Social Security Act Amendments of 1994
PL 103-432 (H.R.5252), enacted 10/31/1994

108 STAT. 4398 
PUBLIC LAW 103-432—OCT. 31, 1994 
Public Law 103-432 
103d Congress 
An Act 
Oct. 31, 1994 
[H.R. 5252] 
Social Security 
Act 
Amendments 
of 1994. 
42 u s e 1305 
note. 
To amend the Social Security Act and related Acts to make miscellaneous and 
technical amendments, and for other purposes. 
Be it enacted by the Senate and House of Representatives 
of 
the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the "Social Security Act Amendments 
of 1994". 
SEC. 2. REFERENCES IN ACT; TABLE OF CONTENTS. 
(a) AMENDMENTS TO SOCIAL SECURITY ACT.—Except as other-
wise specifically provided, whenever in this Act an 
amendment 
is expressed in terms of an amendment to or repeal of a section 
or other provision, the reference shall be considered to be made 
to that section or other provision of the Social Security Act. 
(b) REFERENCES TO OBRA.—In this Act, the terms "OBRA-
1986", "OBRA-1987", "OBRA-1989", "OBRA-1990", and "OBRA-
1993" refer to the Omnibus Budget Reconciliation Act of 1986 
(Public Law 99-509), the Omnibus Budget Reconciliation Act of 
1987 (Public Law 100-203), the Omnibus Budget 
Reconciliation 
Act of 1989 (Public Law 101-239), the Omnibus Budget Reconcili-
ation Act of 1990 (Public Law 101-508), and the Omnibus Budget 
Reconciliation Act of 1993 (Public Law 103-66), respectively. 
(c) TABLE OF CONTENTS.—^The table of contents is as follows: 
Sec. 1. Short title. 
Sec. 2. References in Act; table of contents. 
TITLE I—MEDICARE PROVISIONS 
Subtitle A—Provisions Relating to Part A 
Provisions relating to adjustments to standardized amounts for wages 
and wage-related costs. 
Essential access community hospital (EACH) amendments. 
Provisions relating to rural health transition grant program. 
Psychology services in hospitals. 
Medicare-dependent, small rural hospitals and sole community hospitals. 
Skilled nursing facilities. 
Notification of availability of hospice benefit. 
Clarifying expertise of individuals to serve on the Prospective Payment 
Assessment Commission. 
Authority for budget neutral adjustments for changes in payment 
amounts for transfer cases. 
Clarification of DRG payment window expansion; miscellaneous and tech-
nical corrections. 
Sec. 
Sec. 
Sec. 
Sec. 
Sec. 
Sec. 
Sec. 
Sec. 
Sec. 
Sec. 
10 L 
102. 
103. 
104, 
105. 
106. 
107. 
108. 
109. 
110. 
PUBLIC LAW 103-432—OCT. 31, 1994 
108 STAT. 4399 
Subtitle B—Provisions Relating to Part B 
PART I—PHYSICIANS' SERVICES 
Sec. 121. Development and implementation of resource-based methodology for prac-
tice expenses. 
Sec. 122. Geographic cost of practice index refinements. 
Sec. 123. Extra-billine limits. 
Sec. 124. Relative vanies for pediatric services. 
Sec. 125. Administration of claims relating to physicians'services. 
Sec. 126. Miscellaneous and technical corm:tions. 
PART II—DURABLE MEDICAL EQUIPMENT 
Sec. 131. Certification of suppliers. 
Sec. 132. Restrictions on certain marketing and sales activities. 
Sec. 133. Beneficiary liability ibr noncovered services. 
Sec. 134. Adjustments for inherent reasonableness. 
Sec. 135. Miscellaneous and technical corrections. 
PART III—OTHER ITEMS AND SERVICES 
Sec. 141. Ambulatory surgical center services. 
Sec. 142. Study of medicare coverage of patient care costs associated with clinical 
trials of new cancer therapies. 
Sec. 143. Study of annual cap on amount of medicare payment for outpatient phys-
ical therapy and occupational therapy services. 
Sec. 144. Payment 01 part B premium late enrollment penalties by States. 
Sec. 145. Application of Tnammography certification requirements. 
Sec. 146. Coverage of services oi speedi-language pathologists and audiologists. 
Sec. 147. Miscellaneous and techmcal corrections. 
Subtitle C—Provisions Relating to Parts A and B 
Sec. 151. Medicare secondary payer reforms. 
Sec. 152. Physician ownership and referral. 
Sec. 153. Definition of FMGEMS examination for payment of direct graduate medi-
cal education. 
Sec. 154. Qualified medicare beneficiary outreach. 
Sec. 155. Hospital agreements with organ procurement organizations. « 
Sec. 156. Peer review organizations. 
Sec. 157. Health maintenance organizations. 
Sec. 158. Home health agencies. 
Sec. 159. Permanent extension of authority to contract with fiscal intermediaries 
and carriers on other than a cost basis. 
Sec. 160. Miscellaneous and technical corrections. 
Subtitle D—Provisions Relating to Medicare Supplemental Insurance Polides 
Sec. 171. Standards for medicare supplemental insurance policies. 
Sec. 172. 6-month extension of period for issuance of medicare select policies. 
TITLE II—MATERNAL AND CHILD HEALTH SERVICES BLOCK GRANT PRO-
GRAM, INCOME SECURITY, HUMAN RESOURCES, AND RELATED PRO-
GRAMS 
Sec. 201. Increase in authorization of appropriations for the Maternal and Child 
Health Services Block Grant Program. 
Subtitle A—Child Welfare, Foster Care, Adoption 
Sec. 202. Required protections for foster children. 
Sec. 203. Conformity reviews. 
Sec. 204. States required to report on measures taken to comply with the Indian 
Child Welfare Act. 
Sec. 205. Child welfare traineeships. 
Sec. 206. Dispositional hearing. 
Sec. 207. Elimination of foster care ceilings and of authority to transfer unused fos-
ter care fiinds to child welfare services programs. 
Sec. 208. Demonstration projeci:s. 
Sec. 209. Placement accountability. 
Sec. 210. Payments of State claims for foster care and adoption assistance. 
Sec. 211. Effect of failure to carry out State plan. 
Subtitle B—Child Support Enforcement 
Sec. 212. Reports to credit bureaus on persons delinquent in child support 
payments. 
Sec. 213. Technical amendments to provision on State paternity establishment 
programs. 
108 STAT. 4400 
PUBLIC LAW 103-432—OCT. 31, 1994 
Sec. 214. Agreement to assist in locating missing children under the parent locator 
service. 
Subtitle C—Supplemental Security Income 
Sec. 221. Definition of disability for children under age 18 applied to all individuals 
luider age 18. 
Subtitle D—Aid to Families With Dependent Children 
Sec. 231. Simplification of income and eligibility verification system. 
Sec. 232. MeasTirement and reporting of welfare receipt. 
Sec. 233. New Hope demonstration project. 
Sec. 234. Delay in requirement that outlying areas operate an AFDC-UP Program. 
Sec. 235. State option to use retrospective budgeting without monthly reporting. 
Subtitle E—JOBS Program 
Sec. 241. Ebcpansion of coverage for Indian tribes. 
Sec. 242. Report to the Congress with respect to performance standards in the 
JOBS program. 
Subtitle F—Other Provisions 
Sec. 261. Elxtension of demonstration to expand job opportunities. 
Sec. 262. Earlv childhood development proiects. 
Sec. 263. Reallocation of funds under title XX for empowerment and enterprise 
grants. 
Sec. 264. Corrections related to the income security and human resotirces provi-
sions of OBRA-1990. 
Sec. 265. Technical corrections related to the human resource and income security 
provisions of OBRA-1989. 
Sec. 266. Technical correction related to the himian resowoe and income security 
E
rovisions of OBRA-1993. 
mination of obsolete provisions relating to treatment of the earned in-
come tax credit. 
Sec. 268. Redesignation of certain provisions. 
TITLE I—MEDICARE PROVISIONS 
Subtitle A—Provisions Relating to Part A 
SEC. 101. PROVISIONS RELATING TO ADJUSTMENTS TO STANDARD-
IZED AMOUNTS FOR WAGES AND WAGE-RELATED COSTS. 
(a) USE OF OCCUPATIONAL MIX IN GUIDELINES FOR DETERMINA-
TION OF AREA WAGE INDEX.— 
(1) IN GENERAL.—Section 1886(d)(10)(D)(i)(I) (42 U.S.C. 
1395ww(d)(10)(D)(i)(I)) is amended by inserting "(to the extent 
the Secretary determines appropriate)" after "taking into 
account". 
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(2) EFFECTIVE DATE.—^The amendment made by paragraph 
^°^- 
(1) shall take effect as if included in the enactment of OJBRA-
1989. 
(b) CONFORMING AMENDMENTS RELATING TO GEOGRAPHIC AREA 
USED TO DETERMINE WAGE INDEX APPUCABLE TO HOSPITAL.—(1) 
Section 1886(d)(8)(C) (42 U.S.C. 1395ww(d)(8)(C)), as amended by 
section 13501(bXl) of OBRA-1993, is amended— 
(A) in clause (iv), by striking "paragraph (1)" and inserting 
"paragraph (10)"; and 
(B) by adding at the end the following new clause: 
"(v) This subparagraph shall apply with respect to discharges 
occurring in a fiscal year only if the Secretary uses a method 
for making adjustments to the DRG prospective payment rate for 
area differences in hospital wage levels under paragraph (3)(E) 
for the fiscal year that is based on the use of Metropolitan Statistical 
Area classifications.". 
PUBLIC LAW 103-432—OCT. 31, 1994 
108 STAT. 4401 
(2) Section 1886(d)(10) (42 U.S.C. 1395ww(d)(10)) is amended— 
(A) in subparagraph (C)(i)(II), by striking "the area wage 
index appHcable" and inserting "the factor used to adjust the 
DRG prospective payment rate for area differences in hospital 
wage levels that applies"; and 
(B) in subparagraph (D)— 
(i) by redesignating clause (ii) as clause (iii), and 
(ii) by inserting after clause (i) the following new 
clause: 
"(ii) Notwithstanding clause (i), if the Secretary uses a method 
for making adjustments to the DRG prospective payment rate for 
area differences in hospital wage levels under paragraph (3)(E) 
that is not based on the use of Metropolitan Statistical Area classi-
fications, the Secretary may revise the guidelines published under 
clause (i) to the extent such guidelines are used to determine 
the appropriateness of the geographic area in which the hospital 
is determined to be located for purposes of making 
such 
adjustments.". 
(c) ADJUSTMENT OF LABOR AND NON-LABOR PORTIONS OF 
STANDARDIZED 
AMOUNTS.—Section 
1886(d)(3)(A)(iii) (42 U.S.C. 
1395ww(d)(3)(A)(iii)) is amended by adding at the end the following: 
"For discharges occurring on or after October 1, 1994, the Secretary 
shall adjust the ratio of the labor portion to non-labor portion 
of each average standardized amount to equal such ratio for the 
national average of all standardized amounts.". 
SEC. 102. ESSENTIAL 
ACCESS 
COMMUNITY 
HOSPITAL 
(EACH) 
AMENDMENTS. 
(a) TREATMENT OF INPATIENT HOSPITAL SERVICES PROVIDED 
IN RURAL PRIMARY CARE HOSPITALS.— 
(1) IN GENERAI..—Section 1820(f)(1)(F) (42 U.S.C. 13951-
4(f)(1)(F)) is amended to read as follows: 
"(F) subject to paragraph (4), provides not more than 
6 inpatient beds (meeting such conditions as the Secretary 
may establish) for providing inpatient care to patients 
requiring stabilization before discharge or transfer to a 
hospital, except that the facility may not provide any 
inpatient hospital services— 
"(i) to any patient whose attending physician does 
not certify that the patient may reasonably be expected 
to be discharged or transferred to a hospital within 
72 hours of admission to the facility; or 
"(ii) consisting of surgery or any other service 
requiring the use of general anesthesia (other than 
surgical procedures specified by the Secretary under 
section 1833(i)(l)(A)), unless the attending physician 
certifies that the risk associated with transferring the 
patient to a hospital for such services outweighs the 
benefits of transferring the patient to a hospital for 
such services.". 
(2) LIMITATION ON AVERAGE LENGTH OF STAY.—Section 
1820(f) (42 U.S.C. 13951-4(0) is amended by adding at the 
end the following new paragraph: 
"(4) LIMITATION ON AVERAGE LENGTH OF INPATIENT STAYS.— 
The Secretary may terminate a designation of a rural primary 
care hospital under paragraph (1) if the Secretary finds that 
the average length of stay for inpatients at the facility during 
108 STAT. 4402 
PUBLIC LAW 103-432—OCT. 31, 1994 
the previous year in which the designation was in effect 
exceeded 72 hours. In determining the compliance of a facility 
with the requirement of the previous sentence, there shall 
not be taken into account periods of stay of inpatients in excess 
of 72 hours to the extent such periods exceed 72 hours because 
transfer to a hospital is precluded because of inclement weather 
or other emergency conditions.". 
(3) 
CONFORMING 
AMENDMENT.—Section 
1814(a)(8) (42 
U.S.C. 1395fla)(8)) is amended by striking "such services" and 
all that follows and inserting "the individual may reasonably 
be expected to be discharged or transferred to a hospital within 
72 hours after admission to the rural primary care hospital.". 
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(4) GAO REPORTS.—Not later than 2 years after the date 
^°^- 
of the enactment of this Act, the Comptroller General shall 
submit reports to Congress on— 
(A) the application of the requirements under section 
1820(f) of the Social Security Act (as amended by this 
subsection) that rural primary care hospitals provide 
inpatient care only to those individuals whose attending 
physicians certify may reasonably be expected to be dis-
charged within 72 hours after admission and maintain 
an average length of inpatient stay during a year that 
does not exceed 72 hours; and 
(B) the extent to which such requirements have 
resulted in such hospitals providing inpatient care beyond 
their capabilities or have limited the ability of such hos-
pitals to provide needed services. 
(b) DESIGNATION OF HOSPITALS.— 
(1) PERMITTING DESIGNATION OF HOSPITALS LOCATED IN 
URBAN AREAS.— 
(A) IN GENERAL.—Section 1820 (42 U.S.C. 1395i-4) 
is amended— 
(i) by striking paragraph (1) of subsection (e) and 
redesignating paragraphs (2) through (6) as paragraphs 
(1) through (5); 
(ii) in subsection (e)(1)(A) (as redesignated by 
subparagraph (A))— 
(I) by striking "is located" and inserting 
"except in the case of a hospital located in an 
urban area, is located", 
(II) by striking ", (ii)" and inserting "or (ii)", 
and 
(III) by striking "or (iii)" and all that follows 
through "section,"; and 
(iii) in subsection (i)(l)(B), by striking "paragraph 
(3)" and inserting "paragraph (2)". 
(B) N o CHANGE I N MEDICARE PROSPECTIVE PAYMENT.— 
Section 
1886(d)(5)(D) (42 U.S.C. 
1395ww(d)(5)(D)) is 
amended— 
(i) in clause (iii)(III), by inserting "located in a 
rural area and" after "that is", and 
(ii) in clause (v), by inserting "located in a rural 
area and" after "in the case of a hospital". 
(2) PERMITTING HOSPITALS LOCATED IN ADJOINING STATES 
TO PARTICIPATE IN STATE PROGRAM.— 
(A) IN GENERAL.—Section 1820 (42 U.S.C. 1395i-4) 
is amended— 
PUBLIC LAW 103-432—OCT. 31, 1994 
108 STAT. 4403 
(i) by redesignating subsection (k) as subsection 
(l);and 
(ii) by inserting after subsection (j) the following 
new subsection: 
"(k) ELIGIBILITY OF HOSPITALS NOT LOCATED IN PARTICIPATING 
STATES.—Notwithstanding any other provision of this section— 
"(1) for purposes of including a hospital or facility as a 
member institution of a rural health network, a State may 
designate a hospital or facility that is not located in the State 
as an essential access community hospital or a rural primary 
care hospital if the hospital or facility is located in an adjoining 
State and is otherwise eligible for designation as such a hos-
pital; 
"(2) the Secretary may designate a hospital or facility that 
is not located in a State receiving a grant under subsection 
(a)(1) as an essential access community hospital or a rural 
primary care hospital if the hospital or facility is a member 
institution of a rural health network of a State receiving a 
grant under such subsection; and 
"(3) a hospital or facility designated pursuant to this sub-
section shall be eligible to receive a grant under subsection 
(a)(2).". 
(B) CONFORMING AMENDMENTS.—(i) Section 1820(c)(1) 
(42 U.S.C. 1395i-4(c)(l)) is amended by striking "paragraph 
(3)" and inserting "paragraph (3) or subsection (k)". 
(ii) Paragraphs (1)(A) and (2)(A) of section 1820(i) (42 
U.S.C. 1395i-4(i)) are each amended— 
(I) in clause (i), by striking "(a)(1)" and inserting 
"(a)(1) (except as provided in subsection (k))", and 
(II) in clause (ii), by striking "subparagraph (B)" 
and inserting "subparagraph (B) or subsection (k)". 
(c) SKILLED NURSING SERVICES IN RURAL PRIMARY CARE HOS-
PITALS.—Section 1820(f)(3) (42 U.S.C. 1395i-4(f)(3)) is amended by 
striking "because the facility" and all that follows and inserting 
the following: "because, at the time the facility applies to the 
State for designation as a rural primary care hospital, there is 
in effect an agreement between the facility and the Secretary under 
section 1883 under which the facility's inpatient hospital facilities 
are used for the furnishing of extended care services, except that 
the number of beds used for the furnishing of such services may 
not exceed the total number of licensed inpatient beds at the time 
the facility applies to the State for such designation (minus the 
number of inpatient beds used for providing inpatient care pursuant 
to paragraph (1)(F)). For purposes of the previous sentence, the 
number of beds of the facility used for the furnishing of extended 
care services shall not include any beds of a unit of the facility 
that is licensed as a distinct-part skilled nursing facility at the 
time the facility applies to the State for designation as a rural 
primary care hospital.". 
(d) DEADLINE FOR DEVELOPMENT OF PROSPECTIVE PAYMENT 
SYSTEM FOR INPATIENT RURAL PRIMARY CARE HOSPITAL SERVICES.— 
Section 1814(1)(2) (42 U.S.C. 1395fi:i)(2)) is amended by striking 
"January 1, 1993" and inserting "January 1, 1996". 
(e) PAYMENT FOR OUTPATIENT RURAL PRIMARY CARE HOSPITAL^ 
SERVICES.— 
(1) IMPLEMENTATION OF PROSPECTIVE PAYMENT SYSTEM.— 
Section 1834(g) (42 U.S.C. 1395m(g)) is amended— 
108 STAT. 4404 
PUBLIC LAW 103-432—OCT. 31,1994 
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(A) in paragraph (1), by striking "during a year before 
1993" and inserting "during a year before Qie prospective 
payment system described in paragraph (2) is in effect"; 
and 
(B) in paragraph (2), by striking "January 1, 1993," 
and inserting "January 1,1996,". 
(2) No USE OF CUSTOMARY CHARGE IN DETERMINING PAY-
MENT.—Section 1834(g)(1) (42 U.S.C. 1395m(g)(l)) is amended 
by adding at the end the following new flush sentence: 
"The amount of payment shall be determined under either 
method without regard to the amount of the customary or 
other charge.". 
if) CLARIFICATION OF PHYSICIAN STAFFING REQUIREMENT FOR 
RURAL PRIMARY CARE HOSPITALS.—Section 1820(f)(1)(H) (42 U.S.C. 
1395i-4(f)(l)(H)) is amended by striking the period and inserting 
the following: ", except that in determining whether a facihty meets 
the requirements of this subparagraph, subparagraphs (E) and (F) 
of that paragraph shall be appUed as if any reference to a ^physician' 
is a reference to a physician as defined in section 1861(r)(l).". 
(g) TECHNICAL AMENDMENTS RELATING TO PART A DEDUCTIBLE, 
COINSURANCE, AND SPELL OF ILLNESS.—(1) Section 1812(a)(1) (42 
U.S.C. 1395d(a)(l)) is amended— 
(A) by striking "inpatient hospital services" the first place 
it appears and inserting "inpatient hospital services or inpatient 
rural primary care hospital services"; 
(B) by striking *4npatient hospital services" the second 
place it appears and inserting "such services"; and 
(C) by striking "and inpatient rural primary care hospital 
services". 
(2) Sections 1813(a) and 1813(b)(3)(A) (42 U.S.C. 1395e(a), 
1395e(b)(3)(A)) are each amended by striking "inpatient hospital 
services" each place it appears and inserting "inpatient hospital 
services or inpatient rural primary care hospital services". 
(3) Section 1813(b)(3)(B) (42 U.S.C. 1395e(b)(3)(B)) is amended 
by striking "inpatient hospital services" and inserting "inpatient 
hospital services, inpatient rural primary care hospital services". 
(4) Section 1861(a) (42 U.S.C. 1395x(a)) is amended— 
(A) in paragraph (1), by striking "inpatient hospital serv-
ices" and inserting "inpatient hospital services, inpatient rural 
primary care hospital services"; and 
(B) in paragraph (2), by striking "hospital" and inserting 
liospital or rural primary care hospital". 
(h) AUTHORIZATION OF APPROPRIATIONS.—Section 1820(1) (42 
U.S.C. 1395i-4(l)), as redesignated by subsection (b)(2)(A), is 
amended by striking "1990, 1991, and 1992" and inserting "1990 
through 1997". 
(i) EFFECTIVE DATE.—^The amendments made by this section 
shall take effect on the date of the enactment of this Act. 
SEC. 103. PROVISIONS RELATING TO RURAL HEALTH TRANSITION 
GRANT PROGRAM. 
(a) 
ELIGIBILITY OF RURAL PRIMARY CARE HOSPITALS FOR 
GRANTS.— 
(1) IN GENERAL.—Section 4005(e)(2) of OBRA-1987 is 
amended in the matter preceding subparagraph (A) by inserting 
"any rural primary care hospital designated by the Secretary 
PUBLIC LAW 103-432—OCT. 31, 1994 
108 STAT. 4405 
under section 1820(i)(2) of the Social Security Act, or" after 
"means". 
(2) EFFECTIVE DATE.—The amendment made by paragraph 
(1) shall apply to grants made on or after October 1, 1994. 
(b) EXTENSION OF AUTHORIZATION OF APPROPRIATIONS.—Section 
4005(e)(9) of OBRA-1987 is amended— 
(1) by striking "1989 and" and inserting "1989,"; and 
(2) by striking "1992" and inserting "1992 and $30,000,000 
for each of fiscal years 1993 through 1997". 
(c) FREQUENCY OF REQUIRED REPORTS.—Section 4008(e)(8)(B) 
of OBRA-1987 is amended by striking "every 6 months" and insert-
ing "every 12 months", 
SEC. 104. PSYCHOLOGY SJ:RVICES IN HOSPITALS. 
Section 1861(e)(4) (42 U.S.C. 1395x(e)(4)) is amended by strik-
ing "physician;" and inserting "physician, except that a patient 
receiving qualified psychologist services (as defined in subsection 
(ii)) may be under the care of a clinical psychologist with respect 
to such services to the extent permitted under State law;". 
SEC. 105. MEDICARE-DEPENDENT, SMALL RURAL HOSPITALS AND 
SOLE COMMUNITY HOSPITALS. 
(a) MEDICARE DEPENDENT, SMALL RURAL HOSPITALS.— 
(1) 
CLARIFICATION 
OF ADDITIONAL 
PAYMENT.—Section 
1886(d)(5)(G)(ii)(I) 
(42 U.S.C. 
1395ww(d)(5)(G)(ii)(I)), 
as 
amended by section 13501(e)(1) of OBRA-1993, is amended 
by striking "the first 3 12-month cost reporting periods that 
begin" and inserting "the 36-month period beginning with the 
first day of the cost reporting period that begins". 
(2) CONFORMING TARGET AMOUNTS TO EXTENSION OF ADDI-
TIONAL 
PAYMENTS.—Section 
1886(b)(3)(D) 
(42 
U.S.C. 
1395ww(b)(3)(D)) is amended in the matter preceding clause 
(i) by striking "March 31, 1993" and inserting "September 30, 
1994". 
(b) CLARIFICATION OF UPDATES.—Section 1886(b)(3)(B)(iv)(II) 
(42 U.S.C. 1395ww(b)(3)(B)(iv)(II)), as added by section 13501(a)(2) 
of OBRA-1993, is amended by striking "(taking into account" and 
all that follows through "1994)" and inserting "(adjusted to exclude 
any portion of a cost reporting period beginning during fiscal year 
1993 for which the applicable percentage increase is determined 
under subparagraph (I))". 
SEC. 106. SKILLED NURSING FACILITIES. 
' 
(a) CONSTRUCTION OF WAGE INDEX.—Not later than 1 year 
after the date of the enactment of this Act, the Secretary of Health 
and Human Services shall begin to collect data on employee com-
pensation and paid hours of employment in skilled nursing facilities 
for the purpose of constructing a skilled nursing facility wage index 
adjustment to the routine service cost limits required under section 
1888(a)(4) of the Social Security Act. 
(b) 
CLARIFICATION 
OF REPEAL 
OF UTILIZATION 
REVIEW 
REQUIREMENTS 
(1) IN GENERAL.—(A) 
Section 
1814(a)(5) (42 U.S.C. 
1395f(a)(5)) is amended— 
(i) by striking "and with respect" and all that follows 
through "regulations"; 
(ii) by striking "or skilled nursing facility, as the case 
may be"; and 
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108 STAT. 4406 
PUBLIC LAW 103-432—OCT. 31, 1994 
(iii) by striking "or facility". 
(B) Section 1866(d) (42 U.S.C. 1395cc(d)) is amended— 
(i) by striking "or skilled nursing facility**; 
(ii) by striking "or facility" each place it appears; 
(iii) by striking "or for post-hospital" and all that fol-
lows through "the case may be"; and 
(iv) by striking ", or (in the case of and all that 
follows through "transfer agreement,". 
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(2) EFFECTIVE DATE.—The amendments made by paragraph 
^°^- 
(1) shall take effect as if included in the enactment of OBRA-
1987. 
(c) CONFORMING AMENDMENTS TO NURSING HOME REFORM.— 
(1) SUSPENSION OF DECERTIFICATION OF NURSES AIDE TRAIN-
ING AND COMPETENCY EVALUATION PROGRAMS BASED ON 
EXTENDED SURVEYS.— 
(A) IN GENERAL.—Section 1819(f)(2)(B)(iii)(I)(b) (42 
U.S.C. 1395i-3(f)(2)(B)(iii)(I)(b)) is amended by striking the 
semicolon and inserting the following: ", unless the survey 
shows that the facility is in compHance with the require-
ments of subsections (b), (c), and (a) of this section;". 
42USCi395i-3 
(B) EFFECTIVE DATE.—The amendment made by 
"°*®- 
subparagraph (A) shall take effect as if included in the 
enactment of OBRA-1990. 
(2) REQUIREMENTS FOR CONSULTANTS CONDUCTING REVIEWS 
ON USE OF DRUGS.— 
(A) IN GENERAL.—Section 1819(c)(1)(D) (42 U.S.C. 
1395i-3(cXl)(D)) is amended by adding at the end the 
following sentence: "In determining whether such a consult-
ant is qualified to conduct reviews under the preceding 
sentence, the Secretary shall take into account the needs 
of nursing facUities under this title to have access to the 
services of such a consultant on a timely basis.". 
42USCi395i-3 
(B) EFFECTIVE DATE.—The amendment made by 
note- 
subparagraph (A) shall take effect as if included in the 
enactment of OBRA-1987. 
(3) INCREASE IN MINIMUM AMOUNT REQUIRED FOR SEPARATE 
DEPOSIT OF PERSONAL FUNDS.— 
(A) IN GENERAL.—Section 1819(cX6)(B)(i) (42 U.S.C. 
1395i-3(c)(6)(B)(i)) is amended by striking "$50" and insert-
mg "$100". 
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(B) EFFECTIVE DATE.—The amendment made by 
note- 
subparagraph (A) shall take effect January 1,1995. 
(4) DUE PROCESS PROTECTIONS FOR NURSES AIDES.— 
(A) 
PROHIBITING 
STATE FROM INCLUDING 
UNDOCU-
MENTED ALLEGATIONS IN NURSES AIDE REGISTRY.—Section 
1819(e)(2XB) (42 U.S.C. 1395i-3(eX2)(B)) is amended by 
striking the period at the end of tiie first sentence and 
inserting the following: ", but shall not include any allega-
tions of resident abuse or neglect or misappropriation of 
resident property that are not specifically documented by 
the State under such subsection.". 
(B) 
DUE 
PROCESS 
REQUIREMENTS FOR REBUTTING 
ALLEGATIONS.—Section 1819(gXlXC) (42 U.S.C. 13951-
3(g)(1)(C)) is amended by striking the second sentence and 
inserting the following: "The State shall, after providing 
the individual involved with a written notice of the allega-
tions (including a statement of the avsdlabihty of a hearing 
PUBLIC LAW 103-432-OCT. 31, 1994 ,, 
108 STAT. 4407 
for the individual to rebut the allegations) and the oppor-
tunity for a hearing on the record, make a written finding 
as to the accuracy of the allegations.". 
(C) EFFECTIVE DATE.—The amendments made by this 42USCi395i-3 
paragraph shall take effect January 1, 1995. 
note. 
(d) CORRECTIONS REIATING TO SECTION 4008.— 
(1) Section 1819(b)(5)(D) (42 U.S.C. 1395i-3(b)(5)(D)), as 
amended by section 4008(h)(1)(D) of OBRA-1990, is amended 
by striking the comma before "or a new competency evaluation 
program.". 
(2) Section 1819(b)(5)(G) (42 U.S.C. 1395i-3(b)(5)(G)) is 
amended by striking "or licensed or certified social worker" 
and inserting "licensed or certified social worker, registered 
respiratory 
therapist, 
or 
certified 
respiratory 
therapy 
technician". 
(3) Section 1819(f)(2)(B)(i) (42 U.S.C. 1395i-3(f)(2)(B)(i)) is 
amended by striking "facilities," and inserting "facilities (subject 
to clause (iii)),". 
(4) 
Section 
1819(f)(2)(B)(iii)(I)(c) 
(42 
U.S.C. 
13951-
3(f)(2)(B)(iii)(I)(c)) is amended by striking "clauses" each place 
it appears and inserting "clause". 
(5) Section 1819(g)(5)(B) (42 U.S.C. 1395i-3(g)(5)(B)) is 
amended by striking "paragraphs" and inserting "paragraph". 
(6) Section 4008(h)(l)(F)(ii) of OBRA-1990 is amended— 42USCi395i-3 
(A) by striking "The amendments" and inserting "(I) "
o
*
^
®
. 
The amendments"; 
(B) by striking "nursing facility" each place it appears 
and inserting "skilled nursing facility"; 
(C) by redesignating subclauses (I) through (V) as items 
(aa) through (ee); and 
(D) by adding at the end the following new subclause: 
"(II) Notwithstanding subclause (I) and subject to 
section 1819(f)(2)(B)(iii)(I) of the Social Security Act 
(as amended by clause (i)), a State may approve a 
training and competency evaluation program or a com-
petency evaluation program offered by or in a skilled 
nursing facility described in subclause (I) if, during 
the previous 2 years, item (aa), (bb), (cc), (dd), or (ee) 
of subclause (I) did not apply to the facility.". 
(7) EFFECTIVE DATE.—The amendments made by this sub- 42 USC l395i-3 
section shall take effect as if included in the enactment of ^°^-
OBRA-1990. 
SEC. 107. NOTIFICATION OF AVAILABILITY OF HOSPICE BENEFIT, 
(a) 
IN 
GENERAL.—Section 
1861(ee)(2)(D) 
(42 
U.S.C. 
1395x(ee)(2)(D)) is amended by inserting ", including hospice serv-
ices," after "post-hospital services". 
(b) EFFECTIVE DATE.—The amendment made by subsection (a) 
42 use I395x 
shall apply to services furnished on or after the first day of the note. 
first month beginning more than one year after the date of the 
enactment of this Act. 
SEC. 108. CLARIFYING EXPERTISE OF INDIVIDUALS TO SERVE ON THE 
PROSPECTIVE PAYMENT ASSESSMENT COMMISSION. 
Section 1886(e)(6)(B) (42 U.S.C. 1395ww(e)(6)(B)) is amended 
by striking "hospital reimbursement, hospital financial manage-
ment" and inserting "health facility management, reimbursement 
108 STAT. 4408 
PUBLIC LAW 103-432-OCT. 31,1994 
of health facilities or other providers of services which reflect the 
scope of the Commission's responsibilities". 
SEC. 1
0
9
. 
AUTHORITY FOR 
BUDGET NEUTRAL ADJUSTMENTS 
FOR 
CHANGES 
IN 
PAYMENT 
AMOUNTS 
FOR 
TRANSFER 
CASES. 
Section 1886(d)(5)(I) (42 U.S.C. 1395ww(d)(5)) is amended— 
(1) by inserting "(i)" after "(I)"; and 
(2) by adding at the end the following new clause: 
"(ii) In making adjustments under clause (i) for transfer cases 
(as defined by the Secretary) in a fiscal year, the Secretary may 
make adjustments to each of the average standardized amounts 
determined under paragraph (3) to assure that the aggregate pay-
ments made under this subsection for such fiscal year are not 
greater or lesser than those that would have otherwise been made 
in such fiscal year,". 
SEC. 110. CLARIFICATION OF DRG PAYMENT WINDOW EXPANSION; 
MISCELLANEOUS AND TECHNICAL CORRECTIONS. 
(a) CLARIFICATION OF DRG PAYMENT WINDOW EXPANSION.— 
The first sentence of section 1886(a)(4) (42 U.S.C. 1395ww(a)(4)) 
is amended by inserting "(or, in the case of a hospital that is 
not a subsection (d) hospital, during the 1 day)" after "3 days". 
(b) TECHNICAL CORRECTION RELATING TO RESIDENT ASSESS-
MENT IN NURSING HOMES.—Section 1819(b)(3)(C)(i)(I) (42 U.S.C. 
1395i-3(b)(3)(C)(i)(I)) is amended by striking "not later than" before 
"14 days". 
(c) TECHNICAL CORRECTION RELATING TO APPLICABLE ADJUST-
MENT FACTOR FOR INDIRECT MEDICAL EDUCATION ADJUSTMENT.— 
Section 1886(d)(5)(B)(ii) (42 U.S.C. 1395ww(d)(5)(B)(ii)) is amended 
by striking "May 1, 1986," and inserting "October 1, 1988,". 
(d) CLERICAL CORRECTIONS.—(1) Section 1814(i)(l)(C)(i) (42 
U.S.C. 1395f(i)(l)(C)(i)) is amended by striking "September 30, 
1990,," and inserting "September 30, 1990,". 
(2) Section 1816(f)(2)(A)(ii) (42 U.S.C. 1396h(f)(2)(A)(ii)) is 
amended by striking "such agency" and inserting "such agency's". 
Subtitle B—Provisions Relating to Part B 
PART I—PHYSICIANS' SERVICES 
SEC. 121. DEVELOPMENT AND IMPLEMENTATION OF RESOURCE-
BASED METHODOLOGY FOR PRACTICE EXPENSES. 
42 use 1395W-4 
(a) DEVELOPMENT.— 
note. 
(1) IN GENERAL.—The Secretary of Health and Human 
Services shall develop a methodology for implementing in 1998 
a resource-based system for determining practice expense rel-
ative value units for each physicians' service. The methodology 
utilized shall recognize the staff, equipment, and supplies used 
in the provision of various medical and surgical services in 
various settings. 
(2) REPORT.—The Secretary shall transmit a report by June 
30, 1996, on the methodology developed under paragraph (1) 
to the Committees on Ways and Means and Energy and Com-
merce of the House of Representatives and the Committee 
on Finance of the Senate. The report shall include a presen-
tation of data utilized in developing the methodology and an 
explanation of the methodology. 
PUBLIC LAW 103-432—OCT. 31, 1994 
108 STAT. 4409 
(b) IMPLEMENTATION.— 
' 
(1) IN GENERAL.—Section 
1848(c)(2)(C)(ii) (42 U.S.C. 
1395w-4(c)(2)(C)(ii)) is amended— 
(A) by inserting "for the service for years before 1998" 
before "equal to", 
(B) by striking the period at the end of subclause 
(II) and inserting a comma, and 
(C) by adding after and below subclause (II) the 
following: 
"and for years beginning with 1998 based on the rel-
ative practice expense resources involved in furnishing 
the service.". 
(2) CONFORMING .AMENDMENT.—Section 1848(c)(3)(C)(ii) (42 
U.S.C. 1395w-4(c)(3)(C)(ii)) is amended by striking "The prac-
tice" and inserting "For years before 1998, the practice". 
(3) APPLICATION OF CERTAIN PROVISIONS.—In implementing 
the amendment made by psiragraph (1)(C), the provisions of 
clauses (iiXH) and (iii) of section 1848(c)(2)(B) of the Social 
Security Act shall apply in the same manner as they apply 
to adjustments imder clause (ii)(I) of such section. 
SEC. 122. GEOGRAPHIC COST OF PRACTICE INDEX REFINEMENTS. 
(a) 
REQUIRING CONSULTATION WITH 
REPRESENTATIVES OF 
PirreiciANS IN REVIEWING GEOGRAPHIC ADJUSTMENT FACTORS.— 
Section 1848(e)(1)(C) (42 U.S.C. 1395w-4(e)(l)(C)) is amended bv 
striking "shall review" and inserting "shall, in consultation with 
appropriate representatives of physicians, review". 
(b) USE OF MOST RECENT DATA IN GEOGRAPHIC ADJUSTMENT.— 
Section 1848(e)(1) (42 U.S.C. 1395w-4(e)(l)) is amended by adding 
at the end the following new subparagraph: 
"(D) USE OF RECENT DATA.—In establishing indices 
and index values imder this paragraph, the Secretsiry shaU 
use the most recent data available relating to practice 
expenses, malpractice expenses, and physician work: effort 
in different fee schedule areas.". 
(c) REPORT ON REVIEW PROCESS.—^Not later than 1 year after 
the date of the enactment of this Act, the Secretary of Health 
and Himian Services shall study and report to the Committee 
on Finance of the Senate and the Committee on Ways and Means 
and the Conmiittee on Energy and Commerce of the House of 
Representatives on— 
(1) the data necessary to review and revise the indices 
established imder section 1848(e)(1)(A) of the Social Security 
Act, including— 
(A) the shares allocated to physicians' work effort, prac-
tice expenses (otiier than malpractice expenses), and mal-
practice expenses; 
(B) the weights assigned to the input components of 
such shares; and 
(C) the index values assigned to such components; 
(2) any limitations on the availability of data necessary 
to review and revise such indices at least every three years; 
(3) ways of addressing such limitations, with particular 
attention to the development of alternative data sources for 
input components for which current index values are based 
on data collected less frequentiy than every three years; and 
(4) the costs of developing more accurate and timely data. 
42 use 1395W-4 
note. 
42 use 1395W-4 
note. 
108 STAT. 4410 
PUBLIC LAW 103-432—OCT. 31, 1994 
SEC. 123. EXTRA-BILUNG LIMITS. 
(a) ENFORCEMENT OF LIMITS.—Section 1848(g) (42 U.S.C. 
1395w-4(g)), as amended by section 13517(a) of OBRA-1993, is 
amended— 
(1) by amending paragraph (1) to read as follows: 
"(1) LIMITATION ON ACTUAL CHARGES.— 
"(A) IN GENERAL.—In the case of a nonparticipating 
physician or nonparticipating supplier or other person (as 
defined in section 1842(i)(2)) who does not accept payment 
on an assignment-related basis for a physician's service 
furnished with respect to an individual enrolled under this 
part, the following rules apply: 
"(i) APPLICATION OF LIMITING CHARGE.—No person 
may bill or collect an actual charge for the service 
in excess of the limiting charge described in paragraph 
(2) for such service. 
"(ii) No LIABILITY FOR EXCESS CHARGES.—No per-
son is liable for payment of any amounts billed for 
the service in excess of such limiting charge. 
"(iii) CORRECTION OF EXCESS CHARGES.—If such 
a physician, supplier, or other person bills, but does 
not collect, an actual charge for a service in violation 
of clause (i), the physician, supplier, or other person 
shall reduce on a timely basis the actual charge billed 
for the service to an amount not to exceed the limiting 
charge for the service. 
"(iv) REFUND OF EXCESS COLLECTIONS.—If such a 
physician, supplier, or other person collects an actual 
charge for a service in violation of clause (i), the physi-
cian, supplier, or other person shall provide on a timely 
basis a refund to the individual charged in the amount 
by which the amount collected exceeded the limiting 
charge for the service. The amount of such a refund 
shall be reduced to the extent the individual has an 
outstanding balance owed by the individual to the 
physician. 
"(B) SANCTIONS.—If a physician, supplier, or other 
person— 
"(i) knowingly and willfully bills or collects for 
services in violation of subparagraph (A)(i) on a 
repeated basis, or 
"(ii) fails to comply with clause (iii) or (iv) of 
subparagraph (A) on a timely basis, 
the Secretary may apply sanctions against the physician, 
supplier, or other person in accordance with paragraph 
(2) of section 1842(j). In applying this subparagraph, para-
graph (4) of such section applies in the same manner 
as such paragraph applies to such section and any reference 
in such section to a physician is deemed also to include 
a reference to a supplier or other person under this 
subparagraph. 
"(C) TIMELY BASIS.—For purposes of this paragraph, 
a correction of a bill for an excess charge or refund of 
an amount with respect to a violation of subparagraph 
(A)(i) in the case of a service is considered to be provided 
'on a timely basis', if the reduction or refund is made 
not later than 30 days after the date the physician, sup-
PUBLIC LAW 103-432—OCT. 31, 1994 
108 STAT. 4411 
plier, or other person is notified by the carrier under this 
part of such violation and of the requirements of subpara-
graph (A)."; and 
(2) in paragraph (3)(B)— 
(A) by inserting after the first sentence the following: 
"No person is liable for payment of any amounts billed 
for such a service in violation of the previous sentence.", 
and 
(B) in the last sentence, by striking "previous sentence" 
and inserting "first sentence". 
(b) CLARIFICATION OF MANDATORY ASSIGNMENT RULES FOR CER-
TAIN PRACTITIONERS.— 
(1) IN GENERAL.—Section 1842(b) (42 U.S.C. 1395u(b)), as 
amended by section 126(e), is amended by adding at the end 
the following new paragraph: 
"(18)(A) Payment for any service furnished by a practitioner 
described in subparagraph (C) and for which payment may be 
made under this part on a reasonable charge or fee schedule basis 
may only be made under this part on an assignment-related basis. 
"(B) A practitioner described in subparagraph (C) or other 
person may not bill (or collect any amount from) the individual 
or another person for any service described in subparagraph (A), 
except for deductible and coinsurance amounts applicable under 
this part. No person is liable for payment of any amounts billed 
for such a service in violation of the previous sentence. If a practi-
tioner or other person knowingly and willfully bills (or collects 
an amount) for such a service in violation of such sentence, the 
Secretary may apply sanctions against the practitioner or other 
person in the same manner as the Secretary may apply sanctions 
against a physician in accordance with subsection (j)(2) in the 
same manner as such section applies with respect to a physician. 
Paragraph (4) of subsection (j) shall apply in this subparagraph 
in the same manner as such paragraph applies to such section. 
"(C) A practitioner described in this subparagraph is any of 
the following: 
"(i) A physician assistant, nurse practitioner, or clinical 
nurse specialist (as defined in section 1861(aa)(5)). 
"(ii) A certified registered nurse anesthetist (as defined 
in section 1861(bb)(2)). 
"(iii) A certified nurse-midwife (as defined in section 
1861(gg)(2)). 
"(iv) A clinical social worker (as defined in section 
1861(hh)(l)). 
"(v) A clinical psychologist (as defined by the Secretary 
for purposes of section 1861(ii)). 
"(D) For purposes of this paragraph, a service furnished by 
a practitioner described in subparagraph (C) includes any services 
and supplies furnished as incident to the service as would otherwise 
be covered under this part if furnished by a physician or as incident 
to a physician's service.". 
(2) CONFORMING AMENDMENTS.— 
(A) Section 1833 (42 U.S.C. 13951) is amended— 
42 USC 1395/. 
(1) in subsection (1)(5), by striking subparagraph 
(B) and redesignating subparagraph (C) as subpara-
graph (B); 
(ii) by striking subsection (p); and 
108 STAT. 4412 
PUBLIC LAW 103-432—OCT. 31,1994 
(iii) in subsection (r), by striking paragraph (3) 
and redesignating paragraph (4) as paragraph (3). 
(B) Section 1842(b)(12) (42 U.S.C. 1395u(b)(12)) is 
amended by striking subparagraph (C). 
(c) INFORMATION ON EXTRA-BILLING LIMITS.— 
(1) PART OF EXPLANATION OF MEDICARE BENEFITS.—Section 
1842(h)(7) (42 U.S.C. 1395u(h)(7)) is amended— 
(A) by striking "and" at the end of subparagraph (B), 
(B) in subparagraph (C), by striking "shall include", 
(C) in subparagraph (C), by striking the period at 
the end and inserting ", and", and 
(D) by adding 
at 
the 
end 
the 
following 
new 
subparagraph: 
"(D) in the case of services for which the billed amount 
exceeds the limiting charge imposed under section 1848(g), 
information regarding such applicable limiting charge (includ-
ing information concerning the right to a refund under section 
1848(g)(l)(A)(iv)).". 
(2) DETERMINATIONS BY CARRIERS.—Subparagraph (G) of 
section 1842(b)(3) (42 U.S.C. 1395u(b)(3)) is amended to read 
as follows: 
"(G) will, for a service that is furnished with respect to 
an individual enrolled under this part, that is not paid on 
an assignment-related basis, and that is subject to a limiting 
charge under section 1848(g)— 
"(i) determine, prior to making payment, whether the 
amount billed for such service exceeds the limiting charge 
applicable under section 1848(g)(2); 
"(ii) notify the physician, supplier, or other person 
periodically (but not less often than once every 30 days) 
of determinations that amounts billed exceeded such 
applicable limiting charges; and 
"(iii) provide for prompt response to inquiries of physi-
cians, suppliers, and other persons concerning the accuracy 
of such limiting charges for their services;". 
(d) REPORT ON CHARGES IN EXCESS OF LIMITING CHARGE.— 
Section 1848(g)(6)(B) (42 U.S.C. 1395w-4(g)(6)(B)) is amended by 
inserting "information on the extent to which actual charges exceed 
limiting charges, the number and types of services involved, and 
the average amount of excess charges and information" after "report 
to the Congress". 
(e) 
MISCELLANEOUS AND TECHNICAL AMENDMENTS.—Section 
1833(h)(5)(D) (42 U.S.C. 13951(h)(5)(D)) is amended— 
(1) by striking "paragraphs (2) and (3)" and by inserting 
"paragraph (2)"; and 
(2) by adding at the end the following: "Paragraph (4) 
of such section shall apply in this subparagraph in the same 
manner as such paragraph applies to such section.". 
(f) EFFECTIVE DATES.— 
42 use 1395/ 
(1) ENFORCEMENT; MISCELLANEOUS AND TECHNICAL AMEND-
note- 
MENTS.—The amendments made by subsections (a) and (e) shall 
apply to services furnished on or after the date of the enactment 
of this Act; except that the amendments made by subsection 
(a) shall not apply to services of a nonparticipating supplier 
or other person furnished before January 1, 1995. 
'
•
^
^ 
PUBLIC LAW 103-432—OCT. 31, 1994 
108 STAT. 4413 
(2) PRACTITIONERS.—The amendments made by subsection 
(b) shall apply to services furnished on or after January 1, 
1995. 
(3) EOMBs.—The amendments made by subsection (c)(1) 
shall apply to explanations of benefits provided on or after 
July 1, 1995. 
(4) CARRIER DETERMINATIONS.—^The amendments made by 
subsection (c)(2) shall apply to contracts as of January 1, 1995. 
(5) REPORT.—^The amendment made by subsection (d) shall 
apply to reports for years beginning with 1995. 
SEC. 124. RELATIVE VALUES FOR PEDIATRIC SERVICES. 
(a) IN GENERAL.—The Secretary of Health and Human Services 
shall fully develop, by not later than July 1, 1995, relative values 
for the full range of pediatric physicians' services which are consist-
ent with the relative values developed for other physicians' services 
under section 1848(c) of the Social Security Act. In developing 
such values, the Secretary shall conduct such refinements as may 
be necessary to produce appropriate estimates for such relative 
values. 
(b) STUDY.— 
(1) IN GENERAL.—^The Secretary shall conduct a study of 
the relative values for pediatric and other services to determine 
whether there are significant variations in the resources used 
in providing similar services to different populations. In 
conducting such study, the Secretary shall consult with appro-
priate organizations representing pediatricians and other physi-
cians and physical and occupational therapists. 
(2) REPORT.—Not later than July 1, 1995, the Secretary 
shall submit to Congress a report on the study conducted under 
paragraph (1). Such report shall include any appropriate rec-
ommendations regarding needed changes in coding or other 
payment policies to ensure that payments for pediatric services 
appropriately reflect the resources required to provide these 
services. 
SEC. 125. ADMINISTRATION OF CLAIMS RELATING TO PHYSICIANS' 
SERVICES. 
(a) LIMITATION ON CARRIER USER FEES.—Section 1842(c) (42 
U.S.C. 1395u(c)) is amended by adding at the end the following 
new paragraph: 
"(4) Neither a carrier nor the Secretary may impose a fee 
under this title— 
"(A) for the filing of claims related to physicians' services, 
"(B) for an error in filing a claim relating to physicians' 
services or for such a claim which is denied, 
"(C) for any appeal under this title with respect to physi-
cians' services, 
"(D) for applying for (or obtaining) a unique identifier under 
subsection (r), or 
"(E) for responding to inquiries respecting physicians' serv-
ices or for providing information with respect to medical review 
of such services.". 
(b) 
CLARIFICATION 
OF 
PERMISSIBLE 
SUBSTITUTE 
BILLING 
ARRANGEMENTS.— 
(1) IN GENERAL.—Clause (D) of section 1842(b)(6) (42 U.S.C. 
1395u(b)(6)) is amended to read as follows: "(D) payment may 
be made to a physician for physicians' services (and services 
42 use 1395/ 
note. 
42 use 1395u 
note. 
42 use 1395u 
note. 
42 use 1395W-4 
note. 
42 u s e 1395W-4 
note. 
108 STAT. 4414 
PUBLIC LAW 103-432—OCT. 31, 1994 
furnished incident to such services) furnished by a second physi-
cian to patients of the first physician if (i) the first physician 
is unavailable to provide the services; (ii) the services are 
furnished pursuant to an arrangement between the two physi-
cians that (I) is informal and reciprocal, or (II) involves per 
diem or other fee-for-time compensation for such services; (iii) 
the services are not provided by the second physician over 
a continuous period of more than 60 days; and (iv) the claim 
form submitted to the carrier for such services includes the 
second physician's unique identifier (provided under the system 
established under subsection (r)) and indicates that the claim 
meets the requirements of this subparagraph for payment to 
the first physician". 
42 use 1395u 
(2) EFFECTIVE DATE.—The amendment made by paragraph 
"°*®' 
(1) shall apply to services furnished on or after the first day 
of the first month beginning more than 60 days after the 
date of the enactment of this Act. 
SEC. 126. MISCELLANEOUS AND TECHNICAL CORRECTIONS. 
(a) OVERVALUED PROCEDURES.—(1) Section 1842(b)(16)(B)(iii) 
(42 U.S.C. 1395u(b)(16)(B)(iii)) is amended— 
(A) by striking ", simple and subcutaneous", 
(B) by striking "; small" and inserting "and small", 
(C) by striking "treatments;" the first place it appears 
and inserting "and", 
(D) by striking "lobectomy;", 
(E) by striking "enterectomy; colectomy; cholecystectomy;", 
(F) by striking "; transurerethral resection" and inserting 
"and resection", and 
(G) by striking "sacral laminectomy;". 
42 use 1
3
9
5
U 
(2) Section 4101(b)(2) of OBRA-1990 is amended— 
"°^- 
(A) in the matter before subparagraph (A), by striking 
"1842(b)(16)" and inserting "1842(b)(16)(B)", and 
(B) in subparagraph (B)— 
(i) by striking ", simple and subcutaneous", 
(ii) by striking "(HCPCS codes 19160 and 19162)" and 
inserting "(HCPCS code 19160)", and 
(iii) by striking all that follows "(HCPCS codes 92250" 
and inserting "and 92260).". 
(b) RADIOLOGY SERVICES.—(1) Section 1834(b)(4) (42 U.S.C. 
1395m(b)(4)) is amended by redesignating the subparagraphs (E) 
and (F) redesignated by section 4102(a)(1) of OBRA-1990 as sub-
paragraphs (F) and (G), respectively. 
(2) 
Section 
1834(b)(4)(D) (42 U.S.C. 
1395m(b)(4)(D)) is 
amended— 
(A) in the matter before clause (i), by striking "shall be 
determined as follows:" and inserting "shall, subject to clause 
(vii), be reduced to the adjusted conversion factor for the locality 
determined as follows:", 
(B) in clause (iv), by striking "LOCAL ADJUSTMENT.—Subject 
to clause (vii), the conversion factor to be applied to" and 
inserting 
"ADJUSTED 
CONVERSION 
FACTOR.—The 
adjusted 
conversion factor for", 
(C) in clause (vii), by striking "under this subparagraph", 
and 
(D) in clause (vii), by inserting "reduced under this subpara-
graph by" after "shall not be". 
.,\:^-i;ir 
PUBLIC LAW 103-432—OCT. 31, 1994 
108 STAT. 4415 
(3) Section 4102(c)(2) of OBRA-1990 is amended by striking 
"radiology services" and all that follows and inserting "nuclear 
medicine services.". 
(4) Section 4102(d) of OBRA-1990 is amended by striking "new 
paragraph" and inserting "new subparagraph". 
(5) Section 1834(b)(4)(E) (42 U.S.C. 1395m(b)(4)(E)) is amended 
by inserting "RULE FOR CERTAIN SCANNING SERVICES.—" after "(E)". 
(6) Section 1848(a)(2)(D)(iii) (42 U.S.C. 1395w-4(a)(2)(D)(iii)) 
is amended by striking "that are subject to section 6105(b) of 
the Omnibus Budget Reconciliation Act of 1989" and by striking 
"provided under such section" and inserting "provided under section 
6105(b) of the Omnibus Budget Reconciliation Act of 1989". 
(c) ANESTHESIA SERVICES.—(1) Section 4103(a) of OBRA-1990 
is amended by striking "REDUCTION IN FEE SCHEDULE" and insert-
ing "REDUCTION IN PREVAILING CHARGES". 
(2) 
Section 
1842(q)(l)(B) 
(42 U.S.C. 
1395u(q)(l)(B)) is 
amended— 
(A) in the matter before clause (i), by striking "shall be 
determined as follows:" and inserting "shall, subject to clause 
(iv), be reduced to the adjusted prevailing charge conversion 
factor for the locality determined as follows:", and 
(B) in clause (iii), by striking "Subject to clause (iv), the 
prevailing charge conversion factor to be applied in" and insert-
ing "The adjusted prevailing charge conversion factor for". 
(d) ASSISTANTS AT SURGERY.—(1) Section 4107(c) of OBRA-
1990 is amended by inserting "(a)(1)" after "subsection". 
(2) Section 4107(a)(2) of OBRA-1990 is amended by adding 
at the end the following: "In applying section 1848(g)(2)(D) of the 
Social Security Act for services of an assistant-at-surgery furnished 
during 1991, the recognized payment amount shall not exceed the 
maximum amount specified under section 1848(i)(2)(A) of such Act 
(as applied under this paragraph in such year).". 
(e) TECHNICAL COMPONENTS OF DIAGNOSTIC SERVICES.—Section 
1842(b) (42 U.S.C. 1395u(b)) is amended by redesignating paragraph 
(18), as added by section 4108(a) of OBRA-1990, as paragraph 
(17) and, in such paragraph, by inserting ", tests specified in para-
graph (14)(C)(i)," after "diagnostic laboratory tests". 
(f) STATEWIDE FEE SCHEDULES.—Section 4117 of OBRA-1990 
is amended— 
(1) in subsection (a)— 
" 
(A) by striking "(a) IN GENERAL.—", and 
(B) by striking ", if the" and all that follows through 
"1991,"; and 
(2) by striking subsections (b), (c), and (d). 
(g) OTHER MISCELLANEOUS AND TECHNICAL AMENDMENTS.— 
(1) The heading of section 1834(f) (42 U.S.C. 1395m(f)) is amended 
by striking "FISCAL YEAR". 
(2)(A) Section 4105(b) of OBRA-1990 is amended— 
(i) in paragraph (2), by striking "amendments" and insert-
ing "amendment", and 
(ii) in paragraph (3), by striking "amendments made by 
paragraphs (1) and (2)" and inserting "amendment made by 
paragraph (1)". 
(B) Section 
1848(f)(2)(C) (42 U.S.C. 1395w-4(f)(2)(C)) is 
amended by inserting "PERFORMANCE STANDARD RATES OF INCREASE 
FOR FISCAL YEAR 1991.—" after "(C)". 
42 u s e 1395m 
note. 
42 u s e 1395m. 
42 u s e 1895u. 
42 u s e 1395W-4 
note. 
42 u s e 1395W-4 
note. 
42 u s e 1395W-4 
note. 
42 u s e 1395u 
note. 
108 STAT. 4416 
PUBLIC LAW 103-432—OCT. 31, 1994 
42 use 1395W-4 
note. 
42 use 1395W-4 
note. 
42 use 1395u 
note. 
42 u s e 1395W-4. 
42 use 1395u. 
42 use 1395W-4 
note. 
42 use 1395m 
note. 
(C) Section 4105(d) of OBRA-1990 is amended by insertii^ 
"PUBUCATION OF PERFORMANCE STANDARD RATES.—" after "(d) . 
(3) Section 4106(c) of OBRA-1990 is amended by inserting 
"of tiie Social Security Actf' after "1848(d)(1)(B)''. 
(4) Section 4114 of OBRA-1990 is amended by striking 
"patients" the second place it appears. 
(5) Section 1848(e)(1)(C) (42 U.S.C. 1395w-4(e)(l)(C)) 
is 
amended by inserting "date of the" after "since the". 
(6) Section 4118(f)(1)(D) of OBRA-1990 is amended by striking 
"is amended". 
(7) Section 4118(f)(l)(N)(ii) of OBRA-1990 is amended by strik-
ing "subsection (f)(5)(A)" and inserting "subsection (f)(5)(A))". 
(8) Section 1845(e) (42 U.S.C. 1395w-l(e)) is amended— 
(A) by striking paragraph (2); and 
(B) by redesignating paragraphs (3), (4), and (5) as para-
graphs (2), (3), and (4). 
(9) Section 4118(j)(2) of OBRA-1990 is amended by striking 
"In section" £ind inserting "Section". 
(10)(A) Section 1848(i)(3) (42 U.S.C. 1395w-4(i)(3)) is amended 
by striking the space before the period at the end. 
(B) Section 1834(a)(10)(B) (42 U.S.C. 1395m(a)(10)(B)) is 
amended— 
(i) by striking "apply to" and inserting "would otherwise 
apply to", and 
(ii) by inserting before the period at the end "but for the 
application of section 1848(i)(3)". 
(h) OTHER CORRECTIONS.—(1) Eflfective on the date of the enact-
ment of this Act, section 6102(d)(4) of OBRA-1989 is amended 
by striking aU that follows the first sentence. 
(2) Effective for payments for fiscal years beginning with fiscal 
year 1994, section 1842(c)(1) (42 U.S.C. 1395u(cXl)) is amended— 
(A) in subparagraph (A), by striking *XA) Any contract" 
and inserting "Any contract"; and 
(B) by striking subparagraph (B). 
(i) EFFECTIVE DATE.—Except as provided in subsection (h), 
the amendments made by this section and the provisions of this 
section shall take effect as if included in the enactment of OBRA-
1990. 
PART 
II—DURABLE 
MEDICAL 
EQUIPMENT 
SEC. 131. CERTIFICATION OF SUPPUERS. 
(a) REQUIREMENTS.— 
(1) IN GENERAL.—Section 1834 (42 U.S.C. 1395m), as 
amended by section 13544(b)(1) of OBRA-1993, is amended 
by adding at the end the following new subsection: 
"g) REQUIREMENTS FOR SUPPLIERS OF MEDICAL EQUIPMENT AND 
SUPPLIES.— 
"(1) ISSUANCE AND RENEWAL OF SUPPUER NUMBER.— 
"(A) PAYMENT.—Except as provided in subparagraph 
(C), no payment may be made under this part after the 
date of the enactment of the Social Security Act Amend-
ments of 1994 for items furnished by a supplier of medical 
equipment and supplies unless such supplier obtains (and 
renews at such intervals as the Secretary may require) 
a supplier number. 
(B) STANDARDS FOR POSSESSING A SUPPUER NUMBER.— 
A suppher may not obtain a supplier number unless— 
PUBLIC LAW 103-432—OCT. 31, 1994 
108 STAT. 4417 
**(i) for medical equipment and supplies furnished 
on or after the date of the enactment of the Social 
Seciuity Act Amendments of 1994 and before January 
1, 1996, the suppUer meets standards prescribed by 
the Secretary in regulations issued on June 18, 1992; 
and 
"(ii) for medical equipment and supplies furnished 
on or after January 1, 1996, the suppHer meets revised 
standards prescribed hv the Secretary (in consultation 
with representatives of suppUers of medical equipment 
and supplies, carriers, and consumers) that shall 
include requirements that the suppUer— 
"(I) comply with all applicable State and Fed-
eral Ucensure and regulatory requirements; 
"(II) maintain a physical facility on an appro-
priate site; 
"(III) have proof of appropriate liabihty insur-
ance; and 
"(IV) meet such other requirements as the Sec-
retary may specify. 
"(C) EXCEPTION FOR ITEMS FURNISHED AS INCIDENT TO 
A PHYSICIAN'S SERVICE.—Subparagraph (A) shall not apply 
with respect to medical equipment and suppUes furnished 
incident to a physician's service. 
"(D) PROHIBITION AGAINST MULTIPLE SUPPLIER NUM-
BERS.—^The Secnjtary may not issue more than one suppher 
number to any supplier of medical equipment and supplies 
unless the issuance of more than one niunber is appropriate 
to identify subsidiary or regional entities under the suppU-
er's ownership or control. 
"(E) 
PROHIBITION AGAINST DELEGATION OF SUPPLIER 
DETERMINATIONS.—The Secretary may not delegate (other 
than by contract imder section 1842) the responsibility 
to determine whether suppUers meet the standards nec-
essaiy to obtain a suppHer number. 
"(2) (JERTIFICATES OF MEDICAL NECESSITY.— 
"(A) LIMITATION ON INFORMATION PROVIDED BY SUPPLI-
ERS ON CERTIFICATES OF MEDICAL NECESSITY.— 
"(i) IN GENERAL.—Effective 60 days ailer the date Effective date. 
of the enactment of the Social Security Act Amend-
ments of 1994, a supplier of medical equipment and 
suppUes mav distribute to physicians, or to individuals 
entitled to benefits under tnis pgut, a certificate of 
medical necessity for commercial purposes which con-
tains no more than the following information completed 
by the suppUer: 
(I) An identification of the supplier and the 
beneficiary to whom such medical equipment and 
suppUes are furnished. 
"(II) A description of such medical equipment 
and suppHes. 
"(Ill) Any product code identifying such medi-
cal equipment and suppUes. 
'XIV) Any other administrative information 
(other than information relating to the bene-
ficiary's medical condition) identified by the 
Secretary. 
108 STAT. 4418 
PUBLIC LAW 103-432—OCT. 31, 1994 
"(ii) 
INFORMATION ON 
PAYMENT AMOUNT AND 
CHARGES.—If a supplier distributes a certificate of 
medical necessity containing any of the information 
permitted to be supplied under clause (i), the supplier 
shall also list on the certificate of medical necessity 
the fee schedule amount and the supplier's charge 
for the medical equipment or supplies being furnished 
prior to distribution of such certificate to the physician, 
"(iii) PENALTY.—^Any supplier of medical equip-
ment and supplies who knowingly and willfully distrib-
utes a certificate of medical necessity in violation of 
clause (i) or fails to provide the information required 
under clause (ii) is subject to a civil money penalty 
in an amount not to exceed $1,000 for each such certifi-
cate of medical necessity so distributed. The provisions 
of section 1128A (other than subsections (a) and (b)) 
shall apply to civil money penalties under this subpara-
graph in the same manner as they apply to a penalty 
or proceeding under section 1128A(a). 
"(B) DEFINITION.—For purposes of this paragraph, the 
term 'certificate of medical necessity' means a form or 
other document containing information required by the 
carrier to be submitted to show that an item is reasonable 
and necessary for the diagnosis or treatment of illness 
or injury or to improve the functioning of a malformed 
body member. 
"(3) COVERAGE AND REVIEW CRITERIA.—The Secretary shall 
annually review the coverage and utilization of items of medical 
equipment and supplies to determine whether such items 
should be made subject to coverage and utilization review cri-
teria, and if appropriate, shall develop and apply such criteria 
to such items. 
"(4) DEFINITION.—^The term 'medical equipment and sup-
plies' means— 
"(A) durable medical equipment (as defined in section 
1861(n)); 
"(B) prosthetic devices (as described 
in 
section 
1861(s)(8)); 
"(C) orthotics and prosthetics (as described in section 
1861(s)(9)); 
"(D) surgical dressings (as described 
in 
section 
1861(s)(5)); 
"(E) such other items as the Secretary may determine; 
and 
"(F) for purposes of paragraphs (1) and (3)— 
"(i) home dialysis supplies and equipment (as 
described in section 1861(s)(2)(F)), 
"(ii) immunosuppressive drugs (as described in sec-
tion 1861(s)(2)(J)), 
"(iii) therapeutic shoes for diabetics (as described 
in section 1861(s)(12)), 
' 
"(iv) oral drugs prescribed for use as an anticancer 
therapeutic 
agent 
(as 
described 
in 
section 
1861(s)(2)(Q)), and 
"(v) self-administered erythropoetin (as described 
in section 1861(s)(2)(P)).". 
PUBLIC LAW 103-432—OCT. 31, 1994 
108 STAT. 4419 
(2) CONFORMING AMENDMENT.—Effective 60 days after the 
date of enactment of the Social Securitj^ Act Amendments of 
1994, paragraph (16) of section 1834(a) (42 U.S.C. 1395m(a)) 
is repealed. 
(b) USE OF COVERED ITEMS BY DISABLED BENEFICIARIES.— 
(1) IN GENERAL.—The Secretary of Health and Human 
Services, in consultation with representatives of suppliers of 
durable medical equipment under part B of the medicare pro-
gram and individuals entitled to benefits under such program 
on the basis of disability, shall conduct a study of the effects 
of the methodology for determining payments for items of such 
equipment under such part on the ability of such individuals 
to obtain items of such equipment, including customized items. 
(2) REPORT.—Not later than one year after the date of 
the enactment of this Act, the Secretary shall submit a report 
to Congress on the study conducted under paragraph (1), and 
shall include in the report such recommendations as the Sec-
retary considers appropriate to assure that disabled medicare 
beneficiaries have access to items of durable medical equipment. 
(c) CRITERIA FOR TREATMENT OF ITEMS AS PROSTHETIC DEVICES 
OR ORTHOTICS AND PROSTHETICS.—Not later than one year after 
the date of the enactment of this Act, the Secretary of Health 
and Human Services shall submit a report to the Committees 
on Ways and Means and Energy and Commerce of the House 
of Representatives and the Committee on Finance of the Senate 
describing prosthetic devices or orthotics and prosthetics covered 
under part B of the medicare program that do not require individ-
ualized or custom fitting and adjustment to be used by a patient. 
Such report shall include recommendations for an appropriate meth-
odology for determining the amount of payment for such items 
under such program. 
SEC. 132. RESTRICTIONS ON CERTAIN MARKETING AND SALES 
ACTIVITIES. 
(a) PROHIBITING UNSOLICITED TELEPHONE CONTACTS FROM 
SUPPLIERS OF DURABLE MEDICAL EQUIPMENT TO MEDICARE BENE-
FICIARIES.— 
(1) IN GENERAL.—Section 1834(a) (42 U.S.C. 1395m(a)) is 
amended by adding at the end the following new paragraph: 
"(17) PROHIBITION AGAINST UNSOLICITED TELEPHONE CON-
TACTS B
Y SUPPLIERS.— 
"(A) IN GENERAL.—^A supplier of a covered item under 
this subsection may not contact an individual enrolled 
under this part by telephone regarding the furnishing of 
a covered item to the individual unless 1 of the following 
applies: 
"(i) The individual has given written permission 
to the supplier to make contact by telephone regarding 
the furnishing of a covered item. 
"(ii) The supplier has furnished a covered item 
to the individual and the supplier is contacting the 
individual only regarding the furnishing of such cov-
ered item. 
"(iii) If the contact is regarding the furnishing 
of a covered item other than a covered item already 
furnished to the individual, the supplier has furnished 
at least 1 covered item to the individual during the 
42 u s e 1395m 
note. 
42 u s e 1395m 
note. 
Reports. 
79-194 O—95—30 : QL 3 Part 5 
108 STAT. 4420 
PUBLIC LAW 103-432—OCT. 31, 1994 
15-month period preceding the date on which the sup-
plier makes such contact. 
"(B) PROHIBITING PAYMENT FOR ITEMS FURNISHED SUB-
SEQUENT TO UNSOLICITED CONTACTS.—If a suppHer know-
ingly contacts an individual in violation of subparagraph 
(A), no payment may be made under this part for any 
item subsequently furnished to the individual by the sup-
plier. 
"(C) EXCLUSION FROM PROGRAM FOR SUPPLIERS ENGAG-
ING IN PATTERN OF UNSOLICITED CONTACTS.—If a supplier 
knowingly contacts individuals in violation of subparagraph 
(A) to such an extent that the supplier's conduct establishes 
a pattern of contacts in violation of such subparagraph, 
the Secretary shall exclude the supplier from participation 
in the programs under this Act, in accordance with the 
procedures set forth in subsections (c), (f), and (g) of section 
1128.". 
(2) REQUIRING REFUND OF AMOUNTS COLLECTED FOR DIS-
ALLOWED ITEMS.—Section 1834(a) (42 U.S.C. 1395m(a)), as 
amended by paragraph (1), is amended by adding at the end 
the following new paragraph: 
"(18) 
REFUND OF AMOUNTS COLLECTED FOR CERTAIN DIS-
ALLOWED ITEMS.— 
"(A) IN GENERAL.—If a nonparticipating supplier fur-
nishes to an individual enrolled under this part a covered 
item for which no payment may be made under this part 
by reason of paragraph (17)(B), the supplier shall refund 
on a timely basis to the patient (and shall be liable to 
the patient for) any amounts collected from the patient 
for the item, unless— 
"(i) the supplier establishes that the supplier did 
not know and could not reasonably have been expected 
to know that payment may not be made for the item 
by reason of paragraph (17)(B), or 
"(ii) before the item was furnished, the patient 
was informed that payment under this part may not 
be made for that item and the patient has agreed 
to pay for that item. 
"(B) SANCTIONS.—If a supplier knowingly and willfully 
fails to make refunds in violation of subparagraph (A), 
the Secretary may apply sanctions against the supplier 
in accordance with section 1842(j)(2). 
"(C) NOTICE.—Each carrier with a contract in effect 
under this part with respect to suppliers of covered items 
shall send any notice of denial of pajonent for covered 
items by reason of paragraph (17)(B) and for which pay-
ment is not requested on an assignment-related basis to 
the supplier and the patient involved. 
"(D) TIMELY BASIS DEFINED.-—A refund under subpara-
graph (A) is considered to be on a timely basis only if^ 
"(i) in the case of a supplier who does not request 
reconsideration or seek appeal on a timely basis, the 
refund is made within 30 days after the date the 
supplier receives a denial notice under subparagraph 
(C),or 
"(ii) in the case in which such a reconsideration 
or appeal is taken, the refund is made within 15 days 
note. 
PUBLIC LAW 103-432—OCT. 31, 1994 
108 STAT. 4421 
after the date the suppHer receives notice of an adverse 
determination on reconsideration or appeal,". 
(b) CONFORMING AMENDMENT.—Section 1834(h)(3) (42 U.S.C. 
1395m(h)(3)) is amended by striking "Paragraph (12)" and inserting 
"Paragraphs (12) and (17)". 
(c) EFFECTIVE DATE.—^The amendments made by subsections 
42 use I395m 
(a) and (b) shall apply to items furnished after the expiration 
of the 6()-day period that begins on the date of the enactment 
of this Act. 
SEC. 133. BENEFICIARY LIABIUTY FOR NONCOVERED SERVICES. 
(a) UNASSIGNED CLAIMS.— 
(1) IN GENERAL.—Section 1834(j) (42 U.S.C. 1395m(i)), as 
added by section 131(a)(1), is amended— 
(A) by redesignating paragraph (4) as paragraph (5), 
and 
(B) by inserting after paragraph (3) the following new 
paragraph: 
"(4) LIMITATION ON PATIENT LIABILITY.—If a supplier of 
medical equipment and supplies (as defined in paragraph (5))— 
"(A) furnishes an item or service to a beneficiary for 
which no payment may be made by reason of paragraph 
(1); 
"(B) furnishes an item or service to a beneficiary for 
which payment is denied in advance under subsection 
(a)(15);or 
"(C) furnishes an item or service to a beneficiary for 
which payment is denied under section 1862(a)(1); 
any expenses incurred for items and services furnished to an 
individual by such a supplier not on an assigned basis shall 
be the responsibility of such supplier. The individual shall 
have no financial responsibility for such expenses and the sup-
plier shall refund on a timely basis to the individual (and 
shall be liable to the individual for) any amounts collected 
from the individual for such items or services. The provisions 
of subsection (a)(18) shall apply to refunds required under 
the previous sentence in the same manner as such provisions 
apply to refunds under such subsection.". 
(2) CONFORMING AMENDMENT.—Section 1128B(b)(3)(B) (42 
U.S.C. 1320a-7b(b)(3)(B)), as amended by section 134(a), is 
amended by striking "1834(j)(4)" and inserting "18340*)(5)". 
(b) ASSIGNED CLAIMS.—Section 1879 (42 U.S.C. 1395pp) is 
amended by adding at the end the following new subsection: 
"(h) If a supplier of medical equipment and supplies (as defined 
in section 1834(j)(5))— 
"(1) furnishes an item or service to a beneficiary for which 
no payment may be made by reason of section 1834(j)(l); 
"(2) furnishes an item or service to a beneficiary for which 
payment is denied in advance under section 1834(a)(15); or 
"(3) furnishes an item or service to a beneficiary for which 
no payment may be made by reason of section 1834(a)(17)(B), 
any expenses incurred for items and services furnished to an 
individual by such a supplier on an assignment-related basis shall 
be the responsibility of such supplier. The individual shall have 
no financial responsibility for such expenses and the supplier shall 
refund on a timely basis to the individual (and shall be liable 
to the individual for) any amounts collected from the individual 
108 STAT. 4422 
PUBLIC LAW 103-432—OCT. 31, 1994 
for such items or services. The provisions of section 1834(a)(18) 
sh£ill apply to refunds required under the previous sentence in 
the same manner as such provisions apply to refunds under such 
section.". 
42 use I320a-7b 
(c) EFFECTIVE DATE.—^The amendments made by this section 
"°*^® 
shall apply to items or services furnished on or after January 
1, 1995. 
SEC. 
1
3
4
. 
ADJUSTMENTS 
FOR 
INHERENT 
REASONABLENESS. 
(a) ADJUSTMENTS MADE TO FINAL PAYMENT AMOUNTS.— 
(1) IN GENERAL.—Section 
1834(aX10XB) (42 U.S.C. 
1395m(a)(10XB)) is amended by adding at the end the following: 
**In applying such provisions to payments for an item under 
this siibsection, the Secretary shall make a<^ustments to the 
payment bsisis for the item described in paragraph (IXB) if 
the Secretary determines (in accordance with such provisions 
and on the basis of prices and costs appHcable at the time 
the item is furnished) that such pajrment basis is not inherentiy 
reasonable.". 
42 use 1395m 
(2) EFFECTIVE DATE.—^The amendment made by paragraph 
"°*® 
(1) shall take effect on the date of the enactment of this Act 
42 u s e 1395m 
(b) ADJUSTMENT REQUIRED FOR CERTAIN ITEMS.— 
"°^® 
(1) I N GENERAL.—In accordance with section 1834(a)(10XB) 
of the Social Security Act (as amended by subsection (a)), the 
Secretary of Health and Human Services shall determine 
whether the payment amoimts for the items described in para-
graph (2) are not inherentiy reasonable, and shall adjust such 
amounts in accordance wim such section if the amounts are 
not inherentiy reasonable. 
(2) ITEMS DESCRIBED.—^The items referred to in paragraph 
(1) are decubitus care equipment, transcutaneous electrical 
nerve stimulators, and any other items considered appropriate 
by the Secretary. 
SEC. 136. MISCELLANEOUS AND TECHNICAL CORRECTIONS. 
(a) UPDATES TO PAYMENT AMOUNTS.—(1) Subparagraph (A) 
of section 1834(aX14) (42 U.S.C. 1395m(a)(14)) is amended to read 
as foUows: 
"(A) for 1991 and 1992, the percentage increase in 
the consumer price index for all urban consumers (U.S. 
city average) for the 12-month period ending with June 
of the previous year reduced by 1 percentage point* and". 
Effective date. 
(2) The amendment made by paragrapn (1) shall oe effective 
^^ ti^ 
^^^^"^ 
°^ *^® ^^*® °^ *^® enactment of this Act 
Effective date 
(^) ADVANCE DETERMINATIONS OF COVERAGE.—(1) Effective On 
the date of the enactment of this Act section 1834(aX15) (42 U.S.C. 
1395m(a)(15)) is amended to read as follows: 
"(15) ADVANCE DETERMINATIONS OF COVERAGE FOR CERTAIN 
ITEMS.— 
**(A) DEVELOPMENT OF USTS OF ITEMS BY SECRETARY.— 
The Secretary may develop and periodically update a Ust 
of items for which payment may oe made under this sub-
section that the Secretary determines, on the beisis of prior 
payment experience, are frequentiy subject to unnecessary 
utilization throughout a carrier's entire service area or 
a portion of such area. 
"(B) DEVELOPMENT OF LISTS OF SUPPUERS BY SEC-
RETARY.—^The Secretary may develop and periodically 
- 
jT 
^' 
-^ 
PUBLIC LAW 103-432—OCT. 31, 1994 
108 STAT. 4423 
update a list of suppliers of items for which payment may 
be made under this subsection with respect to whom— 
"(i) the Secretary has foimd that a substantial 
number of claims for payment under this part for items 
furnished by the supplier have been denied on the 
basis of the appHcation of section 1862(a)(1); or 
"(ii) the Secretary has identified a pattern of 
overutilization resulting fix)m the business practice of 
the suppUer. 
"(C) 
DETERMINATIONS OF COVERAGE IN ADVANCE.—A 
c£irrier shall determine in advance of delivery of an item 
whether payment for the item may not be made because 
the item is not covered or because of the appHcation of 
section 1862(a)(1) if— 
"(i) the item is included on the Ust developed by 
the Secretary under subparagraph (A); 
"(ii) the item is furnished by a suppher included 
on the Hst developed by the Secretary tmder subpara-
graph (B); or 
"(iii) the item is a customized item (other than 
inexpensive items specified by the Secretary) and the 
patient to whom the item is to be fiimished or the 
suppher requests that such advance determination be 
made.". 
(2) Effective for standsirds applied for contract years beginning 
after the date of the enactment of this Act, section 1842(c) (42 
U.S.C. 1395u(c)), as amended by section 125(a), is amended by 
adding at the end the following new paragraph: 
"(5) Each contract under this section which provides for the 
disbursement of fiinds, as described in subsection (a)(1)(B), shall 
require the carrier to meet criteria developed by the Secretary 
to measure the timeliness of carrier responses to requests for pay-
ment of items described in section 1834(aX15)(C).". 
(3) Effective on the date of the enactment of this Act, section Effective date. 
1834(hX3) (42 U.S.C. 1395m(h)(3)), as amended by section 133(b), 
is amended by striking "(12) and (17)" and inserting "(12), (15), 
and (17)". 
(c) STUDY OF VARIATIONS IN DURABLE MEDICAL EQUIPMENT 
SuppuER COSTS.— 
(1) COLLECTION AND ANALYSIS OF SUPPLIER COST DATA.— 
The Administrator of the Health Care Financing Administra- 
-
tion shall, in consultation with appropriate organizations, col-
lect data on supplier costs of diu^ble medical equipment for 
which payment may be made under part B of me medicare 
program, and shall analyze such data to determine the propor-
tions of such costs attributable to the service and product 
components of fiunishing such equipment and the extent to 
which such proportions vary by type of equipment and by 
the geographic region in which the supplier is located. 
(2) 
DEVELOPMENT OF GEOGRAPHIC ADJUSTMENT INDEX; 
REPORTS.—Not later than July 1,1995— 
(A) the Admioistrator shall submit a report to the 
Committees on E n e i ^ and Conunerce and Ways £ind 
Means of the House of Representatives and the Committee 
on Finance of the Senate on the data collected and the 
smalysis conducted under paragraph (1), and shall include 
in such report the Administrator's recommendations for 
108 STAT. 4424 
PUBLIC LAW 103-432—OCT. 31, 1994 
Effective date. 
42 u s e 1395m 
note. 
42 u s e 1395m 
note. 
42 u s e 1395m. 
42 u s e 1395m 
note. 
42 u s e 1395CC 
note. 
Effective date. 
42 u s e 1395m 
note. 
a geographic cost adjustment index for suppliers of durable 
medical equipment imder the medicare program and an 
analysis of the impact of such proposed index on payments 
under the medicare program; and 
(B) the Comptroller General shall submit a report to 
the Committees on Energy and Commerce and Ways and 
Means of the House of Representatives and the Committee 
on Finance of the Senate analyzing on a geographic basis 
the suppUer costs of durable medical equipment under 
the medicare program. 
(d) OXYGEN RETESTING.—(1) Section 1834(a)(5)(E) (42 U.S.C. 
1395m(a)(5)(E)) is amended by striking "55" and inserting "56". 
(2) The amendment made by paragraph (1) shall be effective 
on the date of the enactment of this Act. 
(e) OTHER MISCELLANEOUS AND TECHNICAL AMENDMENTS.— 
(1) Section 4152(a)(3) of OBRA-1990 is amended by striking 
"amendment made by subsection (a)" and inserting "amendments 
made by this subsection". 
(2) Section 4152(c)(2) of OBRA-1990 is amended by striking 
"1395m(a)(7)(A)" and inserting "1395m(a)(7)". 
(3) 
Section 
1834(a)(7)(A)(iii)(II) 
(42 
U.S.C. 
1395m(a)(7)(A)(iii)(II)) is amended by striking "clause (v)" and 
inserting "clause (vi)". 
(4) Section 1834(a)(7)(C)(i) (42 U.S.C. 1395m(a)(7)(C)(i)) is 
amended by striking "or paragraph (3)". 
(5) Section 1834(a)(3) (42 U.S.C. 1395m(a)(3)) is amended by 
striking subparagraph (D). 
(6) Section 4153(c)(1) of OBRA-1990 is amended by striking 
"1834(a)" and inserting "1834(h)". 
(7) Section 4153(d)(2) of OBRA-1990 is amended by striking 
"Reconihation" and inserting "ReconciHation". 
(8) The amendments made by this subsection shall take effect 
as if included in the enactment of OBRA-1990. 
PART III—OTHER ITEMS AND SERVICES 
SEC. 141. AMBULATORY SURGICAL CENTEK SERVICES. 
(a) PAYMENT AMOUNTS FOR SERVICES FURNISHED IN AMBULA-
TORY SURGICAL CENTERS.— 
(1) USE OF SURVEY TO DETERMINE INCURRED COSTS.—Sec-
42 use 1395/. 
tion 
1833(i)(2)(A)(i) (42 U.S.C. 13951(i)(2)(A)(i)) is amended by 
striking the comma at the end and inserting the following: 
", as aetermined in accordance with a survey (based upon 
a representative sample of procedures and facilities) taken not 
later tiian January 1, 1995, and every 5 years thereafter, of 
the actual audited costs inciured by such centers in providing 
such services,". 
(2) AUTOMATIC APPLICATION OF INFLATION ADJUSTMENT.— 
42 use 1395/. 
Section 1833(i)(2) (42 U.S.C. 13951(i)(2)) is amended— 
(A) in the second sentence of subparagraph (A) and 
the second sentence of subparagraph (B), by striking "and 
may be adjusted by the Secretary, when appropriate,"; 
and 
(B) by 
adding 
at 
the 
end 
the 
following 
new 
subparagraph: 
"(C) Notwithstanding the second sentence of subparagraph (A) 
or the second sentence of subparagraph (B), if the Secretary has 
PUBLIC LAW 103-432—OCT. 31, 1994 
108 STAT. 4425 
42 use 1395/. 
not updated amounts established under such subparagraphs with 
respect to facihty services furnished during a fiscal year (beginning 
wim fiscal year 1996), such amounts shall be increased by the 
percentage increase in the consumer price index for all urban 
consumers (U.S. city average) as estimated by the Secretary for 
the 12-montii period ending with the midpoint of the year involved.". 
(3) CONSULTATION REQUIREMENT.—The second sentence of 
section 1833(i)(l) (42 U.S.C. 13951(1X1)) is amended by striking 
42 use 1395/. 
the period and inserting the following: *, in consultation with 
appropriate trade and professional organizations.". 
(b) ADJUSTMENTS TO PAYMENT AMOUNTS FOR NEW TECHNOLOGY 
INTRAOCULAR LENSES.— 
(1) ESTABUSHMENT OF PROCESS FOR REVIEW OF AMOUNTS.— 
Not later than 1 year after the date of the enactment of this 
Act, the Secretary of Health and Human Services (in this 
subsection referred to as the "Secretary") shall develop and 
implement a process under which interested parties may 
request review by the Secretary of the appropriateness of the 
reimbursement amount provided under section 1833(iX2XA)(iii) 
of the Social Security Act with respect to a class of new tech-
nology intraocular lenses. For pmposes of the preceding sen-
tence, an intraocular lens may not be treated as a new 
technology lens unless it has been approved by the Food and 
Drug Administration. 
(2) FACTORS CONSIDERED.—In determining whether to pro-
vide an adjustment of payment with respect to a particular 
lens under paragraph (1), the Secretary shall take into account 
whether use of the lens is likely to result in reduced risk 
of intraoperative or postoperative compUcation or trauma, accel-
erated postoperative recovery, reduced induced astigmatism, 
improved postoperative visusil acuity, more stable postoperative 
vision, or other compajrable cUnical advantages. 
(3) NOTICE AND COMMENT.—The Secretary shall pubUsh 
notice in the Federal Register fi^m time to time (but no less 
oft«n than once each year) of a list of the requests that the 
Secret£iry has received for review under this subsection, and 
shall provide for a 30-day comment period on the lenses that 
are the subjects of the requests contained in such notice. The 
Secretary snail publish a notice of the Secretary's determina-
tions with respect to intraocular lenses listed in the notice 
within 90 days after the close of the comment period. 
(4) EFFECTIVE DATE OF ADJUSTMENT.—Any adyustment of 
a payment amount (or payment Umit) made under this sub-
section shall become effective not later than 30 days after 
the date on which the notice with respect to the adjustment 
is pubhshed under paragraph (3). 
(c) TECHNICAL CORRECJTION RELATING TO BLEND AMOUNTS FOR 
AMBULATORY SURGICAL CENTER PAYMENTS.— 
(1) IN GENERAL.—Subclauses (I) and (II) of section 
1833(iX3)(B)(ii) (42 U.S.C. 13951(i)(3XBXii)) are each amended— 
42 use 1395/ 
(A) by striking "for reporting" and inserting "for por-
tions of cost reporting"; and 
(B) by striking and on or before" and inserting "and 
ending on or before". 
(2) EFFECTIVE DATE.—The amendments made by paragraph 
(1) shall take effect as if included in the enactment of OBRA-
1990. 
Federal 
Register, 
publication. 
42 use 1395/ 
note. 
108 STAT. 4426 
PUBLIC LAW 103-432—OCT. 31, 1994 
(d) TECHNICAL CORRECTION RELATED TO CATARACT SURGERY.— 
Effective as if included in the enactment of OBRA-1990, section 
ILY^^ ^^^^' 
4151(c)(3) of such Act is amended by striking "for the insertion 
of an intraocular lens" and inserting "for an intraocular lens 
inserted". 
note. 
42 u s e 1395/ 
SEC. 142. STUDY OF MEDICARE COVERAGE OF PATIENT CARE COSTS 
"o<^e. 
ASSOCIATED WITH CLINICAL TRIALS O F NEW 
CANCER 
THERAPIES. 
(a) STUDY.—^The Secretary of Health and Human Services shall 
conduct a study of the effects of expressly covering under the 
medicare program the patient care costs for beneficiaries enrolled 
in clinical trials of new cancer therapies, where the protocol for 
the trial has been approved by the National Cancer Institute or 
meets similar scientific and ethical standards, including approval 
by an institutional review board. The study shall include— 
(1) an estimate of the cost of such coverage, taking into 
account the extent to which medicare currently pays for such 
patient care costs in practice; 
(2) an assessment of the extent to which such clinical 
trials represent the best available treatment for the patients 
involved and of the effects of participation in the trials on 
the health of such patients; 
(3) an assessment of whether progress in developing new 
anticancer therapies would be assisted by medicare coverage 
of such patient care costs; and 
(4) an evaluation of whether there should be special criteria 
for the admission of medicare beneficiaries (on account of their 
age or physical condition) to clinical trials for which medicare 
would pay the patient care costs. 
(b) REPORT.—^Not later than 2 years after the date of the 
enactment of this Act, the Secretary of Health and Human Services 
shall submit a report on the study conducted under subsection 
(a) to the Committee on Ways and Means and the Committee 
on Energy and Commerce of the House of Representatives and 
the Committee on Finance of the Senate. Such report shall include 
recommendations as to the coverage under the medicare program 
of patient care costs of beneficiaries enrolled in clinical trials of 
new cancer therapies. 
42 u s e 1395/ 
SEC. 143. STUDY OF ANNUAL CAP ON AMOUNT OF MEDICARE PAY-
note. 
MENT 
FOR 
OUTPATIENT 
PHYSICAL 
THERAPY 
AND 
OCCUPATIONAL THERAPY SERVICES. 
(a) STUDY.—^The Secretary of Health and Human Services shall 
conduct a study of the appropriateness of continuing an annual 
limitation on the amount of payment for outpatient services of 
independently practicing physical and occupational therapists under 
the medicare program. 
(b) REPORT.—By not later than January 1, 1996, the Secretary 
shall submit to the Committees on Energy and Commerce and 
Ways and Means of the House of Representatives and the Commit-
tee on Finance of the Senate a report on the study conducted 
under subsection (a). Such report shall include such recommenda-
tions for changes in such annual limitation as the Secretary finds 
appropriate. 
PUBLIC LAW 103-432—OCT. 31, 1994 
108 STAT. 4427 
SEC. 144. PAYMENT OF PART B PREMIUM LATE ENROLLMENT PEN-
ALTIES BY STATES. 
Section 1839 (42 U.S.C. 1395r) is amended by adding at the 
end the following new subsection: 
"(g)(1) Upon the request of a State, the Secretary may enter 
Contracts, 
into an agreement with the State under which the State agrees 
to pay on a quarterly or other periodic basis to the Secretary 
(to be deposited in the Treasury to the credit of the Federal Supple-
mentary Medical Insurance Trust Fund) an amount equal to the 
amount of the part B late enrollment premium increases with 
respect to the premiums for eligible individuals (as defined in 
paragraph (3)(A)). 
"(2) No part B late enrollment premium increase shall apply 
to an eligible individual for premiums for months for which the 
amount of such an increase is payable under an agreement under 
paragraph (1). 
"(3) In this subsection: 
"(A) The term 'eligible individual' means an individual 
who is enrolled under this part B and who is within a class 
of individuals specified in the agreement under paragraph (1). 
"(B) The term 'part B late enrollment premium increase' 
means any increase in a premium as a result of the application 
of subsection (b).". 
SEC. 145. APPLICATION 
OF 
MAMMOGRAPHY 
CERTIFICATION 
REQUIREMENTS. 
(a) SCREENING MAMMOGRAPHY.—Section 1834(c) (42 U.S.C. 
1395m(c)) is amended— 
(1) in paragraph (1)(B), by striking "meets the quality 
standards established under paragraph (3)" and inserting "is 
conducted by a facility that has a certificate (or provisional 
certificate) issued under section 354 of the Public Health Service 
Act"; 
(2) in paragraph (l)(C)(iii), by striking "paragraph (4)" and 
inserting "paragraph (3)"; 
(3) by striking paragraph (3); and 
(4) by redesignating paragraphs (4) and (5) as paragraphs 
(3) and (4). 
(b) DIAGNOSTIC MAMMOGRAPHY.—Section 1861(s)(3) (42 U.S.C. 
1395x(s)(3)) is amended by inserting "and including diagnostic 
mammography if conducted by a facility that has a certificate 
(or provisional certificate) issued under section 354 of the Public 
Health Service Act" after "necessary". 
(c) CONFORMING AMENDMENTS.—(1) Section 1862(a)(1)(F) (42 
U.S.C. 1395y(a)(l)(F)) is amended by striking "or which does not 
meet the standards established under section 1834(c)(3)" and insert-
ing "or which is not conducted by a facility described in section 
1834(c)(1)(B)". 
(2) Section 1863 (42 U.S.C. 1395z) is amended by striking 
"or whether screening mammography meets the standards estab-
lished under section 1834(c)(3),". 
(3) The first sentence of section 1864(a) (42 U.S.C. 1395aa(a)) 
is amended by striking ", or whether screening mammography 
meets the standards established under section 1834(c)(3)". 
(4) The third sentence of section 1865(a) (42 U.S.C. 1395bb(a)) 
is amended by striking "1834(c)(3),". 
108 STAT. 4428 
PUBLIC LAW 103-432—OCT. 31, 1994 
42 use 1395m 
(d) EFFECTIVE DATE.—The amendments made by this section 
^ 
shall apply to mammography furnished by a facihty on and after 
the first date that the certificate requirements of section 354(b) 
of the PubHc Health Service Act apply to such mammography 
conducted by such facility. 
SEC. 148. COVERAGE OF SERVICES OF SPEECH-LANGUAGE PATHOLO-
GISTS AND AUDIOLOGISTS. 
(a) SERVICES DEFINED.—Section 1861 (42 U.S.C. 1395x), as 
amended by section 148(f)(6XE), is amended by inserting after 
subsection (kk) the following new subsection: 
"Speech-Language Pathology Services; Audiology Services 
"(11)(1) The term 'speech-language pathology services' means 
such speech, language, and related mnction assessment and 
rehabiUtation services fiimished by a qualified speech-language 
pathologist as the speech-language pathologist is legally authorized 
to perform under State law (or the State regulatory mechanism 
provided by State law) as would otherwise be coverea if fiimished 
by a physician. 
(2) The term 'audiology services' means such hearing and 
balance assessment services fiimished by a qualified audiologist 
as the audiologist is legally authorized to perform xmder State 
law (or the State regulatory mechanism provided by State law), 
as would otherwise be covered if fiimished by a physician. 
"(3) In this subsection: 
"(A) The term 'qualified speech-language pathologist* means 
an individual with a master's or doctoral degree in speech-
language pathology who— 
"(i) is licensed as a speech-language pathologist by 
the State in which the individual fiimisnes such services, 
or 
"(ii) in the case of an individual who fiimishes services 
in a State which does not Ucense speech-language patholo-
gists, has successfiilly completed 350 clock hours of 
supervised clinical practicum (or is in the process of 
accumulating such supervised cUnical experience), per-
formed not less than 9 months of supervised fiill-time 
speech-language patliology services afi^er obtaining a mas-
ter's or doctoral degree in speech-lsinguage pathology or 
a related field, and successfiilly completed a national 
examination in speech-language pathology approved by the 
Secretsiry. 
"(B) The term 'qualified audiologist' means an individual 
with a master's or doctoral degree in audiology who— 
"(i) is Ucensed as an audiologist by the State in which 
the individual fiimishes such services, or 
"(ii) in the case of an individual who fiimishes services 
in a State which does not license audiologists, has success-
fiilly completed 350 clock hours of supervised clinical 
practicum (or is in the process of accumulating such super-
vised cHnical experience), performed not less than 9 months 
of supervised full-time audiology services after obtaining 
a master's or doctoral degree in audiology or a related 
field, and successfully completed a national examination 
in audiology approved by the Secretary.". 
PUBLIC LAW 103-432—OCT. 31, 1994 
108 STAT. 4429 
(b) Co>fFORMiNG AMENDMENTS RELATING TO MEDICARE TREAT-
MENT OF SPEECH AND LANGUAGE SERVICES.— 
(1) EXTENDED CARE SERVICES.—Section 1861(h)(3) (42 
U.S.C. 1395x(h)(3)) is amended by striking ", occupational, or 
speech therapy" and inserting "or occupational therapy or 
speech-language pathology services". 
(2) HOME HEALTH SERVICES.—Section 1861(m)(2) (42 U.S.C. 
1395x(m)(2)) is amended by striking ", occupational, or speech 
therapy" and inserting "or occupational therapy or speech-lan-
guage pathology services". 
(3) OUTPATIENT PHYSICAL THERAPY SERVICES.—The fourth 
sentence of section 186l(p) (42 U.S.C. 1395x(p)) is amended 
by striking "speech pathology services" and inserting "speech-
language pathology services". 
(4) COMPREHENSIVE OUTPATIENT REHABILITATION FACILITY 
SERVICES.—Section 1861(cc)(l)(B) (42 U.S.C. 1395x(cc)(l)(B)) is 
amended by striking "speech pathology services" and inserting 
"speech-language pathology services". 
(5) HOSPICE CARE.—Section 1861(dd)(l)(B) (42 U.S.C. 
1395x(dd)(l)(B)) is amended by striking "therapy or speech-
language pathology" and inserting "therapy, or speech-language 
pathology services". 
(c) EFFECTIVE DATE.—^The amendments made by this section 
shall take effect on January 1, 1995. 
SEC. 147. MISCELLANEOUS AND TECHNICAL CORRECTIONS. 
(a) REVISION OF INFORMATION ON PART B CLAIMS FORMS.— 
Section 1833(q)(l) (42 U.S.C. 13951(q)(l)) is amended— 
(1) by striking "provider number" and inserting "unique 
physician identification number"; and 
(2) by striking "and indicate whether or not the referring 
physician is an interested investor (within the meaning of sec-
tion 1877(h)(5))". 
(b) CONSULTATION FOR SOCIAL WORKERS.—Effective with 
respect to services furnished on or after January 1, 1991, section 
6113(c) of OBRA-1989 is amended— 
(1) by inserting "and clinical social worker services" after 
"psychologist services"; and 
(2) by striking "psychologist" the second and third place 
it appears and inserting "psychologist or clinical social worker". 
(c) REPORTS ON HOSPITAL OUTPATIENT PAYMENT.—(1) OBRA-
1989 is amended by striking section 6137. 
(2) Section 1135(d) (42 U.S.C. 1320b-5(d)) is amended— 
(A) by striking paragraph (6); and 
(B) in paragraph (7>— 
(i) by striking "systems" each place it appears and 
inserting "system"; and 
(ii) by striking "paragraphs (1) and (6)" and inserting 
"paragraph (1)". 
(d) RADIOLOGY AND DIAGNOSTIC SERVICES PROVIDED IN HOS-
PITAL OUTPATIENT DEPARTMENTS.—(1) Effective as if included in 
the enactment of OBRA-1989, section 1833(n)(l)(B)(i)(II) (42 U.S.C. 
13951(n)(l)(B)(i)(II)) is amended— 
(A) by inserting "and for services described in subsection 
(a)(2)(E)(ii) furnished on or after January 1, 1992" after "1989"; 
and 
42 use 1395x 
note. 
42 use 1395/. 
Effective date. 
42 use 1395/ 
note. 
42 u s e 1395/ 
note. 
Effective date. 
108 STAT. 4430 
PUBLIC LAW 103-432—OCT. 31, 1994 
(B) by striking "1842(b)" and inserting "1842(b) (or, in 
the case of services furnished on or after January 1, 1992, 
under section 1848)". 
(2) Effective as if included in the enactment of OBRA-1989, 
42 use 1395/. 
section 
1833(n)(l)(B)(i)(II) 
(42 U.S.C. 
13951(n)(l)(B)(i)(II)) 
is 
amended by striking "January 1, 1989" and inserting "April 1, 
1989". 
(e) PAYMENTS TO NURSE PRACTITIONERS IN RURAL AREAS (SEC-
TION 4155 OF OBRA-1990).—<1) Section 1861(s)(2)(K)(iii) (42 U.S.C. 
1395x(s)(2)(K)(iii)) is amended— 
(A) by striking "subsection (aa)(3)" and inserting "sub-
section (aa)(5)"; and 
(B) by striking "subsection (aa)(4)" and inserting "sub-
section (aa)(6)". 
42 use 1395/. 
(2) Section 1833(r)( 1) (42 U.S.C. 13951(r)( 1)) is amended— 
(A) by striking "ambulatory" each place it appears and 
inserting "or ambulatory"; and 
(B) by striking "center," and inserting "center". 
42 use 1395/. 
(3) Section 1833(r)(2)(A) (42 U.S.C. 13951(r)(2)(A)) is amended 
by striking "subsection 
(a)(l)(M)" and inserting 
"subsection 
(a)(l)(0)". 
(4) Section 1861(b)(4) (42 U.S.C. 1395x(b)(4)) is amended by 
striking "subsection (s)(2)(K)(i)" and inserting "clauses (i) or (iii) 
of subsection (s)(2)(K)". 
(5) Section 1861(aa)(5) (42 U.S.C. 1395x(aa)(5)) is amended 
by striking "this Act" and inserting "this title". 
(6) Section 1862(a)(14) (42 U.S.C. 1395y(a)(14)) is amended 
by striking "1861(s)(2)(K)(i)" and inserting "1861(s)(2)(K)(i) or 
1861(s)(2)(K)(iii)". 
(7) Section 1866(a)(1)(H) (42 U.S.C. 1395cc(a)(l)(H)) is amended 
by striking "1861(s)(2)(K)(i)" and inserting "1861(s)(2)(K)(i) or 
1861(s)(2)(K)(iii)". 
(f) OTHER MISCELLANEOUS AND TECHNICAL AMENDMENTS.— 
(1) IMMEDIATE ENROLLMENT IN PART B BY INDIVIDUALS COV-
ERED B
Y AN EMPLOYMENT-BASED PLAN.—(A) Subparagraphs (A) 
and (B) of section 1837(i)(3) (42 U.S.C. 1395p(i)(3)) are each 
amended— 
(i) by striking "beginning with the first day of the 
first month in which the individual is no longer enrolled" 
and inserting "including each month during any part of 
which the individual is enrolled"; and 
(ii) by striking "and ending seven months later" and 
inserting "ending with the last day of the eighth consecutive 
month in which the individual is at no time so enrolled". 
(B) Paragraphs (1) and (2) of section 1838(e) (42 U.S.C. 
1395q(e)) are amended to read as follows: 
"(1) in any month of the special enrollment period in which 
the individual is at any time enrolled in a plan (specified 
in subparagraph (A) or (B), as applicable, of section 1837(i)(3)) 
or in the first month following such a month, the coverage 
period shall begin on the first day of the month in which 
the individual so enrolls (or, at the option of the individual, 
on the first day of any of the following three months), or 
"(2) in any other month of the special enrollment period, 
the coverage period shall begin on the first day of the month 
following the month in which the individual so enrolls.". 
PUBLIC LAW 103-432—OCT. 31, 1994 
108 STAT. 4431 
(C) The amendments made by subparagraphs (A) and (B) 
shall take effect on the first day of the first month that begins 
after the expiration of the 120-day period that begins on the 
date of the enactment of this Act 
(2) 
CONICAL 
DIAGNOSTIC LABORATORY TESTS.—Section 
4154(e)(5) of OBRA-1990 is amended by striking ''(1)(A)" and 
inserting ''(1)(A),''. 
(3) SEPARATE PAYMENT UNDER PART B FOR CERTAIN SERV-
ICES.—Section 4157(a) of OBRA-1990 is amended by striking 
"(a) SERVICES OF" and aU that follows through "Section" and 
inserting "(a) TREATMENT OF SERVICES OF CERTAIN HEALTH 
PRACTITIONERS.—Section". 
(4) COMMUNITY HEALTH CENTERS AND RURAL HEALTH CLIN-
ICS.—(A) The fourth sentence of section 1861(aa)(2) (42 U.S.C. 
1395x(aa)(2)) is amended— 
(i) by striking "certification" the first place it appears 
and inserting "approval"; and 
(ii) by striking "the Secretary's approval or disapproval 
of the certification" and inserting "Secretary's approval or 
disapproval". 
(B) Section 4161(a)(7)(B) of OBRA-1990 is amended by 
inserting "and to the Committee on Finance of the Senate" 
after "Representatives". 
(5) SCREENING MAMMOGRAPHY.—Section 4163 of OBRA-
1990 is amended— 
(A) by adding at the end of subsection (d) the following 
new paragraph: 
"(3) The amendment made by paragraph (2)(A)(iv) shall 
apply to screening pap smears performed on or after July 
1, 1990."; and 
(B) in subsection (e), by striking "The amendments" 
and inserting "Except £is provided in subsection (d)(3), the 
amendments . 
(6) INJECTABLE DRUGS FOR TREATMENT OF OSTEOPOROSIS.— 
(A) CLARIFICATION OF DRUGS COVERED.—The section 
1861(jj) (42 U.S.C, 1395xm)) inserted by section 4156(a)(2) 
of OBRA-1990 is amended— 
(i) in the matter preceding paragraph (1), by strik-
ing "a bone fracture related to ; and 
(ii) in paragraph (1), by striking "patient" and 
inserting "individual has suffered a bone firacture 
related to post-menopausal osteoporosis and that the 
individual". 
(B) LIMITING COVERAGE TO DRUGS PROVIDED BY HOME 
HEALTH AGENCIES.—<i) The section 1861(jj) (42 U.S.C. 
1395x(jj)) inserted by section 4156(a)(2) of OBRA-1990 is 
amended by striking "if and inserting "by a home health 
agency if'. 
(ii) Section 1861(m)(5) (42 U.S.C. 1395x(m)(5)) is 
amended by striking "but excluding" and inserting "and 
a covered osteoporosis drug (as defined in subsection (kk)), 
but excluding other". 
(iii) Section 1861(s)(2) (42 U.S.C. 1395x(s)(2)) is 
amended— 
(I) by adding "and" at the end of subparagraph 
(N), and 
Effective date. 
42 u s e 1395p 
note. 
42 u s e 1395/ 
note. 
42 u s e 1395x. 
42 u s e 254b 
note. 
42 u s e 1395y 
note. 
42 u s e 1395/ 
note. 
108 STAT. 4432 
PUBLIC LAW 103-432—OCT. 31, 1994 
42 use 1395/. 
42 use 1395/. 
42 use 1395u 
note. 
42 u s e 1320a-3a 
note. 
(II) by striking subparagraph (O) and redesignat-
ing subparagraph (P) as subparagraph (O). 
(C) PAYMENT BASED ON REASONABLE COST.—Section 
1833(a)(2) (42 U.S.C. 13951(a)(2)) is amended— 
(i) in subparagraph (A), by striking "health serv-
ices" and inserting "health services (other than a cov-
ered 
osteoporosis 
drug 
(as 
defined 
in 
section 
1861(kk)))"; 
(ii) by striking "and" at the end of subparagraph 
(D); 
(iii) by striking the semicolon at the end of 
subparagraph (E) and inserting "; and"; and 
(iv) by adding at the end the following new 
subparagraph: 
"(F) with respect to a covered osteoporosis drug (as 
defined in section 1861(kk)) furnished by a home health 
agency, 80 percent of the reasonable cost of such service, 
as determined under section 186l(v);". 
(D) 
APPLICATION OF PART B DEDUCTIBLE,—Section 
1833(b)(2) (42 U.S.C. 13951(b)(2)) is amended by striking 
"services" and inserting "services (other than a covered 
osteoporosis drug (as denned in section 1861(kk)))". 
(E) 
COVERED OSTEOPOROSIS DRUG (SECTION 4156 OF 
OBRA-1990).—Section 1861 (42 U.S.C. 1395x) is amended, 
in the subsection (jj) inserted by section 4156(a)(2) of 
OBRA-1990, by striking "(jj) The term" and inserting "(kk) 
The term". 
(7) OTHER MISCELLANEOUS AND TECHNICAL CORRECTIONS.— 
(A) OWNERSHIP DISCLOSURE REQUIREMENTS.—(i) Sec-
tion 
1124A(a)(2)(A) 
(42 
U.S.C. 
1320a-3a(a)(2)(A)) 
is 
amended by striking "of the Social Security Act". 
(ii) Section 4164(b)(4) of OBRA-1990 is amended by 
striking "paragraph" and inserting "paragraphs". 
(B) DIRECTORY OF UNIQUE PHYSICIAN IDENTIFIER NUM-
BERS.—Section 4164(c) of OBRA-1990 is amended by strik-
ing "publish" and inserting "publish, and shall periodically 
update,". 
(g) EFFECTIVE DATE.—Except as otherwise provided in this 
section, the amendments made by this section shall take effect 
as if included in the enactment of OBRA-1990. 
Subtitle C—Provisions Relating to Parts A 
andB 
SEC. 151. MEDICARE SECONDARY PAYER REFORMS. 
(a) IMPROVING IDENTIFICATION OF MEDICARE SECONDARY PAYER 
SITUATIONS.— 
(1) SURVEY OF BENEFICIARIES.— 
(A) IN GENERAL.—Section 
1862(b)(5) 
(42 
U.S.C. 
1395y(b)(5)) is amended by adding at the end the following 
new subparagraph: 
"(D) OBTAINING INFORMATION FROM BENEFICIARIES.— 
Before an individual applies for benefits under part A 
or enrolls under part B, the Administrator shall mail the 
individual a questionnaire to obtain information on whether 
the individual is covered under a primary plan and the 
PUBLIC LAW 103-432—OCT. 31, 1994 
108 STAT. 4433 
nature of the coverage provided under the plan, including 
the name, address, and identifying number of the plan.". 
(B) DISTRIBUTION OF QUESTIONNAIRE BY CONTRACTOR.— 
42 use i395y 
The Secretary of Health and Human Services shall enter "°*^-
into an agreement with an entity not later than 60 days 
after the date of the enactment of the Social Security 
Act Amendments of 1994, to distribute the questionnaire 
described in section 1862(b)(5)(D) of the Social Security 
Act (as added by subparagraph (A)). 
(C) No MEDICARE SECONDARY PAYER DENIAL BASED ON 
FAILURE TO COMPLETE QUESTIONNAIRE.—Section 1862(b)(2) 
(42 U.S.C. 1395y(b)(2)) is amended by adding at the end 
the following new subparagraph: 
**(C) TREATMENT OF QUESTIONNAIRES.—The Secretary 
may not fail to make payment under subparagraph (A) 
solely on the ground that an individual failed to complete 
a questionnaire concerning the existence of a primary 
plan.". 
(2) MANDATORY SCREENING BY PROVIDERS AND SUPPLIERS 
UNDER PART B.— 
(A) IN GENERAL.—Section 1862(b) (42 U.S.C. 1395y(b)) 
is amended by adding at the end the following new 
paragraph: 
"(6) 
SCREENING 
REQUIREMENTS 
FOR PROVIDERS AND 
SUPPUERS.— 
"(A) IN GENERAL.—^Notwithstanding any other provi-
sion of this titie, no payment may be made for any item 
or service furnished under part B unless the entity furnish-
ing such item or service completes (to the best of its knowl-
edge and on the basis of information obtained from the 
individual to whom the item or service is ftimished) the 
portion of the claim form relating to the availability of 
other health benejfit plans. 
"(B) PENALTIES.—An entity that knowingly, willfully, 
and repeatedly fails to complete a claim form in accordance 
with subparagraph (A) or provides inaccurate information 
relating to the availabiMty of otiier health benefit plans 
on a claim form under such subparagraph shall be subject 
to a civil money penalty of not to exceed $2,000 for each 
such incident. The provisions of section 1128A (other than 
subsections (a) and (b)) shall apply to a civil money penalty 
under the previous sentence in the same manner as such 
provisions apply to a penalty or proceeding under section 
1128A(a).". 
(B) 
EFFECTIVE 
DATE.—The amendment made by 42 use I395y 
subparagraph (A) shall apply with respect to items and "°*^-
services furnished on or after the expiration of the 120-
day period beginning on the date of the enactment of this 
Act 
(b) IMPROVEMENTS IN RECOVERY OF PAYMENTS FROM PRIMARY 
PAYERS.— 
(1) SUBMISSION OF REPORTS ON EFFORTS TO RECOVER ERRO-
NEOUS PAYMENTS.— 
(A) FISCAL INTERMEDLIVRIES UNDER PART A.—Section 
1816 (42 U.S.C. 1396h) is amended by adding at the end 42 use I395h. 
the following new subsection: 
108 STAT. 4434 
PUBLIC LAW 103-432—OCT. 31, 1994 
"(k) An agreement with an agency or organization under this 
section shall require that such agency or organization submit an 
annual report to the Secretary describing the steps taken to recover 
payments made for items or services for which pa3nnent has been 
or could be made under a primary plan (as defined in section 
1862(b)(2)(A)).". 
(B) CARRIERS UNDER PART B.—Section 1842(b)(3) (42 
U.S.C. 1395u(b)(3)) is amended— 
(i) by striking "and" at the end of subparagraph 
(G); 
(ii) by striking "and" at the end of subparagraph 
(H); and 
(iii) by inserting after subparagraph (H) the follow-
ing new subparagraph: 
"(I) will submit annual reports to the Secretary describing 
the steps taken to recover payments made under this part 
for items or services for which payment has been or could 
be made under a primary plan (as defined in section 
1862(b)(2)(A)); and". 
(2) REQUIREMENTS UNDER CARRIER PERFORMANCE EVALUA-
TION PROGRAM.— 
(A) FISCAL INTERMEDIARIES UNDER PART A.—Section 
42 use I395h. 
1816(f)(1)(A) (42 U.S.C. 1396h(f)(l)(A)) is amended by strik-
ing "processing" and inserting "processing (including the 
agency's or organization's success in recovering payments 
made under this title for services for which payment has 
been or could be made under a primary plan (as defined 
in section 1862(b)(2)(A)))". 
(B) CARRIERS UNDER PART B.—Section 1842(b)(2) (42 
U.S.C. 1395u(b)(2)) is amended by adding at the end the 
following new subparagraph: 
"(D) In addition to any other standards and criteria established 
by the Secretary for evaluating carrier performance under this 
paragraph relating to avoiding erroneous pa3nnents, the carrier 
shall be subject to standards and criteria relating to the carrier's 
success in recovering pa3anents made under this part for items 
or services for which payment has been or could be made under 
a primary plan (as defined in section 1862(b)(2)(A)).". 
(3) DEADLINE FOR REIMBURSEMENT BY PRIMARY PLANS.— 
(A) IN GENERAL.—Section 1862(b)(2)(B)(i) (42 U.S.C. 
1395y(b)(2)(B)(i)) is amended by adding at the end the 
following sentence: "If reimbursement is not made to the 
appropriate Trust Fund before the expiration of the 60-
day period that begins on the date such notice or other 
information is received, the Secretary may charge interest 
(beginning with the date on which the notice or other 
information is received) on the amount of the reimburse-
ment until reimbursement is made (at a rate determined 
by the Secretary in accordance with regulations of the 
Secretary of the Treasury applicable to charges for late 
payments).". 
(B) CONFORMING AMENDMENT.—The heading of clause 
42 use I395y. 
(i) of section 1862(b)(2)(B) is amended to read as follows: 
"REPAYMENT REQUIRED.—". 
42 u s e l395y 
(C) EFFECTIVE DATE.—The amendments made by this 
"°*® 
paragraph shall apply to payments for items and services 
PUBLIC LAW 103-432—OCT. 31, 1994 
108 STAT. 4435 
furnished on or after the date of the enactment of this 
Act. 
(4) EFFECTIVE DATE.—^The amendments made by para-
graphs (1) and (2) shall apply to contracts with fiscal 
intermediaries and carriers under title XVIII of the Social 
Security Act for contract years beginning with 1995. 
(c) MISCELLANEOUS AND TECHNICAL CORRECTIONS.— 
(1) Effective as if included in the enactment of OBRA-
1993, section 1862(b)(1)(A) (42 U.S.C. 1395y(b)( 1)(A)), as 
amended by section 13561(e)(1) of OBRA-1993, is amended— 
(A) in clause (i)(II), by striking "over (and the individ-
ual's spouse age 65 or older) who is covered under the 
plan by virtue of the individual's current employment sta-
tus with an employer" and inserting "older (and the spouse 
age 65 or older of any individual) who has current employ-
ment status with an employer"; and 
(B) in clause (ii), by striking "or employee organization 
that has 20 or more individuals in current employment 
status" and inserting "that has 20 or more employees". 
(2) Effective as if included in the enactment of OBRA-
1993, section 1837(i) (42 U.S.C. 1395p(i)) is amended— 
(A) by striking "as an active individual (as those terms 
are defined in section 1862(b)(l)(B)(iv))" each place it 
appears in the second sentence of paragraph (1), and the 
second sentence of paragraph (2) and inserting "(as that 
term is defined in section 1862(b)(l)(B)(iv)) by reason of 
the individual's current employment status (or the current 
employment status of a family member of the individual)"; 
(B) in paragraph (3)(B), by striking "as an active 
individual in a large group health plan (as such terms 
are defined in section 1862(b)( l)(B)(iv))" and inserting "in 
a large group health plan (as that term is defined in 
section 1862(b)(l)(B)(iv)) by reason of the individual's cur-
rent employment status (or the current employment status 
of a family member of the individual)"; 
(C) in the second sentence of paragraph (2) (as amend-
ed by subparagraph (A)), by striking "as an active individ-
ual" and inserting "by reason of the individual's current 
employment status (or the current employment status of 
a family member of the individual)"; and 
(D) by inserting "status" after "current employment" 
each place it appears in paragraphs (1)(A), (2)(B), (2)(C), 
and (3)(A). 
(3) Effective as if included in the enactment of OBRA-
1993, the second sentence of section 1839(b) (42 U.S.C. 1395r(b)) 
is amended— 
(A) by inserting "status" after "current employment", 
and 
(B) by striking "as an active individual (as those terms 
are defined in section 1862(b)(l)(B)(iv))" and inserting "(as 
that term is defined in section 1862(b)(l)(B)(iv)) by reason 
of the individual's current employment status (or the cur-
rent employment status of a family member of the individ-
ual)". 
(4) Effective as if included in the enactment of OBRA-
1990, the sentence in section 1862(b)(1)(C) added by section 
108 STAT. 4436 
PUBLIC LAW 103-432—OCT. 31, 1994 
42 use 1395y. 
42 use 1395y 
note. 
26 use 6103 
note. 
42 use 1395y 
note. 
42 use 1395y. 
42 use 1395y 
note. 
4203(c)(1)(B) of OBRA-1990 is amended by striking "clauses 
(i) and (ii)" and inserting "this subparagraph". 
(5) Effective as if included in the enactment of OBRA-
1989, section 1862(b)(1)(C) is amended in the matter after 
clause (ii), by striking "taking into account that" and inserting 
"paying benefits secondary to this title when". 
(6) Effective as if included in the enactment of OBRA-
1989, section 1862(b)(5)(C)(i) (42 U.S.C. 1395y(b)(5)(C)(i)) is 
amended 
by 
striking 
"6103(l)(12)(D)(iii)" 
and 
inserting 
"6103(l)(12)(E)(iii)". 
(7) Effective as if included in the enactment of OBRA-
1990, section 4203(c)(2) of such Act is amended— 
(A) by striking "the application of clause (iii)" and 
inserting "the second sentence"; 
(B) by striking "on individuals" and all that follows 
through "section 226A of such Act"; 
(C) in clause (ii), by striking "clause" and inserting 
"sentence"; 
(D) in clause (v), by adding "and" at the end; and 
(E) in clause (wi)— 
(i) by inserting "of such Act" after "1862(b)(1)(C)", 
and 
(ii) by striking the period at the end and inserting 
the following: ", without regard to the number of 
employees covered by such plans.". 
(8) Effective as if included in the enactment of OBRA-
1990, section 4203(d) of OBRA-1990 is amended by striking 
"this subsection" and inserting "this section". 
(9) Effective as if included in the enactment of OBRA-
1993, section 13561(e)(1)(D) of OBRA-1993 is amended— 
(A) by inserting "effective as if included in the enact-
ment of OBRA-1989," after "(D)", and 
(B) by striking "of each subparagraph". 
(10) The amendment made by section 13561(e)(1)(G) of 
OBRA-1993, to the extent it relates to the definition of large 
group health plan, shall be effective as if included in the enact-
ment of OBRA-1989. 
SEC. 152. PHYSICIAN OWNERSfflP AND REFERRAL. 
(a) IN GENERAL.—Section 1877(f) (42 U.S.C. 1395nn) is 
amended— 
(1) in the matter before paragraph (1), by inserting ", 
investment, and compensation" after "ownership"; 
(2) in paragraph (2), by inserting ", or with a compensation 
arrangement (as described in subsection (a)(2)(B))," after 
"investment interest (as described in subsection (a)(2)(A))"; 
(3) in paragraph (2), by inserting "interest or who have 
such a compensation relationship with the entity" before the 
period at the end; 
(4) in the fourth sentence, by striking "covered items and" 
and inserting "designated health"; and 
(5) by striking the third and fifth sentences. 
(b) 
RADIOLOGY 
SERVICES.—Section 
1877(h)(6) (42 U.S.C. 
1395nn(h)(6)), as amended by section 13562(a)(2) of OBRA-1993, 
is amended— 
(1) in subparagraph (D), by striking "or other diagnostic 
services" and inserting "services, including magnetic resonance 
PUBLIC LAW 103-432—OCT. 31, 1994 
108 STAT. 4437 
imaging, computerized axial tomography scans, and ultrasound 
services"; and 
(2) in subparagraphs (E), (F), and (H), by inserting "and 
supplies" before the period at the end. 
(c) REVISION OF EFFECTIVE DATE EXCEPTION PROVISION.—Sec-
tion 13562(b)(2) of OBRA-1993 is amended by striking subpara-
graphs (A) and (B) and inserting the following: 
"(A) the second sentence of subsection (a)(2), and sub-
sections (b)(2)(B) and (d)(2), of section 1877 of the Social 
Security Act (as in effect on the day before the date of 
the enactment of this Act) shall apply instead of the cor-
responding provisions in section 1877 (as amended by this 
Act); 
"(B) section 1877(b)(4) of the Social Security Act (as 
in effect on the day before the date of the enactment 
of this Act) shall apply; 
"(C) the requirements of section 1877(c)(2) of the Social 
Security Act (as amended by this Act) shall not apply 
to any securities of a corporation that meets the require-
ments of section 1877(c)(2) of the Social Security Act (as 
in effect on the day before the date of the enactment 
of this Act); 
"(D) section 1877(e)(3) of the Social Security Act (as 
amended by this Act) shall apply, except that it shall 
not apply to any arrangement that meets the requirements 
of subsection (e)(2) or subsection (e)(3) of section 1877 
of the Social Security Act (as in effect on the day before 
the date of the enactment of this Act); 
"(E) the requirements of clauses (iv) and (v) of section 
1877(h)(4)(A), and of clause (i) of section 1877(h)(4)(B), 
of the Social Security Act (as amended by this Act) shall 
not apply; and 
"(F) section 1877(h)(4)(B) of the Social Security Act 
(as in effect on the day before the date of the enactment 
of this Act) shall apply instead of section 1877(h)(4)(A)(ii) 
of such Act (as amended by this Act).". 
(d) EFFECTIVE DATES.— 
(1) The amendments made by subsections (a) and (b) shall 
apply to referrals made on or after January 1, 1995. 
(2) The amendment made by subsection (c) shall apply 
as if included in the enactment of OBRA-1993. 
SEC. 153. DEFINITION OF FMGEMS EXAMINATION FOR PAYMENT OF 
DIRECT GRADUATE MEDICAL EDUCATION. 
(a) 
IN 
GENERAL.—Section 
1886(h)(5)(E) 
(42 
U.S.C. 
1395ww(h)(5)(E)) is amended by inserting "or any successor exam-
ination" after "Medical Sciences". 
(b) EFFECTIVE DATE.—The amendment made by subsection (a) 
shall apply as if included in the enactment of the Consolidated 
Omnibus Budget Reconciliation Act of 1985 (Public Law 99-272). 
SEC. 154. QUAUFIED MEDICARE BENEFICIARY OUTREACH. 
Not later than 1 year after the date of the enactment of this 
Act, the Secretary of Health and Human Services shall establish 
and implement a method for obtaining information from newly 
eligible medicare beneficiaries that may be used to determine 
whether such beneficiaries may be eligible for medical assistance 
for medicare cost-sharing under State medicaid plans as qualified 
42 u s e 1395nn 
note. 
42 u s e 1395nn 
note. 
42 u s e 1395WW 
note. 
42 u s e 1395b-3 
note. 
108 STAT. 4438 
PUBLIC LAW 103-432—OCT. 31, 1994 
medicare beneficiaries, and for transmitting such information to 
the State in which such a beneficiary resides. 
SEC. 155. HOSPITAL 
AGREEMENTS 
WITH ORGAN 
PROCUREMENT 
ORGANIZATIONS. 
(a) HOSPITAL AGREEMENTS.— 
(1) I N GENERAL.— 
(A) 
IDENTIFICATION 
OF 
ORGAN 
DONORS.—Section 
1138(a)(l)(A)(iii) 
(42 
U.S.C. 
1320b-8(a)(l)(A)(iii)) 
is 
amended to read as follows: 
"(iii) require that such hospital's designated organ 
procurement agency (as defined in paragraph (3)(B)) is 
notified of potential organ donors;". 
(B) AGREEMENTS WITH DESIGNATED ORGAN PROCURE-
MENT AGENCIES.—Section 1138(a)(1) (42 U.S.C. 1320b-
8(a)(1)) is amended— 
(i) by striking the period at the end of subpara-
graph (B) and inserting "; and"; and 
(ii) by adding at the end the following new 
subparagraph: 
"(C) the hospital or rural primary care hospital has an 
agreement (as defined in paragraph (3)(A)) only with such 
hospital's designated organ procurement agency.". 
(C) 
WAIVER OF REQUIREMENTS RELATED TO AGREE-
MENTS.—Section 
1138(a) 
(42 
U.S.C. 
1320b-8(a)) 
is 
amended— 
(i) by redesignating paragraph (2) as paragraph 
(3); and 
(ii) by inserting after paragraph (1) the following 
new paragraph: 
"(2)(A) The Secretary shall grant a waiver of the requirements 
under subparagraphs (A)(iii) and (C) of paragraph (1) to a hospital 
or rural primary care hospital desiring to enter into an agreement 
with an organ procurement agency other than such hospital's des-
ignated organ procurement agency if the Secretary determines 
that— 
"(i) the waiver is expected to increase organ donation; and 
"(ii) the waiver will assure equitable treatment of patients 
referred for transplants within the service area served by such 
hospital's designated organ procurement agency and within 
the service area served by the organ procurement agency with 
which the hospital seeks to enter into an agreement under 
the waiver. 
"(B) In making a determination under subparagraph (A), the 
Secretary may consider factors that would include, but not be 
limited to— 
"(i) cost effectiveness; 
"(ii) improvements in quality; 
"(iii) whether there has been any change in a hospital's 
designated organ procurement agency due to a change made 
on or after December 28, 1992, in the definitions for metropoli-
tan statistical areas (as established by the Office of Manage-
ment and Budget); and 
"(iv) the length and continuity of a hospital's relationship 
with an organ procurement agency other than the hospital's 
designated organ procurement agency; 
PUBLIC LAW 103-432—OCT. 31, 1994 
108 STAT. 4439 
except that nothing in this subparagraph shall be construed to 
permit the Secretary to grant a waiver that does not meet the 
requirements of subparagraph (A). 
"(C) Any hospital or rural primary care hospital seeking a 
waiver under subparagraph (A) shall submit an application to the 
Secretary containing such information as the Secretary determines 
appropriate. 
"(D) The Secretary shall— 
"(i) publish a public notice of any waiver application 
received from a hospital or rural primary care hospital under 
this paragraph within 30 days of receiving such application; 
and 
"(ii) prior to making a final determination on such applica-
tion under subparagraph (A), offer interested parties the oppor-
tunity to submit written comments to the Secretary during 
the 60-day period beginning on the date such notice is 
published.". 
(D) DEFINITIONS.—Section 1138(a)(3) (42 U.S.C. 1320b-
8(a)(3)), as redesignated by subparagraph (C), is amended 
to read as follows: 
"(3) For purposes of this subsection— 
"(A) the term 'agreement' means an agreement described 
in section 371(b)(3)(A) of the Public Health Service Act; 
"(B) the term 'designated organ procurement agency' 
means, with respect to a hospital or rural primary care hospital, 
the organ procurement agency designated pursuant to sub-
section (b) for the service area in which such hospital is located; 
and 
"(C) the term 'organ' means a human kidney, liver, heart, 
lung, pancreas, and any other human organ or tissue specified 
by the Secretary for purposes of this subsection.". 
(2) EXISTING AGREEMENTS.—Any hospital or rural primary 
care hospital which has an agreement (as defined in section 
1138(a)(3)(A) of the Social Security Act) with an organ procure-
ment agency other than such hospital's designated organ 
procurement agency (as defined in section 1138(a)(3)(B) of such 
Act) on the date of the enactment of this section shall, if 
such hospital desires to continue such agreement on and after 
the effective date of the amendments made by paragraph (1), 
submit an application to the Secretary for a waiver under 
section 1138(a)(2) of such Act not later than January 1, 1996, 
and such agreement may continue in effect pending the Sec-
retary's determination with respect to such application. 
(3) EFFECTIVE DATE.—The amendments made by paragraph 
(1) shall apply to hospitals and rural primary care hospitals 
participating in the programs under titles XVIII and XIX of 
the Social Security Act beginning January 1, 1996. 
(b) STUDY ON HOSPITAL AGREEMENTS WITH ORGAN PROCURE-
MENT AGENCIES,— 
(1) IN GENERAL.—^The Office of Technology Assessment 
(referred to in this section as the "OTA") shall, pursuant to 
the approval of the Technology Assessment Board of the OTA, 
conduct a study to determine the efficacy and fairness of requir-
ing a hospital to enter into an agreement under section 
371(b)(3)(A) of the Public Health Service Act with the organ 
procurement agency designated pursuant to section 1138(b) 
of the Social Securitv Act for the service area in which such 
42 use 1320b-8 
note. 
42 use 1320b-8 
note. 
42 u s e 273 note. 
108 STAT. 4440 
PUBLIC LAW 103-432—OCT. 31, 1994 
hospital is located and the impact of such requirement on 
the efficacy and fairness of organ procurement and distribution. 
(2) REPORT.—^Not later than 2 years after the date of the 
enactment of this Act, the OTA shall complete the study 
required under paragraph (1) and prepare and submit to the 
Committee on Finance and the Committee on Labor and Human 
Resources of the Senate and the Committee on Ways and 
Means and the Committee on Energy and Commerce of the 
House of Representatives a report containing the findings of 
such study and the implications of such findings with respect 
to policies affecting organ procurement and distribution. 
SEC. 156. PEER REVIEW ORGANIZATIONS. 
(a) REPEAL OF PRO PRECERTIFICATION REQUIREMENT FOR CER-
TAIN SURGICAL PROCEDURES.— 
(1) IN GENERAL.—Section 1164 (42 U.S.C. 1320c-13) is 
repealed. 
(2) CONFORMING AMENDMENTS.— 
(A) Section 1154 (42 U.S.C. 1320c-3) is amended— 
(i) in subsection (a), by striking paragraph (12), 
and 
(ii) in subsection (d), by striking "(and except as 
provided in section 1164)". 
(B) Section 1833 (42 U.S.C. 13951) is amended— 
(i) in subsection (a)(l)(D)(i), by striking ", or for 
tests furnished in connection with obtaining a second 
opinion required under section 1164(c)(2) (or a third 
opinion, if the second opinion was in disagreement 
with the first opinion)"; 
(ii) in subsection (a)(1), by striking subparagraph 
(G); 
(iii) in subsection (a)(2)(A), by striking ", to items 
and services (other than clinical diagnostic laboratory 
tests) furnished in connection with obtaining a second 
opinion required under section 1164(c)(2) (or a third 
opinion, if the second opinion was in disagreement 
with the first opinion),"; 
(iv) in subsection (a)(2)(D)(i)— 
(I) by striking "basis," and inserting "basis 
or", and 
(II) by striking ", or for tests furnished in 
connection 
with 
obtaining a 
second 
opinion 
required under section 1164(c)(2) (or a third opin-
ion, if the second opinion was in disagreement 
with the first opinion)"; 
(v) in subsection (a)(3), by striking "and for items 
and services furnished in connection with obtaining 
a second opinion required under section 1164(c)(2), or 
a third opinion, if the second opinion was in disagree-
ment with the first opinion"; and 
(vi) in the first sentence of subsection (b), by strik-
ing "(4)" and all that follows through "and (5)" and 
inserting "and (4)". 
(C) Section 1834(g)(1)(B) (42 U.S.C. 1395m(g)(l)(B)) 
is amended by striking "and for items and services fur-
nished in connection with obtaining a second opinion 
required under section 1164(c)(2), or a third opinion, if 
PUBLIC LAW 103-432—OCT. 31, 1994 
108 STAT. 4441 
the second opinion was in disagreement with the first 
opinion". 
(D) Section 1862(a) (42 U.S.C. 1395y(a)) is amended— 
(i) by adding "or" at the end of paragraph (14), 
(ii) by striking "; or" at the end of paragraph 
(15) and inserting a period, and 
(iii) by striking paragraph (16). 
(E) The third sentence of section 1866(a)(2)(A) (42 
U.S.C. 1395w(a)(2)(A)) is amended by striking ", with 
respect to items and services furnished in connection with 
obtaining 
a 
second 
opinion 
required 
under 
section 
1164(c)(2) (or a third opinion, if the second opinion was 
in disagreement with the first opinion),". 
(3) EFFECTIVE DATE.—The amendments made by this sub-
section shall apply to services provided on or after the date 
of the enactment of this Act. 
(b) 
MISCELLANEOUS AND TECHNICAL CORRECTIONS.—(1) 
The 
third sentence of section 1156(b)(1) (42 U.S.C. 1320c-5(b)(l)) is 
amended by striking "whehter" and inserting "whether". 
(2)(A) Section 1154(a)(9)(B) (42 U.S.C. 1320c-3(a)(9)(B)) is 
amended to read as follows: 
"(B) If the organization finds, after reasonable notice to 
and opportunity for discussion with the physician or practi-
tioner concerned, that the physician or practitioner has 
furnished services in violation of section 1156(a) and the 
organization determines that the physician or practitioner 
should enter into a corrective action plan under section 
1156(b)(1), the organization shall notify the State board or 
boards responsible for the licensing or disciplining of the physi-
cian or practitioner of its finding and of any action taken 
as a result of the finding.". 
(B) Subparagraph (D) of section 1160(b)(1) (42 U.S.C. 1320c-
9(b)(1)) is amended to read as follows: 
"(D) to provide notice in accordance with section 
1154(a)(9)(B);". 
(3) Section 4205(d)(2)(B) of OBRA-1990 is amended by striking 
"amendments" and inserting "amendment". 
(4) Section 1160(d) (42 U.S.C. 1320c-9(d)) is amended by strik-
ing "subpena" and inserting "subpoena". 
(5) Section 4205(e)(2) of OBRA-1990 is amended by striking 
"amendments" and inserting "amendment" and by striking "all". 
(6)(A) Except as provided in subparagraph (B), the amendments 
made by this subsection shall take effect as if included in the 
enactment of OBRA-1990. 
(B) The amendments made by paragraph (2) (relating to the 
requirement on reporting of information to State boards) shall take 
effect on the date of the enactment of this Act. 
SEC. 157. HEALTH MAINTENANCE ORGANIZATIONS. 
(a) REVISIONS IN THE PAYMENT METHODOLOGY FOR RISK CON-
TRACTORS.—Section 4204(b) of OBRA-1990 is amended to read as 
follows: 
"(b) REVISIONS IN THE PAYMENT METHODOLOGY FOR RISK CON-
TRACTORS.—(1)( 
A) Not later than October 1, 1995, the Secretary 
of Health and Human Services (in this subsection referred to as 
the 'Secretary') shall submit a proposal to the Congress that pro-
vides for revisions to the payment method to be applied in years 
42 u s e 1320C-3 
note. 
42 u s e 1320C-5 
note. 
42 u s e 1320C-9 
note. 
42 u s e 1320C-9 
note. 
Effective date. 
42 u s e 1395mm 
note. 
108 STAT. 4442 
PUBLIC LAW 103-432—OCT. 31, 1994 
Reports. 
42 u s e 1395mm 
note. 
42 u s e 1395y 
note. 
beginning with 1997 for organizations with a risk-sharing contract 
under section 1876(g) of the Social Security Act. 
"(B) In proposing the revisions required under subparagraph 
(A), the Secretary shall consider— 
"(i) the difference in costs associated with medicare bene-
ficiaries 
with 
differing 
health 
status 
and 
demographic 
characteristics; and 
"(ii) the effects of using alternative geographic classifica-
tions on the determinations of costs associated with bene-
ficiaries residing in different areas. 
"(2) Not later than 3 months after the date of submittal of 
the proposal under paragraph (1), the Comptroller General shall 
review the proposal and shall report to Congress on the appropriate-
ness of the proposed modifications.", 
(b) MISCELLANEOUS AND TECHNICAL CORRECTIONS.—(1) Section 
1876(a)(3) (42 U.S.C. 1395mm(a)(3)) is amended by striking "sub-
section (c)(7)" and inserting "subsections (c)(2)(B)(ii) and (c)(7)". 
(2) Section 4204(c)(3) of OBRA-1990 is amended by striking 
"for 1991" and inserting "for years beginning with 1991". 
(3) Section 4204(d)(2) of OBRA-1990 is amended by striking 
"amendment" and inserting "amendments". 
(4) Section 1876(a)(l)(E)(ii)(I) (42 U.S.C. 1395mm(a)(l)(E)(ii)(I)) 
is amended by striking the comma after "contributed to". 
(5) Section 4204(e)(2) of OBRA-1990 is amended by striking 
"(which has a risk-sharing contract under section 1876 of the Social 
Security Act)". 
(6) Section 4204(f)(4) of OBRA-1990 is amended by striking 
"final". 
(7) 
Section 
1862(b)(3)(C) 
(42 U.S.C. 
1395y(b)(3)(C)) 
is 
amended— 
(A) in the heading, by striking "PLAN" and inserting "PLAN 
OR A LARGE GROUP HEALTH PLAN"; 
(B) by striking "group health plan" and inserting "group 
health plan or a large group health plan"; 
(C) by striking ", unless such incentive is also offered 
to all individuals who are eligible for coverage under the plan"; 
and 
(D) by striking "the first sentence of subsection (a) and 
other than subsection (b)" and inserting "subsections (a) and 
(b)". 
(8) The amendments made by this subsection shall take effect 
as if included in the enactment of OBRA-1990. 
42 u s e 1395x 
note. 
42 use 1395y 
note. 
SEC. 158, HOME HEALTH AGENCIES. 
(a) USE OF MOST CURRENT DATA IN DETERMINING WAGE 
INDEX.— 
(1) IN GENERAL.—Section 1861(v)(l)(L)(iii) (42 U.S.C. 
1395x(v)(l)(L)(iii)) is amended by striking "as of such date 
to" and inserting "and determined using the survey of the 
most recent available wages and wage-related costs of. 
(2) EFFECTIVE DATE.—^The amendment made by paragraph 
(1) shall apply with respect to cost reporting periods beginning 
on or after July 1, 1996. 
(b) CLARIFICATION OF EXTENSION OF WAIVER OF LIABILITY.— 
(1) IN GENERAL.—^The second sentence of section 9205 of 
the Consolidated Omnibus Budget Reconciliation Act of 1985 
PUBLIC LAW 103-432—OCT. 31, 1994 
108 STAT. 4443 
is amended by striking "November 1, 1990" and inserting 
"December 31, 1995". 
(2) EFFECTIVE DATE.—The amendment made by paragraph 
(1) shall take effect as if included in the enactment of OBRA-
1990. 
SEC. 159. PERMANENT EXTENSION OF AUTHORITY TO CONTRACT 
WITH FISCAL, INTERMEDIARIES AND CARRIERS ON OTHER 
THAN A COST BASIS. 
(a) IN GENERAL.—Section 2326(a) of the Deficit Reduction Act 
of 1984, as amended by section 6215 of OBRA-1989, is amended 
in the third sentence by striking "during such period" and inserting 
"beginning with fiscal year 1990 and any subsequent fiscal year". 
(b) EFFECTIVE DATE.—The amendment made by subsection (a) 
shall apply beginning with fiscal year 1994, 
SEC. 160. MISCELLANEOUS AND TECHNICAL CORRECTIONS. 
(a) SURVEY AND CERTIFICATION REQUIREMENTS.—(1) Section 
1864 (42 U.S.C. 1395aa) is amended— 
(A) in subsection (e), by striking "title" and inserting "title 
(other than any fee relating to section 353 of the Public Health 
Service Act)"; and 
(B) in the first sentence of subsection (a), by striking 
"1861(s) or" and all that follows through "Service Act," and 
inserting" 186 l(s),". 
(2) An agreement made by the Secretary of Health and Human 
Services with a State under section 1864(a) of the Social Security 
Act may include an agreement that the services of the State health 
agency or other appropriate State agency (or the appropriate local 
agencies) will be utilized by the Secretary for the purpose of deter-
mining whether a laboratory meets the requirements of section 
353 of the Public Health Service Act. 
(b) 
HOME 
DIALYSIS DEMONSTRATION TECHNICAL 
CORREC-
TIONS.—Section 4202 of OBRA-1990 is amended— 
(1) in subsection (b)(1)(A), by striking "home hemodialysis 
staff assistant" and inserting "qualified home hemodialysis staff 
assistant (as described in subsection (d))"; 
(2) in subsection (b)(2)(B)(ii)(I), by striking "(as adjusted 
to reflect differences in area wage levels)"; 
(3) in subsection (c)(1)(A), by striking "skilled"; and 
(4) in subsection (c)(1)(E), by striking "(b)(4)" and inserting 
"(b)(2)". 
(c) TECHNICAL CORRECTION TO REVISIONS OF COVERAGE FOR 
IMMUNOSUPPRESSIVE DRUG THERAPY.—The Secretary of Health and 
Human Services may administer section 1861(s)(2)(J) of the Social 
Security Act (42 U.S.C. 1395x(s)(2)(J)) in a manner such that the 
months of coverage of drugs described in such section are provided 
consecutively, so long as the total number of months of coverage 
provided is the same as the number of months described in such 
section. 
(d) OTHER MISCELLANEOUS AND TECHNICAL PROVISIONS.—(1) 
Section 1833 (42 U.S.C. 13951) is amended by redesignating the 
subsection (r) added by section 4206(b)(2) of OBRA-1990 as sub-
section (s). 
(2) Section 1866(f)(1) (42 U.S.C. 1395cc(f)(l)) is amended by 
striking "1833(r)" and inserting "1833(s)". 
42 u s e 1395y 
note. 
42 u s e 1395h 
note. 
42 u s e 1395h 
note. 
42 u s e 1395aa 
note. 
42 u s e 1395rr 
note. 
42 u s e 1395x 
note. 
42 u s e 1395/. 
108 STAT. 4444 
PUBLIC LAW 103-432—OCT. 31, 1994 
42 use 1395rr. 
42 u s e 1395dd. 
42 use 1395dd 
note. 
42 u s e 1395WW 
note. 
42 use 1395x 
note. 
42 use 1395x 
note. 
42 u s e 1395bbb 
note. 
42 use 1395hh 
note. 
(3) Section 4201(d)(2) of OBRA-1990 is amended by striking 
"(B) by striking", "(C) by striking", and "(3) by adding" and inserting 
"(i) by striking", "(ii) by striking", and "(B) by adding", respectively. 
(4) The section following section 4206 of OBRA-1990 is 
amended by striking "SEC. 4027." and inserting "SEC. 4207.", and 
in this subtitle is referred to as section 4207 of OBRA-1990. 
(5)(A) Section 4207(a)(1) of OBRA-1990 is amended by adding 
closing quotation marks and a period after "such review.". 
(B) Section 4207(a)(4) of OBRA-1990 is amended by striking 
"this subsection" and inserting "paragraphs (2) and (3)". 
(C) Section 4207(b)(1) of OBRA-1990 is amended by striking 
"section 3(7)" and inserting "section 601(a)(1)". 
(6) Section 2355(b)(1)(B) of the Deficit Reduction Act of 1984, 
as 
amended 
by section 
4207(b)(4)(B)(ii) 
of OBRA-1990, 
is 
amended— 
(A) 
by 
striking 
"12907(c)(4)(A)" 
and 
inserting 
"4207(b)(4)(B)(i)", and 
(B) by striking "feasibilitly" and inserting "feasibility". 
(7) Section 4207(b)(4)(B)(iii)(III) of OBRA-1990 is amended by 
striking the period at the end and inserting a semicolon. 
(8) Subsections (c)(3) and (e) of section 2355 of the Deficit 
Reduction Act of 1984, as amended by section 4207(b)(4)(B) of 
OBRA-1990, are each amended by striking "12907(c)(4)(A)" each 
place it appears and inserting "4207(b)(4)(B)". 
(9) Section 4207(c)(2) of OBRA-1990 is amended by striking 
"the Committee on Ways and Means" each place it appears and 
inserting "the Committees on Ways and Means and Energy and 
Commerce". 
(10) Section 4207(d) of OBRA-1990 is amended by redesignat-
ing the second paragraph (3) (relating to effective date) as para-
graph (4). 
(11) Section 4207(i)(2) of OBRA-1990 is amended— 
(A) by striking the period at the end of clause (iii) and 
inserting a semicolon, and 
(B) in clause (v), by striking "residents" and inserting 
"patients". 
(12) Section 4207(j) of OBRA-1990 is amended by striking 
"title" each place it appears and inserting "subtitle". 
Subtitle D—Provisions Relating to 
Medicare Supplemental Insurance Policies 
SEC. 171. STANDARDS FOR MEDICARE SUPPLEMENTAL INSURANCE 
POUCIES. 
(a) SIMPLIFICATION OF MEDICARE SUPPLEMENTAL POLICIES.— 
42USC1395SS. 
(1) Section 4351 of OBRA-1990 is amended by striking 
"(a) IN GENERAL.—". 
(2) Section 1882(p) (42 U.S.C. 1395ss(p)) is amended— 
(A) in paragraph (1)(A)— 
(i) by 
striking 
"promulgates" 
and 
inserting 
"changes 
the 
revised 
NAIC 
Model 
Regulation 
(described in subsection (m)) to incorporate", 
(ii) by striking "(such limitations, language, defini-
tions, format, and standards referred to collectively 
in this subsection as 'NAIC standards'),", and 
PUBLIC LAW 103-432—OCT. 31, 1994 
108 STAT. 4445 
(iii) by striking "included a reference to the NAIC 
standards" and inserting "were a reference to the 
revised NAIC Model Regulation as changed under this 
subparagraph (such changed regulation referred to in 
this section as the '1991 NAIC Model Regulation')"; 
(B) in paragraph (1)(B)— 
(i) by striking "promulgate NAIC standards" and 
inserting "make the changes in the revised NAIC Model 
Regulation", 
(ii) by striking "limitations, language, definitions, 
format, and standards described in clauses (i) through 
(iv) of such subparagraph (in this subsection referred 
to collectively as 'Federal standards')" and inserting 
"a regulation", and 
(iii) by striking "included a reference to the Federal 
standards" and inserting "were a reference to the 
revised NAIC Model Regulation as changed by the 
^ 
Secretary under this subparagraph (such changed 
regulation referred to in this section as the '1991 Fed-
eral Regulation')"; 
(C) in paragraph (l)(C)(i), by striking "NAIC standards 
or the Federal standards" and inserting "1991 NAIC Model 
Regulation or 1991 Federal Regulation"; 
(D) in paragraphs (l)(C)(ii)(I), (1)(E), (2), and (9)(B), 
by striking "NAIC or Federal standards" and inserting 
"1991 NAIC Model Regulation or 1991 Federal Regulation"; 
(E) in paragraph (2)(C), by striking "(5)(B)" and insert-
ing "(4)(B)"; 
(F) in paragraph (4)(A)(i), by inserting "or paragraph 
(6)" after "(B)"; 
(G) in paragraph (4), by striking "applicable standards" 
each place it appears and inserting "applicable 1991 NAIC 
Model Regulation or 1991 Federal Regulation"; 
(H) in paragraph (6), by striking "in regard to the 
limitation of benefits described in paragraph (4)" and 
inserting "described in clauses (i) through (iii) of paragraph 
(1)(A)"; 
(I) in paragraph (7), by striking "policyholder" and 
inserting "policyholders"; 
(J) in paragraph (8), by striking "after the effective 
date of the NAIC or Federal standards with respect to 
the policy, in violation of the previous requirements of 
this subsection" and inserting "on and after the effective 
date specified in paragraph (IXC) (but subject to paragraph 
(10)), in violation of the applicable 1991 NAIC Model Regu-
lation or 1991 Federal Regulation insofar as such regula-
tion relates to the requirements of subsection (o) or (q) 
or clause (i), (ii), or (iii) of paragraph (1)(A)"; 
(K) in paragraph (9), by adding at the end the following 
new subparagraph: 
"(D) Subject to paragraph (10), this paragraph shall apply 
to sales of policies occurring on or after the eff'ective date specified 
in paragraph (1)(C)."; and 
(L) in paragraph (10), by striking "this subsection" 
and inserting "paragraph (l)(A)(i)". 
(b) GUARANTEED RENEWABILITY.—Section 1882(q) (42 U.S.C. 
1395ss(q)) is amended— 
108 STAT. 4446 
PUBLIC LAW 103-432—OCT. 31, 1994 
(1) in paragraph (2), by striking "paragraph (2)" and insert-
ing "paragraph (4)", and 
(2) in paragraph (4), by striking "the succeeding issuer" 
and inserting "issuer of the replacement policy". 
(c) ENFORCEMENT OF STANDARDS.— 
(1) Section 1882(a)(2) (42 U.S.C. 1395ss(a)(2)) is amended— 
(A) in subparagraph (A), by striking "NAIC standards 
or the Federal standards" and inserting "1991 NAIC Model 
Regulation or 1991 Federal Regulation", and 
(B) by striking "after the effective date of the NAIC 
or Federal standards with respect to the policy" sind insert-
ing "on and after the effective date specified in subsection 
(p)(l)(C)". 
(2) The sentence in section 1882(b)(1) added by section 
42 use 1395SS. 
4353(c)(5) of OBRA-1990 is amended— 
(A) by striking "The report" and inserting "Each 
report", 
(B) by inserting "and requirements" after "standards", 
(C) by striking "and" after "compliance,", and 
(D) by striking the comma after "Commissioners". 
(3) Section 1882(g)(2)(B) (42 U.S.C. 1395ss(g)(2)(B)) is 
amended by striking "Panel" and inserting "Secretary". 
(4) Section 1882(b)(1) (42 U.S.C. 1395ss(b)(l)) is amended 
by striking "the the Secretary" and inserting "the Secretary". 
(d) PREVENTING DUPLICATION.— 
(1) Section 1882(d)(3)(A) (42 U.S.C. 1395ss(d)(3)(A)) is 
amended— 
(A) by amending the first sentence to read as follows: 
"(i) It is unlawful for a person to sell or issue to an individual 
entitled to benefits under part A or enrolled under part B of this 
title— 
"(I) a health insurance policy with knowledge that the 
policy duplicates health benefits to which the individual is 
otherwise entitled under this title or title XIX, 
"(II) a medicare supplemental policy with knowledge that 
the individual is entitled to benefits under another medicare 
supplemental policy, or 
"(III) a health insurance policy (other than a medicare 
supplemental policy) with knowledge that the policy duplicates 
health benefits to which the individual is otherwise entitled, 
other than benefits to which the individual is entitled under 
a requirement of State or Federal law."; 
(B) by designating the second sentence as clause (ii) 
and, in such clause, by striking "the previous sentence" 
and inserting "clause (i)"; 
(C) by designating the third sentence as clause (iii) 
and, in such clause— 
(i) by striking "the previous sentence" and insert-
ing "clause (i) with respect to the sale of a medicare 
supplemental policy", and 
(ii) by striking "and the statement" and all that 
follows up to the period at the end; and 
(D) by striking the last sentence. 
(2) Section 1882(d)(3)(B) (42 U.S.C. 1395ss(d)(3)(B)) is 
amended— 
(A) in clause (ii)(II), by striking "65 years of age or 
older", 
PUBLIC LAW 103-432—OCT. 31, 1994 
108 STAT. 4447 
(B) in clause (iiiXD, by striking "another medicare" 
and inserting "a medicare", 
(C) in clause (iiiXD, by striking *such a policy" and 
inserting "a medicare supplemental policy", 
(D) in clause (iiiXII), by striking "another policy" and 
inserting "a medicare supplemental poUcy", and 
(E) oy amending subclause (III) of clause (iii) to read 
as follows: 
"(III) If the statement required by clause (i) is obtained and 
indicates that the individual is entitled to any medical assistance 
under titie XIX, the sale of the poHcy is not in violation of clause 
(i) (insofar as such clause relates to such medical assistance), if 
(aa) a State medicaid plan under such title pays the premiums 
for the policy, (bb) in the case of a qualified medicare beneficiary 
described in section 1905(pXl), the policy provides for coverage 
of outpatient prescription drugs, or (cc) the only medical assistance 
to which the individual is entitied under the State plan is medicare 
cost sharing described in section 1905(p)(3)(A)(ii).". 
(3)(A) Section 1882(dX3XC) (42 U.S.C. 1395ss(dX3XC)) is 
amended— 
(i) by striking "the selling" and inserting "(i) the sale 
or issuance", and 
(ii) by inserting before the period at the end the follow-
ing: ", (ii) the sale or issuance of a policy or plan described 
in subparagraph (A)(iXI) (other than a medicare supple-
mental policy to an individual entitied to any medical 
assistance under titie XIX) under which aU the benefits 
are fiilly payable directiy to or on behalf of the individual 
without regard to other health benefit coverage of the 
individual but only if (for poUcies sold or issued more 
than 60 days after the date the statements are published 
or promulgated under subparagraph (D)) there is disclosed 
in a prominent manner as paurt of (or together with) the 
appHcation the applicable statement (specified 
under 
subparagraph (D)) of the extent to which benefits payable 
under the poUcy. or plan duplicate benefits under this titie, 
or (iii) the sale or issuance of a policy or plan described 
in subparagraph (A)(i)(III) imder which all the benefits 
are fiilly payable directly to or on behalf of the individual 
without regard to other health benefit coverage of the 
individual". 
(B) Section 1882(dX3) (42 U.S.C. 1395ss(dX3)) is amended 
by adding at the end the following: 
"(D)(i) If— 
"(I) within the 90-day period beginning on the date of 
the enactment of this subparagraph, tiie National Association 
of Insurance Commissioners develops (after consultation with 
consumer and insurance industry representatives) and submits 
to the Secretary a statement for each of the types of health 
insurance policies (other than medicare supplemental poUcies 
and including, but not limited to, as separate types of policies, 
policies paying directiy to the beneficiary fixed, cash benefits, 
and policies that limit benefit payments to specific diseases) 
which are sold or issued to persons entitied to health benefits 
under this titie, of the extent to which benefits payable under 
the policy or plan duphcate benefits under this titfe, and 
108 STAT. 4448 
PUBLIC LAW 103-432—OCT. 31, 1994 
"(11) the Secretary approves all the statements submitted 
as meeting the requirements of subclause (I), 
each such statement shall be (for purposes of subparagraph (C)) 
the statement specified under this subparagraph for the type of 
policy involved. The Secretary shall review and approve (or dis-
approve) all the statements submitted under subclause (I) within 
30 days after the date of their submittal. Upon approval of such 
statements, the Secretary shall publish such statements. 
"(ii) If the Secretary does not approve the statements under 
clause (i) or the statements are not submitted within the 90-day 
period specified in such clause, the Secretary shall promulgate 
(after consultation with consumer and insurance industry represent-
atives and not later than 90 days after the date of disapproval 
or the end of such 90-day period (as the case may be)) a statement 
for each of the types of health insurance policies (other than medi-
care supplemental policies and including, but not limited to, as 
separate types of policies, policies paying directly to the beneficiary 
fixed, cash benefits, and policies that limit benefit payments to 
specific diseases) which are sold or issued to persons entitled to 
health benefits under this title, of the extent to which benefits 
payable under the policy or plan duplicate benefits under this 
title, and each such statement shall be (for purposes of subpara-
graph (O) the statement specified under this subparagraph for 
the type of policy involved.". 
42 use I395ss 
(C) The requirement 
of a disclosure under 
section 
"o*^- 
1882(d)(3)(C)(ii) of the Social Security Act shall not apply to 
an application made for a policy or plan before 60 days after 
the date the Secretary of Health and Human Services publishes 
or promulgates all the statements under section 1882(d)(3)(D) 
of such Act. 
42 use 1395SS. 
(4) Subparagraphs (A) and (B) of section 1882(q)(5) are 
amended by striking "of the Social Security Act", 
(e) Loss RATIOS AND REFUNDS OF PREMIUMS,— 
(1) Section 1882(r) (42 U.S.C. 1395ss(r)) is amended— 
(A) in paragraph (1), by striking "or sold" and inserting 
"or renewed (or otherwise provide coverage after the date 
described in subsection (p)(l)(C))"; 
(B) in paragraph (1)(A), by inserting "for periods after 
the effective date of these provisions" after "the policy 
can be expected"; 
(C) in paragraph (1)(A), by striking "Commissioners," 
and inserting "Commissioners)"; 
(D) in paragraph (1)(B), by inserting before the period 
at the end the following: ", treating policies of the same 
type as a single policy for each standard package"; 
(E) by adding at the end of paragraph (1) the following: 
"For the purpose of calculating the refund or credit required 
under paragraph (I)(B) for a policy issued before the date 
specified in subsection (p)(l)(C), the refund or credit cal-
culation shall be based on the aggregate benefits provided 
and premiums collected under all such policies issued by 
an insurer in a State (separated as to individual and group 
policies) and shall be based only on aggregate benefits 
provided and premiums collected under such policies after 
the date specified in section 171(m)(4) of the Social Security 
Act Amendments of 1994."; 
PUBLIC LAW 103-432—OCT. 31, 1994 
108 STAT. 4449 
(F) in the first sentence of paragraph (2)(A), by striking 
"by policy number" and inserting "by standard package"; 
(G) by striking the second sentence of paragraph (2XA) 
and inserting the following: "Paragraph (1)(B) shall not 
apply to a policy until 12 months following issue."; 
(H) in the last sentence of paragraph (2)(A), by striking 
"in order" and all that follows through "are effective"; 
(I) by adding at the end of paragraph (2)(A), the follow-
ing new sentence: "In the case of a policy issued before 
the date specified in subsection (p)(l)(C), paragraph (1)(B) 
shall not apply until 1 year after the date specified in 
section 171(m)(4) of the Social Security Act Amendments 
of 1994."; 
(J) in paragraph (2), by striking "policy year" each 
place it appears and inserting "calendar year"; 
(K) 
in 
paragraph 
(4), by 
striking 
"February", 
"disllowance", "loss-ratios" each place it appears, and "loss-
ratio" and inserting "October", "disallowance", "loss ratios", 
and "loss ratio", respectively; 
(L) in paragraph (6)(A), by striking "issues a policy 
in violation of the loss ratio requirements of this subsection" 
and "such violation" and inserting "fails to provide refunds 
or credits as required in paragraph (1)(B)" and "policy 
issued for which such failure occurred", respectively; and 
(M) in paragraph (6)(B), by striking "to policyholders" 
and inserting "to the policyholder or, in the case of a 
group policy, to the certificate holder". 
(2) Section 1882(b)(1) (42 U.S.C. 1395ss(b)(l)) is amended, 
in the matter after subparagraph (H), by striking "subsection 
(F)" and inserting "subparagraph (F)". 
(3) Section 4355(d) of OBRA-1990 is amended by striking 
42 USC I395ss 
"sold or issued" and all that follows and inserting "issued 
"°^-
or renewed (or otherwise providing coverage after the date 
described in section 1882(p)(l)(C) of the Social Security Act) 
on or after the date specified in section 1882(p)(l)(C) of the 
Social Security Act.". 
(f) TREATMENT OF HMO'S.— 
(1) Section 1882(g)(1) (42 U.S.C. 1395ss(g)(l)) is amended 
by striking "a health maintenance organization or other direct 
service organization" and all that follows through "1833" and 
inserting "an eligible organization (as defined in section 1876(b)) 
if the policy or plan provides benefits pursuant to a contract 
under section 1876 or an approved demonstration project 
described in section 603(c) of the Social Security Amendments 
of 1983, section 2355 of the Deficit Reduction Act of 1984, 
or section 9412(b) of the Omnibus Budget Reconciliation Act 
of 1986, or, during the period beginning on the date specified 
in subsection (p)(l)(C) and ending on December 31, 1995, a 
policy or plan of an organization if the policy or plan provides 
benefits pursuant to an agreement under section 1833(a)(1)(A)". 
(2) Section 4356(b) of OBRA-1990 is amended by striking 
42 USC I395ss 
"on the date of the enactment of this Act" and inserting "on 
"°*^-
the date specified in section 1882(p)(l)(C) of the Social Security 
Act". 
(g) PRE-EXISTING CONDITION LIMITATIONS.—Section 1882(s) (42 
U.S.C. 1395ss(s)) is amended— 
108 STAT. 4450 
PUBLIC LAW 103-432—OCT. 31, 1994 ^ 
(1) in paragraph (2)(A), by striking "for which an applica-
tion is submitted" and inserting "in the case of an individual 
for whom an application is submitted prior to or", 
(2) in paragraph (2)(A), by striking "in which the individual 
(who is 65 years of age or older) first is enrolled for benefits 
under part B" and inserting "as of the first day on which 
the individual is 65 years of age or older and is enrolled 
for benefits under part B", and 
(3) in paragraph (2)(B), by striking "before it" and inserting 
"before the policy". 
(h) MEDICARE SELECT POLICIES.— 
(1) Section 1882(t) (42 U.S.C. 1395ss(t)) is amended— 
(A) in paragraph (1), by inserting "medicare supple-
mental" afl:er "If a", 
(B) in paragraph (1), by striking "NAIC Model Stand-
ards" and inserting "1991 NAIC Model Regulation or 1991 
Federal Regulation", 
(C) in paragraph (1)(A), by inserting "or agreements" 
after "contracts", 
(D) in subparagraphs (E)(i) and (F) of paragraph (1), 
by striking "NAIC standards" and inserting "standards in 
the 1991 NAIC Model Regulation or 1991 Federal Regula-
tion", and 
(E) in paragraph (2), by inserting "the issuer" before 
"is subject to a civil money penalty". 
(2) Section 1154(a)(4)(B) (42 U.S.C. 1320c-3(a)(4)(B)) is 
amended— 
(A) by inserting "that is" after "(or", and 
(B) by striking "1882(t)" and inserting "1882(t)(3)". 
(i) HEALTH INSURANCE COUNSELING.—Section 4360 of OBRA-
42 use l395b-4. 1990 is amended— 
(1) in subsection (b)(2)(A)(ii), by striking "Act" and inserting 
"Act)"; 
(2) in subsection (b)(2)(D), by striking "services" and insert-
ing "counseling"; 
(3) in subsection (b)(2)(I), by striking "assistance" and 
inserting "referrals"; 
(4) in subsection (c)(1), by striking "and that such activities 
will continue to be maintained at such level"; 
(5) in subsection (d)(3), by striking "to the rural areas" 
and inserting "eligible individuals residing in rural areas"; 
(6) in subsection (e)— 
(A) by striking "subsection (c) or (d)" and inserting 
"this section", 
(B) by striking "and annually thereafter, issue an 
annual report" and inserting "and annually thereafter dur-
ing the period of the grant, issue a report", and 
(C) in paragraph (1), by striking "State-wide"; 
(7) in subsection (f), by striking paragraph (2) and by 
redesignating paragraphs (3) through (5) as paragraphs (2) 
through (4), respectively; and 
(8) in the second subsection (f) (relating to authorization 
of appropriations for grants)— 
(A) by striking "and 1993" and inserting "1993, 1994, 
1995, and 1996"; and 
(B) by redesignating such subsection as subsection (g). 
(j) TELEPHONE INFORMATION SYSTEM.— 
PUBLIC LAW 103-432—OCT. 31, 1994 
108 STAT. 4451 
(1) Section 1804 (42 U.S.C. 1395b-2) is amended— 
(A) by adding at the end of the heading the following: 
"; MEDICARE AND MEDIGAP INFORMATION", 
(B) by inserting "(a)" after "1804.", and 
(C) by adding at the end the following new subsection: 
"(b) The Secretary shall provide information via a toll-free 
telephone number on the programs under this title.". 
(2) Section 1882(f) (42 U.S.C. 1395ss(f)) is amended by 
adding at the end the following new paragraph: 
"(3) The Secretary shall provide information via a toll-free 
telephone number on medicare supplemental policies (including the 
relationship of State programs under title XIX to such policies).". 
(3) Section 1889 is repealed. 
(k) 
MAILING OF POLICIES.—Section 1882(d)(4) (42 U.S.C. 
1395ss(d)(4)) is amended— 
(1) in subparagraph (D), by striking ", if such policy" and 
all that follows up to the period at the end, and 
(2) by adding at the end the following new subparagraph: 
"(E) Subparagraph (A) shall not apply in the case of an issuer 
who mails or causes to be mailed a policy, certificate, or other 
matter solely to comply with the requirements of subsection (q).". 
(1) EFFECTIVE DATE.—^The amendments made by this section 
shall be effective as if included in the enactment of OBRA-1990; 
except that— 
(1) the amendments made by subsection (d)(1) shall take 
effect on the date of the enactment of this Act, but no penalty 
shall be imposed under section 1882(d)(3)(A) of the Social Secu-
rity Act (for an action occurring after the effective date of 
the amendments made by section 4354 of OBRA-1990 and 
before the date of the enactment of this Act) with respect 
to the sale or issuance of a policy which is not unlawful under 
section 1882(d)(3)(A)(i)(II) of the Social Security Act (as 
amended by this section); 
(2) the amendments made by subsection (d)(2)(A) and by 
subparagraphs (A), (B), and (E) of subsection (e)(1) shall be 
effective on the date specified in subsection (m)(4); and 
^, 
(3) the amendment made by subsection (g)(2) shall take 
effect on January 1, 1995, and shall apply to individuals who 
attain 65 years of age or older on or after the effective date 
of section 1882(s)(2) of the Social Security Act (and, in the 
case of individuals who attained 65 years of age after such 
effective date and before January 1, 1995, and who were not 
covered under such section before January 1, 1995, the 6-
month period specified in that section shall begin January 
1, 1995). 
(m) TRANSITION PROVISIONS.— 
(1) IN GENERAL.—If the Secretary of Health and Human 
Services identifies a State as requiring a change to its statutes 
or regulations to conform its regulatory program to the changes 
made by this section, the State regulatory program shall not 
be considered to be out of compliance with the requirements 
of section 1882 of the Social Security Act due solely to failure 
to make such change until the date specified in paragraph 
(4). 
(2) NAIC STANDARDS.—If, within 6 months after the date 
of the enactment of this Act, the National Association of Insur-
ance Commissioners (in this subsection referred to as the 
Communications. 
42 u s e 1395SS 
note. 
42 u s e 1395SS 
note. 
79-194 O—95—31 : QL 3 Part 5 
108 STAT. 4452 
PUBLIC LAW 103-432—OCT. 31, 1994 
"NAIC") modifies its 1991 NAIC Model Regulation (adopted 
in July 1991) to conform to the amendments made by this 
section and to delete from section 15C the exception which 
begins with "unless", such revised regulation incorporating the 
modifications shall be considered to be the 1991 Regulation 
for the purposes of section 1882 of the Social Security Act. 
(3) SECRETARY STANDARDS.—If the NAIC does not make 
the modifications described in paragraph (2) within the period 
specified in such paragraph, the Secretary of Health and 
Human Services shall make the modifications described in such 
paragraph and such revised regulation incorporating the modi-
fications shall be considered to be the 1991 Regulation for 
the purposes of section 1882 of the Social Security Act. 
(4) DATE SPECIFIED.— 
(A) IN GENERAL.—Subject to subparagraph (B), the date 
specified in this paragraph for a State is the earlier of— 
(i) the date the State changes its statutes or regu-
lations to conform its regulatory program to the 
changes made by this section, or 
(ii) 1 year after the date the NAIC or the Secretary 
first makes the modifications under paragraph (2) or 
(3), respectively. 
(B) ADDITIONAL LEGISLATIVE ACTION REQUIRED.—In the 
case of a State which the Secretary identifies as— 
(i) requiring State legislation (other than legisla-
tion appropriating funds) to conform its regulatory pro-
gram to the changes made in this section, but 
(ii) having a legislature which is not scheduled 
to meet in 1996 in a legislative session in which such 
legislation may be considered, 
the date specified in this paragraph is the first day of 
the first calendar quarter beginning after the close of the 
first legislative session of the State legislature that begins 
on or after January 1, 1996. For purposes of the previous 
sentence, in the case of a State that has a 2-year legislative 
session, each year of such session shall be deemed to be 
a separate regular session of the State legislature. 
SEC. 172. 6-MONTH EXTENSION OF PERIOD FOR ISSUANCE OF MEDI-
CARE SELECT POLICIES. 
(a) IN GENERAL.—Section 4358(c) of the Omnibus Budget Rec-
onciliation Act of 1990 (42 U.S.C. 1320c-3 note) is amended by 
striking "3-year" and inserting "3y2-year". 
42 use 1320C-3 
(b) EFFECTIVE DATE.—^The amendment made by subsection (a) 
"°^- 
shall take effect as if included in the enactment of the Omnibus 
Budget Reconciliation Act of 1990. 
PUBLIC LAW 103-432—OCT. 31, 1994 
108 STAT. 4453 
TITLE 
II—MATERNAL 
AND 
CHILD 
HEALTH 
SERVICES 
BLOCK 
GRANT 
PROGRAM, 
INCOME 
SECURITY, 
HUMAN RESOURCES, AND RELATED 
PROGRAMS 
SEC. 201. INCREASE IN AUTHORIZATION OF APPROPRIATIONS FOR 
THE MATERNAL AND CHILD HEALTH SERVICES BLOCK 
GRANT PROGRAM. 
Section 501(a) (42 U.S.C. 701(a)) is amended by striking 
"$686,000,000 for fiscal year 1990" and inserting "$705,000,000 
for 
fiscEil 
year 1994". 
Subtitle A—Child Welfare, Foster Care, 
Adoption 
SEC. 202. 
REQUIRED 
PROTECTIONS 
FOR 
FOSTER 
CHILDREN. 
(a) IN GENERAL.—Section 422(b) (42 U.S.C. 622(b)) is 
amended— 
(1) by strikii^ "and" at the end of paragraph (7); 
(2) by striking the period at tne end of paragraph (8) 
and inserting "; and"; and 
(3) by adding at the end the following: 
"(9) provide assurances that the State— 
(A) since June 17, 1980, has completed an inventory 
of aU children who, before the inventory, had been in 
foster care imder the responsibility of tiie State for 6 
months or more, which determined— 
"(i) the appropriateness of, and necessity for, the 
foster care placement; 
"(ii) whether the child could or should be returned 
to the parents of the child or should be fi^ed for 
adoption or other permanent placement; and 
"(iii) the services necessary to facilitate the return 
of the child or the placement of the child for adoption 
or legal guardianship; 
"(B) is operating, to the satisfaction of the Secretary— 
"(i) a statewide information system trora. wluch 
can be readily determined the status, demographic 
characteristics, location, and goals for the placement 
of every child who is (or, within the immediately 
preceding 12 months, has been) in foster care; 
"(ii) a case review system (as defined in section 
475(5)) for each child receiving foster care under the 
supervision of the State; 
"(iii) a service program designed to help children— 
"(I) where appropriate, return to families fix)m 
which they have been removed; or 
"(II) be placed for adoption, with a legal guard-
ian, or, if adoption or legal guardianship is deter-
mined not to be appropriate for a child, in some 
other planned, permanent living arrangement; and 
"(iv) a preplacement preventive services program 
designed to help children at risk of foster care place-
ment remain with their famiUes; and 
108 STAT. 4454 
PUBLIC LAW 103-432—OCT. 31, 1994 
**(C)(i) has reviewed (or within 12 months after the 
date of the enactment of this paragraph will review) State 
policies and administrative and judicial procedures in effect 
for children abandoned at or shortly after birth (including 
poHcies and procedures providing for legal representation 
of such children); and 
**(ii) is implementing (or within 24 months after the 
date of the enactment of this paragraph will imi)lement) 
such policies and procedures as the State determines, on 
the basis of the review described in clause (i), to be nec-
essarv to enable permanent decisions to be made expedi-
tiously with respect to the placement of such children.". 
(b) RESTRICTION ON REALLOTMENT.—Section 424 (42 U.S.C. 
624) is amended— 
(1) in the first sentence, by striking "The amount" and 
inserting the following: 
**(a) IN GENERAL.—Subject to subsection (b), the amount"; and 
(2) by adding at the end the following: 
*
*
(
b
) EXCEPTION RELATING TO FOSTER CHILD PROTECTIONS.— 
The Secretary shall not reallot under subsection (a) of this section 
any amount that is withheld or recovered fix)m a State due to 
the failure of the State to meet the requirements of section 
422(b)(9).". 
(c) REPEAL.—Section 427 (42 U.S.C. 627) is hereby repealed. 
(d) CONFORMING AMENDMENTS.— 
(1) Section 423(a) (42 U.S.C. 623(a)) is amended by striking 
"and in section 427". 
(2) Section 425(a)(2) (42 U.S.C. 625(a)(2)) is amended by 
striking "the statistical report required by section" and inserting 
"section 422(b)(9) or". 
(3) Section 472(d) (42 U.S.C. 672(d)) is amended by striking 
"427(b)" and inserting "422(b)(9)". 
42 use 622 note. 
(e) EFFECTIVE DATE.—^The amendments and repeal made by 
this section shall be effective witii respect to fiscal years beginning 
on or after April 1,1996. 
SEC. 203. CONFORMITY REVIEWS. 
(a) IN GENERAL.—Part A of titie XI (42 U.S.C. 1301-1320b-
13) is amended by inserting after section 1122 the following: 
" R E V I E W S O F CHILD AND FAMILY SERVICES PROGRAMS, AND OF FOS-
TER CARE AND ADOPTION ASSISTANCE PROGRAMS, FOR CONFORMITY 
WITH STATE PLAN REQUIREMENTS 
Regulations. 
"SEC. 1123. (a) IN GENERAL.—The Secretary, in consultation 
with the State agencies administering the State programs iinder 
parts B and E of titie IV, shall promulgate regulations for the 
review of such programs to determine whether such programs are 
in substantial conformity with— 
"(1) State plan requirements under such parts B and E, 
"(2) implementing regulations promulgated by the Sec-
retEuv, and 
*\3) the relevant approved State plans. 
"(b) ELEMENTS OF REVIEW SYSTEM.—The regulations referred 
to in subsection (a) shall— 
"(1) specify the timetable for conformity reviews of State 
programs, including-— 
"(A) an initial review of each State program; 
•i.mt'^' 
PUBLIC LAW 103-432—(Xrr. 31, 1994 
108 STAT. 4455 
"(B) a timely review of a State program following a 
review in which such program was found not to be in 
substantial conformity; and 
"(C) less frequent reviews of State programs which 
have been found to be in substantial conformity, but such 
regulations shall permit the Secretary to reinstate more 
frequent reviews based on information which indicates that 
a State program may not be in conformity; 
"(2) specify the requirements subject to review, and the 
criteria to be used to measure conformity with such require-
ments and to determine whether there is a substantial failure 
to so conform; 
"(3) specify the method to be used to determine the amount 
of any Federal matching funds to be withheld (subject to para-
graph (4)) due to the State program's failure to so conform, 
which ensures that— 
"(A) such funds will not be withheld with respect to 
a program, unless it is determined that the program fails 
substantially to so conform; 
"(B) such funds will not be withheld for a failure to 
so conform resulting from the State's reliance upon and 
correct use of formal written statements of Federal law 
or policy provided to the State by the Secretary; and 
"(C) the amount of such funds withheld is related 
to the extent of the failure to so conform; and 
"(4) require the Secretary, with respect to any State pro-
gram found to have failed substantially to so conform— 
"(A) to afford the State an opportunity to adopt and 
implement a corrective action plan, approved by the Sec-
retary, designed to end the failure to so conform; 
"(B) to make technical assistance available to the State 
to the extent feasible to enable the State to develop and 
implement such a corrective action plan; 
"(C) to suspend the withholding of any Federal match-
ing funds under this section while such a corrective action 
plan is in effect; and 
"(D) to rescind any such withholding if the failure 
to so conform is ended by successful completion of such 
a corrective action plan. 
"(c) PROVISIONS FOR ADMINISTRATIVE AND JUDICIAL REVIEW.— 
The regulations referred to in subsection (a) shall— 
"(1) require the Secretary, not later than 10 days after 
a final determination that a program of the State is not in 
conformity, to notify the State of— 
"(A) the basis for the determination; and 
"(B) the amount of the Federal matching funds (if 
any) to be withheld from the State; 
"(2) afford the State an opportunity to appeal the deter-
mination to the Departmental Appeals Board within 60 days 
after receipt of the notice described in paragraph (1) (or, if 
later, after failure to continue or to complete a corrective action 
plan); and 
"(3) afford the State an opportunity to obtain judicial review 
of an adverse decision of the Board, within 60 days after the 
State receives notice of the decision of the Board, by appeal 
to the district court of the United States for the judicial district 
108 STAT. 4456 
PUBLIC LAW 103-432—OCT. 31, 1994 
in which the principal or headquarters office of the agency 
responsible for administering the program is located.". 
(b) 
CONFORMING AMENDMENT.—-Section 471(b) (42 
U.S.C. 
671(b)) is amended by striking aU that follows the first sentence. 
(c) EFFECTIVE D A T E S . — 
42 use I320a-ia 
(1) IN GENERAL.—The amendment made by subsection (a) 
"°^® 
shaU take effect on the date of the enactment of this Act 
42 use 671 note. 
(2) CONFORMING AMENDMENT.—The amendment made by 
subsection (b) shall take effect on October 1,1995. 
42 use I320a-ia 
(3) REGULATIONS.—The Secretary shall promulgate the 
"°*®- 
regulations referred to in section 1123(a) of the Social Security 
Act (as added by this section) not later than July 1, 1995, 
to take effect on April 1,1996. 
SEC. 204. STATES REQUIRED TO REPORT ON MEASURES TAKEN TO 
COMPLY WITH THE INDIAN CHILD WELFARE ACT. 
(a) STATE PLAN REQUIREMENT.—Section 422(b) (42 U.S.C. 
622(b)), as amended by section 202(a), is amended— 
(1) by striking "and" at the end of paragraph (8); 
(2) by striking the period at the end of paragraph (9) 
and inserting *
*
; and"; and 
(3) by adding at the end the following: 
**(10) contain a description, developed after consultation 
with tribal organizations (as defined in section 4 of the Indian 
Self-Determination and Education Assistance Act) in the State, 
of the specific measures taken by the State to comply with 
the Indian Child Welfare Act.". 
42 use 622 note. 
(b) EFFECTIVE DATE.—The amendments made by subsection 
(a) shall be effective with respect to fiscal years beginning on 
or after October 1,1995. 
SEC. 20S. CHILD WELFARE TRAINEESmPS. 
(a) IN GENERAL.—Subpart 1 of part B of titie IV (42 U.S.C. 
620-628) is amended by inserting after section 428 the following: 
"CHILD WELFARE TRAINEESHIPS 
42 use 628a. 
**SEC. 429. The Secretary may approve an application for a 
grant to a pubUc or nonprofit institution for higher learning to 
provide traineeships with stipends imder section 426(a)(1)(C) only 
if the application— 
"(1) provides assurances that each individual who receives 
a stipend with such traineeship (in this section referred to 
as a Tecipienf) will enter into an agreement with the institution 
imder which the recipient agrees— 
"(A) to participate in training at a public or private 
nonprofit chud welfare agency on a regular basis (as deter-
mined by the Secretary) for the period of the traineeship; 
**(B) to be employed for a period of years equivalent 
to the period of the traineeship, in a public or private 
nonprofit child welfare agency in any State, within a period 
of tune (determined by the Secretary in accordance with 
regulations) after completing the postsecondary education 
for which tiie traineeship was awarded; 
"(C) to fiimish to the institution and the Secretary 
evidence of compliance with subparagraphs (A) and (B); 
and 
PUBLIC LAW 103-432—OCT. 31, 1994 
108 STAT. 4457 
"(D) if the recipient fails to comply with subparagraph 
(A) or (B) and does not qualify for any exception to this 
subparagraph which the Secretary may prescribe in regula-
tions, to repay to the Secretary all (or an appropriately 
prorated part) of the amount of the stipend, plus interest, 
and, if applicable, reasonable collection fees (in accordance 
with regulations promulgated by the Secretary); 
"(2) provides assurances that the institution will— 
"(A) enter into agreements with child welfare agencies 
for onsite training of recipients; 
"(B) permit an individual who is employed in the field 
of child welfare services to apply for a traineeship with 
a stipend if the traineeship fiirtbers the progress of the 
individual toward tihe completion of degree requirements; 
and 
"(C) develop and implement a system that, for the 
3-year period that begins on the date any recipient com-
pletes a child welfare services program of study, tracks 
the emplojmaent record of the recipient, for the purpose 
of determining the percentage of recipients who secure 
employment in the field of child welfare services and 
remain employed in the field.". 
(b) CONFORMING AMENDMENT.—Section 426(a)(1)(C) (42 U.S.C. 
626(a)(1)(C)) is amended by inserting "described in section 429" 
after "including traineeships". 
(c) APPLICABILITY.—^The amendments made by this section shall 42 use 626 note, 
apply to grants awarded on or after October 1,1995. 
SEC. 206. DISPOSITIONAL HEARING. 
(a) MOST APPROPRIATE SETTING.—Section 475(5)(A) (42 U.S.C. 
675(5)(A)) is amended by inserting "and most appropriate" after 
"(most family like)". 
(b) TIMING OF SUBSEQUENT REVIEW.—Section 475(5)(C) (42 
U.S.C. 675(5)(C)) is amended by striking "periodicsdly" and inserting 
"not less fi^quentiy than every 12 montibs". 
(c) EFFECTIVE DATE.—^The amendments made by this section 42 use 675 note. 
shall take effect on October 1,1995. 
SEC. 207. ELIMINATION OF FOSTER CARE CEILINGS AND OF AUTHOR-
ITY TO TRANSFER UNUSED FOSTER CARE FUNDS TO CHILD 
WELFARE SERVICES PROGRAMS. 
(a) REPEAL.—Subsections (b) and (c) of section 474 (42 U.S.C. 
674 (b) and (c)) are hereby repealed. 
(b) CONFORMING AMENDMENTS.—Section 474 (42 U.S.C. 674) 
is amended— 
(1) in subsection (d)(1)— 
(A) by striking "subsections (a), (b), and (c)" and insert-
ing "subsection (a)"; and 
(B) by strildng "the provisions of such subsections" 
and inserting "subsection (a)"; and 
(2) by redesignating subsections (d) and (e) as subsections 
(b) and (c), respectively. 
(c) EFFECTIVE DATE.—^The amendments and repeals made by 42 use 674 note. 
this section shall apply to payments for calendar quarters beginning 
on or after October 1,1993. 
SEC. 208. DEMONSTRATION PROJECTS. 
Part A of titie XI (42 U.S.C. 1301-1320b-13) is amended by 
inserting after section 1129 the following: 
108 STAT. 4458 
PUBLIC LAW 103-432—OCT. 31, 1994 
"DEMONSTRATION PROJECTS 
42 use i320a-9. 
«SEC. 1130. (a) IN GENERAL.—The Secretary may authorize 
not more than 10 States to conduct demonstration projects pursuant 
to this section which the Secretary finds are likely to promote 
the objectives of part B or E of title IV. 
"(b) WAIVER AUTHORITY.—^The Secretary may waive compliance 
with any requirement of part B or E of titie IV which (if appUed) 
would prevent a State from carrying out a demonstration project 
under this section or prevent the State Scorn effectively achieving 
the purpose of such a project, except that the Secretary may not 
waive— 
"(1) any provision of section 427 (as in effect before April 
1, 1996), section 422(b)(9) (as in effect after such date), or 
section 479; or 
"(2) any provision of such part E, to the extent that the 
waiver would impair the entitiement of any qualified child 
or family to benefits under a State plan approved imder such 
partE. 
"(c) TREATMENT AS PROGRAM EXPENDITURES.—For purposes of 
parts B and E of title IV, the Secretary shall consider the expendi-
tures of any State to conduct a demonstration project under this 
section to be expenditures under subpart 1 or 2 of such part B, 
or under such part E, as the State may elect. 
"(d) DURATION OF DEMONSTRATION.—A demonstration project 
under this section may be conducted for not more than 5 years. 
"(e) APPLICATION.—^Any State seeking to conduct a demonstra-
tion project under this section shall submit to the Secretary an 
application, in such form as the Secretary may require, which 
includes— 
"(1) a description of the proposed project, the geographic 
area in which the proposed project would be conducted, the 
children or families who would be served by the proposed 
project, and the services which would be provided by the pro-
posed project (which shall provide, where appropriate, for ran-
dom assignment of children and families to groups served under 
tlie project and to control groups); 
"(2) a statement of tibe period during which the proposed 
project would be conducted; 
"(3) a discussion of the benefits that sire expected frovo. 
the proposed project (compared to a continuation of activities 
imder the approved plan or plans of the State); 
"(4) an estimate of the costs or savings of the proposed 
project; 
"(5) a statement of program requirements for which waivers 
would be needed to permit the proposed project to be conducted; 
"(6) a description of the proposed evaluation design; and 
"(7) such additional information as the Secretary may 
require. 
"(f) EVALUATIONS; REPORT.—^Each State authorized to conduct 
a demonstration project under this section shall— 
"(1) obtain an evaluation by an independent contractor 
of the efiectiveness of the project, using an evaluation design 
approved by the Secretary which provides for— 
"(A) comparison of methods of service delivery under 
the project, and such methods under a State plan or plans. 
PUBLIC LAW 103-432—OCT. 31, 1994 
108 STAT. 4459 
with respect to efficiency, economy, and any other appro-
priate measures of program management; 
"(B) comparison of outcomes for children and families 
(and groups of children and famihes) under the project, 
and such outcomes imder a State plan or plsuas, for pur-
poses of assessing the effectiveness of the project in achiev-
ing program goals; and 
"(C) any other information that the Secretary may 
require; and 
"(2) provide interim and final evaluation reports to the 
Secretary, at such times and in such manner as tne Secretary 
may require. 
"(g) COST NEUTRALITY.—^The Secretary may not authorize a 
State to conduct a demonstration project under this section unless 
the Secretary determines that the total amount of Federal funds 
that will be expended under (or by reason of) the project over 
its approved term (or such portion thereof or other period as the 
Secretary may find appropriate) will not exceed the amount of 
such funds that woula be expended by the State under the State 
plans approved under parts B and E of title IV if the project 
were not conducted.". 
SEC. 209. PLACEMENT ACCOUNTABILITY. 
(a) CASE PLAN REQUIREMENTS.—Section 475(5)(A) (42 U.S.C. 
675(5)(A)) is amended by adding at the end the following: "which— 
"(i) if the child has been placed in a foster family 
home or child-care institution a substantial distance 
fix)m the home of the parents of the child, or in a 
State different firom the State in which such home 
is located, sets forth the reasons why such placement 
is in the best interests of the chHd, and 
"(ii) if the child has been placed in foster care 
outside the State in which the home of the parents 
of the child is located, requires that, periodically, but 
not less fii^quently than every 12 months, a caseworker 
on the staff of the State agency of the State in which 
the home of the parents of tie child is located, or 
of the State in wmch the child has been placed, visit 
such child in such home or institution and submit 
a report on such visit to the State agency of tJie State 
in which the home of the parents of the child is 
located,". 
(b) DISPOSITIONAL HEARING.—Section 475(5)(C) (42 U.S.C. 
675(5)(C)) is amended by inserting "and, in tiie case of a child 
described in subparagraph (A)(ii), whether the out-of-State place-
ment continues to be appropriate and in the best interests of the 
child," Edler "long-term basis)". 
(c) 
DATA 
COLLECTION.—Section 
479(c)(3)(C) 
(42 
U.S.C. 
679(c)(3)(C)) is amended— 
(1) by striking "and" at the end of clause (i); and 
(2) by adding at the end the following: 
"(iii) children placed in foster care outside the State 
which has placement and care responsibility, and". 
(d) EFFECTIVE DATE.—The amendments made by this section 
42 use 675 note. 
shall be effective with respect to fiscal years beginning on or after 
October 1,1995. 
108 STAT. 4460 
PUBLIC LAW 103-432—OCT. 31, 1994 
42 u s e 674 note. 
42 use 
1320a-10. 
42 u s e 1320a-10 
note. 
SEC. 210. PAYMENTS OF STATE CIJUMS FOR FOSTER CARE AND ADOP-
TION ASSISTANCE. 
(a) IN GENERAL.—Section 474(b) (42 U.S.C. 674(b)), as redesig-
nated by section 207(b)(2), is amended by adding at the end the 
following: 
"(4)0^.) Within 60 days after receipt of a State claim for expendi-
tures pursuant to subsection (a), the Secretary shall allow, disallow, 
or defer such claim. 
*
*
(
B
) Within 15 days after a decision to defer such a State 
claim, the Secretary shall notify the State of the reasons for the 
deferral and of tlie additional information necessary to determine 
the aUowabihty of the claim. 
"(C) Within 90 days after receiving such necessary information 
(in readily reviewable form), the Secretary shall— 
(i) disallow the claim, if able to complete the review and 
determine that the claim is not allowable, or 
"(ii) in any other case, allow the claim, subject to dissdlow-
£Uice (as necessary)— 
**(I) upon completion of the review, if it is determined 
that tlie claim is not allowable; or 
"(II) on the basis of findings of an audit or financial 
mansigement review.". 
(b) EFFECTIVE DATE.—^The amendment made by subsection (a) 
shall be effective with respect to claims made on or sifter the 
date of the enactment of this Act. 
SEC. 211. EFFECT OF FAILURE TO CARRY OUT STATE PLAN. 
(a) IN GENERAL.—Part A of title XI (42 U.S.C. 1301-1320b-
13), as amended by section 208, is amended by inserting after 
section 1130 the following: 
"EFFECT OF FAILURE TO CARRY OUT STATE PLAN 
"SEC. 1130A. In an action brought to enforce a provision of 
the Social Security Act, such provision is not to be deemed 
unenforceable because of its inclusion in a section of the Act requir-
ing a State plan or specifying the required contents of a State 
plan. This section is not intended to Hmit or expand the grounds 
for determining the availabihty of private actions to enforce State 
plan requirements other than by overturning any such grounds 
applied in Suter v. Artist M., 112 S. Ct. 1360 (1992), but not 
appHed in prior Supreme Court decisions respecting such enforce-
abihty: Provided, however, That this section is not intended to 
alter the holding in Suter v. Artist M. that section 471(a)(15) 
of tiie Act is not enforceable in a private right of action.". 
(b) APPUCABILITY.—^The amendment made by subsection (a) 
shall apply to actions pending on the date of the enactment of 
this Act and to actions brought on or after such date of enactment 
Subtitle B—Child Support Enforcement 
SEC. 
212. 
REPORTS 
TO 
CREDIT 
BUREAUS 
ON 
PERSONS 
DELINQUENT 
IN 
CHILD 
SUPPORT 
PAYMENTS. 
(a) IN GENERAL.—Section 466(a)(7) (42 U.S.C. 666(a)(7)) is 
amended— 
(1) by striking "Procedures" and all that follows through 
"request of such agency^ and inserting "Procedures which 
•T«^SJM3;-
PUBLIC LAW 103-432—OCT. 31, 1994 
108 STAT. 4461 
require the State to periodically report to consumer reporting 
agencies (as defined in section 603(^ of the Fair Credit Report-
ing Act (15 U.S.C. 1681a(f))) the name of any parent who 
owes overdue support and is at least 2 months delinquent 
in the pajonent of such support and the amount of such delin-
quency ; and 
(2) by striking *
*
(
C
) a fee" and all that follows through 
*
*
b
y the State" and inserting *(C) such information shall not 
be made available to (i) a consumer reporting agency which 
the State determines does not have sufficient capability to 
systematically and timely make accurate use of sucn informa-
tion, or (u) an entity which has not fiimished evidence satisfac-
tory to the State that the entity is a consumer reporting 
agency". 
(b) EFFECTIVE DATE.—The amendments made by subsection 42 use 666 note, 
(a) shall take effect on October 1,1995. 
SEC. 213. TECHNICAL AMENDMENTS TO PROVISION ON STATE PATER-
NITY ESTABLISHMENT PROGRAMS. 
Section 452(g)(2XA) (42 U.S.C. 652(gX2)(A)), as amended by 
section 13721(a) of OBRA-1993, is amended— 
(1) in clause (i), by striking "during the fiscal year"; 
(2) in subclause (I) of clause (ii), by striking "as of the 
end of the fiscal year" and inserting "in the fiscal year or, 
at the option of the State, as of the end of such year^; 
(3) in subclause (II) of clause (ii), by striking "or E as 
of the end of the fiscal year^ and inserting "in the fiscal year 
or, at the option of the State, as of the end of such year"; 
(4) in clause (iii), bv striking "during the fiscal year"; and 
(5) in the matter following clause (ui)— 
(A) by striking "who were bom out of wedlock during 
the inmiediately preceding fiscal year'' and inserting *l)om 
out of wedlock"; 
(B) by striking "such preceding fiscal year" both places 
it appears and inserting "the preceding fiscal year^; and 
(C) by striking "or E" the second place it appears. 
SEC. 214. AGREEMENT TO ASSIST IN LOCATING MISSING CHILDREN 
UNDER THE PARENT LOCATOR SERVICE. 
(a) IN GENERAL.—Section 463 (42 U.S.C. 663) is amended by 
adding at the end the following new subsection: 
"(f) The Secretary shall enter into an agreement with the Attor-
ney General of the United States, imder which the services of 
the Parent Locator Service estabUshed under section 453 shall 
be made available to the Office of Juvenile Justice and Delinquencv 
Prevention upon its request to locate any parent or child on behalf 
of such Office for the purpose o
f
— 
"(1) enforcing any State or Federal law with respect to 
the unlawfid taking or restraint of a child, or 
"(2) making or enforcing a child custody determination. 
The Parent Locator Service shall charge no tees for services 
requested pursuant to this subsection.". 
(b) CONFORMING AMENDMENT.—Section 463(c) (42 U.S.C. 663(c)) 
is amended by striking "(a), (b), or (e) and inserting "(a), (b), 
(e),or(f)". 
(c) EFFECTIVE DATE.—^The amendments made by this section 42 use 663 note, 
shall take effect on October 1,1995. 
108 STAT. 4462 
PUBLIC LAW 103-432—OCT. 31, 1994 
Subtitle C—Supplemental Security Income 
SEC. 221. DEFINITION OF DISABILITY FOR CHILDREN UNDER AGE 18 
APPLIED TO ALL INDIVIDUALS UNDER AGE 18. 
(a) IN GENERAL.—Section 1614(a)(3) (42 U.S.C. 1382c(a)(3)) is 
amended— 
(1) in subparagraphs (A) and (H), by striking "a child" 
each place it appears and inserting "an individual"; and 
(2) in subparagraph (H), by striking "child" the second 
and third place it appears and inserting "individual". 
42USC1382C 
(b) EFFECTIVE DATE.—The amendments made by subsection 
"°*®- 
(a) shall apply to determinations made on or after the date of 
the enactment of this Act. 
Subtitle D—Aid to Families With 
Dependent Children 
SEC. 231. SIMPLIFICATION OF INCOME AND ELIGIBILITY VERIFICA-
TION SYSTEM. 
Paragraph (1)(A) of section 1137(d) (42 U.S.C. 1320b-7(d)) is 
amended to read as follows: 
"(1)(A) The State shall require, as a condition of an individ-
ual's eligibility for benefits under a program listed in subsection 
(b), a declaration in writing, under penalty of perjury— 
"(i) by the individual, 
"(ii) in the case in which eligibility for program benefits 
is determined on a family or household basis, by any adult 
member of such individual's family or household (as 
applicable), or 
"(iii) in the case of an individual bom into a family 
or household receiving benefits under such program, by 
any adult member of such family or household no later 
than the next redetermination of eligibility of such family 
or household following the birth of such individual, 
stating whether the individual is a citizen or national of the 
United States, and, if that individual is not a citizen or national 
of the United States, that the individual is in a satisfactory 
immigration status.". 
Welfare 
SEC. 232. MEASUREMENT AND REPORTING OF WELFARE RECEIPT. 
Act 0^1994 
(^) CONGRESSIONAL 
POLICY.—^The Congress hereby declares 
42 use 1314a. 
that— 
(1) it is the policy and responsibility of the Federal Govern-
ment to reduce the rate at which and the degree to which 
families depend on income from welfare programs and the 
duration of welfare receipt, consistent with other essential 
national goals; 
(2) it is the policy of the United States to strengthen 
families, to ensure that children grow up in families that are 
economically self-sufficient and that the life prospects of chil-
dren are improved, and to underscore the responsibility of 
parents to support their children; 
(3) the Federal Government should help welfare recipients 
as well as individuals at risk of welfare receipt to improve 
their education and job skills, to obtain child care and other 
'!.g*^"" 
PUBLIC LAW 103-432—OCT. 31, 1994 
108 STAT. 4463 
necessary support services, and to take such other steps as 
may be necessary to assist them to become financially independ-
ent; and 
(4) it is the purpose of this section to provide the public 
with generally accepted measures of welfare receipt so that 
it can track such receipt over time and determine whether 
progress is being made in reducing the rate at which and, 
to the extent feasible, the degree to which, families depend 
on income from welfare programs and the duration of welfare 
receipt. 
(b) DEVELOPMENT OF WELFARE INDICATORS AND PREDICTORS.— 
The Secretary of Health and Human Services (in this section 
referred to as the "Secretary") in consultation with the Secretary 
of Agriculture shall— 
(1) develop— 
(A) indicators of the rate at which and, to the extent 
feasible, the degree to which, families depend on income 
from welfare programs and the duration of welfare receipt; 
and 
(B) predictors of welfare receipt; 
(2) assess the data needed to report annually on the indica-
tors and predictors, including the ability of existing data collec-
tion efforts to provide such data and any additional data collec-
tion needs; and 
(3) not later than 2 years after the date of the enactment 
of this section, provide an interim report containing conclusions 
; 
resulting from the development and assessment described in 
paragraphs (1) and (2), to— 
(A) the Committee on Ways and Means of the House 
of Representatives; 
(B) the Committee on Education and Labor of the 
House of Representatives; 
(C) the Committee on Agriculture of the House of 
Representatives; 
(D) the Committee on Energy and Commerce of the 
House of Representatives; 
(E) the Committee on Finance of the Senate; 
(F) the Committee on Labor and Human Resources 
of the Senate; and 
(G) the Committee on Agriculture, Nutrition, and For-
estry of the Senate. 
(c) ADVISORY BOARD ON WELFARE INDICATORS.— 
(1) ESTABLISHMENT.—There is established an Advisory 
Board on Welfare Indicators (in this subsection referred to 
as the "Board"). 
(2) COMPOSITION.—The Board shall be composed of 12 mem- 
President. 
bers with equal numbers to be appointed by the House of 
Representatives, the Senate, and the President. The Board 
shall be composed of experts in the fields of welfare research 
and welfare statistical methodology, representatives of State 
and local welfare agencies, and organizations concerned with 
welfare issues. 
(3) VACANCIES.—^Any vacancy occurring in the membership 
of the Board shall be filled in the same manner as the original 
appointment for the position being vacated. The vacancy shall 
not affect the power of the remaining members to execute 
the duties of the Board. 
108 STAT. 4464 
PUBLIC LAW 103-432—OCT. 31, 1994 
(4) DUTIES.—Duties of the Board shall include— 
(A) providing advice and recommendations to the Sec-
retary on the development of indicators of the rate at 
which and, to the extent feasible, the degree to which, 
families depend on income from welfare programs and the 
duration of welfare receipt; and 
(B) providing advice on the development and presen-
tation of annual reports required under subsection (d). 
(5) TRAVEL EXPENSES.—Members of the Board shall not 
be compensated, but shall receive travel expenses, including 
per diem in lieu of subsistence, at rates authorized for employ-
ees of agencies under subchapter I of chapter 57 of title 5, 
United States Code, for each day the member is engaged in 
the performance of duties away from the home or regular 
place of business of the member. 
(6) DETAIL OF FEDERAL EMPLOYEES.—The Secretary shall 
detail, without reimbursement, any of the personnel of the 
Department of Health and Human Services to the Board to 
assist the Board in carrying out its duties. Any detail shall 
not interrupt or otherwise affect the civil service status or 
privileges of the Federal employee. 
(7) VOLUNTARY SERVICE.—Notwithstanding section 1342 of 
title 31, United States Code, the Board may accept the vol-
untary services provided by a member of the Board. 
(8) TERMINATION OF BOARD.—The Board shall be termi-
nated at such time as the Secretary determines the duties 
described in paragraph (4) have been completed, but in any 
case prior to the submission of the first report required under 
subsection (d). 
(d) ANNUAL WELFARE INDICATORS REPORT.— 
(1) PREPARATION.—^The Secretary shall prepare annual 
reports on welfare receipt in the United States. 
(2) COVERAGE.—^The report shall include analysis of fami-
lies and individuals receiving assistance under means-tested 
benefit programs, including the program of aid to families with 
dependent children under part A of title IV of the Social Secu-
rity Act (42 U.S.C. 601 et seq.), the food stamp program under 
the Food Stamp Act of 1977 (7 U.S.C. 2011 et seq.), and the 
Supplemental Security Income program under title XVI of the 
Social Security Act (42 U.S.C. 1381 et seq.), or as general 
assistance under programs administered by State and local 
governments. 
(3) CONTENTS.—Each report shall set forth for each of 
the means-tested benefit programs described in paragraph (2)— 
(A) indicators of— 
(i) the rate at which and, to the extent feasible, 
the degree to which, families depend on income from 
welfare programs, and 
(ii) the duration of welfare receipt; 
(B) trends in indicators; 
(C) predictors of welfare receipt; 
(D) the causes of welfare receipt; 
(E) patterns of multiple program receipt; 
(F) such other information as the Secretary deems 
relevant; and 
(G) such recommendations for legislation, which shall 
not include proposals to reduce eligibility levels or impose 
PUBLIC LAW 103-432—OCT. 31, 1994 
108 STAT. 4465 
barriers to program access, as the Secretary may determine 
to be necessary or desirable to reduce— 
(i) the rate at which and the degree to which 
families depend on income from welfare programs, and 
(ii) the duration of welfare receipt. 
(4) SUBMISSION.—^The Secretary shall submit such a report 
not later than 3 years after the date of the enactment of 
this section and annually thereafter, to the committees specified 
in subsection (b)(3)(C). Each such report shall be transmitted 
during the first 60 days of each regular session of Congress. 
(e) SHORT TITLE.—^This section may be cited as the "Welfare 
Indicators Act of 1994". 
SEC. 233. NEW HOPE DEMONSTRATION PROJECT. 
42 USC 602 note. 
(a) IN GENERAL.—The Secretary of Health and Human Services 
(in this section referred to as the "Secretary") shall provide for 
a demonstration project for a qualified program to be conducted 
in Milwaukee, Wisconsin, in accordance with this section. 
(b) PAYMENTS.—For each calendar quarter in which there is 
a qualified program approved under this subsection, the Secretary 
shall pay to the operator of the qualified program, for no more 
than 20 calendar quarters, an amount equal to the aggregate 
amount that would otherwise have been payable to the State with 
respect to participants in the program for such calendar quarter, 
in the absence of the program, for cash assistance and child care 
under part A of title IV of the Social Security Act, for medical 
assistance under title XIX of such Act, and for administrative 
expenses related to such assistance. The amount payable to the 
operator of the program under this section shall not include the 
costs of evaluating the effects of the program. 
(c) DEMONSTRATION PROJECT DESCRIBED.—For purposes of this 
section, the term "qualified program" means a pro-am operated— 
(1) by The New Hope Project, Inc., a private, not-for-profit 
corporation incorporated under the laws of the State of Wiscon-
sin (in this section referred to as the "operator"), which offers 
low-income residents of Milwaukee, Wisconsin, employment, 
wage supplements, child care, health care, and counseling and 
training for job retention or advancement; and 
(2) in accordance with an application submitted by the 
operator of the program and approved by the Secretary based 
on the Secretary's determination that the application satisfies 
the requirements of subsection (d). 
(d) CONTENTS OF APPLICATION.—The operator of the qualified 
program shall provide, in its application to conduct a demonstration 
project for the program, that the following terms and conditions 
will be met: 
(1) The operator will develop and implement an evaluation 
plan designed to provide valid and reliable information on 
the impact and implementation of the program. The evaluation 
plan will include adequately sized groups of project participants 
and control groups assigned at random. 
(2) The operator will develop and implement a plan 
addressing the services and assistance to be provided by the 
program, the timing and determination of payments from the 
Secretary to the operator of the program, and the roles and 
responsibilities of the Secretary and the operator with respect 
to meeting the requirements of this paragraph. 
108 STAT. 4466 
PUBLIC LAW 103-432—OCT. 31, 1994 
(3) The operator will specify a reliable methodology for 
determining expenditures to be paid to the operator by the 
Secretary, with assistance from the Secretary in calculating 
the amount that would otherwise have been payable to the 
State in the absence of the program, pursuant to subsection 
(b). 
Reports- 
(4) The operator will issue an interim and final report 
on the results of the evaluation described in paragraph (1) 
to the Secretary at such times as required by the Secretary. 
(e) EFFECTIVE DATE.—This section shall take effect on the 
first day of the first calendar quarter that begins after the date 
of the enactment of this Act. 
SEC. 234. 
DELAY 
IN 
REQUIREMENT 
THAT 
OUTLYING 
AREAS 
OPERATE 
AN 
AFDC-UP 
PROGRAM. 
(a) IN GENERAL.—Section 401(g)(2) of the Family Support Act 
of 1988 (42 U.S.C. 602 note; 102 Stat. 2396) is amended by striking 
"October 1, 1992" and inserting "the date of the repeal of the 
limitations contained in section 1108(a) of the Social Security Act 
on payments to such jurisdictions for purposes of making mainte-
nance pa3nnents under parts A and E of title IV of such Act". 
42 use 602 note. 
(b) EFFECTIVE DATE.—^The amendment made by subsection (a) 
shall take effect as if included in the provision of the Family 
Support Act of 1988 to which the amendment relates at the time 
such provision became law, 
SEC. 235. STATE OPTION TO USE RETROSPECTIVE BUDGETING WITH-
OUT MONTHLY REPORTING. 
(a) IN GENERAL.—Section 402(a)(13) (42 U.S.C. 602(a)(13)) is 
amended— 
(1) by striking all that precedes subparagraph (A) and 
inserting the following: 
"(13) provide, at the option of the State and with respect 
to such category or categories as the State may select and 
identify in the State plan, that—"; and 
(2) in each of subparagraphs (A) and (B), by striking ", 
in the case of families who are required to report monthly 
to the State agency pursuant to paragraph (14)". 
42 use 602 note. 
(b) EFFECTIVE DATE.—^The amendment made by subsection (a) 
shall take effect on October 1, 1994, and shall apply to payments 
under part A of title IV of the Social Security Act for fiscal year 
1994 and such payments for succeeding fiscal years. 
Subtitle E^JOBS Program 
SEC. 241. EXPANSION OF COVERAGE FOR INDIAN TRIBES. 
(a) IN GENERAL.—Section 482(i)(2)(A) (42 U.S.C. 682(i)(2)(A)) 
is amended by striking "members of such Indian tribe receiving 
aid to families with dependent children" and inserting "Indians 
receiving aid to families with dependent children who reside on 
the reservation or within the designated service area". 
42 use 682 note. 
(b) EFFECTIVE DATE.—^The amendment made by subsection (a) 
shall take effect on October 1, 1995. 
SEC. 242. REPORT TO THE CONGRESS WITH RESPECT TO PERFORM-
ANCE STANDARDS IN THE JOBS PROGRAM. 
Section 487(a) (42 U.S.C. 687(a)) is amended— 
PUBLIC LAW 103-432—OCT. 31, 1994 
108 STAT. 4467 
(1) by stiiking "S** and insertLpg "4''; 
(2) in paragraph (1), by inserting "criteria for" after 
"develoi)"; 
(3) in paragraph (2), by striking "for" and inserting "with 
respect to"; and 
(4) in the second sentence, by striking "under this sub-
section" and inserting "with respect to the program under this 
part". 
Subtitle F—Other Provisions 
SEC. 261. EXTENSION 
OF 
DEMONSTRATION 
TO 
EXPAND 
JOB 
OPPORTUNITIES. 
(a) IN GENERAL.—Section 505 of the Family Support Act of 
1988 (42 U.S.C. 1315 note; 102 Stat. 2404) is amended— 
(1) in subsection (e), by striking "3-year period" and insert-
ing "6-year period", 
(2) in subsection (f)(2), by striking "January 1, 1993" and 
inserting "January 1, 1995", and 
(3) in subsection (g), by striking "1991, and 1992" and 
inserting "1991, 1992, 1993, 1994, 1995, and 1996". 
(b) EFFECTIVE DATE.—^The amendments made by subsection 42 use 1315 
(a) shall take effect on October 1,1993. 
"°*^ 
SEC. 262. EARLY CHILDHOOD DEVELOPMENT PROelECTS. 
Section 501(a) of the Family Support Act of 1988 (42 U.S.C. 
1315 note; 102 Stat 2400) is amended by adding at the end the 
following: 
"(4) For grants to States to conduct demonstration proiects 
under this subsection, there are authorized to be appropriated not 
to exceed $3,000,000 for eadi of the fiscal years 1995 through 
1999.". 
SEC. 263. REALLOCATION 
OF 
FUNDS 
UNDER 
TITLE 
XX 
FOR 
EMPOWERMENT AND ENTERPRISE GRANTS. 
Section 2007 (42 U.S.C. 1397f), as added by section 13761 
of OBRA-1993, is amended— 
(1) by redesignating subsection (e) as subsection (f); and 
(2) by inserting after subsection (d) the following new 
subsection: 
"(e) REALLOCATION OF REMAINING FUNDS.— 
"(1) REMITTED AMOUNTS.—The amount specified in section 
2003(c) for any fiscal year is hereby increased by the total 
of the amounts remitted during the fiscal year pursuant to 
subsection (d) of this section. 
"(2) AMOUNTS NOT PAID TO THE STATES.—The amoimt speci-
fied in section 2003(c) for fiscal year 1998 is hereby increased 
by the amount made available for grants under this section 
tnat has not been paid to any State by the end of fiscal year 
1997.". 
SEC. 264. CORRECTIONS RELATED TO THE INCOME SECURITY AND 
HUMAN RESOURCES PROVISIONS OF OBRA-1990. 
(a) AMENDMENT RELATED TO SECTION 5035(a)(2).—Section 
5035(a)(2) of OBRA-1990 is amended by striJking "a semicolon" 42 use I382a. 
and inserting "*; and'". 
108 STAT. 4468 
PUBLIC LAW 103-432—OCT. 31, 1994 
(b) AMENDMENT RELATED TO SECTION 5040.—Section 163 l(n) 
(42 U.S.C. 1383(n)) is amended by striking "subsection" and insert-
ing "section". 
(c) 
AMENDMENT 
RELATED 
TO 
SECTION 
5051(a).—Section 
402(a)(14) (42 U.S.C. 602(a)(14)) is amended to read as follows: 
"(14) at the option of the State and with respect to such 
category or categories as the State may select and identify 
in the plan, provide that— 
"(A) the State agency will require each family to which 
the State provides (or, but for paragraph (22) or (32), 
would provide) aid to families with dependent children, 
as a condition to the continued receipt of such aid (or 
to continuing to be deemed to be a recipient of such aid), 
to report to the State agency monthly (or less frequently 
in the case of such categories of recipients as the State 
may select) on— 
"(i) the income of the family, the composition of 
the family, and other relevant circumstances during 
the prior month; and 
"(ii) the income and resources the family expects 
to receive, or any changes in circumstances affecting 
continued eligibility for, or amount of benefits, the 
family expects to occur, in that month or in future 
months; and 
"(B) in addition to any action that may be appropriate 
based on other reports or information received by the State 
agency, the State agency will— 
"(i) take prompt action to adjust the amount of 
assistance payable, as may be appropriate, on the basis 
of the information contained in the report (or upon 
the failure of the family to submit a timely report); 
and 
"(ii) give the family an appropriate explanatory 
notice concurrent with any action taken under clause 
(i);". 
(d) REPEAL OF PROVISION INADVERTENTLY INCLUDED.—Section 
5057 of O B R A - 1 9 9 0 , and the amendment made by such section, 
42 use 1320b-9. are hereby repealed, and section 1139(d) of the Social Security 
Act shall be applied and administered as if such section 5057 
had never been enacted. 
(e) AMENDMENT RELATED TO SECTION 5105(a)(1)(B).—The sec-
ond paragraph of section 1631(a) (42 U.S.C. 1383(a)) is amended 
by striking "(A)(i) Pajnnents" and inserting "(2)(A)(i) Payments". 
(f) 
AMENDMENTS 
RELATED 
TO SECTION 
5105(b).—Section 
1631(a)(2)(C) (42 U.S.C. 1383(a)(2)(C)) is amended— 
(1) in clause (i), by striking "to representative" and insert-
ing "to a representative"; 
(2) by striking clause (ii); 
(3) by redesignating clauses (iii), (iv), and (v) as clauses 
(ii), (iii), and (iv), respectively; and 
(4) in clause (iv) (as so redesignated), by striking "(iii), 
and (iv)" and inserting "and (iii)". 
(g) AMENDMENTS RELATED TO SECTION 5107(a)(2)(B).—Section 
1631(c)(1)(B) (42 U.S.C. 1383(c)(1)(B)) is amended by striking "para-
graph (1)" each place such term appears and inserting "subpara-
graph (A)". 
PUBLIC LAW 103-432—OCT. 31, 1994 
108 STAT. 4469 
(h) EFFECTIVE DATE.—Each amendment made by this section 42 use 602 note, 
shall take effect as if included in the provision of OBRA-1990 
to which the amendment relates at the time such provision became 
law. 
SEC. 265. TECHNICAL CORRECTIONS RELATED TO THE HUMAN 
RESOURCE AND INCOME SECURITY PROVISIONS OF OBRA-
1989. 
(a) AMENDMENT 
RELATING TO SECTION 8004(a).—Section 
408(m)(2)(A) (42 U.S.C. 608(m)(2)(A)) is amended by striking "a 
fiscal" and inserting "the fiscal". 
(b) AMENDMENT 
RELATING TO SECTION 8006(a).—Section 
473(a)(6)(B) (42 U.S.C. 673(a)(6)(B)) is amended by striking 
"474(a)(3)(B)'' and inserting "474(a)(3)(C)". 
(c) AMENDMENT RELATING TO SECTION 8007(b)(3).—Subpara-
grapih (D) of section 475(5) (42 U.S.C. 675(5)(D)) is amended by 
moving such subparagraph 2 ems to the right so that the left 
margin of such subparagraph is aligned with the left margin of 
subparagraph (C) of such section. 
(d) EFFECTIVE DATE.—Each Eunendment made by this section 42 use 608 note, 
shall take effect as if the amendment had been included in the 
provision of OBRA-1989 to which the amendment relates, at the 
time the provision became law. 
SEC. 26«. TECHNICAL 
CORRECTION RELATED TO THE HUMAN 
RESOURCE AND INCOME SECURITY PROVISIONS OF OBRA-
1993. 
(a) AMENDMENT RELATING TO SECTION 13713(a).—Section 
473(a)(6)(B) (42 U.S.C. 673(a)(6)(B)) is amended by striking 
"474(a)(3)(C)'' and inserting "474(a)(3)(E)''. 
(b) EFFECTIVE DATE.—The amendment made by this section 42 use 673 note. 
shall take efiect as if the Eonendment had been included in the 
provision of OBRA-1993 to which the amendment relates, at the 
time the provision became law. 
SEC. 267. ELIMINATION OF OBSOLETE PROVISIONS RELATING TO 
TREATMENT OF THE EARNED INCOME TAX CREDIT. 
(a) 
TREATMENT 
OF EITC 
AS EARNED 
INCOME.—Section 
1612(a)(1) (42 U.S.C. 1382a(a)(l)) is amended by striking subpara-
graph (C) and by redesignating subparagraphs (D) and (E) as sub-
paragraphs (C) and (D), respectively. 
(b) ADJUSTMENT OF BENEFITS DUE TO TREATMENT OF EITC 
AS EARNED INCOME.—Section 1631(b) (42 U.S.C. 1383(b)) is amend-
ed by striking paragraph (3) and by redesignating paragraphs (4) 
and (5) as paragraphs (3) and (4), respectively. 
108 STAT. 4470 
PUBLIC LAW 103-432—OCT. 31, 1994 
SEC. 268. K E D E S I G N A H O N OF CERTAIN PROVISIONS. 
The first paragraph 6 of section 1631(e) (42 U.S.C. 1383(e)(6)) 
is amended by redesignating subparagraphs (1) and (2) as subpara-
graphs (A) £ind (B), respectively. 
Approved October 31, 1994. 
LEGISLATIVE HISTORY—H.R. 5252: 
CONGRESSIONAL RECORD, Vol. 140 (1994): 
Oct. 7, considered and pfissed House. 
Oct. 8, considered and passed Senate.