410
Title V, Subtitle A
any taxpayer shall not constitute a recapture
event.
‘‘(C) SECRETARIAL
WAIVER.—The Sec-
retary may waive any recapture event caused by
extraordinary circumstances.
‘‘(4) NO CREDITS AGAINST TAX.—Any increase
in tax under this subsection shall not be treated as
a tax imposed by this chapter for purposes of deter-
mining the amount of any credit under subpart A,
B, or D of this part.’’.
(2) CLERICAL AMENDMENT.—The table of sec-
tions for subpart A of part IV of subchapter A of
chapter 1 of such Code is amended by inserting
after the item relating to section 25 the following
new item:
‘‘Sec. 25A. Primary health services providers.’’.
(3) EFFECTIVE DATE.—The amendments made
by this subsection shall apply to taxable years begin-
ning after the date of the enactment of this Act.
(b) NATIONAL HEALTH SERVICE CORPS LOAN RE-
PAYMENTS EXCLUDED FROM GROSS INCOME.—
(1) IN GENERAL.—Part III of subchapter B of
chapter 1 of the Internal Revenue Code of 1986 (re-
lating to items specifically excluded from gross in-
come) is amended by redesignating section 137 as
411
Title V, Subtitle A
section 138 and by inserting after section 136 the
following new section:
‘‘SEC. 137. NATIONAL HEALTH SERVICE CORPS LOAN RE-
PAYMENTS.
‘‘(a) GENERAL RULE.—Gross income shall not in-
clude any qualified loan repayment.
‘‘(b) QUALIFIED LOAN REPAYMENT.—For purposes
of this section, the term ‘qualified loan repayment’ means
any payment made on behalf of the taxpayer by the Na-
tional Health Service Corps Loan Repayment Program
under section 338B(g) of the Public Health Service Act.’’.
(2) CONFORMING AMENDMENT.—Paragraph (3)
of section 338B(g) of the Public Health Service Act
is amended by striking ‘‘Federal, State, or local’’
and inserting ‘‘State or local’’.
(3) CLERICAL AMENDMENT.—The table of sec-
tions for part III of subchapter B of chapter 1 of
the Internal Revenue Code of 1986 is amended by
striking the item relating to section 136 and insert-
ing the following:
‘‘Sec. 137. National Health Service Corps loan repayments.
‘‘Sec. 138. Cross references to other Acts.’’.
(4) EFFECTIVE DATE.—The amendments made
by this subsection shall apply to payments made
under section 338B(g) of the Public Health Service
Act after the date of the enactment of this Act.
412
Title V, Subtitle A
(c) EXPENSING OF MEDICAL EQUIPMENT.—
(1) IN GENERAL.—Section 179 of the Internal
Revenue Code of 1986 (relating to election to ex-
pense certain depreciable business assets) is amend-
ed—
(A) by striking paragraph (1) of subsection
(b) and inserting the following:
‘‘(1) DOLLAR LIMITATION.—
‘‘(A) GENERAL RULE.—The aggregate cost
which may be taken into account under sub-
section (a) for any taxable year shall not exceed
$17,500.
‘‘(B) RURAL HEALTH CARE PROPERTY.—
In the case of rural health care property, the
aggregate cost which may be taken into account
under subsection (a) for any taxable year shall
not exceed $32,500, reduced by the amount
otherwise taken into account under subsection
(a) for such year.’’; and
(B) by adding at the end of subsection (d)
the following new paragraph:
‘‘(11) RURAL HEALTH CARE PROPERTY.—For
purposes of this section, the term ‘rural health care
property’ means section 179 property—
413
Title V, Subtitle A
‘‘(A) which is medical equipment used in
the screening, monitoring, observation, diag-
nosis, or treatment of patients in a laboratory,
medical, or hospital environment,
‘‘(B) which is owned (directly or indirectly)
and used by a physician (as defined in section
1861(r) of the Social Security Act) in the active
conduct of such physician’s full-time trade or
business of providing primary health services
(as defined in section 330(b)(1) of the Public
Health Service Act) in a rural health profes-
sional shortage area (as defined in section
25A(d)(5)), and
‘‘(C) substantially all the use of which is in
such area.’’.
(2) EFFECTIVE DATE.—The amendments made
by this subsection shall apply to property placed in
service in taxable years beginning after the date of
enactment of this Act.
(d) DEDUCTION FOR STUDENT LOAN PAYMENTS BY
MEDICAL
PROFESSIONALS
PRACTICING
IN
RURAL
AREAS.—
(1) INTEREST ON STUDENT LOANS NOT TREAT-
ED AS PERSONAL INTEREST.—Section 163(h)(2) of
the Internal Revenue Code of 1986 (defining per-
414
Title V, Subtitle A
sonal interest) is amended by striking ‘‘and’’ at the
end of subparagraph (D), by striking the period at
the end of subparagraph (E) and inserting ‘‘, and’’,
and by adding at the end thereof the following new
subparagraph:
‘‘(F) any qualified medical education interest
(within the meaning of subsection (k)).’’.
(2) QUALIFIED MEDICAL EDUCATION INTEREST
DEFINED.—Section 163 of such Code (relating to in-
terest expenses) is amended by redesignating sub-
section (k) as subsection (l) and by inserting after
subsection (j) the following new subsection:
‘‘(k) QUALIFIED MEDICAL EDUCATION INTEREST OF
MEDICAL
PROFESSIONALS
PRACTICING
IN
RURAL
AREAS.—
‘‘(1) IN GENERAL.—For purposes of subsection
(h)(2)(F), the term ‘qualified medical education in-
terest’ means an amount which bears the same ratio
to the interest paid on qualified educational loans
during the taxable year by an individual performing
services under a qualified rural medical practice
agreement as—
‘‘(A) the number of months during the tax-
able year during which such services were per-
formed, bears to
415
Title V, Subtitle A
‘‘(B) the number of months in the taxable
year.
‘‘(2) DOLLAR
LIMITATION.—The aggregate
amount which may be treated as qualified medical
education interest for any taxable year with respect
to an individual shall not exceed $5,000.
‘‘(3) QUALIFIED
RURAL
MEDICAL
PRACTICE
AGREEMENT.—For purposes of this subsection—
‘‘(A) IN
GENERAL.—The term ‘qualified
rural medical practice agreement’ means a writ-
ten agreement between an individual and an ap-
plicable rural community under which the indi-
vidual agrees—
‘‘(i) in the case of a medical doctor,
upon completion of the individual’s resi-
dency (or internship if no residency is re-
quired), or
‘‘(ii) in the case of a registered nurse,
nurse practitioner, or physician’s assistant,
upon completion of the education to which
the qualified education loan relates,
to perform full-time services as such a medical
professional in the applicable rural community
for a period of 24 consecutive months. An indi-
vidual and an applicable rural community may
416
Title V, Subtitle A
elect to have the agreement apply for 36 con-
secutive months rather than 24 months.
‘‘(B) SPECIAL RULE FOR COMPUTING PE-
RIODS.—An individual shall be treated as meet-
ing the 24- or 36-consecutive month require-
ment under subparagraph (A) if, during each
12-consecutive month period within either such
period, the individual performs full-time services
as a medical doctor, registered nurse, nurse
practitioner, or physician’s assistant, whichever
applies, in the applicable rural community dur-
ing 9 of the months in such 12-consecutive
month period. For purposes of this subsection,
an individual meeting the requirements of the
preceding sentence shall be treated as perform-
ing services during the entire 12-month period.
‘‘(C) APPLICABLE
RURAL
COMMUNITY.—
The term ‘applicable rural community’ means—
‘‘(i) any political subdivision of a
State which—
‘‘(I) has a population of 5,000 or
less, and
‘‘(II) has a per capita income of
$15,000 or less, or
418
Title V, Subtitle A
section (h)(2)(F) for such taxable year and any
subsequent taxable year, and
‘‘(B) there shall be included in gross in-
come for such taxable year the aggregate
amount of the deductions allowable under this
section (by reason of subsection (h)(2)(F)) for
all preceding taxable years.
‘‘(6) DEFINITIONS.—For purposes of this sub-
section, the terms ‘registered nurse’, ‘nurse practi-
tioner’, and ‘physician’s assistant’ have the meaning
given such terms by section 1861 of the Social Secu-
rity Act.’’.
(3) DEDUCTION ALLOWED IN COMPUTING AD-
JUSTED
GROSS
INCOME.—Section 62(a) of such
Code, as amended by sections 2002(c)(3) and
2003(b), is amended by inserting after paragraph
(17) the following new paragraph:
‘‘(18) INTEREST ON STUDENT LOANS OF RURAL
HEALTH PROFESSIONALS.—The deduction allowable
by reason of section 163(h)(2)(F) (relating to stu-
dent loan payments of medical professionals practic-
ing in rural areas).’’.
(4) EFFECTIVE DATE.—The amendments made
by this subsection shall apply to taxable years begin-
ning after the date of the enactment of this Act.
419
Title V, Subtitle A
SEC. 5004. RURAL EMERGENCY ACCESS CARE HOSPITALS.
(a) RURAL EMERGENCY ACCESS CARE HOSPITALS
DESCRIBED.—Section 1861 of the Social Security Act (42
U.S.C. 1395x) is amended by adding at the end the follow-
ing new subsection:
‘‘Rural Emergency Access Care Hospital; Rural
Emergency Access Care Hospital Services
‘‘(oo)(1) The term ‘rural emergency access care hos-
pital’ means, for a fiscal year, a facility with respect to
which the Secretary finds the following:
‘‘(A) The facility is located in a rural area (as
defined in section 1886(d)(2)(D)).
‘‘(B) The facility was a hospital under this title
at any time during the 5-year period that ends on
the date of the enactment of this subsection.
‘‘(C) The facility is in danger of closing due to
low inpatient utilization rates and negative operating
losses, and the closure of the facility would limit the
access of individuals residing in the facility’s service
area to emergency services.
‘‘(D) The facility has entered into (or plans to
enter into) an agreement with a hospital with a par-
ticipation agreement in effect under section 1866(a),
and under such agreement the hospital shall accept
patients transferred to the hospital from the facility
420
Title V, Subtitle A
and receive data from and transmit data to the facil-
ity.
‘‘(E) There is a practitioner who is qualified to
provide advanced cardiac life support services (as de-
termined by the State in which the facility is lo-
cated) on-site at the facility on a 24-hour basis.
‘‘(F) A physician is available on-call to provide
emergency medical services on a 24-hour basis.
‘‘(G) The facility meets such staffing require-
ments as would apply under section 1861(e) to a
hospital located in a rural area, except that—
‘‘(i) the facility need not meet hospital
standards relating to the number of hours dur-
ing a day, or days during a week, in which the
facility must be open, except insofar as the fa-
cility is required to provide emergency care on
a 24-hour basis under subparagraphs (E) and
(F); and
‘‘(ii) the facility may provide any services
otherwise required to be provided by a full-time,
on-site dietician, pharmacist, laboratory techni-
cian, medical technologist, or radiological tech-
nologist on a part-time, off-site basis.
‘‘(H) The facility meets the requirements appli-
cable to clinics and facilities under subparagraphs
421
Title V, Subtitle A
(C) through (J) of paragraph (2) of section
1861(aa) and of clauses (ii) and (iv) of the second
sentence of such paragraph (or, in the case of the
requirements of subparagraph (E), (F), or (J) of
such paragraph, would meet the requirements if any
reference in such subparagraph to a ‘nurse practi-
tioner’ or to ‘nurse practitioners’ was deemed to be
a reference to a ‘nurse practitioner or nurse’ or to
‘nurse practitioners or nurses’), except that in deter-
mining whether a facility meets the requirements of
this subparagraph, subparagraphs (E) and (F) of
that paragraph shall be applied as if any reference
to a ‘physician’ is a reference to a physician as de-
fined in section 1861(r)(1).
‘‘(2) The term ‘rural emergency access care hospital
services’ means medical and other health services fur-
nished by a rural emergency access care hospital.’’.
(b) COVERAGE OF AND PAYMENT FOR SERVICES.—
Section 1832(a)(2) of the Social Security Act (42 U.S.C.
1395k(a)(2)) is amended—
(1) by striking ‘‘and’’ at the end of subpara-
graph (I);
(2) by striking the period at the end of sub-
paragraph (J) and inserting ‘‘; and’’; and
422
Title V, Subtitle A
(3) by adding at the end the following new sub-
paragraph:
‘‘(K) rural emergency access care hospital
services (as defined in section 1861(oo)(2)).’’.
(c) PAYMENT BASED ON PAYMENT FOR OUTPATIENT
RURAL PRIMARY CARE HOSPITAL SERVICES.—
(1) IN GENERAL.—Section 1833(a)(6) of the
Social Security Act (42 U.S.C. 1395l(a)(6)) is
amended by striking ‘‘services,’’ and inserting ‘‘serv-
ices and rural emergency access care hospital serv-
ices,’’.
(2) PAYMENT
METHODOLOGY
DESCRIBED.—
Section 1834(g) of such Act (42 U.S.C. 1395m(g))
is amended—
(A) in the heading, by striking ‘‘SERV-
ICES’’ and inserting ‘‘SERVICES
AND RURAL
EMERGENCY ACCESS CARE HOSPITAL SERV-
ICES’’; and
(B) in paragraph (1), by striking ‘‘during
a year before 1993’’ and inserting ‘‘during a
year before the prospective payment system de-
scribed in paragraph (2) is in effect’’;
(C) in paragraph (1), by adding at the end
the following:
423
Title V, Subtitle A
‘‘The amount of payment shall be determined under
either method without regard to the amount of the
customary or other charge.’’;
(D) in paragraph (2), by striking ‘‘Janu-
ary 1, 1993,’’ and inserting ‘‘January 1,
1996,’’; and
(E) by adding at the end the following new
paragraph:
‘‘(3) APPLICATION OF METHODS TO PAYMENT
FOR
RURAL
EMERGENCY
ACCESS
CARE
HOSPITAL
SERVICES.—The amount of payment for rural emer-
gency access care hospital services provided during
a year shall be determined using the applicable
method provided under this subsection for determin-
ing payment for outpatient rural primary care hos-
pital services during the year.’’.
(d) EFFECTIVE DATE.—The amendments made by
this section shall apply to fiscal years beginning on or
after October 1, 1994.
SEC. 5005. GRANTS TO STATES REGARDING AIRCRAFT FOR
TRANSPORTING RURAL VICTIMS OF MEDICAL
EMERGENCIES.
Part E of title XII of the Public Health Service Act
(42 U.S.C. 300d–51 et seq.) is amended by adding at the
end thereof the following new section:
424
Title V, Subtitle A
‘‘SEC. 1252. GRANTS FOR SYSTEMS TO TRANSPORT RURAL
VICTIMS OF MEDICAL EMERGENCIES.
‘‘(a) IN GENERAL.—The Secretary shall make grants
to States to assist such States in the creation or enhance-
ment of air medical transport systems that provide victims
of medical emergencies in rural areas with access to treat-
ments for the injuries or other conditions resulting from
such emergencies.
‘‘(b) APPLICATION AND PLAN.—
‘‘(1) APPLICATION.—To be eligible to receive a
grant under subsection (a), a State shall prepare
and submit to the Secretary an application in such
form, made in such manner, and containing such
agreements, assurances, and information, including
a State plan as required in paragraph (2), as the
Secretary determines to be necessary to carry out
this section.
‘‘(2) STATE PLAN.—An application submitted
under paragraph (1) shall contain a State plan that
shall—
‘‘(A) describe the intended uses of the
grant proceeds and the geographic areas to be
served;
‘‘(B) demonstrates that the geographic
areas to be served, as described under subpara-
graph (A), are rural in nature;
425
Title V, Subtitle A
‘‘(C) demonstrate that there is a lack of
facilities available and equipped to deliver ad-
vanced levels of medical care in the geographic
areas to be served;
‘‘(D) demonstrate that in utilizing the
grant proceeds for the establishment or en-
hancement of air medical services the State
would be making a cost-effective improvement
to existing ground-based or air emergency medi-
cal service systems;
‘‘(E) demonstrate that the State will not
utilize the grant proceeds to duplicate the capa-
bilities of existing air medical systems that are
effectively meeting the emergency medical needs
of the populations they serve;
‘‘(F) demonstrate that in utilizing the
grant proceeds the State is likely to achieve a
reduction in the morbidity and mortality rates
of the areas to be served, as determined by the
Secretary;
‘‘(G) demonstrate that the State, in utiliz-
ing the grant proceeds, will—
‘‘(i) maintain the expenditures of the
State for air and ground medical transport
systems at a level equal to not less than
426
Title V, Subtitle A
the level of such expenditures maintained
by the State for the fiscal year preceding
the fiscal year for which the grant is re-
ceived; and
‘‘(ii) ensure that recipients of direct
financial assistance from the State under
such grant will maintain expenditures of
such recipients for such systems at a level
at least equal to the level of such expendi-
tures maintained by such recipients for the
fiscal year preceding the fiscal year for
which the financial assistance is received;
‘‘(H) demonstrate that persons experienced
in the field of air medical service delivery were
consulted in the preparation of the State plan;
‘‘(I) contain such other information as the
Secretary may determine appropriate.
‘‘(c) CONSIDERATIONS IN AWARDING GRANTS.—In
determining whether to award a grant to a State under
this section, the Secretary shall—
‘‘(1) consider the rural nature of the areas to
be served with the grant proceeds and the services
to be provided with such proceeds, as identified in
the State plan submitted under subsection (b); and
427
Title V, Subtitle A
‘‘(2) give preference to States with State plans
that demonstrate an effective integration of the pro-
posed air medical transport systems into a com-
prehensive network or plan for regional or statewide
emergency medical service delivery.
‘‘(d) 
STATE
ADMINISTRATION
AND
USE
OF
GRANT.—
‘‘(1) IN
GENERAL.—The Secretary may not
make a grant to a State under subsection (a) unless
the State agrees that such grant will be adminis-
tered by the State agency with principal responsibil-
ity for carrying out programs regarding the provi-
sion of medical services to victims of medical emer-
gencies or trauma.
‘‘(2) PERMITTED
USES.—A State may use
amounts received under a grant awarded under this
section to award subgrants to public and private en-
tities operating within the State.
‘‘(3) OPPORTUNITY FOR PUBLIC COMMENT.—
The Secretary may not make a grant to a State
under subsection (a) unless that State agrees that,
in developing and carrying out the State plan under
subsection (b)(2), the State will provide public notice
with respect to the plan (including any revisions
428
Title V, Subtitle A
thereto) and facilitate comments from interested
persons.
‘‘(e) NUMBER
OF GRANTS.—The Secretary shall
award grants under this section to not less than 7 States.
‘‘(f) REPORTS.—
‘‘(1) REQUIREMENT.—A State that receives a
grant under this section shall annually (during each
year in which the grant proceeds are used) prepare
and submit to the Secretary a report that shall con-
tain—
‘‘(A) a description of the manner in which
the grant proceeds were utilized;
‘‘(B) a description of the effectiveness of
the air medical transport programs assisted
with grant proceeds; and
‘‘(C) such other information as the Sec-
retary may require.
‘‘(2) TERMINATION OF FUNDING.—In reviewing
reports submitted under paragraph (1), if the Sec-
retary determines that a State is not using amounts
provided under a grant awarded under this section
in accordance with the State plan submitted by the
State under subsection (b), the Secretary may termi-
nate the payment of amounts under such grant to
the State until such time as the Secretary deter-
429
Title V, Subtitle A
mines that the State comes into compliance with
such plan.
‘‘(g) DEFINITION.—As used in this section, the term
‘rural areas’ means geographic areas that are located out-
side of standard metropolitan statistical areas, as identi-
fied by the Secretary.
‘‘(h) AUTHORIZATION OF APPROPRIATIONS.—There
are authorized to be appropriated to make grants under
this section, $15,000,000 for fiscal year 1995, and such
sums as may be necessary for each of the fiscal years 1996
and 1997.’’.
SEC. 5006. DEMONSTRATION PROJECTS TO ENCOURAGE
THE DEVELOPMENT AND OPERATION OF
RURAL HEALTH NETWORKS.
(a) IN GENERAL.—
(1) ESTABLISHMENT.—
(A) IN
GENERAL.—The Secretary may
conduct a demonstration project under which
public and private entities may apply for waiv-
ers of any of the provisions of titles XVIII and
XIX of the Social Security Act in order to oper-
ate rural health networks (as defined in sub-
section (d)(1)) which—
(i) improve the access of medicare
beneficiaries (as defined in subsection
430
Title V, Subtitle A
(d)(2))) and medicaid beneficiaries (as de-
fined in subsection (d)(3)) to health care
services;
(ii) improve the quality of health care
services furnished to such beneficiaries;
and
(iii) improve the outcomes of health
care services furnished to such bene-
ficiaries.
(B) NUMBER OF WAIVERS.—The Secretary
may grant waivers to operate rural health net-
works under the demonstration project con-
ducted under this section to a number of public
and private entities determined appropriate by
the Secretary.
(2) APPLICATIONS.—
(A) IN GENERAL.—In order to participate
in the demonstration project conducted under
this subsection, a public or private entity desir-
ing to operate a rural health network shall sub-
mit an application to the Secretary which meets
the requirements of subparagraph (B). Such
application shall be submitted in such manner
and at such time as the Secretary shall require.
431
Title V, Subtitle A
(B) REQUIREMENTS.—An application sub-
mitted by a public or private entity under this
subsection must provide—
(i) a description of the health care
providers participating in the rural health
network;
(ii) a description of the geographic
area served by the rural health network;
(iii) information demonstrating that
the public or private entity has consulted
with interested parties with respect to the
operation of the rural health network, in-
cluding local government entities and com-
munity groups;
(iv) a description of the operational
structure of the rural health network, in-
cluding whether the network is a managed
care entity or a fee-for-service provider;
(v) a proposal for how payments
should be made to the rural health network
under titles XVIII and XIX of the Social
Security Act, including a statement as to
whether such payments should be made
pursuant to the provisions of such titles or
432
Title V, Subtitle A
pursuant to an alternative payment meth-
odology described in the application;
(vi) assurances that medicare bene-
ficiaries served by the rural health network
will receive care and services of the same
quality as the care and services received by
other beneficiaries under title XVIII of the
Social Security Act;
(vii) assurances that medicaid bene-
ficiaries served by the rural health network
will receive care and services of the same
quality as the care and services received by
other beneficiaries under title XIX of the
Social Security Act;
(viii) a description of how the rural
health network plans to handle any situa-
tion in which a medicare beneficiary or
medicaid beneficiary served by the network
receives health care services from providers
outside the network;
(ix) assurances that the rural health
network is furnishing health care services
to a significant number of individuals who
are not receiving benefits under titles
XVIII and XIX of the Social Security Act;
433
Title V, Subtitle A
(x) assurances that through sharing
of facilities, land, and equipment, the rural
health network will result in a reduction of
total capital costs for the area served by
the network;
(xi) a plan for cooperation in service
delivery by health care providers partici-
pating in the rural health network that
demonstrates the elimination of unneces-
sary duplication and, when appropriate,
the consolidation of specialized services
within the area served by the network;
(xii) evidence that the rural health
network furnishes services which address
the special access needs of the medicare
beneficiaries and medicaid beneficiaries
served by the network;
(xiii) evidence of capability and exper-
tise in network planning and management;
and
(xiv) such additional information as
the Secretary determines appropriate.
(C) APPROVAL OF APPLICATION.—
(i) INITIAL REVIEW.—Within 60 days
after an application is submitted by a pub-
434
Title V, Subtitle A
lic or private entity under this subsection,
the Secretary shall review and approve
such application or provide the entity with
a list of the modifications that are nec-
essary for such application to be approved.
(ii) ADDITIONAL REVIEW.—Within 60
days after a public or private entity resub-
mits any application under this subsection,
the Secretary shall review and approve
such application or provide the entity with
a summary of which items included on the
list provided to the State under clause (i)
remain unsatisfied. An entity may resub-
mit an application under this subpara-
graph as many times as necessary to gain
approval.
(3) COORDINATION WITH OTHER PROGRAMS.—
The Secretary shall coordinate the demonstration
project conducted under this subsection with any
other relevant Federal or State programs in order to
prevent duplication and improve the quality and de-
livery of health care services to medicare bene-
ficiaries and medicaid beneficiaries.
(4) PAYMENTS TO NETWORKS.—
435
Title V, Subtitle A
(A) IN GENERAL.—The Secretary shall de-
termine the amount of payments to be made
under titles XVIII and XIX to a rural health
network 
participating 
in 
a 
demonstration
project under this subsection based on historic
costs adjusted based on population and geo-
graphic area as the Secretary determines appro-
priate to take into account the costs of furnish-
ing health care services in the area served by
the network.
(B) BUDGET NEUTRALITY.—The Secretary
shall provide that in carrying out the dem-
onstration project under this section, the aggre-
gate payments under titles XVIII and XIX of
the Social Security Act to providers participat-
ing in a rural health network shall be no great-
er or lesser than what such payments would
have been if such providers were not participat-
ing in such network.
(5) DURATION
OF
WAIVERS.—Any waiver
granted under the demonstration project conducted
under this subsection shall be granted for a period
determined appropriate by the Secretary. The Sec-
retary may terminate such a waiver at any time if
the Secretary determines that the rural health net-
436
Title V, Subtitle A
work has failed to furnish health care services in ac-
cordance with the terms of the waiver.
(6) REPORTS.—
(A) IN GENERAL.—Each public or private
entity receiving a waiver to operate a rural
health network under the demonstration project
conducted under this subsection shall, through
an independent entity, evaluate the network and
submit interim and final reports to the Sec-
retary at such times and containing such infor-
mation as the Secretary shall require.
(B) REPORT
TO
CONGRESS.—Not later
than 60 days after the receipt of a final report
by a rural health network under subparagraph
(A) the Secretary shall submit a report to Con-
gress.
(b) GRANTS
FOR
THE DEVELOPMENT
OF RURAL
HEALTH NETWORKS.—
(1) IN GENERAL.—The Secretary shall award
grants to public and private entities which have re-
ceived a waiver under the demonstration project con-
ducted under subsection (a) for the purpose of plan-
ning and developing rural health networks.
(2) APPLICATION PROCESS.—
437
Title V, Subtitle A
(A) SUBMISSION OF APPLICATION.—Each
public or private entity desiring to receive a
grant under this subsection shall submit an ap-
plication to the Secretary at such time and con-
taining such information as the Secretary deter-
mines appropriate.
(B) CONSIDERATION OF APPLICATIONS.—
The Secretary shall develop a system for deter-
mining the priority for distributing grants
under this subsection and such grants shall be
distributed in accordance with such system.
(3) USE OF GRANT FUNDS.—A State that is
awarded grant funds under this subsection may use
such funds for all costs associated with assisting
public or private entities in planning and developing
rural health networks.
(4) AUTHORIZATION
OF
APPROPRIATIONS.—
There are authorized to be appropriated such sums
as may be necessary for the purposes of awarding
grants under this subsection.
(c) GRANTS
FOR
THE
OPERATION
OF
RURAL
HEALTH NETWORKS.—
(1) IN GENERAL.—The Secretary shall award
grants to public and private entities which have re-
ceived a waiver under the demonstration project con-
438
Title V, Subtitle A
ducted under subsection (a) for the operation of
rural health networks.
(2) APPLICATION PROCESS.—
(A) SUBMISSION
OF
APPLICATION.—Any
public or private entity which desires to receive
a grant under this subsection shall submit an
application to the Secretary at such time and
containing such information as the Secretary
determines appropriate.
(B) CONSIDERATION OF APPLICATIONS.—
The Secretary shall develop a system for deter-
mining the priority for distributing grants
under this subsection and such grants shall be
distributed in accordance with such priority.
(3) USE OF GRANT FUNDS.—A public or pri-
vate entity that is awarded grant funds under this
subsection may use such funds for all costs associ-
ated with operating a rural health network.
(4) AUTHORIZATION
OF
APPROPRIATIONS.—
There are authorized to be appropriated such sums
as may be necessary for the purposes of awarding
grants under this subsection.
(d) DEFINITIONS.—For purposes of this section:
(1) RURAL
HEALTH
NETWORK.—The term
‘‘rural health network’’ means a formal cooperative
439
Title V, Subtitle A
arrangement between participating hospitals, physi-
cians, and other health care providers which—
(A) furnishes health care services to medi-
care beneficiaries and medicaid beneficiaries;
(B) is located in a rural area; and
(C) is governed by a board of directors se-
lected by participating health care providers.
(2) MEDICAID BENEFICIARY.—The term ‘‘med-
icaid beneficiary’’ means an individual receiving ben-
efits under title XIX of the Social Security Act who
resides in a rural area or who receives health care
services from a health care provider located in a
rural area.
(3) MEDICARE BENEFICIARY.—The term ‘‘med-
icare beneficiary’’ means an individual receiving ben-
efits under title XVIII of the Social Security Act
who resides in a rural area or who receives health
care services from a health care provider located in
a rural area.
(4) RURAL
AREA.—The term ‘‘rural area’’
means a rural area as described in section
1886(d)(2)(D).
440
Title V, Subtitle A
SEC. 5007. STUDY ON EXPANDING BENEFITS UNDER QUALI-
FIED HEALTH PLANS FOR INDIVIDUALS RE-
SIDING IN RURAL AREAS.
(a) STUDY.—
(1) IN GENERAL.—The Secretary shall conduct
a study on the possible benefits of a program under
which issuers of qualified health plans covering indi-
viduals who reside in rural areas may—
(A) develop a package of benefits targeted
at improving access to health care services
which would supplement the benefits included
under such plan; and
(B) receive premium payments for such
package of benefits from the Secretary.
(2) CONSULTATION WITH CERTAIN ENTITIES.—
In conducting the study under paragraph (1), the
Secretary shall consult with the Office of Rural
Health Policy and private and public entities with
expertise in rural health issues.
(b) REPORT.—Not later than 1 year after the date
of the enactment of this Act the Secretary shall submit
a report to Congress containing the results of the study
conducted under subsection (a) and any legislative rec-
ommendations determined appropriate by the Secretary.
441
Title V, Subtitle B
Subtitle B—Primary Care Provider
Education
SEC. 5101. GRADUATE MEDICAL EDUCATION DEMONSTRA-
TION PROJECTS.
Part C of title VII of the Public Health Service Act
(42 U.S.C. 293j et seq.) is amended by adding at the end
the following new section:
‘‘SEC. 753. GRADUATE MEDICAL EDUCATION DEMONSTRA-
TION PROJECTS.
‘‘(a) STATE DEMONSTRATION PROGRAM.—
‘‘(1) IN GENERAL.—The Secretary of Health
and Human Services (hereafter referred to in this
section as the ‘‘Secretary’’) acting through the Ad-
ministrator of the Health Resources and Services
Administration shall provide for the establishment of
demonstration projects in no more than 7 States for
the purpose of testing and evaluating mechanisms to
increase the number and percentage of medical stu-
dents entering primary care practice relative to those
entering nonprimary care practice through the use
of funds otherwise available for direct graduate med-
ical education costs under section 1886(h) of the So-
cial Security Act.
‘‘(2) APPLICATIONS.—
442
Title V, Subtitle B
‘‘(A) IN GENERAL.—Each State desiring to
conduct a demonstration project under this sub-
section shall prepare and submit to the Sec-
retary an application, at such time, in such
manner, and containing such information as the
Secretary may require, including—
‘‘(i) information demonstrating that
the State has consulted with interested
parties with respect to conducting a dem-
onstration project under this subsection,
including State medical associations, State
hospital associations, and medical schools
located in the State;
‘‘(ii) an assurance that in conducting
a demonstration project under this sub-
section no single teaching hospital located
in the State will lose more than 10 percent
of such hospital’s approved medical resi-
dency positions in any year; and
‘‘(ii) an explanation of a plan for eval-
uating the project.
‘‘(B) APPROVAL
OF
APPLICATIONS.—A
State that submits an application under sub-
paragraph (A) may begin a demonstration
project under this subsection—
443
Title V, Subtitle B
‘‘(i) upon approval of such application
by the Secretary; or
‘‘(ii) at the end of the 60-day period
beginning on the date such application is
submitted, unless the Secretary denies the
application during such period.
‘‘(C) NOTICE
AND
COMMENT.—A State
shall issue a public notice on the date it sub-
mits an application under subparagraph (A)
which contains a general description of the pro-
posed demonstration project. Any interested
party may comment on the proposed dem-
onstration project to the State or the Secretary
during the 30-day period beginning on the date
the public notice is issued.
‘‘(3) 
FUNDING
FOR
DEMONSTRATION
PROJECTS.—
‘‘(A) ALLOCATION OF GME FUNDS.—
‘‘(i) IN GENERAL.—For each year a
State conducts a demonstration project
under this subsection the Secretary shall
pay to such State an amount equal to the
total amount available to hospitals located
in the State under section 1886(h) of the
Social Security Act. In the case of a State
444
Title V, Subtitle B
which establishes any health care training
consortium under clause (ii)(II), the State
shall designate a teaching hospital for each
resident assigned to such a consortium
which the Secretary shall use to calculate
the State’s payment amount under such
section. Such teaching hospital shall be the
hospital where the resident receives the
majority of the resident’s hospital-based,
nonambulatory training experience.
‘‘(ii) USE
OF
FUNDS.—Each State
that receives a payment under clause (i)
shall use such funds to conduct activities
which test and evaluate mechanisms to in-
crease the number and percentage of medi-
cal students entering primary care practice
relative to those entering nonprimary care
practice as follows:
‘‘(I) 
The 
State 
may 
apply
weighting factors that are different
than the weighting factors set forth in
section 1886(h)(4)(C) of the Social
Security Act for the purpose of mak-
ing direct graduate medical education
payments. 
In 
applying 
different
445
Title V, Subtitle B
weighting factors, the State may re-
quire entities receiving payments to
use a portion of such payments to in-
crease stipends paid to primary care
residents relative to nonprimary care
residents.
‘‘(II) The State may use funds to
provide for the establishment and op-
eration of any health care training
consortium. The State shall make
payments to any such consortium
through an entity identified by the
consortium as appropriate for receiv-
ing payment on behalf of the consor-
tium. The consortium shall have dis-
cretion in determining the purposes
for which such payments may be used
and may direct such payments to con-
sortium medical schools for primary
care medical student education pro-
grams.
‘‘(B) GRANTS FOR PLANNING AND EVAL-
UATIONS.—
‘‘(i) IN
GENERAL.—The Secretary
may award grants to States conducting
446
Title V, Subtitle B
demonstration projects under this sub-
section for the purpose of developing and
evaluating such projects. A State may con-
duct such an evaluation or contract with a
private entity to conduct the evaluation.
Each State desiring to receive a grant
under this subparagraph shall prepare and
submit to the Secretary an application, at
such time, in such manner, and containing
such information as the Secretary may re-
quire.
‘‘(ii) AUTHORIZATION OF APPROPRIA-
TIONS.—There are authorized to be appro-
priated such sums as may be necessary to
carry out the purposes of this subpara-
graph for fiscal years 1995 through 2003.
‘‘(4) MAINTENANCE
OF
EFFORT.—Any funds
available for the activities covered by a demonstra-
tion project conducted under this subsection shall
supplement, and shall not supplant, funds that are
expended for similar purposes under any State, re-
gional, or local program.
‘‘(b) CONSORTIUM DEMONSTRATION PROGRAM.—
‘‘(1) IN
GENERAL.—The Secretary, acting
through the Administrator of the Health Resources
447
Title V, Subtitle B
and Services Administration, shall provide for the
establishment of demonstration projects for no more
than 7 health care training consortia which are lo-
cated in States that are not conducting a demonstra-
tion project under subsection (a) for the purpose of
testing and evaluating mechanisms to increase the
number and percentage of medical students entering
primary care practice relative to those entering
nonprimary care practice through the use of funds
otherwise available for direct graduate medical edu-
cation costs under section 1886(h) of the Social Se-
curity Act.
‘‘(2) APPLICATIONS.—
‘‘(A) IN
GENERAL.—Each health care
training consortium desiring to conduct a dem-
onstration project under this subsection shall
prepare and submit to the Secretary an applica-
tion, at such time, in such manner, and con-
taining such information as the Secretary may
require, including an explanation of a plan for
evaluating the project.
‘‘(B) APPROVAL
OF
APPLICATIONS.—A
consortium that submits an application under
subparagraph (A) may begin a demonstration
project under this subsection—
448
Title V, Subtitle B
‘‘(i) upon approval of such application
by the Secretary; or
‘‘(ii) at the end of the 60-day period
beginning on the date such application is
submitted, unless the Secretary denies the
application during such period.
‘‘(3) 
FUNDING
FOR
DEMONSTRATION
PROJECTS.—
‘‘(A) ALLOCATION OF GME FUNDS.—
‘‘(i) IN GENERAL.—For each year a
consortium 
conducts 
a 
demonstration
project under this subsection the Secretary
shall pay to such consortium an amount
equal to the total amount available to hos-
pitals that are members of the consortium
under section 1886(h) of the Social Secu-
rity Act. The consortium shall designate a
teaching hospital for each resident as-
signed to the consortium which the Sec-
retary shall use to calculate the consor-
tium’s payment amount under such sec-
tion. Such teaching hospital shall be the
hospital where the resident receives the
majority of the resident’s hospital-based,
nonambulatory training experience.
449
Title V, Subtitle B
‘‘(ii) USE OF FUNDS.—
‘‘(I) 
TESTING
AND
EVALUA-
TION.—Each consortium that receives
a payment under clause (i) shall use
such funds to conduct activities which
test and evaluate mechanisms to in-
crease the number and percentage of
medical students entering primary
care practice relative to those entering
nonprimary care practice.
‘‘(II) ESTABLISHMENT AND OP-
ERATION.—Each consortium that re-
ceives a payment under clause (i) may
also use such funds for the establish-
ment and operation of the consortium.
The Secretary shall make payments to
the consortium through an entity
identified by the consortium as appro-
priate for receiving payment on behalf
of the consortium. The consortium
shall have discretion in determining
the purposes for which such payments
may be used and may direct such pay-
ments to consortium medical schools
450
Title V, Subtitle B
for primary care medical student edu-
cation programs.
‘‘(B) GRANTS FOR PLANNING AND EVAL-
UATIONS.—
‘‘(i) IN
GENERAL.—The Secretary
may award grants to consortia conducting
demonstration projects under this sub-
section for the purpose of developing and
evaluating such projects. Each consortium
desiring to receive a grant under this sub-
paragraph shall prepare and submit to the
Secretary an application, at such time, in
such manner, and containing such infor-
mation as the Secretary may require.
‘‘(ii) AUTHORIZATION OF APPROPRIA-
TIONS.—There are authorized to be appro-
priated such sums as may be necessary to
carry out the purposes of this subpara-
graph for fiscal years 1995 through 2003.
‘‘(4) MAINTENANCE
OF
EFFORT.—Any funds
available for the activities covered by a demonstra-
tion project conducted under this subsection shall
supplement, and shall not supplant, funds that are
expended for similar purposes under any State, re-
gional, or local program.
451
Title V, Subtitle B
‘‘(c) DURATION.—A demonstration project under this
section shall be conducted for a period not to exceed 8
years. The Secretary may terminate a project if the Sec-
retary determines that the State or consortium conducting
the project is not in substantial compliance with the terms
of the application approved by the Secretary under this
section.
‘‘(d) EVALUATIONS AND REPORTS.—
‘‘(1) EVALUATIONS.—Each State or consortium
that conducts a demonstration project under this
section shall submit to the Secretary a final evalua-
tion of such project within 360 days of the termi-
nation of such project and such interim evaluations
as the Secretary may require.
‘‘(2) REPORTS TO CONGRESS.—Not later than
360 days after the first demonstration project under
this section begins, and annually thereafter for each
year in which a project is conducted under this sec-
tion, the Secretary shall submit a report to the ap-
propriate committees of the Congress which evalu-
ates the effectiveness of the demonstration projects
conducted under this section and includes any legis-
lative recommendations determined appropriate by
the Secretary.
‘‘(e) DEFINITIONS.—For purposes of this section:
452
Title V, Subtitle B
‘‘(1) AMBULATORY TRAINING SITES.—The term
‘ambulatory training sites’ includes, but is not lim-
ited to, health maintenance organizations, federally
qualified health centers, community health centers,
migrant health centers, rural health clinics, nursing
homes, hospice, and other community-based provid-
ers, including private practices.
‘‘(2) HEALTH CARE TRAINING CONSORTIUM.—
The term ‘health care training consortium’ means a
State, regional, or local entity which—
‘‘(A) includes teaching hospitals, ambula-
tory training sites, and one or more schools of
medicine located in the same geographic region;
and
‘‘(B) is operated in a manner intended to
ensure that by the end of the 8 year demonstra-
tion project at least 50 percent of the graduates
of the schools included in the entity will become
primary care providers during the 1-year period
immediately following the date such graduates
complete their residency training.
‘‘(3) PRIMARY CARE.—The term ‘primary care’
means family practice, general internal medicine,
and general pediatrics, and may also include obstet-
rics and gynecology if such care is person-centered,
453
Title V, Subtitle B
comprehensive care that is not organ or problem
specific.’’.
SEC. 5102. FUNDING UNDER MEDICARE FOR TRAINING IN
NONHOSPITAL-OWNED FACILITIES.
(a) RESIDENCY TRAINING TIME IN NONHOSPITAL-
OWNED FACILITIES COUNTED IN DETERMINING FULL-
TIME-EQUIVALENT RESIDENTS FOR DIRECT GRADUATE
MEDICAL
EDUCATION
PAYMENTS.—Section
1886(h)(4)(E) of the Social Security Act (42 U.S.C.
1395ww(h)(4)(E)) is amended by striking ‘‘, if the hos-
pital incurs all, or substantially all, of the costs for the
training program in that setting’’.
(b) RESIDENCY TRAINING TIME IN NONHOSPITAL-
OWNED FACILITIES COUNTED IN DETERMINING FULL-
TIME-EQUIVALENT RESIDENTS FOR INDIRECT MEDICAL
EDUCATION PAYMENTS.—
(1) IN GENERAL.—Section 1886(d)(5)(B)(iv) of
the 
Social 
Security 
Act 
(42 
U.S.C.
1395ww(d)(5)(B)(iv)) is amended to read as follows:
‘‘(iv) In determining such adjustment,
the Secretary shall count interns and resi-
dents—
‘‘(I) assigned to any patient serv-
ice environment which is part of the
hospital’s approved medical residency
454
Title V, Subtitle B
training program (as defined in sec-
tion 1886(h)(5)(A)), or
‘‘(II) providing services at any
entity receiving a grant under section
330 of the Public Health Service Act
that is under the ownership or control
of the hospital (if the hospital incurs
all, or substantially all, of the costs of
the services furnished by such interns
and residents),
as part of the calculation of the full-time-
equivalent number of interns and resi-
dents.’’.
(2) ADJUSTMENT OF INDIRECT TEACHING AD-
JUSTMENT FACTOR TO ACHIEVE BUDGET NEUTRAL-
ITY.—Section 1886(d)(5)(B)(ii) of the Social Secu-
rity Act (42 U.S.C. 1395ww(d)(5)(B)(ii)) is amend-
ed to read as follows:
‘‘(ii)(I) For purposes of clause (i)(II),
the indirect teaching adjustment factor is
equal to 1.89 × (((1 + r × t) to the nth
power) – 1).
‘‘(II) For purposes of subclause (i)—
455
Title V, Subtitle B
‘‘(aa) ‘r’ is the ratio of the hos-
pital’s full-time-equivalent interns and
residents to beds;
‘‘(bb) ‘t’ is the ratio of the num-
ber of full-time-equivalent interns and
residents of all hospitals paid under
this paragraph and used in the cal-
culation of ‘r’ on June 1, 1993, to the
number of full-time-equivalent interns
and residents of all hospitals paid
under this paragraph and used in the
calculation of ‘r’ on June 1, 1994;
and
‘‘(cc) ‘n’ equals .405.’’.
SEC. 5103. INCREASE IN NATIONAL HEALTH SERVICE
CORPS FUNDING.
(a) GENERAL AUTHORIZATION.—Section 338H(b)(1)
of the Public Health Service Act (42 U.S.C. 254q(b)(1))
is amended—
(1) by striking ‘‘1991, and’’ and inserting
‘‘1991,’’; and
(2) by striking ‘‘through 2000’’ and inserting ‘‘,
1993, and 1994, $120,000,000 for fiscal year 1995,
and such sums as may be necessary for each of the
fiscal years 1996 through 1998’’.
458
Title V, Subtitle B
is further amended by adding at the end thereof the fol-
lowing new section:
‘‘SEC. 754. PHYSICIAN ASSISTANT SCHOLARSHIP PROGRAM.
‘‘(a) IN GENERAL.—The Secretary may award grants
to public and nonprofit private entities to enable such enti-
ties to meet the cost of providing traineeships for individ-
uals in baccalaureate and advanced-degree programs in
order to educate such individuals to serve in and prepare
for practice as physician assistants.
‘‘(b) 
SPECIAL
CONSIDERATION
IN
MAKING
GRANTS.—In awarding grants for traineeships under sub-
section (a), the Secretary shall give special consideration
to entities submitting applications for the conduct of
traineeship programs that conform to the guidelines estab-
lished by the Secretary under section 750(b)(2).
‘‘(c) PREFERENCES
IN AWARDING GRANTS.—The
Secretary may award a grant under subsection (a) only
if the grant applicant involved agrees that, in providing
traineeships under such grant, the applicant will give pref-
erence to individuals who are residents of health profes-
sional shortage areas designated under section 332.
‘‘(d) USE OF GRANT.—The Secretary may award a
grant under subsection (a) only if the grant applicant in-
volved agrees that traineeships provided with amounts re-
459
Title V, Subtitle B
ceived under the grant will pay all or part of the costs
of—
‘‘(1) the tuition, books, and fees of the physi-
cian assistants’ program with respect to which the
traineeship is provided; and
‘‘(2) amounts necessary to pay the reasonable
living expenses of the individual involved during the
period for which the traineeship is provided.
‘‘(e) AUTHORIZATION OF APPROPRIATIONS.—For the
purpose of carrying out this section, there are authorized
to be appropriated $25,000,000 for fiscal year 1995, and
such sums as may be necessary for each of the fiscal years
1996 and 1997.’’.
SEC. 5106. STATE GRANTS TO INCREASE THE NUMBER OF
PRIMARY CARE PROVIDERS.
Part B of title III of the Public Health Service Act
(42 U.S.C. 243 et seq.) is amended by adding at the end
thereof the following new section:
‘‘SEC. 320A. PRIMARY CARE DEMONSTRATION GRANTS.
‘‘(a) 
AUTHORIZATION.—The 
Secretary, 
acting
through the Health Resources and Services Administra-
tion, shall award grants to States or nonprofit entities to
fund not less than 10 demonstration projects to enable
such States or entities to evaluate one or more of the fol-
lowing:
460
Title V, Subtitle B
‘‘(1) State mechanisms, including changes in
the scope of practice laws, to enhance the delivery of
primary care by nurse practitioners or physician as-
sistants.
‘‘(2) The feasibility of, and the most effective
means to train subspecialists to deliver primary care
as primary care providers.
‘‘(3) State mechanisms to increase the supply
or improve the distribution of primary care provid-
ers.
‘‘(b) APPLICATION.—To be eligible to receive a grant
under this section a State or nonprofit entity shall prepare
and submit to the Secretary an application at such time,
in such manner, and containing such information as the
Secretary may require.
‘‘(c) AUTHORIZATION OF APPROPRIATIONS.—There
are authorized to be appropriated to carry out this section,
$9,000,000 for fiscal year 1995, and such sums as may
be necessary for each of the fiscal years 1996 through
1998.’’.
461
Title V, Subtitle C
Subtitle C—Programs Relating to
Primary and Preventive Care
Services
SEC. 5201. MATERNAL AND INFANT CARE COORDINATION.
(a) PURPOSE.—It is the purpose of this section to
assist States in the development and implementation of
coordinated, multidisciplinary, and comprehensive primary
health care and social services, and health and nutrition
education programs, designed to improve maternal and
child health.
(b) GRANTS FOR IMPLEMENTATION OF PROGRAMS.—
(1) AUTHORITY.—The Secretary of Health and
Human Services (hereafter referred to in this section
as the ‘‘Secretary’’) is authorized to award grants to
States to enable such States to plan and implement
coordinated, multidisciplinary, and comprehensive
primary health care and social service programs tar-
geted to pregnant women and infants.
(2) ELIGIBILITY.—To be eligible to receive a
grant under this section, a State shall—
(A) prepare and submit to the Secretary
an application at such time, in such manner,
and containing such information as the Sec-
retary may require;
462
Title V, Subtitle C
(B) as part of the State application, pro-
vide assurances that under the program estab-
lished with amounts received under a grant, in-
dividuals will have access to a broad range of
primary health care services, social services,
and health and nutrition programs designed to
improve maternal and child health and a de-
scription of how coordination of such services
will improve maternal and child health based
upon the goals of ‘‘Healthy People 2000: Na-
tional Health Promotion and Disease Preven-
tion Objectives’’;
(C) as part of the State application, sub-
mit a plan for the coordination of existing and
proposed Federal and State resources, as ap-
propriate, including amounts provided under
the medicaid program under title XIX of the
Social Security Act, the special supplemental
food program under section 17 of the Child Nu-
trition Act of 1966, family planning programs,
substance abuse programs, State maternal and
child health programs funded under title V of
the Social Security Act, community and mi-
grant health center programs under the Public
463
Title V, Subtitle C
Health Service Act, and other publicly, or where
practicable, privately supported programs;
(D) demonstrate that the major service
providers to be involved, including private non-
profit entities committed to improving maternal
and infant health, are committed to and in-
volved in the program to be funded with
amounts received under the grant;
(E) with respect to States with high infant
mortality rates among minority populations,
demonstrate the involvement of major health,
multiservice, professional, or civic group rep-
resentatives of such minority groups in the
planning and implementation of the State pro-
gram; and
(F) demonstrate that activities under the
State program are targeted to women of child-
bearing age, particularly those at risk for hav-
ing low birth weight babies.
(3) TERM OF GRANT.—A grant awarded under
this subsection shall be for a period of 5 years.
(4) USE OF AMOUNTS.—Amounts received by a
State under a grant awarded under this subsection
shall be used to establish a State program to provide
coordinated, multidisciplinary, and comprehensive
464
Title V, Subtitle C
primary health care and social services, and health
and nutrition education program services, that are
designed to improve maternal and child health. Such
amounts shall not be used for the construction of
buildings or the purchase of medical equipment.
(5) MAINTENANCE OF EFFORT.—Any funds re-
ceived by a State under this subsection shall supple-
ment, and shall not supplant, funds that are ex-
pended for similar purposes by the State.
(6) AUTHORIZATION
OF
APPROPRIATIONS.—
There are authorized to be appropriated such sums
as may be necessary to carry out the purposes of
this subsection for fiscal years 1995 through 1998.
SEC. 5202. COMPREHENSIVE SCHOOL HEALTH EDUCATION
PROGRAM.
Section 4605 of the Elementary and Secondary Edu-
cation Act of 1965 (20 U.S.C. 3155) is amended to read
as follows:
‘‘SEC. 4605. COMPREHENSIVE SCHOOL HEALTH EDUCATION
PROGRAMS.
‘‘(a) PURPOSE.—It is the purpose of this section to
establish a comprehensive school health education and pre-
vention program for elementary and secondary school stu-
dents.
465
Title V, Subtitle C
‘‘(b) 
PROGRAM
AUTHORIZED.—The 
Secretary,
through the Office of Comprehensive School Health Edu-
cation established in subsection (d), shall award grants to
States to enable such States to—
‘‘(1) award grants to local or intermediate edu-
cational agencies, and consortia thereof, to enable
such agencies or consortia to establish, operate and
improve local programs of comprehensive health edu-
cation and prevention, early health intervention, and
health education, in elementary and secondary
schools (including preschool, kindergarten, inter-
mediate, and junior high schools); and
‘‘(2) develop training, technical assistance and
coordination activities for the programs assisted pur-
suant to paragraph (1).
‘‘(c) USE OF FUNDS.—Grant funds under this sec-
tion may be used to improve elementary and secondary
education in the areas of—
‘‘(1) personal health and fitness;
‘‘(2) prevention of chronic diseases;
‘‘(3) prevention and control of communicable
diseases;
‘‘(4) nutrition;
‘‘(5) substance use and abuse;
‘‘(6) accident prevention and safety;
466
Title V, Subtitle C
‘‘(7) community and environmental health;
‘‘(8) mental and emotional health; and
‘‘(9) the effective use of the health services de-
livery system.
‘‘(d) OFFICE OF COMPREHENSIVE SCHOOL HEALTH
EDUCATION.—The Secretary shall establish within the Of-
fice of the Secretary an Office of Comprehensive School
Health Education which shall have the following respon-
sibilities:
‘‘(1) To recommend mechanisms for the coordi-
nation of school health education programs con-
ducted by the various departments and agencies of
the Federal Government.
‘‘(2) To advise the Secretary on formulation of
school health education policy within the Depart-
ment of Education.
‘‘(3) To disseminate information on the benefits
to health education of utilizing a comprehensive
health curriculum in schools.
‘‘(e) AUTHORIZATION OF APPROPRIATIONS.—
‘‘(1) IN GENERAL.—There are authorized to be
appropriated such sums as may be necessary to
carry out the purposes of this subsection for fiscal
years 1995 through 1998.
467
Title V, Subtitle C
‘‘(2) AVAILABILITY.—Funds appropriated pur-
suant to the authority of paragraph (1) in any fiscal
year shall remain available for obligation and ex-
penditure until the end of the fiscal year succeeding
the fiscal year for which such funds were appro-
priated.’’.
SEC. 5203. FRONTIER STATES.
(a) IN GENERAL.—Frontier States (including Alaska,
Wyoming and Montana) may implement proposals to offer
preventive services, including mobile preventive health cen-
ters which may include centers equipped with various pre-
ventive health services, such as mammography, eye care,
X-ray, and other advanced equipment, and which may be
located on aircraft, watercraft, or other forms of transpor-
tation.
(b) DEMONSTRATION PROJECTS.—Frontier States
may participate in demonstration projects under this or
any other Act to improve recruitment, retention, and
training of rural providers, including nurse practitioners
and physician assistants. Such demonstration projects
shall give special consideration to the diverse needs of
Frontier States, and shall involve cooperative agreements
with a range of service delivery systems and teaching hos-
pitals.
468
Title VI, Subtitle A
TITLE VI—TREATMENT OF
EXISTING FEDERAL PROGRAMS
SEC. 6000. REFERENCES IN TITLE.
Except as otherwise specifically provided, whenever in
this title an amendment is expressed in terms of an
amendment to or repeal of a section or other provision,
the reference shall be considered to be made to that sec-
tion or other provision of the Social Security Act.
Subtitle A—Medicaid Program
PART I—OPTIONAL COVERAGE UNDER
QUALIFIED HEALTH PLANS
SEC. 
6001. 
OPTIONAL 
COVERAGE 
UNDER 
QUALIFIED
HEALTH PLANS.
(a) STATE OPTION.—Section 1902(a) (42 U.S.C.
1396a(a)) is amended—
(1) by striking ‘‘and’’ at the end of paragraph
(61);
(2) by striking the period at the end of para-
graph (62) and inserting ‘‘; and’’; and
(3) by adding at the end the following new
paragraph:
‘‘(63) at the option of the State, provide that
an individual eligible for medical assistance under
the State plan has the option to receive medical as-
sistance consisting of the items or services covered
469
Title VI, Subtitle A
under the standard benefit package required to be
offered by a qualified health plan (as defined in sec-
tion 1931(d)(2)) through enrollment with such a
qualified health plan offered in the health care cov-
erage area (as defined in section 1931(d)(1)) in
which such individual resides instead of through en-
rollment in the State plan, in accordance with the
requirements of section 1931.’’.
(b) REQUIREMENTS DESCRIBED.—Title XIX (42
U.S.C. 1396 et seq.) is amended by redesignating section
1931 as section 1932 and by inserting after section 1930
the following new section:
‘‘REQUIREMENTS FOR STATES PROVIDING OPTIONAL
COVERAGE UNDER QUALIFIED HEALTH PLANS
‘‘SEC. 1931. (a) IN GENERAL.—For purposes of sec-
tion 1902(a)(63), a State meets the requirements of this
section with respect to individuals eligible for medical as-
sistance under the State plan if the State meets the follow-
ing requirements:
‘‘(1) CHOICE OF PLANS.—The State may not
restrict the individual’s choice of a qualified health
plan under such section, except that nothing in this
paragraph may be construed to waive any limits on
the capacity of a qualified health plan applicable
under title I of the Health Equity and Access Re-
form Today Act of 1993.
470
Title VI, Subtitle A
‘‘(2) INFORMED CHOICE.—The State shall en-
sure that each individual who is eligible for medical
assistance under the State plan is provided sufficient
information to make an informed choice about en-
rolling in a qualified health plan under such section
and selecting such a plan.
‘‘(3) PAYMENTS TO QUALIFIED HEALTH PLANS
BY STATES.—
‘‘(A) IN
GENERAL.—Subject to subpara-
graph (B), the State shall make all necessary
payments 
of 
premiums, 
copayments, 
and
deductibles applicable under a qualified health
plan on behalf of an individual who enrolls in
a qualified health plan under such section.
‘‘(B) LIMITATION
ON
AMOUNT
OF
PRE-
MIUM PAYMENTS.—With respect to an individ-
ual who is enrolled in a qualified health plan in
a health care coverage area under such section,
the State is not required to pay more than the
applicable dollar limit for such area (as deter-
mined under section 2001 of the Health Equity
and Access Reform Today Act of 1993).
‘‘(4) ANNUAL STUDIES AND REPORTS.—
‘‘(1) ANNUAL STUDY.—The State shall provide
for an annual study focusing on the health outcomes
471
Title VI, Subtitle A
of individuals in the State who have elected to enroll
in qualified health plans under such section.
‘‘(2) ANNUAL
REPORTS.—The results of the
studies conducted pursuant to paragraph (1) shall
be summarized in reports submitted to the Secretary
at such time and in such manner as the Secretary
determines appropriate.
‘‘(b) TREATMENT OF PAYMENTS AS MEDICAL AS-
SISTANCE.—For purposes of determining the amount of
Federal financial participation for a State under section
1903 in a quarter, any payments made by a State under
subsection (a)(3) shall be treated as expenditures for med-
ical assistance under the State plan for such quarter.
‘‘(c) LIMITATION ON NUMBER OF INDIVIDUALS PER-
MITTED TO MAKE ELECTION.—
‘‘(1) IN GENERAL.—
‘‘(A) LIMITATION.—The number of AFDC-
eligible and SSI-eligible individuals electing to
enroll in a qualified health plan under section
1902(a)(63) in a State during a year may not
exceed the applicable percentage of the Sec-
retary’s estimate of the number of such individ-
uals in the State who are eligible to enroll in
qualified health plans under such section during
the year.
472
Title VI, Subtitle A
‘‘(B) 
APPLICABLE
PERCENTAGE
DE-
SCRIBED.—In subparagraph (A), the ‘applicable
percentage’ with respect to a State for a year—
‘‘(i) for each of the first 3 years for
which the State exercises the option de-
scribed in such section, 15 percent; and
‘‘(ii) for each succeeding year for
which the State exercises such option, the
applicable percentage under this subpara-
graph for the preceding year, increased by
10 percent.
‘‘(2) WAIVER
OF
LIMITATION.—The limit on
the number of individuals provided in paragraph (1)
may be waived by the Secretary with respect to a
State if the Secretary determines that such a waiver
is appropriate.
‘‘(3) DEFINITIONS.—
‘‘(A) 
AFDC 
RECIPIENT.—The 
term
‘AFDC recipient’ means an individual who is
receiving aid or assistance under any plan of
the State approved under title I, X, XIV, or
XVI, or part A or part E of title IV.
‘‘(B) SSI RECIPIENT.—The term ‘SSI re-
cipient’ means an individual—
473
Title VI, Subtitle A
‘‘(i) with respect to whom supple-
mental security income benefits are being
paid under title XVI,
‘‘(ii) who is receiving a supplementary
payment under section 1616 or under sec-
tion 212 of Public Law 93–66, or
‘‘(iii) who is receiving monthly bene-
fits under section 1619(a) (whether or not
pursuant to section 1616(c)(3)).
‘‘(d) DEFINITIONS.—For purposes of this section:
‘‘(1) HEALTH
CARE
COVERAGE
AREA.—The
term ‘health care coverage area’ means a health care
coverage area established under section 1403 of the
Health Equity and Access Reform Today Act of
1993.
‘‘(2) QUALIFIED
HEALTH
PLAN.—The term
‘qualified health plan’ means a health plan that is
certified as a qualified health plan under section
1402 of the Health Equity and Access Reform
Today Act of 1993.’’.
474
Title VI, Subtitle A
PART II—LIMITATION ON CERTAIN FEDERAL
MEDICAID PAYMENTS.
SEC. 6011. CAP ON FEDERAL PAYMENTS MADE FOR ACUTE
MEDICAL SERVICES FURNISHED UNDER THE
MEDICAID PROGRAM.
(a) IN GENERAL.—Title XIX (42 U.S.C. 1396 et
seq.) is amended by redesignating section 1932 as section
1933 and by inserting after section 1931 the following new
section:
‘‘CAP ON FEDERAL PAYMENT MADE FOR ACUTE MEDICAL
SERVICES
‘‘SEC. 1932. (a) ANNUAL FEDERAL CAP.—Federal
financial participation is not available under section
1903(a)(1) for expenditures for acute medical services (as
defined in subsection (c)(1)), including expenditures con-
sisting of payments to qualified health plans under section
1931(a)(3) on behalf of individuals enrolling in such plans
under section 1902(a)(63), for a class of medicaid categor-
ical individuals (as defined in subsection (c)(2)) for a
State for a quarter in a fiscal year, to the extent such
expenditures exceed 1⁄4 of the product of—
‘‘(1) the per-capita limit determined under sub-
section (b) for the State for such fiscal year for such
class, multiplied by
‘‘(2) the average number of medicaid categor-
ical individuals in such class entitled to receive medi-
476
Title VI, Subtitle A
but does not include such expenditures for
which no Federal financial participation is
provided under such plan; divided by
‘‘(ii) the average total number of med-
icaid categorical individuals in such class
in the State in any month during fiscal
year 1994.
‘‘(B) DISPROPORTIONATE
SHARE
PAY-
MENTS NOT INCLUDED.—In applying subpara-
graph (A), payments made under section 1923
shall not be counted in the gross amount of
payments.
‘‘(C) TREATMENT OF DISALLOWANCES.—
The amount determined under this paragraph
shall take into account amounts (or an estimate
of amounts) disallowed.
‘‘(3) APPLICABLE PERCENTAGE.—In paragraph
(1), the applicable percentage for a fiscal year is
equal to—
‘‘(A) 6 percent, for each of fiscal years
1997 through 2000; and
‘‘(B) 5 percent, for fiscal year 2001 and
each succeeding fiscal year.
479
Title VI, Subtitle A
‘‘(i) with respect to whom supple-
mental security income benefits are being
paid under title XVI of the Social Security
Act,
‘‘(ii) who receiving a supplementary
payment under section 1616 of such Act or
under section 212 of Public Law 93–66, or
‘‘(iii) who receiving monthly benefits
under section 1619(a) of such Act (wheth-
er or not pursuant to section 1616(c)(3) of
such Act).
‘‘(B) OTHER INDIVIDUALS.—Medicaid cat-
egorical individuals not described in subpara-
graph (A).’’.
(b) REQUIRING STATE MAINTENANCE OF EFFORT.—
Section 1902(a) (42 U.S.C. 1396a(a)), as amended by sec-
tion 6001(a), is amended—
(1) by striking ‘‘and’’ at the end of paragraph
(62);
(2) by striking the period at the end of para-
graph (63) and inserting ‘‘; and’’; and
(3) by adding at the end the following new
paragraph:
‘‘(64) provide that the State will continue to
make eligible for medical assistance under section
480
Title VI, Subtitle A
1902(a)(10)(A) any class or category of individuals
eligible for medical assistance under such section
during fiscal year 1994.’’.
(c) DISCONTINUATION OF REIMBURSEMENT STAND-
ARDS
FOR INPATIENT HOSPITAL SERVICES.—Section
1902(a)(13)(A) (42 U.S.C. 1396a(a)(13)(A)) is amend-
ed—
(1) by striking ‘‘hospital services, nursing facil-
ity services, and’’ and inserting ‘‘nursing facilities
services and’’;
(2) by striking ‘‘, in the case of hospitals,’’ and
all that follows through ‘‘(v)(1)(G))) which’’;
(3) by striking ‘‘and to assure’’ and all that fol-
lows through ‘‘adequate quality’’; and
(4) by striking ‘‘each hospital, nursing facility,
and’’ and inserting ‘‘each nursing facility and’’.
(d) REVISION OF FEDERAL MEDICAL ASSISTANCE
PERCENTAGE FOR CERTAIN STATES.—Section 1905(b)
(42 U.S.C. 1396d(b)) is amended—
(1) by redesignating clauses (1) and (2) as
clauses (2) and (3) and by inserting after ‘‘except
that’’ the following: ‘‘(1) for Alaska and Hawaii, the
State percentage shall be that percentage which
bears the same ratio to 45 per centum as the square
of the adjusted per capita income of such State
481
Title VI, Subtitle A
bears to the square of the per capita income of the
United States;’’; and
(2) by inserting after the first sentence the fol-
lowing: ‘‘The ‘adjusted per capita income’ for Alaska
shall be determined by dividing the State 3-year av-
erage per capita income by 1.25, and for Hawaii by
dividing the State 3-year average per capita income
by 1.15.’’.
(e) EFFECTIVE DATE.—The amendments made by
this section shall become effective on October 1, 1995.
PART III—STATE FLEXIBILITY TO CONTRACT
FOR COORDINATED CARE SERVICES
SEC. 6021. MODIFICATION OF FEDERAL REQUIREMENTS TO
ALLOW STATES MORE FLEXIBILITY IN CON-
TRACTING FOR COORDINATED CARE SERV-
ICES UNDER MEDICAID.
(a) IN GENERAL.—
(1) PAYMENT
PROVISIONS.—Section 1903(m)
(42 U.S.C. 1396b(m)) is amended to read as follows:
‘‘(m)(1) No payment shall be made under this title
to a State with respect to expenditures incurred by such
State for payment to an entity which is at risk (as defined
in section 1933(a)(4)) for services provided by such entity
to individuals eligible for medical assistance under the
State plan under this title, unless the entity is a risk con-
482
Title VI, Subtitle A
tracting entity (as defined in section 1933(a)(3)) and the
State and such entity comply with the applicable provi-
sions of section 1933.
‘‘(2) No payment shall be made under this title to
a State with respect to expenditures incurred by such
State for payment for services provided to an individual
eligible for medical assistance under the State plan under
this title if such payment by the State is contingent upon
the individual receiving such services from a specified
health care provider or subject to the approval of a speci-
fied health care provider, unless the entity receiving pay-
ment is a primary care case management entity (as de-
fined in section 1933(a)(2)) and the State and such entity
comply with the applicable provisions of section 1933.’’.
(2) REQUIREMENTS FOR COORDINATED CARE
SERVICES.—Title XIX (42 U.S.C. 1396 et seq.) is
amended by redesignating section 1933 as section
1934 and by inserting after section 1932 the follow-
ing new section:
‘‘REQUIREMENTS FOR COORDINATED CARE SERVICES
‘‘SEC. 1933. (a) DEFINITIONS.—For purposes of this
title—
‘‘(1) PRIMARY CARE CASE MANAGEMENT PRO-
GRAM.—The term ‘primary care case management
program’ means a program operated by a State
agency under which such State agency enters into
483
Title VI, Subtitle A
contracts with primary care case management enti-
ties for the provision of health care items and serv-
ices which are specified in such contracts and the
provision of case management services to individuals
who are—
‘‘(A) eligible for medical assistance under
the State plan,
‘‘(B) enrolled with such primary care case
management entities, and
‘‘(C) entitled to receive such specified
health care items and services and case man-
agement services only as approved and ar-
ranged for, or provided, by such entities.
‘‘(2) PRIMARY CARE CASE MANAGEMENT EN-
TITY.—The term ‘primary care case management
entity’ means a health care provider which—
‘‘(A) must be a physician, group of physi-
cians, a Federally qualified health center, a
rural health clinic, or an entity employing or
having other arrangements with physicians op-
erating under a contract with a State to provide
services under a primary care case management
program,
‘‘(B) receives payment on a fee for service
basis (or, in the case of a Federally qualified
484
Title VI, Subtitle A
health center or a rural health clinic, on a rea-
sonable cost per encounter basis) for the provi-
sion of health care items and services specified
in such contract to enrolled individuals,
‘‘(C) receives an additional fixed fee per
enrollee for a period specified in such contract
for providing case management services (includ-
ing approving and arranging for the provision
of health care items and services specified in
such contract on a referral basis) to enrolled in-
dividuals, and
‘‘(D) is not an entity that is at risk (as de-
fined in paragraph (4)) for such case manage-
ment services.
‘‘(3) RISK
CONTRACTING
ENTITY.—The term
‘risk contracting entity’ means an entity which has
a contract with the State agency (or a health insur-
ing organization described in subsection (n)(2))
under which the entity—
‘‘(A) provides or arranges for the provision
of health care items or services which are speci-
fied in such contract to individuals eligible for
medical assistance under the State plan, and
‘‘(B) is at risk (as defined in paragraph
(4)) for part or all of the cost of such items or
485
Title VI, Subtitle A
services furnished to individuals eligible for
medical assistance under such plan.
‘‘(4) AT RISK.—The term ‘at risk’ means an
entity which—
‘‘(A) has a contract with the State agency
under which such entity is paid a fixed amount
for providing or arranging for the provision of
health care items or services specified in such
contract to an individual eligible for medical as-
sistance under the State plan and enrolled with
such entity, regardless of whether such items or
services are furnished to such individual, and
‘‘(B) is liable for all or part of the cost of
furnishing such items or services, regardless of
whether such cost exceeds such fixed payment.
‘‘(5) FEDERALLY
QUALIFIED
HEALTH
CEN-
TER.—The term ‘Federally qualified health center’
means a Federally qualified health center as defined
in section 1905(l)(2)(B).
‘‘(6) RURAL HEALTH CLINIC.—The term ‘rural
health clinic’ means a rural health clinic as defined
in section 1905(l)(1).
‘‘(b) GENERAL REQUIREMENTS
FOR RISK CON-
TRACTING ENTITIES.—
486
Title VI, Subtitle A
‘‘(1) ORGANIZATION.—A risk contracting entity
meets the requirements of this section only if such
entity—
‘‘(A)(i) is a qualified health maintenance
organization as defined in section 1310(d) of
the Public Health Service Act, as determined by
the Secretary pursuant to section 1312 of such
Act; or
‘‘(ii) is described in subparagraph (C), (D),
(E), (F), or (G) of subsection (e)(4);
‘‘(B) is a federally qualified health center
or a rural health clinic which has made ade-
quate provision against the risk of insolvency
(pursuant to the guidelines and regulations is-
sued by the Secretary under this section), and
ensures that individuals eligible for medical as-
sistance under the State plan are not held liable
for such entity’s debts in case of such entity’s
insolvency; or
‘‘(C) is an entity which meets all applicable
State licensing requirements and has made ade-
quate provision against the risk of insolvency
(pursuant to the guidelines and regulations is-
sued by the Secretary under this section), and
ensures that individuals eligible for medical as-
487
Title VI, Subtitle A
sistance under the State plan are not held liable
for such entity’s debts in case of such entity’s
insolvency.
‘‘(2) GUARANTEES OF ENROLLEE ACCESS.—A
risk contracting entity meets the requirements of
this section only if—
‘‘(A) the geographic locations, hours of op-
eration, patient to staff ratios, and other rel-
evant characteristics of such entity are suffi-
cient to afford individuals eligible for medical
assistance under the State plan access to such
entities that is at least equivalent to the access
to health care providers that would be available
to such individuals if such individuals were not
enrolled with such entity;
‘‘(B) such entity has reasonable and ade-
quate hours of operation, including 24-hour
availability of—
‘‘(i)(I) treatment for an unforeseen ill-
ness, injury, or condition of an individual
eligible for medical assistance under the
State plan and enrolled with such entity;
or
‘‘(II) referral to other health care pro-
viders for such treatment; and
488
Title VI, Subtitle A
‘‘(ii) other information, as determined
by the Secretary or the State; and
‘‘(C) such entity complies with such other
requirements relating to access to care as the
Secretary or the State may impose.
‘‘(3) CONTRACT WITH STATE AGENCY.—A risk
contracting entity meets the requirements of this
section only if such entity has a written contract
with the State agency which provides—
‘‘(A) that the entity will comply with all
applicable provisions of this section, that the
State has the right to penalize the entity for
failure to comply with such requirements and to
terminate the contract in accordance with sub-
section (j), and that the entity will be subject
to penalties imposed by the Secretary under
subsection (i) for failure to comply with such
requirements;
‘‘(B) for a payment methodology based on
experience rating or another actuarially sound
methodology approved by the Secretary, which
guarantees (as demonstrated by such models or
formulas as the Secretary may approve) that—
‘‘(i) payments to the entity under the
contract shall not exceed an amount equal
489
Title VI, Subtitle A
to 100 percent of the costs (which shall in-
clude administrative costs and which may
include costs for inpatient hospital services
that would have been incurred in the ab-
sence of such contract) that would have
been incurred by the State agency in the
absence of the contract; and
‘‘(ii) the financial risk for inpatient
hospital services is limited to an extent es-
tablished by the State;
‘‘(C) that the Secretary and the State (or
any person or organization designated by ei-
ther) shall have the right to audit and inspect
any books and records of the entity (and of any
subcontractor) that pertain—
‘‘(i) to the ability of the entity (or a
subcontractor) to bear the risk of potential
financial losses; or
‘‘(ii) to services performed or deter-
minations of amounts payable under the
contract;
‘‘(D) that in the entity’s enrollment,
reenrollment, or disenrollment of individuals eli-
gible for medical assistance under the State
plan and eligible to enroll, reenroll, or disenroll
490
Title VI, Subtitle A
with the entity pursuant to the contract, the en-
tity will not discriminate among such individ-
uals on the basis of such individuals’ health sta-
tus or requirements for health care services;
‘‘(E)(i) individuals eligible for medical as-
sistance under the State plan who have enrolled
with the entity are permitted to terminate such
enrollment without cause as of the beginning of
the first calendar month (or in the case of an
entity described in subsection (e)(4), as of the
beginning of the first enrollment period) follow-
ing a full calendar month after a request is
made for such termination;
‘‘(ii) that when an individual has relocated
outside the entity’s service area, and the entity
has been notified of the relocation, services
(within reasonable limits) furnished by a health
care provider outside the service area will be re-
imbursed either by the entity or by the State
agency; and
‘‘(iii) for written notification of each such
individual’s right to terminate enrollment,
which shall be provided at the time of such indi-
vidual’s enrollment, and, in the case of a child
with special health care needs as defined in sub-
491
Title VI, Subtitle A
section (e)(1)(B)(ii), at the time the entity iden-
tifies such a child;
‘‘(F) in the case of services immediately re-
quired to treat an unforeseen illness, injury, or
condition, of an individual eligible for medical
assistance under the State plan and enrolled
with the entity—
‘‘(i) that such services shall not be
subject to a preapproval requirement; and
‘‘(ii) where such services are furnished
by a health care provider other than the
entity, for reimbursement of such provider
either by the entity or by the State agency;
‘‘(G) for disclosure of information in ac-
cordance with subsection (h) and section 1124;
‘‘(H) that any physician incentive plan op-
erated by the entity meets the requirements of
section 1876(i)(8);
‘‘(I) for maintenance of sufficient patient
encounter data to identify the physician who de-
livers services to patients;
‘‘(J) that the entity will comply with the
requirement of section 1902(w) with respect to
each enrollee;
492
Title VI, Subtitle A
‘‘(K) that the entity will implement a
grievance system, inform enrollees in writing
about how to use such grievance system, ensure
that grievances are addressed in a timely man-
ner, and report grievances to the State at inter-
vals to be determined by the State;
‘‘(L) that contracts between the entity and
each subcontractor of such entity will require
each subcontractor—
‘‘(i) to cooperate with the entity in the
implementation of its internal quality as-
surance program under paragraph (4) and
adhere to the standards set forth in the
quality 
assurance 
program, 
including
standards with respect to access to care,
facilities in which patients receive care,
and availability, maintenance, and review
of medical records;
‘‘(ii) to cooperate with the Secretary,
the State agency and any contractor to the
State in monitoring and evaluating the
quality and appropriateness of care pro-
vided to enrollees as required by Federal or
State laws and regulations; and
493
Title VI, Subtitle A
‘‘(iii) where applicable, to adhere to
regulations and program guidance with re-
spect to reporting requirements under sec-
tion 1905(r);
‘‘(M) that, where the State deems it nec-
essary to ensure the timely provision to enroll-
ees 
of 
the 
services 
listed 
in 
subsection
(f)(2)(C)(ii), the State may arrange for the pro-
vision of such services by health care providers
other than the entity and may adjust its pay-
ments to the entity accordingly;
‘‘(N) that the entity and the State will
comply with guidelines and regulations issued
by the Secretary with respect to procedures for
marketing and information that must be pro-
vided to individuals eligible for medical assist-
ance under the State plan;
‘‘(O) that the entity must provide pay-
ments to hospitals for inpatient hospital serv-
ices furnished to infants who have not attained
the age of 1 year, and to children who have not
attained the age of 6 years and who receive
such services in a disproportionate share hos-
pital, in accordance with paragraphs (2) and
(3) of section 1902(s);
494
Title VI, Subtitle A
‘‘(P) that the entity shall report to the
State, at such time and in such manner as the
State shall require, on the rates paid for hos-
pital services (by type of hospital and type of
service) furnished to individuals enrolled with
the entity;
‘‘(Q) detailed information regarding the
relative responsibilities of the entity and the
State, for providing (or arranging for the provi-
sion of), and making payment for, the following
items and services:
‘‘(i) immunizations;
‘‘(ii) the purchase of vaccines;
‘‘(iii) lead screening and treatment
services;
‘‘(iv) screening and treatment for tu-
berculosis;
‘‘(v) screening and treatment for, and
preventive services related to, sexually
transmitted diseases, including HIV infec-
tion;
‘‘(vi) screening, diagnostic, and treat-
ment services required under section
1905(r);
‘‘(vii) family planning services;
495
Title VI, Subtitle A
‘‘(viii) services prescribed under—
‘‘(I) an Individual Education
Plan or Individualized Family Service
Plan under part B or part H of the
Individuals with Disabilities Edu-
cation Act; and
‘‘(II) any other individual plan of
care or treatment developed under
this title or title V;
‘‘(ix) transportation needed to obtain
services to which the enrollee is entitled
under the State plan or pursuant to an in-
dividual plan of care or treatment de-
scribed in subclauses (I) and (II) of clause
(viii); and
‘‘(x) such other services as the Sec-
retary may specify;
‘‘(R) detailed information regarding the
procedures for coordinating the relative respon-
sibilities of the entity and the State to ensure
prompt delivery of, compliance with any appli-
cable reporting requirements related to, and ap-
propriate record keeping with respect to, the
items and services described in subparagraph
(Q); and
496
Title VI, Subtitle A
‘‘(S) such other provisions as the Secretary
may require.
‘‘(4) INTERNAL QUALITY ASSURANCE.—A risk
contracting entity meets the requirements of this
section only if such entity has in effect a written in-
ternal quality assurance program which includes a
systematic process to achieve specified and measur-
able goals and objectives for access to, and quality
of, care, which—
‘‘(A) identifies the organizational units re-
sponsible for performing specific quality assur-
ance functions, and ensures that such units are
accountable to the governing body of the entity
and that such units have adequate supervision,
staff, and other necessary resources to perform
these functions effectively,
‘‘(B) if any quality assurance functions are
delegated to other entities, ensures that the risk
contracting entity remains accountable for all
quality assurance functions and has mecha-
nisms to ensure that all quality assurance ac-
tivities are carried out,
‘‘(C) includes methods to ensure that phy-
sicians and other health care professionals
under contract with the entity are licensed or
497
Title VI, Subtitle A
certified as required by State law, or are other-
wise qualified to perform the services such phy-
sicians and other professionals provide, and
that these qualifications are ensured through
appropriate credentialing and recredentialing
procedures,
‘‘(D) provides for continuous monitoring of
the delivery of health care, through—
‘‘(i) identification of clinical areas to
be monitored, including immunizations,
prenatal care, services required under sec-
tion 1905(r), and other appropriate clinical
areas, to reflect care provided to enrollees
eligible for medical assistance under the
State plan,
‘‘(ii) use of quality indicators and
standards for assessing the quality and ap-
propriateness of care delivered, and the
availability and accessibility of all services
for which the entity is responsible under
such entity’s contract with the State,
‘‘(iii) use of epidemiological data or
chart review, as appropriate, and patterns
of care overall,
498
Title VI, Subtitle A
‘‘(iv) patient surveys, spot checks, or
other appropriate methods to determine
whether—
‘‘(I) enrollees are able to obtain
timely appointments with primary
care providers and specialists, and
‘‘(II) 
enrollees 
are 
otherwise
guaranteed access and care as pro-
vided under paragraph (2),
‘‘(v) provision of written information
to health care providers and other person-
nel on the outcomes, quality, availability,
accessibility, and appropriateness of care,
and
‘‘(vi) implementation of corrective ac-
tions,
‘‘(E) includes standards for timely enrollee
access to information and care which at a mini-
mum shall incorporate standards used by the
State or professional or accreditation bodies for
facilities furnishing perinatal and neonatology
care and other forms of specialized medical and
surgical care,
‘‘(F) includes standards for the facilities in
which patients receive care,
499
Title VI, Subtitle A
‘‘(G) includes standards for managing and
treating medical conditions prevalent among
such entity’s enrollees eligible for medical as-
sistance under the State plan,
‘‘(H) includes mechanisms to ensure that
enrollees eligible for medical assistance under
the State plan receive services for which the en-
tity is responsible under the contract which are
consistent with standards established by the ap-
plicable professional societies or government
agencies,
‘‘(I) includes standards for the availability,
maintenance, and review of medical records
consistent with generally accepted medical prac-
tice,
‘‘(J) provides for dissemination of quality
assurance procedures to health care providers
under contract with the entity, and
‘‘(K) meets any other requirements pre-
scribed by the Secretary or the State.
‘‘(c) GENERAL REQUIREMENTS FOR PRIMARY CARE
CASE MANAGEMENT PROGRAMS.—A primary care case
management program implemented by a State under this
section shall—
501
Title VI, Subtitle A
with standards established by applicable
professional 
societies 
or 
governmental
agencies, or such other standards pre-
scribed by the Secretary or the State, and
‘‘(ii) where other items and services
are determined to be medically necessary,
give timely approval of such items and
services and referral to appropriate health
care providers,
‘‘(3) provide that no preapproval shall be re-
quired for emergency health care items or services,
and
‘‘(4) permit individuals eligible for medical as-
sistance under the State plan who have enrolled with
a primary care case management entity to terminate
such enrollment without cause not later than the be-
ginning of the first calendar month following a full
calendar month after the request is made for such
termination.
‘‘(d) EXEMPTIONS FROM STATE PLAN REQUIRE-
MENTS.—A State plan may permit or require an individ-
ual eligible for medical assistance under such plan to en-
roll with a risk contracting entity or a primary care case
management entity without regard to the requirements set
forth in the following paragraphs of section 1902(a):
502
Title VI, Subtitle A
‘‘(1) Paragraph (1) (concerning statewideness).
‘‘(2) Paragraph (10)(B) (concerning com-
parability of benefits), to the extent benefits not in-
cluded in the State plan are provided.
‘‘(3) Paragraph (23) (concerning freedom of
choice of provider), except with respect to services
described in section 1905(a)(4)(C) and except as re-
quired under subsection (e).
‘‘(e) STATE OPTIONS WITH RESPECT TO ENROLL-
MENT AND DISENROLLMENT.—
‘‘(1) MANDATORY ENROLLMENT.—
‘‘(A) IN GENERAL.—Except as provided in
subparagraph (B), a State plan may require an
individual eligible for medical assistance under
such plan to enroll with a risk contracting en-
tity or a primary care case management entity
only if the individual is permitted a choice with-
in a reasonable service area (as defined by the
State)—
‘‘(i) between or among 2 or more risk
contracting entities,
‘‘(ii) among a risk contracting entity
and a primary care case management pro-
gram, or
503
Title VI, Subtitle A
‘‘(iii) among primary care case man-
agement entities.
‘‘(B) SPECIAL NEEDS CHILDREN.—
‘‘(i) IN GENERAL.—A State may not
require a child with special health care
needs (as defined in clause (ii)) to enroll
with a risk contracting entity or a primary
care case management entity.
‘‘(ii) DEFINITION.—For purposes of
this subparagraph, the term ‘child with
special health care needs’ refers to an indi-
vidual eligible for supplemental security in-
come under title XVI, a child described
under section 501(a)(1)(D), or a child de-
scribed in section 1902(e)(3).
‘‘(2) REENROLLMENT
OF
INDIVIDUALS
WHO
REGAIN ELIGIBILITY.—In the case of an individual
who—
‘‘(A) in a month is eligible for medical as-
sistance under the State plan and enrolled with
a risk contracting entity with a contract under
this section,
‘‘(B) in the next month (or next 2 months)
is not eligible for such medical assistance, but
504
Title VI, Subtitle A
‘‘(C) in the succeeding month is again eli-
gible for such benefits,
the State agency (subject to subsection (b)(3)(E))
may enroll the individual for that succeeding month
with such entity, if the entity continues to have a
contract with the State agency under this sub-
section.
‘‘(3) DISENROLLMENT.—
‘‘(A) RESTRICTIONS ON DISENROLLMENT
WITHOUT CAUSE.—Except as provided in sub-
paragraph (C), a State plan may restrict the
period in which individuals enrolled with risk
contracting entities described in paragraph (4)
may terminate such enrollment without cause to
the first month of each period of enrollment (as
defined in subparagraph (B)), but only if the
State provides notification, at least once during
each such enrollment period, to individuals en-
rolled with such entity of the right to terminate
such enrollment and the restriction on the exer-
cise of this right. Such restriction shall not
apply to requests for termination of enrollment
for cause.
505
Title VI, Subtitle A
‘‘(B) PERIOD OF ENROLLMENT.—For pur-
poses of this paragraph, the term ‘period of en-
rollment’ means—
‘‘(i) a period not to exceed 6 months
in duration, or
‘‘(ii) a period not to exceed 1 year in
duration, in the case of a State that, on
the effective date of this paragraph, had in
effect a waiver under section 1115 of re-
quirements under this title under which
the State could establish a 1-year mini-
mum period of enrollment with risk con-
tracting entities.
‘‘(C) SPECIAL NEEDS CHILDREN.—A State
may not restrict disenrollment of a child with
special health care needs (as defined in para-
graph (1)(B)(ii)).
‘‘(4) ENTITIES ELIGIBLE FOR DISENROLLMENT
RESTRICTIONS.—A risk contracting entity described
in this paragraph is—
‘‘(A) a qualified health maintenance orga-
nization as defined in section 1310(d) of the
Public Health Service Act,
‘‘(B) an eligible organization with a con-
tract under section 1876,
506
Title VI, Subtitle A
‘‘(C) an entity that is receiving (and has
received during the previous 2 years) a grant of
at least $100,000 under section 329(d)(1)(A)
or 330(d)(1) of the Public Health Service Act,
‘‘(D) an entity that—
‘‘(i) received a grant of at least
$100,000 under section 329(d)(1)(A) or
section 330(d)(1) of the Public Health
Service Act in the fiscal year ending June
30, 1976, and has been a grantee under ei-
ther such section for all periods after that
date, and
‘‘(ii) provides to its enrollees, on a
prepaid capitation or other risk basis, all
of the services described in paragraphs (1),
(2), (3), (4)(C), and (5) of section 1905(a)
(and the services described in section
1905(a)(7), to the extent required by sec-
tion 1902(a)(10)(D)),
‘‘(E) an entity that is receiving (and has
received during the previous 2 years) at least
$100,000 (by grant, subgrant, or subcontract)
under the Appalachian Regional Development
Act of 1965,
507
Title VI, Subtitle A
‘‘(F) a nonprofit primary health care en-
tity located in a rural area (as defined by the
Appalachian Regional Commission)—
‘‘(i) which received in the fiscal year
ending June 30, 1976, at least $100,000
(by grant, subgrant, or subcontract) under
the Appalachian Regional Development Act
of 1965, and
‘‘(ii) which, for all periods after such
date, either has been the recipient of a
grant, subgrant, or subcontract under such
Act or has provided services on a prepaid
capitation or other risk basis under a con-
tract with the State agency initially en-
tered into during a year in which the entity
was the recipient of such a grant,
subgrant, or subcontract,
‘‘(G) an entity that had contracted with
the State agency prior to 1970 for the provi-
sion, on a prepaid risk basis, of services (which
did not include inpatient hospital services) to
individuals eligible for medical assistance under
the State plan,
‘‘(H) a program pursuant to an undertak-
ing described in subsection (n)(3) in which at
508
Title VI, Subtitle A
least 25 percent of the membership enrolled on
a prepaid basis are individuals who—
‘‘(i) are not insured for benefits under
part B of title XVIII or eligible for medical
assistance under the State plan, and
‘‘(ii) (in the case of such individuals
whose prepayments are made in whole or
in part by any government entity) had the
opportunity at the time of enrollment in
the program to elect other coverage of
health care costs that would have been
paid in whole or in part by any govern-
mental entity,
‘‘(I) an entity that, on the date of enact-
ment of this provision, had a contract with the
State agency under a waiver under section 1115
or 1915(b) and was not subject to a require-
ment under this title to permit disenrollment
without cause, or
‘‘(J) an entity that has a contract with the
State agency under a waiver under section
1915(b)(5).
‘‘(f) STATE MONITORING AND EXTERNAL REVIEW.—
‘‘(1) STATE GRIEVANCE PROCEDURE.—A State
contracting with a risk contracting entity or a pri-
509
Title VI, Subtitle A
mary care case management entity under this sec-
tion shall provide for a grievance procedure for en-
rollees of such entity with at least the following ele-
ments:
‘‘(A) a toll-free telephone number for en-
rollee questions and grievances,
‘‘(B) periodic notification of enrollees of
their rights with respect to such entity or pro-
gram,
‘‘(C) periodic sample reviews of grievances
registered with such entity or program or with
the State, and
‘‘(D) periodic survey and analysis of en-
rollee satisfaction with such entity or program,
including 
interviews 
with 
individuals 
who
disenroll from the entity or program.
‘‘(2) STATE MONITORING OF QUALITY AND AC-
CESS.—
‘‘(A) RISK
CONTRACTING
ENTITIES.—A
State contracting with a risk contracting entity
under this section shall provide for ongoing
monitoring of such entity’s compliance with the
requirements of subsection (b), including com-
pliance with the requirements of such entity’s
contract under subsection (b)(3), and shall un-
510
Title VI, Subtitle A
dertake appropriate followup activities to ensure
that any problems identified are rectified and
that compliance with the requirements of sub-
section (b) and the requirements of the contract
under subsection (b)(3) is maintained.
‘‘(B) PRIMARY CARE CASE MANAGEMENT
ENTITIES.—A State electing to implement a
primary care case management program shall
provide for ongoing monitoring of the pro-
gram’s compliance with the requirements of
subsection (c) and shall undertake appropriate
followup activities to ensure that any problems
identified are rectified and that compliance with
subsection (c) is maintained.
‘‘(C) SERVICES.—
‘‘(i) IN
GENERAL.—The State shall
establish procedures (in addition to those
required under subparagraphs (A) and
(B)) to ensure that the services listed in
clause (ii) are available in a timely manner
to an individual enrolled with a risk con-
tracting entity or a primary care case man-
agement entity. Where necessary to ensure
the timely provision of such services, the
State shall arrange for the provision of
511
Title VI, Subtitle A
such services by health care providers
other than the risk contracting entity or
the primary care case management entity
in which an individual is enrolled.
‘‘(ii) SERVICES LISTED.—The services
listed in this clause are:
‘‘(I) prenatal care;
‘‘(II) immunizations;
‘‘(III) lead screening and treat-
ment;
‘‘(IV) prevention, diagnosis and
treatment of tuberculosis, sexually
transmitted diseases (including HIV
infection), and other communicable
diseases; and
‘‘(V) such other services as the
Secretary may specify.
‘‘(iii) REPORT.—The procedures re-
ferred to in clause (i) shall be described in
an annual report to the Secretary provided
by the State.
‘‘(3) EXTERNAL INDEPENDENT REVIEW.—
‘‘(A) IN GENERAL.—Except as provided in
paragraph (4), a State contracting with a risk
contracting entity under this section shall pro-
512
Title VI, Subtitle A
vide for an annual external independent review
of the quality and timeliness of, and access to,
the items and services specified in such entity’s
contract with the State agency. Such review
shall be conducted by a utilization control and
peer review organization with a contract under
section 1153 or another organization unaffili-
ated with the State government or with any
risk contracting entity and approved by the
Secretary.
‘‘(B) CONTENTS OF REVIEW.—An external
independent review conducted under this para-
graph shall include the following:
‘‘(i) a review of the entity’s medical
care, through sampling of medical records
or other appropriate methods, for indica-
tions of quality of care and inappropriate
utilization (including overutilization) and
treatment,
‘‘(ii) a review of enrollee inpatient and
ambulatory data, through sampling of
medical records or other appropriate meth-
ods, to determine trends in quality and ap-
propriateness of care,
513
Title VI, Subtitle A
‘‘(iii) notification of the entity and the
State when the review under this para-
graph indicates inappropriate care, treat-
ment, or utilization of services (including
overutilization), and
‘‘(iv) other activities as prescribed by
the Secretary or the State.
‘‘(C) AVAILABILITY.—The results of each
external independent review conducted under
this paragraph shall be available to the public
consistent with the requirements for disclosure
of information contained in section 1160.
‘‘(4) DEEMED
COMPLIANCE
WITH
EXTERNAL
INDEPENDENT QUALITY OF CARE REVIEW REQUIRE-
MENTS.—
‘‘(A) IN
GENERAL.—The Secretary may
deem the State to have fulfilled the requirement
for independent external review of quality of
care with respect to an entity which has been
accredited by an organization described in sub-
paragraph (B) and approved by the Secretary.
‘‘(B) ACCREDITING
ORGANIZATION.—An
accrediting organization described in this sub-
paragraph must—
514
Title VI, Subtitle A
‘‘(i) exist for the primary purpose of
accrediting coordinated care organizations;
‘‘(ii) be governed by a group of indi-
viduals representing health care providers,
purchasers, regulators, and consumers (a
minority of which shall be representatives
of health care providers);
‘‘(iii) have substantial experience in
accrediting coordinated care organizations,
including an organization’s internal quality
assurance program;
‘‘(iv) be independent of health care
providers or associations of health care
providers;
‘‘(v) be a nonprofit organization; and
‘‘(vi) have an accreditation process
which meets requirements specified by the
Secretary.
‘‘(5) 
FEDERAL
MONITORING
RESPONSIBIL-
ITIES.—The Secretary shall review the external inde-
pendent reviews conducted pursuant to paragraph
(3) and shall monitor the effectiveness of the State’s
monitoring and followup activities required under
subparagraph (A) of paragraph (2). If the Secretary
determines that a State’s monitoring and followup
515
Title VI, Subtitle A
activities are not adequate to ensure that the re-
quirements of paragraph (2) are met, the Secretary
shall undertake appropriate followup activities to en-
sure that the State improves its monitoring and fol-
lowup activities.
‘‘(g) PARTICIPATION
OF FEDERALLY QUALIFIED
HEALTH CENTERS AND RURAL HEALTH CLINICS.—
‘‘(1) IN GENERAL.—Each risk contracting en-
tity shall, with respect to each electing essential
community provider (as defined in paragraph (5))
located within the plan’s service area, either—
‘‘(A) enter into a written provider partici-
pation agreement (described in paragraph (2))
with the provider, or
‘‘(B) enter into a written agreement under
which the plan shall make payment to the pro-
vider in accordance with paragraph (3).
‘‘(2) PARTICIPATION
AGREEMENT.—A partici-
pation agreement between a risk contracting entity
and an electing essential community provider under
this subsection shall provide that the entity agrees to
treat the provider in accordance with terms and con-
ditions at least as favorable as those that are appli-
cable to other participating providers with the risk
516
Title VI, Subtitle A
contracting entity with respect to each of the follow-
ing:
‘‘(A) The scope of services for which pay-
ment is made by the entity to the provider.
‘‘(B) The rate of payment for covered care
and services.
‘‘(C) The availability of financial incentives
to participating providers.
‘‘(D) Limitations on financial risk provided
to other participating providers.
‘‘(E) Assignment of enrollees to participat-
ing providers.
‘‘(F) Access by the provider’s patients to
providers in medical specialties or subspecialties
participating in the plan.
‘‘(3) PAYMENTS FOR PROVIDERS WITHOUT PAR-
TICIPATION AGREEMENTS.—Payment in accordance
with this paragraph is payment based on payment
methodologies and rates used under the applicable
Medicare payment methodology and rates (or the
most closely applicable methodology under such pro-
gram as the Secretary of Health and Human Serv-
ices specifies in regulations).
‘‘(4) ELECTION.—
517
Title VI, Subtitle A
‘‘(A) IN GENERAL.—In this subsection, the
term ‘electing essential community provider’
means, with respect to a risk contracting entity,
an essential community provider that elects this
subpart to apply to the entity.
‘‘(B) FORM
OF
ELECTION.—An election
under this paragraph shall be made in a form
and manner specified by the Secretary, and
shall include notice to the risk contracting en-
tity involved. Such an election may be made an-
nually with respect to an entity, except that the
entity and provider may agree to make such an
election on a more frequent basis.
‘‘(5) PROVIDERS
DESCRIBED.—The categories
of providers and organizations described in this sub-
section are as follows:
‘‘(A) MIGRANT HEALTH CENTERS.—A re-
cipient or subrecipient of a grant under section
329 of the Public Health Service Act.
‘‘(B) COMMUNITY
HEALTH
CENTERS.—A
recipient or subrecipient of a grant under sec-
tion 330 of the Public Health Service Act.
‘‘(C) HOMELESS PROGRAM PROVIDERS.—A
recipient or subrecipient of a grant under sec-
tion 340 of the Public Health Service Act.
518
Title VI, Subtitle A
‘‘(D) PUBLIC HOUSING PROVIDERS.—A re-
cipient or subrecipient of a grant under section
340A of the Public Health Service Act.
‘‘(E) FAMILY PLANNING CLINICS.—A re-
cipient or subrecipient of a grant under title X
of the Public Health Service Act.
‘‘(F) INDIAN HEALTH PROGRAMS.—A serv-
ice unit of the Indian Health Service, a tribal
organization, or an urban Indian program, as
defined in the Indian Health Care Improvement
Act.
‘‘(G) AIDS 
PROVIDERS
UNDER
RYAN
WHITE
ACT.—A public or private nonprofit
health care provider that is a recipient or sub-
recipient of a grant under title XXIII of the
Public Health Service Act.
‘‘(H) MATERNAL AND CHILD HEALTH PRO-
VIDERS.—A public or private nonprofit entity
that provides prenatal care, pediatric care, or
ambulatory services to children, including chil-
dren with special health care needs, and that
receives funding for such care or services under
title V of the Social Security Act.
‘‘(I) FEDERALLY QUALIFIED HEALTH CEN-
TER; RURAL
HEALTH
CLINIC.—A Federally-
519
Title VI, Subtitle A
qualified health center or a rural health clinic
(as such terms are defined in section 1861(aa)).
‘‘(6) SUBRECIPIENT
DEFINED.—In this sub-
section, the term ‘subrecipient’ means, with respect
to a recipient of a grant under a particular author-
ity, an entity that—
‘‘(A) is receiving funding from such a
grant under a contract with the principal recipi-
ent of such a grant, and
‘‘(B) meets the requirements established to
be a recipient of such a grant.
‘‘(7) SUNSET OF REQUIREMENT.—The require-
ments of this subsection shall only apply to risk con-
tracting entities during calendar years 1995 through
2000.
‘‘(h) TRANSACTIONS WITH PARTIES IN INTEREST.—
‘‘(1) IN GENERAL.—Each risk contracting en-
tity which is not a qualified health maintenance or-
ganization (as defined in section 1310(d) of the
Public Health Service Act) must report to the State
and, upon request, to the Secretary, the Inspector
General of the Department of Health and Human
Services, and the Comptroller General of the United
States a description of transactions between the en-
tity and a party in interest (as defined in section
520
Title VI, Subtitle A
1318(b) of such Act), including the following trans-
actions:
‘‘(A) Any sale or exchange, or leasing of
any property between the entity and such a
party.
‘‘(B) Any furnishing for consideration of
goods, services (including management serv-
ices), or facilities between the entity and such
a party, but not including salaries paid to em-
ployees for services provided in the normal
course of their employment.
‘‘(C) Any lending of money or other exten-
sion of credit between the entity and such a
party.
The State or the Secretary may require that infor-
mation reported with respect to a risk contracting
entity which controls, or is controlled by, or is under
common control with, another entity be in the form
of a consolidated financial statement for the risk
contracting entity and such entity.
‘‘(2) AVAILABILITY
OF
INFORMATION.—Each
risk contracting entity shall make the information
reported pursuant to paragraph (1) available to its
enrollees upon reasonable request.
‘‘(i) REMEDIES FOR FAILURE TO COMPLY.—
521
Title VI, Subtitle A
‘‘(1) IN GENERAL.—If the Secretary determines
that a risk contracting entity or a primary care case
management entity—
‘‘(A) fails substantially to provide services
required under section 1905(r), when such an
entity is required to do so, or provide medically
necessary items and services that are required
to be provided to an individual enrolled with
such an entity, if the failure has adversely af-
fected (or has substantial likelihood of adversely
affecting) the individual;
‘‘(B) imposes premiums on individuals en-
rolled with such an entity in excess of the pre-
miums permitted under this title;
‘‘(C) acts to discriminate among individ-
uals in violation of the provision of subsection
(b)(3)(D), including expulsion or refusal to
reenroll an individual or engaging in any prac-
tice that would reasonably be expected to have
the effect of denying or discouraging enrollment
(except as permitted by this section) by eligible
individuals with the entity whose medical condi-
tion or history indicates a need for substantial
future medical services;
522
Title VI, Subtitle A
‘‘(D) misrepresents or falsifies information
that is furnished—
‘‘(i) to the Secretary or the State
under this section; or
‘‘(ii) to an individual or to any other
entity under this section; or
‘‘(E) fails to comply with the requirements
of section 1876(i)(8),
the Secretary may provide, in addition to any other
remedies available under law, for any of the rem-
edies described in paragraph (2).
‘‘(2) ADDITIONAL
REMEDIES.—The remedies
described in this paragraph are—
‘‘(A) civil money penalties of not more
than $25,000 for each determination under
paragraph (1), or, with respect to a determina-
tion under subparagraph (C) or (D)(i) of such
paragraph, of not more than $100,000 for each
such determination, plus, with respect to a de-
termination under paragraph (1)(B), double the
excess amount charged in violation of such
paragraph (and the excess amount charged
shall be deducted from the penalty and returned
to the individual concerned), and plus, with re-
spect to a determination under paragraph
523
Title VI, Subtitle A
(1)(C), $15,000 for each individual not enrolled
as a result of a practice described in such para-
graph, or
‘‘(B) denial of payment to the State for
medical assistance furnished by a risk contract-
ing entity or a primary care case management
entity under this section for individuals enrolled
after the date the Secretary notifies the entity
of a determination under paragraph (1) and
until the Secretary is satisfied that the basis for
such determination has been corrected and is
not likely to recur.
The provisions of section 1128A (other than sub-
sections (a) and (b)) shall apply to a civil money
penalty under subparagraph (A) in the same manner
as such provisions apply to a penalty or proceeding
under section 1128A(a).
‘‘(j) TERMINATION OF CONTRACT BY STATE.—Any
State which has a contract with a risk contracting entity
or a primary care case management entity may terminate
such contract if such entity fails to comply with the terms
of such contract or any applicable provision of this section.
‘‘(k) FAIR HEARING.—Nothing in this section shall
affect the rights of an individual eligible to receive medical
524
Title VI, Subtitle A
assistance under the State plan to obtain a fair hearing
under section 1902(a)(3) or under applicable State law.
‘‘(l) DISPROPORTIONATE SHARE HOSPITALS.—Noth-
ing in this section shall affect any requirement on a State
to comply with section 1923.
‘‘(m) REFERRAL PAYMENTS.—For 1 year following
the date on which individuals eligible for medical assist-
ance under the State plan in a service area are required
to enroll with a risk contracting entity or a primary care
case management entity, Federally qualified health cen-
ters and rural health centers located in such service area
or providing care to such enrollees, shall receive a fee for
educating such enrollees about the availability of services
from the risk contracting entity or primary care case man-
agement entity with which such enrollees are enrolled.
‘‘(n) SPECIAL RULES.—
‘‘(1) NONAPPLICABILITY
OF
CERTAIN
PROVI-
SIONS TO CERTAIN RISK CONTRACTING ENTITIES.—
In the case of any risk contracting entity which—
‘‘(A)(i) is an individual physician or a phy-
sician group practice of less than 50 physicians,
and
‘‘(ii) is not described in paragraphs (A)
and (B) of subsection (b)(1), and
525
Title VI, Subtitle A
‘‘(B) is at risk only for the health care
items and services directly provided by such en-
tity,
paragraphs (3)(K), (3)(L), (3)(O), (3)(P), and (4)
of subsection (b), and paragraph (3) of subsection
(f), shall not apply to such entity.
‘‘(2) EXCEPTION
FROM
DEFINITION
OF
RISK
CONTRACTING ENTITY.—For purposes of this sec-
tion, the term ‘risk contracting entity’ shall not in-
clude a health insuring organization which was used
by a State before April 1, 1986, to administer a por-
tion of the State plan of such State on a statewide
basis.
‘‘(3) NEW
JERSEY.—The rules under section
1903(m)(6) as in effect on the day before the effec-
tive date of this section shall apply in the case of an
undertaking by the State of New Jersey (as de-
scribed in such section 1903(m)(6)).
‘‘(o) CONTINUATION
OF CERTAIN COORDINATED
CARE PROGRAMS.—The Secretary may provide for the
continuation of any coordinated care program operating
under section 1115 or 1915 without requiring compliance
with any provision of this section which conflicts with the
continuation of such program and without requiring any
additional waivers under such sections 1115 and 1915 if
526
Title VI, Subtitle A
the program has been successful in assuring quality and
containing costs (as determined by the Secretary) and is
likely to continue to be successful in the future.
‘‘(p) GUIDELINES, REGULATIONS, AND MODEL CON-
TRACT.—
‘‘(1) GUIDELINES AND REGULATIONS ON SOL-
VENCY.—At the earliest practicable time after the
date of enactment of this section, the Secretary shall
issue guidelines and regulations concerning solvency
standards for risk contracting entities and sub-
contractors of such risk contracting entities. Such
guidelines and regulations shall take into account
characteristics that may differ among risk contract-
ing entities including whether such an entity is at
risk for inpatient hospital services.
‘‘(2) GUIDELINES AND REGULATIONS ON MAR-
KETING.—At the earliest practicable time after the
date of enactment of this section, the Secretary shall
issue guidelines and regulations concerning—
‘‘(A) marketing undertaken by any risk
contracting entity or any primary care case
management program to individuals eligible for
medical assistance under the State plan, and
‘‘(B) information that must be provided by
States or any such entity to individuals eligible
527
Title VI, Subtitle A
for medical assistance under the State plan
with respect to—
‘‘(i) the options and rights of such in-
dividuals to enroll with, and disenroll from,
any such entity, as provided in this section,
and
‘‘(ii) the availability of services from
any such entity (including a list of services
for which such entity is responsible or
must approve and information on how to
obtain services for which such entity is not
responsible).
In developing the guidelines and regulations under
this paragraph, the Secretary shall address the spe-
cial circumstances of children with special health
care needs (as defined in subsection (e)(1)(B)(ii))
and other individuals with special health care needs.
‘‘(3) MODEL CONTRACT.—The Secretary shall
develop a model contract to reflect the requirements
of subsection (b)(3) and such other requirements as
the Secretary determines appropriate.’’
(b) WAIVERS
FROM REQUIREMENTS
ON COORDI-
NATED CARE PROGRAMS.—Section 1915(b) (42 U.S.C.
1396n) is amended—
528
Title VI, Subtitle A
(1) in the matter preceding paragraph (1), by
striking ‘‘as may be necessary’’ and inserting ‘‘, and
section 1933 as may be necessary’’;
(2) in paragraph (1), by striking ‘‘a primary
care case management system or’’;
(3) by striking ‘‘and’’ at the end of paragraph
(3);
(4) by striking the period at the end of para-
graph (4) and inserting ‘‘, and’’; and
(5) by inserting after paragraph (4) the follow-
ing new paragraph:
‘‘(5) to permit a risk contracting entity (as de-
fined in section 1933(a)(3)) to restrict the period in
which individuals enrolled with such entity may ter-
minate such enrollment without cause in accordance
with section 1933(e)(3)(A).’’.
(c) STATE OPTION TO GUARANTEE MEDICAID ELIGI-
BILITY.—Section 1902(e)(2) (42 U.S.C. 1396a(e)(2)) is
amended—
(1) in subparagraph (A), by striking all that
precedes ‘‘(but for this paragraph)’’ and inserting
‘‘In the case of an individual who is enrolled—
‘‘(i) with a qualified health maintenance
organization (as defined in title XIII of the
Public Health Service Act) or with a risk con-
529
Title VI, Subtitle A
tracting 
entity 
(as 
defined 
in 
section
1933(a)(3)), or
‘‘(ii) with any risk contracting entity (as
defined in section 1933(a)(3)) in a State that,
on the effective date of this provision, had in ef-
fect a waiver under section 1115 of require-
ments under this title under which the State
could extend eligibility for medical assistance
for enrollees of such entity, or
‘‘(iii) with an eligible organization with a
contract under section 1876,
and who would’’,
(2) in subparagraph (B), by striking ‘‘organiza-
tion or’’ each place it appears, and
(3) by adding at the end the following new sub-
paragraph:
‘‘(C) The State plan may provide, notwith-
standing any other provision of this title, that
an individual shall be deemed to continue to be
eligible for benefits under this title until the end
of the month following the month in which such
individual would (but for this paragraph) lose
such eligibility because of excess income and re-
sources, if the individual is enrolled with a risk
contracting entity or primary care case manage-
530
Title VI, Subtitle A
ment entity (as those terms are defined in sec-
tion 1933(a)).’’.
(d) ENHANCED MATCH RELATED TO QUALITY RE-
VIEW.—Section 
1903(a)(3)(C) 
(42 
U.S.C.
1396b(a)(3)(C)) is amended—
(1) by striking ‘‘organization or by’’ and insert-
ing ‘‘organization, by’’; and
(2) by striking ‘‘section 1152, as determined by
the Secretary,’’ and inserting ‘‘section 1152, as de-
termined by the Secretary, or by another organiza-
tion approved by the Secretary which is unaffiliated
with the State government or with any risk contract-
ing entity (as defined in section 1933(a)(3)),’’.
(e) ACCUMULATION OF RESERVES BY CERTAIN EN-
TITIES—Any organization referred to in section 329, 330,
or 340, of the Public Health Service Act which has con-
tracted with a State agency as a risk contracting entity
under section 1933(g)(3)(A) of the Social Security Act
may accumulate reserves with respect to payments made
to such organization under section 1933(g)(3)(C) of such
Act.
(f) CONFORMING AMENDMENTS.—
(1) Section 1128(b)(6)(C)(i) (42 U.S.C. 1320a–
7(b)(6)(C)(i)) is amended by striking ‘‘health main-
531
Title VI, Subtitle A
tenance organization’’ and inserting ‘‘risk contract-
ing entity’’.
(2) 
Section 
1902(a)(23) 
(42 
U.S.C.
1396a(a)(23)) is amended by striking ‘‘primary
care-case management system (described in section
1915(b)(1)), a health maintenance organization,’’
and inserting ‘‘primary care case management pro-
gram (as defined in section 1933(a)(1)), a risk con-
tracting entity (as defined in section 1933(a)(3)),’’.
(3) 
Section 
1902(a)(30)(C) 
(42 
U.S.C.
1396a(a)(30)(C)) is amended by striking ‘‘use a uti-
lization’’ and all that follows through ‘‘with the re-
sults’’ and inserting ‘‘provide for independent review
and quality assurance of entities with contracts
under section 1933, in accordance with subsection
(f) of such section 1933, with the results’’.
(4) 
Section 
1902(a)(57) 
(42 
U.S.C.
1396a(a)(57)) is amended by striking ‘‘or health
maintenance organization (as defined in section
1903(m)(1)(A))’’ and inserting ‘‘risk contracting en-
tity, or primary care case management entity (as de-
fined in section 1933(a))’’.
(5) Section 1902(a) (42 U.S.C. 1396a), as
amended by sections 6001(a) and 6011(b), is
amended—
532
Title VI, Subtitle A
(A) by striking ‘‘and’’ at the end of para-
graph (63);
(B) by striking the period at the end of
paragraph (64) and inserting ‘‘; and’’; and
(C) by adding at the end the following new
paragraphs:
‘‘(65) at State option, provide for a primary
care case management program in accordance with
section 1933; and
‘‘(66) at State option, provide for a program
under which the State contracts with risk contract-
ing entities in accordance with section 1933.’’.
(6) Section 1902(p)(2) (42 U.S.C. 1396a(p)(2))
is amended by striking ‘‘health maintenance organi-
zation (as defined in section 1903(m))’’ and insert-
ing ‘‘risk contracting entity (as defined in section
1933(a)(3))’’.
(7) Section 1902(w) (42 U.S.C. 1396a(w)) is
amended—
(A) in paragraph (1), by striking ‘‘section
1903(m)(1)(A)’’ 
and 
inserting 
‘‘section
1933(a)(3)’’, and
(B) in paragraph (2)(E)—
533
Title VI, Subtitle A
(i) by striking ‘‘health maintenance
organization’’ and inserting ‘‘risk contract-
ing entity’’, and
(ii) by striking ‘‘organization’’ and in-
serting ‘‘entity’’.
(8) Section 1903(k) (42 U.S.C. 1396b(k)) is
amended by striking ‘‘health maintenance organiza-
tion which meets the requirements of subsection (m)
of this section’’ and inserting ‘‘risk contracting en-
tity which meets the requirements of section 1933’’.
(9) Section 1903(w)(7)(A)(viii) (42 U.S.C.
1396b(w)(7)(A)(viii)) is amended by striking ‘‘health
maintenance organizations (and other organizations
with contracts under section 1903(m))’’ and insert-
ing ‘‘risk contracting entities with contracts under
section 1933’’.
(10) Section 1905(a) (42 U.S.C. 1396d(a)) is
amended, in the matter preceding clause (i), by in-
serting ‘‘(which may be on a prepaid capitation or
other risk basis)’’ after ‘‘payment’’.
(11) 
Section 
1916(b)(2)(D) 
(42 
U.S.C.
1396o(b)(2)(D)) is amended by striking ‘‘health
maintenance organization (as defined in section
1903(m))’’ and inserting ‘‘risk contracting entity (as
defined in section 1933(a)(3))’’.
534
Title VI, Subtitle A
(12) Section 1925(b)(4)(D)(iv) (42 U.S.C.
1396r–6(b)(4)(D)(iv)) is amended—
(A) in the heading, by striking ‘‘HMO’’
and inserting ‘‘RISK CONTRACTING ENTITY’’,
(B) by striking ‘‘health maintenance orga-
nization (as defined in section 1903(m)(1)(A))’’
and inserting ‘‘risk contracting entity (as de-
fined in section 1933(a)(3)’’, and
(C) by striking ‘‘health maintenance orga-
nization in accordance with section 1903(m)’’
and inserting ‘‘risk contracting entity in accord-
ance with section 1933’’.
(13) Paragraphs (1) and (2) of section 1926(a)
(42 U.S.C. 1396r–7(a)) are each amended by strik-
ing ‘‘health maintenance organizations under section
1903(m)’’ and inserting ‘‘risk contracting entities
under section 1933’’.
(13) Section 1927(j)(1) is amended by striking
‘‘* * * Health Maintenance Organizations, includ-
ing those organizations that contract under section
1903(m)’’ and inserting ‘‘risk contracting entities
(as defined in section 1933(a)(3))’’.
(d) EFFECTIVE DATE.—The amendments made by
this section shall become effective with respect to calendar
quarters beginning on or after January 1, 1995.
535
Title VI, Subtitle A
PART IV—OTHER PROVISIONS
SEC. 6031. PHASED-IN ELIMINATION OF MEDICAID HOS-
PITAL DISPROPORTIONATE SHARE ADJUST-
MENT PAYMENTS.
(a) IN GENERAL.—Section 1923 (42 U.S.C. 1396r–
4) is amended by adding at the end the following new sub-
section:
‘‘(g) PHASED-IN ELIMINATION OF FEDERAL FINAN-
CIAL PARTICIPATION
FOR DISPROPORTIONATE SHARE
ADJUSTMENTS.—Notwithstanding any other provisions of
this section, the amount of payments under section
1903(a) with respect to any payment adjustment made
under this section for hospitals in a State for quarters—
‘‘(1) in fiscal year 1996, shall not exceed 80
percent of the amount otherwise determined under
subsection (f);
‘‘(2) in fiscal year 1997, shall not exceed 60
percent of the amount otherwise determined under
subsection (f);
‘‘(3) in fiscal year 1998, shall not exceed 40
percent of the amount otherwise determined under
subsection (f);
‘‘(4) in fiscal year 1999, shall not exceed 20
percent of the amount otherwise determined under
subsection (f); and
536
Title VI, Subtitle B
‘‘(5) in fiscal year 2000 and each succeeding
fiscal year, shall not exceed the amount otherwise
determined under subsection (f).’’.
(b) IN GENERAL.—The amendments made by sub-
section (a) shall be effective on the date of the enactment
of this Act.
Subtitle B—Medicare
PART I—ENROLLMENT OF MEDICARE
BENEFICIARIES IN QUALIFIED HEALTH PLANS
SEC. 6101. LEGISLATIVE PROPOSAL ON ENROLLING MEDI-
CARE BENEFICIARIES IN QUALIFIED HEALTH
PLANS.
(a) IN GENERAL.—
(1) LEGISLATIVE PROPOSAL.—Not later than 1
year after the date of the enactment of this Act, the
Secretary shall develop and submit to Congress a
proposal for legislation which provides for the enroll-
ment of medicare beneficiaries in qualified health
plans.
(2) MEDICARE BENEFICIARY.—For purposes of
this section, the term ‘‘medicare beneficiary’’ means
an individual who is eligible for benefits under part
A of title XVIII of the Social Security Act and is en-
rolled under part B of such title.
537
Title VI, Subtitle B
(b) CONTENTS OF THE PROPOSAL.—A proposal for
legislation submitted under subsection (a) shall—
(1) provide for an appropriate methodology by
which the Secretary shall make payment to qualified
health plans for the enrollment of medicare bene-
ficiaries;
(2) provide individuals the opportunity to re-
main enrolled in a qualified plan without an inter-
ruption in coverage upon becoming medicare bene-
ficiaries; and
(3) provide medicare beneficiaries with the op-
portunity to enroll in a qualified health plan.
SEC. 6102. INTERIM ENROLLMENT OF MEDICARE BENE-
FICIARIES IN QUALIFIED HEALTH PLANS.
(a) INTERIM ENROLLMENT
OF MEDICARE BENE-
FICIARIES IN QUALIFIED HEALTH PLANS.—
(1) IN GENERAL.—Notwithstanding title XVIII
of the Social Security Act, the Secretary shall pro-
vide for a monthly payment as provided under sub-
section (b)(1) to a qualified health plan on behalf of
enrolled medicare beneficiaries.
(2) MEDICARE BENEFICIARY.—For purposes of
this section, the term ‘‘medicare beneficiary’’ means
an individual who is eligible for benefits under part
538
Title VI, Subtitle B
A of title XVIII of the Social Security Act and is en-
rolled under part B of such title.
(b) PAYMENT SPECIFIED.—
(1) FEDERAL PAYMENT.—
(A) IN
GENERAL.—The amount of pay-
ment specified in this paragraph for an individ-
ual who is enrolled in a qualified health plan is
the lesser of—
(i) the applicable rate specified in sec-
tion 1876(a)(1)(C) of the Social Security
Act (but at 100 percent, rather than 95
percent, of the applicable amount); or
(ii) the monthly premium charged the
individual for coverage under the qualified
health plan.
(B) SOURCE OF PAYMENT.—The payment
to a qualified health plan under this paragraph
for individuals entitled to benefits under part A
and enrolled under part B of title XVIII of the
Social Security Act shall be made from the
Federal Hospital Insurance Trust Fund and
the Federal Supplementary Medical Insurance
Trust Fund, with the allocation to be deter-
mined by the Secretary.
539
Title VI, Subtitle B
(2) INDIVIDUAL’S SHARE.—If the monthly pre-
mium for the qualified health plan in which the indi-
vidual is enrolled is greater than the amount speci-
fied under paragraph (1)(A)(i), the individual shall
be responsible for paying to the qualified health plan
the difference between the monthly premium charged
the individual for coverage under the qualified health
plan and the amount specified in paragraph
(1)(A)(i).
(c) PAYMENTS UNDER THIS SECTION AS SOLE MEDI-
CARE BENEFITS.—Payments made under this section
shall be instead of the amounts that would otherwise be
payable, pursuant to sections 1814(b) and 1833(a) of the
Social Security Act, for services furnished to medicare
beneficiaries.
PART II—ENHANCEMENT OF MEDICARE RISK
CONTRACTS
SEC. 6111. REVISIONS IN THE PAYMENT METHODOLOGY
FOR RISK CONTRACTORS.
Section 4204(b) of the Omnibus Budget Reconcili-
ation Act of 1990 is amended to read as follows:
‘‘(b) REVISIONS IN THE PAYMENT METHODOLOGY
FOR RISK CONTRACTORS.—(1)(A) Not later than 1 year
after the date of the enactment of the Health Equity and
Access Reform Today Act of 1993, the Secretary of
540
Title VI, Subtitle B
Health and Human Services (in this subsection referred
to as the ‘Secretary’) shall submit a proposal to the Con-
gress that provides for revisions to the payment method
to be applied in years beginning with 1996 for organiza-
tions with a risk-sharing contract under section 1876(g)
of the Social Security Act.
‘‘(B) In proposing the revisions required under sub-
paragraph (A), the Secretary shall consider—
‘‘(i) the difference in costs associated with med-
icare beneficiaries with differing health status and
demographic characteristics;
‘‘(ii) the difference in costs associated with
medicare beneficiaries who receive health benefits
from a primary payer other than medicare; and
‘‘(iii) the effects of using alternative geographic
classifications on the determinations of costs associ-
ated with beneficiaries residing in different areas.
‘‘(2) Not later than 3 months after the date of sub-
mittal of the proposal under paragraph (1), the Physician
Payment Review Commission and the Prospective Pay-
ment Assessment Commission shall review the proposal
and shall report to Congress on the appropriateness of the
proposed modifications.’’.
541
Title VI, Subtitle B
SEC. 6112. ADJUSTMENT IN MEDICARE CAPITATION PAY-
MENTS TO TAKE INTO ACCOUNT SECONDARY
PAYER STATUS.
(a) IN GENERAL.—In defining the classes to be used
in determining the annual per capita rate of payment
under section 1876(a)(1)(B) of the Social Security Act to
an eligible organization with a risk-sharing contract under
such section (for months beginning after June 1994), the
Secretary shall treat as a separate class individuals enti-
tled to benefits under title XVIII of such Act with respect
to whom there is a group health plan that is a primary
plan (within the meaning of section 1862(b)(2)(A) of such
Act).
(b) DEADLINE FOR ANNOUNCEMENT OF RATES.—
Not later than May 15, 1994, the Secretary shall an-
nounce annual per capita rates of payment for eligible or-
ganizations described in subsection (a) that take into ac-
count the separate treatment of individuals with respect
to whom there is a group health plan that is a primary
plan.
SEC. 6113. ESTABLISHMENT OF OUTLIER POOL.
(a) GENERAL RULE.—Section 1876(a)(1) (42 U.S.C.
1395mm(a)(1)) is amended by adding at the end the fol-
lowing new subparagraph:
‘‘(G)(i) In the case of an eligible organization with
a risk-sharing contract, the Secretary may make addi-
542
Title VI, Subtitle B
tional payments to the organization equal to not more
than 50 percent of reasonable cost above the threshold
amount of items and services covered under parts A and
B and provided (or paid for) in a year by the organization
to any individual enrolled with the organization under this
section.
‘‘(ii) For purposes of clause (i), the ‘threshold
amount’ is an amount determined by the Secretary from
time to time, adjusted by the geographic factor utilized
in determining payments to the organization under sub-
paragraph (C) and rounded to the nearest multiple of
$100, such that the total amount to be paid under this
subparagraph for a year is estimated to be 5 percent or
less of the total amount to be paid under risk-sharing con-
tracts for services furnished for that year.
‘‘(iii) An eligible organization shall submit a claim for
additional payments under subsection (i) within such time
as the Secretary may specify.’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) applies to services furnished after 1994.
PART III—MEDICARE SELECT
SEC. 6121. MEDICARE SELECT.
(a) AMENDMENTS
TO PROVISIONS RELATING
TO
MEDICARE SELECT POLICIES.—
543
Title VI, Subtitle B
(1) PERMITTING MEDICARE SELECT POLICIES
IN ALL STATES.—Subsection (c) of section 4358 of
the Omnibus Budget Reconciliation Act of 1990 is
hereby repealed.
(2) REQUIREMENTS
OF
MEDICARE
SELECT
POLICIES.—Section 
1882(t)(1) 
(42 
U.S.C.
1395ss(t)(1)) is amended to read as follows:
‘‘(1)(A) If a medicare supplemental policy meets the
requirements of the 1991 NAIC Model Regulation or 1991
Federal Regulation and otherwise complies with the re-
quirements of this section except that—
‘‘(i) the benefits under such policy are re-
stricted to items and services furnished by certain
entities (or reduced benefits are provided when items
or services are furnished by other entities), and
‘‘(ii) in the case of a policy described in sub-
paragraph (C)(i)—
‘‘(I) the benefits under such policy are not
one of the groups or packages of benefits de-
scribed in subsection (p)(2)(A),
‘‘(II) except for nominal copayments im-
posed for services covered under part B of this
title, such benefits include at least the core
group of basic benefits described in subsection
(p)(2)(B), and
544
Title VI, Subtitle B
‘‘(III) an enrollee’s liability under such pol-
icy for physician’s services covered under part
B of this title is limited to the nominal
copayments described in subclause (II),
the policy shall nevertheless be treated as meeting those
requirements if the policy meets the requirements of sub-
paragraph (B).
‘‘(B) A policy meets the requirements of this sub-
paragraph if—
‘‘(i) full benefits are provided for items and
services furnished through a network of entities
which have entered into contracts or agreements
with the issuer of the policy,
‘‘(ii) full benefits are provided for items and
services furnished by other entities if the services are
medically necessary and immediately required be-
cause of an unforeseen illness, injury, or condition
and it is not reasonable given the circumstances to
obtain the services through the network,
‘‘(iii) the network offers sufficient access,
‘‘(iv) the issuer of the policy has arrangements
for an ongoing quality assurance program for items
and services furnished through the network,
545
Title VI, Subtitle B
‘‘(v)(I) the issuer of the policy provides to each
enrollee at the time of enrollment an explanation
of—
‘‘(aa) the restrictions on payment under
the policy for services furnished other than by
or through the network,
‘‘(bb) out of area coverage under the pol-
icy,
‘‘(cc) the policy’s coverage of emergency
services and urgently needed care, and
‘‘(dd) the availability of a policy through
the entity that meets the 1991 Model NAIC
Regulation or 1991 Federal Regulation without
regard to this subsection and the premium
charged for such policy, and
‘‘(II) each enrollee prior to enrollment acknowl-
edges receipt of the explanation provided under
subclause (I), and
‘‘(vi) the issuer of the policy makes available to
individuals, in addition to the policy described in this
subsection, any policy (otherwise offered by the is-
suer to individuals in the State) that meets the 1991
Model NAIC Regulation or 1991 Federal Regulation
and other requirements of this section without re-
gard to this subsection.
546
Title VI, Subtitle B
‘‘(C)(i) A policy described in this subparagraph—
‘‘(I) is offered by an eligible organization (as
defined in section 1876(b)),
‘‘(II) is not a policy or plan providing benefits
pursuant to a contract under section 1876 or an ap-
proved demonstration project described in section
603(c) of the Social Security Amendments of 1983,
section 2355 of the Deficit Reduction Act of 1984,
or section 9412(b) of the Omnibus Budget Reconcili-
ation Act of 1986, and
‘‘(III) provides benefits which, when combined
with benefits which are available under this title, are
substantially similar to benefits under policies of-
fered to individuals who are not entitled to benefits
under this title.
‘‘(ii) In making a determination under subclause (III)
of clause (i) as to whether certain benefits are substan-
tially similar, there shall not be taken into account, except
in the case of preventive services, benefits provided under
policies offered to individuals who are not entitled to bene-
fits under this title which are in addition to the benefits
covered by this title and which are benefits an entity must
provide in order to meet the definition of an eligible orga-
nization under section 1876(b)(1).’’.
547
Title VI, Subtitle B
(b) RENEWABILITY
OF MEDICARE SELECT POLI-
CIES.—Section 1882(q)(1) (42 U.S.C. 1395ss(q)(1)) is
amended—
(1) by striking ‘‘(1) Each’’ and inserting
‘‘(1)(A) Except as provided in subparagraph (B),
each’’;
(2) by redesignating subparagraphs (A) and
(B) as clauses (i) and (ii), respectively; and
(3) by adding at the end the following new sub-
paragraph:
‘‘(B)(i) In the case of a policy that meets the
requirements of subsection (t), an issuer may cancel
or nonrenew such policy with respect to an individ-
ual who leaves the service area of such policy; except
that, if such individual moves to a geographic area
where such issuer, or where an affiliate of such is-
suer, is issuing medicare supplemental policies, such
individual must be permitted to enroll in any medi-
care supplemental policy offered by such issuer or
affiliate that provides benefits comparable to or less
than the benefits provided in the policy being can-
celed or nonrenewed. An individual whose coverage
is canceled or nonrenewed under this subparagraph
shall, as part of the notice of termination or
nonrenewal, be notified of the right to enroll in other
548
Title VI, Subtitle B
medicare supplemental policies offered by the issuer
or its affiliates. 
‘‘(ii) For purposes of this subparagraph, the
term ‘affiliate’ shall have the meaning given such
term by the 1991 NAIC Model Regulation.’’.
(c) CIVIL PENALTY.—Section 1882(t)(2) (42 U.S.C.
1395ss(t)(2)) is amended—
(1) by striking ‘‘(2)’’ and inserting ‘‘(2)(A)’’;
(2) by redesignating subparagraphs (A), (B),
(C), and (D) as clauses (i), (ii), (iii), and (iv), re-
spectively;
(3) in clause (iv), as redesignated—
(A) by striking ‘‘paragraph (1)(E)(i)’’ and
inserting ‘‘paragraph (1)(B)(v)(I); and
(B) by striking ‘‘paragraph (1)(E)(ii)’’ and
inserting ‘‘paragraph (1)(B)(v)(II)’’;
(4) by striking ‘‘the previous sentence’’ and in-
serting ‘‘this subparagraph’’; and
(5) by adding at the end the following new sub-
paragraph:
‘‘(B) If the Secretary determines that an issuer of
a policy approved under paragraph (1) has made a mis-
representation to the Secretary or has provided the Sec-
retary with false information regarding such policy, the
issuer is subject to a civil money penalty in an amount
549
Title VI, Subtitle B
not to exceed $100,000 for each such determination. The
provisions of section 1128A (other than the first sentence
of subsection (a) and other than subsection (b)) shall
apply to a civil money penalty under this subparagraph
in the same manner as such provisions apply to a penalty
or proceeding under section 1128A(a).’’.
(d) EFFECTIVE DATES.—
(1) NAIC STANDARDS.—If, within 6 months
after the date of the enactment of this Act, the Na-
tional Association of Insurance Commissioners
(hereafter in this subsection referred to as the
‘‘NAIC’’) makes changes in the 1991 NAIC Model
Regulation (as defined in section 1882(p)(1)(A) of
the Social Security Act) to incorporate the additional
requirements imposed by the amendments made by
this section, section 1882(g)(2)(A) of such Act shall
be applied in each State, effective for policies issued
to policyholders on and after the date specified in
paragraph (3), as if the reference to the Model Reg-
ulation adopted on June 6, 1979, were a reference
to the 1991 NAIC Model Regulation (as so defined)
as changed under this paragraph (such changed
Regulation referred to in this subsection as the
‘‘1994 NAIC Model Regulation’’).
550
Title VI, Subtitle B
(2) SECRETARY
STANDARDS.—If the NAIC
does not make changes in the 1991 NAIC Model
Regulation (as so defined) within the 6-month period
specified in paragraph (1), the Secretary of Health
and Human Services (hereafter in this subsection re-
ferred to as the ‘‘Secretary’’) shall promulgate a reg-
ulation and section 1882(g)(2)(A) of the Social Se-
curity Act shall be applied in each State, effective
for policies issued to policyholders on and after the
date specified in paragraph (3), as if the reference
to the Model Regulation adopted on June 6, 1979,
were a reference to the 1991 NAIC Model Regula-
tion (as so defined) as changed by the Secretary
under this paragraph (such changed Regulation re-
ferred to in this subsection as the ‘‘1994 Federal
Regulation’’).
(3) DATE SPECIFIED.—
(A) IN
GENERAL.—Subject to subpara-
graph (B), the date specified in this paragraph
for a State is the earlier of—
(i) the date the State adopts the 1994
NAIC Model Regulation or the 1994 Fed-
eral Regulation, or
(ii) 1 year after the date the NAIC or
the Secretary first adopts such regulations.
551
Title VI, Subtitle B
(B) ADDITIONAL LEGISLATIVE ACTION RE-
QUIRED.—In the case of a State which the Sec-
retary identifies, in consultation with the NAIC,
as—
(i) requiring State legislation (other
than legislation appropriating funds) in
order for medicare supplemental policies to
meet the 1994 NAIC Model Regulation or
the 1994 Federal Regulation, but
(ii) having a legislature which is not
scheduled to meet in 1995 in a legislative
session in which such legislation may be
considered,
the date specified in this paragraph is the first
day of the first calendar quarter beginning after
the close of the first legislative session of the
State legislature that begins on or after Janu-
ary 1, 1995. For purposes of the previous sen-
tence, in the case of a State that has a 2-year
legislative session, each year of such session
shall be deemed to be a separate regular session
of the State legislature.
PART IV—OTHER PROVISIONS
SEC. 6131. MEDICARE PART B PREMIUM.
Section 1839(e) (42 U.S.C. 1395r(e)) is amended—
552
Title VI, Subtitle B
(1) in paragraph (1)(A)—
(A) by striking ‘‘(A)’’; and
(B) by striking ‘‘and prior to January
1999’’;
(2) in paragraph (1)(B), by striking ‘‘(B)’’ and
inserting ‘‘(2)’’; and
(3) by striking paragraph (2).
SEC. 6132. 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 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 RECAPTURE AMOUNT.—In the
case of an individual, if the modified adjusted gross in-
come of the taxpayer for the taxable year exceeds the
threshold amount, such taxpayer shall pay (in addition to
any other amount imposed by this subtitle) a recapture
amount for such taxable year equal to the sum of the ag-
gregate of the medicare part B recapture amounts (if any)
for months during such year that a premium is paid under
553
Title VI, Subtitle B
part B of title XVIII of the Social Security Act for the
coverage of the individual under such part.
‘‘(b) MEDICARE PART B PREMIUM RECAPTURE
AMOUNT FOR MONTH.—For purposes of this section, the
medicare part B premium recapture amount for any
month is the amount equal to the excess of—
‘‘(1) 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
‘‘(2) the total monthly premium under section
1839 of the Social Security Act (determined without
regard to subsections (b) and (f) of section 1839 of
such Act).
‘‘(c) PHASE-IN
OF RECAPTURE AMOUNT.—If the
modified adjusted gross income of the taxpayer for any
taxable year exceeds the threshold amount by less than
$10,000, the recapture amount imposed by this section for
such taxable year shall be an amount which bears the
same ratio to the recapture amount which would (but for
this subsection) be imposed by this section for such tax-
able year as such excess bears to $10,000.
‘‘(d) OTHER DEFINITIONS AND SPECIAL RULES.—
For purposes of this section—
554
Title VI, Subtitle B
‘‘(1) THRESHOLD AMOUNT.—The term ‘thresh-
old amount’ means—
‘‘(A) except as otherwise provided in this
paragraph, $90,000,
‘‘(B) $115,000 in the case of a joint re-
turn, and
‘‘(C) zero in the case of a taxpayer who—
‘‘(i) is married (as determined under
section 7703) but does not file a joint re-
turn for such year, and
‘‘(ii) does not live apart from his
spouse at all times during the taxable year.
‘‘(2) MODIFIED
ADJUSTED
GROSS
INCOME.—
The term ‘modified adjusted gross income’ means
adjusted gross income—
‘‘(A) determined without regard to sections
135, 911, 931, and 933, and
‘‘(B) increased by the amount of interest
received or accrued by the taxpayer during the
taxable year which is exempt from tax.
‘‘(3) JOINT RETURNS.—In the case of a joint
return—
‘‘(A) the recapture amount under sub-
section (a) shall be the sum of the recapture
555
Title VI, Subtitle B
amounts determined separately for each spouse,
and
‘‘(B) subsections (a) and (c) shall be ap-
plied by taking into account the combined modi-
fied adjusted gross income of the spouses.
‘‘(4) COORDINATION
WITH
OTHER
PROVI-
SIONS.—
‘‘(A) TREATED AS TAX FOR SUBTITLE F.—
For purposes of subtitle F, the recapture
amount imposed by this section shall be treated
as if it were a tax imposed by section 1.
‘‘(B) NOT TREATED AS TAX FOR CERTAIN
PURPOSES.—The recapture amount imposed by
this section shall not be treated as a tax im-
posed by this chapter for purposes of determin-
ing—
‘‘(i) the amount of any credit allow-
able under this chapter, or
‘‘(ii) the amount of the minimum tax
under section 55.’’.
(b) TRANSFERS TO SUPPLEMENTAL MEDICAL IN-
SURANCE TRUST FUND.—
(1) IN
GENERAL.—There are hereby appro-
priated to the Supplemental Medical Insurance
Trust Fund amounts equivalent to the aggregate in-
556
Title VI, Subtitle B
crease in liabilities under chapter 1 of the Internal
Revenue Code of 1986 that are attributable to the
application of section 59B(a) of such Code, as added
by this section.
(2) TRANSFERS.—The amounts appropriated
by paragraph (1) to the Supplemental Medical In-
surance Trust Fund shall be transferred from time
to time (but not less frequently than quarterly) from
the general fund of the Treasury on the basis of es-
timates made by the Secretary of the Treasury of
the amounts referred to in paragraph (1). Any quar-
terly payment shall be made on the first day of such
quarter and shall take into account the recapture
amounts referred to in such section 59B(a) for such
quarter. Proper adjustments shall be made in the
amounts subsequently transferred to the extent prior
estimates were in excess of or less than the amounts
required to be transferred.
(c) REPORTING REQUIREMENTS.—
(1)(A) Paragraph (1) of section 6050F(a) of
the Internal Revenue Code of 1986 (relating to re-
turns relating to social security benefits) is amended
by striking ‘‘and’’ at the end of subparagraph (B)
and by inserting after subparagraph (C) the follow-
ing new subparagraph:
557
Title VI, Subtitle B
‘‘(D) the number of months during the cal-
endar year for which a premium was paid under
part B of title XVIII of the Social Security Act
for the coverage of such individual under such
part, and’’.
(B) Paragraph (2) of section 6050F(b) of such
Code is amended to read as follows:
‘‘(2) the information required to be shown on
such return with respect to such individual.’’.
(C) Subparagraph (A) of section 6050F(c)(1)
of such Code is amended by inserting before the
comma ‘‘and in the case of the information specified
in subsection (a)(1)(D)’’.
(D) The heading for section 6050F of such
Code is amended by inserting ‘‘AND
MEDICARE
PART B COVERAGE’’ before the period.
(E) The item relating to section 6050F in the
table of sections for subpart B of part III of sub-
chapter A of chapter 61 of such Code is amended by
inserting ‘‘and medicare part B coverage’’ before the
period.
(d) WAIVER OF ESTIMATED TAX PENALTIES FOR
1996.—No addition to tax shall be imposed under section
6654 of the Internal Revenue Code of 1986 (relating to
failure to pay estimated income tax) for any period before
558
Title VI, Subtitle B
April 16, 1997, with respect to any underpayment to the
extent that such underpayment resulted from section
59B(a) of the Internal Revenue Code of 1986, as added
by this section.
(e) 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.’’.
(f) EFFECTIVE DATE.—The amendments made by
this section shall apply to periods after December 31,
1994, in taxable years ending after such date.
SEC. 6133. PERMANENT 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 years
1992 through 1998’’ and inserting ‘‘fiscal year 1992, and
each subsequent fiscal year,’’.
SEC. 6134. PERMANENT REDUCTION IN PAYMENTS 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 ‘‘fiscal
years 1991 through 1998’’ and inserting ‘‘fiscal year
1991, and each subsequent fiscal year’’.
559
Title VI, Subtitle B
SEC. 6135. IMPOSITION OF COINSURANCE ON LABORATORY
SERVICES.
(a) IN GENERAL.—Paragraphs (1)(D) and (2)(D) of
section 1833(a) (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. 6136. IMPOSITION OF COPAYMENT FOR CERTAIN
HOME HEALTH VISITS.
(a) IN GENERAL.—
(1) PART
A.—Section 1813(a) (42 U.S.C.
1395e(a)) is amended by adding at the end the fol-
lowing new paragraph:
‘‘(5) The amount payable for home health services
furnished to an individual under this part shall be reduced
by a copayment amount equal to 20 percent of the average
of all per visit costs for home health services furnished
under this title determined under section 1861(v)(1)(L)
(as determined by the Secretary on a prospective basis for
services furnished during a calendar year), unless such
services were furnished to the individual during the 30-
560
Title VI, Subtitle B
day period that begins on the date the individual is dis-
charged as an inpatient from a hospital.’’.
(2) PART B.—Section 1833(a)(2) (42 U.S.C.
1395l(a)(2)) is amended—
(A) in subparagraph (A), by striking ‘‘to
home health services,’’ and by striking the
comma after ‘‘opinion)’’;
(B) in subparagraph (D), by striking
‘‘and’’ at the end;
(C) in subparagraph (E), by striking the
semicolon at the end and inserting ‘‘; and’’; and
(D) by adding at the end the following new
subparagraph:
‘‘(F) with respect to home health serv-
ices—
‘‘(i) the lesser of —
‘‘(I) the reasonable cost of such
services, as determined under section
1861(v), or
‘‘(II) the customary charges with
respect to such services,
less the amount a provider may charge as
described 
in 
clause 
(ii) 
of 
section
1866(a)(2)(A),
561
Title VI, Subtitle B
‘‘(ii) if such services are furnished by
a public provider of services, or by another
provider which demonstrates to the satis-
faction of the Secretary that a significant
portion of its patients are low-income (and
requests that payment be made under this
clause), free of charge or at nominal
charges to the public, the amount deter-
mined 
in 
accordance 
with 
section
1814(b)(2), or
‘‘(iii) if (and for so long as) the condi-
tions described in section 1814(b)(3) are
met, the amounts determined under the re-
imbursement system described in such sec-
tion,
less a copayment amount equal to 20 percent of
the average of all per visit costs for home
health services furnished under this title deter-
mined under section 1861(v)(1)(L) (as deter-
mined by the Secretary on a prospective basis
for services furnished during a calendar year),
unless such services were furnished to the indi-
vidual during the 30-day period that begins on
the date the individual is discharged as an inpa-
tient from a hospital;’’.
562
Title VI, Subtitle B
(3) 
PROVIDER
CHARGES.—Section
1866(a)(2)(A)(i) (42 U.S.C. 1395cc(a)(2)(A)(i)) is
amended—
(A) by striking ‘‘deduction or coinsurance’’
and inserting 
‘‘deduction, 
coinsurance, 
or
copayment’’; and
(B) by striking ‘‘or (a)(4)’’ and inserting
‘‘(a)(4), or (a)(5)’’.
(b) EFFECTIVE DATE.—The amendments made by
subsection (a) shall apply to home health services fur-
nished on or after January 1, 1995.
SEC. 6137. PHASED-IN ELIMINATION OF MEDICARE HOS-
PITAL DISPROPORTIONATE SHARE ADJUST-
MENT PAYMENTS.
Section 1886(d)(5)(F) of the Social Security Act (42
U.S.C. 1395ww(d)(5)(F)) is amended—
(1) in clause (ii), by striking ‘‘The amount of
such payment’’ and inserting ‘‘Subject to clause (ix),
the amount of such payment’’; and
(2) by adding at the end the following new
clause:
‘‘(ix) The amount of the additional payment made
under this paragraph for a discharge shall be equal to—
563
Title VI, Subtitle B
‘‘(I) for discharges occurring during fiscal year
1996, 80 percent of the amount otherwise deter-
mined for the discharge under clause (ii);
‘‘(II) for discharges occurring during fiscal year
1997, 60 percent of the amount otherwise deter-
mined for the discharge under clause (ii);
‘‘(III) for discharges occurring during fiscal
year 1998, 40 percent of the amount otherwise de-
termined for the discharge under clause (ii);
‘‘(IV) for discharges occurring during fiscal
year 1999, 20 percent of the amount otherwise de-
termined for the discharge under clause (ii); and
‘‘(V) for discharges occurring during fiscal year
2000, and each subsequent fiscal year, 0 percent of
the amount otherwise determined for the discharge
under clause (ii).’’.
SEC. 6138. ELIMINATION OF BAD DEBT RECOGNITION FOR
HOSPITAL SERVICES.
(a) IN GENERAL.—Effective October 1, 1995, in
making any payment to hospitals under title XVIII of the
Social Security Act, the Secretary shall discontinue pay-
ments under title XVIII of such Act to providers of service
for reasonable costs relating to unrecovered costs associ-
ated with unpaid deductible and coinsurance amounts in-
curred under such title.
564
Title VI, Subtitle B
(b) CONFORMING AMENDMENTS.—
(1) IN GENERAL.—(A) Subsection (c) of section
4008 of the Omnibus Budget Reconciliation Act of
1987 is repealed.
(B) Section 1833 (42 U.S.C. 1395l) is amend-
ed—
(i) in subsection (l)(5), by striking sub-
paragraph (C); and
(ii) in subsection (r), by striking paragraph
(4).
(2) EFFECTIVE DATE.—The amendments made
by paragraph (1) shall take effect on October 1,
1995.
SEC. 6139. MEDICARE AS SECONDARY PAYER.
(a) PERMANENT EXTENSION OF DATA MATCH PRO-
GRAM.—
(1) IN GENERAL.—Section 1862(b)(5)(C) (42
U.S.C. 1395y(b)(5)(C)) is amended by striking
clause (iii).
(2) PERMANENT EXTENSION OF CERTAIN TAX-
PAYER
IDENTITY
INFORMATION
DISCLOSURE
RE-
QUIREMENTS.—Section 6103(l)(12) of the Internal
Revenue Code of 1986 is amended by striking sub-
paragraph (F).
565
Title VII
(b) PERMANENT EXTENSION OF MEDICARE SECOND-
ARY
PAYER
TO
DISABLED
BENEFICIARIES.—Section
1862(b)(1)(B)(iii) (42 U.S.C. 1395y(b)(1)(B)(iii)), is
amended—
(1) in the heading, by striking ‘‘SUNSET’’ and
inserting ‘‘EFFECTIVE DATE’’; and
(2) by striking ‘‘, and October 1, 1998’’.
(c) PERMANENT EXTENSION OF 18-MONTH RULE
FOR ESRD BENEFICIARIES.—The second sentence of sec-
tion 1862(b)(1)(C) (42 U.S.C. 1395y(b)(1)(C)) is amend-
ed by striking ‘‘and on or before October 1, 1998,’’.
TITLE VII—PATIENT’S RIGHT TO
SELF-DETERMINATION 
RE-
GARDING HEALTH CARE
SEC. 7001. TREATMENT OF ADVANCE DIRECTIVES.
(a) IN GENERAL.—An advance directive that fails to
meet the formalities of execution, form, or language re-
quired by State law shall be given effect to the extent that
the treating health care provider in good faith believes that
such directive constitutes a reliable expression of the wish-
es of the individual executing such directive concerning
such individual’s health care.
(b) CONSTRUCTION.—Nothing in subsection (a) may
be construed to authorize the administration, withholding,
566
Title VII
or withdrawal of health care otherwise prohibited by the
laws of the State.
SEC. 7002. EFFECT ON OTHER LAWS.
Written policies and written information adopted by
health care providers pursuant to sections 4206 and 4751
of the Omnibus Budget Reconciliation Act of 1990 (Public
Law 101–508), shall be modified within 6 months of en-
actment of this title to conform to the provisions of this
title.
SEC. 7003. INFORMATION PROVIDED TO CERTAIN INDIVID-
UALS.
The Secretary shall provide on a periodic basis writ-
ten information regarding an individual’s right to consent
to, or to decline, medical treatment as provided in this
title to individual’s who are beneficiaries under titles II,
XVI, XVIII, and XIX of the Social Security Act.
SEC. 7004. RECOMMENDATIONS TO THE CONGRESS ON IS-
SUES RELATING TO A PATIENT’S RIGHT OF
SELF-DETERMINATION.
Not later than 180 days after the date of the enact-
ment of this Act the Secretary shall study the implementa-
tion of sections 4206 and 4751 of the Omnibus Budget
Reconciliation Act of 1990 (Public Law 101–508) and
provide recommendations to the Congress concerning the
results of the study and the medical, legal, ethical, social,