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Title VII, Subtitle B
‘‘(iv) 1 plus the Secretary’s estimate
of the percentage increase or decrease (di-
vided by 100) in expenditures for all physi-
cians’ services or of the category of physi-
cians’ services, respectively, in the fiscal
year (compared with the previous fiscal
year) which are estimated to result from
changes in law or regulations affecting the
percentage increase described in clause (i)
and which is not taken into account in the
percentage increase described in clause (i),
minus 1, multiplied by 100, and reduced by the
performance standard factor (specified in sub-
paragraph (C)).’’.
(b) TREATMENT OF DEFAULT UPDATE.—
(1) IN
GENERAL.—Section 1848(d)(3)(B) of
such Act (42 U.S.C. 1395w–4(d)(3)(B)) is amend-
ed—
(A) in clause (i)—
(i) in the heading, by striking ‘‘IN
GENERAL’’ and inserting ‘‘1992 THROUGH
1996’’, and
(ii) by striking ‘‘for a year’’ and in-
serting ‘‘for 1992, 1993, 1994, 1995, and
1996’’; and
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Title VII, Subtitle B
(B) by adding after clause (ii) the follow-
ing new clause:
‘‘(iii) YEARS BEGINNING WITH 1997.—
‘‘(I) IN
GENERAL.—The update
for a category of physicians’ services
for a year beginning with 1997 pro-
vided under subparagraph (A) shall be
increased or decreased by the same
percentage by which the cumulative
percentage increase in actual expendi-
tures for such category of physicians’
services for such year was less or
greater, respectively, than the per-
formance standard rate of increase
(established under subsection (f)) for
such category of services for such
year.
‘‘(II) CUMULATIVE PERCENTAGE
INCREASE
DEFINED.—In subclause
(I), the ‘cumulative percentage in-
crease in actual expenditures’ for a
year shall be equal to the product of
the adjusted increases for each year
beginning with 1995 up to and includ-
ing the year involved, minus 1 and
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Title VII, Subtitle B
multiplied by 100. In the previous
sentence, the ‘adjusted increase’ for a
year is equal to 1 plus the percentage
increase in actual expenditures for the
year.’’.
(2) 
CONFORMING
AMENDMENT.—Section
1848(d)(3)(A)(i) of such Act (42 U.S.C. 1395w–
4(d)(3)(A)(i)) is amended by striking ‘‘subparagraph
(B)’’ and inserting ‘‘subparagraphs (B) and (C)’’.
(c) USE OF REAL GDP TO ADJUST FOR VOLUME
AND INTENSITY.—Section 1848(f)(2)(B)(iii) of such Act
(42 U.S.C. 1395w–4(f)(2)(B)(iii)), as added by subsection
(a), is amended to read as follows:
‘‘(iii) 1 plus the average per capita
growth in the real gross domestic product
(divided by 100) for the 5-fiscal-year pe-
riod ending with the previous fiscal year
(increased by 1.5 percentage points for the
category of services consisting of primary
care services), and’’.
(d) REPEAL OF RESTRICTION ON MAXIMUM REDUC-
TION.—Section 1848(d)(3)(B)(ii) of such Act (42 U.S.C.
1395w–4(d)(3)(B)(ii)) is amended—
(1) in the heading, by inserting ‘‘IN CERTAIN
YEARS’’ after ‘‘ADJUSTMENT’’;
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Title VII, Subtitle B
(2) in the matter preceding subclause (I), by
striking ‘‘for a year’’;
(3) in subclause (I), by adding ‘‘and’’ at the
end;
(4) in subclause (II), by striking ‘‘, and’’ and
inserting a period; and
(5) by striking subclause (III).
(e) REPEAL
OF PERFORMANCE STANDARD FAC-
TOR.—
(1) IN GENERAL.—Section 1842(f)(2) of such
Act, as amended by subsection (a)(3), is amended by
striking subparagraph (C) and redesignating sub-
paragraph (D) as subparagraph (C).
(2) 
CONFORMING
AMENDMENT.—Section
1842(f)(2)(B) of such Act, as added by subsection
(a), is amended in the matter following clause (iv)
by striking ‘‘1, multiplied by 100’’ and all that fol-
lows through ‘‘subparagraph (C))’’ and inserting ‘‘1
and multiplied by 100’’.
(f) REDUCTION IN CONVERSION FACTOR FOR PHYSI-
CIAN FEE SCHEDULE FOR 1995.—Section 1848(d)(1) of
the Social Security Act (42 U.S.C. 1395w–4(d)(1)) is
amended—
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Title VII, Subtitle B
(1) in subparagraph (A), by inserting after
‘‘subparagraph (B)’’ the following: ‘‘, and, in the
case of 1995, specified in subparagraph (C)’’;
(2) by redesignating subparagraph (C) as sub-
paragraph (D); and
(3) by inserting after subparagraph (B) the fol-
lowing new subparagraph:
‘‘(C) SPECIAL PROVISION FOR 1995.—For
purposes of subparagraph (A), the conversion
factor specified in this subparagraph for 1995
is—
‘‘(i) in the case of physicians’ services
included in the category of primary care
services (as defined in subsection (j)(1)),
the conversion factor established under this
subsection for 1994 adjusted by the update
established under paragraph (3) for 1995;
and
‘‘(ii) in the case of any other physi-
cians’ services, the conversion factor estab-
lished under this subsection for 1994 re-
duced by 3 percentage points and adjusted
by the update established under paragraph
(3) for 1995.’’.
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Title VII, Subtitle B
SEC. 7112. IMPOSITION OF COINSURANCE ON LABORATORY
SERVICES.
(a) IN GENERAL.—Paragraphs (1)(D) and (2)(D) of
section 1833(a) of the Social Security Act (42 U.S.C.
1395l(a)) are each amended—
(1) by striking ‘‘(or 100 percent’’ and all that
follows through ‘‘the first opinion))’’; and
(2) by striking ‘‘100 percent of such negotiated
rate’’ and inserting ‘‘80 percent of such negotiated
rate’’.
(b) EFFECTIVE DATE.—The amendments made by
subsection (a) shall apply to tests furnished on or after
January 1, 1995.
SEC. 7113. INCREASE IN MEDICARE PART B PREMIUM FOR
INDIVIDUALS WITH HIGH INCOME.
(a) IN GENERAL.—Subchapter A of chapter 1 of the
Internal Revenue Code of 1986 is amended by adding at
the end thereof the following new part:
‘‘PART VIII—MEDICARE PART B PREMIUMS FOR
HIGH-INCOME INDIVIDUALS
‘‘Sec. 59B. Medicare part B premium tax.
‘‘SEC. 59B. MEDICARE PART B PREMIUM TAX.
‘‘(a) IMPOSITION OF TAX.—In the case of an individ-
ual to whom this section applies for the taxable year, there
is hereby imposed (in addition to any other tax imposed
by this subtitle) a tax for such taxable year equal to the
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Title VII, Subtitle B
aggregate of the Medicare part B premium taxes for each
of the months during such year that such individual is
covered by Medicare part B.
‘‘(b) INDIVIDUALS TO WHOM SECTION APPLIES.—
This section shall apply to any individual for any taxable
year if—
‘‘(1) such individual is covered under Medicare
part B for any month during such year, and
‘‘(2) the modified adjusted gross income of the
taxpayer for such taxable year exceeds the threshold
amount.
‘‘(c) MEDICARE
PART
B PREMIUM
TAX
FOR
MONTH.—
‘‘(1) IN GENERAL.—The Medicare part B pre-
mium tax for any month is the applicable percentage
(as defined in paragraph (2)) of the amount equal
to the excess of—
‘‘(A) 150 percent of the monthly actuarial
rate for enrollees age 65 and over determined
for that calendar year under section 1839(b) of
the Social Security Act, over
‘‘(B) the total monthly premium under sec-
tion 1839 of the Social Security Act (deter-
mined without regard to subsections (b) and (f)
of section 1839 of such Act).
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Title VII, Subtitle B
‘‘(2) PHASE-IN OF TAX.—If the modified ad-
justed gross income of the taxpayer for any taxable
years exceeds the threshold amount by—
‘‘(A) less than $25,000, the applicable per-
centage under this paragraph is 331⁄3 percent,
‘‘(B) at least $25,000, but less than
$50,000, the applicable percentage under this
paragraph is 662⁄3 percent,
‘‘(C) at least $50,000, but less than
$75,000, the applicable percentage under this
paragraph is 65/75 (expressed as a percent), or
‘‘(D) at least $75,000, the applicable per-
centage under this paragraph is 100 percent.
‘‘(d) OTHER DEFINITIONS AND SPECIAL RULES.—
For purposes of this section—
‘‘(1) THRESHOLD AMOUNT.—The term ‘thresh-
old amount’ means—
‘‘(A) except as otherwise provided in this
paragraph, $75,000,
‘‘(B) $100,000 in the case of a joint re-
turn, and
‘‘(C) zero in the case of a taxpayer who—
‘‘(i) is married at the close of the tax-
able year but does not file a joint return
for such year, and
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Title VII, Subtitle B
‘‘(ii) does not live apart from his
spouse at all times during the taxable year.
‘‘(2) MODIFIED
ADJUSTED
GROSS
INCOME.—
The term ‘modified adjusted gross income’ means
adjusted gross income—
‘‘(A) determined without regard to sections
135, 911, 931, and 933, and
‘‘(B) increased by the amount of interest
received or accrued by the taxpayer during the
taxable year which is exempt from tax.
‘‘(3) MEDICARE PART B COVERAGE.—An indi-
vidual shall be treated as covered under Medicare
part B for any month if a premium is paid under
part B of title XVIII of the Social Security Act for
the coverage of the individual under such part for
the month.
‘‘(4) MARRIED
INDIVIDUAL.—The determina-
tion of whether an individual is married shall be
made in accordance with section 7703.’’.
(b) CLERICAL AMENDMENT.—The table of parts for
subchapter A of chapter 1 of such Code is amended by
adding at the end thereof the following new item:
‘‘Part VIII. Medicare Part B Premiums For High-Income Individ-
uals.’’.
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Title VII, Subtitle B
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to months after December 1995
in taxable years ending after December 31, 1995.
SEC. 7114. EXTENSION OF 25 PERCENT PART B PREMIUM.
Section 1839(e) of the Social Security Act (42 U.S.C.
1395r(e)) is amended—
(1) in paragraph (1)(A), by striking ‘‘after after
December 1995 and prior to January 1999’’ and in-
serting ‘‘after December 1995’’;
(2) by striking ‘‘(1)(A)’’ and inserting ‘‘(1)’’;
(3) by striking paragraph (2); and
(4) by redesignating subparagraph (B) of para-
graph (1) as paragraph (2) (and redesignating the
clauses of such subparagraph accordingly).
SEC. 7115. REDUCTION IN HOSPITAL OUTPATIENT SERV-
ICES THROUGH ESTABLISHMENT OF PRO-
SPECTIVE PAYMENT SYSTEM.
(a) IN GENERAL.—Section 1833(a)(2)(B) of the So-
cial Security Act (42 U.S.C. 1395l(a)(2)(B)) is amended
by striking ‘‘section 1886)—’’ and all that follows and in-
serting the following: ‘‘section 1886), an amount equal to
a prospectively determined payment rate established by
the Secretary that provides for payments for such items
and services to be based upon a national rate adjusted
to take into account the relative costs of furnishing such
683
Title VII, Subtitle B
items and services in various geographic areas, except that
for items and services furnished during cost reporting pe-
riods (or portions thereof) in years beginning with 1996,
such amount shall be equal to 95 percent of the amount
that would otherwise have been determined;’’.
(b) ESTABLISHMENT
OF PROSPECTIVE PAYMENT
SYSTEM.—Not later than July 1, 1995, the Secretary of
Health and Human Services shall establish the prospective
payment system for hospital outpatient services necessary
to carry out section 1833(a)(2)(B) of the Social Security
Act (as amended by subsection (a)).
(c) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply to items and services furnished
on or after January 1, 1996.
PART 3—SAVINGS RELATING TO PARTS A AND B
SEC. 
7121. 
REDUCTION 
IN 
HOME 
HEALTH 
SERVICES
THROUGH 
ESTABLISHMENT 
OF 
PROSPEC-
TIVE PAYMENT SYSTEM.
(a) IN GENERAL.—
(1) PAYMENTS UNDER PART A.—Section 1814
of the Social Security Act (42 U.S.C. 1395f) is
amended—
(A) in subsection (b) in the matter preced-
ing paragraph (1)—
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Title VII, Subtitle B
(i) by striking ‘‘(other than’’ and all
that follows through ‘‘medical equip-
ment)’’, and
(ii) by striking ‘‘the provisions of’’
and inserting ‘‘the succeeding provisions of
this section and’’; and
(B) by adding at the end the following new
subsection:
‘‘Payments for Home Health Services
‘‘(m) The amount of payment under this part for
home health services shall be equal to a prospectively de-
termined payment rate established by the Secretary that
provides for payments for such services to be based upon
a national rate adjusted to take into account the relative
costs of furnishing such services in various geographic
areas, except that for services furnished during cost re-
porting periods (or portions thereof) in years beginning
with 1996, such amount shall be equal to 95 percent of
the amount that would otherwise have been determined.’’.
(2) 
PAYMENTS
UNDER
PART
B.—Section
1833(a)(2)(A) of the Social Security Act (42 U.S.C.
1395l(a)(2)(A)) is amended by striking ‘‘section
1861(s)(10)(A), the lesser of—’’ and all that follows
and inserting the following: ‘‘section 1861(s)(10)(A),
an amount equal to a prospectively determined pay-
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Title VII, Subtitle B
ment rate established by the Secretary that provides
for payments for such services to be based upon a
national rate adjusted to take into account the rel-
ative costs of furnishing such services in various geo-
graphic areas, except that for services furnished dur-
ing cost reporting periods (or portions thereof) in
years beginning with 1996, such amount shall be
equal to 95 percent of the amount that would other-
wise have been determined;’’.
(b) ESTABLISHMENT
OF PROSPECTIVE PAYMENT
SYSTEM.—Not later than July 1, 1995, the Secretary of
Health and Human Services shall establish the prospective
payment system for home health services necessary to
carry out sections 1814(m) and 1833(a)(2)(A) of the So-
cial Security Act (as amended by subsection (a)).
(c) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply to items and services furnished
on or after January 1, 1996.
SEC. 7122. MEDICARE SECONDARY PAYER.
(a) DELAY IN SUNSET OF DATA MATCHING RE-
QUIREMENTS.—(1) Section 1862(b)(5)(C)(iii) of the So-
cial Security Act (42 U.S.C. 1395y(b)(5)(C)(iii)) is
amended by striking ‘‘1998’’ and inserting ‘‘2005’’.
(2) Section 6103(l)(12)(F) of the Internal Revenue
Code of 1986 is amended—
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Title VII, Subtitle B
(A) in clause (i), by striking ‘‘1998’’ and insert-
ing ‘‘2005’’,
(B) in clause (ii)(I), by striking ‘‘1997’’ and in-
serting ‘‘2004’’, and
(C) in clause (ii)(II), by striking ‘‘1998’’ and
inserting ‘‘2005’’.
(b) EXTENSION OF MEDICARE SECONDARY PAYER
TO
DISABLED
BENEFICIARIES.—Section
1862(b)(1)(B)(iii) of the Social Security Act (42 U.S.C.
1395y(b)(1)(B)(iii)) is amended by striking ‘‘1998’’ and
inserting ‘‘2005’’.
(c) EXTENSION
OF COVERAGE
FOR INDIVIDUALS
WITH
END
STAGE
RENAL
DISEASE.—Section
1862(b)(1)(C) of such Act (42 U.S.C. 1395y(b)(1)(C)) is
amended—
(1) in the second sentence, by striking ‘‘October
1, 1998’’ and inserting ‘‘October 1, 1995’’; and
(2) by adding at the end the following: ‘‘Effec-
tive for items and services furnished on or after Oc-
tober 1, 1995, and before October 1, 2005 (with re-
spect to periods beginning on or after April 1,
1994), clauses (i) and (ii) shall be applied by sub-
stituting ‘24-month’ for ‘12-month’ each place it ap-
pears.’’.
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Title VIII
(d) APPLICATION TO DISABLED BENEFICIARIES IN
ALL GROUP HEALTH PLANS.—Section 1862(b)(1)(B) of
such Act (42 U.S.C. 1395y(b)(1)(B)) is amended—
(1) in the heading, by striking ‘‘IN
LARGE
GROUP HEALTH PLANS’’;
(2) in clause (i), by striking ‘‘large group health
plan (as defined in clause (v))’’ and inserting ‘‘group
health plan (as defined in subparagraph (A)(v))’’;
and
(3) by striking clause (iv) and inserting the fol-
lowing:
‘‘(iv) 
SMALL
EMPLOYER
EXEMP-
TION.—Clauses (ii) and (iii) of subpara-
graph (A) shall apply with respect to
clause (i) in the same manner as they
apply to subparagraph (A)(i).’’.
TITLE 
VIII—INCENTIVES 
TO
PURCHASE LONG-TERM CARE
INSURANCE
TABLE OF CONTENTS OF TITLE
Subtitle A—Establishment of Federal Standards for Long-
Term Care Insurance
Sec. 8001. Establishment of Federal standards for long-term care insurance.
‘‘TITLE XXII—LONG-TERM CARE INSURANCE STANDARDS
‘‘PART A—PROMULGATION OF STANDARDS AND MODEL BENEFITS
‘‘Sec. 2201. Standards.
‘‘PART B—ESTABLISHMENT AND IMPLEMENTATION OF LONG-TERM CARE
INSURANCE POLICY STANDARDS
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Title VIII, Subtitle A
‘‘Sec. 2211. Implementation of policy standards.
‘‘Sec. 2212. Regulation of sales practices.
‘‘Sec. 2213. Additional responsibilities for carriers.
‘‘Sec. 2214. Renewability standards for issuance, and basis for cancellation
of policies.
‘‘Sec. 2215. Benefit standards.
‘‘Sec. 2216. Offer of nonforfeiture benefits.
‘‘Sec. 2217. Limit of period of contestability and right to return.
‘‘Sec. 2218. Civil money penalty.
‘‘PART C—LONG-TERM CARE INSURANCE POLICIES, DEFINITION AND
ENDORSEMENTS
‘‘Sec. 2221. Long-term care insurance policy defined.
‘‘Sec. 2222. Code of conduct with respect to endorsements.
‘‘PART D—MISCELLANEOUS PROVISIONS
‘‘Sec. 2231. Definitions.’’
Subtitle B—Tax Treatment of Long-Term Care Insurance
Sec. 8101. Treatment of long-term care insurance or plans.
Sec. 8102. Exclusion for benefits provided under long-term care insurance and
for certain employer-provided coverage.
Sec. 8103. Qualified long-term services treated as medical care.
Sec. 8104. Exclusion from gross income for amounts otherwise includible on the
surrender or cancellation of any life insurance policy which are
used for long-term care insurance premiums.
Sec. 8105. Effective date.
Subtitle C—Studies
Sec. 8201. Feasibility of encouraging health care providers to donate services
to homebound patients.
Sec. 8202. Feasibility of tax credit for heads of households who care for elderly
family members in their homes.
Sec. 8203. Case management of current long-term care benefits.
Sec. 8204. Subacute care study.
Sec. 8205. Study of long-term care insurance.
Subtitle A—Establishment of Fed-
eral Standards for Long-Term
Care Insurance
SEC. 8001. ESTABLISHMENT OF FEDERAL STANDARDS FOR
LONG-TERM CARE INSURANCE.
(a) IN GENERAL.—The Social Security Act, as
amended by section 2101(a), is amended by adding at the
end the following new title:
696
Title VIII, Subtitle A
care services and who have expertise in the delivery
and financing of such services; and
‘‘(5) the Secretary of Veterans Affairs.
‘‘(e) DUTIES.—The advisory committee established
under subsection (d) shall—
‘‘(1) recommend the appropriate inflationary
index to be used with respect to the inflation protec-
tion benefit portion of the standards;
‘‘(2) recommend the uniform needs assessment
mechanism to be used in determining the eligibility
of individuals for benefits under a policy;
‘‘(3) recommend appropriate standards for ben-
efits under section 2215(c); and
‘‘(4) perform such other activities as deter-
mined appropriate by the Secretary.
‘‘(f) ADMINISTRATIVE PROVISIONS.—The following
provisions of section 1886(e)(6) shall apply to the advisory
committee chosen under subsection (d) in the same man-
ner as such provisions apply under such section:
‘‘(1) Subparagraph (C) (relating to staffing and
administration).
‘‘(2) Subparagraph (D) (relating to compensa-
tion of members).
‘‘(3) Subparagraph (F) (relating to access to
information).
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Title VIII, Subtitle A
‘‘(4) Subparagraph (G) (relating to use of
funds).
‘‘(5) Subparagraph (H) (relating to periodic
GAO audits).
‘‘(6) Subparagraph (J) (relating to requests for
appropriations).
‘‘PART B—ESTABLISHMENT AND IMPLEMENTATION OF
LONG-TERM CARE INSURANCE POLICY STANDARDS
‘‘SEC. 2211. IMPLEMENTATION OF POLICY STANDARDS.
‘‘(a) IN GENERAL.—
‘‘(1) REGULATORY
PROGRAM.—No long-term
care policy (as defined in section 2221) may be is-
sued, sold, or offered for sale as a long-term care in-
surance policy in a State on or after the date speci-
fied in section 2201(b) unless—
‘‘(A) the Secretary determines that the
State has established a regulatory program
that—
‘‘(i) provides for the application and
enforcement of the standards established
under section 2201(a); and
‘‘(ii) complies with the requirements
of subsection (b);
by the date specified in section 2201(b), and
the policy has been approved by the State com-