who has demonstrated the capacity
to carry out one or more of the activities
carried out under the program; and
341
Title IV, Subtitle B
(ii) who, for not less than one year,
has been a resident of the community in
which the program is to be operated.
(3) LIMITATIONS ON ACTIVITIES FUNDED.—Fi-
nancial assistance made available under this section
may not be used for any of the following:
(A) For a telecommunications system un-
less such system is coordinated with, and does
not duplicate, a system existing in the area.
(B) For construction or remodeling of
health care facilities.
(4) LIMITATION ON AMOUNT AVAILABLE FOR
DEVELOPMENT OF NETWORK.—The amount of fi-
nancial assistance available for activities described in
paragraph (1)(A) may not exceed $50,000 and may
not be made available for a period of time exceeding
1 year.
(d) APPLICATION.—
(1) IN GENERAL.—No financial assistance shall
be provided under this section to an entity unless
the entity has submitted to the Secretary, in a time
and manner specified by the Secretary, and had ap-
proved by the Secretary an application.
(2) INFORMATION
TO
BE
INCLUDED.—Each
such application shall include—
342
Title IV, Subtitle B
(A) a description of the community rural
health network, including service area and ca-
pacity, and
(B) a description of how the proposed net-
work will utilize existing health care facilities in
a manner that avoids unnecessary duplication.
(e) AUTHORIZATION OF APPROPRIATIONS.—
(1) IN GENERAL.—There are authorized to be
appropriated $100,000,000 for each of fiscal years
1996 and 1997, $120,000,000 for fiscal year 1998,
$130,000,000 for fiscal year 1999, $140,000,000 for
fiscal year 2000, $150,000,000 for fiscal year 2001,
$160,000,000 for fiscal year 2002, $170,000,000 for
fiscal year 2003, and $180,000,000 for fiscal year
2004, to carry out this section. Amounts appro-
priated under this section shall be available until ex-
pended.
(2) INTEGRATION
OF
OTHER
AUTHORIZA-
TIONS.—In order to provide for the authorization of
appropriations under paragraph (1), notwithstanding
any other provision of law, no funds are authorized
to be appropriated to carry out the following pro-
grams in fiscal years after fiscal year 1994:
343
Title IV, Subtitle B
(A) The rural health transition grant pro-
gram (under section 4005(e) of the Omnibus
Budget Reconciliation Act of 1987).
(B) The rural health outreach program
(for which appropriations were annually pro-
vided under the Departments of Labor, Health
and Human Services, and Education, and Re-
lated Agencies Appropriation Acts).
(3) 
ANNUAL
LIMIT
ON
ASSISTANCE
TO
GRANTEE.—The amount of financial assistance pro-
vided to an entity under this section during a year
may not exceed $250,000.
SEC. 4104. DEFINITIONS.
For purposes of this part:
(1) COMMUNITY RURAL HEALTH NETWORK.—
The term ‘‘community rural health network’’ means
a formal cooperative arrangement between partici-
pating hospitals, physicians, and other health care
providers which—
(A) is located in an underserved rural
area;
(B) furnishes health care services to indi-
viduals residing in the area; and
344
Title IV, Subtitle B
(C) is governed by a board of directors se-
lected by participating health care providers
and residents of the area.
(2) RURAL AREA.—The term ‘‘rural area’’ has
the 
meaning 
given 
such 
term 
in 
section
1886(d)(2)(D) of the Social Security Act.
(3) SECRETARY.—The term ‘‘Secretary’’ means
the Secretary of Health and Human Services.
(4) STATE.—The term ‘‘State’’ means each of
the several States, the District of Columbia, Puerto
Rico, the Virgin Islands, Guam, the Northern Mari-
ana Islands, and American Samoa.
(5) UNDERSERVED
RURAL
AREA.—The term
‘‘underserved rural area’’ means a rural area des-
ignated—
(A) as a health professional shortage area
under section 332(a) of the Public Health Serv-
ice Act; or
(B) as a chronically underserved area
under section 4101.
345
Title IV, Subtitle B
PART 2—INCENTIVES FOR HEALTH
PROFESSIONALS TO PRACTICE IN RURAL AREAS
Subpart A—National Health Service Corps
Program
SEC. 4111. NATIONAL HEALTH SERVICE CORPS LOAN RE-
PAYMENTS EXCLUDED FROM GROSS INCOME.
(a) IN GENERAL.—Part III of subchapter B of chap-
ter 1 of the Internal Revenue Code of 1986 (relating to
items specifically excluded from gross income) is amended
by redesignating section 137 as section 138 and by insert-
ing after section 136 the following new section:
‘‘SEC. 137. NATIONAL HEALTH SERVICE CORPS LOAN RE-
PAYMENTS.
‘‘(a) GENERAL RULE.—Gross income shall not in-
clude any qualified loan repayment.
‘‘(b) QUALIFIED LOAN REPAYMENT.—For purposes
of this section, the term ‘qualified loan repayment’ means
any payment made on behalf of the taxpayer by the Na-
tional Health Service Corps Loan Repayment Program
under section 338B(g) of the Public Health Service Act.’’.
(b) CONFORMING AMENDMENT.—Paragraph (3) of
section 338B(g) of the Public Health Service Act is
amended by striking ‘‘Federal, State, or local’’ and insert-
ing ‘‘State or local’’.
(c) CLERICAL AMENDMENT.—The table of sections
for part III of subchapter B of chapter 1 of the Internal
346
Title IV, Subtitle B
Revenue Code of 1986 is amended by striking the item
relating to section 137 and inserting the following:
‘‘Sec. 137. National Health Service Corps loan repayments.
‘‘Sec. 138. Cross references to other Acts.’’.
(d) EFFECTIVE DATE.—The amendments made by
this section shall apply to payments made under section
338B(g) of the Public Health Service Act after the date
of the enactment of this Act.
SEC. 4112. MODIFICATION IN CRITERIA FOR DESIGNATION
AS HEALTH PROFESSIONAL SHORTAGE AREA.
(a) RELEVANCE OF TRAVEL TIMES WITHIN FRON-
TIER AREAS.—Section 332(a) of the Public Health Service
Act (42 U.S.C. 245e(a)) is amended by adding at the end
the following new paragraph:
‘‘(4) With respect to meeting the criteria under
paragraph (1)(A) for an area to be designated as a
health professional shortage area, the Secretary
shall, in the case of a frontier area, make the deter-
mination of whether the frontier area is a rational
area for the delivery of health services without re-
gard to—
‘‘(A) the travel time between population
centers in the frontier area; or
‘‘(B) the travel time to contiguous area re-
sources in the frontier area.’’.
347
Title IV, Subtitle B
(b) REGULATIONS
DEFINING
HEALTH
PROFES-
SIONAL SHORTAGE AREAS.—Within 1 year after the date
of the enactment of this Act, the Secretary of Health and
Human Services shall promulgate regulations that define
health professional shortage areas for purposes of title III
of the Public Health Service Act.
(c) AGENCY
RECOMMENDATIONS
FOR
IMPROVE-
MENTS.—Not later than July 1, 1995, the Secretary of
Health and Human Services shall submit to the Congress
a report specifying the recommendations of the Secretary
for improving the manner of determining the extent to
which a geographic area has a need for assignments of
members of the National Health Service Corps, and for
equitably allocating such assignments among the geo-
graphic areas with a need for such assignments.
(d) EFFECTIVE DATE.—This section shall take effect
on October 1, 1994, or upon the date of the enactment
of this Act, whichever occurs later.
SEC. 4113. OTHER PROVISIONS REGARDING NATIONAL
HEALTH SERVICE CORPS.
(a) SCHOLARSHIP
AND LOAN REPAYMENT PRO-
GRAMS.—
(1) AUTHORIZATION
OF
APPROPRIATIONS.—
Section 338H(b)(1) of the Public Health Service Act
(42 U.S.C. 254q(b)(1)) is amended—
348
Title IV, Subtitle B
(A) by striking ‘‘and’’ after ‘‘1991,’’; and
(B) by striking ‘‘through 2000.’’ and in-
serting ‘‘through 1994, $150,000,000 for fiscal
year 1995, $175,000,000 for fiscal year 1996,
$200,000,000 
for 
fiscal 
year 
1997,
$275,000,000 
for 
fiscal 
year 
1998,
$275,000,000 
for 
fiscal 
year 
1999,
$275,000,000 
for 
fiscal 
year 
2000,
$300,000,000 
for 
fiscal 
year 
2001,
$325,000,000 
for 
fiscal 
year 
2002,
$350,000,000 
for 
fiscal 
year 
2003, 
and
$375,000,000 for fiscal year 2004.’’.
(2) 
ALLOCATION
FOR
PARTICIPATION
OF
NURSES
IN
SCHOLARSHIP
PROGRAM.—Section
338H(b)(2) of the Public Health Service Act (42
U.S.C. 254q(b)(2)) is amended by adding at the end
the following subparagraph:
‘‘(C) Of the amounts appropriated under
paragraph (1) for fiscal year 1995 and subse-
quent fiscal years, the Secretary shall reserve
such amounts as may be necessary to ensure
that, of the aggregate number of individuals
who are participants in the Scholarship Pro-
gram, the total number who are being educated
349
Title IV, Subtitle B
as nurses or are serving as nurses, respectively,
is increased to 20 percent.’’.
(b) INCREASE
IN NUMBER
OF MENTAL HEALTH
PROFESSIONALS IN SHORTAGE AREAS.—
(1) IN GENERAL.—Section 338H(b) of the Pub-
lic Health Service Act (42 U.S.C. 254q(b)) is
amended by adding at the end the following para-
graph:
‘‘(3) MENTAL
HEALTH
PROFESSIONALS.—In
providing contracts under this subpart for scholar-
ships and loan repayments, the Secretary shall en-
sure that an appropriate number of mental health
professionals is assigned under section 333 for
health professional shortage areas.’’.
(2) APPLICABILITY.—With respect to contracts
for scholarships and loan repayments under subpart
III of part D of title III of the Public Health Service
Act, the amendment made by subsection (a) applies
with respect to contracts entered into on or after Oc-
tober 1, 1994.
350
Title IV, Subtitle B
Subpart B—Incentives Under Other
Programs
SEC. 4121. EXTENSION OF ADDITIONAL PAYMENT UNDER
MEDICARE FOR PHYSICIANS’ SERVICES FUR-
NISHED IN FORMER SHORTAGE AREAS.
(a) IN GENERAL.—Section 1833(m) of the Social Se-
curity Act (42 U.S.C. 1395l(m)) is amended by striking
‘‘area,’’ and inserting ‘‘area (or, in the case of an area
for which the designation as a health professional shortage
area under such section is withdrawn, in the case of physi-
cians’ services furnished to such an individual during the
3-year period beginning on the effective date of the with-
drawal of such designation),’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply to physicians’ services furnished
in an area for which the designation as a health profes-
sional shortage area under section 332(a)(1)(A) of the
Public Health Service Act is withdrawn on or after Janu-
ary 1, 1995.
SEC. 4122. REFINEMENT OF GEOGRAPHIC ADJUSTMENT
FACTOR FOR MEDICARE PHYSICIANS’ SERV-
ICES.
(a) DEADLINE
FOR INITIAL REVIEW
AND REVI-
SION.—Section 1848(e)(1)(C) of the Social Security Act
(42 U.S.C. 1395w–4(e)(1)(C)) is amended by adding at
351
Title IV, Subtitle B
the end the following: ‘‘The first such review and revision
shall apply to services furnished on or after January 1,
1995.’’.
(b) AUTHORITY TO ADJUST INDEX VALUE
FOR
INPUT COMPONENT UNDER CERTAIN CIRCUMSTANCES.—
(1) Section 1848(e)(1) of the Social Security Act (42
U.S.C. 1395w–4(e)(1)) is amended—
(A) in subparagraph (A), by striking ‘‘(B) and
(C)’’ and inserting ‘‘(B), (C), and (D)’’;
(B) by redesignating subparagraph (C) as sub-
paragraph (D); and
(C) by inserting after subparagraph (B) the fol-
lowing:
‘‘(C) SPECIAL ADJUSTMENT TO CORRECT
FOR
UNIQUE
LOCAL
CIRCUMSTANCES.—The
Secretary may adjust the value assigned to an
input component of an index in a fee schedule
area if the Secretary determines that the value
that would otherwise apply in such area does
not accurately reflect the relative costs of such
input for such area because of unique local cir-
cumstances.’’.
(2) Section 1848(i)(1)(D) of the Social Security Act
(42 U.S.C. 1395w–4(i)(1)(D)) is amended by inserting
352
Title IV, Subtitle B
‘‘(including any adjustment under subparagraph (C)
thereof)’’ after ‘‘subsection (e)’’.
(c) REPORT ON REVIEW PROCESS.—Not later than
April 1, 1996, the Secretary of Health and Human Serv-
ices (in this section referred to as the ‘‘Secretary’’) shall
study and report to the Committee on Finance of the Sen-
ate and the Committees on Ways and Means and Energy
and Commerce of the House of Representatives on—
(1) the data necessary to review and revise the
indices established under section 1848(e)(1)(A) of
the Social Security Act, including—
(A) the shares allocated to physicians’
work effort, practice expenses (other than mal-
practice expenses), and malpractice expenses;
(B) the weights assigned to the input com-
ponents of such shares; and
(C) the index values assigned to such com-
ponents;
(2) any limitations on the availability of data
necessary to review and revise such indices at least
every three years;
(3) ways of addressing such limitations, with
particular attention to the development of alternative
data sources for input components for which current
353
Title IV, Subtitle B
index values are based on data collected less fre-
quently than every three years; and
(4) the costs of developing more accurate and
timely data sources.
(d) STUDY ON LOW-VOLUME ADJUSTMENT IN ISO-
LATED AREAS.—(1) Not later than July 1, 1996, the Phy-
sician Payment Review Commission shall study and report
to the Committee on Finance of the Senate and the Com-
mittees on Ways and Means and Energy and Commerce
of the House of Representatives on the feasibility and de-
sirability of providing for a special adjustment to the index
value of the medical equipment and supplies input compo-
nent of the index used under section 1848(e) of the Social
Security Act with respect to services described in para-
graph (2).
(2) Services described in this paragraph are serv-
ices—
(A) furnished by a physician who practices in
an isolated area;
(B) requiring the presence of expensive medical
equipment and supplies in the physician’s office; and
(C) with respect to which the cost per service
of operating the equipment is increased because of
the low volume of patients of such physician.
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Title IV, Subtitle B
SEC. 4123. DEVELOPMENT OF MODEL STATE SCOPE OF
PRACTICE LAW.
(a) IN GENERAL.—The Secretary of Health and
Human Services shall develop and publish a model law
that may be adopted by States to increase the access of
individuals residing in underserved rural areas to health
care services by expanding the services which non-physi-
cian health care professionals may provide in such areas.
(b) DEADLINE.—The Secretary shall publish the
model law developed under subsection (a) not later than
1 year after the date of the enactment of this Act.
PART 3—ASSISTANCE FOR INSTITUTIONAL
PROVIDERS
Subpart A—Community and Migrant Health
Centers
SEC. 4131. COMMUNITY AND MIGRANT HEALTH CENTERS.
(a) 
MIGRANT
HEALTH
CENTERS.—Section
329(h)(1)(A) of the Public Health Service Act (42 U.S.C.
254b(h)(1)(A)) is amended—
(1) by striking ‘‘and’’ after ‘‘1991,’’; and
(2) by inserting before the period the following:
‘‘, $75,000,000 for fiscal year 1996, $80,000,000
for fiscal year 1997, $155,000,000 for fiscal year
1998, 
$165,000,000 
for 
fiscal 
year 
1999,
$175,000,000 for fiscal year 2000, $185,000,000 for
fiscal year 2001, $195,000,000 for fiscal year 2002,
356
Title IV, Subtitle B
(2) in the heading for part A, by striking ‘‘Gen-
eral’’ and all that follows and inserting ‘‘General Au-
thorities and Duties’’; and
(3) by amending section 1201 to read as fol-
lows:
‘‘SEC. 1201. ESTABLISHMENT OF OFFICE OF EMERGENCY
MEDICAL AND TRAUMA CARE SERVICES.
‘‘(a) IN GENERAL.—The Secretary shall establish an
office to be known as the Office of Emergency Medical
and Trauma Care Services, which shall be headed by a
director appointed by the Secretary. The Secretary shall
carry out this title acting through the Director of such
Office.
‘‘(b) GENERAL AUTHORITIES AND DUTIES.—With
respect to emergency medical services (including trauma
care), the Secretary shall—
‘‘(1) conduct and support research, training,
evaluations, and demonstration projects;
‘‘(2) foster the development of appropriate,
modern systems of such services through the sharing
of information among agencies and individuals in-
volved in the study and provision of such services;
‘‘(3) foster the development of regional systems
for the provision of such services;
‘‘(4) sponsor workshops and conferences;
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Title IV, Subtitle B
‘‘(5) as appropriate, disseminate to public and
private entities information obtained in carrying out
paragraphs (1) through (4);
‘‘(6) provide technical assistance to State and
local agencies;
‘‘(7) coordinate activities of the Department of
Health and Human Services; and
‘‘(8) as appropriate, coordinate activities of
such Department with activities of other Federal
agencies.
‘‘(c) CERTAIN REQUIREMENTS.—With respect to
emergency medical services (including trauma care), the
Secretary shall ensure that activities under subsection (b)
are carried out regarding—
‘‘(1) maintaining an adequate number of health
professionals with expertise in the provision of the
services, including hospital-based professionals and
prehospital-based professionals;
‘‘(2) developing, periodically reviewing, and re-
vising as appropriate, in collaboration with appro-
priate public and private entities, guidelines for the
provision of such services (including, for various typ-
ical circumstances, guidelines on the number and va-
riety of professionals, on equipment, and on train-
ing);
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Title IV, Subtitle B
‘‘(3) the appropriate use of available tech-
nologies, including communications technologies; and
‘‘(4) the unique needs of underserved inner-city
areas and underserved rural areas.
‘‘(d) GRANTS, COOPERATIVE AGREEMENTS, AND
CONTRACTS.—In carrying out subsections (b) and (c), the
Secretary may make grants and enter into cooperative
agreements and contracts.
‘‘(e) DEFINITIONS.—For purposes of this part:
‘‘(1) The term ‘hospital-based professional’
means a health professional (including an allied
health professional) who has expertise in providing
one or more emergency medical services and who
normally provides the services at a medical facility.
‘‘(2) The term ‘prehospital-based professional’
means a health professional (including an allied
health professional) who has expertise in providing
one or more emergency medical services and who
normally provides the services at the site of the med-
ical emergency or during transport to a medical fa-
cility.’’.
(b) STATE OFFICES OF EMERGENCY MEDICAL SERV-
ICES; DEMONSTRATION PROGRAM REGARDING TELE-
COMMUNICATIONS.—Part A of title XII of the Public
Health Service Act (42 U.S.C. 300d et seq.), as amended
359
Title IV, Subtitle B
by section 601(b) of Public Law 103-183 (107 Stat.
2238), is amended—
(1) by redesignating sections 1202 and 1203 as
sections 1203 and 1204, respectively;
(2) by inserting after section 1201 the following
section:
‘‘SEC. 1202. STATE OFFICES OF EMERGENCY MEDICAL
SERVICES.
‘‘(a) PROGRAM
OF GRANTS.—The Secretary may
make grants to States for the purpose of improving the
availability and quality of emergency medical services
through the operation of State offices of emergency medi-
cal services.
‘‘(b) REQUIREMENT OF MATCHING FUNDS.—
‘‘(1) IN
GENERAL.—The Secretary may not
make a grant under subsection (a) unless the State
involved agrees, with respect to the costs to be in-
curred by the State in carrying out the purpose de-
scribed in such subsection, to provide non-Federal
contributions toward such costs in an amount that—
‘‘(A) for the first fiscal year of payments
under the grant, is not less than $1 for each $3
of Federal funds provided in the grant;
360
Title IV, Subtitle B
‘‘(B) for any second fiscal year of such
payments, is not less than $1 for each $1 of
Federal funds provided in the grant; and
‘‘(C) for any third fiscal year of such pay-
ments, is not less than $3 for each $1 of Fed-
eral funds provided in the grant.
‘‘(2) DETERMINATION
OF
AMOUNT
OF
NON-
FEDERAL CONTRIBUTION.—
‘‘(A) Subject to subparagraph (B), non-
Federal contributions required in paragraph (1)
may be in cash or in kind, fairly evaluated, in-
cluding plant, equipment, or services. Amounts
provided by the Federal Government, or serv-
ices assisted or subsidized to any significant ex-
tent by the Federal Government, may not be in-
cluded in determining the amount of such non-
Federal contributions.
‘‘(B) The Secretary may not make a grant
under subsection (a) unless the State involved
agrees that—
‘‘(i) for the first fiscal year of pay-
ments under the grant, 100 percent or less
of the non-Federal contributions required
in paragraph (1) will be provided in the
form of in-kind contributions;
361
Title IV, Subtitle B
‘‘(ii) for any second fiscal year of such
payments, not more than 50 percent of
such non-Federal contributions will be pro-
vided in the form of in-kind contributions;
and
‘‘(iii) for any third fiscal year of such
payments, such non-Federal contributions
will be provided solely in the form of cash.
‘‘(c) CERTAIN REQUIRED ACTIVITIES.—The Sec-
retary may not make a grant under subsection (a) unless
the State involved agrees that activities carried out by an
office operated pursuant to such subsection will include—
‘‘(1) coordinating the activities carried out in
the State that relate to emergency medical services;
‘‘(2) activities regarding the matters described
in paragraphs (1) through (4) section 1201(b); and
‘‘(3) identifying Federal and State programs re-
garding emergency medical services and providing
technical assistance to public and nonprofit private
entities regarding participation in such programs.
‘‘(d) REQUIREMENT REGARDING ANNUAL BUDGET
FOR OFFICE.—The Secretary may not make a grant
under subsection (a) unless the State involved agrees that,
for any fiscal year for which the State receives such a
grant, the office operated pursuant to subsection (a) will
362
Title IV, Subtitle B
be provided with an annual budget of not less than
$50,000.
‘‘(e) CERTAIN USES OF FUNDS.—
‘‘(1) RESTRICTIONS.—The Secretary may not
make a grant under subsection (a) unless the State
involved agrees that—
‘‘(A) if research with respect to emergency
medical services is conducted pursuant to the
grant, not more than 10 percent of the grant
will be expended for such research; and
‘‘(B) the grant will not be expended to pro-
vide emergency medical services (including pro-
viding cash payments regarding such services).
‘‘(2) ESTABLISHMENT
OF
OFFICE.—Activities
for which a State may expend a grant under sub-
section (a) include paying the costs of establishing
an office of emergency medical services for purposes
of such subsection.
‘‘(f) REPORTS.—The Secretary may not make a
grant under subsection (a) unless the State involved
agrees to submit to the Secretary reports containing such
information as the Secretary may require regarding activi-
ties carried out under this section by the State.
‘‘(g) REQUIREMENT
OF APPLICATION.—The Sec-
retary may not make a grant under subsection (a) unless
363
Title IV, Subtitle B
an application for the grant is submitted to the Secretary
and the application is in such form, is made in such man-
ner, and contains such agreements, assurances, and infor-
mation as the Secretary determines to be necessary to
carry out this section.’’; and
(3) in section 1204 (as redesignated by para-
graph (1) of this subsection)—
(A) by redesignating subsection (c) as sub-
section (d); and
(B) by inserting after subsection (b) the
following new subsection:
‘‘(c) DEMONSTRATION PROGRAM REGARDING TELE-
COMMUNICATIONS.—
‘‘(1) LINKAGES
FOR
RURAL
FACILITIES.—
Projects under subsection (a)(1) shall include dem-
onstration projects to establish telecommunications
between rural medical facilities and medical facilities
that have expertise or equipment that can be utilized
by the rural facilities through the telecommuni-
cations.
‘‘(2) MODES
OF
COMMUNICATION.—The Sec-
retary shall ensure that the telecommunications
technologies demonstrated under paragraph (1) in-
clude interactive video telecommunications, static
video imaging transmitted through the telephone
364
Title IV, Subtitle B
system, and facsimiles transmitted through such sys-
tem.’’.
(c) FUNDING.—Section 1232 of the Public Health
Service Act (42 U.S.C. 300d-32) is amended by striking
subsections (a) and (b) and inserting the following:
‘‘(a) 
EMERGENCY
MEDICAL
SERVICES
GEN-
ERALLY.—For the purpose of carrying out section 1201
other than with respect to trauma care, and for the pur-
pose of carrying out section 1204(c), there are authorized
to be appropriated $2,000,000 for each of the fiscal years
1996, 1997, and 1998.
‘‘(b) STATE OFFICES.—For the purpose of carrying
out section 1202, there are authorized to be appropriated
$3,000,000 for each of the fiscal years 1996, 1997, and
1998.’’.
SEC. 4142. GRANTS TO STATES REGARDING AIRCRAFT FOR
TRANSPORTING RURAL VICTIMS OF MEDICAL
EMERGENCIES.
Part E of title XII of the Public Health Service Act
(42 U.S.C. 300d-51 et seq.) is amended by adding at the
end the following new section:
‘‘SEC. 1252. GRANTS FOR SYSTEMS TO TRANSPORT RURAL
VICTIMS OF MEDICAL EMERGENCIES.
‘‘(a) IN GENERAL.—The Secretary shall make grants
to States to assist such States in the creation or enhance-
365
Title IV, Subtitle B
ment of air medical transport systems that provide victims
of medical emergencies in rural areas with access to treat-
ments for the injuries or other conditions resulting from
such emergencies.
‘‘(b) APPLICATION AND PLAN.—
‘‘(1) APPLICATION.—To be eligible to receive a
grant under subsection (a), a State shall prepare
and submit to the Secretary an application in such
form, made in such manner, and containing such
agreements, assurances, and information, including
a State plan as required in paragraph (2), as the
Secretary determines to be necessary to carry out
this section.
‘‘(2) STATE PLAN.—An application submitted
under paragraph (1) shall contain a State plan that
shall—
‘‘(A) describe the intended uses of the
grant proceeds and the geographic areas to be
served;
‘‘(B) demonstrate that the geographic
areas to be served, as described under subpara-
graph (A), are rural in nature;
‘‘(C) demonstrate that there is a lack of
facilities available and equipped to deliver ad-
366
Title IV, Subtitle B
vanced levels of medical care in the geographic
areas to be served;
‘‘(D) demonstrate that in utilizing the
grant proceeds for the establishment or en-
hancement of air medical services the State
would be making a cost-effective improvement
to existing ground-based or air emergency medi-
cal service systems;
‘‘(E) demonstrate that the State will not
utilize the grant proceeds to duplicate the capa-
bilities of existing air medical systems that are
effectively meeting the emergency medical needs
of the populations they serve;
‘‘(F) demonstrate that in utilizing the
grant proceeds the State is likely to achieve a
reduction in the morbidity and mortality rates
of the areas to be served, as determined by the
Secretary;
‘‘(G) demonstrate that the State, in utiliz-
ing the grant proceeds, will—
‘‘(i) maintain the expenditures of the
State for air and ground medical transport
systems at a level equal to not less than
the level of such expenditures maintained
by the State for the fiscal year preceding
367
Title IV, Subtitle B
the fiscal year for which the grant is re-
ceived; and
‘‘(ii) ensure that recipients of direct
financial assistance from the State under
such grant will maintain expenditures of
such recipients for such systems at a level
at least equal to the level of such expendi-
tures maintained by such recipients for the
fiscal year preceding the fiscal year for
which the financial assistance is received;
‘‘(H) demonstrate that persons experienced
in the field of air medical service delivery were
consulted in the preparation of the State plan;
and
‘‘(I) contain such other information as the
Secretary may determine appropriate.
‘‘(c) CONSIDERATIONS IN AWARDING GRANTS.—In
determining whether to award a grant to a State under
this section, the Secretary shall—
‘‘(1) consider the rural nature of the areas to
be served with the grant proceeds and the services
to be provided with such proceeds, as identified in
the State plan submitted under subsection (b); and
‘‘(2) give preference to States with State plans
that demonstrate an effective integration of the pro-
368
Title IV, Subtitle B
posed air medical transport systems into a com-
prehensive network or plan for regional or statewide
emergency medical service delivery.
‘‘(d) 
STATE
ADMINISTRATION
AND
USE
OF
GRANT.—
‘‘(1) IN
GENERAL.—The Secretary may not
make a grant to a State under subsection (a) unless
the State agrees that such grant will be adminis-
tered by the State agency with principal responsibil-
ity for carrying out programs regarding the provi-
sion of medical services to victims of medical emer-
gencies or trauma.
‘‘(2) PERMITTED
USES.—A State may use
amounts received under a grant awarded under this
section to award subgrants to public and private en-
tities operating within the State.
‘‘(3) OPPORTUNITY FOR PUBLIC COMMENT.—
The Secretary may not make a grant to a State
under subsection (a) unless that State agrees that,
in developing and carrying out the State plan under
subsection (b)(2), the State will provide public notice
with respect to the plan (including any revisions
thereto) and facilitate comments from interested
persons.
369
Title IV, Subtitle B
‘‘(e) NUMBER
OF GRANTS.—The Secretary shall
award grants under this section to not less than 7 States.
‘‘(f) REPORTS.—
‘‘(1) REQUIREMENT.—A State that receives a
grant under this section shall annually (during each
year in which the grant proceeds are used) prepare
and submit to the Secretary a report that shall con-
tain—
‘‘(A) a description of the manner in which
the grant proceeds were utilized;
‘‘(B) a description of the effectiveness of
the air medical transport programs assisted
with grant proceeds; and
‘‘(C) such other information as the Sec-
retary may require.
‘‘(2) TERMINATION OF FUNDING.—In reviewing
reports submitted under paragraph (1), if the Sec-
retary determines that a State is not using amounts
provided under a grant awarded under this section
in accordance with the State plan submitted by the
State under subsection (b), the Secretary may termi-
nate the payment of amounts under such grant to
the State until such time as the Secretary deter-
mines that the State comes into compliance with
such plan.
370
Title IV, Subtitle B
‘‘(g) DEFINITION.—As used in this section, the term
‘rural areas’ means geographic areas that are located out-
side of standard metropolitan statistical areas, as identi-
fied by the Secretary.
‘‘(h) AUTHORIZATION OF APPROPRIATIONS.—There
are authorized to be appropriated to make grants under
this section, $15,000,000 for each of the fiscal years 1996
and 1997, $20,000,000 for fiscal year 1998, $25,000,000
for fiscal year 1999, and $30,000,000 for fiscal year
2000.’’.
Subpart C—Assistance to Rural Providers
Under Medicare
SEC. 4151. AMENDMENTS TO ESSENTIAL ACCESS COMMU-
NITY HOSPITAL (EACH) PROGRAM UNDER
MEDICARE.
(a) 
INCREASING
NUMBER
OF
PARTICIPATING
STATES.—Section 1820(a)(1) of the Social Security Act
(42 U.S.C. 1395i-4(a)(1)) is amended by striking ‘‘7’’ and
inserting ‘‘9’’.
(b) TREATMENT OF INPATIENT HOSPITAL SERVICES
PROVIDED IN RURAL PRIMARY CARE HOSPITALS.—
(1) IN
GENERAL.—Section 1820(f)(1)(F) of
such Act (42 U.S.C. 1395i-4(f)(1)(F)) is amended to
read as follows:
371
Title IV, Subtitle B
‘‘(F) subject to paragraph (4), provides not
more than 6 inpatient beds (meeting such con-
ditions as the Secretary may establish) for pro-
viding inpatient care to patients requiring sta-
bilization before discharge or transfer to a hos-
pital, except that the facility may not provide
any inpatient hospital services—
‘‘(i) to any patient whose attending
physician does not certify that the patient
may reasonably be expected to be dis-
charged or transferred to a hospital within
72 hours of admission to the facility; or
‘‘(ii) consisting of surgery or any
other service requiring the use of general
anesthesia (other than surgical procedures
specified by the Secretary under section
1833(i)(1)(A)), unless the attending physi-
cian certifies that the risk associated with
transferring the patient to a hospital for
such services outweighs the benefits of
transferring the patient to a hospital for
such services.’’.
(2) LIMITATION
ON
AVERAGE
LENGTH
OF
STAY.—Section 1820(f) of such Act (42 U.S.C.
372
Title IV, Subtitle B
1395i-4(f)) is amended by adding at the end the fol-
lowing new paragraph:
‘‘(4) LIMITATION ON AVERAGE LENGTH OF IN-
PATIENT STAYS.—The Secretary may terminate a
designation of a rural primary care hospital under
paragraph (1) if the Secretary finds that the average
length of stay for inpatients at the facility during
the previous year in which the designation was in ef-
fect exceeded 72 hours. In determining the compli-
ance of a facility with the requirement of the pre-
vious sentence, there shall not be taken into account
periods of stay of inpatients in excess of 72 hours
to the extent such periods exceed 72 hours because
transfer to a hospital is precluded because of inclem-
ent weather or other emergency conditions.’’.
(3) 
CONFORMING
AMENDMENT.—Section
1814(a)(8) of such Act (42 U.S.C. 1395f(a)(8)) is
amended by striking ‘‘such services’’ and all that fol-
lows and inserting ‘‘the individual may reasonably be
expected to be discharged or transferred to a hos-
pital within 72 hours after admission to the rural
primary care hospital.’’.
(4) GAO REPORTS.—Not later than 2 years
after the date of the enactment of this Act, the
373
Title IV, Subtitle B
Comptroller General shall submit reports to Con-
gress on—
(A) the application of the requirements
under section 1820(f) of the Social Security Act
(as amended by this subsection) that rural pri-
mary care hospitals provide inpatient care only
to those individuals whose attending physicians
certify may reasonably be expected to be dis-
charged within 72 hours after admission and
maintain an average length of inpatient stay
during a year that does not exceed 72 hours;
and
(B) the extent to which such requirements
have resulted in such hospitals providing inpa-
tient care beyond their capabilities or have lim-
ited the ability of such hospitals to provide
needed services.
(c) DESIGNATION OF HOSPITALS.—
(1) PERMITTING DESIGNATION OF HOSPITALS
LOCATED IN URBAN AREAS.—
(A) IN GENERAL.—Section 1820 of such
Act (42 U.S.C. 1395i-4) is amended—
(i) by striking paragraph (1) of sub-
section (e) and redesignating paragraphs
374
Title IV, Subtitle B
(2) through (6) as paragraphs (1) through
(5);
(ii) in subsection (e)(1)(A) (as redes-
ignated by subparagraph (A))—
(I) by striking ‘‘is located’’ and
inserting ‘‘except in the case of a hos-
pital located in an urban area, is lo-
cated’’,
(II) by striking ‘‘, (ii)’’ and in-
serting ‘‘or (ii)’’, and
(III) by striking ‘‘or (iii)’’ and all
that follows through ‘‘section,’’; and
(iii) in subsection (i)(1)(B), by strik-
ing ‘‘paragraph (3)’’ and inserting ‘‘para-
graph (2)’’.
(B) NO CHANGE IN MEDICARE PROSPEC-
TIVE
PAYMENT.—Section 1886(d)(5)(D) of
such Act (42 U.S.C. 1395ww(d)(5)(D)) is
amended—
(i) in clause (iii)(III), by inserting ‘‘lo-
cated in a rural area and’’ after ‘‘that is’’,
and
(ii) in clause (v), by inserting ‘‘located
in a rural area and’’ after ‘‘in the case of
a hospital’’.
375
Title IV, Subtitle B
(2) PERMITTING HOSPITALS LOCATED IN AD-
JOINING STATES TO PARTICIPATE IN STATE PRO-
GRAM.—
(A) IN GENERAL.—Section 1820 of such
Act (42 U.S.C. 1395i-4) is amended—
(i) by redesignating subsection (k) as
subsection (l); and
(ii) by inserting after subsection (j)
the following new subsection:
‘‘(k) ELIGIBILITY OF HOSPITALS NOT LOCATED IN
PARTICIPATING
STATES.—Notwithstanding any other
provision of this section—
‘‘(1) for purposes of including a hospital or fa-
cility as a member institution of a rural health net-
work, a State may designate a hospital or facility
that is not located in the State as an essential access
community hospital or a rural primary care hospital
if the hospital or facility is located in an adjoining
State and is otherwise eligible for designation as
such a hospital;
‘‘(2) the Secretary may designate a hospital or
facility that is not located in a State receiving a
grant under subsection (a)(1) as an essential access
community hospital or a rural primary care hospital
if the hospital or facility is a member institution of
376
Title IV, Subtitle B
a rural health network of a State receiving a grant
under such subsection; and
‘‘(3) a hospital or facility designated pursuant
to this subsection shall be eligible to receive a grant
under subsection (a)(2).’’.
(B) CONFORMING AMENDMENTS.—(i) Sec-
tion 1820(c)(1) of such Act (42 U.S.C. 1395i-
4(c)(1)) is amended by striking ‘‘paragraph
(3)’’ and inserting ‘‘paragraph (3) or subsection
(k)’’.
(ii) Paragraphs (1)(A) and (2)(A) of sec-
tion 1820(i) of such Act (42 U.S.C. 1395i-4(i))
are each amended—
(I) in clause (i), by striking ‘‘(a)(1)’’
and inserting ‘‘(a)(1) (except as provided
in subsection (k))’’, and
(II) in clause (ii), by striking ‘‘sub-
paragraph (B)’’ and inserting ‘‘subpara-
graph (B) or subsection (k)’’.
(d) SKILLED NURSING SERVICES IN RURAL PRIMARY
CARE HOSPITALS.—Section 1820(f)(3) of such Act (42
U.S.C. 1395i-4(f)(3)) is amended by striking ‘‘because the
facility’’ and all that follows and inserting the following:
‘‘because, at the time the facility applies to the State for
designation as a rural primary care hospital, there is in
377
Title IV, Subtitle B
effect an agreement between the facility and the Secretary
under section 1883 under which the facility’s inpatient
hospital facilities are used for the furnishing of extended
care services, except that the number of beds used for the
furnishing of such services may not exceed the total num-
ber of licensed inpatient beds at the time the facility ap-
plies to the State for such designation (minus the number
of inpatient beds used for providing inpatient care pursu-
ant to paragraph (1)(F)). For purposes of the previous
sentence, the number of beds of the facility used for the
furnishing of extended care services shall not include any
beds of a unit of the facility that is licensed as a distinct-
part skilled nursing facility at the time the facility applies
to the State for designation as a rural primary care hos-
pital.’’.
(e) DEADLINE FOR DEVELOPMENT OF PROSPECTIVE
PAYMENT SYSTEM
FOR INPATIENT RURAL PRIMARY
CARE HOSPITAL SERVICES.—Section 1814(l)(2) of such
Act (42 U.S.C. 1395f(l)(2)) is amended by striking ‘‘Jan-
uary 1, 1993’’ and inserting ‘‘January 1, 1996’’.
(f) PAYMENT
FOR OUTPATIENT RURAL PRIMARY
CARE HOSPITAL SERVICES.—
(1) IMPLEMENTATION
OF
PROSPECTIVE
PAY-
MENT SYSTEM.—Section 1834(g) of such Act (42
U.S.C. 1395m(g)) is amended—
378
Title IV, Subtitle B
(A) in paragraph (1), by striking ‘‘during
a year before 1993’’ and inserting ‘‘during a
year before the prospective payment system de-
scribed in paragraph (2) is in effect’’; and
(B) in paragraph (2), by striking ‘‘January
1, 1993,’’ and inserting ‘‘January 1, 1996,’’.
(2) NO USE OF CUSTOMARY CHARGE IN DETER-
MINING PAYMENT.—Section 1834(g)(1) of such Act
(42 U.S.C. 1395m(g)(1)) is amended by adding at
the end the following new flush sentence: ‘‘The
amount of payment shall be determined under either
method without regard to the amount of the cus-
tomary or other charge.’’.
(g) CLARIFICATION OF PHYSICIAN STAFFING RE-
QUIREMENT FOR RURAL PRIMARY CARE HOSPITALS.—
Section 1820(f)(1)(H) of such Act (42 U.S.C. 1395i–
4(f)(1)(H)) is amended by striking the period and insert-
ing the following: ‘‘, except that in determining whether
a facility meets the requirements of this subparagraph,
subparagraphs (E) and (F) of that paragraph shall be ap-
plied as if any reference to a ‘physician’ is a reference
to a physician as defined in section 1861(r)(1).’’.
(h) TECHNICAL AMENDMENTS RELATING TO PART
A DEDUCTIBLE, COINSURANCE, AND SPELL
OF ILL-
379
Title IV, Subtitle B
NESS.—(1) Section 1812(a)(1) of such Act (42 U.S.C.
1395d(a)(1)) is amended—
(A) by striking ‘‘inpatient hospital services’’ the
first place it appears and inserting ‘‘inpatient hos-
pital services or inpatient rural primary care hos-
pital services’’;
(B) by striking ‘‘inpatient hospital services’’ the
second place it appears and inserting ‘‘such serv-
ices’’; and
(C) by striking ‘‘and inpatient rural primary
care hospital services’’.
(2) Sections 1813(a) and 1813(b)(3)(A) of such Act
(42 U.S.C. 1395e(a), 1395e(b)(3)(A)) are each amended
by striking ‘‘inpatient hospital services’’ each place it ap-
pears and inserting ‘‘inpatient hospital services or inpa-
tient rural primary care hospital services’’.
(3) Section 1813(b)(3)(B) of such Act (42 U.S.C.
1395e(b)(3)(B)) is amended by striking ‘‘inpatient hos-
pital services’’ and inserting ‘‘inpatient hospital services,
inpatient rural primary care hospital services’’.
(4) Section 1861(a) of such Act (42 U.S.C. 1395x(a))
is amended—
(A) in paragraph (1), by striking ‘‘inpatient
hospital services’’ and inserting ‘‘inpatient hospital
380
Title IV, Subtitle B
services, inpatient rural primary care hospital serv-
ices’’; and
(B) in paragraph (2), by striking ‘‘hospital’’
and inserting ‘‘hospital or rural primary care hos-
pital’’.
(i) AUTHORIZATION OF APPROPRIATIONS.—Section
1820(l) of such Act (42 U.S.C. 1395i–4(l)), as redesig-
nated by subsection (c)(2)(A), is amended by striking
‘‘1990, 1991, and 1992’’ and inserting ‘‘1990 through
2000’’.
(j) EFFECTIVE DATE.—The amendments made by
this section shall take effect on the date of the enactment
of this Act.
SEC. 4152. RURAL EMERGENCY ACCESS CARE HOSPITALS
DESCRIBED.
(a) IN GENERAL.—Section 1861 of the Social Secu-
rity Act (42 U.S.C. 1395x) is amended by adding at the
end the following new subsection:
‘‘Rural Emergency Access Care Hospital; Rural
Emergency Access Care Hospital Services
‘‘(oo)(1) The term ‘rural emergency access care hos-
pital’ means, for a fiscal year, a facility with respect to
which the Secretary finds the following:
‘‘(A) The facility is located in a rural area (as
defined in section 1886(d)(2)(D)).
381
Title IV, Subtitle B
‘‘(B) The facility was a hospital under this title
at any time during the 5-year period that ends on
the date of the enactment of this subsection.
‘‘(C) The facility is in danger of closing due to
low inpatient utilization rates and negative operating
losses, and the closure of the facility would limit the
access of individuals residing in the facility’s service
area to emergency services.
‘‘(D) The facility has entered into (or plans to
enter into) an agreement with a hospital with a par-
ticipation agreement in effect under section 1866(a),
and under such agreement the hospital shall accept
patients transferred to the hospital from the facility
and receive data from and transmit data to the facil-
ity.
‘‘(E) There is a practitioner who is qualified to
provide advanced cardiac life support services (as de-
termined by the State in which the facility is lo-
cated) on-site at the facility on a 24-hour basis.
‘‘(F) A physician is available on-call to provide
emergency medical services on a 24-hour basis.
‘‘(G) The facility meets such staffing require-
ments as would apply under section 1861(e) to a
hospital located in a rural area, except that—
382
Title IV, Subtitle B
‘‘(i) the facility need not meet hospital
standards relating to the number of hours dur-
ing a day, or days during a week, in which the
facility must be open, except insofar as the fa-
cility is required to provide emergency care on
a 24-hour basis under subparagraphs (E) and
(F); and
‘‘(ii) the facility may provide any services
otherwise required to be provided by a full-time,
on-site dietician, pharmacist, laboratory techni-
cian, medical technologist, or radiological tech-
nologist on a part time, off-site basis.
‘‘(H) The facility meets the requirements appli-
cable to clinics and facilities under subparagraphs
(C) through (J) of paragraph (2) of section
1861(aa) and of clauses (ii) and (iv) of the second
sentence of such paragraph (or, in the case of the
requirements of subparagraph (E), (F), or (J) of
such paragraph, would meet the requirements if any
reference in such subparagraph to a ‘nurse practi-
tioner’ or to ‘nurse practitioners’ was deemed to be
a reference to a ‘nurse practitioner or nurse’ or to
‘nurse practitioners or nurses’); except that in deter-
mining whether a facility meets the requirements of
this subparagraph, subparagraphs (E) and (F) of
383
Title IV, Subtitle B
that paragraph shall be applied as if any reference
to a ‘physician’ is a reference to a physician as de-
fined in section 1861(r)(1).
‘‘(2) The term ‘rural emergency access care hospital
services’ means the following services provided by a rural
emergency access care hospital:
‘‘(A) An appropriate medical screening exam-
ination (as described in section 1867(a)).
‘‘(B) Necessary stabilizing examination and
treatment services for an emergency medical condi-
tion and labor (as described in section 1867(b)).’’.
(b) REQUIRING RURAL EMERGENCY ACCESS CARE
HOSPITALS TO MEET HOSPITAL ANTI-DUMPING RE-
QUIREMENTS.—Section 1867(e)(5) of such Act (42 U.S.C.
1395dd(e)(5)) is amended by striking ‘‘1861(mm)(1))’’
and inserting ‘‘1861(mm)(1)) and a rural emergency ac-
cess care hospital (as defined in section 1861(oo)(1))’’.
SEC. 4153. COVERAGE OF AND PAYMENT FOR SERVICES.
(a) COVERAGE UNDER PART B.—Section 1832(a)(2)
of the Social Security Act (42 U.S.C. 1395k(a)(2)) is
amended—
(1) by striking ‘‘and’’ at the end of subpara-
graph (I);
(2) by striking the period at the end of sub-
paragraph (J) and inserting ‘‘; and’’; and
384
Title IV, Subtitle B
(3) by adding at the end the following new sub-
paragraph:
‘‘(K) rural emergency access care hospital
services (as defined in section 1861(oo)(2)).’’.
(b) PAYMENT BASED ON PAYMENT FOR OUTPATIENT
RURAL PRIMARY CARE HOSPITAL SERVICES.—
(1) IN GENERAL.—Section 1833(a)(6) of the
Social Security Act (42 U.S.C. 1395l(a)(6)) is
amended by striking ‘‘services,’’ and inserting ‘‘serv-
ices and rural emergency access care hospital serv-
ices,’’.
(2) PAYMENT
METHODOLOGY
DESCRIBED.—
Section 1834(g) of such Act (42 U.S.C. 1395m(g))
is amended—
(A) in the heading, by striking ‘‘SERV-
ICES’’ and inserting ‘‘SERVICES
AND RURAL
EMERGENCY ACCESS CARE HOSPITAL SERV-
ICES’’;
(B) in paragraph (1), by striking ‘‘during
a year before 1993’’ and inserting ‘‘during a
year before the prospective payment system de-
scribed in paragraph (2) is in effect’’;
(C) in paragraph (1), by adding at the end
the following: ‘‘The amount of payment shall be
determined under either method without regard
385
Title IV, Subtitle B
to the amount of the customary or other
charge.’’;
(D) in paragraph (2), by striking ‘‘Janu-
ary 1, 1993,’’ and inserting ‘‘January 1,
1996,’’; and
(E) by adding at the end the following new
paragraph:
‘‘(3) APPLICATION OF METHODS TO PAYMENT
FOR
RURAL
EMERGENCY
ACCESS
CARE
HOSPITAL
SERVICES.—The amount of payment for rural emer-
gency access care hospital services provided during
a year shall be determined using the applicable
method provided under this subsection for determin-
ing payment for outpatient rural primary care hos-
pital services during the year.’’.
SEC. 4154. EFFECTIVE DATE.
The amendments made by this subpart shall apply
to fiscal years beginning on or after October 1, 1994.
Subpart D—Demonstration Projects to En-
courage Primary Care and Rural-Based
Graduate Medical Education
SEC. 4161. STATE AND CONSORTIUM DEMONSTRATION
PROJECTS.
(a) IN GENERAL.—
386
Title IV, Subtitle B
(1) PARTICIPATION OF STATES AND CONSOR-
TIA.—The Secretary shall establish and conduct a
demonstration project to increase the number and
percentage of medical students entering primary
care practice relative to those entering nonprimary
care practice under which the Secretary shall make
payments in accordance with subsection (d)—
(A) to not more than 10 States for the
purpose of testing and evaluating mechanisms
to meet the goals described in section 4162;
and
(B) to not more than 10 health care train-
ing consortia for the purpose of testing and
evaluating mechanisms to meet such goals.
(2) EXCLUSION OF CONSORTIA IN PARTICIPAT-
ING STATES.—A consortia may not receive payments
under the demonstration project under paragraph
(1)(B) if any of its members is located in a State
receiving payments under the project under para-
graph (1)(A).
(b) APPLICATIONS.—
(1) IN GENERAL.—Each State and consortium
desiring to conduct a demonstration project under
this section shall prepare and submit to the Sec-
retary an application, at such time, in such manner,
387
Title IV, Subtitle B
and containing such information as the Secretary
may require to assure that the State or consortium
will meet the goals described in section 4162. In the
case of an application of a State, the application
shall include—
(A) information demonstrating that the
State has consulted with interested parties with
respect to the project, including State medical
associations, State hospital associations, and
medical schools located in the State;
(B) an assurance that no hospital conduct-
ing an approved medical residency training pro-
gram in the State will lose more than 10 per-
cent of such hospital’s approved medical resi-
dency positions in any year as a result of the
project; and
(C) an explanation of a plan for evaluating
the impact of the project in the State.
(2) APPROVAL OF APPLICATIONS.—A State or
consortium that submits an application under para-
graph (1) may begin a demonstration project under
this subsection—
(A) upon approval of such application by
the Secretary; or
388
Title IV, Subtitle B
(B) at the end of the 60-day period begin-
ning on the date such application is submitted,
unless the Secretary denies the application dur-
ing such period.
(3) NOTICE AND COMMENT.—A State or con-
sortium shall issue a public notice on the date it
submits an application under paragraph (1) which
contains a general description of the proposed dem-
onstration project. Any interested party may com-
ment on the proposed demonstration project to the
State or consortium or the Secretary during the 30-
day period beginning on the date the public notice
is issued.
(c) SPECIFIC REQUIREMENTS FOR PARTICIPANTS.—
(1) REQUIREMENTS FOR STATES.—Each State
participating in the demonstration project under this
subtitle shall use the payments provided under sub-
section (d) to test and evaluate either of the follow-
ing mechanisms to increase the number and percent-
age of medical students entering primary care prac-
tice relative to those entering nonprimary care prac-
tice:
(A) USE
OF
ALTERNATIVE
WEIGHTING
FACTORS.—
389
Title IV, Subtitle B
(i) IN
GENERAL.—The State may
make payments to hospitals in the State
for direct graduate medical education costs
in amounts determined under the meth-
odology provided under section 1886(h) of
the Social Security Act, except that the
State shall apply weighting factors that are
different than the weighting factors other-
wise set forth in section 1886(h)(4)(C) of
the Social Security Act.
(ii) USE OF PAYMENTS FOR PRIMARY
CARE
RESIDENTS.—In applying different
weighting factors under clause (i), the
State shall ensure that the amount of pay-
ment made to hospitals for costs attrib-
utable to primary care residents shall be
greater than the amount that would have
been paid to hospitals for costs attributable
to such residents if the State had applied
the weighting factors otherwise set forth in
section 1886(h)(4)(C) of the Social Secu-
rity Act.
(B) PAYMENTS FOR MEDICAL EDUCATION
THROUGH CONSORTIUM.—The State may make
payments for graduate medical education costs
390
Title IV, Subtitle B
through payments to a health care training con-
sortium (or through any entity identified by
such a consortium as appropriate for receiving
payments on behalf of the consortium) that is
established in the State but that is not other-
wise participating in the demonstration project.
(2) REQUIREMENTS FOR CONSORTIUM.—
(A) IN GENERAL.—In the case of a consor-
tium participating in the demonstration project
under this subtitle, the Secretary shall make
payments for graduate medical education costs
through a health care training consortium
whose members provide medical residency train-
ing (or through any entity identified by such a
consortium as appropriate for receiving pay-
ments on behalf of the consortium).
(B) USE OF PAYMENTS.—
(i) IN
GENERAL.—Each consortium
receiving payments under subparagraph
(A) shall use such funds to conduct activi-
ties which test and evaluate mechanisms to
increase the number and percentage of
medical students entering primary care
practice 
relative 
to 
those 
entering
nonprimary care practice, and may use
391
Title IV, Subtitle B
such funds for the operation of the consor-
tium.
(ii) PAYMENTS
TO
PARTICIPATING
PROGRAMS.—The consortium shall ensure
that the majority of the payments received
under subparagraph (A) are directed to
consortium members for primary care resi-
dency programs, and shall designate for
each resident assigned to the consortium a
hospital operating an approved medical
residency training program for purposes of
enabling the Secretary to calculate the con-
sortium’s payment amount under the
project. Such hospital shall be the hospital
where the resident receives the majority of
the 
resident’s 
hospital-based, 
non-
ambulatory training experience.
(d) ALLOCATION OF PORTION OF MEDICARE GME
PAYMENTS FOR ACTIVITIES UNDER PROJECT.—Notwith-
standing any provision of title XVIII of the Social Security
Act, the following rules apply with respect to each State
and each health care training consortium participating in
the demonstration project established under this section
during a year:
(1) In the case of a State—
392
Title IV, Subtitle B
(A) the Secretary shall reduce the amount
of each payment made to hospitals in the State
during the year for direct graduate medical
education costs under section 1886(h) of the
Social Security Act by 3 percent; and
(B) the Secretary shall pay the State an
amount equal to the Secretary’s estimate of the
sum of the reductions made during the year
under subparagraph (A) (as adjusted by the
Secretary in subsequent years for over- or
under-estimations in the amount estimated
under this subparagraph in previous years).
(2) In the case of a consortium—
(A) the Secretary shall reduce the amount
of each payment made to hospitals who are
members of the consortium during the year for
direct graduate medical education costs under
section 1886(h) of the Social Security Act by 3
percent; and
(B) the Secretary shall pay the consortium
an amount equal to the Secretary’s estimate of
the sum of the reductions made during the year
under subparagraph (A) (as adjusted by the
Secretary in subsequent years for over- or
393
Title IV, Subtitle B
under-estimations in the amount estimated
under this subparagraph in previous years).
(e) ADDITIONAL GRANT FOR PLANNING AND EVAL-
UATION.—
(1) IN GENERAL.—The Secretary may award
grants to States and consortia participating in the
demonstration project under this section for the pur-
pose of developing and evaluating such projects. A
State or consortia may conduct such an evaluation
or contract with a private entity to conduct the eval-
uation. Each State and consortia desiring to receive
a grant under this paragraph shall prepare and sub-
mit to the Secretary an application, at such time, in
such manner, and containing such information as
the Secretary may require.
(2) AUTHORIZATION
OF
APPROPRIATIONS.—
There are authorized to be appropriated such sums
as may be necessary for grants under this paragraph
for fiscal years 1996 through 2000.
(f) DURATION.—A demonstration project under this
section shall be conducted for a period not to exceed 5
years. The Secretary may terminate a project if the Sec-
retary determines that the State or consortium conducting
the project is not in substantial compliance with the terms
of the application approved by the Secretary.
394
Title IV, Subtitle B
(g) EVALUATIONS AND REPORTS.—
(1) EVALUATIONS.—Each State or consortium
participating in the demonstration project shall sub-
mit to the Secretary a final evaluation within 360
days of the termination of the State or consortium’s
participation and such interim evaluations as the
Secretary may require.
(2) REPORTS TO CONGRESS.—Not later than
360 days after the first demonstration project under
this subtitle begins, and annually thereafter for each
year in which such a project is conducted, the Sec-
retary shall submit a report to Congress which eval-
uates the effectiveness of the State and consortium
activities conducted under such projects and includes
any legislative recommendations determined appro-
priate by the Secretary.
(h) MAINTENANCE OF EFFORT.—Any funds available
for the activities covered by a demonstration project under
this subtitle shall supplement, and shall not supplant,
funds that are expended for similar purposes under any
State, regional, or local program.
SEC. 4162. GOALS FOR PROJECTS.
The goals referred to in this section for a State or
consortium participating in the demonstration project
under this subtitle are as follows:
395
Title IV, Subtitle B
(1) The training of an equal number of physi-
cian and non-physician primary care providers.
(2) The recruiting of residents for graduate
medical education training programs who received a
portion of undergraduate training in a rural area.
(3) The allocation of not less than 50 percent
of the training spent in a graduate medical residency
training program at sites at which acute care inpa-
tient hospital services are not furnished.
(4) The rotation of residents in approved medi-
cal residency training programs among practices
that serve residents of rural areas.
(5) The development of a plan under which,
after a 5-year transition period, not less than 50
percent of the residents who begin an initial resi-
dency period in an approved medical residency train-
ing program shall be primary care residents.
SEC. 4163. DEFINITIONS.
In this subpart:
(1) APPROVED MEDICAL RESIDENCY TRAINING
PROGRAM.—The term ‘‘approved medical residency
training program’’ has the meaning given such term
in section 1886(h)(5)(A) of the Social Security Act.
(2) HEALTH
CARE
TRAINING
CONSORTIUM.—
The term ‘‘health care training consortium’’ means
396
Title IV, Subtitle B
a State, regional, or local entity consisting of at
least one of each of the following:
(A) A hospital operating an approved med-
ical residency training program at which resi-
dents receive training at ambulatory training
sites located in rural areas.
(B) A school of medicine or osteopathic
medicine.
(C) A school of allied health or a program
for the training of physician assistants (as such
terms are defined in section 799 of the Public
Health Service Act).
(D) A school of nursing (as defined in sec-
tion 853 of the Public Health Service Act).
(3) PRIMARY CARE.—The term ‘‘primary care’’
means family practice, general internal medicine,
general pediatrics, and obstetrics and gynecology.
(4) RESIDENT.—The term ‘‘resident’’ has the
meaning given such term in section 1886(h)(5)(H)
of the Social Security Act.
(5) RURAL AREA.—The term ‘‘rural area’’ has
the 
meaning 
given 
such 
term 
in 
section
1886(d)(2)(D) of the Social Security Act.
397
Title IV, Subtitle B
PART 4—HOSPITAL AFFILIATED PRIMARY CARE
CENTER
SEC. 4171. HOSPITAL-AFFILIATED PRIMARY CARE CEN-
TERS.
(a) DEFINITIONS.—For purposes of this section:
(1) COMMUNITY HOSPITAL.—The term ‘‘com-
munity hospital’’ means a public general hospital,
owned and operated by a State, county or local unit
of government, or a private community hospital
that—
(A) has less than 50 beds; and
(B) primarily serves a medically under-
served 
population 
as 
defined 
in 
section
330(b)(3) of the Public Health Service Act (42
U.S.C. 254c(b)(3)) or a health professional
shortage area as defined in section 322(a)(1) of
such Act (42 U.S.C. 254c(a)(1).
(2) HOSPITAL-AFFILIATED PRIMARY CARE CEN-
TER.—The term ‘‘hospital-affiliated primary care
center’’ (referred to in this section as a ‘‘primary
care center’’) means a distinct administrative unit of
a community hospital, located in, or adjacent to, the
hospital, that—
(A) delivers primary health services as de-
fined in section 330(b)(1) of such Act (42
U.S.C. 354c(b)(1)) to a catchment area deter-
398
Title IV, Subtitle B
mined by the hospital and approved by the Sec-
retary; and
(B) provides referrals to providers of sup-
plemental health services as defined in section
330(b)(2) of such Act (42 U.S.C. 354c(b)(2)).
(3) PRIMARY CARE GROUP PRACTICE.—
(A) The term ‘‘primary care group prac-
tice’’ means any combination of 3 or more pri-
mary care physicians who are—
(i) organized to provide primary
health services in a manner that is consist-
ent with the needs of the population
served;
(ii) located in, or adjacent to, the
community hospital;
(iii) who have admitting privileges at
the community hospital; and
(iv)(I) who are salaried by the hos-
pital such that a majority of the members
of the group practice is full time in the pri-
mary care center; or
(II) who are organized into a legal en-
tity (partnership, corporation, or profes-
sional association) that has a contract ap-
proved by the Secretary with the commu-
399
Title IV, Subtitle B
nity hospital to provide primary health
services.
(B) SPECIAL RULE FOR HPSAS AND NEAR-
HPSAS.—In the case of a group that is located
in an area that—
(i) is designated as a primary care
health professional shortage area under
section 332 of the Public Health Service
Act (42 U.S.C. 254e); or
(ii) would meet the requirements for
designation as a primary care health pro-
fessional shortage area if there were 25
percent fewer physicians in the area;
the requirement that a group practice have 3 or
more primary care physicians may be met by
substituting a nurse practitioner or a physician
assistant for 1 member of the group.
(C) 
SPECIAL
RULE
FOR
FRONTIER
AREAS.—In the case of a group that is located
in a frontier area, subparagraph (A) shall be
applied by substituting ‘‘two’’ for ‘‘three’’ in the
matter preceding clause (i).
(D) OTHER REQUIREMENTS FOR GROUP.—
(i) physicians in specialties other than
primary care specialties may become mem-
400
Title IV, Subtitle B
bers of a primary care group practice as
needed, but may not be used to satisfy the
requirement of subsection (b)(2)(D); and
(ii) nonphysician providers, particu-
larly physician assistants, certified nurse
midwives, and nurse practitioners, shall be
used where practicable in concert with the
physicians of a primary care group prac-
tice.
(4) FRONTIER
AREA.—The term ‘‘frontier
area’’ means a county in which there are 6 or fewer
individuals residing per square mile.
(5) PRIMARY CARE PHYSICIAN.—The term ‘‘pri-
mary care physician’’ means a physician in the spe-
cialty of family practice, general internal medicine,
general pediatrics, or obstetrics and gynecology.
(6) PRIMARY CARE RESIDENT.—The term ‘‘pri-
mary care resident’’ means a graduate physician in
training, whose training program is approved by ap-
propriate certifying bodies and is in a primary care
specialty.
(b) ESTABLISHMENT OF GRANT PROGRAM.—
(1) IN GENERAL.—The Secretary of Health and
Human Services (referred to in this section as the
‘‘Secretary’’) shall make grants to community hos-
401
Title IV, Subtitle B
pitals to assist such hospitals in planning, develop-
ing, and operating primary care services in medically
underserved areas. In making such grants, the Sec-
retary shall avoid duplication of efforts in areas
where existing community health centers, migrant
health centers, rural emergency access care hos-
pitals, federally qualified health centers, and other
facilities are adequate to meet the needs of the medi-
cally underserved population.
(2) ELIGIBILITY FOR GRANTS.—In order to be
eligible for a grant under this subsection, a commu-
nity hospital shall submit an application that con-
tains or is supported by assurances, satisfactory to
the Secretary, that—
(A) the services of the primary care center
will be delivered through a primary care group
practice;
(B) to the extent practicable, primary
health services in the community hospital will
be delivered only through the primary care cen-
ter;
(C) qualified personnel trained in triage
will be placed in the emergency room, the out-
patient department, and the primary care cen-
402
Title IV, Subtitle B
ter to screen and direct patients to the appro-
priate location for care;
(D) each patient of the primary care cen-
ter will have an identified member of the group
practice responsible for continuous management
of the patient, including emergency services and
referrals of the patients for inpatient or out-
patient services;
(E) to the extent practicable, excess facili-
ties and equipment in or owned by the commu-
nity hospital will be covered for use in the pri-
mary care center;
(F) the hospital and the primary care cen-
ter will avoid unnecessary duplication of facili-
ties and equipment, except that the primary
care center may install appropriate support
equipment for routine primary health services;
(G) the primary care center will be main-
tained as a separate and distinct cost and reve-
nue center for accounting purposes;
(H) the primary care center will be oper-
ated in accordance with all of the requirements
specified for community health centers in sec-
tion 330(e)(3) of the Public Health Service Act
(other than subparagraph (G));
403
Title IV, Subtitle B
(I) the hospital has an advisory committee
that—
(i) is composed of individuals, a ma-
jority of whom are health consumers in the
catchment area of the hospital; and
(ii) meets at least 6 times a year to
review the operations of the primary care
center and develop recommendations to the
governing board of the hospital about the
operation of the center and the types of
services to be provided; and
(J) the primary care center will maintain
an information program for its patients that
fully discloses—
(i) the covered professional services
and referral capabilities offered by the pri-
mary care center; and
(ii) the method by which patients of
the primary care center may resolve griev-
ances about billing for covered professional
services and the quality of such services.
(3) OTHER REQUIREMENTS.—
(A) USE OF PRIMARY CARE RESIDENTS.—
(i) Primary health services may be delivered by
primary care residents if such services are deliv-
404
Title IV, Subtitle B
ered under the supervision of a member of the
group practice.
(ii)(I) Medical and other health science
students may receive primary care training in
the primary care center, except that no full-
time member of the group practice may also
spend full time in the teaching of residents and
students.
(II) The Secretary shall issue regulations
to assure that teaching does not detract signifi-
cantly from the actual delivery of service in the
primary care center.
(B) COSTS OF PRIMARY CARE CENTERS.—
(i) Only costs clearly associated with the provi-
sion of services in the primary care setting may
be assigned to a primary care center.
(ii) Inpatient-related costs may not be in-
cluded in the costs of operating a primary care
center.
(iii) Costs associated with the education
and training of residents, medical, and other
health science students may not be included in
the costs of operating a primary care center, ex-
cept that salaries and other costs associated
with the delivery of services by residents may be
405
Title IV, Subtitle B
included in such costs as long as such costs are
prorated based on the actual percentage of time
spent by the resident in the primary care
center.
(C) ADVISORY COMMITTEE.—(i) The advi-
sory committee referred to in paragraph (2)(I)
shall participate in the development of an appli-
cation for a grant under this section and the
development of any grant renewal application.
(ii) The Secretary may not approve the ap-
plication for a grant under this subsection un-
less the application has been approved by the
advisory committee.
(4) USE OF GRANTS.—(A) A grant under this
subsection may be used to cover costs associated
with (i) planning, (ii) developing (including mod-
ernization and renovation of space), and (iii) operat-
ing primary care centers.
(B) Not more than 25 percent of any grant
may be used for the purposes specified in subpara-
graph (A)(ii).
(c) TECHNICAL ASSISTANCE.—The Secretary shall,
upon request, provide technical and other nonfinancial as-
sistance (including fiscal and program management assist-
ance and training in such management) to a community
406
Title IV, Subtitle B
hospital to assist it in developing plans for, and in operat-
ing, a primary care center. Funds appropriated under this
section may be used to carry out the purposes of this sec-
tion.
(d) RETENTION
OF EARNED INCOME.—The Sec-
retary shall establish, by regulation, a plan to allow pri-
mary care centers to retain earned income from the oper-
ation of the center if the income is used to—
(1) expand or improve the services of the
center;
(2) expand the population eligible to utilize the
services of the center;
(3) make managerial or physical improvements
to the center; or
(4) establish a reserve fund for conversion to a
prepaid reimbursement methodology.
(e) USE OF APPROPRIATIONS.—To carry out this sec-
tion, there are authorized to be appropriated $12,000,000
for fiscal year 1996, $21,000,000 for fiscal year 1997,
$150,000,000 for fiscal year 1998, $160,000,000 for fis-
cal year 1999, $180,000,000 for fiscal year 2000, and
$190,000,000 for each of fiscal years 2001 through 2004.
407
Title IV, Subtitle C
Subtitle C—Academic Health
Centers
SEC. 4201. STUDY OF PAYMENTS FOR MEDICAL EDUCATION
AT SITES OTHER THAN HOSPITALS.
(a) STUDY.—The Secretary of Health and Human
Services shall conduct a study of the feasibility and desir-
ability of making payments to facilities that are not hos-
pitals for the direct and indirect costs of graduate medical
education attributable to residents trained at such facili-
ties. In conducting the study, the Secretary shall evaluate
new payment methodologies—
(1) under which each entity which incurs costs
of graduate medical education shall receive reim-
bursement for such costs; and
(2) which would encourage the training of pri-
mary care physicians.
(b) REPORT.—Not later than 2 years after the date
of the enactment of this Act, the Secretary shall submit
a report to Congress a report on the study conducted
under subsection (a), and shall include in the report such
recommendations as the Secretary considers appropriate.
SEC. 4202. STUDY OF FUNDING NEEDS OF HEALTH PROFES-
SIONS SCHOOLS.
(a) IN GENERAL.—The Secretary shall conduct a
study for the purpose of determining the funding needs
408
Title IV, Subtitle C
of health professions schools, including schools of medicine
and osteopathic medicine, schools of dentistry, and schools
of public health.
(b) CONSIDERATION OF CERTAIN COSTS.—In con-
ducting the study under subsection (a), the Secretary shall
also consider the following costs regarding the funding
needs of health professions schools:
(1) Uncompensated costs incurred in providing
health care.
(2) Costs resulting from reduced productivity
due to teaching responsibilities.
(3) Increased costs of caring for the health
needs of patients with severe medical complications.
(4) Uncompensated costs incurred by faculty,
residents, and students in providing consultations
for hospitalized patients.
(5) Uncompensated costs incurred in conduct-
ing clinical research.
(c) 
CONSIDERATIONS
REGARDING
ADDITIONAL
FUNDING.—In conducting the study under subsection (a),
the Secretary shall determine the following:
(1) Whether the health professions schools in-
volved have a significant need for an increase in the
amount of funds available to the schools.
(2) If there is such a need—
409
Title IV, Subtitle D
(A) 
recommendations 
regarding 
the
sources of funds to provide the increase; and
(B) recommendations for a methodology
for determining the amount that should be pro-
vided to the schools involved.
(d) REPORT
TO CONGRESS.—Not later than 18
months after the date of the enactment of this Act, the
Secretary shall submit to the Congress a report describing
the findings and recommendations made in the study.
Subtitle D—United States-Mexico
Border Health Commission
SEC. 4301. AGREEMENT TO ESTABLISH BINATIONAL COM-
MISSION.
The President is authorized and encouraged to con-
clude an agreement with Mexico to establish a binational
commission to be known as the United States-Mexico Bor-
der Health Commission.
SEC. 4302. DUTIES.
It should be the duty of the Commission—
(1) to conduct a comprehensive needs assess-
ment in the United States-Mexico border area for
the purposes of identifying, evaluating, preventing,
and resolving health problems that affect the general
population of the area;
410
Title IV, Subtitle D
(2) to implement the actions recommended by
the needs assessment by—
(A) assisting in the coordination of the ef-
forts of public and private entities to prevent
and resolve such health problems,
(B) assisting in the coordination of the ef-
forts of public and private entities to educate
such population concerning such health prob-
lems, and
(C) assisting in the development and im-
plementation of programs to prevent and re-
solve such health problems and (where nec-
essary) to educate such population concerning
such health programs; and
(3) to formulate recommendations to the Gov-
ernments of the United States and Mexico concern-
ing a fair and reasonable method by which the gov-
ernment of one country would reimburse a public or
private entity in the other country for the cost of a
health care service that the entity furnishes to a citi-
zen of the first country who is unable, through in-
surance or otherwise, to pay for the service.
SEC. 4303. OTHER AUTHORIZED FUNCTIONS.
In addition to the duties described in section 4302,
the Commission should be authorized to perform the fol-
411
Title IV, Subtitle D
lowing additional functions as the Commission determines
to be appropriate:
(1) To conduct or sponsor investigations, re-
search, or studies designed to identify, study, and
monitor health problems that affect the general pop-
ulation in the United States-Mexico border area.
(2) To provide financial, technical, or adminis-
trative assistance to public or private entities who
act to prevent, resolve, or educate such population
concerning such health problems.
SEC. 4304. MEMBERSHIP.
(a) NUMBER AND APPOINTMENT OF UNITED STATES
SECTION.—The United States section of the Commission
should be composed of 13 members. The section should
consist of the following members:
(1) The Secretary of Health and Human Serv-
ices or such individual’s delegate.
(2) The commissioners of health from the
States of Texas, New Mexico, California, and Ari-
zona or such individuals’ delegates.
(3) 2 individuals from each of the States of
Texas, New Mexico, California, and Arizona who are
nominated by the chief executive officer of one of
such States and are appointed by the President from
among individuals who have demonstrated ties to
412
Title IV, Subtitle D
community-based organizations and have a dem-
onstrated interest in health issues of the United
States-Mexico border area.
(b) COMMISSIONER.—The Commissioner of the Unit-
ed States section of the Commission should be the Sec-
retary of Health and Human Services or such individual’s
delegate to the Commission. The Commissioner should be
the leader of the section.
SEC. 4305. REGIONAL OFFICES.
The Commission should establish no fewer than 2 re-
gional border offices in locations selected by the Commis-
sion.
SEC. 4306. REPORTS.
Not later than February 1 of each year that occurs
more than 1 year after the date of the establishment of
the Commission, the Commission should submit an annual
report to both the United States Government and the Gov-
ernment of Mexico regarding all activities of the Commis-
sion during the preceding calendar year.
SEC. 4307. DEFINITIONS.
For purposes of this subtitle:
(1) COMMISSION.—The term ‘‘Commission’’
means the United States-Mexico Border Health
Commission authorized in section 4301.
413
Title V
(2) HEALTH
PROBLEM.—The term ‘‘health
problem’’ means a disease or medical ailment or an
environmental condition that poses the risk of dis-
ease or medical ailment. The term includes diseases,
ailments, or risks of disease or ailment caused by or
related to environmental factors, control of animals
and rabies, control of insect and rodent vectors, dis-
posal of solid and hazardous waste, and control and
monitoring of air and water quality.
(3) UNITED STATES-MEXICO BORDER AREA.—
The term ‘‘United States-Mexico border area’’
means the area located in the United States and
Mexico within 100 kilometers of the border between
the United States and Mexico.
TITLE V—HEALTH CARE
QUALITY ENHANCEMENT
TABLE OF CONTENTS OF TITLE
Subtitle A—Quality Assurance
Sec. 5001. Health Quality Advisory Council.
Sec. 5002. Quality assessment using measures.
Sec. 5003. Definitions.
Subtitle B—Primary Care Provider Education
Sec. 5101. Area health education centers.
Sec. 5102. Public health and preventive medicine.
Sec. 5103. Family medicine.
Sec. 5104. General internal medicine and pediatrics.
Sec. 5105. Physician assistants.
Sec. 5106. Allied health project grants and contracts.
Sec. 5107. Nurse practitioner and nurse midwife programs.
414
Title V, Subtitle A
Subtitle A—Quality Assurance
SEC. 5001. HEALTH QUALITY ADVISORY COUNCIL.
(a) ESTABLISHMENT.—The Secretary shall provide
for the establishment of an advisory council to be known
as the ‘‘Health Quality Advisory Council’’ (in this subtitle
referred to as the ‘‘Council’’).
(b) DUTIES.—
(1) INITIAL MEASURES AND REQUIREMENTS.—
(A) DEVELOPMENT
OF
QUALITY
MEAS-
URES.—The Council shall develop an initial set
of quality measures to be used to assess the
quality of carriers, group health plans, and mul-
tiple employer welfare arrangements. The qual-
ity measures shall include measures that pro-
vide information with respect to such entities on
the following subjects:
(i) Outcomes of care for specified
medical conditions.
(ii) Health status of enrollees.
(iii) Health promotion activities.
(iv) Prevention of diseases, disorders,
disabilities, injuries, and other adverse
health conditions.
(v) Risk management and reduction.
(vi) Consumer satisfaction.
415
Title V, Subtitle A
(B) RECOMMENDATIONS.—Not later than
the date that is 9 months from the date of the
enactment of this Act, the Council shall rec-
ommend to the Secretary—
(i) the initial set of quality measures
developed under subparagraph (A);
(ii) a standard set of data to be devel-
oped and collected in a uniform form and
manner by carriers, group health plans,
and multiple employer welfare arrange-
ments in order to permit such a carrier,
plan, or arrangement to assess its quality
using such initial set of measures;
(iii) a standard methodology to be
used by such entities to carry out the as-
sessments described in clause (ii);
(iv) a standard format to be used by
such entities publicly to report the results
of such assessments; and
(v) a schedule for implementing, in
succession—
(I) the data development and col-
lection 
requirements 
recommended
under clause (ii);
416
Title V, Subtitle A
(II) the assessment requirements
recommended under clause (iii); and
(III) the reporting requirements
recommended under clause (iv).
(2) MODIFYING MEASURES.—The Council shall
make recommendations to the Secretary with respect
to modifying, as additional information with respect
to carriers, group health plans, and multiple em-
ployer welfare arrangements becomes valid and
available, a set of quality measures selected by the
Secretary under section 5002. A recommendation
under the preceding sentence shall be accompanied
by recommendations for modifications to a data set,
assessment methodology, reporting format, or sched-
ule for implementation selected by the Secretary
under such section that the Council determines
would be necessary in order to implement appro-
priately a modification in the set of quality meas-
ures.
(c) MEMBERSHIP.—
(1) IN GENERAL.—The Council shall, in accord-
ance with this subsection, be composed of appointed
members and ex officio members. All members of the
Council shall be voting members, other than officials
417
Title V, Subtitle A
designated under paragraph (3) as ex officio mem-
bers of the Council.
(2) APPOINTED
MEMBERS.—The Secretary
shall appoint to the Council 9 appropriately qualified
individuals who are not officers or employees of the
United States. Members appointed under this para-
graph shall include—
(A) individuals distinguished in the field of
health outcomes;
(B) representatives of carriers, group
health plans, and multiple employer welfare ar-
rangements;
(C) health care providers; and
(D) consumers of health care.
(3) EX OFFICIO MEMBERS.—The Secretary may
designate as ex officio members of the Council the
Director of the National Institutes of Health, the
Director of the Centers for Disease Control, the Ad-
ministrator of the Health Care Financing Adminis-
tration, the Assistant Secretary of Defense (Health
Affairs), and the Chief Medical Officer of the De-
partment of Veterans Affairs.
(d) TERMS.—
418
Title V, Subtitle A
(1) IN GENERAL.—Except as provided in para-
graph (2), members of the Council appointed under
subsection (c)(2) shall serve for a term of 3 years.
(2) STAGGERED ROTATION.—Of the members
first appointed to the Council under subsection
(c)(2), the Secretary shall appoint 3 members to
serve for a term of 3 years, 3 members to serve for
a term of 2 years, and 3 members to serve for a
term of 1 year.
(3) SERVICE BEYOND TERM.—A member of the
Council appointed under subsection (c)(2) may con-
tinue to serve after the expiration of the term of the
member until a successor is appointed.
(e) VACANCIES.—If a member of the Council ap-
pointed under subsection (c)(2) does not serve the full
term applicable under subsection (d), the individual ap-
pointed to fill the resulting vacancy shall be appointed for
the remainder of the term of the predecessor of the indi-
vidual.
(f) CHAIR.—The Secretary shall, from among the
members of the Council appointed under subsection (c)(2),
designate an individual to serve as the chair of the Coun-
cil.
(g) MEETINGS.—The Council shall meet at the call
of the chair or the Secretary.
419
Title V, Subtitle A
(h) COMPENSATION AND REIMBURSEMENT OF EX-
PENSES.—
(1) APPOINTED
MEMBERS.—Members of the
Council appointed under subsection (c)(2) shall re-
ceive compensation for each day (including travel-
time) engaged in carrying out the duties of the
Council. Such compensation may not be in an
amount in excess of the maximum rate of basic pay
payable under section 5376 of title 5, United States
Code.
(2) EX
OFFICIO
MEMBERS.—Officials des-
ignated under subsection (c)(3) as ex officio mem-
bers of the Council may not receive compensation for
service on the Council in addition to the compensa-
tion otherwise received for duties carried out as offi-
cers of the United States.
(i) STAFF.—The Secretary shall provide to the Coun-
cil such staff, information, and other assistance as may
be necessary to carry out the duties of the Council.
(j) DURATION.—Notwithstanding section 14(a) of the
Federal Advisory Committee Act, the Council shall con-
tinue in existence until otherwise provided by law.
SEC. 5002. QUALITY ASSESSMENT USING MEASURES.
(a) INITIAL MEASURES AND REQUIREMENTS.—
420
Title V, Subtitle A
(1) EVALUATION
OF
RECOMMENDATIONS.—If
the Council makes the recommendations to the Sec-
retary that are described in section 5001(b)(1)(B)
not later than the deadline described in such section,
the Secretary shall evaluate the recommendations to
determine whether they will provide for effective
measurement and reporting of the quality of car-
riers, group health plans, and multiple employer wel-
fare arrangements. The Secretary shall complete
such evaluation not later than the date that is 90
days from the date on which the Secretary receives
the recommendations of the Council.
(2) MODIFICATION.—Prior to the initiation of a
rule making under paragraph (3), the Secretary
may, as the Secretary determines appropriate based
on the evaluation under paragraph (1), modify any
quality measure, data set, assessment methodology,
reporting format, or schedule for implementation
recommended 
by 
the 
Council 
under 
section
5001(b)(1)(B).
(3) RULE
MAKING.—After notice and oppor-
tunity for public comment, the Secretary shall pro-
mulgate a rule that—
421
Title V, Subtitle A
(A) establishes an initial set of quality
measures of the type described in section
5001(b)(1)(A);
(B) establishes a standard data set, meth-
odology, reporting format, and an implementa-
tion schedule of the types described in section
5001(b)(1)(B) and requirements on carriers,
group health plans, and multiple employer wel-
fare arrangements in accordance with such
standards and schedule;
(C) requires each carrier, group health
plans, and multiple employer welfare arrange-
ment periodically to publish a report, using the
standard reporting format established under
subparagraph (B), and to send the report to
employers, brokers, health plan purchasing or-
ganizations, and consumers in its service area;
(D) specifies the amount and nature of the
data that carriers, group health plans, and mul-
tiple employer welfare arrangements shall
transmit under paragraphs (2) and (4) of sub-
section (b) in order to permit States and the
Secretary of Labor to conduct audits under
paragraphs (1) and (4) of such subsection; and
422
Title V, Subtitle A
(E) specifies the frequency with which, and
the method by which, such data shall be trans-
mitted to States or the Secretary of Labor.
(b) COMPLIANCE.—
(1) PERIODIC AUDITS.—Each State shall con-
duct periodic audits to evaluate whether carriers
providing health insurance coverage in the State are
complying with the requirements established under
subsection (a). Such audits shall include an assess-
ment of the completeness, accuracy, and validity of
any data developed or collected by a carrier under
such subsection and any report published by such an
entity under such subsection. A State may satisfy
the requirements of this paragraph by entering into
a contract or other agreement with any appropriate
individual or entity.
(2) DATA TRANSMISSION.—A carrier providing
health insurance coverage in a State shall transmit
to the State, in accordance with the requirements
promulgated under subsection (a)(3)(E), the data
determined to be necessary by the Secretary under
subsection (a)(3)(D).
(3) ENSURING
COMPLIANCE.—A State may
take appropriate action to ensure compliance by car-
riers with the requirements of subsection (a) and
423
Title V, Subtitle A
paragraph (2). Such action may include the imposi-
tion of a penalty on a carrier that transmits incom-
plete, false, or misleading data to the State.
(4) APPLICATION
TO
GROUP
HEALTH
PLANS
AND
MULTIPLE
EMPLOYER
WELFARE
ARRANGE-
MENTS.—
(A) AUDITS AND DATA TRANSMISSION.—
The Secretary of Labor shall undertake the du-
ties, and may exercise the authorities, of States
that are described in paragraph (1) with respect
to each group health plan, and each multiple
employer welfare arrangement, that does not
provide health coverage through a carrier. Such
a plan or arrangement shall transmit to the
Secretary of Labor, in accordance with the re-
quirements 
promulgated 
under 
subsection
(a)(3)(E), the data determined to be necessary
by the Secretary of Health and Human Services
under subsection (a)(3)(D).
(B) ENSURING
COMPLIANCE.—For pur-
poses of part 5 of subtitle B of title I of the
Employee Retirement Income Security Act of
1974, the provisions of this section shall be con-
sidered to be provisions of title I of such Act,
but only to the extent that this section applies
424
Title V, Subtitle A
to group health plans and multiple employer
welfare arrangements that do not provide
health coverage through a carrier.
(c) MODIFYING MEASURES.—
(1) IN GENERAL.—The Secretary may modify
any set of quality measures established under sub-
section (a). The Secretary may make any modifica-
tion to a set of data, standard methodology, stand-
ard reporting format, implementation schedule, or
requirement on carriers, group health plans, and
multiple employer welfare arrangements established
under such subsection that the Secretary determines
is necessary to implement appropriately a modifica-
tion in the set of quality measures.
(2) PROCEDURE.—Prior to implementing a
modification under paragraph (1), the Secretary
shall—
(A) receive the recommendations of the
Council with respect to the modification;
(B) provide notice and opportunity for
public comment; and
(C) promulgate a rule.
SEC. 5003. DEFINITIONS.
For purposes of this subtitle:
425
Title V, Subtitle B
(1) The term ‘‘carrier’’ means a carrier (as de-
fined in section 1903(2)) providing health insurance
coverage (as defined in section 1903(7)).
(2) The term ‘‘multiple employer welfare ar-
rangement’’ means a multiple employer welfare ar-
rangement (as defined in section 1903(12)) provid-
ing benefits consisting of medical care described in
section 607(1) of the Employee Retirement Income
Security Act of 1974.
Subtitle B—Primary Care Provider
Education
SEC. 5101. AREA HEALTH EDUCATION CENTERS.
Section 746(i)(1)(A) of the Public Health Service Act
(42 U.S.C. 293j(i)(1)(A)) is amended by striking
‘‘through 1995’’ and inserting ‘‘through 1994 and
$30,000,000 for each of the fiscal years 1995 through
1999’’.
SEC. 5102. PUBLIC HEALTH AND PREVENTIVE MEDICINE.
Section 765(a) of the Public Health Service Act (42
U.S.C. 294c(a)) is amended by striking ‘‘through 1995’’
and inserting ‘‘through 1999’’.
SEC. 5103. FAMILY MEDICINE.
Section 747(d)(1) of the Public Health Service Act
(42 U.S.C. 293k(d)(1)) is amended by striking ‘‘through
1995’’ and inserting ‘‘through 1999’’.
427
Title VI
Sec. 6004. Enrolling eligible employees and qualifying individuals for qualified
health coverage through a purchasing organization.
Sec. 6005. Restriction on charges.
Sec. 6006. State report on establishment of purchasing organizations.
PART 2—ENCOURAGEMENT OF MULTIPLE EMPLOYER ARRANGEMENTS
PROVIDING BASIC HEALTH BENEFITS
Sec. 6011. Eliminating commonality of interest or geographic location require-
ment for tax exempt trust status.
PART 3—TAX EXEMPTION FOR HIGH RISK POOLS
Sec. 6021. Tax exemption for high risk insurance pools.
Subtitle B—Preemption of State Benefit Mandates and Anti-
Managed Care Laws
Sec. 6101. Preemption from State benefit mandates.
Sec. 6102. Preemption of State law restrictions on managed care arrangements.
Sec. 6103. Preemption of State laws restricting utilization review programs.
Sec. 6104. Prohibition of provisions prohibiting employer groups from purchas-
ing health insurance.
Sec. 6105. Preemption relating to different insurance standards.
Sec. 6106. GAO study on managed care.
Subtitle C—Malpractice Reform
PART 1—UNIFORM STANDARDS FOR MALPRACTICE CLAIMS
Sec. 6201. Applicability.
Sec. 6202. Requirement for initial resolution of action through alternative dis-
pute resolution.
Sec. 6203. Optional application of practice guidelines.
Sec. 6204. Treatment of noneconomic and punitive damages.
Sec. 6205. Periodic payments for future losses.
Sec. 6206. Treatment of attorney’s fees and other costs.
Sec. 6207. Uniform statute of limitations.
Sec. 6208. Special provision for certain obstetric services.
Sec. 6209. Jurisdiction of Federal courts.
Sec. 6210. Preemption.
PART 2—REQUIREMENTS FOR STATE ALTERNATIVE DISPUTE RESOLUTION
SYSTEMS (ADR)
Sec. 6221. Basic requirements.
Sec. 6222. Certification of State systems; applicability of alternative Federal
system.
Sec. 6223. Reports on implementation and effectiveness of alternative dispute
resolution systems.
PART 3—DEFINITIONS
Sec. 6231. Definitions.
Subtitle D—Administrative Simplification
Sec. 6300. Purpose.
Sec. 6301. Definitions.
428
Title VI
PART 1—STANDARDS FOR DATA ELEMENTS AND TRANSACTIONS
Sec. 6311. General requirements on Secretary.
Sec. 6312. Standards for data elements of health information.
Sec. 6313. Information transaction standards.
Sec. 6314. Timetables for adoption of standards.
PART 2—REQUIREMENTS WITH RESPECT TO CERTAIN TRANSACTIONS AND
INFORMATION
Sec. 6321. Standard transactions and information.
Sec. 6322. Accessing health information for authorized purposes.
Sec. 6323. Ensuring availability of information.
Sec. 6324. Timetables for compliance with requirements.
PART 3—MISCELLANEOUS PROVISIONS
Sec. 6331. Standards and certification for health information network services.
Sec. 6332. Imposition of additional requirements.
Sec. 6333. Effect on State law.
Sec. 6334. Grants for demonstration projects.
PART 4—ASSISTANCE TO THE SECRETARY
Sec. 6341. General requirement on Secretary.
Sec. 6342. Health Information Advisory Committee.
Subtitle E—Fair Health Information Practices
Sec. 6400. Definitions.
PART 1—DUTIES OF HEALTH INFORMATION TRUSTEES
Sec. 6401. Inspection of protected health information.
Sec. 6402. Amendment of protected health information.
Sec. 6403. Notice of information practices.
Sec. 6404. Accounting for disclosures.
Sec. 6405. Security.
PART 2—USE AND DISCLOSURE OF PROTECTED HEALTH INFORMATION
Sec. 6411. General limitations on use and disclosure.
Sec. 6412. Authorizations for disclosure of protected health information.
Sec. 6413. Treatment, payment, and oversight.
Sec. 6414. Next of kin and directory information.
Sec. 6415. Public health.
Sec. 6416. Health research.
Sec. 6417. Emergency circumstances.
Sec. 6418. Judicial and administrative purposes.
Sec. 6419. Law enforcement.
Sec. 6420. Subpoenas, warrants, and search warrants.
Sec. 6421. Health information service organizations.
PART 3—ACCESS PROCEDURES AND CHALLENGE RIGHTS
Sec. 6431. Access procedures for law enforcement subpoenas, warrants, and
search warrants.
Sec. 6432. Challenge procedures for law enforcement subpoenas.
Sec. 6433. Access and challenge procedures for other subpoenas.
429
Title VI
Sec. 6434. Construction of part; suspension of statute of limitations.
Sec. 6435. Responsibilities of Secretary.
PART 4—MISCELLANEOUS PROVISIONS
Sec. 6441. Payment card and electronic payment transactions.
Sec. 6442. Access to protected health information outside of the United States.
Sec. 6443. Standards for electronic documents and communications.
Sec. 6444. Duties and authorities of affiliated persons.
Sec. 6445. Agents and attorneys.
Sec. 6446. Minors.
Sec. 6447. Maintenance of certain protected health information.
PART 5—ENFORCEMENT
Sec. 6451. Civil actions.
Sec. 6452. Civil money penalties.
Sec. 6453. Alternative dispute resolution.
Sec. 6454. Amendments to criminal law.
PART 6—AMENDMENTS TO TITLE 5, UNITED STATES CODE
Sec. 6461. Amendments to title 5, United States Code.
PART 7—REGULATIONS, RESEARCH, AND EDUCATION; EFFECTIVE DATES;
APPLICABILITY; AND RELATIONSHIP TO OTHER LAWS
Sec. 6471. Regulations; research and education.
Sec. 6472. Effective dates.
Sec. 6473. Applicability.
Sec. 6474. Relationship to other laws.
Subtitle F—Antitrust
Sec. 6501. Publication of antitrust guidelines on activities of health plans.
Sec. 6502. Issuance of health care certificates of public advantage.
Sec. 6503. Study of impact on competition.
Subtitle G—Fraud and Abuse
PART 1—ESTABLISHMENT OF ALL-PAYER HEALTH CARE FRAUD AND ABUSE
CONTROL PROGRAM
Sec. 6601. All-payer health care fraud and abuse control program.
Sec. 6602. Authorization of additional appropriations for investigators and
other personnel.
Sec. 6603. Establishment of anti-fraud and abuse trust fund.
PART 2—REVISIONS TO CURRENT SANCTIONS FOR FRAUD AND ABUSE
Sec. 6611. Mandatory exclusion from participation in medicare and State
health care programs.
Sec. 6612. Establishment of minimum period of exclusion for certain individ-
uals and entities subject to permissive exclusion from medicare
and State health care programs.
Sec. 6613. Revisions to criminal penalties.
Sec. 6615. Revisions to limitations on physician self-referral.
Sec. 6616. Medicare health maintenance organizations.
Sec. 6617. Effective date.
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Title VI, Subtitle A
PART 3—AMENDMENTS TO CRIMINAL LAW
Sec. 6621. Penalties for health care fraud.
Sec. 6622. Rewards for information leading to prosecution and conviction.
Sec. 6623. Broadening application of mail fraud statute.
PART 4—ADVISORY OPINIONS
Sec. 6631. Authorizing the Secretary of Health and Human Services to issue
advisory opinions under title XI.
Sec. 6632. Authorizing the Secretary of Health and Human Services to issue
advisory opinions relating to physician ownership and referral.
Sec. 6633. Effective date.
PART 5—PAYMENTS FOR STATE HEALTH CARE FRAUD CONTROL UNITS
Sec. 6641. Establishment of State fraud units.
Sec. 6642. Requirements for State fraud units.
Sec. 6643. Scope and purpose.
Sec. 6644. Payments to States.
Subtitle H—Billing for Laboratory Services
Sec. 6701. Easing restrictions on billing for laboratory and other services.
‘‘TITLE XXVII—RESTRICTIONS ON BILLING
‘‘Sec. 2701. Prohibition.
‘‘Sec. 2702. Exceptions.
‘‘Sec. 2703. Sanctions.
‘‘Sec. 2704. Regulations.
‘‘Sec. 2705. Definitions.
Sec. 6702. Effective date.
Subtitle A—Facilitating Establish-
ment of Health Plan Purchasing
Organization (HPPOs)
PART 1—HEALTH PLAN PURCHASING
ORGANIZATIONS
SEC. 6001. ESTABLISHMENT AND ORGANIZATION.
(a) IN GENERAL.—Health plan purchasing organiza-
tions (each in this part referred to as a ‘‘purchasing orga-
nization’’) may be established in accordance with this part.
Each purchasing organization shall be chartered under
State law and operated as a not-for-profit corporation. A
431
Title VI, Subtitle A
carrier may not form, underwrite, or possess a majority
vote of a purchasing organization, but may administer
such an organization.
(b) BOARD OF DIRECTORS.—
(1) IN GENERAL.—Each purchasing organiza-
tion shall be governed by a Board of Directors. Such
Board shall initially be appointed under procedures
established by the State in which it operates. Subse-
quently, the Board shall be elected by the members
of the organization in accordance with paragraph
(3). Such Board shall be composed of individuals
who are small employers (or representatives of small
employers), eligible employees of small employers (or
representatives of such employees), and qualifying
individuals in the area in which the organization op-
erates.
(2) MEMBERSHIP.—A purchasing organization
shall accept all small employers and eligible employ-
ees and other individuals who are in the individual/
small employer market within the area served by the
organization as members if such employers, employ-
ees, or individuals request such membership.
(3) VOTING.—Members of a purchasing organi-
zation shall have voting rights consistent with the
432
Title VI, Subtitle A
rules established under the bylaws governing the or-
ganization.
(c) DUTIES OF PURCHASING ORGANIZATIONS.—
(1) IN GENERAL.—Subject to paragraph (2),
each purchasing organization shall—
(A) market health insurance coverage in
the individual/small group market throughout
the entire area served by the organization;
(B) enter into agreements under section
6002 with carriers offering qualified health cov-
erage under this subtitle;
(C) enter into agreements with small em-
ployers under section 6003;
(D) enroll individuals with carriers offering
qualified health coverage, only in accordance
with section 6004;
(E) disseminate quality information under
section 4002; and
(F) carry out other functions provided for
under this part.
(2) LIMITATION ON ACTIVITIES.—A purchasing
organization shall not—
(A) perform any activity (including review,
approval, or enforcement) relating to payment
rates for providers;
433
Title VI, Subtitle A
(B) perform any activity (including certifi-
cation or enforcement) relating to compliance of
carriers (and health coverage provided by car-
riers) with the requirements of subtitle A of
title I;
(C) assume financial risk in relation to any
such carrier; or
(D) perform other activities identified by
the State as being inconsistent with the per-
formance of its duties under paragraph (1).
(3) CHARACTERISTICS OF SERVICE AREA.—
(A) IN GENERAL.—A purchasing organiza-
tion need not serve geographic areas that are
contiguous, but the geographic boundaries of
such areas shall be consistent with the bound-
aries established under section 1021 for fair
rating areas.
(B) SERVICE OF ENTIRE METROPOLITAN
STATISTICAL AREA.—If a purchasing organiza-
tion serves a part of a metropolitan statistical
area the organization shall serve the entire
area.
(d) ESTABLISHMENT NOT REQUIRED.—Nothing in
this section shall be construed as requiring—
434
Title VI, Subtitle A
(1) that a purchasing organization be estab-
lished in each area of a State in which it operates;
and
(2) that there be only one purchasing organiza-
tion established with respect to any area.
SEC. 6002. AGREEMENTS TO OFFER QUALIFIED HEALTH
COVERAGE.
(a) AGREEMENTS.—
(1) IN GENERAL.—Except as provided in para-
graph (3), each purchasing organization for an area
shall enter into an agreement under this section with
each carrier that desires to make available qualified
health coverage through the purchasing organization
(consistent with any procedures established by the
State).
(2) TERMINATION OF AGREEMENT.—An agree-
ment under paragraph (1) shall remain in effect for
a 12-month period, except that the purchasing orga-
nization may terminate an agreement under para-
graph (1) if the carrier’s license or certification
under State law is terminated or for other good
cause shown.
(3) LIMITATION
ON
RENEWAL
OF
AGREE-
MENTS.—Subsequent to the 12-month period de-
435
Title VI, Subtitle A
scribed in paragraph (2), a purchasing organization
may—
(A) refuse to enter into a subsequent
agreement with a carrier if the organization de-
termines that the number of enrollees or the
premium for coverage is too low, and
(B) if a previous agreement with a carrier
was terminated for good cause and the organi-
zation determines appropriate actions have not
been taken to correct the problems, refuse to
enter into a subsequent agreement with the car-
rier.
(b) RECEIPT OF PREMIUMS ON BEHALF OF CAR-
RIERS.—
(1) IN GENERAL.—Under an agreement under
this section between a purchasing organization and
a carrier—
(A) premiums shall be payable, and
(B) payment of premiums may be made by
individuals (or employers on their behalf) di-
rectly to the purchasing organization for the
benefit of the carrier.
(2) TIMING OF PAYMENT OF PREMIUMS.—Pre-
miums may be payable on a monthly basis (or, at
the option of an eligible employee or individual, on
436
Title VI, Subtitle A
a quarterly basis). The purchasing organization may
provide for reasonable penalties and grace periods
for late payment.
(3) 
CARRIERS
RETAIN
RISK
OF
NONPAYMENT.—Nothing in this subsection shall be
construed as placing upon a purchasing organization
any risk associated with the failure of individuals
and employers to make prompt payment of pre-
miums (other than the portion of the premium rep-
resenting the purchasing organization administrative
fee under section 6005). Each small employer and
qualifying individual who enrolls with a carrier pro-
viding qualified health coverage through the pur-
chasing organization is liable to the carrier for pre-
miums.
(c) FORWARDING OF PREMIUMS.—
(1) IN
GENERAL.—If, under an agreement
under subsection (a), premium payments for quali-
fied health coverage are made to the purchasing or-
ganization, the purchasing organization shall for-
ward to the carrier the amount of the premiums.
(2) PAYMENTS.—Payments shall be made by
the purchasing organization under this subsection
within a period of days (specified by the Secretary
and not to exceed 7 days) after receipt of the pre-
437
Title VI, Subtitle A
mium from the small employer of the eligible em-
ployee or the qualifying individual, as the case may
be.
(d) PAYMENT OF COMMISSIONS.—
(1) IN GENERAL.—Subject to paragraph (2),
nothing in this part shall be construed to preclude
a carrier from paying a commission or other remu-
neration in connection with the purchase of health
care coverage by individuals or groups, consistent
with State law.
(2) LIMITATION ON VARIATION.—A carrier may
not vary such compensation or remuneration based,
directly or indirectly, on the anticipated or actual
claims experience associated with the group or indi-
viduals purchasing health care coverage.
SEC. 6003. PROVISION OF INFORMATION.
(a) IN GENERAL.—Each purchasing organization for
an area shall make available to small employers that em-
ploy individuals in the area and to qualifying individuals
who reside in the area—
(1) information provided to the purchasing or-
ganization by the State or carriers, and
(2) the opportunity to enter into an agreement
with the organization for the purchase of qualified
health coverage.
438
Title VI, Subtitle A
(b) FORWARDING INFORMATION AND PAYROLL DE-
DUCTIONS.—As part of an agreement entered into under
this section, a small employer shall forward the informa-
tion and make the payroll deductions required under sec-
tion 1201(a).
SEC. 6004. ENROLLING ELIGIBLE EMPLOYEES AND QUALI-
FYING INDIVIDUALS FOR QUALIFIED HEALTH
COVERAGE THROUGH A PURCHASING ORGA-
NIZATION.
A purchasing organization shall offer, on behalf of
each carrier with which an agreement was entered into
under section 6002 and in accordance with the enrollment
procedures of such carriers and the enrollment periods
provided under 1005, enrollment for the coverage only to
individuals in the individual/small group market in the
area served by the purchasing organization. Each purchas-
ing organization shall coordinate annual open enrollment
periods (described in section 1005(c)) of all carriers
through which coverage is offered by the organization so
that there is one common annual open enrollment period
for all such carriers with respect to each individual en-
rolled for coverage through the organization. Nothing in
this section shall preclude a purchasing organization from
having different common annual open enrollment periods
for different individuals.
439
Title VI, Subtitle A
SEC. 6005. RESTRICTION ON CHARGES.
(a) IN GENERAL.—A purchasing organization may
impose an administrative fee with respect to an eligible
employee or qualifying individual enrolled for qualified
health coverage offered through the purchasing organiza-
tion.
(b) FEE.—A purchasing organization that elects to
impose a fee under subsection (a) shall ensure that such
fee is set as a percentage of the premium for each such
coverage option, is imposed uniformly with respect to all
coverage options offered through the organization, and is
disclosed explicitly as an addition to the premium.
SEC. 
6006. 
STATE 
REPORT 
ON 
ESTABLISHMENT 
OF
PURCHASING ORGANIZATIONS.
(a) IN GENERAL.—Not later than January 1, 2000,
each State shall conduct a review of access of residents
of the State who are not employees of large employers or
medicare beneficiaries to obtaining standard health insur-
ance coverage through a purchasing organization.
(b) RESPONSE.—If the State determines, based on
such review, that such residents are unable to obtain such
coverage through such an organization, the State shall
take such actions as the State determines appropriate to
ensure public or private entities provide access to such an
organization by such residents.
440
Title VI, Subtitle A
PART 
2—ENCOURAGEMENT 
OF 
MULTIPLE
EMPLOYER 
ARRANGEMENTS 
PROVIDING
BASIC HEALTH BENEFITS
SEC. 6011. ELIMINATING COMMONALITY OF INTEREST OR
GEOGRAPHIC LOCATION REQUIREMENT FOR
TAX EXEMPT TRUST STATUS.
(a) IN GENERAL.—Paragraph (9) of section 501(c)
of the Internal Revenue Code of 1986 (relating to exempt
organizations) is amended—
(1) by inserting ‘‘(A)’’ after ‘‘(9)’’; and
(2) by adding at the end the following:
‘‘(B) Any determination of whether a certified
multiple employer health plan (as defined in section
701(9) of the Employee Retirement Income Security
Act of 1974), a multiple employer welfare arrange-
ment which is fully insured, or a plan described in
clause (ii) or (iii) of section 3(40)(A) of such Act is
a voluntary employees’ beneficiary association meet-
ing the requirements of this paragraph shall be
made without regard to any determination of com-
monality of interest or geographic location.’’.
(b) EFFECTIVE DATE.—The amendments made by
subsection (a) shall apply with respect to determinations
made on or after the date of the enactment of this Act.
441
Title VI, Subtitle B
PART 3—TAX EXEMPTION FOR HIGH RISK POOLS
SEC. 6021. TAX EXEMPTION FOR HIGH RISK INSURANCE
POOLS.
(a) IN GENERAL.—Subsection (c) of section 501 of
the Internal Revenue Code of 1986 (relating to list of ex-
empt organizations) is amended by adding at the end the
following new paragraph:
‘‘(27) In the case of taxable years beginning be-
fore January 1, 1997, any corporation, association,
or similar legal entity which is created by any State
or political subdivision thereof to establish a risk
pool to provide health insurance coverage to any per-
son unable to obtain health insurance coverage in
the private insurance market because of health con-
ditions and no part of the net earnings of which in-
ures to the benefit of any private shareholder, mem-
ber, or individual.’’
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply to taxable years beginning after
December 31, 1989.
Subtitle B—Preemption of State
Benefit Mandates and Anti-Man-
aged Care Laws
SEC. 6101. PREEMPTION FROM STATE BENEFIT MANDATES.
Effective as of January 1, 1997, no State shall estab-
lish or enforce any law or regulation that—
442
Title VI, Subtitle B
(1) requires the offering, as part of health in-
surance coverage, of any services, category of care,
or services of any class or type of provider, except
as provided in section 1013; or
(2) specifies the individuals to be provided
health insurance coverage or the duration of such
coverage.
SEC. 6102. PREEMPTION OF STATE LAW RESTRICTIONS ON
MANAGED CARE ARRANGEMENTS.
(a) LIMITATION
ON RESTRICTIONS
ON NETWORK
PLANS.—Effective as of January 1, 1997—
(1) a State may not prohibit or limit a carrier
or group health plan providing health coverage from
including incentives for enrollees to use the services
of participating providers;
(2) a State may not prohibit or limit such a
carrier or plan from limiting coverage of services to
those provided by a participating provider, except as
provided in section 1013;
(3) a State may not prohibit or limit the nego-
tiation of rates and forms of payments for providers
by such a carrier or plan with respect to health
coverage;
443
Title VI, Subtitle B
(4) a State may not prohibit or limit such a
carrier or plan from limiting the number of partici-
pating providers;
(5) a State may not prohibit or limit such a
carrier or plan from requiring that services be pro-
vided (or authorized) by a practitioner selected by
the enrollee from a list of available participating pro-
viders or, except as provided in section 1011(e),
from requiring enrollees to obtain referral in order
to have coverage for treatment by a specialist or
health institution; and
(6) a State may not prohibit or limit the
corporate practice of medicine.
(b) DEFINITIONS.—In this section:
(1) MANAGED
CARE
COVERAGE.—The term
‘‘managed care coverage’’ means health coverage to
the extent the coverage is provided through a man-
aged care arrangement (as defined in section
1903(11)(A)) that meets the applicable requirements
of such section.
(2) 
PARTICIPATING
PROVIDER.—The 
term
‘‘participating provider’’ means an entity or individ-
ual which provides, sells, or leases health care serv-
ices as part of a provider network (as defined in sec-
tion 1903(11)(B)).
444
Title VI, Subtitle B
(c) REFERENCE
TO STANDARDS
FOR MANAGED
CARE ARRANGEMENTS.—For requirements relating to
managed care arrangements, see section 1011.
SEC. 6103. PREEMPTION OF STATE LAWS RESTRICTING UTI-
LIZATION REVIEW PROGRAMS.
(a) IN GENERAL.—Effective January 1, 1997, no
State law or regulation shall prohibit or regulate activities
under a utilization review program (as defined in sub-
section (b)).
(b) UTILIZATION REVIEW PROGRAM DEFINED.—In
this section, the term ‘‘utilization review program’’ means
a system of reviewing the medical necessity and appro-
priateness of patient services (which may include inpatient
and outpatient services) using specified guidelines. Such
a system may include preadmission certification, the appli-
cation of practice guidelines, continued stay review, dis-
charge planning, preauthorization of ambulatory proce-
dures, and retrospective review.
(c) EXEMPTION OF LAWS PREVENTING DENIAL OF
LIFESAVING MEDICAL TREATMENT PENDING TRANSFER
TO ANOTHER HEALTH CARE PROVIDER.—Nothing in this
subtitle shall be construed to invalidate any State law that
has the effect of preventing involuntary denial of life-pre-
serving medical treatment when such denial would cause
the involuntary death of the patient pending transfer of
445
Title VI, Subtitle B
the patient to a health care provider willing to provide
such treatment.
SEC. 6104. PROHIBITION OF PROVISIONS PROHIBITING EM-
PLOYER 
GROUPS 
FROM 
PURCHASING
HEALTH INSURANCE.
No provision of State or local law shall apply that
prohibits 2 or more employers from obtaining coverage
that is fully insured (within the meaning of section 701(8)
of the Employee Retirement Income Security Act of 1974,
as added by section 1401(a) of this Act) under a multiple
employer health plan.
SEC. 6105. PREEMPTION RELATING TO DIFFERENT INSUR-
ANCE STANDARDS.
A State may not establish or enforce standards for
health insurance coverage made available in the individual
and small group markets that are different from the
standards established under title I.
SEC. 6106. GAO STUDY ON MANAGED CARE.
(a) IN GENERAL.—The Comptroller General shall
conduct a study of the benefits and cost effectiveness of
the use of managed care in the delivery of health services.
(b) REPORT.—By not later than 4 years after the
date of the enactment of this Act, the Comptroller General
shall submit a report to Congress on the study conducted
446
Title VI, Subtitle C
under subsection (a) and shall include in the report such
recommendations as may be appropriate.
Subtitle C—Malpractice Reform
PART 1—UNIFORM STANDARDS FOR
MALPRACTICE CLAIMS
SEC. 6201. APPLICABILITY.
Except as provided in section 6221, this part shall
apply to any medical malpractice liability action brought
in a Federal or State court, and to any medical mal-
practice claim subject to an alternative dispute resolution
system, that is initiated on or after January 1, 1996.
SEC. 6202. 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 6212(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 6222(b).
447
Title VI, Subtitle C
(2) FEDERAL DIVERSITY ACTIONS.—A medical
malpractice liability action may not be brought in
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)
448
Title VI, Subtitle C
may not be brought in any Federal court unless
the claim has been initially resolved under the
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—
(1) the ADR reaches a decision on whether the
defendant is liable to the plaintiff for damages; and
(2) if the ADR determines that the defendant
is liable, the ADR reaches a decision on the amount
of damages assessed against the defendant.
(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.
449
Title VI, Subtitle C
(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
450
Title VI, Subtitle C
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. 6203. OPTIONAL APPLICATION OF PRACTICE GUIDE-
LINES.
(a) DEVELOPMENT AND CERTIFICATION OF GUIDE-
LINES.—Each State may develop, for certification by the
Secretary, a set of specialty clinical practice guidelines,
based on recommended guidelines from national specialty
societies, to be updated annually. In the absence of rec-
ommended guidelines from such societies, each State may
develop such guidelines based on such criteria as the State
considers appropriate (including based on recommended
guidelines developed by the Agency for Health Care Policy
and Research).
(b) PROVISION OF HEALTH CARE UNDER GUIDE-
LINES.—Notwithstanding any other provision of law, in
any medical malpractice liability action arising from the
conduct of a health care provider or health care profes-
sional, if such conduct was in accordance with a guideline
developed by the State in which the conduct occurred and
certified by the Secretary under subsection (a), the guide-
line—
451
Title VI, Subtitle C
(1) may be introduced by any party to the ac-
tion (including a health care provider, health care
professional, or patient); and
(2) if introduced, shall establish a rebuttable
presumption that the conduct was in accordance
with the appropriate standard of medical care, which
may only be overcome by the presentation of clear
and convincing evidence on behalf of the party
against whom the presumption operates.
SEC. 6204. TREATMENT OF NONECONOMIC AND PUNITIVE
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) NO AWARD OF PUNITIVE DAMAGES AGAINST
MANUFACTURER OF MEDICAL PRODUCT.—In the case of
a medical malpractice liability action in which the plaintiff
alleges a claim against the manufacturer of a medical
product, no punitive or exemplary damages may be award-
ed against such manufacturer.
452
Title VI, Subtitle C
(c) JOINT
AND SEVERAL LIABILITY
FOR NON-
ECONOMIC DAMAGES.—The liability of each defendant for
noneconomic damages shall be several only and shall not
be joint, and each defendant shall be liable only for the
amount of noneconomic damages allocated to the defend-
ant in direct proportion to the defendant’s percentage of
responsibility (as determined by the trier of fact).
(d) USE OF PUNITIVE DAMAGE AWARDS FOR OPER-
ATION OF ADR SYSTEMS IN STATES.—
(1) IN GENERAL.—The total amount of any pu-
nitive damages awarded in a medical malpractice li-
ability 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 ac-
tion were provided), and shall be used by the State
solely to implement and operate the State alternative
dispute resolution system certified by the Secretary
under section 6222 (except as provided in paragraph
(2)).
(2) USE
OF
REMAINING
AMOUNTS
FOR
PRO-
VIDER LICENSING AND DISCIPLINARY ACTIVITIES.—
If the amount of punitive damages paid to a State
under paragraph (1) for a year is greater than the
State’s costs of implementing and operating the
453
Title VI, Subtitle C
State alternative dispute resolution system during
the year, the balance of such punitive damages paid
to the State shall be used solely to carry out activi-
ties to assure the safety and quality of health care
services provided in the State, including (but not
limited to)—
(A) licensing or certifying health care pro-
fessionals and health care providers in the
State; and
(B) carrying out programs to reduce mal-
practice-related costs for providers volunteering
to provide services in medically underserved
areas.
(3) MAINTENANCE OF EFFORT.—A State shall
use any amounts paid pursuant to paragraph (1) to
supplement and not to replace amounts spent by the
State for implementing and operating the State al-
ternative dispute resolution system or carrying out
the activities described in paragraph (2).
SEC. 6205. PERIODIC PAYMENTS FOR FUTURE LOSSES.
(a) IN GENERAL.—In any medical malpractice liabil-
ity action in which the damages awarded for future eco-
nomic loss exceeds $100,000, a defendant may not be re-
quired to pay such damages in a single, lump-sum pay-
ment, but may be permitted to make such payments on
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a periodic basis. The periods for such payments shall be
determined by the court, based upon projections of when
such expenses are likely to be incurred.
(b) WAIVER.—A court may waive the application of
subsection (a) with respect to a defendant if the court de-
termines that it is not in the best interests of the plaintiff
to receive payments for damages on such a periodic basis.
SEC. 6206. TREATMENT OF ATTORNEY’S FEES AND OTHER
COSTS.
(a) REQUIRING PARTY CONTESTING ADR RULING
TO PAY ATTORNEY’S FEES AND OTHER COSTS.—
(1) IN GENERAL.—The court in a medical mal-
practice liability action shall require the party that
(pursuant to section 6202(c)(1)) contested the ruling
of the alternative dispute resolution system with re-
spect to the medical 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 ex-
pert witnesses, and other litigation expenses (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—
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(A) 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 is less than the amount of
damages awarded to the party under the ADR
system; and
(B) in the case of an action in which the
party that contested the ruling is the defendant,
the amount of damages assessed against the
party under the action is greater than the
amount of damages assessed under the ADR
system.
(2) EXCEPTIONS.—Paragraph (1) shall not
apply if—
(A) the party contesting the ruling made
under the previous alternative dispute resolu-
tion system shows that—
(i) the ruling was procured by corrup-
tion, fraud, or undue means,
(ii) there was partiality or corruption
under the system,
(iii) there was other misconduct under
the system that materially prejudiced the
party’s rights, or
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such service under subtitle E, its certification under
this section shall be terminated unless the Secretary
determines that appropriate corrective action has
been taken.
(2) CONDITIONAL
CERTIFICATION—The Sec-
retary may establish a procedure under which a
health information network service may remain cer-
tified on a conditional basis if the service is operat-
ing consistently with a plan intended to correct any
violations described in paragraph (1). Such proce-
dure may provide for the appointment of a trustee
to continue operation of the service until the require-
ments for full certification are met.
(d) CERTIFICATION
BY PRIVATE ENTITIES.—The
Secretary may designate private entities to conduct the
certification procedures established by the Secretary under
this section. A health information network service certified
by such an entity in accordance with such designation
shall be considered to be certified by the Secretary.
(e) INFORMATION HELD BY HEALTH INFORMATION
NETWORK SERVICES.—If a health information network
service certified under this section loses its certified status
or takes any action that would threaten the continued
availability of the standard data elements of health infor-
mation held by such service, such data elements shall be
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transferred to another health information network service
certified under this section that has been designated by
the Secretary.
SEC. 6332. IMPOSITION OF ADDITIONAL REQUIREMENTS.
(a) IN GENERAL.—Except as provided in subsection
(c), after the Secretary has established standards under
section 6312 that are necessary to make uniform and com-
patible for electronic transmission the data elements that
the Secretary determines are appropriate for transmission
in connection with a transaction described in part 2, an
individual or entity may not require an individual or en-
tity, to provide in any manner any additional data element
in connection with—
(1) the transaction; or
(2) an inquiry with respect to the transaction.
(b) TRANSMISSION METHOD.—Except as provided in
subsection (c), after the Secretary has established stand-
ards under section 6313 relating to the method by which
data elements that the Secretary determines are appro-
priate for transmission in connection with a transaction
described in part 2 may be transmitted electronically, an
individual or entity may not require an individual or entity
to transmit any data element in a manner inconsistent
with the standards in connection with—
(1) the transaction; or