187
fair market value and is not determined in
a manner that takes into account the vol-
ume or value of any referrals or other busi-
ness generated between the parties,
‘‘(iii) the compensation is provided
pursuant to an agreement which would be
commercially reasonable even if no refer-
rals were made to the entity, and
‘‘(iv) the compensation arrangement
meets such other requirements as the Sec-
retary may impose by regulation as needed
to protect against program or patient
abuse.
‘‘(B) SPECIFIED SERVICES.—For purposes
of subparagraph (A), the services specified in
this subparagraph are any of the following:
‘‘(i) Consultative services that—
‘‘(I) relate to results that have
been obtained that are outside estab-
lished parameters, or are specifically
requested by the referring physician
on a specified patient,
‘‘(II) are furnished by a physi-
cian other than the referring physi-
cian (or by another physician who is
188
a member of the same group prac-
tice), and
‘‘(III) for which the physician
furnishes a written report for that pa-
tient.
‘‘(ii) Interpretation of tissue pathology
or Pap smear slides or the provision of
other cytology services.
‘‘(iii) Phlebotomy services for pater-
nity or toxicology testing where the serv-
ices are furnished by a physician other
than the physician referring the individual
for such testing (or by another physician
who is a member of the same group prac-
tice).
‘‘(iv) Employment-related health care
services, including a payment by a self-in-
sured employer for services rendered to
employee applicants, employees, or their
families under the terms of a health bene-
fit plan.
‘‘(v) Services as a clinical consultant
to the entity as required for certification of
the provider under section 353 of the Pub-
lic Health Service Act.
189
‘‘(vi) Services required by local, State,
or Federal licensure, accreditation, or
other health and safety provisions.
‘‘(vii) Services billed in the name of a
group practice provided by a physician
under contract to the group practice for
services not otherwise available directly
through a physician who is a member of
the group.
‘‘(8) PAYMENTS BY A PHYSICIAN FOR ITEMS
AND SERVICES.—Payments made by a physician—
‘‘(A) to a laboratory in exchange for the
provision of clinical laboratory services, or
‘‘(B) to an entity as compensation for
other items or services if the items or services
are furnished at a price that is consistent with
fair market value and are generally available to
referrors and non-referrors alike on similar
terms and conditions.
‘‘(9) PAYMENTS FOR PATHOLOGY SERVICES OF
A GROUP PRACTICE.—Payments made to a group
practice for pathology services under an agreement
if—
‘‘(A) the agreement is set out in writing
and specifies the services to be provided by the
190
parties and the compensation for services pro-
vided under the agreement,
‘‘(B) the compensation paid over the term
of the agreement is consistent with fair market
value and is not determined in a manner that
takes into account the volume or value of any
referrals or other business generated between
the parties,
‘‘(C) the compensation is provided pursu-
ant to an agreement which would be commer-
cially reasonable even if no referrals were made
to the entity; and
‘‘(D) the compensation arrangement be-
tween the parties meets such other require-
ments as the Secretary may impose by regula-
tion as needed to protect against program or
patient abuse.’’.
(c) TREATMENT OF GROUP PRACTICES.—
(1) USE OF BILLING NUMBERS, ETC.—Section
1877 of the Social Security Act is amended—
(A) in subsection (b)(2)(B), by inserting
‘‘under a billing number assigned to the group
practice’’ after ‘‘member’’,
191
(B) in subsection (h)(4)(B), by inserting
‘‘and under a billing number assigned to the
group’’ after ‘‘in the name of the group’’, and
(C) in subsection (h)(4)(C), by striking
‘‘by members of the group’’.
(2) TREATMENT
OF
CLINICAL
LABORATORY
SERVICES FURNISHED UNDER ARRANGEMENTS BE-
TWEEN HOSPITALS AND GROUP PRACTICES.—
(A) IN GENERAL.—Section 1877(h)(4) of
such Act is amended—
(i) in subparagraph (B) (as amended
by paragraph (1)(B)), by inserting ‘‘(or
are billed in the name of a hospital for
which the group provides clinical labora-
tory services pursuant to an arrangement
that meets the requirements of subpara-
graph (B))’’ after ‘‘assigned to the group’’;
(ii) by redesignating subparagraphs
(A) through (D) as clauses (i) through
(iv), respectively;
(iii) by inserting ‘‘(A)’’ after ‘‘.—’’;
and
(iv) by adding at the end the following
new subparagraph:
192
‘‘(B) The requirements of this subparagraph,
with respect to an arrangement for clinical labora-
tory services provided by the laboratory of a group
and billed in the name of a hospital, are that—
‘‘(i) with respect to services provided to an
inpatient of the hospital, the arrangement is
pursuant to the provision of inpatient hospital
services under section 1861(b)(3);
‘‘(ii) the arrangement began before Decem-
ber 19, 1989, and has continued in effect with-
out interruption since such date;
‘‘(iii) the laboratory provides substantially
all of the clinical laboratory services to the hos-
pital’s patients;
‘‘(iv) the arrangement is pursuant to an
agreement that is set out in writing and that
specifies the services to be provided by the par-
ties and the compensation for services provided
under the agreement;
‘‘(v) the compensation paid over the term
of the agreement is consistent with fair market
value and the compensation per unit of services
is fixed in advance and is not determined in a
manner that takes into account the volume or
193
value of any referrals or other business gen-
erated between the parties;
‘‘(vi) the compensation is provided pursu-
ant to an agreement which would be commer-
cially reasonable even if no referrals were made
to the entity; and
‘‘(vii) the arrangement between the parties
meets such other requirements as the Secretary
may impose by regulation as needed to protect
against program or patient abuse.’’.
(B) CONFORMING
AMENDMENT.—Section
1877(b)(2)(B) of such Act is amended by in-
serting ‘‘(or by a hospital for which such a
group practice provides clinical laboratory serv-
ices pursuant to an arrangement that meets the
requirements of subsection (h)(4)(B))’’ after
‘‘by a group practice of which such physician is
a member’’.
(3) TREATMENT OF CERTAIN FACULTY PRAC-
TICE
PLANS.—The 
last 
sentence 
of 
section
1877(h)(4)(A) of such Act, as redesignated by para-
graph (1)(A), is amended by inserting ‘‘, institution
of higher education, or medical school’’ after ‘‘hos-
pital’’.
194
(d) EXPANDING RURAL PROVIDER EXCEPTION TO
COVER COMPENSATION ARRANGEMENTS.—
(1) IN GENERAL.—Section 1877(b) of such Act
is further amended—
(A) by redesignating paragraph (5) as
paragraph (7), and
(B) by inserting after paragraph (4) the
following new paragraph:
‘‘(5) RURAL PROVIDERS.—In the case of des-
ignated services if—
‘‘(A) the entity furnishing the services is in
a 
rural 
area 
(as 
defined 
in 
section
1886(d)(2)(D)), and
‘‘(B) substantially all of the services fur-
nished by the entity to individuals entitled to
benefits under this title are furnished to such
individuals who reside in such a rural area.’’.
(2) 
CONFORMING
AMENDMENTS.—Section
1877(d) of such Act is amended—
(A) by striking paragraph (2), and
(B) by redesignating paragraph (3) as
paragraph (2).
(e) EXEMPTION OF COMPENSATION ARRANGEMENTS
INVOLVING CERTAIN TYPES OF REMUNERATION.—Sec-
tion 1877(h)(1) of such Act is amended—
195
(1) by striking subparagraph (B);
(2) in subparagraph (A), by inserting before the
period the following: ‘‘(other than an arrangement
involving only remuneration described in subpara-
graph (B))’’; and
(3) by adding at the end the following new sub-
paragraph:
‘‘(B) Remuneration described in this subpara-
graph is any remuneration consisting of any of the
following:
‘‘(i) The forgiveness of amounts owed for
inaccurate tests or procedures, mistakenly per-
formed tests or procedures, or the correction of
minor billing errors.
‘‘(ii) The provision of items, devices, or
supplies of minor value that are used to—
‘‘(I) collect, transport, process, or
store specimens for the entity providing
the item, device, or supply, or
‘‘(II) communicate the results of tests
or procedures for such entity.
‘‘(iii) The furnishing by an entity of lab-
oratory services to a group practice affiliated
with the entity, if the entity provides all or sub-
196
stantially all of the clinical laboratory services
of the group practice.’’.
(f) MISCELLANEOUS
AND
TECHNICAL
CORREC-
TIONS.—Section 1877 of such Act is amended—
(1) in the fourth sentence of subsection (f)—
(A) by striking ‘‘provided’’ and inserting
‘‘furnished’’, and
(B) by striking ‘‘provides’’ and inserting
‘‘furnish’’;
(2) in the fifth sentence of subsection (f)—
(A) by striking ‘‘providing’’ each place it
appears and inserting ‘‘furnishing’’,
(B) by striking ‘‘with respect to the provid-
ers’’ and inserting ‘‘with respect to the enti-
ties’’, and
(C) by striking ‘‘diagnostic imaging serv-
ices of any type’’ and inserting ‘‘magnetic reso-
nance imaging, computerized axial tomography
scans, and ultrasound services’’; and
(3) in subsection (a)(2)(B), by striking ‘‘sub-
section (h)(1)(A)’’ and inserting ‘‘subsection (h)(1)’’.
SEC. 354. EFFECTIVE DATES.
(a) EXPANSION OF COVERAGE AND PAYORS.—The
amendments made by sections 351 and 352 shall apply
with respect to a referral by a physician for designated
197
health services (as described in section 1877(i) of the So-
cial Security Act) made on or after the first day of the
first month beginning 2 years after the date of the enact-
ment of this Act.
(b) CHANGES IN EXCEPTIONS, ETC.—The amend-
ments made by section 353 shall apply to referrals made
on or after January 1, 1992.
Subtitle D—Other Provisions
SEC. 361. MALPRACTICE REFORM.
(a) STUDY BY PHYSICIAN PAYMENT REVIEW COM-
MISSION.—The Physician Payment Review Commission
shall conduct a study of—
(1) the need for tort reforms with respect to
medical malpractice liability claims, including the
need to establish or impose alternative dispute reso-
lution requirements on such claims; and
(2) the impact of such reforms on—
(A) expenditures for health care services
and on access to such services,
(B) the quality of health care services, and
(C) access of injured patients to the medi-
cal malpractice system.
(b) REPORT.—Not later than September 30, 1993,
the Commission shall submit a report to Congress on the
study conducted under paragraph (1) and shall include in