Text: H.R.2530 — 104th Congress (1995-1996)All Information (Except Text)

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Introduced in House (10/25/1995)

 
[Congressional Bills 104th Congress]
[From the U.S. Government Printing Office]
[H.R. 2530 Introduced in House (IH)]


104th CONGRESS
  1st Session
                                H. R. 2530

   To provide for deficit reduction and achieve a balanced budget by 
                           fiscal year 2002.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                            October 25, 1995

 Mr. Orton (for himself, Mr. Stenholm, Mr. Peterson of Minnesota, Mr. 
Condit, Mr. Payne of Virginia, Mr. Browder, Mrs. Lincoln, Mr. Brewster, 
 Mr. Tanner, Mr. Baesler, Mr. Minge, Mr. Hall of Texas, Mr. Hayes, Mr. 
 Pete Geren of Texas, Mr. Cramer, Mr. Rose, Mr. Sisisky, Mr. Sabo, Mr. 
   Poshard, and Mr. Roemer) introduced the following bill; which was 
    referred to the Committee on the Budget, and in addition to the 
 Committees on Agriculture, Banking and Financial Services, Commerce, 
     Economic and Educational Opportunities, Government Reform and 
     Oversight, House Oversight, the Judiciary, National Security, 
Resources, Rules, Transportation and Infrastructure, Veterans' Affairs, 
 and Ways and Means, for a period to be subsequently determined by the 
  Speaker, in each case for consideration of such provisions as fall 
           within the jurisdiction of the committee concerned

_______________________________________________________________________

                                 A BILL


 
   To provide for deficit reduction and achieve a balanced budget by 
                           fiscal year 2002.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Common Sense 
Balanced Budget Act of 1995''.
    (b) Table of Contents.--

           TITLE I--ENERGY, NATURAL RESOURCES AND ENVIRONMENT

                           Subtitle A--Energy

Sec. 1101. Privatization of uranium enrichment.
Sec. 1102. Making permanent Nuclear Regulatory Commission annual 
                            charges.
Sec. 1103. Cogeneration.
Sec. 1104. FEMA radiological emergency preparedness fees.
                        Subtitle B--Central Utah

Sec. 1121. Prepayment of certain repayment contracts between the United 
                            States and the Central Utah Water 
                            Conservancy District.
                  Subtitle C--Army Corps of Engineers

Sec. 1131. Regulatory Program Fund.
                       Subtitle D--Helium Reserve

Sec. 1141. Sale of helium processing and storage facility.
                        Subtitle E--Territories

Sec. 1151. Termination of annual direct assistance to Northern Mariana 
                            Islands.
                    TITLE II--AGRICULTURAL PROGRAMS

Sec. 2001. Short title.
  Subtitle A--Extension and Modification of Various Commodity Programs

Sec. 2101. Extension of loans, payments, and acreage reduction programs 
                            for wheat through 2002.
Sec. 2102. Extension of loans, payments, and acreage reduction programs 
                            for feed grains through 2002.
Sec. 2103. Extension of loans, payments, and acreage reduction programs 
                            for cotton through 2002.
Sec. 2104. Extension of loans, payments, and acreage reduction programs 
                            for rice through 2002.
Sec. 2105. Extension of loans and payments for oilseeds through 2002.
Sec. 2106. Increase in flex acres.
Sec. 2107. Reduction in 50/85 and 0/85 programs.
                           Subtitle B--Sugar

Sec. 2201. Extension and modification of sugar program.
                          Subtitle C--Peanuts

Sec. 2301. Extension of price support program for peanuts and related 
                            programs.
Sec. 2302. National poundage quotas and acreage allotments.
Sec. 2303. Sale, lease, or transfer of farm poundage quota.
Sec. 2304. Penalty for reentry of exported peanut products.
Sec. 2305. Price support program for peanuts.
Sec. 2306. Referendum regarding poundage quotas.
Sec. 2307. Regulations.
                          Subtitle D--Tobacco

Sec. 2401. Elimination of Federal budgetary outlays for tobacco 
                            programs.
Sec. 2402. Establishment of farm yield for Flue-cured tobacco based on 
                            individual farm production history.
Sec. 2403. Removal of farm reconstitution exception for Burley tobacco.
Sec. 2404. Reduction in percentage threshold for transfer of Flue-cured 
                            tobacco quota in cases of disaster.
Sec. 2405. Expansion of types of tobacco subject to no net cost 
                            assessment.
Sec. 2406. Repeal of reporting requirements relating to export of 
                            tobacco.
Sec. 2407. Repeal of limitation on reducing national marketing quota 
                            for Flue-cured and Burley tobacco.
Sec. 2408. Application of civil penalties under Tobacco Inspection Act.
Sec. 2409. Transfers of quota or allotment across county lines in a 
                            State.
Sec. 2410. Calculation of national marketing quota.
Sec. 2411. Clarification of authority to access civil money penalties.
Sec. 2412. Lease and transfer of farm marketing quotas for Burley 
                            tobacco.
Sec. 2413. Limitation on transfer of acreage allotments of other 
                            tobacco.
Sec. 2414. Good faith reliance on actions or advice of Department 
                            representatives.
Sec. 2415. Uniform forfeiture dates for Flue-cured and Burley tobacco.
Sec. 2416. Sale of Burley and Flue-cured tobacco marketing quotas for a 
                            farm by recent purchasers.
                    Subtitle E--Planting Flexibility

Sec. 2501. Definitions.
Sec. 2502. Crop and total acreage bases.
Sec. 2503. Planting flexibility.
Sec. 2504. Farm program payment yields.
Sec. 2505. Application of provisions.
                  Subtitle F--Miscellaneous Provisions

Sec. 2601. Limitations on amount of deficiency payments and land 
                            diversion payments.
Sec. 2602. Sense of Congress regarding certain Canadian trade 
                            practices.
                          TITLE III--COMMERCE

Sec. 3101. Spectrum auctions.
Sec. 3102. Federal Communications Commission fee collections
Sec. 3103. Auction of recaptured analog licenses.
Sec. 3104. Patent and trademark fees.
Sec. 3105. Repeal of authorization of transitional appropriations for 
                            the United States Postal Service.
                        TITLE IV--TRANSPORTATION

Sec. 4101. Extension of railroad safety fees.
Sec. 4102. Permanent extension of vessel tonnage duties.
Sec. 4103. Sale of Governors Island, New York.
Sec. 4104. Sale of air rights.
                      TITLE V--HOUSING PROVISIONS

Sec. 5101. Reduction of section 8 annual adjustment factors for units 
                            without tenant turnover.
Sec. 5102. Maximum mortgage amount floor for single family mortgage 
                            insurance.
Sec. 5103. Foreclosure avoidance and borrower assistance.
 TITLE VI--INDEXATION AND MISCELLANEOUS ENTITLEMENT-RELATED PROVISIONS

Sec. 6101. Consumer Price Index.
Sec. 6102. Reduction in title XX block grants to States for social 
                            services.
Sec. 6103. Matching rate requirement for title XX block grants to 
                            States for social services.
Sec. 6104. Denial of unemployment insurance to certain high-income 
                            individuals.
Sec. 6105. Denial of unemployment insurance to individuals who 
                            voluntarily leave military service.
                       TITLE VII--MEDICAID REFORM

                 Subtitle A--Per Capita Spending Limit

Sec. 7001. Limitation on expenditures recognized for purposes of 
                            Federal financial participation.
                   Subtitle B--Medicaid Managed Care

Sec. 7101. Permitting greater flexibility for States to enroll 
                            beneficiaries in managed care arrangements.
Sec. 7102. Removal of barriers to provision of medicaid services 
                            through managed care.
Sec. 7103. Additional requirements for medicaid managed care plans.
Sec. 7104. Preventing fraud in medicaid managed care.
Sec. 7105. Assuring adequacy of payments to medicaid managed care plans 
                            and providers.
Sec. 7106. Sanctions for noncompliance by eligible managed care 
                            providers.
Sec. 7107. Report on public health services.
Sec. 7108. Report on payments to hospitals.
Sec. 7109. Conforming amendments.
Sec. 7110. Effective date; status of waivers.
     Subtitle C--Additional Reforms of Medicaid Acute Care Program

Sec. 7201. Permitting increased flexibility in medicaid cost-sharing.
Sec. 7202. Limits on required coverage of additional treatment services 
                            under EPSDT.
Sec. 7203. Delay in application of new requirements.
Sec. 7204. Deadline on action on waivers.
       Subtitle D--National Commission on Medicaid Restructuring

Sec. 7301. Establishment of commission.
Sec. 7302. Duties of commission.
Sec. 7303. Administration.
Sec. 7304. Authorization of appropriations.
Sec. 7305. Termination.
      Subtitle E--Restrictions on Disproportionate Share Payments

Sec. 7401. Reforming disproportionate share payments under State 
                            medicaid programs.
                      Subtitle F--Fraud Reduction

Sec. 7501. Monitoring payments for dual eligibles.
Sec. 7502. Improved identification systems.
                          TITLE VIII--MEDICARE

Sec. 8000. Short title; references in title.
                  Subtitle A--Medicare Choice Program

          Part 1--Increasing Choice Under the Medicare Program

Sec. 8001. Increasing choice under medicare.
Sec. 8002. Medicare Choice program.
            ``Part C--Provisions Relating to Medicare Choice

        ``Sec. 1851. Requirements for Medicare Choice organizations.
        ``Sec. 1852. Requirements relating to benefits, provision of 
                            services, enrollment, and premiums.
        ``Sec. 1853. Patient protection standards.
        ``Sec. 1854. Provider-sponsored organizations.
        ``Sec. 1855. Payments to Medicare Choice organizations.
        ``Sec. 1856. Establishment of standards for Medicare Choice 
                            organizations and products.
        ``Sec. 1857. Medicare Choice certification.
        ``Sec. 1858. Contracts with Medicare Choice organizations.
        ``Sec. 1859. Demonstration project for high deductible/medisave 
                            products.
Sec. 8003. Reports.
Sec. 8004. Transitional rules for current medicare HMO program.
   Part 2--Special Rules for Medicare Choice Medical Savings Accounts

Sec. 8011. Medicare choice MSA's.
Sec. 8012. Certain rebates excluded from gross income.
      Part 3--Special Antitrust Rule for Provider Service Networks

Sec. 8021. Application of antitrust rule of reason to provider service 
                            networks.
                          Part 4--Commissions

Sec. 8031. Medicare Payment Review Commission.
Sec. 8032. Commission on the Effect of the Baby Boom Generation on the 
                            Medicare Program.
           Part 5--Preemption of State Anti-Managed Care Laws

Sec. 8041. Preemption of State law restrictions on managed care 
                            arrangements.
Sec. 8042. Preemption of State laws restricting utilization review 
                            programs.
          Subtitle B--Provisions Relating to Regulatory Relief

    Part 1--Provisions Relating to Physician Financial Relationships

Sec. 8101. Repeal of prohibitions based on compensation arrangements.
Sec. 8102. Revision of designated health services subject to 
                            prohibition.
Sec. 8103. Delay in implementation until promulgation of regulations.
Sec. 8104. Exceptions to prohibition.
Sec. 8105. Repeal of reporting requirements.
Sec. 8106. Preemption of State law.
Sec. 8107. Effective date.
                        Part 2--Antitrust Reform

Sec. 8111. Publication of antitrust guidelines on activities of health 
                            plans.
Sec. 8112. Issuance of health care certificates of public advantage.
Sec. 8113. Study of impact on competition.
Sec. 8114. Antitrust exemption.
Sec. 8115. Requirements.
Sec. 8116. Definition.
          subpart a--uniform standards for malpractice claims.
Sec. 8121. Applicability.
Sec. 8122. Requirement for initial resolution of action through 
                            alternative dispute resolution.
Sec. 8123. Optional application of practice guidelines.
Sec. 8124. Treatment of noneconomic and punitive damages.
Sec. 8125. Periodic payments for future losses.
Sec. 8126. Treatment of attorney's fees and other costs.
Sec. 8127. Uniform statute of limitations.
Sec. 8128. Special provision for certain obstetric services.
Sec. 8129. Jurisdiction of Federal courts.
Secsubpart b--requirements for state alternative dispute resolution 
                             systems (adr)
Sec. 8131. Basic requirements.
Sec. 8132. Certification of State systems; applicability of alternative 
                            Federal system.
Sec. 8133. Reports on implementation and effectiveness of alternative 
                         subpart c--definitionssystems.
Sec. 8141. Definitions.
     Part 4--Payment Areas for Physicians' Services Under Medicare

Sec. 8151. Modification of payment areas used to determine payments for 
                            physicians' services under medicare.
         Subtitle C--Medicare Payments to Health Care Providers

               Part 1--Provisions Affecting All Providers

Sec. 8201. One-year freeze in payments to providers.
                  Part 2--Provisions Affecting Doctors

Sec. 8211. Payments for physicians' services.
                 Part 3--Provisions Affecting Hospitals

Sec. 8221. Reduction in update for inpatient hospital services.
Sec. 8222. Elimination of formula-driven overpayments for certain 
                            outpatient hospital services.
Sec. 8223. Establishment of prospective payment system for outpatient 
                            services.
Sec. 8224. Reduction in medicare payments to hospitals for inpatient 
                            capital-related costs.
Sec. 8225. Moratorium on PPS exemption for long-term care hospitals.
              Part 4--Provisions Affecting Other Providers

Sec. 8231. Revision of payment methodology for home health services.
Sec. 8232. Limitation of home health coverage under part A.
Sec. 8233. Reduction in fee schedule for durable medical equipment.
Sec. 8234. Nursing home billing.
Sec. 8235. Freeze in payments for clinical diagnostic laboratory tests.
       Part 5--Graduate Medical Education and Teaching Hospitals

Sec. 8241. Teaching hospital and graduate medical education trust fund.
Sec. 8242. Reduction in payment adjustments for indirect medical 
                            education.
       Subtitle D--Provisions Relating to Medicare Beneficiaries

Sec. 8301. Part B premium.
Sec. 8302. Full cost of medicare part B coverage payable by high-income 
                            individuals.
Sec. 8303. Expanded coverage of preventive benefits.
                  Subtitle E--Medicare Fraud Reduction

Sec. 8401. Increasing beneficiary awareness of fraud and abuse.
Sec. 8402. Beneficiary incentives to report fraud and abuse.
Sec. 8403. Elimination of home health overpayments.
Sec. 8404. Skilled nursing facilities.
Sec. 8405. Direct spending for anti-fraud activities under medicare.
Sec. 8406. Fraud reduction demonstration project.
Sec. 8407. Report on competitive pricing.
              Subtitle F--Improving Access to Health Care

                 Part 1subpart a--rural hospitalsviders
Sec. 8501. Sole community hospitals.
Sec. 8502. Clarification of treatment of EAC and RPC hospitals.
Sec. 8503. Establishment of rural emergency access care hospitals.
Sec. 8504. Classification of rural referral centers.
Sec. 8505. Floor on area wage index.
Sec. 8506. Msubpart b--rural physicians and other providers
Sec. 8511. Provider incentives.
Sec. 8512. National Health Service Corps loan repayments excluded from 
                            gross income.
Sec. 8513. Telemedicine payment methodology.
Sec. 8514. Demonstration project to increase choice in rural areas.
                      Part 2--Medicare Subvention

Sec. 8521. Medicare program payments for health care services provided 
                            in the military health services system.
                      Subtitle G--Other Provisions

Sec. 8601. Extension and expansion of existing secondary payer 
                            requirements.
Sec. 8602. Repeal of medicare and medicaid coverage data bank.
Sec. 8603. Clarification of medicare coverage of items and services 
                            associated with certain medical devices 
                            approved for investigational use.
Sec. 8604. Additional exclusion from coverage.
Sec. 8605. Extending medicare coverage of, and application of hospital 
                            insurance tax to, all State and local 
                            government employees.
      Subtitle H--Monitoring Achievement of Medicare Reform Goals

Sec. 8701. Establishment of budgetary and program goals.
Sec. 8702. Medicare Reform Commission.
Subtitle I--Lock-Box Provisions for Medicare Part B Savings from Growth 
                               Reductions

Sec. 8801. Establishment of Medicare Growth Reduction Trust Fund for 
                            part B savings.
                   Subtitle J--Clinical Laboratories

Sec. 8901. Exemption of physician office laboratories.
                        TITLE IX--WELFARE REFORM

Sec. 9000. Amendment of the Social Security Act.
              Subtitle A--Temporary Employment Assistance

Sec. 9101. State plan.
                       Subtitle B--Make Work Pay

Sec. 9201. Transitional medicaid benefits.
Sec. 9202. Notice of availability required to be provided to applicants 
                            and former recipients of temporary family 
                            assistance, food stamps, and medicaid.
Sec. 9203. Notice of availability of earned income tax credit and 
                            dependent care tax credit to be included on 
                            W-4 form.
Sec. 9204. Advance payment of earned income tax credit through State 
                            demonstration programs.
Sec. 9205. Funding of child care services.
Sec. 9206. Certain Federal assistance includible in gross income.
Sec. 9207. Dependent care credit to be refundable; high-income 
                            taxpayers ineligible for credit.
                         Subtitle C--Work First

Sec. 9301. Work first program.
Sec. 9302. Regulations.
Sec. 9303. Applicability to States.
     Subtitle D--Family Responsibility And Improved Child Support 
                              Enforcement

Chapter 1--Eligibility and Other Matters Concerning Title IV-D Program 
                                Clients

Sec. 9401. State obligation to provide paternity establishment and 
                            child support enforcement services.
Sec. 9402. Distribution of payments.
Sec. 9403. Due process rights.
Sec. 9404. Privacy safeguards.
             Chapter 2--Program Administration and Funding

Sec. 9411. Federal matching payments.
Sec. 9412. Performance-based incentives and penalties.
Sec. 9413. Federal and State reviews and audits.
Sec. 9414. Required reporting procedures.
Sec. 9415. Automated data processing requirements.
Sec. 9416. Director of CSE program; staffing study.
Sec. 9417. Funding for Secretarial assistance to State programs.
Sec. 9418. Reports and data collection by the Secretary.
                  Chapter 3--Locate and Case Tracking

Sec. 9421. Central State and case registry.
Sec. 9422. Centralized collection and disbursement of support payments.
Sec. 9423. Amendments concerning income withholding.
Sec. 9424. Locator information from interstate networks.
Sec. 9425. Expanded Federal parent locator service.
Sec. 9426. Use of social security numbers.
          Chapter 4--Streamlining and Uniformity of Procedures

Sec. 9431. Adoption of uniform State laws.
Sec. 9432. Improvements to full faith and credit for child support 
                            orders.
Sec. 9433. State laws providing expedited procedures.
                   Chapter 5--Paternity Establishment

Sec. 9441. Sense of the Congress.
Sec. 9442. Availability of parenting social services for new fathers.
Sec. 9443. Cooperation requirement and good cause exception.
Sec. 9444. Federal matching payments.
Sec. 9445. State laws concerning paternity establishment.
Sec. 9446. Outreach for voluntary paternity establishment.
      Chapter 6--Establishment and Modification of Support Orders

Sec. 9451. National Child Support Guidelines Commission.
Sec. 9452. Simplified process for review and adjustment of child 
                            support orders.
                Chapter 7--Enforcement of Support Orders

Sec. 9461. Federal income tax refund offset.
Sec. 9462. Internal Revenue Service collection of arrears.
Sec. 9463. Authority to collect support from Federal employees.
Sec. 9464. Enforcement of child support obligations of members of the 
                            Armed Forces.
Sec. 9465. Motor vehicle liens.
Sec. 9466. Voiding of fraudulent transfers.
Sec. 9467. State law authorizing suspension of licenses.
Sec. 9468. Reporting arrearages to credit bureaus.
Sec. 9469. Extended statute of limitation for collection of arrearages.
Sec. 9470. Charges for arrearages.
Sec. 9471. Denial of passports for nonpayment of child support.
Sec. 9472. International child support enforcement.
Sec. 9473. Seizure of lottery winnings, settlements, payouts, awards, 
                            and bequests, and sale of forfeited 
                            property, to pay child support arrearages.
Sec. 9474. Liability of grandparents for financial support of children 
                            of their minor children.
Sec. 9475. Sense of the Congress regarding programs for noncustodial 
                            parents unable to meet child support 
                            obligations.
                       Chapter 8--Medical Support

Sec. 9481. Technical correction to ERISA definition of medical child 
                            support order.
               Chapter 9--Food Stamp Program Requirements

Sec. 9491. Cooperation with child support agencies.
Sec. 9492. Disqualification for child support arrears.
                    Chapter 10--Effect of Enactment

Sec. 9498. Effective dates.
Sec. 9499. Severability.
            Subtitle E--Teen Pregnancy And Family Stability

Sec. 9501. State option to deny temporary employment assistance for 
                            additional children.
Sec. 9502. Supervised living arrangements for minors.
Sec. 9503. National clearinghouse on adolescent pregnancy.
Sec. 9504. Required completion of high school or other training for 
                            teenage parents.
Sec. 9505. Denial of Federal housing benefits to minors who bear 
                            children out-of-wedlock.
Sec. 9506. State option to deny temporary employment assistance to 
                            minor parents.
                         Subtitle F--SSI Reform

Sec. 9601. Definition and eligibility rules.
Sec. 9602. Eligibility redeterminations and continuing disability 
                            reviews.
Sec. 9603. Additional accountability requirements.
Sec. 9604. Denial of SSI benefits by reason of disability to drug 
                            addicts and alcoholics.
Sec. 9605. Denial of SSI benefits for 10 years to individuals found to 
                            have fraudulently misrepresented residence 
                            in order to obtain benefits simultaneously 
                            in 2 or more States.
Sec. 9606. Denial of SSI benefits for fugitive felons and probation and 
                            parole violators.
Sec. 9607. Reapplication requirements for adults receiving SSI benefits 
                            by reason of disability.
Sec. 9608. Reduction in unearned income exclusion.
                      Subtitle G--Food Assistance

                     Chapter 1--Food Stamp Program

Sec. 9701. Application of amendments.
Sec. 9702. Amendments to the Food Stamp Act of 1977.
Sec. 9703. Authority to establish authorization periods.
Sec. 9704. Specific period for prohibiting participation of stores 
                            based on lack of business integrity.
Sec. 9705. Information for verifying eligibility for authorization.
Sec. 9706. Waiting period for stores that initially fail to meet 
                            authorization criteria.
Sec. 9707. Bases for suspensions and disqualifications.
Sec. 9708. Authority to suspend stores violating program requirements 
                            pending administrative and judicial review.
Sec. 9709. Disqualification of retailers who are disqualified from the 
                            WIC program.
Sec. 9710. Permanent debarment of retailers who intentionally submit 
                            falsified applications.
Sec. 9711. Expanded civil and criminal forfeiture for violations of the 
                            food Stamp Act.
Sec. 9712. Expanded authority for sharing information provided by 
                            retailers.
Sec. 9713. Expanded definition of ``coupon''.
Sec. 9714. Doubled penalties for violating food stamp program 
                            requirements.
Sec. 9715. Mandatory claims collection methods.
Sec. 9716. Promoting expansion of electronic benefits transfer.
Sec. 9717. Reduction of basic benefit level.
Sec. 9718. 2-year freeze of standard deduction.
Sec. 9719. Pro-rating benefits after interruptions in participation.
Sec. 9720. Disqualification for participating in 2 or more States.
Sec. 9721. Disqualification relating to child support arrears.
Sec. 9722. State authorization to assist law enforcement officers in 
                            locating fugitive felons.
Sec. 9723. Work requirement for able-bodied recipients.
Sec. 9724. Coordination of employment and training programs.
Sec. 9725. Extending current claims retention rates.
Sec. 9726. Nutrition assistance for Puerto Rico.
Sec. 9727. Treatment of children living at home.
                   Chapter 2--Commodity Distribution

Sec. 9751. Short title.
Sec. 9752. Availability of commodities.
Sec. 9753. State, local and private supplementation of commodities.
Sec. 9754. State plan.
Sec. 9755. Allocation of commodities to States.
Sec. 9756. Priority system for State distribution of commodities.
Sec. 9757. Initial processing costs.
Sec. 9758. Assurances; anticipated use.
Sec. 9759. Authorization of appropriations.
Sec. 9760. Commodity supplemental food program.
Sec. 9761. Commodities not income.
Sec. 9762. Prohibition against certain State charges.
Sec. 9763. Definitions.
Sec. 9764. Regulations.
Sec. 9765. Finality of determinations.
Sec. 9766. Relationship to other programs.
Sec. 9767. Settlement and adjustment of claims.
Sec. 9768. Repealers; amendments.
                       Chapter 3--Other Programs
Sec. 9781. Child and adult care food program.
Sec. 9782. Resumption of discretionary funding for nutrition education 
                            and training program.
                    Subtitle H--Treatment of Aliens
Sec. 9801. Extension of deeming of income and resources under TEA, SSI, 
                            and food stamp programs.
Sec. 9802. Requirements for sponsor's affidavits of support.
Sec. 9803. Extending requirement for affidavits of support to family-
                            related and diversity immigrants.
                  Subtitle I--Earned Income Tax Credit
Sec. 9901. Earned income tax credit denied to individuals not 
                            authorized to be employed in the United 
                            States.
    TITLE X--REDUCTIONS IN CORPORATE TAX SUBSIDIES AND OTHER REFORMS
Sec. 10001. Short title.
               Subtitle A--Tax Treatment of Expatriation
Sec. 10101. Revision of tax rules on expatriation.
Sec. 10102. Basis of assets of nonresident alien individuals becoming 
                            citizens or residents.
            Subtitle B--Modification to Earned Income Credit
Sec. 10201. Earned income tax credit denied to individuals with 
                            substantial capital gain net income.
Subtitle C--Alternative Minimum Tax on Corporations Importing Products 
         into the United States at Artificially Inflated Prices
Sec. 10301. Alternative minimum tax on corporations importing products 
                            into the United States at artificially 
                            inflated prices.
      Subtitle D--Tax Treatment of Certain Extraordinary Dividends
Sec. 10401. Tax treatment of certain extraordinary dividends.
                Subtitle E--Foreign Trust Tax Compliance
Sec. 10501. Improved information reporting on foreign trusts.
Sec. 10502. Modifications of rules relating to foreign trusts having 
                            one or more United States beneficiaries.
Sec. 10503. Foreign persons not to be treated as owners under grantor 
                            trust rules.
Sec. 10504. Information reporting regarding foreign gifts.
Sec. 10505. Modification of rules relating to foreign trusts which are 
                            not grantor trusts.
Sec. 10506. Residence of estates and trusts, etc.
              Subtitle F--Limitation on Section 936 Credit

Sec. 10601. Limitation on section 936 credit.
                      TITLE XI--VETERANS' AFFAIRS

Sec. 11001. Short title.
        Subtitle A--Permanent Extension of Temporary Authorities

Sec. 11011. Authority to require that certain veterans agree to make 
                            copayments in exchange for receiving 
                            health-care benefits.
Sec. 11012. Medical care cost recovery authority.
Sec. 11013. Income verification authority.
Sec. 11014. Limitation on pension for certain recipients of medicaid-
                            covered nursing home care.
Sec. 11015. Home loan fees.
Sec. 11016. Procedures applicable to liquidation sales on defaulted 
                            home loans guaranteed by the Department of 
                            Veterans Affairs.
                       Subtitle B--Other Matters

Sec. 11021. Revised standard for liability for injuries resulting from 
                            Department of Veterans Affairs treatment.
Sec. 11022. Enhanced loan asset sale authority.
Sec. 11023. Withholding of payments and benefits.
               Subtitle C--Health Care Eligibility Reform

Sec. 11031. Hospital care and medical services.
Sec. 11032. Extension of authority to priority health care for Persian 
                            Gulf veterans.
Sec. 11033. Prosthetics.
Sec. 11034. Management of health care.
Sec. 11035. Improved efficiency in health care resource management.
Sec. 11036. Sharing agreements for specialized medical resources.
Sec. 11037. Personnel furnishing shared resources.
                     TITLE XII--LEGISLATIVE BRANCH

Sec. 12101. Requirement that excess funds provided for official 
                            allowances of Members of the House of 
                            Representatives be dedicated to deficit 
                            reduction.
                  TITLE XIII--MISCELLANEOUS PROVISIONS

Sec. 13101. Elimination of disparity between effective dates for 
                            military and civilian retiree cost-of-
                            living adjustments for fiscal years 1996, 
                            1997, and 1998.
Sec. 13102. Disposal of certain materials in National Defense Stockpile 
                            for deficit reduction.
Sec. 13103. Requirement that certain agencies prefund Government health 
                            benefits contributions for their 
                            annuitants.
Sec. 13104. Application of OMB Circular a-129.
Sec. 13105. 7-year extension of Hazardous Substance Superfund excise 
                            taxes.
                  TITLE XIV--BUDGET PROCESS PROVISIONS

                    Chapter 1--Short Title; Purpose

Sec. 14001. Short title.
Sec. 14002. Purpose.
                      Chapter 2--Budget Estimates

Sec. 14051. Board of Estimates.
               Subtitle B--Discretionary Spending Limits

Sec. 14101. Discretionary spending limits.
Sec. 14102. Technical and conforming changes.
Sec. 14103. Elimination of certain adjustments to discretionary 
                            spending limits.
                  Subtitle C--Pay-As-You-Go Procedures

Sec. 14201. Permanent extension of pay-as-you-go procedures; ten-year 
                            scorekeeping.
Sec. 14202. Elimination of emergency exception.
                       Subtitle D--Miscellaneous

Sec. 14301. Technical correction.
Sec. 14302. Repeal of expiration date.
                      Subtitle E--Deficit Control

Sec. 14401. Deficit control.
Sec. 14402. Sequestration process.
                       Subtitle F--Line Item Veto

Sec. 14501. Line item veto authority.
Sec. 14502. Line item veto effective unless disapproved.
Sec. 14503. Definitions.
Sec. 14504. Congressional consideration of line item vetoes.
Sec. 14505. Report of the General Accounting Office.
Sec. 14506. Judicial review.
                 Subtitle G--Enforcing Points of Order

Sec. 14601. Points of order in the Senate.
Sec. 14602. Points of order in the House of Representatives.
                 Subtitle H--Deficit Reduction Lock-box

Sec. 14701. Deficit reduction lock-box provisions of appropriation 
                            measures.
Sec. 14702. Downward adjustments.
Sec. 14703. CBO tracking.
Subtitle I--Emergency Spending; Baseline Reform; Continuing Resolutions 
                                 Reform

                     Chapter 1--Emergency Spending

Sec. 14801. Establishment of budget reserve account.
Sec. 14802. Congressional budget process changes.
Sec. 14803. Reporting.
                       Chapter 2--Baseline Reform

Sec. 14851. The baseline.
Sec. 14852. The President's budget.
Sec. 14853. The congressional budget.
Sec. 14854. Congressional Budget Office reports to committees.
          Chapter 3--Restricted Uses of Continuing Resolutions

Sec. 14871. Restrictions respecting continuing resolutions.
            Subtitle J--Technical and Conforming Amendments

Sec. 14901. Amendments to the Congressional Budget and Impoundment 
                            Control Act of 1974.
Sec. 14902. Technical and conforming amendments to the Rules of the 
                            House of representatives.
Sec. 14903. President's budget.
                    Subtitle K--Truth in Legislating

Sec. 14951. Identity, sponsor, and cost of certain provisions required 
                            to be reported.

           TITLE I--ENERGY, NATURAL RESOURCES AND ENVIRONMENT

                           Subtitle A--Energy

                                                    Title I, Subtitle A

SEC. 1101. PRIVATIZATION OF URANIUM ENRICHMENT.

    (a) Reference.--Except as otherwise expressly provided, whenever in 
this section an amendment or repeal is expressed in terms of an 
amendment to, or repeal of, a section or other provision, the reference 
shall be considered to be made to a section or other provision of the 
Atomic Energy Act of 1954 (42 U.S.C. 2011 et seq.).
    (b) Production Facility.--Paragraph v. of section 11 (42 U.S.C. 
2014 v.) is amended by striking ``or the construction and operation of 
a uranium enrichment production facility using Atomic Vapor Laser 
Isotope Separation technology''.
    (c) Definitions.--Section 1201 (42 U.S.C. 2297) is amended--
            (1) in paragraph (4), by inserting before the period the 
        following: ``and any successor corporation established through 
        privatization of the Corporation'';
            (2) by redesignating paragraphs (10) through (13) as 
        paragraphs (14) through (17), respectively, and by inserting 
        after paragraph (9) the following new paragraphs:
            ``(10) The term `low-level radioactive waste' has the 
        meaning given such term in section 102(9) of the Low-Level 
        Radioactive Waste Policy Amendments Act of 1985 (42 U.S.C. 
        2021b(9)).
            ``(11) The term `mixed waste' has the meaning given such 
        term in section 1004(41) of the Solid Waste Disposal Act (42 
        U.S.C. 6903(41)).
            ``(12) The term `privatization' means the transfer of 
        ownership of the Corporation to private investors pursuant to 
        chapter 25.
            ``(13) The term `privatization date' means the date on 
        which 100 percent of ownership of the Corporation has been 
        transferred to private investors.'';
            (3) by inserting after paragraph (17) (as redesignated) the 
        following new paragraph:
            ``(18) The term `transition date' means July 1, 1993.''; 
        and
            (4) by redesignating the unredesignated paragraph (14) as 
        paragraph (19).
    (d) Employees of the Corporation.--
            (1) Paragraph (2).--Paragraphs (1) and (2) of section 
        1305(e) (42 U.S.C. 2297b-4(e)(1)(2)) are amended to read as 
        follows:
                    ``(A) In general.--It is the purpose of this 
                subsection to ensure that the privatization of the 
                Corporation shall not result in any adverse effects on 
                the pension benefits of employees at facilities that 
                are operated, directly or under contract, in the 
                performance of the functions vested in the Corporation.
                    ``(B) Applicability of existing collective 
                bargaining agreement.--The Corporation shall abide by 
                the terms of the collective bargaining agreement in 
                effect on the privatization date at each individual 
                facility.''.
            (2) Paragraph (4).--Paragraph (4) of section 1305(e) (42 
        U.S.C. 2297b-4(e)(4)) is amended--
                    (A) by striking ``and detailees'' in the heading;
                    (B) by striking the first sentence;
                    (C) in the second sentence, by inserting ``from 
                other Federal employment'' after ``transfer to the 
                Corporation''; and
                    (D) by striking the last sentence.
    (e) Marketing and Contracting Authority.--
            (1) Marketing authority.--Section 1401(a) (42 U.S.C. 
        2297c(a)) is amended effective on the privatization date (as 
        defined in section 1201(13) of the Atomic Energy Act of 1954)--
                    (A) by amending the subsection heading to read 
                ``Marketing Authority.--''; and
                    (B) by striking the first sentence.
            (2) Transfer of contracts.--Section 1401(b) (42 U.S.C. 
        2297c(b)) is amended--
                    (A) in paragraph (2)(B), by adding at the end the 
                following: ``The privatization of the Corporation shall 
                not affect the terms of, or the rights or obligations 
                of the parties to, any such power purchase contract.''; 
                and
                    (B) by adding at the end the following:
            ``(3) Effect of transfer.--
                    ``(A) As a result of the transfer pursuant to 
                paragraph (1), all rights, privileges, and benefits 
                under such contracts, agreements, and leases, including 
                the right to amend, modify, extend, revise, or 
                terminate any of such contracts, agreements, or leases 
                were irrevocably assigned to the Corporation for its 
                exclusive benefit.
                    ``(B) Notwithstanding the transfer pursuant to 
                paragraph (1), the United States shall remain obligated 
                to the parties to the contracts, agreements, and leases 
                transferred pursuant to paragraph (1) for the 
                performance of the obligations of the United States 
                thereunder during the term thereof. The Corporation 
                shall reimburse the United States for any amount paid 
                by the United States in respect of such obligations 
                arising after the privatization date to the extent such 
                amount is a legal and valid obligation of the 
                Corporation then due.
                    ``(C) After the privatization date, upon any 
                material amendment, modification, extension, revision, 
                replacement, or termination of any contract, agreement, 
                or lease transferred under paragraph (1), the United 
                States shall be released from further obligation under 
                such contract, agreement, or lease, except that such 
                action shall not release the United States from 
                obligations arising under such contract, agreement, or 
                lease prior to such time.''.
            (3) Pricing.--Section 1402 (42 U.S.C. 2297c-1) is amended 
        to read as follows:

``SEC. 1402. PRICING.

    ``The Corporation shall establish prices for its products, 
materials, and services provided to customers on a basis that will 
allow it to attain the normal business objectives of a profitmaking 
corporation.''.
            (4) Leasing of gaseous diffusion facilities of 
        department.--Effective on the privatization date (as defined in 
        section 1201(13) of the Atomic Energy Act of 1954), section 
        1403 (42 U.S.C. 2297c-2) is amended by adding at the end the 
        following:
    ``(h) Low-Level Radioactive Waste and Mixed Waste.--
            ``(1) Responsibility of the department; costs.--
                    ``(A) With respect to low-level radioactive waste 
                and mixed waste generated by the Corporation as a 
                result of the operation of the facilities and related 
property leased by the Corporation pursuant to subsection (a) or as a 
result of treatment of such wastes at a location other than the 
facilities and related property leased by the Corporation pursuant to 
subsection (a) the Department, at the request of the Corporation, 
shall--
                            ``(i) accept for treatment or disposal of 
                        all such wastes for which treatment or disposal 
                        technologies and capacities exist, whether 
                        within the Department or elsewhere; and
                            ``(ii) accept for storage (or ultimately 
                        treatment or disposal) all such wastes for 
                        which treatment and disposal technologies or 
                        capacities do not exist, pending development of 
                        such technologies or availability of such 
                        capacities for such wastes.
                    ``(B) All low-level wastes and mixed wastes that 
                the Department accepts for treatment, storage, or 
                disposal pursuant to subparagraph (A) shall, for the 
                purpose of any permits, licenses, authorizations, 
                agreements, or orders involving the Department and 
                other Federal agencies or State or local governments, 
                be deemed to be generated by the Department and the 
                Department shall handle such wastes in accordance with 
                any such permits, licenses, authorizations, agreements, 
                or orders. The Department shall obtain any additional 
                permits, licenses, or authorizations necessary to 
                handle such wastes, shall amend any such agreements or 
                orders as necessary to handle such wastes, and shall 
                handle such wastes in accordance therewith.
                    ``(C) The Corporation shall reimburse the 
                Department for the treatment, storage, or disposal of 
                low-level radioactive waste or mixed waste pursuant to 
                subparagraph (A) in an amount equal to the Department's 
                costs but in no event greater than an amount equal to 
                that which would be charged by commercial, State, 
                regional, or interstate compact entities for treatment, 
                storage, or disposal of such waste.
            ``(2) Agreements with other persons.--The Corporation may 
        also enter into agreements for the treatment, storage, or 
        disposal of low-level radioactive waste and mixed waste 
        generated by the Corporation as a result of the operation of 
        the facilities and related property leased by the Corporation 
        pursuant to subsection (a) with any person other than the 
        Department that is authorized by applicable laws and 
        regulations to treat, store, or dispose of such wastes.''.
            (5) Liabilities.--
                    (A) Subsection (a) of section 1406 (42 U.S.C. 
                2297c-5(a)) is amended--
                            (i) by inserting ``and Privatization'' 
                        after ``Transition'' in the heading; and
                            (ii) by adding at the end the following: 
                        ``As of the privatization date, all liabilities 
                        attributable to the operation of the 
                        Corporation from the transition date to the 
                        privatization date shall be direct liabilities 
                        of the United States.''.
                    (B) Subsection (b) of section 1406 (42 U.S.C. 
                2297c-5(b)) is amended--
                            (i) by inserting ``and Privatization'' 
                        after ``Transition'' in the heading; and
                            (ii) by adding at the end the following: 
                        ``As of the privatization date, any judgment 
                        entered against the Corporation imposing 
                        liability arising out of the operation of the 
                        Corporation from the transition date to the 
                        privatization date shall be considered a 
                        judgment against the United States.''.
                    (C) Subsection (d) of section 1406 (42 U.S.C. 
                2297c-5(d)) is amended--
                            (i) by inserting ``and Privatization'' 
                        after ``Transition'' in the heading; and
                            (ii) by striking ``the transition date'' 
                        and inserting ``the privatization date (or, in 
                        the event the privatization date does not 
                        occur, the transition date)''.
            (6) Transfer of uranium.--Title II (42 U.S.C. 2297 et seq.) 
        is amended by redesignating section 1408 as section 1409 and by 
        inserting after section 1407 the following:

``SEC. 1408. TRANSFER OF URANIUM.

    ``The Secretary may, before the privatization date, transfer to the 
Corporation without charge raw uranium, low-enriched uranium, and 
highly enriched uranium.''.
    (f) Privatization of the Corporation.--
            (1) Establishment of private corporation.--Chapter 25 (42 
        U.S.C. 2297d et seq.) is amended by adding at the end the 
        following new section:

``SEC. 1503. ESTABLISHMENT OF PRIVATE CORPORATION.

    ``(a) Establishment.--
            ``(1) In general.--In order to facilitate privatization, 
        the Corporation may provide for the establishment of a private 
        corporation organized under the laws of any of the several 
        States. Such corporation shall have among its purposes the 
        following:
                    ``(A) To help maintain a reliable and economical 
                domestic source of uranium enrichment services.
                    ``(B) To undertake any and all activities as 
                provided in its corporate charter.
            ``(2) Authorities.--The corporation established pursuant to 
        paragraph (1) shall be authorized to--
                    ``(A) enrich uranium, provide for uranium to be 
                enriched by others, or acquire enriched uranium 
                (including low-enriched uranium derived from highly 
                enriched uranium);
                    ``(B) conduct, or provide for conducting, those 
                research and development activities related to uranium 
                enrichment and related processes and activities the 
                corporation considers necessary or advisable to 
                maintain itself as a commercial enterprise operating on 
                a profitable and efficient basis;
                    ``(C) enter into transactions regarding uranium, 
                enriched uranium, or depleted uranium with--
                            ``(i) persons licensed under section 53, 
                        63, 103, or 104 in accordance with the licenses 
                        held by those persons;
                            ``(ii) persons in accordance with, and 
                        within the period of, an agreement for 
                        cooperation arranged under section 123; or
                            ``(iii) persons otherwise authorized by law 
                        to enter into such transactions;
                    ``(D) enter into contracts with persons licensed 
                under section 53, 63, 103, or 104, for as long as the 
                corporation considers necessary or desirable, to 
                provide uranium or uranium enrichment and related 
                services;
                    ``(E) enter into contracts to provide uranium or 
                uranium enrichment and related services in accordance 
                with, and within the period of, an agreement for 
                cooperation arranged under section 123 or as otherwise 
                authorized by law; and
                    ``(F) take any and all such other actions as are 
                permitted by the law of the jurisdiction of 
                incorporation of the corporation.
            ``(3) Transfer of assets.--For purposes of implementing the 
        privatization, the Corporation may transfer some or all of its 
        assets and obligations to the corporation established pursuant 
        to this section, including--
                    ``(A) all of the Corporation's assets, including 
                all contracts, agreements, and leases, including all 
                uranium enrichment contracts and power purchase 
                contracts;
                    ``(B) all funds in accounts of the Corporation held 
                by the Treasury or on deposit with any bank or other 
                financial institution;
                    ``(C) all of the Corporation's rights, duties, and 
                obligations, accruing subsequent to the privatization 
                date, under the power purchase contracts covered by 
                section 1401(b)(2)(B); and
                    ``(D) all of the Corporation's rights, duties, and 
                obligations, accruing subsequent to the privatization 
                date, under the lease agreement between the Department 
                and the Corporation executed by the Department and the 
                Corporation pursuant to section 1403.
            ``(4) Merger or consolidation.--For purposes of 
        implementing the privatization, the Corporation may merge or 
        consolidate with the corporation established pursuant to 
        subsection (a)(1) if such action is contemplated by the plan 
        for privatization approved by the President under section 
        1502(b). The Board shall have exclusive authority to approve 
        such merger or consolidation and to take all further actions 
        necessary to consummate such merger or consolidation, and no 
        action by or in respect of shareholders shall be required. The 
        merger or consolidation shall be effected in accordance with, 
        and have the effects of a merger or consolidation under, the 
        laws of the jurisdiction of incorporation of the surviving 
        corporation, and all rights and benefits provided under this 
        title to the Corporation shall apply to the surviving 
        corporation as if it were the Corporation.
            ``(5) Tax treatment of privatization.--
                    ``(A) Transfer of assets or merger.--No income, 
                gain, or loss shall be recognized by any person by 
                reason of the transfer of the Corporation's assets to, 
                or the Corporation's merger with, the corporation 
                established pursuant to subsection (a)(1) in connection 
                with the privatization.
                    ``(B) Cancellation of debt and common stock.--No 
                income, gain, or loss shall be recognized by any person 
                by reason of any cancellation of any obligation or 
                common stock of the Corporation in connection with the 
                privatization.
    ``(b) OSHA Requirements.--For purposes of the regulation of 
radiological and nonradiological hazards under the Occupational Safety 
and Health Act of 1970, the corporation established pursuant to 
subsection (a)(1) shall be treated in the same manner as other 
employers licensed by the Nuclear Regulatory Commission. Any 
interagency agreement entered into between the Nuclear Regulatory 
Commission and the Occupational Safety and Health Administration 
governing the scope of their respective regulatory authorities shall 
apply to the corporation as if the corporation were a Nuclear 
Regulatory Commission licensee.
    ``(c) Legal Status of Private Corporation.--
            ``(1) Not federal agency.--The corporation established 
        pursuant to subsection (a)(1) shall not be an agency, 
        instrumentality, or establishment of the United States 
        Government and shall not be a Government corporation or 
        Government-controlled corporation.
            ``(2) No recourse against united states.--Obligations of 
        the corporation established pursuant to subsection (a)(1) shall 
        not be obligations of, or guaranteed as to principal or 
        interest by, the Corporation or the United States, and the 
        obligations shall so plainly state.
            ``(3) No claims court jurisdiction.--No action under 
        section 1491 of title 28, United States Code, shall be 
        allowable against the United States based on the actions of the 
        corporation established pursuant to subsection (a)(1).
    ``(d) Board of Director's Election After Public Offering.--In the 
event that the privatization is implemented by means of a public 
offering, an election of the members of the board of directors of the 
Corporation by the shareholders shall be conducted before the end of 
the 1-year period beginning the date shares are first offered to the 
public pursuant to such public offering.
    ``(e) Adequate Proceeds.--The Secretary of Energy shall not allow 
the privatization of the Corporation unless before the sale date the 
Secretary determines that the estimated sum of the gross proceeds from 
the sale of the Corporation will be an adequate amount.''.
            (2) Ownership limitations.--Chapter 25 (as amended by 
        paragraph (1)) is amended by adding at the end the following 
        new section:

``SEC. 1504. OWNERSHIP LIMITATIONS.

    ``(a) Securities Limitation.--In the event that the privatization 
is implemented by means of a public offering, during a period of 3 
years beginning on the privatization date, no person, directly or 
indirectly, may acquire or hold securities representing more than 10 
percent of the total votes of all outstanding voting securities of the 
Corporation.
    ``(b) Application.--Subsection (a) shall not apply--
            ``(1) to any employee stock ownership plan of the 
        Corporation,
            ``(2) to underwriting syndicates holding shares for resale, 
        or
            ``(3) in the case of shares beneficially held for others, 
        to commercial banks, broker-dealers, clearing corporations, or 
        other nominees.
    ``(c) No director, officer, or employee of the Corporation may 
acquire any securities, or any right to acquire securities, of the 
Corporation--
            ``(1) in the public offering of securities of the 
        Corporation in the implementation of the privatization,
            ``(2) pursuant to any agreement, arrangement, or 
        understanding entered into before the privatization date, or
            ``(3) before the election of directors of the Corporation 
        under section 1503(d) on any terms more favorable than those 
        offered to the general public.''.
            (3) Exemption from liability.--Chapter 25 (as amended by 
        paragraph (2)) is amended by adding at the end the following 
        new section:

``SEC. 1505. EXEMPTION FROM LIABILITY.

    ``(a) In General.--No director, officer, employee, or agent of the 
Corporation shall be liable, for money damages or otherwise, to any 
party if, with respect to the subject matter of the action, suit, or 
proceeding, such person was fulfilling a duty, in connection with any 
action taken in connection with the privatization, which such person in 
good faith reasonably believed to be required by law or vested in such 
person.
    ``(b) Exception.--The privatization shall be subject to the 
Securities Act of 1933 and the Securities Exchange Act of 1934. The 
exemption set forth in subsection (a) shall not apply to claims arising 
under such Acts or under the Constitution or laws of any State, 
territory, or possession of the United States relating to transactions 
in securities, which claims are in connection with a public offering 
implementing the privatization.''.
            (4) Resolution of certain issues.--Chapter 25 (as amended 
        by paragraph (3)) is amended by adding at the end the following 
        new section:

``SEC. 1506. RESOLUTION OF CERTAIN ISSUES.

    ``(a) Corporation Actions.--Notwithstanding any provision of any 
agreement to which the Corporation is a party, the Corporation shall 
not be considered to be in breach, default, or violation of any such 
agreement because of any provision of this chapter or any action the 
Corporation is required to take under this chapter.
    ``(b) Right To Sue Withdrawn.--The United States hereby withdraws 
any stated or implied consent for the United States, or any agent or 
officer of the United States, to be sued by any person for any legal, 
equitable, or other relief with respect to any claim arising out of, or 
resulting from, acts or omissions under this chapter.''.
            (5) Application of privatization proceeds.--Chapter 25 (as 
        amended by paragraph (4)) is amended by adding at the end the 
        following new section:

``SEC. 1507. APPLICATION OF PRIVATIZATION PROCEEDS.

    ``The proceeds from the privatization shall be included in the 
budget baseline required by the Balanced Budget and Emergency Deficit 
Control Act of 1985 and shall be counted as an offset to direct 
spending for purposes of section 252 of such Act, notwithstanding 
section 257(e) of such Act.''.
            (6) Conforming amendment.--The table of contents for 
        chapter 25 is amended by inserting after the item for section 
        1502 the following:

``Sec. 1503. Establishment of private corporation.
``Sec. 1504. Ownership limitations.
``Sec. 1505. Exemption from liability.
``Sec. 1506. Resolution of certain issues.
``Sec. 1507. Application of privatization proceeds.''.
            (7) Section 193 (42 U.S.C. 2243) is amended by adding at 
        the end the following:
    ``(f) Limitation.--If the privatization of the United States 
Enrichment Corporation results in the Corporation being--
            ``(1) owned, controlled, or dominated by a foreign 
        corporation or a foreign government, or
            ``(2) otherwise inimical to the common defense or security 
        of the United States,
any license held by the Corporation under sections 53 and 63 shall be 
terminated.''.
            (8) Period for congressional review.--Section 1502(d) (42 
        U.S.C. 2297d-1(d)) is amended by striking ``less than 60 days 
        after notification of the Congress'' and inserting ``less than 
        60 days after the date of the report to Congress by the 
        Comptroller General under subsection (c)''.
    (g) Periodic Certification of Compliance.--Section 1701(c)(2) (42 
U.S.C. 2297f(c)(2)) is amended by striking ``Annual application for 
certificate of compliance.--The Corporation shall apply at least 
annually to the Nuclear Regulatory Commission for a certificate of 
compliance under paragraph (1).'' and inserting ``Periodic application 
for certificate of compliance.--The Corporation shall apply to the 
Nuclear Regulatory Commission for a certificate of compliance under 
paragraph (1) periodically, as determined by the Nuclear Regulatory 
Commission, but not less than every 5 years.''.
    (h) Licensing of Other Technologies.--Subsection (a) of section 
1702 (42 U.S.C. 2297f-1(a)) is amended by striking ``other than'' and 
inserting ``including''.
    (i) Conforming Amendments.--
            (1) Repeals in atomic energy act of 1954 as of the 
        privatization date.--
                    (A) Repeals.--As of the privatization date (as 
                defined in section 1201(13) of the Atomic Energy Act of 
                1954), the following sections (as in effect on such 
                privatization date) of the Atomic Energy Act of 1954 
                are repealed:
                            (i) Section 1202.
                            (ii) Sections 1301 through 1304.
                            (iii) Sections 1306 through 1316.
                            (iv) Sections 1404 and 1405.
                            (v) Section 1601.
                            (vi) Sections 1603 through 1607.
                    (B) Conforming amendment.--The table of contents of 
                such Act is amended by repealing the items referring to 
                sections repealed by paragraph (1).
            (2) Statutory modifications.--As of such privatization 
        date, the following shall take effect:
                    (A) For purposes of title I of the Atomic Energy 
                Act of 1954, all references in such Act to the ``United 
                States Enrichment Corporation'' shall be deemed to be 
                references to the corporation established pursuant to 
                section 1503 of the Atomic Energy Act of 1954 (as added 
                by subsection (f)(1)).
                    (B) Section 1018(1) of the Energy Policy Act of 
                1992 (42 U.S.C. 2296b-7(1)) is amended by striking 
                ``the United States'' and all that follows through the 
                period and inserting ``the corporation referred to in 
                section 1201(4) of the Atomic Energy Act of 1954.''.
                    (C) Section 9101(3) of title 31, United States 
                Code, is amended by striking subparagraph (N), as added 
                by section 902(b) of Public Law 102-486.
            (3) Revision of section 1305.--As of such privatization 
        date, section 1305 of the Atomic Energy Act of 1954 (42 U.S.C 
        2297b-4) is amended--
                    (A) by repealing subsections (a), (b), (c), and 
                (d), and
                    (B) in subsection (e)--
                            (i) by striking the subsection designation 
                        and heading,
                            (ii) by redesignating paragraphs (1) and 
                        (2) (as added by subsection (d)(1)) as 
                        subsections (a) and (b) and by moving the 
                        margins 2-ems to the left,
                            (iii) by striking paragraph (3), and
                            (iv) by redesignating paragraph (4) (as 
                        amended by subsection (d)(2)) as subsection 
                        (c), and by moving the margins 2-ems to the 
                        left.

SEC. 1102. MAKING PERMANENT NUCLEAR REGULATORY COMMISSION ANNUAL 
              CHARGES.

    Paragraph (3) of section 6101(a)(3) of the Omnibus Budget 
Reconciliation Act of 1990 (42 U.S.C. 2214(a)(3)) is repealed.

SEC. 1103. COGENERATION.

    Section 804(2)(B) of the National Energy Conservation Policy Act 
(42 U.S.C. 8287c(2)(B)) is amended by striking ``, excluding any 
cogeneration process for other than a federally owned building or 
buildings or other federally owned facilities''.

SEC. 1104. FEMA RADIOLOGICAL EMERGENCY PREPAREDNESS FEES.

    (a) In General.--The Director of the Federal Emergency Management 
Agency may assess and collect fees applicable to persons subject to 
radiological emergency preparedness regulations issued by the Director.
    (b) Requirements.--The assessment and collection of fees by the 
Director under subsection (a) shall be fair and equitable and shall 
reflect the full amount of costs to the Agency of providing 
radiological emergency planning, preparedness, response, and associated 
services. Such fees shall be assessed by the Director in a manner which 
reflects the use of resources of the Agency for classes of regulated 
persons and the administrative costs of collecting such fees.
    (c) Amount of Fees.--The aggregate amount of fees assessed under 
subsection (a) in a fiscal year shall approximate, but not be less 
than, 100 percent of the amounts anticipated by the Director to be 
obligated for the radiological emergency preparedness program of the 
Agency for such fiscal year.
    (d) Deposit of Fees in Treasury.--Fees received pursuant to 
subsection (a) shall be deposited in the general fund of the Treasury 
as offsetting receipts.

                        Subtitle B--Central Utah

                                                    Title I, Subtitle B

SEC. 1121. PREPAYMENT OF CERTAIN REPAYMENT CONTRACTS BETWEEN THE UNITED 
              STATES AND THE CENTRAL UTAH WATER CONSERVANCY DISTRICT.

    The second sentence of section 210 of the Central Utah Project 
Completion Act (106 Stat. 4624) is amended to read as follows: ``The 
Secretary of the Interior shall allow for prepayment of the repayment 
contract between the United States and the Central Utah Water 
Conservancy District dated December 28, 1965, and supplemented on 
November 26, 1985, providing for repayment of the municipal and 
industrial water delivery facilities for which repayment is provided 
pursuant to such contract, under such terms and conditions as the 
Secretary deems appropriate to protect the interest of the United 
States, which shall be similar to the terms and conditions contained in 
the supplemental contract that provided for the prepayment of the 
Jordan Aqueduct dated October 28, 1993. The District shall exercise its 
right to prepayment pursuant to this section by the end of fiscal year 
2002.''.

                  Subtitle C--Army Corps of Engineers

                                                    Title I, Subtitle C

SEC. 1131. REGULATORY PROGRAM FUND.

    (a) Establishment.--There is established in the Treasury of the 
United States the ``Army Civil Works Regulatory Program Fund'' 
(hereinafter in this section referred to as the ``Regulatory Program 
Fund'') into which shall be deposited fees collected by the Secretary 
of the Army pursuant to subsection (b). Amounts deposited into the 
Regulatory Program Fund are authorized to be appropriated to the 
Secretary of the Army to cover a portion of the expenses incurred by 
the Department of the Army in administering laws pertaining to the 
regulation of the navigable waters of the United States, including 
wetlands.
    (b) Regulatory Fees.--
            (1) Collection.--Not later than 60 days after the date of 
        the enactment of this Act, the Secretary of the Army shall 
        establish fees for the evaluation of commercial permit 
        applications, for the recovery of costs associated with the 
        preparation of environmental impact statements required by the 
        National Environmental Policy Act of 1969, and for the recovery 
        of costs associated with wetlands delineations for major 
        developments affecting wetlands. The Secretary shall collect 
        such fees and deposit amounts collected pursuant to this 
        paragraph into the Regulatory Program Fund.
            (2) Fees.--The fees described in paragraph (1) shall be 
        established by the Secretary of the Army at rates that will 
        allow for the recovery of receipts at amounts sufficient to 
        cover the costs for which the fees are established under 
        paragraph (1).

                       Subtitle D--Helium Reserve

                                                    Title I, Subtitle D

SEC. 1141. SALE OF HELIUM PROCESSING AND STORAGE FACILITY.

    (a) Short Title.--This section may be cited as the ``Helium Act of 
1995''.
    (b) References.--Except as otherwise expressly provided, whenever 
in this section an amendment or repeal is expressed in terms of an 
amendment to, or repeal of, a section or other provision, the reference 
shall be considered to be made to a section or other provision of the 
Helium Act (50 U.S.C. 167 to 167n).
    (c) Authority of Secretary.--Sections 3, 4, and 5 are amended to 
read as follows:

``SEC. 3. AUTHORITY OF SECRETARY.

    ``(a) Extraction and Disposal of Helium on Federal Lands.--(1) The 
Secretary may enter into agreements with private parties for the 
recovery and disposal of helium on Federal lands upon such terms and 
conditions as he deems fair, reasonable and necessary. The Secretary 
may grant leasehold rights to any such helium. The Secretary may not 
enter into any agreement by which the Secretary sells such helium other 
than to a private party with whom the Secretary has an agreement for 
recovery and disposal of helium. Such agreements may be subject to such 
rules and regulations as may be prescribed by the Secretary.
    ``(2) Any agreement under this subsection shall be subject to the 
existing rights of any affected Federal oil and gas lessee. Each such 
agreement (and any extension or renewal thereof) shall contain such 
terms and conditions as deemed appropriate by the Secretary.
    ``(3) This subsection shall not in any manner affect or diminish 
the rights and obligations of the Secretary and private parties under 
agreements to dispose of helium produced from Federal lands in 
existence at the enactment of the Helium Act of 1995 except to the 
extent that such agreements are renewed or extended after such date.
    ``(b) Storage, Transportation, and Sale.--The Secretary is 
authorized to store, transport, and sell helium only in accordance with 
this Act.
    ``(c) Monitoring and Reporting.--The Secretary is authorized to 
monitor helium production and helium reserves in the United States and 
to periodically prepare reports regarding the amounts of helium 
produced and the quantity of crude helium in storage in the United 
States.

``SEC. 4. STORAGE AND TRANSPORTATION OF CRUDE HELIUM.

    ``(a) Storage and Transportation.--The Secretary is authorized to 
store and transport crude helium and to maintain and operate existing 
crude helium storage at the Bureau of Mines Cliffside Field, together 
with related helium transportation and withdrawal facilities.
    ``(b) Cessation of Production, Refining, and Marketing.--Effective 
one year after the date of enactment of the Helium Act of 1995, the 
Secretary shall cease producing, refining, and marketing refined helium 
and shall cease carrying out all other activities relating to helium 
which the Secretary was authorized to carry out under this Act before 
the date of enactment of the Helium Act of 1995, except those 
activities described in subsection (a).
    ``(c) Disposal of Facilities.--(1) Within one year after the date 
of enactment of the Helium Act of 1995, the Secretary shall dispose of 
all facilities, equipment, and other real and personal property, 
together with all interests therein, held by the United States for the 
purpose of producing, refining, and marketing refined helium. The 
disposal of such property shall be in accordance with the provisions of 
law governing the disposal of excess or surplus properties of the 
United States.
    ``(2) All proceeds accruing to the United States by reason of the 
sale or other disposal of such property shall be treated as moneys 
received under this chapter for purposes of section 6(f). All costs 
associated with such sale and disposal (including costs associated with 
termination of personnel) and with the cessation of activities under 
subsection (b) shall be paid from amounts available in the helium 
production fund established under section 6(f).
    ``(3) Paragraph (1) shall not apply to any facilities, equipment, 
or other real or personal property, or any interest therein, necessary 
for the storage and transportation of crude helium.
    ``(d) Existing Contracts.--All contracts which were entered into by 
any person with the Secretary for the purchase by such person from the 
Secretary of refined helium and which are in effect on the date of the 
enactment of the Helium Act of 1995 shall remain in force and effect 
until the date on which the facilities referred to in subsection (c) 
are disposed of. Any costs associated with the termination of such 
contracts shall be paid from the helium production fund established 
under section 6(f).

``SEC. 5. FEES FOR STORAGE, TRANSPORTATION AND WITHDRAWAL.

    ``Whenever the Secretary provides helium storage, withdrawal, or 
transportation services to any person, the Secretary is authorized and 
directed to impose fees on such person to reimburse the Secretary for 
the full costs of providing such storage, transportation, and 
withdrawal. All such fees received by the Secretary shall be treated as 
moneys received under this Act for purposes of section 6(f).''.
    (d) Sale of Crude Helium.--Section 6 is amended as follows:
            (1) Subsection (a) is amended by striking out ``from the 
        Secretary'' and inserting ``from persons who have entered into 
        enforceable contracts to purchase an equivalent amount of crude 
        helium from the Secretary''.
            (2) Subsection (b) is amended by inserting ``crude'' before 
        ``helium'' and by adding the following at the end thereof: 
        ``Except as may be required by reason of subsection (a), the 
        Secretary shall not make sales of crude helium under this 
        section in such amounts as will disrupt the market price of 
        crude helium.''.
            (3) Subsection (c) is amended by inserting ``crude'' before 
        ``helium'' after the words ``Sales of'' and by striking 
        ``together with interest as provided in this subsection'' and 
        all that follows down through the period at the end of such 
        subsection and inserting the following: ``all funds required to 
        be repaid to the United States as of October 1, 1994 under this 
        section (hereinafter referred to as `repayable amounts'). The 
        price at which crude helium is sold by the Secretary shall not 
        be less than the amount determined by the Secretary as follows:
            ``(1) Divide the outstanding amount of such repayable 
        amounts by the volume (in mcf) of crude helium owned by the 
        United States and stored in the Bureau of Mines Cliffside Field 
        at the time of the sale concerned.
            ``(2) Adjust the amount determined under paragraph (1) by 
        the Consumer Price Index for years beginning after December 31, 
        1994.''.
            (4) Subsection (d) is amended to read as follows:
    ``(d) Extraction of Helium From Deposits on Federal Lands.--All 
moneys received by the Secretary from the sale or disposition of helium 
on Federal lands shall be paid to the Treasury and credited against the 
amounts required to be repaid to the Treasury under subsection (c) of 
this section.''.
            (5) Subsection (e) is repealed.
            (6) Subsection (f) is amended by inserting ``(1)'' after 
        ``(f)'' and by adding the following at the end thereof:
    ``(2) Within 7 days after the commencement of each fiscal year 
after the disposal of the facilities referred to in section 4(c), all 
amounts in such fund in excess of $2,000,000 (or such lesser sum as the 
Secretary deems necessary to carry out this Act during such fiscal 
year) shall be paid to the Treasury and credited as provided in 
paragraph (1). Upon repayment of all amounts referred to in subsection 
(c), the fund established under this section shall be terminated and 
all moneys received under this Act shall be deposited in the Treasury 
as General Revenues.''.
    (e) Elimination of Stockpile.--Section 8 is amended to read as 
follows:

``SEC. 8. ELIMINATION OF STOCKPILE.

    ``(a) Review of Reserves.--Not later than January 1, 2014 the 
Secretary shall review the known helium reserves in the United States 
and make a determination as to the expected life of the domestic helium 
reserves (other than federally owned helium stored at the Cliffside 
Reservoir) at that time.
    ``(b) Reserves Below 1 BCF in 2014.--Not later than January 1, 
2014, if the Secretary determines that domestic helium reserves (other 
than federally owned helium stored at the Cliffside Reservoir) are less 
than 1 billion cubic feet (bcf), the Secretary shall commence making 
sales of crude helium from helium reserves owned by the United States 
in such amounts as may be necessary to dispose of all such helium 
reserves in excess of 600 million cubic feet (mcf) by January 1, 2019. 
The sales shall be at such times and in such lots as the Secretary 
determines, in consultation with the helium industry, necessary to 
carry out this subsection. The price for all such sales, as determined 
by the Secretary in consultation with the helium industry, shall be 
such as will ensure repayment of the amounts required to be repaid to 
the Treasury under section 6(c) by the year 2019 with minimum market 
disruption. The date specified in this subsection for completion of 
such sales and for repayment of debt may be extended by the Secretary 
for a period of not to exceed 5 additional years if necessary in order 
to assure repayment of such debt with minimum market disruption.
    ``(c) Reserves Above 1 BCF in 2014.--Not later than January 1, 
2014, if the Secretary determines that domestic helium reserves (other 
than federally owned helium stored at the Cliffside Reservoir) are more 
than 1 billion cubic feet (bcf), the Secretary shall commence making 
sales of crude helium from helium reserves owned by the United States 
in such amounts as may be necessary to dispose of all such helium 
reserves in excess of 600 million cubic feet (mcf) by January 1, 2024. 
The sales shall be at such times and in such lots as the Secretary 
determines, in consultation with the helium industry, necessary to 
carry out this subsection with minimum disruption of the market for 
crude helium.
    ``(d) Discovery of Additional Reserves.--The discovery of 
additional helium reserves after the year 2014 shall not affect the 
duty of the Secretary to make sales of helium as provided in subsection 
(b) or (c), as the case may be.''.
    (f) Repeal of Authority To Borrow.--Sections 12 and 15 are 
repealed.

                        Subtitle E--Territories

                                                    Title I, Subtitle E

SEC. 1151. TERMINATION OF ANNUAL DIRECT ASSISTANCE TO NORTHERN MARIANA 
              ISLANDS.

    (a) In General.--No annual payment may be made under section 701, 
702, or 704 of the Covenant to Establish a Commonwealth of the Northern 
Mariana Islands in Political Union with the United States of America 
(48 U.S.C. 1681 note), for any fiscal year beginning after September 
30, 1995.
    (b) Elimination of 7-Year Extensions.--
            (1) In general.--The Act of March 24, 1976 (90 Stat. 263; 
        16 U.S.C. 1681 note), is amended by striking sections 3 and 4.
            (2) Conforming changes.--(A) Section 5 of the Act of March 
        24, 1976 (90 Stat. 263; 16 U.S.C. 1681 note) is redesignated as 
        section 3.
            (B) Section 3 of such Act, as redesignated by subparagraph 
        (A) of this paragraph, is amended--
                    (i) by striking ``agreement identified in section 3 
                of this Act'' and inserting ``Agreement of the Special 
                Representatives on Future United States Financial 
                Assistance for the Government of the Northern Mariana 
                Islands, executed June 10, 1985, between the special 
                representative of the President of the United States 
                and the special representatives of the Governor of the 
                Northern Mariana Islands''; and
                    (ii) by striking ``Interior and Insular Affairs'' 
                and inserting ``Resources''.

                    TITLE II--AGRICULTURAL PROGRAMS

SEC. 2001. SHORT TITLE.

    This title may be cited as the ``Agricultural Reconciliation Act of 
1995''.

                                                   Title II, Subtitle A

  Subtitle A--Extension and Modification of Various Commodity Programs

SEC. 2101. EXTENSION OF LOANS, PAYMENTS, AND ACREAGE REDUCTION PROGRAMS 
              FOR WHEAT THROUGH 2002.

    (a) Agricultural Act of 1949.--Section 107B of the Agricultural Act 
of 1949 (7 U.S.C. 1445b-3a) is amended--
            (1) in the section heading by striking ``1995'' and 
        inserting ``2002'';
            (2) in subsections (a)(1), (a)(4)(C), (b)(1), (c)(1)(A), 
        (c)(1)(B)(iii), (e)(1)(G), (e)(3)(A), (e)(3)(C)(iii), (f)(1), 
        (q), by striking ``1995'' each place it appears and inserting 
        ``2002'';
            (3) in the heading of subsection (c)(1)(B)(ii), by striking 
        ``and 1995'' and inserting ``through 2002'';
            (4) in subsection (c)(1)(B)(ii), by striking ``and 1995'' 
        and inserting ``through 2002'';
            (5) in subsection (c)(1)(E)(vii), by striking ``1997'' and 
        inserting ``2002'';
            (6) in the heading of subsection (e)(1)(G), by striking 
        ``1995'' and inserting ``2002''; and
            (7) in subsection (g)(1), by striking ``and 1995'' and 
        inserting ``through 2002''.
    (b) Food Security Wheat Reserve.--Section 302(i) of the Food 
Security Wheat Reserve Act of 1980 (7 U.S.C. 1736f-1(i)) is amended by 
striking ``1995'' both places it appears and inserting ``2002''.
    (c) Nonapplicability of Certificate Requirements.--Sections 379d 
through 379j of the Agricultural Adjustment Act of 1938 (7 U.S.C. 
1379d-1379j) shall not be applicable to wheat processors or exporters 
during the period June 1, 1996, through May 31, 2003.
    (d) Suspension of Land Use, Wheat Marketing Allocation, and 
Producer Certificate Provisions.--Sections 331 through 339, 379b, and 
379c of the Agricultural Adjustment Act of 1938 (7 U.S.C. 1331 through 
1339, 1379b, and 1379c) shall not be applicable to the 1996 through 
2002 crops of wheat.
    (e) Suspension of Certain Quota Provisions.--The joint resolution 
entitled ``A joint resolution relating to corn and wheat marketing 
quotas under the Agricultural Adjustment Act of 1938, as amended'', 
approved May 26, 1941 (7 U.S.C. 1330 and 1340), shall not be applicable 
to the crops of wheat planted for harvest in the calendar years 1996 
through 2002.
    (f) Nonapplicability of Section 107 of Agricultural Act of 1949.--
Section 107 of the Agricultural Act of 1949 (7 U.S.C. 1445a) shall not 
be applicable to the 1996 through 2002 crops of wheat.

SEC. 2102. EXTENSION OF LOANS, PAYMENTS, AND ACREAGE REDUCTION PROGRAMS 
              FOR FEED GRAINS THROUGH 2002.

    (a) Agricultural Act of 1949.--Section 105B of the Agricultural Act 
of 1949 (7 U.S.C. 1444f) is amended--
            (1) in the section heading, by striking ``1995'' and 
        inserting ``2002'';
            (2) in subsections (a)(1), (a)(4)(C), (a)(6), (b)(1), 
        (c)(1)(A), (c)(1)(B)(iii), (e)(1)(G), (e)(1)(H), (e)(2)(H), 
        (e)(3)(A), (e)(3)(C)(iii), (f)(1), (p)(1), (q)(1), and (r), by 
        striking ``1995'' each place it appears and inserting ``2002'';
            (3) in the heading of subsection (c)(1)(B)(ii), by striking 
        ``and 1995'' and inserting ``through 2002'';
            (4) in subsection (c)(1)(B)(ii), by striking ``and 1995'' 
        and inserting ``through 2002'';
            (5) in subsection (c)(1)(E)(vii), by striking ``1997'' and 
        inserting ``2002'';
            (6) in the headings of subsections (e)(1)(G) and (e)(1)(H), 
        by striking ``1995'' both places it appears and inserting 
        ``2002''; and
            (7) in subsection (g)(1), by striking ``and 1995'' and 
        inserting ``through 2002''.
    (b) Recourse Loan Program For Silage.--Section 403 of the Food 
Security Act of 1985 (7 U.S.C. 1444e-1) is amended by striking ``1996'' 
and inserting ``2002''.
    (c) Nonapplicability of Section 105 of Agricultural Act of 1949.--
Section 105 of the Agricultural Act of 1949 (7 U.S.C. 1444b) shall not 
be applicable to the 1996 through 2002 crops of feed grains.

SEC. 2103. EXTENSION OF LOANS, PAYMENTS, AND ACREAGE REDUCTION PROGRAMS 
              FOR COTTON THROUGH 2002.

    (a) Extra Long Staple Cotton.--Section 103(h)(16) of the 
Agricultural Act of 1949 (7 U.S.C. 1444(h)(16)) is amended by striking 
``1996'' and inserting ``2003''.
    (b) Upland Cotton.--Section 103B of the Agricultural Act of 1949 (7 
U.S.C. 1444-2) is amended--
            (1) in the section heading, by striking ``1997'' and 
        inserting ``2002'';
            (2) in subsections (a)(1), (b)(1), (c)(1)(A), 
        (c)(1)(B)(ii), (c)(1)(D)(v)(II), and (o), by striking ``1997'' 
        each place it appears and inserting ``2002'';
            (3) in the heading of subsection (c)(1)(D)(v)(II), by 
        striking ``1997 crops'' and inserting ``2002 crops'';
            (4) in subsection (e)(1)(D), by striking ``the 1997 crop'' 
        and inserting ``each of the 1997 through 2002 crops'';
            (5) in subsections (e)(3)(A) and (f)(1), by striking 
        ``1995'' each place it appears and inserting ``2002''; and
            (6) in subparagraphs (B)(i), (D)(i), (E)(i), and (F)(i) of 
        subsection (a)(5), by striking ``1998'' each place it appears 
        and inserting ``2003''.
    (c) Cottonseed and Cottonseed Oil.--Section 203(b) of the 
Agricultural Act of 1949 (7 U.S.C. 1446d(b)) is amended by striking 
``1995'' and inserting ``2002''.
    (d) Agricultural Adjustment Act of 1938.--Section 374(a) of the 
Agricultural Adjustment Act of 1938 (7 U.S.C. 1374(a)) is amended by 
striking ``1995'' each place it appears and inserting ``2002''.
    (e) Suspension of Base Acreage Allotments, Marketing Quotas, and 
Related Provisions.--Sections 342, 343, 344, 345, 346, and 377 of the 
Agricultural Adjustment Act of 1938 (7 U.S.C. 1342-1346 and 1377) shall 
not be applicable to any of the 1996 through 2002 crops of upland 
cotton.
    (f) Suspension of miscellaneous cotton provisions.--Section 103(a) 
of the Agricultural Act of 1949 (7 U.S.C. 1444(a)) shall not be 
applicable to the 1996 through 2002 crops.
    (g) Preliminary Allotments for 2003 Crop of Upland Cotton.--
Notwithstanding any other provision of law, the permanent State, 
county, and farm base acreage allotments for the 1977 crop of upland 
cotton, adjusted for any underplantings in 1977 and reconstituted as 
provided in section 379 of the Agricultural Adjustment Act of 1938 (7 
U.S.C. 1379), shall be the preliminary allotments for the 2003 crop.
    (h) Cotton Classification Services.--The first sentence of section 
3a of the Act of March 3, 1927 (commonly known as the ``Cotton 
Statistics and Estimates Act'') (chapter 337; 7 U.S.C. 473a), is 
amended by striking ``1996'' and inserting ``2002''.

SEC. 2104. EXTENSION OF LOANS, PAYMENTS, AND ACREAGE REDUCTION PROGRAMS 
              FOR RICE THROUGH 2002.

    Section 101B of the Agricultural Act of 1949 (7 U.S.C. 1441-2) is 
amended--
            (1) in the section heading, by striking ``1995'' and 
        inserting ``2002'';
            (2) in subsections (a)(1), (a)(3), (b)(1), (c)(1)(A), 
        (c)(1)(B)(iii), (e)(3)(A), (f)(1), and (n), by striking 
        ``1995'' each place it appears and inserting ``2002'';
            (3) in subsection (a)(5)(D)(i), by striking ``1996'' and 
        inserting ``2001'';
            (4) in the heading of subsection (c)(1)(B)(ii), by striking 
        ``and 1995'' and inserting ``through 2002'';
            (5) in subsection (c)(1)(B)(ii), by striking ``and 1995'' 
        and inserting ``through 2002'';
            (6) in subsection (c)(1)(D)(v)(II), by striking ``1997'' 
        and inserting ``2002''; and
            (7) in the heading of subsection (c)(1)(D)(v)(II), by 
        striking ``1997 crops'' and inserting ``2002 crops''.

SEC. 2105. EXTENSION OF LOANS AND PAYMENTS FOR OILSEEDS THROUGH 2002.

    Section 205 of the Agricultural Act of 1949 (7 U.S.C. 1446f) is 
amended--
            (1) in the section heading, by striking ``1995'' and 
        inserting ``2002'';
            (2) in subsections (b), (c), (e)(1), and (n), by striking 
        ``1995'' each place it appears and inserting ``2002''; and
            (3) in subsections (c) and (h)(2), by striking ``1997'' 
        each places it appears and inserting ``2002''.

SEC. 2106. INCREASE IN FLEX ACRES.

    (a) Wheat.--Subsection (c)(1)(C)(ii) of section 107B of the 
Agricultural Act of 1949 (7 U.S.C. 1445b-3a) is amended by striking 
``85 percent'' and inserting ``85 percent (through the 1995 crop of 
wheat) and 77 percent (for the 1996 through 2002 crops)''.
    (b) Feed Grains.--Subsection (c)(1)(C)(ii) of section 105B of such 
Act (7 U.S.C. 1444f) is amended by striking ``85 percent'' and 
inserting ``85 percent (through the 1995 crop) and 77 percent (for the 
1996 through 2002 crops)''.
    (c) Upland Cotton.--Subsection (c)(1)(C)(ii) of section 103B of 
such Act (7 U.S.C. 1444-2) is amended by striking ``85 percent'' and 
inserting ``85 percent (through the 1995 crop of upland cotton) and 77 
percent (for the 1996 through 2002 crops)''.
    (d) Rice.--Subsection (c)(1)(C)(ii) of section 101B of such Act (7 
U.S.C. 1441-2) is amended by striking ``85 percent'' and inserting ``85 
percent (through the 1995 crop of rice) and 77 percent (for the 1996 
through 2002 crops)''.

SEC. 2107. REDUCTION IN 50/85 AND 0/85 PROGRAMS.

    (a) Rice.--Section 101B(c)(1)(D) of the Agricultural Act of 1949 (7 
U.S.C. 1441-2(c)(1)(D)) is amended--
            (1) in the subparagraph heading, by striking ``50/85 
        program'' and inserting ``50/80 program''; and
            (2) in clause (i), by striking ``8 percent for each of the 
        1991 through 1993 crops, and 15 percent for each of the 1994 
        through 1997 crops'' both places it appears and inserting ``20 
        percent for each of the 1996 through 2002 crops''.
    (b) Cotton.--Section 103B(c)(1)(D) of such Act (7 U.S.C. 1444-
2(c)(1)(D)) is amended--
            (1) in the subparagraph heading, by striking ``50/85 
        program'' and inserting ``50/80 program''; and
            (2) in clause (i), by striking ``8 percent for each of the 
        1991 through 1993 crops, and 15 percent for each of the 1994 
        through 1997 crops'' both places it appears and inserting ``20 
        percent for each of the 1996 through 2002 crops''.
    (c) Feed Grains.--Section 105B(c)(1)(E) of such Act (7 U.S.C. 
1444f(c)(1)(E)) is amended--
            (1) in the subparagraph heading, by striking ``0/85 
        program'' and inserting ``0/80 program''; and
            (2) in clause (i), by striking ``8 percent for each of the 
        1991 through 1993 crops, and 15 percent for each of the 1994 
        through 1997 crops'' both places it appears and inserting ``20 
        percent for each of the 1996 through 2002 crops''.
    (d) Wheat.--Section 107B(c)(1)(E) of such Act (7 U.S.C. 1445-
3a(c)(1)(E)) is amended--
            (1) in the subparagraph heading, by striking ``0/85 
        program'' and inserting ``0/80 program''; and
            (2) in clause (i), by striking ``8 percent for each of the 
        1991 through 1993 crops, and 15 percent for each of the 1994 
        through 1997 crops'' both places it appears and inserting ``20 
        percent for each of the 1996 through 2002 crops''.
    (e) Effect of Amendments on Prior Crop Years.--Sections 
101B(c)(1)(D), 103B(c)(1)(D), 105B(c)(1)(E), and 107B(c)(1)(E) of the 
Agricultural Act of 1949, as in effect on the day before the date of 
the enactment of this Act, shall continue to apply with respect to the 
1991 through 1995 crops covered by such sections.

                           Subtitle B--Sugar

                                                   Title II, Subtitle B

SEC. 2201. EXTENSION AND MODIFICATION OF SUGAR PROGRAM.

    (a) Assurance of Sugar Supply.--Section 206 of the Agricultural Act 
of 1949 (7 U.S.C. 1446g, et seq.) is amended to read as follows:

``SEC. 206. ASSURANCE OF SUGAR SUPPLY.

    ``(a) In General.--The price of each crop of sugar beets and 
sugarcane, respectively, shall be supported in accordance with this 
section.
    ``(b) Sugarcane.--Subject to subsection (d), the Secretary shall 
support the price of domestically grown sugarcane through loans at 18 
cents per pound for raw cane sugar.
    ``(c) Sugar Beets.--Subject to subsection (d), the Secretary shall 
support the price of each crop of domestically grown sugar beets 
through loans at the level provided for refined beet sugar produced 
from the 1995 crop of domestically grown sugar beets.
    ``(d) Adjustment in Support Level.--
            ``(1) Downward adjustment in support level.--
                    ``(A) In general.--The Secretary shall decrease the 
                support price of domestically grown sugarcane and sugar 
                beets from the price determined for the preceding crop, 
                as established under this section, if negotiated 
                reductions in export subsidies and domestic subsidies 
                provided for sugar of the European Union and other 
                major sugar growing, producing, and exporting countries 
                (`major countries') in the aggregate exceed the 
                commitments made as part of the Uruguay Round 
                Agreements.
                    ``(B) Extent of reduction.--The Secretary shall not 
                reduce the support price under this section below a 
                level that provides an equal measure of support to that 
                provided by any other major country or customs union 
                based on an examination of both domestic and export 
                subsidies subject to reduction in the Agreement on 
                Agriculture referenced in 19 U.S.C. 3511(d)(2).
                    ``(C) Major countries.--For purposes of this 
                subsection, the term `major countries' includes all 
                countries allocated a share of the tariff rate quota 
                for imported sugars and syrups by the United States 
                Trade Representative pursuant to additional U.S. note 5 
                of chapter 17 of the Harmonized Tariff Schedule, all 
                countries of the European Union, and the People's 
                Republic of China.
            ``(2) Increases in support level.--The Secretary may 
        increase the support level for each crop of domestically grown 
        sugarcane and sugar beets from the level determined for the 
        preceding crop based on such factors as the Secretary 
        determines appropriate, including changes (during the 2 crop 
        years immediately preceding the crop year for which the 
        determination is made) in the cost of sugar products, the cost 
        of domestic sugar production, the amount of any applicable 
        assessments, and other factors or circumstances that may 
        adversely affect domestic sugar production.
    ``(e) Loan Type; Processor Assurances.--
            ``(1) In general.--Subject to paragraph (2), the Secretary 
        shall carry out this section through the use of recourse loans.
            ``(2) Modification.--During any fiscal year in which the 
        tariff rate quota for imports of sugar into the United States 
        is set at, or is increased to, a level that exceeds the minimum 
        level for such imports committed to by the United States under 
        the Agreement on Agriculture contained in the Uruguay Round of 
        Agreements of the General Agreement on Tariffs and Trade, the 
        Secretary shall carry out this section by making available 
        nonrecourse loans. Any recourse loan previously made available 
        by the Secretary under this section during such fiscal year 
        shall be modified by the Secretary into a nonrecourse loan.
            ``(3) Processor assurances.--In order to effectively 
        support the prices of sugar beets and sugarcane received by the 
        producer, the Secretary shall obtain from each processor that 
        receives a loan under this section such assurances as the 
        Secretary considers adequate that, if the Secretary is required 
        under paragraph (2) to make nonrecourse loans available, or 
        modify recourse loans into nonrecourse loans, each producer 
        served by the processor will receive the appropriate minimum 
        payment for sugar beets and sugarcane delivered by the 
        producer, as determined by the Secretary.
    ``(f) Announcements.--In order to ensure the efficient 
administration of the program under this section and the effective 
support of the price of sugar, the Secretary shall announce the type of 
loans available and the loan rates for beet sugar and cane sugar for 
any fiscal year under this section as far in advance as is practicable.
    ``(g) Loan Term.--
            ``(1) In general.--Except as provided in paragraph (2) and 
        subsection (h), loans under this section during any fiscal year 
        shall be made available not earlier than the beginning of the 
        fiscal year and shall mature at the end of 3 months.
            ``(2) Extension.--The maturity of a loan under this section 
        may be extended for up to 2 additional 3-month periods, at the 
        option of the borrower, upon written request to the Commodity 
        Credit Corporation. The maturity of a loan may not be extended 
        under this paragraph beyond the end of the fiscal year.
    ``(h) Supplementary Loans.--Subject to subsection (d), the 
Secretary shall make available to eligible processors price support 
loans with respect to sugar processed from sugar beets and sugarcane 
harvested in the last 3 months of a fiscal year. Such loans shall 
mature at the end of the fiscal year. The processor may repledge the 
sugar as collateral for a price support loan in the subsequent fiscal 
year, except that the second loan shall--
            ``(1) be made at the loan rate in effect at the time the 
        second loan is made; and
            ``(2) mature in not more than 9 months less the quantity of 
        time that the first loan was in effect.
    ``(i) Use of Commodity Credit Corporation.--The Secretary shall use 
the funds, facilities, and authorities of the Commodity Credit 
Corporation to carry out this section.
    ``(j) Marketing Assessments.--The following assessments shall be 
collected with respect to all sugar marketed within the United States 
during the 1996 through 2003 fiscal years:
            ``(1) Beet sugar.--The first seller of beet sugar produced 
        from sugar beets or sugar beet molasses, or refined sugar 
        refined outside of the United States, shall remit to the 
        Commodity Credit Corporation a nonrefundable marketing 
        assessment in an amount equal to 1.1794 percent of the loan 
        level established under subsection (b) per pound of sugar 
        marketed.
            ``(2) Cane sugar.--The first seller of raw cane sugar 
        produced from sugarcane or sugarcane molasses, shall remit to 
        the Commodity Credit Corporation a nonrefundable marketing 
        assessment in an amount equal to 1.1 percent of the loan level 
        established under subsection (b) per pound of sugar marketed 
        (including the transfer or delivery of the sugar to a refinery 
        for further processing or marketing).
            ``(3) Collection.--
                    ``(A) Timing.--Marketing assessments required under 
                this subsection shall be collected and remitted to the 
                Commodity Credit Corporation within 30 days of the date 
                that the sugar is marketed.
                    ``(B) Manner.--Subject to subparagraph (A), 
                marketing assessments shall be collected under this 
                subsection in the manner prescribed by the Secretary 
                and shall be nonrefundable.
            ``(4) Penalties.--If any person fails to remit an 
        assessment required by this subsection or fails to comply with 
        such requirements for recordkeeping or otherwise as are 
        required by the Secretary to carry out this subsection, the 
        person shall be liable to the Secretary for a civil penalty up 
        to an amount determined by multiplying--
                    ``(A) the quantity of sugar involved in the 
                violation; by
                    ``(B) the loan level for the applicable crop of 
                sugarcane or sugar beets from which the sugar is 
                produced.
    For the purposes of this paragraph, refined sugar shall be treated 
as produced from sugar beets.
            ``(5) Enforcement.--The Secretary may enforce this 
        subsection in the courts of the United States.
            ``(6) Regulations.--The Secretary shall promulgate 
        regulations to carry out this subsection.
    ``(k) Information Reporting.--
            ``(1) Duty of processors and refiners to report.--All 
        sugarcane processors, cane sugar refiners, and sugar beet 
        processors shall furnish the Secretary, on a monthly basis, 
        such information as the Secretary may require to administer 
        sugar programs, including the quantity of purchases of 
        sugarcane, sugar beets, and sugar, and production, importation, 
        distribution, and stock levels of sugar.
            ``(2) Duty of producers to report.--In order to efficiently 
        and effectively carry out the program under this section, the 
        Secretary may require a producer of sugarcane or sugar beets to 
        report, in the manner prescribed by the Secretary, the 
        producer's sugarcane or sugar beet yields and acres planted to 
        sugarcane or sugar beets, respectively.
            ``(3) Penalty.--Any person willfully failing or refusing to 
        furnish the information, or furnishing willfully any false 
        information, shall be subject to a civil penalty of not more 
        than $10,000 for each such violation.
            ``(4) Monthly reports.--Taking into consideration the 
        information received under paragraph (1), the Secretary shall 
        publish on a monthly basis composite data on production, 
        imports, distribution, and stock levels of sugar.
    ``(l) Sugar Estimates.--
            ``(1) Domestic requirement.--Before the beginning of each 
        fiscal year, the Secretary shall estimate the domestic sugar 
        requirement of the United States equal to Total Estimated 
        Disappearance minus the quantity of sugar that will be 
        available from carry-in stocks.
            ``(2) Total disappearance.--For the purposes of this 
        subsection, the term ``Total Estimated Disappearance'' means 
        the quantity of sugar, as estimated by the Secretary, that will 
        be consumed in the United States during the fiscal year (other 
        than sugar imported for the production of polyhydric alcohol or 
        to be refined and reexported in refined form or in sugar 
        containing products) plus the quantity of sugar that would 
        provide for adequate carryover stocks.
            ``(3) Quarterly reestimates.--The Secretary shall make 
        quarterly reestimates of sugar consumption, stocks, production, 
        and imports for a fiscal year no later than the beginning of 
        each of the second through fourth quarters of the fiscal year.
    ``(m) Definition of Market.--For purposes of this section, the term 
`market' means to sell or otherwise dispose of in commerce in the 
United States (including, with respect to any integrated processor and 
refiner, the movement of raw cane sugar into the refining process) and 
deliver to a buyer.
    ``(n) Crops.--This section shall be effective only for the 1996 
through 2002 crops of sugar beets and sugarcane.''.
    (b) Conforming Amendment.--Part VII of subtitle B of title III of 
the Agricultural Adjustment Act of 1938 (7 U.S.C. 1359aa et seq.) is 
repealed.

                          Subtitle C--Peanuts

                                                   Title II, Subtitle C

SEC. 2301. EXTENSION OF PRICE SUPPORT PROGRAM FOR PEANUTS AND RELATED 
              PROGRAMS.

    (a) Agricultural Act of 1949.--Section 108B of the Agricultural Act 
of 1949 (7 U.S.C. 1445c-3) is amended--
            (1) in the section heading, by striking ``1997'' and 
        inserting ``2002'';
            (2) in subsection (a)(1), (a)(2), (b)(1), and (h), by 
        striking ``1997'' each place it appears and inserting ``2002''; 
        and
            (3) in subsection (g)(1), by striking ``1997 crops'' the 
        first place it appears and inserting ``2002 crops''.
    (b) Agricultural Adjustment Act of 1938.--Part VI of subtitle B of 
title III of the Agricultural Adjustment Act of 1938 is amended--
            (1) in section 358-1 (7 U.S.C. 1358-1)--
                    (A) in the section heading, by striking ``1997'' 
                and inserting ``2002'';
                    (B) in subsection (a)(3), by striking ``1990'' and 
                inserting ``1990, for the 1991 through 1995 marketing 
                years, and 1995, for the 1996 through 2002 marketing 
                years'';
                    (C) in subsection (b)(1)(A)--
                            (i) by striking ``1997'' and inserting 
                        ``2002''; and
                            (ii) in clause (i), by inserting before the 
                        semicolon the following: ``, for the 1991 
                        through 1995 marketing years, and the 1995 
                        marketing year, for the 1996 through 2002 
                        marketing years''; and
                    (D) in subsections (b)(1)(B), (b)(2)(A), (b)(2)(C), 
                (b)(3)(A), and (f), by striking ``1997'' each place it 
                appears and inserting ``2002'';
            (2) in section 358b (7 U.S.C. 1358b)--
                    (A) in the section heading, by striking ``1995'' 
                and inserting ``2002''; and
                    (B) in subsection (c), by striking ``1995'' and 
                inserting ``2002'';
            (3) in section 358c(d) (7 U.S.C. 1358c(d)), by striking 
        ``1995'' and inserting ``2002''; and
            (4) in section 358e (7 U.S.C. 1359a)--
                    (A) in the section heading, by striking ``1997'' 
                and inserting ``2002''; and
                    (B) in subsection (i), by striking ``1997'' and 
                inserting ``2002''.
    (c) Food, Agriculture, Conservation, and Trade Act of 1990.--Title 
VIII of the Food, Agriculture, Conservation, and Trade Act of 1990 
(Public Law 101-624; 104 Stat. 3459) is amended--
            (1) in section 801 (104 Stat. 3459), by striking ``1995'' 
        and inserting ``2002'';
            (2) in section 807 (104 Stat. 3478), by striking ``1995'' 
        and inserting ``2002''; and
            (3) in section 808 (7 U.S.C. 1441 note), by striking 
        ``1995'' and inserting ``2002''.

SEC. 2302. NATIONAL POUNDAGE QUOTAS AND ACREAGE ALLOTMENTS.

    (a) Establishment.--Subsection (a)(1) of section 358-1 of the 
Agricultural Adjustment Act of 1938 (7 U.S.C. 1358-1) is amended to 
read as follows:
            ``(1) Establishment.--The national poundage quota for 
        peanuts for each of the 1991 through 2002 marketing years shall 
        be established by the Secretary at a level that is equal to the 
        quantity of peanuts (in tons) that the Secretary estimates will 
        be devoted in each such marketing year to domestic edible and 
        related uses. Beginning with the 1996 marketing year, the 
        Secretary shall exclude seed uses from the estimate of domestic 
        edible and related uses, but shall include the estimated 
        quantity of peanuts and peanut products to be imported into the 
        United States for the marketing year for which the quota is 
        being established.''.
    (b) Exclusions From Farm Poundage Quota.--Subsection (b) of such 
section is amended--
            (1) in paragraph (1)(B), by striking clauses (i) and (ii) 
        and inserting the following new clauses:
                            ``(i) through the 1995 marketing year, any 
                        increases for undermarketings from previous 
                        years; or
                            ``(ii) through the 2002 marketing year, any 
                        increases resulting from the allocation of 
                        quotas voluntarily released for 1 year under 
                        paragraph (7).''; and
            (2) in paragraph (3)(B), by striking clauses (i) and (ii) 
        and inserting the following new clauses:
                            ``(i) through the 1995 marketing year, any 
                        increases for undermarketings of quota peanuts 
                        from previous years; or
                            ``(ii) through the 2002 marketing year, any 
                        increase resulting from the allocation of 
                        quotas voluntarily released for 1 year under 
                        paragraph (7).''.
    (c) Temporary Quota Allocation.--Subsection (b)(2) of such section 
is amended--
            (1) in subparagraph (A), by striking ``subparagraph (B) and 
        subject to''; and
            (2) by striking subparagraph (B) and inserting the 
        following new subparagraph:
                    ``(B) Temporary quota allocation.--
                            ``(i) Allocation related to seed peanuts.--
                        Temporary allocation of quota pounds for the 
                        marketing year only in which the crop is 
                        planted shall be made to producers for each of 
                        the 1996 through 2002 marketing years as 
                        provided in this subparagraph. The temporary 
                        quota allocation shall be equal to the pounds 
                        of seed peanuts planted on the farm, as may be 
                        adjusted under regulations prescribed by the 
                        Secretary. The temporary allocation of quota 
                        pounds under this paragraph shall be in 
                        addition to the farm poundage quota otherwise 
                        established under this subsection and shall be 
                        credited for the applicable marketing year 
                        only, in total to the producer of the peanuts 
                        on the farm in a manner prescribed by the 
                        Secretary.
                            ``(ii) Condition on allocation.--The 
                        allocation of quota pounds to producers under 
                        this subparagraph shall be performed in such a 
                        manner so that such allocation will not result 
                        in a net decrease in the farm poundage quota 
                        for a farm in excess of 3 percent, after 
                        temporary seed quota is added, from the basic 
                        farm quota in 1996. Such decrease shall occur 
                        one time only and shall be applicable to the 
                        1996 marketing year only.
                            ``(iii) Term of provision.--Application of 
                        this subparagraph may continue so long as doing 
                        so does not result in increased cost to the 
                        Commodity Credit Corporation by displacement of 
                        quota peanuts by additional peanuts in the 
                        domestic market, increased losses in the 
                        Association loan pools, or other such increases 
                        in cost.
                            ``(iv) Effect of other requirements.--
                        Nothing in this section shall alter or change 
                        in any way the requirements regarding the use 
                        of quota and additional peanuts established by 
                        section 359a(b) of the Agricultural Act of 1949 
                        (7 U.S.C. 1359a(b)), as added by section 804 of 
                        the Food, Agriculture, Conservation, and Trade 
                        Act of 1990.''.
    (d) Quota Considered Produced.--Subsection (b)(4) of such section 
is amended to read as follows:
            ``(4) Quota considered produced.--
                    ``(A) Natural disaster.--For purposes of this 
                subsection, the farm poundage quota shall be considered 
                produced on a farm if the farm poundage quota was not 
                produced on the farm because of drought, flood, or any 
                other natural disaster, or any other condition beyond 
                the control of the producer, as determined by the 
                Secretary.
                    ``(B) Lease or release of quota.--Such farm 
                poundage quota shall also be considered produced on a 
                farm if the farm poundage quota was either leased to 
                another owner or operator of a farm within the same 
                county for transfer to such farm for only 1 of the 3 
                marketing years immediately preceding the marketing 
                year for which the determination is being made or the 
                farm poundage quota was released voluntarily under 
                paragraph (7) for only 1 of the 3 marketing years 
                immediately preceding the marketing year for which the 
                determination is being made. The farm poundage quota 
                leased or released under this subparagraph shall be 
                considered produced for only 1 of the 3 marketing years 
                immediately preceding the marketing year for which the 
                determination is being made. The farm shall not receive 
                considered produced credit for more than 1 marketing 
                year out of the 3 immediately preceding marketing years 
                under the options in this subparagraph.''.
    (e) Allocation of Quotas Reduced or Released to Farms Without 
Quotas.--Subsection (b)(6) of such section is amended to read as 
follows:
            ``(6) Allocation of quotas reduced or released.--
                    ``(A) In general.--The total quantity of the farm 
                poundage quotas reduced or voluntarily released from 
                farms in a State for any marketing year under 
                paragraphs 3 and (5) shall be allocated under 
                subparagraph (B), as the Secretary may by regulation 
                prescribe, to other farms in the State on which peanuts 
                were produced in at least 2 of the 3 crop years 
                immediately preceding the year for which the allocation 
                is being made.
                    ``(B) Set-aside for farms with no quota.--The total 
                amount of farm poundage quota to be allocated in the 
                State under subparagraph (A) shall be allocated to 
                farms in the State for which no farm poundage quota was 
                established for the immediately preceding year's crop. 
                The allocation to any such farm shall not exceed the 
                average farm production of peanuts for the 3 
                immediately preceding years during which peanuts were 
                produced on the farm. Any farm quota pounds remaining 
                after allocation to farms under this subparagraph shall 
                be allocated to farms in the State on which poundage 
                quotas were established for the immediately preceding 
                crop year.''.
    (f) Transfer of Additional Peanuts.--Subsection (b) of such section 
is amended by striking paragraphs (8) and (9) and inserting the 
following new paragraph:
            ``(8) Transfer of additional peanuts.--Additional peanuts 
        on a farm from which the quota poundage was not harvested and 
        marketed may be transferred to the quota loan pool for pricing 
        purposes on such basis as the Secretary shall by regulation 
        provide, except that the poundage of such peanuts so 
        transferred shall not exceed the difference in the total 
        peanuts meeting quality requirements for domestic edible use as 
        determined by the Secretary marketed from the farm and the 
        total farm poundage quota, excluding quota pounds transferred 
        to the farm in the fall. Peanuts transferred under this 
        paragraph shall be supported at a total of not less than 70 
        percent of the quota support rate for the marketing years in 
        which such transfers occur and such transfers for a farm shall 
        not exceed 25 percent of the total farm quota pounds, excluding 
        pounds transferred in the fall.''.

SEC. 2303. SALE, LEASE, OR TRANSFER OF FARM POUNDAGE QUOTA.

    (a) Transfers Authorized Under Certain Circumstances.--Subsection 
(a) of section 358b of the Agricultural Adjustment Act of 1938 (7 
U.S.C. 1358b) is amended--
            (1) in paragraph (1)--
                    (A) by striking ``(including any applicable under 
                marketings)'' both places it appears;
                    (B) in subparagraph (A), by striking 
                ``undermarketings and''; and
                    (C) by adding at the end the following new 
                sentences: ``In the case of a fall transfer only, 
                poundage quota from a farm may be leased to another 
                owner or operator of a farm within the same county or 
                to another owner or operator of a farm in any other 
                county within the State. Fall transfers of quota pounds 
                shall not affect the farm quota history for the 
                transferring or receiving farm and shall not result in 
                reducing the farm poundage quota on the transferring 
                farm.'';
            (2) by striking paragraph (2) and inserting the following 
        new paragraph:
            ``(2) Transfers to other self-owned farms.--The owner or 
        operator of a farm may transfer all or any part of the farm 
        poundage quota for the farm to any other farm owned or 
        controlled by the owner or operator that is in the same county 
        or any other county within the same State and that had a farm 
        poundage quota for the preceding crop year, if both the 
        transferring and the receiving farms were under the control of 
        the owner or operator for at least 3 crop years prior to the 
        crop year in which the farm poundage quota is transferred. Any 
        farm poundage quota transferred under this paragraph shall not 
        result in any reduction in the farm poundage quota for the 
        transferring farm if sufficient acreage is planted on the 
        receiving farm to produce the quota pounds transferred.'';
            (3) in paragraph (3), by striking ``(including any 
        applicable undermarketings)''; and
            (4) by adding at the end the following new paragraph:
            ``(4) Transfers by sale in states having quotas of 10,000 
        tons or more.--Subject to such terms and conditions as the 
        Secretary may prescribe, the owner, or operator with permission 
        of the owner, of any farm for which a farm quota has been 
        established and which is located in a State having a quota of 
        10,000 tons or more may sell poundage quota to any other 
        eligible owner or operator of a farm within the same State. The 
        Secretary shall ensure that no more than 15 percent of the 
        total poundage quota within a county as of January 1, 1996, is 
        sold and transferred in 1996 under this paragraph and that no 
        more than 5 percent of the quota pounds remaining in a county 
        as of January 1 in each of the next 4 years are sold and 
        transferred in any such year. Notwithstanding any other 
        provision of this paragraph, no more than 30 percent of the 
        total poundage quota within a county may be sold and 
        transferred. Quota pounds sold and transferred under this 
        paragraph may not be leased or sold from the farm to which 
        transferred to another farm owner or operator within the same 
        State for a period of 5 years following the original transfer 
        to the farm.''.
    (b) Conditions.--Subsection (b) of such section is amended--
            (1) in paragraph (1), by inserting before the period at the 
        end the following: ``, except that no such agreement shall be 
        necessary in the event of fall lease, if the operator had the 
        lienholder's agreement for a previous spring cash lease''; and
            (2) by striking paragraph (3) and inserting the following 
        new paragraph:
            ``(3) Record.--No transfer of the farm poundage quota shall 
        be effective until a record thereof is filed with the county 
        committees of the counties from which transferred and to which 
        transferred and the committees determine that the transfer 
        complies with this section.''.

SEC. 2304. PENALTY FOR REENTRY OF EXPORTED PEANUT PRODUCTS.

    Section 358e(d)(6)(A) of the Agricultural Adjustment Act of 1938 (7 
U.S.C. 1359a(d)(6)(A)) is amended by inserting ``or peanut products 
manufactured from additional peanuts'' after ``any additional 
peanuts''.

SEC. 2305. PRICE SUPPORT PROGRAM FOR PEANUTS.

    (a) Support Rates.--Subsection (a)(2) Section 108B of the 
Agricultural Act of 1949 (7 U.S.C. 1445c-3) is amended--
            (1) by striking ``any increase'' and inserting ``any 
        increase or decrease''; and
            (2) by striking ``, except that'' and all that follows 
        through ``preceding crop'' and inserting the following: ``In no 
        event shall the national average quota support rate be 
        increased by more than 5 percent of the national average quota 
        support rate for the preceding crop. In no event shall the 
        national average quota support rate be decreased by more than 5 
        percent of the national average quota support rate for the 
        preceding crop.''.
    (b) Special Rule Regarding New Mexico Pools.--Subsection (c)(2)(A) 
of such section is amended by inserting after the first sentence the 
following new sentence: ``Peanuts physically produced outside the State 
of New Mexico shall not be eligible for entry into or participation in 
the New Mexico pools even though the farm on which the peanuts are 
produced is considered to be a New Mexican farm for administrative 
purposes.''.
    (c) Losses in Area Quota Pools.--Subsection (d)(2) of such section 
is amended--
            (1) by redesignating subparagraph (B) as subparagraph (D);
            (2) by inserting after subparagraph (A) the following new 
        paragraphs:
                    ``(B) Reduction of gains of other producers in same 
                pool.--If use of the authority provided in subparagraph 
                (A) is not sufficient to cover losses in an area quota 
                pool, the additional losses shall be offset by reducing 
                the gain of any producer in such pool by the amount of 
                pool gains attributed to the same producer from the 
                sale of additional peanuts for domestic and export 
                edible use.
                    ``(C) Use of marketing assessments.--If use of the 
                authority provided in subparagraphs (A) and (B) is not 
                sufficient to cover losses in area quota pools, the 
                Secretary shall use funds collected under subsection 
                (g) to offset such losses. At the end of each year, the 
                Secretary shall deposit in the Treasury those funds 
                collected under subsection (g) that the Secretary 
                determines are not required to cover losses in area 
                quota pools for that year.''; and
            (3) in subparagraph (D), as redesignated by paragraph (1), 
        by adding at the end the following new sentence: ``This 
        subparagraph shall apply only to the extent that use of the 
        authority provided in subparagraphs (A), (B), and (C) is not 
        sufficient to cover losses in an area quota pool.''.
    (d) Compliance With Quality Standards.--Subsection (f)(2) of such 
section is amended to read as follows:
            ``(2) Exports and other peanuts.--The Secretary shall 
        require that all peanuts in the domestic market, including 
        peanuts imported into the United States, meet all United States 
        quality standards under Marketing Agreement No. 146 and that 
        importers of such peanuts fully comply with inspection, 
        handling, storage, and processing requirements implemented 
        under Marketing Agreement No. 146. The Secretary shall ensure 
        that peanuts produced for the export market meet quality, 
        inspection, handling, storage, and processing requirements 
        under Marketing Agreement No. 146.''.
    (e) Assessment Rates.--Subsection (g) of such section is amended--
            (1) in paragraph (1), by striking ``1.15 percent'' the 
        first place it appears and all that follows through the period 
        at the end of such paragraph and inserting ``and 1.2 percent 
        for the 1996 through 2002 crops, of the applicable support rate 
        under this subsection.'';
            (2) in paragraph (2)(A)(i)--
                    (A) by inserting ``and'' at the end of subclause 
                (II); and
                    (B) by striking subclauses (III) and (IV) and 
                inserting the following new subclause:
                                    ``(III) in the case of each of the 
                                1996 through 2002 crops, .6 percent of 
                                the applicable national average support 
                                rate;''; and
            (3) in paragraph (2)(A)(ii)--
                    (A) by striking ``and'' at the end of subclause 
                (I);
                    (B) in subclause (II), by striking ``through 1997 
                crops'' and inserting ``and 1995 crops''; and
                    (C) by adding at the end the following new 
                subclause:
                                    ``(III) in the case of each of the 
                                1996 through 2002 crops, .6 percent of 
                                the applicable national average support 
                                rate; and''.
    (f) Assessment on Imports.--Subsection (g) of such section is 
further amended--
            (1) by redesignating paragraphs (3), (4), (5), and (6) as 
        paragraphs (4), (5), (6), and (7), respectively; and
            (2) by inserting after paragraph (2) the following new 
        paragraph:
            ``(3) Imports.--Each importer of peanuts produced outside 
        of the United States and imported into the United States after 
        the date of the enactment of this paragraph shall remit to the 
        Commodity Credit Corporation a nonrefundable marketing 
        assessment in an amount equal to the product obtained by 
        multiplying the number of pounds of peanuts imported by the 
        importer by 1.2 percent of the national average support rate 
        for additional peanuts.''.

SEC. 2306. REFERENDUM REGARDING POUNDAGE QUOTAS.

    Section 358-1(d) of the Agricultural Adjustment Act of 1938 (7 
U.S.C. 13581(d)) is amended by striking paragraph (1) and inserting the 
following new paragraph:
            ``(1) In general.--Each calendar year, the Secretary shall 
        conduct a referendum of producers engaged in the production of 
        quota peanuts in the calendar year in which the referendum is 
        held to determine whether the producers are in favor of or 
        opposed to poundage quotas with respect to the crops of peanuts 
        produced in the seven calendar years immediately following the 
        year in which the referendum is held, except that, if as many 
        as two-thirds of the producers voting in any referendum vote in 
        favor of poundage quotas, no referendum shall be held with 
        respect to quotas for the next six years of the period. In the 
        case of the referendum required in 1995, the Secretary shall 
        conduct the referendum as soon as practicable after the date of 
        the enactment of the Agricultural Reconciliation Act of 1995. 
        In the case of any referendum required in calendar years 1996 
        through 2002, the Secretary shall conduct the referendum not 
        later than December 15 of the calendar year in which the 
        referendum is required.''.

SEC. 2307. REGULATIONS.

    The Secretary of Agriculture shall issue such regulations as are 
necessary to carry out this title and the amendments made by this 
title. In issuing the regulations, the Secretary--
            (1) is encouraged to comply with subchapter II of chapter 5 
        of title 5, United States Code;
            (2) shall provide public notice through the Federal 
        Register of any such proposed regulations; and
            (3) shall allow adequate time for written public comment 
        prior to the formulation and issuance of any final regulations.

                          Subtitle D--Tobacco

                                                   Title II, Subtitle D

SEC. 2401. ELIMINATION OF FEDERAL BUDGETARY OUTLAYS FOR TOBACCO 
              PROGRAMS.

    Section 106(g)(1) of the Agricultural Act of 1949 (7 U.S.C. 
1445(g)(1)) is amended--
            (1) by striking ``1998'' and inserting ``2002''; and
            (2) by inserting after ``equal to'' the following: ``a pro 
        rata share of the total amount of the costs of other Department 
        of Agriculture programs related to tobacco production or 
        processing that are not required to be covered by user fees or 
        by contributions or assessments under section 106A(d)(1) or 
        106B(d)(1), but in no event less than''.

SEC. 2402. ESTABLISHMENT OF FARM YIELD FOR FLUE-CURED TOBACCO BASED ON 
              INDIVIDUAL FARM PRODUCTION HISTORY.

    (a) Method of Determining Farm Acreage Allotments.--Subsection (a) 
of section 317 of the Agricultural Adjustment Act of 1938 (7 U.S.C. 
1314c) is amended by striking paragraphs (2) through (8) and inserting 
the following new paragraphs:
            ``(2) Farm acreage allotments.--The term `farm acreage 
        allotment' for a tobacco farm, other than a new tobacco farm, 
        means the acreage allotment determined by dividing the farm 
        marketing quota by the farm yield.
            ``(3) Farm yield.--The term `farm yield' means the yield 
        per acre for a farm determined according to regulations issued 
        by the Secretary and which would be expected to result in a 
        quality of tobacco acceptable to the tobacco trade.
            ``(4) Farm marketing quota.--
                    ``(A) In general.--The term `farm marketing quota' 
                for a farm for a marketing year means a number that is 
                equal to the number of pounds of tobacco determined by 
                multiplying--
                            ``(i) the farm marketing quota for the farm 
                        for the previous marketing year (prior to any 
                        adjustment for undermarketing or 
                        overmarketing); by
                            ``(ii) the national factor.
                    ``(B) Adjustment.--The farm marketing quota 
                determined under subparagraph (A) for a marketing year 
                shall be increased for undermarketing or decreased for 
                overmarketing by the number of pounds by which 
                marketings of tobacco from the farm during the 
                immediate preceding marketing year (if marketing quotas 
                were in effect for that year under the program 
                established by this section) is less than or exceeds 
                the farm marketing quota for such year. Notwithstanding 
                the preceding sentence, the farm marketing quota for a 
                marketing year shall not be increased under this 
                subparagraph for undermarketing by an amount in excess 
                of the farm marketing quota determined for the farm for 
                the immediately preceding year prior to any increase 
                for undermarketing or decrease for overmarketing. If 
                due to excess marketing in the preceding marketing 
                year, the farm marketing quota for the marketing year 
                is reduced to zero pounds without reflecting the entire 
                reduction required, the additional reduction shall be 
                made for the subsequent marketing year or years.
            ``(5) National factor.--The term `national factor' for a 
        marketing year means a number obtained by dividing--
                    ``(A) the national marketing quota (less the 
                reserve provided for under subsection (e)); by
                    ``(B) the sum of the farm marketing quotas (prior 
                to any adjustments for undermarketing or overmarketing) 
                for the immediate preceding marketing year for all 
                farms for which marketing quotas for the kind of 
                tobacco involved will be determined for such succeeding 
                marketing year.''.
    (b) Conforming Amendments.--Such section is further amended--
            (1) in the first sentence of subsection (b), by striking 
        ``and the national acreage allotment and national average yield 
        goal for the 1965 crop of Flue-cured tobacco,'';
            (2) in the first sentence of subsection (c), by striking 
        ``and at the same time announce the national acreage allotment 
        and national average yield goal'';
            (3) in subsection (d)--
                    (A) in the sixth sentence, by striking ``, national 
                acreage allotment, and national average yield goal'';
                    (B) in the eighth sentence, by striking ``, 
                national acreage allotment and national average yield 
                goal''; and
                    (C) in the ninth sentence, by striking ``, national 
                acreage allotment, and national average goal are'' and 
                inserting ``is'';
            (4) in subsection (e)--
                    (A) in the first sentence, by striking ``No farm 
                acreage allotment or farm yield shall be established'' 
                and inserting ``A farm marketing quota and farm yield 
                shall not be established'';
                    (B) in the second sentence, by striking ``acreage 
                allotment'' both places it appears and inserting 
                ``marketing quota'';
                    (C) in the second sentence, by striking ``acreage 
                allotments'' both places it appears and inserting 
                ``marketing quotas''; and
                    (D) in the last sentence, by striking ``acreage 
                allotment'' and inserting ``marketing quota''; and
            (5) in subsection (g)--
                    (A) in paragraph (1), by striking ``paragraph 
                (a)(8)'' and inserting ``subsection (a)(4)''; and
                    (B) in paragraph (3), by striking ``subsection 
                (a)(8)'' and inserting ``subsection (a)(4)''.
    (c) Farm Marketing Quota Reductions.--Subsection (f) of such 
section is amended to read as follows:
    ``(f) Causes for Farm Marketing Quota Reduction.--(1) When an 
acreage-poundage program is in effect for any kind of tobacco under 
this section, the farm marketing quota next established for a farm 
shall be reduced by the amount of such kind of tobacco produced on the 
farm--
            ``(A) which was marketed as having been produced on a 
        different farm;
            ``(B) for which proof of disposition is not furnished as 
        required by the Secretary;
            ``(C) on acreage equal to the difference between the 
        acreage reported by the farm operator or a duly authorized 
        representative and the determined acreage for the farm; and
            ``(D) as to which any producer on the farm filed, or aids, 
        or acquiesces, in the filing of any false report with respect 
        to the production or marketing of tobacco.
    ``(2) If the Secretary, through the local committee, find that no 
person connected with a farm caused, aided, or acquiesced in any 
irregularity described in paragraph (1), the next established farm 
marketing quota shall not be reduced under this subsection.
    ``(3) The reduction required under this subsection shall be in 
addition to any other adjustments made pursuant to this section.
    ``(4) In establishing farm marketing quotas for other farms owned 
by the owner displaced by acquisition of the owner's land by any 
agency, as provided in section 378 of this Act, increases or decreases 
in such farm marketing quotas as provided in this section shall be made 
on account of marketings below or in excess of the farm marketing 
quotas for the farm acquired by the agency.
    ``(5) Acreage allotments and farm marketing quotas determined under 
this section may (except in the case of kinds of tobacco not subject to 
section 316) be leased and sold under the terms and conditions in 
section 316 of this Act, except that any credit for undermarketing or 
charge for overmarketing shall be attributed to the farm to which 
transferred.''.
    (d) Effect of Amendments on Current Tobacco Crop.--Section 317 of 
the Agricultural Adjustment Act of 1938 (7 U.S.C. 1314c), as in effect 
on the day before the date of the enactment of this Act, shall continue 
to apply with respect to the 1995 crop of Flue-cured tobacco.

SEC. 2403. REMOVAL OF FARM RECONSTITUTION EXCEPTION FOR BURLEY TOBACCO.

    Section 379(a)(6) of the Agricultural Adjustment Act of 1938 (7 
U.S.C. 1379(a)(6)) is amended by striking ``, but this clause (6) shall 
not be applicable in the case of burley tobacco''.

SEC. 2404. REDUCTION IN PERCENTAGE THRESHOLD FOR TRANSFER OF FLUE-CURED 
              TOBACCO QUOTA IN CASES OF DISASTER.

    The second subsection (h) in section 316 of the Agricultural 
Adjustment Act of 1938 (7 U.S.C. 1314b) is amended by striking ``90 
percent'' in paragraph (1)(A) and inserting ``80 percent''.

SEC. 2405. EXPANSION OF TYPES OF TOBACCO SUBJECT TO NO NET COST 
              ASSESSMENT.

    (a) No Net Cost Tobacco Fund.--Section 106A(d)(1)(A) of the 
Agricultural Act of 1949 (7 U.S.C. 1445-1(d)(1)(A)) is amended--
            (1) in clause (ii), by inserting after ``Burley quota 
        tobacco'' the following: ``and cigar-type quota tobacco''; and
            (2) in clause (iii)--
                    (A) in the matter preceding the subclauses, by 
                striking ``Flue-cured or Burley tobacco'' and inserting 
                ``each kind of tobacco for which price support is made 
                available under this Act, and each kind of like 
                tobacco,''; and
                    (B) by striking subclause (II) and inserting the 
                following new subclause:
                            ``(II) the sum of the amount of the per 
                        pound producer contribution and purchaser 
                        assessment (if any) for such kind of tobacco 
                        payable under clauses (i) and (ii); and''.
    (b) No Net Cost Tobacco Account.--Section 106B(d)(1) of the 
Agricultural Act of 1949 (7 U.S.C. 1445-2(d)(1)) is amended--
            (1) in subparagraph (B), by inserting after ``Burley quota 
        tobacco'' the following: ``and cigar-type quota tobacco''; and
            (2) in subparagraph (C), by striking ``Flue-cured and 
        Burley tobacco'' and inserting ``each kind of tobacco for which 
        price support is made available under this Act, and each kind 
        of like tobacco,''.
    (c) Effective Date.--The amendments made by this section shall take 
effect 60 days after the date of the enactment of this Act.

SEC. 2406. REPEAL OF REPORTING REQUIREMENTS RELATING TO EXPORT OF 
              TOBACCO.

    Section 214 of the Tobacco Adjustment Act of 1983 (7 U.S.C. 509) is 
repealed.

SEC. 2407. REPEAL OF LIMITATION ON REDUCING NATIONAL MARKETING QUOTA 
              FOR FLUE-CURED AND BURLEY TOBACCO.

    (a) Flue-cured Tobacco.--Section 317(a)(1) of the Agricultural 
Adjustment Act of 1938 (7 U.S.C. 1314c(a)(1)) is amended by striking 
subparagraph (C).
    (b) Burley Tobacco.--Section 319(c)(3) of the Agricultural 
Adjustment Act of 1938 (7 U.S.C. 1314e(c)(3)) is amended by striking 
subparagraph (C).

SEC. 2408. APPLICATION OF CIVIL PENALTIES UNDER TOBACCO INSPECTION ACT.

    Section 12 of the Tobacco Inspection Act (7 U.S.C. 511k) is 
amended--
            (1) by inserting ``(a) Fine for Viola- tions.--'' after 
        ``That any person''; and
            (2) by adding at the end the following new subsections:
    ``(b) Jurisdiction.--The district courts of the United States are 
vested with jurisdiction specifically to enforce, and to prevent and 
restrain any person from violating, any rule or regulation issued under 
this Act.
    ``(c) Referral to Attorney General.--A civil action authorized to 
be commenced under this section shall be referred to the Attorney 
General for appropriate action, except that the Secretary shall not be 
required to refer to the Attorney General a violation of this Act, if 
the Secretary believes that the administration and enforcement of this 
Act would be adequately served by providing a suitable written notice 
or warning to the person who committed such violation or administrative 
action.
    ``(d) Civil Penalties and Orders.--
            ``(1) Civil penalties.--Any person who willfully violates 
        any provision of this Act or any of the regulations issued by 
        the Secretary under this Act may be assessed a civil penalty by 
        the Secretary of not less than $500 or more than $5,000 for 
        each such violation. Each violation shall be a separate 
        offense.
            ``(2) Cease and desist orders.--In addition to, or in lieu 
        of, a civil penalty under paragraph (1), the Secretary may 
        issue an order requiring a person to cease and desist from 
        continuing any such violation.
            ``(3) Notice and hearing.--No penalty shall be assessed or 
        cease-and-desist order issued by the Secretary under this 
        subsection unless the person against whom the penalty is 
        assessed or the order is issued is given notice and opportunity 
        for a hearing before the Secretary with respect to such 
        violation.
            ``(4) Finality.--The order of the Secretary assessing a 
        penalty or imposing a cease-and-desist order under this 
        subsection shall be final and conclusive unless the affected 
        person files an appeal of the Secretary's order with the 
        appropriate district court of the United States, in accordance 
        with subsection (e).
    ``(e) Review by District Court.--
            ``(1) Commencement of action.--Any person who has been 
        determined to be in violation of this Act, or against whom a 
        civil penalty has been assessed or a cease-and-desist order 
        issued under subsection (d), may obtain review of the penalty 
        or order--
                    ``(A) by filing, within the 30-day period beginning 
                on the date the penalty is assessed or order issued, a 
                notice of appeal in--
                            ``(i) the district court of the United 
                        States for the district in which the person 
                        resides or conducts business; or
                            ``(ii) the United States District Court for 
                        the District of Columbia; and
                    ``(B) by sending, within the same period, a copy of 
                such notice by certified mail to the Secretary.
            ``(2) Record.--The Secretary shall file promptly in the 
        appropriate court referred to in paragraph (1), a certified 
        copy of the record on which the Secretary has determined that 
        the person had committed a violation.
            ``(3) Standard of review.--A finding of the Secretary under 
        this section shall be set aside only if such finding is found 
        to be unsupported by substantial evidence.
    ``(f) Failure To Obey Orders.--Any person who fails to obey a 
cease-and-desist order under this section after such order has become 
final and unappealable, or after the appropriate United States district 
court has entered a final judgment in favor of the Secretary, shall be 
subject to a civil penalty assessed by the Secretary, after opportunity 
for hearing and for a judicial review under the procedures specified in 
subsection (e), of not more than $500 for each offense. Each day during 
which such failure continues shall be considered as a separate 
violation of such order.
    ``(g) Failure To Pay Penalties.--If any person fails to pay an 
assessment of a civil penalty under this section after it has become a 
final and unappealable order, or after the appropriate United States 
district court has entered final judgment in favor of the Secretary, 
the Secretary shall refer the matter to the Attorney General for 
recovery of the amount assessed in the district court of the United 
States for the district in which the person resides or conducts 
business. In such action, the validity and appropriateness of the final 
order imposing the civil penalty shall not be subject to review.
    ``(h) Additional Remedies.--The remedies provided in this section 
shall be in addition to, and not exclusive of, other remedies that may 
be available.''.

SEC. 2409. TRANSFERS OF QUOTA OR ALLOTMENT ACROSS COUNTY LINES IN A 
              STATE.

    (a) Transfers Allowed by Referendum.--
            (1) Flue-cured tobacco.--Section 316(g) of the Agricultural 
        Adjustment Act of 1938 (7 U.S.C. 1314b(g)) is amended by adding 
        at the end the following:
    ``(3) Notwithstanding paragraph (1), the Secretary may permit the 
sale of a Flue-cured tobacco allotment or quota from one farm in a 
State to any other farm in the State if a majority of active Flue-cured 
tobacco producers within the State approve of such sales by a state-
wide referendum to be conducted by the Secretary.''.
            (2) Other tobacco.--Section 318(b) of such Act (7 U.S.C. 
        1314d(b)) is amended in the proviso by inserting after ``same 
        State'' the following: ``and, in the case of other kinds of 
        tobacco, any such transfer may be made to a farm in another 
        county in the same State if transfers of such type are approved 
        by a majority of the active producers of that kind of tobacco 
        in the State who vote in a referendum held on the subject''.
            (3) Burley tobacco.--Section 319(l) of such Act (7 U.S.C. 
        1314e(l)) is amended by striking the last sentence.
    (b) Same Grower in Contiguous Counties.--Section 379(b) of such Act 
(7 U.S.C. 1379(b)) is amended by striking ``Burley tobacco poundage 
quota'' and inserting ``tobacco quota or allotment''.

SEC. 2410. CALCULATION OF NATIONAL MARKETING QUOTA.

    (a) Flue-Cured Tobacco.--Section 317(a)(1)(B)(ii) of the 
Agricultural Adjustment Act of 1938 (7 U.S.C. 1314c(a)(1)(B)(ii)) is 
amended by inserting before the semicolon the following: ``, but 
excluding any exports of unmanufactured tobacco counted under clause 
(i)''.
    (b) Burley Tobacco.--Section 319(c)(3)(A)(ii) of such Act (7 U.S.C. 
1314e(l)) is amended by inserting before the semicolon the following: 
``, but excluding any exports of unmanufactured tobacco counted under 
clause (i)''.
    (c) Application of Amendments.--The amendments made by this section 
shall apply with respect to the 1996 and subsequent crops of Flue-cured 
and Burley tobacco.

SEC. 2411. CLARIFICATION OF AUTHORITY TO ACCESS CIVIL MONEY PENALTIES.

    Section 314 of the Agricultural Adjustment Act of 1938 (7 U.S.C. 
1314) is amended--
            (1) by redesignating subsection (c) as subsection (d); and
            (2) by inserting after subsection (b) the following new 
        subsection:
    ``(c) The failure by a person to comply with regulations issued by 
the Secretary governing the marketing, disposition, or handling of 
tobacco under this part shall subject the person to a penalty at the 
rate provided in subsection (a).''.

SEC. 2412. LEASE AND TRANSFER OF FARM MARKETING QUOTAS FOR BURLEY 
              TOBACCO.

    Section 319(g) of the Agricultural Adjustment Act of 1938 (7 U.S.C. 
1314e(g)) is amended--
            (1) in paragraph (1), by striking ``July 1'' each place it 
        appears and inserting ``September 1''; and
            (2) in paragraph (3)--
                    (A) by striking ``within the three immediately 
                preceding crop years'' in the first sentence and 
                inserting ``during the current crop year or either of 
                the two immediately preceding crop years''; and
                    (B) by striking ``July 1'' in the second sentence 
                and inserting ``September 1''.

SEC. 2413. LIMITATION ON TRANSFER OF ACREAGE ALLOTMENTS OF OTHER 
              TOBACCO.

    Section 318(g) of the Agricultural Adjustment Act of 1938 (7 U.S.C. 
1314d(g)) is amended by striking ``ten acres'' and inserting ``20 
acres''.

SEC. 2414. GOOD FAITH RELIANCE ON ACTIONS OR ADVICE OF DEPARTMENT 
              REPRESENTATIVES.

    The Agricultural Adjustment Act of 1938 is amended by inserting 
after section 314A (7 U.S.C. 1314-1) the following new section:

``SEC. 315. GOOD FAITH RELIANCE ON ACTIONS OR ADVICE OF DEPARTMENT 
              REPRESENTATIVES.

    ``Notwithstanding any other provision of law, the performance 
rendered in good faith by a person in good faith in reliance upon 
action or advice of an authorized representative of the Secretary may 
be accepted as meeting the requirements of this part.''.

SEC. 2415. UNIFORM FORFEITURE DATES FOR FLUE-CURED AND BURLEY TOBACCO.

    (a) Sale or Forfeiture of Flue-Cured Tobacco Allotment or Quota.--
The first subsection (h) of section 316 of the Agricultural Adjustment 
Act of 1938 (7 U.S.C. 1314b) is amended--
            (1) in paragraph (1), by striking ``before the expiration 
        of the eighteen month period beginning on July 1 of the year in 
        which such crop is planted'' and inserting ``before February 15 
        of the year after the end of the marketing year for the planted 
        crop''; and
            (2) in paragraph (2), by striking ``July 1'' and inserting 
        ``February 15''.
    (b) Mandatory Sale of Flue-Cured Tobacco Allotment or Quota.--
Section 316A of such Act (7 U.S.C. 1314b-1) is amended--
            (1) in subsection (a), by striking ``December 1 of the 
        year'' and inserting ``February 15 of the year''; and
            (2) in subsection (b), by striking ``July 1'' and inserting 
        ``February 15''.
    (c) Mandatory Sale of Burley Tobacco Allotment or Quota.--Section 
316B of such Act (7 U.S.C. 1314b-2) is amended--
            (1) in subsection (a), by striking ``December 1 of the 
        year'' and inserting ``February 15 of the year''; and
            (2) in subsection (c)(1), by striking ``before the 
        expiration of the eighteen month period beginning on July 1 of 
        the year in which such crop is planted'' and inserting ``before 
        February 15 of the year after the end of the marketing year for 
        the planted crop''.

SEC. 2416. SALE OF BURLEY AND FLUE-CURED TOBACCO MARKETING QUOTAS FOR A 
              FARM BY RECENT PURCHASERS.

    The Agricultural Adjustment Act of 1938 is amended by inserting 
after section 316B (7 U.S.C. 1314b-2) the following new section:

``SEC. 316C. AUTHORITY FOR RECENT PURCHASER OF A FARM TO SELL BURLEY 
              TOBACCO OR FLUE-CURED TOBACCO MARKETING QUOTAS FOR THE 
              FARM.

    ``A new owner of a farm that has purchase history of Burley tobacco 
or Flue-cured tobacco may sell the purchased tobacco quota 
notwithstanding any limitations on such a sale contained in this part 
if the sale is completed not later than one year after the purchase 
date of the farm.''.

                    Subtitle E--Planting Flexibility

                                                   Title II, Subtitle E

SEC. 2501. DEFINITIONS.

    Section 502 of the Agricultural Act of 1949 (7 U.S.C. 1462) is 
amended by adding at the end the following:
            ``(4) Acreage conservation reserve, reduced acreage.--The 
        terms `acreage conservation reserve' and `reduced acreage' mean 
        the number of acres on a farm to be devoted to conservation 
        uses on the farm, which must be protected from weeds and 
        erosion. Such number shall be determined by multiplying the 
        specific crop acreage base for a crop on the farm by the 
        percentage acreage reduction required by the Secretary.
            ``(5) Permitted acreage.--The term `permitted acreage' 
        means the crop acreage base for a program crop for the farm 
        less the acreage conservation reserve. If an acreage reduction 
        program is not in effect for a program crop, for purposes of 
        administering this title, the permitted acreage of such a crop 
        on a farm shall be equal to the crop acreage base for the crop 
        for the farm.
            ``(6) Payment acreage.--The term `payment acreage' means 
        the lesser of--
                    ``(A) the number of acres planted and considered 
                planted to an eligible crop, as determined in sections 
                503(c) and 504(b)(1), for harvest within the permitted 
                acreage; or
                    ``(B) 77 percent of the crop acreage base for the 
                crop for the farm less the acreage conservation 
                reserve.
            ``(7) Resource-conserving crop.--The term `resource-
        conserving crop' means legumes, legume-grass mixtures, legume-
        small grain mixtures, legume-grass-small grain mixtures, and 
        experimental and industrial crops, crops planted for special 
        conservation practices, biomass production, intensive 
        rotational grazing, and non-legume crops, as determined by the 
        Secretary, to satisfy program objectives.
            ``(8) Resource-conserving crop rotation.--The term 
        `resource-conserving crop rotation' means a crop rotation that 
        includes at least one resource-conserving crop and that reduces 
        erosion, maintains or improves soil fertility and tilth, 
        interrupts pest cycles, or conserves water.
            ``(9) Farming operations and practices.--The term `farming 
        operations and practices' means practices which include the 
        integration of crops and crop-plant variety selection, rotation 
        practices, tillage systems, soil conserving and soil building 
        practices, nutrient management strategies, biological control 
        and integrated pest management strategies, livestock production 
        and management systems, animal waste management systems, water 
        and energy conservation measures, and health and safety 
        considerations.
            ``(10) Integrated farm management plan.--The term 
        `integrated farm management plan' means a comprehensive, 
        multiyear, site-specific plan that meets the requirements of 
        section 1451 of the Food, Agriculture, Conservation, and Trade 
        Act of 1990 (7 U.S.C. 5822).
            ``(11) Grass.--The term `grass' means any perennial grasses 
        commonly used for haying or grazing.
            ``(12) Legume.--The term `legume' means any forage legumes 
        (such as alfalfa or clover) or any legume grown for use as a 
        forage or green manure, but not including any bean crop from 
        which the seeds are harvested.
            ``(13) Small grain.--The term `small grain' does not 
        include malting barley or wheat, except for wheat interplanted 
        with other small grain crops for nonhuman consumption.''.

SEC. 2502. CROP AND TOTAL ACREAGE BASES.

    Section 503 of the Agricultural Act of 1949 (7 U.S.C. 1463) is 
amended--
            (1) in the section heading, by inserting ``and total'' 
        after ``crop'';
            (2) at the end of subsection (a), by adding the following 
        new paragraph:
            ``(4) Total acreage base.--The total acreage base for a 
        farm shall equal the sum of the crop acreage bases established 
        for program crops on the farm that are enrolled in the acreage 
        reduction programs established by the Secretary.'';
            (3) in the heading for subsection (b) by adding ``of Crop 
        Acreage Bases'' after ``Calculation'';
            (4) in subsection (b)(2)--
                    (A) by striking ``(A) In general'';
                    (B) by striking ``except as provided in 
                subparagraph (B),''; and
                    (C) by striking subparagraph (B); and
            (5) in subsection (c)(1), by striking ``reduced acreage'' 
        and inserting ``acreage conservation reserve''.

SEC. 2503. PLANTING FLEXIBILITY.

    (a) Specified Commodities.--Subsection (b) of section 504 of the 
Agricultural Act of 1949 (7 U.S.C. 1464) is amended--
            (1) in paragraph (1)--
                    (A) by striking ``and'' at the end of subparagraph 
                (D);
                    (B) by redesignating subparagraph (E) as 
                subparagraph (F); and
                    (C) by inserting the following new subparagraph 
                after subparagraph (D):
                    ``(E) any cover crop (including maintenance of 
                native cover) and summer fallow which, as determined by 
                the Secretary, will protect the land from weeds and 
                erosion; and'';
            (2) by striking paragraph (2) and inserting the following 
        new paragraph:
            ``(2) Limitations on crops.--
                    ``(A) In general.--For purposes of this section, 
                the Secretary may restrict the planting on a crop 
                acreage base of any crop specified in paragraph (1).
                    ``(B) Effect of acreage reduction program.--If an 
                acreage reduction program is in effect for any specific 
                program crop, the Secretary may limit the plantings of 
                the specific program crop for which there is an acreage 
                reduction program in effect to no more than the sum 
                of--
                            ``(i) the permitted acreage for the 
                        specific program crop for which there is an 
                        acreage reduction program in effect; plus
                            ``(ii) 23 percent of other crop acreage 
                        bases which are included in the total acreage 
                        base for a farm.
                    ``(C) Minimum planting.--The Secretary may require 
                that, as a condition for eligibility for loans, 
                deficiency payments and any other program benefits 
                authorized by this Act, a minimum percentage not to 
                exceed 50 percent of a specific permitted acreage, be 
                planted to the specific program crop.''; and
            (3) in paragraph (3) by striking ``make a determination in 
        each crop year of'' and inserting ``determine''.
    (b) Limitation on Plantings.--Subsection (c) of such section is 
amended by striking paragraphs (1) and (2) and inserting the following:
    ``The quantity of the total acreage base that may be planted to 
program crops enrolled in an acreage reduction program shall not exceed 
100 percent of the total acreage base, less the acreage conservation 
reserve for the farm.''.
    (c) Plantings in Excess of Permitted Acreage.--Subsection (d) of 
such section is amended to read as follows:
    ``(d) Plantings in Excess of Permitted Acreage.--Notwithstanding 
any other provision of this Act, except as provided in section 
504(b)(2)(B), producers of a program crop who are participating in the 
acreage reduction program for that crop shall be allowed to plant that 
program crop in a quantity that exceeds the permitted acreage for that 
crop without losing their eligibility for loans or payments with 
respect to that crop if--
            ``(1) the acreage planted to that program crop on the farm 
        in excess of the permitted acreage for that crop does not 
        exceed the permitted acreage of other program crops on the 
        farm; and
            ``(2) the producer agrees to a reduction in permitted 
        acreage for the other program crops produced on the farm by a 
        quantity equal to the overplanting.''.
    (d) Loan Eligibility.--Subsection (e) of such section is amended to 
read as follows:
    ``(e) Loan Eligibility.--Producers of a specific program crop 
(referred to in this subsection as the `original program crop') who 
plant for harvest on the crop acreage base established for such 
original program crop another program crop in accordance with this 
section and who are participants in the program established for such 
other program crop shall be eligible to receive loans or loan 
deficiency payments for such other program crop on the same terms and 
conditions as are provided to participants in a acreage reduction 
program established for such other program crop if the producers--
            ``(1) plant such other program crop in an amount that does 
        not exceed 100 percent of the permitted acreage established for 
        the original program crop; and
            ``(2) agree to a reduction in the permitted acreage for the 
        original program crop for the particular crop year.''.

SEC. 2504. FARM PROGRAM PAYMENT YIELDS.

    Section 505 of the Agricultural Act of 1949 (7 U.S.C. 1465) is 
amended to read as follows:

``SEC. 505. FARM PROGRAM PAYMENT YIELDS.

    ``(a) Establishment.--The Secretary shall provide for the 
establishment of a farm program payment yield for each farm for each 
program crop for each crop year in accordance with subsection (b) or 
(c).
    ``(b) Farm Program Payment Yields Based on 1995 Crop Year.--
            ``(1) In general.--If the Secretary determines that farm 
        program payment yields shall be established in accordance with 
        this subsection, except as provided in paragraph (2), the farm 
        program payment yield for each of the 1996 through 2002 crop 
        years shall be the farm program payment yield for the 1995 crop 
        year for the farm.
            ``(2) Additional yield payments.--In the case of each of 
        the 1991 through 2002 crop years for a commodity, if the farm 
        program payment yield for a farm is reduced more than 10 
        percent below the farm program payment yield for the 1985 crop 
        year, the Secretary shall make available to producers 
        established price payments for the commodity in such amount as 
        the Secretary determines is necessary to provide the same total 
        return to producers as if the farm program payment yield had 
        not been reduced more than 10 percent below the farm program 
        payment yield for the 1985 crop year. The payments shall be 
        made available not later than the time final deficiency 
        payments are made.
            ``(3) No yield available.--If no farm program payment yield 
        was established for the farm for 1995 crop, the farm program 
        payment yield shall be established on the basis of the average 
        farm program payment yield for the crop years for similar farms 
        in the area.
            ``(4) National, state, or county yields.--If the Secretary 
        determines the action is necessary, the Secretary may establish 
        national, State, or county program payment yields on the basis 
        of--
                    ``(A) historical yields, as adjusted by the 
                Secretary to correct for abnormal factors affecting the 
                yields in the historical period; or
                    ``(B) the Secretary's estimate of actual yields for 
                the crop year involved if historical yield data is not 
                available.
            ``(5) Balancing yields.--If national, State, or county 
        program payment yields are established, the farm program 
        payment yields shall balance to the national, State, or county 
        program payment yields.
    ``(c) Determination of Yields.--
            ``(1) Actual yields.--With respect to the 1996 and 
        subsequent crop years, the Secretary may--
                    ``(A) establish the farm program payment yield as 
                provided in subsection (a); or
                    ``(B) establish a farm program payment yield for 
                any program crop for any farm on the basis of the 
                average of the yield per harvested acre for the crop 
                for the farm for each of the 5 crop years immediately 
                preceding the crop year, excluding the crop year with 
                the highest yield per harvested acre, the crop year 
                with the lowest yield per harvested acre, and any crop 
                year in which such crop was not planted on the farm.
            ``(2) Prior yields.--For purposes of the preceding 
        sentence, the farm program payment yield for the 1996 crop year 
        and the actual yield per harvested acre with respect to the 
        1997 and subsequent crop years shall be used in determining 
        farm program payment yields.
            ``(3) Reduction limitation.--Notwithstanding any other 
        provision of this subsection, for purposes of establishing a 
        farm program payment yield for any program crop for any farm 
        for the 1991 and subsequent crop years, the farm program 
        payment yield for the 1986 crop year may not be reduced more 
        than 10 percent below the farm program payment yield for the 
        farm for the 1985 crop year.
            ``(4) Adjustment of yields.--The county committee, in 
        accordance with regulations prescribed by the Secretary, may 
        adjust any farm program payment yield for any program crop for 
        any farm if the farm program payment yield for the crop on the 
        farm does not accurately reflect the productive potential of 
        the farm.
    ``(d) Assignment of Yields.--In the case of any farm for which the 
actual yield per harvested acre for any program crop referred to in 
subsection (c) for any crop year is not available, the county committee 
may assign the farm a yield for the crop for the crop year on the basis 
of actual yields for the crop for the crop year on similar farms in the 
area.
    ``(e) Actual Yield Data.--
            ``(1) Provision.--The Secretary shall, under such terms and 
        conditions as the Secretary may prescribe, allow producers to 
        provide to county committees data with respect to the actual 
        yield for each farm for each program crop.
            ``(2) Maintenance.--The Secretary shall maintain the data 
        for at least 5 crop years after receipt in a manner that will 
        permit the data to be used, if necessary, in the administration 
        of the commodity programs.''.

SEC. 2505. APPLICATION OF PROVISIONS.

    Section 509 of the Agricultural Act of 1949 (7 U.S.C. 1469) is 
amended to read as follows:

``SEC. 509. APPLICATION OF TITLE.

    ``Except as provided in section 406, this title shall apply only 
with respect to the 1996 through 2002 crops.''.

                  Subtitle F--Miscellaneous Provisions

                                                   Title II, Subtitle F

SEC. 2601. LIMITATIONS ON AMOUNT OF DEFICIENCY PAYMENTS AND LAND 
              DIVERSION PAYMENTS.

    Section 1001(1)(A) of the Food Security Act of 1985 (7 U.S.C. 
1308(1)(A)) is amended by striking ``$50,000'' and inserting 
``$47,000''.

SEC. 2602. SENSE OF CONGRESS REGARDING CERTAIN CANADIAN TRADE 
              PRACTICES.

    (a) Findings.--The Congress finds the following:
            (1) On October 15, 1993, in response to a request from the 
        National Potato Council, the Foreign Agricultural Service of 
        the Department of Agriculture listed several Canadian nontariff 
        barriers that violate the national treatment principle of the 
        General Agreement on Tariffs and Trade, including the 
        prohibition on bulk shipments, container size limitations on 
        processed products, and prohibitions on consignment sales.
            (2) Current Government-to-Government and direct grower-to-
        grower discussions with Canada have failed to result in changes 
        in Canadian trade practices.
    (b) Sense of Congress.--It is the sense of the Congress that the 
Secretary of Agriculture and the United States Trade Representative 
should intensify efforts to resolve the Canadian potato trade concerns 
and begin to consider formal action under the dispute resolution 
procedures of the North American Free Trade Agreement or the General 
Agreement on Tariffs and Trade.

                          TITLE III--COMMERCE

                                                              Title III

SEC. 3101. SPECTRUM AUCTIONS.

    (a) Extension and Expansion of Auction Authority.--
            (1) Amendments.--Section 309(j) of the Communications Act 
        of 1934 (47 U.S.C. 309(j)) is amended--
                    (A) by striking paragraphs (1) and (2) and 
                inserting in lieu thereof the following:
            ``(1) General authority.--If, consistent with the 
        obligations described in paragraph (6)(E), mutually exclusive 
        applications are accepted for any initial license or 
        construction permit which will involve an exclusive use of the 
        electromagnetic spectrum, then the Commission shall grant such 
        license or permit to a qualified applicant through a system of 
        competitive bidding that meets the requirements of this 
        subsection.
            ``(2) Exemptions.--The competitive bidding authority 
        granted by this subsection shall not apply to licenses or 
        construction permits issued by the Commission--
                    ``(A) that, as the result of the Commission 
                carrying out the obligations described in paragraph 
                (6)(E), are not mutually exclusive;
                    ``(B) for public safety radio services, including 
                non-Government uses that protect the safety of life, 
                health, and property and that are not made commercially 
                available to the public; or
                    ``(C) for initial licenses or construction permits 
                for new terrestrial digital television services 
                assigned by the Commission to existing terrestrial 
                broadcast licensees to replace their current television 
                licenses.''; and
                    (B) by striking ``1998'' in paragraph (11) and 
                inserting ``2002''.
            (2) Conforming amendment.--Subsection (i) of section 309 of 
        such Act is repealed.
            (3) Effective date.--The amendment made by paragraph (1)(A) 
        shall not apply with respect to any license or permit for which 
        the Federal Communications Commission has accepted mutually 
        exclusive applications on or before the date of enactment of 
        this Act.
    (b) Commission Obligation To Make Additional Spectrum Available by 
Auction.--
            (1) In general.--The Federal Communications Commission 
        shall complete all actions necessary to permit the assignment, 
        by September 30, 2002, by competitive bidding pursuant to 
        section 309(j) of the Communications Act of 1934 (47 U.S.C. 
        309(j)) of licenses for the use of bands of frequencies that--
                    (A) individually span not less than 25 megahertz, 
                unless a combination of smaller bands can, 
                notwithstanding the provisions of paragraph (7) of such 
                section, reasonably be expected to produce greater 
                receipts;
                    (B) in the aggregate span not less than 100 
                megahertz;
                    (C) are located below 3 gigahertz; and
                    (D) have not, as of the date of enactment of this 
                Act--
                            (i) been designated by Commission 
                        regulation for assignment pursuant to such 
                        section; or
                            (ii) been identified by the Secretary of 
                        Commerce pursuant to section 113 of the 
                        National Telecommunications and Information 
                        Administration Organization Act.
                The Commission shall conduct the competitive bidding 
                for not less than one-half of such aggregate spectrum 
                by September 30, 2001.
            (2) Criteria for reassignment.--In making available bands 
        of frequencies for competitive bidding pursuant to paragraph 
        (1), the Commission shall--
                    (A) seek to promote the most efficient use of the 
                spectrum;
                    (B) take into account the cost to incumbent 
                licensees of relocating existing uses to other bands of 
                frequencies or other means of communication;
                    (C) take into account the needs of public safety 
                radio services; and
                    (D) comply with the requirements of international 
                agreements concerning spectrum allocations.
            (3) Notification to ntia.--The Commission shall notify the 
        Secretary of Commerce if--
                    (A) the Commission is not able to provide for the 
                effective relocation of incumbent licensees to bands of 
                frequencies that are available to the Commission for 
                assignment; and
                    (B) the Commission has identified bands of 
                frequencies that are--
                            (i) suitable for the relocation of such 
                        licensees; and
                            (ii) allocated for Federal Government use, 
                        but that could be reallocated pursuant to part 
                        B of the National Telecommunications and 
                        Information Administration Organization Act (as 
                        amended by this Act).
    (c) Identification and Reallocation of Frequencies.--The National 
Telecommunications and Information Administration Organization Act (47 
U.S.C. 901 et seq.) is amended--
            (1) in section 113, by adding at the end the following new 
        subsection:
    ``(f) Additional Reallocation Report.--If the Secretary receives a 
notice from the Commission pursuant to section 3001(b)(3) of the Seven-
Year Balanced Budget Reconciliation Act of 1995, the Secretary shall 
prepare and submit to the President and the Congress a report 
recommending for reallocation for use other than by Federal Government 
stations under section 305 of the 1934 Act (47 U.S.C. 305), bands of 
frequencies that are suitable for the uses identified in the 
Commission's notice.'';
            (2) in section 114(a)(1), by striking ``(a) or (d)(1)'' and 
        inserting ``(a), (d)(1), or (f)''.
    (d) Completion of C-Block PCS Auction.--The Federal Communications 
Commission shall commence the Broadband Personal Communications 
Services C-Block auction described in the Commission's Sixth Report and 
Order in DP Docket 93-253 (FCC 93-510, released July 18, 1995) not 
later than December 4, 1995. The Commission's competitive bidding rules 
governing such auction, as set forth in such Sixth Report and Order, 
are hereby ratified and adopted as a matter of Federal law.
    (e) Modification of Auction Policy To Preserve Auction Value of 
Spectrum.--The voluntary negotiation period for relocating fixed 
microwave licensees to frequency bands other than those allocated for 
licensed emerging technology services (including licensed personal 
communications services), established by the Commission's Third Report 
and Order in ET Docket No. 92-9, shall expire one year after the date 
of acceptance by the Commission of applications for such licensed 
emerging technology services. The mandatory negotiation period for 
relocating fixed microwave licensees to frequency bands other than 
those allocated for licensed emerging technology services (including 
licensed personal communications services), established in such Third 
Report and Order, shall expire two years after the date of acceptance 
by the Commission of applications for such licensed emerging technology 
services.
    (f) Identification and Reallocation of Auctionable Frequencies.--
The National Telecommunications and Information Administration 
Organization Act (47 U.S.C. 901 et seq.) is amended--
            (1) in section 113(b)--
                    (A) by striking the heading of paragraph (1) and 
                inserting ``Initial reallocation report'';
                    (B) by inserting ``in the first report required by 
                subsection (a)'' after ``recommend for reallocation'' 
                in paragraph (1);
                    (C) by inserting ``or (3)'' after ``paragraph (1)'' 
                each place it appears in paragraph (2); and
                    (D) by inserting after paragraph (2) the following 
                new paragraph:
            ``(3) Second reallocation report.--In accordance with the 
        provisions of this section, the Secretary shall recommend for 
        reallocation in the second report required by subsection (a), 
        for use other than by Federal Government stations under section 
        305 of the 1934 Act (47 U.S.C. 305), a single frequency band 
        that spans not less than an additional 20 megahertz, that is 
        located below 3 gigahertz, and that meets the criteria 
        specified in paragraphs (1) through (5) of subsection (a).''; 
        and
            (2) in section 115--
                    (A) in subsection (b), by striking ``the report 
                required by section 113(a)'' and inserting ``the 
                initial reallocation report required by section 
                113(a)''; and
                    (B) by adding at the end the following new 
                subsection:
    ``(c) Allocation and Assignment of Frequencies Identified in the 
Second Reallocation Report.--With respect to the frequencies made 
available for reallocation pursuant to section 113(b)(3), the 
Commission shall, not later than 1 year after receipt of the second 
reallocation report required by such section, prepare, submit to the 
President and the Congress, and implement, a plan for the allocation 
and assignment under the 1934 Act of such frequencies. Such plan shall 
propose the immediate allocation and assignment of all such frequencies 
in accordance with section 309(j).''.

SEC. 3102. FEDERAL COMMUNICATIONS COMMISSION FEE COLLECTIONS

    (a) Application Fees.--
            (1) Adjustment of application fee schedule.--Section 8(b) 
        of the Communications Act of 1934 (47 U.S.C. 158(b)) is amended 
        to read as follows:
    ``(b)(1) For fiscal year 1996 and each fiscal year thereafter, the 
Commission shall, by regulation, modify the application fees by 
proportionate increases or decreases so as to result in estimated total 
collections for the fiscal year equal to--
            ``(A) $40,000,000; plus
            ``(B) an additional amount, specified in an appropriation 
        Act for the Commission for that fiscal year to be collected and 
        credited to such appropriation, not to exceed the amount by 
        which the necessary expenses for the costs described in 
        paragraph (5) exceeds $40,000,000.
    ``(2) In making adjustments pursuant to this paragraph the 
Commission may round such fees to the nearest $5.00 in the case of fees 
under $100, or to the nearest $20 in the case of fees of $100 or more. 
The Commission shall transmit to the Congress notification of any 
adjustment made pursuant to this paragraph immediately upon the 
adoption of such adjustment.
    ``(3) The Commission is authorized to continue to collect fees at 
the prior year's rate until the effective date of fee adjustments or 
amendments made pursuant to paragraphs (1) and (4).
    ``(4) The Commission shall, by regulation, add, delete, or 
reclassify services, categories, applications, or other filings subject 
to application fees to reflect additions, deletions, or changes in the 
nature of its services or authorization of service processes as a 
consequence of Commission rulemaking proceedings or changes in law.
    ``(5) Any modified fees established under paragraph (4) shall be 
derived by determining the full-time equivalent number of employees 
performing application activities, adjusted to take into account other 
expenses that are reasonably related to the cost of processing the 
application or filing, including all executive and legal costs incurred 
by the Commission in the discharge of these functions, and other 
factors that the Commission determines are necessary in the public 
interest. The Commission shall--
            ``(A) transmit to the Congress notification of any proposed 
        modification made pursuant to this paragraph immediately upon 
        adoption of such proposal; and
            ``(B) transmit to the Congress notification of any 
        modification made pursuant to this paragraph immediately upon 
        adoption of such modification.
    ``(6) Increases or decreases in application fees made pursuant to 
this subsection shall not be subject to judicial review.''.
            (2) Treatment of additional collections.--Section 8(e) of 
        such Act is amended to read as follows:
    ``(e) Of the moneys received from fees authorized under this 
section--
            ``(1) $40,000,000 shall be deposited in the general fund of 
        the Treasury to reimburse the United States for amounts 
        appropriated for use by the Commission in carrying out its 
        functions under this Act; and
            ``(2) the remainder shall be deposited as an offsetting 
        collection in, and credited to, the account providing 
        appropriations to carry out the functions of the Commission.''.
            (3) Schedule of application fees for PCS.--The schedule of 
        application fees in section 8(g) of such Act is amended by 
        adding, at the end of the portion under the heading ``common 
        carrier services'', the following new item:

``23.  Personal communications services
                ``a. Initial or new application................    230 
                ``b. Amendment to pending application..........     35 
                ``c. Application for assignment or transfer of     230 
                    control.
                ``d. Application for renewal of license........     35 
                ``e. Request for special temporary authority...    200 
                ``f. Notification of completion of construction     35 
                ``g. Request to combine service areas..........   50''.
            (4) Vanity call signs.--
                    (A) Lifetime license fees.--
                            (i) Amendment.--The schedule of application 
                        fees in section 8(g) of such Act is further 
                        amended by adding, at the end of the portion 
                        under the heading ``private radio services'', 
                        the following new item:

  ``11.  Amateur vanity call signs.........................  150.00''. 
                            (ii) Treatment of receipts.--Moneys 
                        received from fees established under the 
                        amendment made by this subsection shall be 
                        deposited as an offsetting collection in, and 
                        credited to, the account providing 
                        appropriations to carry out the functions of 
                        the Commission.
                    (B) Termination of annual regulatory fees.--The 
                schedule of regulatory fees in section 9(g) of such Act 
                (47 U.S.C. 159(g)) is amended by striking the following 
                item from the fees applicable to the Private Radio 
                Bureau:

``Amateur vanity call-signs....................................    7''.
    (b) Regulatory Fees.--
            (1) Executive and legal costs.--Section 9(a)(1) of the 
        Communications Act of 1934 (47 U.S.C. 159(a)(1)) is amended by 
        inserting before the period at the end the following: ``, and 
        all executive and legal costs incurred by the Commission in the 
        discharge of these functions''.
            (2) Establishment and adjustment.--Section 9(b) of such Act 
        is amended--
                    (A) in paragraph (4)(B), by striking ``90 days'' 
                and inserting ``45 days''; and
                    (B) by adding at the end the following new 
                paragraph:
            ``(5) Effective date of adjustments.--The Commission is 
        authorized to continue to collect fees at the prior year's rate 
        until the effective date of fee adjustments or amendments made 
        pursuant to paragraph (2) or (3).''.
            (3) Regulatory fees for satellite tv operations.--The 
        schedule of regulatory fees in section 9(g) of such Act is 
        amended, in the fees applicable to the Mass Media Bureau, by 
        inserting after each of the items pertaining to construction 
        permits in the fees applicable to VHF commercial and UHF 
        commercial TV the following new item:

``Terrestrial television satellite operations..................  500''.
            (4) Governmental entities use for common carrier 
        purposes.--Section 9(h) of such Act is amended by adding at the 
        end the following new sentence: ``The exceptions provided by 
        this subsection for governmental entities shall not be 
        applicable to any services that are provided on a commercial 
        basis in competition with another carrier.''.
            (5) Information required in connection with adjustment of 
        regulatory fees.--Title I of such Act is amended--
                    (A) in section 9, by striking subsection (i); and
                    (B) by inserting after section 9 the following new 
                section:

``SEC. 10. ACCOUNTING SYSTEM AND ADJUSTMENT INFORMATION.

    ``(a) Accounting System Required.--The Commission shall develop 
accounting systems for the purposes of making the adjustments 
authorized by sections 8 and 9. The Commission shall annually prepare 
and submit to the Congress an analysis of such systems and shall 
annually afford interested persons the opportunity to submit comments 
concerning the allocation of the costs of performing the functions 
described in section 8(a)(5) and 9(a)(1) in making such adjustments in 
the schedules required by sections 8 and 9.
    ``(b) Information Required in Connection With Adjustment of 
Application and Regulatory Fees.--
            ``(1) Schedule of requested amounts.--No later than May 1 
        of each calendar year, the Commission shall prepare and 
        transmit to the Committees of Congress responsible for the 
        Commission's authorization and appropriations a detailed 
        schedule of the amounts requested by the President's budget to 
        be appropriated for the ensuing fiscal year for the activities 
        described in sections 8(a)(5) and 9(a)(1), allocated by 
        bureaus, divisions, and offices of the Commission.
            ``(2) Explanatory statement.--If the Commission anticipates 
        increases in the application fees or regulatory fees applicable 
        to any applicant, licensee, or unit subject to payment of fees, 
        the Commission shall submit to the Congress by May 1 of such 
        calendar year a statement explaining the relationship between 
        any such increases and either (A) increases in the amounts 
        requested to be appropriated for Commission activities in 
        connection with such applicants, licensees, or units subject to 
        payment of fees, or (B) additional activities to be performed 
        with respect to such applicants, licensees, or units.
            ``(3) Definition.--For purposes of this subsection, the 
        term `amount requested by the President's budget' shall include 
        any adjustments to such requests that are made by May 1 of such 
        calendar year. If any such adjustment is made after May 1, the 
        Commission shall provide such Committees with updated schedules 
        and statements containing the information required by this 
        subsection within 10 days after the date of any such 
        adjustment.''.

SEC. 3103. AUCTION OF RECAPTURED ANALOG LICENSES.

    (a) Limitations on Terms of Analog Television Licenses (``Reversion 
Date'').--The Commission shall not renew any analog television license 
for a period that extends beyond the earlier of December 31, 2005, or 
one year after the date the Commission finds, based on annual surveys 
conducted pursuant to subsection (b), that at least 95 percent of 
households in the United States have the capability to receive and 
display video signals, other than video signals transmitted pursuant to 
an analog television license. After such date, the Commission shall not 
issue any television licenses other than advanced television licenses.
    (b) Annual Survey.--The Secretary of Commerce shall, each calendar 
year from 1998 to 2005, conduct a survey to estimate the percentage of 
households in the United States that have the capability to receive and 
display video signals other than signals transmitted pursuant to an 
analog television license.
    (c) Spectrum Reversion.--The Commission shall ensure that, as 
analog television licenses expire pursuant to subsection (a), spectrum 
previously used for the broadcast of analog television signals is 
reclaimed and reallocated in such manner as to maximize the deployment 
of new services. Licensees for new services shall be selected by 
competitive bidding. The Commission shall complete the competitive 
bidding procedure by May 1, 2002.
    (d) Minimum Service Obligation.--
            (1) Provision of capability to receive advanced services.--
        The Commission shall, by regulation, establish procedures to 
        ensure that, within the year prior to the reversion date 
        defined in subsection (a), the advanced television licensees 
        shall provide each household with the capability to receive and 
        display video signals for advanced television services if such 
        household requests such capability.
            (2) Provision of nonsubscription services.--Each advanced 
        television service licensee shall provide, for at least a 
        minimum of 5 years from the date identified in subsection (a), 
        at least one nonsubscription video service that meets or 
        exceeds minimum technical standards established by the 
        Commission. In setting such minimum technical standards, the 
        Commission shall, to the extent technically feasible, ensure 
        that picture and audio quality are at least as good as that 
        provided to recipients within the Grade B contour of an analog 
        television license. The Commission shall revoke the license of 
        any advanced television licensee who fails to meet this 
        condition of the license.
    (e) Definitions.--As used in this section:
            (1) The term ``Commission'' means the Federal 
        Communications Commission.
            (2) The term ``advanced television services'' means 
        television services provided using digital or other advanced 
        technology to enhance audio quality and video resolution, as 
        further defined in the Opinion, Report, and Order of the 
        Commission entitled ``Advanced Television Systems and Their 
        Impact Upon the Existing Television Service,'' MM Docket No. 
        87-268.
            (3) The term ``analog television licenses'' means licenses 
        issued pursuant to 47 C.F.R. 73.682 et seq.

SEC. 3104. PATENT AND TRADEMARK FEES.

    Section 10101 of the Omnibus Budget Reconciliation Act of 1990 (35 
U.S.C. 41 note) is amended--
            (1) in subsection (a) by striking ``1998'' and inserting 
        ``2002'';
            (2) in subsection (b)(2) by striking ``1998'' and inserting 
        ``2002''; and
            (3) in subsection (c)--
                    (A) by striking ``through 1998'' and inserting 
                ``through 2002''; and
                    (B) by adding at the end the following:
            ``(9) $119,000,000 in fiscal year 1999.
            ``(10) $119,000,000 in fiscal year 2000.
            ``(11) $119,000,000 in fiscal year 2001.
            ``(12) $119,000,000 in fiscal year 2002.''.

SEC. 3105. REPEAL OF AUTHORIZATION OF TRANSITIONAL APPROPRIATIONS FOR 
              THE UNITED STATES POSTAL SERVICE.

    (a) In General.--(1) Section 2004 of title 39, United States Code, 
is repealed.
    (2)(A) The table of sections for chapter 20 of such title is 
amended by repealing the item relating to section 2004.
    (B) Section 2003(e)(2) of such title is amended by striking 
``sections 2401 and 2004'' each place it appears and inserting 
``section 2401''.
    (b) Clarification That Liabilities Formerly Paid Pursuant to 
Section 2004 Remain Liabilities Payable by the Postal Service.--Section 
2003 of title 39, United States Code, is amended by adding at the end 
the following:
    ``(h) Liabilities of the former Post Office Department to the 
Employees' Compensation Fund (appropriations for which were authorized 
by former section 2004, as in effect before the effective date of this 
subsection) shall be liabilities of the Postal Service payable out of 
the Fund.''.

                        TITLE IV--TRANSPORTATION

                                                               Title IV

SEC. 4101. EXTENSION OF RAILROAD SAFETY FEES.

    Subsection (e) of section 20115 of title 49, United States Code, is 
repealed.

SEC. 4102. PERMANENT EXTENSION OF VESSEL TONNAGE DUTIES.

    (a) Extension of Duties.--Section 36 of the Act of August 5, 1909 
(36 Stat. 111; 46 App. U.S.C. 121), is amended--
            (1) by striking ``for fiscal years 1991, 1992, 1993, 1994, 
        1995, 1996, 1997, 1998, and 2 cents per ton not to exceed in 
        the aggregate 10 cents per tone in any one year, for each 
        fiscal year thereafter''; and
            (2) by striking ``for fiscal years 1991, 1992, 1993, 1994, 
        1995, 1996, 1997, 1998, and 6 cents per ton, not to exceed 30 
        cents per ton for each fiscal year thereafter''.
    (b) Conforming Amendment.--The Act entitled ``An Act concerning 
tonnage duties on vessels entering otherwise than by sea'', approved 
March 8, 1910 (36 Stat. 234; 46 App. U.S.C. 132), is amended by 
striking ``for fiscal years 1991, 1992, 1993, 1994, 1995, 1996, 1997, 
and 1998, and 2 cents per ton, not to exceed in the aggregate 10 cents 
per ton in any 1 year, for each fiscal year thereafter,''.

SEC. 4103. SALE OF GOVERNORS ISLAND, NEW YORK.

    (a) In General.--Notwithstanding any other provision of law, the 
Administrator of General Services shall dispose of by sale at fair 
market value all rights, title, and interests of the United States in 
and to the land of, and improvements to, Governors Island, New York.
    (b) Right of First Refusal.--Before a sale is made under subsection 
(a) to any other parties, the State of New York and the city of New 
York shall be given the right of first refusal to purchase all or part 
of Governors Island. Such right may be exercised by either the State of 
New York or the city of New York or by both parties acting jointly.
    (c) Proceeds.--Proceeds from the disposal of Governors Island under 
subsection (a) shall be deposited in the general fund of the Treasury 
and credited as miscellaneous receipts.

SEC. 4104. SALE OF AIR RIGHTS.

    (a) In General.--Notwithstanding any other provision of law, the 
Administrator of General Services shall sell, at fair market value and 
in a manner to be determined by the Administrator, the air rights 
adjacent to Washington Union Station described in subsection (b), 
including air rights conveyed to the Administrator under subsection 
(d). The Administrator shall complete the sale by such date as is 
necessary to ensure that the proceeds from the sale will be deposited 
in accordance with subsection (c).
    (b) Description.--The air rights referred to in subsection (a) 
total approximately 16.5 acres and are depicted on the plat map of the 
District of Columbia as follows:
            (1) Part of lot 172, square 720.
            (2) Part of lots 172 and 823, square 720.
            (3) Part of lot 811, square 717.
    (c) Proceeds.--Before September 30, 1996, proceeds from the sale of 
air rights under subsection (a) shall be deposited in the general fund 
of the Treasury and credited as miscellaneous receipts.
    (d) Conveyance of Amtrak Air Rights.--
            (1) General rule.--As a condition of future Federal 
        financial assistance, Amtrak shall convey to the Administrator 
        of General Services on or before December 31, 1995, at no 
        charge, all of the air rights of Amtrak described in subsection 
        (b).
            (2) Failure to comply.--If Amtrak does not meet the 
        condition established by paragraph (1), Amtrak shall be 
        prohibited from obligating Federal funds after March 1, 1996.

                                                                Title V

                      TITLE V--HOUSING PROVISIONS

SEC. 5101. REDUCTION OF SECTION 8 ANNUAL ADJUSTMENT FACTORS FOR UNITS 
              WITHOUT TENANT TURNOVER.

    Paragraph (2)(A) of section 8(c) of the United States Housing Act 
of 1937 (42 U.S.C. 1437f(c)(2)(A)) is amended by striking the last 
sentence.

SEC. 5102. MAXIMUM MORTGAGE AMOUNT FLOOR FOR SINGLE FAMILY MORTGAGE 
              INSURANCE.

    Subparagraph (A) of the first sentence of section 203(b)(2) of the 
National Housing Act (12 U.S.C. 1709(b)(2)(A)) is amended by striking 
``the greater of'' and all that follows through ``applicable size'' and 
inserting the following: ``50 percent of the dollar amount limitation 
determined under section 305(a)(2) of the Federal Home Loan Mortgage 
Corporation Act (as adjusted annually under such section) for a 
residence of the applicable size''.

SEC. 5103. FORECLOSURE AVOIDANCE AND BORROWER ASSISTANCE.

    (a) Foreclosure Avoidance.--The last sentence of section 204(a) of 
the National Housing Act (12 U.S.C. 1710(a)) is amended by inserting 
before the period the following: ``: And provided further, That the 
Secretary may pay insurance benefits to the mortgagee to recompense the 
mortgagee for its actions to provide an alternative to foreclosure of a 
mortgage that is in default, which actions may include such actions as 
special forbearance, loan modification, and deeds in lieu of 
foreclosure, all upon such terms and conditions as the mortgagee shall 
determine in the mortgagee's sole discretion within guidelines provided 
by the Secretary, but which may not include assignment of a mortgage to 
the Secretary: And provided further, That for purposes of the preceding 
proviso, no action authorized by the Secretary and no action taken, nor 
any failure to act, by the Secretary or the mortgagee shall be subject 
to judicial review''.
    (b) Authority to Assist Mortgagors in Default.--Section 230 of the 
National Housing Act (12 U.S.C. 1715u) is amended to read as follows:

              ``authority to assist mortgagors in default

    ``Sec. 230. (a) Payment of Partial Claim.--The Secretary may 
establish a program for payment of a partial insurance claim to a 
mortgagee that agrees to apply the claim amount to payment of a 
mortgage on a 1- to 4-family residence that is in default. Any such 
payment under such program to the mortgagee shall be made in the 
Secretary's sole discretion and on terms and conditions acceptable to 
the Secretary, except that--
            ``(1) the amount of the payment shall be in an amount 
        determined by the Secretary, which shall not exceed an amount 
        equivalent to 12 monthly mortgage payments and any costs 
        related to the default that are approved by the Secretary; and
            ``(2) the mortgagor shall agree to repay the amount of the 
        insurance claim to the Secretary upon terms and conditions 
        acceptable to the Secretary.
The Secretary may pay the mortgagee, from the appropriate insurance 
fund, in connection with any activities that the mortgagee is required 
to undertake concerning repayment by the mortgagor of the amount owed 
to the Secretary.
    ``(b) Assignment.--
            ``(1) Program authority.--The Secretary may establish a 
        program for assignment to the Secretary, upon request of the 
        mortgagee, of a mortgage on a 1- to 4-family residence insured 
        under this Act.
            ``(2) Program requirements.--The Secretary may accept 
        assignment of a mortgage under a program under this subsection 
        only if--
                    ``(A) the mortgage was in default;
                    ``(B) the mortgagee has modified the mortgage to 
                cure the default and provide for mortgage payments 
                within the reasonable ability of the mortgagor to pay 
                at interest rates not exceeding current market interest 
                rates; and
                    ``(C) the Secretary arranges for servicing of the 
                assigned mortgage by a mortgagee (which may include the 
                assigning mortgagee) through procedures that the 
                Secretary has determined to be in the best interests of 
                the appropriate insurance fund.
            ``(3) Payment of insurance benefits.--Upon accepting 
        assignment of a mortgage under the program under this 
        subsection, the Secretary may pay insurance benefits to the 
        mortgagee from the appropriate insurance fund in an amount that 
        the Secretary determines to be appropriate, but which may not 
        exceed the amount necessary to compensate the mortgagee for the 
assignment and any losses resulting from the mortgage modification.
    ``(c) Prohibition of Judicial Review.--No decision by the Secretary 
to exercise or forego exercising any authority under this section shall 
be subject to judicial review.''.
    (c) Savings Provision.--Any mortgage for which the mortgagor has 
applied to the Secretary of Housing and Urban Development, before the 
date of the enactment of this Act, for assignment pursuant to section 
230(b) of the National Housing Act shall continue to be governed by the 
provisions of such section, as in effect immediately before such date 
of enactment.
    (d) Applicability of Other Laws.--No provision of the National 
Housing Act or any other law shall be construed to require the 
Secretary of Housing and Urban Development to provide an alternative to 
foreclosure for mortgagees with mortgages on 1- to 4-family residences 
insured by the Secretary under the National Housing Act, or to accept 
assignments of such mortgages.

 TITLE VI--INDEXATION AND MISCELLANEOUS ENTITLEMENT-RELATED PROVISIONS

                                                               Title VI

SEC. 6101. CONSUMER PRICE INDEX.

    (a) Adjustments Applicable to Internal Revenue Code Provisions.--
            (1) In general.--Paragraph (3) of section 1(f) of the 
        Internal Revenue Code of 1986 (defining cost-of-living 
        adjustment) is amended by striking the period at the end and 
        inserting a comma and by inserting at the end the following 
        flush material:
                ``reduced by the number of percentage points determined 
                under paragraph (8) for the calendar year for which 
                such adjustment is being determined.''
            (2) Limitation on increases.--Subsection (f) of section 1 
        of such Code is amended by adding at the end the following new 
        paragraph:
            ``(8) Limitation on increases in cpi.--
                    ``(A) In general.--The number of percentage points 
                determined under this paragraph for any calendar year 
                is--
                            ``(i) in the case of calendar years 1996, 
                        1997, and 1998, 0.5 percentage point, and
                            ``(ii) in the case of calendar years 1999, 
                        2000, 2001, and 2002, 0.3 percentage point.
                    ``(B) Computation of base to reflect limitation.--
                The Secretary shall adjust the number taken into 
                account under paragraph (3)(B) so that any increase 
                which is not taken into account by reason of 
                subparagraph (A) shall not be taken into account at any 
                time so as to allow such increase for any period.''
    (b) Adjustments Applicable to Certain Entitlement Programs.--
            (1) In general.--For purposes of determining the amount of 
        any cost-of-living adjustment which takes effect for benefits 
        payable after December 31, 1995, with respect to any benefit 
        described in paragraph (5)--
                    (A) any increase in the relevant index (determined 
                without regard to this subsection) shall be reduced by 
                the number of percentage points determined under 
                paragraph (2), and
                    (B) the amount of the increase in such benefit 
                shall be equal to the product of--
                            (i) the increase in the relevant index (as 
                        reduced under subparagraph (A)), and
                            (ii) the average such benefit for the 
                        preceding calendar year under the program 
                        described in paragraph (5) which provides such 
                        benefit.
            (2) Limitation on increases.--
                    (A) In general.--The number of percentage points 
                determined under this paragraph for any calendar year 
                is--
                            (i) in the case of calendar years 1996, 
                        1997, and 1998, 0.5 percentage point, and
                            (ii) in the case of calendar years 1999, 
                        2000, 2001, and 2002, 0.3 percentage point.
                    (B) Computation of base to reflect limitation.--Any 
                increase which is not taken into account by reason of 
                subparagraph (A) shall not be taken into account at any 
                time so as to allow such increase for any period.
            (3) Paragraph (1) to apply only to computation of benefit 
        amounts.--Paragraph (1) shall apply only for purposes of 
        determining the amount of benefits and not for purposes of 
        determining--
                    (A) whether a threshold increase in the relevant 
                index has been met, or
                    (B) increases in amounts under other provisions of 
                law not described in paragraph (5) which operate by 
                reference to increases in such benefits.
            (4) Definitions.--For purposes of this subsection--
                    (A) Cost-of-living adjustment.--The term ``cost-of-
                living adjustment'' means any adjustment in the amount 
                of benefits described in paragraph (5) which is 
                determined by reference to changes in an index.
                    (B) Index.--
                            (i) Index.--The term ``index'' means the 
                        Consumer Price Index and any other index of 
                        price or wages.
                            (ii) Relevant index.--The term ``relevant 
                        index'' means the index on the basis of which 
                        the amount of the cost-of-living adjustment is 
                        determined.
            (5) Benefits to which subsection applies.--For purposes of 
        this subsection, the benefits described in this paragraph are--
                    (A) old age, survivors, and disability insurance 
                benefits subject to adjustment under section 215(i) of 
                the Social Security Act (but the limitation under 
                paragraph (1) shall not apply to supplemental security 
                income benefits under title XVI of such Act);
                    (B) retired and retainer pay subject to adjustment 
                under section 1401a of title 10, United States Code;
                    (C) civil service retirement benefits under section 
                8340 of title 5, United States Code, foreign service 
                retirement benefits under section 826 of the Foreign 
                Service Act of 1980, Central Intelligence Agency 
                retirement benefits under part J of the Central 
                Intelligence Agency Retirement Act of 1964 for certain 
                employees, and any other benefits under any similar 
                provision under any retirement system for employees of 
                the government of the United States;
                    (D) Federal workers' compensation under section 
                8146a of title 5, United States Code;
                    (E) benefits under section 3(a), 4(a), or 4(f) of 
                the Railroad Retirement Act of 1974; and
                    (F) benefits and expenditure limits under title 
                XVIII or XIX of the Social Security Act.
            (6) Benefit.--For purposes of this section, the term 
        ``benefit'' includes a payment.

SEC. 6102. REDUCTION IN TITLE XX BLOCK GRANTS TO STATES FOR SOCIAL 
              SERVICES.

    Section 2003(c) of the Social Security Act (42 U.S.C. 1397b(c)) is 
amended--
            (1) by striking ``and'' at the end of paragraph (4);
            (2) in paragraph (5), by striking ``fiscal year after 
        fiscal year 1989.'' and inserting ``of fiscal years 1990 
        through 1995; and''; and
            (3) by adding at the end the following:
            ``(6) $2,520,000,000 for fiscal year 1996 and each 
        succeeding fiscal year.''.

SEC. 6103. MATCHING RATE REQUIREMENT FOR TITLE XX BLOCK GRANTS TO 
              STATES FOR SOCIAL SERVICES.

    Section 2002(a)(1) of the Social Security Act (42 U.S.C. 
1397a(a)(1)) is amended by striking ``Each State'' and all that follows 
through the period and inserting the following: ``(A) Each State shall 
be entitled to payment under this title for each fiscal year in an 
amount equal to the lesser of--
            ``(i) 80 percent of the total amount expended by the State 
        during the fiscal year for services referred to in subparagraph 
        (B); or
            ``(ii) the allotment of the State for the fiscal year.
    ``(B) A State to which a payment is made under this title shall use 
the payment for services directed at the goals set forth in section 
2001, subject to the requirements of this title.''.

SEC. 6104. DENIAL OF UNEMPLOYMENT INSURANCE TO CERTAIN HIGH-INCOME 
              INDIVIDUALS.

    (a) General Rule.--Subsection (a) of section 3304 of the Internal 
Revenue Code of 1986, as amended by section 10101, is further amended 
by striking ``and'' at the end of paragraph (18), by redesignating 
paragraph (19) as paragraph (20), and by inserting after paragraph (18) 
the following new paragraph:
            ``(19) compensation shall not be payable to any individual 
        for any benefit year if the taxable income of such individual 
        for such individual's most recent taxable year ending before 
        the beginning of such benefit year exceeded $120,000; and''.
    (b) Effective Date.--
            (1) In general.--Except as provided in paragraph (2), the 
        amendment made by this section shall apply to benefit years 
        beginning after December 31, 1995.
            (2) Special rule.--In the case of any State the legislature 
        of which has not been in session for at least 30 calendar days 
        (whether or not successive) between the date of the enactment 
        of this Act and December 31, 1995, the amendments made by this 
        section shall apply to benefit years beginning after the day 30 
        calendar days after the first day on which such legislature is 
        in session on or after December 31, 1995.

SEC. 6105. DENIAL OF UNEMPLOYMENT INSURANCE TO INDIVIDUALS WHO 
              VOLUNTARILY LEAVE MILITARY SERVICE.

    (a) General Rule.--Paragraph (1) of section 8521(a) of title 5, 
United States Code, is amended to read as follows:
            ``(1) `Federal service' means active service (not including 
        active duty in a reserve status unless for a continuous period 
        of 45 days or more) in the armed forces or the commissioned 
        corps of the National Oceanic and Atmospheric Administration if 
        with respect to that service the individual--
                    ``(A) was discharged or released under honorable 
                conditions,
                    ``(B) did not resign or voluntarily leave the 
                service, and
                    ``(C) was not discharged or released for cause as 
                defined by the Secretary of Defense;''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply in the case of a discharge or release after the date of the 
enactment of this Act.

                       TITLE VII--MEDICAID REFORM

                 Subtitle A--Per Capita Spending Limit

                                                  Title VII, Subtitle A

SEC. 7001. LIMITATION ON EXPENDITURES RECOGNIZED FOR PURPOSES OF 
              FEDERAL FINANCIAL PARTICIPATION.

    (a) In General.--Title XIX of the Social Security Act is amended--
            (1) in section 1903(a), by striking ``From'' and inserting 
        ``Subject to section 1931, from'';
            (2) by redesignating section 1931 as section 1932; and
            (3) by inserting after section 1930 the following new 
        section:

     ``limitation on federal financial participation based on per 
                          beneficiary spending

    ``Sec. 1931. (a) In General.--Subject to subsection (e), the total 
amount of State expenditures for medical assistance for which Federal 
financial participation may be made under section 1903(a) for quarters 
in a fiscal year (beginning with fiscal year 1997) may not exceed the 
sum of the following:
            ``(1) Nondisabled medicaid children.--The product of--
                    ``(A) the number of full-year equivalent 
                nondisabled medicaid children (described in subsection 
                (b)(1)) in the State in the fiscal year, and
                    ``(B) the per capita medical assistance limit 
                established under subsection (c)(1) for such category 
                of individuals for the fiscal year.
            ``(2) Nondisabled medicaid adults.--The product of--
                    ``(A) the number of full-year equivalent 
                nondisabled medicaid adults (described in subsection 
                (b)(2)) in the State in the fiscal year, and
                    ``(B) the per capita medical assistance limit 
                established under subsection (c)(1) for such category 
                individuals for the fiscal year.
            ``(3) Nondisabled elderly medicaid beneficiaries.--The 
        product of--
                    ``(A) the number of full-year equivalent 
                nondisabled elderly medicaid beneficiaries (described 
                in subsection (b)(3)) in the State in the fiscal year, 
                and
                    ``(B) the per capita medical assistance limit 
                established under subsection (c)(1) for such category 
                of individuals for the fiscal year.
            ``(4) Disabled medicaid beneficiaries.--The product of--
                    ``(A) the number of full-year equivalent disabled 
                medicaid beneficiaries (described in subsection (b)(4)) 
                in the State in the fiscal year, and
                    ``(B) the per capita medical assistance limit 
                established under subsection (c)(1) for such category 
                individuals for the fiscal year.
            ``(5) Administrative expenditures.--The product of--
                    ``(A) the number of full-year equivalent medicaid 
                beneficiaries who are in any category of beneficiaries 
                in the State in the fiscal year, and
                    ``(B) the per capita limit established under 
                subsection (c)(1) for administrative expenditures for 
                the fiscal year.
This section shall not apply to expenditures for which no Federal 
financial participation is available under this title.
    ``(b) Definitions Relating to Categories of Individuals.--In this 
section:
            ``(1) Nondisabled medicaid children.--The term `nondisabled 
        medicaid child' means an individual entitled to medical 
        assistance under the State plan under this title who is not 
        disabled (as such term is used under paragraph (4)) and is 
        under 21 years of age.
            ``(2) Nondisabled medicaid adults.--The term `nondisabled 
        medicaid adult' means an individual entitled to medical 
        assistance under the State plan under this title who is not 
        disabled (as such term is used under paragraph (4)) and is at 
        least 21 years of age but under 65 years of age.
            ``(3) Nondisabled elderly medicaid beneficiary.--The term 
        `nondisabled medicaid adult' means an individual entitled to 
        medical assistance under the State plan under this title who is 
        not disabled (as such term is used under paragraph (4)) and is 
        at least 65 years of age.
            ``(4) Disabled medicaid beneficiaries.--The term `disabled 
        medicaid beneficiary' means an individual entitled to medical 
        assistance under the State plan under this title who is 
        entitled to such assistance solely on the basis of blindness or 
        disability.
For purposes of this section, nondisabled medicaid children, 
nondisabled medicaid adults, nondisabled elderly medicaid 
beneficiaries, and disabled medicaid beneficiaries each constitutes a 
separate category of medicaid beneficiaries.
    ``(c) Establishment of Per Capita Limits.--
            ``(1) In general.--The Secretary shall establish for each 
        State a per capita medical assistance limit for each category 
        of medicaid beneficiaries described in subsection (b) and for 
        administrative expenditures for a fiscal year equal to the 
        product of the following:
                    ``(A) Previous expenditures.--The average of the 
                amount of the per capita matchable medical assistance 
                expenditures (determined under paragraph (2)(A)) for 
                such category (or the per capita matchable 
                adminstrative expenditures determined under paragraph 
                (2)(B)) for such State for each of the 3 previous 
                fiscal years.
                    ``(B) Inflation factor.--The rolling 2-year CPI 
                increase factor (determined under paragraph (3)(A)) for 
                the fiscal year involved.
                    ``(C) Transitional allowance.--The transitional 
                allowance factor (if any) applicable under paragraph 
                (3)(B) to such limit for the previous fiscal year and 
                for the fiscal year involved.
            ``(2) Per capita matchable medical assistance 
        expenditures.--For purposes of this section--
                    ``(A) Medical assistance expenditures.--The `per 
                capita matchable medical assistance expenditures', for 
                a category of medicaid beneficiaries for a State for a 
                fiscal year, is equal to--
                            ``(i) the amount of expenditures for which 
                        Federal financial participation is (or may be) 
                        provided (consistent with this section) to the 
                        State under paragraphs (1) and (5) of section 
                        1903(a) (other than expenditures excluded under 
                        subsection (e)) with respect to medical 
                        assistance furnished with respect to 
                        individuals in such category during the fiscal 
                        year, divided by
                            ``(ii) the number of full-year equivalent 
                        individuals in such category in the State in 
                        such fiscal year.
                    ``(B) Per capita matchable administrative 
                expenditures.--The `per capita matchable administrative 
                expenditures', for a State for a fiscal year, is equal 
                to--
                            ``(i) the amount of expenditures for which 
                        Federal financial participation is (or may be) 
                        provided (consistent with this section) to the 
                        State under section 1903(a) (under paragraphs 
                        (1) and (5) of such section) during the fiscal 
                        year, divided by
                            ``(ii) the number of full-year equivalent 
                        individuals in any category of medicaid 
                        beneficiary in the State in such fiscal year.
            ``(3) Increase factors.--In this subsection--
                    ``(A) Rolling 2-year cpi increase factor.--The 
                `rolling 2-year CPI increase factor' for a fiscal year 
                is 1 plus the percentage by which--
                            ``(i) the Secretary's estimate of the 
                        average value of the consumer price index for 
                        all urban consumers (all items, U.S. city 
                        average) for months in the particular fiscal 
                        year, exceeds
                            ``(ii) the average value of such index for 
                        months in the 3 previous fiscal years.
                    ``(B) Transitional allowance factors.--
                            ``(i) Fiscal year 1996.--The `transitional 
                        allowance factor' for fiscal year 1996--
                                    ``(I) for the category of 
                                nondisabled medicaid children, is 
                                1.051;
                                    ``(II) for the category of 
                                nondisabled medicaid adults, is 1.067;
                                    ``(III) for the category of 
                                nondisabled elderly medicaid 
                                beneficiaries is 1.031;
                                    ``(IV) for the category of disabled 
                                medicaid beneficiaries is 1.015; and
                                    ``(V) for administrative 
                                expenditures is 1.046.
                            ``(ii) Subsequent fiscal years for 
                        nondisabled children and adults and for 
                        disabled categories.--The `transitional 
                        allowance factor' for the categories of 
                        nondisabled medicaid children, nondisabled 
                        medicaid adults, and disabled medicaid 
                        beneficiaries--
                                    ``(I) for fiscal year 1997 is 1.01, 
                                and
                                    ``(II) for each subsequent fiscal 
                                year is 1.0.
                            ``(iii) Subsequent fiscal years for the 
                        elderly and administrative expenditures.--The 
                        `transitional allowance factor' for the 
                        category of nondisabled elderly medicaid 
                        beneficiaries and for administrative 
                        expenditures for fiscal years after fiscal year 
                        1996 is 1.0.
            ``(4) Notice.--The Secretary shall notify each State before 
        the beginning of each fiscal year of the per capita limits 
        established under this subsection for the State for the fiscal 
        year.
    ``(d) Special Rules and Exceptions.--For purposes of this section, 
expenditures attributable to any of the following shall not be subject 
to the limits established under this section and shall not be taken 
into account in establishing per capita medical assistance limits under 
subsection (c)(1):
            ``(1) DSH.--Payment adjustments under section 1923.
            ``(2) Medicare cost-sharing.--Payments for medical 
        assistance for medicare cost-sharing (as defined in section 
        1905(p)(3)).
            ``(3) Services through ihs and tribal providers.--Payments 
        for medical assistance for services described in the last 
        sentence of section 1905(b).
Nothing in this section shall be construed as applying any limitation 
to expenditures for the purchase and delivery of qualified pediatric 
vaccines under section 1928.
    ``(e) Definitions.--In this section, the term `medicaid 
beneficiary' means an individual entitled to medical assistance under 
the State plan under this title.
    ``(f) Estimations and Notice.--
            ``(1) In general.--The Secretary shall--
                    ``(A) establish a process for estimating the limits 
                established under subsection (a) for each State at the 
                beginning of each fiscal year and adjusting such 
                estimate during such year; and
                    ``(B) notifying each State of the estimations and 
                adjustments referred to in subparagraph (A).
            ``(2) Determination of number of full-year equivalent 
        individuals.--For purposes of this section, the number of full-
        year equivalent individuals in each category described in 
        subsection (b) for a State for a year shall be determined based 
        on actual reports submitted by the State to the Secretary. In 
        the case of individuals who were not entitled to benefits under 
        a State plan for the entire fiscal year (or are within a group 
        of individuals for only part of a fiscal year), the number 
        shall take into account only the portion of the year in which 
        they were so entitled or within such group. The Secretary may 
        audit such reports.
    ``(g) Anti-Gaming Adjustment to Reflect Changes in Eligibility.--
            ``(1) Report on per capita expenditures.--If a State makes 
        a change (on or after October 15, 1995) relating to eligibility 
        for medical assistance in its State plan that results in the 
        addition or deletion of individuals eligible for such 
        assistance, the State shall submit to the Secretary with such 
        change such information as the Secretary may require in order 
        to carry out paragraph (2).
            ``(2) Adjustment for certain additions.--If a State makes a 
        change described in paragraph (1) that the Secretary believes 
        will result in making medical assistance available for 
        additional individuals (within a category described in 
        subsection (b)) with respect to whom the Secretary estimates 
        the per capita average medical assistance expenditures will be 
        less the applicable per capita limit established under 
        subsection (c)(1) for such category, the Secretary shall apply 
        the per capita limits under such subsection separately with 
        respect to individuals who are eligible for medical assistance 
        without regard to such addition and with respect to the 
        individuals so added.
            ``(3) Adjustment for certain deletions.--If a State makes a 
        change described in paragraph (1) that the Secretary believes 
        will result in denial of medical assistance for individuals 
        (within a category described in subsection (b)) with respect to 
        whom the Secretary estimates the per capita average medical 
        assistance expenditures is greater than the applicable per 
        capita limit established under subsection (c)(1) for such 
        catetory, the Secretary shall adjust the payment limits under 
        subsection (a) to reflect any decrease in average per 
        beneficiary expenditures that would result from such change.
    ``(h) Treatment of States Operating Under Waivers.--The Secretary 
shall provide for such adjustments to the per capita limits under 
subsection (c) for a fiscal year as may be appropriate to take into 
account the case of States which either--
            ``(1) during any of the 3 previous fiscal years was 
        providing medical assistance to its residents under a waiver 
        granted under section 1115, section 1915, or other provision of 
        law, and, in the fiscal year involved is no longer providing 
        such medical assistance under such waiver; or
            ``(2) during any of the 3 previous fiscal years was not 
        providing medical assistance to its residents under a waiver 
        granted under section 1115, section 1915, or other provision of 
        law, and, in the fiscal year involved is providing such medical 
        assistance under such a waiver.''.
    (b) Enforcement-Related Provisions.--
            (1) Assuring actual payments to states consistent with 
        limitation.--Section 1903(d) of such Act (42 U.S.C. 1396b(d)) 
        is amended--
                    (A) in paragraph (2)(A), by striking ``The 
                Secretary'' and inserting ``Subject to paragraph (7), 
                the Secretary'', and
                    (B) by adding at the end the following new 
                paragraph:
    ``(7)(A) The Secretary shall take such steps as are necessary to 
assure that payments under this subsection for quarters in a fiscal 
year are consistent with the payment limits established under section 
1931 for the fiscal year. Such steps may include limiting such payments 
for one or more quarters in a fiscal year based on--
            ``(i) an appropriate proportion of the payment limits for 
        the fiscal year involved, and
            ``(ii) numbers of individuals within each category, as 
        reported under subparagraph (B) for a recent previous quarter.
    ``(B) Each State shall include, in its report filed under paragraph 
(1)(A) for a calendar quarter--
            ``(i) the actual number of individuals within each category 
        described in section 1931(b) for the second previous calendar 
        quarter and (based on the data available) for the previous 
        calendar quarter, and
            ``(ii) an estimate of such numbers for the calendar quarter 
        involved.''.
            (2) Restriction on authority of states to apply less 
        restrictive income and resource methodologies.--Section 
        1902(r)(2) of such Act (42 U.S.C. 1396a(r)(2)) is amended by 
        adding at the end the following new subparagraph:
    ``(C) Subparagraph (A) shall not apply to plan amendments made on 
or after October 15, 1995.''.
    (c) Conforming Amendment.--Section 1903(i) of such Act (42 U.S.C. 
1396b(i)) is amended--
            (1) by striking ``or'' at the end of paragraph (14),
            (2) by striking the period at the end of paragraph (15) and 
        inserting ``; or'', and
            (3) by inserting after paragraph (15) the following:
            ``(16) in accordance with section 1931, with respect to 
        amounts expended to the extent they exceed applicable limits 
        established under section 1931(a).''.
    (d) Effective Date.--The amendments made by this section shall 
apply to payments for calendar quarters beginning on or after October 
1, 1996.

                   Subtitle B--Medicaid Managed Care

                                                  Title VII, Subtitle B

SEC. 7101. PERMITTING GREATER FLEXIBILITY FOR STATES TO ENROLL 
              BENEFICIARIES IN MANAGED CARE ARRANGEMENTS.

    (a) In General.--Title XIX of the Social Security Act (42 U.S.C. 
1396 et seq.), as amended by section 7001(a), is amended--
            (1) by redesignating section 1932 as section 1933; and
            (2) by inserting after section 1931 the following new 
        section:

    ``state options for enrollment of beneficiaries in managed care 
                              arrangements

    ``Sec. 1932. (a) Mandatory Enrollment.--
            ``(1) In general.--Subject to the succeeding provisions of 
        this section and notwithstanding paragraphs (1), (10)(B), and 
        (23) of section 1902(a), a State may require an individual 
        eligible for medical assistance under the State plan under this 
        title to enroll with an eligible managed care provider as a 
        condition of receiving such assistance and, with respect to 
        assistance furnished by or under arrangements with such 
        provider, to receive such assistance through the provider, if 
        the following provisions are met:
                    ``(A) The provider meets the requirements of 
                section 1933.
                    ``(B) The provider enters into a contract with the 
                State to provide services for the benefit of 
                individuals eligible for benefits under this title 
                under which prepaid payments to such provider are made 
                on an actuarially sound basis.
                    ``(C) There is sufficient capacity among all 
                providers meeting such requirements to enroll and serve 
                the individuals required to enroll with such providers.
                    ``(D) The individual is not a special needs 
                individual (as defined in subsection (c)).
                    ``(E) The State--
                            ``(i) permits an individual to choose an 
                        eligible managed care provider--
                                    ``(I) from among not less than 2 
                                medicaid managed care plans; or
                                    ``(II) between a medicaid managed 
                                care plan and a primary care case 
                                management provider;
                            ``(ii) provides the individual with the 
                        opportunity to change enrollment among eligible 
                        managed care providers not less than once 
                        annually and notifies the individual of such 
                        opportunity not later than 60 days prior to the 
                        first date on which the individual may change 
                        enrollment;
                            ``(iii) establishes a method for 
                        establishing enrollment priorities in the case 
                        of an eligible managed care provider that does 
                        not have sufficient capacity to enroll all such 
                        individuals seeking enrollment under which 
                        individuals already enrolled with the provider 
                        are given priority in continuing enrollment 
                        with the provider;
                            ``(iv) establishes a default enrollment 
                        process which meets the requirements described 
                        in paragraph (2) and under which any such 
                        individual who does not enroll with an eligible 
                        managed care provider during the enrollment 
                        period specified by the State shall be enrolled 
                        by the State with such a provider in accordance 
                        with such process; and
                            ``(v) establishes the sanctions provided 
                        for in section 1934.
            ``(2) Default enrollment process requirements.--The default 
        enrollment process established by a State under paragraph 
        (1)(E)(iv) shall--
                    ``(A) provide that the State may not enroll 
                individuals with an eligible managed care provider 
                which is not in compliance with the requirements of 
                section 1933; and
                    ``(B) provide for an equitable distribution of 
                individuals among all eligible managed care providers 
                available to enroll individuals through such default 
                enrollment process, consistent with the enrollment 
                capacities of such providers.
    ``(b) Reenrollment of Individuals Who Regain Eligibility.--
            ``(1) In general.--If an individual eligible for medical 
        assistance under a State plan under this title and enrolled 
        with an eligible managed care provider with a contract under 
        subsection (a)(1)(B) ceases to be eligible for such assistance 
        for a period of not greater than 2 months, the State may 
        provide for the automatic reenrollment of the individual with 
        the provider as of the first day of the month in which the 
        individual is again eligible for such assistance.
            ``(2) Conditions.--Paragraph (1) shall only apply if--
                    ``(A) the month for which the individual is to be 
                reenrolled occurs during the enrollment period covered 
                by the individual's original enrollment with the 
                eligible managed care provider;
                    ``(B) the eligible managed care provider continues 
                to have a contract with the State agency under 
                subsection (a)(1)(B) as of the first day of such month; 
                and
                    ``(C) the eligible managed care provider complies 
                with the requirements of section 1933.
            ``(3) Notice of reenrollment.--The State shall provide 
        timely notice to an eligible managed care provider of any 
        reenrollment of an individual under this subsection.
    ``(c) Special Needs Individuals Described.--In this section, a 
`special needs individual' means any of the following:
            ``(1) Special needs child.--An individual who is under 19 
        years of age who --
                    ``(A) is eligible for supplemental security income 
                under title XVI;
                    ``(B) is described under section 501(a)(1)(D);
                    ``(C) is a child described in section 1902(e)(3); 
                or
                    ``(D) is in foster care or is otherwise in an out-
                of-home placement.
            ``(2) Homeless individuals.--An individual who is homeless 
        (without regard to whether the individual is a member of a 
        family), including--
                    ``(A) an individual whose primary residence during 
                the night is a supervised public or private facility 
                that provides temporary living accommodations; or
                    ``(B) an individual who is a resident in 
                transitional housing.
            ``(3) Migrant agricultural workers.--A migratory 
        agricultural worker or a seasonal agricultural worker (as such 
        terms are defined in section 329 of the Public Health Service 
        Act), or the spouse or dependent of such a worker.
            ``(4) Indians.--An Indian (as defined in section 4(c) of 
        the Indian Health Care Improvement Act (25 U.S.C. 1603(c))).''.
    (b) Conforming Amendment.--Section 1902(a)(23) of such Act (42 
U.S.C. 1396a(a)(23)) is amended--
            (1) in the matter preceding subparagraph (A), by striking 
        ``subsection (g) and in section 1915'' and inserting 
        ``subsection (g), section 1915, and section 1931,''; and
            (2) in subparagraph (B)--
                    (A) by striking ``a health maintenance 
                organization, or a'' and inserting ``or with an 
                eligible managed care provider, as defined in section 
                1933(g)(1), or''.

SEC. 7102. REMOVAL OF BARRIERS TO PROVISION OF MEDICAID SERVICES 
              THROUGH MANAGED CARE.

    (a) Repeal of Current Barriers.--Except as provided in subsection 
(b), section 1903(m) of the Social Security Act (42 U.S.C. 1396b(m)) is 
repealed on the date of the enactment of this Act.
    (b) Existing Contracts.--In the case of any contract under section 
1903(m) of such Act which is in effect on the day before the date of 
the enactment of this Act, the provisions of such section shall apply 
to such contract until the earlier of--
            (1) the day after the date of the expiration of the 
        contract; or
            (2) the date which is 1 year after the date of the 
        enactment of this Act.
    (c) Eligible Managed Care Providers Described.--Title XIX of such 
Act (42 U.S.C. 1396 et seq.), as amended by sections 7001(a) and 
7101(a), is amended--
            (1) by redesignating section 1933 as section 1934; and
            (2) by inserting after section 1932 the following new 
        section:

                   ``eligible managed care providers

    ``Sec. 1933. (a) Definitions.--In this section, the following 
definitions shall apply:
            ``(1) Eligible managed care provider.--The term `eligible 
        managed care provider' means--
                    ``(A) a medicaid managed care plan; or
                    ``(B) a primary care case management provider.
            ``(2) Medicaid managed care plan.--The term `medicaid 
        managed care plan' means a health maintenance organization, an 
        eligible organization with a contract under Section 1876, a 
        provider sponsored network or any other plan which provides or 
        arranges for the provision of one or more items and services to 
        individuals eligible for medical assistance under the State 
        plan under this title in accordance with a contract with the 
        State under section 1932(a)(1)(B).
            ``(3) Primary care case management provider.--
                    ``(A) In general.--The term `primary care case 
                management provider' means a health care provider 
                that--
                            ``(i) is a physician, group of physicians, 
                        a Federally-qualified health center, a rural 
                        health clinic, or an entity employing or having 
                        other arrangements with physicians that 
                        provides or arranges for the provision of one 
                        or more items and services to individuals 
                        eligible for medical assistance under the State 
                        plan under this title in accordance with a 
                        contract with the State under section 
                        1932(a)(1)(B);
                            ``(ii) receives payment on a fee-for-
                        service basis (or, in the case of a Federally-
                        qualified health center or a rural health 
                        clinic, on a reasonable cost per encounter 
                        basis) for the provision of health care items 
                        and services specified in such contract to 
                        enrolled individuals;
                            ``(iii) receives an additional fixed fee 
                        per enrollee for a period specified in such 
                        contract for providing case management services 
                        (including approving and arranging for the 
                        provision of health care items and services 
                        specified in such contract on a referral basis) 
                        to enrolled individuals; and
                            ``(iv) is not an entity that is at risk.
                    ``(B) At risk.--In subparagraph (A)(iv), the term 
                `at risk' means an entity that--
                            ``(i) has a contract with the State under 
                        which such entity is paid a fixed amount for 
                        providing or arranging for the provision of 
                        health care items or services specified in such 
                        contract to an individual eligible for medical 
                        assistance under the State plan and enrolled 
                        with such entity, regardless of whether such 
                        items or services are furnished to such 
                        individual; and
                            ``(ii) is liable for all or part of the 
                        cost of furnishing such items or services, 
                        regardless of whether such cost exceeds such 
                        fixed payment.
    ``(b) Enrollment.--
            ``(1) Nondiscrimination.--An eligible managed care provider 
        may not discriminate on the basis of health status or 
        anticipated need for services in the enrollment, reenrollment, 
        or disenrollment of individuals eligible to receive medical 
        assistance under a State plan under this title or by 
        discouraging enrollment (except as permitted by this section) 
        by eligible individuals.
            ``(2) Termination of enrollment.--
                    ``(A) In general.--An eligible managed care 
                provider shall permit an individual eligible for 
                medical assistance under the State plan under this 
                title who is enrolled with the provider to terminate 
                such enrollment for cause at any time, and without 
                cause during the 60-day period beginning on the date 
                the individual receives notice of enrollment, and shall 
                notify each such individual of the opportunity to 
                terminate enrollment under these conditions.
                    ``(B) Fraudulent inducement or coercion as grounds 
                for cause.--For purposes of subparagraph (A), an 
                individual terminating enrollment with an eligible 
                managed care provider on the grounds that the 
                enrollment was based on fraudulent inducement or was 
                obtained through coercion shall be considered to 
                terminate such enrollment for cause.
                    ``(C) Notice of termination.--
                            ``(i) Notice to state.--
                                    ``(I) By individuals.--Each 
                                individual terminating enrollment with 
                                an eligible managed care provider under 
                                subparagraph (A) shall do so by 
                                providing notice of the termination to 
                                an office of the State agency 
                                administering the State plan under this 
title, the State or local welfare agency, or an office of an eligible 
managed care provider.
                                    ``(II) By plans.--Any eligible 
                                managed care provider which receives 
                                notice of an individual's termination 
                                of enrollment with such provider 
                                through receipt of such notice at an 
                                office of an eligible managed care 
                                provider shall provide timely notice of 
                                the termination to the State agency 
                                administering the State plan under this 
                                title.
                            ``(ii) Notice to plan.--The State agency 
                        administering the State plan under this title 
                        or the State or local welfare agency which 
                        receives notice of an individual's termination 
                        of enrollment with an eligible managed care 
                        provider under clause (i) shall provide timely 
                        notice of the termination to such provider.
                    ``(D) Reenrollment.--Each State shall establish a 
                process under which an individual terminating 
                enrollment under this paragraph shall be promptly 
                enrolled with another eligible managed care provider 
                and notified of such enrollment.
            ``(3) Provision of enrollment materials in understandable 
        form.--Each eligible managed care provider shall provide all 
        enrollment materials in a manner and form which may be easily 
        understood by a typical adult enrollee of the provider who is 
        eligible for medical assistance under the State plan under this 
        title.
    ``(c) Quality Assurance.--
            ``(1) Access to services.--Each eligible managed care 
        provider shall provide or arrange for the provision of all 
        medically necessary medical assistance under this title which 
        is specified in the contract entered into between such provider 
        and the State under section 1932(a)(1)(B) for enrollees who are 
        eligible for medical assistance under the State plan under this 
        title.
            ``(2) Timely delivery of services.--Each eligible managed 
        care provider shall respond to requests from enrollees for the 
        delivery of medical assistance in a manner which --
                    ``(A) makes such assistance --
                            ``(i) available and accessible to each such 
                        individual, within the area served by the 
                        provider, with reasonable promptness and in a 
                        manner which assures continuity; and
                            ``(ii) when medically necessary, available 
                        and accessible 24 hours a day and 7 days a 
                        week; and
                    ``(B) with respect to assistance provided to such 
                an individual other than through the provider, or 
                without prior authorization, in the case of a primary 
                care case management provider, provides for 
                reimbursement to the individual (if applicable under 
                the contract between the State and the provider) if --
                            ``(i) the services were medically necessary 
                        and immediately required because of an 
                        unforeseen illness, injury, or condition; and
                            ``(ii) it was not reasonable given the 
                        circumstances to obtain the services through 
                        the provider, or, in the case of a primary care 
                        case management provider, with prior 
                        authorization.
            ``(3) External independent review of eligible managed care 
        provider activities.--
                    ``(A) Review of medicaid managed care plan 
                contract.--
                            ``(i) In general.--Except as provided in 
                        subparagraph (B), each medicaid managed care 
                        plan shall be subject to an annual external 
                        independent review of the quality and 
                        timeliness of, and access to, the items and 
                        services specified in such plan's contract with 
                        the State under section 1932(a)(1)(B). Such 
                        review shall specifically evaluate the extent 
                        to which the medicaid managed care plan 
                        provides such services in a timely manner.
                            ``(ii) Contents of review.--An external 
                        independent review conducted under this 
                        paragraph shall include the following:
                                    ``(I) a review of the entity's 
                                medical care, through sampling of 
                                medical records or other appropriate 
                                methods, for indications of quality of 
                                care and inappropriate utilization 
                                (including overutilization) and 
                                treatment,
                                    ``(II) a review of enrollee 
                                inpatient and ambulatory data, through 
                                sampling of medical records or other 
                                appropriate methods, to determine 
                                trends in quality and appropriateness 
                                of care,
                                    ``(III) notification of the entity 
                                and the State when the review under 
                                this paragraph indicates inappropriate 
                                care, treatment, or utilization of 
                                services (including overutilization), 
                                and
                                    ``(IV) other activities as 
                                prescribed by the Secretary or the 
                                State.
                            ``(iii) Availability of results.--The 
                        results of each external independent review 
                        conducted under this subparagraph shall be 
                        available to participating health care 
                        providers, enrollees, and potential enrollees 
                        of the medicaid managed care plan, except that 
                        the results may not be made available in a 
                        manner that discloses the identity of any 
                        individual patient.
                    ``(B) Deemed compliance.--
                            ``(i) Medicare plans.--The requirements of 
                        subparagraph (A) shall not apply with respect 
                        to a medicaid managed care plan if the plan is 
                        an eligible organization with a contract in 
                        effect under section 1876.
                            ``(ii) Private accreditation.--
                                    ``(I) In general.--The requirements 
                                of subparagraph (A) shall not apply 
                                with respect to a medicaid managed care 
                                plan if --
                                            ``(aa) the plan is 
                                        accredited by an organization 
                                        meeting the requirements 
                                        described in clause (iii); and
                                            ``(bb) the standards and 
                                        process under which the plan is 
                                        accredited meet such 
                                        requirements as are established 
                                        under subclause (II), without 
                                        regard to whether or not the 
                                        time requirement of such 
                                        subclause is satisfied.
                                    ``(II) Standards and process.--Not 
                                later than 180 days after the date of 
                                the enactment of this Act, the 
                                Secretary shall specify requirements 
                                for the standards and process under 
                                which a medicaid managed care plan is 
                                accredited by an organization meeting 
                                the requirements of clause (iii).
                            ``(iii) Accrediting organization.--An 
                        accrediting organization meets the requirements 
                        of this clause if the organization --
                                    ``(I) is a private, nonprofit 
                                organization;
                                    ``(II) exists for the primary 
                                purpose of accrediting managed care 
                                plans or health care providers; and
                                    ``(III) is independent of health 
                                care providers or associations of 
                                health care providers.
                    ``(C) Review of primary care case management 
                provider contract.--Each primary care case management 
                provider shall be subject to an annual external 
                independent review of the quality and timeliness of, 
                and access to, the items and services specified in the 
                contract entered into between the State and the primary 
                care case management provider under section 
                1932(a)(1)(B).
            ``(4) Federal monitoring responsibilities.--The Secretary 
        shall review the external independent reviews conducted 
        pursuant to paragraph (3) and shall monitor the effectiveness 
        of the State's monitoring and followup activities required 
        under subparagraph (A) of paragraph (2). If the Secretary 
        determines that a State's monitoring and followup activities 
        are not adequate to ensure that the requirements of paragraph 
        (2) are met, the Secretary shall undertake appropriate followup 
        activities to ensure that the State improves its monitoring and 
        followup activities.
            ``(5) Providing information on services.--
                    ``(A) Requirements for medicaid managed care 
                plans.--
                            ``(i) Information to the state.--Each 
                        medicaid managed care plan shall provide to the 
                        State (at such frequency as the Secretary may 
                        require), complete and timely information 
                        concerning the following:
                                    ``(I) The services that the plan 
                                provides to (or arranges to be provided 
                                to) individuals eligible for medical 
                                assistance under the State plan under 
                                this title.
                                    ``(II) The identity, locations, 
                                qualifications, and availability of 
                                participating health care providers.
                                    ``(III) The rights and 
                                responsibilities of enrollees.
                                    ``(IV) The services provided by the 
                                plan which are subject to prior 
                                authorization by the plan as a 
                                condition of coverage (in accordance 
                                with paragraph (6)(A)).
                                    ``(V) The procedures available to 
                                an enrollee and a health care provider 
                                to appeal the failure of the plan to 
                                cover a service.
                                    ``(VI) The performance of the plan 
                                in serving individuals eligible for 
                                medical assistance under the State plan 
                                under this title.
                            ``(ii) Information to health care 
                        providers, enrollees, and potential 
                        enrollees.--Each medicaid managed care plan 
                        shall--
                                    ``(I) upon request, make the 
                                information described in clause (i) 
                                available to participating health care 
                                providers, enrollees, and potential 
                                enrollees in the plan's service area; 
                                and
                                    ``(II) provide to enrollees and 
                                potential enrollees information 
                                regarding all items and services that 
                                are available to enrollees under the 
                                contract between the State and the plan 
                                that are covered either directly or 
                                through a method of referral and prior 
                                authorization.
                    ``(B) Requirements for primary care case management 
                providers.--Each primary care case management provider 
                shall--
                            ``(i) provide to the State (at such 
                        frequency as the Secretary may require), 
                        complete and timely information concerning the 
                        services that the primary care case management 
                        provider provides to (or arranges to be 
                        provided to) individuals eligible for medical 
                        assistance under the State plan under this 
                        title;
                            ``(ii) make available to enrollees and 
                        potential enrollees information concerning 
                        services available to the enrollee for which 
                        prior authorization by the primary care case 
                        management provider is required; and
                            ``(iii) provide enrollees and potential 
                        enrollees information regarding all items and 
                        services that are available to enrollees under 
                        the contract between the State and the primary 
                        care case management provider that are covered 
                        either directly or through a method of referral 
                        and prior authorization.
                            ``(iv) provide assurances that such 
                        entities and their professional personnel are 
                        licensed as required by State law and qualified 
                        to provide case management services, through 
                        methods such as ongoing monitoring of 
                        compliance with applicable requirements and 
                        providing information and technical assistance.
                    ``(C) Requirements for both medicaid managed care 
                plans and primary care case management providers.--Each 
                eligible managed care provider shall provide the State 
                with aggregate encounter data for early and periodic 
                screening, diagnostic, and treatment services under 
                section 1905(r) furnished to individuals under 21 years 
                of age. Any such data provided may be audited by the 
                State and the Secretary.
            ``(6) Timeliness of payment.--An eligible managed care 
        provider shall make payment to health care providers for items 
        and services which are subject to the contract under section 
        1931(a)(1)(B) and which are furnished to individuals eligible 
        for medical assistance under the State plan under this title 
        who are enrolled with the provider on a timely basis and under 
        the claims payment procedures described in section 
        1902(a)(37)(A), unless the health care provider and the 
        eligible managed care provider agree to an alternate payment 
        schedule.
            ``(7) Additional quality assurance requirements for 
        medicaid managed care plans.--
                    ``(A) Conditions for prior authorization.--A 
                medicaid managed care plan may require the approval of 
                medical assistance for nonemergency services before the 
                assistance is furnished to an enrollee only if the 
                system providing for such approval--
                            ``(i) provides that such decisions are made 
                        in a timely manner, depending upon the urgency 
                        of the situation; and
                            ``(ii) permits coverage of medically 
                        necessary medical assistance provided to an 
                        enrollee without prior authorization in the 
                        event of an emergency.
                    ``(B) Internal grievance procedure.--Each medicaid 
                managed care plan shall establish an internal grievance 
                procedure under which a plan enrollee or a provider on 
                behalf of such an enrollee who is eligible for medical 
                assistance under the State plan under this title may 
                challenge the denial of coverage of or payment for such 
                assistance.
                    ``(C) Use of unique physician identifier for 
                participating physicians.--Each medicaid managed care 
                plan shall require each physician providing services to 
                enrollees eligible for medical assistance under the 
                State plan under this title to have a unique identifier 
                in accordance with the system established under section 
                1902(x).
                    ``(D) Patient encounter data.--
                            ``(i) In general.--Each medicaid managed 
                        care plan shall maintain sufficient patient 
                        encounter data to identify the health care 
                        provider who delivers services to patients and 
                        to otherwise enable the State plan to meet the 
                        requirements of section 1902(a)(27). The plan 
                        shall incorporate such information in the 
                        maintenance of patient encounter data with 
                        respect to such health care provider.
                            ``(ii) Compliance.--A medicaid managed care 
                        plan shall--
                                    ``(I) submit the data maintained 
                                under clause (i) to the State; or
                                    ``(II) demonstrate to the State 
                                that the data complies with managed 
                                care quality assurance guidelines 
established by the Secretary in accordance with clause (iii).
                            ``(iii) Standards.--In establishing managed 
                        care quality assurance guidelines under clause 
                        (ii)(II), the Secretary shall consider--
                                    ``(I) managed care industry 
                                standards for--
                                            ``(aa) internal quality 
                                        assurance; and
                                            ``(bb) performance 
                                        measures; and
                                    ``(II) any managed care quality 
                                standards established by the National 
                                Association of Insurance Commissioners.
                    (E) Payments to hospitals.--A medicaid managed care 
                plan shall--
                            ``(i) provide the State with assurances 
                        that payments for hospital services are 
                        reasonable and adequate to meet the costs which 
                        must be incurred by efficiently and 
                        economically operated facilities in order to 
                        provide such services to individuals enrolled 
                        with the plan under this title in conformity 
                        with applicable State and Federal laws, 
                        regulations, and quality and safety standards;
                            ``(ii) report to the State at least 
                        annually--
                                    ``(I) the rates paid to hospitals 
                                by the plan for items and services 
                                furnished to such individuals,
                                    ``(II) an explanation of the 
                                methodology used to compute such rates, 
                                and
                                    ``(III) a comparison of such rates 
                                with the rates used by the State to pay 
                                for hospital services furnished to 
                                individuals who are eligible for 
                                benefits under the program established 
                                by the State under this title but are 
                                not enrolled in a medicaid managed care 
                                plan; and
                            ``(iii) if the rates paid by the plan are 
                        lower than the rates paid by the State (as 
                        described in clause (ii)(III)), an explanation 
                        of why the rates paid by the plan nonetheless 
                        meet the standard described in clause (i).
    ``(d) Due Process Requirements for Eligible Managed Care 
Providers.--
            ``(1) Denial of or unreasonable delay in determining 
        coverage as grounds for hearing.--If an eligible managed care 
        provider--
                    ``(A) denies coverage of or payment for medical 
                assistance with respect to an enrollee who is eligible 
                for such assistance under the State plan under this 
                title; or
                    ``(B) fails to make any eligibility or coverage 
                determination sought by an enrollee or, in the case of 
                a medicaid managed care plan, by a participating health 
                care provider or enrollee, in a timely manner, 
                depending upon the urgency of the situation, the 
                enrollee or the health care provider furnishing such 
                assistance to the enrollee (as applicable) may obtain a 
                hearing before the State agency administering the State 
                plan under this title in accordance with section 
                1902(a)(3), but only, with respect to a medicaid 
                managed care plan, after completion of the internal 
                grievance procedure established by the plan under 
                subsection (c)(6)(B).
            ``(2) Completion of internal grievance procedure.--Nothing 
        in this subsection shall require completion of an internal 
        grievance procedure if such procedure does not exist or if the 
        procedure does not provide for timely review of health needs 
        considered by the enrollee's health care provider to be of an 
        urgent nature.
    ``(e) Miscellaneous.--
            ``(1) Protecting enrollees against the insolvency of 
        eligible managed care providers and against the failure of the 
        state to pay such providers.--Each eligible managed care 
        provider shall provide that an individual eligible for medical 
        assistance under the State plan under this title who is 
        enrolled with the provider may not be held liable--
                    ``(A) for the debts of the eligible managed care 
                provider, in the event of the provider's insolvency;
                    ``(B) for services provided to the individ- ual--
                            ``(i) in the event of the provider failing 
                        to receive payment from the State for such 
                        services; or
                            ``(ii) in the event of a health care 
                        provider with a contractual or other 
                        arrangement with the eligible managed care 
                        provider failing to receive payment from the 
                        State or the eligible managed care provider for 
                        such services; or
                    ``(C) for the debts of any health care provider 
                with a contractual or other arrangement with the 
                provider to provide services to the individual, in the 
                event of the insolvency of the health care provider.
            ``(2) Treatment of children with special health care 
        needs.--
                    ``(A) In general.--In the case of an enrollee of an 
                eligible managed care provider who is a child with 
                special health care needs--
                            ``(i) if any medical assistance specified 
                        in the contract with the State is identified in 
                        a treatment plan prepared for the enrollee by a 
                        program described in subparagraph (C), the 
                        eligible managed care provider shall provide 
                        (or arrange to be provided) such assistance in 
                        accordance with the treatment plan either--
                                    ``(I) by referring the enrollee to 
                                a pediatric health care provider who is 
                                trained and experienced in the 
                                provision of such assistance and who 
                                has a contract with the eligible 
                                managed care provider to provide such 
                                assistance; or
                                    ``(II) if appropriate services are 
                                not available through the eligible 
                                managed care provider, permitting such 
                                enrollee to seek appropriate specialty 
                                services from pediatric health care 
                                providers outside of or apart from the 
                                eligible managed care provider; and
                            ``(ii) the eligible managed care provider 
                        shall require each health care provider with 
                        whom the eligible managed care provider has 
                        entered into an agreement to provide medical 
                        assistance to enrollees to furnish the medical 
                        assistance specified in such enrollee's 
                        treatment plan to the extent the health care 
                        provider is able to carry out such treatment 
                        plan.
                    ``(B) Prior authorization.--An enrollee referred 
                for treatment under subparagraph (A)(i)(I), or 
                permitted to seek treatment outside of or apart from 
                the eligible managed care provider under subparagraph 
                (A)(i)(II) shall be deemed to have obtained any prior 
                authorization required by the provider.
                    ``(C) Child with special health care needs.--For 
                purposes of subparagraph (A), a child with special 
                health care needs is a child who is receiving services 
                under--
                            ``(i) a program administered under part B 
                        or part H of the Individuals with Disabilities 
                        Education Act;
                            ``(ii) a program for children with special 
                        health care needs under title V;
                            ``(iii) a program under part B or part D of 
                        title IV; or
                            ``(iv) any other program for children with 
                        special health care needs identified by the 
                        Secretary.
            ``(3) Physician incentive plans.--Each medicaid managed 
        care plan shall require that any physician incentive plan 
        covering physicians who are participating in the medicaid 
managed care plan shall meet the requirements of section 1876(i)(8).
            ``(4) Incentives for high quality eligible managed care 
        providers.--The Secretary and the State may establish a program 
        to reward, through public recognition, incentive payments, or 
        enrollment of additional individuals (or combinations of such 
        rewards), eligible managed care providers that provide the 
        highest quality care to individuals eligible for medical 
        assistance under the State plan under this title who are 
        enrolled with such providers. For purposes of section 
        1903(a)(7), proper expenses incurred by a State in carrying out 
        such a program shall be considered to be expenses necessary for 
        the proper and efficient administration of the State plan under 
        this title.''.
    (d) Clarification of Application of FFP Denial Rules to Payments 
Made Pursuant to Medicaid Managed Care Plans.--Section 1903(i) of such 
Act (42 U.S.C. 1396b(i)) is amended by adding at the end the following 
sentence: ``Paragraphs (1)(A), (1)(B), (2), (5), and (12) shall apply 
with respect to items or services furnished and amounts expended by or 
through an eligible managed care provider (as defined in section 
1933(a)(1)) in the same manner as such paragraphs apply to items or 
services furnished and amounts expended directly by the State.''.
    (e) Clarification of Certification Requirements for Physicians 
Providing Services to Children and Pregnant Women.--Section 1903(i)(12) 
of such Act (42 U.S.C. 1396b(i)(12)) is amended --
            (1) in subparagraph (A)(i), to read as follows:
                            ``(i) is certified in family practice or 
                        pediatrics by the medical specialty board 
                        recognized by the American Board of Medical 
                        Specialties for family practice or pediatrics 
                        or is certified in general practice or 
                        pediatrics by the medical specialty board 
                        recognized by the American Osteopathic 
                        Association,'';
            (2) in subparagraph (B)(i), to read as follows:
                            ``(i) is certified in family practice or 
                        obstetrics by the medical specialty board 
                        recognized by the American Board of Medical 
                        Specialties for family practice or obstetrics 
                        or is certified in family practice or 
                        obstetrics by the medical specialty board 
                        recognized by the American Osteopathic 
                        Association,''; and
            (3) in both subparagraphs (A) and (B) --
                    (A) by striking ``or'' at the end of clause (v);
                    (B) by redesignating clause (vi) as clause (vii); 
                and
                    (C) by inserting after clause (v) the following new 
                clause:
                            ``(vi) delivers such services in the 
                        emergency department of a hospital 
                        participating in the State plan approved under 
                        this title, or''.

SEC. 7103. ADDITIONAL REQUIREMENTS FOR MEDICAID MANAGED CARE PLANS.

    Section 1933 of the Social Security Act, as added by section 
7102(c)(2), is amended --
            (1) by redesignating subsections (d) and (e) as subsections 
        (e) and (f), respectively; and
            (2) by inserting after subsection (c) the following new 
        subsection:
    ``(d) Additional Requirements for Medicaid Managed Care Plans.--
            ``(1) Demonstration of adequate capacity and services.--
                    ``(A) In general.--Subject to subparagraph (C), 
                each medicaid managed care plan shall provide the State 
                and the Secretary with adequate assurances (as 
                determined by the Secretary) that the plan, with 
                respect to a service area --
                            ``(i) has the capacity to serve the 
                        expected enrollment in such service area;
                            ``(ii) offers an appropriate range of 
                        services for the population expected to be 
                        enrolled in such service area, including 
                        transportation services and translation 
                        services consisting of the principal languages 
                        spoken in the service area;
                            ``(iii) maintains sufficient numbers of 
                        providers of services included in the contract 
                        with the State to ensure that services are 
                        available to individuals receiving medical 
                        assistance and enrolled in the plan to the same 
                        extent that such services are available to 
                        individuals enrolled in the plan who are not 
                        recipients of medical assistance under the 
                        State plan under this title;
                            ``(iv) maintains extended hours of 
                        operation with respect to primary care services 
                        that are beyond those maintained during a 
                        normal business day;
                            ``(v) provides preventive and primary care 
                        services in locations that are readily 
                        accessible to members of the community; and
                            ``(vi) provides information concerning 
                        educational, social, health, and nutritional 
                        services offered by other programs for which 
                        enrollees may be eligible.
                            ``(vii) complies with such other 
                        requirements relating to access to care as the 
                        Secretary or the State may impose.
                    ``(B) Proof of adequate primary care capacity and 
                services.--Subject to subparagraph (C), a medicaid 
                managed care plan that contracts with a reasonable 
                number of primary care providers (as determined by the 
                Secretary) and whose primary care membership includes a 
                reasonable number (as so determined) of the following 
                providers will be deemed to have satisfied the 
                requirements of subparagraph (A):
                            ``(i) Rural health clinics, as defined in 
                        section 1905(l)(1).
                            ``(ii) Federally-qualified health centers, 
                        as defined in section 1905(l)(2)(B).
                            ``(iii) Clinics which are eligible to 
                        receive payment for services provided under 
                        title X of the Public Health Service Act.
                    ``(C) Sufficient providers of specialized 
                services.--Notwithstanding subparagraphs (A) and (B), a 
                medicaid managed care plan may not be considered to 
                have satisfied the requirements of subparagraph (A) if 
                the plan does not have a sufficient number (as 
                determined by the Secretary) of providers of 
                specialized services, including perinatal and pediatric 
                specialty care, to ensure that such services are 
                available and accessible.
            ``(2) Written provider participation agreements for certain 
        providers.--Each medicaid managed care plan that enters into a 
        written provider participation agreement with a provider 
        described in paragraph (1)(B) shall --
                    ``(A) include terms and conditions that are no more 
                restrictive than the terms and conditions that the 
                medicaid managed care plan includes in its agreements 
                with other participating providers with respect to --
                            ``(i) the scope of covered services for 
                        which payment is made to the provider;
                            ``(ii) the assignment of enrollees by the 
                        plan to the provider;
                            ``(iii) the limitation on financial risk or 
                        availability of financial incentives to the 
                        provider;
                            ``(iv) accessibility of care;
                            ``(v) professional credentialing and 
                        recredentialing;
                            ``(vi) licensure;
                            ``(vii) quality and utilization management;
                            ``(viii) confidentiality of patient 
                        records;
                            ``(ix) grievance procedures; and
                            ``(x) indemnification arrangements between 
                        the plans and providers; and
                    ``(B) provide for payment to the provider on a 
                basis that is comparable to the basis on which other 
                providers are paid.''.

SEC. 7104. PREVENTING FRAUD IN MEDICAID MANAGED CARE.

    (a) In General.--Section 1933 of the Social Security Act, as added 
by section 7102(c)(2) and amended by section 7103, is amended--
            (1) by redesignating subsection (f) as subsection (g); and
            (2) by inserting after subsection (e) the following new 
        subsection:
    ``(f) Anti-Fraud Provisions.--
            ``(1) Provisions applicable to eligible managed care 
        providers.--
                    ``(A) Prohibiting affiliations with individuals 
                debarred by Federal agencies.--
                            ``(i) In general.--An eligible managed care 
                        provider may not knowingly--
                                    ``(I) have a person described in 
                                clause (iii) as a director, officer, 
                                partner, or person with beneficial 
                                ownership of more than 5 percent of the 
                                plan's equity; or
                                    ``(II) have an employment, 
                                consulting, or other agreement with a 
                                person described in clause (iii) for 
                                the provision of items and services 
                                that are significant and material to 
                                the organization's obligations under 
                                its contract with the State.
                            ``(ii) Effect of noncompliance.--If a State 
                        finds that an eligible managed care provider is 
                        not in compliance with subclause (I) or (II) of 
                        clause (i), the State--
                                    ``(I) shall notify the Secretary of 
                                such noncompliance;
                                    ``(II) may continue an existing 
                                agreement with the provider unless the 
                                Secretary (in consultation with the 
                                Inspector General of the Department of 
                                Health and Human Services) directs 
                                otherwise; and
                                    ``(III) may not renew or otherwise 
                                extend the duration of an existing 
                                agreement with the provider unless the 
                                Secretary (in consultation with the 
                                Inspector General of the Department of 
                                Health and Human Services) provides to 
                                the State and to the Congress a written 
                                statement describing compelling reasons 
                                that exist for renewing or extending 
                                the agreement.
                            ``(iii) Persons described.--A person is 
                        described in this clause if such person--
                                    ``(I) is debarred or suspended by 
                                the Federal Government, pursuant to the 
                                Federal acquisition regulation, from 
                                Government contracting and 
                                subcontracting;
                                    ``(II) is an affiliate (within the 
                                meaning of the Federal acquisition 
                                regulation) of a person described in 
                                clause (i); or
                                    ``(III) is excluded from 
                                participation in any program under 
                                title XVIII or any State health care 
                                program, as defined in section 1128(h).
                    ``(B) Restrictions on marketing.--
                            ``(i) Distribution of materials.--
                                    ``(I) In general.--An eligible 
                                managed care provider may not 
                                distribute marketing materials within 
                                any State--
                                            ``(aa) without the prior 
                                        approval of the State; and
                                            ``(bb) that contain false 
                                        or materially misleading 
                                        information.
                                    ``(II) Prohibition.--The State may 
                                not enter into or renew a contract with 
                                an eligible managed care provider for 
                                the provision of services to 
                                individuals enrolled under the State 
                                plan under this title if the State 
                                determines that the provider 
                                intentionally distributed false or 
                                materially misleading information in 
                                violation of subclause (I)(bb).
                            ``(ii) Service market.--An eligible managed 
                        care provider shall distribute marketing 
                        materials to the entire service area of such 
                        provider.
                            ``(iii) Prohibition of tie-ins.--An 
                        eligible managed care provider, or any agency 
                        of such provider, may not seek to influence an 
                        individual's enrollment with the provider in 
                        conjunction with the sale of any other 
                        insurance.
                            ``(iv) Prohibiting marketing fraud.--Each 
                        eligible managed care provider shall comply 
                        with such procedures and conditions as the 
                        Secretary prescribes in order to ensure that, 
                        before an individual is enrolled with the 
                        provider, the individual is provided accurate 
                        and sufficient information to make an informed 
                        decision whether or not to enroll.
            ``(2) Provisions applicable only to medicaid managed care 
        plans.--
                    ``(A) State conflict-of-interest safeguards in 
                medicaid risk contracting.--A medicaid managed care 
                plan may not enter into a contract with any State under 
                section 1932(a)(1)(B) unless the State has in effect 
                conflict-of-interest safeguards with respect to 
                officers and employees of the State with 
                responsibilities relating to contracts with such plans 
                or to the default enrollment process described in 
                section 1932(a)(1)(D)(iv) that are at least as 
                effective as the Federal safeguards provided under 
                section 27 of the Office of Federal Procurement Policy 
                Act (41 U.S.C. 423), against conflicts of interest that 
                apply with respect to Federal procurement officials 
                with comparable responsibilities with respect to such 
                contracts.
                    ``(B) Requiring disclosure of financial 
                information.--In addition to any requirements 
                applicable under section 1902(a)(27) or 1902(a)(35), a 
                medicaid managed care plan shall--
                            ``(i) report to the State (and to the 
                        Secretary upon the Secretary's request) such 
                        financial information as the State or the 
                        Secretary may require to demonstrate that--
                                    ``(I) the plan has the ability to 
                                bear the risk of potential financial 
                                losses and otherwise has a fiscally 
                                sound operation;
                                    ``(II) the plan uses the funds paid 
                                to it by the State and the Secretary 
                                for activities consistent with the 
                                requirements of this title and the 
                                contract between the State and plan; 
                                and
                                    ``(III) the plan does not place an 
                                individual physician, physician group, 
                                or other health care provider at 
                                substantial risk (as determined by the 
                                Secretary) for services not provided by 
                                such physician, group, or health care 
                                provider, by providing adequate 
                                protection (as determined by the 
                                Secretary) to limit the liability of 
                                such physician, group, or health care 
                                provider, through measures such as stop 
loss insurance or appropriate risk corridors;
                            ``(ii) agree 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 plan (and 
                        of any subcontractor) relating to the 
                        information reported pursuant to clause (i) and 
                        any information required to be furnished under 
                        section paragraphs (27) or (35) of section 
                        1902(a);
                            ``(iii) make available to the Secretary and 
                        the State a description of each transaction 
                        described in subparagraphs (A) through (C) of 
                        section 1318(a)(3) of the Public Health Service 
                        Act between the plan and a party in interest 
                        (as defined in section 1318(b) of such Act); 
                        and
                            ``(iv) agree to make available to its 
                        enrollees upon reasonable request --
                                    ``(I) the information reported 
                                pursuant to clause (i); and
                                    ``(II) the information required to 
                                be disclosed under sections 1124 and 
                                1126.
                    ``(C) Adequate provision against risk of 
                insolvency.--
                            ``(i) Establishment of standards.--The 
                        Secretary shall establish standards, including 
                        appropriate equity standards, under which each 
                        medicaid managed care plan shall make adequate 
                        provision against the risk of insolvency.
                            ``(ii) Consideration of other standards.--
                        In establishing the standards described in 
                        clause (i), the Secretary shall consider 
                        solvency standards applicable to eligible 
                        organizations with a risk-sharing contract 
                        under section 1876.
                            (iii) Model contract on solvency.--At the 
                        earliest practicable time after the date of 
                        enactment of this section, the Secretary shall 
                        issue guidelines and regulations concerning 
                        solvency standards for risk contracting 
                        entities and subcontractors of such risk 
                        contracting entities. Such guidelines and 
                        regulations shall take into account 
                        characteristics that may differ among risk 
                        contracting entities including whether such an 
                        entity is at risk for inpatient hospital 
                        services.
                    ``(D) Requiring report on net earnings and 
                additional benefits.--Each medicaid managed care plan 
                shall submit a report to the State and the Secretary 
                not later than 12 months after the close of a contract 
                year containing --
                            ``(i) the most recent audited financial 
                        statement of the plan's net earnings, in 
                        accordance with guidelines established by the 
                        Secretary in consultation with the States, and 
                        consistent with generally accepted accounting 
                        principles; and
                            ``(ii) a description of any benefits that 
                        are in addition to the benefits required to be 
                        provided under the contract that were provided 
                        during the contract year to members enrolled 
                        with the plan and entitled to medical 
                        assistance under the State plan under this 
                        title.''.

SEC. 7105. ASSURING ADEQUACY OF PAYMENTS TO MEDICAID MANAGED CARE PLANS 
              AND PROVIDERS.

    Title XIX of the Social Security Act, as amended by sections 7001, 
7101(a), and 7102(c), is further amended--
            (1) by redesignating section 1934 as section 1935; and
            (2) by inserting after section 1933 the following new 
        section:

  ``assuring adequacy of payments to medicaid managed care plans and 
                               providers

    ``Sec. 1934. As a condition of approval of a State plan under this 
title, a State shall--
            ``(1) find, determine, and make assurances satisfactory to 
        the Secretary that--
                    ``(A) the rates it pays medicaid managed care plans 
                for individuals eligible under the State plan are 
                reasonable and adequate to assure access to services 
                meeting professionally recognized quality standards, 
                taking into account--
                            ``(i) the items and services to which the 
                        rate applies,
                            ``(ii) the eligible population, and
                            ``(iii) the rate the State pays providers 
                        for such items and services; and
                    ``(B) the methodology used to adjust the rate 
                adequately reflects the varying risks associated with 
                individuals actually enrolling in each medicaid managed 
                care plan; and
            ``(2) report to the Secretary, at least annually, on--
                    ``(A) the rates the States pays to medicaid managed 
                care plans, and
                    ``(B) the rates medicaid managed care plans pay for 
                hospital services (and such other information as 
                medicaid managed care plans are required to submit to 
                the State pursuant to section 1933(c)(5)(E).''.

SEC. 7106. SANCTIONS FOR NONCOMPLIANCE BY ELIGIBLE MANAGED CARE 
              PROVIDERS.

    (a) Sanctions Described.--Title XIX of such Act (42 U.S.C. 1396 et 
seq.), as previously amended, is further amended --
            (1) by redesignating section 1934 as section 1935; and
            (2) by inserting after section 1934 the following new 
        section:

    ``sanctions for noncompliance by eligible managed care providers

    ``Sec. 1935. (a) Use of Intermediate Sanctions by the State To 
Enforce Requirements.--Each State shall establish intermediate 
sanctions, which may include any of the types described in subsection 
(b) other than the termination of a contract with an eligible managed 
care provider, which the State may impose against an eligible managed 
care provider with a contract under section 1932(a)(1)(B) if the 
provider --
            ``(1) fails substantially to provide medically necessary 
        items and services that are required (under law or under such 
        provider's contract with the State) to be provided to an 
        enrollee covered under the contract, if the failure has 
        adversely affected (or has a substantial likelihood of 
        adversely affecting) the enrollee;
            ``(2) imposes premiums on enrollees in excess of the 
        premiums permitted under this title;
            ``(3) acts to discriminate among enrollees on the basis of 
        their health status or requirements for health care services, 
        including expulsion or refusal to reenroll an individual, 
        except as permitted by sections 1932 and 1933, or engaging in 
        any practice that would reasonably be expected to have the 
        effect of denying or discouraging enrollment with the provider 
        by eligible individuals whose medical condition or history 
        indicates a need for substantial future medical services;
            ``(4) misrepresents or falsifies information that is 
        furnished
                    ``(A) to the Secretary or the State under section 
                1932 or 1933; or
                    ``(B) to an enrollee, potential enrollee, or a 
                health care provider under such sections; or
            ``(5) fails to comply with the requirements of section 
        1876(i)(8).
    ``(b) Intermediate Sanctions.--The sanctions described in this 
subsection are as follows:
            ``(1) Civil money penalties as follows:
                    ``(A) Except as provided in subparagraph (B), (C), 
                or (D), not more than $25,000 for each determination 
                under subsection (a).
                    ``(B) With respect to a determination under 
                paragraph (3) or (4)(A) of subsection (a), not more 
                than $100,000 for each such determination.
                    ``(C) With respect to a determination under 
                subsection (a)(2), double the excess amount charged in 
                violation of such subsection (and the excess amount 
                charged shall be deducted from the penalty and returned 
                to the individual concerned).
                    ``(D) Subject to subparagraph (B), with respect to 
                a determination under subsection (a)(3), $15,000 for 
                each individual not enrolled as a result of a practice 
                described in such subsection.
            ``(2) The appointment of temporary management to oversee 
        the operation of the eligible managed care provider and to 
        assure the health of the provider's enrollees, if there is a 
        need for temporary management while--
                    ``(A) there is an orderly termination or 
                reorganization of the eligible managed care provider; 
                or
                    ``(B) improvements are made to remedy the 
                violations found under subsection (a), except that 
                temporary management under this paragraph may not be 
                terminated until the State has determined that the 
                eligible managed care provider has the capability to 
                ensure that the violations shall not recur.
            ``(3) Permitting individuals enrolled with the eligible 
        managed care provider to terminate enrollment without cause, 
        and notifying such individuals of such right to terminate 
        enrollment.
    ``(c) Treatment of Chronic Substandard Providers.--In the case of 
an eligible managed care provider which has repeatedly failed to meet 
the requirements of section 1932 or 1933, the State shall (regardless 
of what other sanctions are provided) impose the sanctions described in 
paragraphs (2) and (3) of subsection (b).
    ``(d) Authority To Terminate Contract.--In the case of an eligible 
managed care provider which has failed to meet the requirements of 
section 1932 or 1933, the State shall have the authority to terminate 
its contract with such provider under section 1932(a)(1)(B) and to 
enroll such provider's enrollees with other eligible managed care 
providers (or to permit such enrollees to receive medical assistance 
under the State plan under this title other than through an eligible 
managed care provider).
    ``(e) Availability of Sanctions to the Secretary.--
            ``(1) Intermediate sanctions.--In addition to the sanctions 
        described in paragraph (2) and any other sanctions available 
        under law, the Secretary may provide for any of the sanctions 
        described in subsection (b) if the Secretary determines that--
                    ``(A) an eligible managed care provider with a 
                contract under section 1932(a)(1)(B) fails to meet any 
                of the requirements of section 1932 or 1933; and
                    ``(B) the State has failed to act appropriately to 
                address such failure.
            ``(2) Denial of payments to the state.--The Secretary may 
        deny payments to the State for medical assistance furnished 
        under the contract under section 1932(a)(1)(B) for individuals 
        enrolled after the date the Secretary notifies an eligible 
        managed care provider of a determination under subsection (a) 
        and until the Secretary is satisfied that the basis for such 
        determination has been corrected and is not likely to recur.
    ``(f) Due Process for Eligible Managed Care Providers.--
            ``(1) Availability of hearing prior to termination of 
        contract.--A State may not terminate a contract with an 
        eligible managed care provider under section 1932(a)(1)(B) 
        unless the provider is provided with a hearing prior to the 
        termination.
            ``(2) Notice to enrollees of termination hearing.--A State 
        shall notify all individuals enrolled with an eligible managed 
        care provider which is the subject of a hearing to terminate 
        the provider's contract with the State of the hearing and that 
        the enrollees may immediately disenroll with the provider for 
        cause.
            ``(3) Other protections for eligible managed care providers 
        against sanctions imposed by state.--Before imposing any 
        sanction against an eligible managed care provider other than 
        termination of the provider's contract, the State shall provide 
        the provider with notice and such other due process protections 
        as the State may provide, except that a State may not provide 
        an eligible managed care provider with a pretermination hearing 
        before imposing the sanction described in subsection (b)(2).
            ``(4) Imposition of civil monetary penalties by 
        secretary.--The provisions of section 1128A (other than 
        subsections (a) and (b)) shall apply with respect to a civil 
        money penalty imposed by the Secretary under subsection (b)(1) 
        in the same manner as such provisions apply to a penalty or 
        proceeding under section 1128A.''.
    (b) Conforming Amendment Relating to Termination of Enrollment for 
Cause.--Section 1933(b)(2)(B) of the Social Security Act, as added by 
this part, is amended by inserting after ``coercion'' the following: 
``, or pursuant to the imposition against the eligible managed care 
provider of the sanction described in section 1935(b)(3),''.

SEC. 7107. REPORT ON PUBLIC HEALTH SERVICES.

    (a) In General.--Not later than January 1, 1994, the Secretary of 
Health and Human Services (in this subtitle referred to as the 
``Secretary'') shall report to the Committee on Finance of the Senate 
and the Committee on Commerce of the House of Representatives on the 
effect of risk contracting entities (as defined in section 1932(a)(3) 
of the Social Security Act) and primary care case management entities 
(as defined in section 1932(a)(1) of such Act) on the delivery of and 
payment for the services listed in subsection (f)(2)(C)(ii) of section 
1932 of such Act.
    (b) Contents of Report.--The report referred to in subsection (a) 
shall include--
            (1) information on the extent to which enrollees with risk 
        contracting entities and primary care case management programs 
        seek services at local health departments, public hospitals, 
        and other facilities that provide care without regard to a 
        patient's ability to pay;
            (2) information on the extent to which the facilities 
        described in paragraph (1) provide services to enrollees with 
        risk contracting entities and primary care case management 
        programs without receiving payment;
            (3) information on the effectiveness of systems implemented 
        by facilities described in paragraph (1) for educating such 
        enrollees on services that are available through the risk 
        contracting entities or primary care case management programs 
        with which such enrollees are enrolled;
            (4) to the extent possible, identification of the types of 
        services most frequently sought by such enrollees at such 
        facilities; and
            (5) recommendations about how to ensure the timely delivery 
        of the services listed in subsection (f)(2)(C)(ii) of 
section 1931 of the Social Security Act to enrollees of risk 
contracting entities and primary care case management entities and how 
to ensure that local health departments, public hospitals, and other 
facilities are adequately compensated for the provision of such 
services to such enrollees.

SEC. 7108. REPORT ON PAYMENTS TO HOSPITALS.

    (a) In General.--Not later than October 1 of each year, beginning 
with October 1, 1996, the Secretary and the Comptroller General shall 
analyze and submit a report to the Committee on Finance of the Senate 
and the Committee on Commerce of the House of Representatives on rates 
paid for hospital services under coordinated care programs described in 
section 1932 of the Social Security Act.
    (b) Contents of Report.--The information in the report described in 
subsection (a) shall--
            (1) be organized by State, type of hospital, type of 
        service, and
            (2) include a comparison of rates paid for hospital 
        services under coordinated care programs with rates paid for 
        hospital services furnished to individuals who are entitled to 
        benefits under a State plan under title XIX of the Social 
        Security Act and are not enrolled in such coordinated care 
        programs.
    (c) Reports by States.--Each State shall transmit to the Secretary, 
at such time and in such manner as the Secretary determines 
appropriate, the information on hospital rates submitted to such State 
under section 1932(b)(3)(P) of such Act.

SEC. 7109. CONFORMING AMENDMENTS.

    (a) Exclusion of Certain Individuals and Entities From 
Participation in Program.--Section 1128(b)(6)(C) of the Social Security 
Act (42 U.S.C. 1320a-7(b)(6)(C)) is amended--
            (1) in clause (i), by striking ``a health maintenance 
        organization (as defined in section 1903(m))'' and inserting 
        ``an eligible managed care provider, as defined in section 
        1933(a)(1),''; and
            (2) in clause (ii), by inserting ``section 1115 or'' after 
        ``approved under''.
    (b) State Plan Requirements.--Section 1902 of such Act (42 U.S.C. 
1396a) is amended--
            (1) in subsection (a)(30)(C), by striking ``section 
        1903(m)'' and inserting ``section 1932(a)(1)(B)''; and
            (2) in subsection (a)(57), by striking ``hospice program, 
        or health maintenance organization (as defined in section 
        1903(m)(1)(A))'' and inserting ``or hospice program'';
            (3) in subsection (e)(2)(A), by striking ``or with an 
        entity described in paragraph (2)(B)(iii), (2)(E), (2)(G), or
            (6) of section 1903(m) under a contract described in 
        section 1903(m)(2)(A);
            (4) in subsection (p)(2)--
                    (A) by striking ``a health maintenance organization 
                (as defined in section 1903(m))'' and inserting ``an 
                eligible managed care provider, as defined in section 
                1933(a)(1),'';
                    (B) by striking ``an organization'' and inserting 
                ``a provider''; and
                    (C) by striking ``any organization'' and inserting 
                ``any provider''; and
            (5) in subsection (w)(1), by striking ``sections 
        1903(m)(1)(A) and'' and inserting ``section''.
    (c) Payment to States.--Section 1903(w)(7)(A)(viii) of such Act (42 
U.S.C. 1396b(w)(7)(A)(viii)) is amended to read as follows:
                            ``(viii) Services of an eligible managed 
                        care provider with a contract under section 
                        1932(a)(1)(B).''.
    (d) Use of Enrollment Fees and Other Charges.--Section 1916 of such 
Act (42 U.S.C. 1396o) is amended in subsections (a)(2)(D) and (b)(2)(D) 
by striking ``a health maintenance organization (as defined in section 
1903(m))'' and inserting ``an eligible managed care provider, as 
defined in section 1933(a)(1),'' each place it appears.
    (e) Extension of Eligibility for Medical Assistance.--Section 
1925(b)(4)(D)(iv) of such Act (42 U.S.C. 1396r-6(b)(4)(D)(iv)) is 
amended to read as follows:
                            ``(iv) Enrollment with eligible managed 
                        care provider.--Enrollment of the caretaker 
                        relative and dependent children with an 
                        eligible managed care provider, as defined in 
                        section 1933(a)(1), less than 50 percent of the 
                        membership (enrolled on a prepaid basis) of 
                        which consists of individuals who are eligible 
                        to receive benefits under this title (other 
                        than because of the option offered under this 
                        clause). The option of enrollment under this 
                        clause is in addition to, and not in lieu of, 
                        any enrollment option that the State might 
                        offer under subparagraph (A)(i) with respect to 
                        receiving services through an eligible managed 
                        care provider in accordance with sections 1932, 
                        1933, and 1934.''.
    (f) Assuring Adequate Payment Levels for Obstetrical and Pediatric 
Services.--Section 1926(a) of such Act (42 U.S.C. 1396r-7(a)) is 
amended in paragraphs (1) and (2) by striking ``health maintenance 
organizations under section 1903(m)'' and inserting ``eligible managed 
care providers under contracts entered into under section 
1932(a)(1)(B)'' each place it appears.
    (g) Payment for Covered Outpatient Drugs.--Section 1927(j)(1) of 
such Act (42 U.S.C. 1396r-8(j)(1)) is amended by striking ``***Health 
Maintenance Organizations, including those organizations that contract 
under section 1903(m),'' and inserting ``health maintenance 
organizations and medicaid managed care plans, as defined in section 
1933(a)(2),''.
    (h) Demonstration Projects To Study Effect of Allowing States To 
Extend Medicaid Coverage for Certain Families.--Section 4745(a)(5)(A) 
of the Omnibus Budget Reconciliation Act of 1990 (42 U.S.C. 1396a note) 
is amended by striking ``(except section 1903(m)'' and inserting 
``(except sections 1932, 1933, and 1934)''.

SEC. 7110. EFFECTIVE DATE; STATUS OF WAIVERS.

    (a) Effective Date.--Except as provided in subsection (b), the 
amendments made by this subtitle shall apply to medical assistance 
furnished--
            (1) during quarters beginning on or after October 1, 1996; 
        or
            (2) in the case of assistance furnished under a contract 
        described in section 7102(b), during quarters beginning after 
        the earlier of--
                (A) the date of the expiration of the contract; or
                    (B) the expiration of the 1-year period which 
                begins on the date of the enactment of this Act.
    (b) Application to Waivers.--
            (1) Existing waivers.--If any waiver granted to a State 
        under section 1115 or 1915 of the Social Security Act (42 
        U.S.C. 1315, 1396n) or otherwise which relates to the provision 
        of medical assistance under a State plan under title XIX of the 
        such Act (42 U.S.C. 1396 et seq.), is in effect or approved by 
        the Secretary of Health and Human Services as of the applicable 
        effective date described in subsection (a), the amendments made 
        by this subtitle shall not apply with respect to the State 
        before the expiration (determined without regard to any 
        extensions) of the waiver to the extent such amendments are 
        inconsistent with the terms of the waiver.
            (2) Secretarial evaluation and report for existing waivers 
        and extensions.--
                    (A) Prior to approval.--On and after the applicable 
                effective date described in subsection (a), the 
                Secretary, prior to extending any waiver granted under 
                section 1115 or 1915 of the Social Security Act (42 
                U.S.C. 1315, 1396n) or otherwise which relates to the 
                provision of medical assistance under a State plan 
under title XIX of the such Act (42 U.S.C. 1396 et seq.), shall--
                            (i) conduct an evaluation of--
                                    (I) the waivers existing under such 
                                sections or other provision of law as 
                                of the date of the enactment of this 
                                Act; and
                                    (II) any applications pending, as 
                                of the date of the enactment of this 
                                Act, for extensions of waivers under 
                                such sections or other provision of 
                                law; and
                            (ii) submit a report to the Congress 
                        recommending whether the extension of a waiver 
                        under such sections or provision of law should 
                        be conditioned on the State submitting the 
                        request for an extension complying with the 
                        provisions of sections 1932, 1933, and 1934 of 
                        the Social Security Act (as added by this 
                        subtitle).
                    (B) Deemed approval.--If the Congress has not 
                enacted legislation based on a report submitted under 
                subparagraph (A)(ii) within 120 days after the date 
                such report is submitted to the Congress, the 
                recommendations contained in such report shall be 
                deemed to be approved by the Congress.

     Subtitle C--Additional Reforms of Medicaid Acute Care Program

                                                  Title VII, Subtitle C

SEC. 7201. PERMITTING INCREASED FLEXIBILITY IN MEDICAID COST-SHARING.

    (a) In General.--Subsections (a)(3) and (b)(3) of section 1916 of 
the Social Security Act (42 U.S.C. 1396o) are amended by striking 
everything that follows ``other care and services'' and inserting the 
following: ``will be established pursuant to a public schedule of 
charges and will be adjusted to reflect the income, resources, and 
family size of the individual provided the item or service.''.
    (b) Effective Date.--The amendments made by subsection (a) shall 
apply to items and services furnished on or after the first day of the 
first calendar quarter beginning after the date of the enactment of 
this Act.

SEC. 7202. LIMITS ON REQUIRED COVERAGE OF ADDITIONAL TREATMENT SERVICES 
              UNDER EPSDT.

    (a) Regulations.--The Secretary of Health and Human Services shall 
define, by regulation promulgated after consultation with States and 
organizations representing health care providers, those treatment 
services (in addition to those otherwise covered under a State plan 
under title XIX of the Social Security Act) that must be covered under 
section 1905(r)(5) of such Act.
    (b) Construction.--Nothing in subsection (a) shall be construed as 
limiting the scope of such treatment services a State may cover under 
such section.

SEC. 7203. DELAY IN APPLICATION OF NEW REQUIREMENTS.

    (a) Delay in Implementation.--
            (1) In general.--Notwithstanding any other provision of 
        law, no change in law--
                    (A) which has the effect of imposing a requirement 
                on a State under a State plan under title XIX of the 
                Social Security Act, and
                    (B) with respect to the Secretary of Health and 
                Human Services is required to issue regulations to 
                carry out such requirement,
        shall take effect until the date the Secretary promulgates such 
        regulation as a final regulation.
            (2) State option.--Except as otherwise provided by the 
        Secretary, a State may elect to have a change in a law 
        described in paragraph (1) apply with respect to the State 
        during the period (or portion thereof) in which the change 
        would have taken effect but for paragraph (1).
    (b) Prohibition of Changes in Final Regulations During a Fiscal 
Year.--
            (1) In general.--Except as provided in paragraph (2), any 
        change in a regulation of the Secretary of Health and Human 
        Services relating to the medicaid program under title XIX of 
        the Social Security Act shall not become effective until the 
        beginning of the fiscal year following the fiscal year in which 
        the change was promulgated.
            (2) State option.--Except as otherwise provided by the 
        Secretary, a State may elect to have a change in a regulation 
        described in paragraph (1) apply with respect to the State 
        during the period (or portion thereof) in which the change 
        would have taken effect but for paragraph (1).
    (c) Sense of Congress Regarding Federal Payment for New Medicaid 
Mandates.--It is the sense of Congress that if a State is required by 
future legislation to provide for additional services, eligible 
individuals, or otherwise incur additional costs under its medicaid 
program under title XIX of the Social Security Act, the Federal 
Government shall provide for full payment of any such additional costs 
for at least the first two years in which such requirement applies.

SEC. 7204. DEADLINE ON ACTION ON WAIVERS.

    (a) In General.--In considering applications for medicaid waivers--
            (1) the application shall be deemed granted unless the 
        Secretary of Health and Human Services, within ninety days 
        after the date of the submission of the application of the 
        Secretary, either denies the application in writing or informs 
        the applicant in writing with respect to any additional 
        information which is needed in order to make a final 
        determination with respect to the application, and
            (2) after the date the Secretary receives such additional 
        information, the application shall be deemed granted unless the 
        Secretary within ninety days of such date, denies such 
        application.
    (b) Medicaid Waivers.--In this section, the term ``medicaid 
waiver'' means the request of a State for a waiver of a provision of 
title XIX of the Social Security Act (or of another provision of law 
that applies to State plans under such title), and includes such a 
waiver under the authority of section 1115 or section 1915 of the 
Social Security Act or under section 222 of the Social Security 
Amendments of 1972 and section 402(a) of the Social Security Amendments 
of 1967.

       Subtitle D--National Commission on Medicaid Restructuring

                                                  Title VII, Subtitle D

SEC. 7301. ESTABLISHMENT OF COMMISSION.

    (a) In General.--There is hereby established the National 
Commission on Medicaid Restructuring (in this subtitle referred to as 
the ``Commission'').
    (b) Composition.--The Commission shall be composed as follows:
            (1) 2 federal officials.--The President shall appoint 2 
        Federal officials, one of whom the President shall designate as 
        chairperson of the Commission.
            (2) 4 members of congress.--(A) The Speaker of the House of 
        Representatives shall appoint one Member of the House as a 
        member.
            (B) The minority leader of the House of Representatives 
        shall appoint one Member of the House as a member.
            (C) The majority leader of the Senate shall appoint one 
        Member of the Senate as a member.
            (D) The minority leader of the Senate shall appoint one 
        Member of the Senate as a member.
            (3) 6 state government representatives.--(A) The majority 
        leaders of the House of Representatives and the Senate shall 
        jointly appoint 3 individuals who are governors, State 
        legislators, or State medicaid officials.
            (B) The minority leaders of the House of Representatives 
        and the Senate shall jointly appoint 3 individuals who are 
        governors, State legislators, or State medicaid officials.
            (4) 6 experts.--(A) The majority leaders of the House of 
        Representatives and the Senate shall jointly appoint 4 
        individuals who are not officials of the Federal or State 
        governments and who have expertise in a health-related field, 
        such as medicine, public health, or delivery and financing of 
        health care services.
            (B) The President shall appoint 2 individuals who are not 
        officials of the Federal or State governments and who have 
        expertise in a health-related field, such as medicine, public 
        health, or delivery and financing of health care services.
    (c) Initial Appointment.--Members of the Commission shall first be 
appointed by not later than February 1, 1996.
    (d) Compensation and Expenses.--
            (1) Compensation.--Each member of the Commission shall 
        serve without compensation.
            (2) Travel expenses.--Members of the Commission shall be 
        allowed travel expenses, including per diem in lieu of 
        subsistence, at rates authorized for employees of agencies 
        under subchapter I of chapter 57 of title 5, United States 
        Code, while away from their homes or regular places of business 
        in the performance of services for the Commission.

SEC. 7302. DUTIES OF COMMISSION.

    (a) Study of Medicaid Program.--
            (1) In general.--The Commission shall study and make 
        recommendations to the Congress, the President, and the 
        Secretary regarding the need for changes (in addition to the 
        changes effected under this title) in the laws and regulations 
        regarding the medicaid program under title XIX of the Social 
        Security Act.
            (2) Specific concerns.--The Commission shall specifically 
        address each of the following:
                    (A) Changes needed to ensure adequate access to 
                health care for low-income individuals.
                    (B) Promotion of quality care.
                    (C) Deterrence of fraud and abuse.
                    (D) Providing States with additional flexibility in 
                implementing their medicaid plans.
                    (E) Methods of containing Federal and State costs.
    (b) Reports.--
            (1) First report.--The Commission shall issue a first 
        report to Congress by not later than December 31, 1996.
            (2) Subsequent reports.--The Commission shall issue 
        subsequent reports to Congress by not later than December 31, 
        1997, and December 31, 1998.

SEC. 7303. ADMINISTRATION.

    (a) Appointment of Staff.--
            (1) Executive director.--The Commission shall have an 
        Executive Director who shall be appointed by the Chairperson 
        with the approval of the Commission. The Executive Director 
        shall be paid at a rate not to exceed the rate of basic pay 
        payable for level III of the Executive Schedule.
            (2) Staff.--With the approval of the Commission, the 
        Executive Director may appoint and determine the compensation 
        of such staff as may be necessary to carry out the duties of 
        the Commission. Such appointments and compensation may be made 
        without regard to the provisions of title 5, United States 
        Code, that govern appointments in the competitive services, and 
        the provisions of chapter 51 and subchapter III of chapter 53 
        of such title that relate to classifications and the General 
        Schedule pay rates.
            (3) Consultants.--The Commission may procure such temporary 
        and intermittent services of consultants under section 3109(b) 
        of title 5, United States Code, as the Commission determines to 
        be necessary to carry out the duties of the Commission.
    (b) Provision of Administrative Support Services by HHS.--Upon the 
request of the Commission, the Secretary of Health and Human Services 
shall provide to the Commission on a reimbursable basis such 
administrative support services as the Commission may request.

SEC. 7304. AUTHORIZATION OF APPROPRIATIONS.

    There are authorized to be appropriated to carry out this subtitle 
$3,000,000 for fiscal year 1996, $4,000,000 for each of fiscal years 
1997 and 1998, and $2,000,000 for fiscal year 1999.

SEC. 7305. TERMINATION.

    The Commission shall terminate on December 31, 1998.

      Subtitle E--Restrictions on Disproportionate Share Payments

SEC. 7401. REFORMING DISPROPORTIONATE SHARE PAYMENTS UNDER STATE 
              MEDICAID PROGRAMS.

    (a) Targeting Payments.--Section 1923 of the Social Security Act 
(42 U.S.C.1396r-3) is amended--
            (1) in subsection (a)(1)--

                                                  Title VII, Subtitle E

                    (A) by redesignating subparagraphs (A) and (B) as 
                clauses (i) and (ii),
                    (B) by striking ``(1)'' and inserting ``(1)(A)'',
                    (C) in clause (i) (as so redesignated) by striking 
                ``(b)(1)'' and inserting ``(b)(1)(A)'', and
                    (D) by adding at the end the following:
    ``(B) A State plan under this title shall not be considered to meet 
the requirement of section 1902(a)(13)(A) (insofar as it requires 
payments to hospitals to take into account the situation of hospitals 
that serve a disproportionate number of low-income patients with 
special needs), as of July 1, 1996, unless the State has submitted to 
the Secretary, by not later than such date, an amendment to such plan 
that utilizes the definition of such hospitals specified in subsection 
(b)(1)(B) in lieu of the definition established by the State under 
subparagraph (a)(i).'';
            (2) in subsection (a)(2)(A)--
                    (A) by inserting ``(i)'' after ``(2)(A)'',
                    (B) by striking ``paragraph (1)'' and inserting 
                ``paragraph (1)(A)(i)'', and
                    (C) by adding at the end the following:
    ``(ii) In order to be considered to have met such requirement of 
section 1902(a)(13)(A) as of July 1, 1996, the State must submit to the 
Secretary by not later than April 1, 1996, the State plan amendment 
described in paragraph (1)(B), consistent with subsection (c), 
effective for inpatient hospital services furnished on or after July 1, 
1996.'';
            (3) in subsection (b)--
                    (A) in the heading, by striking ``Hospitals Deemed 
                Disproportionate Share'' and inserting 
                ``Disproportionate Share Hospitals'',
                    (B) in paragraph (1)--
                            (i) by redesignating subparagraphs (A) and 
                        (B) as clauses (i) and (ii),
                            (ii) by striking ``(1) For purposes of 
                        subsection (a)(1)'' and inserting ``(1)(A) For 
                        purposes of subsection (a)(1)(A)'', and
                            (iii) by adding at the end the following:
    ``(B) For purposes of subsection (a)(1)(B), a hospital that meets 
the requirements of subsection (d) is a disproportionate share hospital 
only if--
            ``(i) in the case of a hospital that is not described in 
        subsection (d)(2)(A)(i), the hospital's low-income utilization 
        rate (as defined in paragraph (3)) exceeds 25 percent; or
            ``(ii) in the case of a hospital that is described in 
        subsection (d)(2)(A)(i)--
                    ``(I) the hospital meets the requirement of clause 
                (i), or
                    ``(II) the hospital's medicaid inpatient 
                utilization rate (as defined in paragraph (2)) exceeds 
                20 percent.'';
                    (C) in paragraph (2) by striking ``(1)(A)'' and 
                inserting ``(1)'',
                    (D) in paragraph (3) by striking ``(1)(B)'' and 
                inserting ``(1)'', and
                    (E) by striking paragraph (4);
            (4) in subsection (c)--
                    (A) in paragraph (2), by striking ``subparagraph 
                (A) or (B) of subsection (b)(1)'' and inserting 
                ``clause (i) or (ii) of subsection (b)(1)(A)'',
                    (B) by striking paragraph (3), and
                    (C) in the matter following paragraph (3)--
                            (i) by striking ``(1)(B)'' each place it 
                        appears and inserting ``(1)(A)(ii)'', and
                            (ii) by striking ``(2)(A)'' each place it 
                        appears and inserting ``(2)(A)(i)'' ; and
            (5) in subsection (e)--
                    (A) in paragraph (1)(C), by striking ``meets the 
                requirement of subsection (d)(3)'' and inserting 
                ``makes payments under this section only to hospitals 
                described in subsection (b)(1)(B)'', and
                    (B) in paragraph (2)--
                            (i) by inserting ``and'' at the end of 
                        subparagraph (B), and
                            (ii) by striking subparagraph (C).
    (b) Direct Payment by State.--Section 1923(a) of such Act (42 
U.S.C. 1396r-4(a)), as amended by subsection (a), is further amended--
            (1) in paragraph (1), by adding at the end the following
    ``(C) A State plan under this title shall not be considered to meet 
the requirement of section 1902(a)(13)(A) (insofar as it requires 
payments to hospitals to take into account the situation of hospitals 
that serve a disproportionate number of low-income patients with 
special needs), as of July 1, 1996, unless the State provides that any 
payments made under this section with respect to individuals who are--
            ``(i) entitled to benefits under the State plan, and
            ``(ii) enrolled with a health maintenance organization or 
        other managed care plan,
are, at the option of the hospital, made directly to such hospital by 
the State.''; and
            (2) in paragraph (2)(A)(ii), by striking ``amendment 
        described in paragraph (1)(B)'' and inserting ``amendments 
        described in subparagraphs (B) and (C) of paragraph (1)''.
    (c) Adjustment to National DSH Limit; State Allocations.--
            (1) In general.--Section 1923(f) (42 U.S.C. 1396r-4(f)) is 
        amended--
                    (A) in paragraph (1)(B), by striking ``for a fiscal 
                year'' and all that follows and inserting the 
                following: ``for--
                            ``(i) each of fiscal years 1997 and 1998, 
                        is $6.5 billion,
                            ``(ii) each of fiscal years 1999 and 2000, 
                        is $5.5 billion,
                            ``(iii) each succeeding fiscal year is $5.0 
                        billion.'';
                    (B) by striking subparagraphs (D) and (E) of 
                paragraph (1); and
                    (C) by amending paragraph (2) to read as follows:
            ``(2) Determination of state dsh allotments.--
                    ``(A) In general.--The State DSH allotment for a 
                fiscal year is equal to the State's share (as 
                determined under subparagraph (B)) of the national DSH 
                limit for the fiscal year established under paragraph 
                (1)(B).
                    ``(B) State share.--For purposes of subparagraph 
                (A), the `State share' is equal to the ratio of--
                            ``(i) the total number low-income patient 
                        days (as defined in subparagraph (C)) for all 
                        hospitals described in subsection (b)(1)(B) in 
                        the State for the fiscal year, to
                            ``(ii) the total number of such low-income 
                        patient days for all such hospitals for all 
                        States for the fiscal year.
                The Secretary shall determine the State share based on 
                the Secretary's best estimate of patient days and 
                hospitals.
                    ``(C) Low-income patient day.--
                            ``(i) In general.--For purposes of this 
                        paragraph, the term `low-income patient day' 
                        means, for a hospital, a patient day (as 
                        defined in clause (ii)) attributable to an 
                        individual who either is eligible for medical 
                        assistance under the State plan or has no 
                        health insurance (or other source of third 
                        party coverage) for services furnished by the 
                        hospital.
                            ``(ii) Patient days defined.--For purposes 
                        of this subparagraph, the term `patient day' 
                        includes each day in which--
                                    ``(I) an individual (including a 
                                new-born) is an inpatient in the 
                                hospital, whether or not the individual 
                                is in a specialized ward and whether or 
                                not the individual remains in the 
                                hospital for lack of suitable placement 
                                elsewhere, and
                                    ``(II) an individual makes one or 
                                more outpatient visits to the 
                                hospital.''.
            (2) Effective date.--The amendments made by paragraph (1) 
        shall apply to fiscal years beginning with fiscal year 1997.
    (d) Effective Date.--Except as provided in subsection (c)(2), the 
amendments made by this section shall apply to payments to States under 
section 1903(a) of the Social Security Act for payments to hospitals 
made under State plans after--
            (1) July 1, 1996, or
            (2) in the case of a State with a State legislature that is 
        not scheduled to have a regular legislative session in 1996, 
        July 1, 1997.

                      Subtitle F--Fraud Reduction

                                                  Title VII, Subtitle F

SEC. 7501. MONITORING PAYMENTS FOR DUAL ELIGIBLES.

    The Administrator of the Health Care Financing Administration shall 
develop mechanisms to better monitor and prevent inappropriate payments 
under the medicaid program in the case of individuals who are dually 
eligible for benefits under such program and under the medicare 
program.

SEC. 7502. IMPROVED IDENTIFICATION SYSTEMS.

    The Administrator of the Health Care Financing Administration shall 
develop improved mechanisms, such as picture identification documents 
and smart documents, to provide methods of improved identification and 
tracking of beneficiaries and providers that perpetrate fraud against 
the medicaid program.

                          TITLE VIII--MEDICARE

                                                             Title VIII

SEC. 8000. SHORT TITLE; REFERENCES IN TITLE.

    (a) Short Title of Title.--This title may be cited as the 
``Medicare Preservation Act of 1995''.
    (b) Amendments to Social Security Act.--Except as otherwise 
specifically provided, whenever in this title an amendment is expressed 
in terms of an amendment to or repeal of a section or other provision, 
the reference shall be considered to be made to that section or other 
provision of the Social Security Act.
    (c) References to OBRA.--In this title, the terms ``OBRA-1986'', 
``OBRA-1987'', ``OBRA-1989'', ``OBRA-1990'', and ``OBRA-1993'' refer to 
the Omnibus Budget Reconciliation Act of 1986 (Public Law 99-509), the 
Omnibus Budget Reconciliation Act of 1987 (Public Law 100-203), the 
Omnibus Budget Reconciliation Act of 1989 (Public Law 101-239), the 
Omnibus Budget Reconciliation Act of 1990 (Public Law 101-508), and the 
Omnibus Budget Reconciliation Act of 1993 (Public Law 103-66), 
respectively.

                  Subtitle A--Medicare Choice Program

                                                 Title VIII, Subtitle A

          PART 1--INCREASING CHOICE UNDER THE MEDICARE PROGRAM

SEC. 8001. INCREASING CHOICE UNDER MEDICARE.

    (a) In General.--Title XVIII is amended by inserting after section 
1804 the following new section:

                   ``providing for choice of coverage

    ``Sec. 1805. (a) Choice of Coverage.--
            ``(1) In general.--Subject to the provisions of this 
        section, every individual who is entitled to benefits under 
        part A and enrolled under part B shall elect to receive 
        benefits under this title through one of the following:
                    ``(A) Through fee-for-service system.--Through the 
                provisions of parts A and B.
                    ``(B) Through a medicare choice product.--Through a 
                Medicare Choice product (as defined in paragraph (2)), 
                which may be--
                            ``(i) a product offered by a provider-
                        sponsored organization,
                            ``(ii) a product offered by an organization 
                        that is a union, Taft-Hartley plan, or 
                        association, or
                            ``(iii) a product providing for benefits on 
                        a fee-for-service or other basis.
                Such a product may be a high deductible/medisave 
                product (and a contribution into a Medicare Choice 
                medical savings account (MSA)) under the demonstration 
                project provided under section 1859.
            ``(2) Medicare choice product defined.--For purposes of 
        this section and part C, the term `Medicare Choice product' 
        means health benefits coverage offered under a policy, 
        contract, or plan by a Medicare Choice organization (as defined 
        in section 1851(a)) pursuant to and in accordance with a 
        contract under section 1858.
            ``(3) Terminology relating to options.--For purposes of 
        this section and part C--
                    ``(A) Non-medicare-choice option.--An individual 
                who has made the election described in paragraph (1)(A) 
                is considered to have elected the `Non-Medicare Choice 
                option'.
                    ``(B) Medicare choice option.--An individual who 
                has made the election described in paragraph (1)(B) to 
                obtain coverage through a Medicare Choice product is 
                considered to have elected the `Medicare Choice option' 
                for that product.
    ``(b) Special Rules.--
            ``(1) Residence requirement.--Except as the Secretary may 
        otherwise provide, an individual is eligible to elect a 
        Medicare Choice product offered by a Medicare Choice 
        organization only if the organization in relation to the 
        product serves the geographic area in which the individual 
        resides.
            ``(2) Affiliation requirements for certain products.--
                    ``(A) In general.--Subject to subparagraph (B), an 
                individual is eligible to elect a Medicare Choice 
                product offered by a limited enrollment Medicare Choice 
                organization (as defined in section 1852(c)(4)(D)) only 
                if--
                            ``(i) the individual is eligible under 
                        section 1852(c)(4) to make such election, and
                            ``(ii) in the case of a Medicare Choice 
                        organization that is a union sponsor or Taft-
                        Hartley sponsor (as defined in section 
                        1852(c)(4)), the individual elected under this 
                        section a Medicare Choice product offered by 
                        the sponsor during the first enrollment period 
                        in which the individual was eligible to make 
                        such election with respect to such sponsor.
                    ``(B) No reelection after disenrollment for certain 
                products.--An individual is not eligible to elect a 
                Medicare Choice product offered by a Medicare Choice 
                organization that is a union sponsor or Taft-Hartley 
                sponsor if the individual previously had elected a 
                Medicare Choice product offered by the organization and 
                had subsequently discontinued to elect such a product 
                offered by the organization.
    ``(c) Process for Exercising Choice.--
            ``(1) In general.--The Secretary shall establish a process 
        through which elections described in subsection (a) are made 
        and changed, including the form and manner in which such 
        elections are made and changed. Such elections shall be made or 
        changed only during coverage election periods specified under 
        subsection (e) and shall become effective as provided in 
        subsection (f).
            ``(2) Expedited implementation.--The Secretary shall 
        establish the process of electing coverage under this section 
        during the transition period (as defined in subsection 
        (e)(1)(B)) in such an expedited manner as will permit such an 
        election for Medicare Choice products in an area as soon as 
        such products become available in that area.
            ``(3) Coordination through medicare choice organizations.--
                    ``(A) Enrollment.--Such process shall permit an 
                individual who wishes to elect a Medicare Choice 
                product offered by a Medicare Choice organization to 
                make such election through the filing of an appropriate 
                election form with the organization.
                    ``(B) Disenrollment.--Such process shall permit an 
                individual, who has elected a Medicare Choice product 
                offered by a Medicare Choice organization and who 
                wishes to terminate such election, to terminate such 
                election through the filing of an appropriate election 
                form with the organization.
            ``(4) Default.--
                    ``(A) Initial election.--
                            ``(i) In general.--Subject to clause (ii), 
                        an individual who fails to make an election 
                        during an initial election period under 
                        subsection (e)(1) is deemed to have chosen the 
                        Non-Medicare Choice option.
                            ``(ii) Seamless continuation of coverage.--
                        The Secretary shall establish procedures under 
                        which individuals who are enrolled with a 
                        Medicare Choice organization at the time of the 
initial election period and who fail to elect to receive coverage other 
than through the organization are deemed to have elected an appropriate 
Medicare Choice product offered by the organization.
                    ``(B) Continuing periods.--An individual who has 
                made (or deemed to have made) an election under this 
                section is considered to have continued to make such 
                election until such time as--
                            ``(i) the individual changes the election 
                        under this section, or
                            ``(ii) a Medicare Choice product is 
                        discontinued, if the individual had elected 
                        such product at the time of the 
                        discontinuation.
            ``(5) Agreements with commissioner of social security to 
        promote efficient administration.--In order to promote the 
        efficient administration of this section and the Medicare 
        Choice program under part C, the Secretary may enter into an 
        agreement with the Commissioner of Social Security under which 
        the Commissioner performs administrative responsibilities 
        relating to enrollment and disenrollment in Medicare Choice 
        products under this section.
    ``(d) Provision of Beneficiary Information to Promote Informed 
Choice.--
            ``(1) In general.--The Secretary shall provide for 
        activities under this subsection to disseminate broadly 
        information to medicare beneficiaries (and prospective medicare 
        beneficiaries) on the coverage options provided under this 
        section in order to promote an active, informed selection among 
        such options. Such information shall be made available on such 
        a timely basis (such as 6 months before the date an individual 
        would first attain eligibility for medicare on the basis of 
        age) as to permit individuals to elect the Medicare Choice 
        option during the initial election period described in 
        subsection (e)(1).
            ``(2) Use of nonfederal entities.--The Secretary shall, to 
        the maximum extent feasible, enter into contracts with 
        appropriate non-Federal entities to carry out activities under 
        this subsection.
            ``(3) Specific activities.--In carrying out this 
        subsection, the Secretary shall provide for at least the 
        following activities in all areas in which Medicare Choice 
        products are offered:
                    ``(A) Information booklet.--
                            ``(i) In general.--The Secretary shall 
                        publish an information booklet and disseminate 
                        the booklet to all individuals eligible to 
                        elect the Medicare Choice option under this 
                        section during coverage election periods.
                            ``(ii) Information included.--The booklet 
                        shall include information presented in plain 
                        English and in a standardized format 
                        regarding--
                                    ``(I) the benefits (including cost-
                                sharing) and premiums for the various 
                                Medicare Choice products in the areas 
                                involved;
                                    ``(II) the quality of such 
                                products, including consumer 
                                satisfaction information; and
                                    ``(III) rights and responsibilities 
                                of medicare beneficiaries under such 
                                products.
                            ``(iii) Periodic updating.--The booklet 
                        shall be updated on a regular basis (not less 
                        often than once every 12 months) to reflect 
                        changes in the availability of Medicare Choice 
                        products and the benefits and premiums for such 
                        products.
                    ``(B) Toll-free number.--The Secretary shall 
                maintain a toll-free number for inquiries regarding 
                Medicare Choice options and the operation of part C.
                    ``(C) General information in medicare handbook.--
                The Secretary shall include information about the 
                Medicare Choice option provided under this section in 
                the annual notice of medicare benefits under section 
                1804.
    ``(e) Coverage Election Periods.--
            ``(1) Initial choice upon eligibility to make election.--
                    ``(A) In general.--In the case of an individual who 
                first becomes entitled to benefits under part A and 
                enrolled under part B after the beginning of the 
                transition period (as defined in subparagraph (B)), the 
                individual shall make the election under this section 
                during a period (of a duration and beginning at a time 
                specified by the Secretary) at the first time the 
                individual both is entitled to benefits under part A 
                and enrolled under part B. Such period shall be 
                specified in a manner so that, in the case of an 
                individual who elects a Medicare Choice product during 
                the period, coverage under the product becomes 
                effective as of the first date on which the individual 
                may receive such coverage.
                    ``(B) Transition period defined.--In this 
                subsection, the term `transition period' means, with 
                respect to an individual in an area, the period 
                beginning on the first day of the first month in which 
                a Medicare Choice product is first made available to 
                individuals in the area and ending with the month 
                preceding the beginning of the first annual, 
                coordinated election period under paragraph (3).
            ``(2) During transition period.--Subject to paragraph (6)--
                    ``(A) Continuous open enrollment into a medicare 
                choice option.--During the transition period, an 
                individual who is eligible to make an election under 
                this section and who has elected the non-Medicare 
                Choice option may change such election to a Medicare 
                Choice option at any time.
                    ``(B) Open disenrollment before end of transition 
                period.--During the transition period, an individual 
                who has elected a Medicare Choice option for a Medicare 
                Choice product may change such election to another 
                Medicare Choice product or to the non-Medicare Choice 
                option.
            ``(3) Annual, coordinated election period.--
                    ``(A) In general.--Subject to paragraph (5), each 
                individual who is eligible to make an election under 
                this section may change such election during annual, 
                coordinated election periods.
                    ``(B) Annual, coordinated election period.--For 
                purposes of this section, the term `annual, coordinated 
                election period' means, with respect to a calendar year 
                (beginning with 1998), the month of October before such 
                year.
                    ``(C) Medicare choice health fair during october, 
                1996.--In the month of October, 1996, the Secretary 
                shall provide for a nationally coordinated educational 
                and publicity campaign to inform individuals, who are 
                eligible to elect Medicare Choice products, about such 
                products and the election process provided under this 
                section (including the annual, coordinated election 
                periods that occur in subsequent years).
            ``(4) Special 90-day disenrollment option.--
                    ``(A) In general.--In the case of the first time an 
                individual elects a Medicare Choice option under this 
                section, the individual may discontinue such election 
                through the filing of an appropriate notice during the 
                90-day period beginning on the first day on which the 
                individual's coverage under the Medicare Choice product 
                under such option becomes effective.
                    ``(B) Effect of discontinuation of election.--An 
                individual who discontinues an election under this 
                paragraph shall be deemed at the time of such 
                discontinuation to have elected the Non-Medicare Choice 
                option.
            ``(5) Special election periods.--An individual may 
        discontinue an election of a Medicare Choice product offered by 
        a Medicare Choice organization other than during an annual, 
        coordinated election period and make a new election under this 
        section if--
                    ``(A) the organization's or product's certification 
                under part C has been terminated or the organization 
                has terminated or otherwise discontinued providing the 
                product;
                    ``(B) in the case of an individual who has elected 
                a Medicare Choice product offered by a Medicare Choice 
                organization, the individual is no longer eligible to 
                elect the product because of a change in the 
                individual's place of residence or other change in 
                circumstances (specified by the Secretary, but not 
                including termination of membership in a qualified 
                association in the case of a product offered by a 
                qualified association or termination of the 
                individual's enrollment on the basis described in 
                clause (i) or (ii) section 1852(c)(3)(B));
                    ``(C) the individual demonstrates (in accordance 
                with guidelines established by the Secretary) that--
                            ``(i) the organization offering the product 
                        substantially violated a material provision of 
                        the organization's contract under part C in 
                        relation to the individual and the product; or
                            ``(ii) the organization (or an agent or 
                        other entity acting on the organization's 
                        behalf) materially misrepresented the product's 
                        provisions in marketing the product to the 
                        individual; or
                    ``(D) the individual meets such other conditions as 
                the Secretary may provide.
    ``(f) Effectiveness of Elections.--
            ``(1) During initial coverage election period.--An election 
        of coverage made during the initial coverage election period 
        under subsection (e)(1)(A) shall take effect upon the date the 
        individual becomes entitled to benefits under part A and 
        enrolled under part B, except as the Secretary may provide 
        (consistent with section 1838) in order to prevent retroactive 
        coverage.
            ``(2) During transition; 90-day disenrollment option.--An 
        election of coverage made under subsection (e)(2) and an 
        election to discontinue a Medicare Choice option under 
        subsection (e)(4) at any time shall take effect with the first 
        calendar month following the date on which the election is 
        made.
            ``(3) Annual, coordinated election period and medisave 
        election.--An election of coverage made during an annual, 
        coordinated election period (as defined in subsection 
        (e)(3)(B)) in a year shall take effect as of the first day of 
        the following year.
            ``(4) Other periods.--An election of coverage made during 
        any other period under subsection (e)(5) shall take effect in 
        such manner as the Secretary provides in a manner consistent 
        (to the extent practicable) with protecting continuity of 
        health benefit coverage.
    ``(g) Effect of Election of Medicare Choice Option.--Subject to the 
provisions of section 1855(f), payments under a contract with a 
Medicare Choice organization under section 1858(a) with respect to an 
individual electing a Medicare Choice product offered by the 
organization shall be instead of the amounts which (in the absence of 
the contract) would otherwise be payable under parts A and B for items 
and services furnished to the individual.
    ``(h) Demonstration Projects.--The Secretary shall conduct 
demonstration projects to test alternative approaches to coordinated 
open enrollments in different markets, including different annual 
enrollment periods and models of rolling open enrollment periods. The 
Secretary may waive previous provisions of this section in order to 
carry out such projects.''.

SEC. 8002. MEDICARE CHOICE PROGRAM.

    (a) In General.--Title XVIII is amended by redesignating part C as 
part D and by inserting after part B the following new part:

            ``Part C--Provisions Relating to Medicare Choice

            ``requirements for medicare choice organizations

    ``Sec. 1851. (a) Medicare Choice Organization Defined.--In this 
part, subject to the succeeding provisions of this section, the term 
`Medicare Choice organization' means a public or private entity that is 
certified under section 1857 as meeting the requirements and standards 
of this part for such an organization.
    ``(b) Organized and Licensed Under State Law.--
            ``(1) In general.--A Medicare Choice organization shall be 
        organized and licensed under State law to offer health 
        insurance or health benefits coverage in each State in which it 
        offers a Medicare Choice product.
            ``(2) Exception for union and taft-hartley sponsors.--
        Paragraph (1) shall not apply to an Medicare Choice 
        organization that is a union sponsor or Taft-Hartley sponsor 
        (as defined in section 1852(c)(4)).
            ``(3) Exception for provider-sponsored organizations.--
        Subject to paragraph (5), paragraph (1) shall not apply to a 
        Medicare Choice organization that is a provider-sponsored 
        organization (as defined in section 1854(a)).
            ``(4) Exception for qualified associations.--Paragraph (1) 
        shall not apply to a Medicare Choice organization that is a 
        qualified association (as defined in section 1852(c)(4)(B)).
            ``(5) Limitation.--Effective on and after January 1, 2000, 
        paragraph (1) shall only apply (and paragraph (3) shall no 
        longer apply) to a Medicare Choice organization in a State if 
        the standards for licensure of the organization under the law 
        of the State are identical to the standards established under 
        section 1856(b).
    ``(c) Prepaid Payment.--A Medicare Choice organization shall be 
compensated (except for deductibles, coinsurance, and copayments) for 
the provision of health care services to enrolled members by a payment 
which is paid on a periodic basis without regard to the date the health 
care services are provided and which is fixed without regard to the 
frequency, extent, or kind of health care service actually provided to 
a member.
    ``(d) Assumption of Full Financial Risk.--The Medicare Choice 
organization shall assume full financial risk on a prospective basis 
for the provision of the health care services (other than hospice care) 
for which benefits are required to be provided under section 
1852(a)(1), except that the organization--
            ``(1) may obtain insurance or make other arrangements for 
        the cost of providing to any enrolled member such services the 
        aggregate value of which exceeds $5,000 in any year,
            ``(2) may obtain insurance or make other arrangements for 
        the cost of such services provided to its enrolled members 
        other than through the organization because medical necessity 
        required their provision before they could be secured through 
        the organization,
            ``(3) may obtain insurance or make other arrangements for 
        not more than 90 percent of the amount by which its costs for 
        any of its fiscal years exceed 115 percent of its income for 
        such fiscal year, and
            ``(4) may make arrangements with physicians or other health 
        professionals, health care institutions, or any combination of 
        such individuals or institutions to assume all or part of the 
        financial risk on a prospective basis for the provision of 
        basic health services by the physicians or other health 
        professionals or through the institutions.
In the case of a Medicare Choice organization that is a union sponsor 
or Taft-Hartley sponsor (as defined in section 1852(c)(4)) or 
a qualified association (as defined in section 1852(c)(4)(B)), this 
subsection shall not apply with respect to Medicare Choice products 
offered by such organization and issued by an organization to which 
subsection (b)(1) applies or by a provider-sponsored organization (as 
defined in section 1854(a)).
    ``(e) Provision Against Risk of Insolvency.--
            ``(1) In general.--Each Medicare Choice organization shall 
        meet standards under section 1856 relating to the financial 
        solvency and capital adequacy of the organization. Such 
        standards shall take into account the nature and type of 
        Medicare Choice products offered by the organization.
            ``(2) Treatment of taft-hartley sponsors.--An entity that 
        is a Taft-Hartley sponsor is deemed to meet the requirement of 
        paragraph (1).
            ``(3) Treatment of certain qualified associations.--An 
        entity that is a qualified association is deemed to meet the 
        requirement of paragraph (1) with respect to Medicare Choice 
        products offered by such association and issued by an 
        organization to which subsection (b)(1) applies or by a 
        provider-sponsored organization.
    ``(f) Organizations Treated as MedicarePlus Organizations During 
Transition.--Any of the following organizations shall be considered to 
qualify as a MedicarePlus organization for contract years beginning 
before January 1, 1997:
            ``(1) Health maintenance organizations.--An organization 
        that is organized under the laws of any State and that is a 
        qualified health maintenance organization (as defined in 
        section 1310(d) of the Public Health Service Act), an 
        organization recognized under State law as a health maintenance 
        organization, or a similar organization regulated under State 
        law for solvency in the same manner and to the same extent as 
        such a health maintenance organization.
            ``(2) Licensed insurers.--An organization that is organized 
        under the laws of any State and--
                    ``(A) is licensed by a State agency as an insurer 
                for the offering of health benefit coverage, or
                    ``(B) is licensed by a State agency as a service 
                benefit plan,
        but only for individuals residing in an area in which the 
        organization is licensed to offer health insurance coverage.
            ``(3) Current risk-contractors.--An organization that is an 
        eligible organization (as defined in section 1876(b)) and that 
        has a risk-sharing contract in effect under section 1876 as of 
        the date of the enactment of this section.

``requirements relating to benefits, provision of services, enrollment, 
                              and premiums

    ``Sec. 1852. (a) Benefits Covered.--
            ``(1) In general.--Each Medicare Choice product offered 
        under this part shall provide benefits for at least the items 
        and services for which benefits are available under parts A and 
        B consistent with the standards for coverage of such items and 
        services applicable under this title.
            ``(2) Organization as secondary payer.--Notwithstanding any 
        other provision of law, a Medicare Choice organization may (in 
        the case of the provision of items and services to an 
        individual under this part under circumstances in which payment 
        under this title is made secondary pursuant to section 
        1862(b)(2)) charge or authorize the provider of such services 
        to charge, in accordance with the charges allowed under such 
        law or policy--
                    ``(A) the insurance carrier, employer, or other 
                entity which under such law, plan, or policy is to pay 
                for the provision of such services, or
                    ``(B) such individual to the extent that the 
                individual has been paid under such law, plan, or 
                policy for such services.
            ``(3) Satisfaction of requirement.--A Medicare Choice 
        product offered by a Medicare Choice organization satisfies 
        paragraph (1) with respect to benefits for items and services 
        if the following requirements are met:
                    ``(A) Fee for service providers.--In the case of 
                benefits furnished through a provider that does not 
                have a contract with the organization, the product 
                provides for at least the dollar amount of payment for 
                such items and services as would otherwise be provided 
                under parts A and B.
                    ``(B) Participating providers.--In the case of 
                benefits furnished through a provider that has such a 
                contract, the individual's liability for payment for 
                such items and services does not exceed (after taking 
                into account any deductible, which does not exceed any 
                deductible under parts A and B) the lesser of the 
                following:
                            ``(i) Non-medicare choice liability.--The 
                        amount of the liability that the individual 
                        would have had (based on the provider being a 
                        participating provider) if the individual had 
                        elected the non-Medicare Choice option.
                            ``(ii) Medicare coinsurance applied to 
                        product payment rates.--The applicable 
                        coinsurance or copayment rate (that would have 
                        applied under the non-Medicare Choice option) 
                        of the payment rate provided under the 
                        contract.
    ``(b) Antidiscrimination.--A Medicare Choice organization may not 
deny, limit, or condition the coverage or provision of benefits under 
this part based on the health status, claims experience, receipt of 
health care, medical history, or lack of evidence of insurability, of 
an individual.
    ``(c) Guaranteed Issue and Renewal.--
            ``(1) In general.--Except as provided in this subsection, a 
        Medicare Choice organization shall provide that at any time 
        during which elections are accepted under section 1805 with 
        respect to a Medicare Choice product offered by the 
        organization, the organization will accept without restrictions 
        individuals who are eligible to make such election.
            ``(2) Priority.--If the Secretary determines that a 
        Medicare Choice organization, in relation to a Medicare Choice 
        product it offers, has a capacity limit and the number of 
        eligible individuals who elect the product under section 1805 
        exceeds the capacity limit, the organization may limit the 
        election of individuals of the product under such section but 
        only if priority in election is provided--
                    ``(A) first to such individuals as have elected the 
                product at the time of the determination, and
                    ``(B) then to other such individuals in such a 
                manner that does not discriminate among the individuals 
                (who seek to elect the product) on a basis described in 
                subsection (b).
            ``(3) Limitation on termination of election.--
                    ``(A) In general.--Subject to subparagraph (B), a 
                Medicare Choice organization may not for any reason 
                terminate the election of any individual under section 
                1805 for a Medicare Choice product it offers.
                    ``(B) Basis for termination of election.--A 
                Medicare Choice organization may terminate an 
                individual's election under section 1805 with respect 
                to a Medicare Choice product it offers if--
                            ``(i) any premiums required with respect to 
                        such product are not paid on a timely basis 
                        (consistent with standards under section 1856 
                        that provide for a grace period for late 
                        payment of premiums),
                            ``(ii) the individual has engaged in 
                        disruptive behavior (as specified in such 
                        standards), or
                            ``(iii) the product is terminated with 
                        respect to all individuals under this part.
                Any individual whose election is so terminated is 
                deemed to have elected the Non-Medicare Choice option 
                (as defined in section 1805(a)(3)(A)).
                    ``(C) Organization obligation with respect to 
                election forms.--Pursuant to a contract under section 
                1858, each Medicare Choice organization receiving an 
                election form under section 1805(c)(2) shall transmit 
                to the Secretary (at such time and in such manner as 
                the Secretary may specify) a copy of such form or such 
                other information respecting the election as the 
                Secretary may specify.
            ``(4) Special rules for limited enrollment Medicare choice 
        organizations.--
                    ``(A) Taft-hartley sponsors.--
                            ``(i) In general.--Subject to subparagraph 
                        (D), a Medicare Choice organization that is a 
                        Taft-Hartley sponsor (as defined in clause 
                        (ii)) shall limit eligibility of enrollees 
                        under this part for Medicare Choice products it 
                        offers to individuals who are entitled to 
                        obtain benefits through such products under the 
                        terms of an applicable collective bargaining 
                        agreement.
                            ``(ii) Taft-hartley sponsor.--In this part 
                        and section 1805, the term `Taft-Hartley 
                        sponsor' means, in relation to a group health 
                        plan that is established or maintained by two 
                        or more employers or jointly by one or more 
                        employers and one or more employee 
                        organizations, the association, committee, 
                        joint board of trustees, or other similar group 
                        of representatives of parties who establish or 
                        maintain the plan.
                    ``(B) Qualified associations.--
                            ``(i) In general.--Subject to subparagraph 
                        (D), a Medicare Choice organization that is a 
                        qualified association (as defined in clause 
                        (iii)) shall limit eligibility of individuals 
                        under this part for products it offers to 
                        individuals who are members of the association 
                        (or who are spouses of such individuals).
                            ``(ii) Limitation on termination of 
                        coverage.--Such a qualifying association 
                        offering a Medicare Choice product to an 
                        individual may not terminate coverage of the 
                        individual on the basis that the individual is 
                        no longer a member of the association except 
                        pursuant to a change of election during an open 
                        election period occurring on or after the date 
                        of the termination of membership.
                            ``(iii) Qualified association.--In this 
                        part and section 1805, the term `qualified 
                        association' means an association, religious 
                        fraternal organization, or other organization 
                        (which may be a trade, industry, or 
                        professional association, a chamber of 
                        commerce, or a public entity association) that 
                        the Secretary finds--
                                    ``(I) has been formed for purposes 
                                other than the sale of any health 
                                insurance and does not restrict 
                                membership based on the health status, 
                                claims experience, receipt of health 
                                care, medical history, or lack of 
                                evidence of insurability, of an 
                                individual,
                                    ``(II) does not exist solely or 
                                principally for the purpose of selling 
                                insurance, and
                                    ``(III) has at least 1,000 
                                individual members or 200 employer 
                                members.
                        Such term includes a subsidiary or corporation 
                        that is wholly owned by one or more qualified 
                        organizations.
                    ``(C) Unions.--
                            ``(i) In general.--Subject to subparagraph 
                        (D), a union sponsor (as defined in clause 
                        (ii)) shall limit eligibility of enrollees 
                        under this part for Medicare Choice products it 
                        offers to individuals who are members of the 
                        sponsor and affiliated with the sponsor through 
                        an employment relationship with any employer or 
                        are the spouses of such members.
                            ``(ii) Union sponsor.--In this part and 
                        section 1805, the term `union sponsor' means an 
                        employee organization in relation to a group 
                        health plan that is established or maintained 
                        by the organization other than pursuant to a 
                        collective bargaining agreement.
                    ``(D) Limitation.--Rules of eligibility to carry 
                out the previous subparagraphs of this paragraph shall 
                not have the effect of denying eligibility to 
                individuals on the basis of health status, claims 
                experience, receipt of health care, medical history, or 
                lack of evidence of insurability.
                    ``(E) Limited enrollment medicare choice 
                organization.--In this part and section 1805, the term 
                `limited enrollment Medicare Choice organization' means 
                a Medicare Choice organization that is a union sponsor, 
                a Taft-Hartley sponsor, or a qualified association.
                    ``(F) Employer, etc.--In this paragraph, the terms 
                `employer', `employee organization', and `group health 
                plan' have the meanings given such terms for purposes 
                of part 6 of subtitle B of title I of the Employee 
                Retirement Income Security Act of 1974.
    ``(d) Submission and Charging of Premiums.--
            ``(1) In general.--Each Medicare Choice organization shall 
        file with the Secretary each year, in a form and manner and at 
        a time specified by the Secretary--
                    ``(A) the amount of the monthly premiums for 
                coverage under each Medicare Choice product it offers 
                under this part in each payment area (as determined for 
                purposes of section 1855) in which the product is being 
                offered; and
                    ``(B) the enrollment capacity in relation to the 
                product in each such area.
            ``(2) Amounts of premiums charged.--The amount of the 
        monthly premium charged by a Medicare Choice organization for a 
        Medicare Choice product offered in a payment area to an 
        individual under this part shall be equal to the amount (if 
        any) by which--
                    ``(A) the amount of the monthly premium for the 
                product for the period involved, as established under 
                paragraph (3) and submitted under paragraph (1), 
                exceeds
                    ``(B) \1/12\ of the annual Medicare Choice 
                capitation rate specified in section 1855(b)(2) for the 
                area and period involved.
            ``(3) Uniform premium.--The premiums charged by a Medicare 
        Choice organization under this part may not vary among 
        individuals who reside in the same payment area.
            ``(4) Terms and conditions of imposing premiums.--Each 
        Medicare Choice organization shall permit the payment of 
        monthly premiums on a monthly basis and may terminate election 
        of individuals for a Medicare Choice product for failure to 
        make premium payments only in accordance with subsection 
        (c)(3)(B).
            ``(5) Relation of premiums and cost-sharing to benefits.--
        In no case may the portion of a Medicare Choice organization's 
        premium rate and the actuarial value of its deductibles, 
        coinsurance, and copayments charged (to the extent attributable 
        to the minimum benefits described in subsection (a)(1) and not 
        counting any amount attributable to balance billing) to 
        individuals who are enrolled under this part with the 
        organization exceed the actuarial value of the coinsurance and 
        deductibles that would be applicable on the average to 
        individuals enrolled under this part with the organization (or, 
        if the Secretary finds that adequate data are not available to 
determine that actuarial value, the actuarial value of the coinsurance 
and deductibles applicable on the average to individuals in the area, 
in the State, or in the United States, eligible to enroll under this 
part with the organization, or other appropriate data) and entitled to 
benefits under part A and enrolled under part B if they were not 
members of a Medicare Choice organization.
    ``(e) Requirement for Additional Benefits, Part B Premium Discount 
Rebates, or Both.--
            ``(1) Requirement.--
                    ``(A) In general.--Each Medicare Choice 
                organization (in relation to a Medicare Choice product 
                it offers) shall provide that if there is an excess 
                amount (as defined in subparagraph (B)) for the product 
                for a contract year, subject to the succeeding 
                provisions of this subsection, the organization shall 
                provide to individuals such additional benefits (as the 
                organization may specify), a monetary rebate (paid on a 
                monthly basis) of the part B monthly premium, or a 
                combination thereof, in an total value which is at 
                least equal to the adjusted excess amount (as defined 
                in subparagraph (C)).
                    ``(B) Excess amount.--For purposes of this 
                paragraph, the `excess amount', for an organization for 
                a product, is the amount (if any) by which--
                            ``(i) the average of the capitation 
                        payments made to the organization under this 
                        part for the product at the beginning of 
                        contract year, exceeds
                            ``(ii) the actuarial value of the minimum 
                        benefits described in subsection (a)(1) under 
                        the product for individuals under this part, as 
                        determined based upon an adjusted community 
                        rate described in paragraph (5) (as reduced for 
                        the actuarial value of the coinsurance and 
                        deductibles under parts A and B).
                    ``(C) Adjusted excess amount.--For purposes of this 
                paragraph, the `adjusted excess amount', for an 
                organization for a product, is the excess amount 
                reduced to reflect any amount withheld and reserved for 
                the organization for the year under paragraph (3).
                    ``(D) Uniform application.--This paragraph shall be 
                applied uniformly for all enrollees for a product in a 
                service area.
                    ``(E) Construction.--Nothing in this subsection 
                shall be construed as preventing a Medicare Choice 
                organization from providing health care benefits that 
                are in addition to the benefits otherwise required to 
                be provided under this paragraph and from imposing a 
                premium for such additional benefits.
            ``(2) Limitation on amount of part b premium discount 
        rebate.--In no case shall the amount of a part B premium 
        discount rebate under paragraph (1)(A) exceed, with respect to 
        a month, the amount of premiums imposed under part B (not 
        taking into account section 1839(b) (relating to penalty for 
        late enrollment) or 1839(h) (relating to affluence testing)), 
        for the individual for the month. Except as provided in the 
        previous sentence, a Medicare Choice organization is not 
        authorized to provide for cash or other monetary rebates as an 
        inducement for enrollment or otherwise.
            ``(3) Stabilization fund.--A Medicare Choice organization 
        may provide that a part of the value of an excess actuarial 
        amount described in paragraph (1) be withheld and reserved in 
        the Federal Hospital Insurance Trust Fund and in the Federal 
        Supplementary Medical Insurance Trust Fund (in such proportions 
        as the Secretary determines to be appropriate) by the Secretary 
        for subsequent annual contract periods, to the extent required 
        to stabilize and prevent undue fluctuations in the additional 
        benefits and rebates offered in those subsequent periods by the 
        organization in accordance with such paragraph. Any of such 
        value of amount reserved which is not provided as additional 
        benefits described in paragraph (1)(A) to individuals electing 
        the Medicare Choice product in accordance with such paragraph 
        prior to the end of such periods, shall revert for the use of 
        such trust funds.
            ``(4) Determination based on insufficient data.--For 
        purposes of this subsection, if the Secretary finds that there 
        is insufficient enrollment experience (including no enrollment 
        experience in the case of a provider-sponsored organization) to 
        determine an average of the capitation payments to be made 
        under this part at the beginning of a contract period, the 
        Secretary may determine such an average based on the enrollment 
        experience of other contracts entered into under this part.
            ``(5) Adjusted community rate.--
                    ``(A) In general.--For purposes of this subsection, 
                subject to subparagraph (B), the term `adjusted 
                community rate' for a service or services means, at the 
                election of a Medicare Choice organization, either--
                            ``(i) the rate of payment for that service 
                        or services which the Secretary annually 
                        determines would apply to an individual 
                        electing a Medicare Choice product under this 
                        part if the rate of payment were determined 
                        under a `community rating system' (as defined 
                        in section 1302(8) of the Public Health Service 
                        Act, other than subparagraph (C)), or
                            ``(ii) such portion of the weighted 
                        aggregate premium, which the Secretary annually 
                        estimates would apply to such an individual, as 
                        the Secretary annually estimates is 
                        attributable to that service or services,
                but adjusted for differences between the utilization 
                characteristics of the individuals electing coverage 
                under this part and the utilization characteristics of 
                the other enrollees with the organization (or, if the 
                Secretary finds that adequate data are not available to 
                adjust for those differences, the differences between 
                the utilization characteristics of individuals 
                selecting other Medicare Choice coverage, or 
                individuals in the area, in the State, or in the United 
                States, eligible to elect Medicare Choice coverage 
                under this part and the utilization characteristics of 
                the rest of the population in the area, in the State, 
                or in the United States, respectively).
                    ``(B) Special rule for provider-sponsored 
                organizations.--In the case of a Medicare Choice 
                organization that is a provider-sponsored organization, 
                the adjusted community rate under subparagraph (A) for 
                a Medicare Choice product may be computed (in a manner 
                specified by the Secretary) using data in the general 
                commercial marketplace or (during a transition period) 
                based on the costs incurred by the organization in 
                providing such a product.
    ``(f) Rules Regarding Physician Participation.--
            ``(1) Procedures.--Each Medicare Choice organization shall 
        establish reasonable procedures relating to the participation 
        (under an agreement between a physician and the organization) 
        of physicians under Medicare Choice products offered by the 
        organization under this part. Such procedures shall include--
                    ``(A) providing notice of the rules regarding 
                participation,
                    ``(B) providing written notice of participation 
                decisions that are adverse to physicians, and
                    ``(C) providing a process within the organization 
                for appealing adverse decisions, including the 
                presentation of information and views of the physician 
                regarding such decision.
            ``(2) Consultation in medical policies.--A Medicare Choice 
        organization shall consult with physicians who have entered 
        into participation agreements with the organization regarding 
        the organization's medical policy, quality, and medical 
        management procedures.
            ``(3) Limitations on physician incentive plans.--
                    ``(A) In general.--Each Medicare Choice 
                organization may not operate any physician incentive 
                plan (as defined in subparagraph (B)) unless the 
                following requirements are met:
                            ``(i) No specific payment is made directly 
                        or indirectly under the plan to a physician or 
                        physician group as an inducement to reduce or 
                        limit medically necessary services provided 
                        with respect to a specific individual enrolled 
                        with the organization.
                            ``(ii) If the plan places a physician or 
                        physician group at substantial financial risk 
                        (as determined by the Secretary) for services 
                        not provided by the physician or physician 
                        group, the organization--
                                    ``(I) provides stop-loss protection 
                                for the physician or group that is 
                                adequate and appropriate, based on 
                                standards developed by the Secretary 
                                that take into account the number of 
                                physicians placed at such substantial 
                                financial risk in the group or under 
                                the plan and the number of individuals 
                                enrolled with the organization who 
                                receive services from the physician or 
                                the physician group, and
                                    ``(II) conducts periodic surveys of 
                                both individuals enrolled and 
                                individuals previously enrolled with 
                                the organization to determine the 
                                degree of access of such individuals to 
                                services provided by the organization 
                                and satisfaction with the quality of 
                                such services.
                            ``(iii) The organization provides the 
                        Secretary with descriptive information 
                        regarding the plan, sufficient to permit the 
                        Secretary to determine whether the plan is in 
                        compliance with the requirements of this 
                        subparagraph.
                    ``(B) Physician incentive plan defined.--In this 
                paragraph, the term `physician incentive plan' means 
                any compensation arrangement between a Medicare Choice 
                organization and a physician or physician group that 
                may directly or indirectly have the effect of reducing 
                or limiting services provided with respect to 
                individuals enrolled with the organization under this 
                part.
            ``(4) Exception for certain fee-for-service plans.--The 
        previous provisions of this subsection shall not apply in the 
        case of a Medicare Choice organization in relation to a 
        Medicare Choice product if the organization does not have 
        agreements between physicians and the organization for the 
        provision of benefits under the product.
    ``(g) Provision of Information.--A Medicare Choice organization 
shall provide the Secretary with such information on the organization 
and each Medicare Choice product it offers as may be required for the 
preparation of the information booklet described in section 
1805(d)(3)(A).
    ``(h) Coordinated Acute and Long-term Care Benefits Under a 
Medicare Choice Product.--Nothing in this part shall be construed as 
preventing a State from coordinating benefits under its medicaid 
program under title XIX with those provided under a Medicare Choice 
product in a manner that assures continuity of a full-range of acute 
care and long-term care services to poor elderly or disabled 
individuals eligible for benefits under this title and under such 
program.

                     ``patient protection standards

    ``Sec. 1853. (a) Disclosure to Enrollees.--A Medicare Choice 
organization shall disclose in clear, accurate, and standardized form, 
information regarding all of the following for each Medicare Choice 
product it offers:
            ``(1) Benefits under the Medicare Choice product offered, 
        including exclusions from coverage.
            ``(2) Rules regarding prior authorization or other review 
        requirements that could result in nonpayment.
            ``(3) Potential liability for cost-sharing for out-of-
        network services.
            ``(4) The number, mix, and distribution of participating 
        providers.
            ``(5) The financial obligations of the enrollee, including 
        premiums, deductibles, co-payments, and maximum limits on out-
        of-pocket losses for items and services (both in and out of 
        network).
            ``(6) Statistics on enrollee satisfaction with the product 
        and organization, including rates of reenrollment.
            ``(7) Enrollee rights and responsibilities, including the 
        grievance process provided under subsection (f).
            ``(8) A statement that the use of the 911 emergency 
        telephone number is appropriate in emergency situations and an 
        explanation of what constitutes an emergency situation.
            ``(9) A description of the organization's quality assurance 
        program under subsection (d).
Such information shall be disclosed to each enrollee under this part at 
the time of enrollment and at least annually thereafter.
    ``(b) Access to Services.--
            ``(1) In general.--A Medicare Choice organization offering 
        a Medicare Choice product may restrict the providers from whom 
        the benefits under the product are provided so long as--
                    ``(A) the organization makes such benefits 
                available and accessible to each individual electing 
                the product within the product service area with 
                reasonable promptness and in a manner which assures 
                continuity in the provision of benefits;
                    ``(B) when medically necessary the organization 
                makes such benefits available and accessible 24 hours a 
                day and 7 days a week;
                    ``(C) the product provides for reimbursement with 
                respect to services which are covered under 
                subparagraphs (A) and (B) and which are provided to 
                such an individual other than through the organization, 
                if--
                            ``(i) the services were medically necessary 
                        and immediately required because of an 
                        unforeseen illness, injury, or condition, and
                            ``(ii) it was not reasonable given the 
                        circumstances to obtain the services through 
                        the organization; and
                    ``(D) coverage is provided for emergency services 
                (as defined in paragraph (5)) without regard to prior 
                authorization or the emergency care provider's 
                contractual relationship with the organization.
            ``(2) Minimum payment levels where providing point-of-
        service coverage.--If a Medicare Choice product provides 
        benefits for items and services (not described in paragraph 
        (1)(C)) through a network of providers and also permits payment 
        to be made under the product for such items and services not 
        provided through such a network, the payment level under the 
        product with respect to such items and services furnished 
        outside the network shall be at least 70 percent (or, if the 
        effective cost-sharing rate is 50 percent, at least 35 percent) 
        of the lesser of--
                    ``(A) the payment basis (determined without regard 
                to deductibles and cost-sharing) that would have 
                applied for such items and services under parts A and 
                B, or
                    ``(B) the amount charged by the entity furnishing 
                such items and services.
            ``(3) Protection of enrollees for certain out-of-network 
        services.--
                    ``(A) Participating providers.--In the case of 
                physicians' services or renal dialysis services 
                described in subparagraph (C) which are furnished by a 
                participating physician or provider of services or 
                renal dialysis facility to an individual enrolled with 
                a Medicare Choice organization under this section, the 
                applicable participation agreement is deemed to provide 
                that the physician or provider of services or renal 
                dialysis facility will accept as payment in full from 
                the organization the amount that would be payable to 
                the physician or provider of services or renal dialysis 
                facility under part B and from the individual under 
                such part, if the individual were not enrolled with 
                such an organization under this part.
                    ``(B) Nonparticipating providers.--In the case of 
                physicians' services described in subparagraph (C) 
                which are furnished by a nonparticipating physician, 
                the limitations on actual charges for such services 
                otherwise applicable under part B (to services 
                furnished by individuals not enrolled with a Medicare 
                Choice organization under this section) shall apply in 
                the same manner as such limitations apply to services 
                furnished to individuals not enrolled with such an 
                organization.
                    ``(C) Services described.--The physicians' services 
                or renal dialysis services described in this 
                subparagraph are physicians' services or renal dialysis 
                services which are furnished to an enrollee of a 
                Medicare Choice organization under this part by a 
                physician, provider of services, or renal dialysis 
                facility who is not under a contract with the 
                organization.
            ``(4) Protection for needed services.--A Medicare Choice 
        organization that provides covered services through a network 
        of providers shall provide coverage of services provided by a 
        provider that is not part of the network if the service cannot 
        be provided by a provider that is part of the network and the 
        organization authorized the service directly or through 
        referral by the primary care physician who is designated by the 
        organization for the individual involved.
            ``(5) Emergency services.--In this subsection, the term 
        `emergency services' means--
                    ``(A) health care items and services furnished in 
                the emergency department of a hospital, and
                    ``(B) ancillary services routinely available to 
                such department,
        to the extent they are required to evaluate and treat an 
        emergency medical condition (as defined in paragraph (6)) until 
        the condition is stabilized.
            ``(6) Emergency medical condition.--In paragraph (5), the 
        term `emergency medical condition' means a medical condition, 
        the onset of which is sudden, that manifests itself by symptoms 
        of sufficient severity, including severe pain, that a prudent 
        layperson, who possesses an average knowledge of health and 
        medicine, could reasonably expect the absence of immediate 
        medical attention to result in--
                    ``(A) placing the person's health in serious 
                jeopardy,
                    ``(B) serious impairment to bodily functions, or
                    ``(C) serious dysfunction of any bodily organ or 
                part.
            ``(7) Protection against balance billing.--The limitations 
        on billing that apply to a provider (including a physician) 
        under parts A and B in the case of an individual electing the 
        non-Medicare Choice option shall apply to an individual who 
        elects the Medicare Choice option in the case of any provider 
        that (under the Medicare Choice option) may bill the enrollee 
        directly for services.
    ``(c) Confidentiality and Accuracy of Enrollee Records.--Each 
Medicare Choice organization shall establish procedures--
            ``(1) to safeguard the privacy of individually identifiable 
        enrollee information, and
            ``(2) to maintain accurate and timely medical records for 
        enrollees.
    ``(d) Quality Assurance Program.--
            ``(1) In general.--Each Medicare Choice organization must 
        have arrangements, established in accordance with regulations 
        of the Secretary, for an ongoing quality assurance program for 
        health care services it provides to such individuals.
            ``(2) Elements of program.--The quality assurance program 
        shall--
                    ``(A) stress health outcomes;
                    ``(B) provide for the establishment of written 
                protocols for utilization review, based on current 
                standards of medical practice;
                    ``(C) provide review by physicians and other health 
                care professionals of the process followed in the 
                provision of such health care services;
                    ``(D) monitors and evaluates high volume and high 
                risk services and the care of acute and chronic 
                conditions;
                    ``(E) evaluates the continuity and coordination of 
                care that enrollees receive;
                    ``(F) has mechanisms to detect both 
                underutilization and overutilization of services;
                    ``(G) after identifying areas for improvement, 
                establishes or alters practice parameters;
                    ``(H) takes action to improve quality and assesses 
                the effectiveness of such action through systematic 
                follow-up;
                    ``(I) makes available information on quality and 
                outcomes measures to facilitate beneficiary comparison 
                and choice of health coverage options (in such form and 
                on such quality and outcomes measures as the Secretary 
                determines to be appropriate);
                    ``(J) is evaluated on an ongoing basis as to its 
                effectiveness; and
                    ``(K) provide for external accreditation or review, 
                by a utilization and quality control peer review 
                organization under part B of title XI or other 
                qualified independent review organization, of the 
                quality of services furnished by the organization meets 
                professionally recognized standards of health care 
                (including providing adequate access of enrollees to 
                services).
            ``(3) Exception for certain fee-for-service plans.--
        Paragraph (1) and subsection (c)(2) shall not apply in the case 
        of a Medicare Choice organization in relation to a Medicare 
        Choice product to the extent the organization provides for 
        coverage of benefits without restrictions relating to 
        utilization and without regard to whether the provider has a 
        contract or other arrangement with the plan for the provision 
        of such benefits.
            ``(4) Treatment of accreditation.--The Secretary shall 
        provide that a Medicare Choice organization is deemed to meet 
        the requirements of paragraphs (1) and (2) of this subsection 
        and subsection (c) if the organization is accredited (and 
        periodically reaccredited) by a private organization under a 
        process that the Secretary has determined assures that the 
        organization meets standards that are no less stringent than 
        the standards established under section 1856 to carry out this 
        subsection and subsection (c).
    ``(e) Coverage Determinations.--
            ``(1) Decisions on nonemergency care.--A Medicare Choice 
        organization shall make determinations regarding authorization 
requests for nonemergency care on a timely basis, depending on the 
urgency of the situation.
            ``(2) Appeals.--
                    ``(A) In general.--Appeals from a determination of 
                an organization denying coverage shall be decided 
                within 30 days of the date of receipt of medical 
                information, but not later than 60 days after the date 
                of the decision.
                    ``(B) Physician decision on certain appeals.--
                Appeal decisions relating to a determination to deny 
                coverage based on a lack of medical necessity shall be 
                made only by a physician.
                    ``(C) Emergency cases.--Appeals from such a 
                determination involving a life-threatening or emergency 
                situation shall be decided on an expedited basis.
    ``(f) Grievances and Appeals.--
            ``(1) Grievance mechanism.--Each Medicare Choice 
        organization must provide meaningful procedures for hearing and 
        resolving grievances between the organization (including any 
        entity or individual through which the organization provides 
        health care services) and enrollees under this part.
            ``(2) Appeals.--An enrollee with an organization under this 
        part who is dissatisfied by reason of the enrollee's failure to 
        receive any health service to which the enrollee believes the 
        enrollee is entitled and at no greater charge than the enrollee 
        believes the enrollee is required to pay is entitled, if the 
        amount in controversy is $100 or more, to a hearing before the 
        Secretary to the same extent as is provided in section 205(b), 
        and in any such hearing the Secretary shall make the 
        organization a party. If the amount in controversy is $1,000 or 
        more, the individual or organization shall, upon notifying the 
        other party, be entitled to judicial review of the Secretary's 
        final decision as provided in section 205(g), and both the 
        individual and the organization shall be entitled to be parties 
        to that judicial review. In applying sections 205(b) and 205(g) 
        as provided in this subparagraph, and in applying section 
        205(l) thereto, any reference therein to the Commissioner of 
        Social Security or the Social Security Administration shall be 
        considered a reference to the Secretary or the Department of 
        Health and Human Services, respectively.
            ``(3) Coordination with secretary of labor.--The Secretary 
        shall consult with the Secretary of Labor so as to ensure that 
        the requirements of this subsection, as they apply in the case 
        of grievances referred to in paragraph (1) to which section 503 
        of the Employee Retirement Income Security Act of 1974 applies, 
        are applied in a manner consistent with the requirements of 
        such section 503.
    ``(g) Information on Advance Directives.--Each Medicare Choice 
organization shall meet the requirement of section 1866(f) (relating to 
maintaining written policies and procedures respecting advance 
directives).
    ``(h) Approval of Marketing Materials.--
            ``(1) Submission.--Each Medicare Choice organization may 
        not distribute marketing materials unless--
                    ``(A) at least 45 days before the date of 
                distribution the organization has submitted the 
                material to the Secretary for review, and
                    ``(B) the Secretary has not disapproved the 
                distribution of such material.
            ``(2) Review.--The standards established under section 1856 
        shall include guidelines for the review of all such material 
        submitted and under such guidelines the Secretary shall 
        disapprove such material if the material is materially 
        inaccurate or misleading or otherwise makes a material 
        misrepresentation.
            ``(3) Deemed approval (1-stop shopping).--In the case of 
        material that is submitted under paragraph (1)(A) to the 
        Secretary or a regional office of the Department of Health and 
        Human Services and the Secretary or the office has not 
        disapproved the distribution of marketing materials under 
        paragraph (1)(B) with respect to a Medicare Choice product in 
        an area, the Secretary is deemed not to have disapproved such 
        distribution in all other areas covered by the product and 
        organization.
            ``(4) Prohibition of certain marketing practices.--Each 
        Medicare Choice organization shall conform to fair marketing 
        standards in relation to Medicare Choice products offered under 
        this part, included in the standards established under section 
        1856. Such standards shall include a prohibition against an 
        organization (or agent of such an organization) completing any 
        portion of any election form under section 1805 on behalf of 
        any individual.
    ``(i) Additional Standardized Information on Quality, Outcomes, and 
Other Factors.--
            ``(1) In general.--In addition to any other information 
        required to be provided under this part, each Medicare Choice 
        organization shall provide the Secretary (at a time, not less 
        frequently than annually, and in an electronic, standardized 
        form and manner specified by the Secretary) such information as 
        the Secretary determines to be necessary, consistent with this 
        part, to evaluate the performance of the organization in 
        providing benefits to enrollees.
            ``(2) Information to be included.--Subject to paragraph 
        (3), information to be provided under this subsection shall 
        include at least the following:
                    ``(A) Information on the characteristics of 
                enrollees that may affect their need for or use of 
                health services and the determination of risk-adjusted 
                payments under section 1855.
                    ``(B) Information on the types of treatments and 
                outcomes of treatments with respect to the clinical 
                health, functional status, and well-being of enrollees.
                    ``(C) Information on health care expenditures and 
                the volume and prices of procedures.
                    ``(D) Information on the flexibility permitted by 
                plans to enrollees in their selection of providers.
            ``(3) Special treatment.--The Secretary may waive the 
        provision of such information under paragraph (2), or require 
        such other information, as the Secretary finds appropriate in 
        the case of a newly established Medicare Choice organization 
        for which such information is not available.
    ``(j) Demonstration Projects.--The Secretary shall provide for 
demonstration projects to determine the effectiveness, cost, and impact 
of alternative methods of providing comparative information about the 
performance of Medicare Choice organizations and products and the 
performance of medicare supplemental policies in relation to such 
products. Such projects shall include information about health care 
outcomes resulting from coverage under different products and policies.

                   ``provider-sponsored organizations

    ``Sec. 1854. (a) Provider-Sponsored Organization Defined.--
            ``(1) In general.--In this part, the term `provider-
        sponsored organization' means a public or private entity that 
        (in accordance with standards established under subsection (b)) 
        is a provider, or group of affiliated providers, that provides 
        a substantial proportion (as defined by the Secretary under 
        such standards) of the health care items and services under the 
        contract under this part directly through the provider or 
        affiliated group of providers.
            ``(2) Substantial proportion.--In defining what is a 
        `substantial proportion' for purposes of paragraph (1), the 
        Secretary--
                    ``(A) shall take into account the need for such an 
                organization to assume responsibility for a substantial 
                proportion of services in order to assure financial 
                stability and the practical difficulties in such an 
                organization integrating a very wide range of service 
                providers; and
                    ``(B) may vary such proportion based upon relevant 
                differences among organizations, such as their location 
                in an urban or rural area.
            ``(3) Affiliation.--For purposes of this subsection, a 
        provider is `affiliated' with another provider if, through 
        contract, ownership, or otherwise--
                    ``(A) one provider, directly or indirectly, 
                controls, is controlled by, or is under common control 
                with the other,
                    ``(B) each provider is a participant in a lawful 
                combination under which each provider shares, directly 
                or indirectly, substantial financial risk in connection 
                with their operations,
                    ``(C) both providers are part of a controlled group 
                of corporations under section 1563 of the Internal 
                Revenue Code of 1986, or
                    ``(D) both providers are part of an affiliated 
                service group under section 414 of such Code.
            ``(4) Control.--For purposes of paragraph (3), control is 
        presumed to exist if one party, directly or indirectly, owns, 
        controls, or holds the power to vote, or proxies for, not less 
        than 51 percent of the voting rights or governance rights of 
        another.
    ``(b) Preemption of State Insurance Licensing Requirements.--
            ``(1) In general.--This section supersedes any State law 
        which--
                    ``(A) requires that a provider-sponsored 
                organization meet requirements for insurers of health 
                services or health maintenance organizations doing 
                business in the State with respect to initial 
                capitalization and establishment of financial reserves 
                against insolvency, or
                    ``(B) imposes requirements that would have the 
                effect of prohibiting the organization from complying 
                with the applicable requirements of this part,
        insofar as such the law applies to individuals enrolled with 
        the organization under this part.
            ``(2) Exception for identical standards.--Paragraph (1) 
        shall not apply with respect to any State law to the extent 
        that such law provides the application of standards that are 
        identical to the standards established for provider-sponsored 
        organizations under this part.
            ``(3) Construction.--Nothing in this subsection shall be 
        construed as affecting the operation of section 514 of the 
        Employee Retirement Income Security Act of 1974.

              ``payments to medicare choice organizations

    ``Sec. 1855. (a) Payments.--
            ``(1) In general.--Under a contract under section 1858 the 
        Secretary shall pay to each Medicare Choice organization, with 
        respect to coverage of an individual under this part in a 
        payment area for a month, an amount equal to the monthly 
        adjusted Medicare Choice capitation rate (as provided under 
        subsection (b)) with respect to that individual for that area.
            ``(2) Annual announcement.--The Secretary shall annually 
        determine, and shall announce (in a manner intended to provide 
        notice to interested parties) not later than September 7 before 
        the calendar year concerned--
                    ``(A) the annual Medicare Choice capitation rate 
                for each payment area for the year, and
                    ``(B) the factors to be used in adjusting such 
                rates under subsection (b) for payments for months in 
                that year.
            ``(3) Advance notice of methodological changes.--At least 
        45 days before making the announcement under paragraph (2) for 
        a year, the Secretary shall provide for notice to Medicare 
        Choice organizations of proposed changes to be made in the 
        methodology or benefit coverage assumptions from the 
        methodology and assumptions used in the previous announcement 
        and shall provide such organizations an opportunity to comment 
        on such proposed changes.
            ``(4) Explanation of assumptions.--In each announcement 
        made under paragraph (2) for a year, the Secretary shall 
        include an explanation of the assumptions (including any 
        benefit coverage assumptions) and changes in methodology used 
        in the announcement in sufficient detail so that Medicare 
        Choice organizations can compute monthly adjusted Medicare 
        Choice capitation rates for classes of individuals located in 
        each payment area which is in whole or in part within the 
        service area of such an organization.
    ``(b) Monthly Adjusted Medicare Choice Capitation Rate.--
            ``(1) In general.--For purposes of this section, the 
        `monthly adjusted Medicare Choice capitation rate' under this 
        subsection, for a month in a year for an individual in a 
        payment area (specified under paragraph (3)) and in a class 
        (established under paragraph (4)), is \1/12\ of the annual 
        Medicare Choice capitation rate specified in paragraph (2) for 
        that area for the year, adjusted to reflect the actuarial value 
        of benefits under this title with respect to individuals in 
        such class compared to the national average for individuals in 
        all classes.
            ``(2) Annual medicare choice capitation rates.--
                    ``(A) In general.--For purposes of this section, 
                the annual Medicare Choice capitation rate for a 
                payment area for a year is equal to the annual Medicare 
                Choice capitation rate for the area for the previous 
                year (or, in the case of 1996, the average annual per 
                capita rate of payment described in section 
                1876(a)(1)(C) for the area for 1995) increased by the 
                per capita growth rate for that area and year (as 
                determined under subsection (c)).
                    ``(B) Special rules for 1996.--
                            ``(i) Floor at 85 percent of national 
                        average.--In no case shall the annual Medicare 
                        Choice capitation rate for a payment area for 
                        1996 be less than 85 percent of the national 
                        average of such rates for such year for all 
                        payment areas (weighted to reflect the number 
                        of medicare beneficiaries in each such area).
                            ``(ii) Removal of medical education and 
                        disproportionate share hospital payments from 
                        calculation of adjusted average per capita 
                        cost.--In determining the annual Medicare 
                        Choice capitation rate for 1996, the average 
                        annual per capita rate of payment described in 
                        section 1876(a)(1)(C) for 1995 shall be 
                        determined as though the Secretary had excluded 
                        from such rate any amounts which the Secretary 
                        estimated would have been payable under this 
                        title during the year for--
                                    ``(I) payment adjustments under 
                                section 1886(d)(5)(F) for hospitals 
                                serving a disproportionate share of 
                                low-income patients; and
                                    ``(II) the indirect costs of 
                                medical education under section 
                                1886(d)(5)(B) or for direct graduate 
                                medical education costs under section 
                                1886(h).
            ``(3) Payment area defined.--
                    ``(A) In general.--In this section, the term 
                `payment area' means--
                    ``(i) a metropolitan statistical area, or
                    ``(ii) all areas of a State outside of such an 
                area.
                    ``(B) Special rule for esrd beneficiaries.--Such 
                term means, in the case of the population group 
                described in paragraph (5)(C), each State.
            ``(4) Classes.--
                    ``(A) In general.--For purposes of this section, 
                the Secretary shall define appropriate classes of 
                enrollees, consistent with paragraph (5), based on age, 
                gender, welfare status, institutionalization, and such 
                other factors as the Secretary determines to be 
                appropriate, so as to ensure actuarial equivalence. The 
                Secretary may add to, modify, or substitute for such 
                classes, if such changes will improve the determination 
                of actuarial equivalence.
                    ``(B) Research.--The Secretary shall conduct such 
                research as may be necessary to provide for greater 
                accuracy in the adjustment of capitation rates under 
                this subsection. Such research may include research 
                into the addition or modification of classes under 
                subparagraph (A). The Secretary shall submit to 
                Congress a report on such research by not later than 
                January 1, 1997.
            ``(5) Division of medicare population.--In carrying out 
        paragraph (4) and this section, the Secretary shall recognize 
        the following separate population groups:
                    ``(A) Aged.--Individuals 65 years of age or older 
                who are not described in subparagraph (C).
                    ``(B) Disabled.--Disabled individuals who are under 
                65 years of age and not described in subparagraph (C).
                    ``(C) Individuals with end stage renal disease.--
                Individuals who are determined to have end stage renal 
                disease.
    ``(c) Per Capita Growth Rates.--
            ``(1) For 1996.--
                    ``(A) In general.--For purposes of this section and 
                subject to subparagraph (B), the per capita growth 
                rates for 1996, for a payment area assigned to a 
                service utilization cohort under subsection (d), shall 
                be the following:
                            ``(i) Below average service utilization 
                        cohort.--For areas assigned to the below 
                        average service utilization cohort, 9.6 
                        percent.
                            ``(ii) Above average service utilization 
                        cohort.--For areas assigned to the above 
                        average service utilization cohort, 4.8 
                        percent.
                            ``(iii) Highest service utilization 
                        cohort.--For areas assigned to the highest 
                        service utilization cohort, 2.1 percent.
                    ``(B) Budget neutral adjustment.--The Secretary 
                shall adjust the per capita growth rates specified in 
                subparagraph (A) for all the areas by such uniform 
                factor as may be necessary to assure that the total 
                capitation payments under this section during 1996 are 
                the same as the amount such payments would have been if 
                the per capita growth rate for all such areas for 1996 
                were equal to the national average per capita growth 
                rate, specified in paragraph (3) for 1996.
            ``(2) For subsequent years.--
                    ``(A) In general.--For purposes of this section and 
                subject to subparagraph (B), the Secretary shall 
                compute a per capita growth rate for each year after 
                1996, for each payment area as assigned to a service 
                utilization cohort under subsection (d), consistent 
                with the following rules:
                            ``(i) Below average service utilization 
                        cohort set at 143 percent of national average 
                        per capita growth rate.--The per capita growth 
                        rate for areas assigned to the below average 
                        service utilization cohort for the year shall 
                        be 160 percent of the national average per 
                        capita growth rate for the year (as specified 
                        under paragraph (3)).
                            ``(ii) Above average service utilization 
                        cohort set at 80 percent of national average 
                        per capita growth rate.--The per capita growth 
                        rate for areas assigned to the above average 
                        service utilization cohort for the year shall 
                        be 80 percent of the national average per 
                        capita growth rate for the year.
                            ``(iii) Highest service utilization cohort 
                        set at 40 percent of national average per 
                        capita growth rate.--The per capita growth rate 
                        for areas assigned to the highest service 
                        utilization cohort for the year shall be 35 
                        percent of the national average per capita 
                        growth rate for the year.
                    ``(B) Average per capita growth rate at national 
                average to assure budget neutrality.--The Secretary 
                shall compute per capita growth rates for a year under 
                subparagraph (A) in a manner so that the weighted 
                average per capita growth rate for all areas for the 
                year (weighted to reflect the number of medicare 
                beneficiaries in each area) is equal to the national 
                average per capita growth rate under paragraph (3) for 
                the year.
            ``(3) National average per capita growth rates.--In this 
        subsection, the `national average per capita growth rate' for--
                    ``(A) 1996 is 6.0 percent,
                    ``(B) 1997 is 6.0 percent,
                    ``(C) 1998 is 6.0 percent,
                    ``(D) 1999 is 5.5 percent,
                    ``(E) 2000 is 5.5 percent,
                    ``(F) 2001 is 5.5 percent,
                    ``(G) 2002 is 5.5 percent, and
                    ``(H) each subsequent year is 5.5 percent.
    ``(d) Assignment of Payment Areas to Service Utilization Cohorts.--
            ``(1) In general.--For purposes of determining per capita 
        growth rates under subsection (c) for areas for a year, the 
        Secretary shall assign each payment area to a service 
        utilization cohort (based on the service utilization index 
        value for that area determined under paragraph (2)) as follows:
                    ``(A) Below average service utilization cohort.--
                Areas with a service utilization index value of less 
                than 1.00 shall be assigned to the below average 
                service utilization cohort.
                    ``(B) Above average service utilization cohort.--
                Areas with a service utilization index value of at 
                least 1.00 but less than 1.20 shall be assigned to the 
                above average service utilization cohort.
                    ``(C) Highest service utilization cohort.--Areas 
                with a service utilization index value of at least 1.20 
                shall be assigned to the highest service utilization 
                cohort.
            ``(2) Determination of service utilization index values.--
        In order to determine the per capita growth rate for a payment 
        area for each year (beginning with 1996), the Secretary shall 
        determine for such area and year a service utilization index 
        value, which is equal to--
                    ``(A) the annual Medicare Choice capitation rate 
                under this section for the area for the year in which 
                the determination is made (or, in the case of 1996, the 
                average annual per capita rate of payment (described in 
                section 1876(a)(1)(C)) for the area for 1995); divided 
                by
                    ``(B) the input-price-adjusted annual national 
                Medicare Choice capitation rate (as determined under 
                paragraph (3)) for that area for the year in which the 
                determination is made.
            ``(3) Determination of input-price-adjusted rates.--
                    ``(A) In general.--For purposes of paragraph (2), 
                the `input-price-adjusted annual national Medicare 
                Choice capitation rate' for a payment area for a year 
                is equal to the sum, for all the types of medicare 
                services (as classified by the Secretary), of the 
                product (for each such type) of--
                            ``(i) the national standardized Medicare 
                        Choice capitation rate (determined under 
                        subparagraph (B)) for the year,
                            ``(ii) the proportion of such rate for the 
                        year which is attributable to such type of 
                        services, and
                            ``(iii) an index that reflects (for that 
                        year and that type of services) the relative 
                        input price of such services in the area 
                        compared to the national average input price of 
                        such services.
                In applying clause (iii), the Secretary shall, subject 
                to subparagraph (C), apply those indices under this 
                title that are used in applying (or updating) national 
                payment rates for specific areas and localities.
                    ``(B) National standardized medicare choice 
                capitation rate.--In this paragraph, the `national 
                standardized Medicare Choice capitation rate' for a 
                year is equal to--
                            ``(i) the sum (for all payment areas) of 
                        the product of (I) the annual Medicare Choice 
                        capitation rate for that year for the area 
                        under subsection (b)(2), and (II) the average 
                        number of medicare beneficiaries residing in 
                        that area in the year; divided by
                            ``(ii) the total average number of medicare 
                        beneficiaries residing in all the payment areas 
                        for that year.
                    ``(C) Special rules for 1996.--In applying this 
                paragraph for 1996--
                            ``(i) medicare services shall be divided 
                        into 2 types of services: part A services and 
                        part B services;
                            ``(ii) the proportions described in 
                        subparagraph (A)(ii) for such types of services 
                        shall be--
                                    ``(I) for part A services, the 
                                ratio (expressed as a percentage) of 
                                the average annual per capita rate of 
                                payment for the area for part A for 
                                1995 to the total average annual per 
                                capita rate of payment for the area for 
                                parts A and B for 1995, and
                                    ``(II) for part B services, 100 
                                percent minus the ratio described in 
                                subclause (I);
                            ``(iii) for the part A services, 70 percent 
                        of payments attributable to such services shall 
                        be adjusted by the index used under section 
                        1886(d)(3)(E) to adjust payment rates for 
                        relative hospital wage levels for hospitals 
                        located in the payment area involved;
                            ``(iv) for part B services--
                                    ``(I) 66 percent of payments 
                                attributable to such services shall be 
                                adjusted by the index of the geographic 
                                area factors under section 1848(e) used 
                                to adjust payment rates for physicians' 
                                services furnished in the payment area, 
                                and
                                    ``(II) of the remaining 34 percent 
                                of the amount of such payments, 70 
                                percent shall be adjusted by the index 
                                described in clause (iii);
                            ``(v) the index values shall be computed 
                        based only on the beneficiary population 
                        described in subsection (b)(5)(A).
                The Secretary may continue to apply the rules described 
                in this subparagraph (or similar rules) for 1997.
    ``(e) Payment Process.--
            ``(1) In general.--Subject to section 1859(f), the 
        Secretary shall make monthly payments under this section in 
        advance and in accordance with the rate determined under 
        subsection (a) to the plan for each individual enrolled with a 
        Medicare Choice organization under this part.
            ``(2) Adjustment to reflect number of enrollees.--
                    ``(A) In general.--The amount of payment under this 
                subsection may be retroactively adjusted to take into 
                account any difference between the actual number of 
                individuals enrolled with an organization under this 
                part and the number of such individuals estimated to be 
                so enrolled in determining the amount of the advance 
                payment.
                    ``(B) Special rule for certain enrollees.--
                            ``(i) In general.--Subject to clause (ii), 
                        the Secretary may make retroactive adjustments 
                        under subparagraph (A) to take into account 
                        individuals enrolled during the period 
                        beginning on the date on which the individual 
                        enrolls with a Medicare Choice organization 
                        under a product operated, sponsored, or 
                        contributed to by the individual's employer or 
                        former employer (or the employer or former 
                        employer of the individual's spouse) and ending 
                        on the date on which the individual is enrolled 
                        in the organization under this part, except 
                        that for purposes of making such retroactive 
                        adjustments under this subparagraph, such 
                        period may not exceed 90 days.
                            ``(ii) Exception.--No adjustment may be 
                        made under clause (i) with respect to any 
                        individual who does not certify that the 
                        organization provided the individual with the 
                        disclosure statement described in section 
                        1853(a) at the time the individual enrolled 
                        with the organization.
    ``(f) Payments From Trust Fund.--The payment to a Medicare Choice 
organization under this section for individuals enrolled under this 
part with the organization, and payments to a Medicare Choice MSA under 
subsection (f)(1)(B), shall be made from the Federal Hospital Insurance 
Trust Fund and the Federal Supplementary Medical Insurance Trust Fund 
in such proportion as the Secretary determines reflects the relative 
weight that benefits under part A and under part B represents of the 
actuarial value of the total benefits under this title.
    ``(g) Special Rule for Certain Inpatient Hospital Stays.--In the 
case of an individual who is receiving inpatient hospital services from 
a subsection (d) hospital (as defined in section 1886(d)(1)(B)) as of 
the effective date of the individual's--
            ``(1) election under this part of a Medicare Choice product 
        offered by a Medicare Choice organization--
                    ``(A) payment for such services until the date of 
                the individual's discharge shall be made under this 
                title through the Medicare Choice product or Non-
                Medicare Choice option (as the case may be) elected 
                before the election with such organization,
                    ``(B) the elected organization shall not be 
                financially responsible for payment for such services 
                until the date after the date of the individual's 
                discharge, and
                    ``(C) the organization shall nonetheless be paid 
                the full amount otherwise payable to the organization 
                under this part; or
            ``(2) termination of election with respect to a Medicare 
        Choice organization under this part--
                    ``(A) the organization shall be financially 
                responsible for payment for such services after such 
                date and until the date of the individual's discharge,
                    ``(B) payment for such services during the stay 
                shall not be made under section 1886(d) or by any 
                succeeding Medicare Choice organization, and
                    ``(C) the terminated organization shall not receive 
                any payment with respect to the individual under this 
                part during the period the individual is not enrolled.

  ``establishment of standards for medicare choice organizations and 
                                products

    ``Sec. 1856. (a) Interim Standards.--
            ``(1) In general.--The Secretary shall issue regulations 
        regarding standards for Medicare Choice organizations and 
        products within 180 days after the date of the enactment of 
        this section. Such regulations shall be issued on an interim 
        basis, but shall become effective upon publication and shall be 
        effective through the end of 1999.
            ``(2) Solicitation of views.--In developing standards under 
        this subsection relating to solvency of Medicare Choice 
        organizations, the Secretary shall solicit the views of the 
        American Academy of Actuaries.
            ``(3) Effect on state regulations.--Regulations under this 
        subsection shall not preempt State regulations for Medicare 
        Choice organizations for products not offered under this part.
    ``(b) Permanent Standards.--
            ``(1) In general.--The Secretary shall develop permanent 
        standards under this subsection.
            ``(2) Consultation.--In developing standards under this 
        subsection, the Secretary shall consult with the National 
        Association of Insurance Commissioners, associations 
        representing the various types of Medicare Choice 
        organizations, and medicare beneficiaries.
            ``(3) Effectiveness.--The standards under this subsection 
        shall take effect for periods beginning on or after January 1, 
        2000.
    ``(c) Solvency.--In establishing interim and permanent standards 
under this section relating to solvency of organizations, the Secretary 
shall recognize the multiple means of demonstrating solvency, 
including--
            ``(1) reinsurance purchased through a recognized commerce 
        company or through a capitive company owned directly or 
        indirectly by 3 or more provider-sponsored organizations,
            ``(2) unrestricted surplus,
            ``(3) guarantees, and
            ``(4) letters of credit.
In such standards, the Secretary may treat as admitted assets the 
assets used by a provider-sponsored organization in delivering covered 
services.
    ``(d) Application of New Standards to Entities with a Contract.--In 
the case of a Medicare Choice organization with a contract in effect 
under this part at the time standards applicable to the organization 
under this section are changed, the organization may elect not to have 
such changes apply to the organization until the end of the current 
contract year (or, if there is less than 6 months remaining in the 
contract year, until 1 year after the end of the current contract 
year).
    ``(e) Relation to State Laws.--The standards established under this 
section shall supersede any State law. The standard or regulation with 
respect to Medicare Choice products which are offered by Medicare 
Choice organizations and are issued by organizations to which section 
1851(b)(1) applies, to the extent such law or regulation is 
inconsistent with such standards.

                    ``medicare choice certification

    ``Sec. 1857. (a) In General.--
            ``(1) Establishment.--The Secretary shall establish a 
        process for the certification of organizations and products 
        offered by organizations as meeting the applicable standards 
        for Medicare Choice organizations and Medicare Choice products 
        established under section 1856.
            ``(2) Involvement of secretary of labor.--Such process 
        shall be established and operated in cooperation with the 
        Secretary of Labor with respect to union sponsors and Taft-
        Hartley sponsors.
            ``(3) Use of private accreditation processes.--
                    ``(A) In general.--The process under this 
                subsection shall, to the maximum extent practicable, 
                provide that Medicare Choice organizations and products 
                that are licensed or certified through a qualified 
                private accreditation process that the Secretary finds 
                applies standards that are no less stringent than the 
                requirements of this part are deemed to meet the 
                corresponding requirements of this part for such an 
                organization or product.
                    ``(B) Periodic accreditation.--The use of an 
                accreditation under subparagraph (A) shall be valid 
                only for such period as the Secretary specifies.
            ``(4) User fees.--The Secretary may impose user fees on 
        entities seeking certification under this subsection in such 
        amounts as the Secretary deems sufficient to finance the costs 
        of such certification.
    ``(b) Notice to Enrollees in Case of Decertification.--If a 
Medicare Choice organization or product is decertified under this 
section, the organization shall notify each enrollee with the 
organization and product under this part of such decertification.
    ``(c) Qualified Associations.--In the case of Medicare Choice 
products offered by a Medicare Choice organization that is a qualified 
association (as defined in section 1854(c)(4)(C)) and issued by an 
organization to which section 1851(b)(1) applies or by a provider-
sponsored organization (as defined in section 1854(a)), nothing in this 
section shall be construed as limiting the authority of States to 
regulate such products.

             ``contracts with medicare choice organizations

    ``Sec. 1858. (a) In General.--The Secretary shall not permit the 
election under section 1805 of a Medicare Choice product offered by a 
Medicare Choice organization under this part, and no payment shall be 
made under section 1856 to an organization, unless the Secretary has 
entered into a contract under this section with an organization with 
respect to the offering of such product. Such a contract with an 
organization may cover more than one Medicare Choice product. Such 
contract shall provide that the organization agrees to comply with the 
applicable requirements and standards of this part and the terms and 
conditions of payment as provided for in this part.
    ``(b) Enrollment Requirements.--
            ``(1)(A) Minimum enrollment requirement.--Subject to 
        subparagraphs (B) and (C), the Secretary may not enter into a 
        contract under this section with a Medicare Choice organization 
        (other than a union sponsor or Taft-Hartley sponsor) unless the 
        organization has at least 5,000 individuals (or 1,500 
        individuals in the case of an organization that is a provider-
        sponsored organization) who are receiving health benefits 
        through the organization, except that the standards under 
        section 1856 may permit the organization to have a lesser 
        number of beneficiaries (but not less than 500 in the case of 
        an organization that is a provider-sponsored organization) if 
        the organization primarily serves individuals residing outside 
        of urbanized areas.
            ``(B) Allowing transition.--The Secretary may waive the 
        requirement of subparagraph (A) during the first 3 contract 
        years with respect to an organization.
            ``(C) Treatment of areas with low managed care 
        penetration.--The Secretary may waive the requirement of 
        subparagraph (A) in the case of organizations operating in 
areas in which there is a low proportion of medicare beneficiaries who 
have made the Medicare Choice election.
            ``(2) Requirement for enrollment of non-medicare 
        beneficiaries.--
                    ``(A) In general.--Each Medicare Choice 
                organization with which the Secretary enters into a 
                contract under this section shall have, for the 
                duration of such contract, an enrolled membership at 
                least one-half of which consists of individuals who are 
                not entitled to benefits under this title or under a 
                State plan approved under title XIX.
                    ``(B) Exception.--Subparagraph (A) shall not apply 
                to--
                            ``(i) an organization that has been 
                        certified by a national organization recognized 
                        by the Secretary and has been found to have met 
                        performance standards established by the 
                        Secretary for at least 2 years, or
                            ``(ii) a provider-sponsored organization 
                        for which commercial payments to providers 
                        participating in the organization exceed the 
                        payments to the organization under this part.
                    ``(C) Modification and waiver.--The Secretary may 
                modify or waive the requirement imposed by subparagraph 
                (A)--
                            ``(i) to the extent that more than 50 
                        percent of the population of the area served by 
                        the organization consists of individuals who 
                        are entitled to benefits under this title or 
                        under a State plan approved under title XIX, or
                            ``(ii) in the case of an organization that 
                        is owned and operated by a governmental entity, 
                        only with respect to a period of three years 
                        beginning on the date the organization first 
                        enters into a contract under this section, and 
                        only if the organization has taken and is 
                        making reasonable efforts to enroll individuals 
                        who are not entitled to benefits under this 
                        title or under a State plan approved under 
                        title XIX.
                    ``(D) Enforcement.--If the Secretary determines 
                that an organization has failed to comply with the 
                requirements of this paragraph, the Secretary may 
                provide for the suspension of enrollment of individuals 
                under this part or of payment to the organization under 
                this part for individuals newly enrolled with the 
                organization, after the date the Secretary notifies the 
                organization of such noncompliance.
    ``(c) Contract Period and Effectiveness.--
            ``(1) Period.--Each contract under this section shall be 
        for a term of at least one year, as determined by the 
        Secretary, 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.
            ``(2) Termination authority.--In accordance with procedures 
        established under subsection (h), the Secretary may at any time 
        terminate any such contract or may impose the intermediate 
        sanctions described in an applicable paragraph of subsection 
        (g) on the Medicare Choice organization if the Secretary 
        determines that the organization--
                    ``(A) has failed substantially to carry out the 
                contract;
                    ``(B) is carrying out the contract in a manner 
                inconsistent with the efficient and effective 
                administration of this part;
                    ``(C) is operating in a manner that is not in the 
                best interests of the individuals covered under the 
                contract; or
                    ``(D) no longer substantially meets the applicable 
                conditions of this part.
            ``(3) Effective date of contracts.--The effective date of 
        any contract executed pursuant to this section shall be 
        specified in the contract.
            ``(4) Previous terminations.--The Secretary may not enter 
        into a contract with a Medicare Choice organization if a 
        previous contract with that organization under this section was 
        terminated at the request of the organization within the 
        preceding five-year period, except in circumstances which 
        warrant special consideration, as determined by the Secretary.
            ``(5) No contracting authority.--The authority vested in 
        the Secretary by this part may be performed without regard to 
        such provisions of law or regulations relating to the making, 
        performance, amendment, or modification of contracts of the 
        United States as the Secretary may determine to be inconsistent 
        with the furtherance of the purpose of this title.
    ``(d) Protections Against Fraud and Beneficiary Protections.--
            ``(1) Inspection and audit.--Each contract under this 
        section shall provide that the Secretary, or any person or 
        organization designated by the Secretary--
                    ``(A) shall have the right to inspect or otherwise 
                evaluate (i) the quality, appropriateness, and 
                timeliness of services performed under the contract and 
                (ii) the facilities of the organization when there is 
                reasonable evidence of some need for such inspection, 
                and
                    ``(B) shall have the right to audit and inspect any 
                books and records of the Medicare Choice organization 
                that pertain (i) to the ability of the organization to 
                bear the risk of potential financial losses, or (ii) to 
                services performed or determinations of amounts payable 
                under the contract.
            ``(2) Enrollee notice at time of termination.--Each 
        contract under this section shall require the organization to 
        provide (and pay for) written notice in advance of the 
        contract's termination, as well as a description of 
        alternatives for obtaining benefits under this title, to each 
        individual enrolled with the organization under this part.
            ``(3) Disclosure.--
                    ``(A) In general.--Each Medicare Choice 
                organization shall, in accordance with regulations of 
                the Secretary, report to the Secretary financial 
                information which shall include the following:
                            ``(i) Such information as the Secretary may 
                        require demonstrating that the organization has 
                        a fiscally sound operation.
                            ``(ii) A copy of the report, if any, filed 
                        with the Health Care Financing Administration 
                        containing the information required to be 
                        reported under section 1124 by disclosing 
                        entities.
                            ``(iii) A description of transactions, as 
                        specified by the Secretary, between the 
                        organization and a party in interest. Such 
                        transactions shall include--
                                    ``(I) any sale or exchange, or 
                                leasing of any property between the 
                                organization and a party in interest;
                                    ``(II) any furnishing for 
                                consideration of goods, services 
                                (including management services), or 
                                facilities between the organization and 
                                a party in interest, but not including 
                                salaries paid to employees for services 
                                provided in the normal course of their 
                                employment and health services provided 
                                to members by hospitals and other 
                                providers and by staff, medical group 
                                (or groups), individual practice 
                                association (or associations), or any 
                                combination thereof; and
                                    ``(III) any lending of money or 
                                other extension of credit between an 
                                organization and a party in interest.
                The Secretary may require that information reported 
                respecting an organization which controls, is 
                controlled by, or is under common control with, another 
                entity be in the form of a consolidated financial 
                statement for the organization and such entity.
                    ``(B) Party in interest defined.--For the purposes 
                of this paragraph, the term `party in interest' means--
                            ``(i) any director, officer, partner, or 
                        employee responsible for management or 
                        administration of a Medicare Choice 
                        organization, any person who is directly or 
                        indirectly the beneficial owner of more than 5 
                        percent of the equity of the organization, any 
                        person who is the beneficial owner of a 
                        mortgage, deed of trust, note, or other 
                        interest secured by, and valuing more than 5 
                        percent of the organization, and, in the case 
                        of a Medicare Choice organization organized as 
                        a nonprofit corporation, an incorporator or 
                        member of such corporation under applicable 
                        State corporation law;
                            ``(ii) any entity in which a person 
                        described in clause (i)--
                                    ``(I) is an officer or director;
                                    ``(II) is a partner (if such entity 
                                is organized as a partnership);
                                    ``(III) has directly or indirectly 
                                a beneficial interest of more than 5 
                                percent of the equity; or
                                    ``(IV) has a mortgage, deed of 
                                trust, note, or other interest valuing 
                                more than 5 percent of the assets of 
                                such entity;
                            ``(iii) any person directly or indirectly 
                        controlling, controlled by, or under common 
                        control with an organization; and
                            ``(iv) any spouse, child, or parent of an 
                        individual described in clause (i).
                    ``(C) Access to information.--Each Medicare Choice 
                organization shall make the information reported 
                pursuant to subparagraph (A) available to its enrollees 
                upon reasonable request.
            ``(4) Loan information.--The contract shall require the 
        organization to notify the Secretary of loans and other special 
        financial arrangements which are made between the organization 
        and subcontractors, affiliates, and related parties.
    ``(f) Additional Contract Terms.--The contract shall contain such 
other terms and conditions not inconsistent with this part (including 
requiring the organization to provide the Secretary with such 
information) as the Secretary may find necessary and appropriate.
    ``(g) Intermediate Sanctions.--
            ``(1) In general.--If the Secretary determines that a 
        Medicare Choice organization with a contract under this 
        section--
                    ``(A) fails substantially to provide medically 
                necessary items and services that are required (under 
                law or under the contract) to be provided to an 
                individual covered under the contract, if the failure 
                has adversely affected (or has substantial likelihood 
                of adversely affecting) the individual;
                    ``(B) imposes premiums on individuals enrolled 
                under this part in excess of the premiums permitted;
                    ``(C) acts to expel or to refuse to re-enroll an 
                individual in violation of the provisions of this part;
                    ``(D) engages in any practice that would reasonably 
                be expected to have the effect of denying or 
                discouraging enrollment (except as permitted by this 
                part) by eligible individuals with the organization 
                whose medical condition or history indicates a need for 
                substantial future medical services;
                    ``(E) misrepresents or falsifies information that 
                is furnished--
                            ``(i) to the Secretary under this part, or
                            ``(ii) to an individual or to any other 
                        entity under this part;
                    ``(F) fails to comply with the requirements of 
                section 1852(f)(3); or
                    ``(G) employs or contracts with any individual or 
                entity that is excluded from participation under this 
                title under section 1128 or 1128A for the provision of 
                health care, utilization review, medical social work, 
                or administrative services or employs or contracts with 
                any entity for the provision (directly or indirectly) 
                through such an excluded individual or entity of such 
                services;
        the Secretary may provide, in addition to any other remedies 
        authorized by law, for any of the remedies described in 
        paragraph (2).
            ``(2) Remedies.--The remedies described in this paragraph 
        are--
                    ``(A) civil money penalties of not more than 
                $25,000 for each determination under paragraph (1) or, 
                with respect to a determination under subparagraph (D) 
                or (E)(i) of such paragraph, of not more than $100,000 
                for each such determination, plus, with respect to a 
                determination under paragraph (1)(B), double the excess 
                amount charged in violation of such paragraph (and the 
                excess amount charged shall be deducted from the 
                penalty and returned to the individual concerned), and 
                plus, with respect to a determination under paragraph 
                (1)(D), $15,000 for each individual not enrolled as a 
                result of the practice involved,
                    ``(B) suspension of enrollment of individuals under 
                this part after the date the Secretary notifies the 
                organization of a determination under paragraph (1) and 
                until the Secretary is satisfied that the basis for 
                such determination has been corrected and is not likely 
                to recur, or
                    ``(C) suspension of payment to the organization 
                under this part for individuals enrolled after the date 
                the Secretary notifies the organization of a 
                determination under paragraph (1) and until the 
                Secretary is satisfied that the basis for such 
                determination has been corrected and is not likely to 
                recur.
            ``(3) Other intermediate sanctions.--In the case of a 
        Medicare Choice organization for which the Secretary makes a 
        determination under subsection (c)(2) the basis of which is not 
        described in paragraph (1), the Secretary may apply the 
        following intermediate sanctions:
                    ``(A) civil money penalties of not more than 
                $25,000 for each determination under subsection (c)(2) 
                if the deficiency that is the basis of the 
                determination has directly adversely affected (or has 
                the substantial likelihood of adversely affecting) an 
                individual covered under the organization's contract;
                    ``(B) civil money penalties of not more than 
                $10,000 for each week beginning after the initiation of 
                procedures by the Secretary under subsection (h) during 
                which the deficiency that is the basis of a 
                determination under subsection (c)(2) exists; and
                    ``(C) suspension of enrollment of individuals under 
                this part after the date the Secretary notifies the 
                organization of a determination under subsection (c)(2) 
                and until the Secretary is satisfied that the 
                deficiency that is the basis for the determination has 
                been corrected and is not likely to recur.
            ``(4) Procedures for imposing sanctions.--The provisions of 
        section 1128A (other than subsections (a) and (b)) shall apply 
        to a civil money penalty under paragraph (1) or (2) in the same 
manner as they apply to a civil money penalty or proceeding under 
section 1128A(a).
    ``(h) Procedures for Imposing Sanctions.--The Secretary may 
terminate a contract with a Medicare Choice organization under this 
section or may impose the intermediate sanctions described in 
subsection (g) on the organization in accordance with formal 
investigation and compliance procedures established by the Secretary 
under which--
            ``(1) the Secretary provides the organization with the 
        opportunity to develop and implement a corrective action plan 
        to correct the deficiencies that were the basis of the 
        Secretary's determination under subsection (c)(2);
            ``(2) the Secretary shall impose more severe sanctions on 
        organizations that have a history of deficiencies or that have 
        not taken steps to correct deficiencies the Secretary has 
        brought to their attention;
            ``(3) there are no unreasonable or unnecessary delays 
        between the finding of a deficiency and the imposition of 
        sanctions; and
            ``(4) the Secretary provides the organization with 
        reasonable notice and opportunity for hearing (including the 
        right to appeal an initial decision) before imposing any 
        sanction or terminating the contract.

     ``demonstration project for high deductible/medisave products

    ``Sec. 1859. (a) Permitting Demonstration Projects.--
            ``(1) In general.--The Secretary shall permit, on a 
        demonstration project basis, the offering of high deductible/
        medisave products under this part, subject to the special rules 
        provided under this section.
            ``(2) Limitation on number and duration of projects.--The 
        Secretary shall not permit under this section the offering of 
        more than 10 demonstration projects and each such project shall 
        not exceed 7 years in duration.
    ``(b) High Deductible/Medisave Product Defined.--
            ``(1) In general.--In this part, the term `high deductible/
        medisave product' means a Medicare Choice product that--
                    ``(A) provides reimbursement for at least the items 
                and services described in section 1852(a)(1) in a year 
                but only after the enrollee incurs countable expenses 
                (as specified under the product) equal to the amount of 
                a deductible (described in paragraph (2));
                    ``(B) counts as such expenses (for purposes of such 
                deductible) at least all amounts that would have been 
                payable under parts A and B or by the enrollee if the 
                enrollee had elected to receive benefits through the 
                provisions of such parts; and
                    ``(C) provides, after such deductible is met for a 
                year and for all subsequent expenses for benefits 
                referred to in subparagraph (A) in the year, for a 
                level of reimbursement that is not less than--
                            ``(i) 100 percent of such expenses, or
                            ``(ii) 100 percent of the amounts that 
                        would have been paid (without regard to any 
                        deductibles or coinsurance) under parts A and B 
                        with respect to such expenses,
                whichever is less. Such term does not include the 
                Medicare Choice MSA itself or any contribution into 
                such account.
            ``(2) Deductible.--The amount of deductible under a high 
        deductible/medisave product--
                    ``(A) for contract year 1997 shall be not more than 
                $10,000; and
                    ``(B) for a subsequent contract year shall be not 
                more than the maximum amount of such deductible for the 
                previous contract year under this paragraph increased 
                by the national average per capita growth rate under 
                section 1855(c)(3) for the year.
        If the amount of the deductible under subparagraph (B) is not a 
        multiple of $50, the amount shall be rounded to the nearest 
        multiple of $50.
    ``(c) Special Rules Relating to Enrollment.--The rule under section 
1805 relating to election of medicare choice products shall apply to 
election of high deductible/medisave products offered under the 
demonstration project under this section, except as follows:
            ``(1) Special rule for certain annuitants.--An individual 
        is not eligible to elect a high deductible/medisave product 
        under section 1805 if the individual is entitled to benefits 
        under chapter 89 of title 5, United States Code, as an 
        annuitant or spouse of an annuitant.
            ``(2) Transition period rule.--During the transition period 
        (as defined in section 1805(e)(1)(B)), an individual who has 
        elected a high deductible/medisave product may not change such 
        election to a Medicare Choice product that is not a high 
        deductible/medisave product unless the individual has had such 
        election in effect for 12 months.
            ``(3) No 90-day disenrollment option.--Paragraph (4)(A) of 
        section 1805(e) shall not apply to an individual who elects a 
        high deductible/medisave product.
            ``(4) Timing of election.--An individual may elect a high 
        deductible/medisave product only during an annual, coordinated 
        election period described in section 1805(e)(3)(B) or during 
        the month of October, 1996.
            ``(5) Effectiveness of election.--An election of coverage 
        for a high deductible/medisave product made in a year shall 
        take effect as of the first day of the following year.
    ``(d) Special Rules Relating to Benefits.--
            ``(1) In general.--Paragraphs (1) and (3) of section 
        1852(a) shall not apply to high deductible/medisave products.
            ``(2) Premiums.--
                    ``(A) Application of alternative premium.--In 
                applying section 1852(d)(2) in the case of a high 
                deductible/medisave product, instead of the amount 
                specified in subparagraph (B) there shall be 
                substituted the monthly adjusted Medicare Choice 
                capitation rate specified in section 1855(b)(1) for the 
                individual and period involved.
                    ``(B) Class adjusted premiums.--Notwithstanding 
                section 1852(d)(3), a Medicare Choice organization 
                shall establish premiums for any high deductible/
                medisave product it offers in a payment area based on 
                each of the risk adjustment categories established for 
                purposes of determining the amount of the payment to 
                Medicare Choice organizations under section 1855(b)(1) 
                and using the identical demographic and other 
                adjustments among such categories as are used for such 
                purposes.
                    ``(C) Requirement for additional benefits not 
                applicable.--Section 1852(e)(1)(A) shall not apply to a 
                high deductible/medisave product.
    ``(e) Additional Disclosure.--In any disclosure made pursuant to 
section 1853(a)(1) for a high deductible/medisave product, the 
disclosure shall include a comparison of benefits under such a product 
with benefits under other Medicare Choice products.
    ``(f) Special Rules for Individuals Electing High Deductible/
Medisave Product.--
            ``(1) In general.--In the case of an individual who has 
        elected a high deductible/medisave product, notwithstanding the 
        provisions of section 1855--
                    ``(A) the amount of the payment to the Medicare 
                Choice organization offering the high deductible/
                medisave product shall not exceed the premium for the 
                product, and
                    ``(B) subject to paragraph (2), the difference 
                between the amount of payment that would otherwise be 
                made and the amount of payment to such organization 
                shall be made directly into a Medicare Choice MSA 
                established (and, if applicable, designated) by the 
                individual under paragraph (2).
            ``(2) Establishment and designation of medicare choice 
        medical savings account as requirement for payment of 
        contribution.--In the case of an individual who has elected 
        coverage under a high deductible/medisave product, no payment 
        shall be made under paragraph (1)(B) on behalf of an individual 
        for a month unless the individual--
                    ``(A) has established before the beginning of the 
                month (or by such other deadline as the Secretary may 
                specify) a Medicare Choice MSA (as defined in section 
                137(b) of the Internal Revenue Code of 1986), and
                    ``(B) if the individual has established more than 
                one Medicare Choice MSA, has designated one of such 
                accounts as the individual's Medicare Choice MSA for 
                purposes of this part.
        Under rules under this section, such an individual may change 
        the designation of such account under subparagraph (B) for 
        purposes of this part.
            ``(3) Lump sum deposit of medical savings account 
        contribution.--In the case of an individual electing a high 
        deductible/medisave product effective beginning with a month in 
        a year, the amount of the contribution to the Medicare Choice 
        MSA on behalf of the individual for that month and all 
        successive months in the year shall be deposited during that 
        first month. In the case of a termination of such an election 
        as of a month before the end of a year, the Secretary shall 
        provide for a procedure for the recovery of deposits 
        attributable to the remaining months in the year.
    ``(g) Special Contract Rules.--
            ``(1) Enrollment requirements waived.--Subsection (b) of 
        section 1858 shall not apply with respect to a contract that 
        relates only to one or more high deductible/medisave products.
            ``(2) Effective date of contracts.--In no case shall a 
        contract under section 1858 which provides for coverage under a 
        high deductible/medisave account be effective before January 
        1997 with respect to such coverage.''.
    (b) Conforming References to Previous Part C.--Any reference in law 
(in effect before the date of the enactment of this Act) to part C of 
title XVIII of the Social Security Act is deemed a reference to part D 
of such title (as in effect after such date).
    (c) Use of Interim, Final Regulations.--In order to carry out the 
amendment made by subsection (a) in a timely manner, the Secretary of 
Health and Human Services may promulgate regulations that take effect 
on an interim basis, after notice and pending opportunity for public 
comment.
    (d) Advance Directives.--Section 1866(f)(1) (42 U.S.C. 
1395cc(f)(1)) is amended--
            (1) in paragraph (1)--
                    (A) by inserting ``1853(g),'' after ``1833(s),'', 
                and
                    (B) by inserting ``, Medicare Choice 
                organization,'' after ``provider of services'', and
            (2) by adding at the end the following new paragraph:
    ``(4) Nothing in this subsection shall be construed to require the 
provision of information regarding assisted suicide, euthanasia, or 
mercy killing.''.
    (e) Conforming Amendment.--Section 1866(a)(1)(O) (42 U.S.C. 
1395cc(a)(1)(O)) is amended by inserting before the semicolon at the 
end the following: ``and in the case of hospitals to accept as payment 
in full for inpatient hospital services that are covered under this 
title and are furnished to any individual enrolled under part C with a 
Medicare Choice organization which does not have a contract 
establishing payment amounts for services furnished to members of the 
organization the amounts that would be made as a payment in full under 
this title if the individuals were not so enrolled''.

SEC. 8003. REPORTS.

    (a) Alternative Payment Approaches.--By not later than 18 months 
after the date of the enactment of this Act, the Secretary of Health 
and Human Services (in this title referred to as the ``Secretary'') 
shall submit to Congress a report on alternative provider payment 
approaches under the medicare program, including--
            (1) combined hospital and physician payments per admission,
            (2) partial capitation models for subsets of medicare 
        benefits, and
            (3) risk-sharing arrangements in which the Secretary 
        defines the risk corridor and shares in gains and losses.
Such report shall include recommendations for implementing and testing 
such approaches and legislation that may be required to implement and 
test such approaches.
    (b) Coverage of Retired Workers.--
            (1) In general.--The Secretary shall work with employers 
        and health benefit plans to develop standards and payment 
        methodologies to allow retired workers to continue to 
        participate in employer health plans instead of participating 
        in the medicare program. Such standards shall also cover 
        workers covered under the Federal Employees Health Benefits 
        Program under chapter 89 of title 5, United States Code.
            (2) Report.--Not later than 18 months after the date of the 
        enactment of this Act, the Secretary shall submit to Congress a 
        report on the development of such standards and payment 
        methodologies. The report shall include recommendations 
        relating to such legislation as may be necessary.

SEC. 8004. TRANSITIONAL RULES FOR CURRENT MEDICARE HMO PROGRAM.

    (a) Transition from Current Contracts.--
            (1) Limitation on new contracts.--The Secretary of Health 
        and Human Services (in this section referred to as the 
        ``Secretary'') shall not enter into any risk-sharing or cost 
        reimbursement contract under section 1876 of the Social 
        Security Act with an eligible organization for any contract 
        year beginning on or after the date standards for Medicare 
        Choice organizations and products are first established under 
        section 1856(a) of such Act with respect to Medicare Choice 
        organizations that are insurers or health maintenance 
        organizations unless such a contract had been in effect under 
        section 1876 of such Act for the organization for the previous 
        contract year.
            (2) Termination of current contracts.--
                    (A) Risk-sharing contracts.--Notwithstanding any 
                other provision of law, the Secretary shall not extend 
                or continue any risk-sharing contract with an eligible 
                organization under section 1876 of the Social Security 
                Act (for which a contract was entered into consistent 
                with paragraph (1)(A)) for any contract year beginning 
                on or after 1 year after the date standards described 
                in paragraph (1)(A) are established.
                    (B) Cost reimbursement contracts.--The Secretary 
                shall not extend or continue any reasonable cost 
                reimbursement contract with an eligible organization 
                under section 1876 of the Social Security Act for any 
                contract year beginning on or after January 1, 1998.
    (b) Conforming Payment Rates Under Risk-Sharing Contracts.--
Notwithstanding any other provision of law, the Secretary shall provide 
that payment amounts under risk-sharing contracts under section 1876(a) 
of the Social Security Act for months in a year (beginning with January 
1996) shall be computed--
            (1) with respect to individuals entitled to benefits under 
        both parts A and B of title XVIII of such Act, by substituting 
        payment rates under section 1855(a) of such Act for the payment 
        rates otherwise established under section 1876(a) of such Act, 
        and
            (2) with respect to individuals only entitled to benefits 
        under part B of such title, by substituting an appropriate 
        proportion of such rates (reflecting the relative proportion of 
        payments under such title attributable to such part) for the 
        payment rates otherwise established under section 1876(a) of 
        such Act.
For purposes of carrying out this paragraph for payment for months in 
1996, the Secretary shall compute, announce, and apply the payment 
rates under section 1855(a) of such Act (notwithstanding any deadlines 
specified in such section) in as timely a manner as possible and may 
(to the extent necessary) provide for retroactive adjustment in 
payments made not in accordance with such rates.

   PART 2--SPECIAL RULES FOR MEDICARE CHOICE MEDICAL SAVINGS ACCOUNTS

SEC. 8011. MEDICARE CHOICE MSA'S.

    (a) In General.--Part III of subchapter B of chapter 1 of the 
Internal Revenue Code of 1986 (relating to amounts specifically 
excluded from gross income) is amended by redesignating section 137 as 
section 138 and by inserting after section 136 the following new 
section:

``SEC. 137. MEDICARE CHOICE MSA'S.

    ``(a) Exclusion.--Gross income shall not include any payment to the 
Medicare Choice MSA of an individual by the Secretary of Health and 
Human Services under section 1859(f)(1)(B) of the Social Security Act.
    ``(b) Medicare Choice MSA.--For purposes of this section--
            ``(1) Medicare choice msa.--The term `Medicare Choice MSA' 
        means a trust created or organized in the United States 
        exclusively for the purpose of paying the qualified medical 
        expenses of the account holder, but only if the written 
        governing instrument creating the trust meets the following 
        requirements:
                    ``(A) Except in the case of a trustee-to-trustee 
                transfer described in subsection (d)(4), no 
                contribution will be accepted unless it is made by the 
                Secretary of Health and Human Services under section 
                1859(f)(1)(B) of the Social Security Act.
                    ``(B) The trustee is a bank (as defined in section 
                408(n)), an insurance company (as defined in section 
                816), or another person who demonstrates to the 
                satisfaction of the Secretary that the manner in which 
                such person will administer the trust will be 
                consistent with the requirements of this section.
                    ``(C) No part of the trust assets will be invested 
                in life insurance contracts.
                    ``(D) The assets of the trust will not be 
                commingled with other property except in a common trust 
                fund or common investment fund.
                    ``(E) The interest of an individual in the balance 
                in his account is nonforfeitable.
                    ``(F) Trustee-to-trustee transfers described in 
                subsection (d)(4) may be made to and from the trust.
            ``(2) Qualified medical expenses.--
                    ``(A) In general.--The term `qualified medical 
                expenses' means, with respect to an account holder, 
                amounts paid by such holder--
                            ``(i) for medical care (as defined in 
                        section 213(d)) for the account holder, but 
                        only to the extent such amounts are not 
                        compensated for by insurance or otherwise, or
                            ``(ii) for long-term care insurance for the 
                        account holder.
                    ``(B) Health insurance may not be purchased from 
                account.--Subparagraph (A)(i) shall not apply to any 
                payment for insurance.
            ``(3) Account holder.--The term `account holder' means the 
        individual on whose behalf the Medicare Choice MSA is 
        maintained.
            ``(4) Certain rules to apply.--Rules similar to the rules 
        of subsections (g) and (h) of section 408 shall apply for 
        purposes of this section.
    ``(c) Tax Treatment of Accounts.--
            ``(1) In general.--A Medicare Choice MSA is exempt from 
        taxation under this subtitle unless such MSA has ceased to be a 
        Medicare Choice MSA by reason of paragraph (2). Notwithstanding 
        the preceding sentence, any such MSA is subject to the taxes 
        imposed by section 511 (relating to imposition of tax on 
        unrelated business income of charitable, etc. organizations).
            ``(2) Account assets treated as distributed in the case of 
        prohibited transactions or account pledged as security for 
        loan.--Rules similar to the rules of paragraphs (2) and (4) of 
        section 408(e) shall apply to Medicare Choice MSA's, and any 
        amount treated as distributed under such rules shall be treated 
        as not used to pay qualified medical expenses.
    ``(d) Tax Treatment of Distributions.--
            ``(1) Inclusion of amounts not used for qualified medical 
        expenses.--No amount shall be included in the gross income of 
        the account holder by reason of a payment or distribution from 
        a Medicare Choice MSA which is used exclusively to pay the 
        qualified medical expenses of the account holder. Any amount 
        paid or distributed from a Medicare Choice MSA which is not so 
        used shall be included in the gross income of such holder.
            ``(2) Penalty for distributions not used for qualified 
        medical expenses if minimum balance not maintained.--
                    ``(A) In general.--The tax imposed by this chapter 
                for any taxable year in which there is a payment or 
                distribution from a Medicare Choice MSA which is not 
                used exclusively to pay the qualified medical expenses 
                of the account holder shall be increased by 50 percent 
                of the excess (if any) of--
                            ``(i) the amount of such payment or 
                        distribution, over
                            ``(ii) the excess (if any) of--
                                    ``(I) the fair market value of the 
                                assets in the Medicare Choice MSA as of 
                                the close of the calendar year 
                                preceding the calendar year in which 
                                the taxable year begins, over
                                    ``(II) an amount equal to 60 
                                percent of the deductible under the 
                                catastrophic health plan covering the 
                                account holder as of January 1 of the 
                                calendar year in which the taxable year 
                                begins.
                    ``(B) Exceptions.--Subparagraph (A) shall not apply 
                if the payment or distribution is made on or after the 
                date the account holder--
                            ``(i) becomes disabled within the meaning 
                        of section 72(m)(7), or
                            ``(ii) dies.
                    ``(C) Special rules.--For purposes of subparagraph 
                (A)--
                            ``(i) all Medicare Choice MSA's of the 
                        account holder shall be treated as 1 account,
                            ``(ii) all payments and distributions not 
                        used exclusively to pay the qualified medical 
                        expenses of the account holder during any 
                        taxable year shall be treated as 1 
                        distribution, and
                            ``(iii) any distribution of property shall 
                        be taken into account at its fair market value 
                        on the date of the distribution.
            ``(3) Withdrawal of erroneous contributions.--Paragraphs 
        (1) and (2) shall not apply to any payment or distribution from 
        a Medicare Choice MSA to the Secretary of Health and Human 
        Services of an erroneous contribution to such MSA and of the 
        net income attributable to such contribution.
            ``(4) Trustee-to-trustee transfers.--Paragraphs (1) and (2) 
        shall not apply to any trustee-to-trustee transfer from a 
        Medicare Choice MSA of an account holder to another Medicare 
        Choice MSA of such account holder.
            ``(5) Coordination with medical expense deduction.--For 
        purposes of section 213, any payment or distribution out of a 
        Medicare Choice MSA for qualified medical expenses shall not be 
        treated as an expense paid for medical care.
    ``(e) Treatment of Account After Death of Account Holder.--
            ``(1) Treatment if designated beneficiary is spouse.--
                    ``(A) In general.--In the case of an account 
                holder's interest in a Medicare Choice MSA which is 
                payable to (or for the benefit of) such holder's spouse 
                upon the death of such holder, such Medicare Choice MSA 
                shall be treated as a Medicare Choice MSA of such 
                spouse as of the date of such death.
                    ``(B) Special rules if spouse not medicare 
                eligible.--If, as of the date of such death, such 
                spouse is not entitled to benefits under title XVIII of 
                the Social Security Act, then after the date of such 
                death--
                            ``(i) the Secretary of Health and Human 
                        Services may not make any payments to such 
                        Medicare Choice MSA, other than payments 
                        attributable to periods before such date,
                            ``(ii) in applying subsection (b)(2) with 
                        respect to such Medicare Choice MSA, references 
                        to the account holder shall be treated as 
                        including references to any dependent (as 
                        defined in section 152) of such spouse and any 
                        subsequent spouse of such spouse, and
                            ``(iii) in lieu of applying subsection 
                        (d)(2), the rules of section 220(f)(2) shall 
                        apply.
            ``(2) Treatment if designated beneficiary is not spouse.--
        In the case of an account holder's interest in a Medicare 
        Choice MSA which is payable to (or for the benefit of) any 
        person other than such holder's spouse upon the death of such 
        holder--
                    ``(A) such account shall cease to be a Medicare 
                Choice MSA as of the date of death, and
                    ``(B) an amount equal to the fair market value of 
                the assets in such account on such date shall be 
                includible--
                            ``(i) if such person is not the estate of 
                        such holder, in such person's gross income for 
                        the taxable year which includes such date, or
                            ``(ii) if such person is the estate of such 
                        holder, in such holder's gross income for last 
                        taxable year of such holder.
    ``(f) Reports.--
            ``(1) In general.--The trustee of a Medicare Choice MSA 
        shall make such reports regarding such account to the Secretary 
        and to the account holder with respect to--
                    ``(A) the fair market value of the assets in such 
                Medicare Choice MSA as of the close of each calendar 
                year, and
                    ``(B) contributions, distributions, and other 
                matters,
        as the Secretary may require by regulations.
            ``(2) Time and manner of reports.--The reports required by 
        this subsection--
                    ``(A) shall be filed at such time and in such 
                manner as the Secretary prescribes in such regulations, 
                and
                    ``(B) shall be furnished to the account holder--
                            ``(i) not later than January 31 of the 
                        calendar year following the calendar year to 
                        which such reports relate, and
                            ``(ii) in such manner as the Secretary 
                        prescribes in such regulations.''
    (b) Exclusion of Medicare Choice MSA's From Estate Tax.--Part IV of 
subchapter A of chapter 11 of such Code is amended by adding at the end 
the following new section:

``SEC. 2057. MEDICARE CHOICE MSA'S.

    ``For purposes of the tax imposed by section 2001, the value of the 
taxable estate shall be determined by deducting from the value of the 
gross estate an amount equal to the value of any Medicare Choice MSA 
(as defined in section 137(b)) included in the gross estate.''
    (c) Tax on Prohibited Transactions.--
            (1) Section 4975 of such Code (relating to tax on 
        prohibited transactions) is amended by adding at the end of 
        subsection (c) the following new paragraph:
            ``(5) Special rule for Medicare Choice MSA's.--An 
        individual for whose benefit a Medicare Choice MSA (within the 
        meaning of section 137(b)) is established shall be exempt from 
        the tax imposed by this section with respect to any transaction 
        concerning such account (which would otherwise be taxable under 
        this section) if, with respect to such transaction, the account 
        ceases to be a Medicare Choice MSA by reason of the application 
        of section 137(c)(2) to such account.''
            (2) Paragraph (1) of section 4975(e) of such Code is 
        amended to read as follows:
            ``(1) Plan.--For purposes of this section, the term `plan' 
        means--
                    ``(A) a trust described in section 401(a) which 
                forms a part of a plan, or a plan described in section 
                403(a), which trust or plan is exempt from tax under 
                section 501(a),
                    ``(B) an individual retirement account described in 
                section 408(a),
                    ``(C) an individual retirement annuity described in 
                section 408(b),
                    ``(D) a medical savings account described in 
                section 220(d),
                    ``(E) a Medicare Choice MSA described in section 
                137(b), or
                    ``(F) a trust, plan, account, or annuity which, at 
                any time, has been determined by the Secretary to be 
                described in any preceding subparagraph of this 
                paragraph.''
    (d) Failure To Provide Reports on Medicare Choice MSA's.--
            (1) Subsection (a) of section 6693 of such Code (relating 
        to failure to provide reports on individual retirement accounts 
        or annuities) is amended to read as follows:
    ``(a) Reports.--
            ``(1) In general.--If a person required to file a report 
        under a provision referred to in paragraph (2) fails to file 
        such report at the time and in the manner required by such 
        provision, such person shall pay a penalty of $50 for each 
        failure unless it is shown that such failure is due to 
        reasonable cause.
            ``(2) Provisions.--The provisions referred to in this 
        paragraph are--
                    ``(A) subsections (i) and (l) of section 408 
                (relating to individual retirement plans),
                    ``(B) section 220(h) (relating to medical savings 
                accounts), and
                    ``(C) section 137(f) (relating to Medicare Choice 
                MSA's).''
            (2) The section heading for section 6693 of such Code is 
        amended to read as follows:

``SEC. 6693. FAILURE TO FILE REPORTS ON INDIVIDUAL RETIREMENT PLANS AND 
              CERTAIN OTHER TAX-FAVORED ACCOUNTS; PENALTIES RELATING TO 
              DESIGNATED NONDEDUCTIBLE CONTRIBUTIONS.''

    (e) Clerical Amendments.--
            (1) The table of sections for part III of subchapter B of 
        chapter 1 of such Code is amended by striking the last item and 
        inserting the following:

                              ``Sec. 137. Medicare Choice MSA's.
                              ``Sec. 138. Cross references to other 
                                        Acts.''
            (2) The table of sections for subchapter B of chapter 68 of 
        such Code is amended by striking the item relating to section 
        6693 and inserting the following new item:

                              ``Sec. 6693. Failure to file reports on 
                                        individual retirement plans and 
                                        certain other tax-favored 
                                        accounts; penalties relating to 
                                        designated nondeductible 
                                        contributions.''
            (3) The table of sections for part IV of subchapter A of 
        chapter 11 of such Code is amended by adding at the end the 
        following new item:

                              ``Sec. 2057. Medicare Choice MSA's.''
    (f) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 1996.

SEC. 8012. CERTAIN REBATES EXCLUDED FROM GROSS INCOME.

    (a) In General.--Section 105 of the Internal Revenue Code of 1986 
(relating to amounts received under accident and health plans) is 
amended by adding at the end the following new subsection:
    ``(j) Certain Rebates Under Social Security Act.--Gross income does 
not include any rebate received under section 1852(e)(1)(A) of the 
Social Security Act during the taxable year.''
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to amounts received after the date of the enactment of this Act.

      PART 3--SPECIAL ANTITRUST RULE FOR PROVIDER SERVICE NETWORKS

SEC. 8021. APPLICATION OF ANTITRUST RULE OF REASON TO PROVIDER SERVICE 
              NETWORKS.

    (a) Rule of Reason Standard.--In any action under the antitrust 
laws, or under any State law similar to the antitrust laws--
            (1) the conduct of a provider service network in 
        negotiating, making, or performing a contract (including the 
        establishment and modification of a fee schedule and the 
        development of a panel of physicians), to the extent such 
        contract is for the purpose of providing health care services 
        to individuals under the terms of a Medicare Choice PSO 
        product, and
            (2) the conduct of any member of such network for the 
        purpose of providing such health care services under such 
        contract to such extent,
shall not be deemed illegal per se. Such conduct shall be judged on the 
basis of its reasonableness, taking into account all relevant factors 
affecting competition, including the effects on competition in properly 
defined markets.
    (b) Definitions.--For purposes of subsection (a):
            (1) Antitrust laws.--The term ``antitrust laws'' has the 
        meaning given it in subsection (a) of the first section of the 
        Clayton Act (15 U.S.C. 12), except that such term includes 
        section 5 of the Federal Trade Commission Act (15 U.S.C. 45) to 
        the extent that such section 5 applies to unfair methods of 
        competition.
            (2) Health care provider.--The term ``health care 
        provider'' means any individual or entity that is engaged in 
        the delivery of health care services in a State and that is 
        required by State law or regulation to be licensed or certified 
        by the State to engage in the delivery of such services in the 
        State.
            (3) Health care service.--The term ``health care service'' 
        means any service for which payment may be made under a 
        Medicare Choice PSO product including services related to the 
        delivery or administration of such service.
            (4) Medicare choice program.--The term ``Medicare Choice 
        program'' means the program under part C of title XVIII of the 
        Social Security Act.
            (5) Medicare choice pso product.--The term ``Medicare 
        Choice PSO product'' means a Medicare Choice product offered by 
        a provider-sponsored organization under part C of title XVIII 
        of the Social Security Act.
            (6) Provider service network.--The term ``provider service 
        network'' means an organization that--
                    (A) is organized by, operated by, and composed of 
                members who are health care providers and for purposes 
                that include providing health care services,
                    (B) is funded in part by capital contributions made 
                by the members of such organization,
                    (C) with respect to each contract made by such 
                organization for the purpose of providing a type of 
                health care service to individuals under the terms of a 
                Medicare Choice PSO product--
                            (i) requires all members of such 
                        organization who engage in providing such type 
                        of health care service to agree to provide 
                        health care services of such type under such 
                        contract,
                            (ii) receives the compensation paid for the 
                        health care services of such type provided 
                        under such contract by such members, and
                            (iii) provides for the distribution of such 
                        compensation,
                    (D) has established, consistent with the 
                requirements of the Medicare Choice program for 
                provider-sponsored organizations, a program to review, 
                pursuant to written guidelines, the quality, 
                efficiency, and appropriateness of treatment methods 
                and setting of services for all health care providers 
                and all patients participating in such product, along 
                with internal procedures to correct identified 
                deficiencies relating to such methods and such 
                services,
                    (E) has established, consistent with the 
                requirements of the Medicare Choice program for 
                provider-sponsored organizations, a program to monitor 
                and control utilization of health care services 
                provided under such product, for the purpose of 
                improving efficient, appropriate care and eliminating 
                the provision of unnecessary health care services,
                    (F) has established a management program to 
                coordinate the delivery of health care services for all 
                health care providers and all patients participating in 
                such product, for the purpose of achieving efficiencies 
                and enhancing the quality of health care services 
                provided, and
                    (G) has established, consistent with the 
                requirements of the Medicare Choice program for 
                provider-sponsored organizations, a grievance and 
                appeal process for such organization designed to review 
                and promptly resolve beneficiary or patient grievances 
                and complaints.
        Such term may include a provider-sponsored organization.
            (7) Provider-sponsored organization.--The term ``provider-
        sponsored organization'' means a Medicare Choice organization 
        under the Medicare Choice program that is a provider-sponsored 
        organization (as defined in section 1854(a)(1) of the Social 
        Security Act).
            (8) State.--The term ``State'' has the meaning given it in 
        section 4G(2) of the Clayton Act (15 U.S.C. 15g(2)).
    (c) Issuance of Guidelines.--Not later than 120 days after the date 
of the enactment of this Act, the Attorney General and the Federal 
Trade Commission shall issue jointly guidelines specifying the 
enforcement policies and analytical principles that will be applied by 
the Department of Justice and the Commission with respect to the 
operation of subsection (a).

                          PART 4--COMMISSIONS

SEC. 8031. MEDICARE PAYMENT REVIEW COMMISSION.

    (a) In General.--Title XVIII, as amended by section 8001(a), is 
amended by inserting after section 1805 the following new section:

                  ``medicare payment review commission

    ``Sec. 1806. (a) Establishment.--There is hereby established the 
Medicare Payment Review Commission (in this section referred to as the 
`Commission').
    ``(b) Duties.--
            ``(1) General duties and reports.--The Commission shall 
        review, and make recommendations to Congress concerning, 
        payment policies under this title. By not later than June 1 of 
        each year, the Commission shall submit a report to Congress 
        containing an examination of issues affecting the medicare 
        program, including the implications of changes in health care 
        delivery in the United States and in the market for health care 
        services on the medicare program. The Commission may submit to 
        Congress from time to time such other reports as the Commission 
        deems appropriate. The Secretary shall respond to 
        recommendations of the Commission in notices of rulemaking 
        proceedings under this title.
            ``(2) Specific duties relating to medicare choice 
        program.--Specifically, the Commission shall review, with 
        respect to the Medicare Choice program under part C--
                    ``(A) the appropriateness of the methodology for 
                making payment to plans under such program, including 
                the making of differential payments and the 
                distribution of differential updates among different 
                payment areas,
                    ``(B) the appropriateness of the mechanisms used to 
                adjust payments for risk and the need to adjust such 
                mechanisms to take into account health status of 
                beneficiaries,
                    ``(C) the implications of risk selection both among 
                Medicare Choice organizations and between the Medicare 
                Choice option and the non-Medicare Choice option,
                    ``(D) in relation to payment under part C, the 
                development and implementation of mechanisms to assure 
                the quality of care for those enrolled with Medicare 
                Choice organizations,
                    ``(E) the impact of the Medicare Choice program on 
                access to care for medicare beneficiaries, and
                    ``(F) other major issues in implementation and 
                further development of the Medicare Choice program.
            ``(3) Specific duties relating to the fee-for-service 
        system.--Specifically, the Commission shall review payment 
        policies under parts A and B, including--
                    ``(A) the factors affecting expenditures for 
                services in different sectors, including the process 
                for updating hospital, physician, and other fees,
                    ``(B) payment methodologies; and
                    ``(C) the impact of payment policies on access and 
                quality of care for medicare beneficiaries.
            ``(4) Specific duties relating to interaction of payment 
        policies with health care delivery generally.--Specifically the 
        Commission shall review the effect of payment policies under 
        this title on the delivery of health care services under this 
        title and assess the implications of changes in the health 
        services market on the medicare program.
    ``(c) Membership.--
            ``(1) Number and appointment.--The Commission shall be 
        composed of 15 members appointed by the Comptroller General.
            ``(2) Qualifications.--The membership of the Commission 
        shall include individuals with national recognition for their 
        expertise in health finance and economics, actuarial science, 
        health facility management, health plans and integrated 
        delivery systems, reimbursement of health facilities, 
        physicians, and other providers of services, and other related 
        fields, who provide a mix of different professionals, broad 
        geographic representation, and a balance between urban and 
        rural representatives, including physicians and other health 
        professionals, employers, third party payors, individuals 
        skilled in the conduct and interpretation of biomedical, health 
        services, and health economics research and expertise in 
        outcomes and effectiveness research and technology assessment. 
        Such membership shall also include representatives of consumers 
        and the elderly.
            ``(3) Considerations in initial appointment.--To the extent 
        possible, in first appointing members to the Commission the 
        Comptroller General shall consider appointing individuals who 
        (as of the date of the enactment of this section) were serving 
        on the Prospective Payment Assessment Commission or the 
        Physician Payment Review Commission.
            ``(4) Terms.--
                    ``(A) In general.--The terms of members of the 
                Commission shall be for 3 years except that the 
                Comptroller General shall designate staggered terms for 
                the members first appointed.
                    ``(B) Vacancies.--Any member appointed to fill a 
                vacancy occurring before the expiration of the term for 
                which the member's predecessor was appointed shall be 
                appointed only for the remainder of that term. A member 
                may serve after the expiration of that member's term 
                until a successor has taken office. A vacancy in the 
                Commission shall be filled in the manner in which the 
                original appointment was made.
            ``(5) Compensation.--While serving on the business of the 
        Commission (including traveltime), a member of the Commission 
        shall be entitled to compensation at the per diem equivalent of 
        the rate provided for level IV of the Executive Schedule under 
        section 5315 of title 5, United States Code; and while so 
        serving away from home and member's regular place of business, 
        a member may be allowed travel expenses, as authorized by the 
        Chairman of the Commission. Physicians serving as personnel of 
        the Commission may be provided a physician comparability 
        allowance by the Commission in the same manner as Government 
        physicians may be provided such an allowance by an agency under 
        section 5948 of title 5, United States Code, and for such 
        purpose subsection (i) of such section shall apply to the 
        Commission in the same manner as it applies to the Tennessee 
        Valley Authority. For purposes of pay (other than pay of 
        members of the Commission) and employment benefits, rights, and 
        privileges, all personnel of the Commission shall be treated as 
        if they were employees of the United States Senate.
            ``(6) Chairman; vice chairman.--The Comptroller General 
        shall designate a member of the Commission, at the time 
of appointment of the member, as Chairman and a member as Vice Chairman 
for that term of appointment.
            ``(7) Meetings.--The Commission shall meet at the call of 
        the Chairman.
    ``(d) Director and Staff; Experts and Consultants.--Subject to such 
review as the Comptroller General deems necessary to assure the 
efficient administration of the Commission, the Commission may--
            ``(1) employ and fix the compensation of an Executive 
        Director (subject to the approval of the Comptroller General) 
        and such other personnel as may be necessary to carry out its 
        duties (without regard to the provisions of title 5, United 
        States Code, governing appointments in the competitive 
        service);
            ``(2) seek such assistance and support as may be required 
        in the performance of its duties from appropriate Federal 
        departments and agencies;
            ``(3) enter into contracts or make other arrangements, as 
        may be necessary for the conduct of the work of the Commission 
        (without regard to section 3709 of the Revised Statutes (41 
        U.S.C. 5));
            ``(4) make advance, progress, and other payments which 
        relate to the work of the Commission;
            ``(5) provide transportation and subsistence for persons 
        serving without compensation; and
            ``(6) prescribe such rules and regulations as it deems 
        necessary with respect to the internal organization and 
        operation of the Commission.
    ``(e) Powers.--
            ``(1) Obtaining official data.--The Commission may secure 
        directly from any department or agency of the United States 
        information necessary to enable it to carry out this section. 
        Upon request of the Chairman, the head of that department or 
        agency shall furnish that information to the Commission on an 
        agreed upon schedule.
            ``(2) Data collection.--In order to carry out its 
        functions, the Commission shall collect and assess information.
                    ``(A) utilize existing information, both published 
                and unpublished, where possible, collected and assessed 
                either by its own staff or under other arrangements 
                made in accordance with this section,
                    ``(B) carry out, or award grants or contracts for, 
                original research and experimentation, where existing 
                information is inadequate, and
                    ``(C) adopt procedures allowing any interested 
                party to submit information for the Commission's use in 
                making reports and recommendations.
            ``(3) Access of gao to information.--The Comptroller 
        General shall have unrestricted access to all deliberations, 
        records, and data of the Commission, immediately upon request.
            ``(4) Periodic audit.--The Commission shall be subject to 
        periodic audit by the General Accounting Office.
    ``(f) Authorization of Appropriations.--
            ``(1) Request for appropriations.--The Commission shall 
        submit requests for appropriations in the same manner as the 
        Comptroller General submits requests for appropriations, but 
        amounts appropriated for the Commission shall be separate from 
        amounts appropriated for the Comptroller General.
            ``(2) Authorization.--There are authorized to be 
        appropriated such sums as may be necessary to carry out the 
        provisions of this section. 60 percent of such appropriation 
        shall be payable from the Federal Hospital Insurance Trust 
        Fund, and 40 percent of such appropriation shall be payable 
        from the Federal Supplementary Medical Insurance Trust Fund.''.
    (b) Abolition of ProPAC and PPRC.--
            (1) ProPAC.--
                    (A) In general.--Section 1886(e) (42 U.S.C. 
                1395ww(e)) is amended--
                            (i) by striking paragraphs (2) and (6); and
                            (ii) in paragraph (3), by striking ``(A) 
                        The Commission'' and all that follows through 
                        ``(B)''.
                    (B) Conforming amendment.--Section 1862 (42 U.S.C. 
                1395y) is amended by striking ``Prospective Payment 
                Assessment Commission'' each place it appears in 
                subsection (a)(1)(D) and subsection (i) and inserting 
                ``Medicare Payment Review Commission''.
            (2) PPRC.--
                    (A) In general.--Title XVIII is amended by striking 
                section 1845 (42 U.S.C. 1395w-1).
                    (B) Conforming amendments.--
                            (i) Section 1834(b)(2) (42 U.S.C. 
                        1395m(b)(2)) is amended by striking ``Physician 
                        Payment Review Commission'' and inserting 
                        ``Medicare Payment Review Commission''.
                            (ii) Section 1842(b) (42 U.S.C. 1395u(b)) 
                        is amended by striking ``Physician Payment 
                        Review Commission'' each place it appears in 
                        paragraphs (2)(C), (9)(D), and (14)(C)(i) and 
                        inserting ``Medicare Payment Review 
                        Commission''.
                            (iii) Section 1848 (42 U.S.C. [email protected]) is 
                        amended by striking ``Physician Payment Review 
                        Commission'' and inserting ``Medicare Payment 
                        Review Commission'' each place it appears in 
                        paragraph (2)(A)(ii), (2)(B)(iii), and (5) of 
                        subsection (c), subsection (d)(2)(F), 
                        paragraphs (1)(B), (3), and (4)(A) of 
                        subsection (f), and paragraphs (6)(C) and 
                        (7)(C) of subsection (g).
    (c) Effective Date; Transition.--
            (1) In general.--The Comptroller General shall first 
        provide for appointment of members to the Medicare Payment 
        Review Commission (in this subsection referred to as ``MPRC'') 
        by not later than March 31, 1996.
            (2) Transition.--Effective on a date (not later than 30 
        days after the date a majority of members of the MPRC have 
        first been appointed, the Prospective Payment Assessment 
        Commission (in this subsection referred to as ``ProPAC'') and 
        the Physician Payment Review Commission (in this subsection 
        referred to as ``PPRC''), and amendments made by subsection 
        (b), are terminated. The Comptroller General, to the maximum 
        extent feasible, shall provide for the transfer to the MPRC of 
        assets and staff of ProPAC and PPRC, without any loss of 
        benefits or seniority by virtue of such transfers. Fund 
        balances available to the ProPAC or PPRC for any period shall 
        be available to the MPRC for such period for like purposes.
            (3) Continuing responsibility for reports.--The MPRC shall 
        be responsible for the preparation and submission of reports 
        required by law to be submitted (and which have not been 
        submitted by the date of establishment of the MPRC) by the 
        ProPAC and PPRC, and, for this purpose, any reference in law to 
        either such Commission is deemed, after the appointment of the 
        MPRC, to refer to the MPRC.

SEC. 8032. COMMISSION ON THE EFFECT OF THE BABY BOOM GENERATION ON THE 
              MEDICARE PROGRAM.

    (a) Establishment.--There is established a commission to be known 
as the Commission on the Effect of the Baby Boom Generation on the 
Medicare Program (in this section referred to as the ``Commission'').
    (b) Duties.--
            (1) In general.--The Commission shall--
                    (A) examine the financial impact on the medicare 
                program of the significant increase in the number of 
                medicare eligible individuals which will occur 
                beginning approximately during 2010 and lasting for 
approximately 25 years, and
                    (B) make specific recommendations to the Congress 
                respecting a comprehensive approach to preserve the 
                medicare program for the period during which such 
                individuals are eligible for medicare.
            (2) Considerations in making recommendations.--In making 
        its recommendations, the Commission shall consider the 
        following:
                    (A) The amount and sources of Federal funds to 
                finance the medicare program, including the potential 
                use of innovative financing methods.
                    (B) The most efficient and effective manner of 
                administering the program, including the 
                appropriateness of continuing the enforcement of 
                medicare budget targets under section 8701 for fiscal 
                years after fiscal year 2002 and the appropriate long-
                term growth rates for contributions electing coverage 
                under Medicare Choice under part C of title XVIII of 
                such Act.
                    (C) Methods used by other nations to respond to 
                comparable demographic patterns in eligibility for 
                health care benefits for elderly and disabled 
                individuals.
                    (D) Modifying age-based eligibility to correspond 
                to changes in age-based eligibility under the OASDI 
                program.
                    (E) Trends in employment-related health care for 
                retirees, including the use of medical savings accounts 
                and similar financing devices.
    (c) Membership.--
            (1) Appointment.--The Commission shall be composed of 15 
        members appointed as follows:
                    (A) The President shall appoint 3 members.
                    (B) The Majority Leader of the Senate shall 
                appoint, after consultation with the minority leader of 
                the Senate, 6 members, of whom not more than 4 may be 
                of the same political party.
                    (C) The Speaker of the House of Representatives 
                shall appoint, after consultation with the minority 
                leader of the House of Representatives, 6 members, of 
                whom not more than 4 may be of the same political 
                party.
            (2) Chairman and vice chairman.--The Commission shall elect 
        a Chairman and Vice Chairman from among its members.
            (3) Vacancies.--Any vacancy in the membership of the 
        Commission shall be filled in the manner in which the original 
        appointment was made and shall not affect the power of the 
        remaining members to execute the duties of the Commission.
            (4) Quorum.--A quorum shall consist of 8 members of the 
        Commission, except that 4 members may conduct a hearing under 
        subsection (e).
            (5) Meetings.--The Commission shall meet at the call of its 
        Chairman or a majority of its members.
            (6) Compensation and reimbursement of expenses.--Members of 
        the Commission are not entitled to receive compensation for 
        service on the Commission. Members may be reimbursed for 
        travel, subsistence, and other necessary expenses incurred in 
        carrying out the duties of the Commission.
    (d) Staff and Consultants.--
            (1) Staff.--The Commission may appoint and determine the 
        compensation of such staff as may be necessary to carry out the 
        duties of the Commission. Such appointments and compensation 
        may be made without regard to the provisions of title 5, United 
        States Code, that govern appointments in the competitive 
        services, and the provisions of chapter 51 and subchapter III 
        of chapter 53 of such title that relate to classifications and 
        the General Schedule pay rates.
            (2) Consultants.--The Commission may procure such temporary 
        and intermittent services of consultants under section 3109(b) 
        of title 5, United States Code, as the Commission determines to 
        be necessary to carry out the duties of the Commission.
    (e) Powers.--
            (1) Hearings and other activities.--For the purpose of 
        carrying out its duties, the Commission may hold such hearings 
        and undertake such other activities as the Commission 
        determines to be necessary to carry out its duties.
            (2) Studies by gao.--Upon the request of the Commission, 
        the Comptroller General shall conduct such studies or 
        investigations as the Commission determines to be necessary to 
        carry out its duties.
            (3) Cost estimates by congressional budget office.--
                    (A) Upon the request of the Commission, the 
                Director of the Congressional Budget Office shall 
                provide to the Commission such cost estimates as the 
                Commission determines to be necessary to carry out its 
                duties.
                    (B) The Commission shall reimburse the Director of 
                the Congressional Budget Office for expenses relating 
                to the employment in the office of the Director of such 
                additional staff as may be necessary for the Director 
                to comply with requests by the Commission under 
                subparagraph (A).
            (4) Detail of federal employees.--Upon the request of the 
        Commission, the head of any Federal agency is authorized to 
        detail, without reimbursement, any of the personnel of such 
        agency to the Commission to assist the Commission in carrying 
        out its duties. Any such detail shall not interrupt or 
        otherwise affect the civil service status or privileges of the 
        Federal employee.
            (5) Technical assistance.--Upon the request of the 
        Commission, the head of a Federal agency shall provide such 
        technical assistance to the Commission as the Commission 
        determines to be necessary to carry out its duties.
            (6) Use of mails.--The Commission may use the United States 
        mails in the same manner and under the same conditions as 
        Federal agencies and shall, for purposes of the frank, be 
        considered a commission of Congress as described in section 
        3215 of title 39, United States Code.
            (7) Obtaining information.--The Commission may secure 
        directly from any Federal agency information necessary to 
        enable it to carry out its duties, if the information may be 
        disclosed under section 552 of title 5, United States Code. 
        Upon request of the Chairman of the Commission, the head of 
        such agency shall furnish such information to the Commission.
            (8) Administrative support services.--Upon the request of 
        the Commission, the Administrator of General Services shall 
        provide to the Commission on a reimbursable basis such 
        administrative support services as the Commission may request.
            (9) Acceptance of donations.--The Commission may accept, 
        use, and dispose of gifts or donations of services or property.
            (10) Printing.--For purposes of costs relating to printing 
        and binding, including the cost of personnel detailed from the 
        Government Printing Office, the Commission shall be deemed to 
        be a committee of the Congress.
    (f) Report.--Not later than May 1, 1997, the Commission shall 
submit to Congress a report containing its findings and recommendations 
regarding how to protect and preserve the medicare program in a 
financially solvent manner until 2030 (or, if later, throughout the 
period of projected solvency of the Federal Old-Age and Survivors 
Insurance Trust Fund). The report shall include detailed 
recommendations for appropriate legislative initiatives respecting how 
to accomplish this objective.
    (g) Termination.--The Commission shall terminate 60 days after the 
date of submission of the report required in subsection (f).
    (h) Authorization of Appropriations.--There are authorized to be 
appropriated $1,500,000 to carry out this section. Amounts appropriated 
to carry out this section shall remain available until expended.

           PART 5--PREEMPTION OF STATE ANTI-MANAGED CARE LAWS

SEC. 8041. PREEMPTION OF STATE LAW RESTRICTIONS ON MANAGED CARE 
              ARRANGEMENTS.

    (a) Limitation on Restrictions on Network Plans.--Effective as of 
January 1, 1997--
            (1) a State may not prohibit or limit a carrier or group 
        health plan providing health coverage from including incentives 
        for enrollees to use the services of participating providers;
            (2) a State may not prohibit or limit such a carrier or 
        plan from limiting coverage of services to those provided by a 
        participating provider, except as provided in section 1013;
            (3) a State may not prohibit or limit the negotiation of 
        rates and forms of payments for providers by such a carrier or 
        plan with respect to health coverage;
            (4) a State may not prohibit or limit such a carrier or 
        plan from limiting the number of participating providers;
            (5) a State may not prohibit or limit such a carrier or 
        plan from requiring that services be provided (or authorized) 
        by a practitioner selected by the enrollee from a list of 
        available participating providers or, except for services of a 
        physician who specializes in obstetrics and gynecology, from 
        requiring enrollees to obtain referral in order to have 
        coverage for treatment by a specialist or health institution; 
        and
            (6) a State may not prohibit or limit the corporate 
        practice of medicine.
    (b) Definitions.--In this section:
            (1) Managed care coverage.--The term ``managed care 
        coverage'' means health coverage to the extent the coverage is 
        provided through a managed care arrangement (as defined in 
        paragraph (3)) that meets the applicable requirements of such 
        section.
            (2) Participating provider.--The term ``participating 
        provider'' means an entity or individual which provides, sells, 
        or leases health care services as part of a provider network 
        (as defined in paragraph (4)).
            (3) Managed care arrangement.--The term ``managed care 
        arrangement'' means, with respect to a group health plan or 
        under health insurance coverage, an arrangement under such plan 
        or coverage under which providers agree to provide items and 
        services covered under the arrangement to individuals covered 
        under the plan or who have such coverage.
            (4) Provider network.--The term ``provider network'' means, 
        with respect to a group health plan or health insurance 
        coverage, providers who have entered into an agreement 
        described in paragraph (3).

SEC. 8042. PREEMPTION OF STATE LAWS RESTRICTING UTILIZATION REVIEW 
              PROGRAMS.

    (a) In General.--Effective January 1, 1997, no State law or 
regulation shall prohibit or regulate activities under a utilization 
review program (as defined in subsection (b)).
    (b) Utilization Review Program Defined.--In this section, the term 
``utilization review program'' means a system of reviewing the medical 
necessity and appropriateness of patient services (which may include 
inpatient and outpatient services) using specified guidelines. Such a 
system may include preadmission certification, the application of 
practice guidelines, continued stay review, discharge planning, 
preauthorization of ambulatory procedures, and retrospective review.
    (c) Exemption of Laws Preventing Denial of Lifesaving Medical 
Treatment Pending Transfer to Another Health Care Provider.--Nothing in 
this subtitle shall be construed to invalidate any State law that has 
the effect of preventing involuntary denial of life-preserving medical 
treatment when such denial would cause the involuntary death of the 
patient pending transfer of the patient to a health care provider 
willing to provide such treatment.

          Subtitle B--Provisions Relating to Regulatory Relief

                                                 Title VIII, Subtitle B

    PART 1--PROVISIONS RELATING TO PHYSICIAN FINANCIAL RELATIONSHIPS

SEC. 8101. REPEAL OF PROHIBITIONS BASED ON COMPENSATION ARRANGEMENTS.

    (a) In General.--Section 1877(a)(2) (42 U.S.C. 1395nn(a)(2)) is 
amended by striking ``is--'' and all that follows through ``equity,'' 
and inserting the following: ``is (except as provided in subsection 
(c)) an ownership or investment interest in the entity through 
equity,''.
    (b) Conforming Amendments.--Section 1877 (42 U.S.C. 1395nn) is 
amended as follows:
            (1) In subsection (b)--
                    (A) in the heading, by striking ``to Both Ownership 
                and Compensation Arrangement Provisions'' and inserting 
                ``Where Financial Relationship Exists''; and
                    (B) by redesignating paragraph (4) as paragraph 
                (7).
            (2) In subsection (c)--
                    (A) by amending the heading to read as follows: 
                ``Exception for Ownership or Investment Interest in 
                Publicly Traded Securities and Mutual Funds''; and
                    (B) in the matter preceding paragraph (1), by 
                striking ``subsection (a)(2)(A)'' and inserting 
                ``subsection (a)(2)''.
            (3) In subsection (d)--
                    (A) by striking the matter preceding paragraph (1);
                    (B) in paragraph (3), by striking ``paragraph (1)'' 
                and inserting ``paragraph (4)''; and
                    (C) by redesignating paragraphs (1), (2), and (3) 
                as paragraphs (4), (5), and (6), and by transferring 
                and inserting such paragraphs after paragraph (3) of 
                subsection (b).
            (4) By striking subsection (e).
            (5) In subsection (f)(2), as amended by section 152(a) of 
        the Social Security Act Amendments of 1994--
                    (A) in the matter preceding paragraph (1), by 
                striking ``ownership, investment, and compensation'' 
                and inserting ``ownership and investment'';
                    (B) in paragraph (2), by striking ``subsection 
                (a)(2)(A)'' and all that follows through ``subsection 
                (a)(2)(B)),'' and inserting ``subsection (a)(2),''; and
                    (C) in paragraph (2), by striking ``or who have 
                such a compensation relationship with the entity''.
            (6) In subsection (h)--
                    (A) by striking paragraphs (1), (2), and (3);
                    (B) in paragraph (4)(A), by striking clauses (iv) 
                and (vi);
                    (C) in paragraph (4)(B), by striking ``rules.--'' 
                and all that follows through ``(ii) Faculty'' and 
                inserting ``rules for faculty; and
                    (D) by adding at the end of paragraph (4) the 
                following new subparagraph:
                    ``(C) Member of a group.--A physician is a `member' 
                of a group if the physician is an owner or a bona fide 
                employee, or both, of the group.''.

SEC. 8102. REVISION OF DESIGNATED HEALTH SERVICES SUBJECT TO 
              PROHIBITION.

    (a) In General.--Section 1877(h)(6) (42 U.S.C. 1395nn(h)(6)) is 
amended by striking subparagraphs (B) through (K) and inserting the 
following:
                    ``(B) Items and services furnished by a community 
                pharmacy (as defined in paragraph (1)).
                    ``(C) Magnetic resonance imaging and computerized 
                tomography services.
                    ``(D) Outpatient physical therapy services.''.
    (b) Community Pharmacy Defined.--Section 1877(h) (42 U.S.C. 
1395nn(h)), as amended by section 8101(b)(6), is amended by inserting 
before paragraph (4) the following new paragraph:
            ``(1) Community pharmacy.--The term `community pharmacy' 
        means any entity licensed or certified to dispense prescription 
        drugs by the State in which the entity is located (including an 
        entity which dispenses such drugs by mail order).''.
    (c) Conforming Amendments.--
            (1) Section 1877(b)(2) (42 U.S.C. 1395nn(b)(2)) is amended 
        in the matter preceding subparagraph (A) by striking 
        ``services'' and all that follows through ``supplies)--'' and 
        inserting ``services--''.
            (2) Section 1877(h)(5)(C) (42 U.S.C. 1395nn(h)(5)(C)) is 
        amended--
                    (A) by striking ``, a request by a radiologist for 
                diagnostic radiology services, and a request by a 
                radiation oncologist for radiation therapy,'' and 
                inserting ``and a request by a radiologist for magnetic 
                resonance imaging or for computerized tomography'', and
                    (B) by striking ``radiologist, or radiation 
                oncologist'' and inserting ``or radiologist''.

SEC. 8103. DELAY IN IMPLEMENTATION UNTIL PROMULGATION OF REGULATIONS.

    (a) In General.--Section 13562(b) of OBRA-1993 (42 U.S.C. 1395nn 
note) is amended--
            (1) in paragraph (1), by striking ``paragraph (2)'' and 
        inserting ``paragraphs (2) and (3)''; and
            (2) by adding at the end the following new paragraph:
            ``(3) Promulgation of regulations.--Notwithstanding 
        paragraphs (1) and (2), the amendments made by this section 
        shall not apply to any referrals made before the effective date 
        of final regulations promulgated by the Secretary of Health and 
        Human Services to carry out such amendments.''.
    (b) Effective Date.--The amendments made by subsection (a) shall 
take effect as if included in the enactment of OBRA-1993.

SEC. 8104. EXCEPTIONS TO PROHIBITION.

    (a) Revisions to Exception for In-office Ancillary Services.--
            (1) Repeal of site-of-service requirement.--Section 1877 
        (42 U.S.C. 1395nn) is amended--
                    (A) by amending subparagraph (A) of subsection 
                (b)(2) to read as follows:
                    ``(A) that are furnished personally by the 
                referring physician, personally by a physician who is a 
                member of the same group practice as the referring 
                physician, or personally by individuals who are under 
                the general supervision of the physician or of another 
                physician in the group practice, and'', and
                    (B) by adding at the end of subsection (h) the 
                following new paragraph:
            ``(7) General supervision.--An individual is considered to 
        be under the `general supervision' of a physician if the 
        physician (or group practice of which the physician is a 
        member) is legally responsible for the services performed by 
        the individual and for ensuring that the individual meets 
        licensure and certification requirements, if any, applicable 
        under other provisions of law, regardless of whether or not the 
        physician is physically present when the individual furnishes 
        an item or service.''.
            (2) Clarification of treatment of physician owners of group 
        practice.--Section 1877(b)(2)(B) (42 U.S.C. 1395nn(b)(2)(B)) is 
        amended by striking ``physician or such group practice'' and 
        inserting ``physician, such group practice, or the physician 
        owners of such group practice''.
            (3) Conforming amendment.--Section 1877(b)(2) (42 U.S.C. 
        1395nn(b)(2)) is amended by amending the heading to read as 
        follows: ``Ancillary services furnished personally or through 
        group practice.--''.
    (b) Clarification of Exception for Services Furnished in a Rural 
Area.--Paragraph (5) of section 1877(b) (42 U.S.C. 1395nn(b)), as 
transferred by section 8101(b)(3)(C), is amended by striking 
``substantially all'' and inserting ``not less than 75 percent''.
    (c) Revision of Exception for Certain Managed Care Arrangements.--
Section 1877(b)(3) (42 U.S.C. 1395nn(b)(3)) is amended--
            (1) in the heading by inserting ``managed care 
        arrangements'' after ``Prepaid plans'';
            (2) in the matter preceding subparagraph (A), by striking 
        ``organization--'' and inserting ``organization, directly or 
        through contractual arrangements with other entities, to 
        individuals enrolled with the organization--'';
            (3) in subparagraph (A), by inserting ``or part C'' after 
        ``section 1876'';
            (4) by striking ``or'' at the end of subparagraph (C);
            (5) by striking the period at the end of subparagraph (D) 
        and inserting a comma; and
            (6) by adding at the end the following new subparagraphs:
                    ``(E) with a contract with a State to provide 
                services under the State plan under title XIX (in 
                accordance with section 1903(m)) or a State MediGrant 
                plan under title XXI; or
                    ``(F) which--
                            ``(i) provides health care items or 
                        services directly or through one or more 
                        subsidiary entities or arranges for the 
                        provision of health care items or services 
                        substantially through the services of health 
                        care providers under contract with the 
                        organization, and
                            ``(ii)(I) assumes financial risk for the 
                        provision of health services through mechanisms 
                        (such as capitation, risk pools, withholds, and 
                        per diem payments) or offers its network of 
                        contract health providers to an entity 
                        (including self-insured employers and indemnity 
                        plans) which assumes financial risk for the 
                        provision of such health services, or
                            ``(II) has in effect a written agreement 
                        with the provider of services under which the 
                        provider is at significant financial risk 
                        (whether through a withhold, capitation, 
                        incentive pool, per diem payments, or similar 
                        risk sharing arrangement) for the cost or 
                        utilization of services that the provider is 
                        obligated to provide.''.
    (d) New Exception for Shared Facility Services.--
            (1) In general.--Section 1877(b) (42 U.S.C. 1395nn(b)), as 
        amended by section 8101(b)(3)(C), is amended--
                    (A) by redesignating paragraphs (4) through (7) as 
                paragraphs (5) through (8); and
                    (B) by inserting after paragraph (3) the following 
                new paragraph:
            ``(4) Shared facility services.--In the case of a 
        designated health service consisting of a shared facility 
        service of a shared facility--
                    ``(A) that is furnished--
                            ``(i) personally by the referring physician 
                        who is a shared facility physician or 
                        personally by an individual directly employed 
                        or under the general supervision of such a 
                        physician,
                            ``(ii) by a shared facility in a building 
                        in which the referring physician furnishes 
                        substantially all of the services of the 
                        physician that are unrelated to the furnishing 
                        of shared facility services, and
                            ``(iii) to a patient of a shared facility 
                        physician; and
                    ``(B) that is billed by the referring physician or 
                a group practice of which the physician is a member.''.
            (2) Definitions.--Section 1877(h) (42 U.S.C. 1395nn(h)), as 
        amended by section 8101(b)(6) and section 8102(b), is amended 
        by inserting after paragraph (1) the following new paragraph:
            ``(2) Shared facility related definitions.--
                    ``(A) Shared facility service.--The term `shared 
                facility service' means, with respect to a shared 
                facility, a designated health service furnished by the 
                facility to patients of shared facility physicians.
                    ``(B) Shared facility.--The term `shared facility' 
                means an entity that furnishes shared facility services 
                under a shared facility arrangement.
                    ``(C) Shared facility physician.--The term `shared 
                facility physician' means, with respect to a shared 
                facility, a physician (or a group practice of which the 
                physician is a member) who has a financial relationship 
                under a shared facility arrangement with the facility.
                    ``(D) Shared facility arrangement.--The term 
                `shared facility arrangement' means, with respect to 
                the provision of shared facility services in a 
                building, a financial arrangement--
                            ``(i) which is only between physicians who 
                        are providing services (unrelated to shared 
                        facility services) in the same building,
                            ``(ii) in which the overhead expenses of 
                        the facility are shared, in accordance with 
                        methods previously determined by the physicians 
                        in the arrangement, among the physicians in the 
                        arrangement, and
                            ``(iii) which, in the case of a 
                        corporation, is wholly owned and controlled by 
                        shared facility physicians.''.
    (e) New Exception for Services Furnished in Communities With No 
Alternative Providers.--Section 1877(b) (42 U.S.C. 1395nn(b)), as 
amended by section 8101(b)(3)(C) and subsection (d)(1), is amended--
            (1) by redesignating paragraphs (5) through (8) as 
        paragraphs (6) through (9); and
            (2) by inserting after paragraph (4) the following new 
        paragraph:
            ``(5) No alternative providers in area.--In the case of a 
        designated health service furnished in any area with respect to 
        which the Secretary determines that individuals residing in the 
        area do not have reasonable access to such a designated health 
        service for which subsection (a)(1) does not apply.''.
    (f) New Exception for Services Furnished in Ambulatory Surgical 
Centers.--Section 1877(b) (42 U.S.C. 1395nn(b)), as amended by section 
8101(b)(3)(C), subsection (d)(1), and subsection (e)(1), is amended--
            (1) by redesignating paragraphs (6) through (9) as 
        paragraphs (7) through (10); and
            (2) by inserting after paragraph (5) the following new 
        paragraph:
            ``(6) Services furnished in ambulatory surgical centers.--
        In the case of a designated health service furnished in an 
        ambulatory surgical center described in section 
        1832(a)(2)(F)(i).''.
    (g) New Exception for Services Furnished in Renal Dialysis 
Facilities.--Section 1877(b) (42 U.S.C. 1395nn(b)), as amended by 
section 8101(b)(3)(C), subsection (d)(1), subsection (e)(1), and 
subsection (f), is amended--
            (1) by redesignating paragraphs (7) through (10) as 
        paragraphs (8) through (11); and
            (2) by inserting after paragraph (6) the following new 
        paragraph:
            ``(7) Services furnished in renal dialysis facilities.--In 
        the case of a designated health service furnished in a renal 
        dialysis facility under section 1881.''.
    (h) New Exception for Services Furnished in a Hospice.--Section 
1877(b) (42 U.S.C. 1395nn(b)), as amended by section 8101(b)(3)(C), 
subsection (d)(1), subsection (e)(1), subsection (f), and subsection 
(g), is amended--
            (1) by redesignating paragraphs (8) through (11) as 
        paragraphs (9) through (12); and
            (2) by inserting after paragraph (7) the following new 
        paragraph:
            ``(8) Services furnished by a hospice program.--In the case 
        of a designated health service furnished by a hospice program 
        under section 1861(dd)(2).''.
    (i) New Exception for Services Furnished in a Comprehensive 
Outpatient Rehabilitation Facility.--Section 1877(b) (42 U.S.C. 
1395nn(b)), as amended by section 8101(b)(3)(C), subsection (d)(1), 
subsection (e)(1), subsection (f), subsection (g), and subsection (h), 
is amended--
            (1) by redesignating paragraphs (9) through (12) as 
        paragraphs (10) through (13); and
            (2) by inserting after paragraph (8) the following new 
        paragraph:
            ``(9) Services furnished in a comprehensive outpatient 
        rehabilitation facility.--In the case of a designated health 
        service furnished in a comprehensive outpatient rehabilitation 
        facility (as defined in section 1861(cc)(2)).''.
    (i) Definition of Referral.--Section 1877(h)(5)(A) (42 U.S.C. 
1395nn(h)(5)(A)) is amended--
            (1) by striking ``an item or service'' and inserting ``a 
        designated health service'', and
            (2) by striking ``the item or service'' and inserting ``the 
        designated health service''.

SEC. 8105. REPEAL OF REPORTING REQUIREMENTS.

    Section 1877 (42 U.S.C. 1395nn) is amended--
            (1) by striking subsection (f); and
            (2) by striking subsection (g)(5).

SEC. 8106. PREEMPTION OF STATE LAW.

    Section 1877 (42 U.S.C. 1395nn) is amended by adding at the end the 
following new subsection:
    ``(i) Preemption of State Law.--This section preempts State law to 
the extent State law is inconsistent with this section.''.

SEC. 8107. EFFECTIVE DATE.

    Except as provided in section 8103(b), the amendments made by this 
part shall apply to referrals made on or after August 14, 1995, 
regardless of whether or not regulations are promulgated to carry out 
such amendments.

                        PART 2--ANTITRUST REFORM

SEC. 8111. PUBLICATION OF ANTITRUST GUIDELINES ON ACTIVITIES OF HEALTH 
              PLANS.

    (a) In General.--The Attorney General shall provide for the 
development and publication of explicit guidelines on the application 
of antitrust laws to the activities of health plans. The guidelines 
shall be designed to facilitate development and operation of plans, 
consistent with the antitrust laws.
    (b) Review Process.--The Attorney General shall establish a review 
process under which the administrator or sponsor of a health plan (or 
organization that proposes to administer or sponsor a health plan) may 
submit a request to the Attorney General to obtain a prompt opinion 
(but in no event later than 90 days after the Attorney General receives 
the request) from the Department of Justice on the plan's conformity 
with the Federal antitrust laws.

SEC. 8112. ISSUANCE OF HEALTH CARE CERTIFICATES OF PUBLIC ADVANTAGE.

    (a) Issuance and Effect of Certificate.--The Attorney General, 
after consultation with the Secretary, shall issue in accordance with 
this section a certificate of public advantage to each eligible health 
care collaborative activity that complies with the requirements in 
effect under this section on or after the expiration of the 1-year 
period that begins on the date of the enactment of this Act (without 
regard to whether or not the Attorney General has promulgated 
regulations to carry out this section by such date). Such activity, and 
the parties to such activity, shall not be liable under any of the 
antitrust laws for conduct described in such certificate and engaged in 
by such activity if such conduct occurs while such certificate is in 
effect.
    (b) Requirements Applicable to Issuance of Certificates.--
            (1) Standards to be met.--The Attorney General shall issue 
        a certificate to an eligible health care collaborative activity 
        if the Attorney General finds that--
                    (A) the benefits that are likely to result from 
                carrying out the activity outweigh the reduction in 
                competition (if any) that is likely to result from the 
                activity, and
                    (B) such reduction in competition is necessary to 
                obtain such benefits.
            (2) Factors to be considered.--
                    (A) Weighing of benefits against reduction in 
                competition.--For purposes of making the finding 
                described in paragraph (1)(A), the Attorney General 
                shall consider whether the activity is likely--
                            (i) to maintain or to increase the quality 
                        of health care by providing new services not 
                        currently offered in the relevant market,
                            (ii) to increase access to health care,
                            (iii) to achieve cost efficiencies that 
                        will be passed on to health care consumers, 
                        such as economies of scale, reduced transaction 
                        costs, and reduced administrative costs, that 
                        cannot be achieved by the provision of 
                        available services and facilities in the 
                        relevant market,
                            (iv) to preserve the operation of health 
                        care facilities located in underserved 
                        geographical areas,
                            (v) to improve utilization of health care 
                        resources, and
                            (vi) to reduce inefficient health care 
                        resource duplication.
                    (B) Necessity of reduction in competition.--For 
                purposes of making the finding described in paragraph 
                (1)(B), the Attorney General shall consider--
                            (i) the ability of the providers of health 
                        care services that are (or likely to be) 
                        affected by the health care collaborative 
                        activity and the entities responsible for 
                        making payments to such providers to negotiate 
                        societally optimal payment and service 
                        arrangements,
                            (ii) the effects of the health care 
                        collaborative activity on premiums and other 
                        charges imposed by the entities described in 
                        clause (i), and
                            (iii) the availability of equally 
                        efficient, less restrictive alternatives to 
                        achieve the benefits that are intended to be 
                        achieved by carrying out the activity.
    (c) Establishment of Criteria and Procedures.--Subject to 
subsections (d) and (e), not later than 1 year after the date of the 
enactment of this Act, the Attorney General and the Secretary shall 
establish jointly by rule the criteria and procedures applicable to the 
issuance of certificates under subsection (a). The rules shall specify 
the form and content of the application to be submitted to the Attorney 
General to request a certificate, the information required to be 
submitted in support of such application, the procedures applicable to 
denying and to revoking a certificate, and the procedures applicable to 
the administrative appeal (if such appeal is authorized by rule) of the 
denial and the revocation of a certificate. Such information may 
include the terms of the health care collaborative activity (in the 
case of an activity in existence as of the time of the application) and 
implementation plan for the collaborative activity.
    (d) Eligible Health Care Collaborative Activity.--To be an eligible 
health care collaborative activity for purposes of this section, a 
health care collaborative activity shall submit to the Attorney General 
an application that complies with the rules in effect under subsection 
(c) and that includes--
            (1) an agreement by the parties to the activity that the 
        activity will not foreclose competition by entering into 
        contracts that prevent health care providers from providing 
        health care in competition with the activity,
            (2) an agreement that the activity will submit to the 
        Attorney General annually a report that describes the 
        operations of the activity and information regarding the impact 
        of the activity on health care and on competition in health 
        care, and
            (3) an agreement that the parties to the activity will 
        notify the Attorney General and the Secretary of the 
        termination of the activity not later than 30 days after such 
        termination occurs.
    (e) Review of Applications for Certificates.--Not later than 90 
days after an eligible health care collaborative activity submits to 
the Attorney General an application that complies with the rules in 
effect under subsection (c) and with subsection (d), the Attorney 
General shall issue or deny the issuance of such certificate. If, 
before the expiration of such 90-day period, the Attorney General may 
extend the time for issuance for good cause.
    (f) Revocation of Certificate.--Whenever the Attorney General finds 
that a health care collaborative activity with respect to which a 
certificate is in effect does not meet the standards specified in 
subsection (b), the Attorney General shall revoke such certificate.
    (g) Written Reasons; Judicial Review.--
            (1) Denial and revocation of certificates.--If the Attorney 
        General denies an application for a certificate or revokes a 
        certificate, the Attorney General shall include in the notice 
        of denial or revocation a statement of the reasons relied upon 
        for the denial or revocation of such certificate.
            (2) Judicial review.--
                    (A) After administrative proceeding.--(i) If the 
                Attorney General denies an application submitted or 
                revokes a certificate issued under this section after 
                an opportunity for hearing on the record, then any 
                party to the health care collaborative activity 
                involved may commence a civil action, not later than 60 
                days after receiving notice of the denial or 
                revocation, in an appropriate district court of the 
                United States for review of the record of such denial 
                or revocation.
                    (ii) As part of the Attorney General's answer, the 
                Attorney General shall file in such court a certified 
                copy of the record on which such denial or revocation 
                is based. The findings of fact of the Attorney General 
                may be set aside only if found to be unsupported by 
                substantial evidence in such record taken as a whole.
                    (B) Denial or revocation without administrative 
                proceeding.--If the Attorney General denies an 
                application submitted or revokes a certificate issued 
                under this section without an opportunity for hearing 
                on the record, then any party to the health care 
                collaborative activity involved may commence a civil 
                action, not later than 60 days after receiving notice 
                of the denial or revocation, in an appropriate district 
                court of the United States for de novo review of such 
                denial or revocation.
    (h) Exemption.--A person shall not be liable under any of the 
antitrust laws for conduct necessary--
            (1) to prepare, agree to prepare, or attempt to agree to 
        prepare an application to request a certificate under this 
        section, or
            (2) to attempt to enter into any health care collaborative 
        activity with respect to which such a certificate is in effect.
    (i) Definitions.--In this section:
            (1) The term ``certificate'' means a certificate of public 
        advantage authorized to be issued under subsection (a).
            (2) The term ``health care collaborative activity'' means 
        an agreement (whether existing or proposed) between 2 or more 
        providers of health care services that is entered into solely 
        for the purpose of sharing in the provision and coordination of 
        health care services and that involves substantial integration 
        and financial risk-sharing between the parties, but does not 
        include the exchanging of information, the entering into of any 
        agreement, or the engagement in any other conduct that is not 
        reasonably required to carry out such agreement.
            (3) The term ``health care services'' includes services 
        related to the delivery or administration of health care 
        services.
            (4) The term ``liable'' means liable for any civil or 
        criminal violation of the antitrust laws.
            (5) The term ``provider of health care services'' means any 
        individual or entity that is engaged in the delivery of health 
        care services in a State and that is required by State law or 
        regulation to be licensed or certified by the State to engage 
        in the delivery of such services in the State.

SEC. 8113. STUDY OF IMPACT ON COMPETITION.

    The Attorney General, in consultation with the Chairman of the 
Federal Trade Commission, annually shall submit to the Congress a 
report as part of the annual budget oversight proceedings concerning 
the Antitrust Division of the Department of Justice. The report shall 
enable the Congress to determine how enforcement of antitrust laws is 
affecting the formation of efficient, cost-saving joint ventures and if 
the certificate of public advantage procedure set forth in section 8112 
has resulted in undesirable reduction in competition in the health care 
marketplace. The report shall include an evaluation of the factors set 
forth in paragraphs (2)(A) and (2)(B) of section 8112(b).

SEC. 8114. ANTITRUST EXEMPTION.

    The antitrust laws shall not apply with respect to--
            (1) the merger of, or the attempt to merge, 2 or more 
        hospitals,
            (2) a contract entered into solely by 2 or more hospitals 
        to allocate hospital services, or
            (3) the attempt by only 2 or more hospitals to enter into a 
        contract to allocate hospital services,
if each of such hospitals satisfies all of the requirements of section 
8115 at the time such hospitals engage in the conduct described in 
paragraph (1), (2), or (3), as the case may be.

SEC. 8115. REQUIREMENTS.

    The requirements referred to in section 8114 are as follows:
            (1) The hospital is located outside of a city, or in a city 
        that has less than 150,000 inhabitants, as determined in 
        accordance with the most recent data available from the Bureau 
        of the Census.
            (2) In the most recently concluded calendar year, the 
        hospital received more than 40 percent of its gross revenue 
        from payments made under Federal programs.
            (3) There is in effect with respect to the hospital a 
        certificate issued by the Health Care Financing Administration 
        specifying that such Administration has determined that Federal 
        expenditures would be reduced, consumer costs would not 
        increase, and access to health care services would not be 
        reduced, if the hospital and the other hospitals that requested 
        such certificate merge, or allocate the hospital services 
        specified in such request, as the case may be.

SEC. 8116. DEFINITION.

    For purposes of this subtitle, the term ``antitrust laws'' has the 
meaning given such term in subsection (a) of the first section of the 
Clayton Act (15 U.S.C. 12), except that such term includes section 5 of 
the Federal Trade Commission Act (15 U.S.C. 45) to the extent that such 
section 5 applies with respect to unfair methods of competition.

                       PART 3--MALPRACTICE REFORM

          Subpart A--Uniform Standards for Malpractice Claims

SEC. 8121. APPLICABILITY.

    Except as provided in section 8131, this subpart shall apply to any 
medical malpractice liability action brought in a Federal or State 
court, and to any medical malpractice claim subject to an alternative 
dispute resolution system, that is initiated on or after January 1, 
1996.

SEC. 8122. REQUIREMENT FOR INITIAL RESOLUTION OF ACTION THROUGH 
              ALTERNATIVE DISPUTE RESOLUTION.

    (a) In General.--
            (1) State cases.--A medical malpractice liability action 
        may not be brought in any State court during a calendar year 
        unless the medical malpractice liability claim that is the 
        subject of the action has been initially resolved under an 
        alternative dispute resolution system certified for the year by 
        the Secretary under section 8132(a), or, in the case of a State 
        in which such a system is not in effect for the year, under the 
        alternative Federal system established under section 8132(b).
            (2) Federal diversity actions.--A medical malpractice 
        liability action may not be brought in any Federal court under 
        section 1332 of title 28, United States Code, during a calendar 
        year unless the medical malpractice liability claim that is the 
        subject of the action has been initially resolved under the 
        alternative dispute resolution system referred to in paragraph 
        (1) that applied in the State whose law applies in such action.
            (3) Claims against united states.--
                    (A) Establishment of process for claims.--The 
                Attorney General shall establish an alternative dispute 
                resolution process for the resolution of tort claims 
                consisting of medical malpractice liability claims 
                brought against the United States under chapter 171 of 
                title 28, United States Code. Under such process, the 
                resolution of a claim shall occur after the completion 
                of the administrative claim process applicable to the 
                claim under section 2675 of such title.
                    (B) Requirement for initial resolution under 
                process.--A medical malpractice liability action based 
                on a medical malpractice liability claim described in 
                subparagraph (A) may not be brought in any Federal 
                court unless the claim has been initially resolved 
                under the alternative dispute resolution process 
                established by the Attorney General under such 
                subparagraph.
    (b) Initial Resolution of Claims Under ADR.--For purposes of 
subsection (a), an action is ``initially resolved'' under an 
alternative dispute resolution system if--
            (1) the ADR reaches a decision on whether the defendant is 
        liable to the plaintiff for damages; and
            (2) if the ADR determines that the defendant is liable, the 
        ADR reaches a decision on the amount of damages assessed 
        against the defendant.
    (c) Procedures for Filing Actions.--
            (1) Notice of intent to contest decision.--Not later than 
        60 days after a decision is issued with respect to a medical 
        malpractice liability claim under an alternative dispute 
        resolution system, each party affected by the decision shall 
        submit a sealed statement to a court of competent jurisdiction 
        indicating whether or not the party intends to contest the 
        decision.
            (2) Deadline for filing action.--A medical malpractice 
        liability action may not be brought by a party unless--
                    (A) the party has filed the notice of intent 
                required by paragraph (1); and
                    (B) the party files the action in a court of 
                competent jurisdiction not later than 90 days after the 
                decision resolving the medical malpractice liability 
                claim that is the subject of the action is issued under 
                the applicable alternative dispute resolution system.
            (3) Court of competent jurisdiction.--For purposes of this 
        subsection, the term ``court of competent jurisdiction'' 
        means--
                    (A) with respect to actions filed in a State court, 
                the appropriate State trial court; and
                    (B) with respect to actions filed in a Federal 
                court, the appropriate United States district court.
    (d) Legal Effect of Uncontested ADR Decision.--The decision reached 
under an alternative dispute resolution system shall, for purposes of 
enforcement by a court of competent jurisdiction, have the same status 
in the court as the verdict of a medical malpractice liability action 
adjudicated in a State or Federal trial court. The previous sentence 
shall not apply to a decision that is contested by a party affected by 
the decision pursuant to subsection (c)(1).

SEC. 8123. OPTIONAL APPLICATION OF PRACTICE GUIDELINES.

    (a) Development and Certification of Guidelines.--Each State may 
develop, for certification by the Secretary, a set of specialty 
clinical practice guidelines, based on recommended guidelines from 
national specialty societies, to be updated annually. In the absence of 
recommended guidelines from such societies, each State may develop such 
guidelines based on such criteria as the State considers appropriate 
(including based on recommended guidelines developed by the Agency for 
Health Care Policy and Research).
    (b) Provision of Health Care Under Guidelines.--Notwithstanding any 
other provision of law, in any medical malpractice liability action 
arising from the conduct of a health care provider or health care 
professional, if such conduct was in accordance with a guideline 
developed by the State in which the conduct occurred and certified by 
the Secretary under subsection (a), the guideline--
            (1) may be introduced by any party to the action (including 
        a health care provider, health care professional, or patient); 
        and
            (2) if introduced, shall establish a rebuttable presumption 
        that the conduct was in accordance with the appropriate 
        standard of medical care, which may only be overcome by the 
        presentation of clear and convincing evidence on behalf of the 
        party against whom the presumption operates.

SEC. 8124. TREATMENT OF NONECONOMIC AND PUNITIVE DAMAGES.

    (a) Limitation on Noneconomic Damages.--The total amount of 
noneconomic damages that may be awarded to a claimant and the members 
of the claimant's family for losses resulting from the injury which is 
the subject of a medical malpractice liability action may not exceed 
$500,000, regardless of the number of parties against whom the action 
is brought or the number of actions brought with respect to the injury.
    (b) No Award of Punitive Damages Against Manufacturer of Medical 
Product.--In the case of a medical malpractice liability action in 
which the plaintiff alleges a claim against the manufacturer of a 
medical product, no punitive or exemplary damages may be awarded 
against such manufacturer.
    (c) Joint and Several Liability for Noneconomic Damages.--The 
liability of each defendant for noneconomic damages shall be several 
only and shall not be joint, and each defendant shall be liable only 
for the amount of noneconomic damages allocated to the defendant in 
direct proportion to the defendant's percentage of responsibility (as 
determined by the trier of fact).
    (d) Use of Punitive Damage Awards for Operation of ADR Systems in 
States.--
            (1) In general.--The total amount of any punitive damages 
        awarded in a medical malpractice liability action shall be paid 
        to the State in which the action is brought (or, in a case 
        brought in Federal court, in the State in which the health care 
        services that caused the injury that is the subject of the 
        action were provided), and shall be used by the State solely to 
        implement and operate the State alternative dispute resolution 
        system certified by the Secretary under section 8132 (except as 
        provided in paragraph (2)).
            (2) Use of remaining amounts for provider licensing and 
        disciplinary activities.--If the amount of punitive damages 
        paid to a State under paragraph (1) for a year is greater than 
        the State's costs of implementing and operating the State 
        alternative dispute resolution system during the year, the 
        balance of such punitive damages paid to the State shall be 
        used solely to carry out activities to assure the safety and 
        quality of health care services provided in the State, 
        including (but not limited to)--
                    (A) licensing or certifying health care 
                professionals and health care providers in the State; 
                and
                    (B) carrying out programs to reduce malpractice-
                related costs for providers volunteering to provide 
                services in medically underserved areas.
            (3) Maintenance of effort.--A State shall use any amounts 
        paid pursuant to paragraph (1) to supplement and not to replace 
        amounts spent by the State for implementing and operating the 
        State alternative dispute resolution system or carrying out the 
        activities described in paragraph (2).
    (e) Drugs and Devices.--
            (1)(A) Punitive damages shall not be awarded against a 
        manufacturer or product seller of a drug (as defined in section 
        201(g)(1) of the Federal Food, Drug, and Cosmetic Act (21 
        U.S.C. 321(g)(1)) or medical device (as defined in section 
        201(h) of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 
        321(h)) which caused the claimant's harm where--
                    (i) such drug or device was subject to premarket 
                approval by the Food and Drug Administration with 
                respect to the safety of the formulation or performance 
                of the aspect of such drug or device which caused the 
                claimant's harm or the adequacy of the packaging or 
                labeling of such drug or device, and such drug was 
                approved by the Food and Drug Administration; or
                    (ii) the drug is generally recognized as safe and 
                effective pursuant to conditions established by the 
                Food and Drug Administration and applicable 
                regulations, including packaging and labeling 
                regulations.
            (B) Subparagraph (A) shall not apply in any case in which 
        the defendant, before or after premarket approval of a drug or 
        device--
                    (i) intentionally and wrongfully withheld from or 
                misrepresented to the Food and Drug Administration 
                information concerning such drug or device required to 
                be submitted under the Federal Food, Drug, and Cosmetic 
                Act (21 U.S.C. 301 et seq.) or section 351 of the 
                Public Health Service Act (42 U.S.C. 262) that is 
                material and relevant to the harm suffered by the 
                claimant, or
                    (ii) made an illegal payment to an official or 
                employee of the Food and Drug Administration for the 
                purpose of securing or maintaining approval of such 
                drug or device.
            (2) Packaging.--In a product liability action for harm 
        which is alleged to relate to the adequacy of the packaging (or 
        labeling relating to such packaging) of a drug which is 
        required to have tamper-resistant packaging under regulations 
        of the Secretary of Health and Human Services (including 
        labeling regulations related to such packaging), the 
        manufacturer of the drug shall not be held liable for punitive 
        damages unless the drug is found by the court by clear and 
        convincing evidence to be substantially out of compliance with 
        such regulations.

SEC. 8125. PERIODIC PAYMENTS FOR FUTURE LOSSES.

    (a) In General.--In any medical malpractice liability action in 
which the damages awarded for future economic loss exceeds $100,000, a 
defendant may not be required to pay such damages in a single, lump-sum 
payment, but may be permitted to make such payments on a periodic 
basis. The periods for such payments shall be determined by the court, 
based upon projections of when such expenses are likely to be incurred.
    (b) Waiver.--A court may waive the application of subsection (a) 
with respect to a defendant if the court determines that it is not in 
the best interests of the plaintiff to receive payments for damages on 
such a periodic basis.

SEC. 8126. TREATMENT OF ATTORNEY'S FEES AND OTHER COSTS.

    (a) Requiring Party Contesting ADR Ruling To Pay Attorney's Fees 
and Other Costs.--
            (1) In general.--The court in a medical malpractice 
        liability action shall require the party that (pursuant to 
        section 8122(c)(1)) contested the ruling of the alternative 
        dispute resolution system with respect to the medical 
        malpractice liability claim that is the subject of the action 
        to pay to the opposing party the costs incurred by the opposing 
        party under the action, including attorney's fees, fees paid to 
        expert witnesses, and other litigation expenses (but not 
        including court costs, filing fees, or other expenses paid 
        directly by the party to the court, or any fees or costs 
        associated with the resolution of the claim under the 
        alternative dispute resolution system), but only if--
                    (A) in the case of an action in which the party 
                that contested the ruling is the claimant, the amount 
                of damages awarded to the party under the action is 
                less than the amount of damages awarded to the party 
                under the ADR system; and
                    (B) in the case of an action in which the party 
                that contested the ruling is the defendant, the amount 
                of damages assessed against the party under the action 
                is greater than the amount of damages assessed under 
                the ADR system.
            (2) Exceptions.--Paragraph (1) shall not apply if--
                    (A) the party contesting the ruling made under the 
                previous alternative dispute resolution system shows 
                that--
                            (i) the ruling was procured by corruption, 
                        fraud, or undue means,
                            (ii) there was partiality or corruption 
                        under the system,
                            (iii) there was other misconduct under the 
                        system that materially prejudiced the party's 
                        rights, or
                            (iv) the ruling was based on an error of 
                        law;
                    (B) the party contesting the ruling made under the 
                alternative dispute resolution system presents new 
                evidence before the trier of fact that was not 
                available for presentation under the ADR system;
                    (C) the medical malpractice liability action raised 
                a novel issue of law; or
                    (D) the court finds that the application of such 
                paragraph to a party would constitute an undue 
                hardship, and issues an order waiving or modifying the 
                application of such paragraph that specifies the 
                grounds for the court's decision.
            (3) Limit on attorneys' fees paid.--Attorneys' fees that 
        are required to be paid under paragraph (1) by the contesting 
        party shall not exceed the amount of the attorneys' fees 
        incurred by the contesting party in the action. If the 
        attorneys' fees of the contesting party are based on a 
        contingency fee agreement, the amount of attorneys' fees for 
        purposes of the preceding sentence shall not exceed the 
        reasonable value of those services.
            (4) Records.--In order to receive attorneys' fees under 
        paragraph (1), counsel of record in the medical malpractice 
        liability action involved shall maintain accurate, complete 
        records of hours worked on the action, regardless of the fee 
        arrangement with the client involved.
    (b) Contingency Fee Defined.--As used in this section, the term 
``contingency fee'' means any fee for professional legal services which 
is, in whole or in part, contingent upon the recovery of any amount of 
damages, whether through judgment or settlement.

SEC. 8127. UNIFORM STATUTE OF LIMITATIONS.

    (a) In General.--Except as provided in subsection (b), no medical 
malpractice claim may be initiated after the expiration of the 2-year 
period that begins on the date on which the alleged injury that is the 
subject of such claim was discovered, but in no event may such a claim 
be initiated after the expiration of the 4-year period that begins on 
the date on which the alleged injury that is the subject of such claim 
occurred.
    (b) Exception for Minors.--In the case of an alleged injury 
suffered by a minor who has not attained 6 years of age, a medical 
malpractice claim may not be initiated after the expiration of the 2-
year period that begins on the date on which the alleged injury that is 
the subject of such claim was discovered or should reasonably have been 
discovered, but in no event may such a claim be initiated after the 
date on which the minor attains 12 years of age.

SEC. 8128. SPECIAL PROVISION FOR CERTAIN OBSTETRIC SERVICES.

    (a) In General.--In the case of a medical malpractice claim 
relating to services provided during labor or the delivery of a baby, 
if the health care professional or health care provider against whom 
the claim is brought did not previously treat the claimant for the 
pregnancy, the trier of fact may not find that such professional or 
provider committed malpractice and may not assess damages against such 
professional or provider unless the malpractice is proven by clear and 
convincing evidence.
    (b) Applicability to Group Practices or Agreements Among 
Providers.--For purposes of subsection (a), a health care professional 
shall be considered to have previously treated an individual for a 
pregnancy if the professional is a member of a group practice whose 
members previously treated the individual for the pregnancy or is 
providing services to the individual during labor or the delivery of a 
baby pursuant to an agreement with another professional.

SEC. 8129. JURISDICTION OF FEDERAL COURTS.

    Nothing in this subpart shall be construed to establish any 
jurisdiction over any medical malpractice liability action in the 
district courts of the United States on the basis of sections 1331 or 
1337 of title 28, United States Code.

SEC. 8130. PREEMPTION.

    (a) In General.--The provisions of this subpart shall preempt any 
State law to the extent such law is inconsistent with such provisions, 
except that the provisions of this subpart shall not preempt any State 
law that provides for defenses or places limitations on a person's 
liability in addition to those contained in this part, places greater 
limitations on the amount of attorneys' fees that can be collected, or 
otherwise imposes greater restrictions than those provided in this 
part.
    (b) Effect on Sovereign Immunity and Choice of Law or Venue.--
Nothing in this subpart shall be construed to--
            (1) waive or affect any defense of sovereign immunity 
        asserted by any State under any provision of law;
            (2) waive or affect any defense of sovereign immunity 
        asserted by the United States;
            (3) affect the applicability of any provision of the 
        Foreign Sovereign Immunities Act of 1976;
            (4) preempt State choice-of-law rules with respect to 
        claims brought by a foreign nation or a citizen of a foreign 
        nation; or
            (5) affect the right of any court to transfer venue or to 
        apply the law of a foreign nation or to dismiss a claim of a 
        foreign nation or of a citizen of a foreign nation on the 
        ground in inconvenient forum.

   Subpart B--Requirements for State Alternative Dispute Resolution 
                             Systems (ADR)

SEC. 8131. BASIC REQUIREMENTS.

    (a) In General.--A State's alternative dispute resolution system 
meets the requirements of this section if the system--
            (1) applies to all medical malpractice liability claims 
        under the jurisdiction of the courts of that State;
            (2) requires that a written opinion resolving the dispute 
        be issued not later than 6 months after the date by which each 
        party against whom the claim is filed has received notice of 
        the claim (other than in exceptional cases for which a longer 
        period is required for the issuance of such an opinion), and 
        that the opinion contain--
                    (A) findings of fact relating to the dispute, and
                    (B) a description of the costs incurred in 
                resolving the dispute under the system (including any 
                fees paid to the individuals hearing and resolving the 
                claim), together with an appropriate assessment of the 
                costs against any of the parties;
            (3) requires individuals who hear and resolve claims under 
        the system to meet such qualifications as the State may require 
        (in accordance with regulations of the Secretary);
            (4) is approved by the State or by local governments in the 
        State;
            (5) with respect to a State system that consists of 
        multiple dispute resolution procedures--
                    (A) permits the parties to a dispute to select the 
                procedure to be used for the resolution of the dispute 
                under the system, and
                    (B) if the parties do not agree on the procedure to 
                be used for the resolution of the dispute, assigns a 
                particular procedure to the parties;
            (6) provides for the transmittal to the State agency 
        responsible for monitoring or disciplining health care 
        professionals and health care providers of any findings made 
        under the system that such a professional or provider committed 
        malpractice, unless, during the 90-day period beginning on the 
        date the system resolves the claim against the professional or 
        provider, the professional or provider brings an action 
        contesting the decision made under the system; and
            (7) provides for the regular transmittal to the 
        Administrator for Health Care Policy and Research of 
        information on disputes resolved under the system, in a manner 
        that assures that the identity of the parties to a dispute 
        shall not be revealed.
    (b) Application of Malpractice Liability Standards to Alternative 
Dispute Resolution.--The provisions of subpart A (other than section 
8122) shall apply with respect to claims brought under a State 
alternative dispute resolution system or the alternative Federal system 
in the same manner as such provisions apply with respect to medical 
malpractice liability actions brought in the State.

SEC. 8132. CERTIFICATION OF STATE SYSTEMS; APPLICABILITY OF ALTERNATIVE 
              FEDERAL SYSTEM.

    (a) Certification.--
            (1) In general.--Not later than October 1 of each year 
        (beginning with 1995), the Secretary, in consultation with the 
        Attorney General, shall determine whether a State's alternative 
        dispute resolution system meets the requirements of this 
        subpart for the following calendar year.
            (2) Basis for certification.--The Secretary shall certify a 
        State's alternative dispute resolution system under this 
        subsection for a calendar year if the Secretary determines 
        under paragraph (1) that the system meets the requirements of 
        section 8131, including the requirement described in section 
        8124 that punitive damages awarded under the system are paid to 
        the State for the uses described in such section.
    (b) Applicability of Alternative Federal System.--
            (1) Establishment and applicability.--Not later than 
        October 1, 1995, the Secretary, in consultation with the 
        Attorney General, shall establish by rule an alternative 
        Federal ADR system for the resolution of medical malpractice 
        liability claims during a calendar year in States that do not 
        have in effect an alternative dispute resolution system 
        certified under subsection (a) for the year.
            (2) Requirements for system.--Under the alternative Federal 
        ADR system established under paragraph (1)--
                    (A) paragraphs (1), (2), (6), and (7) of section 
                8131(a) shall apply to claims brought under the system;
                    (B) if the system provides for the resolution of 
                claims through arbitration, the claims brought under 
                the system shall be heard and resolved by arbitrators 
                appointed by the Secretary in consultation with the 
                Attorney General; and
                    (C) with respect to a State in which the system is 
                in effect, the Secretary may (at the State's request) 
                modify the system to take into account the existence of 
                dispute resolution procedures in the State that affect 
                the resolution of medical malpractice liability claims.
            (3) Treatment of States with alternative system in 
        effect.--If the alternative Federal ADR system established 
        under this subsection is applied with respect to a State for a 
        calendar year, the State shall make a payment to the United 
        States (at such time and in such manner as the Secretary may 
        require) in an amount equal to 110 percent of the costs 
        incurred by the United States during the year as a result of 
        the application of the system with respect to the State.

SEC. 8133. REPORTS ON IMPLEMENTATION AND EFFECTIVENESS OF ALTERNATIVE 
              DISPUTE RESOLUTION SYSTEMS.

    (a) In General.--Not later than 5 years after the date of the 
enactment of this Act, the Secretary shall prepare and submit to the 
Congress a report describing and evaluating State alternative dispute 
resolution systems operated pursuant to this subpart and the 
alternative Federal system established under section 8132(b).
    (b) Contents of Report.--The Secretary shall include in the report 
prepared and submitted under subsection (a)--
            (1) information on--
                    (A) the effect of the alternative dispute 
                resolution systems on the cost of health care within 
                each State,
                    (B) the impact of such systems on the access of 
                individuals to health care within the State, and
                    (C) the effect of such systems on the quality of 
                health care provided within the State; and
            (2) to the extent that such report does not provide 
        information on no-fault systems operated by States as 
        alternative dispute resolution systems pursuant to this part, 
        an analysis of the feasibility and desirability of establishing 
        a system under which medical malpractice liability claims shall 
        be resolved on a no-fault basis.

                         Subpart C--Definitions

SEC. 8141. DEFINITIONS.

    As used in this part:
            (1) Alternative dispute resolution system.--The term 
        ``alternative dispute resolution system'' means a system that 
        is enacted or adopted by a State to resolve medical malpractice 
        claims other than through a medical malpractice liability 
        action.
            (2) Claimant.--The term ``claimant'' means any person who 
        brings a health care liability action and, in the case of an 
        individual who is deceased, incompetent, or a minor, the person 
        on whose behalf such an action is brought.
            (3) Clear and convincing evidence.--The term ``clear and 
        convincing evidence'' is that measure or degree of proof that 
        will produce in the mind of the trier of fact a firm belief or 
        conviction as to the truth of the allegations sought to be 
        established, except that such measure or degree of proof is 
        more than that required under preponderance of the evidence, 
        but less than that required for proof beyond a reasonable 
        doubt.
            (4) Economic damages.--The term ``economic damages'' means 
        damages paid to compensate an individual for losses for 
        hospital and other medical expenses, lost wages, lost 
        employment, and other pecuniary losses.
            (5) Health care professional.--The term ``health care 
        professional'' means any individual who provides health care 
        services in a State and who is required by State law or 
        regulation to be licensed or certified by the State to provide 
        such services in the State.
            (6) Health care provider.--The term ``health care 
        provider'' means any organization or institution that is 
        engaged in the delivery of health care services in a State that 
        is required by State law or regulation to be licensed or 
        certified by the State to engage in the delivery of such 
        services in the State.
            (7) Injury.--The term ``injury'' means any illness, 
        disease, or other harm that is the subject of a medical 
        malpractice claim.
            (8) Medical malpractice liability action.--The term 
        ``medical malpractice liability action'' means any civil action 
        brought pursuant to State law in which a plaintiff alleges a 
        medical malpractice claim against a health care provider or 
        health care professional, but does not include any action 
in which the plaintiff's sole allegation is an allegation of an 
intentional tort.
            (9) Medical malpractice claim.--The term ``medical 
        malpractice claim'' means any claim relating to the provision 
        of (or the failure to provide) health care services or the use 
        of a medical product, without regard to the theory of liability 
        asserted, and includes any third-party claim, cross-claim, 
        counterclaim, or contribution claim in a medical malpractice 
        liability action.
            (10) Medical product.--
                    (A) In general.--The term ``medical product'' 
                means, with respect to the allegation of a claimant, a 
                drug (as defined in section 201(g)(1) of the Federal 
                Food, Drug, and Cosmetic Act (21 U.S.C. 321(g)(1)) or a 
                medical device (as defined in section 201(h) of the 
                Federal Food, Drug, and Cosmetic Act (21 U.S.C. 321(h)) 
                if--
                            (i) such drug or device was subject to 
                        premarket approval under section 505, 507, or 
                        515 of the Federal Food, Drug, and Cosmetic Act 
                        (21 U.S.C. 355, 357, or 360e) or section 351 of 
                        the Public Health Service Act (42 U.S.C. 262) 
                        with respect to the safety of the formulation 
                        or performance of the aspect of such drug or 
                        device which is the subject of the claimant's 
                        allegation or the adequacy of the packaging or 
                        labeling of such drug or device, and such drug 
                        or device is approved by the Food and Drug 
                        Administration; or
                            (ii) the drug or device is generally 
                        recognized as safe and effective under 
                        regulations issued by the Secretary of Health 
                        and Human Services under section 201(p) of the 
                        Federal Food, Drug, and Cosmetic Act (21 U.S.C. 
                        321(p)).
                    (B) Exception in case of misrepresentation or 
                fraud.--Notwithstanding subparagraph (A), the term 
                ``medical product'' shall not include any product 
                described in such subparagraph if the claimant shows 
                that the product is approved by the Food and Drug 
                Administration for marketing as a result of withheld 
                information, misrepresentation, or an illegal payment 
                by manufacturer of the product.
            (11) Noneconomic damages.--The term ``noneconomic damages'' 
        means damages paid to compensate an individual for losses for 
        physical and emotional pain, suffering, inconvenience, physical 
        impairment, mental anguish, disfigurement, loss of enjoyment of 
        life, loss of consortium, and other nonpecuniary losses, but 
        does not include punitive damages.
            (12) Punitive damages.--The term ``punitive damages'' means 
        compensation, in addition to compensation for actual harm 
        suffered, that is awarded for the purpose of punishing a person 
        for conduct deemed to be malicious, wanton, willful, or 
        excessively reckless.

     PART 4--PAYMENT AREAS FOR PHYSICIANS' SERVICES UNDER MEDICARE

SEC. 8151. MODIFICATION OF PAYMENT AREAS USED TO DETERMINE PAYMENTS FOR 
              PHYSICIANS' SERVICES UNDER MEDICARE.

    (a) In General.--Section 1848(j)(2) (42 U.S.C. [email protected](j)(2)) is 
amended to read as follows:
            ``(2) Fee schedule area.--
                    ``(A) General rule.--Except as provided in 
                subparagraph (B), the term `fee schedule area' means, 
                with respect to physicians' services furnished in a 
                State, the State.
                    ``(B) Exception for states with highest variation 
                among areas.--In the case of the 15 States with the 
                greatest variation in cost associated with physicians' 
                services among various geographic areas of the State 
                (as determined by the Secretary in accordance with such 
                standards as the Secretary considers appropriate), the 
                fee schedule area applicable with respect to 
                physicians' services furnished in the State shall be a 
                locality used under section 1842(b) for purposes of 
                computing payment amounts for physicians' services, 
                except that the Secretary shall revise the localities 
                used under such section so that there are no more than 
                5 such localities in any State.''.
    (b) Budget-Neutrality Requirement.--The Secretary of Health and 
Human Services shall carry out the amendment made by subsection (a) in 
a manner which ensures that the aggregate amount of payment made for 
physicians' services under part B of the medicare program in any year 
does not exceed the aggregate amount of payment which would have been 
made for such services under part B during the year if the amendment 
were not in effect.
    (c) Effective Date.--The amendment made by subsection (a) shall 
apply to physicians' services furnished on or after January 1, 1997.

         Subtitle C--Medicare Payments to Health Care Providers

                                                 Title VIII, Subtitle C

               PART 1--PROVISIONS AFFECTING ALL PROVIDERS

SEC. 8201. ONE-YEAR FREEZE IN PAYMENTS TO PROVIDERS.

    (a) Freeze in Updates.--
            (1) In general.--Notwithstanding any other provision of 
        law, except as otherwise provided in paragraph (2), for 
        purposes of determining the amount to paid for an item or 
        service under title XVIII of the Social Security Act, the 
        percentage increase in any economic index by which a payment 
        amount under title XVIII of the Social Security Act is required 
        to be increased during fiscal year 1996 shall be deemed to be 
        zero.
            (2) Exceptions.--Paragraph (1) shall not apply to the 
        determination of hospital-specific FTE resident amounts under 
        section 1886(h) of such Act.
    (b) Economic Index.-- The term ``economic index'' includes--
            (1) the hospital market basket index (described in section 
        1886(b)(3)(B)(iii) of the Social Security Act),
            (2) the medicare economic index (referred to in the fourth 
        sentence of section 1842(b)(3) of such Act),
            (3) the consumer price index for all urban consumers (U.S. 
        city average), and
            (4) any other index used to adjust payment amounts under 
        title XVIII of such Act.
    (c) Extension of Payment Freeze for SNFs and HHAs.--
            (1) Skilled nursing facilities.--
                    (A) No change in cost limits.--Section 13503(a)(1) 
                of OBRA-1993 is amended by striking ``1994 and 1995'' 
                and inserting ``1994, 1995, and 1996''.
                    (B) Delay in updates; no catch up.--The last 
                sentence of section 1888(a) (42 U.S.C. 1395yy(a)) is 
                amended--
                            (i) by striking ``1995'' and inserting 
                        ``1996'', and
                            (ii) by striking ``subsection.'' and 
                        inserting ``subsection (except that such 
                        updates may not take into account any changes 
                        in the routine service costs of skilled nursing 
                        facilities during cost reporting periods which 
                        began during fiscal year 1994, 1995, or 
                        1996).''.
                    (C) Prospective payments.--Section 13505(b) of 
                OBRA-1993 is amended by striking ``fiscal years 1994 
                and 1995'' and inserting ``fiscal years 1994, 1995, and 
                1996''.
            (2) Home health agencies.--
                    (A) No change in cost limits.--Section 13564(a)(1) 
                of OBRA-1993 is amended by striking ``1996'' and 
                inserting ``1997''.
                    (B) Delay in updates; no catch up.--Section 
                1861(v)(1)(L)(iii) (42 U.S.C. 1395x(v)(1)(L)(iii)) is 
                amended--
                            (i) by striking ``1996'' and inserting 
                        ``1997'', and
                            (ii) by adding at the end the following: 
                        ``In establishing limits under this 
                        subparagraph, the Secretary may not take into 
                        account any changes in the routine service 
                        costs of the provision of services furnished by 
                        home health agencies with respect to cost 
                        reporting periods which began on or after July 
                        1, 1994, and before July 1, 1997.''.

                  PART 2--PROVISIONS AFFECTING DOCTORS

SEC. 8211. PAYMENTS FOR PHYSICIANS' SERVICES.

    (a) Establishing Update to Conversion Factor to Match Spending 
Under Sustainable Growth Rate.--
            (1) In general.--Section 1848(d)(2) (42 U.S.C. 
        1395ww(d)(2)) is amended to read as follows:
            ``(2) Recommendation of update.--
                    ``(A) In general.--Not later than April 15 of each 
                year (beginning with 1996), the Secretary shall 
                transmit to the Congress a report that includes a 
                recommendation on the appropriate update in the 
                conversion factor for all physicians' services (as 
                defined in subsection (f)(3)(A)) in the following year. 
                In making the recommendation, the Secretary shall 
                consider--
                            ``(i) the percentage change in the medicare 
                        economic index (described in the fourth 
                        sentence of section 1842(b)(3)) for that year;
                            ``(ii) such factors as enter into the 
                        calculation of the update adjustment factor as 
                        described in paragraph (3)(B); and
                            ``(iii) access to services.
                    ``(B) Additional considerations.--In making 
                recommendations under subparagraph (A), the Secretary 
                may also consider--
                            ``(i) unexpected changes by physicians in 
                        response to the implementation of the fee 
                        schedule;
                            ``(ii) unexpected changes in outlay 
                        projections;
                            ``(iii) changes in the quality or 
                        appropriateness of care;
                            ``(iv) any other relevant factors not 
                        measured in the resource-based payment 
                        methodology; and
                            ``(v) changes in volume or intensity of 
                        services.
                    ``(C) Commission review.--The Medicare Payment 
                Review Commission shall review the report submitted 
                under subparagraph (A) in a year and shall submit to 
                the Congress, by not later than May 15 of the year, a 
                report including its recommendations respecting the 
                update in the conversion factor for the following 
                year.''.
            (2) Update.--Section 1848(d)(3) (42 U.S.C. [email protected](d)(3)) 
        is amended to read as follows:
            ``(3) Update.--
                    ``(A) In general.--Unless Congress otherwise 
                provides, subject to subparagraph (E), for purposes of 
                this section the update for a year (beginning with 
                1997) is equal to the product of--
                            ``(i) 1 plus the Secretary's estimate of 
                        the percentage increase in the medicare 
                        economic index (described in the fourth 
                        sentence of section 1842(b)(3)) for the year 
                        (divided by 100), and
                            ``(ii) 1 plus the Secretary's estimate of 
                        the update adjustment factor for the year 
                        (divided by 100),
                minus 1 and multiplied by 100.
                    ``(B) Update adjustment factor.--The `update 
                adjustment factor' for a year is equal to the quotient 
                of--
                            ``(i) the difference between (I) the sum of 
                        the allowed expenditures for physicians' 
                        services furnished during each of the years 
                        1995 through the year involved and (II) the sum 
                        of the amount of actual expenditures for 
                        physicians' services furnished during each of 
                        the years 1995 through the previous year; 
                        divided by
                            ``(ii) the Secretary's estimate of allowed 
                        expenditures for physicians' services furnished 
                        during the year.
                    ``(C) Determination of allowed expenditures.--For 
                purposes of subparagraph (B), allowed expenditures for 
                physicians' services shall be determined as follows (as 
                estimated by the Secretary):
                            ``(i) In the case of allowed expenditures 
                        for 1995, such expenditures shall be equal to 
                        actual expenditures for services furnished 
                        during the 12-month period ending with June 30, 
                        1995.
                            ``(ii) In the case of allowed expenditures 
                        for 1996 and each subsequent year, such 
                        expenditures shall be equal to allowed 
                        expenditures for the previous year, increased 
                        by the sustainable growth rate under subsection 
                        (f) for the fiscal year which begins during the 
                        year.
                    ``(D) Determination of actual expenditures.--For 
                purposes of subparagraph (B), the amount of actual 
                expenditures for physicians' services furnished during 
                a year shall be equal to the amount of expenditures for 
                such services during the 12-month period ending with 
                June of the previous year.
                    ``(E) Restriction on variation from medicare 
                economic index.--Notwithstanding the amount of the 
                update adjustment factor determined under subparagraph 
                (B) for a year, the update in the conversion factor 
                under this paragraph for the year may not be--
                            ``(i) greater than 103 percent of 1 plus 
                        the Secretary's estimate of the percentage 
                        increase in the medicare economic index 
                        (described in the fourth sentence of section 
                        1842(b)(3)) for the year (divided by 100), 
                        minus 1 and multiplied by 100; or
                            ``(ii) less than 91.75 percent of 1 plus 
                        the Secretary's estimate of the percentage 
                        increase in the medicare economic index 
                        (described in the fourth sentence of section 
                        1842(b)(3)) for the year (divided by 100), 
                        minus 1 and multiplied by 100.''.
            (3) Effective date.--The amendments made by this subsection 
        shall apply to physicians' services furnished on or after 
        January 1, 1997.
    (b) Replacement of Volume Performance Standard With Sustainable 
Growth Rate.--Section 1848(f) (42 U.S.C. [email protected](f)) is amended to read 
as follows:
    ``(f) Sustainable Growth Rate.--
            ``(1) Process for establishing sustainable growth rate of 
        increase.--
                    ``(A) Secretary's recommendation.--By not later 
                than April 15 of each year (beginning with 1996), the 
                Secretary shall transmit to the Congress a 
                recommendation on the sustainable growth rate for the 
                fiscal year beginning in such year. In making the 
                recommendation, the Secretary shall confer with 
                organizations representing physicians and shall 
                consider--
                            ``(i) inflation,
                            ``(ii) changes in numbers of enrollees 
                        (other than private plan enrollees) under this 
                        part,
                            ``(iii) changes in the age composition of 
                        enrollees (other than private plan enrollees) 
                        under this part,
                            ``(iv) changes in technology,
                            ``(v) evidence of inappropriate utilization 
                        of services,
                            ``(vi) evidence of lack of access to 
                        necessary physicians' services, and
                            ``(vii) such other factors as the Secretary 
                        considers appropriate.
                    ``(B) Commission review.--The Medicare Payment 
                Review Commission shall review the recommendation 
                transmitted during a year under subparagraph (A) and 
                shall make its recommendation to Congress, by not later 
                than May 15 of the year, respecting the sustainable 
                growth rate for the fiscal year beginning in that year.
                    ``(C) Publication of sustainable growth rate.--The 
                Secretary shall cause to have the sustainable growth 
                rate published in the Federal Register, in the last 15 
                days of October of each calendar year (beginning with 
                1997), for the fiscal year beginning in that year. The 
                Secretary shall cause to have published in the Federal 
                Register, by not later than January 1, 1997, the 
                paragraph (2) for fiscal year 1997.
            ``(2) Specification of growth rate.--
                    ``(A) Fiscal year 1996.--The sustainable growth 
                rate for all physicians' services for fiscal year 1996 
                shall be equal to the product of--
                            ``(i) 1 plus the Secretary's estimate of 
                        the percentage change in the medicare economic 
                        index for 1996 (described in the fourth 
                        sentence of section 1842(b)(3)) (divided by 
                        100),
                            ``(ii) 1 plus the Secretary's estimate of 
                        the percentage change (divided by 100) in the 
                        average number of individuals enrolled under 
                        this part (other than private plan enrollees) 
                        from fiscal year 1995 to fiscal year 1996,
                            ``(iii) 1 plus the Secretary's estimate of 
                        the projected percentage growth in real gross 
                        domestic product per capita (divided by 100) 
                        from fiscal year 1995 to fiscal year 1996, and
                            ``(iv) 1 plus the Secretary's estimate of 
                        the percentage change (divided by 100) in 
                        expenditures for all physicians' services in 
                        fiscal year 1996 (compared with fiscal year 
                        1995) which will result from changes in law 
                        (including the Common Sense Balanced Budget Act 
                        of 1995), determined without taking into 
                        account estimated changes in expenditures due 
                        to changes in the volume and intensity of 
                        physicians' services or changes in expenditures 
                        resulting from changes in the update to the 
                        conversion factor under subsection (d),
                minus 1 and multiplied by 100.
                    ``(B) Subsequent fiscal years.--The sustainable 
                growth rate for all physicians' services for fiscal 
                year 1997 and each subsequent fiscal year shall be 
                equal to the product of--
                            ``(i) 1 plus the Secretary's estimate of 
                        the percentage change in the medicare economic 
                        index for the fiscal year involved (described 
                        in the fourth sentence of section 1842(b)(3)) 
                        (divided by 100),
                            ``(ii) 1 plus the Secretary's estimate of 
                        the percentage change (divided by 100) in the 
                        average number of individuals enrolled under 
                        this part (other than private plan enrollees) 
                        from the previous fiscal year to the fiscal 
                        year involved,
                            ``(iii) 1 plus the Secretary's estimate of 
                        the projected percentage growth in real gross 
                        domestic product per capita (divided by 100) 
                        from the previous fiscal year to the fiscal 
                        year involved, and
                            ``(iv) 1 plus the Secretary's estimate of 
                        the percentage change (divided by 100) in 
                        expenditures for all physicians' services in 
                        the fiscal year (compared with the previous 
                        fiscal year) which will result from changes in 
                        law, determined without taking into account 
                        estimated changes in expenditures due to 
                        changes in the volume and intensity of 
                        physicians' services or changes in expenditures 
                        resulting from changes in the update to the 
                        conversion factor under subsection (d)(3),
                minus 1 and multiplied by 100.
            ``(3) Definitions.--In this subsection:
                    ``(A) Services included in physicians' services.--
                The term `physicians' services' includes other items 
                and services (such as clinical diagnostic laboratory 
                tests and radiology services), specified by the 
                Secretary, that are commonly performed or furnished by 
                a physician or in a physician's office, but does not 
                include services furnished to a private plan enrollee.
                    ``(B) Private plan enrollee.--The term `private 
                plan enrollee' means, with respect to a fiscal year, an 
                individual enrolled under this part who has elected to 
                receive benefits under this title for the fiscal year 
                through a Medicare Choice product under part C or 
                through enrollment with an eligible organization with a 
                risk-sharing contract under section 1876.''.
    (c) Establishment of Single Conversion Factor for 1996.--
            (1) In general.--Section 1848(d)(1) (42 U.S.C. 
        [email protected](d)(1)) is amended--
                    (A) by redesignating subparagraph (C) as 
                subparagraph (D); and
                    (B) by inserting after subparagraph (B) the 
                following new subparagraph:
                    ``(C) Special rule for 1996.--For 1996, the 
                conversion factor under this subsection shall be $36.40 
                for all physicians' services.''.
            (2) Conforming amendments.--Section 1848 (42 U.S.C. 
        [email protected]), as amended by paragraph (1), is amended--
                    (A) by striking ``(or factors)'' each place it 
                appears in subsection (d)(1)(A) and (d)(1)(D)(ii);
                    (B) in subsection (d)(1)(A), by striking ``or 
                updates'';
                    (C) in subsection (d)(1)(D)(ii), by striking ``(or 
                updates)''; and
                    (D) in subsection (i)(1)(C), by striking 
                ``conversion factors'' and inserting ``the conversion 
                factor''.

                 PART 3--PROVISIONS AFFECTING HOSPITALS

SEC. 8221. REDUCTION IN UPDATE FOR INPATIENT HOSPITAL SERVICES.

    (a) PPS Hospitals.--Section 1886(b)(3)(B)(i) (42 U.S.C. 
1395ww(b)(3)(B)(i)) is amended--
            (1) by amending subclause (XII) to read as follows:
            ``(XII) for each of the fiscal years 1997 through 2002, the 
        market basket percentage increase minus 0.5 percentage point 
        for hospitals in a rural area, and the market basket percentage 
        increase minus 1.5 percentage points for all other hospitals, 
        and''; and
            (2) in subclause (XIII), by striking ``1998'' and inserting 
        ``2003''.
    (b) PPS-Exempt Hospitals.--
            (1) In general.--Section 1886(b)(3)(B)(ii) (42 U.S.C. 
        1395ww(b)(3)(B)(ii)) is amended--
                    (A) in subclause (V)--
                            (i) by striking ``thorugh 1997'' and 
                        inserting ``through 1996'', and
                            (ii) by striking ``and'' at the end;
                    (B) by redesignating subclause (VI) as subclause 
                (VII); and
                    (C) by inserting after subclause (V) the following 
                new subclause:
            ``(VI) fiscal years 1997 through 2002, is the market basket 
        percentage increase minus 1.0 percentage point, and''.
            (2) Conforming amendment.--Section 1886(b)(3)(B) (42 U.S.C. 
        1395ww(b)(3)(B)) is amended by striking clause (v).

SEC. 8222. ELIMINATION OF FORMULA-DRIVEN OVERPAYMENTS FOR CERTAIN 
              OUTPATIENT HOSPITAL SERVICES.

    (a) Ambulatory Surgical Center Procedures.--Section 
1833(i)(3)(B)(i)(II) (42 U.S.C. 1395l(i)(3)(B)(i)(II)) is amended--
            (1) by striking ``of 80 percent''; and
            (2) by striking the period at the end and inserting the 
        following: ``, less the amount a provider may charge as 
        described in clause (ii) of section 1866(a)(2)(A).''.
    (b) Radiology Services and Diagnostic Procedures.--Section 
1833(n)(1)(B)(i)(II) (42 U.S.C. 1395l(n)(1)(B)(i)(II)) is amended--
            (1) by striking ``of 80 percent''; and
            (2) by striking the period at the end and inserting the 
        following: ``, less the amount a provider may charge as 
        described in clause (ii) of section 1866(a)(2)(A).''.
    (c) Effective Date.--The amendments made by this section shall 
apply to services furnished during portions of cost reporting periods 
occurring on or after January 1, 1996.

SEC. 8223. ESTABLISHMENT OF PROSPECTIVE PAYMENT SYSTEM FOR OUTPATIENT 
              SERVICES.

    (a) In General.--Section 1833(a)(2)(B) (42 U.S.C. 1395l(a)(2)(B)) 
is amended by striking ``section 1886)--'' and all that follows and 
inserting the following: ``section 1886), an amount equal to a 
prospectively determined payment rate established by the Secretary that 
provides for payments for such items and services to be based upon a 
national rate adjusted to take into account the relative costs of 
furnishing such items and services in various geographic areas, except 
that for items and services furnished during cost reporting periods (or 
portions thereof) in years beginning with 1996, such amount shall be 
equal to 95 percent of the amount that would otherwise have been 
determined;''.
    (b) Establishment of Prospective Payment System.--Not later than 
July 1, 1995, the Secretary of Health and Human Services shall 
establish the prospective payment system for hospital outpatient 
services necessary to carry out section 1833(a)(2)(B) of the Social 
Security Act (as amended by subsection (a)).
    (c) Effective Date.--The amendment made by subsection (a) shall 
apply to items and services furnished on or after January 1, 1997.

SEC. 8224. REDUCTION IN MEDICARE PAYMENTS TO HOSPITALS FOR INPATIENT 
              CAPITAL-RELATED COSTS.

    (a) PPS Hospitals.--Section 1886(g)(1)(A) (42 U.S.C. 
1395ww(g)(1)(A)) is amended by striking ``1995'' and inserting 
``2002''.
    (b) PPS-Exempt Hospitals.--Section 1861(v)(1) (42 U.S.C. 
1395x(v)(1)) is amended by adding at the end the following:
                    ``(T) Such regulations shall provide that, in 
                determining the amount of the payments that may be made 
                under this title with respect to the capital-related 
                costs of inpatient hospital services furnished by a 
                hospital that is not a subsection (d) hospital (as 
                defined in section 1886(d)(1)(B)) or a subsection (d) 
                Puerto Rico hospital (as defined in section 
                1886(d)(9)(A)), the Secretary shall reduce the amounts 
                of such payments otherwise established under this title 
                by 10 percent for payments attributable to portions of 
                cost reporting periods occurring during each of the 
                fiscal year 1996 through 2002.''.

SEC. 8225. MORATORIUM ON PPS EXEMPTION FOR LONG-TERM CARE HOSPITALS.

    (a) In General.--Section 1886(d)(1)(B)(iv) (42 U.S.C. 
1395ww(d)(1)(B)(iv)) is amended by striking ``Secretary)'' and 
inserting ``Secretary on or before September 30, 1995)''.
    (b) Recommendations on Appropriate Standards for Long-Term Care 
Hospitals.--Not later than 1 year after the date of the enactment of 
this Act, the Secretary of Health and Human Services shall submit to 
Congress recommendations for modifications to the standards used by the 
Secretary to determine whether a hospital (including a distinct part of 
another hospital) is classified as a long-term care hospital for 
purposes of determining the amount of payment to the hospital under 
part A of the medicare program for the operating costs of inpatient 
hospital services.

              PART 4--PROVISIONS AFFECTING OTHER PROVIDERS

SEC. 8231. REVISION OF PAYMENT METHODOLOGY FOR HOME HEALTH SERVICES.

    (a) Additions to Cost Limits.--Section 1861(v)(1)(L) (42 U.S.C. 
1395x(v)(1)(L)) is amended by adding at the end the following new 
clauses:
                            ``(iv) For services furnished by home 
                        health agencies for cost reporting periods 
                        beginning on or after October 1, 1996, the 
                        Secretary shall provide for an interim system 
                        of limits. Payment shall be the lower of--
                                    ``(I) costs determined under the 
                                preceding provisions of this 
                                subparagraph, or
                                    ``(II) an agency-specific per 
                                beneficiary annual limit calculated 
                                from the agency's 12-month cost 
                                reporting period ending on or after 
                                January 1, 1994 and on or before 
                                December 31, 1994 based on reasonable 
                                costs (including non-routine medical 
                                supplies), updated by the home health 
                                market basket index. The per 
                                beneficiary limitation shall be 
                                multiplied by the agency's unduplicated 
                                census count of Medicare patients for 
                                the year subject to the limitation. The 
                                limitation shall represent total 
                                Medicare reasonable costs divided by 
                                the unduplicated census count of 
                                Medicare patients.
                            ``(v) For services furnished by home health 
                        agencies for cost reporting periods beginning 
                        on or after October 1, 1996, the following 
                        rules shall apply:
                                    ``(I) For new providers and those 
                                providers without a 12-month cost 
                                reporting period ending in calendar 
                                year 1994, the per beneficiary limit 
                                shall be equal to the mean of these 
                                limits (or the Secretary's best 
                                estimates thereof) applied to home 
                                health agencies as determined by the 
                                Secretary. Home health agencies that 
                                have altered their corporate structure 
                                or name may not be considered new 
                                providers for payment purposes.
                                    ``(II) For beneficiaries who use 
                                services furnished by more than one 
                                home health agency, the per beneficiary 
                                limitation shall be pro-rated among 
                                agencies.
                            ``(vi) Home health agencies whose cost or 
                        utilization experience is below 125 percent of 
                        the mean national or census region aggregate 
                        per beneficiary cost or utilization experience 
                        for 1994, or best estimates thereof, and whose 
                        year-end reasonable costs are below the agency-
                        specific per beneficiary limit, shall receive 
                        payment equal to 50 percent of the difference 
                        between the agency's reasonable costs and its 
                        limit for fiscal years 1996, 1997, 1998, and 
                        1999. Such payments may not exceed 5 percent of 
                        an agency's aggregate Medicare reasonable cost 
                        in a year.
                            ``(vii) Effective January 1, 1997, or as 
                        soon as feasible, the Secretary shall modify 
                        the agency specific per beneficiary annual 
                        limit described in clause (iv) to provide for 
                        regional or national variations in utilization. 
                        For purposes of determining payment under 
                        clause (iv), the limit shall be calculated 
                        through a blend of 75 percent of the agency-
                        specific cost or utilization experience in 1994 
                        with 25 percent of the national or census 
                        region cost or utilization experience in 1994, 
                        or the Secretary's best estimates thereof.''.
    (b) Use of Interim Final Regulations.--The Secretary shall 
implement the payment limits described in section 1861(v)(1)(L)(iv) of 
the Social Security Act by publishing in the Federal Register a notice 
of interim final payment limits by August 1, 1996 and allowing for a 
period of public comments thereon. Payments subject to these limits 
will be effective for cost reporting periods beginning on or after 
October 1, 1996, without the necessity for consideration of comments 
received, but the Secretary shall, by Federal Register notice, affirm 
or modify the limits after considering those comments.
    (c) Studies.--The Secretary shall expand research on a prospective 
payment system for home health agencies that shall tie prospective 
payments to an episode of care, including an intensive effort to 
develop a reliable case mix adjuster that explains a significant amount 
of the variances in costs. The Secretary shall develop such a system 
for implementation in fiscal year 2000.
    (d) Payments Determined on Prospective Basis.--Title XVIII is 
amended by adding at the end the following new section:

             ``prospective payment for home health services

    ``Sec. 1893. (a) Notwithstanding section 1861(v), the Secretary 
shall, for cost reporting periods beginning on or after fiscal year 
2000, provide for payments for home health services in accordance with 
a prospective payment system, which pays home health agencies on a per 
episode basis, established by the Secretary.
    ``(b) Such a system shall include the following:
            ``(1) Per episode rates under the system shall be 15 
        percent less than those that would otherwise occur under fiscal 
        year 2000 Medicare expenditures for home health services.
            ``(2) All services covered and paid on a reasonable cost 
        basis under the Medicare home health benefit as of the date of 
        the enactment of the Medicare Enhancement Act of 1995, 
        including medical supplies, shall be subject to the per episode 
        amount. In defining an episode of care, the Secretary shall 
        consider an appropriate length of time for an episode the use 
        of services and the number of visits provided within an 
        episode, potential changes in the mix of services provided 
        within an episode and their cost, and a general system design 
        that will provide for continued access to quality services. The 
        per episode amount shall be based on the most current audited 
        cost report data available to the Secretary.
    ``(c) The Secretary shall employ an appropriate case mix adjuster 
that explains a significant amount of the variation in cost.
    ``(d) The episode payment amount shall be adjusted annually by the 
home health market basket index. The labor portion of the episode 
amount shall be adjusted for geographic differences in labor-related 
costs based on the most current hospital wage index.
    ``(e) The Secretary may designate a payment provision for outliers, 
recognizing the need to adjust payments due to unusual variations in 
the type or amount of medically necessary care.
    ``(f) A home health agency shall be responsible for coordinating 
all care for a beneficiary. If a beneficiary elects to transfer to, or 
receive services from, another home health agency within an episode 
period, the episode payment shall be pro-rated between home health 
agencies.''.

SEC. 8232. LIMITATION OF HOME HEALTH COVERAGE UNDER PART A.

    (a) In General.--Section 1812(a)(3) (42 U.S.C. 1395d(a)(3)) is 
amended by striking the semicolon and inserting ``for up to 150 days 
during any spell of illness;''.
    (b) Conforming Amendment.--Section 1812(b) (42 U.S.C. 1395d(b)) is 
amended--
            (1) by striking ``or'' at the end of paragraph (2),
            (2) by striking the period at the end of paragraph (3) and 
        inserting ``; or'', and
            (3) by adding at the end the following new paragraph:
            ``(4) home health services furnished to the individual 
        during such spell after such services have been furnished to 
        the individual for 150 days during such spell.''.
    (c) Exclusion of Additional Part B Costs From Determination of Part 
B Monthly Premium.--Section 1839(a) (42 U.S.C. 1395r(a)) is amended--
            (1) in the second sentence of paragraph (1), by striking 
        ``enrollees.'' and inserting ``enrollees (except as provided in 
        paragraph (5)).''; and
            (2) by adding at the end the following new paragraph:
    ``(5) In estimating the benefits and administrative costs which 
will be payable from the Federal Supplementary Medical Insurance Trust 
Fund for a year (beginning with 1996), the Secretary shall exclude an 
estimate of any benefits and costs attributable to home health services 
for which payment would have been made under part A during the year but 
for paragraph (4) of section 1812(b).''.
    (d) Effective Date.--The amendments made by this subsection shall 
apply to spells of illness beginning on or after October 1, 1995.

SEC. 8233. REDUCTION IN FEE SCHEDULE FOR DURABLE MEDICAL EQUIPMENT.

    (a) In General.--
            (1) Freeze in update for covered items.--Section 
        1834(a)(14) (42 U.S.C. 1395m(a)(14)) is amended--
                    (A) by striking ``and'' at the end of subparagraph 
                (A);
                    (B) in subparagraph (B)--
                            (i) by striking ``a subsequent year'' and 
                        inserting ``1993, 1994, and 1995'', and
                            (ii) by striking the period at the end and 
                        inserting ``; and''; and
                    (C) by adding at the end the following:
                    ``(C) for each of the years 1996 through 2002, 0 
                percent; and
                    ``(D) for a subsequent year, the percentage 
                increase in the consumer price index for all urban 
                consumers (U.S. urban average) for the 12-month period 
                ending with June of the previous year.''.
            (2) Update for orthotics and prosthetics.--Section 
        1834(h)(4)(A)(iii) (42 U.S.C. 1395m(h)(4)(A)(iii)) is amended 
        by striking ``1994 and 1995'' and inserting ``each of the years 
        1994 through 2002''.
    (b) Oxygen and Oxygen Equipment.--Section 1834(a)(9)(C) (42 U.S.C. 
1395m(a)(9)(C)) is amended--
            (1) by striking ``and'' at the end of clause (iii);
            (2) in clause (iv)--
                    (A) by striking ``a subsequent year'' and inserting 
                ``1993, 1994, and 1995'', and
                    (B) by striking the period at the end and inserting 
                ``; and''; and
            (3) by adding at the end the following new clause:
                            ``(v) in 1996 and each subsequent year, is 
                        90 percent of the national limited monthly 
                        payment rate computed under subparagraph (B) 
                        for the item for the year.''.

SEC. 8234. NURSING HOME BILLING.

    (a) Payments for Routine Service Costs.--
            (1) Clarification of definition of routine service costs.--
        Section 1888 (42 U.S.C. 1395yy) is amended by adding at the end 
        the following new subsection:
    ``(e) For purposes of this section, the `routine service costs' of 
a skilled nursing facility are all costs which are attributable to 
nursing services, room and board, administrative costs, other overhead 
costs, and all other ancillary services (including supplies and 
equipment), excluding costs attributable to covered non-routine 
services subject to payment limits under section 1888A.''.
            (2) Conforming amendment.--Section 1888 (42 U.S.C. 1395yy) 
        is amended in the heading by inserting ``and certain 
        ancillary'' after ``service''.
    (b) Incentives for Cost Effective Management of Covered Nonroutine 
Services.--
            (1) In general.--Title XVIII is amended by inserting after 
        section 1888 the following new section:

   ``incentives for cost-effective management of covered non-routine 
                 services of skilled nursing facilities

    ``Sec. 1888A. (a) Definitions.--For purposes of this section:
            ``(1) Covered non-routine services.--The term `covered non-
        routine services' means post-hospital extended care services 
        consisting of any of the following:
                    ``(A) Physical or occupational therapy or speech-
                language pathology services, or respiratory therapy.
                    ``(B) Prescription drugs.
                    ``(C) Complex medical equipment.
                    ``(D) Intravenous therapy and solutions (including 
                enteral and parenteral nutrients, supplies, and 
                equipment).
                    ``(E) Radiation therapy.
                    ``(F) Diagnostic services, including laboratory, 
                radiology (including computerized tomography services 
                and imaging services), and pulmonary services.
            ``(2) SNF market basket percentage increase.--The term `SNF 
        market basket percentage increase' for a fiscal year means a 
        percentage equal to the percentage increase in routine service 
        cost limits for the year under section 1888(a).
            ``(3) Stay.--The term `stay' means, with respect to an 
        individual who is a resident of a skilled nursing facility, a 
        period of continuous days during which the facility provides 
        extended care services for which payment may be made under this 
        title to the individual during the individual's spell of 
        illness.
    ``(b) New Payment Method for Covered Non-Routine Services.--
            ``(1) In general.--Subject to subsection (c), a skilled 
        nursing facility shall receive interim payments under this 
        title for covered non-routine services furnished to an 
        individual during a cost reporting period beginning during a 
        fiscal year (after fiscal year 1996) in an amount equal to the 
        reasonable cost of providing such services in accordance with 
        section 1861(v). The Secretary may adjust such payments if the 
        Secretary determines (on the basis of such estimated 
        information as the Secretary considers appropriate) that 
        payments to the facility under this paragraph for a cost 
        reporting period would substantially exceed the cost reporting 
        period limit determined under subsection (c)(1)(B).
            ``(2) Responsibility of skilled nursing facility to manage 
        billings.--
                    ``(A) Clarification relating to part a billing.--In 
                the case of a covered non-routine service furnished to 
                an individual who (at the time the service is 
                furnished) is a resident of a skilled nursing facility 
                who is entitled to coverage under section 1812(a)(2) 
                for such service, the skilled nursing facility shall 
                submit a claim for payment under this title for such 
                service under part A (without regard to whether or not 
                the item or service was furnished by the facility, by 
                others under arrangement with them made by the 
                facility, under any other contracting or consulting 
                arrangement, or otherwise).
                    ``(B) Part b billing.--In the case of a covered 
                non-routine service furnished to an individual who (at 
                the time the service is furnished) is a resident of a 
                skilled nursing facility who is not entitled to 
                coverage under section 1812(a)(2) for such service but 
                is entitled to coverage under part B for such service, 
                the skilled nursing facility shall submit a claim for 
                payment under this title for such service under part B 
                (without regard to whether or not the item or service 
                was furnished by the facility, by others under 
                arrangement with them made by the facility, under any 
                other contracting or consulting arrangement, or 
                otherwise).
                    ``(C) Maintaining records on services furnished to 
                residents.--Each skilled nursing facility receiving 
                payments for extended care services under this title 
                shall document on the facility's cost report all 
                covered non-routine services furnished to all residents 
                of the facility to whom the facility provided extended 
                care services for which payment was made under part A 
                during a fiscal year (beginning with fiscal year 1996) 
                (without regard to whether or not the services were 
                furnished by the facility, by others under arrangement 
                with them made by the facility, under any other 
                contracting or consulting arrangement, or otherwise).
    ``(c) Reconciliation of Amounts.--
            ``(1) Limit based on per stay limit and number of stays.--
                    ``(A) In general.--If a skilled nursing facility 
                has received aggregate payments under subsection (b) 
                for covered non-routine services during a cost 
                reporting period beginning during a fiscal year in 
                excess of an amount equal to the cost reporting period 
                limit determined under subparagraph (B), the Secretary 
                shall reduce the payments made to the facility with 
                respect to such services for cost reporting periods 
                beginning during the following fiscal year in an amount 
                equal to such excess. The Secretary shall reduce 
                payments under this subparagraph at such times and in 
                such manner during a fiscal year as the Secretary finds 
                necessary to meet the requirement of this subparagraph.
                    ``(B) Cost reporting period limit.--The cost 
                reporting period limit determined under this 
                subparagraph is an amount equal to the product of--
                            ``(i) the per stay limit applicable to the 
                        facility under subsection (d) for the period; 
                        and
                            ``(ii) the number of stays beginning during 
                        the period for which payment was made to the 
                        facility for such services.
                    ``(C) Prospective reduction in payments.--In 
                addition to the process for reducing payments described 
                in subparagraph (A), the Secretary may reduce payments 
                made to a facility under this section during a cost 
                reporting period if the Secretary determines (on the 
                basis of such estimated information as the Secretary 
                considers appropriate) that payments to the facility 
                under this section for the period will substantially 
                exceed the cost reporting period limit for the period 
                determined under this paragraph.
            ``(2) Incentive payments.--
                    ``(A) In general.--If a skilled nursing facility 
                has received aggregate payments under subsection (b) 
                for covered non-routine services during a cost 
                reporting period beginning during a fiscal year in an 
                amount that is less than the amount determined under 
                paragraph (1)(B), the Secretary shall pay the skilled 
                nursing facility in the following fiscal year an 
                incentive payment equal to 50 percent of the difference 
                between such amounts, except that the incentive payment 
                may not exceed 5 percent of the aggregate payments made 
                to the facility under subsection (b) for the previous 
                fiscal year (without regard to subparagraph (B)).
                    ``(B) Installment incentive payments.--The 
                Secretary may make installment payments during a fiscal 
                year to a skilled nursing facility based on the 
                estimated incentive payment that the facility would be 
                eligible to receive with respect to such fiscal year.
    ``(d) Determination of Facility Per Stay Limit.--
            ``(1) Limit for fiscal year 1997.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), the Secretary shall establish 
                separate per stay limits for hospital-based and 
                freestanding skilled nursing facilities for the 12-
                month cost reporting period beginning during fiscal 
                year 1997 that are equal to the sum of--
                            ``(i) 50 percent of the facility-specific 
                        stay amount for the facility (as determined 
                        under subsection (e)) for the last 12-month 
                        cost reporting period ending on or before 
                        September 30, 1994, increased (in a compounded 
                        manner) by the SNF market basket percentage 
                        increase for fiscal years 1995 through 1997; 
                        and
                            ``(ii) 50 percent of the average of all 
                        facility-specific stay amounts for all 
                        hospital-based facilities or all freestanding 
                        facilities (whichever is applicable) during the 
                        cost reporting period described in clause (i), 
                        increased (in a compounded manner) by the SNF 
                        market basket percentage increase for fiscal 
                        years 1995 through 1997.
                    ``(B) Facilities not having 1994 cost reporting 
                period.--In the case of a skilled nursing facility for 
                which payments were not made under this title for 
                covered non-routine services for the last 12-month cost 
                reporting period ending on or before September 30, 
                1994, the per stay limit for the 12-month cost 
                reporting period beginning during fiscal year 1997 
                shall be twice the amount determined under subparagraph 
                (A)(ii).
            ``(2) Limit for subsequent fiscal years.--The per stay 
        limit for a skilled nursing facility for a 12-month cost 
        reporting period beginning during a fiscal year after fiscal 
        year 1997 is equal to the per stay limit established under this 
        subsection for the 12-month cost reporting period beginning 
        during the previous fiscal year, increased by the SNF market 
        basket percentage increase for such subsequent fiscal year 
        minus 2 percentage points.
            ``(3) Rebasing of amounts.--
                    ``(A) In general.--The Secretary shall provide for 
                an update to the facility-specific amounts used to 
                determine the per stay limits under this subsection for 
                cost reporting periods beginning on or after October 1, 
                1999, and every 2 years thereafter.
                    ``(B) Treatment of facilities not having rebased 
                cost reporting periods.--Paragraph (1)(B) shall apply 
                with respect to a skilled nursing facility for which 
                payments were not made under this title for covered 
                non-routine services for the 12-month cost reporting 
                period used by the Secretary to update facility-
                specific amounts under subparagraph (A) in the same 
                manner as such paragraph applies with respect to a 
                facility for which payments were not made under this 
                title for covered non-routine services for the last 12-
                month cost reporting period ending on or before 
                September 30, 1994.
    ``(e) Determination of Facility-Specific Stay Amounts.--The 
`facility-specific stay amount' for a skilled nursing facility for a 
cost reporting period is the sum of--
            ``(1) the average amount of payments made to the facility 
        under part A during the period which are attributable to 
        covered non-routine services furnished during a stay (as 
        determined on a per diem basis); and
            ``(2) the Secretary's best estimate of the average amount 
        of payments made under part B during the period for covered 
        non-routine services furnished to all residents of the facility 
        to whom the facility provided extended care services for which 
        payment was made under part A during the period (without regard 
        to whether or not the services were furnished by the facility, 
        by others under arrangement with them made by the facility, 
        under any other contracting or consulting arrangement, or 
        otherwise), as estimated by the Secretary.
    ``(f) Intensive Nursing or Therapy Needs.--
            ``(1) In general.--In applying subsection (b) to covered 
        non-routine services furnished during a stay beginning during a 
        cost reporting period beginning during a fiscal year (beginning 
        with fiscal years after fiscal year 1997) to a resident of a 
        skilled nursing facility who requires intensive nursing or 
        therapy services, the per stay limit for such resident shall be 
        the per stay limit developed under paragraph (2) instead of the 
        per stay limit determined under subsection (d)(1)(A).
            ``(2) Per stay limit for intensive need residents.--Not 
        later than June 30, 1997, the Secretary, after consultation 
        with the Medicare Payment Review Commission and skilled nursing 
        facility experts, shall develop and publish a per stay limit 
        for residents of a skilled nursing facility who require 
        intensive nursing or therapy services.
            ``(3) Budget neutrality.--The Secretary shall adjust 
        payments under subsection (b) in a manner that ensures that 
        total payments for covered non-routine services under this 
        section are not greater or less than total payments for such 
        services would have been but for the application of paragraph 
        (1).
    ``(g) Special Treatment for Small Skilled Nursing Facilities.--This 
section shall not apply with respect to a skilled nursing facility for 
which payment is made for routine service costs during a cost reporting 
period on the basis of prospective payments under section 1888(d).
    ``(h) Exceptions and Adjustments to Limits.--
            ``(1) In general.--The Secretary may make exceptions and 
        adjustments to the cost reporting limits applicable to a 
        skilled nursing facility under subsection (c)(1)(B) for a cost 
        reporting period, except that the total amount of any 
        additional payments made under this section for covered non-
        routine services during the cost reporting period as a result 
        of such exceptions and adjustments may not exceed 5 percent of 
        the aggregate payments made to all skilled nursing facilities 
        for covered non-routine services during the cost reporting 
        period (determined without regard to this paragraph).
            ``(2) Budget neutrality.--The Secretary shall adjust 
        payments under subsection (b) in a manner that ensures that 
        total payments for covered non-routine services under this 
        section are not greater or less than total payments for such 
        services would have been but for the application of paragraph 
        (1).
    ``(i) Special Rule for X-Ray Services.--Before furnishing a covered 
non-routine service consisting of an X-ray service for which payment 
may be made under part A or part B to a resident, a skilled nursing 
facility shall consider whether furnishing the service through a 
provider of portable X-ray service services would be appropriate, 
taking into account the cost effectiveness of the service and the 
convenience to the resident.''.
            (2) Conforming amendment.--Section 1814(b) (42 U.S.C. 
        1395f(b)) is amended in the matter preceding paragraph (1) by 
        striking ``1813 and 1886'' and inserting ``1813, 1886, 1888, 
        and 1888A''.

SEC. 8235. FREEZE IN PAYMENTS FOR CLINICAL DIAGNOSTIC LABORATORY TESTS.

    Section 1833(h)(2)(A)(ii)(IV) (42 U.S.C. 1395l(h)(2)(A)(ii)(IV)) is 
amended by striking ``1994 and 1995'' and inserting ``1994 through 
2002''.

       PART 5--GRADUATE MEDICAL EDUCATION AND TEACHING HOSPITALS

SEC. 8241. TEACHING HOSPITAL AND GRADUATE MEDICAL EDUCATION TRUST FUND.

    (a) Teaching Hospital and Graduate Medical Education Trust Fund.--
The Social Security Act (42 U.S.C. 300 et seq.) is amended by adding at 
the end the following title:

  ``TITLE XXI--TEACHING HOSPITAL AND GRADUATE MEDICAL EDUCATION TRUST 
                                  FUND

                    ``Part A--Establishment of Fund

``SEC. 2101. ESTABLISHMENT OF FUND.

    ``(a) In General.--There is established in the Treasury of the 
United States a fund to be known as the Teaching Hospital and Graduate 
Medical Education Trust Fund (in this title referred to as the `Fund'), 
consisting of amounts transferred to the Fund under subsection (c), 
amounts appropriated to the Fund pursuant to subsections (d) and 
(e)(3), and such gifts and bequests as may be deposited in the Fund 
pursuant to subsection (f). Amounts in the Fund are available until 
expended.
    ``(b) Expenditures From Fund.--Amounts in the Fund are available to 
the Secretary for making payments under section 2111.
    ``(c) Transfers to Fund.--
            ``(1) In general.--From the Federal Hospital Insurance 
        Trust Fund and the Federal Supplementary Medical Insurance 
        Trust Fund, the Secretary shall, for fiscal year 1996 and each 
        subsequent fiscal year, transfer to the Fund an amount 
        determined by the Secretary for the fiscal year involved in 
        accordance with paragraph (2).
            ``(2) Determination of amounts.--For purposes of paragraph 
        (1), the amount determined under this paragraph for a fiscal 
        year is an estimate by the Secretary of an amount equal to 75 
        percent of the difference between--
                    ``(A) the nationwide total of the amounts that 
                would have been paid under sections 1855 and 1876 
                during the year but for the operation of section 
                1855(b)(2)(B)(ii); and
                    ``(B) the nationwide total of the amounts paid 
                under such sections during the year.
            ``(3) Allocation between medicare trust funds.--In 
        providing for a transfer under paragraph (1) for a fiscal year, 
        the Secretary shall provide for an allocation of the amounts 
        involved between part A and part B of title XVIII (and the 
        trust funds established under the respective parts) as 
        reasonably reflects the proportion of payments for the indirect 
        costs of medical education and direct graduate medical 
        education costs of hospitals associated with the provision of 
        services under each respective part.
    ``(d) Authorization of Appropriations.--There are authorized to be 
appropriated to the Fund such sums as may be necessary for each of the 
fiscal years 1996 through 2002.
    ``(e) Investment.--
            ``(1) In general.--The Secretary of the Treasury shall 
        invest such amounts of the Fund as such Secretary determines 
        are not required to meet current withdrawals from the Fund. 
        Such investments may be made only in interest-bearing 
        obligations of the United States. For such purpose, such 
        obligations may be acquired on original issue at the issue 
        price, or by purchase of outstanding obligations at the market 
        price.
            ``(2) Sale of obligations.--Any obligation acquired by the 
        Fund may be sold by the Secretary of the Treasury at the market 
        price.
            ``(3) Availability of income.--Any interest derived from 
        obligations acquired by the Fund, and proceeds from any sale or 
        redemption of such obligations, are hereby appropriated to the 
        Fund.
    ``(f) Acceptance of Gifts and Bequests.--The Fund may accept on 
behalf of the United States money gifts and bequests made 
unconditionally to the Fund for the benefit of the Fund or any activity 
financed through the Fund.

                ``Part B--Payments to Teaching Hospitals

``SEC. 2111. FORMULA PAYMENTS TO TEACHING HOSPITALS.

    ``(a) In General.--In the case of each teaching hospital that in 
accordance with subsection (b) submits to the Secretary a payment 
document for fiscal year 1996 or any subsequent fiscal year, the 
Secretary shall make payments for the year to the teaching hospital for 
the direct and indirect costs of operating approved medical residency 
training programs. Such payments shall be made from the Fund, and shall 
be made in accordance with a formula established by the Secretary.
    ``(b) Payment Document.--For purposes of subsection (a), a payment 
document is a document containing such information as may be necessary 
for the Secretary to make payments under such subsection to a teaching 
hospital for a fiscal year. The document is submitted in accordance 
with this subsection if the document is submitted not later than the 
date specified by the Secretary, and the document is in such form and 
is made in such manner as the Secretary may require. The Secretary may 
require that information under this subsection be submitted to the 
Secretary in periodic reports.''.
    (b) National Advisory Council on Postgraduate Medical Education.--
            (1) In general.--There is established within the Department 
        of Health and Human Services an advisory council to be known as 
        the National Advisory Council on Postgraduate Medical Education 
        (in this title referred to as the ``Council'').
            (2) Duties.--The council shall provide advice to the 
        Secretary on appropriate policies for making payments for the 
        support of postgraduate medical education in order to assure an 
        adequate supply of physicians trained in various specialities, 
        consistent with the health care needs of the United States.
            (3) Composition.--
                    (A) In general.--The Secretary shall appoint to the 
                Council 15 individuals who are not officers or 
                employees of the United States. Such individuals shall 
                include not less than 1 individual from each of the 
                following categories of individuals or entities:
                            (i) Organizations representing consumers of 
                        health care services.
                            (ii) Physicians who are faculty members of 
                        medical schools, or who supervise approved 
                        physician training programs.
                            (iii) Physicians in private practice who 
                        are not physicians described in clause (ii).
                            (iv) Practitioners in public health.
                            (v) Advanced-practice nurses.
                            (vi) Other health professionals who are not 
                        physicians.
                            (vii) Medical schools.
                            (viii) Teaching hospitals.
                            (ix) The Accreditation Council on Graduate 
                        Medical Education.
                            (x) The American Board of Medical 
                        Specialities.
                            (xi) The Council on Postdoctoral Training 
                        of the American Osteopathic Association.
                            (xii) The Council on Podiatric Medical 
                        Education of the American Podiatric Medical 
                        Association.
                    (B) Requirements regarding representative 
                membership.--To the greatest extent feasible, the 
                membership of the Council shall represent the various 
                geographic regions of the United States, shall reflect 
                the racial, ethnic, and gender composition of the 
                population of the United States, and shall be broadly 
                representative of medical schools and teaching 
                hospitals in the United States.
                    (C) Ex officio members; other federal officers or 
                employees.--The membership of the Council shall include 
                individuals designated by the Secretary to serve as 
                members of the Council from among Federal officers or 
                employees who are appointed by the President, or by the 
                Secretary (or by other Federal officers who are 
                appointed by the President with the advice and consent 
                of the Senate). Individuals designated under the 
                preceding sentence shall include each of the following 
                officials (or a designee of the official):
                            (i) The Secretary of Health and Human 
                        Services.
                            (ii) The Secretary of Veterans Affairs.
                            (iii) The Secretary of Defense.
            (4) Chair.--The Secretary shall, from among members of the 
        council appointed under paragraph (3)(A), designate an 
        individual to serve as the chair of the council.
            (5) Termination.--The Council terminates December 31, 1999.
    (c) Remove Medical Education and Disproportionate Share Hospital 
Payments From Calculation of Adjusted Average Per Capita Cost.--For 
provision removing medical education and disproportionate share 
hospital payments from calculation of payment amounts for organizations 
paid on a capitated basis, see section 1855(b)(2)(B)(ii).
            (2) Payments to hospitals of amounts attributable to dsh.--
        Section 1886 (42 U.S.C. 1395ww) is amended by adding at the end 
        the following new subsection:
    ``(j)(1) In addition to amounts paid under subsection (d)(5)(F), 
the Secretary is authorized to pay hospitals which are eligible for 
such payments for a fiscal year supplemental amounts that do not exceed 
the limit provided for in paragraph (2).
    ``(2) The sum of the aggregate amounts paid pursuant to paragraph 
(1) for a fiscal year shall not exceed the Secretary's estimate of 75 
percent of the amount of reductions in payments under section 1855 that 
are attributable to the operation of subsection (b)(2)(B)(ii) of such 
section.''.

SEC. 8242. REDUCTION IN PAYMENT ADJUSTMENTS FOR INDIRECT MEDICAL 
              EDUCATION.

    (a) Modification Regarding 6.8 Percent.--Section 1886(d)(5)(B)(ii) 
(42 U.S.C. 1395ww(d)(5)(B)(ii)) is amended--
            (1) by striking ``on or after October 1, 1988,'' and 
        inserting ``on or after October 1, 1999,''; and
            (2) by striking ``1.89'' and inserting ``1.68''.
    (b) Special Rule Regarding Fiscal Years 1996 Through 1998; 
Modification Regarding 6 Percent.--Section 1886(d)(5)(B)(ii), as 
amended by paragraph (1), is amended by adding at the end the 
following: ``In the case of discharges occurring on or after October 1, 
1995, and before October 1, 1999, the preceding sentence applies to the 
same extent and in the same manner as the sentence applies to 
discharges occurring on or after October 1, 1999, except that the term 
`1.68' is deemed to be 1.48.''.

       Subtitle D--Provisions Relating to Medicare Beneficiaries

                                                 Title VIII, Subtitle D

SEC. 8301. PART B PREMIUM.

    (a) Freeze in Premium for 1996.--Section 1839(e)(1) (42 U.S.C. 
1395r(e)(1)) is amended--
            (1) in subparagraph (A), by striking ``December 1995'' and 
        inserting ``December 1996''; and
            (2) in subparagraph (B)(v), by striking ``1995'' and 
        inserting ``1995 and 1996''.
    (b) Establishing Premium at 25 Percent of Program Costs Through 
2002.--Section 1839(e)(1)(A) (42 U.S.C. 1395r(e)(1)(A)) is amended by 
striking ``January 1999'' and inserting ``January 2003''.

SEC. 8302. FULL COST OF MEDICARE PART B COVERAGE PAYABLE BY HIGH-INCOME 
              INDIVIDUALS.

    (a) In General.--Subchapter A of chapter 1 of the Internal Revenue 
Code of 1986 is amended by adding at the end thereof the following new 
part:

  ``PART VIII--SUPPLEMENTAL MEDICARE PART B PREMIUMS FOR HIGH-INCOME 
                              INDIVIDUALS

                              ``Sec. 59B. Supplemental Medicare part B 
                                        premium.

``SEC. 59B. SUPPLEMENTAL MEDICARE PART B PREMIUM.

    ``(a) Requirement To Pay Premium.--In the case of an individual to 
whom this section applies for the taxable year, there is hereby imposed 
(in addition to any other amount imposed by this subtitle) an amount 
equal to the aggregate of the supplemental Medicare part B premiums (if 
any) for months during such year that such individual is covered under 
Medicare part B.
    ``(b) Individuals to Whom Section Applies.--This section shall 
apply to any individual for any taxable year if--
            ``(1) such individual is covered under Medicare part B for 
        any month during such year, and
            ``(2) the modified adjusted gross income of the taxpayer 
        for such taxable year exceeds the threshold amount.
    ``(c) Supplemental Medicare Part B Premium.--
            ``(1) In general.--For purposes of subsection (a), the 
        supplemental Medicare part B premium for any month is an amount 
        equal to the excess of--
                    ``(A) subject to adjustment under paragraph (2), 
                200 percent of the monthly actuarial rate for enrollees 
                age 65 and over determined under subsection 1839(a)(1) 
                of the Social Security Act for such month, over
                    ``(B) the total monthly premium under section 1839 
                of the Social Security Act (determined without regard 
                to subsections (b) and (f) of section 1839 of such 
                Act).
            ``(2) Adjusting monthly actuarial rate by geographic 
        area.--
                    ``(A) In general.--In determining the amount 
                described in paragraph (1)(A) for an individual 
                residing in a premium area, the Secretary shall adjust 
                such amount for a year by a geographic adjustment 
                factor established by the Secretary which reflects the 
                relative benefits and administrative costs payable from 
                the Federal Supplementary Medical Insurance Trust Fund 
                for services performed and related administrative costs 
                incurred in the year with respect to enrollees residing 
                in such area compared to the national average of such 
                benefits and costs.
                    ``(B) Premium area.--In this paragraph, a `premium 
                area' means a metropolitan statistical area or the 
                portion of a State outside of any metropolitan 
                statistical area.
    ``(d) Phasein.--
            ``(1) In general.--If the modified adjusted gross income of 
        the taxpayer for any taxable year exceeds the threshold amount 
        by less than $50,000, the amount imposed by this section for 
        such taxable year shall be an amount which bears the same ratio 
        to the amount which would (but for this subsection) be imposed 
        by this section for such taxable year as such excess bears to 
        $50,000. The preceding sentence shall not apply to any 
        individual whose threshold amount is zero.
            ``(2) Phasein range for joint returns.--In the case of a 
        joint return, paragraph (1) shall be applied by substituting 
        `$75,000' for `$50,000'.
    ``(e) Other Definitions and Special Rules.--For purposes of this 
section--
            ``(1) Threshold amount.--The term `threshold amount' 
        means--
                    ``(A) except as otherwise provided in this 
                paragraph, $50,000,
                    ``(B) $75,000 in the case of a joint return, and
                    ``(C) zero in the case of a taxpayer who--
                            ``(i) is married at the close of the 
                        taxable year but does not file a joint return 
                        for such year, and
                            ``(ii) does not live apart from his spouse 
                        at all times during the taxable year.
            ``(2) Modified adjusted gross income.--The term `modified 
        adjusted gross income' means adjusted gross income--
                    ``(A) determined without regard to sections 135, 
                911, 931, and 933, and
                    ``(B) increased by the amount of interest received 
                or accrued by the taxpayer during the taxable year 
                which is exempt from tax.
            ``(3) Joint returns.--In the case of a joint return--
                    ``(A) the amount imposed by subsection (a) shall be 
                the sum of the amounts so imposed determined separately 
                for each spouse, and
                    ``(B) subsections (a) and (d) shall be applied by 
                taking into account the combined modified adjusted 
                gross income of the spouses.
            ``(4) Medicare part b coverage.--An individual shall be 
        treated as covered under Medicare part B for any month if a 
        premium is paid under part B of title XVIII of the Social 
        Security Act for the coverage of the individual under such part 
        for the month.
            ``(5) Married individual.--The determination of whether an 
        individual is married shall be made in accordance with section 
        7703.
    ``(f) Coordination With Other Provisions.--
            ``(1) Treatment as medical expense.--For purposes of 
        section 213, the supplemental Medicare part B premium imposed 
        by this section shall be treated as an amount paid for 
        insurance covering medical care (as defined in section 213(d)).
            ``(2) Treatment under subtitle f.--For purposes of subtitle 
        F (other than section 6654), the supplemental Medicare part B 
        premium imposed by this section shall be treated as if it were 
        a tax imposed by section 1.
            ``(3) Not treated as tax for certain purposes.--The 
        supplemental Medicare part B premium imposed by this section 
        shall not be treated as a tax imposed by this chapter for 
        purposes of determining--
                    ``(A) the amount of any credit allowable under this 
                chapter, or
                    ``(B) the amount of the minimum tax imposed by 
                section 55.''
    (b) Transfers to Supplemental Medical Insurance Trust Fund.--
            (1) In general.--There are hereby appropriated to the 
        Supplemental Medical Insurance Trust Fund amounts equivalent to 
        the aggregate increase in liabilities under chapter 1 of the 
        Internal Revenue Code of 1986 which is attributable to the 
        application of section 59B of such Code, as added by this 
        section.
            (2) Transfers.--The amounts appropriated by paragraph (1) 
        to the Supplemental Medical Insurance Trust Fund shall be 
        transferred from time to time (but not less frequently than 
        quarterly) from the general fund of the Treasury on the basis 
        of estimates made by the Secretary of the Treasury of the 
        amounts referred to in paragraph (1). Any quarterly payment 
        shall be made on the first day of such quarter and shall take 
        into account the portion of the supplemental Medicare part B 
        premium (as defined in such section 59B) which is attributable 
        to months during such quarter. Proper adjustments shall be made 
        in the amounts subsequently transferred to the extent prior 
        estimates were in excess of or less than the amounts required 
        to be transferred.
    (c) Reporting Requirements.--
            (1) Paragraph (1) of section 6050F(a) (relating to returns 
        relating to social security benefits) is amended by striking 
        ``and'' at the end of subparagraph (B) and by inserting after 
        subparagraph (C) the following new subparagraph:
                    ``(D) the number of months during the calendar year 
                for which a premium was paid under part B of title 
                XVIII of the Social Security Act for the coverage of 
                such individual under such part, and''.
            (2) Paragraph (2) of section 6050F(b) is amended to read as 
        follows:
            ``(2) the information required to be shown on such return 
        with respect to such individual.''
            (3) Paragraph (1) of section 6050F(c) is amended by 
        striking ``and'' at the end of subparagraph (A), by striking 
        the period at the end of subparagraph (B) and inserting ``, 
        and'', and by adding at the end the following new subparagraph:
                    ``(C) the Secretary of Health and Human Services in 
                the case of the information specified in subsection 
                (a)(1)(D).''
            (4) The heading for section 6050F is amended by inserting 
        ``and medicare part b coverage'' before the period.
            (5) The item relating to section 6050F in the table of 
        sections for subpart B of part III of subchapter A of chapter 
        61 is amended by inserting ``and Medicare part B coverage'' 
        before the period.
    (d) Clerical Amendment.--The table of parts for subchapter A of 
chapter 1 is amended by adding at the end thereof the following new 
item:

                              ``Part VIII. Supplemental Medicare part B 
                                        premiums for high-income 
                                        individuals.''
    (e) Effective Date.--The amendments made by this section shall 
apply to months after December 1995 in taxable years ending after 
December 31, 1995.

SEC. 8303. EXPANDED COVERAGE OF PREVENTIVE BENEFITS.

    (a) Providing Annual Screening Mammography for Women Over Age 49.--
Section 1834(c)(2)(A) (42 U.S.C. 1395m(c)(2)(A)) is amended--
            (1) in clause (iv), by striking ``but under 65 years of 
        age,''; and
            (2) by striking clause (v).
    (b) Coverage of Screening Pap Smear and Pelvic Exams.--
            (1) Coverage of pelvic exam; increasing frequency of 
        coverage of pap smear.--Section 1861(nn) (42 U.S.C. 1395x(nn)) 
        is amended--
                    (A) in the heading, by striking ``Smear'' and 
                inserting ``Smear; Screening Pelvic Exam'';
                    (B) by striking ``(nn)'' and inserting ``(nn)(1)'';
                    (C) by striking ``3 years'' and all that follows 
                and inserting ``3 years, or during the preceding year 
                in the case of a woman described in paragraph (3).''; 
                and
                    (D) by adding at the end the following new 
                paragraphs:
    ``(2) The term `screening pelvic exam' means an pelvic examination 
provided to a woman if the woman involved has not had such an 
examination during the preceding 3 years, or during the preceding year 
in the case of a woman described in paragraph (3), and includes a 
clinical breast examination.
    ``(3) A woman described in this paragraph is a woman who--
            ``(A) is of childbearing age and has not had a test 
        described in this subsection during each of the preceding 3 
        years that did not indicate the presence of cervical cancer; or
            ``(B) is at high risk of developing cervical cancer (as 
        determined pursuant to factors identified by the Secretary).''.
            (2) Waiver of deductible.--The first sentence of section 
        1833(b) (42 U.S.C. 1395l(b)), as amended by subsection (a)(2), 
        is amended--
                    (A) by striking ``and (5)'' and inserting ``(5)''; 
                and
                    (B) by striking the period at the end and inserting 
                the following: ``, and (6) such deductible shall not 
                apply with respect to screening pap smear and screening 
                pelvic exam (as described in section 1861(nn)).''.
            (3) Conforming amendments.--(A) Section 1861(s)(14) (42 
        U.S.C. 1395x(s)(14)) is amended by inserting ``and screening 
        pelvic exam'' after ``screening pap smear''.
            (B) Section 1862(a)(1)(F) (42 U.S.C. 1395y(a)(1)(F)) is 
        amended by inserting ``and screening pelvic exam'' after 
        ``screening pap smear''.
    (c) Coverage of Colorectal Screening.--
            (1) In general.--Section 1834 (42 U.S.C. 1395m) is amended 
        by inserting after subsection (c) the following new subsection:
    ``(d) Frequency and Payment Limits for Screening Fecal-Occult Blood 
Tests, Screening Flexible Sigmoidoscopies, and Screening Colonoscopy.--
            ``(1) Frequency limits for screening fecal-occult blood 
        tests.--Subject to revision by the Secretary under paragraph 
        (4), no payment may be made under this part for a screening 
        fecal-occult blood test provided to an individual for the 
        purpose of early detection of colon cancer if the test is 
        performed--
                    ``(A) in the case of an individual under 65 years 
                of age, more frequently than is provided in a 
                periodicity schedule established by the Secretary for 
                purposes of this subparagraph; or
                    ``(B) in the case of any other individual, within 
                the 11 months following the month in which a previous 
                screening fecal-occult blood test was performed.
            ``(2) Screening flexible sigmoid- oscopies.--
                    ``(A) Payment amount.--The Secretary shall 
                establish a payment amount under section 1848 with 
                respect to screening flexible sigmoidoscopies provided 
                for the purpose of early detection of colon cancer that 
                is consistent with payment amounts under such section 
                for similar or related services, except that such 
                payment amount shall be established without regard to 
                subsection (a)(2)(A) of such section.
                    ``(B) Frequency limits.--Subject to revision by the 
                Secretary under paragraph (4), no payment may be made 
                under this part for a screening flexible sigmoidoscopy 
                provided to an individual for the purpose of early 
                detection of colon cancer if the procedure is 
                performed--
                            ``(i) in the case of an individual under 65 
                        years of age, more frequently than is provided 
                        in a periodicity schedule established by the 
                        Secretary for purposes of this subparagraph; or
                            ``(ii) in the case of any other individual, 
                        within the 59 months following the month in 
                        which a previous screening flexible 
                        sigmoidoscopy was performed.
            ``(3) Screening colonoscopy for individuals at high risk 
        for colorectal cancer.--
                    ``(A) Payment amount.--The Secretary shall 
                establish a payment amount under section 1848 with 
                respect to screening colonoscopy for individuals at 
                high risk for colorectal cancer (as determined in 
                accordance with criteria established by the Secretary) 
                provided for the purpose of early detection of colon 
                cancer that is consistent with payment amounts under 
                such section for similar or related services, except 
                that such payment amount shall be established without 
                regard to subsection (a)(2)(A) of such section.
                    ``(B) Frequency limit.--Subject to revision by the 
                Secretary under paragraph (4), no payment may be made 
                under this part for a screening colonoscopy for 
                individuals at high risk for colorectal cancer provided 
                to an individual for the purpose of early detection of 
                colon cancer if the procedure is performed within the 
                47 months following the month in which a previous 
                screening colonoscopy was performed.
                    ``(C) Factors considered in establishing criteria 
                for determining individuals at high risk.--In 
                establishing criteria for determining whether an 
                individual is at high risk for colorectal cancer for 
                purposes of this paragraph, the Secretary shall take 
                into consideration family history, prior experience of 
                cancer, a history of chronic digestive disease 
                condition, and the presence of any appropriate 
                recognized gene markers for colorectal cancer.
            ``(4) Revision of frequency.--
                    ``(A) Review.--The Secretary shall review 
                periodically the appropriate frequency for performing 
                screening fecal-occult blood tests, screening flexible 
                sigmoidoscopies, and screening colonoscopy based on age 
                and such other factors as the Secretary believes to be 
                pertinent.
                    ``(B) Revision of frequency.--The Secretary, taking 
                into consideration the review made under clause (i), 
                may revise from time to time the frequency with which 
                such tests and procedures may be paid for under this 
                subsection.''.
            (2) Conforming amendments.--(A) Paragraphs (1)(D) and 
        (2)(D) of section 1833(a) (42 U.S.C. 1395l(a)) are each amended 
        by striking ``subsection (h)(1),'' and inserting ``subsection 
        (h)(1) or section 1834(d)(1),''.
            (B) Clauses (i) and (ii) of section 1848(a)(2)(A) (42 
        U.S.C. 1395w-4(a)(2)(A)) are each amended by striking ``a 
        service'' and inserting ``a service (other than a screening 
        flexible sigmoidoscopy provided to an individual for the 
        purpose of early detection of colon cancer or a screening 
        colonoscopy provided to an individual at high risk for 
        colorectal cancer for the purpose of early detection of colon 
        cancer)''.
            (C) Section 1862(a) (42 U.S.C. 1395y(a)) is amended--
                    (i) in paragraph (1)--
                            (I) in subparagraph (E), by striking 
                        ``and'' at the end;
                            (II) in subparagraph (F), by striking the 
                        semicolon at the end and inserting ``, and''; 
                        and
                            (III) by adding at the end the following 
                        new subparagraph:
            ``(G) in the case of screening fecal-occult blood tests, 
        screening flexible sigmoidoscopies, and screening colonoscopy 
        provided for the purpose of early detection of colon cancer, 
        which are performed more frequently than is covered under 
        section 1834(d);''; and
                    (ii) in paragraph (7), by striking ``paragraph 
                (1)(B) or under paragraph (1)(F)'' and inserting 
                ``subparagraphs (B), (F), or (G) of paragraph (1)''.
    (d) Prostate Cancer Screening Tests.--
            (1) In general.--Section 1861(s)(2) (42 U.S.C. 1395x(s)(2)) 
        is amended--
                    (A) by striking ``and'' at the end of subparagraph 
                (N) and subparagraph (O); and
                    (B) by inserting after subparagraph (O) the 
                following new subparagraph:
            ``(P) prostate cancer screening tests (as defined in 
        subsection (oo)); and''.
            (2) Tests described.--Section 1861 (42 U.S.C. 1395x) is 
        amended by adding at the end the following new subsection:

                   ``Prostate Cancer Screening Tests

    ``(oo) The term `prostate cancer screening test' means a test that 
consists of a digital rectal examination or a prostate-specific antigen 
blood test (or both) provided for the purpose of early detection of 
prostate cancer to a man over 40 years of age who has not had such a 
test during the preceding year.''.
            (3) Payment for prostate-specific antigen blood test under 
        clinical diagnostic laboratory test fee schedules.--Section 
        1833(h)(1)(A) (42 U.S.C. 1395l(h)(1)(A)) is amended by 
        inserting after ``laboratory tests'' the following: 
        ``(including prostate cancer screening tests under section 
        1861(oo) consisting of prostate-specific antigen blood 
        tests)''.
            (4) Conforming amendment.--Section 1862(a) (42 U.S.C. 
        1395y(a)), as amended by subsection (c)(3)(C), is amended--
                    (A) in paragraph (1)--
                            (i) in subparagraph (F), by striking 
                        ``and'' at the end,
                            (ii) in subparagraph (G), by striking the 
                        semicolon at the end and inserting ``, and'', 
                        and
                            (iii) by adding at the end the following 
                        new subparagraph:
            ``(H) in the case of prostate cancer screening test (as 
        defined in section 1861(oo)) provided for the purpose of early 
        detection of prostate cancer, which are performed more 
        frequently than is covered under such section;''; and
                    (B) in paragraph (7), by striking ``or (G)'' and 
                inserting ``(G), or (H)''.
    (e) Diabetes Screening Benefits.--
            (1) Diabetes outpatient self-management training 
        services.--
                    (A) In general.--Section 1861(s)(2) (42 U.S.C. 
                1395x(s)(2)), as amended by subsection (d)(1), is 
                amended--
                            (i) by striking ``and'' at the end of 
                        subparagraph (N);
                            (ii) by striking ``and'' at the end of 
                        subparagraph (O); and
                            (iii) by inserting after subparagraph (O) 
                        the following new subparagraph:
            ``(P) diabetes outpatient self-management training services 
        (as defined in subsection (pp)); and''.
                    (B) Definition.--Section 1861 (42 U.S.C. 1395x), as 
                amended by subsection (d)(2), is amended by adding at 
                the end the following new subsection:

        ``diabetes outpatient self-management training services

    ``(pp)(1) The term `diabetes outpatient self-management training 
services' means educational and training services furnished to an 
individual with diabetes by or under arrangements with a certified 
provider (as described in paragraph (2)(A)) in an outpatient setting by 
an individual or entity who meets the quality standards described in 
paragraph (2)(B), but only if the physician who is managing the 
individual's diabetic condition certifies that such services are needed 
under a comprehensive plan of care related to the individual's diabetic 
condition to provide the individual with necessary skills and knowledge 
(including skills related to the self-administration of injectable 
drugs) to participate in the management of the individual's condition.
    ``(2) In paragraph (1)--
            ``(A) a `certified provider' is an individual or entity 
        that, in addition to providing diabetes outpatient self-
        management training services, provides other items or services 
        for which payment may be made under this title; and
            ``(B) an individual or entity meets the quality standards 
        described in this paragraph if the individual or entity meets 
        quality standards established by the Secretary, except that the 
        individual or entity shall be deemed to have met such standards 
        if the individual or entity meets applicable standards 
        originally established by the National Diabetes Advisory Board 
        and subsequently revised by organizations who participated in 
        the establishment of standards by such Board, or is recognized 
        by the American Diabetes Association as meeting standards for 
        furnishing the services.''.
                    (C) Consultation with organizations in establishing 
                payment amounts for services provided by physicians.--
                In establishing payment amounts under section 1848(a) 
                of the Social Security Act for physicians' services 
                consisting of diabetes outpatient self-management 
                training services, the Secretary of Health and Human 
                Services shall consult with appropriate organizations, 
                including the American Diabetes Association, in 
                determining the relative value for such services under 
                section 1848(c)(2) of such Act.
            (2) Blood-testing strips for individuals with diabetes.--
                    (A) Including strips as durable medical 
                equipment.--Section 1861(n) (42 U.S.C. 1395x(n)) is 
                amended by striking the semicolon in the first sentence 
                and inserting the following: ``, and includes blood-
                testing strips for individuals with diabetes without 
                regard to whether the individual has Type I or Type II 
                diabetes (as determined under standards established by 
                the Secretary in consultation with the American 
                Diabetes Association);''.
            (2) Payment for strips based on methodology for inexpensive 
        and routinely purchased equipment.--Section 1834(a)(2)(A) (42 
        U.S.C. 1395m(a)(2)(A)) is amended--
                    (A) by striking ``or'' at the end of clause (ii);
                    (B) by adding ``or'' at the end of clause (iii); 
                and
                    (C) by inserting after clause (iii) the following 
                new clause:
                            ``(iv) which is a blood-testing strip for 
                        an individual with diabetes,''.
    (e) Effective Date.--The amendments made by this section shall 
apply to items and services furnished on or after January 1, 2001.

                  Subtitle E--Medicare Fraud Reduction

                                                 Title VIII, Subtitle E

SEC. 8401. INCREASING BENEFICIARY AWARENESS OF FRAUD AND ABUSE.

    (a) Beneficiary Outreach Efforts.--The Secretary of Health and 
Human Services (acting through the Administrator of the Health Care 
Financing Administration and the Inspector General of the Department of 
Health and Human Services) shall make ongoing efforts (through public 
service announcements, publications, and other appropriate methods) to 
alert individuals entitled to benefits under the medicare program of 
the existence of fraud and abuse committed against the program and the 
costs to the program of such fraud and abuse, and of the existence of 
the toll-free telephone line operated by the Secretary to receive 
information on fraud and abuse committed against the program.
    (b) Clarification of Requirement to Provide Explanation of Medicare 
Benefits.--The Secretary shall provide an explanation of benefits under 
the medicare program with respect to each item or service for which 
payment may be made under the program which is furnished to an 
individual, without regard to whether or not a deductible or 
coinsurance may be imposed against the individual with respect to the 
item or service.
    (c) Provider Outreach Efforts; Publication of Fraud Alerts.--
            (1) Special fraud alerts.--
                    (A) In general.--
                            (i) Request for special fraud alerts.--Any 
                        person may present, at any time, a request to 
                        the Secretary to issue and publish a special 
                        fraud alert.
                            (ii) Special fraud alert defined.--In this 
                        section, a ``special fraud alert'' is a notice 
                        which informs the public of practices which the 
                        Secretary considers to be suspect or of 
                        particular concern under the medicare program 
                        or a State health care program (as defined in 
                        section 1128(h) of the Social Security Act).
                    (B) Issuance and publication of special fraud 
                alerts.--
                            (i) Investigation.--Upon receipt of a 
                        request for a special fraud alert under 
                        subparagraph (A), the Secretary shall 
                        investigate the subject matter of the request 
                        to determine whether a special fraud alert 
                        should be issued. If appropriate, the Secretary 
                        (in consultation with the Attorney General) 
                        shall issue a special fraud alert in response 
                        to the request. All special fraud alerts issued 
                        pursuant to this subparagraph shall be 
                        published in the Federal Register.
                            (ii) Criteria for issuance.--In determining 
                        whether to issue a special fraud alert upon a 
                        request under subparagraph (A), the Secretary 
                        may consider--
                                    (I) whether and to what extent the 
                                practices that would be identified in 
                                the special fraud alert may result in 
                                any of the consequences described in 
                                subparagraph (C); and
                                    (II) the extent and frequency of 
                                the conduct that would be identified in 
                                the special fraud alert.
                    (C) Consequences described.--The consequences 
                described in this subparagraph are as follows:
                            (i) An increase or decrease in access to 
                        health care services.
                            (ii) An increase or decrease in the quality 
                        of health care services.
                            (iii) An increase or decrease in patient 
                        freedom of choice among health care providers.
                            (iv) An increase or decrease in competition 
                        among health care providers.
                            (v) An increase or decrease in the cost to 
                        health care programs of the Federal Government.
                            (vi) An increase or decrease in the 
                        potential overutilization of health care 
                        services.
                            (viii) Any other factors the Secretary 
                        deems appropriate in the interest of preventing 
                        fraud and abuse in health care programs of the 
                        Federal Government.
            (2) Publication of all hcfa fraud alerts in federal 
        register.--Each notice issued by the Health Care Financing 
        Administration which informs the public of practices which the 
        Secretary considers to be suspect or of particular concern 
        under the medicare program or a State health care program (as 
        defined in section 1128(h) of the Social Security Act) shall be 
        published in the Federal Register, without regard to whether or 
        not the notice is issued by a regional office of the Health 
        Care Financing Administration.

SEC. 8402. BENEFICIARY INCENTIVES TO REPORT FRAUD AND ABUSE.

    (a) Program to Collect Information on Fraud and Abuse.--
            (1) Establishment of program.--Not later than 3 months 
        after the date of the enactment of this Act, the Secretary 
        shall establish a program under which the Secretary shall 
        encourage individuals to report to the Secretary information on 
        individuals and entities who are engaging or who have engaged 
        in acts or omissions which constitute grounds for the 
        imposition of a sanction under section 1128, section 1128A, or 
        section 1128B of the Social Security Act, or who have otherwise 
        engaged in fraud and abuse against the medicare program.
            (2) Payment of portion of amounts collected.--If an 
        individual reports information to the Secretary under the 
        program established under paragraph (1) which serves as the 
        basis for the collection by the Secretary or the Attorney 
        General of any amount of at least $100 (other than any amount 
        paid as a penalty under section 1128B of the Social Security 
        Act), the Secretary may pay a portion of the amount collected 
        to the individual (under procedures similar to those applicable 
        under section 7623 of the Internal Revenue Code of 1986 to 
        payments to individuals providing information on violations of 
        such Code).
    (b) Program to Collect Information on Program Efficiency.--
            (1) Establishment of program.--Not later than 3 months 
        after the date of the enactment of this Act, the Secretary 
        shall establish a program under which the Secretary shall 
        encourage individuals to submit to the Secretary suggestions on 
        methods to improve the efficiency of the medicare program.
            (2) Payment of portion of program savings.--If an 
        individual submits a suggestion to the Secretary under the 
        program established under paragraph (1) which is adopted by the 
        Secretary and which results in savings to the program, the 
        Secretary may make a payment to the individual of such amount 
        as the Secretary considers appropriate.

SEC. 8403. ELIMINATION OF HOME HEALTH OVERPAYMENTS.

    (a) Requiring Billing and Payment to be Based on Site Where Service 
Furnished.--Section 1891 (42 U.S.C. 1395bbb) is amended by adding at 
the end the following new subsection:
    ``(g) A home health agency shall submit claims for payment for home 
health services under this title only on the basis of the geographic 
location at which the service is furnished.''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to services furnished during cost reporting periods beginning on 
or after October 1, 1995.

SEC. 8404. SKILLED NURSING FACILITIES.

    (a) Clarification of Treatment of Hospital Transfers.--
            (1) In general.--Section 1886(d)(5)(I) (42 U.S.C. 
        1395ww(d)(5)(I)) is amended by adding at the end the following 
        new clause:
    ``(iii) In making adjustments under clause (i) for transfer cases, 
the Secretary shall treat as a transfer any transfer to a hospital 
(without regard to whether or not the hospital is a subsection (d) 
hospital), a unit thereof, or a skilled nursing facility.''.
            (2) Effective date.--The amendment made by paragraph (1) 
        shall apply to discharges occurring on or after October 1, 
        1995.
    (b) Requiring Billing and Payment To Be Based on Site Where Service 
Furnished.--Section 1819(b) (42 U.S.C. [email protected](b)) is amended by adding 
at the end the following new paragraph:
            ``(8) Special rule for billing and payment.--A skilled 
        nursing facility shall submit claims for payment for services 
        under this title (whether such services are billed under part A 
        or part B) only on the basis of the geographic location at 
        which the service is furnished.''.

SEC. 8405. DIRECT SPENDING FOR ANTI-FRAUD ACTIVITIES UNDER MEDICARE.

    (a) Establishment of Medicare Integrity Program.--Title XVIII, as 
amended by section 8231(d), is further amended by adding at the end the 
following new section:

                      ``medicare integrity program

    ``Sec. 1894. (a) Establishment of Program.--There is hereby 
established the Medicare Integrity Program (hereafter in this section 
referred to as the `Program') under which the Secretary shall promote 
the integrity of the medicare program by entering into contracts in 
accordance with this section with eligible private entities to carry 
out the activities described in subsection (b).
    ``(b) Activities Described.--The activities described in this 
subsection are as follows:
            ``(1) Review of activities of providers of services or 
        other individuals and entities furnishing items and services 
        for which payment may be made under this title (including 
        skilled nursing facilities and home health agencies), including 
        medical and utilization review and fraud review (employing 
        similar standards, processes, and technologies used by private 
        health plans, including equipment and software technologies 
        which surpass the capability of the equipment and technologies 
        used in the review of claims under this title as of the date of 
        the enactment of this section).
            ``(2) Audit of cost reports.
            ``(3) Determinations as to whether payment should not be, 
        or should not have been, made under this title by reason of 
        section 1862(b), and recovery of payments that should not have 
        been made.
            ``(4) Education of providers of services, beneficiaries, 
        and other persons with respect to payment integrity and benefit 
        quality assurance issues.
    ``(c) Eligibility of Entities.--An entity is eligible to enter into 
a contract under the Program to carry out any of the activities 
described in subsection (b) if--
            ``(1) the entity has demonstrated capability to carry out 
        such activities;
            ``(2) in carrying out such activities, the entity agrees to 
        cooperate with the Inspector General of the Department of 
        Health and Human Services, the Attorney General of the United 
        States, and other law enforcement agencies, as appropriate, in 
        the investigation and deterrence of fraud and abuse in relation 
        to this title and in other cases arising out of such 
        activities;
            ``(3) the entity's financial holdings, interests, or 
        relationships will not interfere with its ability to perform 
        the functions to be required by the contract in an effective 
        and impartial manner; and
            ``(4) the entity meets such other requirements as the 
        Secretary may impose.
    ``(d) Process for Entering Into Contracts.--The Secretary shall 
enter into contracts under the Program in accordance with such 
procedures as the Secretary may by regulation establish, except that 
such procedures shall include the following:
            ``(1) The Secretary shall determine the appropriate number 
        of separate contracts which are necessary to carry out the 
        Program and the appropriate times at which the Secretary shall 
        enter into such contracts.
            ``(2) The provisions of section 1153(e)(1) shall apply to 
        contracts and contracting authority under this section, except 
        that competitive procedures must be used when entering into new 
        contracts under this section, or at any other time considered 
        appropriate by the Secretary.
            ``(3) A contract under this section may be renewed without 
        regard to any provision of law requiring competition if the 
        contractor has met or exceeded the performance requirements 
        established in the current contract.
    ``(e) Limitation on Contractor Liability.--The Secretary shall by 
regulation provide for the limitation of a contractor's liability for 
actions taken to carry out a contract under the Program, and such 
regulation shall, to the extent the Secretary finds appropriate, employ 
the same or comparable standards and other substantive and procedural 
provisions as are contained in section 1157.
    ``(f) Transfer of Amounts to Medicare Anti-Fraud and Abuse Trust 
Fund.--For each fiscal year, the Secretary shall transfer from the 
Federal Hospital Insurance Trust Fund and the Federal Supplementary 
Medical Insurance Trust Fund to the Medicare Anti-Fraud and Abuse Trust 
Fund under subsection (g) such amounts as are necessary to carry out 
the activities described in subsection (b). Such transfer shall be in 
an allocation as reasonably reflects the proportion of such 
expenditures associated with part A and part B.
    ``(g) Medicare Anti-Fraud and Abuse Trust Fund.--
            ``(1) Establishment.--
                    ``(A) In general.--There is hereby established in 
                the Treasury of the United States the Anti-Fraud and 
                Abuse Trust Fund (hereafter in this subsection referred 
                to as the `Trust Fund'). The Trust Fund shall consist 
                of such gifts and bequests as may be made as provided 
                in subparagraph (B) and such amounts as may be 
                deposited in the Trust Fund as provided in subsection 
                (f), paragraph (3), and title XI.
                    ``(B) Authorization to accept gifts and bequests.--
                The Trust Fund is authorized to accept on behalf of the 
                United States money gifts and bequests made 
                unconditionally to the Trust Fund, for the benefit of 
                the Trust Fund or any activity financed through the 
                Trust Fund.
            ``(2) Investment.--
                    ``(A) In general.--The Secretary of the Treasury 
                shall invest such amounts of the Fund as such Secretary 
                determines are not required to meet current withdrawals 
                from the Fund in government account serial securities.
                    ``(B) Use of income.--Any interest derived from 
                investments under subparagraph (A) shall be credited to 
                the Fund.
            ``(3) Amounts deposited into trust fund.--In addition to 
        amounts transferred under subsection (f), there shall be 
        deposited in the Trust Fund--
                    ``(A) that portion of amounts recovered in relation 
                to section 1128A arising out of a claim under title 
                XVIII as remains after application of subsection (f)(2) 
                (relating to repayment of the Federal Hospital 
                Insurance Trust Fund or the Federal Supplementary 
                Medical Insurance Trust Fund) of that section, as may 
                be applicable,
                    ``(B) fines imposed under section 1128B arising out 
                of a claim under this title, and
                    ``(C) penalties and damages imposed (other than 
                funds awarded to a relator or for restitution) under 
                sections 3729 through 3732 of title 31, United States 
                Code (pertaining to false claims) in cases involving 
                claims relating to programs under title XVIII, XIX, or 
                XXI.
            ``(4) Direct appropriation of funds to carry out program.--
                    ``(A) In general.--There are appropriated from the 
                Trust Fund for each fiscal year such amounts as are 
                necessary to carry out the Medicare Integrity Program 
                under this section, subject to subparagraph (B).
                    ``(B) Amounts specified.--The amount appropriated 
                under subparagraph (A) for a fiscal year is as follows:
                            ``(i) For fiscal year 1996, such amount 
                        shall be not less than $430,000,000 and not 
                        more than $440,000,000.
                            ``(ii) For fiscal year 1997, such amount 
                        shall be not less than $490,000,000 and not 
                        more than $500,000,000.
                            ``(iii) For fiscal year 1998, such amount 
                        shall be not less than $550,000,000 and not 
                        more than $560,000,000.
                            ``(iv) For fiscal year 1999, such amount 
                        shall be not less than $620,000,000 and not 
                        more than $630,000,000.
                            ``(v) For fiscal year 2000, such amount 
                        shall be not less than $670,000,000 and not 
                        more than $680,000,000.
                            ``(vi) For fiscal year 2001, such amount 
                        shall be not less than $690,000,000 and not 
                        more than $700,000,000.
                            ``(vii) For fiscal year 2002, such amount 
                        shall be not less than $710,000,000 and not 
                        more than $720,000,000.
            ``(5) Annual report.--The Secretary shall submit an annual 
        report to Congress on the amount of revenue which is generated 
        and disbursed by the Trust Fund in each fiscal year.''.
    (b) Elimination of FI and Carrier Responsibility for Carrying out 
Activities Subject to Program.--
            (1) Responsibilities of fiscal intermediaries under part 
        a.--Section 1816 (42 U.S.C. 1395h) is amended by adding at the 
        end the following new subsection:
    ``(l) No agency or organization may carry out (or receive payment 
for carrying out) any activity pursuant to an agreement under this 
section to the extent that the activity is carried out pursuant to a 
contract under the Medicare Integrity Program under section 1894.''.
            (2) Responsibilities of carriers under part b.--Section 
        1842(c) (42 U.S.C. 1395u(c)) is amended by adding at the end 
        the following new paragraph:
    ``(6) No carrier may carry out (or receive payment for carrying 
out) any activity pursuant to a contract under this subsection to the 
extent that the activity is carried out pursuant to a contract under 
the Medicare Integrity Program under section 1894.''.
    (c) Conforming Amendment.--Section 1128A(f)(3) (42 U.S.C. 1320a-
7a(f)(3)) is amended by striking ``as miscellaneous receipts of the 
Treasury of the United States'' and inserting ``in the Anti-Fraud and 
Abuse Trust Fund established under section 1895(g)''.
    (d) Direct Spending for Medicare-Related Activities of Inspector 
General.--Section 1894, as added by subsection (a), is amended by 
adding at the end the following new subsection:
    ``(h) Direct Spending for Medicare-Related Activities of Inspector 
General.--
            ``(1) In general.--There are appropriated from the Federal 
        Hospital Insurance Trust Fund and the Federal Supplementary 
        Medical Insurance Trust Fund to the Inspector General of the 
        Department of Health and Human Services for each fiscal year 
        such amounts as are necessary to enable the Inspector General 
        to carry out activities relating to the medicare program (as 
        described in paragraph (2)), subject to paragraph (3).
            ``(2) Activities described.--The activities described in 
        this paragraph are as follows:
                    ``(A) Prosecuting medicare-related matters through 
                criminal, civil, and administrative proceedings.
                    ``(B) Conducting investigations relating to the 
                medicare program.
                    ``(C) Performing financial and performance audits 
                of programs and operations relating to the medicare 
                program.
                    ``(D) Performing inspections and other evaluations 
                relating to the medicare program.
                    ``(E) Conducting provider and consumer education 
                activities regarding the requirements of this title.
            ``(3) Amounts specified.--The amount appropriated under 
        paragraph (1) for a fiscal year is as follows:
                    ``(A) For fiscal year 1996, such amount shall be 
                $130,000,000.
                    ``(B) For fiscal year 1997, such amount shall be 
                $181,000,000.
                    ``(C) For fiscal year 1998, such amount shall be 
                $204,000,000.
                    ``(D) For each subsequent fiscal year, the amount 
                appropriated for the previous fiscal year, increased by 
                the percentage increase in aggregate expenditures under 
                this title for the fiscal year involved over the 
                previous fiscal year.
            ``(4) Allocation of payments among trust funds.--The 
        appropriations made under paragraph (1) shall be in an 
        allocation as reasonably reflects the proportion of such 
        expenditures associated with part A and part B.''.

SEC. 8406. FRAUD REDUCTION DEMONSTRATION PROJECT.

    (a) In General.--Not later than July 1, 1996, the Secretary of 
Health and Human Services (in this section referred to as the 
``Secretary'') shall establish not less than three demonstration 
projects under which organizations with a contract under section 1816 
or section 1842 of the Social Security Act--
            (1) identify practitioners and providers whose patterns of 
        providing care to beneficiaries enrolled under title XVIII of 
        the Social Security Act are consistently outside the norm for 
        other practitioners or providers of the same category, class, 
        or type, and
            (2) experiment with ways of identifying fraudulent claims 
        submitted to the program established under such title before 
        they are paid.
    (b) Duration of Projects.--Each project established under 
subsection (a) shall last for at least 18 months and shall focus on 
those categories, classes, or types of providers and practitioners that 
have been identified by the Inspector General of the Department of 
Health and Human Services as having a high incidence of fraud and 
abuse.
    (c) Report.--Not later than July 1, 1997, the Secretary shall 
report to the Congress on the demonstration projects established under 
subsection (a), and shall include in the report an assessment of the 
effectiveness of, and any recommended legislative changes based on, the 
projects.

SEC. 8407. REPORT ON COMPETITIVE PRICING.

    Not later than 1 year after the date of the enactment of this Act, 
the Secretary of Health and Human Services (acting through the 
Administrator of the Health Care Financing Administration) shall submit 
to Congress a report recommending legislative changes to the medicare 
program to enable the prices paid for items and services under the 
medicare program to be established on a more competitive basis.

              Subtitle F--Improving Access to Health Care

                                                 Title VIII, Subtitle F

                 PART 1--ASSISTANCE FOR RURAL PROVIDERS

                       Subpart A--Rural Hospitals

SEC. 8501. SOLE COMMUNITY HOSPITALS.

    (a) Update.--Section 1886(b)(3)(B)(iv) (42 U.S.C. 
1395ww(b)(3)(B)(iv)) is amended--
                    (A) in subclause (III), by striking ``and'' at the 
                end; and
                    (B) by striking subclause (IV) and inserting the 
                following:
            ``(IV) for each of the fiscal years 1996 through 2000, the 
        market basket percentage increase minus 1 percentage points, 
        and
            ``(V) for fiscal year 2001 and each subsequent fiscal year, 
        the applicable percentage increase under clause (i).''.
    (b) Study of Impact of Sole Community Hospital Designations.--
            (1) Study.--The Medicare Payment Review Commission shall 
        conduct a study of the impact of the designation of hospitals 
        as sole community hospitals under the medicare program on the 
        delivery of health care services to individuals in rural areas, 
        and shall include in the study an analysis of the 
        characteristics of the hospitals designated as such sole 
        community hospitals under the program.
            (2) Report.--Not later than 12 months after the date a 
        majority of the members of the Commission are first appointed, 
        the Commission shall submit to Congress a report on the study 
        conducted under paragraph (1).

SEC. 8502. CLARIFICATION OF TREATMENT OF EAC AND RPC HOSPITALS.

    Paragraphs (1)(A) and (2)(A) of section 1820(i) (42 U.S.C. 
[email protected](i)) are each amended by striking the semicolon at the end and 
inserting the following: ``, or in a State which the Secretary finds 
would receive a grant under such subsection during a fiscal year if 
funds were appropriated for grants under such subsection for the fiscal 
year;''.

SEC. 8503. ESTABLISHMENT OF RURAL EMERGENCY ACCESS CARE HOSPITALS.

    (a) Establishment.--
            (1) In general.--Section 1861 (42 U.S.C. 1395x) is amended 
        by adding at the end the following new subsection:

  ``Rural Emergency Access Care Hospital; Rural Emergency Access Care 
                           Hospital Services

    ``(oo)(1) The term `rural emergency access care hospital' means, 
for a fiscal year, a facility with respect to which the Secretary finds 
the following:
            ``(A) The facility is located in a rural area (as defined 
        in section 1886(d)(2)(D)).
            ``(B) The facility was a hospital under this title at any 
        time during the 5-year period that ends on the date of the 
        enactment of this subsection.
            ``(C) The facility is in danger of closing due to low 
        inpatient utilization rates and operating losses, and the 
        closure of the facility would limit the access to emergency 
        services of individuals residing in the facility's service 
        area.
            ``(D) The facility has entered into (or plans to enter 
        into) an agreement with a hospital with a participation 
        agreement in effect under section 1866(a), and under such 
        agreement the hospital shall accept patients transferred to the 
        hospital from the facility and receive data from and transmit 
        data to the facility.
            ``(E) There is a practitioner who is qualified to provide 
        advanced cardiac life support services (as determined by the 
        State in which the facility is located) on-site at the facility 
        on a 24-hour basis.
            ``(F) A physician is available on-call to provide emergency 
        medical services on a 24-hour basis.
            ``(G) The facility meets such staffing requirements as 
        would apply under section 1861(e) to a hospital located in a 
        rural area, except that--
                    ``(i) the facility need not meet hospital standards 
                relating to the number of hours during a day, or days 
                during a week, in which the facility must be open, 
                except insofar as the facility is required to provide 
                emergency care on a 24-hour basis under subparagraphs 
                (E) and (F); and
                    ``(ii) the facility may provide any services 
                otherwise required to be provided by a full-time, on-
                site dietitian, pharmacist, laboratory technician, 
                medical technologist, or radiological technologist on a 
                part-time, off-site basis.
            ``(H) The facility meets the requirements applicable to 
        clinics and facilities under subparagraphs (C) through (J) of 
        paragraph (2) of section 1861(aa) and of clauses (ii) and (iv) 
        of the second sentence of such paragraph (or, in the case of 
        the requirements of subparagraph (E), (F), or (J) of such 
        paragraph, would meet the requirements if any reference in such 
        subparagraph to a `nurse practitioner' or to `nurse 
        practitioners' were deemed to be a reference to a `nurse 
        practitioner or nurse' or to `nurse practitioners or nurses'); 
        except that in determining whether a facility meets the 
        requirements of this subparagraph, subparagraphs (E) and (F) of 
        that paragraph shall be applied as if any reference to a 
        `physician' is a reference to a physician as defined in section 
        1861(r)(1).
    ``(2) The term `rural emergency access care hospital services' 
means the following services provided by a rural emergency access care 
hospital and furnished to an individual over a continuous period not to 
exceed 24 hours (except that such services may be furnished over a 
longer period in the case of an individual who is unable to leave the 
hospital because of inclement weather):
            ``(A) An appropriate medical screening examination (as 
        described in section 1867(a)).
            ``(B) Necessary stabilizing examination and treatment 
        services for an emergency medical condition and labor (as 
        described in section 1867(b)).''.
            (2) Requiring rural emergency access care hospitals to meet 
        hospital anti-dumping requirements.--Section 1867(e)(5) (42 
        U.S.C. 1395dd(e)(5)) is amended by striking ``1861(mm)(1))'' 
        and inserting ``1861(mm)(1)) and a rural emergency access care 
        hospital (as defined in section 1861(oo)(1))''.
    (b) Coverage and Payment Under Part B.--
            (1) Coverage under part b.--Section 1832(a)(2) (42 U.S.C. 
        1395k(a)(2)) is amended--
                    (A) by striking ``and'' at the end of subparagraph 
                (I);
                    (B) by striking the period at the end of 
                subparagraph (J) and inserting ``; and''; and
                    (C) by adding at the end the following new 
                subparagraph:
                    ``(K) rural emergency access care hospital services 
                (as defined in section 1861(oo)(2)).''.
            (2) Payment based on payment for outpatient rural primary 
        care hospital services.--
                    (A) In general.--Section 1833(a)(6) (42 U.S.C. 
                1395l(a)(6)) is amended by striking ``services,'' and 
                inserting ``services and rural emergency access care 
                hospital services,''.
                    (B) Payment methodology described.--Section 1834(g) 
                (42 U.S.C. 1395m(g)) is amended--
                            (i) in the heading, by striking 
                        ``Services'' and inserting ``Services and Rural 
                        Emergency Access Care Hospital Services''; and
                            (ii) by adding at the end the following new 
                        sentence: ``The amount of payment for rural 
                        emergency access care hospital services 
                        provided during a year shall be determined 
                        using the applicable method provided under this 
                        subsection for determining payment for 
                        outpatient rural primary care hospital services 
                        during the year.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to fiscal years beginning on or after October 1, 1995.

SEC. 8504. CLASSIFICATION OF RURAL REFERRAL CENTERS.

    (a) Prohibiting Denial of Request for Reclassification on Basis of 
Comparability of Wages.--
            (1) In general.--Section 1886(d)(10)(D) (42 U.S.C. 
        1395ww(d)(10)(D)) is amended--
                    (A) by redesignating clause (iii) as clause (iv); 
                and
                    (B) by inserting after clause (ii) the following 
                new clause:
    ``(iii) Under the guidelines published by the Secretary under 
clause (i), in the case of a hospital which is classified by the 
Secretary as a rural referral center under paragraph (5)(C), the Board 
may not reject the application of the hospital under this paragraph on 
the basis of any comparison between the average hourly wage of the 
hospital and the average hourly wage of hospitals in the area in which 
it is located.''.
            (2) Effective date.--Notwithstanding section 
        1886(d)(10)(C)(ii) of the Social Security Act, a hospital may 
        submit an application to the Medicare Geographic Classification 
        Review Board during the 30-day period beginning on the date of 
        the enactment of this Act requesting a change in its 
        classification for purposes of determining the area wage index 
        applicable to the hospital under section 1886(d)(3)(D) of such 
        Act for fiscal year 1997, if the hospital would be eligible for 
        such a change in its classification under the standards 
        described in section 1886(d)(10)(D) (as amended by paragraph 
        (1)) but for its failure to meet the deadline for applications 
        under section 1886(d)(10)(C)(ii).
    (b) Continuing Treatment of Previously Designated Centers.--Any 
hospital classified as a rural referral center by the Secretary of 
Health and Human Services under section 1886(d)(5)(C) of the Social 
Security Act for fiscal year 1994 shall be classified as such a rural 
referral center for fiscal year 1996 and each subsequent fiscal year.

SEC. 8505. FLOOR ON AREA WAGE INDEX.

    (a) In General.--For purposes of section 1886(d)(3)(E) of the 
Social Security Act for discharges occurring on or after October 1, 
1995, the area wage index applicable under such section to any hospital 
which is not located in a rural area (as defined in section 
1886(d)(2)(D) of such Act) may not be less than the average of the area 
wage indices applicable under such section to hospitals located in 
rural areas in the State in which the hospital is located.
    (b) Budget-Neutrality in Implementation.--The Secretary of Health 
and Human Services shall make any adjustments required under subsection 
(a) in a manner which assures that the aggregate payments made under 
section 1886(d) of the Social Security Act in a fiscal year for the 
operating costs of inpatient hospital services are not greater or less 
than those which would have been made in the year without such 
adjustments.

SEC. 8506. MEDICAL EDUCATION.

    (a) State and Consortium Demonstration Projects.--
            (1) In general.--
                    (A) Participation of states and consortia.--The 
                Secretary shall establish and conduct a demonstration 
                project to increase the number and percentage of 
                medical students entering primary care practice 
                relative to those entering nonprimary care practice 
                under which the Secretary shall make payments in 
                accordance with paragraph (4)--
                            (i) to not more than 10 States for the 
                        purpose of testing and evaluating mechanisms to 
                        meet the goals described in subsection (b); and
                            (ii) to not more than 10 health care 
                        training consortia for the purpose of testing 
                        and evaluating mechanisms to meet such goals.
                    (B) Exclusion of consortia in participating 
                states.--A consortia may not receive payments under the 
                demonstration project under subparagraph (A)(ii) if any 
                of its members is located in a State receiving payments 
                under the project under subparagraph (A)(i).
            (2) Applications.--
                    (A) In general.--Each State and consortium desiring 
                to conduct a demonstration project under this 
                subsection shall prepare and submit to the Secretary an 
                application, at such time, in such manner, and 
                containing such information as the Secretary may 
                require to assure that the State or consortium will 
                meet the goals described in subsection (b). In the case 
                of an application of a State, the application shall 
                include--
                            (i) information demonstrating that the 
                        State has consulted with interested parties 
                        with respect to the project, including State 
                        medical associations, State hospital 
                        associations, and medical schools located in 
                        the State;
                            (ii) an assurance that no hospital 
                        conducting an approved medical residency 
                        training program in the State will lose more 
                        than 10 percent of such hospital's approved 
                        medical residency positions in any year as a 
                        result of the project; and
                            (iii) an explanation of a plan for 
                        evaluating the impact of the project in the 
                        State.
                    (B) Approval of applications.--A State or 
                consortium that submits an application under 
                subparagraph (A) may begin a demonstration project 
                under this subsection--
                            (i) upon approval of such application by 
                        the Secretary; or
                            (ii) at the end of the 60-day period 
                        beginning on the date such application is 
                        submitted, unless the Secretary denies the 
                        application during such period.
                    (C) Notice and comment.--A State or consortium 
                shall issue a public notice on the date it submits an 
                application under subparagraph (A) which contains a 
                general description of the proposed demonstration 
                project. Any interested party may comment on the 
                proposed demonstration project to the State or 
                consortium or the Secretary during the 30-day period 
                beginning on the date the public notice is issued.
            (3) Specific requirements for participants.--
                    (A) Requirements for states.--Each State 
                participating in the demonstration project under this 
                section shall use the payments provided under paragraph 
                (4) to test and evaluate either of the following 
                mechanisms to increase the number and percentage of 
                medical students entering primary care practice 
                relative to those entering nonprimary care practice:
                            (i) Use of alternative weighting factors.--
                                    (I) In general.--The State may make 
                                payments to hospitals in the State for 
                                direct graduate medical education costs 
                                in amounts determined under the 
                                methodology provided under section 
                                1886(h) of the Social Security Act, 
                                except that the State shall apply 
                                weighting factors that are different 
                                than the weighting factors otherwise 
                                set forth in section 1886(h)(4)(C) of 
                                the Social Security Act.
                                    (II) Use of payments for primary 
                                care residents.--In applying different 
                                weighting factors under subclause (I), 
                                the State shall ensure that the amount 
                                of payment made to hospitals for costs 
                                attributable to primary care residents 
                                shall be greater than the amount that 
                                would have been paid to hospitals for 
                                costs attributable to such residents if 
                                the State had applied the weighting 
                                factors otherwise set forth in section 
                                1886(h)(4)(C) of the Social Security 
                                Act.
                            (ii) Payments for medical education through 
                        consortium.--The State may make payments for 
                        graduate medical education costs through 
                        payments to a health care training consortium 
                        (or through any entity identified by such a 
                        consortium as appropriate for receiving 
                        payments on behalf of the consortium) that is 
                        established in the State but that is not 
                        otherwise participating in the demonstration 
                        project.
                    (B) Requirements for consortium.--
                            (i) In general.--In the case of a 
                        consortium participating in the demonstration 
                        project under this section, the Secretary shall 
                        make payments for graduate medical education 
                        costs through a health care training consortium 
                        whose members provide medical residency 
                        training (or through any entity identified by 
                        such a consortium as appropriate for receiving 
                        payments on behalf of the consortium).
                            (ii) Use of payments.--
                                    (I) In general.--Each consortium 
                                receiving payments under clause (i) 
                                shall use such funds to conduct 
                                activities which test and evaluate 
                                mechanisms to increase the number and 
                                percentage of medical students entering 
                                primary care practice relative to those 
                                entering nonprimary care practice, and 
may use such funds for the operation of the consortium.
                                    (II) Payments to participating 
                                programs.--The consortium shall ensure 
                                that the majority of the payments 
                                received under clause (i) are directed 
                                to consortium members for primary care 
                                residency programs, and shall designate 
                                for each resident assigned to the 
                                consortium a hospital operating an 
                                approved medical residency training 
                                program for purposes of enabling the 
                                Secretary to calculate the consortium's 
                                payment amount under the project. Such 
                                hospital shall be the hospital where 
                                the resident receives the majority of 
                                the resident's hospital-based, 
                                nonambulatory training experience.
            (4) Allocation of portion of medicare gme payments for 
        activities under project.--Notwithstanding any provision of 
        title XVIII of the Social Security Act, the following rules 
        apply with respect to each State and each health care training 
        consortium participating in the demonstration project 
        established under this subsection during a year:
                    (A) In the case of a State--
                            (i) the Secretary shall reduce the amount 
                        of each payment made to hospitals in the State 
                        during the year for direct graduate medical 
                        education costs under section 1886(h) of the 
                        Social Security Act by 3 percent; and
                            (ii) the Secretary shall pay the State an 
                        amount equal to the Secretary's estimate of the 
                        sum of the reductions made during the year 
                        under clause (i) (as adjusted by the Secretary 
                        in subsequent years for over- or under-
                        estimations in the amount estimated under this 
                        subparagraph in previous years).
                    (B) In the case of a consortium--
                            (i) the Secretary shall reduce the amount 
                        of each payment made to hospitals who are 
                        members of the consortium during the year for 
                        direct graduate medical education costs under 
                        section 1886(h) of the Social Security Act by 3 
                        percent; and
                            (ii) the Secretary shall pay the consortium 
                        an amount equal to the Secretary's estimate of 
                        the sum of the reductions made during the year 
                        under clause (i) (as adjusted by the Secretary 
                        in subsequent years for over- or under-
                        estimations in the amount estimated under this 
                        subparagraph in previous years).
            (5) Duration.--A demonstration project under this 
        subsection shall be conducted for a period not to exceed 5 
        years. The Secretary may terminate a project if the Secretary 
        determines that the State or consortium conducting the project 
        is not in substantial compliance with the terms of the 
        application approved by the Secretary.
            (6) Evaluations and reports.--
                    (A) Evaluations.--Each State or consortium 
                participating in the demonstration project shall submit 
                to the Secretary a final evaluation within 360 days of 
                the termination of the State or consortium's 
                participation and such interim evaluations as the 
                Secretary may require.
                    (B) Reports to congress.--Not later than 360 days 
                after the first demonstration project under this 
                section begins, and annually thereafter for each year 
                in which such a project is conducted, the Secretary 
                shall submit a report to Congress which evaluates the 
                effectiveness of the State and consortium activities 
                conducted under such projects and includes any 
                legislative recommendations determined appropriate by 
                the Secretary.
            (7) Maintenance of effort.--Any funds available for the 
        activities covered by a demonstration project under this 
        section shall supplement, and shall not supplant, funds that 
        are expended for similar purposes under any State, regional, or 
        local program.
    (b) Goals for Projects.--The goals referred to in this subsection 
for a State or consortium participating in the demonstration project 
under this section are as follows:
            (1) The training of an equal number of physician and 
        nonphysician primary care providers.
            (2) The recruiting of residents for graduate medical 
        education training programs who received a portion of 
        undergraduate training in a rural area.
            (3) The allocation of not less than 50 percent of the 
        training spent in a graduate medical residency training program 
        at sites at which acute care inpatient hospital services are 
        not furnished.
            (4) The rotation of residents in approved medical residency 
        training programs among practices that serve residents of rural 
        areas.
            (5) The development of a plan under which, after a 5-year 
        transition period, not less than 50 percent of the residents 
        who begin an initial residency period in an approved medical 
        residency training program shall be primary care residents.
    (c) Definitions.--In this section:
            (1) Approved medical residency training program.--The term 
        ``approved medical residency training program'' has the meaning 
        given such term in section 1886(h)(5)(A) of the Social Security 
        Act.
            (2) Health care training consortium.--The term ``health 
        care training consortium'' means a State, regional, or local 
        entity consisting of at least one of each of the following:
                    (A) A hospital operating an approved medical 
                residency training program at which residents receive 
                training at ambulatory training sites located in rural 
                areas.
                    (B) A school of medicine or osteopathic medicine.
                    (C) A school of allied health or a program for the 
                training of physician assistants (as such terms are 
                defined in section 799 of the Public Health Service 
                Act).
                    (D) A school of nursing (as defined in section 853 
                of the Public Health Service Act).
            (3) Primary care.--The term ``primary care'' means family 
        practice, general internal medicine, general pediatrics, and 
        obstetrics and gynecology.
            (4) Resident.--The term ``resident'' has the meaning given 
        such term in section 1886(h)(5)(H) of the Social Security Act.
            (5) Rural area.--The term ``rural area'' has the meaning 
        given such term in section 1886(d)(2)(D) of the Social Security 
        Act.

            Subpart B--Rural Physicians and Other Providers

SEC. 8511. PROVIDER INCENTIVES.

    (a) Additional Payments Under Medicare for Physicians' Services 
Furnished in Shortage Areas.--
            (1) Increase in amount of additional payment.--Section 
        1833(m) (42 U.S.C. 1395l(m)) is amended by striking ``10 
        percent'' and inserting ``20 percent''.
            (2) Restriction to primary care services.--Section 1833(m) 
        (42 U.S.C. 1395l(m)) is amended by inserting after 
        ``physicians' services'' the following: ``consisting of primary 
        care services (as defined in section 1842(i)(4))''.
            (3) Extension of payment for former shortage areas.--
                    (A) In general.--Section 1833(m) (42 U.S.C. 
                1395l(m)) is amended by striking ``area,'' and 
                inserting ``area (or, in the case of an area for which 
the designation as a health professional shortage area under such 
section is withdrawn, in the case of physicians' services furnished to 
such an individual during the 3-year period beginning on the effective 
date of the withdrawal of such designation),''.
                    (B) Effective date.--The amendment made by 
                subparagraph (A) shall apply to physicians' services 
                furnished in an area for which the designation as a 
                health professional shortage area under section 
                332(a)(1)(A) of the Public Health Service Act is 
                withdrawn on or after January 1, 1996.
            (4) Requiring carriers to report on services provided.--
        Section 1842(b)(3) (42 U.S.C. 1395u(b)(3)) is amended--
                    (A) by striking ``and'' at the end of subparagraph 
                (I); and
                    (B) by inserting after subparagraph (I) the 
                following new subparagraph:
            ``(J) will provide information to the Secretary not later 
        than 30 days after the end of the contract year on the types of 
        providers to whom the carrier made additional payments during 
        the year for certain physicians' services pursuant to section 
        1833(m), together with a description of the services furnished 
        by such providers during the year; and''.
            (5) Study.--
                    (A) In general.--The Secretary of Health and Human 
                Services shall conduct a study analyzing the 
                effectiveness of the provision of additional payments 
                under part B of the medicare program for physicians' 
                services provided in health professional shortage areas 
                in recruiting and retaining physicians to provide 
                services in such areas.
                    (B) Report.--Not later than 1 year after the date 
                of the enactment of this Act, the Secretary shall 
                submit to Congress a report on the study conducted 
                under subparagraph (A), and shall include in the report 
                such recommendations as the Secretary considers 
                appropriate.
            (6) Effective date.--The amendments made by paragraphs (1), 
        (2), and (4) shall apply to physicians' services furnished on 
        or after January 1, 1996.
    (b) Development of Model State Scope of Practice Law.--
            (1) In general.--The Secretary of Health and Human Services 
        shall develop and publish a model law that may be adopted by 
        States to increase the access of individuals residing in 
        underserved rural areas to health care services by expanding 
        the services which non-physician health care professionals may 
        provide in such areas.
            (2) Deadline.--The Secretary shall publish the model law 
        developed under paragraph (1) not later than 1 year after the 
        date of the enactment of this Act.

SEC. 8512. NATIONAL HEALTH SERVICE CORPS LOAN REPAYMENTS EXCLUDED FROM 
              GROSS INCOME.

    (a) In General.--Part III of subchapter B of chapter 1 of the 
Internal Revenue Code of 1986 (relating to items specifically excluded 
from gross income) is amended by redesignating section 137 as section 
138 and by inserting after section 136 the following new section:

``SEC. 137. NATIONAL HEALTH SERVICE CORPS LOAN REPAYMENTS.

    ``(a) General Rule.--Gross income shall not include any qualified 
loan repayment.
    ``(b) Qualified Loan Repayment.--For purposes of this section, the 
term `qualified loan repayment' means any payment made on behalf of the 
taxpayer by the National Health Service Corps Loan Repayment Program 
under section 338B(g) of the Public Health Service Act.''.
    (b) Conforming Amendment.--Paragraph (3) of section 338B(g) of the 
Public Health Service Act is amended by striking ``Federal, State, or 
local'' and inserting ``State or local''.
    (c) Clerical Amendment.--The table of sections for part III of 
subchapter B of chapter 1 of the Internal Revenue Code of 1986 is 
amended by striking the item relating to section 137 and inserting the 
following:

                              ``Sec. 137. National Health Service Corps 
                                        loan repayments.
                              ``Sec. 138. Cross references to other 
                                        Acts.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to payments made under section 338B(g) of the Public Health 
Service Act after the date of the enactment of this Act.

SEC. 8513. TELEMEDICINE PAYMENT METHODOLOGY.

    The Secretary of Health and Human Services shall establish a 
methodology for making payments under part B of the medicare program 
for telemedicine services furnished on an emergency basis to 
individuals residing in an area designated as a health professional 
shortage area (under section 332(a) of the Public Health Service Act).

SEC. 8514. DEMONSTRATION PROJECT TO INCREASE CHOICE IN RURAL AREAS.

    The Secretary of Health and Human Services (acting through the 
Administrator of the Health Care Financing Administration) shall 
conduct a demonstration project to assess the advantages and 
disadvantages of requiring Medicare Choice organizations under part C 
of title XVIII of the Social Security Act (as added by section 8002(a)) 
to market Medicare Choice products in certain underserved areas which 
are near the standard service area for such products.

                      PART 2--MEDICARE SUBVENTION

SEC. 8521. MEDICARE PROGRAM PAYMENTS FOR HEALTH CARE SERVICES PROVIDED 
              IN THE MILITARY HEALTH SERVICES SYSTEM.

    (a) Payments Under Medicare Risk Contracts Program.--
            (1) Current program.--Section 1876 (42 U.S.C. 1395mm) is 
        amended by adding at the end the following new subsection:
    ``(k) Notwithstanding any other provision of this section, a 
managed health care plan established by the Secretary of Defense under 
chapter 55 of title 10, United States Code, shall be considered an 
eligible organization under this section, and the Secretary shall make 
payments to such a managed health care plan during a year on behalf of 
any individuals entitled to benefits under this title who are enrolled 
in such a managed health care plan during the year. Such payments shall 
be equal to 30 percent of the amount otherwise paid to other eligible 
organizations under this section, and shall be made under similar terms 
and conditions under which the Secretary makes payments to other 
eligible organizations with risk sharing contracts under this 
section.''.
            (2) Medicare choice program.--Section 1855, as inserted by 
        section 8002(a), by adding at the end the following new 
        subsection:
    ``(h) Payments to Military Program.--Notwithstanding any other 
provision of this section, a managed health care plan established by 
the Secretary of Defense under chapter 55 of title 10, United States 
Code, shall be considered a Medicare Choice organization under this 
part, and the Secretary shall make payments to such a managed health 
care plan during a year on behalf of any individuals entitled to 
benefits under this title who are enrolled in such a managed health 
care plan during the year. Such payments shall be equal to 30 percent 
of the amount otherwise paid to other Medicare Choice organizations 
under this section, and shall be made under similar terms and 
conditions under which the Secretary makes payments to other Medicare 
Choice organizations with contracts in effect under this part.''.
    (b) Temporary Provision for Waiver of Part B Premium Penalty.--
Section 1839 (42 U.S.C. 1395r) is amended by adding at the end the 
following new subsection:
    ``(h) The premium increase required by subsection (b) shall not 
apply with respect to a person who is enrolled with a managed care plan 
that is established by the Secretary of Defense under chapter 55 of 
title 10, United States Code, and is recognized as an eligible 
organization pursuant to section 1855(h) or section 1876(k), if such 
person first enrolled in such plan prior to January 1, 1998.''.
    (c) Payments Under Part A of Medicare.--Section 1814(c) (42 U.S.C. 
1395f(c)) is amended--
            (1) by redesignating the current matter as paragraph (1); 
        and
            (2) by adding at the end the following new paragraph:
            ``(2) Paragraph (1) shall not apply to services provided by 
        facilities of the uniformed services pursuant to chapter 55 of 
        title 10, United States Code, and subject to the provisions of 
        section 1095 of such title. With respect to such services, 
        payments under this title shall be made without regard to 
        whether the beneficiary under this title has paid the 
        deductible and copayments amounts generally required by this 
        title.''.
    (d) Payments Under Part B of Medicare.--Section 1835(d) (42 U.S.C. 
1395n(d)) is amended--
            (1) by redesignating the current matter as paragraph (1); 
        and
            (2) by adding at the end the following new paragraph:
    ``(2) Paragraph (1) shall not apply to services provided by 
facilities of the uniformed services pursuant to chapter 55 of title 
10, United States Code, and subject to the provisions of section 1095 
of such title. With respect to such services, payments under this title 
shall be made without regard to whether the beneficiary under this 
title has paid the deductible and copayments amounts generally required 
by this title.''.
    (e) Conforming Amendments to the Third Party Collection Program for 
Military Medical Facilities.--(1) Section 1095(d) of title 10, United 
States Code, is amended--
            (A) by striking ``XVIII or''; and
            (B) by striking ``1395'' and inserting ``1396''.
    (2) Section 1095(h)(2) of such title is amended by inserting after 
``includes'' the following: ``plans administered under title XVIII of 
the Social Security Act (42 U.S.C. 1395 et seq.),''.
    (f) Effective Date.--The amendments made by this section shall take 
effect at the end of the 30-day period beginning on the date of the 
enactment of this Act.

                      Subtitle G--Other Provisions

                                                 Title VIII, Subtitle G

SEC. 8601. EXTENSION AND EXPANSION OF EXISTING SECONDARY PAYER 
              REQUIREMENTS.

    (a) Data Match.--
            (1) Section 1862(b)(5)(C) (42 U.S.C. 1395y(b)(5)(C)) is 
        amended by striking clause (iii).
            (2) Section 6103(l)(12) of the Internal Revenue Code of 
        1986 is amended by striking subparagraph (F).
    (b) Application to Disabled Individuals in Large Group Health 
Plans.--
            (1) In general.--Section 1862(b)(1)(B) (42 U.S.C. 
        1395y(b)(1)(B)) is amended--
                    (A) in clause (i), by striking ``clause (iv)'' and 
                inserting ``clause (iii)'',
                    (B) by striking clause (iii), and
                    (C) by redesignating clause (iv) as clause (iii).
            (2) Conforming amendments.--Paragraphs (1) through (3) of 
        section 1837(i) (42 U.S.C. 1395p(i)) and the second sentence of 
        section 1839(b) (42 U.S.C. 1395r(b)) are each amended by 
        striking ``1862(b)(1)(B)(iv)'' each place it appears and 
        inserting ``1862(b)(1)(B)(iii)''.
    (c) Expansion of Period of Application to Individuals With End 
Stage Renal Disease.--Section 1862(b)(1)(C) (42 U.S.C. 1395y(b)(1)(C)) 
is amended--
            (1) in the first sentence, by striking ``12-month'' each 
        place it appears and inserting ``24-month'', and
            (2) by striking the second sentence.

SEC. 8602. REPEAL OF MEDICARE AND MEDICAID COVERAGE DATA BANK.

    (a) In General.--Section 1144 (42 U.S.C. 1320b-14) is repealed.
    (b) Conforming Amendments.--
            (1) Medicare.--Section 1862(b)(5) (42 U.S.C. 1395y(b)(5)) 
        is amended--
                    (A) in subparagraph (B), by striking ``under--'' 
                and all that follows through the end and inserting 
                ``subparagraph (A) for purposes of carrying out this 
                subsection.'', and
                    (B) in subparagraph (C)(i), by striking 
                ``subparagraph (B)(i)'' and inserting ``subparagraph 
                (B)''.
            (2) Medicaid.--Section 1902(a)(25)(A)(i) (42 U.S.C. 
        1396a(a)(25)(A)(i)) is amended by striking ``including the use 
        of'' and all that follows through ``any additional measures''.
            (3) ERISA.--Section 101(f) of the Employee Retirement 
        Income Security Act of 1974 (29 U.S.C. 1021(f)) is repealed.
            (4) Data matches.--Section 552a(a)(8)(B) of title 5, United 
        States Code, is amended--
                    (A) by adding ``; or'' at the end of clause (v),
                    (B) by striking ``or'' at the end of clause (vi), 
                and
                    (C) by striking clause (vii).

SEC. 8603. CLARIFICATION OF MEDICARE COVERAGE OF ITEMS AND SERVICES 
              ASSOCIATED WITH CERTAIN MEDICAL DEVICES APPROVED FOR 
              INVESTIGATIONAL USE.

    (a) Coverage.--Nothing in title XVIII of the Social Security Act 
may be construed to prohibit coverage under part A or part B of the 
medicare program of items and services associated with the use of a 
medical device in the furnishing of inpatient hospital services (as 
defined for purposes of part A of the medicare program) solely on the 
grounds that the device is not an approved device, if--
            (1) the device is an investigational device; and
            (2) the device is used instead of an approved device.
    (b) Clarification of Payment Amount.--Notwithstanding any other 
provision of title XVIII of the Social Security Act, the amount of 
payment made under the medicare program for any item or service 
associated with the use of an investigational device in the furnishing 
of inpatient hospital services (as defined for purposes of part A of 
the medicare program) may not exceed the amount of the payment which 
would have been made under the program for the item or service if the 
item or service were associated with the use of an approved device.
    (c) Definitions.--In this section--
            (1) the term ``approved device'' means a medical device 
        which has been approved for marketing under pre-market approval 
        under the Federal Food, Drug, and Cosmetic Act or cleared for 
        marketing under a 510(k) notice under such Act; and
            (2) the term ``investigational device'' means a medical 
        device (other than a device described in paragraph (1)) which 
        is approved for investigational use under section 520(g) of the 
        Federal Food, Drug, and Cosmetic Act.

SEC. 8604. ADDITIONAL EXCLUSION FROM COVERAGE.

    (a) In General.--Section 1862(a) (42 U.S.C. 1395y(a)) is amended--
            (1) by striking ``or'' at the end of paragraph (14),
            (2) by striking the period at the end of paragraph (15) and 
        inserting ``; or'', and
            (3) by inserting after paragraph (15) the following new 
        paragraph:
            ``(16) where such expenses are for items or services, or to 
        assist in the purchase, in whole or in part, of health benefit 
        coverage that includes items or services, for the purpose of 
        causing, or assisting in causing, the death, suicide, 
        euthanasia, or mercy killing of a person.''.
    (b) Effective Date.--The amendments made by subsection (a) shall 
apply to payment for items and services furnished on or after the date 
of the enactment of this Act.

SEC. 8605. EXTENDING MEDICARE COVERAGE OF, AND APPLICATION OF HOSPITAL 
              INSURANCE TAX TO, ALL STATE AND LOCAL GOVERNMENT 
              EMPLOYEES.

    (a) In General.--
            (1) Application of hospital insurance tax.--Section 
        3121(u)(2) of the Internal Revenue Code of 1986 is amended by 
        striking subparagraphs (C) and (D).
            (2) Coverage under medicare.--Section 210(p) of the Social 
        Security Act (42 U.S.C. 410(p)) is amended by striking 
        paragraphs (3) and (4).
            (3) Effective date.--The amendments made by this subsection 
        shall apply to services performed after December 31, 1996.
    (b) Transition in Benefits for State and Local Government Employees 
and Former Employees.--
            (1) In general.--
                    (A) Employees newly subject to tax.--For purposes 
                of sections 226, 226A, and 1811 of the Social Security 
                Act, in the case of any individual who performs 
                services during the calendar quarter beginning January 
                1, 1997, the wages for which are subject to the tax 
                imposed by section 3101(b) of the Internal Revenue Code 
                of 1986 only because of the amendment made by 
                subsection (a), the individual's medicare qualified 
                State or local government employment (as defined in 
                subparagraph (B)) performed before January 1, 1997, 
                shall be considered to be ``employment'' (as defined 
                for purposes of title II of such Act), but only for 
                purposes of providing the individual (or another 
                person) with entitlement to hospital insurance benefits 
                under part A of title XVIII of such Act for months 
                beginning with January 1997.
                    (B) Medicare qualified state or local government 
                employment defined.--In this paragraph, the term 
                ``medicare qualified State or local government 
                employment'' means medicare qualified government 
                employment described in section 210(p)(1)(B) of the 
                Social Security Act (determined without regard to 
                section 210(p)(3) of such Act, as in effect before its 
                repeal under subsection (a)(2)).
            (2) Authorization of appropriations.--There are authorized 
        to be appropriated to the Federal Hospital Insurance Trust Fund 
        from time to time such sums as the Secretary of Health and 
        Human Services deems necessary for any fiscal year on account 
        of--
                    (A) payments made or to be made during such fiscal 
                year from such Trust Fund with respect to individuals 
                who are entitled to benefits under title XVIII of the 
                Social Security Act solely by reason of paragraph (1),
                    (B) the additional administrative expenses 
                resulting or expected to result therefrom, and
                    (C) any loss in interest to such Trust Fund 
                resulting from the payment of those amounts, in order 
                to place such Trust Fund in the same position at the 
                end of such fiscal year as it would have been in if 
                this subsection had not been enacted.
            (3) Information to individuals who are prospective medicare 
        beneficiaries based on state and local government employment.--
        Section 226(g) of the Social Security Act (42 U.S.C. 426(g)) is 
        amended--
                    (A) by redesignating paragraphs (1) through (3) as 
                subparagraphs (A) through (C), respectively,
                    (B) by inserting ``(1)'' after ``(g)'', and
                    (C) by adding at the end the following new 
                paragraph:
    ``(2) The Secretary, in consultation with State and local 
governments, shall provide procedures designed to assure that 
individuals who perform medicare qualified government employment by 
virtue of service described in section 210(a)(7) are fully informed 
with respect to (A) their eligibility or potential eligibility for 
hospital insurance benefits (based on such employment) under part A of 
title XVIII, (B) the requirements for, and conditions of, such 
eligibility, and (C) the necessity of timely application as a condition 
of becoming entitled under subsection (b)(2)(C), giving particular 
attention to individuals who apply for an annuity or retirement benefit 
and whose eligibility for such annuity or retirement benefit is based 
on a disability.''
    (c) Technical Amendments.--
            (1) Subparagraph (A) of section 3121(u)(2) of the Internal 
        Revenue Code of 1986 is amended by striking ``subparagraphs (B) 
        and (C),'' and inserting ``subparagraph (B),''.
            (2) Subparagraph (B) of section 210(p)(1) of the Social 
        Security Act (42 U.S.C. 410(p)(1)) is amended by striking 
        ``paragraphs (2) and (3).'' and inserting ``paragraph (2).''
            (3) Section 218 of the Social Security Act (42 U.S.C. 418) 
        is amended by striking subsection (n).
            (4) The amendments made by this subsection shall apply 
        after December 31, 1996.

      Subtitle H--Monitoring Achievement of Medicare Reform Goals

SEC. 8701. ESTABLISHMENT OF BUDGETARY AND PROGRAM GOALS.

                                                 Title VIII, Subtitle H

    (a) In General.--The Secretary shall establish program budgetary 
and program goals for the medicare program consistent with this 
section.
    (b) Budgetary Goals.--The budgetary goal is to restrict total 
outlays under the medicare program as follows:
            (1) For fiscal year 1996, $173,500,000,000.
            (2) For fiscal year 1997, $187,300,000,000.
            (3) For fiscal year 1998, $200,800,000,000.
            (4) For fiscal year 1999, $215,200,000,000.
            (5) For fiscal year 2000, $220,500,000,000.
            (6) For fiscal year 2001, $248,000,000,000.
            (7) For fiscal year 2002, $267,100,000,000.
    (c) Program Goals.--The program goals shall be consistent with the 
following:
            (1) There should be an equitable distribution of funds 
        between per beneficiary spending on payments to Medicare Choice 
        organizations under part C of the medicare program and on 
        payments to providers on a fee-for-service basis under parts A 
        and B of the program.
            (2) Payments to Medicare Choice organizations should be 
        established in a manner that promotes the availability of 
        Medicare Choice products in all regions of the country and that 
        permits such organizations to offer adequate coverage.

SEC. 8702. MEDICARE REFORM COMMISSION.

    (a) Establishment.--There is established a commission to be known 
as the Medicare Reform Commission (in this section referred to as the 
``Commission'').
    (b) Duties.--
            (1) In general.--The Commission shall examine how the 
        medicare program has met the budgetary and program goals 
        established under section 8701.
            (2) Periodic reports.--
                    (A) In general.--The Commission shall issue a 
                report on April 1, 1998, and on March 1 of every third 
                subsequent year, on the status of the medicare program 
                in relation to the budgetary and program goals 
                specified in section 8601.
                    (B) Contents.--Each report shall include the 
                following information about the medicare program in the 
                most recent fiscal year and projects for the succeeding 
                3 fiscal years:
                            (i) The actuarial value of the traditional 
                        medicare benefit package.
                            (ii) The projected rate of growth of 
                        outlays under the traditional medicare program.
                            (iii) The ability of Medicare Choice 
                        organizations to offer an adequate benefit 
                        package under part C of the medicare program.
                            (iv) The extent of Medicare Choice products 
                        made available to medicare beneficiaries in the 
                        different regions of the country.
            (3) Recommendations.--
                    (A) In general.--If a report under paragraph (2) 
                finds that any of the following problems exists, the 
                Commission shall include recommendations to respond to 
                the problem:
                            (i) The actuarial value of the traditional 
                        medicare benefit package exceeds the payment 
                        rate under the Medicare Choice program.
                            (ii) The rate of growth of the traditional 
                        medicare program under parts A and B is 
                        projected to result in medicare outlays 
                        exceeding the outlay targets specified in 
                        section 8701.
                            (iii) The payments under the Medicare 
                        Choice program are not sufficient to allow 
                        contractors to provide an adequate benefit 
                        package.
                            (iv) The selection of Medicare Choice 
                        products are limited or not available in parts 
                        of the country.
                    (B) Types of recommendations.--The recommendations 
                provided under subparagraph (A) may include--
                            (i) in response to the problem described in 
                        subparagraph (A)(ii), reduction in payments to 
                        providers under parts A and B or an increase in 
                        cost sharing by beneficiaries; and
                            (ii) in response to the problems described 
                        in subparagraphs (A)(iii) and (A)(iv), an 
                        adjustment to payment rates to Medicare Choice 
                        organizations.
                Such recommendations may not include any change that is 
                inconsistent with attaining the outlay targets 
                specified under section 8701.
            (4) Presidential response.--If the Commission reports under 
        this subsection that the goals established in section 8701 are 
        not met (or projects that such goals will not be met during a 
        3-year period), the President shall submit to Congress, within 
        90 days after the date of submission of the report, specific 
        legislative recommendations to correct the problem. Such 
        recommendations may include those described in paragraph (3)(B) 
        and may not include any change that is inconsistent with 
        attaining the outlay targets specified under section 8701.
            (5) Congressional consideration.--
                    (A) In general.--The President's recommendations 
                submitted under paragraph (4) shall not apply unless a 
                joint resolution (described in subparagraph (B)) 
                approving such recommendations is enacted, in 
                accordance with the provisions of subparagraph (C), 
                before the end of the 60-day period beginning on the 
                date on which a report containing such recommendations 
                is submitted by the President under paragraph (4). For 
                purposes of applying the preceding sentence and 
                subparagraphs (B) and (C), the days on which either 
                House of Congress is not in session because of an 
                adjournment of more than three days to a day certain 
                shall be excluded in the computation of a period.
                    (B) Joint resolution of approval.--A joint 
                resolution described in this subparagraph means only a 
                joint resolution which is introduced within the 10-day 
                period beginning on the date on which the report 
                described in subparagraph (A) is submitted and--
                            (i) which does not have a preamble;
                            (ii) the matter after the resolving clause 
                        of which is as follows: ``That Congress 
                        approves the recommendations of the President 
                        under section 8702(b)(4) of the Medicare 
                        Preservation Act, as submitted by the President 
                        on ______________.'', the blank space being 
                        filled in with the appropriate date; and
                            (iii) the title of which is as follows: 
                        ``Joint resolution approving Presidential 
                        recommendations submitted under section 
                        8702(b)(4) of the Medicare Preservation Act, as 
                        submitted by the President on 
                        ______________.'', the blank space being filled 
                        in with the appropriate date.
                    (C) Procedures for consideration of resolution of 
                approval.--Subject to subparagraph (D), the provisions 
                of section 2908 (other than subsection (a)) of the 
                Defense Base Closure and Realignment Act of 1990 shall 
                apply to the consideration of a joint resolution 
                described in subparagraph (B) in the same manner as 
                such provisions apply to a joint resolution described 
                in section 2908(a) of such Act.
                    (D) Special rules.--For purposes of applying 
                subparagraph (C) with respect to such provisions--
                            (i) any reference to the Committee on Armed 
                        Services of the House of Representatives shall 
                        be deemed a reference to the Committee on Ways 
                        and Means and any reference to the Committee on 
                        Armed Services of the Senate shall be deemed a 
                        reference to the Committee on Finance of the 
                        Senate; and
                            (ii) any reference to the date on which the 
                        President transmits a report shall be deemed a 
                        reference to the date on which the President 
                        submits the recommendations under paragraph 
                        (4).
    (c) Membership.--
            (1) Appointment.--The Commission shall be composed of 5 
        members appointed by the President, of which 4 of whom are 
        appointed from a list (of at least 5 nominees) submitted by 
        each of the following:
                    (A) The Speaker of the House of Representatives.
                    (B) The Minority Leader of the House of 
                Representatives.
                    (C) The Majority Leader of the Senate.
                    (D) The Minority Leader of the Senate.
            (2) Term of service.--Each member of the Commission shall 
        serve for a term of 3 years. Members may be reappointed for 
        additional terms.
            (3) Chairman and vice chairman.--The Commission shall elect 
        a Chairman and Vice Chairman from among its members.
            (4) Vacancies.--Any vacancy in the membership of the 
        Commission shall be filled in the manner in which the original 
        appointment was made and shall not affect the power of the 
        remaining members to execute the duties of the Commission.
            (5) Quorum.--A quorum shall consist of 3 members of the 
        Commission, except that 2 members may conduct a hearing under 
        subsection (e).
            (6) Meetings.--The Commission shall meet at the call of its 
        Chairman or a majority of its members.
            (7) Compensation and reimbursement of expenses.--Members of 
        the Commission are not entitled to receive compensation for 
        service on the Commission. Members may be reimbursed for 
        travel, subsistence, and other necessary expenses incurred in 
        carrying out the duties of the Commission.
    (d) Staff and Consultants.--
            (1) Staff.--The Commission may appoint and determine the 
        compensation of such staff as may be necessary to carry out the 
        duties of the Commission. Such appointments and compensation 
        may be made without regard to the provisions of title 5, United 
        States Code, that govern appointments in the competitive 
        services, and the provisions of chapter 51 and subchapter III 
        of chapter 53 of such title that relate to classifications and 
        the General Schedule pay rates.
            (2) Consultants.--The Commission may procure such temporary 
        and intermittent services of consultants under section 3109(b) 
        of title 5, United States Code, as the Commission determines to 
        be necessary to carry out the duties of the Commission.
    (e) Powers.--
            (1) Hearings and other activities.--For the purpose of 
        carrying out its duties, the Commission may hold such hearings 
        and undertake such other activities as the Commission 
        determines to be necessary to carry out its duties.
            (2) Studies by gao.--Upon the request of the Commission, 
        the Comptroller General shall conduct such studies or 
        investigations as the Commission determines to be necessary to 
        carry out its duties.
            (3) Cost estimates by congressional budget office.--
                    (A) Upon the request of the Commission, the 
                Director of the Congressional Budget Office shall 
                provide to the Commission such cost estimates as the 
                Commission determines to be necessary to carry out its 
                duties.
                    (B) The Commission shall reimburse the Director of 
                the Congressional Budget Office for expenses relating 
                to the employment in the office of the Director of such 
                additional staff as may be necessary for the Director 
                to comply with requests by the Commission under 
                subparagraph (A).
            (4) Detail of federal employees.--Upon the request of the 
        Commission, the head of any Federal agency is authorized to 
        detail, without reimbursement, any of the personnel of such 
        agency to the Commission to assist the Commission in carrying 
        out its duties. Any such detail shall not interrupt or 
        otherwise affect the civil service status or privileges of the 
        Federal employee.
            (5) Technical assistance.--Upon the request of the 
        Commission, the head of a Federal agency shall provide such 
        technical assistance to the Commission as the Commission 
        determines to be necessary to carry out its duties.
            (6) Use of mails.--The Commission may use the United States 
        mails in the same manner and under the same conditions as 
        Federal agencies and shall, for purposes of the frank, be 
        considered a commission of Congress as described in section 
        3215 of title 39, United States Code.
            (7) Obtaining information.--The Commission may secure 
        directly from any Federal agency information necessary to 
        enable it to carry out its duties, if the information may be 
        disclosed under section 552 of title 5, United States Code. 
        Upon request of the Chairman of the Commission, the head of 
        such agency shall furnish such information to the Commission. 
        In particular, the Administrator of the Health Care Financing 
        Administration and the Director of the Office of Management and 
        Budget shall provide the Commission with access to data for the 
        conduct of its work.
            (8) Administrative support services.--Upon the request of 
        the Commission, the Administrator of General Services shall 
        provide to the Commission on a reimbursable basis such 
        administrative support services as the Commission may request.
            (9) Acceptance of donations.--The Commission may accept, 
        use, and dispose of gifts or donations of services or property.
            (10) Printing.--For purposes of costs relating to printing 
        and binding, including the cost of personnel detailed from the 
        Government Printing Office, the Commission shall be deemed to 
        be a committee of the Congress.
    (f) Authorization of Appropriations.--There are authorized to be 
appropriated such sums as may be necessary to carry out this section. 
Amounts appropriated to carry out this section shall remain available 
until expended.

Subtitle I--Lock-Box Provisions for Medicare Part B Savings from Growth 
                               Reductions

                                                 Title VIII, Subtitle I

SEC. 8801. ESTABLISHMENT OF MEDICARE GROWTH REDUCTION TRUST FUND FOR 
              PART B SAVINGS.

    Part B of title XVIII is amended by inserting after section 1841 
the following new section:

                 ``medicare growth reduction trust fund

    ``Sec. 1841A. (a)(1) There is hereby created on the books of the 
Treasury of the United States a trust fund to be known as the `Federal 
Medicare Growth Reduction Trust Fund' (in this section referred to as 
the `Trust Fund'). The Trust Fund shall consist of such gifts and 
bequests as may be made as provided in section 201(i)(1) and amounts 
appropriated under paragraph (2).
    ``(2) There are hereby appropriated to the Trust Fund amounts 
equivalent to 100 percent of the Secretary's estimate of the reductions 
in expenditures under this part that are attributable to the Medicare 
Preservation Act of 1995. The amounts appropriated by the preceding 
sentence shall be transferred from time to time (not less frequently 
than monthly) from the general fund in the Treasury to the Trust Fund.
    ``(3)(A) Subject to subparagraph (B), with respect to monies 
transferred to the Trust Fund, no transfers, authorizations of 
appropriations, or appropriations are permitted.
    ``(B) Beginning with fiscal year 2003, the Secretary may expend 
funds in the Trust Fund to carry out this title, but only to the extent 
provided by Congress in advance through a specific amendment to this 
section.
    ``(b) The provisions of subsections (b) through (e) of section 1841 
shall apply to the Trust Fund in the same manner as they apply to the 
Federal Supplementary Medical Insurance Trust Fund, except that the 
Board of Trustees and Managing Trustee of the Trust Fund shall be 
composed of the members of the Board of Trustees and the Managing 
Trustee, respectively, of the Federal Supplementary Medical Insurance 
Trust Fund.''.

                   Subtitle J--Clinical Laboratories

SEC. 8901. EXEMPTION OF PHYSICIAN OFFICE LABORATORIES.

                                                 Title VIII, Subtitle J

    Section 353(d) of the Public Health Service Act (42 U.S.C. 263a(d)) 
is amended--
            (1) by redesignating paragraphs (2), (3), and (4) as 
        paragraphs (3), (4), and (5) and by adding after paragraph (1) 
        the following:
            ``(2) Exemption of physician office laboratories.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), a clinical laboratory in a 
                physician's office (including an office of a group of 
                physicians) which is directed by a physician and in 
                which examinations and procedures are either performed 
                by a physician or by individuals supervised by a 
                physician solely as an adjunct to other services 
                provided by the physician's office is exempt from this 
                section.
                    ``(B) Exception.--A clinical laboratory described 
                in subparagraph (A) is not exempt from this section 
                when it performs a pap smear (Papanicolaou Smear) 
                analysis.
                    ``(C) Definition.--For purposes of subparagraph 
                (A), the term `physician' has the same meaning as is 
                prescribed for such term by section 1861(r) of the 
                Social Security Act (42 U.S.C. 1395x(r)).'';
            (2) in paragraph (3) (as so redesignated) by striking 
        ``(3)'' and inserting ``(4)''; and
            (3) in paragraphs (4) and (5) (as so redesignated) by 
        striking ``(2)'' and inserting ``(3)''.

                        TITLE IX--WELFARE REFORM

                                                               Title IX

SEC. 9000. AMENDMENT OF THE SOCIAL SECURITY ACT.

    Except as otherwise expressly provided, wherever in this title an 
amendment or repeal is expressed in terms of an amendment to, or repeal 
of, a section or other provision, the reference shall be considered to 
be made to a section or other provision of the Social Security Act.

              Subtitle A--Temporary Employment Assistance

                                                   Title IX, Subtitle A

SEC. 9101. STATE PLAN.

    (a) In General.--Title IV (42 U.S.C. 601 et seq.) is amended by 
striking part A and inserting the following:

               ``PART A--TEMPORARY EMPLOYMENT ASSISTANCE

``SEC. 400. APPROPRIATION.

    ``For the purpose of providing assistance to families with needy 
children and assisting parents of children in such families to obtain 
and retain private sector work to the extent possible, and public 
sector or volunteer work if necessary, through the Work First 
Employment Block Grant program (hereafter in this title referred to as 
the `Work First program'), there is hereby authorized to be 
appropriated, and is hereby appropriated, for each fiscal year a sum 
sufficient to carry out the purposes of this part. The sums made 
available under this section shall be used for making payments to 
States which have approved State plans for temporary employment 
assistance.

      ``Subpart 1--State Plans for Temporary Employment Assistance

``SEC. 401. ELEMENTS OF STATE PLANS.

    ``A State plan for temporary employment assistance shall provide a 
description of the State program which carries out the purpose 
described in section 400 and shall meet the requirements of the 
following sections of this subpart.

``SEC. 402. FAMILY ELIGIBILITY FOR TEMPORARY EMPLOYMENT ASSISTANCE.

    ``(a) In General.--The State plan shall provide that any family--
            ``(1) with 1 or more children (or any expectant family, at 
        the option of the State), defined as needy by the State; and
            ``(2) which fulfills the conditions set forth in subsection 
        (b),
shall be eligible for cash assistance under the plan, except as 
otherwise provided under this part.
    ``(b) Individual Responsibility Plan.--The State plan shall provide 
that not later than 30 days after the approval of the application for 
temporary employment assistance, a parent qualifying for assistance 
shall execute an individual responsibility plan as described in section 
403. If a child otherwise eligible for assistance under this part is 
residing with a relative other than a parent, the State plan may 
require the relative to execute such a plan as a condition of the 
family receiving such assistance.
    ``(c) Limitations on Eligibility.--
            ``(1) Length of time.--
                    ``(A) In general.--Except as provided in 
                subparagraphs (B), (C), (D), and (E), the State plan 
                shall provide that the family of an individual who, 
                after attaining age 18 years (or age 19 years, at the 
                option of the State), has received assistance under the 
                plan for 60 months, shall no longer be eligible for 
                cash assistance under the plan.
                    ``(B) Hardship exception.--With respect to any 
                family, the State plan shall not include in the 
                determination of the 60-month period under subparagraph 
                (A) any month in which--
                            ``(i) at the option of the State, the 
                        family includes an individual working 20 hours 
                        per week (or more, at the option of the State);
                            ``(ii) the family resides in an area with 
                        an unemployment rate exceeding 8 percent; or
                            ``(iii) the family is experiencing other 
                        special hardship circumstances which make it 
                        appropriate for the State to provide an 
                        exemption for such month, except that the total 
                        number of exemptions under this clause for any 
                        month shall not exceed 15 percent of the number 
                        of families to which the State is providing 
                        assistance under the plan.
                    ``(C) Exception for teen parents.--With respect to 
                any family, the State plan shall not include in the 
                determination of the 60-month period under subparagraph 
                (A) any month in which the parent--
                            ``(i) is under age 18 (or age 19, at the 
                        option of the State); and
                            ``(ii) is making satisfactory progress 
                        while attending high school or an alternative 
                        technical preparation school.
                    ``(D) Exception for individuals exempt from work 
                requirements.--With respect to any family, the State 
                plan shall not include in the determination of the 60-
                month period under subparagraph (A) any month in which 
                1 or each of the parents--
                            ``(i) is seriously ill, incapacitated, or 
                        of advanced age;
                            ``(ii)(I) except for a child described in 
                        subclause (II), is responsible for a child 
                        under age 1 year (or age 6 months, at the 
                        option of the State), or
                            ``(II) in the case of a 2nd or subsequent 
                        child born during such period, is responsible 
                        for a child under age 3 months;
                            ``(iii) is pregnant in the 3rd trimester; 
                        or
                            ``(iv) is caring for a family member who is 
                        ill or incapacitated.
                    ``(E) Exception for child-only cases.--With respect 
                to any child who has not attained age 18 (or age 19, at 
                the option of the State) and who is eligible for 
                assistance under this part, but not as a member of a 
                family otherwise eligible for assistance under this 
                part (determined without regard to this paragraph), the 
                State plan shall not include in the determination of 
                the 60-month period under subparagraph (A) any month in 
                which such child has not attained such age.
                    ``(F) Other program eligibility.--The State plan 
                shall provide that if a family is no longer eligible 
                for cash assistance under the plan due to the 
                imposition of the 60-month period under subparagraph 
                (A) or due to the imposition of a penalty under 
                subparagraph (A)(ii) or (B)(ii) of section 403(e)(1)--
                            ``(i) for purposes of determining 
                        eligibility for any other Federal or federally 
                        assisted program based on need, such family 
                        shall continue to be considered eligible for 
                        such cash assistance;
                            ``(ii) for purposes of determining the 
                        amount of assistance under any other Federal or 
                        federally assisted program based on need, such 
                        family shall continue to be considered 
                        receiving such cash assistance; and
                            ``(iii) the State may, at the option of the 
                        State, after having assessed the needs of the 
                        child or children of the family, provide for 
                        such needs with a voucher for such family--
                                    ``(I) determined on the same basis 
                                as the State would provide assistance 
                                under the State plan to such a family 
                                with 1 less individual,
                                    ``(II) designed appropriately to 
                                pay third parties for shelter, goods, 
                                and services received by the child or 
                                children, and
                                    ``(III) payable directly to such 
                                third parties.
            ``(2) Treatment of interstate migrants.--The State plan may 
        apply to a category of families the rules for such category 
        under a plan of another State approved under this part, if a 
        family in such category has moved to the State from the other 
        State and has resided in the State for less than 12 months.
            ``(3) Individuals on old-age assistance or ssi ineligible 
        for temporary employment assistance.--The State plan shall 
        provide that no assistance shall be furnished any individual 
        under the plan with respect to any period with respect to which 
        such individual is receiving old-age assistance under the State 
        plan approved under section 102 of title I or supplemental 
        security income under title XVI.
            ``(4) Children for whom federal, state, or local foster 
        care maintenance or adoption assistance payments are made.--A 
        child with respect to whom foster care maintenance payments or 
        adoption assistance payments are made under part E or under 
        State or local law shall not, for the period for which such 
        payments are made, be regarded as a needy child under this 
        part, and such child's income and resources shall be 
        disregarded in determining the eligibility of the family of 
        such child for temporary employment assistance.
            ``(5) Denial of assistance for 10 years to a person found 
        to have fraudulently misrepresented residence in order to 
        obtain assistance in 2 or more states.--The State plan shall 
        provide that no assistance will be furnished any individual 
        under the plan during the 10-year period that begins on the 
        date the individual is convicted in Federal or State court of 
        having made, a fraudulent statement or representation with 
        respect to the place of residence of the individual in order to 
        receive benefits or services simultaneously from 2 or more 
        States under programs that are funded under this part, title 
        XIX, or the Food Stamp Act of 1977, or benefits in 2 or more 
        States under the supplemental security income program under 
        title XVI.
            ``(6) Denial of assistance for fugitive felons and 
        probation and parole violators.--
                    ``(A) In general.--The State plan shall provide 
                that no assistance will be furnished any individual 
                under the plan for any period if during such period the 
                State agency has knowledge that such individual is--
                            ``(i) fleeing to avoid prosecution, or 
                        custody or confinement after conviction, under 
                        the laws of the place from which the individual 
                        flees, for a crime, or an attempt to commit a 
                        crime, which is a felony under the laws of the 
                        place from which the individual flees, or 
                        which, in the case of the State of New Jersey, 
                        is a high misdemeanor under the laws of such 
                        State; or
                            ``(ii) violating a condition of probation 
                        or parole imposed under Federal or State law.
                    ``(B) Exchange of information with law enforcement 
                agencies.--Notwithstanding any other provision of law, 
                the State plan shall provide that the State shall 
                furnish any Federal, State, or local law enforcement 
                officer, upon the request of the officer, with the 
                current address of any recipient of assistance under 
                the plan, if the officer furnishes the agency with the 
                name of the recipient and notifies the agency that--
                            ``(i) such recipient--
                                    ``(I) is described in clause (i) or 
                                (ii) of subparagraph (A); or
                                    ``(II) has information that is 
                                necessary for the officer to conduct 
                                the officer's official duties; and
                            ``(ii) the location or apprehension of the 
                        recipient is within such officer's official 
                        duties.
    ``(d) Determination of Eligibility.--
            ``(1) Determination of need.--The State plan shall provide 
        that the State agency take into consideration any income and 
        resources of any individual the State determines should be 
        considered in determining the need of the child or relative 
        claiming temporary employment assistance, subject to section 
        407.
            ``(2) Resource and income determination.--In determining 
        the total resources and income of the family of any needy 
        child, the State plan shall provide the following:
                    ``(A) Resources.--The State's resource limit, 
                including a description of the policy determined by the 
                State regarding any exclusion allowed for vehicles 
                owned by family members, resources set aside for future 
                needs of a child, individual development accounts, or 
                other policies established by the State to encourage 
                savings.
                    ``(B) Family income.--The extent to which earned or 
                unearned income is disregarded in determining 
                eligibility for, and amount of, assistance.
                    ``(C) Child support.--The State's policy, if any, 
                for determining the extent to which child support 
                received in excess of $50 per month on behalf of a 
                member of the family is disregarded in determining 
                eligibility for, and the amount of, assistance.
                    ``(D) Child's earnings.--The treatment of earnings 
                of a child living in the home.
                    ``(E) Earned income tax credit.--The State agency 
                shall disregard any refund of Federal income taxes made 
                to a family receiving temporary employment assistance 
                by reason of section 32 of the Internal Revenue Code of 
                1986 (relating to earned income tax credit) and any 
                payment made to such a family by an employer under 
                section 3507 of such Code (relating to advance payment 
of earned income credit).
            ``(3) Verification System.--The State plan shall provide 
        that information is requested and exchanged for purposes of 
        income and eligibility verification in accordance with a State 
        system which meets the requirements of section 1137.

``SEC. 403. INDIVIDUAL RESPONSIBILITY PLAN.

    ``(a) Assessment.--The State agency responsible for administering 
the State plan shall make an initial assessment of the skills, prior 
work experience, and employability of each applicant for, or recipient 
of, assistance under the State plan who--
            ``(1) has attained 18 years of age; or
            ``(2) has not completed high school or obtained a 
        certificate of high school equivalency, and is not attending 
        secondary school.
    ``(b) Individual Responsibility Plans.--
            ``(1) In general.--On the basis of the assessment made 
        under subsection (a) with respect to an individual, the State 
        agency, in consultation with the individual, shall develop an 
        individual responsibility plan for the individual, which--
                    ``(A) shall provide that participation by the 
                individual in job search activities shall be a 
                condition of eligibility for assistance under the State 
                plan approved under part A, except during any period 
                for which the individual is employed full-time in an 
                unsubsidized job in the private sector;
                    ``(B) sets forth an employment goal for the 
                individual and a plan for moving the individual 
                immediately into private sector employment;
                    ``(C) sets forth the obligations of the individual, 
                which may include a requirement that the individual 
                attend school, maintain certain grades and attendance, 
                keep school age children of the individual in school, 
                immunize children, attend parenting and money 
                management classes, or do other things that will help 
                the individual become and remain employed in the 
                private sector;
                    ``(D) may require that the individual enter the 
                State program established under part F, if the 
                caseworker determines that the individual will need 
                education, training, job placement assistance, wage 
                enhancement, or other services to become employed in 
                the private sector;
                    ``(E) shall provide that the individual must--
                            ``(i) assign to the State any rights to 
                        support from any other person the individual 
                        may have in such individual's own behalf or in 
                        behalf of any other family member for whom the 
                        individual is applying for or receiving 
                        assistance; and
                            ``(ii) cooperate with the State--
                                    ``(I) in establishing the paternity 
                                of a child born out of wedlock with 
                                respect to whom assistance is claimed, 
                                and
                                    ``(II) in obtaining support 
                                payments for the individual and for a 
                                child with respect to whom such 
                                assistance is claimed, or in obtaining 
                                any other payments or property due the 
                                individual or the child,
                unless (in either case) the individual is found to have 
                good cause for refusing to cooperate as determined by 
                the State agency in accordance with standards 
                prescribed by the Secretary, which standards shall take 
                into consideration the best interests of the child on 
                whose behalf assistance is claimed.
                    ``(F) to the greatest extent possible shall be 
                designed to move the individual into whatever private 
                sector employment the individual is capable of handling 
                as quickly as possible, and to increase the 
                responsibility and amount of work the individual is to 
                handle over time;
                    ``(G) shall describe what services the State will 
                provide the individual so that the individual will be 
                able to obtain and keep employment in the private 
                sector, and describe the job counseling and other 
                services that will be provided by the State; and
                    ``(H) at the option of the State, may require the 
                individual to undergo appropriate substance abuse 
                treatment.
            ``(2) Timing.--The State agency shall comply with paragraph 
        (1) with respect to an individual--
                    ``(A) within 90 days (or, at the option of the 
                State, 180 days) after the effective date of this part, 
                in the case of an individual who, as of such effective 
                date, is a recipient of assistance under the State plan 
                approved under this part; or
                    ``(B) within 30 days (or, at the option of the 
                State, 90 days) after the individual is determined to 
                be eligible for such assistance, in the case of any 
                other individual.
    ``(c) Provision of Program and Employment Information.--The State 
shall inform all applicants for and recipients of assistance under the 
State plan approved under this part of all available services under the 
State plan for which they are eligible.
    ``(d) Requirement That Recipients Enter the Work First Program.--
            ``(1) In general.--Beginning with fiscal year 2004, the 
        State shall place recipients of assistance under the State plan 
        approved under this part, who have not become employed in the 
        private sector within 1 year after signing an individual 
        responsibility plan, in the first available slot in the State 
        program established under part F, except as provided in 
        paragraph (2).
            ``(2) Exceptions.--A state may not be required to place a 
        recipient of such assistance in the State program established 
        under part F if the recipient--
                    ``(A) is ill, incapacitated, or of advanced age;
                    ``(B) has not attained 18 years of age;
                    ``(C) is caring for a child or parent who is ill or 
                incapacitated; or
                    ``(D) is enrolled in school or in educational or 
                training programs that will lead to private sector 
                employment.
    ``(e) Penalties.--
            ``(1) State not operating a work first or workfare 
        program.--In the case of a State that is not operating a 
        program under part F or G:
                    ``(A) Failure to comply with individual 
                responsibility plan or agreement of mutual 
                responsibility.--
                            ``(i) Progressive reductions in assistance 
                        for 1st and 2nd failures.--The amount of 
                        assistance otherwise to be provided under the 
                        State plan approved under this part to a family 
                        that includes an individual who fails without 
                        good cause to comply with an individual 
                        responsibility plan (or, if the State has 
                        established a program under subpart 1 of part F 
                        and the individual is required to participate 
                        in the program, an agreement of mutual 
                        responsibility) signed by the individual (other 
                        than by reason of conduct described in 
                        paragraph (2)) shall be reduced by--
                                    ``(I) 33 percent for the 1st such 
                                act of noncompliance; or
                                    ``(II) 66 percent for the 2nd such 
                                act of noncompliance.
                            ``(ii) Denial of assistance for 3rd 
                        failure.--In the case of the 3rd such act of 
                        noncompliance, the family of which the 
                        individual is a member shall not thereafter be 
eligible for assistance under the State plan approved under this part.
                            ``(iii) Acts of noncompliance.--For 
                        purposes of this paragraph, a 1st act of 
                        noncompliance by an individual continues for 
                        more than 1 calendar month shall be considered 
                        a 2nd act of noncompliance, and a 2nd act of 
                        noncompliance that continues for more than 3 
                        calendar months shall be considered a 3rd act 
                        of noncompliance.
                    ``(B) Denial of assistance to adults refusing to 
                work, look for work, or accept a bona fide offer of 
                employment.--
                            ``(i) Refusal to work or look for work.--If 
                        an unemployed individual who has attained 18 
                        years of age refuses to work or look for work--
                                    ``(I) in the case of the 1st such 
                                refusal, assistance under the State 
                                plan approved under this part shall not 
                                be payable with respect to the 
                                individual until the later of--
                                            ``(aa) a period of not less 
                                        than 6 months after the date of 
                                        the first such refusal; or
                                            ``(bb) the first date the 
                                        individual agrees to work or 
                                        look for work; or
                                    ``(II) in the case of the 2nd such 
                                refusal, the family of which the 
                                individual is a member shall not 
                                thereafter be eligible for assistance 
                                under the State plan approved under 
                                this part.
                            ``(ii) Refusal to accept a bona fide offer 
                        of employment.--If an unemployed individual who 
                        has attained 18 years of age refuses to accept 
                        a bona fide offer of employment, the family of 
                        which the individual is a member shall not 
                        thereafter be eligible for assistance under the 
                        State plan approved under this part.
            ``(2) Other states.--In the case of any other State, the 
        State shall reduce, by such amount as the State considers 
        appropriate, the amount of assistance otherwise payable under 
        the State plan approved under this part to a family that 
        includes an individual who fails without good cause to comply 
        with an individual responsibility plan signed by the 
        individual.

``SEC. 404. PAYMENT OF ASSISTANCE.

    ``(a) Standards of Assistance.--The State plan shall specify 
standards of assistance, including--
            ``(1) the composition of the unit for which assistance will 
        be provided;
            ``(2) a standard, expressed in money amounts, to be used in 
        determining the need of applicants and recipients;
            ``(3) a standard, expressed in money amounts, to be used in 
        determining the amount of the assistance payment; and
            ``(4) the methodology to be used in determining the payment 
        amount received by assistance units.
    ``(b) Level of Assistance.--Except as otherwise provided in this 
title, the State plan shall provide that--
            ``(1) the determination of need and the amount of 
        assistance for all applicants and recipients shall be made on 
        an objective and equitable basis; and
            ``(2) families of similar composition with similar needs 
        and circumstances shall be treated similarly.
    ``(c) Correction of Payments.--The State plan shall provide that 
the State agency will promptly take all necessary steps to correct any 
overpayment or underpayment of assistance under such plan, including 
the request for Federal tax refund intercepts as provided under section 
416.
    ``(d) Optional Voluntary Diversion Program.--The State plan shall, 
at the option of the State, and in such part or parts of the State as 
the State may select, provide that--
            ``(1) upon the recommendation of the caseworker who is 
        handling the case of a family eligible for assistance under the 
        State plan, the State shall, in lieu of any other assistance 
        under the State plan to the family during a time period of not 
        more than 3 months, make a lump-sum payment to the family for 
        the time period in an amount not to exceed--
                    ``(A) the value of the monthly benefits that would 
                otherwise be provided to the family under the State 
                plan; multiplied by
                    ``(B) the number of months in the time period;
            ``(2) a lump-sum payment pursuant to subparagraph (A) shall 
        not be made more than once to any family; and
            ``(3) if, during a time period for which the State has made 
        a lump-sum payment to a family pursuant to subparagraph (A), 
        the family applies for and (but for the lump-sum payment) would 
        be eligible under the State plan for a monthly benefit that is 
        greater than the value of the monthly benefit which would have 
        been provided to the family under the State plan at the time of 
        the calculation of the lump sum payment, then, notwithstanding 
        subparagraph (A), the State shall, for that part of the time 
        period that remains after the family becomes eligible for the 
        greater monthly benefit, provide monthly benefits to the family 
        in an amount not to exceed--
                    ``(A) the amount by which the value of the greater 
                monthly benefit exceeds the value of the former monthly 
                benefit, multiplied by the number of months in the time 
                period; divided by
                    ``(B) the whole number of months remaining in the 
                time period.''.

``SEC. 405. OTHER PROGRAMS.

    ``(a) Work First Program; Workfare or Job Placement Voucher 
Program.--The State plan shall provide that the State has in effect and 
operation--
            ``(1) a work first program that meets the requirements of 
        part F; and
            ``(2) a workfare program that meets the requirements of 
        part G, or a job placement voucher program that meets the 
        requirements of part H, but not both.
    ``(b) Provision of Positions and Vouchers.--The State plan shall 
provide that the State shall provide a position in the workfare program 
established by the State under part G, or a job placement voucher under 
the job placement voucher program established by the State under part H 
to any individual who, by reason of section 487(b), is prohibited from 
participating in the work first program operated by the State, and 
shall not provide such a position or such a voucher to any other 
individual.
    ``(c) Provision of Case Management Services.--The State plan shall 
provide that the State shall provide to participants in such programs 
such case management services as are necessary to ensure the integrated 
provision of benefits and services under such programs.
    ``(d) State Child Support Agency.--The State plan shall--
            ``(1) provide that the State has in effect a plan approved 
        under part D and operates a child support program in 
        substantial compliance with such plan;
            ``(2) provide that the State agency administering the plan 
        approved under this part shall be responsible for assuring 
        that--
                    ``(A) the benefits and services provided under 
                plans approved under this part and part D are furnished 
                in an integrated manner, including coordination of 
                intake procedures with the agency administering the 
                plan approved under part D;
                    ``(B) all applicants for, and recipients of, 
                temporary employment assistance are encouraged, 
                assisted, and required (as provided under section 
                403(b)(1)(E)(ii)) to cooperate in the establishment and 
enforcement of paternity and child support obligations and are notified 
about the services available under the State plan approved under part 
D; and
                    ``(C) procedures require referral of paternity and 
                child support enforcement cases to the agency 
                administering the plan approved under part D not later 
                than 10 days after the application for temporary 
                employment assistance; and
            ``(3) provide for prompt notice (including the transmittal 
        of all relevant information) to the State child support 
        collection agency established pursuant to part D of the 
        furnishing of temporary employment assistance with respect to a 
        child who has been deserted or abandoned by a parent (including 
        a child born out-of-wedlock without regard to whether the 
        paternity of such child has been established).
    ``(e) Child Welfare Services and Foster Care and Adoption 
Assistance.--The State plan shall provide that the State has in 
effect--
            ``(1) a State plan for child welfare services approved 
        under part B; and
            ``(2) a State plan for foster care and adoption assistance 
        approved under part E,
and operates such plans in substantial compliance with the requirements 
of such parts.
    ``(f) Report of Child Abuse, etc.--The State plan shall provide 
that the State agency will--
            ``(1) report to an appropriate agency or official, known or 
        suspected instances of physical or mental injury, sexual abuse 
        or exploitation, or negligent treatment or maltreatment of a 
        child receiving assistance under the State plan under 
        circumstances which indicate that the child's health or welfare 
        is threatened thereby; and
            ``(2) provide such information with respect to a situation 
        described in paragraph (1) as the State agency may have.
    ``(g) Availability of Assistance in Rural Areas of State.--The 
State plan shall consider and address the needs of rural areas in the 
State to ensure that families in such areas receive assistance to 
become self-sufficient.
    ``(h) Family Preservation.--
            ``(1) In general.--The State plan shall describe the 
        efforts by the State to promote family preservation and 
        stability, including efforts--
                    ``(A) to encourage fathers to stay home and be a 
                part of the family;
                    ``(B) to keep families together to the extent 
                possible; and
                    ``(C) except to the extent provided in paragraph 
                (2), to treat 2-parent families and 1-parent families 
                equally with respect to eligibility for assistance.
            ``(2) Maintenance of treatment.--The State may impose 
        eligibility limitations relating specifically to 2-parent 
        families to the extent such limitations are no more restrictive 
        than such limitations in effect in the State plan in fiscal 
        year 1995.

``SEC. 406. ADMINISTRATIVE REQUIREMENTS FOR STATE PLAN.

    ``(a) Statewide Plan.--The State plan shall be in effect in all 
political subdivisions of the State, and, if administered by the 
subdivisions, be mandatory upon such subdivisions. If such plan is not 
administered uniformly throughout the State, the plan shall describe 
the administrative variations.
    ``(b) Single Administrating Agency.--The State plan shall provide 
for the establishment or designation of a single State agency to 
administer the plan or supervise the administration of the plan.
    ``(c) Financial Participation.--The State plan shall provide for 
financial participation by the State in the same manner and amount as 
such State participates under title XIX, except that with respect to 
the sums expended for the administration of the State plan, the 
percentage shall be 50 percent.
    ``(d) Reasonable Promptness.--The State plan shall provide that all 
individuals wishing to make application for temporary employment 
assistance shall have opportunity to do so, and that such assistance be 
furnished with reasonable promptness to all eligible individuals.
    ``(e) Automated Data Processing System.--The State