SEC. 5. EXPANDING THE NATIONAL HEALTH SERVICE
CORPS.
(a) ADDITIONAL FUNDING FOR CORPS PROGRAMS.—
Section 338(a) of the Public Health Service Act (42
U.S.C. 254k) is amended—
(1) by redesignating paragraph (2) as para-
graph (3); and
(2) by inserting after paragraph (1) the follow-
ing new paragraph:
‘‘(2)(A) For the purpose of carrying out this para-
graph, 
there 
are 
authorized 
to 
be 
appropriated
$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. The preceding sentence constitutes
budget authority in advance of appropriations acts and
represents the obligation of the Federal government to
provide funding for payments in the amounts, and for the
fiscal years, specified under this section. Such levels shall
not be subject to offset or reprogramming for any reason.
‘‘(B) The authorizations of appropriations established
in subparagraph (A) are in addition to the authorization
of appropriations in paragraph (1).
‘‘(C) Of the amounts appropriated under subpara-
graph (A), 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 pro-
gram under section 338A, or in the Loan Repayment Pro-
gram under section 338B, the total number who are being
educated as nurses or are serving as nurses, respectively,
is increased to 20 percent.
‘‘(D) Notwithstanding section 333(a)(3) and the pri-
orities stated in section 333A for approval of applications
for the assignment of Corps members, to the extent that
additional funds appropriated pursuant to subparagraph
(A) increases the number of individuals participating in
the Scholarship Program under Section 338A of the Pub-
lic Health Service Act and in the Loan Repayment Pro-
gram under section 338B of such Act over the number
of individuals participating in such programs in fiscal year
1994, the Secretary shall give preference in assigning
those individuals to applicants that serve a health profes-
sional shortage area and receive grants to provide health
services and enabling services under sections 329, 330 or
340 (including, but not limited to, networks and plans
awarded funds under section 330) and other Federally
qualified health centers as defined in section 1861(aa)(4)
of the Social Security Act.’’.
SEC. 6. FACILITATING THE PARTICIPATION OF COMMUNITY
PROVIDERS IN HEALTH PROFESSIONS TRAIN-
ING.
(a) PREFERENCE FOR CERTAIN HEALTH PROFES-
SIONS PROGRAM APPLICANTS.—Section 791(a)(1) of the
Public Health Service Act (42 U.S.C. 295j(a)(1)) is
amended—
(1) by striking ‘‘or under section 766 or 767,’’
and inserting the following: ‘‘, under section 766 or
767, or under section 777 or 778, in addition to
preferences stated in such sections,’’;
(2)(A) by striking ‘‘(B) during’’ and inserting
‘‘(ii) during’’; and
(B) by striking ‘‘(A) has’’ and inserting ‘‘(B)(i)
has’’; and
(3) by inserting before subparagraph (B) (as
redesignated by paragraph (2) of this subsection)
the following new subparagraph:
‘‘(A) is (or is a co-applicant with) an entity
that receives support under section 329, 330, or
340, or that is certified as a Federally qualified
health center under section 1861(aa)(4) of the
Social Security Act; and’’.
(b) PREFERENCE FOR CERTAIN NURSE TRAINING
PROGRAM APPLICANTS.—Section 860(e)(1)(A) of the
Public Health Service Act (42 U.S.C. 298b–7(e)(1)(A)) is
amended—
(1) by inserting ‘‘820(b), 820(c),’’ before
‘‘821,’’;
(2) by inserting ‘‘827,’’ before ‘‘830,’’;
(3)(A) by striking ‘‘(ii) during’’ and inserting
‘‘(II) during’’; and
(B) by striking ‘‘(i) has’’ and inserting ‘‘(ii)(I)
has’’; and
(4) by inserting before clause (ii) (as redesig-
nated by paragraph (3) of this subsection) the fol-
lowing new clause:
‘‘(i) is (or is a co-applicant with) an
entity that receives support under section
329, 330, or 340, or that is certified as a
Federally qualified health center under sec-
tion 1861(aa)(4) of the Social Security
Act; and’’.
(c) PAYMENT FOR DIRECT COSTS OF GRADUATE
MEDICAL EDUCATION.—Section 1886(h)(4)(E) of the So-
cial Security Act (42 U.S.C. 1395ww(h)(4)(E)) is amend-
ed by inserting before the period at the end the following:
‘‘(or, in the case of activities performed at a Federally
qualified health center described in section 1861(aa)(4),
if the hospital incurs any of the costs for the training pro-
gram at such center and reimburses the center for any
of the costs of the program that the center incurs)’’.
(d) PAYMENT FOR INDIRECT COSTS OF GRADUATE
MEDICAL EDUCATION.—Section 1886(d)(5)(B)(iv) of the
Social Security Act (42 U.S.C. 1395ww(d)(5)(B)(iv)), as
amended by section 13506 of the Omnibus Budget Rec-
onciliation Act of 1993 (Public Law 103–66; 107 Stat.
579), is amended—
(1) by striking ‘‘entity receiving a grant’’ and
all that follows through ‘‘control of the hospital’’ and
inserting ‘‘Federally qualified health center de-
scribed in section 1861(aa)(4)’’;
(2) by striking ‘‘all, or substantially all, of the
costs’’ and inserting ‘‘any of the costs’’; and
(3) by striking ‘‘residents)’’ and inserting the
following: ‘‘residents and reimburses the center for
any of the costs of the program that the center in-
curs)’’.
(e) CLARIFYING ALLOWABILITY OF COSTS.—Section
1833(a)(3) of the Social Security Act (42 U.S.C.
1395l(a)(3)) is amended by inserting after ‘‘furnishing
such services’’ the following: ‘‘(including, without limita-
tion, all costs associated with participation in an approved
medical residency training program)’’.
(f) EFFECTIVE DATE.—The amendments made by
subsections (c), (d), and (e) shall apply to services fur-
nished during cost reporting periods beginning on or after
October 1, 1994.
SEC. 7. PROVIDING SAFEGUARDS FOR RURAL HEALTH
CLINICS 
AND 
FEDERALLY 
QUALIFIED
HEALTH CENTERS IN MEDICAID DEMONSTRA-
TIONS.
(a) Section 1115(a)(1) of the Social Security Act (42
U.S.C. 1315(a)(1)) is amended by striking ‘‘or 1902,’’ and
inserting the following: ‘‘or 1902 (other than paragraphs
(13)(E), (10)(A), and (23) of section 1902(a) insofar as
such paragraphs require provision of, payment for, and
allow freedom of choice to select the provider of, the care
and services described in subparagraphs (B) and (C) of
section 1905(a)(2)),’’.
(b) Section 1115(a)(2) of the Social Security Act (42
U.S.C. 1315(a)(2)) is amended by inserting before the pe-
riod at the end the following: ‘‘, except that this paragraph
shall not provide authority for the Secretary to waive com-
pliance by a State with the requirements of paragraph
(2)(A)(ix) or (3) of section 1903(m)’’.
(c) Section 1915(b) of the Social Security Act (42
U.S.C. 1396n(b)) is amended—
(1) in the matter preceding paragraph (1), by
striking ‘‘section 1905(a)(2)(C))’’ and inserting
‘‘subparagraphs 
(B) 
and 
(C) 
of 
section
1905(a)(2))’’; and
(2) in the matter after and below paragraph
(4), by striking ‘‘section 1905(a)(4)(C)’’ and insert-
ing ‘‘paragraphs (2)(B), (2)(C), and (4)(C) of sec-
tion 1905(a)’’.
(d) Section 1903(m) of the Social Security Act (42
U.S.C. 1396b) is amended by inserting after paragraph
(2) the following new paragraph:
‘‘(3) Notwithstanding sections 1115 and 1915(b), in
the event that a State agency contracts with an entity de-
scribed in paragraph (2)(A) or an entity similar to such
entity, such State agency, upon receiving an offer to pro-
vide health care services from a rural health clinic or a
Federally qualified health center operating in the same ge-
ographic area as such entity, shall enter into a contract
with such clinic or center for the provision of all health
care services referred to in such offer and, unless the clinic
or center elects otherwise, the payment made by the State
to such clinic or center for services described in subpara-
graphs (B) and (C) of section 1905(a)(2) to the individ-
uals proposed to be served in the clinic’s or center’s offer
shall be made at the rates of payment specified in section
1902(a)(13)(E).’’.
SEC. 8. PROVIDING SAFE HARBOR FOR CERTAIN COLLABO-
RATIVE EFFORTS THAT BENEFIT MEDICALLY
UNDERSERVED PERSONS.
(a) Section 1128B(b)(3) of the Social Security Act
(42 U.S.C. 1320a–7b(b)(3)) is amended—
(1) in subparagraph (D), by striking ‘‘and’’
after the semicolon at the end;
(2) in subparagraph (E), by striking the period
at the end and inserting ‘‘; and’’; and
(3) by adding at the end the following:
‘‘(F) any remuneration paid by or to a recipient
or subrecipient of Federal grant funds under or in
connection with an arrangement for the procurement
of goods or services by the recipient or subrecipient,
the referral of patients, or the lease or purchase of
space or equipment, provided that the following re-
quirements are met:
‘‘(i) The arrangement is in writing and
signed by the parties.
‘‘(ii) The arrangement will result in the
savings of Federal grant funds or increased rev-
enues to the recipient or subrecipient that will
be used to increase the availability or accessibil-
ity of services to a medically underserved popu-
lation served by the recipient or subrecipient or
an improvement in the quality of services to
such population; provided that the recipient or
subrecipient may seek a prior determination
from the Public Health Service that this re-
quirement is met and, if the recipient or sub-
recipient does so, Public Health Service ap-
proval shall be conclusive and binding on the
Federal Government.
‘‘(iii) The arrangement will not result in
private inurement to any current employees or
members of the Board of Directors of the recip-
ient or subrecipient, or to agents of the recipi-
ent or subrecipient who were involved in rec-
ommending or negotiating the arrangement.
‘‘(iv) With respect to an arrangement
under which a recipient or subrecipient is pro-
curing goods or services, the provider of the
goods or services is the only provider able to
supply such goods or services, or the recipient
or subrecipient has engaged in a competitive
process to procure the goods or services that
meets the requirements for competition under
Federal grant awards.
‘‘(v) With respect to an arrangement for a
referral of patients, the arrangement will assure
that all patients covered or affected by the ar-
rangement are advised that they may request a
referral to any person or entity of their choos-
ing, subject to appropriate contractual limita-
tions under which the recipient or subrecipient
may operate as a health plan or as a contract
health plan provider and such limitations as the
patient may be under as an enrollee of a health
plan.
‘‘(vi) With respect to an arrangement for
a referral of patients, the arrangement will not
interfere with the discretion of health profes-
sionals to refer patients in a manner they be-
lieve will most appropriately deal with a pa-
tient’s particular circumstances, subject to ap-
propriate contractual limitations under which
the recipient or subrecipient may operate as a
health plan or as a contract health plan pro-
vider and such limitations as the patient may
be under as an enrollee of a health plan.
For any arrangement that does not meet the above
requirements, paragraphs (1) and (2) shall not apply
when the recipient or subrecipient of Federal grant
funds has applied to the Secretary for approval of
the arrangement and the Secretary, after consulta-
tion with the Department of Health and Human
Services Office of Inspector General, has approved
the arrangement based upon a finding that the ar-
rangement will produce a substantial benefit to a
medically underserved population that outweighs the
arrangement’s failure to fully satisfy all of the above
requirements. For any arrangement existing on the
date of enactment of this subparagraph (F) involv-
ing a recipient or subrecipient of Federal grant
funds that does not meet the foregoing requirements
and would subject the recipient or subrecipient to
criminal penalties under paragraphs (1) or (2), the
recipient or subrecipient shall be immune from
criminal prosecution under paragraphs (1) or (2),
provided that within six months after enactment of
this subparagraph (F) the arrangement is termi-
nated or amended to conform to the requirements of
this subparagraph (F).
For purposes of this section, a ‘recipient’ shall mean
a public or nonprofit private entity that receives a grant
or cooperative agreement under the Public Health Service
Act or title V of this Social Security Act. For purposes
of this section, a ‘subrecipient’ shall mean a public or non-
profit private entity that performs substantive work under
a grant or cooperative agreement under the Public Health
Service Act or title V of this Act to a recipient.’’.
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