Medicare Catastrophic Coverage Act of 1988
PL 100-360 (H.R.2470), enacted 07/01/1988

PUBLIC LAW 100-360—JULY 1, 1988 
102 STAT. 683 
Public Law 100-360 
100th Congress 
An Act 
To amend title XVlll of the Social Security Act to provide protection against 
catastrophic medical expenses under the medicare program, 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; REFERENCES IN ACT; TABLE OF CONTENTS. 
(a) SHORT TITLE.—^This Act may be cited as the "Medicare Cata-
strophic Coverage Act of 1988". 
(b) AMENDMENTS TO THE SOCIAL SECURITY ACT.—Except as other-
wise specifically provided, whenever in this Act an amendment is 
expre£»ed in terms of an amendment to or repeal of a section or 
otiber provision, the reference shall be consider^ to be made to that 
section or other provision of the Social Security Act. 
(c) TABLE OF CONTENTS.—^The table of contents of this Act is as 
follows: 
Sec. 1. Short title; references in Act; table of contents. 
TITLE I—PROVISIONS RELATING TO PART A OF MEDICARE PROGRAM AND 
SUPPLEMENTAL MEDICARE PREMIUM 
Subtitle A—Expansion of Medicare Part A Benefits 
Sec. 101. Expanding scope of benefits imder part A. 
Sec. 102. Deductibles and coinsurance under part A. 
Sec. 103. Part A premium for medicare buy-ins. 
Sec. 104. Effective dates, transition, and conforming amendments. 
Subtitle B—Supplemental Medicare Premium 
Sec. 111. Imposition of supplemental medicare premium. 
Sec. 112. Establishment of Federal Hospital Insurance Catastrophic Coverage Re-
serve Fund. 
Sec. 113. Study of tax incentives for purchase of coverage for long-term care. 
TITLE n—PROVISIONS RELATING TO PART B OF THE MEDICARE PROGRAM 
AND TO MEDICARE SUPPLEMENTAL HEALTH INSURANCE 
Subtitle A—Expansion of Medicare Part B Benefits 
Sec. 201. Limitation on medicare part B oostsharing. 
Sec. 202. Coverage of catastrophic expenses for prescription drugs and itnailin-
Sec. 203. Coverage of home intravenous drug therapy services. 
Sec. 204. Coverage of screening mammography. 
Sec. 205. In-home care for certain chronically dependent individuals. 
Sec. 206. Ebctending home health services. 
Sec. 207. Research on long-term care services for medicare beneficiaries. 
Sea 208. Study of adult day care services. 
Subtitle B—Medicare Part B Monthly Premium and Financing 
Sec. 211. Adjustment in medicare part B premium. 
Sec. 212. Establishment of Federal Catastrophic Drug Insurance Trust Fund; fund 
transfers. 
Sec. 213. Creation of Medicare Catastrophic Coverage Account 
July 1, 1988 
[H.R. 2470] 
Medicare 
Catastrophic 
Coverage Act of 
1988. 
Aged persons. 
Insurance. 
Health and 
medical care. 
Health care 
facilities. 
42 u s e 1305 
note. 
102 STAT. 684 
PUBLIC LAW 100-360—JULY 1, 1988 
Subtitle C—Miscellaneous Provisions 
Sec. 221. Voluntary certification of medical supplemental health insurance policies. 
Sec. 222. Adjustment of contracts with prepaid health plans. 
Sec. 223. Mailing of notice of medicare benefits and information describing partici-
pating physician program. 
Sec. 224. Changes in dvil money penalties for certain practices of health mainte-
nance organizations and competitive medical plans. 
TITLE m—PROVISIONS RELATING TO THE MEDICAID PROGRAM 
Sec. 301. Requiring medicaid buy-in of premiums and cost-sharing for indigent med-
icare beneficiaries. 
Sec. 302. Coverage and payment for pr^poant women and infants with incomes 
below poverty line. 
Sec 303. Protection of income and resources of couple for maintenance of commu-
nity spouse. 
TITLE IV—UNITED STATES BIPARTISAN COMMISSION ON COMPREHEN-
SIVE HEALTH CARE. OBRA TECHNICAL CORRECTIONS, AND MISCELLA-
NEOUS PROVISIONS 
Subtitie A—^United States Bipartisan Commission on Comprehensive Health Care 
Sec. 401. Establishment 
Sec. 402. Duties. 
Sec 403. Membership. 
Sec 404. Staff and consultants. 
Sec 405. Powers. 
Sec 406. Report 
Sec 407. Termination. 
Sec 408. Authorization of appropriations. 
Subtitie B—OBRA Technical Corrections 
Sec 411. Technical corrections to certain health care provisions in the Omnibus 
Budget Reconciliation Act of 1987. 
Subtitie C—Miscellaneous Provisions 
Sec. 421. Maintenance of effort 
Sec. 422. Rate reduction for medicare eligible Federal annuitants. 
Sec 423. Study and reports by the Office of Personnel Bfanagement on offering 
medicare supplemental plans to Federal medicare eligible individuals, 
and other changea 
Sec 424. Benefits counseling and assistance demonstration project for certain medir 
care and medicaid beneficiaries. 
Sec 425. Case management demonstration projects. 
Sec 426. Extensions of expiring provisions. 
Sec. 427. Advisory Committee on Medicare Home Health Claims. 
Sec 428. Prohibition of misuse of tfjrmbols, emblems, or names in reference to Social 
Security or Medicare. 
Sec 429. Demonstration projects with respect to chronic ventilator-dependent units 
in hospitals. 
TITLE I—PROVISIONS RELATING TO PART 
A OF MEDICARE PROGRAM AND SUP-
PLEMENTAL MEDICARE PREMIUM 
Subtitle A—Expansion of Medicare Part A 
Benefits 
SECIOI. EXPANDING SCOPE OF BENEFITS UNDER PART A. 
Section 1812 (42 U.S.C. 1395d) is amended— 
(1) in subsection (a), by striking paragraphs (1) through (4) and 
inserting the foUowinjg: 
PUBLIC LAW 100-360—JULY 1, 1988 
102 STAT. 685 
"(1) inpatient hospital services; 
"(2) extended care services for up to 150 days during any 
calendar year; 
"(3) home health services; and 
"(4) in lieu of certain other benefits, hospice care with respect 
to tbe individual during up to two periods of 90 days each, a 
subsequent period of 30 days, and a subsequent extension period 
with respect to which the individual makes an election under 
subsection (dXl)-"; 
(2) by amending subsection (b) to read as follows: 
"0>) Payment luider this part for services furnished to an individ-
ual may not be made for— 
"(1) extended care services furnished to the individual during 
a calendar year after such services have been furnished to the 
individual for 150 days during that year, or 
"(2) inpatient psychiatric hospital services furnished to the 
individual after such services have been furnished to the 
individual for a total of 190 days during his lifetime."; 
(3) by amending subsection (c) to read as follows: 
"(cXl) If an individual is an inpatient of a psychiatric hospital on 
the first day of medicare entitiement (as defined in paragraph (4XA)) 
payment may not be made under this part during the period de-
scnbed in paragraph (2) for inpatient mental health services (as 
defined in paragraph (4XB)) in excess of the number of days specified 
in paragraph (3). 
"(2) The period described in this paragraph— 
"(A) b^ins on the first day of medicare entitiement, and 
"(B) ends at the end of the fust period of 60 consecutive days 
thereafter on each of which the individual is not receiving 
inpatient mental health services. 
"(3) The number of days specified in this paragraph for an individ-
ual is 150 days less the number of days (during the 150-day period 
immediately before the first day of medicare entitiement) during 
which the individual was an inpatient of a psychiatric hospital. 
''(4) In this subsection: 
"(A) The term 'first day of medicare entitiement' means, for 
an individual, the first day of the first month for which the 
individual is entitied to benefits under this part. 
"(B) The term 'inpatient mental health services' means— 
"(i) inpatient psychiatric hospital services, and 
"(ii) inpatient hospital services for an individual who is 
an inpatient primarily for the diagnosis or treatment of 
mental Ulness."; 
(4) in subsection (d)— 
(A) in paragraph (1), by striking "and one subsequent 
period of 30 days' and inserting ", a subsequent period of 30 
days, and a subsequent extension period", and 
^ ) in paragraph (2)^), by inserting "or a subsequent 
extension period' after "30-day period"; 
(5) in subsection (e), by striking post-hospital"; and 
(6) by striking subsections (f) and (g). 
SEC 102. DEDUCTIBLES AND COINSURANCE UNDER PART A. 
Section 1813 (42 U.S.C. 1395e) is amended— 
(1) by ainendiDg paragraphs (1) through (3) of subsection (a) to 
read as follows: 
102 STAT. 686 
PUBLIC LAW 100-360—JULY 1, 1988 
"(IXA) Subject to subparagraph (C), the amount payable for in-
patient hospital services furnished to an individual during the 
individuEd's first period of hospitalization to begin during a calendar 
year shall be reduced by a deduction equal to the inpatient hospital 
deductible for that year or, if less, the charges imposed with respect 
to such individual for such services, except that, if the customary 
charges for such services are greater than the charges so imposed, 
such customary charges shall be considered to be the charges so 
imposed. 
"(B) For purposes of subparagraph (A), the term 'period of hos-
pitalization means, with respect to an individual, the period begin-
ning on the first day the individual is furnished inpatient hospital 
services and ending on the individual's date of discharge (as estab-
lished by the Secretary for purposes of section 1886) from the 
hospital (or, in the case of a transfer, hospitals) involved. 
"(C) In the case of an individual with respect to whom— 
"(i) a period of hospitalization begins during December of any 
calendar year, 
"(ii) an inpatient hospital deductible is imposed with respect 
to such period of hospitalization, and 
"(iii) a period of hospitalization begins during January of the 
following calendar year, 
no inpatient hospital deductible shall be imposed with respect to a 
period of hospitalization beginning in January of such following 
year (but such period of hospitalization shall not be taken into 
account in determining the application of an inpatient hospital 
deductible for any period of hospitalization beginning for such 
individual after January 31 of such following year). 
Contracts. 
"(D) If the Secretary terminates a contract under section 1876 
during a year, no inpatient hospital deductible shall be imposed 
during the remainder of the year in the case of an individual who 
can demonstrate to the satisfaction of the Secretary that, during a 
period of enrollment with the organization in the year, the individ-
ual was admitted to a hospital for inpatient hospital services for 
which the organization was obligated to make payment under such 
section. 
"(2)(A) The amount payable to any provider of services under this 
part for services furnished an individual shall be further reduced by 
a deduction equal to the expenses incurred for the first three pinte 
of whole blood (or equivalent quantities of packed red blood cells, as 
defined under regulations) furnished to the individual during each 
calendar year, except that such deductible for such blood shall in 
accordance with regulations be appropriately reduced to the extent 
that there has been a replacement of such blood (or equivalent 
quantities of packed red blood cells, as so defined); and for such 
purposes blood (or equivalent quantities of packed red blood cells, as 
so defined) furnished such individual shall be deemed replaced when 
the institution or other person furnishing such blood (or such 
equivalent quantities of packed red blood cells, as so defined) is 
given one pint of blood for each pint of blood (or equivalent quan-
tities of packed red blood cells, as so defined) furnished such individ-
ual with respect to which a deduction is made under this sentence. 
"(B) The deductible under subparagraph (A) for blood or blood 
cells furnished an individual in a year shall be reduced to the extent 
that a deductible has been imposed under section 1833(b) to blood or 
blood cells furnished the individual in the year. 
PUBLIC LAW 100-360—JULY 1, 1988 
102 STAT. 687 
"(3XA) The amount payable for extended care services furnished 
an individual in any calendar year shall be reduced by the coinsur-
ance amount (promulgated under subparagraph (Q for that year) for 
each day (before the 9th day) on which he is furnished such services 
during the year. 
"(B) Before September 1 of each year (b^inning with 1988), the 
Secretary shall estimate the national average per diem reasonable 
cost recognized under this title for extended care services which will 
be furnished in the succeeding calendar year. 
"(C) The Secretary shall, in September of each year (b^;inning 
with 1988) promulgate the coinsurance amount which shall apply to 
extended care services furnished in the succeeding year. Such 
amount shall be equal to 20 percent of the national average per 
diem cost estimated imder subparagraph (B) in that year. If the 
coinsurance amount determined under the preceding sentence is not 
a multiple of 50 cents, it shall be rounded to the nearest multiple of 
50 cents (or, if it is a multiple of 25 cents but not a multiple of 50 
cents, to the next higher multiple of 50 cents)."; and 
(2) by striking paragraph (3) of subsection (b). 
SEC. 103. PART A PREMIUM FOR MEDICARE BUY-INS. 
Subsection (d) of section 1818 (42 U.S.C. 13951) is amended to read 42 use i395i-2. 
as follows: 
"(dXD The Secretary shall, during September of each year (b^in-
ning with 1988), estimate the monthly actuarial rate for months in 
the succeeding year. Such actuarial rate shall be one-twelfth of the 
amount which the Secretary estimates (on an average, per capita 
basis) is equal to 100 percent of the benefits and administrative costs 
which will be payable from the Federal Hospital Insurance Trust 
Fund for services performed and related administrative costs in-
curred in the succeeding year with respect to individuals age 65 and 
over who will be entitled to benefits under this part during that 
entire year. 
"(2) The Secretary shall, during September of each year determine 
and promulgate the dollar amount which shall be applicable for 
premiums for months occurring in the following year. Such amount 
shall be equal to the monthly actuarial rate determined under 
paragraph (1) for that following year. Any amount determined 
under the preceding sentence which is not a multiple of $1 shall be 
rounded to the nearest multiple of $1 (or, if it is a multiple of 50 
cents but not a multiple of $1, to the next higher multiple of $1). 
"(3) Whenever the Secretary promulgates the dollar amount Public 
which shall be applicable as the montibly premium under this information. 
section, he shall, at the time such promulgation is announced, issue 
a public statement setting forth the actuarial assumptions and bases 
employed by him in arriving at the amount of an adequate actuarial 
rate for individuals 65 and older as provided in paragraph (1).". 
SEC 104. EFFECTIVE DATES, TRANSITION, AND C
O
N
F
O
R
M
I
N
G AMEND-
BIENTS. 
(a) EJFPECTIVE DATE.— 
42 use i395d 
(1) IN GENERAL.—Except as provided in paragraphs (2) and (3), note. 
the amendments made by this subtitle shall take effect on 
January 1,1989, and shall apply— 
(A) to the inpatient hospital deductible for 1989 and 
^ 
succeeding years. 
102 STAT. 688 
PUBLIC LAW 100-360—JULY 1, 1988 
(B) to care and services furnished on or after January 1, 
1989, 
(C) to premiums for January 1989 and succeeding months, 
and 
(D) to blood or blood cells furnished on or after January 1, 
1989. 
(2) ELIMINATION OP POST-HOSPITAL REQUIREMENT FOR EXTENDED 
C
A
R
E SERVICES.—The amendments made by this subtitle, insofar 
as they eliminate the requirement (under section 1812(aX2) of 
the Social Security Act) that extended care services are only 
covered under title XVHI of such Act if they are post-hospital 
extended care services, shall only apply to extended care serv-
ices furnished pursuant to an admission to a skilled nursing 
facility occurring on or after Januai^ 1,1989. 
42 use I395e 
(b) HoLD H
A
R
M
L
E
S
S PROVISIONS.—In the case of an individual for 
note. 
whom a spell of illness (as defined in section 1861(a) of the Social 
Security Act, as in effect on December 31, 1988) began before 
January 1,1989, and had not yet ended as of such date— 
(1) the amendment made to section 1813(aXl) of such Act shall 
not apply to services furnished during that spell of illness 
during 1989 or 1990, and 
(2) the amount of any deductible under section 1813(aX2) of 
such Act (as amended by this subtitle) shall be reduced during 
that spell of illness durinjg 1989 or 1990 to the extent the 
deductible under such section was applied during the spell of 
illness. 
42 u s e 1395WW 
(c) ADJUSTMENTS IN PAYMENTS FOR INPATIENT HOSPITAL SERV-
note. 
ICES.— 
(1) PPS HOSPITALS.—^In adjusting DRG prospective pa3mient 
rates under section 1886(d) of the Social Security Act, outlier 
cutoff points under section 1886(dX5XA) of such Act, and 
weighting factors under section 1886(dX4) of such Act for dis-
chaj^es occurring on or after October 1, 1988, the Secretaiy of 
Health and Human Services shall, to the extent appropriate, 
take into consideration the reductions in payments to hospitals 
by medicare beneficiaries resulting from the elimination of a 
day limitation on medicare inpatient hospital services (under 
the amendments made by section 101). 
(2) PPS-EXEMPT HOSPITAL.—In adjusting target amoimts 
under section 1886(bX3) of the Social Security Act for cost 
reporting periods b^pnning on or after October 1, 1988, the 
Secretary shall, on a hospital-specific basis, take into consider-
ation the reductions in payments to hospitals by medicare 
beneficiaries resulting from the elimination of a day limitation 
on medicare inpatient hospital services (under the amendments 
made by section 101). 
(d) MISCELLANEOUS CONFORMING AMENDMENTS.— 
(1) Section 1811 (42 U.S.C. 1395c) is amended by striking 
"hospital, related post-hospital" and inserting "inpatient hos-
pital services, extended care services". 
(2) Section 1814 (42 U.S.C. 13950 is amended— 
(A) in paragraphs (2)(B) and (6) of subsection (a), by 
strildng "post-hospital" each place it appears; 
(B) in subsection (aX2)(B), by striking ", for any of the 
conditions" and all that follows up to the semicolon; 
(C) in subsection (aX7XA)— 
(i) by striking "and" at the end of clause (i), 
PUBLIC LAW 100-360—JULY 1, 1988 
102 STAT. 689 
(ii) by striking the semicolon at the end of clause (ii) 
and inserting ", and", and 
(iii) by adding at the end the following new clause: 
"(iii) in a subsequent extension period, the medical 
director or physician described in clause (iXII) 
recertifies at the beginning of the period that the 
individual is terminally ill;"; and 
(D) in subsection (dX3)— 
(i) by striking "60 percent" and "80 percent" and 
inserting "100 percent" both places, and 
(ii) by striking "two-thirds of. 
(3) Section 1832(b) (42 U.S.C. 1395k(b)) is amended by striking 
" 'spell of illness'," and the comma before "and". 
(4) Section 1861 (42 U.S.C. 1395x) is amended— 
(A) by striking subsection (a); 
(B) in subsection (e)— 
(i) in the matter before paragraph (1), by striking 
"paragraph (7) of this subsection, and subsection (i) of 
this section" and inserting "and paragraph (7) of this 
subsection", 
(ii) in the third sentence, by striking "section 
1814(fK2), and subsection (i) of this section" and insert-
ing "and section 1814(fK2)", 
(iii) in the fifth sentence, by striking ", except for 
purposes of subsection (aX2),", and 
(iv) by striking the second sentence; 
(C) by striking subsection (i); 
(D) in subsections (vXlXGXi), (vX2XA), and (vX3), by strik-
ing "post-hospital" each place it appears; and 
(E) in subsection (y)— 
(i) by striking "Post-Hospital" in the heading and by 
striking "post-hospital" each place it appears, 
(ii) in paragraph (1), by striking "(except for purposes 
of subsection (aX2))", 
(iii) in par^aphs (2) and (3), by striking "spell of 
illness" and 
spell" each place either appears and 
inserting "year", 
(iv) in paragraph (2XAXi), by striking "30 days" and 
inserting "45 days", 
(v) in paragraph (3), by striking "one-eighth" and all 
that follows through "31st day and inserting "the 
coinsurance 
amount 
established 
under 
section 
1813(aX3XC) for each day before the 46th day", and 
(vi) by striking paragraph (4). 
(5) Section 1866(d) (42 U.S.C. 1395cc(d)) is amended by striking 
"post-hospital" each place it appears. 
(6) Subsections (dXD and (f) of section 1883 (42 U.S.C. 1395tt) 
are amended by striking "post-hospital" each place it appears. 
Subtitle B—Supplemental Medicare Premium 
SEC. 111. IMPOSITION OF SUPPLEMENTAL MEDICARE PREMIUM. 
(a) GENERAL RULE.—Subchapter A of chapter 1 of the Internal 
J 
Revenue Code of 1986 (relating to determination of tax liability) is 
amended by adding at the end thereof the following new part: 
102 STAT. 690 
PUBLIC LAW 100-360—JULY 1, 1988 
Taxes 
"PART VIII—SUPPLEMENTAL MEDICARE 
PREMIUM 
"Sec. 59B. Supplemental medicare premium. 
26 use 59B. 
"SEC. 59B. SUPPLEMENTAL MEDICARE PREMIUM. 
"(a) IMPOSITION OF PSEMIUM.—In the case of an individual to 
whom this section applies, there is hereby imposed (in addition to 
any other amount imposed by tliis subtitle) for each taxable year a 
supplemental premium equal to the annual premium for such year 
determined under subsection (c). 
"(b) INDIVTOUALS SUBJECT TO PREMIUM.—This section shall apply 
to an individual for any taxable year if— 
"(1) such individual is a medicare-eligible individual for more 
than 6 full months b^inning in the taxable year, and 
"(2) such individual's acijusted income tax liability for the 
taxable year equals or exceeds $150. 
"(c) DETERMINATION OF AMOUNT OF SUPPLEMENTAL PREMIUM.— 
For purposes of this section— 
"(1) IN GENERAL.—^Except as otherwise provided in this 
subsection, the annual premium determined under this subsec-
tion with respect to any individual for any taxable year shall be 
equal to the product of— 
"(A) tiie supplemental premium rate determined under 
subsection (d) or (e) (whichever applies) for the taxable year, 
multiplied by 
"(B) the amount determined by dividing— 
"(i) the individual's adjusted income tax liability for 
the taxable year, by 
"(ii)$150. 
"(2) LIMITATION ON ANNUAL PREMIUM.— 
"(A) YEARS BEFORE 1994.—^In the case of any taxable year 
b^inning before 1994, the annual premium determined 
under HUB subsection with respect to any individual shall 
not exceed the limitation determined under the following 
table: 
"In the case of taxable 
years beginning in: 
The limitation is: 
1989 
$800 
1990 
850 
1991 
900 
1992 
950 
1993 
1,060. 
"(B) YEARS AFTER 1993.—^In the case of any taxable year 
b^inning in a calendar year after 1993, the annual pre-
mium determined under ti^ subsection with respect to any 
individual shall not exceed— 
"(i) the limitation which would be in effect under this 
paragraph for taxable years b^^inning in the preceding 
calendar year without r^ard to the last sentence of 
this subparagraph, increased by 
"(ii) the percentage (if any) by which— 
"(I) the medicare-iMu-t B value for the 2nd 
preceding calendar year, exceeds 
"(Q) such value for the 3rd preceding calendar 
year. 
PUBLIC LAW 100-360—JULY 1, 1988 
102 STAT. 691 
If the limitation determined under the preceding sentence 
is not a multiple of $50, such limitation shall be rounded to 
the nearest multiple of $50. 
"(C) MEDICARB-PART B VALUE.— 
"(i) IN GENERAL.—^For purposes of subparagraph (B), 
the term 'medicare-part B value' means, with respect to 
any calendar year, an amount equal to the excess o
f
— 
"(I) l^e average per capita part B outlays for the 
year, over 
"(n) 12 times the monthly premium for months 
in such calendar year established under section 
1839 of such Act (without r^ard to subsections (b), 
(a (gX4), and (gX5) thereof), 
"(ii) AVERAGE PER CAPITA PART B OUTLAYS.—For pur-
poses of clause (i), tiie term 'average per capita part B 
outlays' means, with respect to a calendar year— 
"(D the outlays under part B of title XVm of the 
Social Security Act for the year, divided by 
"(ID the average number of individuals covered 
under such part during the year. 
"(iii) SPECIAL RULE FOR cx)VERED OUTPATIENT DRUGS.— 
In applying the limitation under subparagraph (B) with 
respect to taxable years b^inning in any calendar year 
before 1998, for purposes of this subparagraph— 
"(D the term 'outlays' does not include outlays 
for covered outpatient drugs (as defined in section 
1861(tX2) of the Social Security Act), and 
"(n) the monthly premium shall be computed 
under clause (i)(n) excluding premiums under sec-
tion 1839(g) of such Act attributable to the 
prescription drug monthly premium. 
"(3) TABLES.—^The annual premium shall be determined 
under tables which shall be prescribed by tlie Secretary. Such 
tables shall be based on the ror^oing provisions of this subeec* 
tion; except that such tables may have adjusted income tax 
liability brackets of less than $150. 
"(d) DErratMINATION OF SUPPLEMENTAL PREMIUM RATE FOR YEARS 
BEFORE 1994.—^In the case of any taxable year beginning before 
1994, the supplemental premium rate determined under this subsec-
tion shall be the sum of the catastrophic coverage premium rate and 
the prescription drug premium rate determined under the following 
table: 
"In tiie case of any taxable 
The catastrophic coverage The prescription drug 
year i>eginning in: 
premium rate is: 
premium rate is: 
1989 
$22.50 
0 
1990 
27.14 
110.36 
1991 
30.17 
8.83 
1992 
30.55 
9.95 
1993 
29.55 
12.45. 
"(e) SUPPLEMENTAL PREMIUM RATE FOR YEARS AFTER 1993.— 
"(1) IN GENERAL.—^In the case of any taxable year b^^ioning 
in a calendar year after 1993, except as provided in paragraph 
(2), the supplemental premium rate determined under this 
subsection shall be the sum of— 
"(A) the catastrophic coverage premium rate (which 
would be in ^ect under this section for taxable years 
102 STAT. 692 
PUBLIC LAW 100-360—JULY 1, 1988 
beginning in the preceding calendar year if paragraph (2) 
did not apply to any preceding calendar year) adjusted by 
the percentage determined under paragraph (3) for the 
calendar year in which the taxable year begins, and 
"(B) the prescription drug premium rate (which would be 
in effect under this section for taxable years beginning in 
the preceding calendar year if paragraph (2) did not apply 
to any prece&ig calendar year) adjusted by the percent£^e 
determined under paragraph (4) for the calendar year in 
which the taxable year begins. 
"(2) SUPPLEMENTAL PREMIUM RATE CANNOT GO DOWN, AND 
CANNOT GO UP BY MORE THAN $1.50.— 
"(A) IN GENERAL.—In no event shall the supplemental 
premium rate determined under this subsection for any 
taxable year beginning in a calendar year after 1993— 
"(i) be less than, or 
"(ii) exceed by more than $1.50, 
the supplemental premium rate in effect under this section 
for taxable years beginning in the preceding calendar year. 
"(B) 
DETERMINATION 
OF 
COMPONENT 
RATES 
WHERE 
SUBPARAGRAPH (A) APPUES.—If subpara^aph (A) affects 
the supplemental premium rate determined under this 
subsection for taxable years beginning in any calendar 
year, the supplemental premium rate determined after the 
application of subparagraph (A) shall be allocated between 
the catastrophic coverage premium rate and the prescrip-
tion drug premium rate on the basis of the respective 
amounts of such rates without regard to the application of 
subparagraph (A). 
"(3) PERCENTAGE ADJUSTMENT FOR CATASTROPHIC COVERAGE 
PREMIUM RATE.— 
"(A) IN GENERAL.—The percentage determined under this 
paragraph for any calendar year shcdl be the sum of— 
"(i) the outlay-premium percentage, and 
"(ii) the reserve account percentage. 
For purposes of the preceding sentence, negative percent-
ages shall be taken into account as negatives. 
"(B) OUTLAY-PREMIUM PERCENTAGE.— 
"(i) IN GENERAL.—Except as otherwise provided in 
this subparagraph, the outlay-premium percentage for 
any calendar year is— 
"(I) the percentage by which the per capita cata-
strophic outlays in the 2nd preceding calendar 
year exceed such outlays in the 3rd preceding cal-
endar year, reduced (including below zero) by 
"dD the percentage by which the per capita 
catastrophic coverage premium liability for the 
2nd preceding calendar year exceeds such liability 
for the 3rd preceding calendar year (determined as 
if the catastrophic coverage premium rate for the 
2nd preceding calendar year were the same as the 
rate in effect for the 3ra preceding calendar year). 
If there is no excess described in subclause (I) or (II), 
such subclause shall be applied by substituting 'is less 
than' for 'exceeds' and the percentage determined with 
such substitution shall be taken into account as a 
n^ative percentage. 
PUBLIC LAW 100-360—JULY 1, 1988 
102 STAT. 693 
"(ii) ADJUSTMENT FOR MORE RECENT INCREASES IN 
COSTKJF-LIVING.—If— 
"(I) the percentage increase in the CPI for the 12-
month period endmg with May of the preceding 
calendar year, exceeds (or is less than) 
"(ED such increase for the 12-month period 
ending with May of the 2nd preceding calendar 
year, 
by at least 1 percentage point, the percentage deter-
mined under clause (i) for the calendar year shall be 
adjusted up (or down, respectively) by Vz of the amount 
by which such excess (or shortage, respectively) exceeds 
1 percent. 
'(C) RESERVE ACCOUNT PERCENTAGE.— 
"(i) IN GENERAL.—The reserve account percentage for 
any calendar year is the percentage which the rate 
change determined under clause (ii) is of the cata-
strophic coverage premium rate which would be in 
effect under this section for taxable years beginning in 
the preceding calendar year if paragraph (2) did not 
apply to any preceding calendar year. K there is an 
excess determined under clause (iii), the percentage 
determined under the preceding sentence shall be 
taken into account as a negative percentage. 
"(ii) DETERMINATION OF RATE CHANGE.—The rate 
chmige determined under this clause for any calendar 
year is the adjustment in the catastrophic coverage 
premium rate (otherwise in effect for taxable years 
b^iiming in the 2nd preceding calendar year) which 
the Secretary determines would have resulted in an 
a ^ r ^ a t e increase (or decrease) in the premiums im-
posed by this section for such taxable years equal to 63 
percent of the shortfall or excess determined under 
clause (iii) for the calendar year. 
"(iii) DETERMINATION OF SHORTFALL OR EXCESS.—The 
shortfall (or excess) determined under this clause for 
any calendar year is the amount by which— 
"(I) 20 percent of the outlays during the 2nd 
preceding calendar year from the Medicare Cata-
strophic (Coverage Account created under section 
1841B of the Social Security Act, exceeds (or is less 
than) 
"(II) the balance in such Account as of the close 
of such 2nd preceding calendar year (determined 
by taking into account previous premium increases 
by reason of the reserve account percentage under 
this subsection or by reason of section 1839(gX2) of 
the Social Security Act but not credited to the 
Account). 
'(D) DEFINITIONS.—For purposes of this paragraph— 
"(i) PER CAPITA CATASTROPHIC OUTLAYS.—The term 
'per capita catastrophic outlays' means, with respect to 
any calendar year, the amount (as determined by the 
Secretary of Health and Human Services) equal to— 
"(I) the outlay during such year from the Medi-
care Catastrophic CJoverage Account created under 
section 1841B of the Socisd Security Act, divided by 
102 STAT. 694 
PUBLIC LAW 100-360-JULY 1, 1988 
"(ID the average number of individuals entitled 
to receive benefits under part A of title XVIII of 
the Social Security Act during such calendar year. 
"(ii) PER CAPITA CATASTROPHIC COVERAGE PREMIUM 
LIABILITY.—The term 'per capita catastrophic coverage 
premium liability' means, with respect to any calendar 
year, the amount (as determined by the Secretary) 
equal to— 
"(D the aggregate premiums impeded by this 
section for taxable years beginning in such cal-
endar year to the extent attributable to the cata-
strophic coverage premium rate, divided by 
"(II) the number of individuals who had pre-
mium liability imder this section for such taxable 
years, 
"(iii) PERCENTAGE INCREASE IN CPI.—The percentage 
increase in the CPI for any 12-month period shall be 
the percentage by which the 0)nsumer Price Index (as 
defined in section l(fX5)) for the last month of such 
period exceeds such Index for the last month of the 
preceding 12-month period. 
"(4) PERCENTAGE ADJUSTMENT FOR PRESCRIPTION DRUG PRE-
MIUM RATE.—^The percentage determined under this paragraph 
for any calendar year shall be determined under rules similar to 
the rules of paragraph (3); except that— 
"(A) in determining the prescription drug premium rate 
for any calendar year before 1998, the foUowing percent-
^ ages shall be substituted for 20 percent in paragraph 
(3XCXiii)a): 
"In 
the 
case 
of 
calendar 
yean 
The 
percentage is: 
1994 
75 
1995 
50 
1996 
25 
1997 
25, 
"(B) no adjustment by reason of the outlay-premium 
percentage shall be made for any calendar year before 1998, 
"(C) any reference to the Medicare C!atastrophic Coverage 
Account shall be treated as a reference to the Federal 
Catastrophic Drug Insurance Trust Fund, and 
"(D) any reference to the catastrophic coverage premium 
rate shall be treated as a reference to the prescription drug 
premium rate. 
"(f) DEFINITIONS AND SPECIAL RULES.— 
"(1) MEDICARE-ELIGIBLE INDIVIDUAL.—For purposes of this sec-
tion— 
"(A) IN GENERAL.—Except as otherwise provided in this 
paragraph, the term 'medicare-eligible individual' means, 
with respect to any month, any individual who is entitled to 
(or, on application without tne payment of an additional 
p««mium, would be entitled to) benefits under part A of 
title XVin of the Social Security Act for such month. 
"(B) EXCEPTIONS.—The term 'medicare-eligible individual' 
shall not include for any month— 
"(i) any individual who is entitled to benefits under 
part A of title XVin of the Social Security Act for such 
month solely by reason of the pa3mient of a premium 
under section 1818 of such Act, or 
PUBLIC LAW 100-360—JULY 1, 1988 
102 STAT. 695 
"(ii) any qualified nonresident. 
"(2) SPECIAL RULES FOR JOINT RETURNS.—^In the case of a joint 
return— 
"(A) WHERE PREikiiuM APPUES TO BOTH SPOUSES.—If both 
spouses meet the requirements of subsection OaXl) for the 
taxable year— 
"(i) such spouses shall be treated as 1 individual for 
purposes of applying this section, except that 
"(ii) the limitation of subsection (cX2) shall be twice 
the amount which would otherwise apply. 
"(B) WHERE PREMIUM APPUES TO ONLY i SPOUSE.—^If only 1 
spouse meets the requirements of subsection (bXD for the 
taxable year— 
"(i) this section shall be applied separately with 
respect to such spouse, and 
"(ii) the adjusted income tax liability of such spouse 
shall be determined under paragraph (4)— 
"(D by taking into account one-half of the income 
tax liability determined with respect to the joint 
return, and 
"(ID by taking into account under clause (ii) of 
paragraph (4XC) only amounts attributable to such 
spouse. 
"(3) 
SEPARATE RETURNS BY MARRIED INDIVIDUALS.—K 
an 
individual is married as of the close of the taxable year (within 
the meaning of section 7703) but does not file a joint return for 
the taxable year and such individual does not live apart from 
his spouse at all times during the taxable year— 
"(A) the limitation of subsection (cX2) shall be twice the 
amount which would otherwise apply if both the individual 
and the spouse of the individual meet the requirements of 
subsection (bXD with respect to the calendar year in which 
the taxable year begins (determined without r^ard to 
subparagraph (B) of this paragraph), 
"(B) tf such individual does not otherwise meet the 
requirements of subsection (bXD, such individual shall be 
treated as meeting the requirements of subsection (bXD for 
the taxable year if the spouse of such individual meets such 
requirements with respect to the calendar year in which 
the taxable year b^;ins, and 
"(Q in applying subparagraph (C) of paragraph (4)— 
"(i) the dollar limitation of clause (i) thereof shall be 
V
^ of the amount which applies to a joint return where 
both spouses meet the requirements of subsection (bXl)> 
and 
"(ii) the individual shall be deemed to receive social 
security benefits during the taxable year in an amount 
not less than % of the aggr^ate social security benefits 
received by such individual and his spouse during the 
taxable year. 
"(4) ADJUSTED INCOME TAX LIABILITY.—^For purposes of this 
section— 
"(A) IN GENERAL.—The term 'adjusted income tax liabil-
ity' means an amount equal to the income tax liability, 
reduced by the excess (if any) of— 
102 STAT. 696 
PUBLIC LAW 100-360-JULY 1, 1988 
"(i) 15 percent of the governmental retiree exclusion 
amount (if any) determined under subparagraph (C) for 
the taxable year, over 
"(ii) the amount of the credit allowable under section 
22 for the taxable year. 
"(B) INCOBCE TAX LIABILITY.—^The term 'income tax liabil-
ity' means— 
"(i) the tax imposed by this chapter (determined 
without regard to this section), reduced by 
"(ii) the credits allowed under part IV of this sub-
chapter (other than under sections 31, 33, and 34). 
"(C) GOVERNMENTAL RETIREE EXCLUSION AMOUNT.—The 
governmental retiree exclusion amount for any taxable 
year is the lesser of— 
"(i) $6,000 ($9,000 in the case of a joint return where 
both spouses meet the requirements of subsection (bXl) 
for the taxable year), or 
"(ii) the amount which is received as an annuity 
(whether for a period certain or during 1 or more lives) 
under a governmental plan (as defined in the 1st sen-
tence of section 414(d)) and which is includible in gross 
income under section 72 for the taxable year. 
The amount determined under the preceding sentence shall 
be reduced by the social security benefits (as defined in 
section 86(d)) received during the taxable year. 
"(D) INDEXING.—In the case of any taxable year b^in-
ning in a calendar year after 1989, subparagraph (CXi) shall 
be applied by substituting for each doUar amount contained 
in such subparagraph an amount equal to— 
"(i) the dollar amount which would be in effect under 
subparagraph (CXi) for taxable years b^inning in the 
preceding calendar year without r^ard to the last 
sentence of this subparagraph, increased by 
"(ii) the cost-of-living adjustment determined under 
section 215(i) of the Social Security Act for the calendar 
year in which the taxable year begins. 
Any amount determined under the preceding sentence 
shall be rounded to the nearest multiple of $50. 
"(5) QUALIFIED NONRESIDENT.— 
"(A) IN GENERAL.—For purposes of paragraph (1), the 
term 'qualified nonresident' means, with respect to any 
month during the taxable year, any individual if— 
"(i) such individual is not furnished during such 
taxable year or any of the 4 preceding taxable years 
any service for which a claim for payment is made 
under part A of title XVIII of the Social Security Act, 
"(ii) such individual is not entitled to benefits under 
part B of title XVUI of the Social Security Act at any 
time during such taxable year or any of the 4 preceding 
taxable years, and 
"(iii) such individu£d is present in a foreign country 
or countries for at least 330 full days during— 
"(I) the 12-month period ending at the close of 
the taxable year, and 
"(ID each of the 4 consecutive preceding 12-
month periods. 
PUBLIC LAW 100-360—JULY 1, 1988 
102 STAT. 697 
"(B) SPECIAL RULE FOR INDIVIDUALS WHO DIE DURING THE 
TAXABLE YEAR.—An individual who dies during the taxable 
year shall be treated as meeting the requirement of 
subparagraph (AXiiiXD if such individual is present in a 
foreign country or countries for at least a number of full 
days equal to 90 percent of the da3rs during such taxable 
year before the date of death. 
"(6) COORDINATION WITH OTHER PROVISIONS.— 
"(A) NOT TREATED AS MEDICAL EXPENSE.—^For purposes of 
section 213, the supplemental premium imposed by this 
section for any taxaJsle year shall not be treated as an 
expense paid for medical care. 
"(B) NOT TREATED AS TAX FOR CERTAIN PURPOSES.—The 
supplemental premium imposed by this section shall not be 
treated as a tax imposed by this chapter for purposes of 
determining— 
"(i) the amount of any credit allowable under this 
chapter, or 
"(ii) the amount of the minimum tax imposed by 
section 55. 
"(CJ) TREATED AS TAX FOR SUBTITLE F.—For purposes of 
subtitle F, the supplemental premium imposed by this sec-
tion shall be treat«i as if it were a tax imposed by section 1. 
"(D) SECTION 1 5 NOT TO APPLY.—Section 15 shall not apply 
to the supplemental premium imposed by this section. 
"(7) SECTION NOT TO AFFECT LLABBLITY TO POSSESSIONS, ETC.— 
This section shall not apply for purposes of determining liability 
to any possession of the United States. For purposes of sections 
932 and 7654, the supplemental premium imposed by this sec-
tion shall not be treated as a tax imposed by this chapter. 
"(8) SHORT TAXABLE YEARS.—In the case of a taxable year of 
less than 12 months, this section shall be applied imder regula-
tions prescribed by the Secretary." 
(b) INFORMATION REPORTING.— 
(1) Subsection (a) of section 6050F of such (Dode is amended by 26 use 6050F. 
striking "and" at the end of paragraph (1), by redesignating 
paragraph (2) as paragraph (3), and by inserting after paragraph 
(1) the following new paragraph: 
"(2) whether any individual meets the requirements of section 
59B(bXl) with respect to the calendar year (determined without 
regard to section 59B(fXlXBXii)), and". 
(2) Section 6050F(b) of such CJode is amended— 
(A) by inserting "or making the determination imder 
subsection (aX2)" after "payments" in paragraph (1), and 
(B) by inserting "and the information required under 
subsection (aX2)," after "reductions," in paragraph (2). 
(3) Section 6050F(cXlXA) of such (Dode is amended by inserting 
"and the information required under subsection (aX2)" after 
"section 86(dXlXA)". 
(c) CLERICAL AMENDMENT.—^The table of parts for subchapter A of 
chapter 1 of such Code is amended by adding at the end thereof the 
following new item: 
"Part Vm. Supplemental medicare premium." 
(d) ANNOUNCEMENT OF SUPPLEMENTAL PREMIUM RATE.—In the 
26 use 59B note. 
case of calendar year 1993 or any calendar year thereafter— 
102 STAT. 698 
PUBLIC LAW 100-360—JULY 1, 1988 
(1) not later than July 1 of such calendar year, the Secretary 
of the Treasury or his delegate shall make an announcement of 
the estimated supplemental premium rate under section 59B of 
the Internal Revenue Code of 1986 for taxable years beginning 
in the following calendar year, and 
(2) not later than October 1 of such calendar year, the Sec-
retary of the Treasury or his del^ate shall make an announce-
ment of the actual supplemental premium rate under such 
section for such taxable years. 
26 use 59B note. 
(e) EFFECTIVE DATE.— 
(1) IN GENERAL.—^The amendments made by this section shall 
apply to taxable years b^^inning after December 31,1988. 
(2) WAIVER OF ESTIMATED TAX REQUIREMENT FOR YEARS BEGIN-
NING IN 1989.—In the case of a taxable year beginning in 1989, 
the premium imposed by section 59B of the Internal Revenue 
Code of 1986 (as added by this section) shall not be treated as a 
tax for purposes of appl3dng section 6654 of such Code. 
SEC. 112. ESTABLISHMENT OF FEDERAL HOSPITAL INSURANCE CATA-
STROPHIC COVERAGE RESERVE FUND. 
(a) IN GENERAL.—Part A of title XVm is amended by inserting 
after section 1817 the following new section: 
"FEDERAL HOSPITAL INSURANCE CATASTROPHIC COVERAGE RESERVE 
FUND 
42USCi395i-ia. 
"SBC. 1817A. (aXD There is hereby created on the books of the 
Treasury of the United States a trust fund to be known as the 
'Federal Hospital Insurance Catastrophic Coverage Reserve Fund' 
(in this section referred to as the 'Reserve Fund'). The Reserve Fund 
shall consist of such gifts and bequests as may be made as provided 
in section 201(iXl) and amounts appropriated under paragraph (2). 
"(2) There are hereby appropriated to the Reserve Fund, from the 
supplementsd premiums imposed by section 59B of the Internal 
Revenue Code of 1986 attributable to the supplemental catastrophic 
premium rate, amounts equivalent to 100 percent of the amount of 
outlays made under this part attributable to the amendments made 
by the Medicare Cllatastrophic 0}verage Act of 1988. The amoimts 
appropriated by the preceding sentence shall be transferred from 
time to time (not less frequently than monthly) from the general 
fimd in the Treasury to the Reserve Fund, such amounts to be 
determined on the basis of estimates by the Secretary of the Treas-
ury of the premiums, specified in the preceding sentence, paid to or 
deposited into the Treasury and on the basis of outla3rs, specified in 
the previous sentence, made; and proper adjustments shall be made 
in amounts subsequently transferred to the extent prior estimate 
were in excess of or were less than the appropriate amounts speci-
fied in such sentence. At the close of each year, the transfers under 
this subsection shall reflect all premiums (described in this para-
graph) paid or deposited into the Treasury in the year. 
"(3) With respect to monies transferred to the Reserve Fund, no 
transfers, authorizations of appropriations, or appropriations are 
permitted. 
"(b) llie provisions of subsections (b) through (e) of section 1817 
shall apply to the Reserve Fund in the same manner as they apply 
to the FedercQ Hospital Insurance Trust Fund, except that the Board 
of Trustees and Managing Trustee of the Reserve Fund shall be 
composed of the members of the Board of Trustees and the Manag-
PUBLIC LAW 100-360—JULY 1, 1988 
102 STAT. 699 
ing Trustee, respectively, of the Federal Hospital Insurance Trust 
Fund. 
"(c) In this part, with respect to the Reserve Fund, the terms 
'outlays' and 'receipts' mean, with respect to a quarter or other 
period, gross outlays and receipts, as such terms are employed in the 
Monthly Treasury Statement of Receipts and Outlays of the United 
States Government (MTS)', as published by the Department of the 
Treasury, for months in such quarter or other period.". 
(b) bmaiEST ADJUsrafENT.—In July 1990, the Secretary of the 42 use I395i-la 
Treasury shall calculate the interest lost to the Federal Hospital note. 
Insurance Catastrophic Coverage Reserve Fund due to the lag be-
tween the outlays (attributable to the amendments made by this 
Act) from the Federal Hospital Insurance Trust Fund during 1989 
and the transfers made to such Reserve Fund to cover such outlays. 
Appropriations under section 1817A(aX2) of the Social Security Act 
(as inserted by subsection (a)) shall include the amount calciilated 
under the previous sentence. 
SEC. 113. STUDY OF TAX INCENTIVES FOR PURCHASE OF COVERAGE FOR 
LONG-TERM CARE. 
(a) IN GENERAL.—^The Secretary of the Treasury (in this section 
referred to as the "Secretary") shall conduct a study of Federal tax 
policies to promote the private financing of long-term care (as 
defined in subsection (d)). The study shall identify alternative meth-
ods of creating incentives, through the tax system, to encourage 
individuals to purchase insurance coverage for long-term care. The 
study shall also consider the cost to the United States Treasury and 
the potential benefits to consumers, including whether the incen-
tives would benefit all or most of the population requiring protec-
tion. 
(b) CONSULTATION.—The Secretary shall conduct the study re-
quired by subsection (a) in consultation with representatives of the 
insurance industry, providers of long-term care, and consumers. 
(c) REPORT.—The Secretary shall report the results of the study 
required by subsection (a) to the (Congress not later than November 
30, 1988, t(^ether with the Secretary's recommendations for any 
changes in Federal law that the Secretary determines to be appro-
priate to promote the private financing of long-term care. 
(d) LONG-TERM CARE DEFINED.—For purposes of this section, the 
term "long-term care" includes care and services provided by nurs-
ing homes, home health agencies, and other mechanisms for the 
delivery of long-term care services. 
TITLE 
II—PROVISIONS RELATING TO 
PART B OF THE MEDICARE PROGRAM 
AND TO MEDICARE SUPPLEMENTAL 
HEALTH INSURANCE 
Subtitle A—Expansion of Medicare Part B 
Benefits 
SEC 201. UMITATION ON MEDICARE PART B COST-SHARING. 
(a) IN GENERAL.—Section 1833 (42 U.S.C. 13951) is amended— 
102 STAT. 700 
/ 
PUBLIC LAW 100-360-JULY 1, 1988 
(1) in subsection (c)— 
(A) by striking "subsections (a) and (b)" and inserting 
"subsection (a) through (c)", 
(B) by redesignating paragraphs (1) and (2) as subpara-
graphs (A) and (B), 
(C) bv striking "this subsection" and inserting "this para-
graph , and 
(D) by striking "(c)" and inserting "(dXD"; 
(2) by redesi^ating subsection (d) as paragraph (2); 
(3) in subsection (g), by striking "(a) and (b)" and inserting "(a) 
through (c)"; and 
(4) by inserting after subsection (b) the following new subsec-
tion: 
"(cXD Notwithstanding subsections (a) and (b), if an individual has 
incurred out-of-pocket part B cost sharing (as defined in paragraph 
(2)) in a calendair year (bc^ginning with 1990) in an amount equal to 
the part B catastrophic limit (established under paragraph (3)) for 
the year, payment under this part with respect to any additional 
incurred expenses in the calendar year shall be made as i
f
— 
"(A) the deduction described in the second sentence of subsec-
tion (b) (relating to blood) no longer applied, and 
"(B) '100 percent' and '0 percent' were substituted for '80 
percent' and *20 percent', respectively, each place either ap-
pears in subsections (a) and (iX2), in sections 1834(aXlXA), 
1834(eXlXC), 1835(bX2), and 1866(aX2XA), and in subsections 
(bX2) and (bX3) of section 1881, except as such provisions may 
apply to in-home care. 
"(2) Li this subsection, the term 'out-of-pocket part B cost sharing' 
means, with respect to an individual covered under this part, the 
amounts of expenses that the individual incurs that are attributable 
to— 
"(A) the deductions established under subsection (b), and 
"(B) the difference between the payment amount provided 
under this part and the payment amount that would be pro-
vided if '100 percent' and '0 percent' were substituted for *80 
percent' and '20 percent', respectively, each place either ap-
pears in subsections (a) and (iX2), in sections 1834(aXlXA), 
1834(eXlXC), 1835(bX2), and 1866(aX2XA), and in subsections 
0
1
)
X
2
) and (bX3) of section 1881. 
"(3XA) The part B catastrophic limit for 1990 is $1,370. The part B 
catastrophic limit for any succeeding year shall be such an amount 
(rounded to the nearest multiple of $1) as the Secretary estimates 
will result, in that succeeding year, in 7 percent of the average 
number of individuals enrolled under this part (other than individ-
uals enrolled with an eligible organization under section 1876 or an 
oiganization described in subsection (aXlXA)) during the year be-
coming entitled to benefits under this subsection. 
"(B) Not later than September 1 of each year (begmnii^ with 
1990), the Secretary shall promulgate the part B catastrophic limit 
under this paragraph for the succeeding year. 
Contracts. 
"(4) In the case of an organization receiving payment under clause 
(A) of subsection (aXl) or under a reasonable cost reimbursement 
contract under section 1876, in appljdng paragraph (1), the Sec-
retary s h ^ provide for an appropriate adjustment in the payment 
amounts otherwise made to reflect the aggr^ate increase in pay-
ments that would otherwise be made with respect to enrollees in 
'i«i*i^r '".^'^--'^^ 
PUBLIC LAW 100-360—JULY 1, 1988 
102 STAT. 701 
such an organization if payments were made other than under such 
clause or such a contract on an individual-by-individual basis. 
"(5XA) Except as provided in subparagraph (B), expenses incurred 
by a medicare beneficiary for out-of-pocket part B cost-sharing shall 
be counted (consistent with subparagraph (C)) whether or not, at the 
time the expenses were incurred, the beneficiary was enrolled in a 
plan under section 1833(aXlXA) or under section 1876. In this para-
graph, with respect to a medicare beneficiary enrolled in such a 
plan, the term 
'out-of-pocket 
part 
B cost-sharing* includes 
deductibles and coinsurance under the plan for items and services 
covered under this part. 
"(B) In the case of a medicare beneficiary enrolled in a month in a 
buy-out plan (as defined in subparagraph (D))— 
"(i) expenses incurred by the beneficiary for items and serv-
ices reimbursed under the plan shall not be treated as out-of-
pocket part B cost-sharing for purposes of paragraph (1), but 
"(ii) the beneficiary is deemed to have incurred, for each 
month of such enrollment, expenses for out-of-pocket part B 
cost-sharing in an amount equal to the actuarial value (with 
respect to a month in the year involved) of the deductible and 
coinsurance amounts under part B (as computed by the Sec-
retary for purposes of section 1876(eXl), other than with respect 
to covered outpatient drugs) applicable on the average to 
individuals in the United States. 
"(C) The Secreteiry may not enter into a contract with an Contracts. 
organization under section 1876, or provide for payment under 
section 1833(aXlXA) with respect to an organization, with respect to 
a plan that is not a buy-out plan, unless the organization provides 
assurances, satisfactory to the Secretary, that— 
"(i) the organization will maintain and make available, for its 
enroUees and in coordination with the appropriate carriers 
under this part, an accounting of expenses incurred in each 
year under the plan for out-of-pocket part B cost-sharing (as 
defined in subparagraph (A)); and 
"(ii) the organization will not undertake to charge a bene-
ficiary during a year for services for which payment may be 
made under this part (other than for covered outpatient drugs) 
after the individual has incurred (whether through the 
organization or otherwise) out-of-pocket part B cost sharing in 
the year in an amount equal to the part B catastrophic limit 
established under paragraph (1) for the year. 
"(D) In this paragraph, the term 'buy-out plan' means a plan 
under section 1833(aXlXA) or offered by an organization under 
section 1876 and with respect to which— 
"(i) the actuarial vahie of the coinsurance and deductibles 
under the plan with respect to benefits (other than covered 
outpatient drugs) under this title (as determined by the Sec-
retary), 
is less than 50 percent of— 
"(ii) the actuarial value of the coinsurance and deductibles for 
such benefits for all medicare beneficiaries (as determined by 
the Secretary) appUcable on the average to individuals in the 
United States. 
"(E) In this subsection, the term 'medicare beneficiary' means, 
with respect to a month, an individual covered for benefits under 
this part for the month.". 
102 STAT. 702 
PUBLIC LAW 100-360—JULY 1, 1988 
(b) 
LIMITATION 
ON 
CHARGES 
WHEN 
CATASTROPHIC 
LIMIT 
REACHED.—Section 1866(aX2XA) (42 U.S.C. 1395cc(aX2XA)) is 
amended by adding at the end the following new sentence: "A 
provider of services may not impose a charge under the first sen-
tence of this subparagraph for services for which payment is made 
to the provider pursuant to section 1833(c) (relating to catastrophic 
benefits).". 
(c) NoncE F
O
R BENEFICIARIES REACHING CATASTROPHIC LIMIT.— 
Section 1842(bX3) (42 U.S.C. 1395u(bX3)) is amended— 
(1) by striking "and" at the end of subparagraph (G), 
(2) by insert^ig "and" at the end of subparagraph (H), and 
(3) by inserting after subparagraph (H) the following new 
subparagraph: 
"(I) will provide each individual, who is determined to have 
incurred (or has had paid on the individual's behalf) suifficient 
outK>f-pocket part B cost sharing in a calend^u* year to qualify 
for payment for additional incuired expenses to be made pursu-
ant to section 1833(c), with a notice that states that the individ-
ual has reached the part B catastrophic limit on out-of-pocket 
cost sharing for the year;". 
(d) CONFORMING AM^^IMENT.—The second sentence of section 
1866(aX2XA) (42 U.S.C. 1395cc(aX2XA)) is amended by striking 
"1833(c)" and inserting "1833(dXl)". 
SEC. 202. COVERAGE OF CATASTROPHIC EXPENSES FOR PRESCRIPTION 
DRUGS AND INSULIN. 
(a) DESCRIPTION OF COVERED OUTPATIENT DRUGS.—Section 1861 (42 
U.S.C. 1395x) is amended— 
(1) by amending subparagraph (J) of subsection (sX2) to read 
as follows: 
"(J) covered outpatient drugs (as defined in subsection (t)); 
and", and 
(2) in subsection (t)— 
(A) by inserting "and paragraph (2)" after "subsection 
(mX5)", 
(B) by mserting "(1)" after "(t)", and 
(C) by adding at the end the following new paragraphs: 
"(2) Subject to paragraph (3), the term 'covered outpatient drug* 
means— 
"(A) a drug which may be dispensed only upon prescription 
and— 
"(i) which is approved for safety and effectiveness as a 
prescription drug under section 506 or 507 of the Federal 
Food, Drug, and C!osmetic Act or which is approved under 
section 505(j) of such Act; 
"(ii)(D which was commercially used or sold in the United 
States before the date of the enactment of the Drug Amend-
ments of 1962 or which is identical, similar, or related 
(within the meaning of section 310.6(bXl) of title 21 of the 
Code of Federal R^ulations) to such a drug, and (II) which 
has not been the subject of a final determination by the 
Secretary that it is a 'new drug* (within the meaning of 
section 201(p) of the Federal Food, Drug, and Cosmetic Act) 
or an action brought by the Secretary under section 301, 
302(a), or 304(a) of such Act to enforce section 502(f) or 
505(a) of such Act; or 
, r » .r*v'^-S •<'!B^im.< 
"
^ 'J!-'-*i«7rM»g»*-r 
PUBLIC LAW 100-360—JULY 1, 1988 
102 STAT. 703 
"(iiiXD which is described in section 107(cX3) of the Drug 
Amendments of 1962 and for which the Secretary has 
determined there is a compelling justification for its medi-
cal need, or is identical, similar, or related (within the 
meaning of section 310.60aXl) of title 21 of the Code of 
Federal R^ulations) to such a drug, and (11) for which the 
Secretary has not issued a notice of an opportunity for a 
hearing under section 505(e) of the Federal Food, Drug, and 
Cosmetic Act on a proposed order of the Secretary to with-
draw approval of an application for such drug under such 
section because the Secretary has determined that the drug 
is less than effective for all conditions of use prescribed, 
recommended, or suggested in its labeling; 
"(B) a biol(^cal product which— 
"(i) may only be dispensed upon prescription, 
"(ii) is licensed under section 351 of the Public Health 
Service Act, and 
"(iii) is produced at an establishment licensed under such 
section to produce such product; and 
"(C) insulin certified under section 506 of the Federal Food, 
Drug, and Cosmetic Act. 
"(3XA) The term 'covered outpatient drug* does not include any 
drug, biol(^cal product, or insulin provided as, as part of, or as 
incident to, any of the following (and for which payment may be 
included under this title): 
"(i) Inpatient hospital services (described in subsection (bX2)). 
"(ii) Extended care services (described in subsection (hX5)). 
"(iii) Physicians' services under subparagraph (A) or (B) of 
subsection (sX2). 
"(iv) Dialysis supplies under subsection (sX2)(F). 
"(v) Antigens under subsection (sX2XG). 
"(vi) Blood clotting factors for hemophiliacs under subsection 
(sX2XI). 
"(vii) Services of a physician assistant under subsection 
(sX2XKXii). 
"(viii) Pneumococcal, hepatitis B, or influenza vaccines under 
subsection (sXlO). 
"(ix) Rural health clinic services (under subsection (aaXD). 
"(x) Comprehensive outpatient rehabilitation facility services 
(under subsection (ccXD). 
"(xi) Hospice care (as defined in subsection (ddXD). 
"(xii) Certified nurse-midwife service (as defined in subsection 
(ggXD). 
"(xiii) A covered surgical procedure in an ambulatory surgical 
center (under section 1832(aX2XFXi)). 
"(B) With respect to covered outpatient drugs dispensed in 1990, 
the term 'covered outpatient drug* is limited— 
"(i) to drugs described in paragraph (2XA) used in immuno-
suppressive therapy, and 
(ii) to covered home IV drugs (as defined in paragraph (4)). 
"(C) The term 'covered outpatient drug* does not include a drug 
that is intravenously administered in a home setting unless it is a 
covered home IV drug. 
"(4XA) The term 'covered home IV drug* means a covered out-
patient drug dispensed to an individual that— 
102 STAT. 704 
PUBLIC LAW 100-360—JULY 1, 1988 
"(i) is intravenously administered in a place of residence used 
as the individual's home, and 
"(iiXD is an antibiotic drug and the Secretary has not deter-
mined, for the specific drug or for the indication to which it is 
applied, that the drug cannot generally be administered safely 
and effectively in a home setting, or 
"(ID is not an antibiotic d n ^ and the Secretary has deter-
mined, for the specific drug and the indication for which the 
drug is being appUed, that the drug can generally be adminis-
tered safely and effectively in a home setting. 
"(B) Not later than January 1, 1990 (and periodically thereafter), 
the Secretary shall publish a list of the drugs, and indications for 
such drugs, that are covered home IV drugs (as defined in subpara-
graph (A)), with respect to which home intravenous drug therapy 
may be provided under this title.", 
(b) DEDUCTIBLE AND PAYMENT AMOUNTS.—Part B is amended— 
(1) in subsection (aXD of section 1833 (42 U.S.C. 13951(b)), as 
amended by section 411(hX7XAXvXI) of this Act— 
(A) by striking "and" before "(L)", and 
(B) by adding at the end the following: "and (M) with 
respect to expenses incurred for covered outpatient drugs, 
the amounts paid shall be the amounts determined under 
section 1834(cX2)"; 
(2) in subsection (aX2) of such section by inserting "(other 
than covered outpatient drugs)" after "(2) in the case of serv-
ices"; 
(3) in subsection (b) of such section— 
(A) in clause (1), by inserting "or for covered outpatient 
drugs" afl«r "1861(sX10XA)", and 
(B) in clause (2), by inserting "or with respect to covered 
outpatient drugs" after "home health services"; and 
(4) by adding at the end of section 1834 (42 U.S.C. 1395m) the 
following new subsection: 
"(c) PAYMENT FOR COVERED OUTPATIENT DRUGS.— 
"(1) DEDUCTIBLE.— 
"(A) APPUCATION.— 
"(i) IN GENERAL.—Except as provided in clauses (ii) 
and (iii), pajmient shall be made under paragraph (2) 
only with respect to expenses incurred by an individual 
for covered outpatient drugs during a calendar year on 
or after such date in the year as the Secretary deter-
mines that the individual has incurred expenses in the 
year for covered outpatient drugs (during a period in 
which the individual is entitled to benefits under this 
part) equal to the amount of the catastrophic drug 
deductible specified in subparagraph (C) for that year. 
"(ii) DEDUCTIBLE NOT APPLIED FOR POST-HOSPITAL HOME 
INTRAVENOUS DRUG THERAPY.—The catastrophic drug 
deductible established under this paragraph shall not 
apply to covered home IV drugs dispensed in conjunc-
tion with home intravenous drug therapy services 
which are part of a continuous course of such therapy 
initiated while the individual was an inpatient in a 
hospital. 
"(iii) 
DEDUCTIBLE 
NOT 
APPLIED 
TO 
1ST 
YEAR 
IMMUNOSUPPRESSIVES.—The catastrophic drug deduct-
ible established under this paragraph shall not apply to 
' •'.*i?t^'«^-*t%^-*"5g^S5i|f«'» "I'fy^srt -j»." < 
PUBLIC LAW 100-360—JULY 1, 1988 
102 STAT. 705 
drugs described in section 1861(tX2XA) used in immuno-
suppressive therapy and furnished, to an individual 
who receives an organ transplant for which payment is 
made under this title, withm 1 year after the date of 
the transplant. 
"(B) RESPONSE TO APPUCATION.—^If the system described 
in section 1842(oX4) has not been established and an individ-
ual applies to the Secretary to establish that the individual 
has met the requirement of subparagraph (A), the Sec-
retary shall promptly notify the individual (and, if the 
application was submitted by or through a participating 
pharmacy, the pharmacy) as to the date (if any) as of which 
the individual has met such requirement. 
"(C) CATASTROPHIC DRUG DEDUCTIBLE AMOUNT.— 
"(i) IN GENERAL.—Subject to subparagraph (D), the 
catastrophic drug deductible specified in tlus subpara-
graph for— 
"a) 1990 is $550, 
"(ID 1991 is $600, 
, 
"(m) 1992 is $652, and 
"(TV) any succeeding year, is such an amount as 
the Secretary determines will result in 16.8 per-
cent of the average number of individuals covered 
under this part (other than individuals enrolled 
with an eligible organization under section 1876 or 
an organization described in section 1833(aXlXA)) 
during that succeeding year having incurred 
expenses for covered outpatient drugs sufficient to 
meet the catastrophic drug deductible so deter-
mined, 
"(ii) ROUNDING.—Any amount determined under this 
subparagraph which is not a multiple of $1 shall be 
rounded to the nearest multiple of $1. 
"(iii) PuBUCATiON.—Before May 1 of each year 
(b^inning with 1992) the Secretary shall publish in the 
Federal Roister a proposed r^^ulation establishing the 
amount of the catastrophic drug deductible under this 
subparagraph for the following year. During the last 3 
days of September of such year, the Secretary shall 
publish in the Federal Roister the final regulation 
establishing the amount of such deductible for the 
following year, which amount may not be greater than 
the amount specified in the proposed r^ulation. 
"(2) PAYMENT AMOUNT.— 
"(A) IN GENERAL.—Subject to the catastrophic drug 
deductible established under paragraph (IXA) and except as 
provided in subparagraph (C), the amounts payable under 
this part with respect to a covered outpatient drug is equal 
to the payment percent (specified in subparagraph (B)) of 
the lesser o
f
— 
"(i) the actual charge for the drug, or 
"(ii) the applicable payment limit established under 
paragraph (3). 
"(B) PAYMENT PERCENT.—^For purposes of subparagraph 
(A), the payment percent is I
C
K
) percent minus the ap-
plicable coinsurance percent (specified in subparagraph (C)). 
Federal 
Register, 
publication. 
Regulations. 
102 STAT. 706 
PUBLIC LAW 100-360—JULY 1, 1988 
Contracts. 
"(O COINSURANCE PERCENT.—For purposes of subpara-
graph (B), the coinsurance percent— 
"(i) for covered home IV drugs and for drugs de-
scribed in paragraph dXAXiii) (relating to immuno-
suppressive therapy during the 1st year after trans-
plant), is 20 percent; and 
"(ii) for other covered outpatient drugs dispensed— 
"(X) in 1990 or 1991, is 50 percent, 
"(ID in 1992 is 40 percent, and 
"(HI) in 1993 or a succeeding year is 20 percent. 
"(D) 
TREATMENT 
OP 
CERTAIN 
COST-BASED 
PREPAID 
ORGANIZATIONS.—In applying subparagraph (A) in the case 
of an organization under a reasonable cost reimbursement 
contract under section 1876 and in the case of an organiza-
tion receiving payment under section 1833(aXlXA) and 
providing coverage of covered outpatient drugs, the Sec-
retary shall provide for an appropriate adjustment in the 
payment amounts otherwise made to reflect the aggr^ate 
increase in payments that would otherwise be made Mdth 
respect to enrollees in such an organization if payments 
were made other than under such clause or such a contract 
on an individual-by-individual basis. 
*(3) PAYMENT LIMITS.— 
"(A) PAYMENT LIMIT FOR NON-MULTIPLE SOURCE DRUGS AND 
MULTIPLEH30URCE DRUGS WITH RESTRICTIVE PRESCRIPTIONS.— 
In the case of a drug that either is not a multiple source 
drug (as defined in paragraph (9XA)) or is a multiple source 
drug and has a restrictive prescription (as defined in para-
graph (9)(B)), the payment limit for the drug under this 
paragraph for a pajmient calculation period is equal to the 
lesser of— 
"(i) the 90th percentile of the actual charges (com-
puted on a statewide basis, carrier-wide basis, or other 
appropriate geographic area basis, as specified by the 
Secretary) for the drug for the second previous pay-
ment c£dculation period, adjusted (as the Secretary 
determines to be appropriate) to reflect the number of 
tablets (or other dosage units) dispensed; or 
"(ii) the amount of the administrative allowance 
(established under paragraph (4)) plus the product o
f
— 
"(I) the number of t£d)lets (or other dosage units) 
dispensed, and 
(n) the per tablet or unit average wholesale 
price for such drug (as determined under subpara-
graph (C) for the period for purposes of this 
subparagraph); 
except that clause (i) shall not apply to covered outpatient 
drugs dispensed before January 1,1992. 
"©) PAYMENT UMTT FOR MULTIPLE SOURCE DRUGS WITHOUT 
R
E
S
T
R
I
C
T
I
V
E P
R
E
S
C
R
I
P
T
I
O
N
S
.
—
^
I
n the case of a drug that is a 
multiple source drug but does not have a restrictive 
prescription, the payment limit for the drug under this 
paragraph for a payment calculation period is equal to the 
amount of the administrative allowance (established under 
paragraph (4)) plus the product of— 
"(i) the number of tablets (or other dosage units) 
dispensed, and 
' J.- •> t .•» ' 
- S ^ P A ^ - ^ 
PUBLIC LAW 100-360—JULY 1, 1988 
102 STAT. 707 
"(ii) the unweighted median of the per tablet or unit 
average wholesale prices (determined under subpara-
graph (C) for purposes of this subparagraph) for such 
drug for the period. 
"(C) DETERMINATION OF UNIT PRICE.— 
"(i) IN GENERAL.—For purposes of this paragraph, the 
Secretary shall determine, with respect to the dispens-
ing of a covered outpatient drug in a payment calcula-
tion period (beginning on or after January 1, 1990), the 
per tablet or unit average wholesale price for the drug, 
"(ii) BASIS FOR DETERMINATIONS.— 
"(I) DETERMINATION FOR NON-MULTIPLE-SOURCE 
DRUGS.—For purposes of subparagraph (A), such 
determination shall be b£ised on a biannual survey 
conducted by the Secretary of a representative 
sample of direct sellers, wholessders, or pharmacies 
(as appropriate) of wholesale (or comparable direct) 
prices (excluding discounts to pharmacies); except 
that if, because of low volume of sales for the drug 
or other appropriate reasons or in the case of 
covered outpatient drugs during 1990, the Sec-
retary determines that such a survey is not appro-
priate with respect to a specific drug, such 
determination shall be based on published average 
wholesale (or comparable direct) prices for the 
drug. 
"(II) 
DETERMINATION 
FOR 
MULTIPLE-SOURCE 
DRUGS.—For purposes of subparagraph (B), the Sec-
retary may base the determination under this 
subparagraph on the published average wholesale 
(or comparable direct) prices for the drug or on a 
biannual survey conducted by the Secretary of a 
representative sample of direct sellers, whole-
salers, or pharmacists (as appropriate) of wholesale 
(or comparable direct) prices (excluding discounts 
to pharmacies). 
"(Ill) COMPUANCE WITH SURVEY REQUIRED.—If a 
wholesaler or direct seller of a covered outpatient 
drug refuses, after being requested by the Sec-
retary, to provide the information required in a 
survey under this clause, or deliberately provides 
information that is false, the Secretary may impose 
a civil money penalty of not to exceed $10,000 for 
each such refusal or provision of false information. 
The provisions of section 1128A (other than subsec-
tions (a) and 0))) shall apply to civil money pen-
alties under the previous sentence in the same 
manner as such provisions apply to a penalty or 
proceeding under section 1128A(a). Information 
gathered pursuant to the survey shall not be dis-
closed except as the Secretary determines to be 
necessary to carry out the purposes of this part, 
"(iii) QUANTITY AND TIMING.—Such determination 
sheill be based on the price or prices for purchases in 
reasonable quantities and shall be made for a pa3mient 
calculation period based on prices for the first day of 
Law 
enforcement 
and crime. 
Classified 
information. 
102 STAT. 708 
PUBLIC LAW 100-360—JULY 1, 1988 
the first month of the previous payment calculation 
period. 
"(iv) GEOGRAPHIC BASIS.—The Secretary shall make 
such determination, and calculate the payment limits 
under this paragraph, on a national basis; except that 
the Secretary may make such determination, and cal-
culate such payment limits, on a regional basis to take 
account of limitations on the availability of drug prod-
ucts and variations among regions in the average 
wholesale prices for a drug product. 
"(4) ADMINISTRATIVE ALLOWANCE FOR PURPOSES OF PAYMENT 
LIMITS.— 
"(A) IN GENERAL.—Except as provided in subparagraph 
(B), for drugs dispensed in— 
"(i) 1990 or 1991, the administrative allowance under 
this paragraph is— 
"(I) $4.50 for drugs dispensed by a participating 
pharmacy, or 
"(II) $2.50 for drugs dispensed by another phar-
macy; or 
"(ii) a subsequent year, the administrative allowance 
under this paragraph is the administrative allowemce 
under this paragraph for the preceding year increased 
by the percentage increase (if any) in the implicit price 
deflator for gross national product (as published by the 
Department of Commerce in its 'Survey of Current 
Business') over the 12-month period ending with 
August of such preceding year. 
Any allowance determined under the clause (ii) which is not 
a multiple of 1 cent shall be rounded to the nearest mul-
tiple of 1 cent. 
"(B) ADJUSTMENT IN ALLOWANCE FOR MAIL SERVICE PHAR-
MACIES.—The Secretary may, by regulation and after con-
sultation with pharmacists, elderly groups, and private 
insurers, reduce the administrative allowances established 
under subparagraph (A) for any drug dispensed by a mail 
service pharmacy (as defined by the Secretary) based on 
differences between such pharmacies and other pharmacies 
with respect to operating costs and other economies. 
"(5) ASSURING APPROPRIATE PRESCRIBING AND DISPENSING PRAC-
TICES.— 
Healthcare 
"(A) IN GENERAL.—The Secretary shall establish a pro-
professionals, 
gram to identify (and to educate physicians and phar-
macists concerning)— 
"(i) instamces or patterns of unnecessary or inappro-
priate prescribing or dispensing practices for covered 
outpatient drugs, 
"(ii) instances or patterns of substandard care with 
respect to such drugs, and 
(iii) potential adverse reactions. 
"(B) STANDARDS.—In carr3dng out the program under 
subparagraph (A), the Secretary shall establish for each 
covered outpatient drug standards for the prescribing of the 
Safety. 
drug which are based on accepted medical practice. In 
establishing such standards, the Secretary shall incorporate 
standards from such current authoritative compendia as 
the Secretary may select; except that the Secretary may 
PUBLIC LAW 100-360—JULY 1, 1988 
102 STAT. 709 
modify such a standard by regulation on the basis of sci-
entific and medical information that such standard is not 
consistent with the safe and effective use of the drug. 
"(C) PROHIBITION OF FORMULARY.—Nothing in this title 
(including pareigraph (8)), other than sections 1861(t)(4XA) 
and 1862(c), shall be construed as authorizing the Secretary 
to exclude from coverage or to deny pajnnent— 
"(i) for any specific covered outpatient drug, or spe-
cific class of covered outpatient drug, or 
"(ii) for any specific use of such a drug for a specific 
Safety. 
indication unless such exclusion is pursuant to section 
1862(aXl) based on a finding by the Secretary that such 
use is not safe or is not effective. 
"(6) TREATMENT OF CERTAIN PREPAID ORGANIZATIONS.— 
"(A) GENERAL RULE COUNTING PREPAID PLAN EXPENSES 
TOWARDS THE CATASTROPHIC DRUG DEDUCTIBLE.—Except aS 
provided in subparagraph (B), expenses incurred by (or on 
behalf of) a medicare beneficiary for covered outpatient 
drugs shall be counted (consistent with subparagraph (C)) 
toward the catastrophic drug deductible established under 
paragraph (1) whether or not, at the time the expenses were 
incurred, the beneficiary was enrolled in a plan under 
section 1833(a)(lXA) or under section 1876. 
"(B) TREATMENT OF DRUG BUY-OUT PLAN EXPENSES.—In the 
case of a medicare beneficiary enrolled in a month in a drug 
buy-out plan (as defined in subparagraph (D))— 
"(i) expenses incurred by the beneficiary for covered 
outpatient drugs reimbursed under the plan shall not 
be counted towards the catastrophic drug deductible, 
but 
"(ii) if the individual disenroUs from the plan during 
the year, the beneficiary is deemed to have incurred, 
for each month of such enrollment, expenses for cov-
ered outpatient drugs in an amount equal to the 
actuarial value (with respect to such month) of the 
deductible for covered outpatient drugs (as computed 
by the Secretary for purposes of section 1876(eXl)) ap-
plicable on the average to individuals in the United 
States. 
"(C) TREATMENT OF EXPENSES FOR COVERED OUTPATIENT 
DRUGS INCURRED WHILE ENROLLED IN A PREPAID PLAN OTHER 
THAN A DRUG BUY-OUT PLAN.—The Secretary may not enter 
into a contract with an organization under section 1876, or 
provide for payment under section 1833(a)(lXA) with re-
spect to an organization which provides reimbursement for 
covered outpatient drugs, with respect to a plan that is not 
a drug buy-out plein, unless the organization provides assur-
ances, satisfactory to the Secretary, that— 
"(i) the organization will maintain and make avail-
able, for its enroUees and in coordination with the 
appropriate carriers under this part, £in accounting of 
expenses incurred by (or on behalf of) enroUees under 
the plan for covered outpatient drugs; and 
"(ii) the organization will take into account, in any 
deductibles established under the plan in a year with 
respect to covered outpatient drugs under this part, the 
amounts of expenses for covered outpatient drugs in-
102 STAT. 710 
PUBLIC LAW 100-360—JULY 1, 1988 
curred in the year by (or on behalf of) the beneficiary 
and otherwise counted towards the catastrophic drug 
deductible in the year. 
"(D) DRUG BUY-OUT PLAN DEFINED.—In this paragraph, 
the term 'drug buy-out plan' means a plan under section 
1833(aXlXA) or offered by an organization under section 
1876 and with respect to which— 
"(i) the amount of any deductible under the plan with 
respect to covered outpatient drugs under this title, 
is less than 50 percent of— 
"(ii) the catastrophic drug deductible specified in 
paragraph (IXC). 
"(E) MEDICARE BENEFICIARY DEFINED.—In this subsection, 
the term 'medicare beneficiary' means, with respect to a 
month, an individual covered for benefits under this part 
for the month. 
"(F) TREATMENT OF PLAN CHARGES.—In the case of cov-
ered outpatient drugs furnished by an eligible organization 
under section 1876(b) or an organization described in sec-
tion 1833(a)(lXA) which does not impose charges on covered 
outpatient drugs dispensed to its members, for purposes of 
this subsection the actual charges of the organization shall 
be the organization's standard charges to members, and 
other individuals, not entitled to benefits with respect to 
such drugs. 
"(7) PHYSICIAN GUIDE.— 
"(A) IN GENERAL.—The Secretary shall develop, and 
update annually, an information guide for physicians 
concerning the comparative average wholesale prices of at 
least 500 of the most commonly prescribed covered out-
patient drugs. Such guide shall, to the extent practicable, 
group covered outpatient drugs (including multiple source 
drugs) in a manner useful to physicians by therapeutic 
category or with respect to the conditions for which they 
are prescribed. Such guide shall specify the average whole-
sale prices on the basis of the amount of the drug required 
for a typical daily therapeutic regimen. 
"(B) MAIUNG GUIDE.—The Secretary shall provide for 
mailing, in January of each year (beginning with 1991), a 
copy of the guide developed and updated under subpara-
graph (A)— 
"(i) to each hospital with an agreement in effect 
under section 1866, 
"(ii) to each physician (as defined in section 1861(rXl)) 
who routinely provides services under this part, and 
"(iii) to Social Security offices, senior citizen centers, 
and other appropriate places, 
"(8) REPORTS ON OUTLAYS AND RECEIPTS; SPECIAL COST CON-
TROI£.— 
"(A) COMPILATION OF INFORMATION.—The Secretary shall 
compile information on— 
"(i) manufacturers' prices for coveied outpatient 
drugs, and on charges of pharmacists for covered out-
patient drugs, and 
"(ii) the use of covered outpatient drugs by individ-
uals entitled to benefits under this part. 
" "' ^''iflSW'*''^,-"' 
PUBLIC LAW 100-360—JULY 1, 1988 
102 STAT. 711 
The information compiled under clause (i) shall include a 
comparison of the increases in prices and charges for cov-
ered outpatient drugs during each 6 month period (begin-
ning with January 1987) with the semiannual average in-
crease in such prices and charges during the 6 years begin-
ning with 1981. 
"(B) REPORTS.—The Secretary shall submit 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 a report, in May and November of 
1989 and 1990 and in May of each succeeding year, provid-
ing the information compiled under subparagraph (A). For 
each such report submitted after 1991, the report shsdl 
include an explanation of the extent to which the increases 
in outlays for covered outpatient drugs under this part are 
due to the factors described in subparagraphs (A)(i) and 
(A)(ii). 
"(C) 
MONTHLY REPORTS ON OUTLAYS AND RECEIPTS.— 
Within 30 days after the end of each month (beginning with 
October 1991 and ending with April 1993), the Secretary 
shall report to Congress on the outlays and receipts of the 
Federal Catastrophic Drug Insurance Trust Fund (in this 
paragraph referred to as the 'Trust Fund') in the month. 
"(D) BUDGETARY INFORMATION.— 
"(i) IN GENERAL.—In each report submitted under 
subparagraph (B) after 1991, the Secretary shall in-
clude information on— 
"(I) the projected budgetary status of the Trust 
Fund for the succeeding year, 
"(II) the projected increases in manufacturers' 
prices for covered outpatient drugs and in charges 
of pharmacists for covered outpatient drugs, 
"(III) the projected level of utilization of covered 
outpatient drugs by medicare beneficiaries, and 
"(IV) the projected administrative costs relating 
to covered outpatient drugs. 
"(ii) DETERMINATION AND PUBUCATION OF ANY OUTLAY 
CONTROLS FOR 1993 AND 1994.—For each such report in 
1992 and 1993, the Secretary— 
"(I) shall determine in the report whether the 
anticipated outlays and receipts of the Trust Fund 
for the succeeding year will provide for at least 
the minimum contingency margin specified in 
subparagraph (F) for that succeeding year, and 
"(II) if not, shall include in the report (and shall 
publish in the Federal Register by May 1 of the 
year a proposed regulation to carry out) chcmges in 
the provisions of this part (consistent with subpara-
graph (E)) in order to reduce outlays from the 
Trust Fund in that succeeding year sufficiently to 
provide for the minimum contingency margin 
specified in subparsigraph (F). 
Any changes described in subclause (II) in such report 
shall reflect appropriately each of the anticipated 
causes of increased or unanticipated outlays for cov-
ered outpatient drugs. 
Federal 
Register, 
publication. 
Regulations. 
102 STAT. 712 
PUBLIC LAW 100-360—JULY 1, 1988 
Federal 
Register, 
publication. 
"(iii) EFFESCTIVKNESS OP REGULATORY CHANGES.—If 
proposed regulations are published under clause (iiXn) 
in 1992 or 1993, during the last 3 days of September of 
such year, the Secretary shall pubuish in the Federal 
Register a final regulation to implement the changes 
described in such clause. Notwiuistanding any other 
provision of this part, but subject to subparagraph (E) 
and unless otherwise provided by law, such cmmges 
shall become effective on January 1 of the succeeding 
year and shall apply only during that succeeding year. 
Such final regulation may not revise the proposed ren^-
lation in a manner that would result in a greater 
reduction in outlays than would have been the case 
under the proposed regulation. 
"(E) LIMITATION ON CHANGES.—In making r^ulatory 
changes under subparagraph (D), the Secretary may not— 
"(i) provide for a formulary (in violation of paragraph 
(5XC)); 
"(ii) change the methodology for determining 
whether for a year an individual has met the cata-
strophic drug deductible established under paragraph 
(lXA);or 
"(iii) increase the coinsurance percent under para-
graph (2XC) for a year above the coinsurance percent in 
effect during the previous year. 
Clause (ii) shall not be construed as prohibiting the Sec-
retary from increasing the amount of the catastrophic drug 
deductible under paragraph (IXA). 
"(F) MINIMUM CONTINGENCY MARGIN DEFINED.—In this 
paragraph, the term ^minimum contingency margin' 
means— 
"(i) for 1993,50 percent, and 
"(ii) for 1994,25 percent. 
Such margin shall be determined as of the close of each 
calendar year and shall be determined based on the total 
outlays from the Trust Fund during the year. 
*(9) DEFINITIONS.—In this subsection: 
"(A) MULTIPLE SOURCE DRUG.— 
"(i) IN GENERAL.—The term 'multiple source drug* 
means, with respect to a payment calculation period, a 
covered outpatient drug for which there are 2 or more 
drug products which— 
"(I) are rated as therapeutically equivalent 
(under the Food and Drug Administration's most 
recent publication of 'Approved Drug Products 
with Therapeutic Equivalence Evaluations'), 
"(ID except as provided in clause (ii), are 
pharmaceutically equivalent and bioequivalent, as 
defined in clause (iii) and as determined by the 
Food and Drug Administration, and 
"(HI) are sold or marketed during the period. 
"(ii) EXCEPTION.—Subclause (II) of clause (i) shall not 
apply if the Food and Drug Administration changes by 
r^ulation (after an opportunity for public comment of 
90 days) the requirement that, for purposes of the 
publication described in clause (iXD, in order for drug 
products to be rated as therapeutically equivalent 
** ^^i^ 
*'5f~*5:'.s™g5p|^^T- ^ -"^ P -pift" 
PUBLIC LAW 100-360—JULY 1, 1988 
102 STAT. 713 
they 
must be pharmaceutically 
equivalent and 
bioequivalent, as defined in clause (iii). 
"(iii) DEFINITIONS.—For purposes of this subpara-
graph: 
"(I) 
PHARMACEUTICALLY 
EQUIVALENT.—Drug 
products are pharmaceutically equivalent if the 
products contain identical amounts of the same 
active drug ingredient in the same dosage form and 
meet compendial or other applicable standards of 
strength, quality, purity, and identity. 
"(II) BIOEQUIVALENT.—Drugs are bioequivalent if 
they do not present a known or potential 
bioequivalence problem or, if they do present such 
a problem, are shown to meet an appropriate 
standard of bioequivalence. 
"(Ill) SOLD OR MARKETED.—A drug is considered 
to be sold or marketed during a period if it is listed 
in the publications referred to in clause (iXD, 
unless the Secretary determines that such sale or 
marketing is not actually taking place. 
"(B) RESTRICTIVE PRESCRIPTION.—A drug has a 'restrictive 
prescription' only if— 
"(i) in the case of a written prescription, the prescrip-
tion for the drug indicates, in the handwriting of the 
physician or other person prescribing the drug and 
with an appropriate phrase (such as 'brand medically 
necessary') recognized by the Secretary, that the 
particular drug must be dispensed, or 
"(ii) in the case of a prescription issued by tele-
phone— 
"(I) the physician or other person prescribing the 
drug (through use of such an appropriate phrase) 
states that the particular drug must be dispensed, 
and 
"(II) the physician or other person submits to the 
pharmacy involved, within 30 days after the date 
of the telephone prescription, a written confirma-
tion which is in the handwriting of the physician 
or other person prescribing the drug and which 
indicates with such appropriate phrase that the 
particular drug was required to have been dis-
pensed. 
"(C) PAYMENT CALCULATION PERIOD.—The term 'pajonent 
calculation period' means the 6-month period beginning 
with January of each year and the 6-month period begin-
ning with July of each year. 
"(D) 
OUTLAYS; 
RECEIPTS.—The terms 
'outlays' and 
'receipts' mean, with respect to a year or other period, gross 
outlays and receipts, as such terms are employed in the 
'Monthly Treasury Statement of Receipts and Outlays of 
the United States Government (MTS)', as published by the 
Department of the Treasury, for months in such year or 
other period.", 
(c) PARTICIPATING PHARMACIES; CIVIL MONEY PENALTIES.— 
(1) PARTICIPATING PHARMACIES.—Section 1842 (42 U.S.C. 
1395t) is amended— 
42USCi395u. 
102 STAT. 714 
PUBLIC LAW 100-360—JULY 1, 1988 
(A) in subsection (hXD, by inserting before the period at 
the end of the second sentence the following: ", except that, 
with respect to a supplier of covered outpatient drugs, the 
term 'participating supplier' means a participating phJar-
macy (as defined in subsection (oXD)"; 
(B) in subsection (hX4), is amended by adding at the end 
the following: "In publishing directories under this para-
graph, the Secretaiy shall provide for separate directories 
(wherever appropriate) for participating pharmacies."; and 
(C) by adding at the end the following new subsection: 
"(oXD For purposes of this section, the term 'participating phar-
macy* means, with respect to covered outpatient drugs dispensed on 
or after January 1,1991, an entity which is authorized under a State 
law to dispense covered outpatient drugs and which has entered into 
an agreement with the Secretary, providing at least the following: 
"(A) The entity agrees to accept payment under this part on 
an assignment-related basis for all covered outpatient drugs 
dispensed to an individual entitled to benefits under this part 
(in this subsection referred to as a 'medicare beneficiary') during 
a year after— 
"(i) the Secretary has notified the entity, through the 
electronic system described in subparagraph (DXi), or 
"(ii) in the absence of such a system, the entity is other-
wise notified that the Secretary has determined, 
that the individual has met the catastrophic drug deductible 
with respect to such drugs under section 1834(cXl) for the year. 
"(B) The entity agrees— 
"(i) not to refuse to dispense covered outpatient drugs 
stocked by the entity to any medicare beneficiary, and 
"(ii) not to chai:ge medicare beneficiaries (r^ardless of 
whether or not the beneficiaries are enrolled under a pre-
paid health plan or with eligible organization under section 
1876) more for such drugs than the amount it chafes to the 
general public (as determined by the Secretary in r^ula-
tions). 
"(C) The entity agrees to keep patient records (including 
records on expenses) for all covered outpatient drugs dispensed 
to £dl medic£u:« beneficiaries. 
"(D) The entity agrees to submit information (in a manner 
specified by the Secretary to be necessary to administer this 
title) on all purchases of covered outpatient drugs dispensed to 
medicare beneficiaries. 
"(E) The entity agrees— 
"(i) to offer to counsel, or to offer to provide information 
(consistent with State law respecting the provision of such 
information) to, each medicare beneficiaiy on the appro-
priate use of a drug to be dispensed and whether there are 
potential interactions between the drug and other drugs 
dispensed to the beneficiary; and 
' (ii) to advise the beneficiary on the availability (consist-
ent with State laws respecting substitution of drugs) of 
therapeutically equivalent covered outpatient drugs. 
"(F) The entity agrees to provide the information requested by 
the Secretary in surveys under section 1834(cX3XCXii)-
Nothing in this paragraph shall be construed as requiring a phar-
macy operated by an eligible organization (described in scK^tion 
1876(b)) or an organization described in section 1833(aXlXA) for the 
ii^' 
-
PUBLIC LAW 100-360—JULY 1, 1988 
102 STAT. 715 
exclusive benefit of its members to dispense covered outpatient 
drugs to individuals who are not members of the organization. 
"(2) The Secretary shall provide to each participating pharmacy— 
"(A) a distinctive emblem (suitable for display to the public) 
indicating that the pharmacy is a participating pharmacy, and 
"(B) upon request, such electronic equipment and technical Claims. 
assistance (other than the costs of obtaining, maintaining, or 
expanding telephone service) as the Secretary determines may 
be necessary for the pharmacy to submit claims using the 
electronic system established under paragraph (4). 
"(3) The Secretary shall provide for periodic audits of participat-
ing pharmacies to assure— 
"(A) compliance with the requirements for participation 
under this title, and 
"(B) the accuracy of information submitted by the pharmacies 
under this title. 
"(4) The Secretary shall establish, by not later than January 1, 
1991, a point-of-sale electronic system for use by carriers and partici-
pating pharmacies in the submission of information respecting cov-
ered outpatient drugs dispensed to medicare beneficiaries under this 
part. 
"(5) Notwithstanding subsection (bX3XB), pajmient for covered 
outpatient drugs may be made on the bsisis of an assignment 
described in clause (ii) of that subsection only to a participating 
pharmacy.". 
(2) CIVIL MONEY PENALTIES FOR VIOLATION OF PARTICIPATION 
AGREEMENT, FOR EXCESSIVE CHARGES FOR NONPARTICIPATING 
PHARMACIES AND FOR FAILURE TO PROVIDE SURVEY INFORMA-
TION.—Section 1128A(a) (42 U.S.C. 1320a-7a(a)) is amended— 
(A) by striking "or" at the end of paragraph (1), 
(B) in paragraph (2XC), by inserting "or to be a participat-
ing pharmacy under section 1842(o)" after "1842(hXl)", 
(C) by striking ", or" at the end of paragraph (2) and 
inserting a semicolon, 
(D) by adding "or" at the end of paragraph (3), and 
(E) by inserting after paragraph (3) the following new 
paragraph: 
"(4) in the case of a participating or nonparticipating phar-
macy (as defined for purposes of part B of title XVIII)— 
"(A) presents or causes to be presented to any person a 
request for payment for covered outpatient drugs dispensed 
to an individual entitled to benefits under part B of title 
XVIII and for which the amount charged by the pharmacy 
is greater than the amount the pharmacy charges the 
general public (as determined by the Secretary in regula-
tions), or 
"(B) fails to provide the information requested by the 
Secretary in a survey under section 1834(cX3XCXii);". 
(d) LIMITATION ON LENGTH OF PRESCRIPTION,—Section 1862(c) (42 
U.S.C. 1395y(c)) is amended— 
(1) by redesignating subparagraphs (A) through (D) of para-
graph (1) as clauses (i) through (iv), respectively; 
(2) in paragraph (2XA), by striking "paragraph (1)" and insert-
ing "subparagraph (A)"; 
(3) by redesignating subparagraphs (A) and (B) of paragraph 
(2) as clauses (i) and (ii), respectively; 
Science and 
technology. 
Communications 
and tele-
communications. 
102 STAT. 716 
PUBLIC LAW 100-360—JULY 1, 1988 
(4) by redesignating paragraphs (1) and (2) as subparagraphs 
(A) and (B), respectively; 
(5) by inserting "(1)" after "(0"; and 
(6) by adding at the end the following new paragraph: 
"(2) No payment may be made under part B for any expense 
incurred for a covered outpatient drug if the drug is dispensed in a 
quantity exceeding a supply of 30 days or such longer period of time 
(not to exceed 90 days, except in exceptional circumstances) as the 
Secretary may authorize.". 
(e) USE OF CARRIESS, FISCAL INTERMEDIABIES, AND OTHER ENTITIES 
IN ADMINISTRATION.— 
(1) AUTHORIZING USE OF OTHER ENTITIES IN ELECTRONIC CLAIMS 
SYSTEM.—Section 1842(f) (42 U.S.C. 1395u(f)) is amended— 
(A) by striking "and" at the end of paragraph (1), 
(B) by striking the period at the end of paragraph (2) and 
inserting "; and', and 
(C) by adding at the end the following new paragraph: 
"(3) with respect to implementation and operation (and re-
lated functions) of the electronic sjrstem established under 
subsection (oX4), a voluntary association, corporation, partner-
ship, or other nongovernmental organization, which the Sec-
retary determines to be qualified to conduct such activities.". 
(2) ADDITIONAL FUNCTIONS OF CARRIERS.—Section 1842(bX3) (42 
U.S.C. 1395u(bX3)), as amended by section 201(c) of this Act, is 
amended— 
(A) by striking "and" at the end of subparagraph (H), and 
(B) by inserting after subparagraph (I) the following new 
subparagraphs: 
"(J) if it makes determinations or payments with respect to 
covered outpatient drugs, will— 
"(i) receive information transmitted under the electronic 
system est£d)lished under subsection (oX4), and 
"(ii) respond to requests by participating pharmacies (and 
individuals entitled to benefits under this part) as to 
whether or not such an individual has met the catastrophic 
drug deductible established under section 1834(cXlXA) tor a 
year; and 
Ckintracts. 
"(K) will enter into such contracts with organizations de-
scribed in subsection (fX3) as the Secretary determines may be 
necessary to implement and operate (and for related functions 
with respect to) the electronic system established under subsec-
tion (oX4) for covered outpatient drugs under this part;". 
(3) SPECIAL CONTRACT PROVISIONS FOR ELECTRONIC CLAIMS 
SYSTEM.— 
(A) PAYMENT ON OTHER THAN A COST BASIS.—Section 
1842(cXlXA) (42 U.S.C. 1395u(cXlXA)) is amended— 
(i) by inserting "(i)" after "(cXlXA)", 
(ii) in the first sentence, by inserting ", except as 
provided in clause (ii)," after "under this part, and", 
and 
(iii) by adding at the end the following new clause: 
"(ii) To the extent that a contract under this section provides for 
implementation and operation (and related functions) of the elec-
tronic system established imder subsection (oX4) for covered out-
patient drugs, tiie Secretary may provide for payment for such 
activities \xaed on any method of payment determined by the 
Secretary to be appropriate.". 
PUBLIC LAW 100-360—JULY 1, 1988 
102 STAT. 717 
(B) APPUCATION OF DIFFERENT PERFORMANCE STAND-
ARDS.—The Secretary of Health and Human Services, 
before entering into contracts under section 1842 of the 
Social Security Act with respect to the implementation and 
operation (and related functions) of the electronic system 
for covered outpatient drugs, shall est,ablish standards with 
respect to performance with respect to such activities. The 
provisions of section 1153(eX2), and paragraphs (1) and (2) of 
section 1153(h), of such Act shall apply to such activities in 
the same manner as they apply to contracts with peer 
review organizations, instead of the requirements of the 
last 2 sentences of section 1842(bX2) of such Act. 
(C) USE OF REGIONAL CARRIERS.—Section 1842(bX2) is 
amended by adding at the end the following new sentence: 
"With respect to activities relating to implementation and 
operation (and related functions) of the electronic system 
established under subsection (oX4), the Secretary may enter 
into contracts with carriers under this section to perform 
such activities on a regional basis.". 
(4) ADJUSTMENT OF CARRIER OBUGATIONS.— 
(A) NO TOLL-FREE TELEPHONE NUMBER REQUIRED OF UM-
ITED CARRIERS.—Section 1842(hX2) (42 U.S.C. 1395u(hX2)) is 
amended by inserting "(other than a carrier described in 
subsection (fK3))" after "Each carrier". 
(B) DELAY IN APPUCATION OF COORDINATED BENEFITS WITH 
MEDiGAP.—The provisions of subparagraph (B) of section 
1842(hX3) of the Social Security Act shall not apply to 
covered outpatient drugs (other than drugs described in 
section 1861(sX2XJ) of such Act as of the date of the enact-
ment of this Act) dispensed before January 1,1993. 
(5) BATCH PROMPT PROCESSING OF CLAIMS.—Section 1842(c) (42 
U.S.C. 1395u(c)) is amended— 
(A) in paragraphs (2XA) and (3XA), by striking "Each" 
and inserting "Except as provided in pareigraph (3), each"; 
(B) by adding at the end the following new paragraph: 
"(4XA) Each contract under this section which provides for the 
disbursement of funds, as described in subsection (aXlXB), with 
respect to claims for payment for covered outpatient drugs shall 
provide for a payment cycle under which each carrier will, on a 
monthly basis, make a payment with respect to all claims which 
were received and approved for payment in the period since the 
most recent date on which such a pa3mient was made with respect to 
the participating pharmacy or individual submitting the claim. 
"(B) If payment is not issued, mailed, or otherwise transmitted 
within 5 days of when such a pajmient is required to be made under 
subparagraph (A), interest shall be paid at the rate used for pur-
poses of section 3902(a) of title 31, United States Code (relating to 
interest penalties for fgdlure to make prompt pa3mients) for the 
period beginning on the day after such 5-day period and ending on 
the date on which payment is made.", 
(f) MODIFICATION OF HMO/CMP (DONTRACTS.— 
(1) SEPARATE ACTUARIAL DETERMINATION FOR COVERED OUT-
PATIENT 
DRUG 
BENEFIT.—Section 
1876(eXl) 
(42 U.S.C. 
1395mm(eXl)) is amended by adding at the end thereof the 
following new sentence: "The preceding sentence shall be ap-
plied separately with respect to covered outpatient drugs. . 
Contracts. 
42 u s e 1395u 
note. 
Contracts. 
42 u s e 1395u 
note. 
Contracts. 
Claims. 
102 STAT. 718 
PUBLIC LAW 100-360—JULY 1, 1988 
Law 
enforcement and 
(2) ADDITIONAL OPTIONAL BENEFITS.—Section 1876(gX3XA) (42 
U.S.C. 1395mm(gX3XA)) is amended by striking '^ate" and 
inserting "rates". 
(g) REQUIRING SUBMISSION OF DIAGNOSTIC INFORMATION.—Section 
1842 (42 U.S.C. 1395u), as amended by subsection (cXlXC), is 
amended by adding at the end the following new subsection: 
Health care 
"(pXD Each request for pajrment, or bill submitted, for an item or 
professionals. 
service fumished by a physician for which payment may be made 
under this part shall include the appropriate diagnosis code (or 
codes) as established by the Secretaiy for such item or service. 
"(2) In the case of a request for payment for an item or service 
furnished by a physician on an assignment-related basis which does 
not include the code (or codes) required under paragraph (1), pay-
ment may be denied under this part. 
"(3) In the case of a request for pajmient for an item or service 
furnished by a physician not submitted on an assignment-related 
basis and which does not include the code (or codes) required under 
paragraph (1)— 
"(A) if the physician knowingly and willfully fails to provide 
the code (or codes) promptly upon request of the Secret^uy or a 
carrier, the phjrsician may be subject to a civil money penalty in 
an amoimt not 
to 
exceed $2,000, and 
"(B) if the physician knowingly, willfully, and in repeated 
cases faOs, after being notified by the Secretary of the obliga-
tions and requiremente of this subsection, to include the code (or 
codes) required under paragraph (1), the physician may be 
subject to the sanction described in section 18420'X2XA). 
The provisions of section 1128A (other than subsections (a) and (b)) 
shall apply to civil money penalties under subparagraph (A) in the 
same manner as they apply to a penalty or proceeding under section 
1128A(a).". 
(h) CONFORMING AMENDMENTS.— 
(1) The first sentence of section 1866(aX2XA) (42 U.S.C. 
1395cc(aX2XA)) is amended— 
(A) by inserting "1834(c)," after "1833(b),", and 
(B) by inserting "and in the case of covered outpatient 
drugs, applicable coinsurance percent (specified in section 
1834(cX2XC)) of the lesser of the actual charges for the drugs 
or the payment limit (esteblished under section 1834(cX3))" 
after "esteblished by the Secretery". 
(2) Section 1903(iX5) (42 U.S.C. 1396b(iX5)) is amended by 
striking "section 1862(c)" and inserting "section 1862(cXl)". 
42 u s e 1395m 
(i) REPORTS ON MEDICARE BENEFICIARY D R U G EXPENSES.— 
note. 
(1) HHS.—The Secreteiy of Health and Human Services, by 
not later than April 1,1989— 
(A) using date from the 1987 National Medical Expendi-
tures Survey (conducted by the National Center for He£dth 
Services Research and Health Care Technology Assess-
ment), shall report to Congress on expenses incurred by 
medicare beneficiaries for outpatient prescription drugs, 
and 
(B) shall provide the Director of the Congressional Budget 
Office with such date from that Survey as the Director 
may request to make the estimates required under para-
graph (2). 
(2) REESTIMATION OF COSTS.—The Director of the Congres-
sional Budget Office shall transmit to the Congress, not later 
Drugs and drug 
abuse. 
PUBLIC LAW 100-360—JULY 1, 1988 
102 STAT. 719 
than June 1,1989, or, if later, 60 days after the date of providing 
data requested under paragraph (IXB), the Director's estimate 
of the outlays which wHl be made (in each of fiscal years 1990, 
1991, 1992, and 1993) under the medicare program for covered 
outpatient drugs (under the amendments made by this section), 
(j) PRESCRipnoN DRUG PAYMENT REVIEW (Ik)MMissiON.—Part B is 
amended by adding at the end the following new section: 
Reports. 
PRESCRIPTION DRUG PAYMENT REVIEW COMMISSION 
"SEC. 1847. (aXD The Director of the Congressional Office of 42 use i395w-3. 
Technol<^y Assessment (in this section referred to as the 'Director' 
and the 'Office', respectively) shall provide for the appointment of a 
Prescription Drug Payment Review Commission (in this section 
referred to as the 'Commission'), to be composed of individuals with 
expertise in the provision and financing of covered outpatient drugs 
appointed by the Director (without regsuxl to the provisions of title 5, 
United States Code, governing appointments in the competitive 
service). 
"(2) The Commission shall consist of 11 individuals. Members of 
the (Jommission shall first be appointed by no later than January 1, 
1989, for a term of 3 years, except that the Director may provide 
initially for such shorter terms as will insure that (on a continuing 
basis) the terms of no more than 4 members expire in any one year. 
"(3) The membership of the Commission shall include recc^nized 
experts in the fielcte of health care economics, medicine, pharmacol-
ogy, pharmacy, and prescription drug reimbursement, as well as at 
least one individual who is a medicare beneficiary. 
"(bXD The (Commission shall submit to 0)ngress an annual report 
no later than May 1 of each year, b^inning with 1990, concerning 
methods of determining payment for covered outpatient drugs 
under this part. 
"(2) Such report, in 1992 and thereafter, shall include, with re-
spect to the previous year, information on— 
"(A) increases in manufacturers' prices for covered outpatient 
drugs and in charges of pharmacists for covered outpatient 
drugs, 
"(B) the level of utilization of covered outpatient drugs by 
medicare beneficiaries, and 
"(C) administrative costs relating to covered outpatient drugs. 
"(3) Such report, in 1992 and thereafter, shall include comments 
on the budgetary status of the Federal dJatastrophic Drug Insurance 
Trust Fund and recommendations for any reductions in outlays that 
may be required to achieve the contingency margin (established 
under section 1841A(d) for the following year), taking into account 
each of the causes of increased or unanticipated outlays for covered 
outpatient drugs in the year. 
"(c) Section 1845(cXl) shall apply to the (Dommission in the same 
maimer as it applies to the Physician Payment Review (Dommission. 
"(d) There are authorized to be appropriated such sums as may be 
necessary to carry out the provisions of this section. Such sums shall 
be payable from the Federal (Ilatastrophic Drug Insuremce Trust 
Fund.'^'. 
(k) ADDITIONAL STUDIES.— 
(1) HHS.—^The Secretary of Health and Human Services (in 
this section referred to as the "Secretary") shall conduct tie 
Appropriation 
authorization. 
Reports. 
42 u s e 1395m 
note. 
102 STAT. 720 
PUBLIC LAW 100-360—JULY 1, 1988 
Diseases. 
Mail. 
Records. 
42 u s e 1395m 
note. 
following studies, and report to Congress on the results of each 
such study by the following dates: 
(A) A study of the possibility of including drugs which 
have not yet been approved under section 505 or 507 of the 
Federal Food, Drug, and Cosmetic Act and biological prod-
ucts which have not been licensed under section 351 of the 
Public Health Service Act but which are commonly used in 
the treatment of cancer or in immunosuppressive therapy 
and other experimental drugs and biological products as 
covered outpatient drugs under the medicare prc^am, for 
which a report shall be made by January 1,1990. The study 
under this subparagraph shall be conducted in consultation 
with an advisory board of consumers, experts in the fields 
of cancer chemotherapy and immunosuppressive therapy, 
representatives of pharmaceutical manufacturers, and such 
other individuals as the Secretary may select. 
(B) A study to evaluate the potential to use mail service 
pharmacies to reduce costs to the medicare program and to 
medicare beneficiaries, for which a report shall be made by 
January 1,1990. 
(C) A study of methods to improve utilization review of 
covered outpatient drugs, for which a report shall be 
made by January 1,1993. 
(D) A longitudinal study, to be conducted as a follow-up to 
the data collected under the survey referred to in sul^ec-
tion (iXlXA), on the use of outpatient prescription drugs by 
medicare beneficiaries with respect to medical necessity, 
potential for adverse drug interactions, cost (including 
whether lower cost drugs could have been used), and pa-
tient stockpiling or wastage, for which a report shall be 
made by January 1,1993. 
(2) GAO.—The Comptroller General shall conduct the follow-
ing studies, and report to Congress on the results of each such 
study by not later than May 1,1991: 
(A) A study comparing average wholesale prices with 
actual pharmacy acquisition costs by type of pharmacy. 
(B) A study to determine the overhead costs of retail 
pharmacies. 
(C) A study of the discounts given by pharmacies to other 
third-party insurers. 
Pharmacies which fail to provide the Comptroller General with 
reasonable access to necessaiy records to carry out the studies 
under this paragraph are subject to exclusion from the medi-
care and medicaid programs under section 1128(a) of the Social 
Security Act. 
(1) DEVELOPMENT OF STANDARD MEDICARE CLAIMS FORM.— 
(1) TTie Secretary shaU develop, in consultation with rep-
resentatives of pharmacies and other interested individuals, a 
standard claims form (and a standard electronic claims format) 
to be used in requests for payment for covered outpatient drugs 
under the medicare program and other third-party payors. 
(2) Not later than October 1,1989, the Secretary shall distrib-
ute official sample copies of the format developed under para-
graph (1) to pharmacies and other interested psurties and by not 
kiter than October 1,1990, shall distribute official sample copies 
of the form developed under paragraph (1) to pharmacies and 
other interested parties. 
PUBLIC LAW 100-360—JULY 1, 1988 
102 STAT. 721 
(m) EFFECTIVE DATES.— 
42USC1395U 
(1) IN GENERAL.—Except as otherwise provided in this subsec- ^^ote. 
tion, the amendments made by this section shall apply to items 
dispensed on or after Jsinuary 1,1990. 
(2) CARRIERS.—The amendments made by subsection (e) shall 
teike effect on the date of the enactment of this Act; except that 
the eunendments made by subsection (eX5) shall take effect on 
January 1, 1991, but shall not be construed as requiring pay-
ment before February 1,1991. 
(3) HMO/CMP ENROiXMENTS.—The amendment made by 
subsection (f) shall apply to enrollments effected on or after 
January 1,1990. 
(4) DIAGNOSTIC CODING.—The amendment made by subsection 
(g) shall apply to services furnished after March 31, 1989. 
(5) TRANSITION.—With respect to administrative expenses 
(and costs of the Prescription Drug Pajmaent Review Commis-
sion) for periods before January 1, 1990, amounts otherwise 
payable from the Federal Catastrophic Drug Insurance Trust 
Fund shall be payable from the Federal Supplementary Medical 
Insurance Trust Fund and shall also be treated as a debit to the 
Medicare Catastrophic Coverage Account. 
SEC. 203. COVERAGE OF HOME INTRAVENOUS DRUG THERAPY SERVICES. 
(a) IN GENERAL.—Section 1832(aX2XA) (42 U.S.C. 1395k(aX2XA)) is 
amended by inserting "and home intravenous drug therapy serv-
ices" before the semicolon. 
(b) HOME INTRAVENOUS DRUG THERAPY SERVICES DEFINED.—Sec-
tion 1861 (42 U.S.C. 1395x) is amended by adding at the end the 
following new subsection: 
"(jjXD The term 'home intravenous drug therapy services' means 
the items and services described in parg^aph (2) furnished to an 
individual who is under the care of a physician— 
"(A) in a place of residence used as such individued's home; 
"(B) by a quedified home intravenous drug therapy provider 
(as defined in paragraph (3)) or by others under arrangements 
with them made by such provider; and 
"(C) under a pl£ui established and periodically reviewed by a 
physician. 
"(2) The items and services described in this paragraph are such 
nursing, pharmacy, and related services (including medical supplies, 
intravenous fluids, delivery, and equipment) as are necessary to 
conduct safely and effectively an intravenously administered drug 
regimen through use of a covered home IV drug (as defined in 
subsection (tX4)), but do not include such covered outpatient drugs. 
"(3) The term 'qualified home intravenous drug therapy provider' 
means any entity that the Secretary determines meets the following 
requirements: 
"(i) The entity is capable of providing or arranging for the 
items and services described in paragraph (2) and covered home 
IV drugs. 
"(ii) The entity maintains clinical records on all patients, 
"(iii) The entity adheres to written protocols and policies with 
respect to the provision of items and services. 
' (iv) The entity makes services available (as needed) seven 
davs a week on a 24-hour basis. 
(v) The entity coordinates all services with the patient's 
physician. 
102 STAT. 722 
PUBLIC LAW 100-360—JULY 1, 1988 
42 u s e 1395m. 
Regulations. 
"(vi) The entity conducts a quality assessment and assurance 
program, including drug r^imen review and coordination of 
patient care. 
"(vii) The entity assures that only trained personnel provide 
covered home IV drugs (and any other service for which train-
ing is required to safely provide the service). 
'(viii) The entity assumes responsibility for the quality of 
services provided by others under arrangements with the 
agency or entity. 
"(ix) In the case of an entity in any State in which State or 
applicable local law provides for the licensing of entities of this 
nature, (0 is licensed pursuant to such law, or (U) is approved, 
by the agency of such State or locality responsible for licensing 
entities of this nature, as meeting the standards established for 
such licensing. 
"(x) The entity meets such other requirements as the Sec-
retary may determine are necessary to assure the safe and 
effective provision of home intravenous drug therapy services 
and the efficient administration of the home intravenous drug 
therapy benefit.", 
(c) PAYMENT.— 
(1) IN GENERAL.—Part B is amended— 
(A) in subsection (aX2XB) of section 1833 (42 U.S.C. 13951), 
by striking "or (E)" and inserting "(E), or (F)"; 
(B) in subsection (aX2)(D) of such section, by striking 
"and" at the end; 
(C) in subsection (aX2)(E) of such section, by striking the 
semicolon and inserting "; and"; 
(D) by inserting after subsection (aX2)(E) of such section 
the following new subparagraph: 
"(F) with respect to home intravenous drug therapy serv-
ices, the amounts described in section 1834(dXl);"; 
(E) in subsection (b) of such section, by striking "services, 
(3)" and inserting "services and home intravenous drug 
therapy services, (3)"; and 
(F) by adding at the end of section 1834, as amended by 
section 202(bX4) of this Act, the following new subsection: 
"(d) HOME INTRAVENOUS DRUG THERAPY SERVICES.— 
"(1) IN GENERAL.—With respect to home intravenous drug 
therapy services, subject to paragraph (3), payment under this 
part shall be made in an amount equal to the lesser of the 
actual charges for such services or the fee schedule established 
under paragraph (2). 
"(2) ESTABLISHMENT OP FEE SCHEDULE.—The Secretary shall 
establish by r^ulation before the b^inning of calendar year 
1990 and each succeeding calendar year a fee schedule for home 
intravenous drug therapy services for which payment is made 
under this part. A fee schedule established under this subsec-
tion shall be on a per diem basis. 
"(3) LIMITATION ON ACCEPTANCE OF, AND PAYMENTS FOR, CER-
TAIN REFERRAL£I.— 
"(A) IN GENERAL.—Except as provided in subparagraph 
(B), a home intravenous drug therapy provider may not 
provide home intravenous drug therapy services under this 
part to an individual if the individual's referring physician 
(as defined in subparagraph (D)), or an immediate family 
member of the physician— 
PUBLIC LAW 100-360—JULY 1, 1988 
102 STAT. 723 
"(i) has an ownership interest in the provider, or 
"(ii) receives compensation from the provider. 
"(B) EXCEPTIONS.— 
"(i) Subparagraph (AXi) shedl not apply— 
"(I) if the ownership interest is the ownership of 
stock which is traded over a publicly-regulated 
exchange and was purchased on terms generally 
available to the public, or 
"(II) if the provider is a sole home intravenous 
drug therapy provider (as defined by the Secretary) 
in a rural area, 
"(ii) Subparagraph (AXii) shall not apply if the com-
pensation is reasonably related to items or services 
actually provided by the physician and does not vary in 
proportion to the number of referrals made by the 
referring physician, but such exception shall not 
apply to compensation provided for direct patient care 
services. 
"(iii) Subparagraph (A) shall not be construed to 
apply to a referring physician whose only ownership or 
financial relationship with the provider is as an im-
compensated officer or director of the provider. 
"(iv) Subparagraph (A) also shall not apply in such 
cases, established by the Secretary in regulations, in 
which the nature of the ownership or compensation 
does not pose a substantial risk of program abuse. 
"(C) SANCTIONS.— 
"(i) DENIAL OP PAYMENT.—No pa3niient may be made 
under this part for home intravenous drug therapy 
services which are provided in violation of subpara-
graph (A). 
"(ii) CIVIL MONEY PENALTY FOR IMPROPER CLAIMS.— 
Any person (including a home intravenous drug ther-
apy provider or physician) that presents or causes to be 
presented a claim for an item or service that such 
person knows or should know is for an item or service 
for which pajonent may not be made under subpara-
graph (A) shall be subject to a civil money penalty of 
not more than $15,000 for each such item or service. 
The provisions of section 1128A (other than the first 
sentence of subsection (a) and other than subsection (Jb)) 
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). 
"(D) REFERRING PHYSICIAN DEFINED.—In this paragraph, 
the term 'referring physician' means, with respect to 
providing home intravenous drug therapy services to an 
individual, a physician who— 
"(i) prescribed the covered home IV drug for which 
the services are to be provided, or 
"(ii) established the plan of care for such services.". 
(2) PROPAC STUDY.—The Prospective Payment Assessment 42 use I395ww 
Commission shall conduct a study, and make recommendations ^°^^-
to Congress and the Secretary of Health and Human Services by 
not later than March 1, 1991, concerning appropriate adjust-
ment to the payment amounts provided under section 1886(d) of 
the Social Security Act for inpatient hospital services to account 
102 STAT. 724 
PUBLIC LAW 100-360-JULY 1, 1988 
Health care 
professionals. 
Law 
enforcement and 
crime. 
for reduced costs to hospitals resulting from the amendments 
made by this section. 
(3) 
INSPECTOR GENERAL REPORT ON POTENTIALLY ABUSIVE 
OWNERSHIP O
R COMPENSATION ARRANGEMENTS.—The Inspector 
General of the Department of Health and Human Services shall 
study and report to CJongress, by not later than May 1, 1989, 
concerning— 
(A) physician ownership of, or compensation from, an 
entity providing items or services to which the physician 
makes referrals and for which pa3anent may be made under 
the medicare program; 
(B) the range of such arrangements and the means by 
which they are marketed to physicians; 
(C) the potential of such ownership or compensation to 
influence the decision of a physician regarding referrals 
and to lead to inappropriate utilization of such items and 
services; and 
(D) the practical difficulties involved in enforcement ac-
tions against such ownership and compensation arrange-
ments that violate current antikickback provisions. 
Such report shall include such recommendations as may be 
appropriate to strengthen current law provisions to prevent 
program abuse, 
(d) CERTIFICATION.— 
(1) IN GENERAL.—Section 1835(aX2) (42 U.S.C. 1395n(aX2)) is 
amended— 
(A) by striking "and" at the end of subparagraph (E); 
(B) by striking the period at the end of subparagraph (F) 
and inserting "; and"; and 
(C) by inserting after subparagraph (F) the following new 
subparagraph: 
"(G) in the case of home intravenous drug therapy serv-
ices, (i) such services are or were required because the 
individual needed such services for the administration of a 
covered home IV drug, (ii) a plan for furnishing such serv-
ices has been established and is reviewed periodically by a 
physician, (iii) such services are or were furnished while the 
individual is or was under the care of a physician, (iv) such 
services are administered in a place of residence used as 
such individual's home, and (v) with respect to such services 
initiated before January 1, 1993, such services have been 
reviewed and approved by a utilization and peer review 
organization under section 1154(aX16) before the date such 
services were initiated (or, in the case of services first 
initiated on an outpatient basis, within 1 working day 
(except in exceptional circumstances) of the date of initi-
ation of the services).". 
(2) PRO PRIOR APPROVAL REQUIRED.—Section 1154(a) (42 U.S.C. 
1320c-3(a)) is amended by adding at the end the following new 
paragraph: 
"(16) The org£mization shall perform the review described in 
par£^aph (1) with respect to home intravenous drug therapy 
services (as defined in section 1861(iJXl)) initiated before Janu-
ary 1, 1993, within 1 working day of the date of the organiza-
tion's receipt of a request for such review. The Secretary shall 
establish criteria to be used by such an organization in conduct-
PUBLIC LAW 100-360—JULY 1, 1988 
102 STAT. 725 
ing reviews with respect to the appropriateness of home intra-
venous drug therapy services under this paragraph.". 
(e) CERTIFICATION OF HOME INTRAVENOUS DRUG THERAPY PRO-
VIDERS; INTERMEDIATE SANCTIONS FOR NONCOMPLIANCE.— 
(1) TREATMENT AS PROVIDER OF SERVICES.—Section 1861(u) (42 
U.S.C. 1395x(u)) is amended by inserting "home intravenous 
drug therapy provider," after "hospice program,". 
(2) CONSULTATION WITH STATE AGENCIES AND OTHER ORGANIZA-
TIONS.—Section 1863 (42 U.S.C. 1395z) is amended by striking 
"and (ddX2)" and mserting "(ddX2), and (ijX3)". 
(3) USE OF STATE AGENCIES IN DETERMINING COMPLIANCE.— 
Section 1864(a) (42 U.S.C. 1395aa(a)) is amended— 
(A) in the first sentence, by inserting "or a home intra-
venous drug therapy provider," after "hospice program", 
and 
(B) in the second sentence, by striking "or hospice pro-
gram" and inserting "hospice program, or home intra-
venous drug therapy provider". 
(4) APPUCATION OF INTERMEDIATE SANCTIONS.—Section 
1846 
(42 U.S.C. 1395W-2) is amended— 
(A) in the heading, by adding "AND FOR QUALIFIED HOME 
INTRAVENOUS DRUG THERAPY PROVIDERS" at the end; 
(B) in subsection (a), by inserting "or that a qualified 
home intravenous drug therapy provider that is certified 
for participation under this title no longer substantially 
meets the requirements of section 1861(ijX3)" after "under 
this part"; and 
(C) in subsection (bX2XAXiv) by inserting "or home intra-
venous drug therapy services" after "clinical diagnostic 
laboratory tests". 
(f) USE OF REGIONAL INTERMEDIARIES IN ADMINISTRATION OF BENE-
FIT.—Section 1816 (42 U.S.C. 1395h) is amended by adding at the end 
thereof the following new subsection: 
"(k) With respect to carrying out functions relating to payment for Contracts 
home intravenous drug therapy services and covered home IV 
drugs, the Secretary may enter into contracts with agencies or 
organizations under this section to perform such functions on a 
regional basis.". 
(g) EFFECTIVE DATE.—The amendments made by this section shall 
apply to items and services furnished on or after January 1, 1990. 
SEC. 204. COVERAGE OF SCREENING MAMMOGRAPHY. 
(a) IN GENERAL.—Section 1861 (42 U.S.C. 1395x) is amended— 
(1) in subsection (s)— 
(A) by redesignating paragraphs (13) and (14) as para-
graphs (14) and (15), respectively, 
(B) by striking "and" at the end of paragraph (11), 
(C) by striking the period at the end of paragraph (12) and 
inserting "; and", and 
(D) by inserting after paragraph (12) the following new 
paragraph: 
"(13) screening mammography (as defined in subsection 
(kk))."; and 
(2) by adding at the end the following new subsection: 
42 use 1320C-3 
note. 
102 STAT. 726 
PUBLIC LAW 100-360—JULY 1, 1988 
''Screening Mammography 
"(kk) The term 'screening mammography* means a radiologic 
procedure provided to a woman for the purpose of early detection of 
breast cancer and includes a physician's interpretation of the results 
of the procedure.". 
(b) PAYMENT AND COVERAGE.—Section 1834 (42 U.S.C. 1395m), as 
amended by sections 202(bX4) and 203(cXlXF) of this Act, is 
amended— 
(1) in subsection OiXlXB), by inserting "and subject to subsec-
tion (eXlXA)" after "conversion factors", and 
(2) by adding at the end the following new subsection: 
"(e) PAYMENTS AND STANDARDS FOR SCREENING MAMMOGRAPHY.— 
"(1) IN GENERAL.—Notwithstanding any other provision of 
this part (except as provided in section 1833(c)), with respect to 
expenses incurred for screening mammography (as defined in 
section 1861(kk))— 
"(A) payment may be made only for screening mammc^-
raphy conducted consistent with the frequen^'^ permitt^ 
under paragraph (2); 
"(B) payment may be made only if the screening 
mammography meets the quality stendards established 
under paragraph (3); and 
"(Q the amount of the payment under this part shall, 
subject to the deductible established under section 1833(b), 
be equal to 80 percent of the least of— 
"(i) the actual charge for the screening, 
"(ii) the fee schedule established under subsection (b) 
with respect to both the professional and technic^ 
components of the screening mammc^aphy, in the 
case of screening mammography subject to such sched-
ule but for this paragraph, or 
"(iii) the limit established under paragraph (4) for the 
screening mammography. 
"(2) FREQUENCY COVERED.— 
"(A) IN GENERAL.—Subject to revision by the Secretary 
under subparagraph (B)— 
"(i) No payment may be made under this part for 
screening mammography performed on a woman under 
35 years of age. 
* (ii) Payment may be made under this part for only 1 
screening mammc^p-aphy performed on a woman over 
34 years of age, but under 40 years of age. 
"(iii) In the case of a woman over 39 years of age, but 
under 50 years of age, who— 
"(D is at a high risk of developii^ breast cancer 
(as determined pursuant to factors identified by 
the Secretary), payment may not be made under 
this part for a screening mammography performed 
within the 11 months of a previous screening 
manmu^raphy, or 
"(Q) is not at a high risk of developing breast 
cancer, paynient may not be made under this part 
for a screening manmi<^raphy performed within 
the 23 months after a previous screening mammog-
raphy. 
PUBLIC LAW 100-360—JULY 1, 1988 
102 STAT. 727 
"(iv) In the case of a woman over 49 years of age, but 
under 65 years of age, payment may not be made under 
this part for screening mammography 
performed 
within 11 months after a previous screening mammog-
raphy. 
(v) In the case of a woman over 64 years of age, 
payment may not be made for screening mammog-
raphy performed within 23 months after a previous 
screening mammography. 
"(B) REVISION OF FREQUENCY.— 
"(i) REVIEW.—The Secretary, in consultation with the 
Director of the National Cancer Institute, shall review 
periodically the appropriate frequency for performing 
screening mammography, based on age and such other 
factors as the Secretary believes to be pertinent. 
"(ii) REVISION OF FREQUENCY.—The Secretary, taking 
into consideration the review made under clause (i), 
may revise from time to time the frequency with which 
screening mammography may be paid for under this 
subsection, but no such revision shall apply to screen-
ing mammography performed before January 1, 1992. 
"(3) QUALITY STANDARDS.—The Secretary shall establish 
Safety. 
standartfe to assure the safety and accuracy of screening 
mammography performed under this part. Such standards shall 
include the requirements that— 
"(A) the equipment used to perform the mammography 
must be specifically designed for mammography and must 
meet radiologic standards established by the Secretary for 
mammography; 
"(B) the mammography must be performed by an individ-
ual who— 
"(i) is licensed by a State to perform radiological 
procedures, or 
"(ii) is certified as qualified to perform radiological 
procedures by such an appropriate organization £is the 
Secretary specifies in regulations; 
"(C) the results of the mammography must be interpreted 
by a phvsician— 
(i) who is certified as qualified to interpret radiologi-
cal procedures by such an appropriate board as the 
Secretary specifies in regulations, or 
"(ii) wno is certified as qualified to interpret screen-
ing mammography procedures by such a program as 
the Secretary recognizes in regulation as assuring the 
qualifications of the individual with respect to such 
interpretation; and 
"(D) with respect to the first screening mammography 
Records. 
performed on a woman for which pajmient is made under 
this part, there are satisfactory assurances that the results 
of the mammography will be placed in permanent medical 
records maintained with respect to the woman. 
"(4) LIMIT.— 
"(A) $50, INDEXED.—Except as provided by the Secretary 
under subparagraph (B), the limit established under this 
paragraph— 
"(i) for screening mammography performed in 1990, 
is $50, and 
102 STAT. 728 
PUBLIC LAW 100-360—JULY 1, 1988 
"(ii) for screening mammography performed in a 
subsequent year is the limit established under this 
paragraph for the preceding year increased by the 
percentage increase in the MEI for that subsequent 
year. 
"(B) REDUCTION OF UMIT.—The Secretary shall review 
from time to time the appropriateness of the amount of the 
limit established under this paragraph. The Secretary may, 
with respect to screening mammography performed in a 
year after 1991, reduce the amount of such limit as it 
applies nationally or in any area to the amount that the 
Secretary estimates is required to assure that screening 
mammography of an appropriate quality is readily and 
conveniently available during the year. 
"(C) APPUCATION OF UMIT IN HOSPITAL OUTPATIENT SET-
Claims. 
TING.—The Secretary shall provide for an appropriate 
allocation of the limit established under this paragraph 
between professional and technical components in the case 
of hospital outpatient screening mammography (and com-
parable situations) where there is a claim for profes-
sional services separate from the claim for the radiologic 
procedure. 
"(5) LIMITING CHARGES OF NONPARTICIPATING PHYSICIANS.— 
"(A) IN GENERAL.—In the case of mammography screen-
ing performed on or after January 1, 1990, for which pay-
ment is made under this subsection, if a nonparticipating 
physician or supplier provides the screening to an individ-
ual entitled to benefits under this part, the physician or 
supplier may not charge the individual more than the 
limiting charge (as defined in subparagraph (B), or, if ap-
plicable and if less, as defined in subsection (bX5XB)). 
"(B) LIMITING CHARGE DEFINED.—In subparagraph (A), the 
term 'limiting charge' means, with respect to screening 
mammography performed— 
"(i) in 1990, 125 percent of the limit established 
under paragraph (4), 
"(ii) in 1991, 120 percent of the limit established 
under paragraph (4), and 
"(iii) after 1991, 115 percent of the limit established 
under paragraph (4). 
"(C) ENFORCEMENT.—If a physician or supplier knowing 
and willfully imposes a charge in violation of subparagraph 
(A), the Secretary may apply sanctions against such physi-
cian or supplier in accordance with section 18420X2).". 
(c) CERTIFICATION OF SCREENING MAMMOGRAPHY QUALITY STAND-
ARDS.— 
(1) Section 1863 (42 U.S.C. 1395z) is amended by inserting "or 
whether screening mammography meets the standards estab-
lished under section 1834(eX3)," after "1832(aX2XFXi),". 
(2) The first sentence of section 1864(a) (42 U.S.C. 1395aa(a)) is 
amended by inserting before the period the following: ", or 
whether screening mammography meets the standards estab-
lished under section 1834(eX3)". 
(3) Section 1865(a) (42 U.S.C. 1395bb(a)) is amended by insert-
ing "1834(eX3)," after "1832(aX2XFXi),". 
(d) CONFORMING AMENDMENTS.— 
PUBLIC LAW 100-360—JULY 1, 1988 
102 STAT. 729 
(1) Section 1833(aX2XE) (42 U.S.C. 13951(aX2XE)) is amended by 
inserting ", but excluding screening mammography" after 
"imaging services". 
(2) Section 1862(a) (42 U.S.C. 1395y(a)) is amended— 
(A) in paragraph (1)— 
(i) in subparagraph (A), by striking "subparagraph 
(B), (C), (D), or (E)" and inserting "a succeeding 
subparagraph", 
(ii) in subpareigraph (D), by striking "and" at the end, 
(iii) in subparagraph (E), by striking the semicolon at 
the end and inserting ", and', and 
(iv) by adding at the end the following new subpara-
graph: 
"(F) in the case of screening mammography, which is per-
formed more frequently than is covered under section 1834(eX2) 
or which does not meet the standards established under section 
1834(eX3);"; and 
(B) in paragraph (7), by inserting "or under pargigraph 
(IXF)" after "(IXB)". 
(3) 
Sections 
1864(a), 
1865(a), 
1902(aX9XC), 
and 
1915(aXlXB)(iiXI) (42 U.S.C. 1395aa(a), 1395bb(a), 1396a(aX9)(C), 
1396n(aXlXB)(ii)(I)) are each amended by striking "paragraphs 
(13) and (14)" and inserting "paragraphs (14) and (15) . 
(e) EFFECTIVE DATE.—The amendments made by this section shall 
apply to screening mammography performed on or after January 1, 
1990. Paragraph (5) of section 1834(e) of the Social Security Act shall 
only apply until such time as the Secretary of Health and Human 
Services implements the physician fee schedules based on relative 
value scale developed under section 1845(e) of such Act. 
(f) REPORTS.— 
(1) The Physician Payment Review Commission shall study 
and report, by July 1, 1989, to the Committees on Ways and 
Means and Energy and Commerce of the House of Representa-
tives and the (Dommittee on Finemce of the Senate concerning 
the cost of providing screening mammography in a variety of 
settings and at different volume levels. 
(2) The Comptroller General shall study and report, by July 1, 
1989, to the (Committees specified in paragraph (1) concerning 
the quality of care of screening mammography in a variety of 
settings. 
SEC. 205. IN-HOME CARE FOR CERTAIN CHRONICALLY DEPENDENT 
INDIVIDUALS. 
(a) IN GENERAL.—Section 1832(a) (42 U.S.C. 1395k(a)) is amended— 
(1) in paragraph (2XA)— 
(A) by inserting "(i)" after "(A)", and 
(B) by inserting before the semicolon at the end the 
following: ", and (ii) in-home care for a chronically depend-
ent individual for up to 80 hours in any 12-month period 
described in section 1861(11X4), but not to exceed 80 hours in 
any calendar year;"; and 
(2) by adding at the end the following new sentence: 
"In the case of in-home care (described in paragraph (2XAXii)) 
provided to a chronically dependent individual on any day, such 
care provided for 3 hours or less on the day shall be counted (for 
purposes of the limitation in such paragraph) as 3 hours of such 
care.". 
42 use 1395m 
note. 
42 use 1395m 
note. 
102 STAT. 730 
PUBLIC LAW 100-360—JULY 1, 1988 
(b) IN-HOME CARE FOR CHRONICALLY DEPENDENT INDIVIDUAL DE-
PINED.—Section 1861 (42 U.S.C. 1395x), as amended by section 
204(aX2) of this Act, is amended by adding at the end the following 
new subsection: 
"In-Home Care; Chronically Dependent Individual 
"(IIXD The term 'in-home care' means the following items and 
services furnished, under the supervision of a roistered professional 
nurse, to a chronically dependent individual (as detined in para-
graph (2)) during the period described in paragraph (4) by a home 
health agency or by others under arrangements with them made by 
such agency in a place of residence used as such individual's home: 
"(A) Services of a homemaker/home health aide (who has 
successfully completed a training program approved by the 
Secretary). 
"(B) Personal care services. 
"(C) Nursing care provided by a licensed professional nurse. 
"(2) The term 'chronically dependent individual' means an 
individual who— 
"(A) is dependent on a daily basis on a primary caregiver who 
is living with the individual and is assisting the individual 
without monetary compensation in the performance of at least 2 
of the activities of daily living (described in paragraph (3)), and 
"(B) without such assistance could not perform such activities 
of daily living. 
"(3) The 'activities of daily living*, referred to in paragraph (2), are 
as follows: 
"(i) Eating, 
"(u) Bathing, 
"(iii) Dressing, 
"(iv) Toileting. 
"(v) Transferring in and out of a bed or in and out of a chair. 
"(4) The 12-month period described in this paragraph is the 1-year 
period beginning on the date that the Secretary determines that a 
chronically dependent individual either— 
"(A) has become entitled to benefits under section 1833(c) 
(relating to having incurred out-of-pocket part B cost sharing 
equal to the part B catastrophic limit), or 
"OB) has become entitled to have payments made for covered 
outpatient drugs under section 1834(c). 
In the case of an individual who qualifies under subparagraph (A) or 
(B) within 12 months after previously qualifying, the sul^equent 
qualification shall b^in a new 12-month period under this para-
graph. In the case of an individual enrolled in a buy-out plan (as 
defmed in section 1833(cX5)(D)) or a drug buy-out plan (as defined in 
section 1834(cX6)(D)), the Secretary shaJl establish such procedures 
as may be appropriate to identify individuals who are deemed to be 
described in subparagraph (A) or (B), respectively, for purposes of 
the provision of in-home care under the plan.". 
(c) PAYMENT.—Section 1833(a) (42 U.S.C. 13951(a)) is amended— 
(1) in paragraph (2), by inserting "(AXii)," after "subpara-
graphs" the first place it appears, 
(2) in paragraph (3), by striking "(D)" and inserting "(AXii), 
(D),",and 
(3) by adding at the end the following: 
PUBLIC LAW 100-360—JULY 1, 1988 
102 STAT. 731 
"Payment for in-home care for chronically dependent individuals 
shall he paid on the basis of an hour of such care provided. In 
applying paragraph (2) in the case of an organization receiving 
payment under clause (A) of paragraph (1) or under a reasonable 
cost reimbursement contract under section 1876 and providing cov-
erage of in-home care, the Secretary shall provide for an appropriate 
adjustment in the payment amounts otherwise made to reflect the 
a^r^ate increase in payments that would otherwise be made with 
respect to enrollees in the organization if payments were made other 
than under such clause or such a contract if payments were to be 
made on an individual-by-individual basis.". 
(d) CERTIFICATION.—Section 1835(aX2) (42 U.S.C. 1395n(aX2)), as 
amended by section 203(d) of this Act, is amended— 
(1) by striking "and" at the end of subparagraph (F); 
(2) by striking the period at the end of subparagraph (G) and 
inserting in lieu thereof "; and"; and 
(3) by inserting after subparagraph (G) the following new 
subparagraph: 
"OH) in the case of in-home care provided to a chronically 
dependent individual during a 12-month period, the individ-
ual was a chronically dependent individual during the 3-
month period imme(tiately preceding the beginning of the 
12-month period.". 
(e) STANDARDS FOR UTILIZATION.— 
(1) Section 1862(a) (42 U.S.C. 1395y(a)), as amended by section 
204(dX2) of this Act, is amended— 
(A) in paragraph (1)— 
(i) by striking "and" at the end of subparagraph (E), 
(ii) by adding "suid" at the end of subparagraph (F), 
and 
(iv) by adding at the end the following new subpara-
graph: 
"(G) in the case of in-home care for chronically dependent 
individuals, which is not reasonable and necessary to assure the 
health and condition of the individual is maintained in the 
individual's noninstitutional residence;"; and 
(B) in paragraph (6), by inserting "and except, in the case 
of in-home care, as is otherwise permitted under paragraph 
(IXG)" after "paragraph (IXC)". 
(2) The Secretary of Health and Human Services shall take 
appropriate efforts to assure the quality, and provide for appro-
priate utilization of, in-home care for chronically dependent 
individuals under the amendments made by this section. 
(f) EFFECTIVE DATE.—^The amendments made by this section shall 
apply to items and services furnished on or after January 1, 1990. 
(g) STUDY OF ALTERNATIVE OUT-OF-HOBIE SERVICES.—The Sec-
retary of Health and Human Services shall study, and report to 
Congress, not later than 18 months after the date of the enactment 
of this Act, on tJie advisability of providing, to chronically dependent 
individuals eligible for in-home care under the amendments made 
by this section, out-of-home services (such as adult day care services 
or nursing facility services) as alternative services to in-home care. 
SEC. 206. EXTENDING HOME HEALTH SERVICES. 
(a) IN GENERAL.—Section 1861(m) (42 U.S.C. 1395x(m)) is amended 
by adding at the end the following new sentence: "For purposes of 
paragraphs (1) and (4) and sections 1814(aX2XC) and 1835(aX2XA), 
Contracts. 
42 use 1395k 
note. 
42 use 1395k 
note. 
Reports. 
42 use 1395k 
note. 
102 STAT. 732 
PUBLIC LAW 100-360—JULY 1, 1988 
42 use 1395x 
note. 
42 use 1395b-l 
note. 
eonsumer 
protection. 
42 use 1395// 
note. 
nursing care and home health aide services shall be considered to be 
provided or needed on an 'intermittent' basis if they are provided or 
needed less than 7 days each week and, in the case they are provided 
or needed for 7 days each week, if they are provided or needed for a 
period of up to 38 consecutive days.". 
(b) EFFECTIVE DATE.—The amendment made by subsection (a) 
shall apply to services furnished in cases of initial periods of home 
health services beginning on or after January 1,1990. 
SEC. 207. RESEARCH ON LONG-TERM CARE SERVICES FOR MEDICARE 
BENEFICIARIES. 
(a) IN GENERAL.—The Secretary of Health and Human Services, 
from the funds appropriated under subsection 0)), shall provide for 
research on issues relating to the deliverjr and financing of long-
term care services for medicare beneficiaries. Such research sh^Jl 
include research into at least the following areas: 
(1) The financial characteristics of medicare beneficiaries who 
receive or need long-term care services, including whether such 
beneficiaries are eligible for medicaid benefits for such services. 
(2) How the financial and other characteristics of medicare 
beneficiaries 
affect 
their utilization of institutional 
and 
noninstitutional long-term care services. 
(3) How relatives of medicare beneficiaries are affected finan-
cially and in other ways because the beneficiaries require or 
receive long-term care services. 
(4) The quality of long-term care services (in community-based 
and custodial settings) gind how the provision of long-term care 
services may reduce expenditures for acute health care services. 
(5) The effectiveness of, and need for, State and Federal 
consumer protections which assure adequate access to and pro-
tect the rights of medicare beneficiaries who are provided long-
term care services (other than in a nursing facility). 
(b) AUTHORIZATION OF APPROPRIATIONS.—There are authorized to 
be appropriated, in equal parts from the Federal Hospital Insurance 
Trust Fund and from the Federal Supplementary Medical Insurance 
Trust Fund, $5,000,000 for each of fiscal years 1989,1990,1991,1992, 
and 1993 to carry out the research described in subsection (a). 
(c) LONG-TERM CARE SERVICES DEFINED.—In this section, the term 
"long-term care services" includes nursing home care, home care, 
community-based services, and custodial care. 
(d) REPORTS.—The Secretary of Health and Human Services shall 
submit interim reports by December 1, 1990, and by December 1, 
1992, and a final report by June 1, 1994, concerning the demonstra-
tion projects conducted under this section. 
SEC. 208. STUDY OF ADULT DAY CARE SERVICES. 
(a) SURVEY OF CURRENT ADULT DAY CARE SERVICES.—The Sec-
retary of Health and Human Services shall conduct a survey of 
adult day care services in the United States to collect information 
concerning— 
(1) the scope of such services and the extent of their avail-
ability; 
(2) the characteristics of entities providing such services; 
(3) licensure, certification, and other quality standards that 
are applied to those providing such services; 
(4) the cost and financing of such services; and 
(5) the characteristics of the people who use such services. 
PUBLIC LAW 100-360—JULY 1, 1988 
102 STAT. 733 
(b) REPORT.—The Secretary shall report to Congress, by not later 
than 1 year after the date of the enactment of this Act, on the 
information collected in the survey. Based on such information, the 
Secretary shall include in the report recommendations concerning 
appropriate standards for coverage of adult day care services under 
medicare, including defining chronically dependent individuals, 
defining services included in adult day care services, establishing 
qualifications of providers of adult day care services, and establish-
ing a reimbursement mechanism. 
(c) ADULT DAY CARE SERVICES DEFINED.—In this section, the term 
"adult day care services" means medical or social services provided 
in an organized nonresidential setting to chronically impaired 
individuals who are not inpatients in a medical institution. 
Subtitle B—Medicare Part B Monthly 
Premium Financing 
SEC. 211. ADJUSTMENTIN MEDICARE PARTB PREMIUM. 
Prescription 
(a) IN GENERAL.—Section 1839 (42 U.S.C. 1395r) is amended by 
^'^^• 
adding at the end the following new subsection: 
"(gXlXA) Except as provided in this paragraph, paragraphs (4) and 
(5), and subsections (b) and (f), the monthly premium for each 
individual enrolled under this part otherwise determined, without 
regard to this subsection, shall be increased by the sum of the 
catastrophic coverage monthly premium and the prescription drug 
monthly premium for months in the year determined under the 
following table (for months occurring in 1989 through 1993) or 
determined in accordance with paragraphs (2) and (3) (for months 
after December 1993): 
The 
prescription 
drug 
The catastrophic coverage monthly 
monthly 
"In the case of: 
premium ia: 
premium is: 
1989 
$4.00 
0 
1990 
$4.90 
0 
1991 
$5.46 
$1.94 
1992 
$6.75 
$2.45 
1993 
$7.18 
$3.02. 
"(BXi) Except as provided in subparagraph (C), if the amount of 
the supplemental premium rate otherwise determined under section 
59B of the Internal Revenue Code of 1986 for taxable years begin-
ning in a calendar year is increased as a result of subsection 
(eX2XAXi) of such section or is reduced as a result of subsection 
(eX2XAXii) of such section, the monthly premium increase otherwise 
determined under this paragraph shall be reduced or increased, 
respectively, by an amount equal to— 
"(I) Vi2th of the excess or shortfall, respectively, determined 
under clause (ii) for the year, as adjusted under clause (iv),, 
divided by 
"(II) the average number of individuals covered under this 
part during the preceding year, 
"(ii) The excess or shortfall determined under this clause for a 
year is the excess or shortfall, determined by the Secretary of the 
Treasury, of— 
102 STAT. 734 
PUBLIC LAW 100-360—JULY 1, 1988 
"(I) the total amount of the supplemental premiums imposed 
under section 59B of the Internal Revenue Code of 1986 in the 
2nd preceding year, over 
"(II) the total amount of such premiums which would have 
been imposed in such year if the supplemental premium rate 
under such section had been increased by the shortfall rate, or 
decreased by the excess rate, described in clause (iii). 
"(iii) The excess rate or shortfall rate under this clause for a year 
is the excess or shortfall of— 
"(I) the supplemental premium rate established under section 
59B of the Internal Revenue Code of 1986 for taxable years 
beginning in the year, and 
"(II) the amount of such supplemental rate if determined 
without regard to subsection (eX2XA) of such section, 
"(iv) The amount determined under clause (iXD for a year shall be 
increased by the percentage by which the per capita catastrophic 
coverage premium liability (as determined in section 59B(eX3XDXii) 
of the Internal Revenue Code of 1986) for the second preceding year 
exceeds such liability for the fourth preceding year (determined as if 
the catastrophic coverage premium rate for the second preceding 
calendar year were the same as the rate in effect for the fourth 
preceding calendar year). 
"(C) In no event shall the monthly premium increase in effect 
under this paragraph for months in a year after 1993 be less than 
the monthly premium increase in effect under this paragraph for 
months in the preceding year. 
"(D) If subparagraph (B) or subparagraph (C), or both, affects the 
increase in the monthly premium determined under this paragraph 
for a year, the increase in the monthly premium determined after 
the application of such subparagraph or subparagraphs shall be 
allocated between the catastrophic coverage monthly premium and 
the prescription drug monthly premium on the basis of the respec-
tive amounts of such premiums without regard to the application of 
either such subparagraph. 
"(2XA) In the case of months in a year after 1993, the catastrophic 
coverage monthly premium is the catastrophic coverage monthly 
premium (in effect under paragraph (1) or this paragraph for 
months in the preceding year, determined without regard to para-
graph (IXB) or (1)(C)) adjusted by the percentage determined under 
subparagraph (B) for the year. 
"(B) The percentage determined under this subparagraph for a 
year shall be the sum of— 
"(i) the outlay-premium percentage, and 
"(ii) the reserve account percentage. 
For purposes of the preceding sentence, negative percentages shall 
be taken into account as negatives. 
"(CXi) Except as provided in clause (ii), the outlay-premium 
percentage for any year is the percentage by which— 
"(I) the per capita catastrophic outlays in the 2nd preceding 
year exceeds 
"(II) such outlays in the 3rd preceding calendar year. 
If there is no excess, this clause shall be applied by substituting 'is 
less than' for 'exceeds' and the percentage determined with such 
substitution shall be taken into account as a negative percentage. 
"(ii)If— 
^imm-
PUBLIC LAW 100-360—JULY 1, 1988 
102 STAT. 735 
"(I) the percentage increase in the CPI for the 12-month 
period ending with May of the preceding calendar year, exceeds 
(or is less than) 
"(II) such increase for the 12-month period ending with May 
of the 2nd preceding calendar year, 
by at least 1 percentage point, the percentage determined under 
clause (i) for any year shall be adjusted up (or down, respectively) by 
V2 of the amount by which such excess (or shortage, respectively) 
exceeds 1 percent. 
"(DXi) The reserve account percentage for any calendar year is the 
percentage which the premium change determined under clause (ii) 
is of the catastrophic coverage monthly premium in effect under 
paragraph (1) or this paragraph for the preceding year (determined 
without regard to paragraph (IXB) or (IXC)). If there is an excess 
determined under clause (iii), the percentage determined under the 
preceding sentence shall be taken into account as a negative 
percentage. 
"(ii) The premium change determined under this clause for any 
year is the adjustment in the catastrophic coverage monthly pre-
mium (otherwise in effect for the 2nd preceding year) which the 
Secretary determines would have resulted in £m aggregate increase 
(or decrease) in the premiums imposed by this subsection for such 
year equal to 37 percent of the shortfall or excess determined under 
clause (iii) for the calendar year. 
"(iii) The shortfall (or excess) determined under this clause for any 
year is the amount by which— 
"(I) 20 percent of the outlays during the 2nd preceding cal-
endar year from the Medicare Catastrophic Coverage Account 
created under section 1841B, exceeds (or is less than) 
"(II) the balance in such Account as of the close of such 2nd 
preceding calendar year (determined by taking into account 
previous premium increases by reason of the reserve account 
percentage under this paragraph or section 59B(e) of the 
Internal Revenue Cllode of 1986 which have not been credited 
into such Account). 
"(3) In the case of months in a year after 1993, the prescription 
drug monthly premium shall be determined under rules similar to 
the rules of paragraph (2); except that— 
"(A) in determining the prescription drug monthly premium 
for any month in a year before 1998, the following percentages 
shall be substituted for 20 percent in paragraph (2)(DXiiiXI): 
"In 
the 
case 
of 
year: 
The 
percentage is: 
1994 
75 
1995 
50 
1996 
25 
1997 
25; 
"(B) no adjustment by reason of the outlay-premium percent-
age shall be made for any calendar year before 1998; 
"(C) any reference to the Medicare Catastrophic Coverage 
Account shall be treated as a reference to the Federal Cata-
strophic Drug Insurance Trust Fund; and 
"(D) any reference to the catastrophic coverage monthly pre-
mium shall be treated as a reference to the prescription drug 
monthly premium. 
"(4XA) In the case of an individual who is a resident of Puerto Rico 
Territories, U.S. 
or who is a resident of another U.S. commonwealth or territory 
during a month, instead of the premium increase provided under 
102 STAT. 736 
PUBLIC LAW 100-360—JULY 1, 1988 
paragraph (1), subject to subsection (b), the monthly premium for 
each individual enrolled under this part otherwise determined, 
without regard to this subsection, shall be increased by the sum of— 
"(i) the catastrophic coverage monthly premium determined 
under subparagraph (B) for such resident for the year, and 
"(ii) the prescription drug monthly premium determined 
under subparagraph (C) for the resident for the year. 
"(B) The catastrophic coverage monthly premium for months— 
"(i) in 1989 is $1.30 for a resident of Puerto Rico and $2.10 for 
a resident of another U.S. commonwealth or territory; 
"(ii) in 1990 is $3.56 for a resident of Puerto Rico and $5.78 for 
a resident of another U.S. commonwealth or territory; and 
"(iii) in a subsequent year, with respect to a resident of Puerto 
Rico or a resident of another U.S. commonwealth or territory, is 
the catastrophic coverage monthly premium established under 
this subparagraph for the preceding year with respect to such a 
resident increased by the same percentage (estimated by the 
Secretary in September of that preceding year) by which— 
"(I) the per capita catastrophic outlays for the year, will 
exceed 
"(II) the per capita catastrophic outlays for that preced-
ing year. 
"(C) The prescription drug monthly premium for months— 
"(i) in 1990 is $0.14 for a resident of Puerto Rico and $0.22 for 
a resident of another U.S. commonwealth or territory; 
"(ii) in 1991 is $1.21 for a resident of Puerto Rico and $1.93 for 
a resident of another U.S. commonwealth or territory; and 
"(iii) in a subsequent year, with respect to a resident of Puerto 
Rico or a resident of another U.S. commonwealth or territory, is 
the prescription drug monthly premium established under this 
subparagraph for the preceding year with respect to such a 
resident increeised by the same percentage (estimated by the 
Secretary in September of that preceding year) by which— 
"(I) the per capita prescription drug outlays for the year, 
will exceed 
"(II) the per capita prescription drug outlays for that 
preceding year. 
"(5XA) In the case of a part B only individual (as defined in 
paragraph (8XF)) during a month, instead of the premium increase 
provided under paragraph (1), subject to subsection Qi), the monthly 
premium otherwise determined, without regard to this subsection, 
shall be increased by the sum of— 
"(i) the catastrophic coverage monthly premium determined 
under subparagraph (B) for the year, and 
"(ii) the prescription drug monthly premium determined 
under subparagraph (C) for the year. 
"(B) The catastrophic coverage monthly premium for months— 
"(i) in 1990 is $8.57, and 
"(ii) in a subsequent year is Viath of the average actuarial 
expenses that the Secretary estimates (during September before 
the year) will be incurred during the year for benefits and 
administration costs (other than benefits and costs attributable 
to part A) for which outlays may be made from the Medicare 
Catastrophic Coverage Account. 
"(C) The prescription drug monthly premium for months— 
"(i) in 1990 is $0.53, 
"(ii) in 1991 is $4.61, and 
PUBLIC LAW 100-360—JULY 1, 1988 
102 STAT. 737 
"(iii) a subsequent year is yi2th of the average actuarial 
expenses that the Secretary estimates (during September before 
the year) will be incurred during the year for benefits and 
administration costs for which outlays may be made from the 
Federal Catastrophic Drug Insurance Trust Fund. 
"(6XA) If any premium increase for a month under this subsection 
is not a multiple of 10 cents, the Secretary shall round the increase 
to the nearest multiple of 10 cents. 
"(B) If the Secretary so rounds the premium increase, the amount 
of such increase shall be allocated between the catastrophic cov-
erage monthly premium and the prescription drug monthly pre-
mium on the basis of the respective amounts of such premiums 
without r^ard to the application of subparagraph (A). 
"(7XA) T
T
h
i
e Secretary and the Secretary of the Treasury shall 
jointly— 
"(i) publish in the Federal Register by not later than July 1 of 
each year (beginning with 1993) a proposed regulation to estab-
lish premium increases under this subsection for months in the 
following year, 
"(ii) report to Congress, by not later than September 1 of such 
year, on the final premiums to be published under clause (iii), 
and 
"(iii) publish in the Federal Register, during the last 3 days of 
September of each such year, a final regulation establisning 
monthly premiums under thk subsection for months in the 
following year. 
"(B) The Secretary shall report to Congress, in 1993, respecting 
the appropriateness of the level of premium increases established 
under paragraph (4) for residents of Puerto Rico and of other U.S. 
commonwe^ths and territories. 
"(8) For purposes of this subsection: 
"(A) The term 'per capita catastrophic outla}rs' means, with 
respect to any year, the amoimt (as determined by the Sec-
retary) equal to— 
"(i) the outlays during such ^ear from the Medicare 
Catastrophic Coverage Account, divided by 
"(ii) the average number of individuals entitled to receive 
benefits imder part A during such ^ear. 
"(B) The term 'per capita prescription drug outlays' means, 
with respect to any year, the amount (as determined by the 
Secretary) equsd to-— 
"(i) the outlays during such year from the Federal Cata-
strophic Drug Insurance Trust Fund, divided by 
"(ii) the average number of individuals entitled to receive 
benefits under part A during such year. 
"(C) The percentage increase in the CPI for any 12-month 
period shall be the percentage by which the Consumer Price 
Index (as defined in section l(fX5) of the IntemsJ Revenue Code 
of 1986) for the last month of such period exceeds such Index for 
the last month of the preceding 12-month period. 
"(D) The term 'Medicare Catastrophic Covera^ Account' 
refers to such Account as created under section 1841B. 
"(E) The term *U.S. commonwealth or territory* means Puerto 
Rico, the United States Virgin Islands, Guam, American Samoa, 
or the Northern Mariana Islands. 
"(F) The term 'part B only individual' means, with respect to 
a month, an individual who— 
Federal 
Register, 
publication. 
Regulations. 
Reports. 
Federal 
Register, 
publication. 
Regulations. 
Reports. 
Territories, U.S. 
102 STAT. 738 
PUBLIC LAW 100-360—JULY 1, 1988 
"(i) is not a resident of a U.S. commonwealth or territory 
(as defined in subparagraph (E)) during the month, 
"(ii) is entitled to benefits under this part, and 
"(iii) is not entitled to (or, on application without pay-
ment of an additional premium, would not be entitled to) 
benefits under part A or is entitled to benefits under such 
part only because of pajonent of a premium under section 
1818.". 
(b) EXTENSION OF HOLD-HARMLESS PROVISION.—Subsection (f) of 
section 1839 (42 U.S.C. 1395r) is amended to read as follows: 
"(f) For any calendar year after 1988, if an individucd is entitled to 
monthly benefits under section 202 or 223 or to a monthly annuity 
under section 3(a), 4(a), or 4(f) of the Railroad Retirement Act of 1974 
for November and Diecember of the preceding year, and if the 
monthly premium of the individual under this section for December 
and for January is deducted from those benefits under section 
1840(aXl) or section 1840(bXl). the monthly premium otherwise 
determined under this section for an individual for that year shall 
not be increased, pursuant to this subsection, to the extent that such 
increase would reduce the amount of benefits payable to that 
individual for that January below the amount of benefits payable to 
that individual for that Etecember (after the deduction of the pre-
mium under this section). For purposes of this subsection, retro-
active adjustments or pa3anents and deductions on account of work 
shall not be taken into account in determining the monthly benefits 
to which an individual is entitled under section 202 or 223 or under 
the Railroad Retirement Act of 1974.". 
(c) CONFORMING AMENDMENTS.— 
(1) Section 1839 (42 U.S.C. 1395r) is amended— 
(A) in the second sentence of subsections (aXD and (aX4), 
by inserting "(other than costs relating to the amendments 
made by the Medicare Catastrophic Coverage Act of 1988)" 
before the period; 
(B) by inserting before the period at the end of the last 
sentence of subsections (aXD and (aX4) the following: ", but 
shall not take into account any amounts in the Trust Fund 
that may be attributable to receipts or outlays relating to 
the Medicare Catastrophic Coverage Account"; 
(C) in subsection (aX2), by striking "and (e)" and inserting 
",(e),and(g)"; 
(D) in subsection (aX3), by striking "subsection (e)" and 
inserting "subsections (e) and (g)"; 
(E) in subsection (b), by striking "determined under 
subsection (a) or (e)" and inserting otherwise determined 
under this section (without regard to subsections (f) and 
(gX6))";and 
(F) in subsection (eXD, by inserting "except as provided in 
subsection (g)," after "subsection (a) . 
(2) Section 1844(a) (42 U.S.C. 1395w(a)) is amended by adding 
at the end the following: 
"In computing the amount of aggregate premiums and premiums 
per enroUee under paragraph (1), there shall not be taken into 
account premiums attributable to section 1839(g) or section 59B of 
the Internal Revenue Code of 1986.". 
42 use 1395mm. 
(3) Section 1876(aX5) (42 U.S.C. 1395ff(aX5)) is amended— 
(A) by striking "and the Federal Supplementary Medical 
Insurance Trust Fund" and inserting , the Federal Supple-
PUBLIC LAW 100-360—JULY 1, 1988 
102 STAT. 739 
mentary Medical Insurance Trust Fund, and the Federal 
Catastrophic Drug Insurance Trust Fund", and 
(B) by eimending the second sentence to read as follows: 
"The portion of that pa5T]ient to the organization for a month to be Contracts. 
paid by each trust fund shall be determined as follows: 
"(A) In regard to expenditures by eligible organizations 
having risk-sharing contracts, the allocation shall be deter-
mined each year by the Secretary based on the relative weight 
that benefits from each fund contribute to the adjusted average 
per capita cost. 
"(B) In regard to expenditures by eligible organizations 
operating under a reasonable cost reimbursement contract, the 
initial allocation shall be based on the plan's most recent 
budget, such allocation to be adjusted, as needed, after cost 
settlement to reflect the distribution of actual expenditures.", 
(d) EFFECTIVE DATE.—The amendments made by this section shall 
42 use I395r 
apply (except as otherwise specified in such amendments) to "°t®-
monthly premiums for months beginning with January 1989. 
SEC. 212. ESTABLISHMENT OF FEDERAL CATASTROPHIC DRUG INSUR-
ANCE TRUST FUND; FUND TRANSFERS. 
(a) IN GENERAL.—Part B of title XVIII is amended by inserting 
after section 1841 the following new section: 
"FEDERAL CATASTROPHIC DRUG INSURANCE TRUST FUND 
"SEC. 1841A. (aXD There is hereby created on the books of the 42 use I395t-i. 
Treasury of the United States a trust fund to be known as the 
'Federal Catastrophic Drug Insurance Trust Fund' (in this section 
referred to as the 'Trust Fund'). The Trust Fund shall consist of such 
gifts and bequests as may be made as provided in section 201(iXl) 
and amounts transferred to it in accordance with section 1841(j) or 
under paragraph (2). 
"(2) There are hereby appropriated to the Trust Fund amounts 
equivalent to 100 percent of the supplemental premiums imposed by 
section 59B of the Internal Revenue Code of 1986 which are attrib-
utable to the prescription drug rate. The amounts appropriated by 
the preceding sentence shall be transferred from time to time (not 
less frequently than monthly) from the general fund in the Treasury 
to the Trust Fund, such amounts to be determined on the basis of 
estimates by the Secretary of the Treasury of the premiums, speci-
fied in the preceding sentence, paid to or deposited into the Treas-
ury; and proper adjustments shall be made in amounts subsequently 
transferred to the extent prior estimates were in excess of or were 
less than the premiums specified in such sentence. At the close of 
each year, the transfers under this subsection shall reflect all 
premiums paid or deposited (as specified in this subsection) into the 
Treasury in the year. 
"
O
t
>
) TTie provisions of subsections (b) through (i) of section 1841 
shall apply to the Trust Fund in the same manner as they apply to 
the Federal Supplementary Medical Insurance Trust Fund. 
"(c) Notwithstanding any other provision of this title, all pay-
ments under this part on or after January 1, 1990, for benefits and 
administrative costs relating to covered outpatient drugs shall be 
made from the Trust Fund. 
102 STAT. 740 
PUBLIC LAW 100-360—JULY 1, 1988 
Federal 
Register, 
publication. 
Reports. 
"(dXD The Secretary of the Treasury, in consultation with the 
Board of Trustees of the Trust Fund, shall publish in the Federal 
Register— 
"(A) not later than July 1 of each year Ot)eginning with 1992), 
information on— 
"(i) the outlays made from the Trust Fund in the preced-
ing year, and 
(ii) the balance in the Trust Fund as of the close of the 
preceding year; and 
"(B) during the last 3 days of September of each such year, the 
prescription drug monthly premiums to be established under 
section 1839(g) for months in the succeeding year. 
"(2) The Secretary shall report to Congress, not later than July 1 
of each year (beginning with 1992), respecting the distribution of 
outlays from the Trust Fund in the previous year among major 
spending categories. The Comptroller General shall report, not later 
than September 1 of each year, to Congress concerning the 
completeness and accuracy of the Secretary's report under the 
previous sentence and of the premiums established under section 
1839(g) and under section 59B of the Internal Revenue Code of 1986. 
"(e) In this part, with respect to the Trust Fund and the Medicare 
Catastrophic Coverage Account, the terms 'outlays' and 'receipts' 
mean, with respect to a quarter or other period, gross outlays and 
receipts, as such terms are employed in the 'Monthly Treasury 
Statement of Receipts and Outlays of the United States Government 
(MTS)', as published by the Department of the Treasury, for months 
in such quarter or other period.". 
(b) TRANSFERS OF CERTAIN PREMIUMS.— 
(1) TRANSFER OF FLAT PRESCRIPTION DRUG PREMIUMS TO FED-
ERAL CATASTROPHIC DRUG INSURANCE TRUST FUND.—Section 1840 
(42 U.S.C. 1395s) is amended by adding at the end the following 
new subsection: 
"(i) Notwithstanding the previous provisions of this subsection, 
premiums collected under this part which are attributable to a 
prescription drug monthly premium established under section 
1839(g) shall, instead of being transferred to (or being deposited to 
the credit of) the Federal Supplemental Medical Insurance Trust 
Fund, be transferred to (or deposited to the credit of) the Federal 
Catastrophic Drug Insurance Trust Fund.". 
(2) TRANSFER OF SUPPLEMENTAL CATASTROPHIC COVERAGE PRE-
MIUMS INTO THE SMI TRUST FUND.—Section 1841(a) (42 U.S.C. 
1395t(a)) is amended by adding the following: "There are hereby 
appropriated to the Trust Fund amounts equivalent to 100 
percent of the supplemental premiums imposed by section 59B 
of the Internal Revenue Code of 1986 which are attributable to 
the catastrophic covereige rate and which are not otherwise 
appropriated under section 1817A(aX2) to the Federal Hospital 
Insurance Catastrophic Coverage Reserve Fimd. The amounts 
appropriated by the preceding sentence shall be transferred 
from time to time (not less frequently than monthly) from the 
general fund in the Treasury to the IVust Fund, such amounts 
to be determined on the basis of estimates by the Secretary of 
the Treasury of the premiums, specified in the preceding sen-
tence, paid to or deposited into the Treasury; and proper adjust-
ments shall be made in amounts subsequently transferred to 
the extent prior estimates were in excess of or were less than 
the premiums specified in such sentence. At the close of each 
PUBLIC LAW 100-360—JULY 1, 1988 
102 STAT. 741 
year, the transfers under this subsection shall reflect all pre-
miums under section 59B of the Internal Revenue Code of 1986 
paid or deposited into the Treasury in the year.". 
(c) CONFORMING AMENDMENTS.— 
(IXA) Section 201(gXlXA) (42 U.S.C. 401(gXlXA)) is amended 
by striking "and the Federal Supplementary Medical Insurance 
Trust Fund" and inserting ", Federal Supplementary Medical 
Insurance Trust Fund, and the Federal Catastrophic Drug 
Insurance Trust Fund". 
(B) Section 201(iXl) (42 U.S.C. 401(iXl)) is amended by striking 
"and the Federal Supplementary Medical Insurance Trust 
Fund" and inserting ", Federal Hospital Insurance Catastrophic 
(Coverage Reserve Fund, Federal Supplementary Medical Insur-
ance Trust Fund, and the Federal Catastrophic Drug Insurance 
Trust Fund". 
(2) Section 1833(a) (42 U.S.C. 13951(a)) is amended, in the 
matter before paragraph (1), by inserting "or, as provided in 
section 1841A(c), from the Federal Catastrophic Drug Insurance 
Trust Fund" after "Medical Insurance Trust Fund". 
(3) Section 1817(b) (42 U.S.C. 1395i(b)) is amended by insertmg 
after the sixth sentence the following: "Such report shall also 
identify (and treat separately) those outlays from the Trust 
Fund which are also outlays from the Medicare Catastrophic 
Coverage Account created under section 1841B and those out-
lays for which there are amounts transferred into the Federal 
Hospital Insurance Catastrophic (Average Reserve Fund.". 
(4) Section 1841(b) (42 U.S.C. 1395t(b)) is amended by inserting 
after the sixth sentence the following: "Such report shall also 
identify (and treat separately) those receipts and outlays in the 
Trust Fund which are also receipts and outlays in the Medicare 
Catastrophic Coverage Account created under section 1841B.". 
SEC. 213. CREATION OF MEDICARE CATASTROPHIC COVERAGE ACCOUNT. 
(a) IN GENERAL.—Part B of title XVIII is amended by inserting 
after section 1841A, as inserted by section 212, the following new 
section: 
"MEDICARE CATASTROPHIC COVERAGE ACCOUNT 
"SEC. 1841B. (a) For purposes of ceirrying out certain provisions of 42 use l395t-2. 
this title, and section 59B of the Internal Revenue (jode of 1986, 
there is hereby created on the books of the Treasury of the United 
States an account to be known as the 'Medicare Catastrophic (Cov-
erage Account' (in this section referred to as the 'Account'), to be 
maintained by the Secretary of the Treasury in consultation with 
the Boards of Trustees of the Federal Hospital Insurance Trust 
Fund and the Federal Supplementary Medical Insurance Trust 
Fund. No funds shall actually be transferred into or paid out of the 
Account, but, for other purposes of this part and for purposes of 
section 59B of the Internal Revenue 0)de of 1986, amounts credited 
to the Account shall be considered receipts of the Account and 
amounts debited to the Account shall be considered outlays from the 
Accoimt. 
"(bXD The Account shall be— 
"(A) credited for receipts of the Federal Supplementary Medi-
cal Insurance Trust Fund attributable to the portion of supple-
mental premiums under section 59B of the Internal Revenue 
Code of 1986, and the premiums imder section 1839(g), attrib-
102 STAT. 742 
PUBLIC LAW 100-360—JULY 1, 1988 
Federal 
Register, 
publication. 
Reports. 
Reports. 
utable to the catastrophic coverage premium rate or cata-
strophic coverage monthly premium, 
"(B) credited for receipts of the Federal Hospital Insurance 
Catastrophic Coverage Reserve Fund, and 
"(C) debited for outlajrs made under this title that are attrib-
utable to the amendments made by the Medicare Catastrophic 
Coverage Act of 1988 (other than outlays relating to covered 
outpatient drugs and related administrative costs). 
"(2) In addition, the Account shall be— 
"(A) credited with interest (at the rate used for purposes of 
the Federal Supplementary Medical Insurance Trust Fund) on 
any positive average balance maintained in the Account in a 
calendar quarter, and 
"(B) debited with interest (at the rate used for purposes of the 
Federal Supplementary Medical Insurance Trust Fund) on any 
negative average balance maintained in the Account in a cal-
endar quarter. 
"(3) Credits and debits under this subsection shall be made as of 
the last date of each month based upon receipts and outlays occur-
ring during the month, as estimated by the Secretary and the 
Secretary of the Treasury. 
"(4) The Account shall also identify (and treat separately) those 
credits and debits in the Account which are also receipts and outlays 
in the Federal Supplementary Medical Insurance Trust Fund, those 
receipts which are also receipts of the Federal Hospital Insurance 
Catastrophic Coverage Reserve Fund, and those outlays that are 
also outlays from the Federal Hospital Insurance Trust Fund. 
"(cXD The Secretary of the Treasury shall publish in the Federal 
Register— 
"(A) not later than July 1 of each year (beginning with 1990), 
information on— 
"(i) the outlays made from the Account in the preceding 
year, and 
"(ii) the balance in the Account as of the close of the 
preceding year; and 
"(B) during the last 3 da3rs of September of each such year, the 
catastrophic coverage monthly premiums to be established 
under section 1839(g) for months in the succeeding year. 
"(2) The Secretary shall report to Congress, not later than July 1 
of each year (beginning with 1990), respecting the distribution of 
outlays from the Account in the previous year among major spend-
ing categories. The Comptroller (xeneral shall report, not later than 
September 1 of each year, to Congress concerning the completeness 
and accuracy of the Secretary's report under the previous sentence 
and of the premiums established under section 1839(g) and under 
section 59B of the Internal Revenue Code of 1986. 
"(d) The Secretary of the Treasury shall report to Congress in 
April of each year on the status of the Account created under this 
section.". 
Subtitle C—Miscellaneous Provisions 
SEC. 221. VOLUNTARY CERTIFICATION OF MEDICARE SUPPLEMENTAL 
HEALTH INSURANCE POLICIES. 
(a) 
FREE-LOOK 
PERIOD.—Section 1882 (42 U.S.C. 1395ss) is 
amended— 
PUBLIC LAW 100-360—JULY 1, 1988 
102 STAT. 743 
(1) in subsection O^XIXB), by striking "and (3)" and inserting 
"through (4)", and 
(2) in subsection (c)— 
(A) by striking "and" at the end of paragraph (2), 
(B) by striking the period at the end of paragraph (3) and 
inserting "; and ', and 
(C) by adding at the end thereof the following: 
"(4) may, during a period of not less than 30 days after the 
policy is issued, be returned for a full refund of any premiums 
paid (without regard to the manner in which the purchase of 
the policy was solicited).". 
(b) REPORTING OF INFORMATION RELATING TO LOSS RATIOS.—Sec-
tion 188203X1), as amended by subsection (a), is further amended— 
(1) in subparagraph (C), by striking "(A) and (B)" and insert-
ing "(A), (B), and (C)", 
(2) by redesignating subparagraphs (C) and (D) as subpara-
graphs (D) and (E), respectively, and 
(3) by inserting after subparagraph (B) the following new 
subparagraph: 
"(C) provides that— 
"(i) information vdth respect to the actual ratio of bene-
fits provided to premiums collected under such policies will 
be reported to the State on forms conforming to those 
developed by the National Association of Insurance 
Commissioners for such purpose, or 
"(ii) such ratios will be monitored under the program in 
an alternative manner approved by the Secretary;". 
(c) CONSUMER INFORMATION.—Section 1882(e) is amended— 
42 use I395ss. 
(1) by inserting "(1)" after "(e)", and 
(2) by adding at the end thereof the following: 
"(2) The Secretary shall— 
"(A) inform all individuals entitled to benefits under this title 
(and, to the extent feasible, individuals about to become so 
entitled) of^ 
"(i) the actions and practices that are subject to sanctions 
under subsection (d), and 
"(ii) the manner in which they may report any such 
action or practice to an appropriate official of the Depart-
ment of Health and Human Services (or to an appropriate 
State official), and 
"(B) publish the toll-free telephone number for individuals to Law 
report suspected violations of the provisions of such subsection. 
^^^°^^?^5"* 
"(3) The Secretary shall provide individuals entitled to benefits 
under this title (and, to the extent feasible, individuals about to 
become so entitled) with a listing of the addresses and telephone 
numbers of State and Federal agencies and offices that provide 
information and assistance to individuals with respect to the selec-
tion of medicare supplemental policies.". 
(d) REVISION OF MODEL STANDARDS; TRANSITION.—Section 1882 
is 
further amended— 
(1) in the third sentence of subsection (a), by striking "Such 
certification" and inserting "Subject to subsection (kX3), such 
certification"; 
(2) in subsection (b), by striking "(for so long as" and inserting 
"(subject to subsection (kX3), for so long as"; and 
(3) by adding at the end thereof the following new subsections: 
and crime. 
102 STAT. 744 
PUBLIC LAW 100-360—JULY 1, 1988 
state and local 
"(kXlXA) If, within the 90-day period beginning on the date of the 
governments. 
enactment of this subsection, the National Association of Insurance 
Commissioners (in this subsection referred to as the 'Association') 
amends the NAIC Model Emulation adopted on June 6, 1979 (as it 
relates to medicare supplemental policies), with respect to matters 
such as minimum benefit standards, loss ratios, disclosure require-
ments, and replacement requirements and provisions otherwise 
necessary to reflect the changes in law made by the Medicare 
Catastrophic Coverage Act of 1988, subsection (gX2XA) shall be 
applied in a State, effective on and after the date specified in 
subparagraph (B), as if the reference to the Model Regulation 
adopted on June 6, 1979, were a reference to the Model Regulation 
as amended by the Association in accordance with this paragraph 
(in this subsection and subsection (1) referred to as the 'amended 
NAIC Model Regulation'). 
"(B) The date specified in this subparagraph for a State is the 
earlier of the date the State adopts st£uidards equal to or more 
stringent than the amended NAIC Model Regulation or 1 year after 
the date the Association first adopts such amended Regulation. 
"(2XA) If the Association does not amend the NAIC Model Regula-
tion within the 90-day period specified in paragraph (IXA), the 
Secretary shall promulgate, not later than 60 days after the end of 
such period, Federsd model standards (in this subsection and subsec-
tion (1) referred to as Federal model standards') for medicare supple-
mental policies to reflect the changes in law made by the Medicare 
Catastrophic Coverage Act of 1988, and subsection (gX2XA) shall be 
applied in a State, effective on and after the date specified in 
subparagraph (B), as if the reference to the Model Regulation 
adopted on June 6, 1979, were a reference to Federal model 
standards. 
"(B) The date specified in this subparagraph for a State is the 
earlier of the date the State adopts standards equal to or more 
stringent than the Federal model standards or 1 year after the date 
the Secretary first promulgates such standards. 
"(3) Notwithstanding any other provision of this section (except as 
provided in subsection (1))-— 
"(A) no medicare supplemental policy may be certified by the 
Secretary pursuant to subsection (a), 
"(B) no certification made pursuant to subsection (a) shall 
remain in effect, and 
"(C) no State regulatory program shall be found to meet (or to 
continue to meet) the requirements of subsection Ot>XlXA), 
unless such policy meets (or such program provides for the applica-
tion of standards equal to or more stringent than) the standards set 
forth in the amended NAIC Model R^^lation or the Federal model 
standards (as the case may be) by the date specified in paragraph 
(IXB) or (2XB) (as the case may be). 
State and local 
"(IXD Until the date specified in paragraph (3), in the case of a 
governments. 
qualifying medicare supplemental policy described in paragraph (2) 
issued— 
"(A) before January 1,1989, the policy is deemed to remain in 
compliance with this section if the insurer issuing the policy 
complies with the NAIC Model Transition Regulation (including 
giving notices to subscribers and filing for premium adjust-
ments with the State as described in section 5.B. of such Regula-
tion) by January 1,1989; or 
PUBLIC LAW 100-360—JULY 1, 1988 
102 STAT. 745 
"(B) on or after January 1,1989, the policy is deemed to be in 
compliance with this section if the insurer issuing the policy 
complies with the NAIC Model Transition Regulation before the 
date of the sale of the policy. 
"(2) In paragraph (1), the term 'qualifying medicare supplemental 
policy' means a medicare supplemental policy— 
"(A) issued in a State which— 
"(i) has not adopted standards equal to or more stringent 
than the NAIC Model Transition Regulation by January 1, 
1989, and 
"(ii) has not adopted standards equal to or more stringent 
than the amended NAIC Model Regulation (or Federal 
model standards) by January 1,1989; and 
"(B) which has been issued in compliance with this section (as 
in effect on June 1,1988). 
"(3XA) The date specified in this paragraph is the earlier o
f
— 
"(i) the first date a State adopts, after January 1, 1989, 
standards equal to or more stringent than the NAIC Model 
Transition Regulation or equal to or more stringent than the 
amended NAIC Model Regulation (or Federal model standards), 
as the case may be, or 
"(ii) the later of (1) the date specified in subsection (kXl)(B) or 
(kX2)(B) (as the case may be), or (II) the date specified in 
subparagraph (B). 
"(B) In the case of a State which the Secretary identifies as— 
"(i) requiring State legislation (other than l^islation appro-
priating funds) in order for medicare supplemental policies to 
meet standards described in subparagraph (AXi), but 
"(ii) having a legislature which is not scheduled to meet in 
1989 in a legislative session in which such l^islation may be 
considered, 
the date specified in this subparagraph is the first day of the first 
calendar quarter b^inning after the close of the first l^islative 
session of the State l^islature that b^ins on or after January 1, 
1989, and in which legislation described in clause (i) may be consid-
ered. 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 l^islature. 
"(4) In the case of a medicare supplemental policy in effect on 
Januaiy 1, 1989, and offered in a State which, as of such date— 
(A) has adopted standards equal to or more stringent than 
the amended NAIC Model Regulation (or Federal model stand-
ards), but 
"(B) does not have in effect standards equal to or more 
stringent than the NAIC Model Transition R^ulation (or other-
wise requiring notice substantially the same as the notice re-
quired in section 5.B. of such Regulation), 
the policy shall not be deemed to meet the standards in subsection 
(c) unless each individual who is entitled to benefits under this title 
and is a policyholder under such policy on January 1, 1989, is sent 
such a notice in any appropriate form by not later than January 31, 
1989, that explains— 
"(A) the improved benefits under this title contained in the 
Medicare Catastrophic Coverage Act of 1988, and 
"(B) how these improvements affect the benefits contained in 
the policies and the premium for the policy. 
102 STAT. 746 
PUBLIC LAW 100-360—JULY 1, 1988 
Reports. 
42 use 1395SS. 
State and local 
governments. 
42 use 1395SS 
note. 
42 use 1395mm 
note. 
"(5) In this subsection, the term *NAIC Model Transition Regula-
tion' refers to the standards contained in the 'Model Regulation to 
Implement Transitional Requirements for the Conversion of Medi-
care Supplement Insurance Benefits and Premiums to Conform to 
Medicare Pr(^am Revisions' (as adopted by the National Associa-
tion of Insurance Commissioners in September 1987). 
"(6) The Secretary shall report to the Congress in March 1989 and 
in July 1990 on actions States have taken in adopting standards 
equal to or more stringent than the NAIC Model Transition Regula-
tion or the amended NAIC Model Regulation (or Federal model 
standards).". 
(e) REQUIRED SUBMISSION OP ADVERTISING.—Section 1882(b) is fur-
ther amended by adding at the end the following new paragraph: 
"(3) Notwithstanding paragraph (1), a medicare supplemental 
policy offered in a State shall not be deemed to meet the standards 
and requirements set forth in subsection (c), with respect to an 
advertisement (whether through written, radio, or television 
medium) used (or, at a State's option, to be used) for the policy in the 
State, unless the entity issuing the policy provides a copy of each 
advertisement to the Commissioner of Insurance (or comparable 
officer identified by the Secretary) of that State for review or 
approval to the extent it may be required under Stete law.". 
(f) APPOINTMENT OF SUPPLEMENTAL HEALTH INSURANCE PANEL 
MEMBERS.—Section 188201)X2XA) is amended by striking ''appointed 
by the President" and inserting "appointed by the Secretary". 
(g) EFFECTIVE DATES.— 
(1) Except as provided in paragraphs (2) and (3), the amend-
ments made by this section shall take effect on the date of the 
enactment of this Act. 
(2) The amendments made by subsections (a) and (b) shall 
become effective on the date specified in subsection (k)(l)(B) or 
(kX2)(B) of section 1882 of the Social Security Act (as added by 
subsection (c) of this section). 
(3) The amendment made by subsection (f) shall apply to 
medicare supplemental policies as of January 1, 1989, with 
respect to advertising used on or after such date. 
(4) The Secretary of Health and Human Services shall provide 
for the reappointment of members to the Supplemental Health 
Insurance Panel (under section 1882(bX2) of the Social Security 
Act) by not later than 90 dajrs after the date of the enactment of 
this Act. 
SEC. 222. ADJUSTMENT OF CONTRACTS WITH PREPAID HEALTH PLANS. 
The Secretary of Health and Human Services shall— 
(1) modify contracts under sections 1833(aXlXA) and 1876 of 
the Social Security Act, for portions of contract years occurring 
after December 31, 1988, to take into account the amendments 
made by this Act; and 
(2) require such organizations to make appropriate adjust-
ments (including ac^ustments in premiums and benefits) in the 
terms of their agreements with medicare beneficiaries to take 
into account such amendments. 
The Secretary shall also provide for appropriate modifications of 
contracts with health maintenance organizations under section 
1876(iX2XA) of the Social Security Act (as in effect before February 
1, 1985), under section 402(a) of the Social Security Amendments of 
1967, or under section 222(a) of the Social Security Amendments of 
PUBLIC LAW 100-360—JULY 1, 1988 
102 STAT. 747 
1972, for portions of contract years occurring after December 31, 
1988, so as to apply to such organizations and contracts the require-
ments imposed by the amendments made by this Act upon an 
organization with a risk-sharing contract under section 1876 of the 
Social Security Act. 
SEC. 223. MAILING OF NOTICE OF MEDICARE BENEFITS AND INFORMA-
TION DESCRIBING PARTICIPATING PHYSICIAN PROGRAM. 
(a) DISTRIBUTION OF NOTICES.—Title XVin is amended by inserting 
after section 1803 the following new section: 
"NOTICE OF MEDICARE BENEFITS 
"SEC. 1804. The Secretary shall prepare (in consultation with 
42 use l395b-2. 
groups representing the elderly and with health insurers) and pro-
vide for d^tribution of a notice containing— 
"(1) a clear, simple explanation of the benefits available under 
this title and the major categories of health care for which 
benefits are not available imder this title, 
"(2) the limitations on payment (including deductibles and 
coinsurance amounts) that are imposed under this title, and 
"(3) a description of the limited benefits for long-term care 
services available under this title and generally available under 
State plans approved under title XIX. 
Such notice shall be mailed annually to individuals entitled to 
benefits under part A or part B of this title and when an individual 
applies for benefits under part A or enrolls under part B.". 
(b) 
DISTRIBUTION OF INFORMATION DESCRIBING 
PARTICIPATING 
PHYSICIAN PROGRAM.—Section 1842(hX5) (42 U.S.C. 1395u(hX5)) is 
amended— 
(1) by inserting "through an annual mailing" after "under 
this part", 
(2) by striking the last sentence, 
(3) by inserting "(A)" after "(5)", and 
(4) by adding at the end the following new subparagraph: 
"(B) The annual notice provided under subparagraph (A) shall 
include— 
"(i) a description of the participation program, 
"(ii) an explanation of the advantages to beneficiaries of 
obtaining covered services through a psuticipating physician or 
supplier, 
(iii) an explanation of the assistance offered by carriers in 
obtaining the names of participating physicians and suppliers, 
and 
"(iv) the toll-free telephone number under paragraph (2XA) 
for inquiries concerning the program and for requests for free 
copies of appropriate directories.'. 
(c) REVISION OF EXPLANATION OF MEDICARE BENEFITS.—Section 
1842(hX7) (42 U.S.C. 1395u(hX7)) is amended— 
(1) in subparagraph (A)— 
(A) by inserting "prominent" before "reminder", and 
(B) by striking ), and" and inserting "and a clear state-
ment of any amounts charged for the particular items or 
services on the claim involved above the amount recognized 
under this part),"; 
(2) in subparagraph (B), by striking the period at the end and 
inserting ", and'; and 
102 STAT. 748 
PUBLIC LAW 100-360—JULY 1, 1988 
42 use 1395b-2 
note. 
42 use 1395u 
note. 
42 use 1395u 
note. 
(3) by adding at the end the following new subparagraph: 
"(C) shall include (i) an offer of assistance to such an individ-
ual in obtaining the names of participating physicians of appro-
priate specialty and (ii) an offer to provide a free copy of the 
appropriate participating physician directory.", 
(d) EFFECTIVE DATES.— 
(1) The Secretary of Health and Human Services shall first 
distribute the notice required by the amendment made by 
subsection (a) not later than January 31,1989. 
(2) The amendments made by subsection (b) shall apply to 
annual notices beginning with 1989. 
(3) The amendments made by subsection (c) shall first apply to 
explanations of benefits provided for items and services fur-
nished on or after January 1,1989. 
SEC. 224. CHANGES IN CIVIL MONEY PENALTIES FOR CERTAIN PRAC-
TICES OF HEALTH MAINTENANCE ORGANIZATIONS AND 
COMPETITIVE MEDICAL PLANS. 
Section 1876(iX6)(BXi) (42 U.S.C. 1395mm(iX6)(BXi)) is amended by 
adding at the end the following: "plus, with respect to a determina-
tion under subparagraph (AXii), double the excess amount charged 
in violation of such subparagraph (and the excess amount charged 
shall be deducted from the penalty and returned to the individual 
concerned), and plus, with respect to a determination under 
subparagraph (AXiv), $15,000 for each individual not enrolled as a 
result of the practice involved,". 
TITLE III—PROVISIONS RELATING TO 
THE MEDICAID PROGRAM 
SEC. 301. REQUIRING MEDICAID BUY-IN OF PREMIUMS AND COST-SHAR-
ING FOR INDIGENT MEDICARE BENEFICIARIES. 
(a) REQUIREMENT.— 
(1) Section 1902(aX10XE) (42 U.S.C. 1396a(aX10XE)) is amended 
by striking "at the option of a State, but". 
(2) Section 1905(pXlXB) (42 U.S.C. 1396d(pXlXB)) is amended 
by striking "and the election of the State". 
Qy) PHASING-IN REQUIRED INCOME STANDARD TO 100 PERCENT OF 
POVERTY LEVEL.—Section 1905(pX2XA) (42 U.S.C. 1396d(pX2XA)) is 
amended— 
(1) by striking "may not exceed a percentage (not more than 
100 percent)" and inserting "shall be at least the percent pro-
vided under clause (ii) (but not more than 100 percent)", 
(2) by inserting "(i)" after "(2XA)", and 
(3) by adding at the end the following new clause: 
"(ii) Except as provided in clause (iii), the percent provided under 
this clause, with respect to eligibility for medical assistance on or 
after— 
"(I) January 1,1989, is 85 percent, 
"(II) January 1,1990, is 90 percent, 
"(HI) January 1,1991, is 95 percent, and 
"(TV) January 1,1992, is 100 percent, 
"(iii) In the case of a State which has elected treatment under 
section 1902(f) and which, as of January 1, 1987, used an income 
standard for individuals age 65 or older which was more restrictive 
PUBLIC LAW 100-360—JULY 1, 1988 
102 STAT. 749 
than the income standard established under the supplemental secu-
rity income program under title XVI, the percent provided under 
clause (ii), with respect to eligibility for medical assistance on or 
after— 
"(D January 1,1989, is 80 percent, 
"(ID January 1,1990, is 85 percent, 
"OID January 1,1991, is 90 percent, 
"(IV) January 1,1992, is 95 percent, and 
"(V) January 1,1993, is 100 percent.". 
(c) RESOURCE STANDAHD.—Section 1905(p) (42 U.S.C. 1396d(p)) is 
(1) in paragraph (IXQ, by striking "(2XA)" and inserting "(2)"; 
(2) in paragraph (IXD), by striking "(except as provided in 
paragraph (2)(B))" and inserting "twice"; and 
(3) in psuragraph (2)— 
(A) in subparagraph (A), by striking "(2XA)" and inserting 
"(2)", and 
(B) by strikii^ subparagraph (B). 
(d) MEDICARE COVERAGE.—Section 1905(p) (42 U.S.C. 1396d(p)) is 
amended— 
(1) in paragraph (3XA), by striking "under part B and (if 
applicable) imder section 1818" and inserting "under title XVIII 
(including under part B and, if applicable, under section 1818)"; 
(2) by amending subparagraphs (B) and (C) of paragraph (3) to 
read as follows: 
"(B) (Coinsurance under title XVm (including coinsurance 
described in section 1813). 
"(0) Subject to paragraph (4), deductibles established under 
title XVm (including those described in section 1813, 1833(b), 
and section 1834(cXl))."; and 
(3) by adding at the end the following new paragraph: 
"(4) In a State which provides medical assistance for prescribed 
state and local 
drugs under section 1905(aX12), instead of providing to qualified |°^^™/}^f,^^ 
medicare beneficiaries, under paragraph (3XC), medicare cost-shar-
ing with respect to the annual deductible for covered outpatient 
drugs under section 1834(cXl)i the State may provide to such bene-
ficiaries, before charges for covered outpatient drugs for a year 
reach such deductible amount, benefits for prescribed drugs in the 
same amount, duration, and scope as the benefits made available 
imder the State plan for individuals described in section 
1902(aX10XAXi).". 
(e) CONFORMING AMENDMENTS.— 
(1) Section 1843 (42 U.S.C. 1395v) is amended by inserting "or 
after 1988" in subsections (a), (gXD, and (hXD after "during 
1981". 
(2) Section 1902 (42 U.S.C. 1396a) is amended— 
(A) in subsection (aX10XAXii)(X), by striking "subject to 
subsection (mX3),", 
(B) in subsection (aX10)(E), by striking "subject to subsec-
tion (mX3),"; 
(Q in subsection (aX17), by striking "(mX4), and (mX5)" 
and inserting "(mX3), and (mX4)", and 
(D) in subsection (m), by striking paragraph (3) and by 
redesignating paragraphs (4) and (5) as paragraphs (3) and 
(4), respectively. 
Prescription 
drugs. 
102 STAT. 750 
PUBLIC LAW 100-360—JULY 1, 1988 
Effective date, 
42 u s e 1395v 
note. 
Effective date. 
42 use 1396a 
note. 
42 u s e 1396a 
note. 
State and local 
governments. 
State and local 
governments. 
(3) The amendment made by paragraph (1) shall take effect on 
January 1, 1989, and the amendments made by paragraph (2) 
shall take effect on July 1,1989. 
(f) TECHNICAL AMENDMENT.—Effective as though mcluded in the 
enactment of the Omnibus Budget Reconciliation Act of 1986, para-
graph (2) of section 9403(g) of such Act is amended to read as follows: 
"(2) PAYMENT OP MEDICARE COST4SHARING.—Section 1903(aXl) 
(42 U.S.C. 1396b(aXl)) is amended by mserting 'includmg 
expenditures for medicare cost-sharing and' before 'including 
expenditures'.". 
(g) TREATMENT OF CERTAIN STATES.-^ 
(1) STATES OPERATING UNDER DEMONSTRATION PROJECTS,—In 
the case of any State which is providing medical assistance to its 
residents under a waiver granted under section 1115(a) of the 
Social Security Act, the Secretary of Health and Human Serv-
ices shall require the State to meet the requirement of section 
1902(aX10)(E) of the Social Security Act in the same manner as 
the State would be required to meet such requirement if the 
State had in effect a plan approved under title XIX of such Act. 
(2) COMMONWEALTHS AND TERRITORIES.—Section 1905(p) (42 
U.S.C. 1396d(p)), as amended by subsection (dX3), is further 
amended by adding at the end the following new paragraph: 
"(5) Notwithstanding any other provision of this title, in the case 
of a State (other than the 50 Stat^ and the District of (Columbia)— 
"(A) the requirement stated in section 1902(aX10)(E) shall be 
optional, and 
"(B) for purposes of paragraph (2XA), the State may substitute 
for the percent provided under clause (ii) of such paragraph any 
percent.". 
(h) EFFECTIVE DATE.—(1) The amendments made by this section 
apply (except as provided in subsections (e) and (f) and under 
paragraph (2)) to pa3mients under title XIX of the Social Security 
Act for calendar quarters beginning on or after January 1, 1989, 
without regard to whether or not final regulations to carry out such 
amendments have been promulgated by such date, with respect to 
medical assistance for— 
(A) monthly premiums under title XVIII of such Act for 
months beginning with January 1989, and 
(B) items and services furnished on and after January 1,1989. 
(2) In the case of a State plan for medical assistance under title 
X K of the Social Security Act which the Secretary of Health and 
Human Services determines requires State legislation (other than 
legislation appropriating funds) in order for the plan to meet the 
additional requirements imposed by the amendments made by this 
section, the State plan shall not be regarded as failing to comply 
with the requirements of such title solely on the basis of its failure 
to meet these additional requirements before the first day of the 
first session of the State legislature that begins after the date of the 
enactment of this Act. 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. 302. COVERAGE AND PAYMENT FOR PREGNANT WOMEN AND IN-
FANTS WITH INCOMES BELOW POVERTY LINE. 
(a) PREGNANT WOMEN AND INFANTS UNDER AGE 1.— 
PUBLIC LAW 100-360—JULY 1, 1988 
102 STAT. 751 
<1) REQUIRING COVERAGE.—Section 1902(aX10) (42 U.S.C. 
1396a(a)(10)) is amended— 
(A) in subparagraph (AXi), by striking "or" at the end of 
subclause (II), by striking the semicolon in subclause (III) 
and inserting ", or", and by adding at the end the following 
new subclause: 
"(IV) who are described in subparagraph (A) or 
(B) of subsection (1X1) and whose family income 
does not exceed the minimum income level the 
State is required to establish under subsection 
(1X2XA) for such a family;"; 
(B) by amending subclause (IX) of subparagraph (AXii) to 
read as follows: 
"(IX) who are described in subsection (IXD and 
are not described in clause (i)dV);"; and 
(C) in clause (VII) in the matter after and below subpara-
graph (E), by mserting "(AXiXIV) or" before "(AXiiXIX)". 
(2) DESCRIPTION OF INDIVIDUALS REQUIRED TO BE COVERED.— 
Section 1902(1) (42 U.S.C. 1396a(l)) is amended— 
(A) in paragraph (IXC)— 
(i) by inserting "at the option of the State," after 
"(C)", and 
(ii) by striking "and" after "1983,"; and 
(B) in paragraph (2XA)— 
(i) by striking "not more than 185 percent)" and 
inserting "(not less than the percentage provided under 
clause (ii) and not more than 185 percent)"; 
(ii) by inserting "(i)" after "(2XA)"; and 
(iii) by adding at the end the following new clause: 
"(ii) Subject to clause (iii), the percentage provided under this 
clause, with respect to eligibility for medical assistance on or after— 
"(I) July 1,1989, is 75 percent, and 
"ai) July 1,1990, is 100 percent, 
"(iii) In the case of a State which, as of the date of the enactment 
of this clause, has elected to provide, and provides, medical assist-
ance to individuals described in this subsection or has enacted 
legislation authorizing, or appropriating funds, to provide such 
assistance to such individuals before July 1, 1989, the percentage 
provided under clause (ii) shall not be less than— 
"(I) the percentage specified by the State in an amendment to 
its State plan (whether approved or not) as of the date of the 
enactment of this clause, or 
"(II) if no such percentage is specified as of the date of the 
enactment of this clause, the percentage established under the 
State's authorizing legislation or provided for under the State's 
appropriations; 
but in no case shall this clause require the percentage provided 
under clause (ii) to exceed 100 percent.". 
0>) COVERAGE OF MEDICALLY NECESSARY SERVICES FOR INFANTS AND 
ASSURING ADEQUATE PAYMENT FOR INPATIENT HOSPITAL SERVICES 
FOR INFANTS IN DISPROPORTIONATE SHARE HOSPITAIS.— 
(1) COVERAGE OP MEDICALLY NECESSARY SERVICES FOR IN-
FANTS.—Section 1902(aX10) (42 U.S.C. 1396a(aX10)) is amended, 
in the matter after and below subparagraph (E)— 
(A) by striking "and" before "(IX)", and 
(B) by inserting before the semicolon at the end the 
following: ", and (X) if the plan provides for any fixed 
102 STAT. 752 
PUBLIC LAW 100-360—JULY 1, 1988 
durational limit on medical assistance for inpatient hos-
pital services (whether or not such a limit varies by medical 
condition or diagnosis), the plan must establish exceptions 
to such a limit for medically necessary inpatient hospital 
services furnished with respect to individuals under one 
year of age in a hospital defined under the State plan, 
pursuant to section 1923(aXlXA), as a disproportionate 
share hospital and subparagraph (B) (relating to com-
parability) shall not be construed as requiring such an 
exception for other individuals, services, or hospitals". 
(2) ASSURING ADEQUATE PAYMENT FOR INPATIENT HOSPITAL 
SERVICES FOR INFANTS IN DISPROPORTIONATE SHARE HOSPITALS.— 
Section 1923(aX2), as redesignated pursuant to the amendment 
42 use l396r-4. 
made by section 411(kX6XB) of this Act, is amended by adding at 
the end the following new subparagraph: 
"(C) If a State plan under this title provides for pajmients for 
inpatient hospital services on a prospective basis (whether per diem, 
per case, or otherwise), in order for the plan to be considered to have 
met such requirement of section 1902(aX13XA) as of July 1,1989, the 
State must submit to the Secretary by not later than April 1,1989, a 
State plan amendment that provides, in the case of hospitals defined 
by the State as disproportionate share hospitals under paragraph 
(IXA), for an outlier adjustment in payment amounts for medically 
necessary inpatient hospital services provided on or after July 1, 
1989, involving exceptionally high costs or exceptionally long 
lengths of stay for individuals under one year of age.". 
(c) CERTAIN STATE PLAN REQUIREMENTS.— 
(1) IN GENERAL.—Subsection (c) of section 1902 (42 U.S.C. 
1396a) is amended to read as follows: 
"(c) Notwithstanding subsection (b), the Secretary shall not ap-
prove any State plan for medical assistance if— 
"(1) the State has in effect, under its plan established under 
part A of title IV, pa3nment levels that are less than the pay-
ment levels in effect under such plan on May 1, 1988; or 
"(2) the State requires individuals described in subsection 
(IXD to apply for benefits under such part as a condition of 
appl3dng for, or receiving, medical assistance under this title.". 
(2) ELIMINATING DUPUCATE REQUIREMENT.—Section 1902G) (42 
U.S.C. 1396a(l)) is amended by striking paragraph (4). 
(3) MAINTENANCE OF EFFORT TO RECEIVE MEDICAL ASSISTANCE 
FOR OPTIONAL COVERAGE OF PREGNANT WOMEN AND CHILDREN.— 
Section 1903(i) (42 U.S.C. 1396b(i)) is amended— 
(A) by striking the period at the end of paragraph (8) and 
inserting "; or", and 
(B) by inserting after paragraph (8) the following new 
paragraph: 
"(9) with respect to any amount of medical assistance for 
pregnant 
women 
and 
children 
described 
in 
section 
1902(aX10XAXiiXIX), if the State has in effect, under its plan 
established under part A of title IV, payment levels that are less 
than the payment levels in effect under such plan on July 1, 
1987.". 
(d) TREATMENT OF CERTAIN STATES AND TERRITORIES.—Section 
19020) (42 U.S.C. 1396a(l)) is amended by adding at the end the 
following new paragraph: 
"(4XA) In the case of any State which is providing medical assist-
ance to its residents under a waiver granted under section 1115, the 
PUBLIC LAW 100-360—JULY 1, 1988 
102 STAT. 753 
Secretary shall reqviire the State to provide medical assistance for 
pr^nant women and infants under age 1 described in subsection 
(aXlOXAXiXIV) in the same manner as the State would be required 
to provide such assistance for such individuals if the State had in 
effect a plan approved under this title. 
"(B) In the case of a State which is not one of the 50 States or the 
District of Columbia, the State need not meet the requirement of 
suteection (aXlOXAXiXIV) and, for purposes of paragraph (2XA), the 
State may substitute for the percentage provided under clause (ii) of 
such paragraph any percentage.". 
(e) CONFORMING AMENDMENTS.— 
(1) Section 1902(eX6) (42 U.S.C. 1396a(eX6)) is amended to read 
as follows: 
"(6) At the option of a State, in the case of a pr^nant woman 
described in subsection (aXlO) who, because of a change in income of 
the family of which she is a member, would not otherwise continue 
to be described in such subsection, the State plan may nonetheless 
treat the woman as being an individual described in subsection 
(aXlOXAXiXIV) and subsection (IXIXA) without regard to such 
change of income through the end of the month in which the 60-day 
pericd (b^inning on the last day of her pr^nancy) ends.". 
(2) Section 1902(eX7) (42 U.S.C. 1396a(eX7)) is amended— 
(A) by striking "If a State plan provides medical assist-
ance for individuals under subsection (aX10XAXii)(IX), in" 
and inserting "In", 
(B) by inserting "or paragraph (2) of section 1905(n)" after 
"subsection (1X1) the first place it appears, and 
(C) by striking "subsection (aX10XAXii)(IX) and subsection 
GXD" and inserting "such respective provision". 
(3) Section 1902(1) (42 U.S.C. 1396a(l)) is amended— 
(A) in the matter after and below subparagraph (Q of 
paragraph (1), by inserting "any of subclauses (I) through 
(m) o f after "who are not described in", and 
(B) in paragraph (3), in the matter before subpara-
grapfti (A), by inserting 
"(aXlOXAXiXIV) or" before 
^(aXlOXAXiiXDC)". 
(4) Section 1903(fX4) (42 U.S.C. 1396b(fX4)) is amended, m 
the 
matter 
before 
subparagraph 
(A), 
by 
inserting 
"1902(aX10XAXiXIV)," before *'1902(aX10XAXiiXIX)'\ 
(f) EPFBCnVE DATE.— 
42 use 1396a 
(1) IN GENERAL.—The amendments made by this section apply note. 
(except as provided in this subsection) to payments imder title 
XIX of the Social Security Act for calendar quarters banning 
on or after July 1, 1989, with respect to eligibility for medical 
assistance on or after such date, without regard to whether or 
not final r^ulations to carry out such amendments have been 
promulgated by such date. 
(2) PAYMENT ADJUSTMENT.—The amendments made by subsec-
tion (bX2) shall take effect on the date of the enactment of this 
Act. 
(3) DELAY FOR STATE LEGISLATION.—In the case of a State plan 
for medical assistance under title XIX of the Social Security Act 
which the Secretary of Health and Human Services determines 
requires State l^islation (other than legislation appropriating 
funds) in order for the plan to meet the additional requirements 
imposed by the amendments made by this section (other than 
subsection (bX2)), the State plan shall not be regarded as failing 
102 STAT. 754 
PUBLIC LAW 100-360—JULY 1, 1988 
to comply with the requirements of such title solely on the basis 
of its failure to meet these additional requirements before the 
first day of the first calendar quarter beginning after the close 
of the first regular session of the State legislature that begins 
after the date of the enactment of this Act. For purposes of the 
previous sentence, in the case of a State that has a regular 
legislative session of 2 years, each year of such session shall be 
deemed to be a separate regular session of the State legislature. 
SEC. 303. PROTECTION OF INCOME AND RESOURCES OF COUPLE FOR 
MAINTENANCE OF COMMUNITY SPOUSE. 
(a) IN GENERAL.— 
(1) Title XIX, as amended by the amendment made by section 
411(kX6XB) of this Act, is amended— 
42 use 1396s. 
(A) by redesignating section 1924 as section 1925, and 
(B) by inserting after section 1923 the following new 
section: 
"TREATMENT OF INCOME AND RESOURCES FOR CERTAIN 
INSTITUTIONALIZED SPOUSES 
42 use 1396r-5. 
"SEC. 1924. (a) SPECIAL TREATMENT FOR INSTITUTIONALIZED 
SPOUSES.— 
"(1) SUPERSEDES OTHER PROVISIONS.—In determining the eligi-
bility for medical assistance of an institutionalized spouse (as 
defined in subsection (hXl)), the provisions of this section super-
sede any other provision of this title (including sections 
1902(aX17) and 1902(f)) which is inconsistent with them. 
"(2) No COMPARABLE TREATMENT REQUIRED.—Any different 
treatment provided under this section for institutionalized 
spouses shall not, by reason of paragraph (10) or (17) of section 
1902(a), require such treatment for other individuals. 
"(3) DOES NOT AFFECT CERTAIN DETERMINATIONS.—Except as 
this section specifically provides, this section does not apply to— 
"(A) the determination of what constitutes income or 
resources, or 
"(B) the methodology and standards for determining and 
evaluating income and resources. 
"(4) APPUCATION IN CERTAIN STATES AND TERRITORIES.— 
"(A) APPUCATION IN STATES OPERATING UNDER DEM-
ONSTRATION PROJECTS.—In the case of any State which is 
providing medical assistance to its residents under a waiver 
granted under section 1115, the Secretary shall require the 
State to meet the requirements of this section in the same 
manner as the State would be required to meet such 
requirement if the State had in effect a plan approved 
under this title. 
"(B) No APPUCATION IN COMMONWEALTHS AND TERRI-
. TORIES.—This section shall only apply to a State that is one 
of the 50 States or the District of Columbia. 
"(b) RULES FOR TREATMENT OF INCOME.— 
"(1) SEPARATE TREATMENT OF INCOME.—During any month in 
which an institutionalized spouse is in the institution, except as 
provided in paragraph (2), no income of the community spouse 
shall be deemed available to the institutionalized spouse. 
"(2) ATTRIBUTION OF INCOME.—In determining the income of 
an institutionalized spouse or community spouse, after the 
•r^^^K^, 
PUBLIC LAW 100-360—JULY 1, 1988 
102 STAT. 755 
institutionalized spouse has been determined to be eligible for 
medical assistance, except as otherwise provided in this section 
and regardless of any State laws relating to community prop-
erty or the division of marital property, the following rules 
apply: 
"(A) NON-TRUST PROPERTY.—Subject to subparagraphs (C) 
and (D), in the case of income not from a trust, unless the 
instrument providing the income otherwise specifically pro-
vides— 
"(i) if payment of income is made solely in the name 
of the institutionalized spouse or the community 
spouse, the income shall be considered available only to 
that respective spouse; 
"(ii) if payment of income is made in the names of the 
institutionalized spouse and the community spouse, 
one-half of the income shall be considered available to 
each of them; and 
"(iii) if payment of income is made in the names of 
the institutionalized spouse or the community spouse, 
or both, and to another person or persons, the income 
shall be considered available to each spouse in propor-
tion to the spouse's interest (or, if payment is made 
with respect to both spouses and no such interest is 
speciAed, one-half of the joint interest shall be consid-
ered available to each spouse). 
"(B) TRUST PROPERTY.—In the case of a trust— 
"(i) except as provided in clause (ii), income shall be 
attributed in accordance with the provisions of this 
title (including sections 1902(aX17) and 1902(k)), and 
"(ii) income shall be considered available to each 
spouse as provided in the trust, or, in the absence of a 
specific provision in the trust— 
"(I) if payment of income is made solely to the 
institutionalized spouse or the community spouse, 
the income shall be considered available only to 
that respective spouse; 
"(II) if payment of income is made to both the 
institutionalized 
spouse and the community 
spouse, one-half of the income shall be considered 
available to each of them; and 
"(in) if payment of income is made to the institu-
tionalized spouse or the community spouse, or 
both, and to another person or persons, the income 
shall be considered available to each spouse in 
proportion to the spouse's interest (or, if pajrment 
is made with respect to both spouses and no such 
interest is specified, one-half of the joint interest 
shall be considered available to each spouse). 
"(C) PROPERTY WITH NO INSTRUMENT.—In the case of 
income not from a trust in which there is no instrument 
establishing ownership, subject to subparagraph (D), one-
half of the income shall be considered to be available to the 
institutionalized spouse and one-half to the community 
spouse. 
"(D) REBUTTING OWNERSHIP.—The rules of subpar£^aphs 
(A) and (C) are superseded to the extent that an institu-
tionalized spouse can establish, by a preponderance of the 
102 STAT. 756 
PUBLIC LAW 100-360-JULY 1, 1988 
evidence, that the ownership interests in income are other 
than as provided under such subparagraphs. 
"(c) RULES FOR TREATMENT OF RESOURCES.— 
"(1) COMPUTATION OF SPOUSAL SHARE AT TIME OF INSTTTU-
TIONAUZATION.— 
"(A) TOTAL JOINT RESOURCES.—There shall be computed 
(as of the beginning of a continuous period of institutional-
ization of the institutionalized spouse)^ 
"(i) the total value of the resources to the extent 
either the institutionalized spouse or the community 
spouse has an ownership interest, and 
"(ii) a spousal share which is equal to ¥2 of such total 
value. 
State and local 
"(B) ASSESSMENT,—At the request of an institutionalized 
governments. 
spouse or Community spouse, at the beginning of a continu-
^^°''^- 
ous period of institutionalization of the institutionalized 
spouse and upon the receipt of relevant documentation of 
resources, the State shall promptly assess and document 
the total value described in subparagraph (AXi) and shall 
provide a copy of such assessment and documentation to 
each spouse and shall retain a copy of the assessment for 
use under this section. If the request is not part of an 
application for medical assistance under this title, the State 
may, at its option as a condition of providing the assess-
ment, require pa3mient of a fee not exceeding the reason-
able expenses of providing and documenting the assess-
ment. At the time of providing the copy of the assessment, 
the State shall include a notice indicating that the spouse 
has right to a fair hearing under subsection (eX2XE) with 
respect to the determination of the community spouse re-
source allowance, to provide for an allowance adequate to 
raise the spouse's income to the minimum monthly mainte-
nance needs allowance. 
"(2) ATTRIBUTION OF RESOURCES AT TIME OF INITIAL ELIGIBILITY 
DETERMINATION.—In determining the resources of an institu-
tionalized spouse at the time of application for benefits under 
this title, regardless of any State laws relating to community 
property or the division of marital property— 
"(A) except as provided in subparagraph (B), all the 
resources held by either the institutionalized spouse, 
community spouse, or both, shall be considered to be avail-
able to the institutionalized spouse, and 
"(B) resources shall not be considered to be available to 
an institutionalized spouse, to the extent that the amount 
of such resources does not exceed the amount computed 
under subsection (fK2XA) (as of the time of application for 
benefits). 
"(3) ASSIGNMENT OF SUPPORT RIGHTS.—The institutionalized 
spouse shall not be ineligible by reason of resources determined 
under paragraph (2) to be available for the cost of care where— 
(A) the institutionalized spouse has assigned to the State 
any rights to support from the community spouse; 
(B) the institutionalized spouse lacks the ability to exe-
cute an assignment due to physical or mental impairment 
but the State has the right to bring a support proceeding 
against a community spouse without such assignment; or 
PUBLIC LAW 100-360—JULY 1, 1988 
102 STAT. 757 
"(C) the State determines that denial of eligibility would 
work an undue hardship. 
"(4) SEPARATE TREATMENT OF RESOURCES AFTER EUGIBIUTY FOR 
BENEFITS ESTABUSHED.—During the continuous period in which 
an institutionalized spouse is in an institution £ind after the 
month in which an institutionalized spouse is determined to be 
eligible for benefits under this title, no resources of the commu-
nity spouse shall be deemed available to the institutionalized 
spouse. 
"(5) RESOURCES DEFINED.—In this section, the term 'resources' 
does not include— 
"(A) resources excluded under subsection (a) or (d) of 
section 1613, and 
"(B) resources that would be excluded under section 
1613(aX2XA) but for the limitation on total value described 
in such section. 
"(d) PROTECTING INCOME FOR COMMUNITY SPOUSE.— 
"(1) 
ALLOWANCES TO BE OFFSET FROM INCOME OF INSTITU-
TiONAUZED SPOUSE.—After an institutionalized spouse is deter-
mined to be eligible for medical assistance, in determining the 
amount of the spouse's income that is to be applied monthly to 
pajmaent for the costs of care in the institution, there shall be 
deducted from the spouse's monthly income the following 
amounts in the following order: 
"(A) A personal needs allowance (described in section 
1902(qXl)), in an amount not less than the amount specified 
in section 1902(qX2). 
"(B) A community spouse monthly income allowance (as 
defined in paragraph (2)), but only to the extent income of 
the institutionalized spouse is made available to (or for the 
benefit of) the community spouse. 
"(C) A family allowance, for each family member, equal 
to at least V
a of the amount by which the amount described 
in paragraph (3XAXi) exceeds the amount of the monthly 
income of that family member, 
"(D) Amounts for incurred expenses for medical or re-
medial care for the institutionalized spouse (as provided 
under section 1902(r)). 
In subparagraph (C), the term 'family member' only includes 
minor or dependent children, dependent parents, or dependent 
siblings of the institutionalized or community spouse who are 
residing with the community spouse. 
"(2) 
COMMUNITY SPOUSE MONTHLY INCOME ALLOWANCE DE-
FINED.—In this section (except as provided in paragraph (5)), the 
'community spouse monthly income allowance' for a community 
spouse is an amount by which— 
"(A) except as provided in subsection (e), the minimum 
monthly maintenance needs allowance (established under 
and in accordance with paragraph (3)) for the spouse, ex-
ceeds 
"(B) the amount of monthly income otherwise available 
to the community spouse (determined without regard to 
such an allowance). 
"(3) 
ESTABUSHMENT OF MINIMUM MONTHLY MAINTENANCE 
NEEDS ALLOWANCE,— 
"(A) IN GENERAL.—Each State shall establish a minimum 
state and local 
monthly maintenance needs allowsmce for each community 
governments. 
102 STAT. 758 
PUBLIC LAW 100-360—JULY 1, 1988 
spouse which, subject to subparagraph (Q, is equal to or 
exceeds— 
"(i) the applicable percent (described in subpara-
graph (B)) of Via of the nonfarm income official poverty 
line (defined by the Office of Management and Budget 
and revised annually in accordance with sections 652 
and 673(2) of the Omnibus Budget Reconciliation Act of 
1981) for a family unit of 2 members; plus 
"(ii) an excess shelter allowance (as defined in para-
graph (4)). 
A revision of the official poverty line referred to in clause (i) 
shall apply to medical assistance furnished during and after 
the second calendar quarter that b^ins after the date of 
publication of the revision. 
"(B) APPUCABLE PERCENT.—For purposes of subparagraph 
(AXi), the 'applicable percent' described in this paragraph, 
effisctive AB O{~~' 
"(i) September 30,1989, is 122 percent, 
"(ii) July 1,1991, is 133 percent, and 
"(iii) July 1,1992, is 150 percent. 
"iO CAP ON MINIMUM MONTHLY MAINTENANCE NEEDS 
ALLOWANCE.—The minimum monthly maintenance needs 
allowance established under subparagraph (A) may not 
exceed $1,500 (subject to a4justment under subsections (e) 
and (g)). 
"(4) EXCESS SHELTER ALLOWANCE DEFINED.—In paragraph 
(3XAXii), the term 'excess shelter allowance' means, for a 
community spouse, the amount by which the sum of— 
"(A) the spouse's expenses for rent or mortgage pajonent 
(including principal and interest), taxes and insurance and, 
in the case of a condominium or cooperative, required 
maintenance chaige, for the community spouse's principal 
residence, and 
"(B) the standard utility allowance (used by the State 
under section 5(e) of the Food Stamp Act of 1977) or, if the 
State does not use such an allowance, the spouse's actual 
utility expenses, 
exceeds 30 percent of the amount described in paragraph 
(3XAXi), except that^ in the case of a condominium or coopera-
tive, for which a maintenance chaige is included under subpara-
graph (A), any allowance under subparagraph (C) shall be re-
duced to the extent the maintenance charge includes utility 
expensea. 
(5) COURT ORDERED SUPPORT.—If a court has entered an order 
against an institutionalized spouse for monthly income for the 
support of the community spouse, the community spouse 
montUy income allowance for the spouse shall be not less than 
the amount of the monthly income so ordered. 
"(e) NOTICE AND FAIR HEARING.— 
State and local 
"(1) NOTICE.—Upon— 
governments. 
<«(^) jj determination of eligibility for medical assistance 
of an institutionalized spouse, or 
"(B) a request by either the institutionalized spouse, or 
the conmiunity spouse, or a representative acting on behalf 
of either spouse, 
each State shall notify both spouses (in the case described in 
subparagraph (A)) or the spouse making the request (in the case 
PUBLIC LAW 100-360—JULY 1, 1988 
102 STAT. 759 
described in subparagraph (B)) of the amount of the community 
spouse monthly income allowance (described in subsection 
(dXlXB)), of the amount of any family allowances (described in 
subsection (dXlXC)), of the method for computing the amount of 
the community spouse resources allowance permitted under 
subsection (f), and of the spouse's right to a fair hearing under 
this subsection respecting ownership or availability of income or 
resources, and the determination of the community spouse 
monthly income or resource allowance. 
"(2) FAIR HEARING.— 
"(A) IN GENERAL.—If either the institutionalized spouse 
or the community spouse is dissatisfied with a determina-
tion o
f
— 
"(i) 
the 
community 
spouse 
monthly 
income 
allowance; 
"(ii) the amount of monthly income otherwise 
available to the community spouse (as applied under 
subsection (dX2XB)); 
"(iii) the computation of the spousal share of re-
sources under subsection (cXD; 
"(iv) the attribution of resources under subsection 
(cX2); or 
"(v) the determination of the community spouse re-
source allowance (as defined in subsection (fX2)); 
such spouse is entitled to a fair hearing described in section 
1902(a)(3) with respect to such determination. Any such 
hearing respecting the determination of the community 
spouse resource allowance shall be held within 30 days of 
the date of the request for the hearing. 
"(B) REVISION OF MINIMUM MONTHLY MAINTENANCE NEEDS 
ALLOWANCE.—If either such spouse establishes that the 
community spouse needs income, above the level otherwise 
provided by the minimum monthly maintenance needs 
allowance, due to exceptional circumstances resulting in 
significant finemcial duress, there shall be substituted, for 
the minimum monthly maintenance needs allowance in 
subsection (dX2XA), an amount adequate to provide such 
additional income as is necessary. 
"(C) REVISION OF COMMUNITY SPOUSE RESOURCE ALLOW-
ANCE.—If either such spouse establishes that the commu-
nity spouse resource allowance (in relation to the amount of 
income generated by such an allowance) is inadequate to 
raise the community spouse's income to the minimum 
monthly maintenance needs allowemce, there shall be sub-
stituted, for the community spouse resource allowance 
under subsection (fK2), an amount adequate to provide such 
a minimum monthly maintenance needs allowance. 
"(f) PERMITTING TRANSFER OF RESOURCES TO COMMUNITY SPOUSE.— 
"(1) IN GENERAL.—An institutionedized spouse may, without 
regard to section 1917, transfer to the community spouse (or to 
another for the sole benefit of the community spouse) an 
amount equal to the community spouse resource allowance (as 
defined in paragraph (2)), but only to the extent the resources of 
the institutionalized spouse are transferred to (or for the sole 
benefit of) the community spouse. The transfer under the 
preceding sentence shall be made as soon as pacticable after the 
date of the initial determination of eligibility, taking into ac-
102 STAT. 760 
PUBLIC LAW 100-360—JULY 1, 1988 
count such time as may be necessary to obtain a court order 
under paragraph (3). 
"(2) COMMUNITY SPOUSE RESOURCE ALLOWANCE DEFINED.—In 
paragraph (1), the 'community spouse resource allowance' for a 
community spouse is an amount (if any) by which— 
"(A) the greatest of— 
"(i) ^12,000 (subject to adjustment under subsection 
(g)), or, if greater (but not to exceed the amount speci-
fied in clause (iiXID) an amount specified under the 
State plan, 
"(ii) the lesser of (I) the spousal share computed 
under subsection (cXD, or (II) $60,000 (subject to adjust-
ment under subsection (g)), 
"(iii) the amount established under subsection (eX2); 
or 
"(iv) the amount transferred under a court order 
under paragraph (3); 
exceeds 
"(B) the amount of the resources otherwise available to 
the community spouse (determined without regard to such 
an allowance). 
"(3) TRANSFERS UNDER COURT ORDERS.—If a court has entered 
an order against an institutionalized spouse for the support of 
the community spouse, section 1917 shall not apply to amounts 
of resources transferred pursuant to such order for the support 
of the spouse of a family member (as defined in subsection 
(dXD). 
"(g) INDEXING DOLLAR AMOUNTS.—For services furnished during a 
calendar year after 1989, the dollar amounts specified in subsections 
(dX3XC), (fX2XAXi), and (f)(2XA)(iiXII) shall be increased by the same 
percentage as the percentage increase in the consumer price index 
for all urban consumers (all items; U.S. city average) between 
September 1988 and the September before the calendar year in-
volved. 
"(h) DEFINITIONS.—In this section: 
"(1) The term 'institutionalized spouse' means an individual 
who— 
"(A) is in a medical institution or nursing facility or who 
(at the option of the State) is described in section 
1902(aX10XAXiiXVI), and 
"(B) is married to a spouse who is not in a medical 
institution or nursing facility; 
but does not include any such individual who is not likely to 
meet the requirements of subparagraph (A) for at least 30 
consecutive days. 
"(2) The term 'community spouse* means the spouse of an 
institutionalized spouse.". 
(2) Section 
1919(cXlXBXi) (42 U.S.C. 1396r(cXlXBXi)) is 
amended by inserting "and of the requirements and procedures 
for establishing eligibility for medical assistance under this 
title, including the right to request an assessment under section 
1924(cXlXB)" before the semicolon, 
(b) TAKING INTO ACCOUNT CERTAIN TRANSFERS OF ASSETS.—Subsec-
tion (c) of section 1917 (42 U.S.C. 1396p) is amended to read as 
follows: 
State and local 
"(cXD In order to meet the requirements of this subsection (for 
governments. 
purposes of section 1902(aX51XB)), the State plan must provide for a 
PUBLIC LAW 100-360—JULY 1, 1988 
102 STAT. 761 
period of ineligibility in the case of an institutionalized individual 
(as defined in paragraph (3)) who, at any time during the 30-month 
period immediately before the individual's application for medical 
assistance imder the State plan, disposed of resources for less than 
fair market value. The period of ineligibility shall begin with the 
month in which such resources were transferred and the number of 
months in such period shall be equal to the lesser of— 
"(A) 30 months, or 
"(BXi) the total uncompensated value of the resources so 
transferred, divided by (ii) the average cost, to a private patient 
at the time of the application, of nursing facility services in the 
State or, at State option, in the community in which the individ-
ual is institutional^ed. 
"(2) An individual shall not be ineligible for medical assistance by 
reason of paragraph (1) to the extent that— 
"(A) the resources transferred were a home and title to the 
home was transferred to— 
"(i) the spouse of such individual; 
"(ii) a child of such individual who is under age 21, or 
(with respect to States eligible to participate in the State 
prc^am established under title XVT) is blind or perma-
nently and totally disabled, or (with respect to States which 
are not eligible to participate in such program) is blind or 
disabled as defined in section 1614; 
"(iii) a sibling of such individual who has an equity 
interest in such home and who was residing in such individ-
ual's home for a period of at least one year immediately 
before the date of the individual's admission to the medical 
institution or nursing facility; or 
"(iv) a son or daughter of such individual (other than a 
child described in clause (ii)) who was residing in such 
individual's home for a period of at least two years imme-
diately before the date of such individual's admission to the 
medical institution or nursing facility, and who (as deter-
mined by the State) provided care to such individual which 
permitted such individual to reside at home rather than in 
such an institution or facility; 
"(B) the resources were transferred to (or to another for the 
sole benefit of) the community spouse, as defined in section 
1924(hX2), or the individual's child who is blind or permanently 
and totally disabled; 
"(C) a satisfactory showing is made to the State (in accordance 
with any regulations promulgated by the Secretary) that (i) the 
individual intended to dispose of the resources either at fair 
market value, or for other valuable consideration, or (ii) the 
resources were transferred exclusively for a purpose other than 
to qualify for medical assistance; or 
"(D) the State determines that denial of eligibility would work 
an undue hardship. 
"(3) In this subsection, the term 'institutionalized individual' 
means an individual who is an inpatient in a medical institution or 
nursing facility. 
"(4) A State (including a State which has elected treatment under 
section 1902(f)) may not provide for any period of ineligibility for an 
individual due to transfer of resources for less than fair market 
value except in accordance with this subsection.". 
Real property. 
Children and 
youth. 
Blind persons. 
Handicapped 
persons. 
Children and 
youth. 
Blind persons. 
Handicapped 
persons. 
102 STAT. 762 
PUBLIC LAW 100-360—JULY 1, 1988 
(c) NEW SSI POLICY REGARDING DISPOSAL OP RESOURCES FOR LESS 
THAN FAIR MARKET VALUE.— 
(1) ELIMINATION OP SSI PENALTY; NOTIFICATION OF MEDICAID 
POLICY LIMITING EUGIBILTTY OF INSTITUTIONALIZED INDIVIDUALS 
FOR BENEFITS BASED ON SUCH DISPOSAL OP RESOURCES.—Subsec-
tion (c) of section 1613 (42 U.S.C. 1382b) is amended to read as 
follows: 
"Notification of Medicaid Policy Restricting Eligibility of Institu-
tionalized Individuals for Benefits Based on Disposal of Resources 
for Less Than Fair Market Value 
"(cXD At the time an individual (and the individual's eligible 
spouse, if any) applies for benefits under this title, and at the time 
the eligibility of an individual (and such spouse, if any) for such 
benefits is redetermined, the Secretary shall— 
"(A) inform such individual of the provisions of section 1917(c) 
providing for a period of ineligibility for benefits under title 
XIX for individuals who make certain dispositions of resources 
for less than fair market value, and inform such individual that 
information obtained pursuant to subparagraph (B) will be 
made available to the State agency administering a State plan 
under title XIX (as provided in paragraph (2)); and 
"(B) obtain from such individual information which may be 
used by the State agency in determining whether or not a 
period of ineligibility for such benefits would be required by 
reason of section 1917(c) if such individual (or such spouse, if 
any) enters a medical institution or nursing facility. 
State and local 
"(2) The Secretary shall make the information obtained under 
governments. 
paragraph (IXB) available, on request, to any State agency admin-
istering a State plan approved under title XIX.", 
(2) CONFORMING AMENDMENT.—Subparagraph (B) of section 
1611(eXl) (42 U.S.C. 1382(eXl)) is amended by adding after and 
below clause (iii) the following new sentence: 
"For purposes of this subsection, a hospital, extended care facility, 
nursing home, or intermediate care facility which is a 'medical 
institution or nursing facility' within the meaning of section 1917(c) 
shall be considered to be receiving payments with respect to an 
individual under a State plan approved under title XIX during any 
period of ineligibility of such individual provided for under the Stete 
plan pursuant to section 1917(c).". 
(d) DISREGARDING PAYMENTS FOR CERTAIN MEDICAL EXPENSES BY 
INSTITUTIONALIZED INDIVIDUALS.—Section 1902 (42 U.S.C. 1396), as 
42 use 1396a 
amended by the amendment made by section 411(nX3) of this Act, is 
amended by adding at the end the following new subsection: 
"(r) For purposes of sections 1902(aX17) and 1924(dXlXD) and for 
purposes of a wsdver under section 1915, with respect to the post-
eligibility treatment of income of individuals who are institutional-
ized or receiving home or community-based services under such a 
waiver, there shall be taken into account amounts for incurred 
expenses for medical or remedial care that are not subject to 
pa3rment by a third party, including— 
"(A) medicare and other health insurance 
premiums, 
deductibles, or coinsurance, and 
"(B) necessary medical or remedial care recognized under 
Stete law but not covered under the Stete plan under this title, 
subject to reasonable limits the Stete may esteblish on the 
amount of these expenses.". 
r-^*-*^^'','^;':*;-'"'-
PUBLIC LAW 100-360—JULY 1, 1988 
102 STAT. 763 
(e) CoNFORBtiNG AMENDMENT.—Scction 1902 (42 U.S.C. 1396a), as 
amended by the amendment made by section 411(nX3) of this Act, is 
(1) in subsection (aXlOXCXiXni), by striking "the same" each 
place it appears and inserting "no more restrictive than the"; 
(2) by striking "and" at the end of subsection (aX49); 
(3) by striking the period at the end of subsection (aX50) and 
inserting "; and'; 
(4) by inserting after paragraph (50) of subsection (a) the 
following new paragraph: 
"(51XA) meet the requirements of section 1924 (relating to 
protection of conmiunity spouses), and (B) meet the requirement 
of section 1917(c) (relating to transfer of assets)."; and 
(5) in subsection (r), as added by subsection id)— 
(A) by redesignating subparagraphs (A) and (B) as clauses 
(i) and (ii), respectively, 
(B) by inserting "(1)"^' after "(r)", and 
(C) by adding at the end the following new paragraph: 
"(2XA) The methodology to be employed in determining income 
and 
resource 
eligibili^ for individuals 
under 
subsection 
(aXlOXAXiXm), (aXlOXAXiXIV), (aXlOXAXii), (aXlOXCXiXIH), or under 
subsection (f) may be less restrictive, and shall be no more restric-
tive, than the methodology— 
"(i) in the case of groups consisting of aged, blind, or disabled 
individuals, under the supplemental security income program 
under title XVI, or 
"(ii) in the case of other groups, under the State plan most 
closely cat^orically related. 
"(B) For purposes of this subsection and subsection (aXlO), meth-
odology is considered to be 'no more restrictive' if, using the 
methodol<^y, additional individuals may be eligible for medical 
assistance and no individuals who are otherwise eligible are made 
ineligible for such assistance.". 
(f) TREATMENT OF HOMESTEAD EXEMPTION IN MISSOURI.—The State 
medical assistance plan of Missouri shall not be in compliance with 
the requirements of title XIX of the Social Security Act as of 
October 1, 1989, unless such pkui is amended to provide that, in 
determining the resources of any aged, blind, or disabled individual 
in the State who applies for medical assistance under such plan on 
or after such date, the State will not consider the home of the 
individual as a resource, r^ardless of the value of the home. 
(g) EFFECTIVE DATE.— 
(IXA) The amendments made by this section apply (except as 
provided in this subsection) to payments under title XIX of the 
Social Security Act for calendar quarters beginning on or after 
September 30, 1989, without r^ard to whether or not final 
regulations to carry out such amendments have been promul-
gated by such date. 
(B) Section 1924 of the Social Security Act (as inserted by 
subsection (a)) shall only apply to institutionalised individuals 
who b^in continuous periods of institutionalization on or after 
September 30, 1989, except that subsections (b) and (d) of such 
section (and so much of subsection (e) of such section as relates 
to such other subsections) shall apply as of such date to individ-
uals institutionalized on or after such date. 
(2XA) The amendment made by subsection (b) and section 
1902(a)(51)(B) of the Social Security Act, apply (except as pro-
Blind persons. 
Handicapped 
persons. 
Blind persons. 
Handicapped 
persons. 
42 u s e 1396r-5 
note. 
102 STAT. 764 
PUBLIC LAW 100-360—JULY 1, 1988 
vided in paragraph (5)) to payments under title XIX of the 
Social Security Act for calendar quarters beginning on or after 
July 1, 1988, or the date of the enactment of this Act, without 
regard to whether or not final regulations to carry out such 
amendments have been promulgated by such date. 
(B) Section 1917(c) of the Social Security Act, as amended by 
subsection 0^) of this section, shall apply to resources disposed of 
on or after July 1,1988. 
State and local 
(C) Notwithstanding subparagraphs (A) and (B), a State may 
governments. 
continue to apply the policies contained in the State plan as of 
June 30, 1988, with respect to resources disposed of before July 
1,1988. 
(3) The amendments made by subsection (c) shall apply to 
transfers occurring on or after July 1, 1988, without regard to 
whether or not final regulations to carry out such amendments 
have been promulgated by such date. 
(4) The amendment made by subsection (d) is effective on and 
after April 8, 1988, The final rule of the Health Care Financing 
Administration published on February 8, 1988 (53 Federal Reg-
ister 3586) is superseded to the extent inconsistent with the 
amendment made by subsection (d). 
State and local 
(5) In the case of a State plan for medical assistance under 
governments. 
title XIX of the Social Security Act which the Secretary of 
Health and Human Services determines requires State legisla-
tion (other than legislation appropriating funds) in order for the 
plan to meet the additional requirements imposed by the 
amendments made by this section (other than subsection (e)), 
the State plan shall not be regarded as failing to comply with 
the requirements of such title solely on the basis of its failure to 
meet these additional requirements before the first day of the 
first calendar quarter beginning after the close of the first 
regular session of the State legislature that begins after the 
date of the enactment of this Act. 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. 
(6) The amendments made by paragraphs (1) and (5) of subsec-
tion (e) shall apply to medical assistance furnished on or after 
October 1,1982. 
PUBLIC LAW 100-360—JULY 1, 1988 
102 STAT. 765 
TITLE IV—UNITED STATES BIPARTISAN 
COMMISSION 
ON 
COMPREHENSIVE 
HEALTH CARE, OBRA TECHNICAL COR-
RECTIONS, AND MISCELLANEOUS PRO-
VISIONS 
. 
Subtitle A—United States Bipartisan 
Commission on Comprehensive Health Care 
SEC. 401. ESTABLISHMENT. 
There is established a commission to be known as the United 
States Bipartisan Commission on Comprehensive Health Care (in 
this title referred to as the "Commission ). 
SEC. 402. DUTIES. 
(a) IN GENERAL.—The Commission shall— 
(1) examine shortcomings in the current health care delivery 
and financing mechanisms that limit or prevent access of all 
individuals in the United States to comprehensive health care, 
and 
(2) make specific recommendations to the Congress respecting 
Federal programs, policies, and financing needed to assure the 
availability o
f
— 
(A) comprehensive long-term care services for the elderly 
and disabled, 
(B) comprehensive health care services for the elderly 
and disabled, and 
(C) comprehensive health care services for all individuals 
in the United States. 
(b) CONSIDERATIONS IN RECOMMENDATIONS.—In making its rec-
ommendations, the Commission shall consider— 
(1) the amount and sources (consistent with principles of 
social insurance) of Federal funds to finance the needed serv-
ices, including reallocations of existing Federal program funds, 
and 
(2) the most efficient and effective manner of administering 
such programs. 
(c) DEFINITIONS.—In this title: 
(1) The term "comprehensive health care services" includes— 
(A) inpatient hospital services (including mental health 
services); 
(B) skilled nursing facility services, intermediate care 
facility services, home health services, and other long-term 
health care services; 
(C) physician services and other outpatient health care 
services (including mental health services); 
(D) periodic general physical examinations, eye examina-
tions, hearing examinations, dental examinations, foot 
examinations, and other preventive health care services; 
and 
(E) prescription drugs, eyeglasses, hearing aids, ortho-
pedic equipment, and dentures (both complete and partial). 
42 use 1395b 
note. 
42 use 1395b 
note. 
102 STAT. 766 
PUBLIC LAW 100-360-JULY 1, 1988 
(2) The term "comprehensive long-term care services" in-
cludes custodial and noncustodial services in facilities, as well 
as home and community-based services. 
42 use 1395b 
SEC. 403. MEMBERSHIP. 
(a) APPOINTMENT.—^The Commission shall be composed of 15 mem-
bers appointed as foUows: 
President of U.S. 
(1) The President shall appoint 3 members. 
(2) The President pro tempore of the Senate shall appoint, 
after consultation with the minority leader of the Senate, 6 
members of the Senate, of whom not more than 4 may be of the 
same political party. 
(3) The Speaker of the House of Representatives shall appoint, 
after consultation with the minority leader of the House of 
Representatives, 6 members of the House, of whom not more 
than 4 may be of the same political party. 
(b) CHAIRMAN AND VICE CHAIRMAN.—The Commission shall elect 
a chairman and vice chairman from among its members. 
(c) VACANCIES.—Any vacancy in the membership of the Commis-
sion shall be filled in the manner in which the original appointment 
was made and shall not afTect the power of the remaining members 
to execute the duties of the Commission. 
(d) QUORUM.—A quorum shall consist of 8 members of the 
Commission, except that 4 members may conduct a hearing under 
section 405(a). 
(e) MEETINGS.—The Commission shall meet at the caU of its 
chairman or a majority of its members. 
(f) COMPENSATION AND REIMBURSEMENT OF EXPENSES.—Members 
of the Commission are not entitled to receive compensation for 
service on the Commission. Members may be reimbursed for travel, 
subsistence, and other necessary expenses incurred in carrying out 
the duties of the Commission. 
42 
use 
1
3
9
5
b 
SEC. 
404. 
STAFF 
AND 
CONSULTANTS. 
(a) STAFF.—The Commission may appoint and determine the com-
pensation of such staff as may be necessary to carry out the duties of 
the Commission. Such appointments and compensation may be 
made without r^ard to the provisions of title 5, United States Code, 
that govern appointments in the competitive services, and the provi-
sions of chapter 51 and subchapter m of chapter 53 of such title that 
relate to classifications and the General Schedule pay rates. 
(b) CONSULTANTS.—The Commission may procure such temporary 
and intermittent services of consultants under section 3109(b) of 
title 5, United States Oxle, as the Commission determines to be 
necessary to carry out the duties of the Commission. 
42 use 1395b 
SEC. 405. POWERS. 
(a) HEARINGS AND OTHER ACTIVITIES.—For the purpose of carrying 
out its duties, the Commission may hold such hearings and under-
take such other activities as the Commission determines to be 
necessary to carry out its duties. 
(b) STUDIES BY GENERAL ACCOUNTING OFFICE.—Upon the request 
of the Commission, the Comptroller General shall conduct such 
studies or investigations as the (Commission determines to be nec-
essary to carry out its duties. 
(c) COST ESIIMATES BY CONGRESSIONAL BUDGET OFFICE.— 
•,«S|*6%*''i* 
PUBLIC LAW 100-360-JULY 1,1988 
102 STAT. 767 
(1) Upon the request of the Commission, the Director of the 
Congressional Budget Office shall provide to the Commission 
such cost estimates as the Commission determines to be nec-
essary to carry out its duties. 
(2) The Commission shall reimburse the Director of the 
Congressional Budget Office for expenses relating to the 
employment in the office of the Director of such additional staff 
as may be necessary for the Director to comply with requests by 
the Commission under paragraph (1). 
(d) DETAIL OP FEDERAL EMPLOYEES.—Upon the request of the 
Commission, the head of any Federal agency is authorized to detail, 
without reimbursement, any of the personnel of such agency to the 
Commission to assist the Commission in carrying out its duties. Any 
such detail shall not interrupt or otherwise affect the civil service 
status or privileges of the Federal employee. 
(e) TECHNICAL ASSISTANCE.—Upon the request of the Commission, 
the head of a Federal agency shsdl provide such technical assistance 
to the Commission as the Commission determines to be necessary to 
carry out its duties. 
(f) USE OF MAILS.—The Commission may use the United States 
mails in the same manner and under the same conditions as Federal 
agencies. 
(g) OBTAINING INFORMATION.—The Commission may secure di-
rectly from any Federal agency information necessary to enable it to 
carry out its duties, if the information may be disclosed under 
section 552 of title 5, United States Code. Upon request of the 
Chairman of the Commission, the head of such agency shall furnish 
such information to the Commission. 
(h) ADMINISTRATIVE SUPPORT SERVICES.—Upon the request of the 
Commission, the Administrator of General Services shall provide to 
the Commission on a reimbursable basis such administrative sup-
port services as the Commission may request. 
(i) ACCEPTANCE OF DONATIONS.—The Commission may accept, use, 
and dispose of gifts or donations of services or property. 
SEC. 406. REPORT. 
(a) REPORT ON COMPREHENSIVE LONG-TERM CARE SERVICES FOR THE 
ELDERLY AND DISABLED.—The Commission shall submit to Congress 
a report, not later than 6 months after the date of the enactment of 
this Act, containing its findings and recommendations regarding 
comprehensive long-term care services for the elderly and disabled. 
The report shall include detailed recommendations for appropriate 
legislative initiatives respecting such services. 
(b) REPORT ON COMPREHENSIVE HEALTH CARE SERVICES.—The 
Commission shall submit to Congress a report, not later than 1 year 
after the date of the enactment of this Act, containing its ffnctings 
and recommendations regarding comprehensive health care services 
for the elderly and disabled and comprehensive health care services 
for £dl individuals in the United States. The report shall include 
detailed recommendations for appropriate legislative initiatives 
respecting such services. 
SEC. 407. TERMINATION. 
The Commission shall terminate 30 days after the date of submis-
sion of the report required in section 406(b). 
42 u s e 1395b 
note. 
42 u s e 1395b 
note. 
102 STAT. 768 
PUBLIC LAW 100-360—JULY 1, 1988 
42 use 1395b 
note. 
SEC. 408. AUTHORIZATION OF APPROPRIATIONS. 
There are authorized to be appropriated $1,500,000 to carry out 
this title. 
Subtitle B—OBRA Technical Corrections 
SEC. 411. TECHNICAL CORRECTIONS TO CERTAIN HEALTH CARE PROVI-
SIONS IN THE OMNIBUS BUDGET RECONCILIATION ACT OF 
1987. 
1 u s e 106 note. 
(a) REFERENCE TO OBRA AND EFFECTIVE D A T E S . — 
(1) REFERENCE.—In this section, the term "OBRA" refers to 
the Omnibus Budget Reconciliation Act of 1987 (Public Law 
100-203). 
' 
(2) EFFECTIVE DATE.—Except as specifically provided in this 
section, the amendments made by this section, as they relate to 
a provision in OBRA, shall be effective as if they were included 
in the enactment of that provision in OBRA. 
(3) RATIFICATION OF ENROLLMENT CORRECTIONS AND PRINTED 
ENROLLMENT.— 
(A) IN GENERAL.—Except as provided in subparagraph (B), 
the enrollment corrections noted in footnotes numbered 9 
through 72 of OBRA are hereby ratified and shall be consid-
ered to have been enacted as part of OBRA. The printed 
enrollment of title IV of OBRA, as prepared and printed 
under section 8004 of OBRA (including the footnote correc-
tions described in subparagraph (B) and as incorporating 
the clarifications described in subparagraph (O), shedl be 
deemed to constitute title IV of OBRA as enacted. 
(B) FOOTNOTE CORRECTIONS.—(i) With respect to the ref-
erence to which footnote 28 relates (101 Stat. 1330-81), the 
reference shall be deemed to have read "1320a-7b)". 
(ii) With respect to the word to which footnote 30 relates 
(101 Stat. 1330-91), the word shall be deemed to have read 
"the". 
(iii) With respect to the designation to which footnote 52 
relates (101 Stat. 1330-151), the designation shall be deemed 
to have read "(F)". 
(C) CLARIFICATIONS OF ILLEGIBLE MATTER.—(i) Section 
1842(nXlXA) of the Social Security Act, as added by section 
4051(a) of OBRA (101 Stat. 1330-93), is deemed to have the 
phrase "the supplier's reasonable charge to individuals 
enrolled under this part for the test" immediately after "or, 
if lower, the". 
(ii) Section 1834(aX7XBXi) of the Social Security Act, as 
inserted by section 4062(b) of OBRA (101 Stat. 1330-103), is 
deemed to have a reference to "1987" immediately after 
"December". 
(b) CORRECTIONS RELATING TO PART 1 OF SUBTITLE A OF TITLE I V 
(PART A OF THE MEDICARE PROGRAM).— 
(1) SECTION 4002.—(A) Subclauses (III) and (TV) of section 
1886(bX3XBXi) of the Social Security Act, as amfended by section 
42 use I395ww. 
4002(a) of OBRA, are amended by striking "other hospitals" and 
inserting "for hospitals located in other urban areas". 
(B) Section 1886(bX3XBXiXrV) of the Social Security Act, as 
amended by section 4002(a) of OBRA, is amended by striking 
42 use 
1320a-7b. 
42 u s e 1395m. 
42 use 1396b. 
42 u s e 1395u. 
42 use 1395m. 
^f. •"^igE?''Pjwr.5ry.'?^ ,,^ '^^*'^?f*"^T.-
PUBLIC LAW 100-360—JULY 1, 1988 
102 STAT. 769 
"percent" each place it appears and inserting "percentage 
points". 
(C) Section 1886(bX3XBXiXV) of the Social Security Act, as 
amended by section 4002(a) of OBRA, is amended by inserting 
"increase" after "market basket percentage". 
(D) The second sentence of section 1886(dX2XD) of the Social 
S^urity Act, as amended by section 400203) of OBRA, is amend-
ed by strikii^ "the publication described in subsection (eX5)(B)" 
and inserting "the publications described in subsection (eX5)". 
(E) Section 4002(cXlXBXiii) of OBRA is amended, in the 
matter stricken, Iw striking the comma after "available". 
(F) Section 1886(dX3XAXii) of the Social Security Act, as 
amended by section 4002(cXlXC) of OBRA, is amended by strik-
ing "in urban areas" and inserting "in other urban areas". 
(G) Section 1886(dXlXAXiii) of the Social Security Act, as 
amended by section 4()02(d) of OBRA, is amended by striking "if 
greater" and inserting "if the average standardized amount 
(desoribed in clause (i)0) or clause (iiXD of paragraph (3)(D)) for 
hospitals within the r^on of, and in the same rural, large 
urban, or other urban area as, the hospital is greater than the 
average standardized amount (described in the respective 
clause) for hospitals within the United States in that type of 
area". 
(HXi) Section 1886(dX2XD) of the Social Security Act is amend-
ed by striking the last sentence (added by section 4002(fXlXA) of 
OBRA). 
(ii) Section 4002(f) of OBRA is amended by adding at the end 
the following new paragraph: 
"(3) The second sentence of section 18130i>Xl) of the Social 
Security Act (42 U.S.C. 1395eO)Xl)) is amended by striking 
'applicsJole percentage increase' and all that follows through 'is 
applied' and inserting 'Secretary's best estimate of the pay-
ment-weighted average of the applicable percentage increases 
(as defined in section 1886(bX3)(B)) which are applied'.". 
(iii) The amendment made by clause (ii) shall apply to the 
inpatient hospital deductible for years b^inning with 1989. 
(D Section 4002(g) of OBRA is amended— 
(i) in paragraph (IXA), by striking "1886(aXlXAXiii)" and 
inserting "1886(dXlXAXiii)'', 
(ii) in paragraphs (1)(B) and (2)(B), by striking 
"1886(dX3XB)" and inserting "1886(bX3XB)". and 
42 u s e 1395WW. 
42 u s e 1395WW. 
Urban areas. 
Urban areas. 
Rural areas. 
Effective date. 
42 u s e 1395e 
note. 
42 u s e 1
3
9
5
W
W 
note. 
(ill) in paragraph (6), 
inserting ''l886(dXlXB)". 
(2) SECTION 4003.—Section 
(A) in paragraph (2)— 
(i) by inserting 
by striking "1886(dX10XB)" and 
4003(d) of OBRA is amended— loi Stat. 1330-46. 
'(other than under section 
1886(dX5XF) of such Act)" after "receives payments", 
and 
(ii) by inserting "of such services" after "reasonable 
costs"; and 
(B) in the matter following paragraph (2), by inserting 
"the" after "fadUties of. 
(3) SECTION 4004.—Section 4004(a) of OBRA is amended by 42 use I395ww. 
inserting "(1)" after "SUBVET.—" and by adding at the end the 
following new paragraph: 
"(2) Section 1886(dX9XC)(iv) of such Act is amended by adding at Puerto Rico. 
the end the following new sentence: The second and third sentences 
102 STAT. 770 
PUBLIC LAW 100-360—JULY 1, 1988 
42 use 1395WW. 
Rural areas. 
101 Stat. 1330-47. 
42 u s e 1395WW 
note. 
42 use 1395tt. 
42 use 1395WW. 
42 u s e 1395WW 
note. 
of paragraph (3XE) shall apply to subsection (d) Puerto Rico hos-
pitals under this clause in the same manner as they apply to 
subsection (d) hospitals under such paragraph and, for purposes of 
this clause, any reference in such paragraph to a subsection (d) 
hospital is deemed a reference to a subsection (d) Puerto Rico 
hospital.'.". 
(4) SECTION 4005.—(A) Section 1886(dX8XB) of the Social Secu-
rity Act, as added by section 4005(a)(lXD) of OBRA, is amend-
ed— 
(i) by striking "The Secretary" and inserting "For pur-
poses of this subsection, the Secretary", and 
(ii) by striking all that follows if' and inserting the 
following: "the rural county would otherwise be considered 
part of an urban area, under the standards for designating 
Metropolitan Statistical Areas (and for designating New 
England County Metropolitan Areas) published in the Fed-
eral Register on January 3, 1980, if the commuting rates 
used in determining outlying counties (or, for New England, 
similar recognized areas) were determined on the basis of 
the aggregate number of resident workers who commute to 
(and, if applicable under the standards, from) the central 
county or counties of all contiguous Metropolitan Statistical 
Areas (or New England County Metropolitan Areas),". 
(B) Section 1886(dX8XC) of the Social Security Act, as added by 
section 4005(aXl)(D) of OBRA, is amended by striking 
"standardized amount" and inserting "standardized amounts'. 
(C) Section 4005(a) of OBRA is amended— 
(i) in paragraph (IXD), by striking "subparagraph" and 
inserting "subparagraphs", and 
(ii) in paragraph (3), by striking "This section, and the 
amendments made by paragraph (1)," and inserting "This 
o i l H Q 0 / » ^ 1 QTl 
(D) Section 1883(dX3) of the Social Security Act, as added by 
section 4005(bX2XB) of OBRA, is amended by inserting before 
the period at the end the following: ", except that such pajmient 
shall continue to be made in the period for those patients who 
are receiving extended care services at the time the hospital 
reaches the limit specified in this paragraph". 
(5) SECTION 4006.—(A) Section 1886(gX3XAXiv) of the Social 
Security Act, as amended by section 4006(a) of 
OBRA, is amended 
by inserting "for payments attributable" after "15 percent". 
(B) Section 4006(a) of OBRA is amended— 
(i) by adding "and" at the end of subparagraph (A), and 
(ii) by redesignating subparagraphs (A) and (3) as para-
graphs (1) and (2), respectively. 
(6) SECTION 4007.—Section 4007 of OBRA is amended— 
(A) in the second sentence of subsection (a), by striking 
"updata" and inserting "updated"; 
O
B
) by amending sul:^ection (b) to read aa follows: 
"
0
1
>
) REQUIRING REPORTING OF STANDARDIZED COST REPORT ELEC-
TRONICALLY.— 
"(1) IN GENERAL.—Section 1886(fKl) of the Social Security Act 
(42 U.S.C. 1395ww(fXl)) is amended— 
"(A) by striking ', for a period ending not ecu'lier than 
September 30,1988,', 
^(B) by inserting '(A)' after '(fXD', and 
?A*^SPt« 
PUBLIC LAW 100-360—JULY 1, 1988 
102 STAT. 771 
"(C) by adding at the end the following new subpara-
graph: 
" *(BXi) Subject to clause (ii), the Secretary shall place into effect a 
standardized electronic cost reporting format for hospitals under 
this title. 
" '(ii) The Secretary may delay or waive the implementation of 
such format in particular instances where such implementation 
would result in financial hardship (in particular with respect to 
hospitals with a small percentage of inpatients entitled to benefits 
under this title).'. 
"(2) EFFECTIVE DATE.—^The amendment made by p^aragraph 
(IXC) shall apply to hospital cost reporting periods beginning on 
or after October 1,1989."; and 
(C) in subsection (c)— 
(i) in paragraph (1)— 
(I) by striking "3-year", and 
(II) by striking "contracting" and inserting 
"conducting"; 
(ii) in paragraph (2), by striking "by category of 
service and" in subparagraphs (A) and (B); 
(iii) in paragraph (2XC), by striking "(by cat^ory of 
service)"; 
(iv) in i>aragraph (2), by striking subparagraph (D) 
and redesignating subparagraphs (E) through (L) as 
subparagraphs (D) through CK), respectively; 
(v) by amending subparagraph (D, as so redesignated, 
to read as follows: 
"(I) Bad debt and charity care."; 
(vi) in paragraph (2), by adding at the end the follow-
ing: 
"The Secretary shall develop a definition of 'outpatient visit' for 
purposes of reporting hospital information."; 
(vii) in paragraph (5), by striking "paragraph (3)" and 
inserting "paragraph (2)"; 
(viii) in paragraph (5XA), by striking "The terms" 
and all that follows through "as" and insertii^ "The 
term Ijad debt and charity care' has such meaning as"; 
(ix) in paragraph (5)(B)-— 
(D by inserting "at least" after "to payors", 
(ID by striking "title VBI" and mserting "title 
XVra",and 
(HI) by striking "self-paying individuals" and 
inserting "and other persons (including self-paying 
individuals)"; and 
(x) in paragraph (6>— 
(D by striking "$1,000,000 for each o f and insert-
ing "a total of $3,000,000 for", 
(0) by inserting "or from operation funds" after 
"research funds", 
(HI) by striking ", and at least" and all that 
follows through 'operations funds" and inserting 
"and", and 
(IV) by striking "over 3 years". 
(7) SECTION 4008.—Section 4008(dXlXB) of OBRA is amended 
by striking "1886" and inserting "1886(d)". 
(8) SECTION 4009.—(A) Section 4009(a) of OBRA is amended— 
42 u s e 1395WW 
note. 
42 u s e 1395WW 
note. 
42 u s e 1395WW 
note. 
42 u s e 1395dd. 
102 STAT. 772 
PUBLIC LAW 100-360—JULY 1, 1988 
42 u s e 1395dd 
note. 
42 u s e 1395WW. 
42 u s e 1395VW 
note. 
100 Stat. 1988. 
42 u s e 1395mm. 
eontracts. 
42 u s e 1395CC. 
(i) by striking parsigraphs (1) and (2) and inserting the 
following: 
"(1) INCREASE IN CIVIL MONETARY PENALTY AND EXCLUSION OF 
RESPONSIBLE PHYSICIAN VIOLATORS.—Section 1867(dX2) of the 
Social Security Act (42 U.S.C. 1395dd(dX2)) is amended— 
"(A) in the second sentence— 
"(i) by redesignating such sentence as subparagraph 
(C), 
"(ii) by striking 'previous sentence' and inserting 
'this paragraph', and 
"(iii) by redesignating subparagraphs (A) and (B) as 
clauses (i) and (ii), respectively; and 
"(B) by striking the first sentence and inserting the fol-
lowing: '(A) A participating hospital that knowingly vio-
lates a requirement of this section is subject to a civil 
money penalty of not more than $50,000 for each such 
violation. The provisions of section 1128A (other than 
subsections (a) and (b)) shall apply to a civil money penaltv 
under this subparagraph in the same manner as such 
provisions apply with respect to a penalty or proceeding 
under section 1128A(a). 
"'(B) The responsible physician in a participating hos-
pital with respect to the hospital's violation of a require-
ment of this subsection is subject to the sanctions described 
in section 18420X2), except that, for purposes of this 
subparagraph, the civil money penalty with respect to each 
violation may not exceed $50,000, rather than $2,000.'"; 
and 
(ii) by redesignating paragraph (3) as paragraph (2). 
(B) Section 4009(dXlXA) of OBRA is amended, in the matter 
inserted by such section, by striking the comma after "rep-
I*6S611.i^tiv6S 
(C) Section 4009(i) of OBRA is amended by striking "New 
England county metropolitan areas" and "4001(b)" and insert-
ing "urban areas in New England" and "40020t))", respectively. 
(D) Section 4009(j) of OBRA is amended by adding at the end 
the following new paragraphs: 
"(9) Section 1818(c) of the Social Security Act (42 U.S.C. 13951-
2(c)) is amended by striking paragraph (4) and redesignating 
paragraphs (5) through (7) as paragraphs (4) through (6), respec-
tively. 
"(10) Section 9305(d) of the Omnibus Budget Reconciliation 
Act of 1986 is amended by striking '2 years after the date of the 
enactment of this Act' and inserting 'eJanuary 1,1990'.". 
(c) CORRECTIONS RELATING TO SUBPART A OP PART 2 OF SUBTITLE A 
OF TITLE IV (HEALTH MAINTENANCE ORGANIZATION REFORMS).— 
(1) SECTION 401I.—Subparagraph (F) of section 1876(cX3) of 
the Social Security Act, as added by the amendment made by 
section 4011(aXl) of OBRA, is amended by moving its indenta-
tion 4 ems to the left so its left margin is aligned with the left 
margin of subparagraph (G) of that section, as added by section 
4011(bXl)ofOBRA. 
(2) SECTION 4012.—(AXi) Section 1866(aXlXO) of the Social 
Security Act, as inserted by section 4012(a) of OBRA, is 
amended by striking "with a risk-sharing contract under section 
1876" and inserting "(i) with a risk-sharing contract under 
section 1876, under section 1876(iX2XA) (as in effect before 
S¥ ^'V*~7¥'!«_-,^,;t«*,, r^i 
PUBLIC LAW 100-360—JULY 1, 1988 
102 STAT. 773 
February 1, 1985), under section 402(a) of the Social Security 
Amendments of 1967, or under section 222(a) of the Social 
Security Amendments of 1972, and (ii) which does not have a 
, contract establishing payment amounts for services furnished to 
members of the organization". 
(ii) The amendment made by clause (i) shall apply to admis-
sions occurring on or after the first day of the fourth month 
beginning after the date of the enactment of this Act. 
(B) Section 4012(c) of OBRA is amended by striking "para-
graph (2)" and inserting "subsection (a)". 
(3) SECTION 4013.—Section 4013 of OBRA. is amended by strik-
ing "(a) IN GENERAL" and all that follows through the end and 
inserting the following: 
"Section 2350(bX3) of the Deficit Reduction Act of 1984 is amended 
by striking 'four years after the date of the enactment of this Act' 
and mserting 'September 30,1990'.". 
(4) SECTION 4014.—Section 1876(iX6) of the Social Security Act, 
as amended by section 4014 of OBRA, is amended— 
(A) in subparagraph (A), by inserting ", in addition to any 
other remedies authorized by law," after "the Secretary 
may provide", and 
(B) in the last sentence of subparagraph (B), by striking 
"under that section" and inserting 
or proceeding under 
section 1128A(a)". 
(5) SECTION 4018.—Section 1876(fX3XA) of the Social Security 
Act, as inserted by section 4018(a) of OBRA, is amended— 
(A) by inserting "enrollment and residency requirements 
under this section and for" after "for purposes of, and 
(B) by striking "of the subdivision" and inserting "de-
scribed in subparagraph (BXiii) who receive services 
through the subdivision'. 
(d) CORRECTIONS RELATING TO SUBPART B OP PART 2 OF SUBTITLE A 
OP TITLE IV (HOME HEALTH QUALITY).— 
(1) SECTION 4021.—(A) Section 1891(a) of the Social Security 
Act, as added by section 4021(b) of OBRA, is amended— 
(i) in paragraph (3XA), by striking "who is not a licensed 
health care professional (as defined in subparagraph (F))", 
(ii) in paragraph (3)(F), by inserting "physical or occupa-
tional therapy assistant," after "occupational therapist,", 
and 
(iii) by striking paragraph (4) and by redesignating para-
graphs (5) and (6) as paragraphs (4) and (5), respectively. 
(BXi) Section 1861(n) of the Social Security Act (42 U.S.C. 
1395x(n)) is amended by inserting before the period at the end 
the following: "; except that such term does not include such 
equipment furnished by a supplier who has used, for the dem-
onstration and use of specific equipment, an individual who has 
not met such minimum training standards as the Secretary may 
establish with respect to the demonstration and use of such 
specific equipment . 
(ii) The amendment made by clause (i) shall apply to equip-
ment furnished on or after the effective date provided in section 
4021(c) of OBRA. 
(2) SECTION 4022.—(A) The third sentence of section 1891(cXl) 
of the Social Security Act, as added by section 4022(a) of OBRA, 
is amended by inserting "(other than subsections (a) and (b))" 
after "1128A". 
Effective date. 
42 u s e 1395CC 
note. 
42 u s e 1395mm 
note. 
42 u s e 1395mm. 
42 u s e 1395mm 
note. 
42 u s e 1395mm. 
42 u s e 1395bbb. 
Health care 
professionals. 
Effective date. 
102 STAT. 774 
PUBLIC LAW 100-360—JULY 1, 1988 
42 use 1395bbb. 
42 use 1395bbb. 
42 use 1395aa. 
42 use 1395aa 
note. 
42 use 1395x. 
Wages. 
(B) Section 1891(dX2XA) of the Social Security Act, as added 
by section 4022(a) of OBRA, is amended by striking "1991" and 
inserting "1992". 
(3) SECTION 4023.—(A) Section 4023 of OBRA is amended by 
inserting "(a) IN GENERAL.—" before "Section 1891". 
(B) Section 1891(0(2XA) of the Social Security Act, as added by 
section 4023 of OBRA, is amended— 
(i) by moving the indentation of clauses (i) through (iii) 
(and the sentence following clause (iii)) 2 ems to the left, 
(ii) in clause (i), by striking "for each day of noncompli-
ance" and inserting "in an amount not to exceed $10,000 for 
each day of noncompliance", and 
(iii) by inserting after and below clause (iii), the following: 
"The provisions of section 1128A (other than subsections (a) and 
(b)) shall apply to a civil money penalty under clause (i) in the 
same manner as such provisions apply to a penalty or proceed-
ing under section 1128A(a),". 
(C) Section 4023(b) of OBRA is amended by inserting before 
the period at the end the following: ", and no intermediate 
sanction described in section 1891(fK2XA) of such Act shall be 
imposed for violations occurring before such effective date". 
(4) SECTION 4025.—(A) Section 1864(a) of the Social Security 
Act is amended— 
(i) in the first sentence added by section 4025(a) of OBRA, 
by striking "most recent accreditation survey conducted 
with respect to the agency," and inserting "most recent 
accreditation survey conducted by a State agency or private 
accreditation agency under section 1865 with respect to the 
home health agency,", and 
(ii) in the second sentence so added— 
(I) by inserting "such State or local" before "agency" 
the first place it appears, and 
(II) by striking "section 1864" and inserting "section 
1865". 
(B) Section 4025 of OBRA is amended— 
(i) in subsection (b), by striking "subsection (a)" and 
inserting "this section" and by redesignating such subsec-
tion as subsection (c), and 
(ii) by inserting after subsection (a) the following new 
subsection: 
"(b) CONFORMING AMENDMENT.—The last sentence of section 
1865(a) of such Act (42 U.S.C. 1395bb(a)) is amended by inserting 
'(other than a survey with respect to a home health agency' after 
'any accreditation survey'.". 
(5) SECTION 4026.—(A) Section 1861(vXlXLXiii) of the Social 
Security Act, as added by section 4026(aXl) of OBRA, is 
amended— 
(i) by striking "audited" each place it appears and insert-
ing "verified", and 
(ii) by adding at the end the following: 
"In the case of a home health agency that refuses to provide data, or 
deliberately provides false data, respecting wages for purposes of 
this clause upon the request of the Secretary, the Secretary may 
withhold up to 5 percent of the amount of the pa3anents otherwise 
payable to the agency under this title until such date as the Sec-
retary determines that such data has been satisfactorily provided.". 
PUBLIC LAW 100-360—JULY 1,1988 
102 STAT. 775 
(B) Section 4026(aX2) of OBRA is amended by striking "July 1, 
1988" and inserting "July 1,1989". 
(C) Section 40260)) of OBRA is amended by striking "June 1, 
1988" and inserting "June 1,1989". 
(6) SBcnoN 4027.—Section 4027(a) of OBRA is amended by 
striking "July 1.1988" and inserting "April 1,1989". 
(e) CoBBEcnoNS RELATING TO SUBPABT C OF PAST 2 OF SUBTITLE A 
O
F TITLE IV (OTHER MEDICARE PART A AND B PROVK(IONS).— 
(1) SECTION 4032.—(A) Section 4032 of OBRA is amended by 
striking "AND PHYSICIAN REVIEW" in the heading of subsection 
(a) and by striking "AND CARRIERS" in the heading of subsection 
0)). 
(B) Section 1816(jX2) of the Social Security Act, as added by 
section 4032(a) of OBRA, is amended— 
(i) by inserting "in the case of a request for reconsider-
ation of a denial, after "(2)", and 
(ii) by inserting "the" before "disposition". 
(C) Section 4032(cXlXB) of OBRA is amended by striking 
"claims 
filed" 
and inserting "reconsiderations requested". 
(2) SECTION 4033.—Section 4033 of OBRA is amended— 
(A) by striking "(a) IN GENERAL.—"; 
(B) by redesignating paragraphs (1) and (2) (and subpara-
graphs (A) and (B) of paragraph (2)) as subsections (a) and 
(b) (and paragraphs (1) and (2) of subsection (b)), respec-
tively; and 
{O by aligning the left margins of the matter in such 
section flush left. 
(3) SECTION 4039.—Section 4039 of OBRA is amended by 
addii^ at the end the foUowii^ new subsection: 
"(h) TECHNICAL CORRECTIONS.— 
"(1) Section 1128A0)) of the Social Security Act (42 U.S.C. 
1320a-7a(b)) is amended— 
"(A) in paragraph (IXA), by striking 'XVII' and inserting 
'XVm',and 
"(B) in paragraph (2) by inserting 'each' after '$2,000 for'. 
"(2) Section 1138(aXlXB) of such Act (42 U.S.C. 1320b-
8(a)(1)(B)) is amended by striking 'In' and inserting 'in'. 
"(3) Section 1154(aX4) of such Act (42 U.S.C. 1320c-3(aX4)) is 
amended— 
"(A) by indenting subparagraphs (B) and (C) (and clauses 
(i) through (iii) of subparagraph (O) two additional ems; 
"(B) in subparagraph (B), by inserting 'risk-sharing' 
before 'contract under section 1876'; and 
"
(
C
J
) in subparagraph (CXi), by adding before the comma 
at the end the following: '(other than the ability to perform 
review functions under this section that are not described 
in subparagraph (B))*. 
"(4) Section 1154(d) of such Act (42 U.S.C. 1320c-3(d)) is 
amended by striking '1164(bX4)' and inserting '1164'. 
"(5) Section 1156(b) of such Act (42 U.S.C. 1320c-5(b)) is 
amended— 
"(A) in the second sentence of paragraph (1), by striking 
'such services on a reimbursable basis.' and inserting 'serv-
ices under this Act on a reimbursable basis.', and 
"(B) in paragraph (2), by striking 'at such time' and all 
that follows through 'and shall remain' and inserting 'on 
the same date and in the same manner as an exclusion 
42 u s e 1395x 
note. 
42 u s e 1395n 
note. 
42 u s e 1395h. 
42 u s e 1395h. 
42 u s e 1395h 
note. 
42 u s e 426. 
42 u s e 426 note. 
102 STAT. 776 
PUBLIC LAW 100-360—JULY 1, 1988 
from participation under the programs under this Act be-
comes effective under section 1128(c), and shall remain'. 
"(6) Section 1160 of such Act (42 U.S.C. 1320c-9) is amended 
by adding at the end the following new subsection: 
"'(e) For purposes of this section and section 1157, the term 
"organization with a contract with the Secretary under this part" 
includes an entity with a contract with the Secretary under section 
1154(aX4XC).'. 
"(7) liie heading of section 1870 of such Act (42 U.S.C. 1395gg) 
is amended to read as follows: 
42 u s e 1320C-3 
note. 
Contracts. 
42 u s e 1395mm 
note. 
eontracts. 
42 u s e 1395u. 
42 u s e 1395u. 
42 u s e 1395u 
note. 
OVEBPAYMENT ON BEHALF OF INDIVIDUAIS AND SETTLEMENT OF 
CLAIMS FOR BENEFITS ON BEHALF OF DECEASED INOIVIDUAIS'. 
"(8) Section 1876(iX7) of such Act (42 U.S.C. 1395mm(iX7)) is 
amended— 
"(A) in subparagraph (A), by striking 'Except as provided 
under section 1154(aX4XC^, each' and inserting 'Each'; 
"(B) in subparagraph (A), by inserting 'or with an entity 
selected by the Secretary under section 1154(aX4XC)' after 
'located)'; and 
"
(
C
D by striking 'peer' in subparagraph (B) and the second 
place it appears in subparagraph (A). 
"(9) Section 9353 of the Omnibus Budget Reconciliation Act of 
1986 is amended— 
"(A) in subsection (aX6XAXi), by striking 'paragraphs (1) 
and (2)(D) shall apply to contracts as of and inserting 
'paragraph (1) shall apply to contracts entered into or 
renewed on or after'; 
"(B) in subsection (aX6)(B), by striking 'amendment made 
by paragraph (2)(B)' and inserting 'amendments made by 
paragraphs (2XB) and (2XD)'; and 
"(C) in subsection (e)(3)(B), by adding at the end the 
following: 'The provisions of section 1876(iX7) of the Social 
Security Act (added by such amendment) shall apply to 
health maintenance organizations with contracts in effect 
under section 1876 of such Act (as in effect before the date 
of the enactment of Public Law 97-248) in the same manner 
as it applies to eligible organizations with risk-sharing 
contracts in effect under section 1876 of such Act (as in 
effect on the date of the enactment of this Act).'.", 
(f) CORRECTIONS RELATING TO SUBPART A OF PART 3 OF SUBTITLE A 
O
P TITLE IV (PAYMENTS FOR PHYSICIANS' SERVICES).— 
(1) SECTION 4041.—(A) Section 4041(aXlXB) of OBRA is 
amended— 
(i) by inserting "as amended retroactively by section 
4085(iX7XC)," after "(jXlXC),", and 
(ii) by redesignating the clause added by such section as 
clause (viii). 
(B) The last sentence of section 1842(bX2) of the Social Secu-
rity Act, as added by section 4041(aX3XA) of OBRA, is amended 
by striking "and subsection (h)" and inserting ", subsection (h), 
and section 1845(fX2)". 
(Q Subclause (U) of section 4041(aX3XBXiii) of OBRA is 
amended to read as follows: 
"(U) by striking 'April 1' and inserting 'September 
30', and'*. 
PUBLIC LAW 100-360—JULY 1, 1988 
102 STAT. 777 
(2) SECTION 4042.—(A) Section 1842(bX4XFXiii) of the Social 
Security Act, as added by section 4042(a) of OBRA, is amended— 42 use I395u. 
(i) in subclause (I), by striking the semicolon and inserting 
a comma, and 
(ii) in subclause (11), by striking "physician's" and insert-
ing "physicians'". 
(B) Section 1842(bX4XFXiiXI) of the Social Security Act, as 
added by section 4042(a) of OBRA., is amended bv striking 
"subparagraph (EXiii)" and inserting "subsection (iX4)'. 
(C) Section 4042(b) of OBRA is amended by striking "Section" 
and all that follows up to "The term" and inserting the follow-
ing: 
^'(1) Section 1842 of such Act (42 U.S.C. 1395u) is amended— 
"(A) in subsection (hX7), by striking ', described in para-
graph (8)'; 
"(B) in paragraph (8) of subsection (h)— 
"(i) by striking *(8) For purposes of this title, a' and 
inserting *(1) A', 
"(ii) by indenting such paragraph 2 ems, and 
"(iii) by inserting before such paragraph the 
following: 
*(i) For purposes of this title:*; 
'^(C) in subsection fl3X4XE)— 
"(i) by striking '(E) In this section:', 
"(ii) by redesignating clauses (i) and (ii), as para-
graphs (2) and (3), respectively, and 
"(iii) by transferring and inserting such paragraphs, 
as redesignated, before subsection (j); 
"(D) in sul^ection (bX4), by redesignating subparagraphs 
(F) and (G) of subsection (bX4), as subparagraphs (E) and (F), 
respectively; and 
(E) by inserting, after the paragraphs transferred and 
inserted by subparagraph (CXiii), the following new para-
graph: 
" W . 
(D) Section 40420t)) of OBRA is further amended by adding at 42 use I395u. 
the end the following: 
"(2XA) Section 1842(bX4XA)(vii) of such Act, as redesignated 
by sections 4041(aXlXAXi) and 4044(a), is amended by striking 
'subparagraph (EXii)' and inserting 'subsection (iX3)'. 
"(B) Section 18330X2) of such Act (42 U.S.C. 139510X2)) is 
amended by striking '18420t)X4XEXii)' and inserting '1842(iX3)'.". 
(E) The last sentence of section 1842(bX4XAXivXID of the 
Social Security Act, as added by section 4042(cX2) of OBRA, is 
amended by striking "January 1,1988" and inserting "January 
1 1989". 
' (F) Section 4042(c) of OBRA is amended— 
(i) by striking "Section" and all that follows up to "In the 
previous sentence" and inserting the following: 
"(1) The first sentence of clause (iv) of section 18420i>X4XA) of 
such Act (42 U.S.C. 139u(bX4XA)) is amended to read as follows: 
'The reasonable chcuge for physicians' services furnished on or Health care 
after January 1, 1987, by a nonparticipating physician shall be professionals. 
no greater than the applicable percent of the prevailing charge 
levels established under the third and fourth sentences of para-
^aph (3) (or under any other applic£d>le provision of law affect-
mg the prevailing cha^e level)..', and 
102 STAT. 778 
PUBLIC LAW 100-360—JULY 1, 1988 
Health care 
professionals. 
42 use 1395U. 
101 Stat. 1330-86. 
42 use 1395u. 
42 use 1395u. 
-Effective date. 
42 use 1395y 
note. 
(ii) by adding at the end the following: 
"(2) Subclauses d) and (U) of section 1842(jXlXCXi) of such Act 
are amended by striking 'prevailing charge for the year in-
volved for such service furnished by nonparticipating physi-
cians' and inserting 'applicable percent (as defined in subsection 
(bX4XAXiv)) of the prevailing charge for the year and service 
involved*.". 
(3) SECTION 4044.—(A) Section 4044(a) of OBRA is amended by 
striking "INCREASE IN PREVAILING CHARGES" and inserting 
"PREVAILING CHARGE FLOOR". 
(B) Section 1842(bX4XAXvi) of the Social Security Act, as 
inserted by section 4044(a) of OBRA, is amended— 
(i) by striking "subparagraph (EXiii)" and inserting 
"subsection (iX4)", 
(ii) by striking "the average of the prevailing charge 
levels" and inserting "the estimated average prevailing 
chaxge levels based on the best available data", aiid 
(iii) by striking "for participating physicians". 
(4) SECTION 4045.—(A) Section 1842(bX10) of the Social Secu-
rity Act, as amended by section 4045(a) of OBRA, is amended— 
(i) in subparagraph (AXi>— 
(I) by striking "under paragraph (3)", 
(ID by striking "subparagraph (C)" and inserting 
"subparagraph (B)", and 
(in) 
by 
striking 
"for 
participating 
and 
nonparticipating physicians"; 
(ii) in subparagraph (AXiii), by striking "clause (iXH)" and 
inserting "clause (i)(D"; 
(iii) in subparagraph (B) by inserting "(including subse-
quent insertion of an intraocular lens)" after "cataract 
surgery"; and 
(iv) in subparagraph (D), by inserting "under" after 
"review". 
(B) Section 4045(cX2) of OBRA is amended— 
(i) in subparagraph (B), by inserting before the period at 
the end the following: "and by striking the second sen-
tence", and 
(ii) by adding at the end the following new subparagraph: 
"(D) The fourth sentence of section 1842(bX3) of the Social 
Security Act (42 U.S.C. 1395u(bX3)) is amended by inserting '(or 
under any other provision of law ejecting the prevailing charge 
level)' after 'the level determined under this sentence'.". 
(Q Section 1842(jXlXDXiv) of the Social Security Act, as added 
by section 4045(cXlXB) of OBRA, is amended by strildng "im-
poses a charge" and inserting "bills". 
(DXi) Section 1862(aX15) of the Social Security Act (42 U.S.C. 
1395y(aX15)) is amended by inserting "(including subsequent 
insertion of an intraocular lens)" after "operation". 
(ii) "nbe amendment made by clause (i) shall apply to oper-
ations performed on or after 60 days after the date of the 
enactment of this Act. 
(5) SECTION 4046.—(A) Section 1842(bXllXCXi) of the Social 
Security Act, as inserted by section 4046(aXlXC) of OBRA and as 
designated by section 4()(S3(aXlXA), is amended by striking 
"implantation" and inserting "insertion". 
PUBLIC LAW 100-360—JULY 1, 1988 
102 STAT. 779 
(B) Section 1842(jXlXDXiiXIV) of the Social Security Act, as 
inserted by section 4046(aX2XA) of OBRA, is amended by strik-
ing IS . 
(6) SECTION 4047.—(A) The heading of section 4047 of OBRA is 
amended by striking "PRIMARY CARE" and inserting "CER-
TAIN". 
(B) Section 1842(bX4XG) of the Social Security Act, as added 
by section 4047(a) of OBRA, is amended— 
(i) by inserting "than" after "(other", and 
(ii) by striking "(as determined under the third and 
fourth sentences of paragraph (3) and under paragraph 
(4))". 
(C) Section 404703) of OBRA is amended by inserting "on or" 
after "medicare beneficiaries". 
(D) The item in the table of contents of title IV of OBRA 
relating to section 4047 is amended to read as follows: 
"Sec. 4047. Customary charges for certain services of new physicians.". 
(7) SECTION 4048.—(A) Paragraph (14) of section 1842(b) of the 
Social Security Act, as added by section 4048(a) of OBRA, is 
redesignated as paragraph (13). 
(B) Section 4048 of OBRA is amended by adding at the end the 
following new subsection: 
"(e) CONFORMING AMENDMENT TO MAXMIMUM ALLOWABLE ACTUAL 
CHARGE.—Section 1842(jXlXC) of the Social Security Act (42 U.S.C. 
1395u(jXlXC)), as amended by sections 4085(iX7XC) and 4041(aXlXB) 
of this title, is amended by adding at the end the following new 
clause: 
" '(ix) If there is a reduction under subsection (bX13) in the 
reasonable 
charge 
for 
medical 
direction 
furnished 
by 
a 
nonparticipating physicisui, the maximum allowable actual charge 
otherwise permitted under this subsection for such services shEill be 
reduced in the same manner and in the same percent£ige as the 
reduction in such reasonable charge.'.". 
(8) SECTION 4049.—(A) Section 1834a)X6) of the Social Security 
Act, as added by section 4049(aX2) of OBRA, is amended by 
striking "radiologic" each place it appears and inserting "radi-
ology". 
(B) Section 4049(a) of OBRA is amended— 
(i) in paragraph (1), by striking "4062(cX3)" and inserting 
"4062(dX3)", and 
(ii) in paragraph (2), by striking "4062(a)" and inserting 
"4062(b)'\ 
(C) Section 1833(aXl) of the Social Security Act, as amended 
by section 4049(aXl) of OBRA, is amended in the clause added 
by that section by striking "18340t)X5)" and inserting 
"18340aX6)". 
(D) Section 1834(b) of the Social Security Act, as added by 
section 4049(aX2) of OBRA, is amended— 
(i) in the headings of paragraphs (4)(D) cmd (5), by insert-
ing "AND SUPPLIERS" after "PHYSICIANS"; 
(ii) in paragraph (5XC), by striking "imposes a charge" 
and inserting "bills"; 
(iii) in paragraph (5XC), by inserting "in the same manner 
as such sanctions may apply to a physician" after 
"1842(jX2)"; 
42 u s e 1395u. 
42 u s e 1395U 
note. 
101 Stat. 1330-89. 
Health care 
professionals. 
42 use 1395m. 
42 u s e 1395/. 
42 use 1395n. 
42 u s e 1395Z. 
102 STAT. 780 
PUBLIC LAW 100-360—JULY 1, 1988 
(iv) in paragraph (6), by striking ", section 1833(aXlXD, 
and section 1842(hXlXB)" and inserting "and section 
1833(aXlXJ)"; and 
(v) in paragraph (6XB), by striking "billings" and insert-
ing "the total amount of chai^ges". 
42 use 1395m 
(E) Section 4049(b) of OBRA is amended by striking "estab-
note. 
lish" and inserting "propose". 
(9) SECTION 4051.—Section 1842(n) of the Social Security Act, 
42 use 1395U. 
as added by section 4051(a) of OBRA, is amended— 
(A) in paragraph (1) in the matter before subparagraph 
(Ah-
(i) by striking "to a patient", 
(ii) by inserting "the bill or request for" after "for 
which", 
(iii) by striking "his" and inserting "a", and 
(iv) by striking "supervised the test" and inserting 
"supennsed the performance of the test"; 
(B) in paragraph (IXA), by striking "to individuals en-
rolled under this part"; 
(Q in paragraph (2XA), by inserting "the pavment 
amount specified in paragraph (IXA) and" after 
other 
than"; and 
(D) in paragraph (3), by striking "or supplier". 
(10) FIRST SECTION 4052.--(A) Section 1892(a) of the Social 
42 use 1
3
9
5
C
C
C
. 
Security Act, as added by the first section 4052(a) of OBRA, is 
amended— 
(i) in paragraphs (2XC7Xii) and (3)(B), by striking "para-
graph (3)" and inserting "paragraph (4)", 
(ii) in paragraph (4), by striking "bar" and inserting 
"exclude , and 
(iii) in paragraph (4), by inserting before the period at the 
end the following: "if a State requests that the phj^ician 
not be excluded". 
(B) The first section 4052(b) of OBRA (relating to conforming 
42 use 254o. 
reference) is amended by striking "338E(bXl)" and "254oa)Xl) 
and inserting "SSSEObXlXBXi)" and "254ofljXlXBXi)", respec-
tively. 
(CXi) Section 1892 of the Social Security Act, as added by the 
first section 4052(a) of OBRA, is amended— 
(D in the heading, by striking "PHYSICIANS" and "SCHOL-
ABsmp" and inserting "INDIVIDUAI^" and "SCHOLABSHIP 
AND LOAN", respectively; 
(U) by striking "physician" each place it appears (other 
than the third place it appears in subsection (aX4)) and 
inserting "individual"; 
(m) by striking "physician" the third place it appears in 
subsection (aX4) and inserting "practitioner"; 
(IV) in paragraph (IXA), by inserting ", the Physician 
Shortage Area Scholarship Program, or the Health Edu-
cation Assistance Loan Program," after "Scholarship Pro-
gram"; 
(V) in subsection (b), by striking ", and (2)" and all that 
follows through "Act" and inserting "or under subpart m 
of part F of title VII of such Act (as in effect before October 
1, 1976) and which has not been paid by the deadline 
established by the Secretary pursuant to such respective 
section"; and 
PUBLIC LAW 100-360—JULY 1, 1988 
102 STAT. 781 
(VI) in subsection Qo), by striking the period at the end 
and inserting "; or" and by adding at the end the following: 
"(2) owed by an individual to the United States by reason of a 
loan covered by Federal loan insurance under subpart I of part 
C of title VII of the Public Health Service Act and pajnnent for 
which has not been cancelled, waived, or suspended by the 
Secretary under such subpart.". 
(ii) Section 733(f) of the Public Health Service Act (42 U.S.C. 
294f(f)) is amended by adding at the end the following: "Proce-
dures for reduction of pa3mients under the medicare program 
are provided under section 1892 of the Social Security Act.". 
(iii) The amendments made by this subparsigraph shall be 
effective 30 days after the date of the enactment of this Act. 
(11) SECOND SECTION 4052.—(A) The second section 4052(a) of 
OBRA is amended by striking "is amended" and all that follows 
through the end and inserting the following: "is amended by 
inserting before the period at the end of the next-to-last sen-
tence the following: ', and shall remain at such prevailing 
charge level until the prevailing charge for a year (as adjusted 
by economic index data) equals or exceeds such prevEiiling 
charge level'.". 
(B) The second section 4052(b) of OBRA is amended by strik-
ing "January" and inserting "April". 
(12) SECTION 4054.—(A) Section 4054 of OBRA is amended to 
read as follows: 
"SEC. 4054. APPLYING COPAYMENT AND DEDUCTIBLE TO CERTAIN OUT-
PATIENT PHYSICIANS' SERVICES. 
"(a) IN GENERAL.—Section 1833 of the Social Security Act (42 
U.S.C. 13951) is amended— 
"(1) in subsection (aXD, by striking clause (F), 
"(2) in subsection (b), by striking paragraph (3) and by re-
designating paragraphs (4) and (5) as paragraphs (3) and (4), 
respectively, and 
"(3) in subsection (i), by striking paragraph (4). 
"(b) EFFECTIVE DATE.—The amendments made by subsection (a) 
shall apply to services furnished on or after April 1,1988.". 
(B) The item relating to section 4054 in the table of contents of 
title IV of OBRA is amended to read as follows: 
"Sec. 4054. Applying copayment and deductible to certain outpatient physicians' 
services.". 
(13) SECTION 4055.—Section 4055 of OBRA is amended— 
(A) in subsection (aX2), by striking "such list" and insert-
ing "such definitions", and 
(B) in subsection (bXD, by striking "dermatology,". 
(14) REDESIGNATION.—The second section 4052 of OBRA and 
sections 4053, 4054, and 4055 of OBRA are redesignated as 
sections 4053 through 4056, respectively. 
(g) CORRECTIONS RELATING TO SUBPART B OF PART 3 OF SUBTITLE A 
OF TITLE IV (PAYMENTS FOR OTHER PART B SERVICES).— 
(1) SECTION 4062.—(A) The heading of section 1834 of the 
Social Security Act, as inserted bv section 4062(b) of OBRA, is 
amended by inserting "ITEMS AND after "PARTICULAR". 
(B) Subsection (a) of section 1834 of the Social Security Act, as 
so inserted, is amended— 
Loans. 
Effective date. 
42 use 294f 
note. 
42 u s e 1395u. 
42 use 1395u 
note. 
42 use 1395/ 
note. 
42 use 1395u 
note. 
42 u s e 1395W-1 
note. 
42 use 1395u, 
1395u notes, 
1395Z, 1395/ 
notes, 1395w-l 
note. 
42 u s e 1395m. 
102 STAT. 782 
PUBLIC LAW 100-360—JULY 1, 1988 
42 use 1395m 
note. 
42 use 1395CC. 
42 u s e 1395/. 
(i) in paragraph (IXC), by inserting "or under part A to a 
home health agency" after "under this part"; 
(ii) in the second sentence of paragraph (2)(A), by striking 
"rental" before "pajonents"; 
(iii) in paragraph (2XBXi), by striking "allowed" and 
inserting 'reasonable", and in paragraphs OXBXi) and 
(SXAXiXD, by striking "allowable and inserting "reason-
able"; 
(iv) in paragraph (3XA), by striking the extra space after 
"ventilators"; 
(v) in paragraph (4), by inserting after "individual pa-
tient" the following: ", and for that reason cannot be 
grouped with similar items for purposes of pa3anent under 
this title,"; 
(vi) in paragraph (4), by inserting "(A)" after "in a lump-
sum amount' and by inserting "(B)" after "for that item, 
and"; 
(vii) in paragraph (4), by striking "maintenance and serv-
ice" each place it appears and inserting "maintenance and 
servicing", in paragraph (TXAXiii), by striking "service and 
maintenance" and inserting "maintenance and servicing", 
and in paragraphs (7XAXii) and (IIXA), by striking "servic-
ing" and inserting "maintenance and servicing"; 
(viii) in paragraph (TXAXiiiXD, bv striking "fee estab-
lished by the carrier" and inserting fee or fees established 
by the Secretary "; 
(ix) in paragraph OXAXiiXD, by striking "12-month 
period" and inserting "6-month period"; 
(x) in paragraph OXAXiiXH), by striking "and to 1991" 
and inserting ", 1991, and 1992"; 
(xi) in paragraphs (9XBXi) and (lOXBXi), by striking the 
comma after '1991"; 
(xii) in paragraph (9XCXi), by striking "subparagraph 
(AXii)(I)" and inserting "subparagraph (AXii)"; 
(xiii) in paragraph (10)(B), by inserting before the period 
the following: ' ^ d pajrments under this subsection as such 
provisions apply to physicians' services and physicians and 
a reasonable charge under section 1842(b)"; 
(xiv) in the last sentence of paragraph (IIXA), by striking 
"under subsection OX^)" and inserting "under section 
1842qX2)"; 
(xv) in paragraph (12), by striking "(as defined in section 
1886(dX2XD))"; and 
(xvi) by striking paragraph (14). 
(C) Section 4062(cX4) of OBRA is amended— 
(i) by inserting "and payment of a reasonable copying fee 
which the Secretary may establish" after "upon written 
re(][uest", and 
(li) by inserting before the period at the end the following: 
", but onlv in a form which does not permit identification of 
individual suppliers". 
(D) The last sentence of section 1866(aX2XA) of the Social 
Security Act, as added by section 4062(dX4) of OBRA, is 
amended by striking "section 1834(aX2)" and inserting "section 
1834(aXlXB)". 
(E) The matter added by section 4062(dX3XAXii) of OBRA is 
amended by striking "and' before "(I)". 
PUBLIC LAW 100-360—JULY 1, 1988 
102 STAT. 783 
(2) SECTION 4063.—(A) Section 1842(bXllXCXii) of the Social 
Security Act, as amended by section 4063(aXlXA) of OBRA, is 
amended— 
(i) by striking "implanted" and inserting "inserted", and 
(ii) by inserting "or subsequent to" after during". 
(B) Subclause (IV) of section 1842(jXlXDXii) of the Social 
Security Act, as inserted by section 4063(aX2XA) of OBRA, is 
redesignated as subclause (V) and is amended by striking "is". 
iO Section 4063(aX2XB) of OBRA is amended by striking 
clause (ii) and by redesignating clauses (iii) and (iv) as clauses 
(ii) and (iii), respectively. 
(D) Section 1833(iX2XAXiii) of the Social Security Act, as 
inserted by section 4063(b)(3) of OBRA, is amended— 
(i) by striking "implantation" and inserting "insertion", 
and 
(ii) by inserting "or subsequent to" after "during". 
(E) Section 4063 of OBRA is amended by adding at the end the 
following new subsection: 
"(e) PREVENTION OP ADDITIONAL BILLINGS FOR IOLS.— 
"(1) Section 1833(i) of the Social Security Act (42 U.S.C. 
13951(i)) is amended by adding at the end the following new 
paragraph: 
" X6) Any person, other than a facility having an agreement under 
section 1832(aX2)(FXi), who knowingly and willfully presents, or 
causes to be presented, a bill or r e q u ^ for payment, for an intra-
ocular lens inserted during or subsequent to cataract surgery for 
which payment may be made under paragraph (2XAXiii), is subject 
to a civil money penalty of not to exceed $2,000. 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)' 
"(2) 
Section 
1832(aX2XFXi) 
of 
such 
Act 
(42 
U.S.C. 
1395k(aX2)(FXi)) is amended by inserting '(including intraocular 
lens in cases described in section 1833(iX2XAXiii)) after 'serv-
ices' each place it appears.". 
(3) SECTION 4064.—(A) Section 4064(a) of OBRA is amended by 
striking all that follows the first dash and inserting the follow-
ing: "Paragraph (2) of section 1833(h) of the Social Security Act 
(42 U.S.C. 13951(h)) is amended— 
"(1) by inserting'(AXi)'after W ; 
"(2) in the second sentence— 
"(A) by redesignating clauses (A) and (B) as clauses (i) and 
(ii), respectively, and 
"(B) by designating such sentence as subparagraph (B); 
and 
"(3) by adding at the end of subparagraph (AXi), as designated 
under paragraph (1), the following new clause: 
"'(ii) Notwithstsinding any other provision of this subsection— 
"'(I) any change in the fee schedules which would have 
become effective under this subsection for tests furnished on or 
after January 1, 1988, shall not be effective for tests furnished 
during the 3-month period beginning on January 1, 1988, and 
" '(U) the Secretary shall not adjust the fee schedules under 
clause (i) to take into account any increase in the consumer 
price index for 1988.'.". 
(B) Section 4064a)Xl) of OBRA is amended— 
42 u s e 1395u. 
42 u s e 1395/. 
42 u s e 1395Z. 
eontracts. 
eiaims. 
Law 
enforcement and 
crime. 
42 u s e 1395/ 
note. 
102 STAT. 784 
PUBLIC LAW 100-360—JULY 1, 1988 
(i) by striking "1833(hX2) of the Social Security Act (42 
U.S.C. 13951(hX2))" and inserting "1833(hX2XA) of the Social 
Security Act (42 U.S.C. 13951(hX2XA)), as amended by 
subsection (a),"; 
(ii) by striking "the following: 'In establishing fee sched-
ules under the first sentence of this paragraph with respect 
to" and inserting "the following new clause: 
" '(iii) In establishing fee schedules under clause (i) with respect 
to"; and 
(iii) by moving the indentation of all the matter added 
following "with respect to" 2 ems to the left. 
42 use 1395/. 
(C) The clause added by section 406403X1) of OBRA, as amend-
ed by subparagraph (A), is amended by inserting before the 
period at the end the following: ", and such reduced fee sched-
ules shall serve as the base for 1989 and subsequent years". 
(D) Section 1833(hX4)(BXii) of the Social Security Act, as 
42 use 1395/. 
amended by section 4064(bX2XB) of OBRA, is amended by insert-
ing "after" before "March". 
(E) Section 4064(c) of OBRA is amended by striking all that 
follows the dash 
and inserting the following: 
"Section 
1833(hXl)(D) of such Act is amended by inserting ', in a sole 
community hospital (as defined in the last sentence of section 
1886(dX5XCXii)), after 'a hospital laboratory'.". 
(F) Section 4064(c) of OBRA is amended by inserting "(1)" 
after the dash and by adding at the end the following new 
paragraph: 
Effective date. 
"(2) The amendment made by paragraph (1) shall apply with 
42 use 1395/ 
respect to diagnostic laboratory tests furnished on or after April 1, 
''''^- 
1988.". 
(G) Section 1846 of the Social Security Act, as added by 
42 use 1395W-2. 
section 4064(dXl) of OBRA, is amended— 
(i) in subsection (a)— 
(I) by striking "certified" and "certification" and 
inserting "approved" and "approval", respectively, 
(II) by inserting "or for coverage" after "conditions of 
participation", and 
(III) by striking "cancelling immediately the certifi-
,
^ 
cation of the provider or clinical laboratory" and 
inserting "terminating immediately the provider agree-
ment or cancelling immediately approval of the clinical 
laboratory"; 
(ii) in subsections (bXl)(A) and (bX2)(AXiv), by striking 
"certified"; 
Law 
(iii) in subsection (b)(2XAXii), by striking "civil fines and 
enforcement and 
penalties" and inserting "civil money penalties in an 
''''""®- 
amount not to exceed $10,000 for each day of substantial 
noncompliance"; 
(iv) in subsection Ot)X2XA), by adding at the end the 
following new sentence: 
Law 
"The provisions of section 1128A (other than subsections (a) and 0))) 
enforcement and shall apply to a civil money penalty under clause (ii) in the same 
manner as such provisions apply to a penalty or proceeding under 
section 1128A(a).'*; 
(v) in subsection (bX2XAXiii), by striking "certification"; 
(vi) in subsection 0)X2XAXiv), bv striking "provided on or 
after the date in" and inserting furnished on or after the 
date on"; and 
crime. 
PUBLIC LAW 100-360—JULY 1, 1988 
102 STAT. 785 
(vii) in subsection (bX3), by striking "fines" and inserting 
"penalties" each place it appears. 
(H) The matter inserted in section 1861(s) of the Social Secu-
rity Act by section 4064(eXl) of OBRA is amended by inserting a 
comma after "year". 
(4) SEcnoN 4066.—(A) The heading of section 4066 of OBRA is 
amended by inserting "AND OTHER DIAGNOSTIC TESTS" 
after "RADIOLOGY". 
(B) The item relating to section 4066 in the table of contents of 
title IV of OBRA is amended to read as follows: 
"Sec. 4066. Payments to hospital outpatient departments for radiology and other di-
agnostic tests.". 
(C) Section 1833(n) of the Social Security Act, as added by 
section 4066(aX2) of OBRA, is amended— 
(i) in paragraph (IXA), by striking "b^inning on or after 
October 1, 1988, under this part for services described in 
subsection (aX2)(E)" and inserting "for services described in 
subsection (aX2)(EXi) furnished under this part on or after 
October 1, 1988, and for services described in subsection 
(aX2XEXii) furnished under this part on or after October 1, 
1989,"; 
(ii) in paragraph (IXBXiXID, by inserting "or (for services 
described in subsection (aX2XEXi) furnished on or after 
January 1,1989) the fee schedule amount established" after 
"the prevailing charge"; and 
(iii) by amending subclauses (D and (ID of paragraph 
(IXBXii) to read as follows: 
"OD The term 'cost proportion' means 50 percent, except that 
such term means 65 percent in the case of outpatient radiology 
services for portions of cost reporting periods which occur in 
fiscal year 1989 and in the case of diagnostic procedures de-
scribed in subsection (aX2XEXii) for portions of cost reporting 
periods which occur in fiscal year 1990. 
"(II) The term 'charge proportion' means 100 percent minus 
the cost proportion.". 
(5) SECTION 4067.—Section 1833(f) of the Social Security Act, 
as inserted by section 4067(a) of OBRA, is amended by striking 
"medicare economic index (referred to in the fourth sentence of 
section 1842(bX3)) applicable to physicians' services" and insert-
ing "MEI (as defined in section 1842(iX3)) applicable to primary 
care services (as defined in section 184^i)(4))'. 
(6) SECTION 4068.—The last sentence of section 1135(dX3) of 
the Social Security Act, as added by section 4068(bXl) of OBRA, 
is amended by striking "speciality^' and inserting "specialty". 
(h) Ck)RRECTiONS RELATING TO SUBPART B OF PART 3 OF SUBTITLE A 
OF TITLE IV (PART B ELIGIBILITY AND BENEFITS CJHANGES).— 
(1) SECTION 4070.—(A) The last sentence of section 1833(c) of 
the Social Security Act, as added by section 4070(aX2) of OBRA, 
is amended by striking "prescribing or monitoring prescription 
drugs" and inserting "monitoring or changing drug prescrip-
tions". 
(B) Section 1861(ff) of the Social Security Act, as added by 
section 4070a)X2) of OBRA, is amended— 
(i) by inserting before such subsection the following head-
ing: 
42 u s e 1395x. 
42 use 1395/. 
42 u s e 1320b-5. 
Prescription 
drugs. 
102 STAT. 786 
PUBLIC LAW 100-360—JULY 1, 1988 
42 u s e 1395x. 
42 u s e 1395/. 
42 u s e 1395k. 
42 use 1395/. 
eiaims. 
Law 
enforcement and 
crime. 
"Partial Hospitalization Services", and 
(ii) in paragraph (3), by striking "hospital-based or hos-
pital-affiliated (as defined by the Secretary)" and inserting 
"furnished by a hospital to its outpatients". 
(2) SECTION 4071.—Section 1861(sX10XA) of the Social Security 
Act, as amended by section 407i(a) of OBRA, is amended by 
inserting ", subject to section 4071(b) of the Omnibus Budget 
Reconciliation Act of 1987," before "influenza vaccine". 
(3) SECTION 4072.—(A) Section 1861(s)(12) of the Social Security 
Act, as amended by section 4072(a) of OBRA, is amended by 
inserting "subject to section 4072(e) of the Omnibus Budget 
Reconciliation Act of 1987," after "(12)". 
(B) Section 4072(b) of OBRA is amended— 
(i) by striking "by inserting after subsection (e)" and 
inserting "by adding at the end, as previously amended,", 
and 
(ii) by redesignating the subsection added by such section 
as subsection (o). 
(4) SECTION 4073.—Section 4073 of OBRA is amended— 
(A) by striking paragraph (1) of subsection (b); 
(B) in paragraph (2) of subsection O
t
>
)
— 
(i) by redesignating such paragraph as paragraph (1); 
(ii) by inserting "and" at the end of subparagraph 
(A); 
(iii) by striking subparagraph (B); 
(iv) in the matter added by subparagraph (C)— 
(I) by striking "and (I)" and inserting "(K)", 
(II) by inserting "8() percent of the lesser of the 
actual charge for the services or" after "amounts 
paid shall be", 
(III) by striking "but in no event more than" and 
inserting "but in no event shall such fee schedule 
exceed", and 
(IV) by striking the semicolon and inserting a 
comma; and 
(v) by redesignating subparagraph (C) as subpara-
graph (B); 
(C) in paragraph (3) of subsection (b)— 
(i) by inserting ", as previously amended," after "at 
the end", 
(ii) by redesignating such paragraph as paragraph (2), 
(iii) by redesignating the subsection added by such 
paragraph as subsection (p), and 
(iv) by adding at the end of the subsection added by 
such paragraph the following: "Except for deductible 
and coinsurance amounts applicable under section 
1833, whoever knowingly and willfully presents, or 
causes to be presented, to an individual enrolled under 
this part a bill or request for payment for services 
described in the previous sentence, is subject to a civil 
money penalty of not to exceed $2,000 for each such bill 
or request. 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 applv to a penalty or 
proceeding under section 1128A(a). ; 
PUBLIC LAW 100-360—JULY 1, 1988 
102 STAT. 787 
(D) in the subsection added by subsection (c)— 
(i) by redesignating such subsection as subsection 
(gg), and 
(ii) in paragraph (1), by striking "his" and inserting 
"the nurse-midwife's" and by striking "physician's" 
and inserting "physicians' "; and 
(E) in the matter inserted by subsection (dXD, by striking 
"section 1861(ff)" and inserting "section 1861(gg)". 
(5) SECTION 4074.—Section 4074 of OBRA is amended— 
(A) in the matter inserted by subsection (aXD, by striking 
"(ff)" and inserting "(hh)", and 
(B) by redesignating the subsection added by subsection 
G)) as subsection (hh). 
(6) SECTION 4076.—Subsection (a) of section 4076 of OBRA is 
amended to read as follows: 
"(a) SERVICES COVERED.—Section 1861(sX2XK) of the Social Secu-
rity Act (42 U.S.C. 1395x(sX2XK)) is amended by inserting '(I)' before 
'in a hospital' and by striking 'or as an assistant at surgery' and 
inserting ', (II) as an assistant at surgery, or (III) in a rursd area (as 
defined in section 1886(dX2XD)) that is designated, under section 
332(aXlXA) of the Public Health Service Act, as a heedth manpower 
shortage area,'.". 
(7) SECTION 4077.—Section 4077(b) of OBRA is amended— 
(A) in paragraph (1), by inserting "by section 4073(a) of 
this title' after "as amended"; 
(B) by striking paragraph (2); 
(C) in paragraph (3)— 
(i) 
by 
striking 
"1395k(aXl))" 
and 
inserting 
"13951(aXl)), 
(ii) by striking subparagraphs (A) and (B), 
(iii) in subparagraph (C), by striking "(I)" and insert-
ing "(K)" and by redesignating such subparagraph as 
subparagraph (A), 
(iv) in subparagraph (D), by striking "subparagraph:" 
and inserting "clause:" and by redesignating such 
subparagraph as subparagraph (B), and 
(v) in the matter added by subparagraph (B), as so 
(I) by striking "(J)" and inserting "(L)", and 
(II) by inserting "80 percent of the lesser of the 
actual charge for the services or" after "amounts 
paid shall be"; 
(D) in paragraph (4), by striking "section 40730^X3)" and 
inserting "4073a)X2)"; 
(E) in paragraph (5), by redesignating the subsection (gg) 
added by such paragraph as subsection (ii); and 
(F) by redesignating paragraphs (3) through (6) as para-
graphs (2) through (5), respectively. 
(8) SECTION 4079.—Section 4079(cXl) of OBRA is amended by 
striking "subsection (d)" and inserting "subsection (e)". 
(i) PROVISIONS RELATING TO SUBPART D OF PART 3 OF SUBTITLE A OF 
TITLE IV (OTHER PART B PROVISIONS).— 
(1) SECTION 408i.—(A) Section 1842(hX3XB) of the Social Secu-
rity Act, as added by section 4081(a) of OBRA, is amended— 
(i) in the second sentence— 
(I) by striking "claims" and inserting "pajrment", and 
42 u s e 1395x. 
42 u s e 1396d. 
42 u s e 1395x. 
42 u s e 1395x. 
Rural areas. 
42 u s e 1395x. 
42 u s e 1395k. 
42 u s e 1395/. 
42 u s e 1395/. 
42 u s e 1395x. 
42 u s e 1395/, 
1395x, 1395k 
note. 
42 u s e 1395mm 
note. 
42 u s e 1395U. 
102 STAT. 788 
PUBLIC LAW 100-360—JULY 1, 1988 
42 u s e 1395SS. 
42 u s e 1395SS. 
42 u s e 1395SS 
note. 
42 use 1395u. 
Effective date. 
42 u s e 1395Z 
note. 
42 use 1395W-1. 
(II) by striking "including such information as the 
Secretary determines is generally provided" and insert-
ing "shall include an explanation of benefits and any 
additional information that the Secretary may deter-
mine to be appropriate in order"; 
(ii) in the third sentence, by striking "arrangements" and 
inserting "agreements"; and 
(iii) in the fourth sentence— 
(I) by inserting "by a carrier" after "under this 
subparagraph", and 
(II) by inserting before the period at the end the 
following: ", and such user fees shall be collected and 
retained by the carrier". 
(B) Section 4081(bX2) of OBRA is amended by redesignating 
subparagraphs (A) through (C) as subparagraphs (B) through 
(D), respectively, and by inserting before subparagraph (B), as so 
redesignated, the following: 
"(A) in the matter before paragraph (1), by inserting '(or, 
with respect to paragraph (3), the issuer of the policy)' after 
'he finds that such policy',". 
(C) Section 1882(cX3) of the Social Security Act, as inserted by 
section 4081(bX2XC) of OBRA, is amended— 
(i) in subparagraph (A), by striking "claims form" each 
place it appears and inserting "claim form" in the first 2 
places and notice" in the third place, 
(ii) in subparagraph (BXi), by inserting "under the policy" 
after "pa3mient determination", and 
(iii) in subparagraph (BXii), by striking "appropriate pay-
ment" and inserting "pa3rment covered by such policy . 
(D) Section 4081(cX2XBXi) of OBRA is amended by striking 
"medical" and inserting "medicare". 
(E) Section 4081(cX2XBXii) of OBRA is amended by inserting 
"or which has not enacted such legislation before July 1,1988, 
after "in which such l^islation may be considered". 
(2) SECTION 4082.—Section 4082(c) of OBRA is amended— 
(A) by striking "1842(bX5) of such Act (42 U.S.C. 
1395u(bX5)" and inserting "1842(bX2) of such Act (42 U.S.C. 
1395u(bX2))", and 
(B) in paragraph (1), by striking "(5)" and inserting "(2)". 
(3) SECTION 4084.—Section 4084 of OBRA is amended by 
adding at the end the following new subsection: 
'(c) ADDITIONAL TECHNICAL CORRECTIONS.— 
"(1) Section 186ia)bX2) of the Social Security Act (42 U.S.C. 
1395x(bbX2)) is amended by adding at the end the following: 
'Such term also includes, as prescribed by the Secretary, an 
anesthesiologist assistant.'. 
"(2) Section 1833(aXlXH) of such Act (42 U.S.C. 13951(aXlXH)) 
is amended by striking 'lesser of the actual charge' and insert-
ing 'least of the actual charge, the prevailing charge that would 
be recognized if the services had been performed by an anesthe-
siologist,'. 
"(3) The amendments made by this subsection shall apply to 
services furnished after December 31,1988.". 
(4) SECTION 4085.—(A) Section 1845(f) of the Social Security 
Act, as added by section 4085(a) of OBRA, is amended— 
(i) in paragraph (1), by striking "October 1st" and insert-
ing "December 31st", and 
PUBLIC LAW 100-360—JULY 1, 1988 
102 STAT. 789 
(ii) in paragraph (2), by striking "July 1st of the following 
year" and inserting "the later of (A) July 1st of the follow-
ing year, or (B) 45 days after the date of a reasonable charge 
u^ate". 
(B) Subparagraph (D) of section 1833(hX5) of the Social Secu-
rity Act, as added by section 40850)X1) of OBRA, is amended— 42 use 1395/. 
(i) by striking "If a person" and all that follows through 
"under subparagraph (C)" and inserting the following: "A 
person may not bill for a clinical diagnostic laboratory test 
performed by a laboratory, other than a rural health clinic, 
other than on an assignment-related basis. If a person 
knowingly and willfully and on a repeated basis bills for a 
clinical diagnostic laboratory test in violation of the pre-
vious sentence", and 
(ii) by striking "section 1842(jX2)" and inserting "para-
graphs (2) and (3) of section 18420) in the same manner such 
paragraphs apply with respect to a physician". 
(C) Section 4085(i) of OBRA is amended— 
(i) in the matter inserted by paragraph (IXA), by inserting 42 U
S
C 1395/. 
a comma after "assignment-related basis"; 
(ii) in paragraph (1), by striking subparagraph (B); 
(iii) in paragraph (11), by striking "9367(a)' and inserting 42 U
S
C I395x. 
"4072(a)"; 
(iv) in paragraph (21XDXi), by inserting "by" after "(i)"; 42 use 1395/. 
(v) in paragraph (21XDXii), by striking "and by" and all 42 use 1395/ 
that follows up to the semicolon; and 
^ 
(vi) by adding at the end the following: 
"(22XA) Section 1832(aX2XFXii) of the Social Security Act (42 
U.S.C. 1395k(aX2XFXii)) is amended by striking 'an assignment 
described in section 1842(bX3XBXii)' and inserting 'pajnnent on 
an assignment-related basis'. 
"(B) Section 1833(hX5) of such Act (42 U.S.C. 13951(hX5)) is 
amended, in each of subparagraphs (A) and (C), by striking 'on 
the basis of an assignment' and all that follows through 
'1870(f)(1),' and inserting 'on an assignment-related basis'. 
"(C) Section 1842(bX7XBXiii) of such Act (42 U.S.C. 
1395u(bX7XBXii)) is amended by striking 'the basis of and all 
that follows through '1870(fKl)' and inserting 'an assignment-
r6ld.^6Q nasi s 
"(23) Section 1833(lX5XBXii) of such Act (42 U.S.C. 
1395k(lX5XBXii)) is amended— 
42 U
S
C 1395/. 
"(A) in the first sentence by striking 'monetary' and 
inserting 'money', and 
"(B) by amending the second sentence to read as follows: 
'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).'. 
"(24) The fourth sentence of section 1842(bX3) of such Act (42 
U.S.C. 1395u(bX3)) is amended by striking 'physician services* 
and 'physicians services' and inserting 'physicians' services* in 
both olaces 
"(25) Section 
1842(bX12XC) of such Act (42 U.S.C. 
1395ua>X12XC)) is amended— 
"(A) in the first sentence by striking 'monetary' and 
inserting 'money*, and 
102 STAT. 790 
PUBLIC LAW 100-360—JULY 1, 1988 
"(B) by amending the second sentence to read as follows: 
'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).'. 
"(26) Section 18420X2) of such Act (42 U.S.C. 1395uO'X2XB)) is 
amended— 
"(A) by striking 'title' each place it appears and inserting 
'Act', and 
"(B) in subparagraph (B)— 
"(i) by striking 'the imposition of, 
"(ii) by inserting 'and assessments' after 'such pen-
alties', and 
"(iii) by amending the second sentence to read as 
follows: 'The provisions of section 1128A (other than 
the first 2 sentences of subsection (a) and other than 
subsection (b)) shall apply to a civil money penalty and 
assessment under subparagraph (B) in the same 
manner as such provisions apply to a penalty, assess-
ment, or proceeding under section 1128A(a), except to 
the extent such provisions are inconsistent with 
subparagraph (A) or paragraph (3).'. 
"(27) Section 
1842(lXlXCXi) of such Act (42 U.S.C. 
1395u(lXlXCXi)) is amended by inserting 'the physician estab-
lishes that' after '(i)'. 
"(28) Section 1866(g) of such Act (42 U.S.C. 1395cc(g)) is 
amended— 
"(A) in the first sentence by striking 'monetary' and 
inserting 'money', and 
"(B) by amending the second sentence to read as follows: 
'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).'.". 
(DXi) Section 1862(e) of the Social Security Act (42 U.S.C. 
13953Ke)) is amended— 
(I) by striking "or section 1128A" and inserting ", 1128A, 
1156,18420'X2), or 1867(d)", 
(II) by redesignating paragraphs (1) and (2) as subpara-
graphs (A) and (B), and 
(III) by inserting "(1)" after "(e)". 
(ii) Section 1890 of the Social Security Act, as added by section 
42 use I395aaa. 
10 of Public Law 100-93, is amended— 
(I) by striking its heading; 
(II) by striking "SEC. 1890" and inserting "(2)"; 
an) by inserting "18420*X2)," before "1862(d),"; 
(IV) by striking "or 1866" and msertmg "1866, or 
1867(d)"; and 
(V) by transferring and adding such provision at the end 
42 use I395y. 
of section 1862(e) of such Act. 
0*) CORRECTnONS TO P A R T 4 OF SUBTITLE A OF TiTLE I V (RELATING TO 
Psmt REVIEW ORGANIZATIONS).— 
42 use 1
3
2
0
C
-
2 
(1) SECTION 4091.—Section 4091(aXl)(B) of OBRA is amended 
note. 
by striking "renewals occurring" and inserting "contracts expir-
ing". 
PUBLIC LAW 100-360—JULY 1, 1988 
102 STAT. 791 
(2) SECTION 4093.—Section 1154(aX3) of the Social Security 
Act, as amended by section 4093(a) of OBRA, is amended by 
42 USC l320c-3. 
amending the last sentence to read as follows: 
"(C) The discussion and review conducted under subpara- Healthcare 
graph (BXii) shall not affect the rights of a practitioner or professionals. 
provider to a formal reconsideration of a determination under 
this part (as provided under section 1155).". 
(3) SECTION 4094.—(A) Section 4094(a) of OBRA is amended by 
42 use i320c-3. 
striking "subparagraph (B)" and inserting "subparagraph (A)". 
(B) Section 1154(aX15) of the Social Security Act, as added by 
section 4094(b) of OBRA, is amended by striking "at at" and 
inserting "in at". 
(4) SECTION 4096.—(A) Section 4096(aXlXA) of OBRA is 42USCl395u. 
amended by striking "(bX3Xii)" and inserting "(bX3XBXii)". 
(B) Section 1870(f) of the Social Security Act, as amended by 
section 4096(aX2) of OBRA, is amended by striking "specified in 
42 USC I395gg. 
subclauses (I) and (II) of" and inserting "of assignment specified 
in". 
(C) Sections 1154(eX3XAXi) and 1154(eX3XB) (42 U.S.C. 1320c-
3(eX3XAXi), 1320c-3(eX2XB)), as amended by section 4096(c) of 
OBRA, are each amended by striking "or (2)" before "paragraph 
(2)". 
(5) SECTION 4097.—Section 40970)) of OBRA is amended by 
42 use I395cc. 
striking 
"1866(aX4XCXii) 
of 
such 
Act 
(42 
U.S.C. 
1395cc(aX4XCXii))" and inserting "1866(aX3XCXii) of such Act (42 
U.S.C. 1395cc(a)(3XCXii))". 
(k) (CORRECTIONS TO SUBTITLE B OP TITLE IV (RELATING TO MEDIC-
AID).— 
(1) TABLE OF CONTENTS.—The table of contents of title IV of 
OBRA is amended by striking the item relating to section 4105 
and by redesignating the items relating to sections 4106 and 
4107 as relating to sections 4105 and 4106, respectively. 
(2) SECTION 410I.—Section 1916(cXl) of the Social Security 
Act, as inserted by section 4101(dXlXC) of OBRA, is amended by 
42 USC i396o. 
striking "nonfarm". 
(3) SECTION 4102.—(A) Section 1915(dX5XB) of the Social Secu-
rity Act, as amended by section 4102(a)(lXB) of OBRA, is 42USCi396n. 
amended— 
(i) in clause (iiiXHD, by striking "75" and inserting "65", 
and 
(ii) by inserting before "Effective on" the following: "The 
Secretary shall develop (by not later than October 1,1989) a 
method for projecting, on a State-specific basis, the percent-
age increase in the number of residents in each State who 
are over 75 years of age for any period.". 
(B) Section 1915(dX5XCXi) of the Social Security Act, as 
amended by section 41()2(aXlXB) of OBRA, is amended— 
(i) by striking "(4XB)," and inserting "(4), and", and 
(ii) by striking ", and services furnished" and all that 
follows through "subsection (c)". 
(4) SECTION 4103.—Section 1905(aX5XB) of the Social Security 
Act, as inserted by section 4103(a) of OBRA, is amended by 
42 USC I396d. 
striking "subparagraph" and inserting "clause". 
(5) SECTION 4104.—(A) Paragraph (1) of section 4104(1) of 
OBRA is amended to read as follows: 
42 USC 1396a. 
102 STAT. 792 
PUBLIC LAW 100-360—JULY 1, 1988 
42 use 1396a. 
42 use 1396a 
note. 
State and local 
governments. 
ehildren £ind 
youth. 
"(1) by striking ', or' at the end of subclause (IX) and inserting 
a semicolon and by inserting 'or' at the end of subclause (X): 
and". 
(B) Section 1902(aX10XAXiiXXI) of the Social Security Act, as 
added by section 4104(2) of OBRA, is amended— 
(i) by striking "are more restrictive" and inserting "may 
be more restrictive", and 
(ii) by striking the period at the end £ind inserting a 
semicolon. 
(6) SECTION 4112.—(A) Section 4112 of OBRA is amended— 
(i) in subsection (aX2XA)— 
(I) by striking "such date" and inserting "April 1, 
1989", and 
(II) by inserting ", effective for inpatient hospital 
services provided on or after July 1, 1989" before the 
period; 
(ii) in subsection (aX2XB)— 
(I) by striking "such date" and inserting "April 1, 
1990", and 
(II) by inserting ", effective for inpatient hospital 
services provided on or after July 1, 1990" before the 
period; 
(iii) the undesignated paragraph at the end of subsection 
(a) is amended— 
(I) by striking "June 30 of each year in which the 
State is required to submit" and inserting "90 days 
after the date a State submits", 
(II) by indenting all of such paragraph 2 ems, and 
(III) by designating the first two sentences thereof as 
paragraph (3) and the last sentence thereof as para-
graph (4); 
(iv) in subsection (bX2), by striking "the State plan" and 
inserting "a State plan"; 
(v) in subsection (b)(3)(BXi), by inserting ", less the portion 
of any cash subsidies described in clause (i)(II) in the period 
reasonably attributable to inpatient hospital services after 
"charity care in a period"; 
(vi) in subsection (c)— 
(I) by striking "paragraphs (2XA) and (2XB)" and 
inserting "paragraphs (IXB) and (2XA) of subsection 
(a)", 
(II) by striking "paragraph (2XA)" and "paragraph 
(2KB)" and inserting "such paragraph (IXB)" and such 
paragraph (2XA)", respectively, 
(III) in paragraph (1), by inserting "at least" after 
"equal to", 
(IV) in paragraph (2), by inserting "(without regard 
to the election made by a State under subsection (bXl))" 
after "payment) and", 
(V) in the matter after paragraph (2), by inserting "at 
least" before "one-third" and before "two-thirds", and 
(VI) by adding at the end the following new sen-
tences: In the case of a hospital described in subsec-
tion (dX2XAXi) (relating to children's hospitals), in 
computing the hospital's disproportionate share adjust-
ment percentage for purposes of paragraph (IXB) of 
this subsection, the disproportionate patient percent-
PUBLIC LAW 100-360—JULY 1, 1988 
102 STAT. 793 
age (defined in section 1886(dX5XFXvi)) shall be com-
puted by substituting for the fraction described in 
subclause (D of such section the fraction described in 
subclause dl) of that section. If a State elects in a State 
plan amendment under subsection (a) to provide the 
payment ac^ustment described in paragraph (2), the 
State must include in the amendment a detailed 
description of the specific methodol(^ to be used in 
determining the specified additional payment amount 
(or increased percentage payment) to be made to each 
hospital qualifying for such a payment adjustment and 
must publish at least annually the name of each hos-
pital qucdifying for such a payment ac^ustment and the 
amount of such payment adjustment made for each 
such hospital."; and 
(vii) in subsection (e)— 
(D by inserting "(1)" after "SPECIAL RULE.—", 
(n) by inserting "based on a pooling arrangement 
involving a majority of the hospitals participating 
under the plan after "payment adjustments , and 
(m) by adding at the end the following new 
paragraph: 
"(2) In the case of a State that used a health insuring oiganization 
before January 1,1986, to administer a portion of its plan on a State-
wide basis, during the 3-year period b^inning on July 1, 1988— 
"(A) the requirements of subsections (b) and (c) shsdl not apply 
if the aggr^ate amount of the payment adjustments under the 
plan for disproportionate share hospitals (as defined under the 
State plan) is not less than the aggregate amount of payment 
adjustments otherwise required to be made if such subsections 
applied, and 
(B) subsection (dX2)(B) shall apply to hospitals located in 
urban areas, as well as in rural areas. . 
(B) Section 4112 of OBRA is further amended— 
(i) by striking "(a) IIAPLEMENTATION OF REQUIREMENT.—" 
and inserting the following: 
"(a) IN GENERAL.—Title XIX of the Social Security Act is 
amended— 
"(1) by redesignating section 1923 as section 1924, and 
"(2) by inserting after section 1922 the following new section: 
State and local 
governments. 
State and local 
governments. 
Urban areas. 
Rural areas. 
42 u s e 1396a 
note. 
42 u s e 1396s. 
ADJUSTMENT IN PAYMENT FOR INPATIENT HOSPITAL SERVICES 
FURNISHED BY DISPROPORTIONATE SHARE HOSPITAI^ 
'SEC. 1923. (a) IMPLEMENTATION OF REQUIREMENT.—"; 
(ii) in subsection (aXD, by striking "A State's plan under 
title XIX of the Social Security Act and inserting "A State 
plan under this title"; 
(iii) in subsection (aXD, by striking "of such Act"; 
(iv) in subsection (a), by striking "of Health and Himian 
Services" each place it appears; 
(v) in the matter following paragraph (2)(B) of subsection 
(a), by striking "of the Social Security Act"; 
(vi) in subsections (b) and (c), by striking "under title XIX 
of the Social Security Act" each place it appecu-s and insert-
ing "under this title ; 
42 u s e 1396r-4. 
102 STAT. 794 
PUBLIC LAW 100-360—JULY 1, 1988 
Disadvantaged 
persons. 
42 u s e 1396b. 
42 u s e 1396a. 
42 u s e 1396a. 
42 u s e 1396a, 
1396b. 
42 u s e 1396d. 
42 u s e 1396d. 
101 Stat. 1330-153. 
100 Stat. 217. 
42 u s e 1396n. 
42 u s e 1320a-7a 
note. 
(vii) in subsection (dX2)(B), by striking "of the Social 
Security Act"; 
(viii) in subsections (bX2), (b)(3), and (d)(2)(B), by striking 
double quotation marks enclosing terms and inserting 
jj 
single quotation marks; 
(ix) by placing opening double quotation marks at the 
beginning of any matter with an initial paragraph indenta-
tion (beginning with subsection (a)(1)) and closing double 
quotation marks at the end of subsection (e); and 
(x) by adding at the end the following: 
"(b) CONFORMING AMENDMENT.—Section 1903(i)(3) of such Act (42 
U.S.C. 1396b(i)(3)) is amended by inserting '(other than amounts 
attributable to the special situation of a hospital which serves a 
disproportionate number of low income patients with special needs)' 
before 'to the extent'.". 
(7) SECTION 4113.—Section 4113 of OBRA is amended— 
(A) in the matter inserted by subsection (a)(1)(B)— 
(i) by moving the left margin of the matter 2 ems to 
the left, and 
(ii) by striking "subparagraph (G)" and inserting 
"subparagraph (E) or (G)"; 
(B) in the matter inserted by subsection (a)(2), by striking 
"paragraph 
(2)(G) or (6)" and 
inserting 
"paragraph 
(2)(B)(iii),(2)(E),(2)(G),or(6)"; 
(C) in subsection (b)(2)(ii), by striking "such"; and 
(D) by striking subsection (d) and redesignating subsec-
tion (e) as subsection (d). 
(8) SECTION 4114.—(A) Section 4114 of OBRA is amended in 
paragraph (1), by striking " '(1)' " and inserting " '(o)(l)' ". 
(B) Section 1905(o)(l)(B) of the Social Security Act, as added by 
section 4114(3) of OBRA, is amended— 
(i) by striking "only", and 
(ii) by striking "immunodeficiency s5mdrome" and insert-
ing "immune deficiency syndrome (AIDS)". 
(9) SECTION 4115.—(A) Section 4115 of OBRA is amended— 
(A) in subsection (b)(4)(B), by striking "program" and 
inserting "Program", 
(B) in subsection (c)— 
(i) by inserting "under section 9121 of this Act" after 
"Upon approval', and 
(ii) by striking "1916, and 1924" and inserting 
"1902(e)(1), and 1916", and 
(C) by adding at the end the following: 
"(d) EXTENSION OF TEXAS STATE WAIVER.—Section 9523(a) of the 
Consolidated Omnibus Budget Reconciliation Act of 1985 is amended 
by striking 'January 1, 1989' and inserting 'January 1, 1990'.". 
(10) SECTION 4118.—(A) Section 1915(c)(10) of the Social Secu-
rity Act, as added by section 41180t)) of OBRA, is amended— 
(i) by striking "No waiver under this subsection shall 
limit by an amount less than 200" and inserting "The 
Secretary shall not limit to fewer than 200", and 
(ii) by striking "under such waiver" and inserting "under 
a waiver under this subsection". 
(B) Section 4118(e) of OBRA is amended— 
(i) in paragraph (3), by striking "amendment" and insert-
ing "amendments", and 
(ii) in paragraph (1)— 
PUBLIC LAW 100-360—JULY 1, 1988 
102 STAT. 795 
42 use 
1320a-7a, 
1320a-7. 
42 use 
1320a-7a. 
42 use 1320a-7a 
note. 
(I) by inserting "(A)" after "(1)", 
(II) by striking "1128A(aXl)" and "1320a-7(aXl))" and 
inserting "1128(a)" and "1320a-7(a))", respectively, and 
(III) by adding at the end the following: 
"(B) Section 1128A of such Act is amended by adding at the 
end the following new subsection: 
" '(1) A principal is liable under this section for the actions of the 
principal's agent acting within the scope of the agency.' ". 
(C) Section 1128(dX3XBXii) of the Social Security Act, as added 
by section 4118(eX2XB) of OBRA, is amended by striking "under 42 use i320a-7. 
a program". 
(D) Section 4118(e) of OBRA is amended by redesignating 
paragraph (3) as paragraph (14) and by inserting after para-
graph (2) the following new paragraphs: 
"(3) Section 1128(bX8XAXi) of such Act is amended by insert-
ing after '(AXi)' the following: 'who has a direct or indirect 
ownership or control interest of 5 percent or more in the entity 
or'. 
"(4) Section 1128(d) of such Act is amended— 
"(A) in paragraph (1), by striking 'subsection (b)' and 
inserting 'this section and section 1128A', and 
"(B) in paragraph (3XA), by striking 'under a program'. 
"(5) Section 1128(i) of such Act is amended— 
"(A) in the matter before paragraph (1), by striking 'a 
physician or other individual and inserting 'an individual 
or entity', 
"(B) in par£igraphs (1) through (4), by striking 'physician 
or other individual' each place it appears and inserting 
'individual or entity', and 
"(C) in paragrapn (4), by striking'first offender or other 
program' and inserting 'first offender, deferred a4judica-
tion, or other arrangement or program'. 
"(6) Section 1128A(aXlXD) of such Act is amended— 
"(A) by striking 'excluded under' and inserting 'excluded 
from', and 
"(B) by inserting 'or as a result of the application of the 
provisions of section 1842(jX2) or section 1867(dX2)* after 'or 
1866(b)'. 
"(7) The second sentence of section 1128A(cXl) of such Act is 
amended— 
"(A) by inserting ', request for pavment, or other occur-
rence described in this section' after any claim', and 
"(B) by inserting ', the request for payment was made, or 
the occurrence took place' after 'claim was presented'. 
"(8) Section 1128A(i) of such Act is amended, in the matter 
before paragraph (1), by striking 'subsection' and inserting 'sec-
tion'. 
"(9) Section 1128A(iXl) of such Act is amended by inserting 'or 
title XX'after'title v . 
"(10) Section 1128A of such Act is further amended— 
"(A) in the matter in subsection (a) before paragraph (1), 
by inserting *
, but excluding a beneficiary, as defined in 
subsection (iX5)' after 'other entity', 
"(B) in subsection (iX2), by striking 'submitted by' and all 
that follows through the end and inserting 'for payments 
for items and services under title V, XVIII, XIX, or XX of 
this Act.', and 
102 STAT. 796 
PUBLIC LAW 100-360—JULY 1, 1988 
42 u s e 1396J. 
42 use 1396a 
note. 
State and local 
governments. 
42 u s e 1396n. 
42 use 1396n. 
"(C) by adding at the end the following new paragraph: 
"'(5) The term "beneficiary" means an individual who is 
eligible to receive items or services for which payment may be 
made under title V, XVIII, XIX, or XX but does not include a 
provider, supplier, or practitioner,'. 
"(11) Section 1903(iX2) of such Act (42 U.S.C. 1396b(iX2)) is 
amended— 
"(A) in subparagraph (A), by striking 'in the State plan 
under this title pursuant to section 1128 or section 1128A' 
and inserting 'under title V, XVIII, or XX or under this 
title pursuant to section 1128, 1128A, 1156, 18420X2), or 
1867(dX2)', and 
"(B) in subparagraph (B), by striking 'pursuant to section 
1128 or section 1128A from participation in the progrgun 
under this title' and inserting 'from participation under 
title V, XVIII, or XX or under this title pursuant to section 
1128,1128A, 1156,18420X2), or 1867(dX2)'. 
"(12) Section 504(bX6) of such Act (42 U.S.C. 704(bX6)) is 
amended by striking 'pursuant to section 1128 or section 1128A 
from participation in the program under this title' each place it 
appears and inserting 'under this title or title XVIII, XIX, or 
XX pursuant to section 1128, 1128A, 1156, 18420X2), or 
1867(dX2)'. 
"(13) Section 2005(aX9) of such Act (42 U.S.C. 1397d(aX9)) is 
amended by striking 'pursuant to section 1128 or section 1128A 
from participation in the program under this title' each place it 
appears and inserting 'under this title or title V, XVIII, or XIX 
pursuant to section 1128, 1128A, 1156, 18420X2), or 1867(dX2)'.". 
(E) Section 4118(fKl) of OBRA is amended by striking 
"4111(gX8)" and inserting "4211(hX8)". 
(F) Section 4118(gXlXB) of OBRA is amended by striking 
"insert" and inserting "inserting". 
(G) Section 4118(h) of OBRA is amended— 
(i) by inserting a dash after "EXPENSES."; 
(ii) in paragraph (1), by striking "Section 1902(aX17) of the 
Social Security Act (42 U.S.C. 1396a(aX17)) is amended" and 
inserting "Sections 1902(aX17) and 1903(fX2) of the Social 
Security Act (42 U.S.C. 1396a(aX17), 1396b(fX2)) are each 
amended"; 
(iii) in paragraph (2), by striking "(2) The amendment 
made by paragraph (1)" and inserting "(3) The amendments 
made by this subsection", and 
(iv) by inserting after paragraph (1) the following new 
paragraph: 
"(2) The first sentence of section 1902(f) of such Act (42 U.S.C. 
1396a(f)) is amended by inserting after 'as recognized under 
State law' the following: 'regardless of whether such expenses 
are reimbursed under another public program of the State or 
political subdivision thereof'.". 
(H) Section 1915(cX7XB) of the Social Security Act, as added by 
section 4118(k) of OBRA, is £unended by inserting before the 
period at the end the following: ", without regard to the avail-
ability of beds for such inpatients". 
a) Section 41180X1) of OBRA is amended by inserting ", as 
redesignated by section 4102(a)," after "1396n(h))". 
PUBLIC LAW 100-360—JULY 1, 1988 
102 STAT. 797 
101 Stat. 1330-
158. 
42 u s e 1396a 
note. 
Reports. 
(J) Section 9414(bX3) of the Omnibus Budget Reconciliation 
Act of 1986, as amended by section 4118(oXlXC) of OBRA, is 100 Stat. 2064 
amended by striking "nonfarm". 
(K) Section 4118(oX2XA) of OBRA is amended by inserting 
"each place it appears" before "and inserting". 
(L) Section 4118(pX9) of OBRA is amended by striking 42USCi396s 
"1925(a)" and "(4111(a))" and inserting "1923(a)" and "4211(a)", 
respectively. 
(M) Section 4118(p) of OBRA is amended by adding at the end 
the following new paragraph: 
"(11) Paragraph (5) of section 9432(c) of the Omnibus Budget 
Reconciliation Act of 1986 is amended to read as follows: 
" *(5) The Secretary shall submit an interim report on the results 
of the study, including an analysis of the geographic variations 
under paragraph (2), to the Congress not later than January 1,1990, 
and shall report the finsd results of the study to the Congress not 
later than January 1,1992.'.". 
(11) OMITTED SECTION.—(A) Part 2 of subtitle B of title IV of 
OBRA is amended by adding at the end the following new 
section: 
"SEC. 4119. STUDY OF MEANS OF RECOVERING COSTS OF NURSING FACIL-
ITY SERVICES FROM ESTATES OF BENEFICIARIES. 
"The Secretary of Health and Human Services shall study the 
means of recovering amounts from estates of deceased medicaid 
beneficiaries (or the estates of the spouses of such deceased bene-
ficiaries) to pay for the medical assistance for skilled nursing facility 
or intermediate care facility services furnished, under title XIX of 
the Social Security Act, to such medicaid beneficiaries. The Sec- Reports, 
retary shall report to Congress, not later than December 31,1988, on 
such means, and include appropriate recommendations for changes 
in legislation.", 
(B) The table of contents of title IV of OBRA is amended by 
inserting after the item relating to section 4118 the following new 
item: 
"Sec. 4119. Study of means of recovering costs of nursing facility services from es-
tates of beneficiaries.". 
(12) 
MEDICAID CONFORMING AMENDMENT TO SECTION 40 14 OF 
OBRA.—(A) Paragraph (5) of section 1903(m) of the Social Secu-
rity Act (42 U.S.C. 1396b(m)) is amended to read as follows: 
"(5XA) If the Secretary determines that an entity with a contract Contracts. 
under this subsection— 
"(i) fails substantially to provide medically necessary items 
and services that are required (under law or under the contract) 
to be provided to an individual covered under the contract, if 
the failure has adversely affected (or has substantial likelihood 
of adversely affecting) the individual; 
"(ii) imposes premiums on individuals enrolled under this 
subsection in excess of the premiums permitted under this title; 
"(iii) acts to discriminate among individuals in violation of the 
provision of paragraph (2XAXv), including expulsion or refusal 
to re-enroll an individual or engaging in £iny practice that would 
reasonably be expected to have the effect of denying or discour-
aging enrollment (except as permitted by this subsection) by 
eligible individuals with the organization whose medical condi-
102 STAT. 798 
PUBLIC LAW 100-360—JULY 1, 1988 
Law 
enforcement and 
crime. 
State and local 
governments. 
Contracts. 
Effective date. 
42 u s e 1396b 
note. 
Children and 
youth. 
Handicapped 
persons. 
Effective date. 
42 u s e 1396b 
note. 
tion or history indicates a need for substantial future medical 
services; or 
"(iv) misrepresents or falsifies information that is furnished— 
"(I) to the Secretary or the State under this subsection, or 
"(11) to an individual or to any other entity under this 
subsection, 
the Secretary may provide, in addition to any other remedies avail-
able under law, for any of the remedies described in subparagraph 
(B). 
"(B) The remedies described in this subparagraph are— 
"(i) civil money penalties of not more than $25,000 for each 
determination under subparagraph (A), or, with respect to a 
determination under clause (iii) or (ivXI) of such subparagraph, 
of not more than $100,000 for each such determination, plus, 
with respect to a determination under subparagraph (A)(ii), 
double the excess amount charged in violation of such subpara-
graph (and the excess amount charged shall be deducted from 
the penalty and returned to the individual concerned), and plus, 
with respect to a determination under subparagraph (AXiii), 
$15,000 for each individual not enrolled as a result of a practice 
described in such subparagraph, or 
"(ii) denial of payment to the State for medical assistance 
furnished under the contract under this subsection for individ-
uals enrolled after the date the Secretary notifies the organiza-
tion of a determination under subparagraph (A) and until the 
Secretary is satisfied that the basis for such determination has 
been corrected and is not likely to recur. 
The provisions of section 1128A (other than subsections (a) and (b)) 
shall apply to a civil money penalty under clause (i) in the same 
manner as such provisions apply to a penalty or proceeding under 
section 1128A(a).". 
(B) The amendment made by subparagraph (A) shall apply to 
actions occurring on or after the date of the enactment of this 
Act. 
(13) 
TREATMENT OF EDUCATIONALLY-RELATED SERVICES.—(A) 
Section 1903 of the Social Security Act (42 U.S.C. 1396b) is 
amended by inserting after subsection (b) the following new 
subsection: 
"(c) Nothing in this title shall be construed as prohibiting or 
restricting, or authorizing the Secretary to prohibit or restrict, 
payment under subsection (a) for medical assistance for covered 
services furnished to a hsmdicapped child because such services are 
included in the child's individualized education program established 
pursuant to part B of the Education of the Handicapped Act or 
furnished to a handicapped infant or toddler because such services 
are included in the child's individualized family service plan 
adopted pursuant to part H of such Act.". 
(B) The amendment made by subparagraph (A) shall take 
effect on the date of the enactment of this Act. 
(14) CLARIFICATION OF TERM "INSTITUTION FOR MENTAL DIS-
EASES".—(A) Section 1905 of the Social Security Act (42 U.S.C. 
1396d) is amended by inserting after subsection (h) the following 
new subsection: 
"(i) The term 'institution for mental diseases' means a hospital, 
nursing facility, or other institution of more than 16 beds, that is 
primarily engaged in providing diagnosis, treatment, or care of 
'•%.»*.-,. r^^sf^ 
PUBLIC LAW 100-360—JULY 1, 1988 
102 STAT. 799 
persons with mental diseases, including medical attention, nursing 
care, and related services.". 
(B) The amendment made by subparagraph (A) shall take 
effect on the date of the enactment of this Act. 
(15) EUGIBILTTY VERIFICATION TECHNICAL CORRECTION.—(A) 
Section 1137 of the Social Security Act (42 U.S.C. 1320b-7) is 
amended by adding at the end the following new subsection: 
"{{) Subsections (aXD and (d) shall not apply with respect to aliens 
seeking medical assistance for the treatment of an emergency medi-
cal condition under section 1903(vX2).". 
(B) The amendment made by subparagraph (A) shall apply as 
if it were included in the enactment of section 9406 of the 
Omnibus Budget Reconciliation Act of 1986. 
(16) TECHNICAL CORRECTIONS RELATING TO PRESUMPTIVE EUGI-
BiLTTY.—(A) Section 1920(dXlXB) of the Social Security Act (42 
U.S.C. 1396r-l(dXlXB)) is amended by striking "by a qualified 
provider" and inserting "by a provider that is eligible for 
payments under the State plan". 
(B) Section 1920(bX2XD) of such Act (42 U.S.C. 1396r-l(bX2XD)) 
is amended— 
(i) in clause (i)— 
(I) in subclause (I), by striking "or section 330" and 
inserting ", 330, or 340" and by striking "or" at the 
end, 
(II) in subclause (11), by striking the semicolon at the 
end and inserting ", or", and 
(HI) by adding after subclause (11) the following new 
subclause: 
"(HI) title V of the Indian Health Care Improvement 
Act;"; 
(ii) in clause (ii), by striking "or" at the end; and 
(iii) by adding at the end the following new clause: 
"(iv) is the Indian Health Service or is a health program 
or facility operated by a tribe or tribal organization under 
the Indian Self-Determination Act (Public Law 93-638).". 
(C) The amendments made by this paragraph shall be effec-
tive as if they were included in section 94070t)) of the Omnibus 
Budget Reconciliation Act of 1986. 
(17) WAIVER FOR CHILDREN INFECTED WITH AIDS OR DRUG 
DEPENDENT AT BIRTH.—(A) Section 1915 of the Social Security 
Act (42 U.S.C. 1396n) is amended— 
(i) by redesignating subsection (f) as paragraph (2); 
(ii) in subsection (e), by striking paragraph (2) and by 
redesignating such subsection as subsection (i); 
(iii) by inserting after subsection (d) the following new 
subsection: 
"(eXlXA) Subject to paragraph (2), the Secretary shall grant a 
waiver to provide that a Stete plan approved under this title shall 
include as 'medical assistance' under such plan payment for part or 
all of the cost of nursing care, respite care, physicians' services, 
prescribed drugs, medical devices and supplies, transportetion serv-
ices, and such other services requested by the Stete as the Secretary 
may approve which are provided pursuant to a written plan of care 
to a child described in subparagraph (B) with respect to whom there 
has been a determination that but for the provision of such services 
the infants would be likely to require the level of care provided in a 
Effective date. 
42 u s e 1396d 
note. 
Aliens. 
Effective date. 
42 u s e 1320b-7 
note. 
Indians. 
Effective date. 
42 u s e 1396r-l 
note. 
State and local 
governments. 
Prescription 
drugs. 
Children and 
youth. 
Transportation. 
102 STAT. 800 
PUBLIC LAW 100-360—JULY 1, 1988 
AIDS. 
Drugs and drug 
abuse. 
State and local 
governments. 
Safety. 
42 use 13951-3. 
hospital or nursing facility the cost of which could be reimbursed 
under the State plan. 
"(B) Children described in this subparagraph are individuals 
under 5 years of age who— 
"(i) at the time of birth were infected with (or tested positively 
for) the etiologic agent for acquired immune deficiency syn-
drome (AIDS), 
"(ii) have such syndrome, or 
"(iii) at the time of birth were dependent on heroin, cocaine, 
or phencyclidine, 
and with respect to whom adoption or foster care assistance is (or 
will be) made available under part E of title IV. 
"(2) A waiver shall not be granted under this subsection unless the 
State provides assurances satisfactory to the Secretary that— 
"(A) necessary safeguards (including adequate standards for 
provider participation) have been taken to protect the health 
and welfare of individuals provided services under the waiver 
and to assure financial accountability for funds expended with 
respect to such services; 
' (B) under such waiver the average per capita expenditure 
estimated by the State in any fiscal year for medical assistance 
provided with respect to such individuals does not exceed 100 
percent of the average per capita expenditure that the State 
reasonably estimates would have been made in that fiscal year 
for expenditures under the State plan for such individuals if the 
waiver had not been granted; and 
"(C) the State will provide to the Secretary annually, consist-
ent with a data collection plan designed by the Secretary, 
information on the impact of the waiver granted under this 
subsection on the tjrpe and amount of medical assistance pro-
vided under the State plan and on the health and welfare of 
recipients. 
"(3) A waiver granted under this subsection may include a waiver 
of the requirements of section 1902(aXl) (relating to statewideness) 
and section 1902(aX10XB) (relating to comparability). A waiver 
under this subsection shall be for an initial term of 3 years and, 
upon the request of a State, shall be extended for additional five-
year periods unless the Secretary determines that for the previous 
waiver period the assurances provided under paragraph (2) have not 
been met. 
"(4) The provisions of paragraph (6) of subsection (d) shall apply to 
this subsection in the same manner as it applies to subsection (d)."; 
and 
(iv) in subsection (h), by striking "or (d)" and inserting 
"(d), or (e)". 
(B) Section 1902(aX10XAXiiXVI) of such Act (42 U.S.C. 
1396a(aX10XAXiiXVI)) is amended by striking "(c) or (d)" each 
place it appears and inserting "(c), (d), or (e)". 
G) CORRECTIONS RELATING TO SUBTITLE C OF TITLE IV (NURSING 
HOME REFORM).— 
(1) SECTION 4201.—(A) Section 1819 of the Social Security Act, 
as added by section 4201(aX3) of OBRA, is amended— 
(i) in subsection (bX3XCXiXI), by striking "October 1, 
1990" the second place it appears and inserting "January 1, 
1991"; 
(ii) in subsection (bX4XCXi)— 
(I) by inserting "licensed" after "24-hour", 
PUBLIC LAW 100-360—JULY 1,1988 
102 STAT. 801 
(ID by strikmg "employ" and inserting "use", and 
(in) by striking "during the day tour of duty (of at 
least 8 hours a day)" and inserting "at least 8 consecu-
tive hours a dav 
(iii) in subsection (bX5XA), bv striking "October 1, 1989" 
and all that follows through July 1, 1989)" and inserting 
"January 1,1990"; 
(iv) in subsection (eXlXA), by striking "March 1, 1989" 
and inserting "January 1,1989 ; 
(v) in subsection (eXlXB), by striking "March 1,1990" and 
inserting "January 1,1990"; 
(vi) in subsection (eX2XA), by striking "March 1, 1989" 
and inserting "January 1,1989'; 
(vii) in subsection (eX3), by striking "October 1,1990" and 
inserting "October 1,1989"; 
(viii) in subsection (eX5), by striking "July 1, 1989" and 
msertmg "July 1,1990"; 
(ix) in subsection (fX3), by striking "October 1,1989" and 
inserting "October 1,1988"; 
(x) in subsection (fX6XA), by striking "July 1, 1989" and 
inserting "January 1,1989"; and 
(xi) in subsection (fX6XB), by striking "October 1, 1990" 
and inserting "April 1,1990". 
(B) Section 4201(d) of OBRA is amended— 
(i) by striking "AMENDMENT.—" and inserting "AMEND-
MENTS.—(1)", 
(u) by striking "1919(aX2)" and inserting "1819(aXl)", and 
(iii) by adding at the end the following new paragraph: 
"(2) Section 1861(n) of such Act (42 U.S.C. 1395x(n)) is amended by 
striking 'or (jXD of this section' and inserting *or of section 
1819(aXl)'.". 
(2) SECTIONS 4201 AND 4211.—(A) Sections 1819(bX3XAXiv) and 
1919(bX3XAXiv) of the Social Security Act, as added by section 
4201(aX3) and as inserted by section 4211(aX3) of OBRA, respec-
tively, are amended by striking "in the case of a resident 
eligible for benefits under part A of this title" and by striking 
"in the case of a resident eligible for benefits under part A of 
title XVm", respectively. 
(B) Sections 18190t)X3XAXiii) and 1919(bX3XAXiii) of the Social 
Security Act, as added by section 4201(aX3) and as inserted by 
section 4211(aX3) of OBRA, respectively, are amended by strik-
ing "in the case of a resident eligible ifbr benefits under title 
XDC," and "in the case of a resident eligible for benefits under 
this title 
resoectivelv 
(C) Subclause (m) of each of sections 1819a>X3XBXii) and 
1919(bX3)(BXii) of the Social Security Act, as added by section 
4201(aX3) and as inserted by section 4211(aX3) of OBRA, respec-
tively, is amended to read as follows: 
"(in) The provisions of section 1128A (other than 
subsections (a) and (b)) shall apply to a civil money 
penalty under this clause in the same manner as 
such provisions apply to a penalty or proceeding 
under section 1128A(a).". 
(D) Sections 18190i>X5) and 19190bX5) of the Social Security 
Act, as added by section 4201(aX3) of OBRA and as inserted by 
section 4211(aX3) of OBRA, respectively, are each amended— 
42 u s e 1395x. 
42 u s e 1395i-3, 
1396r. 
102 STAT. 802 
PUBLIC LAW 100-360—JULY 1, 1988 
Effective date. 
42 u s e 1395x 
note. 
42 u s e 1395x. 
42 use 1395i-3, 
1396r. 
State and local 
governments. 
Public 
information. 
Records. 
(i) in subparagraph (A), by striking ", who is not a 
licensed he^th care professional (as defined in subpara-
graph (E)),", 
(ii) in subparagraph (AXii), by striking "such services" 
and inserting "nursing or nursing-related services", and 
(iii) in subparagraph (G), by inserting "physical or 
occupational therapy assistant," after "occupational thera-
pist,'*. 
(E) Effective as of the date of the enactment of this Act £ind 
until the effective date of section 1819(c) of such Act, section 
18610') of the Social Security Act is deemed to include the 
requirement described in section 1819(cX3XA) of such Act (as 
added by section 4201(aX3) of OBRA). 
(F) Sections 1819(cX2XAXv) and 1919(cX2XAXv) of the Social 
Security Act, as added by section 4201(aX3) and as inserted by 
section 4211(aX3) of OBRA, respectively, are each amended by 
striking "an allowable charge" and adl that follows through the 
semicolon and inserting "for a stay at the facility;". 
(G) Sections 1819(cX6) and 1919(cX6) of the Social Security Act, 
as added by section 4201(aX3) and as inserted by section 
4211(aX3) of OBRA, respectively, are each amended— 
(i) in subparagraph (AXii), by striking "once the facility 
accepts" and inserting "upon", and 
(ii) in subparagraph (B), by striking "a facility's accept-
ance of". 
(H) Sections 1819(eX2XB) and 1919(eX2XB) of the Social Secu-
rity Act, as added by section 4201(aX3) and as inserted by section 
4211(aX3) of OBRA, respectively are each amended by inserting 
after the first sentence the following sentence: "The State shall 
make available to the public information in the registry.". 
(I) Sections 1819(eX3), 1819(f)(3), 1919(eX3), and 1919(fK3) of the 
Social Security Act, as added by section 4201(aX3) and as 
inserted by section 421 l(aX3) of OBRA, are each amended— 
(i) by inserting "AND DISCHARGES" after "TRANSFERS", and 
(ii) by inserting "and discharges" after "transfers". 
(J) Sections 1819(fK2XAXiXI) and 1919(fK2XAXiXI) of the Social 
Security Act, as added by section 4201(a)(3) and as inserted by 
section 4211(aX3) of OBRA, respectively^, are each amended by 
striking "cognitive, behavioral and social care" and inserting 
"recognition of menteil health and social service needs". 
(K) Sections 1819(fK7) and 1919(fK7) of the Social Security Act, 
as added by section 4201(aX3) and as inserted by section 
4211(aX3) of OBRA, respectively, are each amended by striking 
"patients" and inserting "residents". 
(LXi) Section 1819(f)(7XB) of the Social Securitv Act, as added 
by section 4201(aX3), is amended by striking shall not" and 
inserting "shall". 
(ii) Section 1919(fX7XB) of the Social Security Act, as inserted 
by section 4211(aX3) of OBRA, is amended by striking "do not". 
(3) SECTION 4211.—(A) Section 1919(bX4XC) of the Social Secu-
rity Act, as inserted bv section 4211(a) of OBRA, is amended— 
(i) by striking registered nurse" each place it appears 
and inserting "registered professional nurse"; 
(ii) bv striking employ and inserting "use"; 
(iii) by striking "(ii) FACILITY WAIVERS.—" and all that 
follows through (i) WAIVER" and inserting "(ii) WAIVER"; 
, -i^i'-f 5r'~-"%'/3^?^;'s*-j-
'^s-rjfcj*'!^. 
PUBLIC LAW 100-360—JULY 1, 1988 
102 STAT. 803 
(iv) by striking "and subject to clause (ii)" and inserting 
"and subject to clause (iii)"; 
(v) by striking "(ii) ASSUMPTION" and inserting "(iii) 
ASSUMPTION"; and 
(vi) in clause (iii), as so redesignated, by striking 
"excercise" and inserting "exercise". 
(B) Section 1919(bX5XA) of the Social Security Act, as added 
by section 4211(aX3) of OBRA, is amended by striking "subpara-
graph (E)" and inserting "subparagraph (F)". 
(C) Effective as of the date of the enactment of this Act and 
until the effective date of section 1919(c) of such Act, section 
1905(c) of the Social Security Act is deemed to include the 
requirement described in section 1919(cX3XA) of such Act (as 
inserted by section 4211(aX3) of OBRA). 
(D) Section 1919 of the Social Security Act, as inserted by 
section 4211(aX3) of OBRA., is amended— 
(i) in subsection (eXlXA), by striking "September 1,1988" 
and inserting "January 1,1989"; 
(ii) m subsection (eXlXB), by striking "September 1,1990" 
and inserting "January 1,1990"; 
(iii) in subsection (eX7)(E), by striking "October 1, 1988" 
and inserting "April 1,1989"; and 
(iv) m subsection (fX2), by striking "July 1, 1988" and 
insertmg "September 1,1988". 
(E) Section 1902(aX28XDXi) of the Social Security Act, as 
amended by section 4211(bXl)(B) of OBRA, is amended by strik-
ing "1919(f)" and all that follows through "mstrument)" and 
inserting "1919(e)". 
(F) Section 4211(dX2) of OBRA is amended by striking "For 
calendstr quarters during fiscal years 1988 and 1989" and insert-
ing "For the 8 calendar quarters Ot)eginning with the calendar 
quarter that begins on July 1,1988)". 
(G) Section 4211(hX10XG) of OBRA is amended by adding 
before the period at the end the following: ", and by striking 
'skilled nursing facility or intermediate care facility' in 
subparagraph (B) and inserting 'nursing facility' ". 
(H) Section 4211(hX2) of OBRA is amended— 
(i) in subparagraph (C), by striking "inserting 'nursing 
facilities' " each place it appears and inserting "inserting 
'nursing facilities and for intermediate care facilities for 
the mentally retarded'", 
(ii) in subparagraph (DXi), by striking "inserting 'nursing 
facility' " and inserting "inserting 'nursing facility or inter-
mediate care facility for the mentally retarded' ", and 
(iii) in subparagraph (DXii), by striking "inserting 'nurs-
ing facility' " and inserting "inserting 'nursing facility 
services or services in an intermediate care facility for the 
mentally retarded'". 
a) Subparagraph (B) of section 4211(hX12) of OBRA is 
amended to read as follows: 
"(B) in subsection (cX2)(BXii), by striking 'skilled' each place it 
appears.". 
(4) SECTION 4202.—Section 1819(gX2XCXi) of the Social Secu-
rity Act, as added by section 4202(a) of OBRA, is amended by 
striking "October 1, 1990" and inserting "January 1, 1990'\ 
42 use 1396r. 
Effective date. 
42 u s e 1396d. 
42 u s e 1396a. 
42 u s e 1396b 
note. 
42 use 1396n. 
42 u s e 1396a. 
42 u s e 1396p. 
42 u s e 1395i-3. 
102 STAT. 804 
PUBLIC LAW 100-360—JULY 1, 1988 
(5) SECTIONS 4202 AND 4212.—Sections 1819(g) and 1919(g) of 
the Social Security Act, as added by sections 4202(aX2) and 
42 use l395i-3, 
4212(a) of OBRA, respectively, are amended— 
(A) in paragraph (IXC), by striking ", review," and insert-
ing "and timely review"; 
(B) in the first sentence of paragraph (IXC), by inserting 
"or by another individual used by the facility in providing 
services to such a resident" after "a nursing facility"; 
(C) by striking the second sentence of paragraph dXC) 
State and local 
and inserting the following: "The State shall, after notice to 
governments. 
the individual involved and a reasonable opportunity for a 
professionals 
hearing for the individual to rebut allegations, make a 
finding as to the accuracy of the allegations. If the State 
finds that a nurse aide has neglected or abused a resident 
or misappropriated resident property in a facility, the State 
shall notify the nurse aide and the registry of such finding. 
If the State finds that any other individual used by the 
facility has neglected or abused a resident or misappro-
priated resident property in a facility, the State shall notify 
the appropriate licensure authority."; 
(D) in paragraph (1)(D), by striking "to establish stand-
ards under subsection (f)" and inserting "to issue regula-
tions to carry out this subsection"; 
(E) in paragraph (2XAXi), by amending the third sentence 
to read as follows: "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)."; 
(F) in paragraph (3XD) (relating to special surveys of 
compliance, as redesignated by paragraph (6XA) in the case 
of section 1919(g)), by striking "on that basis" and inserting 
"on the basis of that survey"; and 
(G) in paragraph (4), by striking "chronically". 
(6) SECTION 42i2.--(A) Section 1919(gX3) of the Social Security 
Act, as added by section 4212(a) of OBRA, is amended by 
redesignating the second subparagraph (C) (relating to special 
surveys of compliance) as subparagraph (D). 
42 use I395aa, 
(B) Section 42120?) of OBRA is amended to read as follows: 
^^^^^- 
"Ot)) POSTING SURVEY RESULTS.—Section 1919(c) of such Act is 
amended by adding at the end the following new paragraph: 
" '(7) POSTING OF SURVEY RESULTS.—A nursing facility must 
post in a place readily accessible to residents, and family mem-
bers and legal representatives of residents, the results of the 
most recent survey of the facility conducted under subsection 
(g).'.". 
42 use 1396a. 
(C) Section 1902(aX33XB) of the Social Security Act, as 
amended by section 4212(dX3) of OBRA, is amended by striking 
"1919(d)" and inserting "1919(g)". 
42 use 1396a. 
(J)) Section 4212(eXlXB) of OBRA is amended by inserting 
"provided" after "services" each place it appears. 
(E) Section 4212(e) of OBRA is amended by adding at the end 
the following new paragraph: 
42 use i396r-3. 
"(5) Section 1922(e) of such Act, as redesignated and transferred 
by section 4211(aX2) of this Act, is amended by striking '1910(c)' in 
paragraphs (1) and (2XA) and inserting '1910(b)'.". 
•4 'tW^mm^cs^'^fj^,*^ 
•j^ifrp^ff W5p.*f!riT?.>r, * 
PUBLIC LAW 100-360—JULY 1, 1988 
102 STAT. 805 
42 use 1395i-3, 
1396r. 
42 use 1396r. 
42 use 1396a. 
(7) SECTIONS 4203 AND 4213.—(A) Sections 1819(hX2XBXii) and 
1919(hX3XCXii) of the Social Security Act, as added by sections 
4203(a)(2) and 4213(a) of OBRA, respectively, are each amended 
by striking "and the Secretary" and all that follows through 
"1128A." and inserting the following: ". The provisions of sec-
tion 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) Sections 1819(hX6) and 1919(hX9) of the Social Security 
Act, as added by sections 4203(aX2) and 4213(a) of OBRA, respec-
tively, are each amended by inserting "by such facilities" after 
"shall be made available". 
(8) SECTION 4213.—(A) Section 4213(a) of OBRA is amended by 
striking "as inserted by section 4201 and simended by section 
4202" and inserting "as inserted by section 4211 and amended 
by section 4212". 
(B) Section 1919(h) of the Social Security Act, as added by 
section 4213(a) of OBRA, is amended— 
(i) in the last sentence of paragraph (1), by striking 
"(2XA)(i)" and inserting "(2XAXii)", 
(ii) in the second sentence of paragraph (2XB)(i), by strik-
ing "or otherwise", and 
(iii) in paragraph (5), by striking "State and the Sec-
retary" and inserting "State or the Secretary, respec-
tively". 
(C) Paragraph (1) of section 4213(b) of OBRA is amended by 
striking "1902 and all that follows through the end and insert-
ing the following: "1902(i) of such Act (42 U.S.C. 1396a(i)) is 
amended— 
"(A) in paragraph (1), by striking 'skilled nursing facility or 
intermediate care facility' and inserting 'intermediate care 
facility for the mentally retarded'; 
"(B) in paragraph (1), by striMng 'the provisions of section 
1861(j) or section 1905(c), respectively,' and inserting 'the 
requirements for such a facility under this title'; and 
(C) in paragraphs (2) and (3), by striking 'the provisions of 
section 1861(j) or section 1905(c) (as the case may be)' and 
inserting 'the requirements for such a facility under this title'.". 
(9) SECTION 4204.—(A) Section 4204(a) of OBRA is amended by 
striking "extended care". 
(B) Section 4204 of OBRA is amended— 
(i) in subsection (a), by striking "made by this part" and 
inserting "made by sections 4201 and 4202 (relating to 
skilled nursing facilitv requirements and survey and certifi-
cation requirements)', 
(ii) by redesignating subsection (c) as subsection (d), and 
(iii) by inserting after subsection (a) the following new 
subsection: 
"(b) ENFORCEMENT.—(1) Except as otherwise specifically provided Effective date 
in section 1819 of the Social Security Act, the amendments made by 
section 4203 of this Act apply January 1, 1988, without regard to 
whether regulations to implement such amendments are promul-
gated by such date. 
"(2) In appljdng the amendments made by section 4203 of this Act 
for services furnished by a skilled nursing facility before October 1, 
1990, any reference to a requirement of subsection (b), (c), or (d), of 
42 use 1395i-3 
note. 
102 STAT. 806 
PUBLIC LAW 100-360—JULY 1, 1988 
section 1819 of the Social Security Act is deemed a reference to the 
provisions of section 18610) of such Act.". 
42 use I396r 
(10) SECTION 4214.—Section 4214 of OBRA is amended— 
note. 
(A) by striking "(c) TRANSITIONAL RULE.—" and inserting 
"(2)", 
(B) by inserting "of section 1919 of the Social Security 
Act" after "(b), (c), or (d)", and 
(C) by redesignating subsection (d) as subsection (c). 
(m) CORRECTIONS TO SUBTITLE E OP TITLE IV (RELATING TO RURAL 
HEALTH).— 
(1) SECTION 4401.—Section 711(bXl) of the Social Security Act, 
42 use 912. 
as added by section 4401 of OBRA, is amended by striking 
"section 4083 of the Omnibus Budget Reconciliation Act of 
1987" and inserting "section 4403 of the Omnibus Budget Rec-
onciliation Act of 1987 (as such section pertains to rural health 
issues)" 
42 use I395b-l 
(2) SECTION 4403.—(A) Section 4403 of OBRA is amended— 
''°^- 
(i) in the heading, by striking "EXPERIMENTS AND 
DEMONSTRATION PROJECTS RELATING TO RURAL 
HEALTH CARE ISSUES" and inserting "RESEARCH 
AND DEMONSTRATION PROJECTS ON RURAL AND 
INNER-CITY HEALTH ISSUES"; 
(ii) in subsection (a)— 
(I) by striking "SET ASIDE.—" and inserting "SET 
ASIDES FOR ISSUES OF HEALTH CARE IN RURAL AREAS 
AND IN INNER-CITY AREAS.—(1)", 
(II) by striking "expended in each fiscal year" and all 
that follows through "1972" and inserting "annually 
appropriated to, and expended by, the Health Care 
Financing Administration for the conduct of research 
and demonstration projects in fiscal years 1988, 1989, 
and 1990", 
(III) by 
striking 
"experiments" 
and 
inserting 
"research"; 
(iii) by adding at the end the following new paragraph: 
Research and 
"(2) Not less than ten percent of the total amounts annually 
development. 
appropriated to, and expended by, the Health Care Financing 
Urban areas. 
Administration for the conduct of research and demonstration 
projects in fiscal years 1988, 1989, and 1990 shall be expended for 
research and demonstration projects relating exclusively or substan-
tially to issues of providing health care in inner-city areas, including 
Ot)ut not limited to) the impact of the pa3mient methodology under 
section 1886(d) of the Social Security Act on the financial viability of 
inner-city hospitals and the impact of medicare policies on access to 
(and the quality of) health care in inner-city areas."; and 
(iv) in subsection 0^)— 
(I) by striking "of experiments" and inserting "of 
research", 
(II) by inserting "or to inner-city health issues" after 
"rural health issues", and 
(III) by striking "experiments and". 
(B) The item in the table of contents of OBRA relating to 
section 4403 is amended to read as follows: 
"Sec. 4403. Set aside for research and demonstration projects on rural and inner-
city health issues.". 
PUBLIC LAW 100-360—JULY 1, 1988 
102 STAT. 807 
(n) CORRECTIONS TO CERTAIN HEALTH-RELATED PROVISIONS IN TITLE 
I X . -
(1) SECTION 9010.—The last sentence of section 226fla) of the 
Socisd Security Act, as added by section 9010(eX3) of OBRA, is 
amended to read as follows: "In determining when an individ-
ual's entitlement or status terminates for purposes of the 
preceding sentence, the term '36 months' in the second sentence 
of section 223(aXl), in section 202(dXlXGXi), in the last sentence 
of section 202(eXl), and in the last sentence of section 202(fKl) 
shall be applied as though it read '15 months'.". 
(2) SECTION 9115.—Section 9115(b) of OBRA is amended by 
striking "1902a)" and inserting "1902(o)". 
(3) SECTION 9II9.—Section 9119 of OBRA is amended by 
adding at the end the following new subsection: 
"(d) CONFORMING AMENDMENTS TO MEDICAID PROGRAM FOR THE 
MEDICALLY NEEDY.—(1) Section 1902 of the Social Security Act (42 
U.S.C. 1396a) is amended— 
"(A) in subsection (a)— 
"(i) by striking 'and' at the end of paragraph (48), 
"(ii) by striking the period at the end of paragraph (49) 
and inserting '; and', and 
"(iii) by inserting after paragraph (49) the following new 
paragraph: 
" '(50) provide, in accordance with subsection (q), for a 
monthly personal needs £illowance for certain institutionalized 
individuals and couples.'; and 
"(B) by adding at the end the following new subsection: 
" '(qXlXA) In order to meet the requirement of subsection (aX50), 
the State plan must provide that, in the case of an institutionadized 
individual or couple described in subparagraph (B), in determining 
the amount of the individual's or couple's income to be applied 
monthly to payment for the cost of care in an institution, there shall 
be deducted from the monthly income (in addition to other allow-
ances otherwise provided under the State plan) a monthly personal 
needs allowance— 
" *(i) which is reasonable in amount for clothing and other 
personal needs of the individual (or couple) while in an institu-
tion, and 
" '(ii) which is not less (and may be greater) than the mini-
mum monthly personal needs allowance described in paragraph 
(2). 
" '(B) In this subsection, the term "institutionalized individual or 
couple" means £in individual or married couple— 
" '(i) who is an inpatient (or who are inpatients) in a medical 
institution or nursing facility for which payments are made 
under this title throughout a month, and 
" '(ii) who is or are determined to be eligible for medical 
assistance under the State plan. 
" '(2) The minimum monthly personal needs allowance described 
in this paragraph is $30 for an institutionalized individual and $60 
for an institutionalized couple (if both are aged, blind, or disabled, 
and their incomes are considered available to each other in deter-
mining eligibility).'. 
"(2) The amendments made by paragraph (1) apply to pajonents 
under title XIX of the Social Security Act for calendar quarters 
beginning on or after July 1, 1988, without regard to whether or not 
42 u s e 426. 
42 u s e 1396a. 
42 u s e 1396a 
note. 
State and local 
governments. 
Blind persons. 
Handicapped 
persons. 
42 u s e 1396a 
note. 
102 STAT. 808 
PUBLIC LAW 100-360—JULY 1, 1988 
42 use 
300aa-15. 
42 use 
300aa-12. 
final regulations to carry out such amendments have been promul-
gated by such date.", 
(o) SuBTiTij; D OF TITLE IV.— 
(1) SECTION 4303.—Section 2115 of the Public Health Service 
Act is amended— 
(A) in subsection (iXD, as added by section 4303(a) of 
OBRA, by striking "from appropriations under subsection 
(i)" and inserting "by the Secretary from appropriations 
under subsection 0')", and 
(B) in subsection 0'), as added by section 4303(b) of OBRA, 
by inserting "to the Department of Health and Human 
Services" after "to be appropriated". 
(2) SECTION 4307.—Section 4307(3X0 of OBRA is amended by 
striking "subsection (g)" and inserting "subsection (e), as re-
designated by section 4303(dX2XA),". 
(3) SECTION 4308.—(A) Subtitle D of title IV of OBRA is 
amended by adding at the end the following new section: 
"SEC. 4308. TECHNICAL AMENDMENTS RELATING TO COURT OF CLAIMS 
PROCEDURES. 
"(a) DUTIES OF SPECIAL MASTERS.—Section 2112(cX2) of the Public 
Health Service Act (42 U.S.C. 300aa-12(a)) is amended— 
"(1) by inserting ', shall prepare and submit to the court 
proposed findings of fact and conclusions of law,' after 'adjunct 
to the court', 
"(2) by inserting 'and' at the end of subparagraph (C), 
"(3) by striking *, and' at the end of subparagraph (D) and 
inserting a period, and 
"(4) by striking subparagraph (E). 
"Ot)) REQUIRING FIUNG OF APPEALS WITHIN 60 DAYS.—Section 
2112(e) of such Act (42 U.S.C. 300aa-12(e)), as redesignated by section 
4303(d)(2)(A), is amended by inserting 'within 60 days of the date of 
the judgment' after 'petition filed'. 
"(c) CLARIFICATION ON TIMING OF BRINGING ADDITIONAL AC-
TIONS.—The second sentence of section 2121(a) of such Act (42 U.S.C. 
300aa-21(a)) is amended by striking 'the entrv of the court's judg-
ment' and inserting 'the court's final judgment.". 
(B) The table of contents relating to title IV of OBRA is 
amended by inserting after the item relating to section 4307 the 
following new item: 
"Sec. 4308. Technical amendments relating to Court of Claims procedures.". 
Subtitle C—Miscellaneous Provisions 
Employment 
and 
unemployment. 
42 u s e 1395b 
note. 
SEC. 42L MAINTENANCE OF EFFORT. 
(a) IN GENERAL.— 
(1) DupucATiVE PART A BENEFITS.—If an employer described in 
subsection (bXD provides, as of the date of the enactment of this 
Act, health care benefits to an employee or retired former 
employee that are duplicative part A benefits (as defined in 
paragraph (3XA)), the employer shall, during the period de-
scribed in subsection (cXD, provide to the employee or retired 
former employee an amount of additional benefits or refunds, or 
combination of such benefits and refunds, that total at least the 
PUBLIC LAW 100-360—JULY 1, 1988 
102 STAT. 809 
actuarial value of the duplicative part A benefits during the 
period described in subsection (cXlXA). 
(2) DupucATiVE P
A
R
T B BENEFITS.—If an employer described in 
subsection (bX2) provides, as of the date of the enactment of this 
Act, health care benefits to an employee or retired former 
employee that are duplicative part B benefits (as defined in 
paragraph (3XB)), the employer shall, during the period de-
scribed in subsection (cX2), provide to the employee or retired 
former employee an amount of additional benefits or refunds, or 
combination of such benefits and refunds, that total at least the 
actuarial value of the duplicative part B benefits during the 
period described in subsection (cXlXB). 
(3) DupucATivE BENEFITS DEFINED.—In tWs section: 
(A) The term "duplicative part A benefits" means bene-
fits which are duplicative of benefits under part A of title 
XVIII of the Social Security Act (as amended by this Act as 
of January 1, 1989), but which were not duplicative of such 
benefits as such part was in effect before the date of the 
enactment of this Act. 
(B) The term "duplicative part B benefits" means benefits 
which are duplicative of benefits under part B of title XVTII 
of the Social Security Act (as amended by this Act as of 
January 1, 1990, but excluding any such benefits with 
respect to covered outpatient drugs), but which were not 
duplicative of such benefits as such part was in effect before 
the date of the enactment of this Act. 
(C) Duplicative part A benefits and duplicative part B 
benefits shall be determined under this section net of any 
premiums payable by employees (or retired former em-
ployees) attributable to the respective duplicative benefits. 
(b) EMPLOYERS CJOVERED.— 
(1) DuPUCATiVE P
A
R
T A BENEFITS.—An employer is described 
in this paragraph if the employer (including a public employer, 
other than an employer to which section 422 applies) provides, 
as of the date of the enactment of this Act, duplicative part A 
benefits the actuarial v^ue of which is at least 50 percent of the 
national average actuarial value (discounted to the value as of 
the date of the enactment of this Act) of the duplicative part A 
benefits. 
(2) DupucATTVE P
A
R
T B BENEFITS.—An employer is described 
in this paragraph if the employer (including a public employer, 
other than an employer to which section 422 applies) provides, 
as of the date of the enactment of this Act, duplicative part B 
benefits the actuarial value of which is at least 50 percent of the 
national average actuarial value (discounted to the value as of 
the date of the enactment of this Act) of the duplicative part B 
benefits. 
(3) ELECTION.—For purposes of this section— 
(A) IN GENERAL.—An employer may elect to compute the 
actuarial value of duplicative part A benefits and duplica-
tive part B benefits either— 
(i) on the basis of average actuarial values published 
by the Secretary under subparagraph (BXi)> or 
(ii) on the basis of the actuarial value with respect to 
that employer, computed using guidelines pubUsned by 
the Secretsury under subparagraph (BXii). 
102 STAT. 810 
PUBLIC LAW 100-360—JULY 1, 1988 
(B) COMPUTATION OF ACTUARIAL VALUES.—The Secretary 
of Health and Human Services, before the beginning of 
each of 4 years (beginning with 1989 for duplicative part A 
benefits and beginning with 1990 for duplicative part B 
benefits) shall— 
(i) calculate and publish the national average actuar-
ial value of duplicative part A benefits and duplicative 
part B benefits for 1988 and the year involved, and 
(ii) guidelines for employers to use, under subpara-
graph (AXii), in computing the actuarial value of such 
duplicative benefits with respect to each employer for 
such years. 
The guidelines published under clause (ii) shall include 
instructions to assist employers in determining whether or 
not employers are described in paragraph (1) or (2) of this 
subsection. 
(c) EFFECTIVE PERIOD.— 
(1) IN GENERAL.— 
(A) DupucATivE PART A BENEFITS.—Subsoction (aXD shall 
only be effective during the period beginning on January 1, 
1989, and ending on December 31,1989, or, if later, the date 
specified in paragraph (2). 
(B) DupuCATTVE PART B BENEFITS.—Subsoction (aX2) shall 
only be effective during the period beginning on January 1, 
1990, and ending on December 31,1990, or, if later, the date 
specified in paragraph (2). 
(2) EXTENSION TO COVER CURRENT COLLECTIVE BARGAINING 
AGREEMENTS.—In the caso of employees or retired former 
employees who are provided duplicative part A benefits or 
duplicative part B benefits under a collective bargaining agree-
ment that is in effect on the date of enactment of this Act, the 
date specified in this paragraph is the date of the expiration of 
the agreement (determined without regard to any extension 
thereof agreed to after the date of the enactment of this Act). 
(d) EXCLUSION OF MULTI-EMPLOYER PLANS.—This section shall not 
apply with respect to duplicative benefits provided under a plan— 
(1) to which more than one employer is required to contribute, 
and 
Contracts. 
(2) which is maintained pursuant to one or more collective 
bargaining agreements between one or more employee organiza-
tions and more than one employer. 
5 use 8902 note. SEC. 422. RATE REDUCTION FOR MEDICARE ELIGIBLE FEDERAL ANNU-
ITANTS. 
(a) IN GENERAL.— 
(1) The Office of Personnel Management shall, in consultation 
with carriers offering health benefits plans contracted pursuant 
to section 8902 of title 5, United States Code, reduce the rates 
charged medicare eligible individuals participating in such 
health benefit plans, by the amount, prorated for each covered 
medicare eligible individual, of the estimated cost of medical 
services and supplies which, but for the amendments made by 
subtitle A of title I and subtitle A of title II of this Act, would 
have been payable by such plans. 
(2) The reduced rates as provided under paragraph (1), shall 
apply as of the effective dates of the respective amendments. 
***;» 
PUBLIC LAW 100-360—JULY 1, 1988 
102 STAT. 811 
(b) A
X
T
T
H
O
R
I
Z
A
T
I
O
N O
P AVAILABIUTY O
F E
M
P
L
O
Y
E
E HEALTH BENE-
FITS FUND FOR RATE REDUCTION.—Funds in the Employees Health 
Benefits Fund established under section 8909 of title 5, United 
States Code, are available without fiscal year limitation for costs 
incurred by the Office of Personnel Management in making rate 
reductions provided under this section. 
(c) DEFINITION.—For purposes of this section the term "medicare 
eligible individual" means any annuitant, survivor of an annuitant, 
or former spouse of an annuitant— 
(1) who is— 
(A) otherwise eligible for benefits under chapter 89 of 
title 5, United States Code; 
(B) eligible for benefits under part A of title XVIII of the 
Social Security Act; and 
(C) covered by the insurance program established under 
part B of such title; and 
(2) for whom benefits paid under title XVIII of the Social 
Security Act are the primary source of health care benefits. 
SEC. 423. STUDY AND REPORTS BY THE OFFICE OF PERSONNEL MANAGE-
M
E
N
T O
N OFFERING MEDICARE SUPPLEMENTAL PLANS TO 
FEDERAL MEDICARE ELIGIBLE INDIVIDUALS, AND O
T
H
E
R 
CHANGES. 
(a) STUDY AND REPORT.— 
(1) No later than April 1, 1989, the Director of the Office of 
Personnel Management shall conduct a study and submit a 
report to the Committee on (Jovemmental Affairs of the Senate 
and the Committee on Post Office and Civil Service of the House 
of Representatives regarding changes to the health benefits 
program established under chapter 89 of title 5, United States 
Code, that may be required to incorporate plans designed 
specifically for medicare eligible individuals and to improve the 
efficiency and effectiveness of the program. 
(2) Any medicare supplementad plan recommended by the 
Director of the Office of Personnel Management shall not dupli-
cate benefits for which payment may be made under title XVIII 
of the Social Security Act, however such recommendation— 
(A) shall cover expenses which are not payable under 
such title by reason of deductibles or coinsurance amounts; 
and 
(B) may offer additional reimbursement— 
(i) where benefits under such title are limited by fee 
schedule; and 
(ii) for benefits not covered under such title which 
may be of value to medicare eligible individuals. 
Qo) FEASIBILITY STUDY AND REPORT.—No later than April 1, 1989, 
the Director of the Office of Personnel Management shall report to 
the appropriate committees of the Congress whether it is feasible to 
adopt such standards as issued by the National Association of 
Insurance Commissioners as required by section 1882 of the Social 
Security Act (42 U.S.C. 1395ss) for medicare supplemental policies, 
when providing medicare supplemental plans as a type of health 
benefits plan available for Federal employees pursuant to chapter 
89 of title 5, United States Code. 
102 STAT. 812 
PUBLIC LAW 100-360—JULY 1, 1988 
Voluntarism. 
SEC. 424. BENEFITS COUNSELING AND ASSISTANCE DEMONSTRATION 
42USC1395b-2 
PROJECT FOR CERTAIN MEDICARE AND MEDICAID BENE-
°°*®- 
FICIARIES. 
(a) TRAINING AND TECHNICAL ASSISTANCE.— 
Contracts. 
(1) The Secretary of Health and Human Services (in this 
section referred to as the "Secretary") shall establish a dem-
onstration project through an agreement with a private or 
public nonprofit agency or organization, which demonstrates, to 
the satisfaction of the Secretary, that its volunteers are ade-
quately trained and competent to render effective benefits coun-
seling and assistance to the elderly, for the purpose of providing 
training and technical assistance to prepare volunteers to pro-
vide to elderly individuals receiving benefits under title XVIII 
or XIX of the Social Security Act counseling with respect to 
eligibility for such benefits and assistance in preparing such 
documentation as may be required to fully receive such benefits. 
(2) In addition to any other forms of technical assistance 
provided under this subsection, the Secretary is authorized to 
provide to the project— 
(A) material to be used in making elderly persons aware 
of the availability of assistance under volunteer assistance 
programs under this section; and 
(B) technical materials and publications to be used by 
such volunteers. 
OJ) POWERS OF THE SECRETARY.—Under the demonstration project 
under this section, the Secretary is authorized— 
(1) to provide for the training of volunteers, and assist in such 
training, to insure that volunteers are qualified to provide 
benefits and counseling assistance (as described in paragraph 
(D) to the elderly; 
(2) to provide reimbursement to volunteers through the 
agency or organization for transportation, meals, and other 
expenses incurred by them in training or providing benefits 
counseling and assistance under this section, and such other 
support and assistance as the Secretary determines to be appro-
priate in carrying out the provisions of this section; and 
(3) to provide for the use of services, personnel, and facilities 
of Federal executive agencies and of State and local public 
agencies with their consent, with or without reimbursement 
therefor. 
(c) EMPLOYMENT OF VOLUNTEERS.— 
(1) Service as a volunteer in the demonstration project carried 
out under this section shall not be considered service as an 
employee of the United States. Volunteers under the project 
shsdl not be considered Federal employees and shall not be 
subject to the provisions of law relating to Federal emplojrment, 
except that the provisions of section 1905 of title 18, United 
States Code, shall apply to volunteers as if they were employees 
of the United States. 
Taxes. 
(2) Amounts received by volunteers serving in any program 
carried out under this section as reimbursement for expenses 
are exempt from taxation under chapters 1 and 21 of the 
Internal Revenue Code of 1986. 
(d) DEFINITION.—For purposes of this section, the term "elderly 
individual" means an individual who has attained the age of 60 
years. 
note. 
PUBLIC LAW 100-360—JULY 1, 1988 
102 STAT. 813 
(e) AUTHORIZATION OF APPROPRIATIONS.—There are authorized to 
be appropriated, in appropriate parts from the Federal Hospital 
Insurance Trust Fund and from the Federal Supplementary Medical 
Insurance Trust Fund, for fiscal years 1989, 1990, and 1991 such 
sums as may be necessary to carry out the provisions of this section. 
SEC. 425. CASE MANAGEMENT DEMONSTRATION PROJECTS. 
Contracts. 
(a) IN GENERAL.—Within 12 months after the date of the enact-
ment of this Act, the Secretary of Health and Human Services (in 
this section referred to as the "Secretary") shall establish 4 dem-
onstration projects under which an appropriate entity agrees to 
provide case management services to medicare beneficiaries with 
selected catastrophic illnesses, particularly those with high costs of 
health care services. At least one such demonstration project shall 
be conducted through an agreement with a utilization and quality 
control peer review orgeinization with a contract with the Secretary 
under part B of title XI of the Social Security Act. 
(b) PURPOSE OP PROJECTS.—It is the purpose of the demonstration 
projects established under this section to provide the Secretary and 
the Congress with the information necessary— 
(1) to evaluate the appropriateness of providing case manage-
ment services under the medicare program for medicare bene-
ficiaries with high costs of medical care, and 
(2) to determine the most effective approach to implementing 
a case management system under the program for such bene-
ficiaries. 
(c) AGREEMENT.—The Eigreement entered into under subsection (a) 
shall specify— 
(1) the high cost cases with respect to which case management 
services will be provided under the project, 
(2) the pa3nnents to be made to the entity conducting the 
project for canying out the project, and 
(3) such other terms and conditions as the Secretary and the 
entity conducting the project may agree to. 
(d) WAIVERS.—The Secretary shall w£iive— 
(1) such provisions of part B of title XI of the Social Security 
Act, and 
(2) such provisions of title XVIII of such Act as relate to 
limitations or restrictions on benefits under such title, 
as the Secretary determines to be appropriate for the conduct of 
demonstration projects under this section. 
(e) DURATION.— 
(1) Except as provided in paragraph (2), a demonstration 
prmect under this section shall be conducted for a 2-year period. 
(2) The Secretary may terminate a demonstration project 
before the end of the 2-year period specified in paragraph (1) if 
the Secretary determines that the entity conducting the project 
is not in substantial compliance with the terms of the agree-
ment entered into under subsection (a). 
(f) INFORMATION AND REPORTS.— 
(1) An entity with an agreement under subsection (a) shall 
furnish the Secretary with such information as the Secretary 
determines to be necessary to evaluate the results of that 
prmect. 
(2XA) The Secretary shall submit to the Congress an interim 
report on the projects conducted under this section based upon 
information that is derived from the first year of project oper-
102 STAT. 814 
PUBLIC LAW 100-360—JULY 1, 1988 
42 use 1395y 
note. 
42 use 1395y 
note. 
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note. 
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3
9
5
W
W 
note. 
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note. 
ations and shall set forth any interim findings, recommenda-
tions, and conclusions that the Secretary determines to be 
appropriate. 
(B) The Secretary shall submit to the Congress a final report 
on the demonstration projects conducted under this section 
based upon data derived from the projects and shall update the 
findings, recommendations, and conclusions set forth in the 
interim report submitted under paragraph (1). 
(g) AUTHORIZATION TO USE CERTAIN FUNDS.—The Secretary shall 
provide for the transfer, from the Federal Hospital Insurance Trust 
Fund and the Federal Supplementary Insurance Trust Fund in such 
proportions as the Secretary determines to be appropriate, of not to 
exceed $2,000,000 in each of 2 fiscal years for administrative costs in 
carrying out the demonstration projects under this section. Such 
amounts shall be transferred without regard to amounts appro-
priated in advance in appropriation Acts. 
SEC. 426. EXTENSIONS OF EXPIRING PROVISIONS. 
(a) HOSPICE WAIVER OF LIABILITY PROVISION.—Section 9305(fK2) of 
the Omnibus Budget Reconciliation Act of 1986 is amended by 
striking "November 1, 1988" and inserting "November 1, 1990 . 
0)) SKILLED NURSING FACiLrry WAIVER OP LIABILITY PRESUMP-
TION.—The second sentence of section 9126(c) of the Consolidated 
Omnibus Budget Reconciliation Act of 1985 is amended— 
(1) by striking "30-month", and 
(2) by inserting before the period at the end the following: 
"and ending on October 31,1990". 
(c) HOME HEALTH SERVICES WAIVER OF LIABILITY PRESUMPTION.— 
Section 9305(gX3) of the Omnibus Budget Reconciliation Act of 1986 
is amended by striking "October 1, 1989" and inserting "November 
1,1990". 
(d) 
HOME HEALTH WAIVER OF LIABILITY PRESUMPTION.—The 
second sentence of section 9205 of the Consolidated Omnibus Budget 
Reconciliation Act of 1985 is amended by striking all that follows 
"until" and inserting "November 1,1990.'' 
(e) PROHIBITION ON NEW COST-SAVING REGULATIONS.—Section 
4039(d) of the Omnibus Budget Reconciliation Act of 1987 is 
amended— 
(1) by striking "October 15, 1988" and inserting "October 15, 
1989", and 
(2) by inserting "or in fiscal year 1990" after "in fiscal year 
1989". 
SEC. 427. ADVISORY COMMITTEE ON MEDICARE HOME HEALTH CLAIMS. 
(a) ESTABUSHMENT.—The Administrator of the Health Care 
Financing Administration (in this section referred to as the 
"Administrator") shall, within 90 days after the date of the enact-
ment of this Act, establish an advisory committee to be known £is 
the Advisory Committee on Medicare Home Health Claims (in this 
section referred to as the "Advisory Committee"). 
(b) MEMBERSHIP.—The Advisory Committee shall be composed of 
11 members appointed by the Administrator for the life of the 
Committee. Of the members appointed— 
(1) at least 5 shall be representatives of home health or 
visiting nurse agencies, and 
(2) the remaining members shall be representative of fiscal 
intermediaries, physician groups, and senior citizen groups, but 
PUBLIC LAW 100-360—JULY 1, 1988 
102 STAT. 815 
no more than 3 of such members may be representative of fiscal 
intermedicuies. 
Members shall be appointed so as to be representative of all geo-
graphic areas of the United States. 
(c) DUTIES.—The Advisory Committee shall study the reasons for 
the increase in the denial of claims for home health services during 
1986 and 1987, the ramifications of such increase, and the need to 
reform the process involved in such denials. 
(d) REPORT.—The Advisory Committee shall report to the Adminis-
trator, the Committees on Ways and Means and Energy and Com-
merce of the House of Representatives, and the Committee on 
Finance of the Senate, not later than one year after the date of the 
enactment of this Act, on its study under subsection (c), the findings 
of its study, and its recommendations for changes in the regulations 
under title XVIII of the Social Security Act as they relate to denial 
of claims for home health services. 
(e) MISCELLANEOUS PROVISIONS.— 
(1) The Advisory Committee shall elect one of its members to 
serve as Chairman. 
(2XA) A majority of the members of the Advisory Committee 
shall constitute a quorum for the transaction of business. 
(B) The Advisory Committee shall meet at the call of the 
Chairman, or at the call of a majority of its members. 
(3) Members of the Advisory Committee shall serve without 
compensation, but shall be entitled to reimbusement for travel, 
subsistence, and other necessary expenses incurred in the 
performance of their duties as members of the Committee. 
(4) The Advisory Committee may appoint and fix the com-
pensation of such personnel £is it deems advisable, in accordance 
with the provisions of title 5, United States Code, governing 
appointments to the competitive service, and the provisions of 
chapter 51 and subchapter III of chapter 53 of such title, 
relating to classification and General Schedule pay rates. 
(5) In canning out its duties, the Advisory Committee is 
authorized to hold such hearings, sit and act at such times and 
places, and take such testimony, with respect to matters for 
which is has a responsibility under this section, as the Commit-
tee may deem advisable. 
(6) The Advisory Committee may secure directly from any 
department or Eigency of the United States such data and 
information as may be necessary to carry out its responsibil-
ities. Upon request of the Committee, any such department or 
agency shall furnish any such data or information. 
(7) The General Services Administration shall provide to the 
Commission, on a reimbursable basis, such administrative sup-
port services as the Advisory Committee may request. 
(f) AUTHORIZATION OF APPROPRIATIONS.—There are authorized to 
be appropriated such sums sis may be necessary to carry out this 
section. 
SEC. 428. PROHIBITION OF MISUSE OF SYMBOLS, EMBLEMS, OR NAMES IN 
REFERENCE TO SOCIAL SECURITY OR MEDICARE. 
(a) IN GENERAL.—Part A of title XI is amended by adding at the 
end the following new section: 
102 STAT. 816 
PUBLIC LAW 100-360—JULY 1, 1988 
Law 
enforcement and 
crime. 
42 use 
1320b-10. 
Claims. 
PROHIBITION OF MISUSE OF SYMBOLS, EMBLEMS, OR NAMES IN 
REFERENCE TO SOCIAL SECURITY OR MEDICARE 
"SEC. 1140, (a) No person may use, in connection with any item 
constituting an advertisement, solicitation, circular, book, pamphlet, 
or other communication, or a play, motion picture, broadcast, tele-
cast, or other production, alone or with other words, letters, S3mi-
bols, or emblems— 
"(1) the words 'Social Security', 'Social Security Account', 
'Social Security System', 'Social Security Administration', 
'Medicare', 'Health Care Financing Administration', the letters 
'SSA' or 'HCFA', or any other combination or variation of such 
words or letters, or 
"(2) a sjonbol or emblem of the Social Security Administration 
(including the design of, or a reasonable facsimile of the design 
of, the social security card issued pursuant to section 
205(cX2)(E), the check used for payment of benefits under title 
II, or envelopes or other stationery used by the Social Security 
Administration) or of the Health Care Financing Administra-
tion, or any other combination or variation of such symbols or 
emblems, 
in a manner which such person knows or should know would convey 
the false impression that such item is approved, endorsed, or au-
thorized by the Social Security Administration, the Health Care 
Financing Administration, or the Department of Health and 
Human Services or that such person has some connection with, or 
authorization from, the Social Security Administration, the Health 
Care Financing Administration, or the Department of Health and 
Human Services. 
"Ot>Xl) Subject to parajgraph (2), the Secretary may, pursuant to 
regulations, impose a civil money penalty not to exceed— 
"(A) except as provided in subparagraph (B), $5,000, or 
"(B) in the ceise of a violation consisting of a broadcast or 
telecast, $25,000, 
against any person for each violation by such person of subsection 
(a). 
"(2) The total amount of penalties which may be imposed under 
paragraph (1) with respect to multiple violations in any one year 
period consisting of substantially identical communications or 
productions shall not exceed $100,000. 
"(cXD Subsections (c), (d), (e), (g), 0), and (k) of section 1128A shall 
apply with respect to violations under subsection (a) and penalties 
imposed under subsection (b) in the same manner and to the same 
extent as such subsections apply with respect to claims in violation 
of section 1128A and penalties imposed under section 1128A(a). 
"(2) Penalties imposed against a person under subsection (b) may 
be compromised by the Secretary and may be recovered in a civil 
action in the name of the United States brought in the district court 
of the United States for the district in which the violation occurred 
or where the person resides, has its principal office, or may be found, 
as determined by the Secretary. Amounts recovered under this 
section shall be paid to the Secretary and shall be deposited as 
miscellaneous receipts of the Treasury of the United States. The 
amount of such penalty when finally determined, or the amount 
agreed upon in compromise, may be deducted from any sum then or 
later owing by the United States to the person against whom the 
penalty has been imposed.". 
PUBLIC LAW 100-360—JULY 1, 1988 
102 STAT. 817 
(b) AUTHORIZING CIVIL MONEY PENALTIES FOR CERTAIN VIOLATIONS 
RELATING TO MEDICAL SUPPLEMENTAL POUCIES.—Section 1882(d) (42 
U.S.C. 1395ss(d)) is amended— 
(1) by striking "shall be guilty" and all that follows through 
"or both" in each of paragraphs (1), (2), (3XA), and (4XA), and 
inserting in each case the following: "shall be fined under title 
18, United States Code, or imprisoned not more than 5 years, or 
both, and, in addition to or in lieu of such a criminal penalty, is 
subject to a civil money penalty of not to exceed $5,000 for each 
such prohibited act", and 
(2) by adding at the end the following new paragraph: 
"(5) The provisions of section 1128A (other than subsections (a) 
and (b)) shall apply to civil money penalties under paragraphs (1), 
(2), (3XA), and (4XA) in the same manner as such provisions apply to 
penalties and proceedings under section 1128A(a).". 
(c) EFFECTIVE DATE.—The amendments made by this section shall 
take effect on the date of the enactment of this Act and shall apply 
only with respect to violations occurring on or after such date. 
SEC. 429. DEMONSTRATION PROJECTS WITH RESPECT TO CHRONIC VEN-
TILATOR-DEPENDENT UNITS IN HOSPITALS. 
(a) IN GENERAL.—The Secretary of Health and Human Services 
shall provide for up to 5 demonstration projects, for up to 3 years 
each, to review the appropriateness of classifying chronic ventilator-
dependent units in hospitals as rehabilitation units. Such projects 
shall be conducted in consultation with the Prospective Pajnnent 
Assessment Commission. 
(b) WAIVER AUTHORITY.—In conducting demonstration projects 
under this section for units, the Secretary may treat such a unit as a 
rehabilitation unit described in section 1886(dXlXB) of the Social 
Security Act for purposes of such section. 
Approved July 1,1988. 
42 use 1320b-10 
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LEGISLATIVE HISTORY—H.R. 2470 (S. 1127): 
HOUSE REPORTS: No. 100-105, Pt. 1 (Comm. on Ways and Means) and Pt. 2 (Comm. 
on Energy and Commerce), and No. 100-661 (Comm. of Confer-
ence). 
SENATE REPORTS: No. 100-126 accompanying S. 1127 (Comm. on Finance). 
CONGRESSIONAL RECORD: 
Vol. 133 (1987): July 22, considered and passed House. 
Oct. 9, 13, 23, S. 1127 considered in Senate. 
Oct. 27, H.R. 2470 considered and passed Senate, £unended, in 
lieu of S. 1127. 
Vol. 134 (1988): June 2, House agreed to conference report. 
June 8, Senate agreed to conference report. 
WEEKLY COMPILATION OF PRESIDENTIAL DOCUMENTS, Vol. 24 (1988): 
July 1, Presidential remarks.