SEC. 2. PRESERVATION OF PROVIDER OPERATED NURSING 
AND 
ALLIED 
HEALTH 
EDUCATION 
PRO-
GRAMS. 
(a) IN GENERAL.—Section 1861(v) of the Social Se-
curity Act (42 U.S.C. 1395x(v)) is amended by adding at 
the end the following new paragraph: 
‘‘(9) 
PRESERVATION
OF
PROVIDER-OPERATED 
NURSING
AND
ALLIED
HEALTH
EDUCATION
PRO-
GRAMS.— 
‘‘(A) IN
GENERAL.—The Secretary shall not 
deny provider-operated status for a nursing and al-
lied health education program that substantially 
meets requirements in effect under paragraphs (e) 
and (f) of section 413.85 of title 42, Code of Federal 
Regulations, as of October 1, 2006, on the basis of 
an organizational structure, contractual arrange-
ments, or legal structure of the program, or a 
change in such a structure or arrangement, such as 
those described in subparagraph (B), so long as a 
hospital, hospitals, or health system continues to 
substantially control the nursing or allied health pro-
gram. 
‘‘(B) EXAMPLES
OF
ARRANGEMENTS
AND 
STRUCTURES.—The following are examples of an or-
ganizational structure, contractual arrangement, 
legal structure, or a change in such a structure or 
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arrangement, referred to in subparagraph (A) of a 
provider-operated program: 
‘‘(i) The students enrolled in the program 
are concurrently enrolled in a college, commu-
nity college, or university or receive degrees, di-
plomas, or other certificates or credentials upon 
graduation from both the nursing or allied 
health education and the college, community 
college, or university. 
‘‘(ii) The program enters into an agree-
ment with a third party to provide classroom, 
administrative, or financial services if the con-
tract is related to the nursing or allied health 
education activity and the hospital or other pro-
vider retains the authority to modify, amend, 
rescind, or renew the agreement. 
‘‘(iii) The program fails to comply with 
regulations or requirements promulgated for 
such a program because such compliance would 
result in direct conflict with requirements— 
‘‘(I) of the State Board of Nursing or 
other regulatory agency in the State in 
which the program is located; or 
‘‘(II) of a national nursing or allied 
health accreditation body or a regional, in-
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stitutional accrediting body that is recog-
nized by the Department of Education or 
such a State Board or regulatory agency. 
‘‘(iv) The program which is offered by a 
for profit college or university is wholly owned 
by a hospital or health system, or by a non-
profit college or university that is operated by 
a hospital or health system, and collectively the 
college or university and the hospital or health 
system meets all the requirements in effect 
under paragraphs (e) and (f) of section 413.85 
of title 42, Code of Federal Regulations. 
‘‘(v) The nursing or allied health education 
program is operated by one or more hospitals, 
or a health system or chain organization, or any 
combination of a hospital or hospitals and pro-
viders or entities whose principal business is 
providing hospital services. 
‘‘(C) LIMITATION ON PAYMENT DENIALS.—The 
Secretary— 
‘‘(i) shall not recoup, withhold, offset, dis-
allow, or deny reasonable cost, pass-through 
payment for the costs of approved educational 
activities for a nursing or allied health edu-
cation program described in subparagraph (A) 
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on a ground for which a denial of provider-oper-
ated status is not permitted under such sub-
paragraph; 
‘‘(ii) shall not reopen any cost reporting 
year of any hospital for the purpose of effecting 
any recoupment or other denial of payment de-
scribed in clause (i) and shall withdraw and dis-
continue any such reopening effected before the 
date of the enactment of this paragraph; and 
‘‘(iii) shall restore to a hospital any such 
recoupment or denial effected for a previous 
cost reporting year by not later than the hos-
pital’s cost reporting year beginning after such 
date of enactment. 
‘‘(D) CONSTRUCTION.—This paragraph shall 
not affect payment— 
‘‘(i) with respect to a provider-operated 
program which is in compliance with regula-
tions and guidance issued as of the date of the 
enactment of this paragraph; or 
‘‘(ii) to a hospital or provider with respect 
to reasonable cost, pass-through reimbursement 
pursuant to section 4004(b) of the Omnibus 
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Budget Reconciliation Act of 1990 (Public Law 
101–508; 104 Stat. 1388–39).’’. 
Æ 
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