I
106TH CONGRESS
1ST SESSION
H. R. 2650
To amend title XVIII of the Social Security Act to improve and streamline
the physician self-referral law.
IN THE HOUSE OF REPRESENTATIVES
JULY 29, 1999
Mr. STARK introduced the following bill; which was referred to the Committee
on Commerce, and in addition to the Committee on Ways and Means,
for a period to be subsequently determined by the Speaker, in each case
for consideration of such provisions as fall within the jurisdiction of the
committee concerned
A BILL
To amend title XVIII of the Social Security Act to improve
and streamline the physician self-referral law.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE; REFERENCES TO SOCIAL SECU-
RITY ACT; TABLE OF CONTENTS.
(a) SHORT TITLE.—This Act may be cited as the
‘‘Medicare Physician Self-Referral Improvement Act of
1999’’;
(b) REFERENCES TO SOCIAL SECURITY ACT.—Ex-
cept as otherwise expressly provided, whenever in this Act
an amendment or repeal is expressed in terms of an
amendment to, or repeal of, a section or other provision,
the reference shall be considered to be made to a section
or other provision of Social Security Act.
(c) TABLE OF CONTENTS.—The table of contents of
this Act is as follows:
Sec. 1. Short title; references to Social Security Act; table of contents.
Sec. 2. Changes in exceptions for both ownership and compensation arrange-
ments.
Sec. 3. Revision of exceptions for certain compensation arrangements.
Sec. 4. Revision of definitions.
Sec. 5. Change in reporting requirements.
Sec. 6. Advisory opinions.
Sec. 7. Effective date.
SEC. 2. CHANGES IN EXCEPTIONS FOR BOTH OWNERSHIP
AND COMPENSATION ARRANGEMENTS.
(a) INCLUSION OF DURABLE MEDICAL EQUIPMENT
AND PARENTERAL AND ENTERAL NUTRIENTS, EQUIP-
MENT, AND SUPPLIES IN EXCEPTION FOR IN-OFFICE AN-
CILLARY
SERVICES.—Section 1877(b)(2) (42 U.S.C.
1395nn(b)(2)) is amended by striking ‘‘In the case of’’
and all that follows through ‘‘supplies)’’ and inserting
‘‘Subsection (a)(1) shall not apply in the case of des-
ignated health services’’.
(b) MODIFICATION OF THE DIRECT SUPERVISION
REQUIREMENT FOR IN-OFFICE ANCILLARY SERVICES.—
Section 1877(b)(2)(A)(i) (42 U.S.C. 1395nn(b)(2)(A)(i))
is amended by striking ‘‘who are directly supervised by
the physician or by another physician in the group prac-
tice’’ and inserting ‘‘who assume full and direct legal, fi-
nancial, and professional responsibility for the services or
items, or both, that are provided and who provide those
services’’.
(c) EXPANSION OF PREPAID PLAN EXCEPTION.—
Section 
1877(b)(3) 
(42 
U.S.C. 
1395nn(b)(3)) 
is
amended—
(1) in subparagraph (A), by inserting ‘‘part C
or’’ before ‘‘section 1876’’; and
(2) by striking ‘‘or’’ at the end of subparagraph
(C);
(3) by striking the period at the end of sub-
paragraph (D) and inserting ‘‘; and’’; and
(4) by adding at the end the following new sub-
paragraph:
‘‘(E) that is a medicaid managed care or-
ganization 
(as 
defined 
in 
section
1903(m)(1)(A)) to an individual enrolled with
the organization.’’.
(d) NEW EXCEPTION FOR CAPITATED PAYMENTS.—
Section 1877(b) (42 U.S.C. 1395nn(b)) is amended—
(1) by redesignating paragraph (4) as para-
graph (5); and
(2) by inserting after paragraph (3) the fol-
lowing new paragraph:
‘‘(4) OTHER
CAPITATED
PAYMENTS.—Sub-
section (a)(1) shall not apply in the case of a des-
ignated health service, if the designated health serv-
ice is included in the services for which a physician
or physician group is paid only on a capitated basis
by a health plan or insurer pursuant to a written ar-
rangement between the plan or insurer and the phy-
sician or physician group in which the physician or
physician group.’’.
(e) NEW EXCEPTION FOR SERVICES FURNISHED IN
COMMUNITIES WITH NO ALTERNATIVE PROVIDERS.—
Section 1877(b) (42 U.S.C. 1395nn(b)), as amended by
subsection (d), is further amended—
(1) by redesignating paragraph (5) as para-
graph (6); and
(2) inserting after paragraph (4) the following
new paragraph:
‘‘(5) NO ALTERNATIVE PROVIDERS IN AREA.—
In the case of a designated health service furnished
in any area with respect to which the Secretary de-
termines that individuals residing in the area do not
have reasonable access to such a designated health
service.’’.
(f) NEW EXCEPTION FOR SERVICES FURNISHED IN
AMBULATORY SURGICAL CENTERS.—Section 1877(b) (42
U.S.C. 1395nn(b)), as amended by subsections (d) and
(e), is further amended—
(1) by redesignating paragraph (6) as para-
graph (7); and
(2) inserting after paragraph (5) the following
new paragraph:
‘‘(6) SERVICES
FURNISHED
IN
AMBULATORY
SURGICAL CENTERS.—In the case of a designated
health service furnished in an ambulatory surgical
center described in section 1832(a)(2)(F)(i).’’.
(g) NEW EXCEPTION FOR SERVICES FURNISHED IN
A HOSPICE.—Section 1877(b) (42 U.S.C. 1395nn(b)), as
amended by subsections (d) through (g), is further
amended—
(1) by redesignating paragraph (8) as para-
graph (9); and
(2) inserting after paragraph (7) the following
new paragraph:
‘‘(8) SERVICES FURNISHED BY A HOSPICE PRO-
GRAM.—In the case of a designated health service
furnished by a hospice program under section
1861(dd)(2).’’.
(h) CONFORMING AMENDMENTS.—Paragraphs (3)
and (9) of section 1877(b) (42 U.S.C. 1395nn(b)), as pre-
viously redesignated by this section, are each amended by
striking ‘‘In the case of’’ and inserting ‘‘Subsection (a)(1)
shall not apply in the case of’’.
SEC. 3. REVISION OF EXCEPTIONS FOR CERTAIN COM-
PENSATION ARRANGEMENTS.
Section 1877 (42 U.S.C. 1395nn) is amended—
(1) in subsection (a)(2)(B)—
(A) by striking ‘‘except as provided in sub-
section (e)(2),’’; and
(B) by striking ‘‘entity.’’ and inserting
‘‘entity which does not meet the requirements
of subsection (e)(1).’’; and
(2) by amending subsection (e) to read as fol-
lows:
‘‘(e) REQUIREMENTS AND EXCEPTIONS FOR PERMIS-
SIBLE COMPENSATION ARRANGEMENTS.—
‘‘(1) IN
GENERAL.—The requirements under
this paragraph with respect to a compensation ar-
rangement are as follows:
‘‘(A) The arrangement is in writing and is
signed by all parties to the arrangement.
‘‘(B) The arrangement is for a specified
period of time, which may be less than a year
and may be renewed any number of times if the
terms of the arrangement and the compensation
for the same items or services do not change.