Medicare Physician Ownership and Referral Amendments of 1995

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Medicare Physician Ownership and 
Referral Amendments of 1995''.

SEC. 2. MODIFICATIONS TO EXCEPTIONS FOR CERTAIN ARRANGEMENTS.

    (a) Exceptions for Both Ownership and Compensation Arrangements.--
            (1) Repeal of exception for physicians' services.--Section 
        1877(b) of the Social Security Act (42 U.S.C. 1395nn(b)) is 
        amended by striking ``Subsection (a)(1) shall not apply in the 
        following cases'' and all that follows through paragraph (1).
            (2) New exception for shared facility services.--Section 
        1877(b) of such Act (42 U.S.C. 1395nn(b)), as amended by 
        paragraph (1), is amended by inserting before paragraph (2) the 
        following new paragraph:
            ``(1) Shared facility services.--
                    ``(A) In general.--Subsection (a)(1) shall not 
                apply in the case of a designated health service 
                consisting of a shared facility service of a shared 
                facility--
                            ``(i) that is furnished--
                                    ``(I) personally by the referring 
                                physician who is a shared facility 
                                physician or personally by an 
                                individual directly employed by such a 
                                physician,
                                    ``(II) by a shared facility in a 
                                building in which the referring 
                                physician furnishes substantially all 
                                of the services of the physician that 
                                are unrelated to the furnishing of 
                                shared facility services, and
                                    ``(III) to a patient of a shared 
                                facility physician; and
                            ``(ii) that is billed by the referring 
                        physician.
                    ``(B) Shared facility related definitions.--
                            ``(i) Shared facility service.--The term 
                        `shared facility service' means, with respect 
                        to a shared facility, a designated health 
                        service furnished by the facility to patients 
                        of shared facility physicians.
                            ``(ii) Shared facility.--The term `shared 
                        facility' means an entity that furnishes shared 
                        facility services under a shared facility 
                        arrangement.
                            ``(iii) Shared facility physician.--The 
                        term `shared facility physician' means, with 
                        respect to a shared facility, a physician who 
                        has a financial relationship under a shared 
                        facility arrangement with the facility.
                            ``(iv) Shared facility arrangement.--The 
                        term `shared facility arrangement' means, with 
                        respect to the provision of shared facility 
                        services in a building, a financial 
                        arrangement--
                                    ``(I) which is only between 
                                physicians who are providing services 
                                (unrelated to shared facility services) 
                                in the same building,
                                    ``(II) in which the overhead 
                                expenses of the facility are shared, in 
                                accordance with methods previously 
                                determined by the physicians in the 
                                arrangement, among the physicians in 
                                the arrangement, and
                                    ``(III) which, in the case of a 
                                corporation, is wholly owned and 
                                controlled by shared facility 
                                physicians.''.
            (3) Inclusion of durable medical equipment and parenteral 
        and enteral nutrients, equipment, and supplies in exception for 
        in-office ancillary services.--Section 1877(b)(2) of such Act 
        (42 U.S.C. 1395nn(b)(2)) is amended by striking ``In the case 
        of'' and all that follows through ``supplies)'' and inserting 
        ``Subsection (a)(1) shall not apply in the case of designated 
        health services''.
            (4) New exception for capitated payments.--Section 1877(b) 
        of such Act (42 U.S.C. 1395nn(b)) is amended--
                    (A) by redesignating paragraph (4) as paragraph 
                (5); and
                    (B) by inserting after paragraph (3) the following 
                new paragraph:
            ``(4) Other capitated payments.--Subsection (a)(1) shall 
        not apply in the case of a designated health service, if the 
        designated health service is included in the services for which 
        a physician or physician group is paid only on a capitated 
        basis by a health plan or insurer pursuant to a written 
        arrangement between the plan or insurer and the physician or 
        physician group in which the physician or physician group 
        assumes financial risk for the furnishing of the service.''.
            (5) Conforming amendments.--Paragraphs (3) and (5) of 
        section 1877(b) of such Act (42 U.S.C. 1395nn(b)), as 
        redesignated by paragraph (4), are each amended by striking 
        ``In the case of'' and inserting ``Subsection (a)(1) shall not 
        apply in the case of''.
    (b) Revision of Exceptions for Certain Compensation Arrangements.--
            (1) Exception for all arrangements meeting requirements.--
        Section 1877(a)(2)(B) of such Act (42 U.S.C. 1395nn(a)(2)(B)) 
        is amended--
                    (A) by striking ``except as provided in subsection 
                (e),''; and
                    (B) by striking ``entity.'' and inserting ``entity 
                which does not meet the requirements of subsection 
                (e).''.
            (2) Requirements described.--Section 1877(e) of such Act 
        (42 U.S.C. 1395nn(e)) is amended to read to follows:
    ``(e) Requirements for Permissible Compensation Arrangements.--The 
requirements under this subsection with respect to a compensation 
arrangement are as follows:
            ``(1) The arrangement is in writing and is signed by all 
        parties to the arrangement.
            ``(2) The arrangement is consistent with fair market value.
            ``(3) The amount of compensation under the arrangement is 
        not determined in a manner that takes into account the volume 
        or value of any referrals or other business generated between 
        the parties.
            ``(4) The arrangement would be commercially reasonable even 
        if no referrals were made between the parties.
            ``(5) The services compensated or contracted for do not 
        exceed those that are reasonable and necessary for the 
        legitimate business purposes of the arrangement.
            ``(6) The arrangement meets such other requirements as the 
        Secretary may impose as needed to protect against program or 
        patient abuse.''.

SEC. 3. EXCLUSION OF INTRAOCULAR LENS, EYEGLASSES, AND CONTACT LENSES 
              FROM DESIGNATED HEALTH SERVICES SUBJECT TO PROHIBITIONS.

    Section 1877(h)(6)(H) of the Social Security Act (42 U.S.C. 
1395nn(h)(6)(H)) is amended by striking the period at the end and 
inserting the following: ``, other than an intraocluar lens inserted 
during or subsequent to cataract surgery, eyeglasses, or contact 
lenses.''.

SEC. 4. EFFECTIVE DATE.

    The amendments made by this Act shall apply to referrals made on or 
after January 1, 1996.

Summary: Medicare Physician Ownership and Referral Amendments of 1995 - Makes modifications under the Medicare program under title XVIII of the Social Security Act to the general exceptions to both ownership and compensation arrangement prohibitions with respect to physician referrals.  Excepts shared facility services from such referral prohibitions.  Revises exceptions for certain other compensation arrangements as well. 
Excludes intraocular lens, eyeglasses, and contact lenses from designated health services subject to such prohibitions.