An Act to amend the Public Health Service Act to revise and extend the program of assistance under that Act for health maintenance organizations.
PL 95-559 (S.2534), enacted 11/01/1978

PUBLIC LAW 95-559—NOV. 1, 1978 
92 STAT. 2131 
Public Law 95-559 
95th Congress 
An Act 
To amend tte Public Health Service Act to revise and extend the program of 
assistance under that Act for health maintenance organizations. 
Be it enacted hy the Senate and House of Representatives of the 
United States of America in Congress assembled, 
SHORT TITLE, REFERENCE TO ACT 
SECTION 1. (a) This Act may be cited as the "Health Maintenance 
Organization Amendments of .1978". 
(b) Whenever in this Act (other than in section 14) an amendment 
or repeal is expressed in terms of an amendment to, or repeal of, a 
section or other provision, the reference shall be considered to be made 
to a section or other provision of the Public Health Service Act. 
EXTENSION OP PROGRAM 
SEC. 2. (a) Section 1304(j) is amended (1) by striking out "may be 
made through September 30, 1978;", and (2) by striking out "1979" 
and inserting in lieu thereof "1981". 
(b) Section 1305 (d) is amended by striking out "1980" and inserting 
in lieu thereof "1981". 
(c) Section 1309(a) is amended (1) by striking out "and" after 
"1977,", and (2) by striking out the semicolon and all that follows in 
that section and inserting in lieu thereof the following: ", $31,000,000 
for the fiscal year ending September 30,1979, $65,000,000 for the fiscal 
year ending September 30,1980, and $68,000,000 for the fiscal year end-
ing September 30,1981.". 
INITIAL DEVELOPMENT 
SEC. 3. (a) The first sentence of section 1304:(b) (2) is amended by 
striking out "includes" and inserting in lieu thereof "means the estab-
lishment of a health maintenance organization, the expansion of the 
services of a health maintenance organization, or the". 
(b) (1) The first sentence of section 1304(b) (3) is amended by strik-
ing out "in the one-year period beginning on" and inserting in lieu 
thereof "incurred in a period not to exceed three years from". 
(2) The second sentence of such section is repealed. 
(c)(1) Subparagraph (A) of section 1304(f)(2) is amended to 
read as follows: 
"(A) $1,000,000 through September 30, 1979, and $2,000,000 
thereafter, or". 
(2) Section 1304(f) is amended— 
(A) by striking out "The amount" in paragraph (2) and insert-
ing in lieu thereof "Except as provided in paragraph (3), the 
amount"; 
(B) by striking out" (except as provided in paragraph (3))" in 
paragraph (2); and 
(C) by inserting after "(3)" in paragraph (3) the following: 
"The cumulative total of grants made to, contracts entered into 
with, and principal of loans guaranteed for, a health maintenance 
Nov. 1, 1978 
[S. 2534J 
Health 
Maintenance 
Organization 
Amendments of 
1978. 
42 use 201 note. 
42 use 201 note. 
42 use 300e-3. 
42 use 300e-4. 
42 use 300e-8. 
42 use 300e-3. 
92 STAT. 2132 
PUBLIC LAW 95-559—NOV. 1, 1978 
Effective date. 
42 use 300e-3 
note. 
42 use 300e-4. 
42 use 300e-7. 
organization under subsection (b) of this section may not exceed 
$1,000,000 through September 30,1979, or $2,000,000 thereafter.", 
(d) The amendments made by this section shall only be effective for 
fiscal years beginning on or after October 1,1978. 
INITIAL OPERATING LOANS AND LOAN GUARANTEES 
SEC. 4. (a) Section 1305(b) (1) is amended by— 
(1) striking out "$2,500,000" and inserting in lieu thereof 
"$2,500,000 (or $4,000,000 if the Secretary makes a written deter-
mination that such loans or loan guarantees are necessary to 
preserve the fiscally sound operation of the health maintenance 
organization and to protect against the risk of insolvency of 
the health maintenance organization and, within 30 days of the 
making of such loans or loan guarantees, furnishes the Committee 
on Human Resources of the Senate and the Committee on Inter-
state and Foreign Commerce of the House of Representatives 
with written notification of the making of the loans or loan 
guarantees and a copy of the written determination made with 
respect to the loans or loan guarantees and the reasons for the 
determination) through September 30,1979, and $4,000,000 there-
after" ; and 
(2) striking out "$1,000,000" and inserting in lieu thereof 
"$1,000,000 (or $2,000,000 if the Secretary makes a written deter-
mination that such disbursements are necessary to preserve the 
fiscally sound operation of the health maintenance organization 
and protect against the risk of insolvency of the health mainte-
nance organization and, within 30 days of such disbursement, 
furnishes the Committee on Human Resources of the Senate and 
the Committee on Interstate and Foreign Commerce of the House 
of Representatives with written notification of the making of the 
disbursement and a copy of the written determination made with 
respect to it and the reasons for the determination) 
through 
September 30,1979, and $2,000,000 thereafter". 
(b) (1) Section 1305 (a) is amended by striking out "operating costs" 
each place it occurs and inserting in lieu thereof "costs of operation". 
(2) The second sentence of section 1305(b)(1) is amended by 
striking out "any fiscal year" and inserting in lieu thereof "any twelve-
month period". 
(3) The title of section 1305 is amended by striking out "OPERATION 
COSTS" and inserting in lieu thereof "COSTS OF OPERATION". 
(c) (1) Section 1308 is amended by adding at the end the following 
new subsection: 
"(f) The Secretary may take such action as he deems appropriate to 
protect the interest of the United States in the event of a default on 
a loan made or guaranteed under this title, including taking possession 
of, holding, and using real property pledged as security for such a 
loan or loan guarantee.". 
(2) (A) Subsection (d) of section 1308 is amended (i) by inserting 
before the period in the first sentence of paragraph (1) the following: 
"and to take the action authorized by subsection (f)", and (ii) by 
inserting after "under this title" in the first sentence of paragraph 
(2) the following: "and to take the action authorized by subsec-
tion (f)". 
(B) The first sentence of subsection (e) of section 1308 is amended 
by inserting before the period the following: "and to take the action 
authorized by subsection (f)". 
PUBLIC LAW 95-559—NOV. 1, 1978 
92 STAT. 2133 
(d) The amendments made by this section shall only be effective for f
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fiscal years beginning on or after October 1,1978. 
42 u s e 300e-4 
note 
LOANS AND LOAN GUARANTEES FOR ACQUISITION AND CONSTRUCTION 
OF AMBULATORY HEALTH CARE FACILITIES 
SEC. 5. (a) Title XIII is amended by inserting after section 1305 the 42 USC 300e. 
following new section: 
" L O A N S A N D L O A N GUARANTEES FOR ACQUISITION AND CONSTRUCTION 
OF AMBULATORY HEALTH CARE FACILITIES 
"SEO. 1305A. (a) The Secretary may— 
"(1) make loans, from the fund established under section 1308 
(e), to public and nonprofit private health maintenance organiza-
tions for projects for the acquisition or construction of ambulatory 
health care facilities and for the acquisition of equipment for facil-
ities acquired or constructed under a loan made under this para-
graph ; and 
"(2) guarantee to— 
"(A) non-Federal lenders for their loans to nonprofit pri-
vate health maintenance organizations for projects described 
in paragraph (1) and to private health maintenance organi-
zations for such projects which will serve medically under-
served populations, and 
"(B) the Federal Financing Bank for its loans to nonprofit 
private health maintenance organizations for projects de-
scribed in paragraph (1) and to private health maintenance 
organizations for such projects which will serve medically 
underserved populations, 
the payment of principal and interest on such loans. 
"(b)(1) Except as provided in paragraph (2), the aggregate amount 
of principal of loans made or guaranteed, or both, under subsection (a) 
for an ambulatory health care facility may not exceed $2,500,000. 
"(2) The cumulative total of the principal of the loans outstanding 
at any time which have been directly made or with respect to which 
guarantees have been issued under subsection (a) may not exceed such 
limitations as may be specified in appropriation Acts. 
"(3) The authority of the Secretary to make loans under subsection 
(a) shall be effective for any fiscal year only to such extent or in such 
amounts as are provided in advance in appropriation Acts. 
"(c) For purposes of this section— 
"(1) The term 'ambulatory health care facility' means a health 
care facility for the provision of diagnostic, treatment, and pre-
vention services to ambulatory patients; and 
"(2) the term 'construction' means the (A) construction of new 
facilities, (B) alterations, expansion, remodeling, replacement, 
and renovation of existing facilities, (C) cost of offsite improve-
ments in connection with an activity described in clause (A) or 
(B), and (D) cost of the acquisition of land in connection with 
an activity described in clause (A), (B), or (C).". 
(b) Section 1313(4) is amended by inserting before the period the 
following: "or in meeting the costs of such organizations in acquiring 
or constructing ambulatory health care facilities". 
42 USC 300e-4a. 
42 USC 300e-7. 
Principal of 
loans, limitation. 
Cumulative total, 
limitation. 
"Ambulatory 
health care 
facility." 
"Construction. 
42 USC 
300e-12. 
92 STAT. 2134 
PUBLIC LAW 95-559—NOV. 1, 1978 
CONTINUING DEVELOPMENT ASSISTANCE 
42 use 300e-3. 
SEC. 6. Section 1304(b) is amended by adding after paragraph (3) 
the following new paragraph: 
" (4) A health maintenance organization which is a qualified health 
42 use 300e-9. 
maintenance organization within the meaning of section 1310(d) may 
receive, in accordance with paragraph (1), a grant, contract, or loan 
guarantee for the expansion of its services or the significant expansion 
of its membership or the area served by it.". 
TRAINING AND TECHNICAL ASSISTANCE 
42 use 300e. 
SEC. 7. (a) Title XIII is amended by adding at the end thereof the 
following new section: 
National Health 
Maintenance 
Organization 
Intern Program. 
Establishment. 
42 use 
300e-16. 
Travel and other 
expenses. 
Payments to 
organization or 
other entity. 
Technical 
assistance. 
42 u s e 300e-2, 
300e-3. 
42 u s e 300e-9. 
"TRAINING AND TECHNICAL ASSISTANCE 
"SEC. 1317. (a) (1) The Secretary shall establish a National Health 
Maintenance Organization Intern Program (hereinafter in this sub-
section referred to as the 'Program') for the purpose of providing 
training to individuals to become administrators and medical direc-
tors of health maintenance organizations or to assume other managerial 
positions with health maintenance organizations. Under the Program 
the Secretary may directly provide internships for such training and 
may make grants to or enter into contracts with health maintenance 
organizations and other entities to provide such internships. 
"(2) No internship may be provided by the Secretary and no grant 
may be made or contract entered into by the Secretary for the pro-
vision of internships unless an application therefor has been sub-
mitted to and approved by the Secretary. Such an application shall 
be in such form and contain such information, and be submitted to 
the Secretary in such manner, as the Secretary shall prescribe. Sec-
tion 1306 does not apply to an application submitted under this section. 
" (3) Internships under the Program shall provide for such stipends 
and allowances (including travel and subsistence expenses and 
dependency allowances) for the recipients of the internships as the 
Secretary deems necessary. An internship provided an individual for 
training at a health maintenance organization or any other entity shall 
also provide for payments to be made to the organization or other 
entity for the cost of support services (including the cost of salaries, 
supplies, equipment, and related items) provided such individual by 
such organization or other entity. The amount of any such payments 
to any organization or other entity shall be determined by the Secre-
tary and shall bear a direct relationship to the reasonable costs of the 
organization or other entity for establishing and maintaining its train-
ing programs. 
"(4) Payments under grants under the Program may be made in 
advance or by way of reimbursement, and at such intervals and on 
such conditions, as the Secretary finds necessary. 
"(b) The Secretary shall provide technical assistance (1) to 
entities in connection with projects for which assistance is being pro-
vided under section 1303 or 1304, (2) to entities intending to become 
a qualified health maintenance organization within the meaning of 
section 1310(d), and (3) to health maintenance organizations. The 
Secretary may provide such technical assistance through grants to 
public and nonprofit private entities and contracts with public and 
private entities. 
PUBLIC LAW 95-559—NOV. 1, 1978 
92 STAT. 2135 
"(c) The authority of the Secretary to enter into contracts under 
subsections (a) and (b) shall be effective for any fiscal year only to 
such extent or in such amounts as are provided in advance by appro-
priation Acts.". 
(b) Section 1309(a) is amended by striking out "and 1304(b)" and 
inserting in lieu thereof "1304(b), and 1317". 
(c) The amendments made by this section shall only be effective for 
fiscal years beginning on or after October 1,1978. 
EMPLOYEE HEALTH BENEFIT PLANS 
SEC. 8. (a) Section 1310(c) is amended by adding at the end the 
following: "Each employer which provides payroll deductions as a 
means of paying emj^loyees' contributions for health benefits or which 
provides a health benefits plan to which an employee contribution is 
not required and which is required by subsection (a) to offer his 
employees the option of membership in a qualified health maintenance 
organization shall, with the consent of an employee who exercises such 
option, arrange for the employee's contribution for such membership 
to be paid through payroll deductions,". 
(b) Clauses (1) and (2) of section 1310(b) are amended to read as 
follows: 
"(1) one or more of such organizations provides basic health 
services through physicians or other health professionals who are 
members of the staff of the organization or a medical group (or 
groups), and 
"(2) one or more of such organizations provides basic health 
services through (A) an individual practice association (or 
associations), or (B) a combination of such association (or 
associations), medical group (or groups), staff, and individual 
physicians and other health professionals under contract with the 
organization,". 
42 use 300e-8. 
Ante p. 2134. 
42 use 300e-16 
note. 
42 use 300e-9. 
FINANCIAL DISCLOSURE; ENROLLMENT PROTECTION 
SEC. 9. (a) Title X I I I as amended by section 7 is amended by adding 
at the end the following new section: 
42 use 300e. 
u 
FINANCIAL DISCLOSURE 
"SEC. 1318. (a) Each health maintenance organization shall, in 
accordance with regulations of the Secretary, report to the Secretary 
financial information which shall include the following: 
"(1) Such information as the Secretary may require demon-
strating that the health maintenance organization has a fiscally 
sound operation. 
" (2) The information required to be reported under section 1124 
of the Social Security Act by disclosing entities and the informa-
tion required to be supplied under section 1902(a) (38) of such 
Act. 
" (3) A description of transactions, as specified by the Secretary, 
between the health maintenance organization and a party in 
interest. Such transactions shall include— 
"(A) any sale or exchange, or leasing of any property 
between the health maintenance organization and a party in 
interest; 
42 use 
300e-17. 
42 use 
1320a-3. 
42 use 1396a. 
92 STAT. 2136 
PUBLIC LAW 95-559~NOV. 1, 1978 
Consolidated 
financial 
statement. 
"Party in 
interest." 
Information, 
availability. 
Evaluation of 
transactions. 
Number of 
organizations. 
Report to 
G)ngress. 
"(B) any furnishing for consideration of goods, services 
(including management services, but excluding health services 
provided to members b;^ staff, medical group (or groups), 
individual practice association (or associations), or any com-
bination thereof), or facilities between the health mainte-
nance organization and a party in interest; and 
"(C) any lending of money or other extension of credit 
between a health maintenance organization and a party in 
interest. 
The Secretary may require that information reported respecting a 
health maintenance organization which controls, is controlled by, or 
is under common control with, another entity be in the form of a 
consolidated financial statement for the organization and such entity. 
"(b) For the purposes of this section the term 'party in interest' 
means: 
" (1) any director, officer, partner, or employee of a health main-
tenance organization, any person who is directly or indirectly the 
beneficial owner of more than 6 per centum of the equity of the 
organization, any person who is the beneficial owner of a mort-
gage, deed of trust, note, or other interest secured by, and valuing 
more than 5 per centum of the health maintenance organization, 
and, in the case of a health maintenance organization organized 
as a nonprofit corporation, an incorporator or member of such 
corporation under applicable State corporation law; 
" (2) any entity in which a person described in paragraph (1) — 
"(A) is an officer or director; 
"(B) is a partner (if such entity is organized as a 
partnership); 
"(C) has directly or indirectly a beneficial interest of more 
than 5 per centum of the equity; or 
"(D) has a mortgage, deed of trust, note, on other interest 
valuing more than 5 per centum of the assets of such entity; 
" (3) any person directly or indirectly controlling, controlled by, 
or under common control with a health maintenance organization; 
and 
"(4) any member of the immediate family of an individual 
described in paragraph (1). 
"(c) Each health maintenance organization shall make the informa-
tion reported pursuant to subsection (a) available to its enrollees upon 
reasonable request. 
"(d) The Secretary shall, as he deems necessary, conduct an evalu-
ation of transactions reported to the Secretary under subsection (a) (3) 
for the purpose of determining their adverse impact, if any, on the 
fiscal soundness and reasonableness of charges to the health mainte-
nance organization with respect to which they transpired. The Secre-
tary shall evaluate the reported transactions of not less than five, 
or if there are more than twenty health maintenance organizations 
reporting such transactions, not less than one-fourth of the health 
maintenance organizations reporting any such transactions under 
subsection (a) (3). 
"(e) The Secretary shall file an annual report with the Congress 
on the operation of this section. Such report shall include— 
"(1) an enumeration of standards and norms utilized to make 
the evaluations required under subsection (d); 
PUBLIC LAW 95-559—NOV. 1, 1978 
92 STAT. 2137 
"(2) an assessment of the degree of conformity or noncon-
formity of each health maintenance organization evaluated by 
the Secretary mider subsection (d) with such standards and 
norms; 
"(3) what action, if any, the Secretary considers necessary 
under section 1312 with respect to health maintenance organi-
zations evaluated under subsection (d). 
"(f) Nothing in this section shall be construed to confer upon the 
Secretary any authority to approve or disapprove the rates charged 
by any health maintenance organization. 
"(g) Any health maintenance organization failing to file with the 
Secretary the annual financial statement required in subsection (a) 
shall be ineligible for any Federal assistance under this title until 
such time as such statement is received by the Secretary and shall 
not be a qualified health maintenance organization for purposes of 
section 1310. 
"(h) Whoever knowingly and willfully makes or causes to be made 
any false statement or representation of a material fact in any 
statement filed pursuant to this section shall be guilty of a felony 
and upon conviction thereof shall be fined not more than $25,000 or 
imprisoned for not more than five years, or both.". 
(b) Section 1301(c)(3) is amended (1) by inserting "(A)" after 
"(3)", and (2) by inserting before the semicolon a comma and the 
following: "and (B) carry out enrollment of members who are enti-
tled to medical assistance under a State plan approved under title 
X I X of the Social Security Act in accordance with procedures 
approved under regulations promulgated by the Secretary". 
Conformity, or 
nonconformity. 
42 use 
300e-ll. 
Rates. 
Annual financial 
statement, filing. 
42 u s e 300e-9. 
False statement 
or representation 
of material fact, 
penalty. 
42 USC300e. 
42 u s e 1396. 
ORGANIZATION REQUIREMENTS 
SEC. 10. (a) Section 1301(b) is amended (1) by inserting "except in 42 USe 300e. 
the case of basic health services provided a member who is a full-time 
student (as defined by the Secretary) at an accredited institution of 
higher education," after "(C)" in paragraph (1), and (2) by insert-
ing "unless the supplemental health services payment is for a supple-
mental health service provided a member who is a full-time student 
(as defined by the Secretary) at an accredited institution of higher 
education," after "community rating system" in the second sentence 
of paragraph (2). 
(b) Section 1301(c)(1) is amended (1) by inserting "(A)" after 
"(1)", and (2) by inserting before the semicolon a comma and the 
following: "and (B) have administrative and managerial arrange-
ments satisfactory to the Secretary". 
(c) Section 1301(c) (6) is amended (1) by striking out "(6)" and 
inserting in lieu thereof "(6) (A) in the case of a private health 
maintenance organization,", (2) by redesignating clauses (A) and 
(B) as subclauses (i) and (ii), respectively, and (3) by inserting 
before the semicolon a comma and the following: "and (B) in the 
case of a public health maintenance organization, have an advisory 
board to the policymaking body of the public entity operating the 
organization which board meets the requirements of clause (A) of this 
paragraph and to which may be delegated policymaking authority 
for the organization." 
92 STAT. 2138 
PUBLIC LAW 95-559—NOV. 1, 1978 
42 u s e 300e. 
42 u s e 300e-l. 
Contracts with 
other than staff 
physicians, 
prohibition. 
REQUIREMENTS FOR THE PROVISION OF SERVICES 
SEC. 11. (a) Paragraph (3) of section 1310(b) is amended to read 
as follows: 
"(3) (A) Except as provided in subparagraph (B), the serv-
ices of a physician vs^hich are provided as basic health services 
shall be provided through— 
"(i) members of the staff of the health maintenance 
organization, 
'" (ii) a medical group (or groups), 
"(iii) an individual practice association (or associations), 
"(iv) subject to subparagraph (C), physicians or other 
health professionals who have contracted with the health 
maintenance organization for the provision of such services, 
or 
"(v) any combination of such staff, medical group (or 
groups), individual practice association (or associations) or 
physicians or other health professionals under contract with 
the organization. 
"(B) (i) Subparagraph (A) does not apply to the provision of 
the services of a physician— 
"(I) which the health maintenance organization deter-
mines, in conformity with regulations of the Secretary, are 
unusual or infrequently used, or 
"(II) which are provided a member of the organization in 
a manner other than that prescribed by subparagraph (A) 
because of an emergency which made it medically necessary 
that the service be provided to the member before it could 
be provided in a manner prescribed by subparagraph (A), 
"(ii) In a forty-eight-month period beginning after the month 
in which a health maintenance organization becomes a qualified 
health maintenance organization (within the meaning of section 
1310(d)), the organization may provide the services of physicians 
through an entity which but for the requirement of section 1302 
(4)(C)(i) would be a medical group for the purposes of this title. 
After the expiration of such period, the organization may provide 
physician services through such an entity only if authorized by the 
Secretary in accordance with regulations which take into con-
sideration the unusual circumstances of such entity. 
"(C) After the expiration of the first four fiscal years of a 
health maintenance organization beginning after the month in 
which it became a qualified health maintenance organization 
(within the meaning of section 1310(d)), the organization may 
not enter into contracts with physicians other than members of 
staff, medical groups, or individual practice associations if the 
amounts paid under such contracts for basic and supplemental 
health services provided by physicians exceed 15 per centum of the 
total estimated amount to be paid in such fiscal year by the health 
maintenance organization to physicians for the provision of basic 
and supplemental health services by physicians, or, if the health 
maintenance organization principally serves a rural area, 30 per 
centum of such amount, except that this subparagraph does not 
apply to the entering into contracts for the purchase of physician 
services through an entity which, but for the requirements of 
PUBLIC LAW 95-559—NOV. 1, 1978 
92 STAT. 2139 
section 1302 (4) (C) (i), would be a medical group for the purposes 
of this title. 
"(D) Contracts between a health maintenance organization and 
health professionals for the provision of basic and supplemental 
health services shall include such provisions as the Secretary rnay 
require (including provisions requiring appropriate continuing 
education). 
"(E) For purposes of this paragraph the term 'health pro-
fessional' means physicians, dentists, nurses, podiatrists, optome-
trists, and such other individuals engaged in the delivery of health 
services as the Secretary may by regulation designate.". 
(b) Section 1301(b)(1) is amended by adding at the end the 
following: "The requirements of this paragraph respecting the basic 
health services payment shall not apply to the provision of basic 
health services to a member for an illness or injury for which the 
member is entitled to benefits under a workmen's compensation law 
or an insiirance policy but only to the extent such benefits apply to 
such services. For the provision of such services for an illness or injury 
for which a member is entitled to benefits under such a law, the 
health maintenance organization may, if authorized by such law, 
charge or authorize the provider of such services to charge, in accord-
ance with the charges allowed under such law, the insurance carrier, 
employer, or other entity which under such law is to pay for the 
provision of such services or, to the extent that such member has been 
paid under such law for such services, such member. For the provi-
sion of such services for an illness or injury for which a member is 
entitled to benefits under an insurance policy, a health maintenance 
organization may charge or authorize the provider of such services 
to charge the insurance carrier under such policy or, to the extent 
that such member has been paid under such policy for such services, 
such member.". 
(c) The second sentence of section 1301(b) (4) is amended to read 
as follows: "A member of a health maintenance organization shall 
be reimbursed by the organization for his expenses in securing basic 
and supplemental health services other than through the organization 
if the services were medically necessary and immediately required 
because of an unforeseen illness, injury, or condition.". 
(d) Section 1301(b) is amended by adding at the end the following 
new paragraph: 
"(5) To the extent that a natural disaster, war, riot, civil insur-
rection, or any other similar event not within the control of a 
health maintenance organization (as determined under regula-
tions of the Secretary) results in the facilities, personnel, or 
financial resources of a health maintenance organization not being 
available to provide or arrange for the provision of a basic or 
supplemental health service in accordance with the requirements 
of paragraphs (1) through (4) of this subsection, such require-
ments only require the organization to make a good-faith effort 
to provide or arrange for the provision of such service within 
such limitation on its facilities, personnel, or resources.". 
(e) Section 1302(1) is amended by inserting before the second 
sentence the following: "Such term does not include a health service 
which the Secretary, upon application of a health maintenance organi-
zation, determines is unusual and infrequently provided and not neces-
42 u s e 300e-l. 
"Health 
professional.' 
42 u s e 300e. 
Basic health 
service payment. 
Charges by health 
maintenance 
organization or 
provider of 
services. 
Reimbursement. 
Natural disaster, 
war, riot, or other 
similar event. 
42 u s e 300e-l. 
92 STAT. 2140 
PUBLIC LAW 95-559—NOV. 1, 1978 
sary for the protection of individual health. The Secretary shall 
Publication in 
publish in the Federal Register each determination made by him under 
Federal Register, the preceding sentence.". 
Repeal. 
42 use 300e-9. 
Repeal. 
42 use 300e-ll. 
42 use 300e-5. 
42 use 
300e-13. 
Grant and loan 
programs. 
Report to 
eongress. 
ADMINISTRATION OP PROGRAM 
SEC.12. (a) (1) Subsection (h) of section 1310 is repealed. 
(2) Subsection (c) of section 1312 is repealed. 
(b) Section 1306(b) (2) is amended by inserting "in the case of an 
application for assistance under section 1304, 1305, or 1305A," before 
"he determines". 
(c) Section 1306(b) is amended by adding at the end the following 
new sentence: "In determining, for purposes of paragraph (2), 
whether an applicant would be able to complete a project or under-
taking without the assistance applied for, the Secretary shall not 
consider any asset of the applicant the obligation of which for such 
undertaking or project would jeopardize the fiscal soundness of the 
applicant.". 
PROGRAM MANAGEMENT 
EVALUATION 
SEC. 13. Section 1314 is amended by adding at the end thereof the 
following new subsection: 
"(d) The Comptroller General shall evaluate the adequacy and 
effectiveness of the policies and procedures of the Secretary for the 
management of the grant and loan programs established by this title 
and the adequacy of the amounts of assistance available under such 
programs and shall report to the Congress the results of such evalua-
tion not later than May 1,1979.". 
42 use 1396a. 
Effective date. 
42 use 1396a 
note. 
42 use 1396. 
AMENDMENTS TO THE SOCIAL SECURITY ACT 
SEC. 14. (a) (1) Section 1902(a) (4) of the Social Security Act is 
amended (A) by striking out "and" at the end of clause (A), and (B) 
by inserting before the semicolon a comma and the following: "and 
(C) that each State or local officer or employee who is responsible for 
the expenditure of substantial amounts of funds under the State plan, 
each individual who formerly was such an officer or employee, and each 
partner of such an officer or employee shall be prohibited from commit-
ting any act, in relation to any activity under the plan, the commission 
of which, in connection with any activity concerning the United States 
Government, by an officer or employee of the United States Govern-
ment, an individual who was such an officer or employee, or a partner 
of such an officer or employee is prohibited by section 207 or 208 of title 
18, United States Code". 
(2) (A) Except as provided in subparagraph (B), the amendments 
made by paragraph (1) shall take effect one hundred and eighty days 
after the date of the enactment of this Act. 
(B) In the case of a State plan for medical assistance under title 
XIX of the Social Security Act which the Secretary determines 
requires State legislation in order for the plan to meet the requirement 
added by the amendments made by paragraph (1), such amendments 
shall not apply with respect to such State plan before ninety days 
after the close of the first regular session of the State legislature that 
begins after the date of the enactment of this Act. 
PUBLIC LAW 95-559—NOV. 1, 1978 
92 STAT. 2141 
(b) Section 1122 of the Social Security Act is amended— 
42 USC 
(1) by striking out "or health maintenance organizations" each 1320a-l. 
place it occurs, 
(2) by striking out "or health maintenance organizations" each 
place it occurs, and 
(3) by striking out "or organization, or of any facility of such 
organization," in subsection (d) (2). 
(c) Section 1903(m) (1) (B) of the Social Security Act is amended 42 USC 1396b. 
by striking out "shall be administered through the Assistant Secretary 
for Health and in the Office of the Assistant Secretary for Health, and 
the administration of such duties and functions". 
Approved November 1, 1978. 
LEGISLATIVE HISTORY: 
HOUSE REPORTS: No. 95-1479 accompanying H.R. 13655 (Comm. on Interstate and 
Foreign Commerce) and No. 95-1784 (Comm. of Conference). 
SENATE REPORT No. 95-837 (Comm. on Human Resources). 
CONGRESSIONAL RECORD, Vol. 124 (1978): 
July 21, considered and passed Senate. 
Sept. 25, H.R. 13655 considered and passed House; passage vacated and 
S. 2534, amended, passed in lieu. 
Oct. 13, House agreed to conference report. 
Oct. 14, Senate agreed to conference report.