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June of the previous year reduced (but not below zero) by
2.0 percentage points.
SEC. 5524. OXYGEN AND OXYGEN EQUIPMENT.
(a) IN GENERAL.—Section 1834(a)(9)(B) (42 U.S.C.
1395m(a)(9)(B)) is amended—
(1) by striking ‘‘and’’ at the end of clause (iii);
(2) in clause (iv)—
(A) by striking ‘‘a subsequent year’’ and in-
serting ‘‘1995, 1996, and 1997’’, and
(B) by striking the period at the end and
inserting a semicolon; and
(3) by adding at the end the following new
clauses:
‘‘(v) in 1998, 75 percent of the amount
determined under this subparagraph for
1997;
‘‘(vi) in 1999, 62.5 percent of the
amount determined under this subpara-
graph for 1997; and
‘‘(vii) for each subsequent year, the
amount determined under this subpara-
graph for the preceding year increased by
the covered item update for such subsequent
year.’’.
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(b) UPGRADED DURABLE MEDICAL EQUIPMENT.—
Section 1834(a) (42 U.S.C. 1395m(a)) is amended by in-
serting after paragraph (15) the following new paragraph:
‘‘(16) CERTAIN UPGRADED ITEMS.—
‘‘(A) INDIVIDUAL’S RIGHT TO CHOOSE UP-
GRADED ITEM.—Notwithstanding any other pro-
vision of law, effective on the date on which the
Secretary issues regulations under subparagraph
(C), an individual may purchase or rent from a
supplier an item of upgraded durable medical
equipment for which payment would be made
under this subsection if the item were a standard
item.
‘‘(B) PAYMENTS TO SUPPLIER.—In the case
of the purchase or rental of an upgraded item
under subparagraph (A)—
‘‘(i) the supplier shall receive payment
under this subsection with respect to such
item as if such item were a standard item;
and
‘‘(ii) the individual purchasing or
renting the item shall pay the supplier an
amount equal to the difference between the
supplier’s charge and the amount under
clause (i).
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In no event may the supplier’s charge for an up-
graded item exceed the applicable fee schedule
amount (if any) for such item.
‘‘(C) 
CONSUMER
PROTECTION
SAFE-
GUARDS.—The Secretary shall issue regulations
providing for consumer protection standards
with respect to the furnishing of upgraded equip-
ment under subparagraph (A). Such regulations
shall provide for—
‘‘(i) determination of fair market
prices with respect to an upgraded item;
‘‘(ii) full disclosure of the availability
and price of standard items and proof of re-
ceipt of such disclosure information by the
beneficiary before the furnishing of the up-
graded item;
‘‘(iii) conditions of participation for
suppliers in the simplified billing arrange-
ment;
‘‘(iv) sanctions of suppliers who are de-
termined to engage in coercive or abusive
practices, including exclusion; and
‘‘(v) such other safeguards as the Sec-
retary determines are necessary.’’.
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(c) ESTABLISHMENT OF CLASSES FOR PAYMENT.—
Section 1848(a)(9) (42 U.S.C. 1395m(a)(9)) is amended by
adding at the end the following:
‘‘(D) AUTHORITY TO CREATE CLASSES.—
‘‘(i) IN
GENERAL.—Subject to clause
(ii), the Secretary may establish separate
classes for any item of oxygen and oxygen
equipment and separate national limited
monthly payment rates for each of such
classes.
‘‘(ii) BUDGET NEUTRALITY.—The Sec-
retary may take actions under clause (i)
only to the extent such actions do not result
in expenditures for any year to be more or
less than the expenditures which would have
been made if such actions had not been
taken.’’.
(d) STANDARDS AND ACCREDITATION.—The Secretary
shall as soon as practicable establish service standards and
accreditation requirements for persons seeking payment
under part B of title XVIII of the Social Security Act for
the providing of oxygen and oxygen equipment to bene-
ficiaries within their homes.
(e) ACCESS TO HOME OXYGEN EQUIPMENT.—
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(1) STUDY.—The Comptroller General of the
United States shall study issues relating to access to
home oxygen equipment and shall, within 6 months
after the date of the enactment of this Act, report to
the Committee on Ways and Means of the House of
Representatives and the Committee on Finance of the
Senate the results of the study, including rec-
ommendations (if any) for legislation.
(2) PEER REVIEW EVALUATION.—The Secretary
of Health and Human Services shall arrange for peer
review organizations established under section 1154 of
the Social Security Act to evaluate access to, and
quality of, home oxygen equipment.
(f) DEMONSTRATION PROJECT.—Not later than 6
months after the date of enactment of this Act, the Secretary
shall, in consultation with appropriate organizations, initi-
ate a demonstration project in which the Secretary utilizes
a competitive bidding process for the furnishing of home
oxygen equipment to medicare beneficiaries under title
XVIII of the Social Security Act.
(g) EFFECTIVE DATE.—
(1) OXYGEN.—The amendments made by sub-
section (a) shall apply to items furnished on and
after January 1, 1998.
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(2) OTHER PROVISIONS.—The amendments made
by this section other than subsection (a) shall take ef-
fect on the date of the enactment of this Act.
SEC. 5525. UPDATES FOR AMBULATORY SURGICAL SERV-
ICES.
Section 1833(i)(2)(C) (42 U.S.C. 1395l(i)(2)(C)) is
amended by inserting at the end the following: ‘‘In each
of the fiscal years 1998 through 2002, the increase under
this subparagraph shall be reduced (but not below zero) by
2.0 percentage points.’’.
SEC. 
5526. 
REIMBURSEMENT 
FOR 
DRUGS 
AND
BIOLOGICALS.
(a) IN GENERAL.—Section 1842 (42 U.S.C. 1395u) is
amended by inserting after subsection (n) the following new
subsection:
‘‘(o)(1) If a physician’s, supplier’s, or any other per-
son’s bill or request for payment for services includes a
charge for a drug or biological for which payment may be
made under this part and the drug or biological is not paid
on a cost or prospective payment basis as otherwise pro-
vided in this part, the amount payable for the drug or bio-
logical is equal to 95 percent of the average wholesale price,
as specified by the Secretary.
‘‘(2)(A) In the case of a drug or biological for which
payment was under this part on May 1, 1997, the amount
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‘‘(4) The Secretary shall conduct such studies or sur-
veys as are necessary to determine the average wholesale
price (and such other price as the Secretary determines ap-
propriate) of any drug or biological for purposes of para-
graph (1). The Secretary shall, not later than 6 months
after the date of the enactment of this subsection, report to
the appropriate committees of Congress the results of the
studies and surveys conducted under this paragraph.’’.
(b) EFFECTIVE DATE.—The amendments made by sub-
section (a) apply to drugs and biologicals furnished on or
after January 1, 1998.
CHAPTER 3—PART B PREMIUM AND
RELATED PROVISIONS
SEC. 5541. PART B PREMIUM.
(a) IN GENERAL.—Section 1839(a)(3) (42 U.S.C.
1395r(a)(3)) is amended by striking the first 3 sentences
and inserting the following: ‘‘The Secretary, during Sep-
tember of each year, shall determine and promulgate a
monthly premium rate for the succeeding calendar year that
is equal to 50 percent of the monthly actuarial rate for en-
rollees age 65 and over, determined according to paragraph
(1), for that succeeding calendar year.’’.
(b) CONFORMING AND TECHNICAL AMENDMENTS.—
(1) SECTION
1839.—Section 1839 (42 U.S.C.
1395r) is amended—
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(A) in subsection (a)(2), by striking ‘‘(b)
and (e)’’ and inserting ‘‘(b), (c), and (f)’’,
(B) in the last sentence of subsection
(a)(3)—
(i) by inserting ‘‘rate’’ after ‘‘pre-
mium’’, and
(ii) by striking ‘‘and the derivation of
the dollar amounts specified in this para-
graph’’,
(C) by striking subsection (e), and
(D) by redesignating subsection (g) as sub-
section (e) and inserting that subsection after
subsection (d).
(2) SECTION
1844.—Subparagraphs (A)(i) and
(B)(i) of section 1844(a)(1) (42 U.S.C. 1395w(a)(1))
are each amended by striking ‘‘or 1839(e), as the case
may be’’.
SEC. 5542. INCOME-RELATED REDUCTION IN MEDICARE
SUBSIDY.
(a) IN GENERAL.—Section 1839 (42 U.S.C. 1395r) is
amended by adding at the end the following:
‘‘(h)(1) Notwithstanding the previous subsections of
this section, in the case of an individual whose modified
adjusted gross income for a taxable year ending with or
within a calendar year (as initially determined by the Sec-
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retary in accordance with paragraph (3)) exceeds the
threshold amount described in paragraph (5)(B), the Sec-
retary shall increase the amount of the monthly premium
for months in the calendar year by an amount equal to
the difference between—
‘‘(A) 200 percent of the monthly actuarial rate
for enrollees age 65 and over as determined under
subsection (a)(1) for that calendar year; and
‘‘(B) the total of the monthly premiums paid by
the individual under this section (determined without
regard to subsection (b)) during such calendar year.
‘‘(2) In the case of an individual described in para-
graph (1) whose modified adjusted gross income exceeds the
threshold amount by less than $50,000, the amount of the
increase in the monthly premium applicable under para-
graph (1) shall be an amount which bears the same ratio
to the amount of the increase described in paragraph (1)
(determined without regard to this paragraph) as such ex-
cess bears to $50,000.
‘‘(3) The Secretary shall make an initial determina-
tion of the amount of an individual’s modified adjusted
gross income for a taxable year ending with or within a
calendar year for purposes of this subsection as follows:
‘‘(A) Not later than September 1 of the year pre-
ceding the year, the Secretary shall provide notice to
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each individual whom the Secretary finds (on the
basis of the individual’s actual modified adjusted
gross income for the most recent taxable year for
which such information is available or other informa-
tion provided to the Secretary by the Secretary of the
Treasury) will be subject to an increase under this
subsection that the individual will be subject to such
an increase, and shall include in such notice the Sec-
retary’s estimate of the individual’s modified adjusted
gross income for the year.
‘‘(B) If, during the 30-day period beginning on
the date notice is provided to an individual under
subparagraph (A), the individual provides the Sec-
retary with information on the individual’s antici-
pated modified adjusted gross income for the year, the
amount initially determined by the Secretary under
this paragraph with respect to the individual shall be
based on the information provided by the individual.
‘‘(C) If an individual does not provide the Sec-
retary with information under subparagraph (B), the
amount initially determined by the Secretary under
this paragraph with respect to the individual shall be
the amount included in the notice provided to the in-
dividual under subparagraph (A).
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‘‘(4)(A) If the Secretary determines (on the basis of
final information provided by the Secretary of the Treas-
ury) that the amount of an individual’s actual modified
adjusted gross income for a taxable year ending with or
within a calendar year is less than or greater than the
amount initially determined by the Secretary under para-
graph (3), the Secretary shall increase or decrease the
amount of the individual’s monthly premium under this
section (as the case may be) for months during the following
calendar year by an amount equal to 1⁄12 of the difference
between—
‘‘(i) the total amount of all monthly premiums
paid by the individual under this section during the
previous calendar year; and
‘‘(ii) the total amount of all such premiums
which would have been paid by the individual during
the previous calendar year if the amount of the indi-
vidual’s modified adjusted gross income initially de-
termined under paragraph (3) were equal to the ac-
tual amount of the individual’s modified adjusted
gross income determined under this paragraph.
‘‘(B)(i) In the case of an individual for whom the
amount initially determined by the Secretary under para-
graph (3) is based on information provided by the individ-
ual under subparagraph (B) of such paragraph, if the Sec-
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retary determines under subparagraph (A) that the amount
of the individual’s actual modified adjusted gross income
for a taxable year is greater than the amount initially de-
termined under paragraph (3), the Secretary shall increase
the amount otherwise determined for the year under sub-
paragraph (A) by interest in an amount equal to the sum
of the amounts determined under clause (ii) for each of the
months described in clause (ii).
‘‘(ii) Interest shall be computed for any month in an
amount determined by applying the underpayment rate es-
tablished under section 6621 of the Internal Revenue Code
of 1986 (compounded daily) to any portion of the difference
between the amount initially determined under paragraph
(3) and the amount determined under subparagraph (A)
for the period beginning on the first day of the month begin-
ning after the individual provided information to the Sec-
retary under subparagraph (B) of paragraph (3) and end-
ing 30 days before the first month for which the individual’s
monthly premium is increased under this paragraph.
‘‘(iii) Interest shall not be imposed under this subpara-
graph if the amount of the individual’s modified adjusted
gross income provided by the individual under subpara-
graph (B) of paragraph (3) was not less than the individ-
ual’s modified adjusted gross income determined on the
basis of information shown on the return of tax imposed
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by chapter 1 of the Internal Revenue Code of 1986 for the
taxable year involved.
‘‘(C) In the case of an individual who is not enrolled
under this part for any calendar year for which the individ-
ual’s monthly premium under this section for months dur-
ing the year would be increased pursuant to subparagraph
(A) if the individual were enrolled under this part for the
year, the Secretary may take such steps as the Secretary
considers appropriate to recover from the individual the
total amount by which the individual’s monthly premium
for months during the year would have been increased
under subparagraph (A) if the individual were enrolled
under this part for the year.
‘‘(D) In the case of a deceased individual for whom
the amount of the monthly premium under this section for
months in a year would have been decreased pursuant to
subparagraph (A) if the individual were not deceased, the
Secretary shall make a payment to the individual’s surviv-
ing spouse (or, in the case of an individual who does not
have a surviving spouse, to the individual’s estate) in an
amount equal to the difference between—
‘‘(i) the total amount by which the individual’s
premium would have been decreased for all months
during the year pursuant to subparagraph (A); and
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‘‘(ii) the amount (if any) by which the individ-
ual’s premium was decreased for months during the
year pursuant to subparagraph (A).
‘‘(5) In this subsection, the following definitions apply:
‘‘(A) The term ‘modified adjusted gross income’
means adjusted gross income (as defined in section 62
of the Internal Revenue Code of 1986)—
‘‘(i) determined without regard to sections
135, 911, 931, and 933 of such Code, and
‘‘(ii) increased by the amount of interest re-
ceived or accrued by the taxpayer during the
taxable year which is exempt from tax under
such Code.
‘‘(B) The term ‘threshold amount’ means—
‘‘(i) except as otherwise provided in this
paragraph, $50,000,
‘‘(ii) $75,000, in the case of a joint return
(as defined in section 7701(a)(38) of such Code),
and
‘‘(iii) zero in the case of a taxpayer who—
‘‘(I) is married at the close of the tax-
able year but does not file a joint return (as
so defined) for such year, and
‘‘(II) does not live apart from his
spouse at all times during the taxable year.
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‘‘(6)(A) The Secretary shall transfer amounts received
pursuant to this subsection to the Federal Hospital Insur-
ance Trust Fund.
‘‘(B) In applying section 1844(a), amounts attrib-
utable to clause (i) shall not be counted in determining the
dollar amount of the premium per enrollee under para-
graph (1)(A) or (1)(B).’’.
(b) CONFORMING AMENDMENTS.—(1) Section 1839 (42
U.S.C. 1395r) is amended—
(A) in subsection (a)(2), by inserting ‘‘or section
subsection (h)’’ after ‘‘subsections (b) and (e)’’;
(B) in subsection (a)(3) of section 1839(a), by
inserting ‘‘or subsection (h)’’ after ‘‘subsection (e)’’;
(C) in subsection (b), inserting ‘‘(and as in-
creased under subsection (h))’’ after ‘‘subsection (a) or
(e)’’; and
(D) in subsection (f), by striking ‘‘if an individ-
ual’’ and inserting the following: ‘‘if an individual
(other than an individual subject to an increase in
the monthly premium under this section pursuant to
subsection (h))’’.
(2) Section 1840(c) (42 U.S.C. 1395r(c)) is amended
by inserting ‘‘or an individual determines that the estimate
of modified adjusted gross income used in determining
whether the individual is subject to an increase in the
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monthly premium under section 1839 pursuant to sub-
section (h) of such section (or in determining the amount
of such increase) is too low and results in a portion of the
premium not being deducted,’’ before ‘‘he may’’.
(c) REPORTING REQUIREMENTS FOR SECRETARY OF
THE TREASURY.—
(1) IN GENERAL.—Subsection (l) of section 6103
of the Internal Revenue Code of 1986 (relating to con-
fidentiality and disclosure of returns and return in-
formation) is amended by adding at the end the fol-
lowing new paragraph:
‘‘(16) DISCLOSURE OF RETURN INFORMATION TO
CARRY OUT INCOME-RELATED REDUCTION IN MEDI-
CARE PART B PREMIUM.—
‘‘(A) IN
GENERAL.—The Secretary may,
upon written request from the Secretary of
Health and Human Services, disclose to officers
and employees of the Health Care Financing Ad-
ministration return information with respect to
a taxpayer who is required to pay a monthly
premium under section 1839 of the Social Secu-
rity Act. Such return information shall be lim-
ited to—
‘‘(i) taxpayer identity information
with respect to such taxpayer,
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‘‘(ii) the filing status of such taxpayer,
‘‘(iii) the adjusted gross income of such
taxpayer,
‘‘(iv) the amounts excluded from such
taxpayer’s gross income under sections 135
and 911,
‘‘(v) the interest received or accrued
during the taxable year which is exempt
from the tax imposed by chapter 1 to the ex-
tent such information is available, and
‘‘(vi) the amounts excluded from such
taxpayer’s gross income by sections 931 and
933 to the extent such information is avail-
able.
‘‘(B) RESTRICTION ON USE OF DISCLOSED
INFORMATION.—Return 
information 
disclosed
under subparagraph (A) may be used by officers
and employees of the Health Care Financing Ad-
ministration only for the purposes of, and to the
extent necessary in, establishing the appropriate
monthly premium under section 1839 of the So-
cial Security Act.’’.
(2) 
CONFORMING
AMENDMENT.—Paragraphs
(3)(A) and (4) of section 6103(p) of such Code are
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each amended by striking ‘‘or (15)’’ each place it ap-
pears and inserting ‘‘(15), or (16)’’.
(d) EFFECTIVE DATE.—
(1) IN
GENERAL.—The amendments made by
subsections (a) and (b) shall apply to the monthly
premium under section 1839 of the Social Security
Act for months beginning with January 1998.
(2) INFORMATION FOR PRIOR YEARS.—The Sec-
retary of Health and Human Services may request
information under section 6013(l)(16) of the Social
Security Act (as added by subsection (c)) for taxable
years beginning after December 31, 1994.
SEC. 5543. DEMONSTRATION PROJECT ON INCOME-RELAT-
ED PART B DEDUCTIBLE.
(a) ESTABLISHMENT OF PROJECT.—
(1) IN
GENERAL.—Notwithstanding any other
provision of law, the Secretary of Health and Human
Services (in this section referred to as the ‘‘Sec-
retary’’) shall conduct a demonstration project (in
this section referred to as the ‘‘project’’) in which in-
dividuals otherwise responsible for an income-related
premium by reason of section 1839(h) of the Social
Security Act (42 U.S.C. 1395r(h)) (as added by sec-
tion 5542 of this Act) would instead be responsible for
an income-related deductible using the same income
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limits and administrative procedures provided for in
such section 1839(h).
(2) SITES.—The Secretary shall conduct the
project in a representative number of sites and shall
include a sufficient number of individuals in the
project to ensure that the project produces statistically
satisfactory findings.
(3) PARTICIPATION.—
(A) IN
GENERAL.—Participation in the
project shall be on a voluntary basis.
(B) MEDIGAP.—No individual shall be eli-
gible to participate in the project if such individ-
ual is covered under a medicare supplemental
policy under section 1882 of the Social Security
Act (42 U.S.C. 1395ss).
(4) CONSULTATION.—In conducting the project,
the Secretary shall consult with appropriate organi-
zations and experts.
(5) DURATION.—The project shall be conducted
for a period not to exceed 5 years.
(b) WAIVER AUTHORITY.—The Secretary shall waive
compliance with the requirements of titles XI, XVIII, and
XIX of the Social Security Act (42 U.S.C. 1301 et seq., 1395
et seq., 1396 et seq.) to such extent and for such period as
the Secretary determines is necessary to conduct the project.
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(c) REPORTS TO CONGRESS.—
(1) IN GENERAL.—Not later than 2 and 5 years
after the date of enactment of this Act, and bian-
nually thereafter, the Secretary shall submit to Con-
gress a report regarding the project.
(2) CONTENTS
OF
REPORT.—The reports in
paragraph (1) shall include the following:
(A) A description of the demonstration
projects conducted under this section.
(B) A description of the utilization and
health care status of individuals participating in
the project.
(C) Any other information regarding the
project that the Secretary determines to be ap-
propriate.
SEC. 5544. LOW-INCOME MEDICARE BENEFICIARY BLOCK
GRANT PROGRAM.
(a) IN GENERAL.—Title XVIII (42 U.S.C. 1395 et
seq.), as amended by section 5047, is amended by adding
at the end the following:
‘‘LOW-INCOME MEDICARE BENEFICIARY BLOCK GRANT
PROGRAM
‘‘SEC. 1898. (a) ESTABLISHMENT.—The Secretary
shall establish a program to award block grants to States
for the payment of medicare cost sharing described in sec-
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tion 1905(p)(3)(A)(ii) on behalf of eligible low-income med-
icare beneficiaries.
‘‘(b) APPLICATION.—To be eligible to receive a block
grant under this section, a State shall prepare and submit
to the Secretary an application at such time, in such man-
ner, and containing such information as the Secretary may
require.
‘‘(c) PAYMENTS.—
‘‘(1) AMOUNT OF GRANT.—From amounts appro-
priated under subsection (d) for a fiscal year, the Sec-
retary shall award a grant to each State with an ap-
plication approved under subsection (b), in an
amount that bears the same ratio to such amounts as
the total number of eligible low-income medicare bene-
ficiaries in the State bears to the total number of eli-
gible low-income medicare beneficiaries in all States.
‘‘(2) 100 PERCENT FMAP.—Notwithstanding sec-
tion 1905(b), the Federal medical assistance percent-
age for any State that receives a grant under this sec-
tion shall be 100 percent.
‘‘(d) APPROPRIATIONS.—
‘‘(1) IN GENERAL.—The Secretary is authorized
to transfer from the Federal Supplementary Medical
Insurance Trust Fund under section 1841 for the pur-
pose of carrying out this section, an amount equal to
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$200,000,000 in fiscal year 1998, $250,000,000 in fis-
cal year 1999, $300,000,000 in fiscal year 2000,
$350,000,000 in fiscal year 2001, and $400,000,000
in fiscal year 2002, to remain available without fiscal
year limitation.
‘‘(2) STATE
ENTITLEMENT.—This section con-
stitutes budget authority in advance of appropria-
tions Acts and represents the obligation of the Federal
Government to provide for the payment to States of
amounts provided in accordance with the provisions
of this section.
‘‘(e) DEFINITIONS.—In this section:
‘‘(1) ELIGIBLE
LOW-INCOME
MEDICARE
BENE-
FICIARY.—The term ‘eligible low-income medicare
beneficiary’ means an individual who is described in
section 1902(a)(10)(E)(iii) but whose family income
is greater than or equal to 120 percent of the poverty
line and does not exceed 150 percent of the poverty
line for a family of the size involved.
‘‘(2) STATE.—The term ‘State’ means each of the
50 States, the District of Columbia, Puerto Rico,
Guam, the Virgin Islands, American Samoa, and the
Northern Mariana Islands.’’.
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Subtitle H—Provisions Relating to
Parts A and B
CHAPTER 1—SECONDARY PAYOR
PROVISIONS
SEC. 5601. EXTENSION AND EXPANSION OF EXISTING RE-
QUIREMENTS.
(a) DATA MATCH.—
(1) ELIMINATION OF MEDICARE SUNSET.—Sec-
tion 1862(b)(5)(C) (42 U.S.C. 1395y(b)(5)(C)) is
amended by striking clause (iii).
(2) ELIMINATION OF INTERNAL REVENUE CODE
SUNSET.—Section 6103(l)(12) of the Internal Revenue
Code of 1986 is amended by striking subparagraph
(F).
(b) APPLICATION
TO
DISABLED
INDIVIDUALS
IN
LARGE GROUP HEALTH PLANS.—
(1) IN
GENERAL.—Section 1862(b)(1)(B) (42
U.S.C. 1395y(b)(1)(B)) is amended—
(A) in clause (i), by striking ‘‘clause (iv)’’
and inserting ‘‘clause (iii)’’;
(B) by striking clause (iii); and
(C) by redesignating clause (iv) as clause
(iii).
(2) 
CONFORMING
AMENDMENTS.—Paragraphs
(1) through (3) of section 1837(i) (42 U.S.C.
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1395p(i)) and the second sentence of section 1839(b)
(42 U.S.C. 1395r(b)) are each amended by striking
‘‘1862(b)(1)(B)(iv)’’ each place it appears and insert-
ing ‘‘1862(b)(1)(B)(iii)’’.
(c) INDIVIDUALS WITH END STAGE RENAL DIS-
EASE.—Section 1862(b)(1)(C) (42 U.S.C. 1395y(b)(1)(C))
is amended—
(1) in the last sentence by striking ‘‘October 1,
1998’’ and inserting ‘‘the date of enactment of the
Balanced Budget Act of 1997’’; and
(2) by adding at the end the following: ‘‘Effective
for items and services furnished on or after the date
of enactment of the Balanced Budget Act of 1997,
(with respect to periods beginning on or after the date
that is 18 months prior to such date), clauses (i) and
(ii) shall be applied by substituting ‘30-month’ for
‘12-month’ each place it appears.’’.
SEC. 5602. IMPROVEMENTS IN RECOVERY OF PAYMENTS.
(a) PERMITTING RECOVERY AGAINST THIRD PARTY
ADMINISTRATORS
OF
PRIMARY
PLANS.—Section
1862(b)(2)(B)(ii) (42 U.S.C. 1395y(b)(2)(B)(ii)) is amend-
ed—
(1) by striking ‘‘under this subsection to pay’’
and inserting ‘‘(directly, as a third-party adminis-
trator, or otherwise) to make payment’’; and
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(2) by adding at the end the following: ‘‘The
United States may not recover from a third-party ad-
ministrator under this clause in cases where the
third-party administrator would not be able to re-
cover the amount at issue from the employer or group
health plan for whom it provides administrative serv-
ices due to the insolvency or bankruptcy of the em-
ployer or plan.’’.
(b) EXTENSION OF CLAIMS FILING PERIOD.—Section
1862(b)(2)(B) (42 U.S.C. 1395y(b)(2)(B)) is amended by
adding at the end the following:
‘‘(v) 
CLAIMS-FILING
PERIOD.—Not-
withstanding any other time limits that
may exist for filing a claim under an em-
ployer group health plan, the United States
may seek to recover conditional payments
in accordance with this subparagraph where
the request for payment is submitted to the
entity required or responsible under this
subsection to pay with respect to the item or
service (or any portion thereof) under a pri-
mary plan within the 3-year period begin-
ning on the date on which the item or serv-
ice was furnished.’’.
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(c) EFFECTIVE DATE.—The amendments made by this
section apply to items and services furnished on or after
the date of enactment of this Act.
CHAPTER 2—OTHER PROVISIONS
SEC. 5611. CONFORMING AGE FOR ELIGIBILITY UNDER
MEDICARE TO RETIREMENT AGE FOR SOCIAL
SECURITY BENEFITS.
(a) ENTITLEMENT TO HOSPITAL INSURANCE BENE-
FITS.—Section 226 (42 U.S.C. 426) is amended by striking
‘‘age 65’’ each place such term appears and inserting ‘‘re-
tirement age’’.
(b) HOSPITAL
INSURANCE
BENEFITS
FOR
THE
AGED.—Section 1811 (42 U.S.C. 1395c) is amended by
striking ‘‘age 65’’ each place such term appears and insert-
ing ‘‘retirement age (as such term is defined in section
216(l)(1))’’.
(c) HOSPITAL INSURANCE BENEFITS FOR UNINSURED
ELDERLY INDIVIDUALS NOT OTHERWISE ELIGIBLE.—Sec-
tion 1818 (42 U.S.C. 1395i–2) is amended—
(1) in subsection (a)(1), by striking ‘‘age of 65’’
and inserting ‘‘retirement age (as such term is de-
fined in section 216(l)(1))’’;
(2) in subsection (d)(1), by striking ‘‘age 65’’
and inserting ‘‘retirement age (as such term is de-
fined in section 216(l)(1))’’; and
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(3) in subsection (d)(3), by striking ‘‘65’’ and in-
serting ‘‘retirement age (as such term is defined in
section 216(l)(1))’’.
(d) HOSPITAL INSURANCE BENEFITS FOR DISABLED
INDIVIDUALS WHO HAVE EXHAUSTED OTHER ENTITLE-
MENT.—Section 1818A(a)(1) (42 U.S.C. 1395i–2a(a)(1)) is
amended by striking ‘‘the age of 65’’ and inserting ‘‘retire-
ment age (as such term is defined in section 216(l)(1))’’.
(e) ELIGIBILITY FOR PART B BENEFITS.—
(1) IN
GENERAL.—Section 1836 (42 U.S.C.
1395o) is amended by striking ‘‘age 65’’ each place
such term appears and inserting ‘‘retirement age (as
such term is defined in section 216(l)(1))’’.
(2) ENROLLMENT PERIODS.—Section 1837 (42
U.S.C. 1395p) is amended by striking ‘‘age 65’’ and
‘‘the age of 65’’ each place such terms appear and in-
serting ‘‘retirement age (as such term is defined in
section 216(l)(1))’’.
(3) COVERAGE
PERIOD.—Section 1838(c) (42
U.S.C. 1395q(c)) is amended by striking ‘‘the age of
65’’ and inserting ‘‘retirement age (as such term is
defined in section 216(l)(1))’’.
(4) AMOUNTS OF PREMIUMS.—Section 1839 (42
U.S.C. 1395r) is amended by striking ‘‘age 65’’ and
‘‘the age of 65’’ each place such terms appear and in-
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serting ‘‘retirement age (as such term is defined in
section 216(l)(1))’’.
(f) APPROPRIATIONS TO COVER GOVERNMENT CON-
TRIBUTIONS
AND
CONTINGENCY
RESERVE.—Section
1844(a)(1) (42 U.S.C. 1395w) is amended by striking ‘‘age
65’’ each place such term appears and inserting ‘‘retirement
age’’.
(g) MEDICARE SECONDARY PAYER.—Section 1862(b)
(42 U.S.C. 1395y(b)) is amended by striking ‘‘age 65’’ each
place such term appears and inserting ‘‘retirement age (as
such term is defined in section 216(l)(1))’’.
(h) MEDICARE SUPPLEMENTAL POLICIES.—Section
1882(s)(2)(A) (42 U.S.C. 1395ss(s)(2)(A)) is amended by
striking ‘‘65 years of age’’ and inserting ‘‘retirement age
(as such term is defined in section 216(l)(1))’’.
SEC. 5612. INCREASED CERTIFICATION PERIOD FOR CER-
TAIN 
ORGAN 
PROCUREMENT 
ORGANIZA-
TIONS.
Section 
1138(b)(1)(A)(ii) 
(42 
U.S.C. 
1320b–
8(b)(1)(A)(ii)) is amended by striking ‘‘two years’’ and in-
serting ‘‘2 years (3 years if the Secretary determines appro-
priate for an organization on the basis of its past prac-
tices)’’.
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SEC. 5613. FACILITATING THE USE OF PRIVATE CONTRACTS
UNDER THE MEDICARE PROGRAM.
(a) IN GENERAL.—Title XVIII of the Social Security
Act (42 U.S.C. 1395 et seq.) is amended by inserting after
section 1804 of such Act (42 U.S.C. 1395b–2) the following:
‘‘CLARIFICATION OF PRIVATE CONTRACTS FOR HEALTH
SERVICES
‘‘SEC. 1805. (a) IN GENERAL.—Nothing in this title
shall prohibit a physician or another health care profes-
sional who does not provide items or services under the pro-
gram under this title from entering into a private contract
with a medicare beneficiary for health services for which
no claim for payment is to be submitted under this title.
‘‘(b) LIMITATION ON ACTUAL CHARGE NOT APPLICA-
BLE.—Section 1848(g) shall not apply with respect to a
health service provided to a medicare beneficiary under a
contract described in subsection (a).
‘‘(c) DEFINITION
OF MEDICARE BENEFICIARY.—In
this section, the term ‘medicare beneficiary’ means an indi-
vidual who is entitled to benefits under part A or enrolled
under part B.
‘‘(d) REPORT.—Not later than October 1, 2001, the Ad-
ministrator of the Health Care Financing Administration
shall submit a report to Congress on the effect on the pro-
gram under this title of private contracts entered into under
this section. Such report shall include—
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‘‘(1) analyses regarding—
‘‘(A) the fiscal impact of such contracts on
total Federal expenditures under this title and
on out-of-pocket expenditures by medicare bene-
ficiaries for health services under this title; and
‘‘(B) the quality of the health services pro-
vided under such contracts; and
‘‘(2) recommendations as to whether medicare
beneficiaries should continue to be able to enter pri-
vate contracts under this section and if so, what legis-
lative changes, if any should be made to improve such
contracts.’’.
(b) EFFECTIVE DATE.—The amendment made by sub-
section (a) shall apply with respect to contracts entered into
on and after October 1, 1997.
Subtitle I—Miscellaneous
Provisions
SEC. 5651. INCLUSION OF STANLY COUNTY, N.C. IN A LARGE
URBAN AREA UNDER MEDICARE PROGRAM.
(a) IN GENERAL.—For purposes of section 1886(d) of
the Social Security Act (42 U.S.C. 1395ww(d)), the large
urban area of Charlotte-Gastonia-Rock Hill-North Caro-
lina-South Carolina may be deemed to include Stanly
County, North Carolina.
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(b) EFFECTIVE DATE.—This section shall apply with
respect to discharges occurring on or after October 1, 1997.
SEC. 5652. MEDICARE ANTI-DUPLICATION PROVISION.
(a) In section 1395ss(d)(3)(A)(v) of title 42, United
States Code, insert ‘‘(a)’’ before ‘‘For’’, and after the first
sentence insert:
‘‘(b) For purposes of this subparagraph, a health in-
surance policy (which may be a contract with a health
maintenance organization) is not considered to ‘duplicate’
health benefits under this title or title XIX or under another
health insurance policy if it—
‘‘(1) provides comprehensive health care benefits
that replace the benefits provided by another health
insurance policy,
‘‘(2) is being provided to an individual entitled
to benefits under part A or enrolled under part B on
the basis of section 226(b), and
‘‘(3) coordinates against items and services
available or paid for under this title or title XIX,
provided that payments under this title or title XIX
shall not be treated as payments under such policy in
determining annual or lifetime benefit limits.’’.
(b) In section 1395ss(d)(3)(A)(v) of title 42, United
States Code, insert ‘‘(c)’’ before ‘‘For purposes of this
clause’’.
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DIVISION 
2—MEDICAID 
AND
CHILDREN’S HEALTH INSUR-
ANCE INITIATIVES
Subtitle I—Medicaid
CHAPTER 1—MEDICAID SAVINGS
Subchapter A—Managed Care Reforms
SEC. 5701. STATE OPTION FOR MANDATORY MANAGED
CARE.
(a) IN GENERAL.—Title XIX is amended—
(1) by inserting after the title heading the follow-
ing:
‘‘PART A—GENERAL PROVISIONS’’; and
(2) by adding at the end the following new part:
‘‘PART B—PROVISIONS RELATING TO MANAGED CARE
‘‘SEC. 1941. BENEFICIARY CHOICE; ENROLLMENT.
‘‘(a) STATE OPTIONS FOR ENROLLMENT OF BENE-
FICIARIES IN MANAGED CARE ARRANGEMENTS.—
‘‘(1) IN
GENERAL.—Subject to the succeeding
provisions of this part and notwithstanding para-
graphs (1), (10)(B), and (23)(A) of section 1902(a),
a State may require an individual who is eligible for
medical assistance under the State plan under this
title and who is not a special needs individual (as de-
fined in subsection (e)) to enroll with a managed care
entity (as defined in section 1950(a)(1)) as a condi-
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tion of receiving such assistance (and, with respect to
assistance furnished by or under arrangements with
such entity, to receive such assistance through the en-
tity), if the following provisions are met:
‘‘(A) ENTITY MEETS REQUIREMENTS.—The
entity meets the applicable requirements of this
part.
‘‘(B) CONTRACT WITH STATE.—The entity
enters into a contract with the State to provide
services for the benefit of individuals eligible for
benefits under this title under which prepaid
payments to such entity are made on an actuari-
ally sound basis. Such contract shall specify ben-
efits the provision (or arrangement) for which
the entity is responsible.
‘‘(C) CHOICE OF COVERAGE.—
‘‘(i) IN GENERAL.—The State permits
an individual to choose a managed care en-
tity from managed care organizations and
primary care case managers who meet the
requirements of this part but not less than
from—
‘‘(I) 2 medicaid managed care or-
ganizations,
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‘‘(II) a medicaid managed care
organization and a primary care case
manager, or
‘‘(III) a primary care case man-
ager as long as an individual may
choose between 2 primary care case
managers.
‘‘(ii) STATE OPTION.—At the option of
the State, a State shall be considered to
meet the requirements of clause (i) in the
case of an individual residing in a rural
area, if the State—
‘‘(I) requires the individual to en-
roll with a medicaid managed care or-
ganization or a primary care case
manager if such organization or entity
permits the individual to receive such
assistance through not less than 2 phy-
sicians or case managers (to the extent
that at least 2 physicians or case man-
agers are available to provide such as-
sistance in the area), and
‘‘(II) permits the individual to ob-
tain such assistance from any other
provider in appropriate circumstances
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(as established by the State under regu-
lations of the Secretary).
‘‘(iii) RELIGIOUS CHOICE.—The State,
in permitting an individual to choose a
managed care entity under clause (i) shall
permit the individual to have access to ap-
propriate 
religiously-affiliated 
long-term
care facilities that are not pervasively sec-
tarian and that provide comparable non-
sectarian medical care. With respect to such
access, the State shall permit an individual
to select a facility that is not a part of the
network of the managed care entity if such
network does not provide access to appro-
priate faith-based facilities. Such facility
that provides care under this clause shall
accept the terms and conditions offered by
the managed care entity to other providers
in the network. No facility may be com-
pelled to admit an individual if the medical
director of that facility believes that the fa-
cility cannot provide the specific nursing
care and services an enrollee requires.
‘‘(D) 
CHANGES
IN
ENROLLMENT.—The
State—
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‘‘(i) provides the individual with the
opportunity to change enrollment among
managed care entities once annually and
notifies the individual of such opportunity
not later than 60 days prior to the first
date on which the individual may change
enrollment, and
‘‘(ii) permits individuals to terminate
their enrollment as provided under para-
graph (2).
‘‘(E) ENROLLMENT PRIORITIES.—The State
establishes a method for establishing enrollment
priorities in the case of a managed care entity
that does not have sufficient capacity to enroll
all such individuals seeking enrollment under
which individuals already enrolled with the en-
tity are given priority in continuing enrollment
with the entity.
‘‘(F) DEFAULT
ENROLLMENT
PROCESS.—
The State establishes a default enrollment process
which meets the requirements described in para-
graph (3) and under which any such individual
who does not enroll with a managed care entity
during the enrollment period specified by the
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State shall be enrolled by the State with such an
entity in accordance with such process.
‘‘(G) SANCTIONS.—The State establishes the
sanctions provided for in section 1949.
‘‘(H) INDIAN ENROLLMENT.—No individual
who is an Indian (as defined in section 4 of the
Indian Health Care Improvement Act of 1976) is
required to enroll in any entity that is not one
of the following (and only if such entity is par-
ticipating under the plan):
‘‘(i) The Indian Health Service.
‘‘(ii) An Indian health program oper-
ated by an Indian tribe or tribal organiza-
tion pursuant to a contract, grant, coopera-
tive agreement, or compact with the Indian
Health Service pursuant to the Indian Self-
Determination Act (25 U.S.C. 450 et seq.).
‘‘(iii) An urban Indian health program
operated by an urban Indian organization
pursuant to a grant or contract with the
Indian Health Service pursuant to title V of
the Indian Health Care Improvement Act
(25 U.S.C. 1601 et seq.).
‘‘(2) TERMINATION OF ENROLLMENT.—
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‘‘(A) IN GENERAL.—The State, enrollment
broker, and managed care entity (if any) shall
permit an individual eligible for medical assist-
ance under the State plan under this title who
is enrolled with the entity to terminate such en-
rollment for cause at any time, and without
cause during the 90-day period beginning on the
date the individual receives notice of enrollment
and at least every 12 months thereafter, and
shall notify each such individual of the oppor-
tunity to terminate enrollment under these con-
ditions.
‘‘(B) FRAUDULENT INDUCEMENT OR COER-
CION AS GROUNDS FOR CAUSE.—For purposes of
subparagraph (A), an individual terminating
enrollment with a managed care entity on the
grounds that the enrollment was based on fraud-
ulent inducement or was obtained through coer-
cion or pursuant to the imposition against the
managed care entity of the sanction described in
section 1949(b)(3) shall be considered to termi-
nate such enrollment for cause.
‘‘(C) NOTICE OF TERMINATION.—
‘‘(i) NOTICE TO STATE.—
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‘‘(I) BY INDIVIDUALS.—Each in-
dividual terminating enrollment with
a managed care entity under subpara-
graph (A) shall do so by providing no-
tice of the termination to an office of
the State agency administering the
State plan under this title, the State or
local welfare agency, or an office of a
managed care entity.
‘‘(II) BY
ORGANIZATIONS.—Any
managed care entity which receives no-
tice of an individual’s termination of
enrollment with such entity through re-
ceipt of such notice at an office of a
managed care entity shall provide
timely notice of the termination to the
State agency administering the State
plan under this title.
‘‘(ii) NOTICE
TO
PLAN.—The State
agency administering the State plan under
this title or the State or local welfare agen-
cy which receives notice of an individual’s
termination of enrollment with a managed
care entity under clause (i) shall provide
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timely notice of the termination to such en-
tity.
‘‘(3) DEFAULT ENROLLMENT PROCESS REQUIRE-
MENTS.—The requirements of a default enrollment
process established by a State under paragraph (1)(F)
are as follows:
‘‘(A) The process shall provide that the
State may not enroll individuals with a man-
aged care entity which is not in compliance with
the applicable requirements of this part.
‘‘(B) The process shall provide (consistent
with subparagraph (A)) for enrollment of such
an individual with a medicaid managed care or-
ganization—
‘‘(i) that maintains existing provider-
individual relationships or that has entered
into contracts with providers (such as Fed-
erally qualified health centers, rural health
clinics, hospitals that qualify for dispropor-
tionate share hospital payments under sec-
tion 1886(d)(5)(F), and hospitals described
in section 1886(d)(1)(B)(iii)) that have tra-
ditionally served beneficiaries under this
title, and
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‘‘(ii) if there is no provider described
in clause (i), in a manner that provides for
an equitable distribution of individuals
among all qualified managed care entities
available to enroll individuals through such
default enrollment process, consistent with
the enrollment capacities of such entities.
‘‘(C) The process shall permit and assist an
individual enrolled with an entity under such
process to change such enrollment to another
managed care entity during a period (of at least
90 days) after the effective date of the enrollment.
‘‘(D) The process may provide for consider-
ation of factors such as quality, geographic prox-
imity, continuity of providers, and capacity of
the plan when conducting such process.
‘‘(b) REENROLLMENT OF INDIVIDUALS WHO REGAIN
ELIGIBILITY.—
‘‘(1) IN GENERAL.—If an individual eligible for
medical assistance under a State plan under this title
and enrolled with a managed care entity with a con-
tract under subsection (a)(1)(B) ceases to be eligible
for such assistance for a period of not greater than 2
months, the State may provide for the automatic re-
enrollment of the individual with the entity as of the
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first day of the month in which the individual is
again eligible for such assistance, and may consider
factors such as quality, geographic proximity, con-
tinuity of providers, and capacity of the plan when
conducting such reenrollment.
‘‘(2) CONDITIONS.—Paragraph (1) shall only
apply if—
‘‘(A) the month for which the individual is
to be reenrolled occurs during the enrollment pe-
riod covered by the individual’s original enroll-
ment with the managed care entity,
‘‘(B) the managed care entity continues to
have a contract with the State agency under sub-
section (a)(1)(B) as of the first day of such
month, and
‘‘(C) the managed care entity complies with
the applicable requirements of this part.
‘‘(3) NOTICE
OF
REENROLLMENT.—The State
shall provide timely notice to a managed care entity
of any reenrollment of an individual under this sub-
section.
‘‘(c) STATE OPTION OF MINIMUM ENROLLMENT PE-
RIOD.—
‘‘(1) IN GENERAL.—In the case of an individual
who is enrolled with a managed care entity under
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this part and who would (but for this subsection) lose
eligibility for benefits under this title before the end
of the minimum enrollment period (defined in para-
graph (2)), the State plan under this title may pro-
vide, notwithstanding any other provision of this
title, that the individual shall be deemed to continue
to be eligible for such benefits until the end of such
minimum period, but, except for benefits furnished
under section 1902(a)(23)(B), only with respect to
such benefits provided to the individual as an enrollee
of such entity.
‘‘(2) MINIMUM ENROLLMENT PERIOD DEFINED.—
For purposes of paragraph (1), the term ‘minimum
enrollment period’ means, with respect to an individ-
ual’s enrollment with an entity under a State plan,
a period, established by the State, of not more than
6 months beginning on the date the individual’s en-
rollment with the entity becomes effective, except that
a State may extend such period for up to a total of
12 months in the case of an individual’s enrollment
with a managed care entity (as defined in section
1950(a)(1)) so long as such extension is done uni-
formly for all individuals enrolled with all such enti-
ties.
‘‘(d) OTHER ENROLLMENT-RELATED PROVISIONS.—
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‘‘(1) NONDISCRIMINATION.—A managed care en-
tity may not discriminate on the basis of health sta-
tus or anticipated need for services in the enrollment,
reenrollment, or disenrollment of individuals eligible
to receive medical assistance under a State plan
under this title or by discouraging enrollment (except
as permitted by this section) by eligible individuals.
‘‘(2) PROVISION OF INFORMATION.—
‘‘(A) IN GENERAL.—Each State, enrollment
broker, or managed care organization shall pro-
vide all enrollment notices and informational
and instructional materials in a manner and
form which may be easily understood by enroll-
ees of the entity who are eligible for medical as-
sistance under the State plan under this title, in-
cluding enrollees and potential enrollees who are
blind, deaf, disabled, or cannot read or under-
stand the English language.
‘‘(B) INFORMATION TO HEALTH CARE PRO-
VIDERS, ENROLLEES, AND POTENTIAL ENROLL-
EES.—Each medicaid managed care organiza-
tion shall—
‘‘(i) upon request, make the informa-
tion described in section 1945(c)(1) avail-
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able to enrollees and potential enrollees in
the organization’s service area, and
‘‘(ii) provide to enrollees and potential
enrollees information regarding all items
and services that are available to enrollees
under the contract between the State and
the organization that are covered either di-
rectly or through a method of referral and
prior authorization.
‘‘(3) PROVISION
OF
COMPARATIVE
INFORMA-
TION.—
‘‘(A) BY STATE.—A State that requires in-
dividuals to enroll with managed care entities
under this part shall annually provide to all en-
rollees and potential enrollees a list identifying
the managed care entities that are (or will be)
available and information described in subpara-
graph (C) concerning such entities. Such infor-
mation shall be presented in a comparative,
chart-like form.
‘‘(B) BY ENTITY.—Upon the enrollment, or
renewal of enrollment, of an individual with a
managed care entity under this part, the entity
shall provide such individual with the informa-
tion described in subparagraph (C) concerning
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such entity and other entities available in the
area, presented in a comparative, chart-like
form.
‘‘(C) REQUIRED
INFORMATION.—Informa-
tion under this subparagraph, with respect to a
managed care entity for a year, shall include the
following:
‘‘(i) BENEFITS.—The benefits covered
by the entity, including—
‘‘(I) covered items and services be-
yond those provided under a tradi-
tional fee-for-service program;
‘‘(II) any beneficiary cost sharing;
and
‘‘(III) any maximum limitations
on out-of-pocket expenses.
‘‘(ii) PREMIUMS.—The net monthly
premium, if any, under the entity.
‘‘(iii) SERVICE
AREA.—The service
area of the entity.
‘‘(iv) QUALITY AND PERFORMANCE.—
To the extent available, quality and per-
formance indicators for the benefits under
the entity (and how they compare to such
indicators under the traditional fee-for-serv-
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ice programs in the area involved), includ-
ing—
‘‘(I) disenrollment rates for enroll-
ees electing to receive benefits through
the entity for the previous 2 years (ex-
cluding disenrollment due to death or
moving outside the service area of the
entity);
‘‘(II) information on enrollee sat-
isfaction;
‘‘(III) information on health proc-
ess and outcomes;
‘‘(IV) grievance procedures;
‘‘(V) the extent to which an en-
rollee may select the health care pro-
vider of their choice, including health
care providers within the network of
the entity and out-of-network health
care providers (if the entity covers out-
of-network items and services); and
‘‘(VI) an indication of enrollee ex-
posure to balance billing and the re-
strictions on coverage of items and
services provided to such enrollee by an
out-of-network health care provider.
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‘‘(v) SUPPLEMENTAL
BENEFITS
OP-
TIONS.—Whether the entity offers optional
supplemental benefits and the terms and
conditions (including premiums) for such
coverage.
‘‘(vi) PHYSICIAN COMPENSATION.—An
overall summary description as to the meth-
od of compensation of participating physi-
cians.
‘‘(e) SPECIAL NEEDS INDIVIDUALS DESCRIBED.—In
this part, the term ‘special needs individual’ means any
of the following individuals:
‘‘(1) SPECIAL
NEEDS
CHILD.—An individual
who is under 19 years of age who—
‘‘(A) is eligible for supplemental security
income under title XVI;
‘‘(B) 
is 
described 
under 
section
501(a)(1)(D);
‘‘(C) is a child described in section
1902(e)(3); or
‘‘(D) is not described in any preceding sub-
paragraph but is in foster care or otherwise in
an out-of-home placement.
‘‘(2) MEDICARE
BENEFICIARIES.—A qualified
medicare 
beneficiary 
(as 
defined 
in 
section