An act to amend titles XV and XVI of the Public Health Service Act to revise and extend the authorities and requirements under those titles for health planning and health resources development, and for other purposes.
PL 96-79 (S.544), enacted 10/04/1979

93 STAT. 592 
PUBLIC LAW 96-79—OCT. 4, 1979 
Public Law 96-79 
96th Congress 
An Act 
Oct. 4, 1979 
[S. 544] 
Health Planning 
and Resources 
Development 
Amendments of 
1979. 
42 u s e 201 note. 
To amend titles XV and XVI of the Public Health Service Act to revise and extend 
the authorities and requirements under those titles for health planning and 
health resources development, and for other purposes. 
Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled, 
SHORT TITLE; R E F E R E N C E S TO P U B L I C H E A L T H SERVICE ACT; A N D T A B L E 
OF C O N T E N T S 
SECTION 1. (a) This Act may be cited as the "Health Planning and 
Resources Development Amendments of 1979". 
(b) Whenever in this Act (other than in subsections (j) and (k) of 
Posf, pp. 607,629. section 115 and in section 128) an amendment or repeal 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 a section or 
42 use 201 note, other provision of the Public Health Service Act. 
TABLE OF CONTENTS 
Sec. 1. Short title; references to Public Health Service Act; and table of contents. 
T I T L E I—REVISION OF HEALTH PLANNING AUTHORITY 
Revision and reporting on national guidelines for health planning. 
National health priorities; National Council on Health Planning and 
Development. 
The role of competition in the allocation of health services. 
Designation of health service areas. 
Designation of health systems agencies. 
Planning grants. 
Carryover of grant funds. 
Membership requirements. 
Governing body selection. 
Responsibilities of governing bodies. 
Meetings and records. 
Support and reimbursement for members of governing bodies. 
Conflicts of interest. 
Staff expertise. 
Health plan requirements. 
Criteria and procedures for reviews. 
Certificate of need programs. 
Appropriateness review. 
Review and approval of proposed uses of Federal funds. 
Coordination of health planning with rate review. 
Coordination within standard metropolitan statistical areas and with 
other entities. 
Collection and publication of hospital charges. 
State health planning and development agencies. 
Statewide Health Coordinating Council composition. 
Centers for health planning. 
Definitions. 
Authorizations. 
Technical amendment. 
Effective date. 
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PUBLIC LAW 96-79—OCT. 4, 1979 
93 STAT. 593 
TITLE II—REVISION OF AUTHORITY FOR HEALTH RESOURCES 
DEVELOPMENT 
Sec. 201. Revision and extension of assistance. 
Sec. 202. Conforming amendments. 
Sec. 203. Technical amendments. 
Sec. 204. Effective date. 
TITLE III-PROGRAM TO ASSIST AND ENCOURAGE THE DISCONTINUANCE 
OF UNNEEDED HOSPITAL SERVICES 
Sec. 301. Authorization of program. 
Sec. 302. Study. 
TITLE I—REVISION OF HEALTH PLANNING AUTHORITY 
REVISION AND REPORTING ON NATIONAL GUIDELINES FOR HEALTH 
PLANNING 
SEC. lOL (a)(1)(A) Section 1501 is amended (i) by striking out "and 42 USC 300k-l. 
shall, as he deems appropriate, by regulation revise such guidelines" 
in subsection (a), and (ii) by adding after subsection (c) the following: 
"(d) The Secretary shall, on an annual basis, review the standards 
and goals included in the guidelines issued under subsection (a). In 
conducting such a review, the Secretary shall review the health 
systems plans and annual implementation plans of health systems 
agencies and State health plans. If the Secretary proposes to revise a 
guideline issued under subsection (a), he shall make such revision by 
regulations promulgated in accordance with section 553 of title 5, 
United States Code. 
"(e)(1) The Secretary may collect data to determine whether the 
health care delivery systems meet or are changing to meet the goals 
included in health systems plans under section 1513(b)(2) and State 42 USC 300/-2. 
health plans under section 1524 and to determine the personnel, 42 usc 300m-3. 
facilities, and other resources needed to meet such goals. The Secre-
tary shall prescribe (A) the manner in which such data shall be 
assembled and reported to the Secretary by health systems agencies. 
State health planning and development agencies, and other entities, 
and (B) the definitions which shall be used by such agencies and 
entities in assembling and reporting such data. 
"(2) The Secretary shall from the data collected under paragraph 
(1) periodically make public a (A) statement of the relationship 
between the goals contained in the health systems plans and the 
State health plans and the status of the supply, distribution, and 
organization of health resources with respect to which such goals 
were established, and (B) summary of changes (either through addi-
tions or reductions) in resources needed to meet such goals.". 
(B) The amendments made by subparagraph (A) do not authorize Budget 
the enactment of new budget authority before October 1, 1979. 42*usc*^3()0k-i 
(2) Subsection (b)(1) of section 1501 is amended by adding at the end note. 
thereof the following: "Such standards shall reflect the unique 42 use 300k-l. 
circumstances and needs of medically underserved populations in 
isolated rural communities.". 
(3) Subsection (c) of section 1501 is amended by striking out "In 
issuing guidelines under subsection (a) the Secretary shall" and 
inserting in lieu thereof "At least 45 days before the initial publica-
tion of a regulation proposing a guideline under subsection (a) or a 
revision under subsection (d) of such a guideline, the Secretary shall, 
with respect to such proposed guideline or revision,". 
(bXD Section 1513(bXl) is amended by adding after and below 42 USC 300/-2. 
subparagraph (F) the following: 
59-194 O — 81 
40 : QL3 
93 STAT. 594 
PUBLIC LAW 96-79—OCT. 4, 1979 
"The agency shall also assemble and report to the Secretary such 
data (including data on the personnel, facilities, and other resources 
needed to meet the goals set forth in the agency's health system plan) 
as the Secretary may require to carry out his responsibilities under 
Ante, p. 593. 
section 1501(e). The Secretary may not require the assembling and 
reporting of data under this paragraph which is regularly collected 
by any entity of the Department of Health, Education, and Welfare 
under a provision of law other than this title.". 
42 use 300m-i. 
(2) Section 1522(b)(10) is amended by inserting after "require the 
State agency to" the following: "(A) assemble and report to the 
Secretary data (other than data which is regularly collected by any 
entity of the Department of Health, Education, and Welfare under a 
provision of law other than this title) which the Secretary may 
require to carry out his responsibilities under section 1501(e), includ-
ing data on the personnel, facilities, and other resources needed to 
meet the goals set forth in the State health plan, and (B)". 
NATIONAL HEALTH PRIORITIES; NATIONAL COUNCIL ON HEALTH 
PLANNING AND DEVELOPMENT 
42 use 300k-2. 
SEC. 102. (a)(1) Section 1502 is amended by adding at the end the 
following: 
"(12) The identification and discontinuance of duplicative or 
unneeded services and facilities. 
"(13) The adoption of policies which will (A) contain the rapidly 
rising costs of health care delivery, (B) insure more appropriate 
use of health care services, and (C) promote greater efficiency in 
the health care delivery system. 
"(14) The elimination of inappropriate placement in institu-
tions of persons with mental health problems and the improve-
ment of the quality of care provided those with mental health 
problems for whom institutional care is appropriate. 
"(15) Assurance of access to community mental health centers 
and other mental health care providers for needed mental health 
services to emphasize the provision of outpatient as a preferable 
alternative to inpatient mental health services. 
"(16) The promotion of those health services which are pro-
vided in a manner cognizant of the emotional and psychological 
components of the prevention and treatment of illness and the 
maintenance of health.". 
(2) Section 1502(9) is amended by inserting before the period the 
following: "and the development and use of cost saving technology". 
42 use 300k-3. 
(b) Section 1503(b)(1) is amended (1) by striking out "fifteen" and 
inserting in lieu thereof "twenty"; (2) by inserting "the Assistant 
Secretary for Rural Development of the Department of Agriculture," 
after "Defense,"; (3) by striking out "not less than five shall be 
persons who are not providers of health services" and inserting in 
lieu thereof "not less than eight members shall be persons who are 
not providers of health care and those members shall include individ-
uals who represent urban and rural medically underserved popula-
tions"; and (4) by inserting "not less than one member shall represent 
hospitals," after "Federal Government,". 
THE ROLE OF COMPETITION IN THE ALLOCATION OF HEALTH SERVICES 
Supra. 
SEC 103. (a) Section 1502(a) is amended by adding after paragraph 
(16) (added by section 102(a)) the following new paragraph: 
"(17) The strengthening of competitive forces in the health 
services industry wherever competition and consumer choice can 
PUBLIC LAW 96-79—OCT. 4, 1979 
93 STAT. 595 
constructively serve, in accordance with subsection (b), to 
advance the purposes of quahty assurance, cost effectiveness, 
and access.". 
(b) Section 1502 is amended (1) by inserting "(a)" after "1502.", and 42 USC 300k-2. 
(2) by adding at the end the following: 
"(b)(1) The Congress finds that the effect of competition on deci-
sions of providers respecting the supply of health services and 
facilities is diminished. The primary source of the lessening of such 
effect is the prevailing methods of paying for health services by public 
and private health insurers, particularly for inpatient health services 
and other institutional health services. As a result, there is duplica-
tion and excess supply of certain health services and facilities, 
particularly in the case of inpatient health services. 
"(2) For health services, such as inpatient health services and other 
institutional health services, for which competition does not or will 
not appropriately allocate supply consistent with health systems 
plans and State health plans, health systems agencies and State 
health planning and development agencies should in the exercise of 
their functions under this title take actions (where appropriate to 
advance the purposes of quality assurance, cost effectiveness, and 
access and the other purposes of this title) to allocate the supply of 
such services. 
"(3) For the health services for which competition appropriately 
allocates supply consistent with health systems plans and State 
health plans, health systems agencies and State health planning and 
development agencies should in the performance of their functions 
under this title give priority (where appropriate to advance the 
purposes of quality assurance, cost effectiveness, and access) to 
actions which would strengthen the effect of competition on the 
supply of such services.". 
(c) Section 1513(a) is amended (1) bv striking out "and" at the end of 42 USC 300/-2. 
paragraph (3), (2) by inserting "and' at the end of paragraph (4), and 
(3) by adding after paragraph (4) the following: 
"(5) preserving and improving, in accordance with section 
1502(b), competition in the health service area,". 
(d) Section 1532(c) is amended by adding at the end the following: 42 USC 300n-l. 
"(11) In accordance with section 1502(b), the factors which 
affect the effect of competition on the supply of the health 
services being reviewed. 
"(12) Improvements or innovations in the financing and deliv-
ery of health services which foster competition, in accordance 
with section 1502(b), and serve to promote quality assurance and 
cost effectiveness.". 
DESIGNATION OF HEALTH SERVICE AREAS 
SEC. 104. (a)(1) Section 1511(b)(4) is amended to read as follows: 42 use 300/. 
"(4) The Secretary shall review on his own initiative or at the 
request of any Governor or designated health systems agency the 
appropriateness of the boundaries of the health service areas estab-
lished under paragraph (3) and, if he determines that— 
"(A) the boundaries for a health service area no longer meet 
the requirements of subsection (a), or 
"(B) the boundaries for a proposed revised health service area 
meet the requirements of subsection (a) in a significantly more 
appropriate manner in terms of the efficiency and effectiveness 
of health planning efforts, 
he shall revise the boundaries in accordance with the procedures 
prescribed by paragraph (3)(B)(ii). If the Secretary acts on his own 
93 STAT. 596 
PUBLIC LAW 96-79—OCT. 4, 1979 
Boundary 
revisions, 
regulations. 
42 u s e 300/ 
note. 
Ante, p. 595. 
Repeal. 
42 u s e 300/. 
42 u s e 300n-5. 
42 u s e 300n. 
initiative to revise the boundaries of any health service area, he shall 
consult with the Governor of the State or States which would be 
affected by the revision, the chief executive officer or agency of the 
political subdivisions within such State or States, and the designated 
health systems agency or agencies and the established Statewide 
Health Coordinating Council or Councils that would be affected by 
the revision. A Governor may request a revision of the boundaries of 
a health service area only after consultation with the Governor of 
any other State or States that would be affected by the revision, the 
chief executive officer or agency of the political subdivisions within 
such State or States, and the designated health systems agencies and 
the established Statewide Health Coordinating Council or Councils 
that would be affected by the revision and shall include in such 
request the comments concerning the proposed revision made by such 
individuals and entities. A designated health systems agency may 
request a revision of the boundaries of its health service area only 
after consultation with the Governor of the State or States that would 
be affected by the revision, the chief executive officer or agency of the 
political subdivisions within such State or States, the Statewide 
Health Coordinating Council of such State or States, and the health 
systems agencies that would be affected by the revision and shall 
include in such request the comments concerning the proposed 
revision made by such individuals and entities. No proposed revision 
of the boundaries of a health service area shall comprise an entire 
State without the prior consent of the Governor of such State. In 
addition, for each proposed revision of the boundaries of a health 
service area, the Secretary shall give notice and an opportunity for a 
hearing to all interested persons and make a written determination 
of his findings and decision.". 
(2) Not later than one year after the date of the enactment of this 
Act the Secretary shall by regulation prescribe criteria for the 
revision of health service area boundaries under section 1511(b)(4) of 
the Public Health Service Act (as amended by paragraph (D). 
(b) Section 1511(c) is repealed. 
(c)(1) Section 1536(a) is amended by inserting "the Commonwealth 
of Puerto Rico," before "the Virgin Islands". 
(2) Section 1531(1) is amended by striking out "and the Common-
wealth of Puerto Rico". 
DESIGNATION OF HEALTH SYSTEMS AGENCIES 
42 use 300M. 
SEC. 105. (a) Section 1515(b)(4) is amended by striking out the last 
sentence and inserting in lieu thereof: "In considering such applica-
tions, the Secretary shall give priority to any application which has 
been recommended by a Governor or a Statewide Health Coordinat-
ing Council for approval. When the Secretary enters into an agree-
ment with an entity under paragraph (1), the Secretary shall notify 
the Governor of the State in which such entity is located of such 
agreement.". 
(b) The last sentence of section 1515(c)(2) is amended to read as 
follows: "In considering such applications, the Secretary shall give 
priority to any application which has been recommended by a 
Governor or a Statewide Health Coordinating Council for approval.". 
(c) Section 1515(c) is amended by adding after paragraph (3) the 
following: 
"(4) Before renewing an agreement with a health systems agency 
under this subsection, the Secretary shall provide the State health 
planning and development agency of the State in which the health 
systems agency is located an opportunity to comment on the perform-
PUBLIC LAW 96-79—OCT. 4, 1979 
93 STAT. 597 
Effective date. 
42 u s e 300Z-4 
note. 
ance of such agency and to provide a recommendation on whether 
such agreement should be renewed and whether the agency should be 
returned to a conditional status as authorized by paragraph (3). 
"(5) If the Secretary enters into an agreement under this subsection 
with an entity or renews such an agreement, the Secretary shall 
notify the Governor of the State in which such entity is located of the 
agreement, and any renewal of the agreement.". 
(d)(1)(A) Paragraphs (1) and (3) of section 1515(c) are each amended 42 USC 300/-4. 
by striking out "twelve months" and inserting in lieu thereof "thirty-
six months". 
(B) The amendments made by subparagraph (A) shall take effect 
with respect to designation agreements entered into under section 
1515(c) of the Public Health Service Act after the date of the 
enactment of this Act. 
(2) Section 1515(c)(1) is amended— 
(A) by inserting "(A)" after "(c)(1)", 
(B) by redesignating subparagraphs (A) and (B) as clauses (i) 
and (ii), respectively, 
(C) by amending clause (ii) (as so redesignated) to read as 
follows: 
"(ii) by the Secretary if the Secretary determines, in accord-
ance with subparagraph (B), that the entity is not complying 
with the provisions of such agreement.", and 
(D) by adding at the end the following: 
"(B) Before the Secretary may terminate, under subparagraph 
(A)(ii), an agreement with an entity for designation as the health 
systems agency for a health service area, the Secretary shall— 
"(i) consult with the Governor and the Statewide Health 
Coordinating Council of each State in which is located the health 
service area respecting the proposed termination, 
"(ii) give the entity notice of the intention to terminate the 
agreement and in the notice specify with particularity (I) the 
basis for the determination of the Secretary that the entity is not 
in compliance with the agreement, and (II) the actions that the 
entity should take to come into compliance with the agreement, 
and 
"(iii) provide the entity with a reasonable opportunity for a 
hearing, before an officer or employee of the Department of 
Health, Education, and Welfare designated for such purpose, on 
the matter specified in the notice. 
The Secretary may not terminate such an agreement before consult-
ing with the National Council on Health Planning and Development 
respecting the proposed termination. Before the Secretary may 
permit the term of an agreement to expire without renewing the 
agreement, the Secretary shall make the consultations prescribed by 
clause (i) and the preceding sentence, give the entity with which the 
agreement was made notice of the intention not to renew the 
agreement and the reasons for not renewing the agreement, and 
provide, as prescribed by clause (iii), the entity an opportunity for a 
hearing on the matter specified in the notice.". 
(e) Section 1515(c) (as amended by subsection (d)) is amended by 
adding after clause (ii) of paragraph (1)(A) the following: "A designa-
tion agreement under this subsection may be terminated by the 
Secretary before the expiration of its term if the health service area 
with respect to which the agreement was entered into is revised 
under section 1511(b)(4) and the Secretary determines, after consulta- ^"^e, p. 595 
tion with the Governor and Statewide Health Coordinating Council of 
each State in which the health service area (as revised) is located, 
that the health systems agency designated under such agreement 
Termination 
procedures. 
93 STAT. 598 
PUBLIC LAW 96-79—OCT. 4, 1979 
cannot effectively carry out the agreement for the area (as revised). 
In terminating an agreement under the preceding sentence, the 
Secretary may provide that the termination not take effect before an 
agreement for the designation of a new agency takes effect and shall 
provide the agency designated under the agreement to be terminated 
an opportunity to terminate its affairs in a satisfactory manner.". 
42 use 300/-3. 
(f) Section 1514 is amended (1) by striking out "may" and inserting 
in lieu thereof "shall", and (2) by striking out "(including entities" 
through "section 304)". 
42 use 300/-4. 
(g) Section 1515(d) is amended (1) by inserting "agreement" after 
"If a designation", and (2) by inserting "or is not renewed" after 
"prescribed for its expiration". 
(h) Section 1515(c)(3) is amended (1) by inserting "(A)" after "(3)"; (2) 
by inserting "during the period of the agreement to be renewed" after 
"section 1513"; and (3) by adding at the end thereof the following new 
subparagraph: 
42 use 300n-4. 
"(Q) jf upon a review under section 1535 of the agency's operation 
and performance of its functions, the Secretary determines that it has 
not fulfilled, in a satisfactory manner, the functions of a health 
42 use 300/-2. 
systems agency prescribed by section 1513 during the period of the 
agreement to be renewed or does not continue to meet the require-
42 use 300/-1. 
ments of section 1512(b), he may terminate such agreement or return 
such agency to a conditionally designated status under subsection (b) 
for a period not to exceed twelve months. At the end of such period, 
the Secretary shall either terminate the agreement with such agency 
or enter into an agreement with such agency under paragraph (1). 
The Secretary may not terminate an agreement or return an agency 
to a conditionally designated status unless the Secretary has— 
"(i) provided the agency with notice of his intent to return it to 
a conditional status or terminate the agreement with the agency 
and included in that notice specification of any functions which 
the Secretary has determined the agency did not satisfactorily 
fulfill and of any requirements which the Secretary has deter-
mined the agency has not met; 
"(ii) provided the agency with a reasonable opportunity for a 
hearing, before an officer or employee of the Department of 
Health, Education, and Welfare designated for such purpose, on 
the action proposed to be taken by the Secretary; and 
"(iii) in the case of a proposed termination of an agreement, 
consulted with the National Council on Health Planning and 
Development respecting the termination.". 
PLANNING GRANTS 
42 use 300/-5. 
SEC. 106. (a) Section 1516 is amended by redesignating subsection (c) 
as subsection (d) and by striking out subsection (b) and inserting in 
lieu thereof the following: 
"(b) The amount of any grant under subsection (a) to a health 
42 use 300/-4. 
systems agency designated under section 1515(b) shall be determined 
by the Secretary. 
"(c)(1) Except as provided in paragraph (2), the amount of a grant 
under subsection (a) to a health systems agency designated under 
section 1515(c) shall be the greater of the amount determined under 
subparagraph (A), (B), or (C) as follows: 
"(A) The amount of a grant to a health systems agency shall be 
the lesser o
f
— 
"(i) the product of $0.60 and the population of the health 
service area for which the agency is designated, or 
"(ii) $3,750,000. 
PUBLIC LAW 96-79—OCT. 4, 1979 
93 STAT. 599 
"(B)(i) If the application of the health systems agency for such 
grant states that the agency, in its latest fiscal year ending before 
the period in which such grant will be available for obligation, 
collected non-Federal funds meeting the requirements of clause 
(ii) for the purposes for which such grant may be made, the 
amount of such grant shall be the sum of— 
"(I) the amount determined under subparagraph (A) or (C), 
whichever is applicable, and 
"(II) the lesser of the amount of such non-Federal funds or 
$200,000 or the product of $0.25 and the population of the 
health service area for which the agency is designated, 
whichever is greater, 
"(ii) The non-Federal funds which an agency may use for the 
purpose of obtaining a grant under subsection (a) which is 
computed on the basis of the formula prescribed by clause (i) 
shall be funds which are not paid to the agency for the perform-
ance of particular services by it and which are otherwise contrib-
uted to the agency without conditions as to their use other than 
the condition that the funds shall be used for the purposes for 
which a grant made under this section may be used. 
"(C) The amount of a grant to a health systems agency may not 
be less than— 
"(i) in the case of a grant made in the fiscal year ending 
September 30, 1979, $175,000 and, to the extent appropri-
ations are specifically made after October 1,1979, to provide 
the additional amount authorized by this clause, an amount 
) 
which bears the same ratio to $50,000 as the number of days 
beginning in the period beginning on October 1, 1979, and 
ending on the date of the period for which the grant was 
made bears to 365, 
"(ii) $225,000 in the case of a grant made in the fiscal year 
ending September 30,1980, 
"(iii) $245,000 in the case of a grant made in the fiscal year 
ending September 30,1981, and 
"(iv) $260,000 in the case of a grant made in any succeed-
ing fiscal year. 
"(2) If the Secretary determines, after review of the budget of a 
health systems agency and after consultation with the State health 
planning and development agency of the State in which such agency 
\ 
is located, that the amount of a grant which is to be made to the 
agency in accordance with paragraph (1) is in excess of the amount 
needed by the agency to adequately perform its functions under its 
designation agreement, the amount of the grant to the agency shall 
be such amount as the Secretary determines the agency needs for the 
performance of such functions.'. 
(b) Subsection (d) (as so redesignated) is amended by striking out ^"^«' P- 598. 
paragraph (2) and inserting in lieu thereof the following: 
"(2) Of the amount appropriated under paragraph (1) for any fiscal 
year, the Secretary may use not more than 5 per centum of such 
amount to increase the amount of grants in such fiscal year to health 
systems agencies under subsection (a) to assist the agencies in 
meeting extraordinary expenses (including extraordinary expenses 
resulting from an agency's health service area being located in more 
than one State or from an agency serving a large rural or urban 
medically underserved population or a geographically large health 
service area) which would not be covered under the amount of a grant 
that would be available to an agency under subsection (c) and in 
improving their performance as a result of the development and 
implementation of innovative health planning techniques. 
93 STAT. 600 
PUBLIC LAW 96-79—OCT. 4, 1979 
"(3) Notwithstanding subsection (c)(1), if the total of the amounts 
appropriated under paragraph (1) for any fiscal year (reduced by the 
amount to be retained by the Secretary for use under paragraph (2)) is 
less than the amount required to make grants to each health system 
Ante, p. 597. 
agency designated under section 1515(c) in the amount prescribed for 
such agency by subparagraph (A), (B), or (C) of subsection (c)(1), the 
Secretary shall make a pro rata reduction in the amount of the grant 
to each such agency, but, to the extent of available appropriations, no 
such agency shall receive a grant in an amount less than the amount 
prescribed by such subparagraph (C) for such fiscal year.". 
42 use 300Z-5. 
(c) The second sentence of section 1516(a) is amended by inserting 
"(including submission of the health systems agency's budget)" after 
"such conditions". 
CARRYOVER OF GRANT FUNDS 
42 use 300/-2. 
SEC. 107. (a) Section 1513(c)(3) is amended by striking out the period 
at the end of the fourth sentence and inserting in lieu thereof the 
following: "unless another grant or contract is made or entered into, 
in which case the funds under the first grant or contract shall remain 
available for the period of the second grant or contract. Funds from a 
first grant or contract which remain available for obligation in the 
period of a second grant or contract shall not be considered in 
determining the amount of the second grant or contract.". 
42 use 300/-5. 
(bXD The second sentence of section 1516(a) is amended by striking 
out ", and shall be available for obligation" and all that follows in 
such sentence and inserting in lieu thereof a period. 
(2) Such section is amended by inserting after the second sentence 
the following: "Funds under a grant which remain available for 
obligation at the end of the fiscal year in which the grant has been 
made shall remain available for obligation in the succeeding fiscal 
year, except that (1) no funds under any grant to an agency may be 
obligated in any period in which a designation agreement is not in 
effect for such agency, and (2) notwithstanding clause (1), a grant 
made to a conditionally designated entity with which the Secretary 
will not enter into a designation agreement under section 1515(c) 
shall be available for obligation for such additional period as the 
Secretary determines such entity will require to satisfactorily termi-
nate its activities under the agreement for its conditional designa-
tion.". 
42 use 300m-4. 
(c) The second sentence of section 1525(a) is amended to read as 
follows: "Funds under a grant which remain available for obligation 
at the end of the fiscal year in which the grant has been made shall 
remain available for obligation in the succeeding fiscal year, but no 
funds under any grant to a State Agency may be obligated in any 
period in which a designation agreement is not in effect for such State 
Agency.". 
42 use 300m-5. 
(d) Section 1526(c) is amended (1) by striking out "(1) such a grant" 
and all that follows through "(2)", and (2) by inserting at the end the 
following: "Funds under a grant which remain available for obliga-
tion at the end of the fiscal year in which the grant has been made 
shall remain available for obligation in the succeeding fiscal year, but 
no funds under any grant to a State Agency may be obligated in any 
period in which a designation agreement is not in effect for such State 
Agency.". 
PUBLIC LAW 96-79—OCT. 4, 1979 
93 STAT. 601 
MEMBERSHIP REQUIREMENTS 
SEC. 108. (a)(1) Clause (i) of section 1512(b)(3)(C) is amended (A) by ^2 use 300M. 
inserting "(I)" after "shall be", and (B) by striking out all after 
"providers of health care" and inserting in lieu thereof ", and (II) 
broadly representative of the health service area and shall include 
individuals representing the principal social, economic, linguistic, 
handicapped, and racial populations and geographic areas of the 
health service area and major purchasers of health care (including 
labor organizations) in the area.'. 
(2) The first sentence of section 1512(b)(3)(C)(ii) is amended (A) by 
striking out "residents o f and inserting in lieu thereof "residents of, 
or have their principal place of business in,", (B) in subclause (I), bv 
inserting "podiatrists, physician assistants," after "optometrists,', 
(C) by inserting "rehabilitation facilities," after "long-term care 
facilities," in subclause (II), (D) by striking out "substance abuse" in 
subclause (II) and inserting in lieu thereof "alcohol and drug abuse", 
(E) by striking out "and" at the end of subclause (IV), and (F) by 
inserting before the period a comma and the following: "and (VI) 
other providers of health care". 
(3) The second sentence of section 1512(b)(3)(C)(ii) is amended (A) by 
striking out "one-third" and inserting in lieu thereof "one-half, and 
(B) by inserting before the period at the end the following: "and of 
such direct providers of health care, at least one shall be a person 
engaged in the administration of a hospital". 
(b)(1) Section 1512(b)(3)(C)(iii)(I) is amended by striking out "and 
other representatives of governmental authorities" and inserting in 
lieu thereof "and other representatives of units of general purpose 
local government". 
(2) Subclause (II) of such section is amended (A) by striking out "is 
equal" and inserting in lieu thereof "is at least equal", and (B) by 
striking out "and" at the end. 
(3) Such section is amended by striking out subclause (III) and 
inserting in lieu thereof the following: 
"(III) include (through consumer and provider mem-
bers) individuals who are knowledgeable about mental 
health services, 
"(IV) if the health systems agency serves an area in 
which there is located one or more hospitals or other 
health care facilities of the Veterans' Administration, 
include, as a nonvoting, ex officio member, an individual 
whom the Chief Medical Director of the Veterans' 
Administration shall have designated for such purpose, 
and 
"(V) if the agency serves an area in which there is 
located one or more health maintenance organizations, 
include at least one member who is representative of 
such organizations.". 
(c) Section 1512(b)(3)(C) is amended by inserting after and below 
clause (iv) the following: 
"For purposes of clause (iii)(I), to be considered a representative of a 
unit of general purpose local government, an individual must be 
appointed by such unit or a combination thereof, and the State 
government of a State which is comprised of a single health service 
area shall be deemed to be a unit of general purpose local govern-
ment. A member of a governing body appointed pursuant to clause 
(iii)(IV) shall not be considered in determining the number of mem-
bers of the governing body for purposes of the numerical limit 
prescribed by subparagraph (A).". 
93 STAT. 602 
PUBLIC LAW 96-79—OCT. 4, 1979 
Ante, p. 601. 
(d)(1) Section 1512(b)(3)(C)(i) is amended (A) by striking out "(nor 
within the twelve months preceding appointment been)", and (B) by 
inserting "(including labor organizations and business corporations) 
after "major purchasers of health care". 
"Provider of 
(2) Section 1531(3) is amended to read as follows: 
42 uscf 
300n 
"^^^ '^^® term 'provider of health care' means an individual— 
"(A) who is a direct provider of health care (including a 
physician, dentist, nurse, podiatrist, optometrist, physician as-
sistant, or ancillary personnel employed under the supervision of 
a physician) in that the individual's primary current activity is 
the provision of health care to individuals or the administration 
of facilities or institutions (including hospitals, long-term care 
facilities, rehabilitation facilities, alcohol and drug abuse treat-
ment facilities, outpatient facilities, and health maintenance 
organizations) in which such care is provided and, when required 
by State law, the individual has received professional training in 
the provision of such care or in such administration and is 
licensed or certified for such provision or administration; 
"(B) who holds a fiduciary position with, or has a fiduciary 
interest in, any entity described in clause (ii) or (iv) of subpara-
graph (C) other than an entity described in such clause which is 
also an entity described in section 501(c)(3) of the Internal 
26 use 501. 
Revenue Code of 1954 and which does not have as its primary 
purpose the delivery of health care, the conduct of research, the 
conduct of instruction for health professionals, or the production 
of drugs or articles described in clause (iii) of subparagraph (C); 
"(C) who receives (either directly or through the individual's 
spouse) more than one-fifth of his gross annual income from any 
one or combination of— 
"(i) fees or other compensation for research into or instruc-
tion in the provision of health care, 
"(ii) entities engaged in the provision of health care or in 
research or instruction in the provision of health care, 
"(iii) producing or supplying drugs or other articles for 
individuals or entities for use in the provision of or in 
research into or instruction in the provision of health care, 
or 
"(iv) entities engaged in producing drugs or such other 
articles; 
"(D) who is the member of the immediate family of an 
individual described in subparagraph (A), (B), or (C); or 
"(E) who is engaged in issuing any policy or contract of 
individual or group health insurance or hospital or medical 
service benefits. 
An individual shall not be considered a provider of health care solely 
because the individual is the member of the governing board of an 
entity described in clause (ii) or (iv) of subparagraph (C).". 
42 use 300/-1. 
(e) Section 1512(b)(3)(CXiv) is amended (1) by striking out "of its 
members", and (2) by adding before the period at the end a comma 
and the following "except that appointments shall be made to such 
subcommittees and groups in such a manner that a majority of their 
members shall be consumers of health care". 
GOVERNING BODY SELECTION 
42 use 300/-1. 
SEC. 109. Section 1512(b)(3) is amended by adding after subpara-
graph (C) the following new subparagraph: 
"(D) SELECTION.—Each health systems agency shall establish a 
process for the selection of the members of its governing body 
PUBLIC LAW 96-79—OCT. 4, 1979 
93 STAT. 603 
which process is designed to assure that (i) such members are 
selected in accordance with the requirements of subparagraph 
(C), (ii) there is the opportunity for broad participation in such 
process by the residents of the health service area of the agency, 
and (iii) the participation of such residents will be encouraged 
and facilitated. Sucii process shall prohibit the selection of more 
than one-half of the members of such body by members of such 
body. Each agency shall make public such process and report it to 
the Secretary. The requirements of this subparagraph shall 
apply with respect to the selection of members of a subarea 
advisory council if the council is authorized to select or selects 
one or more members of the governing body of a health systems 
agency.". 
RESPONSIBILITIES OF GOVERNING BODIES 
SEC. 110. (a) Section 1512(b)(3)(B)(i) is amended to read as follows: 42 use 300/-i. 
"(i) shall be responsible for— 
"(I) the internal affairs of the health systems agency, 
including matters relating to the staff of the agency and 
the agency's budget, except that the governing body for 
health planning of an agency which is a public regional 
planning body or unit of general local government shall 
not be responsible for the establishment of personnel 
rules and practices for the staff of the agency or for the 
agency's budget unless authorized by the planning body 
or unit of government, and 
"(II) procedures and criteria developed and published 
pursuant to section 1532 and applicable to its functions '^^ USC 300n-i. 
under subsections (e), (f), and (g) of section 1513;". ^^ use 300/-2. 
Ot)) Section 1512a))(3)(A) is amended (1) by striking out "have a 42USe300/-l. 
governing body for health planning, which is established in accord-
ance with subparagraph (C)," and inserting in lieu thereof "appoint a 
governing body for health planning in accordance with subparagraph 
(C)", (2) by striking out "which has exclusive" and inserting in lieu 
thereof "which shall have exclusive", and (3) by striking out "not 
more than twenty-five members" and inserting in lieu thereof "not 
less than ten members and not more than thirty members". 
(c) Section 1512(b)(3)(B)(iv) is amended by striking out "(g), and (h)" 
and inserting in lieu thereof "and (g)". 
(d)(1) Paragraph (4) of section 15120t)) is amended to read as follows: 
"(4) LIABILITY.— 
"(A) IN GENERAL.—Except as provided in subparagraph (B)— 
"(i) a health systems agency shall not, by reason of the 
performance of any duty, function, or activity, required of, or 
authorized to be undertaken by, the agency, be liable for the 
payment of damages under any law of the United States or 
any State (or political subdivision thereof) if the member of 
the governing body of the agency or employee of the agency 
who acted on behalf of the agency in the performance of such 
duty, function, or activity acted within the scope of his duty, 
function, or activity as such a member or employee, exer-
cised due care, and acted without malice toward any person 
affected by it; and 
"(ii) no individual member of the governing body of a 
health systems agency or employee of a health systems 
agency shall, by reason of his performance on behalf of the 
agency of any duty, function, or activity required of, or 
authorized to be undertaken by, the agency, be liable for the 
93 STAT. 604 
PUBLIC LAW 96-79—OCT. 4, 1979 
42 use 300m-3. 
42 use 300Z-1. 
Ante, p. 603. 
42 use 300/-2. 
Infra. 
Exemption. 
42 use 300/-1 
note. 
42 use 300Z-4. 
42 use 300/-1. 
Ante, p. 603. 
42 use 300/-2. 
42 use 300Z-2. 
payment of damages under any law of the United States or 
any State (or political subdivision of a State) if he believed he 
was acting within the scope of his duty, function, or activity 
as such a member or employee, and, with respect to such 
performance, acted without gross negligence or malice 
toward any person affected by it. 
"(B) EXCEPTION.—Subparagraph (A) does not apply with re-
spect to civil actions for bodily injury to individuals or physical 
damages to property brought against a health systems agency or 
any member of the governing body of or employee of such an 
agency.". 
(2) Section 1524 is amended by adding at the end thereof the 
following new subsection: 
"(d) No individual who as a member or employee of a SHCC shall, 
by reason of his performance of any duty, function, or activity 
required of, or authorized to be undertaken by, the SHCC, be liable 
for payment of damages under any law of the United States or any 
State (or political subdivision of a State) if he believed he was acting 
within the scope of his duty, function, or activity as such a member or 
employee, and acted, with respect to that performance, without gross 
negligence or malice toward any person affected by it.". 
(e)(1) The first sentence of section 1512(b)(3)(A) is amended by 
striking out "to perform for the agency" and inserting in lieu thereof 
"to perform". 
(2)(A) Section 1512(b)(3)(B)(ii) is amended by inserting before the 
semicolon the following: "and in the case of a health systems agency 
which is a public regional planning body or unit of general local 
government, the planning body or unit of government shall be given, 
in accordance with sections 1513(b)(2) and 1513(b)(3), a reasonable 
opportunity to comment on the health systems plan and annual 
implementation plan proposed by the governing body and to propose 
additions to and other revisions in it". 
(B) The amendment made by subparagraph (A) shall not apply with 
respect to a health systems agency for which a designation under 
section 1515 of the Public Health Service Act was in effect on 
January 1, 1979, and which is a unit of general local government. 
(3) Clauses (iii) and (iv) of section 1512(b)(3)(B) are each amended by 
striking out "approval" and inserting in lieu thereof "approval or 
disapproval". 
(4) Section 1513(b)(2) is amended by adding at the end the following: 
"If the health systems agency is a public regional planning body or 
unit of general local government, the planning body or unit of 
government shall be given a reasonable opportunity to comment on 
the proposed HSP and to propose additions to and other revisions in 
it. Any such proposed additions or other revisions not included in the 
HSP established by the agency shall be appended to the HSP. If the 
goals contained in the HSP are not consistent with guidelines issued 
by the Secretary under section 1501, it shall provide the State health 
planning and development agency and the Secretary with a detailed 
statement of the reasons for the inconsistency between such goals 
and guidelines. When making such HSP available to a Statewide 
Health Coordinating Council under section 1524(c)(2)(A), the agency 
shall also report such statement to such Council.". 
(f) Section 1513(a) is amended by adding after the first sentence the 
following: "None of the funds authorized to be appropriated under 
this title may be used by a health systems agency directly to pay any 
individual to influence the issuance, amendment, or revocation of 
any Executive order or regulation by any Federal, State, or local chief 
executive officer or agency or to influence the passage, amendment or 
PUBLIC LAW 96-79—OCT. 4, 1979 
93 STAT. 605 
defeat of any legislation by the Congress or by any State or local 
legislative body. The preceding sentence does not apply with respect 
to compensation paid by a health systems agency to an employee of 
the agency unless the primary responsibility of the employee for the 
agency is to influence such governmental action.". 
MEETINGS AND RECORDS 
SEC. 111. (a) Section 1512(b)(3)(B)(viii) is amended (1) by striking out 42 use 300Z-i. 
"conduct its business meetings in public" and inserting in lieu 
thereof "hold in public meetings to conduct the business of the agency 
(other than any part of a meeting in which it is likely, as determined 
by the governing body, that information respecting the performance 
or remuneration of an employee of the agency will be disclosed and 
such a disclosure would constitute a clearly unwarranted invasion of 
the personal privacy of the employee or that information relating to 
the agency's participation in a judicial proceeding will be disclosed)", 
and (2) by striking out "its records and data" and inserting in lieu 
thereof "records and data of the agency (other than records or data 
respecting the performance or remuneration of an employee the 
disclosure of which would constitute a clearly unwarranted invasion 
of the personal privacy of the employee and records or data of the 
agency relating to its participation in a judicial proceeding)". 
(b)(1) Section 1512(b)(6)(A) is amended by inserting after "such 
information" the following: "(other than information respecting the 
performance or remuneration of an employee of the agency the 
disclosure of which would constitute a clearly unwarranted invasion 
of the personal privacy of the employee or information relating the 
agency s participation in a judicial proceeding)". 
(2) Section 1512(b)(6) is amended by redesignating subparagraphs 
(A), (B), and (C) as subparagraphs (B), (C), and (D) and by adding 
before subparagraph (B) (as so redesignated) the following: 
"(A) provide that any executive committee of the agency and 
any entity appointed by the governing body or executive commit-
tee of the agency shall (i) hold in public meetings to conduct the 
business of the committee or entity (other than any part of a 
meeting in which it is likely, as determined by the executive 
committee or entity, that information respecting the perform-
ance or remuneration of an employee of the agency will be 
disclosed and such disclosure would constitute a clearly unwar-
ranted invasion of the personal privacy of the employee or that 
information relating the agency's participation in a judicial 
proceeding will be disclosed), and (ii) give adequate notice of its 
meetings to those persons who have requested such notice;", 
(c) Section 1522(b)(6) is amended (1) by striking out "conduct its 42 USC 300m-l. 
business meetings in public" and inserting in lieu thereof "hold in 
public meetings to conduct the business of the State Agency (other 
than any part of a meeting in which it is likely, as determined by the 
State Agency, that information respecting the performance or remu-
neration of an employee of the agency will be disclosed and such a 
disclosure would constitute a clearly unwarranted invasion of the 
personal privacy of the employee or that information relating to the 
agency's participation in a judicial proceeding will be disclosed)", and 
(2) by striking out "its records and data" and inserting in lieu thereof 
"records and data of the agency (other than records or data respect-
ing the performance or remuneration of an employee the disclosure 
of which would constitute a clearly unwarranted invasion of the 
personal privacy of the employee and records or data of the agency 
relating to its participation in a judicial proceeding)". 
93 STAT. 606 
PUBLIC LAW 96-79—OCT. 4, 1979 
SUPPORT AND REIMBURSEMENT FOR MEMBERS OF GOVERNING BODIES 
42 use 300/-1. 
SEC. 112. (a) Section 1512(b)(3) is amended by adding after subpara-
graph (D) (added by section 109 of this Act) the following new 
subparagraph: 
"(E) SUPPORT.—Each health systems agency shall have an 
identifiable program of providing assistance to the members of 
its governing body, executive committee (if any), and any entity 
appointed by the governing body or executive committee in 
making decisions for the agency, and shall include in such 
program means to determine the support needs of the members 
and to provide for meeting those needs (including the provision of 
training and continuing education).". 
(b) Section 1512(b)(3)(B)(vi) is amended (1) by striking out "reim-
burse" and inserting in lieu thereof "reimburse (or when appropriate 
make advances to)", and (2) by inserting "and performing any other 
duties and functions of the health systems agency" after "governing 
body". 
(c) Section 1512(b)(2)(A) is amended by adding at the end the 
following: "At least one member of the staff shall be designated to 
have the responsibility of providing the members of the governing 
body of an agency (particularly the consumer members) with such 
information and technical assistance as they may require to 
effectively perform their functions.". 
CONFLICTS OF INTEREST 
Supra. 
SEC. 113. (a) Section 1512(b)(3) is amended by adding after subpara-
graph (E) (added by section 112 of this Act) the following new 
subparagraph: 
"(F) CONFLICTS OF INTEREST.—No member of a governing body, 
executive committee, or any entity appointed by a governing 
body, or executive committee may, in the exercise of any function 
of the agency described in subsection (e), (f), or (g) of section 1513, 
vote on any matter before the governing body, executive commit-
tee, or any such entity respecting any individual or entity with 
which such member has (or, within the twelve months preceding 
the vote, had) any substantial ownership, employment, medical 
staff, fiduciary, contractual, creditor, or consultative relation-
ship. A governing body, executive committee, and any entity 
appointed by a governing body or executive committee shall 
require each of its members who has or has had such a relation-
ship with an individual or entity involved in any matter before 
the governing body, committee, or entity to make a written 
disclosure of such relationship before any action is taken by the 
body, committee, or entity with respect to such matter in the 
exercise of any function of the agency described in section 1513 
and to make such relationship public in any meeting in which 
such action is to be taken.". 
Ante, p. 603. 
(b) Section 1524 is amended by adding after subsection (d) (added by 
section 110(d)(2) of this Act) the following new subsection: 
"(e) No member of any SHCC may, in the exercise of any function of 
the SHCC described in subsection (c)(6), vote on any matter before the 
SHCC respecting any individual or entity with which such member 
has (or, within the twelve months preceding the vote, had) any 
substantial ownership, employment, medical staff, fiduciary, contrac-
tual, creditor, or consultative relationship. Each SHCC shall require 
each of its members who has or has had such a relationship with an 
individual or entity involved in any matter before the SHCC to make 
PUBLIC LAW 96-79—OCT. 4, 1979 
93 STAT. 607 
a written disclosure of 
such relationship before any action is taken by 
the SHCC with respect to such matter in the exercise of any function 
under subsection (c) and to make such relationship public in any 
meeting in which such action is to be taken.". 
STAFF EXPERTISE 
SEC. 114. Section 1512(b)(2)(A) is amended (1) by striking out 
"health resources" in the first sentence and inserting in lieu thereof 
"health (including mental health) resources", (2) by striking out 
"and" after "health planning," in such sentence, (3) by inserting 
before the period in such sentence a comma and the following: "(v) 
financial and economic analysis, and (vi) prevention of disease and 
other public health matters", and (4) by striking out "health re-
sources" in the second sentence and inserting in lieu thereof "health 
(including mental health) resources". 
HEALTH PLAN REQUIREMENTS 
42 u s e 300/-1. 
Ante, p. 606. 
42 u s e 300m-3. 
SEC. 115, (a) Section 1524(c)(1) is amended by striking out "Review" 
and inserting in lieu thereof "Establish (in consultation with the 
health systems agencies in the State and the State Agency) a uniform 
format for HSP's and review". 
(b)(1) Section 1513(b)(2)(A) is amended by inserting "(primarily with 42 use 300Z-2. 
regard to health care equipment and to health services provided by 
health care institutions, health care facilities, and other providers of 
health care and to other health resources)" after "healthful 
environment". 
(2) Section 1513(b)(2) is amended (A) by striking out "establish" in 
the first sentence and inserting in lieu thereof "establish (in accord-
ance with the format established pursuant to section 1524(c)(1))", and Supra. 
(B) by inserting after the first sentence the following: "The HSP of 
the agency shall include goals for the delivery of mental health 
services in its health service area which goals shall be developed 
under a procedure under which persons (acting as an advisory group 
or subcommittee appointed by the agency or, if the agency requests 
and is authorized by the Secretary to use an existing group, acting as 
part of such a group) knowledgeable about such services (including 
services for alcohol and drug abuse) will be consulted with respect to 
such goals.". 
(3) Section 1522(b)(7) is amended (A) by striking out "and" at the 
end of clause (A), and (B) by inserting before the period the following: 
", and (C) provide for consultation and coordination (in accordance 
with regulations of the Secretary) between the State Agency, the 
Statewide Health Coordinating Council, the State mental health 
authority, and other agencies of the State government designated by 
the Governor". 
(c)(1)(A) Section 1523(a)(1) is amended (i) by striking out "under 
section 1524(c)(2)" and inserting in lieu thereof "except as provided 
under section 1524(c)(2)(E)", and (ii) by inserting "(A)" after '^(l)" and 
by inserting before the period a comma and the following: "and (B) 
determine the statewide health needs of the State after providing 
reasonable opportunity for the submission of written recommenda-
tions respecting such needs by the State health authority, the State 
mental health authority, and other agencies of the State government, 
designated by the Governor for the purpose of making such recom-
mendations, and after consulting with the Statewide Health Coordi-
nating Council". 
42 u s e 300m-1. 
42 u s e 300m-2. 
42 u s e 300m-3. 
93 STAT. 608 
PUBLIC LAW 96-79—OCT. 4, 1979 
42 use 300m-2. 
(B) Section 1523(a)(2) is amended (i) by striking out "statewide 
health needs" and inserting in Ueu thereof "statewide health needs 
determined under paragraph (1)(B)", and (ii) by inserting after the 
first sentence the following: "In carrying out its functions under this 
paragraph, the State Agency shall refer the HSP's to the State health 
authority, the State mental health authority, and other agencies of 
the State government (designated by the Governor to make the 
review prescribed by this sentence) to review the goals and related 
resource requirements of the HSP's and to make written recom-
mendations to the State Agency respecting such goals and 
requirements.". 
(C) Subsection (a) of section 1523 is amended by adding after and 
below the last paragraph the following: "If in determining the 
statewide health needs under paragraph (1)(B) or in preparing or 
revising a preliminary State health plan under paragraph (2) the 
State Agency does not take an action proposed in a recommendation 
submitted under the applicable paragraph, the State Agency shall 
when publishing such needs or health plan make available to the 
public a written statement of its reasons for not taking such action.". 
42 use 300m-3. 
(D) Section 1524(c)(2) is amended (i) by inserting "as determined by 
the State Agency of the State" after "statewide health needs" each 
place it occurs, and (ii) by inserting at the end of subparagraph (B) the 
following: "If in preparing or revising the State health plan the SHCC 
does not take an action proposed in a recommendation submitted 
42 use 300m-2. 
under section 1523(a)(1)(B), the SHCC shall when publishing such 
plan make available to the public a written statement of its reasons 
for not taking such action.". 
42 use 300/-2. 
(2) Section 1513(b)(2) is amended (A) by striking out "and" after 
"resources of the area;", (B) by striking out "resources" and inserting 
in lieu thereof "resources (including entities described in section 
42 use 300n-i. 
1532(c)(7))", and (C) by inserting before the period at the end of the 
first sentence a semicolon and the following: "(D) which are respon-
sive to statewide health needs as determined by the State health 
planning and development agency". 
(d)(1) The first sentence of section 1513(b)(2) (as amended by 
subsection (c)(2)) is further amended by inserting before the period at 
the end a semicolon and the following: "(E) which describe the 
42 use 300n. 
institutional health services (as defined in section 1531(5)) needed to 
provide for the well-being of persons receiving care within the health 
service area, including, at a minimum, acute inpatient (including 
psychiatric inpatient, obstetrical inpatient, and neonatal inpatient), 
rehabilitation, and long-term care services; and (F) which describe 
other health services needed to provide for the well-being of persons 
receiving care within the health service area, including, at a mini-
mum, preventive, ambulatory, and home health services and treat-
ment for alcohol and drug abuse". 
(2) Section 1513(b)(2) is amended by adding after the sentence added 
by subsection (b)(2) the following: "The HSP shall describe the 
number and type of resources, including facilities, personnel, major 
medical equipment, and other resources required to meet the goals of 
the HSP and shall state the extent to which existing health care 
facilities are in need of modernization, conversion to other uses, or 
closure and the extent to which new health care facilities need to be 
constructed or acquired.". 
42USC300m-3. 
(3) Section 1524(c)(2)(A) is amended by adding after the second 
sentence the following new sentences: "The plan shall also describe 
the institutional health services (as defined in section 1531(5)) needed 
to provide for the well-being of persons receiving care within the 
State, including, at a minimum, acute inpatient (including psychiat-
PUBLIC LAW 96-79—OCT. 4, 1979 
93 STAT. 609 
ric inpatient, obstetrical inpatient, and neonatal inpatient), rehabili-
tation, and long-term care services; and also describe other health 
services needed to provide for the well-being of persons receiving care 
within the State, including, at a minimum, preventive, ambulatory, 
and home health services and treatment for alcohol and drug abuse. 
The plan shall also describe the number and type of resources, 
including facilities, personnel, major medical equipment, and other 
resources required to meet the goals of the plan and shall state the 
extent to which existing health care facilities are in need of modern-
ization, conversion to other uses, or closure and the extent to which 
new health care facilities need to be constructed or acquired.". 
(e) Section 1513(b)(3) is amended (1) by inserting after "goals of the 42 USC 300/-2. 
HSP" in the first sentence the following: "(as stated in the HSP of the 
agency or, if revised under section 1524(c)(2)(A) when included in the 42 USC 300m-3. 
State health plan, as so revised)", and (2) by adding at the end the 
following "The AIP shall include a statement of the personnel, 
facilities, and other resources which the agency determines are 
required to meet the objectives described pursuant to the first 
sentence. The AIP shall be established, annually reviewed, and 
amended in accordance with the procedures set forth in the last two 
sentences of paragraph (2). If the health systems agency is a public 
regional planning body or unit of general local government, the 
planning body or unit of government shall be given a reasonable 
opportunity to comment on the proposed AIP and to propose addi-
tions to and other revisions in it. Any such proposed additions or 
other revisions not included in the AIP approved by the agency shall 
be appended to the AIP.". 
(f) Section 1513(b)(2)(C) is amended by striking out "and is consist- 42 USC 300/-2. 
ent with". 
(g) Section 1524(c)(2) is amended by adding at the end the following: 42 USC 300m-3. 
"(C) The State health plan or any revised State health plan 
approved by the SHCC shall be the State health plan for the 
State for purposes of this title after it is approved by the 
Governor of the State. The State health plan for a State may be 
disapproved by the Governor of the State only if the Governor 
determines that the plan does not effectively meet the statewide 
health needs of the State as determined by the State Agency for 
the State. In disapproving a State health plan, a Governor shall 
make public a detailed statement of the basis for the determina-
tion that the plan does not meet such needs and shall specify the 
changes in the plan which the Governor determines are needed 
to meet such needs. Subparagraph (B) does not apply to the 
-
preparation of revisions of a State health plan disapproved by a 
Governor. 
"(D) In carrying out its functions with respect to the goals and 
resource requirements for mental health services of the State 
health plan, the SHCC may establish a procedure under which 
persons (acting as or as part of an advisory group or subcommit-
tee appointed by the SHCC) knowledgeable about mental health 
services (including services for alcohol and drug abuse) will have 
the opportunity to make recommendations to the SHCC respect-
ing such services. 
"(E) The State health authority, the State mental health 
authority, and other agencies of the State government, desig-
nated by the Governor, shall carry out those parts of the State 
health plan which relate to the government of the State. 
"(F) If a State health plan as required by this subsection is not 
in effect for a State, the Secretary may not make any grant under 
59-194 O — 81 
41 : QL3 
93 STAT. 610 
PUBLIC LAW 96-79—OCT. 4, 1979 
42 u s e 300m-4. 
42 u s e 300m. 
42 u s e 300Z-2. 
Ante, p. 604, 
607-609. 
42 u s e 300m-2. 
Ante, p. 608. 
42 u s e 300m-3. 
Ante, p. 607. 
Ante, p. 608. 
42 u s e 4573. 
21 u s e 1176. 
42 u s e 2689t. 
Supra. 
42 u s e 246. 
Supra. 
section 1525 to the State Agency designated for such State under 
section 1521(b)(3).". 
(h) Section 1513(c)(2) is amended (1) by striking out "may" and 
inserting in lieu thereof "shall", and (2) by inserting "in obtaining 
and filling out the necessary forms and may provide other technic^ 
assistance" after "technical assistance". 
(i)(l)(A) The first sentence of section 1513(b)(2) is amended by 
striking out "annually" and inserting in lieu thereof "at least 
triennially". 
(B) The second sentence of section 1513(b)(2) is amended by striking 
out "Before establishing an HSP" and inserting in lieu thereof 
"Before establishing or amending an HSP and in its review of an 
HSP". 
(2) The first sentence of section 1523(a)(2) and the first sentence of 
section 1524(c)(2)(A) are each amended by striking out "and review 
and revise as necessary (but at least annually)" and inserting in lieu 
thereof ", review at least triennially, and revise as necessary". 
(3) Section 1524(c)(1) (as amended by subsection (a)) is amended by 
striking out "review annually and coordinate the HSP and AIP" and 
inserting in lieu thereof "review and coordinate at least triennially 
the HSP and review at least annually the AIP". 
(4) The third sentence of section 1524(c)(2)(A) is amended by 
striking out "for each year". 
(j)(l) Section 303(a) of the Comprehensive Alcohol Abuse and 
Alcoholism Prevention, Treatment, and Rehabilitation Act of 1970 is 
amended by adding after and below paragraph (16) the following: 
"Such plan shall be consistent with the State health plan in effect for 
such State under section 1524(c) of the Public Health Service Act.". 
(2) Section 409(e) of the Drug Abuse Office and Treatment Act of 
1972 is amended by adding after and below paragraph (13) the 
following: "Such plan shall be consistent with the State health plan 
in effect for such State under section 1524(c) of the Public Health 
Service Act.". 
(k)(l) Section 237(a) of the Community Mental Health Centers Act 
is amended in the matter preceding paragraph (1) by inserting "shall 
be consistent with the State health plan in effect for such State under 
section 1524(c) of the Public Health Service Act and" before "shall 
be". 
(2) Paragraph (2)(D)(iv) of subsection (g) of section 314 of the Public 
Health Service Act is amended by striking out "a plan" and inserting 
in lieu thereof "a plan which is consistent with the State health plan 
in effect for the State under section 1524(c) and". 
42 u s e 300n-l. 
Post, p. 611, 613. 
Ante, p. 595. 
Posf, pp. 611,613, 
614. 
CRITERIA AND PROCEDURES FOR REVIEWS 
SEC 116. (a)(1) The first sentence of section 1532(a) is amended (A) 
by striking out "; and in performing" and inserting in lieu thereof 
"; in performing", and (B) by inserting before the period a semicolon 
and the following: "and in performing its review functions a 
Statewide Health Coordinating Council shall (except to the extent 
approved by the Secretary) follow procedures and apply criteria 
developed and published by the Council in accordance with regula-
tions of 
the Secretary". 
(2) The second sentence of such section is amended by striking out 
"and States Agencies" and inserting in lieu thereof ", State Agencies, 
and Statewide Health Coordinating Councils". 
(b)(1) Subsections (b) and (c) of section 1532 are each amended— 
(A) by striking out "agency and State Agency" each place it 
occurs (other than in paragraph (11) of subsection (b)) and 
PUBLIC LAW 96-79—OCT. 4, 1979 
93 STAT. 611 
inserting in lieu thereof "agency, State Agency, and Statewide 
Health Coordinating Council", and 
(B) by striking out "agency or State Agency" each place it 
occurs and inserting in lieu thereof "agency. State Agency, or 
Statewide Health Coordinating Council". 
(2) Subsection (b)(4) of such section is amended by striking out 
"agency or a State Agency" and inserting in lieu thereof "agency, 
State Agency, or Statewide Health Coordinating Council". 
(3) Section 1532(c)(1) is amended by striking out "HSP and AIP" 42 USC 300n-i. 
and inserting in lieu thereof "HSP, AIP, and State health plan". 
(c) Section 1532(a) is amended by adding at the end the following: 
"Health systems agencies, the State Agency, and, if appropriate, the 
Statewide Health Coordinating Council within each State shall 
cooperate in the development of procedures and criteria under this 
subsection to the extent appropriate to the achievement of efficiency 
in their reviews and consistency in criteria for such reviews.'. 
(d)(1)(A) Section 1532(b)(1) is amended (i) by striking out "Written" 
and inserting in lieu thereof "Timely written", and (ii) by inserting 
before the period "and, if a person has asked the entity conducting 
the review to place the person's name on a mailing list maintained by 
the entity, such notification shall be sent to such person". 
(B) Section 1532(b)(7) is amended by striking out "Notification" and 
inserting in lieu thereof "Timely notification'. 
(2) Section 1532(b)(2) is amended by adding at the end the following: 
"If, after a review has begun, a State Agency, health systems agency, 
or Statewide Health Coordinating Council requires, in accordance 
with paragraph (3), the person subject to the review to submit 
information respecting the subject of the review, such person shall be 
provided at least fifteen days to submit the information.". 
(3) Section 1532(b) is amended by adding after paragraph (11) the 
following new paragraph: 
"(12) The following procedural requirements with respect to 
proceedings under a certificate of need program: 
"(A) Hearings under a certificate of need program shall be 
held before a State Agency or a health systems agency to 
which the State Agency has delegated the authority to hold 
such a hearing. In a hearing under the program, any person 
shall have the right to be represented by counsel and to 
present oral or written arguments and evidence relevant to 
the matter which is the subject of the hearing, any person 
directly affected by the matter which is the subject of the 
hearing may conduct reasonable questioning of persons who 
make factual allegations relevant to such matter, and a 
record of the hearing shall be maintained. The requirements 
of this subparagraph do not apply to hearings held by a 
health systems agency in the performance of a review under 
section 1513(f). 
42 USC 300/-2. 
"(B) Any decision of a State Agency to issue or to not issue 
a certificate of need or to withdraw a certificate of need shall 
be based solely (i) on the review of the State Agency 
conducted in accordance with procedures and criteria it has 
adopted in accordance with this section and regulations 
promulgated under this section, and (ii) on the record estab-
lished in administrative proceedings held with respect to the 
application for such certificate or the Agency's proposal to 
withdraw the certificate, as the case may be. Any decision of 
a State Agency to approve or disapprove an application for 
an exemption under section 1527(b) shall be based solely on 
Post, p. 614. 
93 STAT. 612 
PUBLIC LAW 96-79—OCT. 4, 1979 
the record established in the administrative proceedings 
held with respect to the application. 
"(CXi) The State Agency shall establish the period within 
which approval or disapproval by the State Agency of 
applications for certificates of need and for exemptions 
Post, p. 614. 
under section 1527(b) shall be made. If, after a review has 
begun by the State Agency, the State Agency or health 
systems agency requires, in accordance with section 
42 use 300n-i. 
1532(bX3), an applicant to submit information respecting the 
subject of the review, the period prescribed pursuant to the 
preceding sentence shall, at the request of the applicant, be 
extended fifteen days. 
"(ii) If the State Agency fails to approve or disapprove an 
application within the applicable period under clause (i), the 
applicant may, within a reasonable period of time following 
the expiration of such period, bring an action in an appropri-
ate State court to require the State Agency to approve or 
disapprove the application. 
"(D) The program shall provide that each decision of the 
State Agency to issue, not to issue, or to withdraw a certifi-
cate of need or to approve or disapprove an application for an 
exemption under section 1527(b) shall, upon request of any 
person directly affected by such decision, be administra-
tively reviewed under em appeals mechanism consistent 
with State law governing the practices and procedures of 
administrative agencies or, if there is no such State law, by 
an entity (other than the State Agency) designated by the 
Grovemor. 
"(E) Any person adversely affected by a final decision of a 
State Agency with respect to a certificate of need or an 
application for an exemption under section 1527(b) and a 
health systems agency if the decision respecting the certifi-
cate of need is inconsistent with a recommendation made by 
the agency to the State Agency with respect to the certificate 
of need may, within a reasonable period of time after such 
decision is made (and any administrative review of it com-
pleted), obtain judicial review of it in an appropriate State 
court. The decision of the State Agency shall be affirmed 
upon such judicial review unless it is found to be arbitrary or 
capricious or not made in compliance with applicable law. 
(F) There shall be no ex parte contacts— 
"(i) in the case of an application for a certificate of 
need, between the applicant for the certificate of need, 
£my person acting on behalf of the applicant, or any 
person opposed to the issuance of a certificate for the 
applicant and any person in the State Agency who 
exercises any responsibility respecting the application 
after the commencement of a hearing on the applicant's 
application and before a decision is made with respect 
for it; and 
"(ii) in the case of a proposed withdrawal of a certifi-
cate of need, between the holder of the certificate of 
need, any person acting on behalf of the holder, or any 
gerson in favor of the withdrawal and any person in the 
tate Agency who exercises responsibility respecting 
withdrawal of the certificate after commencement of a 
hearing on the Agency's proposal to withdraw the 
certificate of need and before a decision is made on 
withdrawal. 
PUBLIC LAW 96-79—OCT. 4, 1979 
93 STAT. 613 
The requirements of this paragraph are in addition to the 
requirements of the other paragraphs of this subsection and may, 
as appropriate, apply to other review programs.". 
(e) Section 1532(b) is amended by adding after paragraph (12) Ante, p. 6ii. 
(added by subsection (d)) the following new paragraph: 
"(13)(A) In the case of reviews by health systems agencies 
under section 1513(f) and by State Agencies under paragraphs (4) 42 use 300/-2. 
and (5) of section 1523(a)— 
42 use 300m-2. 
"(i) provision for applications to be submitted in accord-
ance with a timetable established by the reviewing agency, 
"(ii) provision for such reviews to be undertaken in a 
timely fashion, and 
"(iii) provision for all completed applications pertaining to 
similar types of services, facilities, or equipment affecting 
the same health service area to be considered in relation to 
each other (but no less often than twice a year). 
"(B) In the case of reviews by health systems agencies under 
section 1513(g) and by State Agencies under paragraph (6) of 
section 1523(a), provision for reviews of similar types of institu-
tional health services affecting the same health service area to be 
considered in relation to each other.". 
(f) Section 1532(c)(6) is amended to read as follows: 
42 use 300n-i. 
"(6) In the case of health services proposed to be provided— 
"(A) the availability of resources (including health man-
power, management personnel, and funds for capital and 
operating needs) for the provision of such services, 
"(B) the effect of the means proposed for the delivery of 
such services on the clinical needs of health professional 
training programs in the area in which such services are to 
be provided, 
"(C) if such services are to be available in a limited number 
of facilities, the extent to which the health professions 
schools in the area will have access to the services for 
training purposes, 
"(D) the availability of alternative uses of such resources 
for the provision of other health services, and 
"(E) the extent to which such proposed services will be 
accessible to all the residents of the area to be served by such 
services.". 
(g)(1) Section 1532(c)(9)(B) is amended by inserting "and on the costs 
and charges to the public of providing health services by other 
persons" after "construction project" the second time it occurs. 
(2) Section 1532(c) (as amended by section 103(d)) is amended by Ante, p. 594. 
adding at the end the following: 
"(13) In the case of health services or facilities proposed to be 
provided, the efficiency and appropriateness of the use of existing 
services and facilities similar to those proposed. 
"(14) In the case of existing services or facilities, the quality of 
care provided by such services or facilities in the past.", 
(h) Section 1532(a) is amended by adding after the sentence added Ante, p. 6II. 
by subsection (c) the following: "The Secretary shall review at least 
annually regulations promulgated under this section and provide 
opportunity for the submission of comments by health systems 
agencies. State Agencies, and Statewide Health Coordinating Coun-
cils on the need for the revision of such regulations. At least forty-five 
days before the initial publication of a regulation proposing a revision 
in a regulation of the Secretary under this section, the Secretary 
shall, with respect to such proposed revision, consult with and solicit 
93 STAT. 614 
PUBLIC LAW 96-79—OCT. 4, 1979 
the recommendations from health systems agencies, State Agencies, 
and Statewide Health Coordinating Councils.". 
42USC300n-l. 
(i)(l) Section 1532(b)(3) is amended by adding at the end the 
following: "Each health systems agency, State Agency, and Statewide 
Health Coordinating Council shall develop procedures to assure that 
requests for information in connection with a review under this title 
are limited to only that information which is necessary for the 
agency. State Agency, or Statewide Health Coordinating Council to 
perform the review.". 
(2) Section 1532(b)(10) is amended by striking out "pertinent" and 
inserting in lieu thereof "essential". 
CERTIFICATE OF NEED PROGRAMS 
SEC. 117. (a) Part C of title XV is amended by adding at the end the 
following: 
"CERTIFICATE 
OF 
NEED 
PROGRAM 
42 use 300m-6. 
"SEC. 1527. (a) The certificate of need program required by section 
42 use 300m-2. 1523(a)(4)(B) shall, in accordance with this section, provide for the 
following: 
"(1) Review and determination of need under such program 
for— 
"(A) major medical equipment and institutional health 
services, and 
"(B) capital expenditures, 
shall be made before the time such equipment is acquired, such 
services are offered, substantial expenditures are undertaken in 
preparation for such offering, or capital expenditures are 
obligated. 
"(2) The acquisition and offering of only such equipment and 
services as may be found by the State Agency to be needed; and 
the obligation of only those capital expenditures found to be 
needed by the State Agency. Except as otherwise authorized by 
this section, review under the program of an application for a 
certificate of need may not be made subject to any criterion and 
the issuance of a certificate of need may not be made subject to 
any condition unless the criterion or condition directly relates 
to— 
42 use 300n-i. 
"(A) Criteria prescribed by section 1532(c), 
"(B) criteria prescribed by regulations of the Secretary 
promulgated under section 1532(a) before the date of the 
enactment of the Health Planning and Resources Develop-
ment Amendments of 1979, or 
"(C) criteria prescribed by regulation by the State Agency 
in accordance with an authorization prescribed by State law. 
The Secretary may not require a State to include in its program 
any criterion in addition to criteria described in subparagraphs 
(A) and (B). 
"(3) An application for a certificate of need for an institutional 
health service, medical equipment, or a capital expenditure shall 
specify the time the applicant will require to make such service 
or equipment available or to obligate such expenditure and a 
timetable for making such service or equipment available or 
obligating such expenditure. After the issuance of a certificate of 
need, the State Agency shall periodically review the progress of 
the holder of the certificate in meeting the timetable specified in 
the approved application for the certificate. If on the basis of 
PUBLIC LAW 96-79—OCT. 4, 1979 
93 STAT. 615 
such a review the State Agency determines that the holder of a 
certificate is not meeting such timetable and is not making a 
good faith effort to meet it, the State Agency may, after consider-
ing any recommendation made by the health systems agency 
which received a report from the State Agency on such review, 
withdraw the certificate. 
"(4) In issuing a certificate of need, the State shall specify in 
the certificate the maximum amount of capital expenditures 
which may be obligated under such certificate. The program 
shall, in accordance with regulations promulgated by the Secre-
tary, prescribe the extent to which a project authorized by a 
certificate of need shall be subject to further review if the 
amount of capital expenditures obligated or expected to be 
obligated for the project exceed the maximum specified in the 
certificate of need. 
"(5) The program shall provide that (A) the requirements of 
section 1532 shall apply to proceedings under the program, and 42 USC 300n-i. 
(B) each decision to issue a certificate of need (i) may only be 
issued by the State Agency, and (ii) shall, except in emergency 
circumstances that pose a threat to public health, be consistent 
with the State health plan in effect for such State under section 
1524(c). 
42 u s e 300m-3. 
"(b)(1) Under the program a State shall not require a certificate of 
need for the offering of an inpatient institutional health service or 
the acquisition of major medical equipment for the provision of an 
inpatient institutional health service or the obligation of a capital 
expenditure for the provision of an inpatient institutional health 
service by— 
"(A) a health maintenance organization or a combination of 
health maintenance organizations if (i) the organization or com-
bination of organizations has, in the service area of the organiza-
tion or the service areas of the organizations in the combination, 
an enrollment of at least 50,000 individuals, (ii) the facility in 
which the service will be provided is or will be geographically 
located so that the service will be reasonably accessible to such 
enrolled individuals, and (iii) at least 75 percent of the patients 
who can reasonably be expected to receive the institutional 
health service will be individuals enrolled with such organization 
or organizations in the combination; 
"(B) a health care facility if (i) the facility primarily provides or 
will provide inpatient health services, (ii) the facility is or will be 
controlled, directly or indirectly, by a health maintenance orga-
nization or a combination of health maintenance organizations 
which has, in the service area of the organization or service areas 
of the organizations in the combination, an enrollment of at least 
50,000 individuals, (iii) the facility is or will be geographically 
located so that the service will be reasonably accessible to such 
enrolled individuals, and (iv) at least 75 percent of the patients 
who can reasonably be expected to receive the institutional 
health service will be individuals enrolled with such organization 
or organizations in the combination, or 
"(C) a health care facility (or portion thereof) if (i) the facility is 
or will be leased by a health maintenance organization or 
combination of health maintenance organizations which has, in 
the service area of the organization or the service areas of the 
organizations in the combination, an enrollment of at least 
50,000 individuals and on the date the application is submitted 
under paragraph (2) at least fifteen years remain in the term of 
the lease, (ii) the facility is or will be geographically located so 
93 STAT. 616 
PUBLIC LAW 96-79—OCT. 4, 1979 
that the service will be reasonably accessible to such enrolled 
individuals, and (iii) at least 75 percent of the patients who can 
reasonably be expected to receive the institutional health service 
will be individuals enrolled with such organization, 
if, with respect to such offering, acquisition, or obligation, the State 
Agency has, upon application under paragraph (2), granted an 
exemption from such requirement to the organization, combination 
of organizations, or facility, 
"(2) A health maintenance organization, combination of health 
maintenance organizations, or health care facility shall not be 
exempt under paragraph (1) from obtaining a certificate of need 
before offering an institutional health service, acquiring major medi-
cal equipment, or obligating capital expenditures unless— 
"(A) it has submitted, at such time and in such form and 
manner as the State Agency shall prescribe, an application for 
such exemption, 
' 
"(B) the application contains such information respecting the 
organization, combination, or facility and the proposed offering, 
acquisition, or obligation as the State Agency may require to 
determine if the organization or combination meets the require-
ments of paragraph (1) or the facility meets or will meet such 
^ 
requirements, and 
(C) the State Agency approves such application. 
In the case of a proposed health care facility (or portion thereof) 
which has not begun to provide institutional health services on the 
date an application is submitted under this paragraph with respect to 
such facility (or portion), the facility (or portion) shall meet the 
applicable requirements of paragraph (1) when the facility first 
provides such services. The State Agency shall approve an applica-
tion submitted under this paragraph if it determines that the 
applicable requirements of paragraph (1) are met, 
(3) Notwithstanding subsection (d), a health care facility (or any 
part thereof) or medical equipment with respect to which an exemp-
tion was granted under paragraph (1) may not be sold or leased and a 
controlling interest in such facility or equipment or in a lease of such 
facility or equipment may not be acquired and a health care facility 
described in subparagraph (C) of paragraph (1) which was granted an 
exemption under paragraph (1) may not be used by any person other 
than the lessee described in such subparagraph unless— 
"(A) the State Agency issues a certificate of need approving the 
sale, lease, acquisition, or use, or 
"(B) the State Agency determines, upon application, that (i) the 
entity to which the facility or equipment is proposed to be sold or 
leased, which intends to acquire the controlling interest, or 
which intends to use the facility is a health maintenance organi-
zation or a combination of health maintenance organizations 
which meets the requirements of clause (i) of subparagraph (A) of 
paragraph (1) and (ii) with respect to such facility or equipment, 
the entity meets the requirements of clauses (ii) and (iii) of such 
subparagraph (A) or the requirements of clauses (i) and (ii) of 
subparagraph (B) of paragraph (1). 
"(4) In the case of a health maintenance organization or an 
ambulatory care facility or health care facility which ambulatory or 
health care facility is controlled, directly or indirectly, by a health 
maintenance organization or a combination of health maintenance 
organizations, a State may under the program apply its certificate of 
need requirements only to the offering of inpatient institutional 
health services, the acquisition of major medical equipment, and the 
obligation of capital expenditures for the offering of inpatient institu-
PUBLIC LAW 96-79—OCT. 4, 1979 
93 STAT. 617 
tional health services and then only to the extent that such offering, 
acquisition, or obligation is not exempt under paragraph (1). 
' (5) Notwithstanding section 1532(c), if a health maintenance 
organization or a health care facility which is controlled, directly or 
indirectly, by a health maintenance organization apply for a certifi-
cate of need, such application shall be approved by the State Agency 
if the State Agency finds (in accordance with criteria prescribed by 
the Secretary by regulation) that— 
"(A) approval of such application is required to meet the needs 
of the members of the health maintenance organization and of 
the new members which such organization can reasonably be 
expected to enroll, and 
'(B) the health maintenance organization is unable to provide, 
through services or facilities which can reasonably be expected to 
be available to the organization, its institutional health services 
in a reasonable and cost-effective manner which is consistent 
with the basic method of operation of the organization and which 
makes such services available on a long-term basis through 
physicians and other health professionals associated with it. 
Except as provided in paragraph (1) and notwithstanding subsection 
(d), a health care facility (or any part thereof) or medical equipment 
with respect to which a certificate of need was issued under this 
subsection may not be sold or leased and a controlling interest in such 
facility or equipment or in a lease of such facility or equipment may 
not be acquired unless the State Agency issues a certificate of need 
approving the sale, acquisition, or lease.'. 
(c) Notwithstanding section 1532(c), an application for a certificate 
of need for a capital expenditure which is required— 
"(1) to eliminate or prevent imminent safety hazards as de-
fined by Federal, State, or local fire, building, or life safety codes 
or regulations, 
"(2) to comply with State licensure standards, or 
"(3) to comply with accreditation standards compliance with 
which is required to receive reimbursements under title XVIII of 
the Social Security Act or payments under a State plan for 
medical assistance approved under title XIX of such Act, 
shall be approved unless the State Agency finds that the facility or 
service with respect to which such capital expenditure is proposed to 
be made is not needed or that the obligation of such capital expendi-
ture is not consistent with the State health plan in effect under 
section 1524. An application for a certificate of need approved under 
this subsection shall be approved only to the extent that the capital 
expenditure is required to eliminate or prevent the hazards described 
in paragraph (1) or to comply with the standards described in 
paragraph (2) or (3). 
"(d)(1) Under the program a certificate of need shall, except as 
provided in subsection (b), be required for the obligation of a capital 
expenditure to acquire (either by purchase or under lease or compara-
ble arrangement) an existing health care facility i
f
— 
"(A) the notice required by paragraph (2) is not filed in 
accordance with that paragraph with respect to such acquisition, 
or 
"(B) the State Agency finds, within thirty days after the date it 
receives a notice in accordance with paragraph (2) with respect to 
such acquisition, that the services or bed capacity of the facility 
will be changed in being acquired. 
"(2) Before any person enters into a contractual arrangement to 
acquire an existing health care facility which arrangement will 
require the obligation of a capital expenditure, such person shall 
State Agency 
approval. 
42 use 300n-l. 
42 use 1395. 
42 use 1396. 
42 use 300m-3. 
93 STAT. 618 
PUBLIC LAW 96-79—OCT. 4, 1979 
Major medical 
equipment, 
donations and 
Osteopathic or 
allopathic 
facility. 
42 u s e 300n-l. 
42 u s e 300/-2. 
42 u s e 300m-2. 
notify the State Agency of the State in which such facility is located 
of such person's intent to acquire such facility and of the services to 
be offered in the facility and its bed capacity. Such notice shall be 
made in writing and shall be made at least thirty days before 
contractual arrangements are entered into to acquire the facility 
with respect to which the notice is given. 
"(e)(1)(A) Except as provided in subsection (b) and subparagraph 
(B), under the program a certificate of need shall not be required for 
the acquisition of major medical equipment which will not be owned 
by or located in a health care facility unless— 
"(i) the notice required by paragraph (2) is not filed in accord-
ance with that paragraph with respect to such acquisition, or 
"(ii) the State Agency finds, within thirty days after the date it 
receives a notice in accordance with paragraph (2) with respect to 
such acquisition, that the equipment will be used to provide 
services for inpatients of a hospital. 
"(B) The certificate of need program of a State may include a 
requirement for a certificate of need for an acquisition of major 
medical equipment which requirement is in addition to the require-
ment for a certificate of need established by subparagraph (A), except 
that after September 30, 1982, the certificate of need program of a 
State may not be changed to include any such additional require-
ment. 
"(2) Before any person enters into a contractual arrangement to 
acquire major medical equipment which will not be owned by or 
located in a health care facility, such person shall notify the State 
Agency of the State in which such equipment will be located of such 
person's intent to acquire such equipment and of the use that will be 
made of the equipment. Such notice shall be made in writing and 
shall be made at least thirty days before contractual arrangements 
are entered into to acquire the equipment with respect to which the 
notice is given. 
"(3) For purposes of this subsection, donations and leases of major 
medical equipment shall be considered acquisitions of such equip-
ment, and an acqusition of medical equipment through a transfer of it 
for less than fair market value shall be considered an acquisition of 
maior medical equipment if its fair market value is at least $150,000. 
(f) Notwithstanding section 1532(c), when an application is made 
by an osteopathic or allopathic facility for a certificate of need to 
construct, expand, or modernize a health care facility, acquire major 
medical equipment, or add services, the need for that construction, 
expansion, modernization, acquisition of equipment, or addition of 
services shall be considered on the basis of the need for and the 
availability in the community of services and facilities for osteo-
pathic and allopathic physicians and their patients. The State 
Agency shall consider the application in terms of its impact on 
existing and proposed institutional training programs for doctors of 
osteopathy and medicine at the student, internship, and residency 
training levels. 
"(g) In approving or disapproving applications for certificates of 
need or in withdrawing certificates of need under such a program, a 
State Agency shall take into account recommendations made by 
health systems agencies within the State under section 1513(f).'. 
(bXD Section 1523(a)(4XB) is amended (A) by striking out "new 
institutional health services proposed to be offered or developed 
within the State" and inserting in lieu thereof "the obligation of 
capital expenditures within the State and the offering within the 
State of new institutional health services and the acquisition of major 
medical equipment", and (B) by striking out "which is satisfactory to 
PUBLIC LAW 96-79—OCT. 4, 1979 
93 STAT. 619 
the Secretary" and inserting in lieu thereof "which is consistent with 
standards established by the Secretary by regulation". 
(2) The second sentence of section 1523(a)(4) is amended to read as 
follows: "A certificate of need program shall provide for procedures 
and penalties to enforce the requirements of the program.". 
(3) Section 1531 is amended (i) by striking out "For purposes of this 
title" and inserting in lieu thereof "Except as otherwise provided, for 
purposes of this title", and (ii) by adding after paragraph (5) the 
following new paragraphs: 
"(6) For purposes of sections 1523 and 1527, the term 'capital 
expenditure' means an expenditure— 
"(A) made by or on behalf of a health care facility (as such a 
facility is defined in regulations prescribed under paragraph (5)); 
and 
"(B)(i) which (I) under generally accepted accounting principles 
is not properly chargeable as an expense of operation and 
maintenance, or (II) is made to obtain by lease or comparable 
arrangement any facility or part thereof or any equipment for a 
facility or part; and 
"(ii) which (I) exceeds the expenditure minimum, (II) substan-
tially changes the bed capacity of the facility with respect to 
which the expenditure is made, or (III) substantially changes the 
services of such facility. 
For purposes of subparagraph (B)(ii)(I), the cost of any studies, 
surveys, designs, plans, working drawings, specifications, and other 
activities essential to the acquisition, improvement, expansion, or 
replacement of any plant or equipment with respect to which an 
expenditure described in subparagraph (B)(i) is made shall be 
included in determining if such expenditure exceeds the expenditure 
minimum. Donations of equipment or facilities to a health care 
facility which if acquired directly by such facility would be subject to 
review under section 1527 shall be considered capital expenditures 
for purposes of sections 1523 and 1527, and a transfer of equipment or 
facilities for less than fair market value shall be considered a capital 
expenditure for purposes of such sections if a transfer of the equip-
ment or facilities at fair market value would be subject to review 
under section 1527. For purposes of this paragraph, the term 'expend-
iture minimum' means $150,000 for the twelve-month period begin-
ning with the month in which this paragraph is enacted and for each 
twelve-month period thereafter, $150,000 or, at the discretion of the 
State, the figure in effect for the preceding twelve-month period, 
adjusted to reflect the change in the preceding twelve-month period 
in an index maintained or developed by the Department of Commerce 
and designated by the Secretary by regulation for purposes of making 
such adjustment. 
"(7) For purposes of sections 1523 and 1527, the term 'major 
medical equipment' means medical equipment which is used for the 
provision of medical and other health services and which costs in 
excess of $150,000, except that such term does not include medical 
equipment acquired by or on behalf of a clinical laboratory to provide 
clinical laboratory services if the clinical laboratory is independent of 
a physician's office and a hospital and it has been determined under 
title XVIII of the Social Security Act to meet the requirements of 
paragraphs (10) and (11) of section 1861(s) of such Act. In determining 
whether medical equipment has a value in excess of $150,000, the 
value of studies, surveys, designs, plans, working drawings, specifica-
tions, and other activities essential to the acquisition of such equip-
ment shall be included. 
42 u s e 300m-2. 
42 u s e 300n. 
"eapital 
expenditure." 
42 u s e 300m-2. 
Ante, p. 614. 
"Major medical 
equipment." 
42 u s e 1395. 
42 u s e 1395x. 
93 STAT. 620 
PUBLIC LAW 96-79—OCT. 4, 1979 
"Health 
maintenance 
organization. 
42 u s e 300e-9. 
42 u s e 300m-l. 
42 u s e 300n-l. 
42 u s e 300m-6 
note. 
Ante, p. 614. 
Report to 
congressional 
committees. 
Regulations. 
42 u s e 300m-6 
note. 
Ante, p. 614. 
"(8) The term 'health maintenance organization' means a public or 
private organization, organized under the laws of any State, which— 
"(A) is a qualified health maintenance organization under 
section 1310(d); or 
"(B)(i) provides or otherwise makes available to enrolled par-
ticipants health care services, including at least the following 
basic health care services: usual physician services, hospitaliza-
tion, laboratory, X-ray, emergency and preventive services, and 
out of area coverage; (ii) is compensated (except for copayments) 
for the provision of the basic health care services listed in clause 
(i) to enrolled participants by a payment which is paid on a 
periodic basis without regard to the date the health care services 
are provided and which is fixed without regard to the frequency, 
extent, or kind of health service actually provided; and (iii) 
provides physicians' services primarily (I) directly through physi-
cians who are either employees or partners of such organization, 
or (II) through arrangements with individual physicians or one 
or more groups of physicians (organized on a group practice or 
individual practice basis).". 
(4)(A) Section 1522(b)(13) is amended (i) by striking out "(3),", (ii) by 
inserting "in a timely manner" after "reviewed" in subparagraph 
(A), and (iii) by inserting after "agencies," in subparagraph (A) the 
following: "or, if there is no such State law,". 
(B) Section 1522(b)(13)(B) is amended by inserting "under subpara-
graph (A)" after "the reviewing agency". 
(5) Section 1532(c)(8) is amended by striking out "for which assist-
ance may be provided under title XIII", 
(c) The Comptroller General shall conduct an evaluation of the 
exemption authority provided by section 1527(b) of the Public Health 
Service Act. In conducting the evaluation, the Comptroller General 
shall determine— 
(1) the health maintenance organizations, combinations of 
health maintenance organizations, and health care facilities 
which have applied to receive an exemption under that section, 
(2) the services, facilities, and equipment with respect to which 
applications have been submitted under that section, 
(3) the impact of the exemption on existing contractual ar-
rangements between health maintenance organizations and 
health care facilities and on plans of such organizations respect-
ing such arrangements, and 
(4) the impact of the exemption on health care delivery 
systems, including its impact on the cost, availability, accessibil-
ity, and quality of health care. 
The Comptroller General shall report the results of the evaluation to 
the Committee on Labor and Human Resources of the Senate and the 
Committee on Interstate and Foreign Commerce of the House of 
Representatives not later than February 1,1982. 
(d) Within one hundred and eighty days of the date of the enact-
ment of this Act, the Secretary of Health, Education, and Welfare 
shall promulgate such regulations as may be necessary to enable the 
States to establish certificate of need programs which meet the 
requirements of section 1527 of the Public Health Service Act. 
APPROPRIATENESS REVIEW 
42 use 300/-2. 
SEC. 118. (a)(1) Section 1513(g)(1) is amended by striking out "all 
institutional health services offered in the health service area of the 
agency" and inserting in lieu thereof "at least those institutional and 
home health services which are offered in the health service area of 
PUBLIC LAW 96-79—OCT. 4, 1979 
93 STAT. 621 
the agency and with respect to which goals have been established in 
the State health plan". 
(2) Section 1523(a)(6) is amended by striking out "all institutional 42 use 300m-2. 
health services being offered in the State" and inserting in lieu 
thereof "at least those institutional and home health services which 
are offered in the State and with respect to which goals have been 
established in the State health plan". 
(b)(1) Section 1513(g) is amended by adding at the end the following: 42 use 300/-2. 
"(3) In making the appropriateness review required by para-
graph (1) of a health service, each health systems agency shall at 
least consider the need for the service, its accessibility and 
availability, financial viability, cost effectiveness, and the qual-
ity of service provided.". 
(2) Section 1523(a)(6) is amended by adding at the end the following: 42 use 300m-2. 
"In making the appropriateness review required by this paragraph of 
a health service, the State Agency shall at least consider the need for 
the service, its accessibility and availability, financial viability, cost 
effectiveness, and the quality of 
service provided.". 
(c) Section 1513(g)(2) is amended by striking out "existing institu- 42 use 300/-2. 
tional". 
REVIEW AND APPROVAL OF PROPOSED USES OF FEDERAL FUNDS 
SEC. 119. (a) Section 1524(c)(6) is amended— 
4
2 use 300m-3. 
(1) by striking out "approve or disapprove" in the first sentence 
and inserting in lieu thereof "recommend approval or disap-
proval of (A) , 
(2) by striking out "or the Comprehensive" in the first sentence 
and inserting in lieu thereof ' 
Wtion 409 of the Drug Abuse 
Office and Treatment Act of 1972, or the Comprehensive", 21 use ii76. 
(3) by inserting before the period at the end of 
the first sentence 
a comma and the following: "and (B) any application (and any 
revision of an application) submitted to the Secretary by a State 
for a grant or contract under any provision of law referred to in 
clause (A) for projects in more than one health service area of the 
State", 
(4) by amending the third sentence to read as follows: "If a 
SHCC recommends disapproval of such a plan or application, the 
Secretary, after making a finding that such plan or application is 
not in conformity with the State health plan, may not make 
Federal funds available under such State plan or application.", 
(5) by inserting after the third sentence the following new 
sentence: "If the Secretary makes such a finding, he shall notify 
the Governor of his finding and the reasons therefor and advise 
him that he has thirty days in which to submit a revised State 
plan or application that conforms with the State health plan.", 
and 
(6) by striking out "If after such review" in the last sentence 
and inserting in lieu thereof the following: "If after reviewing a 
recommendation of a SHCC to disapprove such State plan or 
application,". 
(b)(1) Section 1513(e)(l)(A)(i) is amended— 
42 use 300/-2. 
(A) by inserting "of 1972" after "Treatment Act", and 
(B) by inserting after "health resources" the following: "by any 
entity other than the government of a State unless such re-
sources are solely within the health service area of 
such agency". 
(2) Section 1513(e)(l)(AXii) is amended by striking out "an allot-
ment" and inserting in lieu thereof "an ^lotment, contract, or 
grant". 
93 STAT. 622 
PUBLIC LAW 96-79—OCT. 4, 1979 
42 u s e 300/-2. 
Proposed use of 
Federal funds, 
availability for 
State use, 
review. 
(3) The first sentence of section 1513(e)(1)(B) is amended by striking 
out "under title IV, VII, or VIII of this Act" and all that follows in 
such sentence and inserting in lieu thereof the following: "for 
research or training unless the grants or contracts are to be made, 
entered into, or used for the development, expansion, or support of 
health resources which, in the case of grants or contracts for training, 
would make a significant change in the health services available in 
the health service area or which, in the case of grants or contracts for 
research, would significantly change the delivery of health services, 
or the distribution or extent of health resources, available to persons 
in the health service area other than those who are participants in 
such research.". 
(4) Section 1513(e)(2) is amended— 
(A) by striking out "such paragraph" in the first sentence and 
inserting in lieu thereof "paragraph (lXA)(i)", and 
(B) by striking out "If in the second sentence and inserting in 
lieu thereof "If under paragraph (l)(A)(i)". 
(5) Section 1513(e) is amended by redesignating paragraph (3) as 
paragraph (4) and by inserting after paragraph (2) the following new 
paragraph: 
"(3) The Governor of a State shall allow health systems agencies 
sixty days to make the review required by paragraph (l)(A)(ii). If 
under such paragraph an agency disapproves a proposed use of 
Federal funds in its health service area, the Governor may not make 
such Federal funds available for such use until he has made, upon 
request of the entity making such proposal, a review of the agency 
decision. In making any such review of any agency decision, the 
Governor shall give the State health planning and development 
agency an opportunity to consider the decision of the health systems 
agency and to submit to the Governor its comments on the decision. 
The Governor, after taking into consideration such State Agency's 
comments (if any), may make such Federal funds available for such 
use, notwithstanding the disapproval of the health systems agency. 
Each such decision by the Governor to make funds available shall be 
submitted to the appropriate health systems agency and State health 
planning and development agency and shall contain a detailed 
statement of the reasons for the decision.". 
COORDINATION OF HEALTH PLANNING WITH RATE REVIEW 
42 use 300Z-2. 
SEC. 120. (a) Section 1513(d) is amended (1) by redesignating 
paragraph (4) as paragraph (5); (2) by striking out "and" in paragraph 
(3); and (3) by adding after paragraph (3) the following new para-
graph: 
"(4) any entity of the State in which the agency is located 
which reviews the rates or budgets of health care facilities 
located in the agency's health service area, and". 
Ante, p. 607. 
(b) Section 1522(b)(7)(A) is amended by inserting before the comma 
at the end the following: "and for the coordination by the State 
Agency in the conduct of its activities with any entity of the State 
which reviews the rates or budgets of health care facilities in the 
State". 
42 use 300m-5. 
(c)(1) Section 1526 is amended— 
(A) by striking out "(not later than six months after the date of 
the enactment of this title)" in the first sentence of subsection (a); 
and 
(B) by striking out the last sentence of subsection (a). 
(2) Such section is further amended— 
PUBLIC LAW 96-79—OCT. 4, 1979 
93 STAT. 623 
(A) by inserting before the period in the first sentence of 
subsection (a) "or to any other entity of 
the government of 
a State 
which has so indicated an intent to regulate such rates"; 
(B) by striking out "A State Agency" in subsection (b)(1) and 
inserting in lieu thereof "An entity"; 
(C) by striking out "the State Agency" in subparagraphs (A) 
and (F) of such subsection and inserting in lieu thereof "the 
entity"* 
(D) by inserting "if it is a State Agency," after "(D)" and "(E)", 
respectively, in such subsection; 
(E) by adding after and below subparagraph (G) of such 
subsection the following: "If an entity which is not a State 
Agency receives a grant under subsection (a), such entity shall 
coordinate its activities under the grant with the State Agency 
for the State in which such entity is located, share with the State 
Agency data obtained from such activities, and for purposes of 
such activities, develop with the State Agency criteria for the 
review of institutional health services, equipment, and facilities 
which guidelines are not in conflict with criteria adopted by the 
State Agency."; 
(F) by striking out "a State Agency" in subsection (b)(2) and 
inserting in lieu thereof "an entity" and by striking out "the 
State Agency" in such subsection and inserting in lieu thereof 
"the entity"; and 
(G) by striking out "State Agency" in subsection (d) and in the 
first sentence of subsection (c) and inserting in lieu thereof 
-^^^i' 
"entity". 
COORDINATION WITHIN STANDARD METROPOLITAN STATISTICAL AREAS 
AND WITH OTHER ENTITIES 
SEC. 121. (a) Section 1513(d) is amended by inserting "(including 42 use 300/-2. 
area agencies on aging and local and regional alcohol abuse, drug 
abuse, and mental health planning agencies)" after "administrative 
agencies'' in paragraph (3). 
(b) Subsection (d) of section 1513 (as amended by section 120(a)) is 
amended (1) by inserting "(1)" after "(d)", (2) by redesignating 
paragraphs (1), (2), (3), (4), and (5) as subparagraphs (A), (B), (C), (D), 
and (E), respectively, and (3) by adding at the end the following: 
"(2) Each health systems agency which has all or part of its health 
service area within a part of a standard metropolitan statistical area 
(as determined by the Office of Management and Budget) shall 
coordinate its activities with the activities of anj^ other health 
systems agency which has any part of its health service area within 
such standard metropolitan statistical area. Such coordination shall 
at least provide that each health systems agency designated for a 
health service area within any part of a single standard metropolitan 
^ 
statistical area shall review (A) each HSP and AIP for each such 
health service area, (B) the criteria used in accordance with section 
1532 for reviews affecting any such area, and (C) each decision under 42 use 300n-i 
certificate of 
need programs which affect any such area. 
"(3) The Secretary shall by regulation provide for the sharing by 
health systems agencies of health planning data with Indian tribes 
and Alaska Native Villages. 
"(4) Health systems agencies that have an Indian tribe or inter-
tribal Indian organization (referred to in subsection (e)(1)(B)) located 
within such agencies' health service areas shall carry out their 
functions under this section in a manner that recognizes tribal self-
determination. Such agencies shall seek to enter into agreements 
Coordination 
with other 
health systems 
agency. 
93 STAT. 624 
PUBLIC LAW 96-79—OCT. 4, 1979 
Ante, p. 622. 
25 u s e 450b. 
with the Indian tribes and intertribal organizations located within 
their health service areas on matters of mutual concern as defined in 
regulations of the Secretary.". 
(c) Section 1513(e) is amended by inserting "as defined in section 
4(b) of the Indian Self-Determination and Education Assistance Act)" 
after "Indian tribe" in paragraph (1)(B). 
COLLECTION AND PUBLICATION OF HOSPITAL CHARGES 
42 use 300/-2. 
SEC. 122. (a) Subsection (h) of section 1513 is amended to read as 
follows: 
"(h)(1) Each health systems agency shall collect annually on a form 
developed in consultation with the State health planning and devel-
opment agency (or agencies) the rates charged for each of the twenty-
five most frequently used hospital services in the State (or States) 
including the average semiprivate and private room rates. 
"(2) Each health systems agency shall make available to the public 
for inspection and copying (at a reasonable expense to the public) the 
information supplied to the health systems agency pursuant to this 
subsection in readily understandable language and in a manner 
designed to facilitate comparisons among the hospitals in the health 
systems agency's health service area.". 
42 use 300m-i. 
(b) Section 1522(b)(5) is amended by adding before the semicolon the 
following: "and contain provisions to assure compliance with requests 
for information made by health systems agencies in accordance with 
Supra. 
section 1513(h)". 
42 u s e 300m. 
42 u s e 300n-4. 
State Agency's 
operation and 
performance. 
42 u s e 300m-l. 
Termination 
agreement 
conditions. 
STATE HEALTH PLANNING AND DEVELOPMENT AGENCIES 
SEC. 123. (a) Section 1521(b)(4) is amended (1) by inserting "(A)" 
after "(4)"; (2) by inserting "upon a review under section 1535 of the 
State Agency's operation and performance of its function" before "he 
determines"; (3) by adding at the end of paragraph (4) the following: 
"Before renewing an agreement under this paragraph with a State 
Agency for a State, the Secretary shall provide each health systems 
agency designated for a health service area located (in whole or in 
part) in such State and the Statewide Health Coordinating Council of 
such State an opportunity to comment on the performance of the 
State Agency and to provide a recommendation on whether such 
agreement should be renewed."; and (4) adding at the end thereof the 
following new subparagraph: 
"(B) If upon a review under section 1535 of the State Agency's 
operation and performance of its functions, the Secretary determines 
that it has not fulfilled, in a satisfactory manner, the responsibilities 
of a State Agency during the period of the agreement to be renewed 
or if the applicable State administrative program does not continue to 
meet the requirements of section 1522, he may terminate such 
agreement or return the State Agency to a conditionally designated 
status under paragraph (2) of subsection (b) for a period not to exceed 
twelve months. At the end of such period, the Secretary shall either 
terminate its agreement with such State Agency or enter into an 
agreement with such State Agency under paragraph (3) of subsection 
(b). The Secretary may not terminate an agreement or return a State 
Agency to a conditionally designated status unless the Secretary 
has— 
"(i) provided the State Agency with notice of his intent to 
return it to a conditional status or terminate the agreement with 
it and included in that notice specification of any functions which 
the Secretary has determined the State Agency did not satisfac-
PUBLIC LAW 96-79—OCT. 4, 1979 
93 STAT. 625 
torily fulfill and of any requirements which the Secretary has 
determined it has not met; 
"(ii) provided the State Agency with a reasonable opportunity 
for a hearing, before an officer or employee of the Department of 
Health, Education, and Welfare designated for such purpose, on 
the action proposed to be taken by the Secretary; and 
"(iii) in the case of a proposed termination, consulted with the 
National Council on Health Planning and Development respect-
ing the termination.". 
(b)(1)(A) Paragraphs (3) and (4) of section 1521(b) are each amended 
by striking out "twelve months" and inserting in lieu thereof "thirty-
six months". 
(B) The amendments made by subparagraph (A) shall apply with 
respect to designation agreements entered into under section 
1521(b)(3) of the Public Health Service Act after the date of the 
enactment of this Act. 
(2) Section 1521(b)(3) is amended— 
(A) by inserting "(A)" after "(3)", 
(B) by redesignating subparagraphs (A) and (B) as clauses (i) 
and (ii), respectively, 
(C) by amending clause (ii) (as so redesignated) to read as 
follows: 
"(ii) by the Secretary if the Secretary determines, in accord-
ance with subparagraph (B), that the designated State Agency is 
not complying with the provisions of such agreement.", and 
(D) by adding at the end the following: 
"(B) Before the Secretary may terminate an agreement with a 
designated State Agency under subparagraph (A)(ii), the Secretary 
shall— 
"(i) consult with the Statewide Health Coordinating Council of 
the State for which the State Agency is designated respecting the 
proposed termination, 
"(ii) give the State Agency notice of the intention to terminate 
the agreement and in the notice specify with particularity (I) the 
basis for the determination of the Secretary that the State 
Agency is not in compliance with the agreement, and (II) the 
actions that the State Agency should take to come into compli-
ance with the agreement, and 
"(iii) provide the State Agency with a reasonable opportunity 
for a hearing, before an officer or employee of the Department of 
Health, Education, and Welfare designated for such purpose, on 
the matter specified in the notice. 
The Secretary may not terminate such an agreement before consult-
ing with the National Council on Health Planning and Development 
respecting the proposed termination. Before the Secretary may 
permit the term of an agreement to expire without renewing the 
agreement, the Secretary shall make the consultations prescribed by 
clause (i) and the preceding sentence, give the State Agency with 
which the agreement was made notice of the intention not to renew 
the agreement and the reasons for not renewing the agreement, and 
provide, as prescribed by clause (iii), the State Agency an opportunity 
for a hearing on the matter specified in the notice.". 
(c)(1)(A) Section 1522(b)(13) is amended by striking out ", (g), or (h)" 
and inserting in lieu thereof "or (g)". 
(B) Section 1513(a) is amended by striking out "through (h)" and 
inserting in lieu thereof "through (g)". 
(2) Paragraph (3) of section 1523(a) is amended by striking out 
"review of the State medical facilities plan required under section 
1603, and in the". 
42 u s e 300m. 
42 u s e 300m 
note. 
Termination 
agreement 
conditions. 
Nonrenewal of 
agreement; 
notice, hearing. 
42 u s e 300m-1. 
Ante, pp. 595, 
604. 
42 u s e 300m-2. 
59-194 O — 81 
42 : QL3 
93 STAT. 626 
PUBLIC LAW 96-79—OCT. 4, 1979 
42 u s e 300m-2. 
Health care 
facilities 
inventories; 
report. 
42 u s e 300/-2. 
42 u s e 300m. 
Ante, p. 625. 
42 u s e 2689 
note. 
42 u s e 4541 
note. 
21 u s e 1101 
note. 
42 u s e 300m-l. 
Supra. 
42 u s e 300m. 
(3) Section 1523(a) is amended by adding after paragraph (6) the 
following new paragraph: 
"(7) Prepare an inventory of the health care facilities (other 
than Federal health care facilities) located in the State and 
evaluate on an ongoing basis the physical condition of such 
facilities. Such inventory and evaluations shall be reported to the 
health systems agencies designated for health service areas 
located (in whole or in part) in the State for purposes of the 
functions of the agency under section 1513(b).". 
(d) Subsection (d) of section 1521 is amended to read as follows: 
"(d)(1) If an agreement under subsection (b)(3) for the designation of 
a State Agency for a State is not in effect upon the expiration of^ 
"(A) the fourth fiscal year which begins after the calendar year 
in which the National Health Planning and Resources Develop-
ment Act of 1974 is enacted; or 
"(B)(i) if the legislature of the State is in a regular session on 
the date of the enactment of the Health Planning and Resources 
Development Amendments of 1979 and the legislature will be in 
session for at least twelve months from such date, twelve months 
from such date, or 
h 
"(ii) if the legislature of the State is in session on such date of 
enactment but twelve months do not remain in such session after 
such date or if the legislature of the State is not in session on such 
date, twelve months after the beginning of the first regular 
session of the legislature beginning after such date, 
whichever occurs later, the Secretary shall take the action prescribed 
by paragraph (2). 
(2) If upon the expiration of the period applicable under para-
graph (1) an agreement is not in effect for the designation of a State 
Agency for a State, the Secretary shall until such an agreement is in 
effect take the following action: 
"(A) During the first twelve months after the date of the 
expiration of the applicable period, the Secretary shall reduce by 
25 percent the amount of each allotment, grant, loan, and loan 
guarantee made to and each contract entered into with an 
individual or entity in such State during such period under this 
Act, the Community Mental Health Centers Act, the Compre-
hensive Alcohol Abuse and Alcoholism Prevention, Treatment, 
and Rehabilitation Act of 1970, and the Drug Abuse Office and 
Treatment Act of 1972. 
"(B) During the second twelve months after such expiration 
date, the Secretary shall reduce by 50 percent the amount of each 
such allotment, grant, loan, loan guarantee, and contract. 
"(C) During the third twelve months after such expiration 
date, the Secretary shall reduce by 75 percent the amount of each 
such allotment, grant, loan, loan guarantee, and contract. 
"(D) After the expiration of thirty-six months after such 
expiration date, the Secretary may not make or enter into any 
such allotment, grant, loan, loan guarantee, or contract.". 
(e)(1) Section 1522(c) is amended by striking out "once each year" 
and inserting in lieu thereof "once every three years". 
(2) Section 1523(a) (as amended by subsection (c)(3)) is amended by 
adding the following new paragraph at the end thereof: 
"(8) Provide technical assistance to individuals and public and 
private entities in obtaining and filling out the necessary forms 
for the development of projects and programs.". 
(f) The first sentence of section 1521(b)(2)(B) is amended by inserting 
before the period a comma and the following: "except that the 
Secretary may extend the period for such additional time as he finds 
PUBLIC LAW 96-79—OCT. 4, 1979 
93 STAT. 627 
appropriate if he finds that the designated State Agency is making a 
good faith effort to comply with the requirements of section 1523". 4
2 use 300m-2. 
(gXD Paragraph (5) of section 1523(a) is amended by striking out 
"1413(f)" and inserting in lieu thereof "1513(f)". 
(2) Section 1521(bKl) is amended by striking out "this part" and 42 use 300m. 
inserting in lieu thereof "this title". 
STATEWIDE HEALTH COORDINATING COUNCIL COMPOSITION 
SEC. 124. (aXD Section 1524(bXlXA)(ii) is amended by inserting 42USe300m-3. 
before the period a comma and the following: "except that the 
number of representatives on the SHCC to which a health systems 
agency designated for a health service area which is not entirely 
within the State shall be a number which is based on the relationship 
of the population of the portion of such health service area within the 
State to the population of the largest health service area located 
entirely within the State, except that each such agency shall be 
entitled to at least one representative on the SHCC". 
(2) Section 1524(bXlXA)(iii) is amended to read as follows: 
"(iii) Except as otherwise provided in clause (ii) and this clause, 
each such health systems agency shall be entitled to at least two 
representatives on the SHCC. If there are more than ten health 
systems agencies within a State, each health systems agency 
within such State shall be entitled to at least one representative 
on the SHCC. Of the representatives of health systems agencies 
on the SHCC, not less than one-half shall be individuals who are 
consumers of health care and who are not providers of health 
care.". 
(3) Section 1524(bXlXAXi) is amended (A) by inserting "(or if the 
number of representatives on the SHCC to which health systems 
agencies are entitled under the second sentence of clause (iii) is less 
than sixteen, no fewer than the number to which they are entitled)" 
after "sixteen representatives", (B) by striking out "at least five", and 
(C) by adding at the end the following: "Each agency shall submit a 
number of nominees to the Governor which is at least twice the 
number of representatives on the SHCC to which the agency is 
entitled.". 
(4) Section 1524(bXl) is amended by adding at the end thereof the 
following new paragraph: 
"(E) Members of the SHCC who are consumers of health care 
and who are not providers of health care shall include individ-
uals who represent rural and urban medically underserved 
populations if such populations exist in the State." 
(b) Section 1524(bX2) is amended to read as follows: 
"(2) The Governor may select, by and with the advice and consent of 
the State senate, or, in the case of a State with a unicameral 
legislature, of the State legislature, the chairman of the SHCC from 
among the members of the SHCC. If the Governor does not select the 
chairman, the SHCC shall select the chairman from among its 
members.". 
(cXD Section 1524(bXlXC) is amended (A) by striking out "one-
third" and inserting in lieu thereof "one-half, and (B) by striking 
^
* 
out "an ex officio" and inserting in lieu thereof "a nonvoting, ex 
officio". 
(2) Section 1524(bXlXD) is amended by striking out "two" and 
inserting in lieu thereof "one". 
(d) The first sentence of section 1524(cX2)(B) is amended by striking 
out "State agency" and inserting in lieu thereof "State Agency". 
93 STAT. 628 
PUBLIC LAW 96-79—OCT. 4, 1979 
CENTERS FOR HEALTH PLANNING 
42 use 300n-3. 
SEC. 125. (a) Section 1534(b)(1) is amended (1) by inserting "and it 
will be able to provide assistance and dissemination of information to 
health systems agencies and State Agencies as provided in subsec-
tions (a) and (c)," after "paragraph (2)", and (2) by inserting "and is 
able to provide such assistance and dissemination of information" 
after "such requirements", 
(b) Clause (2) of section 1534(c) is amended to read as follows: "(2) 
*
' •'" 
shall develop and use methods (satisfactory to the Secretary) to 
disseminate to such agencies and State Agencies planning 
approaches, methodologies (including methodologies to provide for 
education of new board members and new staff and continuing 
education of board members and staff of such agencies and State 
Agencies), policies, and standards.". 
DEFINITIONS 
42USC300n. 
SEC. 126. (a)(1) Section 1531(5) is amended to read as follows: 
"(5) The term 'institutional health services' means health services 
which (A) are provided through private and public hospitals, rehabili-
tation facilities, nursing homes, and other health care facilities, as 
defined by the Secretary by regulation, and (B) entail annual operat-
ing costs of at least the expenditure minimum. For purposes of this 
paragraph, the term 'expenditure minimum' means $75,000 for the 
twelve-month period beginning with the month in which this para-
graph is enacted and for each twelve-month period thereafter, 
$75,000 or, at the discretion of the State, the figure in effect for the 
preceding twelve-month period, adjusted to reflect the change in the 
preceding twelve-month period in an index maintained or developed 
by the Department of Commerce and designated by the Secretary by 
regulation for purposes of making such adjustment.". 
(2) After the date of the enactment of this Act, the Secretary shall 
consult with the Committee on Labor and Human Resources of the 
Senate and the Committee on Interstate and Foreign Commerce of 
the House of Representatives before promulgating regulations defin-
ing health care facilities for purposes of section 1531(5) of the Public 
Health Service Act as amended by paragraph (1). 
(b) Section 1531 is amended by adding after paragraph (8) (added by 
section 117 of this Act) the following new paragraphs: 
"(9) For purposes of paragraph (5) of this section and sections 
1523(a)(4)(B) and 1527, the term 'rehabilitation facility' means an 
inpatient facility which is operated for the primary purpose of 
assisting in the rehabilitation of disabled persons through an inte-
grated program of medical and other services which are provided 
under competent professional supervision. For purposes of the re-
maining provisions of this title, the term 'rehabilitation facility' 
means an inpatient facility described in the preceding sentence and, 
in addition, an outpatient facility which is operated as described in 
such sentence. 
"(10) The term 'medically underserved population' has the same 
42 use 254c. 
meaning as such term has under section 330(b)(3). 
^ 
"(11) Any reference to the term 'health' includes physical and 
mental health. 
"(12) The term 'physician' means a doctor of medicine or osteop-
athy legally authorized to practice medicine and surgery by a State.". 
Consultations 
with 
congressional 
committees. 
42 u s e 300n 
note. 
42 u s e 300m-2. 
Ante, p. 614. 
PUBLIC LAW 96-79—OCT. 4, 1979 
93 STAT. 629 
AUTHORIZATIONS 
SEC. 127. (a) Section 1516(d)(1) (as amended by section 106) is Ante, p. 598. 
amended— 
(1) by striking out "and" after "1976,", and 
(2) by inserting before the period the following: ", $150,000,000 
for the fiscal year ending September 30, 1980, $165,000,000 for 
the fiscal year ending September 30, 1981, and $185,000,000 for 
the fiscal year ending September 30,1982". 
O
t
>
) Section 1525(c) is amended— 
42 use 300m-4. 
(1) by striking out "and" after "1976,", and 
(2) by inserting before the period the following: ", $35,000,000 
for the fiscal year ending September 30,1980, $40,000,000 for the 
fiscal year ending September 30, 1981, and $45,000,000 for the 
fiscal year ending September 30,1982". 
(c) Section 1526(e) is amended— 
42 use 300m-5. 
(1) by striking out "and" after "1976,", and 
(2) by inserting before the period the following: ", $6,000,000 for 
the fiscal year ending September 30, 1980, $6,000,000 for the 
fiscal year ending September 30, 1981, and $6,000,000 for the 
fiscal year ending September 30,1982". 
(d) Section 1534(d) is amended— 
42 use 300n-3. 
(1) by striking out "and" after "1976,", and 
(2) by inserting before the period the following: ", $6,000,000 for 
the fiscal year ending September 30, 1980, $8,000,000 for the 
fiscal year ending September 30, 1981, and $10,000,000 for the 
fiscal year ending September 30,1982". 
(e) Section 1640(d) is amended— 
42 use 300t. 
(1) by striking out "and" after "1976,", and 
(2) by inserting before the period the following: ", $20,000,000 
for the fiscal year ending September 30,1981, and $30,000,000 for 
the fiscal year ending September 30,1982". 
TECHNICAL AMENDMENT 
SEC. 128. Section 1903(m)(2)(C) of the Social Security Act is 42 use I396b. 
amended by striking out "the date the entity enters into a contract 
with the State under this title for the provision of health services on a 
prepaid risk basis" and inserting in lieu thereof "the date the entity 
qualifies as a health maintenance organization (as determined by 
the Secretary)". 
EFFECTIVE DATE 
SEC. 129. (a) The amendments made by this title (other than by 42 use 300/ 
sections 101, 102, 103(a), 103(b), 103(c), 104(c), 105, 106, 107, 110(c), note. 
110(d), 110(e), 110(0, 111, 115(0,116(d), 116(e), 117,120,123,126,127, 
and 128) shall take effect one year after the date of the enactment of 
this Act, except that on and after the date of the enactment of this 
Act— 
(1) the changes in the membership of the health systems 
agencies and the Statewide Health Coordinating Councils re-
quired by amendments to sections 1512,1524, and 1531 shall be 42 use 300/-i, 
implemented through selections of members to fill vacancies 300m-3,300n. 
occurring after such date, 
(2) a health systems agency, a State health planning and 
development agency, and a Statewide Health Coordinating Coun-
cil may make the organizational and related changes required by 
93 STAT. 630 
PUBLIC LAW 96-79—OCT. 4, 1979 
42 u s e 300/-1, 
300m-l, 300m-2, 
300m-3, 300n. 
42 u s e 300^5 
note. 
Ante, p. 598. 
42 u s e 300/-5. 
42 u s e 300n-6 
note. 
42 u s e 300m-2. 
the amendments to sections 1512, 1522, 1523, 1524, and 1531 of 
the PubUc Health Service Act, and 
(3) health systems agencies, State health planning and develop-
ment agencies, and Statewide Health Coordinating Councils may 
act in accordance with the changes in their functions made by 
the amendments to sections 1513, 1522, 1523, 1524, and 1532 of 
the Public Health Service Act. 
(b)(1) Except as provided in section 1516(c)(l)(C)(i) of the Public 
Health Service Act as amended by section 106, the amendments made 
by section 106 shall apply with respect to grants made under section 
1516 of the Public Health Service Act after the date of the enactment 
of this Act from appropriations under an appropriation Act enacted 
for the fiscal year ending September 30,1980. 
(2) The amendments made by sections 116(d), 116(e), 117, and 126 
shall take effect on the date of the enactment of this Act, except that 
if the Secretary of Health, Education, and Welfare determines that 
any amendment made by any such section will require a State to 
change its laws before the State health planning and development 
agency designated for such State may perform its functions under 
section 1523(a)(4)(B) of the Public Health Service Act, such amend-
ment shall take effect in such State— 
(A) if the legislature of the State is in a regular session on the 
date of the enactment of the Health Planning and Resources 
Development Amendments of 1979 and the legislature will be in 
session for at least twelve months from such date, twelve months 
from such date, or 
(B) if the legislature of the State is in session on such date of 
enactment but twelve months do not remain in such session after 
such date or if the legislature of the State is not in session on such 
date, twelve months after the beginning of the first regular 
session of the legislature beginning after such date. 
TITLE II—REVISION OF AUTHORITY FOR HEALTH 
RESOURCES DEVELOPMENT 
Repeal. 
42 use 
300p-300p-3. 
Post, p. 632, 635. 
42 u s e 300q. 
Loans to public 
or nonprofit 
entities. 
42 u s e 300q-2. 
Guarantees. 
REVISION AND EXTENSION OF ASSISTANCE 
SEC. 201. (a) Part B of title XVI is repealed. 
(b)(1) Subsections (a) and (b) of section 1620 are amended to read as 
follows: 
"(a)(1) The Secretary, during the period ending September 30,1982, 
may, in accordance with this part, make loans from the fund 
established under section 1622(d) to any public or nonprofit private 
entity for projects for— 
"(A) the discontinuance of unneeded hospital services or 
facilities, 
"(B) the conversion of unneeded hospital services and facilities 
to needed health services and medical facilities, including outpa-
tient medical facilities and facilities for long-term care; 
"(C) the renovation and modernization of medical facilities, 
particularly projects for the prevention or elimination of safety 
hazards, projects to avoid noncompliance with licensure or ac-
creditation standards, or projects to replace obsolete facilities; 
"(D) the construction of new outpatient medical facilities; and 
"(E) the construction of new inpatient medical facilities in 
areas which have experienced (as determined by the Secretary) 
recent rapid population growth. 
"(2)(A) The Secretary, during the period ending September 30,1982, 
may, in accordance with this part, guarantee to— 
PUBLIC LAW 96-79—OCT. 4, 1979 
93 STAT. 631 
"(i) non-Federal lenders for their loans to public and nonprofit 
private entities for medical facilities projects described in para-
graph (1), and 
"(ii) the Federal Financing Bank for its loans to public and 
nonprofit private entities for such projects, 
pavment of principal and interest on such loans. 
(B) In the case of a guarantee of any loan to a public or nonprofit 
private entity under subparagraph (A)(i) which is located in an urban 
or rural poverty area, the Secretary may pay, to the holder of such 
loan and for and on behalf of the project for which the loan was made, 
amounts sufficient to reduce by not more than one half the net 
effective interest rate otherwise payable on such loan if the Secretary 
finds that without such assistance the project could not be 
undertaken. 
"(b) The principal amount of a loan directly made or guaranteed 
under subsection (a) for a medical facilities project, when added to 
any other assistance provided such project under part B, may not 
exceed 90 per centum of the cost of such project unless the project is 
located in an area determined by the Secretary to be an urban or 
rural poverty area, in which case the principal amount, when added 
to other assistance under part B, may cover up to 100 per centum of 
such costs.". 
(2) Section 1622(b)(2)(D) is amended by striking out "minus 3 per 
centum per annum" and inserting in lieu thereof the following: 
"minus any interest subsidy made in accordance with section 
1601(a)(2)(B) with respect to a loan made for a project located in an 
urban or rural poverty area". 
(3) Section 1622(e)(2) is amended (A) by striking out "and" after 
"1977,", and (B) by inserting before the period a comma and the 
following: "September 30, 1979, September 30, 1980, September 30, 
1981, and September 30,1982". 
(c) Section 1625 is amended to read as follows: 
"PROJECT GRANTS 
"SEC. 1625. (a)(1)(A) The Secretary may make grants for construc-
tion or modernization projects designed to— 
"(i) eliminate or prevent in medical facilities imminent safety 
hazards as defined by Federal, State, or local fire, building, or life 
safety codes or regulations, or 
"(ii) avoid noncompliance by medical facilities with State or 
voluntary licensure or accreditation standards. 
"(B) A grant under subparagraph (A) may only be made to— 
"(i) a State or political subdivision of a State, including any 
city, town, county, borough, hospital district authority, or public 
or quasi-public corporation, for any medical facility owned or 
operated by the State or political subdivision; and 
"(ii) a nonprofit private entity for any medical facility owned 
or operated by the entity but only if the Secretary determines— 
"(I) the level of community service provided by the facility 
and the proportion of its patients who are unable to pay for 
services rendered in the facility is similar to such level and 
proportion in a medical facility of a State or political 
subdivision, and 
"(II) that without a grant under subparagraph (A) there 
would be a disruption of the provision of health care to low-
income individuals. 
"(2) The amount of any grant under paragraph (1) may not exceed 
75 per centum of the cost of the project for which the grant is made 
Projects in urban 
or rural areas, 
loan assistance. 
Medical facilities 
project loan, 
limitation. 
Ante, p. 630. 
42 u s e 300q-2. 
Post, pp. 632,635. 
Post, p. 635. 
42 u s e 300r. 
Post, pp. 632,635. 
93 STAT. 632 
PUBLIC LAW 96-79—OCT. 4, 1979 
Appropriation 
authorization. 
Appropriation 
authorization. 
Repeal. 
42 use 
300o-300o-3 
42 u s e SOOq-
300q-2, 300r, 
300s-300s-5, 
300t. 
42 u s e 300s. 
42 use 
300s-la-300s-5. 
42 u s e 300s. 
unless the project is located in an area determined by the Secretary to 
be an urban or rural poverty area, in which case the grant may cover 
up to 100 per centum of such costs. 
"(3) There are authorized to be appropriated for grants under 
paragraph (1) $40,000,000 for the fiscal year ending September 30, 
1980, $50,000,000 for the fiscal year ending September 30, 1981, and 
$50,000,000 for the fiscal year ending September 30, 1982. Funds 
available for obligation under this subsection (as in effect before the 
date of the enactment of the Health Planning and Resources Develop-
ment Amendments of 1979) in the fiscal year ending September 30, 
1979, shall remain available for obligation under this subsection in 
the succeeding fiscal year. 
"(b)(1) The Secretary may make grants to public and nonprofit 
private entities for projects for (A) construction or modernization of 
outpatient medical facilities which are located apart from hospitals 
and which will provide services for medically underserved popula-
tions, and (B) conversion of existing facilities into outpatient medical 
facilities or facilities for long-term care to provide services for such 
populations. 
"(2) The amount of any grant under paragraph (1) may not exceed 
80 per centum of the cost of the project for which the grant is made 
unless the project is located in an area determined by the Secretary to 
be an urban or rural poverty area, in which case the grant may cover 
up to 100 per centum of such costs. 
"(3) There are authorized to be appropriated for grants under 
paragraph (1) $15,000,000 for the fiscal year ending September 30, 
1981, and $15,000,000 for the fiscal year ending September 30,1982.". 
CONFORMING AMENDMENTS 
SEC. 202. (a) Part A of title XVI is repealed and parts C, D, E, and F 
of title XVI are redesignated as parts A, B, C, and D, respectively. 
(b) Part C (as so redesignated) of title XVI is amended by striking 
out section 1630, by redesignating section 1631 through 1635 as 
section 1622 through 1626, respectively, and by inserting before 
section 1622 (as so redesignated) the following: 
"GENERAL REGULATIONS 
"SEC. 1620. The Secretary shall by regulation— 
"(1) prescribe the manner in which he shall determine the 
priority among projects for which assistance is available under 
part A or B, based on the relative need of different areas for such 
projects and giving special consideration— 
"(A) to projects for medical facilities serving areas with 
5
1 
relatively small financial resources and for medical facilities 
serving rural communities, 
"(B) in the case of projects for modernization of medical 
facilities, to projects for facilities serving densely populated 
areas, 
"(C) in the case of projects for construction of outpatient 
medical facilities, to projects that will be located in, and 
provide services for residents of, areas determined by the 
Secretary to be rural or urban poverty areas, 
"(D) to projects designed to (i) eliminate or prevent immi-
nent safety hazards as defined by Federal, State, or local fire, 
building, or life safety codes or regulations, or (ii) avoid 
noncompliance with State or voluntary licensure or accredi-
tation standards, and 
Ante, p. 632. 
PUBLIC LAW 96-79—OCT. 4, 1979 
93 STAT. 633 
"(E) to projects for medical facilities which, alone or in 
conjunction with other facilities, will provide comprehensive 
health care, including outpatient and preventive care as well 
as hospitalization; 
"(2) prescribe for medical facilities projects assisted under part 
A or B general standards of construction, modernization, and 
equipment, which standards may vary on the basis of the class of 
facilities and their location; and 
"(3) prescribe the general manner in which each entity which 
receives financial assistance under part A or B or has received 
financial assistance under part A or B or title VI shall be 42 use 300q-
required to comply with the assurances required to be made at ^^^<i"2.300r, 
the time such assistance was received and the means by which ^Jl;^ 
such entity shall be required to demonstrate compliance with 
such assurances. 
An entity subject to the requirements prescribed pursuant to para-
graph (3) respecting compliance with assurances made in connection 
with receipt of financial assistance shall submit periodically to the 
Secretary data and information which reasonably supports the enti-
ty's compliance with such assurances. The Secretary may not waive 
the requirement of the preceding sentence. 
"APPLICATIONS 
"SEC. 1621. (a) No loan, loan guarantee, or grant may be made 42 use 300s-l. 
under part A or B for a medical facilities project unless an application 
for such project has been submitted to and approved by the Secretary. 
If two or more entities join in a project, an application for such project 
may be filed by any of such entities or by all of them. 
'XbXD An application for a medical facilities project shall be 
submitted in such form and manner as the Secretary shall by 
regulation prescribe and shall, except as provided in paragraph (2), 
set forth— 
"(A) in the case of a modernization project for a medical facility 
for continuation of existing health services, a finding by the State 
Agency of a continued need for such services, and, in the case of 
any other project for a medical facility, a finding by the State 
Agency of the need for the new health services to be provided 
through the medical facility upon completion of the project; 
"(B) in the case of an application for a grant, assurances 
satisfactory to the Secretary that (i) the applicant making the 
application would not be able to complete the project for which 
the application is submitted without the grant applied for, and 
(ii) in the case of a project to construct a new medical facility, it 
would be inappropriate to convert an existing medical facility to 
provide the services to be provided through the new medical 
facility; 
"(C) in the case of a project for the discontinuance of a service 
or facility or the conversion of a service or a facility, an evalua-
tion of the impact of such discontinuance or conversion on the 
provision of health care in the health service area in which such 
service was provided or facility located; 
"(D) a description of the site of such project; 
"(E) plans and specifications therefor which meet the require-
ments of the regulations prescribed under section 1620(2); 
^^te, p. 632. 
"(F) reasonable assurance that title to such site is or will be 
vested in one or more of the entities filing the application or in a 
public or other nonprofit entity which is to operate the facility on 
completion of the project; 
93 STAT. 634 
PUBLIC LAW 96-79—OCT. 4, 1979 
"(G) reasonable assurance that adequate financial support will 
be available for the completion of the project and for its mainte-
nance and operation when completed, and, for the purpose of 
determining if the requirements of this subparagraph are met. 
Federal assistance provided directly to a medical facility which is 
located in an area determined by the Secretary to be an urban or 
rural poverty area or through benefits provided individuals 
served at such facility shall be considered as financial support; 
42 use 
"(H) the type of assistance being sought under part A or B for 
300q-300q-2, 
the project; 
Ante p 632 
"® reasonable assurance that all laborers and mechanics 
employed by contractors or subcontractors in the performance of 
work on a project will be paid wages at rates not less than those 
prevailing on similar construction in the locality as determined 
by the Secretary of Labor in accordance with the Act of March 3, 
1931 (40 U.S.C. 276a—276a-5, known as the Davis-Bacon Act), 
and the Secretary of Labor shall have with respect to such labor 
standards the authority and functions set forth in Reorganiza-
tion Plan Numbered 14 of 1950 (15 FR 3176; 5 U.S.C. Appendix) 
and section 2 of the Act of June 13, 1934 (40 U.S.C. 276c); 
"(J) in the case of a project for the construction or moderniza-
tion of an outpatient facility, reasonable assurance that the 
services of a general hospital will be available to patients at such 
facility who are in need of hospital care; and 
"(K) reasonable assurance that at all times after such applica-
tion is approved (i) the facility or portion thereof to be 
constructed, modernized, or converted will be made available to 
all persons residing or employed in the area served by the 
facility, and (ii) there will be made available in the facility or 
portion thereof to be constructed, modernized, or converted a 
reasonable volume of services to persons unable to pay therefor 
and the Secretary, in determining the reasonableness of the 
volume of services provided, shall take into consideration the 
extent to which compliance is feasible from a financial view-
point. 
Waiver. 
"(2)(A) The Secretary may waive— 
"(i) the requirements of subparagraph (D) of paragraph (1) for 
compliance with modernization and equipment standards pre-
Ante, p. 632. 
scribed pursuant to section 1620(2), and 
"(ii) the requirement of subparagraph (E) of paragraph (1) 
respecting title to a project site, 
in the case of an application for a project described in subparagraph 
(B) of this paragraph. 
"(B) A project referred to in subparagraph (A) is a project— 
"(i) for the modernization of an outpatient medical facility 
which will provide general purpose health services, which is not 
part of a hospital, and which will serve a medically underserved 
42 use 300s-3. 
population as defined in section 1624 or as designated by a health 
Ante, p. 682. 
systems agency, and 
"(ii) for which the applicant seeks a loan under part A the 
principal amount of which does not exceed $20,000.". 
42 use 
(c) Part C (as so redesignated) of title XVI is amended by adding at 
300s-300s-5. 
^Yie end thereof the following new section: 
Ante, p. 632. 
" 
"ENFORCEMENT OF ASSURANCES 
42USe300s-6. 
"SEC. 1627. The Secretary shall investigate and ascertain, on a 
periodic basis, with respect to each entity which is receiving financial 
assistance under this title or which has received financial assistance 
PUBLIC LAW 96-79—OCT. 4, 1979 
93 STAT. 635 
under title VI or this title, the extent of compliance by such entity 
with the assurances required to be made at the time such assistance 
was received. If the Secretary finds that such an entity has failed to 
comply with any such assurance, the Secretary shall report such 
noncompliance to the health systems agency for the health service 
area in which such entity is located and the State health planning 
and development agency of the State in which the entity is located 
and shall take any action authorized by law (including an action for 
specific performance brought by the Attorney General upon request 
of the Secretary) which will effect compliance by the entity with such 
assurances. An action to effectuate compliance with any such assur-
ance may be brought by a person other than the Secretary only if a 
complaint has been filed by such person with the Secretary and the 
Secretary has dismissed such complaint or the Attorney General has 
not brought a civil action for compliance with such assurance within 
six months after the date on which the complaint was filed with the 
Secretary.". 
42 u s e 291. 
Noncompliance 
report. 
TECHNICAL AMENDMENTS 
SEC. 203. (a) Part A (as so redesignated) of title XVI is amended— 
(1) by striking out section 1621 and by redesignating sections 
1620 and 1622 as sections 1601 and 1602, respectively, 
(2) by striking out "section 1622(d)" in subsection (a)(1) of 
section 1601 (as so redesignated) and inserting in lieu thereof 
"section 1602(d)", and 
(3) by striking out "section 1620(b)(2)" each place it occurs in 
subsection (d) of section 1602 (as so redesignated) and inserting in 
lieu thereof "section 1601(a)(2)(B)". 
(b) Section 1625 of part B (as so redesignated) is redesignated as 
section 1610. 
(c) Subsection (a)(1) of section 1622 (as so redesignated) is amended 
by striking out "section 1604" and inserting in lieu thereof "section 
1621 or 1642". 
(d) Section 1623 (as so redesignated) is amended by striking out 
"STATE" in the heading for such section. 
(e)(1) Section 1624 (as so redesignated) is amended by striking out 
paragraphs (1) and (2) and by redesignating paragraphs (3) through 
(16) as paragraphs (1) through (14), respectively. 
(2) Section 2(f) of the Public Health Service Act is amended by 
striking out "1531(1), and 1633(1)" and inserting in lieu thereof "and 
1531(1)^'. 
(f) Section 1626 (as so redesignated) is amended (1) by striking out 
"nonprofit", and (2) by striking out "section 1604" and inserting in 
lieu thereof "section 1621 or 1642". 
(g)(1) Section 1602 (as so redesignated) is amended by adding at the 
end thereof the following: 
"(f)(1) The Secretary may take such action as may be necessary to 
prevent a default on a loan made or guaranteed under this part or 
under title VI, including the waiver of regulatory conditions, deferral 
of loan payments, renegotiation of loans, and the expenditure of 
funds for technical and consultative assistance, for the temporary 
payment of the interest and principal on such a loan, and for other 
purposes. Any such expenditure made under the preceding sentence 
on behalf of a medical facility shall be made under such terms and 
conditions as the Secretary shall prescribe, including the implemen-
tation of such organizational, operational, and financial reforms as 
the Secretary determines are appropriate and the disclosure of such 
Ante, p. 632. 
42 u s e 300q-l, 
300q, 300q-2. 
42 u s e 300q. 
42 u s e 300q-2. 
Ante, pp. 631, 
632. 
42 u s e 300r. 
42 u s e 300s-la.. 
42 u s e 300s-2. 
42 u s e 300s-3. 
42 u s e 201. 
42 u s e 300S-5. 
42 u s e 300q-2. 
Loan, default 
prevention. 
42 u s e 291. 
93 STAT. 636 
PUBLIC LAW 96-79—OCT. 4, 1979 
Foreclosure 
procedures. 
42 u s e 291. 
42 u s e 300q-2. 
Ante, p. 635. 
financial or other information as the Secretary may require to 
determine the extent of the implementation of such reforms. 
"(2) The Secretary may take such action, consistent with State law 
respecting foreclosure procedures, as he deems appropriate to protect 
the interest of the United States in the event of a default on a loan 
made or guaranteed under this part or under title VI, including for a 
reasonable period of time taking possession of, holding, and using real 
property pledged as security for such a loan or loan guarantee.". 
(2) Paragraph (1) of subsection (d) of section 1602 (as so redesig-
nated) is amended (A) by striking out "and" at the end of subpara-
graph (D), (B) by striking out the period at the end of subparagraph 
(E) and inserting in lieu thereof ", and", and (C) by adding after 
subparagraph (E) the following: 
"(F) to enable the Secretary to take the action authorized by 
subsection (f).". 
(3) Paragraph (2) of such subsection (d) is amended (A) by striking 
out "and" at the end of subparagraph (D), (B) by inserting "and" at 
the end of subparagraph (E), and (C) by adding after subparagraph (E) 
the following: 
"(F) to enable the Secretary to take the action authorized by 
subsection (f),". 
42 u s e SOOq 
note. 
42 use 
300q-300q-2. 
Ante, p. 632. 
EFFECTIVE DATE 
SEC. 204. The amendments made by this title shall take effect 
October 1, 1979, except that the amendments made by section 201(b) 
respecting the payment of an interest subsidy for a loan or loan 
guarantee made under part A of title XVI of the Public Health 
Service Act shall apply only with respect to loans and loan guaran-
tees made after October 1, 1979, and with respect to loans and loan 
guarantees made under such part before such date the Secretary 
shall continue to pay the interest subsidy authorized for such loans 
and loan guarantees before such date. 
TITLE III—PROGRAM TO ASSIST AND ENCOURAGE THE DIS-
CONTINUANCE OF UNNEEDED HOSPITAL SERVICES 
AUTHORIZATION OF PROGRAM 
SEC. 301. (a) Title XVI, as amended by title II of this Act, is 
amended by adding at the end the following new part: 
"PART E—PROGRAM TO ASSIST AND ENCOURAGE THE VOLUNTARY 
DISCONTINUANCE OF UNNEEDED HOSPITAL SERVICES AND THE CON-
VERSION OF UNNEEDED HOSPITAL SERVICES TO OTHER HEALTH 
SERVICES NEEDED BY THE COMMUNITY 
42 u s e 300t-ll. 
Grants and 
technical 
assistance. 
Grants to State 
agencies. 
Ante, p. 625. 
ESTABLISHMENT OF PROGRAM 
"SEC. 1641. The Secretary shall, by April 1, 1980, establish a 
program under which— 
"(1) grants and technical assistance may be provided to hospi-
tals in operation on the date of the enactment of this part (A) for 
the discontinuance of unneeded hospital services, and (B) for the 
conversion of unneeded hospital services to other health services 
needed by the community; and 
"(2) grants may be provided to State Agencies designated 
under section 1521(b)(3) for reducing excesses in resources and 
facilities of hospitals. 
PUBLIC LAW 96-79—OCT. 4, 1979 
93 STAT. 637 
"GRANTS FOR DISCONTINUANCE AND CONVERSION 
"SEC. 1642. (a)(1) A grant to a hospital under the program shall be 42 use 300t-i2. 
subject to such terms and conditions as the Secretary may by 
regulation prescribe to assure that the grant is used for the purpose 
for which it was made. 
"(2) The amount of any such grant shall be determined by the 
Secretary. The recipient of such a grant may use the grant— 
"(A) in the case of a grantee which discontinues the provision 
of all hospital services or all inpatient hospital services or an 
identifiable part of a hospital facility which provides inpatient 
hospital services, for the liquidation of the outstanding debt on 
the facilities of the grantee used for the provision of the services 
or for the liquidation of the outstanding debt of the grantee on 
such identifiable part; 
"(B) in the case of a grantee which in discontinuing the 
provision of an inpatient hospital service converts or proposes to 
convert an identifiable part of a hospital facility used in the 
provision of the discontinued service to the delivery of other 
health services, for the planning, development (including con-
struction and acquisition of equipment), and delivery of the 
health service; 
"(C) to provide reasonable termination pay for personnel of the 
grantee who will lose employment because of the discontinuance 
of hospital services made by the grantee, retraining of such 
personnel, assisting such personnel in securing employment, and 
other costs of implementing arrangements described in subsec-
tion (c); and 
"(D) for such other costs which the Secretary determines may 
need to be incurred by the grantee in discontinuing hospital 
services. 
"(b)(1) No grant may be made to a hospital unless an application 
therefor is submitted to and approved by the Secretary. Such an 
application shall be in such form and submitted in such manner as 
the Secretary may prescribe and shall include— 
"(A) a description of each service to be discontinued and, if a 
part of a hospital is to be discontinued or converted to another 
use in connection with such discontinuance, a description of such 
part; 
"(B) an evaluation of the impact of such discontinuance and 
conversion on the provision of health care in the health service 
area in which such service is provided; 
"(C) an estimate of the change in the applicant's costs which 
will result from such discontinuance and conversion; and 
"(D) reasonable assurance that all laborers and mechanics 
employed by contractors or subcontractors in the performance of 
work on a project will be paid wages at rates not less than those 
prevailing on similar construction in the locality as determined 
by the Secretary of Labor in accordance with the Act of March 3, 
1931 (40 U.S.C. 276a—276a-5, known as the Davis-Bacon Act), 
and the Secretary of Labor shall have with respect to such labor 
standards the authority and functions set forth in Reorganiza-
tion Plan Numbered 14 of 1950 (15 FR 3176; 5 U.S.C. Appendix) 
and section 2 of the Act of June 13, 1934 (40 U.S.C. 276c); 
"(E) such other information as the Secretary may require. 
"(2)(A) The health systems agency for the health service area in 
which is located a hospital applying for a grant under the program 
shall (i) in making the review of the applicant's application under 
section 1513(e), determine the need for each service or part proposed 42 use 300/-2. 
93 STAT. 638 
PUBLIC LAW 96-79—OCT. 4, 1979 
29 u s e 167. 
Guidelines, 
promulgation, 
consultation, 
with HEW. 
to be discontinued by the applicant, (ii) in the case of an application 
for the conversion of a facility, determine the need for each service 
which will be provided as a result of the conversion, and (iii) make a 
recommendation to the State Agency for the State in which the 
applicant is located respecting approval by the Secretary of the 
applicant's application. 
"(B) A State Agency which has received a recommendation from a 
health systems agency under subparagraph (A) respecting an applica-
tion shall, after consideration of such recommendation, make a 
recommendation to the Secretary respecting the approval by the 
Secretary of the application. A State Agency's recommendation 
under this subparagraph respecting the approval of an application (i) 
shall be based upon (I) the need for each service or part proposed to be 
discontinued by the applicant, (II) in the case of an application for the 
conversion of a facility, the need for each service which will be 
provided as a result of the conversion, and (III) such other criteria as 
the Secretary may prescribe, and (ii) shall be accompanied by the 
health systems agency's recommendation made with respect to the 
approval of the application. 
"(C) In determining, under subparagraphs (A) and (B), the need for 
the service (or services) or part proposed to be discontinued or 
converted by an applicant for a grant, a health systems agency and 
State Agency shall give special consideration to the unmet needs and 
existing access patterns of urban or rural poverty populations. 
"(3)(A) The Secretary may not approve an application of a hospital 
for a grant— 
"(i) if a State Agency recommended that the application not be 
approved, or 
"(ii) if the Secretary is unable to determine that the cost of 
providing inpatient health services in the health service area in 
which the applicant is located will be less than if the inpatient 
health services proposed to be discontinued were not discon-
tinued. 
"(B) In considering applications of hospitals for grants the Secre-
tary shall consider the recommendations of health systems agencies 
and State Agencies and shall give special consideration to applica-
tions (i) which will assist health systems agencies and State Agencies 
to meet the goals in their health systems plans and State health 
plans, or (ii) which will result in the greatest reduction in hospital 
costs within a health service area. 
"(c)(1) Except as provided in paragraph (3), the Secretary may not 
approve an application submitted under subsection (b) unless the 
Secretary of Labor has certified that fair and equitable arrangements 
have been made to protect the interests of employees affected by the 
discontinuance of services against a worsening of their positions with 
respect to their employment, including arrangements to preserve the 
rights of employees under collective-bargaining agreements, continu-
ation of collective-bargaining rights consistent with the provisions of 
the National Labor Relations Act, reassignment of affected employ-
ees to other jobs, retraining programs, protecting pension, health 
benefits, and other fringe benefits of affected employees, and arrang-
ing adequate severance pay, if necessary. 
"(2) The Secretary of Labor shall by regulation prescribe guidelines 
for arrangements for the protection of the interests of employees 
affected by the discontinuance of hospital services. The Secretary of 
Labor shall consult with the Secretary of Health, Education, and 
Welfare in the promulgation of such guidelines. Such guidelines shall 
first be promulgated not later than the promulgation of regulations 
PUBLIC LAW 96-79—OCT. 4, 1979 
93 STAT. 639 
by the Secretary for the administration of the grants authorized by 
section 1641. 
Ante, p. 636. 
"(3) The Secretary of Labor shall review each application submitted 
under subsection (b) to determine if the arrangements described in 
paragraph (1) have been made and if they are satisfactory and shall 
notify the Secretary respecting his determination. Such review shall 
be completed within— 
(A) ninety days from the date of the receipt of the application 
from the Secretary of Health, Education, and Welfare, or 
"(B) one hundred and twenty days from such date if the 
Secretary of Labor has by regulation prescribed the circum-
stances under which the review will require at least one hundred 
and twenty days. 
If within the applicable period, the Secretary of Labor does not notify 
the Secretary of Health, Education, and Welfare respecting his 
determination, the Secretary of Health, Education, and Welfare shall 
review the application to determine if the applicant has made the 
arrangements described in paragraph (1) and if such arrangements 
are satisfactory. The Secretary may not approve the application 
unless he determines that such arrangements have been made and 
that they are satisfactory. 
"(d) The records and audits requirements of section 705 shall apply 42 use 292e. 
with respect to grants made under subsection (a). 
"(e) For purposes of this part, the term 'hospital' means, with 
respect to any fiscal year, an institution (including a distinct part of 
an institution participating in the programs established under title 
XVIII of the Social Security Act)— 
42 use 1395. 
"(1) which satisfies paragraphs (1) and (7) of section 1861(e) of 
such Act, 
"(2) imposes charges or accepts payments for services provided 
to patients, and 
(3) the average duration of a patient's stay in which was thirty 
days or less in the preceding fiscal year, 
but such term does not include a Federal hospital or a psychiatric 
hospital (as described in section 1861(f)(1) of the Social Security Act). 42 use I395x. 
GRANTS TO STATES FOR REDUCTION OF EXCESS HOSPITAL CAPACITY 
"SEC. 1643. (a) For the purpose of demonstrating the effectiveness 42 use 300t-i3. 
of various means for reducing excesses in resources and facilities of 
hospitals (referred to in this section as 'excess hospital capacity'), the 
Secretary may make grants to State Agencies designated under 
section 1521(b)(3) to assist such Agencies in— 
42 use 300m. 
"(1) identifying (by geographic region or by health service) 
excess hospital capacity, 
"(2) developing programs to inform the public of the costs 
associated with excess hospital capacity, 
"(3) developing programs to reduce excess hospital capacity in 
a manner which will produce the greatest savings in the cost of 
health care delivery, 
"(4) developing means to overcome barriers to the reduction of 
excess hospital capacity, 
"(5) in planning, evaluating, and carrying out programs to 
decertify health care facilities providing health services that are 
not appropriate, and 
"(6) any other activity related to the reduction of excess 
hospital capacity. 
"(b) Grants under subsection (a) shall be made on such terms and 
conditions as the Secretary may prescribe. 
93 STAT. 640 
PUBLIC LAW 96-79—OCT. 4, 1979 
42 u s e 300t-14. 
Ante, pp. 637, 
639. 
42 u s e 300S-3. 
Ante, p. 632. 
Ante, p. 637. 
AUTHORIZATION OF APPROPRIATIONS 
"SEC. 1644. To make payments under grants under sections 1642 
and 1643 there are authorized to be appropriated $30,000,000 for the 
fiscal year ending September 30,1980, $50,000,000 for the fiscal year 
ending September 30,1981, and $75,000,000 for the fiscal year ending 
September 30, 1982, except that in any fiscal year not more than 10 
percent of the amount appropriated under this section may be 
obligated for grants under section 1643.". 
O
W Section 1624 is amended by striking out "For purposes of this 
title" and inserting in lieu thereof "Except as provided in section 
1642(e), for purposes of this title". 
Unneeded 
hospital services, 
elimination. 
42 u s e 300t-ll 
note. 
Ante, p. 636. 
Report to 
eongress. 
STUDY 
SEC. 302. The Secretary of Health, Education, and Welfare shall 
conduct a study of the effect on the elimination of unneeded hospital 
services made during the two fiscal year period ending September 30, 
1981, by the program authorized by part E of title XVI of the Public 
Health Service Act. The Secretary shall not later than January 1, 
1982, report the results of the study to Congress together with his 
recommendations for any revisions in the program under such part E 
which he determines to be appropriate, including any revision in the 
authorizations of appropriations for grants under such program. 
Approved October 4, 1979. 
tnim 
LEGISLATIVE HISTORY: 
HOUSE REPORTS: No. 96-190 accompanying H.R. 3917 (Oomm. on Interstate and 
Foreign Commerce) and No. 96-420 (Comm. of Conference). 
SENATE REPORTS: No. 96-96 (Comm. on Labor and Human Resources) and No. 
96-309 (Comm. of Conference). 
CONGRESSIONAL RECORD, Vol. 125 (1979): 
May 1, considered and passed Senate. 
July 19, H.R. 3917 considered and passed House; passage vacated and S. 544, 
amended, passed in lieu. 
Sept. 20, House agreed to conference report. 
Sept. 21, Senate agreed to conference report. 
WEEKLY COMPILATION OF PRESIDENTIAL DOCUMENTS, Vol. 15, No. 40: 
Oct. 4, Presidential statement.