349
(iv) by adding at the end the following
new subparagraph:
‘‘(F) with respect to covered osteoporosis
drug (as defined in section 1861(kk)) furnished
by a home health agency, 80 percent of the rea-
sonable cost of such service, as determined
under section 1861(v);’’.
(D) APPLICATION
OF
PART
B
DEDUCT-
IBLE.—Section 
1833(b)(2) 
(42 
U.S.C.
1395l(b)(2)) is amended by striking ‘‘services’’
and inserting ‘‘services (other than covered
osteoporosis 
drug 
(as 
defined 
in 
section
1861(kk)))’’.
(E) COVERED OSTEOPOROSIS DRUG (SEC-
TION 4156 OF OBRA–1990).—Section 1861 (42
U.S.C. 1395x) is amended, in the subsection
(jj) inserted by section 4156(a)(2) of OBRA–
1990, by striking ‘‘(jj) The term’’ and inserting
‘‘(kk) The term’’.
(9) OTHER
MISCELLANEOUS
AND
TECHNICAL
CORRECTIONS (SECTION 4164 OF OBRA–1990).—
(A) OWNERSHIP
DISCLOSURE
REQUIRE-
MENTS.—(i) 
Section 
1124A(a)(2)(A) 
(42
U.S.C. 1320a–3a(a)(2)(A)) is amended by
striking ‘‘of the Social Security Act’’.
350
(ii) Section 4164(b)(4) of OBRA–1990 is
amended by striking ‘‘paragraph’’ and inserting
‘‘paragraphs’’.
(B) DIRECTORY
OF
UNIQUE
PHYSICIAN
IDENTIFIER
NUMBERS.—Section 4164(c) of
OBRA–1990 is amended by striking ‘‘publish’’
and inserting ‘‘publish, and shall periodically
update,’’.
(g) EFFECTIVE DATE.—Except as otherwise provided
in this section, the amendments made by this section shall
take effect as if included in the enactment of OBRA–1990.
Subchapter F—Part B Premium
SEC. 13481. PART B PREMIUM.
Section 1839(e) (42 U.S.C. 1395r(e)) is amended—
(1) in paragraph (1)(A), by inserting ‘‘and for
each month in 1996 and 1997’’ after ‘‘January
1991’’, and
(2) in paragraph (2), by striking ‘‘1991’’ and
inserting ‘‘1998’’.
351
CHAPTER 3—PROVISIONS RELATING TO
PARTS A AND B
Subchapter A—Elimination of Updates
SEC. 13501. ELIMINATION OF COST-OF-LIVING UPDATE IN
PER RESIDENT AMOUNTS FOR DIRECT MEDI-
CAL EDUCATION.
Section 1886(h)(2)(D) (42 U.S.C. 1395ww(h)(2)(D))
is amended by inserting ‘‘(other than in the case of cost
reporting periods beginning during fiscal year 1994 or fis-
cal year 1995)’’ after ‘‘updated’’.
SEC. 13502. ELIMINATION OF INFLATION UPDATE IN COST
LIMITS FOR HOME HEALTH SERVICES.
The Secretary of Health and Human Services shall
not provide for any increase, on the basis of inflation or
changes in the cost of goods and services, in the per visit
cost limits for home health services under section
1861(v)(1)(L) of the Social Security Act for cost reporting
periods beginning during fiscal year 1994 or fiscal year
1995.
Subchapter B—Medicare Secondary Payer
Provisions
SEC. 13511. EXTENSION OF TRANSFER OF DATA.
(a) EXTENSION OF DATA MATCH PROGRAM.—
352
(1) Section 1862(b)(5)(C)(iii) of the Social Se-
curity Act (42 U.S.C. 1395y(b)(5)(C)(iii)) is amend-
ed by striking ‘‘1995’’ and inserting ‘‘1998’’.
(2) Section 6103(l)(12)(F) of the Internal Rev-
enue Code of 1986 is amended—
(A) in clause (i), by striking ‘‘1995’’ and
inserting ‘‘1998’’,
(B) in clause (ii)(I), by striking ‘‘1994’’
and inserting ‘‘1997’’, and
(C) in clause (ii)(II), by striking ‘‘1995’’
and inserting ‘‘1998’’.
(b) SECONDARY PAYER EXEMPTION FOR MEMBERS
OF RELIGIOUS ORDERS.—Effective as if included in the
enactment of OBRA–1989, section 6202(e)(2) of such Act
is amended by adding at the end the following: ‘‘Such
amendment also shall apply to items and services fur-
nished before such date with respect to secondary payer
cases which the Secretary of Health and Human Services
had not identified as of such date.’’.
(c) PERMITTING
THE USE
OF MINIMUM INCOME
THRESHOLDS.—
(1) Section 6103(l)(12)(B)(i) of the Internal
Revenue Code of 1986 is amended by inserting ‘‘,
above an amount (if any) specified by the Secretary
353
of Health and Human Services,’’ after ‘‘section
3401(a))’’.
(2) The matter in section 6103(l)(12)(B)(ii) of
such Code preceding subclause (I) is amended by in-
serting ‘‘, above an amount (if any) specified by the
Secretary of Health and Human Services,’’ after
‘‘wages’’.
(3) The heading to section 6103(l)(12) of such
Code is amended by striking ‘‘TAXPAYER IDENTITY’’
and inserting ‘‘RETURN’’.
SEC. 13512. 3-YEAR 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’’.
SEC. 13513. 3-YEAR EXTENSION OF 18-MONTH RULE FOR
ESRD BENEFICIARIES.
Section 1862(b)(1)(C) (42 U.S.C. 1395y(b)(1)(C)) is
amended by striking ‘‘1996’’ and inserting ‘‘1999’’.
SEC. 13514. MEDICARE SECONDARY PAYER REFORMS.
(a) IMPROVING IDENTIFICATION OF MEDICARE SEC-
ONDARY PAYER SITUATIONS.—
(1) SURVEY OF BENEFICIARIES.—
354
(A) IN GENERAL.—Section 1862(b)(5) (42
U.S.C. 1395y(b)(5)) is amended by adding at
the end the following new subparagraph:
‘‘(D) 
OBTAINING
INFORMATION
FROM
BENEFICIARIES.—Before an individual applies
for benefits under part A or enrolls under part
B, the Administrator shall mail the individual a
questionnaire to obtain information on whether
the individual is covered under a primary plan
and the nature of the coverage provided under
the plan, including the name, address, and iden-
tifying number of the plan.’’.
(B) DISTRIBUTION OF QUESTIONNAIRE BY
CONTRACTOR.—The Secretary of Health and
Human Services shall enter into an agreement
with an entity not later than November 1,
1993, to distribute the questionnaire described
in section 1862(b)(5)(D) of the Social Security
Act (as added by subparagraph (A)).
(C) NO MEDICARE SECONDARY PAYER DE-
NIAL BASED ON FAILURE TO COMPLETE QUES-
TIONNAIRE.—Section 1862(b)(2) (42 U.S.C.
1395y(b)(2)) is amended by adding at the end
the following new subparagraph:
355
‘‘(C) TREATMENT OF QUESTIONNAIRES.—
The Secretary may not fail to make payment
under subparagraph (A) solely on the ground
that an individual failed to complete a question-
naire concerning the existence of a primary
plan.’’.
(2) MANDATORY
SCREENING
BY
PROVIDERS
AND SUPPLIERS UNDER PART B.—
(A) IN
GENERAL.—Section 1862(b) (42
U.S.C. 1395y(b)) is amended by adding at the
end the following new paragraph:
‘‘(6) SCREENING REQUIREMENTS FOR PROVID-
ERS AND SUPPLIERS.—
‘‘(A) IN GENERAL.—Notwithstanding any
other provision of this title, no payment may be
made for any item or service furnished under
part B unless the entity furnishing such item or
service completes (to the best of its knowledge
and on the basis of information obtained from
the individual to whom the item or service is
furnished) the portion of the claim form relat-
ing to the availability of other health benefit
plans.
‘‘(B) PENALTIES.—An entity that know-
ingly, willfully, and repeatedly fails to complete
356
a claim form in accordance with subparagraph
(A) or provides inaccurate information relating
to the availability of other health benefit plans
on a claim form under such subparagraph shall
be subject to a civil money penalty of not to ex-
ceed $2,000 for each such incident. The provi-
sions of section 1128A (other than subsections
(a) and (b)) shall apply to a civil money penalty
under the previous sentence in the same man-
ner as such provisions apply to a penalty or
proceeding under section 1128A(a).’’.
(B) EFFECTIVE
DATE.—The amendment
made by subparagraph (A) shall apply with re-
spect to items and services furnished on or
after January 1, 1994.
(b) IMPROVEMENTS
IN RECOVERY
OF PAYMENTS
FROM PRIMARY PAYERS.—
(1) SUBMISSION OF REPORTS ON EFFORTS TO
RECOVER ERRONEOUS PAYMENTS.—
(A) FISCAL INTERMEDIARIES UNDER PART
A.—Section 1816 (42 U.S.C. 1396h) is amend-
ed by adding at the end the following new sub-
section:
‘‘(k) An agreement with an agency or organization
under this section shall require that such agency or orga-
357
nization submit an annual report to the Secretary describ-
ing the steps taken to recover payments made for items
or services for which payment has been or could be made
under 
a 
primary 
plan 
(as 
defined 
in 
section
1862(b)(2)(A)).’’.
(B) CARRIERS
UNDER
PART
B.—Section
1842(b)(3) (42 U.S.C. 1395u(b)(3)) is amend-
ed—
(i) by striking ‘‘and’’ at the end of
subparagraph (H); and
(ii) by inserting after subparagraph
(H) the following new subparagraph:
‘‘(I) will submit annual reports to the Secretary
describing the steps taken to recover payments made
under this part for items or services for which pay-
ment has been or could be made under a primary
plan (as defined in section 1862(b)(2)(A)).’’.
(2) REQUIREMENTS UNDER CARRIER PERFORM-
ANCE EVALUATION PROGRAM.—
(A) FISCAL INTERMEDIARIES UNDER PART
A.—Section 
1816(f)(1)(A) 
(42 
U.S.C.
1396h(f)(1)(A)) is amended by striking ‘‘proc-
essing’’ and inserting ‘‘processing (including the
agency’s or organization’s success in recovering
payments made under this title for services for
358
which payment has been or could be made
under a primary plan (as defined in section
1862(b)(2)(A)))’’.
(B) CARRIERS
UNDER
PART
B.—Section
1842(b)(2) (42 U.S.C. 1395u(b)(2)) is amended
by adding at the end the following new sub-
paragraph:
‘‘(D) In addition to any other standards and criteria
established by the Secretary for evaluating carrier per-
formance under this paragraph relating to avoiding erro-
neous payments, the Secretary shall establish standards
and criteria relating to the carrier’s success in recovering
payments made under this part for items or services for
which payment has been or could be made under a pri-
mary plan (as defined in section 1862(b)(2)(A)).’’.
(3) DEADLINE FOR REIMBURSEMENT BY PRI-
MARY PLANS.—
(A) 
IN
GENERAL.—Section
1862(b)(2)(B)(i) (42 U.S.C. 1395y(b)(2)(B)(i))
is amended by adding at the end the following
sentence: ‘‘If reimbursement is not made to the
appropriate Trust Fund before the expiration of
the 60-day period that begins on the date such
notice or other information is received, the Sec-
retary may charge interest (beginning with the
359
date on which the notice or other information
is received) on the amount of the reimburse-
ment until reimbursement is made (at a rate
determined by the Secretary in accordance with
regulations of the Secretary of the Treasury ap-
plicable to charges for late payments).’’.
(B) 
CONFORMING
AMENDMENT.—The
heading of clause (i) of section 1862(b)(2)(B) is
amended to read as follows: ‘‘REPAYMENT RE-
QUIRED.—’’.
(C) EFFECTIVE DATE.—The amendments
made by this paragraph shall apply to payments
for items and services furnished on or after the
date of the enactment of this Act.
(4) EFFECTIVE DATE.—The amendments made
by paragraphs (1) and (2) shall apply to contracts
with fiscal intermediaries and carriers under title
XVIII of the Social Security Act for years beginning
with 1994.
(c) APPLICATION OF AGGREGATION RULES.—
(1) WORKING
AGED.—Section 1862(b)(1)(A)
(42 U.S.C. 1395y(b)(1)(A)) is amended by adding at
the end the following new clause:
‘‘(vi) APPLICATION OF AGGREGATION
RULES.—All employers treated as a single
360
employer under subsection (a) or (b) of
section 52 of the Internal Revenue Code of
1986 shall be treated as a single employer
for purposes of this subparagraph.’’.
(2) 
DISABLED
INDIVIDUALS.—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: ‘‘All employers
treated as a single employer under subsection (a) or
(b) of section 52 shall be treated as a single em-
ployer for purposes of this paragraph.’’.
(3) EFFECTIVE DATE.—The amendments made
by this subsection shall take effect 90 days after the
date of the enactment of this Act.
(d) APPLICATION OF EXCISE TAX TO FAILURE TO
REIMBURSE FEDERAL GOVERNMENT.—
(1) IN GENERAL.—Section 5000(c) of the Inter-
nal Revenue Code of 1986 (relating to nonconform-
ing group health plans) is amended by striking ‘‘of
section 1862(b)(1)’’ and inserting ‘‘of paragraph (1),
or with the requirements of paragraph (2), of section
1862(b)’’.
(2) EFFECTIVE DATE.—The amendment made
by paragraph (1) shall apply to demands for repay-
361
ment issued after the date of the enactment of this
Act.
(e) MISCELLANEOUS
AND
TECHNICAL
CORREC-
TIONS.—
(1) The sentence in section 1862(b)(1)(C)
added by section 4203(c)(1)(B) of OBRA–1990 is
amended—
(A) by striking ‘‘on or before’’ and insert-
ing ‘‘before’’, and
(B) by striking ‘‘clauses (i) and (ii)’’ and
inserting ‘‘this subparagraph’’.
(2) Effective as if included in the enactment of
OBRA–1989, section 1862(b)(1) is amended—
(A) 
in 
subparagraphs 
(A)(v) 
and
(B)(iv)(II), by inserting ‘‘, without regard to
section 5000(d) of such Code’’ before the period
at the end of each subparagraph;
(B) in subparagraph (A)(iii), by striking
‘‘current calendar year or the preceding cal-
endar year’’ and inserting ‘‘current calendar
year and the preceding calendar year’’; and
(C) in the matter in subparagraph (C)
after clause (ii), by striking ‘‘taking into ac-
count that’’ and inserting ‘‘paying benefits sec-
ondary to this title when’’.
362
(3) Effective as if included in the enactment of
OBRA–1989, section 1862(b)(5)(C)(i) (42 U.S.C.
1395y(b)(5)(C)(i)) 
is 
amended 
by 
striking
‘‘6103(l)(12)(D)(iii)’’ 
and 
inserting
‘‘6103(l)(12)(E)(iii)’’.
(4) Section 4203(c)(2) of OBRA–1990 is
amended—
(A) by striking ‘‘the application of clause
(iii)’’ and inserting ‘‘the second sentence’’;
(B) by striking ‘‘on individuals’’ and all
that follows through ‘‘section 226A of such
Act’’;
(C) in clause (ii), by striking ‘‘clause’’ and
inserting ‘‘sentence’’;
(D) in clause (v), by adding ‘‘and’’ at the
end; and
(E) in clause (vi)—
(i) by inserting ‘‘of such Act’’ after
‘‘1862(b)(1)(C)’’, and
(ii) by striking the period at the end
and inserting the following: ‘‘, without re-
gard to the number of employees covered
by such plans.’’.
363
(5) Section 4203(d) of OBRA–1990 is amended
by striking ‘‘this subsection’’ and inserting ‘‘this sec-
tion’’.
(6) Except as provided in paragraphs (2) and
(3), the amendments made by this subsection shall
be effective as if included in the enactment of
OBRA–1990.
Subchapter C—Physician Ownership and
Referral
SEC. 13521. APPLICATION OF MEDICARE BAN ON SELF-RE-
FERRALS TO ALL PAYERS.
(a) IN GENERAL.—Section 1877 (42 U.S.C. 1395nn)
is amended—
(1) in subsection (a)—
(A) in paragraph (1)(A), by striking ‘‘for
which payment otherwise may be made under
this title’’ and inserting ‘‘for which a charge is
imposed’’, and
(B) in paragraph (1)(B), by striking
‘‘under this title’’;
(2) by amending paragraph (1) of subsection
(g) to read as follows:
‘‘(1) DENIAL OF PAYMENT.—No payment may
be made under this title, under another Federal
health care program, or under a State health care
364
program (as defined in section 1128(h)) for a des-
ignated health service for which a claim is presented
in violation of subsection (a)(1)(B). No individual,
third party payer, or other entity is liable for pay-
ment for designated health services for which a
claim is presented in violation of such subsection.’’;
and
(3) in subsection (g)(3), by striking ‘‘for which
payment may not be made under paragraph (1)’’
and inserting ‘‘for which such a claim may not be
presented under subsection (a)(1)’’.
(b) CONFORMING AMENDMENT TO REPORTING RE-
QUIREMENT.—Section 1877(f) (42 U.S.C. 1395nn(f)) is
amended—
(1) by striking ‘‘for which payment may be
made under this title’’ each place it appears and in-
serting ‘‘for which a charge is imposed’’, and
(2) by striking the third sentence.
SEC. 13522. EXTENSION OF SELF-REFERRAL BAN TO ADDI-
TIONAL SPECIFIED SERVICES.
Section 1877 (42 U.S.C. 1395nn) is amended—
(1) by striking ‘‘clinical laboratory service’’,
‘‘clinical laboratory services’’, and ‘‘CLINICAL LAB-
ORATORY
SERVICES’’ and inserting ‘‘designated
health service’’, ‘‘designated health services’’, and
365
‘‘DESIGNATED
HEALTH
SERVICES’’, respectively,
each place each appears in subsections (a)(1),
(b)(2)(A)(ii), (b)(4), (d)(1), (d)(2), (d)(3), (f),
(g)(1), and (h)(7)(B); and
(2) by adding at the end the following new sub-
section:
‘‘(i) DESIGNATED HEALTH SERVICES DEFINED.—In
this section, the term ‘designated health services’ means
any of the following items or services:
‘‘(1) clinical laboratory services;
‘‘(2) physical and occupational therapy services;
‘‘(3) radiology services, including magnetic reso-
nance imaging, computerized axial tomography
scans, and ultrasound services;
‘‘(4) radiation therapy services;
‘‘(5) durable medical equipment;
‘‘(6) parenteral and enteral nutrition equipment
and supplies;
‘‘(7) prosthetic devices and orthotics and pros-
thetics;
‘‘(8) outpatient prescription drugs;
‘‘(9) home infusion therapy services, home dial-
ysis, and home health services;
‘‘(10) ambulance services;
‘‘(11) inpatient and outpatient hospital services;
366
‘‘(12) comprehensive outpatient rehabilitation
facility services;
‘‘(13) contact lenses and eyeglasses; and
‘‘(14) hearing aids.’’.
SEC. 13523. EXCEPTIONS FOR BOTH OWNERSHIP AND COM-
PENSATION ARRANGEMENTS.
(a) MODIFICATION TO EXCEPTION FOR IN-OFFICE
ANCILLARY SERVICES.—Section 1877(b)(2) (42 U.S.C.
1395nn(b)(2)) is amended—
(1) by inserting ‘‘(other than durable medical
equipment, parenteral and enteral nutrition equip-
ment and supplies, and ambulance services)’’ after
‘‘services’’ the first place it appears, and
(2) in subparagraph (A)(ii)(II), by striking
‘‘centralized provision’’ and inserting ‘‘provision of
some or all’’.
(b) MODIFICATION
OF RURAL PROVIDER EXCEP-
TION.—
(1) IN GENERAL.—Section 1877(b) (42 U.S.C.
1395nn(b)) is amended—
(A) by redesignating paragraph (5) as
paragraph (6), and
(B) by inserting after paragraph (4) the
following new paragraph:
367
‘‘(5) RURAL PROVIDERS.—In the case of des-
ignated health services if—
‘‘(A) the entity furnishing the services is in
a 
rural 
area 
(as 
defined 
in 
section
1886(d)(2)(D)), and
‘‘(B) substantially all of the services (as
defined by the Secretary) furnished by the en-
tity are furnished to individuals who reside in
such a rural area.’’.
(2) 
CONFORMING
AMENDMENTS.—Section
1877(d) (42 U.S.C. 1395nn(d)) is amended—
(A) by striking paragraph (2), and
(B) by redesignating paragraph (3) as
paragraph (2).
SEC. 13524. EXCEPTIONS RELATED ONLY TO OWNERSHIP
OR INVESTMENT.
(a) 
PUBLICLY-TRADED
SECURITIES.—Section
1877(c)(2) (42 U.S.C. 1395nn(c)(2)) is amended by strik-
ing ‘‘total assets’’ and inserting ‘‘stockholder equity’’.
(b) RURAL PROVIDERS.—For amendment to excep-
tion relation to rural providers, see section 13523(b).
SEC. 13525. EXCEPTIONS RELATED ONLY TO COMPENSA-
TION ARRANGEMENTS.
(a) RENTAL OF OFFICE SPACE AND EQUIPMENT.—
368
(1) IN
GENERAL.—Paragraph (1) of section
1877(e) (42 U.S.C. 1395nn(e)) is amended to read
as follows:
‘‘(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 aggregate space rented or
leased does not exceed that which is rea-
sonable and necessary for the legitimate
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 for at least one year,
‘‘(iv) the aggregate rental charges
over the term of the lease are set in ad-
vance, 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 gen-
erated between the parties,
369
‘‘(v) the lease would be commercially
reasonable even if no referrals were made
between the parties,
‘‘(vi) the lease covers all of the prem-
ises leased between the parties for the pe-
riod of the lease, and
‘‘(vii) the compensation arrangement
meets such other requirements as the Sec-
retary may impose by regulation as needed
to protect against program or patient
abuse.
‘‘(B) EQUIPMENT.—Payments made by a
lessee of equipment to the lessor of the equip-
ment 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 legitimate 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 one year,
370
‘‘(iv) the aggregate rental charges
over the term of the lease are set in ad-
vance, 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 gen-
erated between the parties,
‘‘(v) the lease would be commercially
reasonable even if no referrals were made
between the parties,
‘‘(vi) the lease covers all of the equip-
ment leased between the parties for the pe-
riod of the lease, and
‘‘(vii) the compensation arrangement
meets such other requirements as the Sec-
retary may impose by regulation as needed
to protect against program or patient
abuse.’’.
(2) 
CONFORMING
AMENDMENT.—Section
1877(h) (42 U.S.C. 1395nn(h)) is amended by strik-
ing paragraphs (5) and (6).
(b) BONA FIDE EMPLOYMENT RELATIONSHIPS.—
Section 1877(e) (42 U.S.C. 1395nn(e)) is amended—
(1) in paragraph (2)—
371
(A) by striking ‘‘EMPLOYMENT’’ and all
that follows through ‘‘if’’ and inserting ‘‘BONA
FIDE
EMPLOYMENT
RELATIONSHIPS.—Any
amount paid by an employer to a physician (or
immediate family member) who has a bona fide
employment relationship with the employer for
the provision of services if’’;
(B) in subparagraphs (A), (B), and (D),
by striking ‘‘arrangement’’ and inserting ‘‘em-
ployment’’;
(C) in subparagraph (C), by striking ‘‘to
the hospital’’; and
(D) by adding at the end the following:
‘‘Subparagraph (B)(ii) shall not be construed as pro-
hibiting the payment of remuneration in the form of
shares of overall profits or in the form of a produc-
tivity bonus based on services performed personally
by the physician or family member, if the amount of
the remuneration is not determined in a manner
that takes into account directly the volume or value
of any referrals by the referring physician.’’; and
(2) in paragraph (5)(A), by striking ‘‘in the
same manner as they apply to a hospital’’.
(c) PERSONAL SERVICE ARRANGEMENTS.—
372
(1) IN
GENERAL.—Paragraph (3) of section
1877(e) (42 U.S.C. 1395nn(e)) is amended to read
as follows:
‘‘(3) PERSONAL SERVICE ARRANGEMENTS.—Re-
muneration from an entity under an arrangement
if—
‘‘(A) the arrangement is set out in writing,
signed by the parties, and specifies the services
covered by the arrangement,
‘‘(B) the arrangement covers all of the
services to be provided by the physician (or
family member) to the entity,
‘‘(C) the aggregate services contracted for
do not exceed those that are reasonable and
necessary for the legitimate business purposes
of the arrangement,
‘‘(D) the term of the arrangement is for at
least one year,
‘‘(E) the compensation to be paid over the
term of the arrangement is set in advance, does
not exceed fair market value, and is not deter-
mined in a manner that takes into account di-
rectly or indirectly the volume or value of any
referrals or other business generated between
the parties,
373
‘‘(F) the services to be performed under
the arrangement do not involve the counseling
or promotion of a business arrangement or
other activity that violates any State or Federal
law, and
‘‘(G) the arrangement meets such other re-
quirements as the Secretary may impose by reg-
ulation as needed to protect against program or
patient abuse.’’.
(2) HEALTH
SERVICES
FURNISHED
UNDER
CERTAIN
HOSPITAL
ARRANGEMENTS.—Section
1877(e) (42 U.S.C. 1395nn(e)) is amended by add-
ing at the end the following new paragraph:
‘‘(7) CERTAIN
GROUP
PRACTICE
ARRANGE-
MENTS WITH A HOSPITAL.—
‘‘(A) IN GENERAL.—An arrangement be-
tween a hospital and a group for the provision
of designated health services by the group but
billed in the name of the hospital if—
‘‘(i) the group would be a group prac-
tice, but for the fact that it bills for such
services in the name of the hospital;
‘‘(ii) with respect to services provided
to an inpatient of the hospital, the ar-
rangement is pursuant to the provision of
374
inpatient hospital services under section
1861(b)(3);
‘‘(iii) the arrangement began before
December 19, 1989, and has continued in
effect without interruption since such date;
‘‘(iv) the group provides substantially
all of the designated health services fur-
nished under the arrangement to the hos-
pital’s patients;
‘‘(v) 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 serv-
ices provided under the agreement;
‘‘(vi) 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 re-
ferrals or other business generated between
the parties;
‘‘(vii) the compensation is provided
pursuant to an agreement which would be
375
commercially reasonable even if no refer-
rals were made to the entity; and
‘‘(viii) the arrangement between the
parties meets such other requirements as
the Secretary may impose by regulation as
needed to protect against program or pa-
tient abuse.’’.
(d) PHYSICIAN RECRUITMENT.—Section 1877(e)(4)
(42 U.S.C. 1395nn(e)(4)) is amended—
(1) by redesignating subparagraphs (A) through
(C) as subparagraph (B) through (D), and
(2) by inserting before subparagraph (B), as so
redesignated, the following new subparagraph:
‘‘(A) the remuneration arrangement is set
out in writing, signed by the parties, and speci-
fies the benefits provided by the hospital, the
terms under which the benefits are to be pro-
vided, and the obligations of the parties,’’.
(e) ISOLATED TRANSACTIONS.—Section 1877(e)(5)
(42 U.S.C. 1395nn(e)(5)) is amended—
(1) by striking ‘‘ISOLATED’’ and inserting
‘‘ONE-TIME’’,
(2) by striking ‘‘isolated’’ and inserting ‘‘one-
time’’, and
376
(3) by inserting ‘‘or practice’’ after ‘‘one-time
sale of property’’.
(f) NEW EXCEPTION
FOR PAYMENTS
BY PHYSI-
CIAN.—Section 1877(e) (42 U.S.C. 1395nn(e)), as amend-
ed by subsection (c)(2), is further amended by adding at
the end the following new paragraph:
‘‘(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.’’.
SEC. 13526. CLARIFICATION CONCERNING CIVIL MONEY
PENALTY SANCTIONS.
Section 1877(g)(3) (42 U.S.C. 1395nn(g)(3)) is
amended by inserting ‘‘(including a referring physician)’’
after ‘‘Any person’’.
SEC. 13527. REQUIREMENTS FOR GROUP PRACTICE.
(a) 
ADDITIONAL
REQUIREMENTS.—Section
1877(h)(4) (42 U.S.C. 1395nn(h)(4)) is amended—
(1) by striking ‘‘and’’ at the end of subpara-
graph (C);
377
(2) by redesignating subparagraphs (A), (B),
(C), and (D) as clauses (i), (ii), (iii), and (vii), re-
spectively;
(3) by inserting ‘‘(A)’’ after ‘‘.—’’;
(4) by inserting after clause (iii), as so redesig-
nated, the following:
‘‘(iv) subject to subparagraph (B), no phy-
sician who is a member of the group receives
compensation based on the volume or value of
referrals by the physician;
‘‘(v) there are no less than, on average, 5
physicians for each office location (as defined in
subparagraph (C)), except where there is only a
single office location for the entire group prac-
tice;
‘‘(vi) members of the group personally con-
duct no less than 75 percent of the physician-
patient encounters of the group practice; and’’;
and
(5) by adding at the end the following new sub-
paragraphs:
‘‘(B) A physician in a group practice may be
paid a share of overall profits of the group or a pro-
ductivity bonus (based on services personally per-
formed or personally supervised by the physician or
378
by another physician in the group) so long as the
share or bonus is not determined in any manner
which is directly related to the volume or value of re-
ferrals by that physician.
‘‘(C)(i) Except as provided in clauses (ii)
through (iv), the term ‘office location’ means an of-
fice where physician services are offered to patients.
‘‘(ii) Such term does not include a location con-
sisting solely of a diagnostic facility, nursing facility,
or treatment facility (such as a physical or occupa-
tional therapy center), or administrative services af-
filiated with the group practice.
‘‘(iii) Any office location which is located imme-
diately adjacent to another office location shall be
treated as the same office location.
‘‘(iv) The term ‘office location’ does not include
an office located in a rural area (as defined in sec-
tion 1886(d)(2)(D)) if at least 85 percent of the
physician services at the location are provided to in-
dividuals who reside in such a rural area.’’.
(b) USE OF BILLING NUMBERS, ETC.—Section 1877
(42 U.S.C. 1395nn) is amended—
(1) in subsection (b)(2)(B), by inserting ‘‘under
a billing number assigned to the group practice’’
after ‘‘member’’,
379
(2) in subsection (h)(4)(A)(ii), as redesignated
by subsection (a)(2), by inserting ‘‘and under a bill-
ing number assigned to the group’’ after ‘‘in the
name of the group’’, and
(3) in subsection (h)(4)(A)(iii), as redesignated
by subsection (a)(2), by striking ‘‘by members of the
group’’.
(c) TREATMENT OF CERTAIN FACULTY PRACTICE
PLANS.—The last sentence of section 1877(h)(4)(A) (42
U.S.C. 1395nn(h)(4)(A)), as redesignated by subsection
(a)(2), is amended by inserting ‘‘, institution of higher
education, or medical school’’ after ‘‘hospital’’.
SEC. 13538. NO FEDERAL PREEMPTION OF MORE RESTRIC-
TIVE STATE LAWS.
Section 1877 (42 U.S.C. 1395nn), as amended by
section 13522(2), is amended by adding at the end the
following new subsection:
‘‘(j) NO FEDERAL PREEMPTION OF MORE RESTRIC-
TIVE STATE LAWS.—Nothing in this section shall preempt
provisions of State law—
‘‘(1) that relate to referrals not covered by this
section, or
‘‘(2) that relate to referrals covered by this sec-
tion and are more restrictive with respect to such re-
ferrals than the provisions of this section.’’.
380
SEC. 13529. MISCELLANEOUS PROVISIONS.
(a) INDIRECT FINANCIAL RELATIONSHIPS.—The last
sentence of section 1877(a)(2) (42 U.S.C. 1395nn(a)(2))
is amended by inserting before the period the following:
‘‘and includes an interest in an entity that holds an owner-
ship or investment in another entity’’.
(b) MINOR
REMUNERATION.—Section 1877(h)(1)
(42 U.S.C. 1395nn(h)(1)) is amended—
(1) in subparagraph (A), by inserting before the
period at the end the following: ‘‘(other than an ar-
rangement involving only remuneration described in
subparagraph (C))’’, and
(2) by adding at the end the following new sub-
paragraph:
‘‘(C) Remuneration described in this subpara-
graph is any remuneration consisting of any of the
following:
‘‘(i) The forgiveness of amounts owed for
inaccurate tests or procedures, mistakenly per-
formed tests or procedures, 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
381
‘‘(II) communicate the results of tests
or procedures for such entity.’’.
(c) REFERRING PHYSICIAN.—Section 1877(h)(7)(C)
(42 U.S.C. 1395nn(h)(7)(C)) is amended—
(1) by inserting ‘‘a request by a radiologist for
diagnostic radiology services, and a request by a ra-
diation oncologist for radiation therapy,’’ after ‘‘ex-
amination services,’’, and
(2) by inserting ‘‘, radiologist, or radiation
oncologist’’ after ‘‘pathologist’’ the second place it
appears.
(d) MISCELLANEOUS
AND
TECHNICAL
CORREC-
TIONS.—Section 1877 (42 U.S.C. 1395nn) is further
amended—
(1) in the next to last sentence of subsection
(f)—
(A) by striking ‘‘provided’’ and inserting
‘‘furnished’’, and
(B) by striking ‘‘provides’’ and inserting
‘‘furnish’’;
(2) in the last sentence of subsection (f)—
(A) by striking ‘‘providing’’ each place it
appears and inserting ‘‘furnishing’’,
382
(B) by striking ‘‘with respect to the provid-
ers’’ and inserting ‘‘with respect to the enti-
ties’’, and
(C) by striking ‘‘diagnostic imaging serv-
ices of any type’’ and inserting ‘‘magnetic reso-
nance imaging, computerized axial tomography
scans, and ultrasound services’’; and
(3) in subsection (a)(2)(B), by striking ‘‘sub-
section (h)(1)(A)’’ and inserting ‘‘subsection (h)(1)’’.
SEC. 13530. EFFECTIVE DATES.
(a) EXPANSION OF PAYERS AND SERVICES.—The
amendments made by sections 13521 and 13522 shall
apply with respect to a referral by a physician made on
or after December 31, 1994.
(b) OTHER PROVISIONS.—
(1) IN GENERAL.—Except as provided in this
subsection, the amendments made by sections 13523
through 13529 shall apply to referrals made on or
after January 1, 1992.
(2) DELAY IN EFFECTIVENESS FOR MORE RE-
STRICTIVE PROVISIONS.—The amendments made by
the following sections shall apply with respect to a
referral by a physician made on or after December
31, 1994:
383
(A) Section 13523(b) (relating to the rural
provider exception).
(B) Section 13524(a) (relating to publicly-
traded securities).
(C)(i) Section 13525(a) (relating to an ex-
ception for office rental and equipment), other
than the exception relating to equipment.
(ii) Section 13525(c)(1) (relating to excep-
tion for personal services arrangements).
(iii) Section 13525(d) (relating to physi-
cian recruitment).
(D) Section 13526 (relating to civil money
penalty).
(E) Section 13527 (relating to require-
ments for group practices), other than sub-
section (c) (relating to faculty plans).
(F) Section 13528 (relating to non-pre-
emption).
(G) Section 13529(a) (relating to indirect
financial relationships).
Subchapter D—Other Provisions
SEC. 13551. DIRECT GRADUATE MEDICAL EDUCATION.
(a) ADJUSTMENT IN GME BASE-YEAR COSTS OF
FEDERAL INSURANCE CONTRIBUTIONS ACT.—
384
(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 de-
scribed 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 con-
tributions to the retirement system of a State, a po-
litical 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 de-
scribed in this paragraph is a hospital that did not
pay FICA taxes with respect to interns and resi-
dents in its medical residency training program dur-
ing 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.
385
(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.
(b) PUBLICLY-FUNDED FAMILY PRACTICE RESI-
DENCY PROGRAMS.—
(1) IN
GENERAL.—Section 1886(h)(5) (42
U.S.C. 1395ww(h)(5)) is amended by adding at the
end the following new subparagraph:
‘‘(I) ADJUSTMENTS FOR CERTAIN FAMILY
PRACTICE RESIDENCY PROGRAMS.—
‘‘(i) IN GENERAL.—In the case of an
approved medical residency training pro-
gram (meeting the requirements of clause
(ii)) of a hospital which received payments
from the United States, a State, or a polit-
ical subdivision of a State or an instrumen-
tality of such a State or political subdivi-
sion (other than payments under this title
or a State plan under title XIX) for the
program during the cost reporting period
386
that began during fiscal year 1984, the
Secretary shall—
‘‘(I) provide for an average
amount under paragraph (2)(A) that
takes into account the Secretary’s es-
timate of the amount that would have
been recognized as reasonable under
this title if the hospital had not re-
ceived such payments, and
‘‘(II) reduce the payment amount
otherwise provided under this sub-
section in an amount equal to the pro-
portion of such program payments
during the cost reporting period in-
volved that is allocable to this title.
‘‘(ii) ADDITIONAL
REQUIREMENTS.—
A hospital’s approved medical residency
program meets the requirements of this
clause if—
‘‘(I) the program is limited to
training for family and community
medicine;
‘‘(II) the program is the only ap-
proved medical residency program of
the hospital; and
387
‘‘(III) the average amount deter-
mined under paragraph (2)(A) for the
hospital (as determined without re-
gard to the increase in such amount
described in clause (i)(I)) does not ex-
ceed $10,000.’’.
(2) EFFECTIVE DATE.—The amendment made
by paragraph (1) shall apply to payments under sec-
tion 1886(h) of the Social Security Act for cost re-
porting periods beginning on or after October 1,
1990.
(c) PREVENTIVE CARE RESIDENCIES.—
(1) ELIGIBILITY OF PREVENTIVE CARE RESI-
DENCY
PROGRAMS
FOR
EXPANDED
INITIAL
RESI-
DENCY
PERIODS.—Section 1886(h)(5)(F)(ii) (42
U.S.C. 1395ww(h)(5)(F)(ii)) is amended by insert-
ing after ‘‘fellowship program’’ the following: ‘‘or a
preventive care residency or fellowship program’’.
(2) EFFECTIVE DATE.—The amendment made
by paragraph (1) shall apply to cost reporting peri-
ods beginning on or after October 1, 1993.
SEC. 13552. 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
388
and inserting the following: ‘‘title, but only in the case of
drugs furnished—
‘‘(i) before 1994, within 12 months after
the date of the transplant procedure,
‘‘(ii) during 1994, within 18 months after
the date of the transplant procedure,
‘‘(iii) during 1995, within 24 months after
the date of the transplant procedure,
‘‘(iv) during 1996, 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 proce-
dure;’’.
SEC. 
13553. 
REDUCTION 
IN 
PAYMENTS 
FOR
ERYTHROPOIENTIN.
(a) IN GENERAL.—Section 1881(b)(11)(B)(ii)(I) (42
U.S.C. 1395rr(b)(11)(B)(ii)(I)) is amended—
(1) by striking ‘‘1991’’ and inserting ‘‘1994’’;
and
(2) by striking ‘‘$11’’ and inserting ‘‘$10’’.
(b) EFFECTIVE DATE.—The amendments made by
subsection (a) shall apply to erythropoietin furnished on
or after January 1, 1994.
389
SEC. 13554. QUALIFIED MEDICARE BENEFICIARY OUT-
REACH.
The Secretary of Health and Human Services shall
establish and implement a method for obtaining informa-
tion from newly eligible medicare beneficiaries that may
be used to determine whether such beneficiaries may be
eligible for medical assistance for medicare cost-sharing
under State medicaid plans as qualified medicare bene-
ficiaries, and for transmitting such information to the
State in which such a beneficiary resides.
SEC. 13555. EXTENSION OF SOCIAL HEALTH MAINTENANCE
ORGANIZATION DEMONSTRATIONS.
(a) EXTENSION
OF CURRENT WAIVERS.—Section
4018(b) of OBRA–1987, as amended by section
4207(b)(4)(B) of OBRA–1990, is amended—
(1) in paragraph (1) by striking ‘‘December 31,
1995’’ and inserting ‘‘December 31, 1997’’; and
(2) in paragraph (4) by striking ‘‘March 31,
1996’’ and inserting ‘‘March 31, 1998’’.
(b) EXPANSION
OF
DEMONSTRATIONS.—Section
2355 of the Deficit Reduction Act of 1984 is amended—
(1) in the last sentence of subsection (a) by
striking ‘‘12 months’’ and inserting ‘‘36 months’’;
and
(2) in subsection (b)(1)(B)—
390
(A) by striking ‘‘or’’ at the end of clause
(iii); and
(B) by redesignating clause (iv) as clause
(v) and inserting after clause (iii) the following
new clause:
‘‘(iv) integrating acute and chronic
care management for patients with end-
stage renal disease through expanded com-
munity care case management services
(and for purposes of a demonstration
project conducted under this clause, any
requirement under a waiver granted under
this section that a project disenroll individ-
uals who develop end-stage renal disease
shall not apply); or’’.
(c) EXPANSION
OF NUMBER
OF MEMBERS PER
SITE.—The Secretary of Health and Human Services may
not impose a limit of less than 12,000 on the number of
individuals that may participate in a project conducted
under section 2355 of the Deficit Reduction Act of 1984.
(d) MISCELLANEOUS
AND
TECHNICAL
CORREC-
TIONS.—
(1) The section following section 4206 of
OBRA–1990 is amended by striking ‘‘SEC. 4027.’’
391
and inserting ‘‘SEC. 4207.’’, and in this subtitle is
referred to as section 4207 of OBRA–1990.
(2) Section 2355(b)(1)(B) of the Deficit Reduc-
tion 
Act 
of 
1984, 
as 
amended 
by 
section
4207(b)(4)(B)(ii) of OBRA–1990, is amended—
(A) by striking ‘‘12907(c)(4)(A)’’ and in-
serting ‘‘4207(b)(4)(B)(i)’’, and
(B) by striking ‘‘feasibilitly’’ and inserting
‘‘feasibility’’.
(3) Section 4207(b)(4)(B)(iii)(III) of OBRA–
1990 is amended by striking the period at the end
and inserting a semicolon.
(4) Subsections (c)(3) and (e) of section 2355
of the Deficit Reduction Act of 1984, as amended by
section 4207(b)(4)(B) of OBRA–1990, are each
amended by striking ‘‘12907(c)(4)(A)’’ each place it
appears and inserting ‘‘4207(b)(4)(B)’’.
(5) Section 4207(c)(2) of OBRA–1990 is
amended by striking ‘‘the Committee on Ways and
Means’’ each place it appears and inserting ‘‘the
Committees on Ways and Means and Energy and
Commerce’’.
(6) Section 4207(d) of OBRA–1990 is amended
by redesignating the second paragraph (3) (relating
to effective date) as paragraph (4).
392
(7) Section 4207(i)(2) of OBRA–1990 is
amended—
(A) by striking the period at the end of
clause (iii) and inserting a semicolon, and
(B) in clause (v), by striking ‘‘residents’’
and inserting ‘‘patients’’.
(8) Section 4207(j) of OBRA–1990 is amended
by striking ‘‘title’’ each place it appears and insert-
ing ‘‘subtitle’’.
(e) EFFECTIVE DATE.—The amendments made by
this section shall take effect as if included in the enact-
ment of OBRA–90.
SEC. 13556. HOSPICE NOTIFICATION TO HOME HEALTH
BENEFICIARIES.
(a) IN GENERAL.—Section 1891(a)(1) (42 U.S.C.
1395bbb(a)(1)) is amended by adding at the end the fol-
lowing new subparagraph:
‘‘(H) The right, in the case of a resident
who is entitled to benefits under this title, to be
fully informed orally and in writing (at the time
of coming under the care of the agency) of the
entitlement of individuals to hospice care under
section 1812(a)(4) (unless there is no hospice
program providing hospice care for which pay-
ment may be made under this title within the
393
geographic area of the facility and it is not the
common practice of the agency to refer patients
to hospice programs located outside such geo-
graphic area).’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply to services furnished on or after
the first day of the first month beginning more than one
year after the date of the enactment of this Act.
SEC. 13557. INTEREST PAYMENTS.
(a) IN GENERAL.—Sections 1816(c)(2)(B)(ii)(IV)
and 1842(c)(2)(B)(ii)(IV) of the Social Security Act shall
be applied with respect to claims received in the 12-month
period beginning October 1, 1992, by substituting ‘‘30 cal-
endar days’’ for ‘‘24 calendar days’’ and ‘‘17 calendar
days’’.
(b) EFFECTIVE DATE.—Subsection (a) shall be in ef-
fect during the period that begins on the date of the enact-
ment of this Act and ends on September 30, 1993.
SEC. 13558. PEER REVIEW ORGANIZATIONS.
(a) REPEAL OF PRO PRECERTIFICATION REQUIRE-
MENT FOR CERTAIN SURGICAL PROCEDURES.—
(1) IN
GENERAL.—Section 1164 (42 U.S.C.
1320c–13) is repealed.
(2) CONFORMING AMENDMENTS.—
394
(A) Section 1154 (42 U.S.C. 1320c–3) is
amended—
(i) in subsection (a), by striking para-
graph (12), and
(ii) in subsection (d), by striking
‘‘(and except as provided in section
1164)’’.
(B) Section 1833 (42 U.S.C. 1395l) is
amended—
(i) in subsection (a)(1)(D)(i), by strik-
ing ‘‘, or for tests furnished in connection
with obtaining a second opinion required
under section 1164(c)(2) (or a third opin-
ion, if the second opinion was in disagree-
ment with the first opinion)’’;
(ii) in subsection (a)(1), by striking
clause (G);
(iii) in subsection (a)(2)(A), by strik-
ing ‘‘, to items and services (other than
clinical diagnostic laboratory tests) fur-
nished in connection with obtaining a sec-
ond 
opinion 
required 
under 
section
1164(c)(2) (or a third opinion, if the sec-
ond opinion was in disagreement with the
first opinion),’’;
395
(iv) in subsection (a)(2)(D)(i)—
(I) by striking ‘‘basis,’’ and in-
serting ‘‘basis or’’, and
(II) by striking ‘‘, or for tests
furnished in connection with obtaining
a second opinion required under sec-
tion 1164(c)(2) (or a third opinion, if
the second opinion was in disagree-
ment with the first opinion)’’;
(v) in subsection (a)(3), by striking
‘‘and for items and services furnished in
connection with obtaining a second opinion
required under section 1164(c)(2), or a
third opinion, if the second opinion was in
disagreement with the first opinion)’’; and
(vi) in the first sentence of subsection
(b), by striking ‘‘(4)’’ and all that follows
through ‘‘and (5)’’ and inserting and (4)’’.
(C) Section 1834(g)(1)(B) (42 U.S.C.
1395m(g)(1)(B)) is amended by striking ‘‘and
for items and services furnished in connection
with obtaining a second opinion required under
section 1164(c)(2), or a third opinion, if the
second opinion was in disagreement with the
first opinion)’’.
397
(3) Section 4205(d)(2)(B) of OBRA–1990 is amend-
ed by striking ‘‘amendments’’ and inserting ‘‘amend-
ment’’.
(4) Section 1160(d) (42 U.S.C. 1320c–9(d)) is
amended by striking ‘‘subpena’’ and inserting ‘‘subpoena’’.
(5) Section 4205(e)(2) of OBRA–1990 is amended
by striking ‘‘amendments’’ and inserting ‘‘amendment’’
and by striking ‘‘all’’.
(6)(A) Except as provided in subparagraph (B), the
amendments made by this subsection shall take effect as
if included in the enactment of OBRA–1990.
(B) The amendment made by paragraph (2) (relating
to the requirement on reporting of information to State
licensing boards) shall take effect on the date of the enact-
ment of this Act.
SEC. 13559. HEALTH MAINTENANCE ORGANIZATIONS.
(a) ADJUSTMENT IN MEDICARE CAPITATION PAY-
MENTS TO ACCOUNT FOR REGIONAL VARIATIONS IN AP-
PLICATION OF SECONDARY PAYER PROVISIONS.—
(1) IN
GENERAL.—Section 1876(a)(4) (42
U.S.C. 1395mm(a)(4)) is amended by adding at the
end the following new sentence: ‘‘In establishing the
adjusted average per capita cost for a geographic
area, the Secretary shall take into account the dif-
ferences between the proportion of individuals in the
398
area with respect to whom there is a group health
plan that is a primary plan (within the meaning of
section 1862(b)(2)(A)) compared to the proportion
of all such individuals with respect to whom there is
such a group health plan.’’.
(2) EFFECTIVE DATE.—The amendment made
by paragraph (1) shall apply to contracts entered
into for years beginning with 1994.
(b) REVISIONS
IN
THE PAYMENT METHODOLOGY
FOR RISK CONTRACTORS.—Section 4204(b) of OBRA–
1990 is amended to read as follows:
‘‘(b) REVISIONS IN THE PAYMENT METHODOLOGY
FOR RISK CONTRACTORS.—(1)(A) Not later than October
1, 1993, the Secretary of Health and Human Services (in
this subsection referred to as the ‘‘Secretary’’) shall sub-
mit a proposal to the Congress that provides for revisions
to the payment method to be applied in years beginning
with 1995 for organizations with a risk-sharing contract
under section 1876(g) of the Social Security Act.
‘‘(B) In proposing the revisions required under sub-
paragraph (A) the Secretary shall consider—
‘‘(i) the difference in costs associated with med-
icare beneficiaries with differing health status and
demographic characteristics; and
399
‘‘(ii) the effects of using alternative geographic
classifications on the determinations of costs associ-
ated with beneficiaries residing in different areas.
‘‘(2) Not later than 3 months after the date of sub-
mittal of the proposal under paragraph (1), the Comptrol-
ler General shall review the proposal and shall report to
Congress on the appropriateness of the proposed modifica-
tions.’’.
(c) MISCELLANEOUS
AND
TECHNICAL
CORREC-
TIONS.—(1) 
Section 
1876(a)(3) 
(42 
U.S.C.
1395mm(a)(3)) is amended by striking ‘‘subsection
(c)(7)’’ and inserting ‘‘subsections (c)(2)(B)(ii) and
(c)(7)’’.
(2) Section 4204(c)(3) of OBRA–1990 is amended
by striking ‘‘for 1991’’ and inserting ‘‘for years beginning
with 1991’’.
(3) Section 4204(d)(2) of OBRA–1990 is amended
by striking ‘‘amendment’’ and inserting ‘‘amendments’’.
(4) 
Section 
1876(a)(1)(E)(ii)(I) 
(42 
U.S.C.
1395mm(a)(1)(E)(ii)(I)) is amended by striking the
comma after ‘‘contributed to’’.
(5) Section 4204(e)(2) of OBRA–1990 is amended
by striking ‘‘(which has a risk-sharing contract under sec-
tion 1876 of the Social Security Act)’’.
400
(6) Section 4204(f)(4) of OBRA–1990 is amended by
striking ‘‘final’’.
(7) 
Section 
1862(b)(3)(C) 
(42 
U.S.C.
1395y(b)(3)(C)) is amended—
(A) in the heading, by striking ‘‘PLAN’’ and in-
serting ‘‘PLAN OR A LARGE GROUP HEALTH PLAN’’;
(B) by striking ‘‘group health plan’’ and insert-
ing ‘‘group health plan or a large group health
plan’’;
(C) by striking ‘‘, unless such incentive is also
offered to all individuals who are eligible for cov-
erage under the plan’’; and
(D) by striking ‘‘the first sentence of subsection
(a) and other than subsection (b)’’ and inserting
‘‘subsections (a) and (b)’’.
(8) The amendments made by this subsection shall
take effect as if included in the enactment of OBRA–1990.
SEC. 13560. MEDICARE ADMINISTRATION BUDGET PROC-
ESS.
(a) ADJUSTMENTS.—Section 251(b)(2) of the Bal-
anced Budget and Emergency Deficit Control Act of 1985
is amended by redesignating subparagraphs (E) and (F)
as subparagraphs (F) and (G), respectively, and by insert-
ing after subparagraph (D) the following new subpara-
graph:
401
‘‘(E) 
MEDICARE
ADMINISTRATIVE
COSTS.—To the extent that appropriations are
enacted that provide additional new budget au-
thority (as compared with a base level of
$1,526,000,000 for new budget authority) for
the administration of the Medicare program by
fiscal intermediaries and carriers pursuant to
sections 1816 and 1842(a) of title XVIII of the
Social Security Act, the adjustment for that
year shall be that amount, but shall not ex-
ceed—
‘‘(i) 
for 
fiscal 
year 
1994,
$198,000,000 in new budget authority and
$198,000,000 in outlays; and
‘‘(ii) 
for 
fiscal 
year 
1995,
$220,000,000 in new budget authority and
$220,000,000 in outlays; and
the prior-year outlays resulting from these appro-
priations of budget authority and additional adjust-
ments equal to the sum of the maximum adjust-
ments that could have been made in preceding fiscal
years under this subparagraph.’’.
(b) CONFORMING AMENDMENTS.—
(1) Section 603(a) of the Congressional Budget
Act of 1974 is amended by striking ‘‘section
402
251(b)(2)(E)(i)’’ 
and 
inserting 
‘‘section
251(b)(2)(F)(i)’’.
(2) Section 606(d) of the Congressional Budget
Act of 1974 is amended—
(A) in paragraph (1)(A) by striking ‘‘sec-
tion 251(b)(2)(E)(i)’’ and inserting ‘‘section
251(b)(2)(F)(i)’’; and
(B) 
in 
paragraph 
(2), 
by 
inserting
‘‘251(b)(2)(E),’’ after ‘‘251(b)(2)(D),’’.
SEC. 13561. OTHER PROVISIONS.
(a) SURVEY AND CERTIFICATION REQUIREMENTS.—
(1) Section 1864 (42 U.S.C. 1395aa) is amended—
(A) in subsection (e), by striking ‘‘title’’ and in-
serting ‘‘title (other than any fee relating to section
353 of the Public Health Service Act)’’; and
(B) in the first sentence of subsection (a), by
striking ‘‘1861(s) or’’ and all that follows through
‘‘Service Act,’’ and inserting ‘‘1861(s),’’.
(2) An agreement made by the Secretary of Health
and Human Services with a State under section 1864(a)
of the Social Security Act may include an agreement that
the services of the State health agency or other appro-
priate State agency (or the appropriate local agencies) will
be utilized by the Secretary for the purpose of determining
403
whether a laboratory meets the requirements of section
353 of the Public Health Service Act.
(b) HOME DIALYSIS DEMONSTRATION TECHNICAL
CORRECTION.—Section 4202 of OBRA–1990 is amend-
ed—
(1) in subsection (b)(1)(A), by striking ‘‘home
hemodialysis staff assistant’’ and inserting ‘‘quali-
fied home hemodialysis staff assistant (as described
in subsection (d))’’;
(2) in subsection (b)(2)(B)(ii)(I), by striking
‘‘(as adjusted to reflect differences in area wage lev-
els);
(3) 
in 
subsection 
(c)(1)(A), 
by 
striking
‘‘skilled’’; and
(4) in subsection (c)(1)(E), by striking ‘‘(b)(4)’’
and inserting ‘‘(b)(2)’’.
(c) OTHER TECHNICAL AMENDMENTS.—(1) Section
1833 (42 U.S.C. 1395l) is amended by redesignating the
subsection (r) added by section 4206(b)(2) of OBRA–
1990 as subsection (s).
(2) Section 1866(f)(1) (42 U.S.C. 1395cc(f)(1)) is
amended by striking ‘‘1833(r)’’ and inserting ‘‘1833(s)’’.
(3) Section 1861(s)(2) (42 U.S.C. 1395x(s)(2)) is
amended by moving subparagraph (O), as redesignated by
404
section 13478(f)(8)(B)(iii)(II) of this title, two ems to the
left.
(4) 
Section 
1881(b)(1)(C) 
(42 
U.S.C.
1395rr(b)(1)(C)) is amended by striking ‘‘1861(s)(2)(Q)’’
and inserting ‘‘1861(s)(2)(P)’’.
(5) Section 4201(d)(2) of OBRA–1990 is amended
by striking ‘‘(B) by striking’’, ‘‘(C) by striking’’, and ‘‘(3)
by adding’’ and inserting ‘‘(i) by striking’’, ‘‘(ii) by strik-
ing’’, and ‘‘(B) by adding’’, respectively.
(6)(A) Section 4207(a)(1) of OBRA–1990 is amend-
ed by adding closing quotation marks and a period after
‘‘such review.’’.
(B) Section 4207(a)(4) of OBRA–1990 is amended
by striking ‘‘this subsection’’ and inserting ‘‘paragraphs
(2) and (3)’’.
(C) Section 4207(b)(1) of OBRA–1990 is amended
by striking ‘‘section 3(7)’’ and inserting ‘‘section
601(a)(1)’’.
(d) EFFECTIVE DATE.—The amendments made by
this section shall take effect as if included in the enact-
ment of OBRA–1990.
405
CHAPTER 4—MEDICARE SUPPLEMENTAL
INSURANCE POLICIES
SEC. 13571. STANDARDS FOR MEDICARE SUPPLEMENTAL
INSURANCE POLICIES.
(a) SIMPLIFICATION OF MEDICARE SUPPLEMENTAL
POLICIES.—
(1) Section 4351 of OBRA–1990 is amended by
striking ‘‘(a) IN GENERAL.—’’.
(2) Section 1882(p) (42 U.S.C. 1395ss(p)) is
amended—
(A) in paragraph (1)(A)—
(i) by striking ‘‘promulgates’’ and in-
serting ‘‘changes the revised NAIC Model
Regulation (described in subsection (m)) to
incorporate’’,
(ii) by striking ‘‘(such limitations, lan-
guage, definitions, format, and standards
referred to collectively in this subsection as
‘NAIC standards’)’’, and
(iii) by striking ‘‘included a reference
to the NAIC standards’’ and inserting
‘‘were a reference to the revised NAIC
Model Regulation as changed under this
subparagraph (such changed regulation re-
406
ferred to in this section as the ‘1991 NAIC
Model Regulation’)’’;
(B) in paragraph (1)(B)—
(i) by striking ‘‘promulgate NAIC
standards’’ 
and 
inserting 
‘‘make 
the
changes in the revised NAIC Model Regu-
lation’’,
(ii) by striking ‘‘limitations, language,
definitions, format, and standards de-
scribed in clauses (i) through (iv) of such
subparagraph (in this subsection referred
to collectively as ‘Federal standards’)’’ and
inserting ‘‘a regulation’’, and
(iii) by striking ‘‘included a reference
to the Federal standards’’ and inserting
‘‘were a reference to the revised NAIC
Model Regulation as changed by the Sec-
retary under this subparagraph (such
changed regulation referred to in this sec-
tion as the ‘1991 Federal Regulation’)’’;
(C) in paragraph (1)(C)(i), by striking
‘‘NAIC standards or the Federal standards’’
and inserting ‘‘1991 NAIC Model Regulation or
1991 Federal Regulation’’;
407
(D) in paragraphs (1)(C)(ii)(I), (1)(E),
(2), and (9)(B), by striking ‘‘NAIC or Federal
standards’’ and inserting ‘‘1991 NAIC Model
Regulation or 1991 Federal Regulation’’;
(E) in paragraph (2)(C), by striking
‘‘(5)(B)’’ and inserting ‘‘(4)(B)’’;
(F) in paragraph (4)(A)(i), by inserting
‘‘or paragraph (6)’’ after ‘‘(B)’’;
(G) in paragraph (4), by striking ‘‘applica-
ble standards’’ each place it appears and insert-
ing ‘‘applicable 1991 NAIC Model Regulation
or 1991 Federal Regulation’’;
(H) in paragraph (6), by striking ‘‘in re-
gard to the limitation of benefits described in
paragraph (4)’’ and inserting ‘‘described in
clauses (i) through (iii) of paragraph (1)(A)’’;
(I) in paragraph (7), by striking ‘‘policy-
holder’’ and inserting ‘‘policyholders’’;
(J) in paragraph (8), by striking ‘‘after the
effective date of the NAIC or Federal standards
with respect to the policy, in violation of the
previous requirements of this subsection’’ and
inserting ‘‘on and after the effective date speci-
fied in paragraph (1)(C) (but subject to para-
graph (10)), in violation of the applicable 1991
408
NAIC Model Regulation or 1991 Federal Regu-
lation insofar as such regulation relates to the
requirements of subsection (o) or (q) or clause
(i), (ii), or (iii) of paragraph (1)(A)’’;
(K) in paragraph (9), by adding at the end
the following new subparagraph:
‘‘(D) Subject to paragraph (10), this paragraph shall
apply to sales of policies occurring on or after the effective
date specified in paragraph (1)(C).’’; and
(L) in paragraph (10), by striking ‘‘this
subsection’’ 
and 
inserting 
‘‘paragraph
(1)(A)(i)’’.
(b) GUARANTEED RENEWABILITY.—Section 1882(q)
(42 U.S.C. 1395ss(q)) is amended—
(1) in paragraph (2), by striking ‘‘paragraph
(2)’’ and inserting ‘‘paragraph (4)’’, and
(2) in paragraph (4), by striking ‘‘the succeed-
ing issuer’’ and inserting ‘‘issuer of the replacement
policy’’.
(c) ENFORCEMENT OF STANDARDS.—
(1) 
Section 
1882(a)(2) 
(42 
U.S.C.
1395ss(a)(2)) is amended—
(A) in subparagraph (A), by striking
‘‘NAIC standards or the Federal standards’’
409
and inserting ‘‘1991 NAIC Model Regulation or
1991 Federal Regulation’’, and
(B) by striking ‘‘after the effective date of
the NAIC or Federal standards with respect to
the policy’’ and inserting ‘‘on and after the ef-
fective date specified in subsection (p)(1)(C)’’.
(2) The sentence in section 1882(b)(1) added
by section 4353(c)(5) of OBRA–1990 is amended—
(A) by striking ‘‘The report’’ and inserting
‘‘Each report’’,
(B) by inserting ‘‘and requirements’’ after
‘‘standards’’,
(C) by striking ‘‘and’’ after ‘‘compliance,’’,
and
(D) by striking the comma after ‘‘Commis-
sioners’’.
(3) 
Section 
1882(g)(2)(B) 
(42 
U.S.C.
1395ss(g)(2)(B)) is amended by striking ‘‘Panel’’
and inserting ‘‘Secretary’’.
(4) 
Section 
1882(b)(1) 
(42 
U.S.C.
1395ss(b)(1)) is amended by striking ‘‘the the Sec-
retary’’ and inserting ‘‘the Secretary’’.
(d) PREVENTING DUPLICATION.—
(1) 
Section 
1882(d)(3)(A) 
(42 
U.S.C.
1395ss(d)(3)(A)) is amended—
410
(A) by amending the first sentence to read
as follows:
‘‘(i) It is unlawful for a person to sell or issue to an
individual entitled to benefits under part A or enrolled
under part B of this title—
‘‘(I) a health insurance policy with knowledge
that the policy duplicates health benefits to which
the individual is otherwise entitled under this title or
title XIX,
‘‘(II) a medicare supplemental policy with
knowledge that the individual is entitled to benefits
under another medicare supplemental policy, or
‘‘(III) a health insurance policy (other than a
medicare supplemental policy) with knowledge that
the policy duplicates health benefits to which the in-
dividual is otherwise entitled, other than benefits to
which the individual is entitled under a requirement
of State or Federal law.’’;
(B) by designating the second sentence as
clause (ii) and, in such clause, by striking ‘‘the
previous sentence’’ and inserting ‘‘clause (i)’’;
(C) by designating the third sentence as
clause (iii) and, in such clause—
(i) by striking ‘‘the previous sentence’’
and inserting ‘‘clause (i) with respect to
411
the sale of a medicare supplemental pol-
icy’’, and
(ii) by striking ‘‘and the statement’’
and all that follows up to the period at the
end; and
(D) by striking the last sentence.
(2) 
Section 
1882(d)(3)(B) 
(42 
U.S.C.
1395ss(d)(3)(B)) is amended—
(A) in clause (ii)(II), by striking ‘‘65 years
of age or older’’,
(B) in clause (iii)(I), by striking ‘‘another
medicare’’ and inserting ‘‘a medicare’’,
(C) in clause (iii)(I), by striking ‘‘such a
policy’’ and inserting ‘‘a medicare supplemental
policy’’,
(D) in clause (iii)(II), by striking ‘‘another
policy’’ and inserting ‘‘a medicare supplemental
policy’’, and
(E) by amending subclause (III) of clause
(iii) to read as follows:
‘‘(III) If the statement required by clause (i) is ob-
tained and indicates that the individual is entitled to any
medical assistance under title XIX, the sale of the policy
is not in violation of clause (i) (insofar as such clause re-
lates to such medical assistance), if a State medicaid plan
412
under such title pays the premiums for the policy, or, in
the case of a qualified medicare beneficiary described in
section 1905(p)(1), if the State pays less than the full
amount of medicare cost-sharing as described in subpara-
graphs (B), (C), and (D) of section 1905(p)(3) for such
individual.’’.
(3)(A) 
Section 
1882(d)(3)(C) 
(42 
U.S.C.
1395ss(d)(3)(C)) is amended—
(i) by striking ‘‘the selling’’ and inserting
‘‘(i) the sale or issuance’’, and
(ii) by inserting before the period at the
end the following: ‘‘, (ii) the sale or issuance of
a policy or plan described in subparagraph
(A)(i)(I) (other than a medicare supplemental
policy to an individual entitled to any medical
assistance under title XIX) under which all the
benefits are fully payable directly to or on be-
half of the individual without regard to other
health benefit coverage of the individual but
only if (for policies sold or issued more than 60
days after the date the statements are pub-
lished or promulgated under subparagraph (D))
there is disclosed in a prominent manner as
part of (or together with) the application the
applicable statement (specified under subpara-
413
graph (D)) of the extent to which benefits pay-
able under the policy or plan duplicate benefits
under this title, or (iii) the sale or issuance of
a policy or plan described in subparagraph
(A)(i)(III) under which all the benefits are fully
payable directly to or on behalf of the individual
without regard to other health benefit coverage
of the individual’’.
(B) 
Section 
1882(d)(3) 
(42 
U.S.C.
1395ss(d)(3)) is amended by adding at the end the
following:
‘‘(D)(i) If—
‘‘(I) within the 90-day period beginning on the
date of the enactment of this subparagraph, the Na-
tional Association of Insurance Commissioners devel-
ops (after consultation with consumer and insurance
industry representatives) and submits to the Sec-
retary a statement for each of the types of health in-
surance policies (other than medicare supplemental
policies and including, as separate types of policies,
policies paying directly to the beneficiary fixed, cash
benefits) which are sold to persons entitled to health
benefits under this title, of the extent to which bene-
fits payable under the policy or plan duplicate bene-
fits under this title, and
414
‘‘(II) the Secretary approves all the statements
submitted as meeting the requirements of subclause
(I),
each such statement shall be (for purposes of subpara-
graph (C)) the statement specified under this subpara-
graph for the type of policy involved. The Secretary shall
review and approve (or disapprove) all the statements sub-
mitted under subclause (I) within 30 days after the date
of their submittal. Upon approval of such statements, the
Secretary shall publish such statements.
‘‘(ii) If the Secretary does not approve the statements
under clause (i) or the statements are not submitted with-
in the 90-day period specified in such clause, the Secretary
shall promulgate (after consultation with consumer and
insurance industry representatives and not later than 90
days after the date of disapproval or the end of such 90-
day period (as the case may be)) a statement for each
of the types of health insurance policies (other than medi-
care supplemental policies and including, as separate types
of policies, policies paying directly to the beneficiary fixed,
cash benefits) which are sold to persons entitled to health
benefits under this title, of the extent to which benefits
payable under the policy or plan duplicate benefits under
this title, and each such statement shall be (for purposes
415
of subparagraph (C)) the statement specified under this
subparagraph for the type of policy involved.’’.
(C) The requirement of a disclosure under sec-
tion 1882(d)(3)(C)(ii) of the Social Security Act
shall not apply to an application made for a policy
or plan before 60 days after the date of the Sec-
retary of Health and Human Services publishes or
promulgates all the statements under section
1882(d)(3)(D) of such Act.
(4) Subparagraphs (A) and (B) of section
1882(q)(5)(A) are amended by striking ‘‘of the So-
cial Security Act’’.
(5) The second subsection (b) of section 4354
of OBRA–1990 (relating to effective date) is amend-
ed by redesignating such subsection as subsection
(c).
(e) LOSS RATIOS AND REFUNDS OF PREMIUMS.—
(1) Section 1882(r) (42 U.S.C. 1395ss(r)) is
amended—
(A) in paragraph (1), by striking ‘‘or sold’’
and inserting ‘‘or renewed (or otherwise provide
coverage after the date described in subsection
(p)(1)(C))’’;
416
(B) in paragraph (1)(A), by inserting ‘‘for
periods after the effective date of these provi-
sions’’ after ‘‘the policy can be expected’’;
(C) in paragraph (1)(A), by striking
‘‘Commissioners,’’ 
and 
inserting 
‘‘Commis-
sioners)’’;
(D) in paragraph (1)(B), by inserting be-
fore the period at the end the following: ‘‘,
treating policies of the same type as a single
policy for each standard package’’;
(E) by adding at the end of paragraph (1)
the following: ‘‘For the purpose of calculating
the refund or credit required under paragraph
(1)(B) for a policy issued before the date speci-
fied in subsection (p)(1)(C), the refund or cred-
it calculation shall be based on the aggregate
benefits provided and premiums collected under
all such policies issued by an insurer in a State
(separated as to individual and group policies)
and shall be based only on aggregate benefits
provided and premiums collected under such
policies after the date specified in section
13571(m)(4) of the Omnibus Budget Reconcili-
ation Act of 1993.’’;
417
(F) in the first sentence of paragraph
(2)(A), by striking ‘‘by policy number’’ and in-
serting ‘‘by standard package’’;
(G) by striking the second sentence of
paragraph (2)(A) and inserting the following:
‘‘Paragraph (1)(B) shall not apply to a policy
until 12 months following issue.’’;
(H) in the last sentence of paragraph
(2)(A), by striking ‘‘in order’’ and all that fol-
lows through ‘‘are effective’’;
(I) by adding at the end of paragraph
(2)(A), the following new sentence: ‘‘In the case
of a policy issued before the date specified in
subsection (p)(1)(C), paragraph (1)(B) shall
not apply until 1 year after the date specified
in section 13571(m)(4) of the Omnibus Budget
Reconciliation Act of 1993.’’;
(J) in paragraph (2), by striking ‘‘policy
year’’ each place it appears and inserting ‘‘cal-
endar year’’;
(K) in paragraph (4), by striking ‘‘Feb-
ruary’’, ‘‘disllowance’’, ‘‘loss-ratios’’ each place
it appears, and ‘‘loss-ratio’’ and inserting ‘‘Oc-
tober’’, ‘‘disallowance’’, ‘‘loss ratios’’, and ‘‘loss
ratio’’, respectively;
419
maintenance organization or other direct service or-
ganization’’ and all that follows through ‘‘1833’’ and
inserting ‘‘an eligible organization (as defined in sec-
tion 1876(b)) if the policy or plan provides benefits
pursuant to a contract under section 1876 or an ap-
proved demonstration project described in section
603(c) of the Social Security Amendments of 1983,
section 2355 of the Deficit Reduction Act of 1984,
or section 9412(b) of the Omnibus Budget Reconcili-
ation Act of 1986 or, during the period beginning on
the date specified in subsection (p)(1)(C) and ending
on December 31, 1994, a policy or plan of an orga-
nization if the policy or plan provides benefits pursu-
ant to an agreement under section 1833(a)(1)(A)’’.
(2) Section 4356(b) of OBRA–1990 is amended
by striking ‘‘on the date of the enactment of this
Act’’ and inserting ‘‘on the date specified in section
1882(p)(1)(C) of the Social Security Act’’.
(g) PRE-EXISTING CONDITION LIMITATIONS.—Sec-
tion 1882(s) (42 U.S.C. 1395ss(s)) is amended—
(1) in paragraph (2)(A), by striking ‘‘for which
an application is submitted’’ and inserting ‘‘in the
case of an individual for whom an application is sub-
mitted prior to or’’,
420
(2) in paragraph (2)(A), by striking ‘‘in which
the individual (who is 65 years of age or older) first
is enrolled for benefits under part B’’ and inserting
‘‘as of the first day on which the individual is 65
years of age or older and is enrolled for benefits
under part B’’, and
(3) in paragraph (2)(B), by striking ‘‘before it’’
and inserting ‘‘before the policy’’.
(h) MEDICARE SELECT POLICIES.—
(1) Section 1882(t) (42 U.S.C. 1395ss(t)) is
amended—
(A) in paragraph (1), by inserting ‘‘medi-
care supplemental’’ after ‘‘If a’’,
(B) in paragraph (1), by striking ‘‘NAIC
Model Standards’’ and inserting ‘‘1991 NAIC
Model Regulation or 1991 Federal Regulation’’,
(C) in paragraph (1)(A), by inserting ‘‘or
agreements’’ after ‘‘contracts’’,
(D) in subparagraphs (E)(i) and (F) of
paragraph (1), by striking ‘‘NAIC standards’’
and inserting ‘‘standards in the 1991 NAIC
Model Regulation or 1991 Federal Regulation’’,
and
421
(E) in paragraph (2), by inserting ‘‘the is-
suer’’ before ‘‘is subject to a civil money pen-
alty’’.
(2) Section 1154(a)(4)(B) (42 U.S.C. 1320c–
3(a)(4)(B)) is amended—
(A) by inserting ‘‘that is’’ after ‘‘(or’’, and
(B) by striking ‘‘1882(t)’’ and inserting
‘‘1882(t)(3)’’.
(i) HEALTH
INSURANCE
COUNSELING.—Section
4360 of OBRA–1990 is amended—
(1) in subsection (b)(2)(A)(ii), by striking
‘‘Act’’ and inserting ‘‘Act)’’;
(2) in subsection (b)(2)(D), by striking ‘‘serv-
ices’’ and inserting ‘‘counseling’’;
(3) in subsection (b)(2)(I), by striking ‘‘assist-
ance’’ and inserting ‘‘referrals’’;
(4) in subsection (c)(1), by striking ‘‘and that
such activities will continue to be maintained at such
level’’;
(5) in subsection (d)(3), by striking ‘‘to the
rural areas’’ and inserting ‘‘eligible individuals resid-
ing in rural areas’’;
(6) in subsection (e)—
(A) by striking ‘‘subsection (c) or (d)’’ and
inserting ‘‘this section’’,
422
(B) by striking ‘‘and annually thereafter,
issue an annual report’’ and inserting ‘‘and an-
nually thereafter during the period of the grant,
issue a report’’,
(C) in paragraph (1), by striking ‘‘State-
wide’’, and
(D) in subsection (f), by striking para-
graph (2) and by redesignating paragraphs (3)
through (5) as paragraphs (2) through (4), re-
spectively; and
(7) by redesignating the second subsection (f)
(relating to authorization of appropriations for
grants) as subsection (g).
(j) TELEPHONE INFORMATION SYSTEM.—
(1) Section 1804 (42 U.S.C. 1395b–2) is
amended—
(A) by adding at the end of the heading
the following: ‘‘; MEDICARE AND MEDIGAP IN-
FORMATION’’,
(B) by inserting ‘‘(a)’’ after ‘‘1804.’’, and
(C) by adding at the end the following new
subsection:
‘‘(b) The Secretary shall provide information via a
toll-free telephone number on the programs under this
title.’’.
423
(2) Section 1882(f) (42 U.S.C. 1395ss(f)) is
amended by adding at the end the following new
paragraph:
‘‘(3) The Secretary shall provide information via a
toll-free telephone number on medicare supplemental poli-
cies (including the relationship of State programs under
title XIX to such policies).’’.
(3) Section 1889 is repealed.
(k) MAILING OF POLICIES.—Section 1882(d)(4) (42
U.S.C. 1395ss(d)(4)) is amended—
(1) in subparagraph (D), by striking ‘‘, if such
policy’’ and all that follows up to the period at the
end, and
(2) by adding at the end the following new sub-
paragraph:
‘‘(E) Subparagraph (A) shall not apply in the case
of an issuer who mails or causes to be mailed a policy,
certificate, or other matter solely to comply with the re-
quirements of subsection (q).’’.
(l) EFFECTIVE DATE.—The amendments made by
this section shall be effective as if included in the enact-
ment of OBRA–1990; except that—
(1) the amendments made by subsection (d)(1)
shall take effect on the date of the enactment of this
Act, but no penalty shall be imposed under section
424
1882(d)(3)(A) of the Social Security Act (for an ac-
tion occurring after the effective date of the amend-
ments made by section 4354 of OBRA–1990 and be-
fore the date of the enactment of this Act) with re-
spect to the sale or issuance of a policy which is not
unlawful under section 1882(d)(3)(A)(i)(II) of the
Social Security Act (as amended by this section);
(2) the amendments made by subsection
(d)(2)(A) and by subparagraphs (A), (B), and (E)
of subsection (e)(1) shall be effective on the date
specified in subsection (m)(4); and
(3) the amendment made by subsection (g)(2)
shall take effect on January 1, 1994, and shall apply
to individuals who attain 65 years of age or older on
or after the effective date of section 1882(s)(2) of
the Social Security Act (and, in the case of individ-
uals who attained 65 years of age after such effec-
tive date and before January 1, 1994, and who were
not covered under such section before January 1,
1994, the 6-month period specified in that section
shall begin January 1, 1994).
(m) TRANSITION PROVISIONS.—
(1) IN GENERAL.—If the Secretary of Health
and Human Services identifies a State as requiring
a change to its statutes or regulations to conform its
425
regulatory program to the changes made by this sec-
tion, the State regulatory program shall not be con-
sidered to be out of compliance with the require-
ments of section 1882 of the Social Security Act due
solely to failure to make such change until the date
specified in paragraph (4).
(2) NAIC STANDARDS.—If, within 6 months
after the date of the enactment of this Act, the Na-
tional Association of Insurance Commissioners (in
this subsection referred to as the ‘‘NAIC’’) modifies
its 1991 NAIC Model Regulation (adopted in July
1991) to conform to the amendments made by this
section and to delete from section 15C the exception
which begins with ‘‘unless’’, such modifications shall
be considered to be part of that Regulation for the
purposes of section 1882 of the Social Security Act.
(3) SECRETARY
STANDARDS.—If the NAIC
does not make the modifications described in para-
graph (2) within the period specified in such para-
graph, the Secretary of Health and Human Services
shall make the modifications described in such para-
graph and such modifications shall be considered to
be part of that Regulation for the purposes of sec-
tion 1882 of the Social Security Act.
(4) DATE SPECIFIED.—
426
(A) IN
GENERAL.—Subject to subpara-
graph (B), the date specified in this paragraph
for a State is the earlier of—
(i) the date the State changes its stat-
utes or regulations to conform its regu-
latory program to the changes made by
this section, or
(ii) 1 year after the date the NAIC or
the Secretary first makes the modifications
under paragraph (2) or (3), respectively.
(B) ADDITIONAL LEGISLATIVE ACTION RE-
QUIRED.—In the case of a State which the Sec-
retary identifies as—
(i) requiring State legislation (other
than legislation appropriating funds) to
conform its regulatory program to the
changes made in this section, but
(ii) having a legislature which is not
scheduled to meet in 1994 in a legislative
session in which such legislation may be
considered,
the date specified in this paragraph is the first
day of the first calendar quarter beginning after
the close of the first legislative session of the
State legislature that begins on or after Janu-
427
ary 1, 1994. For purposes of the previous sen-
tence, in the case of a State that has a 2-year
legislative session, each year of such session
shall be deemed to be a separate regular session
of the State legislature.
CHAPTER 5—TREATMENT OF CERTAIN
STATE HEALTH CARE PROGRAMS
SEC. 13581. TREATMENT OF CERTAIN STATE HEALTH CARE
PROGRAMS.
Section 514(b)(5) of the Employee Retirement In-
come Security Act of 1974 (29 U.S.C. 1144(b)(5)) is
amended to read as follows:
‘‘(5)(A) Except as provided in subparagraphs
(B) and (C), subsection (a) shall not apply to the
Hawaii Prepaid Health Care Act (Haw. Rev. Stat.
§§ 393–1 through 393–51).
‘‘(B) Nothing in subparagraph (A) shall be con-
strued to exempt from subsection (a) any State tax
law relating to employee benefits plans.
‘‘(C) If the Secretary of Labor notifies the Gov-
ernor of the State of Hawaii that as the result of
an amendment to the Hawaii Prepaid Health Care
Act enacted after October 5, 1992—
428
‘‘(i) the proportion of the population with
health care coverage under such Act is less than
such proportion on such date, or
‘‘(ii) the level of benefit coverage provided
under such Act is less than the actuarial equiv-
alent of such level of coverage on such date,
subparagraph (A) shall not apply with respect to the
application of such amendment to such Act after the
date of such notification.’’.
TITLE XIV—REVENUE
PROVISIONS
SEC. 14001. SHORT TITLE; ETC.
(a) SHORT TITLE.—This title may be cited as the
‘‘Revenue Reconciliation Act of 1993’’.
(b) AMENDMENT TO 1986 CODE.—Except as other-
wise expressly provided, whenever in this title an amend-
ment or repeal 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 a section or other provi-
sion of the Internal Revenue Code of 1986.
(c) SECTION 15 NOT TO APPLY.—Except in the case
of the amendments made by section 14221 (relating to
corporate rate increase), no amendment made by this title
shall be treated as a change in a rate of tax for purposes
of section 15 of the Internal Revenue Code of 1986.
429
(d) WAIVER OF ESTIMATED TAX PENALTIES.—No
addition to tax shall be made under section 6654 or 6655
of the Internal Revenue Code of 1986 for any period be-
fore April 16, 1994 (March 16, 1994, in the case of a
corporation), with respect to any underpayment to the ex-
tent such underpayment was created or increased by any
provision of this title.
(e) TABLE OF CONTENTS.—
TITLE XIV—REVENUE PROVISIONS
Sec. 14001. Short title; etc.
Subtitle A—Training and Investment Incentives
PART I—PROVISIONS RELATING TO EDUCATION AND TRAINING
Sec. 14101. Employer-provided educational assistance.
Sec. 14102. Targeted jobs credit.
PART II—INVESTMENT INCENTIVES
SUBPART A—RESEARCH CREDIT
Sec. 14111. Permanent extension of research credit.
Sec. 14112. Modification of fixed base percentage for startup companies.
SUBPART B—CAPITAL GAIN PROVISIONS
Sec. 14113. 50-percent exclusion for gain from certain small business stock.
Sec. 14114. Rollover of gain from sale of publicly traded securities into special-
ized small business investment companies.
SUBPART C—MODIFICATIONS TO MINIMUM TAX DEPRECIATION RULES
Sec. 14115. Modification to minimum tax depreciation rules.
SUBPART D—INCREASE IN EXPENSE TREATMENT FOR SMALL BUSINESSES
Sec. 14116. Increase in expense treatment for small businesses.
PART III—TAX-EXEMPT BOND PROVISIONS
Sec. 14121. High-speed intercity rail facility bonds exempt from State volume
cap.
Sec. 14122. Permanent extension of qualified small issue bonds.
PART IV—EXPANSION AND SIMPLIFICATION OF EARNED INCOME TAX
CREDIT
Sec. 14131. Expansion and simplification of earned income tax credit.
430
PART V—INCENTIVES FOR INVESTMENT IN REAL ESTATE
SUBPART A—EXTENSION OF QUALIFIED MORTGAGE BONDS AND LOW-INCOME
HOUSING CREDIT
Sec. 14141. Permanent extension of qualified mortgage bonds.
Sec. 14142. Permanent extension of low-income housing credit.
SUBPART B—MODIFICATION OF PASSIVE LOSS RULES
Sec. 14143. Application of passive loss rules to rental real estate activities.
SUBPART C—PROVISIONS RELATING TO REAL ESTATE INVESTMENTS BY
PENSION FUNDS
Sec. 14144. Real estate property acquired by a qualified organization.
Sec. 14145. Repeal of special treatment of publicly traded partnerships.
Sec. 14146. Title-holding companies permitted to receive small amounts of un-
related business taxable income.
Sec. 14147. Exclusion from unrelated business tax of gains from certain prop-
erty.
Sec. 14148. Exclusion from unrelated business tax of certain fees and option
premiums.
Sec. 14149. Treatment of pension fund investments in real estate investment
trusts.
SUBPART D—DISCHARGE OF INDEBTEDNESS
Sec. 14150. Exclusion from gross income for income from discharge of qualified
real property business indebtedness.
SUBPART E—INCREASE IN RECOVERY PERIOD FOR NONRESIDENTIAL REAL
PROPERTY
Sec. 14151. Increase in recovery period for nonresidential real property.
PART VI—LUXURY TAX
Sec. 14161. Repeal of luxury excise taxes other than on passenger vehicles.
Sec. 14162. Exemption from luxury excise tax for certain equipment installed
on passenger vehicles for use by disabled individuals.
Sec. 14163. Tax on diesel fuel used in noncommercial boats.
PART VII—OTHER CHANGES
Sec. 14171. Alternative minimum tax treatment of contributions of appreciated
property.
Sec. 14172. Certain transfers to railroad retirement account made permanent.
Sec. 14173. Temporary extension of deduction for health insurance costs of
self-employed individuals.
Subtitle B—Revenue Increases
PART I—PROVISIONS AFFECTING INDIVIDUALS
SUBPART A—RATE INCREASES
Sec. 14201. Increase in top marginal rate under section 1.
Sec. 14202. Surtax on high-income taxpayers.
431
Sec. 14203. Modifications to alternative minimum tax rates and exemption
amounts.
Sec. 14204. Overall limitation on itemized deductions for high-income taxpayers
made permanent.
Sec. 14205. Phaseout of personal exemption of high-income taxpayers made
permanent.
Sec. 14206. Provisions to prevent conversion of ordinary income to capital gain.
SUBPART B—OTHER PROVISIONS
Sec. 14207. Repeal of limitation on amount of wages subject to health insur-
ance employment tax.
Sec. 14208. Top estate and gift tax rates made permanent.
Sec. 14209. Reduction in deductible portion of business meals and entertain-
ment.
Sec. 14210. Elimination of deduction for club membership fees.
Sec. 14211. Disallowance of deduction for certain employee remuneration in ex-
cess of $1,000,000.
Sec. 14212. Reduction in compensation taken into account in determining con-
tributions and benefits under qualified retirement plans.
Sec. 14213. Modification to deduction for certain moving expenses.
Sec. 14214. Simplification of individual estimated tax safe harbor based on last
year’s tax.
Sec. 14215. Social security and tier 1 railroad retirement benefits.
PART II—PROVISIONS AFFECTING BUSINESSES
Sec. 14221. Increase in top marginal rate under section 11.
Sec. 14222. Denial of deduction for lobbying expenses.
Sec. 14223. Mark to market accounting method for securities dealers.
Sec. 14224. Clarification of treatment of certain FSLIC financial assistance.
Sec. 14225. Modification of corporate estimated tax rules.
Sec. 14226. Limitation on section 936 credit.
Sec. 14227. Modification to limitation on deduction for certain interest.
PART III—FOREIGN TAX PROVISIONS
SUBPART A—CURRENT TAXATION OF CERTAIN EARNINGS OF CONTROLLED
FOREIGN CORPORATIONS
Sec. 14231. Earnings invested in excess passive assets.
Sec. 14232. Modification to taxation of investment in United States property.
Sec. 14233. Other modifications to subpart F.
SUBPART B—ALLOCATION OF RESEARCH AND EXPERIMENTAL EXPENDITURES
Sec. 14234. Allocation of research and experimental expenditures.
SUBPART C—OTHER PROVISIONS
Sec. 14235. Repeal of certain exceptions for working capital.
Sec. 14236. Modifications of accuracy-related penalty.
Sec. 14237. Denial of portfolio interest exemption for contingent interest.
Sec. 14238. Regulations dealing with conduit arrangements.
PART IV—ENERGY TAX PROVISIONS
432
SUBPART A—ENERGY TAX BASED ON BTU CONTENT
Sec. 14241. Imposition of energy tax based on Btu content.
SUBPART B—MODIFICATIONS TO TAX ON DIESEL FUEL
Sec. 14242. Modifications to tax on diesel fuel.
Sec. 14243. Floor stocks tax.
SUBPART C—EXTENSION OF MOTOR FUEL TAX RATES; INCREASED DEPOSITS
INTO HIGHWAY TRUST FUND
Sec. 14244. Extension of motor fuel tax rates; increased deposits into highway
trust fund.
PART V—COMPLIANCE PROVISIONS
Sec. 14251. Reporting required for certain payments to corporations.
Sec. 14252. Modifications to substantial understatement and return-preparer
penalties.
Sec. 14253. Returns relating to the cancellation of indebtedness by certain fi-
nancial entities.
PART VI—TREATMENT OF INTANGIBLES
Sec. 14261. Amortization of goodwill and certain other intangibles.
Sec. 14262. Treatment of certain payments to retired or deceased partner.
PART VII—MISCELLANEOUS PROVISIONS
Sec. 14271. Substantiation requirement for deduction of certain charitable con-
tributions.
Sec. 14272. Disclosure related to quid pro quo contributions.
Sec. 14273. Disallowance of interest on certain overpayments of tax.
Sec. 14274. Denial of deduction relating to travel expenses.
Sec. 14275. Increase in withholding from supplemental wage payments.
Subtitle C—Empowerment Zones and Enterprise Communities, Etc.
PART I—EMPOWERMENT ZONES AND ENTERPRISE COMMUNITIES
Sec. 14301. Designation and treatment of empowerment zones and enterprise
communities.
Sec. 14302. Expansion of targeted jobs credit.
Sec. 14303. Technical and conforming amendments.
Sec. 14304. Effective date.
PART II—CREDIT FOR CONTRIBUTIONS TO CERTAIN COMMUNITY
DEVELOPMENT CORPORATIONS
Sec. 14311. Credit for contributions to certain community development cor-
porations.
Subtitle D—Other Provisions
PART I—DISCLOSURE PROVISIONS
Sec. 14401. Disclosure of return information for administration of certain vet-
erans programs.
433
Sec. 14402. Disclosure of return information to carry out income contingent re-
payment of student loans.
Sec. 14403. Use of return information for income verification under certain
housing assistance programs.
PART II—USER FEE PROVISIONS
Sec. 14411. Fees for applications for alcohol labeling and formula reviews.
Sec. 14412. Use of Harbor Maintenance Trust Fund amounts for administra-
tive expenses.
Sec. 14413. Increase in tax on fuel used in commercial transportation on inland
waterways.
PART III—PUBLIC DEBT LIMIT
Sec. 14421. Increase in public debt limit.
PART IV—VACCINE PROVISIONS
Sec. 14431. Excise tax on certain vaccines made permanent.
Sec. 14432. Continuation coverage under group health plans of costs of pedi-
atric vaccines.
Sec. 14433. Childhood Immunization Trust Fund.
Subtitle A—Training and
Investment Incentives
PART I—PROVISIONS RELATING TO EDUCATION
AND TRAINING
SEC. 14101. EMPLOYER-PROVIDED EDUCATIONAL ASSIST-
ANCE.
(a) PERMANENT EXTENSION OF EXCLUSION.—
(1) IN GENERAL.—Section 127 (relating to edu-
cational assistance programs) is amended by striking
subsection (d) and by redesignating subsection (e) as
subsection (d).
(2) CONFORMING AMENDMENT.—Paragraph (2)
of section 103(a) of the Tax Extension Act of 1991
is hereby repealed.
434
(b) COORDINATION WITH SECTION 132.—Paragraph
(8) of section 132(i) is amended to read as follows:
‘‘(8) APPLICATION OF SECTION TO OTHERWISE
TAXABLE EDUCATIONAL OR TRAINING BENEFITS.—
Amounts paid or expenses incurred by the employer
for education or training provided to the employee
which are not excludable from gross income under
section 127 shall be excluded from gross income
under this section if (and only if) such amounts or
expenses are a working condition fringe.’’
(c) EFFECTIVE DATES.—
(1) SUBSECTION (a).—The amendments made
by subsection (a) shall apply to taxable years ending
after June 30, 1992.
(2) SUBSECTION (b).—The amendment made
by subsection (b) shall apply to taxable years begin-
ning after December 31, 1988.
(d) TRANSITION RULES.—
(1) WAIVER OF INTEREST AND PENALTIES.—
No interest, penalty, or addition to tax shall be im-
posed or required to be paid solely by reason of a
failure, before the date of the enactment of this Act,
to treat educational assistance in a manner consist-
ent with the provisions of section 103(a) of the Tax
441
‘‘(D) LIMITATION ON AMOUNT OF WAGES
TAKEN INTO ACCOUNT.—For purposes of apply-
ing this subpart to wages paid or incurred to
any qualified participant in an approved school-
to-work program, subsection (b)(3) shall be ap-
plied by substituting ‘$3,000’ for ‘$6,000’.
‘‘(E) WAGES.—In the case of remunera-
tion attributable to services performed while the
individual meets the requirements of subpara-
graph (A), wages, and unemployment insurance
wages, shall be determined without regard to
section 3306(c)(10)(C).’’
(3) OVERALL
LIMITATIONS.—Section 51 is
amended by adding at the end thereof the following
new subsection:
‘‘(l) OVERALL LIMITATION ON APPROVED SCHOOL-
TO-WORK PROGRAM PARTICIPANTS.—
‘‘(1) IN GENERAL.—For purposes of subsection
(d)(10), the national school-to-work program limita-
tion—
‘‘(A) for calendar year 1994 is 125,000,
‘‘(B) for calendar year 1995 is 140,000,
‘‘(C) for calendar year 1996 is 160,000,
‘‘(D) for calendar year 1997 is 180,000,
and