‘‘(c) RESERVE FOR RURAL HOSPITALS AND FACILI-
TIES.—At least 10 percent of the total value of all interest
subsidies awarded in any given year shall be awarded to
rural hospitals and facilities, provided that a sufficient
number of applications are approved.
‘‘(d) LIMITATION
ON
AMOUNT
OF
SUBSIDIES
AWARDED IN A GIVEN STATE.—The aggregate value of
interest subsidies made to hospitals and facilities in any
State in a given year shall not exceed 25 percent of the
total value of all interest subsidies made during that year.
‘‘(e) AMOUNT ALLOCATED FROM TRUST FUND.—
The Trust Fund Board shall make available $220,000,000
annually for interest subsidies under this subtitle.
‘‘TERMS AND CONDITIONS FOR SUBSIDIES
‘‘SEC. 2124. (a) STATE OR LOCAL PARTICIPATION.—
State or local participation in an amount equal to not less
than the Federal subsidy is required.
‘‘(b) ISSUANCE OF FEDERAL COMMITMENTS.—Suc-
cessful applicants will receive a Federal commitment of in-
terest subsidy grant. Applicants will then have 12 months
to finalize financing arrangements before unobligated
funds would be returned to the subsidy program pool. A
commitment, when issued, shall be valid for as long as
a hospital or facility continues to meet the eligibility quali-
fications of this title.
‘‘SUBSIDIES FOR LOAN REFINANCING
‘‘SEC. 2125. In addition to providing interest rate
subsidies for new loans, the Trust Fund may provide sub-
sidies to assist in refinancing if the hospital or facility
presently lacks permanent financing at an affordable cur-
rent market rate.
‘‘Subtitle D—Direct Matching
Loans
‘‘PROVISION OF MATCHING LOANS
‘‘SEC. 2131. (a) IN GENERAL.—The Secretary, with
the approval of the Trust Fund Board, shall provide direct
matching loans to qualified hospitals and facilities unable
otherwise to obtain essential financing.
‘‘(b) PURPOSES.—The purpose of this subtitle is to
provide qualifying hospitals and facilities with direct
matching loans for essential replacement (whether by con-
struction or acquisition), modernization, and renovation
projects and capital equipment acquisitions. These loans
are to be primarily provided for the funding of smaller
projects where the transaction costs of securing financing
from other sources may be disproportionately onerous in
relationship to the amounts financed.
‘‘ELIGIBLE PROJECTS
‘‘SEC. 2132. (a) IN GENERAL.—Qualified applicants
may seek a project loan of up to $50,000,000. Not more
than 75 percent of the cost of the project may come from
Federal sources.
‘‘(b) EXCEPTION FOR FINANCIALLY DISTRESSED AP-
PLICANTS.—The Trust Fund Board shall have the discre-
tion to waive the 25 percent match requirement for finan-
cially distressed hospitals and facilities (as described by
the Secretary).
‘‘ALLOTMENT OF LOANS
‘‘SEC. 2133. (a) IN GENERAL.—The Trust Fund
Board shall make available $200,000,000 in direct match-
ing loans annually. Funded projects should be divided be-
tween projects designed to achieve compliance with accred-
itation standards, life safety code, and other certification
standards, and those related to the provision of new serv-
ices.
‘‘(b) RESERVE FOR RURAL HOSPITALS AND FACILI-
TIES.—No less than 10 percent of the total value of loans
made under the program shall be made to rural hospitals
and facilities, if there are a sufficient number of approved
applications from such hospitals and facilities.
‘‘TERMS AND CONDITIONS OF LOANS
‘‘SEC. 2134. (a) GENERAL TERM.—Loans will be
made for a period equal to the construction period plus
up to 39 years amortization.
‘‘(b) INTEREST RATE.—The interest rate will be a
market rate determined by the Trust Fund Board to be
the most recent applicable index for revenue bonds, based
on the index published by the Bond Buyer and such other
information as the Board finds appropriate.
‘‘USE OF LOANS FOR REFINANCING
‘‘SEC. 2135. In addition to providing loans for new
projects, the Trust Fund Board may grant loans under
this subtitle to refinance existing loans if the hospital or
facility has been unable to secure permanent financing at
an affordable current market rate, except that the amount
of assistance provided under this subtitle during a year
for refinancing existing loans may not exceed 20 percent
of the total amount made available for assistance under
this subtitle for the year.
‘‘CREATION OF REVOLVING FUND
‘‘SEC. 2136. In addition to the new amounts made
available each year, all loan repayments made by hospitals
and facilities shall be held in a revolving fund that may
be used for additional loans.
‘‘LOAN DEFAULT.
‘‘SEC. 2137. (a) IN GENERAL.—The failure of the
borrower hospital or facility to make payment due under
or provided by the terms of a loan granted under this sub-
title shall be considered a default under such loan and,
if such default continues for a period of 30 days, the Trust
Fund Board shall have the right to begin collection pro-
ceedings against the borrower.
‘‘(b) PRIORITY OF FEDERAL INTEREST.—In the case
of default, the United States shall be paid prior to State
or local bonds.
‘‘(c) SETTLEMENT
OF CLAIMS.—Notwithstanding
any other provision of law, the Trust Fund Board shall
have the power to pursue to final collection by way of com-
promise or otherwise all claims assigned and transferred
to the Trust Fund in connection with an assignment,
transfer, and delivery and at any time, upon default, to
foreclose or refrain from foreclosing on any assets secured
by any defaulted loan held by the Trust Fund.
‘‘Subtitle E—Grants for Urgent
Capital Needs
‘‘PROVISION OF GRANTS
‘‘SEC. 2141. (a) IN GENERAL.—The Secretary, with
the approval of the Trust Fund Board, shall make direct
grants to qualified hospitals and facilities with urgent cap-
ital needs.
‘‘(b) PURPOSES.—Direct grants shall be available to
eligible hospitals and facilities for 3 types of projects:
‘‘(1) Emergency certification and licensure
grants would be available to eligible hospitals and fa-
cilities that are threatened with closure or loss of ac-
creditation or certification of a facility or of essential
services as a result of life or safety code violations
or similar facility or equipment failures. Such grants
would provide limited funding for repair and renova-
tion or capital equipment acquisition where failure to
fund would disrupt the provision of essential public
health services such as emergency care.
‘‘(2) Emergency grants would be available for
capital 
renovation, 
expansion, 
or 
replacement
(whether by construction or acquisition) necessary to
the maintenance or expansion of essential safety and
health services such as obstetrics, perinatal, emer-
gency and trauma, primary care and preventive
health services.
‘‘(3) Planning grants would be available to
qualified hospitals and facilities requiring pre-ap-
proval assistance related to management and finance
in order to apply for loans, loan guarantees, and in-
terest subsidies under this Act.
‘‘(c) PRIORITY TO FINANCIALLY DISTRESSED PRO-
VIDERS.—Priority for direct grants under this section
would be given to financially distressed hospitals and fa-
cilities (as described by the Secretary).
‘‘(d) APPLICATION PROCESS.—The Secretary, with
the approval of the Trust Fund Board, shall create an
expedited application process for direct grants.
‘‘(e) AMOUNT ALLOCATED FROM TRUST FUND.—
The 
Trust 
Fund 
Board 
shall 
annually 
allocate
$400,000,000 from the Trust Fund for grants under this
subtitle.
‘‘ELIGIBLE PROJECTS
‘‘SEC. 2142. (a) MATCHING GRANTS.—
‘‘(1) LIMITATION ON AMOUNT.—Grants for cap-
ital expenditures by qualified hospitals and facilities
will be limited to $25,000,000.
‘‘(2) MATCHING REQUIREMENT.—At least half
of the projects funded in a year must receive at least
50 percent of their funding from State or local
sources. The remaining projects funded during the
year could be financed up to 90 percent with a com-
bination of Federal grants and loans.
‘‘(3) RESERVATION FOR RURAL APPLICANTS.—
No less than 10 percent of the grant funds in any
given year would be reserved for rural applicants,
provided that a sufficient number of applications are
approved.
‘‘(b) PLANNING GRANTS.—Applicants who can dem-
onstrate general qualification for the direct matching loan,
loan guarantee, or interest subsidy programs under this
title or eligibility for mortgage insurance under section
242 of the National Housing Act will be eligible for a
grant of up to $500,000 to assist in implementation of
key budgetary and financial systems as well as manage-
ment and governance restructuring.’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall take effect October 1, 1993.
SEC. 212. ADJUSTMENT TO PAYMENTS FOR CAPITAL-RE-
LATED COSTS UNDER MEDICARE.
(a) IN GENERAL.—Section 1886(g)(1)(B) of the So-
cial Security Act (42 U.S.C. 1395ww(g)(1)(B)) is amend-
ed—
(1) by striking ‘‘and’’ at the end of clause (iii);
(2) by striking the period at the end of clause
(iv) and inserting ‘‘, and’’; and
(3) by adding at the end the following new
clause:
‘‘(v) shall provide for adjustments to take into
account the extent to which capital-related costs in-
curred by a hospital are costs with respect to which
the hospital received financial assistance under title
XXI.’’.
(b) EFFECTIVE DATE.—The amendments made by
subsection (a) shall apply to cost reporting periods begin-
ning on or after October 1, 1994.
SEC. 213. TAX EXEMPT STATUS OF FEDERALLY GUARAN-
TEED STATE OR LOCAL BONDS.
(a) IN GENERAL.—Section 149(b)(3)(A) of the Inter-
nal Revenue Code of 1986 is amended—
(1) in clause (ii), by striking ‘‘or’’;
(2) in clause (iii), by striking the period at the
end and inserting ‘‘, or’’; and
(3) by adding at the end the following new
clause:
‘‘(iv) any guarantee by the Capital Fi-
nancing Trust Fund pursuant to title XXI
of the Social Security Act.’’.
(b) EFFECTIVE DATE.—The amendments made by
subsection (a) shall take effect on October 1, 1993.
TITLE III—CAPITAL
ALLOCATION PLANS
SEC. 301. REQUIRING STATE REVIEW MECHANISMS AS A
CONDITION OF PAYMENT FOR CAPITAL-RE-
LATED COSTS UNDER MEDICARE.
(a) IN GENERAL.—Section 1862(a) of the Social Se-
curity Act (42 U.S.C. 1395y(a)) is amended—
(1) by striking ‘‘or’’ at the end of paragraph
(15);
(2) by striking the period at the end of para-
graph (16) and inserting ‘‘; or’’; and
(3) by inserting after paragraph (16) the fol-
lowing new paragraph:
‘‘(17) with respect to expenses for capital-relat-
ed costs (as defined in section 1886(g)(1)(C)) in-
curred during a year (beginning with 1995) where—
‘‘(A) such expenses are incurred in a State
that does not have a capital allocation plan ap-
proved by the Secretary under section 1890, or
‘‘(B) the State notifies the Secretary that
such expenses were incurred in violation of the
State’s capital allocation plan under such sec-
tion.’’.
(b) CAPITAL ALLOCATION PLANS DESCRIBED.—Title
XVIII of the Social Security Act (42 U.S.C. 1395 et seq.)
is amended by inserting after section 1889 the following
new section:
‘‘CAPITAL ALLOCATION PLANS
‘‘SEC. 1890. (a) APPROVAL BY SECRETARY.—
‘‘(1) IN
GENERAL.—For purposes of section
1862(a)(17), the Secretary shall approve the capital
allocation plan of a State for a fiscal year if the
Governor of the State provides the Secretary with
information and assurances necessary for the Sec-
retary to find that the plan meets the requirements
of this section.
‘‘(2) TERMINATION
OR
EXTENSION
OF
AP-
PROVAL
PERMITTED.—Notwithstanding paragraph
(1), the Secretary may—
‘‘(A) terminate the approval of a plan
under this section for a fiscal year if the Sec-
retary determines during the year that the plan
is not substantially in compliance with this sec-
tion; or
‘‘(B) extend the approval of a plan under
this section (on a conditional basis) for an addi-
tional period not to exceed 12 months.
‘‘(b) REQUIREMENTS.—
‘‘(1) IN GENERAL.—A State’s capital allocation
plan meets the requirements of this section if—
‘‘(A) except as provided in paragraph (2),
the Governor designates a single agency of the
State government as the State review agency
for the development of the plan;
‘‘(B) the Governor designates a single
agency of the State government as the State re-
view agency for the enforcement of the plan;
‘‘(C) all capital expenditures of health care
services in the State (except as provided in
paragraph (4)) are subject to review and ap-
proval under the plan (in accordance with sub-
section (c));
‘‘(D) the State review agency determines
whether capital expenditures are in accordance
with the plan using the criteria specified in sub-
section (c) and notifies the Secretary if it deter-
mines that any capital expenditures subject to
the plan are not in accordance with the plan;
and
‘‘(E) the State review agency provides the
Secretary with assurances that the agency is
enforcing the plan.
‘‘(2) PERMITTING USE OF REGIONAL REVIEW
AGENCIES.—Notwithstanding paragraph (1)(A), a
Governor may designate a regional review agency to
develop the capital allocation plan for capital ex-
penditures of health care services in a geographic re-
gion in the State, but only if—
‘‘(A) each such geographic region has a
population of at least 500,000;
‘‘(B) if the region includes any portion of
a metropolitan statistical area, the region in-
cludes all of such metropolitan statistical area;
and
‘‘(C) each such regional review agency in
the State—
‘‘(i) is a nonprofit corporation or a
public regional planning body or single
unit of local government,
‘‘(ii) is governed by a board a major-
ity of the members of which are consumers
or purchasers of health care services in the
region, and
‘‘(iii) has resource allocation and plan-
ning in the region as its primary purpose.
‘‘(3) PERMITTING USE OF MULTISTATE REVIEW
AGENCIES.—The Governors of 2 or more contiguous
States may designate a single review agency to carry
out the requirements of this section with respect to
capital expenditures of health care services in such
States, but only if such agency meets the require-
ments described in paragraph (2) for regional review
agencies.
‘‘(4) SPECIAL
TREATMENT
OF
SERVICES
IN
RURAL AREAS PERMITTED.—
‘‘(A) IN
GENERAL.—A capital allocation
plan need not provide for review of expenditures
for services provided in rural areas in a State
if the State has developed a rural health plan
that meets the requirements of this paragraph.
‘‘(B) REQUIREMENTS FOR RURAL HEALTH
PLAN.—A rural health plan must—
‘‘(i) meet criteria developed by the
Secretary;
‘‘(ii) have as its major focus the as-
surance of access to health care services by
low density rural populations in the State;
and
‘‘(iii) address at least—
‘‘(I) the regionalization of serv-
ices,
‘‘(II) alternatives to traditional
facilities,
‘‘(III) the development of new or-
ganizational forms, and
‘‘(IV) the needs for special emer-
gency and other health-services-relat-
ed transportation needs.
‘‘(c) CONTENTS OF PLAN DESCRIBED.—
‘‘(1) REQUIREMENTS
RELATING
TO
ALLOCA-
TION OF CAPITAL.—
‘‘(A) IN
GENERAL.—Each capital alloca-
tion plan under this subsection shall—
‘‘(i) be developed consistent with cri-
teria developed by the Secretary;
‘‘(ii) be designed to assure that the
needs of the State’s residents for health
care services are met;
‘‘(iii) include occupancy targets for in-
patient hospital facilities;
‘‘(iv) include utilization targets for
services subject to review under the plan;
and
‘‘(v) provide an opportunity for formal
review and comment before becoming final.
‘‘(B) SPECIFICS.—Each capital allocation
plan must—
‘‘(i) assure access to hospital facilities;
‘‘(ii) identify which facilities (and
parts of facilities) would be closed in order
to reach the occupancy and utilization tar-
gets for health care services;
‘‘(iii) provide for regionalization of
services, where appropriate; and
‘‘(iv) address—
‘‘(I) the special needs and cir-
cumstances of hospitals receiving an
additional 
payment 
under 
section
1886(d)(5)(F), 
Federally-qualified
health centers, and other institutions
and facilities that receive special as-
sistance for providing services to low-
income individuals and other individ-
uals in medically underserved commu-
nities (as defined in section 799(6) of
the Public Health Service Act), and
‘‘(II) the provision of trauma
care.
‘‘(2) REQUIREMENTS RELATING TO REVIEW.—
‘‘(A) IN GENERAL.—The capital allocation
plan shall—
‘‘(i) require the review of any pro-
posed expenditures for capital expenditures
in excess of $1,000,000 in the area covered
by the plan;
‘‘(ii) permit the review of expenditures
in the area covered by the plan that are
not described in clause (i); and
‘‘(iii) provide that a review shall take
into consideration at least the following
criteria:
‘‘(I) The relationship of the pro-
posed capital expenditure to the plan.
‘‘(II) The need that the popu-
lation to be served has for the pro-
posed services, equipment, or facility
provided by the capital expenditure.
‘‘(III) The availability of alter-
native, less costly, or more effective
methods for providing such services.
‘‘(IV) The impact of the proposed
expenditure on the quality of care and
the costs of health care services pro-
vided to such population.
‘‘(V) The impact of the proposed
expenditure on the utilization of the
applicant’s other capital resources.
‘‘(VI) The extent to which the
proposed services, equipment, or facil-
ity shall eliminate unnecessary or du-
plicative services.
‘‘(VII) The extent to which the
proposed services, equipment, or facil-
ity will be available to all residents of
the area, regardless of their ability to
pay for the use of such services,
equipment, or facility.
‘‘(B) SPECIAL RULES FOR DETERMINING
AMOUNT
OF
EXPENDITURES.—In determining
the amount of proposed expenditures for a cap-
ital project for purposes of subparagraph (A)(i),
there shall be included—
‘‘(i) the cost of any studies, surveys,
designs, plans, working drawings, specifica-
tions, and other activities essential to the
acquisition, improvement, expansion, or re-
placement of the capital project with re-
spect to which the expenditure is made;
and
‘‘(ii) any proposed expenditures for
other capital projects which are found by
the review agency to be fundamentally re-
lated to the capital project in question (in
accordance with criteria developed by the
State using guidelines established by the
Secretary).
‘‘(C) PROCEDURAL REQUIREMENTS.—The
capital allocation plan shall meet requirements
relating to procedures for review as follows:
‘‘(i) Reviews must be performed under
a regular schedule that provides that appli-
cations relating to expenditures for similar
capital projects will be considered at the
same time, and that provides an oppor-
tunity for additional applicants to seek ap-
proval for carrying out a capital project if
the review agency determines (based on the
application of an initial sponsor of such a
project) that an expenditure for such a
project would be appropriate under the
plan.
‘‘(ii) The determinations of the review
must be made in public meetings.
‘‘(iii) If local review agencies are es-
tablished under subsection (a)(2), the
State review agency must take the results
of reviews by such agencies into account.
‘‘(iv) The State review agency must
make provision for access by the general
public to all applications for review and for
written findings of its reviews that state
the basis for agency determinations.
‘‘(v) The State review agency must
hold at least one public hearing if re-
quested by persons directly affected by the
review.
‘‘(vi) Any decision of the State review
agency to approve or not to approve a pro-
posed capital expenditure must be based
solely on the agency’s review and the
record created by the review.
‘‘(vii) An application for a proposed
capital expenditure must include a time-
table for completing the project for which
the expenditure is proposed, and any ap-
proval of such an expenditure shall be
withdrawn if the State review agency finds
that the applicant was not making a good
faith effort to meet the timetable or to oth-
erwise meet any applicable condition for
approval.
‘‘(viii) The allocation plan must pro-
vide either for an appeals mechanism (con-
sistent with the State’s administrative pro-
cedures act) or for an appeal before an en-
tity (other than the State review agency)
designated by the Governor.
‘‘(d) FUNDING ASSISTANCE TO STATES.—
‘‘(1) IN GENERAL.—The Secretary shall make,
in each fiscal year beginning with fiscal year 1994
from the allotment under paragraph (2) for the
State, a grant to each State with an approved cap-
ital allocation plan under this section in an amount
equal to 75 percent of the operating costs of carry-
ing out the plan in the State in the fiscal year.
Grants under this paragraph shall be payable from
the Capital Financing Trust Fund under section
2104.
‘‘(2) AMOUNT OF ALLOTMENT.—The amount of
an allotment to each State is equal to the sum of—
‘‘(A) the product of $0.70 and the number
of individuals residing in the State who do not
reside in an area under the jurisdiction of a re-
gional review agency (as established by the
State under subsection (b)(2)); and
‘‘(B) the product of $1.00 and the number
of individuals residing in the State who reside
in an area under the jurisdiction of a regional
review agency.
‘‘(e) DEFINITIONS.—In this subsection:
‘‘(1) The term ‘Governor’ means the chief exec-
utive officer of a State, or his designee.
‘‘(2) The term ‘capital expenditure’ means an
expenditure which—
‘‘(A) under generally accepted accounting
principles, is not properly chargeable as an ex-
pense of operation and maintenance; or
‘‘(B) is made to obtain by lease or com-
parable arrangement any facility thereof or any
equipment for a facility or part.
‘‘(3) The term ‘rural area’ has the meaning
given such term in section 1886(d)(2)(D).’’.
(c) EFFECT ON ANTITRUST LAWS.—
(1) IN GENERAL.—For purposes of the anti-
trust laws—
(A) the establishment by a State of a cap-
ital allocation plan under section 1890 of the
Social Security Act (as added by subsection (b))
shall be considered as affirmative State policy
with respect to individuals and entities in the
State providing health care services subject to
the plan; and
(B) the enforcement by a State of such a
plan shall be considered as active State super-
vision with respect to such individuals and enti-
ties.
(2) ANTITRUST LAWS DEFINED.—In paragraph
(1), the term ‘‘antitrust laws’’ has the meaning
given it in subsection (a) of the first sections of the
Clayton Act (15 U.S.C. 12(a)), except that such
term includes—
(A) section 5 of the Federal Trade Com-
mission Act (15 U.S.C. 45) to the extent such
section applies to unfair methods of competi-
tion; and
(B) any State law similar to the antitrust
laws.
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