1201
formed by a physician who is serving as an assistant
at surgery.’’.
(c) REMOVAL
OF RESTRICTION
ON EMPLOYMENT
RELATIONSHIP.—Section 
1842(b)(6) 
(42 
U.S.C.
1395u(b)(6)) is amended by adding at the end the follow-
ing new sentence: ‘‘For purposes of clause (C) of the first
sentence of this paragraph, an employment relationship
may include any independent contractor arrangement, and
employer status shall be determined in accordance with
the law of the State in which the services described in such
clause are performed.’’.
(d) EFFECTIVE DATE.—The amendments made by
this section shall apply with respect to services furnished
and supplies provided on and after January 1, 1998.
SEC. 10621. RENAL DIALYSIS-RELATED SERVICES.
(a) AUDITING OF COST REPORTS.—The Secretary
shall audit a sample of cost reports of renal dialysis pro-
viders for 1995 and for each third year thereafter.
(b) IMPLEMENTATION OF QUALITY STANDARDS.—
The Secretary of Health and Human Services shall de-
velop and implement, by not later than January 1, 1999,
a method to measure and report quality of renal dialysis
services provided under the medicare program under title
XVIII of the Social Security Act in order to reduce pay-
ments for inappropriate or low quality care.
1202
CHAPTER 3—PART B PREMIUM
SEC. 10631. PART B PREMIUM.
(a) IN GENERAL.—The first, second and third sen-
tences of section 1839(a)(3) (42 U.S.C. 1395r(a)(3)) are
amended to read as follows: ‘‘The Secretary, during Sep-
tember of each year, shall determine and promulgate a
monthly premium rate for the succeeding calendar year.
That monthly premium rate shall be equal to 50 percent
of the monthly actuarial rate for enrollees age 65 and over,
determined according to paragraph (1), for that succeed-
ing calendar year.’’.
(b) CONFORMING AND TECHNICAL AMENDMENTS.—
(1) SECTION 1839.—Section 1839 (42 U.S.C.
1395r) is amended—
(A) in subsection (a)(2), by striking ‘‘(b)
and (e)’’ and inserting ‘‘(b), (c), and (f)’’,
(B) in the last sentence of subsection
(a)(3)—
(i) by inserting ‘‘rate’’ after ‘‘pre-
mium’’, and
(ii) by striking ‘‘and the derivation of
the dollar amounts specified in this para-
graph’’,
(C) by striking subsection (e), and
1203
(D) by redesignating subsection (g) as sub-
section (e) and inserting that subsection after
subsection (d).
(2) SECTION 1844.—Subparagraphs (A)(i) and
(B)(i) 
of 
section 
1844(a)(1) 
(42 
U.S.C.
1395w(a)(1)) are each amended by striking ‘‘or
1839(e), as the case may be’’.
Subtitle H—Provisions Relating to
Parts A and B
CHAPTER 1—PROVISIONS RELATING TO
MEDICARE SECONDARY PAYER
SEC. 10701. PERMANENT EXTENSION AND REVISION OF
CERTAIN SECONDARY PAYER PROVISIONS.
(a) APPLICATION
TO DISABLED INDIVIDUALS
IN
LARGE GROUP HEALTH PLANS.—
(1) IN GENERAL.—Section 1862(b)(1)(B) (42
U.S.C. 1395y(b)(1)(B)) is amended—
(A) in clause (i), by striking ‘‘clause (iv)’’
and inserting ‘‘clause (iii)’’,
(B) by striking clause (iii), and
(C) by redesignating clause (iv) as clause
(iii).
(2) CONFORMING
AMENDMENTS.—Paragraphs
(1) through (3) of section 1837(i) (42 U.S.C.
1395p(i)) and the second sentence of section
1204
1839(b) (42 U.S.C. 1395r(b)) are each amended by
striking ‘‘1862(b)(1)(B)(iv)’’ each place it appears
and inserting ‘‘1862(b)(1)(B)(iii)’’.
(b) INDIVIDUALS WITH END STAGE RENAL DIS-
EASE.—
(1) IN GENERAL.—Section 1862(b)(1)(C) (42
U.S.C. 1395y(b)(1)(C)) is amended—
(A) in the first sentence, by striking ‘‘12-
month’’ each place it appears and inserting
‘‘30-month’’, and
(B) by striking the second sentence.
(2) EFFECTIVE DATE.—The amendments made
by paragraph (1) shall apply to items and services
furnished on or after the date of the enactment of
this Act and with respect to periods beginning on or
after the date that is 18 months prior to such date.
(c) IRS-SSA-HCFA DATA MATCH.—
(1) 
SOCIAL
SECURITY
ACT.—Section
1862(b)(5)(C) 
(42 
U.S.C. 
1395y(b)(5)(C)) 
is
amended by striking clause (iii).
(2) 
INTERNAL
REVENUE
CODE.—Section
6103(l)(12) of the Internal Revenue Code of 1986 is
amended by striking subparagraph (F).
1205
SEC. 10702. CLARIFICATION OF TIME AND FILING LIMITA-
TIONS.
(a) EXTENSION OF CLAIMS FILING PERIOD.—Sec-
tion 1862(b)(2)(B) (42 U.S.C. 1395y(b)(2)(B)) is amend-
ed by adding at the end the following new clause:
‘‘(v) CLAIMS-FILING
PERIOD.—Not-
withstanding any other time limits that
may exist for filing a claim under an em-
ployer group health plan, the United
States may seek to recover conditional pay-
ments in accordance with this subpara-
graph where the request for payment is
submitted to the entity required or respon-
sible under this subsection to pay with re-
spect to the item or service (or any portion
thereof) under a primary plan within the
3-year period beginning on the date on
which the item or service was furnished.’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) applies to items and services furnished after
1990. The previous sentence shall not be construed as per-
mitting any waiver of the 3-year-period requirement (im-
posed by such amendment) in the case of items and serv-
ices furnished more than 3 years before the date of the
enactment of this Act.
1206
SEC. 
10703. 
PERMITTING 
RECOVERY 
AGAINST 
THIRD
PARTY ADMINISTRATORS.
(a) PERMITTING RECOVERY AGAINST THIRD PARTY
ADMINISTRATORS
OF
PRIMARY
PLANS.—Section
1862(b)(2)(B)(ii) (42 U.S.C. 1395y(b)(2)(B)(ii)) is
amended—
(1) by striking ‘‘under this subsection to pay’’
and inserting ‘‘(directly, as a third-party adminis-
trator, or otherwise) to make payment’’, and
(2) by adding at the end the following: ‘‘The
United States may not recover from a third-party
administrator under this clause in cases where the
third-party administrator would not be able to re-
cover the amount at issue from the employer or
group health plan for whom it provides administra-
tive services due to the insolvency or bankruptcy of
the employer or plan.’’.
(b) CLARIFICATION OF BENEFICIARY LIABILITY.—
Section 1862(b)(1) (42 U.S.C. 1395y(b)(1)) is amended
by adding at the end the following new subparagraph:
‘‘(F) LIMITATION ON BENEFICIARY LIABIL-
ITY.—An individual who is entitled to benefits
under this title and is furnished an item or
service for which such benefits are incorrectly
paid is not liable for repayment of such benefits
1207
under this paragraph unless payment of such
benefits was made to the individual.’’.
(c) EFFECTIVE DATE.—The amendments made by
this section apply to items and services furnished on or
after the date of the enactment of this Act.
CHAPTER 2—HOME HEALTH SERVICES
SEC. 10711. RECAPTURING SAVINGS RESULTING FROM
TEMPORARY 
FREEZE 
ON 
PAYMENT 
IN-
CREASES FOR HOME HEALTH SERVICES.
(a) BASING UPDATES TO PER VISIT COST LIMITS ON
LIMITS FOR FISCAL YEAR 1993.—Section 1861(v)(1)(L)
(42 U.S.C. 1395x(v)(1)(L)) is amended by adding at the
end the following:
‘‘(iv) In establishing limits under this subparagraph
for cost reporting periods beginning after September 30,
1997, the Secretary shall not take into account any
changes in the home health market basket, as determined
by the Secretary, with respect to cost reporting periods
which began on or after July 1, 1994, and before July
1, 1996.’’.
(b) NO EXCEPTIONS PERMITTED BASED ON AMEND-
MENT.—The Secretary of Health and Human Services
shall not consider the amendment made by subsection (a)
in making any exemptions and exceptions pursuant to sec-
1208
tion 1861(v)(1)(L)(ii) of the Social Security Act (42
U.S.C. 1395x(v)(1)(L)(ii)).
SEC. 10712. INTERIM PAYMENTS FOR HOME HEALTH SERV-
ICES.
(a) 
REDUCTIONS
IN
COST
LIMITS.—Section
1861(v)(1)(L)(i) (42 U.S.C. 1395x(v)(1)(L)(i)) is amend-
ed—
(1) by moving the indentation of subclauses (I)
through (III) 2-ems to the left;
(2) in subclause (I), by inserting ‘‘of the mean
of the labor-related and nonlabor per visit costs for
freestanding home health agencies’’ before the
comma at the end;
(3) in subclause (II), by striking ‘‘, or’’ and in-
serting ‘‘of such mean,’’;
(4) in subclause (III)—
(A) by inserting ‘‘and before October 1,
1997,’’ after ‘‘July 1, 1987,’’, and
(B) by striking the comma at the end and
inserting ‘‘of such mean, or’’; and
(5) by striking the matter following subclause
(III) and inserting the following:
‘‘(IV) October 1, 1997, 105 percent of the me-
dian of the labor-related and nonlabor per visit costs
for freestanding home health agencies.’’.
1209
(b) DELAY IN UPDATES.—Section 1861(v)(1)(L)(iii)
(42 U.S.C. 1395x(v)(1)(L)(iii)) is amended by inserting
‘‘, or on or after July 1, 1997, and before October 1,
1997’’ after ‘‘July 1, 1996’’.
(c) 
ADDITIONS
TO
COST
LIMITS.—Section
1861(v)(1)(L) (42 U.S.C. 1395x(v)(1)(L)), as amended by
section 10711(a), is amended by adding at the end the
following new clauses:
‘‘(v) For services furnished by home health agencies
for cost reporting periods beginning on or after October
1, 1997, the Secretary shall provide for an interim system
of limits. Payment shall not exceed the costs determined
under the preceding provisions of this subparagraph or,
if lower, the product of—
‘‘(I) an agency-specific per beneficiary annual
limitation calculated based 75 percent on the reason-
able costs (including nonroutine medical supplies)
for the agency’s 12-month cost reporting period end-
ing during 1994, and based 25 percent on the stand-
ardized regional average of such costs for the agen-
cy’s region, as applied to such agency, for cost re-
porting periods ending during 1994, such costs up-
dated by the home health market basket index; and
1210
‘‘(II) the agency’s unduplicated census count of
patients (entitled to benefits under this title) for the
cost reporting period subject to the limitation.
‘‘(vi) For services furnished by home health agencies
for cost reporting periods beginning on or after October
1, 1997, the following rules apply:
‘‘(I) For new providers and those providers
without a 12-month cost reporting period ending in
calendar year 1994, the per beneficiary limitation
shall be equal to the median of these limits (or the
Secretary’s best estimates thereof) applied to other
home health agencies as determined by the Sec-
retary. A home health agency that has altered its
corporate structure or name shall not be considered
a new provider for this purpose.
‘‘(II) For beneficiaries who use services fur-
nished by more than one home health agency, the
per beneficiary limitations shall be prorated among
the agencies.’’.
(d) DEVELOPMENT
OF CASE MIX SYSTEM.—The
Secretary of Health and Human Services shall expand re-
search on a prospective payment system for home health
agencies under the medicare program that ties prospective
payments to a unit of service, including an intensive effort
1211
to develop a reliable case mix adjuster that explains a sig-
nificant amount of the variances in costs.
(e) SUBMISSION OF DATA FOR CASE MIX SYSTEM.—
Effective for cost reporting periods beginning on or after
October 1, 1997, the Secretary of Health and Human
Services may require all home health agencies to submit
additional information that the Secretary considers nec-
essary for the development of a reliable case mix system.
SEC. 10713. CLARIFICATION OF PART-TIME OR INTERMIT-
TENT NURSING CARE.
(a) IN GENERAL.—Section 1861(m) (42 U.S.C.
1395x(m)) is amended by adding at the end the following:
‘‘For purposes of paragraphs (1) and (4), the term ‘part-
time or intermittent services’ means skilled nursing and
home health aide services furnished any number of days
per week as long as they are furnished (combined) less
than 8 hours each day and 28 or fewer hours each week
(or, subject to review on a case-by-case basis as to the
need for care, less than 8 hours each day and 35 or fewer
hours per week). For purposes of sections 1814(a)(2)(C)
and 1835(a)(2)(A), ‘intermittent’ means skilled nursing
care that is either provided or needed on fewer than 7
days each week, or less than 8 hours of each day for peri-
ods of 21 days or less (with extensions in exceptional cir-
1212
cumstances when the need for additional care is finite and
predictable).’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) applies to services furnished on or after Oc-
tober 1, 1997.
SEC. 10714. STUDY ON DEFINITION OF HOMEBOUND.
(a) STUDY.—The Secretary of Health and Human
Services shall conduct a study of the criteria that should
be applied, and the method of applying such criteria, in
the determination of whether an individual is homebound
for purposes of qualifying for receipt of benefits for home
health services under the medicare program. Such criteria
shall include the extent and circumstances under which
a person may be absent from the home but nonetheless
qualify.
(b) REPORT.—Not later than October 1, 1998, the
Secretary shall submit a report to the Congress on the
study conducted under subsection (a). The report shall in-
clude specific recommendations on such criteria and meth-
ods.
SEC. 10715. PAYMENT BASED ON LOCATION WHERE HOME
HEALTH SERVICE IS FURNISHED.
(a) CONDITIONS OF PARTICIPATION.—Section 1891
(42 U.S.C. 1395bbb) is amended by adding at the end
the following:
1213
‘‘(g) PAYMENT ON BASIS OF LOCATION OF SERV-
ICE.—A home health agency shall submit claims for pay-
ment for home health services under this title only on the
basis of the geographic location at which the service is fur-
nished, as determined by the Secretary.’’.
(b) WAGE ADJUSTMENT.—Section 1861(v)(1)(L)(iii)
(42 U.S.C. 1395x(v)(1)(L)(iii)) is amended by striking
‘‘agency is located’’ and inserting ‘‘service is furnished’’.
(c) EFFECTIVE DATE.—The amendments made by
this section apply to cost reporting periods beginning on
or after October 1, 1997.
SEC. 10716. NORMATIVE STANDARDS FOR HOME HEALTH
CLAIMS DENIALS,
(a) IN GENERAL.—Section 1862(a)(1) (42 U.S.C.
1395y(a)(1)), as amended by section 10616(c), is amend-
ed—
(1) by striking ‘‘and’’ at the end of subpara-
graph (G),
(2) by striking the semicolon at the end of sub-
paragraph (H) and inserting ‘‘, and’’, and
(3) by inserting after subparagraph (H) the fol-
lowing new subparagraph:
‘‘(I) the frequency and duration of home health
services which are in excess of normative guidelines
that the Secretary shall establish by regulation;’’.
1214
(b) NOTIFICATION.—The Secretary of Health and
Human Services may establish a process for notifying a
physician in cases in which the number of home health
service visits furnished under the medicare program pur-
suant to a prescription or certification of the physician sig-
nificantly exceeds such threshold (or thresholds) as the
Secretary specifies. The Secretary may adjust such thresh-
old to reflect demonstrated differences in the need for
home health services among different beneficiaries.
(c) EFFECTIVE DATE.—The amendments made by
this section apply to services furnished on or after October
1, 1997.
SEC. 10717. NO HOME HEALTH BENEFITS BASED SOLELY
ON DRAWING BLOOD.
(a) IN
GENERAL.—Sections 1814(a)(2)(C) and
1835(a)(2)(A) 
(42 
U.S.C. 
1395f(a)(2)(C),
1395n(a)(2)(A)) are each amended by inserting ‘‘(other
than solely venipuncture for the purpose of obtaining a
blood sample)’’ after ‘‘skilled nursing care’’.
(b) EFFECTIVE DATE.—The amendments made by
subsection (a) apply to home health services furnished
after the 6–month period beginning after the date of en-
actment of this Act.
1215
CHAPTER 3—BABY BOOM GENERATION
MEDICARE COMMISSION
SEC. 10721. BIPARTISAN COMMISSION ON THE EFFECT OF
THE BABY BOOM GENERATION ON THE MEDI-
CARE PROGRAM.
(a) ESTABLISHMENT.—There is established a com-
mission to be known as the Bipartisan Commission on the
Effect of the Baby Boom Generation on the Medicare Pro-
gram (in this section referred to as the ‘‘Commission’’).
(b) DUTIES.—
(1) IN GENERAL.—The Commission shall—
(A) examine the financial impact on the
medicare program of the significant increase in
the number of medicare eligible individuals
which will occur beginning approximately dur-
ing 2010 and lasting for approximately 25
years,
(B) make specific recommendations to the
Congress respecting a comprehensive approach
to preserve the medicare program for the period
during which such individuals are eligible for
medicare, and
(C) study the feasibility and desirability of
establishing—
1216
(i) an independent commission on
medicare to make recommendations annu-
ally on how best to match the structure of
the medicare program to available funding
for the program,
(ii) an expedited process for consider-
ation of such recommendations by Con-
gress, and
(iii) a default mechanism to enforce
Congressional spending targets for the pro-
gram if Congress fails to approve such rec-
ommendations.
(2) 
CONSIDERATIONS
IN
MAKING
REC-
OMMENDATIONS.—In making its recommendations,
the Commission shall consider the following:
(A) The amount and sources of Federal
funds to finance the medicare program, includ-
ing the potential use of innovative financing
methods.
(B) Methods used by other nations to re-
spond to comparable demographic patterns in
eligibility for health care benefits for elderly
and disabled individuals.
1217
(C) Modifying age-based eligibility to cor-
respond to changes in age-based eligibility
under the OASDI program.
(D) Trends in employment-related health
care for retirees, including the use of medical
savings accounts and similar financing devices.
(c) MEMBERSHIP.—
(1) APPOINTMENT.—The Commission shall be
composed of 15 voting members as follows:
(A) The Majority Leader of the Senate
shall appoint, after consultation with the minor-
ity leader of the Senate, 6 members, of whom
not more than 4 may be of the same political
party.
(B) The Speaker of the House of Rep-
resentatives shall appoint, after consultation
with the minority leader of the House of Rep-
resentatives, 6 members, of whom not more
than 4 may be of the same political party.
(C) The 3 ex officio members of the Board
of Trustees of the Federal Hospital Insurance
Trust Fund and of the Federal Supplementary
Medical Insurance Trust Fund who are Cabinet
level officials.
1218
(2) CHAIRMAN AND VICE CHAIRMAN.—As the
first item of business at the Commission’s first
meeting (described in paragraph (5)(B)), the Com-
mission shall elect a Chairman and Vice Chairman
from among its members. The individuals elected as
Chairman and Vice Chairman may not be of the
same political party and may not have been ap-
pointed to the Commission by the same appointing
authority.
(3) VACANCIES.—Any vacancy in the member-
ship of the Commission shall be filled in the manner
in which the original appointment was made and
shall not affect the power of the remaining members
to execute the duties of the Commission.
(4) QUORUM.—A quorum shall consist of 8
members of the Commission, except that 4 members
may conduct a hearing under subsection (f).
(5) MEETINGS.—
(A) The Commission shall meet at the call
of its Chairman or a majority of its members.
(B) The Commission shall hold its first
meeting not later than February 1, 1998.
(6) COMPENSATION AND REIMBURSEMENT OF
EXPENSES.—Members of the Commission are not
entitled to receive compensation for service on the
1219
Commission. Members may be reimbursed for travel,
subsistence, and other necessary expenses incurred
in carrying out the duties of the Commission.
(d) ADVISORY PANEL.—
(1) IN GENERAL.—The Chairman, in consulta-
tion with the Vice Chairman, may establish a panel
(in this section referred to as the ‘‘Advisory Panel’’)
consisting of health care experts, consumers, provid-
ers, and others to advise and assist the members of
the Commission in carrying out the duties described
in subsection (b). The panel shall have only those
powers that the Chairman, in consultation with the
Vice Chairman, determines are necessary and appro-
priate to assist the Commission in carrying out such
duties.
(2) COMPENSATION.—Members of the Advisory
Panel are not entitled to receive compensation for
service on the Advisory Panel. Subject to the ap-
proval of the chairman of the Commission, members
may be reimbursed for travel, subsistence, and other
necessary expenses incurred in carrying out the du-
ties of the Advisory Panel.
(e) STAFF AND CONSULTANTS.—
(1) STAFF.—The Commission may appoint and
determine the compensation of such staff as may be
1220
necessary to carry out the duties of the Commission.
Such appointments and compensation may be made
without regard to the provisions of title 5, United
States Code, that govern appointments in the com-
petitive services, and the provisions of chapter 51
and subchapter III of chapter 53 of such title that
relate to classifications and the General Schedule
pay rates.
(2) CONSULTANTS.—The Commission may pro-
cure such temporary and intermittent services of
consultants under section 3109(b) of title 5, United
States Code, as the Commission determines to be
necessary to carry out the duties of the Commission.
(f) POWERS.—
(1) HEARINGS
AND
OTHER
ACTIVITIES.—For
the purpose of carrying out its duties, the Commis-
sion may hold such hearings and undertake such
other activities as the Commission determines to be
necessary to carry out its duties.
(2) STUDIES BY GAO.—Upon the request of the
Commission, the Comptroller General shall conduct
such studies or investigations as the Commission de-
termines to be necessary to carry out its duties.
(3) COST
ESTIMATES
BY
CONGRESSIONAL
BUDGET OFFICE.—
1221
(A) Upon the request of the Commission,
the Director of the Congressional Budget Office
shall provide to the Commission such cost esti-
mates as the Commission determines to be nec-
essary to carry out its duties.
(B) The Commission shall reimburse the
Director of the Congressional Budget Office for
expenses relating to the employment in the of-
fice of the Director of such additional staff as
may be necessary for the Director to comply
with requests by the Commission under sub-
paragraph (A).
(4) DETAIL OF FEDERAL EMPLOYEES.—Upon
the request of the Commission, the head of any Fed-
eral agency is authorized to detail, without reim-
bursement, any of the personnel of such agency to
the Commission to assist the Commission in carry-
ing out its duties. Any such detail shall not interrupt
or otherwise affect the civil service status or privi-
leges of the Federal employee.
(5) TECHNICAL
ASSISTANCE.—Upon the re-
quest of the Commission, the head of a Federal
agency shall provide such technical assistance to the
Commission as the Commission determines to be
necessary to carry out its duties.
1222
(6) USE OF MAILS.—The Commission may use
the United States mails in the same manner and
under the same conditions as Federal agencies and
shall, for purposes of the frank, be considered a
commission of Congress as described in section 3215
of title 39, United States Code.
(7) OBTAINING
INFORMATION.—The Commis-
sion may secure directly from any Federal agency
information necessary to enable it to carry out its
duties, if the information may be disclosed under
section 552 of title 5, United States Code. Upon re-
quest of the Chairman of the Commission, the head
of such agency shall furnish such information to the
Commission.
(8) ADMINISTRATIVE
SUPPORT
SERVICES.—
Upon the request of the Commission, the Adminis-
trator of General Services shall provide to the Com-
mission on a reimbursable basis such administrative
support services as the Commission may request.
(9) PRINTING.—For purposes of costs relating
to printing and binding, including the cost of per-
sonnel detailed from the Government Printing Of-
fice, the Commission shall be deemed to be a com-
mittee of the Congress.
1223
(g) REPORT.—(1) Not later than May 1, 1999, the
Commission shall submit to Congress a report containing
its findings and recommendations regarding how to pro-
tect and preserve the medicare program in a financially
solvent manner until 2030 (or, if later, throughout the pe-
riod of projected solvency of the Federal Old-Age and Sur-
vivors Insurance Trust Fund). The report shall include de-
tailed recommendations for appropriate legislative initia-
tives respecting how to accomplish this objective.
(2) Not later than 12 months after the date of the
enactment of this Act, the Commission shall report to the
Congress on the matters specified in subsection (b)(1)(C).
If the Commission determines that it is feasible and desir-
able to establish the processes described in such sub-
section, the report under this paragraph shall include spe-
cific recommendations on changes in law (such as changes
in the Congressional Budget Act of 1974 and the Bal-
anced Budget and Emergency Deficit Control Act of
1985) as are needed to implement its recommendations.
(h) TERMINATION.—The Commission shall terminate
30 days after the date of submission of the report required
in subsection (g).
(i) AUTHORIZATION
OF APPROPRIATIONS.—There
are authorized to be appropriated $1,500,000 to carry out
this section. 60 percent of such appropriation shall be pay-
1224
able from the Federal Hospital Insurance Trust Fund,
and 40 percent of such appropriation shall be payable
from the Federal Supplementary Medical Insurance Trust
Fund under title XVIII of the Social Security Act (42
U.S.C. 1395i, 1395t).
CHAPTER 4—PROVISIONS RELATING TO
DIRECT GRADUATE MEDICAL EDUCATION
SEC. 10731. LIMITATION ON PAYMENT BASED ON NUMBER
OF RESIDENTS AND IMPLEMENTATION OF
ROLLING AVERAGE FTE COUNT.
Section 1886(h)(4) (42 U.S.C. 1395ww(h)(4)) is
amended by adding after subparagraph (E) the following:
‘‘(F) LIMITATION
ON
NUMBER
OF
RESI-
DENTS
FOR
CERTAIN
FISCAL
YEARS.—Such
rules shall provide that for purposes of a cost
reporting period beginning on or after October
1, 1997, the total number of full-time equiva-
lent residents before application of weighting
factors (as determined under this paragraph)
with respect to a hospital’s approved medical
residency training program may not exceed the
number of full-time equivalent residents with
respect to the hospital’s most recent cost re-
porting period ending on or before December
31, 1996. The Secretary may establish rules,
1225
consistent with the policies in the previous sen-
tence and paragraph (6), with respect to the
application of the previous sentence in the case
of medical residency training programs estab-
lished on or after January 1, 1997.
‘‘(G) COUNTING INTERNS AND RESIDENTS
FOR FY 1998 AND SUBSEQUENT YEARS.—
‘‘(i) FY 1998.—For the hospital’s first
cost reporting period beginning during fis-
cal year 1998, subject to the limit de-
scribed in subparagraph (F), the total
number of full-time equivalent residents,
for determining the hospital’s graduate
medical education payment, shall equal the
average of the full-time equivalent resident
counts for the cost reporting period and
the preceding cost reporting period.
‘‘(ii) SUBSEQUENT YEARS.—For each
subsequent cost reporting period, subject
to the limit described in subparagraph (F),
the total number of full-time equivalent
residents, for determining the hospital’s
graduate medical education payment, shall
equal the average of the actual full-time
equivalent resident counts for the cost re-
1226
porting period and preceding two cost re-
porting periods.
‘‘(iii) ADJUSTMENT FOR SHORT PERI-
ODS.—If a hospital’s cost reporting period
beginning on or after October 1, 1997, is
not equal to twelve months, the Secretary
shall make appropriate modifications to en-
sure that the average full-time equivalent
resident counts pursuant to clause (ii) are
based on the equivalent of full 12-month
cost reporting periods.’’.
SEC. 10732. PHASED-IN LIMITATION ON HOSPITAL OVER-
HEAD AND SUPERVISORY PHYSICIAN COMPO-
NENT 
OF 
DIRECT 
MEDICAL 
EDUCATION
COSTS.
(a) IN GENERAL.—Section 1886(h)(3) (42 U.S.C.
1395ww(h)(3)) is amended—
(1) in subparagraph (B), by inserting ‘‘subject
to subparagraph (D),’’ after ‘‘subparagraph (A)’’,
and
(2) by adding at the end the following:
‘‘(D) PHASED-IN
LIMITATION
ON
HOS-
PITAL OVERHEAD AND SUPERVISORY PHYSICIAN
COMPONENT.—
1227
‘‘(i) IN GENERAL.—In the case of a
hospital for which the overhead GME
amount (as defined in clause (ii)) for the
base period exceeds an amount equal to
the 75th percentile of the overhead GME
amounts in such period for all hospitals
(weighted to reflect the full-time equivalent
resident counts for all approved medical
residency training programs), subject to
clause (iv), the hospital’s approved FTE
resident amount (for periods beginning on
or after October 1, 1997) shall be reduced
from the amount otherwise applicable (as
previously reduced under this subpara-
graph) by an overhead reduction amount.
The overhead reduction amount is equal to
the lesser of—
‘‘(I) 20 percent of the reference
reduction amount (described in clause
(iii)) for the period, or
‘‘(II) 15 percent of the hospital’s
overhead GME amount for the period
(as otherwise determined before the
reduction provided under this sub-
paragraph for the period involved).
1228
‘‘(ii) OVERHEAD GME AMOUNT.—For
purposes of this subparagraph, the term
‘overhead GME amount’ means, for a hos-
pital for a period, the product of—
‘‘(I) the percentage of the hos-
pital’s approved FTE resident amount
for the base period that is not attrib-
utable to resident salaries and fringe
benefits, and
‘‘(II) the hospital’s approved
FTE resident amount for the period
involved.
‘‘(iii) 
REFERENCE
REDUCTION
AMOUNT.—
‘‘(I) 
IN
GENERAL.—The 
ref-
erence reduction amount described in
this clause for a hospital for a cost re-
porting period is the base difference
(described in subclause (II)) updated,
in a compounded manner for each pe-
riod from the base period to the pe-
riod involved, by the update applied
for such period to the hospital’s ap-
proved FTE resident amount.
1229
‘‘(II) BASE
DIFFERENCE.—The
base difference described in this sub-
clause for a hospital is the amount by
which the hospital’s overhead GME
amount in the base period exceeded
the 75th percentile of such amounts
(as described in clause (i)).
‘‘(iv) MAXIMUM REDUCTION TO 75TH
PERCENTILE.—In no case shall the reduc-
tion under this subparagraph effected for a
hospital for a period (below the amount
that would otherwise apply for the period
if this subparagraph did not apply for any
period) exceed the reference reduction
amount for the hospital for the period.
‘‘(v) BASE PERIOD.—For purposes of
this subparagraph, the term ‘base period’
means the cost reporting period beginning
in fiscal year 1984 or the period used to
establish the hospital’s approved FTE resi-
dent amount for hospitals that did not
have approved residency training programs
in fiscal year 1984.
‘‘(vi) RULES FOR HOSPITALS INITIAT-
ING
RESIDENCY
TRAINING
PROGRAMS.—
1230
The Secretary shall establish rules for the
application of this subparagraph in the
case of a hospital that initiates medical
residency training programs during or
after the base period.’’.
(b) EFFECTIVE DATE.—The amendments made by
subsection (a) shall apply to per resident payment
amounts attributable to periods beginning on or after Oc-
tober 1, 1997.
SEC. 10733. PERMITTING PAYMENT TO NON-HOSPITAL PRO-
VIDERS.
(a) IN
GENERAL.— Section 1886 (42 U.S.C.
1395ww) is amended by adding at the end the following:
‘‘(k) PAYMENT TO NON-HOSPITAL PROVIDERS.—
‘‘(1) REPORT.—The Secretary shall submit to
Congress, not later than 18 months after the date
of the enactment of this subsection, a proposal for
payment to qualified non-hospital providers for their
direct costs of medical education, if those costs are
incurred in the operation of an approved medical
residency training program described in subsection
(h). Such proposal shall specify the amounts, form,
and manner in which such payments will be made
and the portion of such payments that will be made
from each of the trust funds under this title.
1231
‘‘(2) EFFECTIVENESS.—Except as otherwise
provided in law, the Secretary may implement such
proposal for residency years beginning not earlier
than 6 months after the date of submittal of the re-
port under paragraph (1).
‘‘(3) QUALIFIED NON-HOSPITAL PROVIDERS.—
For purposes of this subsection, the term ‘qualified
non-hospital provider’ means—
‘‘(A) a Federally qualified health center, as
defined in section 1861(aa)(4);
‘‘(B) a rural health clinic, as defined in
section 1861(aa)(2);
‘‘(C) MedicarePlus organizations; and
‘‘(D) such other providers (other than hos-
pitals) as the Secretary determines to be appro-
priate.’’.
(b) PROHIBITION ON DOUBLE PAYMENTS; BUDGET
NEUTRALITY ADJUSTMENT.—Section 1886(h)(3)(B) (42
U.S.C. 1395ww(h)(3)(B)) is amended by adding at the
end the following:
‘‘The Secretary shall reduce the aggregate ap-
proved amount to the extent payment is made
under subsection (k) for residents included in
the hospital’s count of full-time equivalent resi-
dents and, in the case of residents not included
1232
in any such count, the Secretary shall provide
for such a reduction in aggregate approved
amounts under this subsection as will assure
that the application of subsection (k) does not
result in any increase in expenditures under
this title in excess of those that would have oc-
curred if subsection (k) were not applicable.’’.
SEC. 10734. INCENTIVE PAYMENTS UNDER PLANS FOR VOL-
UNTARY REDUCTION IN NUMBER OF RESI-
DENTS.
(a) IN
GENERAL.—Section 1886(h) (42 U.S.C.
1395ww(h)) is further amended by adding at the end the
following new paragraph:
‘‘(6) INCENTIVE PAYMENT UNDER PLANS FOR
VOLUNTARY
REDUCTION
IN
NUMBER
OF
RESI-
DENTS.—
‘‘(A) IN GENERAL.—In the case of a vol-
untary residency reduction plan for which an
application is approved under subparagraph
(B), the qualifying entity submitting the plan
shall be paid an applicable hold harmless per-
centage (as specified in subparagraph (E)) of
the sum of—
‘‘(i) amount (if any) by which—
1233
‘‘(I) the amount of payment
which would have been made under
this subsection if there had been a 5
percent reduction in the number of
full-time equivalent residents in the
approved medical education training
programs of the qualifying entity as of
June 30, 1997, exceeds
‘‘(II) the amount of payment
which is made under this subsection,
taking into account the reduction in
such number effected under the re-
duction plan; and
‘‘(ii) the amount of the reduction in
payment under 1886(d)(5)(B) (for hos-
pitals participating in the qualifying entity)
that is attributable to the reduction in
number of residents effected under the
plan below 95 percent of the number of
full-time equivalent residents in such pro-
grams of such entity as of June 30, 1997.
‘‘(B) 
APPROVAL
OF
PLAN
APPLICA-
TIONS.—The Secretary may not approve the ap-
plication of an qualifying entity unless—
1234
‘‘(i) the application is submitted in a
form and manner specified by the Sec-
retary and by not later than March 1,
2000,
‘‘(ii) the application provides for the
operation of a plan for the reduction in the
number of full-time equivalent residents in
the approved medical residency training
programs of the entity consistent with the
requirements of subparagraph (D);
‘‘(iii) the entity elects in the applica-
tion whether such reduction will occur
over—
‘‘(I) a period of not longer than
5 residency training years, or
‘‘(II) a period of 6 residency
training years,
except that a qualifying entity described in
subparagraph (C)(i)(III) may not make the
election described in subclause (II); and
‘‘(iv) the Secretary determines that
the application and the entity and such
plan meet such other requirements as the
Secretary specifies in regulations.
‘‘(C) QUALIFYING ENTITY.—
1235
‘‘(i) IN
GENERAL.—For purposes of
this paragraph, any of the following may
be a qualifying entity:
‘‘(I) Individual hospitals operat-
ing one or more approved medical
residency training programs.
‘‘(II) Subject to clause (ii), two
or more hospitals that operate such
programs and apply for treatment
under this paragraph as a single
qualifying entity.
‘‘(III) Subject to clause (iii), a
qualifying consortium (as described in
section 10735 of the Balanced Budget
Act of 1997).
‘‘(ii) ADDITIONAL REQUIREMENT FOR
JOINT PROGRAMS.—In the case of an ap-
plication by a qualifying entity described in
clause (i)(II), the Secretary may not ap-
prove the application unless the application
represents that the qualifying entity ei-
ther—
‘‘(I) in the case of an entity that
meets the requirements of clause (v)
of subparagraph (D) will not reduce
1236
the number of full-time equivalent
residents in primary care during the
period of the plan, or
‘‘(II) in the case of another en-
tity will not reduce the proportion of
its residents in primary care (to the
total number of residents) below such
proportion as in effect as of the appli-
cable time described in subparagraph
(D)(vi).
‘‘(iii) ADDITIONAL REQUIREMENT FOR
CONSORTIA.—In the case of an application
by a qualifying entity described in clause
(i)(III), the Secretary may not approve the
application unless the application rep-
resents that the qualifying entity will not
reduce the proportion of its residents in
primary care (to the total number of resi-
dents) below such proportion as in effect
as of the applicable time described in sub-
paragraph (D)(vi).
‘‘(D) RESIDENCY
REDUCTION
REQUIRE-
MENTS.—
‘‘(i) INDIVIDUAL
HOSPITAL
APPLI-
CANTS.—In the case of a qualifying entity
1237
described in subparagraph (C)(i)(I), the
number of full-time equivalent residents in
all the approved medical residency training
programs operated by or through the en-
tity shall be reduced as follows:
‘‘(I) If base number of residents
exceeds 750 residents, by a number
equal to at least 20 percent of such
base number.
‘‘(II) Subject to subclause (IV),
if base number of residents exceeds
500, but is less than 750, residents,
by 150 residents.
‘‘(III) Subject to subclause (IV),
if base number of residents does not
exceed 500 residents, by a number
equal to at least 25 percent of such
base number.
‘‘(IV) In the case of a qualifying
entity which is described in clause (v)
and which elects treatment under this
subclause, by a number equal to at
least 20 percent of such base number.
‘‘(ii) JOINT APPLICANTS.—In the case
of a qualifying entity described in subpara-
1238
graph (C)(i)(II), the number of full-time
equivalent residents in all the approved
medical residency training programs oper-
ated by or through the entity shall be re-
duced as follows:
‘‘(I) Subject to subclause (II), by
a number equal to at least 25 percent
of such base number.
‘‘(II) In the case of a qualifying
entity which is described in clause (v)
and which elects treatment under this
subclause, by a number equal to at
least 20 percent of such base number.
‘‘(iii) CONSORTIA.—In the case of a
qualifying entity described in subparagraph
(C)(i)(III), the number of full-time equiva-
lent residents in all the approved medical
residency training programs operated by or
through the entity shall be reduced by a
number equal to at least 20 percent of
such base number.
‘‘(iv) MANNER OF REDUCTION.—The
reductions specified under the preceding
provisions of this subparagraph for a quali-
fying entity shall be below the base number
1239
of residents for that entity and shall be
fully effective not later than—
‘‘(I) the 5th residency training
year in which the application under
subparagraph (B) is effective, in the
case of an entity making the election
described in subparagraph (B)(iii)(I),
or
‘‘(II) the 6th such residency
training year, in the case of an entity
making the election described in sub-
paragraph (B)(iii)(II).
‘‘(v) ENTITIES PROVIDING ASSURANCE
OF MAINTENANCE OF PRIMARY CARE RESI-
DENTS.—An entity is described in this
clause if—
‘‘(I) the base number of residents
for the entity is less than 750;
‘‘(II) the number of full-time
equivalent residents in primary care
included in the base number of resi-
dents for the entity is at least 10 per-
cent of such base number; and
‘‘(III) the entity represents in its
application under subparagraph (B)
1240
that there will be no reduction under
the plan in the number of full-time
equivalent residents in primary care.
If a qualifying entity fails to comply with
the representation described in subclause
(III), the entity shall be subject to repay-
ment of all amounts paid under this para-
graph, in accordance with procedures es-
tablished to carry out subparagraph (F).
‘‘(vi) BASE
NUMBER
OF
RESIDENTS
DEFINED.—For purposes of this para-
graph, the term ‘base number of residents’
means, with respect to a qualifying entity
operating 
approved 
medical 
residency
training programs, the number of full-time
equivalent residents in such programs (be-
fore application of weighting factors) of
the entity as of the most recent cost re-
porting period ending before June 30,
1997, or, if less, for any subsequent cost
reporting period that ends before the date
the entity makes application under this
paragraph.
‘‘(E) APPLICABLE HOLD HARMLESS PER-
CENTAGE.—
1241
‘‘(i) IN
GENERAL.—For purposes of
subparagraph (A), the ‘applicable hold
harmless percentage’ is the percentages
specified in clause (ii) or clause (iii), as
elected by the qualifying entity in the ap-
plication submitted under subparagraph
(B).
‘‘(ii) 5-YEAR
REDUCTION
PLAN.—In
the case of an entity making the election
described in subparagraph (B)(iii)(I), the
percentages specified in this clause are, for
the—
‘‘(I) first and second residency
training years in which the reduction
plan is in effect, 100 percent,
‘‘(II) third such year, 75 percent,
‘‘(III) fourth such year, 50 per-
cent, and
‘‘(IV) fifth such year, 25 percent.
‘‘(iii) 6-YEAR
REDUCTION
PLAN.—In
the case of an entity making the election
described in subparagraph (B)(iii)(II), the
percentages specified in this clause are, for
the—
1242
‘‘(I) first residency training year
in which the reduction plan is in ef-
fect, 100 percent,
‘‘(II) second such year, 95 per-
cent,
‘‘(III) third such year, 85 per-
cent,
‘‘(IV) fourth such year, 70 per-
cent,
‘‘(V) fifth such year, 50 percent,
and
‘‘(VI) sixth such year, 25 per-
cent.
‘‘(F) PENALTY FOR INCREASE IN NUMBER
OF
RESIDENTS
IN
SUBSEQUENT
YEARS.—If
payments are made under this paragraph to a
qualifying entity, if the entity (or any hospital
operating as part of the entity) increases the
number of full-time equivalent residents above
the number of such residents permitted under
the reduction plan as of the completion of the
plan, then, as specified by the Secretary, the
entity is liable for repayment to the Secretary
of the total amounts paid under this paragraph
to the entity.
1243
‘‘(G) TREATMENT
OF
ROTATING
RESI-
DENTS.—In applying this paragraph, the Sec-
retary shall establish rules regarding the count-
ing of residents who are assigned to institutions
the medical residency training programs in
which are not covered under approved applica-
tions under this paragraph.’’.
(b) RELATION TO DEMONSTRATION PROJECTS AND
AUTHORITY.—
(1) Section 1886(h)(6) of the Social Security
Act, added by subsection (a), shall not apply to any
residency training program with respect to which a
demonstration project described in paragraph (3)
has been approved by the Health Care Financing
Administration as of May 27, 1997. The Secretary
of Health and Human Services shall take such ac-
tions as may be necessary to assure that (in the
manner described in subparagraph (A) of such sec-
tion) in no case shall payments be made under such
a project with respect to the first 5 percent reduc-
tion in the base number of full-time equivalent resi-
dents otherwise used under the project.
(2) Effective May 27, 1997, the Secretary of
Health and Human Services is not authorized to ap-
prove any demonstration project described in para-
1244
graph (3) for any residency training year beginning
before July 1, 2006.
(3) A demonstration project described in this
paragraph is a project that provides for additional
payments under title XVIII of the Social Security
Act in connection with reduction in the number of
residents in a medical residency training program.
(c) INTERIM, FINAL REGULATIONS.—In order to
carry out the amendment made by subsection (a) in a
timely manner, the Secretary of Health and Human Serv-
ices may first promulgate regulations, that take effect on
an interim basis, after notice and pending opportunity for
public comment, by not later than 6 months after the date
of the enactment of this Act.
SEC. 10735. DEMONSTRATION PROJECT ON USE OF CON-
SORTIA.
(a) IN GENERAL.—The Secretary of Health and
Human Services (in this section referred to as the Sec-
retary) shall establish a demonstration project under
which, instead of making payments to teaching hospitals
pursuant to section 1886(h) of the Social Security Act,
the Secretary shall make payments under this section to
each consortium that meets the requirements of subsection
(b).
1245
(b) QUALIFYING CONSORTIA.—For purposes of sub-
section (a), a consortium meets the requirements of this
subsection if the consortium is in compliance with the fol-
lowing:
(1) The consortium consists of an approved
medical residency training program in a teaching
hospital and one or more of the following entities:
(A) A school of allopathic medicine or os-
teopathic medicine.
(B) Another teaching hospital, which may
be a children’s hospital.
(C) Another approved medical residency
training program.
(D) A Federally qualified health center.
(E) A medical group practice.
(F) A managed care entity.
(G) An entity furnishing outpatient serv-
ices.
(H) Such other entity as the Secretary de-
termines to be appropriate.
(2) The members of the consortium have agreed
to participate in the programs of graduate medical
education that are operated by the entities in the
consortium.
1246
(3) With respect to the receipt by the consor-
tium of payments made pursuant to this section, the
members of the consortium have agreed on a method
for allocating the payments among the members.
(4) The consortium meets such additional re-
quirements as the Secretary may establish.
(c) AMOUNT AND SOURCE OF PAYMENT.—The total
of payments to a qualifying consortium for a fiscal year
pursuant to subsection (a) shall not exceed the amount
that would have been paid under section 1886(h) of the
Social Security Act for the teaching hospital (or hospitals)
in the consortium. Such payments shall be made in such
proportion from each of the trust funds established under
title XVIII of such Act as the Secretary specifies.
SEC. 10736. RECOMMENDATIONS ON LONG-TERM PAYMENT
POLICIES REGARDING FINANCING TEACHING
HOSPITALS AND GRADUATE MEDICAL EDU-
CATION.
(a) IN GENERAL.—The Medicare Payment Advisory
Commission (established under section 1805 of the Social
Security Act and in this section referred to as the ‘‘Com-
mission’’) shall examine and develop recommendations on
whether and to what extent medicare payment policies and
other Federal policies regarding teaching hospitals and
graduate medical education should be reformed. Such rec-
1247
ommendations shall include recommendations regarding
each of the following:
(1) The financing of graduate medical edu-
cation, including consideration of alternative broad-
based sources of funding for such education and
models for the distribution of payments under any
all-payer financing mechanism.
(2) The financing of teaching hospitals, includ-
ing consideration of the difficulties encountered by
such hospitals as competition among health care en-
tities increases. Matters considered under this para-
graph shall include consideration of the effects on
teaching hospitals of the method of financing used
for the MedicarePlus program under part C of title
XVIII of the Social Security Act.
(3) Possible methodologies for making pay-
ments for graduate medical education and the selec-
tion of entities to receive such payments. Matters
considered under this paragraph shall include—
(A) issues regarding children’s hospitals
and approved medical residency training pro-
grams in pediatrics, and
(B) whether and to what extent payments
are being made (or should be made) for train-
1248
ing in the various nonphysician health profes-
sions.
(4) Federal policies regarding international
medical graduates.
(5) The dependence of schools of medicine on
service-generated income.
(6) Whether and to what extent the needs of
the United States regarding the supply of physi-
cians, in the aggregate and in different specialties,
will change during the 10-year period beginning on
October 1, 1997, and whether and to what extent
any such changes will have significant financial ef-
fects on teaching hospitals.
(7) Methods for promoting an appropriate num-
ber, mix, and geographical distribution of health
professionals.
(c) CONSULTATION.—In conducting the study under
subsection (a), the Commission shall consult with the
Council on Graduate Medical Education and individuals
with expertise in the area of graduate medical education,
including—
(1) deans from allopathic and osteopathic
schools of medicine;
(2) chief executive officers (or equivalent ad-
ministrative heads) from academic health centers,
1249
integrated health care systems, approved medical
residency training programs, and teaching hospitals
that sponsor approved medical residency training
programs;
(3) chairs of departments or divisions from
allopathic and osteopathic schools of medicine,
schools of dentistry, and approved medical residency
training programs in oral surgery;
(4) individuals with leadership experience from
representative fields of non-physician health profes-
sionals;
(5) individuals with substantial experience in
the study of issues regarding the composition of the
health care workforce of the United States; and
(6) individuals with expertise on the financing
of health care.
(d) REPORT.—Not later than 2 years after the date
of the enactment of this Act, the Commission shall submit
to the Congress a report providing its recommendations
under this section and the reasons and justifications for
such recommendations.
1250
SEC. 10737. MEDICARE SPECIAL REIMBURSEMENT RULE
FOR CERTAIN COMBINED RESIDENCY PRO-
GRAMS.
(a) IN GENERAL.—Section 1886(h)(5)(G) (42 U.S.C.
1395ww(h)(5)(G)) is amended—
(1) in clause (i), by striking ‘‘and (iii)’’ and in-
serting ‘‘, (iii), and (iv)’’; and
(2) by adding at the end the following:
‘‘(iv) SPECIAL
RULE
FOR
CERTAIN
COMBINED RESIDENCY PROGRAMS.—(I) In
the case of a resident enrolled in a com-
bined medical residency training program
in which all of the individual programs
(that are combined) are for training a pri-
mary care resident (as defined in subpara-
graph (H)), the period of board eligibility
shall be the minimum number of years of
formal training required to satisfy the re-
quirements for initial board eligibility in
the longest of the individual programs plus
one additional year.
‘‘(II) A resident enrolled in a com-
bined medical residency training program
that includes an obstetrics and gynecology
program shall qualify for the period of
board eligibility under subclause (I) if the
1251
other programs such resident combines
with such obstetrics and gynecology pro-
gram are for training a primary care resi-
dent.’’.
(b) EFFECTIVE DATE.—The amendments made by
subsection (a) apply to combined medical residency pro-
grams for residency years beginning on or after July 1,
1998.
CHAPTER 5—OTHER PROVISIONS
SEC. 10741. CENTERS OF EXCELLENCE.
(a) IN GENERAL.—Title XVIII is amended by insert-
ing after section 1888 the following:
‘‘CENTERS OF EXCELLENCE
‘‘SEC. 1889. (a) IN GENERAL.—The Secretary shall
use a competitive process to contract with specific hos-
pitals or other entities for furnishing services related to
surgical procedures, and for furnishing services (unrelated
to surgical procedures) to hospital inpatients that the Sec-
retary determines to be appropriate. The services may in-
clude any services covered under this title that the Sec-
retary determines to be appropriate, including post-hos-
pital services.
‘‘(b) QUALITY STANDARDS.—Only entities that meet
quality standards established by the Secretary shall be eli-
gible to contract under this section. Contracting entities
1252
shall implement a quality improvement plan approved by
the Secretary.
‘‘(c) PAYMENT.—Payment under this section shall be
made on the basis of negotiated all-inclusive rates. The
amount of payment made by the Secretary to an entity
under this title for services covered under a contract shall
be less than the aggregate amount of the payments that
the Secretary would have otherwise made for the services.
‘‘(d) CONTRACT PERIOD.—A contract period shall be
3 years (subject to renewal), so long as the entity contin-
ues to meet quality and other contractual standards.
‘‘(e) INCENTIVES FOR USE OF CENTERS.—Entities
under a contract under this section may furnish additional
services (at no cost to an individual entitled to benefits
under this title) or waive cost-sharing, subject to the ap-
proval of the Secretary.
‘‘(f) LIMIT ON NUMBER OF CENTERS.—The Sec-
retary shall limit the number of centers in a geographic
area to the number needed to meet projected demand for
contracted services.’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) applies to services furnished on or after Oc-
tober 1, 1997.
1253
SEC. 10742. MEDICARE PART B SPECIAL ENROLLMENT PE-
RIOD AND WAIVER OF PART B LATE ENROLL-
MENT 
PENALTY 
AND 
MEDIGAP 
SPECIAL
OPEN ENROLLMENT PERIOD FOR CERTAIN
MILITARY RETIREES AND DEPENDENTS.
(a) MEDICARE PART B SPECIAL ENROLLMENT PE-
RIOD; WAIVER OF PART B PENALTY FOR LATE ENROLL-
MENT.—
(1) IN GENERAL.—In the case of any eligible
individual (as defined in subsection (c)), the Sec-
retary of Health and Human Services shall provide
for a special enrollment period during which the in-
dividual may enroll under part B of title XVIII of
the Social Security Act. Such period shall be for a
period of 6 months and shall begin with the first
month that begins at least 45 days after the date of
the enactment of this Act.
(2) COVERAGE PERIOD.—In the case of an eli-
gible individual who enrolls during the special enroll-
ment period provided under paragraph (1), the cov-
erage period under part B of title XVIII of the So-
cial Security Act shall begin on the first day of the
month following the month in which the individual
enrolls.
(3) WAIVER
OF
PART
B
LATE
ENROLLMENT
PENALTY.—In the case of an eligible individual who
1254
enrolls during the special enrollment period provided
under paragraph (1), there shall be no increase pur-
suant to section 1839(b) of the Social Security Act
in the monthly premium under part B of title XVIII
of such Act.
(b) MEDIGAP SPECIAL OPEN ENROLLMENT PE-
RIOD.—Notwithstanding any other provision of law, an is-
suer of a medicare supplemental policy (as defined in sec-
tion 1882(g) of the Social Security Act)—
(1) may not deny or condition the issuance or
effectiveness of a medicare supplemental policy that
has a benefit package classified as ‘‘A’’, ‘‘B’’, ‘‘C’’,
or ‘‘F’’ under the standards established under sec-
tion 1882(p)(2) of the Social Security Act (42
U.S.C. 1395rr(p)(2)); and
(2) may not discriminate in the pricing of the
policy on the basis of the individual’s health status,
medical condition (including both physical and men-
tal illnesses), claims experience, receipt of health
care, medical history, genetic information, evidence
of insurability (including conditions arising out of
acts of domestic violence), or disability;
in the case of an eligible individual who seeks to enroll
(and is enrolled) during the 6-month period described in
subsection (a)(1).
1255
(c) ELIGIBLE INDIVIDUAL DEFINED.—In this sec-
tion, the term ‘‘eligible individual’’ means an individual—
(1) who, as of the date of the enactment of this
Act, has attained 65 years of age and was eligible
to enroll under part B of title XVIII of the Social
Security Act, and
(2) who at the time the individual first satisfied
paragraph (1) or (2) of section 1836 of the Social
Security Act—
(A) was a covered beneficiary (as defined
in section 1072(5) of title 10, United States
Code), and
(B) did not elect to enroll (or to be deemed
enrolled) under section 1837 of the Social Secu-
rity Act during the individual’s initial enroll-
ment period.
The Secretary of Health and Human Services shall con-
sult with the Secretary of Defense in the identification of
eligible individuals.
SEC. 10743. PROTECTIONS UNDER THE MEDICARE PRO-
GRAM FOR DISABLED WORKERS WHO LOSE
BENEFITS UNDER A GROUP HEALTH PLAN.
(a) NO PREMIUM PENALTY
FOR LATE ENROLL-
MENT.—The second sentence of section 1839(b) (42
U.S.C. 1395r(b)) is amended by inserting ‘‘and not pursu-
1256
ant to a special enrollment period under section
1837(i)(4)’’ after ‘‘section 1837)’’.
(b) SPECIAL MEDICARE ENROLLMENT PERIOD.—
(1) IN GENERAL.—Section 1837(i) (42 U.S.C.
1395p(i)) is amended by adding at the end the fol-
lowing new paragraph:
‘‘(4)(A) In the case of an individual who is entitled
to benefits under part A pursuant to section 226(b) and—
‘‘(i) who at the time the individual first satisfies
paragraph (1) or (2) of section 1836—
‘‘(I) is enrolled in a group health plan de-
scribed in section 1862(b)(1)(A)(v) by reason of
the individual’s (or the individual’s spouse’s)
current employment or otherwise, and
‘‘(II) has elected not to enroll (or to be
deemed enrolled) under this section during the
individual’s initial enrollment period; and
‘‘(ii) whose continuous enrollment under such
group health plan is involuntarily terminated at a
time when the enrollment under the plan is not by
reason of the individual’s (or the individual’s
spouse’s) current employment,
there shall be a special enrollment period described in sub-
paragraph (B).
1257
‘‘(B) The special enrollment period referred to in sub-
paragraph (A) is the 6-month period beginning on the date
of the enrollment termination described in subparagraph
(A)(ii).’’.
(2) COVERAGE PERIOD.—Section 1838(e) (42
U.S.C. 1395q(e)) is amended—
(A) by inserting ‘‘or 1837(i)(4)(B)’’ after
‘‘1837(i)(3)’’ the first place it appears, and
(B) by inserting ‘‘or specified in section
1837(i)(4)(A)(i)’’ after ‘‘1837(i)(3)’’ the second
place it appears’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to involuntary terminations of cov-
erage under a group health plan occurring on or after the
date of the enactment of this Act.
SEC. 10744. PLACEMENT OF ADVANCE DIRECTIVE IN MEDI-
CAL RECORD.
(a) IN GENERAL.—Section 1866(f)(1)(B) (42 U.S.C.
1395cc(f)(1)(B)) is amended by striking ‘‘in the individ-
ual’s medical record’’ and inserting ‘‘in a prominent part
of the individual’s current medical record’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply to provider agreements entered
into, renewed, or extended on or after such date (not later
1258
than 1 year after the date of the enactment of this Act)
as the Secretary of Health and Human Services specifies.
Subtitle I—Medical Liability
Reform
CHAPTER 1—GENERAL PROVISIONS
SEC. 10801. FEDERAL REFORM OF HEALTH CARE LIABILITY
ACTIONS.
(a) APPLICABILITY.—This subtitle shall apply with
respect to any health care liability action brought in any
State or Federal court, except that this subtitle shall not
apply to—
(1) an action for damages arising from a vac-
cine-related injury or death to the extent that title
XXI of the Public Health Service Act applies to the
action, or
(2) an action under the Employee Retirement
Income Security Act of 1974 (29 U.S.C. 1001 et
seq.).
(b) PREEMPTION.—This subtitle shall preempt any
State law to the extent such law is inconsistent with the
limitations contained in this subtitle. This subtitle shall
not preempt any State law that provides for defenses or
places limitations on a person’s liability in addition to
those contained in this subtitle or otherwise imposes great-
er restrictions than those provided in this subtitle.
1259
(c) EFFECT ON SOVEREIGN IMMUNITY AND CHOICE
OF LAW OR VENUE.—Nothing in subsection (b) shall be
construed to—
(1) waive or affect any defense of sovereign im-
munity asserted by any State under any provision of
law;
(2) waive or affect any defense of sovereign im-
munity asserted by the United States;
(3) affect the applicability of any provision of
the Foreign Sovereign Immunities Act of 1976;
(4) preempt State choice-of-law rules with re-
spect to claims brought by a foreign nation or a citi-
zen of a foreign nation; or
(5) affect the right of any court to transfer
venue or to apply the law of a foreign nation or to
dismiss a claim of a foreign nation or of a citizen
of a foreign nation on the ground of inconvenient
forum.
(d) AMOUNT
IN CONTROVERSY.—In an action to
which this subtitle applies and which is brought under sec-
tion 1332 of title 28, United States Code, the amount of
noneconomic damages or punitive damages, and attorneys’
fees or costs, shall not be included in determining whether
the matter in controversy exceeds the sum or value of
$50,000.
1260
(e) FEDERAL COURT JURISDICTION NOT ESTAB-
LISHED ON FEDERAL QUESTION GROUNDS.—Nothing in
this subtitle shall be construed to establish any jurisdiction
in the district courts of the United States over health care
liability actions on the basis of section 1331 or 1337 of
title 28, United States Code.
SEC. 10802. DEFINITIONS.
As used in this subtitle:
(1) ACTUAL DAMAGES.—The term ‘‘actual dam-
ages’’ means damages awarded to pay for economic
loss.
(2) ALTERNATIVE DISPUTE RESOLUTION SYS-
TEM; ADR.—The term ‘‘alternative dispute resolution
system’’ or ‘‘ADR’’ means a system established
under Federal or State law that provides for the res-
olution of health care liability claims in a manner
other than through health care liability actions.
(3) CLAIMANT.—The term ‘‘claimant’’ means
any person who brings a health care liability action
and any person on whose behalf such an action is
brought. If such action is brought through or on be-
half of an estate, the term includes the claimant’s
decedent. If such action is brought through or on be-
half of a minor or incompetent, the term includes
the claimant’s legal guardian.
1261
(4) CLEAR AND CONVINCING EVIDENCE.—The
term ‘‘clear and convincing evidence’’ is that meas-
ure or degree of proof that will produce in the mind
of the trier of fact a firm belief or conviction as to
the truth of the allegations sought to be established.
Such measure or degree of proof is more than that
required under preponderance of the evidence but
less than that required for proof beyond a reason-
able doubt.
(5) COLLATERAL
SOURCE
PAYMENTS.—The
term ‘‘collateral source payments’’ means any
amount paid or reasonably likely to be paid in the
future to or on behalf of a claimant, or any service,
product, or other benefit provided or reasonably like-
ly to be provided in the future to or on behalf of a
claimant, as a result of an injury or wrongful death,
pursuant to—
(A) any State or Federal health, sickness,
income-disability, accident or workers’ com-
pensation Act;
(B) any health, sickness, income-disability,
or accident insurance that provides health bene-
fits or income-disability coverage;
(C) any contract or agreement of any
group, organization, partnership, or corporation
1262
to provide, pay for, or reimburse the cost of
medical, hospital, dental, or income disability
benefits; and
(D) any other publicly or privately funded
program.
(6) DRUG.—The term ‘‘drug’’ has the meaning
given such term in section 201(g)(1) of the Federal
Food, 
Drug, 
and 
Cosmetic 
Act 
(21 
U.S.C.
321(g)(1)).
(7) ECONOMIC
LOSS.—The term ‘‘economic
loss’’ means any pecuniary loss resulting from injury
(including the loss of earnings or other benefits re-
lated to employment, medical expense loss, replace-
ment services loss, loss due to death, burial costs,
and loss of business or employment opportunities),
to the extent recovery for such loss is allowed under
applicable State law.
(8) HARM.—The term ‘‘harm’’ means any le-
gally cognizable wrong or injury for which punitive
damages may be imposed.
(9) 
HEALTH
BENEFIT
PLAN.—The 
term
‘‘health benefit plan’’ means—
(A) a hospital or medical expense incurred
policy or certificate,
1263
(B) a hospital or medical service plan con-
tract,
(C) a health maintenance subscriber con-
tract, or
(D) a MedicarePlus product (offered under
part C of title XVIII of the Social Security
Act),
that provides benefits with respect to health care
services.
(10) HEALTH
CARE
LIABILITY
ACTION.—The
term ‘‘health care liability action’’ means a civil ac-
tion brought in a State or Federal court against a
health care provider, an entity which is obligated to
provide or pay for health benefits under any health
benefit plan (including any person or entity acting
under a contract or arrangement to provide or ad-
minister any health benefit), or the manufacturer,
distributor, supplier, marketer, promoter, or seller of
a medical product, in which the claimant alleges a
claim (including third party claims, cross claims,
counter claims, or distribution claims) based upon
the provision of (or the failure to provide or pay for)
health care services or the use of a medical product,
regardless of the theory of liability on which the
1264
claim is based or the number of plaintiffs, defend-
ants, or causes of action.
(11) HEALTH
CARE
LIABILITY
CLAIM.—The
term ‘‘health care liability claim’’ means a claim in
which the claimant alleges that injury was caused by
the provision of (or the failure to provide) health
care services.
(12) HEALTH
CARE
PROVIDER.—The term
‘‘health care provider’’ means any person that is en-
gaged in the delivery of health care services in a
State and that is required by the laws or regulations
of the State to be licensed or certified by the State
to engage in the delivery of such services in the
State.
(13) 
HEALTH
CARE
SERVICE.—The 
term
‘‘health care service’’ means any service for which
payment may be made under a health benefit plan
including services related to the delivery or adminis-
tration of such service.
(14) MEDICAL DEVICE.—The term ‘‘medical de-
vice’’ has the meaning given such term in section
201(h) of the Federal Food, Drug, and Cosmetic
Act (21 U.S.C. 321(h)).
(15) 
NONECONOMIC
DAMAGES.—The 
term
‘‘noneconomic damages’’ means damages paid to an
1265
individual for pain and suffering, inconvenience,
emotional distress, mental anguish, loss of consor-
tium, injury to reputation, humiliation, and other
nonpecuniary losses.
(16) PERSON.—The term ‘‘person’’ means any
individual, corporation, company, association, firm,
partnership, society, joint stock company, or any
other entity, including any governmental entity.
(17) PRODUCT SELLER.—
(A) IN
GENERAL.—Subject to subpara-
graph (B), the term ‘‘product seller’’ means a
person who, in the course of a business con-
ducted for that purpose—
(i) sells, distributes, rents, leases, pre-
pares, blends, packages, labels, or is other-
wise involved in placing, a product in the
stream of commerce, or
(ii) installs, repairs, or maintains the
harm-causing aspect of a product.
(B) EXCLUSION.—Such term does not in-
clude—
(i) a seller or lessor of real property;
(ii) a provider of professional services
in any case in which the sale or use of a
product is incidental to the transaction and
1266
the essence of the transaction is the fur-
nishing of judgment, skill, or services; or
(iii) any person who—
(I) acts in only a financial capac-
ity with respect to the sale of a prod-
uct; or
(II) leases a product under a
lease arrangement in which the selec-
tion, possession, maintenance, and op-
eration of the product are controlled
by a person other than the lessor.
(18) PUNITIVE DAMAGES.—The term ‘‘punitive
damages’’ means damages awarded against any per-
son not to compensate for actual injury suffered, but
to punish or deter such person or others from en-
gaging in similar behavior in the future.
(19) STATE.—The term ‘‘State’’ means each of
the several States, the District of Columbia, Puerto
Rico, the Virgin Islands, Guam, American Samoa,
the Northern Mariana Islands, and any other terri-
tory or possession of the United States.
SEC. 10803. EFFECTIVE DATE.
This subtitle will apply to any health care liability ac-
tion brought in a Federal or State court and to any health
care liability claim subject to an alternative dispute resolu-
1267
tion system, that is initiated on or after the date of enact-
ment of this subtitle, except that any health care liability
claim or action arising from an injury occurring prior to
the date of enactment of this subtitle shall be governed
by the applicable statute of limitations provisions in effect
at the time the injury occurred.
CHAPTER 2—UNIFORM STANDARDS FOR
HEALTH CARE LIABILITY ACTIONS
SEC. 10811. STATUTE OF LIMITATIONS.
A health care liability action may not be brought
after the expiration of the 2-year period that begins on
the date on which the alleged injury that is the subject
of the action was discovered or should reasonably have
been discovered, but in no case after the expiration of the
5-year period that begins on the date the alleged injury
occurred.
SEC. 10812. CALCULATION AND PAYMENT OF DAMAGES.
(a) TREATMENT OF NONECONOMIC DAMAGES.—
(1) LIMITATION ON NONECONOMIC DAMAGES.—
The total amount of noneconomic damages that may
be awarded to a claimant for losses resulting from
the injury which is the subject of a health care liabil-
ity action may not exceed $250,000, regardless of
the number of parties against whom the action is
1268
brought or the number of actions brought with re-
spect to the injury.
(2) JOINT AND SEVERAL LIABILITY.—In any
health care liability action brought in State or Fed-
eral court, a defendant shall be liable only for the
amount of noneconomic damages attributable to
such defendant in direct proportion to such defend-
ant’s share of fault or responsibility for the claim-
ant’s actual damages, as determined by the trier of
fact. In all such cases, the liability of a defendant
for noneconomic damages shall be several and not
joint.
(b) TREATMENT OF PUNITIVE DAMAGES.—
(1) GENERAL RULE.—Punitive damages may,
to the extent permitted by applicable State law, be
awarded in any health care liability action for harm
in any Federal or State court against a defendant if
the claimant establishes by clear and convincing evi-
dence that the harm suffered was the result of con-
duct—
(A) specifically intended to cause harm, or
(B) conduct manifesting a conscious, fla-
grant indifference to the rights or safety of oth-
ers.
1269
(2) PROPORTIONAL AWARDS.—The amount of
punitive damages that may be awarded in any health
care liability action subject to this subtitle shall not
exceed 3 times the amount of damages awarded to
the claimant for economic loss, or $250,000, which-
ever is greater. This paragraph shall be applied by
the court and shall not be disclosed to the jury.
(3) 
APPLICABILITY.—This 
subsection 
shall
apply to any health care liability action brought in
any Federal or State court on any theory where pu-
nitive damages are sought. This subsection does not
create a cause of action for punitive damages. This
subsection does not preempt or supersede any State
or Federal law to the extent that such law would
further limit the award of punitive damages.
(4) BIFURCATION.—At the request of any
party, the trier of fact shall consider in a separate
proceeding whether punitive damages are to be
awarded and the amount of such award. If a sepa-
rate proceeding is requested, evidence relevant only
to the claim of punitive damages, as determined by
applicable State law, shall be inadmissible in any
proceeding to determine whether actual damages are
to be awarded.
(5) DRUGS AND DEVICES.—
1270
(A) IN
GENERAL.—(i) Punitive damages
shall not be awarded against a manufacturer or
product seller of a drug or medical device which
caused the claimant’s harm where—
(I) such drug or device was subject to
premarket approval by the Food and Drug
Administration with respect to the safety
of the formulation or performance of the
aspect of such drug or device which caused
the claimant’s harm, or the adequacy of
the packaging or labeling of such drug or
device which caused the harm, and such
drug, device, packaging, or labeling was
approved by the Food and Drug Adminis-
tration; or
(II) the drug is generally recognized
as safe and effective pursuant to conditions
established by the Food and Drug Admin-
istration and applicable regulations, includ-
ing packaging and labeling regulations.
(ii) Clause (i) shall not apply in any case
in which the defendant, before or after pre-
market approval of a drug or device—
(I) intentionally and wrongfully with-
held from or misrepresented to the Food
1271
and Drug Administration information con-
cerning such drug or device required to be
submitted under the Federal Food, Drug,
and Cosmetic Act (21 U.S.C. 301 et seq.)
or section 351 of the Public Health Service
Act (42 U.S.C. 262) that is material and
relevant to the harm suffered by the claim-
ant, or
(II) made an illegal payment to an of-
ficial or employee of the Food and Drug
Administration for the purpose of securing
or maintaining approval of such drug or
device.
(B) PACKAGING.—In a health care liability
action for harm which is alleged to relate to the
adequacy of the packaging or labeling of a drug
which is required to have tamper-resistant
packaging under regulations of the Secretary of
Health and Human Services (including labeling
regulations related to such packaging), the
manufacturer or product seller of the drug shall
not be held liable for punitive damages unless
such packaging or labeling is found by the court
by clear and convincing evidence to be substan-
tially out of compliance with such regulations.
1272
(c) PERIODIC PAYMENTS FOR FUTURE LOSSES.—
(1) GENERAL RULE.—In any health care liabil-
ity action in which the damages awarded for future
economic and noneconomic loss exceeds $50,000, a
person shall not be required to pay such damages in
a single, lump-sum payment, but shall be permitted
to make such payments periodically based on when
the damages are found likely to occur, as such pay-
ments are determined by the court.
(2) FINALITY OF JUDGMENT.—The judgment
of the court awarding periodic payments under this
subsection may not, in the absence of fraud, be re-
opened at any time to contest, amend, or modify the
schedule or amount of the payments.
(3) 
LUMP-SUM
SETTLEMENTS.—This 
sub-
section shall not be construed to preclude a settle-
ment providing for a single, lump-sum payment.
(d) TREATMENT
OF COLLATERAL SOURCE PAY-
MENTS.—
(1) INTRODUCTION
INTO
EVIDENCE.—In any
health care liability action, any defendant may intro-
duce evidence of collateral source payments. If any
defendant elects to introduce such evidence, the
claimant may introduce evidence of any amount paid
or contributed or reasonably likely to be paid or con-
1273
tributed in the future by or on behalf of the claim-
ant to secure the right to such collateral source pay-
ments.
(2) NO SUBROGATION.—No provider of collat-
eral source payments shall recover any amount
against the claimant or receive any lien or credit
against the claimant’s recovery or be equitably or le-
gally subrogated the right of the claimant in a
health care liability action.
(3) APPLICATION TO SETTLEMENTS.—This sub-
section shall apply to an action that is settled as well
as an action that is resolved by a fact finder.
SEC. 10813. ALTERNATIVE DISPUTE RESOLUTION.
Any ADR used to resolve a health care liability action
or claim shall contain provisions relating to statute of limi-
tations, non-economic damages, joint and several liability,
punitive damages, collateral source rule, and periodic pay-
ments which are identical to the provisions relating to
such matters in this subtitle.
TITLE XI—BUDGET
ENFORCEMENT
SEC. 11001. SHORT TITLE; TABLE OF CONTENTS.
(a) SHORT TITLE.—This Act may be cited as the
‘‘Budget Enforcement Act of 1997’’.
(b) TABLE OF CONTENTS.—
1274
TITLE XI—BUDGET ENFORCEMENT
Sec. 11001. Short title; table of contents.
Subtitle A—Amendments to the Congressional Budget and Impoundment
Control Act of 1974
Sec. 11101. Amendments to section 3.
Sec. 11102. Amendments to section 201.
Sec. 11103. Amendments to section 202.
Sec. 11104. Amendment to section 300.
Sec. 11105. Amendments to section 301.
Sec. 11106. Amendments to section 302.
Sec. 11107. Amendments to section 303.
Sec. 11108. Amendment to section 305.
Sec. 11109. Amendments to section 308.
Sec. 11110. Amendments to section 310.
Sec. 11111. Amendments to section 311.
Sec. 11112. Amendment to section 312.
Sec. 11113. Adjustments and Budget Committee determinations.
Sec. 11114. Effect of self-executing amendments on points of order in the
House of Representatives.
Sec. 11115. Amendment of section 401 and repeal of section 402.
Sec. 11116. Repeal of title VI.
Sec. 11117. Amendments to section 904.
Sec. 11118. Repeal of sections 905 and 906.
Sec. 11119. Amendments to sections 1022 and 1024.
Sec. 11120. Amendment to section 1026.
Subtitle B—Amendments to the Balanced Budget and Emergency Deficit
Control Act of 1985
Sec. 11201. Purpose.
Sec. 11202. General statement and definitions.
Sec. 11203. Enforcing discretionary spending limits.
Sec. 11204. Violent crime reduction trust fund.
Sec. 11205. Enforcing pay-as-you-go.
Sec. 11206. Reports and orders.
Sec. 11207. Exempt programs and activities.
Sec. 11208. General and special sequestration rules.
Sec. 11209. The baseline.
Sec. 11210. Technical correction.
Sec. 11211. Judicial review.
Sec. 11212. Effective date.
Sec. 11213. Reduction of preexisting balances and exclusion of effects of this
Act from paygo scorecard.
1275
Subtitle A—Amendments to the
Congressional Budget and Im-
poundment Control Act of 1974
SEC. 11101. AMENDMENTS TO SECTION 3.
Section 3 of the Congressional Budget and Impound-
ment Control Act of 1974 (2 U.S.C. 622) is amended—
(1) in paragraph (2)(A), by striking ‘‘and’’ at
the end of clause (iii), by striking the period and in-
serting ‘‘; and’’ at the end of clause (iv), and by
adding at the end the following:
‘‘(v) entitlement authority and the
food stamp program.’’; and
(2) in paragraph (9), by inserting ‘‘, but such
term does not include salary or basic pay funded
through an appropriation Act’’ before the period.
SEC. 11102. AMENDMENTS TO SECTION 201.
(a) TERM OF OFFICE.—The first sentence of section
201(a)(3) of the Congressional Budget Act of 1974 is
amended to read as follows: ‘‘The term of office of the
Director shall be four years and shall expire on January
3 of the year preceding a Presidential election.’’.
(b) REDESIGNATION
OF EXECUTED PROVISION.—
Section 201 of the Congressional Budget Act of 1974 is
amended by redesignating subsection (g) (relating to reve-
nue estimates) as subsection (f).
1276
SEC. 11103. AMENDMENTS TO SECTION 202.
(a) ASSISTANCE
TO BUDGET COMMITTEES.—The
first sentence of section 202(a) of the Congressional
Budget Act of 1974 is amended by inserting ‘‘primary’’
before ‘‘duty’’.
(b) ELIMINATION OF EXECUTED PROVISION.—Sec-
tion 202 of the Congressional Budget Act of 1974 is
amended by striking subsection (e) and by redesignating
subsections (f), (g), and (h) as subsections (e), (f), and
(g), respectively.
SEC. 11104. AMENDMENT TO SECTION 300.
The item relating to February 25 in the timetable
set forth in section 300 of the Congressional Budget Act
of 1974 is amended by striking ‘‘February 25’’ and insert-
ing ‘‘Within 6 weeks after President submits budget’’.
SEC. 11105. AMENDMENTS TO SECTION 301.
(a) TERMS
OF BUDGET RESOLUTIONS.—Section
301(a) of the Congressional Budget Act of 1974 is amend-
ed by striking ‘‘, and planning levels for each of the two
ensuing fiscal years,’’ and inserting ‘‘and for at least each
of the 4 ensuing fiscal years’’.
(b) CONTENTS OF BUDGET RESOLUTIONS.—Para-
graphs (1) and (4) of section 301(a) of the Congressional
Budget Act of 1974 are amended by striking ‘‘, budget
outlays, direct loan obligations, and primary loan guaran-
1277
tee commitments’’ each place it appears and inserting
‘‘and budget outlays’’.
(c) ADDITIONAL MATTERS.—Section 301(b) of the
Congressional Budget Act of 1974 is amended by amend-
ing paragraph (7) to read as follows—
‘‘(7) set forth pay-as-you-go procedures in the
Senate whereby committee allocations, aggregates,
and other levels can be revised for legislation within
a committee’s jurisdiction if such legislation would
not increase the deficit for the first year covered by
the resolution and will not increase the deficit for
the period of 5 fiscal years covered by the resolu-
tion;’’.
(d) VIEWS AND ESTIMATES.—The first sentence of
section 301(d) of the Congressional Budget Act of 1974
is amended by inserting ‘‘or at such time as may be re-
quested by the Committee on the Budget,’’ after ‘‘Code,’’.
(e) HEARINGS AND REPORT.—Section 301(e)(2) of
the Congressional Budget Act of 1974 is amended by
striking ‘‘total direct loan obligations, total primary loan
guarantee commitments,’’.
(f) SOCIAL SECURITY CORRECTIONS.—Section 301(i)
of the Congressional Budget Act of 1974 is amended by—
(1) inserting ‘‘SOCIAL
SECURITY
POINT
OF
ORDER.—’’ after ‘‘(i)’’; and
1278
(2) striking ‘‘as reported to the Senate’’ and in-
serting ‘‘(or amendment, motion, or conference re-
port on such a resolution)’’.
SEC. 11106. AMENDMENTS TO SECTION 302.
(a) ALLOCATIONS
AND
SUBALLOCATIONS.—Sub-
sections (a) and (b) of section 302 of the Congressional
Budget Act of 1974 are amended to read as follows:
‘‘(a) COMMITTEE SPENDING ALLOCATIONS.—
‘‘(1) ALLOCATION
AMONG
COMMITTEES.—The
joint explanatory statement accompanying a con-
ference report on a budget resolution shall include
allocations, consistent with the resolution rec-
ommended in the conference report, of the appro-
priate levels (for each fiscal year covered by that res-
olution and a total for all such years, except in the
case of the Committee on Appropriations only for
the first such fiscal year) of—
‘‘(A) total new budget authority;
‘‘(B) total outlays; and
‘‘(C) in the Senate, social security outlays;
among each committee of the House of Representa-
tives or the Senate that has jurisdiction over legisla-
tion providing or creating such amounts.
1279
‘‘(2) NO DOUBLE COUNTING.—In the House of
Representatives, any item allocated to one committee
may not be allocated to another such committee.
‘‘(3) FURTHER DIVISION OF AMOUNTS.—In the
House of Representatives, the amounts allocated to
each committee for each fiscal year, other than the
Committee on Appropriations, shall be further di-
vided between amounts provided or required by law
on the date of filing of that conference report and
amounts not so provided or required. The amounts
allocated to the Committee on Appropriations for
each fiscal year shall be further divided between dis-
cretionary and mandatory amounts or programs, as
appropriate.
‘‘(4) AMOUNTS NOT ALLOCATED.—(A) In the
House of Representatives, if a committee receives no
allocation of new budget authority or outlays, that
committee shall be deemed to have received an allo-
cation equal to zero for new budget authority or out-
lays.
‘‘(B) In the Senate, if a committee receives no
allocation of new budget authority, outlays, or social
security outlays, that committee shall be deemed to
have received an allocation equal to zero for new
budget authority, outlays, or social security outlays.
1280
‘‘(5) SOCIAL SECURITY LEVELS IN THE SEN-
ATE.—
‘‘(A) IN GENERAL.—For purposes of para-
graph (1)(C), social security surpluses equal the
excess of social security revenues over social se-
curity outlays in a fiscal year or years with
such an excess and social security deficits equal
the excess of social security outlays over social
security revenues in a fiscal year or years with
such an excess.
‘‘(B) TAX TREATMENT.—For purposes of
paragraph (1)(C), no provision of any legisla-
tion involving a change in chapter 1 of the In-
ternal Revenue Code of 1986 shall be treated as
affecting the amount of social security revenues
or outlays unless such provision changes the in-
come tax treatment of social security benefits.
‘‘(6) ADJUSTING
ALLOCATION
OF
DISCRE-
TIONARY SPENDING IN THE HOUSE OF REPRESENT-
ATIVES.—(A) If a concurrent resolution on the
budget is not adopted by April 15, the chairman of
the Committee on the Budget of the House of Rep-
resentatives shall submit to the House, as soon as
practicable, an allocation under paragraph (1) to the
Committee on Appropriations consistent with the
1281
discretionary spending limits contained in the most
recently agreed to concurrent resolution on the
budget for the second fiscal year covered by that res-
olution.
‘‘(B) As soon as practicable after an allocation
under paragraph (1) is submitted under this section,
the Committee on Appropriations shall make sub-
allocations and promptly report those suballocations
to the House of Representatives.
‘‘(b) SUBALLOCATIONS BY APPROPRIATION COMMIT-
TEES.—As soon as practicable after a concurrent resolu-
tion on the budget is agreed to, the Committee on Appro-
priations of each House (after consulting with the Com-
mittee on Appropriations of the other House) shall sub-
allocate each amount allocated to it for the budget year
under subsection (a) among its subcommittees. Each Com-
mittee on Appropriations shall promptly report to its
House suballocations made or revised under this para-
graph.’’.
(b) POINT OF ORDER.—Section 302(c) of the Con-
gressional Budget Act of 1974 is amended to read as fol-
lows:
‘‘(c) POINT OF ORDER.—After the Committee on Ap-
propriations has received an allocation pursuant to sub-
section (a) for a fiscal year, it shall not be in order in
1282
the House of Representatives or the Senate to consider
any bill, joint resolution, amendment, motion, or con-
ference report providing new budget authority for that fis-
cal year within the jurisdiction of that committee, until
such committee makes the suballocations required by sub-
section (b).’’.
(c) ENFORCEMENT OF POINT OF ORDER.—(1) Sec-
tion 302(f)(1) of the Congressional Budget Act of 1974
is amended by—
(A) striking ‘‘providing new budget authority
for such fiscal year or new entitlement authority ef-
fective during such fiscal year’’ and inserting ‘‘pro-
viding new budget authority for any fiscal year cov-
ered by the concurrent resolution’’;
(B) striking ‘‘appropriate allocation made pur-
suant to subsection (b) for such fiscal year’’ and in-
serting ‘‘appropriate allocation made under sub-
section (a) or any suballocation made under sub-
section (b), as applicable, for the fiscal year of the
concurrent resolution or for the total of all fiscal
years covered by the concurrent resolution’’; and
(C) striking ‘‘of new discretionary budget au-
thority or new entitlement authority to be exceeded’’
and inserting ‘‘of new discretionary budget authority
to be exceeded’’.
1283
(2) Section 302(f)(2) of the Congressional Budget
Act of 1974 is amended to read as follows:
‘‘(2) ENFORCEMENT OF COMMITTEE ALLOCA-
TIONS
AND
SUBALLOCATIONS
IN
THE SENATE.—
After a concurrent resolution on the budget is
agreed to, it shall not be in order in the Senate to
consider any bill, joint resolution, amendment, mo-
tion, or conference report that would cause—
‘‘(A) in the case of any committee except
the Committee on Appropriations, the appro-
priate allocation of new budget authority or
outlays under subsection (a) to be exceeded; or
‘‘(B) in the case of the Committee on Ap-
propriations, the appropriate suballocation of
new budget authority or outlays under sub-
section (b) to be exceeded.’’.
(d) SEPARATE ALLOCATIONS.—Section 302(g)
of the Congressional Budget Act of 1974 is amended
to read as follows:
‘‘(g) SEPARATE ALLOCATIONS.—The Committees on
Appropriations and the Budget shall make separate alloca-
tions and suballocations under this section consistent with
the categories in section 251(c) of the Balanced Budget
and Emergency Deficit Control Act of 1985.’’
1284
SEC. 11107. AMENDMENTS TO SECTION 303.
(a) IN GENERAL.—Section 303 of the Congressional
Budget Act of 1974 is amended to read as follows:
‘‘CONCURRENT RESOLUTION ON THE BUDGET MUST BE
ADOPTED
BEFORE
LEGISLATION
PROVIDING
NEW
BUDGET
AUTHORITY, NEW
SPENDING
AUTHORITY,
OR CHANGES IN REVENUES OR THE PUBLIC DEBT
LIMIT IS CONSIDERED
‘‘SEC. 303. (a) IN GENERAL.—It shall not be in order
in either the House of Representatives or the Senate to
consider any bill, joint resolution, amendment, motion, or
conference report as reported to the House or Senate
which provides—
‘‘(1) new budget authority for a fiscal year;
‘‘(2) an increase or decrease in revenues to be-
come effective during a fiscal year;
‘‘(3) an increase or decrease in the public debt
limit to become effective during a fiscal year;
‘‘(4) in the Senate only, new spending authority
(as defined in section 401(c)(2)) for a fiscal year; or
‘‘(5) in the Senate only, outlays,
until the concurrent resolution on the budget for such fis-
cal year (or, in the Senate, a concurrent resolution on the
budget covering such fiscal year) has been agreed to pur-
suant to section 301.
1285
‘‘(b) EXCEPTIONS.—(1) In the House of Representa-
tives, subsection (a) does not apply to any bill or resolu-
tion—
‘‘(A) providing advance discretionary new budg-
et authority which first becomes available in a fiscal
year following the fiscal year to which the concur-
rent resolution applies; or
‘‘(B) increasing or decreasing revenues which
first become effective in a fiscal year following the
fiscal year to which the concurrent resolution ap-
plies.
After May 15 of any calendar year, subsection (a) does
not apply in the House of Representatives to any general
appropriation bill, or amendment thereto, which provides
new budget authority for the fiscal year beginning in such
calendar year.
‘‘(2) In the Senate, subsection (a) does not apply to
any bill or resolution making advance appropriations for
the fiscal year to which the concurrent resolution applies
and the two succeeding fiscal years.
(b) CONFORMING AMENDMENT.—The item relating
to section 303 in the table of contents set forth in section
1(b) of the Congressional Budget and Impoundment Con-
trol Act of 1974 is amended by striking ‘‘new credit au-
thority,’’.
1286
SEC. 11108. AMENDMENT TO SECTION 305.
Section 305(a)(1) of the Congressional Budget Act
of 1974 is amended by inserting ‘‘when the House is not
in session’’ after ‘‘holidays’’ each place it appears.
SEC. 11109. AMENDMENTS TO SECTION 308.
Section 308 of the Congressional Budget Act of 1974
is amended—
(1)(A) in the side heading of subsection (a), by
striking ‘‘OR NEW CREDIT AUTHORITY,’’ and
by striking the first comma and inserting ‘‘OR’’;
(B) in paragraphs (1) and (2) of subsection (a),
by striking ‘‘or new credit authority,’’ each place it
appears and by striking the comma before ‘‘new
spending authority’’ each place it appears and in-
serting ‘‘or’’;
(2) in subsection (b)(1), by striking ‘‘or new
credit authority,’’ and by striking the comma before
‘‘new spending authority’’ and inserting ‘‘or’’;
(3) in subsection (c), by inserting ‘‘and’’ after
the semicolon at the end of paragraph (3), by strik-
ing ‘‘; and’’ at the end of paragraph (4) and insert-
ing a period; and by striking paragraph (5); and
(4) by inserting ‘‘joint’’ before ‘‘resolution’’
each place it appears and, in subsection (b)(1), by
inserting ‘‘joint’’ before ‘‘resolutions’’.
1287
SEC. 11110. AMENDMENTS TO SECTION 310.
Section 310 of the Congressional Budget Act of 1974
is amended by—
(1) in subsection (a)(1), by inserting ‘‘and’’
after the semicolon at the end of subparagraph (B),
by striking ‘‘subparagraphs (C) and (D), and by in-
serting after subparagraph (B) the following new
subparagraph:
‘‘(C) direct spending (as defined in section
250(c)(8) of the Balanced Budget and Emer-
gency Deficit Control Act of 1985),’’; and
(2) in subsection (c)(1)(A), by inserting ‘‘of the
absolute value’’ after ‘‘20 percent’’ each place it ap-
pears.
SEC. 11111. AMENDMENTS TO SECTION 311.
Section 311 of the Congressional Budget Act of 1974
is amended to read as follows:
‘‘NEW BUDGET AUTHORITY, NEW SPENDING AUTHORITY,
AND REVENUE LEGISLATION MUST BE WITHIN AP-
PROPRIATE LEVELS
‘‘SEC. 311. (a) ENFORCEMENT OF BUDGET AGGRE-
GATES.—
‘‘(1) IN THE HOUSE OF REPRESENTATIVES.—
Except as provided by subsection (c), after the Con-
gress has completed action on a concurrent resolu-
tion on the budget for a fiscal year, it shall not be
1288
in order in the House of Representatives to consider
any bill, joint resolution, amendment, motion, or
conference report providing new budget authority for
such fiscal year or reducing revenues for such fiscal
year, if—
‘‘(A) the enactment of such bill or resolu-
tion as reported;
‘‘(B) the adoption and enactment of such
amendment; or
‘‘(C) the enactment of such bill or resolu-
tion in the form recommended in such con-
ference report;
would cause the appropriate level of total new budg-
et authority or total budget outlays set forth in the
most recently agreed to concurrent resolution on the
budget for such fiscal year to be exceeded, or would
cause revenues to be less than the appropriate level
of total revenues set forth in such concurrent resolu-
tion such fiscal year or for the total of all fiscal
years covered by the concurrent resolution, except in
the case that a declaration of war by the Congress
is in effect.
‘‘(2) IN THE SENATE.—After a concurrent reso-
lution on the budget is agreed to, it shall not be in