Text: H.R.2903 — 104th Congress (1995-1996)All Information (Except Text)

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Introduced in House (01/26/1996)

 
[Congressional Bills 104th Congress]
[From the U.S. Government Printing Office]
[H.R. 2903 Introduced in House (IH)]

  2d Session
                                H. R. 2903

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


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                            January 26, 1996

   Mr. Kasich (by request): introduced the following bill; which was 
    referred to the Committee on the Budget, and in addition to the 
Committees on Ways and Means, Commerce, Banking and Financial Services, 
  the Judiciary, Agriculture, Economic and Educational Opportunities, 
 Government Reform and Oversight, House Oversight, National Security, 
Veterans' Affairs, Resources, International Relations, and Rules, 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.

    This Act may be cited as the ``Balanced Budget Act of 1995 for 
Economic Growth and Fairness''.

SEC. 2. TABLE OF CONTENTS.

    This Act is organized into titles as follows:

Title I--Banking, Housing, and Related Provisions
Title II--Spectrum Allocation Provisions
Title III--Medicaid
Title IV--Medicare
Title V--Welfare Reform
Title VI--Federal Retirement Provisions
Title VII--Veterans Provisions
Title VIII--Asset Sales, User Fees, and other Mandatory Provisions
Title IX--Revenues
Title X--Budget Enforcement

           TITLE I--BANKING, HOUSING, AND RELATED PROVISIONS

                   Subtitle A--Financial Institutions

SEC. 2011. SPECIAL ASSESSMENT TO CAPITALIZE SAIF.

    (a) In General.--Except as provided in subsection (f), the Board of 
Directors shall impose a special assessment on the SAIF-assessable 
deposits of each insured depository at a rate applicable to all such 
institutions that the Board of Directors, in its `sole discretion, 
determines (after taking into account the adjustments described in 
subsections (g) through (j)) will cause the Savings Association 
Insurance Fund to achieve the designated reserve ratio on the first 
business day of January 1996.
    (b) Factors To Be Considered.--In carrying out subsection (a), the 
Board of Directors shall base its determination on--
            (1) the monthly Savings Association Insurance Fund balance 
        most recently calculated;
            (2) data on insured deposits reported in the most recent 
        reports of condition filed not later than 70 days before the 
        date of enactment of this Act by insured depository 
        institutions; and
            (3) any other factors that the Board of Directors deems 
        appropriate.
    (c) Date of Determination.--For purposes of subsection (a), the 
amount of the SAIF-assessable deposits of an insured depository 
institution shall be determined as of March 31, 1995.
    (d) Date Payment Due.--The special assessment imposed under this 
section shall be--
            (1) due on the first business day of January 1996; and
            (2) paid to the Corporation on the later of--
                    (A) the first business day of January 1996; or
                    (B) such other date as the Corporation shall 
                prescribe, but not later than 60 days after the date of 
                enactment of this Act.
    (e) Assessment Deposited in SAIF.--Notwithstanding any other 
provisions of law, the proceeds of the special assessment imposed under 
this section shall be deposited in the Savings Association Insurance 
Fund.
    (f) Exemptions for Certain Institutions.--
            (1) Exemption for weak institutions.--The Board of 
        Directors may, by order, in its sole discretion, exempt any 
        insured depository institution that the Board of Directors 
        determines to be weak, from paying the special assessment 
        imposed under this section if the Board of Directors determines 
        that the exemption would reduce risk to the Savings Association 
        Insurance Fund.
            (2) Guidelines required.--Not later than 30 days after the 
        date of enactment of this Act, the Board of Directors shall 
        prescribe guidelines setting forth the criteria that the Board 
        of Directors will use in exempting institutions under paragraph 
        (1). Such guidelines shall be published in the Federal 
        Register.
            (3) Exemption for certain newly chartered and other defined 
        institutions.--
                    (A) In general.--In addition to the institutions 
                exempted from paying the special assessment under 
                paragraph (1), the Board of Directors shall exempt any 
                insured depository institution from payment of the 
                special assessment if the institution--
                            (i) was in existence on October 1, 1995, 
                        and held no SAIF-assessable deposits prior to 
                        January 1, 1993;
                            (ii) is a Federal savings bank which--
                                    (I) was established de novo in 
                                April 1994 in order to acquire the 
                                deposits of a savings association which 
                                was in default or in danger of default; 
                                and
                                    (II) received minority interim 
                                capital assistance from the Resolution 
                                Trust Corporation under section 21A(w) 
                                of the Federal Home Loan Bank Act in 
                                connection with the acquisition of any 
                                such savings association; or
                            (iii) is a savings association, the 
                        deposits of which are insured by the Savings 
                        Association Insurance Fund, which--
                                    (I) prior to January 1, 1987, was 
                                chartered as a Federal savings bank 
                                insured by the Federal Savings and Loan 
                                Insurance Corporation for the purpose 
                                of acquiring all or substantially all 
                                of the assets and assuming all or 
                                substantially all of the deposit 
                                liabilities of a national bank in a 
                                transaction consummated after July 1, 
                                1986; and
                                    (II) as of the date of that 
                                transaction, had assets of less than 
                                $150,000,000.
                    (B) Definition.--For purposes of this paragraph, an 
                institution shall be deemed to have held SAIF-
                assessable deposits prior to January 1, 1993, if--
                            (i) it directly held SAIF-assessable 
                        insured deposits prior to that date; or
                            (ii) it succeeded to, acquired, purchased, 
                        or otherwise holds any SAIF-assessable deposits 
                        as of the date of enactment of this Act that 
                        were SAIF-assessable deposits prior to January 
                        1, 1993.
            (4) Exempt institutions required to pay assessments at 
        former rates.--
                    (A) Payments to saif and dif.--Any insured 
                depository institution that the Board of Directors 
                exempts under this subsection from paying the special 
                assessment imposed under this section shall pay 
                semiannual assessments--
                            (i) during calendar years 1996 and 1997, 
                        into the Savings Association Insurance Fund, 
                        based on SAIF-assessable deposits of that 
                        institution, at assessment rates calculated 
                        under the schedule in effect for Savings 
                        Association Insurance Fund members on June 30, 
                        1995; and
                            (ii) during calendar years 1998 and 1999--
                                    (I) into the Deposit Insurance 
                                Fund, based on SAIF-assessable deposits 
                                of that institution as of December 31, 
                                1997, at assessment rates calculated 
                                under the schedule in effect for 
                                Savings Association Insurance Fund 
                                members on June 30, 1995; or
                                    (II) in accordance with clause (i), 
                                if the Bank Insurance Fund and the 
                                Savings Association Insurance Fund are 
                                not merged into the Deposit Insurance 
                                Fund.
                    (B) Optional pro rata payment of special 
                assessment.--This paragraph shall not apply with 
                respect to any insured depository institution (or 
                successor insured depository institution) that has 
                paid, during any calendar year from 1997 through 1999, 
                upon such terms as the Corporation may announce, an 
                amount equal to the product of--
                            (i) 12.5 percent of the special assessment 
                        that the institution would have been required 
                        to pay under subsection (a), if the Board of 
                        Directors had not exempted the institution; and
                            (ii) the number of full semiannual periods 
                        remaining between the date of the payment and 
                        December 31, 1999.
    (g) Special Election for Certain Institutions Facing Hardship as a 
Result of the Special Assessment.--
            (1) Election authorized.--If--
                    (A) an insured depository institution, or any 
                depository institution holding company which, directly 
                or indirectly, controls such institution, is subject to 
                terms or covenants in any debt obligation or preferred 
                stock outstanding on September 13, 1995; and
                    (B) the payment of the special assessment under 
                subsection (a) would pose a significant risk of causing 
                such depository institution or holding company to 
                default or violate any such term or covenant,
        the depository institution may elect, with the approval of the 
        Corporation, to pay such special assessment in accordance with 
        paragraphs (2) and (3) in lieu of paying such assessment in the 
        manner required under subsection (a).
            (2) 1st assessment.--An insured depository institution 
        which makes an election under paragraph (1) shall pay an 
        assessment of 50 percent of the amount of the special 
        assessment that would otherwise apply under subsection (a), by 
        the date on which such special assessment is otherwise due 
        under subsection (d).
            (3) 2d assessment.--An insured depository institution which 
        makes an election under paragraph (1) shall pay a 2d 
        assessment, by the date established by the Board of Directors 
        in accordance with paragraph (4), in an amount equal to the 
        product of 51 percent of the rate determined by the Board of 
        Directors under subsection (a) for determining the amount of 
        the special assessment and the SAIF-assessable deposits of the 
        institution on March 31, 1996, or such other date in calendar 
        year 1996 as the Board of Directors determines to be 
        appropriate.
            (4) Due date of 2d assessment.--The date established by the 
        Board of Directors for the payment of the assessment under 
        paragraph (3) by a depository institution shall be the earliest 
        practicable date which the Board of Directors determines to be 
        appropriate, which is at least 15 days after the date used by 
        the Board of Directors under paragraph (3).
            (5) Supplemental special assessment.--An insured depository 
        institution which makes an election under paragraph (1) shall 
        pay a supplemental special assessment, at the same time the 
        payment under paragraph (3) is made, in an amount equal to the 
        product of--
                    (A) 50 percent of the rate determined by the Board 
                of Directors under subsection (a) for determining the 
                amount of the special assessment; and
                    (B) 95 percent of the amount by which the SAIF-
                assessable deposits used by the Board of Directors for 
                determining the amount of the 1st assessment under 
                paragraph (2) exceeds, if any, the SAIF-assessable 
                deposits used by the Board for determining the amount 
                of the 2d assessment under paragraph (3).
    (h) Adjustment of Special Assessment for Certain Bank Insurance 
Fund Member Banks.--
            (1) In general.--For purposes of computing the special 
        assessment imposed under this section with respect to a Bank 
        Insurance Fund member bank, the amount of any deposits of any 
        insured depository institution which section 5(d)(3) of the 
        Federal Deposit Insurance Act treats as insured by the Savings 
        Association Insurance Fund shall be reduced by 20 percent--
                    (A) if the adjusted attributable deposit amount of 
                the Bank Insurance Fund member bank is less than 50 
                percent of the total domestic deposits of that member 
                bank as of June 30, 1995; or
                    (B) if, as of June 30, 1995, the Bank Insurance 
                Fund member--
                            (i) had an adjusted attributable deposit 
                        amount equal to less than 75 percent of the 
                        total assessable deposits of that member bank;
                            (ii) had total assessable deposits greater 
                        than $5,000,000,000; and
                            (iii) was owned or controlled by a bank 
                        holding company that owned or controlled 
                        insured depository institutions having an 
                        aggregate amount of deposits insured or treated 
                        as insured by the Bank Insurance Fund greater 
                        than the aggregate amount of deposits insured 
                        or treated as insured by the Savings 
                        Association Insurance Fund.
            (2) Adjusted attributable deposit amount.--For purposes of 
        this subsection, the ``adjusted attributable deposit amount; 
        shall be determined in accordance with section 5(d)(3)(C) of 
        the Federal Deposit Insurance Act.
    (i) Adjustment to the Adjusted Attributable Deposit Amount for 
Certain Bank Insurance Fund Member Banks.--Section 5(d)(3) of the 
Federal Deposit Insurance Act (12 U.S.C. 1815(d)(3)) is amended--
            (1) in subparagraph (C), by striking ``The adjusted 
        attributable deposit amount'' and inserting ``Except as 
        provided in subparagraph (K), the adjusted attributable deposit 
        amount''; and
            (2) by adding at the end the following new subparagraph:
                    ``(K) Adjustment of adjusted attributable deposit 
                amount.--The amount determined under subparagraph 
                (C)(i) for deposits acquired by March 31, 1995, shall 
                be reduced by 20 percent for purposes of computing the 
                adjusted attributable deposit amount for the payment of 
                any assessment for any semiannual period after December 
                31, 1995 (other than the special assessment imposed 
                under section 2011(a) of the Balanced Budget Act of 
                1995), for a Bank Insurance Fund member bank that, as 
                of June 30, 1995--
                            ``(i) had an adjusted attributable deposit 
                        amount that was less than 50 percent of the 
                        total deposits of that member bank; or
                            ``(ii)(I) had an adjusted attributable 
                        deposit amount equal to less than 75 percent of 
                        the total assessable deposits of that member 
                        bank;
                            ``(II) had total assessable deposits 
                        greater than $5,000,000,000; and
                            ``(III) was owned or controlled by a bank 
                        holding company that owned or controlled 
                        insured depository institutions having an 
                        aggregate amount of deposits insured or treated 
                        as insured by the Bank Insurance Fund greater 
                        than the aggregate amount of deposits insured 
                        or treated as insured by the Savings 
                        Association Insurance Fund.''.
    (j) Adjustment of Special Assessment for Certain Savings 
Associations.--
            (1) Special assessment reduction.--For purposes of 
        computing the special assessment imposed under this section, in 
        the case of any converted association, the amount of any 
        deposits of such association which were insured by the Savings 
        Association Insurance Fund as of March 31, 1995, shall be 
        reduced by 20 percent.
            (2) Converted association.--For purposes of this 
        subsection, the term ``converted association'' means--
                    (A) any Federal savings association--
                            (i) that is a member of the Savings 
                        Association Insurance Fund and that has 
                        deposits subject to assessment by that fund 
                        which did not exceed $4,000,000,000, as of 
                        March 31, 1995; and
                            (ii) that had been, or is a successor by 
                        merger, acquisition, or otherwise to an 
                        institution that had been, a State savings 
                        bank, the deposits of which were insured by the 
                        Federal Deposit Insurance Corporation prior to 
                        August 9, 1989, that converted to a Federal 
                        savings association pursuant to section 5(i) of 
                        the Home Owners Loan Act prior to January 1, 
                        1985;
                    (B) a State depository institution that is a member 
                of the Savings Association Insurance Fund that had been 
                a State savings bank prior to October 15, 1982, and was 
                a Federal savings association on August 9, 1989;
                    (C) an insured bank that--
                            (i) was established de novo in order to 
                        acquire the deposits of a savings association 
                        in default or in danger of default;
                            (ii) did not open for business before 
                        acquiring the deposits of such savings 
                        association; and
                            (iii) was a Savings Association Insurance 
                        Fund member as of the date of enactment of this 
                        Act; and
                    (D) an insured bank that--
                            (i) resulted from a savings association 
                        before December 19, 1991, in accordance with 
                        section 5(d)(2)(G) of the Federal Deposit 
                        Insurance Act; and
                            (ii) had an increase in its capital in 
                        conjunction with the conversion in an amount 
                        equal to more than 75 percent of the capital of 
                        the institution on the day before the date of 
                        the conversion.

SEC. 2012. FINANCING CORPORATION ASSESSMENTS SHARED PROPORTIONALLY BY 
              ALL INSURED DEPOSITORY INSTITUTIONS.

    (a) In General.--Section 21 of the Federal Home Loan Bank Act (12 
U.S.C. 1441) is amended--
            (1) in subsection (f)(2)--
                    (A) in the matter immediately preceding 
                subparagraph (A)--
                            (i) by striking ``Savings Association 
                        Insurance Fund member'' and inserting ``insured 
                        depository institution''; and
                            (ii) by striking ``members'' and inserting 
                        ``institutions''; and
                    (B) by striking ``, except that--'' and all that 
                follows through the end of the paragraph and inserting 
                ``, except that--
                    ``(A) the Financing Corporation shall have first 
                priority to make the assessment; and
                    ``(B) no limitation under clause (i) or (iii) of 
                section 7(b)(2)(A) of the Federal Deposit Insurance Act 
                shall apply for purposes of this paragraph.''; and
            (2) in subsection (k)--
                    (A) by striking ``section--'' and inserting 
                ``section, the following definitions shall apply:'';
                    (B) by striking paragraph (1);
                    (C) by redesignating paragraphs (2) and (3) as 
                paragraphs (1) and (2), respectively; and
                    (D) by adding at the end the following new 
                paragraph:
            ``(3) Insured depository institution.--The term `insured 
        depository institution' has the same meaning as in section 3 of 
        the Federal Deposit Insurance Act.''.
    (b) Conforming Amendment.--Section 7(b)(2) of the Federal Deposit 
Insurance Act (12 U.S.C. 1817(b)(2)) is amended by striking 
subparagraph (D).
    (c) Effective Date.--This section and the amendments made by this 
section shall become effective on January 1, 1996.

SEC. 2013. MERGER OF BIF AND SAIF.

    (a) In General.--
            (1) Merger.--The Bank Insurance Fund and the Savings 
        Association Insurance Fund shall be merged into the Deposit 
        Insurance Fund established by section 11(a)(4) of the Federal 
        Deposit Insurance Act, as amended by this section.
            (2) Disposition of assets and liabilities.--All assets and 
        liabilities of the Bank Insurance Fund and the Savings 
        Association Insurance Fund shall be transferred to the Deposit 
        Insurance Fund.
            (3) No separate existence.--The separate existence of the 
        Bank Insurance Fund and the Savings Association Insurance Fund 
        shall cease.
    (b) Special Reserve of the Deposit Insurance Fund.--
            (1) In general.--Immediately before the merger of the Bank 
        Insurance Fund and the Savings Association Insurance Fund, if 
        the reserve ratio of the Savings Association Insurance Fund 
        exceeds the designated reserve ratio, the amount by which that 
        reserve ratio exceeds the designated reserve ratio shall be 
        placed in the Special Reserve of the Deposit Insurance Fund, 
        established under section 11(a)(5) of the Federal Deposit 
        Insurance Act, as amended by this section.
            (2) Definition.--For purposes of this subsection, the term 
        ``reserve ratio'' means the ratio of the net worth of the 
        Savings Association Insurance Fund to aggregate estimated 
        insured deposits held in all Savings Association Insurance Fund 
        members.
    (c) Effective Date.--This section and the amendments made by this 
section shall become effective on January 1, 1998, if no insured 
depository institution is a savings association on that date.
    (d) Technical and Conforming Amendments.--
            (1) Deposit insurance fund.--Section 11(a)(4) of the 
        Federal Deposit Insurance Act (12 U.S.C. 1821(a)(4)) is 
        amended--
                    (A) by redesignating subparagraph (B) as 
                subparagraph (C);
                    (B) by striking subparagraph (A) and inserting the 
                following:
                    ``(A) Establishment.--There is established the 
                Deposit Insurance Fund, which the Corporation shall--
                            ``(i) maintain and administer;
                            ``(ii) use to carry out its insurance 
                        purposes in the manner provided by this 
                        subsection; and
                            ``(iii) invest in accordance with section 
                        13(a).
                    ``(B) Uses.--The Deposit Insurance Fund shall be 
                available to the Corporation for use with respect to 
                Deposit Insurance Fund members.''; and
                    (C) by striking ``(4) General provisions relating 
                to funds.--'' and inserting the following:
            ``(4) Establishment of the deposit insurance fund.--''.
            (2) Other references.--Section 11(a)(4)(C) of the Federal 
        Deposit Insurance Act (12 U.S.C. 1821(a)(4)(C), as redesignated 
        by paragraph (1) of this subsection) is amended by striking 
        ``Bank Insurance Fund and the Savings Association Insurance 
        Fund'' and inserting ``Deposit Insurance Fund''.
            (3) Deposits into fund.--Section 11(a)(4) of the Federal 
        Deposit Insurance Act (12 U.S.C. 1821(a)(4)) is amended by 
        adding at the end the following new subparagraph:
                    ``(D) Deposits.--All amounts assessed against 
                insured depository institutions by the Corporation 
                shall be deposited in the Deposit Insurance Fund.''
            (4) Special reserve of deposits.--Section 11(a)(5) of the 
        Federal Deposit Insurance Act (12 U.S.C. 1821(a)(5)) is amended 
        to read as follows:
            ``(5) Special reserve of deposit insurance fund.--
                    ``(A) Establishment.--
                            ``(i) In general.--There is established a 
                        Special Reserve of the Deposit Insurance Fund, 
                        which shall be administered by the Corporation 
                        and shall be invested in accordance with 
                        section 13(a).
                            ``(ii) Limitation.--The Corporation shall 
                        not provide any assessment credit, refund, or 
                        other payment from any amount in the Special 
                        Reserve.
                    ``(B) Emergency use of special reserve.--
                Notwithstanding subparagraph (A)(ii), the Corporation 
                may, in its sole discretion, transfer amounts from the 
                Special Reserve to the Deposit Insurance Fund, for the 
                purposes set forth in paragraph (4), only if--
                            ``(i) the reserve ratio of the Deposit 
                        Insurance Fund is less than 50 percent of the 
                        designated reserve ratio; and
                            ``(ii) the Corporation expects the reserve 
                        ratio of the Deposit Insurance Fund to remain 
                        at less than 50 percent of the designated 
                        reserve ratio for each of the next 4 calendar 
                        quarters.
                    ``(C) Exclusion of special reserve in calculating 
                reserve ratio.--Notwithstanding any other provision of 
                law, any amounts in the Special Reserve shall be 
                excluded in calculating the reserve ratio of the 
                Deposit Insurance Fund under section 7.''.
            (5) Federal home loan bank act.--Section 21B(f)(2)(C)(ii) 
        of the Federal Home Loan Bank Act (12 U.S.C. 
        1441b(f)(2)(C)(ii)) is amended--
                    (A) in subclause (I), by striking ``to Savings 
                Associations Insurance Fund members'' and inserting 
                ``to insured depository institutions, and their 
                successors, which were Savings Association Insurance 
                Fund members on September 1, 1995''; and
                    (B) in subclause (II), by striking ``to Savings 
                Associations Insurance Fund members'' and inserting 
                ``to insured depository institutions, and their 
                successors, which were Savings Association Insurance 
                Fund members on September 1, 1995''.
            (6) Repeals.--
                    (A) Section 3.--Section 3(y) of the Federal Deposit 
                Insurance Act (12 U.S.C. 1813(y)) is amended to read as 
                follows:
    ``(y) Definitions Relating to the Deposit Insurance Fund.--The 
term--
            ``(1) Deposit insurance fund.--The term `Deposit Insurance 
        Fund' means the fund established under section 11(a)(4).
            ``(2) Reserve ratio.--The term `reserve ratio' means the 
        ratio of the net worth of the Deposit Insurance Fund to 
        aggregate estimated insured deposits held in all insured 
        depository institutions.
            ``(3) Designated reserve ratio.--The designated reserve 
        ratio of the Deposit Insurance Fund for each year shall be--
                    ``(A) 1.25 percent of estimated insured deposits; 
                or
                    ``(B) a higher percentage of estimated insured 
                deposits that the Board of Directors determines to be 
                justified for that year by circumstances raising a 
                significant risk of substantial future losses to the 
                fund.''.
                    (B) Section 7.--Section 7 of the Federal Deposit 
                Insurance Act (12 U.S.C. 1817) is amended--
                            (i) by striking subsection (l);
                            (ii) by redesignating subsections (m) and 
                        (n) as subsections (l) and (m), respectively; 
                        and
                            (iii) in subsection (b)(2), by striking 
                        subparagraphs (B) and (F), and by redesignating 
                        subparagraphs (C), (E), (G), and (H) as 
                        subparagraphs (B) through (E), respectively.
                    (C) Section 11.--Section 11(a) of the Federal 
                Deposit Insurance Act (12 U.S.C. 1821(a)) is amended--
                            (i) by striking paragraphs (6) and (7); and
                            (ii) by redesignating paragraph (8) as 
                        paragraph (6).
            (7) Section 5136 of the revised statutes.--Paragraph 
        Eleventh of section 5136 of the Revised Statutes (12 U.S.C. 24) 
        is amended in the fifth sentence, by striking ``affected 
        deposit insurance fund'' and inserting ``Deposit Insurance 
        Fund''.
            (8) Investments promoting public welfare; limitations on 
        aggregate investments.--The 23d undesignated paragraph of 
        section 9 of the Federal Reserve Act (12 U.S.C. 338a) is 
        amended in the fourth sentence, by striking ``affected deposit 
        insurance fund'' and inserting ``Deposit Insurance Fund''.
            (9) Advances to critically undercapitalized depository 
        institutions.--Section 10B(b)(3)(A)(ii) of the Federal Reserve 
        Act (12 U.S.C. 347b(b)(3)(A)(ii)) is amended by striking ``any 
        deposit insurance fund in'' and inserting ``the Deposit 
        Insurance Fund of''.
            (10) Amendments to the balanced budget and emergency 
        deficit control act of 1985.--Section 255(g)(1)(A) of the 
        Balanced Budget and Emergency Deficit Control Act of 1985 (2 
        U.S.C. 905(g)(1)(A)) is amended--
                    (A) by striking ``Bank Insurance Fund'' and 
                inserting ``Deposit Insurance Fund''; and
                    (B) by striking ``Federal Deposit Insurance 
                Corporation, Savings Association Insurance Fund;''.
            (11) Further amendments to the federal home loan bank 
        act.--The Federal Home Loan Bank Act (12 U.S.C. 1421 et seq.) 
        is amended--
                    (A) in section 11(k) (12 U.S.C. 1431(k))--
                            (i) in the subsection heading, by striking, 
                        ``SAIF'' and inserting ``the Deposit Insurance 
                        Fund''; and
                            (ii) by striking ``Savings Association 
                        Insurance Fund'' each place such term appears 
                        and inserting ``Deposit Insurance Fund'';
                    (B) in section 21A(b)(4)(B) (12 U.S.C. 
                1441a(b)(4)(B)), by striking ``affected deposit 
                insurance fund'' and inserting ``Deposit Insurance 
                Fund'';
                    (C) in section 21A(b)(6)(B) (12 U.S.C. 
                1441a(b)(6)(B))--
                            (i) in the subparagraph heading, by 
                        striking ``SAIF-insured banks'' and inserting 
                        ``Charter conversions''; and
                            (ii) by striking ``Savings Association 
                        Insurance Fund member'' and inserting ``savings 
                        association'';
                    (D) in section 21A(b)(10)(A)(iv)(II) (12 U.S.C. 
                1441a(b)(10)(A)(iv)(II)), by striking ``Savings 
                Association Insurance Fund'' and inserting ``Deposit 
                Insurance Fund'';
                    (E) in section 21B(e) (12 U.S.C. 1441b(e))--
                            (i) in paragraph (5), by inserting ``as of 
                        the date of funding'' after ``Savings 
                        Association Insurance Fund members'' each place 
                        such term appears;
                            (ii) by striking paragraph (7); and
                            (iii) by redesignating paragraph (8) as 
                        paragraph (7); and
                    (F) in section 21B(k) (12 U.S.C. 1441b(k))--
                            (i) by striking paragraph (8); and
                            (ii) by redesignating paragraphs (9) and 
                        (10) as paragraphs (8) and (9), respectively.
            (12) Amendments to the home owners' loan act.--The Home 
        Owners' Loan Act (12 U.S.C. 1461 et seq.) is amended--
                    (A) in section 5 (12 U.S.C. 1464)--
                            (i) in subsection (c)(5)(A), by striking 
                        ``that is a member of the Bank Insurance 
                        Fund'';
                            (ii) in subsection (c)(6), by striking ``As 
                        used in this subsection--'' and inserting ``For 
                        purposes of this subsection, the following 
                        definitions shall apply:'';
                            (iii) in subsection (o)(1), by striking 
                        ``that is a Bank Insurance Fund member'';
                            (iv) in subsection (o)(2)(A), by striking 
                        ``a Bank Insurance Fund member until such time 
                        as it changes its status to a Savings 
                        Association Insurance Fund member'' and 
                        inserting ``insured by the Deposit Insurance 
                        Fund'';
                            (v) in subsection (t)(5)(D)(iii)(II), by 
                        striking ``affected deposit insurance fund'' 
                        and inserting ``Deposit Insurance Fund'';
                            (vi) in subsection (t)(7)(C)(i)(I), by 
                        striking ``affected deposit insurance fund'' 
                        and inserting ``Deposit Insurance Fund''; and
                            (vii) in subsection (v)(2)(A)(i), by 
                        striking ``, the Savings Association Insurance 
                        Fund'' and inserting ``or the Deposit Insurance 
                        Fund''; and
                    (B) in section 10 (12 U.S.C. 1467a)--
                            (i) in subsection (e)(1)(A)(iii)(VII), by 
                        adding ``or'' at the end;
                            (ii) in subsection (e)(1)(A)(iv), by adding 
                        ``and'' at the end;
                            (iii) in subsection (e)(1)(B), by striking 
                        ``Savings Association Insurance Fund or Bank 
                        Insurance Fund'' and inserting ``Deposit 
                        Insurance Fund'';
                            (iv) in subsection (e)(2), by striking 
                        ``Savings Association Insurance Fund or the 
                        Bank Insurance Fund'' and inserting ``Deposit 
                        Insurance Fund''; and
                            (v) in subsection (m)(3), by striking 
                        subparagraph (E), and by redesignating 
                        subparagraphs (F), (G), and (H) as 
                        subparagraphs (E), (F), and (G), respectively.
            (13) Amendments to the national housing act.--The National 
        Housing Act (12 U.S.C. 1701 et seq.) is amended--
                    (A) in section 317(b)(1)(B) (12 U.S.C. 
                1723i(b)(1)(B)), by striking ``Bank Insurance Fund for 
                banks or through the Savings Association Insurance Fund 
                for savings associations'' and inserting ``Deposit 
                Insurance Fund''; and
                    (B) in section 526(b)(1)(B)(ii) (12 U.S.C. 1735f-
                14(b)(1)(B)(ii)), by striking ``Bank Insurance Fund for 
                banks and through the Savings Association Insurance 
                Fund for savings associations'' and inserting ``Deposit 
                Insurance Fund''.
            (14) Further amendments to the federal deposit insurance 
        act.--The Federal Deposit Insurance Act (12 U.S.C. 1811 et 
        seq.) is amended--
                    (A) in section 3(a)(1) (12 U.S.C. 1813(a)(1)), by 
                striking subparagraph (B) and inserting the following:
                    ``(B) includes any former savings association.'';
                    (B) in section 5(b)(5) (12 U.S.C. 1815(b)(5)), by 
                striking ``the Bank Insurance Fund or the Savings 
                Association Insurance Fund;'' and inserting ``Deposit 
                Insurance Fund,'';
                    (C) in section 5(d) (12 U.S.C. 1815(d)), by 
                striking paragraphs (2) and (3);
                    (D) in section 5(d)(1) (12 U.S.C. 1815(d)(1))--
                            (i) in subparagraph (A), by striking 
                        ``reserve ratios in the Bank Insurance Fund and 
                        the Savings Association Insurance Fund'' and 
                        inserting ``the reserve ratio of the Deposit 
                        Insurance Fund'';
                            (ii) by striking subparagraph (B) and 
                        inserting the following:
            ``(2) Fee credited to the deposit insurance fund.--The fee 
        paid by the depository institution under paragraph (1) shall be 
        credited to the Deposit Insurance Fund.'';
                            (iii) by striking ``(1) Uninsured 
                        institutions.--''; and
                            (iv) by redesignating subparagraphs (A) and 
                        (C) as paragraphs (1) and (3), respectively, 
                        and moving the margins 2 ems to the left;
                    (E) in section 5(e) (12 U.S.C. 1815(e))--
                            (i) in paragraph (5)(A), by striking ``Bank 
                        Insurance Fund or the Savings Association 
                        Insurance Fund'' and inserting ``Deposit 
                        Insurance Fund'';
                            (ii) by striking paragraph (6); and
                            (iii) by redesignating paragraphs (7), (8), 
                        and (9) as paragraphs (6), (7), and (8), 
                        respectively;
                    (F) in section 6(5) (12 U.S.C. 1816(5)), by 
                striking ``Bank Insurance Fund or the Savings 
                Association Insurance Fund'' and inserting ``Deposit 
                Insurance Fund'';
                    (G) in section 7(b) (12 U.S.C. 1817(b))--
                            (i) in paragraph (1)(D), by striking ``each 
                        deposit insurance fund'' and inserting ``the 
                        Deposit Insurance Fund'';
                            (ii) in clauses (i)(I) and (iv) of 
                        paragraph (2)(A), by striking ``each deposit 
                        insurance fund'' each place such term appears 
                        and inserting ``the Deposit Insurance Fund'';
                            (iii) in paragraph (2)(A)(iii), by striking 
                        ``a deposit insurance fund'' and inserting 
                        ``the Deposit Insurance Fund'';
                            (iv) by striking clause (iv) of paragraph 
                        (2)(A);
                            (v) in paragraph (2)(C) (as redesignated by 
                        paragraph (6)(B) of this subsection)--
                                    (I) by striking ``any deposit 
                                insurance fund'' and inserting ``the 
                                Deposit Insurance Fund''; and
                                    (II) by striking ``that fund'' each 
                                place such term appears and inserting 
                                ``the Deposit Insurance Fund'';
                            (vi) in paragraph (2)(D) (as redesignated 
                        by paragraph (6)(B) of this subsection)--
                                    (I) in the subparagraph heading, by 
                                striking ``funds achieve'' and 
                                inserting ``fund achieves''; and
                                    (II) by striking ``a deposit 
                                insurance fund'' and inserting ``the 
                                Deposit Insurance Fund'';
                            (vii) in paragraph (3)--
                                    (I) in the paragraph heading, by 
                                striking ``funds'' and inserting 
                                ``fund'';
                                    (II) by striking ``that fund'' each 
                                place such term appears and inserting 
                                the ``the Deposit Insurance Fund'';
                                    (III) in subparagraph (A), by 
                                striking ``Except as provided in 
                                paragraph (2)(F), if'' and inserting 
                                ``If'';
                                    (IV) in subparagraph (A) by 
                                striking ``any deposit insurance fund'' 
                                and inserting ``the Deposit Insurance 
                                Fund''; and
                                    (V) by striking subparagraphs (C) 
                                and (D) and inserting the following:
                    ``(C) Amending schedule.--The Corporation may, by 
                regulation, amend a schedule promulgated under 
                subparagraph (B).''; and
                            (viii) in paragraph (6)--
                                    (I) by striking ``any such 
                                assessment'' and inserting ``any such 
                                assessment is necessary'';
                                    (II) by striking ``(A) is 
                                necessary--'';
                                    (III) by striking subparagraph (B);
                                    (IV) by redesignating clauses (i), 
                                (ii), and (iii) as subparagraphs (A), 
                                (B), and (C), respectively, and moving 
                                the margin 2 ems to the left; and
                                    (V) in subparagraph (C) (as 
                                redesignated), by striking ``; and'' 
                                and inserting a period;
                    (H) in section 11(f)(1) (12 U.S.C. 1821(f)(1)), by 
                striking ``, except that--'' and all that follows 
                through the end of the paragraph and inserting a 
                period;
                    (I) in section 11(i)(3) (12 U.S.C. 1821(i)(3))--
                            (i) by striking subparagraph (B);
                            (ii) by redesignating subparagraph (C) as 
                        subparagraph (B); and
                            (iii) in subparagraph (B) (as 
                        redesignated), by striking ``subparagraphs (A) 
                        and (B)'' and inserting ``subparagraph (A)'';
                    (J) in section 11A(a) (12 U.S.C. 1821a(a))--
                            (i) in paragraph (2), by striking 
                        ``liabilities.--'' and all that follows through 
                        ``Except'' and inserting ``liabilities.--
                        Except'';
                            (ii) by striking paragraph (2)(B); and
                            (iii) in paragraph (3), by striking ``the 
                        Bank Insurance Fund, the Savings Association 
                        Insurance Fund,'' and inserting ``the Deposit 
                        Insurance Fund,'';
                    (K) in section 11A(b) (12 U.S.C. 1821a(b)), by 
                striking paragraph (4);
                    (L) in section 11a(f) (12 U.S.C. 1821a(f)), by 
                striking ``Savings Association Insurance Fund'' and 
                inserting ``Deposit Insurance Fund'';
                    (M) in section 13 (12 U.S.C. 1823)--
                            (i) in subsection (a)(1), by striking 
                        ``Bank Insurance Fund, the Savings Association 
                        Insurance Fund,'' and inserting ``Deposit 
                        Insurance Fund, the Special Reserve of the 
                        Deposit Insurance Fund,'';
                            (ii) in subsection (c)(4)(E)--
                                    (I) in the subparagraph heading, by 
                                striking ``funds'' and inserting 
                                ``fund''; and
                                    (II) in clause (i), by striking 
                                ``any insurance fund'' and inserting 
                                ``the Deposit Insurance Fund'';
                            (iii) in subsection (c)(4)(G)(ii)--
                                    (I) by striking ``appropriate 
                                insurance fund'' and inserting 
                                ``Deposit Insurance Fund'';
                                    (II) by striking ``the members of 
                                the insurance fund (of which such 
                                institution is a member)'' and 
                                inserting ``insured depository 
                                institutions'';
                                    (III) by striking ``each member's'' 
                                and inserting ``each insured depository 
                                institution's''; and
                                    (IV) by striking ``the member's'' 
                                each place such term appears and 
                                inserting ``the institution's'';
                            (iv) in subsection (c), by striking 
                        paragraph (11);
                            (v) in subsection (h), by striking ``Bank 
                        Insurance Fund'' and inserting ``Deposit 
                        Insurance Fund'';
                            (vi) in subsection (K)(4)(B)(i), by 
                        striking ``Savings Association Insurance Fund'' 
                        and inserting ``Deposit Insurance Fund''; and
                            (vii) in subsection (k)(5)(A), by striking 
                        ``Savings Association Insurance Fund'' and 
                        inserting ``Deposit Insurance Fund'';
                    (N) in section 14(a) (12 U.S.C. 1824(a)) in the 
                fifth sentence--
                            (i) by striking ``Bank Insurance Fund or 
                        the Savings Association Insurance Fund'' and 
                        inserting ``Deposit Insurance Fund''; and
                            (ii) by striking ``each such fund'' and 
                        inserting ``the Deposit Insurance Fund'';
                    (O) in section 14(b) (12 U.S.C. 1824(b)), by 
                striking ``Bank Insurance Fund or Savings Association 
                Insurance Fund'' and inserting ``Deposit Insurance 
                Fund'';
                    (P) in section 14(c) (12 U.S.C. 1824(c)), by 
                striking paragraph (3);
                    (Q) in section 14(d) (12 U.S.C. 1824(d))--
                            (i) by striking ``BIF'' each place such 
                        term appears and inserting ``DIF''; and
                            (ii) by striking ``Bank Insurance Fund'' 
                        each place such term appears and inserting 
                        ``Deposit Insurance Fund'';
                    (R) in section 15(c)(5) (12 U.S.C. 1825(c)(5))--
                            (i) by striking ``the Bank Insurance Fund 
                        or Savings Association Insurance Fund, 
                        respectively'' each place such term appears and 
                        inserting ``the Deposit Insurance Fund''; and
                            (ii) in subparagraph (B), by striking ``the 
                        Bank Insurance Fund or the Savings Association 
                        Insurance Fund, respectively'' and inserting 
                        ``the Deposit Insurance Fund'';
                    (S) in section 17(a) (12 U.S.C. 1827(a))--
                            (i) in the subsection heading, by striking 
                        ``BIF, SAIF,'' and inserting ``the Deposit 
                        Insurance Fund''; and
                            (ii) in paragraph (1), by striking ``the 
                        Bank Insurance Fund, the Savings Association 
                        Insurance Fund'' each place such term appears 
                        and inserting ``the Deposit Insurance Fund'';
                    (T) in section 17(d) (12 U.S.C. 1827(d)), by 
                striking ``the Bank Insurance Fund, the Savings 
                Association Insurance Fund,'' each place such term 
                appears and inserting ``the Deposit Insurance Fund'';
                    (U) in section 18(m)(3) (12 U.S.C. 1828(m)(3))--
                            (i) by striking ``Savings Association 
                        Insurance Fund'' each place such term appears 
                        and inserting ``Deposit Insurance Fund''; and
                            (ii) in subparagraph (C), by striking ``or 
                        the Bank Insurance Fund'';
                    (V) in section 18(p) (12 U.S.C. 1828(p)), by 
                striking ``deposit insurance funds'' and inserting 
                ``Deposit Insurance Fund'';
                    (W) in section 24 (12 U.S.C. 1831a) in subsections 
                (a)(1) and (d)(1)(A), by striking ``appropriate deposit 
                insurance fund'' each place such term appears and 
                inserting ``Deposit Insurance Fund'';
                    (X) in section 28 (12 U.S.C. 1831e), by striking 
                ``affected deposit insurance fund'' each place such 
                term appears and inserting ``Deposit Insurance Fund'';
                    (Y) by striking section 31 (12 U.S.C. 1831h);
                    (Z) in section 36(i)(3) (12 U.S.C. 1831m(i)(3)) by 
                striking ``affected deposit insurance fund'' and 
                inserting ``Deposit Insurance Fund'';
                    (AA) in section 38(a) (12 U.S.C. 1831o(a)) in the 
                subsection heading, by striking ``Funds'' and inserting 
                ``Fund'';
                    (BB) in section 38(k) (12 U.S.C. 1831o(k))--
                            (i) in paragraph (1), by striking ``a 
                        deposit insurance fund'' and inserting ``the 
                        Deposit Insurance Fund''; and
                            (ii) in paragraph (2)(A)--
                                    (I) by striking ``A deposit 
                                insurance fund'' and inserting ``The 
                                Deposit Insurance Fund''; and
                                    (II) by striking ``the deposit 
                                insurance fund's outlays'' and 
                                inserting ``the outlays of the Deposit 
                                Insurance Fund''; and
                    (CC) in section 38(o) (12 U.S.C. 1831o(o))--
                            (i) by striking ``Associations.--'' and all 
                        that follows through ``Subsections (e)(2)'' and 
                        inserting ``Associations.--Subsections 
                        (e)(2)'';
                            (ii) by redesignating subparagraphs (A), 
                        (B), and (C) as paragraphs (1), (2), and (3), 
                        respectively, and moving the margins 2 ems to 
                        the left; and
                            (iii) in paragraph (1) (as redesignated), 
                        by redesignating clauses (i) and (ii) as 
                        subparagraphs (A) and (B), respectively, and 
                        moving the margins 2 ems to the left.
            (15) Amendments to the financial institutions reform, 
        recovery, and enforcement act of 1989.--The Financial 
        Institutions Reform, Recovery, and Enforcement Act (Public Law 
        101-73; 103 Stat. 183) is amended--
                    (A) in section 951(b)(3)(B) (12 U.S.C. 
                1833a(b)(3)(B)), by striking ``Bank Insurance Fund, the 
                Savings Association Insurance Fund,'' and inserting 
                ``Deposit Insurance Fund''; and
                    (B) in section 1112(c)(1)(B) (12 U.S.C. 
                3341(c)(1)(B)), by striking ``Bank Insurance Fund, the 
                Savings Association Insurance Fund,'' and inserting 
                ``Deposit Insurance Fund''.
            (16) Amendment to the bank enterprise act of 1991.--Section 
        232(a)(1) of the Bank Enterprise Act of 1991 (12 U.S.C. 
        1834(a)(1)) is amended by striking ``section 7(b)(2)(H)'' and 
        inserting ``section 7(b)(2)(G)''.
            (17) Amendment to the bank holding company act.--Section 
        2(j)(2) of the Bank Holding Company Act of 1956 (12 U.S.C. 
        1841(j)(2)) is amended by striking ``Savings Association 
        Insurance Fund'' and inserting ``Deposit Insurance Fund''.

SEC. 2014. CREATION OF SAIF SPECIAL RESERVE.

    Section 11(a)(6) of the Federal Deposit Insurance Act (12 U.S.C. 
1821(a)(6)) is amended by adding at the end the following new 
subparagraph:
                    ``(L) Establishment of saif special reserve.--
                            ``(i) Establishment.--If, on January 1, 
                        1998, the reserve ratio of the Savings 
                        Association Insurance Fund exceeds the 
                        designated reserve ratio, there is established 
                        a Special Reserve of the Savings Association 
                        Insurance Fund, which shall be administered by 
                        the Corporation and shall be invested in 
                        accordance with section 13(a).
                            ``(ii) Amounts in special reserve.--If, on 
                        January 1, 1998, the reserve ratio of the 
                        Savings Association Insurance Fund exceeds the 
                        designated reserve ratio, the amount by which 
                        the reserve ratio exceeds the designated 
                        reserve ratio shall be placed in the Special 
                        Reserve of the Savings Association Insurance 
                        Fund established by clause (i).
                            ``(iii) Limitation.--The Corporation shall 
                        not provide any assessment credit, refund, or 
                        other payment from any amount in the Special 
                        Reserve of the Savings Association Insurance 
                        Fund.
                            ``(iv) Emergency use of special reserve.--
                        Notwithstanding clause (iii), the Corporation 
                        may, in its sole discretion, transfer amounts 
                        from the Special Reserve of the Savings 
                        Association Insurance Fund to the Savings 
                        Association Insurance Fund for the purposes set 
                        forth in paragraph (4), only if--
                                    ``(I) the reserve ratio of the 
                                Savings Association Insurance Fund is 
                                less than 50 percent of the designated 
                                reserve ratio; and
                                    ``(II) the Corporation expects the 
                                reserve ratio of the Savings 
                                Association Insurance Fund to remain at 
                                less than 50 percent of the designated 
                                reserve ratio for each of the next 4 
                                calendar quarters.
                            ``(v) Exclusion of special reserve in 
                        calculating reserve ratio.--Notwithstanding any 
                        other provision of law, any amounts in the 
                        Special Reserve of the Savings Association 
                        Insurance Fund shall be excluded in calculating 
                        the reserve ratio of the Savings Association 
                        Insurance Fund.''.

SEC. 2015. REFUND OF AMOUNTS IN DEPOSIT INSURANCE FUND IN EXCESS OF 
              DESIGNATED RESERVE AMOUNT.

    Subsection (e) of section 7 of the Federal Deposit Insurance Act 
(12 U.S.C. 1817(e)) is amended to read as follows:
    ``(e) Refunds.--
            ``(1) Overpayments.--In the case of any payment of an 
        assessment by an insured depository institution in excess of 
        the amount due to the Corporation, the Corporation may--
                    ``(A) refund the amount of the excess payment to 
                the insured depository institution; or
                    ``(B) credit such excess amount toward the payment 
                of subsequent semiannual assessments until such credit 
                is exhausted.
            ``(2) Balance in insurance fund in excess of designated 
        reserve.--
                    ``(A) In general.--Subject to subparagraphs (B) and 
                (C), if, as of the end of any semiannual assessment 
                period, the amount of the actual reserves in--
                            ``(i) the Bank Insurance Fund (until the 
                        merger of such fund into the Deposit Insurance 
                        Fund pursuant to section 2013 of the Balanced 
                        Budget Act of 1995); or
                            ``(ii) the Deposit Insurance Fund (after 
                        the establishment of such fund),
                exceeds the balance required to meet the designated 
                reserve ratio applicable with respect to such fund, 
                such excess amount shall be refunded to insured 
                depository institutions by the Corporation on such 
                basis as the Board of Directors determines to be 
                appropriate, taking into account the factors considered 
                under the risk-based assessment system.
                    ``(B) Refund not to exceed previous semiannual 
                assessment.--The amount of any refund under this 
                paragraph to any member of a deposit insurance fund for 
                any semiannual assessment period may not exceed the 
                total amount of assessments paid by such member to the 
                insurance fund with respect to such period.
                    ``(C) Refund limitation for certain institutions.--
                No refund may be made under this paragraph with respect 
                to the amount of any assessment paid for any semiannual 
                assessment period by any insured depository 
                institutions described in clause (v) of subsection 
                (b)(2)(A).''.

SEC. 2016. ASSESSMENT RATES FOR SAIF MEMBERS MAY NOT BE LESS THAN 
              ASSESSMENT RATES FOR BIF MEMBERS.

    Section 7(b)(2)(C) of the Federal Deposit Insurance Act (12 U.S.C. 
1817)(2)(E), as redesignated by section 2013(d)(6) of this Act) is 
amended--
            (1) by striking ``and'' at the end of clause (i);
            (2) by striking the period at the end of clause (ii) and 
        inserting ``; and''; and
            (3) by adding at the end of the following new clause:
                            ``(iii) notwithstanding any other provision 
                        of this subsection, during the period beginning 
                        on the date of enactment of the Balanced Budget 
                        Act of 1995, and ending on January 1, 1998, the 
                        assessment rate for a Savings Association 
                        Insurance Fund member may not be less than the 
                        assessment rate for a Bank Insurance Fund 
                        member that poses a comparable risk to the 
                        deposit insurance fund.''.

SEC. 2017. ASSESSMENTS AUTHORIZED ONLY IF NEEDED TO MAINTAIN THE 
              RESERVE RATIO OF A DEPOSIT INSURANCE FUND.

    (a) In General.--Section 7(b)(2)(A)(i) of the Federal Deposit 
Insurance Act (12 U.S.C. 1817(b)(2)(A)(i)) is amended in the matter 
preceding subclause (I) by inserting ``when necessary, and only to the 
extent necessary'' after ``insured depository institutions''.
    (b) Limitation on Assessment.--Section 7(b)(2)(A)(iii) of the 
Federal Deposit Insurance Act (12 U.S.C. 1817(b)(2)(A)(iii)) is amended 
to read as follows:
                            ``(iii) Limitation on assessment.--Except 
                        as provided in clause (v), the Board of 
                        Directors shall not set semiannual assessments 
                        with respect to a deposit insurance fund in 
                        excess of the amount needed--
                                    ``(I) to maintain the reserve ratio 
                                of the fund at the designated reserve 
                                ratio; or
                                    ``(II) if the reserve ratio is less 
                                than the designated reserve ratio, to 
                                increase the reserve ratio to the 
                                designated reserve ratio.''.
    (c) Exception to Limitation on Assessments.--Section 7(b)(2)(A) of 
the Federal Deposit Insurance Act (12 U.S.C. 1817(b)(2)(A)) is amended 
by adding at the end of the following new clause:
                            ``(v) Exception to limitation on 
                        assessments.--The Board of Directors may set 
                        semiannual assessments in excess of the amount 
                        permitted under clauses (i) and (iii) with 
                        respect to insured depository institutions that 
                        exhibit financial, operational, or compliance 
                        weaknesses ranging from moderately severe to 
                        unsatisfactory, or are not well capitalized, as 
                        that term is defined in section 38.''.

SEC. 2018. LIMITATION ON AUTHORITY OF OVERSIGHT BOARD TO CONTINUE TO 
              EMPLOY MORE THAN 18 OFFICERS AND EMPLOYEES.

    (a) In General.--Section 21A(a) of the Federal Home Loan Bank Act 
(12 U.S.C. 1441a(a)) is amended by adding at the end the following new 
paragraph:
            ``(17) Phased-down operation of oversight board following 
        termination of corporation.--
                    ``(A) Termination of authority to employ staff.--
                Except as provided in subparagraph (B), the authority 
                of the Thrift Depositor Protection Oversight Board 
                under paragraph (5) to establish officer and employee 
                positions, to compensate officers and employees of the 
                Board, and to provide other benefits for officers and 
                employees of the Board shall terminate as of December 
                31, 1995.
                    ``(B) Limited authority for employing staff.--The 
                Thrift Depositor Protection Oversight Board may employ 
                not more than 18 individuals, excluding any employee of 
                any other department or agency utilized by the Board, 
                to carry out the functions of the Board during the 
                period beginning on January 1, 1996 and ending on May 
                1, 1996, other than employees whose employment is in 
                the process of being terminated in accordance with 
                subparagraph (C).
                    ``(C) Termination of employment of additional 
                employees required to be commenced.--The Thrift 
                Depositor Protection Oversight Board shall commence 
                terminating, not later than December 31, 1995, and in 
                accordance with title 5, United States Code, and 
                applicable regulations of the Office of Personnel 
                Management, the employment of any employee of the Board 
                whose continued employment by the Board after such date 
                is inconsistent with the requirement of subparagraph 
                (B).''.
    (b) Technical and Conforming Amendments.--Section 21A(a)(5) of the 
Federal Home Loan Bank Act (12 U.S.C. 1441a(a)(5)) is amended in 
subparagraphs (B), (C), (D), and (E), by inserting ``subject to 
paragraph (17)'', after the closing parenthesis of the subparagraph 
designation in each such subparagraph.

SEC. 2019. DEFINITIONS.

    For purposes of this subtitle--
            (1) the term ``Bank Insurance Fund'' means the fund 
        established pursuant to section (11)(a)(5)(A) of the Federal 
        Deposit Insurance Act, as that section existed on the day 
        before the date of enactment of this Act;
            (2) the terms ``Bank Insurance Fund member'' and ``Savings 
        Association Insurance Fund member'' have the same meanings as 
        in section 7(l) of the Federal Deposit Insurance Act;
            (3) the terms ``bank'', ``Board of Directors'', 
        ``Corporation'', ``insured depository institution'', ``Federal 
        savings association'', ``savings association'', ``State savings 
        bank'', and ``State depository institution'' have the same 
        meanings as in section 3 of the Federal Deposit Insurance Act;
            (4) the term ``Deposit Insurance Fund'' means the fund 
        established under section 11(a)(4) of the Federal Deposit 
        Insurance Act, as amended by section 2013(d) of this Act;
            (5) the term ``depository institution holding company'' has 
        the same meaning as in section 3 of the Federal Deposit 
        Insurance Act;
            (6) the term ``designated reserve ratio'' has the same 
        meaning as in section 7(b)(2)(A)(iv) of the Federal Deposit 
        Insurance Act;
            (7) the term ``Savings Association Insurance Fund'' means 
        the fund established pursuant to section 11(a)(6)(A) of the 
        Federal Deposit Insurance Act, as that section existed on the 
        day before the date of enactment of this Act; and
            (8) the term ``SAIF-assessable deposit'' means--
                    (A) a deposit that is subject to assessment for 
                purposes of the Savings Association Insurance Fund 
                under the Federal Deposit Insurance Act; and
                    (B) a deposit that section 5(d)(3) of the Federal 
                Deposit Insurance Act treats as insured by the Savings 
                Association Insurance Fund.

                          Subtitle B--Housing

SEC. 2051. ANNUAL ADJUSTMENT FACTORS FOR OPERATING COSTS ONLY; 
              RESTRAINT ON RENT INCREASES.

    (a) Annual Adjustment Factors for Operating Costs Only.--Section 
8(c)(2)(A) of the United States Housing Act of 1937 (42 U.S.C. 
1437f(c)(2)(A)) is amended--
            (1) by striking ``(2)(A)'' and inserting ``(2)(A)(i)'';
            (2) by striking the second sentence and all that follows 
        through the end of the subparagraph; and
            (3) by adding at the end of the following new clause:
    ``(ii) Each assistance contract under this section shall provide 
that--
            ``(I) if the maximum monthly rent for a unit in a new 
        construction or substantial rehabilitation project to be 
        adjusted using an annual adjustment factor exceeds 100 percent 
        of the fair market rent for an existing dwelling unit in the 
        market area, the Secretary shall adjust the rent using an 
        operating costs factor that increases the rent to reflect 
        increases in operating costs in the market area; and
            ``(II) if the owner of a unit in a project described in 
        subclause (I) demonstrates that the adjusted rent determined 
        under subclause (I) would not exceed the rent for an unassisted 
        unit of similar quality, type, and age in the same market area, 
        as determined by the Secretary, the Secretary shall use the 
        otherwise applicable annual adjustment factor.''.
    (b) Restraint on Section 8 Rent Increases.--Section 8(c)(2)(A) of 
the United States Housing Act of 1937 (42 U.S.C. 1437f(c)(2)(A)), as 
amended by subsection (a), is amended by adding at the end the 
following new clause:
    ``(iii)(I) Subject to subclause (II), with respect to any unit 
assisted under this section that it occupied by the same family at the 
time of the most recent annual rental adjustment, if the assistance 
contract provides for the adjustment of the maximum monthly rent by 
applying an annual adjustment factor, and if the rent for the unit is 
otherwise eligible for an adjustment based on the full amount of the 
annual adjustment factor, 0.01 shall be subtracted from the amount of 
the annual adjustment factor, except that the annual adjustment factor 
shall not be reduced to less than 1.0.
    ``(II) With respect to any unit described in subclause (I) that is 
assisted under the certificate program, the adjusted rent shall not 
exceed the rent for a comparable unassisted unit of similar quality, 
type, and age in the market area in which the unit is located.''.
    (c) Effective Date.--The amendments made by this section shall 
become effective on October 1, 1995.

SEC. 2052. FORECLOSURE AVOIDANCE AND BORROWER ASSISTANCE.

    (a) Foreclosure Avoidance.--Except as provided in subsection (e), 
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.--Except as provided 
in subsection (e), 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 and expenses 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.
    ``(d) Savings Provision.--Any mortgage for which the mortgagor has 
applied to the Secretary, before the date of the enactment of the 
Balanced Budget Act of 1995, for assignment pursuant to subsection (c) 
of this section as in effect before such date of enactment shall 
continue to be governed by the provisions of this section in effect 
immediately before such date of enactment.
    ``(e) Applicability of Other Laws.--No provision of this Act or any 
other law shall be construed to require the Secretary to provide an 
alternative to foreclosure for mortgagees with mortgages on 1- to 4-
family residences insured by the Secretary under this Act, or to accept 
assignments of such mortgages.''.
    (c) Applicability of Amendments.--Except as provided in subsection 
(e), the amendments made by subsections (a) and (b) shall apply only 
with respect to mortgages insured under the National Housing Act that 
are originated on or after October 1, 1995.
    (d) Regulations.--Not later than the expiration of the 60-day 
period beginning on the date of the enactment of this Act, the 
Secretary of Housing and Urban Development shall issue interim 
regulations to implement this section and the amendments made by this 
section.
    (e) Effectiveness and Applicability.--If this Act is enacted after 
the date of the enactment of the Departments of Veterans Affairs and 
Housing and Urban Development, and Independent Agencies Appropriations 
Act, 1996--
            (1) subsections (a), (b), (c), and (d) of this section 
        shall not take effect; and
            (2) subsection (c) of the section relating to foreclosure 
        avoidance and borrower assistance in title II of the 
        Departments of Veterans Affairs and Housing and Urban 
        Development, and Independent Agencies Appropriations Act, 1996, 
        is amended by striking ``only with respect to mortgages insured 
        under the National Housing Act that are originated before 
        October 1, 1995'' and inserting ``to mortgages originated 
        before, on, and after October 1, 1995''.

      TITLE II--COMMUNICATIONS AND SPECTRUM ALLOCATION PROVISIONS

SEC. 3001. 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 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, 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 the sole or principal purpose of 
                which is to protect the safety of life, health, and 
                property and which 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, unless--
                            ``(i) the Commission, not later than 180 
                        days after the date of enactment of the 
                        Balanced Budget Act of 1995, after notice and 
                        public comment, submits to Congress a report on 
                        the use of the authority provided in this 
                        subsection for the assignment of initial 
                        licenses or construction permits for use of the 
                        electromagnetic spectrum allocated but not 
                        assigned as of the date of enactment of that 
                        Act for television broadcast services; and
                            ``(ii) the Congress amends this subsection 
                        to authorize the use of the authority provided 
                        by this subsection for such licenses or 
                        permits.
                Except as provided in this subparagraph, the Commission 
                may not assign initial licenses or construction permits 
                under this title to terrestrial commercial television 
                broadcast licensees to replace their existing broadcast 
                licenses before November 15, 1996.''; 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 a 
        terrestrial radio or television broadcast station 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 
        service 309(i) 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;
                            (ii) been identified by the Secretary of 
                        Commerce pursuant to section 113 of the 
                        National Telecommunications and Information 
                        Administration Organization Act; or
                            (iii) been reserved for Federal Government 
                        use pursuant to section 305 of the 
                        Communications Act of 1934 (47 U.S.C. 305).
                The Commission shall conduct the competitive bidding 
                for not less than one-half of such aggregate spectrum 
                by September 30, 2000.
            (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;
                    (D) comply with the requirements of international 
                agreements concerning spectrum allocations; and
                    (E) take into account the costs to satellite 
                service providers that could result from multiple 
                auctions of like spectrum internationally for global 
                satellite systems.
            (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 section).
    (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 
        subsections:
    ``(f) Additional Reallocation Report.--If the Secretary receives a 
notice from the Commission pursuant to section 3001(b)(3) of the 
Balanced Budget 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.
    ``(g) Relocation of Federal Government Stations.--
            ``(1) In general.--In order to expedite the efficient use 
        of the electromagnetic spectrum and notwithstanding section 
        3302(b) of title 31, United States Code, any Federal entity 
        which operates a Federal Government station may accept payment 
        in advance or in-kind reimbursement of costs, or a combination 
        of payment in advance and in-kind reimbursement, from any 
        person to defray entirely the expenses of relocating the 
        Federal entity's operations from one or more radio spectrum 
        frequencies to another frequency or frequencies, including, 
        without limitation, the costs of any modification, replacement, 
        ore reissuance of equipment, facilities, operating manuals, 
        regulations, or other expenses incurred by that entity. Any 
        such payment shall be deposited in the account of such Federal 
        entity in the Treasury of the United States. Funds deposited 
        according to this paragraph shall be available, without 
        appropriation or fiscal year limitation, only for the 
        operations of the Federal entity for which such funds were 
        deposited under this paragraph.
            ``(2) Process for relocation.--Any person seeking to 
        relocate a Federal Government station that has been assigned a 
        frequency within a band allocated for mixed Federal and non-
        Federal use may submit a petition for such relocation to NTIA. 
        The NTIA shall limit or terminate the Federal Government 
        station's operating license when the following requirements are 
        met:
                    ``(A) the person seeking relocation of the Federal 
                Government station has guaranteed to defray entirely, 
                through payment in advance, in-kind reimbursement of 
                costs, or a combination thereof, all relocation costs 
                incurred by the Federal entity, including all 
                engineering, equipment, site acquisition and 
                construction, and regulatory fee costs;
                    ``(B) the person seeking relocation completes all 
                activities necessary for implementing the relocation, 
                including construction of replacement facilities (if 
                necessary and appropriate) and identifying and 
                obtaining on the Federal entity's behalf new 
                frequencies for use by the relocated Federal Government 
                station (where such station is not relocating to 
                spectrum reserved exclusively for Federal use);
                    ``(C) any necessary replacement facilities, 
                equipment modifications, or other changes have been 
                implemented and tested to ensure that the Federal 
                Government station is able to successfully accomplish 
                its purposes; and
                    ``(D) NTIA has determined that the proposed use of 
                the spectrum frequency band to which the Federal entity 
                will relocate its operations is--
                            ``(i) consistent with obligations 
                        undertaken by the United States in 
                        international agreements and with United States 
                        national security and public safety interests; 
                        and
                            ``(ii) suitable for the technical 
                        characteristics of the band and consistent with 
                        other uses of the band.
                In exercising its authority under subparagraph (d)(i), 
                NTIA shall consult with the Secretary of Defense, the 
                Secretary of State, or other appropriate officers of 
                the Federal Government.
            ``(3) Right to reclaim.--If within one year after the 
        relocation the Federal Government station demonstrates to the 
        Commission that the new facilities or spectrum are not 
        comparable to the facilities or spectrum from which the Federal 
        Government station was relocated, the person seeking such 
        relocation must take reasonable steps to remedy any defects or 
        pay the Federal entity for the costs of returning the Federal 
        Government station to the spectrum from which such station was 
        relocated.
    ``(h) Federal Action To Expedite Spectrum Transfer.--Any Federal 
Government station which operates on electromagnetic spectrum that has 
been identified for reallocation for mixed Federal and non-Federal use 
in any reallocation report under subsection (a) shall, to the maximum 
extent practicable through the use of the authority granted under 
subsection (g) and any other applicable provision of law, take action 
to relocate its spectrum use to other frequencies that are reserved for 
Federal use or to consolidate its spectrum use with other Federal 
Government stations in a manner that maximizes the spectrum available 
for non-Federal use. Subsection (c)(4) of this section shall not apply 
to the extent that a non-Federal user seeks to relocate or relocates a 
Federal power agency under subsection (g).
    ``(i) Definition.--For purposes of this section, the term `Federal 
entity' means any department, agency, or other instrumentality of the 
Federal Government that utilizes a Government station license obtained 
under section 305 of the 1934 Act (47 U.S.C. 305).''; and
            (2) in section 114(a)(1), by striking ``(a) or (d)(1)'' and 
        inserting ``(a), (d)(1), or (f)''.
    (d) 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) of the 1934 Act (47 U.S.C. 309(j).''.

SEC. 3002. AUCTION OF RECAPTURED ANALOG LICENSES.

    (a) Analog Spectrum Reversion.--
            (1) Limitations on terms of analog television licenses 
        (``reversion date'').--No analog television license may be 
        renewed 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 paragraph 
        (2), that at least 95% of households in the United States have 
        the capability to receive and display television signals, other 
        than television signals transmitted pursuant to an analog 
        television license. Following such date, only advanced 
        television licenses shall be issued.
            (2) Annual survey.--The Department 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 television signals other than 
        signals transmitted pursuant to an analog television license.
            (3) Spectrum reversion.--(A) The Commission shall ensure 
        that, as analog television licenses expire pursuant to 
        paragraph (a)(1), spectrum previously used for the broadcast of 
        analog television is reclaimed and organized in such manner as 
        to maximize the deployment of new and existing services.
            (B) Licensees for new services shall be selected by 
        competitive bidding. The FCC shall complete the competitive 
        bidding procedure by March 1, 2002.
            (4) Minimum service obligation.--(A) The Commission, by 
        regulation, shall establish procedures to ensure that, within 
        the year prior to the reversion date defined in paragraph (1), 
        the advanced television licensees shall provide each household 
        without the capability to receive and display television 
        signals other than television signals transmitted pursuant to 
        an analog television license, if such household requests, with 
        the capability to receive and display advanced television 
        service.
            (B) Each advanced television service licensee shall 
        provide, each day for the duration of its license, at least one 
        non-subscription television service that meets or exceeds 
        minimum technical and other standards established by the 
        Commission as well as any other regulations pursuant to the 
        Communications Act of 1934, as amended, and the Children's 
        Television Act of 1990. In setting these minimum technical 
        standards, the Commission shall, to the extent technically 
        feasible, ensure that picture and audio quality are at least as 
        good as provided to recipients under current Commission rules 
        for National Television Systems Committee (NTSC) signals and 
        shall adopt such technical and other requirements as may be 
        necessary or appropriate to assure the quality of the signal 
        used to provide advanced television services, including 
        regulations that set the minimum number of hours per day that 
        such signal must be transmitted. The Commission shall revoke 
        the license of any advanced television licensee who fails to 
        meet this condition of the license. The Commission shall 
        promulgate regulations to assure the dissemination of converter 
        boxes or devices necessary to ensure access to digital TV to 
        all households that desire this access at a reasonable cost. 
        The Commission in these regulations shall--
                    (A) ensure that consumers receive only one such 
                rebate per household; and
                    (B) implement a mechanism by which responsibility 
                for cost sharing can be equitably allocated. To the 
                extent possible, the digital converter boxes 
                distributed in accordance with this section shall 
                utilize an affordable technology to process digital 
                signals for reception on analog television sets.
            (5) Public interest obligation.--Nothing in this section 
        shall be construed as relieving an advanced television licensee 
        from its obligation to serve the public interest, convenience, 
        and necessity.
    (b) Definitions.--As used in this section--
            (1) 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; and
            (2) the term ``analog television licenses'' means licenses 
        issued pursuant to CFR 73.682 et seq. and in effect November 
        13, 1995.

                          TITLE III--MEDICAID

SEC. 11300. TABLE OF CONTENTS OF SUBTITLE.

    The table of contents of this subtitle is as follows:

                          TITLE III--MEDICAID

Sec. 11300. Table of contents of subtitle.
                        Part 1--Federal Payments

Sec. 11301. Limitations on average per beneficiary rate of growth in 
                            Federal financial participation.
Sec. 11302. Reduction of disproportionate share payments.
Sec. 11303. Medicaid eligibility quality control (MEQC) requirements.
                          Part 2--Eligibility

Sec. 11311. Extension of coverage to additional individuals, subject to 
                            poverty-related or caseload limits.
Sec. 11312. Elimination of authority for new eligibility expansion 
                            demonstrations.
Sec. 11313. Upper income limit on ``less restrictive'' eligibility 
                            methodologies.
                          Part 3--Managed Care

Sec. 11321. Primary care case management services as State option 
                            without need for wavier.
Sec. 11322. State options to restrict choice of providers.
Sec. 11323. Elimination of restrictions on risk contracts.
Sec. 11324. 6-month guaranteed eligibility for all individuals enrolled 
                            in managed care.
Sec. 11325. Requirements to ensure quality of and access to care under 
                            managed care plans.
                            Part 4--Benefits

Sec. 11331. Home- and community-based services as State option without 
                            need for waiver.
Sec. 11332. Elimination of requirement to pay for private insurance.
Sec. 11333. Benefits for individuals covered during transition to work.
            Part 5--Provider Participation and Payment Rates

Sec. 11341. Methods for establishing provider payment rates.
Sec. 11343. Elimination of obstetrical and pediatric payment rate 
                            requirements.
                   Part 6--State Plan Administration

Sec. 11351. MMIS requirements.
Sec. 11352. Elimination of personnel requirements.
Sec. 11353. Elimination of requirements for cooperative agreements with 
                            health agencies.
Sec. 11355. State review of mentally ill or retarded nursing facility 
                            residents upon change in physical or mental 
                            condition.
Sec. 11356. Nurse aide training in Medicare and Medicaid nursing 
                            facilities subject to extended survey and 
                            under certain other conditions.
Sec. 11357. Combined State plan submission.
Sec. 11358. Public Process for developing State plan amendments.
                         Part 7--Effective Date

Sec. 11361. Effective date.

                        PART 1--FEDERAL PAYMENTS

SEC. 11301. LIMITATIONS ON AVERAGE PER BENEFICIARY RATE OF GROWTH IN 
              FEDERAL FINANCIAL PARTICIPATION.

    (a) In General.--Title XIX of the Social Security Act is amended--
            (1) by redesignating section 1931 as section 1932, and
            (2) by inserting after section 1930 the following new 
        section:

 ``limitation on federal financial participation based on average per 
                        beneficiary expenditures

    ``Sec. 1931. (a) Aggregate Limit.--
            ``(1) In general.--Subject to the succeeding provisions of 
        this section, the total amount of payments in grant awards to a 
        State under section 1903(a) for the 4 quarters in each of 
        fiscal years 1997 through 2002 shall not exceed the sum of the 
        limits, specified under paragraph (2), for each group of 
        medicaid enrollees (as defined in subsection (b)(1)) for the 
        State for the fiscal year. Such payment limit shall be based on 
        the total net matchable medicaid expenditures for the State for 
        the fiscal year as defined and specified under subsection 
        (c)(4).
            ``(2) Group limits.--The limit under this paragraph for a 
        group of medicaid enrollees for a State for a fiscal year is 
        the product of the following factors:
                    ``(A) The average per enrollee matchable 
                expenditure limit for the group for the State for the 
                fiscal year (determined under subsection (c)(1)).
                    ``(B) The number of full-time equivalent 
                individuals in the group in the State in the fiscal 
                year (determined under subsection (d)).
                    ``(C) The Federal medical assistance percentage for 
                the State for the fiscal year (as defined in section 
                1905(b)).
            ``(3) Exception for portion of medical assistance provided 
        under approved waivers.--
                    ``(A) In general.--In the case of a State which 
                provides medical assistance under its State plan under 
                this title pursuant to a waiver granted under section 
                1115 (as of [date of introduction of proposal]) on a 
                Statewide basis (or under such a waiver that covers a 
                substate area with a population of at least 9 million), 
                the Secretary shall provide for an adjustment in the 
                application of this section so that--
                            ``(i) the limitation on total payments 
                        under paragraph (1) does not apply to Federal 
                        financial participation attributable to the 
                        medical assistance (and related administrative 
                        expenditures) provided under such a waiver; and
                            ``(ii) the average per enrollee matchable 
                        expenditure limit established under subsection 
                        (c) and applicable to a group of medicaid 
                        enrollees is equal to such limit multiplied by 
                        the nonwaiver proportion (as defined in 
                        subparagraph (B)) for that group.
                    ``(B) Nonwaiver proportion.--In subparagraph 
                (A)(ii), the `nonwaiver proportion' for a group of 
                medicaid enrollees for a State for a fiscal year is the 
                ratio of--
                            ``(i) the amount of the Federal financial 
                        participation that the Secretary estimates 
                        would have been expended (in the absence of 
                        this section) for medical assistance (and 
                        related administrative expenditures) for the 
                        group for the State for the fiscal year for 
                        items and services not covered under the 
                        waiver, to
                            ``(ii) the total amount of the Federal 
                        financial participation that the Secretary 
                        estimates would have been expended (in the 
                        absence of this section) for medical assistance 
                        (and related administrative expenditures) for 
                        the group for the State for the fiscal year 
                        (whether or not covered under the waiver).
            ``(4) No application to vaccine program.--Nothing in this 
        section shall be construed as applying any limitation to 
        payments for the purchase and delivery of qualified pediatric 
        vaccines under section 1928.
    ``(b) Definitions Relating to Groups of Medicaid Enrollees.--In 
this section:
            ``(1) In general.--Each of the following shall be 
        considered a separate `group of medicaid enrollees':
                    ``(A) Nondisabled medicaid children.
                    ``(B) Nondisabled medicaid adults.
                    ``(C) Elderly medicaid beneficiaries.
                    ``(D) Disabled medicaid beneficiaries.
            ``(2) Nondisabled medicaid children.--The term `nondisabled 
        medicaid child' means a medicaid enrollee who--
                    ``(A) is under 21 years of age,
                    ``(B) is not the custodial parent of a child, and
                    ``(C) is not a disabled medicaid beneficiary.
            ``(3) Nondisabled medicaid adults.--The term `nondisabled 
        medicaid adult' means a medicaid enrollee who--
                    ``(A) is under 65 years of age,
                    ``(B) is not a disabled medicaid beneficiary, and
                    ``(C)(i) is at least 21 years of age or (ii) is the 
                custodial parent of a child.
            ``(4) Elderly medicaid beneficiary.--The term `elderly 
        medicaid beneficiary' means a medicaid enrollee who is at least 
        65 years of age.
            ``(5) Disabled medicaid beneficiaries.--The term `disabled 
        medicaid beneficiary' means a medicaid enrollee who--
                    ``(A) is under 65 years of age, and
                    ``(B) has been determined to meet the standards for 
                being blind or disabled under the supplemental income 
                security program under title XVI.
            ``(6) Medicaid enrollee.--The term `medicaid enrollee' 
        means, with respect to a State medical assistance program under 
        this title, an individual who is enrolled with such program, 
        but does not include an individual who is eligible only for 
        medicare cost-sharing benefits under the program as--
                    ``(A) a qualified medicare beneficiary (as defined 
                in section 1905(p)(1)),
                    ``(B) a qualified disabled and working individual 
                (as defined in section 1905(s)), or
                    ``(C) an individual described in section 
                1902(a)(10)(E)(iii).
    ``(c) Average Per Enrollee Matchable Expenditure Limit; Total Net 
Matchable Medicaid Expenditures Defined.--
            ``(1) In general.--For purposes of this section, the 
        average `per enrollee matchable expenditure limit', for a group 
        of medicaid enrollees for a State--
                    ``(A) for fiscal year 1997 is equal to the average 
                base per enrollee amount (as defined under paragraph 
                (2)(A)) for the group for the State multiplied by the 
                allowable growth multiplier (under paragraph (3)) for 
                each of fiscal years 1996 and 1997; and
                    ``(B) for a succeeding fiscal year is equal to the 
                per enrollee matchable expenditure limit under this 
                paragraph for the preceding fiscal year multiplied by 
                the allowable growth multiplier for that succeeding 
                fiscal year.
        Before the beginning of each of fiscal years 1997 through 2002, 
        the Secretary shall determine and publish each State's average 
        per enrollee matchable expenditure limit under this paragraph 
        for each group of medicaid enrollees.
            ``(2) Base per enrollee amount.--
                    ``(A) In general.--In this section, the `base 
                average per enrollee amount', for a group of medicaid 
                enrollees for a State, is equal to--
                            ``(i) the sum of (i) the base medical 
                        assistance amount (determined under 
                        subparagraph (C)) for the group and State, and 
                        (ii) the base administrative cost amount 
                        (determined under subparagraph (D)) for group 
                        and the State; divided by
                            ``(ii) the number of full-year equivalent 
                        medicaid enrollees in the group in the State in 
                        fiscal year 1995 (as determined pursuant to 
                        subsection (d)).
                    ``(B) Determination of net matchable medicaid 
                expenditures for fiscal year 1995.--In order to 
                determine base average per enrollee amounts for a 
                State, the Secretary shall--
                            ``(i) determine the amount of the total net 
                        matchable medicaid expenditures (as defined in 
                        paragraph (4)) for the State for fiscal year 
                        1995, and
                            ``(ii) separately identify--
                                    ``(I) the portion of such amount 
                                attributable to medical assistance, and
                                    ``(II) the portion of such amount 
                                attributable to administrative costs.
                The Secretary shall base the determination under clause 
                (i) on the expenditures reported by the State on line 
                11 of HCFA Form 64 for the 4 quarters of fiscal year 
                1995, subject to the adjustments described in paragraph 
                (4)(B)).
                    ``(C) Base medical assistance amount for each 
                group.--For each State for each group of medicaid 
                enrollees, the Secretary shall determine a `base 
                medical assistance amount' equal to the amount, of the 
                portion of the total net matchable medicaid 
                expenditures for fiscal year 1995 for the State 
                attributed to medical assistance under subparagraph 
                (B)(ii)(I), that the Secretary finds is attributable to 
                items and services furnished to individuals in such 
                group for the State .
                    ``(D) Base administrative cost amount for each 
                group.--For each State for each group of medicaid 
                enrollees, the Secretary shall determine a `base 
                administrative cost amount' equal to the amount that 
                bears the same ratio to the portion of the total net 
                matchable medicaid expenditures for fiscal year 1995 
                for the State attributed to administrative costs under 
                subparagraph (B)(ii)(II) as the base medical assistance 
                amount for the group (as determined under subparagraph 
                (C) for the State) bears to the sum of the base medical 
                assistance amounts for all the groups for the State.
            ``(3) Allowable growth multiplier.--In this subsection, the 
        `allowable growth multiplier' for--
                    ``(A) fiscal year 1996 is 6.5 percent.
                    ``(B) fiscal year 1997 is 6.5 percent.
                    ``(C) fiscal year 1998 is 6.5 percent.
                    ``(D) fiscal year 1999 is 6.0 percent.
                    ``(E) fiscal year 2000 is 5.5 percent.
                    ``(F) fiscal year 2001 is 5.0 percent.
                    ``(G) fiscal year 2002 is 4.5 percent.
            ``(4) Equity adjustor in allowable growth multiplier for 
        states with low per capita expenditures.--
                    ``(A) Fiscal year 1997.--If the [per beneficiary 
                base amount described in paragraph (    ) for the base 
                fiscal year] for a State for a [group of medicare 
                enrollees]--
                            ``(i) does not exceed 80 percent of the 
                        national, weighted average of such [per 
                        beneficiary base amounts] for such group for 
                        all States for the year, then, the determining 
                        the per beneficiary limit for such State and 
                        group for fiscal year 1997, the allowable 
                        growth multiplier for each of fiscal years 1996 
                        and 1997 shall be increased by 2.0 percentage 
                        points;
                            ``(ii) exceeds 80 percent, but does not 
                        exceed 90 percent, of such national, weighted 
                        average, then, in determining the per 
                        beneficiary limit for such State and group for 
                        fiscal year 1997, the allowable growth 
                        multiplier for each of fiscal years
            ``(4) Total net matchable medicaid expenditures.--
                    ``(A) In general.--In this section, the term `total 
                net matchable medicaid expenditures' means, for a State 
                for a fiscal year, the total net expenditures for the 
                State under this title for the 4 quarters of the fiscal 
                year for which payments may be made under section 1903, 
                reduced by the amount of such expenditures that the 
                Secretary determines is attributable to expenditures 
                described in subsection (e).
                    ``(B) Use of forms and adjustment.--The total net 
                matchable medicaid expenditures for a State for a 
                fiscal year shall be determined by the Secretary based 
                on reports submitted by the State under section 1903 
                for quarters in the fiscal year and as adjusted by the 
                Secretary by January 31 of the succeeding fiscal year 
                to take into account disallowances and similar 
                adjustments for expenditures not described in 
                subsection (e).
    ``(d) Determination of Number of Full-Year Equivalent 
Individuals.--
            ``(1) In general.--For purposes of this section, the number 
        of full-year equivalent individuals in each group of medicaid 
        enrollees for a State for a fiscal year shall be determined, 
        subject to paragraphs (2) and (3), based on reports submitted 
        by the State of the Secretary.
            ``(2) Part-year enrollees.--In the case of individuals who 
        were not a medicaid enrollee for the entire fiscal year (or are 
        within a group of medicaid enrollees for only part of a fiscal 
        year), the number shall take into account only the portion of 
        the year in which they were such enrollees or within such 
        group.
            ``(3) Secretarial oversight.--In order to ensure the 
        accuracy of the numbers reported by States under this 
        subsection, the Secretary is authorized--
                    ``(A) to require documentation, whether on a sample 
                or other basis,
                    ``(B) to audit such reports (or to require the 
                performance of independent audits), and
                    ``(C) to revise the numbers so reported.
    ``(e) Expenditures Not Subject to (or Counted in) Limitation.--For 
purposes of this section, the following expenditures (for which 
payments may be made to a State under section 1903(a)) shall not be 
counted in computing base medical assistance amounts or base 
administrative cost amounts under subsection (c)(2) and Federal 
financial participation with respect to such expenditures shall not be 
subject to the limit established under subsection (a)(1):
            ``(1) Disproportionate share payment adjustments.--
        Expenditures attributable to payment adjustments made under 
        section 1923.
            ``(2) Medicare cost-sharing.--Expenditures for medical 
        assistance for medicare cost-sharing, as defined in section 
        1905(p)(3).
            ``(3) Indian health programs.--Expenditures for medical 
        assistance for services provided by--
                    ``(A) the Indian Health Service,
                    ``(B) an Indian health program operated by an 
                Indian tribe or tribal organization pursuant to a 
                contract, grant, cooperative agreement, or compact with 
                the Indian Health Service pursuant to the Indian Self-
                Determination Act (25 U.S.C. 450 et seq.), and
                    ``(C) an urban Indian health program operated by an 
                urban Indian organization pursuant to a grant or 
                contract with the Indian Health Service pursuant to 
                title V of the Indian Health Care Improvement Act (25 
                U.S.C. 1601 et seq.).
            ``(4) Information systems.--Expenditures described in 
        subparagraph (A)(i) and (B) of section 1903(a)(2).
            ``(5) Nursing facility preadmission screening, resident 
        review, and survey and certification activities.--Expenditures 
        described in subparagraphs (C) and (D) of section 1903(a)(2).
            ``(6) SAVE.--Expenditures attributable to implementation of 
        the immigration status verification system (described in 
        section 1137(d)) pursuant to section 1903(a)(4).
            ``(7) Fraud and abuse activities.--Expenditures for 
        activities of State medicaid fraud control units pursuant to 
        section 1903(a)(6).''.
    (b) Enforcement-Related Provisions.--
            (1) Assuring actual payments to states consistent with 
        limitation.--Section 1903(d) of such Act (42 U.S.C. 1396(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 (and for the entire fiscal year) are consistent with the 
limitation 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 limitation under 
        section 1931(a) for the fiscal year involved, and
            ``(ii) numbers of individuals within each group of medicaid 
        enrollees, 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 group of 
        medicaid enrollees described in section 1931(b)(1) 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.
as well as expenditures (other than expenditures described in section 
1931(e)) attributable to each such group for such periods.
    ``(C) In order to implement section 1931 and this subsection, the 
Secretary shall--
            ``(i) change HCFA Form 37 to require States to separate out 
        spending projections by groups of medicaid enrollees, and
            ``(ii) change HCFA Form 64 to include enrollment data and 
        to permit the attribution of expenditures to such groups.
The Secretary shall provide for the auditing of information reported 
under clause (ii).
    ``(D) The Secretary shall take such actions as may be necessary to 
assure the accuracy of the base per enrollee amounts determined under 
section 1931(c)(2).''.
            (2) Upper income limit on ``less restrictive'' eligibility 
        methodologies.--Section 1902(r)(2) of such Act (42 U.S.C. 
        1396a(r)(2)) is amended--
                    (A) in subparagraph (A), by inserting ``(except as 
                provided in subparagraph (C))'' after ``no more 
                restrictive'', and
                    (B) by adding at the end the following new 
                subparagraph:
    ``(C) The methodology described in subparagraph (A) shall not 
result in an income eligibility limit (based on gross income) that is 
greater than the greater of--
            ``(i) 150 percent of the poverty line (as defined in 
        section 673(2) of the Community Services Block Grant Act (42 
        U.S.C. 9902(2)), including any revision required by such 
        section), or
            ``(ii) the income eligibility limit applicable under the 
        State plan in effect in fiscal year 1995 (taking into account 
        any such limit applicable under a waiver under section 
        1115).''.
    (c) Application of Enhanced Matching Rate for Development of 
Information Systems.--Section 1903(a)(3)(A)(i) of such Act (42 U.S.C. 
1396b(a)(3)(A)(i)) is amended by inserting before the comma at the end 
the following: ``and including information systems necessary to assure 
compliance with reporting requirements identified as necessary to carry 
out section ______ of the [Omnibus Budget Reconciliation Act of 
1995]''.
    (d) Conforming Amendment.--Section 1903(a) of such Act (42 U.S.C. 
1396b(a)), in the matter preceding paragraph (1), is amended by 
inserting ``or section 1931'' after ``except as otherwise provided in 
this section''.
    (e) Conforming Amendments.--
            (1) Section 1903(a) is amended in the matter preceding 
        paragraph (1) by inserting ``or section 1931'' after ``except 
        as otherwise provided in the section''.
            (2) Section 1903 is amended by adding after subsection (w) 
        the following new subsections:
    ``(x) Notwithstanding any other provision of this Act, no State 
shall be entitled to payment under this title--
            ``(1) with respect to expenditures after September 30, 
        1996, that exceed the limitation on Federal financial 
        participation specified in section 1931; or
            ``(2) with respect to an expenditure made or other 
        obligation incurred by a State before October 1, 1996, unless 
        the State has submitted to the Secretary, not later than June 
        30, 1997, a claim for Federal financial participation in such 
        expenditure or obligation.''.

                       TITLE IV--MEDICARE SAVINGS

    (a) 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 is considered to be made to that section or other 
provision of the Social Security Act.

                 PART 1--PROVISIONS RELATING TO PART A

SEC. 11101. UPDATES FOR PPS HOSPITALS.

    (a) Update Factors.--Section 1886(b)(3)(B)(i) (42 U.S.C. 
1395ww(b)(3)(B)(i)) is amended by striking subclauses (XII) and (XIII) 
and inserting the following:
            ``(XII) for each of the fiscal years 1997 through 2000, the 
        market basket percentage increase minus 1.0 percentage points 
        for hospitals in all areas,
            ``(XIII) for fiscal years 2001 and 2002, the market basket 
        percentage increase minus 1.5 percentage points for hospitals 
        in all areas, and
            ``(XIV) for fiscal year 2003 and each subsequent fiscal 
        year, the market basket percentage increase for hospitals in 
        all areas.''.
    (b) Adjustments for Case Mix When Recalibrating DRGS.--
            (1) In general.--Section 1886(d)(3) (42 U.S.C. 
        1395ww(d)(3)) is amended by adding at the end the following:
            ``(F) Adjusting for estimated change in case mix.--
                    ``(i) In general.--Effective for discharges 
                occurring in a fiscal year in which the Secretary 
                implements significant changes (as defined by the 
                Secretary) in the diagnosis-related group 
                classification system and thereafter, the Secretary may 
                (subject to clause (ii)) adjust the standardized 
                amounts to take into account estimated case mix 
                increase not attributable to real case mix increase 
                anticipated to occur during the fiscal year to which 
                the standardized amounts apply.
                    ``(ii) Refinement.--With regard to the adjustment 
                described in clause (i), if the Secretary determines, 
                based on data taken from the fiscal year to which the 
                adjustment applied, that the amount of the adjustment 
                varied from the actual amount of case mix increase not 
                attributable to real case mix increase by more than 
                0.25 percentage points, the Secretary shall make a 
                prospective adjustment to the standardized amounts to 
                correct for the variance.''.
            (2) PROPAC recommendations.--Section 1886(e)(2)(A) (42 
        U.S.C. 1395ww(e)(2)(A)) is amended by adding at the end the 
        following: ``With respect to subsection (d) hospitals, the 
        Commission's recommendation regarding the appropriate 
        percentage change shall take into account the anticipated 
        difference during the fiscal year between the change in the 
        average weighting factor and the change in real case mix.''.

SEC. 11102. MAINTAINING SAVINGS FROM TEMPORARY REDUCTION IN PPS CAPITAL 
              RATES.

    Section 1886(g)(1)(A) (42 U.S.C. 1395ww(g)(1)(A)) is amended by 
adding at the end the following: ``In addition to the reduction 
described in the preceding sentence, for discharges occurring after 
September 30, 1995, the Secretary shall reduce by 15.7 percent the 
unadjusted standard Federal capital payment rate (as described in 
section 412.308(c) of volume 42 of the Code of Federal Regulations), as 
in effect on September 30, 1995) and shall reduce by 15.7 percent the 
unadjusted hospital-specific rate (as described in section 
412.328(e)(1) of volume 42 of the Code of Federal Regulations), as in 
effect on September 30, 1995).''.

SEC. 11103. REDUCTIONS IN DISPROPORTIONATE SHARE PAYMENT ADJUSTMENTS.

    (a) In General.--Section 1886(d)(5)(F) (42 U.S.C. 1395ww(d)(5)(F)) 
is amended--
            (1) in clause (ii), by striking ``The amount'' and 
        inserting ``Subject to clause (ix), the amount'', and
            (2) by adding at the end the following:
                    ``(ix) Fiscal year 1999 and later.--For discharges 
                occurring on or after October 1, 1998, the payment 
                amount otherwise determined under clause (ii) shall be 
                reduced by 10 percent.''.
    (b) Conforming Amendment Relating to Determination of Standardized 
Amounts.--Section 1886(d)(2)(C)(iv) (42 U.S.C. 1395ww(d)(2)(C)(iv)) is 
amended inserting the following before the period: ``, and the 
Secretary shall not take into account any reductions in the amount of 
such additional payments resulting from the amendments made by section 
11103(a) of the Balanced Budget Act of 1995 for Economic Growth and 
Fairness''.

SEC. 11104. REDUCTION IN ADJUSTMENT FOR INDIRECT MEDICAL EDUCATION.

    (a) In General.--Section 1886(d)(5)(B)(ii) (42 U.S.C. 
1395ww(d)(5)(B)(ii)) is amended by striking all after ``occurring'' and 
inserting the following: ``the indirect teaching adjustment factor for 
discharges occurring--
                    ``(I) on or after January 1, 1996, and before 
                October 1, 1996, is equal to 1.77  x  (((1+r) to the 
                nth power) - 1),
                    ``(II) during fiscal years 1997 through 1999, is 
                equal to 1.67  x  (((1+r) to the nth power) - 1),
                    ``(III) during the fiscal year 2000, is equal to 
                1.55  x  (((1+r) to nth power) - 1), and
                    ``(IV) during the fiscal years beginning with 2001, 
                is equal to 1.47  x  (((1+r) to the nth power) - 1),
        where `r' is the ratio of the hospital's full-time equivalent 
        interns and residents to beds in `n' equals .405.''.
    (b) Conforming Amendment Relating to Determination of Standardized 
Amounts.--Section 1886(d)(2)(C)(i) (42 U.S.C. 1395ww(d)(2)(C)(i)) is 
amended by adding at the end the following: ``, except that the 
Secretary shall not take into account any reductions in the amount of 
additional payments under subsection (d)(5)(B)(ii) resulting from the 
amendments made by section 11104(a) of the Balanced Budget Act of 1995 
for Economic Growth and Fairness,''.
    (c) Alternative to Restandardization of Costs.--Section 
1886(d)(3)(A) (42 U.S.C. 1395ww(d)(3)(A)) is amended by adding at the 
end the following:
                            ``(vi) Alternative to restandardization of 
                        costs.--Notwithstanding clauses (i) through 
                        (v), if changes in the amount of payment under 
                        subsections (d)(3)(E), (d)(5)(B), or (d)(5)(F) 
                        would otherwise require the Secretary top 
                        restandardize hospital costs under subsection 
                        (d)(2)(C), the Secretary may compute payments 
                        amounts under the subparagraph in a manner that 
                        assures the aggregate payments under this 
                        subsection in a fiscal year not greater or less 
                        than those that would have been made in the 
                        year if the Secretary had restandardized 
                        hospital costs under subsection (d)(2)(C).''.
    (d) Effective Date.--The amendments made by the previous 
subsections apply to discharges occurring after 1995.

SEC. 11105. REVISIONS IN DETERMINATION OF AMOUNT OF PAYMENT FOR MEDICAL 
              EDUCATION.

    (a) Indirect Medical Education.--
            (1) In general.--Section 1886(d)(5)(B) (42 U.S.C. 
        1395ww(d)(5)(B)) is amended--
                    (A) in clause (ii) (as amended by section 111104(a) 
                of the Act), by inserting before the period '', subject 
                to clause (vii)'', and
                    (B) by adding at the end the following:
            ``(v) Limitations on numbers of interns and residents.--In 
        determining such adjustment with respect to a hospital for 
        discharges occurring on or after October 1, 1995--
                    ``(I) except as provided in clause (vi), the total 
                number of interns and residents may not exceed the 
                number of interns and residents with respect to the 
                hospital's cost reporting period ending on or before 
                December 31, 1995, and
                    ``(II) except as provided in subclause (vi), the 
                number of interns and residents who are not who are not 
                primary care residents as defined in section 1886 
                (h)(5)(H) or residents in obstetrics and gynecology, 
                may not exceed the number of such residents as of such 
                cost reporting period.
            ``(vi) Adjustments to limits.--The Secretary shall adjust 
        the number of interns and residents in clause (v)--
                    ``(I) by applying a weighting factor of 0.50 with 
                respect to each intern or resident who was not in an 
                initial residency period as defined in Section 
                1886(h)(5)(F),
                    ``(II) by including any interns and residents that 
                qualify under clause (iv), and
                    ``(III) as appropriate, where a hospital has a 
                significant increase in the number of primary care or 
                obstetrics and gynecology interns and residents after 
                June 30, 1995.
            ``(vii) Limitation on resident-to-bed ratio.--For purposes 
        of clause (ii), `r' may not exceed the ratio of the number of 
        interns and residents as determined under clause (v) with 
        respect to the hospital for its most recent cost reporting 
        period ending on or before December 31, 1995, to the hospital's 
        available beds (as defined by the Secretary) during such cost 
        reporting period.''.
            (2) Payment for interns and residents providing off-site 
        services.--Section 1886(d)(5)(B)(iv) (U.S.C. 42 
        1395ww(d)(5)(B)(iv) is amended to read as follows:
                            ``(iv) Off-site services.--All the time 
                        spent by an intern or resident in patient care 
                        activities under an approved medical residency 
                        training program shall be counted towards the 
                        determination of full-time equivalency at an 
                        entity in a non-hospital setting, if the 
                        hospital incurs all, or substantially all, of 
                        the costs for the training program in that 
                        setting.''.
    (b) Direct Medical Education.--
            (1) Limitation of number of residents.--Section 1886(h)(4) 
        (42 U.S.C. 1395ww(h)(4)) is amended by adding at the end the 
        following:
                    ``(F) Limitation of number of residents for certain 
                fiscal years.--Such rules shall provide that for 
                purposes of a cost reporting period beginning on or 
                after October 1, 1995--
                            ``(i) the total number of full-time 
                        equivalent residents (as determined under this 
                        paragraph) with respect to an approved medical 
                        residency training program may not exceed the 
                        number of full-time equivalent residents with 
                        respect to the ending on or before December 31, 
                        1995, and
                            ``(ii) the number of a hospital's full-
                        time-equivalent residents as determined under 
                        this paragraph who are not primary care 
                        residents (as defined in paragraph (5)(H)) or 
                        residents in obstetrics and gynecology may not 
                        exceed the number of such residents as of such 
                        cost reporting period.
                    ``(G) Adjustments to limitations.--The Secretary 
                may adjust the limitations specified in subparagraph 
                (F) if a hospital has a significant increase in the 
                number of primary care or obstetrics and gynecology 
                interns or residents after June 30, 1995.''.
            (2) Continuation of freeze on updates to fte resident 
        amounts.--Section 1886(h)(2)(D)(ii) (42 U.S.C. 
        1395ww(h)(2)(D)(ii)) is amended by striking ``fiscal year 1994 
        or fiscal year 1995'' and inserting ``fiscal years 1994 through 
        2000''.
            (3) Permitting payment to non-hospital providers.--Section 
        1886 (42 U.S.C. 1395ww)) is amended by adding at the end the 
        following:
    ``(j) Payment to Non-Hospital Providers.--Beginning with cost 
reporting periods beginning on or after July 1, 1996, the Secretary may 
make payments (in such amounts and in such form, and from each of the 
trust funds under this title, as the Secretary considers appropriate) 
to Federally Qualified Health Centers (as defined in section 
1861(aa)(4)) and Rural Health Clinics (as defined in section 
1861(aa)(2)) and eligible organizations with contracts under part C for 
the direct costs of medical education, if such costs are incurred in 
the operation of an approved medical residence training program 
described in subsection (h). The Secretary may designate additional 
entities as eligible organizations for such payments as the Secretary 
determines to be appropriate.''.
    (c) Application to Cost Contracts.--Section 1886(j) of the Social 
Security Act (42 U.S.C. 1395ww(j)) (as added by subsection (b)(3) of 
this section) applies to contracts under section 1876(h) of that Act 
(42 U.S.C. 1395mm).
    (d) Effective Date.--The amendments made by the previous 
subsections apply to hospital cost reporting periods beginning on or 
after October 1, 1995.
    (e) Commission on Medical Education and Workforce Priorities.--
            (1) In general.--There is established within the Department 
        of Health and Human Services a Commission to be known as the 
        National Commission on Medical Education and Workforce 
        Priorities (hereafter in this subsection referred to as the 
        ``Commission'').
            (2) Duties.--The Commission shall have the following 
        responsibilities:
                    (A) To develop and recommend to the Secretary 
                specific policies to address the preservation of the 
                research and educational capacity of the Nation's 
                academic health centers and the supply, composition, 
                and support of the future health care workforce. The 
                Commission shall examine--
                            (i) the financing of graduate medical 
                        education,
                            (ii) issues relating to children's and 
                        specialty hospitals,
                            (iii) policies regarding international 
                        medical school graduates, and
                            (iv) the relationship of graduate medical 
                        education funding and service-generated income.
                    (B) To make recommendations concerning the most 
                effective allocation of training resources to ensure 
                that the numbers and competencies of health care 
                professionals are responsive to the Nation's needs.
            (3) Composition.--
                    (A) Qualifications.--The Commission shall consist 
                of 15 members appointed by the Secretary, and shall to 
                the extent feasible include--
                            (i) individuals nationally recognized for 
                        expertise in health economics, medical 
                        education financing, medical practice, issues 
                        relating to the composition of the health care 
                        workforce, research on and development of 
                        technological and scientific advances in health 
                        care, and other related fields; and
                            (ii) health care professionals including 
                        physicians (both faculty and non-faculty), 
                        consumers, a dean and a chief executive officer 
                        or an academic health center or a teaching 
                        hospital, and representatives from health 
                        insurance organizations, managed care 
                        organizations, and medical workforce 
                        accrediting organizations.
                    (B) National representation.--To the extent 
                feasible, the membership of the Commission--
                            (i) shall represent the various geographic 
                        regions of the United States,
                            (ii) shall reflect the racial, ethnic, and 
                        gender composition of the United States; and
                            (iii) shall be broadly representative of 
                        medical schools, academic health centers, 
                        teaching hospitals, and schools involved in the 
                        training of non-physician providers of health 
                        services.
            (4) Terms of office.--Members of the Commission shall first 
        be appointed no later than July 1, 1996, for a term of two and 
        one half years.
            (5) Ex officio members.--In addition to the members 
        appointed pursuant to paragraph (3), the Commission shall 
        include--
                    (A) the Secretary of Health and Human Services, the 
                Secretary of Veterans Affairs, and the Secretary of 
                Defense (or a designee of each such official); and
                    (B) such additional individuals as may be 
                designated by the Secretary from among Federal officers 
                or employees.
            (6) Chair.--The Secretary shall designate an individual 
        from among the members appointed pursuant to paragraph (3)(A) 
        to serve as the chair of the Commission.
            (7) Quorum.--Nine members of the Commission shall 
        constitute a quorum, but a lesser number may hold hearings.
            (8) Vacancies.--Any vacancy in the Commission shall not 
        affect its power to function.
            (9) Compensation.--Each member of the Commission who is not 
        otherwise employed by the United States Government shall 
        receive compensation at a rate equal to the daily rate 
        prescribed for GS-18 under the General Schedule under section 
        5332 of title 5, United States Code, for each day, including 
        travel time, such member is engaged in the actual performance 
        of duties as a member of the Commission. A member of the 
        Commission who is an officer or employee of the United States 
        Government shall serve without additional compensation. All 
        members of the Commission shall be reimbursed for travel, 
        subsistence, and other necessary expenses incurred by them in 
        the performance of their duties.
            (10) Certain authorities and duties.--In order to carry out 
        the provisions of this subsection, the Commission is authorized 
        to--
                    (A) collect such information, hold such hearings, 
                and sit and act at such times and places, either as a 
                whole or by subcommittee, and request the attendance 
                and testimony of such witnesses and the production of 
                such documents as the Commission may consider 
                advisable; and
                    (B) request the cooperation and assistance of 
                Federal departments, agencies, and instrumentalities, 
                and such departments, agencies, and instrumentalities 
                are authorized to provide such cooperation and 
                assistance.
            (11) Reports.--The Commission shall submit to the Secretary 
        a preliminary report not later than July 1, 1997, and a final 
        report not later than July 1, 1998, making recommendations on 
        the matters specified in paragraph (2).
            (12) Termination.--The Commission shall terminate as of 
        December 31, 1998.
            (13) Authorization of appropriations.--There is authorized 
        to be appropriated to the Secretary of Health and Human 
        Services for use in carrying out this subsection not more than 
        $250,000 for each of fiscal years 1996, 1997, 1998. Funds 
        appropriated for fiscal year 1998 shall remain available until 
        expended.

SEC. 11106. ELIMINATION OF IME AND DSH PAYMENTS ATTRIBUTABLE TO OUTLIER 
              PAYMENTS.

    (a) Indirect Medical Education.--Section 1886(d)(5)(B)(i)(I) (42 
U.S.C. 1395ww(d)(5)(B)(i)(I)) is amended by inserting ``, for cases 
qualifying for additional payment under subparagraph (A)(i),'' before 
``the amount paid to the hospital under subparagraph (A)''.
    (b) Disproportionate Share Adjustments.--Section 
1886(d)(5)(F)(ii)(I) (42 U.S.C. 1395ww(d)(5)(F)(ii)(I)) is amended by 
inserting ``, for cases qualifying for additional payment under 
subparagraph (A)(i),'' before ``the amount paid to the hospital under 
subparagraph (A)''.
    (c) Cost Outlier Payments.--Section 1886(d)(5)(A)(ii) (42 U.S.C. 
1395ww(d)(5)(A)(ii)) is amended by striking ``exceed the applicable DRG 
prospective payment rate'' and inserting ``exceed the sum of the 
applicable DRG prospective payment rate plus any amounts payable under 
paragraphs (d)(5)(B) and (d)(5)(F)''.
    (d) Effective Date.--The amendments made by the previous 
subsections apply to discharges occurring on or after October 1, 1995.

SEC. 11107. TREATMENT OF TRANSFER CASES.

    Section 1886(d)(5)(I) (42 U.S.C. 1395ww(d)(5)(I)) of the Act is 
amended by adding at the end the following:
    ``(iii) Certain transfers.--Effective for discharges occurring on 
or after October 1, 1995, transfer cases (as otherwise defined by the 
Secretary) shall also include cases in which a patient is transferred 
from a subsection (d) hospital to a hospital or hospital unit that is 
not a subsection (d) hospital (under section 1886(d)(1)(B) and 
implementing regulations) or to a skilled nursing facility for the 
purpose of receiving extended care services.''.

SEC. 11108. MORATORIUM ON NEW LONG TERM CARE HOSPITAL EXCLUSIONS.

    Section 1886(d)(1)(B)(iv) (42 U.S.C. 1395ww(d)(1)(B)(iv)) is 
amended by inserting ``(and had such an average on the date of 
enactment of the Balanced Budget Act of 1995 for Economic Growth and 
Fairness)'' before the comma.

SEC. 11109. PAYMENTS TO HOSPITALS EXCLUDED FROM PPS.

    (a) Reductions in Updates.--Section 1886(b)(3)(B)(ii) (42 U.S.C. 
1395ww(b)(4)(B)(ii)) is amended--
            (1) in subclause (V)
                    (A) by striking ``through 1997'' and inserting 
                ``through 1995'', and
                    (B) by striking ``and'',
            (2) by renumbering subclause (VI) as (VIII), and
            (3) by inserting after subclause (V) the following:
            ``(VI) fiscal years 1996 through 2000, the market basket 
        percentage increase minus 1.0 percentage point,
            ``(VII) fiscal years 2001 and 2002, the market basket 
        percentage increase minus 1.5 percentage points, and''.
    (b) Rebasing for PPS-Exempt Hospitals.--Section 1886(b)(3)(A) (42 
U.S.C. 1395ww(b)(3)(A)) is amended to read as follows:
    ``(3)(A) Target Amount.--
            ``(i) Calculation of target amount.--Subject to clauses 
        (ii) and (iii), and except as provided in subparagraphs (C), 
        (D), and (E), for purposes of this subsection, the term `target 
        amount' means--
                    ``(I) with respect to the first 12-month cost 
                reporting period in which this subparagraph is applied 
                to the hospital, the average allowable operating costs 
                of inpatient hospital services (as defined in 
                subsection (a)(4)) recognized under this title for such 
                hospital for the hospital's two most recent 12-month 
                cost reporting periods beginning on or after October 1, 
                1990, subject to the floor and ceiling for target 
                amounts as specified in clause (ii), and increased by 
                the applicable percentage increases under subparagraph 
                (B)(ii) for the hospital's succeeding cost reporting 
                periods beginning before fiscal year 1996, or
                    ``(II) with respect to a later cost reporting 
                period, the target amount for the preceding cost 
                reporting period, increased by the applicable 
                percentage increase under subparagraph (B)(ii).
            ``(ii) Floor and ceiling.--Subject to clause (iii), the 
        target amount determined under this subparagraph for a hospital 
        or unit shall not be less than 70 percent nor more than 150 
        percent of the national mean (adjusted by an appropriate wage 
        index) of the operating costs of inpatient hospital services 
        determined under this paragraph for hospitals (and units 
        thereof as applicable) of each type of hospital described in 
        subsection (d)(1)(B) for the cost reporting periods noted in 
        clause (i)(I) and updated by the applicable percentage increase 
        under subparagraph (B)(ii).
            ``(iii) New hospitals.--In the case of a hospital that does 
        not have a cost reporting period beginning before October 1, 
        1990--
                    ``(I) with respect to cost reporting periods 
                beginning during the hospital's first two fiscal years 
                of operation, the amount of payment made under this 
                title with respect to operating costs of inpatient 
                hospital services (as defined in subsection (a)(4)) 
                shall be the reasonable costs for providing such 
                services, except that such amount may not exceed 150 
                percent of the national mean as determined and updated 
                in clause (ii),
                    ``(II) with respect to a later cost reporting 
                period, clauses (i) and (ii) shall apply to such 
                hospital except that the target amount for the hospital 
                shall be the average allowable operating costs of 
                inpatient hospital services (as defined in subsection 
                (a)(4)) recognized under this title for the hospital's 
                first two 12-month cost reporting periods beginning at 
                least one year after the hospital accepts its first 
                patient.''.
    (c) Exceptions and Adjustments.--Section 1886(b)((4)(A)(i) (42 
U.S.C. 1395ww(b)(4)(A)(i)) is amended by inserting the following after 
the first sentence: * * *.

SEC. 11110. REDUCTIONS TO CAPITAL PAYMENTS FOR PPS-EXEMPT HOSPITALS.

    Section 1861(v)(1) (42 U.S.C. 1395x(v)(1)) is amended by adding at 
the end the following new subparagraph:
            ``(T) Reductions for pps-exempt hospitals.--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 15 percent for payment 
        attributable to portions of cost reporting periods occurring 
        during each of the fiscal years 1996 through 2005.''.

SEC. 11111. MAINTAINING SAVINGS RESULTING FROM TEMPORARY FREEZE ON 
              PAYMENT INCREASES FOR SKILLED NURSING FACILITIES.

    (a) Basing Updates to Per Diem Cost Limits Effective for Fiscal 
Year 1996 on Limits for Fiscal Year 1993.--
            (1) In general.--The last sentence of section 1888(a) (42 
        U.S.C. 1395yy(a)) is amended by adding at the end the 
        following: ``, except that the limits effective October 1, 1995 
        shall be based on the limits effective on October 1, 1992 and 
        shall not take into account any changes in the routine service 
        costs of skilled nursing facilities occurring during cost 
        reporting periods which began during fiscal year 1994 or fiscal 
        year 1995.''.
            (2) No exceptions permitted based on amendment.--The 
        Secretary of Health and Human Services shall not consider the 
        amendment made by paragraph (1) in making any adjustments 
        pursuant to section 1888(c) of the Social Security Act.
    (b) Payments Determined on Prospective Basis.--Prospective payments 
made to skilled nursing facilities under section 1888(d) of the Social 
Security Act for cost reporting periods beginning on or after October 
1, 1995, shall be based on the rates effective for cost reporting 
periods beginning October 1, 1992, and before October 1, 1993, and 
shall not take into account any changes in the costs of services 
occurring during cost reporting periods which began during fiscal year 
1994 or fiscal year 1995.

SEC. 11112. INTERIM PROSPECTIVE PAYMENT FOR SKILLED NURSING FACILITIES.

    (a) In general.--Section 1888 (42 U.S.C. 1395yy) is amended by 
adding at the end the following:
    ``(e) Payment on an Interim Prospective Basis.--The Secretary 
shall, for cost reporting periods beginning on or after October 1, 
1996, provide for payment for routine service costs (excluding capital-
related costs) of extended care services in accordance with a 
prospective payment system established by the Secretary in the amounts 
provided in subsection (f), subject to the exceptions and limitations 
in subsections (g) and (h).
    ``(f) Determination of Payment Amounts.--
            ``(1) Per diem basis.--The amount of payment under 
        subsection (e) shall be determined on a per diem basis.
            ``(2) Use of base year costs updated by market basket.--The 
        Secretary shall compute the routine service costs per diem in a 
        base year (determined by the Secretary) for each skilled 
        nursing facility, and shall update the per diem rate on the 
        basis of a market basket, excluding increases in routine 
        service costs associated with fiscal year 1994 and fiscal year 
        1995, and other factors as the Secretary determines 
        appropriate.
            ``(3) Limitation on base year costs.--The base year routine 
        service costs used to determine the per diem rate applicable to 
        a skilled nursing facility may not exceed the following limits:
                    ``(A) Rural areas.--With respect to skilled nursing 
                facilities located in rural areas, the limit shall be 
                equal to 112 percent of the mean per diem routine 
                service costs in a base year (determined by the 
                Secretary) for freestanding skilled nursing facilities 
                located in rural areas within the same region.
                    ``(B) Urban areas.--With respect to skilled nursing 
                facilities located in urban areas, the limit shall be 
                equal to 112 percent of the mean per diem routine 
                service costs in a base year (determined by the 
                Secretary) for freestanding skilled nursing facilities 
                located in urban areas within the same region.
                    ``(C) Definitions.--For purposes of this 
                subsection, urban and rural areas shall be determined 
                in the same manner as for purposes of subsection (a), 
                and the term ``region'' shall have the same meaning as 
                under section 1886(d)(2)(D).
                    ``(D) Wage adjustments.--In establishing limits 
                under this subsection, the Secretary may make 
                appropriate adjustments to the labor-related portion of 
                the costs based upon on a wage index and other factors 
                as the Secretary determines appropriate.
            ``(4) New skilled nursing facilities.--Skilled nursing 
        facilities entering the Medicare program subsequent to the base 
        period, determined in subsection (f)(1), shall receive a 
        routine payment rate equal to the mean per diem routine costs 
        of skilled nursing facilities in the urban or rural area in 
        which they are located by region. The Secretary shall compute 
        these payment rates using per diem costs in a base year 
        (determined by the Secretary) and shall update the rates on the 
        basis of a market basket and other factors as the Secretary 
        determines appropriate.
            ``(5) Low medicare volume facilities.--Effective for cost 
        reporting periods beginning on or after October 1, 1996, low 
        Medicare volume skilled nursing facilities, as described in 
        subsection (d), shall receive payment for routine service costs 
        as otherwise set forth in subsections (e) through (j), except 
        that they may elect to receive payment on the basis of the 
        rates described in subsection (f)(4).
            ``(6) Case mix adjustments.--The Secretary may make 
        prospective adjustments to the routine payment rates to account 
        for changes in facility patient mix (case mix) as the Secretary 
        determines appropriate. Such adjustments shall be made in a 
        manner which does not increase expenditures for the routine 
        costs of skilled nursing facility services beyond what would 
        otherwise occur.
    ``(g) Hold Harmless Payments.--
            ``(1) In general.--Subject to paragraphs (2) and (3), a 
        facility's per diem payment rate based on the application of 
        subsections (e) and (f) is the greater of--
                    ``(A) its per diem payment amount in the base year, 
                and
                    ``(B) its base year cost per diem up to the 
                regional limit plus any exception amounts that may have 
                been granted in the base year (adjusted by the market 
                basket).
            ``(2) Limit.--The payment rate determined under paragraph 
        (1) shall not exceed the facility's cost per diem incurred in 
        the base year adjusted by the market basket.
            ``(3) New entity exception.--Subparagraph (1)(A) does not 
        apply if the per diem payment amount in the base year was 
        determined on the basis of an exemption under subsection 
        (f)(4).
    ``(h) Upper Limits on Reasonable Costs.--The Secretary, in making 
determinations on the reasonable costs (both capital and operating) of 
ancillary services provided by skilled nursing facilities under part A, 
shall utilize as an upper limit, the carrier fee schedules applicable 
to such services as specified in sections 1834 and 1848. This 
subsection shall not have the effect of mitigating other limits on the 
reasonable costs of ancillary services currently in effect under Part A 
such as those specified in section 1861(v)(5)(A).
    ``(i) Elimination of Exceptions and Exemptions.--Exceptions, as 
described in subsection (c), and exemptions, as described in the 
applicable regulations, are eliminated for cost reporting periods 
beginning on or after October 1, 1996.''.
    (b) Consolidated Billing and Uniform Coding.--
            (1) In general.--Section 1862(a) (42 U.S.C. 1395y(a)) is 
        amended--
                    (A) by striking ``or'' at the end of paragraph 
                (14),
                    (B) by striking the period at the end of paragraph 
                (15) and adding a semicolon, and
                    (C) by inserting after paragraph (15) the 
                following:
            ``(16) which are other than physicians' services, services 
        described by sections 1861(s)(2)(K)(i) through (iii), certified 
        nurse-midwife services, qualified psychologist services, and 
        services of a certified registered nurse anesthetist, and which 
        are furnished to an individual who is a resident of a skilled 
        nursing facility by an entity other than the skilled nursing 
        facility, unless the services are furnished under arrangements 
        (as defined in section 1861(w)(1)) with the entity made by the 
        skilled nursing facility; or
            ``(17) which are on a claim submitted by a skilled nursing 
        facility under this title, unless the claim uses the HCFA 
        common procedure coding system.''.
            (2) Conforming amendment.--Section 1866(a)(1)(H) (42 U.S.C. 
        1395cc(a)(1)(H)) is amended--
                    (A) by striking ``(i)'' and inserting ``(I)'' and 
                striking ``(ii)'' and inserting ``(II)'',
                    (B) by striking ``(H)'' and inserting ``(H)(i)'', 
                and
                    (C) by adding at the end the following:
    ``(ii) in the case of skilled nursing facilities which provide 
services for which payment may be made under this title, to have all 
items and services (other than physicians' services, and other than 
services described by section 1861(s)(2)(K)(i) through (iii), certified 
nurse-midwife services, qualified psychologist services, and services 
of a certified registered nurse anesthetist)--
            ``(I) that are furnished to an individual who is a resident 
        of the skilled nursing facility, and
            ``(II) for which the individual is entitled to have payment 
        made under this title, furnished by the skilled nursing 
        facility or otherwise under arrangements (as defined in section 
        1861(w)(1)) made by the skilled nursing facility,''.
            (3) Effective date.--the amendments made by the preceding 
        paragraphs are effective for services furnished on or after 
        October 1, 1996.

SEC. 11113. FULL PROSPECTIVE PAYMENT SYSTEM FOR SKILLED NURSING 
              FACILITIES.

    (a) In General.--Section 1888 (42 U.S.C. 1395yy) is amended by 
striking subsections (e) through (i) (as added by section 11112(a) of 
this Act) and adding the following:
    ``(e) Full Prospective Payment System.--
            ``(1) In general.--The Secretary shall provide for payment 
        for all costs of extended care services (including routine 
        service costs, ancillary costs, and capital related costs) in 
        accordance with a prospective payment system established by the 
        Secretary.
            ``(2) Budget savings.--Prior to implementing the 
        prospective payment system described in paragraph (1) in a 
        budget neutral fashion, the Secretary shall reduce, by 7 
        percent, the per diem rates for routine costs, and the 
        reasonable costs for ancillary services and capital for skilled 
        nursing facilities as such rates and costs are in effect on 
        September 30, 1998.''.
    (b) Effective Date.--The amendments made by the preceding 
subsection apply to cost reporting periods beginning on or after 
October 1, 1998.

SEC. 11114. SALARY EQUIVALENCY GUIDELINES FOR THERAPY SERVICES.

    Section 1861(v)(5) (42 U.S.C. 1395x(v)(5)) is amended--
            (1) by redesignating subparagraph (B) as subparagraph (D),
            (2) in subparagraph (D), as redesignated, by adding ``(B), 
        or (C),'' after ``subparagraph (A),'',
            (3) by inserting the following after subparagraph (A):
    ``(B) Salary Equivalency Guidelines for Therapy Services.--
            ``(i) In general.--Effective for services furnished on or 
        after January 1, 1996, the Secretary shall establish guidelines 
        relating to occupational therapy services and speech-language 
        pathology services, and revise guidelines established under the 
        subparagraph (A) relating to respiratory therapy services and 
        physical therapy services using the methodology described in 
        clause (ii).
            ``(ii) Calculation of amounts.--The guidelines for each 
        therapy shall be equal to the sum of:
                    ``(I) the sum of an hourly salary rate, plus fringe 
                benefits, plus a rental expense factor (in the same 
                base year), and
                    ``(II) an overhead factor (excluding rental 
                expenses) equal to 28 percent of the amount determined 
                in subclause (I),
        adjusted by geographical area using the methodology contained 
        in the final regulation of the Secretary of Health and Human 
        Services published on page 44928 of volume 48 of the Federal 
        Register on September 30, 1983, updated annually from the base 
        year to the current year by an inflation factor.
            ``(iii) Data.--The data used in establishing the guidelines 
        under clause (ii) shall be--
                    ``(I) in the case of hourly salary rates, for each 
                therapy, the 75th percentile of salaries paid to 
                therapists working full-time in an employment 
                relationship in the area, from the most recent 
                available Bureau of Labor Statistics (BLS) hospital 
                salary data for each, increased by 10 percent,
                    ``(II) in the case of fringe benefits, for each 
                therapy, an aggregate factor derived from hospital cost 
                reports ending in fiscal year 1991 for BLS survey areas 
                used in subclause (I),
                    ``(III) in the case of the rental expense factor, 
                for each therapy, an amount derived from local area 
                rental income data compiled by the Building Owners and 
                Managers Association International for 1991, for BLS 
                survey areas used in subclause (I),
                    ``(IV) in the case of the inflation factor, for 
                each therapy, an amount equal to the average of 
                Employment Cost Indices for wages and benefits of 
                Civilian Hospital, Professional Technical and Clerical 
                Workers, and Private Executives, Administrators and 
                Managers, and the Consumer Price Indices-Urban for 
                Housing and all items less food and energy, weighted by 
                the relative proportion that each component represents 
                of the guidelines amounts.
    ``(C) Use of Additional Data.--Nothing in subparagraph (B) shall 
preclude the Secretary from updating the guidelines using such data 
sources and methodology as the Secretary determine to be appropriate, 
except that any changes to the data sources will be made through 
rulemaking in a manner that does not increase aggregate spending for 
such services beyond what would otherwise occur.'', and
            (4) by adding at the end the following:
    ``(E) No Exception for Previous Contracts.--In applying limitations 
under section 1861(v)(5), the Secretary shall not recognize an 
exception for a provider that entered into a written binding contract 
or contingency contract with a therapist, provider or other 
organization prior to the date the initial guidelines are published.''.

SEC. 11115. REMOVAL OF GRADUATE MEDICAL EDUCATION, INDIRECT MEDICAL 
              EDUCATION, AND DISPROPORTIONATE SHARE HOSPITAL PAYMENTS 
              FROM THE CALCULATION OF THE ADJUSTED AVERAGE PER CAPITA 
              COST.

    (a) Exclusion of Graduate Medical Education, Indirect Medical 
Education, and Disproportionate Share Hospital Payments From the 
Calculation of the Adjusted Average Per Capita Cost.--Section 1851H(2) 
(as added by subtitle B of this title) is amended by adding at the end 
the following: ``Starting in calendar year 1998, the AAPCC shall not 
include estimated amounts that would have been paid for indirect 
medical education costs under section 1886(d)(5)(B), disproportionate 
share payment adjustments under section 1886(d)(5)(F), and direct 
graduate medical education costs under section 1886(h).''.
    (b) Payments for Graduate Education Programs.--Section 1851F (as 
added by subtitle B of this title) is amended by adding at the end the 
following:
    ``(k) Payments for Graduate Medical Education Programs.--
            ``(1) Additional payments.--
                    ``(A) Additional payment to be made.--Starting in 
                calendar year 1998, each contract with an eligible 
                organization under this section shall provide for an 
                additional payment for Medicare's share of allowable 
                direct graduate medical education costs incurred by 
                such organization for an approved medical residency 
                program.
                    ``(B) Limitation for risk contracts.--The sum of 
                such payments to all eligible organizations having a 
                risk contract under this section shall not exceed 75 
                percent of the amount that would otherwise have been 
                payable to the organization if the estimated amounts 
                for direct graduate medical education costs under 
                section 1886(h) had been included in the AAPCC.
            ``(2) Allowable costs.--If the eligible organization has an 
        approved program, the Secretary shall determine the allowable 
        costs as follows:
                    ``(A) Risk contracts.--In the case of an eligible 
                organization having a risk contract under this section, 
                and that incurs all or substantially all of the costs 
                of the approved medical residency program, the 
                allowable costs for such program shall equal the 
                national average per resident amount times the number 
                of full-time-equivalent residents in the program.
                    ``(B) Other contracts.--In the case of other 
                eligible organizations, the allowable costs shall equal 
                the lesser of--
                            ``(i) the direct graduate medical education 
                        costs incurred by the organization, and
                            ``(ii) the national average per resident 
                        amount times the number of full-time-equivalent 
                        residents in the program.
            ``(3) Costs under contracts with hospitals.--If the 
        eligible organization has a written agreement with a hospital 
        or other entity that has an approved medical residency program, 
        the allowable costs shall include such payments specified in 
        the agreement for direct graduate medical education costs 
        incurred for resident time spent in patient care related 
        activities. Allowable costs under this paragraph shall not 
        exceed 75 percent of the amount that would have been included 
        in the AAPCC to account direct graduate medical education costs 
        (if such costs had not been removed by the last sentence of 
        section 1851H(2).
            ``(4) Definitions.--As used in this subsection--
                    ``(A) the terms `approved medical residency 
                program', `direct graduate medical education costs', 
                and `full-time-equivalent residents' have the same 
                meanings as under section 1886(h),
                    ``(B) the term `Medicare's share' means the amount 
                determined by multiplying the eligible organization's 
                allowable costs for an approved medical residency 
                program by the ratio of the number of individuals 
                enrolled with the organization under this section to 
                the total number of individuals enrolled with the 
                organization,
                    ``(C) the term `national average per resident 
                amount' means an amount estimated by the Secretary to 
                equal the weighted average amount that would be paid 
                per full-time-equivalent resident under section 1886(h) 
                for the calendar year (determined separately for 
                primary care residency programs (including obstetrics 
                and gynecology residency programs) and for other 
                residency programs).''.
    (c) Additional Payments to Hospitals for Managed Care Enrollees.--
Section 1886(d) (42 U.S.C. 1395ww(d)) is amended by adding at the end 
the following:
    ``(11) Additional Payments to Hospitals for Managed Care 
Enrollees.--
            ``(A) In general.--For portions of cost reporting periods 
        occurring on or after January 1, 1998, the Secretary shall 
        provide for an additional payment amount for subsection (d) 
        hospitals for services furnished to individuals who are 
        enrolled in an organization having a contract with an eligible 
        organization under part C and who are entitled to part A.
            ``(B) Amount of payment.--Subject to subparagraph (F), the 
        amount of such payment shall be determined by multiplying (i) 
        the sum of the amounts determined under subparagraphs (C) and 
        (D), by (ii) the product of the number of discharges determined 
        under subparagraph (E) and the estimated average per discharge 
        amount that would otherwise have been paid under section 
        1886(d)(1)(A) if the individuals had not been enrolled in an 
        organization having a contract with an eligible organization 
        under part C.
            ``(C) Indirect teaching adjustment factor.--The Secretary 
        shall determine an indirect teaching adjustment factor equal to 
        1.11 x (((1+r) to the nth power)-1), where `r' and `n' have the 
        same meaning as in section 1886(d)(5)(B).
            ``(D) Disproportionate share adjustment.--The Secretary 
        shall determine a disproportionate share adjustment factor 
        equal to the disproportionate share adjustment percentage 
        applicable to the hospital under section 1886(d)(5)(F).
            ``(E) Determination of number of discharges.--The Secretary 
        shall determine the number of discharges as equal to the lesser 
        of--
                    ``(i) the number of discharges during the current 
                cost reporting period attributable to individuals who 
                are enrolled in an organization having a risk contract 
                and who are entitled to part A of this title, and
                    ``(ii) the number of discharges paid under section 
                1886(d) during the hospital's cost reporting period 
                beginning in fiscal year 1992 minus the number of 
                discharges paid under section 1886(d) during the 
                hospital's current cost reporting period.
            ``(F) Adjustment for savings.--At the beginning of each 
        calendar year, the Secretary shall make an adjustment in the 
        amounts otherwise payable under this paragraph so that the 
        estimated payments under this paragraph for the discharges 
        occurring in that calendar year, together with the estimated 
        amounts payable under section 1851F for that calendar year, 
        equal 75 percent of the amounts the Secretary estimates would 
        otherwise have been payable under section 1851F during that 
        calendar year if the adjusted average per capita cost 
        determined under section 1851F included estimated amounts for 
        indirect medical education costs, disproportionate share 
        payment adjustments, and direct graduate medical education 
        costs.''.
    (d) Use of Interim Final Regulations.--The Secretary of Health and 
Human Services may issue regulations on an interim final basis to 
implement this title and the amendments made by this title.

SEC. 11116. SOLE COMMUNITY HOSPITALS.

    (a) Rebasing the Target Amount.--Section 1886(b)(3)(C) (42 U.S.C. 
13955ww (b)(3)(C)) is amended--
            (1) by striking ``or'' at the end of clause (iii),
            (2) in clause (iv)--
                    (A) by striking ``and each subsequent fiscal 
                year'', and
                    (B) by striking the period at the end and adding a 
                comma,
            (3) by inserting after clause (iv) the following:
            ``(v) with respect to discharges occurring in fiscal year 
        1996, the average of--
                    ``(I) the allowable operating costs of inpatient 
                hospital services (as defined in subsection (a)(4)) 
                recognized under this title for the hospital's cost 
                reporting period (if any) beginning during fiscal year 
                1992 increased (in a compounded manner) by the 
                applicable percentage increases applied to such 
                hospital under this paragraph for cost reporting 
                periods beginning in fiscal year 1993 and for 
                discharges occurring in fiscal years 1994, 1995, and 
                1996, and
                    ``(II) the allowable operating costs of inpatient 
                hospital services (as defined in subsection (a)(4)) 
                recognized under this title for the hospital's cost 
                reporting period (if any) beginning during fiscal year 
                1993 increased (in a compounded manner) by the 
                applicable percentage increase applied to such hospital 
                under this paragraph for discharges occurring in fiscal 
                years 1994, 1995, and 1996, or
            ``(vi) With respect to discharges occurring in fiscal year 
        1997 and each subsequent fiscal year, the target amount for the 
        preceding year (determined without application of clause 
        (viii)) increased by the applicable percentage increase under 
        subparagraph (B)(iv).'', and
            (4) by adding at the end the following:
``Notwithstanding clauses (v) and (vi), the target amount with respect 
to discharges occurring in fiscal year 1996 and each subsequent fiscal 
year shall be the higher of the amount determined under clause (v) or 
(vi) (as applicable) and the target amount with respect to discharges 
occurring in fiscal year 1995 (as determined under clause (iv)) 
increased by the applicable percentage increase under subparagraph 
(B)(iv) for discharges occurring in fiscal year 1996. The Secretary may 
substitute more recent cost reporting periods for those specified in 
subclause (v) but no more often than every four fiscal years.''.
    (b) Eliminating the Volume Adjustment.--Section 1886(d)(5)(D)(ii) 
(42 U.S.C. 1395ww(d)(5)(D)(ii)) is amended by striking ``In'' and 
inserting ``For cost reporting periods beginning before October 1, 
1995, in''.

SEC. 11117. RURAL PRIMARY CARE HOSPITAL PROGRAM.

    (a) In General.--The heading to section 1820 (42 U.S.C. 1395i-4)) 
is amended to read ``rural primary care hospital program''.
    (b) Expansion of Program to All States.--Section 1820(a)(1) (42 
U.S.C. 1395i-4(a)(1)) is amended by striking ``not more than 7'' after 
``shall make grants to''.
    (c) Moratorium on New Essential Access Community Hospital 
Designations.--Section 1820 (42 U.S.C. 1395i-4)) is amended--
            (1) in subsections (a)(3) and (b)(1)(C), by striking 
        ``essential access community hospitals or'' after ``as'',
            (2) in subsection (c)(1)(B), by striking ``an essential 
        access community hospital'' after ``is designated as'',
            (3) in subsection (d)(1), by striking ``essential access 
        community hospitals or'' after ``facilities in the State as'',
            (4) in subsection (d)(2), by striking ``or an essential 
        access community hospital'' after ``rural primary care 
        hospital'',
            (5) by striking subsection (e),
            (6) in subsection (g)(1), by amending subparagraph (A) to 
        read as follows:
                    ``(A) at least one hospital that is not a rural 
                primary care hospital. and'',
            (7) in subsection (i)--
                    (A) in the heading, by striking ``Hospitals or'' 
                and ``by Secretary'',
                    (B) by striking paragraphs (1) and (2)(C),
                    (C) in paragraph (2)(A)(ii), by striking 
                ``subparagraph (B)'' and inserting ``paragraph (2)'',
                    (D) by redesignating paragraph (2) as (1),
                    (E) by striking the subparagraph designation 
                ``(B)'' and inserting  ``(2)  Facilities  designated  
                by  the  Sec- retary.--'',
                    (F) by striking the heading to paragraph (1) (as 
                redesignated by subparagraph (D) of this paragraph) and 
                the subparagraph designation ``(A)'' and inserting 
                ``Facilities designated by the state.--'', and
                    (G) by redesignating clauses (i) through (iii) of 
                paragraph (1) (as redesignated by subparagraph (D) of 
                this paragraph) as subparagraphs (A) through (C), and
            (8) in paragraphs (1) and (2) of subsection (j), by 
        striking ``an essential access community hospital or'' each 
        time it appears.
    (d) Continuing Participation of Rural Primary Care Hospitals.--
Section 1820(h)(1)(A) (42 U.S.C. 1395i-4(h)(1)(A)) (as redesignated by 
subsection (c)(7) of this section) is amended by inserting before the 
semicolon 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)''.
    (e) Designation of Nonprofit or Public Hospitals.--Section 
1820(f)(1)(A) (42 U.S.C. 1395i-4(f)(1)(A)) is amended by inserting ``is 
a nonprofit or public hospital, and is'' after ``(A)''.
    (f) Establishing a Minimum Separation Distance Between 
Facilities.--Section 1820(f)(1) (42 U.S.C. 1395i-4(f)(1)) is amended--
            (1) by striking ``and'' at the end of subparagraph (G),
            (2) by striking the period at the end of subparagraph (H) 
        and adding a semicolon, and
            (3) by adding at the end the following:
                    ``(I) is located at least a 35-mile drive from any 
                rural primary care hospital or hospital, or is 
                certified by the State as being a necessary provider of 
                health care services to residents in the area, because 
                of local geography or service patterns.''.
    (g) Removal of Requirement for Prior Compliance With Hospital 
Standards.--Section 1820(f)(1)(B) (42 U.S.C. 1395i-4(f)(1)(B)) is 
amended by striking ``and had not been found, on the basis of a survey 
under section 1864, to be in violation of any requirement to 
participate as a hospital under this title''.
    (h) Limitation on Number of Inpatient Beds.--The matter in section 
1820(f)(1)(F) (42 U.S.C. 1395i-4(f)(1)(F)) preceding clause (i) is 
amended by striking ``6'' and inserting ``15''.
    (i) Limitation on Length of Inpatient Stays.--Section 1820(f) (42 
U.S.C. 1395i-4(f)) is amended--
            (1) in the matter in paragraph (1)(F) preceding clause (i), 
        by striking ``subject to paragraph (4),'',
            (2) in paragraph (1)(F)(i), by striking ``72 hours'' and 
        inserting ``96 hours'', and
            (3) by striking paragraph (4).
    (j) Conforming Change.--Section 1814(a)(8) (42 U.S.C. 1395f(a)(8)) 
is amended by striking ``within 72 hours'' and inserting ``within 96 
hours''.
    (k) Permitting Rural Primary Care Hospitals To Maintain Swing 
Beds.--Section 1820(f)(3) (42 U.S.C. 1395i-4(f)(3)) is amended--
            (1) in the first sentence, by striking everything after 
        ``are used for the furnishing of extended care services'' up to 
        the period, and
            (2) by amending the second sentence to read as follows: 
        ``Nothing in this subsection shall be construed to prohibit a 
        rural primary care hospital from entering into an agreement 
        under section 1883 under which its facilities are used for the 
        furnishing of extended care services.''.
    (l) Conforming Change.--Section 1883 (42 U.S.C. 1395tt) is amended 
by striking ``hospital'' each place it appears and inserting ``hospital 
or rural primary care hospital''.
    (m) Change in Payment Methodology.--Section 1814(l)(1) (42 U.S.C. 
1395f(l)(1)) is amended by striking ``services--'' and all that follows 
and inserting ``services is the reasonable cost of the rural primary 
care hospital in providing such services, as determined under section 
1861(v).''.
    (n) Elimination of Deadline for Development of Prospective Payment 
System.--Section 1814(l) (42 U.S.C. 1395f(l)(1)) is amended--
            (1) by striking paragraph (2), and
            (2) by striking ``(l)(1)'' and inserting ``(l)''.
    (o) No Change in Payment to Existing Essential Access Community 
Hospitals.--Clauses (iii)(III) and (v) of Section 1886(d)(5)(D) (42 
U.S.C. 1395ww(d)(5)(D)) are each amended by--
            (1) inserting ``was'' after ``is located in a rural area 
        and'', and
            (2) inserting ``as in effect on the day before effective 
        date of the Balanced Budget Act of 1995 for Economic Growth and 
        Fairness'' after ``section 1820(I)(1)''.
    (p) Conforming Amendment.--Section 1820(c)(3) (42 U.S.C. 1395i-
4(c)(3)) is amended by striking ``(i)(2)(C)'' and inserting ``(i)(2)'';
    (q) Technical Amendment.--Section 1820(f)(1)(A) (42 U.S.C. 1395i-
4(f)(1)(A)) is amended by striking ``section 1866(d)(2)(D)'' and 
inserting ``section 1886(d)(2)(D)''.

SEC. 11118. RESPITE BENEFIT.

    (a) Entitlement.--Section 1832(a)(2) (42 U.S.C. 1395k(a)(2)) is 
amended by--
            (1) striking ``and'' at the end of subparagraph (I),
            (2) striking the period at the end of subparagraph (J) and 
        inserting ``; and'', and
            (3) inserting at the end the following new subparagraph:
                    ``(K) respite services for no more than 32 hours 
                each year''.
    (b) Conditions and Limitations on Payment.--
            (1) Payment rate.--Section 1833(a)(2) (42 U.S.C. 
        13951(a)(2)) is amended by--
                    (A) adding a new subparagraph (G) to read as 
                follows:
                    ``(G)(i) with respect to respite services, payment 
                shall be made at a rate equal to $7.50 per hour for 
                1996 and at a rate to be determined by the Secretary in 
                subsequent years; and
                    ``(ii) notwithstanding any provisions of section 
                1861(v), in the case of respite services furnished by a 
                home health agency (or other organization designated by 
                the Secretary pursuant to regulations), payment to the 
                agency or other organization for respite services may 
                not exceed 110 percent of the hourly respite allowance 
                times the number of hours of respite for which the 
                agency authorizes payment.''
            (2) Conditions of payment.--Section 1835(a)(2) (42 U.S.C. 
        1395n-(a)(2)) is amended by--
                    (A) striking ``and'' at the end of subparagraph 
                (E),
                    (B) striking the period at the end of subparagraph 
                (F) and inserting ``; and'', and
                    (C) inserting at the end the following new 
                subparagraph:
                    ``(G) In the case of respite services, that the 
                individual for whom payment is claimed is severely 
                impaired due to irreversible dementia (the individual 
                has scored three or more errors on the Short Portable 
                Mental Status Questionnaire) and either needs 
                assistance in at least one out of five activities of 
                daily living (bathing, dressing, transferring, 
                toileting, and eating) or in at least one out of four 
                instrumental activities of daily living (meal 
                preparation, medication management, money management, 
                and telephoning), or needs constant supervision because 
                of one or more behavioral problems.''
            (3) Family designation of respite services provider and 
        care giver.--Section 1835(a)(2) (42 U.S.C. 1295n(a)(2)) is 
        amended by--
                    (A) by adding at the end the following new 
                sentences: ``In the case of respite services which are 
                the subject of the certification described in 
                subparagraph (G), the entity or individual providing 
                the care for which respite is sought shall designate a 
                respite services caregiver either through a home health 
                agency or (if the Secretary designates other 
                organizations to provide or arrange for such services) 
                other organization. The agency or organization shall 
                determine the amount of respite entitlement remaining 
                in the calendar year and inform the entity or 
                individual of the extent to which respite services may 
                be authorized. When services have been provided, the 
                entity or individual shall inform the agency or 
                organization, which shall then make payment to the 
                caregiver. Where additional payment is made on behalf 
                of the beneficiary, the agency or organization shall 
                assure the entity or individual is informed of the 
                limits applicable to such amount. No payment may be 
                made under this title for respite services if the 
                charge to the patient per hour for care by respite 
                aides exceeds by more than two dollars the hourly rates 
                established under this title.''
    (c) Definitions.--Section 1861 (42 U.S.C. 1395x) is amended--
            (1) in subsection (m)--
                    (A) by striking ``and'' at the end of paragraph 
                (6);
                    (B) by adding ``and'' at the end of paragraph (7); 
                and
                    (C) by inserting after paragraph (7) the following:
            ``(8) respite services as described in subsection (oo);'',
            (2) in subsection (o)--
                    (A) by striking ``and'' at the end of paragraph 
                (6);
                    (B) by adding ``and'' at the end of paragraph (7); 
                and
                    (C) by inserting after paragraph (7) the following:
            ``(8) agrees to provide or arrange for respite services as 
        described in subsection (oo);'', and
            (3) by adding at the end the following:
    ``(oo) Respite Services; Respite Aides; Respite Providers.--
            ``(1) Respite services.--The term `respite services' means 
        temporary care provided to individuals who meet the 
        requirements of section 1835(a)(2) for the purposes of ensuring 
        periodic time-off for co-resident primary informal caregivers. 
        Although respite providers may provide assistance with personal 
        care and/or household maintenance activities, their primary 
        function is to provide protective supervision for persons with 
        Alzheimer's and related dementias whose memory, orientation, 
        judgment, and reasoning abilities have become so impaired that, 
        for safety's sake , they require the constant attention or 
        close physical proximity of another person at all or almost all 
        hours of the day or night.
            ``(2) Respite aides.--The term `respite aides' means 
        individuals who have been designated by the Secretary as 
        qualified to act as caregivers for purposes of providing the 
        services described in paragraph (1). Respite aides may be nurse 
        aides as identified in section 1819, home health aides as 
        identified in section 1891, or other individuals licensed by 
        the State or recognized by the Secretary as having the skills 
        necessary to provide such services.
            ``(3) Respite providers.--The term `respite providers' 
        means organizations identified by the Secretary in regulations 
        as qualified to provide or arrange for respite services under 
        this title. The Secretary may establish by regulation any 
        requirements for respite providers as the Secretary determines 
        appropriate.''.
    (d) Payment From Supplementary Medical Insurance Trust Fund for 
Respite Services Furnished to Individuals With Only Hospital Insurance 
Coverage.--(Section 1812(a) (42 U.S.C. 1395(a)) is amended by--
            (1) striking ``and'' and the end of paragraph (3),
            (2) striking the period at the end of paragraph (4), and 
        inserting ''; and'', and
            (3) inserting at the end the following new paragraph:
            ``(5) respite services, described in section 1832(a)(2)(K), 
        except that such services shall be furnished under the 
        Supplementary Medical Insurance Program.''
    (e) Exclusion of Additional Part B Costs From Determination of Part 
B Monthly Premium.--Section 1839(a)(5) (42 U.S.C. 1395r(a)), as added 
by section 11147(f) of this Act, is further amended by--
            (1) inserting ``and Respite Benefit'' after ``Home 
        Health'', and
            (2) inserting before the period the following:
        ``and for respite services as described in section 
        1832(a)(2)(K).''
    (f) Sunset.--The amendments made by this shall be effective for 
services furnished through fiscal year 2005.

                 PART 2--PROVISIONS RELATING TO PART B

SEC. 11121. PAYMENTS FOR PHYSICIANS' SERVICES.

    (a) Establishing Update to Conversion Factor To Match Spending 
Under Sustainable Growth Rate.--
            (1) Update.--
                    (A) In general.--Section 1848(d)(3) (42 U.S.C. 
                1395w-4(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 MEI (described 
                        in section 1842(i)(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 2 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) 1995.--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) 1996 and later years.--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), the update in the conversion factor under this 
                paragraph for a year may not be--
                            ``(i) greater than 103 percent of 1 plus 
                        the Secretary's estimate of the percentage 
                        increase in the MEI (described in section 
                        1842(i)(3)) for the year (divided by 100), 
                        minus 1 and multiplied by 100, or
                            ``(ii) less than 93 percent of 1 plus the 
                        Secretary's estimate of the percentage increase 
                        in the MEI (described in section 1842(i)(3)) 
                        for the year (divided by 100), minus 1 and 
                        multiplied by 100.''.
                    (B) Effective date.--The amendments made by 
                subparagraph (A) apply to physicians' services 
                furnished on or after January 1, 1997.
            (2) Conforming amendments.--
                    (A) Section 1848(d)(2).--Section 1848(d)(2)(A) (42 
                U.S.C. 1395w-4(d)(2)(A)) is amended--
                            (i) in the matter preceding clause (i)--
                                    (I) by striking ``(or updates) in 
                                the conversion factor (or factors)'' 
                                and inserting ``in the conversion 
                                factor'',
                                    (II) by striking ``(beginning with 
                                1991)'' and inserting ``(beginning with 
                                1996)'', and
                                    (III) by striking the second 
                                sentence,
                            (ii) by amending clause (ii) to read as 
                        follows:
                            ``(ii) such factors as enter into the 
                        calculation of the update adjustment factor as 
                        described in paragraph (3)(B); and '',
                            (iii) by amending clause (iii) to read as 
                        follows:
                            ``(iii) access to services.'',
                            (iv) by striking clauses (iv), (v), and 
                        (vi), and
                            (v) by striking the last sentence.
                    (B) Section 1848(d)(2)(b).--Section 1848(d)(2)(B) 
                (42 U.S.C. 1395w-4(d)(2)(B)) is amended--
                            (i) by striking ``and'' at the end of 
                        clause (iii),
                            (ii) by striking the period at the end of 
                        clause (iv) and adding ``; and'', and
                            (iii) by adding at the end the following 
                        new clause:
                            ``(v) changes in volume or intensity of 
                        services.''.
                    (C) Redesignation of subparagraph.--Section 
                1848(d)(2) (42 U.S.C. 1395w-4(d)(2)) is further 
                amended--
                            (i) by striking subparagraphs (C), (D), and 
                        (E),
                            (ii) by redesignating striking subparagraph 
                        (F) as subparagraph (C), and
                            (iii) in subparagraph (C), as redesignated, 
                        by striking ``(or updates) in the conversion 
                        factor (or factors)'' and inserting ``in the 
                        conversion factor''.
    (b) Replacement of Volume Performance Standard With Sustainable 
Growth Rate.--
            (1) In general.--Section 1848(f) (42 U.S.C. 1395w-4(f)) is 
        amended by striking paragraphs (2) through (5) and inserting 
        the following:
            ``(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 increase in the MEI (described 
                        in section 1842(i)(3)) for 1996 (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, plus 
                        1 percentage point, 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 Balanced Budget Act of 1995 for 
                        Economic Growth and Fairness), determined 
                        without taking into account estimated changes 
                        in expenditures due to changes in the volume 
                        and intensity of physicians' services or change 
                        in expenditures resulting from changes in the 
                        update to the conversion factor under 
                        subsection (d),
                minus 1 and multiplied by 100.
                    ``(B) Subsequent years.--The sustainable growth 
                rate for all physicians' services for fiscal year 1997 
                and each subsequent year shall be equal to the product 
                of--
                            ``(i) 1 plus the Secretary's estimate of 
                        the percentage increase in the MEI for the 
                        fiscal year involved (described in section 
                        1842(i)(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, plus 1 percentage point, 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 change in expenditures 
                        resulting from changes in the update to the 
                        conversion factor under subsection (d), 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 
                test 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 an eligible organization 
                enrollee.
                    ``(B) Eligible organization enrollee.--The term 
                `eligible organization enrollee' means, with respect to 
                a fiscal year, an individual enrolled under this part 
                who has elected to receive benefits under this title 
                through an eligible organization with a contract under 
                part C (and, through 2000, enrollment with an 
                organization with a contract under section 1876(h).''.
            (2) Conforming amendments.--Section 1848(f) (42 U.S.C. 
        1395w-4(f)) is amended--
                    (A) in the heading, by striking ``volume 
                performance standard rates of increase'' and inserting 
                ``sustainable growth rate'',
                    (B) in paragraph (1)--
                            (i) in the heading, by striking ``volume 
                        performance standard rates of increase'' and 
                        inserting ``sustainable growth rate'',
                            (ii) in subparagraph (A), in the matter 
                        preceding clause (i), by striking ``performance 
                        standard rates of increase'' and inserting 
                        ``sustainable growth rate'', and
                            (iii) in subparagraph (A), by striking 
                        ``HMO enrollees'' each place it appears and 
                        inserting ``eligible organization enrollees'',
                    (C) in subparagraph (B), by striking ``performance 
                standard rates of increase'' and inserting 
                ``sustainable growth rate'', and
                    (D) in subparagraph (C)--
                            (i) in the heading, by striking 
                        ``performance standard rates of increase'' and 
                        inserting ``sustainable growth rate'',
                            (ii) in the first sentence, by striking 
                        ``with 1991), the performance standard rates of 
                        increase'' and all that follows through the 
                        first period and inserting ``with 1997), the 
                        sustainable growth rate for the fiscal year 
                        beginning in that year.'', and
                            (iii) in the second sentence, by striking 
                        ``January 1, 1990, the performance standard 
                        rate of increase under subparagraph (D) for 
                        fiscal year 1990'' and inserting ``January 1, 
                        1997, the sustainable growth rate for fiscal 
                        year 1997''.
    (c) Establishment of Single Conversion Factor for 1996.--
            (1) In general.--Section 1848(d)(1) (42 U.S.C. 1395w-
        4(d)(1)) is amended--
                    (A) by redesignating subparagraph (C) as 
                subparagraph (D), and
                    (B) by inserting after subparagraph (B) the 
                following:
                            ``(C) Special rule for 1996.--For 1996, the 
                        conversion factor under this subsection shall 
                        be $35.42 for all physicians' services, except 
                        that, for surgical services (as defined in 
                        subsection (j)(i), the conversion factor for 
                        1996 shall be $38.10.''.
            (2) Conforming amendments.--Section 1848 (42 U.S.C. 1395w-
        4) is amended--
                    (A) by striking ``(or factors)'' each place it 
                appears in subsection (d)(1)(A) and (d)(1)(D)(ii) (as 
                redesignated by paragraph (1)(a),
                    (B) in subsection (d)(1)(A), by striking ``or 
                updates'',
                    (C) in subsection (d)(1)(D)(ii) (as redesignated by 
                paragraph (1)(A)), by striking ``(or updates)'', and
                    (D) in subsection (i)(1)(C), by striking 
                ``conversion factors'' and inserting ``the conversion 
                factor''.

SEC. 11122. PRACTICE EXPENSE RELATIVE VALUE UNITS.

    (a) Extension to 1997.--Section 1848(c)(2)(E)(i) (42 U.S.C. 1395w-
4(c)(2)(E)(i)) is amended--
            (1) by striking ``and'' at the end of subclause (II),
            (2) by striking the period at the end of subclause (III) 
        and inserting ``, and'', and
            (3) by inserting at the end the following:
                    ``(IV) 1997, by an additional 25 percent of such 
                excess.''
    (b) Change in Floor on Reductions and Services Covered.--Clauses 
(ii) and (iii)(II) of Section 1848(c)(2)(E) (42 U.S.C. 1395w-
4(c)(2)(E)) are each amended by inserting ``(or 115 percent in the case 
of 1997)'' after ``128 percent''.

SEC. 11123. SINGLE FEE FOR SURGERY.

    (a) In General.--Section 1848(a) (42 U.S.C. 1395w-4(a)) is amended 
by adding at the end the following:
            ``(5) Single fee for surgery.--
                    ``(A) General rule.--Payment under this part for 
                surgical services (as defined by the Secretary under 
                subsection (j)(1)), when a separate payment is also 
                made for the services of a physician or physician 
                assistant acting as an assistant at surgery, may not 
                (except as provided in subparagraph (B)), when added to 
                the separate payment made for the services of that 
                other practitioner, exceed the amount that would be 
                paid for the surgical services if a separate payment 
                were not made for the services of that practitioner.
                    ``(B) Exceptions.--The Secretary may specify 
                surgery procedures or situations to which subparagraph 
                (A) shall not apply.''
    (b) Conforming Amendment.--Section 1848(g)(2)(D) (42 U.S.C. 1395w-
4(g)(2)(D)) is amended by inserting ``(or the lower amount under 
subsection (a)(5))'' after ``subsection (a)''.
    (c) Effective Date.--The amendments made by the preceding 
subsections apply to services furnished on or after January 1, 1996.

SEC. 11124. INCENTIVES TO CONTROL HIGH VOLUME FOR IN-HOSPITAL 
              PHYSICIANS' SERVICES.

    (a) In General.--
            (1) Limitations described.--Part B of title XVIII is 
        amended by adding at the end the following:

``SEC. 1849. INCENTIVES TO CONTROL HIGH VOLUME FOR IN-HOSPITAL 
              PHYSICIANS' SERVICES.

    ``(a) Services Subject to Reduction.--
            ``(1) Determination of hospital-specific per admission 
        relative value.--Not later than October 1 of each year 
        (beginning with 1998), the Secretary shall determine for each 
        hospital--
                    ``(A) the hospital-specific per admission relative 
                value under subsection (b)(2) for the following year, 
                and
                    ``(B) whether such hospital-specific relative value 
                is projected to exceed the allowable average per 
                admission relative value applicable to the hospital for 
                the following year under subsection (b)(1).
            ``(2) Reduction for services at hospitals exceeding 
        allowable average per admission relative value.--If the 
        Secretary determines (under paragraph (1)) that a medical 
        staff's hospital-specific per admission relative value for a 
        year (beginning with 1999) is projected to exceed the allowable 
        average per admission relative value applicable to the medical 
        staff for the year, the Secretary shall reduce (in accordance 
        with subsection (c)) the amount of payment otherwise determined 
        under this part for each physician's service furnished during 
        the year to an inpatient of the hospital by an individual who 
        is a member of the hospital's medical staff.
            ``(3) Timing of determination; notice to medical staffs and 
        carriers.--Not later than October 1 of each year (beginning 
        with 1998), the Secretary shall notify the medical executive 
        committee of each hospital (as set forth in the Standards of 
        the Joint Commission on the Accreditation of Health 
        Organizations) of the determinations made with respect to the 
        medical staff under paragraph (1).
    ``(b) Determination of Allowable Average per Admission Relative 
Value and Hospital--Specific per Admission Relative Values.--
            ``(1) Allowable average per admission relative value.--
                    ``(A) Urban hospitals.--In the case of a hospital 
                located in an urban area, the allowable average per 
                admission relative value established under this 
                subsection for 1999 and 2000 is equal to 125 percent 
                and for years after 2000 is 120 percent of the median 
                of 1997 hospital-specific per admission relative values 
                determined under paragraph (2) for all hospital medical 
                staffs.
                    ``(B) Rural hospitals.--In the case of a hospital 
                located in a rural area, the allowable average per 
                admission relative value established under this 
                subsection for 1999 and each succeeding year, is equal 
                to 140 percent of the median of the 1997 hospital-
                specific per admission relative values determined under 
                paragraph (2) for all hospital medical staffs.
            ``(2) Hospital-specific per admission relative value.--
                    ``(A) In general.--The hospital-specific per 
                admission relative value projected for a hospital 
                (other than a teaching hospital) for a calendar year, 
                shall be equal to the average per admission relative 
                value (as determined under section 1848(c)(2)) for 
                physicians' services furnished to inpatients of the 
                hospital by the hospital's medical staff (excluding 
                interns and residents) during the second year preceding 
                such calendar year, adjusted for variations in case-mix 
                and disproportionate share status among hospitals (as 
                determined by the Secretary under subparagraph (C)).
                    ``(B) Special rule for teaching hospitals.--The 
                hospital-specific relative value projected for a 
                teaching hospital in a calendar year shall be equal to 
                the sum of--
                            ``(i) the average per admission relative 
                        value (as determined under section 1848(c)(2)) 
                        for physicians' services furnished to 
                        inpatients of the hospital by the hospital's 
                        medical staff (excluding interns and residents) 
                        during the second year preceding such calendar 
                        year, and
                            ``(ii) the equivalent per admission 
                        relative value (as determined under section 
                        1848(c)(2)) for physicians' services furnished 
                        to inpatients of the hospital by interns and 
                        residents of the hospital during the second 
                        year preceding such calendar year, adjusted for 
                        variations in case-mix, disproportionate share 
                        status, and teaching status among hospitals (as 
                        determined by the Secretary under subparagraph 
                        (C)). The Secretary shall determine such 
                        equivalent relative value unit per admission 
                        for interns and residents based on the best 
                        available data and may make such adjustment in 
                        the aggregate.
                    ``(C) Adjustment for teaching and disproportionate 
                share hospitals.--The Secretary shall adjust the 
                allowable per admission relative values otherwise 
                determined under this paragraph to take into account 
                the needs of teaching hospitals and hospitals receiving 
                additional payments under subparagraphs (F) and (G) of 
                section 1886(d)(5). The adjustment for teaching status 
                or disproportionate share shall not be less than zero.
    ``(c) Amount of Reduction.--The amount of payment otherwise made 
under this part for a physician's service that is subject to a 
reduction under subsection (a) during a year shall be reduced 15 
percent, in the case of a service furnished by a member of the medical 
staff of the hospital for which the Secretary determines under 
subsection (a)(1) that the hospital medical staff's projected relative 
value per admission exceeds the allowable average per admission 
relative value.
    ``(d) Reconciliation of Reductions Based on Hospital-Specific 
Relative Value per Admission With Actual Relative Values.--
            ``(1) Determination of actual average per admission 
        relative value.--Not later than October 1 of each year 
        (beginning with 2000), the Secretary shall determine the actual 
        average per admission relative value (as determined pursuant to 
        section 1848(c)(2)) for the physicians' services furnished by 
        members of a hospitals medical staff to inpatients of the 
        hospital during the previous year, on the basis of claims for 
        payment for such services that are submitted to the Secretary 
        not later than 90 days after the last day of such previous 
        year. The actual average per admission relative value shall be 
        adjusted by the appropriate case-mix, disproportionate share 
        factor, and teaching factor for the hospital medical staff (as 
        determined by the Secretary under subsection (b)(2)(C)). 
        Notwithstanding any other provision of this title, no payment 
        may be made under this part for any physician's service 
        furnished by a member of a hospital's medical staff to an 
        inpatient of the hospital during a year unless such claim is 
        submitted to the Secretary for payment for such service not 
        later than 90 days after the last day of the year.
            ``(2) Reconciliation with reductions taken.--In the case of 
        a hospital for which the payment amounts for physicians' 
        services furnished by members of the hospital's medical staff 
        to inpatients of the hospital were reduced under this section 
        for a year--
                    ``(A) if the actual average per admission relative 
                value for such hospital's medical staff during the year 
                (as determined by the Secretary under paragraph (1)) 
                did not exceed the allowable average per admission 
                relative value applicable to the hospital's medical 
                staff under subsection (b)(1) for the year, the 
                Secretary shall reimburse the fiduciary agent for the 
                medical staff by the amount by which payments for such 
                services were reduced for the year under subsection 
                (c), including interest at an appropriate rate 
                determined by the Secretary;
                    ``(B) if the actual average per admission relative 
                value for such hospital's medical staff during the year 
                exceeded the allowable average per admission relative 
                value applicable to the hospital's medical staff under 
                subsection (a)(1) for the year, the Secretary shall 
                reimburse the fiduciary agent for the medical staff the 
                amount withheld under subsection (c) multiplied by the 
                `final ratio', including interest at an appropriate 
                rate determined by the Secretary. The final ratio 
                described in the previous sentence shall be determined 
                by dividing the difference between the initial ratio 
                and 0.85, by 0.15, where the initial ratio is 
                determined by dividing the medical staff's allowable 
                average per admission relative value for a year (as 
                determined under subsection (a)(1)) by the medical 
                staff's actual hospital-specific per admission relative 
                value for such year, but in no case shall the initial 
                ratio be less than 0.85.
            ``(3) Medical executive committee of a hospital.--Each 
        medical executive committee of a hospital whose medical staff 
        is projected to exceed the allowable relative value per 
        admission for a year, shall have one year from the date of 
        notification that such medical staff is projected to exceed the 
        allowable relative value per admission to designate a fiduciary 
        agent for the medical staff to receive and disburse any 
        appropriate withhold amount made by the carrier.
            ``(4) Alternative reimbursement to members of staff.--At 
        the request of a fiduciary agent for the medical staff, if the 
        fiduciary agent for the medical staff is owed the reimbursement 
        described in paragraph (2)(B) for excess reductions in payments 
        during a year, the Secretary shall make such reimbursement to 
        the members of the hospital's medical staff, on a pro-rata 
        basis according to the proportion of expenditures for 
        physicians' services furnished to inpatients of the hospital 
        during the year that were furnished by each member of the 
        medical staff.
    ``(e) Definitions.--In this section, the following definitions 
apply:
            ``(1) Medical staff.--An individual furnishing a 
        physician's service is considered to be on the medical staff of 
        a hospital--
                    ``(A) if (in accordance with requirements for 
                hospitals established by the Joint Commission on 
                Accreditation of Health Organizations)--
                            ``(i) the individual is subject to bylaws, 
                        rules, and regulations established by the 
                        hospital to provide a framework for the self-
                        governance of medical staff activities,
                            ``(ii) subject to such bylaws, rules, and 
                        regulations, the individual has clinical 
                        privileges granted by the hospital's governing 
                        body, and
                            ``(iii) under such clinical privileges, the 
                        individual may provide physicians' services 
                        independently within the scope of the 
                        individual's clinical privileges, or
                    ``(B) if such physician provides at least one 
                service to a medicare beneficiary in such hospital.
            ``(2) Rural area; urban area.--The terms `rural area' and 
        `urban area' have the meaning given such terms under section 
        1886(d)(2)(D).
            ``(3) Teaching hospital.--The term `hospital' means a 
        hospital which has a teaching program approved as specified in 
        section 1861(b)(6).
            ``(4) Hospital.--The term `hospital' means a subsection (d) 
        hospital as defined in section 1886(d).
            ``(5) Physicians' services.--The term `physicians' 
        services' means those services described in section 1848(j)(3).
            (2) Conforming amendments.--
                    (A) Section 1833 (a).--Section 1833(a)(1)(N) (42 
                U.S.C. 13951(a)(1)(N)) is amended by inserting 
                ``(subject to reduction under section 1849)'' after 
                ``1848(a)(1)''.
                    (B) Section 1848 (a).--Section 1848(a)(1)(B) (42 
                U.S.C. 1395w-4(a)(1)(B)) is amended by striking ``this 
                subsection,'' and inserting ``this subsection and 
                section 1849,''.
    (b) Requiring Physicians To Identify Hospital at Which Service 
Furnished.--Section 1848(g)(4)(A)(i) (42 U.S.C. 1395w-4(g)(4)(A)(i)) is 
amended by striking ``beneficiary,'' and inserting ``beneficiary (and, 
in the case of a service furnished to an inpatient of a hospital, 
report the hospital identification number on such claim form),''.
    (c) Effective Dates.--
            (1) Subsection (a).--The amendments made by subsection (a) 
        apply to services furnished on or after January 1, 1999.
            (2) Subsection (b).--The amendments made by subsection (b) 
        apply to services furnished on or after January 1, 1998.

SEC. 11125. AMBULATORY SURGICAL CENTER SERVICE UPDATES.

    Section 1833(i)(2)(C) (42 U.S.C. 13951(i)(2)(C)) is amended--
            (1) by striking ``1996'' and inserting ``2003'', and
            (2) by inserting after the subparagraph designation ``(C)'' 
        the following: ``Notwithstanding the second sentence of 
        subparagraph (A) or the second sentence of subparagraph (B), 
        with respect to fiscal years 1996 through 2002, the Secretary 
        shall increase amounts for facility services by the percentage 
        increase in the consumer price index for all urban consumers 
        (U.S. city average) as estimated by the Secretary for the 12-
        month period ending with the midpoint of the year involved, 
        reduced by two percentage points.''

SEC. 11126. OXYGEN AND OXYGEN EQUIPMENT.

    (a) In General.--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 adding 
                ``; and'', and
            (3) by adding at the end the following:
                            ``(v) in each of year beginning with 1996 
                        is the national limited monthly payment rate 
                        computed under subparagraph (B) for the item 
                        for the year reduced by the applicable 
                        percentage described in subparagraph (D) (but 
                        in no case may the amount determined under this 
                        clause be less than 70 percent of such national 
                        limited payment rate).''.
    (b) Applicable Percentage Described.--Section 1834(a)(9) (42 U.S.C. 
1395m(a)(9)) is amended by adding at the end the following:
                    ``(D) Applicable percentage described.--In clause 
                (v) of subparagraph (C), the `applicable percentage' 
                with respect to a year described in that clause is--
                            ``(i) for 1996, 20 percent,
                            ``(ii) for 1997, 21\2/3\ percent,
                            ``(iii) for 1998, 23\1/3\ percent,
                            ``(iv) for 1999, 25 percent,
                            ``(v) for 2000, 26\2/3\ percent,
                            ``(vi) for 2001, 28\1/3\ percent, and
                            ``(vii) for 2002 and thereafter, 30 
                        percent.''.

SEC. 11127. PAYMENT LIMITS FOR HMOS AND CMPS WITH RISK CONTRACTS.

    (a) In General.--Section 1851F(e)(2)(C) (as added by subtitle B of 
this title) is amended--
            (1) by inserting ``, subject to adjustment to take into 
        account the provisions of the succeeding clauses'' before the 
        period,
            (2) by striking ``The annual'' and inserting ``(i) In 
        general.--The annual'', and
            (3) by adding at the end the following new clauses:
            ``(ii) Ceiling.--The portion of the annual per capita rate 
        of payment for each such class attributable to payments made 
        from the Federal Supplementary Medical Insurance Trust Fund may 
        not exceed 95 percent of the following amount (unless the 
        portion of the annual per capita rate of payment for each such 
        class attributable to payments made from the Federal Hospital 
        Insurance Trust Fund is less than 95 percent of the weighted 
        national average of all adjusted average per capita costs 
        determined under paragraph (4) for that class that are 
        attributable to payments made from the Federal Hospital 
        Insurance Trust Fund):
                    ``(I) 1996.--For 1996, 150 percent of the weighted 
                national average of all adjusted average per capita 
                costs determined under paragraph (4) for that class 
                that are attributable to payments made from such Trust 
                Fund, plus 80 percent of the amount by which (if any) 
                the adjusted average per capita cost for that class 
                exceeds 150 percent of that weighted national average.
                    ``(II) 1997.--For 1997, 150 percent of the weighted 
                national average of all adjusted average per capita 
                costs determined under paragraph (4) for that class 
                that are attributable to payments made from such Trust 
                Fund, plus 60 percent of the amount by which (if any) 
                the adjusted average per capita cost for that class 
                exceeds 150 percent of that weighted national average.
                    ``(III) 1998.--For 1998, 150 percent of the 
                weighted national average of all adjusted average per 
                capta costs determined under paragraph (4) for that 
                class that are attributable to payments made from such 
                Trust Fund, plus 40 percent of the amount by which (if 
                any) the adjusted average per capita cost for that 
                class exceeds 150 percent of that weighted national 
                average.
                    ``(IV) 1999.--For 1999, 150 percent of the weighted 
                national average of all adjusted average per capita 
                costs determined under paragraph (4) for that class 
                that are attributable to payments made from such Trust 
                Fund, plus 20 percent of the amount by which (if any) 
                the adjusted average per capita cost for that class 
                exceeds 150 percent of that weighted national average.
                    ``(V) 2000 and later years.--For 2000 and each 
                succeeding year (subject to the establishment by the 
                Secretary of alternative limits under clause (vi)), 150 
                percent of the weighted national average of all 
                adjusted average per capita costs determined under 
                paragraph (4) for that class that are attributable to 
                payments made from such Trust Fund.
            ``(iii) Floor.--For 1996 and succeeding years, the portion 
        of the annual per capita rate of payment for each such class 
        attributable to payments made from the Federal Supplementary 
        Medical Insurance Trust Fund may not be less than 80 percent of 
        95 percent of the weighted national average of all adjusted 
        average per capita costs determined under paragraph (4) for 
        that class that are attributable to payments made from such 
        Trust Fund, unless the portion of the annual per capita rate of 
        payment for each such class attributable to payments made from 
        the Federal Hospital Insurance Trust Fund is greater than 95 
        percent of the weighted national average of all adjusted 
        average per capita costs determined under paragraph (4) for 
        that class that are attributable to payments made from the 
        Federal Hospital Insurance Trust Fund.
            ``(iv) Future revisions.--For 2001 and succeeding years, 
        the Secretary may revise any of the percentages otherwise 
        applicable during a year under the preceding clauses (other 
        than clause (i)), but only if the aggregate payments made under 
        this title to eligible organizations under risk-sharing 
        contracts during the year is not greater than the aggregate 
        payments that would have been made under this title to such 
        organizations during the year if the Secretary had not revised 
        the percentages.
            ``(v) Disregard of esrd costs.--For purposes of clauses 
        (ii) and (iii), in determining the weighted average of all 
        adjusted average per capita costs determined under paragraph 
        (4) for a class, the Secretary shall not take into account any 
        costs associated with individuals entitled to benefits under 
        this title under section 226A.''.
    (b) Conforming Amendment.--Section 1851F(e) (as added by subtitle B 
of this title)) is amended by inserting ``, adjusted to take into 
account the limitations imposed by clauses (ii) through (iv) of 
paragraph (2)(C)'' before the period.

SEC. 11128. WAIVE COST-SHARING FOR MAMMOGRAPHY.--

    (a) Diagnostic Mammography.--Section 1861(s) (42 U.S.C. 1395x(s)) 
is amended--
            (1) in paragraph (3), by striking ``including diagnostic 
        mammography if conducted by a facility that has a certificate 
        (or provisional certificate) issued under section 354 of the 
        Public Health Service Act'',
            (2) by striking ``and'' at the end of paragraph (15),
            (3) by striking the period at the end of paragraph (16) and 
        inserting ``; and'', and
            (4) by adding at the end the following:
            ``(17) diagnostic mammography, if conducted by a facility 
        that has a certificate (or provisional certificate) issued 
        under section 354 of the Public Health Service Act.''.
    (b) Payment for Screening Mammography.--Section 1834(c)(1)(C) (42 
U.S.C. 1395m(c)(1)(C)) is amended by striking ``, subject to the 
deductible established under section 1833(b),'' and ``80 percent of''.
    (c) Waiver of Deductible.--The first sentence of section 1833(b) 
(42 U.S.C. 1395l(b)) is amended by--
            (1) striking ``and'' before ``(4)'', and
            (2) inserting the following before the period: ``, and (5) 
        such deductible shall not apply with respect to screening and 
        diagnostic mammography described in section 1861(s)(13) and 
        section 1861(s)(17).''
    (d) Waiver of Coinsurance.--Section 1833(a)(1) (42 U.S.C. 
1395l(a)(1)) is amended by--
            (1) striking ``and'' at the end of clause (O),
            (2) inserting after clause (P) the following: ``, and
            ``(Q) with respect to diagnostic mammography described in 
        section 1861(s)(17), the amount paid shall be 100 percent of 
        the fee schedule amount provided under section 1848.''.
    (e) Waiver of Coinsurance in Hospital Outpatient Departments.--The 
third sentence of section 1866(a)(2)(A) (42 U.S.C. 1395cc(a)(2)(A)) is 
amended by inserting after ``1861(s)(10)(A)'' the following: ``, with 
respect to items and services described in section 1861(s)(13), with 
respect to items and services described in section 1861(s)(17),''.
    (f) Effective Date.--The amendments made by the preceding 
subsections apply to services furnished on or after January 1, 1997.

SEC. 11129. ANNUAL MAMMOGRAMS.

    (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 63 years of 
        age,'' and
            (2) by striking clause (v).
    (b) Effective Date.--The amendment made by subsection (a) applies 
to services furnished on or after January 1, 1997.

SEC. 11130. COVERAGE OF COLORECTAL SCREENING.

    (a) In General.--Section 1834 (42 U.S.C. 1395m) is amended by 
inserting after subsection (c) the following:
    ``(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 in 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 sigmoidoscopies.--
                    ``(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 and 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.''.
    (b) Conforming Amendments.--
            (1) Section 1833(a).--Paragraphs (1)(D) and (2)(D) of 
        section 1833(a) (42 U.S.C. 13951(a)) are each amended by 
        striking ``subsection (h)(1),'' and inserting ``subsection 
        (h)(1) or section 1834(d)(1),''.
            (2) Section 1848(a)(2)(A).--Clauses (i) and (ii) of section 
        1848(a)(2)(A) (42 U.S.C. 13951(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)''.
            (3) Section 1862(a).--Section 1862(a) (42 U.S.C. 1395y(a)) 
        is amended--
                    (A) in paragraph (1)--
                            (i) by striking ``and'' at the end of 
                        subparagraph (E),
                            (ii) by striking the semicolon at the end 
                        of subparagraph (F) and inserting ``and'', and
                            (iii) by adding at the end the following:
                    ``(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
                    (B) in paragraph (7), by striking ``paragraph 
                (1)(B) or under paragraph (1)(F)'' and inserting 
                ``subparagraphs (B), (F), or (G) of paragraph (1)''.
    (c) Effective Date.--The amendments made by the preceding 
subsections apply to services furnished on or after January 1, 1996.

SEC. 11131. PAYMENTS FOR VACCINES AND VACCINE ADMINISTRATION.

    (a) Payment Amounts for the Administration of Certain Vaccines.--
            (1) In general.--Section 1833(k) (42 U.S.C. 13951(k)) is 
        amended to read as follows:
    ``(k) Payment Amount for Certain Vaccines.--
            ``(1) In general.--The payment amount under this part for 
        the administration of a vaccine described in section 
        1861(s)(10) shall be equal to--
                    ``(A)(i) for a vaccine administered in 1996 not in 
                connection with the furnishing of another service, 
                $9.00, and
                    ``(ii) for a vaccine administered in 1996 in 
                connection with the furnishing of another service, 
                $4.00, and
                    ``(B) for a vaccine administered in any subsequent 
                year, the amount determined under subparagraph (A), or 
                under this subparagraph, for the previous year, 
                increased by the update under section 1848(d)(3) for 
                that subsequent year for physicians' services 
                (described in section 1848(d)(3)(A)(ii)(I)).
            ``(2) Cross reference.--For a limitation on actual charges 
        for items and services described in section 1861(s)(10), see 
        paragraphs (1) and (2) of section 1848(g).''.
            (2) Conforming amendment to section 1832(a)(1).--Section 
        1832(a)(1) (42 U.S.C. 1395k(a)(1)) is amended by striking ``and 
        (D)'' and inserting ``, (D), and (K)''.
            (3) Conforming amendments to section 1832(a)(2).--Section 
        1832(a)(2) (42 U.S.C. 1395k(a)(2)) is amended--
                    (A) in subparagraph (B), by striking ``described in 
                subparagraph (G) or subparagraph (I)'' and inserting 
                ``or services described in subparagraph (G), (I), or 
                (K)'',
                    (B) in subparagraph (D), by inserting before the 
                semicolon the following: ``, other than, in either 
                case, services described in subparagraph (K)'',
                    (C) in subparagraph (H), by inserting before the 
                semicolon the following: ``, other than services 
                described in subparagraph (K)'',
                    (D) in subparagraph (I), by striking the final 
                ``and'',
                    (E) in subparagraph (J), by striking the period and 
                adding ``; and'', and
                    (F) by adding at the end the following:
                    ``(K) administration of vaccines by providers of 
                services, or as rural health clinic or Federally 
                qualified health center services.''.
            (4) Conforming amendments to section 1833(a)(1).--Section 
        1833(a)(1)(B) (42 U.S.C. 13951(a)(1)(B)) is amended--
                    (A) by striking ``items and services described'' 
                and inserting ``vaccines listed'', and
                    (B) by inserting at the end the following: ``and, 
                with respect to the administration of those vaccines, 
                the amounts described in subsection (k)(1),''
            (5) Conforming amendments to section 1833(a)(2).--Section 
        1833(a)(2) (42 U.S.C. 13951(a)(2)) is amended--
                    (A) in the matter preceding subparagraph (A), by 
                striking ``and (I)'' and inserting ``, (I), and (K)'', 
                and
                    (B) in the matter in subparagraph (A) preceding 
                clause (i), by striking ``items and services 
                described'' and inserting ``vaccines listed''.
            (6) Conforming amendment to section 1833(a)(3).--Section 
        1833(a)(3) (42 U.S.C. 13951(a)(3)) is amended by striking 
        ``items and services described'' and inserting ``vaccines 
        listed''.
            (7) Conforming amendments to section 1833(a)(6).--Section 
        1833(a)(6) (42 U.S.C. 13951(a)(6)) is amended--
                    (A) by inserting ``other than services described in 
                section 1832(a)(2)(K)'' after ``services'', and
                    (B) by striking ``and''.
            (8) Conforming amendment to section 1833(a)(7).--Section 
        1833(a)(7) (42 U.S.C. 13951(a)(7)) is amended by striking the 
        period and adding at the end ``; and''.
            (9) Cross reference.--Section 1833(a) (42 U.S.C. 13951(a)) 
        is amended by adding at the end the following:
            ``(8) in the case of services described in section 
        1832(a)(2)(k), the amount described in subsection (k)(1).''.
            (10) Conforming amendment to section 1834(g).--Section 
        1834(g)(2) (42 U.S.C. 1395m(g)(2)) is amended by inserting 
        ``(other than services described in section 1832(a)(2)(K))'' 
        after ``hospital services''.
            (11) Conforming amendments to section 1842(b).--
                    (A) Initial matter in paragraph (3)(b).--The matter 
                in section 1842(b)(3)(B) (42 U.S.C. 1395u(b)(3)(B)) 
                preceding clause (i) is amended by inserting ``, where 
                payment under this part for a service is on a basis 
                other than a cost basis,'' after ``carrier, and''.
                    (B) Paragraph (3)(b)(ii).--Section 
                1842(b)(3)(B)(ii)(I) (42 U.S.C. 1395u(b)(3)(B)(ii)(I)) 
                is amended by inserting ``(or other payment basis)'' 
                after ``reasonable charge''.
            (12) Conforming amendments to section 1848(g).--
                    (A) Paragraph (1).--The first sentence of section 
                1848(g)(1) (42 U.S.C. 1395w-4(g)(1)) is amended by 
                inserting ``or items and services described in section 
                1861(s)(10)'' after ``January 1, 1991)''.
                    (B) Paragraph (2).--Section 1848(g)(2)(C) (42 
                U.S.C. 1395w-4(g)(2)(C)) is amended by adding at the 
                end the following: ``For items and services described 
                in section 1861(s)(10) furnished in a year after 1994, 
                the `limiting charge' shall be 115 percent of the 
                applicable amount described in section 1833(k)(1).''.
    (b) Elimination of Coinsurance and Deductible for Hepatitis B 
Vaccine.--Section 1833(a)(1)(B) (42 U.S.C. 13951(a)(1)(B)), the matter 
in subparagraph (A) of section 1833(a)(2) (42 U.S.C. 13951(a)(2)) 
preceding clause (i), section 1833(a)(3) (42 U.S.C. 13951(a)(3)), 
paragraph (1) of the first sentence of section 1833(b) (42 U.S.C. 
13951(b)), and the third sentence of section 1866(a)(2)(A) (42 U.S.C. 
1395cc(a)(2)(A)) are each amended by striking ``1861(s)(10)(A)'' and 
inserting ``1861(s)(10)''.
    (c) Repeal of Obsolete Provisions.--
            (1) Social security act.--Section 1861(s)(10)(A) (42 U.S.C. 
        1395x(s)(10)(A)) is amended by striking ``, subject to section 
        4071(b) of the Omnibus Reconciliation Act of 1987,''.
            (2) OBRA-1987.--Section 4071(b) of the Omnibus Budget 
        Reconciliation Act of 1987 is repealed.

              PART 3--PROVISIONS RELATING TO PARTS A AND B

SEC. 11141. CENTERS OF EXCELLENCE.

    (a) In General.--Title XVIII is amended by inserting after section 
1888 the following:

``SEC. 1889. CENTERS OF EXCELLENCE.

    ``(a) In General.--The Secretary shall use a competitive process to 
contract with centers of excellence for cataract surgery, coronary 
artery by-pass surgery, and such other services as the Secretary 
determines to be appropriate. Payment under this title shall be made 
for services subject to such contracts on the basis of negotiated or 
all-inclusive rates as follows:
            ``(1) Coverage of urban area.--The center shall cover 
        services provided in an urban area (as defined in section 
        1886(d)(2)(D)) for years beginning with fiscal year 1996.
            ``(2) Savings required.--The amount of payment made by the 
        Secretary to the center under this title for services covered 
        under the project shall be less than the aggregate amount of 
        the payments that the Secretary would have made to the center 
        for such services had the project not been in effect.
            ``(3) Types of services.--The Secretary shall make payments 
        to the center on such a basis for the following services 
        furnished to individuals entitled to benefits under this title:
                    ``(A) Facility, professional, and related services 
                relating to cataract surgery.
                    ``(B) Coronary artery bypass surgery and related 
                services.
                    ``(C) Such other services as the Secretary and the 
                center may agree to cover under the agreement.
    ``(b) Rebate of Portion of Savings.--In the case of any services 
furnished by a center under subsection (a), the Secretary shall make a 
payment to each individual to whom such services are furnished at such 
time and in such manner as the Secretary may provide, in an amount 
equal to 10 percent of the amount by which--
            ``(1) the amount of payment that would have been made by 
        the Secretary under this title to the center for such services 
        if the services had not been provided at the center, exceeds
            ``(2) the amount of payment made by the Secretary under 
        this title to the center for such services.''.
    (b) Effective Date.--The amendments made by subsection (a) apply to 
services furnished on or after October 1, 1996.

SEC. 11142. MAINTAINING SAVINGS RESULTING FROM TEMPORARY FREEZE ON 
              PAYMENT INCREASES FOR HOME HEALTH SERVICES.

    (a) Basing Updates to Per Visit Cost Limits on Limits for Fiscal 
Year 1993.--Section 1861(v)(1)(L)(iii) (42 U.S.C. 1395x(v)(1)(L)(iii)) 
is amended by adding at the end the following sentence: ``In 
establishing limits under this subparagraph, the Secretary may not take 
into account any changes in the 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, 
1996.''.
    (b) No Exceptions Permitted Based on Amendment.--The Secretary of 
Health and Human Services shall not consider the amendment made by 
subsection (a) in making any exemptions and exceptions pursuant to 
section 1861(v)(1)(L)(ii) of the Social Security Act.

SEC. 11143. INTERIM PAYMENTS FOR HOME HEALTH SERVICES.

    (a) Reductions in Cost Limits.--Section 1861(v)(1)(L)(i) (42 U.S.C. 
1395x(v)(1)(L)(i)) is amended--
            (1) by inserting ``and before October 1, 1996,'' after 
        ``July 1, 1987'' in subclause (III),
            (2) by striking the period at the end of the matter 
        following subclause (III), and inserting ``, and'', and
            (3) by adding at the end the following new subclause:
            ``(IV) October 1, 1996, 105 percent of the median of the 
        labor-related and nonlabor per visit costs for freestanding 
        home health agencies.''.
    (b) Delay in Updates.--Section 1861(v)(1)(L)(iii) (42 U.S.C. 
1395x(v)(1)(L)(iii)) is amended by striking ``July 1, 1996'' and 
inserting ``October 1, 1996''.
    (c) 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:
                            ``(iv) Limits for fiscal years 1997 through 
                        1999.--For services furnished by home health 
                        agencies for cost reporting periods beginning 
                        on or after October 1, 1996, but before October 
                        1, 1999, 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 limitation 
                                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 nonroutine 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 patients (entitled to 
                                benefits under this title) for the year 
                                subject to the limitation to determine 
                                the aggregate agency specific per 
                                beneficiary limitation.
                            ``(v) Special rules.--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 
                                limitation 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 shall not be considered new 
                                provides for payment purposes.
                                    ``(II) For beneficiaries who use 
                                services furnished by more than one 
                                home health agency, the per beneficiary 
                                limitations shall be prorated among 
                                agencies.
                            ``(vi) Bonus payments.--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 limitation, shall receive 
                        payments equal to 50 percent of the difference 
                        between the agency's reasonable costs and its 
                        limit for fiscal years 1997, 1998, and 1999. 
                        Such payments may not exceed 5 percent of such 
                        agency's aggregate Medicare reasonable cost in 
                        a year.
                            ``(vii) Modifications for regional or 
                        national variations in utilization.--Effective 
                        January 1, 1997, or as soon as feasible, the 
                        Secretary shall modify the agency-specific per 
                        beneficiary annual limitation 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.''.
    (d) 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 comment 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.
    (e) Development of Case Mix System.--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.
    (f) Submission of Data for Case Mix System.--Effective for cost 
reporting periods beginning on or after October 1, 1998, the Secretary 
may require all home health agencies to submit such additional 
information as the Secretary deems necessary for the development of a 
reliable case mix system.

SEC. 11144. PROSPECTIVE PAYMENT FOR HOME HEALTH SERVICES.

    Title XVIII is amended by adding at the end the following:

``SEC. 1893. PROSPECTIVE PAYMENT FOR HOME HEALTH SERVICES.

    ``(a) In General.--Notwithstanding section 1861(v), the Secretary 
shall, for cost reporting periods beginning on or after October 1, 
1999, 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) Elements of System.--Such a system shall include the 
following:
            ``(1) Based on a per episode amount.--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 Balanced 
        Budget Act of 1995 for Economic Growth and Fairness, 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
            ``(2) Use of case mix.--The Secretary shall employ an 
        appropriate case mix adjustment that explains a significant 
        amount of the variation in cost.
            ``(3) Annual adjustments.--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.
            ``(4) Outliers.--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.
            ``(5) Coordination by home health agency.--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 prorated between home 
        health agencies.
    ``(c) Savings.--Prior to implementing the prospective system 
described in subsections (a) and (b) in a budget neutral fashion, the 
Secretary shall first reduce, by 15 percent, the cost limits, per 
beneficiary limits, and actual costs, described in section 
1861(v)(1)(L)(iv), as such limits are in effect on September 30, 
1999.''.

SEC. 11145. PAYMENT BASED ON LOCATION WHERE HOME HEALTH SERVICE IS 
              FURNISHED.

    (a) Conditions of Participation.--Section 1891 (42 U.S.C. 1395bbb) 
is amended by adding at the end the following:
    ``(g) Payment on Basis of Location of Service.--A home health 
agency shall submit claims for payment of home health services under 
this title only on the basis of the geographic location at which the 
service is furnished, as determined by the Secretary.''.
    (b) Wage Adjustment.--Section 1861(v)(1)(L)(iii) (42 U.S.C. 
1395x(v)(1)(L)(iii)) is amended by striking ``agency is located'' and 
inserting ``service is furnished''.
    (c) Effective Date.--The amendments made by previous subsections 
apply to services furnished on or after October 1, 1996.

SEC. 11146. ELIMINATION OF PERIODIC INTERIM PAYMENTS FOR HOME HEALTH 
              AGENCIES.

    (a) In General.--Section 1815(e)(2) (42 U.S.C. 1395g(e)(2)) is 
amended--
            (1) by inserting ``and'' at the end of subparagraph (C),
            (2) by striking subparagraph (D), and
            (3) by redesignating subparagraph (E) as (D).
    (b) Effective Date.--The amendments made by subsection (a) apply to 
payments made on or after October 1, 1999.

SEC. 11147. ESTABLISHMENT OF POST-HOSPITAL HOME HEALTH BENEFIT UNDER 
              PART A AND TRANSFER OF OTHER HOME HEALTH SERVICES TO PART 
              B.

    (a) In General.--Section 1812(a)(3) (42 U.S.C. 1395d(a)(3)) is 
amended--
            (1) by inserting ``post-hospital'' before ``home health 
        services'', and
            (2) by inserting ``for up to 100 visits during any spell of 
        illness (or, in the case of an individual who is not enrolled 
        in the insurance program established by part B, home health 
        services)'' before the semicolon.
    (b) Post-Hospital Home Health Services.--Section 1861 (42 U.S.C. 
1395x), as amended by section 11118, is further amended by adding at 
the end the following:
    ``(pp) Post-Hospital Home Health Services.--The term `post-hospital 
home health services' means home health services furnished to an 
individual under a plan of treatment established when the individual 
was an inpatient of a hospital or rural primary care hospital for not 
less than 3 consecutive days before discharge, if home health services 
are initiated for such individual within 30 days after discharge from 
the hospital or rural primary care hospital.''.
    (c) Conforming Amendments.--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:
            ``(4) post-hospital home health services furnished to the 
        individual during such spell of illness after such services had 
        been furnished to the individual for 100 visits during such 
        spell.''.
    (d) Clarification of Part-Time or Intermittent Nursing Care.--
Section 1861(m) (42 U.S.C. 1395x(m)) is amended by adding at the end 
the following: ``For purposes of paragraphs (1) and (4), the term 
`part-time or intermittent services' means skilled nursing and home 
health aide services furnished any number of days per week as long as 
they are furnished (combined) less than 8 hours each day and 28 or less 
hours each week (or, subject to review on a case-by-case basis as to 
the need for care, less than 8 hours each day and 35 or less hours per 
week). For purposes of sections 1814(a)(2)(C) and 1835(a)(2)(A), 
`intermittent' means skilled nursing care that is either provided or 
needed on fewer than 7 days each week, or less than 8 hours or each day 
of skilled nursing and home health services combined for periods of 21 
days or less (with extensions in exceptional circumstances when the 
need for additional care is finite and predictable).''.
    (e) Payments Under Part B.--Subparagraph (A) of section 1833(a)(2) 
(42 U.S.C. 13951(a)(2)) is amended to read as follows:
                    ``(A) with respect to home health services (other 
                than a covered osteoporosis drug (as defined in section 
                1861(kk)), and to items and services described in 
                section 1861(s)(10)(A), the amounts determined under 
                section 1861(v)(1)(L) or section 1893, or, if such 
                services are furnished by a public provider of 
                services, or by another provider which demonstrates to 
                the satisfaction of the Secretary that a significant 
                portion of its patients are low-income (and requests 
                that payment be made under this provision), free of 
                charge or at nominal charges to the public, the amount 
                determined in accordance with section 1814(b)(2);''.
    (f) Exclusion of Additional Part B Costs From Determination of Part 
B Monthly Premium.--Section 1839(a) (42 U.S.C. 1395r(a)) is amended--
            (A) in the second sentence of paragraph (1), by inserting 
        ``(except as provided in paragraph (5))'' before the period, 
        and
            (B) by adding at the end the following:
    ``(5) Exclusion of Home Health Costs.--In estimating the benefits 
and administrative costs which will be payable from the Federal 
Supplementary Medical Insurance Trust Fund for a year (beginning with 
1997), the Secretary shall exclude an estimate of any benefits and 
administrative 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), or home health services furnished 
under part A that are not post-hospital home health services.''
    (g) Payments From Supplementary Medical Insurance Trust Fund for 
Certain Home Health Services Furnished Under Part A.--Section 1815(a) 
(42 U.S.C. 1395g(a)) is amended by inserting after ``Trust Fund'' the 
following: ``or in the case of home health services that are not post-
hospital home health services, from the Federal Supplementary Medical 
Insurance Trust Fund)''.
    (h) Effective Date.--The amendments made by the preceding 
subsections apply to spells of illness beginning on or after October 1, 
1996.

SEC. 11148. PERMANENT EXTENSION OF CERTAIN SECONDARY PAYER PROVISIONS.

    (a) Working Disabled.--Section 1862(b)(1)(B) is amended by striking 
clause (iii).
    (b) Individual With End Stage Renal Disease.--Section 1862(b)(1)(C) 
is amended--
            (1) in the first sentence, by striking ``12-month'' each 
        place it occurs and inserting ``18-month'', and
            (2) by striking the second sentence.
    (c) IRS-SSA-HCFA Data Match.--
            (1) Social security act.--Section 1862(b)(5)(C) is amended 
        by striking clause (iii).
            (2) Internal revenue code.--Section 6103(l)(12) of the 
        Internal Revenue Code of 1986 is amended by striking 
        subparagraph (F).

                    PART 4--MEDICARE PART B PREMIUM

SEC. 11161. PART B PREMIUM.

    (a) In General.--The first and second sentences of section 
1839(a)(3) (42 U.S.C. 1395r(a)(3)) are amended to read as follows: 
``The Secretary shall, during September of each year, determine and 
promulgate a monthly premium rate for the succeeding calendar year. 
That monthly premium rate shall be equal to 50 percent of the monthly 
actuarial rate for enrollees age 65 and over, determined according to 
paragraph (1), for that succeeding calendar year.''.
    (b) Conforming and Technical Amendments.--Section 1839 (42 U.S.C. 
1395r) is amended--
            (1) in subsection (a)(2), by striking ``(b) and (e)'' and 
        inserting ``(b), (c), and (f)'',
            (2) in the third sentence of subsection (a)(3)--
                    (A) by inserting ``rate'' after ``premium'', and
                    (B) by striking ``and the derivation of the dollar 
                amounts specified in this paragraph'',
            (3) by striking subsection (e), and
            (4) by redesignating subsection (g) and (e) and inserting 
        that subsection after subsection (d).
    (c) Effective Date.--The amendments made by the preceding 
subsections apply to premiums for months after December 1995.

                  Subtitle B--Expanded Medicare Choice

SEC. 11201. EXPANDED CHOICE UNDER MEDICARE.

    (a) In General.--Title XVIII (42 U.S.C. 1395 et seq.) is amended by 
inserting after section 1804 the following:

                ``option to enroll in managed care plans

    ``Sec. 1805. Every individual entitled to benefits under part A and 
enrolled under part B or enrolled under part B only shall be eligible 
to enroll under part C with any eligible organization with which the 
Secretary has entered into a contract under part C and which serves the 
geographic area in which the individual resides.''.
    (b) Effective Date.--The amendment made by subsection (a) applies 
to enrollments whose periods begin after 1996.

SEC. 11202. BROADER CHOICE AMONG MANAGED CARE ORGANIZATIONS.

    (a) In General.--Title XVIII (42 U.S.C. 1395 et seq.) is amended--
            (1) by redesignating part C (42 U.S.C. 1395x et seq.) as 
        part D, and
            (2) by inserting after part B (42 U.S.C. 1395j et seq.) the 
        following:

                  ``PART C--MANAGED CARE ORGANIZATIONS

``SEC. 1851A. TYPES OF MANAGED CARE ORGANIZATIONS.

    ``(a) Eligible Organizations.--For purposes of this part, the term 
`eligible organization' means a public or private entity, organized 
under the laws of any State, that is--
            ``(1) a qualified health maintenance organization (QHMO),
            ``(2) a competitive medical plan (CMP),
            ``(3) a preferred provider organization (PPO), or
            ``(4) a provider sponsored organization (PSO).
    ``(b) Qualified Health Maintenance Organization (QHMO).--For 
purposes of this part, the term `qualified health maintenance 
organization' means such as organization (as defined in section 1310(d) 
of the Public Health Service Act) that meets the requirements of 
subparagraphs (B) and (E) of subsection (c)(1).
    ``(c) Competitive Medical Plan (CMP).--
            ``(1) In general.--For purposes of this part, the term 
        `competitive medical plan' means an entity that meets the 
        following requirements:
                    ``(A) Minimum services to all members.--The entity 
                provides to enrolled members at least the following 
                health care services:
                            ``(i) Physicians' services performed by 
                        physicians (as defined in section 1861(r)(1)).
                            ``(ii) Inpatient hospital services.
                            ``(iii) Laboratory, X-ray, emergency, and 
                        preventive services.
                            ``(iv) Out-of-area coverage.
                    ``(B) Provision of physicians' services.--The 
                entity provides physicians' services primarily (i) 
                directly through physicians who are either employees or 
                partners of such organization, or (ii) through 
                contracts with individual physicians or one or more 
                groups of physicians (organized on a group practice or 
                individual practice basis).
                    ``(C) Compensation on prepaid risk basis.--The 
                entity is 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 risk.--The entity assumes full 
                financial risk on a prospective basis for the provision 
                of the health care services listed in subparagraph (A), 
                except that such entity may--
                            ``(i) obtain insurance or make other 
                        arrangements for the cost of providing to any 
                        enrolled member health care services listed in 
                        subparagraph (A) the aggregate value of which 
                        exceeds $5,000 in any year,
                            ``(ii) obtain insurance or make other 
                        arrangements for the cost of health care 
                        services listed in subparagraph (A) provided to 
                        its enrolled members other than through the 
                        entity because medical necessity required their 
                        provision before they could be secured through 
                        the entity,
                            ``(iii) 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
                            ``(iv) 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.
                    ``(E) Fiscal soundness; provision against 
                insolvency.--The entity meets standards for fiscal 
                soundness (including standards for provision against 
                the risk of insolvency) applicable to Federally 
                qualified health maintenance organizations under title 
                XIII of the Public Health Service Act.
            ``(2) Exception for certain grandfathered contracts.--
        Paragraph (1)(A)(ii) shall not apply to an entity which had 
        contracted with a single State agency administering a State 
        plan approved under title XIX for the provision of services 
        (other than inpatient hospital services) to individuals 
        eligible for such services under such State plan on a prepaid 
        risk basis prior to 1970.
    ``(d) Preferred Provider Organization (PPO).--
            ``(1) In general.--For purposes of this part, the term 
        `preferred provider organization' means an entity that meets 
        the following requirements:
                    ``(A) Minimum services to all members.--The entity 
                provides at least physicians' services performed by 
                physicians (as defined in section 1861(r)(1)).
                    ``(B) Provision of physician services; fiscal 
                soundness.--The entity meets the requirements of 
                subparagraphs (B) and (E) of subsection (c)(1).
                    ``(C) Assumption of risk.--The entity meets the 
                requirements of subsection (c)(1)(D) with respect to 
                members enrolled with the organization under this part.
            ``(2) Determination of private membership.--In applying the 
        provisions of sections 1851E(g) and 1851F(e)(1)(B)(i) and 
        (f)(1)(B)(i) (concerning minimum private enrollment) to an 
        organization that meets the requirements of paragraph (1), 
        individuals for whom the organization has assumed substantial 
        financial risk shall be considered to be members of the 
        organization.
    ``(e) Provider Sponsored Organization (PSO).--
            ``(1) In general.--For purposes of this part, the term 
        `provider sponsored organization' means an entity that meets 
        the following requirements:
                    ``(A) Type of entity.--The entity is a hospital, a 
                group of affiliated hospitals, or an affiliated group 
                consisting of a hospital or hospitals and physicians 
                (as defined in section 1861(r)(1)).
                    ``(B) Minimum Services to all members.--The entity 
                provides at least physicians' services performed by 
                physicians (as defined in section 1861(r)(1)) and 
                inpatient hospital services.
                    ``(C) Direct provision of services.--The entity 
                provides directly a substantial portion of the services 
                covered under this title (as determined by the 
                Secretary, which may vary for rural or under served 
                areas).
                    ``(D) Assumption of risk.--The entity meets the 
                requirements of subsection (c)(1)(D) with respect to 
                members enrolled with the organization under this part.
                    ``(E) Fiscal soundness; provision against 
                insolvency.--The entity meets requirements for fiscal 
                soundness and provision against insolvency developed by 
                the Secretary.
            ``(2) Determination of private membership.--In applying the 
        provisions of sections 1851E(g) and 1851F(e)(1)(B)(i) and 
        (f)(1)(B)(i) (concerning minimum private enrollment) to an 
        organization that meets the requirements of paragraph (1), 
        individuals for whom the organization has assumed substantial 
        financial risk shall be considered to be members of the 
        organization.
            ``(3) Limited preemption of state law.--Except as otherwise 
        provided in the next sentence, an organization that meets the 
        requirements of paragraph (1) may provide health benefits to 
        individuals enrolled with the organization under this part 
        without regard to any State law that imposes requirements 
        different from those under paragraph (1)(E)) (concerning fiscal 
        soundness and provision against insolvency), or that imposes 
        requirements (in other respects) that differ from those imposed 
        on other organizations which provide health care benefits only 
        through (or preferentially through) certain entities. If the 
        Secretary determines that a State has licensing standards which 
        are substantially equivalent to the requirements of such 
        paragraph (1)(E), that the State has a process for issuing 
        licenses on a timely basis, and that the State does not impose 
        requirements (in other respects) that differ from those imposed 
        on other organizations which provide health care benefits only 
        through (or preferentially through) certain entities, the 
        Secretary shall require the organization to obtain a license 
        from the State.

``SEC. 1851B. ENROLLMENT AND DISENROLLMENT.

    ``(a) In General.--
            ``(1) Secretary's responsibility.--The Secretary shall 
        carry out enrollment and termination of enrollment of 
        individuals with eligible organizations.
            ``(2) Individual options.--An individual may, as prescribed 
        by regulations--
                    ``(A) enroll under this part with an eligible 
                organization; and
                    ``(B) terminate enrollment with such organization--
                            ``(i) as of the beginning of the first 
                        calendar month following the date on which the 
                        request is made for such termination;
                            ``(ii) as of the date determined in 
                        accordance with regulations, in the case of 
                        financial insolvency of the organization; and
                            ``(iii) retroactively to the date of 
                        enrollment, in such special circumstances as 
                        the Secretary may designate.
    ``(b) Information Concerning Enrollment.--
            ``(1) Standardized comparative materials.--The Secretary 
        shall develop and distribute standardized comparative materials 
        about eligible organizations and medicare supplemental policies 
        (as defined in section 1882(g)(1)) to enable individuals to 
        compare benefits, costs, and quality indicators.
            ``(2) Cost-sharing by participating organizations.--Each 
        eligible organization with a contract under this part shall pay 
        the Secretary for its pro rata share (as determined by the 
        Secretary) of the estimated costs to be incurred by the 
        Secretary in carrying out the requirements of the preceding 
        sentence, the first sentence of subsection (a)(1), and section 
        4360 of the Omnibus Reconciliation Act of 1990. Those payments 
        are appropriated to defray the costs described in the preceding 
        sentence, to remain available until expended.
            ``(2) Review of marketing materials.--The Secretary may 
        prescribe the procedures and conditions under which an eligible 
        organization that has entered into a contract with the 
        Secretary under this subsection may furnish information about 
        the organization to enrollees and individuals eligible to 
        enroll under this part. No brochures, application forms, or 
        other promotional or informational material may be distributed 
        by an organization to (or for the use of) such individuals 
        unless at least 45 days before its distribution, the 
        organization has submitted the material to the Secretary for 
        review, and the Secretary has not disapproved the distribution 
        of the material. The Secretary shall review all such material 
        submitted and shall disapprove such material if the Secretary 
        determines, in the Secretary's discretion, that the material is 
        materially inaccurate or misleading or otherwise makes a 
        material misrepresentation.
    ``(c) Periods of Enrollment.--
            ``(1) Standard enrollment opportunities.--Subject to the 
        provisions of this section, an organization with a contract 
        under this part shall permit enrollment under this part by any 
        individual--
                    ``(A) during the month of each year specified by 
                the Secretary for all eligible organizations;
                    ``(B) during the individual's initial enrollment 
                period in the program under part B (as described in 
                section 1837(d));
                    ``(C) during a special enrollment period in the 
                program under part B (for individuals formerly electing 
                employment-based coverage) described in section 
                1837(i)(3); and
                    ``(D) during the 90-day period beginning 30 days 
                before the date the individual takes up residence in 
                the service area of the organization.
            ``(2) Special enrollment period for individuals losing 
        coverage by another organization.--
                    ``(A) In general.--Subject to other provisions of 
                this section, if a contract with an organization under 
                this part is not renewed or otherwise terminated, or is 
                renewed in a manner that discontinues coverage for 
                individuals residing in part of the service area, each 
                other organization with a contract under this part 
                shall permit enrollment under this part by affected 
                individuals enrolled with such other organization on 
                the effective date of such termination or 
                discontinuation of coverage.
                    ``(B) Enrollment period.--The enrollment period 
                required by subparagraph (A) shall be for 30 days and 
                shall begin 30 days after the date that the Secretary 
                provides notice of such requirement.
            ``(2) Acceptance or denial of application.--An eligible 
        organization shall enroll individuals under this part in the 
        order of application, and may deny enrollment of such an 
        individual only if the enrollment--
                    ``(A) would exceed the limits of the organization's 
                capacity (as determined by the Secretary);
                    ``(B) would result in an enrolled population 
                substantially nonrepresentative, as determined in 
                accordance with regulations of the Secretary, of the 
                population in the geographic area served by the 
                organization; or
                    ``(C) would result in the organization's failing to 
                meet the requirements of sections 1851E(g) and 
                1851F(e)(1)(B)(i) and (f)(1)(B)(i) (concerning minimum 
                private enrollment).
            ``(3) Effective date of enrollment.--An individual's 
        enrollment with an eligible organization under this part shall 
        be effective--
                    ``(A) in the case of an enrollment under paragraph 
                (1)(A), on the first day of the third month beginning 
                after the end of the enrollment period;
                    ``(B) in the case of an enrollment under paragraph 
                (1)(B), as specified by section 1838(a);
                    ``(C) in the case of an enrollment under paragraph 
                (1)(C), as specified by section 1838(e);
                    ``(D) in the case of an enrollment under paragraph 
                (1)(D), on the first day of the first month following 
                the month in which the individual enrolled; and
                    ``(E) in the case of an enrollment under paragraph 
                (2), 30 days after the end of the open enrollment 
                period, or, if the Secretary determines that such date 
                is not feasible, such other date as the Secretary 
                specifies.
    ``(d) Enrollment or termination for health reasons prohibited.--An 
eligible organization--
            ``(1) shall not refuse to enroll, and shall not expel or 
        refuse to re-enroll, any individual eligible to enroll or 
        enrolled with the organization under this part because of the 
        individual's health status or requirements for health care 
        services;
            ``(2) shall include in any marketing materials a statement 
        of the requirements of paragraph (1); and
            ``(3) shall notify each such individual of the requirements 
        of paragraph (1) at the time of the individual's enrollment.

``SEC. 1851C. BENEFITS.

    ``(a) Basic Benefits.--
            ``(1) In general.--An eligible organization must provide to 
        members enrolled under this part, either directly or through 
        providers and other persons that meet the applicable 
        requirements of this title and part A of title XI--
                    ``(A) services covered under parts A and B of this 
                title, for those members entitled to benefits under 
                part A and enrolled under part B, or
                    ``(B) services covered under part B, for those 
                members enrolled only under such part,
        which are available to individuals residing in the geographic 
        area served by the organization.
            ``(2) PPO required to afford `point of service' option.--An 
        eligible organization that contracts as a preferred provider 
        organization under this part, in addition to providing services 
        in accordance with paragraph (1), shall also pay for any 
        service furnished to a member enrolled under this part (in the 
        amounts, if any, that otherwise would be paid under this title) 
        by any entity that may furnish that service under this title 
        (other than an entity through which the organization provides 
        services, or other than a service with respect to which the 
        organization is required to provide for reimbursement under 
        subsection (h)(2) (concerning urgently needed services provided 
        outside the organization).
            ``(3) PSO prohibited from affording `point of service' 
        option.--An eligible organization that contracts as a provider 
        sponsored organization under this part may not pay for any 
        service described in subsection (d) that is furnished to a 
        number enrolled under this part.
    ``(b) Additional Benefits or Other Adjustment Under Risk Plans.--
            ``(1) Requirement where adjusted community rates below 
        payment rates.--Each contract under section 1851F(e) shall 
        provide for adjustment in accordance with this subsection, if--
                    ``(A) the adjusted community rate for services 
                under parts A and B (as reduced for the actual value of 
                the coinsurance and deductibles under those parts) for 
                members enrolled under this part with the organization 
                and entitled to benefits under part A and enrolled in 
                part B, or
                    ``(B) the adjusted community rate for services 
                under part B (as reduced for the actuarial value of the 
                coinsurance and deductibles under that part) for 
                members enrolled under this part B only is less than 
                the average of the per capita rates of payment to be 
                made under section 1851F(e)(2) at the beginning of an 
                annual contract period for members enrolled under this 
                part with the organization and entitled to benefits 
                under part A and enrolled in part B, or enrolled in 
                part B only, respectively.
            ``(2) Selection by organization of additional benefits.--An 
        eligible organization to which paragraph (1) applies shall 
        either--
                    ``(A) provide to members described in paragraph 
                (1)(A) or (1)(B), as applicable, the additional 
                benefits described in paragraph (3) which are selected 
                by the eligible organization and which the Secretary 
                finds are at least equal in value to the difference 
                between the average per capita payment and the adjusted 
                community rate (as so reduced); or
                    ``(B) elect an alternative, in accordance with 
                paragraph (4).
            ``(3) Additional benefits.--The additional benefits 
        referred to in paragraph (2) are--
                    ``(A) the reduction of the premium rate or other 
                charges made with respect to services furnished by the 
                organization to members enrolled under this part; or
                    ``(B) the provision of additional health benefits; 
                or both.
            ``(4) Alternatives to additional benefits.--An eligible 
        organization to which paragraph (1) applies--
                    ``(A) may elect to receive a lesser payment such 
                that there is no longer a difference between the AAPCC 
                and adjusted community rate (as so reduced); and
                    ``(B) may (with the approval of the Secretary) 
                provide that a part of the value of such additional 
                benefits be withheld and reserved by the Secretary as 
                provided in paragraph (5).
            ``(5) Benefit stabilization fund.--An organization having a 
        contract under section 1851F(e) may (with the approval of the 
        Secretary) provide that a part of the value of additional 
        benefits otherwise required to be provided by reason of 
        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 
        offered in those subsequent periods by the organization in 
        accordance with paragraph (3). Any of such value of additional 
        benefits which is not provided to members of the organization 
        in accordance with paragraph (3) prior to the end of such 
        period, shall revert for the use of such trust funds.
            ``(6) Determination of per capita rates.--If the Secretary 
        finds that there is insufficient enrollment experience to 
        determine an average of the per capita rates of payment to be 
        made under section 1851F(e)(2) 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.
    ``(c) Supplemental Benefits.--
            ``(1) Subject to secretary's approval.--An eligible 
        organization may provide to individuals enrolled under this 
        part (without affording such individuals an option to decline 
        such coverage), such additional health care services as the 
        Secretary may approve. The Secretary shall approve any such 
        additional services unless the Secretary determines that 
        including such additional services will substantially 
        discourage enrollment by covered individuals with the 
        organization.
            ``(2) At enrollees' option.--Such an organization may 
        provide to such individuals such additional health care 
        services as such individuals may elect, at their option, to 
        have covered.
            ``(3) Disclosure of premium.--Such an organization shall 
        furnish to such individuals information on the portion of its 
        premium rate or other charges applicable to such additional 
        services.
    ``(d) Standarized Packages of Additional Benefits.--Any health care 
service described in subsection (b) or (c) that is included in a 
standardized package of benefits specified by the Secretary may be 
offered only as part of that standardized package.
    ``(e) Availability and Accessibility of Services.--
            ``(1) Services provided through the organization.--An 
        eligible organization with a contract under this part must make 
        the services it has contracted to provide to individuals 
        enrolled with the organization under this part--
                    ``(A) available and accessible to each such 
                individual, within the area served by the organization, 
                with reasonable promptness and in a manner with assures 
                continuity, and
                    ``(B) when medically necessary, available and 
                accessible twenty-four hours a day and seven days a 
                week.
            ``(2) Services provided outside the organization.--An 
        eligible organization with a contract under this part must 
        provide for reimbursement with respect to services described in 
        paragraph (1) provided to such an individual other than through 
        the organization, if--
                    ``(A) the services were medically necessary and 
                immediately required because of an unforeseen illness, 
                injury, or condition; and
                    ``(B) it was not reasonable given the circumstances 
                to obtain the services through the organization.

``SEC. 1851D. LIABILITY OF BENEFICIARY AND THIRD PARTIES.

    ``(a) Limits on Liability for Required Benefits.--
            ``(1) Limitation to actuarial value of fee-for-service 
        coverage.--Total charges by an eligible organization to 
        individuals enrolled with the organization under this part, 
        with respect to services described in section 1851C(a)--
                    ``(A) shall include no amounts other than the 
                individual's share of premiums, deductibles, 
                coinsurance, and copayments; and
                    ``(B) shall not exceed the actuarial value of the 
                deductibles and coinsurance that would be applicable 
                under this title on the average to such individuals if 
                they were not members of an eligible organization.
            ``(2) Alternative data.--If the Secretary finds that 
        adequate data are not available for the determination required 
        under paragraph (1) with respect to an eligible organization, 
        the Secretary may substitute the actuarial value of the 
        deductibles and coinsurance 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.
    ``(b) Limits on Premium for Supplemental Benefits.--If an eligible 
organization provides to its members enrolled under this part 
supplemental benefits in accordance with section 1851C, the sum of--
            ``(1) the portion of such organization's premium rate 
        charged, with respect to such supplemental benefits, to members 
        enrolled under this part, and
            ``(2) the deductibles, coinsurance, and copayments charged, 
        with respect to such services to such members shall not exceed 
        the adjusted community rate for such services.
    ``(c) Limitation on Amounts an Out-of-Plan Physician or Other 
Entity May Collect.--
            ``(1) A physician or other entity (other than a provider of 
        services) that does not have a contract establishing payment 
        amounts for services furnished to an individual enrolled under 
        this part with an eligible organization shall accept as payment 
        in full for services that are furnished to such an individual 
        the amounts that the physician or other entity could collect if 
        the indvidiual were not so enrolled. Any penalty or other 
        provision of law that applies to such payments with respect to 
        an individual entitled to benefits under this title (but not 
        enrolled with an eligible organization under this part) shall 
        also apply with respect to an individual so enrolled.
            ``(2) For similar requirements applicable to providers of 
        services, see section 1866(a)(1)(O).
    ``(d) Plan as a Secondary Payer.--Notwithstanding any other 
provision of law, an eligible organization may (in the case of the 
provision of services for which the Medicare program is a secondary 
payer under 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--
            ``(1) the insurance carrier, employer, or other entity 
        which under such law, plan, or policy is to pay for the 
        provision of such services, or
            ``(2) such member to the extent that the member has been 
        paid under such law, plan, or policy for such services.

``SEC. 1851E. BENEFICIARY PROTECTIONS.

    ``(a) Explanation of Rights and Restrictions.--Each eligible 
organization shall provide each enrollee, at the time of enrollment and 
not less frequently than annually thereafter, an explanation of the 
enrollee's rights under this part and other important information, 
including the following:
            ``(1) Coverage.--The enrollee's rights to benefits from the 
        organization, and benefit limitations, including--
                    ``(A) out-of-area coverage provided by the 
                organization,
                    ``(B) the organization's coverage of emergency 
                services and urgently needed care, and
                    ``(C) the restrictions on payments under this title 
                for services furnished other than by or through the 
                organization.
            ``(2) Termination of coverage.--An explanation that--
                    ``(A) the organization may terminate or refuse to 
                renew the contract under this part; and
                    ``(B) termination of such contract could result in 
                termination of enrollment of individuals with the 
                organization.
            ``(3) Patient rights.--Safeguards on enrollees' rights, 
        including--
                    ``(A) appeal rights of enrollees,
                    ``(B) the right to be informed about various 
                treatment options, and
                    ``(C) the right to decline treatment.
            ``(4) Emergencies.--The appropriate use of the 911 
        emergency telephone system in the case of medical emergencies.
            ``(5) Fraud and abuse reporting.--The processes for 
        reporting potential fraud or abuse.
    ``(b) Notification of Termination Option in Marketing Materials.--
Each eligible organization with a contract under this part shall 
include the information required by subsection (a)(2) in any marketing 
materials described in section 1851B(b)(3) that are distributed by an 
eligible organization to individuals eligible to enroll under this part 
with the organization.
    ``(c) Grievance Mechanism.--An eligible organization with a 
contract under this part 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 members enrolled with the organization under this part.
    ``(d) Coverage Determinations and Appeals.--
            ``(1) Determination by organization.--An eligible 
        organization with a contract under this part shall have a 
        procedure for determining whether an individual enrolled with 
        the organization under this part is entitled to receive a 
        health service described in section 1851C(a) and the amount (if 
        any) that the individual is required to pay for that service, 
        which includes the following elements:
                    ``(A) Timely review.--The organization shall 
                provide for review of a coverage issue within 30 days 
                of a request by such individual, and for 
                reconsideration, where requested, within 60 days after 
                the initial review.
                    ``(B) Expedited review in urgent cases.--The 
                organization shall have an expedited process for review 
                and reconsideration of a coverage issue in cases in 
                which delayed treatment may place the health of such 
                individual in jeopardy, risk serious impairment of 
                bodily functions, or limit medically appropriate 
                treatment options.
            ``(2) Review by external contractor.--An individual 
        dissatisfied with a determination under paragraph (1) 
        concerning such individual's coverage under a contract under 
        this part is entitled to a hearing before an independent 
        reviewer designated by the Secretary.
            ``(3) Appeal to secretary.--An individual dissatisfied with 
        a determination under paragraph (2) concerning such 
        individual's coverage under a contract under this part 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 eligible organization a party. If the amount in 
        controversy is $1,000 or more, the individual or eligible 
        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 
        eligible 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.
    ``(e) Quality Assurance.--
            ``(1) Internal quality assurance (iqa) program.--
                    ``(A) In general.--Subject to subparagraph (B), an 
                eligible organization must have arrangements, 
                established in accordance with regulations of the 
                Secretary, for an ongoing quality assurance program for 
                health care services provided to individuals enrolled 
                with the organization under this part that--
                            ``(i) focuses on health outcomes; and
                            ``(ii) provides for review by physicians 
                        and other health care professionals of the 
                        process followed in the provision of such 
                        health care services.
                    ``(B) Acceptance of accreditation in satisfaction 
                of iqa standards.--If (or to the extent that) an 
                eligible organization has been accredited by an 
                accrediting body whose standards with respect to one or 
                more of the elements of an internal quality assurance 
                program are at least as stringent as such standards 
                pursuant to subparagraph (A), the organization shall be 
                deemed to meet the requirements of such subparagraph 
                (A) with respect to such program elements.
            ``(2) External quality review.--
                    ``(A) Requirements.--Each contract with an eligible 
                organization under this part shall provide that the 
                organization will maintain an agreement with--
                            ``(i) a utilization and quality control 
                        peer review organization (which has a contract 
                        with the Secretary under part B of title XI for 
                        the area in which the eligible organization is 
                        located);
                            ``(ii) an entity selected by the Secretary 
                        under section 1154(a)(4)(C); or
                            ``(iii) an independent quality review and 
                        improvement organization selected by the 
                        organization and approved by the Secretary,
                under which the review organization will perform 
                functions under section 1154(a)(4)(B) and section 
                1154(a)(14) (other than those performed under contracts 
                described in section 1866(a)(1)(F)) with respect to 
                services, furnished by the eligible organization, for 
                which payment may be made under this title.
                    ``(B) Quality review as covered service.--For 
                purposes of payment under this title, the cost of such 
                agreement to the eligible organization shall be 
                considered a cost incurred by a provider of services in 
                providing covered services under this title and shall 
                be paid directly by the Secretary to the review 
                organization on behalf of such eligible organization in 
                accordance with a schedule established by the 
                Secretary.
                    ``(C) Payment from trust funds.--Such payments--
                            ``(i) shall be transferred in appropriate 
                        proportions from the Federal Hospital Insurance 
                        Trust Fund and from the Supplemental Medical 
                        Insurance Trust Fund, without regard to amounts 
                        appropriated in advance in appropriation Acts, 
                        in the same manner as transfers are made for 
                        payment for services provided directly to 
                        beneficiaries, and
                            ``(ii) shall not be less in the aggregate 
                        for such organizations for a fiscal year that 
                        the amounts the Secretary determines to be 
                        sufficient to cover the costs of such 
                        organizations' conducting activities described 
                        in subparagraph (A) with respect to such 
                        eligible organizations under part B of title 
                        XI.
    ``(f) Beneficiary Advance Directives Concerning Medical 
Treatment.--A contract under this part shall provide that an eligible 
organization shall meet the requirements of section 1866(f) (relating 
to maintaining written policies and procedures respecting advance 
directives).
    ``(g) Private Enrollment Requirements.--
            ``(1) 50 percent requirement.--Subject to section 11205 of 
        the Balanced Budget Act of 1995 for Economic Growth and 
        Fairness, each eligible organization with which the Secretary 
        enters into a contract under this part shall have, for the 
        duration of such contract, an enrolled membership (without 
        consideration of members enrolled in the program under title 
        XIX) at least one-half of which consists of individuals who are 
        not entitled to benefits under this title.
            ``(2) Exceptions.--The Secretary may modify or waive the 
        requirement imposed by paragraph (1) only in the following 
        circumstances:
                    ``(A) Area with large medicare population.--If 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.
                    ``(B) Initial period for governmental contractor.--
                In the case of an eligible 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 part, and only if the organization has taken 
                and is making reasonable efforts to enroll individuals 
                who are not entitled to benefits under this title,
                    ``(C) Underserved rural area.--If the organization 
                serves an underserved rural area.
                    ``(D) Contractor with good past record.--If the 
                organization has had contracts under this part for a 
                total of at least three years, has complied with all 
                applicable requirements during that period, maintains a 
                level of enrollment of individuals not entitled to 
                benefits under this title determined by the Secretary, 
                and complies with any additional monitoring 
                requirements established by the Secretary.
                    ``(E) Contractor with good record in another 
                geographic area.--If--
                            ``(i) the Secretary has not previously 
                        entered into a contract with the organization 
                        under this part in the same geographic area (or 
                        has entered into contracts for a total of three 
                        years or less),
                            ``(ii) the organization (or a parent 
                        company that controls the organization) has 
                        entered into (or subsidiaries of the 
                        organization or parent company have entered 
                        into) contracts under this part for at least 
                        three different geographic areas--
                                    ``(I) for which no waiver has been 
                                granted under this paragraph and during 
                                the course of which there has been 
                                compliance with all applicable 
                                requirements; or
                                    ``(II) for which a waiver has been 
                                granted under subparagraph (D);
                            ``(iii) the organization (or parent 
                        company) demonstrates to the Secretary a long-
                        term business and financial commitment to the 
                        geographic area served by the organization, and 
                        the Secretary determines that a waiver is 
                        necessary to promote competition in that area; 
                        and
                            ``(iv) the organization complies with all 
                        applicable requirements and any additional 
                        monitoring requirements established by the 
                        Secretary.
            ``(3) Substitution of quality measurement system.--For 
        conditions under which the requirements of this subsection will 
        be replaced by requirements of a quality measurement system, 
        see section 11205 of the Balanced Budget Act of 1995 for 
        Economic Growth and Fairness.
    ``(h) Access to Specialty Care and Case Management.--Each eligible 
organization shall ensure that enrollees with chronic illnesses or 
disabilities, and other enrollees as appropriate, shall have access to 
medically appropriate specialty care and medically appropriate case 
management.
    ``(i) Restrictions on Physician Incentive Plans.--
            ``(1) Criteria.--Each contract with an eligible 
        organization under this part shall provide that the 
        organization may not operate any physician incentive plan (as 
        defined in paragraph (2)) unless the following requirements are 
        met:
                    ``(A) No inducement to limit care.--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.
                    ``(B) Requirements where physician at financial 
                risk.--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.
                    ``(C) Disclosure to secretary.--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 paragraph.
            ``(2) Definition of `physician incentive plan'.--In this 
        subsection, the term `physician incentive plan' means any 
        compensation arrangement between an eligible 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.''.

``SEC. 1851F. PAYMENTS TO MEDICAREPLUS ORGANIZATIONS.

    ``(a) Payments to Organizations.--
            ``(1) Monthly payment.--
                    ``(A) In general.--Under a contract under paragraph 
                (1) the Secretary shall make monthly payments under 
                this section in advance to each eligible organization, 
                with respect to coverage of an individual under this 
                part in a payment area for a month, in an amount equal 
                to \1/12\ of the annual capitation rate (as calculated 
                under subsection (c)) with respect to that individual 
                for that area, adjusted for such risk factors as age, 
                disability status, gender, institutional status, 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 
                factors, if such changes will improve the determination 
                of actuarial equivalence.
                    ``(B) Special rule for end-stage renal disease.--
                The Secretary shall establish a separate rate of 
                payment to an eligible organization with respect to any 
                individual determined to have end-stage renal disease 
                and enrolled in a plan of the organization. Such rate 
                of payment shall be actuarially equivalent to rates 
                paid to other enrollees in the payment area (or such 
                other area as specified by the Secretary).
            ``(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 differences 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 an eligible organization under a 
                        plan 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 
                        1851(E)(a) at the time the individual enrolled 
                        with the organization.
    ``(b) Annual Announcement of Payment Rates.--
            ``(1) Annual announcement.--The Secretary shall annually 
        determine, and shall announce (in a manner intended to provide 
        notice to interested parties) not later than August 1 before 
        the calendar year concerned--
                    ``(A) the annual capitation rate for each payment 
                area for the year, and
                    ``(B) the risk and other factors to be used in 
                adjusting such rates under subsection (a)(1)(A) for 
                payments for months in that year.
            ``(2) 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 eligible 
        organizations of proposed changes to be made in the methodology 
        from the methodology and assumptions used in the previous 
        announcement and shall provide such organizations an 
        opportunity to comment on such proposed changes.
            ``(3) Explanation of assumptions.--In each announcement 
        made under paragraph (1) for a year, the Secretary shall 
        include an explanation of the assumptions and changes in 
        methodology used in the announcement in sufficient detail so 
        that eligible organizations can compute monthly adjusted 
        capitation rates for individuals in each payment area which is 
        in whole or in part within the service area of such an 
        organization.
    ``(c) Calculation of Annual Capitation Rates.--
            ``(1) In general.--For purposes of this part, the annual 
        capitation rate for a payment area for a contract year 
        consisting of a calendar year, is equal to the greatest of the 
        following:
                    ``(A) Blended capitation rate.--The sum of--
                            ``(i) area-specific percentage for the year 
                        (as specified under paragraph (2) for the year) 
                        of the annual area-specific MedicarePlus 
                        capitation rate for the year for the 
                        MedicarePlus payment area, as determined under 
                        paragraph (3), and
                            ``(ii) national percentage (as specified 
                        under paragraph (2) for the year) of the input-
                        price-adjusted annual national MedicarePlus 
                        capitation, rate for the year, as determined 
                        under paragraph (4),
                multiplied by a budget neutrality adjustment factor 
                determined under paragraph (5).
                    ``(B) Minimum amount.--
                            ``(i) For 1996, $310.
                            ``(ii) For 1997, $325.
                            ``(iii) For a succeeding year, is the 
                        minimum amount specified in this subparagraph 
                        for the preceding year increased by national 
                        per capita growth percentage, specified under 
                        paragraph (6) for that succeeding year.
                    ``(C) Minimum increase of 3 percent over previous 
                year's rate.--
                            ``(i) For 1996, 102 percent of the annual 
                        per capita rate of payment for 1995 determined 
                        under section 1876(a)(1)(C) for the payment 
                        area.
                            ``(ii) For a subsequent year, 102 percent 
                        of the annual capitation rate under this 
                        subsection for the area for the previous year.
            ``(2) Area-specific and national percentages.--For purposes 
        of paragraph (1)(A)--
                    ``(A) for 1996 and 1997, the `area-specific 
                percentage' is 90 percent and the `national percentage' 
                is 10 percent,
                    ``(B) for 1998, the `area-specific percentage' is 
                85 percent and the `national percentage' is 15 percent,
                    ``(C) for 1999, the `area-specific percentage' is 
                80 percent and the `national percentage' is 20 percent,
                    ``(D) for 2000, the `area-specific percentage' is 
                75 percent and the `national percentage' is 25 percent, 
                and
                    ``(E) for a year after 2000, the `area-specific 
                percentage' is 70 percent and the `national percentage' 
                is 30 percent.
            ``(3) Annual area-specific medicare choice capitation 
        rate.--
                    ``(A) In general.--For purposes of paragraph 
                (1)(A), subject to subparagraph (B), the annual area-
                specific Medicare Choice capitation rate for a Medicare 
                Choice payment area--
                            ``(i) for 1996 is the annual per capita 
                        rate of payment for 1995 determined under 
                        section 1876(a)(1)(C) for the payment area, 
                        increased by the national average per capita 
                        growth percentage for 1996 (as defined in 
                        paragraph (6)); or
                            ``(ii) for a subsequent year is the annual 
                        area-specific capitation rate for the previous 
                        year determined under this paragraph for the 
                        payment area, increased by the national average 
                        per capita growth percentage for such 
                        subsequent year.
                    ``(B) Removal of medical education and 
                disproportionate share hospital payments from 
                calculation of adjusted average per capita cost.--In 
                determining the annual area-specific Medicare Choice 
                capitation rate for 1997 under subparagraph (A)(i), the 
                average annual per capita rate of payment for 1996 
                determined under (A)(i) 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).
            ``(4) Input-price-adjusted annual national capitation 
        rate.--
                    ``(A) In general.--For purposes of paragraph 
                (1)(A), the input-price-adjusted annual national 
                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 plan (for each 
                such type) of--
                            ``(i) the national standardized annual 
                        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 annual capitation 
                rate.--In subparagraph (A)(i), the `national 
                standardized annual capitation rate' for a year is 
                equal to--
                            ``(i) the sum (for all payment areas) of 
                        the product of (I) the annual area-specific 
                        capitation rate for that year for the area 
                        under paragraph (3), 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 who 
                        are 65 years of age or older who are not 
                        determined to have end stage renal disease.
                The Secretary may continue to apply the rules described 
                in this subparagraph (or similar rules) for 1997.
            ``(5) Budget neutrality adjustment factor.--For each year, 
        the Secretary shall compute a budget neutrality adjustment 
        factor so that the aggregate of the payments under this part 
        shall not exceed the aggregate payments that would have been 
        made under this part if the area-specific percentage for the 
        year had been 100 percent and the national percentage had been 
        0 percent.
            ``(6) National average per capita growth percentage 
        defined.--In this part, the ``national average per capita 
        growth percentage shall be the percentage determined by the 
        Secretary on an annual basis (not later than August 1st before 
        the calendar year concerned) to reflect the Secretary's 
        estimate of the projected per capita rate of growth in private 
        health insurance expenditures adjusted to reflect differences 
        between the average benefit package under private insurance and 
        the Medicare benefit package and differences in utilization and 
        intensity of services between the general insured population 
        and Medicare beneficiaries. In determining this percentage, the 
        Secretary shall consider the traditional fee-for-service growth 
        rates to ensure there is not a wide disparity between fee for 
        service growth rates and the national average per capita growth 
        rate. Unless the Secretary otherwise determines, the national 
        average per capita growth percentage shall be 7 percent.
    ``(d) Payment Area Defined.--
            ``(1) In general.--In this part, except as provided in 
        paragraph (3), the term `payment area' means a county, or 
        equivalent area specified by the Secretary.
            ``(2) Rule for esrd beneficiaries.--In the case of 
        individuals who are determined to have end stage renal disease, 
        the payment area shall be each State.

``SEC. 1851G. SANCTIONS.

    ``(a) Violations Subject to Civil Money Penalties.--In addition to 
any other remedies authorized by law, the Secretary may impose a civil 
money penalty in accordance with subsection (c) on an eligible 
organization with a contract under this part that has committed any of 
the following violations:
            ``(1) Failure to provide medically necessary care.--The 
        organization has failed 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.
            ``(2) Excessive premiums.--The organization has imposed 
        premiums on individuals enrolled under this part in excess of 
        the premiums permitted.
            ``(3) Discontinuation of coverage.--The organization has 
        expelled or refused to re-enroll an individual in violation of 
        the provisions of this part.
            ``(4) Discouraging enrollment.--The organization has 
        engaged 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.
            ``(5) False information.--The organization has 
        misrepresented or falsified information furnished--
                    ``(A) to the Secretary under this part, or
                    ``(B) to an individual or to any other entity under 
                this part.
            ``(6) Failure to cooperate with external quality review.--
        The organization fails to cooperate in the performance of the 
        review required under section 1851E(e)(2).
            ``(7) Physician incentive plan violations.--The 
        organization fails to comply with the requirements of section 
        1851E(i).
            ``(8) Relationship with excluded individual or entity.--The 
        organization.--
                    ``(A) 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
                    ``(B) employs or contracts with any entity for the 
                provision (directly or indirectly) through such an 
                excluded individual or entity of such services.
    ``(b) Violations Subject to Intermediate Sanctions.--In addition to 
any other remedies authorized by law, the Secretary may impose an 
intermediate sanction in accordance with subsection (d) on an eligible 
organization with a contract under this part that has committed any of 
the following violations:
            ``(1) Violation subject to civil money penalty.--Any 
        violation specified in subsection (a).
            ``(2) Grounds for termination of contract.--Any violation 
        that would be grounds for termination of the contract with the 
        organization pursuant to section 1851F(b)(2).
            ``(3) Failure to make prompt payment.--Failure to make 
        prompt payment as required by section 1851F(d).
            ``(4) Delayed coverage determinations.--Failure to meet 
        timeliness standards for coverage determinations under section 
        1851E(d)(1).
            ``(5) Insufficient private enrollment.--Failure to meet the 
        minimum requirements of section 1851E(g).
    ``(c) Civil Money Penalties.--
            ``(1) Amount of penalty.--The Secretary may impose, on an 
        eligible organization determined to have committed a violation 
        specified in subsection (a), civil money penalties not to 
        exceed the sum of the following amounts, as applicable:
                    ``(A) for each such determination, not more than--
                            ``(i) $100,000 in the case of a 
                        determination under subsection (a)(4) or 
                        (a)(5)(i); or
                            ``(ii) $25,000, in the case of any other 
                        such determination;
                    ``(B) with respect to a determination under 
                subsection (a)(2), double the excess amount charged 
                (and the excess amount charged shall be deducted from 
                the penalty and returned to the individual concerned); 
                and
                    ``(C) with respect to a determination under 
                subsection (a)(4), $15,000 for each individual not 
                enrolled as a result of the practice involved.
            ``(2) Administrative procedure.--The provisions of section 
        1128A (other than subsections (a) and (b) shall apply to a 
        civil money penalty under this section in the same manner as 
        they apply to a civil money penalty or proceeding under section 
        1128A(a).
    ``(d) Intermediate Sanctions.--The Secretary may impose, on an 
eligible organization determined to have committed a violation 
specified in subsection (a) or (b), either or both of the following 
sanctions.
            ``(1) Suspension of enrollment.--Suspension of enrollment 
        of individuals with the organization under this part after the 
        date the Secretary notifies the organization of a determination 
        under subsection (a) or (b) and until the Secretary is 
        satisfied that the basis for such determination has been 
        corrected and is not likely to recur.
            ``(2) Suspension of payment.--Suspension of payment to the 
        organization under this part for individuals enrolled after the 
        date the Secretary notifies the organization of a determination 
        under subsection (a) or (b) and until the Secretary is 
        satisfied that the basis for such determination has been 
        corrected and is not likely to recur.

``SEC. 1851H. DEFINITIONS.

    ``(a) Adjusted Community Rate.--
            ``(1) In general.--For purposes of this part, the term 
        `adjusted community rate' for a service or services means, at 
        the election of an eligible organization, either--
                    ``(A) the rate of payment for that service or 
                services which the Secretary annually determines would 
                apply to a member enrolled under this part with an 
                eligible organization 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
                    ``(B) such portion of the weighted aggregate 
                premium, which the Secretary annually estimates would 
                apply to a member enrolled under this part with the 
                eligible organization, as the Secretary annually 
                estimates is attributable to that service or services, 
                adjusted in accordance with paragraph (2).
            ``(2) Adjustment of differences in utilization.--The rate 
        determined in accordance with subparagraphs (A) and (B) of 
        paragraph (1) shall be adjusted for--
                    ``(A) the differences between the utilization 
                characteristics of the members enrolled with the 
                eligible organization under this part and utilization 
                characteristics of the other members of the 
                organization; or
                    ``(B) (if the Secretary finds that adequate data 
                are not available to calculate the adjustment pursuant 
                to subparagraph (A)) the differences between--
                            ``(i) the utilization characteristics of 
                        members in other eligible organizations, or 
                        individuals in the area, in the State, or in 
                        the United States, eligible to enroll under 
                        this part with an eligible organization, and
                            ``(ii) the utilization characteristics of 
                        the rest of the population in the area, in the 
                        State, or in the United States, respectively.
    ``(b) Adjusted Average Per Capita Cost (AAPCC).--For purposes of 
this part, the term `AAPCC' (adjusted average per capita cost) means 
the average per capita amount that the Secretary estimates in advance 
(on the basis of actual experience, or retrospective actuarial 
equivalent based upon an adequate sample and other information and 
data, in a geographic area served by an eligible organization or in a 
similar area, with appropriate adjustments to assure actuarial 
equivalence) would be payable in any contract year for services covered 
under parts A and B, or part B only, and types of expenses otherwise 
reimbursable under parts A and B, or part B only (including 
administrative costs incurred by organizations described in sections 
1816 and 1842), if the services were to be furnished by other than an 
eligible organization or, in the case of services covered only under 
section 1861(s)(2)(H), if the services were to be furnished by a 
physician or as an incident to a physician's service.''.
    (b) Repeal of Superseded Provision.--Section 1876 (42 U.S.C. 
1395mm) is repealed, except to the extent provided in subsection (e).
    (c) Conforming Amendments.--
            (1) Section 1154(a)(4)(B) (42 U.S.C. 1320c-3(a)(4)(B)) is 
        amended--
                    (A) in the first sentence, by striking ``risk-
                sharing contract under section 1876'' and inserting 
                ``contract under part C of title XVIII'', and
                    (B) in the second sentence, by striking ``a health 
                maintenance organization or competitive medical plan 
                under section 1876'' and inserting ``an eligible 
                organization under part C of title XVIII''.
            (2) The second sentence of section 1154(a)(4)(C) (42 U.S.C. 
        1320c-3(A)(4)(C)) is amended by striking ``section 1876'' and 
        inserting ``part C of title XVIII''.
            (3) Section 1866(a)(1)(O) (42 U.S.C. 1395cc(a)(1)(O)) is 
        amended by striking ``risk-sharing contract under section 
        1876'' and inserting ``contract under part C''.
            (4) The matter in the first sentence of section 1866(f)(1) 
        (42 U.S.C. 1395cc(f)(1)) preceding subparagraph (A) is amended 
        by striking ``1876(c)(8)'' and inserting ``1851E(f)''.
            (5) Section 1866(f)(2)(E) (42 U.S.C. 1395cc(f)(2)(E)) is 
        amended by striking ``1876(b)'' and inserting ``1851A(a)''.
            (6) Section 1882(f)(1) is amended--
                    (A) by striking ``1876(b) and inserting ``1851A''; 
                and
                    (B) by striking ``section 1876'' and inserting 
                ``part C''.
    (d) Effective Date.--Except to the extent otherwise provided, the 
amendments made by the preceding subsections apply to items and 
services furnished after 1996.
    (e) Transition Provisions for Cost Contracts.--
            (1) Repeal of authority for cost contracts delayed to 
        2001.--The amendments made by the preceding subsections (other 
        than the amendments specified in paragraph (2)) do not apply to 
        items and services furnished before 2001 under a contract under 
        section 1876(h) of the Social Security Act (42 U.S.C. 
        1395mm(h)).
            (2) Provisions whose effect is not delayed.--The effective 
        dates of the following provisions of part C of the Social 
        Security Act (as enacted by subsection (a)(2) of this section) 
        shall not be delayed by reason of paragraph (1):
                    (A) Definition of qualified hmo.--Section 1851A(b).
                    (B) Enrollment and disenrollment.--Section 1851B.
                    (C) Beneficiary protections.--Subsections (a) 
                (explanation of patients' rights and restrictions), (c) 
                (grievance mechanism), (d) (coverage determinations and 
                appeals), and (g) (private enrollment requirements) of 
                section 1851E.
            (3) Option restricted to grandfathered organizations.--With 
        respect to services provided after 1995 but before 2001, the 
        Secretary may enter into contracts under subsection (h) of 
        section 1876 of the Social Security Act (42 U.S.C. 1395mm) only 
        with entities with which the Secretary has entered into 
        contracts under that subsection for all or part of 1995, or to 
        which payments have been made during 1995 under section 
        1833(a)(1)(A) of that Act (42 U.S.C. 13951(a)(1)(A)).
    (f) Regulations.--
            (1) Continuity of current regulations.--Regulations in 
        effect (or available in proposed form) on December 31, 1996, 
        that apply to section 1876 of the Social Security Act (42 
        U.S.C. 1395mm) shall apply to part C of title XVIII of that Act 
        (as enacted by subsection (a)(2) of this section), except to 
        the extent that the regulations are inconsistent with the 
        provisions of that part.
            (2) Interim final regulations.--The Secretary may issue 
        regulations before 1998 for part C of title XVIII of the Social 
        Security Act (as enacted by subsection (a)(2) of this section) 
        on an interim final basis.
    (g) Consideration of Experience Under Section 1876 in Satisfaction 
of Requirements of Part C.--Any requirement in part C of title XVIII of 
the Social Security Act (as enacted by subsection (a)(2) of this 
section) that (in a particular context) relates to matters that 
occurred before 1997 shall be satisfied if the corresponding 
requirement was satisfied under section 1876 (42 U.S.C. 1395mm) of that 
Act.
    (h) Enrollment Transition Rule.--An individual who is enrolled on 
December 31, 1996, with an eligible organization under section 1876 of 
the Social Security Act (42 U.S.C. 1395mm) shall be considered to be 
enrolled with that organization on January 1, 1997, under part C of 
title XVIII of that Act (as added by subsection (a)(2) of this section) 
if that organization has a contract under that part for providing 
services on January 1, 1997 (unless the individual has disenrolled 
effective on that date).
    (i) Immediate Effective Date for Certain Requirements for 
Demonstrations.--Section 1851B(b)(2) of the Social Security Act (as 
enacted by subsection (a)(2) of this section) (requiring contribution 
to certain costs related to the enrollment process comparative 
materials) applies to demonstrations occurring after the date of 
enactment of this Act.

SEC. 11203. DEVELOPMENT OF STANDARDS FOR FISCAL SOUNDNESS AND 
              REQUIREMENTS AGAINST RISK OF INSOLVENCY.

    The Secretary of Health and Human Services, in consultation with 
the National Association of Insurance Commissioners, organizations that 
provide or pay for health care services, and consumer organizations, 
shall develop (and publish as an interim final rule by July 1, 1996) 
standards for fiscal soundness and requirements concerning adequate 
provision against the risk of insolvency for provider sponsored 
organizations that have entered into contracts under part C of title 
XVIII of the Social Security Act (as enacted by section 11202(a)(2) of 
this Act). The Secretary may also publish, as an interim final rule by 
that date, any additional requirements related to such organizations.

SEC. 11204. APPLICABILITY OF MEDICARE RATES TO ENROLLEES WHO USE AN 
              OUT-OF-PLAN PROVIDER OF SERVICES.

    (a) Section 1866(a)(1)(O) (42 U.S.C. 1395cc(a)(1)(O)) is amended--
            (1) by striking ``in the case of hospitals and skilled 
        nursing facilities,'';
            (2) by striking ``inpatient hospital and extended care 
        services that are covered under this title and'' and inserting 
        ``services that''; and
            (3) by striking ``(in the case of hospitals) or limits (in 
        the case of skilled nursing facilities)''.
    (b) The amendment made by subsection (a) applies to services 
furnished after 1996.

SEC. 11205. SUBSTITUTION OF QUALITY MEASUREMENT SYSTEM FOR PRIVATE 
              ENROLLMENT REQUIREMENT.

    (a) Promulgation of Regulations.--The Secretary of Health and Human 
Services, after consulting with representatives from managed health 
care plans (including representatives of provider service 
organizations), consumer organizations, and other major purchasers of 
managed care services--
            (1) shall publish proposed regulations by July 1, 1997, 
        requiring the collection, analysis, and reporting of data that 
        will permit measurement of outcomes and other indices of the 
        quality of managed care plans;
            (2) shall publish final regulations after completing review 
        of comments on the proposed regulations published pursuant to 
        paragraph (1).
    (b) Revision of Beneficiary Protection Requirement.--As of the 
effective date of final regulations published pursuant to subsection 
(a), section 1851E(g) (as enacted by section 11202(a)(2) of this Act) 
is amended to read as follows:
    ``(g) Quality Measurement System.--Each eligible organization with 
which the Secretary enters into a contract under this part shall meet 
the requirements of the quality measurement system established by the 
Secretary in regulations.''.

SEC. 11206. HMO COMPETITIVE PRICING AND RELATED DEMONSTRATIONS.

    (a) Amendment Effective on Date of Enactment.--Section 402(b) of 
the Social Security Amendments of 1967 (42 U.S.C. 1395b-1(b)) is 
amended by inserting after the first sentence the following: ``The 
Secretary may also waive, in the case of such an experiment or 
demonstration project, compliance with the requirements of sections 
1876 and 1882 of that Act.
            ``(2) Report to congress on competitive pricing 
        demonstration.--Not later then January 1, 2002, the Secretary 
        shall report to Congress on specific recommendations for a new 
        payment methodology for eligible organizations with contracts 
        under Part C to be based on the results of the competitive 
        pricing demonstrations.''.
    (b) Amendment Effective for 1997-2000.--
            (1) The second sentence of section (402)(b) of the Social 
        Security Amendments of 1967 (42 U.S.C. 1395B-1(b)) (as added by 
        subsection (a) of this section) is amended by inserting ``and 
        part C of title XVIII'' after ``1882''.
            (2) The amendment made by paragraph (1) applies to 
        activities occurring after 1996.
    (c) Amendment Effective After 2000.--
            (1) The second sentence of section 402(b) of the Social 
        Security Amendments of 1967 (42 U.S.C. 1395b-1(b)) (as added by 
        subsection (a) and amended by subsection (b) of this section) 
        is further amended by striking ``sections 1876 and 1882'' and 
        inserting ``section 1882''.
            (2) The amendment made by paragraph (1) applies to 
        activities occurring after 2000.

SEC. 11207. ELIMINATION OF HEALTH CARE PREPAYMENT PLAN OPTION FOR 
              ENTITIES ELIGIBLE TO PARTICIPATE UNDER PART C.

    (a) Elimination of Option.--
            (1) In general.--Section 1833(a)(1)(A) (42 U.S.C. 
        13951(a)(1)(A)) is amended by inserting after ``prepayment 
        basis'' the following: ``(and either is sponsored by a union or 
        employer, or does not provide, or provide benefits for, any 
        inpatient hospital services)''.
            (2) Effective date.--The amendment made by subparagraph (A) 
        applies to services furnished after 1996.
    (b) Medigap Amendment.--Section 1882(g) (42 U.S.C. 1395ss(g)) is 
amended by striking ``, during the period beginning on the date 
specified in subsection (p)(1)(C) and ending on December 31, 1995,''.

SEC. 11208. MEDIGAP REFORMS.

    (a) Uniform Enrollment Periods.--
            (1) In general.--Section 1882(s)(2)(A) (42 U.S.C. 
        1395ss(s)(2)(A)) is amended by striking ``an application is 
        submitted'' and all that follows and inserting the following: 
        ``an application is submitted--
            ``(i) prior to or during the 6-month period beginning with 
        the first month as of the first day on which the individual is 
        65 years of age or older and is enrolled for benefits under 
        part B;
            ``(ii) during an annual 30-day period specified by the 
        Secretary; or
            ``(iii) during a period specified by the Secretary in the 
        circumstances described in section 1851B(c)(2) (with respect to 
        an individual losing coverage through an organization's 
        termination of contract or discontinuation of coverage).''.
            (2) Effective date.--The amendment made by the paragraph 
        (1) is effective after 1996.
    (b) Standardized Information.--
            (1) In general.--
                    (A)(i) Section 1882 (42 U.S.C. 1395ss) is amended 
                by adding at the end the following:
    ``(u) Each entity that offers a medicare supplemental policy shall 
pay the Secretary for its pro rata share (a determined by the 
Secretary) of the estimated costs to be incurred by the Secretary in 
carrying out the requirements of the first sentence of section 
1851B(b)(1) and section 4360 of the Omnibus Reconciliation Act of 1990. 
Those payments are appropriated to defray the costs described in the 
preceding sentence, to remain available until expended.''.
                    (ii) Section 1882(c)(5) (42 U.S.C. 1395ss(c)(5)) is 
                amended by striking ``(t)'' and inserting ``(u)''.
                    (B) Section 4360(g) of the Omnibus Reconciliation 
                Act of 1990 (42 U.S.C. 1395b-4(g)) is amended to read 
                as follows:
    ``(g) Funding.--For funding provisions, see section 1851B(b)(2), 
and section 1882(u), of the Social Security Act.''.
            (2) Effective date.--The amendments made by the preceding 
        paragraphs apply to demonstrations occurring after the date of 
        enactment of this Act, and to other activities occurring after 
        1996.
    (c) Community Rating.--
            (1) In general.--Section 1882(c) (42 U.S.C. 1395ss(c)) is 
        amended--
                    (A) by striking ``and'' at the end of paragraph 
                (4),
                    (B) by striking the period at the end of paragraph 
                (5) and adding ``; and'', and
                    (C) by adding after paragraph (5) the following: 
                ``(6) provides for the same premium for each 
                enrollee.''.
            (2) Conforming amendment.--Section 1882(b)(1)(B) (42 U.S.C. 
        1395ss(b)(1)(B)) is amended by striking ``(5)'' and inserting 
        ``(6)''.
            (3) Effective date and transitional provisions.--The 
        amendments made by the preceding paragraphs apply to policies 
        and plans as of the beginning of 1997 (whether issued before or 
        after that time), subject to such transitional rules as the 
        Secretary may develop after consulting with the National 
        Association of Insurance Commissioners.
    (d) Long-Term Care Insurance Safe Harbor.--
            (1) In general.--Section 1882(d)(3)(C) is amended--
                    (A) by striking ``or (iii)'' and inserting 
                ``(iii)''; and
                    (B) by inserting before the period the following: 
                ``, or (iv) the sale or issuance of a health insurance 
                policy (or rider to an insurance contract which is not 
                a health insurance policy) providing benefits only for 
                long-term care, nursing home care, home health care, or 
                community-based care, or any combination thereof, that 
                coordinates against or excludes items and services 
                available under this title, if such coordination or 
                exclusion is disclosed in the policy's outline of 
                coverage.''.
            (2) Effective date and other rules.--
                    (A) The amendments made by this section shall take 
                effect as if included in the enactment of section 4354 
                of the Omnibus Budget Reconciliation Act of 1990 
                (hereafter referred to as ``OBRA-1990'').
                    (B) No penalty shall be imposed under section 
                1882(d)(3)(A)(i) of the Social Security Act for any set 
                or omission occurring after the effective date of the 
                amendments made by section 4354 of OBRA-90 and before 
                the date of the enactment of this Act relating to the 
                sale of a health insurance policy described in section 
                1882(d)(3)(C)(iv) of the Social Security Act.

SEC. 11209. STANDARDIZED BENEFITS PACKAGES.

    (a) Managed Care.--The Secretary, no later than July 1, 1996, after 
consulting with the National Association of Insurance Commissioners, 
consumer groups, managed care plans, providers of health care, and 
insurers, shall develop standard packages of benefits (in addition to 
the benefits covered under title XVIII of the Social Security Act (42 
U.S.C. 1395 et seq.)) that may be offered by eligible organizations 
under part C of that title (as added by section 11202(a)(2) of this 
Act).
    (b) Medigap.--
            (1)(A) The Secretary shall request the National Association 
        of Insurance Commissioners, in consultation with consumer 
        groups, managed care plans, providers of health care, and 
        insurers, to examine (and recommend by March 1, 1997, any 
        restructuring needed for) the standard benefit packages 
        developed under section 1882(p)(2) of the Social Security Act 
        (42 U.S.C. 1395ss(p)(2)) in order to facilitate to the maximum 
        extent feasible comparison across medicare supplemental 
        policies and benefits offered by eligible organizations under 
        section 1876.
            (B) The Secretary, no later than May 1, 1997, after taking 
        into account any recommendations made under subparagraph (A) by 
        the National Association of Insurance Commissioners, shall 
        restructure, as needed, those standard benefit packages.
            (2)(A) Section 1882(p) (42 U.S.C. 1395ss(p)) is amended by 
        adding at the end the following:
            ``(11) The groups or packages of benefits (including the 
        core group of basic benefits) under paragraph (2) shall be 
        modified by any changes made by the Secretary under section 
        11209(b)(1)(B) of the Balanced Budget Act of 1995 for Economic 
        Growth and Fairness.''.
            (B) The amendment made by subparagraph (A) applies to 
        services provided after 1997.

                     medicaid language explanation

    The proposal would include language with establishing a per capita 
cap on the average per beneficiary rate of growth in the Medicaid 
program.
    There would be an ``equity adjustor'' to states with low per capita 
expenditures (i.e., their growth rates would be higher than other 
states). The national average growth rate, however, would be tagged to 
grow by a national index (compensating for the ``equity adjustor'').
    With respect to savings in the disproportionate share hospital 
program, we would phase out the current disproportionate share program 
and phase in a retargeted disproportionate share program identical to 
the Coalition's bill.
    Funding levels would be as follows:

----------------------------------------------------------------------------------------------------------------
                                                     1996     1997     1998     1999     2000     2001     2002 
----------------------------------------------------------------------------------------------------------------
Phase-out........................................     10.7      8.0      5.3      2.6      0.0      0.0      0.0
Phase-in.........................................      0.0      1.3      2.7      4.0      5.0      5.0      5.0
                                                  --------------------------------------------------------------
  Total..........................................     10.7      9.3      8.0      6.6      5.0      5.0      5.0
----------------------------------------------------------------------------------------------------------------

    The program would also include a mandatory set-aside of payments of 
$290 million for federally qualified health centers and $125 million 
for rural health centers in FY 1997 to be increased annually by the 
overall rate of Medicaid growth in the previous year. We estimate this 
would cost approximately $3 billion over the six year period.
    In addition, we would include language from the conference report 
for the $3.5 billion for payments to states for costs incurred for the 
provision of care to undocumented aliens.
    ``(b) For Undocumented Immigrants.--
            ``(1) In general.--Each of the 15 States with the largest 
        number of illegal immigrants (as estimated by the Statistics 
        Division of the Immigration and Naturalization Service as of 
        October, 1992) shall be entitled, for each of fiscal years 1996 
        through 2000, to an amount bearing the same ratio to the amount 
        specified in paragraph (2) as the illegal immigrant population 
        in all 15 such States.
            ``(2) Amounts authorized.--For purposes of paragraph (1) 
        amounts authorized to be appropriated are--
                    ``(A) $631,000,000 for fiscal year 1996;
                    ``(B) $664,000,000 for fiscal year 1997;
                    ``(C) $699,000,000 for fiscal year 1998;
                    ``(D) $735,000,000 for fiscal year 1999; and
                    ``(E) $771,000,000 for fiscal year 2000.
            ``(3) Annual report.--Not later than 90 days after the end 
        of each fiscal year in which a State receives or uses amounts 
        pursuant to this subsection, the State shall submit to the 
        Secretary, and make available to the public, a report on its 
        use of such amounts in such fiscal year which includes:
                    ``(A) a listing of each of the providers receiving 
                payment from such amounts and the amount of such 
                payments; and
                    ``(B) such information as the Secretary may require 
                to provide an assurance that services provided with 
                such payments were consistent with the limitations 
                under section 1903(v).
    ``(c) Extended Availability of Funds.--Amounts appropriated 
pursuant to this section and not required by a State for the purposes 
of this section in a fiscal year may be used by the State for such 
purposes in any subsequent fiscal year, and shall remain available 
until expended.
    ``(d) State Assurances.--Each State receiving transitional 
assistance payments under this section shall provide assurances 
satisfactory to the Secretary--
            ``(1) in the case of payments under subsection (a), that 
        such payments will be used by the State to make payments to 
        health care providers for services which would otherwise be 
        uncompensated; and
            ``(2) in the case of payments under subsection (b), that 
        such payments will be used by the State to make payments for 
        emergency health care services for illegal immigrants in 
        accordance with section 1903(v).''.
            (2) Payments to states.--Section 1903(a) is amended--
                    (A) by striking the period at the end of paragraph 
                (7) and inserting ``; plus''; and
                    (B) by adding after paragraph (7) the following new 
                paragraph;
                            ``(8) an amount equal to 100 percent of 
                        payments authorized pursuant to section 
                        1923A''.
            (3) Sunset.--Effective October 1, 2000, the amendments made 
        by this subsection are repealed.

SEC. 11303. MEDICAID ELIGIBILITY QUALITY CONTROL (MEQC) REQUIREMENTS.

    Section 1903(u) is amended--
            (1) in paragraph (1)(A), to read as follows:
                    ``(A) Notwithstanding subsection (a), the Secretary 
                shall reduce the aggregate Federal payment limit 
                applicable to a State for fiscal year 1997 or any 
                succeeding fiscal year by the amount, if any, equal to 
                the sum of the products, for each group defined in 
                section 1931(b), of--
                            ``(i) the number of excess erroneous 
                        enrollments of individuals in each such group; 
                        and
                            ``(ii) the per beneficiary rate applicable 
                        to such group for such fiscal year pursuant to 
                        section 1931(c).'';
            (2) in paragraph (1)(C), by striking ``erroneous excess 
        payments for medical assistance'' and inserting ``excess 
        erroneous enrollments'';
            (3) by striking subparagraphs (D) and (E) of paragraph (1) 
        and inserting the following:
                    ``(D) Calculation factors.--For purposes of this 
                subsection--
                            ``(i) Erroneous enrollments.--The term 
                        `erroneous enrollments' means, with respect to 
                        a group defined in section 1931(b), the number 
                        of individuals that a State reports, pursuant 
                        to section 1931(c)(4), as enrolled in such 
                        group who either (I) should have been so 
                        reported as enrolled in another such group 
                        which has a lower per beneficiary base rate, or 
                        (II) were ineligible for medical assistance 
                        under the State plan.
                            ``(ii) Exclusion from erroneous 
                        enrollments.--The term `erroneous enrollments' 
                        does not include any enrollment--
                                    ``(I) of individuals whose 
                                eligibility was determined exclusively 
                                by the Commissioner of Social Security 
                                under an agreement pursuant to section 
                                1634, and such other classes of 
                                individuals as the Secretary may by 
                                regulation prescribe whose eligibility 
                                was determined in part under such an 
                                agreement;
                                    ``(II) resulting from the failure 
                                of an individual to cooperate or give 
                                correct information with respect to 
                                third-party liability as required under 
                                section 1912(a)(1)(C) or 402(a)(26)(C); 
                                or
                                    ``(III) during a presumptive 
                                eligibility period (as defined in 
                                section 1920(b)(1)).
                            ``(iii) Excess erroneous enrollments.--The 
                        term `excess erroneous enrollments' means, with 
                        respect to a group of individuals defined in 
                        section 1931(b), erroneous enrollments in 
                        excess of 3 percent of total enrollments of 
                        individuals in such group.''; and
            (4) in paragraph (2), by striking ``erroneous excess 
        payments'' and inserting ``excess erroneous enrollments''.

                          PART 2--ELIGIBILITY

SEC. 11311. EXTENSION OF COVERAGE TO ADDITIONAL INDIVIDUALS, SUBJECT TO 
              POVERTY-RELATED OR CASELOAD LIMITS.

    (a) Expanded Eligibility.--Section 1902(a)(10) is amended by adding 
after subparagraph (F) the following new paragraph:
                    ``(G) at the option of a State, for making medical 
                assistance available to one of the following groups of 
                individuals who would otherwise be ineligible for such 
                assistance:
                            ``(i) individuals whose income does not 
                        exceed a limit established by the State, not 
                        greater than 150 percent of the Federal poverty 
                        line; or * * *
    (b) Disregard of Additional Enrollees in Calculation of Federal 
Payment Limit.--Section 1931(c)(4)(A), as added by section 11301 of 
this Act, is amended by adding at the end the following new clause:
                            ``(iii) Expanded eligibility disregard.--
                        The numbers reported by the State shall not 
                        include any individuals enrolled in the State 
                        program under this title pursuant to section 
                        1902(a)(10)(G).''.

SEC. 11312. ELIMINATION OF AUTHORITY FOR NEW ELIGIBILITY EXPANSION 
              DEMONSTRATIONS.

    Section 1115(a)(1) is amended by inserting ``(except that waivers 
of requirements of section 1902 with respect to eligibility of 
individuals for medical assistance shall not be granted (but may be 
extended or modified) on or after October 1, 1996)'' after ``project''.

SEC. 11313. UPPER INCOME LIMIT ON ``LESS RESTRICTIVE'' ELIGIBILITY 
              METHODOLOGIES.

    Section 1902(r)(2) is amended--
            (1) in paragraph (A), by inserting ``(except as provided in 
        subparagraph (C))'' after ``no more restrictive''; and
            (2) by adding at the end the following new subparagraph:
    ``(C) The methodology described in subparagraph (A) shall not 
result in an income eligibility limit (based on gross income) higher 
than the higher of--
            ``(i) 150 percent of the Federal poverty line; or
            ``(ii) the income eligibility limit applicable under the 
        State plan in effect in fiscal year 1995 (taking into account 
        any such limit applicable under a waiver under section 
        1115).''.

                          PART 3--MANAGED CARE

SEC. 11321. PRIMARY CARE CASE MANAGEMENT SERVICES AS STATE OPTION 
              WITHOUT NEED FOR WAIVER.

    (a) Primary Care Case Management Services Defined.--Section 1905 is 
amended by adding at the end of the following new subsection:
    ``(t)(1) The term `primary care case management system' means a 
State program under which individuals eligible for medical assistance 
under the State plan under this title are enrolled with primary care 
case managers and are entitled to receive health care items and 
services covered under the State plan and specified in such program 
only as approved (and arranged or provided) by such managers.
    ``(2) The term `primary care case manager' means a provider that 
has entered into a primary care case management contract with the State 
agency and that is--
            ``(A) a physician, a physician group practice, or an entity 
        employing or having other arrangements with physicians who 
        provide case management services; or
            ``(B) at State option--
                    ``(i) a nurse practitioner (as described in section 
                1905(a)(21);
                    ``(ii) a certified nurse-midwife (as defined in 
                section 1861(gg)); or
                    ``(iii) a physician assistant (as defined in 
                section 1861(aa)(5).
    ``(3) The term `primary care case management contract' means a 
contract with a State agency under which a primary care case manager 
undertakes to locate, coordinate and monitor covered primary care, 
covered primary care and other services, or covered services specified 
by the State, to all individuals enrolled with the primary care case 
manager, and which provides for--
            ``(A) reasonable and adequate hours of operation, including 
        24-hour availability of information, referral, and treatment 
        with respect to medical emergencies;
            ``(B) restriction of enrollment to individuals residing 
        sufficiently near a service delivery site of the entity to be 
        able to reach such site within a reasonable time using 
        available and affordable modes of transportation;
            ``(C) employment of, or contracts or other arrangements 
        with, sufficient numbers of physicians and other appropriate 
        health car professionals to ensure that services under the 
        contract can be furnished to enrollees promptly and without 
        compromise to quality of care;
            ``(D) a prohibition on discrimination on the basis of 
        health status or requirements for health services in 
        enrollment, disenrollment, reenrollment, or disenrollment of 
        individuals eligible for medical assistance under this title; 
        and
            ``(E) a right for enrollees to terminate such enrollment 
        without cause during the first month of each enrollment period, 
        each such enrollment period not to exceed six months in 
        duration, and to terminate their enrollment at any time for 
        cause.
    ``(4) The term `primary care' includes all health care services 
customarily provided by or under the supervision of, and all laboratory 
services customarily provided by or through, a general practitioner, 
family medicine physician, internal medicine physician, obstetrician/
gynecologist, or pediatrician.''.
    (b) Inclusion in Definition of Medical Assistance.--Section 1905(a) 
is amended--
            (1) by striking ``and'' at the end of paragraph (24);
            (2) by redesignating paragraph (25) as paragraph (26); and
            (3) by inserting after paragraph (24) the following new 
        paragraph:
            ``(25) primary care case management services (as defined in 
        subsection (t)); and''.
    (c) State Plan Requirement.--Section 1902(a) is amended--
            (1) by striking ``and'' at the end of paragraph (61);
            (2) by striking the period at the end of paragraph (62) and 
        inserting ``; and''; and
            (3) by adding after paragraph (62) the following new 
        paragraph:
            ``(63) provide that any primary care case management 
        services furnished under the plan will be furnished in 
        accordance with the provisions of section 1905(t).''.
    (d) Repeal of Waiver Authority.--Section 1915(b) is amended by 
striking paragraph (1) and redesignating paragraphs (2), (3), and (4) 
as paragraphs (1), (2), and (3), respectively.
    (e) Exception to Freedom of Choice.--For State option to mandate 
enrollment in primary care case management programs, see section 11322.

SEC. 11322. STATE OPTIONS TO RESTRICT CHOICE OF PROVIDERS.

    (a) Mandatory Enrollment in Managed Care.--Section 1915(a) is 
amended by inserting at the end the following new paragraph:
            ``(3) requires individuals eligible for medical assistance 
        for items or services under the State plan to enroll with an 
        entity that provides or arranges for services for enrollees 
        under a contract pursuant to section 1903(m), or with a primary 
        care case manager (as defined in section 1905(t)) (and/or 
        restricts the number of provider agreements with such entities 
        under the State plan, consistent with quality of care), if--
                    ``(A)(i) individuals are permitted to choose 
                between at least 2 such entities, or 2 such managers, 
                or an entity and a manager, each of which has 
                sufficient capacity to provide services to enrollees; 
                or
                    ``(ii) with respect to a rural area--
                            ``(I) individuals who are required to 
                        enroll with a single entity are afforded the 
                        option in appropriate circumstances to obtain 
                        covered services by an alternative provider; 
                        and
                            ``(II) an individual who is offered no 
                        alternative to a single entity or manager is 
                        given a choice between at least two providers 
                        within such entity or through such manager;
                    ``(iii)(I) the State does not restrict the 
                participation of any Indian health program specified in 
                section 1931(d)(1)(C); and
                    ``(II) in any case in which the State directs the 
                enrollment of an individual who is an Indian (as 
                defined in section 4 of the Indian Health Care 
                Improvement Act of 1976) in accordance with this 
                subsection, such individual is enrolled with a 
                participating entity specified in subclause (I), if 
                any;
                    ``(B) the State restricts such individuals from 
                changing their enrollment without cause for periods no 
                longer than six months (and permits enrollees to change 
                enrollment for cause at any time); and
                    ``(C) such restrictions do not apply to providers 
                of family planning services (as defined in section 
                1905(a)(4)(C)) and are not conditions for payment of 
                medicare cost sharing pursuant to section 
                1905(p)(3).''.
    (b) State Option for Six-Month Lock-In in Risk-Based 
Arrangements.--Section 1903(m)(2) is amended--
            (1) in paragraph (A)(vi)--
                    (A) by striking ``(I) as provided under 
                subparagraph (F),''; and
                    (B) by striking all that follows ``to terminate 
                such enrollment'' and inserting ``in accordance with 
                the provisions of subparagraph (F);''; and
            (2) in subparagraph (F), by striking ``In the case of--'' 
        and all that follows through ``a State plan'' and inserting ``A 
        State plan''.

SEC. 11323. ELIMINATION OF RESTRICTIONS ON RISK CONTRACTS.

    (a) 75 Percent Limit on Medicare and Medicaid Enrollment.--
            (1) In general.--Section 1903(m)(2)(A) is amended by 
        striking clause (ii).
            (2) Conforming amendments.--Section 1903(m)(2) is amended--
                    (A) by striking subparagraphs (C), (D), and (E); 
                and
                    (B) in subparagraph (G), by striking ``clauses (i) 
                and (ii)'' and inserting ``clause (i)''.
    (b) Secretarial Approval of Contracts Over $100,000.--Section 
1903(m)(2)(A) is amended in clause (iii) by striking all that follow 
``actuarially sound basis'' and inserting a semicolon.
    (c) Additional Amendments.--For additional amendments to section 
1903(m)(2)(A), see section 11341(b).

SEC. 11324. 6-MONTH GUARANTEED ELIGIBILITY FOR ALL INDIVIDUALS ENROLLED 
              IN MANAGED CARE.

    Section 1902(e)(2) is amended--
            (1) by striking ``who is enrolled'' and all that follows 
        through ``section 1903(m)(2)(A)'' and inserting ``who is 
        enrolled with a health maintenance organization (as defined in 
        section 1903(m)), with a primary care case manager (as defined 
        in section 1905(t),''; and
            (2) by inserting before the period ``or by or through such 
        case manager''.

SEC. 11325. REQUIREMENTS TO ENSURE QUALITY OF AND ACCESS TO CARE UNDER 
              MANAGED CARE PLANS.

    Section 1902(a), as amended by section 11321(c), is amended--
            (1) in paragraph (62), by striking ``; and'' at the end and 
        inserting a semicolon;
            (2) by striking the period at the end of paragraph (63) and 
        inserting ``; and''; and
            (3) by adding after paragraph (63) the following new 
        paragraph:
            ``(64) provide, with respect to all agreements between the 
        State agency and entities described in section 1903(m), section 
        1905(t), and other providers of managed care services--
                    ``(A) that the State agency will develop and 
                implement a quality improvement strategy, consistent 
                with standards established by the Secretary, which 
                includes--
                            ``(i) standards for the provision of 
                        services under such agreements designed to 
                        ensure reasonable access of enrolled 
                        individuals to covered services meeting 
                        applicable standards for quality and safety;
                            ``(ii) procedures for monitoring 
                        performance of entities under such agreements, 
                        including--
                                    ``(I) procedures for collection 
                                from (or reporting by) providers of 
                                patient data; and
                                    ``(II) procedures for analysis of 
                                such data;
                    ``(B) that providers entering into such agreements 
                under which payment is made on a prepaid capitated or 
                other risk basis shall be required--
                            ``(i) to demonstrate a capacity to deliver 
                        covered services to all enrolled individuals; 
                        and
                            ``(ii) to maintain an internal quality 
                        assurance program, meeting such standards as 
                        the Secretary may establish in regulations, 
                        which includes a grievance process.''.

                            PART 4--BENEFITS

SEC. 11331. HOME- AND COMMUNITY-BASED SERVICES AS STATE OPTION WITHOUT 
              NEED FOR WAIVER.

    (a) Elimination of Waiver Restriction.--Section 1915(c) is 
relocated and redesignated as subsection (u) of section 1905, and is 
amended--
            (1) in paragraph (1), by striking everything through 
        ``pursuant to a written plan'' and inserting ``The term `home- 
        and community-based services' means items and services (other 
        than room and board) which are provided in accordance with the 
        provisions of this subsection, and pursuant to a written 
        plan'';
            (2) in paragraph (2)--
                    (A) by striking the matter that precedes 
                subparagraph (A) and inserting ``A State agency that 
                elects to provide home- and community-based services as 
                defined in this subsection shall ensure that--'';
                    (B) by adding ``and'' at the end of subparagraph 
                (B);
                    (C) by striking the semicolon at the end of 
                subparagraph (C) and inserting a period; and
                    (D) by striking subparagraphs (D) and (E);
            (3) in paragraph (3), to read as follows:
            ``(3) A State plan may provide--
                    ``(i) that home- and community-based services 
                furnished under the plan shall not be subject to the 
                provisions of section 1902(a)(1) (relating to 
                statewideness), section 1902(a)(10)(B) (relating to 
                comparability), or section 1902(a)(10)(C)(i)(III) 
                (relating to income and resource rules applicable in 
                the community), and
                    ``(ii) for purposes of post-eligibility treatment 
                of income, for disregard of a greater amount for the 
                maintenance needs of the individual than amounts 
                specified in regulations with respect to a similarly 
                situated institutionalized individual.'';
            (4) in paragraph (4)--
                    (A) by striking the matter preceding subparagraph 
                (A) and inserting ``A State plan providing for home- 
                and community-based services may--'';
                    (B) in subparagraph (A)--
                            (i) by striking ``benefits under such 
                        waiver'' and inserting ``such benefits'';
                            (ii) by striking ``under such waiver'' and 
                        inserting ``for such benefits''; and
                            (iii) by striking ``if the waiver did not 
                        apply'' and inserting ``if institutionalized''; 
                        and
                    (C) by striking the final sentence; and
            (5) by striking paragraphs (6) through (10).
    (b) Inclusion in Definition of ``Medical Assistance''.--Section 
1905(a)(22) is amended to read ``home- and community-based services (as 
defined in subsection (u));''.
    (c) State Plan Requirement.--Section 1902(a), as amended by 
sections 11321(c) and 11325, is amended--
            (1) by striking ``and'' at the end of paragraph (63);
            (2) by striking the period at the end of paragraph (64) and 
        inserting ``; and''; and
            (3) by adding after paragraph (64) the following new 
        paragraph:
            ``(65) provide that any home- and community-based services 
        furnished under the plan will be furnished in accordance with 
        the provisions of section 1905(u).''.
    (d) Repeal of Superseded Provisions.--
            (1) Sections 1929 and 1930 are repealed.
            (2) Section 1905(a) is amended by striking paragraph (23).

SEC. 11332. ELIMINATION OF REQUIREMENTS TO PAY FOR PRIVATE INSURANCE.

    (a) Repeal of State Plan Provision.--
            (1) Section 1902(a)(25) is amended--
                    (A) by striking subparagraph (G); and
                    (B) by redesignating subparagraphs (H) and (I) as 
                subparagraphs (G) and (H), respectively.
    (b) Repeal of Enrollment Requirements.--Section 1906 is repealed.
    (c) Reinstatement of State Option.--Section 1905(a) is amended, in 
the matter preceding clause (i), by inserting ``(including, at State 
option, through purchase or payment of enrollee costs of health 
insurance)'' after ``The term `medical assistance' means payment''.

SEC. 11333. BENEFITS FOR INDIVIDUALS COVERED DURING TRANSITION TO WORK.

    (a) Payment of Group Health Coinsurance at Medicaid Rates.--
            (1) Section 1925(a)(4)(B) is amended--
                    (A) by striking ``and'' at the end of clause 
                (i)(II);
                    (B) by striking the period at the end of clause 
                (ii); and
                    (C) by adding after clause (ii) the following new 
                clause:
                            ``(iii) the State may limit the amount of 
                        any deductible or copayment for any health care 
                        item or service to the applicable portion of 
                        the amount the State would pay if such item or 
                        service had been furnished by a provider 
                        participating in the program under the State 
                        plan.''.
            (2) Section 1925(b)(4)(D) is amended by adding at the end 
        the following new sentence: ``If the State elects to pay such 
        deductibles and coinsurance, the State may limit the amount of 
        such payments as provided in subsection (a)(4)(C)(iii).''.
    (b) Elimination of Premium Limit.--Section 1925 (b)(5)(C) is 
repealed.
    (c) Provision Concerning Reporting Requirements made Optional.--
            (1) Reporting requirement.--Section 1925(b)(2)(B) is 
        amended to read as follows:
                    ``(B) Reporting requirements.--Each State may 
                require, as a condition for additional extended 
                assistance under this subsection, reports by the family 
                at such times and containing such information as the 
                State may specify concerning gross monthly earnings and 
                costs for child care.''.
            (2) State option to terminate benefits for failure to 
        report.--Section 1925(b)(3)(A) is amended (a) in clause (iii), 
        by striking ``(2)(B)(ii)'' each place it appears and inserting 
        ``(2)(B)''.

            PART 5--PROVIDER PARTICIPATION AND PAYMENT RATES

SEC. 11341. METHODS FOR ESTABLISHING PROVIDER PAYMENT RATES.

    (a) Plan Amendments.--Section 1902(a)(13) is amended--
            (1) by striking all that precedes subparagraph (D) and 
        inserting the following:
    ``(13) provide--
            ``(A) for a public process for determination of rates of 
        payment under the plan (including any payment adjustments under 
        section 1923) for nursing facility services and services of 
        intermediate care facilities for the mentally retarded under 
        which--
                    ``(i) proposed rates are published, and providers, 
                beneficiaries and their representatives, and other 
                concerned State residents are given a reasonable 
                opportunity for review and comment thereon; and
                    ``(ii) final rates are published, together with 
                justifications based on the administrative record; 
                and'';
            (2) by redesignating subsections (D) and (E) as subsections 
        (B) and (C), respectively;
            (3) in subparagraph (B), as redesignated, by striking 
        everything through ``of 100 percent of costs'' and inserting 
        the following:
            ``(B) for payment under the plan--
                    ``(i) for all services described in clause (B) or 
                (C) of section 1905(a)(2) furnished on or before 
                September 30, 1998; and
                    ``(ii) for services described in clause (i) 
                furnished on or after October 1, 1998, by an entity 
                described in section 1931(d)(1)(C) of 100 percent of 
                costs''; and
            (4) by striking subsection (F).
    (b) Study and Report to Congress.--The Secretary shall conduct a 
study of the effect on access to services, and quality and safety of 
services, of the rate-setting methods used by States pursuant to 
section 1902(a)(13) of the Social Security Act, as amended by 
subsection (a), and shall submit a report to the Congress on the 
conclusions from such study, together with any legislative 
recommendations, not later than the date four years after enactment of 
this Act.

SEC. 11343. ELIMINATION OF OBSTETRICAL AND PEDIATRIC PAYMENT RATE 
              REQUIREMENTS.

    Section 1926 is repealed.

                   PART 6--STATE PLAN ADMINISTRATION

SEC. 11351. MMIS REQUIREMENTS.

    (a) In General.--Section 1903(r) is amended--
            (1) by striking all that precedes paragraph (5) and 
        inserting the following:
    ``(r) Medicaid Management Information Systems (MMIS).--(1) In 
General.--In order to receive payments under subsection (a) for use of 
automated data systems in administration of the State plan under this 
title, a State must have in operation mechanized claims processing and 
information retrieval systems that meet the requirements of this 
subsection and that the Secretary has found to be--
            ``(A) adequate to provide efficient, economical, and 
        effective administration of such State plan;
            ``(B) compatible with the claims processing and information 
        retrieval systems used in the administration of title XVIII, 
        and for this purpose--
                    ``(i) having a uniform identification coding system 
                for providers, other payees, and beneficiaries under 
                this title or title XVIII;
                    ``(ii) providing liaison between States and 
                carriers and intermediaries with agreements under title 
                XVIII to facilitate timely exchange of appropriate 
                data; and
                    ``(iii) providing for exchange of data between the 
                States and the Secretary with respect to persons 
                sanctioned under this title or title XVIII;
            ``(C) capable of providing accurate and timely data;
            ``(D) able to accommodate receipt of provider claims in 
        standard formats to the extent specified by the Secretary; and
            ``(E) able to transmit electronically such data as is 
        specified by the Secretary.''.
            (2) in paragraph (5)--
                    (A) by striking all that precedes clause (i) and 
                inserting the following:
    ``(2) In order to meet the requirements of this paragraph, 
mechanized claims processing and information retrieval systems must 
meet the following requirements:'';
                    (B) in clause (iii), by striking ``under paragraph 
                (6)''; and
                    (C) by redesignating clauses (i) through (iii) as 
                paragraphs (A) through (C); and
            (3) by striking paragraphs (6), (7), and (8).
    (b) Conforming Amendments.--Section 1902(a)(25)(A)(ii) is amended--
            (1) by striking ``, and'' at the end of subclause (I) and 
        inserting a semicolon;
            (2) by relocating the matter in subclause (I) immediately 
        after ``which plan shall'', after striking the intervening 
        hyphen and the subclause designation; and
            (3) by striking subclause (II).

SEC. 11352. ELIMINATION OF PERSONNEL REQUIREMENTS.

    Section 1902(a)(4) is amended--
            (1) in subparagraph (A), to read as follows:
            ``(A) provide such methods of administration as found by 
        the Secretary to be necessary for the proper and efficient 
        operation of the plan;'';
            (2) by striking subparagraph (B); and
            (3) by redesignating subparagraph (C) as subparagraph (B).

SEC. 11353. ELIMINATION OF REQUIREMENTS FOR COOPERATIVE AGREEMENTS WITH 
              HEALTH AGENCIES.

    Section 1902(a)(11) is repealed.

SEC. 11355. STATE REVIEW OF MENTALLY ILL OR RETARDED NURSING FACILITY 
              RESIDENTS UPON CHANGE IN PHYSICAL OR MENTAL CONDITION.

    (a) State Review on Change in Resident's Condition.--Section 
1919(e)(7)(B)(iii) is amended to read as follows:
                    ``(iii) Review required upon change in resident's 
                condition.--A review and determination under clause (i) 
                or (ii) must be conducted promptly after a nursing 
                facility has notified the State mental health authority 
                or State mental retardation or developmental disability 
                authority, as applicable, with respect to a mentally 
                ill or mentally retarded resident, that there has been 
                a significant change in the resident's physical or 
                mental condition.''.
    (b) Conforming Amendments.--
            (1) Section 1919(b)(3)(E) is amended by adding at the end 
        the following: ``In addition, a nursing facility shall notify 
        the State mental health authority or State mental retardation 
        or developmental disability authority, as applicable, promptly 
        after a significant change in the physical or mental condition 
        of a resident who is mentally ill or mentally retarded.''.
            (2) The heading to section 1919(e)(7)(B) is amended by 
        striking ``annual''.
            (3) The heading to section 1919(e)(7)(D)(i) is amended by 
        striking ``annual''.

SEC. 11356. NURSE AID TRAINING IN MEDICARE AND MEDICAID NURSING 
              FACILITIES SUBJECT TO EXTENDED SURVEY AND UNDER CERTAIN 
              OTHER CONDITIONS.

    (a) Medicare.--Section 1819(f)(2)(B)(iii)(I) is amended, in the 
matter preceding sub-subclause (a), by striking ``by or in a skilled 
nursing facility'' and inserting ``by a skilled nursing facility (or in 
such a facility, unless the State determines that there is no other 
such program offered within a reasonable distance, provides notice of 
the approval to the State long-term care ombudsman, and assures, 
through an oversight effort, that an adequate environment exists for 
such a program)''.
    (b) Medicaid.--Section 1919(f)(2)(B)(iii)(I) is amended, in the 
matter preceding sub-subclause (a), by striking ``by or in a nursing 
facility'' and inserting ``by a nursing facility (or in such a 
facility, unless the State determines that there is no other such 
program offered within a reasonable distance, provides notice of the 
approval to the State long-term care ombudsman, and assures, through an 
oversight effort, that an adequate environment exists for such a 
program)''.

SEC. 11357. COMBINED STATE PLAN SUBMISSION.

    (a) In General.--A State may submit to the Secretary of Health and 
Human Services a single State plan (with any amendments) to carry out--
            (1) the long-term care grant program established by 
        subtitle E;
            (2) the program of health insurance for the temporarily 
        unemployed established by subtitle G; and
            (3) the medical assistance program under title XIX of the 
        Social Security Act.
    (b) Effect of Combined Submission.--A State plan submitted pursuant 
to subsection (a) must meet all requirements of each of the programs 
specified in such subsection.
    (c) Timetable For Approval.--The Secretary shall, within 90 days 
after receipt of a State plan submitted pursuant to subsection (a), 
either approve or disapprove the plan, or inform the State that 
specified additional information is needed to permit review of the 
plan.

SEC. 11358. PUBLIC PROCESS FOR DEVELOPING STATE PLAN AMENDMENTS.

    Section 1902(a), as amended by sections 11321(c), 11325, and 
11331(c), is amended--
            (1) by striking ``and'' at the end of paragraph (64);
            (2) by striking the period at the end of paragraph (65) and 
        inserting ``; and''; and
            (3) by adding after paragraph (65) the following new 
        paragraph:
            ``(66) a process for development of amendments to the State 
        plan that affords an opportunity for review and comment to 
        interested persons and groups, including beneficiaries, 
        providers, Indian tribes, tribal organizations, Indian Health 
        Service facilities, and urban Indian health organizations.''.

                         PART 7--EFFECTIVE DATE

SEC. 11361. EFFECTIVE DATE.

    (a) In General.--Except where otherwise specifically provided, the 
provisions of and amendments made by this subtitle shall be effective 
with respect to State programs under title XIX of the Social Security 
Act on and after October 1, 1996.
    (b) Extension For State Law Amendment.--In the case of a State plan 
under title XIX of the Social Security Act which the Secretary of 
Health and Human Services determines requires State legislation in 
order for the plan to meet the additional requirements imposed by the 
amendments made by subsection (a), the State plan shall not be regarded 
as failing to comply with the requirements of such title solely on the 
basis of its failure to meet these additional requirements before the 
first day of the first calendar quarter beginning after the close of 
the first regular session of the State legislature that begins after 
the date of enactment of this Act. For purposes of the previous 
sentence, in the case of a State that has a 2-year legislative session, 
each year of such session shall be deemed to be a separate regular 
session of the State legislature.

                      Subtitle D--Fraud and Abuse

SEC. 11401. SHORT TITLE; TABLE OF CONTENTS OF SUBTITLE.

    (a) Short Title.--This subtitle may be cited as the ``Federal 
Health Care Payment Integrity Act of 1995''.
    (b) Table of Contents of Subtitle.--The table of contents of this 
subtitle is as follows:

                           TABLE OF CONTENTS

Sec. 11401. Short title; table of contents of subtitle.
       Part 1--Amendments to Current Law Enforcement Authorities

Sec. 11402. Extension of current civil money penalties.
Sec. 11403. Exclusion of persons who defraud Medicare.
Sec. 11404. Illegal remuneration with respect to health care benefit 
                            programs
Sec. 11405. Amendments to PRO (quality of care) sanctions provisions.
Sec. 11406. Final adverse action data base.
Sec. 11407. Expansion of authority of medicaid fraud control units.
Sec. 11408. Recovery of overpayments from bankrupt providers.
Sec. 11409. Grants to States to revoke licenses of unqualified 
                            providers.
Sec. 11410. Authorization for interception of wire, oral or electronic 
                            communications.
              Part 2--Resources for Anti-Fraud Activities

Sec. 11421. Medicare anti-fraud and abuse program.
Sec. 11422. Medicare beneficiary integrity system.
Sec. 11423. Government-side anti-fraud reinvestment fund.
                   Part 3--Amendments to Criminal Law

Sec. 11431. Health care fraud.
Sec. 11432. Forfeitures for federal health care offenses.
Sec. 11433. Injunctive relief relating to federal health care offenses.
Sec. 11434. Grand jury disclosure.
Sec. 11435. False statements.
Sec. 11436. Obstruction of criminal investigations, audits or 
                            inspections of federal health care 
                            offenses.
Sec. 11437. Theft or embezzlement.
Sec. 11438. Laundering of monetary instruments.
Sec. 11439. Authorized investigative demand procedures.
                     Part 4--Medicare Improvements

                  Subpart A--Coordination of Benefits

Sec. 11441. Clarification of time and filing limitations.
Sec. 11442. Clarification of liability of third party administrators.
Sec. 11443. Clarification of payment amounts to Medicare.
Sec. 11444. Conditions for double damages.
Sec. 11445. Repeal of excise tax.
Sec. 11446. Information requirements.
Sec. 11447. Technical changes concerning minimum sizes of group health 
                            plans.
                      Subpart B--Contractor Reform

Sec. 11451. Increased flexibility in contracting for medicare claims 
                            processing.
          Subpart C--Provisions Relating to Part B of Medicare

Sec. 11461. Replacement of reasonable charge methodology by fee 
                            schedules.
Sec. 11462. Application of inherent reasonableness to surgical 
                            dressings.
Sec. 11463. Application of competitive acquisition process to certain 
                            part B items and services.
Sec. 11464. Application of competitive acquisition process to 
                            laboratory services.
Sec. 11465. Changes in payments for clinical laboratory tests.
      Subaprt D--Provisions Relating to Parts A and B of Medicare

Sec. 11471. Disclosure of taxpayer identifying numbers and other 
                            information.
Sec. 11472. Use of wage index for area in which home health services 
                            are furnished.

       PART 1--AMENDMENTS TO CURRENT LAW ENFORCEMENT AUTHORITIES

SEC. 11402. EXTENSION OF CURRENT CIVIL MONEY PENALTIES.

    (a) General Civil Money Penalties.--Section 1128A (42 U.S.C. 1320a-
7a) is amended--
            (1) in the third sentence of subsection (a), by striking 
        ``programs under title XVIII'' and inserting ``Federal health 
        care program (as defined in subsection (m))'';
            (2) in subsection (f)--
                    (A) by redesignating paragraph (3) as paragraph 
                (4); and
                    (B) by inserting after paragraph (2) the following 
                new paragraph:
            ``(3) With respect to amounts recovered arising out of a 
        claim under a Federal health care program (as defined in 
        subsection (m)), the portion of such amounts as is determined 
        to have been paid by the program shall be repaid to the 
        program, and the portion of such amount attributable to the 
        amounts recovered under this section by reason of the 
        amendments made by the Federal Health Care Payment Integrity 
        Act of 1995 (as estimated by the Secretary) shall be deposited 
        into the Health Care Fraud and Abuse Control Account 
        established under section 11423 of such Act.'';
            (3) in subsection (i)--
                    (A) in paragraph (2), by striking ``title V, XVIII, 
                XIX, or XX of this Act'' and inserting ``a Federal 
                health care program (as defined in subsection (m))'';
                    (B) in paragraph (4), by striking ``a health 
                insurance or medical services program under title XVIII 
                or XIX of this Act'' and inserting ``a Federal health 
                care program (as so defined)''; and
                    (C) in paragraph (5), by striking ``title V, XVIII, 
                XIX, or XX'' and inserting ``a Federal health care 
                program (as so defined)''; and
            (4) by adding at the end the following new subsection:
    ``(m)(1) For purposes of this section, with respect to a Federal 
health care program not contained in this Act, references to the 
Secretary in this section shall be deemed to be references to the 
Secretary of Administrator of the department or agency with 
jurisdiction over such program and references to the Inspector General 
of the Department of Health and Human Services in this section shall be 
deemed to be references to the Inspector General and any other office 
with primary enforcement authority of the applicable department or 
agency. With respect to investigations of an employee welfare benefit 
plan as defined in section 3 of the Employee Retirement Income Security 
Act, the agency or department shall be deemed to be the Department of 
Labor.
    ``(2)(A) The Secretary and Administrator of the departments and 
agencies referred to in paragraph (1) may include, in any action 
pursuant to this section, claims within the Jurisdiction of other 
Federal departments or agencies as long as the following conditions are 
satisfied:
            ``(i) The case involves primarily claims submitted to the 
        Federal health care programs of the department or agency 
        initiating the action.
            ``(ii) The Secretary of Administrator and the Inspector 
        General of the department or agency initiating the action gives 
        notice and an opportunity to participate in the investigation 
        to the Secretary or Administrator and the Inspector General of 
        the department or agency with primary jurisdiction over the 
        Federal health care programs to which the claims were 
        submitted. With respect to actions involving an employee 
        welfare benefit plan as defined in section 3 of the Employee 
        Retirement Income Security Act, the department with primary 
        jurisdiction shall be deemed to be the Department of Labor for 
        purposes of this notice.
    ``(B) If the conditions specified in subparagraph (A) are 
fulfilled, the Inspector General of the department or agency initiating 
the action is authorized to exercise all powers granted under the 
Inspector General Act of 1978 with respect to the claims submitted to 
the other departments or agencies to the same manner and extent as 
provided in that Act with respect to claims submitted to such 
departments or agencies.''.
    (b) Excluded Individual Retaining Ownership or Control Interest in 
Participating Entity.--Section 1128A(a) (42 U.S.C. 1320a-7a(a)) is 
amended--
            (1) by striking ``or'' at the end of paragraph (a)(D);
            (2) by striking ``, or'' at the end of paragraph (2) and 
        inserting a semicolon;
            (3) by striking the semicolon at the end of paragraph (3) 
        and inserting ``; or''; and
            (4) by inserting after paragraph (3) the following new 
        paragraph:
            ``(4) in the case of a person who is not an organization, 
        agency, or other entity, is excluded from participating in a 
        program under title XVIII or a State health care program in 
        accordance with this subsection or under section 1128 and who, 
        at the time of a violation of this subsection, retains a direct 
        or indirect ownership or control interest of 5 percent or more, 
        or an ownership or control interest (as defined in section 
        1124(a)(3)) in, or who is an officer or managing employee (as 
        defined in section 1126(b)) of, an entity that is participating 
        in a program under title XVIII or a State health care 
        program;''.
    (c) Employer Billing for Services Furnished, Directed, or 
Prescribed by an Excluded Employee.--Section 1128A(a)(1) (42 U.S.C. 
1320a-7a(a)(1)) is amended--
            (1) by striking ``or'' at the end of subparagraph (C);
            (2) by striking ``; or'' at the end of subparagraph (D) and 
        inserting ``, or''; and
            (3) by adding at the end the following new subparagraph:
                    ``(E) is for a medical or other item or service 
                furnished, directed, or prescribed by an individual who 
                is an employee or agent of the person during a period 
                in which such employee or agent was excluded from the 
                program under which the claim was made on any of the 
                grounds for exclusion described in subparagraph (D);''.
    (d) Modifications of Amounts of Penalties and Assessments.--Section 
1128A(a) (42 U.S.C. 1320a-7a(a)), as amended by subsection (b), is 
amended in the matter following paragraph (4)--
            (1) by striking ``$2,000'' and inserting $10,000'';
            (2) by inserting ``; in cases under paragraph (4), $10,000 
        for each day the prohibited relationship occurs'' after ``false 
        or misleading information was given''; and
            (3) by striking ``twice the amount'' and inserting ``3 
        times the amount''.
    (e) Claims for Item or Service Based on Incorrect Coding.--Section 
1128A(a)(1)(A) (42 U.S.C. 1320a-7a(a)(1)(A)) is amended by striking 
``claimed,'' and inserting ``claimed, including any person who engages 
in a pattern or practice of presenting or causing to be presented a 
claim for an item or service that is based on a code that the person 
knows or should know will result in a greater payment to the person 
that the code the person knows or should know is applicable to the item 
or service actually provided''.
    (f) Permitting Secretary to Impose Civil Money Penalty.--Section 
1128A(b) (42 U.S.C. 1320a-7a(b)) is amended by adding the following new 
subparagraph:
            ``(3) Any person (including any organization, agency, or 
        other entity, but excluding a beneficiary as defined in 
        subsection (i)(5)) who the Secretary determines has violated 
        section 1128B(b) of this title shall be subject to a civil 
        monetary penalty of not more that $10,000 for each such 
        violation. In addition, such person shall be subject to an 
        assessment of not more than twice the total amount of the 
        remuneration offered, paid, solicited, or received in violation 
        of section 1128B(b). The total amount of remuneration subject 
        to all assessments shall be calculated without regard to 
        whether some portion thereof also may have been intended to 
        serve a purpose other than one proscribed by section 
        1128B(b).''.
    (g) Prohibition Against Offering Inducements to Individuals 
Enrolled Under Programs.--
            (1) Offer of remuneration.--Section 1128A(a) (42 U.S.C. 
        1320a-7a(a)) as amended by subsection (b) of this section, is 
        amended--
                    (A) by striking ``or'' at the end of paragraph (3) 
                and inserting a semicolon;
                    (B) by inserting ``or'' after the semicolon at the 
                end of paragraph (4); and
                    (C) by inserting after paragraph (4) the following 
                new paragraph:
                    ``(5) offers to or transfers remuneration to any 
                individual eligible for benefits under a Federal health 
                program that such person knows or should know is likely 
                to influence such individual to order or receive from a 
                particular provider, practitioner, or supplier any item 
                or service for which payment may be made, in whole or 
                in part, under such program;''.
            (2) Remuneration defined.--Section 2238A(i) (42 U.S.C. 
        1320a-7a(i)) is amended by adding the following new paragraph:
            ``(6) The term `remuneration' includes the waiver of 
        coinsurance and deductible amounts (or any part thereof), and 
        transfers of items or services for free or for other than fair 
        market value. The term `remuneration' does not include--
                    ``(A) the waiver of coinsurance and deductible 
                amounts by a person, if--
                            ``(i) the waiver is not offered as part of 
                        any advertisement or solicitation;
                            ``(ii) the person does not routinely waive 
                        coinsurance or deductible amounts; and
                            ``(iii) the person--
                                    ``(I) waives the coinsurance and 
                                deductible amount after determining in 
                                good faith that the individual is in 
                                financial need;
                                    ``(II) fails to collect coinsurance 
                                or deductible amounts after making 
                                reasonable collection efforts; or
                                    (III) provides for any permissible 
                                waiver as specified in section 
                                1128B(b)(3) or in regulations issued by 
                                the Secretary;
                    ``(B) differentials in coinsurance and deductible 
                amounts as part of a benefit plan design as long as the 
                differentials have been disclosed in writing to all 
                beneficiaries, third party payors, and providers, to 
                whom claims are presented and as long as the 
                differentials meet the standards as defined in 
                regulations promulgated by the Secretary not later than 
                180 days after the date of the enactment of this Act; 
                or
                    ``(C) incentives given to individuals to promote 
                the delivery of preventive care as determined by the 
                Secretary in regulations as promulgated.''.
    (h) Definition of Federal Health Care Program.--Section 1128A (42 
U.S.C. 1320a-7b) is amended by adding at the end the following new 
subsection:
    ``(m) Federal Health Care Program.--For purposes of this section, 
the term `Federal health care program' means--
            ``(1) any plan or program (except a plan described in 
        section 3(1) of the Employee Retirement Income Security Act) 
        that provides health benefits, whether directly, through 
        insurance, or otherwise, which is funded, in whole or in part, 
        by the United States Government; or
            ``(2) any State health care program, as defined in section 
        1128(h).''.

SEC. 11403. EXCLUSION OF PERSONS WHO DEFRAUD MEDICARE.

    (a) Minimum Period of Exclusion for Certain Individuals and 
Entities Subject to Permissive Exclusion From Medicare and State Health 
Care Programs.--Section 1128(c)(3) (42 U.S.C. 1320a-7(c)(3)) is amended 
by adding at the end the following new subparagraphs:
            ``(D) In the case of an exclusion of an individual or 
        entity under paragraph (1), (2), or (3) of subsection (b), the 
        period of the exclusion shall be 3 years, unless the Secretary 
        determines in accordance with published regulations that a 
        longer period is appropriate because of aggravating 
        circumstances.
            ``(E) In the case of an exclusion of an individual or 
        entity under subsection (b)(4) or (b)(5), the period of the 
        exclusion shall not be less than the period during which the 
        individual or entity's license to provide health care is 
        revoked, suspended, or surrendered, or the individual or the 
        entity is excluded or suspended from a Federal or State health 
        care program.
            ``(F) In the case of an exclusion of an individual or 
        entity under subsection (b)(6)(B), the period of the exclusion 
        shall be not less than 1 year.''.
    (b) Permissive Exclusion of Individuals With Ownership or Control 
Interest in Sanctioned Entities.--Section 1128(b) (42 U.S.C. 1320a-
7(b)) is amended by adding at the end the following new paragraph:
            ``(15) Individuals controlling a sanctioned entity.--Any 
        individual who has a direct or indirect ownership or control 
        interest of 5 percent or more, or an ownership or control 
        interest (as defined in section 1124(a)(3)) in, or who is an 
        officer or managing employee (as defined in section 1126(b)) 
        of, an entity--
                    ``(A) that has been convicted of any offense 
                described in subsection (a) or in paragraph (1), (2), 
                or (3) of this subsection; or
                    ``(B) that has been excluded from participation 
                under a program title XVIII or under a State health 
                care program.''.
    (c) Sanctions Against Providers for Excessive Fees or Prices.--
Section 1128(b)(6)(A) (42 U.S.C. 1320a-7(b)(6)(A)) is amended--
            (1) by inserting after ``substantially in excess of such 
        individual's or entity's usual charges'' the following: ``(as 
        specified by the Secretary in regulations)''; and
            (2) by striking ``(or in applicable cases, substantially in 
        excess of such individuals or entities' costs)'' and inserting 
        ``, costs or fees'' before ``for such items or services.''.
    (d) Applicability of the Bankruptcy Code To Program Sanctions.--
            (1) Section 1128 (42 U.S.C. 1320a-7) is amended by adding 
        at the end the following new subsection:
                    ``(j) An exclusion imposed under this section is 
                not subject to the automatic stay imposed under the 
                Bankruptcy Code, 11 U.S.C. Sec. 362.''.
            (2) Section 1128A(a) (42 U.S.C. 1320a-7a) is amended by 
        adding at the end the following sentence: ``An exclusion 
        imposed under this section is not subject to the automatic stay 
        which is imposed under 11 U.S.C. Sec. 362, and any penalties 
        and assessments imposed under this section shall be 
        nondischargeable under the Bankruptcy Code (11 U.S.C. Sec. 101 
        et seq.).''.
            (3) Section 1892(a)(4) (42 U.S.C. 1395ccc(a)(4)) is amended 
        by adding at the end the following sentence: ``An exclusion 
        imposed under paragraph (2)(C)(ii) or paragraph (3)(B) is not 
        subject to the automatic stay which is imposed under the 
        Bankruptcy Code (11 U.S.C. Sec. 362).''.

SEC. 11404. ILLEGAL REMUNERATION WITH RESPECT TO HEALTH CARE BENEFIT 
              PROGRAMS.

    (a) In General.--Chapter 11 of title 18, United States Code, is 
amended by adding at the end the following:
``Sec. 227. Illegal remuneration with respect to health care benefit 
              programs
    ``(a) Whoever knowingly and willfully solicits or receives any 
remuneration (including any kickback, bribe, or rebate) directly or 
indirectly, overtly or covertly, in cash or in kind--
            ``(1) in return for referring any individual to a person 
        for the furnishing or arranging for the furnishing of any item 
        or service for which payment may be made in whole or in part by 
        any health care benefit program; or
            ``(2) in return for purchasing, leasing, ordering, or 
        arranging for or recommending purchasing, leasing or ordering 
        any good, facility, service, or item for which payment may be 
        made in whole or in part by any health care benefit program, or 
        attempting to do so,
shall be fined under this title or imprisoned for not more than 5 
years, or both.
    ``(b) Whoever knowingly and willfully offers or pays any 
remuneration (including any kickback, bribe, or rebate) directly or 
indirectly, overtly, or covertly, in cash or in kind to any person to 
induce such person--
            ``(1) to refer an individual to a person for the furnishing 
        or arranging for the furnishing of any item or service for 
        which payment may be made in whole or in part by any health 
        benefit program; or
            ``(2) to purchase, lease, order, or arrange for or 
        recommend purchasing, leasing, or ordering any good, facility, 
        service, or item for which payment may be made in whole or in 
        part by any health benefit program or attempts to do so,
shall be fined under this title or imprisoned for not more than 5 
years, or both.
    ``(c) Subsections (a) and (b) shall not apply to--
            ``(1) a discount or other reduction in price obtained by a 
        provider of services or other entity under a health care 
        benefit program if the reduction in price is properly disclosed 
        and appropriately reflected in the costs claimed or charges 
        made by the provider or entity under a health care benefit 
        program;
            ``(2) any amount paid by an employer to an employee (who 
        has a bona fide employment relationship with such employer) for 
        employment in the provision of covered items or services if the 
        amount of the remuneration under the arrangement is consistent 
        with the fair market value of the services and is not 
        determined in a manner that takes into account (directly or 
        indirectly) the volume or value of any referrals;
            ``(3) any amount paid by a vendor of goods or services to a 
        person authorized to act as a purchasing agent for a group of 
        individuals or entities who are furnishing services reimbursed 
        under a health care benefit program if--
                    ``(A) the person has a written contract, with each 
                such individual or entity, which specifies the amount 
                to be paid the person, which amount may be a fixed 
                amount or a percentage of the value of the purchases 
                made by each such individual or entity under the 
                contract, and
                    ``(B) in the case of an entity that is a provider 
                of services (as defined in section 1861(u) of the 
                Social Security Act, the person discloses (in such form 
                and manner as the Secretary of Health and Human 
                Services requires) to the entity and, upon request, to 
                the Secretary the amount received from each such vendor 
                with respect to purchases made by or on behalf of the 
                entity;
            ``(4) a waiver of any coinsurance under part B of title 
        XVIII of the Social Security Act by a federally qualified 
        health care center with respect to an individual who qualifies 
        for subsidized services under a provision of the Public Health 
        Service Act; and
            ``(5) any payment practice specified by the Secretary of 
        Health and Human Services in regulations promulgated pursuant 
        to section 14(a) of the Medicare and Medicaid Patient and 
        Program Protection act of 1987.
    ``(d) Any person injured in his business or property by reason of a 
violation of this section or section 226 of this title may sue therefor 
in any appropriate United States district court and shall recover 
threefold the damages such person sustains and the cost of the suit, 
including a reasonable attorney's fee.
    ``(e) As used in this section, `health care benefit program' has 
the meaning given such term in section 1347(b) of this title.''.
    (b) Clerical Amendment.--The table of sections at the beginning of 
chapter 11 of title 18, United States Code, is amended by adding at the 
end the following:

``227. Illegal remuneration with respect to health care benefit 
                            programs.''.

    (c) Conforming Amendment.--Section 1128B of the Social Security Act 
(42 U.S.C. 1320a-7b) is amended by striking subsection (b).

SEC. 11405. AMENDMENTS TO PRO (QUALITY OF CARE) SANCTIONS PROVISIONS.

    (a) Minumum Period of Exclusion for Practitioners and Persons 
Failing To Meet Statutory Obligations.--
            (1) In general.--Section 1156(b)(1) (42 U.S.C. 1320c-
        5(b)(1)) is amended in the second sentence by striking ``may 
        prescribe)'' and inserting ``may prescribe, except that such 
        period may not be less than 1 year).''.
            (2) Conforming amendment.--Section 1156(b)(2) (42 U.S.C. 
        1320c-5(b)(2)) is amended by striking ``shall remain'' and 
        inserting ``shall (subject to the minimum period specified in 
        the second sentence of paragraph (1)) remain''.
    (b) Repeal of ``Unwilling or Unable'' Condition for Imposition of 
Sanction.--Section 1156(b)(1) (42 U.S.C. 1320c-5(b)(1) is amended--
            (1) in the second sentence, by striking ``and determines'' 
        and all that follows through ``such obligations,''; and
            (2) by striking the third sentence.
    (c) Sanctions Against Practitioners and Persons for Failure To 
Comply With Statutory Obligations.--Section 1156(b)(3) (42 U.S.C. 
1320c-5(b)(3)) is amended by striking ``the actual or estimated cost'' 
and inserting ``up to $10,000 for each instance.''

SEC. 11406. FINAL ADVERSE ACTION DATA BASE.

    (a) General Purpose.--Not later than January 1, 1997, the Secretary 
of Health and Human Services (in this section referred to as the 
``Secretary'') shall establish a national health care fraud and abuse 
data collection program or the reporting of final adverse actions 
against health care providers, suppliers, or practitioners as required 
by subsection (b), with access as set forth in subsection (c).
    (b) Reporting of Information.--
            (1) In general.--Each government agency and Federal health 
        care program shall (and each other health plan may) report to 
        the Secretary any final adverse action taken against a health 
        care provider, supplier, or practitioner.
            (2) Information to be reported.--The information to be 
        reported under paragraph (1) includes:
                    (A) The name and TIN (as defined in section 
                7701(a)(41) of the Internal Revenue Code of 1986) of--
                            (i) any health care provider, supplier, or 
                        practitioner that is the subject of a final 
                        adverse action, and
                            (ii) any individual with a relationship 
                        specified in section 1128(b)(8)(A) to an entity 
                        described in clause (i).
                    (B) The name (if know) of any health care entity 
                with which a health care provider, supplier, or 
                practitioner is affiliated or associated.
                    (C) The nature of the final adverse action and 
                whether such action is on appeal.
                    (D) A description of the acts of omissions and 
                injuries upon which the final adverse action was based, 
                and such other information as the Secretary determines 
                by regulation is required for appropriate 
                interpretation of information reported under this 
                section.
            (3) Confidentiality.--In determining what information is 
        required, the Secretary shall include procedures to ensure that 
        the privacy of individuals receiving health care services is 
        appropriately protected.
            (4) Timing and form of reporting.--The information required 
        to be reported under this subsection shall be reported 
        regularly (but less often than monthly) and in such form and 
        manner as the Secretary prescribes. Such information shall 
        first be required to be reported on a date specified by the 
        Secretary.
    (c) Disclosure and Correction of Information.--
            (1) Disclosure.--With respect to the information about 
        final adverse actions reported to the Secretary under this 
        section respecting a health care provider, supplier, or 
        practitioner, the Secretary shall, by regulation, provide for--
                    (A) disclosure of the information, upon request, to 
                the health care provider, supplier, or licensed 
                practitioner, and
                    (B) procedures in the case of disputed accuracy of 
                the information.
            (2) Corrections.--Each Government agency and health plan 
        shall report corrections of information already reported about 
        any final adverse action taken against a health care provider, 
        supplier, or practitioner, in such form and manner that the 
        Secretary prescribes by regulation.
    (d) Access to Reported Information.--
            (1) Availability.--The information in this database shall 
        be available to Federal and State government agencies, health 
        plans, and the public pursuant to procedures that the Secretary 
        shall provide by regulation.
            (2) Fees for disclosure.--The Secretary may establish or 
        approve reasonable fees for the disclosure of information in 
        this database (other than with respect to requests by Federal 
        agencies). The amount of such a fee may be sufficient to 
        recover the full costs of carrying out the provisions of this 
        section, including reporting, disclosure and administration. 
        Such fees shall be available to the Secretary or, in the 
        Secretary's discretion to the agency designated under this 
        section to cover such costs.
    (e) Protection From Liability for Reporting.--No person or entity, 
including the agency designated by the Secretary in subsection (b)(5) 
shall be held liable in any civil action with respect to any report 
made as required by this section, without knowledge of the falsity of 
the information contained in the report.
    (f) Definitions and Special Rules.--For purposes of this section:
            (1)(A) The term ``final adverse action'' includes:
                    (i) Civil judgments against a health care provider 
                or practitioner in Federal or State court related to 
                the delivery of a health care item or service.
                    (ii) Federal or State criminal convictions related 
                to the delivery of a health care item or service.
                    (iii) Actions by Federal or State agencies 
                responsible for the licensing and certifications of 
                health care providers, suppliers, and licensed health 
                care practitioners, including--
                            (I) formal or official actions, such as 
                        revocation or suspension of a license (and the 
                        length of any such suspension), reprimand, 
                        censure or probation,
                            (II) any other loss of license, or the 
                        right to apply for or renew a license of the 
                        provider, supplier, or practitioner, whether by 
                        operation of law, voluntary surrender, non-
                        renewable or otherwise, or
                            (III) any other negative action or finding 
                        by such Federal or State agency that, is 
                        publicly available information.
                    (iv) Exclusion from participation in Federal or 
                State health care programs.
                    (v) Any other adjudicated actions or decisions that 
                the Secretary shall establish by regulation.
            (B) The term does not include any action with respect to a 
        malpractice claim.
            (2) The terms ``licensed health care practitioner'', 
        ``licensed practitioner'', and ``practitioner'' mean, with 
        respect to a State, an individual who is licensed or otherwise 
        authorized by the State to provide health care services (or any 
        individual who, without authority holds himself or herself out 
        to be so licensed or authorized).
            (3) The term ``health care provider'' means a provider of 
        services as defined in section 1861(u) of the Social Security 
        Act, and any person or entity, including a health maintenance 
        organization, group medical practice, or any other entity 
        listed by the Secretary in regulation, that provides health 
        care services.
            (4) The term ``supplier'' means a supplier of health care 
        items and services described in section 1819(a) and (b), and 
        section 1861 of the Social Security Act.
            (5) The term ``Government agency'' shall include:
                    (A) The Department of Justice.
                    (B) The Department of Health and Human Services.
                    (C) Any other Federal agency that either 
                administers or provides payment for the delivery of 
                health care services, including, but not limited to the 
                Department of Defense and the Veterans' Administration.
                    (D) State law enforcement agencies.
                    (E) State medicaid fraud and abuse units.
                    (F) Federal or State agencies responsible for the 
                licensing and certification of health care providers 
                and licensed health care practitioners.
            (6) the term ``Federal health care program'' has the 
        meaning given such term in section 1128B(b) of the Social 
        Security Act.
            (7) The term ``health plan'' has the meaning given such 
        term in section 1347 of title 18 of the United States Code.
            (8) For purposes of paragraph (1), the existence of a 
        conviction shall be determined under section 1128 of the Social 
        Security Act.
    (g) Conforming Amendment.--Section 1921(d) (42 U.S.C. 1396r-2(d)) 
is amended by inserting ``and section 105 of the Federal Health Care 
Payment Integrity Act of 1995 after ``section 422 of the Health Care 
Quality Improvement Act of 1986''.

SEC. 11407. EXPANSION OF AUTHORITY OF MEDICAID FRAUD CONTROL UNITS.

    (a) Extension of Concurrent Authority To Investigate and Prosecute 
Fraud in Other Federal Programs.--Section 1903(q)(3) (42 U.S.C. 
1396b(q)(3)) is amended by striking ``in connection with'' and all that 
follows and inserting the following:
            ``in connection with--
                    ``(A) any aspect of the provision of medical 
                assistance and the activities of providers of such 
                assistance under the State plan under this title; and
                    ``(B) (in cases where the entity's function is also 
                described by subparagraph (A), and upon the approval of 
                the relevant Federal agency) any aspect of the 
                provision of health care services and activities of 
                providers of such services under any Federal health 
                care program (as defined in section 1128B(b)(1)).''.
    (b) Extension of Authority To Investigate and Prosecute Patient 
Abuse in Non-Medicaid Board and Care Facilities.--Section 1903(q)(4) 
(42 U.S.C. 1396(b)(q)(4)) is amended to read as follows:
            ``(4)(A) The entity has--
                    ``(i) procedures for reviewing complaints of abuse 
                or neglect of patients in health care facilities which 
                receive payments under the State plan under this title;
                    ``(ii) at the option of the entity, procedures for 
                reviewing complaints of abuse or neglect of patients 
                residing in board and care facilities; and
                    ``(iii) procedures for acting upon such complaints 
                under the criminal laws of the State or for referring 
                such complaints to other State agencies for action.
            ``(B) For purposes of this paragraph, the term `board and 
        care facility' means a residential setting which receives 
        payment from or on behalf of two or more unrelated adults who 
        reside in such facility, and for whom one or both of the 
        following is provided:
                    ``(i) Nursing care services provided by, or under 
                the supervision of, a registered nurse, licensed 
                practical nurse, or licensed nursing assistant.
                    ``(ii) Personal care services that assist residents 
                with the activities of daily living, including personal 
                hygiene, dressing, bathing, eating, toileting, 
                ambulation, transfer, positioning, self-medication, 
                body care, travel to medical services, essential 
                shopping, meal preparation, laundry, and housework.''.
    (c) Authority of Inspectors General.--Nothing in this Act affects 
the authority of the Inspectors General of the Department of Veterans 
Affairs, the Department of Defense, and other health care agencies 
under the Inspector General Act of 1978 to conduct investigations, 
audits, inspections, and evaluations of programs and operations of 
their respective agencies, including health care programs and 
operations.

SEC. 11408. RECOVERY OF MEDICARE OVERPAYMENTS FROM BANKRUPT PROVIDERS.

    (a) Medicare Part A.--Section 1815(d) (42 U.S.C. 1395g(d)) is 
amended by adding at the end the following sentence: ``Amounts due to 
the program under this part are not dischargeable under any title of 
the Bankruptcy Code (11 U.S.C. 101 et seq.).''.
    (b) Medicare Part B.--Section 1833(j) (42 U.S.C. 13951(j)) is 
amended by adding at the end the following sentence: ``Amounts due to 
the program under this part are not dischargeable under any title of 
the Bankruptcy Code (11 U.S.C. 101 et seq.).''.

SEC. 11409. GRANTS TO STATES TO REVOKE LICENSES OF UNQUALIFIED 
              PROVIDERS.

    The Secretary of Health and Human Services is authorized to make 
grants to States for activities necessary to revoke the licenses, 
certification, or other State authorization of health care 
professionals and entities determined to be unqualified for such 
authorization on the basis of exclusion from Federal health care 
programs under section 1128 or 1128A or for any other reason.

SEC. 11410. AUTHORIZATION FOR INTERCEPTION OF WIRE, ORAL OR ELECTRONIC 
              COMMUNICATIONS.

    (a) Section 2516(1)(c) of title 18, United States Code, is 
amended--
            (1) by inserting ``section 226 (bribery and graft in 
        connection with health care), section 227 (illegal 
        remunerations,'' after ``section 224 (bribery in sporting 
        contests),''; and
            (2) by inserting ``section 1347 (health care fraud),'' 
        after ``section 1344 (relating to bank fraud),''.
    (b) Definitions.--Section 1961(1) of title 18, United States Code, 
is amended--
            (1) by inserting ``sections 226 and 227 (relating to 
        bribery and graft, and illegal remuneration in connection with 
        health care),'' after ``section 224 (relating to sports 
        bribery),'';
            (2) by inserting ``section 669 (relating to theft or 
        embezzlement in connection with health care),'' after ``section 
        664 (relating to embezzlement from pension and welfare 
        funds),''; and
            (3) by inserting ``section 1347 (relating to health care 
        fraud),'' after ``section 1344 (relating to financial 
        institution fraud),''.

              PART 2--RESOURCES FOR ANTI-FRAUD ACTIVITIES

SEC. 11421. HEALTH CARE FINANCING ADMINISTRATION AND HHS INSPECTOR 
              GENERAL FUNDING.

    (a) Findings and Statement of Purpose.--
            (1) Findings.--The Congress finds that--
                    (A) a significant amount of funds expended on the 
                Medicare program are lost to fraud, medically 
                unnecessary services and other abuse; and
                    (B) The Department of Health and Human Services 
                through activities of the Office of Inspector General 
                and Health Care Financing Administration is effective 
                in combating Medicare fraud and abuse and returning 
                misspent funds to the Federal Treasury.
            (2) Purpose.--It is the purpose of this Act to--
                    (A) protect, to the maximum extent practicable, the 
                Medicare and Medicaid programs from further losses due 
                to fraud and abuse;
                    (B) test methods by which the savings that these 
                activities generate can be properly accounted for when 
                determining funding levels; and
                    (C) ensure an adequate source of five-year funding 
                for HHS Medicare anti-fraud and abuse activities.
    (b) Establishment of Medicare Anti-Fraud and Abuse Program.--Title 
XI (42 U.S.C. 1301 et seq.) is amended by adding at the end thereof the 
following new part:

            ``Part C--Medicare Anti-Fraud and Abuse Program

                               ``purpose

    ``Sec. 1171. The purpose of this part is to provide funding for 
activities of the Office of Inspector General related to preventing and 
detecting fraud and abuse in the programs under title XVIII and 
determining the accuracy and appropriateness of expenditures under such 
programs.

                          ``funding available

    ``Sec. 1172. (a) Covered Anti-Fraud and Abuse Activities.--Funding 
from the trust funds established under title XVIII shall be available, 
in accordance with subsection (b), for activities conducted by the 
Inspector General, either directly or by contract, pursuant to this Act 
or the Inspector General Act of 1978, for the purposes of--
            ``(1) Prosecuting matters related to the programs under 
        title XVIII through criminal, civil, and administrative 
        proceedings.
            ``(2) Conducting investigations relating to such programs.
            ``(3) Performing financial and performance audits of 
        programs and operations relating to the such programs.
            ``(4) Performing inspections and other evaluations relating 
        to such programs.
            ``(5) Conducting provider and consumer education activities 
        regarding the requirements of this title and title XVIII.
    ``(b) Payments From Trust Funds.--Obligations incurred by the 
Inspector General in carrying out the activities designated in 
subsection (a) shall be paid from--
            ``(1) funds in the Federal Hospital Insurance Trust Fund; 
        and
            ``(2) funds in the Federal Supplementary Medical Insurance 
        Trust Fund, in the amounts set forth in subsection (c), 
        allocated between those funds as the Secretary shall deem fair 
        and equitable after taking into consideration the expenses 
        attributable to each of the programs under title XVIII. The 
        Secretary shall make such transfers of moneys between those 
        funds as may be appropriate to settle accounts between them in 
        cases where expenses properly payable from one fund have been 
        paid from the other fund.
    ``(c) Payment Amounts.--Total amounts paid from the Trust Funds in 
accordance with subsection (b) shall equal--
            ``(1) $130 million for fiscal year 1996;
            ``(2) $181 million for fiscal year 1997;
            ``(3) $204 million for fiscal year 1998;
            ``(4) $223 million for fiscal year 1999; and
            ``(5) $244 million for fiscal year 2000.''.

SEC. 11422. ESTABLISHMENT OF THE MEDICARE BENEFICIARY INTEGRITY SYSTEM.

    (a) In General.--Part C of title XVIII (42 U.S.C. 1395x et seq.) is 
amended by inserting after section 1889 the following:

                     ``beneficiary integrity system

    ``Sec. 1890. (a) Obligations incurred for beneficiary integrity 
system activities for each of fiscal years 1996 through 2000 shall be 
paid from funds in the Federal Hospital Insurance Trust Fund and the 
Federal Supplementary Medical Insurance Trust Fund, in the amounts set 
forth in subsection (b), allocated between those funds as the Secretary 
shall deem fair and equitable after taking into consideration the 
expenses attributable to each of the programs under this title. The 
Secretary shall make such transfers or moneys between those funds as 
may be appropriate to settle accounts between them in cases where 
expenses properly payable from one fund have been paid from the other 
fund.
    ``(b) Total amounts paid from the Trust Funds in accordance with 
subsection (a) shall equal--
            ``(1) $430,000,000 for fiscal year 1996,
            ``(2) $490,000,000 for fiscal year 1997,
            ``(3) $550,000,000 for fiscal year 1998,
            ``(4) $620,000,000 for fiscal year 1999, and
            ``(5) $670,000,000 for fiscal year 2000.
    ``(c) For purposes of this section, beneficiary integrity system 
activities consist of the following:
            ``(1) Review of activities of providers of services or 
        other persons in connection with this title, including medical 
        and utilization review and fraud review.
            ``(2) Audit of cost reports.
            ``(3) Determination 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 
        beneficiary integrity system issues.''.
    (b) Effective Date.--The amendment made by subsection (a) applies 
to obligations incurred after fiscal year 1995.

SEC. 11423. GOVERNMENT-WIDE ANTI-FRAUD REINVESTMENT FUND.

    (a) Establishment.--
            (1) In general.--There is hereby established the Health 
        Care Fraud and Abuse Control Account. The Health Care Fraud and 
        Abuse Control Account shall consist of--
                    (A) such gifts and bequests as may be made as 
                provided in subparagraph (B);
                    (B) such amounts as may be deposited in the Health 
                Care Fraud and Abuse Control Account as provided in 
                title XI of the Social Security Act; and
                    (C) such amounts as are transferred to the Health 
                Care Fraud and Abuse Control Account under paragraph 
                (3), but in no year shall more than $10 million be 
                transferred or otherwise deposited to the Health Care 
                Fraud and Abuse Control Account.
            (2) Authorization to accept gifts.--The Health Care Fraud 
        and Abuse Control Account is authorized to accept on behalf of 
        the United States money gifts and bequests made unconditionally 
        to the Health Care Fraud and Abuse Control Account for the 
        benefit of the Health Care Fraud and Abuse Control Program or 
        any activity financed through the Health Care Fraud and Abuse 
        Control Account, but not to exceed $10 million.
            (3) Transfer of amounts.--The Secretary of the Treasury 
        shall transfer to the Health Care Fraud and Abuse Control 
        Account, under rules similar to the rules in section 9601 of 
        the Internal Revenue Code of 1986, an amount equal to the sum 
        of the following:
                    (A) Civil monetary penalties and assessments 
                recovered (including voluntary settlement agreements) 
                under titles XI, XVIII, and XIX of the Social Security 
                Act (except as otherwise provided by law); the Program 
                Fraud Civil Remedies Act (31 U.S.C. 3801 et seq.) and 
                other civil monetary penalties and assessments imposed 
                in health care cases.
                    (B) Penalties and damages otherwise creditable to 
                Miscellaneous Receipts, Treasury, obtained (including 
                voluntary settlement agreements) under the False Claims 
                Act (31 U.S.C. 3729 et seq.), in cases involving claims 
                related to the provision of health care items and 
                services (other than funds awarded to a relator or for 
                the damages sustained by the health plan because of the 
                acts governed by section 3729).
    (b) General Use of Funds.--
            (1) In general.--Amounts in the Health Care Fraud and Abuse 
        Control Account shall be paid, at the discretion jointly of the 
        Attorney General and the Secretary of Health and Human Services 
        (acting through the Inspector General of the Department of 
        Health and Human Services) to cover the costs (including 
        equipment, salaries and benefits, and travel and training) of 
        activities designed to prevent and detect health care fraud and 
        abuse, and to promote economy and efficiency in Federal health 
        care programs, such as health care fraud investigations, 
        audits, and inspections, including the costs of--
                    (A) prosecuting health care matters (through 
                criminal, civil, and administrative proceedings);
                    (B) investigations;
                    (C) financial and performance audits of health care 
                programs and operations;
                    (D) inspections and other evaluations; and
                    (E) provider and consumer education regarding 
                compliance with the provisions of this title.
            (2) ERISA plans.--Any recoveries in connection with an 
        employee welfare benefit plan as defined in section 3 of the 
        Employee Retirement Income Security Act of 1974 (18 U.S.C. 
        1002) shall first be used to make whole participants and 
        beneficiaries of the employee welfare benefit plan.
            (3) Funds used to supplement agency appropriations.--It is 
        intended that disbursements made from the Health Care Fraud and 
        Abuse control Account be fairly apportioned among all Federal 
        health care agencies and be used to increase and not supplant 
        the recipient agency's appropriated operating budget.
            (4) Annual report.--The Secretary and the Attorney General 
        shall submit jointly an annual report to Congress on the amount 
        of revenue which is generated and disbursed by the Health Care 
        Fraud and Abuse Control Account in each fiscal year.

                   PART 3--AMENDMENTS TO CRIMINAL LAW

SEC. 11431. HEALTH CARE FRAUD.

    In General.--
            (1) Fines and imprisonment for health care fraud 
        violations.--Chapter 63 of title 18, United States Code, is 
        amended by adding at the end the following new section:
``Sec. 1347. Health care fraud
    ``(a) Whoever knowingly and willfully executes, or attempts to 
execute, a scheme or artifice--
            ``(1) to defraud any health plan or other person, in 
        connection with the delivery of or payment for health care 
        benefits, items, or services; or
            ``(2) to obtain, by means of false or fraudulent pretenses, 
        representations, or promises, any of the money or property 
        owned by, or under the custody or control of, any health plan, 
        or person in connection with the delivery of or payment for 
        health care benefits, items, and services;
shall be fined under this title or imprisoned not more than 10 years, 
or both. If the violation results in serious bodily injury (as defined 
in section 1365(g)(3) of this title), such person may be imprisoned for 
any term of years.
    ``(b) For purposes of this section, the term `health plan means a 
plan or program that provides health benefits, whether directly, 
through insurance, or otherwise, and includes--
            ``(1) a policy of health insurance;
            ``(2) a contract of a service benefit organization;
            ``(3) a membership agreement with a health maintenance 
        organization or other prepaid health plan; and
            ``(4) an employee welfare benefit plan or a multiple 
        employer welfare arrangement (as those terms are defined in 
        section 3 of the Employee Retirement Income Security Act of 
        1974 (29 U.S.C. 1002).''.
            (2) Clerical Amendment.--The table of sections at the 
        beginning of chapter 63 of title 18, United States Code, is 
        amended by adding at the end the following:

``1347. Health care fraud.''.

SEC. 11432. FORFEITURES FOR FEDERAL HEALTH CARE OFFENSES.

    In General.--Section 982(a) of title 18, United States Code, is 
amended by adding after paragraph (5) the following new paragraph:
            ``(6)(A) the court, in imposing sentence on a person 
        convicted of a Federal health care offense, shall order the 
        person to forfeit property, real or personal, that constitutes 
        or is derived, directly or indirectly, from proceeds traceable 
        to the commission of the offense.
            ``(B) For purposes of this paragraph, the term `Federal 
        health care offense' means a violation of, or a criminal 
        conspiracy to violate--
                    ``(i) section 1347 of this title;
                    ``(ii) section 1128B of the Social Security Act;
                    ``(iii) sections 287, 371, 664, 666, 1001, 1027, 
                1341, 1343, 1920, of 1954 of this title if the 
                violation or conspiracy relates to health care fraud; 
                or
                    ``(iv) section 501 or 511 of the Employee 
                Retirement Income Security Act of 1974, if the 
                violation or conspiracy relates to health care 
                fraud.''.

SEC. 11433. INJUNCTIVE RELIEF RELATING TO FEDERAL HEALTH CARE OFFENSES.

     (a) In General.--Section 1345(a)(1) of title 18, United States 
Code, is amended--
            (1) by striking ``or'' at the end of subparagraph (A);
            (2) by inserting ``or'' at the end of subparagraph (B); and
            (3) by adding at the end the following new subparagraph:
                    ``(C) committing or about to commit a Federal 
                health care offense (as defined in section 982(a)(6)(B) 
                of this title);''.
    (b) Freezing of Assets.--Section 1345(a)(2) of title 18, United 
States Code, is amended by inserting ``or a Federal health care offense 
(as defined in section 982(a)(6)(B))'' after ``title)''.

SEC. 11434. GRAND JURY DISCLOSURE.

    Section 3322 of title 18, United States Code, is amended--
            (1) by redesignating subsections (c) and (d) as subsections 
        (d) and (e), respectively; and
            (2) by inserting after subsection (b) the following new 
        subsection:
        ``(c) A person who is privy to grand jury information 
concerning a Federal health care offense (as defined in section 
982(a)(6)(B))--
            ``(1) received in the course of duty as an attorney for the 
        Government; or
            ``(2) disclosed under rule 6(a)(3)(A)(ii) of the Federal 
        Rules of Criminal Procedure;
        may disclose that information to an attorney for the Government 
        to use in any investigation or civil proceeding relating to 
        health care fraud.''.

SEC. 11435. FALSE STATEMENTS.

    (a) In General.--Chapter 47 of title 18, United States Code, is 
amended by adding at the end the following new section:
``Sec. 1033. False statements relating to health care matters
    ``(a) Whoever, in any matter involving a health plan, knowingly and 
willfully falsifies, conceals, or covers up by any trick, scheme, or 
device a material fact, or makes any false, fictitious, or fraudulent 
statements or representations, or makes or uses any false writing or 
document knowing the same to contain any false, fictitious, or 
fraudulent statement or entry, shall be fined under this title or 
imprisoned not more than 5 years, or both.
    ``(b) For purposes of this section, the term `health plan' has the 
meaning given such term in section 1347(b).''.
    (b) Clerical Amendment.--The table of sections at the beginning of 
chapter 47 of title 18, United States Code, is amended by adding at the 
end the following:

``1033. False statements relating to health care matters.''.

SEC. 11436. OBSTRUCTION OF CRIMINAL INVESTIGATIONS, AUDITS OR 
              INSPECTIONS OF FEDERAL HEALTH CARE OFFENSES.

    (a) In General.--Chapter 73 of title 18, United States Code, is 
amended by adding at the end the following new section:
``Sec. 1518. Obstruction of criminal investigations, audits or 
              inspections of Federal health care offenses.
    ``(a) In General.--Whoever willfully prevents, obstructs, misleads, 
delays or attempts to present, obstruct, mislead, or delay the 
communication of information or records relating to a Federal health 
care offense to a Federal agent or employee involved in the 
investigation, audit, inspection or other related activity shall be 
fined under this title or imprisoned not more than 5 years, or both.
    ``(b) Federal Health Care Offense.--As used in this section the 
term `Federal health care offense' has the same meaning given such term 
in section 982(a)(6)(B) of this title.
    ``(c) Criminal Investigator.--As used in this section the term 
`criminal investigator' means any individual duly authorized by a 
department, agency, or armed force of the Untied States to conduct or 
engage in investigations for prosecutions for violations of health care 
offenses.''.
    (b) Clerical Amendment.--The table of sections at the beginning of 
chapter 73 of title 18, United States Code, is amended by adding at the 
end the following:

``1518. Obstruction of Criminal Investigations, Audits, or Inspections 
                            of Federal Health Care Offenses.''.

SEC. 11437. THEFT OR EMBEZZLEMENT.

    (a) In General.--Chapter 31 of title 18, United States Code, is 
amended by adding at the end the following new section: ``Sec. 669. 
Theft or embezzlement in connection with health care.
    ``(a) In General.--Whoever willfully embezzles, steals, or 
otherwise without authority willfully and unlawfully converts to the 
use of any person other than the rightful owner, or intentionally 
misapplies any of the moneys, funds, securities, premiums, credits, 
property, or other assets of a health plan, shall be fined under this 
title or imprisoned not more than 10 years, or both.
    ``(b) Health Plan.--As, used in this section the term `health plan' 
has the meaning given such term in section 1347(b).''.
    (b) Clerical Amendment.--The table of sections at the beginning of 
chapter 31 of title 18, United States Code, is amended by adding at the 
end the following:

``669. Theft or Embezzlement in Connection with Health care.''.

SEC. 11438. LAUNDERING OF MONETARY INSTRUMENTS.

    Section 1956(c)(7) of title 18, United States Code, is amended by 
adding at the end the following new subparagraph:
            ``(F) Any act or activity constituting an offense involving 
        a Federal health care offense as that term is defined in 
        section 982(a)(6)(B) of this title.''.

SEC. 11439. AUTHORIZED INVESTIGATIVE DEMAND PROCEDURES.

    (a) In General.--Chapter 233 of title 18, United States Code, is 
amended by adding after section 3485 the following new section:
``Sec. 3486. Authorized investigative demand procedures.
    ``(a) Authorization.--
            ``(1) In any investigation relating to functions set forth 
        in paragraph (2), the Attorney General or designee may issue in 
        writing and cause to be served a subpoena compelling production 
        of any records (including any books, papers, documents, 
        electronic media, or other objects or tangible things), which 
        may be relevant to an authorized law enforcement inquiry, that 
        a person or legal entity may possess or have care, custody, or 
        control. A custodian of records may be required to give 
        testimony concerning the production and authentication of such 
        records. The production of records may be required from any 
        place in any State or in any territory, or other place subject 
        to the jurisdiction of the United States at any designated 
        place; except that such production shall not be required more 
        than 500 miles distant from the place where the subpoena is 
        served. Witnesses summoned under this section shall be paid the 
        same fees and mileage that are paid witnesses in the courts of 
        the United States. A subpoena requiring the production of 
        records shall describe the objects required to be produced and 
        prescribe a return date within a reasonable period of time 
        within which the objects can be assembled and made available.
            ``(2) Investigative demands utilizing an administrative 
        subpoena are authorized for any investigation with respect to 
        any act or activity constituting or involving health car fraud, 
        including a scheme or artifice--
                    ``(A) to defraud any health plan or other person, 
                in connection with the delivery of or payment for 
                health care benefits, items, or services; or
                    ``(B) to obtain, by means of false or fraudulent 
                pretenses, representations, or promises, any of the 
                money or property owned by, or under the custody or 
                control or, any health plan, or person in connection 
                with the delivery of or payment for health care 
                benefits, items, or services.
    ``(b) Service.--A subpoena issued under this section may be served 
by any person designated in the subpoena to serve it. Service upon a 
natural person may be made by personal delivery of the subpoena to such 
person. Service may be made upon a domestic or foreign association 
which is subject to suit under a common name, by delivering the 
subpoena to an officer, to a managing or general agent, or to any other 
agency authorized by appointment or by law to receive service of 
process. The affidavit of the person serving the subpoena entered on a 
true copy thereof by the person serving it shall be proof of service.
    ``(c) Enforcement.--In the case of contumacy by or refusal to obey 
a subpoena issued to any person, the Attorney General may invoke the 
aid of any court of the United States within the Jurisdiction of which 
the investigation is carried on or of which the subpoenaed person is an 
inhabitant, or in which such person carries on business or may be 
found, to compel compliance with the subpoena. The court may issue an 
order requiring the subpoenaed person to appear before the Attorney 
General to produce records, if so ordered, or to give testimony 
touching the matter under investigation. Any failure to obey the order 
of the court may be punished by the court as a contempt thereof. All 
process in any such case may be served in any Judicial district in 
which such person may be found.
    ``(d) Immunity From Civil Liability.--Notwithstanding any Federal, 
State, or local law, any person, including officers, agents, and 
employees receiving a subpoena under this section, who complies in good 
faith with the subpoena and thus produces the materials sought, shall 
not be liable in any court of any State or the United States to any 
customer or other persons for such production or for nondisclosure of 
that production to the customer.
    ``(e) Use in Action Against Individuals.--
            ``(1) Health information about an individual that is 
        disclosed under this section may not be used in, or disclosed 
        to any person for use in, any administrative, civil, or 
        criminal action or investigation directed against the 
        individual who is the subject of the information unless the 
        action or investigation arises out of and is directly related 
        to receipt of health care or payment for health care or action 
        involving a fraudulent claim related to health; or if 
        authorized by an appropriate order of a court of competent 
        jurisdiction, granted after application showing good cause 
        therefore.
            ``(2) In assessing good cause, the court shall weigh the 
        public interest and the need for disclosure against the injury 
        to the patient, to the physician-patient relationship, and to 
        the treatment services.
            ``(3) Upon the granting of such order, the court, in 
        determining the extent to which any disclosure of all or any 
        part of any record is necessary, shall impose appropriate 
        safeguards against unauthorized disclosure.
    ``(f) Health Plan.--As used in this section the term `health plan' 
has the meaning given such term in section 1347(b).''.
    (b) Clerical Amendment.--The table of sections for chapter 223 of 
title 18, United States Code, is amended by inserting after the item 
relating to section 3405 the following new item: Sec. 3486. Authorized 
investigative demand procedures''.
    (c) Conforming Amendment.--Section 1510(b)(3)(B) of title 18, 
United States Code, is amended by inserting ``or a Department of 
Justice subpoena (issued under section 3486),'' after ``subpoena''.

                     PART 4--MEDICARE IMPROVEMENTS

                  Subpart A--Coordination of Benefits

SEC. 11441. CLARIFICATION OF TIME AND FILING LIMITATIONS.

    (a) In General.--Section 1862(b)(2)(B) (42 U.S.C. 1395y(b)(2)(B)) 
is amended by adding at the end of the following:
                    ``(v) Time, filing, and related provisions under 
                primary plan.--Requirements under a primary plan as to 
                the filing of a claim, time limitations for the filing 
                of a claim, information not maintained by the 
                Secretary, or notification or pre-admission review, 
                shall not apply to a claim by the United States under 
                clause (ii) or (iii).''.
    (b) Effective Date.--The amendment made by subsection (a) applies 
to items and services furnished after 1990.

SEC. 11442. CLARIFICATION OF LIABILITY OF THIRD PARTY ADMINISTRATORS.

    (a) In General.--Section 1862(b)(2)(B)(ii) (42 U.S.C. 
1395(b)(2)(B)(ii)) is amended by inserting ``, or which determines 
claims under the primary plan'' after ``primary plan''.
    (b) Claims Between Parties Other Than the United States.--Section 
1862(b)(2)(B) (42 U.S.C. 1395y(b)(2)(B)) (as amended by section 
11441(a) of this Act) is further amended by adding at the end the 
following:
            ``(vi) Claims between parties other than the united 
        states.--A claim by the United States under clause (ii) or 
        (iii) shall not preclude claims between other parties.''.
    (c) Effective Date.--The amendments made by the previous 
subsections apply to items and services furnished after 1990.

SEC. 11443. CLARIFICATION OF PAYMENT AMOUNTS TO MEDICARE.

    (a) In General.--Section 1862(b)(2)(B)(i) (42 U.S.C. 
1395y(b)(2)(B)(i)) is amended to read as follows:
            ``(i) Repayment required.--
                    ``(I) Any payment under this title, with respect to 
                any item or service for which payment by a primary plan 
                is required under the preceding provisions of this 
                subsection, shall be conditioned on reimbursement to 
                the appropriate Trust Fund established by this title 
                when notice or other information is received that 
                payment for that item or service has been or should 
                have been made under those provisions. If reimbursement 
                is not made to the appropriate Trust Fund before the 
                expiration of the 60-day period that begins on the date 
                such notice or other information is received, the 
                Secretary may charge interest (beginning with the date 
                on which the notice or other information is received) 
                on the amount of the reimbursement until reimbursement 
                is made (at a rate determined by the Secretary in 
                accordance with regulations of the Secretary of the 
                Treasury applicable to charges for late payments).
                    ``(II) The amount owned by a primary plan under the 
                first sentence of subclause (I) is the lesser of the 
                full primary payment required (if that amount is 
                readily determinable) and the amount paid under this 
                title for that item or service.''.
    (b) Conforming and Technical Amendments.--
            (1) Subparagraphs (A)(i)(I) and (B)(i) of section 
        1862(b)(1) (42 U.S.C. 1395y(b)(1)) are each amended by 
        inserting ``(or eligible to be covered)'' after ``covered''.
            (2) Section 1862(b)(1)(C)(ii) (42 U.S.C. 
        1395y(b)(1)(C)(ii)) is amended by striking ``covered by such 
        plan''.
            (3) The matter in section 1862(b)(2)(A) (42 U.S.C. 
        1395y(b)(2)(A)) preceding clause (i) is amended by striking ``, 
        except as provided in subparagraph (B),''.
    (c) Effective Date.--The amendments made by the previous 
subsections apply to items and services furnished after 1990.

SEC. 11444. CONDITIONS FOR DOUBLE DAMAGES.

    (a) In General.--Section 1862(b)(2)(B)(ii) (42 U.S.C. 
1395y(b)(2)(B)(ii)) is amended--
            (1) by striking ``, in accordance with paragraph (3)(A)'', 
        and
            (2) by inserting ``, unless the entity demonstrates that it 
        did not know, and could not have known, of its obligation to 
        pay'' after ``against that entity.''
    (b) Conforming Amendment.--Section 1862(b)(3)(A) is amended by 
striking ``(or appropriate reimbursement)''.

SEC. 11445. REPEAL OF EXCISE TAX.

    (a) In General.--Chapter 47 of the Internal Revenue Code of 1986 
(26 U.S.C. 5000) is repealed.
    (b) Conforming Amendment to the Internal Revenue Code of 1986.--The 
table of chapters of subtitle D of the Internal Revenue Code of 1986 
(26 U.S.C. 4001 et seq.) is amended by striking the listing for chapter 
47.
    (c) Conforming Amendments to the Social Security Act.--
            (1) Section 1862(b)(1)(A) (42 U.S.C. 1395y(b)(1)(A)) is 
        amended by striking clause (v).
            (2) The matter in section 1862(b)(1)(C) (42 U.S.C. 
        1395y(b)(1)(C)) preceding clause (i) is amended by striking 
        ``plan (as defined in subparagraph (A)(v))--'' and inserting 
        ``plan--''.
            (3) Section 1862(b)(1)(E) (42 U.S.C. 1395y(b)(1)(E)) is 
        amended by adding at the end the following:
                    ``(iv) Group health plan defined.--The term `group 
                health plan' means a plan (including a self-insured 
                plan) of, or contributed to by, an employer or employee 
                organization to provide health care (directly or 
                otherwise) to the employees, former employees, the 
                employer, others associated or formerly associated with 
                the employer in a business relationship, or their 
                families.''.
            (4) Section 1862(b)(3) (42 U.S.C. 1395y(b)(3)) is amended--
                    (A) by striking subparagraph (B), and
                    (B) by redesignating subparagraph (C) as (B).
            (5) Subparagraph (A) of the first sentence of section 
        1837(i)(1) (42 U.S.C. 1395p(i)(1)), subparagraph (B) of the 
        first sentence of section 1837(i)(2) (42 U.S.C. 1395p(i)(2)), 
        section 1837(i)(3)(A) (42 U.S.C. 1395p(i)(3)(A)), and clause 
        (2) of the second sentence of section 1839(b) (42 U.S.C. 
        1395r(b)), are each amended by striking ``1862(b)(1)(A)(v)'' 
        and inserting ``1862(b)(1)(E)(iv)''.
    (d) Effective Date.--The amendment made by subsection (a) applies, 
with respect to the Internal Revenue Code of 1986, to expenses incurred 
after 1994.

SEC. 11446. INFORMATION REQUIREMENTS.

    (a) Information From Group Health Plans.--Section 1862(b) (42 
U.S.C. 1395y(b)) is amended by adding at the end the following:
            ``(7) Information from group health plans.--
                    ``(A) Provision of information by group health 
                plans.--The administrator of a group health plan (other 
                than a plan exempt, under paragraph (1)(E)(v), from the 
                requirements of paragraph (1)) shall provide to the 
                Secretary any or all of the information elements listed 
                in subparagraph (C), and in such manner and at such 
                times (but not more frequently than four times per 
                year), as the Secretary may specify, with respect to 
                each individual covered under the plan and entitled to 
                benefits under this title.
                    ``(B) Provision of information by employers and 
                employee organizations.--An employer (or employee 
                organization) that maintains or participates in a group 
                health plan (other than a plan exempt, under paragraph 
                (1)(E)(v), from the requirements of paragraph (1)) 
                shall provide to the administrator of the plan any or 
                all of the information elements listed in subparagraph 
                (C), and in such manner and at such times (but not more 
                frequently than four times per year), as the Secretary 
                may specify, with respect to each individual covered 
                under the plan and entitled to benefits under this 
                title.
                    ``(C) Information elements to be provided.--The 
                information elements to be provided under subparagraph 
                (A) or (B) are:
                            ``(i) Elements concerning the individual.--
                                    ``(I) The individual's name.
                                    ``(II) The individual's date of 
                                birth.
                                    ``(II) The individual's sex.
                                    ``(IV) The individual's social 
                                security insurance number.
                                    ``(V) The number assigned by the 
                                Secretary to the individual for claims 
                                under this title.
                                    ``(VI) The family relationship of 
                                the individual to the person who has 
                                current or former employment status 
                                with the employer.
                            ``(ii) Elements concerning the family 
                        member with current or former employment 
                        status.--
                                    ``(I) The name of the person in the 
                                individual's family who has current or 
                                former employment status with the 
                                employer.
                                    ``(II) That person's social 
                                security insurance number.
                                    ``(III) The number or other 
                                identifier assigned by the plan to that 
                                person.
                                    ``(IV) The periods of coverage for 
                                that person under the plan.
                                    ``(V) The employment status of that 
                                person (current or former) during those 
                                periods of coverage.
                                    ``(VI) The classes (of that 
                                person's family members) covered under 
                                the plan.
                            ``(iii) Plan elements.--
                                    ``(I) The nature of the items and 
                                services covered under the plan.
                                    ``(II) The name and address to 
                                which claims under the plan are to be 
                                sent.
                            ``(iv) Elements concerning the employer.--
                                    ``(I) The employer's name.
                                    ``(II) The employer's address.
                                    ``(III) The employer identification 
                                number of the employer.
                    ``(D) Use of identifiers.--The administrator of a 
                group health plan shall utilize an identifier for the 
                plan (that the Secretary may furnish) in providing 
                information under subparagraph (A) and in other 
                transactions, as may be specified by the Secretary, 
                related to the provisions of this subsection.
                    ``(E) Penalty for noncompliance.--Any entity that 
                knowingly and willfully fails to comply with a 
                requirement imposed by the previous subparagraphs shall 
                be subject to a civil money penalty not to exceed $1000 
                for each incident of such failure. The provisions of 
                section 1128A (other than subsections (a) and (b)) 
                shall apply to a civil money penalty under the previous 
                sentence in the same manner as those provisions apply 
                to a penalty or proceeding under section 1128A(a).''.
    (b) Effective Date.--The amendment made by subsection (a) is 
effective 180 days after the date of enactment of this Act.

SEC. 11447. TECHNICAL CHANGES CONCERNING MINIMUM SIZES OF GROUP HEALTH 
              PLANS.

    (a) Consolidation of Requirements.--
            (1) Section 1862(b)(1)(A) (42 U.S.C. 1395y(b)(1)(A)) (as 
        amended by section 11443 of this Act) is further amended--
                    (A) by striking clauses (ii) and (iii), and
                    (B) by renumbering clause (iv) as (ii).
            (2) Section 1862(b)(1)(B) (42 U.S.C. 1395y(b)(1)(B)) is 
        amended--
                    (A) in clause (i), by striking ``large group health 
                plan (as defined in clause (iv))'' and inserting 
                ``group health plan'', and
                    (B) by striking clause (iv).
            (3) Section 1862(b)(1)(E) (42 U.S.C. 1395y(b)(1)(E)) (as 
        amended by section 405(c)(3) of this Act) is further amended by 
        adding at the end the following:
                    ``(v) Exclusion of group health plans of small and 
                medium employers.--
                            ``(I) Subparagraph (A) shall not apply to a 
                        group health plan unless the plan covers 
                        employees of at least one employer that has 20 
                        or more employees on at least 50 percent of its 
                        business days in each of 20 or more calendar 
                        weeks in the current or preceding calendar 
                        year.
                            ``(II) Subparagraph (B) shall not apply to 
                        a group health plan unless the plan covers 
                        employees of at least one employer that has 100 
                        or more employees on at least 50 percent of its 
                        business days in each of 20 or more calendar 
                        weeks in the current or preceding calendar 
                        year.''.
    (b) Conforming Amendments.--
            (1) The second sentence of section 1862(b)(2)(A) (42 U.S.C. 
        1395y(b)(2)(A)) is amended by striking ``or large group health 
        plan''.
            (2) Section 1862 (b)(3)(C) (42 U.S.C. 1395y(b)(3)(C)) is 
        amended--
                    (A) in the heading, by striking ``or a large group 
                health plan'', and
                    (B) in the first sentence, by striking ``or a large 
                group health plan''.
            (3)(A) Subparagraph (A) of the first sentence of section 
        1837(i)(1) (42 U.S.C. 1395p(i)(1)) is amended by striking ``(or 
        the individual's spouse's) current employment status'' and 
        inserting ``current employment status (or the current 
        employment status of a family member of the individual).''.
            (B) Section 1837(i)(1) (42 U.S.C. 1395p(i)(1)) is amended 
        by striking the second sentence.
            (4)(A) Subparagraph (b) of the first sentence of section 
        1837(i)(2) (42 U.S.C. 1395p(i)(2)) is amended by striking ``(or 
        the individual's spouse's) current employment status'' and 
        inserting ``current employment status (or the current 
        employment status of a family member of the individual).''.
            (B) Section 1837(i)(2) (42 U.S.C. 1395p(i)(2)) is amended 
        by striking the second sentence.
            (5) Section 1837(i)(3) (42 U.S.C. 1395p(i)(3)) is amended--
                    (A) by striking subparagraph (b), and
                    (B) by striking ``(3)(A)'' and inserting ``(3)''.
            (6) Clause (2) of the second sentence of section 1839(b) 
        (42 U.S.C. 1395r(b)) is amended by striking ``by reason of the 
        individual's (or the individual's spouse's) current employment 
        status or months during which the individual has not attained 
        the age of 65 and for which the individual can demonstrate that 
        the individual was enrolled in a large group health plan''.

                      Subpart B--Contractor Reform

SEC. 11451. INCREASED FLEXIBILITY IN CONTRACTING FOR MEDICARE CLAIMS 
              PROCESSING.

    (a) Carriers to Include Entities That are Not Insurance 
Companies.--
            (1) The matter in section 1842(a) (42 U.S.C. 1395u(a)) 
        preceding paragraph (1) is amended by striking ``with 
        carriers'' and inserting ``with agencies and organizations 
        (referred to as carriers)''.
            (2) Section 1842(f) (42 U.S.C. 1394u(f)) is repealed.
    (b) Choice of Fiscal Intermediaries by Providers of Services; 
Secretarial Flexibility in Assigning Functions to Intermediaries and 
Carriers.--
            (1) Section 1816 (42 U.S.C. 1395h) is amended by striking 
        everything after the heading but before subsection (b) and 
        inserting the following:
    ``Sec. 1816. (a)(1) The Secretary may enter into contracts with 
agencies or organizations to reform any or all of the following 
functions, or parts of those functions (or, to the extent provided in a 
contract, to secure performance thereof by other organizations):
            ``(A) determine (subject to the provisions of section 1878 
        and to such review by the Secretary as may be provided for the 
        contracts) the amount of the payments required pursuant to this 
        part to be made to providers of services,
            ``(B) make payments described in subparagraph (A),
            ``(C) provide consultative services to institutions or 
        agencies to enable them to establish and maintain fiscal 
        records necessary for purposes of this part and otherwise to 
        qualify as providers of services,
            ``(D) serve as a center for, and communicate to individuals 
        entitles to benefits under this part and to providers of 
        services, any information or instructions furnished to the 
        agency or organization by the Secretary, and serve as a channel 
        of communication from individuals entitled to benefits under 
        this part and from providers of services to the Secretary,
            ``(E) make such audits of the records of providers of 
        services as may be necessary to insure that proper payments are 
        made under this part,
            ``(F) perform the functions described by subsection (d), 
        and
            ``(G) perform such other functions as are necessary to 
        carry out the purposes of this part.
    ``(2) As used in this title and title XI, the term `fiscal 
intermediary' means an agency or organization with a contract under 
this section.''.
            (2) Subsections (d) and (e) of section 1816 (42 U.S.C. 
        1395h) are amended to read as follows:
    ``(d) Each provider of services shall have a fiscal intermediary 
that--
            ``(1) acts as a single point of contact for the provider of 
        services under this part,
            ``(2) makes its services sufficiently available to meet the 
        needs of the provider of services, and
            ``(3) is responsible and accountable for arranging the 
        resolution of issues raised under this part by the provider of 
        services.
    ``(e)(1)(A) The Secretary shall, at least every five years, permit 
each provider of services (other than a home health agency or a hospice 
program) to choose an agency or organization (from at least three 
proposed by the Secretary, of which at least one shall have an office 
in the geographic area of the provider of services, except as provided 
by subparagraph (B)(ii)(II)) as the fiscal intermediary under 
subsection (d) for the provider of services. If a contract with that 
fiscal intermediary is discontinued, the Secretary shall permit the 
provider of services to choose under the same conditions from three 
other agencies or organizations
    ``(B)(i) The Secretary, in carrying out subparagraph (A), shall 
permit a group of hospitals (or a group of another class of providers 
other than home health agencies or hospice programs) under common 
ownership by, or control of, a particular entity to choose one agency 
or organization (from at least three proposed by the Secretary) as the 
fiscal intermediary under subsection (d) for all the providers in that 
group if the conditions specified in clause (ii) are met
    ``(ii) the conditions for clause (i) to apply are that--
            ``(I) the group includes all the providers or services of 
        that class that are under common ownership by, or control of, 
        that particular entity, and
            ``(II) all the providers of services in that group agree 
        that none of the agencies or organizations proposed by the 
        Secretary is required to have an office in any particular 
        geographic area.
    ``(2) The Secretary, in evaluating the performance of a fiscal 
intermediary, shall solicit comments from providers of services.''.
            (3)(A) Section 1816(b)(1)(A) (42 U.S.C. 1395h(b)(1)(A)) is 
        amended by striking ``after applying the standards, criteria, 
        and procedures'' and inserting ``after evaluating the ability 
        of the agency or organization to fulfill the contract 
        performance requirements''.
            (B) The first sentence of section 1816(f)(1) (42 U.S.C. 
        1395h(f)(1)) is amended--
                    (i) by striking ``develop standards, criteria, and 
                procedures'' and inserting ``, after public notice and 
                opportunity for comment, develop contract performance 
                requirements'', and
                    (ii) by striking ``, and the Secretary shall 
                establish standards and criteria with respect to the 
                efficient and effective administration of this part''.
            (C) The second sentence of section 1842(b)(2)(A) (42 U.S.C. 
        1395u(b)(2)(A)) is amended to read as follows: ``The Secretary 
        shall, after public notice and opportunity for comment, develop 
        contract performance requirements for the efficient and 
        effective performance of contract obligations under this 
        section.''.
            (D) Section 1842(b)(2)(A) (42 U.S.C. 1395u(b)(2)(A)) is 
        amended by striking the third sentence.
            (E) The matter in section 1842(b)(2)(B) (42 U.S.C. 
        1395u(b)(2)(B)) preceding clause (i) is amended by striking 
        ``establish standards'' and inserting ``develop contract 
        performance requirements''.
            (F) Section 1842(b)(2)(D) (42 U.S.C. 1395u(b)(2)(D)) is 
        amended by striking ``standards and criteria'' each place it 
        occurs and inserting ``contract performance requirements''.
            (4)(A) The matter in section 1816(b) (42 U.S.C. 1395h(b)) 
        preceding paragraph (1) is amended by striking ``an agreement'' 
        and inserting ``a contract''.
            (B) Paragraphs (1)(B) and (2)(A) of section 1816(b) (42 
        U.S.C. 1395h(b)) are each amended by striking ``agreement'' and 
        inserting ``contract''.
            (C) The first sentence of section 1816(c)(1) (42 U.S.C. 
        1395h(c)(1)) is amended by striking ``An agreement'' and 
        inserting ``A contract''.
            (D) The last sentence of section 1816(c)(1) (42 U.S.C. 
        1395h(c)(1)) is amended by striking ``an agreement'' and 
        inserting ``a contract''.
            (E) The matter in section 1816(c)(2)(A) (42 U.S.C. 
        1395h(c)(2)(A)) preceding clause (i) is amended by striking 
        ``agreement'' and inserting ``contract''.
            (F) Section 1816(c)(3)(A) (42 U.S.C. 1395h(c)(3)(A)) is 
        amended by striking ``agreement'' and inserting ``contract''.
            (G) The first sentence of section 1816(f)(1) (42 U.S.C. 
        1395h(f)(1)) is amended by striking ``an agreement'' and 
        inserting ``a contract''.
            (H) Section 1816(h) (42 U.S.C. 1395h(h)) is amended--
                    (i) by striking ``An agreement'' and inserting ``A 
                contract'', and
                    (ii) by striking ``the agreement'' each place it 
                occurs and inserting ``the contract''.
            (I) Section 1816(i)(1) (42 U.S.C. 1395h(i)(1)) is amended 
        by striking ``an agreement'' and inserting ``a contract''.
            (J) Section 1816(j) (42 U.S.C. 1395(j)) is amended by 
        striking ``An agreement'' and inserting ``A contract''.
            (K) Section 1816(k) (42 U.S.C. 1395h(k)) is amended by 
        striking ``An agreement'' and inserting ``A contract''.
            (L) The matter in section 1842(a) (42 U.S.C. 1395u(a)) 
        preceding paragraph (1) is amended by striking ``agreements'' 
        and inserting ``contracts''.
            (M) Section 1842(h)(3)(A) (42 U.S.C. 1395u(h)(3)(A)) is 
        amended by striking ``an agreement'' and inserting ``a 
        contract''.
            (5) Section 1816(f)(1) (42 U.S.C. 1395h(f)(1)) is amended 
        by striking the second sentence.
            (6)(A) The matter in section 1816(c)(2)(A) (42 U.S.C. 
        1395h(c)(2)(A)) preceding clause (i) is amended by inserting 
        ``that provides for making payments under this part'' after 
        ``this section''.
            (B) Section 1816(c)(3)(A) (42 U.S.C. 1395h(c)(3)(A)) is 
        amended by inserting ``that provides for making payments under 
        this part'' after ``this section''.
            (C) Section 1816(k) (42 U.S.C. 1395h(k)) is amended by 
        inserting ``(as appropriate)'' after ``submit''.
            (D) The matter in section 1842(a) (42 U.S.C. 1395u(a)) 
        preceding paragraph (1) is amended by striking ``some or all of 
        the following functions'' and inserting ``any or all of the 
        following functions, or parts of those functions''.
            (E) The first sentence of section 1842(b)(2)(C) (42 U.S.C. 
        1395u(b)(2)(C)) is amended by inserting ``(as appropriate)'' 
        after ``carriers''.
            (F) The matter preceding subparagraph (A) in the first 
        sentence of section 1842(b)(3) (42 U.S.C. 1395u(b)(3)) is 
        amended by inserting ``(as appropriate)'' after ``contract''.
            (G) The matter in section 1842(b)(7)(A) (42 U.S.C. 
        1395u(b)(7)(A)) preceding clause (i) is amended by striking 
        ``the carrier'' and inserting ``a carrier''.
            (H) The matter in section 1842(b)(11)(A) (42 U.S.C. 
        1395u(b)(11)(A)) preceding clause (i) is amended by inserting 
        ``(as appropriate)'' after ``each carrier''.
            (I) The first sentence of section 1842(h)(2) (42 U.S.C. 
        1395u(b)(2)) is amended by inserting ``(as appropriate)'' after 
        ``shall''.
            (J) Section 1842(h)(5)(A) (42 U.S.C. 1395u(h)(5)(A) is 
        amended by inserting ``(as appropriate)'' after ``carrier''.
            (7)(A) Section 1816(c)(2)(C) (42 U.S.C. 1395h(c)(2)(C) is 
        amended by striking ``hospital, rural primary care hospital, 
        skilled nursing facility, home health agency hospice program, 
        comprehensive outpatient rehabilitation facility, or 
        rehabilitation agency'' and inserting ``* * * of services''.
            (B) The matter in section 1816(j) (42 U.S.C. 1395(j)) 
        preceding paragraph (1) is amended by striking ``for home 
        health services, extended care services, or post-hospital 
        extended care services''.
            (8) Section 1842(a)(3) (42 U.S.C. 1395u(a)(3)) is amended 
        by inserting ``(to and from individuals enroll under this part 
        and to and from physicians and other entities that furnish 
        items and services)'' after ``communication''.
    (c) Elimination of Special Provisions for Terminations of 
Contracts.--
            (1) The matter in section 1816(b) (42 U.S.C. 1395h(b)) 
        preceding paragraph (1) is amended by striking ``or renew''.
            (2) The last sentence of section 1816(c)(1) (42 U.S.C. 
        1395h(c)(1)) is amended by striking ``or renewing''.
            (3) Section 1816(f)(1) (42 U.S.C. 1395h(f)(1)) is amended 
        by striking ``, renew, or terminate'' and ``, whether the 
        Secretary should assign or reassign a provider of services to 
        an agency or organization,''.
            (4) Section 1816(g) (42 U.S.C. 1395h(g)) is repealed.
            (5) The last sentence of section 1842(b)(2)(A) (42 U.S.C. 
        1395u(b)(2)(A)) is amended by striking ``or renewing''.
            (6) Section 1842(b) (42 U.S.C. 1395u(b)) is amended by 
        striking paragraph (5).
    (d) Repeal of Fiscal Intermediary Requirements That Are Not Cost-
Effective.--Section 1816(f)(2) (42 U.S.C. 1395h(f)(2)) is amended to 
read as follows:
    ``(2) The contract performance requirements developed under 
paragraph (1) shall include, with respect to claims for services 
furnished under this part by any provider of services other than a 
hospital, whether such agency or organization is able to process 75 
percent of reconsiderations within 60 days and 90 percent of 
reconsiderations within 90 days.''.
    (e) Repeal of Cost Reimbursement Requirements.--
            (1) The first sentence of section 1816(c)(1) (42 U.S.C. 
        1395h(c)(1)) is amended--
                    (A) by striking the comma after ``appropriate'' and 
                inserting ``and'', and
                    (B) by striking everything after ``subsection (a)'' 
                up to the period.
            (2) Section 1816(c)(1) (42 U.S.C. 1395h(c)(1)) is further 
        amended by striking the second and third sentences.
            (3) The first sentence of section 1842(c)(1)(A) (42 U.S.C. 
        1395u(c)(1)(A)) is amended--
                    (A) by striking ``shall provide'' the first place 
                it occurs and inserting ``may provide'', and
                    (B) by striking everything after ``this part'' up 
                to the period.
            (4) Section 1842(c)(1) (42 U.S.C. 1395u(c)(1)) is further 
        amended by striking the remaining sentences.
            (5) Section 2326(a) of the Deficit Reduction Act of 1984 
        (42 U.S.C. 1395h nt) is repealed.
    (f) Competition Required for New Contracts and In Cases of Poor 
Performance.--
            (1) Section 1816(c) (42 U.S.C. 1395h(c)) is amended by 
        adding at the end the following:
    ``(4)(A) A contract with a fiscal intermediary under this section 
may be renewed from term to term without regard to any provision of law 
requiring competition if the fiscal intermediary has met or exceeded 
the performance requirements established in the current contract.
    ``(B) Functions may be transferred among fiscal intermediaries 
without regard to any provision of law requiring competition.''.
            (2) Section 1842(b) (42 U.S.C. 1395u(b)) is amended by 
        striking everything before paragraph (2) and inserting the 
        following:
    ``(b)(1)(A) A contract with a carrier under subsection (a) may be 
renewed from term to term without regard to any provision of law 
requiring competition if the carrier has met or exceeded the 
performance requirements established in the current contract.
    ``(B) Functions may be transferred among carriers without regard to 
any provision of law requiring competition.''.
    (g) Waiver of Competitive Requirements for Initial Contracts.--
            (1) Contracts whose periods begin during the one year 
        period that begins on the first day of the fourth calendar 
        month that begins after the date of enactment of this Act may 
        be entered into under section 1816(a) of the Social Security 
        Act (42 U.S.C. 1395h(a)) without regard to any provision of law 
        requiring competition.
            (2) The amendments made by subsection (f) apply to 
        contracts whose periods begin after the end of the one year 
        period specified in paragraph (1) of this subsection.
    (h) Effective Dates.--
            (1) The amendments made by subsection (c) apply to 
        contracts whose periods end at, or after, the end of the third 
        calendar month that begins after the date of enactment of this 
        Act.
            (2) The amendments made by subsections (a), (b), (d), and 
        (e) apply to contracts whose periods begin after the third 
        calendar month that begins after the date of enactment of this 
        Act.

          Subpart C--Provisions Relating to Part B of Medicare

SEC. 11461. REPLACEMENT OF REASONABLE CHARGE METHODOLOGY BY FEE 
              SCHEDULES.

    (a) In General.--The matter in section 1833(a)(1) (42 U.S.C. 
13951(a)(1)) preceding clause (A) is amended by striking ``the 
reasonable charges for the services'' and inserting ``the lesser of the 
actual charges for the services and the amounts determined by the 
applicable fee schedules developed by the Secretary for the particular 
services''.
    (b) Conforming Amendments.--
            (1) Section 1833(a)(1) (42 U.S.C. 1395l(a)(1)) is amended--
                    (A) in clause (A), by striking ``reasonable charges 
                for'' and inserting ``payment bases otherwise 
                applicable to'',
                    (B) in clause (B), by striking ``reasonable 
                charges'' and inserting ``fee schedule amounts'', and
                    (C) by inserting after clause (F) the following: 
                ``(G) with respect to services described in clause (i), 
                (ii), or (iv) of section 1861(s)(2)(K) (relating to 
                physician assistants and nurse practitioners), the 
                amounts paid shall be 80 percent of the lesser of the 
                actual charge for the services and the applicable 
                amount determined under subclause (I) of (II) of 
                section 1842(b)(12)(A)(ii),''.
            (2) Section 1833(a)(2) (42 U.S.C. 1395l(a)(2)) is amended--
                    (A) in the matter in subparagraph (B) preceding 
                clause (i), by striking ``(C), (D),'' and inserting 
                ``(D),'' and
                    (B) by striking subparagraph (C).
            (3) Section 1833(l) (42 U.S.C. 1395l(l)) is amended--
                    (A) in paragraph (3)--
                            (i) by striking subparagraph (B), and
                            (ii) by striking ``(3)(A)'' and inserting 
                        ``(3)'', and
                    (B) by striking paragraph (6).
            (4) The heading to section 1834(g)(1)(A)(ii) (42 U.S.C. 
        1395m(g)(1)(A)(ii)) is amended by striking ``Reasonable charges 
        for professional'' and inserting ``Professional''.
            (5) Section 1842(a) (42 U.S.C. 1395u(a)) is amended--
                    (A) in the matter preceding paragraph (1), by 
                striking ``reasonable charge'' and inserting ``fee 
                schedule'', and
                    (B) in paragraph (1)(A), by striking ``reasonable 
                charge'' and inserting ``other''.
            (6)(A) The matter preceding clause (i) in subparagraph (B) 
        of the first sentence of section 1842(b)(3) (42 U.S.C. 
        1395u(b)(3)) is amended by striking everything after ``assure 
        that,'' and inserting the following: ``where payment under this 
        part for a service is on a basis other than a cost basis, such 
        payment will (except as otherwise provided in section 1870(f)) 
        be made--''.
            (B) Subparagraph (B)(ii)(I) of the first sentence of 
        section 1842(b)(3) (42 U.S.C. 1395u(b)(3)) is amended to read 
        as follows: ``(I) the amount determined by the applicable 
        payment basis under this part is the full charge for the 
        service,''.
            (C) Section 1842(b)(3) (42 U.S.C. 1395u(b)(3)) is amended 
        by striking the second, third, fourth, fifth, sixth, eight, and 
        ninth sentences.
            (7)(A) Section 1842(b)(4) (42 U.S.C. 1395u(b)(4)) is 
        amended to read as follows:
            ``(4) In the case of an enteral or parenteral pump that is 
        furnished on a rental basis during a period of medical need--
                    ``(A) monthly rental payments shall not be made 
                under this part for more than 15 months during that 
                period, and
                    ``(B) after monthly rental payments have been made 
                for 15 months during that period, payment under this 
                part shall be made for maintenance and servicing of the 
                pump is such amounts as the Secretary determines to be 
                reasonable and necessary to ensure the proper operation 
                of the pump.''.
            (B) Section 6112(b) (42 U.S.C. 1395m nt) of the Omnibus 
        Reconciliation Act of 1989 is repealed.
            (8) Section 1842(b)(7) (42 U.S.C. 1395u(b)(7)) is amended--
                    (A) in the matter in subparagraph (D)(i) preceding 
                subclause (I), by striking ``, to the extent that such 
                payment is otherwise allowed under this paragraph,'',
                    (B) in subparagraph (D)(ii), by striking 
                ``subparagraph'' and inserting ``paragraph'',
                    (C) by striking ``(7)(A) In the case of'' through 
                the end of subparagraph (C).
                    (D) by striking ``(D)(i)'' and inserting 
                ``(7)(A)'',
                    (E) by redesignating clauses (ii) and (iii) as 
                subparagraphs (B) and (C), respectively, and
                    (F) by redesignating subclauses (I), (II), and 
                (III), of subparagraph (A) (as redesignated by 
                subparagraph (D) of this paragraph) as clauses (i), 
                (ii), and (iii), respectively.
            (9)(A) Section 1842(b) (42 U.S.C. 1395u(b)) is amended by 
        striking paragraphs (8) and (9).
            (B) The first sentence of section 1834(a)(10)(B) (42 U.S.C. 
        1395m(a)(10(B)) is amended by striking everything after ``is 
        authorized to'' up to the period and inserting the following: 
        ``describe by regulation the factors to be used in determining 
        the cases (of particular items) in which the application of 
        this subsection results in the determination of an amount that, 
        by reason of its being grossly excessive or grossly deficient, 
        is not inherently reasonable, and to provide in those cases for 
        the factors that will be considered in establishing an amount 
        that is realistic and equitable''.
            (10) Section 1842(b)(10) (42 U.S.C. 1395u(b)(10)) is 
        repealed.
            (11) Section 1842(b)(11) (42 U.S.C. 1395u(b)(11)) is 
        amended--
                    (A) by striking subparagraphs (B) through (D),
                     (B) by striking ``(11)(A)'' and inserting 
                ``(11)'', and
                    (C) by redesignating clauses (i) and (ii) as 
                subparagraphs (A) and (B), respectively.
            (12) Section 1842(b)(12)(A)(ii) (42 U.S.C. 
        1395u(b)(12)(A)(ii) is amended--
                    (A) in the matter preceding subclause (I), by 
                striking ``prevailing charges determined under 
                paragraph (3)'' and inserting ``the amounts determined 
                under section 1833(a)(1)(G)'', and
                    (B) in subclause (II), by striking ``prevailing 
                charge rate'' and all that follows up to the period and 
                inserting ``fee schedule amount specified in section 
                1848 for such services performed by physicians''.
            (13) Paragraphs (14) through (17) of section 1842(b) (42 
        U.S.C. 1395u(b)) are repealed.
            (14)(A) Section 1842(b)(18)(A) (42 U.S.C. 1395u(b)(18)(A)) 
        is amended by striking ``reasonable charge or''.
            (B) Paragraph (18) of section 1842(b) (42 U.S.C. 1395u(b)) 
        is renumbered as paragraph (14).
            (15)(A) The matter in section 1842(j) (42 U.S.C. 1395u(j)) 
        preceding paragraph (2) is amended to read as follows:
    ``(j)(1) See subsections (k), (l), (m), (n), and (p) as to the 
cases in which sanctions may be applied under paragraph (2).''.
            (B) Section 1842(j)(4) (42 U.S.C. 1395u(j)(4)) is amended 
        by striking ``under paragraph (1)''.
            (16) Section 1842(n)(1)(A) (42 U.S.C. 1395u(n)(1)(A)) is 
        amended by striking ``reasonable charge (or other applicable 
        limit)'' and inserting ``other applicable limit''.
            (17) Section 1842(q) 42 U.S.C. 1395u(q) is amended--
                    (A) by striking paragraph (1)(B), and
                    (B) by striking ``(q)(1)(A)'' and inserting 
                ``(q)(1)''.
            (18) Section 1845(b)(1) (42 U.S.C. 1395w-1(b)(1) is amended 
        by striking ``adjustments to the reasonable charge levels for 
        physicians' services recognized under section 1842(b) and''.
            (19) Section 1848(i)(3) (42 U.S.C. 1395w-4(i)(3)) is 
        repealed.
            (20) Clause (ii) of the first sentence of section 
        1866(a)2)(A) (42 U.S.C. 1395cc(a)(2)(A) is amended by striking 
        ``reasonable charges'' through ``provider)'' and inserting 
        ``amount customarily charged for such items and services by 
        such provider''.
            (21) Section 1881(b)(3)(A) (42 U.S.C. 1395rr(b)(3)(A)) is 
        amended by striking ``a reasonable charge'' through ``section 
        1848)'' and inserting ``the basis described in section 1848''.
            (22) Section 9340 of the Omnibus Budget Reconciliation Act 
        of 1986 (42 U.S.C. 1395u nt) is repealed.
    (c) Effective Dates.--The amendments made by the preceding 
subsections, to the extent they substitute fee schedules for reasonable 
charges, apply to particular services as of the date specified by the 
Secretary of Health and Human Services.
    (d) Initial Budget Neutrality.--The Secretary, in developing a fee 
schedule for particular services (under the amendments made by 
subsections (a) and (b)), shall set amounts for the first year period 
to which the fee schedule applies at a level such that the total 
payments under title XVIII of the Social Security Act (42 U.S.C. 1395 
et seq.) for those services for that year period shall be approximately 
equal to the estimated total payments if those amendments had not been 
made.

SEC. 11462. APPLICATION OF INHERENT REASONABLENESS TO SURGICAL 
              DRESSINGS.

    Section 1834(i) (42 U.S.C. 1395m(i)) is amended by adding at the 
end the following:
            ``(3) Adjustment for inherent reasonableness.--The 
        provisions of subsection (a)(10)(B) shall also apply to 
        surgical dressings.''.

SEC. 11463. APPLICATION OF COMPETITIVE ACQUISITION PROCESS TO CERTAIN 
              PART B ITEMS AND SERVICES.

    (a) General Rule.--Part B of title XVIII (42 U.S.C. 1395j et seq.) 
is amended by inserting after section 1846 the following:

            ``competitive acquisition of items and services

    ``Sec. 1847. (a) Establishment of Bidding Areas.--
            ``(1) In general.--The Secretary shall establish 
        competitive acquisition areas for the purposes of awarding 
        contracts for the furnishing under this part of the items and 
        services described in subsection (c) after 1995. The Secretary 
        may establish different competitive acquisition areas under 
        this subsection for different classes of items and services 
        under this part.
            ``(2) Criteria for establishment.--The competitive 
        acquisition areas established under paragraph (1) shall--
                    ``(A) initially be, or be within, metropolitan 
                statistical areas, and
                    ``(B) be chosen based on the availability and 
                accessibility of entities able to furnish items and 
                services, and the probable savings to be realized by 
                the use of competitive bidding in the furnishing of 
                items and services in the area.
    ``(b) Awarding of Contracts in Areas.--
            ``(1) In general.--The Secretary shall conduct a 
        competition among individuals and entities supplying items and 
        services under this part for each competitive acquisition area 
        established under subsection (a) for each class of items and 
        services.
            ``(2) Conditions for awarding contract.--The Secretary may 
        not award a contract to any entity under the competition 
        conducted pursuant to paragraph (1) to furnish an item or 
        service under this part unless the Secretary finds that the 
        entity meets quality standards specified by the Secretary for 
        the furnishing of the item or service.
            ``(3) Contents of contract.--A contract entered into with 
        an entity under the competition conducted pursuant to paragraph 
        (1) shall specify (for all of the items and services within a 
        class)--
                    ``(A) the quantity of items and services the entity 
                shall provide; and
                    ``(B) such other terms and conditions as the 
                Secretary may require.
    ``(c) Services Described.--The items and services to which the 
provisions of this section shall apply are as follows:
            ``(1) Magnetic resonance imaging tests and computerized 
        axial tomography scans, including physician's interpretation of 
        the results of such tests and scans.
            ``(2) Enteral and parenteral nutrients, supplies, and 
        equipment.
            ``(3) Such other items as the Secretary may specify.''.
    (b) Items and Services To Be Furnished Only Through Competitive 
Acquisition.--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:
            ``(16) where such expenses are for an item or service 
        furnished in a competitive acquisition area (as established by 
        the Secretary under section 1847(a)) by an entity other than an 
        entity with which the Secretary has entered into a contract 
        under section 1847(b) for the furnishing of such an item or 
        service in that area, unless the Secretary finds that such 
        expenses were incurred in a case of urgent need.''.
    (c) Reduction in Payment Amounts if Competitive Acquisition Fails 
To Achieve Minimum Reduction in Payments.--Notwithstanding any 
provision of title XVIII of the Social Security Act (42 U.S.C. 1395 et 
seq.), if the establishment of competitive acquisition areas under 
section 1847 of that Act (as added by this part) and the furnishing of 
items and services under that section during 1997 does not result in a 
reduction of at least 15 percent in the projected payment amounts that 
would apply to a class of items or services under part B of that title 
(42 U.S.C. 1395j et seq.) if that class of items or services were not 
to be furnished under that section 1997, the Secretary shall reduce for 
that year the payment amounts for that class of items and services by 
the percentage the Secretary determines necessary to result in that 
reduction for that year (and those reduced amounts shall be considered 
the full payment amounts for that year in calculating payment amounts 
for future years).
    (d) Effective Date.--The amendments made by subsections (a) and (b) 
apply to items and services furnished under part B of title XVIII of 
the Social Security Act (42 U.S.C. 1395j et seq.) after 1995.

SEC. 11464. APPLICATION OF COMPETITIVE ACQUISITION PROCESS TO 
              LABORATORY SERVICES.

    (a) In General.--Section 1847(c), as added by section 11463(a) of 
this Act, is amended by renumbering paragraph (4) as (5) and inserting 
after paragraph (3) the following:
            ``(4) Clinical diagnostic laboratory tests.''.
    (b) Reduction in Payment Amounts if Competitive Acquisition Fails 
To Achieve Minimum Reduction in Payments.--See section 11463(c) for 
provisions that address reductions in payment amounts.
    (c) Effective Date.--The amendment made by subsection (a) applies 
to tests furnished under part B of title XVIII of the Social Security 
Act (42 U.S.C. 1395j et seq.) after 1995.

SEC. 11465. CHANGES IN PAYMENTS FOR CLINICAL LABORATORY TESTS.

    (a) In General.--Section 1833(h)(2)(A)(iii) (42 U.S.C. 
1395l(h)(2)(A)(iii)) is amended--
            (1) by striking the clause designation ``(iii)'' and 
        inserting ``(iii)(I)'', and
            (2) by adding at the end the following:
    ``(II) In lieu of the fees established under subclause I, the 
Secretary may pay for tests classified as automated tests on the basis 
of a nationally uniform fee for a group of tests (of whatever number) 
performed together.
    ``(III) The Secretary shall pay for tests for amylase, 
apolipoprotein A, apolipoprotein B, creatine kinase, gamma glutamyl 
transferase, iron, lipase, magnesium, thyroxine, triglyceride, or 
triiodothyronine uptake on the same basis as the Secretary pays for 
other tests classified as automated tests.
    ``(IV) The Secretary may, from time to time, reclassify specific 
tests as automated or not automated, based on the volume of a test and 
the relative frequency by which the test is performed on automated 
equipment.''.
    (b) Effective Date and Initial Payment Levels.--
            (1) The amendments made by subsection (a) apply to tests 
        performed after 1995.
            (2) If the Secretary sets a nationally uniform fee under 
        subclause (II) of section 1833(h)(2)(A)(iii) of the Social 
        Security Act (42 U.S.C. 1395(h)(2)(A)(iii)), such a fee shall 
        be initially established so that estimated aggregate payments 
        under such fee shall equal the estimated aggregate amounts that 
        would otherwise have been payable for the tests under subclause 
        (I).

      Subpart D--Provisions Relating to Parts A and B of Medicare

SEC. 11471. DISCLOSURE OF TAXPAYER IDENTIFYING NUMBERS AND OTHER 
              INFORMATION.

    (a) Providers of Services and Certain Other Entities.--Section 1124 
(42 U.S.C. 1320a-3) is amended by adding at the end of the following:
    ``(c) The Secretary may also require a disclosing entity to supply 
the Secretary with the taxpayer identifying number (TIN) of the 
disclosing entity, of any person concerning whom information is to be 
supplied under subsection (a), or of any other disclosing entity listed 
under subsection (b).''.
    (b) Entities That Furnish Items and Services Under Part B.--
            (1) Section 1124A(c)(1) (42 U.S.C. 1320a-3a(c)(1)) is 
        amended by striking ``on an assignment-related basis''.
            (2) Section 1124A(a) (42 U.S.C. 1320a-3a(a)) is amended--
                    (A) by striking ``and'' at the end of paragraph 
                (1),
                    (B) by striking the period at the end of paragraph 
                (2) and adding ''; and'', and
                    (C) by adding at the end the following:
            ``(3) on the identity of each individual described in 
        section 1866(a)(1)(D).''.
            (3) Section 1124A (42 U.S.C. 1320a-3a) is amended--
                    (A) by redesignating subsection (c) as (d), and
                    (B) by inserting after subsection (b) the 
                following:
    ``(d) The Secretary may also require a disclosing part B provider 
to provide the Secretary with the taxpayer identifying number (TIN) of 
the disclosing part B provider, of any person concerning whom 
information is to be supplied under subsection (a)(1), and of any 
managing employee or entity listed under subsection (a)(2).''.
    (c) Verification of TINs With the Secretary of the Treasury.--
Section 6103(m) of the Internal Revenue Code of 1986 (26 U.S.C. 
6103(m)) is amended by adding at the end the following:
            ``(8) Individuals and other entities involved in furnishing 
        health care items and services under Federal (or federally 
        supported) programs.--Upon written request by the Secretary of 
        Health and Human Services, the Secretary shall disclose to the 
        Secretary of Health and Human Services the name of each person 
        or entity whose TIN has been obtained under section 1124(c) or 
        1124A(d) of the Social Security Act.''.

SEC. 11472. USE OF WAGE INDEX FOR AREA IN WHICH HOME HEALTH SERVICES 
              ARE FURNISHED.

    (a) In General.--Section 1861(v)(1)(L)(iii) (42 U.S.C. 
1395x(v)(1)(L)(iii)) is amended by striking ``the home health agency is 
located'' and inserting ``services are furnished''.
    (b) Effective Date.--The amendment made by subsection (a) applies 
to services furnished after 1996.

                     changes to administration bill

    (1) SNF PPS (Section 11113): Advance effective date by one year to 
October 1, 1997. Interim PPS contained in Section 11112 would apply 
between October 1, 1996 and September 30, 1997.
    (2) Medical Education (Section 11105): Delete all but subsections 
(a)(1) and (b)(1). The only thing that remains is the freeze on interns 
and residents at the hospital-specific level in the aggregate and for 
non-primary care slots, for both Medicare IME and GME payments. Plus 
the 2 proposals on the attached sheet.
    (3) AAPCC Add-Ons (Section 11115): Change subsection (c) (new 
section 1886(d)(11)(F)) to payback of 100 percent of IME, GME and DSH 
(rather than 75 percent), effective 1/1/98. See change in removal of 
add-ons in managed care section.
    (4) Oxygen (Section 11126): Delete Section 11126 from 
Administration bill. Substitute Section 8233 from H.R. 2530 (the 
Coalition bill).
    (5) Rural Provisions: Keep Section 11116 (Sole Community Hospitals) 
and Section 11117 (Rural Primary Care Hospital Program). Add Section 
7021 (Rural Referral Center), Section 7024 (PA/NP), Section 7025 
(Telemedicine). Section 7026 (Rural Health Outreach Grants), Section 
7028 (DSH threshold) from the Senate Democratic Plan (printed in the 
Congressional Record on Nov. 1).
    (6) Managed Care: See attachment.
    (7) Preventive benefits demonstration program sunsets in 2001 
unless the Secretary determines these benefits are cost-effective.

                        additional gmf proposals

    Medical Education: Add provision from Administration package to 
allow hospitals to count residents in non-hospital settings for 
purposes of their IME adjustment as long as their resident-to-bed ratio 
does not increase, effective 7/1/96.
    Medical Education: Add provision from Administration package to 
allow DGME payments to be made to certain non-hospital settings when 
the non-hospital is paying for the resident's salary in that setting, 
effective 7/1/96.
    (c) Upgraded Durable Medical Equipment.--Section 1834(a) (42 U.S.C. 
1395m(a)) is amended by inserting after paragraph (15) the following 
new paragraph:
            ``(16) Certain upgraded items.--
                    ``(A) Individual's right to choose upgraded item.--
                Notwithstanding any other provision of law, effective 
                on the date on which the Secretary issues regulations 
                under subparagraph (C), an individual may purchase or 
                rent from a supplier an item of upgraded durable 
                medical equipment for which payment would be made under 
                this subsection if the item were a standard item.
                    ``(B) Payments to supplier.--In the case of the 
                purchase or rental of an upgraded item under 
                subparagraph (A)--
                            ``(i) the supplier shall receive payment 
                        under this subsection with respect to such item 
                        as if such item were a standard item; and
                            ``(ii) the individual purchasing or renting 
                        the item shall pay the supplier an amount equal 
                        to the difference between the supplier's charge 
                        and the amount under clause (i).
                In no event may the supplier's charge for an upgraded 
                item exceed the applicable fee schedule amount (if any) 
                for such item.
                    ``(C) Consumer protection safeguards.--The 
                Secretary shall issue regulations providing for 
                consumer protection standards with respect to the 
                furnishing of upgraded equipment under subparagraph 
                (A). Such regulations shall provide for--
                            ``(i) determination of fair market prices 
                        with respect to an upgraded item;
                            ``(ii) full disclosure of the availability 
                        and price of standard items and proof of 
                        receipt of such disclosure information by the 
                        beneficiary before the furnishing of the 
                        upgraded item;
                            ``(iii) conditions of participation for 
                        suppliers in the simplified billing 
                        arrangement;
                            ``(iv) sanctions of suppliers who are 
                        determined to engage in coercive or abusive 
                        practices, including exclusion; and
                            ``(v) such other safeguards as the 
                        Secretary determines are necessary.''.

    other medicare changes to administration's original plan choices

    Expanded Secretarial discretion over 50/50 and minimum enrollment: 
The Administration bill would establish minimum enrollment requirements 
of 5,000 members in urban areas and 1,500 members in rural areas, and 
maintain the 50/50 enrollment composition requirement in urban and 
rural areas, counting members for whom the entity is ``substantially at 
risk''. The 50/50 requirement could be waived in certain situations.
    This change would give the Secretary authority to contract with 
organizations not meeting either the initial enrollment or the 50/50 
requirements, subject to: (1) an evaluation that the entity has as the 
ability to manage risk; (2) capacity limits imposed by the Secretary; 
(3) meeting appropriate financial solvency requirements; and (4) a 
higher level of monitoring.
    Secretarial authority to contract out with entities: Eligible 
health plans would include those specified in the Administration bill, 
with the addition of an ``other'' category for new types of plans that 
meet specified standards. The Secretary would retain discretion as to 
which plans could contract with Medicare.
    Nurses and PSO issue: The Administration bill limits who can 
establish PSOs to various mixtures of physicians and/or hospitals. This 
change would treat nurse practioners on a par with physicians for 
purposes of creating PSOs.

                                benefits

    Barium enemas with sigmoidoscopy for high risk beneficiaries: The 
Administration bill would cover colonoscopy for beneficiaries at high 
risk of colon cancer. Under this change, Medicare would cover either 
(1) a colonoscopy or (2) a combination of a flexible sigmoidoscopy and 
an air contrast barium enema. The original estimate for the complete 
colon screening benefit was $1.1 billion; the original proposal was 
repriced, based on new information, at $1.365 billion. The total cost 
estimate, including this change, is $1.355 billion, or estimated lower 
costs of $10 million over 7 years. (The combination of sigmoidoscopy 
and air contrast barium enema cost slightly less than colonoscopy.) 
Because HCFA expects a small net savings, we do not anticipate this 
change would affect CBO's estimate.

                           regulatory reform

    CLIA compromise: The ``Blue Dog'' proposal would exempt all 
physician office laboratories (POLs) from CLIA requirements, except 
when they perform Pap smear tests. An identical provision was deleted 
under the Byrd rule from the Reconciliation Bill. This provision would 
leave a majority of the nation's labs with no quality oversight at all. 
Various compromise proposals for reducing CLIA burdens on POLs have 
been discussed on Capitol Hill. One such compromise, drafted by 
Democrats on the House Commerce Committee, would (1) remove the 
requirement of biennial laboratory inspections, allowing as-needed 
inspections based on criteria set by the Secretary; (2) mandate that 
all routine inspections be announced; and (3) reduce application 
requirements for CLIA certificates and remove biennial re-application 
requirements. This change would reduce burdens related to inspections 
and paperwork without compromising the quality of laboratory testing.
    Self-referral compensation exception: The Administration bill 
includes no provision in this area; the Reconciliation Bill would 
substantially weaken current protections.
    This change, modeled after Mr. Stark's bill, would:
    1. Add exceptions for shared facility services and for capitated 
payments (if designated health services are included).
    2. Entirely exclude intraocular lens, eyeglasses, and contact 
lenses from designated health services subject to prohibitions.
    3. Include DME and parenteral and enteral nutrients, equipment and 
supplies in the exception for in-office ancillary services.
    4. Delineate the requirements for permissible compensation 
arrangements, thus making the requirements uniform for all 
arrangements.
    5. Repeal the exception for physicians' services.
    The ``General Exceptions to both Ownership and Compensation 
Arrangement Prohibitions'' would then be: (1) shared facility services 
(new); (2) in-office ancillary services (including DME, parenteral and 
enteral nutrients, equipment, and supplies) (altered); (3) pre-paid 
plans (unchanged); (4) capitated payments (new); and (5) other 
permissible exceptions (unchanged).

                                 other

    OPD/PPS: Add a PPS for OPDs. In particular, in FY 2002, establish a 
PPS that would be budget neutral relative to what Medicare payments 
would have been in 2002 and also budget neutral relative to what total 
beneficiary coinsurance would have been in 2002.
    Hospice: Under current law, hospice care is excepted from the 
package of services provided by risk plans. If beneficiaries elect 
hospice care, Medicare makes payments directly to the hospice, and the 
HMOs and CMPs receive the full monthly capitation amount (less an 
amount paid to the hospice for attending physician services). Thus, 
hospices are not required to contract directly with HMOs and CMPs. This 
technical change would retain the current provision under the new 
authority for Medicare managed care contracting.
    SNF minimum data set: This change would require the continuation of 
standardized resident assessments contained in the minimum data set 
(MDS). The MDS data is necessary for developing a case-mix adjustor for 
a SNF PPS, proposed elsewhere in the bills. Current Congressional 
proposals eliminate the requirement that this data be collected by 
eliminating certain nursing home quality standards.
    Home health agency data for case mix system: This change would 
allow the Secretary to mandate the collection of data that may be 
necessary to develop a case mix adjustor for HH PPS. There is currently 
no requirement that such data be collected.
    Rural Primary Care Hospital Program (Sec. 11117 in President's 
bill)
    (1) Sen. Baucus is seeking an extension of the MAF demonstration 
project until 2002, such as the one that was included in the Conference 
Agreement. Since our Rural Primary Care Hospital (RPCH) expansion 
proposal makes RPCHs much more similar to MAFs in all key aspects, we 
suggest grandfathering all MAFs as RPCHs as of the date of 
implementation of the national program. This would effectively make all 
MAFs permanent, so that extensions of the MAF demonstration would no 
longer be necessary.
    Centers of excellence: This change would replace the term 
``rebates'' with ``beneficiary incentives.''

                        TITLE V--WELFARE REFORM

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

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 second or 
                        subsequent child born during such period, is 
                        responsible for a child under age 3 months;
                            ``(iii) is pregnant in the third 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 that 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 plan shall, at 
the option of the State, provide for the establishment and operation of 
an automated statewide management information system designed 
effectively and efficiently, to assist management in the administration 
of the State plan approved under this part, so as--
            ``(1) to control and account for--
                    ``(A) all the factors in the total eligibility 
                determination process under such plan for assistance, 
                and
                    ``(B) the costs, quality, and delivery of payments 
                and services furnished to applicants for and recipients 
                of assistance; and
            ``(2) to notify the appropriate officials for child 
        support, food stamp, and social service programs, and the 
        medical assistance program approved under title XIX, whenever a 
        recipient becomes ineligible for such assistance or the amount 
        of assistance provided to a recipient under the State plan is 
        changed.
    ``(f) Disclosure of Information.--The State plan shall provide for 
safeguards which restrict the use or disclosure of information 
concerning applicants or recipients.
    ``(g) Detection of Fraud.--The State plan shall provide, in 
accordance with regulations issued by the Secretary, for appropriate 
measures to detect fraudulent applications for temporary employment 
assistance before the establishment of eligibility for such assistance.

                 ``Subpart 2--Administrative Provisions

``SEC. 411. APPROVAL OF PLAN.

    ``(a) In General.--The Secretary shall approve a State plan which 
fulfills the requirements under subpart 1 within 120 days of the 
submission of the plan by the State to the Secretary.
    ``(b) Deemed Approval.--If a State plan has not been rejected by 
the Secretary during the period specified in subsection (a), the plan 
shall be deemed to have been approved.

``SEC. 412. COMPLIANCE.

    In the case of any State plan for temporary employment assistance 
which has been approved under section 411, if the Secretary, after 
reasonable notice and opportunity for hearing to the State agency 
administering or supervising the administration of such plan, finds 
that in the administration of the plan there is a failure to comply 
substantially with any provision required by subpart 1 to be included 
in the plan, the Secretary shall notify such State agency that further 
payments will not be made to the State (or in the Secretary's 
discretion, that payments will be limited to categories under or parts 
of the State plan not affected by such failure) until the Secretary is 
satisfied that such prohibited requirement is no longer so imposed, and 
that there is no longer any such failure to comply. Until the Secretary 
is so satisfied the Secretary shall make no further payments to such 
State (or shall limit payments to categories under or parts of the 
State plan not affected by such failure).

``SEC. 413. PAYMENTS TO STATES.

    ``(a) Computation of Amount.--Subject to section 412, from the sums 
appropriated therefor, the Secretary of the Treasury shall pay to each 
State which has an approved plan for temporary employment assistance, 
for each quarter, beginning with the quarter commencing October 1, 
1996, an amount equal to the Federal medical assistance percentage (as 
defined in section 1905(b)) of the expenditures by the State under such 
plan.
    ``(b) Method of Computation and Payment.--The method of computing 
and paying such amounts shall be as follows:
            ``(1) The Secretary shall, prior to the beginning of each 
        quarter, estimate the amount to be paid to the State for such 
        quarter under the provisions of subsection (a), such estimate 
        to be based on--
                    ``(A) a report filed by the State containing its 
                estimate of the total sum to be expended in such 
                quarter in accordance with the provisions of such 
                subsection and stating the amount appropriated or made 
                available by the State and its political subdivisions 
                for such expenditures in such quarter, and if such 
                amount is less than the State's proportionate share of 
                the total sum of such estimated expenditures, the 
                source or sources from which the difference is expected 
                to be derived;
                    ``(B) records showing the number of needy children 
                in the State; and
                    ``(C) such other information as the Secretary may 
                find necessary.
            ``(2) The Secretary of Health and Human Services shall then 
        certify to the Secretary of the Treasury the amount so 
        estimated by the Secretary of Health and Human Services--
                    ``(A) reduced or increased, as the case may be, by 
                any sum by which the Secretary of Health and Human 
                Services finds that the estimate for any prior quarter 
                was greater or less than the amount which should have 
                been paid to the State for such quarter;
                    ``(B) reduced by a sum equivalent to the pro rata 
                share to which the Federal Government is equitably 
                entitled, as determined by the Secretary of Health and 
                Human Services, of the net amount recovered during any 
                prior quarter by the State or any political subdivision 
                thereof with respect to temporary employment assistance 
                furnished under the State plan; and
                    ``(C) reduced by such amount as is necessary to 
                provide the appropriate reimbursement to the Federal 
                Government that the State is required to make under 
                section 457 out of that portion of child support 
                collections retained by the State pursuant to such 
                section,
        except that such increases or reductions shall not be made to 
        the extent that such sums have been applied to make the amount 
        certified for any prior quarter greater or less than the amount 
        estimated by the Secretary of Health and Human Services for 
        such prior quarter.
    ``(c) Method of Payment.--The Secretary of the Treasury shall 
thereupon, through the Fiscal Service of the Department of the Treasury 
and prior to audit or settlement by the General Accounting Office, pay 
to the State, at the time or times fixed by the Secretary of Health and 
Human Services, the amount so certified.

``SEC. 414. QUALITY ASSURANCE, DATA COLLECTION, AND REPORTING SYSTEM.

    ``(a) Quality Assurance.--
            ``(1) In general.--Under the State plan, a quality 
        assurance system shall be developed based upon a collaborative 
        effort involving the Secretary, the State, the political 
        subdivisions of the State, and assistance recipients, and shall 
        include quantifiable program outcomes related to self 
        sufficiency in the categories of welfare-to-work, payment 
        accuracy, and child support.
            ``(2) Modifications to system.--As deemed necessary, but 
        not more often than every 2 years, the Secretary, in 
        consultation with the State, the political subdivisions of the 
        State, and assistance recipients, shall make appropriate 
        changes in the design and administration of the quality 
        assurance system, including changes in benchmarks, measures, 
        and data collection or sampling procedures.
    ``(b) Data Collection and Reporting.--
            ``(1) In general.--The State plan shall provide for a 
        quarterly report to the Secretary regarding the data described 
        in paragraphs (2) and (3) and such additional data needed for 
        the quality assurance system. The data collection and reporting 
        system under this subsection shall promote accountability, 
        continuous improvement, and integrity in the State plans for 
        temporary employment assistance and Work First.
            ``(2) Disaggregated data.--The State shall collect the 
        following data items on a monthly basis from disaggregated case 
        records of applicants for and recipients of temporary 
        employment assistance from the previous month:
                    ``(A) The age of adults and children (including 
                pregnant women).
                    ``(B) Marital or familial status of cases: married 
                (2-parent family), widowed, divorced, separated, or 
                never married; or child living with other adult 
                relative.
                    ``(C) The gender, race, educational attainment, 
                work experience, disability status (whether the 
                individual is seriously ill, incapacitated, or caring 
                for a disabled or incapacitated child) of adults.
                    ``(D) The amount of cash assistance and the amount 
                and reason for any reduction in such assistance. Any 
                other data necessary to determine the timeliness and 
                accuracy of benefits and welfare diversions.
                    ``(E) Whether any member of the family receives 
                benefits under any of the following:
                            ``(i) Any housing program.
                            ``(ii) The food stamp program under the 
                        Food Stamp Act of 1977.
                            ``(iii) The Head Start programs carried out 
                        under the Head Start Act.
                            ``(iv) Any job training program.
                    ``(F) The number of months since the most recent 
                application for assistance under the plan.
                    ``(G) The total number of months for which 
                assistance has been provided to the families under the 
                plan.
                    ``(H) The employment status, hours worked, and 
                earnings of individuals while receiving assistance, 
                whether the case was closed due to employment, and 
                other data needed to meet the work performance rate.
                    ``(I) Status in Work First and workfare, including 
                the number of hours an individual participated and the 
                component in which the individual participated.
                    ``(J) The number of persons in the assistance unit 
                and their relationship to the youngest child. 
                Nonrecipients in the household and their relationship 
                to the youngest child.
                    ``(K) Citizenship status.
                    ``(L) Shelter arrangement.
                    ``(M) Unearned income (not including temporary 
                employment assistance), such as child support, and 
                assets.
                    ``(N) The number of children who have a parent who 
                is deceased, incapacitated, or unemployed.
                    ``(O) Geographic location.
            ``(3) Aggregated data.--The State shall collect the 
        following data items on a monthly basis from aggregated case 
        records of applicants for and recipients of temporary 
        employment assistance from the previous month:
                    ``(A) The number of adults receiving assistance.
                    ``(B) The number of children receiving assistance.
                    ``(C) The number of families receiving assistance.
                    ``(D) The number of assistance units who had their 
                grants reduced or terminated and the reason for the 
                reduction or termination, including sanction, 
                employment, and meeting the time limit for assistance).
                    ``(E) The number of applications for assistance; 
                the number approved and the number denied and the 
                reason for denial.
            ``(4) Longitudinal studies.--The State shall submit 
        selected data items for a cohort of individuals who are tracked 
        over time. This longitudinal sample shall be used for selected 
        data items described in paragraphs (2) and (3), as determined 
        appropriate by the Secretary.
    ``(c) Additional Data.--The report required by subsection (b) for a 
fiscal year quarter shall also include the following:
            ``(1) Report on use of federal funds to cover 
        administrative costs and overhead.--A statement of--
                    ``(A) the percentage of the Federal funds paid to 
                the State under this part for the fiscal year quarter 
                that are used to cover administrative costs or 
                overhead; and
                    ``(B) the total amount of State funds that are used 
                to cover such costs or overhead.
            ``(2) Report on state expenditures on programs for needy 
        families.--A statement of the total amount expended by the 
        State during the fiscal year quarter on programs for needy 
        families, with the amount spent on the program under this part, 
        and the purposes for which such amount was spent, separately 
        stated.
            ``(3) Report on noncustodial parents participating in work 
        activities.--The number of noncustodial parents in the State 
        who participated in work activities during the fiscal year 
        quarter.
            ``(4) Report on child support collected.--The total amount 
        of child support collected by the State agency administering 
        the State plan under part D on behalf of a family receiving 
        assistance under this part.
            ``(5) Report on child care.--The total amount expended by 
        the State for child care under this part, along with a 
        description of the types of child care provided, such as child 
        care provided in the case of a family that has ceased to 
        receive assistance under this part because of increased hours 
        of, or increased income from, employment, or in the case of a 
        family that is not receiving assistance under this part but 
        would be at risk of becoming eligible for such assistance if 
        child care was not provided.
            ``(6) Report on transitional services.--The total amount 
        expended by the State for providing transitional services to a 
        family that has ceased to receive assistance under this part 
        because of increased hours of, or increased income from, 
        employment, along with a description of such services.
    ``(d) Collection Procedures.--The Secretary shall provide case 
sampling plans and data collection procedures as deemed necessary to 
make statistically valid estimates of plan performance.
    ``(e) Verification.--The Secretary shall develop and implement 
procedures for verifying the quality of the data submitted by the 
State, and shall provide technical assistance, funded by the compliance 
penalties imposed * * *

SEC. 9201. EXTENSION OF PROVISION PROVIDING ADDITIONAL ELIGIBILITY FOR 
              MEDICAID.

    Subsection (f) of section 1925 of the Social Security Act (42 
U.S.C. 1396r-6(f)) is amended by striking ``1998'' and inserting 
``2002''.

SEC. 9202. NOTICE OF AVAILABILITY REQUIRED TO BE PROVIDED TO APPLICANTS 
              AND FORMER RECIPIENTS OF TEMPORARY FAMILY ASSISTANCE, 
              FOOD STAMPS, AND MEDICAID.

    (a) Temporary Family Assistance.--Section 406, as added by the 
amendment made by section 9101(a) of this Act, is amended by adding at 
the end the following:
    ``(h) Notice of Availability of EITC.--The State plan shall provide 
that the State agency referred to in subsection (b) must provide 
written notice of the existence and availability of the earned income 
credit under section 32 of the Internal Revenue Code of 1986 to--
            ``(1) any individual who applies for assistance under the 
        State plan, upon receipt of the application; and
            ``(2) any individual whose assistance under the State plan 
        (or under the State plan approved under part A of this title 
        (as in effect before the effective date of title IX of the 
        Omnibus Budget Reconciliation Act of 1995) is terminated, in 
        the notice of termination of benefits.''.
    (b) Food Stamps.--Section 11(e) of the Food Stamp Act of 1977 (7 
U.S.C. 2020(e)) is amended--
            (1) in paragraph (24) by striking ``and'' at the end;
            (2) in paragraph (25) by striking the period at the end and 
        inserting ``; and''; and
            (3) by inserting after paragraph (25) the following:
            ``(26) that whenever a household applies for food stamp 
        benefits, and whenever such benefits are terminated with 
        respect to a household, the State agency shall provide to each 
        member of such household notice of--
                    ``(A) the existence of the earned income tax credit 
                under section 32 of the Internal Revenue Code of 1986; 
                and
                    ``(B) the fact that such credit may be applicable 
                to such member.''.
    (c) Medicaid.--Section 1902(a) (42 U.S.C. 1396a(a)) is amended--
            (1) by striking ``and'' at the end of paragraph (61);
            (2) by striking the period at the end of paragraph (62) and 
        inserting ``; and''; and
            (3) by inserting after paragraph (62) the following new 
        paragraph:
            ``(63) provide that the State shall provide notice of the 
        existence and availability of the earned income tax credit 
        under section 32 of the Internal Revenue Code of 1986 to each 
        individual applying for medical assistance under the State plan 
        and to each individual whose eligibility for medical assistance 
        under the State plan is terminated.''.

SEC. 9203. NOTICE OF AVAILABILITY OF EARNED INCOME TAX CREDIT AND 
              DEPENDENT CARE TAX CREDIT TO BE INCLUDED ON W-4 FORM.

    (a) In General.--Section 11114 of the Omnibus Budget Reconciliation 
Act of 1990 (26 U.S.C. 21 note), relating to program to increase public 
awareness, is amended by adding at the end the following new sentence: 
``Such means shall include printing a notice of the availability of 
such credits on the forms used by employees to determine the proper 
number of withholding exemptions under chapter 24 of such Code.''

SEC. 9204. ADVANCE PAYMENT OF EARNED INCOME TAX CREDIT THROUGH STATE 
              DEMONSTRATION PROGRAMS.

    (a) In General.--Section 3507 of the Internal Revenue Code of 1986 
(relating to the advance payment of the earned income tax credit) is 
amended by adding at the end the following:
    ``(g) State Demonstrations.--
            ``(1) In general.--In lieu of receiving earned income 
        advance amounts from an employer under subsection (a), a 
        participating resident shall receive advance earned income 
        payments from a responsible State agency pursuant to a State 
        Advance Payment Program that is designated pursuant to 
        paragraph (2).
            ``(2) Designations.--
                    ``(A) In general.--From among the States submitting 
                proposals satisfying the requirements of paragraph (3), 
                the Secretary (in consultation with the Secretary of 
                Health and Human Services) may designate not more than 
                4 State Advance Payment Demonstrations. States selected 
                for the demonstrations may have, in the aggregate, no 
                more than 5 percent of the total number of households 
                participating in the program under the Food Stamp 
                program in the immediately preceding fiscal year. 
                Administrative costs of a State in conducting a 
                demonstration under this section may be included for 
                matching under section 413(a) of the Social Security 
                Act and section 16(a) of the Food Stamp Act of 1977.
                    ``(B) When designation may be made.--Any 
                designation under this paragraph shall be made no later 
                than December 31, 1996.
                    ``(C) Period for which designation is in effect.--
                            ``(i) In general.--Designations made under 
                        this paragraph shall be effective for advance 
                        earned income payments made after December 31, 
                        1996, and before January 1, 2000.
                            ``(ii) Special rules.--
                                    ``(I) Revocation of designations.--
                                The Secretary may revoke any 
                                designation made under this paragraph 
                                if the Secretary determines that the 
                                State is not complying substantially 
                                with the proposal described in 
                                paragraph (3) submitted by the State.
                                    ``(II) Automatic termination of 
                                designations.--Any failure by a State 
                                to comply with the reporting 
                                requirements described in paragraphs 
                                (3)(F) and (3)(G) shall have the effect 
                                of immediately terminating the 
                                designation under this paragraph and 
                                rendering paragraph (5)(A)(ii) 
                                inapplicable to subsequent payments.
            ``(3) Proposals.--No State may be designated under 
        paragraph (2) unless the State's proposal for such 
        designation--
                    ``(A) identifies the responsible State agency,
                    ``(B) describes how and when the advance earned 
                income payments will be made by that agency, including 
                a description of any other State or Federal benefits 
                with which such payments will be coordinated,
                    ``(C) describes how the State will obtain the 
                information on which the amount of advance earned 
                income payments made to each participating resident 
                will be determined in accordance with paragraph (4),
                    ``(D) describes how State residents who will be 
                eligible to receive advance earned income payments will 
                be selected, notified of the opportunity to receive 
                advance earned income payments from the responsible 
                State agency, and given the opportunity to elect to 
                participate in the program,
                    ``(E) describes how the State will verify, in 
                addition to receiving the certifications and statement 
                described in paragraph (7)(D)(iv), the eligibility of 
                participating residents for the earned income tax 
                credit,
                    ``(F) commits the State to furnishing to each 
                participating resident by January 31 of each year a 
                written statement showing--
                            ``(i) the name and taxpayer identification 
                        number of the participating resident, and
                            ``(ii) the total amount of advance earned 
                        income payments made to the participating 
                        resident during the prior calendar year,
                    ``(G) commits the State to furnishing to the 
                Secretary by December 1 of each year a written 
                statement showing the name and taxpayer identification 
                number of each participating resident,
                    ``(H) commits the State to treat any advance earned 
                income payments as described in paragraph (5) and any 
                repayments of excessive advance earned income payments 
                as described in paragraph (6),
                    ``(I) commits the State to assess the development 
                and implementation of its State Advance Payment 
                Program, including an agreement to share its findings 
                and lessons with other interested States in a manner to 
                be described by the Secretary, and
                    ``(J) is submitted to the Secretary on or before 
                June 30, 1996.
            ``(4) Amount and timing of advance earned income 
        payments.--
                    ``(A) Amount.--
                            ``(i) In general.--The method for 
                        determining the amount of advance earned income 
                        payments made to each participating resident 
                        shall conform to the fullest extent possible 
                        with the provisions of subsection (c).
                            ``(ii) Special rule.--A State may, at its 
                        election, apply the rules of subsection 
                        (c)(2)(B) by substituting `between 60 percent 
                        and 75 percent of the credit percentage in 
                        effect under section 32(b)(1) for an individual 
                        with the corresponding number of qualifying 
                        children' for `60 percent of the credit 
                        percentage in effect under section 32(b)(1) for 
                        such an eligible individual with 1 qualifying 
                        child' in clause (i) and `the same percentage 
                        (as applied in clause (i))' for `60 percent' in 
                        clause (ii).
                    ``(B) Timing.--The frequency of advance earned 
                income payments may be determined on the basis of the 
                payroll periods of participating residents, on a single 
                statewide schedule, or on any other reasonable basis 
                prescribed by the State in its proposal; however, in no 
                event may advance earned income payments be made to any 
                participating resident less frequently than on a 
                calendar-quarter basis.
            ``(5) Payments to be treated as payments of withholding and 
        fica taxes.--
                    ``(A) In general.--For purposes of this title, 
                advance earned income payments during any calendar 
                quarter--
                            ``(i) shall neither be treated as a payment 
                        of compensation nor be included in gross 
                        income, and
                            ``(ii) shall be treated as made out of--
                                    ``(I) amounts required to be 
                                deducted by the State and withheld for 
                                the calendar quarter by the State under 
                                section 3401 (relating to wage 
                                withholding),
                                    ``(II) amounts required to be 
                                deducted for the calendar quarter under 
                                section 3102 (relating to FICA employee 
                                taxes), and
                                    ``(III) amounts of the taxes 
                                imposed on the State for the calendar 
                                quarter under section 3111 (relating to 
                                FICA employer taxes),
                        as if the State had paid to the Secretary, on 
                        the day on which payments are made to 
                        participating residents, an amount equal to 
                        such payments.
                    ``(B) If advance payments exceed taxes due.--If for 
                any calendar quarter the aggregate amount of advance 
                earned income payments made by the responsible State 
                agency under a State Advance Payment Program exceeds 
                the sum of the amounts referred to in subparagraph 
                (A)(ii) (without regard to paragraph (6)(A)), each such 
                advance earned income payment shall be reduced by an 
                amount which bears the same ratio to such excess as 
                such advance earned income payment bears to the 
                aggregate amount of all such advance earned income 
                payments.
            ``(6) State repayment of excessive advance earned income 
        payments.--
                    ``(A) In general.--Notwithstanding any other 
                provision of law, in the case of an excessive advance 
                earned income payment a State shall be treated as 
                having deducted and withheld under section 3401 
                (relating to wage withholding), and as being required 
                to pay to the United States, the repayment amount 
                during the repayment calendar quarter.
                    ``(B) Excessive advance earned income payment.--For 
                purposes of this section, the term `excessive advance 
                income payment' means that portion of any advance 
                earned income payment that, when combined with other 
                advance earned income payments previously made to the 
                same participating resident during the same calendar 
                year, exceeds the amount of earned income tax credit to 
                which that participating resident is entitled under 
                section 32 for that year.
                    ``(C) Repayment amount.--For purposes of this 
                subsection, the term `repayment amount' means an amount 
                equal to 50 percent of the excess of--
                            ``(i) excessive advance earned income 
                        payments made by a State during a particular 
                        calendar year, over
                            ``(ii) the sum of--
                                    ``(I) 4 percent of all advance 
                                earned income payments made by the 
                                State during that calendar year, and
                                    ``(II) the excessive advance earned 
                                income payments made by the State 
                                during that calendar year that have 
                                been collected from participating 
                                residents by the Secretary.
                    ``(D) Repayment calendar quarter.--For purposes of 
                this subsection, the term `repayment calendar quarter' 
                means the second calendar quarter of the third calendar 
                year beginning after the calendar year in which an 
                excessive earned income payment is made.
            ``(7) Definitions.--For purposes of this subsection--
                    ``(A) State advance payment program.--The term 
                `State Advance Payment Program' means the program 
                described in a proposal submitted for designation under 
                paragraph (1) and designated by the Secretary under 
                paragraph (2).
                    ``(B) Responsible state agency.--The term 
                `responsible State agency' means the single State 
                agency that will be making the advance earned income 
                payments to residents of the State who elect to 
                participate in a State Advance Payment Program.
                    ``(C) Advance earned income payments.--The term 
                `advance earned income payments' means an amount paid 
                by a responsible State agency to residents of the State 
                pursuant to a State Advance Payment Program.
                    ``(D) Participating resident.--The term 
                `participating resident' means an individual who--
                            ``(i) is a resident of a State that has in 
                        effect a designated State Advance Payment 
                        Program,
                            ``(ii) makes the election described in 
                        paragraph (3)(D) pursuant to guidelines 
                        prescribed by the State,
                            ``(iii) certifies to the State the number 
                        of qualifying children the individual has, and
                            ``(iv) provides to the State the 
                        certifications and statement described in 
                        subsections (b)(1), (b)(2), (b)(3), and (b)(4) 
                        (except that for purposes of this clause, the 
                        term `any employer' shall be substituted for 
                        `another employer' in subsection (b)(3)), along 
                        with any other information required by the 
                        State.''.
    (b) Technical Assistance.--The Secretaries of the Treasury and 
Health and Human Services shall jointly ensure that technical 
assistance is provided to State Advance Payment Programs and that these 
programs are rigorously evaluated.
    (c) Annual Reports.--The Secretary shall issue annual reports 
detailing the extent to which--
            (1) residents participate in the State Advance Payment 
        Programs,
            (2) participating residents file Federal and State tax 
        returns,
            (3) participating residents report accurately the amount of 
        the advance earned income payments made to them by the 
        responsible State agency during the year, and
            (4) recipients of excessive advance earned income payments 
        repay those amounts.
The report shall also contain an estimate of the amount of advance 
earned income payments made by each responsible State agency but not 
reported on the tax returns of a participating resident and the amount 
of excessive advance earned income payments.
    (d) Authorization of Appropriations.--For purposes of providing 
technical assistance described in subsection (b), preparing the reports 
described in subsection (c), and providing grants to States in support 
of designated State Advance Payment Programs, there are authorized to 
be appropriated in advance to the Secretary of the Treasury and the 
Secretary of Health and Human Services a total of $1,400,000 for fiscal 
years 1997 through 2000.

SEC. 9205. CONSOLIDATED CHILD CARE DEVELOPMENT BLOCK GRANT.

    (a) Purpose.--It is the purpose of this section to--
            (1) eliminate program fragmentation and create a seamless 
        system of high quality child care that allows for continuity of 
        care for children as parents move from welfare to work;
            (2) provide for parental choice among high quality child 
        care programs; and
            (3) increase the availability of high quality affordable 
        child care in order to promote self sufficiency and support 
        working families.
    (b) Amendments to Child Care and Development Block Grant Act of 
1990.--
            (1) Appropriations.--Section 658B of the Child Care and 
        Development Block Grant Act of 1990 (42 U.S.C. 9858) is amended 
        to read as follows:

``SEC. 658B. APPROPRIATION.

    ``(a) Authorization of Appropriations of Block Grant Funds.--For 
the purpose of providing child care services for eligible children 
through the awarding of grants to States under this subchapter (other 
than the grants awarded under subsection (b)) by the Secretary, there 
are authorized to be appropriated, $1,000,000,000 for fiscal year 1996 
and such sums as may be necessary for fiscal years 1997 through 2002.
    ``(b) Appropriations of Federal Matching Funds.--For the purpose of 
providing child care services for eligible children through the 
awarding of matching grants to States under section 658J(d) by the 
Secretary, there are authorized to be appropriated and are hereby 
appropriated, baseline plus $500,000,000 for fiscal year 1996, baseline 
plus $500,000,000 for fiscal year 1997, baseline plus $500,000,000 for 
fiscal year 1998, baseline plus $500,000,000 for fiscal year 1999, 
baseline plus $500,000,000 for fiscal year 2000, baseline plus 
$500,000,000 for fiscal year 2001, and baseline plus $500,000,000 for 
fiscal year 2002.''.
            (2) Use of funds.--Section 658E(c)(3)(B) of the Child Care 
        and Development Block Grant Act of 1990 (42 U.S.C. 
        9858c(c)(3)(B)) is amended--
                    (A) in clause (i), by striking ``with very low 
                family incomes (taking into consideration family 
                size)'' and inserting ``described in clause (ii) (in 
                the order so described)'';
                    (B) by redesignating clauses (i) and (ii) as 
                subclauses (I) and (II), respectively, and realigning 
                the margins accordingly;
                    (C) by striking ``Subject'' and inserting the 
                following:
                            ``(i) In general.--Subject''; and
                    (D) by adding at the end the following new clause:
                            ``(ii) Families described.--The families 
                        described in this clause are the following:
                                    ``(I) Families containing an 
                                individual receiving assistance under a 
                                State plan approved under part A of 
                                title IV of the Social Security Act and 
                                participating in education, job search, 
                                job training, work, or workfare 
                                programs.
                                    ``(II) Families containing an 
                                individual who--
                                            ``(aa) no longer qualifies 
                                        for child care assistance under 
                                        section 405(b) of the Social 
                                        Security Act because such 
                                        individual has ceased to 
                                        receive assistance under the 
                                        temporary employment assistance 
                                        program under part A of title 
                                        IV of the Social Security Act 
                                        as a result of increased hours 
                                        of, or increased income from, 
                                        employment; and
                                            ``(bb) the State determines 
                                        requires such child care 
                                        assistance in order to continue 
                                        such employment (but only for 
                                        the 1-year period beginning on 
                                        the date that the individual no 
                                        longer qualifies for child care 
                                        assistance under section 405(b) 
                                        of such Act, and, at the option 
                                        of the State, for the 
                                        additional 1-year period 
                                        beginning after the conclusion 
                                        of the first 1-year period).
                                    ``(III) Families containing an 
                                individual who--
                                            ``(aa) is not described in 
                                        subclause (I) or (II); and
                                            ``(bb) has an annual income 
                                        for a fiscal year below 75 
                                        percent of the State median 
                                        income.''.
            (3) Set-asides for quality and expansion.--Section 
        658E(c)(3) of the Child Care and Development Block Grant Act of 
        1990 (42 U.S.C. 9858c(c)(3)) is amended in subparagraph (C), by 
        striking ``25 percent'' and inserting ``10 percent''.
            (4) Sliding fee scale.--Section 658E(c)(5) of the Child 
        Care and Development Block Grant Act of 1990 (42 U.S.C. 
        9858c(c)(5)) is amended by inserting ``described in subclauses 
        (II) and (III) of paragraph (3)(B)(ii)'' after ``families''.
            (5) Matching requirement for new funds.--

``SEC. 418. FUNDING FOR CHILD CARE.

    ``(a) General Child Care Entitlement.--
            ``(1) General entitlement.--Subject to the amount 
        appropriated under 658(B)(b), each State shall, for the purpose 
        of providing child care assistance, be entitled to payments 
        under a grant under this subsection for a fiscal year in an 
        amount equal to--
                    ``(A) the sum of the total amount required to be 
                paid to the State under former section 403 for fiscal 
                year 1994 with respect to amounts expended for child 
                care under section--
                            ``(i) 402(g) of this Act (as such section 
                        was in effect before October 1, 1995); and
                            ``(ii) 403(i) of this Act (as so in 
                        effect); or
                    ``(B) the average of the total amounts required to 
                be paid to the State for fiscal years 1992 through 1994 
                under the sections referred to in subparagraph (A);
            whichever is greater.
            ``(2) Remainder.--
                    ``(A) Grants.--The Secretary shall use any amounts 
                appropriated for a fiscal year under 658(B)(b)(3), and 
                remaining after the reservation described in paragraph 
                (3) and after grants are awarded under paragraph (1), 
                to make grants to States under this paragraph.
                    ``(B) Amount.--Subject to subparagraph (C), the 
                amount of a grant awarded to a State for a fiscal year 
                under this paragraph shall be based on the formula used 
                for determining the amount of Federal payments to the 
                State under section 658(o).
                    ``(C) Matching requirement.--The Secretary shall 
                pay to each eligible State in a fiscal year an amount, 
                under a grant under subparagraph (A), equal to the 
                Federal medical assistance percentage for such State 
                for fiscal year 1994 (as defined in section 1905(b)) of 
                so much of the expenditures by the State for child care 
                in such year as exceed the State set-aside for such 
                State under subparagraph (A) for such year and the 
                amount of State expenditures in fiscal year 1994 that 
                equal the non-Federal share for the programs described 
                in subparagraphs (A), (B) and (C) of paragraph (1).
            ``(3) Redistribution.--With respect to any fiscal year, if 
        the Secretary determines that amounts under any grant awarded 
        to a State under this subsection for such fiscal year will not 
        be used by such State for carrying out the purpose for which 
        the grant is made, the Secretary shall make such amounts 
        available for carrying out such purpose to 1 or more other 
        States which apply for such funds to the extent the Secretary 
        determines that such other States will be able to use such 
        additional amounts for carrying out such purpose. Such 
        available amounts shall be redistributed to a State pursuant to 
        section 402(i) (as such section was in effect before October 1, 
        1995) by substituting `the number of children residing in all 
        States applying for such funds' for `the number of children 
        residing in the United States in the second preceding fiscal 
        year'. Any amount made available to a State from an 
        appropriation for a fiscal year in accordance with the 
        preceding sentence shall, for purposes of this part, be 
        regarded as part of such State's payment (as determined under 
        this subsection) for such year.
    ``(e) Amounts Reserved for Indian Tribes.--The Secretary shall 
reserve not more than 3 percent of the amount appropriated under 
section 658B in each fiscal year for payments to Indian tribes and 
tribal organizations with applications approved under section 6580(c). 
The amounts reserved under the prior sentence shall be available to 
make grants to or enter into contracts with Indian tribes or tribal 
organizations consistent with section 6580(c) without a requirement of 
matching funds by the Indian tribes or tribal organizations.
    ``(f) Same Treatment as Allotments.--Amounts paid to a State or 
Indian tribe under subsections (d) and (e) shall be subject to the same 
requirements under this subchapter as amounts paid from the allotment 
under section 658O.''.
                    (B) Conforming amendments.--Section 658O of the 
                Child Care and Development Block Grant Act of 1990 (42 
                U.S.C. 9858m) is amended--
                            (i) in subsection (a)--
                                    (I) in paragraph (1), by striking 
                                ``this subchapter'' and inserting 
                                section 658B(a); and
                                    (II) in paragraph (2), by striking 
                                ``section 658B'' and inserting 
                                ``section 658B(a); and
                            (ii) in subsection (b)(1), by striking 
                        ``section 658B'' and inserting ``section 
                        658B(a)''.
            (6) Improving quality.--
                    (A) Increase in required funding.--Section 658G of 
                the Child Care and Development Block Grant Act of 1990 
                (42 U.S.C. 9858e) is amended by striking ``not less 
                than 20 percent''.
                    (B) Quality improvement incentive initiative.--
                Section 658G of the Child Care and Development Block 
                Grant Act of 1990 (42 U.S.C. 9858e) is amended--
                            (i) by striking ``A State'' and inserting 
                        ``(a) In General.--A State'';
                            (ii) by adding at the end the following new 
                        subparagraphs:
            ``(6) Before and after-school activities.--Increasing the 
        availability of before and after-school care.
            ``(7) Infant care.--Increasing the availability of child 
        care for infants under the age of 18 months.
            ``(8) Nontraditional work hours.--Increasing the 
        availability of child care between the hours of 5:00 p.m. and 
        8:00 a.m.'';
                            (iii) by adding at the end the following 
                        new subsection:
    ``(b) Quality Improvement Incentive Initiative.--
            ``(1) In general.--The Secretary shall establish a child 
        care quality improvement incentive initiative to make funds 
        available to States that demonstrate progress in the 
        implementation of--
                    ``(A) innovative teacher training programs such as 
                the Department of Defense staff development and 
                compensation program for child care personnel; or
                    ``(B) enhanced child care quality standards and 
                licensing and monitoring procedures.
            ``(2) Funding.--From the amounts made available for each 
        fiscal year under subsection (a), the Secretary shall reserve 
        not to exceed $250,000,000 in each such fiscal year to carry 
        out this subsection.''.
            (7) Repeal--Section 658H of the Child Care and Development 
        Block Grant Act of 1990 (42 U.S.C. 9858f) is repealed.
            (8) Payments.--Section 658J(a) of the Child Care and 
        Development Block Grant Act of 1990 (42 U.S.C. 9858h) is 
        amended by striking ``Subject to the availability of 
        appropriation, a'' and inserting ``A''.
            (9) Definition of poverty line.--Section 658P of the Child 
        Care and Development Block Grant Act of 1990 (42 U.S.C. 9858n) 
        is amended--
                    (A) by redesignating paragraphs (10) through (14) 
                as paragraphs (11) through (15), respectively; and
                    (B) by inserting after paragraph (9), the following 
                new paragraph:
            ``(10) Poverty line.--The term `poverty line' means the 
        poverty line (as such term is defined in section 673(2) of the 
        Community Services Block Grant Act (42 U.S.C. 9902(2)), 
        including any revision required by such section) that--
                    ``(A) in the case of a family of less than 4 
                individuals, is applicable to a family of the size 
                involved; and
                    ``(B) in the case of a family of 4 or more 
                individuals, is applicable to a family of 4 
                individuals.''.
    (c) Program Repeals.--
            (1) State dependent care grants.--Subchapter E of chapter 8 
        of subtitle A of title VI of the Omnibus Budget Reconciliation 
        Act of 1981 (42 U.S.C. 9871 et seq.) is repealed.
            (2) Child development associate scholarship assistance 
        act.--The Child Development Associate Scholarship Assistance 
        Act of 1985 (42 U.S.C. 10901 et seq.) is repealed.

SEC. 9206. CERTAIN FEDERAL ASSISTANCE INCLUDIBLE IN GROSS INCOME.

    (a) In General.--Part II of subchapter B of chapter 1 of the 
Internal Revenue Code of 1986 (relating to items specifically included 
in gross income) is amended by adding at the end the following new 
section:

``SEC. 91. CERTAIN FEDERAL ASSISTANCE.

    ``(a) In General.--Gross income shall include an amount equal to 
the specified Federal assistance received by the taxpayer during the 
taxable year.
    ``(b) Specified Federal Assistance.--For purposes of this section--
            ``(1) In general.--The term `specified Federal assistance' 
        means--
                    ``(A) supplemental security income benefits under 
                title XVI of the Social Security Act (including 
                supplemental security income benefits of the type 
                described in section 1616 of such Act or section 212 of 
                Public Law 93-66).''.
    (b) Reporting.--
            (1) In general.--Subpart B of part III of subchapter A of 
        chapter 61 of such Code is amended by adding at the end the 
        following new section:

``SEC. 6050Q. PAYMENTS OF CERTAIN FEDERAL ASSISTANCE.

    ``(a) Requirement of Reporting.--The appropriate official shall 
make a return, according to the forms and regulations prescribed by the 
Secretary, setting forth--
            ``(1) the aggregate amount of specified Federal assistance 
        paid to any individual during any calendar year, and
            ``(2) the name, address, and TIN of such individual.
    ``(b) Statements To Be Furnished to Persons With Respect to Whom 
Information Is Required.--Every person required to make a return under 
subsection (a) shall furnish to each individual whose name is required 
to be set forth in such return a written statement showing--
            ``(1) the aggregate amount of payments made to the 
        individual which are required to be shown on such return, and
            ``(2) the name of the agency making the payments.
The written statement required under the preceding sentence shall be 
furnished to the individual on or before January 31 of the year 
following the calendar year for which the return under subsection (a) 
was required to be made.
    ``(c) Definitions and Special Rule.--For purposes of this section--
            ``(1) Appropriate official.--The term `appropriate 
        official' means--
                    ``(A) in the case of specified Federal assistance 
                described in section 91(b)(1)(A), the head of the State 
                agency administering the plan under which such 
                assistance is provided,
                    ``(B) in the case of specified Federal assistance 
                described in section 91(b)(1)(B), the head of the State 
                agency administering the program under which such 
                assistance is provided, and
                    ``(C) in the case of specified Federal assistance 
                described in section 91(b)(1)(C), the Secretary of 
                Health and Human Services.
            ``(2) Specified federal assistance.--The term `specified 
        Federal assistance' has the meaning given such term by section 
        91(b).
            ``(3) Amounts treated as paid.--The rules of section 91(c) 
        shall apply for purposes of determining to whom specified 
        Federal assistance is paid.''
            (2) Penalties.--
                    (A) Subparagraph (B) of section 6724(d)(1) of such 
                Code is amended by redesignating clauses (ix) through 
                (xiv) as clauses (x) through (xv), respectively, and by 
                inserting after clause (viii) the following new clause:
                            ``(ix) section 6050Q (relating to payments 
                        of certain Federal assistance),''.
                    (B) Paragraph (2) of section 6724(d) of such Code 
                is amended by redesignating subparagraphs (Q) through 
                (T) as subparagraphs (R) through (U), respectively, and 
                by inserting after subparagraph (P) the following new 
                subparagraph:
                    ``(Q) section 6050Q(b) (relating to payments of 
                certain Federal assistance),''.
    (c) Supplemental Security Income Benefits Not Taken into Account 
for Purposes of the Earned Income Tax Credit.--Section 32 of the 
Internal Revenue Code of 1986 (relating to the earned income tax 
credit), is amended by adding at the end the following new subsection:
    ``(k) Adjusted Gross Income Determined Without Regard to Certain 
Federal Assistance.--For purposes of this section, adjusted gross 
income shall be determined without regard to any amount which is 
includible in gross income solely by reason of section 91.''
    (d) Clerical Amendments.--
            (1) The table of sections for part II of subchapter B of 
        chapter 1 of such Code is amended by adding at the end the 
        following new item:

                              ``Sec. 91. Certain Federal assistance.''.

            (2) The table of sections for subpart B of part III of 
        subchapter A of chapter 61 of such Code is amended by adding at 
        the end the following new item:


                              ``Sec. 6050Q. Payments of certain Federal 
                                        assistance.''.

    (e) Effective Date.--The amendments made by this section shall 
apply to benefits received after December 31, 1995, except that the 
amendment made by subsection (c) shall apply to taxable years beginning 
after such date.

SEC. 9207. DEPENDENT CARE CREDIT TO BE REFUNDABLE; HIGH-INCOME 
              TAXPAYERS INELIGIBLE FOR CREDIT.

    (a) Credit To Be Refundable.--
            (1) In general.--Section 21 of the Internal Revenue Code of 
        1986 (relating to expenses for household and dependent care 
        services necessary for gainful employment) is hereby moved to 
        subpart C of part IV of subchapter A of chapter 1 of such Code 
        (relating to refundable credits) and inserted after section 34.
            (2) Technical amendments.--
                    (A) Section 35 of such Code is redesignated as 
                section 36.
                    (B) Section 21 of such Code is redesignated as 
                section 35.
                    (C) Paragraph (1) of section 35(a) of such Code (as 
                redesignated by subparagraph (B)) is amended by 
                striking ``this chapter'' and inserting ``this 
                subtitle''.
                    (D) Subparagraph (C) of section 129(a)(2) of such 
                Code is amended by striking ``section 21(e)'' and 
                inserting ``section 35(e)''.
                    (E) Paragraph (2) of section 129(b) of such Code is 
                amended by striking ``section 21(d)(2)'' and inserting 
                ``section 35(d)(2)''.
                    (F) Paragraph (1) of section 129(e) of such Code is 
                amended by striking ``section 21(b)(2)'' and inserting 
                ``section 35(b)(2)''.
                    (G) Subsection (e) of section 213 of such Code is 
                amended by striking ``section 21'' and inserting 
                ``section 35''.
                    (H) Paragraph (2) of section 1324(b) of title 31, 
                United States Code, is amended by inserting before the 
                period ``, or from section 35 of such Code''.
                    (I) The table of sections for subpart C of part IV 
                of subchapter A of chapter 1 of such Code is amended by 
                striking the item relating to section 35 and inserting 
                the following:

                              ``Sec. 35. Expenses for household and 
                                        dependent care services 
                                        necessary for gainful 
                                        employment.
                              ``Sec. 36. Overpayments of tax.''.

                    (J) The table of sections for subpart A of such 
                part IV is amended by striking the item relating to 
                section 21.
    (b) Higher-Income Taxpayers Ineligible for Credit.--Subsection (a) 
of section 35 of such Code, as redesignated by subsection (a), is 
amended by adding at the end the following new paragraph:
            ``(3) Phaseout of credit for higher-income taxpayers.--The 
        amount of the credit which would (but for this paragraph) be 
        allowed by this section shall be reduced (but not below zero) 
        by an amount which bears the same ratio to such amount of 
        credit as the excess of the taxpayer's adjusted gross income 
        for the taxable year over $60,000 bears to $20,000. Any 
        reduction determined under the preceding sentence which is not 
        a multiple of $10 shall be rounded to the nearest multiple of 
        $10.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 1996.

                         Subtitle C--Work First

SEC. 9301. WORK FIRST PROGRAM.

    (a) Establishment and Operation of Program.--Title IV (42 U.S.C. 
601 et seq.) is amended by striking part F and inserting the following:

                      ``Part F--Work First Program

``SEC. 481. STATE ROLE.

    ``(a) Program Requirements.--Any State may establish and operate a 
work first program that meets the following requirements:
            ``(1) Objective.--The objective of the program is for each 
        program participant to find and hold a full-time unsubsidized 
        paid job, and for this goal to be achieved in a cost-effective 
        fashion.
            ``(2) Method.--The method of the program is to connect 
        recipients of assistance under the State plan approved under 
        part A with the private sector labor market as soon as possible 
        and offer them the support and skills necessary to remain in 
        the labor market. Each component of the program should be 
        permeated with an emphasis on employment and with an 
        understanding that minimum wage jobs are a stepping stone to 
        more highly paid employment. The program shall provide 
        recipients with education, training, job search and placement, 
        wage supplementation, temporary subsidized jobs, or such other 
        services that the State deems necessary to help a recipient 
        obtain private sector employment.
            ``(3) Job creation.--The creation of jobs, with an emphasis 
        on private sector jobs, shall be a component of the program and 
        shall be a priority for each State office with responsibilities 
        under the program.
            ``(4) Forms of assistance.--The State shall provide 
        assistance to participants in the program in the form of 
        education, training, job placement services (including vouchers 
        for job placement services), work supplementation programs, 
        temporary subsidized job creation, job counseling, assistance 
        in establishing microenterprises, or other services to provide 
        individuals with the support and skills necessary to obtain and 
        keep employment in the private sector.
            ``(5) 2-year limitation on participation.--The program 
        shall comply with section 487(b).
            ``(6) Agreements of mutual responsibility.--
                    ``(A) In general.--The State agency shall develop 
                an agreement of mutual responsibility for each program 
                participant, which will be an individualized 
                comprehensive plan, developed by the team and the 
                participant, to move the participant into a full-time 
                unsubsidized job. The agreement should detail the 
                education, training, or skills that the individual will 
                be receiving to obtain a full-time unsubsidized job, 
                and the obligations of the individual.
                    ``(B) Hours of participation requirement.--The 
                agreement shall provide that the individual shall 
                participate in activities in accordance with the 
                agreement for--
                            ``(i) not fewer than 20 hours per week 
                        during fiscal years 1997 and 1998;
                            ``(ii) not fewer than 25 hours per week 
                        during fiscal year 1999; and
                            ``(iii) not fewer than 30 hours per week 
                        thereafter.
            ``(7) Caseload participation rates.--The program shall 
        comply with section 488.
            ``(8) Nondisplacement.--The program may not be operated in 
        a manner that results in--
                    ``(A) the displacement of a currently employed 
                worker or position by a program participant;
                    ``(B) the replacement of an employee who has been 
                terminated with a program participant; or
                    ``(C) the replacement of an individual who is on 
                layoff from the same position given to a program 
                participant or any equivalent position.
    ``(b) Annual Reports.--
            ``(1) Compliance with performance measures.--Each State 
        that operates a program under this part shall submit to the 
        Secretary annual reports that compare the achievements of the 
        program with the performance-based measures established under 
        section 488(c).
            ``(2) Compliance with participation rates.--Each State that 
        operates a program under this part for a fiscal year shall 
        submit to the Secretary a report on the participation rate of 
        the State for the fiscal year.

``SEC. 482. REVAMPED JOBS PROGRAM.

    ``A State that establishes a program under this part may operate a 
program similar to the program known as the `GAIN Program' that has 
been operated by Riverside County, California, under Federal law in 
effect immediately before the date this part first applies to the State 
of California.

``SEC. 483. USE OF PLACEMENT COMPANIES.

    ``(a) In General.--A State that establishes a program under this 
part may enter into contracts with private companies (whether operated 
for profit or not for profit) for the placement of participants in the 
program in positions of full-time employment, preferably in the private 
sector, for wages sufficient to eliminate the need of such participants 
for cash assistance.
    ``(b) Required Contract Terms.--Each contract entered into under 
this section with a company shall meet the following requirements:
            ``(1) Provision of job readiness and support services.--The 
        contract shall require the company to provide, to any program 
        participant who presents to the company a voucher issued under 
        subsection (d) intensive personalized support and job readiness 
        services designed to prepare the individual for employment and 
        ensure the continued success of the individual in employment.
            ``(2) Payments.--
                    ``(A) In general.--The contract shall provide for 
                payments to be made to the company with respect to each 
                program participant who presents to the company a 
                voucher issued under subsection (d).
                    ``(B) Structure.--The contract shall provide for 
                the majority of the amounts to be paid under the 
                contract with respect to a program participant, to be 
                paid after the company has placed the participant in a 
                position of full-time employment and the participant 
                has been employed in the position for such period of 
                not less than 5 months as the State deems appropriate.
    ``(c) Competitive Bidding Required.--Contracts under this section 
shall be awarded only after competitive bidding.
    ``(d) Vouchers.--The State shall issue a voucher to each program 
participant whose agreement of mutual responsibility provides for the 
use of placement companies under this section, indicating that the 
participant is eligible for the services of such a company.

``SEC. 484. TEMPORARY SUBSIDIZED JOB CREATION.

    ``A State that establishes a program under this part may establish 
a program similar to the program known as `JOBS Plus' that has been 
operated by the State of Oregon under Federal law in effect immediately 
before the date this part first applies to the State of Oregon.

``SEC. 485. MICROENTERPRISE.

    ``(a) Grants and Loans to Nonprofit Organizations for the Provision 
of Technical Assistance, Training, and Credit to Low Income 
Entrepreneurs.--A State that establishes a program under this part may 
make grants and loans to nonprofit organizations to provide technical 
assistance, training, and credit to low income entrepreneurs for the 
purpose of establishing microenterprises.
    ``(b) Microenterprise Defined.--For purposes of this subsection, 
the term `microenterprise' means a commercial enterprise which has 5 or 
fewer employees, 1 or more of whom owns the enterprise.

``SEC. 486. WORK SUPPLEMENTATION PROGRAM.

    ``(a) In General.--A State that establishes a program under this 
part may institute a work supplementation program under which the 
State, to the extent it considers appropriate, may reserve the sums 
that would otherwise be payable under the State plan approved under 
part A to participants in the program and use the sums instead for the 
purpose of providing and subsidizing jobs for the participants (as 
described in subsection (c)(3) (A) and (B)), as an alternative to 
providing such assistance to the participants.
    ``(b) State Flexibility.--
            ``(1) Nothing in this part, or in any State plan approved 
        under part A, shall be construed to prevent a State from 
        operating (on such terms and conditions and in such cases as 
        the State may find to be necessary or appropriate) a work 
        supplementation program in accordance with this section and 
        section 484 (as in effect immediately before the date this part 
        first applies to the State).
            ``(2) Notwithstanding any other provision of law, a State 
        may adjust the levels of the standards of need under the State 
        plan as the State determines to be necessary and appropriate 
        for carrying out a work supplementation program under this 
        section.
            ``(3) Notwithstanding any other provision of law, a State 
        operating a work supplementation program under this section may 
        provide that the need standards in effect in those areas of the 
        State in which the program is in operation may be different 
        from the need standards in effect in the areas in which the 
        program is not in operation, and the State may provide that the 
        need standards for categories of recipients may vary among such 
        categories to the extent the State determines to be appropriate 
        on the basis of ability to participate in the work 
        supplementation program.
            ``(4) Notwithstanding any other provision of law, a State 
        may make such further adjustments in the amounts of assistance 
        provided under the plan to different categories of recipients 
        (as determined under paragraph (3)) in order to offset 
        increases in benefits from needs-related programs (other than 
        the State plan approved under part A) as the State determines 
        to be necessary and appropriate to further the purposes of the 
        work supplementation program.
            ``(5) In determining the amounts to be reserved and used 
        for providing and subsidizing jobs under this section as 
        described in subsection (a), the State may use a sampling 
        methodology.
            ``(6) Notwithstanding any other provision of law, a State 
        operating a work supplementation program under this section, 
        may reduce or eliminate the amount of earned income to be 
        disregarded under the State plan as the State determines to be 
        necessary and appropriate to further the purposes of the work 
        supplementation program.
    ``(c) Rules Relating to Supplemented Jobs.--
            ``(1) A work supplementation program operated by a State 
        under this section may provide that any individual who is an 
        eligible individual (as determined under paragraph (2)) shall 
        take a supplemented job (as defined in paragraph (3)) to the 
        extent that supplemented jobs are available under the program. 
        Payments by the State to individuals or to employers under the 
        work supplementation program shall be treated as expenditures 
        incurred by the State for temporary employment assistance under 
        part A except as limited by subsection (d).
            ``(2) For purposes of this section, an eligible individual 
        is an individual who is in a category which the State 
        determines should be eligible to participate in the work 
        supplementation program, and who would, at the time of 
        placement in the job involved, be eligible for assistance under 
        an approved State plan if the State did not have a work 
        supplementation program in effect.
            ``(3) For purposes of this subsection, a supplemented job 
        is--
                    ``(A) a job provided to an eligible individual by 
                the State or local agency administering the State plan 
                under part A; or
                    ``(B) a job provided to an eligible individual by 
                any other employer for which all or part of the wages 
                are paid by the State or local agency.
        A State may provide or subsidize under the program any job 
        which the State determines to be appropriate.
    ``(d) Cost Limitation.--The amount of the Federal payment to a 
State under section 413 for expenditures incurred in making payments to 
individuals and employers under a work supplementation program under 
this subsection shall not exceed an amount equal to the amount which 
would otherwise be payable under such section if the family of each 
individual employed in the program established in the State under this 
section had received the maximum amount of assistance providable under 
the State plan to such a family with no income (without regard to 
adjustments under subsection (b) of this section) for the lesser of--
            ``(1) 9 months; or
            ``(2) the number of months in which the individual was 
        employed in the program.
    ``(e) Rules of Interpretation.--
            ``(1) This section shall not be construed as requiring the 
        State or local agency administering the State plan to provide 
        employee status to an eligible individual to whom the State or 
        local agency provides a job under the work supplementation 
        program (or with respect to whom the State or local agency 
        provides all or part of the wages paid to the individual by 
        another entity under the program), or as requiring any State or 
        local agency to provide that an eligible individual filling a 
        job position provided by another entity under the program be 
        provided employee status by the entity during the first 13 
        weeks the individual fills the position.
            ``(2) Wages paid under a work supplementation program shall 
        be considered to be earned income for purposes of any provision 
        of law.
    ``(f) Preservation of Medicaid Eligibility.--Any State that chooses 
to operate a work supplementation program under this section shall 
provide that any individual who participates in the program, and any 
child or relative of the individual (or other individual living in the 
same household as the individual) who would be eligible for assistance 
under the State plan approved under part A if the State did not have a 
work supplementation program, shall be considered individuals receiving 
assistance under the State plan approved under part A for purposes of 
eligibility for medical assistance under the State plan approved under 
title XIX.

``SEC. 487. PARTICIPATION RULES.

    ``(a) In General.--Except as provided in subsection (b), a State 
that establishes a program under this part may require any individual 
receiving assistance under the State plan approved under part A to 
participate in the program.
    ``(b) 2-Year Limitation on Participation.--
            ``(1) In general.--Except as provided in paragraph (2), an 
        individual may not participate in a State program established 
        under this part if the individual has participated in the State 
        program established under this part for 24 months after the 
        date the individual first signed an agreement of mutual 
        responsibility under this part, excluding any month during 
        which the individual worked for an average of at least 25 hours 
        per week in a private sector job.
            ``(2) Authority to allow repeat participation.--
                    ``(A) In general.--Subject to subparagraph (B) of 
                this paragraph, a State may allow an individual who, by 
                reason of paragraph (1), would be prohibited from 
                participating in the State program established under 
                this part to participate in the program for such 
                additional period or periods as the State determines 
                appropriate.
                    ``(B) Limitation on percentage of repeat 
                participants.--
                            ``(i) In general.--Except as provided in 
                        clause (ii) of this subparagraph, the number of 
                        individuals allowed under subparagraph (A) to 
                        participate during a program year in a State 
                        program established under this part shall not 
                        exceed--
                                    ``(I) 10 percent of the total 
                                number of individuals who participated 
                                in the State program established under 
                                this part or the State program 
                                established under part H during the 
                                immediately preceding program year; or
                                    ``(II) in the case of fiscal year 
                                2004 or any succeeding fiscal year, 15 
                                percent of such total number of 
                                individuals.
                            ``(ii) Authority to increase limitation.--
                                    ``(I) Petition.--A State may 
                                request the Secretary to increase to 
                                not more than 15 percent the percentage 
                                limitation imposed by clause (i)(I) for 
                                a fiscal year before fiscal year 2004.
                                    ``(II) Authority to grant 
                                request.--The Secretary may approve a 
                                request made pursuant to subclause (I) 
                                if the Secretary deems it appropriate. 
                                The Secretary shall develop 
                                recommendations on the criteria that 
                                should be applied in evaluating 
                                requests under subclause (I).

``SEC. 488. CASELOAD PARTICIPATION RATES; PERFORMANCE MEASURES.

    ``(a) Participation Rates.--
            ``(1) Requirement.--A State that operates a program under 
        this part shall achieve a participation rate for the following 
        fiscal years of not less than the following percentage:

``Fiscal year:                                              Percentage:
    1997..........................................                  20 
    1998..........................................                  24 
    1999..........................................                  28 
    2000..........................................                  32 
    2001..........................................                  36 
    2002..........................................                  40 
    2003 or later.................................                  52.

            ``(2) Participation rate defined.--
                    ``(A) In general.--As used in this subsection, the 
                term `participation rate' means, with respect to a 
                State and a fiscal year, an amount equal to--
                            ``(i) the average monthly number of 
                        individuals who, during the fiscal year, 
                        participate in the State program established 
                        under this part or (if applicable) part G or H; 
                        divided by
                            ``(ii) the average monthly number of 
                        individuals who are not described in section 
                        402(c)(1)(D) and for whom an individual 
                        responsibility plan is in effect under section 
                        403 during the fiscal year.
                    ``(B) Special rule.--For each of the 1st 12 months 
                after an individual ceases to receive assistance under 
                a State plan approved under part A by reason of having 
                become employed for more than 25 hours per week in an 
                unsubsidized job in the private sector, the individual 
                shall be considered to be participating in the State 
                program established under this part, and to be an adult 
                recipient of such assistance, for purposes of 
                subparagraph (A).
            ``(3) State compliance reports.--Each State that operates a 
        program under this part for a fiscal year shall submit to the 
        Secretary a report on the participation rate of the State for 
        the fiscal year.
            ``(4) Effect of failure to meet participation rates.--
                    ``(A) In general.--If a State reports that the 
                State has failed to achieve the participation rate 
                required by paragraph (1) for the fiscal year, the 
                Secretary may make recommendations for changes in the 
                State program established under this part and (if the 
                State has established a program under part G) the State 
                program established under part G. The State may elect 
                to follow such recommendations, and shall demonstrate 
                to the Secretary how the State will achieve the 
                required participation rates.
                    ``(B) Second consecutive failure.--Notwithstanding 
                subparagraph (A), if a State fails to achieve the 
                participation rate required by paragraph (1) for 2 
                consecutive fiscal years, the Secretary may--
                            ``(i) require the State to make changes in 
                        the State program established under this part 
                        and (if the State has established a program 
                        under part G) the State program established 
                        under part G; and
                            ``(ii) reduce by 5 percent the amount 
                        otherwise payable to the State under section 
                        413.
    ``(b) Performance Standards.--The Secretary shall develop standards 
to be used to measure the effectiveness of the programs established 
under this part and part G in moving recipients of assistance under the 
State plan approved under part A into full-time unsubsidized 
employment.
    ``(c) Performance-Based Measures.--
            ``(1) Establishment.--The Secretary shall, by regulation, 
        establish measures of the effectiveness of the State programs 
        established under this part and under part G in moving 
        recipients of assistance under the State plan approved under 
        part A into full-time unsubsidized employment, based on the 
        performance of such programs.
            ``(2) Annual compliance reports.--Each State that operates 
        a program under this part shall submit to the Secretary annual 
        reports that compare the achievements of the program with the 
        performance-based measures established under paragraph (1).

``SEC. 489. FEDERAL ROLE.

    ``(a) Approval of State Plans.--
            ``(1) In general.--Within 60 days after the date a State 
        submits to the Secretary a plan that provides for the 
        establishment and operation of a work first program that meets 
        the requirements of section 481, the Secretary shall approve 
        the plan.
            ``(2) Authority to extend approval deadline.--The 60-day 
        deadline established in paragraph (1) with respect to a State 
        may be extended in accordance with an agreement between the 
        Secretary and the State.
    ``(b) Performance-Based Measures.--The Secretary shall, by 
regulation, establish measures of the effectiveness of the State 
program established under this part and (if the State has established a 
program under part G) the State program established under part G in 
moving recipients of assistance under the State plan approved under 
part A into full-time unsubsidized employment, based on the performance 
of such programs.
    ``(c) Effect of Failure To Meet Participation Rates.--
            ``(1) In general.--If a State reports that the State has 
        failed to achieve the participation rate required by section 
        488 for the fiscal year, the Secretary may make recommendations 
        for changes in the State program established under this part 
        and (if the State has established a program under part G) the 
        State program established under part G. The State may elect to 
        follow such recommendations, and shall demonstrate to the 
        Secretary how the State will achieve the required participation 
        rates.
            ``(2) Second consecutive failure.--Notwithstanding 
        paragraph (1), if the State has failed to achieve the 
        participation rates required by section 488 for 2 consecutive 
        fiscal years, the Secretary may require the State to make 
        changes in the State program established under this part and 
        (if the State has established a program under part G) the State 
        program established under part G.

                       ``Part G--Workfare Program

``SEC. 490. ESTABLISHMENT AND OPERATION OF PROGRAM.

    ``(a) In General.--A State that establishes a work first program 
under part F may establish and carry out a workfare program that meets 
the requirements of this part, unless the State has established a job 
placement voucher program under part H.
    ``(b) Objective.--The objective of the workfare program is for each 
program participant to find and hold a full-time unsubsidized paid job, 
and for this goal to be achieved in a cost-effective fashion.
    ``(c) Case Management Teams.--The State shall assign to each 
program participant a case management team that shall meet with the 
participant and assist the participant to choose the most suitable 
workfare job under subsection (e), (f), or (g) and to eventually obtain 
a full-time unsubsidized paid job.
    ``(d) Provision of Jobs.--The State shall provide each participant 
in the program with a community service job that meets the requirements 
of subsection (e) or a subsidized job that meets the requirements of 
subsection (f) or (g).
    ``(e) Community Service Jobs.--
            ``(1) In general.--Except as provided in paragraphs (2) and 
        (3), each participant shall work for not fewer than 30 hours 
        per week (or, at the option of the State, 20 hours per week 
        during fiscal years 1997 and 1998, not fewer than 25 hours per 
        week during fiscal year 1999, not fewer than 30 hours per week 
        during fiscal years 2000 and 2001, and not fewer than 35 hours 
        per week thereafter) in a community service job, and be paid at 
        a rate which is not greater than 75 percent (or, at the option 
        of the State, 100 percent) of the maximum amount of assistance 
        that may be provided under the State plan approved under part A 
        to a family of the same size and composition with no income.
            ``(2) Exception.--(A) If the participant has obtained 
        unsubsidized part-time employment in the private sector, the 
        State shall provide the participant with a part-time community 
        service job.
            ``(B) If the State provides a participant a part-time 
        community service job under subparagraph (A), the State shall 
        ensure that the participant works for not fewer than 30 hours 
        per week.
            ``(3) Wages not considered earned income.--Wages paid under 
        a workfare program shall not be considered to be earned income 
        for purposes of any provision of law.
            ``(4) Community service job defined.--For purposes of this 
        section, the term `community service job' means--
                    ``(A) a job provided to a participant by the State 
                administering the State plan under part A; or
                    ``(B) a job provided to a participant by any other 
                employer for which all or part of the wages are paid by 
                the State.
        A State may provide or subsidize under the program any job 
        which the State determines to be appropriate.
    ``(f) Temporary Subsidized Job Creation.--A State that establishes 
a workfare program under this part may establish a program similar to 
the program operated by the State of Oregon, which is known as `JOBS 
Plus'.
    ``(g) Work Supplementation Program.--
            ``(1) In general.--A State that establishes a workfare 
        program under this part may institute a work supplementation 
        program under which the State, to the extent it considers 
        appropriate, may reserve the sums that would otherwise be 
        payable to participants in the program as a community service 
        minimum wage and use the sums instead for the purpose of 
        providing and subsidizing private sector jobs for the 
        participants.
            ``(2) Employer agreement.--An employer who provides a 
        private sector job to a participant under paragraph (1) shall 
        agree to provide to the participant an amount in wages equal to 
        the poverty threshold for a family of three.
    ``(h) Job Search Requirement.--The State shall require each 
participant to spend a minimum of 5 hours per week on activities 
related to securing unsubsidized full-time employment in the private 
sector.
    ``(i) Duration of Participation.--
            ``(1) In general.--Except as provided in paragraph (2), an 
        individual may not participate for more than 2 years in a 
        workfare program under this part.
            ``(2) Authority to allow repeated participation.--
                    ``(A) In general.--Subject to subparagraph (B), a 
                State may allow an individual who, by reason of 
                paragraph (1), would be prohibited from participating 
                in the State program established under this part to 
                participate in the program for such additional period 
                or periods as the State determines appropriate.
                    ``(B) Limitation on percentage of repeat 
                participants.--
                            ``(i) In general.--Except as provided in 
                        clause (ii), the number of individuals allowed 
                        under subparagraph (A) to participate during a 
                        program year in a State program established 
                        under this part shall not exceed 10 percent of 
                        the total number of individuals who 
                        participated in the program during the 
                        immediately preceding program year.
                            ``(ii) Authority to increase limitation.--
                                    ``(I) Petition.--A State may 
                                request the Secretary to increase the 
                                percentage limitation imposed by clause 
                                (i) to not more than 15 percent.
                                    ``(II) Authority to grant 
                                request.--The Secretary may approve a 
                                request made pursuant to subclause (I) 
                                if the Secretary deems it appropriate. 
                                The Secretary shall develop 
                                recommendations on the criteria that 
                                should be applied in evaluating 
                                requests under subclause (I).
    ``(j) Use of Placement Companies.--A State that establishes a 
workfare program under this part may enter into contracts with private 
companies (whether operated for profit or not for profit) for the 
placement of participants in the program in positions of full-time 
employment, preferably in the private sector, for wages sufficient to 
eliminate the need of such participants for cash assistance in 
accordance with section 483.
    ``(k) Maximum of 3 Community Service Jobs.--A program participant 
may not receive more than 3 community service jobs under the program.

                ``Part H--Job Placement Voucher Program

``SEC. 490A. JOB PLACEMENT VOUCHER PROGRAM.

    ``A State that is not operating a workfare program under part G may 
establish a job placement voucher program that meets the following 
requirements:
            ``(1) The program shall offer each program participant a 
        voucher which the participant may use to obtain employment in 
        the private sector.
            ``(2) An employer who receives a voucher issued under the 
        program from an individual may redeem the voucher at any time 
        after the individual has been employed by the employer for 6 
        months, unless another employee of the employer was displaced 
        by the employment of the individual.
            ``(3) Upon presentation of a voucher by an employer to the 
        State agency responsible for the administration of the program, 
        the State agency shall pay to the employer an amount equal to 
        50 percent of the total amount of assistance provided under the 
        State plan approved under part A to the family of which the 
        individual is a member for the most recent 12 months for which 
        the family was eligible for such assistance.''.
    (c) Funding.--Section 413(a), as added by section 9101(a) of this 
Act, is amended--
            (1) by striking ``Subject to'' and inserting the following:
            ``(1) In general.--Subject to''; and
            (2) by inserting after and below the end the following:
            ``(2) Work first and other programs.--(A) Each State that 
        is operating a program in accordance with a plan approved under 
        part F and a program in accordance with part G or H shall be 
        entitled to payments under paragraph (3) for any fiscal year in 
        an amount equal to the sum of the applicable percentages 
        (specified in such paragraph) of its expenditures to carry out 
        such programs (subject to limitations prescribed by or pursuant 
        to such parts or this part on expenditures that may be included 
        for purposes of determining payment under paragraph (3)), but 
        such payments for any fiscal year in the case of any State may 
        not exceed the limitation determined under subparagraph (B) 
        with respect to the State.
            ``(B) The limitation determined under this subparagraph 
        with respect to a State for any fiscal year is the amount that 
        bears the same ratio to the amount specified in subparagraph 
        (C) for such fiscal year as the average monthly number of adult 
        recipients (as defined in subparagraph (D)) in the State in the 
        preceding fiscal year bears to the average monthly number of 
        such recipients in all the States for such preceding year.
            ``(C)(i) The amount specified in this subparagraph is--
                    ``(I) $1,600,000,000 for fiscal year 1997;
                    ``(II) $1,600,000,000 for fiscal year 1998;
                    ``(III) $1,900,000,000 for fiscal year 1999;
                    ``(IV) $2,500,000,000 for fiscal year 2000; and
                    ``(V) $3,200,000,000 for fiscal year 2001; and
                    ``(VI) $4,700,000,000 for fiscal year 2002; and
                    ``(VII) the amount determined under clause (ii) for 
                fiscal year 2003 and each succeeding fiscal year.
            ``(ii) The amount determined under this clause for a fiscal 
        year is the product of the following:
                    ``(I) The amount specified in this subparagraph for 
                the immediately preceding fiscal year.
                    ``(II) 1.00 plus the percentage (if any) by which--
                            ``(aa) the average of the Consumer Price 
                        Index (as defined in section 1(f)(5) of the 
                        Internal Revenue Code of 1986) for the most 
                        recent 12-month period for which such 
                        information is available; exceeds
                            ``(bb) the average of the Consumer Price 
                        Index (as so defined) for the 12-month period 
                        ending on June 30 of the 2nd preceding fiscal 
                        year.
                    ``(III) The amount that bears the same ratio to the 
                amount specified in this subparagraph for the 
                immediately preceding fiscal year as the number of 
                individuals whom the Secretary estimates will 
                participate in programs operated under part F, G, or H 
                during the fiscal year bears to the total number of 
                individuals who participated in such programs during 
                such preceding fiscal year.
            ``(D) For purposes of this paragraph, the term `adult 
        recipient' in the case of any State means an individual other 
        than a dependent child (unless such child is the custodial 
        parent of another dependent child) whose needs are met (in 
        whole or in part) with assistance provided under the State plan 
        approved under this part.
            ``(E) For purposes of subparagraph (D), the term `dependent 
        child' means a needy child (i) who has been deprived of 
        parental support or care by reason of the death, continued 
        absence from the home (other than absence occasioned solely by 
        reason of the performance of active duty in the uniformed 
        services of the United States), or physical or mental 
        incapacity of a parent, and who is living with his father, 
        mother, grandfather, grandmother, brother, sister, stepfather, 
        stepmother, stepbrother, stepsister, uncle, aunt, first cousin, 
        nephew, or niece, in a place of residence maintained by one or 
        more of such relatives as his or their own home, and (ii) who 
        is (I) under the age of eighteen, or (II) at the option of the 
        State, under the age of nineteen and a full-time student in a 
        secondary school (or in the equivalent level of vocational or 
        technical training), if, before he attains age nineteen, he may 
        reasonably be expected to complete the program of such 
        secondary school (or such training).
            ``(F) For purposes of subparagraph (E), the term `relative 
        with whom any dependent child is living' means the individual 
        who is one of the relatives specified in subparagraph (E) and 
        with whom such child is living (within the meaning of such 
        subsection) in a place of residence maintained by such 
        individual (himself or together with any one or more of the 
        other relatives so specified) as his (or their) own home.
            ``(3)(A) In lieu of any payment under paragraph (1) 
        therefor, the Secretary shall pay to each State that is 
        operating a program in accordance with a plan approved under 
        part F and a program in accordance with part G or H, with 
        respect to expenditures by the State to carry out such 
        programs, an amount equal to--
                    ``(i) with respect to so much of such expenditures 
                in a fiscal year as do not exceed the State's 
                expenditures in the fiscal year 1987 with respect to 
                which payments were made to such State from its 
                allotment for such fiscal year pursuant to part C of 
                this title as then in effect, 90 percent; and
                    ``(ii) with respect to so much of such expenditures 
                in a fiscal year as exceed the amount described in 
                clause (i)--
                            ``(I) 50 percent, in the case of 
                        expenditures for administrative costs made by a 
                        State in operating such programs for such 
                        fiscal year (other than the personnel costs for 
                        staff employed full-time in the operation of 
                        such program) and the costs of transportation 
                        and other work-related supportive services; and
                            ``(II) 60 percent or the Federal medical 
                        assistance percentage (as defined in the last 
                        sentence of section 1118), whichever is the 
                        greater, in the case of expenditures made by a 
                        State in operating such programs for such 
                        fiscal year (other than for costs described in 
                        subclause (I)).
            ``(B) With respect to the amount for which payment is made 
        to a State under subparagraph (A)(i), the State's expenditures 
        for the costs of operating such programs may be in cash or in 
        kind, fairly evaluated.
            ``(C) Not more than 10 percent of the amount payable to a 
        State under this paragraph for a quarter may be for 
        expenditures made during the quarter with respect to program 
        participants who are not eligible for assistance under the 
        State plan approved under this part.''.
    (d) Secretary's Special Adjustment Fund.--Section 413(a), as added 
by section 9101(a) of this Act, is amended by adding at the end the 
following:
            ``(4) Secretary's special adjustment fund.--(A) There shall 
        be available to the Secretary from the amount appropriated for 
        payments under paragraph (2) for States' programs under parts F 
        and G for fiscal year 1996, $300,000,000 for special 
        adjustments to States' limitations on Federal payments for such 
        programs.
            ``(B) A State may, not later than March 1 and September 1 
        of each fiscal year, submit to the Secretary a request to 
        adjust the limitation on payments under this section with 
        respect to its program under part F (and, in fiscal years after 
        1997) its program under part G for the following fiscal year. 
        The Secretary shall only consider such a request from a State 
        which has, or which demonstrates convincingly on the basis of 
        estimates that it will, submit allowable claims for Federal 
        payment in the full amount available to it under paragraph (2) 
        in the current fiscal year and obligated 95 percent of its full 
        amount in the prior fiscal year. The Secretary shall by 
        regulation prescribe criteria for the equitable allocation 
        among the States of Federal payments pursuant to adjustments of 
        the limitations referred to in the preceding sentence in the 
        case where the requests of all States that the Secretary finds 
        reasonable exceed the amount available, and, within 30 days 
        following the dates specified in this paragraph, will notify 
        each State whether one or more of its limitations will be 
        adjusted in accordance with the State's request and the amount 
        of the adjustment (which may be some or all of the amount 
        requested).
            ``(C) The Secretary may adjust the limitation on Federal 
        payments to a State for a fiscal year under paragraph (2), and 
        upon a determination by the Secretary that (and the amount by 
        which) a State's limitation should be raised, the amount 
        specified in such paragraph shall be considered to be so 
        increased for the following fiscal year.
            ``(D) The amount made available under subparagraph (A) for 
        special adjustments shall remain available to the Secretary 
        until expended. That amount shall be reduced by the sum of the 
        adjustments approved by the Secretary in any fiscal year, and 
        the amount shall be increased in a fiscal year by the amount by 
        which all States' limitations under paragraph (2) of this 
        subsection and section 2008 for a fiscal year exceeded the sum 
        of the Federal payments under such provisons of law for such 
        fiscal year, but for fiscal years after 1997, such amount at 
        the end of such fiscal year shall not exceed $400,000,000.''.
    (e) Conforming Amendments.--
            (1) Section 1115(b)(2)(A) (42 U.S.C. 1315(b)(2)(A)) is 
        amended by striking ``, and 402(a)(19) (relating to the work 
        incentive program)''.
            (2) Section 1108 (42 U.S.C. 1308) is amended--
                    (A) in subsection (a), by striking ``or, in the 
                case of part A of title IV, section 403(k)''; and
                    (B) in subsection (d), by striking ``(exclusive of 
                any amounts on account of services and items to which, 
                in the case of part A of such title, section 403(k) 
                applies)''.
            (3) Section 1902(a)(10)(A)(i)(I) (42 U.S.C. 
        1396a(a)(19)(A)(i)(I)) is amended--
                    (A) by striking ``402(a)(37), 406(h), or''; and
                    (B) by striking ``482(e)(6)'' and inserting 
                ``486(f)''.
            (4) Section 1928(a)(1) (42 U.S.C. 1396s(a)(1)) is amended 
        by striking ``482(e)(6)'' and inserting ``486(f)''.
    (f) Intent of the Congress.--The Congress intends for State 
activities under section 484 of the Social Security Act (as added by 
the amendment made by section 9301(a) of this Act) to emphasize the use 
of the funds that would otherwise be used to provide individuals with 
assistance under part A of title IV of the Social Security Act and with 
food stamp benefits under the Food Stamp Act of 1977, to subsidize the 
wages of such individuals in temporary jobs.
    (g) Sense of the Congress.--It is the sense of the Congress that 
States should target individuals who have not attained 25 years of age 
for participation in the program established by the State under part F 
of title IV of the Social Security Act (as added by the amendment made 
by section 9301(a) of this section) in order to break the cycle of 
welfare dependency.

SEC. 9302. REGULATIONS.

    The Secretary of Health and Human Services shall prescribe such 
regulations as may be necessary to implement the amendments made by 
this subtitle.

SEC. 9303. APPLICABILITY TO STATES.

    (a) State Option to Accelerate Applicability.--If a State formally 
notifies the Secretary of Health and Human Services that the State 
desires to accelerate the applicability to the State of the amendments 
made by this subtitle, the amendments shall apply to the State on and 
after such earlier date as the State may select.
    (b) State Option to Delay Applicability Until Waivers Expire.--The 
amendments made by this subtitle shall not apply to a State with 
respect to which there is in effect a waiver issued under section 1115 
of the Social Security Act for the State program established under part 
F of title IV of such Act, until the waiver expires, if the State 
formally notifies the Secretary of Health and Human Services that the 
State desires to so delay such effective date.
    (c) Authority of the Secretary of Health and Human Services to 
Delay Applicability to a State.--If a State formally notifies the 
Secretary of Health and Human Services that the State desires to delay 
the applicability to the State of the amendments made by this title, 
the amendments shall apply to the State on and after any later date 
agreed upon by the Secretary and the State.

     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.

    (a) State Law Requirements.--Section 466(a) (42 U.S.C. 666(a)) is 
amended by inserting after paragraph (11) the following:
            ``(12) Use of central case registry and centralized 
        collections unit.--Procedures under which--
                    ``(A) every child support order established or 
                modified in the State on or after October 1, 1998, is 
                recorded in the central case registry established in 
                accordance with section 454A(e); and
                    ``(B) child support payments are collected through 
                the centralized collections unit established in 
                accordance with section 454B--
                            ``(i) on and after October 1, 1998, under 
                        each order subject to wage withholding under 
                        section 466(b); and
                            ``(ii) on and after October 1, 1999, under 
                        each other order required to be recorded in 
                        such central case registry under this paragraph 
                        or section 454A(e), except as provided in 
                        subparagraph (C); and
                    ``(C)(i) parties subject to a child support order 
                described in subparagraph (B)(ii) may opt out of the 
                procedure for payment of support through the 
                centralized collections unit (but not the procedure for 
                inclusion in the central case registry) by filing with 
                the State agency a written agreement, signed by both 
                parties, to an alternative payment procedure; and
                    ``(ii) an agreement described in clause (i) becomes 
                void whenever either party advises the State agency of 
                an intent to vacate the agreement.''.
    (b) State Plan Requirements.--Section 454 (42 U.S.C. 654) is 
amended--
            (1) by striking paragraph (4) and inserting the following:
            ``(4) provide that such State will undertake--
                    ``(A) to provide appropriate services under this 
                part to--
                            ``(i) each child with respect to whom an 
                        assignment is effective under section 
                        403(b)(1)(E)(i), 471(a)(17), or 1912 (except in 
                        cases where the State agency determines, in 
                        accordance with paragraph (25), that it is 
                        against the best interests of the child to do 
                        so); and
                            ``(ii) each child not described in clause 
                        (i)--
                                    ``(I) with respect to whom an 
                                individual applies for such services; 
                                and
                                    ``(II) (on and after October 1, 
                                1998) each child with respect to whom a 
                                support order is recorded in the 
                                central State case registry established 
                                under section 454A, regardless of 
                                whether application is made for 
                                services under this part; and
                    ``(B) to enforce the support obligation established 
                with respect to the custodial parent of a child 
                described in subparagraph (A) unless the parties to the 
                order which establishes the support obligation have 
                opted, in accordance with section 466(a)(12)(C), for an 
                alternative payment procedure.''; and
            (2) in paragraph (6)--
                    (A) by striking subparagraph (A) and inserting the 
                following:
                    ``(A) services under the State plan shall be made 
                available to nonresidents on the same terms as to 
                residents;'';
                    (B) in subparagraph (B)--
                            (i) by inserting ``on individuals not 
                        receiving assistance under part A'' after 
                        ``such services shall be imposed''; and
                            (ii) by inserting ``but no fees or costs 
                        shall be imposed on any absent or custodial 
                        parent or other individual for inclusion in the 
                        central State registry maintained pursuant to 
                        section 454A(e)''; and
                    (C) in each of subparagraphs (B), (C), and (D)--
                            (i) by indenting such subparagraph and 
                        aligning its left margin with the left margin 
                        of subparagraph (A); and
                            (ii) by striking the final comma and 
                        inserting a semicolon.
    (c) Conforming Amendments.--
            (1) Section 452(g)(2)(A) (42 U.S.C. 652(g)(2)(A)) is 
        amended by striking ``454(6)'' each place it appears and 
        inserting ``454(4)(A)(ii)''.
            (2) Section 454(23) (42 U.S.C. 654(23)) is amended, 
        effective October 1, 1998, by striking ``information as to any 
        application fees for such services and''.
            (3) Section 466(a)(3)(B) (42 U.S.C. 666(a)(3)(B)) is 
        amended by striking ``in the case of overdue support which a 
        State has agreed to collect under section 454(6)'' and 
        inserting ``in any other case''.
            (4) Section 466(e) (42 U.S.C. 666(e)) is amended by 
        striking ``or (6)''.

SEC. 9402. DISTRIBUTION OF PAYMENTS.

    (a) Distributions Through State Child Support Enforcement Agency to 
Former Assistance Recipients.--Section 454(5) (42 U.S.C. 654(5)) is 
amended--
            (1) in subparagraph (A)--
                    (A) by striking ``section 402(a)(26) is 
                effective,'' and inserting ``section 403(b)(1)(E)(i) is 
                effective, except as otherwise specifically provided in 
                section 464 or 466(a)(3),''; and
                    (B) by striking ``except that'' and all that 
                follows through the semicolon; and
            (2) in subparagraph (B), by striking ``, except'' and all 
        that follows through ``medical assistance''.
    (b) Distribution to a Family Currently Receiving Temporary 
Employment Assistance.--Section 457 (42 U.S.C. 657) is amended--
            (1) by striking subsection (a) and redesignating subsection 
        (b) as subsection (a);
            (2) in subsection (a) (as so redesignated)--
                    (A) in the matter preceding paragraph (2), to read 
                as follows:
    ``(a) In the Case of a Family Receiving TEA.--Amounts collected 
under this part during any month as support of a child who is receiving 
assistance under part A (or a parent or caretaker relative of such a 
child) shall (except in the case of a State exercising the option under 
subsection (b)) be distributed as follows:
            ``(1) an amount equal to the amount that will be 
        disregarded pursuant to section 402(d)(2)(C) shall be taken 
        from each of--
                    ``(A) the amounts received in a month which 
                represent payments for that month; and
                    ``(B) the amounts received in a month which 
                represent payments for a prior month which were made by 
                the absent parent in that prior month;
        and shall be paid to the family without affecting its 
        eligibility for assistance or decreasing any amount otherwise 
        payable as assistance to such family during such month;'';
                    (B) in paragraph (4), by striking ``or (B)'' and 
                all that follows through the period and inserting ``; 
                then (B) from any remainder, amounts equal to 
                arrearages of such support obligations assigned, 
                pursuant to part A, to any other State or States shall 
                be paid to such other State or States and used to pay 
                any such arrearages (with appropriate reimbursement of 
                the Federal Government to the extent of its 
                participation in the financing); and then (C) any 
                remainder shall be paid to the family.''; and
            (3) by inserting after subsection (a) (as so redesignated) 
        the following new subsection:
    ``(b) Alternative Distribution in Case of Family Receiving TEA.--In 
the case of a State electing the option under this subsection, amounts 
collected as described in subsection (a) shall be distributed as 
follows:
            ``(1) an amount equal to the amount that will be 
        disregarded pursuant to section 402(d)(2)(C) shall be taken 
        from each of--
                    ``(A) the amounts received in a month which 
                represent payments for that month; and
                    ``(B) the amounts received in a month which 
                represent payments for a prior month which were made by 
                the absent parent in that prior month;
        and shall be paid to the family without affecting its 
        eligibility for assistance or decreasing any amount otherwise 
        payable as assistance to such family during such month;
            ``(2) second, from any remainder, amounts equal to the 
        balance of support owed for the current month shall be paid to 
        the family;
            ``(3) third, from any remainder, amounts equal to 
        arrearages of such support obligations assigned, pursuant to 
        part A, to the State making the collection shall be retained 
        and used by such State to pay any such arrearages (with 
        appropriate reimbursement of the Federal Government to the 
        extent of its participation in the financing);
            ``(4) fourth, from any remainder, amounts equal to 
        arrearages of such support obligations assigned, pursuant to 
        part A, to any other State or States shall be paid to such 
        other State or States and used to pay any such arrearages (with 
        appropriate reimbursement of the Federal Government to the 
        extent of its participation in the financing); and
            ``(5) fifth, any remainder shall be paid to the family.''.
    (c) Distribution to a Family Not Receiving TEA.--Section 457(c) (42 
U.S.C. 657(c)) is amended to read as follows:
    ``(c) Distributions in Case of Family Not Receiving TEA.--Amounts 
collected by a State agency under this part during any month as support 
of a child who is not receiving assistance under part A (or of a parent 
or caretaker relative of such a child) shall (subject to the remaining 
provisions of this section) be distributed as follows:
            ``(1) first, amounts equal to the total of such support 
        owed for such month shall be paid to the family;
            ``(2) second, from any remainder, amounts equal to 
        arrearages of such support obligations for months during which 
        such child did not receive assistance under part A shall be 
        paid to the family;
            ``(3) third, from any remainder, amounts equal to 
        arrearages of such support obligations assigned to the State 
        making the collection pursuant to part A shall be retained and 
        used by such State to pay any such arrearages (with appropriate 
        reimbursement of the Federal Government to the extent of its 
        participation in the financing); and
            ``(4) fourth, from any remainder, amounts equal to 
        arrearages of such support obligations assigned to any other 
        State pursuant to part A shall be paid to such other State or 
        States, and used to pay such arrearages, in the order in which 
        such arrearages accrued (with appropriate reimbursement of the 
        Federal Government to the extent of its participation in the 
        financing).''.
    (d) Distribution to a Child Receiving Assistance Under Title IV-
E.--Section 457(d) (42 U.S.C. 657(d)) is amended, in the matter 
preceding paragraph (1), by striking ``Notwithstanding the preceding 
provisions of this section, amounts'' and inserting the following:
    ``(d) Distributions in Case of a Child Receiving Assistance Under 
Title IV-E.--Amounts''.
    (e) Regulations.--The Secretary of Health and Human Services shall 
promulgate regulations under part A of title IV of the Social Security 
Act, establishing standards applicable to States electing the 
alternative formula under section 457(b) of such Act for distribution 
of collections on behalf of families receiving temporary employment 
assistance, designed to minimize irregular monthly payments to such 
families.
    (f) Clerical Amendments.--Section 454 (42 U.S.C. 654) is amended--
            (1) in paragraph (11)--
                    (A) by striking ``(11)'' and inserting ``(11)(A)''; 
                and
                    (B) by inserting after the semicolon ``and''; and
            (2) by redesignating paragraph (12) as subparagraph (B) of 
        paragraph (11).
    (g) Effective Dates.--
            (1) In general.--Except as otherwise provided in this 
        subsection, the amendments made by this section shall become 
        effective on October 1, 1996.
            (2) Family not receiving tea.--The amendment made by 
        subsection (c) shall become effective on October 1, 1999.
            (3) Special rules.--
                    (A) Applicability.--A State may elect to have the 
                amendments made by any subsection of this section 
                become effective only with respect to child support 
                cases beginning on or after the effective date of such 
                subsection.
                    (B) Delayed implementation.--A State may elect to 
                have the amendments made by this section (other than 
                subsection (c)) become effective on a date later than 
                October 1, 1996, which date shall coincide with the 
                operation of the single statewide automated data 
                processing and information retrieval system required by 
                section 454A of the Social Security Act (as added by 
                section 9415(a)(2) of this Act) and the State 
                centralized collection unit required by section 454B of 
                the Social Security Act (as added by section 9422(b) of 
                this Act).

SEC. 9403. DUE PROCESS RIGHTS.

    (a) In General.--Section 454 (42 U.S.C. 654), as amended by section 
9402(f) of this Act, is amended by inserting after paragraph (11) the 
following new paragraph:
            ``(12) provide for procedures to ensure that--
                    ``(A) individuals who are applying for or receiving 
                services under this part, or are parties to cases in 
                which services are being provided under this part--
                            ``(i) receive notice of all proceedings in 
                        which support obligations might be established 
                        or modified; and
                            ``(ii) receive a copy of any order 
                        establishing or modifying a child support 
                        obligation, or (in the case of a petition for 
                        modification) a notice of determination that 
                        there should be no change in the amount of the 
                        child support award, within 14 days after 
                        issuance of such order or determination;
                    ``(B) individuals applying for or receiving 
                services under this part have access to a fair hearing 
                that meets standards established by the Secretary and 
                ensures prompt consideration and resolution of 
                complaints (but the resort to such procedure shall not 
                stay the enforcement of any support order); and
                    ``(C) individuals adversely affected by the 
                establishment or modification of (or, in the case of a 
                petition for modification, the determination that there 
                should be no change in) a child support order shall be 
                afforded not less than 30 days after the receipt of the 
                order or determination to initiate proceedings to 
                challenge such order or determination;''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
become effective on October 1, 1997.

SEC. 9404. PRIVACY SAFEGUARDS.

    (a) State Plan Requirement.--Section 454 (42 U.S.C. 454) is 
amended--
            (1) by striking ``and'' at the end of paragraph (23);
            (2) by striking the period at the end of paragraph (24) and 
        inserting ``; and''; and
            (3) by adding after paragraph (24) the following:
            ``(25) will have in effect safeguards applicable to all 
        sensitive and confidential information handled by the State 
        agency designed to protect the privacy rights of the parties, 
        including--
                    ``(A) safeguards against unauthorized use or 
                disclosure of information relating to proceedings or 
                actions to establish paternity, or to establish or 
                enforce support;
                    ``(B) prohibitions on the release of information on 
                the whereabouts of one party to another party against 
                whom a protective order with respect to the former 
                party has been entered; and
                    ``(C) prohibitions on the release of information on 
                the whereabouts of one party to another party if the 
                State has reason to believe that the release of the 
                information may result in physical or emotional harm to 
                the former party.''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
become effective on October 1, 1997.

             CHAPTER 2--PROGRAM ADMINISTRATION AND FUNDING

SEC. 9411. FEDERAL MATCHING PAYMENTS.

    (a) Increased Base Matching Rate.--Section 455(a)(2) (42 U.S.C. 
655(a)(2)) is amended to read as follows:
            ``(2) The applicable percent for a quarter for purposes of 
        paragraph (1)(A) is--
                    ``(A) for fiscal year 1997, 69 percent,
                    ``(B) for fiscal year 1998, 72 percent, and
                    ``(C) for fiscal year 1999 and succeeding fiscal 
                years, 75 percent.''.
    (b) Maintenance of Effort.--Section 455 (42 U.S.C. 655) is 
amended--
            (1) in subsection (a)(1), in the matter preceding 
        subparagraph (A), by striking ``From'' and inserting ``Subject 
        to subsection (c), from''; and
            (2) by inserting after subsection (b) the following new 
        subsection:
    ``(c) Maintenance of Effort.--Notwithstanding the provisions of 
subsection (a), total expenditures for the State program under this 
part for fiscal year 1997 and each succeeding fiscal year, reduced by 
the percentage specified for such fiscal year under subsection 
(a)(2)(A), (B), or (C)(i), shall not be less than such total 
expenditures for fiscal year 1996, reduced by 66 percent.''.

SEC. 9412. PERFORMANCE-BASED INCENTIVES AND PENALTIES.

    (a) Incentive Adjustments to Federal Matching Rate.--Section 458 
(42 U.S.C. 658) is amended to read as follows:

                ``incentive adjustments to matching rate

    ``Sec. 458. (a) Incentive Adjustment.--(1) In General.--In order to 
encourage and reward State child support enforcement programs which 
perform in an effective manner, the Federal matching rate for payments 
to a State under section 455(a)(1)(A), for each fiscal year beginning 
on or after October 1, 1998, shall be increased by a factor reflecting 
the sum of the applicable incentive adjustments (if any) determined in 
accordance with regulations under this section with respect to 
Statewide paternity establishment and to overall performance in child 
support enforcement.
    ``(2) Standards.--(A) In General.--The Secretary shall specify in 
regulations--
            ``(i) the levels of accomplishment, and rates of 
        improvement as alternatives to such levels, which States must 
        attain to qualify for incentive adjustments under this section; 
        and
            ``(ii) the amounts of incentive adjustment that shall be 
        awarded to States achieving specified accomplishment or 
        improvement levels, which amounts shall be graduated, ranging 
        up to--
                    ``(I) 5 percentage points, in connection with 
                Statewide paternity establishment; and
                    ``(II) 10 percentage points, in connection with 
                overall performance in child support enforcement.
    ``(B) Limitation.--In setting performance standards pursuant to 
subparagraph (A)(i) and adjustment amounts pursuant to subparagraph 
(A)(ii), the Secretary shall ensure that the aggregate number of 
percentage point increases as incentive adjustments to all States do 
not exceed such aggregate increases as assumed by the Secretary in 
estimates of the cost of this section as of June 1995, unless the 
aggregate performance of all States exceeds the projected aggregate 
performance of all States in such cost estimates.
    ``(3) Determination of Incentive Adjustment.--The Secretary shall 
determine the amount (if any) of incentive adjustment due each State on 
the basis of the data submitted by the State pursuant to section 
454(15)(B) concerning the levels of accomplishment (and rates of 
improvement) with respect to performance indicators specified by the 
Secretary pursuant to this section.
    ``(4) Fiscal Year Subject to Incentive Adjustment.--The total 
percentage point increase determined pursuant to this section with 
respect to a State program in a fiscal year shall apply as an 
adjustment to the applicable percent under section 455(a)(2) for 
payments to such State for the succeeding fiscal year.
    ``(5) Recycling of Incentive Adjustment.--A State shall expend in 
the State program under this part all funds paid to the State by the 
Federal Government as a result of an incentive adjustment under this 
section.
    ``(b) Meaning of Terms.--For purposes of this section--
            ``(1) the term `Statewide paternity establishment 
        percentage' means, with respect to a fiscal year, the ratio 
        (expressed as a percentage) of--
                    ``(A) the total number of out-of-wedlock children 
                in the State under one year of age for whom paternity 
                is established or acknowledged during the fiscal year, 
                to
                    ``(B) the total number of children born out of 
                wedlock in the State during such fiscal year; and
            ``(2) the term `overall performance in child support 
        enforcement' means a measure or measures of the effectiveness 
        of the State agency in a fiscal year which takes into account 
        factors including--
                    ``(A) the percentage of cases requiring a child 
                support order in which such an order was established;
                    ``(B) the percentage of cases in which child 
                support is being paid;
                    ``(C) the ratio of child support collected to child 
                support due; and
                    ``(D) the cost-effectiveness of the State program, 
                as determined in accordance with standards established 
                by the Secretary in regulations.''.
    (b) Adjustment of Payments Under Part D of Title IV.--Section 
455(a)(2) (42 U.S.C. 655(a)(2)), as amended by section 9411(a) of this 
Act, is amended--
            (1) by striking the period at the end of subparagraph 
        (C)(ii) and inserting a comma; and
            (2) by adding after and below subparagraph (C), flush with 
        the left margin of the subsection, the following:
``increased by the incentive adjustment factor (if any) determined by 
the Secretary pursuant to section 458.''.
    (c) Conforming Amendments.--Section 454(22) (42 U.S.C. 654(22)) is 
amended--
            (1) by striking ``incentive payments'' the first place it 
        appears and inserting ``incentive adjustments''; and
            (2) by striking ``any such incentive payments made to the 
        State for such period'' and inserting ``any increases in 
        Federal payments to the State resulting from such incentive 
        adjustments''.
    (d) Calculation of IV-D Paternity Establishment Percentage.--(1) 
Section 452(g)(1) (42 U.S.C. 652(g)(1)) is amended in the matter 
preceding subparagraph (A) by inserting ``its overall performance in 
child support enforcement is satisfactory (as defined in section 458(b) 
and regulations of the Secretary), and'' after ``1994,''.
    (2) Section 452(g)(2) (42 U.S.C. 652(g)(2)) is amended--
            (A) in subparagraph (A), in the matter preceding clause 
        (i)--
                    (i) by striking ``paternity establishment 
                percentage'' and inserting ``IV-D paternity 
                establishment percentage''; and
                    (ii) by striking ``(or all States, as the case may 
                be)'';
            (B) in subparagraph (A)(i), by striking ``during the fiscal 
        year'';
            (C) in subparagraph (A)(ii)(I), by striking ``as of the end 
        of the fiscal year'' and inserting ``in the fiscal year or, at 
        the option of the State, as of the end of such year'';
            (D) in subparagraph (A)(ii)(II), by striking ``or (E) as of 
        the end of the fiscal year'' and inserting ``in the fiscal year 
        or, at the option of the State, as of the end of such year'';
            (E) in subparagraph (A)(iii)--
                    (i) by striking ``during the fiscal year''; and
                    (ii) by striking ``and'' at the end; and
            (F) in the matter following subparagraph (A)--
                    (i) by striking ``who were born out of wedlock 
                during the immediately preceding fiscal year'' and 
                inserting ``born out of wedlock'';
                    (ii) by striking ``such preceding fiscal year'' 
                both places it appears and inserting ``the preceding 
                fiscal year''; and
                    (iii) by striking ``or (E)'' the second place it 
                appears.
    (3) Section 452(g)(3) (42 U.S.C. 652(g)(3)) is amended--
            (A) by striking subparagraph (A) and redesignating 
        subparagraphs (B) and (C) as subparagraphs (A) and (B), 
        respectively;
            (B) in subparagraph (A), as redesignated, by striking ``the 
        percentage of children born out-of-wedlock in the State'' and 
        inserting ``the percentage of children in the State who are 
        born out of wedlock or for whom support has not been 
        established''; and
            (C) in subparagraph (B), as redesignated--
                    (i) by inserting ``and overall performance in child 
                support enforcement'' after ``paternity establishment 
                percentages''; and
                    (ii) by inserting ``and securing support'' before 
                the period.
    (e) Reduction of Payments Under Part D of Title IV.--
            (1) New requirements.--Section 455 (42 U.S.C. 655) is 
        amended by inserting after subsection (b) the following:
    ``(c)(1) If the Secretary finds, with respect to a State program 
under this part in a fiscal year beginning on or after October 1, 
1997--
            ``(A)(i) on the basis of data submitted by a State pursuant 
        to section 454(15)(B), that the State program in such fiscal 
        year failed to achieve the IV-D paternity establishment 
        percentage (as defined in section 452(g)(2)(A)) or the 
        appropriate level of overall performance in child support 
        enforcement (as defined in section 458(b)(2)), or to meet other 
        performance measures that may be established by the Secretary, 
        or
            ``(ii) on the basis of an audit or audits of such State 
        data conducted pursuant to section 452(a)(4)(C), that the State 
        data submitted pursuant to section 454(15)(B) is incomplete or 
        unreliable; and
            ``(B) that, with respect to the succeeding fiscal year--
                    ``(i) the State failed to take sufficient 
                corrective action to achieve the appropriate 
                performance levels as described in subparagraph (A)(i) 
                of this paragraph, or
                    ``(ii) the data submitted by the State pursuant to 
                section 454(15)(B) is incomplete or unreliable,
the amounts otherwise payable to the State under this part for quarters 
following the end of such succeeding fiscal year, prior to quarters 
following the end of the first quarter throughout which the State 
program is in compliance with such performance requirement, shall be 
reduced by the percentage specified in paragraph (2).
    ``(2) The reductions required under paragraph (1) shall be--
            ``(A) not less than 6 nor more than 8 percent, or
            ``(B) not less than 8 nor more than 12 percent, if the 
        finding is the second consecutive finding made pursuant to 
        paragraph (1), or
            ``(C) not less than 12 nor more than 15 percent, if the 
        finding is the third or a subsequent consecutive such finding.
    ``(3) For purposes of this subsection, section 405(d), and section 
452(a)(4), a State which is determined as a result of an audit to have 
submitted incomplete or unreliable data pursuant to section 454(15)(B), 
shall be determined to have submitted adequate data if the Secretary 
determines that the extent of the incompleteness or unreliability of 
the data is of a technical nature which does not adversely affect the 
determination of the level of the State's performance.''.
            (2) Conforming amendments.--
                    (A) Section 452(a)(4) (42 U.S.C. 652(a)(4)) is 
                amended by striking ``403(h)'' each place such term 
                appears and inserting ``455(c)''.
                    (B) Subsections (d)(3)(A), (g)(1), and (g)(3)(A) of 
                section 452 (42 U.S.C. 652) are each amended by 
                striking ``403(h)'' and inserting ``455(c)''.
    (f) Effective Dates.--
            (1) Incentive adjustments.--(A) The amendments made by 
        subsections (a), (b), and (c) shall become effective October 1, 
        1997, except to the extent provided in subparagraph (B).
            (B) Section 458 of the Social Security Act, as in effect 
        prior to the enactment of this section, shall be effective for 
        purposes of incentive payments to States for fiscal years prior 
        to fiscal year 1999.
            (2) Penalty reductions.--(A) The amendments made by 
        subsection (d) shall become effective with respect to calendar 
        quarters beginning on and after the date of enactment of this 
        Act.
            (B) The amendments made by subsection (e) shall become 
        effective with respect to calendar quarters beginning on and 
        after the date one year after the date of enactment of this 
        Act.

SEC. 9413. FEDERAL AND STATE REVIEWS AND AUDITS.

    (a) State Agency Activities.--Section 454 (42 U.S.C. 654) is 
amended--
            (1) in paragraph (14), by striking ``(14)'' and inserting 
        ``(14)(A)'';
            (2) by redesignating paragraph (15) as subparagraph (B) of 
        paragraph (14); and
            (3) by inserting after paragraph (14) the following new 
        paragraph:
            ``(15) provide for--
                    ``(A) a process for annual reviews of and reports 
                to the Secretary on the State program under this part, 
                which shall include such information as may be 
                necessary to measure State compliance with Federal 
                requirements for expedited procedures and timely case 
                processing, using such standards and procedures as are 
                required by the Secretary, under which the State agency 
                will determine the extent to which such program is in 
                conformity with applicable requirements with respect to 
                the operation of State programs under this part 
                (including the status of complaints filed under the 
                procedure required under paragraph (12)(B)); and
                    ``(B) a process of extracting from the State 
                automated data processing system and transmitting to 
                the Secretary data and calculations concerning the 
                levels of accomplishment (and rates of improvement) 
                with respect to applicable performance indicators 
                (including IV-D paternity establishment percentages and 
                overall performance in child support enforcement) to 
                the extent necessary for purposes of sections 452(g) 
                and 458.''.
    (b) Federal Activities.--Section 452(a)(4) (42 U.S.C. 652(a)(4)) is 
amended to read as follows:
            ``(4)(A) review data and calculations transmitted by State 
        agencies pursuant to section 454(15)(B) on State program 
        accomplishments with respect to performance indicators for 
        purposes of section 452(g) and 458, and determine the amount 
        (if any) of penalty reductions pursuant to section 455(c) to be 
        applied to the State;
            ``(B) review annual reports by State agencies pursuant to 
        section 454(15)(A) on State program conformity with Federal 
        requirements; evaluate any elements of a State program in which 
        significant deficiencies are indicated by such report on the 
        status of complaints under the State procedure under section 
        454(12)(B); and, as appropriate, provide to the State agency 
        comments, recommendations for additional or alternative 
        corrective actions, and technical assistance; and
            ``(C) conduct audits, in accordance with the government 
        auditing standards of the United States Comptroller General--
                    ``(i) at least once every 3 years (or more 
                frequently, in the case of a State which fails to meet 
                requirements of this part, or of regulations 
                implementing such requirements, concerning performance 
                standards and reliability of program data) to assess 
                the completeness, reliability, and security of the 
                data, and the accuracy of the reporting systems, used 
                for the calculations of performance indicators 
                specified in subsection (g) and section 458;
                    ``(ii) of the adequacy of financial management of 
                the State program, including assessments of--
                            ``(I) whether Federal and other funds made 
                        available to carry out the State program under 
                        this part are being appropriately expended, and 
                        are properly and fully accounted for; and
                            ``(II) whether collections and 
                        disbursements of support payments and program 
                        income are carried out correctly and are 
                        properly and fully accounted for; and
                    ``(iii) for such other purposes as the Secretary 
                may find necessary;''.
    (c) Effective Date.--The amendments made by this section shall be 
effective with respect to calendar quarters beginning on or after the 
date one year after enactment of this section.

SEC. 9414. REQUIRED REPORTING PROCEDURES.

    (a) Establishment.--Section 452(a)(5) (42 U.S.C. 652(a)(5)) is 
amended by inserting ``, and establish procedures to be followed by 
States for collecting and reporting information required to be provided 
under this part, and establish uniform definitions (including those 
necessary to enable the measurement of State compliance with the 
requirements of this part relating to expedited processes and timely 
case processing) to be applied in following such procedures'' before 
the semicolon.
    (b) State Plan Requirement.--Section 454 (42 U.S.C. 654), as 
amended by section 9404(a) of this Act, is amended--
            (1) by striking ``and'' at the end of paragraph (24);
            (2) by striking the period at the end of paragraph (25) and 
        inserting ``; and''; and
            (3) by adding after paragraph (25) the following:
            ``(26) provide that the State shall use the definitions 
        established under section 452(a)(5) in collecting and reporting 
        information as required under this part.''.

SEC. 9415. AUTOMATED DATA PROCESSING REQUIREMENTS.

    (a) Revised Requirements.--(1) Section 454(16) (42 U.S.C. 654(16)) 
is amended--
            (A) by striking ``, at the option of the State,'';
            (B) by inserting ``and operation by the State agency'' 
        after ``for the establishment'';
            (C) by inserting ``meeting the requirements of section 
        454A'' after ``information retrieval system'';
            (D) by striking ``in the State and localities thereof, so 
        as (A)'' and inserting ``so as'';
            (E) by striking ``(i)''; and
            (F) by striking ``(including'' and all that follows and 
        inserting a semicolon.
    (2) Part D of title IV (42 U.S.C. 651-669) is amended by inserting 
after section 454 the following new section:

                      ``automated data processing

    ``Sec. 454A. (a) In General.--In order to meet the requirements of 
this section, for purposes of the requirement of section 454(16), a 
State agency shall have in operation a single statewide automated data 
processing and information retrieval system which has the capability to 
perform the tasks specified in this section, and performs such tasks 
with the frequency and in the manner specified in this part or in 
regulations or guidelines of the Secretary.
    ``(b) Program Management.--The automated system required under this 
section shall perform such functions as the Secretary may specify 
relating to management of the program under this part, including--
            ``(1) controlling and accounting for use of Federal, State, 
        and local funds to carry out such program; and
            ``(2) maintaining the data necessary to meet Federal 
        reporting requirements on a timely basis.
    ``(c) Calculation of Performance Indicators.--In order to enable 
the Secretary to determine the incentive and penalty adjustments 
required by sections 452(g) and 458, the State agency shall--
            ``(1) use the automated system--
                    ``(A) to maintain the requisite data on State 
                performance with respect to paternity establishment and 
                child support enforcement in the State; and
                    ``(B) to calculate the IV-D paternity establishment 
                percentage and overall performance in child support 
                enforcement for the State for each fiscal year; and
            ``(2) have in place systems controls to ensure the 
        completeness, and reliability of, and ready access to, the data 
        described in paragraph (1)(A), and the accuracy of the 
        calculations described in paragraph (1)(B).
    ``(d) Information Integrity and Security.--The State agency shall 
have in effect safeguards on the integrity, accuracy, and completeness 
of, access to, and use of data in the automated system required under 
this section, which shall include the following (in addition to such 
other safeguards as the Secretary specifies in regulations):
            ``(1) Policies restricting access.--Written policies 
        concerning access to data by State agency personnel, and 
        sharing of data with other persons, which--
                    ``(A) permit access to and use of data only to the 
                extent necessary to carry out program responsibilities;
                    ``(B) specify the data which may be used for 
                particular program purposes, and the personnel 
                permitted access to such data; and
                    ``(C) ensure that data obtained or disclosed for a 
                limited program purpose is not used or redisclosed for 
                another, impermissible purpose.
            ``(2) Systems controls.--Systems controls (such as 
        passwords or blocking of fields) to ensure strict adherence to 
        the policies specified under paragraph (1).
            ``(3) Monitoring of access.--Routine monitoring of access 
        to and use of the automated system, through methods such as 
        audit trails and feedback mechanisms, to guard against and 
        promptly identify unauthorized access or use.
            ``(4) Training and information.--The State agency shall 
        have in effect procedures to ensure that all personnel 
        (including State and local agency staff and contractors) who 
        may have access to or be required to use sensitive or 
        confidential program data are fully informed of applicable 
        requirements and penalties, and are adequately trained in 
        security procedures.
            ``(5) Penalties.--The State agency shall have in effect 
        administrative penalties (up to and including dismissal from 
        employment) for unauthorized access to, or disclosure or use 
        of, confidential data.''.
    (3) Regulations.--Section 452 (42 U.S.C. 652) is amended by adding 
at the end the following:
    ``(j) The Secretary shall prescribe final regulations for 
implementation of the requirements of section 454A not later than 2 
years after the date of the enactment of this subsection.''.
    (4) Implementation Timetable.--Section 454(24) (42 U.S.C. 654(24)), 
as amended by sections 9404(a)(2) and 9414(b)(1) of this Act, is 
amended to read as follows:
            ``(24) provide that the State will have in effect an 
        automated data processing and information retrieval system--
                    ``(A) by October 1, 1995, meeting all requirements 
                of this part which were enacted on or before the date 
                of enactment of the Family Support Act of 1988; and
                    ``(B) by October 1, 1999, meeting all requirements 
                of this part enacted on or before the date of enactment 
                of the Omnibus Budget Reconciliation Act of 1995 (but 
                this provision shall not be construed to alter earlier 
                deadlines specified for elements of such system), 
                except that such deadline shall be extended by 1 day 
                for each day (if any) by which the Secretary fails to 
                meet the deadline imposed by section 452(j) of this 
                Act;''.
    (b) Special Federal Matching Rate for Development Costs of 
Automated Systems.--Section 455(a) (42 U.S.C. 655(a)) is amended--
            (1) in paragraph (1)(B)--
                    (A) by striking ``90 percent'' and inserting ``the 
                percent specified in paragraph (3)'';
                    (B) by striking ``so much of''; and
                    (C) by striking ``which the Secretary'' and all 
                that follows and inserting ``, and''; and
            (2) by adding at the end the following new paragraph:
    ``(3)(A) The Secretary shall pay to each State, for each quarter in 
fiscal year 1996, 90 percent of so much of State expenditures described 
in subparagraph (1)(B) as the Secretary finds are for a system meeting 
the requirements specified in section 454(16), or meeting such 
requirements without regard to clause (D) thereof.
    ``(B)(i) The Secretary shall pay to each State, for each quarter in 
fiscal years 1997 through 2001, the percentage specified in clause (ii) 
of so much of State expenditures described in subparagraph (1)(B) as 
the Secretary finds are for a system meeting the requirements specified 
in sections 454(16) and 454A, subject to clause (iii).
    ``(ii) The percentage specified in this clause, for purposes of 
clause (i), is the higher of--
            ``(I) 80 percent, or
            ``(II) the percentage otherwise applicable to Federal 
        payments to the State under subparagraph (A) (as adjusted 
        pursuant to section 458).''.
    (c) Conforming Amendment.--Section 123(c) of the Family Support Act 
of 1988 (102 Stat. 2352; Public Law 100-485) is repealed.
    (d) Additional Provisions.--For additional provisions of section 
454A, as added by subsection (a) of this section, see the amendments 
made by sections 9421, 9422(c), and 9433(d) of this Act.

SEC. 9416. DIRECTOR OF CSE PROGRAM; STAFFING STUDY.

    (a) Reporting to Secretary.--Section 452(a) (42 U.S.C. 652(a)) is 
amended in the matter preceding paragraph (1) by striking ``directly''.
    (b) Staffing Studies.--
            (1) Scope.--The Secretary of Health and Human Services 
        shall, directly or by contract, conduct studies of the staffing 
        of each State child support enforcement program under part D of 
        title IV of the Social Security Act. Such studies shall include 
        a review of the staffing needs created by requirements for 
        automated data processing, maintenance of a central case 
        registry and centralized collections of child support, and of 
        changes in these needs resulting from changes in such 
        requirements. Such studies shall examine and report on 
        effective staffing practices used by the States and on 
        recommended staffing procedures.
            (2) Frequency of studies.--The Secretary shall complete the 
        first staffing study required under paragraph (1) by October 1, 
        1997, and may conduct additional studies subsequently at 
        appropriate intervals.
            (3) Report to the congress.--The Secretary shall submit a 
        report to the Congress stating the findings and conclusions of 
        each study conducted under this subsection.

SEC. 9417. FUNDING FOR SECRETARIAL ASSISTANCE TO STATE PROGRAMS.

    Section 452 (42 U.S.C. 652), as amended by section 9415(a)(3) of 
this Act, is amended by adding at the end the following new subsection:
    ``(k) Funding for Federal Activities Assisting State Programs.--(1) 
There shall be available to the Secretary, from amounts appropriated 
for fiscal year 1996 and each succeeding fiscal year for payments to 
States under this part, the amount specified in paragraph (2) for the 
costs to the Secretary for--
            ``(A) information dissemination and technical assistance to 
        States, training of State and Federal staff, staffing studies, 
        and related activities needed to improve programs (including 
        technical assistance concerning State automated systems);
            ``(B) research, demonstration, and special projects of 
        regional or national significance relating to the operation of 
        State programs under this part; and
            ``(C) operation of the Federal Parent Locator Service under 
        section 453, to the extent such costs are not recovered through 
        user fees.
    ``(2) The amount specified in this paragraph for a fiscal year is 
the amount equal to a percentage of the reduction in Federal payments 
to States under part A on account of child support (including 
arrearages) collected in the preceding fiscal year on behalf of 
children receiving assistance under State plans approved under part A 
in such preceding fiscal year (as determined on the basis of the most 
recent reliable data available to the Secretary as of the end of the 
third calendar quarter following the end of such preceding fiscal 
year), equal to--
            ``(A) 1 percent, for the activities specified in 
        subparagraphs (A) and (B) of paragraph (1); and
            ``(B) 2 percent, for the activities specified in 
        subparagraph (C) of paragraph (1).''.

SEC. 9418. REPORTS AND DATA COLLECTION BY THE SECRETARY.

    (a) Annual Report to Congress.--(1) Section 452(a)(10)(A) (42 
U.S.C. 652(a)(10)(A)) is amended--
            (A) by striking ``this part;'' and inserting ``this part, 
        including--''; and
            (B) by adding at the end the following indented clauses:
                            ``(i) the total amount of child support 
                        payments collected as a result of services 
                        furnished during such fiscal year to 
                        individuals receiving services under this part;
                            ``(ii) the cost to the States and to the 
                        Federal Government of furnishing such services 
                        to those individuals; and
                            ``(iii) the number of cases involving 
                        families--
                                    ``(I) who became ineligible for 
                                assistance under a State plan approved 
                                under part A during a month in such 
                                fiscal year; and
                                    ``(II) with respect to whom a child 
                                support payment was received in the 
                                same month;''.
    (2) Section 452(a)(10)(C) (42 U.S.C. 652(a)(10)(C)) is amended--
            (A) in the matter preceding clause (i)--
                    (i) by striking ``with the data required under each 
                clause being separately stated for cases'' and 
                inserting ``separately stated for (1) cases'';
                    (ii) by striking ``cases where the child was 
                formerly receiving'' and inserting ``or formerly 
                received'';
                    (iii) by inserting ``or 1912'' after 
                ``471(a)(17)''; and
                    (iv) by inserting ``(2)'' before ``all other'';
            (B) in each of clauses (i) and (ii), by striking ``, and 
        the total amount of such obligations'';
            (C) in clause (iii), by striking ``described in'' and all 
        that follows and inserting ``in which support was collected 
        during the fiscal year;'';
            (D) by striking clause (iv); and
            (E) by redesignating clause (v) as clause (vii), and 
        inserting after clause (iii) the following new clauses:
                            ``(iv) the total amount of support 
                        collected during such fiscal year and 
                        distributed as current support;
                            ``(v) the total amount of support collected 
                        during such fiscal year and distributed as 
                        arrearages;
                            ``(vi) the total amount of support due and 
                        unpaid for all fiscal years; and''.
    (3) Section 452(a)(10)(G) (42 U.S.C. 652(a)(10)(G)) is amended by 
striking ``on the use of Federal courts and''.
    (4) Section 452(a)(10) (42 U.S.C. 652(a)(10)) is amended by 
striking all that follows subparagraph (I).
    (b) Data Collection and Reporting.--Section 469 (42 U.S.C. 669) is 
amended--
            (1) by striking subsections (a) and (b) and inserting the 
        following:
    ``(a) The Secretary shall collect and maintain, on a fiscal year 
basis, up-to-date statistics, by State, with respect to services to 
establish paternity and services to establish child support 
obligations, the data specified in subsection (b), separately stated, 
in the case of each such service, with respect to--
            ``(1) families (or dependent children) receiving assistance 
        under State plans approved under part A (or E); and
            ``(2) families not receiving such assistance.
    ``(b) The data referred to in subsection (a) are--
            ``(1) the number of cases in the caseload of the State 
        agency administering the plan under this part in which such 
        service is needed; and
            ``(2) the number of such cases in which the service has 
        been provided.''; and
            (2) in subsection (c), by striking ``(a)(2)'' and inserting 
        ``(b)(2)''.
    (c) Effective Date.--The amendments made by this section shall be 
effective with respect to fiscal year 1996 and succeeding fiscal years.

                  CHAPTER 3--LOCATE AND CASE TRACKING

SEC. 9421. CENTRAL STATE AND CASE REGISTRY.

    Section 454A, as added by section 9415(a)(2) of this Act, is 
amended by adding at the end the following:
    ``(e) Central Case Registry.--(1) In General.--The automated system 
required under this section shall perform the functions, in accordance 
with the provisions of this subsection, of a single central registry 
containing records with respect to each case in which services are 
being provided by the State agency (including, on and after October 1, 
1998, each order specified in section 466(a)(12)), using such 
standardized data elements (such as names, social security numbers or 
other uniform identification numbers, dates of birth, and case 
identification numbers), and containing such other information (such as 
information on case status) as the Secretary may require.
    ``(2) Payment Records.--Each case record in the central registry 
shall include a record of--
            ``(A) the amount of monthly (or other periodic) support 
        owed under the support order, and other amounts due or overdue 
        (including arrears, interest or late payment penalties, and 
        fees);
            ``(B) the date on which or circumstances under which the 
        support obligation will terminate under such order;
            ``(C) all child support and related amounts collected 
        (including such amounts as fees, late payment penalties, and 
        interest on arrearages);
            ``(D) the distribution of such amounts collected; and
            ``(E) the birth date of the child for whom the child 
        support order is entered.
    ``(3) Updating and Monitoring.--The State agency shall promptly 
establish and maintain, and regularly monitor, case records in the 
registry required by this subsection, on the basis of--
            ``(A) information on administrative actions and 
        administrative and judicial proceedings and orders relating to 
        paternity and support;
            ``(B) information obtained from matches with Federal, 
        State, or local data sources;
            ``(C) information on support collections and distributions; 
        and
            ``(D) any other relevant information.
    ``(f) Data Matches and Other Disclosures of Information.--The 
automated system required under this section shall have the capacity, 
and be used by the State agency, to extract data at such times, and in 
such standardized format or formats, as may be required by the 
Secretary, and to share and match data with, and receive data from, 
other data bases and data matching services, in order to obtain (or 
provide) information necessary to enable the State agency (or Secretary 
or other State or Federal agencies) to carry out responsibilities under 
this part. Data matching activities of the State agency shall include 
at least the following:
            ``(1) Data bank of child support orders.--Furnish to the 
        Data Bank of Child Support Orders established under section 
        453(h) (and update as necessary, with information including 
        notice of expiration of orders) minimal information (to be 
        specified by the Secretary) on each child support case in the 
        central case registry.
            ``(2) Federal parent locator service.--Exchange data with 
        the Federal Parent Locator Service for the purposes specified 
        in section 453.
            ``(3) Temporary employment assistance program and medicaid 
        agencies.--Exchange data with State agencies (of the State and 
        of other States) administering the programs under part A and 
        title XIX, as necessary for the performance of State agency 
        responsibilities under this part and under such programs.
            ``(4) Intra- and interstate data matches.--Exchange data 
        with other agencies of the State, agencies of other States, and 
        interstate information networks, as necessary and appropriate 
        to carry out (or assist other States to carry out) the purposes 
        of this part.''.

SEC. 9422. CENTRALIZED COLLECTION AND DISBURSEMENT OF SUPPORT PAYMENTS.

    (a) State Plan Requirement.--Section 454 (42 U.S.C. 654), as 
amended by sections 9404(a) and 9414(b) of this Act, is amended--
            (1) by striking ``and'' at the end of paragraph (25);
            (2) by striking the period at the end of paragraph (26) and 
        inserting ``; and''; and
            (3) by adding after paragraph (26) the following new 
        paragraph:
            ``(27) provide that the State agency, on and after October 
        1, 1998--
            ``(A) will operate a centralized, automated unit for the 
        collection and disbursement of child support under orders being 
        enforced under this part, in accordance with section 454B; and
            ``(B) will have sufficient State staff (consisting of State 
        employees), and (at State option) contractors reporting 
        directly to the State agency to monitor and enforce support 
        collections through such centralized unit, including carrying 
        out the automated data processing responsibilities specified in 
        section 454A(g) and to impose, as appropriate in particular 
cases, the administrative enforcement remedies specified in section 
466(c)(1).''.
    (b) Establishment of Centralized Collection Unit.--Part D of title 
IV (42 U.S.C. 651-669) is amended by adding after section 454A the 
following new section:

     ``centralized collection and disbursement of support payments

    ``Sec. 454B. (a) In General.--In order to meet the requirement of 
section 454(27), the State agency must operate a single centralized, 
automated unit for the collection and disbursement of support payments, 
coordinated with the automated data system required under section 454A, 
in accordance with the provisions of this section, which shall be--
            ``(1) operated directly by the State agency (or by two or 
        more State agencies under a regional cooperative agreement), or 
        by a single contractor responsible directly to the State 
        agency; and
            ``(2) used for the collection and disbursement (including 
        interstate collection and disbursement) of payments under 
        support orders in all cases being enforced by the State 
        pursuant to section 454(4).
    ``(b) Required Procedures.--The centralized collections unit shall 
use automated procedures, electronic processes, and computer-driven 
technology to the maximum extent feasible, efficient, and economical, 
for the collection and disbursement of support payments, including 
procedures--
            ``(1) for receipt of payments from parents, employers, and 
        other States, and for disbursements to custodial parents and 
        other obligees, the State agency, and the State agencies of 
        other States;
            ``(2) for accurate identification of payments;
            ``(3) to ensure prompt disbursement of the custodial 
        parent's share of any payment; and
            ``(4) to furnish to either parent, upon request, timely 
        information on the current status of support payments.''.
    (c) Use of Automated System.--Section 454A, as added by section 
9415(a)(2) of this Act and as amended by section 9421 of this Act, is 
amended by adding at the end the following new subsection:
    ``(g) Centralized Collection and Distribution of Support 
Payments.--The automated system required under this section shall be 
used, to the maximum extent feasible, to assist and facilitate 
collections and disbursement of support payments through the 
centralized collections unit operated pursuant to section 454B, through 
the performance of functions including at a minimum--
            ``(1) generation of orders and notices to employers (and 
        other debtors) for the withholding of wages (and other 
        income)--
                    ``(A) within two working days after receipt (from 
                the directory of New Hires established under section 
                453(i) or any other source) of notice of and the income 
                source subject to such withholding; and
                    ``(B) using uniform formats directed by the 
                Secretary;
            ``(2) ongoing monitoring to promptly identify failures to 
        make timely payment; and
            ``(3) automatic use of enforcement mechanisms (including 
        mechanisms authorized pursuant to section 466(c)) where 
        payments are not timely made.''.
    (d) Effective Date.--The amendments made by this section shall 
become effective on October 1, 1998.

SEC. 9423. AMENDMENTS CONCERNING INCOME WITHHOLDING.

    (a) Mandatory Income Withholding.--(1) Section 466(a)(1) (42 U.S.C. 
666(a)(1)) is amended to read as follows:
            ``(1) Income withholding.--(A) Under orders enforced under 
        the state plan.--Procedures described in subsection (b) for the 
        withholding from income of amounts payable as support in cases 
        subject to enforcement under the State plan.
            ``(B) Under certain orders predating change in 
        requirement.--Procedures under which all child support orders 
        issued (or modified) before October 1, 1996, and which are not 
        otherwise subject to withholding under subsection (b), shall 
        become subject to withholding from wages as provided in 
        subsection (b) if arrearages occur, without the need for a 
        judicial or administrative hearing.''.
    (2) Section 466(a)(8) (42 U.S.C. 666(a)(8)) is repealed.
    (3) Section 466(b) (42 U.S.C. 666(b)) is amended--
            (A) in the matter preceding paragraph (1), by striking 
        ``subsection (a)(1)'' and inserting ``subsection (a)(1)(A)'';
            (B) in paragraph (5), by striking all that follows 
        ``administered by'' and inserting ``the State through the 
        centralized collections unit established pursuant to section 
        454B, in accordance with the requirements of such section 
        454B.'';
            (C) in paragraph (6)(A)(i)--
                    (i) by inserting ``, in accordance with timetables 
                established by the Secretary,'' after ``must be 
                required''; and
                    (ii) by striking ``to the appropriate agency'' and 
                all that follows and inserting ``to the State 
                centralized collections unit within 5 working days 
                after the date such amount would (but for this 
                subsection) have been paid or credited to the employee, 
                for distribution in accordance with this part.'';
            (D) in paragraph (6)(A)(ii), by inserting ``be in a 
        standard format prescribed by the Secretary, and'' after 
        ``shall''; and
            (E) in paragraph (6)(D)--
                    (i) by striking ``employer who discharges'' and 
                inserting ``employer who--(A) discharges'';
                    (ii) by relocating subparagraph (A), as designated, 
                as an indented subparagraph after and below the 
                introductory matter;
                    (iii) by striking the period at the end; and
                    (iv) by adding after and below subparagraph (A) the 
                following new subparagraph:
                    ``(B) fails to withhold support from wages, or to 
                pay such amounts to the State centralized collections 
                unit in accordance with this subsection.''.
    (b) Conforming Amendment.--Section 466(c) (42 U.S.C. 666(c)) is 
repealed.
    (c) Definition of Terms.--The Secretary shall promulgate 
regulations providing definitions, for purposes of part D of title IV 
of the Social Security Act, for the term ``income'' and for such other 
terms relating to income withholding under section 466(b) of such Act 
as the Secretary may find it necessary or advisable to define.

SEC. 9424. LOCATOR INFORMATION FROM INTERSTATE NETWORKS.

    Section 466(a) (42 U.S.C. 666(a)), as amended by section 9423(a)(2) 
of this Act, is amended by inserting after paragraph (7) the following:
            ``(8) Locator information from interstate networks.--
        Procedures ensuring that the State will neither provide funding 
        for, nor use for any purpose (including any purpose unrelated 
        to the purposes of this part), any automated interstate network 
        or system used to locate individuals--
                    ``(A) for purposes relating to the use of motor 
                vehicles; or
                    ``(B) providing information for law enforcement 
                purposes (where child support enforcement agencies are 
                otherwise allowed access by State and Federal law),
        unless all Federal and State agencies administering programs 
        under this part (including the entities established under 
        section 453) have access to information in such system or 
        network to the same extent as any other user of such system or 
        network.''.

SEC. 9425. EXPANDED FEDERAL PARENT LOCATOR SERVICE.

    (a) Expanded Authority to Locate Individuals and Assets.--Section 
453 (42 U.S.C. 653) is amended--
            (1) in subsection (a), by striking all that follows 
        ``subsection (c))'' and inserting the following:
``, for the purpose of establishing parentage, establishing, setting 
the amount of, modifying, or enforcing child support obligations--
            ``(1) information on, or facilitating the discovery of, the 
        location of any individual--
                    ``(A) who is under an obligation to pay child 
                support;
                    ``(B) against whom such an obligation is sought; or
                    ``(C) to whom such an obligation is owed, including 
                such individual's social security number (or numbers), 
                most recent residential address, and the name, address, 
                and employer identification number of such individual's 
                employer; and
            ``(2) information on the individual's wages (or other 
        income) from, and benefits of, employment (including rights to 
        or enrollment in group health care coverage); and
            ``(3) information on the type, status, location, and amount 
        of any assets of, or debts owed by or to, any such 
        individual.''; and
            (2) in subsection (b)--
                    (A) in the matter preceding paragraph (1), by 
                striking ``social security'' and all that follows 
                through ``absent parent'' and inserting ``information 
                specified in subsection (a)''; and
                    (B) in paragraph (2), by inserting before the 
                period ``, or from any consumer reporting agency (as 
                defined in section 603(f) of the Fair Credit Reporting 
                Act (15 U.S.C. 1681a(f))'';
            (3) in subsection (e)(1), by inserting before the period 
        ``, or by consumer reporting agencies''.
    (b) Reimbursement for Data From Federal Agencies.--Section 
453(e)(2) (42 U.S.C. 653(e)(2)) is amended in the fourth sentence by 
inserting before the period ``in an amount which the Secretary 
determines to be reasonable payment for the data exchange (which amount 
shall not include payment for the costs of obtaining, compiling, or 
maintaining the data)''.
    (c) Access to Consumer Reports Under Fair Credit Reporting Act.--
(1) Section 608 of the Fair Credit Reporting Act (15 U.S.C. 1681f) is 
amended--
            (A) by striking ``, limited to'' and inserting ``to a 
        governmental agency (including the entire consumer report, in 
        the case of a Federal, State, or local agency administering a 
        program under part D of title IV of the Social Security Act, 
        and limited to''; and
            (B) by striking ``employment, to a governmental agency'' 
        and inserting ``employment, in the case of any other 
        governmental agency)''.
    (2) Reimbursement for Reports by State Agencies and Credit 
Bureaus.--Section 453 (42 U.S.C. 653) is amended by adding at the end 
the following new subsection:
    ``(g) The Secretary is authorized to reimburse costs to State 
agencies and consumer credit reporting agencies the costs incurred by 
such entities in furnishing information requested by the Secretary 
pursuant to this section in an amount which the Secretary determines to 
be reasonable payment for the data exchange (which amount shall not 
include payment for the costs of obtaining, compiling, or maintaining 
the data).''.
    (d) Disclosure of Tax Return Information.--(1) Section 
6103(1)(6)(A)(ii) of the Internal Revenue Code of 1986 is amended by 
striking ``, but only if'' and all that follows and inserting a period.
    (2) Section 6103(1)(8)(A) of the Internal Revenue Code of 1986 is 
amended by inserting ``Federal,'' before ``State or local''.
    (e) Technical Amendments.--
            (1) Sections 452(a)(9), 453(a), 453(b), 463(a), and 463(e) 
        (42 U.S.C. 652(a)(9), 653(a), 653(b), 663(a), and 663(e)) are 
        each amended by inserting ``Federal'' before ``Parent'' each 
        place it appears.
            (2) Section 453 (42 U.S.C. 653) is amended in the heading 
        by adding ``federal'' before ``parent''.
    (f) New Components.--Section 453 (42 U.S.C. 653), as amended by 
subsection (c)(2) of this section, is amended by adding at the end the 
following:
    ``(h) Data Bank of Child Support Orders.--
            ``(1) In general.--Not later than October 1, 1998, In order 
        to assist States in administering their State plans under this 
        part and parts A, F, and G, and for the other purposes 
        specified in this section, the Secretary shall establish and 
        maintain in the Federal Parent Locator Service an automated 
        registry to be known as the Data Bank of Child Support Orders, 
        which shall contain abstracts of child support orders and other 
        information described in paragraph (2) on each case in each 
        State central case registry maintained pursuant to section 
        454A(e), as furnished (and regularly updated), pursuant to 
        section 454A(f), by State agencies administering programs under 
        this part.
            ``(2) Case information.--The information referred to in 
        paragraph (1), as specified by the Secretary, shall include 
        sufficient information (including names, social security 
        numbers or other uniform identification numbers, and State case 
        identification numbers) to identify the individuals who owe or 
        are owed support (or with respect to or on behalf of whom 
        support obligations are sought to be established), and the 
        State or States which have established or modified, or are 
        enforcing or seeking to establish, such an order.
    ``(i) Directory of New Hires.--
            ``(1) In general.--Not later than October 1, 1998, In order 
        to assist States in administering their State plans under this 
        part and parts A, F, and G, and for the other purposes 
        specified in this section, the Secretary shall establish and 
        maintain in the Federal Parent Locator Service an automated 
        directory to be known as the directory of New Hires, 
        containing--
                    ``(A) information supplied by employers on each 
                newly hired individual, in accordance with paragraph 
                (2); and
                    ``(B) information supplied by State agencies 
                administering State unemployment compensation laws, in 
                accordance with paragraph (3).
            ``(2) Employer information.--
                    ``(A) Information required.--Subject to 
                subparagraph (D), each employer shall furnish to the 
                Secretary, for inclusion in the directory established 
                under this subsection, not later than 10 days after the 
                date (on or after October 1, 1998) on which the 
                employer hires a new employee (as defined in 
                subparagraph (C)), a report containing the name, date 
                of birth, and social security number of such employee, 
                and the employer identification number of the employer.
                    ``(B) Reporting method and format.--The Secretary 
                shall provide for transmission of the reports required 
                under subparagraph (A) using formats and methods which 
                minimize the burden on employers, which shall include--
                            ``(i) automated or electronic transmission 
                        of such reports;
                            ``(ii) transmission by regular mail; and
                            ``(iii) transmission of a copy of the form 
                        required for purposes of compliance with 
                        section 3402 of the Internal Revenue Code of 
                        1986.
                    ``(C) Employee defined.--For purposes of this 
                paragraph, the term `employee' means any individual 
                subject to the requirement of section 3402(f)(2) of the 
                Internal Revenue Code of 1986.
                    ``(D) Paperwork reduction requirement.--As required 
                by the information resources management policies 
                published by the Director of the Office of Management 
                and Budget pursuant to section 3504(b)(1) of title 44, 
                United States Code, the Secretary, in order to minimize 
                the cost and reporting burden on employers, shall not 
                require reporting pursuant to this paragraph if an 
                alternative reporting mechanism can be developed that 
                either relies on existing Federal or State reporting or 
                enables the Secretary to collect the needed information 
                in a more cost-effective and equally expeditious 
                manner, taking into account the reporting costs on 
                employers.
                    ``(E) Civil money penalty on noncomplying 
                employers.--(i) Any employer that fails to make a 
                timely report in accordance with this paragraph with 
                respect to an individual shall be subject to a civil 
                money penalty, for each calendar year in which the 
                failure occurs, of the lesser of $500 or 1 percent of 
                the wages or other compensation paid by such employer 
                to such individual during such calendar year.
                    ``(ii) Subject to clause (iii), the provisions of 
                section 1128A (other than subsections (a) and (b) 
                thereof) shall apply to a civil money penalty under 
                clause (i) in the same manner as they apply to a civil 
                money penalty or proceeding under section 1128A(a).
                    ``(iii) Any employer with respect to whom a penalty 
                under this subparagraph is upheld after an 
                administrative hearing shall be liable to pay all costs 
                of the Secretary with respect to such hearing.
            ``(3) Employment security information.--
                    ``(A) Reporting requirement.--Each State agency 
                administering a State unemployment compensation law 
                approved by the Secretary of Labor under the Federal 
                Unemployment Tax Act shall furnish to the Secretary of 
                Health and Human Services extracts of the reports to 
                the Secretary of Labor concerning the wages and 
                unemployment compensation paid to individuals required 
                under section 303(a)(6), in accordance with 
                subparagraph (B).
                    ``(B) Manner of compliance.--The extracts required 
                under subparagraph (A) shall be furnished to the 
                Secretary of Health and Human Services on a quarterly 
                basis, with respect to calendar quarters beginning on 
                and after October 1, 1996, by such dates, in such 
                format, and containing such information as required by 
                that Secretary in regulations.
    ``(j) Data Matches and Other Disclosures.--
            ``(1) Verification by social security administration.--(A) 
        The Secretary shall transmit data on individuals and employers 
        maintained under this section to the Social Security 
        Administration to the extent necessary for verification in 
        accordance with subparagraph (B).
            ``(B) The Social Security Administration shall verify the 
        accuracy of, correct or supply to the extent necessary and 
        feasible, and report to the Secretary, the following 
        information in data supplied by the Secretary pursuant to 
        subparagraph (A):
                    ``(i) the name, social security number, and birth 
                date of each individual; and
                    ``(ii) the employer identification number of each 
                employer.
            ``(2) Child support locator matches.--For the purpose of 
        locating individuals for purposes of paternity establishment 
        and establishment and enforcement of child support, the 
        Secretary shall--
                    ``(A) match data in the directory of New Hires 
                against the child support order abstracts in the Data 
                Bank of Child Support Orders not less often than every 
                2 working days; and
                    ``(B) report information obtained from such a match 
                to concerned State agencies operating programs under 
                this part not later than 2 working days after such 
                match.
            ``(3) Data matches and disclosures of data in all 
        registries for title iv program purposes.--The Secretary 
        shall--
                    ``(A) perform matches of data in each component of 
                the Federal Parent Locator Service maintained under 
                this section against data in each other such component 
                (other than the matches required pursuant to paragraph 
                (1)), and report information resulting from such 
                matches to State agencies operating programs under this 
                part and parts A, F, and G; and
                    ``(B) disclose data in such registries to such 
                State agencies,
        to the extent, and with the frequency, that the Secretary 
        determines to be effective in assisting such States to carry 
        out their responsibilities under such programs.
    ``(k) Fees.--
            ``(1) For ssa verification.--The Secretary shall reimburse 
        the Commissioner of Social Security, at a rate negotiated 
        between the Secretary and the Commissioner, the costs incurred 
        by the Commissioner in performing the verification services 
        specified in subsection (j).
            ``(2) For information from sesas.--The Secretary shall 
        reimburse costs incurred by State employment security agencies 
        in furnishing data as required by subsection (j)(3), at rates 
        which the Secretary determines to be reasonable (which rates 
        shall not include payment for the costs of obtaining, 
        compiling, or maintaining such data).
            ``(3) For information furnished to state and federal 
        agencies.--State and Federal agencies receiving data or 
        information from the Secretary pursuant to this section shall 
        reimburse the costs incurred by the Secretary in furnishing 
        such data or information, at rates which the Secretary 
        determines to be reasonable (which rates shall include payment 
        for the costs of obtaining, verifying, maintaining, and 
        matching such data or information).
    ``(l) Restriction on Disclosure and Use.--Data in the Federal 
Parent Locator Service, and information resulting from matches using 
such data, shall not be used or disclosed except as specifically 
provided in this section.
    ``(m) Retention of Data.--Data in the Federal Parent Locator 
Service, and data resulting from matches performed pursuant to this 
section, shall be retained for such period (determined by the 
Secretary) as appropriate for the data uses specified in this section.
    ``(n) Information Integrity and Security.--The Secretary shall 
establish and implement safeguards with respect to the entities 
established under this section designed to--
            ``(1) ensure the accuracy and completeness of information 
        in the Federal Parent Locator Service; and
            ``(2) restrict access to confidential information in the 
        Federal Parent Locator Service to authorized persons, and 
        restrict use of such information to authorized purposes.
    ``(o) Limit on Liability.--The Secretary shall not be liable to 
either a State or an individual for inaccurate information provided to 
a component of the Federal Parent Locator Service section and disclosed 
by the Secretary in accordance with this section.''.
    (g) Conforming Amendments.--
            (1) To part d of title iv of the social security act.--
        Section 454(8)(B) (42 U.S.C. 654(8)(B)) is amended to read as 
        follows:
                    ``(B) the Federal Parent Locator Service 
                established under section 453;''.
            (2) To federal unemployment tax act.--Section 3304(16) of 
        the Internal Revenue Code of 1986 is amended--
                    (A) by striking ``Secretary of Health, Education, 
                and Welfare'' each place such term appears and 
                inserting ``Secretary of Health and Human Services'';
                    (B) in subparagraph (B), by striking ``such 
                information'' and all that follows and inserting 
                ``information furnished under subparagraph (A) or (B) 
                is used only for the purposes authorized under such 
                subparagraph;'';
                    (C) by striking ``and'' at the end of subparagraph 
                (A);
                    (D) by redesignating subparagraph (B) as 
                subparagraph (C); and
                    (E) by inserting after subparagraph (A) the 
                following new subparagraph:
                    ``(B) wage and unemployment compensation 
                information contained in the records of such agency 
                shall be furnished to the Secretary of Health and Human 
                Services (in accordance with regulations promulgated by 
                such Secretary) as necessary for the purposes of the 
                directory of New Hires established under section 453(i) 
                of the Social Security Act, and''.
            (3) To state grant program under title iii of the social 
        security act.--Section 303(a) (42 U.S.C. 503(a)) is amended--
                    (A) by striking ``and'' at the end of paragraph 
                (8);
                    (B) by striking the period at the end of paragraph 
                (9) and inserting ``; and''; and
                    (C) by adding after paragraph (9) the following new 
                paragraph:
            ``(10) The making of quarterly electronic reports, at such 
        dates, in such format, and containing such information, as 
        required by the Secretary of Health and Human Services under 
        section 453(i)(3), and compliance with such provisions as such 
        Secretary may find necessary to ensure the correctness and 
        verification of such reports.''.

SEC. 9426. USE OF SOCIAL SECURITY NUMBERS.

    (a) State Law Requirement.--Section 466(a) (42 U.S.C. 666(a)), as 
amended by section 9401(a) of this Act, is amended by inserting after 
paragraph (12) the following:
            ``(13) Social security numbers required.--Procedures 
        requiring the recording of social security numbers--
                    ``(A) of both parties on marriage licenses and 
                divorce decrees; and
                    ``(B) of both parents, on birth records and child 
                support and paternity orders.''.
    (b) Clarification of Federal Policy.--Section 205(c)(2)(C)(ii) (42 
U.S.C. 405(c)(2)(C)(ii)) is amended by striking the third sentence and 
inserting ``This clause shall not be considered to authorize disclosure 
of such numbers except as provided in the preceding sentence.''.

          CHAPTER 4--STREAMLINING AND UNIFORMITY OF PROCEDURES

SEC. 9431. ADOPTION OF UNIFORM STATE LAWS.

    Section 466(a) (42 U.S.C. 666(a)), as amended by sections 9401(a) 
and 9426(a) of this Act, is amended inserting after paragraph (13) the 
following:
            ``(14) Interstate enforcement.--(A) Adoption of uifsa.--
        Procedures under which the State adopts in its entirety (with 
        the modifications and additions specified in this paragraph) 
        not later than January 1, 1997, and uses on and after such 
        date, the Uniform Interstate Family Support Act, as approved by 
        the National Conference of Commissioners on Uniform State Laws 
        in August, 1992.
            ``(B) Expanded application of uifsa.--The State law adopted 
        pursuant to subparagraph (A) shall be applied to any case--
                    ``(i) involving an order established or modified in 
                one State and for which a subsequent modification is 
                sought in another State; or
                    ``(ii) in which interstate activity is required to 
                enforce an order.
            ``(C) Jurisdiction to modify orders.--The State law adopted 
        pursuant to subparagraph (A) of this paragraph shall contain 
        the following provision in lieu of section 611(a)(1) of the 
        Uniform Interstate Family Support Act described in such 
        subparagraph (A):
            ```(1) the following requirements are met:
                    ```(i) the child, the individual obligee, and the 
                obligor--
                            ```(I) do not reside in the issuing State; 
                        and
                            ```(II) either reside in this State or are 
                        subject to the jurisdiction of this State 
                        pursuant to section 201; and
                    ```(ii) (in any case where another State is 
                exercising or seeks to exercise jurisdiction to modify 
                the order) the conditions of section 204 are met to the 
                same extent as required for proceedings to establish 
                orders; or'.
            ``(D) Service of process.--The State law adopted pursuant 
        to subparagraph (A) shall recognize as valid, for purposes of 
        any proceeding subject to such State law, service of process 
        upon persons in the State (and proof of such service) by any 
        means acceptable in another State which is the initiating or 
        responding State in such proceeding.
            ``(E) Cooperation by employers.--The State law adopted 
        pursuant to subparagraph (A) shall provide for the use of 
        procedures (including sanctions for noncompliance) under which 
        all entities in the State (including for-profit, nonprofit, and 
        governmental employers) are required to provide promptly, in 
        response to a request by the State agency of that or any other 
        State administering a program under this part, information on 
        the employment, compensation, and benefits of any individual 
        employed by such entity as an employee or contractor.''.

SEC. 9432. IMPROVEMENTS TO FULL FAITH AND CREDIT FOR CHILD SUPPORT 
              ORDERS.

    Section 1738B of title 28, United States Code, is amended--
            (1) in subsection (a)(2), by striking ``subsection (e)'' 
        and inserting ``subsections (e), (f), and (i)'';
            (2) in subsection (b), by inserting after the 2nd 
        undesignated paragraph the following:
            ```child's home State' means the State in which a child 
        lived with a parent or a person acting as parent for at least 
        six consecutive months immediately preceding the time of filing 
        of a petition or comparable pleading for support and, if a 
        child is less than six months old, the State in which the child 
        lived from birth with any of them. A period of temporary 
        absence of any of them is counted as part of the six-month 
        period.'';
            (3) in subsection (c), by inserting ``by a court of a 
        State'' before ``is made'';
            (4) in subsection (c)(1), by inserting ``and subsections 
        (e), (f), and (g)'' after ``located'';
            (5) in subsection (d)--
                    (A) by inserting ``individual'' before 
                ``contestant''; and
                    (B) by striking ``subsection (e)'' and inserting 
                ``subsections (e) and (f)'';
            (6) in subsection (e), by striking ``make a modification of 
        a child support order with respect to a child that is made'' 
        and inserting ``modify a child support order issued'';
            (7) in subsection (e)(1), by inserting ``pursuant to 
        subsection (i)'' before the semicolon;
            (8) in subsection (e)(2)--
                    (A) by inserting ``individual'' before 
                ``contestant'' each place such term appears; and
                    (B) by striking ``to that court's making the 
                modification and assuming'' and inserting ``with the 
                State of continuing, exclusive jurisdiction for a court 
                of another State to modify the order and assume'';
            (9) by redesignating subsections (f) and (g) as subsections 
        (g) and (h), respectively;
            (10) by inserting after subsection (e) the following:
    ``(f) Recognition of Child Support Orders.--If one or more child 
support orders have been issued in this or another State with regard to 
an obligor and a child, a court shall apply the following rules in 
determining which order to recognize for purposes of continuing, 
exclusive jurisdiction and enforcement:
            ``(1) If only one court has issued a child support order, 
        the order of that court must be recognized.
            ``(2) If two or more courts have issued child support 
        orders for the same obligor and child, and only one of the 
        courts would have continuing, exclusive jurisdiction under this 
        section, the order of that court must be recognized.
            ``(3) If two or more courts have issued child support 
        orders for the same obligor and child, and only one of the 
        courts would have continuing, exclusive jurisdiction under this 
        section, an order issued by a court in the current home State 
        of the child must be recognized, but if an order has not been 
        issued in the current home State of the child, the order most 
        recently issued must be recognized.
            ``(4) If two or more courts have issued child support 
        orders for the same obligor and child, and none of the courts 
        would have continuing, exclusive jurisdiction under this 
        section, a court may issue a child support order, which must be 
        recognized.
            ``(5) The court that has issued an order recognized under 
        this subsection is the court having continuing, exclusive 
        jurisdiction.'';
            (11) in subsection (g) (as so redesignated)--
                    (A) by striking ``Prior'' and inserting 
                ``Modified''; and
                    (B) by striking ``subsection (e)'' and inserting 
                ``subsections (e) and (f)'';
            (12) in subsection (h) (as so redesignated)--
                    (A) in paragraph (2), by inserting ``including the 
                duration of current payments and other obligations of 
                support'' before the comma; and
                    (B) in paragraph (3), by inserting ``arrears 
                under'' after ``enforce''; and
            (13) by adding at the end the following:
    ``(i) Registration for Modification.--If there is no individual 
contestant or child residing in the issuing State, the party or support 
enforcement agency seeking to modify, or to modify and enforce, a child 
support order issued in another State shall register that order in a 
State with jurisdiction over the nonmovant for the purpose of 
modification.''.

SEC. 9433. STATE LAWS PROVIDING EXPEDITED PROCEDURES.

    (a) State Law Requirements.--Section 466 (42 U.S.C. 666) is 
amended--
            (1) in subsection (a)(2), in the first sentence, to read as 
        follows: ``Expedited administrative and judicial procedures 
        (including the procedures specified in subsection (c)) for 
        establishing paternity and for establishing, modifying, and 
        enforcing support obligations.''; and
            (2) by adding after subsection (b) the following new 
        subsection:
    ``(c) Expedited Procedures.--The procedures specified in this 
subsection are the following:
            ``(1) Administrative action by state agency.--Procedures 
        which give the State agency the authority (and recognize and 
        enforce the authority of State agencies of other States), 
        without the necessity of obtaining an order from any other 
        judicial or administrative tribunal (but subject to due process 
        safeguards, including (as appropriate) requirements for notice, 
        opportunity to contest the action, and opportunity for an 
        appeal on the record to an independent administrative or 
        judicial tribunal), to take the following actions relating to 
        establishment or enforcement of orders:
                    ``(A) Genetic testing.--To order genetic testing 
                for the purpose of paternity establishment as provided 
                in section 466(a)(5).
                    ``(B) Default orders.--To enter a default order, 
                upon a showing of service of process and any additional 
                showing required by State law--
                            ``(i) establishing paternity, in the case 
                        of any putative father who refuses to submit to 
                        genetic testing; and
                            ``(ii) establishing or modifying a support 
                        obligation, in the case of a parent (or other 
                        obligor or obligee) who fails to respond to 
                        notice to appear at a proceeding for such 
                        purpose.
                    ``(C) Subpoenas.--To subpoena any financial or 
                other information needed to establish, modify, or 
                enforce an order, and to sanction failure to respond to 
                any such subpoena.
                    ``(D) Access to personal and financial 
                information.--To obtain access, subject to safeguards 
                on privacy and information security, to the following 
                records (including automated access, in the case of 
                records maintained in automated data bases):
                            ``(i) records of other State and local 
                        government agencies, including--
                                    ``(I) vital statistics (including 
                                records of marriage, birth, and 
                                divorce);
                                    ``(II) State and local tax and 
                                revenue records (including information 
                                on residence address, employer, income 
                                and assets);
                                    ``(III) records concerning real and 
                                titled personal property;
                                    ``(IV) records of occupational and 
                                professional licenses, and records 
                                concerning the ownership and control of 
                                corporations, partnerships, and other 
                                business entities;
                                    ``(V) employment security records;
                                    ``(VI) records of agencies 
                                administering public assistance 
                                programs;
                                    ``(VII) records of the motor 
                                vehicle department; and
                                    ``(VIII) corrections records; and
                            ``(ii) certain records held by private 
                        entities, including--
                                    ``(I) customer records of public 
                                utilities and cable television 
                                companies; and
                                    ``(II) information (including 
                                information on assets and liabilities) 
                                on individuals who owe or are owed 
                                support (or against or with respect to 
                                whom a support obligation is sought) 
                                held by financial institutions (subject 
                                to limitations on liability of such 
                                entities arising from affording such 
                                access).
                    ``(E) Income withholding.--To order income 
                withholding in accordance with subsection (a)(1) and 
                (b) of section 466.
                    ``(F) Change in payee.--(In cases where support is 
                subject to an assignment under section 403(b)(1)(E)(i), 
                471(a)(17), or 1912, or to a requirement to pay through 
                the centralized collections unit under section 454B) 
                upon providing notice to obligor and obligee, to direct 
                the obligor or other payor to change the payee to the 
                appropriate government entity.
                    ``(G) Secure assets to satisfy arrearages.--For the 
                purpose of securing overdue support--
                            ``(i) to intercept and seize any periodic 
                        or lump-sum payment to the obligor by or 
                        through a State or local government agency, 
                        including--
                                    ``(I) unemployment compensation, 
                                workers' compensation, and other 
                                benefits;
                                    ``(II) judgments and settlements in 
                                cases under the jurisdiction of the 
                                State or local government; and
                                    ``(III) lottery winnings;
                            ``(ii) to attach and seize assets of the 
                        obligor held by financial institutions;
                            ``(iii) to attach public and private 
                        retirement funds in appropriate cases, as 
                        determined by the Secretary; and
                            ``(iv) to impose liens in accordance with 
                        paragraph (a)(4) and, in appropriate cases, to 
                        force sale of property and distribution of 
                        proceeds.
                    ``(H) Increase monthly payments.--For the purpose 
                of securing overdue support, to increase the amount of 
                monthly support payments to include amounts for 
                arrearages (subject to such conditions or restrictions 
                as the State may provide).
                    ``(I) Suspension of drivers' licenses.--To suspend 
                drivers' licenses of individuals owing past-due 
                support, in accordance with subsection (a)(16).
            ``(2) Substantive and procedural rules.--The expedited 
        procedures required under subsection (a)(2) shall include the 
        following rules and authority, applicable with respect to all 
        proceedings to establish paternity or to establish, modify, or 
        enforce support orders:
                    ``(A) Locator information; presumptions concerning 
                notice.--Procedures under which--
                            ``(i) the parties to any paternity or child 
                        support proceedings are required (subject to 
                        privacy safeguards) to file with the tribunal 
                        before entry of an order, and to update as 
                        appropriate, information on location and 
                        identity (including Social Security number, 
                        residential and mailing addresses, telephone 
                        number, driver's license number, and name, 
                        address, and telephone number of employer); and
                            ``(ii) in any subsequent child support 
                        enforcement action between the same parties, 
                        the tribunal shall be authorized, upon 
                        sufficient showing that diligent effort has 
                        been made to ascertain such party's current 
                        location, to deem due process requirements for 
                        notice and service of process to be met, with 
                        respect to such party, by delivery to the most 
                        recent residential or employer address so filed 
                        pursuant to clause (i).
                    ``(B) Statewide jurisdiction.--Procedures under 
                which--
                            ``(i) the State agency and any 
                        administrative or judicial tribunal with 
                        authority to hear child support and paternity 
                        cases exerts statewide jurisdiction over the 
                        parties, and orders issued in such cases have 
                        statewide effect; and
                            ``(ii) (in the case of a State in which 
                        orders in such cases are issued by local 
                        jurisdictions) a case may be transferred 
                        between jurisdictions in the State without need 
                        for any additional filing by the petitioner, or 
                        service of process upon the respondent, to 
                        retain jurisdiction over the parties.''.
    (c) Exceptions From State Law Requirements.--Section 466(d) (42 
U.S.C. 666(d)) is amended--
            (1) by striking ``(d) If'' and inserting the following:
    ``(d) Exemptions From Requirements.--
            ``(1) In general.--Subject to paragraph (2), if''; and
            (2) by adding at the end the following new paragraph:
            ``(2) Nonexempt requirements.--The Secretary shall not 
        grant an exemption from the requirements of--
                    ``(A) subsection (a)(5) (concerning procedures for 
                paternity establishment);
                    ``(B) subsection (a)(10) (concerning modification 
                of orders);
                    ``(C) subsection (a)(12) (concerning recording of 
                orders in the central State case registry);
                    ``(D) subsection (a)(13) (concerning recording of 
                Social Security numbers);
                    ``(E) subsection (a)(14) (concerning interstate 
                enforcement); or
                    ``(F) subsection (c) (concerning expedited 
                procedures), other than paragraph (1)(A) thereof 
                (concerning establishment or modification of support 
                amount).''.
    (d) Automation of State Agency Functions.--Section 454A, as added 
by section 9415(a)(2) of this Act and as amended by sections 9421 and 
9422(c) of this Act, is amended by adding at the end the following new 
subsection:
    ``(h) Expedited Administrative Procedures.--The automated system 
required under this section shall be used, to the maximum extent 
feasible, to implement any expedited administrative procedures required 
under section 466(c).''.

                   CHAPTER 5--PATERNITY ESTABLISHMENT

SEC. 9441. SENSE OF THE CONGRESS.

    It is the sense of the Congress that social services should be 
provided in hospitals to women who have become pregnant as a result of 
rape or incest.

SEC. 9442. AVAILABILITY OF PARENTING SOCIAL SERVICES FOR NEW FATHERS.

    Section 466(a) (42 U.S.C. 666(a)), as amended by sections 9401(a), 
9426(a), and 9431 of this Act, is amended by inserting after paragraph 
(14) the following:
            ``(15) Procedures for providing new fathers with positive 
        parenting counseling that stresses the importance of paying 
        child support in a timely manner, in accordance with 
        regulations prescribed by the Secretary.''.

SEC. 9443. COOPERATION REQUIREMENT AND GOOD CAUSE EXCEPTION.

    (a) In General.--Section 454 (42 U.S.C. 654) is amended--
            (1) by striking ``and'' at the end of paragraph (23);
            (2) by striking the period at the end of paragraph (24) and 
        inserting ``; and''; and
            (3) by inserting after paragraph (24) the following:
            ``(25) provide that the State agency administering the plan 
        under this part--
                    ``(A) will make the determination specified under 
                paragraph (4), as to whether an individual is 
                cooperating with efforts to establish paternity and 
                secure support (or has good cause not to cooperate with 
                such efforts) for purposes of the requirements of 
                sections 403(b)(1)(E)(i) and 1912;
                    ``(B) will advise individuals, both orally and in 
                writing, of the grounds for good cause exceptions to 
                the requirement to cooperate with such efforts;
                    ``(C) will take the best interests of the child 
                into consideration in making the determination whether 
                such individual has good cause not to cooperate with 
                such efforts;
                    ``(D)(i) will make the initial determination as to 
                whether an individual is cooperating (or has good cause 
                not to cooperate) with efforts to establish paternity 
                within 10 days after such individual is referred to 
                such State agency by the State agency administering the 
                program under part A of title XIX;
                    ``(ii) will make redeterminations as to cooperation 
                or good cause at appropriate intervals; and
                    ``(iii) will promptly notify the individual, and 
                the State agencies administering such programs, of each 
                such determination and redetermination;
                    ``(E) with respect to any child born on or after 
                the date 10 months after enactment of this provision, 
                will not determine (or redetermine) the mother (or 
                other custodial relative) of such child to be 
                cooperating with efforts to establish paternity unless 
                such individual furnishes--
                            ``(i) the name of the putative father (or 
                        fathers); and
                            ``(ii) sufficient additional information to 
                        enable the State agency, if reasonable efforts 
                        were made, to verify the identity of the person 
                        named as the putative father (including such 
                        information as the putative father's present 
                        address, telephone number, date of birth, past 
                        or present place of employment, school 
                        previously or currently attended, and names and 
                        addresses of parents, friends, or relatives 
                        able to provide location information, or other 
                        information that could enable service of 
                        process on such person), and
                    ``(F)(i) (where a custodial parent who was 
                initially determined not to be cooperating (or to have 
                good cause not to cooperate) is later determined to be 
                cooperating or to have good cause not to cooperate) 
                will immediately notify the State agencies 
                administering the programs under part A of title XIX 
                that this eligibility condition has been met; and
                    ``(ii) (where a custodial parent was initially 
                determined to be cooperating (or to have good cause not 
                to cooperate)) will not later determine such individual 
                not to be cooperating (or not to have good cause not to 
                cooperate) until such individual has been afforded an 
                opportunity for a hearing.''.
    (b) Medicaid Amendments.--Section 1912(a) (42 U.S.C. 1396k(a)) is 
amended--
            (1) in paragraph (1)(B), by inserting ``(except as provided 
        in paragraph (2))'' after ``to cooperate with the State'';
            (2) in subparagraphs (B) and (C) of paragraph (1) by 
        striking ``, unless'' and all that follows and inserting a 
        semicolon; and
            (3) by redesignating paragraph (2) as paragraph (5), and 
        inserting after paragraph (1) the following new paragraphs:
            ``(2) provide that the State agency will immediately refer 
        each applicant or recipient requiring paternity establishment 
        services to the State agency administering the program under 
        part D of title IV;
            ``(3) provide that an individual will not be required to 
        cooperate with the State, as provided under paragraph (1), if 
        the individual is found to have good cause for refusing to 
        cooperate, as determined in accordance with standards 
        prescribed by the Secretary, which standards shall take into 
        consideration the best interests of the individuals involved--
                    ``(A) to the satisfaction of the State agency 
                administering the program under part D, as determined 
                in accordance with section 454(25), with respect to the 
                requirements to cooperate with efforts to establish 
                paternity and to obtain support (including medical 
                support) from a parent; and
                    ``(B) to the satisfaction of the State agency 
                administering the program under this title, with 
                respect to other requirements to cooperate under 
                paragraph (1);
            ``(4) provide that (except as provided in paragraph (5)) an 
        applicant requiring paternity establishment services (other 
        than an individual presumptively eligible pursuant to section 
        1920) shall not be eligible for medical assistance under this 
        title until such applicant--
                    ``(i) has furnished to the agency administering the 
                State plan under part D of title IV the information 
                specified in section 454(25)(E); or
                    ``(ii) has been determined by such agency to have 
                good cause not to cooperate; and
            ``(5) provide that the provisions of paragraph (4) shall 
        not apply with respect to an applicant--
                    ``(i) if such agency has not, within 10 days after 
                such individual was referred to such agency, provided 
                the notification required by section 454(25)(D)(iii), 
                until such notification is received; and
                    ``(ii) if such individual appeals a determination 
                that the individual lacks good cause for 
                noncooperation, until after such determination is 
                affirmed after notice and opportunity for a hearing.''.
    (c) Effective Date.--The amendments made by this section shall be 
effective with respect to applications filed in or after the first 
calendar quarter beginning 10 months or more after the date of the 
enactment of this Act (or such earlier quarter as the State may select) 
for assistance under a State plan approved under part A of title IV of 
the Social Security Act or for medical assistance under a State plan 
approved under title XIX of such Act.

SEC. 9444. FEDERAL MATCHING PAYMENTS.

    (a) Increased Base Matching Rate.--Section 455(a)(2) (42 U.S.C. 
655(a)(2)) is amended to read as follows:
            ``(2) The applicable percent for a quarter for purposes of 
        paragraph (1)(A) is--
                    ``(A) for fiscal year 1996, 69 percent;
                    ``(B) for fiscal year 1997, 72 percent; and
                    ``(C) for fiscal year 1998 and succeeding fiscal 
                years, 75 percent.''.
    (b) Maintenance of Effort.--Section 455 (42 U.S.C. 655) is 
amended--
            (1) in subsection (a)(1), in the matter preceding 
        subparagraph (A), by striking ``From'' and inserting ``Subject 
        to subsection (c), from''; and
            (2) by inserting after subsection (b) the following:
    ``(c) Maintenance of Effort.--Notwithstanding subsection (a), total 
expenditures for the State program under this part for fiscal year 1996 
and each succeeding fiscal year, reduced by the percentage specified 
for such fiscal year under subparagraph (A), (B), or (C)(i) of 
paragraph (2), shall not be less than such total expenditures for 
fiscal year 1995, reduced by 66 percent.''.

SEC. 9445. STATE LAWS CONCERNING PATERNITY ESTABLISHMENT.

    (a) State Laws Required.--Section 466(a)(5) (42 U.S.C. 666(a)(5)) 
is amended--
            (1) by striking ``(5)'' and inserting the following:
            ``(5) Procedures concerning paternity establishment.--'';
            (2) in subparagraph (A)--
                    (A) by striking ``(A)(i)'' and inserting the 
                following:
                    ``(A) Establishment process available from birth 
                until age eighteen.--(i)''; and
                    (B) by indenting clauses (i) and (ii) so that the 
                left margin of such clauses is 2 ems to the right of 
                the left margin of paragraph (4);
            (3) in subparagraph (B)--
                    (A) by striking ``(B)'' and inserting the 
                following:
                    ``(B) Procedures concerning genetic testing.--
                (i)'';
                    (B) in clause (i), as redesignated, by inserting 
                before the period ``, where such request is supported 
                by a sworn statement (I) by such party alleging 
                paternity setting forth facts establishing a reasonable 
                possibility of the requisite sexual contact of the 
                parties, or (II) by such party denying paternity 
                setting forth facts establishing a reasonable 
                possibility of the nonexistence of sexual contact of 
                the parties;'';
                    (C) by inserting after and below clause (i) (as 
                redesignated) the following new clause:
                    ``(ii) Procedures which require the State agency, 
                in any case in which such agency orders genetic 
                testing--
                            ``(I) to pay costs of such tests, subject 
                        to recoupment (where the State so elects) from 
                        the putative father if paternity is 
                        established; and
                            ``(II) to obtain additional testing in any 
                        case where an original test result is disputed, 
                        upon request and advance payment by the 
                        disputing party.'';
            (4) by striking subparagraphs (C) and (D) and inserting the 
        following:
                    ``(C) Paternity acknowledgment.--(i) Procedures for 
                a simple civil process for voluntarily acknowledging 
                paternity under which the State must provide that, 
                before a mother and a putative father can sign an 
                acknowledgment of paternity, the putative father and 
                the mother must be given notice, orally, in writing, 
                and in a language that each can understand, of the 
                alternatives to, the legal consequences of, and the 
                rights (including, if 1 parent is a minor, any rights 
                afforded due to minority status) and responsibilities 
                that arise from, signing the acknowledgment.
                    ``(ii) Such procedures must include a hospital-
                based program for the voluntary acknowledgment of 
                paternity focusing on the period immediately before or 
                after the birth of a child.
                    ``(iii) Such procedures must require the State 
                agency responsible for maintaining birth records to 
                offer voluntary paternity establishment services.
                    ``(iv) The Secretary shall prescribe regulations 
                governing voluntary paternity establishment services 
                offered by hospitals and birth record agencies. The 
                Secretary shall prescribe regulations specifying the 
                types of other entities that may offer voluntary 
                paternity establishment services, and governing the 
                provision of such services, which shall include a 
                requirement that such an entity must use the same 
                notice provisions used by, the same materials used by, 
                provide the personnel providing such services with the 
                same training provided by, and evaluate the provision 
                of such services in the same manner as, voluntary 
                paternity establishment programs of hospitals and birth 
                record agencies.
                    ``(v) Such procedures must require the State and 
                those required to establish paternity to use only the 
                affidavit developed under section 452(a)(7) for the 
                voluntary acknowledgment of paternity, and to give full 
                faith and credit to such an affidavit signed in any 
                other State.
                    ``(D) Status of signed paternity acknowledgment.--
                (i) Procedures under which a signed acknowledgment of 
                paternity is considered a legal finding of paternity, 
                subject to the right of any signatory to rescind the 
                acknowledgment within 60 days.
                    ``(ii)(I) Procedures under which, after the 60-day 
                period referred to in clause (i), a signed 
                acknowledgment of paternity may be challenged in court 
                only on the basis of fraud, duress, or material mistake 
                of fact, with the burden of proof upon the challenger, 
                and under which the legal responsibilities (including 
                child support obligations) of any signatory arising 
                from the acknowledgment may not be suspended during the 
                challenge, except for good cause shown.
                    ``(II) Procedures under which, after the 60-day 
                period referred to in clause (i), a minor who signs an 
                acknowledgment of paternity other than in the presence 
                of a parent or court-appointed guardian ad litem may 
                rescind the acknowledgment in a judicial or 
                administrative proceeding, until the earlier of--
                            ``(aa) attaining the age of majority; or
                            ``(bb) the date of the first judicial or 
                        administrative proceeding brought (after the 
                        signing) to establish a child support 
                        obligation, visitation rights, or custody 
                        rights with respect to the child whose 
                        paternity is the subject of the acknowledgment, 
                        and at which the minor is represented by a 
                        parent, guardian ad litem, or attorney.'';
            (5) by striking subparagraph (E) and inserting the 
        following:
                    ``(E) Bar on acknowledgment ratification 
                proceedings.--Procedures under which no judicial or 
                administrative proceedings are required or permitted to 
                ratify an unchallenged acknowledgment of paternity.'';
            (6) by striking subparagraph (F) and inserting the 
        following:
                    ``(F) Admissibility of genetic testing results.--
                Procedures--
                            ``(i) requiring that the State admit into 
                        evidence, for purposes of establishing 
                        paternity, results of any genetic test that 
                        is--
                                    ``(I) of a type generally 
                                acknowledged, by accreditation bodies 
                                designated by the Secretary, as 
                                reliable evidence of paternity; and
                                    ``(II) performed by a laboratory 
                                approved by such an accreditation body;
                            ``(ii) that any objection to genetic 
                        testing results must be made in writing not 
                        later than a specified number of days before 
                        any hearing at which such results may be 
                        introduced into evidence (or, at State option, 
                        not later than a specified number of days after 
                        receipt of such results); and
                            ``(iii) that, if no objection is made, the 
                        test results are admissible as evidence of 
                        paternity without the need for foundation 
                        testimony or other proof of authenticity or 
                        accuracy.''; and
            (7) by adding after subparagraph (H) the following new 
        subparagraphs:
                    ``(I) No right to jury trial.--Procedures providing 
                that the parties to an action to establish paternity 
                are not entitled to jury trial.
                    ``(J) Temporary support order based on probable 
                paternity in contested cases.--Procedures which require 
                that a temporary order be issued, upon motion by a 
                party, requiring the provision of child support pending 
                an administrative or judicial determination of 
                parentage, where there is clear and convincing evidence 
                of paternity (on the basis of genetic tests or other 
                evidence).
                    ``(K) Proof of certain support and paternity 
                establishment costs.--Procedures under which bills for 
                pregnancy, childbirth, and genetic testing are 
                admissible as evidence without requiring third-party 
                foundation testimony, and shall constitute prima facie 
                evidence of amounts incurred for such services and 
                testing on behalf of the child.
                    ``(L) Waiver of state debts for cooperation.--At 
                the option of the State, procedures under which the 
                tribunal establishing paternity and support has 
                discretion to waive rights to all or part of amounts 
                owed to the State (but not to the mother) for costs 
                related to pregnancy, childbirth, and genetic testing 
                and for public assistance paid to the family where the 
                father cooperates or acknowledges paternity before or 
                after genetic testing.
                    ``(M) Standing of putative fathers.--Procedures 
                ensuring that the putative father has a reasonable 
                opportunity to initiate a paternity action.''.
    (b) National Paternity Acknowledgment Affidavit.--Section 452(a)(7) 
(42 U.S.C. 652(a)(7)) is amended by inserting ``, and develop an 
affidavit to be used for the voluntary acknowledgment of paternity 
which shall include the social security account number of each parent'' 
before the semicolon.
    (c) Technical Amendment.--Section 468 (42 U.S.C. 668) is amended by 
striking ``a simple civil process for voluntarily acknowledging 
paternity and''.

SEC. 9446. OUTREACH FOR VOLUNTARY PATERNITY ESTABLISHMENT.

    (a) State Plan Requirement.--Section 454(23) (42 U.S.C. 654(23)) is 
amended by adding at the end the following new subparagraph:
                    ``(C) publicize the availability and encourage the 
                use of procedures for voluntary establishment of 
                paternity and child support through a variety of means, 
                which--
                            ``(i) include distribution of written 
                        materials at health care facilities (including 
                        hospitals and clinics), and other locations 
                        such as schools;
                            ``(ii) may include pre-natal programs to 
                        educate expectant couples on individual and 
                        joint rights and responsibilities with respect 
                        to paternity (and may require all expectant 
                        recipients of assistance under part A to 
                        participate in such pre-natal programs, as an 
                        element of cooperation with efforts to 
                        establish paternity and child support);
                            ``(iii) include, with respect to each child 
                        discharged from a hospital after birth for whom 
                        paternity or child support has not been 
                        established, reasonable follow-up efforts 
                        (including at least one contact of each parent 
                        whose whereabouts are known, except where there 
                        is reason to believe such follow-up efforts 
                        would put mother or child at risk), providing--
                                    ``(I) in the case of a child for 
                                whom paternity has not been 
                                established, information on the 
                                benefits of and procedures for 
                                establishing paternity; and
                                    ``(II) in the case of a child for 
                                whom paternity has been established but 
                                child support has not been established, 
                                information on the benefits of and 
                                procedures for establishing a child 
                                support order, and an application for 
                                child support services;''.
    (b) Enhanced Federal Matching.--Section 455(a)(1)(C) (42 U.S.C. 
655(a)(1)(C)) is amended--
            (1) by inserting ``(i)'' before ``laboratory costs'', and
            (2) by inserting before the semicolon ``, and (ii) costs of 
        outreach programs designed to encourage voluntary 
        acknowledgment of paternity''.
    (c) Effective Dates.--(1) The amendments made by subsection (a) 
shall become effective October 1, 1997.
    (2) The amendments made by subsection (b) shall be effective with 
respect to calendar quarters beginning on and after October 1, 1996.

      CHAPTER 6--ESTABLISHMENT AND MODIFICATION OF SUPPORT ORDERS

SEC. 9451. NATIONAL CHILD SUPPORT GUIDELINES COMMISSION.

    (a) Establishment.--There is hereby established a commission to be 
known as the ``National Child Support Guidelines Commission'' (in this 
section referred to as the ``Commission'').
    (b) General Duties.--The Commission shall develop a national child 
support guideline for consideration by the Congress that is based on a 
study of various guideline models, the benefits and deficiencies of 
such models, and any needed improvements.
    (c) Membership.--
            (1) Number; appointment.--
                    (A) In general.--The Commission shall be composed 
                of 12 individuals appointed jointly by the Secretary of 
                Health and Human Services and the Congress, not later 
                than January 15, 1997, of which--
                            (i) 2 shall be appointed by the Chairman of 
                        the Committee on Finance of the Senate, and 1 
                        shall be appointed by the ranking minority 
                        member of the Committee;
                            (ii) 2 shall be appointed by the Chairman 
                        of the Committee on Ways and Means of the House 
                        of Representatives, and 1 shall be appointed by 
                        the ranking minority member of the Committee; 
                        and
                            (iii) 6 shall be appointed by the Secretary 
                        of Health and Human Services.
                    (B) Qualifications of members.--Members of the 
                Commission shall have expertise and experience in the 
                evaluation and development of child support guidelines. 
                At least 1 member shall represent advocacy groups for 
                custodial parents, at least 1 member shall represent 
                advocacy groups for noncustodial parents, and at least 
                1 member shall be the director of a State program under 
                part D of title IV of the Social Security Act.
            (2) Terms of office.--Each member shall be appointed for a 
        term of 2 years. A vacancy in the Commission shall be filled in 
        the manner in which the original appointment was made.
    (d) Commission Powers, Compensation, Access to Information, and 
Supervision.--The first sentence of subparagraph (C), the first and 
third sentences of subparagraph (D), subparagraph (F) (except with 
respect to the conduct of medical studies), clauses (ii) and (iii) of 
subparagraph (G), and subparagraph (H) of section 1886(e)(6) of the 
Social Security Act shall apply to the Commission in the same manner in 
which such provisions apply to the Prospective Payment Assessment 
Commission.
    (e) Report.--Not later than 2 years after the appointment of 
members, the Commission shall submit to the President, the Committee on 
Ways and Means of the House of Representatives, and the Committee on 
Finance of the Senate, a recommended national child support guideline 
and a final assessment of issues relating to such a proposed national 
child support guideline.
    (f) Termination.--The Commission shall terminate 6 months after the 
submission of the report described in subsection (e).

SEC. 9452. SIMPLIFIED PROCESS FOR REVIEW AND ADJUSTMENT OF CHILD 
              SUPPORT ORDERS.

    (a) In General.--Section 466(a)(10) (42 U.S.C. 666(a)(10)) is 
amended to read as follows:
            ``(10) Procedures for modification of support orders.--
                    ``(A)(i) Procedures under which--
                            ``(I) every 3 years, at the request of 
                        either parent subject to a child support order, 
                        the State shall review and, as appropriate, 
                        adjust the order in accordance with the 
                        guidelines established under section 467(a) if 
                        the amount of the child support award under the 
                        order differs from the amount that would be 
                        awarded in accordance with such guidelines, 
                        without a requirement for any other change in 
                        circumstances; and
                            ``(II) upon request at any time of either 
                        parent subject to a child support order, the 
                        State shall review and, as appropriate, adjust 
                        the order in accordance with the guidelines 
                        established under section 467(a) based on a 
                        substantial change in the circumstances of 
                        either such parent.
                    ``(ii) Such procedures shall require both parents 
                subject to a child support order to be notified of 
                their rights and responsibilities provided for under 
                clause (i) at the time the order is issued and in the 
                annual information exchange form provided under 
                subparagraph (B).
                    ``(B) Procedures under which each child support 
                order issued or modified in the State after the 
                effective date of this subparagraph shall require the 
                parents subject to the order to provide each other with 
                a complete statement of their respective financial 
                condition annually on a form which shall be established 
                by the Secretary and provided by the State. The 
                Secretary shall establish regulations for the 
                enforcement of such exchange of information.''.

                CHAPTER 7--ENFORCEMENT OF SUPPORT ORDERS

SEC. 9461. FEDERAL INCOME TAX REFUND OFFSET.

    (a) Changed Order of Refund Distribution Under Internal Revenue 
Code.--Section 6402(c) of the Internal Revenue Code of 1986 is amended 
by striking the 3rd sentence.
    (b) Elimination of Disparities in Treatment of Assigned and Non-
Assigned Arrearages.--(1) Section 464(a) (42 U.S.C. 664(a)) is 
amended--
            (A) by striking ``(a)'' and inserting ``(a) Offset 
        Authorized.--'';
            (B) in paragraph (1)--
                    (i) in the first sentence, by striking ``which has 
                been assigned to such State pursuant to section 
                402(a)(26) or section 471(a)(17)''; and
                    (ii) in the second sentence, by striking ``in 
                accordance with section 457 (b)(4) or (d)(3)'' and 
                inserting ``as provided in paragraph (2)'';
            (C) in paragraph (2), to read as follows:
            ``(2) The State agency shall distribute amounts paid by the 
        Secretary of the Treasury pursuant to paragraph (1)--
                    ``(A) in accordance with section 457(a)(4) or 
                (d)(3), in the case of past-due support assigned to a 
                State pursuant to section 403(b)(1)(E)(i) or 
                471(a)(17); and
                    ``(B) to or on behalf of the child to whom the 
                support was owed, in the case of past-due support not 
                so assigned.'';
            (D) in paragraph (3)--
                    (i) by striking ``or (2)'' each place it appears; 
                and
                    (ii) in subparagraph (B), by striking ``under 
                paragraph (2)'' and inserting ``on account of past-due 
                support described in paragraph (2)(B)''.
            (2) Section 464(b) (42 U.S.C. 664(b)) is amended--
                    (A) by striking ``(b)(1)'' and inserting ``(b) 
                Regulations.--''; and
                    (B) by striking paragraph (2).
            (3) Section 464(c) (42 U.S.C. 664(c)) is amended--
                    (A) by striking ``(c)(1) Except as provided in 
                paragraph (2), as'' and inserting ``(c) Definition.--
                As''; and
                    (B) by striking paragraphs (2) and (3).
    (c) Effective Date.--The amendments made by this section shall 
become effective October 1, 1999.

SEC. 9462. INTERNAL REVENUE SERVICE COLLECTION OF ARREARS.

    (a) Amendment to Internal Revenue Code.--Section 6305(a) of the 
Internal Revenue Code of 1986 is amended--
            (1) in paragraph (1), by inserting ``except as provided in 
        paragraph (5)'' after ``collected'';
            (2) by striking ``and'' at the end of paragraph (3);
            (3) by striking the period at the end of paragraph (4) and 
        inserting a comma;
            (4) by adding after paragraph (4) the following new 
        paragraph:
            ``(5) no additional fee may be assessed for adjustments to 
        an amount previously certified pursuant to such section 452(b) 
        with respect to the same obligor.''; and
            (5) by striking ``Secretary of Health, Education, and 
        Welfare'' each place it appears and inserting ``Secretary of 
        Health and Human Services''.
    (b) Effective Date.--The amendments made by this section shall 
become effective October 1, 1997.

SEC. 9463. AUTHORITY TO COLLECT SUPPORT FROM FEDERAL EMPLOYEES.

    (a) Consolidation and Streamlining of Authorities.--
            (1) Section 459 (42 U.S.C. 659) is amended in the caption 
        by inserting ``income withholding,'' before ``garnishment''.
            (2) Section 459(a) (42 U.S.C. 659(a)) is amended--
                    (A) by striking ``(a)'' and inserting ``(a) Consent 
                To Support Enforcement.--'';
                    (B) by striking ``section 207'' and inserting 
                ``section 207 of this Act and 38 U.S.C. 5301''; and
                    (C) by striking all that follows ``a private 
                person,'' and inserting ``to withholding in accordance 
                with State law pursuant to subsections (a)(1) and (b) 
                of section 466 and regulations of the Secretary 
                thereunder, and to any other legal process brought, by 
                a State agency administering a program under this part 
                or by an individual obligee, to enforce the legal 
                obligation of such individual to provide child support 
                or alimony.''.
            (3) Section 459(b) (42 U.S.C. 659(b)) is amended to read as 
        follows:
    ``(b) Consent to Requirements Applicable to Private Person.-- 
Except as otherwise provided herein, each entity specified in 
subsection (a) shall be subject, with respect to notice to withhold 
income pursuant to subsection (a)(1) or (b) of section 466, or to any 
other order or process to enforce support obligations against an 
individual (if such order or process contains or is accompanied by 
sufficient data to permit prompt identification of the individual and 
the moneys involved), to the same requirements as would apply if such 
entity were a private person.''.
            (4) Section 459(c) (42 U.S.C. 659(c)) is redesignated and 
        relocated as paragraph (2) of subsection (f), and is amended--
                    (A) by striking ``responding to interrogatories 
                pursuant to requirements imposed by section 461(b)(3)'' 
                and inserting ``taking actions necessary to comply with 
                the requirements of subsection (A) with regard to any 
                individual''; and
                    (B) by striking ``any of his duties'' and all that 
                follows and inserting ``such duties.''.
            (5) Section 461 (42 U.S.C. 661) is amended by striking 
        subsection (b), and section 459 (42 U.S.C. 659) is amended by 
        inserting after subsection (b) (as added by paragraph (3) of 
        this subsection) the following:
    ``(c) Designation of Agent; Response to Notice or Process.--(1) The 
head of each agency subject to the requirements of this section shall--
            ``(A) designate an agent or agents to receive orders and 
        accept service of process; and
            ``(B) publish (i) in the appendix of such regulations, (ii) 
        in each subsequent republication of such regulations, and (iii) 
        annually in the Federal Register, the designation of such agent 
        or agents, identified by title of position, mailing address, 
        and telephone number.''.
            (6) Section 459 (42 U.S.C. 659) is amended by striking 
        subsection (d) and by inserting after subsection (c)(1) (as 
        added by paragraph (5) of this subsection) the following:
    ``(2) Whenever an agent designated pursuant to paragraph (1) 
receives notice pursuant to subsection (a)(1) or (b) of section 466, or 
is effectively served with any order, process, or interrogatories, with 
respect to an individual's child support or alimony payment 
obligations, such agent shall--
            ``(A) as soon as possible (but not later than fifteen days) 
        thereafter, send written notice of such notice or service 
        (together with a copy thereof) to such individual at his duty 
        station or last-known home address;
            ``(B) within 30 days (or such longer period as may be 
        prescribed by applicable State law) after receipt of a notice 
        pursuant to subsection (a)(1) or (b) of section 466, comply 
        with all applicable provisions of such section 466; and
            ``(C) within 30 days (or such longer period as may be 
        prescribed by applicable State law) after effective service of 
        any other such order, process, or interrogatories, respond 
        thereto.''.
            (7) Section 461 (42 U.S.C. 661) is amended by striking 
        subsection (c), and section 459 (42 U.S.C. 659) is amended by 
        inserting after subsection (c) (as added by paragraph (5) and 
        amended by paragraph (6) of this subsection) the following:
    ``(d) Priority of Claims.--In the event that a governmental entity 
receives notice or is served with process, as provided in this section, 
concerning amounts owed by an individual to more than one person--
            ``(1) support collection under section 466(b) must be given 
        priority over any other process, as provided in section 
        466(b)(7);
            ``(2) allocation of moneys due or payable to an individual 
        among claimants under section 466(b) shall be governed by the 
        provisions of such section 466(b) and regulations thereunder; 
        and
            ``(3) such moneys as remain after compliance with 
        subparagraphs (A) and (B) shall be available to satisfy any 
        other such processes on a first-come, first-served basis, with 
        any such process being satisfied out of such moneys as remain 
        after the satisfaction of all such processes which have been 
        previously served.''.
            (8) Section 459(e) (42 U.S.C. 659(e)) is amended by 
        striking ``(e)'' and inserting the following:
    ``(e) No Requirement To Vary Pay Cycles.--''.
            (9) Section 459(f) (42 U.S.C. 659(f)) is amended by 
        striking ``(f)'' and inserting the following:
    ``(f) Relief From Liability.--(1)''.
            (10) Section 461(a) (42 U.S.C. 661(a)) is redesignated and 
        relocated as section 459(g), and is amended--
                    (A) by striking ``(g)'' and inserting the 
                following:
    ``(g) Regulations.--''; and
                    (B) by striking ``section 459'' and inserting 
                ``this section''.
            (11) Section 462 (42 U.S.C. 662) is amended by striking 
        subsection (f), and section 459 (42 U.S.C. 659) is amended by 
        inserting the following after subsection (g) (as added by 
        paragraph (10) of this subsection):
    ``(h) Moneys Subject to Process.--(1) Subject to subsection (i), 
moneys paid or payable to an individual which are considered to be 
based upon remuneration for employment, for purposes of this section--
            ``(A) consist of--
                    ``(i) compensation paid or payable for personal 
                services of such individual, whether such compensation 
                is denominated as wages, salary, commission, bonus, 
                pay, allowances, or otherwise (including severance pay, 
                sick pay, and incentive pay);
                    ``(ii) periodic benefits (including a periodic 
                benefit as defined in section 228(h)(3)) or other 
                payments--
                            ``(I) under the insurance system 
                        established by title II;
                            ``(II) under any other system or fund 
                        established by the United States which provides 
                        for the payment of pensions, retirement or 
                        retired pay, annuities, dependents' or 
                        survivors' benefits, or similar amounts payable 
                        on account of personal services performed by 
                        the individual or any other individual;
                            ``(III) as compensation for death under any 
                        Federal program;
                            ``(IV) under any Federal program 
                        established to provide `black lung' benefits; 
                        or
                            ``(V) by the Secretary of Veterans Affairs 
                        as pension, or as compensation for a service-
                        connected disability or death (except any 
                        compensation paid by such Secretary to a former 
                        member of the Armed Forces who is in receipt of 
                        retired or retainer pay if such former member 
                        has waived a portion of his retired pay in 
                        order to receive such compensation); and
                    ``(iii) worker's compensation benefits paid under 
                Federal or State law; but
            ``(B) do not include any payment--
                    ``(i) by way of reimbursement or otherwise, to 
                defray expenses incurred by such individual in carrying 
                out duties associated with his employment; or
                    ``(ii) as allowances for members of the uniformed 
                services payable pursuant to chapter 7 of title 37, 
                United States Code, as prescribed by the Secretaries 
                concerned (defined by section 101(5) of such title) as 
                necessary for the efficient performance of duty.''.
            (12) Section 462(g) (42 U.S.C. 662(g)) is redesignated and 
        relocated as section 459(i) (42 U.S.C. 659(i)).
            (13)(A) Section 462 (42 U.S.C. 662) is amended--
                    (i) in subsection (e)(1), by redesignating 
                subparagraphs (A), (B), and (C) as clauses (i), (ii), 
                and (iii); and
                    (ii) in subsection (e), by redesignating paragraphs 
                (1) and (2) as subparagraphs (A) and (B).
            (B) Section 459 (42 U.S.C. 659) is amended by adding at the 
        end the following:
    ``(j) Definitions.--For purposes of this section:''.
            (C) Subsections (a) through (e) of section 462 (42 U.S.C. 
        662), as amended by subparagraph (A) of this paragraph, are 
        relocated and redesignated as paragraphs (1) through (4), 
        respectively of section 459(j) (as added by subparagraph (B) of 
        this paragraph, (42 U.S.C. 659(j)), and the left margin of each 
        of such paragraphs (1) through (4) is indented 2 ems to the 
        right of the left margin of subsection (i) (as added by 
        paragraph (12) of this subsection).
    (b) Conforming Amendments.--
            (1) To part d of title iv.--Sections 461 and 462 (42 U.S.C. 
        661), as amended by subsection (a) of this section, are 
        repealed.
            (2) To title 5, united states code.--Section 5520a of title 
        5, United States Code, is amended, in subsections (h)(2) and 
        (i), by striking ``sections 459, 461, and 462 of the Social 
        Security Act (42 U.S.C. 659, 661, and 662)'' and inserting 
        ``section 459 of the Social Security Act (42 U.S.C. 659)''.
    (c) Military Retired and Retainer Pay.--(1) Definition of Court.--
Section 1408(a)(1) of title 10, United States Code, is amended--
            (A) by striking ``and'' at the end of subparagraph (B);
            (B) by striking the period at the end of subparagraph (C) 
        and inserting ``; and''; and
            (C) by adding after subparagraph (C) the following new 
        paragraph:
                    ``(D) any administrative or judicial tribunal of a 
                State competent to enter orders for support or 
                maintenance (including a State agency administering a 
                State program under part D of title IV of the Social 
                Security Act).'';
    (2) Definition of Court Order.--Section 1408(a)(2) of such title is 
amended by inserting ``or a court order for the payment of child 
support not included in or accompanied by such a decree or 
settlement,'' before ``which--''.
    (3) Public Payee.--Section 1408(d) of such title is amended--
            (A) in the heading, by striking ``to spouse'' and inserting 
        ``to (or for benefit of)''; and
            (B) in paragraph (1), in the first sentence, by inserting 
        ``(or for the benefit of such spouse or former spouse to a 
        State central collections unit or other public payee designated 
        by a State, in accordance with part D of title IV of the Social 
        Security Act, as directed by court order, or as otherwise 
        directed in accordance with such part D)'' before ``in an 
        amount sufficient''.
    (4) Relationship to Part D of Title IV.--Section 1408 of such title 
is amended by adding at the end the following new subsection:
    ``(j) Relationship to Other Laws.--In any case involving a child 
support order against a member who has never been married to the other 
parent of the child, the provisions of this section shall not apply, 
and the case shall be subject to the provisions of section 459 of the 
Social Security Act.''.
    (d) Effective Date.--The amendments made by this section shall 
become effective 6 months after the date of the enactment of this Act.

SEC. 9464. ENFORCEMENT OF CHILD SUPPORT OBLIGATIONS OF MEMBERS OF THE 
              ARMED FORCES.

    (a) Availability of Locator Information.--
            (1) Maintenance of address information.--The Secretary of 
        Defense shall establish a centralized personnel locator service 
        that includes the address of each member of the Armed Forces 
        under the jurisdiction of the Secretary. Upon request of the 
        Secretary of Transportation, addresses for members of the Coast 
        Guard shall be included in the centralized personnel locator 
        service.
            (2) Type of address.--
                    (A) Residential address.--Except as provided in 
                subparagraph (B), the address for a member of the Armed 
                Forces shown in the locator service shall be the 
                residential address of that member.
                    (B) Duty address.--The address for a member of the 
                Armed Forces shown in the locator service shall be the 
                duty address of that member in the case of a member--
                            (i) who is permanently assigned overseas, 
                        to a vessel, or to a routinely deployable unit; 
                        or
                            (ii) with respect to whom the Secretary 
                        concerned makes a determination that the 
                        member's residential address should not be 
                        disclosed due to national security or safety 
                        concerns.
            (3) Updating of locator information.--Within 30 days after 
        a member listed in the locator service establishes a new 
        residential address (or a new duty address, in the case of a 
        member covered by paragraph (2)(B)), the Secretary concerned 
        shall update the locator service to indicate the new address of 
        the member.
            (4) Availability of information.--The Secretary of Defense 
        shall make information regarding the address of a member of the 
        Armed Forces listed in the locator service available, on 
        request, to the Federal Parent Locator Service.
    (b) Facilitating Granting of Leave for Attendance at Hearings.--
            (1) Regulations.--The Secretary of each military 
        department, and the Secretary of Transportation with respect to 
        the Coast Guard when it is not operating as a service in the 
        Navy, shall prescribe regulations to facilitate the granting of 
        leave to a member of the Armed Forces under the jurisdiction of 
        that Secretary in a case in which--
                    (A) the leave is needed for the member to attend a 
                hearing described in paragraph (2);
                    (B) the member is not serving in or with a unit 
                deployed in a contingency operation (as defined in 
                section 101 of title 10, United States Code); and
                    (C) the exigencies of military service (as 
                determined by the Secretary concerned) do not otherwise 
                require that such leave not be granted.
            (2) Covered hearings.--Paragraph (1) applies to a hearing 
        that is conducted by a court or pursuant to an administrative 
        process established under State law, in connection with a civil 
        action--
                    (A) to determine whether a member of the Armed 
                Forces is a natural parent of a child; or
                    (B) to determine an obligation of a member of the 
                Armed Forces to provide child support.
            (3) Definitions.--For purposes of this subsection:
                    (A) The term ``court'' has the meaning given that 
                term in section 1408(a) of title 10, United States 
                Code.
                    (B) The term ``child support'' has the meaning 
                given such term in section 462 of the Social Security 
                Act (42 U.S.C. 662).
    (c) Payment of Military Retired Pay in Compliance With Child 
Support Orders.--
            (1) Date of certification of court order.--Section 1408 of 
        title 10, United States Code, is amended--
                    (A) by redesignating subsection (i) as subsection 
                (j); and
                    (B) by inserting after subsection (h) the following 
                new subsection (i):
    ``(i) Certification Date.--It is not necessary that the date of a 
certification of the authenticity or completeness of a copy of a court 
order or an order of an administrative process established under State 
law for child support received by the Secretary concerned for the 
purposes of this section be recent in relation to the date of receipt 
by the Secretary.''.
            (2) Payments consistent with assignments of rights to 
        states.--Section 1408(d)(1) of such title is amended by 
        inserting after the first sentence the following: ``In