§ 1395e. Deductibles and coinsurance

Legislative history

Reconstructed from this section’s Code source credit and amendment notes, resolved against the local Statutes at Large. Editorial notes are evidence, not the law that made the change.

1. 1935

   Health Insurance for the Aged Act

   Pub. L. 89–97 title I § 102(a) · 79 Stat. 288

   Enacted · 42 U.S.C. § 1395e

   Aug. 14, 1935, ch. 531, title XVIII, § 1813, as added Pub. L. 89–97, title I, § 102(a), July 30, 1965, 79 Stat. 292

   Source evidence

   Code source credit
   Aug. 14, 1935, ch. 531, title XVIII, § 1813, as added Pub. L. 89–97, title I, § 102(a), July 30, 1965, 79 Stat. 292

   Enacted provision · exact public law section
   (a) The Social Security Act is amended by adding after title XVII the following new title: 42 USC 1305. “TITLE XVIII— HEALTH INSURANCE FOR THE AGED “Sec. 1801. “prohibition against any federal interference Nothing in this title shall be construed to authorize any Federal officer or employee to exercise any supervision or control over the practice of medicine or the manner in which medical services are provided, or over the selection, tenure, or compensation of any officer or employee of any institution, agency, or person providing health services; or to exercise any supervision or control over the administration or operation of any such institution, agency, or person. “Sec. 1802. “free choice by patient guaranteed Any individual entitled to insurance benefits under this title may obtain health services from any institution, agency, or person qualified to participate under this title if such institution, agency, or person undertakes to provide him such services. “Sec. 1803. “option to individuals to obtain other health insurance protection Nothing contained in this title shall be construed to preclude any State from providing, or any individual from purchasing or oilier wise securing, protection against the cost of any health services. “Part A— Hospital Insurance Benefits for the Aged “Sec. 1811. “description of program The insurance program for which entitlement is established by section 226 provides basic protection against the costs of hospital Ante, p. 290. and related post-hospital services in accordance with this part for individuals who are age 65 or over and are entitled to retirement 42 USC 401–425. benefits under title II of this Act or under the railroad retirement system. “Sec. 1812. “scope of benefits (a) The benefits provided to an individual by the insurance program under this part shall consist of entitlement to have payment made on his behalf (subject to the provisions of this part) for— “(1) inpatient hospital services for up to 90 days during any spell of illness; “(2) post-hospital extended care services for up to 100 days during any spell of illness; “(3) post-hospital home health services for up to 100 visits (during the one-year period described in section 1861(h)) after the beginning of one spell of illness and before the beginning of the next; and “(4) outpatient hospital diagnostic services. “(b) Payment under this part for services furnished an individual during a spell of illness may not (subject to subsection (c)) be made for— “(1) inpatient hospital services furnished to him during such spell after such services have been furnished to him for 90 days (luring such spell; “(2) post-hospital extended care services furnished to him during such spell after such services have been furnished to him for 100 days during such spell; or “(3) inpatient psychiatric hospital services furnished to him after such services have been furnished to him for a total of 190 days during his lifetime. “(c) If an individual is an inpatient of a psychiatric hospital or a tuberculosis hospital on the first day of the first month for which lie is entitled to benefits under this part, the days on which he was an inpatient of such a hospital in the 90-day period immediately before such first day shall be included in determining the 90-day limit under subsection (b)(1)(but not in determining the 190-day limit under subsection (b)(3)). “(d) Payment under this part may be made for post-hospital home health services furnished an individual only during the one-year period described in section 1861 (n) following his most recent hospital discharge which meets the requirements of such section, and only for the first 100 visits in such period. The number of visits to be charged for purposes of the limitation in the preceding sentence, in connection with items or services described in section 1861 (m), shall be determined in accordance with regulations. “(e) For purposes of subsections (b), (c), and (d), inpatient hospital services, inpatient psychiatric hospital services, post-hospital extended care services, and post-hospital home health services shall be taken into account only if payment is or would be, except for this section or the failure to comply with the request and certification requirements of or under section 1814(a), made with respect to such services under this part. “(f) For definition of ‘spell of illness’, and for definitions of other terms used in this part, see section 1861. “Sec. 1813. “deductibles and coinsurance (a) (1) The amount payable for inpatient hospital services furnished an individual during any spell of illness shall be reduced by a deduction equal to the inpatient hospital deductible 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. Such amount shall be further reduced by a coinsurance amount equal to one-fourth of the inpatient hospital deductible for each day (before the 91st day) on which such individual is furnished such services during such spell of illness after such services have been furnished to him for 60 days during such spell. “(2) The amount payable for outpatient hospital diagnostic Outpatient hospital diagnostic services. services furnished an individual during a diagnostic study shall be reduced by a deduction equal to the sum of (A) one-half of the inpatient hospital deductible which is applicable to spells of illness beginning in the same calendar year as such diagnostic study and (B) 20 per centum of the remainder of such amount. For purposes of the preceding sentence, a diagnostic study for any individual consists of the outpatient hospital diagnostic services provided by (or under arrangements made by) the same hospital during the 20-day period beginning on the first day (not included in a previous diagnostic study) on which he is entitled to hospital insurance benefits under section 226 and on which outpatient hospital diagnostic services are Ante, p. 290. furnished him. “(3) The amount payable to any provider of services under this part, for services furnished an individual during any spell of illness shall be further reduced by an amount equal to the cost of the first three pints of whole blood furnished to him as part of such services during such spell of illness. “(4) The amount payable for post-hospital extended care services furnished an individual during any spell of illness shall lie reduced by a coinsurance amount equal to one-eighth of the inpatient hospital deductible for each day (before the 101st day) on which he is furnished such services after such services have been furnished to him for 20 days during such spell. “(b) (1) The inpatient hospital deductible which shall be applicable Inpatient hospital deductible. for the purposes of subsection (a) shall be $40 in the case of any spell of illness or diagnostic study beginning before 1969. “(2) The Secretary shall, between July 1 and October 1 of 1968, and of each year thereafter, determine and promulgate the inpatient hospital deductible which shall be applicable for the purposes of subsection (a) in the case of any spell of illness or diagnostic study beginning during the succeeding calendar year. Such inpatient hospital deductible shall be equal to $40 multiplied by the ratio of (A) the current average per diem rate for inpatient hospital services for the calendar year preceding the promulgation, to (B) the current average per diem rate for such services for 1966. Any amount determined under the preceding sentence which is not a multiple of $4 shall be rounded to the nearest multiple of $4 (or, if it is midway between two multiples of $4, to the next, higher multiple of $4). The current average per diem rate for any year shall be determined by the Secretary on the basis of the best information available to him (at the time the determination is made) as to the amounts paid under this part on account of inpatient hospital services furnished during such year, by hospitals which have agreements in effect under section 1866, to individuals who are entitled Post, p. 327. to hospital insurance benefits under section 226, plus the amount which would have been so paid but for subsection (a)(1) of this section. “Sec. 1814. “conditions of and limitations on payment for services “Requirement of Requests and Certifications (a) Except as provided in subsection (d), payment for services furnished an individual may be made only to providers of services which are eligible therefor under section 1866 and only Post, p. 327. if— “(1) written request, signed by such individual except in cases in which the Secretary finds it impracticable for the individual to do so, is filed for such payment in such form, in such manner, within such time, and by such person or persons as the Secretary may by regulation prescribe; “(2) a physician certifies (and recertifies, where such services are furnished over a period of time, in such cases, with such frequency, and accompanied by such supporting material, appropriate to the case involved, as may be provided by regulations, except that the first of such recertifications shall be required in each case of inpatient hospital services not later than the 20th day of such period) that— “(A) in the case of inpatient hospital services (other than inpatient psychiatric hospital services and inpatient tuberculosis hospital services), such services are or were required to be given on an inpatient basis for such individual’s medical treatment, or that inpatient diagnostic study is or was medically required and such services are or were necessary for such purpose; “(B) in the case of inpatient psychiatric hospital services, such services are or were required to be given on an inpatient basis, by or under the supervision of a physician, tor the psychiatric treatment of an individual; and (i) such treatment can or could reasonably be expected to improve the condition for which such treatment is or was necessary or (ii) inpatient diagnostic study is or was medically required and such services are or were necessary for such purposes; “(C) in the case of inpatient tuberculosis hospital services, such services are or were required to be given on an inpatient basis, by or under the supervision of a physician, for the treatment of an individual for tuberculosis; and such treatment can or could reasonably be expected to (i) improve the condition for which such treatment is or was necessary or (ii) render the condition noncommunicable; “(D) in the case of post-hospital extended care services, such services are or were required to be given on an inpatient basis because the individual needs or needed skilled nursing care on a continuing basis for any of the conditions with respect to which he was receiving inpatient hospital services (or. services which would constitute inpatient hospital services if the institution met the requirements of paragraphs Post, p. 314. (6) and (8) of section 1861(e)) prior to transfer to the extended care facility or for a condition requiring such extended care services which arose after such transfer and while he was still in the facility for treatment of the condition or conditions for which he was receiving such inpatient hospital services; “(E) in the case of post-hospital home health services, such services are or were required because the individual is or was confined to his home (except when receiving items and services referred to in section 1861 (m)(7)) and Post, p. 319. needed skilled nursing care on an intermittent basis, or physical or speech therapy, for any of the conditions with respect to which he was receiving inpatient hospital services (or services which would constitute inpatient hospital services if the institution met the requirements of paragraphs (6) and (8) of section 1861(e)) or post-hospital extended care services; a plan for furnishing such services to such individual has been established and is periodically reviewed by a physician; and such services are or were furnished while the individual was under the care of a physician; or “(F) in the case of outpatient hospital diagnostic services, such services are or were required for diagnostic study; “(3) in the case of inpatient psychiatric hospital services, the services are those which the records of the hospital indicate were furnished to the individual during periods when he was receiving (A) intensive treatment services, (B) admission and related services necessary for a diagnostic study, or (C) equivalent services; “(4) in the case of inpatient tuberculosis hospital services, the services are those which the records of the hospital indicate were furnished to the individual during periods when he was receiving treatment which could reasonably be expected to (A) improve his condition or (B) render it noncommunicable; “(5) with respect to inpatient hospital services furnished such individual after the 20th day of a continuous period of such services and with respect to post-hospital extended care services furnished sifter such day of a continuous period of such services as may be prescribed in or pursuant to regulations, there was not in effect, at the time of admission of such individual to the hospital or extended care facility, as the case may be, a decision under section 1866(d)(based on a finding that utilization Post, p. 327. review of long-stay cases is not being made in such hospital or facility); and “(6) with respect to inpatient hospital services or post-hospital extended care services furnished such individual during a continuous period, a finding has not been made (by the physician members of the committee or group, as described in section 1861(h)(4)) pursuant to the system of utilization review that further inpatient hospital services or further post-hospital extended care services, as the case may be, are not medically necessary; except that, if such a finding has been made, payment may be made for such services furnished before the 4th day after the day on which the hospital or extended care facility, as the case may be, received notice of such finding. To the extent provided by regulations, the certification and recertification requirements of paragraph (2) shall be deemed satisfied where, at a later date, a physician makes certification of the kind provided in subparagraph (A), (B), (C), (D), (E), or (F) of paragraph (2) (whichever would have applied), but only where such certification is accompanied by such medical and other evidence as may be required by such regulations. “(b) “Reasonable Cost of Services The amount paid to any provider of services with respect to services for which payment may be made under this part shall, subject Ante, p. 292. Post, p. 322. to the provisions of section 1813, be the reasonable cost of such services, as determined under section 1861 (v). “(c) “No Payments to Federal Providers of Services No payment may be made under this part (except under subsection (d)) to any Federal provider of services, except a provider of services which the Secretary determines is providing services to the public generally as a community institution or agency; and no such payment may be made to any provider of services for any item or service which such provider is obligated by a law of, or a contract with, the United States to render at public expense. “(d) “Payments for Emergency Hospital Services Payments shall also be made to any hospital for inpatient hospital services or outpatient hospital diagnostic services furnished, by the hospital or under arrangements (as defined in section 1861 (w)) with it, to an individual entitled to hospital insurance benefits under Ante, p. 290. section 226 even though such hospital does not have an agreement in effect under this title if (A) such services were emergency services and (B) the Secretary would be required to make such payment if the hospital had such an agreement in effect and otherwise met the conditions of payment hereunder. Such payments shall be made only in the amounts provided under subsection (b) and then only if such hospital agrees to comply, with respect to the emergency services provided, Post, p. 327. with the provisions of section 1866(a). “(e) “Payment for Inpatient Hospital Services Prior to Notification of Noneligibility Notwithstanding that an individual is not entitled to have payment made under this part for inpatient hospital services furnished by any hospital, payment shall be made to such hospital (unless it elects not to receive such payment or, if payment has already been made by or on behalf of such individual, fails to refund such payment within the time specified by the Secretary) for such services which are furnished to the individual prior to notification to such hospital from the Secretary of his lack of entitlement, if such payments are precluded Ante, p. 291. only by reason of section 1812 and if such hospital complies with the requirements of and regulations under this title with respect to such payments, has acted in good faith and without knowledge of such lack of entitlement, and has acted reasonably in assuming entitlement existed. Payment under the preceding sentence may not be made for services furnished an individual pursuant, to any admission after the 6th elapsed day (not including as an elapsed day Saturday, Sunday, or a legal holiday) after the day on which such admission occurred. “(f) “Payment for Certain Emergency Hospital Services Furnished Outside the United States The authority contained in subsection (d) shall be applicable to emergency inpatient hospital services furnished an individual by a hospital located outside the United States if— “(1) such individual was physically present in a place within the United States at the time the emergency which necessitated such inpatient hospital services occurred; and “(2) such hospital was closer to, or substantially more accessible from, such place than the nearest hospital within the United States which was adequately equipped to deal with, and was available for the treatment of, such individual’s illness or injury. “Sec. 1815. “payment to providers or services The Secretary shall periodically determine the amount which should be paid under this part to each provider of services with respect to the services furnished by it, and the provider of services shall be paid, at such time or times as the Secretary believes appropriate (but not less often than monthly) and prior to audit or settlement by the General Accounting Office, from the Federal Hospital Insurance Trust Fund, the amounts so determined, with necessary Post, p. 299. adjustments on account of previously made overpayments or underpayments; except that no such payments shall be made to any provider unless it has furnished such information as the Secretary may request in order to determine the amounts due such provider under this part, for the period with respect to which the amounts are being paid or any prior period. “Sec. 1816. “use of public agencies or private organizations to facilitate payment to providers of services (a) If any group or association of providers of services wishes to have payments under this part to such providers made through a national, State, or other public or private agency or organization and nominates such agency or organization for this purpose, the Secretary is authorized to enter into an agreement with such agency or organization providing for the determination by such agency or organization (subject to such review by the Secretary as may be provided for by the agreement.) of the amount of the payments required pursuant to this part, to be made to such providers, and for the making of such payments by such agency or organization to such providers. Such agreement may also include provision for the agency or organization to do all or any part of the following: (1) to provide consultative services to institutions or agencies to enable them to establish and maintain fiscal records necessary for purposes of this part and otherwise to qualify as hospitals, extended care facilities, or home health agencies, and (2) with respect to the providers of services which are to receive payments through it (A) to serve as a center for, and communicate to providers, any information or instructions furnished to it by the Secretary, and serve as a channel of communication from providers to the Secretary; (B) to make such audits of the records of providers as may be necessary to insure that proper payments are made under this part; and (C) to perform such other functions as are necessary to carry out this subsection. “(b) The Secretary shall not enter into an agreement with any agency or organization under this section unless (1) he finds (A) that to do so is consistent with the effective and efficient administration of this part, and (B) that such agency or organization is willing and able to assist the providers to which payments are made through it under this part in the application of safeguards against unnecessary utilization of services furnished by them to individuals entitled Ante, p. 290. to Hospital insurance benefits under section 226, and the agreement provides for such assistance, and (2) such agency or organization agrees to furnish to the Secretary such of the information acquired by it in carrying out its agreement under this section as the Secretary may find necessary in performing his functions under this part. “(c) An agreement with any agency or organization under this section may contain such terms and conditions as the Secretary finds necessary or appropriate, may provide for advances of funds to the agency or organization for the making of payments by it under subsection (a), and shall provide for payment of so much of the cost of administration of the agency or organization as is determined by the Secretary to be necessary and proper for carrying out the functions covered by the agreement. “(d) If the nomination of an agency or organization as provided in this section is made by a group or association of providers of services, it shall not be binding on members of the group or association which notify the Secretary of their election to that effect Any provider may, upon such notice as may be specified in the agreement under this section with an agency or organization, withdraw its nomination to receive payments through such agency or organization. Any provider which has withdrawn its nomination, and any provider which has not made a nomination, may elect to receive payments from any agency or organization which has entered into an agreement with the Secretary under this section if the Secretary and such agency or organization agree to it. “(e) An agreement with the Secretary under this section may be terminated— “(1) by the agency or organization which entered into such agreement at such time and upon such notice to the Secretary, to the public, and to the providers as may be provided in regulations, or “(2) by the Secretary at such time and upon such notice to the agency or organization, to the providers which have nominated it for purposes of this section, and to the public, as may be provided in regulations, but only if he finds, after reasonable notice and opportunity for hearing to the agency or organization, that (A) the agency or organization has failed substantially to carry out the agreement, or (B) the continuation of some or all of the functions provided for in the agreement with the agency or organization is disadvantageous or is inconsistent with the efficient administration of this part. “(f) An agreement with an agency or organization under this section may require any of its officers or employees certifying payments or disbursing funds pursuant to the agreement, or otherwise participating in carrying out the agreement, to give surety bond to the United States in such amount as the Secretary may deem appropriate. “(g) (1) No individual designated pursuant to an agreement, under this section as a certifying officer shall, in the absence of gross negligence or intent to defraud the United States, be liable with respect to any payments certified by him under this section. “(2) No disbursing officer shall, in the absence of gross negligence or intent to defraud the United States, be liable with respect, to any payment by him under this section if it was based upon a voucher signed by a certifying officer designated as provided in paragraph (1) of this subsection. “(3) No such agency or organization shall be liable to the United States for any payments referred to in paragraph (1) or (2). “Sec. 1817. “federal hospital insurance trust fund (a) 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 Trust Fund’ (hereinafter in this section referred to as the ‘Trust Fund’). The Trust Fund shall consist of such amounts as may be deposited in, or appropriated to, such fund as provided in this part. There are hereby appropriated to the Trust Fund for the fiscal year ending June 30, 1966, and for each fiscal year thereafter, out of any moneys in the Treasury not otherwise appropriated, amounts equivalent to 100 per centum of— “(1) the taxes imposed by sections 3101 (b) and 3111(b) of the Internal Revenue Code of 1954 with respect to wages reported Post, pp, 395, 396. to the Secretary of the Treasury or his delegate pursuant to subtitle F of such Code after December 31, 1965, as determined by 26 USC 6001 et seq. the Secretary of the Treasury by applying the applicable rates of tax under such sections to such wages, which wages shall be certified by the Secretary of Health, Education, and Welfare on the basis of records of wages established and maintained by the Secretary of Health, Education, and Welfare in accordance with such reports; and “(2) the taxes imposed by section 1401(b) of the Infernal Revenue Code of 1954 with respect to self-employment income Post, p. 394. reported to the Secretary of the Treasury or his delegate on tax returns under subtitle F of such Code, as determined by the Secretary of the Treasury by applying the applicable rate of tax under such section to such self-employment income, which self-employment income shall be certified by the Secretary of Health, Education, and Welfare on the basis of records of self-employment established and maintained by the Secretary of Health, Education, and Welfare in accordance with such returns. The amounts appropriated by the preceding sentence shall be transferred from time to time 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 taxes, specified in the preceding sentence, paid to or deposited into the Treasury; and proper adjustments shall be made in amounts subsequently transferred to the extent prior estimates were in excess of or were less than the taxes specified in such sentence. “(b) With respect to the Trust Fund, there is hereby created a Board of Trustees. body to be known as the Board of Trustees of the Trust Fund (hereinafter in this section referred to as the ‘Board of Trustees’) composed of the Secretary of the Treasury, the Secretary of Labor, and the Secretary of Health, Education, and Welfare, all ex officio. The Secretary of the Treasury shall be the Managing Trustee of the Board of Trustees (hereinafter in this section referred to as the ‘Managing Trustee’), The Commissioner of Social Security shall Reports to Congress. serve as the Secretary of the Board of Trustees. The Board of Trustees shall meet not less frequently than once each calendar year. It shall be the duty of the Board of Trustees to— “(1) Hold the Trust. Fund; “(2) Report to the Congress not later than the first day of March of each year on the operation and status of the Trust Fund during the preceding fiscal year and on its expected operation and status during the current fiscal year and the next 2 fiscal years; “(3) Report immediately to the Congress whenever the Board is of the opinion that the amount of the Trust Fund is unduly small; and “(4) Review the general policies followed in managing the Trust Fund, and recommend changes in such policies, including necessary changes in the provisions of law which govern the way in which the Trust Fund is to be managed. The report, provided for in paragraph (2) shall include a statement of the assets of, and the disbursements made from, the Trust Fund during the preceding fiscal year, an estimate of the expected income to, and disbursements to be made from, the Trust Fund during the current fiscal year and each of the next 2 fiscal years, and a statement of the actuarial status of the Trust Fund. Such report shall be printed as a House document of the session of the Congress to which the report is made. “(c) It shall be the duty of the Managing Trustee to invest such portion of the Trust. Fund as is not, in his judgment, required to meet current withdrawals. Such investments may be made only in interest-bearing obligations of the United States or in obligations guaranteed as to both principal and interest by the United States. For such purpose such obligations may be acquired (1) on original issue at the issue price, or (2) by purchase of outstanding obligations at the market price. The purposes for which obligations of the 40 Stat. 288. 31 USC 774. United States may be issued under the Second Liberty Bond Act, as amended, are hereby extended to authorize the issuance at par of public-debt obligations for purchase by the Trust Fund. Such obligations issued for purchase by the Trust Fund shall have maturities fixed with due regard for the needs of the Trust. Fund and shall bear interest at a rate equal to the average market yield (computed by the Managing Trustee on the basis of market quotations as of the end of the calendar month next preceding the date of such issue) on all marketable interest-bearing obligations of the United States then forming a part of the public debt which are not due or callable until after the expiration of 4 years from the end of such calendar month; except that where such average market yield is not a multiple of one--eighth of 1 per centum, the rate of interest on such obligations shall be the multiple of one-eighth of 1 per centum nearest such market yield. The Managing Trustee may purchase other interest-bearing obligations of the United States or obligations guaranteed as to both principal and interest by the United States, on original issue or at the market, price, only where he determines that the purchase of such other obligations is in the public interest. “(d) Any obligations acquired by the Trust Fund (except public-debt obligations issued exclusively to the Trust Fund) may be sold by the Managing Trustee at the market price, and such public-debt obligations may be redeemed at par plus accrued interest. “(e) The interest on, and the proceeds from the sale or redemption of, any obligations held in the Trust Fund shall be credited to and form a part of the Trust Fund. _ “(f) (1) The Managing Trustee is directed to pay from time to time from the Trust Fund into the Treasury the amount estimated by him as taxes imposed under section 3101(b) which are subject to Post, p. 395. Post, p. 393. refund under section 6413(c) of the Internal Revenue Code of 1954 with respect to wages paid after December 31, 1965. Such taxes shall be determined on the basis of the records of wages established and maintained by the Secretary of Health, Education, and Welfare in accordance with the wages reported to the Secretary of the Treasury or his delegate pursuant to subtitle F of the Internal Revenue Code 26 USC 6001 et seq. of 1954, and the Secretary of Health, Education, and Welfare shall furnish the Managing Trustee such information as may be required by the Managing Trustee for such purpose. The payments by the Managing Trustee shall be covered into the Treasury as repayments to the account for refunding internal revenue collections. “(2) Repayments made under paragraph (1) shall not be available for expenditures but shall be carried to the surplus fund of the Treasury. If it subsequently appears that the estimates under such paragraph in any particular period were too high or too low, appropriate adjustments shall be made by the Managing Trustee in future payments. “(g) There shall be transferred periodically (but not less often than once each fiscal year) to the Trust Fund from the Federal Old-Age and Survivors Insurance Trust Fund and from the Federal Disability Insurance Trust Fund amounts equivalent to the amounts not previously so transferred which the Secretary of Health, Education, and Welfare shall have certified as overpayments (other than amounts so certified to the Railroad Retirement Board) pursuant to section 1870(b) of this Act. There shall be transferred periodically Post, p. 331. (but not less often than once each fiscal year) to the Trust Fund from the Railroad Retirement Account amounts equivalent to the amounts not previously so transferred which the Secretary of Health, Education, and Wei fare shall have certified as overpayments to the Railroad Retirement Board pursuant to section 1870(b) of this Act. “(h) The Managing Trustee shall also pay from time to time from the Trust Fund such amounts as the Secretary of Health, Education, and Welfare certifies are necessary to make the payments provided for by this part, and the payments with respect to administrative expenses in accordance with section 201 (g)(1). Post, p. 338. “Part B— Supplementary Medical Insurance Benefits for the Aged “Sec. 1831. “establishment of supplementary medical insurance program for the aged There is hereby established a voluntary insurance program to provide medical insurance benefits in accordance with the provisions of this part for individuals 65 years of age or over who elect to enroll under such program, to be financed from premium payments by enrollees together with contributions from funds appropriated by the Federal Government. “Sec. 1832. “scope of benefits (a) The benefits provided to an individual by the insurance program established by this part shall consist of— “(1) entitlement to have payment made to him or on his behalf (subject to the provisions of this part) for medical and other health services, except those described in paragraph (2)(B);and “(2) entitlement to have payment made on his behalf (subject to the provisions of this part) for— “(A) home health services for up to 100 visits during a calendar year; and “(B) medical and other health services (other than physicians services unless furnished by a resident or intern of a hospital) furnished by a provider of services or by others under arrangements with them made by a provider of services. “(b) For definitions of ‘spell of illness’, ‘medical and other health services’, and other terms used in this part, see section 1861. “Sec. 1833. “payment of benefits (a) Subject to the succeeding provisions of this section, there shall be paid from the Federal Supplementary Medical Post, p. 308. Insurance Trust Fund, in the case of each individual who is covered under the insurance program established by this part and incurs expenses for services with respect to which benefits are payable under this part, amounts equal to— “(1) in the case of services described in section 1832(a)(1)—80 percent of the reasonable charges for the services; except that an organization which provides medical and other health services (or arranges for their availability) on a prepayment basis may elect to be paid 80 percent of the reasonable cost of services for which payment may be made under this part on behalf of individuals enrolled in such organization in lieu of 80 percent of the reasonable charges for such services if the organization undertakes to charge such individuals no more than 20 percent of such reasonable cost plus any amounts payable by them as a result of subsection (b); and “(2) in the case of services described in section 1832(a)(2)—80 percent of the reasonable cost of the services (as determined Post, p. 322. under section 1861 (v)). “(b) Before applying subsection (a) with respect to expenses incurred by an individual during any calendar year, the total amount of the expenses incurred by such individual during such year (which would, except for this subsection, constitute incurred expenses from which benefits payable under subsection (a) are determinable) shall be reduced by a deductible of $50; except that (1) the amount of the deductible for such calendar year as so determined shall first be reduced by the amount of any expenses incurred by such individual in the last three months of the preceding calendar year (or regarded under clause (2) as incurred in such preceding year with respect to services furnished in such last three months) and applied toward such individual’s deductible under this section for such preceding year, and (2) the Ante, p. 292. amount of any deduction imposed under section 1813(a)(2)(A) with respect to outpatient hospital diagnostic services furnished in any calendar year shall be regarded as an incurred expense under this part for such year. “(c) Notwithstanding any other provision of this part, with respect Mental disorders. to expenses incurred in any calendar year in connection with the treatment of mental, psychoneurotic, and personality disorders of an individual who is not an inpatient of a hospital at the time such expenses are incurred, there shall be considered as incurred expenses for purposes of subsections (a) and (b) only whichever of the following amounts is the smaller: “(1) $312.50, or “(2) 62½ percent of such expenses. “(d) No payment may be made under this part with respect be any services furnished an individual to the extent that such individual is entitled (or would be entitled except for section 1813 other than Ante, p. 292. subsection (a)(2)(A) thereof) to have payment made with respect to such services under part A. “(e) No payment shall be made to any provider of services or other person under this part unless there has been furnished such information as may be necessary in order to determine the amounts due such provider or other person under this part for the period with respect to which the amounts are being paid or for any prior period. “Sec. 1834. “limitation on home health services (a) Payment under this part may be made for home health services furnished an individual during any calendar year only for 100 visits during such year. The number of visits to be charged for purposes of the limitation in the preceding sentence, in connection with items and services described in section 1861 (m), shall be determined Post, p. 319. in accordance with regulations. “(b) For purposes of subsection (a), home health services shall be taken into account only if payment under this part is or would be, except for this section or the failure to comply with the request and certification requirements of or under section 1835(a), made with respect to such services. “Sec. 1835. “procedure for payment of claims of providers of services (a) Payment for services described in section 1832(a)(2) furnished an individual may be made only to providers of services which are eligible therefor under section 1866(a), and only if— Post, p. 327. “(1) written request, signed by such individual except in cases in which the Secretary finds it impracticable for the individual to do so, is filed for such payment in such form, in such manner, within such time, and by such person or persons as the Secretary may by regulations prescribe; and “(2) a physician certifies (and recertifies, where such services are furnished over a period of time, in such cases, with such frequency, and accompanied by such supporting material, appropriate to the case involved, as may be provided by regulations) that— “(A) in the case of home health services (i) such services are or were required because the individual is or was confined to his home (except when receiving items and services referred to in section 1861 (m)(7)) and needed skilled nursing care on an intermittent basis, or physical or speech therapy , (ii) a plan for furnishing such services to such individual has been established and is periodically reviewed by a physician, and (iii) such services are or were furnished while the individual is or was under the care of a physician; and “(B) in the case of medical and other health services, such services are or were medically required. To the extent provided by regulations, the certification and recertification requirements of paragraph (2) shall be deemed satisfied where, at a later date, a physician makes a certification of the kind provided in subparagraph (A) or (B) of paragraph (2)(whichever would have applied), but only where such certification is accompanied by such medical and other evidence as may be required by such regulations. “(b) No payment may be made under this part to any Federal provider of services or other Federal agency, except a provider of services which the Secretary determines is providing services to the public generally as a community institution or agency; and no such payment may be made to any provider of services or other person for any item or service which such provider or person is obligated by a law of, or a contract with, the United States to render at public expense. “Sec. 1836. “eligible individuals Every individual who— “(1) has attained the age of 65, and “(2) (A) is a resident of the United States, and is either (i) a citizen or (ii) an alien lawfully admitted for permanent residence who has resided in the United States continuously during the 5 years immediately preceding the month in which he applies for enrollment under this part, or (B) is entitled to hospital insurance benefits under part A, is eligible to enroll in the insurance program established by this part. “Sec. 1837. “enrollment periods (a) An individual may enroll in the insurance program established by this part only in such manner and form as may be prescribed by regulations, and only during an enrollment period prescribed in or under this section. “(b) (1) No individual may enroll for the first time under this part more than 3 years after the close of the first enrollment period during which he could have enrolled under this part. “(2) An individual whose enrollment under this part has terminated may not enroll for the second time under this part unless he does so in a general enrollment period (as provided in subsection (e)) which begins within 3 years after the effective date of such termination. No individual may enroll under this part more than twice. “(c) In the case of individuals who first, satisfy paragraphs (1) and (2) of section 1836 before January 1, 1966, the initial general enrollment period shall begin on the first day of the second month which begins after the date of enactment of this title and shall end on March 31, 1966. For purposes of this subsection and subsection (d), an individual who satisfies paragraph (2) of section 1836 solely by reason of subparagraph (B) thereof shall be treated as satisfying such paragraph (2) on the first day on which he is (or on filing application would be) entitled to hospital insurance benefits under part A. “(d) In the case of an individual who first satisfies paragraphs (1) and (2) of section 1836 on or after January 1, 1966, his initial enroll- ment period shall begin on the first day of the third month before the month in which he first satisfies such paragraphs and shall end seven months later. “(e) There shall be a general enrollment period, after the period described in subsection (c), during the period beginning on October 1 and ending on December 31 of each odd-numbered year beginning with 1967. “Sec. 1838. “coverage period (a) The period during which an individual is entitled to benefits under the insurance program established by this part (hereinafter referred to as his ‘coverage period’) shall begin on whichever of the following is the latest: “(1) July 1, 1966; or “(2) (A) in the case of an individual who enrolls pursuant to subsection (d) of section 1837 before the month in which he first satisfies paragraphs (1) and (2) of section 1836, the first day of such month, or “(B) in the case of an individual who enrolls pursuant to such subsection (d) in the month in which he first satisfies such paragraphs, the first day of the month following the month in which he so enrolls, Or “(C) in the case of an individual who enrolls pursuant to such subsection (d) in the month following the month in which he first satisfies such paragraphs, the first day of the second month following the month in which he so enrolls, or “(D) in the case of an individual who enrolls pursuant to such subsection (d) more than one month following the month in which he satisfies such paragraphs, the first day of the third month following the month in which he so enrolls, or “(E) in the case of an individual who enrolls pursuant to subsection (e) of section 1837, the July 1 following the month in which he so enrolls. “(b) An individual’s coverage period shall continue until his enrollment has been terminated— “(1) by the filing of notice, during a general enrollment period described in section 1837(e), that the individual no longer wishes to participate in the insurance program established by this part, or “(2) for nonpayment of premiums. The termination of a coverage period under paragraph (1) shall take effect at the close of December 31 of the year in which the notice is filed. The termination of a coverage period under paragraph (2) shall take effect on a date determined under regulations, which may be determined so as to provide a grace period (not in excess of 90 days) in which overdue premiums may be paid and coverage continued. “(c) No payments may be made under this part with respect to the expenses of an individual mi less such expenses were incurred by such individual during a period which, with respect to him, is a coverage period. “Sec. 1839. “amounts of premiums (a) The monthly premium of each individual enrolled under this part for each month before 1968 shall be $3. “(b) (1) The monthly premium of each individual enrolled under this part for each month after 1967 shall be the amount determined under paragraph (2), “(2) The Secretary shall, between July 1 and October 1 of 1967 and of each odd-numbered year thereafter, determine and promulgate the dollar amount which shall be applicable for premiums for months occurring in either of the two succeeding calendar years. Such dollar amount shall be such amount as the Secretary estimates to be necessary so that the aggregate premiums for such two succeeding calendar years will equal one-half of the total of the benefits and administrative costs which he estimates will be payable from the Federal Supplementary Post, p. 308. Medical Insurance Trust Fund for such two succeeding calendar years. In estimating aggregate benefits payable for any period, the Secretary shall include an appropriate amount for a contingency margin. “(c) In the case of an individual whose coverage period began pursuant to an enrollment after his initial enrollment period (determined pursuant to subsection (c) or (d) of section 1837), the monthly premium determined under subsection (b) shall be increased by 10 percent of the monthly premium so determined for each full 12 months in which he could have been but was not enrolled. For purposes of the preceding sentence, there shall be taken into account (1) the months which elapsed between the close of his initial enrollment period and the close of the enrollment period in which he enrolled, plus (in the case of an individual who enrolls for a second time)(2) the month which elapsed between the date of the termination of his first coverage period and the close of the enrollment period in which he enrolled for the second time. “(d) If any monthly premium determined under the foregoing provisions of this section is not a multiple of 10 cents, such premium shall be rounded to the nearest multiple of 10 cents. “Sec. 1840. “payment of premiums (a) (1) In the case of an individual who is entitled to monthly benefits under section 202, his monthly premiums under this part shall (except, as provided in subsection (d)) be collected by deducting the amount thereof from the amount of such monthly benefits. Such deduction shall be made in such manner and at such times as the Secretary shall by regulation prescribe. “(2) The Secretary of the Treasury shall, from time to time, transfer from the Federal Old-Age and Survivors Insurance Trust Fund or the Federal Disability Insurance Trust Fund to the Federal Supplementary Post, p. 308. Medical Insurance Trust Fund the aggregate amount deducted under paragraph (1) for the period to which such transfer relates from benefits under section 202 which are payable from such Trust Fund. Such transfer shall be made on the basis of a certification by the Secretary of Health, Education, and Welfare and shall be appropriately adjusted to the extent that prior transfers were too great or too small. “(b) (1) In the case of an individual who is entitled to receive for a month an annuity or pension under the Railroad Retirement Act of 1937, Ids monthly premiums under this part shall (except as provided in subsection (d)) be collected by deducting the amount thereof from such annuity or pension. Such deduction shall be made in such manner and at such times as the Secretary shall by regulations prescribe. Such regulations shall be prescribed only after consultation with the Railroad Retirement Board. “(2) The Secretary of the Treasury shall, from time to time, transfer from the Railroad Retirement Account to the Federal Supplementary Medical Insurance Trust Fund the aggregate amount deducted under paragraph (1) for the period to which such transfer relates. Such transfers shall be made on the basis of a certification by the Railroad Retirement Board and shall be appropriately adjusted to the extent that prior transfers were too great or too small. “(c) In the case of an individual who is entitled both to monthly benefits under section 202 and to an annuity or pension under the Railroad Retirement Act of 1937 at the time he enrolls under this part, subsection (a) shall apply so long as lie continues to be entitled both to such benefits and such annuity or pension. In the case of an individual who becomes entitled both to such benefits and such an annuity or pension after 42 USC 402. Post, pp. 335, 340, 400. he enrolls under this part-, subsection (a) shall apply if the first month for which he was entitled to such benefits was the same as or earlier than the first month for which he was entitled to such annuity or pension, and otherwise subsection (b) shall apply. “(d) If an individual to whom subsection (a) or (b) applies estimates that the amount which will be available for deduction under such subsection for any premium payment period will be less than the amount of the monthly premiums for such period, he may (under regulations) pay to the Secretary such portion of the monthly premiums for such period as he desires. “(e) (1) In the case of an individual receiving an annuity under the Civil Service Retirement Act annuitants. 70 Stat. 743. 5 USC 2251 note. Civil Service Retirement Act, or other Act. administered by the Civil Service Commission providing retirement or survivorship protection, to whom neither subsection (a) nor subsection (b) applies, his monthly premiums under this part (and the monthly premiums of the spouse of such individual under this part if neither subsection (a) nor subsection (b) applies to such spouse and if such individual agrees) shall, upon notice from the Secretary of Health, Education, and Welfare to the Civil Service Commission, be collected by deducting the amount thereof from each installment of such annuity. Such deduction shall be made in such manner and at such times as the Civil Service Commission may determine. The Civil Service Commission shall furnish such information as the Secretary of Health, Education, and Welfare may reasonably request in order to carry out his functions under this part with respect to individuals to whom this subsection applies. “(2) The Secretary of the Treasury shall, from time to time, but not less often than quarterly, transfer from the Civil Service Retirement and Disability Fund, or the account (if any) applicable in the case of such other Act administered by the Civil Service Commission, to the Federal Supplementary Medical Insurance Trust Fund the aggregate amount deducted under paragraph (1) for the period to which such transfer relates. Such transfer shall be made on the basis of a certification by the Civil Service Commission and shall be appropriately adjusted to the extent that prior transfers were too great or too small. “(f) In the case of an individual who participates in the insurance program established by this part, but with respect to whom none of the preceding provisions of this section applies, or with respect to whom subsection (d) applies, the premiums shall be paid to the Secretary at such times, and in such manner, as the Secretary shall by regulations prescribe. “(g) Amounts paid to the Secretary under subsection (d) or (f) shall be deposited in the Treasury to the credit of the Federal Supplementary Medical Insurance Trust Fund. “(h) In the case of an individual who participates in the insurance program established by this part, premiums shall be payable for the period commencing with the first month of his coverage period and ending with the month in which he dies or, if earlier, in which his coverage under such program terminates. “Sec. 1841. “federal supplementary medical insurance trust fund (a) There is hereby created on the books of the Treasury of the United States a trust fund to be known as the ‘Federal Supplementary Medical Insurance Trust Fund’ (hereinafter in this section referred to as the ‘Trust Fund’). The Trust Fund shall consist of such amounts as may be deposited in, or appropriated to, such fund as provided in this part. “(b) With respect to the Trust. Fund, there is hereby created a body to lie known as the Board of Trustees of the Trust Fund (hereinafter in this section referred to as the ‘Board of Trustees’) composed of the Secretary of the Treasury, the Secretary of Labor, and the Secretary of Health, Education, and Welfare, all ex officio. The Secretary of the Treasury shall be the Managing Trustee of the Board of Trustees (hereinafter in this section referred to as the ‘Managing Trustee’). The Commissioner of Social Security shall serve as the Secretary of the Board of Trustees. The Board of Trustees shall meet not less Reports to Congress. frequently than once each calendar year. It shall be the duty of the Board of Trustees to— “(1) Hold the Trust Fund; “(2) Report, to the Congress not later than the first day of March of each year on the operation and status of the Trust Fund during the preceding fiscal year and on its expected operation and status during the current fiscal year and the next 2 fiscal years; “(3) Report immediately to the Congress whenever the Board is of the opinion that the amount of the Trust Fund is unduly small; and “(4) Review the general policies followed in managing the Trust Fund, and recommend changes in such polities, including necessary changes in the provisions of law which govern the way in which the Trust Fund is to be managed. The report provided for in paragraph (2) shall include a statement of the assets of, and the disbursements made from, the Trust Fund during the preceding fiscal year, an estimate of the expected income to, and disbursements to be made from, the Trust Fund during the current fiscal year and each of the next 2 fiscal years, and a statement, of the actuarial status of the Trust Fund. Such report shall be printed as a House document of the session of the Congress to which the report is made. “(c) It shall be the duty of the Managing Trustee to invest such portion of the Trust Fund as is not, in his judgment, required to meet current withdrawals. Such investments may be made only in interest-bearing obligations of the United States or in obligations guaranteed as to both principal and interest by the United States. For such purpose such obligations may be acquired (1) on original issue at the issue price, or (2) by purchase of outstanding obligations at the market price. The purposes for which obligations of the 40 Stat. 288. 31 USC 774. United States may be issued under the Second Liberty Bond Act, as amended, are hereby extended to authorize the issuance at par of public-debt obligations for purchase by the Trust Fund. Such obligations issued for purchase by the Trust Fund shall have matu-rities fixed with due regard for the needs of the Trust Fund and shall bear interest at a rate equal to the average market yield (computed by the Managing Trustee on the basis of market quotations as of the end of the calendar month next preceding the date of such issue) on all marketable interest-bearing obligations of the United States then forming a part of the public debt which are not due or callable until after the expiration of 4 years from the end of such calendar month; except that where such average market yield is not a multiple of one-eighth of 1 per centum, the rate of interest on such obligations shall be the multiple of one-eighth of 1 per centum nearest such market yield. The Managing Trustee may purchase other interest-bearing obligations of the United States or obligations guaranteed as to both principal and interest by the United States, on original issue or at the market price, only where he determines that the purchase of such other obligations is in the public interest. “(d) Any obligations acquired by the Trust Fund (except public-debt obligations issued exclusively to the Trust Fund) may be sold by the Managing Trustee at the market price, and such public-debt obligations may be redeemed at par plus accrued interest. “(e) The interest on, and the proceeds from the sale or redemption of, any obligations held in the Trust Fund shall be credited to and form a part of the Trust Fund. “(f) There shall be transferred periodically (but not less often than once each fiscal year) to the Trust Fund from the Federal Old-Age and Survivors Insurance Trust Fund and from the Federal Disability Insurance Trust Fund amounts equivalent to the amounts not previously so transferred which the Secretary of Health, Education, and Welfare shall have certified as overpayments (other than amounts so certified to the Railroad Retirement Board) pursuant to section 1870(b) of this Act. There shall be transferred periodically (but Post, p. 331. not less often than once each fiscal year) to the Trust Fund from the Railroad Retirement Account amounts equivalent to the amounts not previously so transferred which the Secretary of Health, Education, and Welfare shall have certified as overpayments to the Railroad Retirement Board pursuant to section 1870(b) of this Act. “(g) The Managing Trustee shall pay from time to time from the Trust Fund such amounts as the Secretary of Health, Education, and Welfare certifies are necessary to make the payments provided for by this part, and the payments with respect to administrative expenses in accordance with section 201(g)(1). Post, p. 338. “(h) The Managing Trustee shall pay from time to time from the Trust Fund such amounts as the Secretary of Health, Education, and Welfare certifies are necessary to pay the costs incurred by the. Civil Service Commission in making deductions pursuant to section 1840(e). During each fiscal year, or after the close of such fiscal year, the Civil Service Commission shall certify to the Secretary the amount of the costs it incurred in making such deductions, and such certified amount shall be the basis for the amount of such costs certified by the Secretary to the Managing Trustee. “Sec. 1842. “use of carriers for administration of benefits (a) In order to provide for the administration of the benefits under this part with maximum efficiency and convenience for individuals entitled to benefits under this part and for providers of services and other persons furnishing services to such individuals, and with a view to furthering coordination of the administration of the benefits under part A and under this part, the Secretary is authorized to enter into contracts with carriers, including carriers with which Ante, p. 297. agreements under section 1816 are in effect, which will perform some or all of the following functions (or, to the extent provided in such Contracts, will secure performance thereof by other organizations); and, with respect to any of the following functions which involve payments for physicians’ services, the Secretary shall to the extent possible enter into such contracts: “(1) (A) make determinations of the rates and amounts of payments required pursuant to this part to be made to providers of services and other persons on a reasonable cost or reasonable charge basis (as maybe applicable); “(B) receive, disburse, and account for funds in making such payments; and “(C) make such audits of the records of providers of services as may be necessary to assure that proper payments are made under this part; “(2) (A) determine compliance with the requirements of section 1861 (k) as to utilization review; and “(B) assist providers of services and other persons who furnish services for which payment may be made under this part in the development of procedures relating to utilization practices, make studies of the effectiveness of such procedures and methods for their improvement, assist in the application of safeguards against unnecessary utilization of services furnished by providers of services and other persons to individuals entitled to benefits under this part, and provide procedures for and assist in arranging, where necessary, the establishment of groups outside hospitals Post, p. 318. (meeting the requirements of section 1861(k)(2)) to make reviews of utilization; “(3) serve as a channel of communication of information relating to the administration of this part; and “(4) otherwise assist, in such manner as the contract may provide, in discharging administrative duties necessary to carry out the purposes of this part. “(b) (1) Contracts with carriers under subsection (a) may be entered into without regard to section 3769 of the Revised Statutes or any other provision of law requiring competitive bidding. “(2) No such contract shall be entered into with any carrier unless the Secretary finds that such carrier will perform its obligations under the contract efficiently and effectively and will meet such requirements as to financial responsibility, legal authority, and other matters as he finds pertinent. “(3) Each such contract shall provide that the carrier— “(A) will take such action as may be necessary to assure that, where payment under this part for a service is on a cost, basis, the cost is reasonable cost (as determined under section 1861 (v)); “(B) will take such action as may be necessary to assure that, where payment under this part for a service is on a charge basis, (i) such charge will be reasonable and not higher than the charge applicable, for a comparable service and under comparable circumstances, to the policyholders and subscribers of the carrier, and (ii) such payment will be made on the basis of a receipted bill, or on the basis of an assignment, under the terms of which the reasonable charge is the full charge for the service; “(C) will establish and maintain procedures pursuant to which an individual enrolled under this part will be granted an oppor-tunity for a fair hearing by the carrier when requests for payment under this part with respect to services furnished him are denied or are not acted upon with reasonable promptness or when the amount of such payment is in controversy; “(D) will furnish to the Secretary such timely information and reports as he may find necessary in performing his functions under this part; and “(E) will maintain such records and afford such access thereto as the Secretary finds necessary to assure the correctness and verification of the information and reports under subparagraph (D) and otherwise to carry out the purposes of this part; and shall contain such other terms and conditions not inconsistent with this section as the Secretary may find necessary or appropriate. In determining the reasonable charge for services for purposes of this paragraph, there shall be taken into consideration the customary charges for similar services generally made by the physician or other person furnishing such services, as well as the prevailing charges in the locality for similar services. “(4) Each contract under this section shall be for a term of at least one year, and may be made automatically renewable from term to term in the absence of notice by either party of intention to terminate at the end of the current term; except that the Secretary may terminate any such contract at any time (after such reasonable notice and opportunity for hearing to the carrier involved as he may provide in regulations) if he finds that the carrier has failed substantially to carry out the contract or is carrying out the contract in a manner inconsistent with the efficient and effective administration of the insurance program established by this part. “(c) Any contract entered into with a carrier under this section shall provide for advances of funds to the carrier for the making of payments by it under this part, and shall provide for payment of the cost of administration of the carrier, as determined by the Secretary to be necessary and proper for carrying out the functions covered by the contract. “(d) Any contract with a carrier under this section may require such carrier or any of its officers or employees certifying payments or disbursing funds pursuant to the contract, or otherwise participating in carrying out the contract, to give surety bond to the United States in such amount as the Secretary may deem appropriate. “(e) (1) No individual designated pursuant to a contract under this section as a certifying officer shall, in the absence of gross negligence or intent to defraud the United States, be liable with respect to any payments certified by him under this section. “(2) No disbursing officer shall, in the absence of gross negligence or intent to defraud the United States, be liable with respect to any payment by him under this section if it was based upon a voucher signed by a certifying officer designated as provided in paragraph (1) of this subsection. “(3) No such carrier shall be liable to the United States for any payments referred to in paragraph (1) or (2). “(f) For purposes of this part, the term ‘carrier’ means— “Carrier.” “(1) with respect to providers of services and other persons, a voluntary association, corporation, partnership, or other non-governmental organization which is lawfully engaged in providing, paying for, or reimbursing the cost of, health services under group insurance policies or contracts, medical or hospital service agreements, membership or subscription contracts, or similar group arrangements, in consideration of premiums or other periodic charges payable to the carrier, including a health benefits plan duly sponsored or underwritten by an employee organization; and “(2) with respect to provider’s of services only, any agency or organization (not described in paragraph (1)) with which an Ante, p. 297. agreement is in effect under section 1816. “Sec. 1843. “state agreements for coverage of eligible individuals who are receiving money payments under public assistance programs (a) The Secretary shall, at the request of a State made before January 1, 1968, enter into an agreement with such State pursuant to which all eligible individuals in either of the coverage groups described in subsection (b)(as specified in the agreement) will be enrolled under the program established by this part. “(b) An agreement entered into with any State pursuant to subsection (a) may be applicable to either of the following coverage groups: “(1) individuals receiving money payments under the plan of such State approved under title I or title XVI; or “(2) individuals receiving money payments under all of the plans of such State approved under titles I, IV, X, XIV, and 42 USC 301, 601, 1201, 1351, 1381. XVI; except that there shall be excluded from any coverage group any 42 USC 401. individual who is entitled to monthly insurance benefits under title II or who is entitled to receive an annuity or pension under the Railroad Post, pp. 335, 340, 400. Retirement Act of 1937. “(c) For purposes of this section, an individual shall be treated as an eligible individual only if he is an eligible individual (within Ante, p. 304. the meaning of section 1836) on the date an agreement covering him is entered into under subsection (a) or he becomes an eligible individual (within the meaning of such section) at any time after such date and before January 1, 1968; and he shall be treated as receiving money payments described in subsection (b) if he receives such payments for the month in which the agreement is entered into or any month thereafter before January 1968. “(d) In the case of any individual enrolled pursuant to this section— “(1) the monthly premium to be paid by the State shall be determined under section 1839 (without any increase under subsection (c) thereof); “(2) his coverage period shall begin on whichever of the following is the latest: “(A) July 1, 1966; “(B) the first day of the third month following the month in which the State agreement, is entered into; “(C) the first day of the first month in which he is both an eligible individual and a member of a coverage group specified in the agreement under this section; or “(D) such date (not later than January 1, 1968) as may be specified in the agreement; and “(3) his coverage period attributable to the agreement with the State under this section shall end on the last day of whichever of the following first occurs: “(A) the month in which he is determined by the State agency to have become ineligible for money payments of a kind specified in the agreement, or “(B) the month preceding the first month for which lie becomes entitled to monthly benefits under title II or to an 42 USC 401. annuity or pension under the Railroad Retirement Act of 1937. Post, pp. 335, 340, 400. “(e) Any individual whose coverage period attributable to the State agreement is terminated pursuant to subsection (d)(3) shall be deemed for purposes of this part (including the continuation of his coverage period under this part) to have enrolled under section 1837 in the initial general enrollment period provided by section Ante, p. 304. 1837(c). “(f) With respect to eligible individuals receiving money payments under the plan of a State approved under title I, IV, X, XlV, 42 USC 301, 601, 1201, 1351, 1381. or XVI, if the agreement entered into under this section so provides, the term ‘carrier’ as defined in section 18–12 (f) also includes the State agency, specified in such agreement, which administers or supervises the administration of the plan of such State approved under title I, XVI, or XIX. The agreement shall also contain such provisions as will facilitate the financial transactions of the State and the carrier with respect to deductions, coinsurance, and otherwise, and as will lead to economy and efficiency of operation, with respect to individuals receiving money payments under plans of the State approved under titles I, IV, X, XIV, and XVI. “Sec. 1844. “appropriations to cover government contributions and contingency reserve (a) There are authorized to be appropriated from time to time, out of any moneys in the Treasury not otherwise appropriated, to the Federal Supplementary Medical Insurance Trust Fund, a Government. contribution equal to the aggregate premiums payable under this part. “(b) In order to assure prompt payment of benefits provided under this part and the administrative expenses thereunder during the early months of the program established by this part, and to provide a contingency reserve, there is also authorized to be appropriated, out of any moneys in the Treasury not otherwise appropriated, to remain available through the calendar year 1967 for repayable advances (without interest) to the Trust Fund, an amount equal to $18 multiplied by the number of individuals (as estimated by the Secretary) who could be covered in July 1966 by the insurance program established by this part if they had theretofore enrolled under this part. “Part C— Miscellaneous Provisions “Sec. 1861. “definitions of services, institutions, etc. For purposes of this title— “(a) “Spell of Illness The term ‘spell of illness’ with respect to any individual means a period of consecutive days— “(1) beginning with the first day (not included in a previous spell of illness)(A) on which such individual is furnished inpatient hospital services or extended care services, and (B) which occurs in a month for which he is entitled to benefits under part A, and Ante, p. 291. “(2) ending with the close of the first period of 60 consecutive days thereafter on each of which he is neither an inpatient of a hospital nor an inpatient of an extended care facility. “(b) “Inpatient Hospital Services The term ‘inpatient hospital services’ means the following items and services furnished to an inpatient of a hospital and (except as provided in paragraph (3)) by the hospital— “(1) bed and board; “(2) such nursing services and other related services, such use of hospital facilities, and such medical social services as are ordinarily furnished by the hospital for the care and treatment of inpatients, and such drugs, biologicals, supplies, appliances, and equipment, for use in the hospital, as are ordinarily furnished by such hospital for the care and treatment of inpatients; and “(3) such other diagnostic or therapeutic items or services, furnished by the hospital or by others under arrangements with them made by the hospital, as are ordinarily furnished to inpatients either by such hospital or by others under such arrangements; excluding, however— “(4) medical or surgical services provided by a physician, resident, or intern: and “(5) the services of a private-duty nurse or other private-duty attendant. Paragraph (4) shall not apply to services provided in the hospital by an intern or a resident-in-training under a teaching program approved by the Council on Medical Education of the American Medical Association or, in the case of an osteopathic hospital, approved by the Committee on Hospitals of the Bureau of Professional Education of the American Osteopathic Association, or, in the case of services in a hospital or osteopathic hospital by an intern or resident-in-training in the field of dentistry, approved by the Council on Dental Education of the American Dental Association. “(c) “Inpatient Psychiatric Hospital Services The term ‘inpatient psychiatric hospital services’ means inpatient hospital services furnished to an inpatient of a psychiatric hospital. “(d) “Inpatient Tuberculosis Hospital Services The term ‘inpatient tuberculosis hospital services’ means inpatient hospital services furnished to an inpatient of a tuberculosis hospital “(e) “Hospital The term ‘hospital’ (except for purposes of section 1814(d), subsection (a)(2) of this section, paragraph (7) of this subsection, and subsections (i) and (n) of this section) means an institution which— “(1) is primarily engaged in providing, by or under the supervision of physicians, to inpatients (A) diagnostic services and therapeutic services for medical diagnosis, treatment, and care of injured, disabled, or sick persons, or (B) rehabilitation services for the rehabilitation of injured, disabled, or sick persons; “(2) maintains clinical records on all patients; “(3) has bylaws in effect with respect to its staff of physicians; “(4) has a requirement that every patient must be under the care of a physician; “(5) provides 24-hour nursing service rendered or supervised by a registered professional nurse, and has a licensed practical nurse or registered professional nurse on duty at all times; “(6) has in effect a hospital utilization review plan which meets the requirements of subsection (k); “(7) in the case of an institution in any State in which State or applicable local law provides for the licensing of hospitals, (A) is licensed pursuant to such law or (B) is approved, by the agency of such State or locality responsible for licensing hospitals, as meeting the standards established for such licensing; and “(8) meets such other requirements as the Secretary finds necessary in the interest of the health and safety of individuals who are furnished services in the institution, except that such other requirements may not be higher than the comparable requirements prescribed for the accreditation of hospitals by the Joint Commission on Accreditation of Hospitals (subject to the second sentence of section 1863). Post, p. 326. For purposes of subsection (a)(2), such term includes any institution which meets the requirements of paragraph (1) of this subsection. For purposes of sections 1814(d)(including determination of whether Ante, p. 296. an individual received inpatient hospital services for purposes of such section and subsections (i) and (n) of this section, such term includes any institution which meets the requirements of paragraphs (1), (2), (3), (4), (5), and (7) of this subsection. Notwithstanding the preceding provisions of this subsection, such term shall not, except for purposes of subsection (a)(2), include any institution which is primarily for the care and treatment of mental diseases or tuberculosis unless it is a tuberculosis hospital (as defined in subsection (g)) or unless it is a psychiatric hospital (as defined in subsection (f)). The term ‘hospital’ also includes a Christian Science sanatorium operated, or listed and certified, by the First Church of Christ, Scientist, Boston, Massachusetts, but only with respect to items and services ordinarily furnished by such institution to inpatients, and payment may be made with respect to services provided by or in such an institution only to such extent and under such conditions, limitations, and requirements (in addition to or in lieu of the conditions, limitations, and requirements otherwise applicable) as may be provided in regulations. For provisions deeming certain requirements of this subsection to be met in the case of accredited institutions, see section 1865. “(f) “Psychiatric Hospital The term ‘psychiatric hospital’ means an institution which— “(1) is primarily engaged in providing, by or under the supervision of a physician, psychiatric services for the diagnosis and treatment of mentally ill persons; “(2) satisfies the requirements of paragraphs (3) through (8) of subsection (e); “(3) maintains clinical records on all patients and maintains such records as the Secretary finds to be necessary to determine the degree and intensity of the treatment provided to individuals entitled to hospital insurance benefits under part A; “(4) meets such staffing requirements as the Secretary finds necessary for the institution to carry out an active program of treatment for individuals who are furnished services in the institution; and “(5) is accredited by the Joint Commission on Accreditation of Hospitals. In the case of an institution which satisfies paragraphs (1) and (2) of the preceding sentence and which contains a distinct part which also satisfies paragraphs (3) and (4) of such sentence, such distinct part shall be considered to be a ‘psychiatric hospital’ if the institution is accredited by the Joint Commission on Accreditation of Hospitals or if such distinct part meets requirements equivalent to such accreditation requirements as determined by the Secretary. “(g) “Tuberculosis Hospital The term ‘tuberculosis hospital’ means an institution which— “(1) is primarily engaged in providing, by or under the supervision of a physician, medical services for the diagnosis and treatment of tuberculosis; “(2) satisfies the requirements of paragraphs (3) through (8) of subsection (e); “(3) maintains clinical records on all patients and maintains such records as the Secretary finds to be necessary to determine the degree and intensity of the treatment provided to individuals covered by the insurance program established by part A; “(4) meets such staffing requirements as the Secretary finds necessary for the institution to carry out an active program of treatment for individuals who are furnished services in the institution; and “(5) is accredited by the Joint Commission on Accreditation of Hospitals. In the case of an institution which satisfies paragraphs (1) and (2) of the preceding sentence and which contains a distinct part which also satisfies paragraphs (3) and (4) of such sentence, such distinct part, shall be considered to be a. ‘tuberculosis hospital’ if the institution is accredited by the Joint Commission on Accreditation of Hospitals or if such distinct part meets requirements equivalent to such accreditation requirements as determined by the Secretary. “(h) “Extended Care Services The term ‘extended care services’ means the following items and services furnished to an inpatient of an extended care facility and (except as provided in paragraphs (3) and (6)) by such extended care facility— “(1) nursing care provided by or under the supervision of a registered professional nurse; “(2) bed and board in connection with the furnishing of such nursing care; “(3) physical, occupational, or speech therapy furnished by the extended care facility or by others under arrangements with them made by the facility; “(4) medical social services; “(5) such drugs, biologicals, supplies, appliances, and equipment, furnished for use in the extended care facility, as are ordinarily furnished by such facility for the care and treatment of inpatients; “(6) medical services provided by an intern or resident-in-training or a hospital with which the facility has in effect a transfer agreement (meeting the requirements of subsection (1)), under a teaching program of such hospital approved as provided in the last sentence of subsection (b), and other diagnostic or therapeutic services provided by a hospital with which the facility has such an agreement in effect; and “(7) such other services necessary to the health of the patients as are generally provided by extended care facilities; excluding, however, any item or service if it. would not be included under subsection (b) if furnished to an inpatient of a hospital. “(i) “Post-Hospital Extended Care Services The term ‘post-hospital extended care services’ means extended care services furnished an individual after transfer from a hospital hi which he was an inpatient for not less than 3 consecutive days before his discharge from the hospital in connection with such transfer. For purposes of the preceding sentence, items and services shall be deemed to have been furnished to an individual after transfer from a hospital, and he shall be deemed to have been an inpatient in the hospital immediately before transfer therefrom, if he is admitted to the extended care facility within 14 days after discharge from such hospital; and an individual shall be deemed not to have been discharged from an extended care facility if, within 14 days after discharge therefrom, he is admitted to such facility or any other extended care facility. “(j) “Extended Care Facility The term ‘extended care facility’ means (except for purposes of subsection (a)(2)) an institution (or a distinct part of an institution) which has in effect a transfer agreement (meeting the requirements of subsection (1)) with one or more hospitals having agreements in effect under section 1866 and which— Post, p. 327. “(1) is primarily engaged in providing to inpatients (A) skilled nursing care and related services for patients who require medical or nursing care, or (B) rehabilitation services for the rehabilitation of injured, disabled, or sick persons; “(2) has policies, which are developed with the advice of (and with provision of review of such policies from time to time by) a group of professional personnel, including one or more physicians and one or more registered professional nurses, to govern the skilled nursing care and related medical or other services it provides; “(3) has a physician, a registered professional nurse, or a medical staff responsible for the execution of such policies; “(4) (A) has a requirement that the health care of every patient must be under the supervision of a physician, and (B) provides for having a physician available to furnish necessary medical care in case of emergency; “(5) maintains clinical records on all patients; “(6) provides 24-hour nursing service which is sufficient to meet nursing needs in accordance with the policies developed as provided in paragraph (2), and has at least one registered professional nurse employed full time; “(7) provides appropriate methods and procedures for the dispensing and administering of drugs and biologicals; “(8) has in effect a utilization review plan which meets the requirements of subsection (k); “(9) in the case of an institution in any State in which State or applicable local law provides for the licensing of institutions of this nature, (A) is licensed pursuant to such law, or (B) is approved, by the agency of such State or locality responsible for licensing institutions of this nature, as meeting the standards established for such licensing; and “(10) meets such other conditions relating to the health and safety of individuals who are furnished services in such institution or relating to the physical facilities thereof as the Secretary may find necessary (subject to the second sentence of section 1863); except that such term shall not (other than for purposes of subsection (a)(2)) include any institution which is primarily for the care and treatment of mental diseases or tuberculosis. For purposes of subsection (a)(2), such term includes any institution which meets the requirements of paragraph (1) of this subsection. The term ‘extended care facility’ also includes an institution described in paragraph (1) of subsection (y), to the extent and subject to the limitations provided in such subsection. “(k) “Utilization Review A utilization review plan of a hospital or extended care facility shall be considered sufficient if it is applicable to services furnished by the institution to individuals entitled to insurance benefits under this title and if it provides— “(1) for the review, on a sample or other basis, of admissions to the institution, the duration of stays therein, and the professional services (including drugs and biologicals) furnished, (A) with respect to the medical necessity of the services, and (B) for the purpose of promoting the most efficient use of available health facilities and services; “(2) for such review to be made by either (A) a staff committee of the institution composed of two or more physicians, with or without participation of other professional personnel, or (B) a group outside the institution which is similarly composed and (i) which is established by the local medical society and some or all of the hospitals and extended care facilities in the locality, or (ii) if (and for as long as) there has not been established such a group which serves such institution, which is established in such other manner as may be approved by the Secretary; “(3) for such review, in each case of inpatient hospital services or extended care services furnished to such an individual during a continuous period of extended duration, as of such days of such period (which may differ for different classes of cases) as may be specified in regulations, with such review to be made as promptly as possible, after each day so specified, and in no event later than one week following such day; and “(4) for prompt notification to the institution, the individual, and his attending physician of any finding (made after opportunity for consultation to such attending physician) by the physician members of such committee or group that any further stay in the institution is not medically necessary. The review committee must be composed as provided in clause (B) of paragraph (2) rather than as provided in clause (A) of such paragraph in the case of any hospital or extended care facility where, because of the small size of the institution, or (in the case of an extended care facility) because of lack of an organized medical staff, or for such other reason or reasons as may be included in regulations, it is impracticable for the institution to nave a properly functioning staff committee for the purposes of this subsection. “(l) “Agreements for Transfer Between Extended Care Facilities and Hospitals A hospital and an extended care facility shall be considered to have a transfer agreement in effect if, by reason of a written agreement between them or (in case, the two institutions are under common control) by reason of a written undertaking by the person or body which controls them, there is reasonable assurance that— “(1) transfer of patients will be effected between the hospital and the extended care facility whenever such transfer is medically appropriate as determined by the attending physician; and “(2) there will be interchange of medical and other information necessary or useful in the care and treatment of individuals transferred between the institutions, or in determining whether such individuals can be adequately cared for otherwise than in either of such institutions. Any extended care facility which does not have such an agreement in effect, but which is found by a State agency (of the State in which such facility is situated) with which an agreement under section 1864 Post, p. 326. is in effect (or, in the case of a State in which no such agency has an agreement under section 1864, by the Secretary) to have attempted in good faith to enter into such an agreement with a hospital sufficiently close to the facility to make feasible the transfer between them of patients and the information referred to in paragraph (2), shall be considered to have such an agreement in effect if and for so long as such agency (or the Secretary, as the case may be) finds that to do so is in the public interest and essential to assuring extended care services for persons in the community who are eligible for payments with respect to such services under this title. “(m) “Home Health Services The term ‘home health services’ means the following items and services furnished to an individual, who is under the care of a physician, by a home health agency or by others under arrangements with them made by such agency, under a plan (for furnishing such items and services to such individual) established and periodically reviewed by a physician, which items and services are, except as provided in paragraph (7), provided on a visiting basis in a place of residence used as such individual’s home— “(1) part-time or intermittent nursing care provided by or under the supervision of a registered professional nurse; “(2) physical, occupational, or speech therapy; “(3) medical social services under the direction of a physician; “(4) to the extent permitted in regulations, part-time or intermittent services of a home health aide; “(5) medical supplies (other than drugs and biologicals), and the use of medical appliances, while under such a plan; “(6) in the ease of a home health agency which is affiliated or under common control with a hospital, medical services provided by an intern or resident-in-training of such hospital, under a teaching program of such hospital approved as provided in the last sentence or subsection (b); and “(7) any of the foregoing items and services which are provided on an outpatient basis, under arrangements made by the home health agency, at a hospital or extended care facility, or at a rehabilitation center which meets such standards as may be prescribed in regulations, and— “(A) the furnishing of which involves the use of equipment of such a nature that the items and services cannot readily be made available to the individual in such place of residence, or “(B) which are furnished at such facility while he is there to receive any such item or service described in clause (A), but not including transportation of the individual in connection with any such item or service; excluding, however, any item or service if it would not be included under subsection (b) if furnished to an inpatient of a hospital. “(n) “Post-Hospital Home Health Services The term ‘post-hospital home health services’ means home health services furnished an individual within one year after his most recent discharge from a hospital of which he was an inpatient for not less than 3 consecutive days or (if later) within one year after his most recent discharge from an extended care facility of which he was an inpatient, entitled to payment under part A for post-hospital extended care services, but only if the plan covering the home health services (as described in subsection (m)) is established within 14 days after his discharge from such hospital or extended care facility. “(o) “Home Health Agency The term ‘home health agency’ means a public agency or private organization, or a subdivision of such an agency or organization. which— “(1) is primarily engaged in providing skilled nursing services and other therapeutic services; “(2) has policies, established by a group of professional personnel (associated with the agency or organization), including one or more physicians and one or more registered professional nurses, to govern the services (referred to in paragraph (1)) which it provides, and provides for supervision of such services by a physician or registered professional nurse; “(3) maintains clinical records on all patients; “(4) in the case of an agency or organization in any State in which State or applicable local law provides for the licensing of agencies or organizations of this nature, (A) is licensed pursuant to such law, or (B) is approved, by the agency of such State or locality responsible for licensing agencies or organizations of this nature, as meeting the standards established for such licensing; and “(5) meets such other conditions of participation as the Secretary may find necessary in the interest of the health and safety of individuals who are furnished services by such agency or organization; except that such term shall not include a private organization which is not a nonprofit organization exempt from Federal income taxation 68A Stat. 163. 26 USC 501. under section 501 of the Internal Revenue Code of 1954 (or a subdivision of such organization) unless it is licensed pursuant to State law and it meets such additional standards and requirements as may be prescribed in regulations; and except that for purposes of part A such term shall not include any agency or organization which is primarily for the care and treatment or mental diseases. “(p) “Outpatient Hospital Diagnostic Services The term ‘outpatient hospital diagnostic services’ means diagnostic services— “(1) which are furnished to an individual as an outpatient by a hospital or by others under arrangements with them made by a hospital; and “(2) which are ordinarily furnished by such hospital (or by others under such arrangements) to its outpatients for the purpose of diagnostic study; excluding, however— “(3) any item or service if it would not be included under subsection (b) if furnished to an inpatient of a hospital; and “(4) any services furnished under such arrangements unless furnished m the hospital or in other facilities operated by or under the supervision of the hospital or its organized medical staff. “(q) “Physicians’ Services The term ‘physicians’ services’ means professional services performed by physicians, including surgery, consultation, anti home, office, and institutional calls (but not. including services described in the last sentence of subsection (b)). “(r) “Physician The term ‘physician’, when used in connection with the performance of any function or action, means (1) a doctor of medicine or osteopathy legally authorized to practice medicine and surgery by the State in which he performs such function or action (including a physician within the meaning of section 1101(a)(7)), or (2) a doctor of 64 Stat. 559. 42 USC 1301. dentistry or of dental or oral surgery who is legally authorized to practice dentistry by the State in which he performs such function but only with respect to (A) surgery related to the jaw or any structure contiguous to the jaw or (B) the reduction of any fracture of the jaw or any facial bone, “(s) “Medical and Other Health Services The term ‘medical and other health services’ means any of the following items pr services (unless they would otherwise constitute inpatient hospital services, extended care services, or home health services) : “(1) physicians’ services; “(2) services and supplies (including drugs and biologicals which cannot, as determined in accordance with regulations, be self-administered) furnished as an incident, to a physician’s professional service, of kinds which are commonly furnished in physicians’ offices and are commonly either rendered without charge or included in the physicians’ bills, and hospital services (including drugs and biologicals which cannot, as determined in accordance with regulations, be self-administered) incident to physicians’ services rendered to outpatients; “(3) diagnostic X-ray tests, diagnostic laboratory tests, and other diagnostic tests; “(4) X-ray, radium, and radioactive isotope therapy, including materials and services of technicians; “(5) surgical dressings, and splints, casts, and other devices used for reduction of fractures and dislocations; “(6) rental of durable medical equipment, including iron lungs, oxygen tents, hospital beds, and wheelchairs used in the patient’s home (including an institution used as his home) : “(7) ambulance service where the use of other methods of transportation is contraindicated by the individual’s condition, but only to the extent provided in regulations; “(8) prosthetic devices (other than dental) which replace all or part of an internal body organ, including replacement of such devices; and “(9) leg, arm, back, and neck braces, and artificial legs, arms, and eyes, including replacements if required because of a change in the patient’s physical condition. No diagnostic tests performed in any laboratory which is independent of a physician’s office or a hospital shall lie included within paragraph (3) unless such laboratory— “(10) if situated in any State in which State or applicable local law provides for licensing of establishments of this nature, (A) is licensed pursuant to such law, or (B) is approved, by the agency of such State or locality responsible for licensing establishments of this nature, as meeting the standards established for such licensing; and “(11) meets such other conditions relating to the health and safety of individuals with respect to whom such tests are performed as the Secretary may find necessary. “(t) “Drugs and Biologicals The term ‘drugs’ and the term ‘biologicals’, except for purposes of subsection (m)(5) of this section, include only such drugs and biologicals, respectively, as are included (or approved for inclusion) in the United States Pharmacopoeia, the National Formulary, or the United States Homeopathic Pharmacopoeia, or in New Drugs or Accepted Dental Remedies (except for any drugs and biologicals unfavorably evaluated therein), or as are approved by the pharmacy and drug therapeutics committee (or equivalent committee) of the medical staff of the hospital furnishing such drugs and biologicals for use in such hospital. “(u) “Provider of Services The term ‘provider of services’ means a hospital, extended care facility, or home health agency. “(v) “Reasonable Cost (1) The reasonable cost of any services shall be determined in accordance with regulations establishing the method or methods to be used, and the items to be included, in determining such costs for various types or classes of institutions, agencies, and services; except that in any case to which paragraph (2) or (3) applies, the amount of the payment determined under such paragraph with respect to the services involved shall be considered the reasonable cost of such services. In prescribing the regulations referred to in the preceding sentence, the Secretary shall consider, among other things, the principles generally applied by national organizations or established prepayment organizations (which have developed such principles) in computing the amount of payment, to be made by persons other than the recipients of services, to providers of services on account of services furnished to such recipients by such providers. Such regulations may provide for determination of the costs of services on a per diem, per unit, per capita, or other basis, may provide for using different methods in different circumstances, may provide for the use of estimates of costs of particular items or services, and may provide for the use of charges or a percentage of charges where this method reasonably reflects the costs. Such regulations shall (A) take into account both direct and indirect costs of providers of services in order that, under the methods of determining costs, the costs with respect to individuals covered by the insurance programs established by this title will not be borne by individuals not so covered, and the costs with respect to individuals not so covered will not be borne by such insurance programs, and (B) provide for the making of suitable retroactive corrective adjustments where, for a provider of services for any fiscal period, the aggregate reimbursement produced by the methods of determining costs proves to be either inadequate or excessive. “(2) (A) If the bed and board furnished as part of inpatient hospital services (including inpatient tuberculosis hospital services and inpatient psychiatric hospital services) or post-hospital extended care services is in accommodations more expensive than semiprivate accommodations, the amount taken into account for purposes of payment under this title with respect to such services may not exceed an amount equal to the reasonable cost of such services if furnished in such semiprivate accommodations unless the more expensive accommodations were required for medical reasons. “(B) Where a provider of services which has an agreement in effect under this title furnishes to an individual items or services which are in excess of or more expensive than the items or services with respect to which payment may be made under part A or part B, as the case may Ante, pp. 291, 301. be, the Secretary shall take into account for purposes of payment to such provider of services only the equivalent of the reasonable cost of the items or services with respect to which such payment may be made. “(3) If the bed and board furnished as part of inpatient hospital services (including inpatient tuberculosis hospital services and inpatient psychiatric hospital services) or post-hospital extended care services is in accommodations other than, but not more expensive than, semiprivate accommodations and the use of such other accommodations rather than semiprivate accommodations was neither at the request of the patient nor for a reason which the Secretary determines is consistent with the purposes of this title, the amount of the payment with respect to such bed and board under part A shall be the reasonable cost of such bed and board furnished in semiprivate accommodations (determined pursuant to paragraph (1)) minus the difference between the charge customarily made by the hospital or extended care facility for bed and board in semiprivate accommodations and the charge customarily made by it for bed and board in the accommodations furnished. “(4) For purposes of this subsection, the term ‘semiprivate accommodations’ “Semi-private accommodations.” means two-bed, three-bed, or four-bed accommodations. “(w) “Arrangements for Certain Services The term ‘arrangements’ is limited to arrangements under which receipt of payment by the hospital, extended care facility, or home health agency (whether in its own right or as agent), with respect to services for which an individual is entitled to have payment made under this title, discharges the liability of such individual or any other person to pay for the services. “(x) “State and United States The terms ‘State’ and ‘United States’ have the meaning given to them by subsections (h) and (i), respectively, of section 210. “(y) “Post-Hospital Extended Care in Christian Science Extended Care Facilities (1) The term ‘extended care facility’ also includes a Christian Science sanatorium operated, or listed and certified, by the First Church of Christ, Scientist, Boston, Massachusetts, but only (except for purposes of subsection (a)(2)) with respect to items and services ordinarily furnished by such an institution to inpatients, and payment may be made with respect to services provided by or in such an institution only to such extent and under such conditions, limitations, and requirements (in addition to or in lieu of the conditions, limitations, and requirements otherwise applicable) as may be provided in regulations. “(2) Notwithstanding any other provision of this title., payment under part A may not be made for services furnished an individual in an extended care facility to which paragraph (1) applies unless such individual elects, in accordance with regulations, for a spell of illness to have such services treated as post-hospital extended care services for purposes of such part; and payment under part-A may not be made for post-hospital extended care services— “(A) furnished an individual during such spell of illness in an extended care facility to which paragraph (1) applies after— “(i) such services have been furnished to him in such a facility for 30 days during such spell, or “(ii) such services have been furnished to him during such spell in an extended care facility to which such paragraph does not apply; or “(B) furnished an individual during such spell of illness in an extended care facility to which paragraph (1) does not apply after such services have been furnished to him during such spell in an extended care facility to which such paragraph applies. “(3) The amount payable under part A for post-hospital extended care services furnished an individual during any spell of illness in an extended care facility to which paragraph (1) applies shall be reduced by a coinsurance amount equal to one-eighth of the inpatient hospital deductible for each day before the 31st day on which he is furnished such services in such a facility during such spell (and the reduction under this paragraph shall be in lieu of any reduction under section Ante, p. 292. 1813(a)(4)). “(4) For purposes of subsection (i), the determination of whether services furnished by or in an institution described in paragraph (1) constitute post-hospital extended care services shall be made in accordance with and subject to such conditions, limitations, and requirements as may be provided in regulations. “Sec. 1862. “exclusions from coverage (a) Notwithstanding any other provision of this title, no payment may be made under part A or part B for any expenses Ante, pp, 291, 301. incurred for items or services— “(1) which are not reasonable and necessary for the diagnosis or treatment of illness or injury or to improve the functioning of a malformed body member; “(2) for which the individual furnished such items or services has no legal obligation to pay, and which no other person (by reason of such individual’s membership in a prepayment plan or otherwise) has a legal obligation to provide or pay for; “(3) which are paid for directly or indirectly by a governmental entity (other than under this Act and other than under a health benefits or insurance plan established for employees of such an entity), except in such cases as the Secretary may specify; “(4) which are not provided within the United States (except for emergency inpatient hospital services furnished outside the United States under the conditions described in section 1814 (f)); Ante, p. 294. “(5) which are required as a result of war, or of an act of w, occurring after the effective date of such individual’s current coverage under such part; “(6) which constitute personal comfort items; “(7) where such expenses are for routine physical checkups, eyeglasses or eye examinations for the purpose of prescribing, fitting, or changing eyeglasses, hearing aids or examinations therefor, or immunizations; “(8) where such expenses are for orthopedic shoes or other supportive devices for the feet; “(9) where such expenses are for custodial care; “(10) where such expenses are for cosmetic surgery or are incurred in connection therewith, except as required for the prompt repair of accidental injury or for improvement of the functioning of a malformed body member; “(11) where such expenses constitute charges imposed by immediate relatives of such individual or members of his household; or “(12) where such expenses are for services in connection with the care, treatment, filling, removal, or replacement of teeth or structures directly supporting teeth. “(b) Payment under this title may not be made with respect to any item or service to the extent that payment has been made, or can reasonably be expected to be made (as determined in accordance with regulations), with respect to such item or service, under a workmen’s compensation law or plan of the United States or a State. Any payment under this title with respect to any item or service shall be conditioned on reimbursement to the appropriate Trust Fund established by this title when notice or other information is received that payment for such item or service has been made under such a law or plan. “Sec. 1863. “consultation with state agencies and other organizations to develop conditions of participation for providers of services In carrying out his functions, relating to determination of conditions of participation by providers of services, under subsections (e)(8), (f)(4), (g)(4), (j)(10), and (o)(5) of section 1861, the Secretary shall consult with the Health Insurance Benefits Advisory Council established by section 1867, appropriate State agencies, and recognized national listing or accrediting bodies, and may consult with appropriate local agencies. Such conditions prescribed under any of such subsections may be varied for different areas or different classes of institutions or agencies and may, at the request-of a State, provide higher requirements for such State than for other States; except that, in the case of any State or political subdivision of a State which imposes higher requirements on institutions as a condition to the purchase of services (or of certain specified services) in such institutions 42 USC 301, Post, p. 343. under a State plan approved under title I, XVI, or XIX, the Secretary shall impose like requirements as a condition to the payment for services (or for the services specified by the State or subdivision) in such institutions in such State or subdivision. “Sec. 1864. “use of state agencies to determine compliance by providers of services with conditions of participation (a) The Secretary shall make an agreement with any State which is able and willing to do so under which the services of the State health agency or other appropriate State agency (or the appropriate local agencies) will be utilized by him for the purpose of determining whether an institution therein is a hospital or extended care facility, or whether an agency therein is a home health agency, or whether a laboratory meets the requirements of paragraphs (10) Ante, p. 321. and (11) of section 1861 (s). To the extent that the Secretary finds it appropriate, an institution or agency which such a State (or local) agency certifies is a hospital, extended care facility, or home health agency (as those terms are defined in section 1861) may be treated as such by the Secretary. The Secretary may also, pursuant to agreement, utilize the services of State health agencies and other appropriate State agencies (and the appropriate local agencies) to do any one or more of the following: (1) to provide consultative services to institutions or agencies to assist them (A) to establish and maintain fiscal records necessary for purposes of this title, or otherwise to qualify as hospitals, extended care facilities, or home health agencies, or (B) to provide information which may be necessary to permit determination under this title as to whether payments are due and the amounts thereof, and (2) to provide consultative services to institutions, agencies, or organizations to assist in the establishment of utilization review procedures meeting the requirements of section 1861 (k) and in evaluating their effectiveness. “(b) The Secretary shall pay any such Stale, in advance or by way of reimbursement, as may be provided in the agreement with it (and may make adjustments in such payments on account-of overpayments or underpayments previously made), for the reasonable cost of performing the functions specified in subsection (a), and for the Federal Ante, p. 299. Hospital Insurance Trust Fund’s fair share of the costs attributable to the planning and other efforts directed toward coordination of activities in carrying out its agreement and other activities related to the provision of services similar to those for which payment may be made under part A, or related to the facilities and personnel required for the provision of such services, or related to improving the quality of such services. “Sec. 1865, “effect of accreditation Except as provided in the second sentence of section 1863, an institution shall be deemed to meet the requirements of the numbered paragraphs of section 1861(e)(except paragraph (6) thereof) if such institution is accredited as a hospital by the Joint Commission on Accreditation of Hospitals. If such Commission, as a condition for accreditation of a hospital, requires a utilization review plan or imposes another requirement which serves substantially the same purpose, the Secretary is authorized to find that all institutions so accredited by the Commission comply also with section 1861 (e)(6), In addition, if the Secretary finds that accreditation of an institution or agency by the American Osteopathic Association or any other national accreditation body provides reasonable assurance that, any or all of the conditions of section 1861 (e), (]), or (o), as the case may be, are met, he may, to the extent he deems it appropriate, treat such institution or agency as meeting the condition or conditions with respect to which he made such finding. “Sec. 1866. “agreements with providers of services (a) (1) Any provider of services shall be qualified to participate under this title and shall be eligible for payments under this title if it files with the Secretary an agreement— “(A) not to charge, except as provided in paragraph (2), any individual or any other person for items or services for which such individual is entitled to have payment made under this title (or for which he would be so entitled if such provider of services had complied with the procedural and other requirements under or pursuant to this title or for which such provider is paid pursuant to the provisions of section 1814(e)), and Ante, p. 296. “(B) to make adequate provision for return (or other disposition, in accordance with regulations) of any moneys incorrectly collected from such individual or other person. “(2) (A) A provider of services may charge such individual or other person (i) the amount of any deduction or coinsurance amount imposed pursuant to section 1813 (a)(1), (a)(2), or (a)(4), section 1833 (b),or section 1861 (y)(3) with respect to such items and services (not in excess of the amount customarily charged for such items and services by such provider), and (ii) an amount equal to 20 per centum of the reasonable charges for such items and services (not in excess of 20 per centum of the amount customarily charged for such items and services by such provider) for which payment is made under part B or, in the case of outpatient hospital diagnostic services, for which payment is made under part A. In the case of items and services described in section 1833(c), clause (ii) of the preceding sentence shall be applied by substituting for 20 percent the proportion which is appropriate under such section. “(B) Where a provider of services has furnished, at the request of such individual, items or services which are in excess of or more expensive than the items or services with respect to which payment may be made under this title, such provider of services may also charge such individual or other person for such more expensive items or services to the extent that the amount customarily charged by it for the items or services furnished at such request exceeds the amount customarily charged by it for the items or services with respect to which payment may be made under this title. “(C) A provider of services may also charge any such individual for any whole blood furnished him with respect to which a deductible is imposed under section 1813(a)(3), except that (i) any excess of such charge over the cost to such provider for the blood shall be deducted from any payment to such provider under this title, (ii) no such charge may be imposed for the cost of administration of such blood, and (iii) such charge may not be made to the extent such blood has been replaced on behalf of such individual or arrangements have been made for its replacement on his behalf. “(b) An agreement with the Secretary under this section may be terminated— “(1) by the provider of services at such time and upon such notice to the Secretary and the public as may be provided in regulations, except that notice of more than 6 months shall not be required, or “(2) by the Secretary at such time and upon such reasonable notice to the provider of services and the public as may be specified in regulations, but only after the Secretary has determined (A) that such provider of services is not complying substantially with the provisions of such agreement, or with the provisions of this title and regulations thereunder, or (B) that such provider of services no longer substantially meets the applicable provisions of section 1861, or (C) that such provider of services has failed to provide such information as the Secretary finds necessary to determine whether payments are or were due under this title and the amounts thereof, or has refused to permit such examination of its fiscal and other records by or on behalf of the Secretary as may be necessary to verify such information. Any termination shall be applicable— “(3) in the case of inpatient hospital services (including inpatient tuberculosis hospital services and inpatient psychiatric hospital services) or post-hospital extended care services, with respect to such services furnished to any individual who is admitted to the hospital or extended care facility furnishing such services on or after the effective date of such termination, “(4) (A) with respect to home health services furnished to an individual under a plan therefor established on or after the effective date of such termination, or (B) if a plan is established before such effective date, with respect to such services furnished to such individual after the calendar year in which such termination is effective, and “(5) with respect, to any other items and services furnished on or after the effective date of such termination. “(c) Where an agreement, filed under this title by a provider of services has been terminated by the Secretary, such provider may not file another agreement under this title unless the Secretary finds that the reason for the termination has been removed and that there is reasonable assurance that it will not recur. “(d) If the Secretary finds that there is a substantial failure to make timely review in accordance with section 1861(k) of long-stay cases in a hospital or extended care facility, he may, in lieu of terminating his agreement with such hospital or facility, decide that, with respect to any individual admitted to such hospital or facility after a subsequent date specified by him, no payment shall be made under this title for inpatient hospital services (including inpatient tuberculosis hospital services and inpatient psychiatric hospital services) after the 20th day of a continuous period of such services or for post-hospital extended care services after such day of a continuous period of such care as is prescribed in or pursuant to regulations, as the case may be. Such decision may lie made effective only after such notice to the hospital, or (in the case of an extended care facility) to the facility and the hospital or hospitals with which it has a transfer agreement, and to the public, as may be prescribed by regulations, and its effectiveness shall terminate when the Secretary finds that the reason therefor has been removed and that there is reasonable assurance that it will not recur. The Secretary shall not make any such decision except after reasonable notice and opportunity for hearing to the institution or agency affected thereby. “Sec. 1867. “health insurance benefits advisory council For the purpose of advising the Secretary on matters of general policy in the administration of this title and in the formulation of regulations under this title, there is hereby created a Health Insurance Benefits Advisory Council which shall consist, of 16 persons, not otherwise in the employ of the United States, appointed by the Secretary without, regard to the civil service laws. The Secretary shall from time to time appoint one of the members to serve as Chairman. The members shall include persons who are outstanding in fields related to hospital, medical, and other health activities, and at least one person who is representative of the general public. Each member shall hold office for a term of 4 years, except that any member appointed to fill a vacancy occurring prior to the expiration of the term for which his predecessor was appointed shall be appointed for the remainder of such term, and except that the terms of office of the members first, taking office shall expire, as designated by the Secretary at. the time of appointment, four at the end of the first year, four at the end of the second year, four at the end of the third year, and four at the end of the fourth year after the date of appointment. A member shall not be eligible to serve continuously for more than 2 terms. The Secretary may, at the request of the Council or otherwise, appoint such special advisory professional or technical committees as may be useful in carrying out this title. Members of the Advisory Council and members of any such advisory or technical committee, while attending meetings or conferences thereof or otherwise serving on business of the Advisory Council or of such committee, shall be entitled to receive compensation at rates fixed by the Secretary, but not exceeding $100 per day, including travel time, and while so serving away from their homes or regular places of business they may be allowed travel expenses, including per diem in lieu of subsistence, as authorized by section 5 of the Administrative Expenses Act of 1946 (5 U.S.C. 73b–2) for persons in the 60 Stat. 808; 75 Stat. 339, 340. Government service employed intermittently. The Advisory Council shall meet as frequently as the Secretary deems necessary. Upon request of 4 or more members, it shall be the duty of the Secretary to call a meeting of the Advisory’ Council. “Sec. 1868. “national medical review committee (a) There is hereby created a National Medical Review Committee (hereinafter in this section referred to as the ‘Committee’) which shall consist of nine persons, not otherwise in the employ of the United States, appointed by the Secretary without regard to the civil service laws. The Secretary shall from time to time appoint one of the members to serve as chairman. The members shall be selected from among individuals who are representative of organizations and associations of professional personnel in the field of medicine and other individuals who are outstanding in the field of medicine or in related fields; except that at least one member shall be representative of the general public, and at least a majority of the members shall be physicians. Each member shall hold office for a term of three years, except that any member appointed to fill a vacancy occurring prior to the expiration of the term for which his predecessor was appointed shall be appointed for the remainder of such term, and except that the terms of office of the members first taking office shall expire, as designated by the Secretary at the time of appointment, three at the end of the first year, three at the end of the second year, and three at the end of the third year after the date of appointment. A member shall not be eligible to serve continuously for more than two terms. “(b) Members of the Committee, while attending meetings or conferences thereof or otherwise serving on business of the Committee, shall be entitled to receive compensation at rates fixed by the Secretary, but not exceeding $100 per day, including travel time, and while so serving away from their homes or regular places of business they may be allowed travel expenses, including per diem in lieu of subsistence, as authorized by section 5 of the Administrative Expenses Act 60 Stat. 808; 75 Stat. 339, 340. of 1946 (5 U.S.C. 73b–2) for persons in the Government service employed intermittently. “(c) It shall be the function of the Committee to study the utilization of hospital and other medical care and services for which payment may be made under this title with a view to recommending any changes which may seem desirable in the way in which such care and services are utilized or in the administration of the programs established by this title, or in the provisions of this title. The Committee Report to Congress. shall make an annual report to the Secretary of the results of its study, including any recommendations it may have with respect thereto, and such report shall be transmitted promptly by the Secretary to the Congress. “(d) The Committee is authorized to engage such technical assistance as may be required to carry out its functions, and the Secretary shall, in addition, make available to the Committee such secretarial, clerical, and other assistance and such pertinent data obtained and prepared by the Department of Health, Education, and Welfare as the Committee may require to carry out its functions. “Sec. 1869. “determinations; appeals (a) The determination of whether an individual is entitled to benefits under part. A or part B, and the determination of the amount of benefits under part A, shall be made by the Secretary in accordance with regulations prescribed by him. “(b) Any individual dissatisfied with any determination under subsection (a) as to entitlement under part A or part B, or as to amount of benefits under part A where the matter in controversy is $100 or more, shall be entitled to a hearing thereon by the Secretary 42 USC 405. to the same extent as is provided in section 205(b), and, in the case of a determination as to entitlement or as to amount of benefits where the amount in controversy is $1,000 or more, to judicial review of the Secretary’s final decision after such hearing as is provided in section 205(g). “(c) Any institution or agency dissatisfied with any determination by the Secretary that it is not a provider of services, or with any determination described in section 1866(b)(2), shall be entitled to a hearing thereon by the Secretary (after reasonable notice and opportunity for hearing) to the same extent as is provided in section 205(b), and to judicial review of the Secretary’s final decision after such hearing as is provided in section 205(g). “Sec. 1870. “overpayments on behalf of individuals (a) Any payment under this title to any provider of services or other person with respect to any items or services furnished any individual shall be regarded as a payment to such individual. “(b) Where— “(1) more than the correct amount is paid under this title to a provider of services or other person for items or services furnished an individual end the Secretary determines that, within such period as he may specify, the excess over the correct amount cannot be recouped from such provider of services or other person, or “(2) any payment has been made under section 1814(e) to a Ante, p. 294. provider of services or other person for items or services furnished on individual, proper adjustments shall be made, under regulations prescribed (after consultation with the Railroad Retirement Board) by the Secretary, by decreasing subsequent payments— “(3) to which such individual is entitled under title II of this Act or under the Railroad Retirement Act of 1937, as the case 42 USC 401. Post, pp. 335, 340, 400. may be, or “(4) if such individual dies before such adjustment has been completed, to which any other individual is entitled under title II of this Act or under the Railroad Retirement Act of 1937, as the case may be, with respect to the wages and self-employment income or the compensation constituting the basis of the benefits of such deceased individual under title II of such Act. As soon as practicable after any adjustment under paragraph (3) or (4) is determined to be necessary, the Secretary, for purposes of this section, section 1817(g), and section 1841(f), shall certify (to the Railroad Retirement Board if the adjustment, is to be made by decreasing subsequent payments under the Railroad Retirement Act of 1937) the amount of the overpayment as to which the adjustment is to be made. “(c) There shall be no adjustment as provided in subsection (b)(nor shall there be recovery) in any case where the incorrect payment has been made (including payments under section 1814(e)) with respect to an individual who is without fault and where such adjustment (or recovery) would defeat the purposes of title II or would be against equity and good conscience. “(d) No certifying or disbursing officer shall be held liable for any amount certified or paid by him to any provider of services or other person where the adjustment or recovery of such amount is waived under subsection (c) or where adjustment under subsection (b) is not completed prior to the death of all persons against whose benefits such adjustment is authorized. “Sec. 1871. “regulations The Secretary shall prescribe such regulations as may be necessary to carry out the administration of the insurance programs under this title. When used in this title, the term ‘regulations’ means, unless the context otherwise requires, regulations prescribed by the Secretary. “Sec. 1872. “application of certain provisions of title ii The provisions of sections 206, 208, and 216(j), and of subsections (a), (d), (e), (f), (h), (i), (j), (k), and (l) of section 205, shall also apply with respect to this title to the same extent as they are applicable with respect to title II. “Sec. 1873. “designation of organization or publication by name Designation in this title, by name, of any nongovernmental organization or publication shall not be affected by change of name or such organization or publication, and shall apply to any successor organization or publication which the Secretary finds serves the purpose for which such designation is made. “Sec. 1874. “administration (a) Except as otherwise provided in this title, the insurance programs established by this title shall be administered by the Secretary. The Secretary may perform any of his functions under this title directly, or by contract providing for payment in .advance or by way of reimbursement, and in such installments, as the Secretary may deem necessary. “(b) The Secretary may contract with any person, agency, or institution to secure on a reimbursable basis such special data, actuarial information, and other information as may be necessary in the carrying out of his functions under this title. “Sec. 1875. “studies and recommendations (a) The Secretary shall carry on studies and develop recommendations to be submitted from time to time to the Congress relating to health care of the aged, including studies and recommendations concerning (1) the adequacy of existing personnel and facilities for health care for purposes of the programs under parts A and B; Ante, pp. 291, 301. (2) methods for encouraging the further development of efficient and economical forms of health care which are a constructive alternative to inpatient hospital care; and (3) the effects of the deductibles and coinsurance provisions upon beneficiaries, persons who provide health services, and the financing, of the program. “(b) The Secretary shall make a continuing study of the operation and administration of the insurance programs under parts A and B, and shall transmit to the Congress annually a report concerning the operation of such programs.”

2. 1968

   Social Security Amendments of 1967

   Pub. L. 90–248 § 137(b) · 81 Stat. 821

   1. Amended · 42 U.S.C. § 1395e(a)(1)

      Pub. L. 90–248, § 137(b), designated existing provisions as subpar. (A)

   2. Added · 42 U.S.C. § 1395e(a)(1)

      Pub. L. 90–248, § 137(b), added subpar. (B) and the exception provision that the reduction for any day shall not exceed the charges for that day

   Source evidence

   Code amendment note
   Subsec. (a)(1). Pub. L. 90–248, § 137(b), designated existing provisions as subpar. (A) and added subpar. (B) and the exception provision that the reduction for any day shall not exceed the charges for that day.

   Enacted provision · exact public law section
   (b) The second sentence of section 1813(a)(1) of such Act is amended to read as follows: “Such amount shall be further reduced by a coinsurance amount equal to— “(A) one-fourth of the inpatient hospital deductible for each day (before the 91st day) on which such individual is furnished such services during such spell of illness after such services have been furnished to him for 60 days during such spell; and “(B) one-half of the inpatient hospital deductible for each day (before the day following the last day for which such individual is entitled under section 1812(a)(1) to have payment made on his behalf for inpatient hospital services during such spell of illness) on which such individual is furnished such services during such spell of illness after such services have been furnished to him for 90 days during such spell; except that the reduction under this sentence for any day shall not exceed the charges imposed for that day with respect to such individual for such services (and for this purpose, 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).”

3. 1968

   Social Security Amendments of 1967

   Pub. L. 90–248 § 135(a) · 81 Stat. 821

   Changed · 42 U.S.C. § 1395e(a)(2)

   Pub. L. 90–248, § 135(a), made the three pint deductible applicable also to equivalent quantities of packed red blood cells, as defined by the Secretary under regulations

   Source evidence

   Code amendment note
   Subsec. (a)(2). Pub. L. 90–248, § 135(a), made the three pint deductible applicable also to equivalent quantities of packed red blood cells, as defined by the Secretary under regulations.

   Enacted provision · exact public law section
   (a) (1) Section 1813(a)(2) of the Social Security Act (as redesignated by section 129(c)(3) of this Act) is amended to read as follows: “(2) The amount payable to any provider of services under this part for services furnished an individual during any spell of illness shall be further reduced by a deduction equal to the cost of the first three pints of whole blood (or equivalent quantities of packed red blood cells, as defined under regulations) furnished to him as part of such services during such spell of illness.”

4. 1968

   Social Security Amendments of 1967

   Pub. L. 90–248 § 129(c)(3) · 81 Stat. 821

   1. Struck · 42 U.S.C. § 1395e(a)(2)(4)

      Pub. L. 90–248, § 129(c)(3), struck out par. (2) which provided for reduction of amount payable for outpatient hospital diagnostic services furnished an individual during a diagnostic study

   2. Redesignated · 42 U.S.C. § 1395e(a)(2)(4)

      Pub. L. 90–248, § 129(c)(3), redesignated pars. (3) and (4) as (2) and (3), respectively

   Source evidence

   Code amendment note
   Subsec. (a)(2) to (4). Pub. L. 90–248, § 129(c)(3), struck out par. (2) which provided for reduction of amount payable for outpatient hospital diagnostic services furnished an individual during a diagnostic study, and redesignated pars. (3) and (4) as (2) and (3), respectively.

   Enacted provision · exact public law section
   (3) Section 1813(a) of such Act is amended by striking out paragraph 42 USC 1395e. (2), and by redesignating paragraphs (3) and (4) as paragraphs (2) and (3), respectively.

5. 1968

   Social Security Amendments of 1967

   Pub. L. 90–248 § 129(c)(4)(A) · 81 Stat. 821

   Struck · 42 U.S.C. § 1395e(b)(1); 42 U.S.C. § 1395e(b)(2)

   Pub. L. 90–248, § 129(c)(4)(A), (B), struck out diagnostic studies from application of inpatient hospital deductible

   Source evidence

   Code amendment note
   Subsec. (b)(1), (2). Pub. L. 90–248, § 129(c)(4)(A), (B), struck out diagnostic studies from application of inpatient hospital deductible.

   Enacted provision · exact public law section
   (A) Section 1813(b)(1) of such Act is amended by striking out “or diagnostic study”.

6. 1981

   Medicare and Medicaid Amendments of 1981

   Pub. L. 97–35 title XXI · 95 Stat. 357

   Substituted · 42 U.S.C. § 1395e(b)(2)

   Pub. L. 97–35 substituted “any inpatient hospital services or post-hospital extended care services furnished during the succeeding calendar year. Such inpatient hospital deductible shall be equal to $45” for “any spell of illness beginning during the succeeding calendar year. Such inpatient hospital deductible shall be equal to $40”

   Source evidence

   Code amendment note
   Subsec. (b)(2). Pub. L. 97–35 substituted “any inpatient hospital services or post-hospital extended care services furnished during the succeeding calendar year. Such inpatient hospital deductible shall be equal to $45” for “any spell of illness beginning during the succeeding calendar year. Such inpatient hospital deductible shall be equal to $40”.

   Enacted provision · exact public law
   TITLE XXI— MEDICARE, MEDICAID, AND MATERNAL AND CHILD HEALTH Sec. 2100. short title of subtitles a, b, and c; table of contents of title Subtitles A, B, and C of this title may be cited as the Medicare and Medicaid Amendments of 1981. 42 USC 1305 note. “Medicare and Medicaid Amendments of 1981”. table of contents of title TITLE II— MEDICARE, MEDICAID, AND MATERNAL AND CHILD HEALTH Sec. 2100. Short title for subtitles A, B, and C; table of contents of title. Subtitle A— Provisions Relating to Medicare and Medicaid CHAPTER 1— REIMBURSEMENT CHANGES Sec. 2101. Payments to promote closing and conversion of underutilized hospital facilities. Sec. 2102. Adjustment in payment for inappropriate hospital services. Sec. 2103. Limitation on medicare and medicaid payments for certain drugs. Sec. 2104. Withholding of payments for certain medicaid providers. CHAPTER 2— OTHER ADMINISTRATIVE CHANGES Sec. 2105. Civil monetary penalties. Sec. 2106. Technical corrections for errors made by the Medicare and Medicaid Amendments of 1980. CHAPTER 3— PROFESSIONAL STANDARDS REVIEW ORGANIZATIONS (PSRO’S) Sec. 2111. Making delegated review optional. Sec. 2112. Assessment of PSRO performance. Sec. 2113. Optional use of PSRO’s under State medicaid plans. Sec. 2114. Secretarial determination in lieu of PSRO certification. Subtitle B— Provisions Relating to Medicare CHAPTER 1— CHANGES IN SERVICES AND BENEFITS Sec. 2121. Elimination of part. A coverage of alcohol detoxification facility services. Sec. 2122. Elimination of occupational therapy as a basis for initial entitlement to home health services. CHAPTER 2— CHANGES IN COINSURANCE, DEDUCTIBLES, AND COPAYMENTS Sec. 2131. Making part A coinsurance current with the year in which services furnished. Sec. 2132. Making part A coinsurance and deductible more current. Sec. 2133. Elimination of carryover from previous year of incurred expenses for meeting the part B deductible. Sec. 2134. Increase in part B deductible. CHAPTER 3— REIMBURSEMENT CHANGES Sec. 2141. Limitation on routine nursing differential. Sec. 2142. Limitation on reasonable cost and reasonable charge for outpatient services. Sec. 2143. Limits on reimbursement to hospitals. Sec. 2144. Limits on reimbursement to home health agencies. Sec. 2145. Incentive reimbursement rate for renal dialysis services. Sec. 2146. Medicare payments secondary in cases of end stage renal disease services covered under certain group health policies. CHAPTER 4— MISCELLANEOUS CHANGES Sec. 2151. Elimination of unlimited open enrollment. Sec. 2152. Utilization guidelines for provision of home health services. Sec. 2153. Repeal of statutory time limitation on agreement with skilled nursing facilities. Sec. 2154. Removal of limitation on number of medicare demonstration projects. Sec. 2155. Repeal of temporary delay in periodic interim payments (PIP). Sec. 2156. Statutory deadlines for implementing AFDC home health aide demonstration projects. Subtitle C— Provisions Relating to Medicaid CHAPTER 1— CHANGES IN PAYMENTS TO STATES Sec. 2161. Reduction in medicaid payments to States and offset for meeting Federal medicaid expenditure targets. Sec. 2162. Payments to territories. Sec. 2163. Eliminating time period limitation on payment of interest on disputed claims. Sec. 2164. Eliminating Federal matching for certain laboratory tests. Sec. 2165. Study of Federal medical assistance percentage formula and of adjustments of target amounts for Federal medicaid expenditures. CHAPTER 2— INCREASED FLEXIBILITY FOR STATES Sec. 2171. Coverage of, and services for, the medically needy. Sec. 2172. Flexibility in coverage of individuals aged 18–20. Sec. 2173. Reimbursement of hospitals. Sec. 2174. Removal of medicaid reasonable charge limitation. Sec. 2175. Inapplicability and waiver of freedom-of-choice and other State plan requirements. Sec. 2176. Waiver to provide home and community-based services for certain individuals. Sec. 2177. Time limitation for action on requests for plan amendments and waivers. Sec. 2178. Flexibility in HMO and prepaid provider participation in State plans. CHAPTER 3— MISCELLANEOUS CHANGES Sec. 2181. Repeal of EPSDT penalty. Sec. 2182. Flexibility in requiring collection of third-party payments. Sec. 2183. Permitting physician assistants and nurse practitioners to provide certain re-certifications. Sec. 2184. Repeal of obsolete authority for medical assistance. Subtitle D— Maternal and Child Health Services Block Grant Sec. 2191. Short title of subtitle. Sec. 2192. Maternal and child health services block grant. Sec. 2193. Repeats and conforming amendments. Sec. 2194. Effective date; transition. Subtitle A— Provisions Relating to Medicare and Medicaid CHAPTER 1— REIMBURSEMENT CHANGES Sec. 2101. payments to promote closing and conversion of underutilized hospital facilities (a) Part C of title XVIII of the Social Security Act is amended by adding at the end the following new section: “Sec. 1884. “payments to promote closing and conversion of underutilized hospital facilities (a) Any hospital may file an application with the 42 USC 1395uu. Secretary (in such form and including such data and information as the Secretary may require) for establishment of a transitional allowance under this title with respect to the closing or conversion of an underutilized hospital facility. The Secretary also may establish procedures, consistent with this section, by which a hospital, before undergoing an actual closure or conversion of a hospital facility, can have a determination made as to whether or not it will be eligible for a transitional allowance under this section with respect to such closure or conversion. “(b) If the Secretary finds, after consideration of an application under subsection (a), that— “(1) the hospital’s closure or conversion— “(A) is formally initiated after September 30, 1981, “(B) is expected to benefit the program under this title by (i) eliminating excess bed capacity, (ii) discontinuing an underutilized service for which there are adequate alternative sources, or (iii) substituting for the underutilized service some other service which is needed in the area, and “(C) is consistent with the findings of an appropriate health planning agency and with any applicable State gram for reduction in the number of hospital beds in the State, and “(2) in the case of a complete closure of a hospital— “(A) the hospital is a private nonprofit hospital or a local governmental hospital, and “(B) the closure is not for replacement of the hospital, the Secretary may include as an allowable cost in the hospital’s reasonable cost (for the purpose of making payments to the hospital under this title) an amount (in this section referred to as a ‘transitional allowance’), as provided in subsection (c). “(c) (1) Each transitional allowance established shall be reasonably related to the prior or prospective use of the facility involved under this title and shall recognize— “(A) in the case of a facility conversion or closure (other than a complete closure of a hospital)— “(i) in the case of a private nonprofit or local governmental hospital, that portion of the hospital’s costs attributable to capital assets of the facility which have been taken into account in determining reasonable cost for purposes of determining the amount of payment to the hospital under this title, and “(ii) in the case of any hospital, transitional operating cost increases related to the conversion or closure to the extent that such operating costs exceed amounts ordinarily reimbursable under this title; and “(B) in the case of complete closure of a hospital, the outstanding portion of actual debt obligations previously recognized as reasonable for purposes of reimbursement under this title, less any salvage value of the hospital. “(2) A transitional allowance shall be for a period (not to exceed 20 years) specified by the Secretary, except that, in the case of a complete closure described in paragraph (1)(B), the Secretary may provide for a lump-sum allowance where the Secretary determines that such a one-time allowance is more efficient and economical. “(3) A transitional allowance shall take effect on a date established by the Secretary, but not earlier than the date of completion of the closure or conversion concerned. “(4) A transitional allowance shall not be considered in applying the limits to costs recognized as reasonable pursuant to the third sentence of subparagraph (A) and subparagraph (L)(i) of section 1861(v)(1) of this Act, or in determining whether the reasonable cost exceeds the customary charges for a service for purposes of determining the amount to be paid to a provider pursuant to sections 1814(b) and 1833(a)(2) of this Act. “(c) A hospital dissatisfied with a determination of the Secretary on its application under this section may obtain an informal or formal hearing, at the discretion of the Secretary, by filing (in such form and within such time period as the Secretary establishes) a request for such a hearing. The Secretary shall make a final determination on such application within 30 days after the last day of such hearing.”. (2) Section 1903 of such Act is amended by inserting after subsection (d) the following new subsection: “(e) A State plan approved under this title may include, as a cost with respect to hospital services under the plan under this title, periodic expenditures made to reflect transitional allowances established with respect to a hospital closure or conversion under section Ante, p. 785. 42 USC 1395uu note. 1884.”. (b) (1) Notwithstanding section 1884(a) of the Social Security Act, the Secretary of Health and Human Services may not establish under such section transitional allowances with respect to more than 50 hospitals prior to January 1, 1984. (2) The Secretary of Health and Human Services shall evaluate the effectiveness of the program of transitional allowances established under section 1884 of the Social Security Act and shall, not later than January 1, 1983, report to the Congress on such evaluation and include in such report such recommendations for such legislative changes as he deems appropriate. (c) The amendment made by subsection (a) shall apply only to Effective date. 42 USC 1395uu note. services furnished by a hospital during any accounting year beginning on or after October 1, 1981. Sec. 2102. adjustment in payment for inappropriate hospital services (a) (1) Section 1861(v)(1)(G)(i) of the Social Security Act is 42 USC 1395x. amended by striking out “the hospital had (during the immediately preceding calendar year) an average daily occupancy rate of 80 percent or more” and inserting in lieu thereof “there is not an excess of hospital beds in such hospital and (subject to clause (iv)) there is not an excess of hospital beds in the area of such hospital”. (2) Clause (iv) of section 1861(v)(1)(G) of such Act is amended to read as follows: “(iv) In determining under clause (i), in the case of a public hospital, whether or not there is an excess of hospital beds in the area of such hospital, such determination shall be made on the basis of only the public hospitals (including the hospital) which are in the area of the hospital and which are under common ownership with that hospital.”. (b) (1) The amendments made by subsection (a) shall apply to Effective date. 42 USC 1395x note. services provided on or after the first day of the first month beginning after the date of the enactment of this Act. (2) For amendments respecting reimbursement for inappropriate hospital services under medicaid, see section 2173 of this subtitle. Sec. 2103. limitation on medicare and medicaid payments for certain drugs (a) (1) Section 1862 of the Social Security Act is amended 42 USC 1395y. by inserting after subsection (b) the following new subsection: “(c) No payment may be made under part B for any expenses incurred for— “(1) a drug product— “(A) which is described in section 107(c)(3) of the Drug Amendments of 1962, 21 USC 321 note. “(B) which may be dispensed only upon prescription, “(C) for which the Secretary has issued a notice of an opportunity for a hearing under subsection (e) of section 505 of the Federal Food, Drug, and Cosmetic Act on a proposed 21 USC 355. order of the Secretary to withdraw approval of an application for such drug product 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, and “(D) for which the Secretary has not determined there is a compelling justification for its medical need; and “(2) any other drug product— “(A) which is identical, related, or similar (as determined in accordance with section 310.6 of title 21 of the Code of Federal Regulations) to a drug product described in paragraph (1), and “(B) for which the Secretary has not determined there is a compelling justification for its medical need, until such time as the Secretary withdraws such proposed order.”. (2) The amendment made by paragraph (1) shall apply with respect Effective date. 42 USC 1395y note. to expenses incurred on or after October 1, 1981. (b) (1) Section 1903(i) of such Act is amended by striking out the period at the end of paragraph (4) and inserting in lieu thereof “; or” and by adding after such paragraph the following new paragraph: “(5) with respect to any amount expended for any drug product for which payment may not be made under part B of title XVIII Ante, p. 787. Effective date. 42 USC 1396b note. because of section 1862(c).”. (2) The amendment made by paragraph (1) shall apply to amounts expended on or after October 1, 1981. Sec. 2104. withholding of payments for certain medicaid providers Part C of title XVIII of the Social Security Act is amended by adding after section 1884 (added by section 2101 of this subtitle) the following new section: “Sec. 1885. “withholding of payments for certain medicaid providers (a) The Secretary may adjust, in accordance with this section, payments under parts A and B to any institution which has in effect an agreement with the Secretary under section 1866, and any person who has accepted payment on the basis of an assignment 42 USC 1395u. under section 1842(b)(3)(B)(ii), where such institution or person— “(1) has (or previously had) in effect an agreement with a State agency to furnish medical care and services under a State plan 42 USC 1396. approved under title XIX, and “(2) from which (or from whom) such State agency (A) has been unable to recover overpayments made under the State plan, or (B) has been unable to collect the information necessary to enable it to determine the amount (if any) of the overpayments made to such institution or person under the State plan. “(b) The Secretary shall by regulation provide procedures for implementation of this section, which procedures shall— “(1) assure that the authority under this section is exercised only on behalf of a State agency which demonstrates to the Secretary’s satisfaction that it has provided adequate notice of a determination or of a need for information, and an opportunity to appeal such determination or to provide such information, “(2) determine the amount of the payment to which the institution or person would otherwise be entitled under this title which shall be treated as a setoff against overpayments under title XIX, and “(3) assure the restoration to the institution or person of amounts withheld under this section which are ultimately determined to be in excess of overpayments under title XIX and to which the institution or person would otherwise be entitled under this title. “(c) Notwithstanding any other provision of this Act, from the trust 42 USC 1395i, 1395t. funds established under sections 1817 and 1841, as appropriate, the Secretary shall pay to the appropriate State agency amounts recovered under this section to offset the State agency’s overpayment under title XIX. Such payments shall be accounted for by the State agency as recoveries of overpayments under the State plan.”. CHAPTER 2— OTHER ADMINISTRATIVE CHANGES Sec. 2105. civil monetary penalties (a) Part A of title XI of the Social Security Act is amended by inserting after section 1128 the following new section: “Sec. 1128A. “civil monetary penalties (a) Any person (including an organization, agency, or 42 USC 1320a–7a. other entity) that presents or causes to be presented to an officer, employee, or agent of the United States, or of any department or agency thereof, or of any State agency (as defined in subsection (h)(1)), a claim (as defined in subsection (h)(2)) that the Secretary determines— “(1) is for a medical or other item or service— “(A) that the person knows or has reason to know was not provided as claimed, or “(B) payment for which may not be made under the program under which such claim was made, pursuant to a determination by the Secretary under section 1128, 1160(b), 1862(d), or 1866(b)(2), or 94 Stat. 2619. 42 USC 1320a–7, 1320c–9, 1395y, 1395cc. “(2) is submitted in violation of an agreement between the person and the United States or a State agency, shall be subject, in addition to any other penalties that may be prescribed by law, to a civil money penalty of not more than $2,000 for each item or service. In addition, such a person shall be subject to an assessment of not more than twice the amount claimed for each such item or service in lieu of damages sustained by the United States or a State agency because of such claim. “(b) (1) The Secretary may initiate a proceeding to determine whether to impose a civil money penalty or assessment under subsection (a) only as authorized by the Attorney General pursuant to procedures agreed upon by them. “(2) The Secretary shall not make a determination adverse to any Notice and hearing. person under subsection (a) until the person has been given written notice and an opportunity for the determination to be made on the record after a hearing at which the person is entitled to be represented by counsel, to present witnesses, and to cross-examine witnesses against the person. “(c) In determining the amount or scope of any penalty or assessment imposed pursuant to subsection (a), the Secretary shall take into account— “(1) the nature of claims and the circumstances under which they were presented, “(2) the degree of culpability, history of prior offenses, and financial condition of the person presenting the claims, and “(3) such other matters as justice may require. “(d) Any person adversely affected by a determination of the Secretary under this section may obtain a review of such determination in the United States Court of Appeals for the circuit in which the person resides, or in which the claim was presented, by filing in such court (within sixty days following the date the person is notified of the Secretary’s determination) a written petition requesting that the determination be modified or set aside. A copy of the petition shall be forthwith transmitted by the clerk of the court to the Secretary, and thereupon the Secretary shall file in the Court the record in the proceeding as provided in section 2112 of title 28, United States Code. Upon such filing, the court shall have jurisdiction of the proceeding and of the question determined therein, and shall have the power to make and enter upon the pleadings, testimony, and proceedings set forth in such record a decree affirming, modifying, remanding for further consideration, or setting aside, in whole or in part, the determination of the Secretary and enforcing the same to the extent that such order is affirmed or modified. No objection that has not been urged before the Secretary shall be considered by the court, unless the failure or neglect to urge such objection shall be excused because of extraordinary circumstances. The findings of the Secretary with respect to questions of fact, if supported by substantial evidence on the record considered as a whole, shall be conclusive. If any party shall apply to the court for leave to adduce additional evidence and shall show to the satisfaction of the court that such additional evidence is material and that there were reasonable grounds for the failure to adduce such evidence in the hearing before the Secretary, the court may order such additional evidence to be taken before the Secretary and to be made a part of the record. The Secretary may modify his findings as to the facts, or make new findings, by reason of additional evidence so taken and filed, and he shall file with the court such modified or new findings, which findings with respect to questions of fact, if supported by substantial evidence on the record considered as a whole, shall be conclusive, and his recommendations, if any, for the modification or setting aside of his original order. Upon the filing of the record with it, the jurisdiction of the court shall be exclusive and its judgment and decree shall be final, except that the same shall be subject to review by the Supreme Court of the United States, as provided in section 1254 of title 28, United States Code. “(e) Civil money penalties and assessments imposed under this section may be compromised by the Secretary and may be recovered in a civil action in the name of the United States brought in United States district court for the district where the claim was presented, or where the claimant resides, as determined by the Secretary. Amounts recovered under this section shall be paid to the Secretary and disposed of as follows: “(1) (A) In the case of amounts recovered arising out of a claim 42 USC 1396. under title XIX, there shall be paid to the State agency an amount equal to the State’s share of the amount paid by the State agency for such claim. “(B) In the case of amounts recovered arising out of a claim 42 USC 701. under an allotment to a State under title V, there shall be paid to the State agency an amount equal to three-sevenths of the amount recovered. “(2) Such portion of the amounts recovered as is determined to have been paid out of the trust funds under sections 1817 and 42 USC 1395i, 1395t. 1841 shall be repaid to such trust funds. “(3) The remainder of the amounts recovered shall be deposited as miscellaneous receipts of the Treasury of the United States. The amount of such penalty or assessment, when finally determined, or the amount agreed upon in compromise, may be deducted from any sum then or later owing by the United States or a State agency to the person against whom the penalty or assessment has been assessed. “(f) A determination by the Secretary to impose a penalty or assessment under subsection (a) shall be final upon the expiration of the sixty-day period referred to in subsection (d). Matters that were raised or that could have been raised in a hearing before the Secretary or in an appeal pursuant to subsection (d) may not be raised as a defense to a civil action by the United States to collect a penalty or assessment assessed under this section. “(g) Whenever the Secretary’s determination to impose a penalty or assessment under subsection (a) becomes final, he shall notify the appropriate State or local medical or professional organization, and the appropriate Professional Standards Review Organization, and the appropriate State or local licensing agency or organization (including the agency specified in section 1864(a) and 1902(a)(33)) that 42 USC 1395aa, 1396a. such a penalty or assessment has become final and the reasons therefor. “(h) For the purposes of this subsection: Definitions. “(1) The term ‘State agency’ means the agency established or designated to administer or supervise the administration of the State plan under title XIX of this Act or designated to administer 42 USC 1396. 42 USC 701. the State’s program under title V of this Act. “(2) The term ‘claim’ means an application submitted by— “(A) a provider of services or other person, agency, or organization that furnishes an item or service under title XVIII of this Act, or 42 USC 1395. “(B) a person, agency, or organization that furnishes an item or service for which medical assistance is provided under title XIX of this Act, or “(C) a person, agency, or organization that provides an item or service for which payment is made under title V of this Act or from an allotment to a State under such title, to the United States or a State agency, or agent thereof, for payment for health care services under title XVIII or XIX of this Act or for any item or service under title V of this Act. “(3) The term ‘item or service’ includes (A) any particular item, device, medical supply, or service claimed to have been provided to a patient and listed in an itemized claim for payment, and (B) in the case of a claim based on costs, any entry in the cost report, books of account or other documents supporting such claim. “(4) The term ‘agency of the United States’ includes any contractor acting as a fiscal intermediary, carrier, or fiscal agent or any other claims processing agent for a health insurance or medical services program under title XVIII or XIX of this Act.”. (b) Section 1128 of such Act is amended— 94 Stat. 2619. 42 USC 1320a–7. (1) by striking out “, for such period as he may deem appropriate,” in subsection (a)(1), (2) by striking out “subsection (a)” in subsection (c) and inserting in lieu thereof “subsection (a) or (b)”, (3) by redesignating subsections (b) and (c) as subsections (c) and (d), respectively, and (4) by inserting after subsection (a) the following new subsection: “(b) Whenever the Secretary makes a final determination to impose a civil money penalty or assessment against a person (including an organization, agency, or other entity) under section 1128A relating to a claim under title XVIII or XIX, the Secretary— “(1) may bar the person from participation in the program under title XVIII, and “(2) (A) shall promptly notify each appropriate State agency administering or supervising the administration of a State plan approved under title XIX of the fact and circumstances of such determination, and (except as provided in subparagraph (B)) may require each such agency to bar the person from participation in the program established by such plan for such period as he shall specify, which in the case of an individual shall be the period established pursuant to paragraph (1), and “(B) may waive the requirement of subparagraph (A) to bar a person from participation in such program where he receives and approves a request for such waiver with respect to that person from the State agency referred to in that subparagraph.”. (c) Section 1902(a)(39) of such Act is amended by striking out “individual” and inserting in lieu thereof “person” each place it appears. Sec. 2106. technical corrections for errors made by the medicare and medicaid amendments of 1980 (a) Section 1833(a)(2) of the Social Security Act (as amended by section 942 of the Medicare and Medicaid Amendments 94 Stat. 2641. 42 USC 1395l. of 1980, P.L. 96–499) is amended by amending subparagraphs (A) and (B) to read as follows: “(A) with respect to home health services and to items and 42 USC 1395x. services described in section 1861(s)(10), the lesser of— “(i) the reasonable cost of such services, as determined under section 1861(v), or “(ii) the customary charges with respect to such services, or, if such services are furnished by a public provider of services free of charge or at nominal charges to the public, the amount 42 USC 1395f. determined in accordance with section 1814(b)(2); “(B) with respect to other services (except those described in subparagraph (C) of this paragraph)— “(i) the lesser of— “(I) the reasonable cost of such services, as determined under section 1861(v), or “(II) the customary charges with respect to such services, less the amount a provider may charge as described in clause 42 USC 1395cc. (ii) of section 1866(a)(2)(A), but in no case may the payment for such other services exceed 80 percent of such reasonable cost, or “(ii) if such services are furnished by a public provider of services free of charge or at nominal charges to the public, 80 percent of the amount determined in accordance with section 1814(b)(2), or “(iii) if (and for so long as) the conditions described in section 1814(b)(3) are met, the amounts determined under the reimbursement system described in such section; and”. (b) (1) Section 1835(a)(2) of such Act is amended— (A) by adding “and” at the end of subparagraph (D), and (B) by striking out “; and” at the end of subparagraph (E) and inserting in lieu thereof a period. (2) The paragraph after section 1838(b) of such Act is amended by striking out “and such notice shall not be considered a disenrollment 42 USC 1395p. 42 USC 1396b. for the purposes of section 1837(b)”. (3) Section 1903(n) of such Act is amended by striking out “of this section” after “section 1866”. (c) The amendment made by subsection (a) is effective as of December 5, 1980, and the amendment made by subsection (b)(2) is effective as of April 1, 1981. CHAPTER 3— PROFESSIONAL STANDARDS REVIEW ORGANIZATIONS (PSRO’S) Sec. 2111. making delegated review optional Section 1155(e) of the Social Security Act is amended by 42 USC 1320c–4. striking out “shall utilize” and inserting in lieu thereof “may utilize”. Sec. 2112. assessment of psro performance (a) (1) Section 1154 of the Social Security Act is amended 42 USC 1320c–3. by adding at the end the following new subsection: “(g) (1) The Secretary shall, not later than September 30, 1981, identify and specify those requirements imposed by the Secretary with respect to the performance of Professional Standards Review Organizations which the Secretary will use for the assessment of the performance of such Organizations under this subsection. Such requirements shall include requirements relating to the effectiveness of such Organizations in (A) monitoring the quality of patient care, (B) reducing unnecessary utilization, and (C) managing its activities efficiently. “(2) Based on such requirements, the Secretary shall assess and determine the relative performance of each of such Organizations designated, conditionally or otherwise, as of September 30, 1981. “(3) If the Secretary determines that such an Organization has a relatively ineffective or inefficient performance, the Secretary may refuse to renew an agreement with the Organization under this part, except that, in exercising the Secretary’s authority under this paragraph in fiscal year 1982, the sum of the number of Organizations with respect to which agreements are not renewed under this paragraph and under any other provision of this Act in the fiscal year may not exceed 30 percent of the number of such Organizations with agreements under this part on May 1, 1981.”. (2) (A) Section 1152(d) of such Act is amended— 42 USC 1320c–1. (i) by striking out “for a term of 12 months” and inserting in lieu thereof “for a term of not longer than 12 months”; (ii) by striking out “at such time and upon such reasonable notice to the organization as may be prescribed in regulations” and inserting in lieu thereof “upon 90 days notice to the organization”; and (iii) by striking out “(after providing such organization with an opportunity for a formal hearing on the matter)”. (B) Sections 1152(d) and 1154(d) of such Act are each amended by adding at the end the following sentence: “A termination of an agreement by the Secretary under this subsection shall not be subject to judicial review.”. (C) The amendment made by subparagraph (A)(iii) shall apply to Effective date. 42 USC 1320c–1 note. agreements entered into on or after the date of the enactment of this Act. (D) The Secretary of Health and Human Services shall, not later 42 USC 1320c–3 note. than September 30, 1982, report to the Congress on his assessment (under section 1154(g) of the Social Security Act) of the relative performance of Professional Standards Review Organizations and on any determinations made not to renew agreements with such Organizations on the basis of such performance. (b) (1) The first sentence of subsection (b) of section 1154 of such Act 42 USC 1320c–3. is amended— (A) by striking out “(other than ancillary, ambulatory care, and long-term care services)” and (B) by striking out “under subsection (f)(2) or subsection (f)(4)” and inserting in lieu thereof “under subsection (f)”. (2) Subsection (f) of such section is amended— (A) by striking out the parenthetical phrase in paragraph (1); (B) by striking out paragraphs (2) and (3); (C) by redesignating paragraph (4) as paragraph (2) and amending it to read as follows: “(2) Where the Secretary finds that the review of particular health care services is cost-effective or yields other significant benefits, the Secretary may require Professional Standards Review Organizations (either generally or under such conditions and circumstances as the Secretary may specify) to review such services under this part.”; and (D) by striking out the parenthetical phrase in paragraph (5) and redesignating such paragraph as paragraph (3). Sec. 2113. optional use of psro’s under state medicaid plans (a) Section 1151 of the Social Security Act is amended— (1) by striking out “under this Act” and inserting in lieu thereof “under title XVIII of this Act”; and (2) by striking out “the Social Security Act” and inserting in lieu thereof “title XVIII of this Act”. (b) Section 1152(e) of such Act is amended by inserting “title XVIII of” before “this Act” each place it appears. (c) Section 1152 of such Act is amended by striking out subsection 42 USC 1320c–3. (h), and section 1154 of such Act is amended by striking out subsection (e). (d) (1) Section 1155(a) of such Act is amended by inserting “title XVIII of” before “this Act” each place it appears in paragraphs (1) and (2). (2) Section 1155(a)(1) of such Act is amended by adding after and below subparagraph (C) the following new sentence: “Each agreement with an Organization under this part shall require the Organization, if requested by a State with a plan approved under title XIX, to enter into a contract with the State, for the performance of review functions in the case of health care services and items provided under such State plan under terms and conditions similar to those contained in the agreement between the Organization and the Secretary under this part.”. (3) Section 1155(a) of such Act is amended by striking out paragraph (7). (4) Section 1155(e)(1) of such Act is amended by striking out “, or intermediate care facility, as defined in section 1905(c)” and “or intermediate care facility”. (e) (1) Section 1158(a) of such Act is amended by striking out “under any title of this Act (other than title V)” and inserting in lieu thereof “under title XVIII” and by striking out “or any program established pursuant thereto”. (2) Section 1158(c) of such Act is amended— (A) by striking out “(subject to sections 1159, 1171(a)(1), and 1171(d)(3)) for purposes of payment under this Act” and inserting in lieu thereof “(subject to section 1159) for purposes of payment under title XVIII”; and (B) by striking out “, or single State agencies” and all that follows through “under title XIX”. (3) Section 1158(d) of such Act is amended by striking out “or 42 USC 1320c–7. section 1902(h)”. (f) Section 1159(a) of such Act is amended by striking out “under 42 USC 1320c–8. this Act (other than title V)” and inserting in lieu thereof “under title XVIII”. (g) (1) Section 1160(a)(1) of such Act is amended by striking out 42 USC 1320c–9. “under this Act” the first place it appears and inserting in lieu thereof “under title XVIII (or under a State plan approved under title XIX, where the services furnished by the person are subject to review under a contract between the State and an Organization under section 1155(a))”, and by striking out “under this Act” the second place it appears and inserting in lieu thereof “under such title (or such State plan)”. (2) Section 1160(b)(1) of such Act is amended by striking out “under this Act” and inserting in lieu thereof “under title XVIII”. (h) Section 1162(e)(1) of such Act is amended by striking out “any 42 USC 1320c–11. program established by or pursuant to this Act” and inserting in lieu thereof “title XVIII”. (i) Section 1164 of such Act is repealed. Repeal. 42 USC 1320c–13. 42 USC 1320c–17. (j) Section 1168 of such Act is amended— (1) by inserting “and” at the end of paragraph (a); (2) by striking out “and” at the end of paragraph (b); (3) by striking out paragraph (c) and redesignating paragraphs (a) and (b) as paragraphs (1) and (2), respectively; (4) by striking out “subsections (a), (b), and (c)” and inserting in lieu thereof “paragraphs (1) and (2)”; (5) by amending the second sentence to read as follows: “The Secretary shall make such transfers of moneys between such funds as may be appropriate to settle accounts between them.”; and (6) by striking out the second parenthetical phrase in the third sentence. (k) Section 1171 of such Act is repealed. Repeal. 42 USC 1320c–20. 42 USC 1320c–21. 42 USC 1396a. (l) Section 1172(4) of such Act is amended by striking out “V, XI, XVIII, and XIX” and inserting in lieu thereof “XI and XVIII”. (m) Section 1902 of such Act is amended by inserting after subsection (c) the following new subsection: “(d) If a State contracts with a Professional Standards Review Organization designated, conditionally or otherwise, under part B of title XI for the performance of medical or utilization review functions 42 USC 1320c. required under this title of a State plan with respect to specific services or providers (or services or providers in a geographic area of the State), such requirements shall be deemed to be met for those services or providers (or services or providers in that area) by delegation to such Organization (or Organizations) under the contract of the State’s authority to conduct such review activities if the contract provides for the performance of activities not inconsistent with part B of title XI and provides for such assurances of satisfactory performance by such Organization (or Organizations) as the Secretary may prescribe.”. (n) Section 1903(a)(3) of such Act is amended— 42 USC 1396b. (1) by striking out “plus” at the end of subparagraph (B) and inserting in lieu thereof “and”, and (2) by adding after subparagraph (B) the following new subparagraph: “(C) 75 per centum of the sums expended with respect to costs incurred during such quarter (as found necessary by the Secretary for the proper and efficient administration of the State plan) as are attributable to the performance of medical and utilization review by a Professional Standards Review Organization under a contract entered into under Ante, p. 795. Effective date. 42 USC 1320c note. section 1902(d); plus” (o) The amendments made by this section apply to agreements with Professional Standards Review Organizations entered into on or after October 1, 1981. Sec. 2114. secretarial determination in lieu of psro certification Section 1861(v)(1)(G)(i) of the Social Security Act is amended by striking out “an organization or agency with review responsibility as is otherwise provided for under part A of title XI” and inserting in lieu thereof “the Secretary or such agent as the Secretary may designate”. Subtitle B— Provisions Relating to Medicare CHAPTER 1— CHANGES IN SERVICES AND BENEFITS Sec. 2121. elimination of part a coverage of alcohol detoxification facility services (a) Section 1812(a) of the Social Security Act is amended— (1) by inserting “and” at the end of paragraph (2), (2) by striking out “; and” at the end of paragraph (3) and inserting in lieu thereof a period, and (3) by striking out paragraph (4). (b) Section 1814(a)(2) of such Act is amended— (1) by inserting “or” at the end of subparagraph (D), (2) by striking out “or” at the end of subparagraph (E), and (3) by striking out subparagraph (F). (c) Section 1861(u) of such Act is amended by striking out “detoxification facility,”. (d) Subsection (bb) of section 1861 of such Act is repealed. (e) The first sentence of section 1154(b) of such Act is amended striking out “and to review of alcohol detoxification facility services”. (f) Section 1155 of such Act is amended by striking out subsection (i). (g) Section 1158 of such Act is amended— (1) by striking out “subsections (d) and (e)” in subsection (a) and inserting in lieu thereof “subsection (d)”, and (2) by striking out subsection (e). (h) Section 931 of the Medicare and Medicaid Amendments of 1980 42 USC 1395ll note. (P.L. 96–499; 94 Stat. 2634) is amended by striking out subsection (f) (relating to a study of medicare coverage of certain additional detoxification-related services). (i) The amendments made by this section (other than by subsection (h)) shall apply to services furnished in detoxification facilities for inpatient stays beginning on or after the tenth day after the date of the enactment of this Act. Sec. 2122. elimination of occupational therapy as a basis for initial entitlement to home health services (a) (1) Sections 1814(a)(2)(D) and 1835(a)(2)(A) of the Social Security Act are each amended by striking out “needed skilled nursing care on an intermittent basis, or physical, occupational, or speech therapy” and inserting in lieu thereof “needs or needed skilled nursing care on an intermittent basis or physical or speech therapy or, in the case of an individual who has been furnished home health services based on such a need and who no longer has such a need for such care or therapy, continues or continued to need occupational therapy”. (b) The amendments made by this section shall apply to services Effective date. 42 USC 1395f note. furnished pursuant to plans of treatment implemented after the third month beginning after the date of the enactment of this Act. CHAPTER 2— CHANGES IN COINSURANCE, DEDUCTIBLES, AND COPAYMENTS Sec. 2131. making part a coinsurance current with the year in which services furnished (a) The first sentence of section 1813(b)(2) of the Social Security Act is amended by striking out “any spell of illness beginning” 42 USC 1395e. and inserting in lieu thereof “any inpatient hospital services or post-hospital extended care services furnished”. (b) The amendment made by subsection (a) is effective for inpatient Effective date. 42 USC 1395e note. hospital services or post-hospital extended care services furnished on or after January 1, 1982. note. Sec. 2132. making part a coinsurance and deductible more current (a) Section 1813(b)(2) of the Social Security Act is amended by striking out “$40” and inserting in lieu thereof “$45”. (b) The amendment made by subsection (a) shall apply to inpatient 42 USC 1395e note. hospital services and post-hospital extended care services furnished in calendar years beginning with calendar year 1982. Sec. 2133. elimination of carryover from previous year of incurred expenses for meeting the part b deductible (a) The first sentence of section 1833(b) of the Social Security Act is amended by striking out “the amount of the deductible 42 USC 1395l. for such calendar year” and all that follows through “(2)”, and by redesignating clauses (3) and (4) as clauses (2) and (3), respectively. (b) The amendments made by subsection (a) first apply to the Effective date. 42 USC 1395l note. deductible for calendar year 1982 with respect to expenses incurred on or after October 1, 1981. Sec. 2134. increase in part b deductible (a) Section 1833(b) of the Social Security Act is amended by striking out “$60” and inserting in lieu thereof “$75”. (b) The amendment made by subsection (a) shall take effect on Effective date. 42 USC 1395l note. January 1, 1982, and shall apply to the deductible for calendar years beginning with 1982. CHAPTER 3— REIMBURSEMENT CHANGES Sec. 2141. limitation on routine nursing differential (a) Section 1861(v)(1) of the Social Security Act is 42 USC 1395x. amended by adding at the end thereof the following new subparagraph: “(J) Such regulations shall provide that an inpatient routine nursing salary cost differential shall be allowable as a reimbursable cost of hospitals, at a rate not to exceed 5 percent, to be applied under the same methodology used for the nursing salary cost differential for the month of April 1981.”. (b) The Comptroller General shall conduct a study to determine the extent (if any) to which the average cost of efficiently providing routine inpatient nursing care to individuals entitled to benefits 42 USC 1395. under title XVIII of the Social Security Act exceeds the average cost of providing such care to other patients. The Comptroller General shall submit a final report with respect to the results of such study to the Congress within six months after the date of the enactment of this Act. (c) (1) Subject to paragraph (2), the amendment made by subsection (a) shall apply to cost reporting periods ending after September 30, 1981. (2) In the case of a cost reporting period beginning before October 1, 1981, any reduction in payments resulting from the amendment made by subsection (a) shall be imposed only in proportion to the part of the period that occurs after September 30, 1981. Sec. 2142. limitation on reasonable cost and reasonable charge for outpatient services (a) Section 1861(v)(1) of the Social Security Act is further amended by adding after subparagraph (J) (added by section 2141 of this subtitle) the following new subparagraph: “(K) The Secretary shall issue regulations that provide, to the extent feasible, for the establishment of limitations on the amount of any costs or charges that shall be considered reasonable with respect to services provided on an outpatient basis by hospitals (other than bona fide emergency services provided in an emergency room) or clinics (other than rural health clinics), which are reimbursed on a cost basis or on the basis of cost related charges, and by physicians utilizing such outpatient facilities. Such limitations shall be reasonably related to the charges in the same area for similar services provided in physicians’ offices. Such regulations shall provide for exceptions to such limitations in cases where similar services are not generally available in physicians’ offices in the area to individuals entitled to benefits under this title.”. (b) Section 1842(b)(3) of such Act is amended by adding at the end thereof the following new sentence: “The amount of any charges for outpatient services which shall be considered reasonable shall be subject to the limitations established by regulations issued by the Secretary pursuant to section 1861(v)(1)(K).”. Sec. 2143. limits on reimbursement to hospitals (a) Section 1861(v)(1) of the Social Security Act is further amended by adding after subparagraph (K) (added by section 2142 of this subtitle) the following new subparagraph: “(L) The Secretary, in determining the amount of the payments that may be made under this title with respect to routine operating costs for the provision of general inpatient hospital services, may not recognize as reasonable (in the efficient delivery of health services) routine operating costs for the provision of general inpatient hospital services by a hospital to the extent these costs exceed 108 percent of the mean of such routine operating costs per diem for hospitals, or, in the judgment of the Secretary, such lower percentage or such comparable or lower limit as the Secretary may determine. The Secretary may provide for such exemptions and exceptions to such limitation as he deems appropriate.”. (b) (1) Subject to paragraph (2), the amendment made by subsection Effective date. 42 USC 1395x note. (a) shall apply to costs reporting periods ending after September 30, 1981. (2) In the case of a cost reporting period beginning before October 1, 1981, any reduction in payments resulting from the amendment made by subsection (a) shall be imposed only in proportion to the part of the period that occurs after September 30, 1981. Sec. 2144. limits on reimbursement to home health agencies (a) Subparagraph (L) of section 1861(v)(1) of the Social 42 USC 1395x. Security Act (added by section 2143 of this subtitle) is amended by inserting “(i)” after “(L)” and by adding at the end the following new clause: “(ii) The Secretary, in determining the amount of the payments that may be made under this title with respect to services furnished by home health agencies, may not recognize as reasonable (in the efficient delivery of such services) costs for the provision of such services by an agency to the extent these costs exceed (on the aggregate for the agency) the 75th percentile of such costs per visit for home health agencies, or, in the judgment of the Secretary, such lower percentile or such comparable or lower limit (based on or related to the mean of the costs of such agencies or otherwise) as the Secretary may determine. The Secretary may provide for such exemptions and exceptions to such limitation as he deems appropriate.”. (b) (1) Subject to paragraph (2), the amendment made by subsection Effective date. 42 USC 1395x note. (a) shall apply to cost reporting periods ending after September 30, 1981. (2) In the case of a cost reporting period beginning before October 1, 1981, any reduction in payments resulting from the amendment made by subsection (a) shall be imposed only in proportion to the part of the period that occurs after September 30, 1981. Sec. 2145. incentive reimbursement rate for renal dialysis services (a) Section 1881(b) of the Social Security Act is 42 USC 1395rr. amended— (1) by inserting “and consistent with any regulations promulgated under paragraph (7)” in paragraph (2)(B) after “section 1861(v))”; (2) by striking out the second sentence of paragraph (2)(B); (3) by inserting “(which effectively encourages the efficient delivery of dialysis services and provides incentives for the increased use of home dialysis)” in paragraph (3)(B) after “or other basis”; (4) by inserting “or on the basis of a method established under paragraph (7)” before the period at the end of paragraph (4); (5) by inserting “(except as may be provided in regulations under paragraph (7))” in the second sentence of paragraph (6) after “in no event” and by striking out “70 percent” in such sentence and inserting in lieu thereof “75 percent”; (6) by inserting “(including methods established under paragraph (7))” in the fifth sentence of paragraph (6) after “any other procedure”; (7) by redesignating paragraphs (7) through (9) as paragraphs (8) through (10), respectively; and (8) by inserting after paragraph (6) the following new paragraph: “(7) The Secretary shall provide by regulation for a method (or methods) for determining prospectively the amounts of payments to be made for dialysis services furnished by providers of services and renal dialysis facilities to individuals in a facility and to such individuals at home. Such method (or methods) shall provide for the prospective determination of a rate (or rates) for each mode of care based on a single composite weighted formula (which takes into account the mix of patients who receive dialysis services at a facility or at home and the relative costs of providing such services in such settings) for hospital-based facilities and such a single composite weighted formula for other renal dialysis facilities, or based on such other method or combination of methods which differentiate between hospital-based facilities and other renal dialysis facilities and which the Secretary determines, after detailed analysis, will more effectively encourage the more efficient delivery of dialysis services and will provide greater incentives for increased use of home dialysis than through the single composite weighted formulas. The Secretary shall provide for such exceptions to such Methods as may be warranted by unusual circumstances (including the special circumstances of sole facilities located in isolated, rural areas). The Secretary may provide that such method will serve in lieu of any target reimbursement rate that would otherwise be established under paragraph (6).”. (b) The amendments made by subsection (a) apply to services furnished on or after October 1, 1981, and the Secretary of Health and Human Services shall first promulgate regulations to carry out Supra. section 1881(b)(7) of the Social Security Act not later than October 1, 1981. Sec. 2146. medicare payments secondary in cases of end stage renal disease services covered under certain group health policies (a) Section 1862(b) of the Social Security Act is amended by inserting “(1)” after “(b)” and by adding at the end thereof the following new paragraph: “(2) (A) In the case of an individual who is entitled to benefits under part A or is eligible to enroll under part B solely by reason of section 226A, payment under this title may not be made, except as provided in subparagraph (B), with respect to any item or service furnished during the period described in subparagraph (C) to the extent that payment with respect to expenses for such item or service (i) has been made under any group health plan (as defined in section 162(h)(2) of Post, p. 801. the Internal Revenue Code of 1954) or (ii) the Secretary determines will be made under such a plan as promptly as would otherwise be the case if payment were made by the Secretary under this title. “(B) Any payment under this title with respect to any item or service to an individual described in subparagraph (A) during the period described in subparagraph (C) shall be conditioned on reimbursement to the appropriate Trust Fund established by this title when notice or other information is received that payment for such item or service has been made under a plan described in subparagraph (A). The Secretary may waive the provisions of this subpara-graph in the case of an individual claim if he determines that the probability of recovery or amount involved in such claim does not warrant the pursuing of the claim. “(C) The provisions of subparagraphs (A) and (B) shall apply to an individual only during the 12-month period which begins with the earlier of— “(i) the month in which a regular course of renal dialysis is initiated, or “(ii) in the case of an individual who receives a kidney transplant, the first month in which he would be eligible for benefits under this title (if he had filed an application for such benefits) under the provisions of section 226A(b)(1)(B). “(D) Where payment for an item or service under such plan is less than the amount of the charge for such item or service, payment may be made under this title (without regard to deductibles and coinsurance under this title) for the remainder of such charge, but— “(i) such payment under this title may not exceed an amount which would be payable under this title for such item or service in the absence of such group health plan; and “(ii) such payment under this title, when combined with the amount payable under such plan, may not exceed the combined amount which would have been payable under this title and such plan if this paragraph were not in effect.”. (b) Section 162 of the Internal Revenue Code of 1954 (relating to 26 USC 162. trade or business expenses) is amended by redesignating subsection (h) as subsection (i) and by inserting after subsection (g) the following new subsection: “(h) Group Health Plans.— “(1) General rule.— The expenses paid or incurred by an employer for a group health plan shall not be allowed as a deduction under this section if the plan differentiates in the benefits it provides between individuals having end stage renal disease and other individuals covered by such plan on the basis of the existence of end stage renal disease, the need for renal dialysis, or in any other manner. “(2) Group health plan.— For purposes of this subsection the term ‘group health plan’ means any plan of, or contributed to by, an employer to provide medical care (as defined in section 213(e)) to his employees, former employees, or the families of such employees or former employees, directly or through insurance, reimbursement, or otherwise.”. (c) (1) The amendments made by subsection (a) shall become effective Effective date. 42 USC 1395y note. 26 USC 162 note. on October 1, 1981. (2) The amendments made by subsection (b) shall be effective with respect to taxable years beginning on or after January 1, 1982. CHAPTER 4— MISCELLANEOUS CHANGES Sec. 2151. elimination of unlimited open enrollment (a) (1) Section 1837(e) of the Social Security Act is 42 USC 1395p. amended to read as follows: “(e) There shall be a general enrollment period during the period beginning on January 1 and ending on March 31 of each year.”. (2) Section 1837(g)(3) of such Act is amended by striking out “the month in which the individual files an application establishing such entitlement” and inserting in lieu thereof “the earlier of the then current or immediately succeeding general enrollment period (as defined in subsection (e) of this section)”. (3) Section 1838(a)(2)(E) of such Act is amended by striking out “the first day of the third month” and inserting in lieu thereof “the July 1”. (4) The second sentence of section 1839(d) of such Act is amended by striking out “the month after the month in which he reenrolled” and inserting in lieu thereof “the close of the enrollment period in which he reenrolled”. (b) The amendments made by this section shall not apply to enrollments pursuant to written requests for enrollment filed before October 1, 1981. Sec. 2152. utilization guidelines for provision of home health services (a) Section 1862 of the Social Security Act is amended by adding at the end the following new subsection: “(f) The Secretary shall establish utilization guidelines for the determination of whether or not payment may be made, consistent with paragraph (1) of subsection (a), under part A or part B for expenses incurred with respect to the provision of home health services, and shall provide for the implementation of such guidelines through a process of selective postpayment coverage review by intermediaries or otherwise.”. (b) The Secretary of Health and Human Services shall establish, and provide for the implementation of, the guidelines described in section 1862(f) of the Social Security Act not later than October 1, 1981. Sec. 2153. repeal of statutory time limitation on agreement with skilled nursing facilities Section 1866(a)(1) of the Social Security Act is amended by striking out the second sentence. Sec. 2154. removal of limitation on number of medicare demonstration projects Section 903 of the Medicare and Medicaid Amendments of 1980 (P.L. 96–499; 94 Stat. 2615) is amended by striking out subsection (c). Sec. 2155. repeal of temporary delay 1n periodic interim payments (pip) Section 959 of the Medicare and Medicaid Amendments 42 USC 1395g note. of 1980 (P.L. 96–499; 94 Stat. 2650) is repealed. Sec. 2156. statutory deadlines for implementing afdc home health aide demonstration projects Section 966 of the Medicare and Medicaid Amendments 42 USC 632a. of 1980 (P.L. 96–499; 94 Stat. 2652) is amended— (1) by adding at the end of subsection (c)(2) the following new sentence: “The Secretary shall, not later than October 1, 1981, establish such guidelines and establish such regulations as may be necessary to assure that agreements are entered into under this section by not later than January 1, 1982.”, and (2) by striking out “The Secretary” in subsection (h) and inserting in lieu thereof “The Secretary shall, during January 1982, submit to the Congress a report on steps taken by January 1, 1982, to enter into agreements under this section, including a general description of each of such agreements entered into by such date and the timetable under which he anticipates other such agreements will be entered into. Thereafter, the Secretary”. Subtitle C— Provisions Relating to Medicaid CHAPTER 1— CHANGES IN PAYMENTS TO STATES Sec. 2161. reduction in medicaid payments to states and offset for meeting federal medicaid expenditure targets (a) Section 1903 of the Social Security Act is amended by 42 USC 1396b. adding at the end the following new subsection: “(s) (1) (A) Notwithstanding any other provision of this section (except as otherwise provided in this subsection), the amount of payments which a State is otherwise entitled to receive under this title for any quarter in— “(i) fiscal year 1982, shall be reduced by 3 percent, “(ii) fiscal year 1983, shall be reduced by 4 percent, and “(iii) fiscal year 1984, shall be reduced by 4.5 percent, of the amount to which the State is otherwise entitled (without regard to payments under subsection (t) and without regard to payments for claims relating to expenditures made before fiscal year 1981). “(B) No reduction may be made under subparagraph (A) for a quarter unless, as of the first day of the quarter, the Secretary has promulgated and has in effect final regulations (on an interim or other basis) implementing paragraphs (10)(C) and (13)(A) of section 1902(a) (as amended by the Medicare and Medicaid Amendments of 1981). “(C) For purposes of this paragraph, the term ‘State’ only includes the fifty States and the District of Columbia and does not include any State which did not have a plan approved under this title as of July 1, 1981. “(2) The percentage reduction imposed by paragraph (1) for a State for a quarter shall be reduced— “(A) by one percentage point if the State has a qualified hospital cost review program (described in paragraph (3)) for the quarter, “(B) by one percentage point if the State has a high unemployment rate (as determined under paragraph (4)) for the quarter, and “(C) by one percentage point if the total amount of the State’s third party and fraud and abuse recoveries (as defined in paragraph (5)(A)) for the previous quarter is equal to or exceeds one percent of the amount of Federal payments that the Secretary estimates are due the State under this title for that previous quarter (without regard to payments under subsection (t)). “(3) For purposes of paragraph (2)(A), a State has a qualified hospital cost review program for a calendar quarter if such program meets the following requirements: “(A) The program must have been established by statute and in effect on July 1, 1981, and at the beginning of the quarter. “(B) The program must be operated directly by the State and must apply (i) to substantially all nonfederal acute care hospitals (as defined by the Secretary) in the State and (ii) to review of either all revenues or expenses for inpatient hospital services 42 USC 1395. (other than revenues under title XVIII of this Act, unless approved by the Secretary) or at least 75 percent of all revenues or expenses for inpatient hospital services (including revenues under title XVIII of this Act). “(C) The State must provide the Secretary with satisfactory assurances as to the equitable treatment under the program of all entities (including Federal and State programs) that pay hospitals for inpatient hospital services, of hospital employees, and of hospital patients. “(D) The Secretary determines that the annual rate of increase in aggregate hospital inpatient costs per capita or per admission (as defined by the Secretary) in the State during the most recent calendar year ending at least nine months before such quarter (or, at the State’s option, during the 2 or 3 calendar-year period ending with that calendar year) is at least two percentage points less than the annual rate of increase during that calendar year (or that period, as the case may be) in such costs per capita or per admission for hospitals located in the United States (excluding from such computation, with respect to any calendar year in any period, any State which had in existence a qualified hospital cost review program (or, in the case of periods before January 1, 1982, had a hospital cost review program which the Secretary determines met for such periods the provisions of subparagraphs (A), (B), and (C) of this paragraph) during that entire calendar year). “(4) (A) For purposes of paragraph (2)(B), a State has a high unemployment rate with respect to a quarter if the average of the monthly unemployment rates (as determined by the Bureau of Labor Statistics) for the State for the three months immediately before such quarter is equal to or greater than 150 percent of the average of such rates for the United States for such months. “(B) For purposes of subparagraph (A), the term ‘United States’ only includes the fifty States and the District of Columbia. (5) (A) For purposes of paragraph (2)(C), the term ‘third party and fraud and abuse recoveries’ means, for a State for a previous quarter— “(i) the total amount that State demonstrates to the Secretary that it has recovered or diverted in the quarter on the basis of (I) third-party payments (described in section 1902(a)(25)), (II) the operation of its State medicaid fraud control unit (defined in subsection (q)), and (III) other fraud or abuse control activities, plus “(ii) any amount carried forward from the previous quarter under subparagraph (B). Subclause (I) of clause (i) shall only apply to quarters during fiscal year 1982. “(B) If the total amount of the State’s third party and fraud and abuse recoveries (defined in subparagraph (A)) for a quarter (beginning on or after October 1, 1981) exceeds one percent of the amount of Federal payments that the Secretary estimates are due the State under this title for that quarter (without regard to subsection (t)), the amount of such excess shall be carried forward to the following quarter for purposes of clause (ii) of subparagraph (A).”. (b) Section 1902 of such Act is further amended by adding after subsection (s) (added by subsection (a) of this section) the following new subsection: “(t) (1) The Secretary shall determine for each State (as defined in subsection (s)(1)(C)) for each of fiscal years 1982, 1983, and 1984, a target amount of Federal medicaid expenditures. Such target amount for a State for fiscal year— “(A) 1982, is equal to 109 percent of the estimate (based upon the last such estimate for such State received by the Secretary before April 1, 1981) of the Federal share of expenditures under this title (other than interest paid under subsection (d)(5), without taking into account reductions in payment under subsection (s) or additional payments under this subsection, and without regard to payments for claims relating to expenditures made prior to October 1, 1980) in fiscal year 1981 for such State; “(B) 1983, is equal to the target amount determined under subparagraph (A) for the State increased or decreased by a percentage equal to the percentage increase or decrease (as the case may be) in the index of the medical care expenditure category of the consumer price index for all urban consumers (published by the Bureau of Labor Statistics) between September 1982 and September 1983; and “(C) 1984, is equal to the target amount determined under subparagraph (A) for the State increased or decreased by a percentage equal to the percentage increase or decrease (as the case may be) in the index of the medical care expenditure category of the consumer price index for all urban consumers (published by the Bureau of Labor Statistics) between September 1982 and September 1984. “(2) Notwithstanding any other provision of this section (except as otherwise provided in this subsection), the amount of payments which a State (with a State plan approved under this title) is otherwise entitled to receive for the first quarter of any fiscal year (beginning with fiscal year 1983 and ending with fiscal year 1985) shall be supplemented by an amount equal to the lesser of— “(A) the amount by which the Secretary determines or estimates (subject to appropriate subsequent adjustments) the Federal share of expenditures under this title (other than interest paid under subsection (f)5), without taking into account reductions in payment under subsection (s) or payments under this subsection, without regard to payments for claims relating to expenditures made prior to October 1, 1980, and subject to paragraph (3) of this subsection) under the State’s plan for the previous fiscal year was less than the target amount of Federal medicaid expenditures for that State for that fiscal year determined under paragraph (1), or “(B) the amount of the reductions imposed with respect to the State under subsection (s) for the quarters in the previous fiscal year. “(3) Only for the purpose of computing under this subsection the Federal share of expenditures for a State for fiscal year 1984 (in the case of the payment which may be made for the first quarter of fiscal year 1985), the Federal medical assistance percentage for fiscal year 1984 shall be the Federal medical assistance percentage for States in effect for fiscal year 1983, disregarding any change in such percentage between fiscal year 1983 and fiscal year 1984.”. (c) (1) Effective for calendar quarters beginning on or after October 1, 1984, subsection (s) of section 1902 of the Social Security Act Ante, p. 803. (added by subsection (a) of this section) is repealed. (2) Effective after payments for the first quarter of fiscal year 1985, subsection (t) of section 1902 of the Social Security Act (added by Ante, p. 804. subsection (b) of this section) is repealed. Sec. 2162. payments to territories (a) (1) Section 1101(a)(1) of the Social Security Act is amended (1) by striking out “American Samoa and” in the third sentence and inserting in lieu thereof “American Samoa, the Northern Mariana Islands, and”, and (2) by inserting after the third sentence the following new sentence: “Such term when used in title XIX also includes the Northern Mariana Islands.”. (2) Clause (2) of section 1905(b) of such Act is amended by striking out “and Guam” and inserting in lieu thereof “Guam, and the Northern Mariana Islands”. (b) (1) Subsection (c) of section 1108 of such Act is amended to read as follows: “(c) The total amount certified by the Secretary under title XIX with respect to a fiscal year for payment to— “(1) Puerto Rico shall not exceed $45,000,000, “(2) the Virgin Islands shall not exceed $1,500,000, “(3) Guam shall not exceed $1,400,000, and “(4) the Northern Mariana Islands shall not exceed $350,000.”. (2) The amendment made by paragraph (1) shall apply to fiscal years beginning with fiscal year 1982. Sec. 2163. eliminating time period limitation on payment of interest on disputed claims Section 1903(d)(5) of the Social Security Act is amended by striking out “(but not to exceed a period of twelve months” and all that follows through “disallowances made thereafter)”. Sec. 2164. eliminating federal matching for certain laboratory tests (a) Section 1903(i) of the Social Security Act, as amended by section 2103 of this subtitle, is further amended by striking out the period at the end of paragraph (5) and inserting in lieu thereof “; or” and by adding at the end the following new paragraph: “(6) with respect to any amount expended for inpatient hospital tests (other than in emergency situations) not specifically ordered by the attending physician or other responsible practitioner.”. (b) The amendments made by subsection (a) shall apply to tests occurring on or after October 1, 1981. Sec. 2165. study of federal medical assistance percentage formula and of adjustments of target amounts for federal medicaid expenditures (a) The Comptroller General, in consultation with the Advisory Committee for Intergovermental Relations, shall conduct a study of— (1) the formula, under section 1905(b) of the Social Security 42 USC 1396d. Act, defining the Federal medical assistance percentage, as it applies to distribution of Federal funds to States (as defined for purposes of title XIX of such Act) under that Act, and (2) the validity and equity of any adjustment to the target amount of Federal medical expenditures (under section 1903(t) of Ante, p. 804. the Social Security Act, added by section 2161 of this subtitle) for all States or any particular State which ought to be made for fiscal year 1983 or fiscal year 1984 (including methodology for calculating and implementing such adjustments) to reflect eco-nomic and demographic factors affecting such State which are out of the ordinary sphere of control of such State. Specifically, pursuant to paragraph (1) the Comptroller General shall examine the feasibility and consequences of revising the medicaid matching formula so as to take into account the relative economic positions and needs of the different States, the different amounts of support and income payments made by different States under the Social Security Act, the relative cost of living and the unemployment 42 USC 1305. rates in the different States, the relative taxable wealth and amount of taxes raised per capita by the different States, and other relevant factors bearing on an equitable distribution of Federal funds to States under that Act. (b) The Comptroller General shall report to the Congress on the study required under this section not later than October 1, 1982. CHAPTER 2— INCREASED FLEXIBILITY FOR STATES Sec. 2171. coverage of, and services for, the medically needy (a) Section 1902(a)(10) of the Social Security Act is 42 USC 1396a. amended— (1) by amending subparagraph (A) to read as follows: “(A) for making medical assistance available, including at least the care and services listed in paragraphs (1) through (5) and (17) of section 1905(a), to all individuals receiving aid or assistance 42 USC 396d. under any plan of the State approved under title I, X, XIV, or XVI, or part A or part E of title IV (including pregnant women 42 USC 301, 1201, 1351, 1381, 601; 94 Stat. 501. 42 USC 670. deemed by the State to be receiving such aid as authorized in section 406(g) and individuals considered by the State to be receiving such aid as authorized under section 414(g)), or with respect to whom supplemental security income benefits are being paid under title XVI;”; (2) by striking out “clause” each place it appears in subparagraph (B) and inserting in lieu thereof “subparagraph” and by striking out “and” at the end of subparagraph (B); and (3) by striking out paragraph (C) and by inserting in lieu thereof the following: “(C) that if medical assistance is included for any group of individuals described in section 1905(a) who are not described in subparagraph (A), then— “(i) the plan must include a description of (I) the criteria for determining eligibility of individuals in the group for such medical assistance and (H) the amount, duration, and scope of medical assistance made available to individuals in the group; “(ii) the plan must make available medical assistance— “(I) to individuals described in section 1905(a)(i), and “(II) to pregnant women, during the course of their pregnancy, who (but for income and resources) would be eligible for medical assistance as an individual described in subparagraph (A); “(iii) such medical assistance must include (I) with respect to children under 18 and individuals entitled to institutional services, ambulatory services, and (II) with respect to pregnant women, prenatal care and delivery services; and “(iv) if such medical assistance includes services in institutions for mental diseases or intermediate care facility services for the mentally retarded (or both) for any such group, it also must include for all groups covered at least the care and services listed in paragraphs (1) through (5) and (17) of section 1905(a) or the care and services listed in any 7 of the paragraphs numbered (1) through (17) of such section; and “(D) for the inclusion of home health services for any individual who, under the State plan, is entitled to skilled nursing facility services;”. (b) Section 1902(a)(13) of such Act is amended by striking out subparagraphs (A), (B), and (C). (c) The amendments made by this section shall become effective on the date of the enactment of this Act. Sec. 2172. flexibility in coverage of individuals aged 18–20 (a) Paragraph (2) of section 1902(b) of the Social Security Act is amended to read as follows: “(2) any age requirement which excludes any individual who has not attained the age of 19 and is a dependent child under part A of title IV;”. (b) (1) Clause (i) of section 1905(a) of such Act is amended to read as follows: “(i) under the age of 21, or, at the option of the State, under the age of 20, 19, or 18 as the State may choose, or any reasonable category of such individuals,”. (2) Section 1905(a)(ii) of such Act is amended by striking out “, except for section 406(a)(2),”. (c) The amendments made by this section shall become effective on the date of the enactment of this Act. Sec. 2173. reimbursement of hospitals (a) (1) Section 1902(a)(13) of the Social Security Act is amended— (A) by striking out subparagraph (D); (B) in subparagraph (E)— (i) by striking out “skilled nursing facility and intermediate care facility” and inserting in lieu thereof “hospital, skilled nursing facility, and intermediate care facility”; (ii) by inserting “and which, in the case of hospitals, take into account the situation of hospitals which serve a disproportionate number of low income patients with special needs and provide, in the case of hospital patients receiving services at an inappropriate level of care (under conditions 42 USC 1395x. similar to those described in section 1861(v)(1)(G)), for lower reimbursement rates reflecting the level of care actually received (in a manner consistent with section 1861(v)(1)(G))” after “determined in accordance with methods and standards developed by the State”; (iii) by inserting before the first semicolon the following: “and to assure that individuals eligible for medical assistance have reasonable access (taking into account geographic location and reasonable travel time) to inpatient hospital services of adequate quality”; and (iv) by striking out “each skilled nursing or intermediate care facility” and inserting in lieu thereof “each hospital, skilled nursing facility, and intermediate care facility”; and (C) by redesignating subparagraphs (E) and (F) as subparagraphs (A) and (B), respectively. (2) Section 1902(a)(20) of such Act is amended— 42 USC 1396a. (A) by inserting “and” at the end of subparagraph (B); (B) by striking out “and” at the end of subparagraph (C); and (C) by striking out subparagraph (D). (b) (1) Subsection (h) of section 1902 of such Act is repealed. (2) The amendment made by paragraph (1) shall not apply with 42 USC 1396a note. respect to services furnished before the date the Secretary of Health and Human Services first promulgates and has in effect final regulations (on an interim or other basis) to carry out section 1902(a)(13)(A) of the Social Security Act (as amended by this subtitle). (c) Part A of title XI of such Act is amended by adding after section 1134 the following new section: “Sec. 1135. “development of model prospective rate methodology (a) The Secretary shall develop a model system or 42 USC 1320b–5. systems for the payment of hospitals for inpatient hospital services on a prospective basis which may be applied for reimbursement of hospitals under title XVIII or under a State plan approved under title XIX. 42 USC 1395, 1396. “(b) The Secretary shall report to the Congress on the development of such system or systems not later than July 31, 1982.”. Sec. 2174. removal of medicaid reasonable charge limitation (a) Section 1902(a)(30) of the Social Security Act is 42 USC 1396a. amended by striking out “(including payments” and all that follows through “reasonable charges” and inserting in lieu thereof “are”. (b) Section 1903(i) of such Act is amended by striking out paragraph 42 USC 1396b. (1). (c) The amendments made by this section shall apply to services Effective date. 42 USC 1396a note. furnished an or after October 1, 1981. Sec. 2175. inapplicability and waiver of freedom-of-choice and other state plan requirements (a) Paragraph (23) of section 1902(a) of the Social Security Act is amended— (1) by inserting “except as provided in section 1915 and” after “(23)”, and (2) by striking out all that follows the first semicolon. (b) Title XIX of the Social Security Act is amended by adding at the end the following new section: “Sec. 1915. “provisions respecting inapplicability and waiver of certain requirements of this title (a) A State shall not be deemed to be out of compliance 42 USC 1396n. with the requirements of paragraphs (1), (10), or (23) of section 1902(a) solely by reason of the fact that the State (or any political subdivision thereof)— “(1) has entered into— “(A) a contract with an organization which has agreed to provide care and services in addition to those offered under the State plan to individuals eligible for medical assistance who reside in the geographic area served by such organization and who elect to obtain such care and services from such organization, or by reason of the fact that the plan provides for payment for rural health clinic services only if those services are provided by a rural health clinic; or “(B) arrangements through a competitive bidding process or otherwise for the purchase of laboratory services referred 42 USC 1396d. to in section 1905(a)(3) or medical devices if the Secretary has found that— “(i) adequate services or devices will be available under such arrangements, and “(ii) any such laboratory services will be provided only through laboratories— “(I) which meet the applicable requirements of 42 USC 1395x. section 1861(e)(9) or paragraphs (11) and (12) of section 1861(s), and such additional requirements as the Secretary may require, and “(II) no more than 75 percent of whose charges for such services are for services provided to individuals who are entitled to benefits under this title or 42 USC 1395c, 1895j. under part A or part B of title XVIII; or “(2) restricts— “(A) for a reasonable period of time the provider or providers from which an individual (eligible for medical assistance for items or services under the State plan) can receive such items or services, if the State has found, after notice and opportunity for a hearing (in accordance with procedures established by the State), that the individual has utilized such items or services at a frequency or amount not medically necessary (as determined in accordance with utilization guidelines established by the State), or “(B) (through suspension or otherwise) for a reasonable period of time the participation of a provider of items or services under the State plan, if the State has found, after notice and opportunity for a hearing (in accordance with procedures established by the State), that the provider has (in a significant number or proportion of cases) provided such items or services either (i) at a frequency or amount not medically necessary (as determined in accordance with utilization guidelines established by the State), or (ii) of a quality which does not meet professionally recognized standards of health care, if, under such restriction, individuals eligible for medical assistance for such services have reasonable access (taking into account geographic location and reasonable travel time) to such services of adequate quality. “(b) The Secretary, to the extent he finds it to be cost-effective and efficient and not inconsistent with the purposes of this title, may 42 USC 1396a, 1396b. waive such requirements of section 1902 and section 1903(m) as may be necessary for a State— “(1) to implement a case-management system or a specialty physician services arrangement which restricts the provider from (or through) whom an individual (eligible for medical assistance under this title) can obtain primary care services (other than in emergency circumstances), if such restriction does not substantially impair access to such services of adequate quality where medically necessary, “(2) to allow a locality to act as a central broker in assisting individuals (eligible for medical assistance under this title) in selecting among competing health care plans, if such restriction does not substantially impair access to services of adequate quality where medically necessary, “(3) to share (through provision of additional services) with recipients of medical assistance under the State plan cost savings resulting from use by the recipient of more cost-effective medical care, and “(4) to restrict the provider from (or through) whom an individual (eligible for medical assistance under this title) can obtain services (other than in emergency circumstances) to providers or practitioners who undertake to provide such services and who meet, accept, and comply with the reimbursement, quality, and utilization standards under the State plan, which standards are consistent with access, quality, and efficient and economic provision of covered care and services, if such restriction does not discriminate among classes of providers on grounds unrelated to their demonstrated effectiveness and efficiency in providing those services. “(c) No waiver under this section may extend over a period of longer than two years unless the State requests continuation of such waiver, and such request shall be deemed granted unless the Secretary denies such request in writing within 90 days after the date of its submission to the Secretary. “(d) (1) The Secretary shall monitor the implementation of waivers granted under this section to assure that the requirements for such waiver are being met and shall, after notice and opportunity for a hearing, terminate any such waiver where he finds noncompliance has occurred. “(2) The Secretary shall report, not later than September 30, 1984, Report to Congress. to Congress on waivers granted under this section.”. (d) (1) Section 1902(a)(9) of such Act is amended— 42 USC 1396a. (A) by striking out “and” at the end of subparagraph (A), (B) by striking out the semicolon at the end of subparagraph (B) and inserting in lieu thereof “, and”, and (C) by adding after subparagraph (B) the following new subparagraph: “(C) that any laboratory services paid for under such plan must be provided by a laboratory which meets the applicable requirements of section 1861(e)(9) or paragraphs (11) and (12) of section 42 USC 1395x. 1861(s), or, in the case of a laboratory which is in a rural health clinic, of section 1861(aa)(2)(G);”. (2) (A) The amendments made by paragraph (1) shall (except as Effective date. 42 USC 1396a note. 42 USC 1396. provided under subparagraph (B)) be effective with respect to payments under title XIX of the Social Security Act for calendar quarters beginning on or after October 1, 1981. (B) 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 legislation in order for the plan to meet the additional requirement imposed by the amendment made by paragraph (1)(C), 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 this additional requirement before the first day of the first calendar year beginning after the close of the first regular session of the State legislature that begins after the date of the enactment of this Act. Sec. 2176. waiver to provide home and community-based services for certain individuals Section 1915 of the Social Security Act (added by section 2175 of this subtitle) is amended— (1) by inserting “(other than a waiver under subsection (c))” in subsection (c) after “No waiver under this section”, and (2) by redesignating subsections (c) and (d) as subsections (d) and (e), respectively, and by inserting after subsection (b) the following new subsection: “(c) (1) The Secretary may by waiver provide that a State plan approved under this part may include as ‘medical assistance’ under such plan home or community-based services (other than room and board) approved by the Secretary which are provided pursuant to a written plan of care to individuals with respect to whom there has been a determination that but for the provision of such services the individuals would require the level of care provided in a skilled nursing facility or intermediate care facility the cost of which could be reimbursed under the State plan. “(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) the State will provide, with respect to individuals who are entitled to medical assistance for skilled nursing facility or intermediate care facility services under the State plan and who may require such services, for an evaluation of the need for such services; “(C) such individuals who are determined to be likely to require the level of care provided in a skilled nursing facility or intermediate care facility are informed of the feasible alternatives, if available under the waiver, at the choice of such individuals, to the provision of skilled nursing facility or intermediate care facility services; “(D) 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 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 “(E) the State will provide to the Secretary annually, consistent with a data collection plan designed by the Secretary, information on the impact of the waiver granted under this subsection on the type and amount of medical assistance provided 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 subsection (a)(1) (relating to statewideness) and 42 USC 1396a. subsection (a)(10) of section 1902. A waiver under this subsection shall be for an initial term of three years and, upon the request of a State, shall be extended for additional three-year periods unless the Secretary determines that for the previous three-year period the assurances provided under paragraph (2) have not been met. “(4) A waiver granted under this section may, consistent with paragraph (2)— “(A) limit the individuals provided benefits under such waiver to individuals with respect to whom the State has determined that there is a reasonable expectation that the amount of medical assistance provided with respect to the individual under such waiver will not exceed the amount of such medical assistance provided for such individual if the waiver did not apply, and “(B) provide medical assistance to individuals (to the extent consistent with written plans of care, which are subject to the approval of the State) for case management services, homemaker/home health aide services and personal care services, adult day health services, habilitation services, respite care, and such other services requested by the State as the Secretary may approve.”. Sec. 2177. time limitation for action an requests for plan amendments and waivers (a) Section 1915 of the Social Security Act (added by Ante, p. 812. section 2175 of this subtitle) is further amended by adding at the end thereof the following new subsection: “(f) A request to the Secretary from a State for a proposed State plan or plan amendment or a waiver of a requirement of this title submitted by the State pursuant to a provision of this title shall be deemed granted unless the Secretary, within 90 days after the date of its submission to the Secretary, either denies such request in writing or informs the State agency in writing with respect to any additional information which is needed in order to make a final determination with respect to the request. After the date the Secretary receives such additional information, the request shall be deemed granted unless the Secretary, within 90 days of such date, denies such request.”. (b) The amendment made by this section shall become effective 90 Effective date. 42 USC 1396n note. days after the date of the enactment of this Act. Sec. 2178. flexibility in hmo and prepaid provider participation in state plans (a) (1) Paragraph (1)(A) of section 1903(m) of the Social Security Act is amended by striking out “means” and all that follows 42 USC 1396b. through the end thereof and inserting in lieu thereof the following: “means a public or private organization, organized under the laws of any State, which is a qualified health maintenance organization (as defined in section 1310(d) of the Public Health Service Act) or 42 USC 300e–9. which— “(i) makes services it provides to individuals eligible for benefits under this title accessible to such individuals, within the area served by the organization, to the same extent as such services are made accessible to individuals (eligible for medical assistance under the State plan) not enrolled with the organization, and “(ii) has made adequate provision against the risk of insolvency, which provision is satisfactory to the State and which assures that individuals eligible for benefits under this title are in no case held liable for debts of the organization in case of the organization’s insolvency.”. (2) Paragraph (2)(A) of section 1903(m) of such Act is amended— 42 USC 1396b. (A) by striking out “and” at the end of clause (i), (B) by striking out “one-half of the membership of the entity” in clause (ii) and inserting in lieu thereof “75 percent of the membership of the entity which is enrolled on a prepaid basis”; (C) by striking out the period at the end of clause (ii) and inserting in lieu thereof a semicolon, and (D) by adding at the end the following new clauses: “(iii) such services are provided for the benefit of individuals eligible for benefits under this title in accordance with a contract between the State and the entity under which prepaid payments to the entity are made on an actuarially sound basis; “(iv) such contract provides that the Secretary and the State (or any person or organization designated by either) shall have the right to audit and inspect any books and records of the entity (and of any subcontractor) that pertain (I) to the ability of the entity to bear the risk of potential financial losses, and (II) to services performed or determinations of amounts payable under the contract; “(v) such contract provides that in the entity’s enrollment, reenrollment, or disenrollment of individuals who are eligible for benefits under this title and eligible to enroll, reenroll, or disenroll with the entity pursuant to the contract, the entity will not discriminate among such individuals on the basis of their health status or requirements for health care services; “(vi) such contract (I) permits individuals who have elected under the plan to enroll with the entity for provision of such benefits to terminate such enrollment without cause as of the beginning of the first calendar month following a full calendar month after the request is made for such termination, and (II) provides for notification of each such individual, at the time of the individual’s enrollment, of such right to terminate such enrollment; and “(vii) such contract provides that, in the case of medically necessary services which were provided (I) to an individual enrolled with the entity under the contract and entitled to benefits with respect to such services under the State’s plan and (II) other than through the organization because the services were immediately required due to an unforseen illness, injury, or condition, either the entity or the State provides for reimbursement with respect to those services.”. (3) Paragraph (2) of such section is further amended by adding after subparagraph (C) the following new subparagraph: “(D) In the case of a health maintenance organization that is a public entity, the Secretary may modify or waive the requirement described in subparagraph (A)(ii) but only if the Secretary determines that (i) special circumstances warrant such modification or waiver, and (ii) the organization has taken and is taking reasonable efforts to enroll individuals who are not entitled to benefits under the State 42 USC 1395. 42 USC 1396a. plan approved under this title or under title XVIII.”. (b) Section 1902(e) of such Act is amended by inserting “(1)” after “(e)” and by adding at the end the following new paragraph: “(2) (A) In the case of an individual who is enrolled with a qualified health maintenance organization (as defined in title XIII of the 42 USC 300e. 42 USC 1396b. Public Health Service Act) under a contract described in section 1903(m)(2)(A) and who would (but for this paragraph) lose eligibility for benefits under this title before the end of the minimum enrollment period (defined in subparagraph (B)), the State plan may provide, notwithstanding any other provision of this title, that the individual shall be deemed to continue to be eligible for such benefits until the end of such minimum period, but only with respect to such benefits provided to the individual as an enrollee of such organization. “(B) For purposes of subparagraph (A), the term ‘minimum enrollement “Minimum enrollment period.” period’ means, with respect to an individual’s enrollment with a health maintenance organization under a State plan, a period, established by the State, of not more than six months beginning on the date the individual’s enrollment with the organization becomes effective.”. (c) The amendments made by this section shall apply with respect 42 USC 1396a note. 42 USC 1396. to services furnished, under a State plan approved under title XIX of the Social Security Act, on or after October 1, 1981; except that such amendments shall not apply with respect to services furnished by a health maintenance organization under a contract with a State entered into under such title before October 1, 1981 unless the organization requests that such amendments apply and the Secretary of Health and Human Services and the single State agency (administering or supervising the administration of the State plan under such title) agree to such request. (d) The Secretary of Health and Human Services shall conduct a 42 USC 1396a note. study evaluating the extent of, and reasons for, the termination by medicaid beneficiaries of their memberships in health maintenance organizations. In conducting such study, the Secretary shall place special emphasis on the quantity and quality of medical care provided in health maintenance organizations and the quality of such care when provided on a fee-for-service basis. The Secretary shall submit Report to Congress. an interim report to the Congress, within two years after the date of the enactment of this Act, and a final report within five years from such date containing, respectively, the interim and final findings and conclusions made as a result of such study. CHAPTER 3— MISCELLANEOUS CHANGES Sec. 2181. repeal of epsdt penalty (a) (1) Subsection (g) of section 403 of the Social Security Act is repealed. 42 USC 603. (2) Section 1902(a) of such Act is amended— (A) by striking out “and” at the end of paragraph (42), 42 USC 1396a. (B) by striking out the period at the end of paragraph (43) and inserting in lieu thereof “; and”, and (C) by inserting after paragraph (43) the following new paragraph: “(44) provide for— “(A) informing all persons in the State who are under the age of 21 and who have been determined to be eligible for medical assistance including services described in section 1905(a)(4)(B), of the availability of early and periodic screening, 42 USC 1396d. diagnostic, and treatment services as described in section 1905(a)(4)(B), “(B) providing or arranging for the provision of such screening services in all cases where they are requested, and “(C) arranging for (directly or through referral to appropriate agencies, organizations, or individuals) corrective treatment the need for which is disclosed by such child health screening services.”. (b) The amendment made by subsection (a)(1) shall apply to reductions Effective date. 42 USC 603 note. for calendar quarters beginning on or after June 30, 1974, and the amendments made by subsection (a)(2) shall take effect on October 1, 1981. Sec. 2182. flexibility in requiring collection of third-party payments Section 1902(a)(25)(C) of the Social Security Act is amended by inserting “and where the amount of reimbursement the State can reasonably expect to recover exceeds the costs of such recovery” after “of the individual”. Sec. 2183. permitting physician assistants and nurse practitioners to provide certain recertifications (a) Section 1903(g)(1)(A) of the Social Security Act is amended— (1) by striking out “(and recertifies” and inserting in lieu thereof “(and the physician, or a physician assistant or nurse practitioner under the supervision of a physician, recertifies”, and (2) by inserting “(or, in the case of services that are intermediate care facility services described in section 1905(d), every year)” after “every 60 days”. (b) The amendments made by subsection (a) shall apply to payments made to States for calendar quarters beginning on or after October 1, 1981. Sec. 2184. repeal of obsolete authority for medical assistance (a) (1) The heading of title I of the Social Security Act is amended by striking out “AND MEDICAL ASSISTANCE”. (2) Section 1 of such Act is amended— (A) by striking out “(a)” the first place it appears in the first sentence, (B) by striking out “, (b) of enabling” and all that follows through “for self-care” in the first sentence, and (C) by striking out “, or for medical assistance for the aged, or for old-age assistance and medical assistance for the aged” in the second sentence. (3) Section 2 of such Act is amended— (A) by striking out “and medical assistance” in the heading; (B) by striking out “, or for medical assistance for the aged, or for old-age assistance and medical assistance for the aged” in subsection (a) before paragraph (1); (C) by striking out “; and” at the end of subsection (a)(10) and inserting in lieu thereof a period; and (D) by striking out paragraphs (11), (12), and (13) of subsection (a). (4) Section 3 of such Act is amended— (A) by striking out paragraphs (1) and (3) of subsection (a); (B) by amending paragraph (2) of subsection (a) to read as follows: “(2) in the case of Puerto Rico, the Virgin Islands, and Guam, an amount equal to one-half of the total of the sums expended during such quarter as old-age assistance under the State plan, not counting so much of any expenditure with respect to any month as exceeds $37.50 multiplied by the total number of recipients of old-age assistance for such month; plus”; and (C) by striking out subsection (d). (5) Section 6 of such Act is amended by striking out subsections (b) 42 USC 306. and (c). (b) (1) Section 403 of such Act is amended— 42 USC 603. (A) by striking out “(including expenditures for premiums” and all that follows through “the cost thereof)” in subsection (a)(1) in the matter before subparagraph (A); (B) by striking out “plus (ii)” and all that follows through “clause (i) or (ii)” in subsection (a)(1)(A) and inserting in lieu thereof “plus (ii) the number of individuals, not counted under clause (1)”; and (C) by striking out “(including expenditures” and all that follows through “the cost thereof)” in subsection (a)(2). (2) Section 406 of such Act is amended— 42 USC 606. (A) by striking out “, or (if provided” and all that follows through “under State law in behalf of,” and “or medical care or any type of remedial care recognized under State law” in subsection (b) in the matter preceding subparagraph (A), and (B) by inserting “(for which such individual is not entitled to medical assistance under the State plan under title XIX)” in subsection (e)(1)(A) after “recognized under State law”. (c) (1) Sections 1001 and 1401 of such Act are each amended by 42 USC 1201, 1351. striking out “and of encouraging each State” and all that follows through “self-care”. (2) Sections 1003(a) and 1403(a) of such Act are each amended— 42 USC 1203, 1353. (A) by striking out paragraph (1), and (B) by striking out “(including expenditures for” and all that follows through “the cost thereof)” in paragraph (2). (3) Sections 1006 and 1405 of such Act are each amended by striking 42 USC 1206, 1355. out “, or (if provided” and all that follows through “under State law in behalf of,” in the matter before paragraph (1). (d) (1) The amendments made by this subsection are to the title XVI of the Social Security Act which only applies in the case of Puerto 42 USC 1381. Rico, Guam, and the Virgin Islands under section 303(b) of the Social Security Amendments of 1972 (Public Law 92–603). 42 USC 301 note. (2) The heading of such title is amended by striking out “AND MEDICAL ASSISTANCE”. (3) Section 1601 of such title is amended— 42 USC 1381 note. (A) by striking out “(a)” the first place it appears in the first sentence, (B) by striking out “, (b) of enabling” and all that follows through “or self-care” in the first sentence, and (C) by striking out “, or for aid to the aged, blind, or disabled and medical assistance for the aged” in the second sentence. (4) Section 1602 of such title is amended— 42 USC 1382 note. (A) by striking out “, or for such aid and medical assistance for the aged” in the heading; (B) by striking out “, or for aid to the aged, blind, or disabled and medical assistance for the aged” in subsection (a) in the matter before paragraph (1); (C) by inserting “and” at the end of paragraph (13) of subsection (a); (D) by striking out the semicolon at the end of paragraph (14) of subsection (a) and inserting in lieu thereof a period; (E) by striking out paragraphs (15), (16), and (17) of subsection (a); (F) by striking out “(or for aid to the aged, blind, or disabled and medical assistance for the aged)” in the second sentence of subsection (a); (G) by striking out “(A) in the case of applicants for aid to the aged, blind, or disabled” in subsection (b)(2); (H) by striking out “and (B)” and all that follows through “who resides in the State” in subsection (b)(2); and (I) by striking out “(or for aid to the aged, blind, or disabled and medical assistance for the aged)” each place it appears in the third sentence of subsection (b). (5) Section 1603 of such title is amended— (A) by striking out paragraphs (1) and (3) of subsection (a); (B) by striking out “(including expenditures for premiums)” and all that follows through “cost thereof)” in paragraph (2)(A); (C) by striking out “the larger of the following amounts: (i)”, “(I)”, and “, or (II)” and all that follows before the semicolon, in paragraph (2)(B); and (D) by striking out subsection (d). (6) Section 1605 of such title is amended— (A) by striking out “, or (if provided” and all that follows through “under State law in behalf of,” in subsection (a) in the matter before paragraph (1), and (B) by striking out subsection (b). Subtitle D— Maternal and Child Health Services Block Grant Sec. 2191. short title of subtitle This subtitle may be cited as the “Maternal and Child Health Services Block Grant Act”. Sec. 2192. maternal and child health services block grant (a) Title V of the Social Security Act is amended to read as follows: “TITLE V— MATERNAL AND CHILD HEALTH SERVICES BLOCK GRANT “Sec. 501. “authorization of appropriations (a) For the purpose of enabling each State— “(1) to assure mothers and children (in particular those with low income or with limited availability of health services) access to quality maternal and child health services, “(2) to reduce infant mortality and the incidence of preventable diseases and handicapping conditions among children, to reduce the need for inpatient and long-term care services, to increase the number of children (especially preschool children) appropriately immunized against disease and the number of low income children receiving health assessments and follow-up diagnostic and treatment services, and otherwise to promote the health of mothers and children (especially by providing preventive and primary care services for low income children, and prenatal, delivery, and postpartum care for low income mothers), “(3) to provide rehabilitation services for blind and disabled individuals under the age of 16 receiving benefits under title XVI 42 USC 1381. of this Act, and “(4) to provide services for locating, and for medical, surgical, corrective, and other services, and care for, and facilities for diagnosis, hospitalization, and aftercare far, children who are crippled or who are suffering from conditions leading to crippling; and for the purpose of enabling the Secretary to provide for special projects of regional and national significance, research, and training with respect to maternal and child health and crippled children, for genetic disease testing, counseling, and information development and dissemination programs, and for grants relating to hemophilia (without regard to age), there are authorized to be appropriated $373,000,000 for fiscal year 1982 and for each fiscal year thereafter. “(b) For purposes of this title: “(1) The term ‘consolidated health programs’ means the programs administered under the provisions of— “(A) this title (relating to maternal and child health and crippled children’s services), “(B) section 1615(c) of this Act (relating to supplemental 42 USC 1382d. security income for disabled children), “(C) sections 316 (relating to lead-based paint poisoning 42 USC 247a, 1301, 1320a, 1320b–1. prevention programs), 1101 (relating to genetic disease programs), 1121 (relating to sudden infant death syndrome programs) and 1131 (relating to hemophilia treatment centers) of the Public Health Service Act, and “(D) title IV of the Health Services and Centers Amendments of 1978 (Public Law 95–626; relating to adolescent 42 USC 247b–1. pregnancy grants), as such provisions were in effect before the date of the enactment of the Maternal and Child Health Services Block Grant Act. “(2) The term ‘low income’ means, with respect to an individual “Low income.” or family, such an individual or family with an income determined to be below the nonfarm income official poverty line defined by the Office of Management and Budget and revised annually in accordance with section 624 of the Economic Opportunity Act of 1964. 42 USC 2971d. “Sec. 502. “allotments to states and federal set-aside (a) (1) Of the amount appropriated under section 501(a), 42 USC 702. the Secretary shall retain an amount equal to 15 percent thereof in the case of fiscal year 1982, and an amount equal to not less than 10, nor more than 15, percent thereof in the case of each fiscal year thereafter, for the purpose of carrying out (through grants, contracts, or otherwise) special projects of regional and national significance, training, and research and for the funding of genetic disease testing, counseling, and information development and dissemination programs and of comprehensive hemophilia diagnostic and treatment centers. The authority of the Secretary to enter into any contracts under this title is effective for any fiscal year only to such extent or in such amounts as are provided in appropriations Acts. “(2) For purposes of paragraph (1)— “(A) amounts retained by the Secretary for training shall be used to make grants to public or nonprofit private institutions of higher learning for training personnel for health care and related services for mothers and children; and “(B) amounts retained by the Secretary for research shall be used to make grants to, contracts with, or jointly financed cooperative agreements with, public or nonprofit institutions of higher learning and public or nonprofit private agencies and organizations engaged in research or in maternal and child health or crippled children’s programs for research projects relating to maternal and child health services or crippled children’s services which show promise of substantial contribution to the advancement thereof. “(3) No funds may be made available by the Secretary under this subsection unless an application therefor has been submitted to, and approved by, the Secretary. Such application shall be in such form, be submitted in such manner, and contain and be accompanied by such information as the Secretary may specify. No such application may be approved unless it contains assurances that the applicant will use the funds provided only for the purposes specified in the approved application and will establish such fiscal control and fund accounting procedures as may be necessary to assure proper disbursement and accounting of Federal funds paid to the applicant under this title. “(b) From the remaining amounts appropriated under section 501(a) for any fiscal year, the Secretary shall allot to each State which has transmitted a description of intended activities and statement of assurances for the fiscal year under section 505, an amount determined as follows: “(1) The Secretary shall determine, for each State— “(A) (i) the amount provided or allotted by the Secretary to the State and to entities in the State under the provisions of the consolidated health programs (as defined in section 501(b)(1)), other than for any of the projects or programs described in subsection (a), from appropriations for fiscal year 1981, “(ii) the proportion that such amount for that State bears to the total of such amounts for all the States, and “(B) (i) the number of low income children in the State, and “(ii) the proportion that such number of children for that State bears to the total of such numbers of children for all the States. “(2) (A) For each of fiscal years 1982 and 1983, each such State shall be allotted for that fiscal year an amount equal to the State’s proportion (determined under paragraph (1)(A)(ii)) of the amounts available for allotment to all the States under this subsection for that fiscal year. “(B) For fiscal years beginning with fiscal year 1984, if the amount available for allotment under this subsection for that fiscal year— “(i) does not exceed the amount available under this subsection for allotment for fiscal year 1983, each such State shall be allotted for that fiscal year an amount equal to the State’s proportion (determined under paragraph (1)(A)(ii)) of the amounts available for allotment to all the States under this subsection for that fiscal year, or “(ii) exceeds the amounts available under this subsection for allotment for fiscal year 1983, each such State shall be allotted for that fiscal year an amount equal to the sum of— “(I) the amount of the allotment to the State under this subsection in fiscal year 1983 (without regard to paragraph (3) of this subsection), and “(II) the State’s proportion (determined under paragraph (1)(B)(ii)) of the amount by which the allotment available under this subsection for all the States for that fiscal year exceeds the amount that was available under this subsection for allotment for all the States for fiscal year 1983. “(3) (A) To the extent that all the funds appropriated under this title for a fiscal year are not otherwise allotted to States either because all the States have not qualified for such allotments under section 505 for the fiscal year or because some States have indicated in their descriptions of activities under section 505 that they do not intend to use the full amount of such allotments, such excess shall be allotted among the remaining States in proportion to the amount otherwise allotted to such States for the fiscal year without regard to this subparagraph. “(B) To the extent that all the funds appropriated under this title for a fiscal year are not otherwise allotted to States because some State allotments are offset under section 506(b)(2), such excess shall be allotted among the remaining States in proportion to the amount otherwise allotted to such States for the fiscal year without regard to this subparagraph. “Sec. 503. “payments to states (a) From the sums appropriated therefor and the allotments 42 USC 703. available under section 502(b), the Secretary shall make payments as provided by section 203 of the Intergovernmental Cooperation Act of 1968 (42 U.S.C. 4213) to each State provided such an allotment under section 502(b), for each quarter, of an amount equal to four-sevenths of the total of the sums expended by the State during such quarter in carrying out the provisions of this title. “(b) Any amount payable to a State under this title from allotments for a fiscal year which remains unobligated at the end of such year shall remain available to such State for obligation during the next fiscal year. No payment may be made to a State under this title from allotments for a fiscal year for expenditures made after the following fiscal year. “(c) The Secretary, at the request of a State, may reduce the amount of payments under subsection (a) by— “(1) the fair market value of any supplies or equipment furnished the State, and “(2) the amount of the pay, allowances, and travel expenses of any officer or employee of the Government when detailed to the State and the amount of any other costs incurred in connection with the detail of such officer or employee, when the furnishing of supplies or equipment or the detail of an officer or employee is for the convenience of and at the request of the State and for the purpose of conducting activities described in section 505 on a temporary basis. The amount by which any payment is so reduced shall be available for payment by the Secretary of the costs incurred in furnishing the supplies or equipment or in detailing the personnel, on which the reduction of the payment is based, and the amount shall be deemed to be part of the payment and shall be deemed to have been paid to the State. “Sec. 504. “use of allotment funds (a) Except as otherwise provided under this section, a 42 USC 704. State may use amounts paid to it under section 503 for the provision of health services and related activities (including planning, administration, education, and evaluation) consistent with its description of intended expenditures and statement of assurances transmitted under section 505. “(b) Amounts described in subsection (a) may not be used for— “(1) inpatient services, other than inpatient services provided to crippled children or to high-risk pregnant women and infants and such other inpatient services as the Secretary may approve; “(2) cash payments to intended recipients of health services; “(3) the purchase or improvement of land, the purchase, construction, or permanent improvement (other than minor remodeling) of any building or other facility, or the purchase of major medical equipment; “(4) satisfying any requirement for the expenditure of non-Federal funds as a condition for the receipt of Federal funds; or “(5) providing funds for research or training to any entity other than a public or nonprofit private entity. The Secretary may waive the limitation contained in paragraph (3) upon the request of a State if the Secretary finds that there are extraordinary circumstances to justify the waiver and that granting the waiver will assist in carrying out this title. “(c) A State may use a portion of the amounts described in subsection (a) for the purpose of purchasing technical assistance from public or private entities if the State determines that such assistance is required in developing, implementing, and administering programs funded under this title. “Sec. 505. “description of intended expenditures and statement of assurances In order to be entitled to payments for allotments under section 502 for a fiscal year, a State must prepare and transmit to the Secretary— “(1) a report describing the intended use of payments the State is to receive under this title for the fiscal year, including (A) a description of those populations, areas, and localities in the State which the State has identified as needing maternal and child health services, (B) a statement of goals and objectives for meeting those needs, (C) information on the types of services to be provided and the categories or characteristics of individuals to be served, and (D) data the State intends to collect respecting activities conducted with such payments; and “(2) a statement of assurances that represents to the Secretary that— “(A) the State will provide a fair method (as determined by the State) for allocating funds allotted to the State under this title among such individuals, areas, and localities identified under paragraph (1)(A) as needing maternal and child health services, and the State will identify and apply guidelines for the appropriate frequency and content of, and appropriate referral and followup with respect to, health care assessments and services financially assisted by the State under this title and methods for assuring quality assessments and services; “(B) funds allotted to the State under this title will only be used, consistent with section 508, to carry out the purposes of this title or to continue activities previously conducted under the consolidated health programs (described in section 502(b)(1)); “(C) the State will use— “(i) a substantial proportion of the sums expended by the State for carrying out this title for the provision of health services to mothers and children, with special consideration given (where appropriate) to the continuation of the funding of special projects in the State previously funded under this title (as in effect before the date of the enactment of the Maternal and Child Health Services Block Grant Act), and “(ii) a reasonable proportion (based upon the State’s previous use of funds under this title) of such sums to carry out the purposes described in paragraphs (1) through (3) of section 501(a); “(D) if the State imposes any charges for the provision of health services assisted by the State under this title, such charges (i) will be pursuant to a public schedule of charges, (ii) will not be imposed with respect to services provided to low income mothers or children, and (iii) will be adjusted to reflect the income, resources, and family size of the individual provided the services; and “(E) the State agency (or agencies) administering the State’s program under this title will participate— “(i) in the coordination of activities between such program and the early and periodic screening, diagnosis, and treatment program under title XIX, to ensure that such programs are carried out without duplication of effort, “(ii) in the arrangement and carrying out of coordination agreements described in section 1902(a)(11) (relating to coordination of care and services available under this title and title XIX), and “(iii) in the coordination of activities within the State with programs carried out under this title and related Federal grant programs (including supplemental food programs for mothers, infants, and children, related education programs, and other health, developmental disability, and family planning programs). The description and statement shall be made public within the State in such manner as to facilitate comment from any person (including any Federal or other public agency) during development of the description and statement and after its transmittal. The description and statement shall be revised (consistent with this section) throughout the year as may be necessary to reflect substantial changes in any element of such description or statement, and any revision shall be subject to the requirements of the preceding sentence. “Sec. 506. “reports and audits (a) (1) Each State shall prepare and submit to the 42 USC 706. Secretary annual reports on its activities under this title. In order properly to evaluate and to compare the performance of different States assisted under this title and to assure the proper expenditure of funds under this title, such reports shall be in such form and contain such information as the Secretary determines (after consultation with the States and the Comptroller General) to be necessary (A) to secure an accurate description of those activities, (B) to secure a complete record of the purposes for which funds were spent, of the recipients of such funds, and of the progress made toward achieving the purposes of this title, and (C) to determine the extent to which funds were expended consistent with the State’s description and statement transmitted under section 505. Copies of the report shall be provided, upon request, to any interested public agency, and each such agency may provide its views on these reports to the Congress. “(2) The Secretary shall annually report to the Congress on activities funded under section 502(a) and shall provide for transmittal of a copy of such report to each State. “(b) (1) Each State shall, not less often than once every two years, audit its expenditures from amounts received under this title. Such State audits shall be conducted by an entity independent of the State agency administering a program funded under this title in accordance with the Comptroller General’s standards for auditing governmental organizations, programs, activities, and functions and generally accepted auditing standards. Within 30 days following the completion of each audit report, the State shall submit a copy of that audit report to the Secretary. “(2) Each State shall repay to the United States amounts found by the Secretary, after notice and opportunity for a hearing to the State, not to have been expended in accordance with this title and, if such repayment is not made, the Secretary may offset such amounts against the amount of any allotment to which the State is or may become entitled under this title or may otherwise recover such amounts. “(3) The Secretary may, after notice and opportunity for a hearing, withhold payment of funds to any State which is not using its allotment under this title in accordance with this title. The Secretary may withhold such funds until the Secretary finds that the reason for the withholding has been removed and there is reasonable assurance that it will not recur. “(c) The State shall make copies of the reports and audits required by this section available for public inspection within the State. “(d) (1) For the purpose of evaluating and reviewing the block grant established under this title, the Secretary and the Comptroller General shall have access to any books, accounts, records, correspondence, or other documents that are related to such block grant, and that are in the possession, custody, or control of States, political subdivisions thereof, or any of their grantees. “(2) In conjunction with an evaluation or review under paragraph (1), no State or political subdivision thereof (or grantee of either) shall be required to create or prepare new records to comply with paragraph (1). “(3) For other provisions relating to deposit, accounting, reports, and auditing with respect to Federal grants to States, see section 202 of the Intergovernmental Cooperation Act of 1968 (42 U.S.C. 4212). “Sec. 507. “criminal penalty for false statements (a) Whoever— “(1) knowingly and willfully makes or causes to be made any false statement or representation of a material fact in connection with the furnishing of items or services for which payment may be made by a State from funds allotted to the State under this title, or “(2) having knowledge of the occurrence of any event affecting his initial or continued right to any such payment conceals or fails to disclose such event with an intent fraudulently to secure such payment either in a greater amount than is due or when no such payment is authorized, shall be fined not more than $25,000 or imprisoned for not more than five years, or both. “(b) For civil monetary penalties for certain submissions of false claims, see section 1128A of this Act. Ante, p. 789. “Sec. 508. “nondiscrimination (a) (1) For the purpose of applying the prohibitions 42 USC 708. against discrimination on the basis of age under the Age Discrimination Act of 1975, on the basis of handicap under section 504 of the 42 USC 6101 note. 29 USC 794. 20 USC 1681. 42 USC 2000d. Rehabilitation Act of 1973, on the basis of sex under title IX of the Education Amendments of 1972, or on the basis of race, color, or national origin under title VI of the Civil Rights Act of 1964, programs and activities funded in whole or in part with funds made available under this title are considered to be programs and activities receiving Federal financial assistance. “(2) No person shall on the ground of sex or religion be excluded from participation in, be denied the benefits of, or be subjected to discrimination under, any program or activity funded in whole or in part with funds made available under this title. “(b) Whenever the Secretary finds that a State, or an entity that has received a payment from an allotment to a State under section 502(b), has failed to comply with a provision of law referred to in subsection (a)(1), with subsection (a)(2), or with an applicable regulation (including one prescribed to carry out subsection (a)(2)), he shall notify the chief executive officer of the State and shall request him to secure compliance. If within a reasonable period of time, not to exceed sixty days, the chief executive officer fails or refuses to secure compliance, the Secretary may— “(1) refer the matter to the Attorney General with a recommendation that an appropriate civil action be instituted, “(2) exercise the powers and functions provided by title VI of the Civil Rights Act of 1964, the Age Discrimination Act of 1975, or section 504 of the Rehabilitation Act of 1973, as may be applicable, or “(3) take such other action as may be provided by law. “(c) When a matter is referred to the Attorney General pursuant to subsection (b)(1), or whenever he has reason to believe that the entity is engaged in a pattern or practice in violation of a provision of law referred to in subsection (a)(1) or in violation of subsection (a)(2), the Attorney General may bring a civil action in any appropriate district court of the United States for such relief as may be appropriate, including injunctive relief. “Sec. 509. “administration of title and state programs (a) The Secretary shall designate an identifiable administrative 42 USC 709. unit with expertise in maternal and child health within the Department of Health and Human Services, which unit shall be responsible for— “(1) the Federal program described in section 502(a); “(2) promoting coordination at the Federal level of the activities authorized under this title and under title XIX of this Act, 42 USC 1396. especially early and periodic screening, diagnosis and treatment, related activities funded by the Departments of Agriculture and Education, and under health block grants and categorical health programs, such as immunizations, administered by the Secretary; “(3) disseminating information to the States in such areas as preventive health services and advances in the care and treatment of mothers and children; “(4) providing technical assistance, upon request, to the States in such areas as program planning, establishment of goals and objectives, standards of care, and evaluation; “(5) in cooperation with the National Center for Health Statistics and in a manner that avoids duplication of data collection, collection, maintenance, and dissemination of information relating to the health status and health service needs of mothers and children in the United States; and “(6) assisting in the preparation of reports to the Congress on the activities funded and accomplishments achieved under this title from the information required to be reported by the States under sections 505 and 506. “(b) The State health agency of each State shall be responsible for the administration (or supervision of the administration) of programs carried out with allotments made to the State under this title, except that, in the case of a State which on July 1, 1967, provided for administration (or supervision thereon of the State plan under this title (as in effect on such date) by a State agency other than the State health agency, that State shall be considered to comply the requirement of this subsection if it would otherwise comply but for the fact that such other State agency administers (or supervises the administration of) any such program providing services for crippled children.”. (b) (1) The Secretary of Health and Human Services shall, no later than October 1, 1984, report to the Congress on the activities of States receiving allotments under title V of the Social Security Act (as amended by this section) and include in such report any recommendations for appropriate changes in legislation. (2) The Secretary of Health and Human Services, in consultation with the Comptroller General, shall examine alternative formulas, for the allotment of funds to States under section 502(b) of the Social Security Act (as amended by this section) which might be used as a substitute for the method of allotting funds described in such section, which provide for the equitable distribution of such funds to States (as defined for purposes of such section), and which take into account— (A) the populations of the States, (B) the number of live births in the States, (C) the number of crippled children in the States, (D) the number of low income mothers and children in the States, (E) the financial resources of the various States, and (F) such other factors as the Secretary deems appropriate, and shall report to the Congress thereon not later than June 30, 1982. Sec. 2193. repeals and conforming amendments (a) (1) (A) Section 316(g) of the Public Health Service Act is amended by inserting “, and, subject to section 2194(b)(3) of the Maternal and Child Health Services Block Grant Act, $8,300,000 for the fiscal year ending September 30, 1982” before the period. (B) Section 1101(b) of such Act is amended by inserting “and, subject to section 2194(b)(3) of the Maternal and Child Health Post, p. 828. Services Block Grant Act, $9,680,000 for the fiscal year ending September 30, 1982” before the period. (C) Section 1121(d)(1) of such Act is amended by inserting “; and, 42 USC 300c–11. subject to section 2194(b)(3) of the Maternal and Child Health Services Block Grant Act, $2,075,000 for fiscal year 1982” before the Post, p. 828. period. (D) Section 1131(f) of such Act is amended by inserting “, and, 42 USC 300c–21. subject to section 2194(b)(3) of the Maternal and Child Health Services Block Grant Act, $2,765,000 for the fiscal year ending September 30, 1982” before the period. (2) Section 607 of the Health Services and Centers Amendments of 1978 (Public Law 95–626) is amended by inserting “, and, subject to 42 USC 300a–27. section 2194(b)(3) of the Maternal and Child Health Services Block Grant Act, $8,530,000 for the fiscal year ending September 30, 1982” before the period. (3) Section 501 of the Social Security Act (as in effect before the date the amendment made by section 2192(a) becomes effective) is 42 USC 701. amended by striking out “for each fiscal year thereafter” and inserting in lieu thereof “and for each of the next three fiscal years, and, subject to section 2194(b)(3) of the Maternal and Child Health Services Block Grant Act, $317,580,000 for the fiscal year ending September 30, 1982”. (4) (A) Section 1615(e)(1) of the Social Security Act is amended by 42 USC 1382d. inserting “and subject to section 2194(b)(3) of the Maternal and Child Health Services Block Grant Act” after “paragraphs (2) and (3)”. (B) Effective for fiscal year 1982, section 1615(e)(3) of such Act is amended by striking out “$30,000,000” and inserting in lieu thereof “$24,070,000”. (b) (1) Sections 316, 1101, 1121 and 1131 of the Public Health Service Act are repealed. 42 USC 247a, 300b, 300c–11, 300c–21. 42 USC 300b–3. (2) Section 1104(a) of such Act is amended by inserting “and” at the end of paragraph (3), by striking out paragraph (4), and by redesignating paragraph (5) as paragraph (4). (3) Section 1104 of such Act is further amended (A) by striking out subsections (b) and (d), (B) by striking out “or under section 1101” in subsection (c), and (C) by redesignating subsection (c) as subsection (b). (4) Sections 1106 and 227 of such Act are repealed. 42 USC 300b–5, 236. 42 USC 300b–6. (5) Section 1107 of such Act is amended by striking out “appropriated under section 1101(b)” and inserting in lieu thereof “allotted for use under section 502(a) of the Social Security Act”. (c) (1) Section 1108(d) of the Social Security Act is amended by 42 USC 1308. striking out “section 502(a)” and all that follows through “1967” and inserting in lieu thereof “section 421”. (2) Section 1101(a)(9)(D) of such Act is amended by striking out “V, 42 USC 1301. XVIII, and XIX” and inserting in lieu thereof “XVIII and XIX”. (3) Section 1122 of such Act is amended— 42 USC 1320a–1. (A) by striking out “V, XVIII, and XIX” and inserting in lieu thereof “XVIII and XIX” each place it appears, and (B) by striking out “V, XVIII, or X” in subsection (d)(2) and inserting in lieu thereof “XVIII or XIX”. (4) Section 1129 of such Act is amended— 42 USC 1320a–8. (A) by striking out “V or” each place it appears in subsection (a), and (B) by striking out “V, XVIII, or” in subsection (b)(2) and inserting in lieu thereof “XVIII or”. (5) Section 1132(a)(1) of such Act is amended by striking out “V,”. 42 USC 1320b–2. 42 USC 1320b–4. (6) Section 1134 of such Act is amended by striking out “V, XVIII,” and inserting in lieu thereof “XVIII”. (7) Section 1172(4) of such Act is amended by striking out “V,”. 42 USC 1320c–21. (8) (A) Subsection (a) of section 1615 of such Act is amended by striking out “appropriate State agency administering the State plan under subsection (b) of this section, and (except in such cases” and inserting in lieu thereof “State agency administering the State Ante, p. 818. program under title V, and (except for individuals who have not attained age 16 and except in such other cases”. (B) Subsections (b) and (e) of such section are repealed. (9) Section 1861(w)(2) of such Act is amended by striking out “V or”. (9) Section 1902(a)(11)(B) of such Act is amended— (A) by striking out “for part or all of the cost of plans or projects under” and inserting in lieu thereof “under (or through an allotment under)”, and (B) by striking out “such plan or project under title V” and inserting in lieu thereof “such title or allotment”. (d) (1) The second sentence of section 402(a)(1) of the Social Security 42 USC 1395b–1. Amendments of 1967 (P.L. 90–248) is amended— (A) by striking out “title XVIII of such Act,” and inserting in lieu thereof “title XVIII of such Act and”, and (B) by striking out the “, and a program established by a plan of a State approved under title V of such Act”. (2) Section 402(a)(2) of such Act is amended by striking out “titles V and XIX” and inserting in lieu thereof “title XIX” both places it occurs. (3) Section 402(b) of such Act is amended by striking out “, XIX, and V” and inserting in lieu thereof “and XIX”. (e) (1) Section 222(a)(1) of the Social Security Amendments of 1972 (P.L. 92–603) is amended by striking out “titles XIX and V” and inserting in lieu thereof “title XIX”. (2) The first sentence of section 222(a)(3) of such Act is amended by striking out “, XIX, and V” and inserting in lieu thereof “and XIX”. (3) Section 222(a)(4) of such Act is amended by striking out “titles V and XIX” and inserting in lieu thereof “title XIX” both places it appears. (f) Titles VI and VII of the Health Services and Centers Amendments of 1978 (P.L. 95–626) are repealed. (g) Section 914(d) of the Omnibus Reconciliation Act of 1980 (P.L. 96–499; 94 Stat. 2622) is amended by striking out “V, XVIII,” and inserting in lieu thereof “XVIII”. Sec. 2194. effective date; transition (a) Except as otherwise provided in this section, the amendments made by sections 2192 and 2193 of this subtitle do not apply to any grant made, or contract entered into, or amounts payable to States under State plans before the earlier of— (1) October 1, 1982, or (2) (A) in the case of such grants, contracts, or payments under consolidated State programs (as defined in subsection (c)(2)(C)) to a State (or entities in the State), the date the State is first entitled to an allotment under title V of the Social Security Act (as amended by this subtitle), or (B) in the case of grants and contracts under consolidated Federal programs (as defined in subsection (c)(2)(B)), October 1, 1981, or such later date (before October 1, 1982) as the Secretary determines to be appropriate. (b) (1) The Secretary of Health and Human Services (hereinafter in this section referred to as the “Secretary”) may not provide for any allotment to a State under title V of the Social Security Act (as amended by this subtitle) for a calendar quarter in fiscal year 1982 unless the State has notified the Secretary, at least 30 days (or 15 days in the case of the first calendar quarter of the fiscal year) before the beginning of the calendar quarter, that the State requests an allotment for that calendar quarter (and subsequent calendar quarters). (2) (A) Any grants or contracts entered into under the authorities of the consolidated State programs (as defined in subsection (c)(2)(C)) after the date of the enactment of this subtitle shall permit the termination of such grant or contract upon three months notice by the State in which the grantee or contractor is located. (B) The Secretary shall not make or renew any grants or contracts under the provisions of the consolidated State programs (as defined in subsection (c)(2)(C)) to a State (or an entity in the State) after the date the State becomes entitled to an allotment of funds under title V of the Social Security Act (as amended by this subtitle). (3) (A) In the case of funds appropriated for fiscal year 1982 for consolidated health programs (as defined in subsection (c)(2)(A)), such funds shall (notwithstanding any other provision of law) be available for use under title V of the Social Security Act (as amended by this subtitle), subject to subparagraphs (B) and (C). (B) Notwithstanding any other provision of law— (i) the amount that may be made available for expenditures for the consolidated Federal programs for fiscal year 1982 and for projects and programs under section 502(a) of the Social Security Act (as amended by this subtitle) may not exceed the amount provided for projects and programs under such section 502(a) for that fiscal year, and (ii) the amount that may be made available to a State (or entities in the State) for carrying out the consolidated State programs for fiscal year 1982 and for allotments to the State under section 502(b) of the Social Security Act (as amended by this subtitle) may not exceed the amount which is allotted to the State for that fiscal year under such section (without regard to paragraphs (3) and (4) thereof). (C) For fiscal year 1982, the Secretary shall reduce the amount which would otherwise be available— (i) for expenditures by the Secretary under section 502(a) of the Social Security Act (as amended by this subtitle) by the amounts which the Secretary determines or estimates are payable for consolidated Federal programs (as defined in subsection (c)(2)(B)) from funds for fiscal year 1982, and (ii) for allotment to each of the States under section 502(b) of such Act (as so amended) by the amounts which the Secretary determines or estimates are payable to that State (or entities in the State) under the consolidated State programs (as defined in subsection (c)(2)(C)) from funds for fiscal year 1982. (c) For purposes of this section: Definitions. (1) The term “State” has the meaning given such term for purposes of title V of the Social Security Act. (2) (A) The term “consolidated health programs” has the meaning given such term in section 501(b) of the Social Security Act (as amended by this subtitle). (B) The term “consolidated Federal programs” means the consolidated health programs— (i) of special projects grants under sections 503 and 504, and training grants under section 511, of the Social Security Act, (ii) of grants and contracts for genetic disease projects and programs under section 1101 of the Public Health Service 42 USC 300b. Act, and (iii) of grants or contracts for comprehensive hemophilia diagnostic and treatment centers under section 1131 of the 42 USC 300c–21. Public Health Service Act, as such sections are in effect before the date of the enactment of this subtitle. (C) The term “consolidated State programs” means the consolidated health programs, other than the consolidated Federal programs. (d) The provisions of chapter 2 of subtitle C of title XVII of this Act shall not apply to this subtitle (or the programs under the amendments Ante, p. 764. made by this title) and, specifically, section 1745 of this Act shall not apply to financial and compliance audits conducted under 42 USC 706. section 506(b) of the Social Security Act (as amended by this subtitle).

7. 1982

   Pub. L. 97–248 title I § 122(e) · 96 Stat. 324

   Added · 42 U.S.C. § 1395e(a)(4)

   Pub. L. 97–248 added par. (4)

   Source evidence

   Code amendment note
   Subsec. (a)(4). Pub. L. 97–248 added par. (4).

   Enacted provision · exact public law section
   (e) Section 1813(a) of such Act is amended by adding at the end the 42 USC 1395e. following new paragraph: “(4) (A) The amount payable for hospice care shall be reduced— “(i) in the case of drugs and biologicals provided on an outpatient basis by (or under arrangements made by) the hospice program, by a coinsurance amount equal to an amount (not to exceed $5 per prescription) determined in accordance with a drug copayment schedule (established by the hospice program) which is related to, and approximates 5 percent of, the cost of the drug or biological to the program, and “(ii) in the case of respite care provided by (or under arrangements made by) the hospice program, by a coinsurance amount equal to 5 percent of the amount estimated by the hospice program (in accordance with regulations of the Secretary) to be equal to the amount of payment under section 1814(i) to that Ante, p. 358. program for respite care; except that the total of the coinsurance required under clause (ii) for an individual may not exceed for a hospice coinsurance period the inpatient hospital deductible applicable for the year in which the period began. For purposes of this subparagraph, the term ‘hospice “Hospice coinsurance period.” coinsurance period’ means, for an individual, a period of consecutive days beginning with the first day for which an election under section 1812(d) is in effect for the individual and ending with the Ante, p. 356. close of the first period of 14 consecutive days on each of which such an election is not in effect for the individual. “(B) During the period of an election by an individual under section 1812(d)(1), no copayments or deductibles other than those under subparagraph (A) shall apply with respect to services furnished to such individual which constitute hospice care, regardless of the setting in which such services are furnished.”.

8. 1986

   Medicare and Medicaid Budget Reconciliation Amendments of 1985

   Pub. L. 99–272 title IX § 9125(a) · 100 Stat. 82

   Substituted · 42 U.S.C. § 1395e(b)(2)

   Pub. L. 99–272 substituted “September 15” for “October 1”

   Source evidence

   Code amendment note
   Subsec. (b)(2). Pub. L. 99–272 substituted “September 15” for “October 1”.

   Enacted provision · exact public law section
   (a) Change in Deadline.— Section l813(b)(2) of the Social Security Act (42 U.S.C. 1395e(b)(2)) is amended by striking out “October 1” and inserting in lieu thereof “September 15”.

9. 1986

   Omnibus Budget Reconciliation Act of 1986

   Pub. L. 99–509 title IX § 9301(a) · 100 Stat. 1874

   Amended · 42 U.S.C. § 1395e(b)

   Pub. L. 99–509 amended subsec. (b) generally. Prior to amendment, subsec. (b) read as follows:

   Source evidence

   Code amendment note
   Subsec. (b). Pub. L. 99–509 amended subsec. (b) generally. Prior to amendment, subsec. (b) read as follows:

   “(1) The inpatient hospital deductible which shall be applicable for the purposes of subsection (a) of this section shall be $40 in the case of any spell of illness beginning before 1969. “(2) The Secretary shall, between July 1 and September 15 of 1968, and of each year thereafter, determine and promulgate the inpatient hospital deductible which shall be applicable for the purposes of subsection (a) of this section in the case of any inpatient hospital services or post-hospital extended care services furnished during the succeeding calendar year. Such inpatient hospital deductible shall be equal to $45 multiplied by the ratio of (A) the current average per diem rate for inpatient hospital services for the calendar year preceding the promulgation, to (B) the current average per diem rate for such services for 1966. Any amount determined under the preceding sentence which is not a multiple of $4 shall be rounded to the nearest multiple of $4 (or, if it is midway between two multiplies of $4, to the next higher multiple of $4). The current average per diem rate for any year shall be determined by the Secretary on the basis of the best information available to him (at the time the determination is made) as to the amounts paid under this part on account of inpatient hospital services furnished during such year, by hospitals which have agreements in effect under section 1395cc of this title, to individuals who are entitled to hospital insurance benefits under section 426 of this title, plus the amount which would have been so paid but for subsection (a)(1) of this section.”

   Enacted provision · exact public law section
   (a) In General.— Section 1813(b) of the Social Security Act (42 U.S.C. 1395e(b)) is amended to read as follows: “(b) (1) The inpatient hospital deductible for 1987 shall be $520. The inpatient hospital deductible for any succeeding year shall be an amount equal to the inpatient hospital deductible for the preceding calendar year, changed by the applicable percentage increase (as defined in section 1886(b)(3)(B)) which is applied under section Ante, p. 153. Post, p. 1983. 1886(d)(3)(A) for discharges in the fiscal year that begins on October 1 of such preceding calendar year, and adjusted to reflect changes in real case mix (determined on the basis of the most recent case mix data available). Any amount determined under the preceding sentence which is not a multiple of $4 shall be rounded to the nearest multiple of $4 (or, if it is midway between two multiples of $4, to the next higher multiple of $4). “(2) The Secretary shall promulgate the inpatient hospital deductible and all coinsurance amounts under this section between September 1 and September 15 of the year preceding the year to which they will apply. “(3) The inpatient hospital deductible for a year shall apply to— “(A) the deduction under the first sentence of subsection (a)(1) for the year in which the first day of inpatient hospital services occurs in a spell of illness, and “(B) to the coinsurance amounts under subsection (a) for inpatient hospital services and post-hospital extended care services furnished in that year.”.

10. 1988

    Medicare Catastrophic Coverage Act of 1988

    Pub. L. 100–360 § 102(1) · 102 Stat. 683

    Amended · 42 U.S.C. § 1395e(a)(1)(3)

    Pub. L. 100–360, § 102(1), amended pars. (1) to (3) generally, revising and reorganizing former pars. (1)(A), (B), (2), and (3), as par. (1), consisting of subpars. (A) to (D), and pars. (2) and (3), each consisting of subpars. (A) and (B)

    Source evidence

    Code amendment note
    Subsec. (a)(1) to (3). Pub. L. 100–360, § 102(1), amended pars. (1) to (3) generally, revising and reorganizing former pars. (1)(A), (B), (2), and (3), as par. (1), consisting of subpars. (A) to (D), and pars. (2) and (3), each consisting of subpars. (A) and (B).

    Enacted provision · exact public law section
    (1) by amending paragraphs (1) through (3) of subsection (a) to read as follows: “(1) (A) Subject to subparagraph (C), the amount payable for in-patient hospital services furnished to an individual during the individual’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 hospitalization r means, with respect to an individual, the period beginning on the first day the individual is furnished inpatient hospital services and ending on the individual’s date of discharge (as established 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). “(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 individual 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 pints 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 quantities of packed red blood cells, as so defined) furnished such individual 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. “(3) (A) The amount payable for extended care services furnished an individual in any calendar year shall be reduced by the coinsurance amount (promulgated under subparagraph (C) 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 (beginning 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 (beginning 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 under 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

11. 1988

    Medicare Catastrophic Coverage Act of 1988

    Pub. L. 100–360 § 411(b)(1)(H)(ii) · 102 Stat. 683

    Added · 42 U.S.C. § 1395e(b)(1)

    Pub. L. 100–360, § 411(b)(1)(H)(ii), added Pub. L. 100–203, § 4002(f)(3), see 1987 Amendment note below

    Source evidence

    Code amendment note
    Subsec. (b)(1). Pub. L. 100–360, § 411(b)(1)(H)(ii), added Pub. L. 100–203, § 4002(f)(3), see 1987 Amendment note below.

    Enacted provision · exact public law section
    (ii) Section 4002(f) of OBRA is amended by adding at the end the following new paragraph: “(3) The second sentence of section 1813(b)(1) of the Social Security Act (42 U.S.C. 1395e(b)(1)) is amended by striking ‘applicable percentage increase’ and all that follows through ‘is applied’ and inserting ‘Secretary’s best estimate of the payment-weighted average of the applicable percentage increases (as defined in section 1886(b)(3)(B)) which are applied.”.

12. 1988

    Medicare Catastrophic Coverage Act of 1988

    Pub. L. 100–360 § 102(2) · 102 Stat. 683

    Struck · 42 U.S.C. § 1395e(b)(3)

    Pub. L. 100–360, § 102(2), struck out par. (3) which related to application of deductible

    Source evidence

    Code amendment note
    Subsec. (b)(3). Pub. L. 100–360, § 102(2), struck out par. (3) which related to application of deductible.

    Enacted provision · exact public law section
    (2) by striking paragraph (3) of subsection (b).

13. 1987

    Pub. L. 100–203 § 4002(f)(3) · 101 Stat. 1330

    1. Added · 42 U.S.C. § 1395e(b)(1)

       Pub. L. 100–203, § 4002(f)(3), as added by Pub. L. 100–360, § 411(b)(1)(H)(ii)

    2. Substituted · 42 U.S.C. § 1395e(b)(1)

       Pub. L. 100–203, § 4002(f)(3), as substituted “Secretary’s best estimate of the payment-weighted average of the applicable percentage increases (as defined in section 1395ww(b)(3)(B) of this title) which are applied” for “applicable percentage increase (as defined in section 1395ww(b)(3)(B) of this title) which is applied”

    Source evidence

    Code amendment note
    Subsec. (b)(1). Pub. L. 100–203, § 4002(f)(3), as added by Pub. L. 100–360, § 411(b)(1)(H)(ii), substituted “Secretary’s best estimate of the payment-weighted average of the applicable percentage increases (as defined in section 1395ww(b)(3)(B) of this title) which are applied” for “applicable percentage increase (as defined in section 1395ww(b)(3)(B) of this title) which is applied”.

    Enacted provision · exact public law section
    (f) Related Conforming and Technical Amendments.— (1) Section 1886 of such Act (42 U.S.C. 1395ww) is further amended— (A) by adding at the end of subsection (d)(2)(D) the following new sentence: “For purposes of payment under this subsection, a hospital is considered to be located in an urban area or large urban area, respectively, if the hospital is paid under this subsection at the rate for hospitals located in such an area.”; (B) in subsection (e)(3)(B), by striking “or determine”; (C) in subsection (e)(4)— (i) by striking “for fiscal year 1988” and inserting “for each fiscal year (beginning with fiscal year 1988)”, (ii) by striking “and shall determine for each subsequent fiscal year” and all that follows through “fiscal year, and”, and (iii) by amending the last sentence to read as follows: “The appropriate change factor may be different for all large urban subsection (d) hospitals, other urban subsection (d) hospitals, urban subsection (d) Puerto Rico hospitals, rural subsection (d) hospitals, and rural subsection (d) Puerto Rico hospitals, and all other hospitals and units not paid under subsection (d), and may vary among such other hospitals and units.”; and (D) in paragraph (5), by striking “or determination” each place it appears. (2) Subsection (a)(1)(B)(ii) of section 107 of the Balanced Budget and Emergency Deficit Control Reaffirmation Act of 1987 (Public Law 100–119) is amended, effective as of the date of 42 USC 1395WW note. the enactment of such Act, by inserting “, the target percentage and DRG percentage shall be those specified in subsection (d)(1)(C)(iv) of such section, and the applicable percentage increase in a hospital’s target amount shall be deemed to be 0 percent” before the period at the end.

14. 1989

    Medicare Catastrophic Coverage Repeal Act of 1989

    Pub. L. 101–234 title I § 101(a) · 103 Stat. 1979

    Repealed · 42 U.S.C. § 1395e(a)(1)(3)(b)(3)

    Pub. L. 101–234 repealed Pub. L. 100–360, § 102, subject to an exception for blood deduction, and provided that the provisions of law amended or repealed by such section are restored or revived as if such section had not been enacted, see 1988 Amendment notes below

    Source evidence

    Code amendment note
    Subsecs. (a)(1) to (3), (b)(3). Pub. L. 101–234 repealed Pub. L. 100–360, § 102, subject to an exception for blood deduction, and provided that the provisions of law amended or repealed by such section are restored or revived as if such section had not been enacted, see 1988 Amendment notes below.

    Enacted provision · exact public law section
    (a) In General.— (1) General rule.— Except as provided in paragraph (2), sections 101, 102, and 104(d) (other than paragraph (7)) of the Medicare Catastrophic Coverage Act of 1988 (Public Law 100–360) (in this Act referred to as “MCCA”) are repealed, and the 42 USC 1395c–1395f, 1395k, 1395x, 1395cc, 1395tt. provisions of law amended or repealed by such sections are restored or revived as if such section had not been enacted. (2) Exception for blood deduction.— The repeal of section 102(1) of MCCA (relating to deductibles and coinsurance under part A) shall not apply, but only insofar as such section amended paragraph (2) of section 1813(a) of the Social Security Act (relating to a deduction for blood).

15. 1994

    Social Security Act Amendments of 1994

    Pub. L. 103–432 § 102(g)(2) · 108 Stat. 4398

    Substituted · 42 U.S.C. § 1395e(a)(1)

    Pub. L. 103–432, § 102(g)(2), substituted “inpatient hospital services or inpatient rural primary care hospital services” for “inpatient hospital services” in introductory provisions and in subpar. (B)

    Source evidence

    Code amendment note
    Subsec. (a)(1). Pub. L. 103–432, § 102(g)(2), substituted “inpatient hospital services or inpatient rural primary care hospital services” for “inpatient hospital services” in introductory provisions and in subpar. (B).

    Enacted provision · exact public law section
    (g) Technical Amendments Relating to Part A Deductible, Coinsurance, and Spell of Illness.— (1) Section 1812(a)(1) (42 U.S.C. 1395d(a)(1)) is amended— (A) by striking “inpatient hospital services” the first place it appears and inserting “inpatient hospital services or inpatient rural primary care hospital services”; (B) by striking “inpatient hospital services” the second place it appears and inserting “such services”; and (C) by striking “and inpatient rural primary care hospital services”, (2) Sections 1813(a) and 1813(b)(3)(A) (42 U.S.C. 1395e(a), 1395e(b)(3)(A)) are each amended by striking “inpatient hospital services” each place it appears and inserting “inpatient hospital services or inpatient rural primary care hospital services”. (3) Section 1813(b)(3)(B) (42 U.S.C. 1395e(b)(3)(B)) is amended by striking “inpatient hospital services” and inserting “inpatient hospital services, inpatient rural primary care hospital services”. (4) Section 1861(a) (42 U.S.C. 1395x(a)) is amended— (A) in paragraph (1), by striking “inpatient hospital services” and inserting “inpatient hospital services, inpatient rural primary care hospital services”; and (B) in paragraph (2), by striking “hospital” and inserting “hospital or rural primary care hospital”.

16. 1994

    Social Security Act Amendments of 1994

    Pub. L. 103–432 § 102(g)(2) · 108 Stat. 4398

    Substituted · 42 U.S.C. § 1395e(b)(3)(A)

    Pub. L. 103–432, § 102(g)(2), substituted “inpatient hospital services or inpatient rural primary care hospital services” for “inpatient hospital services”

    Source evidence

    Code amendment note
    Subsec. (b)(3)(A). Pub. L. 103–432, § 102(g)(2), substituted “inpatient hospital services or inpatient rural primary care hospital services” for “inpatient hospital services”.

    Enacted provision · exact public law section
    (g) Technical Amendments Relating to Part A Deductible, Coinsurance, and Spell of Illness.— (1) Section 1812(a)(1) (42 U.S.C. 1395d(a)(1)) is amended— (A) by striking “inpatient hospital services” the first place it appears and inserting “inpatient hospital services or inpatient rural primary care hospital services”; (B) by striking “inpatient hospital services” the second place it appears and inserting “such services”; and (C) by striking “and inpatient rural primary care hospital services”, (2) Sections 1813(a) and 1813(b)(3)(A) (42 U.S.C. 1395e(a), 1395e(b)(3)(A)) are each amended by striking “inpatient hospital services” each place it appears and inserting “inpatient hospital services or inpatient rural primary care hospital services”. (3) Section 1813(b)(3)(B) (42 U.S.C. 1395e(b)(3)(B)) is amended by striking “inpatient hospital services” and inserting “inpatient hospital services, inpatient rural primary care hospital services”. (4) Section 1861(a) (42 U.S.C. 1395x(a)) is amended— (A) in paragraph (1), by striking “inpatient hospital services” and inserting “inpatient hospital services, inpatient rural primary care hospital services”; and (B) in paragraph (2), by striking “hospital” and inserting “hospital or rural primary care hospital”.

17. 1994

    Social Security Act Amendments of 1994

    Pub. L. 103–432 § 102(g)(3) · 108 Stat. 4398

    Substituted · 42 U.S.C. § 1395e(b)(3)(B)

    Pub. L. 103–432, § 102(g)(3), substituted “inpatient hospital services, inpatient rural primary care hospital services” for “inpatient hospital services”

    Source evidence

    Code amendment note
    Subsec. (b)(3)(B). Pub. L. 103–432, § 102(g)(3), substituted “inpatient hospital services, inpatient rural primary care hospital services” for “inpatient hospital services”.

    Enacted provision · exact public law section
    (3) Section 1813(b)(3)(B) (42 U.S.C. 1395e(b)(3)(B)) is amended by striking “inpatient hospital services” and inserting “inpatient hospital services, inpatient rural primary care hospital services”.

18. 1997

    Balanced Budget Act of 1997

    Pub. L. 105–33 title IV § 4201(c)(1) · 111 Stat. 251

    Substituted · 42 U.S.C. § 1395e

    Pub. L. 105–33 substituted “critical access” for “rural primary care” wherever appearing

    Source evidence

    Code amendment note
    Pub. L. 105–33 substituted “critical access” for “rural primary care” wherever appearing.

    Enacted provision · exact public law section
    (1) In general.— Title XI of the Social Security Act (42 U.S.C. 1301 et seq.) and title XVIII of that Act (42 U.S.C. 1395 et seq.) are each amended by striking “rural primary care” each place it appears and inserting “critical access”.

    Effective date note
    Amendment by Pub. L. 105–33 applicable to services furnished on or after Oct. 1, 1997, see section 4201(d) of Pub. L. 105–33, set out as a note under section 1395f of this title.

20 of 21 references resolved to an enrolled provision · 1 partial