(ix) The unit and the hospital avoid
unnecessary duplication of facilities and
equipment, except that the unit may install
appropriate support equipment for routine
primary health services.
(x) The unit is maintained as a sepa-
rate and distinct cost and revenue center
for accounting purposes.
(xi) The unit is operated in accord-
ance with all of the requirements specified
for community health centers in section
330(e)(3) of the Public Health Service Act
(other than subparagraph (G)).
(xii) The hospital has an advisory
committee that—
(I) is composed of individuals a
majority of whom are health consum-
ers in the catchment area of the hos-
pital; and
(II) meets at least 6 times a year
to review the operations of the pri-
mary care center and develop rec-
ommendations to the governing board
of the hospital about the operation of
the center and the types of services to
be provided.
(xiii) The unit maintains an informa-
tion program for its patients that fully dis-
closes—
(I) the covered professional serv-
ices and referral capabilities offered
by the unit; and
(II) the method by which pa-
tients of the unit may resolve griev-
ances about billing for covered profes-
sional services and the quality of such
services.
(B) COMMUNITY HOSPITAL.—For purposes
of this title, the term ‘‘community hospital’’
means a public general hospital, owned and op-
erated by a State, county or local unit of gov-
ernment, or a private community hospital
that—
(A) has less than 50 beds; and
(B) primarily serves—
(i) a medically underserved popu-
lation, as defined in section 330(b)(3) of
the Public Health Service Act; or
(ii) a health professional shortage
area, as defined in section 332(a)(1) of
such Act.
(C) PRIMARY
CARE
GROUP
PRACTICE.—
For purposes of this title, the term ‘‘primary
care group practice’’ means any combination of
3 or more primary care physicians who are—
(i) organized to provide primary
health services in a manner that is consist-
ent with the needs of the population
served;
(ii) located in, or adjacent to, the
community hospital;
(iii) who have admitting privileges at
the community hospital; and
(iv)(I) who are salaried by the hos-
pital such that a majority of the members
of the group practice is full time in the pri-
mary care center; or
(II) who are organized into a legal en-
tity (partnership, corporation, or profes-
sional association) that has a contract ap-
proved by the Secretary with the commu-
nity hospital to provide primary health
services.
(b) OTHER DEFINITIONS.—For purposes of this title:
(1) The term ‘‘rural area’’ has the meaning
given such term in section 1886(d)(2)(D) of the So-
cial Security Act.
(2) The term ‘‘Secretary’’ means the Secretary
of Health and Human Services.
(3) The term ‘‘State’’ means each of the several
States, the District of Columbia, Puerto Rico, the
Virgin Islands, Guam, the Northern Mariana Is-
lands, and American Samoa.
(4) The term ‘‘underserved rural area’’ means
a rural area designated—
(A) as a health professional shortage area
under section 332(a) of the Public Health Serv-
ice Act; or
(B) as a chronically underserved area
under section 101.
TITLE 
II—INCENTIVES 
FOR
HEALTH PROFESSIONALS TO
PRACTICE IN RURAL AREAS
Subtitle A—National Health
Service Corps Program
SEC. 201. NATIONAL HEALTH SERVICE CORPS LOAN REPAY-
MENTS EXCLUDED FROM GROSS INCOME.
(a) IN GENERAL.—Part III of subchapter B of chap-
ter 1 of the Internal Revenue Code of 1986 (relating to
items specifically excluded from gross income) is amended
by redesignating section 137 as section 138 and by insert-
ing after section 136 the following new section:
‘‘SEC. 137. NATIONAL HEALTH SERVICE CORPS LOAN RE-
PAYMENTS.
‘‘(a) GENERAL RULE.—Gross income shall not in-
clude any qualified loan repayment.
‘‘(b) QUALIFIED LOAN REPAYMENT.—For purposes
of this section, the term ‘qualified loan repayment’ means
any payment made on behalf of the taxpayer by the Na-
tional Health Service Corps Loan Repayment Program
under section 338B(g) of the Public Health Service Act.’’.
(b) CONFORMING AMENDMENT.—Paragraph (3) of
section 338B(g) of the Public Health Service Act is
amended by striking ‘‘Federal, State, or local’’ and insert-
ing ‘‘State or local’’.
(c) CLERICAL AMENDMENT.—The table of sections
for part III of subchapter B of chapter 1 of the Internal
Revenue Code of 1986 is amended by striking the item
relating to section 137 and inserting the following:
‘‘Sec. 137. National Health Service Corps loan repayments.
‘‘Sec. 138. Cross references to other Acts.’’.
(d) EFFECTIVE DATE.—The amendments made by
this section shall apply to payments made under section
338B(g) of the Public Health Service Act after the date
of the enactment of this Act.
SEC. 202. STUDY REGARDING DESIGNATION AS HEALTH
PROFESSIONAL SHORTAGE AREA; ALLOCA-
TION OF CORPS MEMBERS AMONG SHORT-
AGE AREAS.
(a) IN GENERAL.—The Secretary of Health and
Human Services (in this section referred to as the ‘‘Sec-
retary’’) shall conduct a study for the purpose of determin-
ing the following:
(1) With respect to the designation of health
professional shortage areas under subpart II of part
D of title III of the Public Health Service Act—
(A) whether the statutory and administra-
tive criteria for the designation of such areas
should be modified to ensure that all areas with
significant shortages of health professionals re-
ceive such a designation; and
(B) if so, the recommendations of the Sec-
retary for modifications in the criteria.
(2) With respect to the assignment of members
of the National Health Service Corps under such
subpart—
(A) whether the statutory and administra-
tive criteria for the assignment of Corps mem-
bers should be modified in order to ensure that
the members are equitably allocated among
health professional shortage areas; and
(B) if so, the recommendations of the Sec-
retary for modifications in the criteria.
(b) REPORT.—Not later than May 1, 1996, the Sec-
retary shall complete the study required in subsection (a)
and submit to the Congress a report describing the find-
ings made in the study.
SEC. 203. OTHER PROVISIONS REGARDING NATIONAL
HEALTH SERVICE CORPS.
(a) PRIORITY IN ASSIGNMENT OF CORPS MEMBERS;
COMMUNITY
RURAL
HEALTH
NETWORKS.—Section
333A(a)(1)(B) of the Public Health Service Act (42
U.S.C. 254f–1(a)(1)(B)) is amended—
(1) in clause (iii), by striking ‘‘and’’ after the
semicolon at the end;
(2) in clause (iv), by adding ‘‘and’’ after the
semicolon at the end; and
(3) by adding at the end the following clause:
‘‘(v) is a participant in a community
rural health network, as defined in section
104 of the Rural Health Development
Act.’’.
(b) ALLOCATION FOR PARTICIPATION OF NURSES IN
SCHOLARSHIP PROGRAM.—Section 338H(b)(2) of the
Public Health Service Act (42 U.S.C. 254q(b)(2)) is
amended by adding at the end the following subparagraph:
‘‘(C) Of the amounts appropriated under
paragraph (1) for fiscal year 1996 and subse-
quent fiscal years, 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, the total number who are being educated
as nurses or are serving as nurses, respectively,
is increased to 20 percent.’’.
Subtitle B—Incentives Under Other
Programs
SEC. 211. ADDITIONAL PAYMENTS UNDER MEDICARE FOR
PHYSICIANS’ 
SERVICES 
FURNISHED 
IN
SHORTAGE AREAS.
(a) INCREASE
IN AMOUNT
OF ADDITIONAL PAY-
MENT.—Section 1833(m) of the Social Security Act (42
U.S.C. 1395l(m)) is amended by striking ‘‘10 percent’’
and inserting ‘‘20 percent’’.
(b) RESTRICTION TO PRIMARY CARE SERVICES.—
Section 1833(m) of such Act (42 U.S.C. 1395l(m)) is
amended by inserting after ‘‘physicians’ services’’ the fol-
lowing: ‘‘consisting of primary care services (as defined in
section 1842(i)(4))’’.
(c) EXTENSION OF PAYMENT FOR FORMER SHORT-
AGE AREAS.—
(1) IN GENERAL.—Section 1833(m) of the So-
cial Security Act (42 U.S.C. 1395l(m)) is amended
by striking ‘‘area,’’ and inserting ‘‘area (or, in the
case of an area for which the designation as a health
professional shortage area under such section is
withdrawn, in the case of physicians’ services fur-
nished to such an individual during the 3-year pe-
riod beginning on the effective date of the with-
drawal of such designation),’’.
(2) EFFECTIVE DATE.—The amendment made
by paragraph (1) shall apply to physicians’ services
furnished in an area for which the designation as a
health professional shortage area under section
332(a)(1)(A) of the Public Health Service Act is
withdrawn on or after January 1, 1996.
(d) REQUIRING CARRIERS TO REPORT ON SERVICES
PROVIDED.—Section 1842(b)(3) of such Act (42 U.S.C.
1395u(b)(3)) is amended—
(1) by striking ‘‘and’’ at the end of subpara-
graph (I); and
(2) by inserting after subparagraph (I) the fol-
lowing new subparagraph:
‘‘(J) will provide information to the Secretary
not later than 30 days after the end of the contract
year on the types of providers to whom the carrier
made additional payments during the year for cer-
tain 
physicians’ 
services 
pursuant 
to 
section
1833(m), together with a description of the services
furnished by such providers during the year; and’’.
(e) STUDY.—
(1) IN GENERAL.—The Secretary of Health and
Human Services shall conduct a study analyzing the
effectiveness of the provision of additional payments
under part B of the medicare program for physi-
cians’ services provided in health professional short-
age areas in recruiting and retaining physicians to
provide services in such areas.
(2) REPORT.—Not later than 1 year after the
date of the enactment of this Act, the Secretary
shall submit to Congress a report on the study con-
ducted under paragraph (1), and shall include in the
report such recommendations as the Secretary con-
siders appropriate.
(f) EFFECTIVE DATE.—The amendments made by
subsections (a), (b), and (d) shall apply to physicians’
services furnished on or after January 1, 1996.
SEC. 212. DEVELOPMENT OF MODEL STATE SCOPE OF
PRACTICE LAW.
(a) IN GENERAL.—The Secretary of Health and
Human Services shall develop and publish a model law
that may be adopted by States to increase the access of
individuals residing in underserved rural areas to health
care services by expanding the services which non-physi-
cian health care professionals may provide in such areas.
(b) DEADLINE.—The Secretary shall publish the
model law developed under subsection (a) not later than
1 year after the date of the enactment of this Act.
TITLE III—ASSISTANCE FOR
INSTITUTIONAL PROVIDERS
Subtitle A—Hospital-Affiliated
Primary Care Centers
SEC. 301. HOSPITAL-AFFILIATED PRIMARY CARE CENTERS.
Section 330 of the Public Health Service Act (42
U.S.C. 254c) is amended by adding at the end the follow-
ing subsection:
‘‘(l) Of the amounts appropriated under subsection
(g)(1)(A) for a fiscal year, the Secretary shall reserve not
less than 10 percent, and not more than 20 percent, for
the establishment and operation of hospital-affiliated pri-
mary care centers, as defined in section 104 of the Rural
Health Development Act.’’.
Subtitle B—Assistance to Rural
Providers Under Medicare
SEC. 311. ESTABLISHMENT OF RURAL EMERGENCY ACCESS
CARE HOSPITALS.
(a) IN GENERAL.—Section 1861 of the Social Secu-
rity Act (42 U.S.C. 1395x) is amended by adding at the
end the following new subsection:
‘‘Rural Emergency Access Care Hospital; Rural
Emergency Access Care Hospital Services
‘‘(oo)(1) The term ‘rural emergency access care hos-
pital’ means, for a fiscal year, a facility with respect to
which the Secretary finds the following:
‘‘(A) The facility is located in a rural area (as
defined in section 1886(d)(2)(D)).
‘‘(B) The facility was a hospital under this title
at any time during the 5-year period that ends on
the date of the enactment of this subsection.
‘‘(C) The facility is in danger of closing due to
low inpatient utilization rates and negative operating
losses, and the closure of the facility would limit the
access of individuals residing in the facility’s service
area to emergency services.
‘‘(D) The facility has entered into (or plans to
enter into) an agreement with a hospital with a par-
ticipation agreement in effect under section 1866(a),
and under such agreement the hospital shall accept
patients transferred to the hospital from the facility
and receive data from and transmit data to the facil-
ity.
‘‘(E) There is a practitioner who is qualified to
provide advanced cardiac life support services (as de-
termined by the State in which the facility is lo-
cated) on-site at the facility on a 24-hour basis.
‘‘(F) A physician is available on-call to provide
emergency medical services on a 24-hour basis.
‘‘(G) The facility is a member of a community
rural health network under section 104 of the Rural
Health Development Act.
‘‘(H) The facility meets such staffing require-
ments as would apply under section 1861(e) to a
hospital located in a rural area, except that—
‘‘(i) the facility need not meet hospital
standards relating to the number of hours dur-
ing a day, or days during a week, in which the
facility must be open, except insofar as the fa-
cility is required to provide emergency care on
a 24-hour basis under subparagraphs (E) and
(F); and
‘‘(ii) the facility may provide any services
otherwise required to be provided by a full-time,
on-site dietician, pharmacist, laboratory techni-
cian, medical technologist, or radiological tech-
nologist on a part-time, off-site basis.
‘‘(I) The facility meets the requirements appli-
cable to clinics and facilities under subparagraphs
(C) through (J) of paragraph (2) of section
1861(aa) and of clauses (ii) and (iv) of the second
sentence of such paragraph (or, in the case of the
requirements of subparagraph (E), (F), or (J) of
such paragraph, would meet the requirements if any
reference in such subparagraph to a ‘nurse practi-
tioner’ or to ‘nurse practitioners’ was deemed to be
a reference to a ‘nurse practitioner or nurse’ or to
‘nurse practitioners or nurses’); except that in deter-
mining whether a facility meets the requirements of
this subparagraph, subparagraphs (E) and (F) of
that paragraph shall be applied as if any reference
to a ‘physician’ is a reference to a physician as de-
fined in section 1861(r)(1).
‘‘(2) The term ‘rural emergency access care hospital
services’ means the following services provided by a rural
emergency access care hospital:
‘‘(A) An appropriate medical screening exam-
ination (as described in section 1867(a)).
‘‘(B) Necessary stabilizing examination and
treatment services for an emergency medical condi-
tion and labor (as described in section 1867(b)).
‘‘(3) The term ‘inpatient rural emergency access care
hospital services’ means services described in paragraph
(2), furnished to an individual over a continuous period
not to exceed 24 hours (except that such services may be
furnished over a longer period in the case of an individual
who is unable to leave the hospital because of inclement
weather) that would be inpatient hospital services if fur-
nished to an inpatient of a hospital by a hospital.’’.
(b) REQUIRING RURAL EMERGENCY ACCESS CARE
HOSPITALS
TO MEET HOSPITAL ANTI-DUMPING RE-
QUIREMENTS.—Section 1867(e)(5) of such Act (42 U.S.C.
1395dd(e)(5)) is amended by striking ‘‘1861(mm)(1))’’
and inserting ‘‘1861(mm)(1)) and a rural emergency ac-
cess care hospital (as defined in section 1861(oo)(1))’’.
SEC. 312. COVERAGE OF AND PAYMENT FOR SERVICES.
(a) UNDER PART A.—
(1) COVERAGE.—Section 1812(a)(1) of the So-
cial Security Act (42 U.S.C. 1395d(a)(1)) is amend-
ed by striking ‘‘or inpatient rural primary care hos-
pital services’’ and inserting ‘‘inpatient rural pri-
mary care hospital services, or inpatient rural emer-
gency access care hospital services’’.
(2) APPLICATION OF DEDUCTIBLE AND COIN-
SURANCE.—(A) Sections 1813(a) and 1813(b)(3)(A)
of such Act (42 U.S.C. 1395e(a), 1395e(b)(3)(A))
are each amended by striking ‘‘services or inpatient
rural primary care hospital services’’ each place it
appears and inserting ‘‘services, inpatient rural pri-
mary care hospital services, or inpatient rural emer-
gency access care hospital services’’.
(B) Section 1813(b)(3)(B) of such Act (42
U.S.C. 1395e(b)(3)(B)) is amended by inserting ‘‘,
inpatient rural emergency access care hospital serv-
ices,’’ after ‘‘inpatient rural primary care hospital
services’’.
(3) PAYMENT BASED ON REASONABLE COSTS.—
Section 1814 of such Act (42 U.S.C. 1395f) is
amended by adding at the end the following new
subsection:
‘‘Payment for Inpatient Rural Emergency Access Care
Hospital Services
‘‘(m) The amount of payment under this part for in-
patient rural primary care hospital services shall be equal
to the reasonable cost of such services (as determined
under section 1861(v)), less the amount the hospital may
charge as described in clause (ii) of section 1866(a)(2)(A),
but in no case may the payment for such services exceed
80 percent of such reasonable cost.’’.
(4) APPLICATION OF SPELL OF ILLNESS.—Sec-
tion 1861(a) of such Act (42 U.S.C. 1395x(a)) is
amended—
(A) in paragraph (1), by inserting ‘‘, inpa-
tient rural emergency access care hospital serv-
ices,’’ after ‘‘inpatient rural primary care hos-
pital services’’; and
(B) in paragraph (2), by striking ‘‘hospital
or rural primary care hospital’’ and inserting
‘‘hospital, rural primary care hospital, or rural
emergency access care hospital’’.
(b) UNDER PART B.—
(1) COVERAGE.—Section 1832(a)(2) of the So-
cial Security Act (42 U.S.C. 1395k(a)(2)) is amend-
ed—
(A) by striking ‘‘and’’ at the end of sub-
paragraph (I);
(B) by striking the period at the end of
subparagraph (J) and inserting ‘‘; and’’; and
(C) by adding at the end the following new
subparagraph:
‘‘(K) rural emergency access care hospital
services (as defined in section 1861(oo)(2)).’’.
(2) PAYMENT BASED ON REASONABLE COSTS.—
Section 1833(a)(2) of such Act (42 U.S.C.
1395l(a)(2)) is amended—
(A) by striking ‘‘and’’ at the end of sub-
paragraph (D);
(B) by adding ‘‘and’’ at the end of sub-
paragraph (F); and
(C) by adding at the end the following new
subparagraph:
‘‘(G) with respect to rural emergency ac-
cess care hospital services, the reasonable cost
of such services (as determined under section
1861(v)), less the amount the hospital may
charge as described in clause (ii) of section
1866(a)(2)(A), but in no case may the payment
for such services exceed 80 percent of such rea-
sonable cost;’’.
SEC. 313. EFFECTIVE DATE.
The amendments made by this subtitle shall apply to
fiscal years beginning on or after October 1, 1995.
Subtitle 
C—Demonstration 
Proj-
ects to Encourage Primary Care
and Rural-Based Graduate Med-
ical Education
SEC. 321. STATE AND CONSORTIUM DEMONSTRATION
PROJECTS.
(a) IN GENERAL.—
(1) PARTICIPATION OF STATES AND CONSOR-
TIA.—The Secretary shall establish and conduct a
demonstration project to increase the number and
percentage of medical students entering primary
care practice relative to those entering nonprimary
care practice under which the Secretary shall make
payments in accordance with subsection (d)—
(A) to not more than 10 States for the
purpose of testing and evaluating mechanisms
to meet the goals described in section 322; and
(B) to not more than 10 health care train-
ing consortia for the purpose of testing and
evaluating mechanisms to meet such goals.
(2) EXCLUSION OF CONSORTIA IN PARTICIPAT-
ING STATES.—A consortia may not receive payments
under the demonstration project under paragraph
(1)(B) if any of its members is located in a State
receiving payments under the project under para-
graph (1)(A).
(b) APPLICATIONS.—
(1) IN GENERAL.—Each State and consortium
desiring to conduct a demonstration project under
this section shall prepare and submit to the Sec-
retary an application, at such time, in such manner,
and containing such information as the Secretary
may require to assure that the State or consortium
will meet the goals described in section 322. In the
case of an application of a State, the application
shall include—
(A) information demonstrating that the
State has consulted with interested parties with
respect to the project, including State medical
associations, State hospital associations, and
medical schools located in the State;
(B) an assurance that no hospital conduct-
ing an approved medical residency training pro-
gram in the State will lose more than 10 per-
cent of such hospital’s approved medical resi-
dency positions in any year as a result of the
project; and
(C) an explanation of a plan for evaluating
the impact of the project in the State.
(2) APPROVAL OF APPLICATIONS.—A State or
consortium that submits an application under para-
graph (1) may begin a demonstration project under
this subsection—
(A) upon approval of such application by
the Secretary; or
(B) at the end of the 60-day period begin-
ning on the date such application is submitted,
unless the Secretary denies the application dur-
ing such period.
(3) NOTICE AND COMMENT.—A State or con-
sortium shall issue a public notice on the date it
submits an application under paragraph (1) which
contains a general description of the proposed dem-
onstration project. Any interested party may com-
ment on the proposed demonstration project to the
State or consortium or the Secretary during the 30-
day period beginning on the date the public notice
is issued.
(c) SPECIFIC REQUIREMENTS FOR PARTICIPANTS.—
(1) REQUIREMENTS FOR STATES.—Each State
participating in the demonstration project under this
subtitle shall use the payments provided under sub-
section (d) to test and evaluate either of the follow-
ing mechanisms to increase the number and percent-
age of medical students entering primary care prac-
tice relative to those entering nonprimary care prac-
tice:
(A) USE
OF
ALTERNATIVE
WEIGHTING
FACTORS.—
(i) IN
GENERAL.—The State may
make payments to hospitals in the State
for direct graduate medical education costs
in amounts determined under the meth-
odology provided under section 1886(h) of
the Social Security Act, except that the
State shall apply weighting factors that are
different than the weighting factors other-
wise set forth in section 1886(h)(4)(C) of
the Social Security Act.
(ii) USE OF PAYMENTS FOR PRIMARY
CARE
RESIDENTS.—In applying different
weighting factors under clause (i), the
State shall ensure that the amount of pay-
ment made to hospitals for costs attrib-
utable to primary care residents shall be
greater than the amount that would have
been paid to hospitals for costs attributable
to such residents if the State had applied
the weighting factors otherwise set forth in
section 1886(h)(4)(C) of the Social Secu-
rity Act.
(B) PAYMENTS FOR MEDICAL EDUCATION
THROUGH CONSORTIUM.—The State may make
payments for graduate medical education costs
through payments to a health care training con-
sortium (or through any entity identified by
such a consortium as appropriate for receiving
payments on behalf of the consortium) that is
established in the State but that is not other-
wise participating in the demonstration project.
(2) REQUIREMENTS FOR CONSORTIUM.—
(A) IN GENERAL.—In the case of a consor-
tium participating in the demonstration project
under this subtitle, the Secretary shall make
payments for graduate medical education costs
through a health care training consortium
whose members provide medical residency train-
ing (or through any entity identified by such a
consortium as appropriate for receiving pay-
ments on behalf of the consortium).
(B) USE OF PAYMENTS.—
(i) IN
GENERAL.—Each consortium
receiving payments under subparagraph
(A) shall use such funds to conduct activi-
ties which test and evaluate mechanisms to
increase the number and percentage of
medical students entering primary care
practice 
relative 
to 
those 
entering
nonprimary care practice, and may use
such funds for the operation of the consor-
tium.
(ii) PAYMENTS
TO
PARTICIPATING
PROGRAMS.—The consortium shall ensure
that the majority of the payments received
under subparagraph (A) are directed to
consortium members for primary care resi-
dency programs, and shall designate for
each resident assigned to the consortium a
hospital operating an approved medical
residency training program for purposes of
enabling the Secretary to calculate the con-
sortium’s payment amount under the
project. Such hospital shall be the hospital
where the resident receives the majority of
the 
resident’s 
hospital-based, 
non-
ambulatory training experience.
(d) ALLOCATION OF PORTION OF MEDICARE GME
PAYMENTS FOR ACTIVITIES UNDER PROJECT.—Notwith-
standing any provision of title XVIII of the Social Security
Act, the following rules apply with respect to each State
and each health care training consortium participating in
the demonstration project established under this section
during a year:
(1) In the case of a State—
(A) the Secretary shall reduce the amount
of each payment made to hospitals in the State
during the year for direct graduate medical
education costs under section 1886(h) of the
Social Security Act by 3 percent; and
(B) the Secretary shall pay the State an
amount equal to the Secretary’s estimate of the
sum of the reductions made during the year
under subparagraph (A) (as adjusted by the
Secretary in subsequent years for over- or
under-estimations in the amount estimated
under this subparagraph in previous years).
(2) In the case of a consortium—
(A) the Secretary shall reduce the amount
of each payment made to hospitals who are
members of the consortium during the year for
direct graduate medical education costs under
section 1886(h) of the Social Security Act by 3
percent; and
(B) the Secretary shall pay the consortium
an amount equal to the Secretary’s estimate of
the sum of the reductions made during the year
under subparagraph (A) (as adjusted by the
Secretary in subsequent years for over- or
under-estimations in the amount estimated
under this subparagraph in previous years).
(e) ADDITIONAL GRANT FOR PLANNING AND EVAL-
UATION.—
(1) IN GENERAL.—The Secretary may award
grants to States and consortia participating in the
demonstration project under this section for the pur-
pose of planning and evaluating such projects. A
State or consortia may conduct such planning and
evaluation activities or contract with a private entity
to conduct such activities. Each State and consortia
desiring to receive a grant under this paragraph
shall prepare and submit to the Secretary an appli-
cation, at such time, in such manner, and containing
such information as the Secretary may require.
(2) AUTHORIZATION
OF
APPROPRIATIONS.—
There are authorized to be appropriated for grants
under this paragraph $250,000 for fiscal year 1996,
and $100,000 for each of the fiscal years 1997
through 2001.
(f) DURATION.—A demonstration project under this
section shall be conducted for a period not to exceed 5
years. The Secretary may terminate a project if the Sec-
retary determines that the State or consortium conducting
the project is not in substantial compliance with the terms
of the application approved by the Secretary.
(g) EVALUATIONS AND REPORTS.—
(1) EVALUATIONS.—Each State or consortium
participating in the demonstration project shall sub-
mit to the Secretary a final evaluation within 360
days of the termination of the State or consortium’s
participation and such interim evaluations as the
Secretary may require.
(2) REPORTS TO CONGRESS.—Not later than
360 days after the first demonstration project under
this subtitle begins, and annually thereafter for each
year in which such a project is conducted, the Sec-
retary shall submit a report to Congress which eval-
uates the effectiveness of the State and consortium
activities conducted under such projects and includes
any legislative recommendations determined appro-
priate by the Secretary.
(h) MAINTENANCE OF EFFORT.—Any funds available
for the activities covered by a demonstration project under
this subtitle shall supplement, and shall not supplant,
funds that are expended for similar purposes under any
State, regional, or local program.
SEC. 322. GOALS FOR PROJECTS.
The goals referred to in this section for a State or
consortium participating in the demonstration project
under this subtitle are as follows:
(1) The training of an equal number of physi-
cian and non-physician primary care providers.
(2) The recruiting of residents for graduate
medical education training programs who received a
portion of undergraduate training in a rural area.
(3) The allocation of not less than 50 percent
of the training spent in a graduate medical residency
training program at sites at which acute care inpa-
tient hospital services are not furnished.
(4) The rotation of residents in approved medi-
cal residency training programs among practices
that serve residents of rural areas.
(5) The development of a plan under which,
after a 5-year transition period, not less than 50
percent of the residents who begin an initial resi-
dency period in an approved medical residency train-
ing program shall be primary care residents.
SEC. 323. DEFINITIONS.
In this subtitle:
(1) APPROVED MEDICAL RESIDENCY TRAINING
PROGRAM.—The term ‘‘approved medical residency
training program’’ has the meaning given such term
in section 1886(h)(5)(A) of the Social Security Act.
(2) HEALTH
CARE
TRAINING
CONSORTIUM.—
The term ‘‘health care training consortium’’ means
a State, regional, or local entity consisting of at
least one of each of the following:
(A) A hospital operating an approved med-
ical residency training program at which resi-
dents receive training at ambulatory training
sites located in rural areas.
(B) A school of medicine or osteopathic
medicine.
(C) A school of allied health or a program
for the training of physician assistants (as such
terms are defined in section 799 of the Public
Health Service Act).
(D) A school of nursing (as defined in sec-
tion 853 of the Public Health Service Act).
(3) PRIMARY CARE.—The term ‘‘primary care’’
means family practice, general internal medicine,
general pediatrics, and obstetrics and gynecology.
(4) RESIDENT.—The term ‘‘resident’’ has the
meaning given such term in section 1886(h)(5)(H)
of the Social Security Act.
(5) RURAL AREA.—The term ‘‘rural area’’ has
the 
meaning 
given 
such 
term 
in 
section
1886(d)(2)(D) of the Social Security Act.
TITLE IV—MEDICARE PAYMENT
METHODOLOGIES
SEC. 401. TELEMEDICINE SERVICES.
The Secretary of Health and Human Services shall
establish a methodology for making payments under part
B of the medicare program for telemedicine services fur-
nished on an emergency basis to individuals residing in
an area designated as a health professional shortage area
(under section 332(a) of the Public Health Service Act).
SEC. 402. HMO-RISK CONTRACT PROGRAM.
(a) USE OF SINGLE NATIONAL AVERAGE PER CAP-
ITA COSTS FOR ORGANIZATIONS IN ALL GEOGRAPHIC
AREAS.—
(1) IN GENERAL.—Section 1876(a)(4) of the
Social Security Act (42 U.S.C. 1395mm(a)(4)) is
amended by striking ‘‘in a geographic area served by
an eligible organization or in a similar area,’’ and in-
serting ‘‘for all areas in the United States served by
eligible organizations with contracts under this sec-
tion’’.
(2) EFFECTIVE DATE.—The amendment made
by subsection (a) shall apply with respect to contract
years beginning with 1996.
(b) BUDGET NEUTRALITY.—The Secretary shall ad-
just the amount of payment made to eligible organizations
with a risk-sharing contract under section 1876 of the So-
cial Security Act for 1997 and subsequent years to ensure
that total payments to such organizations under such sec-
tion for the year do not exceed the amount which would
have been paid to such organizations during the year if
the amendment made by subsection (a) had not been en-
acted into law.
TITLE V—HOSPITAL ANTITRUST
FAIRNESS
SEC. 501. ANTITRUST EXEMPTION.
The antitrust laws shall not apply with respect to—
(1) the merger of, or the attempt to merge, 2
or more hospitals,
(2) a contract entered into solely by 2 or more
hospitals to allocate hospital services, or
(3) the attempt by only 2 or more hospitals to
enter into a contract to allocate hospital services,
if each of such hospitals satisfies all of the requirements
of section 502 at the time such hospitals engage in the
conduct described in paragraph (1), (2), or (3), as the case
may be.
SEC. 502. REQUIREMENTS.
The requirements referred to in section 501 are as
follows:
(1) The hospital is located outside of a city, or
in a city that has less than 150,000 inhabitants, as
determined in accordance with the most recent data
available from the Bureau of the Census.
(2) In the most recently concluded calendar
year, the hospital received more than 40 percent of
its gross revenue from payments made under Fed-
eral programs.
(3) There is in effect with respect to the hos-
pital a certificate issued by the Health Care Financ-
ing Administration specifying that such Administra-
tion has determined that Federal expenditures would
be reduced, consumer costs would not increase, and
access to health care services would not be reduced,
if the hospital and the other hospitals that requested
such certificate merge, or allocate the hospital serv-
ices specified in such request, as the case may be.
SEC. 503. DEFINITION.
For purposes of this title, the term ‘‘antitrust laws’’
has the meaning given such term in subsection (a) of the
first section of the Clayton Act (15 U.S.C. 12), except that
such term includes section 5 of the Federal Trade Com-
mission Act (15 U.S.C. 45) to the extent that such section
5 applies with respect to unfair methods of competition.
TITLE VI—FINANCING
SEC. 601. INCREASE IN MEDICARE PART B PREMIUM FOR
INDIVIDUALS WITH HIGH INCOME.
(a) IN GENERAL.—Subchapter A of chapter 1 of the
Internal Revenue Code of 1986 is amended by adding at
the end thereof the following new part:
‘‘PART VIII—MEDICARE PART B PREMIUMS FOR
HIGH-INCOME INDIVIDUALS
‘‘Sec. 59B. Medicare part B premium tax.
‘‘SEC. 59B. MEDICARE PART B PREMIUM TAX.
‘‘(a) IMPOSITION OF TAX.—In the case of an individ-
ual to whom this section applies for the taxable year, there
is hereby imposed (in addition to any other tax imposed
by this subtitle) a tax for such taxable year equal to the
aggregate of the Medicare part B premium taxes for each
of the months during such year that such individual is
covered by Medicare part B.
‘‘(b) INDIVIDUALS TO WHOM SECTION APPLIES.—
This section shall apply to any individual for any taxable
year if—
‘‘(1) such individual is covered under Medicare
part B for any month during such year, and
‘‘(2) the modified adjusted gross income of the
taxpayer for such taxable year exceeds the threshold
amount.
‘‘(c) MEDICARE
PART
B PREMIUM
TAX
FOR
MONTH.—
‘‘(1) IN GENERAL.—The Medicare part B pre-
mium tax for any month is 2⁄3 the amount equal to
the excess of—
‘‘(A) 200 percent of the monthly actuarial
rate for enrollees age 65 and over determined
for that calendar year under section 1839(b) of
the Social Security Act, over
‘‘(B) the total monthly premium under sec-
tion 1839 of the Social Security Act (deter-
mined without regard to subsections (b) and (f)
of section 1839 of such Act).
‘‘(2) PHASEIN
OF
TAX.—If the modified ad-
justed gross income of the taxpayer for any taxable
years exceeds the threshold amount by less than
$25,000, the Medicare part B premium tax for any
month during such taxable year shall be an amount
which bears the same ratio to the amount deter-
mined under paragraph (1) (without regard to this
paragraph) as such excess bears to $25,000. The
preceding sentence shall not apply to any individual
whose threshold amount is zero.
‘‘(d) OTHER DEFINITIONS AND SPECIAL RULES.—
For purposes of this section—
‘‘(1) THRESHOLD AMOUNT.—The term ‘thresh-
old amount’ means—
‘‘(A) except as otherwise provided in this
paragraph, $100,000,
‘‘(B) $125,000 in the case of a joint re-
turn, and
‘‘(C) zero in the case of a taxpayer who—
‘‘(i) is married at the close of the tax-
able year but does not file a joint return
for such year, and
‘‘(ii) does not live apart from his
spouse at all times during the taxable year.
‘‘(2) MODIFIED
ADJUSTED
GROSS
INCOME.—
The term ‘modified adjusted gross income’ means
adjusted gross income—
‘‘(A) determined without regard to sections
135, 911, 931, and 933, and
‘‘(B) increased by the amount of interest
received or accrued by the taxpayer during the
taxable year which is exempt from tax.
‘‘(3) MEDICARE PART B COVERAGE.—An indi-
vidual shall be treated as covered under Medicare
part B for any month if a premium is paid under
part B of title XVIII of the Social Security Act for
the coverage of the individual under such part for
the month.
‘‘(4) MARRIED
INDIVIDUAL.—The determina-
tion of whether an individual is married shall be
made in accordance with section 7703.’’
(b) CLERICAL AMENDMENT.—The table of parts for
subchapter A of chapter 1 of such Code is amended by
adding at the end thereof the following new item:
‘‘Part VIII. Medicare Part B Premiums For High-Income Individ-
uals.’’
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to months after December 1995
in taxable years ending after December 31, 1995.
SEC. 602. TERMINATION OF CERTAIN GRANT PROGRAMS.
Notwithstanding any other provision of law, no funds
are authorized to be appropriated to carry out the follow-
ing programs for fiscal year 1996 or any subsequent fiscal
year:
(A) The grant program for rural health
transition under section 4005(e) of the Omni-
bus Budget Reconciliation Act of 1987.
(B) The program for rural outreach grants
(which program was, for fiscal year 1995, car-
ried out by the Health Resources and Services
Administration with funds made available under
Public Law 103–333 for such grants).
(C) 
The 
telemedicine 
grant 
program
(which program was, for fiscal year 1995, car-
ried out by the Health Resources and Services
Administration with funds made available under
Public Law 103–333 for rural health research).
(D) The program under section 338J of
the Public Health Service Act (relating to State
offices of rural health).
(E) The programs under parts A through
C of title XII of the Public Health Service Act
(relating to trauma care).
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