261
entity may require, including a plan for the
provision of services of the type described
in subparagraph (C);
‘‘(ii) provide assurances that services
will be provided under the grant at fee
rates established or determined in accord-
ance with section 330(e)(3)(F); and
‘‘(iii) provide assurances that in the
case of services provided to individuals
with health insurance, such insurance shall
be used as the primary source of payment
for such services.
‘‘(C) SERVICES.—The services to be pro-
vided under a grant awarded under subpara-
graph (A) shall include—
‘‘(i) one or more of the types of pri-
mary health services described in section
330(b)(1);
‘‘(ii) one or more of the types of sup-
plemental health services described in sec-
tion 330(b)(2); and
‘‘(iii) any other services determined
appropriate by the administering entity of
the State.
262
‘‘(D) TARGET POPULATIONS.—Entities or
consortia receiving grants under subparagraph
(A) shall, in providing the services described in
subparagraph (C), substantially target popu-
lations of low-income or medically underserved
populations within the State who reside in
medically underserved or health professional
shortage areas, areas certified as underserved
under the rural health clinic program, or other
areas determined appropriate by the admin-
istering entity of the State, within the State.
‘‘(E) 
PRIORITY.—In 
awarding 
grants
under subparagraph (A), the State shall—
‘‘(i) give priority to entities or consor-
tia that can demonstrate through the plan
submitted under subparagraph (B) that—
‘‘(I) the services provided under
the grant will expand the availability
of primary care services to the maxi-
mum number of low-income or medi-
cally underserved populations who
have no access to such care on the
date of the grant award; and
263
‘‘(II) the delivery of services
under the grant will be cost-effective;
and
‘‘(ii) ensure that an equitable distribu-
tion of funds is achieved among urban and
rural entities or consortia.
‘‘(5) REPORTS AND AUDITS.—Each State shall
prepare and submit to the Secretary annual reports
concerning the State’s activities under this sub-
section which shall be in such form and contain such
information as the Secretary determines appropriate.
Each such State shall establish fiscal control and
fund accounting procedures as may be necessary to
assure that amounts received under this subsection
are being disbursed properly and are accounted for,
and include the results of audits conducted under
such procedures in the reports submitted under this
paragraph.
‘‘(6) PAYMENTS.—
‘‘(A) ELIGIBILITY.—Each State for which
an application has been approved by the Sec-
retary under this subsection shall be eligible to
receive payments under this subsection for each
fiscal year in an amount not to exceed the
State’s allotment under paragraph (2) to be ex-
264
pended by the State in accordance with the
terms of the application for the fiscal year for
which the allotment is to be made.
‘‘(B) METHOD OF PAYMENTS.—The Sec-
retary may make payments to a State in install-
ments, and in advance or by way of reimburse-
ment, with necessary adjustments on account of
overpayments or underpayments, as the Sec-
retary may determine.
‘‘(C) STATE SPENDING OF PAYMENTS.—
Payments to a State from the allotment under
paragraph (2) for any fiscal year must be ex-
pended by the State in that fiscal year or in the
succeeding fiscal year.
‘‘(7) DEFINITION.—As used in this subsection,
the term ‘administering entity of the State’ means
the agency or official designated by the chief execu-
tive officer of the State to administer the amounts
provided to the State under this section.
‘‘(b) HEALTH SERVICES ACCESS GRANTS.—
‘‘(1) ESTABLISHMENT
OF
PROGRAM.—From
amounts appropriated under this subsection, the
Secretary shall, acting through the Bureau of
Health Care Delivery Assistance, award grants
under this subsection to Federally Qualified Health
265
Centers (hereinafter referred to in this subsection as
‘FQHC’s’) and other entities and organizations sub-
mitting applications under this subsection (as de-
scribed in paragraph (3)) for the purpose of provid-
ing access to services for medically underserved pop-
ulations (as defined in section 330(b)(3)) or in high
impact areas (as defined in section 329(a)(5)) not
currently being served by a FQHC.
‘‘(2) ELIGIBILITY FOR GRANTS.—
‘‘(A) IN
GENERAL.—The Secretary shall
award grants under this subsection to entities
or organizations described in this subparagraph
and subparagraph (B) which have submitted a
proposal to the Secretary to expand such enti-
ties or organizations operations (including ex-
pansions to new sites (as determined necessary
by the Secretary)) to serve medically under-
served populations or high impact areas not
currently served by a FQHC and which—
‘‘(i) have as of January 1, 1991, been
certified by the Secretary as a FQHC
under section 1905(l)(2)(B) of the Social
Security Act; or
266
‘‘(ii) have submitted applications to
the Secretary to qualify as FQHC’s under
such section 1905(l)(2)(B); or
‘‘(iii) have submitted a plan to the
Secretary which provides that the entity
will meet the requirements to qualify as a
FQHC when operational.
‘‘(B) NON FQHC ENTITIES.—
‘‘(i) 
ELIGIBILITY.—The 
Secretary
shall also make grants under this sub-
section to public or private nonprofit agen-
cies, health care entities or organizations
which meet the requirements necessary to
qualify as a FQHC except, the requirement
that such entity have a consumer majority
governing board and which have submitted
a proposal to the Secretary to provide
those services provided by a FQHC as de-
fined in section 1905(l)(2)(B) of the Social
Security Act and which are designed to
promote access to primary care services or
to reduce reliance on hospital emergency
rooms or other high cost providers of pri-
mary health care services, provided such
proposal is developed by the entity or orga-
267
nizations (or such entities or organizations
acting in a consortium in a community)
with the review and approval of the Gov-
ernor of the State in which such entity or
organization is located.
‘‘(ii) 
LIMITATION.—The 
Secretary
shall provide in making grants to entities
or organizations described in this subpara-
graph that no more than 10 percent of the
funds provided for grants under this sub-
section shall be made available for grants
to such entities or organizations.
‘‘(3) APPLICATION REQUIREMENTS.—
‘‘(A) IN GENERAL.—In order to be eligible
to receive a grant under this subsection, a
FQHC or other entity or organization must
submit an application in such form and at such
time as the Secretary shall prescribe and which
meets the requirements of this paragraph.
‘‘(B) 
REQUIREMENTS.—An 
application
submitted under this subsection must provide—
‘‘(i)(I) for a schedule of fees or pay-
ments for the provision of the services pro-
vided by the entity designed to cover its
reasonable costs of operations; and
268
‘‘(II) for a corresponding schedule of
discounts to be applied to such fees or pay-
ments, based upon the patient’s ability to
pay (determined by using a sliding scale
formula based on the income of the
patient);
‘‘(ii) assurances that the entity or or-
ganization provides services to persons who
are eligible for benefits under title XVIII
of the Social Security Act, for medical as-
sistance under title XIX of such Act or for
assistance for medical expenses under any
other public assistance program or private
health insurance program; and
‘‘(iii) assurances that the entity or or-
ganization has made and will continue to
make every reasonable effort to collect re-
imbursement for services—
‘‘(I) from persons eligible for as-
sistance under any of the programs
described in clause (ii); and
‘‘(II) from patients not entitled
to benefits under any such programs.
‘‘(4) LIMITATIONS ON USE OF FUNDS.—
269
‘‘(A) IN
GENERAL.—From the amounts
awarded to an entity or organization under this
subsection, funds may be used for purposes of
planning but may only be expended for the
costs of—
‘‘(i) assessing the needs of the popu-
lations or proposed areas to be served;
‘‘(ii) preparing a description of how
the needs identified will be met; and
‘‘(iii) development of an implementa-
tion plan that addresses—
‘‘(I) recruitment and training of
personnel; and
‘‘(II) 
activities 
necessary 
to
achieve operational status in order to
meet 
FQHC 
requirements 
under
1905(l)(2)(B) of the Social Security
Act.
‘‘(B) RECRUITING, TRAINING
AND
COM-
PENSATION
OF
STAFF.—From the amounts
awarded to an entity or organization under this
subsection, funds may be used for the purposes
of paying for the costs of recruiting, training
and compensating staff (clinical and associated
administrative personnel (to the extent such
270
costs are not already reimbursed under title
XIX of the Social Security Act or any other
State or Federal program)) to the extent nec-
essary to allow the entity to operate at new or
expended existing sites.
‘‘(C) FACILITIES AND EQUIPMENT.—From
the amounts awarded to an entity or organiza-
tion under this subsection, funds may be ex-
pended for the purposes of acquiring facilities
and equipment but only for the cost of—
‘‘(i) construction of new buildings (to
the extent that new construction is found
to be the most cost-efficient approach by
the Secretary);
‘‘(ii) acquiring, expanding, and mod-
ernizing of existing facilities;
‘‘(iii) purchasing essential (as deter-
mined by the Secretary) equipment; and
‘‘(iv) amortization of principal and
payment of interest on loans obtained for
purposes of site construction, acquisition,
modernization, or expansion, as well as
necessary equipment.
‘‘(D) 
SERVICES.—From 
the 
amounts
awarded to an entity or organization under this
271
subsection, funds may be expanded for the pay-
ment of services but only for the costs of—
‘‘(i) providing or arranging for the
provision of all services through the entity
necessary to qualify such entity as a
FQHC under section 1905(l)(2)(B) of the
Social Security Act;
‘‘(ii) providing or arranging for any
other service that a FQHC may provide
and be reimbursed for under title XIX of
such Act; and
‘‘(iii) providing any unreimbursed
costs of providing services as described in
section 330(a) to patients.
‘‘(5) 
PRIORITIES
IN
THE
AWARDING
OF
GRANTS.—
‘‘(A) CERTIFIED
FQHC’s.—The Secretary
shall give priority in awarding grants under this
subsection to entities which have, as of January
1, 1991, been certified as a FQHC under sec-
tion 1905(l)(2)(B) of the Social Security Act
and which have submitted a proposal to the
Secretary to expand their operations (including
expansion to new sites) to serve medically un-
derserved populations for high impact areas not
272
currently served by a FQHC. The Secretary
shall give first priority in awarding grants
under this subsection to those FQHCs or other
entities which propose to serve populations with
the highest degree of unmet need, and which
can demonstrate the ability to expand their op-
erations in the most efficient manner.
‘‘(B) QUALIFIED FQHC’s.—The Secretary
shall give second priority in awarding grants to
entities which have submitted applications to
the Secretary which demonstrate that the entity
will 
qualify 
as 
a 
FQHC 
under 
section
1905(l)(2)(B) of the Social Security Act before
it provides or arranges for the provision of serv-
ices supported by funds awarded under this
subsection, and which are serving or proposing
to serve medically underserved populations or
high impact areas which are not currently
served (or proposed to be served) by a FQHC.
‘‘(C) 
EXPANDED
SERVICES
AND
PROJECTS.—The Secretary shall give third pri-
ority in awarding grants in subsequent years to
those FQHCs or other entities which have pro-
vided for expanded services and project and are
able to demonstrate that such entity will incur
273
significant unreimbursed costs in providing
such expanded services.
‘‘(6) RETURN OF FUNDS TO SECRETARY FOR
COSTS
REIMBURSED
FROM
OTHER
SOURCES.—To
the extent that an entity or organization receiving
funds under this subsection is reimbursed from an-
other source for the provision of services to an indi-
vidual, and does not use such increased reimburse-
ment to expand services furnished, areas served, to
compensate for costs of unreimbursed services pro-
vided to patients, or to promote recruitment, train-
ing, or retention of personnel, such excess revenues
shall be returned to the Secretary.
‘‘(7) TERMINATION OF GRANTS.—
‘‘(A) FAILURE TO MEET FQHC REQUIRE-
MENTS.—
‘‘(A) IN GENERAL.—With respect to
any entity that is receiving funds awarded
under this subsection and which subse-
quently fails to meet the requirements to
qualify 
as 
a 
FQHC 
under 
section
1905(l)(2)(B) or is an entity that is not
required to meet the requirements to qual-
ify 
as 
a 
FQHC 
under 
section
1905(l)(2)(B) of the Social Security Act
274
but fails to meet the requirements of this
subsection, the Secretary shall terminate
the award of funds under this subsection
to such entity.
‘‘(ii) NOTICE.—Prior to any termi-
nation of funds under this subsection to an
entity, the entities shall be entitled to 60
days prior notice of termination and, as
provided by the Secretary in regulations,
an opportunity to correct any deficiencies
in order to allow the entity to continue to
receive funds under this subsection.
‘‘(B) REQUIREMENTS.—Upon any termi-
nation of funding under this subsection, the
Secretary may (to the extent practicable)—
‘‘(i) sell any property (including
equipment) acquired or constructed by the
entity using funds made available under
this subsection or transfer such property to
another FQHC, provided, that the Sec-
retary shall reimburse any costs which
were incurred by the entity in acquiring or
constructing 
such 
property 
(including
equipment) which were not supported by
grants under this subsection; and
275
‘‘(ii) recoup any funds provided to an
entity terminated under this subsection.
‘‘(c) AUTHORIZATION OF APPROPRIATIONS; ALLOCA-
TION AMONG PROGRAMS.—
‘‘(1) AUTHORIZATION.—There are authorized to
be 
appropriated 
to 
carry 
out 
this 
section,
$400,000,000 for fiscal year 1995, $800,000,000 for
fiscal year 1996, $1,200,000,000 for fiscal year
1997, $1,600,000,000 for fiscal year 1998, and
$1,600,000,000 for fiscal year 1999.
‘‘(2) ALLOCATION.—Of the amounts appro-
priated pursuant to the authorization described in
paragraph (1) to carry out this section in a fiscal
year, 50 percent shall be allocated for grants under
subsection (a) and 50 percent shall be allocated for
grants under subsection (b).’’.
(b) STUDY AND REPORT ON SERVICES PROVIDED BY
COMMUNITY HEALTH CENTERS AND HOSPITALS.—
(1) IN GENERAL.—The Secretary of Health and
Human Services (hereinafter referred to in this sub-
section as the ‘‘Secretary’’) shall provide for a study
to examine the relationship and interaction between
community health centers and hospitals in providing
services to individuals residing in medically under-
served areas. The Secretary shall ensure that the
276
National Rural Research Centers participate in such
study.
(2) REPORT.—The Secretary shall provide to
the appropriate committees of Congress a report
summarizing the findings of the study within 90
days of the end of each project year and shall in-
clude in such report recommendations on methods to
improve the coordination of and provision of services
in medically underserved areas by community health
centers and hospitals.
(3) AUTHORIZATION.—There are authorized to
be appropriated to carry out the study provided for
in this subsection $150,000 for each of fiscal years
1995 and 1996.
SEC. 502. TAX INCENTIVES FOR PRACTICE IN FRONTIER,
RURAL, AND URBAN UNDERSERVED AREAS.
(a) NONREFUNDABLE CREDIT FOR CERTAIN PRI-
MARY HEALTH SERVICES PROVIDERS.—
(1) IN GENERAL.—Subpart A of part IV of sub-
chapter A of chapter 1 of the Internal Revenue Code
of 1986 (relating to nonrefundable personal credits)
is amended by inserting after section 25 the follow-
ing new section:
277
‘‘SEC. 25A. PRIMARY HEALTH SERVICES PROVIDERS.
‘‘(a) ALLOWANCE
OF CREDIT.—In the case of a
qualified primary health services provider, there is allowed
as a credit against the tax imposed by this chapter for
any taxable year in a mandatory service period an amount
equal to the product of—
‘‘(1) the lesser of—
‘‘(A) the number of months of such period
occurring in such taxable year, or
‘‘(B) 36 months, reduced by the number of
months taken into account under this para-
graph with respect to such provider for all pre-
ceding taxable years (whether or not in the
same mandatory service period), multiplied by
‘‘(2) $1,000 ($500 in the case of a qualified
primary health services provider who is a physician
assistant or a nurse practitioner).
‘‘(b) QUALIFIED PRIMARY HEALTH SERVICES PRO-
VIDER.—For purposes of this section, the term ‘qualified
primary health services provider’ means any physician,
physician assistant, or nurse practitioner who for any
month during a mandatory service period is certified by
the Bureau to be a primary health services provider who—
‘‘(1) is providing primary health services—
‘‘(A) full time, and
278
‘‘(B) to individuals at least 80 percent of
whom reside in a health professional shortage
area (as defined in subsection (d)(2)),
‘‘(2) is not receiving during such year a scholar-
ship under the National Health Service Corps Schol-
arship Program or a loan repayment under the
National Health Service Corps Loan Repayment
Program,
‘‘(3) is not fulfilling service obligations under
such Programs, and
‘‘(4) has not defaulted on such obligations.
‘‘(c) MANDATORY SERVICE PERIOD.—For purposes
of this section, the term ‘mandatory service period’ means
the period of 60 consecutive calendar months beginning
with the first month the taxpayer is a qualified primary
health services provider.
‘‘(d) DEFINITIONS AND SPECIAL RULES.—For pur-
poses of this section—
‘‘(1) BUREAU.—The term ‘Bureau’ means the
Bureau of Health Care Delivery and Assistance,
Health Resources and Services Administration of the
United States Public Health Service.
‘‘(2) 
HEALTH
PROFESSIONAL
SHORTAGE
AREA.—The term ‘health professional shortage area’
means—
280
‘‘(e) RECAPTURE OF CREDIT.—
‘‘(1) IN GENERAL.—If, during any taxable year,
there is a recapture event, then the tax of the tax-
payer under this chapter for such taxable year shall
be increased by an amount equal to the product of—
‘‘(A) the applicable percentage, and
‘‘(B) the aggregate unrecaptured credits
allowed to such taxpayer under this section for
all prior taxable years.
‘‘(2) APPLICABLE RECAPTURE PERCENTAGE.—
‘‘(A) IN GENERAL.—For purposes of this
subsection, the applicable recapture percentage
shall be determined from the following table:
The applicable
‘‘If the recapture
recapture
event occurs during:
percentage is:
Months 1–24 ..............................................
100
Months 25–36 ............................................
Months 37–48 ............................................
Months 49–60 ............................................
Months 61 and thereafter ..........................
0.
‘‘(B) TIMING.—For purposes of subpara-
graph (A), month 1 shall begin on the first day
of the mandatory service period.
‘‘(3) RECAPTURE EVENT DEFINED.—
‘‘(A) IN GENERAL.—For purposes of this
subsection, the term ‘recapture event’ means
the failure of the taxpayer to be a qualified pri-
281
mary health services provider for any month
during any mandatory service period.
‘‘(B) CESSATION
OF
DESIGNATION.—The
cessation of the designation of any area as a
rural health professional shortage area after the
beginning of the mandatory service period for
any taxpayer shall not constitute a recapture
event.
‘‘(C) SECRETARIAL
WAIVER.—The Sec-
retary may waive any recapture event caused by
extraordinary circumstances.
‘‘(4) NO CREDITS AGAINST TAX.—Any increase
in tax under this subsection shall not be treated as
a tax imposed by this chapter for purposes of deter-
mining the amount of any credit under subpart A,
B, or D of this part.’’.
(2) CLERICAL AMENDMENT.—The table of sec-
tions for subpart A of part IV of subchapter A of
chapter 1 of such Code is amended by inserting
after the item relating to section 25 the following
new item:
‘‘Sec. 25A. Primary health services providers.’’.
(3) EFFECTIVE DATE.—The amendments made
by this subsection shall apply to taxable years begin-
ning after the date of the enactment of this Act.
282
(b) NATIONAL HEALTH SERVICE CORPS LOAN RE-
PAYMENTS EXCLUDED FROM GROSS INCOME.—
(1) IN GENERAL.—Part III of subchapter B of
chapter 1 of the Internal Revenue Code of 1986 (re-
lating to items specifically excluded from gross in-
come) is amended by redesignating section 137 as
section 138 and by inserting after section 136 the
following new section:
‘‘SEC. 137. NATIONAL HEALTH SERVICE CORPS LOAN RE-
PAYMENTS.
‘‘(a) GENERAL RULE.—Gross income shall not in-
clude any qualified loan repayment.
‘‘(b) QUALIFIED LOAN REPAYMENT.—For purposes
of this section, the term ‘qualified loan repayment’ means
any payment made on behalf of the taxpayer by the Na-
tional Health Service Corps Loan Repayment Program
under section 338B(g) of the Public Health Service Act.’’.
(2) CONFORMING AMENDMENT.—Paragraph (3)
of section 338B(g) of the Public Health Service Act
is amended by striking ‘‘Federal, State, or local’’
and inserting ‘‘State or local’’.
(3) CLERICAL AMENDMENT.—The table of sec-
tions for part III of subchapter B of chapter 1 of
the Internal Revenue Code of 1986 is amended by
283
striking the item relating to section 136 and insert-
ing the following:
‘‘Sec. 137. National Health Service Corps loan repayments.
‘‘Sec. 138. Cross references to other Acts.’’.
(4) EFFECTIVE DATE.—The amendments made
by this subsection shall apply to payments made
under section 338B(g) of the Public Health Service
Act after the date of the enactment of this Act.
(c) EXPENSING OF MEDICAL EQUIPMENT.—
(1) IN GENERAL.—Section 179 of the Internal
Revenue Code of 1986 (relating to election to ex-
pense certain depreciable business assets) is amend-
ed—
(A) by striking paragraph (1) of subsection
(b) and inserting the following:
‘‘(1) DOLLAR LIMITATION.—
‘‘(A) GENERAL RULE.—The aggregate cost
which may be taken into account under sub-
section (a) for any taxable year shall not exceed
$17,500.
‘‘(B) RURAL HEALTH CARE PROPERTY.—
In the case of rural health care property, the
aggregate cost which may be taken into account
under subsection (a) for any taxable year shall
not exceed $32,500, reduced by the amount
284
otherwise taken into account under subsection
(a) for such year.’’; and
(B) by adding at the end of subsection (d)
the following new paragraph:
‘‘(11) RURAL HEALTH CARE PROPERTY.—For
purposes of this section, the term ‘rural health care
property’ means section 179 property—
‘‘(A) which is medical equipment used in
the screening, monitoring, observation, diag-
nosis, or treatment of patients in a laboratory,
medical, or hospital environment,
‘‘(B) which is owned (directly or indirectly)
and used by a physician (as defined in section
1861(r) of the Social Security Act) in the active
conduct of such physician’s full-time trade or
business of providing primary health services
(as defined in section 330(b)(1) of the Public
Health Service Act) in a rural health profes-
sional shortage area (as defined in section
25A(d)(5)), and
‘‘(C) substantially all the use of which is in
such area.’’.
(2) EFFECTIVE DATE.—The amendments made
by this subsection shall apply to property placed in
285
service in taxable years beginning after the date of
enactment of this Act.
(d) DEDUCTION FOR STUDENT LOAN PAYMENTS BY
MEDICAL
PROFESSIONALS
PRACTICING
IN
RURAL
AREAS.—
(1) INTEREST ON STUDENT LOANS NOT TREAT-
ED AS PERSONAL INTEREST.—Section 163(h)(2) of
the Internal Revenue Code of 1986 (defining per-
sonal interest) is amended by striking ‘‘and’’ at the
end of subparagraph (D), by striking the period at
the end of subparagraph (E) and inserting ‘‘, and’’,
and by adding at the end thereof the following new
subparagraph:
‘‘(F) any qualified medical education interest
(within the meaning of subsection (k)).’’.
(2) QUALIFIED MEDICAL EDUCATION INTEREST
DEFINED.—Section 163 of such Code (relating to in-
terest expenses) is amended by redesignating sub-
section (k) as subsection (l) and by inserting after
subsection (j) the following new subsection:
‘‘(k) QUALIFIED MEDICAL EDUCATION INTEREST OF
MEDICAL
PROFESSIONALS
PRACTICING
IN
RURAL
AREAS.—
‘‘(1) IN GENERAL.—For purposes of subsection
(h)(2)(F), the term ‘qualified medical education in-
288
‘‘(C) APPLICABLE
RURAL
COMMUNITY.—
The term ‘applicable rural community’ means—
‘‘(i) any political subdivision of a
State which—
‘‘(I) has a population of 5,000 or
less, and
‘‘(II) has a per capita income of
$15,000 or less, or
‘‘(ii) an Indian reservation which has
a per capita income of $15,000 or less.
‘‘(4) QUALIFIED
EDUCATIONAL
LOAN.—The
term ‘qualified educational loan’ means any indebt-
edness to pay qualified higher education expenses
(within the meaning of section 135(c)(2)) and rea-
sonable living expenses—
‘‘(A) which are paid or incurred—
‘‘(i) as a candidate for a degree as a
medical doctor at an educational institu-
tion described in section 170(b)(1)(A)(ii),
or
‘‘(ii) in connection with courses of in-
struction at such an institution necessary
for certification as a registered nurse,
nurse practitioner, or physician’s assistant,
and
289
‘‘(B) which are paid or incurred within a
reasonable time before or after such indebted-
ness is incurred.
‘‘(5) RECAPTURE.—If an individual fails to
carry out a qualified rural medical practice agree-
ment during any taxable year, then—
‘‘(A) no deduction with respect to such
agreement shall be allowable by reason of sub-
section (h)(2)(F) for such taxable year and any
subsequent taxable year, and
‘‘(B) there shall be included in gross in-
come for such taxable year the aggregate
amount of the deductions allowable under this
section (by reason of subsection (h)(2)(F)) for
all preceding taxable years.
‘‘(6) DEFINITIONS.—For purposes of this sub-
section, the terms ‘registered nurse’, ‘nurse practi-
tioner’, and ‘physician’s assistant’ have the meaning
given such terms by section 1861 of the Social Secu-
rity Act.’’.
(3) DEDUCTION ALLOWED IN COMPUTING AD-
JUSTED
GROSS
INCOME.—Section 62(a) of such
Code, as amended by sections 2002(c)(3) and
2003(b), is amended by inserting after paragraph
(17) the following new paragraph:
290
‘‘(18) INTEREST ON STUDENT LOANS OF RURAL
HEALTH PROFESSIONALS.—The deduction allowable
by reason of section 163(h)(2)(F) (relating to stu-
dent loan payments of medical professionals practic-
ing in rural areas).’’.
(4) EFFECTIVE DATE.—The amendments made
by this subsection shall apply to taxable years begin-
ning after the date of the enactment of this Act.
SEC. 503. RURAL EMERGENCY ACCESS CARE HOSPITALS.
(a) RURAL EMERGENCY ACCESS CARE HOSPITALS
DESCRIBED.—Section 1861 of the Social Security Act (42
U.S.C. 1395x) is amended by adding at the end the follow-
ing new subsection:
‘‘Rural Emergency Access Care Hospital; Rural
Emergency Access Care Hospital Services
‘‘(oo)(1) The term ‘rural emergency access care hos-
pital’ means, for a fiscal year, a facility with respect to
which the Secretary finds the following:
‘‘(A) The facility is located in a rural area (as
defined in section 1886(d)(2)(D)).
‘‘(B) The facility was a hospital under this title
at any time during the 5-year period that ends on
the date of the enactment of this subsection.
‘‘(C) The facility is in danger of closing due to
low inpatient utilization rates and negative operating
291
losses, and the closure of the facility would limit the
access of individuals residing in the facility’s service
area to emergency services.
‘‘(D) The facility has entered into (or plans to
enter into) an agreement with a hospital with a par-
ticipation agreement in effect under section 1866(a),
and under such agreement the hospital shall accept
patients transferred to the hospital from the facility
and receive data from and transmit data to the
facility.
‘‘(E) There is a practitioner who is qualified to
provide advanced cardiac life support services (as de-
termined by the State in which the facility is lo-
cated) on-site at the facility on a 24-hour basis.
‘‘(F) A physician is available on-call to provide
emergency medical services on a 24-hour basis.
‘‘(G) The facility meets such staffing require-
ments as would apply under section 1861(e) to a
hospital located in a rural area, except that—
‘‘(i) the facility need not meet hospital
standards relating to the number of hours dur-
ing a day, or days during a week, in which the
facility must be open, except insofar as the fa-
cility is required to provide emergency care on
292
a 24-hour basis under subparagraphs (E) and
(F); and
‘‘(ii) the facility may provide any services
otherwise required to be provided by a full-time,
on-site dietician, pharmacist, laboratory techni-
cian, medical technologist, or radiological tech-
nologist on a part-time, off-site basis.
‘‘(H) The facility meets the requirements appli-
cable to clinics and facilities under subparagraphs
(C) through (J) of paragraph (2) of section
1861(aa) and of clauses (ii) and (iv) of the second
sentence of such paragraph (or, in the case of the
requirements of subparagraph (E), (F), or (J) of
such paragraph, would meet the requirements if any
reference in such subparagraph to a ‘nurse practi-
tioner’ or to ‘nurse practitioners’ was deemed to be
a reference to a ‘nurse practitioner or nurse’ or to
‘nurse practitioners or nurses’), except that in deter-
mining whether a facility meets the requirements of
this subparagraph, subparagraphs (E) and (F) of
that paragraph shall be applied as if any reference
to a ‘physician’ is a reference to a physician as de-
fined in section 1861(r)(1).
293
‘‘(2) The term ‘rural emergency access care hospital
services’ means medical and other health services fur-
nished by a rural emergency access care hospital.’’.
(b) COVERAGE OF AND PAYMENT FOR SERVICES.—
Section 1832(a)(2) of the Social Security Act (42 U.S.C.
1395k(a)(2)) is amended—
(1) by striking ‘‘and’’ at the end of subpara-
graph (I);
(2) by striking the period at the end of sub-
paragraph (J) and inserting ‘‘; and’’; and
(3) by adding at the end the following new sub-
paragraph:
‘‘(K) rural emergency access care hospital
services (as defined in section 1861(oo)(2)).’’.
(c) PAYMENT BASED ON PAYMENT FOR OUTPATIENT
RURAL PRIMARY CARE HOSPITAL SERVICES.—
(1) IN GENERAL.—Section 1833(a)(6) of the
Social Security Act (42 U.S.C. 1395l(a)(6)) is
amended by striking ‘‘services,’’ and inserting ‘‘serv-
ices and rural emergency access care hospital serv-
ices,’’.
(2) PAYMENT
METHODOLOGY
DESCRIBED.—
Section 1834(g) of such Act (42 U.S.C. 1395m(g))
is amended—
294
(A) in the heading, by striking ‘‘SERV-
ICES’’ and inserting ‘‘SERVICES
AND RURAL
EMERGENCY ACCESS CARE HOSPITAL SERV-
ICES’’;
(B) in paragraph (1), by striking ‘‘during
a year before 1993’’ and inserting ‘‘during a
year before the prospective payment system de-
scribed in paragraph (2) is in effect’’;
(C) in paragraph (1), by adding at the end
the following: ‘‘The amount of payment shall be
determined under either method without regard
to the amount of the customary or other
charge.’’;
(D) in paragraph (2), by striking ‘‘Janu-
ary 1, 1993,’’ and inserting ‘‘January 1,
1996,’’; and
(E) by adding at the end the following new
paragraph:
‘‘(3) APPLICATION OF METHODS TO PAYMENT
FOR
RURAL
EMERGENCY
ACCESS
CARE
HOSPITAL
SERVICES.—The amount of payment for rural emer-
gency access care hospital services provided during
a year shall be determined using the applicable
method provided under this subsection for determin-
295
ing payment for outpatient rural primary care hos-
pital services during the year.’’.
(d) EFFECTIVE DATE.—The amendments made by
this section shall apply to fiscal years beginning on or
after October 1, 1994.
SEC. 504. GRANTS TO STATES REGARDING AIRCRAFT FOR
TRANSPORTING RURAL VICTIMS OF MEDICAL
EMERGENCIES.
Part E of title XII of the Public Health Service Act
(42 U.S.C. 300d–51 et seq.) is amended by adding at the
end thereof the following new section:
‘‘SEC. 1252. GRANTS FOR SYSTEMS TO TRANSPORT RURAL
VICTIMS OF MEDICAL EMERGENCIES.
‘‘(a) IN GENERAL.—The Secretary shall make grants
to States to assist such States in the creation or enhance-
ment of air medical transport systems that provide victims
of medical emergencies in rural areas with access to treat-
ments for the injuries or other conditions resulting from
such emergencies.
‘‘(b) APPLICATION AND PLAN.—
‘‘(1) APPLICATION.—To be eligible to receive a
grant under subsection (a), a State shall prepare
and submit to the Secretary an application in such
form, made in such manner, and containing such
agreements, assurances, and information, including
296
a State plan as required in paragraph (2), as the
Secretary determines to be necessary to carry out
this section.
‘‘(2) STATE PLAN.—An application submitted
under paragraph (1) shall contain a State plan that
shall—
‘‘(A) describe the intended uses of the
grant proceeds and the geographic areas to be
served;
‘‘(B) demonstrate that the geographic
areas to be served, as described under subpara-
graph (A), are rural in nature;
‘‘(C) demonstrate that there is a lack of
facilities available and equipped to deliver ad-
vanced levels of medical care in the geographic
areas to be served;
‘‘(D) demonstrate that in utilizing the
grant proceeds for the establishment or en-
hancement of air medical services the State
would be making a cost-effective improvement
to existing ground-based or air emergency medi-
cal service systems;
‘‘(E) demonstrate that the State will not
utilize the grant proceeds to duplicate the capa-
bilities of existing air medical systems that are
297
effectively meeting the emergency medical needs
of the populations they serve;
‘‘(F) demonstrate that in utilizing the
grant proceeds the State is likely to achieve a
reduction in the morbidity and mortality rates
of the areas to be served, as determined by the
Secretary;
‘‘(G) demonstrate that the State, in utiliz-
ing the grant proceeds, will—
‘‘(i) maintain the expenditures of the
State for air and ground medical transport
systems at a level equal to not less than
the level of such expenditures maintained
by the State for the fiscal year preceding
the fiscal year for which the grant is re-
ceived; and
‘‘(ii) ensure that recipients of direct
financial assistance from the State under
such grant will maintain expenditures of
such recipients for such systems at a level
at least equal to the level of such expendi-
tures maintained by such recipients for the
fiscal year preceding the fiscal year for
which the financial assistance is received;
298
‘‘(H) demonstrate that persons experienced
in the field of air medical service delivery were
consulted in the preparation of the State plan;
and
‘‘(I) contain such other information as the
Secretary may determine appropriate.
‘‘(c) CONSIDERATIONS IN AWARDING GRANTS.—In
determining whether to award a grant to a State under
this section, the Secretary shall—
‘‘(1) consider the rural nature of the areas to
be served with the grant proceeds and the services
to be provided with such proceeds, as identified in
the State plan submitted under subsection (b); and
‘‘(2) give preference to States with State plans
that demonstrate an effective integration of the pro-
posed air medical transport systems into a com-
prehensive network or plan for regional or statewide
emergency medical service delivery.
‘‘(d) 
STATE
ADMINISTRATION
AND
USE
OF
GRANT.—
‘‘(1) IN
GENERAL.—The Secretary may not
make a grant to a State under subsection (a) unless
the State agrees that such grant will be adminis-
tered by the State agency with principal responsibil-
ity for carrying out programs regarding the provi-
299
sion of medical services to victims of medical emer-
gencies or trauma.
‘‘(2) PERMITTED
USES.—A State may use
amounts received under a grant awarded under this
section to award subgrants to public and private en-
tities operating within the State.
‘‘(3) OPPORTUNITY FOR PUBLIC COMMENT.—
The Secretary may not make a grant to a State
under subsection (a) unless that State agrees that,
in developing and carrying out the State plan under
subsection (b)(2), the State will provide public notice
with respect to the plan (including any revisions
thereto) and facilitate comments from interested
persons.
‘‘(e) NUMBER
OF GRANTS.—The Secretary shall
award grants under this section to not less than 7 States.
‘‘(f) REPORTS.—
‘‘(1) REQUIREMENT.—A State that receives a
grant under this section shall annually (during each
year in which the grant proceeds are used) prepare
and submit to the Secretary a report that shall con-
tain—
‘‘(A) a description of the manner in which
the grant proceeds were utilized;