H. R. 2491—214
The Secretary shall include in the notice a description of any
changes in such allotments from the initial allotments pub-
lished under paragraph (1) for the fiscal year and the reasons
for such changes. Once published under this paragraph, the
Secretary is not authorized to change such allotments.
‘‘(4) GAO REPORT ON FINAL ALLOTMENTS.—The Comptroller
General shall submit to Congress by not later than August
1 of each such fiscal year, a report analyzing the final allot-
ments under paragraph (3) and the extent to which they comply
with the precise requirements of this section.
‘‘(f) SUPPLEMENTAL ALLOTMENT FOR EMERGENCY HEALTH CARE
SERVICES TO CERTAIN ALIENS.—
‘‘(1) IN GENERAL.—Notwithstanding the previous provisions
of this section, the amount of the State outlay allotment for
each of fiscal years 1996 through 2000 for each supplemental
allotment eligible State shall be increased by the amount of
the supplemental outlay allotment provided under paragraph
(2) for the State for that year. The amount of such increased
allotment may only be used for the purpose of providing medical
assistance for care and services for aliens described in para-
graph (1) of section 2123(e) and for which the exception
described in paragraph (2) of such section applies. Section
2122(f)(3) shall apply to such assistance in the same manner
as it applies to medical assistance described in such section.
‘‘(2) SUPPLEMENTAL OUTLAY ALLOTMENT.—
‘‘(A) IN GENERAL.—For purposes of paragraph (1), the
amount of the supplemental outlay allotment for a supple-
mental allotment eligible State for a fiscal year is equal
to the supplemental allotment ratio (as defined in subpara-
graph (C)) multiplied by the supplemental pool amount
(specified in subparagraph (D)) for the fiscal year.
‘‘(B) SUPPLEMENTAL
ALLOTMENT
ELIGIBLE
STATE.—In
this subsection, the term ‘supplemental allotment eligible
State’ means one of the 15 States with the highest number
of undocumented alien residents of all the States.
‘‘(C) SUPPLEMENTAL ALLOTMENT RATIO.—In this para-
graph, the ‘supplemental allotment ratio’ for a State is
the ratio of—
‘‘(i) the number of undocumented aliens residing
in the State, to
‘‘(ii) the sum of such numbers for all supplemental
allotment eligible States.
‘‘(D) SUPPLEMENTAL POOL AMOUNT.—In this paragraph,
the ‘supplemental pool amount’—
‘‘(i) for fiscal year 1996 is $627,325,551,
‘‘(ii) for fiscal year 1997 is $673,388,855,
‘‘(iii) for fiscal year 1998 is $702,313,450,
‘‘(iv) for fiscal year 1999 is $733,140,258, and
‘‘(v) for fiscal year 2000 is $763,831,886.
‘‘(E) DETERMINATION OF NUMBER.—
‘‘(i) IN GENERAL.—The number of undocumented
aliens residing in a State under this paragraph—
‘‘(I) for fiscal year 1996 shall be determined
based on estimates of the resident illegal alien
population residing in each State prepared by the
Statistics Division of the Immigration and Natu-
ralization Service as of October 1992, and
H. R. 2491—215
‘‘(II) for a subsequent fiscal year shall be deter-
mined based on the most recent updated estimate
made under clause (ii).
‘‘(ii) UPDATING
ESTIMATE.—For each fiscal year
beginning with fiscal year 1997, the Secretary, in con-
sultation with the Commission of the Immigration and
Naturalization Service, States, and outside experts,
shall estimate the number of undocumented aliens
residing in each of the 50 States and the District
of Columbia.
‘‘(3) TREATMENT FOR OBLIGATION PURPOSES.—For purposes
of computing obligation allotments under subsection (a)—
‘‘(A) the amount of the supplemental pool amount for
a fiscal year shall be added to the pool amount under
subsection (b) for that fiscal year, and
‘‘(B) the amount of the supplemental allotment to a
State provided under paragraph (1) shall be added to the
outlay allotment of the State for that fiscal year.
‘‘(4) SEQUENCE OF OBLIGATIONS.—For purposes of carrying
out this title, payments to a supplemental allotment eligible
State under section 2122 that are attributable to expenditures
for medical assistance described in the second sentence of para-
graph (1) shall first be counted toward the supplemental outlay
allotment provided under this subsection, rather than toward
the outlay allotment otherwise provided under this section.
‘‘SEC. 2122. PAYMENTS TO STATES.
‘‘(a) AMOUNT
OF PAYMENT.—From the allotment of a State
under section 2121 for a fiscal year, subject to the succeeding
provisions of this title, the Secretary shall pay to each State which
has a MediGrant plan approved under part E, for each quarter
in the fiscal year—
‘‘(1) an amount equal to the applicable Federal medical
assistance percentage (as defined in subsection (c)) of the total
amount expended during such quarter as medical assistance
under the plan; plus
‘‘(2) an amount equal to the applicable Federal medical
assistance percentage of the total amount expended during
such quarter for medically-related services (as defined in section
2112(e)(2)); plus
‘‘(3) subject to section 2123(c)—
‘‘(A) an amount equal to 90 percent of the amounts
expended during such quarter for the design, development,
and installation of information systems and for providing
incentives to promote the enforcement of medical support
orders, plus
‘‘(B) an amount equal to 75 percent of the amounts
expended during such quarter for medical personnel,
administrative support of medical personnel, operation and
maintenance of information systems, modification of
information systems, quality assurance activities, utiliza-
tion review, medical and peer review, anti-fraud activities,
independent evaluations, coordination of benefits, and
meeting reporting requirements under this title, plus
‘‘(C) an amount equal to 50 percent of so much of
the remainder of the amounts expended during such quar-
H. R. 2491—216
ter as are expended by the State in the administration
of the State MediGrant plan.
‘‘(b) PAYMENT PROCESS.—
‘‘(1) QUARTERLY ESTIMATES.—Prior to the beginning of each
quarter, the Secretary shall estimate the amount to which
a State will be entitled under subsection (a) for such quarter,
such estimates to be based on (A) a report filed by the State
containing its estimate of the total sum to be expended in
such quarter in accordance with the provisions of such sub-
sections, and stating the amount appropriated or made avail-
able by the State and its political subdivisions for such expendi-
tures in such quarter, and if such amount is less than the
State’s proportionate share of the total sum of such estimated
expenditures, the source or sources from which the difference
is expected to be derived, and (B) such other investigation
as the Secretary may find necessary.
‘‘(2) PAYMENT.—
‘‘(A) IN
GENERAL.—The Secretary shall then pay to
the State, in such installments as the Secretary may deter-
mine and in accordance with section 6503(a) of title 31,
United States Code, the amount so estimated, reduced
or increased to the extent of any overpayment or
underpayment which the Secretary determines was made
under this section (or section 1903) to such State for any
prior quarter and with respect to which adjustment has
not already been made under this subsection (or under
section 1903(d)).
‘‘(B) TREATMENT AS OVERPAYMENTS.—Expenditures for
which payments were made to the State under subsection
(a) shall be treated as an overpayment to the extent that
the State or local agency administering such plan has
been reimbursed for such expenditures by a third party
pursuant to the provisions of its plan in compliance with
section 2135.
‘‘(C) RECOVERY
OF
OVERPAYMENTS.—For purposes of
this subsection, when an overpayment is discovered, which
was made by a State to a person or other entity, the
State shall have a period of 60 days in which to recover
or attempt to recover such overpayment before adjustment
is made in the Federal payment to such State on account
of such overpayment. Except as otherwise provided in
subparagraph (D), the adjustment in the Federal payment
shall be made at the end of the 60 days, whether or
not recovery was made.
‘‘(D) NO ADJUSTMENT FOR UNCOLLECTABLES.—In any
case where the State is unable to recover a debt which
represents an overpayment (or any portion thereof) made
to a person or other entity on account of such debt having
been discharged in bankruptcy or otherwise being uncollect-
able, no adjustment shall be made in the Federal payment
to such State on account of such overpayment (or portion
thereof).
‘‘(3) FEDERAL SHARE OF RECOVERIES.—The pro rata share
to which the United States is equitably entitled, as determined
by the Secretary, of the net amount recovered during any
quarter by the State or any political subdivision thereof with
respect to medical assistance furnished under the State
H. R. 2491—217
MediGrant plan shall be considered an overpayment to be
adjusted under this subsection.
‘‘(4) TIMING OF OBLIGATION OF FUNDS.—Upon the making
of any estimate by the Secretary under this subsection, any
appropriations available for payments under this section shall
be deemed obligated.
‘‘(5) DISALLOWANCES.—In any case in which the Secretary
estimates that there has been an overpayment under this sec-
tion to a State on the basis of a claim by such State that
has been disallowed by the Secretary under section 1116(d),
and such State disputes such disallowance, the amount of the
Federal payment in controversy shall, at the option of the
State, be retained by such State or recovered by the Secretary
pending a final determination with respect to such payment
amount. If such final determination is to the effect that any
amount was properly disallowed, and the State chose to retain
payment of the amount in controversy, the Secretary shall
offset, from any subsequent payments made to such State under
this title, an amount equal to the proper amount of the disallow-
ance plus interest on such amount disallowed for the period
beginning on the date such amount was disallowed and ending
on the date of such final determination at a rate (determined
by the Secretary) based on the average of the bond equivalent
of the weekly 90-day treasury bill auction rates during such
period.
‘‘(c) APPLICABLE FEDERAL MEDICAL ASSISTANCE PERCENTAGE
DEFINED.—In this section, except as provided in subsection (f),
the term ‘applicable Federal medical assistance percentage’ means,
with respect to one of the 50 States or the District of Columbia,
at the State’s or District’s option—
‘‘(1) the old Federal medical assistance percentage (as deter-
mined in subsection (d));
‘‘(2) the lesser of—
‘‘(A) new Federal medical assistance percentage (as
determined under subsection (e)) or
‘‘(B) the old Federal medical assistance percentage plus
10 percentage points; or
‘‘(3) 60 percent.
‘‘(d) OLD FEDERAL MEDICAL ASSISTANCE PERCENTAGE.—
‘‘(1) IN
GENERAL.—Except as provided in paragraph (2)
and subsection (f), the term ‘old Federal medical assistance
percentage’ for any State is 100 percent less the State percent-
age; and the State percentage is that percentage which bears
the same ratio to 45 percent as the square of the per capita
income of such State bears to the square of the per capita
income of the continental United States (including Alaska) and
Hawaii.
‘‘(2) LIMITATION ON RANGE.—In no case shall the old Federal
medical assistance percentage be less than 50 percent or more
than 83 percent.
‘‘(3) PROMULGATION.—The old Federal medical assistance
percentage for any State shall be determined and promulgated
in accordance with the provisions of section 1101(a)(8)(B).
‘‘(e) 
NEW
FEDERAL
MEDICAL
ASSISTANCE
PERCENTAGE
DEFINED.—
‘‘(1) IN GENERAL.—
H. R. 2491—218
‘‘(A) TERM DEFINED.—Except as provided in paragraph
(3) and subsection (f), the term ‘new Federal medical assist-
ance percentage’ means, for each of the 50 States and
the District of Columbia, 100 percent reduced by the prod-
uct 0.39 and the ratio of—
‘‘(i)(I) for each of the 50 States, the total taxable
resources (TTR) ratio of the State specified in subpara-
graph (B), or
‘‘(II) for the District of Columbia, the per capita
income ratio specified in subparagraph (C),
to—
‘‘(ii) the aggregate expenditure need ratio of the
State or District, as described in subparagraph (D).
‘‘(B) TOTAL TAXABLE RESOURCES (TTR) RATIO.—For pur-
poses of subparagraph (A)(i)(I), the total taxable resources
(TTR) ratio for each of the 50 States is—
‘‘(i) an amount equal to the most recent 3-year
average of the total taxable resources (TTR) of the
State, as determined by the Secretary of the Treasury,
divided by
‘‘(ii) an amount equal to the sum of the 3-year
averages determined under clause (i) for each of the
50 States.
‘‘(C) PER
CAPITA
INCOME
RATIO.—For purposes of
subparagraph (A)(i)(II), the per capita income ratio of the
District of Columbia is—
‘‘(i) an amount equal to the most recent 3-year
average of the total personal income of the District
of Columbia, as determined in accordance with the
provisions of section 1101(a)(8)(B), divided by
‘‘(ii) an amount equal to the total personal income
of the continental United States (including Alaska)
and Hawaii, as determined under section 1101(a)(8)(B).
‘‘(D) AGGREGATE EXPENDITURE NEED RATIO.—For pur-
poses of subparagraph (A), with respect to each of the
50 States and the District of Columbia for a fiscal year,
the aggregate expenditure need ratio is—
‘‘(i) the State aggregate expenditure need (as
defined in section 2121(d)) for the State for the fiscal
year, divided by
‘‘(ii) the such of such State aggregate expenditure
needs for the 50 States and the District of Columbia
for the fiscal year.
‘‘(2) LIMITATION ON RANGE.—Except as provided in sub-
section (f), the new Federal medical assistance percentage shall
in no case be less than 40 percent or greater than 83 percent.
‘‘(3) PROMULGATION.—The new Federal medical assistance
percentage for any State shall be promulgated in a timely
manner consistent with the promulgation of the old Federal
medical assistance percentage under section 1101(a)(8)(B).
‘‘(f) SPECIAL RULES.—For purposes of this title—
‘‘(1) COMMONWEALTHS AND TERRITORIES.—In the case of
Puerto Rico, the Virgin Islands, Guam, the Northern Mariana
Islands, and American Samoa, the old and new Federal medical
assistance percentages are 50 percent.
‘‘(2) ALASKA.—In the case of Alaska, the old Federal medical
assistance percentage is that percentage which bears the same
H. R. 2491—219
ratio to 45 percent as the square of the adjusted per capita
income of such State bears to the square of the per capita
income of the continental United States. For purposes of the
preceding sentence, the adjusted per capita income for Alaska
shall be determined by dividing the State’s most recent 3-
year average per capita by the input cost index for such State
(as determined under section 2121(d)(4)).
‘‘(3) INDIAN HEALTH SERVICE FACILITIES.—
‘‘(A) IN GENERAL.—The old and new Federal medical
assistance percentages shall be 100 percent with respect
to the amounts expended as medical assistance for services
which are received through a facility described in subpara-
graph (B) of an Indian tribe or tribal organization or
through an Indian Health Service facility whether operated
by the Indian Health Service or by an Indian tribe or
tribal organization (as defined in section 4 of the Indian
Health Care Improvement Act).
‘‘(B) FACILITY DESCRIBED.—For purposes of subpara-
graph (A), a facility described in this subparagraph is a
facility of an Indian tribe if—
‘‘(i) the facility is located in a State which, as
of the date of the enactment of this title, was not
operating its State plan under title XIX pursuant to
a Statewide waiver approved under section 1115,
‘‘(ii) the facility is not an Indian Health Service
facility,
‘‘(iii) the tribe owns at least 2 such facilities, and
‘‘(iv) the tribe has at least 50,000 members (as
of the date of the enactment of this title).
‘‘(4) NO STATE MATCHING REQUIRED FOR CERTAIN EXPENDI-
TURES.—In applying subsection (a)(1) with respect to medical
assistance provided to unlawful aliens pursuant to the exception
specified in section 2123(f)(2), payment shall be made for the
amount of such assistance without regard to any need for
a State match.
‘‘(5) SPECIAL TRANSITIONAL RULE.—
‘‘(A) IN GENERAL.—Notwithstanding subsections (a) and
(f), in order to receive the full State outlay allotment
described in section 2121(c)(3)(C)(i), a State described in
subparagraph (C) shall expend State funds in a fiscal year
(before fiscal year 2000) under a MediGrant plan under
this title in an amount not less than the adjusted base
year State expenditures, plus the applicable percentage
of the difference between such expenditures and the
amount necessary to qualify for the full State outlay allot-
ment so described in such fiscal year as determined under
this section without regard to this paragraph.
‘‘(B) REDUCTION IN ALLOTMENT IF EXPENDITURE NOT
MET.—In the event a State described in subparagraph (C)
fails to expend State funds in an amount required by
subparagraph (A) for a fiscal year, the outlay allotment
described in section 2121(c)(3)(C)(i) for such year for such
State shall be reduced by an amount which bears the
same ratio to such outlay allotment as the State funds
expended in such fiscal year bears to the amount required
by subparagraph (A).
H. R. 2491—220
‘‘(C) ADJUSTED BASE YEAR STATE EXPENDITURES.—For
purposes of this paragraph, the term ‘adjusted base year
State expenditures’ means—
‘‘(i) for New Hampshire, $203,000,000, and
‘‘(ii) for Louisiana, $355,000,000.
‘‘(D) APPLICABLE PERCENTAGE.—For purposes of this
paragraph, the applicable percentage for a fiscal year is
specified in the following table:
Applicable
‘‘Fiscal year:
Percentage:
1996 ...................................................................................................
1997 ...................................................................................................
1998 ...................................................................................................
1999 ...................................................................................................
80.
‘‘(g) STATE FINANCIAL PARTICIPATION.—Each MediGrant plan
shall provide for financial participation by the State equal to not
less than 40 percent of the non-Federal share of the expenditures
under the plan with respect to which payments may be made
under this section.
‘‘SEC. 2123. LIMITATION ON USE OF FUNDS; DISALLOWANCE.
‘‘(a) IN GENERAL.—Funds provided to a State under this title
shall only be used to carry out the purposes of this title.
‘‘(b) DISALLOWANCES FOR EXCLUDED PROVIDERS.—
‘‘(1) IN GENERAL.—Payment shall not be made to a State
under this part for expenditures for items and services fur-
nished—
‘‘(A) by a provider who was excluded from participation
under title V, XVIII, or XX or under this title pursuant
to section 1128, 1128A, 1156, or 1842(j)(2), or
‘‘(B) under the medical direction or on the prescription
of a physician who was so excluded, if the provider of
the services knew or had reason to know of the exclusion.
‘‘(2) EXCEPTION FOR EMERGENCY SERVICES.—Paragraph (1)
shall not apply to emergency items or services, not including
hospital emergency room services.
‘‘(c) LIMITATIONS.—
‘‘(1) IN GENERAL.—No Federal financial assistance is avail-
able for expenditures under the MediGrant plan for—
‘‘(A) medically-related services for a quarter to the
extent such expenditures exceed 5 percent of the total
expenditures under the plan for the quarter, or
‘‘(B) total administrative expenses (other than expenses
described in paragraph (2) during the first 8 quarters in
which the plan is in effect under this title) for quarters
in a fiscal year to the extent such expenditures exceed
the sum of $20,000,000 plus 10 percent of the total expendi-
tures under the plan for the year.
‘‘(2) ADMINISTRATIVE
EXPENSES
NOT
SUBJECT
TO
LIMITA-
TION.—The administrative expenses referred to in this para-
graph are expenditures under the MediGrant plan for the fol-
lowing activities:
‘‘(A) Quality assurance.
‘‘(B) The development and operation of the certification
program for nursing facilities and intermediate care facili-
ties for the mentally retarded under section 2137.
‘‘(C) Utilization review activities, including medical
activities and activities of peer review organizations.
H. R. 2491—221
‘‘(D) Inspection and oversight of providers and
capitated health care organizations.
‘‘(E) Anti-fraud activities.
‘‘(F) Independent evaluations.
‘‘(G) Activities required to meet reporting requirements
under this title.
‘‘(d) TREATMENT OF THIRD PARTY LIABILITY.—No payment shall
be made to a State under this part for expenditures for medical
assistance provided for an individual under its MediGrant plan
to the extent that a private insurer (as defined by the Secretary
by regulation and including a group health plan (as defined in
section 607(1) of the Employee Retirement Income Security Act
of 1974), a service benefit plan, and a health maintenance organiza-
tion) would have been obligated to provide such assistance but
for a provision of its insurance contract which has the effect of
limiting or excluding such obligation because the individual is
eligible for or is provided medical assistance under the plan.
‘‘(e) MEDIGRANT AS SECONDARY PAYER.—Except as otherwise
provided by law, no payment shall be made to a State under
this part for expenditures for medical assistance provided for an
individual under its MediGrant plan to the extent that payment
has been made or can reasonably be expected to be made promptly
(as determined in accordance with regulations) under any other
federally operated or financed health care program, other than
a program operated or financed by the Indian Health Service,
as identified by the Secretary. For purposes of this subsection,
rules similar to the rules for overpayments under section 2122(b)
shall apply.
‘‘(f) LIMITATION ON PAYMENTS TO EMERGENCY SERVICES FOR
NONLAWFUL ALIENS.—
‘‘(1) IN
GENERAL.—Notwithstanding the preceding provi-
sions of this section, except as provided in paragraph (2), no
payment may be made to a State under this part for medical
assistance furnished to an alien who is not lawfully admitted
for permanent residence or otherwise permanently residing in
the United States under color of law.
‘‘(2) EXCEPTION FOR EMERGENCY SERVICES.—Payment may
be made under this section for care and services that are
furnished to an alien described in paragraph (1) only if—
‘‘(A) such care and services are necessary for the treat-
ment of an emergency medical condition of the alien,
‘‘(B) such alien otherwise meets the eligibility require-
ments for medical assistance under the MediGrant plan
(other than a requirement of the receipt of aid or assistance
under title IV, supplemental security income benefits under
title XVI, or a State supplementary payment), and
‘‘(C) such care and services are not related to an organ
transplant procedure.
‘‘(3) EMERGENCY MEDICAL CONDITION DEFINED.—For pur-
poses of this subsection, the term ‘emergency medical condition’
means a medical condition (including emergency labor and
delivery) manifesting itself by acute symptoms of sufficient
severity (including severe pain) such that the absence of imme-
diate medical attention could reasonably be expected to result
in—
‘‘(A) placing the patient’s health in serious jeopardy,
‘‘(B) serious impairment to bodily functions, or
H. R. 2491—222
‘‘(C) serious dysfunction of any bodily organ or part.
‘‘(g) LIMITATION
ON
PAYMENT
FOR
CERTAIN
OUTPATIENT
PRESCRIPTION DRUGS.—
‘‘(1) IN GENERAL.—No payment may be made to a State
under this part for medical assistance for covered outpatient
drugs (as defined in section 2175(i)(2)) of a manufacturer pro-
vided under the MediGrant plan unless the manufacturer (as
defined in section 2175(i)(4)) of the drug—
‘‘(A) has entered into a MediGrant master rebate agree-
ment with the Secretary under section 2175,
‘‘(B) is otherwise complying with the provisions of such
section,
‘‘(C) is complying with the provisions of section 8126
of title 38, United States Code, including the requirement
of entering into a master agreement with the Secretary
of Veterans Affairs under such section, and
‘‘(D) subject to paragraph (4), is complying with the
provisions of section 340B of the Public Health Service
Act, including the requirement of entering into an agree-
ment with the Secretary under such section.
‘‘(2) CONSTRUCTION.—Nothing in this subsection shall be
construed as requiring a State to participate in the MediGrant
master rebate agreement under section 2175.
‘‘(3) EFFECT OF SUBSEQUENT AMENDMENTS.—For purposes
of subparagraphs (C) and (D), in determining whether a manu-
facturer is in compliance with the requirements of section 8126
of title 38, United States Code, or section 340B of the Public
Health Service Act—
‘‘(A) the Secretary shall not take into account any
amendments to such sections that are enacted after the
enactment of title VI of the Veterans Health Care Act
of 1992, and
‘‘(B) a manufacturer is deemed to meet such require-
ments if the manufacturer establishes to the satisfaction
of the Secretary that the manufacturer would comply (and
has offered to comply) with the provisions of such sections
(as in effect immediately after the enactment of the Veter-
ans Health Care Act of 1992) and would have entered
into an agreement under such section (as such section
was in effect at such time), but for a legislative change
in such section after the date of the enactment of the
Veterans Health Care Act of 1992.
‘‘(4) EFFECT OF ESTABLISHMENT OF ALTERNATIVE MECHA-
NISM UNDER PUBLIC HEALTH SERVICE ACT.—If the Secretary
does not establish a mechanism to ensure against duplicate
discounts or rebates under section 340B(a)(5)(A) of the Public
Health Service Act within 12 months of the date of the enact-
ment of such section, the following requirements shall apply:
‘‘(A) Each covered entity under such section shall
inform the State when it is seeking reimbursement from
the MediGrant plan for medical assistance with respect
to a unit of any covered outpatient drug which is subject
to an agreement under section 340B(a) of such Act.
‘‘(B) Each such State shall provide a means by which
such an entity shall indicate on any drug reimbursement
claims form (or format, where electronic claims manage-
ment is used) that a unit of the drug that is the subject
H. R. 2491—223
of the form is subject to an agreement under section 340B
of such Act, and not submit to any manufacturer a claim
for a rebate payment with respect to such a drug.
‘‘PART D—PROGRAM INTEGRITY AND QUALITY
‘‘SEC. 2131. USE OF AUDITS TO ACHIEVE FISCAL INTEGRITY.
‘‘(a) FINANCIAL AUDITS OF PROGRAM.—
‘‘(1) IN GENERAL.—Each MediGrant plan shall provide for
an annual audit of the State’s expenditures from amounts
received under this title, in compliance with chapter 75 of
title 31, United States Code.
‘‘(2) VERIFICATION AUDITS.—If, after consultation with the
State and the Comptroller General and after a fair hearing,
the Secretary determines that a State’s audit under paragraph
(1) was performed in substantial violation of chapter 75 of
title 31, United States Code, the Secretary may—
‘‘(A) require that the State provide for a verification
audit in compliance with such chapter, or
‘‘(B) conduct such a verification audit.
‘‘(3) AVAILABILITY OF AUDIT REPORTS.—Within 30 days after
completion of each audit or verification audit under this sub-
section, the State shall—
‘‘(A) provide the Secretary with a copy of the audit
report, including the State’s response to any recommenda-
tions of the auditor, and
‘‘(B) make the audit report available for public inspec-
tion in the same manner as proposed MediGrant plan
amendments are made available under section 2105.
‘‘(b) FISCAL CONTROLS.—
‘‘(1) IN
GENERAL.—With respect to the accounting and
expenditure of funds under this title, each State shall adopt
and maintain such fiscal controls, accounting procedures, and
data processing safeguards as the State deems reasonably nec-
essary to assure the fiscal integrity of the State’s activities
under this title.
‘‘(2) CONSISTENCY WITH GENERALLY ACCEPTED ACCOUNTING
PRINCIPLES.—Such controls and procedures shall be generally
consistent with generally accepted accounting principles as rec-
ognized by the Governmental Accounting Standards Board or
the Comptroller General.
‘‘(c) AUDITS OF PROVIDERS.—Each MediGrant plan shall provide
that the records of any entity providing items or services for which
payment may be made under the plan may be audited as necessary
to ensure that proper payments are made under the plan.
‘‘SEC. 2132. FRAUD PREVENTION PROGRAM.
‘‘(a) ESTABLISHMENT.—Each MediGrant plan shall provide for
the establishment and maintenance of an effective program for
the detection and prevention of fraud and abuse by beneficiaries,
providers, and others in connection with the operation of the pro-
gram.
‘‘(b) PROGRAM REQUIREMENTS.—The program established pursu-
ant to subsection (a) shall include at least the following require-
ments:
‘‘(1) DISCLOSURE OF INFORMATION.—Any disclosing entity
(as defined in section 1124(a)) receiving payments under the
H. R. 2491—224
MediGrant plan shall comply with the requirements of section
1124.
‘‘(2) SUPPLY OF INFORMATION.—An entity (other than an
individual practitioner or a group of practitioners) that fur-
nishes, or arranges for the furnishing of, an item or service
under the MediGrant plan shall supply upon request specifically
addressed to the entity by the Secretary or the State agency
the information described in section 1128(b)(9).
‘‘(3) EXCLUSION.—
‘‘(A) IN GENERAL.—The MediGrant plan shall exclude
any specified individual or entity from participation in
the plan for the period specified by the Secretary when
required by the Secretary to do so pursuant to section
1128 or section 1128A, and provide that no payment may
be made under the plan with respect to any item or service
furnished by such individual or entity during such period.
‘‘(B) AUTHORITY.—In addition to any other authority,
a State may exclude any individual or entity for purposes
of participating under the MediGrant plan for any reason
for which the Secretary could exclude the individual or
entity from participation in a program under title XVIII
or under section 1128, 1128A, or 1866(b)(2).
‘‘(4) NOTICE.—The MediGrant plan shall provide that when-
ever a provider of services or any other person is terminated,
suspended, or otherwise sanctioned or prohibited from partici-
pating under the plan, the State agency responsible for admin-
istering the plan shall promptly notify the Secretary and, in
the case of a physician, the State medical licensing board of
such action.
‘‘(5) ACCESS TO INFORMATION.—The MediGrant plan shall
provide that the State will provide information and access
to certain information respecting sanctions taken against health
care practitioners and providers by State licensing authorities
in accordance with section 2133.
‘‘SEC. 2133. INFORMATION CONCERNING SANCTIONS TAKEN BY STATE
LICENSING 
AUTHORITIES 
AGAINST 
HEALTH 
CARE
PRACTITIONERS AND PROVIDERS.
‘‘(a) INFORMATION REPORTING REQUIREMENT.—The requirement
referred to in section 2132(b)(5) is that the State must provide
for the following:
‘‘(1) INFORMATION
REPORTING
SYSTEM.—The State must
have in effect a system of reporting the following information
with respect to formal proceedings (as defined by the Secretary
in regulations) concluded against a health care practitioner
or entity by any authority of the State (or of a political subdivi-
sion thereof) responsible for the licensing of health care
practitioners (or any peer review organization or private
accreditation entity reviewing the services provided by health
care practitioners) or entities:
‘‘(A) Any adverse action taken by such licensing author-
ity as a result of the proceeding, including any revocation
or suspension of a license (and the length of any such
suspension), reprimand, censure, or probation.
‘‘(B) Any dismissal or closure of the proceedings by
reason of the practitioner or entity surrendering the license
or leaving the State or jurisdiction.
H. R. 2491—225
‘‘(C) Any other loss of the license of the practitioner
or entity, whether by operation of law, voluntary surrender,
or otherwise.
‘‘(D) Any negative action or finding by such authority,
organization, or entity regarding the practitioner or entity.
‘‘(2) ACCESS TO DOCUMENTS.—The State must provide the
Secretary (or an entity designated by the Secretary) with access
to such documents of the authority described in paragraph
(1) as may be necessary for the Secretary to determine the
facts and circumstances concerning the actions and determina-
tions described in such paragraph for the purpose of carrying
out this Act.
‘‘(b) FORM OF INFORMATION.—The information described in sub-
section (a)(1) shall be provided to the Secretary (or to an appropriate
private or public agency, under suitable arrangements made by
the Secretary with respect to receipt, storage, protection of confiden-
tiality, and dissemination of information) in such a form and man-
ner as the Secretary determines to be appropriate in order to
provide for activities of the Secretary under this Act and in order
to provide, directly or through suitable arrangements made by
the Secretary, information—
‘‘(1) to agencies administering Federal health care pro-
grams, including private entities administering such programs
under contract,
‘‘(2) to licensing authorities described in subsection (a)(1),
‘‘(3) to State agencies administering or supervising the
administration of State health care programs (as defined in
section 1128(h)),
‘‘(4) to utilization and quality control peer review organiza-
tions described in part B of title XI and to appropriate entities
with contracts under section 1154(a)(4)(C) with respect to
eligible organizations reviewed under the contracts,
‘‘(5) to State MediGrant fraud control units (as defined
in section 2134),
‘‘(6) to hospitals and other health care entities (as defined
in section 431 of the Health Care Quality Improvement Act
of 1986), with respect to physicians or other licensed health
care practitioners that have entered (or may be entering) into
an employment or affiliation relationship with, or have applied
for clinical privileges or appointments to the medical staff of,
such hospitals or other health care entities (and such informa-
tion shall be deemed to be disclosed pursuant to section 427
of, and be subject to the provisions of, that Act),
‘‘(7) to the Attorney General and such other law enforce-
ment officials as the Secretary deems appropriate, and
‘‘(8) upon request, to the Comptroller General,
in order for such authorities to determine the fitness of individ-
uals to provide health care services, to protect the health and
safety of individuals receiving health care through such pro-
grams, and to protect the fiscal integrity of such programs.
‘‘(c) CONFIDENTIALITY
OF INFORMATION PROVIDED.—The Sec-
retary shall provide for suitable safeguards for the confidentiality
of the information furnished under subsection (a). Nothing in this
subsection shall prevent the disclosure of such information by a
party which is otherwise authorized, under applicable State law,
to make such disclosure.
H. R. 2491—226
‘‘(d) APPROPRIATE COORDINATION.—The Secretary shall provide
for the maximum appropriate coordination in the implementation
of subsection (a) of this section and section 422 of the Health
Care Quality Improvement Act of 1986 and section 1128E.
‘‘SEC. 2134. STATE MEDIGRANT FRAUD CONTROL UNITS.
‘‘(a) IN GENERAL.—Each MediGrant plan shall provide for a
State MediGrant fraud control unit described in subsection (b)
that effectively carries out the functions and requirements described
in such subsection, unless the State demonstrates to the satisfaction
of the Secretary that the effective operation of such a unit in
the State would not be cost-effective because minimal fraud exists
in connection with the provision of covered services to eligible
individuals under the plan, and that beneficiaries under the plan
will be protected from abuse and neglect in connection with the
provision of medical assistance under the plan without the existence
of such a unit.
‘‘(b) UNITS DESCRIBED.—For purposes of this section, the term
‘State MediGrant fraud control unit’ means a single identifiable
entity of the State government which meets the following require-
ments:
‘‘(1) ORGANIZATION.—The entity—
‘‘(A) is a unit of the office of the State Attorney General
or of another department of State government which pos-
sesses statewide authority to prosecute individuals for
criminal violations;
‘‘(B) is in a State the constitution of which does not
provide for the criminal prosecution of individuals by a
statewide authority and has formal procedures that—
‘‘(i) assure its referral of suspected criminal viola-
tions relating to the program under this title to the
appropriate authority or authorities in the State for
prosecution, and
‘‘(ii) assure its assistance of, and coordination with,
such authority or authorities in such prosecutions; or
‘‘(C) has a formal working relationship with the office
of the State Attorney General and has formal procedures
(including procedures for its referral of suspected criminal
violations to such office) which provide effective coordina-
tion of activities between the entity and such office with
respect to the detection, investigation, and prosecution of
suspected criminal violations relating to the program under
this title.
‘‘(2) INDEPENDENCE.—The entity is separate and distinct
from any State agency that has principal responsibilities for
administering or supervising the administration of the
MediGrant plan.
‘‘(3) FUNCTION.—The entity’s function is conducting a state-
wide program for the investigation and prosecution of violations
of all applicable State laws regarding any and all aspects of
fraud in connection with any aspect of the provision of medical
assistance and the activities of providers of such assistance
under the MediGrant plan.
‘‘(4) REVIEW OF COMPLAINTS.—The entity has procedures
for reviewing complaints of the abuse and neglect of patients
of health care facilities which receive payments under the
MediGrant plan under this title, and, where appropriate, for
H. R. 2491—227
acting upon such complaints under the criminal laws of the
State or for referring them to other State agencies for action.
‘‘(5) OVERPAYMENTS.—
‘‘(A) IN GENERAL.—The entity provides for the collec-
tion, or referral for collection to a single State agency,
of overpayments that are made under the MediGrant plan
to health care providers and that are discovered by the
entity in carrying out its activities.
‘‘(B) TREATMENT
OF
CERTAIN
OVERPAYMENTS.—If an
overpayment is the direct result of the failure of the pro-
vider (or the provider’s billing agent) to adhere to a change
in the State’s billing instructions, the entity may recover
the overpayment only if the entity demonstrates that the
provider (or the provider’s billing agent) received prior
written or electronic notice of the change in the billing
instructions before the submission of the claims on which
the overpayment is based.
‘‘(6) PERSONNEL.—The entity employs such auditors, attor-
neys, investigators, and other necessary personnel and is orga-
nized in such a manner as is necessary to promote the effective
and efficient conduct of the entity’s activities.
‘‘SEC. 2135. RECOVERIES FROM THIRD PARTIES AND OTHERS.
‘‘(a) THIRD PARTY LIABILITY.—Each MediGrant plan shall pro-
vide for reasonable steps—
‘‘(1) to ascertain the legal liability of third parties to pay
for care and services available under the plan, including the
collection of sufficient information to enable States to pursue
claims against third parties, and
‘‘(2) to seek reimbursement for medical assistance provided
to the extent legal liability is established where the amount
expected to be recovered exceeds the costs of the recovery.
‘‘(b) BENEFICIARY PROTECTION.—
‘‘(1) IN GENERAL.—Each MediGrant plan shall provide that
in the case of a person furnishing services under the plan
for which a third party may be liable for payment—
‘‘(A) the person may not seek to collect from the individ-
ual (or financially responsible relative) payment of an
amount for the service more than could be collected under
the plan in the absence of such third party liability, and
‘‘(B) may not refuse to furnish services to such an
individual because of a third party’s potential liability for
payment for the service.
‘‘(2) PENALTY.—A MediGrant plan may provide for a reduc-
tion of any payment amount otherwise due with respect to
a person who furnishes services under the plan in an amount
equal to up to 3 times the amount of any payment sought
to be collected by that person in violation of paragraph (1)(A).
‘‘(c) GENERAL LIABILITY.—The State shall prohibit any health
insurer, including a group health plan as defined in section 607
of the Employee Retirement Income Security Act of 1974, a service
benefit plan, or a health maintenance organization, in enrolling
an individual or in making any payments for benefits to the individ-
ual or on the individual’s behalf, from taking into account that
the individual is eligible for or is provided medical assistance under
a MediGrant plan for any State.
H. R. 2491—228
‘‘(d) ACQUISITION OF RIGHTS OF BENEFICIARIES.—To the extent
that payment has been made under a MediGrant plan in any
case where a third party has a legal liability to make payment
for such assistance, the State shall have in effect laws under which,
to the extent that payment has been made under the plan for
health care items or services furnished to an individual, the State
is considered to have acquired the rights of such individual to
payment by any other party for such health care items or services.
‘‘(e) 
ASSIGNMENT
OF
MEDICAL
SUPPORT
RIGHTS.—The
MediGrant plan shall provide for mandatory assignment of rights
of payment for medical support and other medical care owed to
recipients in accordance with section 2136.
‘‘(f) REQUIRED LAWS RELATING TO MEDICAL CHILD SUPPORT.—
‘‘(1) IN GENERAL.—Each State with a MediGrant plan shall
have in effect the following laws:
‘‘(A) A law that prohibits an insurer from denying
enrollment of a child under the health coverage of the
child’s parent on the ground that—
‘‘(i) the child was born out of wedlock,
‘‘(ii) the child is not claimed as a dependent on
the parent’s Federal income tax return, or
‘‘(iii) the child does not reside with the parent
or in the insurer’s service area.
‘‘(B) In any case in which a parent is required by
a court or administrative order to provide health coverage
for a child and the parent is eligible for family health
coverage through an insurer, a law that requires such
insurer—
‘‘(i) to permit such parent to enroll under such
family coverage any such child who is otherwise eligible
for such coverage (without regard to any enrollment
season restrictions);
‘‘(ii) if such a parent is enrolled but fails to make
application to obtain coverage of such child, to enroll
such child under such family coverage upon application
by the child’s other parent or by the State agency
administering the program under this title or part
D of title IV; and
‘‘(iii) not to disenroll, or eliminate coverage of,
such a child unless the insurer is provided satisfactory
written evidence that—
‘‘(I) such court or administrative order is no
longer in effect, or
‘‘(II) the child is or will be enrolled in com-
parable health coverage through another insurer
which will take effect not later than the effective
date of such disenrollment.
‘‘(C) In any case in which a parent is required by
a court or administrative order to provide health coverage
for a child and the parent is eligible for family health
coverage through an employer doing business in the State,
a law that requires such employer—
‘‘(i) to permit such parent to enroll under such
family coverage any such child who is otherwise eligible
for such coverage (without regard to any enrollment
season restrictions);
H. R. 2491—229
‘‘(ii) if such a parent is enrolled but fails to make
application to obtain coverage of such child, to enroll
such child under such family coverage upon application
by the child’s other parent or by the State agency
administering the program under this title or part
D of title IV; and
‘‘(iii) not to disenroll (or eliminate coverage of)
any such child unless—
‘‘(I) the employer is provided satisfactory writ-
ten evidence that such court or administrative
order is no longer in effect, or the child is or
will be enrolled in comparable health coverage
which will take effect not later than the effective
date of such disenrollment, or
‘‘(II) the employer has eliminated family
health coverage for all of its employees; and
‘‘(iv) to withhold from such employee’s compensa-
tion the employee’s share (if any) of premiums for
health coverage (except that the amount so withheld
may not exceed the maximum amount permitted to
be withheld under section 303(b) of the Consumer
Credit Protection Act), and to pay such share of pre-
miums to the insurer, except that the Secretary may
provide by regulation for appropriate circumstances
under which an employer may withhold less than such
employee’s share of such premiums.
‘‘(D) A law that prohibits an insurer from imposing
requirements on a State agency, which has been assigned
the rights of an individual eligible for medical assistance
under this title and covered for health benefits from the
insurer, that are different from requirements applicable
to an agent or assignee of any other individual so covered.
‘‘(E) A law that requires an insurer, in any case in
which a child has health coverage through the insurer
of a noncustodial parent—
‘‘(i) to provide such information to the custodial
parent as may be necessary for the child to obtain
benefits through such coverage,
‘‘(ii) to permit the custodial parent (or provider,
with the custodial parent’s approval) to submit claims
for covered services without the approval of the
noncustodial parent, and
‘‘(iii) to make payment on claims submitted in
accordance with clause (ii) directly to such custodial
parent, the provider, or the State agency.
‘‘(F) A law that permits the State agency under this
title to garnish the wages, salary, or other employment
income of, and requires withholding amounts from State
tax refunds to, any person who—
‘‘(i) is required by court or administrative order
to provide coverage of the costs of health services to
a child who is eligible for medical assistance under
this title,
‘‘(ii) has received payment from a third party for
the costs of such services to such child, but
H. R. 2491—230
‘‘(iii) has not used such payments to reimburse,
as appropriate, either the other parent or guardian
of such child or the provider of such services,
to the extent necessary to reimburse the State agency
for expenditures for such costs under its plan under this
title, but any claims for current or past-due child support
shall take priority over any such claims for the costs of
such services.
‘‘(2) DEFINITION.—For purposes of this subsection, the term
‘insurer’ includes a group health plan, as defined in section
607(1) of the Employee Retirement Income Security Act of
1974, a health maintenance organization, and an entity offering
a service benefit plan.
‘‘(g) ESTATE RECOVERIES AND LIENS PERMITTED.—A State may
take such actions as it considers appropriate to adjust or recover
from the individual or the individual’s estate any amounts paid
as medical assistance to or on behalf of the individual under the
MediGrant plan, including through the imposition of liens against
the property or estate of the individual.
‘‘SEC. 2136. ASSIGNMENT OF RIGHTS OF PAYMENT.
‘‘(a) IN GENERAL.—For the purpose of assisting in the collection
of medical support payments and other payments for medical care
owed to recipients of medical assistance under the MediGrant plan,
each MediGrant plan shall—
‘‘(1) provide that, as a condition of eligibility for medical
assistance under the plan to an individual who has the legal
capacity to execute an assignment for himself, the individual
is required—
‘‘(A) to assign the State any rights, of the individual
or of any other person who is eligible for medical assistance
under the plan and on whose behalf the individual has
the legal authority to execute an assignment of such rights,
to support (specified as support for the purpose of medical
care by a court or administrative order) and to payment
for medical care from any third party,
‘‘(B) to cooperate with the State (i) in establishing
the paternity of such person (referred to in subparagraph
(A)) if the person is a child born out of wedlock, and
(ii) in obtaining support and payments (described in
subparagraph (A)) for himself and for such person, unless
(in either case) the individual is a pregnant woman or
the individual is found to have good cause for refusing
to cooperate as determined by the State, and
‘‘(C) to cooperate with the State in identifying, and
providing information to assist the State in pursuing, any
third party who may be liable to pay for care and services
available under the plan, unless such individual has good
cause for refusing to cooperate as determined by the State;
and
‘‘(2) provide for entering into cooperative arrangements,
including financial arrangements, with any appropriate agency
of any State (including, with respect to the enforcement and
collection of rights of payment for medical care by or through
a parent, with a State’s agency established or designated under
section 454(3)) and with appropriate courts and law enforce-
H. R. 2491—231
ment officials, to assist the agency or agencies administering
the plan with respect to—
‘‘(A) the enforcement and collection of rights to support
or payment assigned under this section, and
‘‘(B) any other matters of common concern.
‘‘(b) USE OF AMOUNTS COLLECTED.—Such part of any amount
collected by the State under an assignment made under the provi-
sions of this section shall be retained by the State as is necessary
to reimburse it for medical assistance payments made on behalf
of an individual with respect to whom such assignment was
executed (with appropriate reimbursement of the Federal Govern-
ment to the extent of its participation in the financing of such
medical assistance), and the remainder of such amount collected
shall be paid to such individual.
‘‘SEC. 2137. QUALITY ASSURANCE REQUIREMENTS FOR NURSING
FACILITIES.
‘‘(a) NURSING FACILITY DEFINED.—In this title, the term ‘nurs-
ing facility’ means an institution (or a distinct part of an institution)
which—
‘‘(1) is primarily engaged in providing to residents—
‘‘(A) skilled nursing care and related services for resi-
dents who require medical or nursing care,
‘‘(B) rehabilitation services for the rehabilitation of
injured, disabled, or sick persons, or
‘‘(C) on a regular basis, health-related care and services
to individuals who because of their mental or physical
condition require care and services (above the level of room
and board) which can be made available to them only
through institutional facilities,
and is not primarily for the care and treatment of mental
diseases;
‘‘(2) has in effect a transfer agreement (meeting the require-
ments of section 1861(l)) with one or more hospitals having
agreements in effect under section 1866; and
‘‘(3) meets the requirements for a nursing facility described
in subsections (b), (c), and (d) of this section.
Such term also includes any facility which is located in a State
on an Indian reservation and is certified by the Secretary as meeting
the requirements of paragraph (1) and subsections (b), (c), and
(d).
‘‘(b) REQUIREMENTS RELATING
TO PROVISION
OF SERVICES.—
‘‘(1) QUALITY OF LIFE.—
‘‘(A) IN
GENERAL.—A nursing facility must care for
its residents in such a manner and in such an environment
as will reasonably promote maintenance or enhancement
of the quality of life of each resident.
‘‘(B) QUALITY ASSESSMENT AND ASSURANCE.—A nursing
facility must maintain a quality assessment and assurance
committee, consisting of the director of nursing services,
a physician designated by the facility, and at least 3 other
members of the facility’s staff, which (i) meets at least
quarterly to identify issues with respect to which quality
assessment and assurance activities are necessary and (ii)
develops and implements appropriate plans of action to
correct identified quality deficiencies. A State or the Sec-
retary may not require disclosure of the records of such
H. R. 2491—232
committee except insofar as such disclosure is related to
the compliance of such committee with the requirements
of this subparagraph.
‘‘(2) SCOPE OF SERVICES AND ACTIVITIES UNDER PLAN OF
CARE.—A nursing facility must provide services and activities
in accordance with a written plan of care which—
‘‘(A) describes the medical, nursing, and psychosocial
needs of the resident and how such needs will be met;
‘‘(B) is initially prepared, with the participation to the
extent practicable of the resident or the resident’s family
or legal representative, by a team which includes the resi-
dent’s attending physician and a registered professional
nurse with responsibility for the resident; and
‘‘(C) is periodically reviewed and revised by such team
after each assessment under paragraph (3).
‘‘(3) RESIDENTS’ ASSESSMENT.—
‘‘(A) REQUIREMENT.—A nursing facility must conduct
a comprehensive, accurate, standardized, reproducible
assessment of each resident’s functional capacity, which
assessment—
‘‘(i) describes the resident’s capability to perform
daily life functions and significant impairments in func-
tional capacity;
‘‘(ii) uses an instrument which is specified by the
State under subsection (e)(5); and
‘‘(iii) includes the identification of medical prob-
lems.
‘‘(B) CERTIFICATION.—
‘‘(i) IN GENERAL.—Each such assessment must be
conducted or coordinated (with the appropriate partici-
pation of health professionals) by a registered profes-
sional nurse who signs and certifies the completion
of the assessment. Each individual who completes a
portion of such an assessment shall sign and certify
as to the accuracy of that portion of the assessment.
‘‘(ii) PENALTY FOR FALSIFICATION.—
‘‘(I) An individual who willfully and knowingly
certifies under clause (i) a material and false state-
ment in a resident assessment is subject to a civil
money penalty of not more than $1,000 with
respect to each assessment.
‘‘(II) An individual who willfully and know-
ingly causes another individual to certify under
clause (i) a material and false statement in a resi-
dent assessment is subject to a civil money penalty
of not more than $5,000 with respect to each
assessment.
‘‘(III) The provisions of section 1128A (other
than subsections (a) and (b)) shall apply to a civil
money penalty under this clause in the same man-
ner as such provisions apply to a penalty or
proceeding under section 1128A(a).
‘‘(iii) USE OF INDEPENDENT ASSESSORS.—If a State
determines, under a survey under subsection (g) or
otherwise, that there has been a knowing and willful
certification of false assessments under this paragraph,
the State may require (for a period specified by the
H. R. 2491—233
State) that resident assessments under this paragraph
be conducted and certified by individuals who are
independent of the facility and who are approved by
the State.
‘‘(C) FREQUENCY.—
‘‘(i) IN
GENERAL.—Such an assessment must be
conducted—
‘‘(I) promptly upon (but no later than 14 days
after the date of) admission for each individual
admitted;
‘‘(II) promptly after a significant change in
the resident’s physical or mental condition; and
‘‘(III) in no case less often than once every
12 months.
‘‘(ii) RESIDENT REVIEW.—The nursing facility must
examine each resident no less frequently than once
every 3 months and, as appropriate, revise the resi-
dent’s assessment to assure the continuing accuracy
of the assessment.
‘‘(D) USE.—The results of such an assessment shall
be used in developing, reviewing, and revising the resident’s
plan of care under paragraph (2).
‘‘(E) COORDINATION.—Such assessments shall be coordi-
nated with any State-required preadmission screening pro-
gram to the maximum extent practicable in order to avoid
duplicative testing and effort. In addition, a nursing facility
shall notify the State mental health authority or State
mental retardation or developmental disability authority,
as applicable, promptly after a significant change in the
physical or mental condition of a resident who is mentally
ill or mentally retarded.
‘‘(4) PROVISION OF SERVICES AND ACTIVITIES.—
‘‘(A) IN GENERAL.—To the extent needed to fulfill all
plans of care described in paragraph (2), a nursing facility
must provide (or arrange for the provision of)—
‘‘(i) nursing and related services and specialized
rehabilitative services;
‘‘(ii) medically-related social services to attain or
maintain the highest practicable physical, mental, and
psychosocial well-being of residents;
‘‘(iii) pharmaceutical services (including procedures
that assure the accurate acquiring, receiving, dispens-
ing, and administering of all drugs and biologicals)
to meet the needs of residents;
‘‘(iv) dietary services that assure that the meals
meet the daily nutritional and special dietary needs
of residents;
‘‘(v) an on-going program, directed by a qualified
professional, of activities designed to meet the interests
and the physical, mental, and psychosocial well-being
of residents; and
‘‘(vi) routine dental services (to the extent covered
under the State MediGrant plan) and emergency dental
services to meet the needs of residents.
The services provided or arranged by the facility must
meet professional standards of quality.
H. R. 2491—234
‘‘(B) QUALIFIED PERSONS PROVIDING SERVICES.—Serv-
ices described in clauses (i), (ii), (iii), (iv), and (vi) of
subparagraph (A) must be provided by qualified persons
in accordance with each resident’s written plan of care.
‘‘(C) REQUIRED NURSING CARE; FACILITY WAIVERS.—
‘‘(i) GENERAL REQUIREMENTS.—A nursing facility—
‘‘(I) except as provided in clause (ii), must
provide 24-hour licensed nursing services which
are sufficient to meet the nursing needs of its
residents, and
‘‘(II) except as provided in clause (ii), must
use the services of a registered professional nurse
for at least 8 consecutive hours a day, 7 days
a week.
‘‘(ii) WAIVER BY STATE.—To the extent that a facil-
ity is unable to meet the requirements of clause (i),
a State may waive such requirements with respect
to the facility if—
‘‘(I) the facility demonstrates to the satisfac-
tion of the State that the facility has been unable,
despite diligent efforts (including offering wages
at the community prevailing rate for nursing facili-
ties), to recruit appropriate personnel,
‘‘(II) the State determines that a waiver of
the requirement will not endanger the health or
safety of individuals staying in the facility,
‘‘(III) the State finds that, for any such periods
in which licensed nursing services are not avail-
able, a registered professional nurse or a physician
is obligated to respond immediately to telephone
calls from the facility,
‘‘(IV) the State agency granting a waiver of
such requirements provides notice of the waiver
to the State long-term care ombudsman (estab-
lished under section 307(a)(12) of the Older Ameri-
cans Act of 1965) and the protection and advocacy
system in the State for the mentally ill and the
mentally retarded, and
‘‘(V) the nursing facility that is granted such
a waiver by a State notifies residents of the facility
(or, where appropriate, the guardians or legal rep-
resentatives of such residents) and members of
their immediate families of the waiver.
A waiver under this clause shall be subject to annual
review and to the review of the Secretary and subject
to clause (iii) shall be accepted by the Secretary for
purposes of this title to the same extent as is the
State’s certification of the facility. In granting or
renewing a waiver, a State may require the facility
to use other qualified, licensed personnel.
‘‘(iii) ASSUMPTION OF WAIVER AUTHORITY BY SEC-
RETARY.—If the Secretary determines that a State has
shown a clear pattern and practice of allowing waivers
in the absence of diligent efforts by facilities to meet
the staffing requirements, the Secretary shall assume
and exercise the authority of the State to grant waiv-
ers.
H. R. 2491—235
‘‘(5) REQUIRED TRAINING OF NURSE AIDES.—
‘‘(A) IN
GENERAL.—(i) Except as provided in clause
(ii), a nursing facility must not use on a full-time basis
any individual as a nurse aide in the facility, for more
than 4 months unless the individual—
‘‘(I) has completed a training and competency
evaluation program, or a competency evaluation pro-
gram, approved by the State under subsection (e)(1)(A),
and
‘‘(II) is competent to provide nursing or nursing-
related services.
‘‘(ii) A nursing facility must not use on a temporary,
per diem, leased, or on any other basis other than as
a permanent employee any individual as a nurse aide in
the facility, unless the individual meets the requirements
described in clause (i).
‘‘(B) OFFERING
COMPETENCY
EVALUATION
PROGRAMS
FOR CURRENT EMPLOYEES.—A nursing facility must provide,
for individuals used as a nurse aide by the facility, for
a competency evaluation program approved by the State
under subsection (e)(1) and such preparation as may be
necessary for the individual to complete such a program.
‘‘(C) COMPETENCY.—The nursing facility must not per-
mit an individual, other than in a training and competency
evaluation program approved by the State, to serve as
a nurse aide or provide services of a type for which the
individual has not demonstrated competency and must not
use such an individual as a nurse aide unless the facility
has inquired of any State registry established under sub-
section (e)(2)(A) that the facility believes will include
information concerning the individual.
‘‘(D) RE-TRAINING REQUIRED.—For purposes of subpara-
graph (A), if, since an individual’s most recent completion
of a training and competency evaluation program, there
has been a continuous period of 24 consecutive months
during none of which the individual performed nursing
or nursing-related services for monetary compensation,
such individual shall complete a new training and com-
petency evaluation program, or a new competency evalua-
tion program.
‘‘(E) REGULAR
IN-SERVICE
EDUCATION.—The nursing
facility must provide such regular performance review and
regular in-service education as assures that individuals
used as nurse aides are competent to perform services
as nurse aides, including training for individuals providing
nursing and nursing-related services to residents with cog-
nitive impairments.
‘‘(F) NURSE AIDE DEFINED.—In this paragraph, the term
‘nurse aide’ means any individual providing nursing or
nursing-related services to residents in a nursing facility,
but does not include an individual—
‘‘(i) who is a licensed health professional (as
defined in subparagraph (G)) or a registered dietician,
‘‘(ii) who volunteers to provide such services with-
out monetary compensation, or
H. R. 2491—236
‘‘(iii) who is trained, whether compensated or not,
to perform a task-specific function which assists resi-
dents in their daily activities.
‘‘(G) LICENSED
HEALTH
PROFESSIONAL
DEFINED.—In
this paragraph, the term ‘licensed health professional’
means a physician, physician assistant, nurse practitioner,
physical, speech, or occupational therapist, physical or
occupational therapy assistant, registered professional
nurse, licensed practical nurse, or licensed or certified social
worker.
‘‘(6) PHYSICIAN
SUPERVISION
AND
CLINICAL
RECORDS.—A
nursing facility must—
‘‘(A) require that the health care of every resident
be provided under the supervision of a physician (or, at
the option of a State, under the supervision of a nurse
practitioner, clinical nurse specialist, or physician assistant
who is not an employee of the facility but who is working
in collaboration with a physician);
‘‘(B) provide for having a physician available to furnish
necessary medical care in case of emergency; and
‘‘(C) maintain clinical records on all residents, which
records include the plans of care (described in paragraph
(2)) and the residents’ assessments (described in paragraph
(3)).
‘‘(c) REQUIREMENTS RELATING TO RESIDENTS’ RIGHTS.—
‘‘(1) GENERAL RIGHTS.—
‘‘(A) SPECIFIED RIGHTS.—A nursing facility must protect
and promote the rights of each resident, including each
of the following rights:
‘‘(i) FREE CHOICE.—The right to choose a personal
attending physician, to be fully informed in advance
about care and treatment, to be fully informed in
advance of any changes in care or treatment that may
affect the resident’s well-being, and (except with
respect to a resident adjudged incompetent) to partici-
pate in planning care and treatment or changes in
care and treatment.
‘‘(ii) FREE FROM RESTRAINTS.—The right to be free
from physical or mental abuse, corporal punishment,
involuntary seclusion, and any physical or chemical
restraints imposed for purposes of discipline or conven-
ience and not required to treat the resident’s medical
symptoms. Restraints may only be imposed—
‘‘(I) to ensure the physical safety of the resi-
dent or other residents, and
‘‘(II) only upon the written order of a physician
that specifies the duration and circumstances
under which the restraints are to be used (except
in emergency circumstances specified by the Sec-
retary until such an order could reasonably be
obtained).
‘‘(iii) PRIVACY.—The right to privacy with regard
to accommodations, medical treatment, written and
telephonic communications, visits, and meetings of
family and of resident groups.
‘‘(iv) CONFIDENTIALITY.—The right to confidential-
ity of personal and clinical records and to access to
H. R. 2491—237
current clinical records of the resident upon request
by the resident or the resident’s legal representative,
within 24 hours (excluding hours occurring during a
weekend or holiday) after making such a request.
‘‘(v) ACCOMMODATION OF NEEDS.—The right—
‘‘(I) to reside and receive services with reason-
able accommodation of individual needs and pref-
erences, except where the health or safety of the
individual or other residents would be endangered,
and
‘‘(II) to receive notice before the room or room-
mate of the resident in the facility is changed
unless a delay in changing the room or roommate
while notice is given would endanger the resident
or others.
‘‘(vi) GRIEVANCES.—The right to voice grievances
with respect to treatment or care that is (or fails to
be) furnished, without discrimination or reprisal for
voicing the grievances and the right to prompt efforts
by the facility to resolve grievances the resident may
have, including those with respect to the behavior of
other residents.
‘‘(vii) PARTICIPATION
IN
RESIDENT
AND
FAMILY
GROUPS.—The right of the resident to organize and
participate in resident groups in the facility and the
right of the resident’s family to meet in the facility
with the families of other residents in the facility.
‘‘(viii) PARTICIPATION
IN
OTHER
ACTIVITIES.—The
right of the resident to participate in social, religious,
and community activities that do not interfere with
the rights of other residents in the facility.
‘‘(ix) EXAMINATION OF SURVEY RESULTS.—The right
to examine, upon reasonable request, the results of
the most recent survey of the facility conducted by
the Secretary or a State with respect to the facility
and any plan of correction in effect with respect to
the facility.
‘‘(x) OTHER RIGHTS.—Any other right established
by the Secretary.
Clause (iii) shall not be construed as requiring the provision
of a private room.
‘‘(B) NOTICE OF RIGHTS.—A nursing facility must—
‘‘(i) inform each resident, orally and in writing
at the time of admission to the facility, of the resident’s
legal rights during the stay at the facility and of the
requirements and procedures for establishing eligibility
for medical assistance under this title, including the
right 
to 
request 
an 
assessment 
under 
section
2115(c)(1)(B);
‘‘(ii) make available to each resident, upon reason-
able request, a written statement of such rights (which
statement is updated upon changes in such rights)
including the notice (if any) of the State developed
under subsection (e)(6);
‘‘(iii) inform each resident who is entitled to medi-
cal assistance under this title—
H. R. 2491—238
‘‘(I) at the time of admission to the facility
or, if later, at the time the resident becomes
eligible for such assistance, of the items and serv-
ices that are included in nursing facility services
under the State MediGrant plan and for which
the resident may not be charged, and of those
other items and services that the facility offers
and for which the resident may be charged and
the amount of the charges for such items and
services, and
‘‘(II) of changes in the items and services
described in subclause (I) and of changes in the
charges imposed for items and services described
in that subclause; and
‘‘(iv) inform each other resident, in writing before
or at the time of admission and periodically during
the resident’s stay, of services available in the facility
and of related charges for such services, including any
charges for services not covered under title XVIII or
by the facility’s basic per diem charge.
The written description of legal rights under this subpara-
graph shall include a description of the protection of per-
sonal funds under paragraph (6) and a statement that
a resident may file a complaint with a State survey and
certification agency respecting resident abuse and neglect
and misappropriation of resident property in the facility.
‘‘(C) RIGHTS OF INCOMPETENT RESIDENTS.—In the case
of a resident adjudged incompetent under the laws of a
State, the rights of the resident under this title shall
devolve upon, and, to the extent judged necessary by a
court of competent jurisdiction, be exercised by, the person
appointed under State law to act on the resident’s behalf.
‘‘(D) 
USE
OF
PSYCHOPHARMACOLOGIC
DRUGS.—
Psychopharmacologic drugs may be administered only on
the orders of a physician and only as part of a plan
(included in the written plan of care described in paragraph
(2)) designed to eliminate or modify the symptoms for which
the drugs are prescribed and only if, at least annually
an independent, external consultant reviews the appro-
priateness of the drug plan of each resident receiving such
drugs.
‘‘(2) TRANSFER AND DISCHARGE RIGHTS.—
‘‘(A) IN GENERAL.—A nursing facility must permit each
resident to remain in the facility and must not transfer
or discharge the resident from the facility unless—
‘‘(i) the transfer or discharge is necessary to meet
the resident’s welfare and the resident’s welfare cannot
be met in the facility;
‘‘(ii) the transfer or discharge is appropriate
because the resident’s health has improved sufficiently
so the resident no longer needs the services provided
by the facility;
‘‘(iii) the safety of individuals in the facility is
endangered;
‘‘(iv) the health of individuals in the facility would
otherwise be endangered;
H. R. 2491—239
‘‘(v) the resident has failed, after reasonable and
appropriate notice, to pay (or to have paid under this
title or title XVIII on the resident’s behalf) for a stay
at the facility; or
‘‘(vi) the facility ceases to operate.
In each of the cases described in clauses (i) through (iv),
the basis for the transfer or discharge must be documented
in the resident’s clinical record. In the cases described
in clauses (i) and (ii), the documentation must be made
by the resident’s physician, and in the case described in
clause (iv) the documentation must be made by a physician.
For purposes of clause (v), in the case of a resident who
becomes eligible for assistance under this title after admis-
sion to the facility, only charges which may be imposed
under this title shall be considered to be allowable.
‘‘(B) PRE-TRANSFER AND PRE-DISCHARGE NOTICE.—
‘‘(i) IN
GENERAL.—Before effecting a transfer or
discharge of a resident, a nursing facility must—
‘‘(I) notify the resident (and, if known, an
immediate family member of the resident or legal
representative) of the transfer or discharge and
the reasons therefor,
‘‘(II) record the reasons in the resident’s clini-
cal record (including any documentation required
under subparagraph (A)), and
‘‘(III) include in the notice the items described
in clause (iii).
‘‘(ii) TIMING OF NOTICE.—The notice under clause
(i)(I) must be made at least 30 days in advance of
the resident’s transfer or discharge except—
‘‘(I) in a case described in clause (iii) or (iv)
of subparagraph (A);
‘‘(II) in a case described in clause (ii) of
subparagraph (A), where the resident’s health
improves sufficiently to allow a more immediate
transfer or discharge;
‘‘(III) in a case described in clause (i) of
subparagraph (A), where a more immediate trans-
fer or discharge is necessitated by the resident’s
urgent medical needs;
‘‘(IV) in a case where a resident has not resided
in the facility for 30 days; or
‘‘(V) in a case where the provision of a 30-
day notice would be impossible or impracticable.
In the case of such exceptions, notice must be given
as many days before the date of the transfer or dis-
charge as is practicable.
‘‘(iii) ITEMS
INCLUDED
IN
NOTICE.—Each notice
under clause (i) must include—
‘‘(I) notice of the resident’s right to appeal
the transfer or discharge under the State process
established under subsection (e)(3);
‘‘(II) the name, mailing address, and telephone
number of the State long-term care ombudsman
(established under title III or VII of the Older
Americans Act of 1965);
H. R. 2491—240
‘‘(III) in the case of residents with developmen-
tal disabilities, the mailing address and telephone
number of the agency responsible for the protection
and advocacy system for developmentally disabled
individuals established under part C of the Devel-
opmental Disabilities Assistance and Bill of Rights
Act; and
‘‘(IV) in the case of mentally ill residents (as
defined in subsection (e)(7)(G)(i)), the mailing
address and telephone number of the agency
responsible for the protection and advocacy system
for mentally ill individuals established under the
Protection and Advocacy for Mentally Ill Individ-
uals Act.
‘‘(iv) EXCEPTION.—This subparagraph shall not
apply to a voluntary transfer or discharge or a transfer
or discharge necessitated by a medical emergency.
‘‘(C) ORIENTATION.—A nursing facility must provide
reasonable preparation and orientation to residents to pro-
mote safe and orderly transfer or discharge from the facil-
ity.
‘‘(D) NOTICE ON BED-HOLD POLICY AND READMISSION.—
‘‘(i) NOTICE BEFORE TRANSFER.—Before a resident
of a nursing facility is transferred for hospitalization
or therapeutic leave, a nursing facility must provide
written information to the resident and an immediate
family member or legal representative concerning—
‘‘(I) the provisions of the State MediGrant plan
under this title regarding the period (if any) during
which the resident will be permitted under the
State MediGrant plan to return and resume resi-
dence in the facility, and
‘‘(II) the policies of the facility regarding such
a period, which policies must be consistent with
clause (iii).
‘‘(ii) NOTICE UPON TRANSFER.—At the time of trans-
fer of a resident to a hospital or for therapeutic leave,
a nursing facility must provide written notice to the
resident and an immediate family member or legal
representative of the duration of any period described
in clause (i).
‘‘(iii) PERMITTING RESIDENT TO RETURN.—A nursing
facility must establish and follow a written policy
under which a resident—
‘‘(I) who is eligible for medical assistance for
nursing facility services under a State MediGrant
plan,
‘‘(II) who is transferred from the facility for
hospitalization or therapeutic leave, and
‘‘(III) whose hospitalization or therapeutic
leave exceeds a period paid for under the State
MediGrant plan for the holding of a bed in the
facility for the resident,
will be permitted to be readmitted to the facility imme-
diately upon the first availability of a bed in a room
(not including a private room) in the facility if, at
H. R. 2491—241
the time of readmission, the resident requires the serv-
ices provided by the facility.
‘‘(3) ACCESS
AND
VISITATION
RIGHTS.—A nursing facility
must—
‘‘(A) permit immediate access to any resident by any
representative of the Secretary, by any representative of
the State, by an ombudsman or agency described in
subclause (II), (III), or (IV) of paragraph (2)(B)(iii), or by
the resident’s individual physician;
‘‘(B) permit immediate access to a resident, subject
to the resident’s right to deny or withdraw consent at
any time, by immediate family or other relatives of the
resident;
‘‘(C) permit immediate access to a resident, subject
to reasonable restrictions and the resident’s right to deny
or withdraw consent at any time, by others who are visiting
with the consent of the resident, unless such access would
endanger the health or safety of the resident or others
in the facility;
‘‘(D) permit reasonable access to a resident by any
entity or individual that provides health, social, legal, or
other services to the resident, subject to the resident’s
right to deny or withdraw consent at any time; and
‘‘(E) permit representatives of the State ombudsman
(described in paragraph (2)(B)(iii)(II)), with the permission
of the resident (or the resident’s legal representative) and
consistent with State law, to examine a resident’s clinical
records.
‘‘(4) EQUAL ACCESS TO QUALITY CARE.—
‘‘(A) IN GENERAL.—A nursing facility must establish
and maintain identical policies and practices regarding
transfer, discharge, and the provision of services required
under the State MediGrant plan for all individuals regard-
less of source of payment.
‘‘(B) CONSTRUCTION.—
‘‘(i) NOTHING PROHIBITING ANY CHARGES FOR NON-
MEDIGRANT PATIENTS.—Subparagraph (A) shall not be
construed as prohibiting a nursing facility from charg-
ing any amount for services furnished, consistent with
the notice in paragraph (1)(B) describing such charges.
‘‘(ii) 
NO
ADDITIONAL
SERVICES
REQUIRED.—
Subparagraph (A) shall not be construed as requiring
a State to offer additional services on behalf of a resi-
dent than are otherwise provided under the State
MediGrant plan.
‘‘(5) PROTECTION OF RESIDENT FUNDS.—
‘‘(A) IN GENERAL.—The nursing facility—
‘‘(i) may not require residents to deposit their per-
sonal funds with the facility, and
‘‘(ii) upon the written authorization of the resident,
must hold, safeguard, and account for such personal
funds under a system established and maintained by
the facility in accordance with this paragraph.
‘‘(B) MANAGEMENT OF PERSONAL FUNDS.—Upon written
authorization of a resident under subparagraph (A)(ii), the
facility must manage and account for the personal funds
of the resident deposited with the facility as follows:
H. R. 2491—242
‘‘(i) DEPOSIT.—The facility must deposit any
amount of personal funds in excess of $250 with respect
to a resident in an interest bearing account (or
accounts) that is separate from any of the facility’s
operating accounts and credits all interest earned on
such separate account to such account. With respect
to any other personal funds, the facility must maintain
such funds in a non-interest bearing account or petty
cash fund.
‘‘(ii) ACCOUNTING AND RECORDS.—The facility must
assure a full and complete accounting of each such
resident’s personal funds, maintain a written record
of all financial transactions involving the personal
funds of a resident deposited with the facility, and
afford the resident (or a legal representative of the
resident) reasonable access to such record.
‘‘(iii) CONVEYANCE UPON DEATH.—Upon the death
of a resident with such an account, the facility must
convey promptly the resident’s personal funds (and
a final accounting of such funds) to the individual
administering the resident’s estate. All other personal
property, including medical records, shall be considered
part of the resident’s estate and shall only be released
to the administrator of the estate.
‘‘(C) ASSURANCE OF FINANCIAL SECURITY.—The facility
must purchase a surety bond, or otherwise provide assur-
ance satisfactory to the State, to assure the security of
all personal funds of residents deposited with the facility.
‘‘(D) LIMITATION ON CHARGES TO PERSONAL FUNDS.—
The facility may not impose a charge against the personal
funds of a resident for any item or service for which pay-
ment is made under this title or title XVIII.
‘‘(6) LIMITATION
ON
CHARGES
IN
CASE
OF
MEDIGRANT-
ELIGIBLE
INDIVIDUALS.—A nursing facility may not impose
charges, for certain MediGrant-eligible individuals for nursing
facility services covered by the State under its plan under
this title, that exceed the payment amounts established by
the State for such services under this title.
‘‘(7) POSTING OF SURVEY RESULTS.—A nursing facility must
post in a place readily accessible to residents, and family mem-
bers and legal representatives of residents, the results of the
most recent survey of the facility conducted under subsection
(g).
‘‘(d) REQUIREMENTS RELATING TO ADMINISTRATION AND OTHER
MATTERS.—
‘‘(1) ADMINISTRATION.—
‘‘(A) IN GENERAL.—A nursing facility must be adminis-
tered in a manner that enables it to use its resources
effectively and efficiently to attain or maintain the highest
practicable physical, mental, and psychosocial well-being
of each resident (consistent with requirements established
under subsection (f)(5)).
‘‘(B) REQUIRED NOTICES.—If a change occurs in—
‘‘(i) the persons with an ownership or control
interest (as defined in section 1124(a)(3)) in the facility,
H. R. 2491—243
‘‘(ii) the persons who are officers, directors, agents,
or managing employees (as defined in section 1126(b))
of the facility,
‘‘(iii) the corporation, association, or other company
responsible for the management of the facility, or
‘‘(iv) the individual who is the administrator or
director of nursing of the facility,
the nursing facility must provide notice to the State agency
responsible for the licensing of the facility, at the time
of the change, of the change and of the identity of each
new person, company, or individual described in the respec-
tive clause.
‘‘(C) NURSING FACILITY ADMINISTRATOR.—The adminis-
trator of a nursing facility, whether freestanding or hos-
pital-based, must meet such standards as are established
by the Secretary.
‘‘(2) LICENSING AND LIFE SAFETY CODE.—
‘‘(A) LICENSING.—A nursing facility must be licensed
under applicable State and local law.
‘‘(B) LIFE SAFETY CODE.—A nursing facility must meet
such provisions of such edition (as specified by the Sec-
retary in regulation) of the Life Safety Code of the National
Fire Protection Association as are applicable to nursing
homes; except that—
‘‘(i) the Secretary may waive, for such periods as
he deems appropriate, specific provisions of such Code
which if rigidly applied would result in unreasonable
hardship upon a facility, but only if such waiver would
not adversely affect the health and safety of residents
or personnel, and
‘‘(ii) the provisions of such Code shall not apply
in any State if the Secretary finds that in such State
there is in effect a fire and safety code, imposed by
State law, which adequately protects residents of and
personnel in nursing facilities.
‘‘(3) SANITARY
AND
INFECTION
CONTROL
AND
PHYSICAL
ENVIRONMENT.—A nursing facility must—
‘‘(A) establish and maintain an infection control pro-
gram designed to provide a safe, sanitary, and comfortable
environment in which residents reside and to help prevent
the development and transmission of disease and infection,
and
‘‘(B) be designed, constructed, equipped, and main-
tained in a manner to protect the health and safety of
residents, personnel, and the general public.
‘‘(4) MISCELLANEOUS.—
‘‘(A) COMPLIANCE
WITH
FEDERAL, STATE, AND
LOCAL
LAWS AND PROFESSIONAL STANDARDS.—A nursing facility,
whether freestanding or hospital-based, must operate and
provide services in compliance with all applicable Federal,
State, and local laws and regulations (including the require-
ments of section 1124) and with accepted professional
standards and principles which apply to professionals
providing services in such a facility.
‘‘(B) OTHER.—A nursing facility must meet such other
requirements relating to the health and safety of residents
H. R. 2491—244
or relating to the physical facilities thereof as the Secretary
may find necessary.
‘‘(e) STATE REQUIREMENTS RELATING
TO NURSING FACILITY
REQUIREMENTS.—A State with a MediGrant plan shall provide for
the following:
‘‘(1) SPECIFICATION AND REVIEW OF NURSE AIDE TRAINING
AND COMPETENCY EVALUATION PROGRAMS AND OF NURSE AIDE
COMPETENCY EVALUATION PROGRAMS.—The State must—
‘‘(A) specify those training and competency evaluation
programs, and those competency evaluation programs, that
the State approves for purposes of subsection (b)(5) and
that meet the requirements established under subsection
(f)(2), and
‘‘(B) provide for the review and reapproval of such
programs, at a frequency and using a methodology consist-
ent with the requirements established under subsection
(f)(2)(A)(iii).
‘‘(2) NURSE AIDE REGISTRY.—
‘‘(A) IN GENERAL.—The State shall establish and main-
tain a registry of all individuals who have satisfactorily
completed a nurse aide training and competency evaluation
program, or a nurse aide competency evaluation program,
approved under paragraph (1) in the State, or any individ-
ual described in subsection (f)(2)(B)(ii) or in subparagraph
(B), (C), or (D) of section 6901(b)(4) of the Omnibus Budget
Reconciliation Act of 1989.
‘‘(B) INFORMATION IN REGISTRY.—The registry under
subparagraph (A) shall provide for the inclusion of specific
documented findings by a State under subsection (g)(1)(C)
of resident neglect or abuse or misappropriation of resident
property involving an individual listed in the registry, as
well as any brief statement of the individual disputing
the findings. The State shall make available to the public
information in the registry. In the case of inquiries to
the registry concerning an individual listed in the registry,
any information disclosed concerning such a finding shall
also include disclosure of any such statement in the registry
relating to the finding or a clear and accurate summary
of such a statement.
‘‘(C) PROHIBITION AGAINST CHARGES.—A State may not
impose any charges on a nurse aide relating to the registry
established and maintained under subparagraph (A).
‘‘(3) STATE
APPEALS
PROCESS
FOR
TRANSFERS
AND
DIS-
CHARGES.—The State must provide for a fair mechanism, meet-
ing the guidelines established under subsection (f)(3), for hear-
ing appeals on transfers and discharges of residents of such
facilities.
‘‘(4) NURSING
FACILITY
ADMINISTRATOR
STANDARDS.—The
State must implement and enforce the nursing facility adminis-
trator standards developed under subsection (f)(4) respecting
the qualification of administrators of nursing facilities. Any
such standards promulgated shall apply to administrators of
hospital-based facilities as well as administrators of freestand-
ing facilities.
‘‘(5) 
SPECIFICATION
OF
RESIDENT
ASSESSMENT
INSTRUMENT.—The State shall specify the instrument to be
H. R. 2491—245
used by nursing facilities in the State in complying with the
requirement of subsection (b)(3)(A)(iii).
‘‘(6) NOTICE
OF
MEDIGRANT
RIGHTS.—Each State shall
develop (and periodically update) a written notice of the rights
and obligations of residents of nursing facilities (and spouses
of such residents) under this title.
‘‘(7) STATE REQUIREMENTS FOR PREADMISSION SCREENING
AND RESIDENT REVIEW.—
‘‘(A) PREADMISSION SCREENING.—
‘‘(i) IN GENERAL.—The State must have in effect
a preadmission screening program, for identifying men-
tally ill and mentally retarded individuals (as defined
in subparagraph (B)) who are admitted to nursing
facilities.
‘‘(ii) STATE REQUIREMENT FOR RESIDENT REVIEW.—
The State shall notify the State mental health author-
ity or the State mental retardation or developmental
disability authority, as appropriate, of the individuals
so identified.
‘‘(B) DEFINITIONS.—In this paragraph:
‘‘(i) An individual is considered to be ‘mentally
ill’ if the individual has a serious mental illness (as
defined by the Secretary in consultation with the
National Institute of Mental Health) and does not have
a primary diagnosis of dementia (including Alzheimer’s
disease or a related disorder) or a diagnosis (other
than a primary diagnosis) of dementia and a primary
diagnosis that is not a serious mental illness.
‘‘(ii) An individual is considered to be ‘mentally
retarded’ if the individual is mentally retarded or a
person with a related condition.
‘‘(f) RESPONSIBILITIES RELATING TO NURSING FACILITY REQUIRE-
MENTS.—
‘‘(1) GENERAL RESPONSIBILITY.—It is the duty and respon-
sibility of a State with a MediGrant plan under this title
to assure that requirements which govern the provision of
care in nursing facilities under the plan, and the enforcement
of such requirements, are adequate to protect the health, safety,
welfare, and rights of residents and to promote the effective
and efficient use of public moneys.
‘‘(2) REQUIREMENTS FOR NURSE AIDE TRAINING AND COM-
PETENCY
EVALUATION
PROGRAMS
AND
FOR
NURSE
AIDE
COM-
PETENCY EVALUATION PROGRAMS.—For purposes of subsections
(b)(5) and (e)(1)(A), the State shall establish—
‘‘(A) requirements for the approval of nurse aide train-
ing and competency evaluation programs, including
requirements relating to (i) the areas to be covered in
such a program (including at least basic nursing skills,
personal care skills, recognition of mental health and social
service needs, care of cognitively impaired residents, basic
restorative services, and residents’ rights) and content of
the curriculum, (ii) minimum hours of initial and ongoing
training and retraining, (iii) qualifications of instructors,
and (iv) procedures for determination of competency;
‘‘(B) requirements for the approval of nurse aide com-
petency evaluation programs, including requirement relat-
ing to the areas to be covered in such a program, including
H. R. 2491—246
at least basic nursing skills, personal care skills, recogni-
tion of mental health and social service needs, care of
cognitively impaired residents, basic restorative services,
and residents’ rights, and procedures for determination
of competency;
‘‘(C) requirements respecting the minimum frequency
and methodology to be used by a State in reviewing such
programs’ compliance with the requirements for such pro-
grams; and
‘‘(D) requirements, under both such programs, that—
‘‘(i) provide procedures for determining competency
that permit a nurse aide, at the nurse aide’s option,
to establish competency through procedures or methods
other than the passing of a written examination and
to have the competency evaluation conducted at the
nursing facility at which the aide is (or will be)
employed, and
‘‘(ii) prohibit the imposition on a nurse aide who
is employed by (or who has received an offer of employ-
ment from) a facility on the date on which the aide
begins either such program of any charges (including
any charges for textbooks and other required course
materials and any charges for the competency evalua-
tion) for either such program.
‘‘(3) QUALIFICATION OF ADMINISTRATORS.—For purposes of
subsections (d)(1)(C) and (e)(4), the State shall develop stand-
ards to be applied in assuring the qualifications of administra-
tors of nursing facilities. Any such standards must apply to
administrators of hospital-based facilities as well as administra-
tors of freestanding facilities.
‘‘(g) SURVEY AND CERTIFICATION PROCESS.—
‘‘(1) STATE AND FEDERAL RESPONSIBILITY.—
‘‘(A) IN GENERAL.—Under each State MediGrant plan
under this title, the State shall be responsible for certifying,
in accordance with surveys conducted under paragraph
(2), the compliance of nursing facilities with the require-
ments of subsections (b), (c), and (d). The Secretary shall
be responsible for certifying, in accordance with surveys
conducted under paragraph (2), the compliance of State
nursing facilities with the requirements of such sub-
sections.
‘‘(B) INVESTIGATION
OF
ALLEGATIONS
OF
RESIDENT
NEGLECT AND ABUSE AND MISAPPROPRIATION OF RESIDENT
PROPERTY.—The State shall provide, through the agency
responsible for surveys and certification of nursing facilities
under this subsection, for a process for the receipt and
timely review and investigation of allegations of neglect
and abuse and misappropriation of resident property by
a nurse aide of a resident in a nursing facility or by
another individual used by the facility in providing services
to such a resident. The State shall, after notice to the
individual involved and a reasonable opportunity for a
hearing for the individual to rebut allegations, make a
finding as to the accuracy of the allegations. If the State
finds that a nurse aide has neglected or abused a resident
or misappropriated resident property in a facility, the State
shall notify the nurse aide and the registry of such finding.
H. R. 2491—247
If the State finds that any other individual used by the
facility has neglected or abused a resident or misappro-
priated resident property in a facility, the State shall notify
the appropriate licensure authority. A State shall not make
a finding that an individual has neglected a resident if
the individual demonstrates that such neglect was caused
by factors beyond the control of the individual.
‘‘(2) SURVEYS.—
‘‘(A) ANNUAL STANDARD SURVEY.—
‘‘(i) IN GENERAL.—Each nursing facility shall be
subject to a standard survey, to be conducted without
any prior notice to the facility. Any individual who
notifies (or causes to be notified) a nursing facility
of the time or date on which such a survey is scheduled
to be conducted is subject to a civil money penalty
of not to exceed $2,000. The provisions of section 1128A
(other than subsections (a) and (b)) shall apply to a
civil money penalty under the previous sentence in
the same manner as such provisions apply to a penalty
or proceeding under section 1128A(a). The State shall
take all reasonable steps to avoid giving notice of such
a survey through the scheduling procedures and the
conduct of the surveys themselves.
‘‘(ii) CONTENTS.—Each standard survey shall
include, for a case-mix stratified sample of residents—
‘‘(I) a survey of the quality of care furnished,
as measured by indicators of medical, nursing, and
rehabilitative care, dietary and nutrition services,
activities and social participation, and sanitation,
infection control, and the physical environment,
‘‘(II) written plans of care provided under sub-
section (b)(2) and an audit of the residents’ assess-
ments under subsection (b)(3) to determine the
accuracy of such assessments and the adequacy
of such plans of care, and
‘‘(III) a review of compliance with residents’
rights under subsection (c).
‘‘(iii) FREQUENCY.—
‘‘(I) IN GENERAL.—Each nursing facility shall
be subject to a standard survey not later than
24 months after the date of the previous standard
survey conducted under this subparagraph, except
that in the case of a facility which has been sub-
jected to an extended survey under subparagraph
(B), a standard survey shall be conducted not later
than 12 months after the date of the preceding
extended survey.
‘‘(II) SPECIAL SURVEYS.—If not otherwise con-
ducted under subclause (I), a standard survey (or
an abbreviated standard survey) may be conducted
within 4 months of any change of ownership,
administration, management of a nursing facility,
or director of nursing in order to determine
whether the change has resulted in any decline
in the quality of care furnished in the facility.
‘‘(B) EXTENDED SURVEYS.—
H. R. 2491—248
‘‘(i) IN GENERAL.—Each nursing facility which is
found, under a standard survey, to have provided sub-
standard quality of care shall be subject to an extended
survey. Any other facility may, at the State’s discretion,
be subject to such an extended survey (or a partial
extended survey).
‘‘(ii) TIMING.—The extended survey shall be con-
ducted immediately after the standard survey (or, if
not practicable, not later than 2 weeks after the date
of completion of the standard survey).
‘‘(iii) CONTENTS.—In such an extended survey, the
survey team shall review and identify the policies and
procedures which produced such substandard quality
of care and shall determine whether the facility has
complied with all the requirements described in sub-
sections (b), (c), and (d). Such review shall include
an expansion of the size of the sample of residents’
assessments reviewed and a review of the staffing,
of in-service training, and, if appropriate, of contracts
with consultants.
‘‘(iv) CONSTRUCTION.—Nothing in this paragraph
shall be construed as requiring an extended or partial
extended survey as a prerequisite to imposing a sanc-
tion against a facility under subsection (h) on the basis
of findings in a standard survey.
‘‘(C) SURVEY PROTOCOL.—Standard and extended sur-
veys shall be conducted—
‘‘(i) based upon the protocol which the Secretary
has developed, tested, and validated, as of the date
of the enactment of this title, and
‘‘(ii) by individuals, of a survey team, who meet
such minimum qualifications as the State establishes.
‘‘(D) CONSISTENCY
OF
SURVEYS.—Each State shall
implement programs to measure and reduce inconsistency
in the application of survey results among surveyors.
‘‘(E) SURVEY TEAMS.—
‘‘(i) IN GENERAL.—Surveys under this subsection
shall be conducted by a multidisciplinary team of
professionals (including a registered professional
nurse).
‘‘(ii) PROHIBITION OF CONFLICTS OF INTEREST.—A
State may not use as a member of a survey team
under this subsection an individual who is serving
(or has served within the previous 2 years) as a mem-
ber of the staff of, or as a consultant to, the facility
surveyed respecting compliance with the requirements
of subsections (b), (c), and (d), or who has a personal
or familial financial interest in the facility being sur-
veyed.
‘‘(3) VALIDATION SURVEYS.—
‘‘(A) IN GENERAL.—The Secretary shall conduct onsite
surveys of a representative sample of nursing facilities
in each State, within 4 months of the date of surveys
conducted under paragraph (2) by the State, in a sufficient
number to allow inferences about the adequacies of each
State’s surveys conducted under paragraph (2). In conduct-
ing such surveys, the Secretary shall use the same survey
H. R. 2491—249
protocols as the State is required to use under paragraph
(2). If the State has determined that an individual nursing
facility meets the requirements of subsections (b), (c), and
(d), but the Secretary determines that the facility does
not meet such requirements, the Secretary’s determination
as to the facility’s noncompliance with such requirements
is binding and supersedes that of the State survey.
‘‘(B) SCOPE.—With respect to each State, the Secretary
shall conduct surveys under subparagraph (A) at least
every third year with respect to at least 5 percent of the
number of nursing facilities surveyed by the State in the
year, but in no case less than 5 nursing facilities in the
State.
‘‘(C) SPECIAL SURVEYS OF COMPLIANCE.—Where the Sec-
retary has found substantial evidence of a pattern of non-
compliance by a nursing facility with any of the require-
ments of subsections (b), (c), and (d), the Secretary may
conduct a survey of the facility and, on the basis of that
survey, make determinations concerning the extent to
which the nursing facility meets such requirements.
‘‘(4) INVESTIGATION OF COMPLAINTS AND MONITORING NURS-
ING FACILITY COMPLIANCE.—Each State shall maintain proce-
dures and adequate staff to—
‘‘(A) investigate complaints of violations of require-
ments by nursing facilities, and
‘‘(B) monitor, on-site, on a regular, as needed basis,
a nursing facility’s compliance with the requirements of
subsections (b), (c), and (d), if—
‘‘(i) the facility has been found not to be in compli-
ance with such requirements and is in the process
of correcting deficiencies to achieve such compliance;
‘‘(ii) the facility was previously found not to be
in compliance with such requirements, has corrected
deficiencies to achieve such compliance, and verifica-
tion of continued compliance is indicated; or
‘‘(iii) the State has reason to question the compli-
ance of the facility with such requirements.
‘‘(5) DISCLOSURE OF RESULTS OF INSPECTIONS AND ACTIVI-
TIES.—
‘‘(A) PUBLIC INFORMATION.—Each State, and the Sec-
retary, shall make available to the public—
‘‘(i) information respecting all surveys and certifi-
cations made respecting nursing facilities, including
statements of deficiencies, within a reasonable time
after such information is made available to those facili-
ties, and approved plans of correction,
‘‘(ii) copies of cost reports of such facilities filed
under this title or under title XVIII,
‘‘(iii) copies of statements of ownership under sec-
tion 1124, and
‘‘(iv) information disclosed under section 1126.
‘‘(B) NOTICE TO OMBUDSMAN.—Each State shall notify
the State long-term care ombudsman (established under
title III or VII of the Older Americans Act of 1965 in
accordance with section 712 of the Act) of the State’s find-
ings of noncompliance with any of the requirements of
subsections (b), (c), and (d), or of any adverse action taken
H. R. 2491—250
against a nursing facility under paragraphs (1), (2), or
(3) of subsection (h), with respect to a nursing facility
in the State.
‘‘(C) NOTICE
TO
PHYSICIANS
AND
NURSING
FACILITY
ADMINISTRATOR LICENSING BOARD.—If a State finds that
a nursing facility has provided substandard quality of care,
the State shall notify—
‘‘(i) the attending physician of each resident with
respect to which such finding is made, and
‘‘(ii) any State board responsible for the licensing
of the nursing facility administrator of the facility.
‘‘(D) ACCESS TO FRAUD CONTROL UNITS.—Each State
shall provide its State MediGrant fraud and abuse control
unit (established under section 2134) with access to all
information of the State agency responsible for surveys
and certifications under this subsection.
‘‘(h) ENFORCEMENT PROCESS.—
‘‘(1) IN GENERAL.—If a State finds, on the basis of a stand-
ard, extended, or partial extended survey under subsection
(g)(2) or otherwise, that a nursing facility no longer meets
a requirement of subsection (b), (c), or (d)—
‘‘(A) the State shall require the facility to correct the
deficiency involved;
‘‘(B) if the State finds that the facility’s deficiencies
immediately jeopardize the health or safety of its residents,
the State shall take immediate action to remove the jeop-
ardy and correct the deficiencies through the remedy speci-
fied in paragraph (2)(A)(iii), or terminate the facility’s
participation under the State MediGrant plan and may
provide, in addition, for one or more of the other remedies
described in paragraph (2); and
‘‘(C) if the State finds that the facility’s deficiencies
do not immediately jeopardize the health or safety of its
residents, the State may—
‘‘(i) terminate the facility’s participation under the
State MediGrant plan,
‘‘(ii) provide for one or more of the remedies
described in paragraph (2), or
‘‘(iii) do both.
‘‘(2) SPECIFIED REMEDIES.—
‘‘(A) LISTING.—Except as provided in subparagraph (B),
each State shall establish by law (whether statute or regu-
lation) at least the following remedies:
‘‘(i) Denial of payment under the State MediGrant
plan with respect to any individual admitted to the
nursing facility involved after such notice to the public
and to the facility as may be provided for by the
State.
‘‘(ii) A civil money penalty assessed and collected,
with interest, for each day in which the facility is
or was out of compliance with a requirement of sub-
section (b), (c), or (d).
‘‘(iii) The appointment of temporary management
to oversee the operation of the facility and to assure
the health and safety of the facility’s residents, where
there is a need for temporary management while—
H. R. 2491—251
‘‘(I) there is an orderly closure of the facility,
or
‘‘(II) improvements are made in order to bring
the facility into compliance with all the require-
ments of subsections (b), (c), and (d).
The temporary management under this clause shall
not be terminated under subclause (II) until the State
has determined that the facility has the management
capability to ensure continued compliance with all the
requirements of subsections (b), (c), and (d).
‘‘(iv) The authority, in the case of an emergency,
to close the facility, to transfer residents in that facility
to other facilities, or both.
The State also shall specify criteria, as to when and how
each of such remedies is to be applied, the amounts of
any fines, and the severity of each of these remedies, to
be used in the imposition of such remedies.
‘‘(B) ALTERNATIVE REMEDIES.—A State may establish
alternative remedies to the remedies described in subpara-
graph (A), if the State demonstrates to the Secretary’s
satisfaction that the alternative remedies are as effective
in deterring noncompliance and correcting deficiencies as
those described in such subparagraph.
‘‘(C) ASSURING PROMPT COMPLIANCE.—If a nursing facil-
ity has not complied with any of the requirements of sub-
sections (b), (c), and (d), within 3 months after the date
the facility is found to be out of compliance with such
requirements, the State may impose the remedy described
in subparagraph (A)(i) for all individuals who are admitted
to the facility after such date.
‘‘(D) REPEATED NONCOMPLIANCE.—In the case of a nurs-
ing facility which, on 3 consecutive standard surveys con-
ducted under subsection (g)(2), has been found to have
provided substandard quality of care, the State shall
(regardless of what other remedies are provided)—
‘‘(i) impose the remedy described in subparagraph
(A)(i), and
‘‘(ii) monitor the facility under subsection (g)(4)(B),
until the facility has demonstrated, to the satisfaction of
the State, that it is in compliance with the requirements
of subsections (b), (c), and (d), and that it will remain
in compliance with such requirements.
‘‘(3) SECRETARIAL AUTHORITY.—
‘‘(A) FOR STATE NURSING FACILITIES.—With respect to
a State nursing facility, the Secretary shall have the
authority and duties of a State under this subsection. Noth-
ing in this subparagraph shall be construed as restricting
the remedies available to the Secretary to remedy a nursing
facility’s deficiencies.
‘‘(B) OTHER NURSING FACILITIES.—With respect to any
other nursing facility in a State, if the Secretary finds
that a nursing facility no longer meets a requirement of
subsection (b), (c), or (d), the Secretary shall notify the
State of such deficiency. If, after a reasonable period of
time after such notification is given, the Secretary finds
that the State has failed to carry out the requirements
of paragraph (1)(A) or paragraph (1)(B) (if appropriate)
H. R. 2491—252
with respect to the deficiency involved, or that the defi-
ciency remains uncorrected—
‘‘(i) the Secretary shall require the facility to cor-
rect the deficiency involved;
‘‘(ii) if the Secretary finds that the deficiency
involved immediately jeopardizes the health or safety
of its residents, the Secretary shall, in consultation
with the State, take action to remove the jeopardy
and correct the deficiencies through the remedy speci-
fied in subparagraph (C)(iii), or terminate the facility’s
participation under the State MediGrant plan and may
provide, in addition, for one or more of the other rem-
edies described in subparagraph (C); and
‘‘(iii) in the case of a deficiency that remains uncor-
rected, if the Secretary finds that the deficiency
involved does not immediately jeopardize the health
or safety of its residents, the Secretary may impose
any of the remedies described in subparagraph (C).
‘‘(C) SPECIFIED REMEDIES.—The remedies specified in
this subparagraph are as follows:
‘‘(i) DENIAL OF PAYMENT.—Denial of any further
payments to the State in accordance with section
2154(f) for medical assistance furnished by the facility
to all individuals in the facility or to individuals admit-
ted to the facility after the effective date of the finding.
‘‘(ii) AUTHORITY WITH RESPECT TO CIVIL MONEY PEN-
ALTIES.—Imposition of a civil money penalty against
the facility in an amount not to exceed $5,000 for
each day of noncompliance. The provisions of section
1128A (other than subsections (a) and (b)) shall apply
to a civil money penalty under the previous sentence
in the same manner as such provisions apply to a
penalty or proceeding under section 1128A(a).
‘‘(iii) APPOINTMENT OF TEMPORARY MANAGEMENT.—
Appointment of temporary management (in consulta-
tion with the State) to oversee the operation of the
facility and to assure the health and safety of the
facility’s residents, where there is a need for temporary
management while—
‘‘(I) there is an orderly closure of the facility,
or
‘‘(II) improvements are made in order to bring
the facility into compliance with all the require-
ments of subsections (b), (c), and (d).
The temporary management under this clause shall
not be terminated under subclause (II) until the Sec-
retary has determined that the facility has the manage-
ment capability to ensure continued compliance with
all the requirements of subsections (b), (c), and (d).
The Secretary shall specify criteria, as to when and how
each of such remedies is to be applied, the amounts of
any fines, and the severity of each of these remedies, to
be used in the imposition of such remedies.
‘‘(4) SPECIAL RULES REGARDING PAYMENTS TO FACILITIES.—
‘‘(A) CONTINUATION
OF
PAYMENTS
PENDING
REMEDI-
ATION.—The State or the Secretary, as appropriate, may
continue payments, over a period of not longer than 6
H. R. 2491—253
months after the effective date of the findings, under this
title with respect to a nursing facility not in compliance
with a requirement of subsection (b), (c), or (d).
‘‘(B) EFFECTIVE
PERIOD
OF
DENIAL
OF
PAYMENT.—A
finding to deny payment under this subsection shall termi-
nate when the State or Secretary (as the case may be)
finds that the facility is in substantial compliance with
all the requirements of subsections (b), (c), and (d).
‘‘(5) CONSTRUCTION.—The remedies provided under this
subsection are in addition to those otherwise available under
Federal or State law and shall not be construed as limiting
such other remedies, including any remedy available to an
individual at common law. The provisions of this subsection
shall apply to a nursing facility (or portion thereof) notwith-
standing that the facility (or portion thereof) also is a skilled
nursing facility for purposes of title XVIII or is accredited
by an entity pursuant to subsection (i)(2).
‘‘(6) SHARING OF INFORMATION.—Notwithstanding any other
provision of law, all information concerning nursing facilities
required by this section to be filed with the Secretary or a
State agency shall be made available by such facilities to Fed-
eral or State employees for purposes consistent with the effec-
tive administration of programs established under this title
and title XVIII, including investigations by State MediGrant
fraud control units.
‘‘(i) CONSTRUCTION.—
‘‘(1) MEDICARE
REQUIREMENTS.—Where requirements or
obligations under this section are identical to those provided
under section 1819 of this Act, the fulfillment of those require-
ments or obligations under section 1819 shall be considered
to be the fulfillment of the corresponding requirements or
obligations under this section.
‘‘(2) EFFECT OF ACCREDITATION.—
‘‘(A) IN GENERAL.—At the option of a State, or the
Secretary, as appropriate, if a nursing facility in the State
is accredited by a national accrediting entity meeting such
standards as the State or the Secretary may impose, such
facility shall be deemed to have met the requirements
of this section and the State shall be deemed to have
met the survey and certification requirements under sub-
section (g).
‘‘(B) REQUIREMENT FOR ACCREDITING ENTITY.—A State
or the Secretary, as appropriate, may not find that an
accrediting entity meets standards under subparagraph (A)
unless such entity applies standards for accreditation for
facilities that meet or exceed the requirements of this sec-
tion.
‘‘SEC. 2138. OTHER PROVISIONS PROMOTING PROGRAM INTEGRITY.
‘‘(a) PUBLIC ACCESS
TO SURVEY RESULTS.—Each MediGrant
plan shall provide that upon completion of a survey of any health
care facility or organization by a State agency to carry out the
plan, the agency shall make public in readily available form and
place the pertinent findings of the survey relating to the compliance
of the facility or organization with requirements of law.
H. R. 2491—254
‘‘(b) RECORD KEEPING.—Each MediGrant plan shall provide
for agreements with persons or institutions providing services under
the plan under which the person or institution agrees—
‘‘(1) to keep such records, including ledgers, books, and
original evidence of costs, as are necessary to fully disclose
the extent of the services provided to individuals receiving
assistance under the plan, and
‘‘(2) to furnish the State agency with such information
regarding any payments claimed by such person or institution
for providing services under the plan, as the State agency
may from time to time request.
‘‘(c) QUALITY ASSURANCE.—Each MediGrant plan shall provide
a program to assure the quality of services provided under the
plan, including such services provided to individuals with chronic
mental or physical illness.
‘‘PART E—ESTABLISHMENT AND AMENDMENT OF MEDIGRANT PLANS
‘‘SEC. 2151. SUBMITTAL AND APPROVAL OF MEDIGRANT PLANS.
‘‘(a) SUBMITTAL.—As a condition of receiving funding under
part C, each State shall submit to the Secretary a MediGrant
plan that meets the applicable requirements of this title.
‘‘(b) APPROVAL.—Except as the Secretary may provide under
section 2154, a MediGrant plan submitted under subsection (a)—
‘‘(1) shall be approved for purposes of this title, and
‘‘(2) shall be effective beginning with a calendar quarter
that is specified in the plan, but in no case earlier than the
first calendar quarter that begins at least 60 days after the
date the plan is submitted.
‘‘SEC. 2152. SUBMITTAL AND APPROVAL OF PLAN AMENDMENTS.
‘‘(a) SUBMITTAL
OF AMENDMENTS.—A State may amend, in
whole or in part, its MediGrant plan at any time through transmit-
tal of a plan amendment under this section.
‘‘(b) APPROVAL.—Except as the Secretary may provide under
section 2154, an amendment to a MediGrant plan submitted under
subsection (a)—
‘‘(1) shall be approved for purposes of this title, and
‘‘(2) shall be effective as provided in subsection (c).
‘‘(c) EFFECTIVE DATES FOR AMENDMENTS.—
‘‘(1) IN GENERAL.—Subject to the succeeding provisions of
this subsection, an amendment to a MediGrant plan shall take
effect on one or more effective dates specified in the amend-
ment.
‘‘(2) AMENDMENTS RELATING TO ELIGIBILITY OR BENEFITS.—
Except as provided in paragraph (4)—
‘‘(A) NOTICE REQUIREMENT.—Any plan amendment that
eliminates or restricts eligibility or benefits under the plan
may not take effect unless the State certifies that it has
provided prior or contemporaneous public notice of the
change, in a form and manner provided under applicable
State law.
‘‘(B) TIMELY TRANSMITTAL.—Any plan amendment that
eliminates or restricts eligibility or benefits under the plan
shall not be effective for longer than a 60-day period unless
the amendment has been transmitted to the Secretary
before the end of such period.
H. R. 2491—255
‘‘(3) OTHER AMENDMENTS.—Subject to paragraph (4), any
plan amendment that is not described in paragraph (2) becomes
effective in a State fiscal year may not remain in effect after
the end of such fiscal year (or, if later, the end of the 90-
day period on which it becomes effective) unless the amendment
has been transmitted to the Secretary.
‘‘(4) EXCEPTION.—The requirements of paragraphs (2) and
(3) shall not apply to a plan amendment that is submitted
on a timely basis pursuant to a court order or an order of
the Secretary.
‘‘SEC. 2153. PROCESS FOR STATE WITHDRAWAL FROM PROGRAM.
‘‘(a) IN GENERAL.—A State may rescind its MediGrant plan
and discontinue participation in the program under this title at
any time after providing—
‘‘(1) the public with 90 days prior notice in a publication
in one or more daily newspapers of general circulation in the
State or in any publication used by the State to publish State
statutes or rules, and
‘‘(2) the Secretary with 90 days prior written notice.
‘‘(b) EFFECTIVE DATE.—Such discontinuation shall not apply
to payments under part C for expenditures made for items and
services furnished under the MediGrant plan before the effective
date of the discontinuation.
‘‘(c) PRORATION OF ALLOTMENTS.—In the case of any withdrawal
under this section other than at the end of a Federal fiscal year,
notwithstanding any provision of section 2121 to the contrary, the
Secretary shall provide for such appropriate proration of the applica-
tion of allotments under section 2121 as is appropriate.
‘‘SEC. 2154. SANCTIONS FOR NONCOMPLIANCE.
‘‘(a) PROMPT REVIEW OF PLAN SUBMITTALS.—The Secretary shall
promptly review MediGrant plans and plan amendments submitted
under this part to determine if they substantially comply with
the requirements of this title.
‘‘(b) DETERMINATIONS OF SUBSTANTIAL NONCOMPLIANCE.—
‘‘(1) AT TIME OF PLAN OR AMENDMENT SUBMITTAL.—
‘‘(A) IN
GENERAL.—If the Secretary, during the 30-
day period beginning on the date of submittal of a
MediGrant plan or plan amendment—
‘‘(i) determines that the plan or amendment
substantially violates (within the meaning of sub-
section (c)) a requirement of this title, and
‘‘(ii) provides written notice of such determination
to the State,
the Secretary shall issue an order specifying that the plan
or amendment, insofar as it is in substantial violation
of such a requirement, shall not be effective, except as
provided in subsection (c), beginning at the end of a period
of not less than 30 days (or 120 days in the case of the
initial submission of the MediGrant plan) specified in the
order beginning on the date of the notice of the determina-
tion.
‘‘(B) EXTENSION OF TIME PERIODS.—The time periods
specified in subparagraph (A) may be extended by written
agreement of the Secretary and the State involved.
‘‘(2) VIOLATIONS IN ADMINISTRATION OF PLAN.—
H. R. 2491—256
‘‘(A) IN GENERAL.—If the Secretary determines, after
reasonable notice and opportunity for a hearing for the
State, that in the administration of a MediGrant plan
there is a substantial violation of a requirement of this
title, the Secretary shall provide the State with written
notice of the determination and with an order to remedy
such violation. Such an order shall become effective
prospectively, as specified in the order, after the date of
receipt of such written notice. Such an order may include
the withholding of funds, consistent with subsection (f),
for parts of the MediGrant plan affected by such violation,
until the Secretary is satisfied that the violation has been
corrected.
‘‘(B) EFFECTIVENESS.—If the Secretary issues an order
under paragraph (1), the order shall become effective,
except as provided in subsection (c), beginning at the end
of a period (of not less than 30 days) specified in the
order beginning on the date of the notice of the determina-
tion to the State.
‘‘(C) TIMELINESS
OF
DETERMINATIONS
RELATING
TO
REPORT-BASED
COMPLIANCE.—The Secretary shall make
determinations under this paragraph respecting violations
relating to information contained in an annual report under
section 2102, an independent evaluation under section
2103, or an audit report under section 2131 not later than
30 days after the date of transmittal of the report or
evaluation to the Secretary.
‘‘(3) CONSULTATION WITH STATE.—Before making a deter-
mination adverse to a State under this section, the Secretary
shall (within any time periods provided under this section)—
‘‘(A) reasonably consult with the State involved,
‘‘(B) offer the State a reasonable opportunity to clarify
the submission and submit further information to substan-
tiate compliance with the requirements of this title, and
‘‘(C) reasonably consider any such clarifications and
information submitted.
‘‘(4) JUSTIFICATION OF ANY INCONSISTENCIES IN DETERMINA-
TIONS.—If the Secretary makes a determination under this
section that is, in whole or in part, inconsistent with any
previous determination issued by the Secretary under this title,
the Secretary shall include in the determination a detailed
explanation and justification for any such difference.
‘‘(5) SUBSTANTIAL VIOLATION DEFINED.—For purposes of this
title, a MediGrant plan (or amendment to such a plan) or
the administration of the MediGrant plan is considered to
‘substantially violate’ a requirement of this title if a provision
of the plan or amendment (or an omission from the plan or
amendment) or the administration of the plan—
‘‘(A) is material and substantial in nature and effect,
and
‘‘(B) is inconsistent with an express requirement of
this title.
A failure to meet a strategic objective or performance goal
(as described in section 2101) shall not be considered to substan-
tially violate a requirement of this title.
‘‘(c) STATE RESPONSE TO ORDERS.—
‘‘(1) STATE RESPONSE BY REVISING PLAN.—
H. R. 2491—257
‘‘(A) IN GENERAL.—Insofar as an order under subsection
(b)(1) relates to a substantial violation by a MediGrant
plan or plan amendment, a State may respond (before
the date the order becomes effective) to such an order
by submitting a written revision of the MediGrant plan
or plan amendment to substantially comply with the
requirements of this part.
‘‘(B) REVIEW OF REVISION.—In the case of submission
of such a revision, the Secretary shall promptly review
the submission and shall withhold any action on the order
during the period of such review.
‘‘(C) SECRETARIAL
RESPONSE.—The revision shall be
considered to have corrected the deficiency (and the order
rescinded insofar as it relates to such deficiency) unless
the Secretary determines and notifies the State in writing,
within 15 days after the date the Secretary receives the
revision, that the MediGrant plan or amendment, as pro-
posed to be revised, still substantially violates a require-
ment of this title. In such case the State may respond
by seeking reconsideration or a hearing under paragraph
(2).
‘‘(D) REVISION RETROACTIVE.—If the revision provides
for substantial compliance, the revision may be treated,
at the option of the State, as being effective either as
of the effective date of the provision to which it relates
or such later date as the State and Secretary may agree.
‘‘(2) STATE RESPONSE BY SEEKING RECONSIDERATION OR AN
ADMINISTRATIVE HEARING.—A State may respond to an order
under subsection (b) by filing a request with the Secretary
for—
‘‘(A) a reconsideration of the determination, pursuant
to subsection (d)(1), or
‘‘(B) a review of the determination through an adminis-
trative hearing, pursuant to subsection (d)(2).
In such case, the order shall not take effect before the comple-
tion of the reconsideration or hearing.
‘‘(3) STATE RESPONSE BY CORRECTIVE ACTION PLAN.—
‘‘(A) IN GENERAL.—In the case of an order described
in subsection (b)(2) that relates to a substantial violation
in the administration of the MediGrant plan, a State may
respond to such an order by submitting a corrective action
plan with the Secretary to correct deficiencies in the
administration of the plan which are the subject of the
order.
‘‘(B) REVIEW
OF
CORRECTIVE
ACTION
PLAN.—In such
case, the Secretary shall withhold any action on the order
for a period (not to exceed 30 days) during which the
Secretary reviews the corrective action plan.
‘‘(C) SECRETARIAL
RESPONSE.—The corrective action
plan shall be considered to have corrected the deficiency
(and the order rescinded insofar as it relates to such defi-
ciency) unless the Secretary determines and notifies the
State in writing, within 15 days after the date the Secretary
receives the corrective action plan, that the State’s adminis-
tration of the MediGrant plan, as proposed to be corrected
in the plan, will still substantially violate a requirement
H. R. 2491—258
of this title. In such case the State may respond by seeking
reconsideration or a hearing under paragraph (2).
‘‘(4) STATE RESPONSE BY WITHDRAWAL OF PLAN AMENDMENT;
FAILURE TO RESPOND.—Insofar as an order relates to a substan-
tial violation in a plan amendment submitted, a State may
respond to such an order by withdrawing the plan amendment
and the MediGrant plan shall be treated as though the amend-
ment had not been made.
‘‘(d) ADMINISTRATIVE REVIEW AND HEARING.—
‘‘(1) RECONSIDERATION.—Within 30 days after the date of
receipt of a request under subsection (b)(2)(A), the Secretary
shall notify the State of the time and place at which a hearing
will be held for the purpose of reconsidering the Secretary’s
determination. The hearing shall be held not less than 20
days nor more than 60 days after the date notice of the hearing
is furnished to the State, unless the Secretary and the State
agree in writing to holding the hearing at another time. The
Secretary shall affirm, modify, or reverse the original deter-
mination within 60 days of the conclusion of the hearing.
‘‘(2) ADMINISTRATIVE HEARING.—Within 30 days after the
date of receipt of a request under subsection (b)(2)(B), an
administrative law judge shall schedule a hearing for the pur-
pose of reviewing the Secretary’s determination. The hearing
shall be held not less than 20 days nor more than 60 days
after the date notice of the hearing is furnished to the State,
unless the Secretary and the State agree in writing to holding
the hearing at another time. The administrative law judge
shall affirm, modify, or reverse the determination within 60
days of the conclusion of the hearing.
‘‘(e) JUDICIAL REVIEW.—
‘‘(1) IN
GENERAL.—A State which is dissatisfied with a
final determination made by the Secretary under subsection
(d)(1) or a final determination of an administrative law judge
under subsection (d)(2) may, within 60 days after it has been
notified of such determination, file with the United States
court of appeals for the circuit in which the State is located
a petition for review of such determination. A copy of the
petition shall be forthwith transmitted by the clerk of the
court to the Secretary and, in the case of a determination
under subsection (d)(2), to the administrative law judge
involved. The Secretary (or judge involved) thereupon shall
file in the court the record of the proceedings on which the
final determination was based, as provided in section 2112
of title 28, United States Code. Only the Secretary, in accord-
ance with this title, may compel a State under Federal law
to comply with the provisions of this title or a MediGrant
plan, or otherwise enforce a provision of this title against
a State, and no action may be filed under Federal law against
a State in relation to the State’s compliance, or failure to
comply, with the provisions of this title or of a MediGrant
plan except by the Secretary as provided under this subsection.
‘‘(2) STANDARD FOR REVIEW.—The findings of fact by the
Secretary or administrative law judge, if supported by substan-
tial evidence, shall be conclusive, but the court, for good cause
shown, may remand the case to the Secretary or judge to
take further evidence, and the Secretary or judge may there-
upon make new or modified findings of fact and may modify
H. R. 2491—259
a previous determination, and shall certify to the court the
transcript and record of the further proceedings. Such new
or modified findings of fact shall likewise be conclusive if sup-
ported by substantial evidence.
‘‘(3) JURISDICTION OF APPELLATE COURT.—The court shall
have jurisdiction to affirm the action of the Secretary or judge
or to set it aside, in whole or in part. The judgment of the
court shall be subject to review by the Supreme Court of the
United States upon certiorari or certification as provided in
section 1254 of title 28, United States Code.
‘‘(f) WITHHOLDING OF FUNDS.—
‘‘(1) IN GENERAL.—Any order under this section relating
to the withholding of funds shall be effective not earlier than
the effective date of the order and shall only relate to the
portions of a MediGrant plan or administration thereof which
substantially violate a requirement of this title. In the case
of a failure to meet a set-aside requirement under section
2112, any withholding shall only apply to the extent of such
failure.
‘‘(2) SUSPENSION OF WITHHOLDING.—The Secretary may sus-
pend withholding of funds under paragraph (1) during the
period reconsideration or administrative and judicial review
is pending under subsection (d) or (e).
‘‘(3) RESTORATION OF FUNDS.—Any funds withheld under
this subsection under an order shall be immediately restored
to a State—
‘‘(A) to the extent and at the time the order is—
‘‘(i) modified or withdrawn by the Secretary upon
reconsideration,
‘‘(ii) modified or reversed by an administrative law
judge, or
‘‘(iii) set aside (in whole or in part) by an appellate
court; or
‘‘(B) when the Secretary determines that the deficiency
which was the basis for the order is corrected;
‘‘(C) when the Secretary determines that violation
which was the basis for the order is resolved or the amend-
ment which was the basis for the order is withdrawn;
or
‘‘(D) at any time upon the initiative of the Secretary.
‘‘(g) INDIVIDUAL COMPLAINT PROCESS.—The Secretary shall pro-
vide for a process under which an individual may notify the Sec-
retary concerning a State’s failure to provide medical assistance
as required under the State MediGrant plan or otherwise comply
with the requirements of this title or such plan. If the Secretary
finds that there is a pattern of complaints with respect to a State
or that a particular failure or finding of noncompliance is egregious,
the Secretary shall notify the chief executive officer of the State
of such finding and shall notify the Congress if the State fails
to respond to such notification within a reasonable period of time.
‘‘SEC. 2155. SECRETARIAL AUTHORITY.
‘‘(a) NEGOTIATED AGREEMENT AND DISPUTE RESOLUTION.—
‘‘(1) NEGOTIATIONS.—Nothing in this part shall be con-
strued as preventing the Secretary and a State from at any
time negotiating a satisfactory resolution to any dispute
concerning the approval of a MediGrant plan (or amendments
H. R. 2491—260
to a MediGrant plan) or the compliance of a MediGrant plan
(including its administration) with requirements of this title.
‘‘(2) COOPERATION.—The Secretary shall act in a coopera-
tive manner with the States in carrying out this title. In the
event of a dispute between a State and the Secretary, the
Secretary shall, whenever practicable, engage in informal dis-
pute resolution activities in lieu of formal enforcement or sanc-
tions under section 2154.
‘‘(b) LIMITATIONS ON DELEGATION OF DECISIONMAKING AUTHOR-
ITY.—The Secretary may not delegate (other than to the Adminis-
trator of the Health Care Financing Administration) the authority
to make determinations or reconsiderations respecting the approval
of MediGrant plans (or amendments to such plans) or the compli-
ance of a MediGrant plan (including its administration) with
requirements of this title. Such Administrator may not further
delegate such authority to any individual, including any regional
official of such Administration.
‘‘(c) REQUIRING FORMAL RULEMAKING FOR CHANGES IN SEC-
RETARIAL ADMINISTRATION.—The Secretary shall carry out the
administration of the program under this title only through a
prospective formal rulemaking process, including issuing notices
of proposed rulemaking, publishing proposed rules or modifications
to rules in the Federal Register, and soliciting public comment.
‘‘PART F—GENERAL PROVISIONS
‘‘SEC. 2171. DEFINITIONS.
‘‘(a) MEDICAL ASSISTANCE.—For purposes of this title, the term
‘medical assistance’ means payment of part or all of the cost of
any of the following, or assistance in the purchase, in whole or
in part, of health benefit coverage that includes any of the following,
for eligible low-income individuals (as defined in subsection (b))
as specified under the MediGrant plan:
‘‘(1) Inpatient hospital services.
‘‘(2) Outpatient hospital services.
‘‘(3) Physician services.
‘‘(4) Surgical services.
‘‘(5) Clinic services and other ambulatory health care serv-
ices.
‘‘(6) Nursing facility services.
‘‘(7) Intermediate care facility services for the mentally
retarded.
‘‘(8) Prescription drugs and biologicals and the administra-
tion of such drugs and biologicals, only if such drugs and
biologicals are not furnished for the purpose of causing, or
assisting in causing, the death, suicide, euthanasia, or mercy
killing of a person.
‘‘(9) Over-the-counter medications.
‘‘(10) Laboratory and radiological services.
‘‘(11) Family planning services and supplies.
‘‘(12) Inpatient mental health services, including services
furnished in a State-operated mental hospital and including
residential or other 24-hour therapeutically planned structured
services in the case of a child.
‘‘(13) Outpatient mental health services, including services
furnished in a State-operated mental hospital and including
community-based services in the case of a child.
H. R. 2491—261
‘‘(14) Durable medical equipment and other medically-
related or remedial devices (such as prosthetic devices,
implants, eyeglasses, hearing aids, dental devices, and adaptive
devices).
‘‘(15) Disposable medical supplies.
‘‘(16) Home and community-based health care services and
related supportive services (such as home health nursing serv-
ices, home health aide services, personal care, assistance with
activities of daily living, chore services, day care services, res-
pite care services, training for family members, and minor
modifications to the home).
‘‘(17) Community supported living arrangements.
‘‘(18) Nursing care services (such as nurse practitioner
services, nurse midwife services, advanced practice nurse serv-
ices, private duty nursing care, pediatric nurse services, and
respiratory care services) in a home, school, or other setting.
‘‘(19) Abortion only if necessary to save the life of the
mother or if the pregnancy is the result of an act of rape
or incest.
‘‘(20) Dental services.
‘‘(21) Inpatient substance abuse treatment services and
residential substance abuse treatment services.
‘‘(22) Outpatient substance abuse treatment services.
‘‘(23) Case management services.
‘‘(24) Care coordination services.
‘‘(25) Physical therapy, occupational therapy, and services
for individuals with speech, hearing, and language disorders.
‘‘(26) Hospice care.
‘‘(27) Any other medical, diagnostic, screening, preventive,
restorative, remedial, therapeutic, or rehabilitative services
(whether in a facility, home, school, or other setting) if recog-
nized by State law and only if the service is—
‘‘(A) prescribed by or furnished by a physician or other
licensed or registered practitioner within the scope of prac-
tice as defined by State law,
‘‘(B) performed under the general supervision or at
the direction of a physician, or
‘‘(C) furnished by a health care facility that is operated
by a State or local government or is licensed under State
law and operating within the scope of the license.
‘‘(28) Premiums for private health care insurance coverage,
including private long-term care insurance coverage.
‘‘(29) Medical transportation.
‘‘(30) Medicare cost-sharing (as defined in subsection (c)).
‘‘(31) Enabling services (such as transportation, translation,
and outreach services) only if designed to increase the acces-
sibility of primary and preventive health care services for
eligible low-income individuals.
‘‘(32) Any other health care services or items specified
by the Secretary and not excluded under this section.
‘‘(b) ELIGIBLE LOW-INCOME INDIVIDUAL.—
‘‘(1) IN GENERAL.—The term ‘eligible low-income individual’
means an individual—
‘‘(A) who has been determined eligible by the State
for medical assistance under the MediGrant plan and is
not an inmate of a public institution (except as a patient
in a State psychiatric hospital), and
H. R. 2491—262
‘‘(B) whose family income (as determined under the
plan) does not exceed a percentage (specified in the
MediGrant plan and not to exceed 275 percent) of the
poverty line for a family of the size involved.
‘‘(2) AMOUNT OF INCOME.—In determining the amount of
income under paragraph (1)(B), a State may exclude costs
incurred for medical care or other types of remedial care recog-
nized by the State.
‘‘(c) MEDICARE COST-SHARING.—For purposes of this title, the
term ‘medicare cost-sharing’ means any of the following:
‘‘(1)(A) Premiums under section 1839.
‘‘(B) Premiums under section 1818 or 1818A.
‘‘(2) Coinsurance under title XVIII (including coinsurance
described in section 1813).
‘‘(3) Deductibles established under title XVIII (including
those described in sections 1813 and 1833(b)).
‘‘(4) The difference between the amount that is paid under
section 1833(a) and the amount that would be paid under
such section if any reference to ‘80 percent’ therein were deemed
a reference to ‘100 percent’.
‘‘(5) Premiums for enrollment of an individual with an
eligible organization under section 1876 or with a MedicarePlus
organization under part C of title XVIII.
‘‘(d) ADDITIONAL DEFINITIONS.—For purposes of this title:
‘‘(1) CHILD.—The term ‘child’ means an individual under
19 years of age.
‘‘(2) ELDERLY
INDIVIDUAL.—The term ‘elderly individual’
means an individual who has attained retirement age, as
defined under section 216(l)(1).
‘‘(3) POVERTY LINE DEFINED.—The term ‘poverty line’ has
the meaning given such term in section 673(2) of the Commu-
nity Services Block Grant Act (42 U.S.C. 9902(2)), including
any revision required by such section.
‘‘(4) PREGNANT
WOMAN.—The term ‘pregnant woman’
includes a woman during the 60-day period beginning on the
last day of the pregnancy.
‘‘SEC. 2172. TREATMENT OF TERRITORIES.
‘‘Notwithstanding any other requirement of this title, the Sec-
retary may waive or modify any requirement of this title with
respect to the medical assistance program for a State other than
the 50 States and the District of Columbia, other than a waiver
of—
‘‘(1) the applicable Federal medical assistance percentage,
‘‘(2) the limitation on total payments in a fiscal year to
the amount of the allotment under section 2121(c), or
‘‘(3) the requirement that payment may be made for medical
assistance only with respect to amounts expended by the State
for care and services described in section 2171(a) and medically-
related services (as defined in section 2112(e)(2)).
‘‘SEC. 2173. DESCRIPTION OF TREATMENT OF INDIAN HEALTH SERVICE
FACILITIES.
‘‘In the case of a State in which one or more facilities of
the Indian Health Service are located, the MediGrant plan shall
include a description of—
‘‘(1) what provision (if any) has been made for payment
for items and services furnished by such facilities, and
H. R. 2491—263
‘‘(2) the manner in which medical assistance for low-income
eligible individuals who are Indians will be provided, as deter-
mined by the State in consultation with the appropriate Indian
tribes and tribal organizations.
‘‘SEC. 2174. APPLICATION OF CERTAIN GENERAL PROVISIONS.
‘‘The following sections in part A of title XI shall apply to
States under this title in the same manner as they applied to
a State under title XIX:
‘‘(1) Section 1101(a)(1) (relating to definition of State).
‘‘(2) Section 1116 (relating to administrative and judicial
review), but only insofar as consistent with the provisions of
part C.
‘‘(3) Section 1124 (relating to disclosure of ownership and
related information).
‘‘(4) Section 1126 (relating to disclosure of information
about certain convicted individuals).
‘‘(5) Section 1128B(d) (relating to criminal penalties for
certain additional charges).
‘‘(6) Section 1132 (relating to periods within which claims
must be filed).
‘‘SEC. 2175. MEDIGRANT MASTER DRUG REBATE AGREEMENTS.
‘‘(a) REQUIREMENT FOR MANUFACTURER TO ENTER INTO AGREE-
MENT.—
‘‘(1) IN
GENERAL.—Pursuant to section 2123(f), in order
for payment to be made to a State under part C for medical
assistance for covered outpatient drugs of a manufacturer, the
manufacturer shall enter into and have in effect a MediGrant
master rebate agreement described in subsection (b) with the
Secretary on behalf of States electing to participate in the
agreement.
‘‘(2) COVERAGE
OF
DRUGS
NOT
COVERED
UNDER
REBATE
AGREEMENTS.—Nothing in this section shall be construed to
prohibit a State in its discretion from providing coverage under
its MediGrant plan of a covered outpatient drug for which
no rebate agreement is in effect under this section.
‘‘(3) EFFECT ON EXISTING AGREEMENTS.—If a State has a
rebate agreement in effect with a manufacturer on the date
of the enactment of this section which provides for a minimum
aggregate rebate equal to or greater than the minimum aggre-
gate rebate which would otherwise be paid under the
MediGrant master agreement under this section, at the option
of the State—
‘‘(A) such agreement shall be considered to meet the
requirements of the MediGrant master rebate agreement,
and
‘‘(B) the State shall be considered to have elected to
participate in the MediGrant master rebate agreement.
‘‘(4) LIMITATION ON PRICES OF DRUGS PURCHASED BY COV-
ERED ENTITIES.—
‘‘(A) AGREEMENT
WITH
SECRETARY.—A manufacturer
meets the requirements of this paragraph if the manufac-
turer has entered into an agreement with the Secretary
that meets the requirements of section 340B of the Public
Health Service Act with respect to covered outpatient drugs
purchased by a covered entity on or after the first day
H. R. 2491—264
of the first month that begins after the date of the enact-
ment of title VI of the Veterans Health Care Act of 1992.
‘‘(B) COVERED ENTITY DEFINED.—In this subsection, the
term ‘covered entity’ means an entity described in section
340B(a)(4) of the Public Health Service Act provided that—
‘‘(i) an entity is licensed by the State to purchase
and take possession of covered outpatient drugs and
furnishes the drugs to patients at a cost no greater
than acquisition plus such dispensing fee as may be
allowable under a State pharmaceutical assistance pro-
gram, and
‘‘(ii) such entity is certified pursuant to section
340B(a)(7) of such Act.
‘‘(C) ESTABLISHMENT OF ALTERNATIVE MECHANISM TO
ENSURE AGAINST DUPLICATE DISCOUNTS OR REBATES.—If the
Secretary does not establish a mechanism under section
340B(a)(5)(A) of the Public Health Service Act within 12
months of the date of the enactment of such section, the
following requirements shall apply:
‘‘(i) Each covered entity shall inform the single
State agency under this title when it is seeking
reimbursement from the medicaid plan for medical
assistance with respect to a unit of any covered out-
patient drug which is subject to an agreement under
section 340B(a) of such Act.
‘‘(ii) Each such single State agency shall provide
a means by which a covered entity shall indicate on
any drug reimbursement claims form (or format, where
electronic claims management is used) that a unit of
the drug that is the subject of the form is subject
to an agreement under section 340B of such Act, and
not submit to any manufacturer a claim for a rebate
payment under subsection (b) with respect to such
a drug.
‘‘(D) EFFECT OF SUBSEQUENT AMENDMENTS.—In deter-
mining whether an agreement under subparagraph (A)
meets the requirements of section 340B of the Public
Health Service Act, the Secretary shall not take into
account any amendments to such section that are enacted
after the enactment of title VI of the Veterans Health
Care Act of 1992.
‘‘(E) DETERMINATION OF COMPLIANCE.—A manufacturer
is deemed to meet the requirements of this paragraph
if the manufacturer establishes to the satisfaction of the
Secretary that the manufacturer would comply (and has
offered to comply) with the provisions of section 340B of
the Public Health Service Act (as in effect immediately
after the enactment title VI of the Veterans Health Care
Act of 1992, and would have entered into an agreement
under such section (as such section was in effect at such
time), but for a legislative change in such section after
such enactment.
‘‘(b) TERMS OF REBATE AGREEMENT.—
‘‘(1) PERIODIC
REBATES.—The MediGrant master rebate
agreement under this section shall require the manufacturer
to provide, to the MediGrant plan of each State participating
in the agreement, a rebate for a rebate period in an amount
H. R. 2491—265
specified in subsection (c) for covered outpatient drugs of the
manufacturer dispensed after the effective date of the agree-
ment, for which payment was made under the plan for such
period. Such rebate shall be paid by the manufacturer not
later than 30 days after the date of receipt of the information
described in paragraph (2) for the period involved.
‘‘(2) STATE PROVISION OF INFORMATION.—
‘‘(A) STATE RESPONSIBILITY.—Each State participating
in the MediGrant master rebate agreement shall report
to each manufacturer not later than 60 days after the
end of each rebate period and in a form consistent with
a standard reporting format established by the Secretary,
information on the total number of units of each dosage
form and strength and package size of each covered out-
patient drug, for which payment was made under the
MediGrant plan for the period, and shall promptly transmit
a copy of such report to the Secretary.
‘‘(B) AUDITS.—A manufacturer may audit the informa-
tion provided (or required to be provided) under subpara-
graph (A). Adjustments to rebates shall be made to the
extent that information indicates that utilization was
greater or less than the amount previously specified.
‘‘(3) MANUFACTURER PROVISION OF PRICE INFORMATION.—
‘‘(A) IN GENERAL.—Each manufacturer which is subject
to the MediGrant master rebate agreement under this sec-
tion shall report to the Secretary—
‘‘(i) not later than 30 days after the last day of
each rebate period under the agreement, on the aver-
age manufacturer price (as defined in subsection (i)(1))
and, for single source drugs and innovator multiple
source drugs, the manufacturer’s best price (as defined
in subsection (c)(1)(C)) for each covered outpatient drug
for the rebate period under the agreement, and
‘‘(ii) not later than 30 days after the date of enter-
ing into an agreement under this section, on the aver-
age manufacturer price (as defined in subsection (i)(1))
as of October 1, 1990, for each of the manufacturer’s
covered outpatient drugs.
‘‘(B) VERIFICATION
SURVEYS
OF
AVERAGE
MANUFAC-
TURER PRICE.—The Secretary may survey wholesalers and
manufacturers that directly distribute their covered out-
patient drugs, when necessary, to verify manufacturer
prices reported under subparagraph (A). The Secretary may
impose a civil monetary penalty in an amount not to exceed
$10,000 on a wholesaler, manufacturer, or direct seller,
if the wholesaler, manufacturer, or direct seller of a covered
outpatient drug refuses a request for information by the
Secretary in connection with a survey under this subpara-
graph. The provisions of section 1128A (other than sub-
sections (a) (with respect to amounts of penalties or addi-
tional assessments) and (b)) shall apply to a civil money
penalty under this subparagraph in the same manner as
such provisions apply to a penalty or proceeding under
section 1128A(a).
‘‘(C) PENALTIES.—
‘‘(i) FAILURE TO PROVIDE TIMELY INFORMATION.—
In the case of a manufacturer which is subject to
H. R. 2491—266
the MediGrant master rebate agreement that fails to
provide information required under subparagraph (A)
on a timely basis, the amount of the penalty shall
be $10,000 for each day in which such information
has not been provided and such amount shall be paid
to the Treasury. If such information is not reported
within 90 days of the deadline imposed, the agreement
shall be suspended for services furnished after the
end of such 90-day period and until the date such
information is reported (but in no case shall such
suspension be for a period of less than 30 days).
‘‘(ii) 
FALSE
INFORMATION.—Any 
manufacturer
which is subject to the MediGrant master rebate agree-
ment, or a wholesaler or direct seller, that knowingly
provides false information under subparagraph (A) or
(B) is subject to a civil money penalty in an amount
not to exceed $100,000 for each item of false informa-
tion. Any such civil money penalty shall be in addition
to other penalties as may be prescribed by law. The
provisions of section 1128A (other than subsections
(a) and (b)) shall apply to a civil money penalty under
this subparagraph in the same manner as such provi-
sions apply to a penalty or proceeding under section
1128A(a).
‘‘(D) CONFIDENTIALITY
OF
INFORMATION.—Notwith-
standing any other provision of law, information disclosed
by manufacturers or wholesalers under this paragraph or
under an agreement with the Secretary of Veterans Affairs
described in section 2123(f) is confidential and shall not
be disclosed by the Secretary or the Secretary of Veterans
Affairs or a State agency (or contractor therewith) in a
form which discloses the identity of a specific manufacturer
or wholesaler or the prices charged for drugs by such
manufacturer or wholesaler, except—
‘‘(i) as the Secretary determines to be necessary
to carry out this section,
‘‘(ii) to permit the Comptroller General to review
the information provided, and
‘‘(iii) to permit the Director of the Congressional
Budget Office to review the information provided.
‘‘(4) LENGTH OF AGREEMENT.—
‘‘(A) IN
GENERAL.—The MediGrant master rebate
agreement under this section shall be effective for an initial
period of not less than 1 year and shall be automatically
renewed for a period of not less than 1 year unless termi-
nated under subparagraph (B).
‘‘(B) TERMINATION.—
‘‘(i) BY THE SECRETARY.—The Secretary may pro-
vide for termination of the MediGrant master rebate
agreement with respect to a manufacturer for violation
of the requirements of the agreement or other good
cause shown. Such termination shall not be effective
earlier than 60 days after the date of notice of such
termination. The Secretary shall provide, upon request,
a manufacturer with a hearing concerning such a
termination, but such hearing shall not delay the effec-
tive date of the termination. Failure of a State to
H. R. 2491—267
provide any advance notice of such a termination as
required by regulation shall not affect the State’s right
to terminate coverage of the drugs affected by such
termination as of the effective date of such termination.
‘‘(ii) BY A MANUFACTURER.—A manufacturer may
terminate its participation in the MediGrant master
rebate agreement under this section for any reason.
Any such termination shall not be effective until the
calendar quarter beginning at least 60 days after the
date the manufacturer provides notice to the Secretary.
‘‘(iii) EFFECTIVENESS OF TERMINATION.—Any termi-
nation under this subparagraph shall not affect rebates
due under the agreement before the effective date of
its termination.
‘‘(iv) NOTICE TO STATES.—In the case of a termi-
nation under this subparagraph, the Secretary shall
provide notice of such termination to the States within
not less than 30 days before the effective date of such
termination.
‘‘(v) APPLICATION
TO
TERMINATIONS
OF
OTHER
AGREEMENTS.—The provisions of this subparagraph
shall apply to the terminations of master agreements
described in section 8126(a) of title 38, United States
Code.
‘‘(C) DELAY BEFORE REENTRY.—In the case of any rebate
agreement with a manufacturer under this section which
is terminated, another such agreement with the manufac-
turer (or a successor manufacturer) may not be entered
into until a period of 1 calendar quarter has elapsed since
the date of the termination, unless the Secretary finds
good cause for an earlier reinstatement of such an agree-
ment.
‘‘(5) SETTLEMENT OF DISPUTES.—
‘‘(A) SECRETARY.—The Secretary shall have the author-
ity to resolve, settle, and compromise disputes regarding
the amounts of rebates owed under this section and section
1927.
‘‘(B) STATE.—Each State, with respect to covered out-
patient drugs paid for under the State’s MediGrant plan,
shall have authority, independent of the Secretary’s author-
ity under subparagraph (A), to resolve, settle, and com-
promise disputes regarding the amounts of rebates owed
under this section. Any such action shall be deemed to
comply with the requirements of this title, and such covered
outpatient drugs shall be eligible for payment under the
MediGrant plan under this title.
‘‘(C) AMOUNT OF REBATE.—The Secretary shall limit
the amount of the rebate payable in any case in which
the Secretary determines that, because of unusual cir-
cumstances or questionable data, the provisions of sub-
section (c) result in a rebate amount that is inequitable
or otherwise inconsistent with the purposes of this section.
‘‘(c) DETERMINATION OF AMOUNT OF REBATE.—
‘‘(1) BASIC REBATE FOR SINGLE SOURCE DRUGS AND INNOVA-
TOR MULTIPLE SOURCE DRUGS.—
‘‘(A) IN GENERAL.—Except as provided in paragraph
(2), the amount of the rebate specified in this subsection
H. R. 2491—268
with respect to a State participating in the MediGrant
master rebate agreement for a rebate period (as defined
in subsection (i)(7)) with respect to each dosage form and
strength of a single source drug or an innovator multiple
source drug shall be equal to the product of—
‘‘(i) the total number of units of each dosage form
and strength paid for under the State MediGrant plan
in the rebate period (as reported by the State); and
‘‘(ii) the greater of—
‘‘(I) the difference between the average manu-
facturer price and the best price (as defined in
subparagraph (C)) for the dosage form and
strength of the drug, or
‘‘(II) the minimum rebate percentage (specified
in subparagraph (B)) of such average manufacturer
price,
for the rebate period.
‘‘(B) MINIMUM REBATE PERCENTAGE.—For purposes of
subparagraph (A)(ii)(II), the ‘minimum rebate percentage’
is 15 percent.
‘‘(C) BEST PRICE DEFINED.—For purposes of this sec-
tion—
‘‘(i) IN GENERAL.—The term ‘best price’ means, with
respect to a single source drug or innovator multiple
source drug of a manufacturer, the lowest price avail-
able from the manufacturer during the rebate period
to any wholesaler, retailer, provider, health mainte-
nance organization, nonprofit entity, or governmental
entity within the United States, excluding—
‘‘(I) any prices charged on or after October
1, 1992, to the Indian Health Service, the Depart-
ment of Veterans Affairs, a State home receiving
funds under section 1741 of title 38, United States
Code, the Department of Defense, the Public
Health Service, or a covered entity described in
section 340B(a)(4) of the Public Health Service
Act,
‘‘(II) any prices charged under the Federal
Supply Schedule of the General Services Adminis-
tration,
‘‘(III) any prices used under a State pharma-
ceutical assistance program, and
‘‘(IV) any depot prices and single award con-
tract prices, as defined by the Secretary, of any
agency of the Federal Government.
‘‘(ii) SPECIAL RULES.—The term ‘best price’—
‘‘(I) shall be inclusive of cash discounts, free
goods that are contingent on any purchase require-
ment, volume discounts, and rebates (other than
rebates under this section),
‘‘(II) shall be determined without regard to
special packaging, labeling, or identifiers on the
dosage form or product or package,
‘‘(III) shall not take into account prices that
are merely nominal in amount, and
H. R. 2491—269
‘‘(IV) shall exclude rebates paid under this
section or any other rebates paid to a State partici-
pating in the MediGrant master rebate agreement.
‘‘(2) ADDITIONAL REBATE FOR SINGLE SOURCE AND INNOVA-
TOR MULTIPLE SOURCE DRUGS.—
‘‘(A) IN GENERAL.—The amount of the rebate specified
in this subsection with respect to a State participating
in the MediGrant master rebate agreement for a rebate
period, with respect to each dosage form and strength
of a single source drug or an innovator multiple source
drug, shall be increased by an amount equal to the product
of—
‘‘(i) the total number of units of such dosage form
and strength dispensed after December 31, 1990, for
which payment was made under the MediGrant plan
for the rebate period; and
‘‘(ii) the amount (if any) by which—
‘‘(I) the average manufacturer price for the
dosage form and strength of the drug for the
period, exceeds
‘‘(II) the average manufacturer price for such
dosage form and strength for the calendar quarter
beginning July 1, 1990 (without regard to whether
or not the drug has been sold or transferred to
an entity, including a division or subsidiary of
the manufacturer, after the first day of such quar-
ter), increased by the percentage by which the
Consumer Price Index for All Urban Consumers
(United States city average) for the month before
the month in which the rebate period begins
exceeds such index for September 1990.
‘‘(B) TREATMENT OF SUBSEQUENTLY APPROVED DRUGS.—
In the case of a covered outpatient drug approved by the
Food and Drug Administration after October 1, 1990, clause
(ii)(II) of subparagraph (A) shall be applied by substituting
‘the first full calendar quarter after the day on which
the drug was first marketed’ for ‘the calendar quarter
beginning July 1, 1990’ and ‘the month prior to the first
month of the first full calendar quarter after the day on
which the drug was first marketed’ for ‘September 1990’.
‘‘(3) REBATE FOR OTHER DRUGS.—
‘‘(A) IN GENERAL.—The amount of the rebate paid to
a State participating in the MediGrant master rebate
agreement for a rebate period with respect to each dosage
form and strength of covered outpatient drugs (other than
single source drugs and innovator multiple source drugs)
shall be equal to the product of—
‘‘(i) the applicable percentage (as described in
subparagraph (B)) of the average manufacturer price
for the dosage form and strength for the rebate period,
and
‘‘(ii) the total number of units of such dosage form
and strength dispensed after December 31, 1990, for
which payment was made under the MediGrant plan
for the rebate period.
H. R. 2491—270
‘‘(B) APPLICABLE PERCENTAGE DEFINED.—For purposes
of subparagraph (A)(i), the ‘applicable percentage’ is 11
percent.
‘‘(4) LIMITATION ON AMOUNT OF REBATE TO AMOUNTS PAID
FOR CERTAIN DRUGS.—
‘‘(A) IN GENERAL.—Upon request of the manufacturer
of a covered outpatient drug, the Secretary shall limit,
in accordance with subparagraph (B), the amount of the
rebate under this subsection with respect to a dosage form
and strength of such drug if the majority of the estimated
number of units of such dosage form and strength that
are subject to rebates under this section were dispensed
to inpatients of nursing facilities.
‘‘(B) AMOUNT OF REBATE.—In the case of a covered
outpatient drug subject to subparagraph (A), the amount
of the rebate specified in this subsection for a rebate period,
with respect to each dosage form and strength of such
drug, shall not exceed the amount paid under the
MediGrant plan with respect to such dosage form and
strength of the drug in the rebate period (without consider-
ation of any dispensing fees paid).
‘‘(5) SUPPLEMENTAL REBATES PROHIBITED.—No rebates shall
be required to be paid by manufacturers with respect to covered
outpatient drugs furnished to individuals in any State that
provides for the collection of such rebates in excess of the
rebate amount payable under this section.
‘‘(d) LIMITATIONS ON COVERAGE OF DRUGS BY STATES PARTICI-
PATING IN MASTER AGREEMENT.—
‘‘(1) PERMISSIBLE RESTRICTIONS.—A State participating in
the MediGrant master rebate agreement under this section
may—
‘‘(A) subject to prior authorization under its MediGrant
plan any covered outpatient drug so long as any such
prior authorization program complies with the require-
ments of paragraph (5); and
‘‘(B) exclude or otherwise restrict coverage under its
plan of a covered outpatient drug if—
‘‘(i) the drug is contained in the list referred to
in paragraph (2);
‘‘(ii) the drug is subject to such restrictions pursu-
ant to the MediGrant master rebate agreement or any
agreement described in subsection (a)(4); or
‘‘(iii) the State has excluded coverage of the drug
from its formulary established in accordance with para-
graph (4).
‘‘(2) LIST OF DRUGS SUBJECT TO RESTRICTION.—The follow-
ing drugs or classes of drugs, or their medical uses, may be
excluded from coverage or otherwise restricted by a State
participating in the MediGrant master rebate agreement:
‘‘(A) Agents when used for anorexia, weight loss, or
weight gain.
‘‘(B) Agents when used to promote fertility.
‘‘(C) Agents when used for cosmetic purposes or hair
growth.
‘‘(D) Agents when used for the symptomatic relief of
cough and colds.
‘‘(E) Agents when used to promote smoking cessation.
H. R. 2491—271
‘‘(F) Prescription vitamins and mineral products, except
prenatal vitamins and fluoride preparations.
‘‘(G) Nonprescription drugs.
‘‘(H) Covered outpatient drugs which the manufacturer
seeks to require as a condition of sale that associated
tests or monitoring services be purchased exclusively from
the manufacturer or its designee.
‘‘(I) Barbiturates.
‘‘(J) Benzodiazepines.
‘‘(3) ADDITIONS TO DRUG LISTINGS.—The Secretary shall,
by regulation, periodically update the list of drugs or classes
of drugs described in paragraph (2), or their medical uses,
which the Secretary has determined to be subject to clinical
abuse or inappropriate use.
‘‘(4) REQUIREMENTS FOR FORMULARIES.—A State participat-
ing in the MediGrant master rebate agreement may establish
a formulary if the formulary meets the following requirements:
‘‘(A) The formulary is developed by a committee consist-
ing of physicians, pharmacists, and other appropriate
individuals appointed by the Governor of the State.
‘‘(B) Except as provided in subparagraph (C), the for-
mulary includes the covered outpatient drugs of any manu-
facturer which has entered into and complies with the
agreement under subsection (a) (other than any drug
excluded from coverage or otherwise restricted under para-
graph (2)).
‘‘(C) A covered outpatient drug may be excluded with
respect to the treatment of a specific disease or condition
for an identified population (if any) only if, based on the
drug’s labeling (or, in the case of a drug the prescribed
use of which is not approved under the Federal Food,
Drug, and Cosmetic Act but is a medically accepted indica-
tion, based on information from the appropriate compendia
described in subsection (i)(5)), the excluded drug does not
have a significant, clinically meaningful therapeutic advan-
tage in terms of safety, effectiveness, or clinical outcome
of such treatment for such population over other drugs
included in the formulary and there is a written expla-
nation (available to the public) of the basis for the exclu-
sion.
‘‘(D) The State MediGrant plan permits coverage of
a drug excluded from the formulary (other than any drug
excluded from coverage or otherwise restricted under para-
graph (2)) pursuant to a prior authorization program that
is consistent with paragraph (5).
‘‘(E) The formulary meets such other requirements as
the Secretary may impose in order to achieve program
savings consistent with protecting the health of program
beneficiaries.
A prior authorization program established by a State under
paragraph (5) is not a formulary subject to the requirements
of this paragraph.
‘‘(5) REQUIREMENTS OF PRIOR AUTHORIZATION PROGRAMS.—
The MediGrant plan of a State participating in the MediGrant
master rebate agreement may require, as a condition of cov-
erage or payment for a covered outpatient drug for which
Federal financial participation is available in accordance with
H. R. 2491—272
this section, the approval of the drug before its dispensing
for any medically accepted indication (as defined in subsection
(i)(5)) only if the system providing for such approval—
‘‘(A) provides response by telephone or other tele-
communication device within 24 hours of a request for
prior authorization, and
‘‘(B) except with respect to the drugs on the list referred
to in paragraph (2), provides for the dispensing of at least
a 72-hour supply of a covered outpatient prescription drug
in an emergency situation (as defined by the Secretary).
‘‘(6) OTHER PERMISSIBLE RESTRICTIONS.—A State participat-
ing in the MediGrant master rebate agreement may impose
limitations, with respect to all such drugs in a therapeutic
class, on the minimum or maximum quantities per prescription
or on the number of refills, if such limitations are necessary
to discourage waste, and may address instances of fraud or
abuse by individuals in any manner authorized under this
Act.
‘‘(e) DRUG USE REVIEW.—
‘‘(1) IN GENERAL.—A State participating in the MediGrant
master rebate agreement may provide for a drug use review
program to educate physicians and pharmacists to identify
and reduce the frequency of patterns of fraud, abuse, gross
overuse, or inappropriate or medically unnecessary care, among
physicians, pharmacists, and patients, or associated with spe-
cific drugs or groups of drugs, as well as potential and actual
severe adverse reactions to drugs.
‘‘(2) APPLICATION OF STATE STANDARDS.—Except as provided
in subparagraph (B), a State with a drug use review program
under this subsection shall establish and operate the program
under such standards as it may establish.
‘‘(f) ELECTRONIC CLAIMS MANAGEMENT.—In accordance with
chapter 35 of title 44, United States Code (relating to coordination
of Federal information policy), the Secretary shall encourage each
State to establish, as its principal means of processing claims for
covered outpatient drugs under its MediGrant plan, a point-of-
sale electronic claims management system, for the purpose of
performing on-line, real time eligibility verifications, claims data
capture, adjudication of claims, and assisting pharmacists (and
other authorized persons) in applying for and receiving payment.
‘‘(g) ANNUAL REPORT.—
‘‘(1) IN
GENERAL.—Not later than May 1 of each year,
the Secretary shall transmit to the Committee on Finance
of the Senate, and the Committee on Commerce of the House
of Representatives, a report on the operation of this section
in the preceding fiscal year.
‘‘(2) DETAILS.—Each report shall include information on—
‘‘(A) ingredient costs paid under this title for single
source drugs, multiple source drugs, and nonprescription
covered outpatient drugs,
‘‘(B) the total value of rebates received and number
of manufacturers providing such rebates,
‘‘(C) the effect of inflation on the value of rebates
required under this section,
‘‘(D) trends in prices paid under this title for covered
outpatient drugs, and
H. R. 2491—273
‘‘(E) Federal and State administrative costs associated
with compliance with the provisions of this title.
‘‘(h) EXEMPTION FOR CAPITATED HEALTH CARE ORGANIZATIONS,
HOSPITALS, AND NURSING FACILITIES.—
‘‘(1) IN GENERAL.—Except as provided in paragraph (2),
the requirements of the MediGrant master rebate agreement
under this section shall not apply with respect to covered out-
patient drugs dispensed by or through—
‘‘(A) a capitated health care organization (as defined
in section 2114(c)(1)), or
‘‘(B) a hospital or nursing facility that dispenses cov-
ered outpatient drugs using a drug formulary system and
bills the State no more than the hospital’s or facility’s
purchasing costs for covered outpatient drugs.
‘‘(2) CONSTRUCTION IN DETERMINING BEST PRICE.—Nothing
in paragraph (1) shall be construed as excluding amounts paid
by the entities described in such paragraph for covered out-
patient drugs from the determination of the best price (as
defined in subsection (c)(1)(C)) for such drugs.
‘‘(i) DEFINITIONS.—In the section—
‘‘(1) AVERAGE MANUFACTURER PRICE.—The term ‘average
manufacturer price’ means, with respect to a covered outpatient
drug of a manufacturer for a rebate period, the average price
paid to the manufacturer for the drug in the United States
by wholesalers for drugs distributed to the retail pharmacy
class of trade, after deducting customary prompt pay discounts.
‘‘(2) COVERED OUTPATIENT DRUG.—Subject to the exceptions
in paragraph (3), the term ‘covered outpatient drug’ means—
‘‘(A) of those drugs which are treated as prescribed
drugs for purposes of section 2171(a)(8), a drug which may
be dispensed only upon prescription (except as provided
in subparagraph (D)), and—
‘‘(i) which is approved as a prescription drug under
section 505 or 507 of the Federal Food, Drug, and
Cosmetic Act;
‘‘(ii)(I) which was commercially used or sold in
the United States before the date of the enactment
of the Drug Amendments of 1962 or which is identical,
similar, or related (within the meaning of section
310.6(b)(1) of title 21 of the Code of Federal Regula-
tions) to such a drug, and (II) which has not been
the subject of a final determination by the Secretary
that it is a ‘new drug’ (within the meaning of section
201(p) of the Federal Food, Drug, and Cosmetic Act)
or an action brought by the Secretary under section
301, 302(a), or 304(a) of such Act to enforce section
502(f) or 505(a) of such Act; or
‘‘(iii)(I) which is described in section 107(c)(3) of
the Drug Amendments of 1962 and for which the Sec-
retary has determined there is a compelling justifica-
tion for its medical need, or is identical, similar, or
related (within the meaning of section 310.6(b)(1) of
title 21 of the Code of Federal Regulations) to such
a drug, and (II) for which the Secretary has not issued
a notice of an opportunity for a hearing under section
505(e) of the Federal Food, Drug, and Cosmetic Act
on a proposed order of the Secretary to withdraw
H. R. 2491—274
approval of an application for such drug under such
section because the Secretary has determined that the
drug is less than effective for some or all conditions
of use prescribed, recommended, or suggested in its
labeling;
‘‘(B) a biological product, other than a vaccine which—
‘‘(i) may only be dispensed upon prescription,
‘‘(ii) is licensed under section 351 of the Public
Health Service Act, and
‘‘(iii) is produced at an establishment licensed
under such section to produce such product;
‘‘(C) insulin certified under section 506 of the Federal
Food, Drug, and Cosmetic Act; and
‘‘(D) a drug which may be sold without a prescription
(commonly referred to as an ‘over-the-counter drug’), if
the drug is prescribed by a physician (or other person
authorized to prescribe under State law).
‘‘(3) LIMITING DEFINITION.—The term ‘covered outpatient
drug’ does not include any drug, biological product, or insulin
provided as part of, or as incident to and in the same setting
as, any of the following (and for which payment may be made
under a MediGrant plan as part of payment for the following
and not as direct reimbursement for the drug):
‘‘(A) Inpatient hospital services.
‘‘(B) Hospice services.
‘‘(C) Dental services, except that drugs for which the
MediGrant plan authorizes direct reimbursement to the
dispensing dentist are covered outpatient drugs.
‘‘(D) Physicians’ services.
‘‘(E) Outpatient hospital services.
‘‘(F) Nursing facility services and services provided by
an intermediate care facility for the mentally retarded.
‘‘(G) Other laboratory and x-ray services.
‘‘(H) Renal dialysis services.
Such term also does not include any such drug or product
for which a National Drug Code number is not required by
the Food and Drug Administration or a drug or biological
product used for a medical indication which is not a medically
accepted indication. Any drug, biological product, or insulin
excluded from the definition of such term as a result of this
paragraph shall be treated as a covered outpatient drug for
purposes of determining the best price (as defined in subsection
(c)(1)(C)) for such drug, biological product, or insulin.
‘‘(4) MANUFACTURER.—The term ‘manufacturer’ means,
with respect to a covered outpatient drug, the entity holding
legal title to or possession of the National Drug Code number
for such drug.
‘‘(5) MEDICALLY ACCEPTED INDICATION.—The term ‘medi-
cally accepted indication’ means any use for a covered out-
patient drug which is approved under the Federal Food, Drug,
and Cosmetic Act, or the use of which is supported by one
or more citations included or approved for inclusion in any
of the following compendia:
‘‘(A) American Hospital Formulary Service Drug
Information.
‘‘(B) United States Pharmacopeia-Drug Information.
‘‘(C) American Medical Association Drug Evaluations.
H. R. 2491—275
‘‘(D) The DRUGDEX Information System.
‘‘(E) The peer-reviewed medical literature.
‘‘(6) MULTIPLE SOURCE DRUG; INNOVATOR MULTIPLE SOURCE
DRUG; NONINNOVATOR MULTIPLE SOURCE DRUG; SINGLE SOURCE
DRUG.—
‘‘(A) DEFINED.—
‘‘(i) MULTIPLE SOURCE DRUG.—The term ‘multiple
source drug’ means, with respect to a rebate period,
a covered outpatient drug (not including any drug
described in paragraph (2)(D)) for which there are 2
or more drug products which—
‘‘(I) are rated as therapeutically equivalent
(under the Food and Drug Administration’s most
recent publication of ‘Approved Drug Products with
Therapeutic Equivalence Evaluations’),
‘‘(II) except as provided in subparagraph (B),
are 
pharmaceutically 
equivalent 
and
bioequivalent, as defined in subparagraph (C) and
as determined by the Food and Drug Administra-
tion, and
‘‘(III) are sold or marketed in the State during
the period.
‘‘(ii) INNOVATOR
MULTIPLE
SOURCE
DRUG.—The
term ‘innovator multiple source drug’ means a multiple
source drug that was originally marketed under an
original new drug application or product licensing
application approved by the Food and Drug Adminis-
tration.
‘‘(iii) NONINNOVATOR
MULTIPLE
SOURCE
DRUG.—
The term ‘noninnovator multiple source drug’ means
a multiple source drug that is not an innovator mul-
tiple source drug.
‘‘(iv) SINGLE
SOURCE
DRUG.—The term ‘single
source drug’ means a covered outpatient drug which
is produced or distributed under an original new drug
application approved by the Food and Drug Adminis-
tration, including a drug product marketed by any
cross-licensed producers or distributors operating
under the new drug application or product licensing
application.
‘‘(B) EXCEPTION.—Subparagraph (A)(i)(II) shall not
apply if the Food and Drug Administration changes by
regulation the requirement that, for purposes of the
publication described in subparagraph (A)(i)(I), in order
for drug products to be rated as therapeutically equivalent,
they 
must 
be 
pharmaceutically 
equivalent 
and
bioequivalent, as defined in subparagraph (C).
‘‘(C) DEFINITIONS.—For purposes of this paragraph—
‘‘(i) drug products are pharmaceutically equivalent
if the products contain identical amounts of the same
active drug ingredient in the same dosage form and
meet compendial or other applicable standards of
strength, quality, purity, and identity,
‘‘(ii) drugs are bioequivalent if they do not present
a known or potential bioequivalence problem, or, if
they do present such a problem, they are shown to
meet an appropriate standard of bioequivalence, and
H. R. 2491—276
‘‘(iii) a drug product is considered to be sold or
marketed in a State if it appears in a published
national listing of average wholesale prices selected
by the Secretary, if the listed product is generally
available to the public through retail pharmacies in
that State.
‘‘(7) REBATE PERIOD.—The term ‘rebate period’ means, with
respect to an agreement under subsection (a), a calendar quar-
ter or other period specified by the Secretary with respect
to the payment of rebates under such agreement.’’.
SEC. 7002. TERMINATION OF CURRENT PROGRAM AND TRANSITION.
(a) TERMINATION OF CURRENT PROGRAM; LIMITATION ON MEDIC-
AID PAYMENTS IN FISCAL YEAR 1996.—
(1) REPEAL
OF
TITLE.—Title XIX of the Social Security
Act is repealed effective October 1, 1996, except that the repeal
of section 1928 of such Act is effective on the date of the
enactment of this Act and the succeeding two sections of such
title shall be effective during fiscal year 1996 in the same
manner and to the same extent as such sections were effective
during fiscal year 1995.
(2) LIMITATION ON OBLIGATION AUTHORITY.—Notwithstand-
ing any other provision of such title—
(A) POST-ENACTMENT, 
PRE-MEDIGRANT.—Subject to
subparagraph (B), the Secretary of Health and Human
Services (in this section referred to as the ‘‘Secretary’’)
may enter into obligations under such title with any State
(as defined for purposes of such title) for expenses incurred
after the date of the enactment of this Act and during
fiscal year 1996, but not in excess of the obligation allot-
ment for that State for fiscal year 1996 under section
2121(a)(4) of the Social Security Act (as added by section
7001).
(B) NONE
AFTER
MEDIGRANT.—The Secretary is not
authorized to enter into any obligation with any State
under title XIX of such Act for expenses incurred on or
after the earlier of—
(i) October 1, 1996, or
(ii) the first day of the first quarter on which
the State MediGrant plan under title XXI of such
Act (as added by section 7001) is first effective.
(C) AGREEMENT.—A State’s submission of claims for
payment under section 1903 of such Act after the date
of the enactment of this Act with respect to which the
limitation described in subparagraph (A) applies is deemed
to constitute the State’s acceptance of the obligation limita-
tion under such subparagraph (including the formula for
computing the amount of such obligation limitation).
(D) EFFECT ON MEDICAL ASSISTANCE.—Effective on the
date of the enactment of this section—
(i) except as provided in this paragraph, the Fed-
eral Government has no obligation to provide payment
with respect to items and services provided under title
XIX of the Social Security Act, and
(ii) such title and title XXI of such Act shall not
be construed as providing for an entitlement, under
Federal law in relation to the Federal Government,
H. R. 2491—277
in an individual or person (including any provider)
at the time of provision or receipt of services.
(3) REQUIREMENT FOR TIMELY SUBMITTAL OF CLAIMS.—No
payment shall be made to a State under title XIX of such
Act with respect to an obligation incurred before the date
of the enactment of this Act, unless the State has submitted
to the Secretary, by not later than June 30, 1996, a claim
for Federal financial participation for expenses paid by the
State with respect to such obligations. Nothing in paragraph
(2) shall be construed as affecting the obligation of the Federal
Government to pay claims described in the previous sentence.
(b) MEDICAID-TO-MEDIGRANT TRANSITION PROVISIONS.—
(1) Notwithstanding any provision of law, in the case where
payment has been made under section 1903(a) of the Social
Security Act to a State before October 1, 1995, and for which
a disallowance has not been taken as of such date (or, if
so taken, has not been completed, including judicial review,
by such date), the Secretary of Health and Human Services
shall discontinue the disallowance proceeding and, if such dis-
allowance has been taken as of the date of the enactment
of this Act, any payment reductions effected shall be rescinded
and the payments returned to the State.
(2) The repeal under subsection (a)(1) of section 1928 of
the Social Security Act shall not affect the distribution of vac-
cines purchased and delivered to the States before the date
of the enactment of this Act. No vaccine may be purchased
after such date by the Federal Government or any State under
any contract under section 1928(d) of the Social Security Act.
(3) No judicial or administrative decision rendered regard-
ing requirements imposed under title XIX of the Social Security
Act with respect to a State shall have any application to the
MediGrant plan of the State title under XXI of such Act.
A State may, pursuant to the previous sentence, seek the
abrogation or modification of any such decision after the date
of termination of the State plan under title XIX of such Act.
(4) No cause of action under title XIX of the Social Security
Act which seeks to require a State to establish or maintain
minimum payment rates under such title or claim which seeks
reimbursement for any period before the date of the enactment
of this Act based on the alleged failure of the State to comply
with such title and which has not become final as of such
date shall be brought or continued.
(5) Section 6408(a)(3) of the Omnibus Budget Reconciliation
Act of 1989 (as amended by section 13642 of the Omnibus
Budget Reconciliation Act of 1993) and section 2 of Public
Law 102–276 (as amended by section 13644 of the Omnibus
Budget Reconciliation Act of 1993) are each amended by strik-
ing ‘‘December 31, 1995’’ and inserting ‘‘October 1, 1996’’.
(c) ANTI-FRAUD PROVISIONS.—Section 1128(h)(1) of the Social
Security Act (42 U.S.C. 1320a–7(h)(1)) is amended by inserting
‘‘or a MediGrant plan under title XXI’’ after ‘‘title XIX’’.
(d) TECHNICAL AND CONFORMING AMENDMENTS.—
(1) SECRETARIAL SUBMISSION OF LEGISLATIVE PROPOSAL.—
Not later than 90 days after the date of the enactment of
this Act, the Secretary of Health and Human Services, in
consultation, as appropriate, with heads of other Federal agen-
cies and the States (as defined in section 1101(a)(8) of the
H. R. 2491—278
Social Security Act for purposes of title XIX of such Act),
shall submit to the appropriate committees of Congress a legis-
lative proposal providing for such technical and conforming
amendments in the law as are required by the provisions of,
and amendments made by, this title.
(2) TRANSITIONAL RULE.—Any reference in any provision
of law to title XIX of the Social Security Act or any provision
thereof shall be deemed to be a reference to such title or
provision as in effect on the day before the date of the enact-
ment of this Act.
SEC. 7003. MEDICARE/MEDIGRANT INTEGRATION DEMONSTRATION
PROJECT.
(a) DESCRIPTION OF PROJECTS.—
(1) IN
GENERAL.—The Secretary of Health and Human
Services (in this section referred to as the ‘‘Secretary’’) shall
conduct demonstration projects under this section to dem-
onstrate the manner in which States may use funds from
the medicare program under title XVIII of the Social Security
Act and the MediGrant program under title XXI of such Act
(in this section referred to as the ‘‘medicare and MediGrant
programs’’) for the purpose of providing a more cost-effective
full continuum of care for delivering services to meet the needs
of chronically-ill elderly and disabled beneficiaries who are
eligible for items and services under such programs, through
integrated systems of care, with an emphasis on case manage-
ment, prevention, and interventions designed to avoid institu-
tionalization whenever possible. The Secretary shall use funds
from the amounts appropriated for the medicare and MediGrant
programs to make the payments required under subsection
(d)(1).
(2) OPTION TO PARTICIPATE.—A State may not require an
individual eligible to receive items and services under the medi-
care and MediGrant programs to participate in a demonstration
project under this section.
(b) ESTABLISHMENT.—The Secretary shall make payments in
accordance with subsection (d) for the conduct of demonstration
projects that provide for integrated systems of care in accordance
with subsection (a). Not more than 10 demonstration projects shall
be conducted under this section.
(c) APPLICATIONS.—Each State, or a coalition of States, desiring
to conduct a demonstration project under this section shall prepare
and submit to the Secretary an application at such time, in such
manner, and containing such information as the Secretary may
require, including an explanation of a plan for evaluating the
project. The Secretary shall approve or deny an application not
later than 90 days after the receipt of such application.
(d) PAYMENTS.—
(1) IN GENERAL.—For each calendar quarter occurring dur-
ing a demonstration project conducted under this section, the
Secretary shall pay to each entity designated under paragraph
(3) an amount equal to the Federal capitated payment rate
determined under paragraph (2).
(2) FEDERAL
CAPITATED
PAYMENT
RATE.—The Secretary
shall determine the Federal capitated payment rate for pur-
poses of this section based on the anticipated Federal quarterly
cost of providing care to chronically-ill elderly and disabled
H. R. 2491—279
beneficiaries who are eligible for items and services under
the medicare and MediGrant programs and who have elected
to participate in a demonstration project under this section.
(3) DESIGNATION OF ENTITY.—
(A) IN GENERAL.—Each State, or coalition of States,
shall designate entities to directly receive the payments
described in paragraph (1).
(B) REQUIREMENT.—A State, or a coalition of States,
may not designate an entity under subparagraph (A) unless
such entity meets the quality, solvency, and coverage stand-
ards applicable to providers of items and services under
the medicare and MediGrant programs.
(4) STATE PAYMENTS.—Each State conducting, or in the
case of a coalition of States, participating in a demonstration
project under this section shall pay to the entities designated
under paragraph (3) an amount equal to the product of (A)
100 percent minus the applicable Federal medical assistance
percentage (as defined in section 2122(e) of the Social Security
Act) for the State, and (B) the expenditures under the project
attributable to the MediGrant program for items and services
provided to chronically-ill elderly and disabled beneficiaries
who have elected to participate in the demonstration.
(5) BUDGET NEUTRALITY.—The aggregate amount of Federal
payments to entities designated by a State, or coalition of
States, under paragraph (3) for a fiscal year shall not exceed
the aggregate amount of such payments that would otherwise
have been made under the medicare and MediGrant programs
for such fiscal year for items and services provided to bene-
ficiaries under such programs but for the election of such bene-
ficiaries to participate in a demonstration project under this
section.
(e) DURATION.—
(1) IN
GENERAL.—The demonstration projects conducted
under this section shall be conducted for a 5-year period, subject
to annual review and approval by the Secretary.
(2) TERMINATION.—The Secretary may, with 90 days’ notice,
terminate any demonstration project conducted under this sec-
tion that is not in substantial compliance with the terms of
the application approved by the Secretary under this section.
(f) OVERSIGHT.—The Secretary shall establish quality standards
for evaluating and monitoring the demonstration projects conducted
under this section. Such quality standards shall include reporting
requirements which contain the following:
(1) A description of the demonstration project.
(2) An analysis of beneficiary satisfaction under such
project.
(3) An analysis of the quality of the services delivered
under the project.
(4) A description of the savings to the MediGrant and
medicare programs as a result of the demonstration project.
H. R. 2491—280
TITLE VIII—MEDICARE
SEC. 8000. SHORT TITLE OF TITLE; AMENDMENTS AND REFERENCES
TO OBRA; TABLE OF CONTENTS OF TITLE.
(a) SHORT TITLE.—This title may be cited as the ‘‘Medicare
Preservation Act of 1995’’.
(b) AMENDMENTS TO SOCIAL SECURITY ACT.—Except as other-
wise specifically provided, whenever in this title an amendment
is expressed in terms of an amendment to or repeal of a section
or other provision, the reference shall be considered to be made
to that section or other provision of the Social Security Act.
(c) REFERENCES TO OBRA.—In this title, the terms ‘‘OBRA–
1986’’, ‘‘OBRA–1987’’, ‘‘OBRA–1989’’, ‘‘OBRA–1990’’, and ‘‘OBRA–
1993’’ refer to the Omnibus Budget Reconciliation Act of 1986
(Public Law 99–509), the Omnibus Budget Reconciliation Act of
1987 (Public Law 100–203), the Omnibus Budget Reconciliation
Act of 1989 (Public Law 101–239), the Omnibus Budget Reconcili-
ation Act of 1990 (Public Law 101–508), and the Omnibus Budget
Reconciliation Act of 1993 (Public Law 103–66), respectively.
(d) TABLE OF CONTENTS OF TITLE.—The table of contents of
this title is as follows:
Sec. 8000. Short title of title; amendments and references to OBRA; table of con-
tents of title.
Subtitle A—MedicarePlus Program
‘‘PART C—MEDICAREPLUS PROGRAM
CHAPTER 1—MEDICAREPLUS PROGRAM
Sec. 8001. Establishment of MedicarePlus program.
‘‘PART C—MEDICAREPLUS PROGRAM
‘‘Sec. 1851. Eligibility, election, and enrollment.
‘‘Sec. 1852. Benefits and beneficiary protections.
‘‘Sec. 1853. Organizational and financial requirements for MedicarePlus organi-
zations; provider-sponsored organizations.
‘‘Sec. 1854. Payments to MedicarePlus organizations.
‘‘Sec. 1855. Premiums and rebates.
‘‘Sec. 1856. Establishment of standards; certification of organizations and
plans.
‘‘Sec. 1857. Contracts with MedicarePlus organizations.
‘‘Sec. 1858. Standards for MedicarePlus and medicare information transactions
and data elements.
‘‘Sec. 1859. Definitions; miscellaneous provisions.
Sec. 8002. Duplication and coordination of medicare-related plans.
Sec. 8003. Transitional rules for current medicare HMO program.
CHAPTER 2—SPECIAL RULES FOR MEDICAREPLUS MEDICAL SAVINGS ACCOUNTS
Sec. 8011. MedicarePlus MSA.
Sec. 8012. Certain rebates excluded from gross income.
CHAPTER 3—MEDICARE PAYMENT REVIEW COMMISSION
Sec. 8021. Medicare Payment Review Commission.
CHAPTER 4—TREATMENT OF HOSPITALS WHICH PARTICIPATE IN PROVIDER-
SPONSORED ORGANIZATIONS
Sec. 8031. Treatment of hospitals which participate in provider-sponsored organiza-
tions.
Subtitle B—Health Care Fraud and Abuse Prevention
CHAPTER 1—FRAUD AND ABUSE CONTROL PROGRAM
Sec. 8101. Fraud and abuse control program.
H. R. 2491—281
Sec. 8102. Medicare integrity program.
Sec. 8103. Beneficiary incentive programs.
Sec. 8104. Application of certain health anti-fraud and abuse sanctions to fraud
and abuse against Federal health care programs.
Sec. 8105. Guidance regarding application of health care fraud and abuse sanc-
tions.
CHAPTER 2—REVISIONS TO CURRENT SANCTIONS FOR FRAUD AND ABUSE
Sec. 8111. Mandatory exclusion from participation in medicare and State health
care programs.
Sec. 8112. Establishment of minimum period of exclusion for certain individuals
and entities subject to permissive exclusion from medicare and State
health care programs.
Sec. 8113. Permissive exclusion of individuals with ownership or control interest in
sanctioned entities.
Sec. 8114. Sanctions against practitioners and persons for failure to comply with
statutory obligations.
Sec. 8115. Intermediate sanctions for medicare health maintenance organizations.
Sec. 8116. Additional exception to anti-kickback penalties for discounting and man-
aged care arrangements.
Sec. 8117. Penalties for the fraudulent conversion of assets in order to obtain State
health care program benefits.
Sec. 8118. Effective date.
CHAPTER 3—ADMINISTRATIVE AND MISCELLANEOUS PROVISIONS
Sec. 8121. Establishment of the health care fraud and abuse data collection pro-
gram.
CHAPTER 4—CIVIL MONETARY PENALTIES
Sec. 8131. Social Security Act civil monetary penalties.
Sec. 8132. Clarification of level of intent required for imposition of sanctions.
Sec. 8133. Penalty for false certification for home health services.
CHAPTER 5—AMENDMENTS TO CRIMINAL LAW
Sec. 8141. Health care fraud.
Sec. 8142. Forfeitures for Federal health care offenses.
Sec. 8143. Injunctive relief relating to Federal health care offenses.
Sec. 8144. False statements.
Sec. 8145. Obstruction of criminal investigations of Federal health care offenses.
Sec. 8146. Theft or embezzlement.
Sec. 8147. Laundering of monetary instruments.
Sec. 8148. Authorized investigative demand procedures.
CHAPTER 6—STATE HEALTH CARE FRAUD CONTROL UNITS
Sec. 8151. State health care fraud control units.
Subtitle C—Regulatory Relief
Sec. 8201. Repeal of physician ownership referral prohibitions based on compensa-
tion arrangements.
Sec. 8202. Revision of designated health services subject to ownership referral pro-
hibition.
Sec. 8203. Delay in implementation of 1993 ownership referral changes until pro-
mulgation of regulations.
Sec. 8204. Exceptions to ownership referral prohibitions.
Sec. 8205. Effective date.
Subtitle D—Modification in Payment Policies Regarding Graduate Medical
Education
Sec. 8301. Indirect medical education payments.
Sec. 8302. Direct graduate medical education.
Subtitle E—Provisions Relating to Part A
CHAPTER 1—GENERAL PROVISIONS RELATING TO PART A
Sec. 8401. PPS hospital payment update.
Sec. 8402. PPS-exempt hospital payments.
Sec. 8403. Reductions in disproportionate share payment adjustments.
Sec. 8404. Capital payments for PPS hospitals.
Sec. 8405. Reduction in payments to hospitals for enrollees’ bad debts.
Sec. 8406. Increase in update for certain hospitals with a high proportion of medi-
care patients.
H. R. 2491—282
CHAPTER 2—PAYMENTS TO SKILLED NURSING FACILITIES
SUBCHAPTER A—PROSPECTIVE PAYMENT SYSTEM
Sec. 8410. Prospective payment system for skilled nursing facilities.
SUBCHAPTER B—INTERIM PAYMENT SYSTEM
Sec. 8411. Payments for routine service costs.
Sec. 8412. Cost-effective management of covered non-routine services.
Sec. 8413. Payments for routine service costs.
Sec. 8414. Reductions in payment for capital-related costs.
Sec. 8415. Treatment of items and services paid for under part B.
Sec. 8416. Medical review process.
Sec. 8417. Report by medicare payment review commission.
Sec. 8418. Effective date.
CHAPTER 3—OTHER PROVISIONS RELATING TO PART A
Sec. 8421. Payments for hospice services.
Sec. 8422. Permanent extension of hemophilia pass-through.
Subtitle F—Provisions Relating to Part B
CHAPTER 1—PAYMENT REFORMS
Sec. 8501. Payments for physicians’ services.
Sec. 8502. Elimination of formula-driven overpayments for certain outpatient hos-
pital services.
Sec. 8503. Extension of reductions in payments for costs of hospital outpatient serv-
ices.
Sec. 8504. Reduction in updates to payment amounts for clinical diagnostic labora-
tory tests.
Sec. 8505. Payments for durable medical equipment.
Sec. 8506. Updates for ambulatory surgical services.
Sec. 8507. Payments for ambulance services.
Sec. 8508. Ensuring payment for physician and nurse for jointly furnished anesthe-
sia services.
CHAPTER 2—PART B PREMIUM
Sec. 8511. Promoting solvency of part A trust fund through part B premium.
Sec. 8512. Income-related reduction in medicare subsidy.
Subtitle G—Provisions Relating to Parts A and B
CHAPTER 1—PAYMENTS FOR HOME HEALTH SERVICES
Sec. 8601. Payment for home health services.
Sec. 8602. Maintaining savings resulting from temporary freeze on payment in-
creases for home health services.
Sec. 8603. Extension of waiver of presumption of lack of knowledge of exclusion
from coverage for home health agencies.
Sec. 8604. Extension of period of home health agency certification.
PART 2—Medicare Secondary Payer Improvements
Sec. 8611. Extension and expansion of existing requirements.
Sec. 8612. Improvements in recovery of payments.
CHAPTER 3—OTHER ITEMS AND SERVICES UNDER PARTS A AND B
Sec. 8621. Medicare coverage of certain anti-cancer drug treatments.
Sec. 8622. Administrative provisions.
CHAPTER 4—FAILSAFE
Sec. 8631. Failsafe budget mechanism.
Subtitle H—Rural Areas
Sec. 8701. Medicare-dependent, small, rural hospital payment extension.
Sec. 8702. Medicare rural hospital flexibility program.
Sec. 8703. Establishment of rural emergency access care hospitals.
Sec. 8704. Classification of rural referral centers.
Sec. 8705. Floor on area wage index.
Sec. 8706. Additional payments for physicians’ services furnished in shortage areas.
Sec. 8707. Payments to physician assistants and nurse practitioners for services
furnished in outpatient or home settings.
Sec. 8708. Expanding access to nurse aide training in underserved areas.
H. R. 2491—283
Subtitle A—MedicarePlus Program
CHAPTER 1—MEDICAREPLUS PROGRAM
SEC. 8001. ESTABLISHMENT OF MEDICAREPLUS PROGRAM.
(a) IN GENERAL.—Title XVIII is amended by redesignating part
C as part D and by inserting after part B the following new
part:
‘‘PART C—MEDICAREPLUS PROGRAM
‘‘ELIGIBILITY, ELECTION, AND ENROLLMENT
‘‘SEC. 1851. (a) CHOICE
OF MEDICARE BENEFITS THROUGH
MEDICAREPLUS PLANS.—
‘‘(1) IN GENERAL.—Subject to the provisions of this section,
every MedicarePlus eligible individual (as defined in paragraph
(3)) is entitled to elect to receive benefits under this title—
‘‘(A) through the Medicare fee-for-service program
under parts A and B, or
‘‘(B) through enrollment in a MedicarePlus plan under
this part.
‘‘(2) TYPES OF MEDICAREPLUS PLANS THAT MAY BE AVAIL-
ABLE.—A MedicarePlus plan may be any of the following types
of plans of health insurance:
‘‘(A) COORDINATED CARE PLANS.—Private coordinated
care plans which provide health care services, including
health maintenance organization plans and preferred pro-
vider organization plans.
‘‘(B) COMBINATION OF HIGH DEDUCTIBLE PLAN AND CON-
TRIBUTIONS TO HIGH DEDUCTIBLE MEDICARE MSA.—A high
deductible plan, as defined in section 1859(b)(2), and a
contribution into a High Deductible MedicarePlus medical
savings account (MSA).
‘‘(C) 
PLANS
OFFERED
BY
PROVIDER-SPONSORED
ORGANIZATION.—A MedicarePlus plan offered by a provider-
sponsored organization, as defined in section 1853(i).
‘‘(D) UNION, TAFT-HARTLEY, AND ASSOCIATION PLANS.—
A 
MedicarePlus 
organization 
plan 
offered 
by 
a
MedicarePlus organization that is a union sponsor, Taft-
Hartley sponsor, or qualified association sponsor, as defined
in section 1859(a).
‘‘(E) FEE-FOR-SERVICE
PLANS.—Plans that reimburse
hospitals, physicians, and other providers on the basis of
a privately determined fee schedule or other basis.
‘‘(F) OTHER HEALTH CARE PLANS.—Any other private
plan for the delivery of health care items and services
that is not described in a previous subparagraph.
‘‘(3) MEDICAREPLUS ELIGIBLE INDIVIDUAL.—
‘‘(A) IN GENERAL.—In this title, subject to subparagraph
(B), the term ‘MedicarePlus eligible individual’ means an
individual who is entitled to benefits under part A and
enrolled under part B.
‘‘(B) SPECIAL RULE FOR END-STAGE RENAL DISEASE.—
Such term shall not include an individual medically deter-
mined to have end-stage renal disease, except that an
individual who develops end-stage renal disease while