H. R. 2264—224
‘‘(B) Any right to receive tangible property or services
under a contract or granted by a governmental unit or
agency or instrumentality thereof.
‘‘(C) Any interest in a patent or copyright.
‘‘(D) To the extent provided in regulations, any right
under a contract (or granted by a governmental unit or
an agency or instrumentality thereof) if such right—
‘‘(i) has a fixed duration of less than 15 years,
or
‘‘(ii) is fixed as to amount and, without regard
to this section, would be recoverable under a method
similar to the unit-of-production method.
‘‘(5) INTERESTS UNDER LEASES AND DEBT INSTRUMENTS.—
Any interest under—
‘‘(A) an existing lease of tangible property, or
‘‘(B) except as provided in subsection (d)(2)(B), any
existing indebtedness.
‘‘(6) TREATMENT OF SPORTS FRANCHISES.—A franchise to
engage in professional football, basketball, baseball, or other
professional sport, and any item acquired in connection with
such a franchise.
‘‘(7) MORTGAGE SERVICING.—Any right to service indebted-
ness which is secured by residential real property unless such
right is acquired in a transaction (or series of related trans-
actions) involving the acquisition of assets (other than rights
described in this paragraph) constituting a trade or business
or substantial portion thereof.
‘‘(8) CERTAIN
TRANSACTION
COSTS.—Any fees for profes-
sional services, and any transaction costs, incurred by parties
to a transaction with respect to which any portion of the gain
or loss is not recognized under part III of subchapter C.
‘‘(f) SPECIAL RULES.—
‘‘(1) TREATMENT OF CERTAIN DISPOSITIONS, ETC.—
‘‘(A) IN
GENERAL.—If there is a disposition of any
amortizable section 197 intangible acquired in a transaction
or series of related transactions (or any such intangible
becomes worthless) and one or more other amortizable
section 197 intangibles acquired in such transaction or
series of related transactions are retained—
‘‘(i) no loss shall be recognized by reason of such
disposition (or such worthlessness), and
‘‘(ii) appropriate adjustments to the adjusted bases
of such retained intangibles shall be made for any
loss not recognized under clause (i).
‘‘(B) SPECIAL RULE FOR COVENANTS NOT TO COMPETE.—
In the case of any section 197 intangible which is a cov-
enant not to compete (or other arrangement) described
in subsection (d)(1)(E), in no event shall such covenant
or other arrangement be treated as disposed of (or becoming
worthless) before the disposition of the entire interest
described in such subsection in connection with which such
covenant (or other arrangement) was entered into.
‘‘(C) SPECIAL RULE.—All persons treated as a single
taxpayer under section 41(f)(1) shall be so treated for pur-
poses of this paragraph.
‘‘(2) TREATMENT OF CERTAIN TRANSFERS.—
H. R. 2264—225
‘‘(A) IN GENERAL.—In the case of any section 197 intan-
gible transferred in a transaction described in subpara-
graph (B), the transferee shall be treated as the transferor
for purposes of applying this section with respect to so
much of the adjusted basis in the hands of the transferee
as does not exceed the adjusted basis in the hands of
the transferor.
‘‘(B) 
TRANSACTIONS
COVERED.—The 
transactions
described in this subparagraph are—
‘‘(i) any transaction described in section 332, 351,
361, 721, 731, 1031, or 1033, and
‘‘(ii) any transaction between members of the same
affiliated group during any taxable year for which a
consolidated return is made by such group.
‘‘(3) TREATMENT OF AMOUNTS PAID PURSUANT TO COVENANTS
NOT TO COMPETE, ETC.—Any amount paid or incurred pursuant
to a covenant or arrangement referred to in subsection (d)(1)(E)
shall be treated as an amount chargeable to capital account.
‘‘(4) TREATMENT OF FRANCHISES, ETC.—
‘‘(A) FRANCHISE.—The term ‘franchise’ has the meaning
given to such term by section 1253(b)(1).
‘‘(B) TREATMENT OF RENEWALS.—Any renewal of a fran-
chise, trademark, or trade name (or of a license, a permit,
or other right referred to in subsection (d)(1)(D)) shall
be treated as an acquisition. The preceding sentence shall
only apply with respect to costs incurred in connection
with such renewal.
‘‘(C) CERTAIN AMOUNTS NOT TAKEN INTO ACCOUNT.—
Any amount to which section 1253(d)(1) applies shall not
be taken into account under this section.
‘‘(5) TREATMENT OF CERTAIN REINSURANCE TRANSACTIONS.—
In the case of any amortizable section 197 intangible resulting
from an assumption reinsurance transaction, the amount taken
into account as the adjusted basis of such intangible under
this section shall be the excess of—
‘‘(A) the amount paid or incurred by the acquirer under
the assumption reinsurance transaction, over
‘‘(B) the amount required to be capitalized under sec-
tion 848 in connection with such transaction.
Subsection (b) shall not apply to any amount required to be
capitalized under section 848.
‘‘(6) TREATMENT OF CERTAIN SUBLEASES.—For purposes of
this section, a sublease shall be treated in the same manner
as a lease of the underlying property involved.
‘‘(7) TREATMENT
AS
DEPRECIABLE.—For purposes of this
chapter, any amortizable section 197 intangible shall be treated
as property which is of a character subject to the allowance
for depreciation provided in section 167.
‘‘(8) TREATMENT OF CERTAIN INCREMENTS IN VALUE.—This
section shall not apply to any increment in value if, without
regard to this section, such increment is properly taken into
account in determining the cost of property which is not a
section 197 intangible.
‘‘(9) ANTI-CHURNING RULES.—For purposes of this section—
‘‘(A) IN GENERAL.—The term ‘amortizable section 197
intangible’ shall not include any section 197 intangible
which is described in subparagraph (A) or (B) of subsection
H. R. 2264—226
(d)(1) (or for which depreciation or amortization would not
have been allowable but for this section) and which is
acquired by the taxpayer after the date of the enactment
of this section, if—
‘‘(i) the intangible was held or used at any time
on or after July 25, 1991, and on or before such date
of enactment by the taxpayer or a related person,
‘‘(ii) the intangible was acquired from a person
who held such intangible at any time on or after July
25, 1991, and on or before such date of enactment,
and, as part of the transaction, the user of such intangi-
ble does not change, or
‘‘(iii) the taxpayer grants the right to use such
intangible to a person (or a person related to such
person) who held or used such intangible at any time
on or after July 25, 1991, and on or before such date
of enactment.
For purposes of this subparagraph, the determination of
whether the user of property changes as part of a trans-
action shall be determined in accordance with regulations
prescribed by the Secretary. For purposes of this subpara-
graph, deductions allowable under section 1253(d) shall
be treated as deductions allowable for amortization.
‘‘(B) EXCEPTION WHERE GAIN RECOGNIZED.—If—
‘‘(i) subparagraph (A) would not apply to an intan-
gible acquired by the taxpayer but for the last sentence
of subparagraph (C)(i), and
‘‘(ii) the person from whom the taxpayer acquired
the intangible elects, notwithstanding any other provi-
sion of this title—
‘‘(I) to recognize gain on the disposition of the
intangible, and
‘‘(II) to pay a tax on such gain which, when
added to any other income tax on such gain under
this title, equals such gain multiplied by the high-
est rate of income tax applicable to such person
under this title,
then subparagraph (A) shall apply to the intangible
only to the extent that the taxpayer’s adjusted basis
in the intangible exceeds the gain recognized under
clause (ii)(I).
‘‘(C) RELATED PERSON DEFINED.—For purposes of this
paragraph—
‘‘(i) RELATED
PERSON.—A person (hereinafter in
this paragraph referred to as the ‘related person’) is
related to any person if—
‘‘(I) the related person bears a relationship
to such person specified in section 267(b) or section
707(b)(1), or
‘‘(II) the related person and such person are
engaged in trades or businesses under common
control (within the meaning of subparagraphs (A)
and (B) of section 41(f)(1)).
For purposes of subclause (I), in applying section 267(b)
or 707(b)(1), ‘20 percent’ shall be substituted for ‘50
percent’.
H. R. 2264—227
‘‘(ii) TIME FOR MAKING DETERMINATION.—A person
shall be treated as related to another person if such
relationship exists immediately before or immediately
after the acquisition of the intangible involved.
‘‘(D) ACQUISITIONS
BY
REASON
OF
DEATH.—Subpara-
graph (A) shall not apply to the acquisition of any property
by the taxpayer if the basis of the property in the hands
of the taxpayer is determined under section 1014(a).
‘‘(E) SPECIAL RULE FOR PARTNERSHIPS.—With respect
to any increase in the basis of partnership property under
section 732, 734, or 743, determinations under this para-
graph shall be made at the partner level and each partner
shall be treated as having owned and used such partner’s
proportionate share of the partnership assets.
‘‘(F) ANTI-ABUSE RULES.—The term ‘amortizable section
197 intangible’ does not include any section 197 intangible
acquired in a transaction, one of the principal purposes
of which is to avoid the requirement of subsection (c)(1)
that the intangible be acquired after the date of the enact-
ment of this section or to avoid the provisions of subpara-
graph (A).
‘‘(g) REGULATIONS.—The Secretary shall prescribe such regula-
tions as may be appropriate to carry out the purposes of this
section, including such regulations as may be appropriate to prevent
avoidance of the purposes of this section through related persons
or otherwise.’’
(b) MODIFICATIONS TO DEPRECIATION RULES.—
(1) TREATMENT OF CERTAIN PROPERTY EXCLUDED FROM SEC-
TION 197.—Section 167 (relating to depreciation deduction) is
amended by redesignating subsection (f) as subsection (g) and
by inserting after subsection (e) the following new subsection:
‘‘(f) TREATMENT OF CERTAIN PROPERTY EXCLUDED FROM SEC-
TION 197.—
‘‘(1) COMPUTER SOFTWARE.—
‘‘(A) IN GENERAL.—If a depreciation deduction is allow-
able under subsection (a) with respect to any computer
software, such deduction shall be computed by using the
straight line method and a useful life of 36 months.
‘‘(B) COMPUTER SOFTWARE.—For purposes of this sec-
tion, the term ‘computer software’ has the meaning given
to such term by section 197(e)(3)(B); except that such term
shall not include any such software which is an amortizable
section 197 intangible.
‘‘(2) CERTAIN
INTERESTS
OR
RIGHTS
ACQUIRED
SEPA-
RATELY.—If a depreciation deduction is allowable under sub-
section (a) with respect to any property described in subpara-
graph (B), (C), or (D) of section 197(e)(4), such deduction shall
be computed in accordance with regulations prescribed by the
Secretary.
‘‘(3) MORTGAGE SERVICING RIGHTS.—If a depreciation deduc-
tion is allowable under subsection (a) with respect to any right
described in section 197(e)(7), such deduction shall be computed
by using the straight line method and a useful life of 108
months.’’
(2) ALLOCATION OF BASIS IN CASE OF LEASED PROPERTY.—
Subsection (c) of section 167 is amended to read as follows:
‘‘(c) BASIS FOR DEPRECIATION.—
H. R. 2264—228
‘‘(1) IN GENERAL.—The basis on which exhaustion, wear
and tear, and obsolescence are to be allowed in respect of
any property shall be the adjusted basis provided in section
1011, for the purpose of determining the gain on the sale
or other disposition of such property.
‘‘(2) SPECIAL RULE FOR PROPERTY SUBJECT TO LEASE.—If
any property is acquired subject to a lease—
‘‘(A) no portion of the adjusted basis shall be allocated
to the leasehold interest, and
‘‘(B) the entire adjusted basis shall be taken into
account in determining the depreciation deduction (if any)
with respect to the property subject to the lease.’’
(c) AMENDMENTS TO SECTION 1253.—Subsection (d) of section
1253 is amended by striking paragraphs (2), (3), (4), and (5) and
inserting the following:
‘‘(2) OTHER PAYMENTS.—Any amount paid or incurred on
account of a transfer, sale, or other disposition of a franchise,
trademark, or trade name to which paragraph (1) does not
apply shall be treated as an amount chargeable to capital
account.
‘‘(3) RENEWALS, ETC.—For purposes of determining the term
of a transfer agreement under this section, there shall be taken
into account all renewal options (and any other period for
which the parties reasonably expect the agreement to be
renewed).’’
(d) AMENDMENT
TO SECTION 848.—Subsection (g) of section
848 is amended by striking ‘‘this section’’ and inserting ‘‘this section
or section 197’’.
(e) AMENDMENTS TO SECTION 1060.—
(1) Paragraph (1) of section 1060(b) is amended by striking
‘‘goodwill or going concern value’’ and inserting ‘‘section 197
intangibles’’.
(2) Paragraph (1) of section 1060(d) is amended by striking
‘‘goodwill or going concern value (or similar items)’’ and insert-
ing ‘‘section 197 intangibles’’.
(f) TECHNICAL AND CONFORMING AMENDMENTS.—
(1) Subsection (g) of section 167 (as redesignated by sub-
section (b)) is amended to read as follows:
‘‘(g) CROSS REFERENCES.—
‘‘(1) For additional rule applicable to depreciation of improve-
ments in the case of mines, oil and gas wells, other natural deposits,
and timber, see section 611.
‘‘(2) For amortization of goodwill and certain other intangibles,
see section 197.’’
(2) Subsection (f) of section 642 is amended by striking
‘‘section 169’’ and inserting ‘‘sections 169 and 197’’.
(3) Subsection (a) of section 1016 is amended by striking
paragraph (19) and by redesignating the following paragraphs
accordingly.
(4) Subparagraph (C) of section 1245(a)(2) is amended by
striking ‘‘193, or 1253(d) (2) or (3)’’ and inserting ‘‘or 193’’.
(5) Paragraph (3) of section 1245(a) is amended by striking
‘‘section 185 or 1253(d) (2) or (3)’’.
(6) The table of sections for part VI of subchapter B of
chapter 1 is amended by adding at the end thereof the following
new item:
‘‘Sec. 197. Amortization of goodwill and certain other intangibles.’’.
H. R. 2264—229
(g) EFFECTIVE DATE.—
(1) IN GENERAL.—Except as otherwise provided in this sub-
section, the amendments made by this section shall apply with
respect to property acquired after the date of the enactment
of this Act.
(2) ELECTION TO HAVE AMENDMENTS APPLY TO PROPERTY
ACQUIRED AFTER JULY 25, 1991.—
(A) IN GENERAL.—If an election under this paragraph
applies to the taxpayer—
(i) the amendments made by this section shall
apply to property acquired by the taxpayer after July
25, 1991,
(ii) subsection (c)(1)(A) of section 197 of the
Internal Revenue Code of 1986 (as added by this sec-
tion) (and so much of subsection (f)(9)(A) of such section
197 as precedes clause (i) thereof) shall be applied
with respect to the taxpayer by treating July 25, 1991,
as the date of the enactment of such section, and
(iii) in applying subsection (f)(9) of such section,
with respect to any property acquired by the taxpayer
on or before the date of the enactment of this Act,
only holding or use on July 25, 1991, shall be taken
into account.
(B) ELECTION.—An election under this paragraph shall
be made at such time and in such manner as the Secretary
of the Treasury or his delegate may prescribe. Such an
election by any taxpayer, once made—
(i) may be revoked only with the consent of the
Secretary, and
(ii) shall apply to the taxpayer making such elec-
tion and any other taxpayer under common control
with the taxpayer (within the meaning of subpara-
graphs (A) and (B) of section 41(f)(1) of such Code)
at any time after August 2, 1993, and on or before
the date on which such election is made.
(3) ELECTIVE BINDING CONTRACT EXCEPTION.—
(A) IN GENERAL.—The amendments made by this sec-
tion shall not apply to any acquisition of property by the
taxpayer if—
(i) such acquisition is pursuant to a written binding
contract in effect on the date of the enactment of
this Act and at all times thereafter before such acquisi-
tion,
(ii) an election under paragraph (2) does not apply
to the taxpayer, and
(iii) the taxpayer makes an election under this
paragraph with respect to such contract.
(B) ELECTION.—An election under this paragraph shall
be made at such time and in such manner as the Secretary
of the Treasury or his delegate shall prescribe. Such an
election, once made—
(i) may be revoked only with the consent of the
Secretary, and
(ii) shall apply to all property acquired pursuant
to the contract with respect to which such election
was made.
H. R. 2264—230
SEC. 13262. TREATMENT OF CERTAIN PAYMENTS TO RETIRED OR
DECEASED PARTNER.
(a) SECTION 736(b) NOT TO APPLY IN CERTAIN CASES.—Sub-
section (b) of section 736 (relating to payments for interest in
partnership) is amended by adding at the end thereof the following
new paragraph:
‘‘(3) LIMITATION ON APPLICATION OF PARAGRAPH (2).—Para-
graph (2) shall apply only if—
‘‘(A) capital is not a material income-producing factor
for the partnership, and
‘‘(B) the retiring or deceased partner was a general
partner in the partnership.’’
(b) LIMITATION ON DEFINITION OF UNREALIZED RECEIVABLES.—
(1) IN GENERAL.—Subsection (c) of section 751 (defining
unrealized receivables) is amended—
(A) by striking ‘‘sections 731, 736, and 741’’ each place
they appear and inserting ‘‘, sections 731 and 741 (but
not for purposes of section 736)’’, and
(B) by striking ‘‘section 731, 736, or 741’’ each place
it appears and inserting ‘‘section 731 or 741’’.
(2) TECHNICAL AMENDMENTS.—
(A) Subsection (e) of section 751 is amended by striking
‘‘sections 731, 736, and 741’’ and inserting ‘‘sections 731
and 741’’.
(B) Section 736 is amended by striking subsection (c).
(c) EFFECTIVE DATE.—
(1) IN GENERAL.—The amendments made by this section
shall apply in the case of partners retiring or dying on or
after January 5, 1993.
(2) BINDING CONTRACT EXCEPTION.—The amendments made
by this section shall not apply to any partner retiring on or
after January 5, 1993, if a written contract to purchase such
partner’s interest in the partnership was binding on January
4, 1993, and at all times thereafter before such purchase.
PART VII—MISCELLANEOUS PROVISIONS
SEC. 13271. DISALLOWANCE OF INTEREST ON CERTAIN OVERPAY-
MENTS OF TAX.
(a) GENERAL RULE.—Subsection (e) of section 6611 is amended
to read as follows:
‘‘(e) DISALLOWANCE OF INTEREST ON CERTAIN OVERPAYMENTS.—
‘‘(1) REFUNDS WITHIN 45 DAYS AFTER RETURN IS FILED.—
If any overpayment of tax imposed by this title is refunded
within 45 days after the last day prescribed for filing the
return of such tax (determined without regard to any extension
of time for filing the return) or, in the case of a return filed
after such last date, is refunded within 45 days after the
date the return is filed, no interest shall be allowed under
subsection (a) on such overpayment.
‘‘(2) REFUNDS AFTER CLAIM FOR CREDIT OR REFUND.—If—
‘‘(A) the taxpayer files a claim for a credit or refund
for any overpayment of tax imposed by this title, and
‘‘(B) such overpayment is refunded within 45 days after
such claim is filed,
H. R. 2264—231
no interest shall be allowed on such overpayment from the
date the claim is filed until the day the refund is made.
‘‘(3) IRS INITIATED ADJUSTMENTS.—If an adjustment initi-
ated by the Secretary, results in a refund or credit of an
overpayment, interest on such overpayment shall be computed
by subtracting 45 days from the number of days interest would
otherwise be allowed with respect to such overpayment.’’
(b) EFFECTIVE DATES.—
(1) Paragraph (1) of section 6611(e) of the Internal Revenue
Code of 1986 (as amended by subsection (a)) shall apply in
the case of returns the due date for which (determined without
regard to extensions) is on or after January 1, 1994.
(2) Paragraph (2) of section 6611(e) of such Code (as so
amended) shall apply in the case of claims for credit or refund
of any overpayment filed on or after January 1, 1995, regardless
of the taxable period to which such refund relates.
(3) Paragraph (3) of section 6611(e) of such Code (as so
amended) shall apply in the case of any refund paid on or
after January 1, 1995, regardless of the taxable period to which
such refund relates.
SEC. 13272. DENIAL OF DEDUCTION RELATING TO TRAVEL EXPENSES.
(a) IN GENERAL.—Section 274(m) (relating to additional limita-
tions on travel expenses) is amended by adding at the end thereof
the following new paragraph:
‘‘(3) TRAVEL
EXPENSES
OF
SPOUSE, DEPENDENT, OR
OTH-
ERS.—No deduction shall be allowed under this chapter (other
than section 217) for travel expenses paid or incurred with
respect to a spouse, dependent, or other individual accompany-
ing the taxpayer (or an officer or employee of the taxpayer)
on business travel, unless—
‘‘(A) the spouse, dependent, or other individual is an
employee of the taxpayer,
‘‘(B) the travel of the spouse, dependent, or other
individual is for a bona fide business purpose, and
‘‘(C) such expenses would otherwise be deductible by
the spouse, dependent, or other individual.’’
(b) EFFECTIVE DATE.—The amendment made by this section
shall apply to amounts paid or incurred after December 31, 1993.
SEC. 13273. INCREASE IN WITHHOLDING FROM SUPPLEMENTAL WAGE
PAYMENTS.
If an employer elects under Treasury Regulation 31.3402
(g)–1 to determine the amount to be deducted and withheld from
any supplemental wage payment by using a flat percentage rate,
the rate to be used in determining the amount to be so deducted
and withheld shall not be less than 28 percent. The preceding
sentence shall apply to payments made after December 31, 1993.
H. R. 2264—232
Subchapter C—Empowerment Zones, Enterprise
Communities, Rural Development Investment Areas, Etc.
PART I—EMPOWERMENT ZONES, ENTERPRISE
COMMUNITIES, AND RURAL DEVELOPMENT
INVESTMENT AREAS
SEC. 13301. DESIGNATION 
AND 
TREATMENT 
OF 
EMPOWERMENT
ZONES, ENTERPRISE COMMUNITIES, AND RURAL DEVEL-
OPMENT INVESTMENT AREAS.
(a) IN GENERAL.—Chapter 1 (relating to normal taxes and
surtaxes) is amended by inserting after subchapter T the following
new subchapter:
‘‘Subchapter U—Designation and Treatment of Empower-
ment Zones, Enterprise Communities, and Rural Develop-
ment Investment Areas
‘‘Part I. Designation.
‘‘Part II. Tax-exempt facility bonds for empowerment zones and enterprise
communities.
‘‘Part III. Additional incentives for empowerment zones.
‘‘Part IV. Regulations.
‘‘PART I—DESIGNATION
‘‘Sec. 1391. Designation procedure.
‘‘Sec. 1392. Eligibility criteria.
‘‘Sec. 1393. Definitions and special rules.
‘‘SEC. 1391. DESIGNATION PROCEDURE.
‘‘(a) IN GENERAL.—From among the areas nominated for des-
ignation under this section, the appropriate Secretaries may des-
ignate empowerment zones and enterprise communities.
‘‘(b) NUMBER OF DESIGNATIONS.—
‘‘(1) ENTERPRISE COMMUNITIES.—The appropriate Secretar-
ies may designate in the aggregate 95 nominated areas as
enterprise communities under this section, subject to the avail-
ability of eligible nominated areas. Of that number, not more
than 65 may be designated in urban areas and not more than
30 may be designated in rural areas.
‘‘(2) EMPOWERMENT
ZONES.—The appropriate Secretaries
may designate in the aggregate 9 nominated areas as
empowerment zones under this section, subject to the availabil-
ity of eligible nominated areas. Of that number, not more
than 6 may be designated in urban areas and not more than
3 may be designated in rural areas. If 6 empowerment zones
are designated in urban areas, no less than 1 shall be des-
ignated in an urban area the most populous city of which
has a population of 500,000 or less and no less than 1 shall
be a nominated area which includes areas in 2 States and
which has a population of 50,000 or less. The Secretary of
Housing and Urban Development shall designate empowerment
zones located in urban areas in such a manner that the aggre-
gate population of all such zones does not exceed 750,000.
‘‘(c) PERIOD DESIGNATIONS MAY BE MADE.—A designation may
be made under this section only after 1993 and before 1996.
‘‘(d) PERIOD FOR WHICH DESIGNATION IS IN EFFECT.—
H. R. 2264—233
‘‘(1) IN GENERAL.—Any designation under this section shall
remain in effect during the period beginning on the date of
the designation and ending on the earliest of—
‘‘(A) the close of the 10th calendar year beginning
on or after such date of designation,
‘‘(B) the termination date designated by the State and
local governments as provided for in their nomination,
or
‘‘(C) the date the appropriate Secretary revokes the
designation.
‘‘(2) REVOCATION OF DESIGNATION.—The appropriate Sec-
retary may revoke the designation under this section of an
area if such Secretary determines that the local government
or the State in which it is located—
‘‘(A) has modified the boundaries of the area, or
‘‘(B) is not complying substantially with, or fails to
make progress in achieving the benchmarks set forth in,
the strategic plan under subsection (f)(2).
‘‘(e) LIMITATIONS
ON DESIGNATIONS.—No area may be des-
ignated under subsection (a) unless—
‘‘(1) the area is nominated by 1 or more local governments
and the State or States in which it is located for designation
under this section,
‘‘(2) such State or States and the local governments have
the authority—
‘‘(A) to nominate the area for designation under this
section, and
‘‘(B) to provide the assurances described in paragraph
(3),
‘‘(3) such State or States and the local governments provide
written assurances satisfactory to the appropriate Secretary
that the strategic plan described in the application under sub-
section (f)(2) for such area will be implemented,
‘‘(4) the appropriate Secretary determines that any informa-
tion furnished is reasonably accurate, and
‘‘(5) such State or States and local governments certify
that no portion of the area nominated is already included
in an empowerment zone or in an enterprise community or
in an area otherwise nominated to be designated under this
section.
‘‘(f) APPLICATION.—No area may be designated under subsection
(a) unless the application for such designation—
‘‘(1) demonstrates that the nominated area satisfies the
eligibility criteria described in section 1392,
‘‘(2) includes a strategic plan for accomplishing the purposes
of this subchapter that—
‘‘(A) describes the coordinated economic, human,
community, and physical development plan and related
activities proposed for the nominated area,
‘‘(B) describes the process by which the affected commu-
nity is a full partner in the process of developing and
implementing the plan and the extent to which local
institutions and organizations have contributed to the plan-
ning process,
‘‘(C) identifies the amount of State, local, and private
resources that will be available in the nominated area
and the private/public partnerships to be used, which may
H. R. 2264—234
include participation by, and cooperation with, universities,
medical centers, and other private and public entities,
‘‘(D) identifies the funding requested under any Federal
program in support of the proposed economic, human,
community, 
and 
physical 
development 
and 
related
activities,
‘‘(E) identifies baselines, methods, and benchmarks for
measuring the success of carrying out the strategic plan,
including the extent to which poor persons and families
will be empowered to become economically self-sufficient,
and
‘‘(F) does not include any action to assist any establish-
ment in relocating from one area outside the nominated
area to the nominated area, except that assistance for
the expansion of an existing business entity through the
establishment of a new branch, affiliate, or subsidiary is
permitted if—
‘‘(i) the establishment of the new branch, affiliate,
or subsidiary will not result in a decrease in employ-
ment in the area of original location or in any other
area where the existing business entity conducts busi-
ness operations, and
‘‘(ii) there is no reason to believe that the new
branch, affiliate, or subsidiary is being established with
the intention of closing down the operations of the
existing business entity in the area of its original loca-
tion or in any other area where the existing business
entity conducts business operation, and
‘‘(3) includes such other information as may be required
by the appropriate Secretary.
‘‘SEC. 1392. ELIGIBILITY CRITERIA.
‘‘(a) IN GENERAL.—A nominated area shall be eligible for des-
ignation under section 1391 only if it meets the following criteria:
‘‘(1) POPULATION.—The nominated area has a maximum
population of—
‘‘(A) in the case of an urban area, the lesser of—
‘‘(i) 200,000, or
‘‘(ii) the greater of 50,000 or 10 percent of the
population of the most populous city located within
the nominated area, and
‘‘(B) in the case of a rural area, 30,000.
‘‘(2) DISTRESS.—The nominated area is one of pervasive
poverty, unemployment, and general distress.
‘‘(3) SIZE.—The nominated area—
‘‘(A) does not exceed 20 square miles if an urban area
or 1,000 square miles if a rural area,
‘‘(B) has a boundary which is continuous, or, except
in the case of a rural area located in more than 1 State,
consists of not more than 3 noncontiguous parcels,
‘‘(C)(i) in the case of an urban area, is located entirely
within no more than 2 contiguous States, and
‘‘(ii) in the case of a rural area, is located entirely
within no more than 3 contiguous States, and
‘‘(D) does not include any portion of a central business
district (as such term is used for purposes of the most
recent Census of Retail Trade) unless the poverty rate
H. R. 2264—235
for each population census tract in such district is not
less than 35 percent (30 percent in the case of an enterprise
community).
‘‘(4) POVERTY RATE.—The poverty rate—
‘‘(A) for each population census tract within the nomi-
nated area is not less than 20 percent,
‘‘(B) for at least 90 percent of the population census
tracts within the nominated area is not less than 25 per-
cent, and
‘‘(C) for at least 50 percent of the population census
tracts within the nominated area is not less than 35
percent.
‘‘(b) SPECIAL RULES RELATING TO DETERMINATION OF POVERTY
RATE.—For purposes of subsection (a)(4)—
‘‘(1) TREATMENT
OF
CENSUS
TRACTS
WITH
SMALL
POPU-
LATIONS.—
‘‘(A) TRACTS WITH NO POPULATION.—In the case of a
population census tract with no population—
‘‘(i) such tract shall be treated as having a poverty
rate which meets the requirements of subparagraphs
(A) and (B) of subsection (a)(4), but
‘‘(ii) such tract shall be treated as having a zero
poverty rate for purposes of applying subparagraph
(C) thereof.
‘‘(B) TRACTS WITH POPULATIONS OF LESS THAN 2,000.—
A population census tract with a population of less than
2,000 shall be treated as having a poverty rate which
meets the requirements of subparagraphs (A) and (B) of
subsection (a)(4) if more than 75 percent of such tract
is zoned for commercial or industrial use.
‘‘(2) DISCRETION TO ADJUST REQUIREMENTS FOR ENTERPRISE
COMMUNITIES.—In determining whether a nominated area is
eligible for designation as an enterprise community, the appro-
priate Secretary may, where necessary to carry out the purposes
of this subchapter, reduce by 5 percentage points one of the
following thresholds for not more than 10 percent of the popu-
lation census tracts (or, if fewer, 5 population census tracts)
in the nominated area:
‘‘(A) The 20 percent threshold in subsection (a)(4)(A).
‘‘(B) The 25 percent threshold in subsection (a)(4)(B).
‘‘(C) The 35 percent threshold in subsection (a)(4)(C).
If the appropriate Secretary elects to reduce the threshold
under subparagraph (C), such Secretary may (in lieu of applying
the preceding sentence) reduce by 10 percentage points the
threshold under subparagraph (C) for 3 population census
tracts.
‘‘(3) EACH NONCONTIGUOUS AREA MUST SATISFY POVERTY
RATE RULE.—A nominated area may not include a noncontig-
uous parcel unless such parcel separately meets (subject to
paragraphs (1) and (2)) the criteria set forth in subsection
(a)(4).
‘‘(4) AREAS NOT WITHIN CENSUS TRACTS.—In the case of
an area which is not tracted for population census tracts, the
equivalent county divisions (as defined by the Bureau of the
Census for purposes of defining poverty areas) shall be used
for purposes of determining poverty rates.
H. R. 2264—236
‘‘(c) FACTORS TO CONSIDER.—From among the nominated areas
eligible for designation under section 1391 by the appropriate Sec-
retary, such appropriate Secretary shall make designations of
empowerment zones and enterprise communities on the basis of—
‘‘(1) the effectiveness of the strategic plan submitted pursu-
ant to section 1391(f)(2) and the assurances made pursuant
to section 1391(e)(3), and
‘‘(2) criteria specified by the appropriate Secretary.
‘‘SEC. 1393. DEFINITIONS AND SPECIAL RULES.
‘‘(a) IN GENERAL.—For purposes of this subchapter—
‘‘(1) APPROPRIATE SECRETARY.—The term ‘appropriate Sec-
retary’ means—
‘‘(A) the Secretary of Housing and Urban Development
in the case of any nominated area which is located in
an urban area, and
‘‘(B) the Secretary of Agriculture in the case of any
nominated area which is located in a rural area.
‘‘(2) RURAL AREA.—The term ‘rural area’ means any area
which is—
‘‘(A) outside of a metropolitan statistical area (within
the meaning of section 143(k)(2)(B)), or
‘‘(B) determined by the Secretary of Agriculture, after
consultation with the Secretary of Commerce, to be a rural
area.
‘‘(3) URBAN AREA.—The term ‘urban area’ means an area
which is not a rural area.
‘‘(4) SPECIAL RULES FOR INDIAN RESERVATIONS.—
‘‘(A) IN
GENERAL.—No empowerment zone or enter-
prise community may include any area within an Indian
reservation.
‘‘(B) INDIAN RESERVATION DEFINED.—The term ‘Indian
reservation’ has the meaning given such term by section
168(j)(6).
‘‘(5) LOCAL
GOVERNMENT.—The term ‘local government’
means—
‘‘(A) any county, city, town, township, parish, village,
or other general purpose political subdivision of a State,
and
‘‘(B) any combination of political subdivisions described
in subparagraph (A) recognized by the appropriate
Secretary.
‘‘(6) NOMINATED AREA.—The term ‘nominated area’ means
an area which is nominated by 1 or more local governments
and the State or States in which it is located for designation
under section 1391.
‘‘(7) GOVERNMENTS.—If more than 1 State or local govern-
ment seeks to nominate an area under this part, any reference
to, or requirement of, this subchapter shall apply to all such
governments.
‘‘(8) SPECIAL RULE.—An area shall be treated as nominated
by a State and a local government if it is nominated by an
economic development corporation chartered by the State.
‘‘(9) USE OF CENSUS DATA.—Population and poverty rate
shall be determined by the most recent decennial census data
available.
H. R. 2264—237
‘‘(b) EMPOWERMENT ZONE; ENTERPRISE COMMUNITY.—For pur-
poses of this title, the terms ‘empowerment zone’ and ‘enterprise
community’ mean areas designated as such under section 1391.
‘‘PART II—TAX-EXEMPT FACILITY BONDS FOR
EMPOWERMENT ZONES AND ENTERPRISE
COMMUNITIES
‘‘Sec. 1394. Tax-exempt enterprise zone facility bonds.
‘‘SEC. 1394. TAX-EXEMPT ENTERPRISE ZONE FACILITY BONDS.
‘‘(a) IN GENERAL.—For purposes of part IV of subchapter B
of this chapter (relating to tax exemption requirements for State
and local bonds), the term ‘exempt facility bond’ includes any bond
issued as part of an issue 95 percent or more of the net proceeds
(as defined in section 150(a)(3)) of which are to be used to provide
any enterprise zone facility.
‘‘(b) ENTERPRISE ZONE FACILITY.—For purposes of this section—
‘‘(1) IN GENERAL.—The term ‘enterprise zone facility’ means
any qualified zone property the principal user of which is
an enterprise zone business, and any land which is functionally
related and subordinate to such property.
‘‘(2) QUALIFIED ZONE PROPERTY.—The term ‘qualified zone
property’ has the meaning given such term by section 1397C;
except that the references to empowerment zones shall be treat-
ed as including references to enterprise communities.
‘‘(3) ENTERPRISE
ZONE
BUSINESS.—The term ‘enterprise
zone business’ has the meaning given to such term by section
1397B, except that—
‘‘(A) references to empowerment zones shall be treated
as including references to enterprise communities, and
‘‘(B) such term includes any trades or businesses which
would qualify as an enterprise zone business (determined
after the modification of subparagraph (A)) if such trades
or businesses were separately incorporated.
‘‘(c) LIMITATION ON AMOUNT OF BONDS.—
‘‘(1) IN GENERAL.—Subsection (a) shall not apply to any
issue if the aggregate amount of outstanding enterprise zone
facility bonds allocable to any person (taking into account such
issue) exceeds—
‘‘(A) $3,000,000 with respect to any 1 empowerment
zone or enterprise community, or
‘‘(B) $20,000,000 with respect to all empowerment
zones and enterprise communities.
‘‘(2) AGGREGATE
ENTERPRISE
ZONE
FACILITY
BOND
BENE-
FIT.—For purposes of subparagraph (A), the aggregate amount
of outstanding enterprise zone facility bonds allocable to any
person shall be determined under rules similar to the rules
of section 144(a)(10), taking into account only bonds to which
subsection (a) applies.
‘‘(d) ACQUISITION
OF
LAND
AND
EXISTING
PROPERTY
PER-
MITTED.—The requirements of sections 147(c)(1)(A) and 147(d) shall
not apply to any bond described in subsection (a).
‘‘(e) PENALTY FOR CEASING TO MEET REQUIREMENTS.—
‘‘(1) FAILURES CORRECTED.—An issue which fails to meet
1 or more of the requirements of subsections (a) and (b) shall
be treated as meeting such requirements if—
H. R. 2264—238
‘‘(A) the issuer and any principal user in good faith
attempted to meet such requirements, and
‘‘(B) any failure to meet such requirements is corrected
within a reasonable period after such failure is first
discovered.
‘‘(2) LOSS OF DEDUCTIONS WHERE FACILITY CEASES TO BE
QUALIFIED.—No deduction shall be allowed under this chapter
for interest on any financing provided from any bond to which
subsection (a) applies with respect to any facility to the extent
such interest accrues during the period beginning on the first
day of the calendar year which includes the date on which—
‘‘(A) substantially all of the facility with respect to
which the financing was provided ceases to be used in
an empowerment zone or enterprise community, or
‘‘(B) the principal user of such facility ceases to be
an enterprise zone business (as defined in subsection (b)).
‘‘(3) EXCEPTION IF ZONE CEASES.—Paragraphs (1) and (2)
shall not apply solely by reason of the termination or revocation
of a designation as an empowerment zone or an enterprise
community.
‘‘(4) EXCEPTION FOR BANKRUPTCY.—Paragraphs (1) and (2)
shall not apply to any cessation resulting from bankruptcy.
‘‘PART III—ADDITIONAL INCENTIVES FOR
EMPOWERMENT ZONES
‘‘SUBPART A. Empowerment zone employment credit.
‘‘SUBPART B. Additional expensing.
‘‘SUBPART C. General provisions.
‘‘Subpart A—Empowerment Zone Employment
Credit
‘‘Sec. 1396. Empowerment zone employment credit.
‘‘Sec. 1397. Other definitions and special rules.
‘‘SEC. 1396. EMPOWERMENT ZONE EMPLOYMENT CREDIT.
‘‘(a) AMOUNT
OF CREDIT.—For purposes of section 38, the
amount of the empowerment zone employment credit determined
under this section with respect to any employer for any taxable
year is the applicable percentage of the qualified zone wages paid
or incurred during the calendar year which ends with or within
such taxable year.
‘‘(b) APPLICABLE PERCENTAGE.—For purposes of this section,
the term ‘applicable percentage’ means the percentage determined
in accordance with the following table:
‘‘In the case of wages paid or
The applicable
incurred during calendar year:
percentage is:
1994 through 2001 ..................................................................
2002 ..........................................................................................
2003 ..........................................................................................
2004 ..........................................................................................
‘‘(c) QUALIFIED ZONE WAGES.—
‘‘(1) IN GENERAL.—For purposes of this section, the term
‘qualified zone wages’ means any wages paid or incurred by
H. R. 2264—239
an employer for services performed by an employee while such
employee is a qualified zone employee.
‘‘(2) ONLY FIRST $15,000 OF WAGES PER YEAR TAKEN INTO
ACCOUNT.—With respect to each qualified zone employee, the
amount of qualified zone wages which may be taken into
account for a calendar year shall not exceed $15,000.
‘‘(3) COORDINATION WITH TARGETED JOBS CREDIT.—
‘‘(A) IN
GENERAL.—The term ‘qualified zone wages’
shall not include wages taken into account in determining
the credit under section 51.
‘‘(B) COORDINATION WITH PARAGRAPH (2).—The $15,000
amount in paragraph (2) shall be reduced for any calendar
year by the amount of wages paid or incurred during such
year which are taken into account in determining the credit
under section 51.
‘‘(d) QUALIFIED ZONE EMPLOYEE.—For purposes of this section—
‘‘(1) IN GENERAL.—Except as otherwise provided in this
subsection, the term ‘qualified zone employee’ means, with
respect to any period, any employee of an employer if—
‘‘(A) substantially all of the services performed during
such period by such employee for such employer are per-
formed within an empowerment zone in a trade or business
of the employer, and
‘‘(B) the principal place of abode of such employee
while 
performing 
such 
services 
is 
within 
such
empowerment zone.
‘‘(2) CERTAIN INDIVIDUALS NOT ELIGIBLE.—The term ‘quali-
fied zone employee’ shall not include—
‘‘(A) any individual described in subparagraph (A), (B),
or (C) of section 51(i)(1),
‘‘(B) any 5-percent owner (as defined in section
416(i)(1)(B)),
‘‘(C) any individual employed by the employer for less
than 90 days,
‘‘(D) any individual employed by the employer at any
facility described in section 144(c)(6)(B), and
‘‘(E) any individual employed by the employer in a
trade or business the principal activity of which is farming
(within the meaning of subparagraph (A) or (B) of section
2032A(e)(5)), but only if, as of the close of the taxable
year, the sum of—
‘‘(i) the aggregate unadjusted bases (or, if greater,
the fair market value) of the assets owned by the
employer which are used in such a trade or business,
and
‘‘(ii) the aggregate value of assets leased by the
employer which are used in such a trade or business
(as determined under regulations prescribed by the
Secretary),
exceeds $500,000.
‘‘(3) SPECIAL RULES RELATED TO TERMINATION OF EMPLOY-
MENT.—
‘‘(A) IN GENERAL.—Paragraph (2)(C) shall not apply
to—
‘‘(i) a termination of employment of an individual
who before the close of the period referred to in para-
graph (2)(C) becomes disabled to perform the services
H. R. 2264—240
of such employment unless such disability is removed
before the close of such period and the taxpayer fails
to offer reemployment to such individual, or
‘‘(ii) a termination of employment of an individual
if it is determined under the applicable State
unemployment compensation law that the termination
was due to the misconduct of such individual.
‘‘(B) CHANGES
IN
FORM
OF
BUSINESS.—For purposes
of paragraph (2)(C), the employment relationship between
the taxpayer and an employee shall not be treated as
terminated—
‘‘(i) by a transaction to which section 381(a) applies
if the employee continues to be employed by the acquir-
ing corporation, or
‘‘(ii) by reason of a mere change in the form of
conducting the trade or business of the taxpayer if
the employee continues to be employed in such trade
or business and the taxpayer retains a substantial
interest in such trade or business.
‘‘SEC. 1397. OTHER DEFINITIONS AND SPECIAL RULES.
‘‘(a) WAGES.—For purposes of this subpart—
‘‘(1) IN GENERAL.—The term ‘wages’ has the same meaning
as when used in section 51.
‘‘(2) CERTAIN TRAINING AND EDUCATIONAL BENEFITS.—
‘‘(A) IN
GENERAL.—The following amounts shall be
treated as wages paid to an employee:
‘‘(i) Any amount paid or incurred by an employer
which is excludable from the gross income of an
employee under section 127, but only to the extent
paid or incurred to a person not related to the
employer.
‘‘(ii) In the case of an employee who has not
attained the age of 19, any amount paid or incurred
by an employer for any youth training program oper-
ated by such employer in conjunction with local edu-
cation officials.
‘‘(B) RELATED PERSON.—A person is related to any other
person if the person bears a relationship to such other
person specified in section 267(b) or 707(b)(1), or such
person and such other person are engaged in trades or
businesses under common control (within the meaning of
subsections (a) and (b) of section 52). For purposes of the
preceding sentence, in applying section 267(b) or 707(b)(1),
‘10 percent’ shall be substituted for ‘50 percent’.
‘‘(b) CONTROLLED GROUPS.—For purposes of this subpart—
‘‘(1) all employers treated as a single employer under sub-
section (a) or (b) of section 52 shall be treated as a single
employer for purposes of this subpart, and
‘‘(2) the credit (if any) determined under section 1396 with
respect to each such employer shall be its proportionate share
of the wages giving rise to such credit.
‘‘(c) CERTAIN OTHER RULES MADE APPLICABLE.—For purposes
of this subpart, rules similar to the rules of section 51(k) and
subsections (c), (d), and (e) of section 52 shall apply.
H. R. 2264—241
‘‘Subpart B—Additional Expensing
‘‘Sec. 1397A. Increase in expensing under section 179.
‘‘SEC. 1397A. INCREASE IN EXPENSING UNDER SECTION 179.
‘‘(a) GENERAL RULE.—In the case of an enterprise zone business,
for purposes of section 179—
‘‘(1) the limitation under section 179(b)(1) shall be increased
by the lesser of—
‘‘(A) $20,000, or
‘‘(B) the cost of section 179 property which is qualified
zone property placed in service during the taxable year,
and
‘‘(2) the amount taken into account under section 179(b)(2)
with respect to any section 179 property which is qualified
zone property shall be 50 percent of the cost thereof.
‘‘(b) RECAPTURE.—Rules similar to the rules under section
179(d)(10) shall apply with respect to any qualified zone property
which ceases to be used in an empowerment zone by an enterprise
zone business.
‘‘Subpart C—General Provisions
‘‘Sec. 1397B. Enterprise zone business defined.
‘‘Sec. 1397C. Qualified zone property defined.
‘‘SEC. 1397B. ENTERPRISE ZONE BUSINESS DEFINED.
‘‘(a) IN GENERAL.—For purposes of this part, the term ‘enter-
prise zone business’ means—
‘‘(1) any qualified business entity, and
‘‘(2) any qualified proprietorship.
‘‘(b) QUALIFIED BUSINESS ENTITY.—For purposes of this section,
the term ‘qualified business entity’ means, with respect to any
taxable year, any corporation or partnership if for such year—
‘‘(1) every trade or business of such entity is the active
conduct of a qualified business within an empowerment zone,
‘‘(2) at least 80 percent of the total gross income of such
entity is derived from the active conduct of such business,
‘‘(3) substantially all of the use of the tangible property
of such entity (whether owned or leased) is within an
empowerment zone,
‘‘(4) substantially all of the intangible property of such
entity is used in, and exclusively related to, the active conduct
of any such business,
‘‘(5) substantially all of the services performed for such
entity by its employees are performed in an empowerment
zone,
‘‘(6) at least 35 percent of its employees are residents
of an empowerment zone,
‘‘(7) less than 5 percent of the average of the aggregate
unadjusted bases of the property of such entity is attributable
to collectibles (as defined in section 408(m)(2)) other than
collectibles that are held primarily for sale to customers in
the ordinary course of such business, and
‘‘(8) less than 5 percent of the average of the aggregate
unadjusted bases of the property of such entity is attributable
to nonqualified financial property.
H. R. 2264—242
‘‘(c) QUALIFIED PROPRIETORSHIP.—For purposes of this section,
the term ‘qualified proprietorship’ means, with respect to any tax-
able year, any qualified business carried on by an individual as
a proprietorship if for such year—
‘‘(1) at least 80 percent of the total gross income of such
individual from such business is derived from the active conduct
of such business in an empowerment zone,
‘‘(2) substantially all of the use of the tangible property
of such individual in such business (whether owned or leased)
is within an empowerment zone,
‘‘(3) substantially all of the intangible property of such
business is used in, and exclusively related to, the active con-
duct of such business,
‘‘(4) substantially all of the services performed for such
individual in such business by employees of such business
are performed in an empowerment zone,
‘‘(5) at least 35 percent of such employees are residents
of an empowerment zone,
‘‘(6) less than 5 percent of the average of the aggregate
unadjusted bases of the property of such individual which is
used in such business is attributable to collectibles (as defined
in section 408(m)(2)) other than collectibles that are held pri-
marily for sale to customers in the ordinary course of such
business, and
‘‘(7) less than 5 percent of the average of the aggregate
unadjusted bases of the property of such individual which is
used in such business is attributable to nonqualified financial
property.
For purposes of this subsection, the term ‘employee’ includes the
proprietor.
‘‘(d) QUALIFIED BUSINESS.—For purposes of this section—
‘‘(1) IN GENERAL.—Except as otherwise provided in this
subsection, the term ‘qualified business’ means any trade or
business.
‘‘(2) RENTAL OF REAL PROPERTY.—The rental to others of
real property located in an empowerment zone shall be treated
as a qualified business if and only if—
‘‘(A) the property is not residential rental property
(as defined in section 168(e)(2)), and
‘‘(B) at least 50 percent of the gross rental income
from the real property is from enterprise zone businesses.
‘‘(3) RENTAL OF TANGIBLE PERSONAL PROPERTY.—The rental
to others of tangible personal property shall be treated as
a qualified business if and only if substantially all of the
rental of such property is by enterprise zone businesses or
by residents of an empowerment zone.
‘‘(4) TREATMENT OF BUSINESS HOLDING INTANGIBLES.—The
term ‘qualified business’ shall not include any trade or business
consisting predominantly of the development or holding of
intangibles for sale or license.
‘‘(5) CERTAIN BUSINESSES EXCLUDED.—The term ‘qualified
business’ shall not include—
‘‘(A) any trade or business consisting of the operation
of any facility described in section 144(c)(6)(B), and
‘‘(B) any trade or business the principal activity of
which is farming (within the meaning of subparagraphs
H. R. 2264—243
(A) or (B) of section 2032A(e)(5)), but only if, as of the
close of the preceding taxable year, the sum of—
‘‘(i) the aggregate unadjusted bases (or, if greater,
the fair market value) of the assets owned by the
taxpayer which are used in such a trade or business,
and
‘‘(ii) the aggregate value of assets leased by the
taxpayer which are used in such a trade or business,
exceeds $500,000.
For purposes of subparagraph (B), rules similar to the rules
of section 1397(b) shall apply.
‘‘(e) NONQUALIFIED FINANCIAL PROPERTY.—For purposes of this
section, the term ‘nonqualified financial property’ means debt, stock,
partnership interests, options, futures contracts, forward contracts,
warrants, notional principal contracts, annuities, and other similar
property specified in regulations; except that such term shall not
include—
‘‘(1) reasonable amounts of working capital held in cash,
cash equivalents, or debt instruments with a term of 18 months
or less, or
‘‘(2) debt instruments described in section 1221(4).
‘‘SEC. 1397C. QUALIFED ZONE PROPERTY DEFINED.
‘‘(a) GENERAL RULE.—For purposes of this part—
‘‘(1) IN GENERAL.—The term ‘qualified zone property’ means
any property to which section 168 applies (or would apply
but for section 179) if—
‘‘(A) such property was acquired by the taxpayer by
purchase (as defined in section 179(d)(2)) after the date
on which the designation of the empowerment zone took
effect,
‘‘(B) the original use of which in an empowerment
zone commences with the taxpayer, and
‘‘(C) substantially all of the use of which is in an
empowerment zone and is in the active conduct of a quali-
fied business by the taxpayer in such zone.
‘‘(2) SPECIAL RULE FOR SUBSTANTIAL RENOVATIONS.—In the
case of any property which is substantially renovated by the
taxpayer, the requirements of subparagraphs (A) and (B) of
paragraph (1) shall be treated as satisfied. For purposes of
the preceding sentence, property shall be treated as substan-
tially renovated by the taxpayer if, during any 24-month period
beginning after the date on which the designation of the
empowerment zone took effect, additions to basis with respect
to such property in the hands of the taxpayer exceed the greater
of (i) an amount equal to the adjusted basis at the beginning
of such 24-month period in the hands of the taxpayer, or (ii)
$5,000.
‘‘(b) SPECIAL RULES FOR SALE-LEASEBACKS.—For purposes of
subsection (a)(1)(B), if property is sold and leased back by the
taxpayer within 3 months after the date such property was origi-
nally placed in service, such property shall be treated as originally
placed in service not earlier than the date on which such property
is used under the leaseback.
‘‘PART IV—REGULATIONS
‘‘Sec. 1397D. Regulations.
H. R. 2264—244
‘‘SEC. 1397D. REGULATIONS.
‘‘The Secretary shall prescribe such regulations as may be
necessary or appropriate to carry out the purposes of parts II
and III, including—
‘‘(1) regulations limiting the benefit of parts II and III
in circumstances where such benefits, in combination with bene-
fits provided under other Federal programs, would result in
an activity being 100 percent or more subsidized by the Federal
Government,
‘‘(2) regulations preventing abuse of the provisions of parts
II and III, and
‘‘(3) regulations dealing with inadvertent failures of entities
to be enterprise zone businesses.’’
(b) CLERICAL AMENDMENT.—The table of subchapters for chap-
ter 1 is amended by inserting after the item relating to subchapter
T the following new item:
‘‘Subchapter U. Designation and treatment of empowerment zones, enter-
prise communities, and rural development investment areas.’’
SEC. 13302. TECHNICAL AND CONFORMING AMENDMENTS.
(a) EMPOWERMENT ZONE EMPLOYMENT CREDIT PART OF GEN-
ERAL BUSINESS CREDIT.—
(1) Subsection (b) of section 38 (relating to current year
business credit) is amended by striking ‘‘plus’’ at the end of
paragraph (7), by striking the period at the end of paragraph
(8) and inserting ‘‘, and’’, and by adding at the end the following
new paragraph:
‘‘(9) the empowerment zone employment credit determined
under section 1396(a).’’
(2) Subsection (d) of section 39 is amended by adding
at the end the following new paragraph:
‘‘(4) EMPOWERMENT ZONE EMPLOYMENT CREDIT.—No portion
of the unused business credit which is attributable to the credit
determined under section 1396 (relating to empowerment zone
employment credit) may be carried to any taxable year ending
before January 1, 1994.’’
(b) DENIAL OF DEDUCTION FOR PORTION OF WAGES EQUAL TO
EMPOWERMENT ZONE EMPLOYMENT CREDIT.—
(1) Subsection (a) of section 280C (relating to rule for
targeted jobs credit) is amended—
(A) by striking ‘‘the amount of the credit determined
for the taxable year under section 51(a)’’ and inserting
‘‘the sum of the credits determined for the taxable year
under sections 51(a) and 1396(a)’’, and
(B) by striking ‘‘TARGETED JOBS CREDIT’’ in the sub-
section heading and inserting ‘‘EMPLOYMENT CREDITS’’.
(2) Subsection (c) of section 196 (relating to deduction for
certain unused business credits) is amended by striking ‘‘and’’
at the end of paragraph (4), by striking the period at the
end of paragraph (5) and inserting ‘‘, and’’, and by adding
at the end the following new paragraph:
‘‘(6) the empowerment zone employment credit determined
under section 1396(a).’’
(c) EMPOWERMENT ZONE EMPLOYMENT CREDIT MAY OFFSET 25
PERCENT OF MINIMUM TAX.—
(1) IN GENERAL.—Section 38(c) (relating to limitation based
on amount of tax) is amended by redesignating paragraph
H. R. 2264—245
(2) as paragraph (3) and by inserting after paragraph (1) the
following new paragraph:
‘‘(2) EMPOWERMENT ZONE EMPLOYMENT CREDIT MAY OFFSET
25 PERCENT OF MINIMUM TAX.—
‘‘(A) IN GENERAL.—In the case of the empowerment
zone employment credit credit—
‘‘(i) this section and section 39 shall be applied
separately with respect to such credit, and
‘‘(ii) for purposes of applying paragraph (1) to such
credit—
‘‘(I) 75 percent of the tentative minimum tax
shall be substituted for the tentative minimum
tax under subparagraph (A) thereof, and
‘‘(II) the limitation under paragraph (1) (as
modified by subclause (I)) shall be reduced by the
credit allowed under subsection (a) for the taxable
year (other than the empowerment zone employ-
ment credit).
‘‘(B) EMPOWERMENT ZONE EMPLOYMENT CREDIT.—For
purposes of this paragraph, the term ‘empowerment zone
employment credit’ means the portion of the credit under
subsection (a) which is attributable to the credit determined
under section 1396 (relating to empowerment zone employ-
ment credit).’’
(d) AMENDMENT
OF TARGETED JOBS CREDIT.—Subparagraph
(A) of section 51(i)(1) is amended by inserting ‘‘, or, if the taxpayer
is an entity other than a corporation, to any individual who owns,
directly or indirectly, more than 50 percent of the capital and
profits interests in the entity,’’ after ‘‘of the corporation’’.
(e) CARRYOVERS.—Subsection (c) of section 381 (relating to
carryovers in certain corporate acquisitions) is amended by adding
at the end the following new paragraph:
‘‘(26) ENTERPRISE
ZONE
PROVISIONS.—The acquiring cor-
poration shall take into account (to the extent proper to carry
out the purposes of this section and subchapter U, and under
such regulations as may be prescribed by the Secretary) the
items required to be taken into account for purposes of
subchapter U in respect of the distributor or transferor corpora-
tion.’’
SEC. 13303. EFFECTIVE DATE.
The amendments made by this part shall take effect on the
date of the enactment of this Act.
PART II—CREDIT FOR CONTRIBUTIONS TO
CERTAIN COMMUNITY DEVELOPMENT COR-
PORATIONS
SEC. 13311. CREDIT FOR CONTRIBUTIONS TO CERTAIN COMMUNITY
DEVELOPMENT CORPORATIONS.
(a) IN GENERAL.—For purposes of section 38 of the Internal
Revenue Code of 1986, the current year business credit shall include
the credit determined under this section.
(b) DETERMINATION OF CREDIT.—The credit determined under
this section for each taxable year in the credit period with respect
H. R. 2264—246
to any qualified CDC contribution made by the taxpayer is an
amount equal to 5 percent of such contribution.
(c) CREDIT PERIOD.—For purposes of this section, the credit
period with respect to any qualified CDC contribution is the period
of 10 taxable years beginning with the taxable year during which
such contribution was made.
(d) QUALIFIED
CDC CONTRIBUTION.—For purposes of this
section—
(1) IN GENERAL.—The term ‘‘qualified CDC contribution’’
means any transfer of cash—
(A) which is made to a selected community develop-
ment corporation during the 5-year period beginning on
the date such corporation was selected for purposes of
this section,
(B) the amount of which is available for use by such
corporation for at least 10 years,
(C) which is to be used by such corporation for qualified
low-income assistance within its operational area, and
(D) which is designated by such corporation for pur-
poses of this section.
(2) LIMITATIONS ON AMOUNT DESIGNATED.—The aggregate
amount of contributions to a selected community development
corporation which may be designated by such corporation shall
not exceed $2,000,000.
(e) SELECTED COMMUNITY DEVELOPMENT CORPORATIONS.—
(1) IN GENERAL.—For purposes of this section, the term
‘‘selected community development corporation’’ means any
corporation—
(A) which is described in section 501(c)(3) of such Code
and exempt from tax under section 501(a) of such Code,
(B) the principal purposes of which include promoting
employment of, and business opportunities for, low-income
individuals who are residents of the operational area, and
(C) which is selected by the Secretary of Housing and
Urban Development for purposes of this section.
(2) ONLY 20 CORPORATIONS MAY BE SELECTED.—The Sec-
retary of Housing and Urban Development may select 20 cor-
porations for purposes of this section, subject to the availability
of eligible corporations. Such selections may be made only
before July 1, 1994. At least 8 of the operational areas of
the corporations selected must be rural areas (as defined by
section 1393(a)(3) of such Code).
(3) OPERATIONAL AREAS MUST HAVE CERTAIN CHARACTERIS-
TICS.—A corporation may be selected for purposes of this section
only if its operational area meets the following criteria:
(A) The area meets the size requirements under section
1392(a)(3).
(B) The unemployment rate (as determined by the
appropriate available data) is not less than the national
unemployment rate.
(C) The median family income of residents of such
area does not exceed 80 percent of the median gross income
of residents of the jurisdiction of the local government
which includes such area.
(f) QUALIFIED LOW-INCOME ASSISTANCE.—For purposes of this
section, 
the 
term 
‘‘qualified 
low-income 
assistance’’ 
means
assistance—
H. R. 2264—247
(1) which is designed to provide employment of, and busi-
ness opportunities for, low-income individuals who are residents
of the operational area of the community development corpora-
tion, and
(2) which is approved by the Secretary of Housing and
Urban Development.
Part III—Investment in Indian Reservations
SEC. 13321. ACCELERATED DEPRECIATION FOR PROPERTY ON INDIAN
RESERVATIONS.
(a) IN GENERAL.—Section 168 is amended by adding at the
end the following new subsection:
‘‘(j) PROPERTY ON INDIAN RESERVATIONS.—
‘‘(1) IN
GENERAL.—For purposes of subsection (a), the
applicable recovery period for qualified Indian reservation prop-
erty shall be determined in accordance with the table contained
in paragraph (2) in lieu of the table contained in subsection
(c).
‘‘(2) APPLICABLE RECOVERY PERIOD FOR INDIAN RESERVATION
PROPERTY.—For purposes of paragraph (1)—
The
applicable
‘‘In the case of:
recovery
period is:
3-year property ..........................................................................
2 years
5-year property ..........................................................................
3 years
7-year property ..........................................................................
4 years
10-year property ........................................................................
6 years
15-year property ........................................................................
9 years
20-year property ........................................................................
12 years
Nonresidential real property ....................................................
22 years.
‘‘(3) DEDUCTION ALLOWED IN COMPUTING MINIMUM TAX.—
For purposes of determining alternative minimum taxable
income under section 55, the deduction under subsection (a)
for property to which paragraph (1) applies shall be determined
under this section without regard to any adjustment under
section 56.
‘‘(4) QUALIFIED INDIAN RESERVATION PROPERTY DEFINED.—
For purposes of this subsection—
‘‘(A) IN GENERAL.—The term ‘qualified Indian reserva-
tion property’ means property which is property described
in the table in paragraph (2) and which is—
‘‘(i) used by the taxpayer predominantly in the
active conduct of a trade or business within an Indian
reservation,
‘‘(ii) not used or located outside the Indian reserva-
tion on a regular basis,
‘‘(iii) not acquired (directly or indirectly) by the
taxpayer from a person who is related to the taxpayer
(within the meaning of section 465(b)(3)(C)), and
‘‘(iv) not property (or any portion thereof) placed
in service for purposes of conducting or housing class
I, II, or III gaming (as defined in section 4 of the
Indian Regulatory Act (25 U.S.C. 2703)).
‘‘(B) EXCEPTION FOR ALTERNATIVE DEPRECIATION PROP-
ERTY.—The term ‘qualified Indian reservation property’
does not include any property to which the alternative
H. R. 2264—248
depreciation 
system 
under 
subsection 
(g) 
applies,
determined—
‘‘(i) without regard to subsection (g)(7) (relating
to election to use alternative depreciation system), and
‘‘(ii) after the application of section 280F(b) (relat-
ing to listed property with limited business use).
‘‘(C) SPECIAL RULE FOR RESERVATION INFRASTRUCTURE
INVESTMENT.—
‘‘(i) IN GENERAL.—Subparagraph (A)(ii) shall not
apply to qualified infrastructure property located out-
side of the Indian reservation if the purpose of such
property is to connect with qualified infrastructure
property located within the Indian reservation.
‘‘(ii) QUALIFIED
INFRASTRUCTURE
PROPERTY.—For
purposes of this subparagraph, the term ‘qualified
infrastructure property’ means qualified Indian res-
ervation property (determined without regard to
subparagraph (A)(ii)) which—
‘‘(I) benefits the tribal infrastructure,
‘‘(II) is available to the general public, and
‘‘(III) is placed in service in connection with
the taxpayer’s active conduct of a trade or business
within an Indian reservation.
Such term includes, but is not limited to, roads, power
lines, water systems, railroad spurs, and communica-
tions facilities.
‘‘(5) REAL
ESTATE
RENTALS.—For purposes of this sub-
section, the rental to others of real property located within
an Indian reservation shall be treated as the active conduct
of a trade or business within an Indian reservation.
‘‘(6) INDIAN RESERVATION DEFINED.—For purposes of this
subsection, the term ‘Indian reservation’ means a reservation,
as defined in—
‘‘(A) section 3(d) of the Indian Financing Act of 1974
(25 U.S.C. 1452(d)), or
‘‘(B) section 4(10) of the Indian Child Welfare Act of
1978 (25 U.S.C. 1903(10)).
‘‘(7) COORDINATION
WITH
NONREVENUE
LAWS.—Any ref-
erence in this subsection to a provision not contained in this
title shall be treated for purposes of this subsection as a ref-
erence to such provision as in effect on the date of the enact-
ment of this paragraph.
‘‘(8) TERMINATION.—This subsection shall not apply to prop-
erty placed in service after December 31, 2003.’’
(b) EFFECTIVE DATE.—The amendment made by this section
shall apply to property placed in service after December 31, 1993.
SEC. 13322. INDIAN EMPLOYMENT CREDIT.
(a) ALLOWANCE OF INDIAN EMPLOYMENT CREDIT.—Section 38(b)
(relating to general business credits) is amended by striking ‘‘plus’’
at the end of paragraph (8), by striking the period at the end
of paragraph (9) and inserting ‘‘, plus’’, and by adding after para-
graph (9) the following new paragraph:
‘‘(10) the Indian employment credit as determined under
section 45A(a).’’
(b) AMOUNT OF INDIAN EMPLOYMENT CREDIT.—Subpart D of
part IV of subchapter A of chapter 1 (relating to business related
H. R. 2264—249
credits) is amended by adding at the end thereof the following
new section:
‘‘SEC. 45A. INDIAN EMPLOYMENT CREDIT.
‘‘(a) AMOUNT
OF CREDIT.—For purposes of section 38, the
amount of the Indian employment credit determined under this
section with respect to any employer for any taxable year is an
amount equal to 20 percent of the excess (if any) of —
‘‘(1) the sum of—
‘‘(A) the qualified wages paid or incurred during such
taxable year, plus
‘‘(B) qualified employee health insurance costs paid
or incurred during such taxable year, over
‘‘(2) the sum of the qualified wages and qualified employee
health insurance costs (determined as if this section were in
effect) which were paid or incurred by the employer (or any
predecessor) during calendar year 1993.
‘‘(b) QUALIFIED WAGES; QUALIFIED EMPLOYEE HEALTH INSUR-
ANCE COSTS.—For purposes of this section—
‘‘(1) QUALIFIED WAGES.—
‘‘(A) IN GENERAL.—The term ‘qualified wages’ means
any wages paid or incurred by an employer for services
performed by an employee while such employee is a quali-
fied employee.
‘‘(B) COORDINATION WITH TARGETED JOBS CREDIT.—The
term ‘qualified wages’ shall not include wages attributable
to service rendered during the 1-year period beginning
with the day the individual begins work for the employer
if any portion of such wages is taken into account in deter-
mining the credit under section 51.
‘‘(2) QUALIFIED EMPLOYEE HEALTH INSURANCE COSTS.—
‘‘(A) IN GENERAL.—The term ‘qualified employee health
insurance costs’ means any amount paid or incurred by
an employer for health insurance to the extent such amount
is attributable to coverage provided to any employee while
such employee is a qualified employee.
‘‘(B) EXCEPTION
FOR
AMOUNTS
PAID
UNDER
SALARY
REDUCTION ARRANGEMENTS.—No amount paid or incurred
for health insurance pursuant to a salary reduction
arrangement shall be taken into account under subpara-
graph (A).
‘‘(3) LIMITATION.—The aggregate amount of qualified wages
and qualified employee health insurance costs taken into
account with respect to any employee for any taxable year
(and for the base period under subsection (a)(2)) shall not
exceed $20,000.
‘‘(c) QUALIFIED EMPLOYEE.—For purposes of this section—
‘‘(1) IN GENERAL.—Except as otherwise provided in this
subsection, the term ‘qualified employee’ means, with respect
to any period, any employee of an employer if—
‘‘(A) the employee is an enrolled member of an Indian
tribe or the spouse of an enrolled member of an Indian
tribe,
‘‘(B) substantially all of the services performed during
such period by such employee for such employer are per-
formed within an Indian reservation, and
H. R. 2264—250
‘‘(C) the principal place of abode of such employee
while performing such services is on or near the reservation
in which the services are performed.
‘‘(2) INDIVIDUALS RECEIVING WAGES IN EXCESS OF $30,000
NOT ELIGIBLE.—An employee shall not be treated as a qualified
employee for any taxable year of the employer if the total
amount of the wages paid or incurred by such employer to
such employee during such taxable year (whether or not for
services within an Indian reservation) exceeds the amount
determined at an annual rate of $30,000.
‘‘(3) INFLATION ADJUSTMENT.—The Secretary shall adjust
the $30,000 amount under paragraph (2) for years beginning
after 1994 at the same time and in the same manner as
under section 415(d).
‘‘(4) EMPLOYMENT MUST BE TRADE OR BUSINESS EMPLOY-
MENT.—An employee shall be treated as a qualified employee
for any taxable year of the employer only if more than 50
percent of the wages paid or incurred by the employer to
such employee during such taxable year are for services per-
formed in a trade or business of the employer. Any determina-
tion as to whether the preceding sentence applies with respect
to any employee for any taxable year shall be made without
regard to subsection (e)(2).
‘‘(5) CERTAIN EMPLOYEES NOT ELIGIBLE.—The term ‘quali-
fied employee’ shall not include—
‘‘(A) any individual described in subparagraph (A), (B),
or (C) of section 51(i)(1),
‘‘(B) any 5-percent owner (as defined in section
416(i)(1)(B)), and
‘‘(C) any individual if the services performed by such
individual for the employer involve the conduct of class
I, II, or III gaming as defined in section 4 of the Indian
Gaming Regulatory Act (25 U.S.C. 2703), or are performed
in a building housing such gaming activity.
‘‘(6) INDIAN TRIBE DEFINED.—The term ‘Indian tribe’ means
any Indian tribe, band, nation, pueblo, or other organized group
or community, including any Alaska Native village, or regional
or village corporation, as defined in, or established pursuant
to, the Alaska Native Claims Settlement Act (43 U.S.C. 1601
et seq.) which is recognized as eligible for the special programs
and services provided by the United States to Indians because
of their status as Indians.
‘‘(7) INDIAN RESERVATION DEFINED.—The term ‘Indian res-
ervation’ has the meaning given such term by section 168(j)(6).
‘‘(d) EARLY TERMINATION OF EMPLOYMENT BY EMPLOYER.—
‘‘(1) IN GENERAL.—If the employment of any employee is
terminated by the taxpayer before the day 1 year after the
day on which such employee began work for the employer—
‘‘(A) no wages (or qualified employee health insurance
costs) with respect to such employee shall be taken into
account under subsection (a) for the taxable year in which
such employment is terminated, and
‘‘(B) the tax under this chapter for the taxable year
in which such employment is terminated shall be increased
by the aggregate credits (if any) allowed under section
38(a) for prior taxable years by reason of wages (or qualified
H. R. 2264—251
employee health insurance costs) taken into account with
respect to such employee.
‘‘(2) CARRYBACKS AND CARRYOVERS ADJUSTED.—In the case
of any termination of employment to which paragraph (1)
applies, the carrybacks and carryovers under section 39 shall
be properly adjusted.
‘‘(3) SUBSECTION NOT TO APPLY IN CERTAIN CASES.—
‘‘(A) IN GENERAL.—Paragraph (1) shall not apply to—
‘‘(i) a termination of employment of an employee
who voluntarily leaves the employment of the taxpayer,
‘‘(ii) a termination of employment of an individual
who before the close of the period referred to in para-
graph (1) becomes disabled to perform the services
of such employment unless such disability is removed
before the close of such period and the taxpayer fails
to offer reemployment to such individual, or
‘‘(iii) a termination of employment of an individual
if it is determined under the applicable State
unemployment compensation law that the termination
was due to the misconduct of such individual.
‘‘(B) CHANGES
IN
FORM
OF
BUSINESS.—For purposes
of paragraph (1), the employment relationship between the
taxpayer and an employee shall not be treated as
terminated—
‘‘(i) by a transaction to which section 381(a) applies
if the employee continues to be employed by the acquir-
ing corporation, or
‘‘(ii) by reason of a mere change in the form of
conducting the trade or business of the taxpayer if
the employee continues to be employed in such trade
or business and the taxpayer retains a substantial
interest in such trade or business.
‘‘(4) SPECIAL RULE.—Any increase in tax under paragraph
(1) shall not be treated as a tax imposed by this chapter
for purposes of—
‘‘(A) determining the amount of any credit allowable
under this chapter, and
‘‘(B) determining the amount of the tax imposed by
section 55.
‘‘(e) OTHER DEFINITIONS AND SPECIAL RULES.—For purposes
of this section—
‘‘(1) WAGES.—The term ‘wages’ has the same meaning given
to such term in section 51.
‘‘(2) CONTROLLED GROUPS.—
‘‘(A) All employers treated as a single employer under
section (a) or (b) of section 52 shall be treated as a single
employer for purposes of this section.
‘‘(B) The credit (if any) determined under this section
with respect to each such employer shall be its propor-
tionate share of the wages and qualified employee health
insurance costs giving rise to such credit.
‘‘(3) CERTAIN OTHER RULES MADE APPLICABLE.—Rules simi-
lar to the rules of section 51(k) and subsections (c), (d), and
(e) of section 52 shall apply.
‘‘(4) COORDINATION
WITH
NONREVENUE
LAWS.—Any ref-
erence in this section to a provision not contained in this
title shall be treated for purposes of this section as a reference
H. R. 2264—252
to such provision as in effect on the date of the enactment
of this paragraph.
‘‘(5) SPECIAL RULE FOR SHORT TAXABLE YEARS.—For any
taxable year having less than 12 months, the amount deter-
mined under subsection (a)(2) shall be multiplied by a fraction,
the numerator of which is the number of days in the taxable
year and the denominator of which is 365.
‘‘(f) TERMINATION.—This section shall not apply to taxable years
beginning after December 31, 2003.’’
(c) DENIAL OF DEDUCTION FOR PORTION OF WAGES EQUAL TO
INDIAN EMPLOYMENT CREDIT.—
(1) Subsection (a) of section 280C (relating to rule for
targeted jobs credit) is amended by striking ‘‘51(a)’’ and insert-
ing ‘‘45A(a), 51(a), and’’.
(2) Subsection (c) of section 196 (relating to deduction for
certain unused business credits) is amended by striking ‘‘and’’
at the end of paragraph (5), by striking the period at the
end of paragraph (6) and inserting ‘‘, and’’, and by adding
at the end the following new paragraph:
‘‘(7) the Indian employment credit determined under section
45A(a).’’
(d) DENIAL OF CARRYBACKS TO PREENACTMENT YEARS.—Sub-
section (d) of section 39 is amended by adding at the end thereof
the following new paragraph:
‘‘(5) NO CARRYBACK OF SECTION 45 CREDIT BEFORE ENACT-
MENT.—No portion of the unused business credit for any taxable
year which is attributable to the Indian employment credit
determined under section 45A may be carried to a taxable
year ending before the date of the enactment of section 45A.’’
(e) CLERICAL AMENDMENT.—The table of sections for subpart
D of part IV of subchapter A of chapter 1 is amended by adding
at the end thereof the following:
‘‘Sec. 45A. Indian employment credit.’’
(f) EFFECTIVE DATE.—The amendments made by this section
shall apply to wages paid or incurred after December 31, 1993.
Subchapter D—Other Provisions
PART I—DISCLOSURE PROVISIONS
SEC. 13401. DISCLOSURE OF RETURN INFORMATION FOR ADMINIS-
TRATION OF CERTAIN VETERANS PROGRAMS.
(a) GENERAL RULE.—Subparagraph (D) of section 6103(l)(7)
(relating to disclosure of return information to Federal, State, and
local agencies administering certain programs) is amended by strik-
ing ‘‘September 30, 1997’’ in the second sentence following clause
(viii) and inserting ‘‘September 30, 1998’’.
(b) EFFECTIVE DATE.—The amendment made by subsection (a)
shall take effect on the date of the enactment of this Act.
SEC. 13402. DISCLOSURE OF RETURN INFORMATION TO CARRY OUT
INCOME CONTINGENT REPAYMENT OF STUDENT LOANS.
(a) GENERAL RULE.—Subsection (l) of section 6103 (relating
to confidentiality and disclosure of returns and return information)
is amended by adding at the end thereof the following new
paragraph:
H. R. 2264—253
‘‘(13) DISCLOSURE OF RETURN INFORMATION TO CARRY OUT
INCOME CONTINGENT REPAYMENT OF STUDENT LOANS.—
‘‘(A) IN GENERAL.—The Secretary may, upon written
request from the Secretary of Education, disclose to officers
and employees of the Department of Education return
information with respect to a taxpayer who has received
an applicable student loan and whose loan repayment
amounts are based in whole or in part on the taxpayer’s
income. Such return information shall be limited to—
‘‘(i) taxpayer identity information with respect to
such taxpayer,
‘‘(ii) the filing status of such taxpayer, and
‘‘(iii) the adjusted gross income of such taxpayer.
‘‘(B) RESTRICTION
ON
USE
OF
DISCLOSED
INFORMA-
TION.—Return information disclosed under subparagraph
(A) may be used by officers and employees of the Depart-
ment of Education only for the purposes of, and to the
extent necessary in, establishing the appropriate income
contingent repayment amount for an applicable student
loan.
‘‘(C) APPLICABLE STUDENT LOAN.—For purposes of this
paragraph, the term ‘applicable student loan’ means—
‘‘(i) any loan made under the program authorized
under part D of title IV of the Higher Education Act
of 1965, and
‘‘(ii) any loan made under part B or E of title
IV of the Higher Education Act of 1965 which is in
default and has been assigned to the Department of
Education.
‘‘(D) TERMINATION.—This paragraph shall not apply
to any request made after September 30, 1998.’’
(b) CONFORMING AMENDMENTS.—
(1) So much of paragraph (4) of section 6103(m) as precedes
subparagraph (B) thereof is amended to read as follows:
‘‘(4) INDIVIDUALS WHO OWE AN OVERPAYMENT OF FEDERAL
PELL
GRANTS
OR
WHO
HAVE
DEFAULTED
ON
STUDENT
LOANS
ADMINISTERED BY THE DEPARTMENT OF EDUCATION.—
‘‘(A) IN GENERAL.—Upon written request by the Sec-
retary of Education, the Secretary may disclose the mailing
address of any taxpayer—
‘‘(i) who owes an overpayment of a grant awarded
to such taxpayer under subpart 1 of part A of title
IV of the Higher Education Act of 1965, or
‘‘(ii) who has defaulted on a loan—
‘‘(I) made under part B, D, or E of title IV
of the Higher Education Act of 1965, or
‘‘(II) made pursuant to section 3(a)(1) of the
Migration and Refugee Assistance Act of 1962 to
a student at an institution of higher education,
for use only by officers, employees, or agents of the Depart-
ment of Education for purposes of locating such taxpayer
for purposes of collecting such overpayment or loan .’’
(2) Subparagraph (B) of section 6103(m)(4) is amended—
(A) in clause (i), by striking ‘‘under part B’’ and insert-
ing ‘‘under part B or D’’; and
(B) in clause (ii), by striking ‘‘under part E’’ and insert-
ing ‘‘under subpart 1 of part A, or part D or E,’’;
H. R. 2264—254
(3) Section 6103(p) is amended—
(A) in paragraph (3)(A), by striking ‘‘(11), or (12), (m)’’
and inserting ‘‘(11), (12), or (13), (m)’’;
(B) in paragraph (4)—
(i) in the matter preceding subparagraph (A), by
striking out ‘‘(10), or (11),’’ and inserting ‘‘(10), (11),
or (13),’’, and
(ii) in subparagraph (F)(ii), by striking ‘‘(11), or
(12),’’ and inserting ‘‘(11), (12), or (13),’’.
(c) EFFECTIVE DATE.—The amendments made by this section
shall take effect on the date of the enactment of this Act.
SEC. 13403. USE OF RETURN INFORMATION FOR INCOME VERIFICA-
TION UNDER CERTAIN HOUSING ASSISTANCE PRO-
GRAMS.
(a) IN GENERAL.—Subparagraph (D) of section 6103(l)(7) (relat-
ing to the disclosure of return information to Federal, State, and
local agencies administering certain programs) is amended—
(1) in clause (vii), by striking ‘‘and’’ at the end;
(2) in clause (viii), by striking the period at the end and
inserting ‘‘; and’’;
(3) by inserting after clause (viii) the following new clause:
‘‘(ix) any housing assistance program administered by the
Department of Housing and Urban Development that involves
initial and periodic review of an applicant’s or participant’s
income, except that return information may be disclosed under
this clause only on written request by the Secretary of Housing
and Urban Development and only for use by officers and
employees of the Department of Housing and Urban Develop-
ment with respect to applicants for and participants in such
programs.’’; and
(4) by adding at the end thereof the following: ‘‘Clause
(ix) shall not apply after September 30, 1998.’’
(b) CONFORMING AMENDMENT.—The heading of paragraph (7)
of section 6103(l) is amended by inserting after ‘‘CODE’’ the following:
‘‘, OR CERTAIN HOUSING ASSISTANCE PROGRAMS’’.
(c) EFFECTIVE DATE.—The amendments made by this section
shall take effect on the date of the enactment of this Act.
PART II—PUBLIC DEBT LIMIT
SEC. 13411. INCREASE IN PUBLIC DEBT LIMIT.
(a) GENERAL RULE.—Subsection (b) of section 3101 of title
31, United States Code, is amended by striking out the dollar
limitation contained in such subsection and inserting in lieu thereof
‘‘$4,900,000,000,000’’.
(b) REPEAL OF TEMPORARY INCREASE.—Effective on and after
the date of the enactment of this Act, section 1 of Public Law
103–12 is hereby repealed.
PART III—VACCINE PROVISIONS
SEC. 13421. EXCISE TAX ON CERTAIN VACCINES MADE PERMANENT.
(a) TAX.—Subsection (c) of section 4131 (relating to tax on
certain vaccines) is amended to read as follows:
‘‘(c) APPLICATION OF SECTION.—The tax imposed by this section
shall apply—
H. R. 2264—255
‘‘(1) after December 31, 1987, and before January 1, 1993,
and
‘‘(2) during periods after the date of the enactment of
the Revenue Reconciliation Act of 1993.’’
(b) TRUST FUND.—Paragraph (1) of section 9510(c) (relating
to expenditures from Vaccine Injury Compensation Trust Fund)
is amended by striking ‘‘and before October 1, 1992,’’.
(c) FLOOR STOCKS TAX.—
(1) IMPOSITION OF TAX.—On any taxable vaccine—
(A) which was sold by the manufacturer, producer,
or importer on or before the date of the enactment of
this Act,
(B) on which no tax was imposed by section 4131
of the Internal Revenue Code of 1986 (or, if such tax
was imposed, was credited or refunded), and
(C) which is held on such date by any person for
sale or use,
there is hereby imposed a tax in the amount determined under
section 4131(b) of such Code.
(2) LIABILITY FOR TAX AND METHOD OF PAYMENT.—
(A) LIABILITY FOR TAX.—The person holding any tax-
able vaccine to which the tax imposed by paragraph (1)
applies shall be liable for such tax.
(B) METHOD OF PAYMENT.—The tax imposed by para-
graph (1) shall be paid in such manner as the Secretary
shall prescribe by regulations.
(C) TIME FOR PAYMENT.—The tax imposed by para-
graph (1) shall be paid on or before the last day of the
6th month beginning after the date of the enactment of
this Act.
(3) DEFINITIONS.—For purposes of this subsection, terms
used in this subsection which are also used in section 4131
of such Code shall have the respective meanings such terms
have in such section.
(4) OTHER LAWS APPLICABLE.—All provisions of law, includ-
ing penalties, applicable with respect to the taxes imposed
by section 4131 of such Code shall, insofar as applicable and
not inconsistent with the provisions of this subsection, apply
to the floor stocks taxes imposed by paragraph (1), to the
same extent as if such taxes were imposed by such section
4131.
SEC. 13422. CONTINUATION 
COVERAGE 
UNDER 
GROUP 
HEALTH
PLANS OF COSTS OF PEDIATRIC VACCINES.
(a) IN GENERAL.—Paragraph (1) of section 4980B(f) is amended
by inserting ‘‘the coverage of the costs of pediatric vaccines (as
defined under section 2162 of the Public Health Service Act) is
not reduced below the coverage provided by the plan as of May
1, 1993, and only if’’ after ‘‘only if’’.
(b) EFFECTIVE DATE.—The amendment made by subsection (a)
shall apply with respect to plan years beginning after the date
of the enactment of this Act.
H. R. 2264—256
PART IV—DISASTER RELIEF PROVISIONS
SEC. 13431. MODIFICATION OF INVOLUNTARY CONVERSION RULES
FOR CERTAIN DISASTER-RELATED CONVERSIONS.
(a) IN GENERAL.—Section 1033 (relating to involuntary conver-
sions) is amended by redesignating subsection (h) as subsection
(i) and by inserting after subsection (g) the following new subsection:
‘‘(h) SPECIAL RULES FOR PRINCIPAL RESIDENCES DAMAGED BY
PRESIDENTIALLY DECLARED DISASTERS.—
‘‘(1) IN GENERAL.—If the taxpayer’s principal residence or
any of its contents is compulsorily or involuntarily converted
as a result of a Presidentially declared disaster—
‘‘(A) TREATMENT OF INSURANCE PROCEEDS.—
‘‘(i) EXCLUSION FOR UNSCHEDULED PERSONAL PROP-
ERTY.—No gain shall be recognized by reason of the
receipt of any insurance proceeds for personal property
which was part of such contents and which was not
scheduled property for purposes of such insurance.
‘‘(ii) OTHER
PROCEEDS
TREATED
AS
COMMON
FUND.—In the case of any insurance proceeds (not
described in clause (i)) for such residence or contents—
‘‘(I) such proceeds shall be treated as received
for the conversion of a single item of property,
and
‘‘(II) any property which is similar or related
in service or use to the residence so converted
(or contents thereof) shall be treated for purposes
of subsection (a)(2) as property similar or related
in service or use to such single item of property.
‘‘(B) EXTENSION OF REPLACEMENT PERIOD.—Subsection
(a)(2)(B) shall be applied with respect to any property so
converted by substituting ‘4 years’ for ‘2 years’.
‘‘(2) PRESIDENTIALLY DECLARED DISASTER.—For purposes of
this subsection, the term ‘Presidentially declared disaster’
means any disaster which, with respect to the area in which
the residence is located, resulted in a subsequent determination
by the President that such area warrants assistance by the
Federal Government under the Disaster Relief and Emergency
Assistance Act.
‘‘(3) PRINCIPAL RESIDENCE.—For purposes of this subsection,
the term ‘principal residence’ has the same meaning as when
used in section 1034, except that such term shall include a
residence not treated as a principal residence solely because
the taxpayer does not own the residence.’’.
(b) EFFECTIVE DATE.—The amendment made by subsection (a)
shall apply to property compulsorily or involuntarily converted as
a result of disasters for which the determination referred to in
section 1033(h)(2) of the Internal Revenue Code of 1986 (as added
by this section) is made on or after September 1, 1991, and to
taxable years ending on or after such date.
Part V—Miscellaneous Provisions
SEC. 13441. INCREASE IN PRESIDENTIAL ELECTION CAMPAIGN FUND
CHECK-OFF.
(a) IN GENERAL.—Section 6096(a) (relating to designation by
individuals) is amended—
H. R. 2264—257
(1) by striking ‘‘$1’’ each place it appears and inserting
‘‘$3’’, and
(2) by striking ‘‘$2’’ and inserting ‘‘$6’’.
(b) EFFECTIVE DATE.—The amendments made by subsection
(a) apply with respect to tax returns required to be filed after
December 31, 1993.
SEC. 13442. SPECIAL RULE FOR HOSPITAL SERVICES.
(a) IN GENERAL.—Section 162 (relating to trade or business
deductions), as amended by section 13211, is amended by
redesignating subsection (n) as subsection (o) and by inserting
after subsection (m) the following new subsection:
‘‘(n) SPECIAL RULE FOR CERTAIN GROUP HEALTH PLANS.—
‘‘(1) IN GENERAL.—No deduction shall be allowed under
this chapter to an employer for any amount paid or incurred
in connection with a group health plan if the plan does not
reimburse for inpatient hospital care services provided in the
State of New York—
‘‘(A) except as provided in subparagraphs (B) and (C),
at the same rate as licensed commercial insurers are
required to reimburse hospitals for such services when
such reimbursement is not through such a plan,
‘‘(B) in the case of any reimbursement through a health
maintenance organization, at the same rate as health
maintenance organizations are required to reimburse hos-
pitals for such services for individuals not covered by such
a plan (determined without regard to any government-
supported individuals exempt from such rate), or
‘‘(C) in the case of any reimbursement through any
corporation organized under Article 43 of the New York
State Insurance Law, at the same rate as any such corpora-
tion is required to reimburse hospitals for such services
for individuals not covered by such a plan.
‘‘(2) STATE LAW EXCEPTION.—Paragraph (1) shall not apply
to any group health plan which is not required under the
laws of the State of New York (determined without regard
to this subsection or other provisions of Federal law) to
reimburse at the rates provided in paragraph (1).
‘‘(3) GROUP HEALTH PLAN.—For purposes of this subsection,
the term ‘group health plan’ means a plan of, or contributed
to by, an employer or employee organization (including a self-
insured plan) to provide health care (directly or otherwise)
to any employee, any former employee, the employer, or any
other individual associated or formerly associated with the
employer in a business relationship, or any member of their
family.’’
(b) EFFECTIVE DATE.—The provisions of this section shall apply
to services provided after February 2, 1993, and on or before May
12, 1995.
SEC. 13443. CREDIT FOR PORTION OF EMPLOYER SOCIAL SECURITY
TAXES PAID WITH RESPECT TO EMPLOYEE CASH TIPS.
(a) IN GENERAL.—Subpart D of part IV of subchapter A of
chapter 1 (relating to business related credits) is amended by adding
at the end the following new section:
H. R. 2264—258
‘‘SEC. 45B. CREDIT FOR PORTION OF EMPLOYER SOCIAL SECURITY
TAXES PAID WITH RESPECT TO EMPLOYEE CASH TIPS.
‘‘(a) GENERAL RULE.—For purposes of section 38, the employer
social security credit determined under this section for the taxable
year is an amount equal to the excess employer social security
tax paid or incurred by the taxpayer during the taxable year.
‘‘(b) EXCESS EMPLOYER SOCIAL SECURITY TAX.—For purposes
of this section—
‘‘(1) IN GENERAL.—The term ‘excess employer social security
tax’ means any tax paid by an employer under section 3111
with respect to tips received by an employee during any month,
to the extent such tips—
‘‘(A) are deemed to have been paid by the employer
to the employee pursuant to section 3121(q), and
‘‘(B) exceed the amount by which the wages (excluding
tips) paid by the employer to the employee during such
month are less than the total amount which would be
payable (with respect to such employment) at the minimum
wage rate applicable to such individual under section
6(a)(1) of the Fair Labor Standards Act of 1938 (determined
without regard to section 3(m) of such Act).
‘‘(2) ONLY
TIPS
RECEIVED
AT
FOOD
AND
BEVERAGE
ESTABLISHMENTS TAKEN INTO ACCOUNT.—In applying paragraph
(1), there shall be taken into account only tips received from
customers in connection with the provision of food or beverages
for consumption on the premises of an establishment with
respect to which the tipping of employees serving food or bev-
erages by customers is customary.
‘‘(c) DENIAL
OF DOUBLE BENEFIT.—No deduction shall be
allowed under this chapter for any amount taken into account
in determining the credit under this section.
‘‘(d) ELECTION NOT TO CLAIM CREDIT.—This section shall not
apply to a taxpayer for any taxable year if such taxpayer elects
to have this section not apply for such taxable year.’’
(b) CREDIT TO BE PART OF GENERAL BUSINESS CREDIT.—
(1) IN GENERAL.—Subsection (b) of section 38 (relating to
current year business credit) is amended by striking ‘‘plus’’
at the end of paragraph (9), by striking the period at the
end of paragraph (10) and inserting ‘‘, plus’’, and by adding
at the end the following new paragraph:
‘‘(11) the employer social security credit determined under
section 45B(a).’’
(2) LIMITATION ON CARRYBACKS.—Subsection (d) of section
39 (relating to transitional rules) is amended by adding at
the end the following new paragraph:
‘‘(6) NO CARRYBACK OF SECTION 45 CREDIT BEFORE ENACT-
MENT.—No portion of the unused business credit for any taxable
year which is attributable to the employer social security credit
determined under section 45B may be carried back to a taxable
year ending before the date of the enactment of section 45B.’’
(c) CLERICAL AMENDMENT.—The table of sections for subpart
D of part IV of subchapter A of chapter 1 is amended by adding
at the end the following new item:
‘‘Sec. 45B. Credit for portion of employer social security taxes paid with re-
spect to employee cash tips.’’
(d) EFFECTIVE DATE.—The amendments made by this section
shall apply with respect to taxes paid after December 31, 1993.
H. R. 2264—259
SEC. 13444. AVAILABILITY AND USE OF DEATH INFORMATION.
(a) RESTRICTION
ON DISCLOSURE
OF TAX RETURN INFORMA-
TION.—Subsection (d) of section 6103 is amended by adding at
the end thereof the following new paragraph:
‘‘(4) AVAILABILITY AND USE OF DEATH INFORMATION.—
‘‘(A) IN GENERAL.—No returns or return information
may be disclosed under paragraph (1) to any agency, body,
or commission of any State (or any legal representative
thereof) during any period during which a contract meeting
the requirements of subparagraph (B) is not in effect
between such State and the Secretary of Health and
Human Services.
‘‘(B) CONTRACTUAL REQUIREMENTS.—A contract meets
the requirements of this subparagraph if—
‘‘(i) such contract requires the State to furnish
the Secretary of Health and Human Services informa-
tion concerning individuals with respect to whom death
certificates (or equivalent documents maintained by
the State or any subdivision thereof) have been offi-
cially filed with it, and
‘‘(ii) such contract does not include any restriction
on the use of information obtained by such Secretary
pursuant to such contract, except that such contract
may provide that such information is only to be used
by the Secretary (or any other Federal agency) for
purposes of ensuring that Federal benefits or other
payments are not erroneously paid to deceased individ-
uals.
Any information obtained by the Secretary of Health and
Human Services under such a contract shall be exempt
from disclosure under section 552 of title 5, United States
Code, and from the requirements of section 552a of such
title 5.
‘‘(C) SPECIAL EXCEPTION.—The provisions of subpara-
graph (A) shall not apply to any State which on July
1, 1993, was not, pursuant to a contract, furnishing the
Secretary of Health and Human Services information
concerning individuals with respect to whom death certifi-
cates (or equivalent documents maintained by the State
or any subdivision thereof) have been officially filed with
it.’’
(b) EFFECTIVE DATE.—
(1) IN GENERAL.—Except as provided in paragraph (2), the
amendment made by subsection (a) shall take effect on the
date one year after the date of the enactment of this Act.
(2) SPECIAL RULE.—The amendment made by subsection
(a) shall take effect on the date 2 years after the date of
the enactment of this Act in the case of any State if it is
established to the satisfaction of the Secretary of the Treasury
that—
(A) under the law of such State as in effect on the
date of the enactment of this Act, it is impossible for
such State to enter into an agreement meeting the require-
ments of section 6103(d)(4)(B) of the Internal Revenue Code
of 1986 (as added by subsection (a)), and
H. R. 2264—260
(B) it is likely that such State will enter into such
an agreement during the extension period under this
paragraph.
CHAPTER 2—HEALTH CARE, HUMAN RESOURCES, IN-
COME SECURITY, AND CUSTOMS AND TRADE PROVI-
SIONS
Subchapter A—Medicare
SEC. 13500. REFERENCES IN SUBCHAPTER; TABLE OF CONTENTS OF
SUBCHAPTER.
(a) AMENDMENTS TO SOCIAL SECURITY ACT.—Except as other-
wise specifically provided, whenever in this subchapter an amend-
ment is expressed in terms of an amendment to or repeal of a
section or other provision, the reference shall be considered to
be made to that section or other provision of the Social Security
Act.
(b) REFERENCES
TO OBRA.—In this subchapter, the terms
‘‘OBRA–1986’’, ‘‘OBRA–1987’’, ‘‘OBRA–1989’’, and ‘‘OBRA–1990’’
refer to the Omnibus Budget Reconciliation Act of 1986 (Public
Law 99–509), the Omnibus Budget Reconciliation Act of 1987 (Pub-
lic Law 100–203), the Omnibus Budget Reconciliation Act of 1989
(Public Law 101–239), and the Omnibus Budget Reconciliation Act
of 1990 (Public Law 101–508), respectively.
(c) TABLE OF CONTENTS OF SUBCHAPTER.—The table of contents
of this subchapter is as follows:
SUBCHAPTER A—MEDICARE
Sec. 13500. References in subchapter; table of contents of subchapter.
PART I—PROVISIONS RELATING TO PART A
Sec. 13501. Payments for PPS hospitals.
Sec. 13502. Reductions in payments for PPS-exempt hospitals.
Sec. 13503. Reductions in payments for skilled nursing facility services.
Sec. 13504. Reductions in payments for hospice services.
Sec. 13505. Hemophilia pass-through extension.
Sec. 13506. Graduate medical education payments in hospital-owned community
health centers.
Sec. 13507. Extension of rural hospital demonstration.
Sec. 13508. Reduction in part A premium for certain individuals with 30 or more
quarters of Social Security coverage.
PART II—PROVISIONS RELATING TO PART B
SUBPART A—PHYSICIANS’ SERVICES
Sec. 13511. Reduction in default update for conversion factor for 1994 and 1995.
Sec. 13512. Reduction in performance standard rate of increase and increase in
maximum reduction permitted in default update.
Sec. 13513. Practice expense relative value units.
Sec. 13514. Separate payment for interpretation of electrocardiograms.
Sec. 13515. Payments for new physicians and practitioners.
Sec. 13516. Payments for anesthesia.
Sec. 13517. Extension of physician payment provisions to nonparticipating suppli-
ers and other persons.
Sec. 13518. Antigens under physician fee schedule.
SUBPART B—OUTPATIENT HOSPITAL SERVICES
Sec. 13521. Extension of 10 percent reduction in payments for capital-related costs
of outpatient hospital services.
Sec. 13522. Extension of reduction in payments for other costs of outpatient hos-
pital services.
SUBPART C—AMBULATORY SURGICAL CENTER SERVICES
Sec. 13531. Ambulatory surgical center services.
H. R. 2264—261
Sec. 13532. Designation of certain hospitals as eye or eye and ear hospitals.
Sec. 13533. Reduction in payments for intraocular lenses.
SUBPART D—DURABLE MEDICAL EQUIPMENT
Sec. 13541. Payment for parenteral and enteral nutrients, supplies, and equipment
during 1994 and 1995.
Sec. 13542. Revisions to payment rules for durable medical equipment.
Sec. 13543. Treatment of nebulizers, aspirators, and certain ventilators.
Sec. 13544. Payment for ostomy supplies and other supplies.
Sec. 13545. Payments for TENS devices.
Sec. 13546. Payments for orthotics, prosthetics, and prosthetic devices.
SUBPART E—OTHER PROVISIONS
Sec. 13551. Payments for clinical diagnostic laboratory tests.
Sec. 13552. Extension of Alzheimer’s disease demonstration projects.
Sec. 13553. Oral cancer drugs.
Sec. 13554. Clarification of coverage of certified nurse-midwife services performed
outside the maternity cycle.
Sec. 13555. Increase in annual cap on amount of medicare payment for outpatient
physical therapy and occupational therapy services.
Sec. 13556. Rural health clinics and federally qualified health centers.
Sec. 13557. Extension of municipal health service demonstration projects.
PART III—PROVISIONS RELATING TO PARTS A AND B
Sec. 13561. Medicare as secondary payer.
Sec. 13562. Physician ownership and referral.
Sec. 13563. Direct graduate medical education.
Sec. 13564. Reduction in payments for home health services.
Sec. 13565. Immunosuppressive drug therapy.
Sec. 13566. Reduction in payments for erythropoientin.
Sec. 13567. Extension of social health maintenance organization demonstrations.
Sec. 13568. Timing of claims payment.
Sec. 13569. Extension of waiver for Watts Health Foundation.
PART IV—PROVISION RELATING TO PART B PREMIUM
Sec. 13571. Part B premium.
PART V—PROVISION RELATING TO DATA BANK
Sec. 13581. Medicare and medicaid coverage data bank.
PART I—PROVISIONS RELATING TO PART A
SEC. 13501. PAYMENTS FOR PPS HOSPITALS.
(a) REDUCTIONS IN PAYMENTS.—
(1) 
REDUCTIONS
IN
INFLATION
UPDATES.—Section
1886(b)(3)(B)(i) (42 U.S.C. 1395ww(b)(3)(B)(i)) is amended—
(A) in subclause (IX)—
(i) by inserting ‘‘minus 2.5 percentage points’’ after
‘‘market basket percentage increase’’ the first place
it appears, and
(ii) by striking ‘‘plus 1.5 percentage points’’ and
inserting ‘‘minus 1.0 percentage point’’;
(B) in subclause (X)—
(i) by inserting ‘‘minus 2.5 percentage points’’ after
‘‘market basket percentage increase’’, and
(ii) by striking ‘‘and’’ at the end;
(C) in subclause (XI)—
(i) by striking ‘‘and each subsequent fiscal year’’,
(ii) by inserting ‘‘minus 2.0 percentage points’’ after
‘‘market basket percentage increase’’, and
(iii) by striking the period at the end and inserting
a comma; and
(D) by adding at the end the following new subclauses:
‘‘(XII) for fiscal year 1997, the market basket percentage
increase minus 0.5 percentage point for hospitals in all areas,
and
H. R. 2264—262
‘‘(XIII) for fiscal year 1998 and each subsequent fiscal year,
the market basket percentage increase for hospitals in all
areas.’’.
(2) UPDATES FOR SOLE COMMUNITY HOSPITALS AND MEDI-
CARE-DEPENDENT, SMALL RURAL HOSPITALS.—
(A) IN
GENERAL.—Section 1886(b)(3)(B) (42 U.S.C.
1395ww(b)(3)(B)) is amended by adding at the end the
following new clause:
‘‘(iv) For purposes of subparagraphs (C) and (D), the ‘applicable
percentage increase’ is—
‘‘(I) for 12-month cost reporting periods beginning during
fiscal years 1986 through 1993, the applicable percentage
increase specified in clause (ii),
‘‘(II) for fiscal year 1994, the market basket percentage
increase minus 2.3 percentage points (taking into account any
portion of the 12-month cost reporting period beginning during
fiscal year 1993 that occurred during fiscal year 1994),
‘‘(III) for fiscal year 1995, the market basket percentage
increase minus 2.2 percentage points, and
‘‘(IV) for fiscal year 1996 and each subsequent fiscal year,
the applicable percentage increase under clause (i).’’.
(B) CONFORMING AMENDMENTS.—Section 1886(b)(3) (42
U.S.C. 1395ww(b)(3)) is amended—
(i) in subparagraph (B)(ii), by striking ‘‘, (C), (D),’’;
(ii) in subparagraph (C)(i)(II), by striking ‘‘or’’ at
the end;
(iii) in clause (ii) of subparagraph (C)—
(I) by striking ‘‘period, the target’’ and insert-
ing ‘‘period beginning before fiscal year 1994, the
target’’,
(II) by striking ‘‘subparagraph (B)(ii)’’ and
inserting ‘‘subparagraph (B)(iv)’’, and
(III) by striking the period at the end of such
clause and inserting a comma;
(iv) in subparagraph (C), by inserting after clause
(ii) the following new clauses:
‘‘(iii) with respect to discharges occurring in fiscal year
1994, the target amount for the cost reporting period beginning
in fiscal year 1993 increased by the applicable percentage
increase under subparagraph (B)(iv), or
‘‘(iv) with respect to discharges occurring in fiscal year
1995 and each subsequent fiscal year, the target amount for
the preceding year increased by the applicable percentage
increase under subparagraph (B)(iv).’’;
(v) in clause (ii) of subparagraph (D)—
(I) by striking ‘‘period, the target’’ and insert-
ing ‘‘period beginning before fiscal year 1994, the
target’’,
(II) by striking ‘‘(B)(ii)’’ and inserting ‘‘(B)(iv)’’,
and
(III) by striking the period at the end of such
clause and inserting ‘‘, and’’; and
(vi) in subparagraph (D), by inserting after clause
(ii) the following new clause:
‘‘(iii) with respect to discharges occurring in fiscal year
1994, the target amount for the cost reporting period beginning
H. R. 2264—263
in fiscal year 1993 increased by the applicable percentage
increase under subparagraph (B)(iv).’’.
(3) REDUCTION IN FEDERAL PORTION OF CAPITAL PAYMENT
RATE.—Section 1886(g)(1)(A) (42 U.S.C. 1395ww(g)(1)(A)) is
amended by adding at the end the following new sentence:
‘‘For discharges occurring after September 30, 1993, the Sec-
retary shall reduce by 7.4 percent the unadjusted standard
Federal capital payment rate (as described in 42 CFR
412.308(c), as in effect on the date of the enactment of the
Omnibus Budget Reconciliation Act of 1993) and shall (for
hospital cost reporting periods beginning on or after October
1, 1993) redetermine which payment methodology is applied
to the hospital under such system to take into account such
reduction.’’.
(b) WAGE INDEX HOLD HARMLESS PROTECTION.—
(1) 
IN
GENERAL.—Section 
1886(d)(8)(C) 
(42 
U.S.C.
1395ww(d)(8)(C)) is amended by adding at the end the following
new clause:
‘‘(iv) The application of subparagraph (B) or a decision of the
Medicare Geographic Classification Review Board or of the Sec-
retary under paragraph (1) may not result in a reduction in an
urban area’s wage index if—
‘‘(I) the urban area has a wage index below the wage
index for rural areas in the State in which it is located; or
‘‘(II) the urban area is located in a State that is composed
of a single urban area.’’.
(2) NO
STANDARDIZED
AMOUNT
ADJUSTMENT.—The Sec-
retary of Health and Human Services shall not revise the
fiscal year 1992 or fiscal year 1993 standardized amounts
pursuant to subsections (d)(3)(B) and (d)(8)(D) of section 1886
of the Social Security Act to account for the amendment made
by paragraph (1).
(3) EFFECTIVE DATE.—The amendment made by paragraph
(1) shall apply to discharges occurring on or after October
1, 1991.
(c) TRANSITION FOR HOSPITAL OUTLIER THRESHOLDS.—Section
1886(d)(5)(A) (42 U.S.C. 1395ww(d)(5)(A)) is amended—
(1) in clause (i), by striking ‘‘The Secretary’’ and inserting
‘‘For discharges occurring during fiscal years ending on or before
September 30, 1997, the Secretary’’;
(2) in clause (ii), by striking the period at the end and
inserting the following: ‘‘, or, for discharges in fiscal years
beginning on or after October 1, 1994, exceed the applicable
DRG prospective payment rate plus a fixed dollar amount deter-
mined by the Secretary.’’;
(3) in clause (iii), by striking ‘‘shall approximate’’ and
inserting ‘‘shall (except as payments under clause (i) are
required to be reduced to take into account the requirements
of clause (v)) approximate’’; and
(4) by adding at the end the following new clauses:
‘‘(v) The Secretary shall provide that—
‘‘(I) the day outlier percentage for fiscal year 1995 shall
be 75 percent of the day outlier percentage for fiscal year
1994;
‘‘(II) the day outlier percentage for fiscal year 1996 shall
be 50 percent of the day outlier percentage for fiscal year
1994; and
H. R. 2264—264
‘‘(III) the day outlier percentage for fiscal year 1997 shall
be 25 percent of the day outlier percentage for fiscal year
1994.
‘‘(vi) For purposes of this subparagraph, the term ‘day outlier
percentage’ means, for a fiscal year, the percentage of the total
additional payments made by the Secretary under this subpara-
graph for discharges in that fiscal year which are additional pay-
ments under clause (i).’’.
(d) EXTENSION FOR REGIONAL REFERRAL CENTERS.—
(1) EXTENSION OF CLASSIFICATION THROUGH FISCAL YEAR
1994.—Any hospital that is classified as a regional referral
center under section 1886(d)(5)(C) of the Social Security Act
as of September 30, 1992, shall continue to be so classified
for cost reporting periods beginning during fiscal year 1993
or fiscal year 1994, unless the area in which the hospital
is located is redesignated as a Metropolitan Statistical Area
by the Office of Management and Budget for such a fiscal
year.
(2) PERMITTING HOSPITALS TO DECLINE RECLASSIFICATION.—
If any hospital fails to qualify as a rural referral center under
section 1886(d)(5)(C) of the Social Security Act as a result
of a decision by the Medicare Geographic Classification Review
Board under section 1886(d)(10) of such Act to reclassify the
hospital as being located in an urban area for fiscal year
1993 or fiscal year 1994, the Secretary of Health and Human
Services shall—
(A) notify such hospital of such failure to qualify,
(B) provide an opportunity for such hospital to decline
such reclassification, and
(C) if the hospital—
(i) declines such reclassification, administer the
Social Security Act (other than section 1886(d)(8)(D))
for such fiscal year as if the decision by the Review
Board had not occurred, or
(ii) fails to decline such reclassification, administer
the Social Security Act without regard to paragraph
(1).
(3) REQUIRING LUMP-SUM RETROACTIVE PAYMENT FOR HOS-
PITALS LOSING CLASSIFICATION.—
(A) IN GENERAL.—In the case of a hospital described
in paragraph (1), the Secretary of Health and Human Serv-
ices shall make a lump-sum payment to the hospital equal
to the difference between the aggregate payment made
to the hospital under section 1886 of such Act (excluding
outlier payments under subsection (d)(5)(A) of such section)
during the period of applicability described in subparagraph
(B) and the aggregate payment that would have been made
to the hospital under such section if, during the period
of applicability, the hospital was classified a regional refer-
ral center under section 1886(d)(5)(C) of such Act.
(B) PERIOD OF APPLICABILITY.—In subparagraph (A),
the ‘‘period of applicability’’ is the period that begins on
October 1, 1992, and ends on the date of the enactment
of this Act.
(e) EXTENSION FOR MEDICARE-DEPENDENT, SMALL RURAL HOS-
PITALS.—
H. R. 2264—265
(1) 
EXTENSION
OF
ADDITIONAL
PAYMENTS.—Section
1886(d)(5)(G) (42 U.S.C. 1395ww(d)(5)(G)) is amended—
(A) in clause (i) in the matter preceding subclause
(I), by striking ‘‘ending on or before March 31, 1993,’’ and
all that follows and inserting the following: ‘‘before October
1, 1994, in the case of a subsection (d) hospital which
is a medicare-dependent, small rural hospital, payment
under paragraph (1)(A) shall be equal to the sum of the
amount determined under clause (ii) and the amount deter-
mined under paragraph (1)(A)(iii).’’;
(B) by redesignating clauses (ii) and (iii) as clauses
(iii) and (iv); and
(C) by inserting after clause (i) the following new
clause:
‘‘(ii) The amount determined under this clause is—
‘‘(I) for discharges occurring during the first 3 12-month
cost reporting periods that begin on or after April 1, 1990,
the amount by which the hospital’s target amount for the
cost reporting period (as defined in subsection (b)(3)(D)) exceeds
the amount determined under paragraph (1)(A)(iii); and
‘‘(II) for discharges occurring during any subsequent cost
reporting period (or portion thereof) and before October 1, 1994,
50 percent of the amount by which the hospital’s target amount
for the cost reporting period (as defined in subsection (b)(3)(D))
exceeds the amount determined under paragraph (1)(A)(iii).’’.
(2) PERMITTING HOSPITALS TO DECLINE RECLASSIFICATION.—
If any hospital fails to qualify as a medicare-dependent, small
rural hospital under section 1886(d)(5)(G)(i) of the Social Secu-
rity Act as a result of a decision by the Medicare Geographic
Classification Review Board under section 1886(d)(10) of such
Act to reclassify the hospital as being located in an urban
area for fiscal year 1993 or fiscal year 1994, the Secretary
of Health and Human Services shall—
(A) notify such hospital of such failure to qualify,
(B) provide an opportunity for such hospital to decline
such reclassification, and
(C) if the hospital declines such reclassification, admin-
ister 
the 
Social 
Security 
Act 
(other 
than 
section
1886(d)(8)(D)) for such fiscal year as if the decision by
the Review Board had not occurred.
(3) REQUIRING LUMP-SUM RETROACTIVE PAYMENT.—
(A) IN
GENERAL.—In the case of a hospital treated
as a medicare-dependent, small rural hospital under section
1886(d)(5)(G) of the Social Security Act, the Secretary of
Health and Human Services shall make a lump-sum pay-
ment to the hospital equal to the difference between the
aggregate payment made to the hospital under section
1886 of such Act (excluding outlier payments under sub-
section (d)(5)(A) of such section) during the period of
applicability described in subparagraph (B) and the aggre-
gate payment that would have been made to the hospital
under such section if, during the period of applicability,
section 1886(d)(5)(G) of such Act had been applied as if
the amendments made by paragraph (1) had been in effect.
(B) PERIOD OF APPLICABILITY.—In subparagraph (A),
the ‘‘period of applicability’’ is, with respect to a hospital,
the period that begins on the first day of the hospital’s
H. R. 2264—266
first 12-month cost reporting period that begins after April
1, 1992, and ends on the date of the enactment of this
Act.
(f) EXTENSION OF REGIONAL FLOOR.—Section 1886(d)(1)(A)(iii)
(42 U.S.C. 1395ww(d)(1)(A)(iii)) is amended to read as follows:
‘‘(iii) beginning on or after April 1, 1988, is equal to—
‘‘(I) the national adjusted DRG prospective payment
rate determined under paragraph (3) for such discharges,
or
‘‘(II) for discharges occurring during a fiscal year end-
ing on or before September 30, 1996, the sum of 85 percent
of the national adjusted DRG prospective payment rate
determined under paragraph (3) for such discharges and
15 percent of the regional adjusted DRG prospective pay-
ment rate determined under such paragraph, but only if
the average standardized amount (described in clause (i)(I)
or clause (ii)(I) of paragraph (3)(D)) for hospitals within
the region of, and in the same large urban or other area
(or, for discharges occurring during a fiscal year ending
on or before September 30, 1994, the same rural, large
urban, or other urban area) as, the hospital is greater
than the average standardized amount (described in the
respective clause) for hospitals within the United States
in that type of area for discharges occurring during such
fiscal year.’’.
SEC. 13502. REDUCTIONS IN PAYMENTS FOR PPS-EXEMPT HOSPITALS.
(a) 
IN
GENERAL.—Section 
1886(b)(3)(B) 
(42 
U.S.C.
1395ww(b)(3)(B)), as amended by section 13501(a)(2)(B)(i), is
amended—
(1) in clause (ii)—
(A) by striking ‘‘and’’ at the end of subclause (III);
(B) in subclause (IV)—
(i) by striking ‘‘subsequent fiscal years’’ and insert-
ing ‘‘a subsequent fiscal year ending on or before
September 30, 1993,’’, and
(ii) by striking the period at the end and inserting
a comma; and
(C) by adding at the end the following new subclauses:
‘‘(V) fiscal years 1994 through 1997, is the market basket
percentage increase minus the applicable reduction (as defined
in clause (v)(II)), or in the case of a hospital for a fiscal year
for which the hospital’s update adjustment percentage (as
defined in clause (v)(I)) is at least 10 percent, the market
basket percentage increase, and
‘‘(VI) subsequent fiscal years is the market basket percent-
age increase.’’; and
(2) by adding at the end the following new clause:
‘‘(v) For purposes of clause (ii)(V)—
‘‘(I) a hospital’s ‘update adjustment percentage’ for a fiscal
year is the percentage by which the hospital’s allowable operat-
ing costs of inpatient hospital services recognized under this
title for the cost reporting period beginning in fiscal year 1990
exceeds the hospital’s target amount (as determined under
subparagraph (A)) for such cost reporting period, increased
for each fiscal year (beginning with fiscal year 1994) by the
H. R. 2264—267
sum of any of the hospital’s applicable reductions under
subclause (V) for previous fiscal years; and
‘‘(II) the ‘applicable reduction’ with respect to a hospital
for a fiscal year is the lesser of 1 percentage point or the
percentage point difference between 10 percent and the hos-
pital’s update adjustment percentage for the fiscal year.’’.
(b) EFFECT
OF PAYMENT REDUCTION
ON EXCEPTIONS
AND
ADJUSTMENTS.—Section 1886(b)(4)(A) (42 U.S.C. 1395ww(b)(4)(A))
is amended—
(1) by inserting ‘‘(i)’’ after ‘‘(A)’’, and
(2) by adding at the end the following:
‘‘(ii) The payment reductions under paragraph (3)(B)(ii)(V) shall
not be considered by the Secretary in making adjustments pursuant
to clause (i).’’.
SEC. 13503. REDUCTIONS IN PAYMENTS FOR SKILLED NURSING
FACILITY SERVICES.
(a) PAYMENTS BASED ON COST LIMITS.—
(1) NO CHANGES IN COST LIMITS.—The Secretary of Health
and Human Services may not provide for any change in the
limits on per diem routine service costs for extended care serv-
ices under section 1888 of the Social Security Act for cost
reporting periods beginning during fiscal years 1994 and 1995,
except as may be necessary to take into account the amend-
ments made by paragraph (3)(A). The effect of the preceding
sentence shall not be considered by the Secretary in making
adjustments pursuant to section 1888(c) of such Act to the
payment limits for such services during such fiscal years.
(2) DELAY IN UPDATES.—The last sentence of section 1888(a)
(42 U.S.C. 1395yy(a)) is amended by inserting after ‘‘October
1, 1992’’ the following: ‘‘, on or after October 1, 1995,’’.
(3) REPEAL OF EXCESS OVERHEAD ALLOCATIONS FOR HOS-
PITAL-BASED FACILITIES.—
(A) IN GENERAL.—Section 1888(b) (42 U.S.C. 1395yy(b))
is amended—
(i) by striking ‘‘shall recognize’’ and inserting ‘‘may
not recognize’’; and
(ii) by striking ‘‘(as determined by’’ and all that
follows and inserting a period.
(B) EFFECTIVE
DATE.—The amendments made by
subparagraph (A) shall apply to cost reporting periods
beginning on or after October 1, 1993.
(b) PAYMENTS DETERMINED ON PROSPECTIVE BASIS.—The Sec-
retary of Health and Human Services may not change the amount
of any prospective payment paid to a skilled nursing facility under
section 1888(d) of the Social Security Act for services furnished
during cost reporting periods beginning during fiscal years 1994
and 1995, except as may be necessary to take into account the
amendment made by subsection (c)(1)(A).
(c) ELIMINATION
OF RETURN
ON EQUITY
FOR PROPRIETARY
SKILLED NURSING FACILITIES.—
(1) REPEAL OF REQUIREMENT FOR RETURN ON EQUITY.—
(A) Section 1861(v)(1)(B) (42 U.S.C. 1395x(v)(1)(B)) is amended
to read as follows:
‘‘(B) In the case of extended care services, the regulations
under subparagraph (A) shall not include provision for specific
recognition of a return on equity capital.’’.
H. R. 2264—268
(B) Section 1878(f)(2) (42 U.S.C. 1395oo(f)(2)) is amended
by striking ‘‘the rate of return on equity capital established
by regulation pursuant to section 1861(v)(1)(B) and in effect
at the time’’ and inserting ‘‘the rate of interest on obligations
issued for purchase by the Federal Hospital Insurance Trust
Fund for the month in which’’.
(2) EFFECTIVE DATE.—The amendments made by paragraph
(1) shall take effect October 1, 1993.
SEC. 13504. REDUCTIONS IN PAYMENTS FOR HOSPICE SERVICES.
Section 1814(i)(1)(C) (42 U.S.C. 1395f(i)(1)(C)) is amended by
striking ‘‘increased by’’ and all that follows and inserting the follow-
ing: ‘‘increased by—
‘‘(I) for a fiscal year ending on or before September 30,
1993, the market basket percentage increase (as defined in
section 1886(b)(3)(B)(iii)) for the fiscal year;
‘‘(II) for fiscal year 1994, the market basket percentage
increase for the fiscal year minus 2.0 percentage points;
‘‘(III) for fiscal year 1995, the market basket percentage
increase for the fiscal year minus 1.5 percentage points;
‘‘(IV) for fiscal year 1996, the market basket percentage
increase for the fiscal year minus 1.5 percentage points;
‘‘(V) for fiscal year 1997, the market basket percentage
increase for the fiscal year minus 0.5 percentage point; and
‘‘(VI) for a subsequent fiscal year, the market basket
percentage increase for the fiscal year.’’.
SEC. 13505. HEMOPHILIA PASS-THROUGH EXTENSION.
Effective as if included in the enactment of OBRA–1989, section
6011(d) of such Act is amended by striking ‘‘2 years after the
date of enactment of this Act’’ and inserting ‘‘September 30, 1994’’.
SEC. 13506. GRADUATE MEDICAL EDUCATION PAYMENTS IN HOS-
PITAL-OWNED COMMUNITY HEALTH CENTERS.
Section 1886(d)(5)(B)(iv) (42 U.S.C. 1395ww(d)(5)(B)(iv)) is
amended by inserting after ‘‘the hospital’’ the following: ‘‘or provid-
ing services at any entity receiving a grant under section 330
of the Public Health Service Act that is under the ownership or
control of the hospital (if the hospital incurs all, or substantially
all, of the costs of the services furnished by such interns and
residents)’’.
SEC. 13507. EXTENSION OF RURAL HOSPITAL DEMONSTRATION.
Section 4008(i)(1) of OBRA–1990 is amended by adding at
the end the following new sentence: ‘‘The Secretary shall continue
any such demonstration project until at least July 1, 1997.’’.
SEC. 13508. REDUCTION IN PART A PREMIUM FOR CERTAIN INDIVID-
UALS WITH 30 OR MORE QUARTERS OF SOCIAL SECURITY
COVERAGE.
(a) IN GENERAL.—Section 1818(d) (42 U.S.C. 1395i–2(d)) is
amended—
(1) in the second sentence of paragraph (2), by striking
‘‘Such amount’’ and inserting ‘‘Subject to paragraph (4), the
amount of an individual’s monthly premium under this section’’;
and
(2) by adding at the end the following new paragraph:
H. R. 2264—269
‘‘(4)(A) In the case of an individual described in subparagraph
(B), the monthly premium for a month shall be reduced by the
applicable reduction percent specified in the following table:
The applicable
reduction
‘‘For a month in:
percent is:
1994 .....................................................................................................
25 percent
1995 .....................................................................................................
30 percent
1996 .....................................................................................................
35 percent
1997 .....................................................................................................
40 percent
1998 or subsequent year ....................................................................
45 percent.
‘‘(B) An individual described in this subparagraph with respect
to a month is an individual who establishes to the satisfaction
of the Secretary that, as of the last day of the previous month,
the individual—
‘‘(i) had at least 30 quarters of coverage under title II;
‘‘(ii) was married (and had been married for the previous
1-year period) to an individual who had at least 30 quarters
of coverage under such title;
‘‘(iii) had been married to an individual for a period of
at least 1 year (at the time of such individual’s death) if
at such time the individual had at least 30 quarters of coverage
under such title; or
‘‘(iv) is divorced from an individual and had been married
to the individual for a period of at least 10 years (at the
time of the divorce) if at such time the individual had at
least 30 quarters of coverage under such title.’’.
(b) EFFECTIVE DATE.—The amendments made by this section
shall apply to monthly premiums under section 1818 of the Social
Security Act for months beginning with January 1, 1994.
PART II—PROVISIONS RELATING TO PART B
Subpart A—Physicians’ Services
SEC. 13511. REDUCTION IN DEFAULT UPDATE FOR CONVERSION FAC-
TOR FOR 1994 AND 1995.
(a) IN
GENERAL.—Section 1848 (42 U.S.C. 1395w–4) is
amended—
(1) in subsection (d)(3)(A)—
(A) in clause (i), by striking ‘‘clause (iii)’’ and inserting
‘‘clauses (iii) through (v)’’, and
(B) by adding at the end the following new clauses:
‘‘(iv) ADJUSTMENT IN PERCENTAGE INCREASE FOR
1994.—In applying clause (i) for services furnished in
1994, the percentage increase in the appropriate
update index shall be reduced by—
‘‘(I) 3.6 percentage points for services included
in the category of surgical services (as defined
for purposes of subsection (j)(1)), and
‘‘(II) 2.6 percentage points for other services.
‘‘(v) ADJUSTMENT
IN
PERCENTAGE
INCREASE
FOR
1995.—In applying clause (i) for services furnished in
1995, the percentage increase in the appropriate
update index shall be reduced by 2.7 percentage points.
‘‘(vi) EXCEPTION FOR CATEGORY OF PRIMARY CARE
SERVICES.—Clauses (iv) and (v) shall not apply to serv-
H. R. 2264—270
ices included in the category of primary care services
(as defined for purposes of subsection (j)(1)).’’; and
(2) in subsection (j)(1), by striking ‘‘Secretary)’’ and insert-
ing ‘‘Secretary and including anesthesia services), primary care
services (as defined in section 1842(i)(4)),’’.
(b) EFFECTIVE DATES.—The amendments made by this section
shall apply to services furnished on or after January 1, 1994;
except that amendment made by subsection (a)(2) shall not apply—
(1) to volume performance standard rates of increase estab-
lished under section 1848(f) of the Social Security Act for fiscal
years before fiscal year 1994, and
(2) to adjustment in updates in the conversion factors for
physicians’ services under section 1848(d)(3)(B) of such Act
for physicians’ services to be furnished in calendar years before
1996.
SEC. 13512. REDUCTION IN PERFORMANCE STANDARD RATE OF
INCREASE AND INCREASE IN MAXIMUM REDUCTION
PERMITTED IN DEFAULT UPDATE.
(a) REDUCTION IN PERFORMANCE STANDARD FACTOR.—Section
1848(f)(2)(B) (42 U.S.C. 1395w–4(f)(2)(B)) is amended—
(1) by striking ‘‘and’’ at the end of clause (ii), and
(2) by striking clause (iii) and inserting the following:
‘‘(iii) for 1993 is 2 percentage points,
‘‘(iv) for 1994 is 31⁄2 percentage points, and
‘‘(v) for each succeeding year is 4 percentage
points.’’.
(b) INCREASE IN MAXIMUM REDUCTION PERMITTED IN DEFAULT
UPDATE.—Section 1848(d)(3)(B)(ii) (42 U.S.C. 1395w–4(d)(3)(B)(ii))
is amended—
(1) in subclause (II), by striking ‘‘or 1995’’, and
(2) in subclause (III), by striking ‘‘3’’ and inserting ‘‘5’’.
SEC. 13513. PRACTICE EXPENSE RELATIVE VALUE UNITS.
Section 1848(c)(2) (42 U.S.C. 1395w–4(c)(2)) is amended by
adding at the end the following new subparagraph:
‘‘(E) REDUCTION IN PRACTICE EXPENSE RELATIVE VALUE
UNITS FOR CERTAIN SERVICES.—
‘‘(i) IN GENERAL.—Subject to clause (ii), the Sec-
retary shall reduce the practice expense relative value
units applied to services described in clause (iii) fur-
nished in—
‘‘(I) 1994, by 25 percent of the number by
which the number of practice expense relative
value units (determined for 1994 without regard
to this subparagraph) exceeds the number of work
relative value units determined for 1994,
‘‘(II) 1995, by an additional 25 percent of such
excess, and
‘‘(III) 1996, by an additional 25 percent of such
excess.
‘‘(ii) FLOOR ON REDUCTIONS.—The practice expense
relative value units for a physician’s service shall not
be reduced under this subparagraph to a number less
than 128 percent of the number of work relative value
units.
‘‘(iii) SERVICES COVERED.—For purposes of clause
(i), the services described in this clause are physicians’
H. R. 2264—271
services that are not described in clause (iv) and for
which—
‘‘(I) there are work relative value units, and
‘‘(II) the number of practice expense relative
value units (determined for 1994) exceeds 128 per-
cent of the number of work relative value units
(determined for such year).
‘‘(iv) EXCLUDED SERVICES.—For purposes of clause
(iii), the services described in this clause are services
which the Secretary determines at least 75 percent
of which are provided under this title in an office
setting.’’.
SEC. 13514. SEPARATE PAYMENT FOR INTERPRETATION OF ELECTRO-
CARDIOGRAMS.
(a) IN GENERAL.—Paragraph (3) of section 1848(b) (42 U.S.C.
1395w–4(b)) is amended to read as follows:
‘‘(3) TREATMENT
OF
INTERPRETATION
OF
ELECTROCARDIO-
GRAMS.—The Secretary—
‘‘(A) shall make separate payment under this section
for the interpretation of electrocardiograms performed or
ordered to be performed as part of or in conjunction with
a visit to or a consultation with a physician, and
‘‘(B) shall adjust the relative values established for
visits and consultations under subsection (c) so as not
to include relative value units for interpretations of electro-
cardiograms in the relative value for visits and consulta-
tions.’’.
(b) ASSURING BUDGET NEUTRALITY.—Section 1848(c)(2) (42
U.S.C. 1395w–4(c)(2)), as amended by section 13513, is further
amended by adding at the end the following new subparagraph:
‘‘(F) 
BUDGET
NEUTRALITY
ADJUSTMENTS.—The
Secretary—
‘‘(i) shall reduce the relative values for all services
(other than anesthesia services) established under this
paragraph (and, in the case of anesthesia services,
the conversion factor established by the Secretary for
such services) by such percentage as the Secretary
determines to be necessary so that, beginning in 1996,
the amendment made by section 13514(a) of the Omni-
bus Budget Reconciliation Act of 1993 would not result
in expenditures under this section that exceed the
amount of such expenditures that would have been
made if such amendment had not been made, and
‘‘(ii) shall reduce the amounts determined under
subsection (a)(2)(B)(ii)(I) by such percentage as the
Secretary determines to be required to assure that,
taking into account the reductions made under clause
(i), the amendment made by section 13514(a) of the
Omnibus Budget Reconciliation Act of 1993 would not
result in expenditures under this section in 1994 that
exceed the amount of such expenditures that would
have been made if such amendment had not been
made.’’.
(c) CONFORMING
AMENDMENTS.—Section 1848 (42 U.S.C.
1395w–4) is amended—
H. R. 2264—272
(1) in subsection (a)(2)(B)(ii)(I), by inserting ‘‘and as
adjusted under subsection (c)(2)(F)(ii)’’ after ‘‘for 1994’’;
(2) in subsection (c)(2)(A)(i), by adding at the end the
following: ‘‘Such relative values are subject to adjustment under
subparagraph (F)(i).’’; and
(3) in subsection (i)(1)(B), by adding at the end ‘‘including
adjustments under subsection (c)(2)(F),’’.
(d) EFFECTIVE DATE.—The amendments made by this section
shall apply to services furnished on or after January 1, 1994.
SEC. 13515. PAYMENTS FOR NEW PHYSICIANS AND PRACTITIONERS.
(a) EQUAL TREATMENT OF NEW PHYSICIANS AND PRACTITION-
ERS.—(1) Section 1848(a) (42 U.S.C. 1395w–4(a)) is amended by
striking paragraph (4).
(2) Section 1842(b)(4) (42 U.S.C. 1395u(b)(4)) is amended by
striking subparagraph (F).
(b) BUDGET NEUTRALITY ADJUSTMENT.—Notwithstanding any
other provision of law, the Secretary of Health and Human Services
shall reduce the following values and amounts for 1994 (to be
applied for that year and subsequent years) by such uniform
percentage as the Secretary determines to be required to assure
that the amendments made by subsection (a) will not result in
expenditures under part B of title XVIII of the Social Security
Act in 1994 that exceed the amount of such expenditures that
would have been made if such amendments had not been made:
(1) The relative values established under section 1848(c)
of such Act for services (other than anesthesia services) and,
in the case of anesthesia services, the conversion factor estab-
lished under section 1848 of such Act for such services.
(2) 
The 
amounts 
determined 
under 
section
1848(a)(2)(B)(ii)(I) of such Act.
(3) The prevailing charges or fee schedule amounts to be
applied under such part for services of a health care practitioner
(as defined in section 1842(b)(4)(F)(ii)(I) of such Act, as in
effect before the date of the enactment of this Act).
(c) CONFORMING
AMENDMENTS.—Section 1848 (42 U.S.C.
1395w–4), as amended by section 13514(c), is amended—
(1) in subsection (a)(2)(B)(ii)(I), by inserting ‘‘and under
section 13515(b) of the Omnibus Budget Reconciliation Act
of 1993’’ after ‘‘subsection (c)(2)(F)(ii)’’;
(2) in subsection (c)(2)(A)(i), by inserting ‘‘and section
13515(b) of the Omnibus Budget Reconciliation Act of 1993’’
after ‘‘under subparagraph (F)(i)’’; and
(3) in subsection (i)(1)(B), by inserting ‘‘and section 13515(b)
of the Omnibus Budget Reconciliation Act of 1993’’ after ‘‘under
subsection (c)(2)(F)’’.
(d) EFFECTIVE DATE.—The amendments made by subsection
(a) shall apply to services furnished on or after January 1, 1994.
SEC. 13516. PAYMENTS FOR ANESTHESIA.
(a) PAYMENT TO A PHYSICIAN FOR MEDICAL DIRECTION.—
(1) IN GENERAL.—Section 1848(a) (42 U.S.C. 1395w–4(a)),
as amended by section 13515(a)(1), is amended by adding at
the end the following new paragraph:
‘‘(4) SPECIAL RULE FOR MEDICAL DIRECTION.—
‘‘(A) IN GENERAL.—With respect to physicians’ services
furnished on or after January 1, 1994, and consisting of
medical direction of two, three, or four concurrent anesthe-
H. R. 2264—273
sia cases, the fee schedule amount to be applied shall
be equal to one-half of the amount described in subpara-
graph (B).
‘‘(B) AMOUNT.—The amount described in this subpara-
graph, for a physician’s medical direction of the perform-
ance of anesthesia services, is the following percentage
of the fee schedule amount otherwise applicable under
this section if the anesthesia services were personally per-
formed by the physician alone:
‘‘(i) For services furnished during 1994, 120 per-
cent.
‘‘(ii) For services furnished during 1995, 115 per-
cent.
‘‘(iii) For services furnished during 1996, 110 per-
cent.
‘‘(iv) For services furnished during 1997, 105 per-
cent.
‘‘(v) For services furnished after 1997, 100 per-
cent.’’.
(2) ELIMINATION
OF
REDUCTION
FOR
MEDICAL
DIRECTION
OF
MULTIPLE
NURSE
ANESTHETISTS
AND
ESTABLISHMENT
OF
CONSISTENT BASE AND TIME UNITS.—Paragraph (13) of section
1842(b) (42 U.S.C. 1395u(b)) is amended—
(A) by striking subparagraphs (A) and (B) and inserting
the following:
‘‘(13)(A) In determining payments under section 1833(l) and
section 1848 for anesthesia services furnished on or after January
1, 1994, the methodology for determining the base and time units
used shall be the same for services furnished by physicians, for
medical direction by physicians of two, three, or four certified reg-
istered nurse anesthetists, or for services furnished by a certified
registered nurse anesthetist (whether or not medically directed)
and shall be based on the methodology in effect, for anesthesia
services furnished by physicians, as of the date of the enactment
of the Omnibus Budget Reconciliation Act of 1993.’’;
(B) by redesignating subparagraph (C) as subpara-
graph (B); and
(C) by striking ‘‘subparagraph (A) or (B)’’ in subpara-
graph (B) (as so redesignated) and inserting ‘‘subparagraph
(A)’’.
(b) PAYMENT TO A CERTIFIED REGISTERED NURSE ANESTHETIST
FOR MEDICALLY DIRECTED SERVICES.—Section 1833(l)(4)(B) (42
U.S.C. 1395l(l)(4)(B)) is amended—
(1) in clause (i), by inserting ‘‘and before January 1, 1994,’’
after ‘‘1991,’’;
(2) in clause (ii)—
(A) by adding ‘‘and’’ at the end of subclause (II),
(B) by striking the comma at the end of subclause
(III) and inserting a period, and
(C) by striking subclauses (IV) through (VII); and
(3) by adding at the end the following new clause:
‘‘(iii) In the case of services of a certified registered nurse
anesthetist who is medically directed or medically supervised by
a physician which are furnished on or after January 1, 1994, the
fee schedule amount shall be one-half of the amount described
in section 1848(a)(5)(B) with respect to the physician.’’.
H. R. 2264—274
SEC. 13517. EXTENSION OF PHYSICIAN PAYMENT PROVISIONS TO
NONPARTICIPATING SUPPLIERS AND OTHER PERSONS.
(a) IN
GENERAL.—Section 1848 (42 U.S.C. 1395w–4) is
amended—
(1) in subsection (a)(3)—
(A) in the heading, by inserting ‘‘AND SUPPLIERS’’ after
‘‘PHYSICIANS’’,
(B) by inserting ‘‘or a nonparticipating supplier or other
person’’ after ‘‘nonparticipating physician’’, and
(C) by adding at the end the following: ‘‘In the case
of physicians’ services (including services which the Sec-
retary excludes pursuant to subsection (j)(3)) of a
nonparticipating physician, supplier, or other person for
which payment is made under this part on a basis other
than the fee schedule amount, the payment shall be based
on 95 percent of the payment basis for such services
furnished by a participating physician, supplier, or other
person.’’;
(2) in subsection (g)(1)—
(A) by inserting ‘‘or nonparticipating supplier or other
person 
(as 
defined 
in 
section 
1842(i)(2))’’ 
after
‘‘nonparticipating physician’’,
(B) by inserting ‘‘including services which the Secretary
excludes pursuant to subsection (j)(3),’’ after ‘‘physician’s
services (’’,
(C) by inserting ‘‘, supplier, or other person’’ after
‘‘such physician’’, and
(D) by adding at the end the following: ‘‘In applying
this subparagraph, any reference in such section to a physi-
cian is deemed also to include a reference to a supplier
or other person under this subparagraph.’’;
(3) 
in 
subsection 
(g)(2)(C), 
by 
inserting 
‘‘or 
for
nonparticipating 
suppliers 
or 
other 
persons’’ 
after
‘‘nonparticipating physicians’’;
(4) in subsection (g)(2)(D), by inserting ‘‘(or, if payment
under this part is made on a basis other than the fee schedule
under this section, 95 percent of the other payment basis)’’
after ‘‘subsection (a)’’;
(5) in subsection (h)—
(A) by inserting ‘‘or nonparticipating supplier or other
person furnishing physicians’ services (as defined in section
1848(j)(3))’’ after ‘‘physician’’ the first place it appears,
(B) by inserting ‘‘, supplier, or other person’’ after
‘‘physician’’ the second place it appears, and
(C) by inserting ‘‘, suppliers, and other persons’’ after
‘‘physicians’’ the second place it appears; and
(6) in subsection (j)(3), by inserting ‘‘, except for purposes
of subsections (a)(3), (g), and (h)’’ after ‘‘tests and’’.
(b) CONFORMING DEFINITION.—Section 1842(i)(2) (42 U.S.C.
1395u(i)(2)) is amended—
(1) by striking ‘‘, and the term’’ and inserting ‘‘; the term’’,
and
(2) by inserting before the period at the end the following:
‘‘; and the term ‘nonparticipating supplier or other person’
means a supplier or other person (excluding a provider of
services) that is not a participating physician or supplier (as
defined in subsection (h)(1))’’.
H. R. 2264—275
(c) EFFECTIVE DATE.—The amendments made by subsection
(a) shall apply to services furnished on or after January 1, 1994.
SEC. 13518. ANTIGENS UNDER PHYSICIAN FEE SCHEDULE.
(a) IN GENERAL.—Section 1848(j)(3) (42 U.S.C. 1395w–4(j)(3))
is amended by inserting ‘‘(2)(G),’’ after ‘‘(2)(D),’’.
(b) BUDGET NEUTRALITY ADJUSTMENT IN 1995.—Notwithstand-
ing any other provision of law, the Secretary of Health and Human
Services shall implement the amendment made by subsection (a)
in a manner to assure that such amendment will result in expendi-
tures under part B of title XVIII of the Social Security Act in
1995 for services described in such amendment that shall be equal
to the amount of expenditures for such services that would have
been made if such amendment had not been made.
(c) EFFECTIVE DATE.—The amendment made by subsection (a)
shall apply to services furnished on or after January 1, 1995.
Subpart B—Outpatient Hospital Services
SEC. 13521. EXTENSION OF 10 PERCENT REDUCTION IN PAYMENTS
FOR CAPITAL-RELATED COSTS OF OUTPATIENT HOS-
PITAL SERVICES.
Section 1861(v)(1)(S)(ii)(I) (42 U.S.C. 1395x(v)(1)(S)(ii)(I)) is
amended by striking ‘‘fiscal year 1992, 1993, 1994, or 1995’’ and
inserting ‘‘fiscal years 1992 through 1998’’.
SEC. 13522. EXTENSION OF REDUCTION IN PAYMENTS FOR OTHER
COSTS OF OUTPATIENT HOSPITAL SERVICES.
Section 1861(v)(1)(S)(ii)(II) (42 U.S.C. 1395x(v)(1)(S)(ii)(II)) is
amended by striking ‘‘, 1992, 1993, 1994, or 1995’’ and inserting
‘‘through 1998’’.
Subpart C—Ambulatory Surgical Center Services
SEC. 13531. AMBULATORY SURGICAL CENTER SERVICES.
The Secretary of Health and Human Services shall not provide
for any inflation update in the payment amounts under subpara-
graphs (A) and (B) of section 1833(i)(2) of the Social Security Act
for fiscal year 1994 or for fiscal year 1995.
SEC. 13532. DESIGNATION OF CERTAIN HOSPITALS AS EYE OR EYE
AND EAR HOSPITALS.
(a) IN
GENERAL.—Section 1833(i) (42 U.S.C. 1395l(i)) is
amended—
(1) in paragraph (3)(B)(ii)—
(A) in the matter preceding subclause (I), by striking
‘‘the last sentence of this clause’’ and inserting ‘‘paragraph
(4)’’, and
(B) by striking the last sentence; and
(2) by inserting after paragraph (3) the following new para-
graph:
‘‘(4)(A) In the case of a hospital that—
‘‘(i) makes application to the Secretary and demonstrates
that it specializes in eye services or eye and ear services (as
determined by the Secretary),
‘‘(ii) receives more than 30 percent of its total revenues
from outpatient services, and
‘‘(iii) on October 1, 1987—
H. R. 2264—276
‘‘(I) was an eye specialty hospital or an eye and ear
specialty hospital, or
‘‘(II) was operated as an eye or eye and ear unit (as
defined in subparagraph (B)) of a general acute care hos-
pital which, on the date of the application described in
clause (i), operates less than 20 percent of the beds that
the hospital operated on October 1, 1987, and has sold
or otherwise disposed of a substantial portion of the hos-
pital’s other acute care operations,
the cost proportion and ASC proportion in effect under subclauses
(I) and (II) of paragraph (3)(B)(ii) for cost reporting periods begin-
ning in fiscal year 1988 shall remain in effect for cost reporting
periods beginning on or after October 1, 1988, and before January
1, 1995.
‘‘(B) For purposes of this subparagraph (A)(iii)(II), the term
‘eye or eye and ear unit’ means a physically separate or distinct
unit containing separate surgical suites devoted solely to eye or
eye and ear services.’’.
(b) EFFECTIVE DATE.—The amendments made by subsection
(a) shall apply to portions of cost reporting periods beginning on
or after January 1, 1994.
SEC. 13533. REDUCTION IN PAYMENTS FOR INTRAOCULAR LENSES.
Notwithstanding section 1833(i)(2)(A)(iii) of the Social Security
Act, the amount of payment determined under such section for
an intraocular lens inserted subsequent to or during cataract sur-
gery in an ambulatory surgical center on or after January 1, 1994,
and before January 1, 1999, shall be equal to $150.
Subpart D—Durable Medical Equipment
SEC. 13541. PAYMENT FOR PARENTERAL AND ENTERAL NUTRIENTS,
SUPPLIES, AND EQUIPMENT DURING 1994 AND 1995.
In determining the amount of payment under part B of title
XVIII of the Social Security Act with respect to parenteral and
enteral nutrients, supplies, and equipment during 1994 and 1995,
the charges determined to be reasonable with respect to such nutri-
ents, supplies, and equipment may not exceed the charges deter-
mined to be reasonable with respect to such nutrients, supplies,
and equipment during 1993.
SEC. 13542. REVISIONS TO PAYMENT RULES FOR DURABLE MEDICAL
EQUIPMENT.
(a) BASING NATIONAL PAYMENT LIMITS ON MEDIAN OF LOCAL
PAYMENT AMOUNTS.—
(1) INEXPENSIVE AND ROUTINELY PURCHASED ITEMS; ITEMS
REQUIRING FREQUENT AND SUBSTANTIAL SERVICING.—(A) Para-
graphs (2)(C)(i)(II) and (3)(C)(i)(II) of section 1834(a) (42 U.S.C.
1395m(a)) are each amended—
(i) by striking ‘‘1992’’ the first place it appears and
inserting ‘‘1992, 1993, and 1994’’; and
(ii) by striking ‘‘1992’’ the second place it appears and
inserting ‘‘the year’’.
(B) Paragraphs (2)(C)(ii) and (3)(C)(ii) of section 1834(a)
(42 U.S.C. 1395m(a)) are each amended—
(i) by striking ‘‘and’’ at the end of subclause (I);
(ii) by redesignating subclause (II) as subclause (IV);
and
H. R. 2264—277
(iii) by inserting after subclause (I) the following new
subclauses:
‘‘(II) for 1992 and 1993, the amount deter-
mined under this clause for the preceding year
increased by the covered item update for such
subsequent year,
‘‘(III) for 1994, the local payment amount
determined under clause (i) for such item or device
for that year, except that the national limited pay-
ment amount may not exceed 100 percent of the
median of all local payment amounts determined
under such clause for such item for that year and
may not be less than 85 percent of the median
of all local payment amounts determined under
such clause for such item or device for that year,
and’’.
(2) 
MISCELLANEOUS
DEVICES
AND
ITEMS.—Section
1834(a)(8) (42 U.S.C. 1395m(a)(8)) is amended—
(A) in subparagraph (A)(ii)(III), by striking ‘‘1992’’ and
inserting ‘‘1992, 1993, and 1994’’; and
(B) in subparagraph (B)—
(i) by striking ‘‘and’’ at the end of clause (i),
(ii) by redesignating clause (ii) as (iv), and
(iii) by inserting after clause (i) the following new
clauses:
‘‘(ii) for 1992 and 1993, the amount determined
under this subparagraph for the preceding year
increased by the covered item update for such subse-
quent year;
‘‘(iii) for 1994, the local purchase price computed
under subparagraph (A)(ii) for the item for the year,
except that such national limited purchase price may
not exceed 100 percent of the median of all local pur-
chase prices computed for the item under such
subparagraph for the year and may not be less than
85 percent of the median of all local purchase prices
computed under such subparagraph for the item for
the year; and’’.
(3) OXYGEN AND OXYGEN EQUIPMENT.—Section 1834(a)(9)
(42 U.S.C. 1395m(a)(9)) is amended—
(A) in subparagraph (A)(ii)(II), by striking ‘‘1991 and
1992’’ and inserting ‘‘1991, 1992, 1993, and 1994’’; and
(B) in subparagraph (B)—
(i) by striking ‘‘and’’ at the end of clause (i),
(ii) by redesignating clause (ii) as (iv), and
(iii) by inserting after clause (i) the following new
clauses:
‘‘(ii) for 1992 and 1993, the amount determined
under this subparagraph for the preceding year
increased by the covered item update for such subse-
quent year;
‘‘(iii) for 1994, the local monthly payment rate
computed under subparagraph (A)(ii) for the item for
the year, except that such national limited monthly
payment rate may not exceed 100 percent of the
median of all local monthly payment rates computed
for the item under such subparagraph for the year
H. R. 2264—278
and may not be less than 85 percent of the median
of all local monthly payment rates computed for the
item under such subparagraph for the year; and’’.
(b) EFFECTIVE DATE.—The amendments made by this section
shall apply to items furnished on or after January 1, 1994.
SEC. 13543. TREATMENT OF NEBULIZERS, ASPIRATORS, AND CERTAIN
VENTILATORS.
(a) 
IN
GENERAL.—Section 
1834(a)(3)(A) 
(42 
U.S.C.
1395m(a)(3)(A)) is amended by striking ‘‘ventilators, aspirators,
IPPB machines, and nebulizers’’ and inserting ‘‘IPPB machines
and ventilators, excluding ventilators that are either continuous
airway pressure devices or intermittent assist devices with continu-
ous airway pressure devices’’.
(b) PAYMENT
FOR
ACCESSORIES
RELATING
TO
NEBULIZERS,
ASPIRATORS, AND CERTAIN VENTILATORS.—Section 1834(a)(2)(A) (42
U.S.C. 1395m(a)) is amended—
(1) by striking ‘‘or’’ at the end of clause (i),
(2) by adding ‘‘or’’ at the end of clause (ii), and
(3) by inserting after clause (ii) the following new clause:
‘‘(iii) which is an accessory used in conjunction
with a nebulizer, aspirator, or a ventilator excluded
under paragraph (3)(A),’’.
(c) EFFECTIVE DATE.—The amendments made by this section
shall apply to items furnished on or after January 1, 1994.
SEC. 13544. PAYMENT FOR OSTOMY SUPPLIES AND OTHER SUPPLIES.
(a) 
OSTOMY
SUPPLIES, 
TRACHEOSTOMY
SUPPLIES, 
AND
UROLOGICALS.—
(1) 
IN
GENERAL.—Section 
1834(h)(1) 
(42 
U.S.C.
1395m(h)(1)) is amended by adding at the end the following
new subparagraph:
‘‘(E) EXCEPTION
FOR
CERTAIN
ITEMS.—Payment for
ostomy supplies, tracheostomy supplies, and urologicals
shall be made in accordance with subparagraphs (B) and
(C) of section 1834(a)(2).’’.
(2) CONFORMING
AMENDMENT.—Section 1834(h)(1)(B) (42
U.S.C. 1395m(h)(1)(B)) is amended by striking ‘‘subparagraph
(C),’’ and inserting ‘‘subparagraphs (C) and (E),’’.
(3) EFFECTIVE DATE.—The amendments made by this sub-
section shall apply to items furnished on or after January
1, 1994.
(b) SURGICAL DRESSINGS.—
(1) IN
GENERAL.—Section 1834 (42 U.S.C. 1395m) is
amended by adding at the end the following new subsection:
‘‘(i) PAYMENT FOR SURGICAL DRESSINGS.—
‘‘(1) IN GENERAL.—Payment under this subsection for sur-
gical dressings (described in section 1861(s)(5)) shall be made
in a lump sum amount for the purchase of the item in an
amount equal to 80 percent of the lesser of—
‘‘(A) the actual charge for the item; or
‘‘(B) a payment amount determined in accordance with
the methodology described in subparagraphs (B) and (C)
of subsection (a)(2) (except that in applying such methodol-
ogy, the national limited payment amount referred to in
such subparagraphs shall be initially computed based on
local payment amounts using average reasonable charges
for the 12-month period ending December 31, 1992,
H. R. 2264—279
increased by the covered item updates described in such
subsection for 1993 and 1994).
‘‘(2) EXCEPTIONS.—Paragraph (1) shall not apply to surgical
dressings that are—
‘‘(A) furnished as an incident to a physician’s profes-
sional service; or
‘‘(B) furnished by a home health agency.’’.
(2) CONFORMING
AMENDMENT.—Section 1833(a)(1) (42
U.S.C. 1395l(a)(1)) is amended—
(A) by striking ‘‘and’’ before ‘‘(N)’’;
(B) with respect to the matter inserted by section
4155(b)(2)(B) of OBRA–1990—
(i) by striking ‘‘(M)’’ and inserting ‘‘, (O)’’, and
(ii) by transferring it and inserting it (as amended)
immediately before the semicolon at the end; and
(C) by inserting before the semicolon at the end the
following: ‘‘, and (P) with respect to surgical dressings,
the amounts paid shall be the amounts determined under
section 1834(i)’’.
(3) EFFECTIVE DATE.—The amendments made by this sub-
section shall apply to items furnished on or after January
1, 1994.
SEC. 13545. PAYMENTS FOR TENS DEVICES.
(a) 
IN
GENERAL.—Section 
1834(a)(1)(D) 
(42 
U.S.C.
1395m(a)(1)(D)) is amended by striking ‘‘15 percent’’ the second
place it appears and inserting ‘‘45 percent’’.
(b) EFFECTIVE DATE.—The amendment made by subsection (a)
shall apply to items furnished on or after January 1, 1994.
SEC. 13546. PAYMENTS FOR ORTHOTICS, PROSTHETICS, AND PROS-
THETIC DEVICES.
Section 1834(h)(4)(A) (42 U.S.C. 1395m(h)(4)(A)) is amended—
(1) in clause (i), by striking ‘‘and’’;
(2) in clause (ii), by striking ‘‘a subsequent year’’ and insert-
ing ‘‘1992 and 1993’’; and
(3) by adding at the end the following new clauses:
‘‘(iii) for 1994 and 1995, 0 percent, and
‘‘(iv) for a subsequent year, the percentage increase
in the consumer price index for all urban consumers
(United States city average) for the 12-month period
ending with June of the previous year;’’.
Subpart E—Other Provisions
SEC. 13551. PAYMENTS FOR CLINICAL DIAGNOSTIC LABORATORY
TESTS.
(a) UPDATE
FREEZE.—Section 1833(h)(2)(A)(ii) (42 U.S.C.
1395l(h)(2)(A)(ii)) is amended—
(1) by striking ‘‘and’’ at the end of subclause (II),
(2) by striking the period at the end of subclause (III)
and inserting ‘‘, and’’, and
(3) by adding at the end the following new subclause:
‘‘(IV) the annual adjustment in the fee schedules deter-
mined under clause (i) for each of the years 1994 and 1995
shall be 0 percent.’’.
(b) 
LOWER
CAP.—Section 
1833(h)(4)(B) 
(42 
U.S.C.
1395l(h)(4)(B)) is amended—
H. R. 2264—280
(1) by striking ‘‘and’’ at the end of clause (iii),
(2) by striking clause (iv) and inserting the following:
‘‘(iv) after December 31, 1990, and before January 1, 1994,
is equal to 88 percent of such median,
‘‘(v) after December 31, 1993, and before January 1, 1995,
is equal to 84 percent of such median,
‘‘(vi) after December 31, 1994, and before January 1, 1996,
is equal to 80 percent of such median, and
‘‘(vii) after December 31, 1995, is equal to 76 percent of
such median.’’.
SEC. 13552. EXTENSION OF ALZHEIMER’S DISEASE DEMONSTRATION
PROJECTS.
Section 9342 of OBRA–1986, as amended by section 4164(a)(2)
of OBRA–1990, is amended—
(1) in subsection (c)(1), by striking ‘‘4 years’’ and inserting
‘‘5 years’’; and
(2) in subsection (f)—
(A) 
by 
striking 
‘‘$55,000,000’’ 
and 
inserting
‘‘$58,000,000’’, and
(B) by striking ‘‘$3,000,000’’ and inserting ‘‘$5,000,000’’.
SEC. 13553. ORAL CANCER DRUGS.
(a) 
NEW
COVERAGE
OF
CERTAIN
SELF-ADMINISTERED
ANTICANCER DRUGS.—Section 1861(s)(2) (42 U.S.C. 1395(s)(2)) is
amended—
(1) by striking ‘‘and’’ at the end of subparagraph (O);
(2) by adding ‘‘and’’ at the end of subparagraph (P); and
(3) by adding at the end the following new subparagraph:
‘‘(Q) an oral drug (which is approved by the Federal Food
and Drug Administration) prescribed for use as an anticancer
chemotherapeutic agent for a given indication, and containing
an active ingredient (or ingredients), which is the same indica-
tion and active ingredient (or ingredients) as a drug which
the carrier determines would be covered pursuant to subpara-
graph (A) or (B) if the drug could not be self-administered;’’.
(b) UNIFORM COVERAGE OF ‘‘OFF-LABEL’’ ANTICANCER DRUGS.—
Section 1861(t) (42 U.S.C. 1395x(t)) is amended—
(1) by inserting ‘‘(1)’’ after ‘‘(t)’’;
(2) by striking ‘‘(m)(5) of this section’’ and inserting ‘‘(m)(5)
and paragraph (2)’’; and
(3) by adding at the end the following new paragraph:
‘‘(2)(A) For purposes of paragraph (1), the term ‘drugs’ also
includes 
any 
drugs 
or 
biologicals 
used 
in 
an 
anticancer
chemotherapeutic regimen for a medically accepted indication (as
described in subparagraph (B)).
‘‘(B) In subparagraph (A), the term ‘medically accepted indica-
tion’, with respect to the use of a drug, includes any use which
has been approved by the Food and Drug Administration for the
drug, and includes another use of the drug if—
‘‘(i) the drug has been approved by the Food and Drug
Administration; and
‘‘(ii)(I) such use is supported by one or more citations which
are included (or approved for inclusion) in one or more of
the following compendia: the American Hospital Formulary
Service-Drug Information, the American Medical Association
Drug Evaluations, the United States Pharmacopoeia-Drug
Information, and other authoritative compendia as identified
H. R. 2264—281
by the Secretary, unless the Secretary has determined that
the use is not medically appropriate or the use is identified
as not indicated in one or more such compendia, or
‘‘(II) the carrier involved determines, based upon guidance
provided by the Secretary to carriers for determining accepted
uses of drugs, that such use is medically accepted based on
supportive clinical evidence in peer reviewed medical literature
appearing in publications which have been identified for pur-
poses of this subclause by the Secretary.
The Secretary may revise the list of compendia in clause (ii)(I)
as is appropriate for identifying medically accepted indications for
drugs.’’.
(c) EFFECTIVE DATE.—The amendments made by subsections
(a) and (b) shall apply to items furnished on or after January
1, 1994.
SEC. 13554. CLARIFICATION OF COVERAGE OF CERTIFIED NURSE-MID-
WIFE SERVICES PERFORMED OUTSIDE THE MATERNITY
CYCLE.
(a) IN GENERAL.—Section 1861(gg)(2) (42 U.S.C. 1395x(gg)(2))
is amended by striking ‘‘, and performs services’’ and all that
follows and inserting a period.
(b) EFFECTIVE DATE.—The amendment made by subsection (a)
shall apply to services furnished on or after January 1, 1994.
SEC. 13555. INCREASE IN ANNUAL CAP ON AMOUNT OF MEDICARE
PAYMENT FOR OUTPATIENT PHYSICAL THERAPY AND
OCCUPATIONAL THERAPY SERVICES.
(a) INCREASE
IN ANNUAL LIMITATION.—Section 1833(g) (42
U.S.C. 1395l(g)) is amended by striking ‘‘$750’’ and inserting ‘‘$900’’
each place it appears.
(b) EFFECTIVE DATE.—The amendment made by subsection (a)
shall apply to services furnished on or after January 1, 1994.
SEC. 13556. RURAL HEALTH CLINICS AND FEDERALLY QUALIFIED
HEALTH CENTERS.
(a) IN GENERAL.—Paragraph (4) of section 1861(aa) (42 U.S.C.
1395x(aa)) is amended—
(1) by striking ‘‘or’’ at the end of subparagraph (B);
(2) by striking the period at the end of subparagraph (C)
and inserting ‘‘; or’’; and
(3) by adding at the end the following new subparagraph:
‘‘(D) is an outpatient health program or facility operated
by a tribe or tribal organization under the Indian Self-Deter-
mination Act or by an urban Indian organization receiving
funds under title V of the Indian Health Care Improvement
Act.’’.
(b) EFFECTIVE DATE.—The amendments made by subsection
(a) shall take effect as if included in the enactment of section
4161(a)(2)(C) of OBRA–1990.
SEC. 13557. EXTENSION 
OF 
MUNICIPAL 
HEALTH 
SERVICE 
DEM-
ONSTRATION PROJECTS.
Section 9215 of the Consolidated Omnibus Budget Reconcili-
ation Act of 1985, as amended by section 6135 of OBRA–1989,
is amended—
(1) by striking ‘‘December 31, 1993’’ and inserting ‘‘Decem-
ber 31, 1997’’, and
H. R. 2264—282
(2) in the second sentence, by inserting after ‘‘beneficiary
costs,’’ the following: ‘‘costs to the medicaid program and other
payers, access to care, outcomes, beneficiary satisfaction, utili-
zation differences among the different populations served by
the projects,’’.
PART III—PROVISIONS RELATING TO PARTS A
AND B
SEC. 13561. MEDICARE AS SECONDARY PAYER.
(a) EXTENSION OF AND MODIFICATIONS TO DATA MATCH PRO-
GRAM.—
(1) Section 1862(b)(5)(C)(iii) (42 U.S.C. 1395y(b)(5)(C)(iii))
is amended by striking ‘‘1995’’ and inserting ‘‘1998’’.
(2) Section 6103(l)(12) of the Internal Revenue Code of
1986 is amended—
(A) in subparagraph (B)(i), by inserting ‘‘, above an
amount (if any) specified by the Secretary of Health and
Human Services,’’ after ‘‘section 3401(a))’’;
(B) in subparagraph (B)(ii), in the matter preceding
subclause (I) by inserting ‘‘, above an amount (if any)
specified by the Secretary of Health and Human Services,’’
after ‘‘wages’’; and
(C) in subparagraph (F)—
(i) in clause (i), by striking ‘‘1995’’ and inserting
‘‘1998’’,
(ii) in clause (ii)(I), by striking ‘‘1994’’ and inserting
‘‘1997’’, and
(iii) in clause (ii)(II), by striking ‘‘1995’’ and insert-
ing ‘‘1998’’.
(b) EXTENSION OF MEDICARE SECONDARY PAYER TO DISABLED
BENEFICIARIES.—Section 
1862(b)(1)(B)(iii) 
(42 
U.S.C.
1395y(b)(1)(B)(iii)) is amended by striking ‘‘1995’’ and inserting
‘‘1998’’.
(c) EXTENSION OF 18-MONTH RULE FOR ESRD BENEFICIARIES.—
Section 1862(b)(1) (42 U.S.C. 1395y(b)(1)) is amended—
(1) in the second sentence of subparagraph (C), by striking
‘‘on or before January 1, 1996’’ and inserting ‘‘before October
1, 1998’’;
(2) in each of subparagraphs (A)(iv) and (B)(ii)—
(A) by striking ‘‘Clause (i) shall not apply’’ and insert-
ing ‘‘Subparagraph (C) shall apply instead of clause (i)’’,
and
(B) by inserting ‘‘(without regard to entitlement under
section 226)’’ after ‘‘individual is, or’’; and
(3) in subparagraph (C), by striking ‘‘benefits under this
title solely by reason of’’ and inserting ‘‘or eligible for benefits
under this title under’’ each place it appears.
(d) APPLICATION OF AGGREGATION RULES.—
(1) IN GENERAL.—Section 1862(b)(1) (42 U.S.C. 1395y(b)(1))
is amended by adding at the end the following new subpara-
graph:
‘‘(E) GENERAL PROVISIONS.—For purposes of this sub-
section:
‘‘(i) AGGREGATION RULES.—
‘‘(I) All employers treated as a single employer
under subsection (a) or (b) of section 52 of the
H. R. 2264—283
Internal Revenue Code of 1986 shall be treated
as a single employer.
‘‘(II) All employees of the members of an affili-
ated service group (as defined in section 414(m)
of such Code) shall be treated as employed by
a single employer.
‘‘(III) Leased employees (as defined in section
414(n)(2) of such Code) shall be treated as employ-
ees of the person for whom they perform services
to the extent they are so treated under section
414(n) of such Code.
In applying sections of the Internal Revenue Code of
1986 under this clause, the Secretary shall rely upon
regulations and decisions of the Secretary of the Treas-
ury respecting such sections.’’.
(2) CONFORMING
AMENDMENT.—Section 5000(b)(2) of the
Internal Revenue Code of 1986 (relating to large group health
plans) is amended by adding at the end the following: ‘‘For
purposes of the preceding sentence—
‘‘(A) all employers treated as a single employer under
subsection (a) or (b) of section 52 shall be treated as a
single employer,
‘‘(B) all employees of the members of an affiliated serv-
ice group (as defined in section 414(m)) shall be treated
as employed by a single employer, and
‘‘(C) leased employees (as defined in section 414(n)(2))
shall be treated as employees of the person for whom
they perform services to the extent they are so treated
under section 414(n). ’’.
(3) The amendments made by this subsection shall take
effect 90 days after the date of the enactment of this Act.
(e) UNIFORM TREATMENT OF CURRENT EMPLOYMENT STATUS.—
(1) IN GENERAL.—Section 1862(b)(1) (42 U.S.C. 1395y(b)(1))
is amended—
(A) in subparagraph (A)(i), by amending subclauses
(I) and (II) to read as follows:
‘‘(I) may not take into account that an individ-
ual (or the individual’s spouse) who is covered
under the plan by virtue of the individual’s current
employment status with an employer is entitled
to benefits under this title under section 226(a),
and
‘‘(II) shall provide that any individual age 65
or over (and the individual’s spouse age 65 or
older) who is covered under the plan by virtue
of the individual’s current employment status with
an employer shall be entitled to the same benefits
under the plan under the same conditions as any
such individual (or spouse) under age 65.’’;
(B) in subparagraph (A)(ii), by striking ‘‘unless the
plan’’ and all that follows through ‘‘employees’’ and insert-
ing ‘‘unless the plan is a plan of, or contributed to by,
an employer or employee organization that has 20 or more
individuals in current employment status’’;
(C) in subparagraph (A)(iii), by striking ‘‘by virtue of
employment’’ and all that follows through ‘‘calendar year
or’’ and inserting ‘‘by virtue of current employment status
H. R. 2264—284
with an employer that does not have 20 or more individuals
in current employment status for each working day in
each of 20 or more calendar weeks in the current calendar
year and’’;
(D) in subparagraph (A)(v), by inserting ‘‘, without
regard to section 5000(d) of such Code’’ before the period
at the end of each subparagraph;
(E) in the heading of subparagraph (B), by striking
‘‘ACTIVE’’;
(F) in subparagraph (B)(i), by striking ‘‘clause (iv)(II))
may not take into account that an active individual (as
defined in clause (iv)(I))’’ and inserting ‘‘clause (iv)) may
not take into account that an individual (or a member
of the individual’s family) who is covered under the plan
by virtue of the individual’s current employment status
with an employer’’;
(G) by amending clause (iv) of subparagraph (B) to
read as follows:
‘‘(iv) LARGE GROUP HEALTH PLAN DEFINED.—In this
subparagraph, the term ‘large group health plan’ has
the meaning given such term in section 5000(b)(2)
of the Internal Revenue Code of 1986, without regard
to section 5000(d) of such Code.’’; and
(H) by adding at the end of subparagraph (E), as
added by subsection (d)(1), the following:
‘‘(ii) CURRENT EMPLOYMENT STATUS DEFINED.—An
individual has ‘current employment status’ with an
employer if the individual is an employee, is the
employer, or is associated with the employer in a busi-
ness relationship.
‘‘(iii) TREATMENT OF SELF-EMPLOYED PERSONS AS
EMPLOYERS.—The term ‘employer’ includes a self-
employed person.’’.
(2)(A) Section 5000 of the Internal Revenue Code of 1986
is amended—
(i) in subsection (a), by inserting ‘‘(including a self-
employed person)’’ after ‘‘employer’’,
(ii) by amending paragraph (1) of subsection (b) to
read as follows:
‘‘(1) GROUP HEALTH PLAN.—The term ‘group health plan’
means a plan (including a self-insured plan) of, or contributed
to by, an employer (including a self-employed person) or
employee organization to provide health care (directly or other-
wise) to the employees, former employees, the employer, others
associated or formerly associated with the employer in a busi-
ness relationship, or their families.’’, and
(iii) in subsection (c), by striking ‘‘of section 1862(b)(1)’’
and inserting ‘‘of paragraph (1), or with the requirements
of paragraph (2), of section 1862(b)’’.
(B) Section 6103(l)(12)(E)(ii) of such Code is amended to
read as follows:
‘‘(ii) GROUP HEALTH PLAN.—The term ‘group health
plan’ means any group health plan (as defined in sec-
tion 5000(b)(1)).’’.
(f) RETROACTIVE EXEMPTION FOR CERTAIN SITUATIONS INVOLV-
ING RELIGIOUS ORDERS.—Section 1862(b)(1)(D) of the Social Security
Act applies, with respect to items and services furnished before
H. R. 2264—285
October 1, 1989, to any claims that the Secretary of Health and
Human Services had not identified as of that date as subject to
the provisions of section 1862(b) of such Act.
SEC. 13562. PHYSICIAN OWNERSHIP AND REFERRAL.
(a) IN
GENERAL.—Section 1877 (42 U.S.C. 1395nn) is
amended—
(1) by amending subsections (a) through (e) to read as
follows:
‘‘(a) PROHIBITION OF CERTAIN REFERRALS.—
‘‘(1) IN GENERAL.—Except as provided in subsection (b),
if a physician (or an immediate family member of such physi-
cian) has a financial relationship with an entity specified in
paragraph (2), then—
‘‘(A) the physician may not make a referral to the
entity for the furnishing of designated health services for
which payment otherwise may be made under this title,
and
‘‘(B) the entity may not present or cause to be presented
a claim under this title or bill to any individual, third
party payor, or other entity for designated health services
furnished pursuant to a referral prohibited under subpara-
graph (A).
‘‘(2) FINANCIAL RELATIONSHIP SPECIFIED.—For purposes of
this section, a financial relationship of a physician (or an imme-
diate family member of such physician) with an entity specified
in this paragraph is—
‘‘(A) except as provided in subsections (c) and (d), an
ownership or investment interest in the entity, or
‘‘(B) except as provided in subsection (e), a compensa-
tion arrangement (as defined in subsection (h)(1)) between
the physician (or an immediate family member of such
physician) and the entity.
An ownership or investment interest described in subparagraph
(A) may be through equity, debt, or other means and includes
an interest in an entity that holds an ownership or investment
interest in any entity providing the designated health service.
‘‘(b) GENERAL EXCEPTIONS TO BOTH OWNERSHIP AND COMPENSA-
TION ARRANGEMENT PROHIBITIONS.—Subsection (a)(1) shall not
apply in the following cases:
‘‘(1) PHYSICIANS’ SERVICES.—In the case of physicians’ serv-
ices (as defined in section 1861(q)) provided personally by (or
under the personal supervision of) another physician in the
same group practice (as defined in subsection (h)(4)) as the
referring physician.
‘‘(2) IN-OFFICE ANCILLARY SERVICES.—In the case of services
(other than durable medical equipment (excluding infusion
pumps) and parenteral and enteral nutrients, equipment, and
supplies)—
‘‘(A) that are furnished—
‘‘(i) personally by the referring physician, person-
ally by a physician who is a member of the same
group practice as the referring physician, or personally
by individuals who are directly supervised by the physi-
cian or by another physician in the group practice,
and
H. R. 2264—286
‘‘(ii)(I) in a building in which the referring physi-
cian (or another physician who is a member of the
same group practice) furnishes physicians’ services
unrelated to the furnishing of designated health serv-
ices, or
‘‘(II) in the case of a referring physician who is
a member of a group practice, in another building
which is used by the group practice—
‘‘(aa) for the provision of some or all of the
group’s clinical laboratory services, or
‘‘(bb) for the centralized provision of the
group’s designated health services (other than
clinical laboratory services),
unless the Secretary determines other terms and condi-
tions under which the provision of such services does
not present a risk of program or patient abuse, and
‘‘(B) that are billed by the physician performing or
supervising the services, by a group practice of which such
physician is a member under a billing number assigned
to the group practice, or by an entity that is wholly owned
by such physician or such group practice,
if the ownership or investment interest in such services meets
such other requirements as the Secretary may impose by regu-
lation as needed to protect against program or patient abuse.
‘‘(3) PREPAID PLANS.—In the case of services furnished by
an organization—
‘‘(A) with a contract under section 1876 to an individual
enrolled with the organization,
‘‘(B) described in section 1833(a)(1)(A) to an individual
enrolled with the organization,
‘‘(C) receiving payments on a prepaid basis, under a
demonstration project under section 402(a) of the Social
Security Amendments of 1967 or under section 222(a) of
the Social Security Amendments of 1972, to an individual
enrolled with the organization, or
‘‘(D) that is a qualified health maintenance organiza-
tion (within the meaning of section 1310(d) of the Public
Health Service Act) to an individual enrolled with the
organization.
‘‘(4) OTHER PERMISSIBLE EXCEPTIONS.—In the case of any
other financial relationship which the Secretary determines,
and specifies in regulations, does not pose a risk of program
or patient abuse.
‘‘(c) GENERAL EXCEPTION RELATED ONLY
TO OWNERSHIP
OR
INVESTMENT PROHIBITION
FOR OWNERSHIP
IN PUBLICLY TRADED
SECURITIES AND MUTUAL FUNDS.—Ownership of the following shall
not be considered to be an ownership or investment interest
described in subsection (a)(2)(A):
‘‘(1) Ownership of investment securities (including shares
or bonds, debentures, notes, or other debt instruments) which
may be purchased on terms generally available to the public
and which are—
‘‘(A)(i) securities listed on the New York Stock
Exchange, the American Stock Exchange, or any regional
exchange in which quotations are published on a daily
basis, or foreign securities listed on a recognized foreign,
H. R. 2264—287
national, or regional exchange in which quotations are
published on a daily basis, or
‘‘(ii) traded under an automated interdealer quotation
system operated by the National Association of Securities
Dealers, and
‘‘(B) in a corporation that had, at the end of the corpora-
tion’s most recent fiscal year, or on average during the
previous 3 fiscal years, stockholder equity exceeding
$75,000,000.
‘‘(2) Ownership of shares in a regulated investment com-
pany as defined in section 851(a) of the Internal Revenue
Code of 1986, if such company had, at the end of the company’s
most recent fiscal year, or on average during the previous
3 fiscal years, total assets exceeding $75,000,000.
‘‘(d) ADDITIONAL EXCEPTIONS RELATED ONLY
TO OWNERSHIP
OR INVESTMENT PROHIBITION.—The following, if not otherwise
excepted under subsection (b), shall not be considered to be an
ownership or investment interest described in subsection (a)(2)(A):
‘‘(1) HOSPITALS IN PUERTO RICO.—In the case of designated
health services provided by a hospital located in Puerto Rico.
‘‘(2) RURAL PROVIDER.—In the case of designated health
services furnished in a rural area (as defined in section
1886(d)(2)(D)) by an entity, if substantially all of the designated
health services furnished by such entity are furnished to
individuals residing in such a rural area.
‘‘(3) HOSPITAL
OWNERSHIP.—In the case of designated
health services provided by a hospital (other than a hospital
described in paragraph (1)) if—
‘‘(A) the referring physician is authorized to perform
services at the hospital, and
‘‘(B) the ownership or investment interest is in the
hospital itself (and not merely in a subdivision of the
hospital).
‘‘(e) EXCEPTIONS RELATING TO OTHER COMPENSATION ARRANGE-
MENTS.—The following shall not be considered to be a compensation
arrangement described in subsection (a)(2)(B):
‘‘(1) RENTAL OF OFFICE SPACE; RENTAL OF EQUIPMENT.—
‘‘(A) OFFICE SPACE.—Payments made by a lessee to
a lessor for the use of premises if—
‘‘(i) the lease is set out in writing, signed by the
parties, and specifies the premises covered by the lease,
‘‘(ii) the space rented or leased does not exceed
that which is reasonable and necessary for the legiti-
mate business purposes of the lease or rental and
is used exclusively by the lessee when being used by
the lessee, except that the lessee may make payments
for the use of space consisting of common areas if
such payments do not exceed the lessee’s pro rata
share of expenses for such space based upon the ratio
of the space used exclusively by the lessee to the total
amount of space (other than common areas) occupied
by all persons using such common areas,
‘‘(iii) the lease provides for a term of rental or
lease for at least 1 year,
‘‘(iv) the rental charges over the term of the lease
are set in advance, are consistent with fair market
value, and are not determined in a manner that takes
H. R. 2264—288
into account the volume or value of any referrals or
other business generated between the parties,
‘‘(v) the lease would be commercially reasonable
even if no referrals were made between the parties,
and
‘‘(vi) the lease meets such other requirements as
the Secretary may impose by regulation as needed
to protect against program or patient abuse.
‘‘(B) EQUIPMENT.—Payments made by a lessee of equip-
ment to the lessor of the equipment for the use of the
equipment if—
‘‘(i) the lease is set out in writing, signed by the
parties, and specifies the equipment covered by the
lease,
‘‘(ii) the equipment rented or leased does not exceed
that which is reasonable and necessary for the legiti-
mate business purposes of the lease or rental and
is used exclusively by the lessee when being used by
the lessee,
‘‘(iii) the lease provides for a term of rental or
lease of at least 1 year,
‘‘(iv) the rental charges over the term of the lease
are set in advance, are consistent with fair market
value, and are not determined in a manner that takes
into account the volume or value of any referrals or
other business generated between the parties,
‘‘(v) the lease would be commercially reasonable
even if no referrals were made between the parties,
and
‘‘(vi) the lease meets such other requirements as
the Secretary may impose by regulation as needed
to protect against program or patient abuse.
‘‘(2) BONA FIDE EMPLOYMENT RELATIONSHIPS.—Any amount
paid by an employer to a physician (or an immediate family
member of such physician) who has a bona fide employment
relationship with the employer for the provision of services
if—
‘‘(A) the employment is for identifiable services,
‘‘(B) the amount of the remuneration under the
employment—
‘‘(i) is consistent with the fair market value of
the services, and
‘‘(ii) is not determined in a manner that takes
into account (directly or indirectly) the volume or value
of any referrals by the referring physician,
‘‘(C) the remuneration is provided pursuant to an
agreement which would be commercially reasonable even
if no referrals were made to the employer, and
‘‘(D) the employment meets such other requirements
as the Secretary may impose by regulation as needed to
protect against program or patient abuse.
Subparagraph (B)(ii) shall not prohibit the payment of remu-
neration in the form of a productivity bonus based on services
performed personally by the physician (or an immediate family
member of such physician).
‘‘(3) PERSONAL SERVICE ARRANGEMENTS.—
H. R. 2264—289
‘‘(A) IN GENERAL.—Remuneration from an entity under
an arrangement (including remuneration for specific physi-
cians’ services furnished to a nonprofit blood center) if—
‘‘(i) the arrangement is set out in writing, signed
by the parties, and specifies the services covered by
the arrangement,
‘‘(ii) the arrangement covers all of the services
to be provided by the physician (or an immediate family
member of such physician) to the entity,
‘‘(iii) the aggregate services contracted for do not
exceed those that are reasonable and necessary for
the legitimate business purposes of the arrangement,
‘‘(iv) the term of the arrangement is for at least
1 year,
‘‘(v) the compensation to be paid over the term
of the arrangement is set in advance, does not exceed
fair market value, and except in the case of a physician
incentive plan described in subparagraph (B), is not
determined in a manner that takes into account the
volume or value of any referrals or other business
generated between the parties,
‘‘(vi) the services to be performed under the
arrangement do not involve the counseling or pro-
motion or a business arrangement or other activity
that violates any State or Federal law, and
‘‘(vii) the arrangement meets such other require-
ments as the Secretary may impose by regulation as
needed to protect against program or patient abuse.
‘‘(B) PHYSICIAN INCENTIVE PLAN EXCEPTION.—
‘‘(i) IN GENERAL.—In the case of a physician incen-
tive plan (as defined in clause (ii)) between a physician
and an entity, the compensation may be determined
in a manner (through a withhold, capitation, bonus,
or otherwise) that takes into account directly or
indirectly the volume or value of any referrals or other
business generated between the parties, if the plan
meets the following requirements:
‘‘(I) No specific payment is made directly or
indirectly under the plan to a physician or a physi-
cian group as an inducement to reduce or limit
medically necessary services provided with respect
to a specific individual enrolled with the entity.
‘‘(II) In the case of a plan that places a physi-
cian or a physician group at substantial financial
risk as determined by the Secretary pursuant to
section 1876(i)(8)(A)(ii), the plan complies with any
requirements the Secretary may impose pursuant
to such section.
‘‘(III) Upon request by the Secretary, the entity
provides the Secretary with access to descriptive
information regarding the plan, in order to permit
the Secretary to determine whether the plan is
in compliance with the requirements of this clause.
‘‘(ii) PHYSICIAN INCENTIVE PLAN DEFINED.—For pur-
poses of this subparagraph, the term ‘physician incen-
tive plan’ means any compensation arrangement
between an entity and a physician or physician group
H. R. 2264—290
that may directly or indirectly have the effect of reduc-
ing or limiting services provided with respect to
individuals enrolled with the entity.
‘‘(4) REMUNERATION UNRELATED TO THE PROVISION OF DES-
IGNATED HEALTH SERVICES.—In the case of remuneration which
is provided by a hospital to a physician if such remuneration
does not relate to the provision of designated health services.
‘‘(5) PHYSICIAN RECRUITMENT.—In the case of remuneration
which is provided by a hospital to a physician to induce the
physician to relocate to the geographic area served by the
hospital in order to be a member of the medical staff of the
hospital, if—
‘‘(A) the physician is not required to refer patients
to the hospital,
‘‘(B) the amount of the remuneration under the
arrangement is not determined in a manner that takes
into account (directly or indirectly) the volume or value
of any referrals by the referring physician, and
‘‘(C) the arrangement meets such other requirements
as the Secretary may impose by regulation as needed to
protect against program or patient abuse.
‘‘(6) ISOLATED TRANSACTIONS.—In the case of an isolated
financial transaction, such as a one-time sale of property or
practice, if—
‘‘(A) the requirements described in subparagraphs (B)
and (C) of paragraph (2) are met with respect to the entity
in the same manner as they apply to an employer, and
‘‘(B) the transaction meets such other requirements
as the Secretary may impose by regulation as needed to
protect against program or patient abuse.
‘‘(7) CERTAIN GROUP PRACTICE ARRANGEMENTS WITH A HOS-
PITAL.—
‘‘(A) IN GENERAL.—An arrangement between a hospital
and a group under which designated health services are
provided by the group but are billed by the hospital if—
‘‘(i) with respect to services provided to an
inpatient of the hospital, the arrangement is pursuant
to the provision of inpatient hospital services under
section 1861(b)(3),
‘‘(ii) the arrangement began before December 19,
1989, and has continued in effect without interruption
since such date,
‘‘(iii) with respect to the designated health services
covered under the arrangement, substantially all of
such services furnished to patients of the hospital are
furnished by the group under the arrangement,
‘‘(iv) the arrangement is pursuant to an agreement
that is set out in writing and that specifies the services
to be provided by the parties and the compensation
for services provided under the agreement,
‘‘(v) the compensation paid over the term of the
agreement is consistent with fair market value and
the compensation per unit of services is fixed in
advance and is not determined in a manner that takes
into account the volume or value of any referrals or
other business generated between the parties,
H. R. 2264—291
‘‘(vi) the compensation is provided pursuant to an
agreement which would be commercially reasonable
even if no referrals were made to the entity, and
‘‘(vii) the arrangement between the parties meets
such other requirements as the Secretary may impose
by regulation as needed to protect against program
or patient abuse.
‘‘(8) PAYMENTS BY A PHYSICIAN FOR ITEMS AND SERVICES.—
Payments made by a physician—
‘‘(A) to a laboratory in exchange for the provision of
clinical laboratory services, or
‘‘(B) to an entity as compensation for other items or
services if the items or services are furnished at a price
that is consistent with fair market value.’’;
(2) by amending subsection (h) to read as follows:
‘‘(h) DEFINITIONS AND SPECIAL RULES.—For purposes of this
section:
‘‘(1) COMPENSATION
ARRANGEMENT; REMUNERATION.—(A)
The term ‘compensation arrangement’ means any arrangement
involving any remuneration between a physician (or an imme-
diate family member of such physician) and an entity other
than an arrangement involving only remuneration described
in subparagraph (C).
‘‘(B) The term ‘remuneration’ includes any remuneration,
directly or indirectly, overtly or covertly, in cash or in kind.
‘‘(C) Remuneration described in this subparagraph is any
remuneration consisting of any of the following:
‘‘(i) The forgiveness of amounts owed for inaccurate
tests or procedures, mistakenly performed tests or proce-
dures, or the correction of minor billing errors.
‘‘(ii) The provision of items, devices, or supplies that
are used solely to—
‘‘(I) collect, transport, process, or store specimens
for the entity providing the item, device, or supply,
or
‘‘(II) order or communicate the results of tests or
procedures for such entity.
‘‘(iii) A payment made by an insurer or a self-insured
plan to a physician to satisfy a claim, submitted on a
fee for service basis, for the furnishing of health services
by that physician to an individual who is covered by a
policy with the insurer or by the self-insured plan, if—
‘‘(I) the health services are not furnished, and the
payment is not made, pursuant to a contract or other
arrangement between the insurer or the plan and the
physician,
‘‘(II) the payment is made to the physician on
behalf of the covered individual and would otherwise
be made directly to such individual,
‘‘(III) the amount of the payment is set in advance,
does not exceed fair market value, and is not deter-
mined in a manner that takes into account directly
or indirectly the volume or value of any referrals, and
‘‘(IV) the payment meets such other requirements
as the Secretary may impose by regulation as needed
to protect against program or patient abuse.
H. R. 2264—292
‘‘(2) EMPLOYEE.—An individual is considered to be
‘employed by’ or an ‘employee’ of an entity if the individual
would be considered to be an employee of the entity under
the usual common law rules applicable in determining the
employer-employee relationship (as applied for purposes of sec-
tion 3121(d)(2) of the Internal Revenue Code of 1986).
‘‘(3) FAIR MARKET VALUE.—The term ‘fair market value’
means the value in arms length transactions, consistent with
the general market value, and, with respect to rentals or leases,
the value of rental property for general commercial purposes
(not taking into account its intended use) and, in the case
of a lease of space, not adjusted to reflect the additional value
the prospective lessee or lessor would attribute to the proximity
or convenience to the lessor where the lessor is a potential
source of patient referrals to the lessee.
‘‘(4) GROUP PRACTICE.—
‘‘(A) DEFINITION OF GROUP PRACTICE.—The term ‘group
practice’ means a group of 2 or more physicians legally
organized as a partnership, professional corporation,
foundation, not-for-profit corporation, faculty practice plan,
or similar association—
‘‘(i) in which each physician who is a member
of the group provides substantially the full range of
services which the physician routinely provides, includ-
ing medical care, consultation, diagnosis, or treatment,
through the joint use of shared office space, facilities,
equipment and personnel,
‘‘(ii) for which substantially all of the services of
the physicians who are members of the group are pro-
vided through the group and are billed under a billing
number assigned to the group and amounts so received
are treated as receipts of the group,
‘‘(iii) in which the overhead expenses of and the
income from the practice are distributed in accordance
with methods previously determined,
‘‘(iv) except as provided in subparagraph (B)(i),
in which no physician who is a member of the group
directly or indirectly receives compensation based on
the volume or value of referrals by the physician,
‘‘(v) in which members of the group personally
conduct no less than 75 percent of the physician-patient
encounters of the group practice, and
‘‘(vi) which meets such other standards as the Sec-
retary may impose by regulation.
‘‘(B) SPECIAL RULES.—
‘‘(i) PROFITS AND PRODUCTIVITY BONUSES.—A physi-
cian in a group practice may be paid a share of overall
profits of the group, or a productivity bonus based
on services personally performed or services incident
to such personally performed services, so long as the
share or bonus is not determined in any manner which
is directly related to the volume or value of referrals
by such physician.
‘‘(ii) FACULTY PRACTICE PLANS.—In the case of a
faculty practice plan associated with a hospital, institu-
tion of higher education, or medical school with an
approved medical residency training program in which
H. R. 2264—293
physician members may provide a variety of different
specialty services and provide professional services
both within and outside the group, as well as perform
other tasks such as research, subparagraph (A) shall
be applied only with respect to the services provided
within the faculty practice plan.
‘‘(5) REFERRAL; REFERRING PHYSICIAN.—
‘‘(A) PHYSICIANS’ SERVICES.—Except as provided in
subparagraph (C), in the case of an item or service for
which payment may be made under part B, the request
by a physician for the item or service, including the request
by a physician for a consultation with another physician
(and any test or procedure ordered by, or to be performed
by (or under the supervision of) that other physician),
constitutes a ‘referral’ by a ‘referring physician’.
‘‘(B) OTHER ITEMS.—Except as provided in subpara-
graph (C), the request or establishment of a plan of care
by a physician which includes the provision of the des-
ignated health service constitutes a ‘referral’ by a ‘referring
physician’.
‘‘(C) CLARIFICATION
RESPECTING
CERTAIN
SERVICES
INTEGRAL TO A CONSULTATION BY CERTAIN SPECIALISTS.—
A request by a pathologist for clinical diagnostic laboratory
tests and pathological examination services, a request by
a radiologist for diagnostic radiology services, and a request
by a radiation oncologist for radiation therapy, if such
services are furnished by (or under the supervision of)
such pathologist, radiologist, or radiation oncologist pursu-
ant to a consultation requested by another physician does
not constitute a ‘referral’ by a ‘referring physician’.
‘‘(6) DESIGNATED HEALTH SERVICES.—The term ‘designated
health services’ means any of the following items or services:
‘‘(A) Clinical laboratory services.
‘‘(B) Physical therapy services.
‘‘(C) Occupational therapy services.
‘‘(D) Radiology or other diagnostic services.
‘‘(E) Radiation therapy services.
‘‘(F) Durable medical equipment.
‘‘(G) Parenteral and enteral nutrients, equipment, and
supplies.
‘‘(H) Prosthetics, orthotics, and prosthetic devices.
‘‘(I) Home health services.
‘‘(J) Outpatient prescription drugs.
‘‘(K) Inpatient and outpatient hospital services.’’;
(3) in subsection (f), by striking ‘‘clinical laboratory serv-
ices’’ and inserting ‘‘designated health services’’; and
(4) in paragraph (1) of subsection (g), by striking ‘‘clinical
laboratory service’’ and inserting ‘‘designated health service’’.
(b) EFFECTIVE DATES.—
(1) IN GENERAL.—Except as provided in paragraph (2), the
amendments made by this section shall apply to referrals—
(A) made on or after January 1, 1992, in the case
of clinical laboratory services, and
(B) made after December 31, 1994, in the case of other
designated health services.
(2) EXCEPTIONS.—With respect to referrals made for clinical
laboratory services on or before December 31, 1994—
H. R. 2264—294
(A) the requirements of clauses (iv) and (v) of section
1877(h)(4)(A) of the Social Security Act, as amended by
this section, shall not apply; and
(B) the second sentence of subsection (a)(2), and sub-
sections (b)(2)(B), (c), (d)(2), (e)(1), and (h)(4)(B) of section
1877 of such Act, as in effect on the day before the date
of the enactment of this Act, shall apply (instead of the
corresponding provision in such section as so amended).
SEC. 13563. DIRECT GRADUATE MEDICAL EDUCATION.
(a) ELIMINATION OF COST-OF-LIVING UPDATE IN PER RESIDENT
AMOUNTS FOR DIRECT MEDICAL EDUCATION.—Section 1886(h) (42
U.S.C. 1395ww(h)) is amended—
(1) in paragraph (2)(D)—
(A) by striking ‘‘For each’’ and inserting ‘‘(i) Except
as provided in clause (ii), for each’’, and
(B) by adding at the end the following new clause:
‘‘(ii) For cost reporting periods beginning during fiscal
year 1994 or fiscal year 1995, the approved FTE resident
amount for a hospital shall not be updated under clause
(i) for a resident who is not a primary care resident (as
defined in paragraph (5)(H)) or a resident enrolled in an
approved medical residency training program in obstetrics
and gynecology.’’; and
(2) in paragraph (5)—
(A) by redesignating subparagraph (H) as subpara-
graph (I); and
(B) by inserting after subparagraph (G) the following
new subparagraph:
‘‘(H) PRIMARY CARE RESIDENT.—The term ‘primary care
resident’ means a resident enrolled in an approved medical
residency training program in family medicine, general
internal medicine, general pediatrics, preventive medicine,
geriatric medicine, or osteopathic general practice.’’.
(b) INITIAL RESIDENCY PERIOD.—
(1) 
IN
GENERAL.—Section 
1886(h)(5)(F) 
(42 
U.S.C.
1395ww(h)(5)(F)) is amended—
(A) by striking ‘‘plus one year’’, and
(B) in clause (ii), by inserting ‘‘or a preventive medicine
residency or fellowship program’’ after ‘‘fellowship pro-
gram’’.
(2) EFFECTIVE DATES.—The amendments made by para-
graphs (1)(A) and (1)(B) shall take effect on July 1, 1995,
and the date of the enactment of this Act, respectively.
(c) ADJUSTMENT FOR PUBLICLY-FUNDED FAMILY PRACTICE RESI-
DENCY PROGRAMS.—
(1) 
IN
GENERAL.—Section 
1886(h)(5) 
(42 
U.S.C.
1395ww(h)(5)), as amended by subsection (a), is amended by
adding at the end the following new subparagraph:
‘‘(J) ADJUSTMENTS FOR CERTAIN FAMILY PRACTICE RESI-
DENCY PROGRAMS.—
‘‘(i) IN GENERAL.—In the case of an approved medi-
cal residency training program (meeting the require-
ments of clause (ii)) of a hospital which received funds
from the United States, a State, or a political subdivi-
sion of a State or an instrumentality of such a State
or political subdivision (other than payments under
H. R. 2264—295
this title or a State plan under title XIX) for the
program during the cost reporting period that began
during fiscal year 1984, the Secretary shall—
‘‘(I) provide for an average amount under para-
graph (2)(A) that takes into account the Secretary’s
estimate of the amount that would have been rec-
ognized as reasonable under this title if the hos-
pital had not received such funds, and
‘‘(II) reduce the payment amount otherwise
provided under this subsection in an amount equal
to the proportion of such program funds received
during the cost reporting period involved that is
allocable to this title.
‘‘(ii) ADDITIONAL
REQUIREMENTS.—A 
hospital’s
approved medical residency program meets the require-
ments of this clause if—
‘‘(I) the program is limited to training for fam-
ily and community medicine;
‘‘(II) the program is the only approved medical
residency program of the hospital; and
‘‘(III) the average amount determined under
paragraph (2)(A) for the hospital (as determined
without regard to the increase in such amount
described in clause (i)(I)) does not exceed $10,000.’’.
(2) EFFECTIVE DATE.—The amendment made by paragraph
(1) shall apply to payments under section 1886(h) of the Social
Security Act for cost reporting periods beginning on or after
October 1, 1992.
(d) ADJUSTMENT IN GME BASE-YEAR COSTS OF FEDERAL INSUR-
ANCE CONTRIBUTIONS ACT.—
(1) IN GENERAL.—In determining the amount of payment
to be made under section 1886(h) of the Social Security Act
in the case of a hospital described in paragraph (2) for cost
reporting periods beginning on or after October 1, 1992, the
Secretary of Health and Human Services shall redetermine
the approved FTE resident amount to reflect the amount that
would have been paid the hospital if, during the hospital’s
base cost reporting period, the hospital had been liable for
FICA taxes or for contributions to the retirement system of
a State, a political subdivision of a State, or an instrumentality
of such a State or political subdivision with respect to interns
and residents in its medical residency training program.
(2) HOSPITALS
AFFECTED.—A hospital described in this
paragraph is a hospital that did not pay FICA taxes with
respect to interns and residents in its medical residency train-
ing program during the hospital’s base cost reporting period,
but is required to pay FICA taxes or make contributions to
a retirement system described in paragraph (1) with respect
to such interns and residents because of the amendments made
by section 11332(b) of OBRA–1990.
(3) DEFINITIONS.—In this subsection:
(A) The ‘‘base cost reporting period’’ for a hospital
is the hospital’s cost reporting period that began during
fiscal year 1984.
(B) The term ‘‘FICA taxes’’ means, with respect to
a hospital, the taxes under section 3111 of the Internal
Revenue Code of 1986.
H. R. 2264—296
SEC. 13564. REDUCTION IN PAYMENTS FOR HOME HEALTH SERVICES.
(a) IN GENERAL.—
(1) NO CHANGES IN COST LIMITS.—The Secretary of Health
and Human Services shall not provide for any change in the
per visit cost limits for home health services under section
1861(v)(1)(L) of such Act for cost reporting periods beginning
on or after July 1, 1994, and before July 1, 1996, except as
may be necessary to take into account the amendment made
by subsection (b)(1). The effect of the preceding sentence shall
not be considered by the Secretary in making adjustments
pursuant to section 1861(v)(1)(L)(ii) of such Act to the payment
limits for such services during such cost reporting periods.
(2) DELAY IN UPDATES.—Section 1861(v)(1)(L)(iii) (42 U.S.C.
1395x(v)(1)(L)(iii)) is amended by striking ‘‘thereafter,’’ and
inserting ‘‘thereafter (but not for cost reporting periods begin-
ning on or after July 1, 1994, and before July 1, 1996),’’.
(b) ELIMINATION OF ADD-ON FOR OVERHEAD OF HOSPITAL-BASED
HOME HEALTH AGENCIES.—
(1) 
GENERAL
RULE.—The 
first 
sentence 
of 
section
1861(v)(1)(L)(ii) (42 U.S.C. 1395x(v)(1)(L)(ii)) is amended by
striking ‘‘, with appropriate adjustment for administrative and
general costs of hospital-based agencies’’.
(2) EFFECTIVE DATE.—The amendment made by paragraph
(1) shall apply to cost reporting periods beginning on or after
October 1, 1993.
SEC. 13565. IMMUNOSUPPRESSIVE DRUG THERAPY.
Section 1861(s)(2)(J) (42 U.S.C. 1395x(s)(2)(J)) is amended by
striking ‘‘title, within’’ and all that follows and inserting the follow-
ing: ‘‘title, but only in the case of drugs furnished—
‘‘(i) before 1995, within 12 months after the date of
the transplant procedure,
‘‘(ii) during 1995, within 18 months after the date
of the transplant procedure,
‘‘(iii) during 1996, within 24 months after the date
of the transplant procedure,
‘‘(iv) during 1997, within 30 months after the date
of the transplant procedure, and
‘‘(v) during any year after 1997, within 36 months
after the date of the transplant procedure;’’.
SEC. 13566. REDUCTION IN PAYMENTS FOR ERYTHROPOIENTIN.
(a) IN GENERAL.—Section 1881(b) (42 U.S.C. 1395rr(b)) is
amended—
(1) in paragraph (1)(C), by striking ‘‘1861(s)(2)(Q)’’ and
inserting ‘‘1861(s)(2)(P)’’; and
(2) in paragraph (11)(B)(ii)(I)—
(A) by striking ‘‘1991’’ and inserting ‘‘1994’’, and
(B) by striking ‘‘$11’’ and inserting ‘‘$10’’.
(b) SELF-ADMINISTRATION
OF
ERYTHROPOIENTIN.—Subpara-
graph (P) of section 1861(s)(2) (42 U.S.C. 1395x(s)(2)) is amended—
(1) by striking ‘‘home’’, and
(2) by moving such subparagraph two ems to the left.
(c) EFFECTIVE DATE.—The amendments made by this section
shall apply to erythropoietin furnished on or after January 1, 1994.