601
Title III, Subtitle E
(B) Maturity date.
(C) Amount and frequency of installments.
(D) Rate of interest, which shall be at a
rate comparable to the rate of interest pre-
vailing on the date the loan is made.
(b) LOAN GUARANTEES.—The Secretary may not ap-
prove a loan guarantee under section 3441 unless the Sec-
retary determines that the terms, conditions, security (if
any), schedule and amount of repayments with respect to
the loan are sufficient to protect the financial interests
of the United States and are otherwise reasonable. Such
loan guarantees shall be subject to such further terms and
conditions as the Secretary determines, in consultation
with the Secretary of the Treasury, and subject to the
Federal Credit Reform Act of 1990, to be necessary to
ensure that the purposes of this section will be achieved.
(c) USE OF EXISTING RESOURCES.—The Secretary
may provide a loan or loan guarantee under section 3441
only if the applicant involved agrees that, in developing
the qualified community health group involved, the appli-
cant will utilize existing resources to the maximum extent
practicable.
SEC. 3443. DEFAULTS; RIGHT OF RECOVERY.
(a) DEFAULTS.—
602
Title III, Subtitle E
(1) IN
GENERAL.—The Secretary may take
such action as may be necessary to prevent a default
on loans or loan guarantees under section 3441, in-
cluding the waiver of regulatory conditions, deferral
of loan payments, renegotiation of loans, and the ex-
penditure of funds for technical and consultative as-
sistance, for the temporary payment of the interest
and principal on such a loan, and for other pur-
poses.
(2) FORECLOSURE.—The Secretary may take
such action, consistent with State law respecting
foreclosure procedures, as the Secretary deems ap-
propriate to protect the interest of the United States
in the event of a default on a loan made pursuant
to section 3441, including selling real property
pledged as security for such a loan or loan guarantee
and for a reasonable period of time taking posses-
sion of, holding, and using real property pledged as
security for such a loan or loan guarantee.
(3) WAIVERS.—The Secretary may, for good
cause, but with due regard to the financial interests
of the United States, waive any right of recovery
which the Secretary has by reasons of the failure of
a borrower to make payments of principal of and in-
terest on a loan made pursuant to section 3441, ex-
603
Title III, Subtitle E
cept that if such loan is sold and guaranteed, any
such waiver shall have no effect upon the Secretary’s
guarantee of timely payment of principal and inter-
est.
(b) TWENTY-YEAR OBLIGATION; RIGHT OF RECOV-
ERY.—
(1) IN GENERAL.—With respect to a facility for
which a loan is to be made pursuant to section
3441, the Secretary may provide the loan or loan
guarantee only if the applicant involved agrees that
the applicant will be liable to the United States for
the amount of the loan or loan guarantee, together
with an amount representing interest, if at any time
during the 20-period beginning on the date of com-
pletion of the activities involved, the facility—
(A) ceases to be a facility utilized by a
qualified community health group, or by an-
other public or nonprofit private entity that
provides health services in one or more health
professional shortage areas or that provides
such services to a significant number of individ-
uals who are members of a medically under-
served population; or
(B) is sold or transferred to any entity
other than an entity that is—
604
Title III, Subtitle E
(i) a qualified community health
group or other entity described in subpara-
graph (A); and
(ii) approved by the Secretary as a
purchaser or transferee regarding the facil-
ity.
(2) SUBORDINATION; WAIVERS.—The Secretary
may subordinate or waive the right of recovery
under paragraph (1), and any other Federal interest
that may be derived by virtue of a loan or loan guar-
antee under subsection (a), if the Secretary deter-
mines that subordination or waiver will further the
objectives of this part.
SEC. 3444. PROVISIONS REGARDING CONSTRUCTION OR EX-
PANSION OF FACILITIES.
(a) SUBMISSION OF INFORMATION.—In the case of
a project for construction, conversion, expansion or mod-
ernization of a facility, the Secretary may provide loans
or loan guarantees under section 3441 only if the appli-
cant submits to the Secretary the following:
(1) A description of the site.
(2) Plans and specifications which meet require-
ments prescribed by the Secretary.
(3) Information reasonably demonstrating that
title to such site is vested in one or more of the enti-
605
Title III, Subtitle E
ties filing the application (unless the agreement de-
scribed in subsection (b)(1) is made).
(4) A specification of the type of assistance
being requested under section 3441.
(b) AGREEMENTS.—In the case of a project for con-
struction, conversion, expansion or modernization of a fa-
cility, the Secretary may provide loans or loan guarantees
under section 3441 only if the applicant makes the fol-
lowing agreements:
(1) Title to such site will be vested in one or
more of the entities filing the application (unless the
assurance described in subsection (a)(3) has been
submitted under such subsection).
(2) Adequate financial support will be available
for completion of the project and for its maintenance
and operation when completed.
(3) All laborers and mechanics employed by
contractors or subcontractors in the performance of
work on a project will be paid wages at rates not
less than those prevailing on similar construction in
the locality as determined by the Secretary of Labor
in accordance with the Act of March 3, 1931 (40
U.S.C. 276a et seq; commonly known as the Davis-
Bacon Act), and the Secretary of Labor shall have
with respect to such labor standards the authority
606
Title III, Subtitle E
and functions set forth in Reorganization Plan
Numbered 14 of 1950 (15 FR 3176; 5 U.S.C. Ap-
pendix) and section 276c of title 40.
(4) The facility will be made available to all
persons seeking service regardless of their ability to
pay.
SEC. 3445. APPLICATION FOR ASSISTANCE.
The Secretary may provide loans or loan guarantees
under section 3441 only if an application for such assist-
ance is submitted to the Secretary, the application con-
tains each agreement described in this subpart, the appli-
cation contains the information required in section
3444(a), and the application is in such form, is made in
such manner, and contains such agreements, assurances,
and information as the Secretary determines to be nec-
essary to carry out this subpart.
SEC. 3446. ADMINISTRATION OF PROGRAMS.
This subpart, and any other program of the Secretary
that provides loans or loan guarantees, shall be carried
out by a centralized loan unit established within the De-
partment of Health and Human Services.
Subpart D—Enabling Services
SEC. 3461. GRANTS AND CONTRACTS FOR ENABLING SERV-
ICES.
(a) IN GENERAL.—
607
Title III, Subtitle E
(1) GRANTS AND CONTRACTS.—The Secretary
may make grants to and enter into contracts with
entities described in paragraph (2) to assist such en-
tities in providing the services described in sub-
section (b) for the purpose of increasing the capacity
of individuals to utilize the items and services in-
cluded in the comprehensive benefits package under
title I.
(2) RELEVANT
ENTITIES.—For purposes of
paragraph (1), the entities described in this para-
graph are qualified community health groups (as de-
fined in section 3421(a)), and other public or non-
profit private entities, that—
(A) provide health services in one or more
health professional shortage areas or that pro-
vide such services to a significant number of in-
dividuals who are members of a medically un-
derserved population; and
(B) are experienced in providing services to
increase the capacity of individuals to utilize
health services.
(b) ENABLING SERVICES.—The services referred to
in subsection (a)(1) are transportation, community and
patient outreach, patient education, translation services,
and such other services as the Secretary determines to be
608
Title III, Subtitle E
appropriate in carrying out the purpose described in such
subsection.
(c) CERTAIN REQUIREMENTS REGARDING PROJECT
AREA.—The Secretary may make an award of a grant or
contract under subsection (a) only if the applicant
involved—
(1) submits to the Secretary—
(A) information demonstrating that the
medically underserved populations in the com-
munity to be served under the award have a
need for enabling services; and
(B) a proposed budget for providing such
services; and
(2) the applicant for the award agrees that the
residents of the community will be significantly in-
volved in the project carried out with the award.
(d) IMPOSITION OF FEES.—The Secretary may make
an award of a grant or contract under subsection (a) only
if the applicant involved agrees that, in the project carried
out under such subsection, enabling services will be pro-
vided without charge to the recipients of the services.
(e) USE OF EXISTING RESOURCES.—The Secretary
may make an award of a grant or contract under sub-
section (a) only if the applicant involved agrees that, in
carrying out the project under such subsection, the appli-
609
Title III, Subtitle E
cant will utilize existing resources to the maximum extent
practicable.
(f) APPLICATION FOR AWARDS OF ASSISTANCE.—
The Secretary may make an award of a grant or contract
under subsection (a) only if an application for the award
is submitted to the Secretary, the application contains
each agreement described in this subpart, the application
contains the information required in subsection (d)(1),
and the application is in such form, is made in such man-
ner, and contains such agreements, assurances, and infor-
mation as the Secretary determines to be necessary to
carry out this subpart.
(g) DEFINITION.—For purposes of this section, the
term ‘‘enabling services’’ means services described in sub-
section (b) that are provided for the purpose described in
subsection (a)(1).
SEC. 3462. AUTHORIZATIONS OF APPROPRIATIONS.
(a) ENABLING SERVICES.—For the purpose of car-
rying out section 3461, there are authorized to be appro-
priated $200,000,000 for fiscal year 1996, $300,000,000
for each of the fiscal years 1997 through 1999, and
$100,000,000 for fiscal year 2000.
(b) RELATION TO OTHER FUNDS.—The authoriza-
tions of appropriations established in subsection (a) are
in addition to any other authorizations of appropriations
610
Title III, Subtitle E
that are available for the purpose described in such sub-
section.
PART 3—NATIONAL HEALTH SERVICE CORPS
SEC. 3471. AUTHORIZATIONS OF APPROPRIATIONS.
(a) ADDITIONAL FUNDING; GENERAL CORPS PRO-
GRAM; ALLOCATIONS REGARDING NURSES.—For the pur-
pose of carrying out subpart II of part D of title III of
the Public Health Service Act, and for the purpose of car-
rying out section 3472, there are authorized to be appro-
priated $50,000,000 for fiscal year 1995, $100,000,000
for fiscal year 1996, and $200,000,000 for each of the
fiscal years 1997 through 2000.
(b) RELATION TO OTHER FUNDS.—The authoriza-
tions of appropriations established in subsection (a) are
in addition to any other authorizations of appropriations
that are available for the purpose described in such sub-
section.
(c) AVAILABILITY
OF FUNDS.—An appropriation
under this section for any fiscal year may be made at any
time before that fiscal year and may be included in an
Act making an appropriation under an authorization
under subsection (a) for another fiscal year; but no funds
may be made available from any appropriation under this
section for obligation under sections 331 through 335, sec-
tion 336A, and section 337 before the fiscal year involved.
611
Title III, Subtitle E
SEC. 3472. ALLOCATION FOR PARTICIPATION OF NURSES
IN SCHOLARSHIP AND LOAN REPAYMENT
PROGRAMS.
Of the amounts appropriated under section 3471, the
Secretary shall reserve such amounts as may be necessary
to ensure that, of the aggregate number of individuals who
are participants in the Scholarship Program under section
338A of the Public Health Service Act, or in the Loan
Repayment Program under section 338B of such Act, the
total number who are being educated as nurses or are
serving as nurses, respectively, is increased to 20 percent.
PART 4—PAYMENTS TO HOSPITALS SERVING
VULNERABLE POPULATIONS
SEC. 3481. PAYMENTS TO HOSPITALS.
(a) ENTITLEMENT STATUS.—The Secretary shall
make payments in accordance with this part to eligible
hospitals described in section 3482. The preceding
sentence—
(1) is an entitlement in the Secretary on behalf
of such eligible hospitals (but is not an entitlement
in the State in which any such hospital is located or
in any individual receiving services from any such
hospital); and
(2) constitutes budget authority in advance of
appropriations Acts and represents the obligation of
the Federal Government to provide funding for such
612
Title III, Subtitle E
payments in the amounts, and for the fiscal years,
specified in subsection (b).
(b) AMOUNT OF ENTITLEMENT.—
(1) IN GENERAL.—For purposes of subsection
(a)(2), the amounts and fiscal years specified in this
subsection are (in the aggregate for all eligible hos-
pitals) $800,000,000 for the fiscal year in which the
general effective date occurs and for each subse-
quent fiscal year.
(2) SPECIAL RULE FOR YEARS BEFORE GEN-
ERAL EFFECTIVE DATE.—
(A) IN
GENERAL.—For any fiscal year
that begins prior to the general effective date,
the amount specified in this subsection for pur-
poses of subsection (a)(2) shall be equal to the
aggregate DSH percentage of the amount oth-
erwise determined under paragraph (1).
(B) AGGREGATE
DSH
PERCENTAGE
DE-
FINED.—In subparagraph (A), the ‘‘aggregate
DSH percentage’’ for a year is the amount (ex-
pressed as a percentage) equal to—
(i) the total amount of payment made
by the Secretary under section 1903(a) of
the Social Security Act during the base
year with respect to payment adjustments
613
Title III, Subtitle E
made under section 1923(c) of such Act
for hospitals in the States in which eligible
hospitals for the year are located; divided
by
(ii) the total amount of payment made
by the Secretary under section 1903(a) of
such Act during the base year with respect
to payment adjustments made under sec-
tion 1923(c) of such Act for hospitals in
all States.
(c) PERIOD OF PAYMENT.—An eligible hospital shall
receive a payment under this section for a period of 5
years, without regard to the year for which the hospital
first receives a payment.
(d) PAYMENTS MADE ON QUARTERLY BASIS.—Pay-
ments to an eligible hospital under this section for a year
shall be made on a quarterly basis during the year.
SEC. 3482. IDENTIFICATION OF ELIGIBLE HOSPITALS.
(a) HOSPITALS
IN
PARTICIPATING
STATES.—In
order to be an eligible hospital under this part, a hospital
must be located in a State that is a participating State
under this Act, except that an eligible hospital remains
eligible to receive a payment under this part notwith-
standing that, during the 5-year period for which the pay-
ment is to be made, the State in which it is located no
614
Title III, Subtitle E
longer meets the requirements for participating States
under this Act.
(b) STATE IDENTIFICATION.—In accordance with the
criteria described in subsection (c) and such procedures
as the Secretary may require, each State shall identify the
hospitals in the State that meet such criteria and provide
the Secretary with a list of such hospitals.
(c) CRITERIA FOR ELIGIBILITY.—A hospital meets
the criteria described in this subsection if the hospital’s
low-income utilization rate for the base year under section
1923(b)(3) of the Social Security Act (as such section is
in effect on the day before the date of the enactment of
this Act) is not less than 25 percent.
SEC. 3483. AMOUNT OF PAYMENTS.
(a) DISTRIBUTION
OF ALLOCATION
FOR LOW-IN-
COME ASSISTANCE.—
(1) ALLOCATION
FROM
TOTAL
AMOUNT.—Of
the total amount available for payments under this
section in a year, 75 percent shall be allocated to
hospitals for low-income assistance in accordance
with this subsection.
(2) DETERMINATION
OF
HOSPITAL
PAYMENT
AMOUNT.—The amount of payment to an eligible
hospital from the allocation made under paragraph
615
Title III, Subtitle E
(1) during a year shall be the equal to the hospital’s
low-income percentage of the allocation for the year.
(b) DISTRIBUTION OF ALLOCATION FOR ASSISTANCE
FOR UNCOVERED SERVICES.—
(1) ALLOCATION FROM TOTAL AMOUNT; DETER-
MINATION OF STATE-SPECIFIC PORTION OF ALLOCA-
TION.—Of the total amount available for payments
under this section in a year, 25 percent shall be allo-
cated to hospitals for assistance in furnishing inpa-
tient hospital services that are not covered services
under title I (in accordance with regulations of the
Secretary) in accordance with this subsection. The
amount available for payments to eligible hospitals
in a State shall be equal to an amount determined
in accordance with a methodology specified by the
Secretary.
(2) DETERMINATION
OF
HOSPITAL
PAYMENT
AMOUNT.—The amount of payment to an eligible
hospital in a State from the amount available for
payments to eligible hospitals in the State under
paragraph (1) during a year shall be the equal to
the hospital’s low-income percentage of such amount
for the year.
(c) LOW-INCOME PERCENTAGE DEFINED.—
616
Title III, Subtitle E
(1) IN GENERAL.—In this subsection, an eligi-
ble hospital’s ‘‘low-income percentage’’ for a year is
equal to the amount (expressed as a percentage) of
the total low-income days for all eligible hospitals for
the year that are attributable to the hospital.
(2) LOW-INCOME DAYS DESCRIBED.—For pur-
poses of paragraph (1), an eligible hospital’s low-in-
come days for a year shall be equal to the product
of—
(A) the total number of inpatient days for
the hospital for the year (as reported to the
Secretary by the State in which the hospital is
located, in accordance with a reporting schedule
and procedures established by the Secretary);
and
(B) the hospital’s low-income utilization
rate for the base year under section 1923(b)(3)
of the Social Security Act (as such section is in
effect on the day before the date of the enact-
ment of this Act).
SEC. 3484. BASE YEAR.
In this part, the ‘‘base year’’ is, with respect to a
State and hospitals in a State, the year immediately prior
to the year in which the general effective date occurs.
617
Title III, Subtitle F
Subtitle F—Mental Health;
Substance Abuse
PART 1—FINANCIAL ASSISTANCE
SEC. 3501. AUTHORIZATIONS OF APPROPRIATIONS.
(a) IN GENERAL.—For the purpose of carrying out
this part, there are authorized to be appropriated
$100,000,000 for fiscal year 1995, $150,000,000 for fis-
cal year 1996, and $250,000,000 for each of the fiscal
years 1997 through 2000.
(b) 
ALLOCATION
AMONG
PROGRAMS.—Of 
the
amounts made available under subsection (a) for a fiscal
year—
(1) the Secretary may reserve for carrying out
section 3503 such amounts as the Secretary deter-
mines to be appropriate; and
(2) the Secretary shall, of the remaining
amounts, reserve 50 percent for carrying out sub-
section (a) of section 3502 and 50 percent for car-
rying out subsection (b) of such section.
(c) RELATION TO OTHER FUNDS.—The authoriza-
tions of appropriations established in subsection (a) are
in addition to any other authorizations of appropriations
that are available for the purpose described in such sub-
section.
621
Title III, Subtitle F
(D) Any activity for which a grant under
section 1911 or section 1921 of the Public
Health Service Act is authorized to be ex-
pended.
(d) MAINTENANCE OF EFFORT.—
(1) IN GENERAL.—With respect to the activities
for which a grant under subsection (a) or (b) is to
be made, the Secretary may make the grant only if
the State involved agrees to maintain expenditures
of non-Federal amounts for such activities at a level
that is not less than the level of such expenditures
maintained by the State for the fiscal year preceding
the first fiscal year for which the State receives such
a grant.
(2) WAIVER.—The Secretary may waive all or
part of the requirement established for a State
under paragraph (1) if—
(A) the State agrees that the amounts that
otherwise would have been subject to such re-
quirement will be expended for the purpose of
developing community-based systems of care to
promote the eventual integration of the public
and private systems for treatment of mental
health, or substance abuse, as applicable to the
grant;
622
Title III, Subtitle F
(B) the State submits to the Secretary a
request for the waiver and a description of the
manner in which the State will carry out such
purpose; and
(C) the Secretary approves the waiver.
(e) APPLICATION FOR GRANT.—For purposes of sub-
section (a)(1) and (b)(1), an application for a grant under
this section regarding mental health or substance abuse,
respectively, is in accordance with this subsection if the
State involved submits the application not later than the
date specified by the Secretary, the application contains
each applicable agreement described in this section, and
the application otherwise is in such form, is made in such
manner, and contains such agreements, assurances, and
information as the Secretary determines to be necessary
to carry out the purpose involved.
SEC. 3503. CAPITAL COSTS OF DEVELOPMENT OF CERTAIN
CENTERS AND CLINICS.
(a) IN GENERAL.—The Secretary may make loans to,
and guarantee the payment of principal and interest to
Federal and non-Federal lenders on behalf of, public and
private entities for the capital costs to be incurred by the
entities in the development of non-acute, residential treat-
ment centers and community-based ambulatory clinics.
623
Title III, Subtitle F
(b) PRIORITIES REGARDING USE
OF FUNDS.—In
providing loans or loan guarantees under subsection (a),
the Secretary shall give priority to authorizing the use of
amounts for projects in health professional shortage areas
or in geographic area in which there resides a significant
number of individuals who are members of a medically un-
derserved population.
(c) APPLICABILITY OF CERTAIN PROVISIONS.—The
Secretary may provide loans or loan guarantees under
subsection (a) only if the applicant involved agrees that,
except to the extent inconsistent with the purpose de-
scribed in subsection (a), subpart C of part 2 of subtitle
E applies to such assistance to the same extent and in
the same manner as such subpart applies to loans and
loan guarantees under section 3441.
PART 2—AUTHORITIES REGARDING
PARTICIPATING STATES
Subpart A—Report
SEC. 3511. REPORT ON INTEGRATION OF MENTAL HEALTH
SYSTEMS.
(a) IN GENERAL.—As a condition of being a partici-
pating State under title I, each State shall, not later than
October 1, 1998, submit to the Secretary a report on (in-
cluding a plan for) the measures to be implemented by
the State to achieve the integration of the mental illness
624
Title III, Subtitle F
and substance abuse services of the State and its political
subdivisions with the mental illness and substance abuse
services that are included in the comprehensive benefit
package under title I. The plan required in the preceding
sentence shall meet the conditions described in section
3074(b).
(b) REQUIRED CONTENTS.—With respect to the pro-
vision of items and services relating to mental illness and
substance abuse, the report of a State under subsection
(a) shall, at a minimum, contain the following information:
(1) Information on the number of individuals
served by or through mental illness and substance
abuse programs administered by State and local
agencies and the proportion who are eligible persons
under title I.
(2) The following information on services fur-
nished to eligible persons:
(A) Each type of benefit furnished.
(B) The mental illness diagnoses for which
each type of benefit is covered, the amount, du-
ration and scope of coverage for each covered
benefit, and any applicable limits on benefits.
(C) Cost sharing rules that apply.
(3) Information on the extent to which each
health provider furnishing mental illness and sub-
625
Title III, Subtitle F
stance abuse services under a State program partici-
pates in one or more regional or corporate alliance
health plans, and, in the case of providers that do
not so participate, the reasons for the lack of par-
ticipation.
(4) The amount of revenues from health plans
received by mental illness and substance abuse pro-
viders that are participating in such health plans
and are funded under one or more State programs.
(5) With respect to the two years preceding the
year in which the State becomes a participating
State under title I—
(A) the amount of funds expended by the
State and its political subdivisions for each of
such years for items and services that are in-
cluded in the comprehensive benefit package
under such title;
(B) the amount of funds expended for
medically necessary and appropriate items and
services not included in such benefit package,
including medical care, other health care, and
supportive services related to the provision of
health care.
(6) An estimate of the amount that the State
will expend to furnish items and services not in-
626
Title III, Subtitle F
cluded in such package once the expansion of cov-
erage for mental illness and substance abuse services
is implemented in the year 2001.
(7) A description of how the State will assure
that all individuals served by mental illness and sub-
stance abuse programs funded by the State will be
enrolled in a health plan and how mental illness and
substance abuse services not covered under the ben-
efit package will continue to be furnished to such en-
rollees.
(8) A description of the conditions under which
the integration of mental illness and substance abuse
providers into regional and corporate alliances can
be achieved, and an identification of changes in par-
ticipation and certification requirements that are
needed to achieve the integration of such programs
and providers into health plans.
(9) If the integration of mental illness and sub-
stance abuse programs operated by the State into
one or more health plans is not medically appro-
priate or feasible for one or more groups of individ-
uals treated under State programs, a description of
the reasons that integration is not feasible or appro-
priate and a plan for assuring the coordination for
such individuals of the care and services covered
627
Title III, Subtitle F
under the comprehensive benefit package with the
additional items and services furnished by such pro-
grams.
(c) GENERAL
PROVISIONS.—Reports under sub-
section (a) shall be provided at the time and in the manner
prescribed by the Secretary.
Subpart B—Pilot Program
SEC. 3521. PILOT PROGRAM.
(a) IN GENERAL.—The Secretary shall establish a
pilot program to demonstrate model methods of achieving
the integration of the mental illness and substance abuse
services of the States with the mental illness and sub-
stance abuse services that are included in the comprehen-
sive benefit package under title I.
(b) CERTAIN CONSIDERATIONS.—With respect to the
provision of items and services relating to mental illness
and substance abuse, the Secretary, in carrying out sub-
section (a), shall consider the following:
(1) The types of items and services needed in
addition to the items and services included in the
comprehensive benefits package under title I.
(2) The optimal methods of treatment for indi-
viduals with long-term conditions.
(3) The capacity of alliance health plans to fur-
nish such treatment.
628
Title III, Subtitle G
(4) The modifications that should be made in
the items and services furnished by such health
plans.
(5) The role of publicly-funded health providers
in the integration of acute and long-term treatment.
Subtitle G—Comprehensive School
Health 
Education; 
School-Re-
lated Health Services
PART 1—GENERAL PROVISIONS
SEC. 3601. PURPOSES.
Subject to the subsequent provisions of this subtitle,
the purposes of this subtitle are as follows:
(1) To support the provision in kindergarten
through grade 12 of sequential, age-appropriate,
comprehensive health education programs that ad-
dress locally relevant priorities.
(2) To establish a national framework within
which States can create comprehensive school health
education programs that—
(A) target the health risk behaviors ac-
counting for the majority of the morbidity and
mortality among youth and adults, including
the following: Tobacco use; alcohol and other
drug abuse; sexual behaviors resulting in infec-
tion with the human immunodeficiency virus, in
629
Title III, Subtitle G
other sexually transmitted diseases or in unin-
tended pregnancy; behaviors resulting in inten-
tional and unintentional injuries; dietary pat-
terns resulting in disease; and sedentary life-
styles; and
(B) are integrated with plans and pro-
grams in the State, if any, under title III of the
Goals 2000: Educate America Act and those
targeting health promotion and disease preven-
tion goals related to the national health objec-
tives set forth in Healthy People 2000.
(3) To pay the initial costs of planning and es-
tablishing Statewide comprehensive school health
education programs that will be implemented and
maintained with local, State, and other Federal re-
sources.
(4) To support Federal activities such as re-
search and demonstrations, evaluations, and training
and technical assistance regarding comprehensive
school health education.
(5) To motivate youth, especially low-achieving
youth, to stay in school, avoid teen pregnancy, and
strive for success by providing intensive, high-quality
health education programs that include peer-teach-
ing, family, and community involvement.
630
Title III, Subtitle G
(6) To improve the knowledge and skills of chil-
dren and youth by integrating academic and experi-
ential learning in health education with other ele-
ments of a comprehensive school health program.
(7) To further the National Education Goals
set forth in title I of the Goals 2000: Educate Amer-
ica Act and the national health objectives set forth
in Healthy People 2000.
SEC. 3602. DEFINITIONS.
(a) COMPREHENSIVE SCHOOL HEALTH EDUCATION
PROGRAM.—For purposes of this subtitle, the term ‘‘com-
prehensive school health education program’’ means a pro-
gram that addresses locally relevant priorities and meets
the following conditions:
(1) The program is sequential, and age and de-
velopmentally appropriate.
(2) The program is provided, in the area served
by the program, every year for all students from kin-
dergarten through grade 12.
(3) The program provides comprehensive health
education, including the following components:
(A) Community health.
(B) Environmental health.
(C) Personal health.
(D) Family life.
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Title III, Subtitle G
(E) Growth and development.
(F) Nutritional health.
(G) Prevention and control of disease and
disorders.
(H) Safety and prevention of injuries.
(I) Substance abuse, including tobacco and
alcohol use.
(J) Consumer health, including education
to ensure that students understand the benefits
and appropriate use of medical services, includ-
ing immunizations and other clinical preventive
services.
(4) The program promotes personal responsi-
bility for a healthy lifestyle and provides the knowl-
edge and skills necessary to adopt a healthy lifestyle,
including teaching the legal, social, and health con-
sequences of behaviors that pose health risks.
(5) The program is sensitive to cultural and
ethnic issues in the content of instructional mate-
rials and approaches.
(6) The program includes activities that sup-
port instruction.
(7) The program includes activities to promote
involvement by parents, families, community organi-
zations, and other appropriate entities.
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Title III, Subtitle G
(8) The program is coordinated with other Fed-
eral, State, and local health education and preven-
tion programs and with other Federal, State and
local education programs, including those carried out
under title I of the Elementary and Secondary Edu-
cation Act of 1965.
(9) The program focuses on the particular
health concerns of the students in the State, school
district, or school, as the case may be.
(b) OTHER DEFINITIONS.—For purposes of this sub-
title:
(1) The term ‘‘local educational agency’’ has
the meaning given such term in section 1471(12) of
the Elementary and Secondary Education Act of
1965.
(2) The term ‘‘State educational agency’’ has
the meaning given such term in section 1471(23) of
the Elementary and Secondary Education Act of
1965.
PART 2—SCHOOL HEALTH EDUCATION; GENERAL
PROVISIONS
SEC. 3611. AUTHORIZATIONS OF APPROPRIATIONS.
(a) FUNDING FOR SCHOOL HEALTH EDUCATION.—
For the purpose of carrying out parts 3 and 4, there are
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Title III, Subtitle G
authorized to be appropriated $50,000,000 for each of the
fiscal year 1995 through 2000.
(b) ALLOCATIONS.—Of the amounts appropriated
under subsection (a) for a fiscal year—
(1) the Secretary may reserve not more than
$13,000,000 for carrying out part 4;
(2) the Secretary may reserve not more than
$5,000,000 to support national leadership activities,
such as research and demonstration, evaluation, and
training and technical assistance in comprehensive
school health education; and
(3) the Secretary may reserve not more than 5
percent for administrative expenses regarding parts
3 and 4.
(c) RELATION TO OTHER FUNDS.—The authoriza-
tions of appropriations established in subsection (a) are
in addition to any other authorizations of appropriations
that are available for the purpose described in such sub-
section.
SEC. 3612. WAIVERS OF STATUTORY AND REGULATORY RE-
QUIREMENTS.
(a) IN GENERAL.—
(1) WAIVERS.—Except as provided in sub-
section (c), upon the request of an entity receiving
funds under part 3 or part 4 and under a program
634
Title III, Subtitle G
specified in paragraph (2), the Secretary of Health
and Human Services or the Secretary of Education
(as the case may be, according to which Secretary
administers the program so specified) may grant to
the entity a waiver of any requirement of such pro-
gram regarding the use of funds, or of the regula-
tions issued for the program by the Secretary in-
volved, if the following conditions are met with re-
spect to such program:
(A) The Secretary involved determines that
the requirement of such program impedes the
ability of the State educational agency or other
recipient to achieve more effectively the pur-
poses of part 3 or 4.
(B) The Secretary involved determines
that, with respect to the use of funds under
such program, the requested use of the funds
by the entity would be consistent with the pur-
poses of part 3 or 4.
(C) In the case of a request for a waiver
submitted by a State educational agency, the
State educational agency—
(i) provides all interested local edu-
cational agencies in the State with notice
635
Title III, Subtitle G
and an opportunity to comment on the
proposal; and
(ii) submits the comments to the Sec-
retary involved.
(D) In the case of a request for a waiver
submitted by a local educational agency or
other agency, institution, or organization that
receives funds under part 3 from the State edu-
cational agency, such request has been reviewed
by the State educational agency and is accom-
panied by the comments, if any, of such agency.
(2) RELEVANT
PROGRAMS.—For purposes of
paragraph (1), the programs specified in this para-
graph are as follows:
(A) In the case of programs administered
by the Secretary of Health and Human Serv-
ices, the following:
(i) The program known as the Preven-
tion, Treatment, and Rehabilitation Model
Projects for High Risk Youth, carried out
under section 517 of the Public Health
Service Act.
(ii) The program known as the State
and Local Comprehensive School Health
Programs to Prevent Important Health
636
Title III, Subtitle G
Problems and Improve Educational Out-
comes, carried out under such Act.
(B) In the case of programs administered
by the Secretary of Education, any program
carried out under part B of the Drug-Free
Schools and Communities Act of 1986.
(b) WAIVER PERIOD.—
(1) IN GENERAL.—A waiver under this section
shall be for a period not to exceed three years.
(2) 
EXTENSIONS.—The 
Secretary 
involved
under subsection (a) may extend such period if the
Secretary determines that—
(A) the waiver has been effective in ena-
bling the State or affected recipients to carry
out the activities for which it was requested and
has contributed to improved performance; and
(B) such extension is in the public interest.
(c) WAIVERS NOT AUTHORIZED.—The Secretary in-
volved under subsection (a) may not waive, under this sec-
tion, any statutory or regulatory requirement relating to—
(1) comparability of services;
(2) maintenance of effort;
(3) the equitable participation of students at-
tending private schools;
(4) parental participation and involvement;
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Title III, Subtitle G
(5) the distribution of funds to States or to
local educational agencies or other recipients of
funds under the programs specified in subsection
(a)(2);
(6) maintenance of records;
(7) applicable civil rights requirements; or
(8) the requirements of sections 438 and 439 of
the General Education Provisions Act.
(d) TERMINATION OF WAIVER.—The Secretary in-
volved under subsection (a) shall terminate a waiver under
this section if the Secretary determines that the perform-
ance of the State or other recipient affected by the waiver
has been inadequate to justify a continuation of the waiver
or if it is no longer necessary to achieve its original pur-
poses.
PART 3—SCHOOL HEALTH EDUCATION; GRANTS
TO STATE EDUCATION AGENCIES
Subpart A—Planning Grants for State Education
Agencies
SEC. 3621. APPLICATION FOR GRANT.
(a) IN GENERAL.—Any State educational agency
that wishes to receive a planning grant under this subpart
shall submit an application to the Secretary of Health and
Human Services, at such time and in such manner as the
Secretary may require.
638
Title III, Subtitle G
(b) APPLICATION; JOINT
DEVELOPMENT; CON-
TENTS.—An application under subsection (a) shall be
jointly developed by the State educational agency and the
State health agencies of the State involved, and shall con-
tain the following:
(1) An assessment of the State’s need for com-
prehensive school health education, using goals es-
tablished by the Department of Health and Human
Services and the Department of Education and the
State’s school improvement plan, if any, under title
III of Goals 2000: Educate America Act.
(2) A description of how the State educational
agency will collaborate with the State health agency
in the planning and development of a comprehensive
school health education program in the State, in-
cluding coordination of existing health education
programs and resources.
(3) A plan to build capacity at the State and
local levels to provide staff development and tech-
nical assistance to local educational agency and local
health agency personnel involved with comprehensive
school health education.
(4) A preliminary plan for evaluating com-
prehensive school health education activities.
639
Title III, Subtitle G
(5) Information demonstrating that the State
has established a State-level advisory council whose
membership includes representatives of the State
agencies with principal responsibilities for programs
regarding health, education, and mental health.
(6) A timetable and proposed budget for the
planning process.
(7) Such other information and assurances as
the Secretary may require.
(c) NUMBER OF GRANTS.—States may receive one
planning grant annually and no more than two planning
grants may be awarded to any one State.
SEC. 3622. APPROVAL OF SECRETARY.
The Secretary may approve the application of a State
under section 3621 if the Secretary determines that—
(1) the application meets the requirements of
this subpart; and
(2) there is a substantial likelihood that the
State will be able to develop and implement a com-
prehensive school health education plan that com-
plies with the requirements of subpart B.
SEC. 3623. AMOUNT OF GRANT.
For any fiscal year, the minimum grant to any State
under this subpart is an amount determined by the Sec-
retary to be necessary to enable the State to conduct the
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Title III, Subtitle G
planning process, and the maximum such grant is
$500,000.
SEC. 3624. AUTHORIZED ACTIVITIES.
A State may use funds received under this subpart
only for the following:
(1) To establish and carry out the State plan-
ning process.
(2) To conduct Statewide or sub-State regional
coordination and collaboration activities for local
educational agencies, local health agencies, and other
agencies and organizations, as appropriate.
(3) To conduct activities to build capacity to
provide staff development and technical assistance
services to local educational agency and local health
agency personnel involved with comprehensive school
health education.
(4) To develop student learning objectives and
assessment instruments.
(5) To work with State and local health agen-
cies and State and local educational agencies to re-
duce barriers to the implementation of comprehen-
sive school health education programs in schools.
(6) To prepare the plan required to receive an
implementation grant under subpart B.
641
Title III, Subtitle G
(7) To adopt, validate, and disseminate cur-
riculum models and program strategies, if the Sec-
retary determines that such activities are necessary
to achieving the objectives of the State’s program.
Subpart B—Implementation Grants for State
Education Agencies
SEC. 3631. APPLICATION FOR GRANT.
(a) IN GENERAL.—Any State that wishes to receive
an implementation grant under this subpart shall submit
an application to the Secretary of Health and Human
Services, at such time, in such manner, and containing
such information and assurances as the Secretary may re-
quire.
(b) APPLICATION AND STATE PLAN; JOINT DEVEL-
OPMENT; CONTENTS.—An application under subsection
(a) shall be jointly developed by the State educational
agency and the State health agencies of the State involved,
and shall include a State plan for comprehensive school
health education programs (as defined in section 3602)
that describes the following:
(1) The State’s goals and objectives for those
programs.
(2) How the State will allocate funds to local
educational agencies in accordance with section
3634.
642
Title III, Subtitle G
(3) How the State will coordinate programs
under this subpart with other local, State and Fed-
eral health education programs.
(4) How comprehensive school health education
programs will be coordinated with other local, State
and Federal education programs, such as programs
under title I of the Elementary and Secondary Edu-
cation Act of 1965, with the State’s school improve-
ment plan, if any, under title III of the Goals 2000:
Educate America Act, and with any similar pro-
grams.
(5) How the State has worked with State and
local education agencies and with State and local
health agencies to reduce barriers to implementing
comprehensive school health education programs.
(6) How the State will monitor the implementa-
tion of such programs by local educational agencies.
(7) How the State will build capacity for profes-
sional development of health educators.
(8) How the State will provide staff develop-
ment and technical assistance to local educational
agencies.
(9) The respective roles of the State educational
agency, local educational agencies, the State health
agency, and the local health agencies in developing
643
Title III, Subtitle G
and implementing such school health education pro-
grams.
(10) How such school health education pro-
grams will be tailored to the extent practicable to be
culturally and linguistically sensitive and responsive
to the various needs of the students served, includ-
ing individuals with disabilities, and individuals from
disadvantaged backgrounds (including racial and
ethnic minorities).
(11) How the State will evaluate and report on
the State’s progress toward attaining the goals and
objectives described in paragraph (1).
SEC. 3632. SELECTION OF GRANTEES.
(a) SELECTION OF GRANTEES.—The Secretary shall
establish criteria for the competitive selection of grantees
under this subpart.
(b) OPPORTUNITY FOR PLANNING GRANT.—If the
Secretary does not approve a State’s application under
this subpart and determines that the State could benefit
from a planning grant under subpart A, the Secretary
shall inform the State of any planning grant funds that
may be available to it under subpart A, subject to section
3621(c).
644
Title III, Subtitle G
SEC. 3633. AMOUNT OF GRANT.
(a) IN GENERAL.—For any fiscal year, the minimum
grant to any State under this subpart is an amount deter-
mined by the Secretary to be necessary to enable the State
to conduct the implementation process.
(b) CRITERIA.—In determining the amount of any
such grant, the Secretary may consider such factors as
the number of children enrolled in schools in the State,
the number of school-aged children living in poverty in the
State, and the scope and quality of the State’s plan.
SEC. 3634. AUTHORIZED ACTIVITIES; LIMITATION ON AD-
MINISTRATIVE COSTS.
(a) SUBGRANTS
TO LOCAL EDUCATIONAL AGEN-
CIES.—Each State that receives funds under this subpart
for any fiscal year shall retain not more than 75 percent
of those funds in the first year, 50 percent of those funds
in the second and third years, and 25 percent of those
funds in each succeeding year. Those funds not retained
by the State shall be used to make grants to local edu-
cational agencies in accordance with section 3635.
(b) STATE-LEVEL ACTIVITIES.—Each State shall use
retained funds for any fiscal year for the following pur-
poses:
(1) To conduct Statewide or sub-State regional
coordination and collaboration activities.
645
Title III, Subtitle G
(2) To adapt, validate, or disseminate program
models or strategies for comprehensive school health
education.
(3) To build capacity to deliver staff develop-
ment and technical assistance services to local edu-
cational agencies, and State and local health agen-
cies.
(4) To promote program activities involving
families and coordinating program activities with
community groups and agencies.
(5) To evaluate and report to the Secretary on
the progress made toward attaining the goals and
objectives described in section 3621(b)(1).
(6) To conduct such other activities to achieve
the objectives of this subpart as the Secretary may
by regulation authorize.
(c) STATE ADMINISTRATION.—Of the amounts re-
ceived by a State for a fiscal year under this subpart and
remaining after any grants to local educational agencies
made from such amounts, the State may use up to 10
percent for the costs of administering such amounts, in-
cluding the activities of the State advisory council and
monitoring the performance of local educational agencies.
646
Title III, Subtitle G
SEC. 3635. SUBGRANTS TO LOCAL EDUCATIONAL AGEN-
CIES.
(a) APPLICATION
FOR
GRANT.—Any local edu-
cational agency that wishes to receive a grant under this
subpart shall submit an application to the State, con-
taining such information and assurances as the State may
require, including a description of the following:
(1) The local educational agency’s goals and ob-
jectives for comprehensive school health education
programs.
(2) How the local educational agency will con-
centrate funds in high-need schools and provide suf-
ficient funds to targeted schools to ensure the imple-
mentation of comprehensive programs.
(3) How the local educational agency will mon-
itor the implementation of these programs.
(4) How the local educational agency will en-
sure that school health education programs are tai-
lored to the extent practicable to be culturally and
linguistically sensitive and responsive to the various
needs of the students served, including individuals
with disabilities, and individuals from disadvantaged
backgrounds (including racial and ethnic minorities).
(5) How the local educational agency, in con-
sultation with the local health agency, will evaluate
647
Title III, Subtitle G
and report on its progress toward attaining the goals
and objectives described in paragraph (1).
(b) SELECTION OF SUBGRANTEES.—Each State shall
give priority to applications from local educational agen-
cies serving areas with high needs, as indicated by criteria
developed by the State, which shall include, but need not
be limited to, high rates of any of the following:
(1) Poverty among school-aged youth.
(2) Births to adolescents.
(3) Sexually transmitted diseases among school-
aged youth.
(4) Drug and alcohol use among school-aged
youth.
(5) Violence among school-aged youth.
(c) AUTHORIZED
ACTIVITIES.—Each local edu-
cational agency that receives a grant under this subpart
shall use the grant funds to implement comprehensive
school health education programs, as defined in section
3602.
Subpart C—State and Local Reports
SEC. 3641. STATE AND LOCAL REPORTS.
(a) STATE REPORTS.—Each State that receives a
grant under this part shall collect and submit to the Sec-
retary such data and other information on State and local
programs as the Secretary may require.
648
Title III, Subtitle G
(b) IN GENERAL.— Each local educational agency
that receives a grant under subpart B shall collect and
report to the State such data and other information as
the Secretary may require.
PART 4—SCHOOL HEALTH EDUCATION; GRANTS
TO CERTAIN LOCAL EDUCATIONAL AGENCIES
Subpart A—Eligibility
SEC. 3651. SUBSTANTIAL NEED OF AREA SERVED BY
AGENCY.
Any local educational agency is eligible for a grant
under this part for any fiscal year if—
(1) the agency enrolls at least 25,000 students;
and
(2) the geographic area served by the agency
has a substantial need for such a grant, relative to
other geographic areas in the United States.
Subpart B—Planning Grants for Local Education
Agencies
SEC. 3661. APPLICATION FOR GRANT.
(a) IN GENERAL.—Any local educational agency that
wishes to receive a planning grant under this subpart shall
submit an application to the Secretary of Health and
Human Services at such time and in such manner as the
Secretary may require.
649
Title III, Subtitle G
(b) STATE EDUCATIONAL AGENCY REVIEW.—Each
such local educational agency, before submitting its appli-
cation to the Secretary, shall submit the application to the
State educational agency for comment by such agency and
by the State health agencies of the State.
(c) CONTENTS OF APPLICATIONS.—Each such appli-
cation shall contain the following:
(1) An assessment of the local educational
agency’s need for comprehensive school health edu-
cation, using goals established by the Department of
Health and Human Services and the Department of
Education, as well as local health and education
strategies, such as State school improvement plans,
if any, under title III of the Goals 2000: Educate
America Act.
(2) Information demonstrating that the local
educational agency has established or selected a
community-level advisory council, which shall include
representatives of relevant community agencies such
as those that administer education, child nutrition,
health, and mental health programs.
(3) A description of how the local educational
agency will collaborate with the State educational
agency, the State health agency, and the local health
agency in the planning and development of a com-
650
Title III, Subtitle G
prehensive school health education program in the
local educational agency, including coordination of
existing health education programs and resources.
(4) A plan to build capacity at the local edu-
cational agency to provide staff development and
technical assistance to local educational agency and
local health agency personnel involved with com-
prehensive school health education.
(5) A preliminary plan for evaluating com-
prehensive school health education activities.
(6) A timetable and proposed budget for the
planning process.
(7) Such other information and assurances as
the Secretary may require.
(d) NUMBER OF GRANTS.—Local educational agen-
cies may receive at a maximum two annual planning
grants.
SEC. 3662. SELECTION OF GRANTEES.
(a) SELECTION CRITERIA.—The Secretary shall es-
tablish criteria for the competitive selection of grantees
under this part.
(b) LIMITATION.—The Secretary shall not approve
an application from a local educational agency in a State
that has an approved plan under subpart A or B of part
3 of this subtitle unless the Secretary determines, after
651
Title III, Subtitle G
consultation with the State that the local application is
consistent with the State plan, if one exists.
SEC. 3663. AMOUNT OF GRANT.
For any fiscal year, the minimum grant to any local
educational agency under this subpart is an amount deter-
mined by the Secretary to be necessary to enable the local
educational agency to conduct the planning process, and
the maximum such grant is $500,000.
SEC. 3664. AUTHORIZED ACTIVITIES.
A local educational agency may use funds received
under this subpart only for the following:
(1) To establish and carry out the local edu-
cational agency planning process.
(2) To undertake joint training, staffing, ad-
ministration, and other coordination and collabora-
tion activities for local educational agencies, local
health agencies, and other agencies and organiza-
tions, as appropriate.
(3) To conduct activities to build capacity to
provide staff development and technical assistance
services to local educational agency and local health
agency personnel involved with comprehensive school
health education.
(4) To develop student learning objectives and
assessment instruments.
652
Title III, Subtitle G
(5) To work with State and local health agen-
cies and State educational agencies to reduce bar-
riers to the implementation of comprehensive school
health education programs in schools, by, for exam-
ple, ensuring that adequate time is a available dur-
ing the school day for such programs.
(6) To prepare the plan required to receive an
implementation grant under subpart C.
Subpart C—Implementation Grants for Local
Educational Agencies
SEC. 3671. APPLICATION FOR GRANT.
(a) IN GENERAL.—Any local educational agency that
wishes to receive an implementation grant under this sub-
part shall submit an application to the Secretary of Health
and Human Services, at such time, in such manner, and
containing such information and assurances as the Sec-
retary may require.
(b) STATE EDUCATIONAL AGENCY REVIEW.—Each
such local educational agency shall submit its application
to the State educational agency for comment before sub-
mitting it to the Secretary.
(c) LOCAL EDUCATIONAL AGENCY PLAN.—Each
such application shall include a local educational agency
plan for comprehensive school health education programs
(as defined in section 3602) that describes the following:
653
Title III, Subtitle G
(1) The local educational agency’s goals and ob-
jectives for those programs.
(2) How the local educational agency will co-
ordinate programs under this subpart with other
local, State and Federal health education programs.
(3) How comprehensive school health education
programs will be coordinated with other local, State
and Federal education programs, such as programs
under title I of the Elementary and Secondary Edu-
cation Act of 1965, and with State’s school improve-
ment plan, if any, under title III of the Goals 2000:
Educate America Act.
(4) How the local educational agency has
worked with State educational agencies and with
State and local health agencies to reduce barriers to
implementing comprehensive school health education
programs.
(5) How local educational agencies will monitor
the implementation of such programs.
(6) How the local educational agency, in con-
sultation with the State educational agency and
State and local health agencies and in conjunction
with other local professional development activities,
will build capacity for professional development of
health educators.
654
Title III, Subtitle G
(7) How the local educational agency, in con-
sultation with the State educational agency and
State and local health agencies, will provide staff de-
velopment and technical assistance.
(8) The respective roles of the State educational
agency, local educational agencies, the State health
agency, and the local health agencies in developing
and implementing such school health education pro-
grams.
(9) How such school health education programs
will be tailored to the extent practicable to be cul-
turally and linguistically sensitive and responsive to
the various needs of the students served, including
individuals with disabilities, and individuals from
disadvantaged backgrounds (including racial and
ethnic minorities).
(10) How the local educational agency, in con-
sultation with the local health agency, will evaluate
and report on the local educational agency’s progress
toward attaining the goals and objectives described
in paragraph (1).
SEC. 3672. SELECTION OF GRANTEES.
(a) SELECTION OF GRANTEES.—The Secretary shall
establish criteria for the competitive selection of grantees
under this subpart.
655
Title III, Subtitle G
(b) LIMITATION.—The Secretary shall not approve
an application from a local educational agency in a State
that has an approved plan under subpart A or B of part
3 unless the Secretary determines, after consultation with
the State that the local application is consistent with such
State plan.
(c) OPPORTUNITY FOR PLANNING GRANT.—If the
Secretary does not approve a local educational agency’s
application under this subpart and determines that the
local educational agency could benefit from a planning
grant under subpart B, the Secretary shall inform the
local educational agency of any planning grant funds that
may be available to it under subpart B, subject to section
3661(d).
SEC. 3673. AMOUNT OF GRANT.
(a) IN GENERAL.—For any fiscal year, the minimum
grant to any local educational agency under this subpart
is an amount determined by the Secretary to be necessary
to enable the local educational agency to conduct the im-
plementation process.
(b) CRITERIA.—In determining the amount of any
such grant, the Secretary may consider such factors as
the number of children enrolled in schools in the local edu-
cational agency, the number of school-aged children living
656
Title III, Subtitle G
in poverty in the local educational agency, and the scope
and quality of the local educational agency’s plan.
SEC. 3674. AUTHORIZED ACTIVITIES.
Each local educational agency that receives a grant
under this subpart shall use the grant funds as follows:
(1) To implement comprehensive school health
education programs, as defined in section 3602.
(2) To conduct local or regional coordination
and collaboration activities.
(3) To provide staff development and technical
assistance to schools, local health agencies, and
other community agencies involved in providing com-
prehensive school health education programs.
(4) To administer the program and monitor
program implementation at the local level.
(5) To evaluate and report to the Secretary on
the local educational agency’s progress toward at-
taining the goals and objectives described in section
3671(c)(1).
(6) To conduct such other activities as the Sec-
retary may by regulation authorize.
SEC. 3675. REPORTS.
Each local educational agency that receives a grant
under this subpart shall collect and report to the Secretary
657
Title III, Subtitle G
and the State such data and other information as the Sec-
retary may require.
PART 5—SCHOOL-RELATED HEALTH SERVICES
Subpart A—Development and Operation of Projects
SEC. 3681. AUTHORIZATIONS OF APPROPRIATIONS.
(a) FUNDING FOR SCHOOL-RELATED HEALTH SERV-
ICES.—For the purpose of carrying out this subpart, there
are authorized to be appropriated $100,000,000 for fiscal
year 
1996, 
$275,000,000 
for 
fiscal 
year 
1997,
$350,000,000 for fiscal year 1998, and $400,000,000 for
each of the fiscal years 1999 and 2000.
(b) RELATION TO OTHER FUNDS.—The authoriza-
tions of appropriations established in subsection (a) are
in addition to any other authorizations of appropriations
that are available for the purpose described in such sub-
section.
SEC. 3682. ELIGIBILITY FOR DEVELOPMENT AND OPER-
ATION GRANTS.
(a) IN GENERAL.—Entities eligible to apply for and
receive grants under section 3484 or 3485 are the fol-
lowing:
(1) State health agencies that apply on behalf
of local community partnerships and other commu-
nities in need of adolescent health services within the
State.
658
Title III, Subtitle G
(2) Local community partnerships in States in
which health agencies have not applied.
(b) LOCAL COMMUNITY PARTNERSHIPS.—
(1) IN GENERAL.—A local community partner-
ship under subsection (a)(2) is an entity that, at a
minimum, includes—
(A) a local health care provider with expe-
rience in delivering services to adolescents;
(B) one or more local public schools; and
(C) at least one community based organi-
zation located in the community to be served
that has a history of providing services to at-
risk youth in the community.
(2) PARTICIPATION.—A partnership described
in paragraph (1) shall, to the maximum extent fea-
sible, involve broad based community participation
from parents and youth to be served, health and so-
cial service providers (including regional alliance
health plans and corporate alliance health plans in
which families in the community are enrolled),
teachers and other public school and school board
personnel, the regional health alliance in which the
schools participating in the partnership are located,
youth development and service organizations, and in-
terested business leaders. Such participation may be
659
Title III, Subtitle G
evidenced through an expanded partnership, or an
advisory board to such partnership.
SEC. 3683. PREFERENCES.
(a) IN GENERAL.—In making grants under sections
3484 and 3485, the Secretary shall give preference to ap-
plicants whose communities to be served show the most
substantial level of need for such services among individ-
uals who are between the ages of 10 and 19 (inclusive),
as measured by indicators of community health including
the following:
(1) High levels of poverty.
(2) The presence of a medically underserved
area or population (as defined under section 330(a)
of the Public Health Service Act).
(3) A health professional shortage area, as des-
ignated under section 332 of the Public Health Serv-
ice Act.
(4) High rates of indicators of health risk
among children and youth, including a high propor-
tion of children receiving services through the Indi-
viduals with Disabilities Education Act, adolescent
pregnancy, sexually transmitted disease (including
infection with the human immunodeficiency virus),
preventable disease, communicable disease, inten-
tional and unintentional injuries among children and
660
Title III, Subtitle G
youth, community and gang violence, youth unem-
ployment, juvenile justice involvement, and high
rates of drug and alcohol exposure.
(b) LINKAGE TO QUALIFIED COMMUNITY HEALTH
GROUPS.—In making grants under sections 3484 and
3485, the Secretary shall give preference to applicants
that demonstrate a linkage to qualified community health
groups (as defined in section 3421(a)).
SEC. 3684. GRANTS FOR DEVELOPMENT OF PROJECTS.
(a) IN GENERAL.—The Secretary may make grants
to State health agencies or to local community partner-
ships to develop school health service sites.
(b) USE OF FUNDS.—A project for which a grant
may be made under subsection (a) may include but not
be limited to the cost of the following:
(1) Planning for the provision of school health
services.
(2) Recruitment, compensation, and training of
health and administrative staff.
(3) The development of agreements with re-
gional and corporate alliance health plans and the
acquisition and development of equipment and infor-
mation services necessary to support information ex-
change between school health service sites and
661
Title III, Subtitle G
health plans, health providers, and other entities au-
thorized to collect information under this Act.
(4) In the case of communities described in
subsection (d)(2)(B), funds to aid in the establish-
ment of local community partnerships.
(5) Other activities necessary to assume oper-
ational status.
(c) APPLICATION FOR GRANT.—
(1) IN GENERAL.—Applicants shall submit ap-
plications in a form and manner prescribed by the
Secretary.
(2) APPLICATIONS BY STATE HEALTH AGEN-
CIES.—
(A) In the case of applicants that are State
health agencies, the application shall contain
assurances that the State health agency is ap-
plying for funds—
(i) on behalf of at least one local com-
munity partnership; and
(ii) on behalf of at least one other
community identified by the State as in
need of the services funded under this part
but without a local community partnership.
(B) In the case of communities identified
in applications submitted by State health agen-
662
Title III, Subtitle G
cies that do not yet have local community part-
nerships, the State shall describe the steps that
will be taken to aid the community in devel-
oping a local community partnership.
(C) A State applying on behalf of local
community partnerships and other communities
may retain not more than 10 percent of grants
awarded under this subpart for administrative
costs.
(d) CONTENTS OF APPLICATION.—In order to receive
a grant under this section, an applicant must include in
the application the following information:
(1) An assessment of the need for school health
services in the communities to be served, using the
latest available health data and health goals and ob-
jectives established by the Secretary.
(2) A description of how the applicant will de-
sign the proposed school health services to reach the
maximum number of school-aged children and youth
at risk for poor health outcome.
(3) An explanation of how the applicant will in-
tegrate its services with those of other health and
social service programs within the community.
(4) An explanation of how the applicant will
link its activities to the regional and corporate alli-
663
Title III, Subtitle G
ance health plans serving the communities in which
the applicant’s program is to be located.
(5) A description of linkages with regional and
corporate health alliances in whose areas the appli-
cant’s program is to be located.
(6) A description of a quality assurance pro-
gram which complies with standards that the Sec-
retary may prescribe.
(e) NUMBER OF GRANTS.—Not more than one plan-
ning grant may be made to a single applicant. A planning
grant may not exceed two years in duration.
SEC. 3685. GRANTS FOR OPERATION OF PROJECTS.
(a) IN GENERAL.—The Secretary may make grants
to State health agencies or to local community partner-
ships for the cost of operating school health service sites.
(b) USE OF GRANT.—The costs for which a grant
may be made under this section include but are not limited
to the following:
(1) The cost of furnishing health services that
are not covered under title I of this Act or by any
other public or private insurer.
(2) The cost of furnishing enabling services, as
defined in section 3461(g).
(3) Training, recruitment and compensation of
health professionals and other staff.
664
Title III, Subtitle G
(4) Outreach services to at-risk youth and to
parents.
(5) Linkage of individuals to health plans, com-
munity health services and social services.
(6) Other activities deemed necessary by the
Secretary.
(c) APPLICATION FOR GRANT.—Applicants shall sub-
mit applications in a form and manner prescribed by the
Secretary. In order to receive a grant under this section,
an applicant must include in the application the following
information:
(1) A description of the services to be furnished
by the applicant.
(2) The amounts and sources of funding that
the applicant will expend, including estimates of the
amount of payments the applicant will received from
alliance health plans and from other sources.
(3) Such other information as the Secretary de-
termines to be appropriate.
(d) ADDITIONAL CONTENTS OF APPLICATION.—In
order to receive a grant under this section, an applicant
must meet the following conditions:
(1) The applicant furnishes the following serv-
ices:
665
Title III, Subtitle G
(A) Diagnosis and treatment of simple ill-
nesses and minor injuries.
(B) Preventive health services, including
health screenings.
(C) Enabling services, as defined in section
3461(g).
(D) Referrals and followups in situations
involving illness or injury.
(E) Health and social services, counseling
services, and necessary referrals, including re-
ferrals regarding mental health and substance
abuse.
(F) Such other services as the Secretary
determines to be appropriate.
(2) The applicant maintains agreements with
all regional and corporate alliance health plans offer-
ing services in the applicant’s service area.
(3) The applicant is a participating provider in
the State’s program for medical assistance under
title XIX of the Social Security Act.
(4) The applicant does not impose charges on
students or their families for services (including col-
lection of any cost-sharing for services under the
comprehensive benefit package that otherwise would
be required).
666
Title III, Subtitle G
(5) The applicant has reviewed and will periodi-
cally review the needs of the population served by
the applicant in order to ensure that its services are
accessible to the maximum number of school age
children and youth in the area, and that, to the
maximum extent possible, barriers to access to serv-
ices of the applicant are removed (including barriers
resulting from the area’s physical characteristics, its
economic, social and cultural grouping, the health
care utilization patterns of children and youth, and
available transportation).
(6) In the case of an applicant which serves a
population that includes a substantial proportion of
individuals of limited English speaking ability, the
applicant has developed a plan to meet the needs of
such population to the extent practicable in the lan-
guage and cultural context most appropriate to such
individuals.
(7) The applicant will provide non-Federal con-
tributions toward the cost of the project in an
amount determined by the Secretary.
(8) The applicant will operate a quality assur-
ance program consistent with section 3684(e)(6).
(e) DURATION OF GRANT.—A grant under this sec-
tion shall be for a period determined by the Secretary.
667
Title III, Subtitle G
(f) REPORTS.—A recipient of funding under this sec-
tion shall provide such reports and information as are re-
quired in regulations of the Secretary.
SEC. 3686. FEDERAL ADMINISTRATIVE COSTS.
Of the amounts made available under section 3681,
the Secretary may reserve not more than 5 percent for
administrative expenses regarding this subpart.
Subpart B—Capital Costs of Developing Projects
SEC. 3691. LOANS AND LOAN GUARANTEES REGARDING
PROJECTS.
(a) IN GENERAL.—The Secretary may make loans to,
and guarantee the payment of principal and interest to
Federal and non-Federal lenders on behalf of, State health
agencies and local community partnerships for the capital
costs of developing projects in accordance with subpart A.
(b) APPLICABILITY OF CERTAIN PROVISIONS.—The
provisions of subpart A apply to loans and loan guarantees
under subsection (a) to the same extent and in the same
manner as such provisions apply to grants under subpart
A. Except for any provision inconsistent with the purpose
described in subsection (a), the provisions of subpart C
of part 2 of subtitle E apply to loans and loan guarantees
under subsection (a) to the same extent and in the same
manner as such provisions apply to loans and loan guaran-
tees under section 3441.
668
Title III, Subtitle H
SEC. 3692. FUNDING.
Amounts available to the Secretary under section
3412 for the purpose of carrying out subparts B and C
of part 2 of subtitle E are, in addition to such purpose,
available to the Secretary for the purpose of carrying out
this subpart.
Subtitle H—Public Health Service
Initiative
SEC. 3701. PUBLIC HEALTH SERVICE INITIATIVE.
(a) IN GENERAL.—There is established pursuant to
this title a Public Health Service Initiative consisting of
the total amounts authorized and described in subsection
(b). The Initiative includes the programs of subtitles C
through G of this title and the programs of subtitle D
of title VIII.
(b) TOTAL OF THE AMOUNTS AUTHORIZED TO BE
APPROPRIATED.—The following is the total of the
amounts authorized to be appropriated for the Initiative
under the previous subtitles of this title:
(1) For fiscal year 1995, $1,125,000,000.
(2) For fiscal year 1996, $2,984,000,000.
(3) For fiscal year 1997, $3,830,000,000.
(4) For fiscal year 1998, $4,205,000,000.
(5) For fiscal year 1999, $4,055,000,000.
(6) For fiscal year 2000, $3,666,000,000.
(c) USE OF AMOUNTS; AVAILABILITY.—
669
Title III, Subtitle I
(1) USE; ANNUAL APPROPRIATIONS.—Amounts
appropriated to carry out the Initiative, including
subtitles A through F of this title, are available to
carry out the specific programs for which the
amounts are appropriated.
(2) 
AVAILABILITY
OF
APPROPRIATED
AMOUNTS.—Amounts appropriated for programs in
the Initiative are available until expended.
Subtitle I—Coordination With
COBRA Continuation Coverage
SEC. 3801. PUBLIC HEALTH SERVICE ACT; COORDINATION
WITH COBRA CONTINUATION COVERAGE.
(a) PERIOD OF COVERAGE.—Subparagraph (D) of
section 2202(2) of the Public Health Service Act (42
U.S.C. 300bb–2(2)) is amended—
(1) by striking ‘‘or’’ at the end of clause (i), by
striking the period at the end of clause (ii) and in-
serting ‘‘, or’’, and by adding at the end the fol-
lowing new clause:
‘‘(iii) eligible for comprehensive health
coverage described in section 1101 of the
Health Security Act.’’, and
(2) by striking ‘‘OR MEDICARE ENTITLEMENT’’
in the heading and inserting ‘‘, MEDICARE ENTITLE-
MENT, OR HEALTH SECURITY ACT ELIGIBILITY’’.
670
Title III, Subtitle I
(b) QUALIFIED BENEFICIARY.—Section 2208(3) of
such Act (42 U.S.C. 300bb–8(3)) is amended by adding
at the end the following new subparagraph:
‘‘(C) SPECIAL
RULE
FOR
INDIVIDUALS
COVERED
BY
HEALTH
SECURITY
ACT.—The
term ‘qualified beneficiary’ shall not include any
individual who, upon termination of coverage
under a group health plan, is eligible for com-
prehensive health coverage described in section
1101 of the Health Security Act.’’.
(c) REPEAL UPON IMPLEMENTATION OF HEALTH
SECURITY ACT.—
(1) IN GENERAL.—Title XXII of such Act (42
U.S.C. 300bb–1 et seq.) is hereby repealed.
(2) CONFORMING AMENDMENT.—The table of
contents of such Act is amended by striking the item
relating to title XXII.
(3) EFFECTIVE DATE.—The amendments made
by this subsection shall take effect on the earlier
of—
(A) January 1, 1998, or
(B) the first day of the first calendar year
following the calendar year in which all States
have in effect plans under which individuals are
671
Title IV
eligible for comprehensive health coverage de-
scribed in section 1101 of this Act.
TITLE IV—MEDICARE AND
MEDICAID
TABLE OF CONTENTS OF TITLE
Page
Sec. 4000. References in title ..................................................................
673
Subtitle A—Medicare and the Alliance System
PART 1—ENROLLMENT OF MEDICARE BENEFICIARIES IN REGIONAL
ALLIANCE PLANS
Sec. 4001. Optional State integration of medicare beneficiaries into re-
gional alliance plans ......................................................
674
Sec. 4002. Individual election to remain in certain health plans ............
681
Sec. 4003. Payments to regional alliances on behalf of certain medi-
care-eligible individuals .................................................
684
Sec. 4004. Prohibiting employers from taking into account status as
medicare beneficiary on any grounds ............................
685
PART 2—ENCOURAGING MANAGED CARE UNDER MEDICARE PROGRAM;
COORDINATION WITH MEDIGAP PLANS
Sec. 4011. Enrollment and termination of enrollment ...........................
689
Sec. 4012. Uniform informational materials ...........................................
692
Sec. 4013. Outlier payments ...................................................................
693
Sec. 4014. Point of service option ...........................................................
695
PART 3—MEDICARE COVERAGE EXPANSIONS
Sec. 4021. Reference to coverage of outpatient prescription drugs ........
702
Sec. 4022. Expanded coverage for physician assistants, nurse practi-
tioners, and clinical nurse specialists ............................
702
PART 4—COORDINATION WITH ADMINISTRATIVE SIMPLIFICATION AND
QUALITY MANAGEMENT INITIATIVES
Sec. 4031. Repeal of separate medicare peer review program ................
703
Sec. 4032. Mandatory assignment for all part B services ......................
704
Sec. 4033. Elimination of complexities caused by dual funding sources
and rules for payment of claims ...................................
705
Sec. 4034. Repeal of pro precertification requirement for certain sur-
gical procedures .............................................................
706
Sec. 4035. Requirements for changes in billing procedures ...................
708
PART 5—AMENDMENTS TO ANTI-FRAUD AND ABUSE PROVISIONS
Sec. 4041. Anti-kickback provisions ........................................................
710
Sec. 4042. Revisions to limitations on physician self-referral ................
718
Sec. 4043. Civil monetary penalties ........................................................
730
Sec. 4044. Exclusions from program participation .................................
738
672
Title IV
Sec. 4045. Sanctions against practitioners and persons for failure to
comply with statutory obligations relating to quality of
care ................................................................................
745
Sec. 4046. Effective date ........................................................................
746
PART 6—FUNDING OF GRADUATE MEDICAL EDUCATION AND ACADEMIC
HEALTH CENTERS
Sec. 4051. Transfers from medicare trust funds for graduate medical
education .......................................................................
746
Sec. 4052. Transfers from Hospital Insurance Trust Fund for aca-
demic health centers ......................................................
748
PART 7—COVERAGE OF SERVICES PROVIDED BY FACILITIES AND PLANS OF
DEPARTMENTS OF DEFENSE AND VETERANS AFFAIRS
Sec. 4061. Treatment of uniformed services health plan as eligible or-
ganization under medicare ............................................
749
Sec. 4062. Coverage of services provided to medicare beneficiaries by
plans and facilities of Department of Veterans Affairs
750
Sec. 4063. Conforming amendments .......................................................
752
Subtitle B—Savings in Medicare Program
PART 1—SAVINGS RELATING TO PART A
Sec. 4101. Reduction in update for inpatient hospital services ..............
752
Sec. 4102. Reduction in adjustment for indirect medical education ......
753
Sec. 4103. Reduction in payments for capital-related costs for inpa-
tient hospital services ....................................................
754
Sec. 4104. Revisions to payment adjustments for disproportionate
share hospitals in participating States .........................
757
Sec. 4105. Moratorium on designation of additional long-term care
hospitals ........................................................................
761
Sec. 4106. Extension of freeze on updates to routine service costs of
skilled nursing facilities ................................................
761
PART 2—SAVINGS RELATING TO PART B
Sec. 4111. Establishment of cumulative expenditure goals for physician
services ..........................................................................
762
Sec. 4112. Use of real GDP to adjust for volume and intensity; repeal
of restriction on maximum reduction permitted in de-
fault update ...................................................................
767
Sec. 4113. Reduction in conversion factor for physician fee schedule
for 1995 ........................................................................
768
Sec. 4114. Limitations on payment for physicians’ services furnished
by high-cost hospital medical staffs ..............................
769
Sec. 4115. Medicare incentives for physicians to provide primary care
780
Sec. 4116. Elimination of formula-driven overpayments for certain out-
patient hospital services ................................................
785
Sec. 4117. Imposition of coinsurance on laboratory services ..................
786
Sec. 4118. Application of competitive acquisition process for part B
items and services .........................................................
787
Sec. 4119. Application of competitive acquisition procedures for labora-
tory services ...................................................................
791
673
Title IV
PART 3—SAVINGS RELATING TO PARTS A AND B
Sec. 4131. Medicare secondary payer changes ........................................
792
Sec. 4132. Payment limits for HMOs and CMPs with risk-sharing con-
tracts .............................................................................
793
Sec. 4133. Reduction in routine cost limits for home health services ....
800
Sec. 4134. Imposition of copayment for certain home health visits .......
801
Sec. 4135. Expansion of centers of excellence ........................................
804
PART 4—PART B PREMIUM
Sec. 4141. General part B premium .......................................................
PART 5—REPORT ON MEDICARE SAVINGS FOR FISCAL YEARS 2000
THROUGH 2003
Sec. 4151. Report on savings ..................................................................
806
Subtitle C—Medicaid
PART 1—COMPREHENSIVE BENEFIT PACKAGE
Sec. 4201. Limiting coverage under medicaid of items and services cov-
ered under comprehensive benefit package ...................
807
PART 2—EXPANDING ELIGIBILITY FOR NURSING FACILITY SERVICES; LONG-
TERM CARE INTEGRATION OPTION
Sec. 4211. Spenddown eligibility for nursing facility residents ..............
809
Sec. 4212. Increased income and resource disregards for nursing facil-
ity residents ...................................................................
811
Sec. 4213. Informing nursing home residents about availability of as-
sistance for home and community-based services .........
813
PART 3—OTHER BENEFITS
Sec. 4221. Treatment of items and services not covered under the com-
prehensive benefit package ............................................
814
Sec. 4222. Establishment of program for poverty-level children with
special needs ..................................................................
818
PART 4—DISCONTINUATION OF CERTAIN PAYMENT POLICIES
Sec. 4231. Discontinuation of medicaid DSH payments ........................
825
Sec. 4232. Discontinuation of reimbursement standards for inpatient
hospital services ............................................................
827
PART 5—COORDINATION WITH ADMINISTRATIVE SIMPLIFICATION AND
QUALITY MANAGEMENT INITIATIVES
Sec. 4241. Requirements for changes in billing procedures ...................
828
PART 6—MEDICAID COMMISSION
Sec. 4251. Medicaid Commission ............................................................
829
Subtitle D—Increase in SSI Personal Needs Allowance
Sec. 4301. Increase in SSI personal needs allowance .............................
832
674
Title IV
TITLE IV—MEDICARE AND
MEDICAID
SEC. 4000. REFERENCES IN TITLE.
(a) AMENDMENTS TO SOCIAL SECURITY ACT.—Ex-
cept as otherwise specifically provided, whenever in this
title 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 title, the terms
‘‘OBRA–1986’’, 
‘‘OBRA–1987’’, 
‘‘OBRA–1989’’,
‘‘OBRA–1990’’, and ‘‘OBRA–1993’’ refer to the Omnibus
Budget Reconciliation Act of 1986 (Public Law 99–509),
the Omnibus Budget Reconciliation Act of 1987 (Public
Law 100–203), the Omnibus Budget Reconciliation Act
of 1989 (Public Law 101–239), the Omnibus Budget Rec-
onciliation Act of 1990 (Public Law 101–508), and the
Omnibus Budget Reconciliation Act of 1993 (Public Law
103–66), respectively.
675
Title IV, Subtitle A
Subtitle A—Medicare and the
Alliance System
PART 1—ENROLLMENT OF MEDICARE
BENEFICIARIES IN REGIONAL ALLIANCE PLANS
SEC. 4001. OPTIONAL STATE INTEGRATION OF MEDICARE
BENEFICIARIES INTO REGIONAL ALLIANCE
PLANS.
Title XVIII is amended by adding at the end the fol-
lowing:
‘‘INTEGRATION OF MEDICARE INTO STATE HEALTH
SECURITY PROGRAMS
‘‘SEC. 1893. (a) PAYMENT TO STATES.—The Sec-
retary shall pay a participating State that has submitted
an application, as specified by subsection (b) which the
Secretary has approved under subsection (c), the amount
specified by subsection (d) for the period specified by sub-
section (e) for covered medicare beneficiaries. This section
shall apply without regard to whether or not a State is
a single-payer State.
‘‘(b) APPLICATION BY STATE.—An application sub-
mitted by a participating State shall contain the following
assurances:
‘‘(1) COVERAGE
OF
ALL
MEDICARE-ELIGIBLE
INDIVIDUALS.—The State’s application shall assure
that the provisions of the succeeding paragraphs of
676
Title IV, Subtitle A
this subsection shall apply to all medicare-eligible in-
dividuals who are residents of the State.’’.
‘‘(2) ENROLLMENT
IN
AND
SELECTION
OF
HEALTH PLANS.—
‘‘(A) ENROLLMENT.—Each medicare-eligi-
ble individual (within a class of medicare bene-
ficiaries covered under the application) who is a
resident of the State will be enrolled in a re-
gional alliance health plan serving the area in
which the individual resides (or, in the case of
an individual who is a resident of a single-payer
State, in the Statewide single-payer system op-
erated under part 2 of subtitle C of title I of
the Health Security Act).
‘‘(B) SELECTION.—Each such individual
will have the same choice among applicable
health plans as other individuals in the State
who are eligible individuals under the Health
Security Act.
‘‘(C) OFFER OF FEE-FOR-SERVICE PLAN.—
Each such individual shall be offered enrollment
in at least one health plan that is a fee-for-serv-
ice plan (or, in the case of an individual who is
a resident of a single-payer State, the Statewide
single-payer system under part 2 of subtitle C
677
Title IV, Subtitle A
of title I of the Health Security Act) that meets
the following requirements:
‘‘(i) The plan’s premium rate, and the
actuarial value of the plan’s deductibles,
coinsurance, and copayments, charged to
the individual do not exceed the actuarial
value of the coinsurance and deductibles
that would be applicable on the average if
this section did not apply to those individ-
uals.
‘‘(ii) The plan’s payment rates for
covered items and services are accepted as
payment in full for such items and serv-
ices.
‘‘(3) COVERAGE
OF
FULL
MEDICARE
BENE-
FITS.—For each health plan providing coverage
under this section—
‘‘(A) the plan shall cover at least the items
and services for which payment would otherwise
be made under this title (including payments
under section 1862(b)(4)), and
‘‘(B) coverage determinations under the
plan are made under rules that are no more re-
strictive than otherwise applicable under this
title.
678
Title IV, Subtitle A
‘‘(4) PREMIUM.—During the period for which
payments are made to a State under this section,
the requirements of the Health Security Act relating
to premiums that are otherwise applicable with re-
spect to individuals enrolled in health plans in a
State shall not apply with respect to medicare-eligi-
ble individuals in the State who are covered under
the State’s application under this section. Nothing in
the previous sentence shall operate to permit a State
or health plans in a State to charge different pre-
miums among medicare-eligible individuals within
the same premium class under the Health Security
Act.
‘‘(5) QUALITY
ASSURANCE.—For each health
plan providing coverage under this section there are
quality assurance mechanisms for covered medicare
individuals that equal, or exceed, such mechanisms
otherwise applicable under this title.
‘‘(6) REVIEW RIGHTS.—Covered medicare indi-
viduals have review, reconsideration, and appeal
rights (including appeals to courts of the State) that
equal or exceed such rights otherwise applicable
under this title.
‘‘(7) DATA REPORTING AND ACCESS TO DOCU-
MENTS.—The State will—
679
Title IV, Subtitle A
‘‘(A) provide such utilization and statistical
data as the Secretary determines are needed for
purposes of the programs established under this
title, and
‘‘(B) the State will ensure access by the
Secretary or the Comptroller General to rel-
evant documents.
‘‘(8) USE OF PAYMENTS.—Payments made to
the State under subsection (a) will be used only to
carry out the purposes of this section.
‘‘(c) APPROVAL BY SECRETARY.—The Secretary shall
approve an application under subsection (b) if the Sec-
retary finds—
‘‘(1) that the individuals covered under the
State’s application shall receive at least the benefits
provided under this title (including cost sharing);
‘‘(2) that the amount of expenditures that will
be made under this title will not exceed the amount
of expenditures that will be made if the State’s ap-
plication is not accepted; and
‘‘(3) that the State is able and willing to carry
out the assurances provided in its application.
‘‘(d) AMOUNT AND SOURCE OF PAYMENT.—
‘‘(1) AMOUNT OF PAYMENT.—For purposes of
subsection (a), the amount of payments to a State—
680
Title IV, Subtitle A
‘‘(A) for the first year for which payments
are made to the State under this section shall
be determined by the applicable rate specified
in section 1876(a)(1)(C) (but at 100 percent,
rather than 95 percent, of the applicable
amount) for each medicare-eligible individual
who is a resident of the State (but without re-
gard to any reduction based on payments to be
made under section 1876(a)(1)(G)), and
‘‘(B) for each succeeding year, shall be de-
termined by the applicable rate determined
under subparagraph (A) or this subparagraph
for the preceding year for each such individual,
adjusted by the regional alliance inflation factor
applicable to regional alliances in the State (as
determined in accordance with section 6001(a)
of the Health Security Act) for the year.
‘‘(2) SOURCE OF PAYMENT.—Payment shall be
made from the Federal Hospital Insurance Trust
Fund and the Federal Supplementary Medical In-
surance Trust Fund as provided under paragraph
(5) of section 1876(a) (other than as provided under
subparagraph (B) of that paragraph).
681
Title IV, Subtitle A
‘‘(e) PERIOD FOR WHICH PAYMENT MADE.—The pe-
riod for which payment may be made under subsection (a)
to a State—
‘‘(1) begins with January 1 of the first calendar
year for which the Secretary approves under sub-
section (c) the application of the State; and
‘‘(2) ends—
‘‘(A) on December 31 of the year in which
the State notifies the Secretary (before April of
that year) that the State no longer intends to
receive payments under this section, or
‘‘(B) if the Secretary finds that the State
is no longer in substantial compliance with the
requirements under paragraphs (2) or (3) of
subsection (c), at the time specified by the Sec-
retary.
No termination is effective under paragraph (2) unless no-
tice has been provided to medicare covered individuals,
health providers, and health plans affected by the termi-
nation.
‘‘(f) PAYMENTS UNDER
THIS SECTION
AS SOLE
MEDICARE BENEFITS.—Payments to a State under sub-
section (a) shall be instead of the amounts that would oth-
erwise be payable, pursuant to sections 1814(b) and
682
Title IV, Subtitle A
1833(a), for services furnished to medicare-eligible resi-
dents of the State covered under the application.
‘‘(g) EVALUATION.—The Secretary shall evaluate on
an ongoing basis the compliance of a State with the re-
quirements of this section.
‘‘(h) DEFINITIONS.—In this section the terms ‘appli-
cable health plan’, ‘fee-for-service plan’, ‘health plan’,
‘medicare-eligible individual’, ‘participating State’, ‘single-
payer State’, and ‘Statewide single-payer system’ have the
meanings of those terms in the Health Security Act.’’.
SEC. 4002. INDIVIDUAL ELECTION TO REMAIN IN CERTAIN
HEALTH PLANS.
(a) 
IN
GENERAL.—Section 
1876 
(42 
U.S.C.
1395mm) is amended by adding at the end the following
new subsection:
‘‘(k)(1) Notwithstanding any other provision of this
section, each eligible organization with a risk-sharing con-
tract (or which is eligible to enter into such a contract,
as determined by the Secretary) that is the sponsor of a
health plan under subtitle E of title I of the Health Secu-
rity Act shall provide each individual who meets the re-
quirements of paragraph (2) with the opportunity to elect
(by submitting an application at such time and in such
manner as specified by the Secretary) to continue enroll-
ment in such plan (for the same benefits as alliance-eligi-
683
Title IV, Subtitle A
ble individuals) and to have payments made by the Sec-
retary to the plan on the individual’s behalf in accordance
with paragraph (3). The premium imposed with respect
to such an individual by the plan shall be in an amount
(determined in accordance with rules of the Secretary and
notwithstanding other provisions of such Act) which re-
flects the difference between the premium otherwise estab-
lished (adjusted by a factor to reflect the actuarial dif-
ference between medicare beneficiaries and other plan en-
rollees) and the amount payable under paragraph (3).
‘‘(2) An individual meets the requirements of this
paragraph if the individual is—
‘‘(A) enrolled in the health plan of an eligible
organization in a month in which the individual is
either not entitled to benefits under part A, or is an
eligible employee (as defined in the Health Security
Act) or the spouse or dependent of an eligible em-
ployee,
‘‘(B) entitled to benefits under part A and en-
rolled under part B in the succeeding month,
‘‘(C) an eligible individual under the Health Se-
curity Act in that succeeding month, and
‘‘(D) not an eligible employee (as defined in the
Health Security Act) or the spouse or dependent of
an eligible employee in that succeeding month.
684
Title IV, Subtitle A
‘‘(3) The Secretary shall make a payment to an eligi-
ble organization on behalf of each individual enrolled with
the organization for whom an election is in effect under
this subsection in an amount determined by the rate speci-
fied by subsection (a)(1)(C) (notwithstanding the second
sentence of paragraph (1)). Such payment shall be made
from the Federal Hospital Insurance Trust Fund and the
Federal Supplementary Medical Insurance Trust Fund as
provided under subsection (a)(5) (other than as provided
under subparagraph (B) of that paragraph).
‘‘(4) The period for which payment may be made
under paragraph (3)—
‘‘(A) begins with the first month for which the
individual meets the requirements of paragraph (2)
(or a later month, in the case of a late application,
as may be specified by the Secretary); and
‘‘(B) ends with the earliest of—
‘‘(i) the month following the month—
‘‘(I) in which the individual notifies
the Secretary that the individual no longer
wishes to be enrolled in the health plan of
the eligible organization and to have pay-
ment made on the individual’s behalf under
this subsection; and
685
Title IV, Subtitle A
‘‘(II) which is a month specified by
the Secretary as a uniform open enroll-
ment period under subsection (c)(3)(A)(i),
or
‘‘(ii) the month in which the individual
ceases to meet the requirements of paragraph
(2).
‘‘(5) Notwithstanding any other provision of this title,
payments to an eligible organization under this subsection
on behalf of an individual shall be the sole payments made
with respect to items and services furnished to the indi-
vidual during the period for which the individual’s election
under this subsection is in effect.’’.
(b) CONFORMING AMENDMENT.—Section 1838(b)
(42 U.S.C. 1395q(b)) is amended by inserting after ‘‘sec-
tion 
1843(e)’’ 
the 
following: 
‘‘, 
1876(c)(3)(B),
1876(k)(4)(B), or 1890(j)(1)(B)(iv)’’.
SEC. 4003. PAYMENTS TO REGIONAL ALLIANCES ON BE-
HALF OF CERTAIN MEDICARE-ELIGIBLE INDI-
VIDUALS.
Title XVIII, as amended by section 4001, is further
amended by adding at the end the following new section:
686
Title IV, Subtitle A
‘‘PAYMENTS TO REGIONAL ALLIANCES ON BEHALF OF
CERTAIN MEDICARE-ELIGIBLE INDIVIDUALS UNDER
HEALTH SECURITY ACT
‘‘SEC. 1894. The Secretary shall provide for a trans-
fer from the Federal Hospital Insurance Trust Fund and
the Federal Supplementary Medical Insurance Trust
Fund, in appropriate proportions, to each regional alliance
in each year of the amount of the reductions in liability
owed to the alliance in the year resulting from the applica-
tion of section 6115 of the Health Security Act. In the
case of an individual to whom such section applies, unless
all the members of the family would be medicare-eligible
individuals (but for section 1012(a) of such Act), the re-
ductions in liability under section 6115 of such Act shall
be based upon the alliance credit amount for an individual
class of enrollment (as defined in section 1011(c)(1)(A)
of such Act).’’.
SEC. 4004. PROHIBITING EMPLOYERS FROM TAKING INTO
ACCOUNT 
STATUS 
AS 
MEDICARE 
BENE-
FICIARY ON ANY GROUNDS.
(a) EXTENSION
OF PROTECTIONS
FOR WORKING
AGED TO GROUP HEALTH PLANS OF ALL EMPLOYERS.—
Section 1862(b)(1)(A) (42 U.S.C. 1395y(b)(1)(A)) is
amended by striking clauses (ii) and (iii).
687
Title IV, Subtitle A
(b) EXTENSION OF PROTECTIONS FOR DISABLED IN-
DIVIDUALS TO ALL GROUP HEALTH PLANS.—
(1) IN GENERAL.—Section 1862(b)(1)(B) (42
U.S.C. 1395y(b)(1)(B)), as amended by section
13561(e) of OBRA–1993, is amended—
(A) in clause (i), by striking ‘‘large group
health plans (as defined in clause (iv))’’ and in-
serting ‘‘group health plan (as defined in sub-
paragraph (A)(v), taking into account the ex-
ceptions described in clauses (ii) and (iii) of
subparagraph (A))’’; and
(B) by striking clause (iv).
(2) 
CONFORMING
AMENDMENT.—Section
1862(b)(1)(A)(v) (42 U.S.C. 1395y(b)(1)(A)(v)) is
amended by striking ‘‘this subparagraph, and sub-
paragraph (C)’’ and inserting ‘‘this paragraph’’.
(c) REPEAL OF LIMITATION ON PERIOD OF PROTEC-
TION FOR INDIVIDUALS WITH END STAGE RENAL DIS-
EASE.—
(1) IN GENERAL.—Section 1862(b)(1)(C) (42
U.S.C. 1395y(b)(1)(C)), as amended by section
13561(c) of OBRA–1993, is amended—
(A) in clause (i), by striking ‘‘an individual
is entitled’’ and all that follows through ‘‘such
benefits’’ and inserting ‘‘an individual (or a
688
Title IV, Subtitle A
member of the individual’s family) who is cov-
ered under the plan by virtue of the individual’s
current employment status with an employer is
entitled to benefits under this title under sec-
tion 226A’’;
(B) in clause (ii), by striking the semicolon
at the end and inserting a period; and
(C) by striking the matter following clause
(ii).
(2) 
CONFORMING
AMENDMENT.—Section
1862(b)(1) is amended—
(A) in subparagraph (A), by striking
clause (iv); and
(B) in subparagraph (B), by striking
clause (ii).
(d) NO PRIMARY PAYMENT FOR SERVICES UNDER
A HEALTH PLAN.—Section 1862(b)(2)(A) (42 U.S.C.
1395y(b)(2)(A)(i)) is amended—
(1) by striking ‘‘or’’ at the end of clause (i);
(2) by striking the period at the end of clause
(ii) and inserting ‘‘, or’’;
(3) by inserting after clause (ii) the following
new clause:
‘‘(iii) payment has been made, or can
reasonably be expected to be made, with
689
Title IV, Subtitle A
respect to the item or service under any
health plan under the Health Security
Act.’’; and
(4) in the second sentence—
(A) by striking ‘‘and’’ after ‘‘applies’’, and
(B) by inserting before the period at the
end the following: ‘‘, and a health plan under
the Health Security Act to the extent that
clause (iii) applies’’.
(e) SIMPLIFICATION OF COORDINATION OF BENE-
FITS.—Section 1862(b)(4) (42 U.S.C. 1395y(b)(4)) is
amended by adding after and below subparagraph (B) the
following:
‘‘Notwithstanding the previous sentence, where pay-
ment is made for an item or service by a primary
plan that is a health plan (within the meaning of
section 1400 of the Health Security Act) and for
which payment would be made under this title but
for this subsection, payment may be made under
this title (without regard to deductibles and coinsur-
ance) in the amount of the cost sharing imposed
under such primary plan (consistent with such
Act).’’.
(f) EFFECTIVE DATE.—The amendments made by
this section shall apply with respect to medicare-eligible
690
Title IV, Subtitle A
individuals residing in a participating State as of January
1 of the first year for which the State is a participating
State.
PART 
2—ENCOURAGING 
MAN-
AGED 
CARE 
UNDER 
MEDI-
CARE 
PROGRAM; 
COORDINA-
TION WITH MEDIGAP PLANS
SEC. 4011. ENROLLMENT AND TERMINATION OF ENROLL-
MENT.
(a) UNIFORM OPEN ENROLLMENT PERIODS.—
(1) FOR CAPITATED PLANS.—The first sentence
of 
section 
1876(c)(3)(A)(i) 
(42 
U.S.C.
1395mm(c)(3)(A)(i)) 
is 
amended 
by 
inserting
‘‘(which may be specified by the Secretary)’’ after
‘‘open enrollment period’’.
(2) FOR MEDIGAP PLANS.—Section 1882(s) (42
U.S.C. 1395ss(s)) is amended—
(A) in paragraph (3), by striking ‘‘para-
graphs (1) and (2)’’ and inserting ‘‘paragraph
(1), (2), or (3)’’,
(B) by redesignating paragraph (3) as
paragraph (4), and
(C) by inserting after paragraph (2) the
following new paragraph:
691
Title IV, Subtitle A
‘‘(3) Each issuer of a medicare supplemental policy
shall have an open enrollment period (which shall be the
period 
specified 
by 
the 
Secretary 
under 
section
1876(c)(3)(A)(i)), of at least 30 days duration every year,
during which the issuer may not deny or condition the
issuance or effectiveness of a medicare supplemental pol-
icy, or discriminate in the pricing of the policy, because
of age, health status, claims experience, receipt of health
care, or medical condition. The policy may not provide any
time period applicable to pre-existing conditions, waiting
periods, elimination periods, and probationary periods (ex-
cept as provided by paragraph (2)(B)). The Secretary may
require enrollment through a third party designated under
section 1876(c)(3)(B).’’.
(b) ENROLLMENTS
FOR NEW MEDICARE BENE-
FICIARIES
AND
THOSE
WHO
MOVE.—Section
1876(c)(3)(A) 
(42 
U.S.C. 
1395mm(c)(3)(A)) 
is
amended—
(1) in clause (i), by striking ‘‘clause (ii)’’ and
inserting ‘‘clauses (ii) through (iv)’’, and
(2) by adding at the end the following:
‘‘(iii) Each eligible organization shall have an open
enrollment period for each individual eligible to enroll
under subsection (d) during any enrollment period speci-
fied by section 1837 that applies to that individual. Enroll-
692
Title IV, Subtitle A
ment under this clause shall be effective as specified by
section 1838.
‘‘(iv) Each eligible organization shall have an open
enrollment period for each individual eligible to enroll
under subsection (d) who has previously resided outside
the geographic area which the organization serves. The en-
rollment period shall begin with the beginning of the
month that precedes the month in which the individual
becomes a resident of that geographic area and shall end
at the end of the following month. Enrollment under this
clause shall be effective as of the first of the month fol-
lowing the month in which the individual enrolls.’’.
(c) ENROLLMENT THROUGH THIRD PARTY; UNI-
FORM TERMINATION OF ENROLLMENT.—The first sen-
tence 
of 
section 
1876(c)(3)(B) 
(42 
U.S.C.
1395mm(c)(3)(B)) is amended—
(1) by inserting ‘‘(including enrollment through
a third party)’’ after ‘‘regulations’’, and
(2) by striking everything after ‘‘with the eligi-
ble organization’’ and inserting ‘‘during an annual
period as prescribed by the Secretary, and as speci-
fied by the Secretary in the case of financial insol-
vency of the organization, if the individual moves
from the geographic area served by the organization,
693
Title IV, Subtitle A
or in other special circumstances that the Secretary
may prescribe.’’.
(d) EFFECTIVE DATE.—The amendments made by
the previous subsections apply to enrollments and termi-
nations of enrollments occurring after 1995 (but only after
the Secretary of Health and Human Services has pre-
scribed the relevant annual period), except that the
amendments made by subsection (a)(2) apply to enroll-
ments for a medicare supplemental policy made after
1995.
SEC. 4012. UNIFORM INFORMATIONAL MATERIALS.
(a) FOR CAPITATED PLANS.—Section 1876(c)(3)(C)
(42 U.S.C. 1395mm(c)(3)(C)) is amended by adding at
the end the following: ‘‘In addition, the Secretary shall de-
velop and distribute comparative materials about all eligi-
ble organizations. Each eligible organization shall reim-
burse the Secretary for its pro rata share (as determined
by the Secretary) of the costs incurred by the Secretary
in carrying out the requirements of the preceding sentence
and other enrollment activities.’’.
(b) FOR MEDIGAP PLANS.—Paragraph (1) of section
1882(f) (42 U.S.C. 1395ss(f)) is amended to read as fol-
lows:
‘‘(f)(1) The Secretary shall develop and distribute
comparative materials about all medicare supplemental
694
Title IV, Subtitle A
policies issued in a State. Each issuer of such a policy
shall reimburse the Secretary for its pro rata share (as
determined by the Secretary for purposes of section
1876(c)(3)(C)) of the costs incurred by the Secretary in
carrying out the requirements of the preceding sentence
and other enrollment activities, or the issuer shall no
longer be considered as meeting the requirements of this
section.’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply with respect to materials for enroll-
ment in years after 1995.
SEC. 4013. OUTLIER PAYMENTS.
(a) GENERAL RULE.—Section 1876(a)(1) (42 U.S.C.
1395mm(a)(1)) is amended by adding at the end the fol-
lowing:
‘‘(G)(i) In the case of an eligible organization with
a risk-sharing contract, the Secretary may make addi-
tional payments to the organization equal to not more
than 50 percent of the imputed reasonable cost (or, if so
requested by the organization, the reasonable cost) above
the threshold amount of services covered under parts A
and B and provided (or paid for) in a year by the organi-
zation to any individual enrolled with the organization
under this section.
695
Title IV, Subtitle A
‘‘(ii) For purposes of clause (i), the ‘imputed reason-
able cost’ is an amount determined by the Secretary on
a national, regional, or other basis that is related to the
reasonable cost of services.
‘‘(iii) For purposes of clause (i), the ‘threshold
amount’ is an amount determined by the Secretary from
time to time, adjusted by the geographic factor utilized
in determining payments to the organization under sub-
paragraph (C) and rounded to the nearest multiple of
$100, such that the total amount to be paid under this
subparagraph for a year is estimated to be 5 percent or
less of the total amount to be paid under risk-sharing con-
tracts for services furnished for that year.
‘‘(iv) An eligible organization shall submit a claim for
additional payments under subsection (i) within such time
as the Secretary may specify.
‘‘(v) To the extent that total payments under clause
(i) in a year—
‘‘(I) exceed the payment set aside as a result of
the reduction under subparagraph (C) for the year,
the Secretary shall increase the percentage reduction
under such subparagraph for the following year by
such percentage as will result in an increase in the
reduction equal to such excess in previous payments,
or
696
Title IV, Subtitle A
‘‘(II) are less than the payment set aside as a
result of the reduction under subparagraph (C) for
the year, the amount of such difference shall remain
available in the succeeding years for additional pay-
ments under this subparagraph and the Secretary
may take such difference into account in establishing
the percentage reduction under subparagraph (C)
for the following year.’’.
(b) 
CONFORMING
AMENDMENT.—Section
1876(a)(1)(C)(i) (42 U.S.C. 1395mm(a)(1)(C)(i)), as
amended by section 4132(a), is further amended by insert-
ing ‘‘, and reduced by a uniform percentage (determined
by the Secretary for a year, subject to adjustment under
subparagraph (G)(v)) so that the total reduction is esti-
mated to equal the amount to be paid under subparagraph
(G)’’ before the period.
(c) EFFECTIVE DATE.—The amendments made by
the preceding subsections apply to services furnished after
1994.
SEC. 4014. POINT OF SERVICE OPTION.
(a) POINT OF SERVICE CONTRACTS.—Part C of title
XVIII is amended by inserting after section 1889 the fol-
lowing:
‘‘POINT OF SERVICE OPTION
‘‘SEC. 1890. (a) ESTABLISHMENT OF PROGRAM.—
Not later than July 1, 1995, the Secretary shall promul-
697
Title IV, Subtitle A
gate regulations establishing a point-of-service program
under which individuals entitled to benefits under this title
(other than individuals enrolled with an eligible organiza-
tion with a risk-sharing contract under section 1876(g))
may obtain such benefits through providers and suppliers
who are members of a point-of-service network established
by the Secretary in accordance with the criteria described
in subsection (b).
‘‘(b) CRITERIA FOR NETWORKS.—In establishing cri-
teria for point-of-service networks under the program
under this section, the Secretary shall—
‘‘(1) designate an appropriate geographic serv-
ice area for each such network to ensure that each
network has a sufficient number of participating
members to provide items and services under this
title to beneficiaries, except that no such service area
may be served by more than one such network;
‘‘(2) establish requirements for participating
members;
‘‘(3) establish a schedule of payments for serv-
ices furnished by networks, including a schedule of
bundled payment arrangements for selected medical
and surgical procedures;
‘‘(4) delineate permissible incentives to encour-
age physicians and other suppliers to join the net-
700
Title IV, Subtitle A
(A) by striking ‘‘and’’ at the end of para-
graph (3),
(B) by substituting ‘‘; and’’ for the period
at the end of paragraph (4), and
(C) by adding at the end the following:
‘‘(5) such additional items and services fur-
nished by a provider of services to an individual sub-
ject to case management as may be specified under
a point-of-service network arrangement under sec-
tion 1890.’’.
(2)(A) Section 1814(b) (42 U.S.C. 1395f(b)) is
amended—
(i) in paragraph (1), by inserting ‘‘or (4)’’
after ‘‘paragraph (3)’’,
(ii) by striking ‘‘or’’ at the end of para-
graph (2),
(iii) by substituting ‘‘; and’’ for the period
at the end of paragraph (3), and
(iv) by inserting after paragraph (3) the
following:
‘‘(4) in the case of items and services furnished
through a point of service network (as described in
section 1890), the payment basis specified under the
arrangement established for such network, plus any
701
Title IV, Subtitle A
bonus payments as determined under subsection (c)
of that section.’’.
(B) The matter in section 1886(d)(1)(A) (42
U.S.C. 1395ww(d)(1)(A)) preceding clause (i) is
amended by inserting ‘‘(other than paragraph (4))’’
after ‘‘1814(b)’’.
(3) Section 1832(a)(2) (42 U.S.C. 1395k(a)(2))
is amended—
(A) by striking ‘‘and’’ at the end of sub-
paragraph (I),
(B) by substituting ‘‘; and’’ for the period
at the end of subparagraph (J), and
(C) by adding at the end the following:
‘‘(K) such additional items and services
(other than inpatient services furnished by pro-
viders of services) as may be specified under a
point-of-service network arrangement under sec-
tion 1890.’’.
(4) Section 1833 (42 U.S.C. 1395l), as amend-
ed by section 4032, is amended by adding at the end
the following new subsection:
‘‘(u) In the case of items and services furnished
through a point of service network (as described in section
1890), there shall be paid (subject to subsection (b))
amounts equal to 80 percent of the payment basis speci-
702
Title IV, Subtitle A
fied in an agreement entered into pursuant to that section,
plus any bonus payments as determined under subsection
(c) of that section.’’.
(5) Section 1862(a) (42 U.S.C. 1395y(a)), as
amended by sections 4034(b)(4), 4118(b), and
2003(b), is further amended—
(A) in paragraph (7), by striking ‘‘or
under paragraph (1)(F)’’ and inserting ‘‘, under
paragraph (1)(F), or under a contract under
section 1890’’,
(B) by striking ‘‘or’’ at the end of para-
graph (16),
(C) by striking the period at the end of
paragraph (17) and inserting ‘‘; or’’, and
(D) by inserting after paragraph (17) the
following new paragraph:
‘‘(18) which are furnished to an individual and
related to a health condition with respect to which
the individual is subject to case management
through a point-of-service network under section
1890 but which are not included in the plan of care
developed for such individual and agreed to by the
individual and the case manager.’’.
(c) EFFECTIVE DATE.—The amendments made by
this subsection shall take effect January 1, 1996.
703
Title IV, Subtitle A
PART 3—MEDICARE COVERAGE
EXPANSIONS
SEC. 4021. REFERENCE TO COVERAGE OF OUTPATIENT
PRESCRIPTION DRUGS.
For provisions adding a new outpatient prescription
drug benefit to the medicare program, see subtitle A of
title II.
SEC. 4022. EXPANDED COVERAGE FOR PHYSICIAN ASSIST-
ANTS, NURSE PRACTITIONERS, AND CLIN-
ICAL NURSE SPECIALISTS.
(a) 
PHYSICIAN
ASSISTANTS.—Section
1861(s)(2)(K)(i) (42 U.S.C. 1395x(s)(2)(K)(i)) is amend-
ed by striking ‘‘(I) in a hospital’’ and all that follows
through ‘‘shortage area’’.
(b) NURSE PRACTITIONERS AND CLINICAL NURSE
SPECIALISTS.—Section 1861(s)(2)(K)(iii) (42 U.S.C.
1395x(s)(2)(K)(iii)) is amended—
(1) by inserting ‘‘(I)’’ before ‘‘in a rural area’’,
and
(2) by inserting ‘‘, (II) in any other area, in the
case of services furnished by nurse practitioners
other than services furnished to an inpatient of a
hospital, or (III) in any other area, in the case of
services furnished by clinical nurse specialists other
than services furnished to an inpatient of a hospital,
704
Title IV, Subtitle A
skilled nursing facility or nursing facility (as defined
in 
section 
1919(a)), 
and’’ 
after 
‘‘section
1886(d)(2)(D))’’.
(c) 
CONFORMING
AMENDMENTS.—(1) 
Section
1832(a)(2)(B)(iv) (42 U.S.C. 1395k(a)(2)(B)(iv)) is
amended by striking ‘‘provided in a rural area (as defined
in section 1886(d)(2)(D))’’ and inserting ‘‘described in
section 1861(s)(2)(K)(iii)’’.
(2) 
Section 
1833(a)(1)(O) 
(42 
U.S.C.
1395l(a)(1)(O)) is amended by striking ‘‘provided in a
rural area’’.
(3) Section 1833(r)(1) (42 U.S.C. 1395l(r)(1)) is
amended by striking ‘‘provided in a rural area’’.
(d) EFFECTIVE DATE.—The amendments made by
this section shall apply to services furnished on or after
January 1, 1996.
PART 
4—COORDINATION 
WITH
ADMINISTRATIVE 
SIM-
PLIFICATION 
AND 
QUALITY
MANAGEMENT INITIATIVES
SEC. 4031. REPEAL OF SEPARATE MEDICARE PEER REVIEW
PROGRAM.
Part B of title XI of the Social Security Act (42
U.S.C. 1301 et seq.) is amended by adding at the end
the following new section:
705
Title IV, Subtitle A
‘‘TERMINATION
‘‘SEC. 1165. The provisions of this part shall termi-
nate effective upon the adoption of the National Quality
Management Program under subtitle A of title V of the
Health Security Act. Any reference to this part or any
section in this part shall not be effective after such date.’’.
SEC. 4032. MANDATORY ASSIGNMENT FOR ALL PART B
SERVICES.
Section 1833 (42 U.S.C. 1395l) is amended—
(1) by redesignating the subsection (r) added by
section 4206(b)(2) of OBRA–1990 as subsection (s);
and
(2) by adding at the end the following new sub-
section:
‘‘(t)(1) Notwithstanding any other provision of this
part, payment under this part for any item or service fur-
nished on or after January 1, 1996, may only be made
on an assignment-related basis.
‘‘(2) Except for deductible, coinsurance, or copay-
ment amounts applicable under this part, no physician,
supplier, or other person may bill or collect any amount
from an individual enrolled under this part or other person
for an item or service for which payment may be made
under this part. No such individual or person is liable for
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Title IV, Subtitle A
payment of any amounts billed in violation of the previous
sentence.
‘‘(3) If a physician, supplier, or other person know-
ingly and willfully bills or collects an amount in violation
of paragraph (2), the Secretary may apply sanctions
against such physician, supplier, or other person in ac-
cordance with section 1842(j)(2). Paragraph (4) of section
1842(j) shall apply in this paragraph in the same manner
as such paragraph applies to such section.’’.
SEC. 4033. ELIMINATION OF COMPLEXITIES CAUSED BY
DUAL FUNDING SOURCES AND RULES FOR
PAYMENT OF CLAIMS.
(a) IN GENERAL.—The Secretary of Health and
Human Services shall take such steps as may be necessary
to consolidate the administration (including processing
systems) of parts A and B of the medicare program (under
title XVIII of the Social Security Act).
(b) COMBINATION OF INTERMEDIARY AND CARRIER
FUNCTIONS.—In taking such steps, the Secretary shall
contract with a single entity that combines the fiscal inter-
mediary and carrier functions in each area except where
the Secretary finds that special regional or national con-
tracts are appropriate.
(c) SUPERSEDING CONFLICTING REQUIREMENTS.—
The provisions of sections 1816 and 1842 of the Social
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Title IV, Subtitle A
Security Act (including provider nominating provisions in
such section 1816) are superseded to the extent required
to carry out this section.
SEC. 4034. REPEAL OF PRO PRECERTIFICATION REQUIRE-
MENT 
FOR 
CERTAIN 
SURGICAL 
PROCE-
DURES.
(a) IN GENERAL.—Section 1164 (42 U.S.C. 1320c–
13) is repealed.
(b) CONFORMING AMENDMENTS.—
(1) Section 1154 (42 U.S.C. 1320c–3) is
amended—
(A) in subsection (a), by striking para-
graph (12), and
(B) in subsection (d), by striking ‘‘(and ex-
cept as provided in section 1164)’’.
(2) Section 1833 (42 U.S.C. 1395l) is
amended—
(A) in subsection (a)(1)(D)(i), by striking
‘‘, or for tests 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)’’;
(B) in subsection (a)(1), by striking clause
(G);
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Title IV, Subtitle A
(C) in subsection (a)(2)(A), by striking ‘‘,
to items and services (other than clinical diag-
nostic laboratory tests) 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) in subsection (a)(2)(D)(i)—
(i) by striking ‘‘basis,’’ and inserting
‘‘basis or’’, and
(ii) by striking ‘‘, or for tests fur-
nished in connection with obtaining a sec-
ond 
opinion 
required 
under 
section
1164(c)(2) (or a third opinion, if the sec-
ond opinion was in disagreement with the
first opinion)’’;
(E) 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
(F) in the first sentence of subsection (b),
by striking ‘‘(4)’’ and all that follows through
‘‘and (5)’’ and inserting and ‘‘(4)’’.
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Title IV, Subtitle A
(3) 
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 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 opinion)’’.
(4) Section 1862(a) (42 U.S.C. 1395y(a)) is
amended—
(A) by adding ‘‘or’’ at the end of para-
graph (14),
(B) by striking ‘‘; or’’ at the end of para-
graph (15) and inserting a period, and
(C) by striking paragraph (16).
(5) 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 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),’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to services provided on or after
the date of the enactment of this Act.
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Title IV, Subtitle A
SEC. 4035. REQUIREMENTS FOR CHANGES IN BILLING PRO-
CEDURES.
(a) LIMITATION
ON
FREQUENCY
OF
SYSTEM
CHANGES.—The Secretary of Health and Human Services
may not implement any change in the system used for the
billing and processing of claims for payment for items and
services furnished under title XVIII of the Social Security
Act within 6 months of implementing any previous change
in such system.
(b) ADVANCE NOTIFICATION TO PROVIDERS AS RE-
QUIREMENT
FOR
CARRIERS
AND
FISCAL
INTER-
MEDIARIES.—
(1) FISCAL INTERMEDIARIES.—Section 1816(c)
(42 U.S.C. 1395h(c)) is amended by adding at the
end the following new paragraph:
‘‘(4) Each agreement with an agency or organization
under this section shall provide that the agency or organi-
zation shall notify providers of services of any major
change in the procedures for billing for services furnished
under this part at least 120 days before such change is
to take effect.’’.
(2) CARRIERS.—Section 1842(b)(3) (42 U.S.C.
1395u(b)(3)) is amended—
(A) by striking ‘‘and’’ at the end of sub-
paragraph (G) and the end of subparagraph
(H); and
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Title V, Subtitle A
ices in the United States and the access of consumers to
such services.
(c) PERFORMANCE REPORTS.—
(1) ALLIANCE AND HEALTH PLAN REPORTS.—
Each health alliance annually shall publish and
make available to the public a performance report
outlining in a standard format the performance of
each health plan offered in the alliance on the set of
national measures of quality performance. The re-
port shall include the results of a smaller number of
such measures for health care providers who are
members of provider networks of such plans (as de-
fined in section 1402(f)), if the available information
is statistically meaningful. The report also shall in-
clude the results of consumer surveys described in
section 5004 that were conducted in the alliance
area during the year that is the subject of the re-
port.
(2) NATIONAL
QUALITY
REPORTS.—The Na-
tional Quality Management Council annually shall
provide to the Congress and to each health alliance
a report that—
(A) outlines in a standard format the per-
formance of each regional alliance, corporate al-
liance, and health plan;