162
tion from the loan programs under this part to
the direct student loan programs under part D
of this title.’’;
(4) in subparagraph (F)—
(A) in the matter preceding clause (i), by
striking ‘‘Except as provided in subparagraph
(G), if’’ and inserting ‘‘If’’;
(B) by amending clause (v) to read as fol-
lows:
‘‘(v) provide the guaranty agency with ad-
ditional advance funds in accordance with sec-
tion 422(c)(7), with such restrictions on the use
of such funds as is determined appropriate by
the Secretary, in order to—
‘‘(I) meet the immediate cash needs of
the guaranty agency;
‘‘(II) ensure the uninterrupted pay-
ment of claims; or
‘‘(III) ensure that the guaranty agen-
cy will make loans as the lender-of-last-
resort, in accordance with subsection
(j)(4);’’;
(C) in clause (vi)—
(i) by striking ‘‘and to avoid’’ and in-
serting ‘‘to avoid’’;
163
(ii) by striking the period at the end
thereof and inserting ‘‘, and to ensure an
orderly transition from the loan programs
under this part to the direct student loan
programs under part D of this title.’’; and
(iii) by redesignating such clause as
clause (vii); and
(D) by inserting after clause (v) the follow-
ing new clause:
‘‘(vi) use all funds and assets of the guar-
anty agency to assist in the activities under-
taken in accordance with this subparagraph and
take appropriate action to require the return, to
the guaranty agency or the Secretary, of any
funds or assets provided by the guaranty agen-
cy, under contract or otherwise, to any person
or organization; or’’;
(5) by striking subparagraph (G);
(6) by redesignating subparagraphs (H), (I),
and (J) as subparagraphs (I), (J), and (K), respec-
tively;
(7) by inserting after subparagraph (F) the fol-
lowing new subparagraphs:
‘‘(G) Notwithstanding any other provision of
Federal or State law, if the Secretary has termi-
164
nated or is seeking to terminate a guaranty agency’s
agreement under subparagraph (E), or has assumed
a guaranty agency’s functions under subparagraph
(F)—
‘‘(i) such guaranty agency may not file for
bankruptcy;
‘‘(ii) no State court may issue any order
affecting the Secretary’s actions with respect to
such guaranty agency;
‘‘(iii) any contract with respect to the ad-
ministration of a guaranty agency’s reserve
funds, or the administration of any assets pur-
chased or acquired with the reserve funds of the
guaranty agency, that is entered into or ex-
tended by the guaranty agency, or any other
party on behalf of or with the concurrence of
the guaranty agency, after the effective date of
this provision shall provide that the contract is
terminable by the Secretary upon 30 days no-
tice to the contracting parties if the Secretary
determines that such contract includes an im-
permissible transfer of the reserve funds or as-
sets, or is otherwise inconsistent with the terms
or purposes of this section; and
165
‘‘(iv) no provision of State law shall apply
to the actions of the Secretary in terminating
the operations of a guaranty agency.
‘‘(H) Notwithstanding any other provision of
law, the Secretary’s liability for any outstanding li-
abilities of a guaranty agency (other than outstand-
ing student loan guarantees under this part), the
functions of which the Secretary has assumed, shall
not exceed the fair market value of the reserves of
the guaranty agency, minus any necessary liquida-
tion or other administrative costs.’’; and
(8) in subparagraph (K) (as redesignated by
paragraph (6)), by striking ‘‘system, together’’
through the end thereof and inserting the following:
‘‘system and the progress of the transition from the
loan programs under this part to the direct student
loan programs under part D of this title.’’.
SEC. 4026. ADMINISTRATIVE COST ALLOWANCE.
Section 428(f)(1) of the Act is amended—
(1) in subparagraph (A), by striking ‘‘The Sec-
retary’’ and inserting ‘‘For a fiscal year prior to fis-
cal year 1994, the Secretary’’; and
(2) in subparagraph (B), by inserting ‘‘prior to
fiscal year 1994’’ after ‘‘any fiscal year’’.
166
SEC. 4027. CONSOLIDATION LOANS.
Section 428C of the Act is amended—
(1) by amending subsection (a)(3)(A) to read as
follows:
‘‘(3) DEFINITION OF ELIGIBLE BORROWERS.—
(A) For the purpose of this section, the term ‘eligi-
ble borrower’ means a borrower who, at the time of
application for a consolidation loan is in repayment
status, or in a grace period preceding repayment, or
is a delinquent or defaulted borrower who will reen-
ter repayment through loan consolidation.’’;
(2) in subsection (b)—
(A) in paragraph (1)—
(i) in subparagraph (A)(ii), by insert-
ing 
‘‘with 
income-sensitive 
repayment
terms’’ after ‘‘obtain a consolidation loan’’;
(ii) by redesignating subparagraph
(E) as subparagraph (F); and
(iii) by inserting after subparagraph
(D) the following new subparagraph:
‘‘(E) that the lender shall offer an income-
sensitive repayment schedule, established by the
lender in accordance with the regulations of the
Secretary, to the borrower of any consolidation
loan made by the lender on or after July 1,
1994; and’’;
167
(B) in paragraph (4), by amending sub-
paragraph (C) to read as follows:
‘‘(C)(i) provides that periodic installments
of principal need not be paid, but interest shall
accrue and be paid in accordance with clause
(ii), during any period for which the borrower
would be eligible for a deferral under section
428(b)(1)(M), and that any such period shall
not be included in determining the repayment
period pursuant to subsection (c)(2) of this sec-
tion; and
‘‘(ii) provides that interest shall accrue and
be paid—
‘‘(I) by the Secretary, in the case of
a consolidation loan that consolidated only
Federal Stafford Loans for which the stu-
dent borrower received an interest subsidy
under section 428; or
‘‘(II) by the borrower, or capitalized,
in the case of a consolidation loan other
than one described in subclause (I);’’; and
(C) by adding at the end thereof the fol-
lowing new paragraph:
‘‘(5) DIRECT LOANS.—In the event that a bor-
rower is unable to obtain a consolidation loan with
168
income-sensitive repayment terms acceptable to the
borrower from a lender with an agreement under
subsection (a)(1), the Secretary shall offer any such
borrower who applies for it, a direct consolidation
loan to be repaid pursuant to an EXCEL Account
under part D of this title, except that the Secretary
shall not offer such loans if, in his or her judgment,
the Department does not yet have the necessary
origination and servicing arrangements in place for
such loans.’’; and
(3) in subsection (c)—
(A) in paragraph (1), by amending sub-
paragraphs (B) and (C) to read as follows:
‘‘(B) A consolidation loan made before July 1,
1994, shall bear interest at an annual rate on the
unpaid principal balance of the loan that is equal to
the greater of—
‘‘(i) the weighted average of the interest
rates on the loans consolidated, rounded to the
nearest whole percent; or
‘‘(ii) 9 percent.
‘‘(C) A consolidation loan made on or after July
1, 1994, shall bear interest at an annual rate on the
unpaid principal balance of the loan that is equal to
the weighted average of the interest rates on the
170
(iv) by adding a period at the end of
clause (vi) (as redesignated by clause (ii));
(C) by striking out suparagraph (B) of
paragraph (2); and
(D) by redesignating subparagraph (C) of
paragraph (2) as subparagraph (B); and
(E) in paragraph (3)(A), by inserting after
the subparagraph designation the following:
‘‘except as required by the terms of repayment
pursuant to an EXCEL Account offered by the
Secretary under subsection (b)(5),’’.
SEC. 4028. STUDENT LOAN MARKETING ASSOCIATION.
Section 439 of the Act is further amended by adding
at the end thereof the following new subsection:
‘‘(s) TRANSITION STUDY.—The Secretaries of Edu-
cation and the Treasury shall prepare a study, to be com-
pleted within 6 months of the enactment of this provision,
which shall examine alternatives concerning the status, op-
erations, and purposes of the Association during and after
the transition from the Federal Family Education Loan
program to the Federal Direct Student Loan program.
Such study shall—
‘‘(1) consider how best to meet the needs of
students and taxpayers;
171
‘‘(2) reflect the need for the Association to
maintain liquidity and perform other functions for
the Federal Family Education Loan program during
the transition from such program to the Federal Di-
rect Student Loan program under part D of this
title, including additional duties as specified by the
Secretary of Education or the Secretary of the
Treasury;
‘‘(3) consider any appropriate change to part D
of title VII, relating to the College Construction
Loan Insurance Association; and
‘‘(4) be considered by the Secretaries of Edu-
cation and the Treasury in developing any legislative
proposals concerning any changes to the status of
the Association as a Government-sponsored enter-
prise or its duties under the Federal Family Edu-
cation Loan program.’’.
SEC. 4029. AUTHORITY TO USE OPTICALLY IMAGED DOCU-
MENTS.
(a) GENERAL AUTHORITY.—Section 484A of the Act
is amended—
(1) in the heading, by adding a semicolon and
‘‘OPTICALLY
IMAGED
DOCUMENTS’’ after ‘‘LIMITA-
TIONS’’; and
172
(2) by adding at the end thereof the following
new subsection:
‘‘(c) IN GENERAL.—(1) It is the purpose of this sub-
section to—
‘‘(A) allow the Secretary to use optical imaging
technology to store and retrieve documents and
records, including promissory notes and repayment
agreements, required for the administration of the
programs authorized under part D of this title, or
for the administration of loans made under part B
of this title that have been assigned to the Secretary;
‘‘(B) permit the Secretary to destroy originals
of such documents and records, including promissory
notes and repayment agreements, after they have
been optically imaged, thereby achieving significant
savings in storage and retrieval costs; and
‘‘(C) ensure that the Secretary may introduce
as evidence in any proceeding with respect to the
programs or loans described in subparagraph (A)
optically imaged documents and records, including
promissory notes and repayment agreements.
‘‘(2) Notwithstanding any other provision of Federal
or State law, an optically imaged copy of any document
or record, including a promissory note or repayment
agreement, may be introduced as evidence in any proceed-
173
ing with respect to the programs or loans described in
paragraph (1)(A) in any Federal or State court, or other
tribunal, and such optically imaged copy shall be admissi-
ble in any court or tribunal of the United States or any
State as if it were the original document or record and
have the same force and effect as the original.
‘‘(3) Nothing in this subsection shall be interpreted
to preclude the admissibility of a duplicate of a document
or record required for the administration of the programs
or loans described in paragraph (1)(A) made by a tech-
nology other than optical imaging consistent with the Fed-
eral Rules of Evidence and section 1732 of title 28 of the
United States Code, or applicable State law.
‘‘(4) Nothing in this subsection shall be interpreted
to preclude the admissibility of an optically imaged copy
of any document or record in a proceeding outside the
scope of this subsection consistent with the Federal Rules
of Evidence and section 1732 of title 28 of the United
States Code, or applicable State law.’’.
(b) PART B AUTHORITY.—Section 432 of the Act is
amended by adding at the end thereof the following new
subsection:
‘‘(q) OPTICALLY
IMAGED
DOCUMENTS.—Records
maintained in accordance with section 484A(c) may be
used in any proceeding, as permitted by section 484A(c),
174
with respect to a loan that was made under this part and
has been assigned to the Secretary.’’.
(c) CONFORMING AMENDMENT.—Section 487 of the
Act is amended by adding at the end thereof the following
new subsection:
‘‘(f) USE OF OPTICALLY IMAGED DOCUMENTS.—In
any proceeding with respect to a program or activity under
part D of this title, or with respect to a loan made under
part B of this title that has been assigned to the Sec-
retary, records maintained in accordance with section
484A may be used as provided in that section.’’.
SEC. 4030. AMENDMENT TO THE BALANCED BUDGET AND
EMERGENCY DEFICIT CONTROL ACT OF 1985.
The Balanced Budget and Emergency Deficit Control
Act of 1985 is amended—
(1) in section 252(c)(1)(B), by striking ‘‘guar-
anteed’’;
(2) in section 256(b)—
(A) by striking the subsection designation
and heading and inserting the following:
‘‘(b) EFFECT OF ORDERS ON STUDENT LOAN PRO-
GRAMS.—
‘‘(1) FEDERAL FAMILY EDUCATION LOAN PRO-
GRAM.—(A)’’;
175
(B) by redesignating paragraphs (2) and
(3) as subparagraphs (B) and (C), respectively,
and by indenting such subparagraphs by an ad-
ditional 2 ems spaces;
(C) in paragraph (1)(A) (as redesignated
in subparagraph (B)), by striking ‘‘described in
paragraphs (2) and (3)’’ and inserting ‘‘de-
scribed in subparagraphs (B) and (C)’’;
(D) in paragraph (1)(B) (as redesignated
in subparagraph (C)), by redesignating sub-
paragraphs (A) and (B) as clauses (i) and (ii),
respectively; and
(E) by adding at the end thereof the fol-
lowing new paragraph:
‘‘(2) FEDERAL
DIRECT
STUDENT
LOAN
PRO-
GRAM.—(A) Any reductions that are required to be
achieved from the Federal Direct Student Loan pro-
gram operated under part D of title IV of the High-
er Education Act of 1965 as a consequence of an
order issued pursuant to section 254, shall be
achieved only by the application of the measures de-
scribed in subparagraph (B).
‘‘(B) For any loan made during the period be-
ginning on the date that an order issued under sec-
tion 254 takes effect with respect to a fiscal year,
176
and ending at the close of such fiscal year, the loan
fee that is authorized to be collected pursuant to
section 456(c) of such Act shall be increased by 0.50
percent.’’.
CHAPTER 3—EFFECTIVE DATES; STUDY
SEC. 4031. EFFECTIVE DATES.
(a) IN GENERAL.—Except as otherwise provided in
this section, the amendments made by this subtitle shall
be effective upon enactment.
(b) 
INCOME
CONTINGENT
REPAYMENT.—The
amendments made by section 4023 of this Act shall be
effective for loans made in accordance with section 428
for periods of instruction beginning on or after July 1,
1993, or made on or after July 1, 1993, in the case of
loans made in accordance with section 428A, 428B, or
428C of the Act.
(c) 
ADMINISTRATIVE
COST
ALLOWANCE.—The
amendments made by section 4026 of this Act shall be
effective on October 1, 1994.
(d) 
CONSOLIDATION
LOANS.—The 
amendments
made by section 4027 of this Act (other than the amend-
ment made by section 4027(2)(B)) shall be effective for
loans made in accordance with section 428C of the Act
or after July 1, 1994.
177
SEC. 4032. STUDY OF INTERNAL REVENUE SERVICE COL-
LECTION OF STUDENT LOANS.
(a) GENERAL RULE.—The Secretary of Education,
in consultation with the Secretary of the Treasury, shall
conduct a study of the feasibility of implementing a system
for the repayment of Federal student loans through wage
withholding or other means involving the Internal Revenue
Service. Such study shall include an examination of—
(1) whether the Internal Revenue Service could
implement such a system within its current re-
sources and without adversely affecting the ability of
the Internal Revenue Service to collect tax revenues,
(2) the cumulative impact on voluntary compli-
ance with the tax system of increased disclosure of
tax return information and increased Internal Reve-
nue Service involvement in nontax collection activi-
ties,
(3) the anticipated effect on the management of
Federal student loan collections and on borrower re-
payment of such loans, and
(4) the ability of the Internal Revenue Service
to effectively service student loans.
(b) RECOMMENDATIONS.—Not later than the date 6
months after the date of the enactment of this Act, the
Secretary of Education shall submit to the Congress a re-
port on the study conducted under subsection (a), together
178
with such legislative recommendations as such Secretary
may deem advisable.
SEC. 4033. PREFERENCE OF COMMITTEE FOR IRS COLLEC-
TION MECHANISM.
It is the sense of the Committee on Education and
Labor that—
(1) the Committee may not, consistent with its
jurisdiction under the Rules of the House of Rep-
resentatives, amend this Act to include provisions
providing for the collection of student loans pursu-
ant to the Internal Revenue Code of 1986 using the
Internal Revenue Service of the Department of the
Treasury;
(2) the Committee would support the amend-
ment of this Act to include such provisions, as well
as amendments to the Higher Education Act of
1965, in the manner proposed by H.R. llll as
introduced on May 11, 1993; and
(3) the Committee recommends that the House
of Representatives consider and adopt such amend-
ments.
179
Subtitle B—Cost Sharing by States
SEC. 4101. COST SHARING BY STATES.
(a) AMENDMENT.—Section 428 of the Higher Edu-
cation Act of 1965 (20 U.S.C. 1001 et seq.) is amended
by adding at the end thereof the following new subsection:
‘‘(n) STATE SHARE OF DEFAULT COSTS.—(1) In the
case of any State in which there are located any institu-
tions of higher education with cohort default rates that
exceed 20 percent, such State shall pay to the Secretary
an amount equal to—
‘‘(A) the new loan volume attributable to all in-
stitutions in the State for the current fiscal year,
multiplied by
‘‘(B) the percentage specified in paragraph (2),
multiplied by
‘‘(C) the quotient of—
‘‘(i) the sum of the amounts calculated
under paragraph (3) for each such institution
in the State, divided by
‘‘(ii) the total amount of loan volume at-
tributable to current and former students of in-
stitutions located in that State entering repay-
ment in the period used to calculate the cohort
default rate.
180
‘‘(2) For purposes of paragraph (1)(B), the percent-
age used shall be—
‘‘(A) 12.5 percent for fiscal year 1995;
‘‘(B) 20 percent for fiscal year 1996; and
‘‘(C) 50 percent for fiscal year 1997 and suc-
ceeding fiscal years.
‘‘(3) For purposes of paragraph (1)(C)(i), the
amount shall be determined by calculating for each insti-
tution the amount by which—
‘‘(A) the amount of the loans received for at-
tendance by its current and former students who (i)
enter repayment during the fiscal year used for the
calculation of the cohort default rate, and (ii) de-
fault before the end of the following fiscal year; ex-
ceeds
‘‘(B) 20 percent of the loans received for at-
tendance by all the current and former students who
enter repayment during the fiscal year used for the
calculation of the cohort default rate.
‘‘(4) A State may charge a fee to an institution of
higher education that participates in the program under
this part and is located in that State according to a fee
structure, approved by the Secretary, that is based on the
institution’s cohort default rate and the State’s risk of loss
under this subsection. Such fee structure shall include a
181
process by which an institution with a high cohort default
rate is exempt from any fees under this paragraph if such
institution demonstrates to the satisfaction of the State
that exceptional mitigating circumstances, as determined
by the State and approved by the Secretary, contributed
to its cohort default rate.’’.
(b) EFFECTIVE DATE.—The amendment made by
this section shall be effective on October 1, 1994.
Subtitle C—ERISA Amendments
Relating to Group Health Plans
SEC. 4201. COORDINATION OF ERISA PREEMPTION RULES
WITH TITLE XIX PROVISIONS PROVIDING FOR
LIABILITY OF THIRD PARTIES.
(a) IN GENERAL.—Paragraph (8) of section 514(b)
of the Employee Retirement Income Security Act of 1974
(29 U.S.C. 1144(b)(8)) is amended to read as follows:
‘‘(8)(A) Subsection (a) of this section shall not apply
to any State law to the extent necessary to permit the
State to comply with the following requirements for the
receipt of Federal financial assistance under title XIX of
the Social Security Act:
‘‘(i) subparagraphs (A), (B), and (H) of section
1902(a)(25) of such Act (relating to third-party li-
ability) and section 1903(o) of such Act (relating to
182
medicaid as secondary payor), as in effect on Octo-
ber 1, 1993; and
‘‘(ii) sections 1902(a)(45) and 1912 of such Act
(relating to assignment of rights of payment), as in
effect on May 12, 1993.
‘‘(B) Paragraph (2)(B) shall not apply to any State
law to the extent necessary to permit the compliance of
the State with any of the requirements described in sub-
paragraph (A).’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall take effect October 1, 1993.
SEC. 4202. CONTINUED COVERAGE OF COSTS OF A PEDI-
ATRIC 
VACCINE 
UNDER 
GROUP 
HEALTH
PLANS.
(a) IN GENERAL.—Part 6 of subtitle B of title I of
the Employee Retirement Income Security Act of 1974
(29 U.S.C. 1161 et seq.) is amended by adding at the end
the following new section:
‘‘SEC. 609. CONTINUED COVERAGE OF COSTS OF A PEDI-
ATRIC 
VACCINE 
UNDER 
GROUP 
HEALTH
PLANS.
‘‘A group health plan may not reduce its coverage of
the costs of pediatric vaccines (as defined under section
2162 of the Public Health Service Act) below the coverage
it provided as of May 1, 1993.’’.
183
(b) CONFORMING AMENDMENT.—The table of con-
tents in section 1 of such Act is amended by adding after
the item relating to section 608 the following new item:
‘‘Sec. 609. Continued coverage of costs of a pediatric vaccine under group
health plans.’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply with respect to plan years begin-
ning after the date of the enactment of this Act.
SEC. 4203. TEMPORARY RULES GOVERNING PREEMPTION
OF CERTAIN STATE LAWS.
Paragraph (5) of section 514(b) of the Employee Re-
tirement Income Security Act of 1974 (29 U.S.C.
1144(b)(5)) is amended to read as follows:
‘‘(5)(A)(i) Except as provided in clauses (ii) and (iii),
subsection (a) shall not apply to the Hawaii Prepaid
Health Care Act (Haw. Rev. Stat. §§ 393-1 through 393-
51).
‘‘(ii) Nothing in clause (i) shall be construed to ex-
empt from subsection (a) any State tax law relating to
employee benefit plans.
‘‘(iii) Notwithstanding clause (i), parts 1 and 4 of
this subtitle, and the preceding sections of this part to
the extent they govern matters which are governed by the
provisions of such parts 1 and 4, shall supersede the Ha-
waii Prepaid Health Care Act (as in effect on or after Jan-
uary 14, 1983), but the Secretary may enter into coopera-
184
tive arrangements under this subparagraph and section
506 with officials of the State of Hawaii to assist them
in effectuating the policies of provisions of such Act which
are superseded by such parts 1 and 4 and the preceding
sections of this part.
‘‘(B)(i) Except as provided in clauses (ii) and (iii),
subsection (a) shall not apply to subtitle 2 of title 19 of
the Annotated Code of Maryland (relating to the Health
Services Cost Review Commission).
‘‘(ii) Nothing in clause (i) shall be construed to ex-
empt from subsection (a)—
‘‘(I) any State tax law relating to employee ben-
efit plans, or
‘‘(II) any amendment of the provision referred
to in clause (i) enacted on or after May 12, 1993,
to the extent it provides for more than the effective
administration of such Act as in effect on such date.
‘‘(iii) Notwithstanding clause (i), parts 1 and 4 of
this subtitle, and the preceding sections of this part to
the extent they govern matters which are governed by the
provisions of such parts 1 and 4, shall supersede the provi-
sion referred to in clause (i) (as in effect on or after May
12, 1993), but the Secretary may enter into cooperative
arrangements under this subparagraph and section 506
with officials of the State of Maryland to assist them in
185
effectuating the policies of such provision which are super-
seded by such parts 1 and 4 and the preceding sections
of this part.
‘‘(C)(i) Except as provided in clauses (ii) and (iii),
subsection (a) shall not apply to the following provisions
of the law of the State of Minnesota:
‘‘(I) section 295.52, Minnesota Statutes, as
amended in May 1993 by House File 1178 (relating
to receipts tax on providers);
‘‘(II) section 19 of article 9 of the Minnesota
Health Right Act, as amended in May 1993 by
House File 1178 (relating to passthrough of 2 per-
cent gross receipts tax on providers); and
‘‘(III) subdivision 2 of section 3 of article 1 of
such Act, article 7 of such Act, and section 1 of arti-
cle 3 of Minnesota House File 1178 and section 4
and all that follows through the end of such article
3, as enacted in May 1993 (relating to data collec-
tion).
‘‘(ii) Nothing in clause (i) shall be construed to ex-
empt from subsection (a)—
‘‘(I) any State tax law relating to employee ben-
efit plans (other than a provision described in clause
(i)), and
186
‘‘(II) any amendment of any provision referred
to in clause (i) enacted on or after May 12, 1993,
to the extent it provides for more than the effective
administration of such provision as in effect on such
date.
‘‘(iii) Notwithstanding clause (i), parts 1 and 4 of
this subtitle, and the preceding sections of this part to
the extent they govern matters which are governed by the
provisions of such parts 1 and 4, shall supersede the provi-
sions described in clause (i) (as in effect on or after May
12, 1993), but the Secretary may enter into cooperative
arrangements under this subparagraph and section 506
with officials of the State of Minnesota to assist them in
effectuating the policies of such provisions which are su-
perseded by such parts 1 and 4 and the preceding sections
of this part.
‘‘(D)(i) Except as provided in clauses (ii), (iv), (v),
and (vii), subsection (a) shall not apply to the following
provisions of the law of the State of New York:
‘‘(I) subdivisions 1(b) and 4(e) of section
2807–c of the Public Health Law (relating to 13
percent surcharge);
‘‘(II) subdivision 1(c) of section 2807–c of the
Public Health Law (relating to uniform hospital
charges);
187
‘‘(III) subdivision 2–a of section 2807–c of the
Public Health Law (relating to the variable sur-
charge for HMOs);
‘‘(IV) subdivision 14 of section 2807–c of the
Public Health Law (relating to basic percentage al-
lowances for bad debt and charity care);
‘‘(V) subdivision 14–b of section 2807–c of the
Public Health Law (relating to health care services
allowances);
‘‘(VI) subdivision 14–c of section 2807–c of the
Public Health Law (relating to further allowances
for financially distressed hospitals); and
‘‘(VII) section 18 of chapter 266 of the laws of
1986, as amended (relating to excess malpractice in-
surance adjustments).
‘‘(ii) Except as provided in clause (iii), nothing in
clause (i) shall be construed to exempt from subsection
(a)—
‘‘(I) any State tax law relating to employee ben-
efit plans, or
‘‘(II) any provision referred to in clause (i) to
the extent that any law of the State of New York
appropriates amounts based on amounts collected by
the State under such provision for any purpose other
188
than carrying out the programs established under
the provisions described in clause (i).
‘‘(iii) Notwithstanding clause (ii), subsection (a) shall
not apply to any provision of the law of the State of New
York to the extent that such provision constitutes—
‘‘(I) an HMO surcharge of the type provided
for under subdivision 2–a of such section 2807–c (as
in effect on February 2, 1993), or
‘‘(II) an allowance, of the type provided for
under the provisions referred to in clause (i) (as so
in effect), for bad debts, charity care, health care
services, or excess malpractice insurance,
but only if the law of such State appropriates amounts
based on and equivalent to amounts collected by the State
under such provision solely for the purpose of carrying out
one or more programs established under the provisions de-
scribed in clause (i).
‘‘(iv) Subsection (a) shall apply to any provision of
the law of the State of New York to the extent that such
provision constitutes a surcharge of the type provided for
under subdivisions 1(b) and 4(e) of section 2807–c of the
Public Health Law of the State of New York (as in effect
on February 2, 1993) unless such provision provides for
use of amounts collected under such provision solely for
189
the purpose of carrying out one or more programs estab-
lished under the provisions described in clause (i).
‘‘(v) Nothing in clause (i) shall be construed to ex-
empt from subsection (a) any amendment of any provision
referred to in clause (i) enacted on or after February 2,
1993, to the extent it provides for more than the effective
administration of such provisions as in effect on such date,
unless such amendment constitutes only a change in the
methodology of determining payments to hospitals and
would result in—
‘‘(I) a surcharge described in clause (iii)(I) of
not more than 9 percent with respect to which the
requirements of clause (iii) are met,
‘‘(II) an allowance described in clause (iii)(II)
which does not exceed in the aggregate a Statewide
average of not more than 10 percent and with re-
spect to which the requirements of clause (iii) are
met, or
‘‘(III) a surcharge described in clause (iv) of
not more than 13 percent with respect to which the
requirements of clause (iv) are met.
‘‘(vi) Subsection (a) shall not apply to any amend-
ment to chapter 2 of the laws of 1988 of the State of
New York, as amended, to the extent that such amend-
190
ment extends the period for which the provisions referred
to in clause (i) are in effect.
‘‘(vii) Notwithstanding clause (i), parts 1 and 4 of
this subtitle, and the preceding sections of this part to
the extent they govern matters which are governed by the
provisions of such parts 1 and 4, shall supersede the provi-
sions described in clause (i) (as in effect on or after Feb-
ruary 2, 1993), but the Secretary may enter into coopera-
tive arrangements under this subparagraph and section
506 with officials of the State of New York to assist them
in effectuating the policies of such provisions which are
superseded by such parts 1 and 4 and the preceding sec-
tions of this part.
‘‘(viii) The provisions of this subparagraph shall be
effective as of February 2, 1993.
‘‘(E) This paragraph shall cease to be effective as of
May 12, 1995.’’.
TITLE V—COMMITTEE ON
ENERGY AND COMMERCE
Subtitle A—Medicare Program
SEC. 5000. REFERENCES IN SUBTITLE; TABLE OF CON-
TENTS OF SUBTITLE.
(a) AMENDMENTS TO SOCIAL SECURITY ACT.—Ex-
cept as otherwise specifically provided, whenever in this
subtitle an amendment is expressed in terms of an amend-
191
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 subtitle, the
terms ‘‘OBRA–1986’’, ‘‘OBRA–1987’’, ‘‘OBRA–1989’’,
and ‘‘OBRA–1990’’ refer to the Omnibus Budget Rec-
onciliation Act of 1986 (Public Law 99–509), the Omni-
bus Budget Reconciliation Act of 1987 (Public Law 100–
203), the Omnibus Budget Reconciliation Act of 1989
(Public Law 101–239), and the Omnibus Budget Rec-
onciliation Act of 1990 (Public Law 101–508), respec-
tively.
(c) TABLE OF CONTENTS OF SUBTITLE.—The table
of contents of this subtitle is as follows:
Sec. 5000. References in subtitle; table of contents of subtitle.
CHAPTER 1—PROVISIONS RELATING TO PART B
SUBCHAPTER A—PHYSICIANS’ SERVICES
Sec. 5001. Reduction in default update for conversion factor for 1994.
Sec. 5002. Reduction in performance standard rate of increase and increase in
maximum reduction permitted in default update.
Sec. 5003. Classification of primary care services as a separate category of
services.
Sec. 5004. Phased-in reduction in practice expense relative value units for cer-
tain services.
Sec. 5005. Limitation on payment for the anesthesia care team.
Sec. 5006. Basing payments for anesthesia services on actual time.
Sec. 5007. Separate payment for interpretation of electrocardiograms.
Sec. 5008. Payments for new physicians and practitioners.
Sec. 5009. Geographic adjustment factors for medicare physicians’ services.
Sec. 5010. Extra-billing limits.
Sec. 5011. Relative values for pediatric services.
Sec. 5012. Antigens under physician fee schedule.
Sec. 5013. Administration of claims relating to physicians’ services.
Sec. 5014. Miscellaneous and technical corrections.
192
SUBCHAPTER B—OUTPATIENT HOSPITAL SERVICES AND AMBULATORY
SURGICAL SERVICES
Sec. 5021. Extension of 10 percent reduction in payments for capital-related
costs of outpatient hospital services.
Sec. 5022. Extension of current reduction in payments for other costs of out-
patient hospital services.
Sec. 5023. 1-year freeze in ambulatory surgery rates.
Sec. 5024. Eye or eye and ear hospitals.
Sec. 5025. Extension of cap on payments for intraocular lenses.
Sec. 5026. Miscellaneous and technical corrections.
SUBCHAPTER C—DURABLE MEDICAL EQUIPMENT
Sec. 5031. Revisions to payment rules for durable medical equipment.
Sec. 5032. Payment for parenteral and enteral nutrients, supplies, and equip-
ment during 1994.
Sec. 5033. Treatment of nebulizers and aspirators.
Sec. 5034. Certification of suppliers.
Sec. 5035. Prohibition against carrier forum shopping.
Sec. 5036. Restrictions on certain marketing and sales activities.
Sec. 5037. Kickback clarification.
Sec. 5038. Beneficiary liability for noncovered services.
Sec. 5039. Adjustments for inherent reasonableness.
Sec. 5040. Payment for surgical dressings.
Sec. 5041. Payments for tens devices.
Sec. 5042. Miscellaneous and technical corrections.
SUBCHAPTER D—PART B PREMIUM
Sec. 5051. Part B premium.
SUBCHAPTER E—OTHER PROVISIONS
Sec. 5061. Payments for clinical diagnostic laboratory tests.
Sec. 5062. Treatment of inpatients and provision of diagnostic and therapeutic
X-ray services by rural health clinics and Federally qualified
health centers.
Sec. 5063. Application of mammography certification requirements.
Sec. 5064. Extension of Alzheimer’s disease demonstration.
Sec. 5065. Oral cancer drugs.
Sec. 5066. Extension of municipal health service demonstration projects.
Sec. 5067. Treatment of certain Indian health programs and facilities as Fed-
erally-qualified health centers.
Sec. 5068. Interest payments.
Sec. 5069. Clarification of coverage of certified nurse-midwife services per-
formed outside the maternity cycle.
Sec. 5069A. Increase in, and study of, annual cap on amount of medicare pay-
ment for outpatient physical therapy and occupational therapy
services.
Sec. 5070. Miscellaneous and technical corrections.
CHAPTER 2—PROVISIONS RELATING TO PARTS A AND B
Sec. 5071. Elimination of add-on for overhead of hospital-based home health
agencies.
Sec. 5072. Study and report on medicare GME payments.
Sec. 5073. Medicare as secondary payer.
193
Sec. 5074. Extension of self-referral ban to additional specified services.
Sec. 5075. Reduction in payment for erythropoietin.
Sec. 5076. Medicare hospital agreements with organ procurement organiza-
tions.
Sec. 5077. Extension of waiver for Watts Health Foundation.
Sec. 5078. Improved outreach for qualified medicare beneficiaries.
Sec. 5079. Social health maintenance organizations.
Sec. 5080. Peer review organizations.
Sec. 5081. Hospice information to home health beneficiaries.
Sec. 5082. Health maintenance organizations.
Sec. 5083. Miscellaneous and technical corrections.
CHAPTER 3—PROVISIONS RELATING TO MEDICARE SUPPLEMENTAL
INSURANCE POLICIES
Sec. 5091. Standards for medicare supplemental insurance policies.
CHAPTER 1—PROVISIONS RELATING TO
PART B
Subchapter A—Physicians’ Services
SEC. 5001. REDUCTION IN DEFAULT UPDATE FOR CONVER-
SION FACTOR FOR 1994.
Section 
1848(d)(3)(A) 
(42 
U.S.C. 
1395w–
4(d)(3)(A)) is amended—
(1) in clause (i), by striking ‘‘clause (iii)’’ and
inserting ‘‘clauses (iii) and (iv)’’, and
(2) by adding at the end the following new
clause:
‘‘(iv) ADJUSTMENT
IN
PERCENTAGE
INCREASE
FOR
1994.—In applying clause
(i) for services (other than primary care
services) furnished in 1994, the percentage
increase in the appropriate update index
shall be reduced by—
194
‘‘(I) 3 percentage points for sur-
gical services (as defined for purposes
of subsection (j)(1)), and
‘‘(II) 2 percentage points for
other services.’’.
SEC. 5002. REDUCTION IN PERFORMANCE STANDARD RATE
OF INCREASE AND INCREASE IN MAXIMUM
REDUCTION PERMITTED IN DEFAULT UP-
DATE.
(a) REDUCTION IN PERFORMANCE STANDARD FAC-
TOR.—Section 
1848(f)(2)(B) 
(42 
U.S.C. 
1395w–
4(f)(2)(B)) is amended—
(1) by striking ‘‘and’’ at the end of clause (ii),
and
(2) by striking clause (iii) and inserting the fol-
lowing:
‘‘(iii) for 1993 is 2 percentage points,
‘‘(iv) for 1994 is 31⁄2
percentage
points, and
‘‘(v) for each succeeding year is 4 per-
centage points.’’.
(b) INCREASE IN MAXIMUM REDUCTION PERMITTED
IN DEFAULT UPDATE.—Section 1848(d)(3)(B)(ii) (42
U.S.C. 1395w–4(d)(3)(B)(ii)) is amended—
195
(1) in subclause (II), by striking ‘‘or 1995’’,
and
(2) in subclause (III), by striking ‘‘3’’ and in-
serting ‘‘5’’.
SEC. 5003. CLASSIFICATION OF PRIMARY CARE SERVICES
AS A SEPARATE CATEGORY OF SERVICES.
(a) IN GENERAL.—Section 1848(j)(1) (42 U.S.C.
1395w–4(j)(1)) is amended by inserting ‘‘, primary care
services (as defined in section 1842(i)(4)),’’ after ‘‘Sec-
retary)’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply—
(1) to volume performance standard rates of
increase established under section 1848(f) of the
Social Security Act for fiscal years beginning with
fiscal year 1994, and
(2) to updates in the conversion factors for phy-
sicians’ services established under section 1848(d) of
such Act for physicians’ services to be furnished in
calendar years beginning with 1996.
196
SEC. 5004. PHASED-IN REDUCTION IN PRACTICE EXPENSE
RELATIVE VALUE UNITS FOR CERTAIN SERV-
ICES.
(a) IN GENERAL.—Section 1848(c)(2) (42 U.S.C.
1395w–4(c)(2)) is amended by adding at the end the fol-
lowing new subparagraph:
‘‘(E) REDUCTION IN PRACTICE EXPENSE
RELATIVE VALUE UNITS FOR CERTAIN SERV-
ICES.—
‘‘(i) IN GENERAL.—Subject to clause
(ii), the Secretary shall reduce the practice
expense relative value units applied to serv-
ices described in clause (iii) furnished in—
‘‘(I) 1994, by 25 percent of the
number by which the number of prac-
tice expense relative value units (de-
termined for 1994 without regard to
this subparagraph) exceeds the num-
ber of work relative value units deter-
mined for 1994,
‘‘(II) 1995, by an additional 25
percent of such excess, and
‘‘(III) 
1996 
and 
subsequent
years, by an additional 25 percent of
such excess.
197
‘‘(ii) FLOOR
ON
REDUCTIONS.—The
practice expense relative value units for a
physicians’ service shall not be reduced
under this subparagraph to a number less
than 110 percent of the number of work
relative value units.
‘‘(iii) SERVICES COVERED.—For pur-
poses of clause (i), the services described in
this clause are physicians’ services that are
not described in clause (iv) and for
which—
‘‘(I) there are work relative value
units, and
‘‘(II) the number of practice ex-
pense relative value units (determined
for 1994) exceeds 110 percent of the
number of work relative value units
(determined for such year).
‘‘(iv) 
EXCLUDED
SERVICES.—For
purposes of clause (iii), the services de-
scribed in this clause are—
‘‘(I) anesthesia services,
‘‘(II) radiology services, and
‘‘(III) services which the Sec-
retary determines at least 75 percent
198
of which are provided under this title
in an office setting.’’.
(b) DEVELOPMENT
OF RESOURCE-BASED METH-
ODOLOGY FOR PRACTICE EXPENSES.—
(1) The Secretary of Health and Human Serv-
ices shall develop a methodology for implementing in
1997 a resource-based system for determining prac-
tice expense relative value units for each physician’s
service.
(2) The Secretary shall transmit a report by
June 30, 1996, on the methodology developed under
paragraph (1) to the Committees on Ways and
Means and Energy and Commerce of the House of
Representatives and the Committee on Finance of
the Senate. The report shall include a presentation
of data utilized in developing the methodology and
an explanation of the methodology.
SEC. 5005. LIMITATION ON PAYMENT FOR THE ANESTHESIA
CARE TEAM.
(a) LIMIT ON PAYMENT TO A PHYSICIAN FOR MEDI-
CAL DIRECTION.—
(1) IN GENERAL.—Section 1848(a) (42 U.S.C.
1395w–4(a)), as amended by section 5008(a)(1), is
amended by adding at the end the following new
paragraph:
199
‘‘(4) SPECIAL
RULE
FOR
MEDICAL
DIREC-
TION.—
‘‘(A) IN GENERAL.—With respect to physi-
cians’ services furnished on or after January 1,
1994, and consisting of medical direction of
two, three, or four concurrent anesthesia cases,
the fee schedule amount to be applied shall not
exceed one-half of the amount described in sub-
paragraph (B).
‘‘(B) AMOUNT.—The amount described in
this subparagraph, for a physician’s medical di-
rection of the performance of anesthesia serv-
ices, is the following percentage of the fee
schedule amount otherwise applicable under this
section if the anesthesia services were person-
ally performed by the physician alone:
‘‘(i) For services furnished during
1994, 120 percent.
‘‘(ii) For services furnished during
1995, 115 percent.
‘‘(iii) For services furnished during
1996, 110 percent.
‘‘(iv) For services furnished during
1997, 105 percent.
200
‘‘(v) For services furnished after
1997, 100 percent.’’.
(2) ELIMINATION OF REDUCTION FOR MEDICAL
DIRECTION OF MULTIPLE NURSE ANESTHETISTS.—
Section 1842(b) (42 U.S.C. 1395u(b)) is amended
by striking paragraph (13).
(b) PAYMENT TO A CERTIFIED REGISTERED NURSE
ANESTHETIST FOR MEDICALLY DIRECTED SERVICES.—
Subparagraph (B) of section 1833(l)(4) (42 U.S.C.
1395l(l)(4)) is amended—
(1) in clause (i), by inserting ‘‘and before Janu-
ary 1, 1994,’’ after ‘‘1991,’’;
(2) in clause (ii)—
(A) by adding ‘‘and’’ at the end of
subclause (II),
(B) by striking the comma at the end of
subclause (III) and inserting a period, and
(C) by striking subclauses (IV) through
(VII); and
(3) by adding at the end the following new
clause:
‘‘(iii) In the case of services of a certified registered
nurse anesthetist who is medically directed by a physician
and that are furnished on or after January 1, 1994, the
fee schedule amount shall be one-half of the amount
201
described in section 1848(a)(4)(B) with respect to the
physician.’’.
SEC. 5006. BASING PAYMENTS FOR ANESTHESIA SERVICES
ON ACTUAL TIME.
(a) PHYSICIANS’ SERVICES.—Section 1848(b)(2)(B)
(42 U.S.C. 1395w–4(b)(2)(B)) is amended by adding at
the end the following: ‘‘For anesthesia services furnished
on or after January 1, 1994, the Secretary may not mod-
ify the methodology in effect as of January 1, 1993, for
determining the amount of time that may be billed for
such services under this section.’’.
(b) SERVICES OF CERTIFIED REGISTERED NURSE
ANESTHETISTS.—Section 
1833(l)(1)(B) 
(42 
U.S.C.
1395l(l)(1)(B)) is amended by adding at the end the fol-
lowing: ‘‘For anesthesia services furnished on or after
January 1, 1994, the Secretary may not modify the meth-
odology in effect as of January 1, 1993, for determining
the amount of time that may be billed for such services
under this section.’’.
SEC. 5007. SEPARATE PAYMENT FOR INTERPRETATION OF
ELECTROCARDIOGRAMS.
(a) IN GENERAL.—Paragraph (3) of section 1848(b)
(42 U.S.C. 1395w–4(b)) is amended to read as follows:
‘‘(3) TREATMENT
OF
INTERPRETATION
OF
ELECTROCARDIOGRAMS.—The Secretary—
202
‘‘(A) shall make separate payment under
this section for the interpretation of electro-
cardiograms performed or ordered to be per-
formed as part of or in conjunction with a visit
to or a consultation with a physician, and
‘‘(B) shall adjust the relative values estab-
lished for visits and consultations under sub-
section (c) so as not to include relative value
units for interpretations of electrocardiograms
in the relative value for visits and consulta-
tions.’’.
(b) 
ASSURING
BUDGET
NEUTRALITY.—Section
1848(c)(2) (42 U.S.C. 1395w–4(c)(2)), as amended by
section 5004(a); is amended by adding at the end the fol-
lowing new subparagraph:
‘‘(F) 
BUDGET
NEUTRALITY
ADJUST-
MENTS.—The Secretary—
‘‘(i) shall reduce the relative values
for all services (other than anesthesia serv-
ices) established under this paragraph
(and, in the case of anesthesia services, the
conversion factor established by the Sec-
retary for such services) by such percent-
age as the Secretary determines to be nec-
essary so that, beginning in 1996, the
203
amendment made by section 5007(a) of
the Omnibus Budget Reconciliation Act of
1993 would not result in expenditures
under this section that exceed the amount
of such expenditures that would have been
made if such amendment had not been
made, and
‘‘(ii) shall reduce the amounts deter-
mined under subsection (a)(2)(B)(ii)(I) by
such percentage as the Secretary deter-
mines to be required to assure that, taking
into account the reductions made under
clause (i), the amendment made by section
5007(a) of the Omnibus Budget Reconcili-
ation Act of 1993 would not result in ex-
penditures under this section in 1994 that
exceed the amount of such expenditures
that would have been made if such amend-
ment had not been made.’’.
(c) CONFORMING AMENDMENTS.—Section 1848 (42
U.S.C. 1395w–4) is amended—
(1) in subsection (a)(2)(B)(ii)(I), by inserting
‘‘and as adjusted under subsection (c)(2)(F)(ii)’’
after ‘‘for 1994’’;
204
(2) in subsection (c)(2)(A)(i), by adding at the
end the following: ‘‘Such relative values are subject
to adjustment under subparagraph (F)(i).’’; and
(3) in subsection (i)(1)(B), by adding at the
end 
‘‘including 
adjustments 
under 
subsection
(c)(2)(F),’’.
(d) EFFECTIVE DATE.—The amendments made by
this section shall apply to services furnished on or after
January 1, 1994.
SEC. 5008. PAYMENTS FOR NEW PHYSICIANS AND PRACTI-
TIONERS.
(a) EQUAL TREATMENT OF NEW PHYSICIANS AND
PRACTITIONERS.—(1) 
Section 
1848(a) 
(42 
U.S.C.
1395w–4(a)) is amended by striking paragraph (4).
(2) Section 1842(b)(4) (42 U.S.C. 1395u(b)(4)) is
amended by striking subparagraph (F).
(b) BUDGET NEUTRALITY ADJUSTMENT.—Notwith-
standing any other provision of law, the Secretary of
Health and Human Services shall reduce the following val-
ues and amounts for 1994 (to be applied for that year
and subsequent years) by such uniform percentage as the
Secretary determines to be required to assure that the
amendments made by subsection (a) will not result in ex-
penditures under part B of title XVIII of the Social Secu-
rity Act in 1994 that exceed the amount of such expendi-
205
tures that would have been made if such amendments had
not been made:
(1) The relative values established under section
1848(c) of such Act for services (other than anesthe-
sia services) and, in the case of anesthesia services,
the conversion factor established under section 1848
of such Act for such services.
(2) The amounts determined under section
1848(a)(2)(B)(ii)(I) of such Act.
(3) The prevailing charges or fee schedule
amounts to be applied under such part for services
of a health care practitioner (as defined in section
1842(b)(4)(F)(ii)(I) of such Act, as in effect before
the date of the enactment of this Act).
(c) CONFORMING AMENDMENTS.—Section 1848 (42
U.S.C. 1395w–4), as amended by section 5007(c), is
amended—
(1) in subsection (a)(2)(B)(ii)(I), by inserting
‘‘and section 5008(b) of the Omnibus Budget Rec-
onciliation Act of 1993’’ after ‘‘(c)(2)(F)(ii)’’;
(2) in subsection (c)(2)(A)(i), by inserting ‘‘and
section 5008(b) of the Omnibus Budget Reconcili-
ation Act of 1993’’ after ‘‘under subparagraph
(F)(i)’’; and
206
(3) in subsection (i)(1)(B), by inserting ‘‘and
section 5008(b) of the Omnibus Budget Reconcili-
ation Act of 1993’’ after ‘‘under subsection
(c)(2)(F)’’.
(d) EFFECTIVE DATE.—The amendments made by
subsection (a) shall apply to services furnished on or after
January 1, 1994.
SEC. 5009. GEOGRAPHIC ADJUSTMENT FACTORS FOR MEDI-
CARE PHYSICIANS’ SERVICES.
(a) REQUIRING CONSULTATION WITH REPRESENTA-
TIVES OF PHYSICIANS IN REVIEWING GEOGRAPHIC AD-
JUSTMENT FACTORS.—Section 1848(e)(1)(C) (42 U.S.C.
1395w–4(e)(1)(C)) is amended by striking ‘‘shall review’’
and inserting ‘‘shall, in consultation with appropriate rep-
resentatives of physicians, review’’.
(b) USE OF MOST RECENT DATA IN GEOGRAPHIC
ADJUSTMENT.—Section 1848(e)(1) (42 U.S.C. 1395w–
4(e)(1)) is amended by adding at the end the following
new subparagraph:
‘‘(D) USE OF RECENT DATA.—In estab-
lishing indices and index values under this
paragraph, the Secretary shall use the most re-
cent data available relating to practice ex-
penses, malpractice expenses, and physician
work effort in different fee schedule areas.’’.
207
(c) DEADLINE
FOR INITIAL REVIEW
AND REVI-
SION.—The Secretary of Health and Human Services
shall first review and revise geographic adjustment factors
under section 1848(e)(1)(C) of the Social Security Act by
not later than January 1, 1995.
(d) REPORT ON REVIEW PROCESS.—Not later than
1 year after the date of the enactment of this Act, the
Secretary of Health and Human Services shall study and
report to the Committee on Finance of the Senate and
the Committee on Ways and Means and the Committee
on Energy and Commerce of the House of Representatives
on—
(1) the data necessary to review and revise the
indices established under section 1848(e)(1)(A) of
the Social Security Act, including—
(A) the shares allocated to physicians’
work effort, practice expenses (other than mal-
practice expenses), and malpractice expenses;
(B) the weights assigned to the input com-
ponents of such shares; and
(C) the index values assigned to such com-
ponents;
(2) any limitations on the availability of data
necessary to review and revise such indices at least
every three years;
208
(3) ways of addressing such limitations, with
particular attention to the development of alternative
data sources for input components for which current
index values are based on data collected less fre-
quently than every three years; and
(4) the costs of developing more accurate and
timely data.
SEC. 5010. EXTRA-BILLING LIMITS.
(a) ENFORCEMENT AND UNIFORM APPLICATION.—
(1) ENFORCEMENT.—Paragraph (1) of section
1848(g) (42 U.S.C. 1395w–4(g)) is amended to read
as follows:
‘‘(1) LIMITATION ON ACTUAL CHARGES.—
‘‘(A) IN
GENERAL.—In the case of a
nonparticipating physician or nonparticipating
supplier or other person (as defined in section
1842(i)(2)) who does not accept payment on an
assignment-related basis for a physician’s serv-
ice furnished with respect to an individual en-
rolled under this part, the following rules apply:
‘‘(i) 
APPLICATION
OF
LIMITING
CHARGE.—No person may bill or collect an
actual charge for the service in excess of
the limiting charge described in paragraph
(2) for such service.
209
‘‘(ii) NO
LIABILITY
FOR
EXCESS
CHARGES.—No person is liable for pay-
ment of any amounts billed for the service
in excess of such limiting charge.
‘‘(iii) 
CORRECTION
OF
EXCESS
CHARGES.—If such a physician, supplier,
or other person bills, but does not collect,
an actual charge for a service in violation
of clause (i), the physician, supplier, or
other person shall reduce on a timely basis
the actual charge billed for the service to
an amount not to exceed the limiting
charge for the service.
‘‘(iv) REFUND
OF
EXCESS
COLLEC-
TIONS.—If such a physician, supplier, or
other person collects an actual charge for
a service in violation of clause (i), the phy-
sician, supplier, or other person shall pro-
vide on a timely basis a refund to the indi-
vidual charged in the amount by which the
amount collected exceeded the limiting
charge for the service. The amount of such
a refund shall be reduced to the extent the
individual has an outstanding balance owed
by the individual to the physician.
210
‘‘(B) SANCTIONS.—If a physician, supplier,
or other person—
‘‘(i) knowingly and willfully bills or
collects for services in violation of subpara-
graph (A)(i) on a repeated basis, or
‘‘(ii) fails to comply with clause (iii)
or (iv) of subparagraph (A) on a timely
basis,
the Secretary may apply sanctions against the
physician, supplier, or other person in accord-
ance with paragraph (2) of section 1842(j). In
applying this subparagraph, paragraph (4) of
such section applies in the same manner as
such paragraph applies to such section and any
reference in such section to a physician is
deemed also to include a reference to a supplier
or other person under this subparagraph.
‘‘(C) TIMELY BASIS.—For purposes of this
paragraph, a correction of a bill for an excess
charge or refund of an amount with respect to
a violation of subparagraph (A)(i) in the case of
a service is considered to be provided ‘on a
timely basis’, if the reduction or refund is made
not later than 30 days after the date the physi-
cian, supplier, or other person is notified by the
211
carrier under this part of such violation and of
the requirements of subparagraph (A).’’.
(2) UNIFORM APPLICATION OF EXTRA-BILLING
LIMITS TO PHYSICIANS’ SERVICES.—
(A) IN GENERAL.—Section 1848(g)(2)(C)
(42 U.S.C. 1395w–4(g)(2)(C)) is amended by
inserting ‘‘or for nonparticipating suppliers or
other persons’’ after ‘‘nonparticipating physi-
cians’’.
(B) CONFORMING
DEFINITION.—Section
1842(i)(2) (42 U.S.C. 1395u(i)(2)) is amend-
ed—
(i) by striking ‘‘, and the term’’ and
inserting ‘‘; the term’’, and
(ii) by inserting before the period at
the end the following: ‘‘; and the term
‘nonparticipating supplier or other person’
means a supplier or other person (exclud-
ing a provider of services) that is not a
participating physician or supplier (as de-
fined in subsection (h)(1))’’.
(3) ADDITIONAL CONFORMING AMENDMENTS.—
Section 1848 (42 U.S.C. 1395w–4) is amended—
(A) in subsection (a)(3)—
212
(i) by inserting ‘‘AND
SUPPLIERS’’
after ‘‘PHYSICIANS’’,
(ii) 
by 
inserting 
‘‘or 
a
nonparticipating supplier or other person’’
after ‘‘nonparticipating physician’’, and
(iii) by adding at the end the follow-
ing: ‘‘In the case of physicians’ services
(including services which the Secretary ex-
cludes pursuant to subsection (j)(3)) of a
nonparticipating physician, supplier, or
other person for which payment is made
under this part on a basis other than the
fee schedule amount, the payment shall be
based on 95 percent of the payment basis
for such services furnished by a participat-
ing physician, supplier, or other person.’’;
(B) in subsection (g)(1)(A), as amended by
subsection (a), in the matter before clause (i),
by inserting ‘‘(including services which the Sec-
retary excludes pursuant to subsection (j)(3))’’
after ‘‘a physician’s service’’;
(C) in subsection (g)(2)(D), by inserting
‘‘(or, if payment under this part is made on a
basis other than the fee schedule under this sec-
213
tion, 95 percent of the other payment basis)’’
after ‘‘subsection (a)’’;
(D) in subsection (g)(3)(B)—
(i) by inserting after the first sentence
the following: ‘‘No person is liable for pay-
ment of any amounts billed for such a
service in violation of the previous sen-
tence.’’, and
(ii) in the last sentence, by striking
‘‘previous sentence’’ and inserting ‘‘first
sentence’’;
(E) in subsection (h)—
(i) by inserting ‘‘or nonparticipating
supplier or other person furnishing physi-
cians’ services (as defined in section
1848(j)(3))’’ after ‘‘physician’’ the first
place it appears,
(ii) by inserting ‘‘, supplier, or other
person’’ after ‘‘physician’’ the second place
it appears, and
(iii) by inserting ‘‘, suppliers, and
other persons’’ after ‘‘physicians’’ the sec-
ond place it appears; and
214
(F) in subsection (j)(3), by inserting ‘‘, ex-
cept for purposes of subsections (a)(3), (g), and
(h)’’ after ‘‘tests and’’.
(b) CLARIFICATION
OF MANDATORY ASSIGNMENT
RULES FOR CERTAIN PRACTITIONERS.—
(1) IN GENERAL.—Section 1842(b) (42 U.S.C.
1395u(b)), as amended by section 5014(e), is
amended by adding at the end the following new
paragraph:
‘‘(18)(A) Payment for any service furnished by a
practitioner described in subparagraph (C) and for which
payment may be made under this part on a reasonable
charge or fee schedule basis may only be made under this
part on an assignment-related basis.
‘‘(B) A practitioner described in subparagraph (C) or
other person may not bill (or collect any amount from)
the individual or another person for any service described
in subparagraph (A), except for deductible and coinsur-
ance amounts applicable under this part. No person is lia-
ble for payment of any amounts billed for such a service
in violation of the previous sentence. If a practitioner or
other person knowingly and willfully bills (or collects an
amount) for such a service in violation of such sentence,
the Secretary may apply sanctions against the practitioner
or other person in the same manner as the Secretary may
215
apply sanctions against a physician in accordance with
section 1842(j)(2) in the same manner as such section ap-
plies with respect to a physician. Paragraph (4) of section
1842(j) shall apply in this subparagraph in the same man-
ner as such paragraph applies to such section.
‘‘(C) A practitioner described in this subparagraph
is any of the following:
‘‘(i) A physician assistant, nurse practitioner, or
clinical nurse specialist (as defined in section
1861(aa)(5)).
‘‘(ii) A certified registered nurse anesthetist (as
defined in section 1861(bb)(2)).
‘‘(iii) A certified nurse-midwife (as defined in
section 1861(gg)(2)).
‘‘(iv) A clinical social worker (as defined in sec-
tion 1861(hh)(1)).
‘‘(v) A clinical psychologist (as defined by the
Secretary for purposes of section 1861(ii)).
‘‘(D) For purposes of this paragraph, a service fur-
nished by a practitioner described in subparagraph (C) in-
cludes any services and supplies furnished as incident to
the service as would otherwise be covered under this part
if furnished by a physician or as incident to a physician’s
service.’’.
(2) CONFORMING AMENDMENTS.—
216
(A) Section 1833 (42 U.S.C. 1395l) is
amended—
(i) in subsection (l)(5), by striking
subparagraph (B) and redesignating sub-
paragraph (C) as subparagraph (B);
(ii) by striking subsection (p); and
(iii) in subsection (r), by striking
paragraph (3) and redesignating para-
graph (4) as paragraph (3).
(B) 
Section 
1842(b)(12) 
(42 
U.S.C.
1395u(b)(12)) is amended by striking subpara-
graph (C).
(c) INFORMATION ON EXTRA-BILLING LIMITS.—
(1) PART OF EXPLANATION OF MEDICARE BEN-
EFITS.—Section 
1842(h)(7) 
(42 
U.S.C.
1395u(h)(7)) is amended—
(A) by striking ‘‘and’’ at the end of sub-
paragraph (B),
(B) in subparagraph (C), by striking ‘‘shall
include’’,
(C) in subparagraph (C), by striking the
period at the end and inserting ‘‘, and’’, and
(D) by adding at the end the following new
subparagraph:
217
‘‘(D) in the case of services for which the billed
amount exceeds the limiting charge imposed under
section 1848(g), information regarding such applica-
ble limiting charge (including information concern-
ing 
the 
right 
to 
a 
refund 
under 
section
1848(g)(1)(A)(iv)).’’.
(2) DETERMINATIONS BY CARRIERS.—Subpara-
graph (G) of section 1842(b)(3) (42 U.S.C.
1395u(b)(3)) is amended to read as follows:
‘‘(G) will, for a service that is furnished with
respect to an individual enrolled under this part,
that is not paid on an assignment-related basis, and
that is subject to a limiting charge under section
1848(g)—
‘‘(i) determine, prior to making payment,
whether the amount billed for such service ex-
ceeds the limiting charge applicable under sec-
tion 1848(g)(2);
‘‘(ii) notify the physician, supplier, or other
person periodically (but not less often than once
every 30 days) of determinations that amounts
billed exceeded such applicable limiting charges;
and
‘‘(iii) provide for prompt response to in-
quiries of physicians, suppliers, and other per-
218
sons concerning the accuracy of such limiting
charges for their services;’’.
(d) REPORT ON CHARGES IN EXCESS OF LIMITING
CHARGE.—Section 1848(g)(6)(B) (42 U.S.C. 1395w–
4(g)(6)(B)) is amended by inserting ‘‘the extent to which
actual charges exceed limiting charges, the number and
types of services involved, and the average amount of ex-
cess charges and’’ after ‘‘report to the Congress’’.
(e) MISCELLANEOUS
AND
TECHNICAL
AMEND-
MENTS.—Section 1833 (42 U.S.C. 1395l) is amended—
(1) in subsection (a)(1), as amended by section
5070(e)(2)—
(A) by striking ‘‘and’’ before ‘‘(O)’’, and
(B) by inserting before the semicolon at
the end the following: ‘‘, and (P) with respect
to services described in clauses (i), (ii) and (iv)
of section 1861(s)(2)(K), the amounts paid are
subject 
to 
the 
provisions 
of 
section
1842(b)(12)’’; and
(2) in subsection (h)(5)(D)—
(A) by striking ‘‘paragraphs (2) and (3)’’
and by inserting ‘‘paragraph (2)’’, and
(B) by adding at the end the following:
‘‘Paragraph (4) of such section shall apply in
219
this subparagraph in the same manner as such
paragraph applies to such section.’’.
(f) EFFECTIVE DATES.—
(1) ENFORCEMENT
AND
UNIFORM
APPLICA-
TION; MISCELLANEOUS
AND
TECHNICAL
AMEND-
MENTS.—The amendments made by subsections (a)
and (e) shall apply to services furnished on or after
the date of the enactment of this Act; except that
the amendments made by subsection (a) shall not
apply to services of a nonparticipating supplier or
other person furnished before January 1, 1994.
(2) PRACTITIONERS.—The amendments made
by subsection (b) shall apply to services furnished on
or after January 1, 1994.
(3) EOMBS.—The amendments made by sub-
section (c)(1) shall apply to explanations of benefits
provided on or after January 1, 1994.
(4) CARRIER
DETERMINATIONS.—The amend-
ments made by subsection (c)(2) shall apply to con-
tracts as of January 1, 1994.
(5) REPORT.—The amendment made by sub-
section (d) shall apply to reports for years beginning
with 1994.
220
SEC. 5011. RELATIVE VALUES FOR PEDIATRIC SERVICES.
(a) IN GENERAL.—The Secretary of Health and
Human Services shall fully develop, by not later than July
1, 1994, relative values for the full range of pediatric phy-
sicians’ services which are consistent with the relative val-
ues developed for other physicians’ services under section
1848(c) of the Social Security Act. In developing such val-
ues, the Secretary shall conduct such refinements as may
be necessary to produce appropriate estimates for such rel-
ative values.
(b) STUDY.—
(1) IN GENERAL.—The Secretary shall conduct
a study of the relative values for pediatric and other
services to determine whether there are significant
variations in the resources used in providing similar
services to different populations. In conducting such
study, the Secretary shall consult with appropriate
organizations representing pediatricians and other
physicians and physical and occupational therapists.
(2) REPORT.—Not later than July 1, 1994, the
Secretary shall submit to Congress a report on the
study conducted under paragraph (1). Such report
shall include any appropriate recommendations re-
garding needed changes in coding or other payment
policies to ensure that payments for pediatric serv-
221
ices appropriately reflect the resources required to
provide these services.
SEC. 5012. ANTIGENS UNDER PHYSICIAN FEE SCHEDULE.
(a) IN GENERAL.—Section 1848(j)(3) (42 U.S.C.
1395w–4(j)(3)) is amended by inserting ‘‘(2)(G),’’ after
‘‘(2)(D),’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply to services furnished on or after
January 1, 1994.
SEC. 5013. ADMINISTRATION OF CLAIMS RELATING TO PHY-
SICIANS’ SERVICES.
(a) LIMITATION ON CARRIER USER FEES.—Section
1842(c) (42 U.S.C. 1395u(c)) is amended by adding at
the end the following new paragraph:
‘‘(4) Neither a carrier nor the Secretary may impose
a fee under this title—
‘‘(A) for the filing of claims related to physi-
cians’ services,
‘‘(B) for an error in filing a claim relating to
physicians’ services or for such a claim which is de-
nied,
‘‘(C) for any appeal under this title with respect
to physicians’ services,
‘‘(D) for applying for (or obtaining) a unique
identifier under subsection (r), or
222
‘‘(E) for responding to inquiries respecting phy-
sicians’ services or for providing information with re-
spect to medical review of such services.’’.
(b) CLARIFICATION OF PERMISSIBLE SUBSTITUTE
BILLING ARRANGEMENTS.—
(1) IN
GENERAL.—Clause (D) of section
1842(b)(6) (42 U.S.C. 1395u(b)(6)) is amended to
read as follows: ‘‘(D) payment may be made to a
physician for physicians’ services (and services fur-
nished incident to such services) furnished by a sec-
ond physician to patients of the first physician if (i)
the first physician is unavailable to provide the serv-
ices; (ii) the services are furnished pursuant to an
arrangement between the two physicians that (I) is
informal and reciprocal, or (II) involves per diem or
other fee-for-time compensation for such services;
(iii) the services are not provided by the second phy-
sician over a continuous period of more than 60
days; and (iv) the claim form submitted to the car-
rier for such services includes the second physician’s
unique identifier (provided under the system estab-
lished under subsection (r)) and indicates that the
claim meets the requirements of this clause for pay-
ment to the first physician’’.
223
(2) EFFECTIVE DATE.—The amendment made
by paragraph (1) shall apply to services furnished on
or after the first day of the first month beginning
more than 60 days after the date of the enactment
of this Act.
SEC. 5014. MISCELLANEOUS AND TECHNICAL CORREC-
TIONS.
(a) OVERVALUED PROCEDURES (SECTION 4101 OF
OBRA–1990).—(1) 
Section 
1842(b)(16)(B)(iii) 
(42
U.S.C. 1395u(b)(16)(B)(iii)) is amended—
(A) by striking ‘‘, simple and subcutaneous’’,
(B) by striking ‘‘; small’’ and inserting ‘‘and
small’’,
(C) by striking ‘‘treatments;’’ the first place it
appears and inserting ‘‘and’’,
(D) by striking ‘‘lobectomy;’’,
(E) by striking ‘‘enterectomy; colectomy; chole-
cystectomy;’’,
(F) by striking ‘‘; transurerethral resection’’
and inserting ‘‘and resection’’, and
(G) by striking ‘‘sacral laminectomy;’’.
(2) Section 4101(b)(2) of OBRA–1990 is amended—
(A) in the matter before subparagraph (A), by
striking 
‘‘1842(b)(16)’’ 
and 
inserting
‘‘1842(b)(16)(B)’’, and
224
(B) in subparagraph (B)—
(i) by striking ‘‘, simple and subcutane-
ous’’,
(ii) by striking ‘‘(HCPCS codes 19160 and
19162)’’ and inserting ‘‘(HCPCS code 19160)’’,
and
(iii) by striking all that follows ‘‘(HCPCS
codes 92250’’ and inserting ‘‘and 92260).’’.
(b) RADIOLOGY
SERVICES
(SECTION
4102 
OF
OBRA–1990).—(1) Section 1834(b)(4) (42 U.S.C.
1395m(b)(4)) is amended by redesignating subparagraphs
(E) and (F) as subparagraphs (F) and (G), respectively.
(2) 
Section 
1834(b)(4)(D) 
(42 
U.S.C.
1395m(b)(4)(D)) is amended—
(A) in the matter before clause (i), by striking
‘‘shall be determined as follows:’’ and inserting
‘‘shall, subject to clause (vii), be reduced to the ad-
justed conversion factor for the locality determined
as follows:’’,
(B) in clause (iv), by striking ‘‘LOCAL ADJUST-
MENT.—Subject to clause (vii), the conversion factor
to be applied to’’ and inserting ‘‘ADJUSTED CONVER-
SION FACTOR.—The adjusted conversion factor for’’,
(C) in clause (vii), by striking ‘‘under this sub-
paragraph’’, and
225
(D) in clause (vii), by inserting ‘‘reduced under
this subparagraph by’’ after ‘‘shall not be’’.
(3) Section 4102(c)(2) of OBRA–1990 is amended
by striking ‘‘radiology services’’ and all that follows and
inserting ‘‘nuclear medicine services.’’.
(4) Section 4102(d) of OBRA–1990 is amended by
striking ‘‘new paragraph’’ and inserting ‘‘new subpara-
graph’’.
(5) 
Section 
1834(b)(4)(E) 
(42 
U.S.C.
1395m(b)(4)(E)) is amended by inserting ‘‘RULE FOR
CERTAIN SCANNING SERVICES.—’’ after ‘‘(E)’’.
(6) Section 1848(a)(2)(D)(iii) (42 U.S.C. 1395w–
4(a)(2)(D)(iii)) is amended by striking ‘‘that are subject
to section 6105(b) of the Omnibus Budget Reconciliation
Act of 1989’’ and by striking ‘‘provided under such sec-
tion’’ and inserting ‘‘provided under section 6105(b) of the
Omnibus Budget Reconciliation Act of 1989’’.
(c) ANESTHESIA
SERVICES
(SECTION
4103 OF
OBRA–1990).—(1) Section 4103(a) of OBRA–1990 is
amended by striking ‘‘REDUCTION IN FEE SCHEDULE’’
and inserting ‘‘REDUCTION IN PREVAILING CHARGES’’.
(2) 
Section 
1842(q)(1)(B) 
(42 
U.S.C.
1395u(q)(1)(B)) is amended—
(A) in the matter before clause (i), by striking
‘‘shall be determined as follows:’’ and inserting
226
‘‘shall, subject to clause (iv), be reduced to the ad-
justed prevailing charge conversion factor for the lo-
cality determined as follows:’’, and
(B) in clause (iii), by striking ‘‘Subject to
clause (iv), the prevailing charge conversion factor to
be applied in’’ and inserting ‘‘The adjusted prevail-
ing charge conversion factor for’’.
(d) ASSISTANTS AT SURGERY (SECTION 4107 OF
OBRA–1990).—(1) Section 4107(c) of OBRA–1990 is
amended by inserting ‘‘(a)(1)’’ after ‘‘subsection’’.
(2) Section 4107(a)(2) of OBRA–1990 is amended
by adding at the end the following: ‘‘In applying section
1848(g)(2)(D) of the Social Security Act for services of
an assistant-at-surgery furnished during 1991, the recog-
nized payment amount shall not exceed the maximum
amount specified under section 1848(i)(2)(A) of such Act
(as applied under this paragraph in such year).’’.
(e) TECHNICAL COMPONENTS OF DIAGNOSTIC SERV-
ICES (SECTION 4108 OF OBRA–1990).—Section 1842(b)
(42 U.S.C. 1395u(b)) is amended by redesignating para-
graph (18), as added by section 4108(a) of OBRA–1990,
as paragraph (17) and, in such paragraph, by inserting
‘‘, tests specified in paragraph (14)(C)(i),’’ after ‘‘diag-
nostic laboratory tests’’.
227
(f) STATEWIDE FEE SCHEDULES (SECTION 4117 OF
OBRA–1990).—Section 4117 of OBRA–1990 is amend-
ed—
(1) in subsection (a)—
(A) by striking ‘‘(a) IN GENERAL.—’’, and
(B) by striking ‘‘, if the’’ and all that fol-
lows through ‘‘1991, ’’; and
(2) by striking subsections (b), (c), and (d).
(g) STUDY OF AGGREGATION RULE FOR CLAIMS OF
SIMILAR
PHYSICIAN
SERVICES
(SECTION
4113 
OF
OBRA–1990).—Section 4113 of OBRA–1990 is amend-
ed—
(1) by inserting ‘‘of the Social Security Act’’
after ‘‘1869(b)(2)’’; and
(2) by striking ‘‘December 31, 1992’’ and in-
serting ‘‘December 31, 1993’’.
(h) OTHER
MISCELLANEOUS
AND
TECHNICAL
AMENDMENTS.—(1) The heading of section 1834(f) (42
U.S.C. 1395m(f)) is amended by striking ‘‘FISCAL YEAR’’.
(2)(A) Section 4105(b) of OBRA–1990 is amended—
(i) in paragraph (2), by striking ‘‘amendments’’
and inserting ‘‘amendment’’, and
(ii) in paragraph (3), by striking ‘‘amendments
made by paragraphs (1) and (2)’’ and inserting
‘‘amendment made by paragraph (1)’’.
228
(B) Section 1848(f)(2)(C) (42 U.S.C. 1395w–
4(f)(2)(C)) is amended by inserting ‘‘PERFORMANCE
STANDARD
RATES
OF
INCREASE
FOR
FISCAL
YEAR
1991.—’’ after ‘‘(C)’’.
(C) Section 4105(d) of OBRA–1990 is amended by
inserting ‘‘PUBLICATION OF PERFORMANCE STANDARD
RATES.—’’ after ‘‘(d)’’.
(3) 
Section 
1842(b)(4)(F) 
(42 
U.S.C.
1395u(b)(4)(F)) is amended—
(A) in clause (i), by striking ‘‘prevailing
charge’’ the first place it appears and inserting
‘‘customary charge’’; and
(B) in clause (ii)(III), by striking ‘‘second,
third, and fourth’’ and inserting ‘‘first, second, and
third’’.
(4) 
Section 
1842(b)(4)(F)(ii)(I) 
(42 
U.S.C.
1395u(b)(4)(F)(ii)(I)) is amended by striking ‘‘respiratory
therapist,’’.
(5) Section 4106(c) of OBRA–1990 is amended by
inserting 
‘‘of 
the 
Social 
Security 
Act’’ 
after
‘‘1848(d)(1)(B)’’.
(6) Section 4114 of OBRA–1990 is amended by
striking ‘‘patients’’ the second place it appears.
229
(7) Section 1848(e)(1)(C) (42 U.S.C. 1395w–
4(e)(1)(C)) is amended by inserting ‘‘date of the’’ after
‘‘since the’’.
(8) Section 4118(f)(1)(D) of OBRA–1990 is amend-
ed by striking ‘‘is amended’’.
(9) Section 4118(f)(1)(N)(ii) of OBRA–1990 is
amended by striking ‘‘subsection (f)(5)(A)’’ and inserting
‘‘subsection (f)(5)(A))’’.
(10) Section 1845(e) (42 U.S.C. 1395w–1(e)) is
amended—
(A) by striking paragraph (2); and
(B) by redesignating paragraphs (3), (4), and
(5) as paragraphs (2), (3), and (4).
(11) Section 4118(j)(2) of OBRA–1990 is amended
by striking ‘‘In section’’ and inserting ‘‘Section’’.
(12)(A) Section 1848(i)(3) (42 U.S.C. 1395w–
4(i)(3)) is amended by striking the space before the period
at the end.
(B) 
Section 
1834(a)(10)(B) 
(42 
U.S.C.
1395m(a)(10)(B)) is amended by striking ‘‘as such provi-
sions apply to physicians’ services and physicians and a
reasonable charge under section 1842(b)’’.
(i) OTHER CORRECTIONS.—(1) Effective on the date
of the enactment of this Act, section 6102(d)(4) of
230
OBRA–1989 is amended by striking all that follows the
first sentence.
(2) Effective for payments for fiscal years beginning
with fiscal year 1994, section 1842(c)(1) (42 U.S.C.
1395u(c)(1)) is amended—
(A) in subparagraph (A), by striking ‘‘(A) Any
contract’’ and inserting ‘‘Any contract’’; and
(B) by striking subparagraph (B).
(j) EFFECTIVE DATE.—Except as provided in sub-
section (i), the amendments made by this section and the
provisions of this section shall take effect as if included
in the enactment of OBRA–1990.
Subchapter B—Outpatient Hospital Services
and Ambulatory Surgical Services
SEC. 5021. EXTENSION OF 10 PERCENT REDUCTION IN PAY-
MENTS FOR CAPITAL-RELATED COSTS OF
OUTPATIENT HOSPITAL SERVICES.
Section 
1861(v)(1)(S)(ii)(I) 
(42 
U.S.C.
1395x(v)(1)(S)(ii)(I)) is amended by striking ‘‘fiscal year
1992, 1993, 1994, or 1995’’ and inserting ‘‘fiscal years
1992 through 1998’’.
231
SEC. 5022. EXTENSION OF CURRENT REDUCTION IN PAY-
MENTS FOR OTHER COSTS OF OUTPATIENT
HOSPITAL SERVICES.
Section 
1861(v)(1)(S)(ii)(II) 
(42 
U.S.C.
1395x(v)(1)(S)(ii)(II)) is amended by striking ‘‘1991’’ and
all that follows and inserting ‘‘1991 through 1998.’’.
SEC. 5023. 1-YEAR FREEZE IN AMBULATORY SURGERY
RATES.
The Secretary of Health and Human Services shall
not provide for any update in the amounts of payment
described in paragraphs (2)(A) and (2)(B) of section
1833(i)(2) of the Social Security Act that otherwise would
occur in fiscal year 1994.
SEC. 5024. EYE OR EYE AND EAR HOSPITALS.
(a) IN
GENERAL.—Section 1833(i) (42 U.S.C.
1395l(i)) is amended—
(1) in paragraph (3)(B)(ii)—
(A) by striking ‘‘the last sentence of this
clause’’ and inserting ‘‘paragraph (4)’’, and
(B) by striking the last sentence; and
(2) by inserting after paragraph (3) the follow-
ing new paragraph:
‘‘(4)(A) In the case of a hospital that—
‘‘(i) makes application to the Secretary and
demonstrates that it specializes in eye services or eye
and ear services (as determined by the Secretary),
232
‘‘(ii) receives more than 30 percent of its total
revenues from outpatient services, and
‘‘(iii) on October 1, 1987—
‘‘(I) was an eye specialty hospital or an eye
and ear specialty hospital, or
‘‘(II) was operated as an eye or eye and
ear unit (as defined in subparagraph (B)) of a
general acute care hospital which, on the date
of the application described in clause (i), oper-
ates less than 20 percent of the beds that the
hospital operated on October 1, 1987, and has
sold or otherwise disposed of a substantial por-
tion of the hospital’s other acute care oper-
ations,
the cost proportion and ASC proportion in effect under
subclauses (I) and (II) of paragraph (3)(B)(ii) for cost
reporting periods beginning in fiscal year 1988 shall re-
main in effect for cost reporting periods beginning on or
after October 1, 1988, and before January 1, 1995.
‘‘(B) For purposes of this subparagraph (A)(iii)(II),
the term ‘eye or eye and ear unit’ means a physically sepa-
rate or distinct unit containing separate surgical suites de-
voted solely to eye or eye and ear services.’’.
233
(b) EFFECTIVE DATE.—The amendments made by
subsection (a) shall apply to portions of cost reporting pe-
riods beginning on or after January 1, 1994.
SEC. 5025. EXTENSION OF CAP ON PAYMENTS FOR INTRA-
OCULAR LENSES.
(a) IN GENERAL.—Section 4151(c)(3) of OBRA–
1990 is amended by striking ‘‘December 31, 1992’’ and
inserting ‘‘December 31, 1994’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall be effective as if included in the enact-
ment of OBRA–1990.
SEC. 5026. MISCELLANEOUS AND TECHNICAL CORREC-
TIONS.
(a) PAYMENT AMOUNTS FOR SERVICES FURNISHED
IN AMBULATORY SURGICAL CENTERS.—(1)(A) Section
1833(i)(2)(A)(i) (42 U.S.C. 1395l(i)(2)(A)(i)) is amended
by striking the comma at the end and inserting the follow-
ing: ‘‘, as determined in accordance with a survey (based
upon a representative sample of procedures and facilities)
taken not later than January 1, 1995, and every 5 years
thereafter, of the actual audited costs incurred by such
centers in providing such services,’’.
(B) Section 1833(i)(2) (42 U.S.C. 1395l(i)(2)) is
amended—
234
(i) in the second sentence of subparagraph (A)
and the second sentence of subparagraph (B), by
striking ‘‘and may be adjusted by the Secretary,
when appropriate,’’; and
(ii) by adding at the end the following new sub-
paragraph:
‘‘(C) Notwithstanding the second sentence of sub-
paragraph (A) or the second sentence of subparagraph
(B), if the Secretary has not updated amounts established
under such subparagraphs with respect to facility services
furnished during a fiscal year (beginning with fiscal year
1996), such amounts shall be increased by the percentage
increase in the consumer price index for all urban consum-
ers (U.S. city average) as estimated by the Secretary for
the 12-month period ending with the midpoint of the fiscal
year involved.’’.
(C) The second sentence of section 1833(i)(1) (42
U.S.C. 1395l(i)(1)) is amended by striking the period and
inserting the following: ‘‘, in consultation with appropriate
trade and professional organizations.’’.
(2) Section 4151(c)(3) of OBRA–1990 is amended
by striking ‘‘for the insertion of an intraocular lens’’ and
inserting ‘‘for an intraocular lens inserted’’.
(b) ADJUSTMENTS TO PAYMENT AMOUNTS FOR NEW
TECHNOLOGY
INTRAOCULAR
LENSES.—(1) Not later
235
than 1 year after the date of the enactment of this Act,
the Secretary of Health and Human Services (in this sub-
section referred to as the ‘‘Secretary’’) shall develop and
implement a process under which interested parties may
request review by the Secretary of the appropriateness of
the reimbursement amount provided under section
1833(i)(2)(A)(iii) of the Social Security Act with respect
to a class of new technology intraocular lenses. For pur-
poses of the preceding sentence, an intraocular lens may
not be treated as a new technology lens unless it has been
approved by the Food and Drug Administration.
(2) In determining whether to provide an adjustment
of payment with respect to a particular lens under para-
graph (1), the Secretary shall take into account whether
use of the lens is likely to result in reduced risk of
intraoperative or postoperative complication or trauma,
accelerated postoperative recovery, reduced induced astig-
matism, improved postoperative visual acuity, more stable
postoperative vision, or other comparable clinical advan-
tages.
(3) The Secretary shall publish notice in the Federal
Register from time to time (but no less often than once
each year) of a list of the requests that the Secretary has
received for review under this subsection, and shall provide
for a 30-day comment period on the lenses that are the
236
subjects of the requests contained in such notice. The Sec-
retary shall publish a notice of his determinations with
respect to intraocular lenses listed in the notice within 90
days after the close of the comment period.
(4) Any adjustment of a payment amount (or pay-
ment limit) made under this subsection shall become effec-
tive not later than 30 days after the date on which the
notice with respect to the adjustment is published under
paragraph (3).
Subchapter C—Durable Medical Equipment
SEC. 5031. REVISIONS TO PAYMENT RULES FOR DURABLE
MEDICAL EQUIPMENT.
(a) BASING NATIONAL PAYMENT LIMITS ON MEDIAN
OF LOCAL PAYMENT AMOUNTS.—
(1) INEXPENSIVE AND ROUTINELY PURCHASED
ITEMS; ITEMS REQUIRING FREQUENT AND SUBSTAN-
TIAL SERVICING.—(A) Paragraphs (2)(C)(i)(II) and
(3)(C)(i)(II) 
of 
section 
1834(a) 
(42 
U.S.C.
1395m(a)) are each amended—
(i) by striking ‘‘1992’’ the first place it ap-
pears and inserting ‘‘1992, 1993, and 1994’’;
and
(ii) by striking ‘‘1992’’ the second place it
appears and inserting ‘‘the year’’.
237
(B) Paragraphs (2)(C)(ii) and (3)(C)(ii) of sec-
tion 1834(a) (42 U.S.C. 1395m(a)) are each amend-
ed—
(i) by striking ‘‘and’’ at the end of
subclause (I);
(ii) by redesignating subclause (II) as (IV);
and
(iii) by inserting after subclause (I) the fol-
lowing new subclauses:
‘‘(II) for 1992 and 1993, the
amount determined under this clause
for the preceding year increased by
the covered item update for such sub-
sequent year,
‘‘(III) for 1994, the local pay-
ment amount determined under clause
(i) for such item or device for that
year, except that the national limited
payment amount may not exceed 100
percent of the median of all local pay-
ment amounts determined under such
clause for such item for that year and
may not be less than 85 percent of
the median of all local payment
amounts 
determined 
under 
such
238
clause for such item or device for that
year, and’’.
(2) MISCELLANEOUS
DEVICES
AND
ITEMS.—
Section 1834(a)(8) (42 U.S.C. 1395m(a)(8)) is
amended—
(A) in subparagraph (A)(ii)(III), by strik-
ing ‘‘1992’’ and inserting ‘‘1992, 1993, and
1994’’; and
(B) in subparagraph (B)—
(i) by striking ‘‘and’’ at the end of
clause (i),
(ii) by redesignating clause (ii) as (iv),
and
(iii) by inserting after clause (i) the
following new clauses:
‘‘(ii) for 1992 and 1993, the amount
determined under this subparagraph for
the preceding year increased by the cov-
ered item update for such subsequent year;
‘‘(iii) for 1994, the local purchase
price computed under subparagraph (A)(ii)
for the item for the year, except that such
national limited purchase price may not ex-
ceed 100 percent of the median of all local
purchase prices computed for the item
239
under such subparagraph for the year and
may not be less than 85 percent of the me-
dian of all local purchase prices computed
under such subparagraph for the item for
the year; and’’.
(3) OXYGEN AND OXYGEN EQUIPMENT.—Sec-
tion 1834(a)(9) (42 U.S.C. 1395m(a)(9)) is amend-
ed—
(A) in subparagraph (A)(ii)(II), by striking
‘‘1991 and 1992’’ and inserting ‘‘1991, 1992,
1993, and 1994’’; and
(B) in subparagraph (B)—
(i) by striking ‘‘and’’ at the end of
clause (i),
(ii) by redesignating clause (ii) as (iv),
and
(iii) by inserting after clause (i) the
following new clauses:
‘‘(ii) for 1992 and 1993, the amount
determined under this subparagraph for
the preceding year increased by the cov-
ered item update for such subsequent year;
‘‘(iii) for 1994, the local monthly pay-
ment rate computed under subparagraph
(A)(ii) for the item for the year, except
240
that such national limited monthly pay-
ment rate may not exceed 100 percent of
the median of all local monthly payment
rates computed for the item under such
subparagraph for the year and may not be
less than 85 percent of the median of all
local monthly payment rates computed for
the item under such subparagraph for the
year; and’’.
(b) PAYMENT
FOR
PROSTHETIC
DEVICES
AND
ORTHOTICS AND PROSTHETICS.—
(1) IN
GENERAL.—Section 1834(h)(2) (42
U.S.C. 1395m(h)(2)) is amended—
(A) in subparagraph (A)(ii)(II), by striking
‘‘1992 or 1993’’ and inserting ‘‘1992, 1993, or
1994’’;
(B) in subparagraph (B)(ii), by striking
‘‘each subsequent year’’ and inserting ‘‘1993’’;
(C) in subparagraph (C)(iv), by striking
‘‘regional purchase price computed under sub-
paragraph (B)’’ and inserting ‘‘national limited
purchase price computed under subparagraph
(E)’’;
(D) in subparagraph (D)(ii), by striking ‘‘a
subsequent year’’ and inserting ‘‘1993’’; and
241
(E) by adding at the end the following new
subparagraph:
‘‘(E) COMPUTATION
OF
NATIONAL
LIM-
ITED PURCHASE PRICE.—With respect to the
furnishing of a particular item in a year, the
Secretary shall compute a national limited
purchase price—
‘‘(i) for 1994, equal to the local pur-
chase price computed under subparagraph
(A)(ii)(II) for the item for the year, except
that such national limited purchase price
may not exceed 100 percent of the median
of all local purchase prices for the item
computed under such subparagraph for the
year, and may not be less than 85 percent
of the median of all local purchase prices
for the item computed under such subpara-
graph for the year; and
‘‘(ii) for each subsequent year, equal
to the amount determined under this sub-
paragraph for the preceding year increased
by the applicable percentage increase for
such subsequent year.’’.
242
(2) EXCEPTION FOR CERTAIN ITEMS.—Section
1834(h) (42 U.S.C. 1395m(h)), as amended by
paragraph (1), is further amended—
(A) in paragraph (1)(B), by striking ‘‘sub-
paragraph (C),’’ and inserting ‘‘subparagraphs
(C) and (F),’’; and
(B) by adding at the end of paragraph (2)
the following new subparagraph:
‘‘(F) EXCEPTION FOR CERTAIN ITEMS.—
Payment for ostomy supplies, tracheostomy
supplies, and urologicals shall be made in ac-
cordance with subparagraphs (B) and (C) of
section 1834(a)(2).’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to items furnished on or after Jan-
uary 1, 1994.
SEC. 5032. PAYMENT FOR PARENTERAL AND ENTERAL NU-
TRIENTS, SUPPLIES, AND EQUIPMENT DUR-
ING 1994.
In determining the amount of payment under part
B of title XVIII of the Social Security Act during 1994,
the charges determined to be reasonable with respect to
parenteral and enteral nutrients, supplies, and equipment
may not exceed the charges determined to be reasonable
243
with respect to such nutrients, supplies, and equipment
during 1993.
SEC. 5033. TREATMENT OF NEBULIZERS AND ASPIRATORS.
(a) IN GENERAL.—Section 1834(a)(3)(A) (42 U.S.C.
1395m(a)(3)(A)) is amended by striking ‘‘ventilators, as-
pirators, IPPB machines, and nebulizers’’ and inserting
‘‘ventilators and IPPB machines’’.
(b) PAYMENT
FOR
ACCESSORIES
RELATING
TO
NEBULIZERS AND ASPIRATORS.—Section 1834(a)(2)(A)
(42 U.S.C. 1395m(a)) is amended—
(1) by striking ‘‘or’’ at the end of clause (i),
(2) by adding ‘‘or’’ at the end of clause (ii), and
(3) by inserting after clause (ii) the following
new clause:
‘‘(iii) which is an accessory used in
conjunction with a nebulizer or aspirator,’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to items furnished on or after Jan-
uary 1, 1994.
SEC. 5034. CERTIFICATION OF SUPPLIERS.
(a) REQUIREMENTS.—
(1) IN
GENERAL.—Section 1834 (42 U.S.C.
1395m) is amended by adding at the end the follow-
ing new subsection:
244
‘‘(i) REQUIREMENTS FOR SUPPLIERS OF MEDICAL
EQUIPMENT AND SUPPLIES.—
‘‘(1) ISSUANCE
AND
RENEWAL
OF
SUPPLIER
NUMBER.—
‘‘(A) PAYMENT.—Except as provided in
subparagraph (C), no payment may be made
under this part after October 1, 1994, for items
furnished by a supplier of medical equipment
and supplies unless such supplier obtains (and
renews at such intervals as the Secretary may
require) a supplier number.
‘‘(B) STANDARDS FOR POSSESSING A SUP-
PLIER NUMBER.—A supplier may not obtain a
supplier number unless—
‘‘(i) for medical equipment and sup-
plies furnished on or after October 1,
1994, and before January 1, 1996, the
supplier meets standards prescribed by the
Secretary; and
‘‘(ii) for medical equipment and sup-
plies furnished on or after January 1,
1996, the supplier meets revised standards
prescribed by the Secretary (in consulta-
tion with representatives of suppliers of
medical equipment and supplies, carriers,
245
and consumers) that shall include require-
ments that the supplier—
‘‘(I) comply with all applicable
State and Federal licensure and regu-
latory requirements;
‘‘(II) maintain a physical facility
on an appropriate site;
‘‘(III) have proof of appropriate
liability insurance; and
‘‘(IV) meet such other require-
ments as the Secretary may specify.
‘‘(C) EXCEPTION FOR ITEMS FURNISHED
AS
INCIDENT
TO
A
PHYSICIAN’S
SERVICE.—
Subparagraph (A) shall not apply with respect
to medical equipment and supplies furnished as
an incident to a physician’s service.
‘‘(D) PROHIBITION
AGAINST
MULTIPLE
SUPPLIER NUMBERS.—The Secretary may not
issue more than one supplier number to any
supplier of medical equipment and supplies un-
less the issuance of more than one number is
appropriate to identify subsidiary or regional
entities under the supplier’s ownership or con-
trol.
246
‘‘(E) PROHIBITION AGAINST DELEGATION
OF
SUPPLIER
DETERMINATIONS.—The Sec-
retary may not delegate (other than by contract
under section 1842) the responsibility to deter-
mine whether suppliers meet the standards nec-
essary to obtain a supplier number.
‘‘(2) CERTIFICATES OF MEDICAL NECESSITY.—
‘‘(A) STANDARDIZED CERTIFICATES.—Not
later than October 1, 1994, the Secretary shall,
in consultation with carriers under this part,
develop one or more standardized certificates of
medical necessity (as defined in subparagraph
(C)) for medical equipment and supplies for
which the Secretary determines that such a cer-
tificate is necessary.
‘‘(B) PROHIBITION AGAINST DISTRIBUTION
BY SUPPLIERS OF CERTIFICATES OF MEDICAL
NECESSITY.—
‘‘(i) IN
GENERAL.—Except as pro-
vided in clause (ii), a supplier of medical
equipment and supplies may not distribute
to physicians or to individuals entitled to
benefits under this part for commercial
purposes any completed or partially com-
247
pleted certificates of medical necessity on
or after October 1, 1994.
‘‘(ii) EXCEPTION FOR CERTAIN BILL-
ING
INFORMATION.—Clause (i) shall not
apply with respect to a certificate of medi-
cal necessity for any item that is not con-
tained on the list of potentially overused
items developed by the Secretary under
subsection (a)(15)(A) to the extent that
such certificate contains only information
completed by the supplier of medical equip-
ment and supplies identifying such supplier
and the beneficiary to whom such medical
equipment and supplies are furnished, a
description of such medical equipment and
supplies, any product code identifying such
medical equipment and supplies, and any
other administrative information (other
than information relating to the bene-
ficiary’s medical condition) identified by
the Secretary. In the event a supplier pro-
vides a certificate of medical necessity con-
taining information permitted under this
clause, such certificate shall also contain
the fee schedule amount and the supplier’s
248
charge for the medical equipment or sup-
plies being furnished prior to distribution
of such certificate to the physician.
‘‘(iii) PENALTY.—Any supplier of
medical equipment and supplies who know-
ingly and willfully distributes a certificate
of medical necessity in violation of clause
(i) is subject to a civil money penalty in an
amount not to exceed $1,000 for each such
certificate of medical necessity so distrib-
uted. The provisions of section 1128A
(other than subsections (a) and (b)) shall
apply to civil money penalties under this
subparagraph in the same manner as they
apply to a penalty or proceeding under sec-
tion 1128A(a).
‘‘(C) DEFINITION.—For purposes of this
paragraph, the term ‘certificate of medical ne-
cessity’ means a form or other document con-
taining information required by the Secretary to
be submitted to show that a covered item is
reasonable and necessary for the diagnosis or
treatment of illness or injury or to improve the
functioning of a malformed body member.
‘‘(3) COVERAGE AND REVIEW CRITERIA.—
249
‘‘(A) DEVELOPMENT
AND
ESTABLISH-
MENT.—Not later than January 1, 1996, the
Secretary, in consultation with representatives
of suppliers of medical equipment and supplies,
individuals enrolled under this part, and appro-
priate medical specialty societies, shall develop
and establish uniform national coverage and
utilization review criteria for 200 items of medi-
cal equipment and supplies selected in accord-
ance with the standards described in subpara-
graph (B). The Secretary shall publish the cri-
teria as part of the instructions provided to fis-
cal intermediaries and carriers under this part
and no further publication, including publica-
tion in the Federal Register, shall be required.
‘‘(B) STANDARDS FOR SELECTING ITEMS
SUBJECT TO CRITERIA.—The Secretary may se-
lect an item for coverage under the criteria de-
veloped and established under subparagraph
(A) if the Secretary finds that—
‘‘(i) the item is frequently purchased
or rented by beneficiaries;
‘‘(ii) the item is frequently subject to
a determination that such item is not
medically necessary; or
250
‘‘(iii) the coverage or utilization cri-
teria applied to the item (as of the date of
the enactment of this subsection) is not
consistent among carriers.
‘‘(C) ANNUAL REVIEW AND EXPANSION OF
ITEMS SUBJECT TO CRITERIA.—The Secretary
shall annually review the coverage and utiliza-
tion of items of medical equipment and supplies
to determine whether items not included among
the items selected under subparagraph (A)
should be made subject to uniform national cov-
erage and utilization review criteria, and, if ap-
propriate, shall develop and apply such criteria
to such additional items.
‘‘(4) DEFINITION.—The term ‘medical equip-
ment and supplies’ means—
‘‘(A) durable medical equipment (as de-
fined in section 1861(n));
‘‘(B) prosthetic devices (as described in
section 1861(s)(8));
‘‘(C) orthotics and prosthetics (as de-
scribed in section 1861(s)(9));
‘‘(D) surgical dressings (as described in
section 1861(s)(5));
647
‘‘(i)(1) Notwithstanding any other provision of this
section, comparability payments may not be established or
adjusted under this section in a manner that would cause
the resulting estimated total amount payable under this
section during the period which—
‘‘(A) begins on July 1, 1994, and ends on June
30, 1995, to exceed $1,800,000,000;
‘‘(B) begins on July 1, 1995, and ends on June
30, 1996, to exceed $2,500,000,000;
‘‘(C) begins on July 1, 1996, and ends on June
30, 1997, to exceed $3,300,000,000;
‘‘(D) begins on July 1, 1997, and ends on June
30, 1998, to exceed $4,200,000,000; or
‘‘(E) begins on July 1, 1998, and ends on Sep-
tember 30, 1998, to exceed $1,747,000,000.
‘‘(2) If necessary in order to achieve compliance with
any of the respective limitations under paragraph (1), the
President may, in carrying out subsection (d)(2), specify
levels of comparability payments less than the minimum
which would otherwise be required under subsection
(a)(3).
‘‘(3) The pay agent shall develop and include in the
appropriate reports under subsection (d)(1) the methodol-
ogy for making any estimates under this subsection, and