323
Title IV, Subtitle B
through which individuals entitled to benefits under the
medicare program may report to the Secretary on a con-
fidential basis (at the individual’s request) instances of
suspected fraudulent actions arising under the program by
providers of items and services under the program.
PART II—REVISIONS TO CURRENT SANCTIONS
FOR FRAUD AND ABUSE
SEC. 4111. MANDATORY EXCLUSION FROM PARTICIPATION
IN MEDICARE AND STATE HEALTH CARE PRO-
GRAMS.
(a) INDIVIDUAL CONVICTED OF FELONY RELATING
TO FRAUD.—
(1) IN
GENERAL.—Section 1128(a) of the
Social Security Act (42 U.S.C. 1320a–7(a)) is
amended by adding at the end the following new
paragraph:
‘‘(3) 
FELONY
CONVICTION
RELATING
TO
FRAUD.—Any individual or entity that has been con-
victed, under Federal or State law, in connection
with the delivery of a health care item or service or
with respect to any act or omission in a program
(other than those specifically described in paragraph
(1)) operated by or financed in whole or in part by
any Federal, State, or local government agency, of
a criminal offense consisting of a felony relating to
324
Title IV, Subtitle B
fraud, theft, embezzlement, breach of fiduciary re-
sponsibility, or other financial misconduct.’’.
(2) 
CONFORMING
AMENDMENT.—Section
1128(b)(1) of such Act (42 U.S.C. 1320a–7(b)(1))
is amended—
(A) in the heading, by striking ‘‘CONVIC-
TION’’ and inserting ‘‘MISDEMEANOR CONVIC-
TION’’; and
(B) by striking ‘‘criminal offense’’ and in-
serting ‘‘criminal offense consisting of a mis-
demeanor’’.
(b) INDIVIDUAL CONVICTED OF FELONY RELATING
TO CONTROLLED SUBSTANCE.—
(1) IN GENERAL.—Section 1128(a) of the So-
cial Security Act (42 U.S.C. 1320a–7(a)), as amend-
ed by subsection (a), is amended by adding at the
end the following new paragraph:
‘‘(4) FELONY CONVICTION RELATING TO CON-
TROLLED
SUBSTANCE.—Any individual or entity
that has been convicted, under Federal or State law,
of a criminal offense consisting of a felony relating
to the unlawful manufacture, distribution, prescrip-
tion, or dispensing of a controlled substance.’’.
325
Title IV, Subtitle B
(2) 
CONFORMING
AMENDMENT.—Section
1128(b)(3) of such Act (42 U.S.C. 1320a–7(b)(3))
is amended—
(A) in the heading, by striking ‘‘CONVIC-
TION’’ and inserting ‘‘MISDEMEANOR CONVIC-
TION’’; and
(B) by striking ‘‘criminal offense’’ and in-
serting ‘‘criminal offense consisting of a mis-
demeanor’’.
SEC. 4112. ESTABLISHMENT OF MINIMUM PERIOD OF EX-
CLUSION FOR CERTAIN INDIVIDUALS AND
ENTITIES SUBJECT TO PERMISSIVE EXCLU-
SION FROM MEDICARE AND STATE HEALTH
CARE PROGRAMS.
Section 1128(c)(3) of the Social Security Act (42
U.S.C. 1320a–7(c)(3)) is amended by adding at the end
the following new subparagraphs:
‘‘(D) In the case of an exclusion of an individual or
entity under paragraph (1), (2), or (3) of subsection (b),
the period of the exclusion shall be 3 years, unless the
Secretary determines in accordance with published regula-
tions that a shorter period is appropriate because of miti-
gating circumstances or that a longer period is appro-
priate because of aggravating circumstances.
326
Title IV, Subtitle B
‘‘(E) In the case of an exclusion of an individual or
entity under subsection (b)(4) or (b)(5), the period of the
exclusion shall not be less than the period during which
the individual’s or entity’s license to provide health care
is revoked, suspended, or surrendered, or the individual
or the entity is excluded or suspended from a Federal or
State health care program.
‘‘(F) In the case of an exclusion of an individual or
entity under subsection (b)(6)(B), the period of the exclu-
sion shall be not less than 1 year.’’.
SEC. 4113. CIVIL MONETARY PENALTIES.
Section 1128A(a)(1) of such Act (42 U.S.C. 1320a–
7a(a)(1)) is amended—
(1) in subparagraph (A) by striking ‘‘claimed,’’
and inserting the following: ‘‘claimed, including any
person who presents or causes to be presented a
claim for an item or service that is based on a code
that the person knows or should know will result in
a greater payment to the person than the code the
person knows or should know is applicable to the
item or service actually provided,’’;
(2) in subparagraph (C), by striking ‘‘or’’ at
the end;
(3) in subparagraph (D), by striking ‘‘; or’’ and
inserting ‘‘, or’’; and
327
Title IV, Subtitle B
(4) by inserting after subparagraph (D) the
following new subparagraph:
‘‘(E) is for a medical or other item or serv-
ice that a person knows or should know is not
medically necessary; or’’.
SEC. 4114. ACTIONS SUBJECT TO CRIMINAL PENALTIES.
Section 1128A(b) of the Social Security Act (42
U.S.C. 1320a–7a(a)) is amended by adding the following
new paragraph:
‘‘(3) Any person (including any organization,
agency, or other entity, but excluding a beneficiary
as defined in subsection (i)(5)) who the Secretary
determines has violated section 1128(B)(b) of this
title shall be subject to a civil monetary penalty of
not more than $10,000 for each such violation. In
addition, such person shall be subject to an assess-
ment of not more than twice the total amount of the
remuneration offered, paid, solicited, or received in
violation of section 1128B(b). The total amount of
remuneration subject to an assessment shall be cal-
culated without regard to whether some portion
thereof also may have been intended to serve a pur-
pose 
other 
than 
one 
proscribed 
by 
section
1128B(b).’’.
328
Title IV, Subtitle B
SEC. 4115. SANCTIONS AGAINST PRACTITIONERS AND PER-
SONS FOR FAILURE TO COMPLY WITH STATU-
TORY OBLIGATIONS.
(a) MINIMUM PERIOD OF EXCLUSION FOR PRACTI-
TIONERS AND PERSONS FAILING TO MEET STATUTORY
OBLIGATIONS.—
(1) IN GENERAL.—The second sentence of sec-
tion 1156(b)(1) of the Social Security Act (42
U.S.C. 1320c–5(b)(1)) is amended by striking ‘‘may
prescribe)’’ and inserting ‘‘may prescribe, except
that such period may not be less than 1 year)’’.
(2) 
CONFORMING
AMENDMENT.—Section
1156(b)(2) of such Act (42 U.S.C. 1320c–5(b)(2)) is
amended by striking ‘‘shall remain’’ and inserting
‘‘shall (subject to the minimum period specified in
the second sentence of paragraph (1)) remain’’.
(b) REPEAL OF ‘‘UNWILLING OR UNABLE’’ CONDI-
TION FOR IMPOSITION OF SANCTION.—Section 1156(b)(1)
of such Act (42 U.S.C. 1320c–5(b)(1)) is amended—
(1) in the second sentence, by striking ‘‘and de-
termines’’ and all that follows through ‘‘such obliga-
tions,’’; and
(2) by striking the third sentence.
(c) AMOUNT OF CIVIL MONEY PENALTY.—Section
1156(b)(3) of such Act (42 U.S.C. 1320c–5(b)(3)) is
329
Title IV, Subtitle B
amended by striking ‘‘the actual or estimated cost’’ and
inserting the following: ‘‘up to $10,000 for each instance’’.
SEC. 4116. INTERMEDIATE SANCTIONS FOR MEDICARE
HEALTH MAINTENANCE ORGANIZATIONS.
(a) APPLICATION OF INTERMEDIATE SANCTIONS FOR
ANY PROGRAM VIOLATIONS.—
(1) IN
GENERAL.—Section 1876(i)(1) of the
Social Security Act (42 U.S.C. 1395mm(i)(1)) is
amended by striking ‘‘the Secretary may terminate’’
and all that follows and inserting the following: ‘‘in
accordance with procedures established under para-
graph (9), the Secretary may at any time terminate
any such contract or may impose the intermediate
sanctions described in paragraph (6)(B) or (6)(C)
(whichever is applicable) on the eligible organization
if the Secretary determines that the organization—
‘‘(A) has failed substantially to carry out
the contract;
‘‘(B) is carrying out the contract in a man-
ner inconsistent with the efficient and effective
administration of this section;
‘‘(C) is operating in a manner that is not
in the best interests of the individuals covered
under the contract; or
330
Title IV, Subtitle B
‘‘(D) no longer substantially meets the ap-
plicable conditions of subsections (b), (c), (e),
and (f).’’.
(2) OTHER
INTERMEDIATE
SANCTIONS
FOR
MISCELLANEOUS
PROGRAM
VIOLATIONS.—Section
1876(i)(6) of such Act (42 U.S.C. 1395mm(i)(6)) is
amended by adding at the end the following new
subparagraph:
‘‘(C) In the case of an eligible organization for which
the Secretary makes a determination under paragraph (1)
the basis of which is not described in subparagraph (A),
the Secretary may apply the following intermediate sanc-
tions:
‘‘(i) civil money penalties of not more than
$25,000 for each determination under paragraph (1)
if the deficiency that is the basis of the determina-
tion has directly adversely affected (or has the sub-
stantial likelihood of adversely affecting) an individ-
ual covered under the organization’s contract;
‘‘(ii) civil money penalties of not more than
$10,000 for each week beginning after the initiation
of procedures by the Secretary under paragraph (9)
during which the deficiency that is the basis of a de-
termination under paragraph (1) exists; and
331
Title IV, Subtitle B
‘‘(iii) suspension of enrollment of individuals
under this section after the date the Secretary noti-
fies the organization of a determination under para-
graph (1) and until the Secretary is satisfied that
the deficiency that is the basis for the determination
has been corrected and is not likely to recur.’’.
(3) PROCEDURES FOR IMPOSING SANCTIONS.—
Section 1876(i) of such Act (42 U.S.C. 1395mm(i))
is amended by adding at the end the following new
paragraph:
‘‘(9) The Secretary may terminate a contract with an
eligible organization under this section or may impose the
intermediate sanctions described in paragraph (6) on the
organization in accordance with formal investigation and
compliance procedures established by the Secretary under
which—
‘‘(A) the Secretary provides the organization
with the opportunity to develop and implement a
corrective action plan to correct the deficiencies that
were the basis of the Secretary’s determination
under paragraph (1);
‘‘(B) in deciding whether to impose sanctions,
the Secretary considers aggravating factors such as
whether an entity has a history of deficiencies or has
332
Title IV, Subtitle B
not taken action to correct deficiencies the Secretary
has brought to their attention;
‘‘(C) there are no unreasonable or unnecessary
delays between the finding of a deficiency and the
imposition of sanctions; and
‘‘(D) the Secretary provides the organization
with reasonable notice and opportunity for hearing
(including the right to appeal an initial decision) be-
fore imposing any sanction or terminating the con-
tract.’’.
(4) CONFORMING AMENDMENTS.—
(A) IN GENERAL.—Section 1876(i)(6)(B)
of such Act (42 U.S.C. 1395mm(i)(6)(B)) is
amended by striking the second sentence.
(B) PROCEDURAL
PROVISIONS.—Section
1876(i)(6) 
of 
such 
Act 
(42 
U.S.C.
1395mm(i)(6)) is further amended by adding at
the end the following new subparagraph:
‘‘(D) The provisions of section 1128A (other than
subsections (a) and (b)) shall apply to a civil money pen-
alty under subparagraph (A) or (B) in the same manner
as they apply to a civil money penalty or proceeding under
section 1128A(a).’’.
(b) AGREEMENTS WITH PEER REVIEW ORGANIZA-
TIONS.—
333
Title IV, Subtitle B
(1) REQUIREMENT
FOR
WRITTEN
AGREE-
MENT.—Section 1876(i)(7)(A) of the Social Security
Act (42 U.S.C. 1395mm(i)(7)(A)) is amended by
striking ‘‘an agreement’’ and inserting ‘‘a written
agreement’’.
(2) DEVELOPMENT OF MODEL AGREEMENT.—
Not later than July 1, 1994, the Secretary shall de-
velop a model of the agreement that an eligible orga-
nization with a risk-sharing contract under section
1876 of the Social Security Act must enter into with
an entity providing peer review services with respect
to services provided by the organization under sec-
tion 1876(i)(7)(A) of such Act.
(3) REPORT BY GAO.—
(A) STUDY.—The Comptroller General
shall conduct a study of the costs incurred by
eligible organizations with risk-sharing con-
tracts under section 1876(b) of such Act of
complying with the requirement of entering into
a written agreement with an entity providing
peer review services with respect to services pro-
vided by the organization, together with an
analysis of how information generated by such
entities is used by the Secretary to assess the
334
Title IV, Subtitle B
quality of services provided by such eligible or-
ganizations.
(B) REPORT
TO
CONGRESS.—Not later
than July 1, 1996, the Comptroller General
shall submit a report to the Committee on
Ways and Means and the Committee on Energy
and Commerce of the House of Representatives
and the Committee on Finance and the Special
Committee on Aging of the Senate on the study
conducted under subparagraph (A).
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply with respect to contract years be-
ginning on or after January 1, 1995.
SEC. 4117. EFFECTIVE DATE.
The amendments made by this part shall take effect
January 1, 1995.
PART III—ADMINISTRATIVE AND
MISCELLANEOUS PROVISIONS
SEC. 4121. ESTABLISHMENT OF THE HEALTH CARE FRAUD
AND ABUSE DATA COLLECTION PROGRAM.
(a) GENERAL PURPOSE.—Not later than January 1,
1995, the Attorney General, in consultation with the Sec-
retary, shall establish a national health care fraud and
abuse data collection program for the reporting of final
adverse actions (not including settlements where no find-
335
Title IV, Subtitle B
ing of liability has been made) against health care provid-
ers, suppliers, or practitioners as required by subsection
(b), with access as set forth in subsection (c).
(b) REPORTING OF INFORMATION.—
(1) IN
GENERAL.—Each government agency
and health care plan shall report any final adverse
action (not including settlements where no finding of
liability has been made) taken against a health care
provider, supplier, or practitioner.
(2) INFORMATION TO BE REPORTED.—The in-
formation to be reported under paragraph (1) in-
cludes:
(A) The name of any health care provider,
supplier, or practitioner who is the subject of a
final adverse action.
(B) The name (if known) of any health
care entity with which a health care provider,
supplier, or practitioner is affiliated or associ-
ated.
(C) The nature of the final adverse action.
(D) A description of the acts or omissions
and injuries upon which the final adverse action
was based, and such other information as the
Attorney General determines by regulation is
336
Title IV, Subtitle B
required for appropriate interpretation of infor-
mation reported under this section.
(3) CONFIDENTIALITY.—In determining what
information is required, the Attorney General shall
include procedures to assure that the privacy of indi-
viduals receiving health care services is appropriately
protected.
(4) TIMING AND FORM OF REPORTING.—The
information required to be reported under this sub-
section shall be reported regularly (but not less often
than monthly) and in such form and manner as the
Attorney General prescribes. Such information shall
first be required to be reported on a date specified
by the Attorney General.
(5) TO WHOM REPORTED.—The information re-
quired to be reported under this subsection shall be
reported to the Attorney General and placed in a na-
tional fraud and abuse data bank established by the
Attorney General. The data bank established by the
Attorney General under the preceding sentence shall
be governed by such privacy and confidentiality re-
quirements as determined appropriate by the Attor-
ney General.
(c) DISCLOSURE
AND CORRECTION
OF INFORMA-
TION.—
337
Title IV, Subtitle B
(1) DISCLOSURE.—With respect to the informa-
tion about final adverse actions (not including settle-
ments where no finding of liability has been made)
reported to the Attorney General under this section
respecting a health care provider, supplier, or practi-
tioner, the Attorney General shall, by regulation,
provide for—
(A) disclosure of the information, upon re-
quest, to the health care provider, supplier, or
licensed practitioner, and
(B) procedures in the case of disputed ac-
curacy of the information.
(2) CORRECTIONS.—Each Government agency
and health care plan shall report corrections of in-
formation already reported about any final adverse
action taken against a health care provider, supplier,
or practitioner, in such form and manner that the
Attorney General prescribes by regulation.
(d) PROTECTION FROM LIABILITY
FOR REPORT-
ING.—No person or entity, including the agency des-
ignated by the Attorney General in subsection (b)(5) shall
be held liable in any civil action with respect to any report
made as required by this section, without knowledge of
the falsity of the information contained in the report.
338
Title IV, Subtitle B
(e) DEFINITIONS AND SPECIAL RULES.—For pur-
poses of this section:
(1) The term ‘‘final adverse action’’ includes:
(A) Civil judgments against a health care
provider in Federal or State court related to the
delivery of a health care item or service.
(B) Federal or State criminal convictions
related to the delivery of a health care item or
service.
(C) Actions by State or Federal agencies
responsible for the licensing and certification of
health care providers, suppliers, and licensed
health care practitioners, including formal or
official actions, such as revocation or suspen-
sion of a license (and the length of any such
suspension), reprimand, censure or probation.
(D) Exclusion from participation in Fed-
eral or State health care programs.
(E) Any other adjudicated actions or deci-
sions that the Attorney General shall establish
by regulation.
(2) The terms ‘‘licensed health care practi-
tioner’’, ‘‘licensed practitioner’’, and ‘‘practitioner’’
mean, with respect to a State, an individual who is
licensed or otherwise authorized by the State to pro-
339
Title IV, Subtitle B
vide health care services (or any individual who,
without authority holds himself or herself out to be
so licensed or authorized).
(3) The term ‘‘health care provider’’ means a
provider of services as defined in section 1861(u) of
the Social Security Act, and any entity, including a
health maintenance organization, group medical
practice, or any other entity listed by the Attorney
General in regulation, that provides health care serv-
ices.
(4) The term ‘‘supplier’’ means a supplier of
health care items and services described in sections
1819 (a) and (b), and section 1861 of the Social
Security Act.
(5) The term ‘‘Government agency’’ shall in-
clude:
(A) The Department of Justice.
(B) The Department of Health and
Human Services.
(C) Any other Federal agency that either
administers or provides payment for the deliv-
ery of health care services, including, but not
limited to the Department of Defense and the
Veterans’ Administration.
(D) State law enforcement agencies.
340
Title IV, Subtitle B
(E) State medicaid fraud and abuse units.
(F) State or Federal agencies responsible
for the licensing and certification of health care
providers and licensed health care practitioners.
(6) The term ‘‘health care plan’’ has the mean-
ing given to such term by section 1128(i) of the
Social Security Act.
(7) For purposes of paragraph (2), the exist-
ence of a conviction shall be determined under para-
graph (4) of section 1128(j) of the Social Security
Act.
(f) CONFORMING AMENDMENT.—Section 1921(d) of
the Social Security Act is amended by inserting ‘‘and sec-
tion 4121 of the Health Equity and Access Reform Today
Act of 1993’’ after ‘‘section 422 of the Health Care Qual-
ity Improvement Act of 1986’’.
SEC. 4122. QUARTERLY PUBLICATION OF ADVERSE AC-
TIONS TAKEN.
(a) IN GENERAL.—Part A of title XI of the Social
Security Act (42 U.S.C. 1301 et seq.) is amended by
adding at the end the following new section:
‘‘QUARTERLY PUBLICATION OF ADVERSE ACTIONS TAKEN
‘‘SEC. 1144. Not later than 30 days after the end
of each calendar quarter, the Secretary shall publish in
the Federal Register a listing of all final adverse actions
taken during the quarter under this part (including pen-
341
Title IV, Subtitle B
alties imposed under section 1107, exclusions under sec-
tion 1128, the imposition of civil monetary penalties under
section 1128A, and the imposition of criminal penalties
under section 1128B) and under section 1156.’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply to calendar quarters beginning
on or after January 1, 1995.
PART IV—AMENDMENTS TO CRIMINAL LAW
SEC. 4131. PENALTIES FOR HEALTH CARE FRAUD.
(a) IN GENERAL.—Chapter 63 of title 18, United
States Code, is amended by adding at the end the follow-
ing:
‘‘§ 1347. Health care fraud
‘‘(a) OFFENSE.—Whoever, being a health care pro-
vider, knowingly engages in any scheme or artifice to de-
fraud any person in connection with the provision of
health care shall be fined under this title or imprisoned
not more than 5 years, or both.
‘‘(b) DEFINITION.—In this section, the term ‘health
care provider’ means—
‘‘(1) a physician, nurse, dentist, therapist, phar-
macist, or other professional provider of health care;
and
‘‘(2) a hospital, health maintenance organiza-
tion, pharmacy, laboratory, clinic, or other health
342
Title IV, Subtitle B
care facility or a provider of medical services, medi-
cal devices, medical equipment, or other medical sup-
plies.
(b) CLERICAL AMENDMENT.—The table of sections
at the beginning of chapter 63 of title 18, United States
Code, is amended by adding at the end the following new
item:
‘‘1347. Health care fraud.’’.
SEC. 4132. BROADENING APPLICATION OF MAIL FRAUD
STATUTE.
Section 1341 of title 18, United States Code, is
amended—
(1) by inserting ‘‘or deposits or causes to be de-
posited any matter or thing whatever to be sent or
delivered by any private or commercial interstate
carrier,’’ after ‘‘Postal Service,’’; and
(2) by inserting ‘‘or such carrier’’ after ‘‘causes
to be delivered by mail’’.
SEC. 4133. AUTHORIZATION OF APPROPRIATIONS.
There are authorized to be appropriated for the pur-
poses of carrying out the purposes of this part and the
amendments made by this part—
(1) such sums as may be necessary for the Fed-
eral Bureau of Investigation to hire, equip, and train
no fewer than 275 special agents and support staff
to investigate health-care fraud cases; and
343
Title IV, Subtitle B
(2) such sums as may be necessary to hire,
equip, and train no fewer than 50 assistant United
States Attorneys and support staff to prosecute
health-care fraud cases.
SEC. 4134. REWARDS FOR INFORMATION LEADING TO
PROSECUTION AND CONVICTION.
Section 3059 of title 18, United States Code, is
amended by adding at the end the following new sub-
section:
‘‘(c)(1) In special circumstances and in the Attorney
General’s sole discretion, the Attorney General may make
a payment of up to $10,000 to a person who furnishes
information unknown to the Government relating to a pos-
sible prosecution under section 1101.
‘‘(2) A person is not eligible for a payment under
paragraph (1) if—
‘‘(A) the person is a current or former officer
or employee of a Federal or State government agen-
cy or instrumentality who furnishes information dis-
covered or gathered in the course of government em-
ployment;
‘‘(B) the person knowingly participated in the
offense;
344
Title IV, Subtitle B
‘‘(C) the information furnished by the person
consists of allegations or transactions that have been
disclosed to the public—
‘‘(i) in a criminal, civil, or administrative
proceeding;
‘‘(ii) in a congressional, administrative or
General Accounting Office report, hearing,
audit, or investigation; or
‘‘(iii) by the news media, unless the person
is the original source of the information; or
‘‘(D) when, in the judgment of the Attorney
General, it appears that a person whose illegal ac-
tivities are being prosecuted or investigated could
benefit from the award.
‘‘(3) For the purposes of paragraph (2)(C)(iii), the
term ‘original source’ means a person who has direct and
independent knowledge of the information that is fur-
nished and has voluntarily provided the information to the
Government prior to disclosure by the news media.
‘‘(4) Neither the failure of the Attorney General to
authorize a payment under paragraph (1) nor the amount
authorized shall be subject to judicial review.’’.
345
Title IV, Subtitle B
SEC. 4135. FORFEITURES FOR FEDERAL HEALTH CARE OF-
FENSES.
Section 982(a) of title 18, United States Code, is
amended by inserting after paragraph (5) the following:
‘‘(6)(A) If the court determines that a Federal health
care offense is of a type that poses a serious threat to
the health of any person or has a significant detrimental
impact on the health care system, the court, in imposing
sentence on a person convicted of that offense, shall order
that person to forfeit property, real or personal, that—
‘‘(i)(I) is used in the commission of the offense;
or
‘‘(II) constitutes or is derived from proceeds
traceable to the commission of the offense; and
‘‘(ii) is of a value proportionate to the serious-
ness of the offense.
‘‘(B) For purposes of this paragraph, the term ‘Fed-
eral health care offense’ means a violation of, or a criminal
conspiracy to violate—
‘‘(i) section 1347 of this title;
‘‘(ii) section 1128B of the Social Security Act;
‘‘(iii) sections 287, 371, 664, 666, 1001, 1027,
1341, 1343, or 1954 of this title if the violation or
conspiracy relates to health care fraud;
346
Title IV, Subtitle B
‘‘(iv) section 501 or 511 of the Employee Re-
tirement Income Security Act of 1974, if the viola-
tion or conspiracy relates to health care fraud; and
‘‘(v) section 301, 303(a)(2), or 303 (b) or (e)
of the Federal Food, Drug and Cosmetic Act, if the
violation or conspiracy relates to health care fraud.’’.
SEC. 4136. INJUNCTIVE RELIEF RELATING TO FEDERAL
HEALTH CARE OFFENSES.
Section 1345(a)(1) of title 18, United States Code,
is amended—
(1) by striking ‘‘or’’ at the end of subparagraph
(A);
(2) by inserting ‘‘or’’ at the end of subpara-
graph (B); and
(3) by adding at the end the following:
‘‘(C) committing or about to commit a
Federal health care offense (as defined in sec-
tion 982(a)(6)(B) of this title);’’.
347
Title IV, Subtitle C
Subtitle C—Treatment of Certain
Activities Under the Antitrust
Laws
SEC. 4201. EXEMPTION FROM ANTITRUST LAWS FOR CER-
TAIN COMPETITIVE AND COLLABORATIVE
ACTIVITIES.
(a) EXEMPTION DESCRIBED.—An activity relating to
the provision of health care services shall be exempt from
the antitrust laws if—
(1) the activity is within one of the categories
of safe harbors described in section 4202;
(2) the activity is within an additional safe har-
bor designated by the Attorney General under sec-
tion 4203; or
(3) the activity is specified in and in compliance
with the terms of a certificate of review issued by
the Attorney General under section 4204 and the ac-
tivity occurs—
(A) while the certificate is in effect, or
(B) in the case of a certificate issued dur-
ing the 2-year period beginning on the date of
the enactment of this Act, at any time on or
after the first day of the 2-year period that
ends on the date the certificate takes effect.
348
Title IV, Subtitle C
(b) AWARD OF ATTORNEY’S FEES AND COSTS OF
SUIT.—
(1) IN GENERAL.—If any person brings an ac-
tion alleging a claim under the antitrust laws and
the activity on which the claim is based is found by
the court to be exempt from such laws under sub-
section (a), the court shall, at the conclusion of the
action—
(A) award to a substantially prevailing
claimant the cost of suit attributable to such
claim, including a reasonable attorney’s fee, or
(B) award to a substantially prevailing
party defending against such claim the cost of
such suit attributable to such claim, including
reasonable attorney’s fee, if the claim, or the
claimant’s conduct during litigation of the
claim, was frivolous, unreasonable, without
foundation, or in bad faith.
(2) OFFSET
IN
CASES
OF
BAD
FAITH.—The
court may reduce an award made pursuant to para-
graph (1) in whole or in part by an award in favor
of another party for any part of the cost of suit (in-
cluding a reasonable attorney’s fee) attributable to
conduct during the litigation by any prevailing party
349
Title IV, Subtitle C
that the court finds to be frivolous, unreasonable,
without foundation, or in bad faith.
SEC. 4202. SAFE HARBORS.
The following activities are safe harbors for purposes
of section 4201(a)(1):
(1) COMBINATIONS
WITH
MARKET
SHARE
BELOW
THRESHOLD.—Activities relating to health
care services of any combination of health care pro-
viders if the number of each type or specialty of pro-
vider in question does not exceed 20 percent of the
total number of such type or specialty of provider in
the relevant market area.
(2) ACTIVITIES OF MEDICAL SELF-REGULATORY
ENTITIES.—
(A) IN
GENERAL.—Subject to subpara-
graph (B), any activity of a medical self-regu-
latory entity relating to standard setting or
standard enforcement activities that are de-
signed to promote the quality of health care
provided to patients.
(B) EXCEPTION.—No activity of a medical
self-regulatory entity may be deemed to fall
under the safe harbor established under this
paragraph if the activity is conducted for pur-
poses of financial gain.
350
Title IV, Subtitle C
(3) PARTICIPATION IN SURVEYS.—The partici-
pation of a provider of health care services in a writ-
ten survey of the prices of services, reimbursement
levels, or the compensation and benefits of employ-
ees and personnel, but only if—
(A) the survey is conducted by a third
party, such as a purchaser of health care serv-
ices, governmental entity, institution of higher
education, or trade association;
(B) the information provided by partici-
pants in the survey is based on prices charged,
reimbursements received, or compensation and
benefits paid prior to the third month preceding
the month in which the information is provided;
and
(C) if the results of the survey are dissemi-
nated, the results are aggregated in a manner
that ensures that no recipient of the results
may identify the prices charged, reimbursement
received, or compensation and benefits paid by
any particular provider.
(4) JOINT VENTURES FOR HIGH TECHNOLOGY
AND COSTLY EQUIPMENT AND SERVICES.—Any ac-
tivity of a health care cooperative venture relating to
the purchase, operation, or marketing of high tech-
351
Title IV, Subtitle C
nology or other expensive medical equipment, or the
provision of high cost or complex services, but only
if the number of participants in the venture does not
exceed the lowest number needed to support the ven-
ture. Other providers may be included in the ven-
ture, but only if such other providers could not pur-
chase, operate, or market such equipment or provide
a competing service either alone or through the for-
mation of a competing venture.
(5) HOSPITAL MERGERS.—Activities relating to
a merger of 2 hospitals if, during the 3-year period
preceding the merger, one of the hospitals had an
average of 150 or fewer operational beds and an av-
erage daily inpatient census of less than 50 percent
of such beds.
(6) JOINT PURCHASING ARRANGEMENTS.—Any
joint purchasing arrangement among health care
providers if—
(A) the purchases under the arrangement
represent less than 35 percent of the total sales
of the product or service purchased in the rel-
evant market; and
(B) the cost of the products and services
purchased jointly accounts for less than 20 per-
cent of the total revenues from all products or
352
Title IV, Subtitle C
services sold by each participant in the joint
purchasing arrangement.
(7) NEGOTIATIONS.—Activities consisting of
good faith negotiations to carry out any activity—
(A) described in this section,
(B) within an additional safe harbor des-
ignated by the Attorney General under section
4203,
(C) that is the subject of an application for
a certificate of review under section 4204, or
(D) that is deemed a submission of a noti-
fication under section 4205(a)(2)(B),
without regard to whether such an activity is carried
out.
SEC. 4203. DESIGNATION OF ADDITIONAL SAFE HARBORS.
(a) IN GENERAL.—
(1) SOLICITATION OF PROPOSALS.—Not later
than 30 days after the date of the enactment of this
Act, the Attorney General shall publish a notice in
the Federal Register soliciting proposals for addi-
tional safe harbors.
(2) REVIEW AND REPORT ON PROPOSED SAFE
HARBORS.—Not later than 180 days after the date
of the enactment of this Act, the Attorney General
(in consultation with the Secretary of Health and
354
Title IV, Subtitle C
(1) The extent to which a competitive or col-
laborative activity will accomplish any of the follow-
ing:
(A) An increase in access to health care
services.
(B) The enhancement of the quality of
health care services.
(C) The establishment of cost efficiencies
that will be passed on to consumers, including
economies of scale and reduced transaction and
administrative costs.
(D) An increase in the ability of health
care facilities to provide services in medically
underserved areas or to medically underserved
populations.
(E) An improvement in the utilization of
health care resources or the reduction in the in-
efficient duplication of the use of such re-
sources.
(2) Whether the designation of an activity as a
safe harbor under subsection (a) will result in the
following outcomes:
(A) Health plans and other health care in-
surers, consumers of health care services, and
health care providers will be better able to ne-
355
Title IV, Subtitle C
gotiate payment and service arrangements
which will reduce costs to consumers.
(B) Taking into consideration the charac-
teristics of the particular purchasers and pro-
viders involved, competition will not be unduly
restricted.
(C) Equally efficient and less restrictive al-
ternatives do not exist to meet the criteria de-
scribed in paragraph (1).
(D) The activity will not unreasonably
foreclose competition by denying competitors a
necessary element of competition.
SEC. 4204. CERTIFICATES OF REVIEW.
(a) ESTABLISHMENT OF PROGRAM.—In consultation
with the Secretary and the Chair, the Attorney General
shall (not later than 180 days after the date of the enact-
ment of this Act) issue certificates of review in accordance
with this section for providers of health care services and
advise and assist any person with respect to applying for
such a certificate of review.
(b) PROCEDURES FOR APPLICATION FOR CERTIFI-
CATE.—
(1) FORM; CONTENT.—To apply for a certifi-
cate of review, a person shall submit to the Attorney
General a written application which—
356
Title IV, Subtitle C
(A) specifies the activities relating to the
provision of health care services which satisfy
the criteria described in section 4203(b) and
which will be included in the certificate; and
(B) is in a form and contains any informa-
tion, including information pertaining to the
overall market in which the applicant operates,
required by rule or regulation promulgated
under section 4207.
(2) PUBLICATION OF NOTICE IN FEDERAL REG-
ISTER.—Within 10 days after an application submit-
ted under paragraph (1) is received by the Attorney
General, the Attorney General shall publish in the
Federal Register a notice that announces that an
application for a certificate of review has been sub-
mitted, identifies each person submitting the appli-
cation, and describes the conduct for which the ap-
plication is submitted.
(3) ESTABLISHMENT OF PROCEDURES FOR IS-
SUANCE OF CERTIFICATE.—In consultation with the
Chair and the Secretary, the Attorney General shall
establish procedures to be used in applying for and
in determining whether to approve an application for
a certificate of review under this subtitle. Under
such procedures the Attorney General shall approve
357
Title IV, Subtitle C
an application if the Attorney General determines
that the activities to be covered under the certificate
will satisfy the criteria described in section 4203(b)
for additional safe harbors designated under such
section and that the benefits of the issuance of the
certificate will outweigh any disadvantages that may
result from reduced competition.
(4) TIMING FOR DECISION ON APPLICATION.—
(A) IN GENERAL.—Within 90 days after
the Attorney General receives an application for
a certificate of review, the Attorney General
shall determine whether the applicant’s health
care market activities are in accordance with
the procedures described in paragraph (3). If
the Attorney General, with the concurrence of
the Secretary, determines that such procedures
are met, the Attorney General shall issue to the
applicant a certificate of review. The certificate
of review shall specify—
(i) the health care market activities to
which the certificate applies,
(ii) the person to whom the certificate
of review is issued, and
(iii) any terms and conditions the At-
torney General or the Secretary deems nec-
358
Title IV, Subtitle C
essary to assure compliance with the appli-
cable procedures described in paragraph
(3).
(B) APPLICATIONS DEEMED APPROVED.—
If the Attorney General does not reject an ap-
plication before the expiration of the 90-period
beginning on the date the Attorney General re-
ceives the application, the Attorney General
shall be deemed to have approved the applica-
tion and to have issued a certificate of review
relating to the applicant’s health care market
activities covered under the application.
(5) EXPEDITED ACTION.—If the applicant indi-
cates a special need for prompt disposition, the At-
torney General and the Secretary may expedite ac-
tion on the application, except that no certificate of
review may be issued within 30 days of publication
of notice in the Federal Register under subsection
(b)(2).
(6) ACTIONS UPON DENIAL.—
(A) NOTIFICATION.—If the Attorney Gen-
eral denies in whole or in part an application
for a certificate, the Attorney General shall no-
tify the applicant of the Attorney General’s de-
termination and the reasons for it.
359
Title IV, Subtitle C
(B) REQUEST
FOR
RECONSIDERATION.—
An applicant may, within 30 days of receipt of
notification that the application has been denied
in whole or in part, request the Attorney Gen-
eral to reconsider the determination. The Attor-
ney General, with the concurrence of the Sec-
retary, shall notify the applicant of the deter-
mination upon reconsideration within 30 days
of receipt of the request.
(C) RETURN OF DOCUMENTS.—If the At-
torney General denies an application for the is-
suance of a certificate of review and thereafter
receives from the applicant a request for the re-
turn of documents submitted by the applicant
in connection with the application for the cer-
tificate, the Attorney General and the Secretary
shall return to the applicant, not later than 30
days after receipt of the request, the documents
and all copies of the documents available to the
Attorney General and the Secretary, except to
the extent that the information has been made
public under an exception to the rule against
public 
disclosure 
described 
in 
subsection
(g)(2)(B).
360
Title IV, Subtitle C
(7) FRAUDULENT
PROCUREMENT.—A certifi-
cate of review shall be void ab initio with respect to
any health care market activities for which the cer-
tificate was procured by fraud.
(c) AMENDMENT
AND REVOCATION
OF CERTIFI-
CATES.—
(1) NOTIFICATION
OF
CHANGES.—Any appli-
cant who receives a certificate of review—
(A) shall promptly report to the Attorney
General any change relevant to the matters
specified in the certificate; and
(B) may submit to the Attorney General
an application to amend the certificate to re-
flect the effect of the change on the conduct
specified in the certificate.
(2) AMENDMENT TO CERTIFICATE.—An appli-
cation for an amendment to a certificate of review
shall be treated as an application for the issuance of
a certificate. The effective date of an amendment
shall be the date on which the application for the
amendment is submitted to the Attorney General.
(3) REVOCATION.—
(A) GROUNDS FOR REVOCATION.—In ac-
cordance with this paragraph, the Attorney
General may revoke in whole or in part a cer-
361
Title IV, Subtitle C
tificate of review issued under this section. The
following shall be considered grounds for the
revocation of a certificate:
(i) After the expiration of the 2-year
period beginning on the date a person’s
certificate is issued, the activities of the
person have not substantially accomplished
the purposes for the issuance of the certifi-
cate.
(ii) The person has failed to comply
with any of the terms or conditions im-
posed under the certificate by the Attorney
General or the Secretary under subsection
(b)(4).
(iii) The activities covered under the
certificate no longer satisfy the criteria set
forth in section 4203(b).
(B) REQUEST FOR COMPLIANCE INFORMA-
TION.—If the Attorney General or Secretary
has reason to believe that any of the grounds
for revocation of a certificate of review de-
scribed in subparagraph (A) may apply to a
person holding the certificate, the Attorney
General shall request such information from
such person as the Attorney General or the Sec-
362
Title IV, Subtitle C
retary deems necessary to resolve the matter of
compliance. Failure to comply with such request
shall be grounds for revocation of the certificate
under this paragraph.
(C) PROCEDURES
FOR
REVOCATION.—If
the Attorney General or the Secretary deter-
mines that any of the grounds for revocation of
a certificate of review described in subpara-
graph (A) apply to a person holding the certifi-
cate, or that such person has failed to comply
with a request made under subparagraph (B),
the Attorney General shall give written notice of
the determination to such person. The notice
shall include a statement of the circumstances
underlying, and the reasons in support of, the
determination. In the 60-day period beginning
30 days after the notice is given, the Attorney
General shall revoke the certificate or modify it
as the Attorney General or the Secretary deems
necessary to cause the certificate to apply only
to activities that meet the procedures for the is-
suance of certificates described in subsection
(b)(2).
(D) 
INVESTIGATION
AUTHORITY.—For
purposes of carrying out this paragraph, the
363
Title IV, Subtitle C
Attorney General may conduct investigations in
the same manner as the Attorney General con-
ducts investigations under section 3 of the Anti-
trust Civil Process Act, except that no civil in-
vestigative demand may be issued to a person
to whom a certificate of review is issued if such
person is the target of such investigation.
(d) REVIEW OF DETERMINATIONS.—
(1) AVAILABILITY OF REVIEW FOR CERTAIN AC-
TIONS.—If the Attorney General denies, in whole or
in part, an application for a certificate of review or
for an amendment to a certificate, or revokes or
modifies a certificate pursuant to paragraph (3), the
applicant or certificate holder (as the case may be)
may, within 30 days of the denial or revocation,
bring an action in any appropriate district court of
the United States to set aside the determination on
the ground that such determination is erroneous
based on the preponderance of the evidence.
(2) NO
OTHER
REVIEW
PERMITTED.—Except
as provided in paragraph (1), no action by the At-
torney General or the Secretary pursuant to this
subtitle shall be subject to judicial review.
(3) EFFECT
OF
REJECTED
APPLICATION.—If
the Attorney General denies, in whole or in part, an
364
Title IV, Subtitle C
application for a certificate of review or for an
amendment to a certificate, or revokes or amends a
certificate, neither the negative determination nor
the statement of reasons therefore shall be admissi-
ble in evidence, in any administrative or judicial pro-
ceeding, concerning any claim under the antitrust
laws.
(e) PUBLICATION
OF DECISIONS.—The Attorney
General shall publish a notice in the Federal Register on
a timely basis of each decision made with respect to an
application for a certificate of review under this section
or the amendment or revocation of such a certificate, in
a manner that protects the confidentiality of any propri-
etary information relating to the application.
(f) ANNUAL REPORTS.—Every person to whom a cer-
tificate of review is issued shall submit to the Attorney
General an annual report, in such form and at such time
as the Attorney General may require, that contains any
necessary updates to the information required under sub-
section (b) and a description of the activities of the holder
under the certificate during the preceding year.
(g) RESTRICTIONS ON DISCLOSURE OF INFORMA-
TION.—
(1) WAIVER
OF
DISCLOSURE
REQUIREMENTS
UNDER
ADMINISTRATIVE
PROCEDURE
ACT.—Infor-
365
Title IV, Subtitle C
mation submitted by any person in connection with
the issuance, amendment, or revocation of a certifi-
cate of review shall be exempt from disclosure under
section 552 of title 5, United States Code.
(2) RESTRICTIONS
ON
DISCLOSURE
OF
COM-
MERCIAL OR FINANCIAL INFORMATION.—
(A) IN GENERAL.—Except as provided in
subparagraph (B), no officer or employee of the
United States shall disclose commercial or fi-
nancial information submitted in connection
with the issuance, amendment, or revocation of
a certificate of review if the information is priv-
ileged or confidential and if disclosure of the in-
formation would cause harm to the person who
submitted the information.
(B) 
EXCEPTIONS.—Subparagraph 
(A)
shall not apply with respect to information dis-
closed—
(i) upon a request made by the Con-
gress or any committee of the Congress,
(ii) in a judicial or administrative pro-
ceeding, subject to appropriate protective
orders,
(iii) with the consent of the person
who submitted the information,
366
Title IV, Subtitle C
(iv) in the course of making a deter-
mination with respect to the issuance,
amendment, or revocation of a certificate
of review, if the Attorney General deems
disclosure of the information to be nec-
essary in connection with making the de-
termination,
(v) in accordance with any require-
ment imposed by a statute of the United
States, or
(vi) in accordance with any rule or
regulation promulgated under subsection
(i) permitting the disclosure of the infor-
mation to an agency of the United States
or of a State on the condition that the
agency will disclose the information only
under 
the 
circumstances 
specified 
in
clauses (i) through (v).
(3) PROHIBITION AGAINST USE OF INFORMA-
TION TO SUPPORT OR ANSWER CLAIMS UNDER ANTI-
TRUST LAWS.—Any information disclosed in an ap-
plication for a certificate of review under this section
shall only be admissible into evidence in a judicial or
administrative proceeding for the sole purpose of es-
367
Title IV, Subtitle C
tablishing that a person is entitled to the protections
provided by such a certificate.
SEC. 4205. NOTIFICATIONS PROVIDING REDUCTION IN CER-
TAIN PENALTIES UNDER ANTITRUST LAW
FOR 
HEALTH 
CARE 
COOPERATIVE 
VEN-
TURES.
(a) NOTIFICATIONS DESCRIBED.—
(1) SUBMISSION
OF
NOTIFICATION
BY
VEN-
TURE.—Any party to a health care cooperative ven-
ture, acting on such venture’s behalf, may, not later
than 90 days after entering into a written agreement
to form such venture or not later than 90 days after
the date of the enactment of this Act, whichever is
later, file with the Attorney General a written notifi-
cation disclosing—
(A) the identities of the parties to such
venture,
(B) the nature and objectives of such ven-
ture, and
(C) such additional information as the At-
torney General may require by regulation.
(2) ACTIVITIES DEEMED SUBMISSION OF NOTI-
FICATION.—The following health care cooperative
ventures shall be deemed to have filed a written noti-
368
Title IV, Subtitle C
fication with respect to the venture under paragraph
(1):
(A) SUBMISSION
OF
APPLICATION
FOR
CERTIFICATE OF REVIEW.—Any health care co-
operative venture for which an application for a
certificate of review is filed with the Attorney
General under section 4203.
(B) CERTAIN VENTURES.—Any health care
cooperative venture meeting the following re-
quirements:
(i) The venture consists of a network
of non-institutional providers not greater
than—
(I) in the case of a nonexclusive
network in which the participating
members are permitted to create or
join other competing networks, 50
percent of the providers of health care
services in the relevant geographic
area and 50 percent of the members
of the provider specialty group in the
relevant market; or
(II) in the case of an exclusive
network in which the participating
members are not permitted to create
369
Title IV, Subtitle C
or join other competing networks, 35
percent of the providers of health care
services in the relevant geographic
area and 35 percent of the members
of the provider specialty group in the
relevant market.
(ii) Each member of the venture as-
sumes substantial financial risk for the op-
eration of the venture through risk-sharing
arrangements, including (but not limited
to)—
(I) the acceptance of capitation
contracts;
(II) the acceptance of contracts
with fee withholding mechanisms re-
lating to the ability to meet estab-
lished goals for utilization review and
management; and
(III) the holding by members of
significant ownership or equity inter-
ests in the venture, where the capital
contributed by the members is used to
fund the operational costs of the ven-
ture such as administration, market-
ing, and computer-operated medical
370
Title IV, Subtitle C
information, if the venture develops
and operates comprehensive programs
for utilization management and qual-
ity assurance that include controls
over the use of institutional, special-
ized, and ancillary medical services.
(3) SUBMISSION
OF
ADDITIONAL
INFORMA-
TION.—
(A) REQUEST OF ATTORNEY GENERAL.—
At any time after receiving a notification filed
under paragraph (1), the Attorney General may
require the submission of additional information
or documentary material relevant to the pro-
posed health care cooperative venture.
(B) PARTIES TO VENTURE.—Any party to
a health care cooperative venture may submit
such additional information on the venture’s be-
half as may be appropriate to ensure that the
venture will receive the protections provided
under subsection (b).
(C) REQUIRED SUBMISSION OF INFORMA-
TION
ON
CHANGES
TO
VENTURE.—A health
care cooperative venture for which a notification
is in effect under this section shall submit infor-
mation on any change in the membership of the
371
Title IV, Subtitle C
venture not later than 90 days after such
change occurs.
(4) PUBLICATION OF NOTIFICATION.—
(A) INFORMATION MADE PUBLICLY AVAIL-
ABLE.—Not later than 30 days after receiving
a notification with respect to a venture under
paragraph (1), the Attorney General shall pub-
lish in the Federal Register a notice with re-
spect to the venture that identifies the parties
to the venture and generally describes the pur-
pose and planned activity of the venture. Prior
to its publication, the contents of the notice
shall be made available to the parties to the
venture.
(B) RESTRICTION
ON
DISCLOSURE
OF
OTHER
INFORMATION.—All information and
documentary material submitted pursuant to
this section and all information obtained by the
Attorney General in the course of any investiga-
tion or case with respect to a potential violation
of the antitrust laws by the health care coopera-
tive venture (other than information and mate-
rial described in subparagraph (A)) shall be ex-
empt from disclosure under section 552 of title
5, United States Code, and shall not be made
372
Title IV, Subtitle C
publicly available by any agency of the United
States to which such section applies except in
a judicial proceeding in which such information
and material is subject to any protective order.
(5) WITHDRAWAL OF NOTIFICATION.—Any per-
son who files a notification pursuant to this section
may withdraw such notification before a publication
by the Attorney General pursuant to paragraph (4).
Any person who is deemed to have filed a notifica-
tion under paragraph (2)(A) shall be deemed to have
withdrawn the notification if the certificate of review
in question is revoked or withdrawn under section
4204.
(6) NO
JUDICIAL
REVIEW
PERMITTED.—Any
action taken or not taken by the Attorney General
with respect to notifications filed pursuant to this
subsection shall not be subject to judicial review.
(b) PROTECTIONS FOR VENTURES SUBJECT TO NO-
TIFICATION.—
(1) IN GENERAL.—
(A) PROTECTIONS DESCRIBED.—The pro-
visions of paragraphs (2), (3), (4), and (5) shall
apply with respect to any action under the anti-
trust laws challenging conduct within the scope
373
Title IV, Subtitle C
of a notification which is in effect pursuant to
subsection (a)(1).
(B) TIMING OF PROTECTIONS.—The pro-
tections described in this subsection shall apply
to the venture that is the subject of a notifica-
tion under subsection (a)(1) as of the earlier
of—
(i) the date of the publication in the
Federal Register of the notice published
with respect to the notification; or
(ii) if such notice is not published dur-
ing the period required under subsection
(a)(4), the expiration of the 30-day period
that begins on the date the Attorney Gen-
eral receives any necessary information re-
quired to be submitted under subsection
(a)(1) or any additional information re-
quired by the Attorney General under sub-
section (a)(3)(A).
(2) APPLICABILITY
OF
RULE
OF
REASON
STANDARD.—In any action under the antitrust laws,
the conduct of any person which is within the scope
of a notification filed under subsection (a) shall not
be deemed illegal per se, but shall be judged on the
basis of its reasonableness, taking into account all
374
Title IV, Subtitle C
relevant factors affecting competition, including, but
not limited to, effects on competition in relevant
markets.
(3) LIMITATION
ON
RECOVERY
TO
ACTUAL
DAMAGES AND INTEREST.—Notwithstanding section
4 of the Clayton Act, any person who is entitled to
recovery under the antitrust laws for conduct that is
within the scope of a notification filed under sub-
section (a) shall recover the actual damages sus-
tained by such person and interest calculated at the
rate specified in section 1961 of title 28, United
States Code, for the period beginning on the earliest
date for which injury can be established and ending
on the date of judgment, unless the court finds that
the award of all or part of such interest is unjust
under the circumstances.
(4) AWARD OF ATTORNEY’S FEES AND COSTS
OF SUIT.—
(A) IN GENERAL.—In any action under the
antitrust laws brought against a health care co-
operative venture for conduct that is within the
scope of a notification filed under subsection
(a), the court shall, at the conclusion of the ac-
tion—
375
Title IV, Subtitle C
(i) award to a substantially prevailing
claimant the cost of suit attributable to
such claim, including a reasonable attor-
ney’s fee, or
(ii) award to a substantially prevailing
party defending against such claim the
cost of such suit attributable to such claim,
including reasonable attorney’s fee, if the
claim, or the claimant’s conduct during
litigation of the claim, was frivolous, un-
reasonable, without foundation, or in bad
faith.
(B) OFFSET IN CASES OF BAD FAITH.—
The court may reduce an award made pursuant
to subparagraph (A) in whole or in part by an
award in favor of another party for any part of
the cost of suit (including a reasonable attor-
ney’s fee) attributable to conduct during the
litigation by any prevailing party that the court
finds to be frivolous, unreasonable, without
foundation, or in bad faith.
(5) RESTRICTIONS
ON
ADMISSIBILITY
OF
IN-
FORMATION.—
(A) IN
GENERAL.—Any information dis-
closed in a notification submitted under sub-
376
Title IV, Subtitle C
section (a)(1) and the fact of the publication of
a notification by the Attorney General under
subsection (a)(4) shall only be admissible into
evidence in a judicial or administrative proceed-
ing for the sole purpose of establishing that a
party to a health care cooperative venture is en-
titled to the protections described in this sub-
section.
(B) ACTIONS OF ATTORNEY GENERAL.—
No action taken by the Attorney General pursu-
ant to this section shall be admissible into evi-
dence in any judicial or administrative proceed-
ing for the purpose of supporting or answering
any claim under the antitrust laws.
SEC. 4206. REVIEW AND REPORTS ON SAFE HARBORS AND
CERTIFICATES OF REVIEW.
(a) IN GENERAL.—The Attorney General (in con-
sultation with the Secretary and the Chair) shall periodi-
cally review the safe harbors described in section 4202,
the additional safe harbors designated under section 4203,
and the certificates of review issued under section 4204,
and—
(1) with respect to the safe harbors described in
section 4202, submit such recommendations to Con-
377
Title IV, Subtitle C
gress as the Attorney General considers appropriate
for modifications of such safe harbors;
(2) with respect to the additional safe harbors
designated under section 4203, issue proposed revi-
sions to such activities and publish the revisions in
the Federal Register; and
(3) with respect to the certificates of review,
submit a report to Congress on the issuance of such
certificates, and shall include in the report a descrip-
tion of the effect of such certificates on increasing
access to high quality health care services at reduced
costs.
(b) RECOMMENDATIONS
FOR LEGISLATION.—The
Attorney General shall include in the reports submitted
under subsection (a)(3) any recommendations of the At-
torney General for legislation to improve the program for
the issuance of certificates of review established under this
subtitle.
SEC. 4207. RULES, REGULATIONS, AND GUIDELINES.
(a) SAFE HARBORS, CERTIFICATES, AND NOTIFICA-
TIONS.—The Attorney General, with the concurrence of
the Secretary, shall promulgate such rules, regulations,
and guidelines as are necessary to carry out sections 4202,
4203, 4204, and 4205, including guidelines defining or re-
378
Title IV, Subtitle C
lating to relevant geographic and product markets for
health care services and providers of health care services.
(b) GUIDANCE FOR PROVIDERS.—
(1) IN
GENERAL.—To promote greater cer-
tainty regarding the application of the antitrust laws
to activities in the health care market, the Attorney
General, in consultation with the Secretary and the
Chair, shall (not later than 1 year after the date of
the enactment of this Act), taking into account the
criteria used to designate additional safe harbors
under section 4203 and grant certificates of review
under section 4204, publish guidelines—
(A) to assist providers of health care serv-
ices in analyzing whether the activities of such
providers may be subject to a safe harbor under
sections 4202 or 4203; and
(B) describing specific types of activities
which would meet the requirements for a cer-
tificate of review under section 4204, and sum-
marizing the factual and legal bases on which
the activities would meet the requirements.
(2) PERIODIC UPDATE.—The Attorney General
shall periodically update the guidelines published
under paragraph (1) as the Attorney General consid-
ers appropriate.
379
Title IV, Subtitle C
(3) WAIVER OF ADMINISTRATIVE PROCEDURE
ACT.—Section 553 of title 5, United States Code,
shall not apply to the issuance of guidelines under
paragraph (1).
SEC. 4208. ESTABLISHMENT OF HHS OFFICE OF HEALTH
CARE COMPETITION POLICY.
(a) IN GENERAL.—There is established within the
Department of Health and Human Services an Office to
be known as the Office of Health Care Competition Policy
(hereafter in this section referred to as the ‘‘Office’’). The
Office shall be headed by a director, who shall be ap-
pointed by the Secretary.
(b) DUTIES.—The Office shall coordinate the respon-
sibilities of the Secretary under this subtitle and otherwise
assist the Secretary in developing policies relating to the
competitive and collaborative activities of providers of
health care services.
SEC. 4209. DEFINITIONS.
In this subtitle, the following definitions shall apply:
(1) The term ‘‘antitrust laws’’—
(A) has the meaning given it in subsection
(a) of the first section of the Clayton Act (15
U.S.C. 12(a)), except that such term includes
section 5 of the Federal Trade Commission Act
380
Title IV, Subtitle C
(15 U.S.C. 45) to the extent such section ap-
plies to unfair methods of competition; and
(B) includes any State law similar to the
laws referred to in subparagraph (A).
(2) The term ‘‘Chair’’ means the Chair of the
Federal Trade Commission.
(3) The term ‘‘health care cooperative venture’’
means any activities, including attempts to enter
into or perform a contract or agreement, carried out
by 2 or more persons for the purpose of providing
health care services.
(4) The term ‘‘health care services’’ means any
services for which payment may be made under a
health plan, including services related to the delivery
or administration of such services.
(5) The term ‘‘medical self-regulatory entity’’
means a medical society or association, a specialty
board, a recognized accrediting agency, or a hospital
medical staff, and includes the members, officers,
employees, consultants, and volunteers or commit-
tees of such an entity.
(6) The term ‘‘person’’ includes a State or unit
of local government.
(7) The term ‘‘provider of health care services’’
means any individual or entity that is engaged in the
381
Title IV, Subtitle C
delivery of health care services in a State and that
is required by State law or regulation to be licensed
or certified by the State to engage in the delivery of
such services in the State.
(8) The term ‘‘specialty group’’ means a medi-
cal specialty or subspecialty in which a provider of
health care services may be licensed to practice by
a State (as determined by the Secretary in consulta-
tion with the certification boards for such specialties
and subspecialties).
(9) The term ‘‘standard setting and enforce-
ment activities’’ means—
(A) accreditation of health care practition-
ers, health care providers, medical education in-
stitutions, or medical education programs,
(B) technology assessment and risk man-
agement activities,
(C) the development and implementation of
practice guidelines or practice parameters, or
(D) official peer review proceedings under-
taken by a hospital medical staff (or committee
thereof) or a medical society or association for
purposes of evaluating the professional conduct
or quality of health care provided by a medical
professional.
382
Title V, Subtitle A
TITLE V—SPECIAL ASSISTANCE
FOR FRONTIER, RURAL, AND
URBAN UNDERSERVED AREAS
Subtitle A—Frontier, Rural, and
Urban Underserved Areas
SEC. 5001. ESTABLISHMENT OF GRANT PROGRAM.
Subpart I of part D of title III of the Public Health
Service Act (42 U.S.C. 254b et seq.) is amended by adding
at the end the following new section:
‘‘SEC. 330A. COMMUNITY-BASED PRIMARY HEALTH CARE
GRANT PROGRAM.
‘‘(a) ESTABLISHMENT.—The Secretary shall estab-
lish and administer a program to provide allotments to
States to enable such States to provide grants for the cre-
ation or enhancement of community-based primary health
care entities that provide services to low-income or medi-
cally underserved populations.
‘‘(b) ALLOTMENTS TO STATES.—
‘‘(1) IN GENERAL.—From the amount available
for allotment under subsection (h) for a fiscal year,
the Secretary shall allot to each State an amount
equal to the product of the grant share of the State
(as determined under paragraph (2)) multiplied by
such amount available.
‘‘(2) GRANT SHARE.—
383
Title V, Subtitle A
‘‘(A) IN GENERAL.—For purposes of para-
graph (1), the grant share of a State shall be
the product of the need-adjusted population of
the State (as determined under subparagraph
(B)) multiplied by the Federal matching per-
centage of the State (as determined under sub-
paragraph (C)), expressed as a percentage of
the sum of the products of such factors for all
States.
‘‘(B) NEED-ADJUSTED POPULATION.—
‘‘(i) IN
GENERAL.—For purposes of
subparagraph (A), the need-adjusted popu-
lation of a State shall be the product of
the total population of the State (as esti-
mated by the Secretary of Commerce) mul-
tiplied by the need index of the State (as
determined under clause (ii)).
‘‘(ii) NEED INDEX.—For purposes of
clause (i), the need index of a State shall
be the ratio of—
‘‘(I) the weighted sum of the geo-
graphic percentage of the State (as
determined under clause (iii)), the
poverty percentage of the State (as
determined under clause (iv)), and the
384
Title V, Subtitle A
multiple grant percentage of the State
(as determined under clause (v)); to
‘‘(II) the general population per-
centage of the State (as determined
under clause (vi)).
‘‘(iii) GEOGRAPHIC PERCENTAGE.—
‘‘(I) IN GENERAL.—For purposes
of clause (ii)(I), the geographic per-
centage of the State shall be the esti-
mated population of the State that is
residing in nonurbanized areas (as de-
termined under subclause (II)) ex-
pressed as a percentage of the total
nonurbanized population of all States.
‘‘(II) 
NONURBANIZED
POPU-
LATION.—For purposes of subclause
(I), the estimated population of the
State that is residing in nonurbanized
areas shall be one minus the urban-
ized population of the State (as deter-
mined using the most recent decennial
census), expressed as a percentage of
the total population of the State (as
determined using the most recent de-
cennial census), multiplied by the cur-
385
Title V, Subtitle A
rent estimated population of the
State.
‘‘(III) STATE OF ALASKA.—Not-
withstanding subclause (I), the geo-
graphic percentage for the State of
Alaska shall be the relative population
density of the State expressed as the
ratio of—
‘‘(aa) the average number of
individuals residing in Alaska per
square mile; to
‘‘(bb) the average number of
individuals residing in the United
States per square mile.
‘‘(iv) POVERTY
PERCENTAGE.—For
purposes of clause (ii)(I), the poverty per-
centage of the State shall be the estimated
number of people residing in the State
with incomes below 200 percent of the in-
come official poverty line (as adjusted for
actual costs and incomes in each State and
as determined by the Office of Manage-
ment and Budget) expressed as a percent-
age of the total number of such people re-
siding in all States.
386
Title V, Subtitle A
‘‘(v) MULTIPLE
GRANT
PERCENT-
AGE.—For purposes of clause (ii)(I), the
multiple grant percentage of the State
shall be the amount of Federal funding re-
ceived by the State under grants awarded
under sections 329, 330, and 340, ex-
pressed as a percentage of the total
amounts received under such grants by all
States. With respect to a State, such per-
centage shall not exceed twice the general
population percentage of the State under
clause (vi) or be less than one-half of the
States general population percentage.
‘‘(vi) GENERAL
POPULATION
PER-
CENTAGE.—For purposes of clause (ii)(II),
the general population percentage of the
State shall be the total population of the
State (as determined by the Secretary of
Commerce) expressed as a percentage of
the total population of all States.
‘‘(C) FEDERAL MATCHING PERCENTAGE.—
‘‘(i) IN
GENERAL.—For purposes of
subparagraph (A), the Federal matching
percentage of the State shall be equal to
387
Title V, Subtitle A
one, less the State matching percentage (as
determined under clause (ii)).
‘‘(ii) STATE
MATCHING
PERCENT-
AGE.—For purposes of clause (i), the State
matching percentage of the State shall be
0.25 multiplied by the ratio of the total
taxable resource percentage (as determined
under clause (iii)) to the need-adjusted
population of the State (as determined
under subparagraph (B)).
‘‘(iii) TOTAL
TAXABLE
RESOURCE
PERCENTAGE.—For purposes of clause (ii),
the total taxable resources percentage of
the State shall be the total taxable re-
sources of a State (as determined by the
Secretary of the Treasury) expressed as a
percentage of the sum of the total taxable
resources of all States.
‘‘(3) ANNUAL ESTIMATES.—
‘‘(A) IN
GENERAL.—If the Secretary of
Commerce does not produce the annual esti-
mates required under paragraph (2)(B)(iv),
such estimates shall be determined by multiply-
ing the percentage of the population of the
State that is below 200 percent of the income
388
Title V, Subtitle A
official poverty line as determined using the
most recent decennial census by the most recent
estimate of the total population of the State.
Except as provided in subparagraph (B), the
calculations required under this subparagraph
shall be made based on the most recent 3-year
average of the total taxable resources of individ-
uals within the State.
‘‘(B) DISTRICT
OF
COLUMBIA.—Notwith-
standing subparagraph (A), the calculations re-
quired under such subparagraph with respect to
the District of Columbia shall be based on the
most recent 3-year average of the personal in-
come of individuals residing within the District
as a percentage of the personal income for all
individuals residing within the District, as de-
termined by the Secretary of Commerce.
‘‘(C) STATE OF ALASKA.—Notwithstanding
subparagraph (A), the calculations required
under such subparagraph with respect to the
State of Alaska shall be based on the quotient
of—
‘‘(i) the most recent 3-year average of
the per capita income of individuals resid-
ing in the State; divided by
389
Title V, Subtitle A
‘‘(ii) 1.25.
‘‘(4) MATCHING REQUIREMENT.—A State that
receives an allotment under this section shall make
available State resources (either directly or indi-
rectly) to carry out this section in an amount that
shall equal the State matching percentage for the
State (as determined under paragraph (2)(C)(ii)) di-
vided by the Federal matching percentage (as deter-
mined under paragraph (2)(C)).
‘‘(c) APPLICATION.—
‘‘(1) IN GENERAL.—To be eligible to receive an
allotment under this section, a State shall prepare
and submit an application to the Secretary at such
time, in such manner, and containing such informa-
tion as the Secretary may by regulation require.
‘‘(2) ASSURANCES.—A State application sub-
mitted under paragraph (1) shall contain an assur-
ance that—
‘‘(A) the State will use amounts received
under its allotment consistent with the require-
ments of this section; and
‘‘(B) the State will provide, from non-Fed-
eral sources, the amounts required under sub-
section (b)(4).
‘‘(d) USE OF FUNDS.—
390
Title V, Subtitle A
‘‘(1) IN
GENERAL.—The State shall use
amounts received under this section to award grants
to eligible public and nonprofit private entities, or
consortia of such entities, within the State to enable
such entities or consortia to provide services of the
type described in paragraph (2) of section 329(h) to
low-income or medically underserved populations.
‘‘(2) ELIGIBILITY.—To be eligible to receive a
grant under paragraph (1), an entity or consortium
shall—
‘‘(A) prepare and submit to the admin-
istering entity of the State, an application at
such time, in such manner, and containing such
information as such administering entity may
require, including a plan for the provision of
services of the type described in paragraph (3);
‘‘(B) provide assurances that services will
be provided under the grant at fee rates estab-
lished or determined in accordance with section
330(e)(3)(F); and
‘‘(C) provide assurances that in the case of
services provided to individuals with health in-
surance, such insurance shall be used as the
primary source of payment for such services.
392
Title V, Subtitle A
‘‘(i) the services provided under the
grant will expand the availability of pri-
mary care services to the maximum num-
ber of low-income or medically underserved
populations who have no access to such
care on the date of the grant award; and
‘‘(ii) the delivery of services under the
grant will be cost-effective; and
‘‘(B) ensure that an equitable distribution
of funds is achieved among urban and rural en-
tities or consortia.
‘‘(e) REPORTS AND AUDITS.—Each State shall pre-
pare and submit to the Secretary annual reports concern-
ing the State’s activities under this section which shall be
in such form and contain such information as the Sec-
retary determines appropriate. Each such State shall es-
tablish fiscal control and fund accounting procedures as
may be necessary to assure that amounts received under
this section are being disbursed properly and are ccounted
for, and include the results of audits conducted under such
procedures in the reports submitted under this subsection.
‘‘(f) PAYMENTS.—
‘‘(1) ENTITLEMENT.—Each State for which an
application has been approved by the Secretary
under this section shall be entitled to payments
393
Title V, Subtitle A
under this section for each fiscal year in an amount
not to exceed the State’s allotment under subsection
(b) to be expended by the State in accordance with
the terms of the application for the fiscal year for
which the allotment is to be made.
‘‘(2) METHOD OF PAYMENTS.—The Secretary
may make payments to a State in installments, and
in advance or by way of reimbursement, with nec-
essary adjustments on account of overpayments or
underpayments, as the Secretary may determine.
‘‘(3) STATE
SPENDING
OF
PAYMENTS.—Pay-
ments to a State from the allotment under sub-
section (b) for any fiscal year must be expended by
the State in that fiscal year or in the succeeding fis-
cal year.
‘‘(g) DEFINITION.—As used in this section, the term
‘administering entity of the State’ means the agency or
official designated by the chief executive officer of the
State to administer the amounts provided to the State
under this section.
‘‘(h) FUNDING.—Notwithstanding any other provi-
sion of law, the Secretary shall use 50 percent of the
amounts that the Secretary is required to utilize under
section 330B(h) in each fiscal year to carry out this sec-
tion.’’.
394
Title V, Subtitle A
SEC. 5002. ESTABLISHMENT OF NEW PROGRAM TO PRO-
VIDE FUNDS TO ALLOW FEDERALLY QUALI-
FIED HEALTH CENTERS AND OTHER ENTI-
TIES OR ORGANIZATIONS TO PROVIDE EX-
PANDED SERVICES TO MEDICALLY UNDER-
SERVED INDIVIDUALS.
(a) IN GENERAL.—Subpart I of part D of title III
of the Public Health Service Act (42 U.S.C. 254b et seq.)
(as amended by section 5001) is amended by adding at
the end the following new section:
‘‘SEC. 330B. ESTABLISHMENT OF NEW PROGRAM TO PRO-
VIDE FUNDS TO ALLOW FEDERALLY QUALI-
FIED HEALTH CENTERS AND OTHER ENTI-
TIES OR ORGANIZATIONS TO PROVIDE EX-
PANDED SERVICES TO MEDICALLY UNDER-
SERVED INDIVIDUALS.
‘‘(a) ESTABLISHMENT OF HEALTH SERVICES AC-
CESS PROGRAM.—From amounts appropriated under this
section, the Secretary shall, acting through the Bureau of
Health Care Delivery Assistance, award grants under this
section to federally qualified health centers (hereinafter re-
ferred to in this section as ‘FQHC’s’) and other entities
and organizations submitting applications under this sec-
tion (as described in subsection (c)) for the purpose of
providing access to services for medically underserved pop-
ulations (as defined in section 330(b)(3)) or in high im-
395
Title V, Subtitle A
pact areas (as defined in section 329(a)(5)) not currently
being served by a FQHC.
‘‘(b) ELIGIBILITY FOR GRANTS.—
‘‘(1) IN GENERAL.—The Secretary shall award
grants under this section to entities or organizations
described in this paragraph and paragraph (2) which
have submitted a proposal to the Secretary to ex-
pand such entities or organizations operations (in-
cluding expansions to new sites (as determined nec-
essary by the Secretary)) to serve medically under-
served populations or high impact areas not cur-
rently served by a FQHC and which—
‘‘(A) have as of January 1, 1991, been cer-
tified by the Secretary as a FQHC under sec-
tion 1905(l)(2)(B) of the Social Security Act;
or
‘‘(B) have submitted applications to the
Secretary to qualify as FQHC’s under such sec-
tion 1905(l)(2)(B); or
‘‘(C) have submitted a plan to the Sec-
retary which provides that the entity will meet
the requirements to qualify as a FQHC when
operational.
‘‘(2) NON FQHC ENTITIES.—
396
Title V, Subtitle A
‘‘(A) ELIGIBILITY.—The Secretary shall
also make grants under this section to public or
private nonprofit agencies, health care entities
or organizations which meet the requirements
necessary to qualify as a FQHC except, the re-
quirement that such entity have a consumer
majority governing board and which have sub-
mitted a proposal to the Secretary to provide
those services provided by a FQHC as defined
in section 1905(l)(2)(B) of the Social Security
Act and which are designed to promote access
to primary care services or to reduce reliance on
hospital emergency rooms or other high cost
providers of primary health care services, pro-
vided such proposal is developed by the entity
or organizations (or such entities or organiza-
tions acting in a consortium in a community)
with the review and approval of the Governor of
the State in which such entity or organization
is located.
‘‘(B) LIMITATION.—The Secretary shall
provide in making grants to entities or organi-
zations described in this paragraph that no
more than 10 percent of the funds provided for
397
Title V, Subtitle A
grants under this section shall be made avail-
able for grants to such entities or organizations.
‘‘(c) APPLICATION REQUIREMENTS.—
‘‘(1) IN GENERAL.—In order to be eligible to
receive a grant under this section, a FQHC or other
entity or organization must submit an application in
such form and at such time as the Secretary shall
prescribe and which meets the requirements of this
subsection.
‘‘(2) REQUIREMENTS.—An application submit-
ted under this section must provide—
‘‘(A)(i) for a schedule of fees or payments
for the provision of the services provided by the
entity designed to cover its reasonable costs of
operations; and
‘‘(ii) for a corresponding schedule of dis-
counts to be applied to such fees or payments,
based upon the patient’s ability to pay (deter-
mined by using a sliding scale formula based on
the income of the patient);
‘‘(B) assurances that the entity or organi-
zation provides services to persons who are eli-
gible for benefits under title XVIII of the Social
Security Act, for medical assistance under title
XIX of such Act or for assistance for medical
398
Title V, Subtitle A
expenses under any other public assistance pro-
gram or private health insurance program; and
‘‘(C) assurances that the entity or organi-
zation has made and will continue to make
every reasonable effort to collect reimbursement
for services—
‘‘(i) from persons eligible for assist-
ance under any of the programs described
in subparagraph (B); and
‘‘(ii) from patients not entitled to ben-
efits under any such programs.
‘‘(d) LIMITATIONS ON USE OF FUNDS.—
‘‘(1) IN GENERAL.—From the amounts award-
ed to an entity or organization under this section,
funds may be used for purposes of planning but may
only be expended for the costs of—
‘‘(A) assessing the needs of the populations
or proposed areas to be served;
‘‘(B) preparing a description of how the
needs identified will be met;
‘‘(C) development of an implementation
plan that addresses—
‘‘(i) recruitment and training of per-
sonnel; and
399
Title V, Subtitle A
‘‘(ii) activities necessary to achieve
operational status in order to meet FQHC
requirements under 1905(l)(2)(B) of the
Social Security Act.
‘‘(2) RECRUITING, TRAINING AND COMPENSA-
TION OF STAFF.—From the amounts awarded to an
entity or organization under this section, funds may
be used for the purposes of paying for the costs of
recruiting, training and compensating staff (clinical
and associated administrative personnel (to the ex-
tent such costs are not already reimbursed under
title XIX of the Social Security Act or any other
State or Federal program)) to the extent necessary
to allow the entity to operate at new or expanded ex-
isting sites.
‘‘(3) FACILITIES AND EQUIPMENT.—From the
amounts awarded to an entity or organization under
this section, funds may be expended for the purposes
of acquiring facilities and equipment but only for the
costs of—
‘‘(A) construction of new buildings (to the
extent that new construction is found to be the
most cost-efficient approach by the Secretary);
‘‘(B) acquiring, expanding, or modernizing
of existing facilities;
400
Title V, Subtitle A
‘‘(C) purchasing essential (as determined
by the Secretary) equipment; and
‘‘(D) amortization of principal and pay-
ment of interest on loans obtained for purposes
of site construction, acquisition, modernization,
or expansion, as well as necessary equipment.
‘‘(4) SERVICES.—From the amounts awarded
to an entity or organization under this section, funds
may be expended for the payment of services but
only for the costs of—
‘‘(A) providing or arranging for the provi-
sion of all services through the entity necessary
to qualify such entity as a FQHC under section
1905(l)(2)(B) of the Social Security Act;
‘‘(B) providing or arranging for any other
service that a FQHC may provide and be reim-
bursed for under title XIX of such Act; and
‘‘(C) providing any unreimbursed costs of
providing services as described in section 330(a)
to patients.
‘‘(e) PRIORITIES IN THE AWARDING OF GRANTS.—
‘‘(1) CERTIFIED FQHC’S.—The Secretary shall
give priority in awarding grants under this section
to entities which have, as of January 1, 1991, been
certified as a FQHC under section 1905(l)(2)(B) of
401
Title V, Subtitle A
the Social Security Act and which have submitted a
proposal to the Secretary to expand their operations
(including expansion to new sites) to serve medically
underserved populations for high impact areas not
currently served by a FQHC. The Secretary shall
give first priority in awarding grants under this sec-
tion to those FQHCs or other entities which propose
to serve populations with the highest degree of
unmet need, and which can demonstrate the ability
to expand their operations in the most efficient man-
ner.
‘‘(2) QUALIFIED FQHC’S.—The Secretary shall
give second priority in awarding grants to entities
which have submitted applications to the Secretary
which demonstrate that the entity will qualify as a
FQHC under section 1905(l)(2)(B) of the Social Se-
curity Act before it provides or arranges for the pro-
vision of services supported by funds awarded under
this section, and which are serving or proposing to
serve medically underserved populations or high im-
pact areas which are not currently served (or pro-
posed to be served) by a FQHC.
‘‘(3) EXPANDED
SERVICES
AND
PROJECTS.—
The Secretary shall give third priority in awarding
grants in subsequent years to those FQHCs or other
402
Title V, Subtitle A
entities which have provided for expanded services
and projects and are able to demonstrate that such
entity will incur significant unreimbursed costs in
providing such expanded services.
‘‘(f) RETURN OF FUNDS TO SECRETARY FOR COSTS
REIMBURSED FROM OTHER SOURCES.—To the extent
that an entity or organization receiving funds under this
section is reimbursed from another source for the provi-
sion of services to an individual, and does not use such
increased reimbursement to expand services furnished,
areas served, to compensate for costs of unreimbursed
services provided to patients, or to promote recruitment,
training, or retention of personnel, such excess revenues
shall be returned to the Secretary.
‘‘(g) TERMINATION OF GRANTS.—
‘‘(1) FAILURE
TO
MEET
FQHC
REQUIRE-
MENTS.—
‘‘(A) IN GENERAL.—With respect to any
entity that is receiving funds awarded under
this section and which subsequently fails to
meet the requirements to qualify as a FQHC
under section 1905(l)(2)(B) or is an entity that
is not required to meet the requirements to
qualify as a FQHC under section 1905(l)(2)(B)
of the Social Security Act but fails to meet the
403
Title V, Subtitle A
requirements of this section, the Secretary shall
terminate the award of funds under this section
to such entity.
‘‘(B) NOTICE.—Prior to any termination
of funds under this section to an entity, the en-
tities shall be entitled to 60 days prior notice of
termination and, as provided by the Secretary
in regulations, an opportunity to correct any de-
ficiencies in order to allow the entity to con-
tinue to receive funds under this section.
‘‘(2) REQUIREMENTS.—Upon any termination
of funding under this section, the Secretary may (to
the extent practicable)—
‘‘(A) sell any property (including equip-
ment) acquired or constructed by the entity
using funds made available under this section
or transfer such property to another FQHC,
provided, that the Secretary shall reimburse
any costs which were incurred by the entity in
acquiring or constructing such property (includ-
ing equipment) which were not supported by
grants under this section; and
‘‘(B) recoup any funds provided to an en-
tity terminated under this section.
404
Title V, Subtitle A
‘‘(h) AUTHORIZATION OF APPROPRIATIONS.—There
are authorized to be appropriated to carry out this section,
$400,000,000 for fiscal year 1995, $800,000,000 for fis-
cal year 1996, $1,200,000,000 for fiscal year 1997,
$1,600,000,000 for fiscal year 1998, and $1,600,000,000
for fiscal year 1999.’’.
(b) EFFECTIVE DATE.—The amendments made by
subsection (a) shall become effective with respect to serv-
ices furnished by a federally qualified health center or
other qualifying entity described in this section beginning
on or after October 1, 1995.
(c) STUDY AND REPORT ON SERVICES PROVIDED BY
COMMUNITY HEALTH CENTERS AND HOSPITALS.—
(1) IN GENERAL.—The Secretary of Health and
Human Services (hereinafter referred to in this sub-
section as the ‘‘Secretary’’) shall provide for a study
to examine the relationship and interaction between
community health centers and hospitals in providing
services to individuals residing in medically under-
served areas. The Secretary shall ensure that the
National Rural Research Centers participate in such
study.
(2) REPORT.—The Secretary shall provide to
the appropriate committees of Congress a report
summarizing the findings of the study within 90
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Title V, Subtitle A
days of the end of each project year and shall in-
clude in such report recommendations on methods to
improve the coordination of and provision of services
in medically underserved areas by community health
centers and hospitals.
(3) AUTHORIZATION.—There are authorized to
be appropriated to carry out the study provided for
in this subsection $150,000 for each of fiscal years
1995 and 1996.
SEC. 5003. TAX INCENTIVES FOR PRACTICE IN FRONTIER,
RURAL, AND URBAN UNDERSERVED AREAS.
(a) NONREFUNDABLE CREDIT FOR CERTAIN PRI-
MARY HEALTH SERVICES PROVIDERS.—
(1) IN GENERAL.—Subpart A of part IV of sub-
chapter A of chapter 1 of the Internal Revenue Code
of 1986 (relating to nonrefundable personal credits)
is amended by inserting after section 25 the follow-
ing new section:
‘‘SEC. 25A. PRIMARY HEALTH SERVICES PROVIDERS.
‘‘(a) ALLOWANCE
OF CREDIT.—In the case of a
qualified primary health services provider, there is allowed
as a credit against the tax imposed by this chapter for
any taxable year in a mandatory service period an amount
equal to the product of—
‘‘(1) the lesser of—
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Title V, Subtitle A
‘‘(A) the number of months of such period
occurring in such taxable year, or
‘‘(B) 36 months, reduced by the number of
months taken into account under this para-
graph with respect to such provider for all pre-
ceding taxable years (whether or not in the
same mandatory service period), multiplied by
‘‘(2) $1,000 ($500 in the case of a qualified
primary health services provider who is a physician
assistant or a nurse practitioner).
‘‘(b) QUALIFIED PRIMARY HEALTH SERVICES PRO-
VIDER.—For purposes of this section, the term ‘qualified
primary health services provider’ means any physician,
physician assistant, or nurse practitioner who for any
month during a mandatory service period is certified by
the Bureau to be a primary health services provider who—
‘‘(1) is providing primary health services—
‘‘(A) full time, and
‘‘(B) to individuals at least 80 percent of
whom reside in a health professional shortage
area (as defined in subsection (d)(2)),
‘‘(2) is not receiving during such year a scholar-
ship under the National Health Service Corps Schol-
arship Program or a loan repayment under the Na-
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Title V, Subtitle A
tional Health Service Corps Loan Repayment Pro-
gram,
‘‘(3) is not fulfilling service obligations under
such Programs, and
‘‘(4) has not defaulted on such obligations.
‘‘(c) MANDATORY SERVICE PERIOD.—For purposes
of this section, the term ‘mandatory service period’ means
the period of 60 consecutive calendar months beginning
with the first month the taxpayer is a qualified primary
health services provider.
‘‘(d) DEFINITIONS AND SPECIAL RULES.—For pur-
poses of this section—
‘‘(1) BUREAU.—The term ‘Bureau’ means the
Bureau of Health Care Delivery and Assistance,
Health Resources and Services Administration of the
United States Public Health Service.
‘‘(2) 
HEALTH
PROFESSIONAL
SHORTAGE
AREA.—The term ‘health professional shortage area’
means—
‘‘(A) a geographic area in which there are
6 or fewer individuals residing per square mile;
‘‘(B) a health professional shortage area
(as defined in section 332(a)(1)(A) of the Pub-
lic Health Service Act),
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Title V, Subtitle A
‘‘(C) an area which is determined by the
Secretary of Health and Human Services as
equivalent to an area described in subparagraph
(A) and which is designated by the Bureau of
the Census as not urbanized, or
‘‘(D) a community that is certified as un-
derserved by the Secretary for purposes of par-
ticipation in the rural health clinic program
under title XVIII of the Social Security Act.
‘‘(3) PHYSICIAN.—The term ‘physician’ has the
meaning given to such term by section 1861(r) of
the Social Security Act.
‘‘(4) PHYSICIAN
ASSISTANT; NURSE
PRACTI-
TIONER.—The terms ‘physician assistant’ and ‘nurse
practitioner’ have the meanings given to such terms
by section 1861(aa)(5) of the Social Security Act.
‘‘(5) PRIMARY HEALTH SERVICES PROVIDER.—
The term ‘primary health services provider’ means a
provider of primary health services (as defined in
section 330(b)(1) of the Public Health Service Act).
‘‘(e) RECAPTURE OF CREDIT.—
‘‘(1) IN GENERAL.—If, during any taxable year,
there is a recapture event, then the tax of the tax-
payer under this chapter for such taxable year shall
be increased by an amount equal to the product of—
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Title V, Subtitle A
‘‘(A) the applicable percentage, and
‘‘(B) the aggregate unrecaptured credits
allowed to such taxpayer under this section for
all prior taxable years.
‘‘(2) APPLICABLE RECAPTURE PERCENTAGE.—
‘‘(A) IN GENERAL.—For purposes of this
subsection, the applicable recapture percentage
shall be determined from the following table:
‘‘If the recapture
The applicable recap-
event occurs during:
true percentage is:
Months 1–24 ..............................................
100
Months 25–36 ............................................
Months 37–48 ............................................
Months 49–60 ............................................
Months 61 and thereafter ..........................
0.
‘‘(B) TIMING.—For purposes of subpara-
graph (A), month 1 shall begin on the first day
of the mandatory service period.
‘‘(3) RECAPTURE EVENT DEFINED.—
‘‘(A) IN GENERAL.—For purposes of this
subsection, the term ‘recapture event’ means
the failure of the taxpayer to be a qualified pri-
mary health services provider for any month
during any mandatory service period.
‘‘(B) CESSATION
OF
DESIGNATION.—The
cessation of the designation of any area as a
rural health professional shortage area after the
beginning of the mandatory service period for
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Title V, Subtitle A
‘‘(ii) an Indian reservation which has
a per capita income of $15,000 or less.
‘‘(4) QUALIFIED
EDUCATIONAL
LOAN.—The
term ‘qualified educational loan’ means any indebt-
edness to pay qualified higher education expenses
(within the meaning of section 135(c)(2)) and rea-
sonable living expenses—
‘‘(A) which are paid or incurred—
‘‘(i) as a candidate for a degree as a
medical doctor at an educational institu-
tion described in section 170(b)(1)(A)(ii),
or
‘‘(ii) in connection with courses of in-
struction at such an institution necessary
for certification as a registered nurse,
nurse practitioner, or physician’s assistant,
and
‘‘(B) which are paid or incurred within a
reasonable time before or after such indebted-
ness is incurred.
‘‘(5) RECAPTURE.—If an individual fails to
carry out a qualified rural medical practice agree-
ment during any taxable year, then—
‘‘(A) no deduction with respect to such
agreement shall be allowable by reason of sub-