192
SEC. 5003. CLASSIFICATION OF PRIMARY CARE SERVICES
AS A SEPARATE CATEGORY OF SERVICES.
(a) IN GENERAL.—Section 1848(j)(1) (42 U.S.C.
1395w–4(j)(1)) is amended by inserting ‘‘, primary care
services (as defined in section 1842(i)(4)),’’ after ‘‘Sec-
retary)’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply—
(1) to volume performance standard rates of
increase established under section 1848(f) of the
Social Security Act for fiscal years beginning with
fiscal year 1994, and
(2) to updates in the conversion factors for phy-
sicians’ services established under section 1848(d) of
such Act for physicians’ services to be furnished in
calendar years beginning with 1996.
SEC. 5004. PHASED-IN REDUCTION IN PRACTICE EXPENSE
RELATIVE VALUE UNITS FOR CERTAIN SERV-
ICES.
(a) IN GENERAL.—Section 1848(c)(2) (42 U.S.C.
1395w–4(c)(2)) is amended by adding at the end the fol-
lowing new subparagraph:
‘‘(E) REDUCTION IN PRACTICE EXPENSE
RELATIVE VALUE UNITS FOR CERTAIN SERV-
ICES.—
193
‘‘(i) IN GENERAL.—Subject to clause
(ii), the Secretary shall reduce the practice
expense relative value units applied to serv-
ices described in clause (iii) furnished in—
‘‘(I) 1994, by 25 percent of the
number by which the number of prac-
tice expense relative value units (de-
termined for 1994 without regard to
this subparagraph) exceeds the num-
ber of work relative value units deter-
mined for 1994,
‘‘(II) 1995, by an additional 25
percent of such excess, and
‘‘(III) 
1996 
and 
subsequent
years, by an additional 25 percent of
such excess.
‘‘(ii) FLOOR
ON
REDUCTIONS.—The
practice expense relative value units for a
physicians’ service shall not be reduced
under this subparagraph to a number less
than 110 percent of the number of work
relative value units.
‘‘(iii) SERVICES COVERED.—For pur-
poses of clause (i), the services described in
this clause are physicians’ services that are
194
not described in clause (iv) and for
which—
‘‘(I) there are work relative value
units, and
‘‘(II) the number of practice ex-
pense relative value units (determined
for 1994) exceeds 110 percent of the
number of work relative value units
(determined for such year).
‘‘(iv) 
EXCLUDED
SERVICES.—For
purposes of clause (iii), the services de-
scribed in this clause are—
‘‘(I) anesthesia services,
‘‘(II) radiology services, and
‘‘(III) services which the Sec-
retary determines at least 75 percent
of which are provided under this title
in an office setting.’’.
(b) DEVELOPMENT
OF RESOURCE-BASED METH-
ODOLOGY FOR PRACTICE EXPENSES.—
(1) The Secretary of Health and Human Serv-
ices shall develop a methodology for implementing in
1997 a resource-based system for determining prac-
tice expense relative value units for each physician’s
service.
195
(2) The Secretary shall transmit a report by
June 30, 1996, on the methodology developed under
paragraph (1) to the Committees on Ways and
Means and Energy and Commerce of the House of
Representatives and the Committee on Finance of
the Senate. The report shall include a presentation
of data utilized in developing the methodology and
an explanation of the methodology.
SEC. 5005. LIMITATION ON PAYMENT FOR THE ANESTHESIA
CARE TEAM.
(a) LIMIT ON PAYMENT TO A PHYSICIAN FOR MEDI-
CAL DIRECTION.—
(1) IN GENERAL.—Section 1848(a) (42 U.S.C.
1395w–4(a)), as amended by section 5008(a)(1), is
amended by adding at the end the following new
paragraph:
‘‘(4) SPECIAL
RULE
FOR
MEDICAL
DIREC-
TION.—
‘‘(A) IN GENERAL.—With respect to physi-
cians’ services furnished on or after January 1,
1994, and consisting of medical direction of
two, three, or four concurrent anesthesia cases,
the fee schedule amount to be applied shall not
exceed one-half of the amount described in sub-
paragraph (B).
196
‘‘(B) AMOUNT.—The amount described in
this subparagraph, for a physician’s medical di-
rection of the performance of anesthesia serv-
ices, is the following percentage of the fee
schedule amount otherwise applicable under this
section if the anesthesia services were person-
ally performed by the physician alone:
‘‘(i) For services furnished during
1994, 120 percent.
‘‘(ii) For services furnished during
1995, 115 percent.
‘‘(iii) For services furnished during
1996, 110 percent.
‘‘(iv) For services furnished during
1997, 105 percent.
‘‘(v) For services furnished after
1997, 100 percent.’’.
(2) ELIMINATION OF REDUCTION FOR MEDICAL
DIRECTION OF MULTIPLE NURSE ANESTHETISTS.—
Section 1842(b) (42 U.S.C. 1395u(b)) is amended
by striking paragraph (13).
(b) PAYMENT TO A CERTIFIED REGISTERED NURSE
ANESTHETIST FOR MEDICALLY DIRECTED SERVICES.—
Subparagraph (B) of section 1833(l)(4) (42 U.S.C.
1395l(l)(4)) is amended—
197
(1) in clause (i), by inserting ‘‘and before Janu-
ary 1, 1994,’’ after ‘‘1991,’’;
(2) in clause (ii)—
(A) by adding ‘‘and’’ at the end of
subclause (II),
(B) by striking the comma at the end of
subclause (III) and inserting a period, and
(C) by striking subclauses (IV) through
(VII); and
(3) by adding at the end the following new
clause:
‘‘(iii) In the case of services of a certified registered
nurse anesthetist who is medically directed by a physician
and that are furnished on or after January 1, 1994, the
fee schedule amount shall be one-half of the amount
described in section 1848(a)(4)(B) with respect to the
physician.’’.
SEC. 5006. BASING PAYMENTS FOR ANESTHESIA SERVICES
ON ACTUAL TIME.
(a) PHYSICIANS’ SERVICES.—Section 1848(b)(2)(B)
(42 U.S.C. 1395w–4(b)(2)(B)) is amended by adding at
the end the following: ‘‘For anesthesia services furnished
on or after January 1, 1994, the Secretary may not mod-
ify the methodology in effect as of January 1, 1993, for
198
determining the amount of time that may be billed for
such services under this section.’’.
(b) SERVICES OF CERTIFIED REGISTERED NURSE
ANESTHETISTS.—Section 
1833(l)(1)(B) 
(42 
U.S.C.
1395l(l)(1)(B)) is amended by adding at the end the fol-
lowing: ‘‘For anesthesia services furnished on or after
January 1, 1994, the Secretary may not modify the meth-
odology in effect as of January 1, 1993, for determining
the amount of time that may be billed for such services
under this section.’’.
SEC. 5007. SEPARATE PAYMENT FOR INTERPRETATION OF
ELECTROCARDIOGRAMS.
(a) IN GENERAL.—Paragraph (3) of section 1848(b)
(42 U.S.C. 1395w–4(b)) is amended to read as follows:
‘‘(3) TREATMENT
OF
INTERPRETATION
OF
ELECTROCARDIOGRAMS.—The Secretary—
‘‘(A) shall make separate payment under
this section for the interpretation of electro-
cardiograms performed or ordered to be per-
formed as part of or in conjunction with a visit
to or a consultation with a physician, and
‘‘(B) shall adjust the relative values estab-
lished for visits and consultations under sub-
section (c) so as not to include relative value
units for interpretations of electrocardiograms
199
in the relative value for visits and consulta-
tions.’’.
(b) 
ASSURING
BUDGET
NEUTRALITY.—Section
1848(c)(2) (42 U.S.C. 1395w–4(c)(2)), as amended by
section 5004(a); is amended by adding at the end the fol-
lowing new subparagraph:
‘‘(F) 
BUDGET
NEUTRALITY
ADJUST-
MENTS.—The Secretary—
‘‘(i) shall reduce the relative values
for all services (other than anesthesia serv-
ices) established under this paragraph
(and, in the case of anesthesia services, the
conversion factor established by the Sec-
retary for such services) by such percent-
age as the Secretary determines to be nec-
essary so that, beginning in 1996, the
amendment made by section 5007(a) of
the Omnibus Budget Reconciliation Act of
1993 would not result in expenditures
under this section that exceed the amount
of such expenditures that would have been
made if such amendment had not been
made, and
‘‘(ii) shall reduce the amounts deter-
mined under subsection (a)(2)(B)(ii)(I) by
200
such percentage as the Secretary deter-
mines to be required to assure that, taking
into account the reductions made under
clause (i), the amendment made by section
5007(a) of the Omnibus Budget Reconcili-
ation Act of 1993 would not result in ex-
penditures under this section in 1994 that
exceed the amount of such expenditures
that would have been made if such amend-
ment had not been made.’’.
(c) CONFORMING AMENDMENTS.—Section 1848 (42
U.S.C. 1395w–4) is amended—
(1) in subsection (a)(2)(B)(ii)(I), by inserting
‘‘and as adjusted under subsection (c)(2)(F)(ii)’’
after ‘‘for 1994’’;
(2) in subsection (c)(2)(A)(i), by adding at the
end the following: ‘‘Such relative values are subject
to adjustment under subparagraph (F)(i).’’; and
(3) in subsection (i)(1)(B), by adding at the
end 
‘‘including 
adjustments 
under 
subsection
(c)(2)(F),’’.
(d) EFFECTIVE DATE.—The amendments made by
this section shall apply to services furnished on or after
January 1, 1994.
201
SEC. 5008. PAYMENTS FOR NEW PHYSICIANS AND PRACTI-
TIONERS.
(a) EQUAL TREATMENT OF NEW PHYSICIANS AND
PRACTITIONERS.—(1) 
Section 
1848(a) 
(42 
U.S.C.
1395w–4(a)) is amended by striking paragraph (4).
(2) Section 1842(b)(4) (42 U.S.C. 1395u(b)(4)) is
amended by striking subparagraph (F).
(b) BUDGET NEUTRALITY ADJUSTMENT.—Notwith-
standing any other provision of law, the Secretary of
Health and Human Services shall reduce the following val-
ues and amounts for 1994 (to be applied for that year
and subsequent years) by such uniform percentage as the
Secretary determines to be required to assure that the
amendments made by subsection (a) will not result in ex-
penditures under part B of title XVIII of the Social Secu-
rity Act in 1994 that exceed the amount of such expendi-
tures that would have been made if such amendments had
not been made:
(1) The relative values established under section
1848(c) of such Act for services (other than anesthe-
sia services) and, in the case of anesthesia services,
the conversion factor established under section 1848
of such Act for such services.
(2) The amounts determined under section
1848(a)(2)(B)(ii)(I) of such Act.
202
(3) The prevailing charges or fee schedule
amounts to be applied under such part for services
of a health care practitioner (as defined in section
1842(b)(4)(F)(ii)(I) of such Act, as in effect before
the date of the enactment of this Act).
(c) CONFORMING AMENDMENTS.—Section 1848 (42
U.S.C. 1395w–4), as amended by section 5007(c), is
amended—
(1) in subsection (a)(2)(B)(ii)(I), by inserting
‘‘and section 5008(b) of the Omnibus Budget Rec-
onciliation Act of 1993’’ after ‘‘(c)(2)(F)(ii)’’;
(2) in subsection (c)(2)(A)(i), by inserting ‘‘and
section 5008(b) of the Omnibus Budget Reconcili-
ation Act of 1993’’ after ‘‘under subparagraph
(F)(i)’’; and
(3) in subsection (i)(1)(B), by inserting ‘‘and
section 5008(b) of the Omnibus Budget Reconcili-
ation Act of 1993’’ after ‘‘under subsection
(c)(2)(F)’’.
(d) EFFECTIVE DATE.—The amendments made by
subsection (a) shall apply to services furnished on or after
January 1, 1994.
203
SEC. 5009. GEOGRAPHIC ADJUSTMENT FACTORS FOR MEDI-
CARE PHYSICIANS’ SERVICES.
(a) REQUIRING CONSULTATION WITH REPRESENTA-
TIVES OF PHYSICIANS IN REVIEWING GEOGRAPHIC AD-
JUSTMENT FACTORS.—Section 1848(e)(1)(C) (42 U.S.C.
1395w–4(e)(1)(C)) is amended by striking ‘‘shall review’’
and inserting ‘‘shall, in consultation with appropriate rep-
resentatives of physicians, review’’.
(b) USE OF MOST RECENT DATA IN GEOGRAPHIC
ADJUSTMENT.—Section 1848(e)(1) (42 U.S.C. 1395w–
4(e)(1)) is amended by adding at the end the following
new subparagraph:
‘‘(D) USE OF RECENT DATA.—In estab-
lishing indices and index values under this
paragraph, the Secretary shall use the most re-
cent data available relating to practice ex-
penses, malpractice expenses, and physician
work effort in different fee schedule areas.’’.
(c) DEADLINE
FOR INITIAL REVIEW
AND REVI-
SION.—The Secretary of Health and Human Services
shall first review and revise geographic adjustment factors
under section 1848(e)(1)(C) of the Social Security Act by
not later than January 1, 1995.
(d) REPORT ON REVIEW PROCESS.—Not later than
1 year after the date of the enactment of this Act, the
Secretary of Health and Human Services shall study and
204
report to the Committee on Finance of the Senate and
the Committee on Ways and Means and the Committee
on Energy and Commerce of the House of Representatives
on—
(1) the data necessary to review and revise the
indices established under section 1848(e)(1)(A) of
the Social Security Act, including—
(A) the shares allocated to physicians’
work effort, practice expenses (other than mal-
practice expenses), and malpractice expenses;
(B) the weights assigned to the input com-
ponents of such shares; and
(C) the index values assigned to such com-
ponents;
(2) any limitations on the availability of data
necessary to review and revise such indices at least
every three years;
(3) ways of addressing such limitations, with
particular attention to the development of alternative
data sources for input components for which current
index values are based on data collected less fre-
quently than every three years; and
(4) the costs of developing more accurate and
timely data.
205
SEC. 5010. EXTRA-BILLING LIMITS.
(a) ENFORCEMENT AND UNIFORM APPLICATION.—
(1) ENFORCEMENT.—Paragraph (1) of section
1848(g) (42 U.S.C. 1395w–4(g)) is amended to read
as follows:
‘‘(1) LIMITATION ON ACTUAL CHARGES.—
‘‘(A) IN
GENERAL.—In the case of a
nonparticipating physician or nonparticipating
supplier or other person (as defined in section
1842(i)(2)) who does not accept payment on an
assignment-related basis for a physician’s serv-
ice furnished with respect to an individual en-
rolled under this part, the following rules apply:
‘‘(i) 
APPLICATION
OF
LIMITING
CHARGE.—No person may bill or collect an
actual charge for the service in excess of
the limiting charge described in paragraph
(2) for such service.
‘‘(ii) NO
LIABILITY
FOR
EXCESS
CHARGES.—No person is liable for pay-
ment of any amounts billed for the service
in excess of such limiting charge.
‘‘(iii) 
CORRECTION
OF
EXCESS
CHARGES.—If such a physician, supplier,
or other person bills, but does not collect,
an actual charge for a service in violation
206
of clause (i), the physician, supplier, or
other person shall reduce on a timely basis
the actual charge billed for the service to
an amount not to exceed the limiting
charge for the service.
‘‘(iv) REFUND
OF
EXCESS
COLLEC-
TIONS.—If such a physician, supplier, or
other person collects an actual charge for
a service in violation of clause (i), the phy-
sician, supplier, or other person shall pro-
vide on a timely basis a refund to the indi-
vidual charged in the amount by which the
amount collected exceeded the limiting
charge for the service. The amount of such
a refund shall be reduced to the extent the
individual has an outstanding balance owed
by the individual to the physician.
‘‘(B) SANCTIONS.—If a physician, supplier,
or other person—
‘‘(i) knowingly and willfully bills or
collects for services in violation of subpara-
graph (A)(i) on a repeated basis, or
‘‘(ii) fails to comply with clause (iii)
or (iv) of subparagraph (A) on a timely
basis,
207
the Secretary may apply sanctions against the
physician, supplier, or other person in accord-
ance with paragraph (2) of section 1842(j). In
applying this subparagraph, paragraph (4) of
such section applies in the same manner as
such paragraph applies to such section and any
reference in such section to a physician is
deemed also to include a reference to a supplier
or other person under this subparagraph.
‘‘(C) TIMELY BASIS.—For purposes of this
paragraph, a correction of a bill for an excess
charge or refund of an amount with respect to
a violation of subparagraph (A)(i) in the case of
a service is considered to be provided ‘on a
timely basis’, if the reduction or refund is made
not later than 30 days after the date the physi-
cian, supplier, or other person is notified by the
carrier under this part of such violation and of
the requirements of subparagraph (A).’’.
(2) UNIFORM APPLICATION OF EXTRA-BILLING
LIMITS TO PHYSICIANS’ SERVICES.—
(A) IN GENERAL.—Section 1848(g)(2)(C)
(42 U.S.C. 1395w–4(g)(2)(C)) is amended by
inserting ‘‘or for nonparticipating suppliers or
208
other persons’’ after ‘‘nonparticipating physi-
cians’’.
(B) CONFORMING
DEFINITION.—Section
1842(i)(2) 
(42 
U.S.C. 
1395u(i)(2)) 
is
amended—
(i) by striking ‘‘, and the term’’ and
inserting ‘‘; the term’’, and
(ii) by inserting before the period at
the end the following: ‘‘; and the term
‘nonparticipating supplier or other person’
means a supplier or other person (exclud-
ing a provider of services) that is not a
participating physician or supplier (as de-
fined in subsection (h)(1))’’.
(3) ADDITIONAL CONFORMING AMENDMENTS.—
Section 1848 (42 U.S.C. 1395w–4) is amended—
(A) in subsection (a)(3)—
(i) by inserting ‘‘AND
SUPPLIERS’’
after ‘‘PHYSICIANS’’,
(ii) 
by 
inserting 
‘‘or 
a
nonparticipating supplier or other person’’
after ‘‘nonparticipating physician’’, and
(iii) by adding at the end the follow-
ing: ‘‘In the case of physicians’ services
(including services which the Secretary ex-
209
cludes pursuant to subsection (j)(3)) of a
nonparticipating physician, supplier, or
other person for which payment is made
under this part on a basis other than the
fee schedule amount, the payment shall be
based on 95 percent of the payment basis
for such services furnished by a participat-
ing physician, supplier, or other person.’’;
(B) in subsection (g)(1)(A), as amended by
subsection (a), in the matter before clause (i),
by inserting ‘‘(including services which the Sec-
retary excludes pursuant to subsection (j)(3))’’
after ‘‘a physician’s service’’;
(C) in subsection (g)(2)(D), by inserting
‘‘(or, if payment under this part is made on a
basis other than the fee schedule under this sec-
tion, 95 percent of the other payment basis)’’
after ‘‘subsection (a)’’;
(D) in subsection (g)(3)(B)—
(i) by inserting after the first sentence
the following: ‘‘No person is liable for pay-
ment of any amounts billed for such a
service in violation of the previous sen-
tence.’’, and
210
(ii) in the last sentence, by striking
‘‘previous sentence’’ and inserting ‘‘first
sentence’’;
(E) in subsection (h)—
(i) by inserting ‘‘or nonparticipating
supplier or other person furnishing physi-
cians’ services (as defined in section
1848(j)(3))’’ after ‘‘physician’’ the first
place it appears,
(ii) by inserting ‘‘, supplier, or other
person’’ after ‘‘physician’’ the second place
it appears, and
(iii) by inserting ‘‘, suppliers, and
other persons’’ after ‘‘physicians’’ the sec-
ond place it appears; and
(F) in subsection (j)(3), by inserting ‘‘, ex-
cept for purposes of subsections (a)(3), (g), and
(h)’’ after ‘‘tests and’’.
(b) CLARIFICATION
OF MANDATORY ASSIGNMENT
RULES FOR CERTAIN PRACTITIONERS.—
(1) IN GENERAL.—Section 1842(b) (42 U.S.C.
1395u(b)), as amended by section 5014(e), is
amended by adding at the end the following new
paragraph:
211
‘‘(18)(A) Payment for any service furnished by a
practitioner described in subparagraph (C) and for which
payment may be made under this part on a reasonable
charge or fee schedule basis may only be made under this
part on an assignment-related basis.
‘‘(B) A practitioner described in subparagraph (C) or
other person may not bill (or collect any amount from)
the individual or another person for any service described
in subparagraph (A), except for deductible and coinsur-
ance amounts applicable under this part. No person is lia-
ble for payment of any amounts billed for such a service
in violation of the previous sentence. If a practitioner or
other person knowingly and willfully bills (or collects an
amount) for such a service in violation of such sentence,
the Secretary may apply sanctions against the practitioner
or other person in the same manner as the Secretary may
apply sanctions against a physician in accordance with
section 1842(j)(2) in the same manner as such section ap-
plies with respect to a physician. Paragraph (4) of section
1842(j) shall apply in this subparagraph in the same man-
ner as such paragraph applies to such section.
‘‘(C) A practitioner described in this subparagraph
is any of the following:
212
‘‘(i) A physician assistant, nurse practitioner, or
clinical nurse specialist (as defined in section
1861(aa)(5)).
‘‘(ii) A certified registered nurse anesthetist (as
defined in section 1861(bb)(2)).
‘‘(iii) A certified nurse-midwife (as defined in
section 1861(gg)(2)).
‘‘(iv) A clinical social worker (as defined in sec-
tion 1861(hh)(1)).
‘‘(v) A clinical psychologist (as defined by the
Secretary for purposes of section 1861(ii)).
‘‘(D) For purposes of this paragraph, a service fur-
nished by a practitioner described in subparagraph (C) in-
cludes any services and supplies furnished as incident to
the service as would otherwise be covered under this part
if furnished by a physician or as incident to a physician’s
service.’’.
(2) CONFORMING AMENDMENTS.—
(A) Section 1833 (42 U.S.C. 1395l) is
amended—
(i) in subsection (l)(5), by striking
subparagraph (B) and redesignating sub-
paragraph (C) as subparagraph (B);
(ii) by striking subsection (p); and
213
(iii) in subsection (r), by striking
paragraph (3) and redesignating para-
graph (4) as paragraph (3).
(B) 
Section 
1842(b)(12) 
(42 
U.S.C.
1395u(b)(12)) is amended by striking subpara-
graph (C).
(c) INFORMATION ON EXTRA-BILLING LIMITS.—
(1) PART OF EXPLANATION OF MEDICARE BEN-
EFITS.—Section 
1842(h)(7) 
(42 
U.S.C.
1395u(h)(7)) is amended—
(A) by striking ‘‘and’’ at the end of sub-
paragraph (B),
(B) in subparagraph (C), by striking ‘‘shall
include’’,
(C) in subparagraph (C), by striking the
period at the end and inserting ‘‘, and’’, and
(D) by adding at the end the following new
subparagraph:
‘‘(D) in the case of services for which the billed
amount exceeds the limiting charge imposed under
section 1848(g), information regarding such applica-
ble limiting charge (including information concern-
ing 
the 
right 
to 
a 
refund 
under 
section
1848(g)(1)(A)(iv)).’’.
214
(2) DETERMINATIONS BY CARRIERS.—Subpara-
graph (G) of section 1842(b)(3) (42 U.S.C.
1395u(b)(3)) is amended to read as follows:
‘‘(G) will, for a service that is furnished with
respect to an individual enrolled under this part,
that is not paid on an assignment-related basis, and
that is subject to a limiting charge under section
1848(g)—
‘‘(i) determine, prior to making payment,
whether the amount billed for such service ex-
ceeds the limiting charge applicable under sec-
tion 1848(g)(2);
‘‘(ii) notify the physician, supplier, or other
person periodically (but not less often than once
every 30 days) of determinations that amounts
billed exceeded such applicable limiting charges;
and
‘‘(iii) provide for prompt response to in-
quiries of physicians, suppliers, and other per-
sons concerning the accuracy of such limiting
charges for their services;’’.
(d) REPORT ON CHARGES IN EXCESS OF LIMITING
CHARGE.—Section 1848(g)(6)(B) (42 U.S.C. 1395w–
4(g)(6)(B)) is amended by inserting ‘‘the extent to which
actual charges exceed limiting charges, the number and
215
types of services involved, and the average amount of ex-
cess charges and’’ after ‘‘report to the Congress’’.
(e) MISCELLANEOUS
AND
TECHNICAL
AMEND-
MENTS.—Section 1833 (42 U.S.C. 1395l) is amended—
(1) in subsection (a)(1), as amended by section
5070(e)(2)—
(A) by striking ‘‘and’’ before ‘‘(O)’’, and
(B) by inserting before the semicolon at
the end the following: ‘‘, and (P) with respect
to services described in clauses (i), (ii) and (iv)
of section 1861(s)(2)(K), the amounts paid are
subject 
to 
the 
provisions 
of 
section
1842(b)(12)’’; and
(2) in subsection (h)(5)(D)—
(A) by striking ‘‘paragraphs (2) and (3)’’
and by inserting ‘‘paragraph (2)’’, and
(B) by adding at the end the following:
‘‘Paragraph (4) of such section shall apply in
this subparagraph in the same manner as such
paragraph applies to such section.’’.
(f) EFFECTIVE DATES.—
(1) ENFORCEMENT
AND
UNIFORM
APPLICA-
TION; MISCELLANEOUS
AND
TECHNICAL
AMEND-
MENTS.—The amendments made by subsections (a)
and (e) shall apply to services furnished on or after
216
the date of the enactment of this Act; except that
the amendments made by subsection (a) shall not
apply to services of a nonparticipating supplier or
other person furnished before January 1, 1994.
(2) PRACTITIONERS.—The amendments made
by subsection (b) shall apply to services furnished on
or after January 1, 1994.
(3) EOMBS.—The amendments made by sub-
section (c)(1) shall apply to explanations of benefits
provided on or after January 1, 1994.
(4) CARRIER
DETERMINATIONS.—The amend-
ments made by subsection (c)(2) shall apply to con-
tracts as of January 1, 1994.
(5) REPORT.—The amendment made by sub-
section (d) shall apply to reports for years beginning
with 1994.
SEC. 5011. RELATIVE VALUES FOR PEDIATRIC SERVICES.
(a) IN GENERAL.—The Secretary of Health and
Human Services shall fully develop, by not later than July
1, 1994, relative values for the full range of pediatric phy-
sicians’ services which are consistent with the relative val-
ues developed for other physicians’ services under section
1848(c) of the Social Security Act. In developing such val-
ues, the Secretary shall conduct such refinements as may
217
be necessary to produce appropriate estimates for such rel-
ative values.
(b) STUDY.—
(1) IN GENERAL.—The Secretary shall conduct
a study of the relative values for pediatric and other
services to determine whether there are significant
variations in the resources used in providing similar
services to different populations. In conducting such
study, the Secretary shall consult with appropriate
organizations representing pediatricians and other
physicians and physical and occupational therapists.
(2) REPORT.—Not later than July 1, 1994, the
Secretary shall submit to Congress a report on the
study conducted under paragraph (1). Such report
shall include any appropriate recommendations re-
garding needed changes in coding or other payment
policies to ensure that payments for pediatric serv-
ices appropriately reflect the resources required to
provide these services.
SEC. 5012. ANTIGENS UNDER PHYSICIAN FEE SCHEDULE.
(a) IN GENERAL.—Section 1848(j)(3) (42 U.S.C.
1395w–4(j)(3)) is amended by inserting ‘‘(2)(G),’’ after
‘‘(2)(D),’’.
218
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply to services furnished on or after
January 1, 1994.
SEC. 5013. ADMINISTRATION OF CLAIMS RELATING TO PHY-
SICIANS’ SERVICES.
(a) LIMITATION ON CARRIER USER FEES.—Section
1842(c) (42 U.S.C. 1395u(c)) is amended by adding at
the end the following new paragraph:
‘‘(4) Neither a carrier nor the Secretary may impose
a fee under this title—
‘‘(A) for the filing of claims related to physi-
cians’ services,
‘‘(B) for an error in filing a claim relating to
physicians’ services or for such a claim which is de-
nied,
‘‘(C) for any appeal under this title with respect
to physicians’ services,
‘‘(D) for applying for (or obtaining) a unique
identifier under subsection (r), or
‘‘(E) for responding to inquiries respecting phy-
sicians’ services or for providing information with re-
spect to medical review of such services.’’.
(b) CLARIFICATION OF PERMISSIBLE SUBSTITUTE
BILLING ARRANGEMENTS.—
219
(1) IN
GENERAL.—Clause (D) of section
1842(b)(6) (42 U.S.C. 1395u(b)(6)) is amended to
read as follows: ‘‘(D) payment may be made to a
physician for physicians’ services (and services fur-
nished incident to such services) furnished by a sec-
ond physician to patients of the first physician if (i)
the first physician is unavailable to provide the serv-
ices; (ii) the services are furnished pursuant to an
arrangement between the two physicians that (I) is
informal and reciprocal, or (II) involves per diem or
other fee-for-time compensation for such services;
(iii) the services are not provided by the second phy-
sician over a continuous period of more than 60
days; and (iv) the claim form submitted to the car-
rier for such services includes the second physician’s
unique identifier (provided under the system estab-
lished under subsection (r)) and indicates that the
claim meets the requirements of this clause for pay-
ment to the first physician’’.
(2) EFFECTIVE DATE.—The amendment made
by paragraph (1) shall apply to services furnished on
or after the first day of the first month beginning
more than 60 days after the date of the enactment
of this Act.
220
SEC. 5014. MISCELLANEOUS AND TECHNICAL CORREC-
TIONS.
(a) OVERVALUED PROCEDURES (SECTION 4101 OF
OBRA–1990).—(1) 
Section 
1842(b)(16)(B)(iii) 
(42
U.S.C. 1395u(b)(16)(B)(iii)) is amended—
(A) by striking ‘‘, simple and subcutaneous’’,
(B) by striking ‘‘; small’’ and inserting ‘‘and
small’’,
(C) by striking ‘‘treatments;’’ the first place it
appears and inserting ‘‘and’’,
(D) by striking ‘‘lobectomy;’’,
(E) by striking ‘‘enterectomy; colectomy; chole-
cystectomy;’’,
(F) by striking ‘‘; transurerethral resection’’
and inserting ‘‘and resection’’, and
(G) by striking ‘‘sacral laminectomy;’’.
(2) Section 4101(b)(2) of OBRA–1990 is amended—
(A) in the matter before subparagraph (A), by
striking 
‘‘1842(b)(16)’’ 
and 
inserting
‘‘1842(b)(16)(B)’’, and
(B) in subparagraph (B)—
(i) by striking ‘‘, simple and subcutane-
ous’’,
(ii) by striking ‘‘(HCPCS codes 19160 and
19162)’’ and inserting ‘‘(HCPCS code 19160)’’,
and
221
(iii) by striking all that follows ‘‘(HCPCS
codes 92250’’ and inserting ‘‘and 92260).’’.
(b) RADIOLOGY
SERVICES
(SECTION
4102 
OF
OBRA–1990).—(1) Section 1834(b)(4) (42 U.S.C.
1395m(b)(4)) is amended by redesignating subparagraphs
(E) and (F) as subparagraphs (F) and (G), respectively.
(2) 
Section 
1834(b)(4)(D) 
(42 
U.S.C.
1395m(b)(4)(D)) is amended—
(A) in the matter before clause (i), by striking
‘‘shall be determined as follows:’’ and inserting
‘‘shall, subject to clause (vii), be reduced to the ad-
justed conversion factor for the locality determined
as follows:’’,
(B) in clause (iv), by striking ‘‘LOCAL ADJUST-
MENT.—Subject to clause (vii), the conversion factor
to be applied to’’ and inserting ‘‘ADJUSTED CONVER-
SION FACTOR.—The adjusted conversion factor for’’,
(C) in clause (vii), by striking ‘‘under this sub-
paragraph’’, and
(D) in clause (vii), by inserting ‘‘reduced under
this subparagraph by’’ after ‘‘shall not be’’.
(3) Section 4102(c)(2) of OBRA–1990 is amended
by striking ‘‘radiology services’’ and all that follows and
inserting ‘‘nuclear medicine services.’’.
222
(4) Section 4102(d) of OBRA–1990 is amended by
striking ‘‘new paragraph’’ and inserting ‘‘new subpara-
graph’’.
(5) 
Section 
1834(b)(4)(E) 
(42 
U.S.C.
1395m(b)(4)(E)) is amended by inserting ‘‘RULE FOR
CERTAIN SCANNING SERVICES.—’’ after ‘‘(E)’’.
(6) Section 1848(a)(2)(D)(iii) (42 U.S.C. 1395w–
4(a)(2)(D)(iii)) is amended by striking ‘‘that are subject
to section 6105(b) of the Omnibus Budget Reconciliation
Act of 1989’’ and by striking ‘‘provided under such sec-
tion’’ and inserting ‘‘provided under section 6105(b) of the
Omnibus Budget Reconciliation Act of 1989’’.
(c) ANESTHESIA
SERVICES
(SECTION
4103 OF
OBRA–1990).—(1) Section 4103(a) of OBRA–1990 is
amended by striking ‘‘REDUCTION IN FEE SCHEDULE’’
and inserting ‘‘REDUCTION IN PREVAILING CHARGES’’.
(2) 
Section 
1842(q)(1)(B) 
(42 
U.S.C.
1395u(q)(1)(B)) is amended—
(A) in the matter before clause (i), by striking
‘‘shall be determined as follows:’’ and inserting
‘‘shall, subject to clause (iv), be reduced to the ad-
justed prevailing charge conversion factor for the lo-
cality determined as follows:’’, and
(B) in clause (iii), by striking ‘‘Subject to
clause (iv), the prevailing charge conversion factor to
223
be applied in’’ and inserting ‘‘The adjusted prevail-
ing charge conversion factor for’’.
(d) ASSISTANTS AT SURGERY (SECTION 4107 OF
OBRA–1990).—(1) Section 4107(c) of OBRA–1990 is
amended by inserting ‘‘(a)(1)’’ after ‘‘subsection’’.
(2) Section 4107(a)(2) of OBRA–1990 is amended
by adding at the end the following: ‘‘In applying section
1848(g)(2)(D) of the Social Security Act for services of
an assistant-at-surgery furnished during 1991, the recog-
nized payment amount shall not exceed the maximum
amount specified under section 1848(i)(2)(A) of such Act
(as applied under this paragraph in such year).’’.
(e) TECHNICAL COMPONENTS OF DIAGNOSTIC SERV-
ICES (SECTION 4108 OF OBRA–1990).—Section 1842(b)
(42 U.S.C. 1395u(b)) is amended by redesignating para-
graph (18), as added by section 4108(a) of OBRA–1990,
as paragraph (17) and, in such paragraph, by inserting
‘‘, tests specified in paragraph (14)(C)(i),’’ after ‘‘diag-
nostic laboratory tests’’.
(f) STATEWIDE FEE SCHEDULES (SECTION 4117 OF
OBRA–1990).—Section 
4117 
of 
OBRA–1990 
is
amended—
(1) in subsection (a)—
(A) by striking ‘‘(a) IN GENERAL.—’’, and
224
(B) by striking ‘‘, if the’’ and all that fol-
lows through ‘‘1991, ’’; and
(2) by striking subsections (b), (c), and (d).
(g) STUDY OF AGGREGATION RULE FOR CLAIMS OF
SIMILAR
PHYSICIAN
SERVICES
(SECTION
4113 
OF
OBRA–1990).—Section 
4113 
of 
OBRA–1990 
is
amended—
(1) by inserting ‘‘of the Social Security Act’’
after ‘‘1869(b)(2)’’; and
(2) by striking ‘‘December 31, 1992’’ and in-
serting ‘‘December 31, 1993’’.
(h) OTHER
MISCELLANEOUS
AND
TECHNICAL
AMENDMENTS.—(1) The heading of section 1834(f) (42
U.S.C. 1395m(f)) is amended by striking ‘‘FISCAL YEAR’’.
(2)(A) Section 4105(b) of OBRA–1990 is amended—
(i) in paragraph (2), by striking ‘‘amendments’’
and inserting ‘‘amendment’’, and
(ii) in paragraph (3), by striking ‘‘amendments
made by paragraphs (1) and (2)’’ and inserting
‘‘amendment made by paragraph (1)’’.
(B) Section 1848(f)(2)(C) (42 U.S.C. 1395w–
4(f)(2)(C)) is amended by inserting ‘‘PERFORMANCE
STANDARD
RATES
OF
INCREASE
FOR
FISCAL
YEAR
1991.—’’ after ‘‘(C)’’.
225
(C) Section 4105(d) of OBRA–1990 is amended by
inserting ‘‘PUBLICATION OF PERFORMANCE STANDARD
RATES.—’’ after ‘‘(d)’’.
(3) 
Section 
1842(b)(4)(F) 
(42 
U.S.C.
1395u(b)(4)(F)) is amended—
(A) in clause (i), by striking ‘‘prevailing
charge’’ the first place it appears and inserting
‘‘customary charge’’; and
(B) in clause (ii)(III), by striking ‘‘second,
third, and fourth’’ and inserting ‘‘first, second, and
third’’.
(4) 
Section 
1842(b)(4)(F)(ii)(I) 
(42 
U.S.C.
1395u(b)(4)(F)(ii)(I)) is amended by striking ‘‘respiratory
therapist,’’.
(5) Section 4106(c) of OBRA–1990 is amended by
inserting 
‘‘of 
the 
Social 
Security 
Act’’ 
after
‘‘1848(d)(1)(B)’’.
(6) Section 4114 of OBRA–1990 is amended by
striking ‘‘patients’’ the second place it appears.
(7) Section 1848(e)(1)(C) (42 U.S.C. 1395w–
4(e)(1)(C)) is amended by inserting ‘‘date of the’’ after
‘‘since the’’.
(8) Section 4118(f)(1)(D) of OBRA–1990 is amend-
ed by striking ‘‘is amended’’.
226
(9) Section 4118(f)(1)(N)(ii) of OBRA–1990 is
amended by striking ‘‘subsection (f)(5)(A)’’ and inserting
‘‘subsection (f)(5)(A))’’.
(10) Section 1845(e) (42 U.S.C. 1395w–1(e)) is
amended—
(A) by striking paragraph (2); and
(B) by redesignating paragraphs (3), (4), and
(5) as paragraphs (2), (3), and (4).
(11) Section 4118(j)(2) of OBRA–1990 is amended
by striking ‘‘In section’’ and inserting ‘‘Section’’.
(12)(A) Section 1848(i)(3) (42 U.S.C. 1395w–
4(i)(3)) is amended by striking the space before the period
at the end.
(B) 
Section 
1834(a)(10)(B) 
(42 
U.S.C.
1395m(a)(10)(B)) is amended by striking ‘‘as such provi-
sions apply to physicians’ services and physicians and a
reasonable charge under section 1842(b)’’.
(i) OTHER CORRECTIONS.—(1) Effective on the date
of the enactment of this Act, section 6102(d)(4) of
OBRA–1989 is amended by striking all that follows the
first sentence.
(2) Effective for payments for fiscal years beginning
with fiscal year 1994, section 1842(c)(1) (42 U.S.C.
1395u(c)(1)) is amended—
227
(A) in subparagraph (A), by striking ‘‘(A) Any
contract’’ and inserting ‘‘Any contract’’; and
(B) by striking subparagraph (B).
(j) EFFECTIVE DATE.—Except as provided in sub-
section (i), the amendments made by this section and the
provisions of this section shall take effect as if included
in the enactment of OBRA–1990.
Subchapter B—Outpatient Hospital Services
and Ambulatory Surgical Services
SEC. 5021. EXTENSION OF 10 PERCENT REDUCTION IN PAY-
MENTS FOR CAPITAL-RELATED COSTS OF
OUTPATIENT HOSPITAL SERVICES.
Section 
1861(v)(1)(S)(ii)(I) 
(42 
U.S.C.
1395x(v)(1)(S)(ii)(I)) is amended by striking ‘‘fiscal year
1992, 1993, 1994, or 1995’’ and inserting ‘‘fiscal years
1992 through 1998’’.
SEC. 5022. EXTENSION OF CURRENT REDUCTION IN PAY-
MENTS FOR OTHER COSTS OF OUTPATIENT
HOSPITAL SERVICES.
Section 
1861(v)(1)(S)(ii)(II) 
(42 
U.S.C.
1395x(v)(1)(S)(ii)(II)) is amended by striking ‘‘1991’’ and
all that follows and inserting ‘‘1991 through 1998.’’.
228
SEC. 5023. 1-YEAR FREEZE IN AMBULATORY SURGERY
RATES.
The Secretary of Health and Human Services shall
not provide for any update in the amounts of payment
described in paragraphs (2)(A) and (2)(B) of section
1833(i)(2) of the Social Security Act that otherwise would
occur in fiscal year 1994.
SEC. 5024. EYE OR EYE AND EAR HOSPITALS.
(a) IN
GENERAL.—Section 1833(i) (42 U.S.C.
1395l(i)) is amended—
(1) in paragraph (3)(B)(ii)—
(A) by striking ‘‘the last sentence of this
clause’’ and inserting ‘‘paragraph (4)’’, and
(B) by striking the last sentence; and
(2) by inserting after paragraph (3) the follow-
ing new paragraph:
‘‘(4)(A) In the case of a hospital that—
‘‘(i) makes application to the Secretary and
demonstrates that it specializes in eye services or eye
and ear services (as determined by the Secretary),
‘‘(ii) receives more than 30 percent of its total
revenues from outpatient services, and
‘‘(iii) on October 1, 1987—
‘‘(I) was an eye specialty hospital or an eye
and ear specialty hospital, or
229
‘‘(II) was operated as an eye or eye and
ear unit (as defined in subparagraph (B)) of a
general acute care hospital which, on the date
of the application described in clause (i), oper-
ates less than 20 percent of the beds that the
hospital operated on October 1, 1987, and has
sold or otherwise disposed of a substantial por-
tion of the hospital’s other acute care oper-
ations,
the cost proportion and ASC proportion in effect under
subclauses (I) and (II) of paragraph (3)(B)(ii) for cost
reporting periods beginning in fiscal year 1988 shall re-
main in effect for cost reporting periods beginning on or
after October 1, 1988, and before January 1, 1995.
‘‘(B) For purposes of this subparagraph (A)(iii)(II),
the term ‘eye or eye and ear unit’ means a physically sepa-
rate or distinct unit containing separate surgical suites de-
voted solely to eye or eye and ear services.’’.
(b) EFFECTIVE DATE.—The amendments made by
subsection (a) shall apply to portions of cost reporting pe-
riods beginning on or after January 1, 1994.
230
SEC. 5025. EXTENSION OF CAP ON PAYMENTS FOR INTRA-
OCULAR LENSES.
(a) IN GENERAL.—Section 4151(c)(3) of OBRA–
1990 is amended by striking ‘‘December 31, 1992’’ and
inserting ‘‘December 31, 1994’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall be effective as if included in the enact-
ment of OBRA–1990.
SEC. 5026. MISCELLANEOUS AND TECHNICAL CORREC-
TIONS.
(a) PAYMENT AMOUNTS FOR SERVICES FURNISHED
IN AMBULATORY SURGICAL CENTERS.—(1)(A) Section
1833(i)(2)(A)(i) (42 U.S.C. 1395l(i)(2)(A)(i)) is amended
by striking the comma at the end and inserting the follow-
ing: ‘‘, as determined in accordance with a survey (based
upon a representative sample of procedures and facilities)
taken not later than January 1, 1995, and every 5 years
thereafter, of the actual audited costs incurred by such
centers in providing such services,’’.
(B) Section 1833(i)(2) (42 U.S.C. 1395l(i)(2)) is
amended—
(i) in the second sentence of subparagraph (A)
and the second sentence of subparagraph (B), by
striking ‘‘and may be adjusted by the Secretary,
when appropriate,’’; and
231
(ii) by adding at the end the following new sub-
paragraph:
‘‘(C) Notwithstanding the second sentence of sub-
paragraph (A) or the second sentence of subparagraph
(B), if the Secretary has not updated amounts established
under such subparagraphs with respect to facility services
furnished during a fiscal year (beginning with fiscal year
1996), such amounts shall be increased by the percentage
increase in the consumer price index for all urban consum-
ers (U.S. city average) as estimated by the Secretary for
the 12-month period ending with the midpoint of the fiscal
year involved.’’.
(C) The second sentence of section 1833(i)(1) (42
U.S.C. 1395l(i)(1)) is amended by striking the period and
inserting the following: ‘‘, in consultation with appropriate
trade and professional organizations.’’.
(2) Section 4151(c)(3) of OBRA–1990 is amended
by striking ‘‘for the insertion of an intraocular lens’’ and
inserting ‘‘for an intraocular lens inserted’’.
(b) ADJUSTMENTS TO PAYMENT AMOUNTS FOR NEW
TECHNOLOGY
INTRAOCULAR
LENSES.—(1) Not later
than 1 year after the date of the enactment of this Act,
the Secretary of Health and Human Services (in this sub-
section referred to as the ‘‘Secretary’’) shall develop and
implement a process under which interested parties may
232
request review by the Secretary of the appropriateness of
the reimbursement amount provided under section
1833(i)(2)(A)(iii) of the Social Security Act with respect
to a class of new technology intraocular lenses. For pur-
poses of the preceding sentence, an intraocular lens may
not be treated as a new technology lens unless it has been
approved by the Food and Drug Administration.
(2) In determining whether to provide an adjustment
of payment with respect to a particular lens under para-
graph (1), the Secretary shall take into account whether
use of the lens is likely to result in reduced risk of
intraoperative or postoperative complication or trauma,
accelerated postoperative recovery, reduced induced astig-
matism, improved postoperative visual acuity, more stable
postoperative vision, or other comparable clinical advan-
tages.
(3) The Secretary shall publish notice in the Federal
Register from time to time (but no less often than once
each year) of a list of the requests that the Secretary has
received for review under this subsection, and shall provide
for a 30-day comment period on the lenses that are the
subjects of the requests contained in such notice. The Sec-
retary shall publish a notice of his determinations with
respect to intraocular lenses listed in the notice within 90
days after the close of the comment period.
233
(4) Any adjustment of a payment amount (or pay-
ment limit) made under this subsection shall become effec-
tive not later than 30 days after the date on which the
notice with respect to the adjustment is published under
paragraph (3).
Subchapter C—Durable Medical Equipment
SEC. 5031. REVISIONS TO PAYMENT RULES FOR DURABLE
MEDICAL EQUIPMENT.
(a) BASING NATIONAL PAYMENT LIMITS ON MEDIAN
OF LOCAL PAYMENT AMOUNTS.—
(1) INEXPENSIVE AND ROUTINELY PURCHASED
ITEMS; ITEMS REQUIRING FREQUENT AND SUBSTAN-
TIAL SERVICING.—(A) Paragraphs (2)(C)(i)(II) and
(3)(C)(i)(II) 
of 
section 
1834(a) 
(42 
U.S.C.
1395m(a)) are each amended—
(i) by striking ‘‘1992’’ the first place it ap-
pears and inserting ‘‘1992, 1993, and 1994’’;
and
(ii) by striking ‘‘1992’’ the second place it
appears and inserting ‘‘the year’’.
(B) Paragraphs (2)(C)(ii) and (3)(C)(ii) of sec-
tion 1834(a) (42 U.S.C. 1395m(a)) are each
amended—
(i) by striking ‘‘and’’ at the end of
subclause (I);
234
(ii) by redesignating subclause (II) as (IV);
and
(iii) by inserting after subclause (I) the fol-
lowing new subclauses:
‘‘(II) for 1992 and 1993, the
amount determined under this clause
for the preceding year increased by
the covered item update for such sub-
sequent year,
‘‘(III) for 1994, the local pay-
ment amount determined under clause
(i) for such item or device for that
year, except that the national limited
payment amount may not exceed 100
percent of the median of all local pay-
ment amounts determined under such
clause for such item for that year and
may not be less than 85 percent of
the median of all local payment
amounts 
determined 
under 
such
clause for such item or device for that
year, and’’.
(2) MISCELLANEOUS
DEVICES
AND
ITEMS.—
Section 1834(a)(8) (42 U.S.C. 1395m(a)(8)) is
amended—
235
(A) in subparagraph (A)(ii)(III), by strik-
ing ‘‘1992’’ and inserting ‘‘1992, 1993, and
1994’’; and
(B) in subparagraph (B)—
(i) by striking ‘‘and’’ at the end of
clause (i),
(ii) by redesignating clause (ii) as (iv),
and
(iii) by inserting after clause (i) the
following new clauses:
‘‘(ii) for 1992 and 1993, the amount
determined under this subparagraph for
the preceding year increased by the cov-
ered item update for such subsequent year;
‘‘(iii) for 1994, the local purchase
price computed under subparagraph (A)(ii)
for the item for the year, except that such
national limited purchase price may not ex-
ceed 100 percent of the median of all local
purchase prices computed for the item
under such subparagraph for the year and
may not be less than 85 percent of the me-
dian of all local purchase prices computed
under such subparagraph for the item for
the year; and’’.
236
(3) OXYGEN AND OXYGEN EQUIPMENT.—Sec-
tion 
1834(a)(9) 
(42 
U.S.C. 
1395m(a)(9)) 
is
amended—
(A) in subparagraph (A)(ii)(II), by striking
‘‘1991 and 1992’’ and inserting ‘‘1991, 1992,
1993, and 1994’’; and
(B) in subparagraph (B)—
(i) by striking ‘‘and’’ at the end of
clause (i),
(ii) by redesignating clause (ii) as (iv),
and
(iii) by inserting after clause (i) the
following new clauses:
‘‘(ii) for 1992 and 1993, the amount
determined under this subparagraph for
the preceding year increased by the cov-
ered item update for such subsequent year;
‘‘(iii) for 1994, the local monthly pay-
ment rate computed under subparagraph
(A)(ii) for the item for the year, except
that such national limited monthly pay-
ment rate may not exceed 100 percent of
the median of all local monthly payment
rates computed for the item under such
subparagraph for the year and may not be
237
less than 85 percent of the median of all
local monthly payment rates computed for
the item under such subparagraph for the
year; and’’.
(b) PAYMENT
FOR
PROSTHETIC
DEVICES
AND
ORTHOTICS AND PROSTHETICS.—
(1) IN
GENERAL.—Section 1834(h)(2) (42
U.S.C. 1395m(h)(2)) is amended—
(A) in subparagraph (A)(ii)(II), by striking
‘‘1992 or 1993’’ and inserting ‘‘1992, 1993, or
1994’’;
(B) in subparagraph (B)(ii), by striking
‘‘each subsequent year’’ and inserting ‘‘1993’’;
(C) in subparagraph (C)(iv), by striking
‘‘regional purchase price computed under sub-
paragraph (B)’’ and inserting ‘‘national limited
purchase price computed under subparagraph
(E)’’;
(D) in subparagraph (D)(ii), by striking ‘‘a
subsequent year’’ and inserting ‘‘1993’’; and
(E) by adding at the end the following new
subparagraph:
‘‘(E) COMPUTATION
OF
NATIONAL
LIM-
ITED PURCHASE PRICE.—With respect to the
furnishing of a particular item in a year, the
238
Secretary shall compute a national limited
purchase price—
‘‘(i) for 1994, equal to the local pur-
chase price computed under subparagraph
(A)(ii)(II) for the item for the year, except
that such national limited purchase price
may not exceed 100 percent of the median
of all local purchase prices for the item
computed under such subparagraph for the
year, and may not be less than 85 percent
of the median of all local purchase prices
for the item computed under such subpara-
graph for the year; and
‘‘(ii) for each subsequent year, equal
to the amount determined under this sub-
paragraph for the preceding year increased
by the applicable percentage increase for
such subsequent year.’’.
(2) EXCEPTION FOR CERTAIN ITEMS.—Section
1834(h) (42 U.S.C. 1395m(h)), as amended by
paragraph (1), is further amended—
(A) in paragraph (1)(B), by striking ‘‘sub-
paragraph (C),’’ and inserting ‘‘subparagraphs
(C) and (F),’’; and
239
(B) by adding at the end of paragraph (2)
the following new subparagraph:
‘‘(F) EXCEPTION FOR CERTAIN ITEMS.—
Payment for ostomy supplies, tracheostomy
supplies, and urologicals shall be made in ac-
cordance with subparagraphs (B) and (C) of
section 1834(a)(2).’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to items furnished on or after Jan-
uary 1, 1994.
SEC. 5032. PAYMENT FOR PARENTERAL AND ENTERAL NU-
TRIENTS, SUPPLIES, AND EQUIPMENT DUR-
ING 1994.
In determining the amount of payment under part
B of title XVIII of the Social Security Act during 1994,
the charges determined to be reasonable with respect to
parenteral and enteral nutrients, supplies, and equipment
may not exceed the charges determined to be reasonable
with respect to such nutrients, supplies, and equipment
during 1993.
SEC. 5033. TREATMENT OF NEBULIZERS AND ASPIRATORS.
(a) IN GENERAL.—Section 1834(a)(3)(A) (42 U.S.C.
1395m(a)(3)(A)) is amended by striking ‘‘ventilators, as-
pirators, IPPB machines, and nebulizers’’ and inserting
‘‘ventilators and IPPB machines’’.
240
(b) PAYMENT
FOR
ACCESSORIES
RELATING
TO
NEBULIZERS AND ASPIRATORS.—Section 1834(a)(2)(A)
(42 U.S.C. 1395m(a)) is amended—
(1) by striking ‘‘or’’ at the end of clause (i),
(2) by adding ‘‘or’’ at the end of clause (ii), and
(3) by inserting after clause (ii) the following
new clause:
‘‘(iii) which is an accessory used in
conjunction with a nebulizer or aspirator,’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to items furnished on or after Jan-
uary 1, 1994.
SEC. 5034. CERTIFICATION OF SUPPLIERS.
(a) REQUIREMENTS.—
(1) IN
GENERAL.—Section 1834 (42 U.S.C.
1395m) is amended by adding at the end the follow-
ing new subsection:
‘‘(i) REQUIREMENTS FOR SUPPLIERS OF MEDICAL
EQUIPMENT AND SUPPLIES.—
‘‘(1) ISSUANCE
AND
RENEWAL
OF
SUPPLIER
NUMBER.—
‘‘(A) PAYMENT.—Except as provided in
subparagraph (C), no payment may be made
under this part after October 1, 1994, for items
furnished by a supplier of medical equipment
241
and supplies unless such supplier obtains (and
renews at such intervals as the Secretary may
require) a supplier number.
‘‘(B) STANDARDS FOR POSSESSING A SUP-
PLIER NUMBER.—A supplier may not obtain a
supplier number unless—
‘‘(i) for medical equipment and sup-
plies furnished on or after October 1,
1994, and before January 1, 1996, the
supplier meets standards prescribed by the
Secretary; and
‘‘(ii) for medical equipment and sup-
plies furnished on or after January 1,
1996, the supplier meets revised standards
prescribed by the Secretary (in consulta-
tion with representatives of suppliers of
medical equipment and supplies, carriers,
and consumers) that shall include require-
ments that the supplier—
‘‘(I) comply with all applicable
State and Federal licensure and regu-
latory requirements;
‘‘(II) maintain a physical facility
on an appropriate site;
242
‘‘(III) have proof of appropriate
liability insurance; and
‘‘(IV) meet such other require-
ments as the Secretary may specify.
‘‘(C) EXCEPTION FOR ITEMS FURNISHED
AS
INCIDENT
TO
A
PHYSICIAN’S
SERVICE.—
Subparagraph (A) shall not apply with respect
to medical equipment and supplies furnished as
an incident to a physician’s service.
‘‘(D) PROHIBITION
AGAINST
MULTIPLE
SUPPLIER NUMBERS.—The Secretary may not
issue more than one supplier number to any
supplier of medical equipment and supplies un-
less the issuance of more than one number is
appropriate to identify subsidiary or regional
entities under the supplier’s ownership or con-
trol.
‘‘(E) PROHIBITION AGAINST DELEGATION
OF
SUPPLIER
DETERMINATIONS.—The Sec-
retary may not delegate (other than by contract
under section 1842) the responsibility to deter-
mine whether suppliers meet the standards nec-
essary to obtain a supplier number.
‘‘(2) CERTIFICATES OF MEDICAL NECESSITY.—
243
‘‘(A) STANDARDIZED CERTIFICATES.—Not
later than October 1, 1994, the Secretary shall,
in consultation with carriers under this part,
develop one or more standardized certificates of
medical necessity (as defined in subparagraph
(C)) for medical equipment and supplies for
which the Secretary determines that such a cer-
tificate is necessary.
‘‘(B) PROHIBITION AGAINST DISTRIBUTION
BY SUPPLIERS OF CERTIFICATES OF MEDICAL
NECESSITY.—
‘‘(i) IN
GENERAL.—Except as pro-
vided in clause (ii), a supplier of medical
equipment and supplies may not distribute
to physicians or to individuals entitled to
benefits under this part for commercial
purposes any completed or partially com-
pleted certificates of medical necessity on
or after October 1, 1994.
‘‘(ii) EXCEPTION FOR CERTAIN BILL-
ING
INFORMATION.—Clause (i) shall not
apply with respect to a certificate of medi-
cal necessity for any item that is not con-
tained on the list of potentially overused
items developed by the Secretary under
244
subsection (a)(15)(A) to the extent that
such certificate contains only information
completed by the supplier of medical equip-
ment and supplies identifying such supplier
and the beneficiary to whom such medical
equipment and supplies are furnished, a
description of such medical equipment and
supplies, any product code identifying such
medical equipment and supplies, and any
other administrative information (other
than information relating to the bene-
ficiary’s medical condition) identified by
the Secretary. In the event a supplier pro-
vides a certificate of medical necessity con-
taining information permitted under this
clause, such certificate shall also contain
the fee schedule amount and the supplier’s
charge for the medical equipment or sup-
plies being furnished prior to distribution
of such certificate to the physician.
‘‘(iii) PENALTY.—Any supplier of
medical equipment and supplies who know-
ingly and willfully distributes a certificate
of medical necessity in violation of clause
(i) is subject to a civil money penalty in an
245
amount not to exceed $1,000 for each such
certificate of medical necessity so distrib-
uted. The provisions of section 1128A
(other than subsections (a) and (b)) shall
apply to civil money penalties under this
subparagraph in the same manner as they
apply to a penalty or proceeding under sec-
tion 1128A(a).
‘‘(C) DEFINITION.—For purposes of this
paragraph, the term ‘certificate of medical ne-
cessity’ means a form or other document con-
taining information required by the Secretary to
be submitted to show that a covered item is
reasonable and necessary for the diagnosis or
treatment of illness or injury or to improve the
functioning of a malformed body member.
‘‘(3) COVERAGE AND REVIEW CRITERIA.—
‘‘(A) DEVELOPMENT
AND
ESTABLISH-
MENT.—Not later than January 1, 1996, the
Secretary, in consultation with representatives
of suppliers of medical equipment and supplies,
individuals enrolled under this part, and appro-
priate medical specialty societies, shall develop
and establish uniform national coverage and
utilization review criteria for 200 items of medi-
246
cal equipment and supplies selected in accord-
ance with the standards described in subpara-
graph (B). The Secretary shall publish the cri-
teria as part of the instructions provided to fis-
cal intermediaries and carriers under this part
and no further publication, including publica-
tion in the Federal Register, shall be required.
‘‘(B) STANDARDS FOR SELECTING ITEMS
SUBJECT TO CRITERIA.—The Secretary may se-
lect an item for coverage under the criteria de-
veloped and established under subparagraph
(A) if the Secretary finds that—
‘‘(i) the item is frequently purchased
or rented by beneficiaries;
‘‘(ii) the item is frequently subject to
a determination that such item is not
medically necessary; or
‘‘(iii) the coverage or utilization cri-
teria applied to the item (as of the date of
the enactment of this subsection) is not
consistent among carriers.
‘‘(C) ANNUAL REVIEW AND EXPANSION OF
ITEMS SUBJECT TO CRITERIA.—The Secretary
shall annually review the coverage and utiliza-
tion of items of medical equipment and supplies
247
to determine whether items not included among
the items selected under subparagraph (A)
should be made subject to uniform national cov-
erage and utilization review criteria, and, if ap-
propriate, shall develop and apply such criteria
to such additional items.
‘‘(4) DEFINITION.—The term ‘medical equip-
ment and supplies’ means—
‘‘(A) durable medical equipment (as de-
fined in section 1861(n));
‘‘(B) prosthetic devices (as described in
section 1861(s)(8));
‘‘(C) orthotics and prosthetics (as de-
scribed in section 1861(s)(9));
‘‘(D) surgical dressings (as described in
section 1861(s)(5));
‘‘(E) such other items as the Secretary
may determine; and
‘‘(F) for purposes of paragraphs (1) and
(3)—
‘‘(i) home dialysis supplies and equip-
ment 
(as 
described 
in 
section
1861(s)(2)(F)), and
‘‘(ii) immunosuppressive drugs (as de-
scribed in section 1861(s)(2)(J)).’’.
248
(2) CONFORMING AMENDMENT.—Effective Oc-
tober 1, 1994, paragraph (16) of section 1834(a)
(42 U.S.C. 1395m(a)) is repealed.
(b) REPORT ON EFFECT OF UNIFORM CRITERIA ON
UTILIZATION OF ITEMS.—Not later than July 1, 1996,
the Secretary shall submit a report to the Committee on
Ways and Means and the Committee on Energy and Com-
merce of the House of Representatives and the Committee
on Finance of the Senate analyzing the impact of the uni-
form criteria established under section 1834(i)(3)(A) of
the Social Security Act (as added by subsection (a)) on
the utilization of items of medical equipment and supplies
by individuals enrolled under part B of the medicare pro-
gram.
(c) USE OF COVERED ITEMS BY DISABLED BENE-
FICIARIES.—
(1) IN GENERAL.—The Secretary of Health and
Human Services, in consultation with representa-
tives of suppliers of durable medical equipment
under part B of the medicare program and individ-
uals entitled to benefits under such program on the
basis of disability, shall conduct a study of the ef-
fects of the methodology for determining payments
for items of such equipment under such part on the
249
ability of such individuals to obtain items of such
equipment, including customized items.
(2) REPORT.—Not later than one year after the
date of the enactment of this Act, the Secretary
shall submit a report to Congress on the study con-
ducted under paragraph (1), and shall include in the
report such recommendations as the Secretary con-
siders appropriate to assure that disabled medicare
beneficiaries have access to items of durable medical
equipment.
(d) CRITERIA FOR TREATMENT OF ITEMS AS PROS-
THETICS DEVICES OR ORTHOTICS AND PROSTHETICS.—
Not later than one year after the date of the enactment
of this Act, the Secretary of Health and Human Services
shall submit a report to the Committees on Ways and
Means and Energy and Commerce of the House of Rep-
resentatives and the Committee on Finance of the Senate
describing prosthetic devices or orthotics and prosthetics
covered under part B of the medicare program that do
not require individualized or custom fitting and adjust-
ment to be used by a patient. Such report shall include
recommendations for an appropriate methodology for de-
termining the amount of payment for such items under
such program.
250
SEC. 5035. PROHIBITION AGAINST CARRIER FORUM SHOP-
PING.
(a) IN GENERAL.—Section 1834(a)(12) (42 U.S.C.
1395m(a)(12)) is amended to read as follows:
‘‘(12) 
USE
OF
CARRIERS
TO
PROCESS
CLAIMS.—
‘‘(A) DESIGNATION
OF
REGIONAL
CAR-
RIERS.—The Secretary may designate, by regu-
lation under section 1842, one carrier for one
or more entire regions to process all claims
within the region for covered items under this
section.
‘‘(B) 
PROHIBITION
AGAINST
CARRIER
SHOPPING.—(i) No supplier of a covered item
may present or cause to be presented a claim
for payment under this part unless such claim
is presented to the appropriate regional carrier
(as designated by the Secretary).
‘‘(ii) For purposes of clause (i), the term
‘appropriate regional carrier’ means the carrier
having jurisdiction over the geographic area
that includes the permanent residence of the
patient to whom the item is furnished.’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply to items furnished on or after
October 1, 1993.
251
(c) CLARIFICATION OF AUTHORITY TO DESIGNATE
CARRIERS FOR OTHER ITEMS AND SERVICES.—Nothing
in this subsection or the amendment made by this sub-
section may be construed to restrict the authority of the
Secretary of Health and Human Services to designate re-
gional carriers or modify claims jurisdiction rules with re-
spect to items or services under part B of the medicare
program that are not covered items under section 1834(a)
of the Social Security Act or prosthetic devices or orthotics
and prosthetics under section 1834(h) of such Act.
SEC. 5036. RESTRICTIONS ON CERTAIN MARKETING AND
SALES ACTIVITIES.
(a) PROHIBITING UNSOLICITED TELEPHONE CON-
TACTS FROM SUPPLIERS OF DURABLE MEDICAL EQUIP-
MENT TO MEDICARE BENEFICIARIES.—
(1) IN GENERAL.—Section 1834(a) (42 U.S.C.
1395m(a)) is amended by adding at the end the fol-
lowing new paragraph:
‘‘(17) PROHIBITION
AGAINST
UNSOLICITED
TELEPHONE CONTACTS BY SUPPLIERS.—
‘‘(A) IN GENERAL.—A supplier of a cov-
ered item under this subsection may not contact
an individual enrolled under this part by tele-
phone regarding the furnishing of a covered
item to the individual (other than a covered
252
item the supplier has already furnished to the
individual) unless—
‘‘(i) the individual gives permission to
the supplier to make contact by telephone
for such purpose; or
‘‘(ii) the supplier has furnished a cov-
ered item under this subsection to the indi-
vidual during the 15-month period preced-
ing the date on which the supplier contacts
the individual for such purpose.
‘‘(B) PROHIBITING PAYMENT FOR ITEMS
FURNISHED
SUBSEQUENT
TO
UNSOLICITED
CONTACTS.—If a supplier knowingly contacts
an individual in violation of subparagraph (A),
no payment may be made under this part for
any item subsequently furnished to the individ-
ual by the supplier.
‘‘(C) EXCLUSION
FROM
PROGRAM
FOR
SUPPLIERS ENGAGING IN PATTERN OF UNSO-
LICITED
CONTACTS.—If a supplier knowingly
contacts individuals in violation of subpara-
graph (A) to such an extent that the supplier’s
conduct establishes a pattern of contacts in vio-
lation of such subparagraph, the Secretary shall
exclude the supplier from participation in the
253
programs under this Act, in accordance with
the procedures set forth in subsections (c), (f),
and (g) of section 1128.’’.
(2) REQUIRING
REFUND
OF
AMOUNTS
COL-
LECTED FOR DISALLOWED ITEMS.—Section 1834(a)
(42 U.S.C. 1395m(a)), as amended by paragraph
(1), is amended by adding at the end the following
new paragraph:
‘‘(18) REFUND OF AMOUNTS COLLECTED FOR
CERTAIN DISALLOWED ITEMS.—
‘‘(A) IN GENERAL.—If a nonparticipating
supplier furnishes to an individual enrolled
under this part a covered item for which no
payment may be made under this part by rea-
son of paragraph (17)(B), the supplier shall re-
fund on a timely basis to the patient (and shall
be liable to the patient for) any amounts col-
lected from the patient for the item, unless—
‘‘(i) the supplier establishes that the
supplier did not know and could not rea-
sonably have been expected to know that
payment may not be made for the item by
reason of paragraph (17)(B), or
‘‘(ii) before the item was furnished,
the patient was informed that payment
254
under this part may not be made for that
item and the patient has agreed to pay for
that item.
‘‘(B) SANCTIONS.—If a supplier knowingly
and willfully fails to make refunds in violation
of subparagraph (A), the Secretary may apply
sanctions against the supplier in accordance
with section 1842(j)(2).
‘‘(C) NOTICE.—Each carrier with a con-
tract in effect under this part with respect to
suppliers of covered items shall send any notice
of denial of payment for covered items by rea-
son of paragraph (17)(B) and for which pay-
ment is not requested on an assignment-related
basis to the supplier and the patient involved.
‘‘(D) TIMELY BASIS DEFINED.—A refund
under subparagraph (A) is considered to be on
a timely basis only if—
‘‘(i) in the case of a supplier who does
not request reconsideration or seek appeal
on a timely basis, the refund is made with-
in 30 days after the date the supplier re-
ceives a denial notice under subparagraph
(C), or
255
‘‘(ii) in the case in which such a re-
consideration or appeal is taken, the re-
fund is made within 15 days after the date
the supplier receives notice of an adverse
determination on reconsideration or ap-
peal.’’.
(b) CONFORMING AMENDMENT.—Section 1834(h)(3)
(42 U.S.C. 1395m(h)(3)) is amended by striking ‘‘Para-
graph (12)’’ and inserting ‘‘Paragraphs (12) and (17)’’.
(c) EFFECTIVE DATE.—The amendments made by
subsections (a) and (b) shall apply to items furnished after
the expiration of the 60-day period that begins on the date
of the enactment of this Act.
SEC. 5037. KICKBACK CLARIFICATION.
(a) IN
GENERAL.—Section 1128B(b)(3)(B) (42
U.S.C. 1320a–7b(b)(3)(B)) is amended by inserting be-
fore the semicolon the following: ‘‘(except that in the case
of a contract supply arrangement between any entity and
a supplier of medical supplies and equipment (as defined
in section 1834(i)(4), but not including items described
in subparagraph (F) of such section), such employment
shall not be considered bona fide to the extent that it in-
cludes tasks of a clerical and cataloging nature in trans-
mitting to suppliers assignment rights of individuals eligi-
256
ble for benefits under part B of title XVIII, or perform-
ance of warehousing or stock inventory functions)’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply with respect to services fur-
nished on or after the first day of the first month that
begins after the expiration of the 60-day period beginning
on the date of the enactment of this Act.
SEC. 5038. BENEFICIARY LIABILITY FOR NONCOVERED
SERVICES.
(a) UNASSIGNED CLAIMS.—
(1) IN GENERAL.—Section 1834(i) (42 U.S.C.
1395m(i)), as added by section 5034(a)(1), is
amended—
(A) by redesignating paragraph (4) as
paragraph (5), and
(B) by inserting after paragraph (3) the
following new paragraph:
‘‘(4) LIMITATION ON PATIENT LIABILITY.—If a
supplier of medical equipment and supplies (as de-
fined in paragraph (5))—
‘‘(A) furnishes an item or service to a ben-
eficiary for which no payment may be made by
reason of paragraph (1);
257
‘‘(B) furnishes an item or service to a ben-
eficiary for which payment is denied in advance
under subsection (a)(15); or
‘‘(C) furnishes an item or service to a ben-
eficiary for which payment is denied under
section 1862(a)(1);
any expenses incurred for items and services fur-
nished to an individual by such a supplier not on an
assigned basis shall be the responsibility of such
supplier. The individual shall have no financial re-
sponsibility for such expenses and the supplier shall
refund on a timely basis to the individual (and shall
be liable to the individual for) any amounts collected
from the individual for such items or services. The
provisions of subsection (a)(18) shall apply to re-
funds required under the previous sentence in the
same manner as such provisions apply to refunds
under such subsection.’’.
(2) 
CONFORMING
AMENDMENT.—Section
1128B(b)(3)(B) (42 U.S.C. 1320a–7b(b)(3)(B)), as
amended by section 5037(a), is amended by striking
‘‘1834(i)(4)’’ and inserting ‘‘1834(i)(5)’’.
(b) ASSIGNED CLAIMS.—Section 1879 (42 U.S.C.
1395pp) is amended by adding at the end the following
new subsection:
258
‘‘(h) If a supplier of medical equipment and supplies
(as defined in section 1834(i)(4))—
‘‘(1) furnishes an item or service to a bene-
ficiary for which no payment may be made by reason
of section 1834(i)(1); or
‘‘(2) furnishes an item or service to a bene-
ficiary for which payment is denied in advance under
section 1834(a)(15);
any expenses incurred for items and services furnished to
an individual by such a supplier on an assignment-related
basis shall be the responsibility of such supplier. The indi-
vidual shall have no financial responsibility for such ex-
penses and the supplier shall refund on a timely basis to
the individual (and shall be liable to the individual for)
any amounts collected from the individual for such items
or services. The provisions of section 1834(a)(18) shall
apply to refunds required under the previous sentence in
the same manner as such provisions apply to refunds
under such section.’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to items or services furnished on
or after October 1, 1994.
259
SEC. 5039. ADJUSTMENTS FOR INHERENT REASONABLE-
NESS.
(a) ADJUSTMENTS
MADE
TO
FINAL
PAYMENT
AMOUNTS.—
(1) IN GENERAL.—Section 1834(a)(10)(B) (42
U.S.C. 1395m(a)(10)(B)) is amended by adding at
the end the following: ‘‘In applying such provisions
to payments for an item under this subsection, the
Secretary shall make adjustments to the payment
basis for the item described in paragraph (1)(B) if
the Secretary determines (in accordance with such
provisions and on the basis of prices and costs appli-
cable at the time the item is furnished) that such
payment basis is not inherently reasonable.’’.
(2) EFFECTIVE DATE.—The amendment made
by paragraph (1) shall take effect on the date of the
enactment of this Act.
(b) ADJUSTMENT REQUIRED FOR CERTAIN ITEMS.—
(1) IN GENERAL.—In accordance with section
1834(a)(10)(B) of the Social Security Act (as
amended by subsection (a)), the Secretary of Health
and Human Services shall determine whether the
payment amounts for the items described in para-
graph (2) are not inherently reasonable, and shall
adjust such amounts in accordance with such section
if the amounts are not inherently reasonable.
260
(2) ITEMS DESCRIBED.—The items referred to
in paragraph (1) are decubitus care equipment,
transcutaneous electrical nerve stimulators, and any
other items considered appropriate by the Secretary.
SEC. 5040. PAYMENT FOR SURGICAL DRESSINGS.
(a) IN GENERAL.—Section 1834 (42 U.S.C. 1395m),
as amended by section 5034(a)(1), is amended by adding
at the end the following new subsection:
‘‘(j) PAYMENT FOR SURGICAL DRESSINGS.—
‘‘(1) IN GENERAL.—Payment under this sub-
section for surgical dressings (described in section
1861(s)(5)) shall be made in a lump sum amount
for the purchase of the item in an amount equal to
80 percent of the lesser of—
‘‘(A) the actual charge for the item; or
‘‘(B) a payment amount determined in ac-
cordance with the methodology described in
subparagraphs (B) and (C) of subsection (a)(2)
(except that in applying such methodology, the
national limited payment amount referred to in
such subparagraphs shall be initially computed
based on local payment amounts using average
reasonable charges for the 12-month period
ending December 31, 1992, increased by the
261
covered item updates described in such sub-
section for 1993 and 1994)
‘‘(2) EXCEPTIONS.—Paragraph (1) shall not
apply to surgical dressings that are—
‘‘(A) furnished as an incident to a physi-
cian’s professional service; or
‘‘(B) furnished by a home health agency.’’.
(b) CONFORMING AMENDMENT.—Section 1833(a)(1)
(42 U.S.C. 1395l(a)(1)), as amended by sections
5070(e)(2) and 5010(e)(1), is amended—
(1) by striking ‘‘and’’ before ‘‘(P)’’, and
(2) by inserting before the semicolon at the end
the following: ‘‘, and (Q) with respect to surgical
dressings, the amounts paid shall be the amounts
determined under section 1834(j)’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to items furnished on or after Jan-
uary 1, 1994.
SEC. 5041. PAYMENTS FOR TENS DEVICES.
(a) IN GENERAL.—Section 1834(a)(1)(D) (42 U.S.C.
1395m(a)(1)(D)) is amended by striking ‘‘15 percent’’ the
second place it appears and inserting ‘‘45 percent’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply to items furnished on or after
January 1, 1994.
262
SEC. 5042. MISCELLANEOUS AND TECHNICAL CORREC-
TIONS.
(a) UPDATES
TO PAYMENT AMOUNTS.—Subpara-
graph 
(A) 
of 
section 
1834(a)(14) 
(42 
U.S.C.
1395m(a)(14)) is amended to read as follows:
‘‘(A) for 1991 and 1992, the percentage
increase in the consumer price index for all
urban consumers (U.S. city average) for the 12-
month period ending with June of the previous
year reduced by 1 percentage point; and’’.
(b) TREATMENT OF POTENTIALLY OVERUSED ITEMS
AND ADVANCED DETERMINATIONS OF COVERAGE.—(1)
Effective on the date of the enactment of this Act, section
1834(a)(15) (42 U.S.C. 1395m(a)(15)) is amended to
read as follows:
‘‘(15) SPECIAL TREATMENT FOR POTENTIALLY
OVERUSED ITEMS.—
‘‘(A) DEVELOPMENT OF LIST OF ITEMS BY
SECRETARY.—The Secretary shall develop and
periodically update a list of items for which
payment may be made under this subsection
that are potentially overused, and shall include
in such list seat-lift mechanisms, transcutane-
ous electrical nerve stimulators, motorized
scooters, decubitus care mattresses, and any
such other item determined by the Secretary to
263
be potentially overused on the basis of any of
the following criteria—
‘‘(i) the item is marketed directly to
potential patients;
‘‘(ii) the item is marketed with an
offer to potential patients to waive the
costs of coinsurance associated with the
item or is marketed as being available at
no cost to policyholders of a medicare sup-
plemental policy (as defined in section
1882(g)(1));
‘‘(iii) the item has been subject to a
consistent pattern of overutilization; or
‘‘(iv) a high proportion of claims for
payment for such item under this part may
not be made because of the application of
section 1862(a)(1).
‘‘(B) ITEMS SUBJECT TO SPECIAL CARRIER
SCRUTINY.—Payment may not be made under
this part for any item contained in the list de-
veloped by the Secretary under subparagraph
(A) unless the carrier has subjected the claim
for payment for the item to special scrutiny or
has followed the procedures described in para-
graph (11)(C) with respect to the item.’’.
264
(2) Effective January 1, 1994, section 1834(a)(11)
(42 U.S.C. 1395m(a)) is amended by adding at the end
the following new subparagraph:
‘‘(C) CARRIER DETERMINATIONS FOR CER-
TAIN ITEMS IN ADVANCE.—A carrier shall de-
termine in advance whether payment for an
item may not be made under this subsection be-
cause of the application of section 1862(a)(1)
if—
‘‘(i) the item is a customized item
(other than inexpensive items specified by
the Secretary); or
‘‘(ii) the item is a specified covered
item under subparagraph (B).’’.
(3) Effective for standards applied for contract years
beginning after the date of the enactment of this Act, sec-
tion 1842(c) (42 U.S.C. 1395u(c)), as amended by section
5013(a), is amended by adding at the end the following
new paragraph:
‘‘(5) Each contract under this section which provides
for the disbursement of funds, as described in subsection
(a)(1)(B), shall require the carrier to meet criteria devel-
oped by the Secretary to measure the timeliness of carrier
responses to requests for payment of items described in
section 1834(a)(11)(C).’’.
265
(4) Section 1834(h)(3) (42 U.S.C. 1395m(h)(3)) is
amended by striking ‘‘paragraph (10) and paragraph
(11)’’ and inserting ‘‘paragraphs (10) and (11)’’.
(c) STUDY OF VARIATIONS IN DURABLE MEDICAL
EQUIPMENT SUPPLIER COSTS.—
(1) COLLECTION AND ANALYSIS OF SUPPLIER
COST DATA.—The Administrator of the Health Care
Financing Administration shall, in consultation with
appropriate organizations, collect data on supplier
costs of durable medical equipment for which pay-
ment may be made under part B of the medicare
program, and shall analyze such data to determine
the proportions of such costs attributable to the
service and product components of furnishing such
equipment and the extent to which such proportions
vary by type of equipment and by the geographic
region in which the supplier is located.
(2) DEVELOPMENT
OF
GEOGRAPHIC
ADJUST-
MENT INDEX; REPORTS.—Not later than January 1,
1995—
(A) the Administrator shall submit a re-
port to the Committees on Energy and Com-
merce and Ways and Means of the House of
Representatives and the Committee on Finance
of the Senate on the data collected and the
266
analysis conducted under paragraph (1), and
shall include in such report the Administrator’s
recommendations for a geographic cost adjust-
ment index for suppliers of durable medical
equipment under the medicare program and an
analysis of the impact of such proposed index
on payments under the medicare program; and
(B) the Comptroller General shall submit a
report to the Committees on Energy and Com-
merce and Ways and Means of the House of
Representatives and the Committee on Finance
of the Senate analyzing on a geographic basis
the supplier costs of durable medical equipment
under the medicare program.
(d) OXYGEN RETESTING.—Section 1834(a)(5)(E)
(42 U.S.C. 1395m(a)(5)(E)) is amended by striking ‘‘55’’
and inserting ‘‘56’’.
(e) 
OTHER
MISCELLANEOUS
AND
TECHNICAL
AMENDMENTS.—(1) Section 4152(a)(3) of OBRA–1990
is amended by striking ‘‘amendment made by subsection
(a)’’ and inserting ‘‘amendments made by this sub-
section’’.
(2) Section 4152(c)(2) of OBRA–1990 is amended
by 
striking 
‘‘1395m(a)(7)(A)’’ 
and 
inserting
‘‘1395m(a)(7)’’.
267
(3) 
Section 
1834(a)(7)(A)(iii)(II) 
(42 
U.S.C.
1395m(a)(7)(A)(iii)(II)) is amended by striking ‘‘clause
(v)’’ and inserting ‘‘clause (vi)’’.
(4) 
Section 
1834(a)(7)(C)(i) 
(42 
U.S.C.
1395m(a)(7)(C)(i)) is amended by striking ‘‘or paragraph
(3)’’.
(5) Section 1834(a)(3) (42 U.S.C. 1395m(a)(3)) is
amended by striking subparagraph (D).
(6) Section 4153(c)(1) of OBRA–1990 is amended
by striking ‘‘1834(a)’’ and inserting ‘‘1834(h)’’.
(7) Section 4153(d)(2) of OBRA–1990 is amended
by striking ‘‘Reconiliation’’ and inserting ‘‘Reconcili-
ation’’.
(8)(A) Section 1834(a) (42 U.S.C. 1395m(a)) is
amended by striking paragraph (6).
(B) Section 1834(a) (42 U.S.C. 1395m(a)) is
amended—
(i) in subparagraphs (A) and (B) of paragraph
(1), by striking ‘‘(2) through (7)’’ each place it ap-
pears and inserting ‘‘(2) through (5) and (7)’’;
(ii) in paragraph (7), by striking ‘‘(2) through
(6)’’ and inserting ‘‘(2) through (5)’’;
(iii) in paragraph (8), by striking ‘‘paragraphs
(6) and (7)’’ each place it appears in the matter pre-
268
ceding subparagraph (A) and in subparagraph (C)
and inserting ‘‘paragraph (7)’’; and
(iv) in paragraph (8)(A)(i), by striking ‘‘de-
scribed—’’ and all that follows and inserting ‘‘de-
scribed in paragraph (7) equal to the average of the
purchase prices on the claims submitted on an as-
signment-related basis for the unused item supplied
during the 6-month period ending with December
1986.’’.
(9) The amendments made by this subsection shall
take effect as if included in the enactment of OBRA–1990.
Subchapter D—Part B Premium
SEC. 5051. PART B PREMIUM.
Section 1839(e) (42 U.S.C. 1395r(e)) is amended—
(1) in paragraph (1)(A), by inserting ‘‘and for
each month in 1996 and 1997’’ after ‘‘January
1991’’, and
(2) in paragraph (2), by striking ‘‘1991’’ and
inserting ‘‘1998’’.
Subchapter E—Other Provisions
SEC. 5061. PAYMENTS FOR CLINICAL DIAGNOSTIC LABORA-
TORY TESTS.
(a) LOWER CAP.—Section 1833(h)(4)(B) (42 U.S.C.
1395l(h)(4)(B)) is amended—
(1) by striking ‘‘and’’ at the end of clause (iii),
269
(2) in clause (iv), by inserting ‘‘and before Jan-
uary 1, 1994,’’ after ‘‘1990,’’,
(3) by striking the period at the end of clause
(iv) and inserting ‘‘, and’’, and
(4) by adding at the end the following:
‘‘(v) after December 31, 1993, is equal to 76
percent of the median of all the fee schedules estab-
lished for that test for that laboratory setting under
paragraph (1).’’.
(b) TWO PERCENT UPDATE FOR 1994 THROUGH
1998.—Section 
1833(h)(2)(A)(ii)(III) 
(42 
U.S.C.
1395l(h)(2)(A)(ii)(III)) is amended by striking ‘‘1991,
1992, and 1993’’ and inserting ‘‘1991 through 1998’’.
SEC. 5062. TREATMENT OF INPATIENTS AND PROVISION OF
DIAGNOSTIC AND THERAPEUTIC X-RAY SERV-
ICES BY RURAL HEALTH CLINICS AND FED-
ERALLY QUALIFIED HEALTH CENTERS.
(a) TREATMENT OF INPATIENTS.—Section 1861(aa)
(42 U.S.C. 1395x(aa)) is amended—
(1) in paragraph (1), in the matter following
subparagraph (C), by striking ‘‘as an outpatient’’
and inserting ‘‘as a patient’’;
(2) in paragraph (2)(A), by striking ‘‘furnishing
to outpatients’’ and inserting ‘‘furnishing to pa-
tients’’; and
270
(3) in paragraph (3), in the matter following
subparagraph (B), by striking ‘‘as an outpatient’’
and inserting ‘‘as a patient’’.
(b) TREATMENT OF DIAGNOSTIC AND THERAPEUTIC
X-RAY
SERVICES.—Section 
1861(aa) 
(42 
U.S.C.
1395x(aa)) is further amended—
(1) in paragraph (1)(A), by inserting ‘‘(i)’’ after
‘‘(A)’’ and by adding at the end the following: ‘‘and
(ii) diagnostic and therapeutic x-ray services,’’, and
(2) in paragraph (2)(A), by striking ‘‘(A)’’ and
inserting ‘‘(A)(i)’’.
(c) 
CONFORMING
AMENDMENT.—Section
1862(a)(14) (42 U.S.C. 1395y(a)(14)) is amended by
striking ‘‘and services of a certified registered nurse anes-
thetist’’ and inserting ‘‘services of a certified registered
nurse anesthetist, rural health clinic services, and Feder-
ally-qualified health center services’’.
(d) EFFECTIVE DATE.—The amendments made by
this section shall take effect on January 1, 1994, and shall
apply to services furnished on or after such date.
SEC. 5063. APPLICATION OF MAMMOGRAPHY CERTIFI-
CATION REQUIREMENTS.
(a) SCREENING MAMMOGRAPHY.—Section 1834(c)
(42 U.S.C. 1395m(c)) is amended—
271
(1) in paragraph (1)(B), by striking ‘‘meets the
quality standards established under paragraph (3)’’
and inserting ‘‘is conducted by a facility that has a
certificate (or provisional certificate) issued under
section 354 of the Public Health Service Act’’;
(2) in paragraph (1)(C)(iii), by striking ‘‘para-
graph (4)’’ and inserting ‘‘paragraph (3)’’;
(3) by striking paragraph (3); and
(4) by redesignating paragraphs (4) and (5) as
paragraphs (3) and (4).
(b) 
DIAGNOSTIC
MAMMOGRAPHY.—Section
1861(s)(3) (42 U.S.C. 1395x(s)(3)) is amended by insert-
ing ‘‘and including diagnostic mammography if conducted
by a facility that has a certificate (or provisional certifi-
cate) issued under section 354 of the Public Health Serv-
ice Act’’ after ‘‘necessary’’.
(c) 
CONFORMING
AMENDMENTS.—(1) 
Section
1862(a)(1)(F) (42 U.S.C. 1395y(a)(1)(F)) is amended by
striking ‘‘or which does not meet the standards established
under section 1834(c)(3)’’ and inserting ‘‘or which is not
conducted 
by 
a 
facility 
described 
in 
section
1834(c)(1)(B)’’.
(2) Section 1863 (42 U.S.C. 1395z) is amended by
striking ‘‘or whether screening mammography meets the
standards established under section 1834(c)(3),’’.
272
(3) The first sentence of section 1864(a) (42 U.S.C.
1395aa(a)) is amended by striking ‘‘, or whether screening
mammography meets the standards established under sec-
tion 1834(c)(3)’’.
(4) The third sentence of section 1865(a) (42 U.S.C.
1395bb(a)) is amended by striking ‘‘1834(c)(3),’’.
(d) EFFECTIVE DATE.—The amendments made by
this section shall apply to mammography furnished by a
facility on and after the first date that the certificate re-
quirements of section 354(b) of the Public Health Service
Act apply to such mammography conducted by such facil-
ity.
SEC. 5064. EXTENSION OF ALZHEIMER’S DISEASE DEM-
ONSTRATION.
Section 9342 of OBRA–1986, as amended by section
4164(a)(2) of OBRA–1990, is amended—
(1) in subsection (c)(1), by striking ‘‘4 years’’
and inserting ‘‘5 years’’; and
(2) in subsection (f)—
(A) by striking ‘‘$55,000,000’’ and insert-
ing ‘‘$60,000,000’’, and
(B) by striking ‘‘$3,000,000’’ and insert-
ing ‘‘$5,000,000’’.
273
SEC. 5065. ORAL CANCER DRUGS.
(a) COVERAGE
OF CERTAIN SELF-ADMINISTERED
ANTICANCER DRUGS.—Section 1861(s)(2) (42 U.S.C.
1395(s)(2)), as amended by section 5070(f)(7)(B), is
amended—
(1) by striking ‘‘and’’ at the end of subpara-
graph (N);
(2) by adding ‘‘and’’ at the end of subpara-
graph (O); and
(3) by adding at the end the following new sub-
paragraph:
‘‘(P) an oral drug (which is approved by the
Federal Food and Drug Administration) prescribed
for use as an anticancer chemotherapeutic agent for
a given indication, and containing an active ingredi-
ent (or ingredients), which is the same indication
and active ingredient (or ingredients) as a drug
which the carrier determines would be covered pur-
suant to subparagraph (A) or (B) if the drug could
not be self-administered;’’.
(b) EFFECTIVE DATE.—The amendments made by
this section shall apply to items furnished on or after Jan-
uary 1, 1994.
274
SEC. 5066. EXTENSION OF MUNICIPAL HEALTH SERVICE
DEMONSTRATION PROJECTS.
Section 9215 of the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended by section 6135
of OBRA–1989, is amended—
(1) by striking ‘‘December 31, 1993’’ and in-
serting ‘‘December 31, 1997’’, and
(2) in the second sentence, by inserting after
‘‘beneficiary costs,’’ the following: ‘‘costs to the med-
icaid program and other payors, access to care, out-
comes, beneficiary satisfaction, utilization differences
among the different populations served by the
projects,’’.
SEC. 5067. TREATMENT OF CERTAIN INDIAN HEALTH PRO-
GRAMS 
AND 
FACILITIES 
AS 
FEDERALLY-
QUALIFIED HEALTH CENTERS.
(a) IN GENERAL.—Section 1861(aa)(4) (42 U.S.C.
1395x(aa)(4)) is amended—
(1) by striking ‘‘or’’ at the end of subparagraph
(B);
(2) by striking the period at the end of sub-
paragraph (C) and inserting ‘‘; or’’; and
(3) by adding at the end the following new sub-
paragraph:
‘‘(D) is an outpatient health program or facility
operated by a tribe or tribal organization under the
275
Indian Self-Determination Act or by an urban In-
dian organization receiving funds under title V of
the Indian Health Care Improvement Act.’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall take effect as if included in the enact-
ment of section 4161(a)(2)(C) of OBRA–1990.
SEC. 5068. INTEREST PAYMENTS.
(a) IN GENERAL.—Section 1842(c)(2)(B)(ii)(IV) of
the Social Security Act shall be applied with respect to
paper claims received in the 9-month period beginning
January 1, 1993, by substituting ‘‘27 calendar days’’ for
‘‘24 calendar days’’ and ‘‘17 calendar days’’.
(b) PROHIBITING PAYMENT OF INTEREST DURING
MANDATORY
PAYMENT
DELAY
PERIOD.—Section
1842(c)(2)(C) (42 U.S.C. 1395u(c)(2)(C)) is amended by
adding at the end the following: ‘‘Notwithstanding any
other provision of law, no interest may be paid with re-
spect to a claim pursuant to the preceding sentence within
any period following the submission of the claim during
which no payment may be issued, mailed, or otherwise
transmitted with respect to the claim.’’.
276
SEC. 5069. CLARIFICATION OF COVERAGE OF CERTIFIED
NURSE-MIDWIFE 
SERVICES 
PERFORMED
OUTSIDE THE MATERNITY CYCLE.
(a) IN GENERAL.—Section 1861(gg)(2) (42 U.S.C.
1395x(gg)(2)) is amended by striking ‘‘, and performs
services’’ and all that follows and inserting a period.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply to services furnished on or after
January 1, 1994.
SEC. 5069A. INCREASE IN, AND STUDY OF, ANNUAL CAP ON
AMOUNT OF MEDICARE PAYMENT FOR OUT-
PATIENT PHYSICAL THERAPY AND OCCUPA-
TIONAL THERAPY SERVICES.
(a) INCREASE
IN ANNUAL LIMITATION.—Section
1833(g) (42 U.S.C. 1395l(g)) is amended by striking
‘‘$750’’ and inserting ‘‘$900’’ each place it appears.
(b) STUDY.—(1) The Physician Payment Review
Commission shall conduct a study of the appropriateness
of continuing an annual limitation on the amount of pay-
ment for outpatient services of independently practicing
physical and occupational therapists under the medicare
program.
(2) By not later than January 1, 1995, the Commis-
sion shall submit to the Committees on Energy and Com-
merce and Ways and Means of the House of Representa-
tives and the Committee on Finance of the Senate a report
277
on the study conducted under paragraph (1). Such report
shall include such recommendations for changes in such
annual limitation as the Commission finds appropriate.
(c) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply to services furnished on or after
January 1, 1994.
SEC. 5070. MISCELLANEOUS AND TECHNICAL CORREC-
TIONS.
(a) REVISION OF INFORMATION ON PART B CLAIMS
FORMS.—Section 1833(q)(1) (42 U.S.C. 1395l(q)(1)) is
amended—
(1) by striking ‘‘provider number’’ and inserting
‘‘unique physician identification number’’; and
(2) by striking ‘‘and indicate whether or not the
referring physician is an interested investor (within
the meaning of section 1877(h)(5))’’.
(b) CONSULTATION FOR SOCIAL WORKERS.—Effec-
tive with respect to services furnished on or after January
1, 1991, section 6113(c) of OBRA–1989 is amended—
(1) by inserting ‘‘and clinical social worker
services’’ after ‘‘psychologist services’’; and
(2) by striking ‘‘psychologist’’ the second and
third place it appears and inserting ‘‘psychologist or
clinical social worker’’.
278
(c) REPORTS
ON
HOSPITAL
OUTPATIENT
PAY-
MENT.—(1) OBRA–1989 is amended by striking section
6137.
(2) Section 1135(d) (42 U.S.C. 1320b–5(d)) is
amended—
(A) by striking paragraph (6); and
(B) in paragraph (7)—
(i) by striking ‘‘systems’’ each place it ap-
pears and inserting ‘‘system’’; and
(ii) by striking ‘‘paragraphs (1) and (6)’’
and inserting ‘‘paragraph (1)’’.
(d) RADIOLOGY AND DIAGNOSTIC SERVICES PRO-
VIDED
IN
HOSPITAL
OUTPATIENT
DEPARTMENTS.—
(1) Effective as if included in the enactment of
OBRA–1989, section 1833(n)(1)(B)(i)(II) (42 U.S.C.
1395l(n)(1)(B)(i)(II)) is amended—
(A) by inserting ‘‘and for services described in
subsection (a)(2)(E)(ii) furnished on or after Janu-
ary 1, 1992’’ after ‘‘1989’’; and
(B) by striking ‘‘1842(b)’’ and inserting
‘‘1842(b) (or, in the case of services furnished on or
after January 1, 1992, under section 1848)’’.
(2) Effective as if included in the enactment of
OBRA–1989, section 1833(n)(1)(B)(i)(II) (42 U.S.C.
279
1395l(n)(1)(B)(i)(II)) is amended by striking ‘‘January
1,’’ and inserting ‘‘April 1,’’.
(e) PAYMENTS TO NURSE PRACTITIONERS IN RURAL
AREAS (SECTION 4155 OF OBRA–1990).—(1) Section
1861(s)(2)(K)(iii) (42 U.S.C. 1395x(s)(2)(K)(iii)) is
amended—
(A) by striking ‘‘subsection (aa)(3)’’ and insert-
ing ‘‘subsection (aa)(5)’’; and
(B) by striking ‘‘subsection (aa)(4)’’ and insert-
ing ‘‘subsection (aa)(6)’’.
(2) Section 1833(a)(1) (42 U.S.C. 1395l(a)(1)) is
amended—
(A) by striking ‘‘and’’ before ‘‘(N)’’; and
(B) with respect to the matter inserted by sec-
tion 4155(b)(2)(B) of OBRA–1990—
(i) by striking ‘‘(M)’’ and inserting ‘‘, and
(O)’’, and
(ii) by transferring and inserting it (as
amended) immediately before the semicolon at
the end.
(3) Section 1833(r)(1) (42 U.S.C. 1395l(r)(1)) is
amended—
(A) by striking ‘‘ambulatory’’ each place it ap-
pears and inserting ‘‘or ambulatory’’; and
280
(B) by striking ‘‘center,’’ and inserting ‘‘cen-
ter’’.
(4) Section 1833(r)(2)(A) (42 U.S.C. 1395l(r)(2)(A))
is amended by striking ‘‘subsection (a)(1)(M)’’ and insert-
ing ‘‘subsection (a)(1)(O)’’.
(5) Section 1861(b)(4) (42 U.S.C. 1395x(b)(4)) is
amended by striking ‘‘subsection (s)(2)(K)(i)’’ and insert-
ing ‘‘clauses (i) or (iii) of subsection (s)(2)(K)’’.
(6) Section 1861(aa)(5) (42 U.S.C. 1395x(aa)(5)) is
amended by striking ‘‘this Act’’ and inserting ‘‘this title’’.
(7) Section 1862(a)(14) (42 U.S.C. 1395y(a)(14)) is
amended by striking ‘‘1861(s)(2)(K)(i)’’ and inserting
‘‘1861(s)(2)(K)(i) or 1861(s)(2)(K)(iii)’’.
(8) 
Section 
1866(a)(1)(H) 
(42 
U.S.C.
1395cc(a)(1)(H)) 
is 
amended 
by 
striking
‘‘1861(s)(2)(K)(i)’’ and inserting ‘‘1861(s)(2)(K)(i) or
1861(s)(2)(K)(iii)’’.
(f) 
OTHER
MISCELLANEOUS
AND
TECHNICAL
AMENDMENTS.—
(1) IMMEDIATE ENROLLMENT IN PART B BY IN-
DIVIDUALS
COVERED
BY
AN
EMPLOYMENT-BASED
PLAN.—(A) Subparagraphs (A) and (B) of section
1837(i)(3) (42 
U.S.C. 
1395p(i)(3)) 
are 
each
amended—
281
(i) by striking ‘‘beginning with the first
day of the first month in which the individual
is no longer enrolled’’ and inserting ‘‘including
each month during any part of which the indi-
vidual is enrolled’’; and
(ii) by striking ‘‘and ending seven months
later’’ and inserting ‘‘ending with the last day
of the eighth consecutive month in which the in-
dividual is at no time so enrolled’’.
(B) Paragraphs (1) and (2) of section 1838(e)
(42 U.S.C. 1395q(e)) are amended to read as fol-
lows:
‘‘(1) in any month of the special enrollment pe-
riod in which the individual is at any time enrolled
in a plan (specified in subparagraph (A) or (B), as
applicable, of section 1837(i)(3)) or in the first
month following such a month, the coverage period
shall begin on the first day of the month in which
the individual so enrolls (or, at the option of the in-
dividual, on the first day of any of the following
three months), or
‘‘(2) in any other month of the special enroll-
ment period, the coverage period shall begin on the
first day of the month following the month in which
the individual so enrolls.’’.
282
(C) The amendments made by subparagraphs
(A) and (B) shall take effect on the first day of the
first month that begins after the expiration of the
120-day period that begins on the date of the enact-
ment of this Act.
(2) BLEND AMOUNTS FOR AMBULATORY SUR-
GICAL CENTER PAYMENTS.—Subclauses (I) and (II)
of 
section 
1833(i)(3)(B)(ii) 
(42 
U.S.C.
1395l(i)(3)(B)(ii)) are each amended—
(A) by striking ‘‘for reporting’’ and insert-
ing ‘‘for portions of cost reporting’’; and
(B) by striking ‘‘and on or before’’ and in-
serting ‘‘and ending on or before’’.
(3) CLINICAL DIAGNOSTIC LABORATORY TESTS
(SECTION 4154 OF OBRA–1990).—Section 4154(e)(5)
of OBRA–1990 is amended by striking ‘‘(1)(A)’’ and
inserting ‘‘(1)(A),’’.
(4) SEPARATE PAYMENT UNDER PART B FOR
CERTAIN SERVICES (SECTION 4157 OF OBRA–1990).—
Section 4157(a) of OBRA–1990 is amended by
striking ‘‘(a) SERVICES
OF’’ and all that follows
through ‘‘Section’’ and inserting ‘‘(a) TREATMENT
OF SERVICES
OF CERTAIN HEALTH PRACTITION-
ERS.—Section’’.
283
(5) COMMUNITY HEALTH CENTERS AND RURAL
HEALTH CLINICS (SECTION 4161 OF OBRA–1990).—
(A) The fourth sentence of section 1861(aa)(2) (42
U.S.C. 1395x(aa)(2)) is amended—
(i) by striking ‘‘certification’’ the first
place it appears and inserting ‘‘approval’’; and
(ii) by striking ‘‘the Secretary’s approval
or disapproval of the certification’’ and insert-
ing ‘‘Secretary’s approval or disapproval’’.
(B) Section 4161(a)(7)(B) of OBRA–1990 is
amended by inserting ‘‘and to the Committee on Fi-
nance of the Senate’’ after ‘‘Representatives’’.
(6) SCREENING MAMMOGRAPHY (SECTION 4163
OF
OBRA–1990).—Section 4163 of OBRA–1990 is
amended—
(A) by adding at the end of subsection (d)
the following new paragraph:
‘‘(3) The amendment made by paragraph
(2)(A)(iv) shall apply to screening pap smears per-
formed on or after July 1, 1990.’’; and
(B) in subsection (e), by striking ‘‘The
amendments’’ and inserting ‘‘Except as pro-
vided in subsection (d)(3), the amendments’’.
(7) INJECTABLE DRUGS FOR TREATMENT OF
OSTEOPOROSIS.—
284
(A) 
CLARIFICATION
OF
DRUGS
COV-
ERED.—The 
section 
1861(jj) 
(42 
U.S.C.
1395x(jj)) inserted by section 4156(a)(2) of
OBRA–1990 is amended—
(i) in the matter preceding paragraph
(1), by striking ‘‘a bone fracture related
to’’; and
(ii) in paragraph (1), by striking ‘‘pa-
tient’’ and inserting ‘‘individual has suf-
fered a bone fracture related to post-meno-
pausal osteoporosis and that the individ-
ual’’.
(B) LIMITING COVERAGE TO DRUGS PRO-
VIDED BY HOME HEALTH AGENCIES.—(i) The
section 1861(jj) (42 U.S.C. 1395x(jj)) inserted
by section 4156(a)(2) of OBRA–1990 is
amended by striking ‘‘if’’ and inserting ‘‘by a
home health agency if’’.
(ii) 
Section 
1861(m)(5) 
(42 
U.S.C.
1395x(m)(5)) is amended by striking ‘‘but ex-
cluding’’ 
and 
inserting 
‘‘and 
a 
covered
osteoporosis drug (as defined in subsection
(kk), but excluding other’’.
(iii) 
Section 
1861(s)(2) 
(42 
U.S.C.
1395x(s)(2)) is amended—
285
(I) by adding ‘‘and’’ at the end of
subparagraph (N), and
(II) by striking subparagraph (O) and
redesignating subparagraph (P) as sub-
paragraph (O).
(C) PAYMENT
BASED
ON
REASONABLE
COST.—Section 
1833(a)(2) 
(42 
U.S.C.
1395l(a)(2)) is amended—
(i) in subparagraph (A), by striking
‘‘health services’’ and inserting ‘‘health
services (other than covered osteoporosis
drug (as defined in section 1861(kk)))’’;
(ii) by striking ‘‘and’’ at the end of
subparagraph (D);
(iii) by striking the semicolon at the
end and inserting ‘‘; and’’; and
(iv) by adding at the end the following
new subparagraph:
‘‘(F) with respect to covered osteoporosis
drug (as defined in section 1861(kk)) furnished
by a home health agency, 80 percent of the rea-
sonable cost of such service, as determined
under section 1861(v);’’.
(D) APPLICATION
OF
PART
B
DEDUCT-
IBLE.—Section 
1833(b)(2) 
(42 
U.S.C.
286
1395l(b)(2)) is amended by striking ‘‘services’’
and inserting ‘‘services (other than covered
osteoporosis 
drug 
(as 
defined 
in 
section
1861(kk)))’’.
(E) COVERED OSTEOPOROSIS DRUG (SEC-
TION 4156 OF OBRA–1990).—Section 1861 (42
U.S.C. 1395x) is amended, in the subsection
(jj) inserted by section 4156(a)(2) of OBRA–
1990, by striking ‘‘(jj) The term’’ and inserting
‘‘(kk) The term’’.
(8) OTHER
MISCELLANEOUS
AND
TECHNICAL
CORRECTIONS (SECTION 4164 OF OBRA–1990).—
(A) OWNERSHIP
DISCLOSURE
REQUIRE-
MENTS.—(i) 
Section 
1124A(a)(2)(A) 
(42
U.S.C. 1320a–3a(a)(2)(A)) is amended by
striking ‘‘of the Social Security Act’’.
(ii) Section 4164(b)(4) of OBRA–1990 is
amended by striking ‘‘paragraph’’ and inserting
‘‘paragraphs’’.
(B) DIRECTORY
OF
UNIQUE
PHYSICIAN
IDENTIFIER
NUMBERS.—Section 4164(c) of
OBRA–1990 is amended by striking ‘‘publish’’
and inserting ‘‘publish, and shall periodically
update,’’.
287
(g) EFFECTIVE DATE.—Except as otherwise provided
in this section, the amendments made by this section shall
take effect as if included in the enactment of OBRA–1990.
CHAPTER 2—PROVISIONS RELATING TO
PARTS A AND B
SEC. 5071. ELIMINATION OF ADD-ON FOR OVERHEAD OF
HOSPITAL-BASED HOME HEALTH AGENCIES.
(a) GENERAL RULE.—The first sentence of section
1861(v)(1)(L)(ii) (42 U.S.C. 1395x(v)(1)(L)(ii)) is
amended by striking ‘‘, with appropriate adjustment for
administrative and general costs of hospital-based agen-
cies’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) applies to cost reporting periods beginning
after fiscal year 1993.
SEC. 5072. STUDY AND REPORT ON MEDICARE GME PAY-
MENTS.
(a) STUDY.—The Secretary of Health and Human
Services shall conduct a study of the methodology used
to determine payments to hospitals under the medicare
program for the costs of medical residency training pro-
grams and shall include in the study an analysis of the
causes of variation among such programs in the per resi-
dent costs of direct graduate medical education, including
288
the extent of support for such programs from non-hospital
sources.
(b) REPORT.—Not later than 1 year after the date
of the enactment of this Act, the Secretary shall submit
a report to Congress on the study conducted under sub-
section (a), and shall include in the report any rec-
ommendations considered appropriate by the Secretary for
modifications to the methodology used to determine pay-
ments to hospitals under the medicare program for the
costs of medical residency training programs that will en-
courage greater uniformity among medical residency train-
ing programs in the per resident costs of direct graduate
medical education.
SEC. 5073. MEDICARE AS SECONDARY PAYER.
(a) EXTENSION OF DATA MATCH PROGRAM.—Sec-
tion 1862(b)(5)(C)(iii) (42 U.S.C. 1395y(b)(5)(C)(iii)) is
amended by striking ‘‘1995’’ and inserting ‘‘1998’’.
(b) PERMANENT APPLICATION TO DISABLED INDI-
VIDUALS.—Section 
1862(b)(1)(B) 
(42 
U.S.C.
1395y(b)(1)(B)) is amended by striking clause (iii).
(c) APPLICATION
OF ESRD RULES
TO CERTAIN
AGED AND DISABLED BENEFICIARIES AND EXTENSION
OF APPLICATION OF 18-MONTH RULE.—
289
(1) Subparagraphs (A)(iv) and (B)(ii) of section
1862(b)(1) (42 U.S.C. 1395y(b)(1)) are each
amended—
(A) by striking ‘‘Clause (i) shall not apply’’
and inserting ‘‘Subparagraph (C) shall apply
instead of clause (i)’’, and
(B) by inserting ‘‘(without regard to enti-
tlement under section 226)’’ after ‘‘or’’ the sec-
ond place it appears.
(2) 
The 
second 
sentence 
of 
section
1862(b)(1)(C) is amended by striking ‘‘on or before
January 1, 1996’’ and inserting ‘‘before October 1,
1998’’.
(d) UNIFORM RULES FOR SIZE OF EMPLOYER.—
(1) IN
GENERAL.—Section 1862(b)(1) (42
U.S.C. 1395y(b)(1)) is amended by adding at the
end the following:
‘‘(E) GENERAL PROVISIONS.—
‘‘(i) EXCLUSION OF GROUP HEALTH
PLAN OF A SMALL EMPLOYER.—Subpara-
graphs (A) through (C) do not apply to a
group health plan unless the plan is a plan
of, or contributed to by, an employer or
employee organization that has 20 or more
individuals in current employment status
290
for each working day in each of 20 or more
calendar weeks in the current calendar
year or the preceding calendar year.
‘‘(ii) EXCEPTION FOR SMALL EMPLOY-
ERS
IN
MULTIEMPLOYER
OR
MULTIPLE
EMPLOYER GROUP HEALTH PLANS.—Sub-
paragraphs (A) through (C) also do not
apply with respect to individuals enrolled
in a multiemployer or multiple employer
group health plan if the coverage of the in-
dividuals under the plan is by virtue of
current employment status with an em-
ployer that does not have 20 or more indi-
viduals in current employment status for
each working day in each of 20 or more
calendar weeks in the current calendar
year and the preceding calendar year; but
the exception provided in this clause ap-
plies only if the plan elects treatment
under this clause.
‘‘(iii) APPLICATION OF CONTROLLED
GROUP
RULES.—For purposes of clauses
(i) and (ii)—
‘‘(I) all employees of corporations
which are members of a controlled
291
group of corporations (within the
meaning of section 1563(a) of the In-
ternal Revenue Code of 1986, deter-
mined without regard to subsection
(a)(4) or (e)(3)(C)), shall be treated
as employed by a single employer,
‘‘(II) all employees of trades or
businesses (whether or not incor-
porated) which are under common
control (under regulations prescribed
by the Secretary of the Treasury
under section 414(c) of that Code)
shall be treated as employed by a sin-
gle employer,
‘‘(III) all employees of the mem-
bers of an affiliated service group (as
defined in section 414(m) of that
Code) shall be treated as employed by
a single employer, and
‘‘(IV) leased employees (as de-
fined in section 414(n)(2) of that
Code) shall be treated as employees of
the person for whom they perform
services to the extent they are so
292
treated under section 414(n) of that
Code.
In applying sections of the Internal Reve-
nue Code of 1986 under this clause, the
Secretary shall rely upon the regulations
and decisions of the Secretary of the
Treasury respecting such sections.
‘‘(iv) GROUP
HEALTH
PLAN
DE-
FINED.—For purposes of this subsection,
the term ‘group health plan’ has the mean-
ing given such term in section 5000(b) of
the Internal Revenue Code of 1986, with-
out regard to section 5000(d) of such
Code.
‘‘(v) CURRENT EMPLOYMENT STATUS
DEFINED.—For purposes of this sub-
section, an individual has ‘current employ-
ment status’ with an employer if the indi-
vidual is an employee, is the employer, or
is associated with the employer in a busi-
ness relationship.
‘‘(vi) 
TREATMENT
OF
SELF-EM-
PLOYED
PERSONS
AS
EMPLOYERS.—For
purposes of this subsection, the term ‘em-
ployer’ includes a self-employed person.’’.
293
(2) CONFORMING AMENDMENTS FOR WORKING
AGED.—Section 
1862(b)(1)(A) 
(42 
U.S.C.
1395y(b)(1)(A)) is amended—
(A) by amending subclauses (I) and (II) of
clause (i) to read as follows:
‘‘(I) may not take into account
that an individual (or the individual’s
spouse) who is covered under the plan
by virtue of the individual’s current
employment status with an employer
is entitled to benefits under this title
under section 226(a), and
‘‘(II) shall provide that any indi-
vidual age 65 or over (and the individ-
ual’s spouse age 65 or older) who is
covered under the plan by virtue of
the individual’s current employment
status with an employer shall be enti-
tled to the same benefits under the
plan under the same conditions as any
such individual (or spouse) under age
65.’’;
(B) by striking clauses (ii), (iii), and (v),
and
294
(C) by redesignating clause (iv) as clause
(ii).
(3) AMENDMENTS
FOR
DISABLED
INDIVID-
UALS.—Section 1862(b) (42 U.S.C. 1395y(b)) is
amended—
(A) by amending the heading and clause
(i) of paragraph (1)(B) to read as follows:
‘‘(B) 
DISABLED
INDIVIDUALS
UNDER
GROUP HEALTH PLANS.—
‘‘(i) IN
GENERAL.—A group health
plan may not take into account that an in-
dividual (or a member of the individual’s
family) who is covered under the plan by
virtue of the individual’s current employ-
ment status with an employer is entitled to
benefits under this title under section
226(b).’’;
(B) by striking clause (iv) of paragraph
(1)(B); and
(C) in the second sentence of paragraph
(2)(A), by striking ‘‘or large group health
plan’’.
(4) AMENDMENTS
FOR
INDIVIDUALS
WITH
ESRD.—Section 
1862(b)(1)(C) 
(42 
U.S.C.
1395y(b)(1)(C)) is amended—
295
(A) in the matter preceding clause (i), by
striking ‘‘(as defined in subparagraph (A)(v))’’,
(B) by striking ‘‘solely’’ each place it ap-
pears,
(C) by striking ‘‘by reason of’’ and insert-
ing ‘‘under’’ each place it appears, and
(D) by inserting ‘‘or eligible for’’ after ‘‘en-
titled to’’ each place it appears.
(e) SECONDARY PAYER EXEMPTION FOR MEMBERS
OF RELIGIOUS ORDERS.—Effective as if included in the
enactment of OBRA–1989, section 6202(e)(2) of such Act
is amended by adding at the end the following: ‘‘Such
amendment also shall apply to items and services fur-
nished before such date with respect to secondary payer
cases which the Secretary of Health and Human Services
had not identified as of such date.’’.
(f) IMPROVING IDENTIFICATION OF MEDICARE SEC-
ONDARY PAYER SITUATIONS.—
(1) SURVEY OF BENEFICIARIES.—
(A) IN GENERAL.—Section 1862(b)(5) (42
U.S.C. 1395y(b)(5)) is amended by adding at
the end the following new subparagraph:
‘‘(D) 
OBTAINING
INFORMATION
FROM
BENEFICIARIES.—Before an individual applies
for benefits under part A or enrolls under part
296
B, the Administrator shall mail the individual a
questionnaire to obtain information on whether
the individual is covered under a primary plan
and the nature of the coverage provided under
the plan, including the name, address, and iden-
tifying number of the plan.’’.
(B) DISTRIBUTION OF QUESTIONNAIRE BY
CONTRACTOR.—The Secretary of Health and
Human Services shall enter into an agreement
with an entity not later than April 1, 1994, to
distribute the questionnaire described in section
1862(b)(5)(D) of the Social Security Act (as
added by subparagraph (A)).
(C) NO MEDICARE SECONDARY PAYER DE-
NIAL BASED ON FAILURE TO COMPLETE QUES-
TIONNAIRE.—Section 1862(b)(2) (42 U.S.C.
1395y(b)(2)) is amended by adding at the end
the following new subparagraph:
‘‘(C) TREATMENT OF QUESTIONNAIRES.—
The Secretary may not fail to make payment
under subparagraph (A) solely on the ground
that an individual failed to complete a question-
naire concerning the existence of a primary
plan.’’.
297
(2) MANDATORY
SCREENING
BY
PROVIDERS
AND SUPPLIERS UNDER PART B.—
(A) IN
GENERAL.—Section 1862(b) (42
U.S.C. 1395y(b)) is amended by adding at the
end the following new paragraph:
‘‘(6) SCREENING REQUIREMENTS FOR PROVID-
ERS AND SUPPLIERS.—
‘‘(A) IN GENERAL.—Notwithstanding any
other provision of this title, no payment may be
made for any item or service furnished under
part B unless the entity furnishing such item or
service completes (to the best of its knowledge
and on the basis of information obtained from
the individual to whom the item or service is
furnished) the portion of the claim form relat-
ing to the availability of other health benefit
plans.
‘‘(B) PENALTIES.—An entity that know-
ingly, willfully, and repeatedly fails to complete
a claim form in accordance with subparagraph
(A) or provides inaccurate information relating
to the availability of other health benefit plans
on a claim form under such subparagraph shall
be subject to a civil money penalty of not to ex-
ceed $2,000 for each such incident. The provi-
298
sions of section 1128A (other than subsections
(a) and (b)) shall apply to a civil money penalty
under the previous sentence in the same man-
ner as such provisions apply to a penalty or
proceeding under section 1128A(a).’’.
(B) EFFECTIVE
DATE.—The amendment
made by subparagraph (A) shall apply with re-
spect to items and services furnished on or
after January 1, 1994.
(g) IMPROVEMENTS
IN RECOVERY
OF PAYMENTS
FROM PRIMARY PAYERS.—
(1) SUBMISSION OF REPORTS ON EFFORTS TO
RECOVER
ERRONEOUS
PAYMENTS.—Section
1842(b)(3) (42 U.S.C. 1395u(b)(3)) is amended—
(A) by striking ‘‘and’’ at the end of sub-
paragraph (H); and
(B) by inserting after subparagraph (H)
the following new subparagraph:
‘‘(I) will submit annual reports to the Secretary
describing the steps taken to recover payments made
under this part for items or services for which pay-
ment has been or could be made under a primary
plan (as defined in section 1862(b)(2)(A)).’’.
(2) REQUIREMENTS UNDER CARRIER PERFORM-
ANCE
EVALUATION
PROGRAM.—Section 1842(b)(2)
299
(42 U.S.C. 1395u(b)(2)) is amended by adding at
the end the following new subparagraph:
‘‘(D) In addition to any other standards and criteria
established by the Secretary for evaluating carrier per-
formance under this paragraph relating to avoiding erro-
neous payments, the Secretary shall establish standards
and criteria relating to the carrier’s success in recovering
payments made under this part for items or services for
which payment has been or could be made under a pri-
mary plan (as defined in section 1862(b)(2)(A)).’’.
(3) DEADLINE FOR REIMBURSEMENT BY PRI-
MARY PLANS.—
(A) 
IN
GENERAL.—Section
1862(b)(2)(B)(i) (42 U.S.C. 1395y(b)(2)(B)(i))
is amended by adding at the end the following
sentence: ‘‘If reimbursement is not made to the
appropriate Trust Fund before the expiration of
the 60-day period that begins on the date such
notice or other information is received, the Sec-
retary may charge interest (beginning with the
date on which the notice or other information
is received) on the amount of the reimburse-
ment until reimbursement is made (at a rate
determined by the Secretary in accordance with
300
regulations of the Secretary of the Treasury ap-
plicable to charges for late payments).’’.
(B) 
CONFORMING
AMENDMENT.—The
heading of clause (i) of section 1862(b)(2)(B) is
amended to read as follows: ‘‘REPAYMENT RE-
QUIRED.—’’.
(C) EFFECTIVE DATE.—The amendments
made by this paragraph shall apply to payments
for items and services furnished on or after the
date of the enactment of this Act.
(4) EFFECTIVE DATE.—The amendments made
by paragraphs (1) and (2) shall apply to contracts
with fiscal intermediaries and carriers under title
XVIII of the Social Security Act for years beginning
with 1994.
(h) MISCELLANEOUS
AND
TECHNICAL
CORREC-
TIONS.—
(1) The sentence in section 1862(b)(1)(C)
added by section 4203(c)(1)(B) of OBRA–1990 is
amended by striking ‘‘clauses (i) and (ii)’’ and in-
serting ‘‘this subparagraph’’.
(2) Effective as if included in the enactment of
OBRA–1989, section 1862(b)(1) is amended—
(A) 
in 
subparagraphs 
(A)(v) 
and
(B)(iv)(II), by inserting ‘‘, without regard to
301
section 5000(d) of such Code’’ before the period
at the end of each subparagraph;
(B) in subparagraph (A)(iii), by striking
‘‘current calendar year or the preceding cal-
endar year’’ and inserting ‘‘current calendar
year and the preceding calendar year’’; and
(C) in the matter in subparagraph (C)
after clause (ii), by striking ‘‘taking into ac-
count that’’ and inserting ‘‘paying benefits sec-
ondary to this title when’’.
(3) 
Section 
1862(b)(5)(C)(i) 
(42 
U.S.C.
1395y(b)(5)(C)(i)) 
is 
amended 
by 
striking
‘‘6103(l)(12)(D)(iii)’’ 
and 
inserting
‘‘6103(l)(12)(E)(iii)’’.
(4) Section 4203(c)(2) of OBRA–1990 is
amended—
(A) by striking ‘‘the application of clause
(iii)’’ and inserting ‘‘the second sentence’’;
(B) by striking ‘‘on individuals’’ and all
that follows through ‘‘section 226A of such
Act’’;
(C) in clause (ii), by striking ‘‘clause’’ and
inserting ‘‘sentence’’;
(D) in clause (v), by adding ‘‘and’’ at the
end; and
302
(E) in clause (vi)—
(i) by inserting ‘‘of such Act’’ after
‘‘1862(b)(1)(C)’’, and
(ii) by striking the period at the end
and inserting the following: ‘‘, without re-
gard to the number of employees covered
by such plans.’’.
(5) Section 4203(d) of OBRA–1990 is amended
by striking ‘‘this subsection’’ and inserting ‘‘this sec-
tion’’.
(6) Except as provided in paragraph (2), the
amendments made by this subsection shall be effec-
tive as if included in the enactment of OBRA–1990
and shall be executed before the amendments made
by subsections (a) through (d) of this section.
(i) EFFECTIVE DATE.—
(1) IN
GENERAL.—Except as otherwise pro-
vided in this section, the amendments made by this
section shall take effect on the date of the enactment
of this Act.
(2) ESRD AND
UNIFORM
SIZE
RULES.—The
amendments made by subsections (c) and (d) apply
to items and services furnished on or after January
1, 1994.
303
SEC. 5074. EXTENSION OF SELF-REFERRAL BAN TO ADDI-
TIONAL SPECIFIED SERVICES.
(a) EXTENSION
TO DESIGNATED HEALTH SERV-
ICES.—
(1) IN
GENERAL.—Section 1877 (42 U.S.C.
1395nn) is amended—
(A) by striking ‘‘clinical laboratory serv-
ices’’ and ‘‘CLINICAL LABORATORY SERVICES’’
and inserting ‘‘designated health services’’ and
‘‘DESIGNATED HEALTH SERVICES’’, respectively,
each place either appears in subsections (a)(1),
(b)(2)(A)(ii), (b)(4), (d)(1), and (d)(3); and
(B) by adding at the end the following new
subsection:
‘‘(i) DESIGNATED HEALTH SERVICES DEFINED.—In
this section, the term ‘designated health services’ means—
‘‘(1) clinical laboratory services;
‘‘(2) physical or occupational therapy services;
‘‘(3) radiology or other diagnostic services;
‘‘(4) radiation therapy services;
‘‘(5) the furnishing of durable medical equip-
ment;
‘‘(6) the furnishing of parenteral and enteral
nutrition nutrients, supplies, and equipment;
‘‘(7) home health services; and
‘‘(8) home infusion therapy services.’’.
304
(2) CONFORMING AMENDMENTS.—Section 1877
is further amended—
(A) in subsection (g)(1), by striking ‘‘clini-
cal laboratory service’’ and inserting ‘‘des-
ignated health service’’, and
(B) in subsection (h)(7)(B), by striking
‘‘clinical laboratory service’’ and inserting ‘‘des-
ignated health service’’.
(b) MULTIPLE
LOCATIONS
FOR
GROUP
PRAC-
TICES.—Section 
1877(b)(2)(A)(ii)(II) 
(42 
U.S.C.
1395nn(b)(2)(A)(ii)(II)) is amended by striking ‘‘central-
ized provision’’ and inserting ‘‘provision of some or all’’.
(c) TREATMENT
OF
COMPENSATION
ARRANGE-
MENTS.—
(1) RENTAL
OF
OFFICE
SPACE
AND
EQUIP-
MENT.—Paragraph (1) of section 1877(e) (42
U.S.C. 1395nn(e)) is amended to read as follows:
‘‘(1) RENTAL OF OFFICE SPACE; RENTAL OF
EQUIPMENT.—
‘‘(A) OFFICE SPACE.—Payments made by
a lessee to a lessor for the use of premises if—
‘‘(i) the lease is set out in writing,
signed by the parties, and specifies the
premises covered by the lease,
305
‘‘(ii) the aggregate space rented or
leased is reasonable and necessary for the
legitimate business purposes of the lease or
rental and is used exclusively by the lessee
when being used by the lessee,
‘‘(iii) the lease provides for a term of
rental or lease for at least one year,
‘‘(iv) the rental charges over the term
of the lease are set in advance, are consist-
ent with fair market value, and are not de-
termined in a manner that takes into ac-
count the volume or value of any referrals
or other business generated between the
parties,
‘‘(v) the lease would be commercially
reasonable even if no referrals were made
between the parties,
‘‘(vi) the lease covers all of the prem-
ises leased between the parties for the pe-
riod of the lease, and
‘‘(vii) the compensation arrangement
meets such other requirements as the Sec-
retary may impose by regulation as needed
to protect against program or patient
abuse.
306
‘‘(B) EQUIPMENT.—Payments made by a
lessee of equipment to the lessor of the equip-
ment for the use of the equipment if—
‘‘(i) the lease is set out in writing,
signed by the parties, and specifies the
equipment covered by the lease,
‘‘(ii) the equipment rented or leased is
reasonable and necessary for the legitimate
business purposes of the lease or rental
and is used exclusively by the lessee when
being used by the lessee,
‘‘(iii) the lease provides for a term of
rental or lease of at least one year,
‘‘(iv) the rental charges over the term
of the lease are set in advance, are consist-
ent with fair market value, and are not de-
termined in a manner that takes into ac-
count the volume or value of any referrals
or other business generated between the
parties,
‘‘(v) the lease would be commercially
reasonable even if no referrals were made
between the parties,
307
‘‘(vi) the lease covers all of the equip-
ment leased between the parties for the pe-
riod of the lease, and
‘‘(vii) the compensation arrangement
meets such other requirements as the Sec-
retary may impose by regulation as needed
to protect against program or patient
abuse.’’.
(2) BONA
FIDE
EMPLOYMENT
RELATION-
SHIPS.—Section 
1877(e)(2) 
(42 
U.S.C.
1395nn(e)(2)) is amended—
(A) by striking ‘‘AND SERVICE’’ and ‘‘WITH
HOSPITALS’’;
(B) by striking ‘‘An arrangement’’ and all
that follows through ‘‘if’’ and inserting ‘‘Any
amount paid by an employer to a physician (or
immediate family member) who has a bona fide
employment relationship with the employer for
the provision of services if’’;
(C) in subparagraphs (A), (B), and (D), by
striking ‘‘arrangement’’ and inserting ‘‘employ-
ment’’;
(D) in subparagraph (C), by striking ‘‘to
the hospital’’; and
(E) by adding at the end the following:
308
‘‘Subparagraph (B)(ii) shall not be construed as pro-
hibiting the payment of remuneration in the form of
shares of overall profits or in the form of a produc-
tivity bonus based on services performed personally
by the physician or member, if the amount of the re-
muneration is not determined in a manner that
takes into account directly the volume or value of
any referrals by the referring physician.’’.
(3) PERSONAL SERVICE ARRANGEMENTS.—Sec-
tion 1877(e) is further amended by adding at the
end the following new paragraph:
‘‘(7) PERSONAL SERVICE ARRANGEMENTS.—Re-
muneration from an entity under an arrangement
if—
‘‘(A) the arrangement is set out in writing,
signed by the parties, and specifies the services
covered by the arrangement,
‘‘(B) the arrangement covers all of the
services to be provided,
‘‘(C) the aggregate services contracted for
do not exceed those that are reasonable and
necessary for the legitimate business purposes
of the arrangement,
‘‘(D) the term of the arrangement is for at
least one year,
309
‘‘(E) the compensation to be paid over the
term of the arrangement is set in advance, does
not exceed fair market value, and is not deter-
mined in a manner that takes into account the
volume or value of any referrals or other busi-
ness generated between the parties,
‘‘(F) the services to be performed under
the arrangement do not involve the counseling
or promotion of a business arrangement of
other activity that violates any State or Federal
law, and
‘‘(G) the arrangement meets such other re-
quirements as the Secretary may impose by reg-
ulation as needed to protect against program or
patient abuse.’’.
(4) 
ADDITIONAL
EXCEPTIONS.—Section
1877(e) is further amended by adding at the end the
following new paragraphs:
‘‘(8) PAYMENTS BY A PHYSICIAN FOR ITEMS
AND SERVICES.—Payments made by a physician—
‘‘(A) to a laboratory in exchange for the
provision of clinical laboratory services, or
‘‘(B) to an entity as compensation for
other items or services if the items or services
310
are furnished at a price that is consistent with
fair market value.
‘‘(9) PAYMENTS FOR PATHOLOGY SERVICES OF
A GROUP PRACTICE.—Payments made to a group
practice for pathology services under an agreement
if—
‘‘(A) the agreement is set out in writing
and specifies the services to be provided by the
parties and the compensation for services pro-
vided under the agreement,
‘‘(B) the compensation paid over the term
of the agreement is consistent with fair market
value and is not determined in a manner that
takes into account the volume or value of any
referrals or other business generated between
the parties,
‘‘(C) the compensation is provided pursu-
ant to an agreement which would be commer-
cially reasonable even if no referrals were made
to the entity, and
‘‘(D) the compensation arrangement be-
tween the parties meets such other require-
ments as the Secretary may impose by regula-
tion as needed to protect against program or
patient abuse.’’.
311
(4) 
REFERRING
PHYSICIANS.—Section
1877(h)(7)(C) (42 U.S.C. 1395nn(h)(7)(C)) is
amended—
(A) by inserting ‘‘a request by a radiologist
for diagnostic radiology services, and a request
by a radiation oncologist for radiation therapy,’’
after ‘‘examination services,’’, and
(B) by inserting ‘‘, radiologist, or radiation
oncologist’’ after ‘‘pathologist’’ the second place
it appears.
(d) TREATMENT OF GROUP PRACTICES.—
(1) USE OF BILLING NUMBERS, ETC.—Section
1877 is amended—
(A) in subsection (b)(2)(B), by inserting
‘‘under a billing number assigned to the group
practice’’ after ‘‘member’’,
(B) in subsection (h)(4)(B), by inserting
‘‘and under a billing number assigned to the
group’’ after ‘‘in the name of the group’’, and
(C) in subsection (h)(4)(C), by striking
‘‘by members of the group’’.
(2) TREATMENT
OF
SERVICES
UNDER
AR-
RANGEMENTS
BETWEEN
HOSPITALS
AND
GROUP
PRACTICES.—
312
(A) IN GENERAL.—Section 1877(h)(4) (42
U.S.C. 1395nn(h)(4)) is amended—
(i) in subparagraph (B) (as amended
by paragraph (1)(B)), by inserting ‘‘(or
are billed in the name of a hospital for
which the group provides designated health
services pursuant to an arrangement that
meets the requirements of subparagraph
(B))’’ after ‘‘assigned to the group’’;
(ii) by redesignating subparagraphs
(A) through (D) as clauses (i) through
(iv), respectively;
(iii) by inserting ‘‘(A)’’ after ‘‘.—’’;
and
(iv) by adding at the end the following
new subparagraph:
‘‘(B) The requirements of this subparagraph,
with respect to an arrangement for designated
health services provided by the group and billed in
the name of a hospital, are that—
‘‘(i) with respect to services provided to an
inpatient of the hospital, the arrangement is
pursuant to the provision of inpatient hospital
services under section 1861(b)(3);
313
‘‘(ii) the arrangement began before Decem-
ber 19, 1989, and has continued in effect with-
out interruption since such date;
‘‘(iii) the group provides substantially all of
the designated health services to the hospital’s
patients;
‘‘(iv) the arrangement is pursuant to an
agreement that is set out in writing and that
specifies the services to be provided by the par-
ties and the compensation for services provided
under the agreement;
‘‘(v) the compensation paid over the term
of the agreement is consistent with fair market
value and the compensation per unit of services
is fixed in advance and is not determined in a
manner that takes into account the volume or
value of any referrals or other business gen-
erated between the parties;
‘‘(vi) the compensation is provided pursu-
ant to an agreement which would be commer-
cially reasonable even if no referrals were made
to the entity; and
‘‘(vii) the arrangement between the parties
meets such other requirements as the Secretary
314
may impose by regulation as needed to protect
against program or patient abuse.’’.
(B) CONFORMING
AMENDMENT.—Section
1877(b)(2)(B) (42 U.S.C. 1395nn(b)(2)(B)) is
amended by inserting ‘‘(or by a hospital for
which such a group practice provides designated
health services pursuant to an arrangement
that meets the requirements of subsection
(h)(4)(B))’’ before ‘‘, or by an entity’’.
(3) TREATMENT OF CERTAIN FACULTY PRAC-
TICE
PLANS.—The 
last 
sentence 
of 
section
1877(h)(4)(A) (42 U.S.C. 1395nn(h)(4)(A)), as re-
designated by paragraph (2)(A), is amended by in-
serting ‘‘, institution of higher education, or medical
school’’ after ‘‘hospital’’.
(e) EXPANDING RURAL PROVIDER EXCEPTION TO
COVER COMPENSATION ARRANGEMENTS.—
(1) IN GENERAL.—Section 1877(b) (42 U.S.C.
1395nn(b)) is amended—
(A) by redesignating paragraph (5) as
paragraph (7), and
(B) by inserting after paragraph (4) the
following new paragraph:
‘‘(5) RURAL PROVIDERS.—In the case of des-
ignated services if—
315
‘‘(A) the entity furnishing the services is in
a 
rural 
area 
(as 
defined 
in 
section
1886(d)(2)(D)), and
‘‘(B) substantially all of the services fur-
nished by the entity to individuals entitled to
benefits under this title are furnished to such
individuals who reside in such a rural area.’’.
(2) 
CONFORMING
AMENDMENTS.—Section
1877(d) (42 U.S.C. 1395nn(d)) is amended—
(A) by striking paragraph (2), and
(B) by redesignating paragraph (3) as
paragraph (2).
(f) EXCEPTION FOR SHARED FACILITY LABORATORY
SERVICES.—
(1) IN GENERAL.—Section 1877 is amended—
(A) in subsection (b), as amended by sub-
section (e)(1), by inserting after paragraph (5)
the following new paragraph:
‘‘(6) SHARED
FACILITY
LABORATORY
SERV-
ICES.—
‘‘(A) IN GENERAL.—In the case of shared
facility laboratory services of a shared facility—
‘‘(i) that are furnished—
‘‘(I) personally by the referring
physician who is a shared facility phy-
316
sician or personally by an individual
supervised by such a physician or by
another shared facility physician and
employed under the shared facility ar-
rangement,
‘‘(II) by a shared facility in a
building in which the referring physi-
cian furnishes physician’s services un-
related to the furnishing of shared fa-
cility laboratory services, and
‘‘(III) to a patient of a shared fa-
cility physician; and
‘‘(ii) that are billed by the referring
physician or by an entity that is wholly
owned by such physician.
‘‘(B) LIMITATION.—The exception under
this paragraph shall only apply to a shared fa-
cility only if the facility and the shared facility
arrangement were established as of June 26,
1992.’’; and
(B) in subsection (h), by adding at the end
the following new paragraph:
‘‘(8) SHARED
FACILITY
RELATED
DEFINI-
TIONS.—
317
‘‘(A) 
SHARED
FACILITY
LABORATORY
SERVICES.—The term ‘shared facility laboratory
services’ means, with respect to a shared facil-
ity, clinical laboratory services furnished by the
facility to patients of shared facility physicians.
‘‘(B) 
SHARED
FACILITY.—The 
term
‘shared facility’ means an entity that furnishes
shared facility laboratory services under a
shared facility arrangement.
‘‘(C) SHARED FACILITY PHYSICIAN.—The
term ‘shared facility physician’ means, with re-
spect to a shared facility, a physician who has
a financial relationship under a shared facility
arrangement with the facility.
‘‘(D) SHARED FACILITY ARRANGEMENT.—
The term ‘shared facility arrangement’ means,
with respect to the provision of shared facility
laboratory services in a building, a financial
arrangement—
‘‘(i) which is only between physicians
who are providing services (unrelated to
shared facility laboratory services) in the
same building,
‘‘(ii) in which the overhead expenses
of the facility are shared, in accordance
318
with methods previously determined by the
physicians in the arrangement, among the
physicians in the arrangement, and
‘‘(iii) which, in the case of a corpora-
tion, is wholly owned and controlled by
shared facility physicians.’’.
(2) GAO STUDY
OF
SHARED
FACILITY
AR-
RANGEMENTS.—
(A) IN GENERAL.—The Comptroller Gen-
eral shall analyze the effect on the utilization of
health services of shared facility arrangements
for which an exception is provided under the
amendments made by paragraph (1). The anal-
ysis shall include a review of the effect of the
limitation, described in section 1877(b)(6)(B) of
the Social Security Act (as added by paragraph
(1)), with respect to such exception and on the
availability of services (including hematology
services).
(B) REPORT.—Not later than January 1,
1995, the Comptroller General shall submit a
report to Congress on the analysis conducted
under subparagraph (A). The report shall in-
clude recommendations with respect to chang-
ing the limitation.
319
(g) EXEMPTION OF COMPENSATION ARRANGEMENTS
INVOLVING CERTAIN TYPES OF REMUNERATION.—Sec-
tion 1877(h)(1) (42 U.S.C. 1395nn(h)(1)) is amended—
(1) by striking subparagraph (B);
(2) in subparagraph (A), by inserting before the
period the following: ‘‘(other than an arrangement
involving only remuneration described in subpara-
graph (B))’’; and
(3) by adding at the end the following new sub-
paragraph:
‘‘(B) Remuneration described in this subpara-
graph is any remuneration consisting of any of the
following:
‘‘(i) The forgiveness of amounts owed for
inaccurate tests or procedures, mistakenly per-
formed tests or procedures, or the correction of
minor billing errors.
‘‘(ii) The provision of items, devices, or
supplies that are used solely to—
‘‘(I) collect, transport, process, or
store specimens for the entity providing
the item, device, or supply, or
‘‘(II) communicate the results of tests
or procedures for such entity.’’.
320
(h) EXCEPTION
FOR PUBLICLY-TRADED SECURI-
TIES.—Section 1877(c)(2) (42 U.S.C. 1395nn(d)(2)) is
amended 
by 
striking 
‘‘total 
assets 
exceeding
$100,000,000’’ and inserting ‘‘stockholder equity exceed-
ing $75,000,000’’.
(i) MISCELLANEOUS
AND
TECHNICAL
CORREC-
TIONS.—Section 1877 (42 U.S.C. 1395nn) is amended—
(1) in subsection (b)(2)(A)(i), in subparagraph
(A)(i), by striking ‘‘who are employed by such physi-
cian or group practice and who are personally’’ and
inserting ‘‘who are directly’’;
(2) in the fourth sentence of subsection (f)—
(A) by striking ‘‘provided’’ and inserting
‘‘furnished’’, and
(B) by striking ‘‘provides’’ and inserting
‘‘furnish’’;
(3) in the fifth sentence of subsection (f)—
(A) by striking ‘‘providing’’ each place it
appears and inserting ‘‘furnishing’’,
(B) by striking ‘‘with respect to the provid-
ers’’ and inserting ‘‘with respect to the enti-
ties’’, and
(C) by striking ‘‘diagnostic imaging serv-
ices of any type’’ and inserting ‘‘magnetic reso-
321
nance imaging, computerized axial tomography
scans, and ultrasound services’’; and
(4) in subsection (a)(2)(B), by striking ‘‘sub-
section (h)(1)(A)’’ and inserting ‘‘subsection (h)(1)’’.
(j) EFFECTIVE DATES.—
(1) The amendments made by subsection (a)
apply with respect to a referral by a physician for
designated health services (as described in section
1877(i) of the Social Security Act) made after De-
cember 31, 1994.
(2) The amendments made by this section
(other than subsection (a)) shall apply to referrals
made on or after January 1, 1992.
SEC. 
5075. 
REDUCTION 
IN 
PAYMENT 
FOR 
ERYTHRO-
POIETIN.
(a) IN GENERAL.—Section 1881(b)(11)(B)(ii)(I) (42
U.S.C. 1395rr(b)(11)(B)(ii)(I)) is amended—
(1) by striking ‘‘1991’’ and inserting ‘‘1994’’,
and
(2) by striking ‘‘$11’’ and inserting ‘‘$10’’.
(b) EFFECTIVE DATE.—The amendments made by
subsection (a) apply to erythropoietin furnished after
1993.
322
SEC. 
5076. 
MEDICARE 
HOSPITAL 
AGREEMENTS 
WITH
ORGAN PROCUREMENT ORGANIZATIONS.
(a) IN GENERAL.—Section 1138(a)(1) (42 U.S.C.
1320b–8(a)(1)) is amended—
(1) by striking ‘‘and’’ at the end of subpara-
graph (A),
(2) by striking the period at the end of sub-
paragraph (B) and inserting ‘‘; and’’, and
(3) by adding at the end the following new sub-
paragraph:
‘‘(C) in the case of a hospital or rural primary
care hospital that has in effect an agreement (de-
scribed in section 371(b)(3)(A) of the Public Health
Service Act) with an organ procurement organiza-
tion, the agreement is with such organization for the
service area in which the hospital is located (as es-
tablished under such section).’’.
(b) EFFECTIVE DATE.—The amendments made by
subsection (a) shall apply to hospitals participating in the
programs under titles XVIII and XIX of the Social Secu-
rity Act as of January 1, 1994.
SEC. 5077. EXTENSION OF WAIVER FOR WATTS HEALTH
FOUNDATION.
Section 9312(c)(3)(D) of OBRA–1986, as added by
section 4018(d) of OBRA–1987 and as amended by sec-
323
tion 6212(a)(1) of OBRA–1989, is amended by striking
‘‘1994’’ and inserting ‘‘1996’’.
SEC. 5078. IMPROVED OUTREACH FOR QUALIFIED MEDI-
CARE BENEFICIARIES.
The Secretary of Health and Human Services shall
establish and implement a method for obtaining informa-
tion from newly eligible medicare beneficiaries that may
be used to determine whether such beneficiaries may be
eligible for medical assistance for medicare cost-sharing
under State medicaid plans as qualified medicare bene-
ficiaries, and for transmitting such information to the
State in which such a beneficiary resides.
SEC. 5079. SOCIAL HEALTH MAINTENANCE ORGANIZA-
TIONS.
(a) EXTENSION
OF CURRENT WAIVERS.—Section
4018(b) of OBRA–1987, as amended by section
4207(b)(4) of OBRA–1990, is amended—
(1) in paragraph (1) by striking ‘‘December 31,
1995’’ and inserting ‘‘December 31, 1997’’; and
(2) in paragraph (4) by striking ‘‘March 31,
1996’’ and inserting ‘‘March 31, 1998’’.
(b) EXPANSION
OF
DEMONSTRATIONS.—Section
2355 of the Deficit Reduction Act of 1984, as amended
by section 4207(b)(4)(B) of OBRA–1990, is amended—
324
(1) in the last sentence of subsection (a) by
striking ‘‘12 months’’ and inserting ‘‘36 months’’;
and
(2) in subsection (b)(1)(B)—
(A) by striking ‘‘or’’ at the end of clause
(iii), and
(B) by redesignating clause (iv) as clause
(v) and inserting after clause (iii) the following
new clause:
‘‘(iv) integrating acute and chronic
care management for patients with end-
stage renal disease through expanded com-
munity care case management services
(and for purposes of a demonstration
project conducted under this clause, any
requirement under a waiver granted under
this section that a project disenroll individ-
uals who develop end-stage renal disease
shall not apply); or’’.
(c) EXPANSION
OF NUMBER
OF MEMBERS PER
SITE.—The Secretary of Health and Human Services may
not impose a limit of less than 12,000 on the number of
individuals that may participate in a project conducted
under section 2355 of the Deficit Reduction Act of 1984.
325
(d) MISCELLANEOUS
AND
TECHNICAL
CORREC-
TIONS.—
(1) The section following section 4206 of
OBRA–1990 is amended by striking ‘‘SEC. 4027.’’
and inserting ‘‘SEC. 4207.’’, and in this subtitle is
referred to as section 4207 of OBRA–1990.
(2) Section 2355(b)(1)(B) of the Deficit Reduc-
tion 
Act 
of 
1984, 
as 
amended 
by 
section
4207(b)(4)(B)(ii) of OBRA–1990, is amended—
(A) by striking ‘‘12907(c)(4)(A)’’ and in-
serting ‘‘4207(b)(4)(B)(i)’’, and
(B) by striking ‘‘feasibilitly’’ and inserting
‘‘feasibility’’.
(3) Section 4207(b)(4)(B)(iii)(III) of OBRA–
1990 is amended by striking the period at the end
and inserting a semicolon.
(4) Subsections (c)(3) and (e) of section 2355
of the Deficit Reduction Act of 1984, as amended by
section 4207(b)(4)(B) of OBRA–1990, are each
amended by striking ‘‘12907(c)(4)(A)’’ each place it
appears and inserting ‘‘4207(b)(4)(B)’’.
(5) Section 4207(c)(2) of OBRA–1990 is
amended by striking ‘‘the Committee on Ways and
Means’’ each place it appears and inserting ‘‘the
326
Committees on Ways and Means and Energy and
Commerce’’.
(6) Section 4207(d) of OBRA–1990 is amended
by redesignating the second paragraph (3) (relating
to effective date) as paragraph (4).
(7) Section 4207(i)(2) of OBRA–1990 is
amended—
(A) by striking the period at the end of
clause (iii) and inserting a semicolon, and
(B) in clause (v), by striking ‘‘residents’’
and inserting ‘‘patients’’.
(8) Section 4207(j) of OBRA–1990 is amended
by striking ‘‘title’’ each place it appears and insert-
ing ‘‘subtitle’’.
(e) EFFECTIVE DATE.—The amendments made by
this section shall take effect as if included in the enact-
ment of OBRA–1990.
SEC. 5080. PEER REVIEW ORGANIZATIONS.
(a) REPEAL OF PRO PRECERTIFICATION REQUIRE-
MENT FOR CERTAIN SURGICAL PROCEDURES.—
(1) IN
GENERAL.—Section 1164 (42 U.S.C.
1320c–13) is repealed.
(2) CONFORMING AMENDMENTS.—
(A) Section 1154 (42 U.S.C. 1320c–3) is
amended—
327
(i) in subsection (a), by striking para-
graph (12), and
(ii) in subsection (d), by striking
‘‘(and except as provided in section
1164)’’.
(B) Section 1833 (42 U.S.C. 1395l) is
amended—
(i) in subsection (a)(1)(D)(i), by strik-
ing ‘‘, or for tests furnished in connection
with obtaining a second opinion required
under section 1164(c)(2) (or a third opin-
ion, if the second opinion was in disagree-
ment with the first opinion)’’;
(ii) in subsection (a)(1), by striking
clause (G);
(iii) in subsection (a)(2)(A), by strik-
ing ‘‘to items and services (other than clin-
ical diagnostic laboratory tests) furnished
in connection with obtaining a second opin-
ion required under section 1164(c)(2) (or a
third opinion, if the second opinion was in
disagreement with the first opinion),’’;
(iv) in subsection (a)(2)(D)(i)—
(I) by striking ‘‘related basis,’’
and inserting ‘‘related basis or’’, and
328
(II) by striking ‘‘, or for tests
furnished in connection with obtaining
a second opinion required under sec-
tion 1164(c)(2) (or a third opinion, if
the second opinion was in disagree-
ment with the first opinion)’’;
(v) in subsection (a)(3), by striking
‘‘and for items and services furnished in
connection with obtaining a second opinion
required under section 1164(c)(2), or a
third opinion, if the second opinion was in
disagreement with the first opinion)’’; and
(vi) in the first sentence of subsection
(b), by striking ‘‘(4)’’ and all that follows
through ‘‘and (5)’’ and inserting ‘‘and
(4)’’.
(C) Section 1834(g)(1)(B) (42 U.S.C.
1395m(g)(1)(B)) is amended by striking ‘‘and
for items and services furnished in connection
with obtaining a second opinion required under
section 1164(c)(2), or a third opinion, if the
second opinion was in disagreement with the
first opinion)’’.
(D) Section 1862(a) (42 U.S.C. 1395y(a))
is amended—
329
(i) by adding ‘‘or’’ at the end of para-
graph (14),
(ii) by striking ‘‘; or’’ at the end of
paragraph (15) and inserting a period, and
(iii) by striking paragraph (16).
(E) 
The 
third 
sentence 
of 
section
1866(a)(2)(A) (42 U.S.C. 1395w(a)(2)(A)) is
amended by striking ‘‘, with respect to items
and services furnished in connection with ob-
taining a second opinion required under section
1164(c)(2) (or a third opinion, if the second
opinion was in disagreement with the first opin-
ion),’’.
(3) EFFECTIVE DATE.—The amendments made
by this subsection shall apply to services provided on
or after the date of the enactment of this Act.
(b) MISCELLANEOUS
AND
TECHNICAL
CORREC-
TIONS.—(1) The third sentence of section 1156(b)(1) (42
U.S.C. 1320c–5(b)(1)) is amended by striking ‘‘whehter’’
and inserting ‘‘whether’’.
(2)(A) Subparagraph (B) of section 1154(a)(9) (42
U.S.C. 1320c–3(a)(9)) is amended to read as follows:
‘‘(B) If the organization finds, after reasonable
notice and opportunity for discussion with the physi-
cian or practitioner concerned, that the physician or
330
practitioner has furnished services in violation of
section 1156(a), the organization shall notify the
State board or boards responsible for the licensing
or disciplining of the physician or practitioner of its
finding and of any action taken as a result of the
finding.’’.
(B) Subparagraph (D) of section 1160(b)(1) (42
U.S.C. 1320c–9(b)(1)) is amended to read as follows:
‘‘(D) to provide notice in accordance with
section 1154(a)(9)(B);’’.
(3) Section 4205(d)(2)(B) of OBRA–1990 is amend-
ed by striking ‘‘amendments’’ and inserting ‘‘amend-
ment’’.
(4) Section 1160(d) (42 U.S.C. 1320c–9(d)) is
amended by striking ‘‘subpena’’ and inserting ‘‘subpoena’’.
(5) Section 4205(e)(2) of OBRA–1990 is amended
by striking ‘‘amendments’’ and inserting ‘‘amendment’’
and by striking ‘‘all’’.
(6)(A) Except as provided in subparagraph (B), the
amendments made by this subsection shall take effect as
if included in the enactment of OBRA–1990.
(B) The amendments made by paragraph (2) (relat-
ing to the requirement on reporting of information to
State boards) shall take effect on the date of the enact-
ment of this Act.
331
SEC. 5081. HOSPICE INFORMATION TO HOME HEALTH
BENEFICIARIES.
(a) IN GENERAL.—Section 1891(a)(1) (42 U.S.C.
1395bbb(a)(1)) is amended by adding at the end the fol-
lowing new subparagraph:
‘‘(H) The right, in the case of a resident
who is entitled to benefits under this title, to be
fully informed orally and in writing (at the time
of coming under the care of the agency) of the
entitlement of individuals to hospice care under
section 1812(a)(4) (unless there is no hospice
program providing hospice care for which pay-
ment may be made under this title within the
geographic area of the facility and it is not the
common practice of the agency to refer patients
to hospice programs located outside such geo-
graphic area).’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply to services furnished on or after
the first day of the first month beginning more than one
year after the date of the enactment of this Act.
SEC. 5082. HEALTH MAINTENANCE ORGANIZATIONS.
(a) ADJUSTMENT IN MEDICARE CAPITATION PAY-
MENTS TO ACCOUNT FOR REGIONAL VARIATIONS IN AP-
PLICATION OF SECONDARY PAYER PROVISIONS.—
332
(1) IN
GENERAL.—Section 1876(a)(4) (42
U.S.C. 1395mm(a)(4)) is amended by adding at the
end the following new sentence: ‘‘In establishing the
adjusted average per capita cost for a geographic
area, the Secretary shall take into account the dif-
ferences between the proportion of individuals in the
area with respect to whom there is a group health
plan that is a primary plan (within the meaning of
section 1862(b)(2)(A)) compared to the proportion
of all such individuals with respect to whom there is
such a group health plan.’’.
(2) EFFECTIVE DATE.—The amendment made
by paragraph (1) shall apply to contracts entered
into for years beginning with 1994.
(b) REVISIONS
IN
THE PAYMENT METHODOLOGY
FOR RISK CONTRACTORS.—Section 4204(b) of OBRA–
1990 is amended to read as follows:
‘‘(b) REVISIONS IN THE PAYMENT METHODOLOGY
FOR RISK CONTRACTORS.—(1)(A) Not later than January
1, 1995, the Secretary of Health and Human Services (in
this subsection referred to as the ‘‘Secretary’’) shall sub-
mit a proposal to the Congress that provides for revisions
to the payment method to be applied in years beginning
with 1996 for organizations with a risk-sharing contract
under section 1876(g) of the Social Security Act.
333
‘‘(B) In proposing the revisions required under sub-
paragraph (A) the Secretary shall consider—
‘‘(i) the difference in costs associated with med-
icare beneficiaries with differing health status and
demographic characteristics; and
‘‘(ii) the effects of using alternative geographic
classifications on the determinations of costs associ-
ated with beneficiaries residing in different areas.
‘‘(2) Not later than 3 months after the date of sub-
mittal of the proposal made pursuant to paragraph (1),
the Comptroller General shall review the proposal and
shall report to Congress on the appropriateness of the pro-
posed modifications.’’.
(c) MISCELLANEOUS
AND
TECHNICAL
CORREC-
TIONS.—(1) 
Section 
1876(a)(3) 
(42 
U.S.C.
1395mm(a)(3)) is amended by striking ‘‘subsection
(c)(7)’’ and inserting ‘‘subsections (c)(2)(B)(ii) and
(c)(7)’’.
(2) Section 4204(c)(3) of OBRA–1990 is amended
by striking ‘‘for 1991’’ and inserting ‘‘for years beginning
with 1991’’.
(3) Section 4204(d)(2) of OBRA–1990 is amended
by striking ‘‘amendment’’ and inserting ‘‘amendments’’.
334
(4) 
Section 
1876(a)(1)(E)(ii)(I) 
(42 
U.S.C.
1395mm(a)(1)(E)(ii)(I)) is amended by striking the
comma after ‘‘contributed to’’.
(5) Section 4204(e)(2) of OBRA–1990 is amended
by striking ‘‘(which has a risk-sharing contract under sec-
tion 1876 of the Social Security Act)’’.
(6) Section 4204(f)(4) of OBRA–1990 is amended by
striking ‘‘final’’.
(7) 
Section 
1862(b)(3)(C) 
(42 
U.S.C.
1395y(b)(3)(C)) is amended—
(A) in the heading, by striking ‘‘PLAN’’ and in-
serting ‘‘PLAN OR A LARGE GROUP HEALTH PLAN’’;
(B) by striking ‘‘group health plan’’ and insert-
ing ‘‘group health plan or a large group health
plan’’;
(C) by striking ‘‘, unless such incentive is also
offered to all individuals who are eligible for cov-
erage under the plan’’; and
(D) by striking ‘‘the first sentence of subsection
(a) and other than subsection (b)’’ and inserting
‘‘subsections (a) and (b)’’.
(8) The amendments made by this subsection shall
take effect as if included in the enactment of OBRA–1990.
335
SEC. 5083. MISCELLANEOUS AND TECHNICAL CORREC-
TIONS.
(a) SURVEY AND CERTIFICATION REQUIREMENTS.—
(1) Section 1864 (42 U.S.C. 1395aa) is amended—
(A) in subsection (e), by striking ‘‘title’’ and in-
serting ‘‘title (other than any fee relating to section
353 of the Public Health Service Act)’’; and
(B) in the first sentence of subsection (a), by
striking ‘‘1861(s) or’’ and all that follows through
‘‘Service Act,’’ and inserting ‘‘1861(s),’’.
(2) An agreement made by the Secretary of Health
and Human Services with a State under section 1864(a)
of the Social Security Act may include an agreement that
the services of the State health agency or other appro-
priate State agency (or the appropriate local agencies) will
be utilized by the Secretary for the purpose of determining
whether a laboratory meets the requirements of section
353 of the Public Health Service Act.
(b) OTHER MISCELLANEOUS AND TECHNICAL PRO-
VISIONS.—(1) Section 1833 (42 U.S.C. 1395l) is amended
by redesignating the subsection (r) added by section
4206(b)(2) of OBRA–1990 as subsection (s).
(2) Section 1866(f)(1) (42 U.S.C. 1395cc(f)(1)) is
amended by striking ‘‘1833(r)’’ and inserting ‘‘1833(s)’’.
(3) Section 1861(s)(2) (42 U.S.C. 1395x(s)(2)) is
amended by moving subparagraph (O), as redesignated by
336
section 5070(f)(7)(B)(iii)(II) of this subtitle, two ems to
the left.
(4) 
Section 
1881(b)(1)(C) 
(42 
U.S.C.
1395rr(b)(1)(C)) is amended by striking ‘‘1861(s)(2)(Q)’’
and inserting ‘‘1861(s)(2)(P)’’.
(5) Section 4201(d)(2) of OBRA–1990 is amended
by striking ‘‘(B) by striking’’, ‘‘(C) by striking’’, and ‘‘(3)
by adding’’ and inserting ‘‘(i) by striking’’, ‘‘(ii) by strik-
ing’’, and ‘‘(B) by adding’’, respectively.
(6)(A) Section 4207(a)(1) of OBRA–1990 is amend-
ed by adding closing quotation marks and a period after
‘‘such review.’’.
(B) Section 4207(a)(4) of OBRA–1990 is amended
by striking ‘‘this subsection’’ and inserting ‘‘paragraphs
(2) and (3)’’.
(C) Section 4207(b)(1) of OBRA–1990 is amended
by striking ‘‘section 3(7)’’ and inserting ‘‘section
601(a)(1)’’.
(7) Section 4202 of OBRA–1990 is amended—
(A) in subsection (b)(1)(A), by striking ‘‘home
hemodialysis staff assistant’’ and inserting ‘‘quali-
fied home hemodialysis staff assistant (as described
in subsection (d))’’;
337
(B) in subsection (b)(2)(B)(ii)(I), by striking
‘‘(as adjusted to reflect differences in area wage lev-
els)’’;
(C) 
in 
subsection 
(c)(1)(A), 
by 
striking
‘‘skilled’’; and
(D) 
in 
subsection 
(c)(1)(E), 
by 
striking
‘‘(b)(4)’’ and inserting ‘‘(b)(2)’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall take effect as if included in the enact-
ment of OBRA–1990.
CHAPTER 3—PROVISIONS RELATING TO
MEDICARE 
SUPPLEMENTAL 
INSUR-
ANCE POLICIES
SEC. 5091. STANDARDS FOR MEDICARE SUPPLEMENTAL IN-
SURANCE POLICIES.
(a) SIMPLIFICATION OF MEDICARE SUPPLEMENTAL
POLICIES.—
(1) Section 4351 of OBRA–1990 is amended by
striking ‘‘(a) IN GENERAL.—’’.
(2) Section 1882(p) (42 U.S.C. 1395ss(p)) is
amended—
(A) in paragraph (1)(A)—
(i) by striking ‘‘promulgates’’ and in-
serting ‘‘changes the revised NAIC Model
338
Regulation (described in subsection (m)) to
incorporate’’,
(ii) by striking ‘‘(such limitations, lan-
guage, definitions, format, and standards
referred to collectively in this subsection as
‘NAIC standards’),’’, and
(iii) by striking ‘‘included a reference
to the NAIC standards’’ and inserting
‘‘were a reference to the revised NAIC
Model Regulation as changed under this
subparagraph (such changed regulation re-
ferred to in this section as the ‘1991 NAIC
Model Regulation’)’’;
(B) in paragraph (1)(B)—
(i) by striking ‘‘promulgate NAIC
standards’’ 
and 
inserting 
‘‘make 
the
changes in the revised NAIC Model Regu-
lation’’,
(ii) by striking ‘‘limitations, language,
definitions, format, and standards de-
scribed in clauses (i) through (iv) of such
subparagraph (in this subsection referred
to collectively as ‘Federal standards’)’’ and
inserting ‘‘a regulation’’, and
339
(iii) by striking ‘‘included a reference
to the Federal standards’’ and inserting
‘‘were a reference to the revised NAIC
Model Regulation as changed by the Sec-
retary under this subparagraph (such
changed regulation referred to in this sec-
tion as the ‘1991 Federal Regulation’)’’;
(C) in paragraph (1)(C)(i), by striking
‘‘NAIC standards or the Federal standards’’
and inserting ‘‘1991 NAIC Model Regulation or
1991 Federal Regulation’’;
(D) in paragraphs (1)(C)(ii)(I), (1)(E),
(2), and (9)(B), by striking ‘‘NAIC or Federal
standards’’ and inserting ‘‘1991 NAIC Model
Regulation or 1991 Federal Regulation’’;
(E) in paragraph (2)(C), by striking
‘‘(5)(B)’’ and inserting ‘‘(4)(B)’’;
(F) in paragraph (4)(A)(i), by inserting
‘‘or paragraph (6)’’ after ‘‘(B)’’;
(G) in paragraph (4), by striking ‘‘applica-
ble standards’’ each place it appears and insert-
ing ‘‘applicable 1991 NAIC Model Regulation
or 1991 Federal Regulation’’;
(H) in paragraph (6), by striking ‘‘in re-
gard to the limitation of benefits described in
340
paragraph (4)’’ and inserting ‘‘described in
clauses (i) through (iii) of paragraph (1)(A)’’;
(I) in paragraph (7), by striking ‘‘policy-
holder’’ and inserting ‘‘policyholders’’;
(J) in paragraph (8), by striking ‘‘after the
effective date of the NAIC or Federal standards
with respect to the policy, in violation of the
previous requirements of this subsection’’ and
inserting ‘‘on and after the effective date speci-
fied in paragraph (1)(C) (but subject to para-
graph (10)), in violation of the applicable 1991
NAIC Model Regulation or 1991 Federal Regu-
lation insofar as such regulation relates to the
requirements of subsection (o) or (q) or clause
(i), (ii), or (iii) of paragraph (1)(A)’’;
(K) in paragraph (9), by adding at the end
the following new subparagraph:
‘‘(D) Subject to paragraph (10), this paragraph shall
apply to sales of policies occurring on or after the effective
date specified in paragraph (1)(C).’’; and
(L) in paragraph (10), by striking ‘‘this
subsection’’ 
and 
inserting 
‘‘paragraph
(1)(A)(i)’’.
(b) GUARANTEED RENEWABILITY.—Section 1882(q)
(42 U.S.C. 1395ss(q)) is amended—
341
(1) in paragraph (2), by striking ‘‘paragraph
(2)’’ and inserting ‘‘paragraph (4)’’, and
(2) in paragraph (4), by striking ‘‘the succeed-
ing issuer’’ and inserting ‘‘issuer of the replacement
policy’’.
(c) ENFORCEMENT OF STANDARDS.—
(1) 
Section 
1882(a)(2) 
(42 
U.S.C.
1395ss(a)(2)) is amended—
(A) in subparagraph (A), by striking
‘‘NAIC standards or the Federal standards’’
and inserting ‘‘1991 NAIC Model Regulation or
1991 Federal Regulation’’, and
(B) by striking ‘‘after the effective date of
the NAIC or Federal standards with respect to
the policy’’ and inserting ‘‘on and after the ef-
fective date specified in subsection (p)(1)(C)’’.
(2) The sentence in section 1882(b)(1) added
by section 4353(c)(5) of OBRA–1990 is amended—
(A) by striking ‘‘The report’’ and inserting
‘‘Each report’’,
(B) by inserting ‘‘and requirements’’ after
‘‘standards’’,
(C) by striking ‘‘and’’ after ‘‘compliance,’’,
and
342
(D) by striking the comma after ‘‘Commis-
sioners’’.
(3) 
Section 
1882(g)(2)(B) 
(42 
U.S.C.
1395ss(g)(2)(B)) is amended by striking ‘‘Panel’’
and inserting ‘‘Secretary’’.
(4) 
Section 
1882(b)(1) 
(42 
U.S.C.
1395ss(b)(1)) is amended by striking ‘‘the the Sec-
retary’’ and inserting ‘‘the Secretary’’.
(d) PREVENTING DUPLICATION.—
(1) 
Section 
1882(d)(3)(A) 
(42 
U.S.C.
1395ss(d)(3)(A)) is amended—
(A) by amending the first sentence to read
as follows:
‘‘(i) It is unlawful for a person to sell or issue to an
individual entitled to benefits under part A or enrolled
under part B of this title—
‘‘(I) a health insurance policy with knowledge
that the policy duplicates health benefits to which
the individual is otherwise entitled under this title or
title XIX,
‘‘(II) a medicare supplemental policy with
knowledge that the individual is entitled to benefits
under another medicare supplemental policy, or
‘‘(III) a health insurance policy (other than a
medicare supplemental policy) with knowledge that
343
the policy duplicates health benefits to which the in-
dividual is otherwise entitled, other than benefits to
which the individual is entitled under a requirement
of State or Federal law.’’;
(B) by designating the second sentence as
clause (ii) and, in such clause, by striking ‘‘the
previous sentence’’ and inserting ‘‘clause (i)’’;
(C) by designating the third sentence as
clause (iii) and, in such clause—
(i) by striking ‘‘the previous sentence’’
and inserting ‘‘clause (i) with respect to
the sale of a medicare supplemental pol-
icy’’, and
(ii) by striking ‘‘and the statement’’
and all that follows up to the period at the
end; and
(D) by striking the last sentence.
(2) 
Section 
1882(d)(3)(B) 
(42 
U.S.C.
1395ss(d)(3)(B)) is amended—
(A) in clause (ii)(II), by striking ‘‘65 years
of age or older’’,
(B) in clause (iii)(I), by striking ‘‘another
medicare’’ and inserting ‘‘a medicare’’,
344
(C) in clause (iii)(I), by striking ‘‘such a
policy’’ and inserting ‘‘a medicare supplemental
policy’’,
(D) in clause (iii)(II), by striking ‘‘another
policy’’ and inserting ‘‘a medicare supplemental
policy’’, and
(E) by amending subclause (III) of clause
(iii) to read as follows:
‘‘(III) If the statement required by clause (i) is ob-
tained and indicates that the individual is entitled to any
medical assistance under title XIX, the sale of the policy
is not in violation of clause (i) (insofar as such clause re-
lates to such medical assistance), if a State medicaid plan
under such title pays the premiums for the policy, or, in
the case of a qualified medicare beneficiary described in
section 1905(p)(1), if the State pays less than the full
amount of medicare cost-sharing as described in subpara-
graphs (B), (C), and (D) of section 1905(p)(3) for such
individual.’’.
(3)(A) 
Section 
1882(d)(3)(C) 
(42 
U.S.C.
1395ss(d)(3)(C)) is amended—
(i) by striking ‘‘the selling’’ and inserting
‘‘(i) the sale or issuance’’, and
(ii) by inserting before the period at the
end the following: ‘‘, (ii) the sale or issuance of
345
a policy or plan described in subparagraph
(A)(i)(I) (other than a medicare supplemental
policy to an individual entitled to any medical
assistance under title XIX) under which all the
benefits are fully payable directly to or on be-
half of the individual without regard to other
health benefit coverage of the individual but
only if (for policies sold or issued more than 60
days after the date the statements are pub-
lished or promulgated under subparagraph (D))
there is disclosed in a prominent manner as
part of (or together with) the application the
applicable statement (specified under subpara-
graph (D)) of the extent to which benefits pay-
able under the policy or plan duplicate benefits
under this title, or (iii) the sale or issuance of
a policy or plan described in subparagraph
(A)(i)(III) under which all the benefits are fully
payable directly to or on behalf of the individual
without regard to other health benefit coverage
of the individual’’.
(B) 
Section 
1882(d)(3) 
(42 
U.S.C.
1395ss(d)(3)) is amended by adding at the end the
following:
‘‘(D)(i) If—
346
‘‘(I) within the 90-day period beginning on the
date of the enactment of this subparagraph, the Na-
tional Association of Insurance Commissioners devel-
ops (after consultation with consumer and insurance
industry representatives) and submits to the Sec-
retary a statement for each of the types of health in-
surance policies (other than medicare supplemental
policies and including, as separate types of policies,
policies paying directly to the beneficiary fixed, cash
benefits) which are sold to persons entitled to health
benefits under this title, of the extent to which bene-
fits payable under the policy or plan duplicate bene-
fits under this title, and
‘‘(II) the Secretary approves all the statements
submitted as meeting the requirements of subclause
(I),
each such statement shall be (for purposes of subpara-
graph (C)) the statement specified under this subpara-
graph for the type of policy involved. The Secretary shall
review and approve (or disapprove) all the statements sub-
mitted under subclause (I) within 30 days after the date
of their submittal. Upon approval of such statements, the
Secretary shall publish such statements.
‘‘(ii) If the Secretary does not approve the statements
under clause (i) or the statements are not submitted with-
347
in the 90-day period specified in such clause, the Secretary
shall promulgate (after consultation with consumer and
insurance industry representatives and not later than 90
days after the date of disapproval or the end of such 90-
day period (as the case may be)) a statement for each
of the types of health insurance policies (other than medi-
care supplemental policies and including, as separate types
of policies, policies paying directly to the beneficiary fixed,
cash benefits) which are sold to persons entitled to health
benefits under this title, of the extent to which benefits
payable under the policy or plan duplicate benefits under
this title, and each such statement shall be (for purposes
of subparagraph (C)) the statement specified under this
subparagraph for the type of policy involved.’’.
(C) The requirement of a disclosure under sec-
tion 1882(d)(3)(C)(ii) of the Social Security Act
shall not apply to an application made for a policy
or plan before 60 days after the date of the Sec-
retary of Health and Human Services publishes or
promulgates all the statements under section
1882(d)(3)(D) of such Act.
(4) Subparagraphs (A) and (B) of section
1882(q)(5) (42 U.S.C. 1395ss(q)(5)(A)) are amend-
ed by striking ‘‘of the Social Security Act’’.
(e) LOSS RATIOS AND REFUNDS OF PREMIUMS.—
348
(1) Section 1882(r) (42 U.S.C. 1395ss(r)) is
amended—
(A) in paragraph (1), by striking ‘‘or sold’’
and inserting ‘‘or renewed (or otherwise provide
coverage after the date described in subsection
(p)(1)(C))’’;
(B) in paragraph (1)(A), by inserting ‘‘for
periods after the effective date of these provi-
sions’’ after ‘‘the policy can be expected’’;
(C) in paragraph (1)(A), by striking
‘‘Commissioners,’’ 
and 
inserting 
‘‘Commis-
sioners)’’;
(D) in paragraph (1)(B), by inserting be-
fore the period at the end the following: ‘‘,
treating policies of the same type as a single
policy for each standard package’’;
(E) by adding at the end of paragraph (1)
the following: ‘‘For the purpose of calculating
the refund or credit required under paragraph
(1)(B) for a policy issued before the date speci-
fied in subsection (p)(1)(C), the refund or cred-
it calculation shall be based on the aggregate
benefits provided and premiums collected under
all such policies issued by an insurer in a State
(separated as to individual and group policies)
349
and shall be based only on aggregate benefits
provided and premiums collected under such
policies after the date specified in section
5091(m)(4) of the Omnibus Budget Reconcili-
ation Act of 1993.’’;
(F) in the first sentence of paragraph
(2)(A), by striking ‘‘by policy number’’ and in-
serting ‘‘by standard package’’;
(G) by striking the second sentence of
paragraph (2)(A) and inserting the following:
‘‘Paragraph (1)(B) shall not apply to a policy
until 12 months following issue.’’;
(H) in the last sentence of paragraph
(2)(A), by striking ‘‘in order’’ and all that fol-
lows through ‘‘are effective’’;
(I) by adding at the end of paragraph
(2)(A), the following new sentence: ‘‘In the case
of a policy issued before the date specified in
subsection (p)(1)(C), paragraph (1)(B) shall
not apply until 1 year after the date specified
in section 5091(m)(4) of the Omnibus Budget
Reconciliation Act of 1993.’’;
(J) in paragraph (2), by striking ‘‘policy
year’’ each place it appears and inserting ‘‘cal-
endar year’’;
350
(K) in paragraph (4), by striking ‘‘Feb-
ruary’’, ‘‘disllowance’’, ‘‘loss-ratios’’ each place
it appears, and ‘‘loss-ratio’’ and inserting ‘‘Oc-
tober’’, ‘‘disallowance’’, ‘‘loss ratios’’, and ‘‘loss
ratio’’, respectively;
(L) in paragraph (6)(A), by striking ‘‘is-
sues a policy in violation of the loss ratio re-
quirements of this subsection’’ and ‘‘such viola-
tion’’ and inserting ‘‘fails to provide refunds or
credits as required in paragraph (1)(B)’’ and
‘‘policy issued for which such failure occurred’’,
respectively; and
(M) in paragraph (6)(B), by striking ‘‘to
policyholders’’ and inserting ‘‘to the policy-
holder or, in the case of a group policy, to the
certificate holder’’.
(2) 
Section 
1882(b)(1) 
(42 
U.S.C.
1395ss(b)(1)) is amended, in the matter after sub-
paragraph (H), by striking ‘‘subsection (F)’’ and in-
serting ‘‘subparagraph (F)’’.
(3) Section 4355(d) of OBRA–1990 is amended
by striking ‘‘sold or issued’’ and all that follows and
inserting ‘‘issued or renewed (or otherwise providing
coverage after the date described in section
1882(p)(1)(C) of the Social Security Act) on or after
351
the date specified in section 1882(p)(1)(C) of such
Act.’’.
(f) TREATMENT OF HMO’S.—
(1) 
Section 
1882(g)(1) 
(42 
U.S.C.
1395ss(g)(1)) is amended by striking ‘‘a health
maintenance organization or other direct service or-
ganization’’ and all that follows through ‘‘1833’’ and
inserting ‘‘an eligible organization (as defined in sec-
tion 1876(b)) if the policy or plan provides benefits
pursuant to a contract under section 1876 or an ap-
proved demonstration project described in section
603(c) of the Social Security Amendments of 1983,
section 2355 of the Deficit Reduction Act of 1984,
or section 9412(b) of the Omnibus Budget Reconcili-
ation Act of 1986 or, during the period beginning on
the date specified in subsection (p)(1)(C) and ending
on December 31, 1994, a policy or plan of an orga-
nization if the policy or plan provides benefits pursu-
ant to an agreement under section 1833(a)(1)(A)’’.
(2) Section 4356(b) of OBRA–1990 is amended
by striking ‘‘on the date of the enactment of this
Act’’ and inserting ‘‘on the date specified in section
1882(p)(1)(C) of the Social Security Act’’.
(g) PRE-EXISTING CONDITION LIMITATIONS.—Sec-
tion 1882(s) (42 U.S.C. 1395ss(s)) is amended—
352
(1) in paragraph (2)(A), by striking ‘‘for which
an application is submitted’’ and inserting ‘‘in the
case of an individual for whom an application is sub-
mitted prior to or’’,
(2) in paragraph (2)(A), by striking ‘‘in which
the individual (who is 65 years of age or older) first
is enrolled for benefits under part B’’ and inserting
‘‘as of the first day on which the individual is 65
years of age or older and is enrolled for benefits
under part B’’, and
(3) in paragraph (2)(B), by striking ‘‘before it’’
and inserting ‘‘before the policy’’.
(h) MEDICARE SELECT POLICIES.—
(1) Section 1882(t) (42 U.S.C. 1395ss(t)) is
amended—
(A) in paragraph (1), by inserting ‘‘medi-
care supplemental’’ after ‘‘If a’’,
(B) in paragraph (1), by striking ‘‘NAIC
Model Standards’’ and inserting ‘‘1991 NAIC
Model Regulation or 1991 Federal Regulation’’,
(C) in paragraph (1)(A), by inserting ‘‘or
agreements’’ after ‘‘contracts’’,
(D) in subparagraphs (E)(i) and (F) of
paragraph (1), by striking ‘‘NAIC standards’’
and inserting ‘‘standards in the 1991 NAIC
353
Model Regulation or 1991 Federal Regulation’’,
and
(E) in paragraph (2), by inserting ‘‘the is-
suer’’ before ‘‘is subject to a civil money pen-
alty’’.
(2) Section 1154(a)(4)(B) (42 U.S.C. 1320c–
3(a)(4)(B)) is amended—
(A) by inserting ‘‘that is’’ after ‘‘(or’’, and
(B) by striking ‘‘1882(t)’’ and inserting
‘‘1882(t)(3)’’.
(i) HEALTH
INSURANCE
COUNSELING.—Section
4360 of OBRA–1990 is amended—
(1) in subsection (b)(2)(A)(ii), by striking
‘‘Act’’ and inserting ‘‘Act)’’;
(2) in subsection (b)(2)(D), by striking ‘‘serv-
ices’’ and inserting ‘‘counseling’’;
(3) in subsection (b)(2)(I), by striking ‘‘assist-
ance’’ and inserting ‘‘referrals’’;
(4) in subsection (c)(1), by striking ‘‘and that
such activities will continue to be maintained at such
level’’;
(5) in subsection (d)(3), by striking ‘‘to the
rural areas’’ and inserting ‘‘eligible individuals resid-
ing in rural areas’’;
(6) in subsection (e)—
354
(A) by striking ‘‘subsection (c) or (d)’’ and
inserting ‘‘this section’’,
(B) by striking ‘‘and annually thereafter,
issue an annual report’’ and inserting ‘‘and an-
nually thereafter during the period of the grant,
issue a report’’, and
(C) in paragraph (1), by striking ‘‘State-
wide;’’,
(7) in subsection (f), by striking paragraph (2)
and by redesignating paragraphs (3) through (5) as
paragraphs (2) through (4), respectively; and
(8) by redesignating the second subsection (f)
(relating to authorization of appropriations for
grants) as subsection (g).
(j) TELEPHONE INFORMATION SYSTEM.—
(1) Section 1804 (42 U.S.C. 1395b–2) is
amended—
(A) by adding at the end of the heading
the following: ‘‘; MEDICARE AND MEDIGAP IN-
FORMATION’’,
(B) by inserting ‘‘(a)’’ after ‘‘1804.’’, and
(C) by adding at the end the following new
subsection:
355
‘‘(b) The Secretary shall provide information via a
toll-free telephone number on the programs under this
title.’’.
(2) Section 1882(f) (42 U.S.C. 1395ss(f)) is
amended by adding at the end the following new
paragraph:
‘‘(3) The Secretary shall provide information via a
toll-free telephone number on medicare supplemental poli-
cies (including the relationship of State programs under
title XIX to such policies).’’.
(3) Section 1889 (42 U.S.C. 1395zz) is re-
pealed.
(k) MAILING OF POLICIES.—Section 1882(d)(4) (42
U.S.C. 1395ss(d)(4)) is amended—
(1) in subparagraph (D), by striking ‘‘, if such
policy’’ and all that follows up to the period at the
end, and
(2) by adding at the end the following new sub-
paragraph:
‘‘(E) Subparagraph (A) shall not apply in the case
of an issuer who mails or causes to be mailed a policy,
certificate, or other matter solely to comply with the re-
quirements of subsection (q).’’.
356
(l) EFFECTIVE DATE.—The amendments made by
this section shall be effective as if included in the enact-
ment of OBRA–1990; except that—
(1) the amendments made by subsection (d)(1)
shall take effect on the date of the enactment of this
Act, but no penalty shall be imposed under section
1882(d)(3)(A) of the Social Security Act (for an ac-
tion occurring after the effective date of the amend-
ments made by section 4354 of OBRA–1990 and be-
fore the date of the enactment of this Act) with re-
spect to the sale or issuance of a policy which is not
unlawful under section 1882(d)(3)(A)(i)(II) of the
Social Security Act (as amended by this section);
(2) the amendments made by subsection
(d)(2)(A) and by subparagraphs (A), (B), and (E)
of subsection (e)(1) shall be effective on the date
specified in subsection (m)(4); and
(3) the amendment made by subsection (g)(2)
shall take effect on January 1, 1994, and shall apply
to individuals who attain 65 years of age or older on
or after the effective date of section 1882(s)(2) of
the Social Security Act (and, in the case of individ-
uals who attained 65 years of age after such effec-
tive date and before January 1, 1994, and who were
not covered under such section before January 1,
357
1994, the 6-month period specified in that section
shall begin January 1, 1994).
(m) TRANSITION PROVISIONS.—
(1) IN GENERAL.—If the Secretary of Health
and Human Services identifies a State as requiring
a change to its statutes or regulations to conform its
regulatory program to the changes made by this sec-
tion, the State regulatory program shall not be con-
sidered to be out of compliance with the require-
ments of section 1882 of the Social Security Act due
solely to failure to make such change until the date
specified in paragraph (4).
(2) NAIC STANDARDS.—If, within 6 months
after the date of the enactment of this Act, the Na-
tional Association of Insurance Commissioners (in
this subsection referred to as the ‘‘NAIC’’) modifies
its 1991 NAIC Model Regulation (adopted in July
1991) to conform to the amendments made by this
section and to delete from section 15C the exception
which begins with ‘‘unless’’, such modifications shall
be considered to be part of that Regulation for the
purposes of section 1882 of the Social Security Act.
(3) SECRETARY
STANDARDS.—If the NAIC
does not make the modifications described in para-
graph (2) within the period specified in such para-
358
graph, the Secretary of Health and Human Services
shall make the modifications described in such para-
graph and such modifications shall be considered to
be part of that Regulation for the purposes of sec-
tion 1882 of the Social Security Act.
(4) DATE SPECIFIED.—
(A) IN
GENERAL.—Subject to subpara-
graph (B), the date specified in this paragraph
for a State is the earlier of—
(i) the date the State changes its stat-
utes or regulations to conform its regu-
latory program to the changes made by
this section, or
(ii) 1 year after the date the NAIC or
the Secretary first makes the modifications
under paragraph (2) or (3), respectively.
(B) ADDITIONAL LEGISLATIVE ACTION RE-
QUIRED.—In the case of a State which the Sec-
retary identifies as—
(i) requiring State legislation (other
than legislation appropriating funds) to
conform its regulatory program to the
changes made in this section, but
(ii) having a legislature which is not
scheduled to meet in 1994 in a legislative
359
session in which such legislation may be
considered,
the date specified in this paragraph is the first
day of the first calendar quarter beginning after
the close of the first legislative session of the
State legislature that begins on or after Janu-
ary 1, 1994. For purposes of the previous sen-
tence, in the case of a State that has a 2-year
legislative session, each year of such session
shall be deemed to be a separate regular session
of the State legislature.
Subtitle B—Medicaid Program and
Other Health Care Provisions
SEC. 5100. REFERENCES IN SUBTITLE; TABLE OF CON-
TENTS OF SUBTITLE.
(a) AMENDMENTS TO SOCIAL SECURITY ACT.—Ex-
cept as otherwise specifically provided, whenever in this
subtitle an amendment is expressed in terms of an amend-
ment to or repeal of a section or other provision, the ref-
erence shall be considered to be made to that section or
other provision of the Social Security Act.
(b) REFERENCES TO OBRA.—In this subtitle, the
terms ‘‘OBRA–1986’’, ‘‘OBRA–1987’’, ‘‘OBRA–1989’’,
and ‘‘OBRA–1990’’ refer to the Omnibus Budget Rec-
onciliation Act of 1986 (Public Law 99–509), the Omni-
360
bus Budget Reconciliation Act of 1987 (Public Law 100–
203), the Omnibus Budget Reconciliation Act of 1989
(Public Law 101–239), and the Omnibus Budget Rec-
onciliation Act of 1990 (Public Law 101–508), respec-
tively.
(c) TABLE OF CONTENTS OF SUBTITLE.—The table
of contents of this subtitle is as follows:
Subtitle B—Medicaid Program and Other Health Care Provisions
Sec. 5100. References in subtitle; table of contents of subtitle.
CHAPTER 1—MEDICAID PROGRAM
SUBCHAPTER A—PROGRAM SAVINGS PROVISIONS
PART I—REPEAL OF MANDATE
Sec. 5101. Personal care services furnished outside the home as optional bene-
fit.
PART II—OUTPATIENT PRESCRIPTION DRUGS
Sec. 5106. Permitting prescription drug formularies under State plans.
Sec. 5107. Elimination of special exemption from prior authorization for new
drugs.
Sec. 5108. Technical corrections relating to section 4401 of OBRA–1990.
PART III—RESTRICTIONS ON DIVESTITURE OF ASSETS AND ESTATE
RECOVERY
Sec. 5111. Transfer of assets.
Sec. 5112. Medicaid estate recoveries.
Sec. 5113. Closing loophole permitting wealthy individuals to qualify for medic-
aid.
PART IV—IMPROVEMENT IN IDENTIFICATION AND COLLECTION OF THIRD
PARTY PAYMENTS
Sec. 5116. Liability of third parties to pay for care and services.
Sec. 5117. Health Coverage Clearinghouse.
‘‘TITLE XXI—HEALTH COVERAGE CLEARINGHOUSE
‘‘Sec. 2101. Establishment of clearinghouse.
‘‘Sec. 2102. Provision of information.
‘‘Sec. 2103. Requirement that employers furnish information.
‘‘Sec. 2104. Data bank.’’.
Sec. 5118. Medical child support.
361
PART V—ASSURING PROPER PAYMENTS TO DISPROPORTIONATE SHARE
HOSPITALS
Sec. 5121. Assuring proper payments to disproportionate share hospitals.
SUBCHAPTER B—MISCELLANEOUS PROVISIONS
PART I—ANTI-FRAUD AND ABUSE PROVISIONS
Sec. 5131. Application of medicare rules limiting certain physician referrals.
Sec. 5132. Intermediate sanctions for kickback violations.
Sec. 5133. Requiring maintenance of effort for State medicaid fraud control
units.
PART II—MANAGED CARE PROVISIONS
Sec. 5135. Medicaid managed care anti-fraud provisions.
Sec. 5136. Clarification of treatment of HMO enrollees in computing the medic-
aid inpatient utilization rate in qualifying hospitals as dis-
proportionate share hospitals.
Sec. 5137. Extension of period of applicability of enrollment mix requirement
to certain health maintenance organizations providing services
under Dayton Area Health Plan.
Sec. 5138. Extension of medicaid waiver for Tennessee Primary Care Network.
Sec. 5139. Waiver of application of medicaid enrollment mix requirement to
District of Columbia Chartered Health Plan, Inc.
Sec. 5140. Extension of Minnesota Prepaid Medicaid Demonstration Project.
PART III—EMERGENCY SERVICES TO UNDOCUMENTED ALIENS
Sec. 5141. Increase in Federal financial participation for emergency medical as-
sistance to undocumented aliens.
Sec. 5142. Limiting Federal medicaid matching payment to bona fide emer-
gency services for undocumented aliens.
PART IV—MISCELLANEOUS PROVISIONS
Sec. 5144. Increase in limit on Federal medicaid matching payments to Puerto
Rico and other territories.
Sec. 5145. Criteria for making determinations of denial of Federal medicaid
matching payments to States.
Sec. 5146. Renewal of unfunded demonstration project for low-income pregnant
women and children.
Sec. 5147. Optional medicaid coverage of TB-related services for certain
TB-infected individuals.
Sec. 5148. Application of mammography certification requirements under the
medicaid program.
Sec. 5149. Removal of sunset on extension of eligibility for working families.
Sec. 5150. Extension of moratorium on treatment of certain facilities as insti-
tutions for mental diseases.
Sec. 5150A. Treatment of certain clinics as federally-qualified health centers.
Sec. 5150B. Nursing home reform.
SUBCHAPTER C—MISCELLANEOUS AND TECHNICAL CORRECTIONS RELATING
TO OBRA–1990
Sec. 5151. Effective date.
362
Sec. 5152. Corrections relating to section 4402 (enrollment under group health
plans).
Sec. 5153. Corrections relating to section 4501 (low-income medicare bene-
ficiaries).
Sec. 5154. Corrections relating to section 4601 (child health).
Sec. 5155. Corrections relating to section 4602 (outreach locations).
Sec. 5156. Corrections relating to section 4604 (payment for hospital services
for children under 6 years of age).
Sec. 5157. Corrections relating to section 4703 (payment adjustments for dis-
proportionate share hospitals).
Sec. 5158. Corrections relating to section 4704 (Federally-qualified health cen-
ters).
Sec. 5159. Corrections relating to section 4708 (substitute physicians).
Sec. 5160. Corrections relating to section 4711 (home and community care for
frail elderly).
Sec. 5161. Corrections relating to section 4712 (community supported living
arrangements services).
Sec. 5162. Correction relating to section 4713 (COBRA continuation coverage).
Sec. 5163. Correction relating to section 4716 (medicaid transition for family
assistance).
Sec. 5164. Corrections relating to section 4723 (medicaid spenddown option).
Sec. 5165. Corrections relating to section 4724 (optional State disability deter-
minations).
Sec. 5166. Correction relating to section 4732 (special rules for health mainte-
nance organizations).
Sec. 5167. Corrections relating to section 4741 (home and community-based
waivers).
Sec. 5168. Corrections relating to section 4744 (frail elderly waivers).
Sec. 5169. Corrections relating to section 4747 (coverage of HIV-positive indi-
viduals).
Sec. 5170. Correction relating to section 4751 (advance directives).
Sec. 5171. Corrections relating to section 4752 (physicians’ services).
Sec. 5172. Corrections relating to section 4801 (nursing home reform).
Sec. 5173. Other technical corrections.
Sec. 5174. Corrections to designations of new provisions.
CHAPTER 2—UNIVERSAL ACCESS TO CHILDHOOD IMMUNIZATIONS
Sec. 5181. Establishment of entitlement and monitoring programs with respect
to childhood immunizations.
‘‘Subtitle 3—Entitlement and Monitoring Programs With Respect to
Childhood Immunizations
‘‘PART A—ENTITLEMENT PROGRAM
‘‘Sec. 2151. Delivery to States of sufficient quantities of pediatric vaccines.
‘‘Sec. 2152. Entitlements.
‘‘Sec. 2153. Voluntary participation of health care providers.
‘‘Sec. 2154. Intrastate distribution of pediatric vaccines.
‘‘Sec. 2155. General provisions.
‘‘Sec. 2156. State option regarding immunization of additional categories
of children.
‘‘Sec. 2157. State application for vaccines.
‘‘Sec. 2158. Contracts with manufacturers of pediatric vaccines.
‘‘Sec. 2159. Certain administrative variations.
363
‘‘Sec. 2160. List of pediatric vaccines; schedule for administration.
‘‘Sec. 2161. Childhood Immunization Trust Fund.
‘‘Sec. 2162. Definitions.
‘‘Sec. 2163. Termination of program.
‘‘PART B—NATIONAL SYSTEM FOR MONITORING IMMUNIZATION STATUS OF
CHILDREN
‘‘Sec. 2171. Formula grants for State registries with respect to monitor-
ing.
‘‘Sec. 2172. Registry data.
‘‘Sec. 2173. General provisions.
‘‘Sec. 2174. Application for grant.
‘‘Sec. 2175. Determination of amount of allotment.
‘‘Sec. 2176. Definitions.
‘‘Sec. 2177. Authorization of appropriations.
‘‘PART C—FUNDING FOR OTHER PURPOSES REGARDING CHILDHOOD
IMMUNIZATIONS
‘‘Sec. 2181. Grants regarding Year 2000 health objectives.
Sec. 5182. National Vaccine Injury Compensation Program amendments.
Sec. 5183. Medicaid immunization provisions.
Sec. 5184. Availability of medicaid payments for childhood vaccine replacement
programs.
Sec. 5185. Healthy start for infants.
Sec. 5186. Increase in authorization of appropriations for the Maternal and
Child Health Services Block Grant Program.
Sec. 5187. Miscellaneous technical corrections to Public Health Service Act pro-
visions.
CHAPTER 1—MEDICAID PROGRAM
Subchapter A—Program Savings Provisions
PART I—REPEAL OF MANDATE
SEC. 5101. PERSONAL CARE SERVICES FURNISHED OUT-
SIDE THE HOME AS OPTIONAL BENEFIT.
(a) IN
GENERAL.—Section 1905(a) (42 U.S.C.
1396d(a)), as amended by section 5174(c)(1), is further
amended—
(1) in paragraph (7), by striking ‘‘including
personal care services’’ and all that follows through
‘‘nursing facility’’;
364
(2) in paragraph (23), by striking ‘‘and’’ at the
end;
(3) by redesignating paragraph (24) as para-
graph (25); and
(4) by inserting after paragraph (23) the fol-
lowing new paragraph:
‘‘(24) personal care services furnished to an in-
dividual who is not an inpatient or resident of a
nursing facility that are (A) authorized by a physi-
cian for the individual in accordance with a plan of
treatment, (B) provided by an individual who is
qualified to provide such services and who is not a
member of the individual’s family, (C) supervised by
a registered nurse, and (D) furnished in a home or
other location; and’’.
(b) 
CONFORMING
AMENDMENTS.—(1) 
Section
1902(a)(10)(C)(iv) (42 U.S.C. 1396a(a)(10)(C)(iv)), as
amended by section 5174(c)(2)(A), is amended by striking
‘‘through (23)’’ and inserting ‘‘through (24)’’.
(2) Section 1902(j) (42 U.S.C. 1396a(j)), as amend-
ed by section 5174(c)(2)(B), is amended by striking
‘‘through (24)’’ and inserting ‘‘through (25)’’.
(c) EFFECTIVE DATE.—The amendments made by
subsections (a) and (b) shall take effect as if included in
the enactment of section 4721(a) of OBRA–90.
365
PART II—OUTPATIENT PRESCRIPTION DRUGS
SEC. 
5106. 
PERMITTING 
PRESCRIPTION 
DRUG
FORMULARIES UNDER STATE PLANS.
(a) ELIMINATION OF PROHIBITION AGAINST USE OF
FORMULARIES.—Paragraph (54) of section 1902(a)(54)
(42 U.S.C. 1396a(a)(54)) is amended to read as follows:
‘‘(54) in the case of a State plan that provides
medical assistance for covered outpatient drugs (as
defined in section 1927(k)), comply with the applica-
ble requirements of section 1927;’’.
(b) 
STANDARDS
FOR
FORMULARIES.—Section
1927(d) (42 U.S.C. 1396r–8(d)), as amended by sections
5107(a) and 5108(b)(4)(A)(iii), is amended—
(1) by adding at the end of paragraph (1) the
following new subparagraph:
‘‘(C) In the case of a State that establishes a
formulary in accordance with paragraph (5), the
State may exclude coverage of a covered outpatient
drug that is not included in the formulary.’’; and
(2) by inserting after paragraph (4) the follow-
ing new paragraph:
‘‘(5) REQUIREMENTS
FOR
FORMULARIES.—A
State may establish a formulary only if the following
requirements are met:
‘‘(A) The formulary is established by a
committee 
consisting 
of 
physicians, 
phar-
366
macists, and other appropriate individuals ap-
pointed by the Governor of the State (or, at the
option of the State, the State’s drug use review
board established under subsection (g)(3)).
‘‘(B) Except as provided in subparagraph
(C), the formulary includes the covered out-
patient drugs of any manufacturer which has
entered into and complies with an agreement
under subsection (a).
‘‘(C) The committee may exclude a covered
outpatient drug with respect to the treatment of
a specific disease or condition for an identified
population (if any) only if the committee finds,
based on the drug’s labeling (or, in the case of
a drug whose prescribed use is not approved
under the Federal Food, Drug, and Cosmetic
Act but is a medically accepted indication,
based on information from the appropriate com-
pendia described in subsection (k)(6)), that the
excluded drug does not have a significant, clini-
cally meaningful therapeutic advantage in terms
of safety, effectiveness, or clinical outcome of
such treatment for such population over other
drugs included in the formulary.
367
‘‘(D) With respect to a decision to exclude
a covered outpatient drug from the formulary
or a prescribed use of such a drug, the commit-
tee issues a written explanation of its decision
that is available to the public, unless the deci-
sion was made at a meeting of the committee
which was open to the public.
‘‘(E) The manufacturer of the drug, and
any person affected by the decision, may obtain
a reversal of the committee’s decision to exclude
a covered outpatient drug from the formulary
under subparagraph (C) on the ground that the
decision was arbitrary and capricious, in ac-
cordance with an appeals process that is estab-
lished by the State and that provides an oppor-
tunity for judicial review of such decision.
‘‘(F) The State plan permits coverage of a
drug excluded from the formulary pursuant to
a prior authorization program that is consistent
with paragraph (4).
‘‘(G) The formulary meets such other re-
quirements as the Secretary may impose.’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to calendar quarters beginning on
or after October 1, 1993, without regard to whether or
368
not regulations to carry out such amendments have been
promulgated by such date.
SEC. 5107. ELIMINATION OF SPECIAL EXEMPTION FROM
PRIOR AUTHORIZATION FOR NEW DRUGS.
(a) IN
GENERAL.—Section 1927(d) (42 U.S.C.
1396r–8(d)), as amended by section 5108(b)(4)(A)(iii), is
amended by striking paragraph (5).
(b) CONFORMING AMENDMENT.—Section 1927(d)(3)
(42 U.S.C. 1396r–8(d)(3)) is amended by striking ‘‘(ex-
cept with respect’’ and all that follows through ‘‘of this
paragraph)’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to calendar quarters beginning on
or after October 1, 1993, without regard to whether or
not regulations to carry out such amendments have been
promulgated by such date.
SEC. 5108. TECHNICAL CORRECTIONS RELATING TO SEC-
TION 4401 OF OBRA–1990.
(a) SECTION 1903, SSA.—Paragraph (10) of section
1903(i), as inserted by section 4401(a)(1)(B) of OBRA–
1990, is amended to read as follows:
‘‘(10) with respect to covered outpatient drugs
unless there is a rebate agreement in effect under
section 1927 with respect to such drugs or unless
section 1927(a)(3) applies;’’.
369
(b) SECTION 1927, SSA.—(1) Section 1927(a) (42
U.S.C. 1396r–8(a)) is amended—
(A) in paragraph (1)—
(i) by amending the second sentence to
read as follows: ‘‘Any such agreement entered
into prior to April 1, 1991, shall be deemed to
have been entered into on January 1, 1991, and
the amount of the rebate under such agreement
shall be calculated as if the agreement had been
entered into on January 1, 1991.’’, and
(ii) in the third sentence, by striking
‘‘March’’ and inserting ‘‘April’’;
(B) in paragraph (2)—
(i) by striking ‘‘first’’, and
(ii) by striking the period at the end and
inserting the following: ‘‘, except that such
paragraph (and section 1903(i)(10)(A)) shall
not apply to the dispensing of such a drug be-
fore April 1, 1991, if the Secretary determines
that there were extenuating circumstances with
respect to the first calendar quarter of 1991.’’;
(C) in paragraph (3), by striking ‘‘single
source’’ and all that follows and inserting the follow-
ing: ‘‘covered outpatient drugs if—
370
‘‘(A) based on information provided by a
beneficiary’s physician, the State has made a
determination that the availability of the drug
is essential to the health of the beneficiary
under the State plan, and the Secretary has re-
viewed and approved such determination; and
‘‘(B) the drug has been given a rating of
1–A by the Food and Drug Administration.’’;
(D) in paragraph (4)—
(i) by striking ‘‘in compliance with’’
and inserting ‘‘in effect under’’, and
(ii) by striking ‘‘coverage of the man-
ufacturer’s drugs’’ and inserting ‘‘ingredi-
ent costs of the manufacturer’s covered
outpatient drugs covered’’; and
(E) by adding at the end the following new
paragraph:
‘‘(5) APPLICATION
IN
CERTAIN
STATES
AND
TERRITORIES.—
‘‘(A) APPLICATION IN STATES OPERATING
UNDER
DEMONSTRATION
PROJECTS.—In the
case of any State which is providing medical as-
sistance to its residents under a waiver granted
under section 1115, the Secretary shall require
the State to meet the requirements of section
371
1902(a)(54) and of this section in the same
manner as the State would be required to meet
such requirements if the State had in effect a
plan approved under this title.
‘‘(B) 
NO
APPLICATION
IN
COMMON-
WEALTHS
AND
TERRITORIES.—This section,
and sections 1902(a)(54) and 1903(i)(10), shall
only apply to a State that is one of the 50
States or the District of Columbia.’’.
(2) Section 1927(b) (42 U.S.C. 1396r–8(b)) is
amended—
(A) in paragraph (1)(A)—
(i) by striking ‘‘(or periodically in accord-
ance with a schedule specified by the Sec-
retary)’’ and inserting ‘‘(or other period speci-
fied by the Secretary)’’, and
(ii) by inserting ‘‘after December 31, 1990,
for which payment was made’’ after ‘‘dis-
pensed’’;
(B) in paragraph (2)(A)—
(i) by striking ‘‘calendar quarter’’ and ‘‘the
quarter’’ and inserting ‘‘rebate period’’ and
‘‘the period’’, respectively,
372
(ii) by striking ‘‘dosage units’’ and insert-
ing ‘‘units of each dosage form and strength’’,
and
(iii) by inserting ‘‘after December 31,
1990, for which payment was made’’ after
‘‘dispensed’’;
(C) in paragraph (3)(A)—
(i) in clause (i), by striking ‘‘quarter’’ each
place it appears and inserting ‘‘calendar quarter
or other rebate period under the agreement’’,
(ii) in clause (i), by striking the open pa-
renthesis before ‘‘for’’ and the close parenthesis
after ‘‘drugs’’,
(iii) in clause (i), by striking ‘‘subsection
(c)(2)(B)) for covered outpatient drugs’’ and in-
serting ‘‘subsection (c)(1)(C) for each covered
outpatient drug’’, and
(iv) in clause (ii), by inserting a comma
after ‘‘this section’’ and after ‘‘1990’’;
(D) in paragraph (3)(B)—
(i) by striking ‘‘$100,000’’ and inserting
‘‘$10,000’’,
(ii) by striking ‘‘if the wholesaler’’ and in-
serting ‘‘for each instance in which the whole-
saler’’,
373
(iii) by inserting ‘‘in response to such a re-
quest’’ after ‘‘false information’’, and
(iv) by striking ‘‘(with respect to amounts
of penalties or additional assessments)’’;
(E) in paragraph (3)(C)—
(i) in clause (i), by striking ‘‘the penalty’’
and inserting ‘‘the rebate next required to be
paid’’,
(ii) in clause (i), by striking ‘‘and such
amount shall be paid to the Treasury, and, if’’
and inserting ‘‘. If’’,
(iii) in clause (ii), by inserting ‘‘under sub-
paragraph (A)’’ after ‘‘provides false informa-
tion’’, and
(iv) in clause (ii), by striking ‘‘Such civil
money penalties are’’ and inserting ‘‘Any such
civil money penalty shall be’’;
(F) in paragraph (3)(D), by striking ‘‘whole-
saler,’’ the first place it appears and inserting
‘‘wholesaler or the’’; and
(G) in paragraph (4)(B)(iii), by adding at the
end the following: ‘‘In the case of such a termi-
nation, a State may terminate coverage of the drugs
affected by such termination as of the effective date
374
of such termination without providing any advance
notice otherwise required by regulation.’’.
(3) Section 1927(c) (42 U.S.C. 1396r–8(c)) is
amended—
(A) in paragraph (1) in the matter preceding
subparagraph (A)—
(i) by striking the first sentence,
(ii) in the second sentence, by striking
‘‘Except as otherwise provided’’ and all that fol-
lows through ‘‘the Secretary)’’ and inserting the
following: ‘‘For purposes of this section, the
amount of the rebate under this subsection for
a rebate period’’, and
(iii) by inserting ‘‘(except as provided in
subsection (b)(3)(C) and paragraph (2))’’ after
‘‘drugs shall’’;
(B) in paragraph (1)(A), by striking ‘‘the quar-
ter (or other period)’’ and inserting ‘‘the rebate pe-
riod’’;
(C) in subparagraph (C)—
(i) by striking ‘‘For purposes of this para-
graph’’ and inserting ‘‘BEST PRICE DEFINED.—
For purposes of this section’’,
(ii) by inserting ‘‘provider,’’ after ‘‘re-
tailer,’’, and
375
(iii) by striking the semicolon at the end
and inserting a period; and
(D) by striking subparagraph (D) and inserting
the following:
‘‘(D) USE
OF
ESTIMATED
BEST
PRICES
DURING
INITIAL
YEAR
OF
AVAILABILITY
OF
DRUG.—If the Secretary determines that a
manufacturer cannot determine the best price
for rebate periods during the first year in which
an agreement is in effect until after the end of
the year, as part of the agreement the Sec-
retary may require the manufacturer to esti-
mate the best price for rebate periods during
the year and provide an adjustment to the re-
bate paid to the State to take into account the
difference (if any) between the best price and
the estimated best price.’’.
(4)(A) Section 1927(d) (42 U.S.C. 1396r–8(d)) is
amended—
(i) in paragraph (2)—
(I) in subparagraph (A), by inserting ‘‘or
loss’’ after ‘‘gain’’,
(II) by striking subparagraph (I), and
(III) by redesignating subparagraphs (J)
and (K) as subparagraphs (I) and (J);
376
(ii) in paragraph (3)—
(I) by striking ‘‘described in paragraph
(2)’’, and
(II) by inserting ‘‘described in paragraph
(2)’’ after ‘‘classes of drugs,’’;
(iii) by striking paragraph (4) and by redesig-
nating paragraphs (5) through (7) as paragraphs
(4) through (6);
(iv) in paragraph (6), as so redesignated, by
striking ‘‘provided’’ and inserting ‘‘if’’; and
(v) by striking the second sentence of para-
graph (6), as so redesignated, and paragraph (8)
and inserting the following:
‘‘(7) CONSTRUCTION WITH RESPECT TO FRAUD
AND ABUSE.—Nothing in this section shall be con-
strued to restrict the authority of a State to apply
sanctions under this Act against any person for
fraud or abuse.’’.
(B) Section 1927(d)(4), as redesignated by subpara-
graph (A)(iii), shall first apply to drugs dispensed on or
after July 1, 1991.
(5)(A) Section 1927(f) (42 U.S.C. 1396r–8(f)) is
amended to read as follows:
‘‘(f) NO REDUCTIONS IN PHARMACY REIMBURSE-
MENT LIMITS.—
377
‘‘(1) IN GENERAL.—During the period begin-
ning on November 5, 1990, and ending on December
31, 1994—
‘‘(A) a State may not reduce the amount
paid by the State under this title with respect
to the ingredient cost of a covered outpatient
drug or the dispensing fee for such a drug
below the amount in effect as of November 5,
1990, and
‘‘(B) the Secretary may not change the
regulations in effect on November 5, 1990, gov-
erning the amounts described in subparagraph
(A) which are eligible for Federal financial par-
ticipation, to reduce the reimbursement limits
described in such regulations.
‘‘(2) CONSTRUCTION.—If the Secretary notified
a State before November 5, 1990, that its payment
amounts under this title with respect to the ingredi-
ent cost of a covered outpatient drug or the dispens-
ing fee for such a drug were in excess of those per-
mitted under regulations in effect on such date,
paragraph (1)(B) shall not be construed as prevent-
ing a State from reducing payment amounts or dis-
pensing fee in order to comply with such regula-
tions.’’.
378
(B) Not later than April 1, 1994, the Secretary of
Health and Human Services shall establish an upper limit
on the amount of payment which is eligible for Federal
financial participation under title XIX of the Social Secu-
rity Act for each multiple source drug (as defined in sec-
tion 1927(k)(7)(A)(i) of such Act) for which the Food and
Drug Administration has rated at least 3 formulations of
such drug as therapeutically and pharmaceutically equiva-
lent, regardless of whether all the formulations of such
drug are rated as so equivalent. In establishing such a
limit for a drug, the Secretary shall take into account only
those formulations of the drug which the Food and Drug
Administration has rated as therapeutically and pharma-
ceutically equivalent.
(6) Section 1927(g) (42 U.S.C. 1396r–8(g)) is
amended—
(A) by amending paragraph (1) to read as fol-
lows:
‘‘(1) REQUIREMENT
FOR
DRUG
USE
REVIEW
PROGRAM.—Each State shall provide, by not later
than January 1, 1993, for a drug use review pro-
gram for covered outpatient drugs (other than drugs
dispensed to residents of nursing facilities) that—
‘‘(A) meets the requirements of paragraph
(2), and
379
‘‘(B) is intended to assure that prescrip-
tions for such drugs are appropriate, medically
necessary, and not likely to lead to adverse
medical results.’’;
(B) in paragraph (2)—
(i) by amending the matter before subpara-
graph (A) to read as follows:
‘‘(2) REQUIREMENTS.—’’,
(ii) by amending subparagraph (A) to read
as follows:
‘‘(A) PROSPECTIVE DRUG USE REVIEW.—
Each drug use review program shall provide for
a review of drug therapy before each prescrip-
tion is filled or delivered to an individual receiv-
ing benefits under this title (including counsel-
ing by pharmacists) consistent with standards
established by the Secretary. Nothing in this
paragraph shall be construed as requiring a
pharmacist to provide consultation when an in-
dividual receiving benefits under this title or
caregiver of such individual refuses such con-
sultation.’’,
(iii) in subparagraph (C)—
380
(I) by striking ‘‘APPLICATION
OF
STANDARDS.—’’ and inserting ‘‘STAND-
ARDS.—(i)’’,
(II) by striking ‘‘and literature re-
ferred to in subsection (1)(B)’’ and insert-
ing ‘‘described in clause (ii)’’,
(III) by striking ‘‘including but not
limited to’’ and inserting ‘‘. Such assess-
ment shall include’’,
(IV) by striking ‘‘abuse/misuse and,
as necessary, introduce remedial strate-
gies,’’ and inserting ‘‘abuse or misuse and
introduce remedial strategies’’, and
(V) by adding at the end the following
new clause:
‘‘(ii) The compendia described in this
clause are the American Hospital Formulary
Service Drug Information, the United States
Pharmacopeia-Drug 
Information, 
and 
the
American Medical Association Drug Evalua-
tions.’’, and
(iv) by amending subparagraph (D) to
read as follows:
‘‘(D) EDUCATIONAL PROGRAM.—The pro-
gram shall educate (directly or by contract)
381
pharmacists, physicians, and other individuals
prescribing or dispensing covered outpatient
drugs under the State plan on common drug
therapy problems in order to improve prescrib-
ing or dispensing practices.’’;
(C) in paragraph (3)—
(i) in subparagraph (A), by striking
‘‘(hereinafter’’ and all that follows and inserting
‘‘(in this paragraph referred to as the ‘DUR
Board’).’’,
(ii) in subparagraph (B), by striking ‘‘51
percent’’ and all that follows and inserting ‘‘50
percent licensed and actively practicing physi-
cians and at least 1/3 but not more than 50
percent licensed and actively practicing phar-
macists.’’,
(iii) by amending subparagraph (C) to
read as follows:
‘‘(C) RESPONSIBILITIES.—The responsibil-
ities of the DUR Board shall include the follow-
ing:
‘‘(i) Carrying out retrospective drug
use review pursuant to paragraph (2)(B).
382
‘‘(ii) Establishing and applying stand-
ards for drug use review described in para-
graph (2)(C).
‘‘(iii) Implementing educational pro-
grams described in paragraph (2)(D).
‘‘(iv) Conducting ongoing evaluations
of the effectiveness of its programs and ac-
tivities in improving the quality and safety
of drug therapy for individuals receiving
benefits under the State plan.’’; and
(D) by amending subparagraph (D) to read as
follows:
‘‘(4) ANNUAL REPORT.—Each State shall sub-
mit a report each year to the Secretary on the na-
ture and scope of the drug use review program
under this subsection. Such report shall include an
estimate of cost savings resulting from operation of
such program.’’.
(7) Section 1927(h) (42 U.S.C. 1396r–8(h)) is
amended to read as follows:
‘‘(h) ENCOURAGING ELECTRONIC CLAIMS MANAGE-
MENT.—The Secretary shall encourage each single State
agency under this title to establish, as its principal means
of processing claims for covered outpatient drugs, a point-
of-sale electronic claims management system for the pur-
383
pose of verifying eligibility, transmitting data on claims,
and assisting pharmacists and other authorized persons
in applying for and receiving payment under the State
plan.’’.
(8) Section 1927(i) (42 U.S.C. 1396r–8(i)) is amend-
ed to read as follows:
‘‘(i) ANNUAL REPORT ON REBATE PROGRAM.—Not
later than May 1 of each year, the Secretary shall submit
to the Committee on Finance of the Senate, the Commit-
tee on Energy and Commerce of the House of Representa-
tives, and the Committee on Aging of the Senate a report
on the operation of the rebate agreements required for
covered outpatient drugs under this section in the preced-
ing fiscal year, and shall include in the report such infor-
mation in addition to the information required to be re-
ported under section 601(d) of the Veterans Health Care
Act of 1992 as the Secretary considers appropriate.’’.
(9) Section 1927(j) (42 U.S.C. 1396r–8(j)) is amend-
ed to read as follows:
‘‘(j) EXEMPTION FROM CERTAIN REQUIREMENTS
FOR CERTAIN HEALTH MAINTENANCE ORGANIZATIONS
AND HOSPITALS.—
‘‘(1) CERTAIN HEALTH MAINTENANCE ORGANI-
ZATIONS
AND
PHARMACIES.—The requirements of