Sec. 102. No medicare secondary payor denial based on failure to complete
questionnaire.
Sec. 103. Limitations on use of extrapolation.
Sec. 104. Limitation on carrier user fees.
Sec. 105. Including physician input in annual carrier performance reviews.
Sec. 106. Appeals of carrier violations.
Sec. 107. Review of medical necessity denials in rural areas by physicians in
same specialty.
Sec. 108. Clarification of permissible substitute billing arrangements for physi-
cians’ services under the medicare and medicaid programs.
Sec. 109. Repeal of PRO precertification requirement for certain surgical pro-
cedures performed in rural areas.
Subtitle B—Increasing Number of Physicians Practicing in Rural Areas
Sec. 111. Deduction for medical school education loan interest incurred by phy-
sicians serving in medically underserved rural areas.
Sec. 112. Determination of greatest shortage of health professionals with re-
spect to assignment of members of National Health Service
Corps.
Subtitle C—Expansion of Exceptions to Limitations on Physician Self-
Referrals
Sec. 121. Changes in exceptions.
Sec. 122. Study and report on changes in costs.
Sec. 123. Effective date.
TITLE II—PROVISIONS RELATING TO HOSPITALS
Sec. 201. Holding rural hospitals harmless from reductions in medicare pay-
ments for capital-related costs resulting from prospective pay-
ment methodology.
Sec. 202. Extension of rural referral center classification.
Sec. 203. Antitrust exemption for certain rural hospitals.
TITLE III—MISCELLANEOUS PROVISIONS
Subtitle A—Administrative Simplification
Sec. 301. Requirements for health benefit plans.
Sec. 302. Requirements for health service providers.
Sec. 303. Health claims clearinghouses.
Sec. 304. Standards relating to electronic claims processing.
Sec. 305. Excise tax on premiums received on group health plans which do not
meet certain requirements.
Sec. 306. Application of requirements to medicare and medicaid programs.
Subtitle B—Other Provisions
Sec. 311. Telecommunications demonstration program for trauma care in rural
areas.
Sec. 312. Primary care nursing clinics in rural areas.
Sec. 313. Identification, assessment, and reduction of paperwork burden associ-
ated with health care services.
TITLE I—PROVISIONS RELATING
TO PHYSICIANS’ SERVICES
Subtitle A—Incentives Under
Medicare
SEC. 101. ELIMINATION OF MEDICARE PAYMENT REDUC-
TIONS FOR NEW DOCTORS AND PRACTITION-
ERS FOR SERVICES FURNISHED IN ANY
RURAL AREA.
(a) IN GENERAL.—
(1) PAYMENTS
TO
PHYSICIANS.—The second
sentence of section 1848(a)(4) of the Social Security
Act (42 U.S.C. 1395w–4(a)(4)) is amended—
(A) by striking ‘‘or services’’ and inserting
‘‘, services’’; and
(B) by inserting before the period at the
end the following: ‘‘, or services furnished in a
rural area (as so defined) by (or under the su-
pervision of, or incident to services of) a physi-
cian described in section 1861(r)(1)’’.
(2) PAYMENTS
TO
OTHER
PRACTITIONERS.—
Section 1842(b)(4)(F)(i) of such Act (42 U.S.C.
1395u(b)(4)(F)(i)) is amended—
(A) by striking ‘‘and other than services’’
and inserting ‘‘, services’’; and
(B) by striking ‘‘area)’’ and inserting the
following: ‘‘area, or services furnished in a rural
area (as so defined) by (or under the super-
vision of, or incident to services of) a physician
described in section 1861(r)(1))’’.
(b) EFFECTIVE DATE.—The amendments made by
subsection (a) shall apply to services furnished after 1993.
SEC. 102. NO MEDICARE SECONDARY PAYOR DENIAL
BASED ON FAILURE TO COMPLETE QUES-
TIONNAIRE.
(a) IN GENERAL.—Section 1862(b)(2) of the Social
Security Act (42 U.S.C. 1395y(b)(2)) is amended by add-
ing at the end the following new subparagraph:
‘‘(C) TREATMENT OF QUESTIONNAIRES.—
The Secretary shall not fail to make payment
under subparagraph (A) based upon the failure
of an individual to complete a questionnaire
concerning the existence of a primary plan.
However, any such payment remains condi-
tional (as provided under subparagraph (B)).’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply to services furnished on or after
January 1, 1994.
SEC. 103. LIMITATIONS ON USE OF EXTRAPOLATION.
(a) IN GENERAL.—Section 1842(c) of the Social Se-
curity Act (42 U.S.C. 1395u(c)) is amended by adding at
the end the following new paragraph:
‘‘(4) In carrying out its contract under subsection
(b)(3) with respect to physicians’ services—
‘‘(A) the carrier may use extrapolation in order
to identify claims for which payment may be dis-
allowed;
‘‘(B) the carrier may not recoup or offset pay-
ment amounts based on extrapolation if the physi-
cian requests that disallowed claims be identified in-
dividually; and
‘‘(C) no refund, offset assessment, penalties, or
interest shall accrue with respect to a claim that is
disallowed until the date the administrative appeals
process has been completed.’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply to services furnished on or after
January 1, 1994.
SEC. 104. LIMITATION ON CARRIER USER FEES.
(a) IN GENERAL.—Section 1842(c) of the Social Se-
curity Act (42 U.S.C. 1395u(c)), as amended by section
103(a), is further amended by adding at the end the fol-
lowing new paragraph:
‘‘(5) Neither a carrier nor the Secretary may impose
a fee under this title—
‘‘(A) for the filing of a claim relating to physi-
cians’ services,
‘‘(B) for an error in filing a claim relating to
physicians’ services or for such a claim which is de-
nied,
‘‘(C) for any appeal under this title with respect
to physicians’ services,
‘‘(D) for applying for (or obtaining) a unique
identifier under subsection (r), or
‘‘(E) for responding to inquiries respecting phy-
sicians’ services or for providing information with re-
spect to medical review of such services.’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply to services furnished on or after
January 1, 1994.
SEC. 105. INCLUDING PHYSICIAN INPUT IN ANNUAL CAR-
RIER PERFORMANCE REVIEWS.
(a) IN GENERAL.—Section 1842(b)(2) of the Social
Security Act (42 U.S.C. 1395u(b)(2)) is amended—
(1) in the second sentence of subparagraph (A),
by inserting ‘‘(including the reduction of administra-
tive burdens on physicians furnishing services for
which payment is made under this part)’’ after ‘‘con-
tract obligations under this section’’, and
(2) by adding at the end the following new sub-
paragraph:
‘‘(D) In applying the standards and criteria estab-
lished under subparagraph (A), the Secretary shall con-
sider any evaluations (with respect to such standards and
criteria) submitted by medical societies representing physi-
cians who are served by the carrier.’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply to services furnished on or after
January 1, 1994.
SEC. 106. APPEALS OF CARRIER VIOLATIONS.
(a) IN GENERAL.—Section 1842(b)(2) of the Social
Security Act (42 U.S.C. 1395u(b)(2)), as amended by sec-
tion 105(a)(2), is further amended by adding at the end
the following new subparagraph:
‘‘(E) The Secretary shall provide that any individual
(including a physician) who—
‘‘(i) is aggrieved by the failure of a carrier to
carry out policies established under this part, wheth-
er established through the carrier manual, regional
office transmittals, central office transmittals, or
other means, and
‘‘(ii) establishes that the individual has (or, in
the case of a failure affecting more than one individ-
ual, the individuals affected by the failure have) suf-
fered damages aggregating at least $500 as a result
of the failure,
may obtain a hearing before the Secretary respecting such
failure. If a carrier is found to have such a failure, the
Secretary shall order the carrier to compensate the ag-
grieved individuals for such failure.’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply to services furnished on or after
January 1, 1994.
SEC. 107. REVIEW OF MEDICAL NECESSITY DENIALS IN
RURAL AREAS BY PHYSICIANS IN SAME SPE-
CIALTY.
Section 1842(b)(2) of the Social Security Act (42
U.S.C. 1395u(b)(2)), as amended by sections 105(a)(2)
and 106(a), is further amended by adding at the end the
following new subparagraph:
‘‘(F) In the contract under subsection (c), the Sec-
retary shall require each carrier, in the case of a decision
to deny payment for physicians’ services provided in a
rural area (as defined in section 18869d)(2)(D)) under
section 1862(a)(1), to provide for review of the decision
by a physician in the same medical specialty as the medi-
cal specialty of the physician who provided the services.’’.
SEC. 108. CLARIFICATION OF PERMISSIBLE SUBSTITUTE
BILLING ARRANGEMENTS FOR PHYSICIANS’
SERVICES UNDER THE MEDICARE AND MED-
ICAID PROGRAMS.
(a) MEDICARE PROGRAM.—
(1) IN
GENERAL.—Clause (D) of section
1842(b)(6) of the Social Security Act (42 U.S.C.
1395u(b)(6)) is amended to read as follows: ‘‘(D)(i)
payment may be made to a physician for physicians’
services (and services incident to such services) to be
provided by a second physician on a reciprocal basis
to individuals who are patients of the first physician
if (I) the first physician is unavailable to provide the
services, (II) the services are not provided by the
second physician over a continuous period of longer
than 60 days, and (III) the claim form submitted to
the carrier includes the second physician’s unique
identifier (provided under the system established
under subsection (r)) and indicates that the claim
meets the requirements of this clause for payment to
the first physician; and (ii) payment may be made
to a physician for physicians’ services (and services
incident to such services) which that physician pays
a second physician on a per diem or other fee-for-
time basis to provide to individuals who are patients
of the first physician if (I) the first physician is un-
available to provide the services, (II) the services are
not provided by the second physician over a continu-
ous period of longer than 90 days (or such longer
period as the Secretary may provide), and (III) the
claim form submitted to the carrier includes the sec-
ond physician’s unique identifier (provided under the
system established under subsection (r)) and indi-
cates that the claim meets the requirements of this
clause for payment to the first physician’’.
(2) EFFECTIVE DATE.—The amendment made
by paragraph (1) shall apply to services furnished on
or after the first day of the first month beginning
more than 60 days after the date of the enactment
of this Act.
(b) MEDICAID PROGRAM.—
(1) IN
GENERAL.—Section 1902(a)(32)(C) of
the Social Security Act (42 U.S.C. 1396a(a)(32)(C))
is amended to read as follows:
‘‘(C) payment may be made to a physician
for services furnished by a substitute physician
under the circumstances described in subpara-
graph (D) of section 1842(b)(6), except that,
for purposes of this subparagraph, any ref-
erence in such subparagraph to ‘a carrier’ or
‘the system established under subsection (r)’ is
deemed a reference to the State (or other fiscal
agent under the State plan) and to the system
established under subsection (x) of this section,
respectively.’’.
(2) EFFECTIVE
DATE.—(A) The amendment
made by paragraph (1) shall apply to services fur-
nished on or after the date of the enactment of this
Act.
(B) Until the first day of the first calendar
quarter beginning more than 60 days after the date
the Secretary of Health and Human Services estab-
lishes the physician identifier system under section
1902(x) of the Social Security Act, the requirement
under section 1902(a)(32)(C) of such Act that a
claim form submitted must include the second physi-
cian’s unique identifier is deemed to be satisfied if
the claim form identifies (in a manner specified by
the Secretary of Health and Human Services) the
second physician.
SEC. 109. REPEAL OF PRO PRECERTIFICATION REQUIRE-
MENT FOR CERTAIN SURGICAL PROCEDURES
PERFORMED IN RURAL AREAS.
(a) IN GENERAL.—Section 1164(b) of the Social Se-
curity Act (42 U.S.C. 1320c–13(b)) is amended by adding
at the end the following new paragraph:
‘‘(5) 
EXCEPTION
FOR
PROCEDURES
PER-
FORMED IN RURAL AREAS.—No surgical procedure
performed in a rural area (as defined in section
1886(d)(2)(D)) shall be covered under this section.’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply to services furnished on or after
January 1, 1994.
Subtitle B—Increasing Number of
Physicians Practicing in Rural
Areas
SEC. 111. DEDUCTION FOR MEDICAL SCHOOL EDUCATION
LOAN INTEREST INCURRED BY PHYSICIANS
SERVING 
IN 
MEDICALLY 
UNDERSERVED
RURAL AREAS.
(a) IN GENERAL.—Paragraph (1) of section 163(h)
of the Internal Revenue Code of 1986 (relating to dis-
allowance of deduction for personal interest) is amended
by striking ‘‘and’’ at the end of subparagraph (D), by re-
designating subparagraph (E) as subparagraph (F), and
by inserting after subparagraph (D) the following new
subparagraph:
‘‘(E) any qualified medical education loan
interest (within the meaning of paragraph (5)),
and’’.
(b) QUALIFIED MEDICAL EDUCATION LOAN INTER-
EST DEFINED.—Subsection (h) of section 163 of such
Code is amended by redesignating paragraph (5) as para-
graph (6) and by inserting after paragraph (4) the follow-
ing new paragraph:
‘‘(5) QUALIFIED MEDICAL EDUCATION LOAN IN-
TEREST.—
‘‘(A) IN
GENERAL.—The term ‘qualified
medical education loan interest’ means inter-
est—
‘‘(i) which is on a medical education
loan of a physician,
‘‘(ii) which is paid or accrued by such
physician, and
‘‘(iii) which accrues during the pe-
riod—
‘‘(I) such physician is providing
primary care (including internal medi-
cine, pediatrics, obstetrics/gynecology,
family medicine, and osteopathy) to
residents of a medically underserved
rural area, and
‘‘(II) such physician’s principal
place of abode is in such area.
‘‘(B) MEDICAL
EDUCATION
LOAN.—The
term ‘medical education loan’ means indebted-
ness incurred to pay the individual’s—
‘‘(i) qualified tuition and related ex-
penses (as defined in section 117(b)) in-
curred for the medical education of such
individual, or
‘‘(ii) reasonable living expenses while
away from home in order to attend an edu-
cational institution described in section
170(b)(1)(A)(ii) for the medical education
of such individual.
‘‘(C) PHYSICIAN.—For purposes of sub-
paragraph (A), the term ‘physician’ has the
meaning given such term by section 1861(r)(1)
of the Social Security Act.
‘‘(D) MEDICALLY
UNDERSERVED
RURAL
AREA.—The term ‘medically underserved rural
area’ means any rural area which is a medically
underserved area (as defined in section 330(b)
or 1302(7) of the Public Health Service Act).’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years ending after the
date of the enactment of this Act.
SEC. 112. DETERMINATION OF GREATEST SHORTAGE OF
HEALTH PROFESSIONALS WITH RESPECT TO
ASSIGNMENT OF MEMBERS OF NATIONAL
HEALTH SERVICE CORPS.
(a) IN GENERAL.—Section 333A(b) of the Public
Health Service Act (42 U.S.C. 254f–1(b)) is amended by
adding at the end the following paragraph:
‘‘(3) The ratio of the estimated number of
medically underserved individuals residing in the
health professional shortage area involved to the ag-
gregate population of all health professional shortage
areas.’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply to assignments of members of
the National Health Service Corps that are made on or
after the date of the enactment of this Act.
Subtitle C—Expansion of Excep-
tions to Limitations on Physi-
cian Self-Referrals
SEC. 121. CHANGES IN EXCEPTIONS.
(a) HEALTH MAINTENANCE ORGANIZATIONS
AND
MANAGED
CARE
PLANS.—Paragraph (3) of section
1877(b) of the Social Security Act is amended to read as
follows:
‘‘(3) HEALTH
MAINTENANCE
ORGANIZATIONS
AND MANAGED CARE PLANS.—
‘‘(A) HEALTH
MAINTENANCE
ORGANIZA-
TIONS.—In the case of services furnished by a
health maintenance organization to an individ-
ual enrolled with the health maintenance orga-
nization, including services furnished by—
‘‘(i) an eligible organization (as de-
fined in section 1876(b));
‘‘(ii) an organization described in sec-
tion 1833(a)(1)(A);
‘‘(iii) an organization receiving pay-
ments on a prepaid basis under a dem-
onstration project under section 402(a) of
the Social Security Amendments of 1967
or under section 222(a) of the Social Secu-
rity Amendments of 1972; and
‘‘(iv) any other entity designated by
the Secretary as a health maintenance or-
ganization for purposes of this subpara-
graph.
‘‘(B) CERTAIN MANAGED CARE PLANS.—In
the case of services furnished by a managed
care plan (as defined by the Secretary) to an
individual enrolled under the plan if—
‘‘(i) the plan selectively contracts with
physicians and with providers of des-
ignated health services; and
‘‘(ii) under the plan physicians bear a
significant financial risk for the cost of
designated health services furnished upon
referral.’’.
(b) EXCEPTION FOR SHARED FACILITY SERVICES.—
Section 1877 of such Act is amended—
(1) in subsection (b), by redesignating para-
graphs (3), (4), and (5) as paragraphs (4), (6), and
(7), respectively, and by inserting after paragraph
(2) the following new paragraph:
‘‘(3) SHARED FACILITY SERVICES.—
‘‘(A) IN GENERAL.—In the case of shared
facility services of a shared facility—
‘‘(i) that are furnished—
‘‘(I) personally by the referring
physician who is a shared facility phy-
sician or personally by an individual
supervised by such a physician or by
another shared facility physician and
employed under the shared facility ar-
rangement,
‘‘(II) by a shared facility in a
building in which the referring physi-
cian furnishes physician’s services un-
related to the furnishing of shared fa-
cility services, and
‘‘(III) to a patient of a shared fa-
cility physician;
‘‘(ii) that are billed by the referring
physician or by an entity that is wholly
owned by such physician; and
‘‘(iii) with respect to the referral for
which the disclosure requirements of sub-
paragraph (B) are met.
‘‘(B) CONFLICT OF INTEREST DISCLOSURE
REQUIREMENTS.—A shared facility meets the
disclosure requirements of this subparagraph,
with respect to a referral of an individual for
the furnishing of shared facility services, if at
the time of the referral (and before the provi-
sion of shared facility services under the refer-
ral) and in a form and manner specified by the
Secretary—
‘‘(i) the individual (I) is given infor-
mation on the financial relationship be-
tween the referring physician and the
shared facility, and (II) is informed that a
list of alternative providers (if any) that
are available to provide such services will
be given upon request,
‘‘(ii) the individual is given, upon re-
quest, a list of alternative providers (if
any) that are available to provide such
services, and
‘‘(iii) the individual is informed that
(I) the individual has the option to use any
of the alternative providers and (II) the re-
ferring physician will not treat the individ-
ual differently if an alternative provider is
selected to provide the designated health
services.
‘‘(C) CONSTRUCTION.—Nothing in sub-
paragraph (B) shall be construed to limit the
information that a shared facility or shared fa-
cility physician may provide to an individual.’’;
and
(2) in subsection (h), by adding at the end the
following new paragraph:
‘‘(8) SHARED
FACILITY
RELATED
DEFINI-
TIONS.—
‘‘(A) SHARED
FACILITY
SERVICES.—The
term ‘shared facility services’ means, with re-
spect to a shared facility, a type of service
which is furnished by the facility to patients of
shared facility physicians.
‘‘(B) 
SHARED
FACILITY.—The 
term
‘shared facility’ means an entity that furnishes
shared facility services under a shared facility
arrangement.
‘‘(C) SHARED FACILITY PHYSICIAN.—The
term ‘shared facility physician’ means, with re-
spect to a shared facility, a physician who has
a financial relationship under a shared facility
arrangement with the facility.
‘‘(D) SHARED FACILITY ARRANGEMENT.—
The term ‘shared facility arrangement’ means,
with respect to the provision of a type of service
by a shared facility in a building, a financial ar-
rangement—
‘‘(i) which is only between physicians
who are providing services (unrelated to
shared facility services) in the same build-
ing,
‘‘(ii) which makes one or more of the
shared facility physicians responsible for
the provision of shared facility services by
the facility,
‘‘(iii) in which the overhead expenses
of the facility are shared, in accordance
with methods previously determined by the
physicians in the arrangement, among the
physicians in the arrangement, and
‘‘(iv) which, in the case of a corpora-
tion, is wholly owned and controlled by
shared facility physicians.’’.
(c) EXCEPTION FOR VALUABLE COMMUNITY SERV-
ICES.—Section 1877(b) of such Act is further amended
by inserting after paragraph (4), as redesignated by sub-
section (b)(1), the following new paragraph:
‘‘(5) VALUABLE COMMUNITY SERVICES.—
‘‘(A) IN GENERAL.—In the case of services
furnished by an entity to individuals in a com-
munity if the Secretary determines that—
‘‘(i) individuals in the community will
be deprived of adequate health care serv-
ices without an exception under this para-
graph for the entity and the services, and
‘‘(ii) the requirements of subpara-
graph (B) are met.
‘‘(B) REQUIREMENTS.—The requirements
of this subparagraph for an exception under
subparagraph (A), for the furnishing of des-
ignated health services by an entity, are as fol-
lows:
‘‘(i) 
EQUAL
INVESTMENT
OPPOR-
TUNITY.—(I) Individuals who are not re-
ferring physicians must be given a bona
fide opportunity to invest in the entity on
the same terms that are offered to refer-
ring physicians.
‘‘(II) The terms on which investment
interests are offered to physicians must not
be related to the past or expected volume
of referrals or other business from the phy-
sicians.
‘‘(III) The return on investment for
interested investors must be tied to the in-
vestor’s equity in the entity and not be re-
lated to the volume of referrals attributable
to the investor.
‘‘(IV) There is no requirement that
any interested or other investor make re-
ferrals to the entity or otherwise generate
business as a condition for remaining an
investor.
‘‘(V) The entity must not loan funds
or guarantee a loan for interested investors
or physicians in a position to refer to the
entity.
‘‘(VI) The entity must not market or
furnish its items or services to interested
investors differently from other investors.
‘‘(ii) 
PROHIBITION
OF
NONCOMPETITION
CLAUSES.—Investment
contracts 
must 
not 
include 
a
‘noncompetition clause’ that prevents phy-
sicians or interested investors from invest-
ing in other entities furnishing such serv-
ices.
‘‘(iii) DISCLOSURE REQUIREMENTS.—
(I) The disclosure requirements of para-
graph (3)(B) must be met.
‘‘(II) The financial relationship with
the referring physician must be disclosed,
when required, to any third-party payor.
‘‘(iv) INTERNAL
UTILIZATION
RE-
VIEW.—There must be in operation an in-
ternal utilization review program to ensure
that physicians who are interested inves-
tors do not exploit their patients in any
way through inappropriate utilization or
otherwise.
‘‘(C) REVIEW.—In the case of any excep-
tion provided an entity under this paragraph,
the Secretary shall periodically review the entity
to determine if the requirements of subpara-
graph (B) continue to be met.
‘‘(D) TERMINATION OF EXCEPTION.—The
Secretary shall, after notice and opportunity for
a hearing, terminate an exception granted an
entity under this paragraph if the Secretary de-
termines that—
‘‘(i) there was a misrepresentation of
material fact in the application for the ex-
ception; or
‘‘(ii) the entity has failed to comply
substantially with the requirements of sub-
paragraph (B).
‘‘(E) COMMUNITY DEFINED.—In this para-
graph, the term ‘community’ means—
‘‘(i) part or all of a metropolitan sta-
tistical area (or equivalent area), or
‘‘(ii) a county (or equivalent area)
outside such a metropolitan statistical area
(or equivalent area).’’.
(d) EXCEPTION FOR HOSPITALS.—Subparagraph (A)
of subsection (d)(3) of such section is amended to read
as follows:
‘‘(A) at the time the services are furnished,
the hospital has a participation agreement in
effect under section 1866, and’’.
SEC. 122. STUDY AND REPORT ON CHANGES IN COSTS.
The Secretary of Health and Human Services shall
conduct a study in order to estimate the changes in aggre-
gate costs for designated health services, under the medi-
care program and other health plans, which will result
from the implementation of the amendments made by this
subtitle. Not later than 2 years after the date of the enact-
ment of this Act the Secretary shall submit to Congress
a report on such study.
SEC. 123. EFFECTIVE DATE.
(a) IN GENERAL.—Subject to subsection (b), the
amendments made by this subtitle shall apply with respect
to a referral by a physician made on or after the first day
of the first month beginning 6 months after the date of
the enactment of this Act.
(b) TIME-LIMITED EXCEPTION FOR CURRENT FI-
NANCIAL RELATIONSHIPS.—
(1) IN GENERAL.—Subject to paragraph (3),
the amendments made by this subtitle shall not
apply in the case of a patient referral with respect
to which a prohibited financial relationship (de-
scribed in paragraph (2)) existed as of the date of
the enactment of this Act if, at the time of the refer-
ral (and before the receipt of services under the re-
ferral), the patient is provided information on the
prohibited financial relationship. Such information
shall be disclosed in the same manner information
must be disclosed under section 1877(b)(3)(B) of
the Social Security Act (as amended by this sub-
title). If such information is not so provided, the re-
ferral shall be subject to such amendments (as pro-
vided in subsection (a)).
(2) PROHIBITED FINANCIAL RELATIONSHIP.—A
prohibited financial relationship described in this
paragraph is a financial relationship described in
subsection (a)(2) of section 1877 of the Social Secu-
rity Act for which an exception described in sub-
section (b), (c), (d), or (e) of such section (as
amended by this subtitle) does not apply.
(3) TIME
LIMIT.—Paragraph (1) shall only
apply to referrals made before the first day of the
first month beginning 4 years after the date of the
enactment of this Act.
TITLE II—PROVISIONS
RELATING TO HOSPITALS
SEC. 201. HOLDING RURAL HOSPITALS HARMLESS FROM
REDUCTIONS IN MEDICARE PAYMENTS FOR
CAPITAL-RELATED COSTS RESULTING FROM
PROSPECTIVE PAYMENT METHODOLOGY.
(a) IN GENERAL.—Section 1886(g)(1)(B) of the So-
cial Security Act (42 U.S.C. 1395ww(g)(1)(B)) is amend-
ed—
(1) by striking ‘‘and’’ at the end of clause (iii);
(2) by striking the period at the end of clause
(iv) and inserting ‘‘, and’’; and
(3) by adding at the end the following new
clause:
‘‘(v) shall provide that the amount of payment
made under the system in a cost reporting period to
any hospital located in a rural area (as defined in
subsection (d)(2)(D)) shall be based on reasonable
costs (as defined in section 1861(v)) or on the meth-
odology used to determine the amount of payment
for other hospitals, as elected by the hospital, except
that the method elected by the hospital shall apply
to at least 3 consecutive cost reporting periods.’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply to portions of cost reporting pe-
riods or discharges (as the case may be) occurring on or
after October 1, 1991.
SEC. 202. EXTENSION OF RURAL REFERRAL CENTER CLAS-
SIFICATION.
(a) EXTENSION THROUGH FISCAL YEAR 1994.—Sec-
tion 6003(d) of the Omnibus Budget Reconciliation Act
of 1989 (42 U.S.C. 1395ww note) is amended by striking
‘‘October 1, 1992’’ and inserting ‘‘October 1, 1994’’.
(b) REPEAL OF SPECIAL TREATMENT FOR REFER-
RAL CENTERS.—
(1) IN GENERAL.—Effective October 1, 1994,
section 1886(d)(5) of the Social Security Act (42
U.S.C. 1395ww(d)(5)) is amended by striking sub-
paragraph (C).
(2) EXCEPTION FOR DETERMINING DISPROPOR-
TIONATE
SHARE
PAYMENTS.—Section
1886(d)(5)(F)(iv) 
of 
such 
Act 
(42 
U.S.C.
1395ww(d)(5)(F)(iv)) is amended by striking ‘‘sub-
paragraph (C),’’ each place it appears in subclauses
(IV) and (V) and inserting the following: ‘‘subpara-
graph (C) (or, for cost reporting periods beginning
on or after October 1, 1994, would be so classified
if such subparagraph were in effect for such a cost
reporting period, or was so classified under such
subparagraph for the most recent cost reporting pe-
riod before such date),’’.
SEC. 203. ANTITRUST EXEMPTION FOR CERTAIN RURAL
HOSPITALS.
(a) IN GENERAL.—The antitrust laws shall not apply
with respect to—
(1) the combination of, or the attempt to com-
bine, 2 or more hospitals,
(2) a contract entered into solely by 2 or more
hospitals to allocate hospital services, or
(3) the attempt by only 2 or more hospitals to
enter into a contract to allocate hospital services,
if each of such hospitals satisfies all of the requirements
of subsection (b) at the time such hospitals engage in the
conduct described in paragraph (1), (2), or (3), as the case
may be.
(b) REQUIREMENTS DESCRIBED.—The requirements
referred to in subsection (a) are as follows:
(1) The hospital is located outside of a city, or
in a city that has less than 125,000 inhabitants, as
determined in accordance with the most recent data
available from the Bureau of the Census.