GRI

Omnibus Budget Reconcihation Act of 1986

Law Financial services Law
Date: 21st Oct, 1986 Source: Congress.gov Country: USA Original Source

Brief

'The Omnibus Budget Reconciliation Act of 1986 is a comprehensive legislation aimed at balancing the federal budget. Key takeaways include changes to load line requirements for vessels, updates to the International Convention on Load Lines, and repeal of certain laws related to tonnage measurement. The act also establishes a timetable for completion of Coast Guard offshore safety studies and repeals certain laws related to civil service retirement and disability fund regulations. Additionally, it provides a mechanism for the government to recover losses due to false, fictitious, or fraudulent claims and statements in government programs. The law requires that each authority head promulgate rules and regulations to implement this chapter within 180 days after its enactment.'

100 STAT. 1874 PUBLIC LAW 99-509—OCT. 21, 1986
*Public Law 99-509
99th Congress c
An Act
Oct. 21, 1986
[H.R. 5300]
Omnibus Budget
Reconciliation
Act of 1986. To provide for reconciliation pursuant to section 2 of the concurrent resolution on the
budget for fiscal year 1987.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.
(a) SHORT TITLE.—This Act may be cited as the "Omnibus Budget
Reconcihation Act of 1986".
(b) TABLE OF CONTENTS.—
Title I. Agriculture programs.
Title II. Banking and housing programs.
Title III. Energy and environmental programs.
Title IV. Transportation and related programs.
Title V. Maritime programs.
Title VI. Civil service, Postal Service, and governmental affairs generally.
Title VII. Fiscal procedures.
Title VIII. Revenues, trade, and related programs.
Title IX. Income security, medicare, medicaid, and maternal and child health
programs.
TITLE I—AGRICULTURAL PROGRAMS
Subtitle A—Sale of Notes
SEC. 1001. SALE OF RURAL DEVELOPMENT NOTES.
7 use 1929a (a) SALES REQUIRED.—The Secretary of Agriculture, under such
note. terms as the Secretary may prescribe, shall sell notes and other
obligations held in the Rural Development Insurance Fund estab­
lished under section 309A of the Consolidated Farm and Rural
7 use 1929a. Development Act in such amounts as to realize net proceeds to the
Government of not less than—
(1) $1,000,000,000 from such sales during fiscal year 1987,
(2) $552,000,000 from such sales during fiscal year 1988, and
(3) $547,000,000 from such sales during fiscal year 1989.
(b) NONRECOURSE SALES.—The second sentence of section 309A(e)
of the Consolidated Farm and Rural Development Act (7 U.S.C.
1929a(e)) is amended by—
(1) inserting "and other obligations" after "Notes"; and
(2) striking out the period at the end thereof and inserting in
lieu thereof the following: ", including sale on a nonrecourse
basis. The Secretary and any subsequent purchaser of such
notes or other obligations sold by the Secretary on a
nonrecourse basis shall be relieved of any responsibilities that
might have been imposed had the borrower remained indebted
to the Secretary.".
7 use 1929a (c) CONTRACT PROVISIONS.—Consistent with section 309A(e) of the
note. Consolidated Farm and Rural Development Act, as amended by
subsection 0)), any sale of notes or other obligations, as described in
*Note: This is a subsequently ts^peset print of the hand enrollment which was signed by
the President on October 21, 1986. PUBLIC LAW 99-509—OCT. 21, 1986 100 STAT. 1875
subsection (a), shall not alter the terms specified in the note or other
obligation, except that, on sale, a note or other obligation shall not
be subject to the provisions of section 333(c) of the Consolidated
Farm and Rural Development Act.
(d) ELIGIBILITY TO PURCHASE NOTES.—Notwithstanding any other
provision of law, each institution of the Farm Credit System shall be
eligible to purchase notes and other obligations held in the Rural
Development Insurance Fund and to service (including the exten­
sion of additional credit and all other actions necessary to preserve,
conserve, or protect the institution's interest in the purchased notes
or other obligations), collect, and dispose of such notes and other
obligations, subject only to such terms and conditions as may be
agreed to by the Secretary of Agriculture and the purchasing
institution and as may be approved by the Farm Credit
Administration.
(e) LOAN SERVICING.—Prior to selling any note or other obligation,
as described in subsection (a), the Secretary of Agriculture shall
require persons offering to purchase the note or other obligation to
demonstrate—
(1) an ability or resources to provide such servicing, with
respect to the loans represented by the note or other obligation,
that the Secretary deems necessary to ensure the continued
performance on the loan; and
(2) the ability to generate capital to provide the borrowers of
the loans such additional credit as may be necessary in proper
servicing of the loans.
SEC. 1002. LIMITATION ON SALES FROM THE AGRICULTURAL CREDIT
INSURANCE FUND.
During fiscal years 1987 through 1989, no note shall be sold out of
the Agricultural Credit Insurance Fund, except in connection with
transactions with the Secretary of the Treasury, without prior
approval by Congress.
Subtitle B—Prepayment of Loans 7 use 1983.
7 use 1929a
note.
QM
7 use 1929 note.
7 use 1729 note.
SEC. 1011. PREPAYMENT OF REA GUARANTEED LOANS.
(a) AMENDMENT TO RURAL ELECTRIFICATION ACT OF 1936.—The
Rural Electrification Act of 1936 is amended by inserting after
section 306 (7 U.S.C. 936) the following new sections:
"SEC. 306A. PREPAYMENT OF LOANS.
"(a) Except as provided in subsection (c), a borrower of a loan
made by the Federal Financing Bank and guaranteed under section
306 of this Act may prepay such loan (or any loan advance there­
under) by paying the outstanding principal balance due on the loan
(or advance), if—
"(1) the loan is outstanding en July 2, 1986;
"(2) private capital, with the existing loan guarantee, is used
'f. to replace the loan; and
( "(3) the borrower certifies that any savings from such prepay­
ment will be passed on to its customers or used to improve the
financial strength of the borrower in cases of financial hardship.
"(b) No sums in addition to the payment of the outstanding
principal balance due on the loan may be charged as the result of 7 use 936a.
Banks and
banking. 100 STAT. 1876 PUBLIC LAW 99-509—OCT. 21, 1986
Banks and
banking.
Effective date.
Ante, p. 710.
Securities.
7 use 936.
7 use 936b.
Effective date.
7 use 936 note.
Ante, p. 710.
7 use 936a note.
Ante, p. 1875.
Utilities. such prepayment against the borrower, the fund, or the Rural
Electrification Administration.
"(c)(1) A borrower will not qualify for prepayment under this
section if, in the opinion of the Secretary of the Treasury, to prepay
in such borrower's case would adversely affect the operation of the
Federal Financing Bank.
"(2) Paragraph (1) shall be effective in fiscal year 1987 only for any
loan the prepayment of the principal amount of which will cause the
cumulative amount of net proceeds from all such prepayments made
during such year to exceed $2,017,500,000.
"(d)(1) The Administrator shall permit, subject to subsection (a),
prepayments of principal on loans in fiscal year 1987 under this
section or Public Law 99-349 in such amounts as to realize net
proceeds from all such prepayments in fiscal year 1987 in an
amount not less than $2,017,500,000.
"(2) The Administrator shall establish—
"(A) eligibility criteria to ensure that any loan prepayment
activity required to be carried out under this subsection will be
directed to those cooperative borrowers in greatest need of the
benefits associated with prepayment, as determined by the
Administrator; and
"(B) such other eligibility criteria as the Administrator deter­
mines are necessary to carry out this subsection.
"(e) Any guarantee of a loan prepaid under this section shall be
fully assignable under the provisions of section 306 of this Act and
transferable. However, the Administrator may require that any
such guarantee, if transfered or assigned, be transferred or assigned
to a loan or security that, if sold, will be grouped with
nonguaranteed loans or securities and sold in a manner to ensure
that such sale will not unreasonably compete with the marketing of
obligations of the United States.
"SEC. 306B. SALE OR PREPAYMENT OF DIRECT OR INSURED LOANS.
"A direct or insured loan made under this Act shall not be sold or
prepaid at a value less than the face value of any outstanding
principal balance on such loan, except when sold to or prepaid by
the borrower at the lesser of the outstanding principal balance due
on the loan or the loan's present value discounted from the face
value at maturity at the rate set by the Administrator. The excep­
tion contained in the preceding sentence shall be effective for the
period ending September 30,1987.".
(b) CONFORMING AMENDMENT.—Chapter I of the Act entitled "An
Act making urgent supplemental appropriations for the fiscal year
ending September 30, 1986, and for other purposes" (Public Law 99-
349), approved July 2, 1986, is amended by striking out the undesig­
nated paragraph relating to the prepayment of loans by Rural
Electrification and Telephone Systems.
(c) REGULATIONS.—The Secretary of Agriculture shall issue regula­
tions to implement this section within 60 days after the date of
enactment of this Act. Such regulations—
(1) shall facilitate prepayment of loans under section 306A of
the Rural Electrification Act of 1936, as added by subsection (a);
and
(2) may not require any rural utility that is a borrower of
loans subject to section 306A to make unreasonable reductions
in rates to its customers as a condition of such prepayment. PUBLIC LAW 99-509—OCT. 21, 1986 100 STAT. 1877
Subtitle C—Advance Deficiency Payments
SEC. 1021. ADVANCE DEFICIENCY PAYMENTS.
Notwithstanding any other provision of law, the Secretary of
Agriculture, in accordance with the criteria in section 107C of the
Agricultural Act of 1949, shall make advance deficiency payments
available for the 1987 crops of wheat, feed grains, upland cotton, and
rice. The percentage of the projected payment rate used in comput­
ing such payments shall not be less than (1) 40 percent in the case of
wheat and feed grains, and (2) 30 percent in the case of rice and
upland cotton.
Subtitle D—Farm Credit Institutions
SEC. 1031. SHORT TITLE.
This subtitle may be cited as the "Farm Credit Act Amendments
of 1986".
SEC. 1032. POLICY.
Section 1.1 of the Farm Credit Act of 1971 (12 U.S.C. 2001) is
amended by adding at the end thereof the following new subsection:
"(c) It is declared to be the policy of Congress that the credit needs
of farmers, ranchers, and their cooperatives are best served if the
institutions of the Farm Credit System provide equitable and
competitive interest rates to eligible borrowers, taking into consider­
ation the creditworthiness and access to alternative sources of credit
for borrowers, the cost of funds, including any costs of defeasance
under section 4.8(b), the operating costs of the institution, including
the costs of any loan loss amortization under section 5.19(b), the cost
of servicing loans, the need to retain earnings to protect borrowers'
stock, and the volume of net new borrowing. Further, it is declared
to be the policy of Congress that Farm Credit System institutions
take action in accordance with the Farm Credit Act Amendments of
1986 in such manner that borrowers from the institutions derive the
greatest benefit practicable from that Act: Provided, That in no case
is any borrower to be charged a rate of interest that is below
competitive market rates for similar loans made by private lenders
to borrowers of equivalent creditworthiness and access to alter­
native credit.".
SEC. 1033. TERMINATION OF FARM CREDIT ADMINISTRATION APPROVAL
OF INTEREST RATES CHARGED BY SYSTEM INSTITUTIONS.
(a) FEDERAL LAND BANKS.—The first sentence of section 1.7 of the
Farm Credit Act of 1971 (12 U.S.C. 2015) is amended by striking out
", with the approval of the Farm Credit Administration as provided
in section 4.17 of this Act".
Ot>) FEDERAL INTERMEDIATE CREDIT BANKS.—The second sentence of
section 2.4 of the Farm Credit Act of 1971 (12 U.S.C. 2075) is
amended by striking out "with the approval of the Farm Credit
Administration as provided in section 4.17 of this Act".
(c) BANKS FOR COOPERATIVES.—The first sentence of section 3.10(a)
of the Farm Credit Act of 1971 (12 U.S.C. 2131(a)) is amended by
striking out ", with the approval of the Farm Credit Administration
as provided in section 4.17 of this Act". 7 use 1445b-2
note.
7 use 1445b-2.
Farm Credit Act
Amendments of
1986.
12 use 2001
note.
Loans.
12 use 2159.
Post, p. 1878.
71-19A 0 – 89 – A : QL. 3 Part3 100 STAT. 1878 PUBLIC LAW 99-509—OCT. 21, 1986
.: etc'. ^
Contracts.
12 use 2211.
Loans.
State and local
governments.
Reports.
Banks and
banking.
Loans.
Supra. SEC. 1034. CERTAIN TRANSACTIONS WITH RESPECT TO SYSTEM OBLIGA­
TIONS.
Section 4.8 of the Farm Credit Act of 1971 (12 U.S.C. 2159) is
amended by—
(1) inserting the designation "(a)" after the heading; and
(2) adding at the end thereof the following:
"(b) Through December 31, 1988, each bank of the System, in
addition to purchasing obligations as authorized by this Act, may,
with the prior approval of the Farm Credit Administration and
subject to such conditions as it may establish, (1) reduce the cost of
its borrowings by doing one or more of the following: (A) contracting
with a third party, or an entity that is established as a limited
purpose System institution under section 4.25 and that is not to be
included in the combined financial statements of other System
institutions, with respect to the payment of interest on the bank's
obligations and the obligations of other banks incurred before Janu­
ary 1, 1985, in consideration of the payment of market interest rates
on such obligations, plus a premium, or (B) for the period July 1,
1986, through December 31, 1988, capitalizing interest costs on
obligations incurred before January 1, 1985, in excess of the esti­
mated interest costs on an equivalent amount of Farm Credit
System obligations at prevailing market rates on such obligations of
similar maturities as of the date of the enactment of this subsection,
or (C) taking other similar action; and (2) amortize, over a period of
not to exceed 20 years, the capitalization of the premium, capitaliza­
tion of interest expense, or like costs of any action taken under
clause (1).". ^ .
SEC. 1035. DETERMINATION OF INTEREST RATES.
Section 4.17 of the Farm Credit Act of 1971 (12 U.S.C. 2205) is
amended by striking out the first sentence and inserting in lieu
thereof the following: "Interest rates on loans from institutions of
the Farm Credit System shall not be subject to any interest rate
limitation imposed by any State constitution or statute or other
laws. Such limitation is preempted for purposes of this Act.".
SEC. 1036. TERMINATION OF FARM CREDIT ADMINISTRATION APPROVAL
OF INTEREST RATES CHARGED ON DIRECT AND DISCOUNTED
LOANS.
Section 5.17(a)(5)(A) of the Farm Credit Act of 1971 (12 U.S.C.
2252(a)(5)(A)) is amended by striking out "and on loans made or
discounted by such institutions".
SEC. 1037. ACCOUNTING. -"-'^ -. •,-.-.•:; ". . .: •..••..:-..,.-.^-v, -,;jp
Section 5.19(b) of the Farm Credit Act of 1971 (12 U.S.C. 2254(b)) is
amended by striking out the second sentence and inserting in lieu
thereof the following: "Each such report shall contain financial
statements prepared in accordance with generally accepted account­
ing principles, except with respect to any actions taken by any
banks of the System under section 4.8(b), and contain such addi­
tional information as the Farm Credit Administration by regulation
may require. Notwithstanding the provisions of the preceding sen­
tence and any other provision of this Act, for the period July 1, 1986,
through December 31, 1988, the institutions of the Farm Credit
System may, on the prior approval of the Farm Credit Administra­
tion and subject to such conditions as it may establish, capitalize
annually their provision for losses that is in excess of one-half of 1 PUBLIC LAW 99-509—OCT. 21, 1986 100 STAT. 1879
percent of loans outstanding and amortize such capitalized amounts
over a period not to exceed 20 years.".
TITLE II—BANKING AND HOUSING
PROGRAMS
SEC. 2001. SALE OF RURAL HOUSING LOANS. 42 USC 1487
(a) REQUIRED SALES TO PUBLIC.—The Secretary of Agriculture
shall take such actions as may be necessary to ensure that loans
made under title V of the Housing Act of 1949 are sold to the public 42 USC 1471.
in amounts sufficient to provide a net reduction in outlays of not
less than $1,715,000,000 in fiscal year 1987 from the proceeds of such
sales.
(b) PROCEDURES AND TERMS OF SALES.—
(1) ESTABLISHMENT OF GUIDELINES.—The Secretary of Agri­
culture shall establish specific guidelines for the sale of loans '"f D8l'2i
under subsection (a). The guidelines shall address the proce­
dures and terms applicable to the sale of the loans, including
the kind of protections that should be provided to borrowers and
terms that will ensure that the sale of the loans will be made at
the lowest practicable cost to the Federal Government. ^
(2) ASSISTANCE BY FEDERAL FINANCING BANK.—In selling loans "
* to the public under subsection (a), the Secretary of Agriculture
shall use the Federal Financing Bank as an agent to sell the
loans, unless the Secretary determines that the sale of loans
directly by the Secretary will result in a higher rate of return to
the Federal Government. If the Secretary determines to sell
loans directly under this paragraph, the Secretary shall notify
the Federal Financing Bank of such determination and the
loans involved and, to the extent practicable, shall implement
£ any reasonable recommendations that may be made by the
i Federal Financing Bank with respect to the procedures and
terms applicable to the sale.
(c) REPORTS TO CONGRESS.—
(1) NOTIFICATION OF INITIAL LOAN SALE.—Not less than 20 days
before the initial sale of loans under subsection (a), the Sec­
retary of Agriculture shall submit a report to the Committee on
Banking, Housing, and Urban Affairs of the Senate and the
Committee on Banking, Finance and Urban Affairs of the
House of Representatives containing an estimate of the amount
of the discount at which loans will be sold at such initial sale
and an estimate of the discount at which loans will be sold at
each subsequent sale during fiscal year 1987.
(2) REPORTS BY SECRETARY.—The Secretary of Agriculture
r shall submit periodic reports to the Committee on Banking,
Housing, and Urban Affairs of the Senate and the Committee
on Banking, Finance and Urban Affairs of the House of Rep­
resentatives setting forth the activities of the Secretary under
this section. Each report shall include the guidelines established
under subsection (b)(1), a description of the loans sold under
subsection (a), and an analysis of the net reduction in outlays
provided by the sale of the loans. The Secretary shall submit the
first report under this paragraph not later than 60 days after
3 the date of the enactment of this Act, and shall submit subse-100 STAT. 1880 PUBLIC LAW 99-509—OCT. 21, 1986
quent reports each 60 days thereafter through the end of fiscal
year 1987.
(3) REPORTS BY COMPTROLLER GENERAL.—The Comptroller Gen­
eral of the United States shall conduct an audit and evaluation
of the activities of the Secretary of Agriculture described in
each report submitted under paragraph (1) or (2), in accordance
with such regulations as the Comptroller General may pre-
Records. , ., scribe. The Comptroller General shall have access to such books,
records, accounts, and other materials of the Secretary as the
Comptroller General determines necessary to conduct each such
audit and evaluation. The Comptroller General shall submit to
the Committee on Banking, Housing, and Urban Affairs of the
Senate and the Committee on Banking, Finance and Urban
Affairs of the House of Representatives a report setting forth
the results of each such audit and evaluation.
(d) RELATION TO OTHER LAW.—The sale of loans under this section
shall not be subject to paragraph (2) or (3) of section 517(d) of the
42 use 1487. Housing Act of 1949.
SEC. 2002. SALE OF EXPORT-IMPORT BANK LOANS.
The Export-Import Bank Act of 1945 (12 U.S.C. 635 et seq.) is
amended by adding at the end the following new section:
12 use 635i-4. "SEC. 16. SALE OF BANK LOANS.
"(a) REQUIRED SALES TO PUBLIC.—The Board of Directors shall
take such actions as may be necessary to ensure that loans made by
the Bank under this Act are sold to the public in amounts sufficient
to provide a net reduction in outlays of not less than $1,500,000,000
in fiscal year 1987 from the proceeds of such sales.
"(b) PROCEDURES AND TERMS OF SALES.—
"(1) ESTABLISHMENT OF GUIDELINES.—The Board of Directors
shall establish specific guidelines for the sale of loans under
subsection (a). The guidelines shall address the procedures and
vii terms applicable to the sale of the loans, including terms that
will ensure that the sale of the loans will bring the highest
possible return to the Federal Government.
/ "(2) ASSISTANCE BY FEDERAL FINANCING BANK.—In selling
loans to the public under subsection (a), the Board of Directors
shall use the Federal Financing Bank as an agent to sell the
loans, unless the Board of Directors determines that the sale of
loans directly by the Export-Import Bank will result in a higher
rate of return to the Federal Government. If the Board of
Directors determines to sell loans directly under this paragraph,
the Board shall notify the Federal Financing Bank of such
determination and the loans involved and, to the extent prac­
ticable, shall implement any reasonable recommendations that
may be made by the Federal Financing Bank with respect to the
procedures and terms applicable to the sale.
"(c) REPORTS TO CONGRESS.—
"(1) NOTIFICATION OF INITIAL LOAN SALE.—Not less than 20
days before the initial sale of loans under subsection (a), the
Board of Directors shall submit a report to the Committee on
Banking, Housing, and Urban Affairs of the Senate and the
Committee on Banking, Finance and Urban Affairs of the
House of Representatives containing an estimate of the amount
of the discount at which loans will be sold at such initial sale PUBLIC LAW 99-509—OCT. 21, 1986 100 STAT. 1881
and an estimate of the discount at which loans will be sold at
each subsequent sale during fiscal year 1987.
"(2) REPORTS BY BANK.—^The Board of Directors shall submit
periodic reports to the Committee on Banking, Housing, and
Urban Affairs of the Senate and the Committee on Banking,
Finance and Urban Affairs of the House of Representatives
setting forth the activities of the Board of Directors under this
section. Each such report shall include the guidelines estab­
lished under subsection (b)(1), a description of the loans sold
under subsection (a), and an analysis of the net reduction in
outlays provided by the sale of such loans. The Board of Direc­
tors shall submit the first report under this paragraph not later
than 60 days after the date of the enactment of this Act, and
shall submit subsequent reports each 60 days thereafter
through the end of fiscal year 1987.
"(3) REPORTS BY COMPTROLLER GENERAL.—The Comptroller
General of the United States shall conduct an audit and evalua­
tion of the activities of the Board of Directors described in each
report submitted under paragraph (1) or (2), in accordance with
such regulations as the Comptroller General may prescribe. The
Comptroller General shall have access to such books, records,
accounts, and other materials of the Board of Directors as the
Comptroller General determines necessary to conduct each such
audit and evaluation. The Comptroller General shall submit to
the Committee on Banking, Housing, and Urban Affairs of the
Senate and the Committee on Banking, Finance and Urban
Affairs of the House of Representatives a report setting forth
the results of each such audit and evaluation.
"(d) SECURITIES LAWS NOT APPLICABLE TO SALES.—The sale of any
loan under this section shall be deemed to be a sale of exempted
securities within the meaning of section 3(a)(2) of the Securities Act
of 1933 (15 U.S.C. 77c(a)(2)) and section 3(a)(12) of the Securities
Exchange Act of 1934 (15 U.S.C. 78c(a)(12)). The Bank shall file with
the Securities and Exchange Commission such annual and other
reports with regard to such securities as the Commission shall
determine to be appropriate in view of the special character of the
Bank and its operations as may be necessary in the public interest
or for the protection of investors.". Records.
Reports.
TITLE III—ENERGY AND ENVIRONMENTAL
PROGRAMS
Subtitle A—Distribution of Petroleum
Overcharge Funds
SEC. 3001. SHORT TITLE.
This subtitle may be cited as the "Petroleum Overcharge Distribu­
tion and Restitution Act of 1986".
SEC. 3002. RESTITUTIONARY AMOUNTS COVERED.
(a) IN GENERAL—This subtitle (other than section 3005)—
(1) specifies the procedure for the disbursement of funds
collected, including interest thereon, by the Secretary or the
courts pursuant to the Emergency Petroleum Allocation Act of Petroleum
Overcharge
Distribution and
Restitution Act
of 1986.
15 use 4501
note.
15 use 4501. 100 STAT. 1882 PUBLIC LAW 99-509—OCT; 21, 1986
15 use 751 note;
12 use 1904
note.
iBicMsfl
96 Stat. 1919.
Securities.
Banks and
banking.
15 use 4502. 1973 or the Economic Stabilization Act of 1970 (and the regula­
tions issued thereunder) as restitution for actual or alleged
violations of such Acts or regulations; and
(2) subject to subsection (c), applies to—
(A) any amount of such funds held in escrow by the
Secretary through accounts administered by the Secretary
of the Treasury on or after the date of enactment of this
Act; and
(B) any amount of such funds determined at any time,
pursuant to judicial or administrative proceedings (includ­
ing any settlement agreement or declaratory judgment)
instituted by the Secretary to enforce such Acts and regula­
tions, to be amounts paid for such actual or alleged viola­
tions, including any such amounts held in escrow by any
court.
(b) SPECIAL RULE.—Amounts described in subsection (a)(2) and
held in an escrow account by a court before the date of enactment of
this Act may continue to be held by such court but shall be
disbursed, together with any interest thereon, by the Secretary or,
as appropriate, by the court only in accordance with the provisions
of this subtitle.
(c) EXCLUSIONS.—Subsection (a)(2) does not apply to—
(1) any amount actually disbursed before the date of enact­
ment of this Act to any person or class of persons pursuant to
section 155 of Public Law 97-377 or any final judicial or adminis­
trative order or judgment (including any settlement agreement
or declaratory judgment);
(2) any amount to which any person or class of persons has an
enforceable right, created or vested, or governed by the terms
and conditions of the settlement approved on July 7, 1986, in In
Re: the Department of Energy Stripper Well Exemption Litiga­
tion, M.D.L. No. 378, in the United States District Court for the
District of Kansas; and
(3) any amount designated by judicial or administrative order
or judgment (including any settlement agreement or declara­
tory judgment) for disbursement at any time to any specific
person or class of persons—
(A) identified in such order or judgment as injured by the
violation or alleged violation of the Acts described in
subsection (a)(1) (including the regulations thereunder); or
(B) identified in such order or judgment issued before the
date of enactment of this Act for indirect restitution.
(d) ESCROW ACCOUNTS.—Subject to subsections (b) and (c), the
amounts covered by subsection (a) shall be held in appropriate
escrow accounts administered for the Secretary by the Secretary of
the Treasury.
(e) INTEREST.—Consistent with the disbursement requirements of
this subtitle, the Secretary of the Treasury shall provide that
amounts described in subsection (a) shall earn interest at the maxi­
mum rate earned on investments of Federal trust funds by the
Secretary of the Treasury in short-term and long-term securities
issued by the Federal Government (including minority bank invest­
ments).
SEC. 3003. IDENTIFICATION AND DISBURSEMENT OF RESTITUTIONARY
AMOUNTS.
(a) IN GENERAL.—(1) Subject to paragraph (2)— '• "n *'r>'; PUBLIC LAW 99-509—OCT. 21, 1986 100 STAT. 1883
(A) all rulings, policies, or other statements (including any
administrative order or settlement agreement) issued after the
date of the enactment of this Act by any office, official, or
employee of the Department of Energy; and
(B) all orders, including declaratory judgments, issued by any
court after the date of the enactment of this Act,
shall be consistent with the provisions of this subtitle.
(2) Nothing in this section shall affect the settlement approved on
July 7, 1986, in In Re: the Department of Energy Stripper Well
Exemption Litigation, M.D.L, No. 378, in the United States District
Court for the District of Kansas.
(b) DISBURSEMENT OF RESTITUTIONARY AMOUNTS AS DIRECT RES­
TITUTION TO INJURED PERSONS.—(1) The Secretary shall, through the
Office of Hearings and Appeals of the Department of Energy, con­
duct proceedings expeditiously in accordance with subpart V regula­
tions for the purpose of, to the maximum extent possible—
(A) identifying persons or classes of persons injured by any
actual or alleged violation of the petroleum pricing and alloca­
tion regulations issued pursuant to the Emergency Petrdleum
Allocation Act of 1973 or the Economic Stabilization Act of 1970;
(B) establishing the amount of any injury incurred by such
persons; and
(C) making restitution, through the disbursement of amounts
in the escrow accounts described in subsections (h) and (d) of
section 3002, to such persons.
(2) In conducting such proceedings, the Secretary shall take into
consideration the reports released pursuant to several orders of the
applicable Federal district court in In Re: the Department of Energy
Stripper Well Exemption Litigation, M.D.L. No. 378, in the United
States District Court for the District of Kansas.
(c) DETERMINATION OF EXCESS AMOUNT TO BE USED FOR INDIRECT
RESTITUTION.—(1) Within 45 days after the date of the enactment of
this Act in the case of fiscal year 1987, and within 45 days after the
beginning of each fiscal year after fiscal year 1987, the Secretary
shall, using the best information available to the Secretary, deter­
mine and publish (along with a justification thereof) in the Federal
Register the amount held in the escrow accounts described in
subsections (b) and (d) of section 3002 that is in excess of the amount
that will be needed to make restitution to persons or classes of
persons in accordance with subsection (b)(1) of this section and to
meet other commitments of such accounts (including the require­
ments of section 155 of Public Law 97-377). In making such deter­
mination, the Secretary shall give primary consideration to assuring
that at all times sufficient funds (including a reasonable reserve) are
set aside for making such restitution and meeting such other
commitments.
(2) The Secretary shall make public the information referred to in
the first sentence of paragraph (1).
(d) DISBURSEMENT OF EXCESS AMOUNT AS INDIRECT RESTITUTION
FOR ENERGY CONSERVATION PROGRAMS.—(1) After the publication of
the determination of an excess amount under subsection (c) for a
fiscal year, the Secretary shall promptly provide for the disburse­
ment of a portion or all of such excess amount for use in energy
conservation programs. The amount so disbursed for a fiscal year
shall be the smaller of—
(A) $200,000,000 minus the amount of Federal funds appro­
priated for energy conservation programs for such fiscal year; or 15 use 751 note.
12 use 1904
note.
Reports. ;Ugi
Federal
Register,
publication.
96 Stat. 1919.
Public
information. 100 STAT. 1884 PUBLIC LAW 99-509—OCT. 21, 1986
(B) the amount determined under subsection (c) to be the
excess amount for such fiscal year.
(2) After determining the amount to be made available under
paragraph (1), the Secretary shall apportion such amount among
each of the energy conservation programs in a manner that will
provide funding under this subtitle for the fiscal year concerned for
each of such programs in the same proportionate amount that was
provided for each of the programs by the Congress for fiscal year
1986. The Secretary shall then make available each amount appor­
tioned for use under an energy conservation program in the same
manner, to the same extent, under the same rulings and regula­
tions, and for the same uses that Federal appropriated funds are
made available and used under such program.
State and local (3) The Secretary shall require that amounts made available
governments. under this subsection are used to supplement, and not supplant,
funds otherwise available for energy conservation activities under
Federal or State law.
15 use 4503. SEC. 3004. DEPOSIT OF REMAINDER OF EXCESS AMOUNT INTO THE
TREASURY AS INDIRECT RESTITUTION.
The amount that remains from the excess amount described in
section 3003(c) after all disbursements have been made for a fiscal
year under section 3003(d) shall be deposited by the Secretary of the
Treasury into the general fund of the Treasury.
15 use 4504. SEC. 3005. STATUTE OF LIMITATION.
(a) IN GENERAL.—(1) Except as provided in subsection (b), the
commencement of a civil enforcement action shall be barred unless
such action is commenced before the later of—
(A) September 30, 1988; or
. -,: . (B) six years after the date of the violation upon which the
. ' ' action is based.
* ' ' (2) For purposes of paragraph (1), the term "commencement of a
civil enforcement action" means—
(A) the signing and issuance of a proposed remedial order
against any person for filing with the Office of Hearings
and Appeals of the Department of Energy; or
(B) the filing of a complaint with the appropriate district
court of the United States.
(3) For purposes of this section, the term "civil enforcement
action" means an administrative or judicial civil action by the
15 use 751 note. Secretary under the Emergency Petroleum Allocation Act of 1973 or
12 use 1904 the Economic Stabilization Act of 1970 (or the regulations issued
^°^- thereunder) for the enforcement of any violation of such Acts or
regulations.
(b) EXCEPTIONS.—(1) In computing the periods established in sub­
paragraphs (A) and (B) of subsection (a)(1), there shall be excluded
i ' any period—
(A) during which any person who is or may become the
sulDJect of a civil enforcement action is outside the United
States, has absconded or concealed himself, or is not subject to
legal process;
(B) during which facts material to the establishment and
maintenance of a civil enforcement action could not be known;
(C) occurring before full compliance with any subpoena or
special report order issued to any person under section 13 of the
15 use 772. Federal Energy Administration Act of 1974, and such additional PUBLIC LAW 99-509—OCT. 21, 1986 100 STAT. 1885
period (not to exceed 12 calendar months) after such compliance
for the Secretary to consider the results thereof and commence
a civil enforcement action;
(D) during the pendency of any relevant criminal action
under the Acts or regulations described in subsection (a)(1)
during which a civil enforcement action is held in abeyance as a
result of prosecutorial discretion and with or without a stay,
and such additional period (not to exceed 12 calendar months) . .,
after a final judicial order or dismissal of such criminal action ].
to commence a civil enforcement action;
(E) before the issuance of an order that constitutes final
agency action on a request for adjustment from any rule, regu­
lation, or order under section 504 of the Department of Energy
Organization Act, and such additional period (not to exceed 12 42 USC 7194.
calendar months) to commence a civil enforcement action; or
(F) of extension, to which the Secretary and the defendant
have consented in writing, before the expiration of the time
periods prescribed in subsection (a)(1).
(2) The provisions of subsection (a) shall not affect or apply to any
civil enforcement action commenced before, on, or after the date of
enactment of this Act and remanded by the Office of Hearings and
Appeals, the Federal Energy Regulatory Commission, or the court
for further action of any kind.
(3) The provisions of subsection (a) shall not apply to any agency
orders issued under the Acts or regulations described in subsection
(a)(1) or to regulations issued under this Act, other than a proposed
remedial order subject to this section.
(c) EXPRESSION OF INTENT.—(1) It is the intent of the Congress
that—
(A) the Secretary and the Administrator of the Economic
Regulatory Administration shall, to the greatest extent possible
and within the time frames specified on September 12, 1986, by
such Administrator to the Committee on Energy and Commerce
of the House of Representatives, commence civil enforcement
I actions with respect to all cases known by such Administrator
as of the date of the enactment of this Act and designated by
such Administrator as "prelitigation cases", unless such an
action is found not to be warranted;
(B) the Secretary and such Administrator not delay civil
enforcement actions so as to cause the limitation in subsection
(a)(1) to apply to any such case;
(C) any negotiations for the purpose of settlement of alleged
violations not delay the commencement of a civil enforcement
. action; and
(D) the Department of Justice cooperate in ensuring that
activities necessary, including the enforcement of subpoenas, to
commence civil enforcement actions are carried out in a timely
manner.
(2) Any failure to comply with the time frames described in v, i::
paragraph (1)(A) shall not be considered for any purpose in any
administrative or judicial proceeding subsequently commenced.
(d) END OF INVESTIGATIONS AND AUDITS.—Notwithstanding any
other provision of law, the Secretary shall not initiate, after Janu­
ary 1, 1987, any audit or investigation of alleged civil violations of
the Acts or regulations described in subsection (a)(1) for the purpose
of commencement of any civil enforcement action. Nothing in this
subsection shall affect or apply to any audit or investigation con-100 STAT. 1886 PUBLIC LAW 99-509—OCT. 21, 1986
ducted with respect to any civil enforcement action commenced
(within the limitation established by subsection (a)(1)) before, on, or
after the date of the enactment of this Act. Nothing in this subsec­
tion shall limit the authority of the Secretary to continue any audit
or investigation initiated before January 1, 1987.
(e) LIMITATION ON REVIEW.—Any review of a final agency action
determined under section 503 or 504 of the Department of Energy
42 use 7193, Organization Act may not be initiated in any court by any person
'^194. subject to such action after—
(1) 60 days after the effective date of that action; or
(2) 90 days after the date of the enactment of this Act,
whichever occurs later.
(f) OVERSIGHT.—(1) In order to ensure the expeditious, effective,
*' and efficient resolution of all civil enforcement actions (whether or
not in administrative or judicial litigation) and all cases pending at
the Office of Hearings and Appeals under subpart V regulations, the
Secretary shall—
(A) maintain a personnel level for the compliance program of
the Economic Regulatory Administration of 170 full-time
equivalents for fiscal year 1987, subject to normal attrition and
subject to the provisions of any appropriation Act enacted for
such fiscal year concerning such program; and
(B) maintain for the remainder of the program an adequate
mix of lawyers, auditors, technical, clerical, and administrative
personnel.
(2) By July 1, 1987, and by July 1 of each year thereafter, the
Administrator of the Economic Regulatory Administration shall
provide to the Committee on Energy and Commerce of the House of
Representatives and to the Committee on Energy and Natural
Resources of the Senate the full-time equivalent level necessary for
such compliance program for the next fiscal year and the basis for
that level.
(3) The Secretary shall, in any fiscal year, provide a notice of at
least 30 days to such Committees before initiating any reduction of
force at the Economic Regulatory Administration. Such notice shall
provide at least—
(A) the reasons for such reduction;
(B) the impact on the mix of personnel and on all cases,
'IV i whether or not in litigation, including the subpart V regulation
rtOii proceedings; and
(C) the expected costs and savings for the applicable fiscal
year.
(4) The Administrator of the Economic Regulatory Administration
shall keep such Committees fully and currently informed about the
status (including delays, settlement negotiations, and other perti­
nent matters) of all enforcement cases (whether or not in litigation)
and subpart V regulation proceedings.
15 use 4505. SEC. 3006. REPORTS. – – -'•
(a) REPORT ON RECEIPTS AND DISBURSEMENTS.—The Secretary shall
transmit, not later than 60 days after the date of the enactment of
this Act, a report to the committees referred to in subsection (d)
containing a clear and complete statement of all receipts, disburse­
ments, and commitments of restitutionary amounts, as of such date
of enactment, by the Secretary pursuant to—
(1) any judicial or administrative proceeding (including any
settlement agreement or declaratory judgment) instituted at PUBLIC LAW 99-509—OCT. 21, 1986 100 STAT. 1887
any time by the Secretary to enforce the crude oil and petro­
leum product pricing and allocation regulations issued under
the Emergency Petroleum Allocation Act of 1973 or the Eco­
nomic Stabilization Act of 1970; or
(2) section 155 of Public Law 97-377.
(b) REPORT ON COLLECTION OF CERTAIN DEFICIENCY FUNDS.—The
Secretary shall transmit a report each fiscal year, beginning in
fiscal year 1987, to such committees on the status of collections by
the Secretary of deficiency funds to be deposited into the M.D.L. No.
378 escrow account established by the United States District Court
for the District of Kansas until all such deficiency funds have been
paid. The Secretary shall, in a manner substantially similar to that
required by section 155 of Public Law 97-377 with respect to
amounts disbursed under such section, monitor the disposition by
the States of any funds disbursed to the States by the court pursuant
to the opinion and order of such District Court, dated July 7, 1986,
with respect to In Re: the Department of Energy Stripper Well
Exemption Litigation, M.D.L. No. 378, including the use of such
funds for administrative costs and attorneys fees.
(c) REPORT ON AMOUNT ESTIMATED TO BE AVAILABLE FOR INDIRECT
RESTITUTION.—The Secretary shall transmit, on March 1 of each
year beginning with 1987 and continuing until all the restitutionary
amounts to which section 3002(a) applies have been collected and
disbursed as provided in this subtitle, a report to such committees
containing an estimate of the amount that will be determined under
section 3003(c) to be the excess amount for purposes of section
3003(d)(1)(B) for the fiscal year beginning the next October 1.
(d) RECEIPT BY COMMITTEES.—The reports required by this subtitle
shall be transmitted to the Committee on Energy and Commerce of
the House of Representatives and the Committee on Energy and
Natural Resources of the Senate.
SEC. 3007. TERMINATION.
(a) IN GENERAL.—(1) Except as provided in subsection (b), the
provisions of this subtitle (other than section 3005) shall terminate
90 days after the Secretary—
(A) determines that all of the restitutionary amounts to which
section 3002(a) applies have been collected and disbursed as
provided in this subtitle; and
(B) submits to Congress the final report required by section
3006.
(2) Such final report shall include the determination (and the
justification thereof) described in paragraph (1)(A). Such report shall
also be published in the Federal Register.
(b) EXCEPTION.—The requirements of section 3003(d) shall con­
tinue to be applicable to the use of restitutionary amounts received
under this subtitle as long as such funds remain available.
SEC. 3008. DEFINITIONS.
For purposes of this subtitle:
(1) The term "Secretary" means the Secretary of Energy.
(2) The term "subpart V regulations" means the provisions of
Subpart V—Special Procedures for Distribution of Refunds (10
CFR 205.280-205.288) and any amendment made after the date
of the enactment of this Act, and all precedents and decisions
under such regulations, but only to the extent that such provi-15 use 751 note.
12 use 1904
note.
96 Stat. 1919.
State and local
governments.
15 use 4506.
Reports.
Federal
Register,
publication.
15 use 4507. 100 STAT. 1888 PUBLIC LAW 99-509—OCT. 21, 1986
sions, precedents, decisions, and amendments are consistent
with the provisions of this subtitle.
(3) The term "energy conservation programs" means—
(A) the program under part A of the Energy Conservation
and Existing Buildings Act of 1976 (42 U.S.C. 6861 and
following);
(B) the programs under part D of title III of the Energy
Policy and Conservation Act (relating to primary and
supplemental State energy conservation programs; 42
U.S.C. 6321 and following);
(C) the program under part G of title III of the Energy
Policy and Conservation Act (relating to energy conserva­
tion for schools and hospitals; 42 U.S.C. 6371 and following);
and
(D) the program under the National Energy Extension
Service Act (42 U.S.C. 7001 and following).
(4) The term "person" includes refiners, retailers, resellers,
farmer cooperatives, transportation entities, public and private
utilities, school districts. Federal, State, and local governmental
entities, farmers, and other individuals and their successors.
(5) The term "State" means each of the several States, the
District of Columbia, the commonwealth of Puerto Rico, and
any territory or possession of the United States.
Subtitle B—Information and Study
Requirements
Classified
information.
Imports. SEC. 3101. MANUFACTURERS ENERGY CONSUMPTION SURVEY.
(a) IN GENERAL,—Section 205 of the Department of Energy
Organization Act (42 U.S.C. 7135) is amended by adding at the end
the following new subsection:
"(i)(l) The Administrator shall conduct and publish the results of
a survey of energy consumption in the manufacturing industries in
the United States on at least a triennial basis and in a manner
designed to protect the confidentiality of individual responses. In
conducting the survey, the Administrator shall collect information,
including—
"(A) quantity of fuels consumed; r «
"(B) energy expenditures;
"(C) fuel switching capabilities; and
"(D) use of nonpurchased sources of energy, such as cogenera-
tion and waste by-products.
"(2) This subsection does not affect the authority of the Adminis­
trator to collect data under section 52 of the Federal Energy
Administration Act of 1974 (15 U.S.C. 790a).".
(b) REPEAL.—Part E of title III of the Energy Policy and Conserva­
tion Act (42 U.S.C. 6341-6346) is hereby repealed.
SEC. 3102. CRUDE OIL PRODUCTION AND REFINING CAPACITY IN THE
UNITED STATES.
(a) IN GENERAL.—(1) The Secretary of Energy, acting with the
Energy Information Administration, shall conduct a study of domes­
tic crude oil production and petroleum refining capacity and the
effects of imports thereon in order to assist the Congress and the PUBLIC LAW 99-509—OCT. 21, 1986 100 STAT. 1889
President in determining whether such production and capacity are
adequate to protect the national security.
(2) The study provided for by this section shall be carried out
within available appropriations.
(b) PUBLIC COMMENT.—The Secretary shall provide notice and
reasonable opportunity for public comment with respect to conduct­
ing the study carried out under this section.
(c) REPORTING DATE.—The Secretary shall, within 120 days of the
date of the enactment of this Act, transmit to the Congress and the
President a copy of the findings and conclusions of the study carried
out under this section. Such findings and conclusions shall be
referred to the Committee on Energy and Natural Resources of the
Senate and appropriate authorization committees of the House of
Representatives.
(d) ACTION BY THE PRESIDENT.—The President shall, within 45
days after the date on which such report is transmitted to him,
report his views concerning the levels at which imports of crude oil
and refined petroleum products become a threat to the national
security and advise the Congress concerning his views of the legisla­
tive or administrative action, or both, that will be required to
prevent imports of crude oil and refined petroleum products from
exceeding those import levels that threaten our national security.
Subtitle C—Strategic Petroleum Reserve President of U.S.
Defense and
national
security.
SEC. 3201. AUTHORIZATION OF APPROPRIATIONS FOR FISCAL YEARS
1987,1988, AND 1989.
(a) IN GENERAL.—The following amounts are hereby authorized to
be appropriated in accordance with section 660 of the Department of
Energy Organization Act for operating expenses for the Strategic 42 USC 7270.
Petroleum Reserve to carry out part B of title I of the Energy Policy
and Conservation Act for the acquisition, transportation, and injec- 42 USC 6231.
tion of petroleum products, as defined for purposes of such part B,
for the Reserve and for any drawdown and distribution of the
Reserve*
(1) For fiscal year 1987, $200,000,000.
(2) For fiscal year 1988, $291,000,000.
(3) For fiscal year 1989, $479,000,000.
(b) EFFECT ON OTHER AUTHORIZATIONS.—The authorization made
by subsection (a) is in lieu of any other authorization of appropria­
tion for fiscal years 1987, 1988, and 1989 for the expenses described
in such subsection.
SEC. 3202. FILL RATE OF THE RESERVE; LIMITATION ON UNITED STATES
SHARE OF THE NAVAL PETROLEUM RESERVE.
(a) FILL RATE OF THE RESERVE.—Section 160(c)(3) of the Energy
Policy and Conservation Act (42 U.S.C. 6240(c)(3)) is amended— Ante, p. 141.
(1) by striking out "fiscal year 1986 and continuing through
fiscal years 1987 and 1988" and inserting in lieu thereof "fiscal
fi year 1987 and continuing through fiscal years 1988 and 1989"; <
(2) by striking out "527,000,000 barrels and inserting in lieu
thereof "750,000,000 barrels"; and
(3) by striking out "at a level" and all that follows through
the period and inserting in lieu thereof "at the highest prac­
ticable fill rate achievable, subject to the availability of appro­
priated funds." 100 STAT. 1890 PUBLIC LAW 99-509—OCT. 21, 1986
(b) LIMITATION ON UNITED STATES SHARE OF THE NAVAL PETRO-
Ante. p. 142. LEUM RESERVE.—Section 160(d)(1) of such Act (42 U.S.C. 6240(d)(1)) is
amended—
(1) in subparagraph (A), by striking out "527,000,000 barrels"
, and inserting in Heu thereof "750,000,000 barrels";
,v^ (2) in subparagraph (B)—
(A) by striking out "100,000 barrels" and inserting in lieu
t ^ thereof "75,000 barrels"; and
; (B) by striking out "; or" and inserting in lieu thereof a
period; and
(3) by striking out subparagraph (C).
SEC. 3203. INFORMATION TO BE CONTAINED IN ANNUAL REPORT ON SPR.
Section 165(a) of the Energy Policy and Conservation Act (42
, i • i U.S.C. 6245(a)) is amended by striking out paragraph (1) and insert-
k ing in lieu thereof the following:
"(1) a detailed statement of the status of the Strategic Petro-
*- '^ ' J leum Reserve, including—
"(A) an estimate of the final capacity of the Reserve and
j^ the scheduled annual fill rate for achieving such capacity;
,, .i;, "(B) the scheduled quarterly fill rate for the 12-month
/]-». period beginning on the date on which such report is
transmitted;
"(C) the type and quality of crude oil to be acquired for
the Reserve pursuant to the schedule described in subpara­
graph (A);
"(D) the schedule of construction of any facilities needed
to achieve the final capacity of the Reserve, including a
,,, ,.j description of the type and location of such facilities and of
enhancements and improvements to existing facilities;
f;Ts ; V •. – "(E) ^^ estimate of the cost of acquiring crude oil and
constructing facilities necessary to complete the Reserve;
•f?5 ; n-Bu Sfe '(^) ^ description of the current distribution plan for
using the Reserve, including the method of drawdown and
-. I- distribution to be utilized; and
"(G) an explanation of any changes made in the matters
described in subparagraphs (A) through (F) since the
transmittal of the previous report under this subsection;".
Subtitle D—Federal Energy Management
SEC. 3301. FEDERAL ENERGY MANAGEMENT. ' ' "
Section 545(a)(2) of the National Energy Conservation Policy Act
(42 U.S.C. 8255(a)(2)) is amended by striking out "marginal" and
inserting in lieu thereof "average".
iii
Subtitle E—Fees and Charges
42 use 7178. SEC. 340L FEDERAL ENERGY REGULATORY COMMISSION FEES AND
ANNUAL CHARGES.
(a) IN GENERAL.—(1) Except as provided in paragraph (2) and
beginning in fiscal year 1987 and in each fiscal year thereafter, "^he
Federal Energy Regulatory Commission shall, using the provisions
of this subtitle and authority provided by other laws, assess and PUBLIC LAW 99-509—OCT. 21, 1986 100 STAT. 1891
collect fees and annual charges in any fiscal year in amounts equal
to all of the costs incurred by the Commission in that fiscal year.
(2) The provisions of this subtitle shall not affect the authority,
requirements, exceptions, or limitations in sections 10(e) and 30(e) of
the Federal Power Act. 16 USC 803, 791.
(b) BASIS FOR ASSESSMENTS.—The fees or annual charges assessed
shall be computed on the basis of methods that the Commission
determines, by rule, to be fair and equitable.
(c) ESTIMATES.—The Commission may assess fees and charges
under this section by making estimates based on data available to ,, , v
the Commission at the time of assessment.
(d) TIME OF PAYMENT.—The Commission shall provide that the
fees and charges assessed under this section shall be paid by the end
of the fiscal year for which they were assessed.
(e) ADJUSTMENTS.—The Commission shall, after the completion of
a fiscal year, make such adjustments in the assessments for such
fiscal year as may be necessary to eliminate any overrecovery or
underrecovery of its total costs, and any overcharging or under- ^., .j.
charging of any person.
(f) USE OF FUNDS.—All moneys received under this section shall be
credited to the general fund of the Treasury.
(g) WAIVER.—The Commission may waive all or part of any fee or
annual charge assessed under this section for good cause shown.
Subtitle F—Environmental Programs
SEC. 3501. ABANDONED MINE RECLAMATION RESEARCH AND DEVELOP- 30 USC 1231
MENT. note-
After the enactment of this Act, the research and demonstration
authorities of the Department of the Interior under the provisions of
section 401(c)(6) of the Surface Mining Control and Reclamation Act
of 1977 (Public Law 95-87) shall be transferred to, and carried out 30 USC 1231.
by, the Director of the Bureau of Mines. Research and demonstra­
tion projects under such provision shall be selected by a panel
appointed by the Director of the Bureau of Mines to be comprised of
9 persons, including 4 representatives of State abandoned mine
reclamation programs, 4 representatives of the Bureau of Mines,
and one representative of the Office of Surface Mining Reclamation
and Enforcement.
SEC. 3502. GREAT SWAMP NATIONAL WILDLIFE REFUGE.
(a) No later than 60 days after the enactment of this section, the Reports.
United States Environmental Protection Agency shall provide the
House Committee on Merchant Marine and Fisheries and the
Senate Committees on Environment and Public Works and Energy
and Natural Resources with an interim status report on the im­
plementation of agency responsibilities for conducting or approving
preliminary assessments, site investigations and, if necessary. Re­
medial Investigation/Feasibility Studies for contaminant problems
on the Great Swamp National Wildlife Refuge, as set forth in the
July 9, 1985, Interagency Memorandum of Agreement between the
United States Environmental Protection Agency, the United States
Fish and Wildlife Service, and the National Park Service. This
report shall describe in a systematic and comprehensive way the
clean-up plan developed to date and the progress made thereunder,
including the identification of responsible parties where possible, for 100 STAT. 1892 PUBLIC LAW 99-509—OCT. 21, 1986
Reports.
Reports. the Rolling Knoll landfill, the Harding landfill, and all asbestos
dumpsites identified within the Great Swamp National Wildlife
Refuge. The report shall also discuss the appointment of appropriate
field personnel to direct the clean-up effort; an assessment and
ranking of the contaminant threats to the Refuge based upon
information available to date; and a detailed work plan and sched­
ule for completing site investigation work, including the analysis of
samples collected during site investigations, and initiating Remedial
Investigation/Feasibility Studies where necessary.
(b) Not later than 240 days after the enactment of this section, the
United States Environmental Protection Agency shall provide the
committees of Congress set forth in subsection (a) of this section
with an update of its interim status report. This update shall
address the same factors included in the original interim report and
shall identify what progress has been made in implementing the site
investigation, data analysis, and remedial clean-up responsibilities
set forth in the interim report.
(c) The development of the interim and updated reports required
in subsections (a) and (b) of this section shall be carried out with
unobligated funds available to the United States Environmental
Protection Agency.
TITLE IV—TRANSPORTATION AND
RELATED PROGRAMS . .
Conrail
Privatization
Act. Subtitle A—Rail Related Issues
PART 1—GENERAL PROVISIONS
SEC, 4001. SHORT TITLE; TABLE OF CONTENTS OF SUBTITLE.
(a) SHORT TITLE.—This subtitle may be cited as the "Conrail
Privatization Act".
(b) TABLE OF CONTENTS OF SUBTITLE.—
PART 1—GENERAL PROVISIONS
Sec. 4001. Short title; table of contents of subtitle.
Sec. 4002. Findings. .,, ,^ , , ~ , . ., ,,.
Sec. 4003. Purposes. ' ' ' ' " ., ,
Sec. 4004. Definitions.
PART 2—CONRAIL
SUBPART A—SALE OF CONRAIL
Sec. 4011. Preparation for public offering.
Sec. 4012. Public offering. ' '• '•
Sec. 4013. Fees. '
SUBPART B—OTHER MATTERS RELATING TO THE SALE ' *
Sec. 4021. Rail service obligations.
Sec. 4022. Ownership limitations.
Sec. 4023. Board of Directors. .^^ :
Sec. 4024. Provisions for employees. " . • • • –
Sec. 4025. Certain enforcement relief.
SUBPART C—MISCELLANEOUS TECHNICAL AND CONFORMING AMENDMENTS AND REPEALS
Sec. 4031. Abolition of United States Railway Association.
Sec. 4032. Applicability of Regional Rail Reorganization Act of 1973 to Conrail
after sale.
Sec. 4033. Miscellaneous amendments and repeals. , ' s , _
Sec. 4034. Exemption from liability. '""' ' PUBLIC LAW 99-509—OCT. 21, 1986 100 STAT. 1893
Sec. 4035. Charter amendment.
Sec. 4036. Status of Conrail after sale.
Sec. 4037. Effect on contracts.
Sec. 4038. Resolution of certain issues.
PART 3—PROMOTION OF RAIL COMPETITION
Sec. 4051. Agriculture contract disclosure.
Sec. 4052. Boxcar provision.
SEC. 4002. FINDINGS. 45 USC 1801.
The Congress finds that—
(1) the bankruptcy of the Penn Central and other railroads
in the Northeast and Midwest resulted in a transportation
emergency which required the intervention of the Federal
Government;
(2) the United States Government created the Consolidated
Rail Corporation, which provides essential rail service to the
Northeast and Midwest;
(3) the future of rail service in the Northeast and Midwest is
essential and must be protected through rail service obligations,
consistent with the transfer of the Corporation to the private
sector;
(4) the Northeast Rail Service Act of 1981 has achieved its 45 USC 1101
purpose in allowing the Corporation to become financially self- note,
sustaining;
(5) the Federal Government has invested over $7,000,000,000
in providing rail service to the Northeast and Midwest;
(6) the Government, as a result of its ownership and invest
ment of taxpayer dollars in the Corporation, controls substan
tial assets, including cash of approximately $1,000,000,000;
(7) the Corporation's viability and sound performance allow it
to be sold to the American public for a substantial sum through
a public offering;
(8) a public offering of the Corporation's stock will preserve
competitive rail service in the region, provide a reasonable
return to the Government, and protect employment;
(9) the Corporation's employees contributed significantly to
the turnaround in the Corporation's financial performance and
they should share in the Corporation's success through a settle­
ment of their claims for reimbursement for wages below indus­
try standard, and a share in the common equity of the
Corporation;
(10) the requirements of section 401(e) of the Regional Rail
Reorganization Act of 1973 are met by this subtitle; and 45 USC 761.
(11) the Secretary of Transportation has discharged the
responsibilities of the Department of Transportation under the
Northeast Rail Service Act of 1981 with respect to the sale of
the Corporation as a single entity.
SEC. 4003. PURPOSES. 45 USC 1302.
The purposes of this subtitle are to transfer the interest of the
United States in the common stock of the Corporation to the private
sector in a manner that provides for the long-term viability of the
Corporation, provides for the continuation by the Corporation of its
rail service in the Northeast and Midwest, provides for the protec­
tion of the public interest in a sound rail transportation system, and,
to the extent not inconsistent with such purposes, secures the
maximum proceeds to the United States. 100 STAT. 1894 PUBLIC LAW 99-509—OCT. 21, 1986
45 use 1303. SEC. 4004. DEFINITIONS.
For the purposes of this subtitle—
(1) the term "capital expenditures" means amounts expended
by the Corporation and its subsidiaries for replacement or
rehabilitation of, or enhancements to, the railroad plant, prop­
erty, trackage, and equipment of the Corporation and its
subsidiaries, as determined in accordance with generally
accepted accounting principles, and in interpreting generally
accepted accounting principles, no amount spent on normal
repair, maintenance, and upkeep of such railroad plant, prop-
, erty, trackage, and equipment in the ordinary course of busi-
,, ness shall constitute capital expenditures;
:,. (2) the term "Commission" means the Interstate Commerce
Commission;
f„ (3) the term "consolidated funded debt" means the aggregate,
after eliminating intercompany items, of all funded debt of the
Corporation and its consolidated subsidiaries, consolidated in
accordance with generally accepted accounting principles;
(4) the term "consolidated tangible net worth" means the
market value of the common equity of the Corporation as of the
sale date, plus or minus the change from the sale date to the
F,. date of measurement in the excess, after making appropriate
> deductions for any minority interest in the net worth of
subsidiaries, of—
(A) the assets of the Corporation and its subsidiaries
(excluding intercompany items) which, in accordance with
; . generally accepted accounting principles, are tangible
assets, after deducting adequate reserves in each case
where, in accordance with generally accepted accounting
I principles, a reserve is proper, over
(B) all liabilities of the Corporation and its subsidiaries
(excluding intercompany items),
taking into account inventory and securities on the basis of the
cost or current market value, whichever is lower, and not
taking into account patents, trademarks, trade names, copy­
rights, licenses, goodwill, treasury stock, or any write-up in the
book value of any assets;
(5) the term "Corporation" means the Consolidated Rail
Corporation;
' (6) the term "cumulative net income" means, for any period,
the net income of the Corporation and its consolidated subsidi-
; aries as determined in accordance with generally accepted
accounting principles, before provision for expenses (net of
income tax effect) related to—
(A) amounts paid by the Corporation under section
4024(e), and comparable payments made to present and
former employees of the Corporation not covered by such
section; and
(B) the aggregate value of any shares and cash distributed
by the Corporation under section 4024(f);
(7) the term "debt" means (A) indebtedness, whether or not
' represented by bonds, debentures, notes, or other securities, for
the repayment of money borrowed, (B) deferred indebtedness for
the payment of the purchase price of property or assets pur­
chased, (C) guarantees, endorsements, assumptions, and other
contingent obligations in respect of, or to purchase or to other-PUBLIC LAW 99-509—OCT. 21, 1986 100 STAT. 1895
wise acquire, indebtedness of others, and (D) indebtedness se­
cured by any mortgage, pledge, or lien existing on property
owned, subject to such mortgage, pledge, or lien, whether or not
indebtedness secured thereby shall have been assumed;
(8) the term "funded debt" means all debt created, assumed,
or guaranteed, directly or indirectly, by the Corporation and its
subsidiaries which matures by its terms, or is renewable at the
option of the Corporation or any such subsidiary to a date, more
than 1 year after the date of the original creation, assumption,
or guarantee of such debt by the Corporation or such subsidiary;
(9) the term "liabilities" means all items of indebtedness or
liability which, in accordance with generally accepted account­
ing principles, would be included in determining total liabilities
as shown on the liabilities side of a balance sheet as at the date
as of which liabilities are to be determined;
(10) the term "person" means an individual, corporation,
partnership, association, trust, or other entity or organization,
including a government or political subdivision thereof or a
governmental body;
(11) the term "preferred stock" means any class or series of
preferred stock, and any class or series of common stock having
liquidation and dividend rights and preferences superior to the
common stock of the Corporation offered for sale under section
4012;
(12) the term "public offering" means an underwritten offer­
ing to the public of such common stock of the Corporation as the
Secretary of Transportation determines to sell under section
4012;
'*' (13) the term "sale date" means the date on which the initial
public offering is closed;
(14) the term "subsidiary" means any corporation more than ..:*i .n .<
50 percent of whose outstanding voting securities are directly or "i&' Lv- .-.
– indirectly owned by the Corporation; and
' (15) the term "United States share" means a share of common
stock of the Corporation held by the United States Government
' on the date of the enactment of this Act or as a result of any
split required pursuant to section 4012(d).
PART 2—CONRAIL
Subpart A—Sale of Conrail
SEC. 4011. PREPARATION FOR PUBLIC OFFERING. Securities.
(a) PUBLIC OFFERING MANAGERS.—(1) Not later than 30 days after banking,
the date of the enactment of this Act, the Secretary of Transpor- 45 USC 1311.
tation, in consultation with the Secretary of the Treasury and the
Chairman of the Board of Directors of the Corporation, shall retain
the services of investment banking firms to serve jointly and be
compensated equally as co-lead managers of the public offering
(hereafter in this subpart referred to as the "co-lead managers")
and to establish a syndicate to underwrite the public offering. The
total number of co-lead managers shall be no fewer than 4 nor
greater than 6. The Secretary shall designate one co-lead manager
to coordinate and administer the public offering.
(2) In selecting the investment banking firms to serve as co-lead
managers of the public offering under paragraph (1), consideration 100 STAT. 1896 PUBLIC LAW 99-509—OCT. 21, 1986
shall be given to the firm's institutional and retail distribution
capabilities, financial strength, knowledge of the railroad industry,
experience in large scale public offerings, research capability, and
reputation. In addition, recognition shall also be given to contribu­
tions made by particular investment banking firms before the date
of the enactment of this Act in demonstrating and promoting the
long-term financial viability of the Corporation.
(b) PAYMENT TO THE UNITED STATES.—(1) Not later than 30 days
after the date of the enactment of this Act, the Corporation shall
transfer to the Secretary of the Treasury $200,000,000.
(2) On or before February 1, 1987, or 30 days before the sale date,
whichever occurs first, the Secretary of Transportation shall deter­
mine whether to require the Corporation to transfer to the Sec­
retary of the Treasury, in addition to amounts transferred under
paragraph (1), not to exceed $100,000,000, taking into account the
viability of the Corporation. The Corporation shall transfer such
funds as are required to be transferred under this paragraph.
(c) REGISTRATION STATEMENT.—The Corporation shall prepare and
cause to be filed with the Securities and Exchange Commission a
registration statement with respect to the securities to be offered
and sold in accordance with the securities laws and the rules and
regulations thereunder in connection with the initial and any subse­
quent public offering.
(d) LIMIT ON AUTHORITY TO PURCHASE STOCK.—Section 21603) of
the Regional Rail Reorganization Act of 1973 (45 U.S.C. 7260))) is
amended by adding at the end thereof the following new paragraph:
"(5) The authority of the Association to purchase debentures or
series A preferred stock of the Corporation shall terminate upon the
date of the enactment of the Conrail Privatization Act.".
Securities. SEC. 4012. PUBLIC OFFERING.
use 312. ^^^ STRUCTURE OF PUBLIC OFFERING.—(1) After the registration
statement referred to in section 4011(c) is declared effective by the
Securities and Exchange Commission, the Secretary of Transpor­
tation, in consultation with the Secretary of the Treasury, the
Chairman of the Board of Directors of the Corporation, and the co-
lead managers, shall offer the United States shares for sale in a
public offering, except as provided in paragraphs (2) and (3).
(2) The Secretary of Transportation, after such consultation, may
elect to offer less than all of the United States shares for sale at the
time of the initial sale.
(3) Under no circumstances shall the Secretary of Transportation
offer any of the United States shares for sale unless, before the sale
date, the Secretary determines, after such consultation, that the
• ^ estimated sum of the gross proceeds from the sale of all the United
States shares will be an adequate amount. A determination by the
Secretary under this paragraph shall not be reviewable.
(4) In making a determination under paragraph (3), the Secretary
shall have the goal of obtaining at least $2,000,000,000 in aggregate
gross proceeds for the United States from the public offering and
any payments made under section 4011(b).
(b) SUBSEQUENT SALES.—If the Secretary of Transportation elects
to offer for sale less than all the United States shares, the Secretary
shall sell the remaining United States shares in subsequent public
offerings. PUBLIC LAW 99-509—OCT. 21, 1986 100 STAT. 1897
(c) CONSENT OF THE CORPORATION NOT REQUIRED.—Any public
offering under this section may be made without the consent of the
Corporation.
(d) AUTHORITY TO REQUIRE STOCK SPLITS.—(1) The Secretary of
Transportation, in consultation with the co-lead managers and the
Chairman of the Board of Directors of the Corporation, may, in
connection with the initial public offering described in subsection MI j "u^
(a), before the filing of the registration statement referred to in
section 4011(c), require the Corporation to declare a stock split or
reverse stock split.
(2) The Corporation shall take such action as may be necessary to
comply with the Secretary's requirements under this subsection.
(e) CANCELLATION OF OTHER SECURITIES HELD BY THE UNITED
STATES.—(1) In consideration for amounts transferred to the United
States under section 4011(b), the Secretary of Transportation shall,
concurrent with the initial public offering described in subsection
(a), deliver to the Corporation all preferred stock, 7.5 percent deben­
tures, and contingent interest notes of the Corporation. The Cor­
poration shall immediately cancel such debentures, preferred stock,
and contingent interest notes, and any interest of the United States
in such debentures, preferred stock, and contingent interest notes
shall be thereby extinguished.
(2) For purposes of regulation by the Commission and State public
utility regulation, the actions authorized by this subsection, the
public offering, and the value of the consideration received therefor
shall not change the value of the Corporation's assets net of depre­
ciation and shall not be used to alter the calculation of the Corpora­
tion's stock or asset values, rate base, expenses, costs, returns,
profits, or revenues, or otherwise affect or be the basis for a change
in the regulation of any railroad service, rate, or practice provided
or established by the Corporation, or any change in the financial
reporting practice of the Corporation.
(f) MINORITY INVESTMENT BANKING FIRMS.—The Secretary of
Transportation shall ensure that minority owned or controlled
investment banking firms shall have an opportunity to participate
to a significant degree in any public offering under this part.
(g) INVESTMENT BANKING FIRM REQUIREMENTS.—(1) The level of
any investment banking firm's participation in the public offering
shall be consistent with that firm's financial capabilities.
(2) No investment banking firm which was not in existence on
September 1, 1986, shall participate in the public offering.
(h) GENERAL ACCOUNTING OFFICE AUTHORITY TO CONDUCT Records.
AUDITS.—The General Accounting Office may make such audits as Reports,
may be deemed appropriate by the Comptroller General of the
United States of all accounts, books, records, memoranda, cor­
respondence, and other documents and transactions of the Corpora­
tion and the co-lead managers associated with the public offering.
The co-lead managers shall agree, in writing, to allow the General
Accounting Office to make such audits. The General Accounting
Office shall report the results of all such audits to the Congress.
SEC. 4013. FEES. 45 USC 1313.
(a) INVESTMENT BANKING FIRM FEES.—The Secretary of Transpor­
tation, in consultation with the Secretary of the Treasury, shall
agree to pay to investment banking firms and other persons partici­
pating with such firms in the public offering the absolute minimum
amount in fees necessary to carry out the public offering. 100 STAT. 1898 PUBLIC LAW 99-509—OCT. 21, 1986
(b) COSTS OF THE PUBLIC OFFERING.—All costs of the public offering
payable by the Secretary of Transportation shall be paid from the
proceeds of the public offering.
* Subpart B—Other Matters Relating to the Sale ^
45 use 1321. SEC. 4021. RAIL SERVICE OBLIGATIONS.
(a) OBLIGATIONS OF THE CORPORATION.—During a period of 5 years
beginning on the date of the enactment of this Act, the following
obligations shall apply to the Corporation:
(1) The Corporation shall spend in each fiscal year the greater
of (A) an amount equal to the Corporation's depreciation for
[ financial reporting purposes for such year or (B) $500,000,000, in
capital expenditures. With respect to any fiscal year, the Cor­
poration's Board of Directors may reduce the required capital
expenditures for such year to an amount which the Board
, determines is justified by prudent business and engineering
practices, except that the Corporation's capital expenditures
shall not be less than $350,000,000 for its first fiscal year
beginning after the sale date, a total of $700,000,000 for its first
two fiscal years beginning after the sale date, a total of
$1,050,000,000 for its first three fiscal years beginning after the
) sale date, a total of $1,400,000,000 for its first four fiscal years
; beginning after the sale date, and a total of $1,750,000,000 for its
first five fiscal years beginning after the sale date.
(2)(A) Unless the Corporation is in compliance with the
« requirements of subparagraph (B), no common stock dividend
or preferred stock dividend may be declared or paid by the
Corporation.
(B)(i) The Corporation shall have been in compliance with the
requirements of paragraph (1) as of the end of the fiscal year
^^ immediately preceding the fiscal year in which such dividend
payment is made.
(ii) After payment of any common stock dividend, the Cor­
poration shall have on hand cash or cash equivalents of
$400,000,000. Such amount may include amounts borrowed by
the Corporation only to the extent that the consolidated funded
debt of the Corporation does not exceed 175 percent of the
consolidated tangible net worth of the Corporation.
. (iii) After payment of any common stock dividend, the cumu-
7^l^^J^ . lative amount of all common stock dividends paid between the
sale date and the date of payment of such dividend shall not
exceed 45 percent of—
(I) the cumulative net income of the Corporation as re­
flected in the quarterly financial statements of the Corpora­
tion, for the period beginning after the end of the last fiscal
o, quarter of the Corporation ending before the sale date, and
*^, ending at the end of the last fiscal quarter of the Corpora­
tion ending before the date of the declaration of such
i; J; • Jii/5i- dividend, less
Ati-^oi (II) the cumulative amount of any preferred stock divi-
I;. dends declared and paid between the sale date and the date
. of payment of such common stock dividend.
f! (C) For purposes of this paragraph—
(i) the term "common stock dividend" means— ^-^ PUBLIC LAW 99-509—OCT. 21,1986 100 STAT. 1899
(I) the declaration or payment by the Corporation of
any dividends in cash, property, or other assets with
respect to any shares of the common stock of the
Corporation (other than dividends payable solely in
shares of the common stock of the Corporation);
(II) the application of any of the property or assets of
the Corporation to the purchase, redemption, or other
acquisition or retirement of any shares of the common
stock of the Corporation;
(III) the setting apart of any sum for the purchase,
redemption, or other acquisition or retirement of any
shares of the common stock of the Corporation; and
(IV) the making of any other distribution, by reduc­
tion of capital or otherwise, with respect to any shares
of the common stock of the Corporation,
except that the merger of ConRail Equity Corporation into
the Corporation shall not constitute a common stock divi­
dend; and
(ii) the term "preferred stock dividend" means—
(I) the declaration or payment by the Corporation of
any dividends in cash, property, or other assets with
respect to any shares of the preferred stock of the i ^
Corporation;
(II) the application of any of the property or assets of
the Corporation to the purchase, redemption, or other
acquisition or retirement of any shares of the preferred
stock of the Corporation;
(III) the setting apart of any sum for the purchase,
redemption, or other acquisition or retirement of any
shares of the preferred stock of the Corporation; and
(IV) the making of any other distribution, by reduc­
tion of capital or otherwise, with respect to any shares
of the preferred stock of the Corporation.
(3) The Corporation shall continue its affirmative action pro- Minorities,
gram and its minority vendor program, substantially as such
programs were being conducted by the Corporation as of Feb­
ruary 8, 1985, subject to any provisions of applicable law.
(4) The Corporation shall not permit to occur any transaction
or series of transactions (other than in the ordinary course of
business of the Corporation and its subsidiaries) whereby all or
any substantial part of the railroad assets and business of the
Corporation and its subsidiaries taken as a whole are sold,
leased, transferred, or otherwise disposed of to any corporation
or entity other than to a wholly owned subsidiary of the
Corporation.
(5) The Corporation shall offer any line for which an abandon­
ment certificate is issued by the Commission to a purchaser who
agrees to provide interconnecting rail service. Such offer shall
last for the 120-day period following the date of issuance of the
abandonment certificate and the price for such abandoned line
shall be equal to 75 percent of net liquidation value as deter­
mined by the Commission, pursuant to regulations that had
been issued under section 308 of the Regional Rail Reorganiza­
tion Act of 1973 (45 U.S.C. 748).
(6) The Corporation and its subsidiaries shall maintain, pre­
serve, protect, and keep their respective properties in good
repair, working order, and condition, and shall not permit 100 STAT. 1900 PUBLIC LAW 99-509—OCT. 21, 1986
deferral of normal and prudent maintenance necessary to pro­
vide and maintain rail service.
(b) COMPLIANCE CERTIFICATES.—(1) Within 90 days after the close
of each of its fiscal years, or at the time its financial statements
have been audited, whichever occurs later, the Corporation shall
deliver to the Secretary of Transportation a certificate executed by
an executive officer of the Corporation. Such certificate shall certify
that, as of such date, the Corporation is in compliance with all
requirements (other than the requirement regarding a common
stock dividend or a preferred stock dividend) set forth in this section.
Such certificate shall include audited consolidated financial
statements.
(2) Within 5 days after the declaration of any common stock
dividend or preferred stock dividend, the Corporation shall deliver
to the Secretary of Transportation a certificate executed by an
executive officer of the Corporation. Such certificate shall certify
that, after giving effect to any such dividend, the Corporation shall
be in compliance with any requirement regarding a common stock
dividend or a preferred stock dividend set forth in this section. Such
certificate shall include—
(A) quarterly financial statements; and
Reports. (B) a report of the Corporation's total capital expenditures,
for the period with respect to which the dividend has been declared,
and the fiscal year to date, and shall compare such capital expendi­
tures to the budgeted capital expenditures and to the capital
expenditures during the comparable periods of the previous fiscal
year.
SEC. 4022. OWNERSHIP LIMITATIONS.
(a) GENERAL.—(1) During a period of 3 years beginning on the sale
date, no person, directly or indirectly, may acquire or hold securities
representing more than 10 percent of the total votes of all outstand­
ing voting securities of the Corporation.
'(' (2) This subsection shall not apply— '
(A) to the employee stock ownership plan (or successor plans)
of the Corporation,
(B) to the Secretary of Transportation,
(C) to a railroad as described under subsection (b),
(D) to underwriting syndicates holding shares for resale, or
Banks and (E) in the case of shares beneficially held for others, to
banking. commercial banks, broker-dealers, clearing corporations, or
other nominees.
(b) RAILROADS.—(1) During a period of 1 year beginning on the sale
date, no railroad may purchase or hold, directly or indirectly, more
than 10 percent of any class of stock of the Corporation. During such
period, no railroad may file an application with the Commission for
a merger or consolidation with the Corporation or the acquisition of
control of the Corporation under section 11344 of title 49, United
States Code.
(2) During a period of 3 years beginning on the sale date, any
railroad which purchases or holds any stock of the Corporation shall
vote such stock in the same proportion as all other common stock of
the Corporation is voted. After the expiration of 1 year after the sale
date, the preceding sentence shall not apply to any railroad with
respect to which the Commission has approved an application for a
merger or consolidation with the Corporation or the acquisition of Securities.
45 use 1322. PUBLIC LAW 99-509—OCT. 21, 1986 100 STAT. 1901
control of the Corporation under section 11344 of title 49, United
States Code.
(3) As used in this subsection, the term "railroad" means a class I
railroad as determined by the Commission under the definition in
effect on the date of the enactment of this Act, and includes any
entity controlling, controlled by, or under common control with any
railroad (other than the Corporation or its subsidiaries).
SEC. 4023. BOARD OF DIRECTORS. 45 USC 1323.
The Board of Directors of the Corporation shall be comprised as
follows:
(1) Except as provided in paragraph (3), with respect to the
period ending June 30, 1987, the board shall remain as it exists
on the date of the enactment of this Act, with any vacancies
being filled by directors nominated and elected by the remain­
der of the members of the board.
(2)(A) Except as provided in paragraph (3), with respect to the
period beginning July 1, 1987, the board shall consist of—
f (i) 3 directors appointed by the Secretary of Transpor­
tation;
(ii) the Chief Executive Officer and the Chief Operating
Officer of the Corporation; and
(iii) 8 directors appointed from among persons knowledge­
able in business affairs by the special court trustees named
under subparagraph (C), in consultation with the Secretary
of Transportation and the Chairman of the Board of Direc­
tors of the Corporation, and recognizing the need for and
importance of—
(I) continuity in the direction of the Corporation's
business and affairs;
(II) preserving the value of the investment of the
United States in the Corporation;
(III) preserving essential rail service provided by the
Corporation; and
(IV) providing for the sale of the United States
f shares.
(B) The Secretary of Transportation and the special court
trustees may appoint directors under subparagraph (A) from
* among existing directors of the Corporation.
(C)(i) If more than 50 percent of the interest of the United
States in the Corporation has not been sold before June 1, 1987,
the special court established under section 209 of the Regional
Rail Reorganization Act of 1973 (45 U.S.C. 719) shall, on that
date, name 3 trustees from among persons knowledgeable in
business affairs to make the appointments required by subpara­
graph (A)(iii). The Corporation shall compensate the special
court trustees in an amount to be specified by the special court,
not to exceed the amount paid by the Corporation to its direc­
tors for comparable services.
(ii) No person shall be eligible to be appointed as a special
court trustee under this subparagraph who, at any time during
the 30 months immediately preceding such appointment, was an
officer, employee, or director of the United States Railway
Association, the Corporation, or the Department of Transpor­
tation.
(3XA) After the sale date, one director shall be elected by the
public shareholders of the Corporation for each increment of 100 STAT. 1902 PUBLIC LAW 99-509—OCT. 21, 1986
12.5 percent of the interest of the United States in the Corpora­
tion that has been sold through public offering.
(B) With respect to the period ending June 30,1987—
(i) the first director elected under this paragraph shall
replace the member of the board who became a director
most recently from among—
(I) directors appointed by the United States Railway
..-;'.:' ;>T«-.,.,> such a director, and
(II) directors appointed by the Secretary of Transpor­
tation, or elected under paragraph (1) to replace such a
director;
(ii) the second director elected under this paragraph shall
., -.. replace the member of the Board who became a director
most recently from among directors described in clause (i)(I)
or (II), whichever group the first director replaced under
– * this subparagraph was not a member of; and
(iii) subsequent directors elected under this paragraph
shall replace members alternately from the groups de-
n- scribed in clause (i)(I) and (II).
(C) With respect to the period beginning July 1, 1987, direc-
' tors elected under this paragraph shall replace directors ap­
pointed by the special court trustees under paragraph (2)(A)(iii),
in the order designated by the special court trustees in a list to
be issued at the time of such original appointments.
(D) With respect to the period beginning on the first date
more than 50 percent of the interest of the United States in the
Corporation has been sold through public offering and ending
when 100 percent of such interest has been sold—
(i) all remaining members of the board referred to in
paragraph (2)(A)(iii), and
^' "' (ii) with respect to the period ending June 30, 1987, all
remaining members of the board, except 3 members ap-
" ' ' pointed by the Secretary of Transportation and the Chief
Executive Officer and the Chief Operating Officer of the
Corporation,
shall be replaced by directors elected by the public shareholders
of the Corporation.
(E) After 100 percent of the interest of the United States in
the Corporation has been sold, any remaining directors ap­
pointed by the Secretary of Transportation, the United States
Railway Association, or the special court trustees referred to
under paragraph (2)(A)(iii), shall be replaced by directors elected
by the public shareholders of the Corporation.
(F) Nothing in this paragraph shall be construed to prohibit
any director referred to in this section from being elected as a
director by the public shareholders of the Corporation.
5 ' (4)(A) No director appointed or elected under this section shall
be a special court trustee or an employee of the United States,
except as elected by the public shareholders of the Corporation.
(B) No director appointed or elected under this section shall
be an employee of the Corporation, except as provided in para-
,, graph (2)(A)(ii) or as elected by the public shareholders of the
arii Corporation. PUBLIC LAW 99-509—OCT. 21, 1986 100 STAT. 1903
SEC. 4024. PROVISIONS FOR EMPLOYEES.
(a) TRANSITIONAL EMPLOYEE PROTECTION.—Section 701(d)(2) of the
Regional Rail Reorganization Act of 1973 (45 U.S.C. 797(d)(2)) is
amended to read as follows:
"(2) Notwithstanding any other provision of law— ^
"(A) upon exhaustion of appropriated funds available for '' ' • " *^
payment of benefits or expenses of administration of the Rail­
road Retirement Board (hereafter in this section referred to as
the 'Board') under this section, or on the expiration of 60 days
after the date of enactment of the Conrail Privatization Act,
whichever first occurs, the United States shall have no further
liability under this section, but the Corporation shall—
"(i) as agent for the Board, pay benefits under this sec- .. 'S'.' ^ *.'
tion, without reimbursement, in such amounts and to such
eligible employees as the Board shall designate, subject to
the limitations prescribed in the benefit schedules issued
under subsection (a); and
"(ii) on a periodic basis determined by the Board, advance
to the Board its necessary expenses of administration,
including expenses reasonably required for close-out of the
program of labor protection under this section and for
f technical transition to the program of labor protection
required by the Conrail Privatization Act, which advances
shall be made without reimbursement.
"(B) The Corporation shall promptly honor the Board's re­
quests for advances under this paragraph as due and payable .sbiossll
liquidated debts, subject to later adjustment after audit by the
Inspector General of the Board. The Board is authorized to
receive and apply Corporation funds advanced under this para­
graph for administration of this section and to refund to the
Corporation any excess administrative funds advanced by the
Corporation.
"(C) The Corporation shall be deemed subrogated to the right
of the Board to recover any benefit paid by the Corporation as '' -*S^I Si
agent for the Board that was improvidently paid under this
paragraph, and the Board shall cooperate with the Corporation
in its effort to recover any such payment; but the Corporation
shall have no claim against the Board for such payment, and
the Board shall not be made a real party in interest to any i^''.'
lawsuit or to any proceeding with respect to recovery of such –
payment.
"(D) Benefits provided by the Corporation, as agent for the
Board, shall, for purposes of this title, be deemed to have been
made available under section 713 of this title.". 45 USC 797/.
(b) DISPUTE RESOLUTION.—Section 701 of the Regional Rail Reorga­
nization Act of 1973 (45 U.S.C. 797) is further amended by adding at
the end thereof a new subsection as follows:
"(e) DISPUTE RESOLUTION.—Any dispute or controversy regarding
eligibility for benefits under this section shall be determined under
such procedures as the Board may by regulation prescribe. Subject
to administrative reconsideration by the Board under its own proce­
dures, findings of fact and conclusions of law of the Board in
determination of any claim for such benefits shall, in the absence of
fraud or an action exceeding the Board's jurisdiction, be binding and
conclusive for all purposes and shall not be subject to review in any
manner. For purposes of administration of this section, the adminis-100 STAT. 1904 PUBLIC LAW 99-509—OCT. 21, 1986
45 use 359, 362.
Effective date.
45 use 797 and
note.
Ante, p. 1903.
45 use 797 note.
Records.
45 use 797 note.
Securities.
45 use 797 note. trative powers and penalties set forth in sections 9 and 12 of the
Railroad Unemployment Insurance Act shall apply as if incor­
porated herein.".
(c) REPEAL OF SECTION 701.—Section 701 of the Regional Rail
Reorganization Act of 1973 is repealed effective on the sale date.
Notwithstanding this repeal—
(1) any dispute or controversy regarding benefits under sec­
tion 701 shall be determined under the terms of the law in effect
prior to such repeal; and
(2) the Railroad Retirement Board shall take such actions as
may be necessary to complete administration and closeout of
the section 701 program and the Board is authorized to receive
and apply Corporation funds for this purpose.
(d) CONTINUING RESPONSIBILITIES.—(1) On and after the sale date,
the Corporation shall provide the protection for its employees de­
scribed in "Part III, Article III, Employee Protection", of the
"Definitive Agreement of September 17, 1985, By and Between
Conrail and the Undersigned Representatives of Conrail's Agree­
ment Employees" and Appendix 3 thereto, together with any
amendments thereto, or under any other terms and conditions as
shall be agreed between the Corporation and the representatives of
its employees.
(2) The Corporation shall pay, as designated by the Railroad
Retirement Board, any remaining benefits under section 701 of the
Regional Rail Reorganization Act of 1973 that accrued, but were not
disbursed, prior to the sale date.
(3) The Railroad Retirement Board shall transfer to the Corpora­
tion such information regarding administration of the labor protec­
tion program under such section 701 as may be reasonably necessary
for the Corporation to discharge its responsibilities under this
subsection, including copies of the individual claim records of
employees of the Corporation.
(4) The United States shall have no liability for benefits under this
subsection.
(e) COMPENSATION FOR WAGES BELOW INDUSTRY STANDARD.—The
Corporation shall pay $200,000,000 to present and former employees
subject to collective bargaining agreements, in accordance with the
terms and conditions in the Definitive Agreement referred to in
subsection (d)(1), or as otherwise agreed between the parties.
(f) ESOP TRANSACTIONS.—(1) As soon as practicable after the date
of the enactment of this Act, the employee stock ownership plan of
the Corporation (hereafter in this subsection referred to as the
"ESOP") shall be amended to provide that—
(A) the shares of the ConRail Equity Corporation preferred
stock held by the ESOP shall be surrendered by the ESOP in
exchange for an equal number of shares of the common stock of
the Corporation, and such common stock of the Corporation
shall be allocated by the ESOP to the same persons in the same
amounts as the shares of ConRail Equity Corporation preferred
stock had been allocated; and
(B) the remaining shares of the ConRail Equity Corporation
preferred stock held by the Corporation shall be cancelled, and
an equal number of shares of the common stock of the Corpora­
tion shall be contributed by the Corporation to the ESOP, which
shares shall be allocated by the ESOP to persons who are or
were ESOP participants in accordance with the formula set
forth in section 2 of Article II of Part III of the Definitive PUBLIC LAW 99-509—OCT. 21, 1986 100 STAT. 1905
Agreement referred to in subsection (d)(1), and in accordance
with a comparable formula for present and former employees of
the Corporation not covered by such section of the Definitive
Agreement, except that no contribution by the Corporation to
the ESOP shall be made which would affect the tax-qualified ,
status of the ESOP, or of any of the employee benefit plans
maintained by the Corporation or any affiliate of the Corpora­
tion, under the Internal Revenue Code of 1954. Post, p. 2095.
(2)(A)(i) As soon as practicable after the expiration of 180 days
after 100 percent of the United States shares are sold, the ESOP
shall distribute all of the stock in the accounts of its participants
and beneficiaries, except as provided in clause (ii).
(ii) Fractional shares shall not be distributed under clause (i).
Shares equal to the aggregate amount of fractional shares shall be
surrendered by the ESOP and redeemed by the Corporation for cash
at the average closing price for the common stock of the Corporation
on a national securities exchange for the 10 business days imme­
diately preceding the date of distribution under clause (i), or, if the
common stock of the Corporation is not listed on a national securi­
ties exchange, at the average closing price for such stock for such 10
business days as appearing in any regularly published reporting or
quotation service, and the proceeds of such redemption shall be
distributed by the ESOP to the same participants and beneficiaries
and in the same amounts as the fractional shares had been
allocated.
(B) After completing the distribution under subparagraph (A), the
ESOP shall terminate.
(3) The Corporation shall distribute any full shares of its common
stock which, because of the exception under paragraph (1)(B), could
not be contributed to the ESOP to those persons to whom the ESOP
would have allocated such shares pursuant to paragraph (1)(B) had
such shares been contributed to the ESOP. The Corporation shall
pay cash pursuant to the formula set forth in paragraph (2)(A)(ii) in *
lieu of fractional shares.
(4) For purposes of Rule 144 promulgated under the Securities Act
of 1933, each share of the common stock of the Corporation distrib- 15 USC 77a.
uted under this subsection shall be deemed to have been beneficially
owned by the recipient, as of the date of such distribution, for a
period of 3 years.
SEC. 4025. CERTAIN ENFORCEMENT RELIEF. Claims.
45 USC 1324
(a) ENFORCEMENT ACTIONS.—The Secretary of Transportation,
with respect to any provision of section 4021 or 4022, and any person
who suffers direct and substantial economic injury as a result of an a
alleged violation by the Corporation, with respect to the provisions
of section 4021(a)(1) and (2), and section 4022, may bring an action to
require compliance with such provision.
(b) SPECIAL COURT.—Any action brought under this part shall be
brought before the special court established under section 209 of the
Regional Rail Reorganization Act of 1973 (45 U.S.C. 719). Such
special court may limit the enforcement of a restriction under
section 4021, if the effect of such restriction would be to substan­
tially impair the continued viability of the Corporation. 100 STAT. 1906 PUBLIC LAW 99-509—OCT. 21, 1986
Subpart C—Miscellaneous Technical and Conforming
Amendments and Repeals
45 use 1341. SEC. 4031. ABOLITION OF UNITED STATES RAILWAY ASSOCIATION.
Effective date. (a) ABOLITION AND TERMINATION.—(1) Effective April 1, 1987, the
United States Railway Association is abolished.
,,.( . , (2) On January 1, 1987, all powers, duties, rights, and obligations
of such association relating to the Corporation under the Regional
Rail Reorganization Act of 1973 (45 U.S.C. 701 et seq.) shall be
transferred to the Secretary of Transportation.
(3) The sole function of the United States Railway Association
after January 1, 1987, shall be the termination of its affairs and the
liquidation of its assets.
(b) TRANSFER OF SECURITIES AND RESPONSIBILITIES.—(1) Any securi­
ties of the Corporation held by the United States Railway Associa­
tion shall, upon the date of the enactment of this Act, be transferred
to the Secretary of Transportation.
(2) If, on the date the United States Railway Association is
abolished under subsection (a), such association shall not have
completed the termination of its affairs and the liquidation of its
assets, the duty of completing such winding up of its affairs and
liquidation shall be transferred to the Secretary of Transportation,
who for such purposes shall succeed to all remaining powers, duties,
rights, and obligations of such association.
Securities. (c) FINANCING AGREEMENT.—(1) On January 1, 1987, the Amended
and Restated Financing Agreement, dated May 10, 1979, between
the United States Railway Association and the Corporation, to­
gether with any and all rights and obligations of or on behalf of any
person with respect to such agreement, shall terminate and be of no
further force or effect, except for those provisions specifying terms
and conditions for payments made to the United States with respect
to debentures, preferred stock, and contingent interest notes.
(2) Effective as of the sale date, those provisions of the Financing
Agreement referred to in paragraph (1) shall terminate.
SEC. 4032. APPLICABILITY OF REGIONAL RAIL REORGANIZATION ACT OF
1973 TO CONRAIL AFTER SALE.
Section 301 of the Regional Rail Reorganization Act of 1973 (45
U.S.C. 741) is amended by adding at the end thereof the following
new subsection:
"(k) GOVERNING PROVISIONS AFTER SALE.—The provisions of this
53; Act shall not apply to the Corporation and to activities and other
actions and responsibilities of the Corporation and its directors and
employees after the sale date, other than with regard to—
Post, p. 1908. "(1) section 102;
45 use 711. "(2) section 201(d);
45 use 713. "(3) section 203, but only with respect to information relating
to proceedings before the special court established under section
45 use 719. 209(b);
"(4) section 209, other than subsection (f) thereof;
45 use 726. "(5) section 216(f)(8), but only as such authority applies to
activities related to the ESOP and related trust before the sale
date;
"(6) section 216(f)(9), but only as such indemnification applies
to activities relating to the ESOP and related trust before the
sale date; Effective date.
''«3iJ PUBLIC LAW 99-509—OCT. 21, 1986 100 STAT. 1907
"(7) section 216(f)(10) with respect to all securities of the
Corporation issued or transferred in connection with the public
offering under the Conrail Privatization Act and all securities of
ConRail Equity Corporation and all interests in the ESOP;
"(8) section 217(c) and (e);
"(9) subsection (b) of this section, but only with respect to
matters covered by the last sentence of such subsection;
"(10) subsection (i) of this section, but only as such authority
applies to service as a director of the Corporation before the sale
of the interest of the United States in the common stock of the
Corporation;
"(11) section 302, but only to the extent of (A) the creation and
maintenance of the power and authority of the Corporation to
operate rail service and to rehabilitate, improve, and modernize
rail properties, and (B) the creation and maintenance of the
powers of the Corporation as a railroad in any State in which it
operates as of the sale date;
"(12) section 303(b)(1) and (2), but only to the extent of
establishing the legal effect of the conveyance of property or­
dered and of the deeds and other instruments executed,
acknowledged, delivered, or recorded in connection therewith
and the quality of title acquired in such property;
"(13) section 303(b)(3)(B) with respect to the effect of an assign­
ment, conveyance, or assumption as set forth in the last sen­
tence of such subparagraph (B);
"(14) section 30303)(5);
"(15) section 303(b)(6), but only with respect to establishing
and maintaining the rights of the Corporation with respect to,
limiting its obligations with respect to, and establishing the
status of, the employee pension and welfare benefit plans trans­
ferred to the Corporation thereunder and with respect to the
exclusivity of the jurisdiction of the special court and the
limitation of jurisdiction of other courts;
"(16) section 303(e);
"(17) section 304, but only with respect to the finality of
abandonments completed before the sale date pursuant to the
authority thereof;
"(18) section 305, but only as to the effect, and continuing
administration, of supplemental transactions consummated
before the sale date;
"(19) section 308, but only (A) as to the finality of abandon­
ments completed before the sale date and (B) as to abandon­
ments of lines where a notice or notices of insufficient revenues
with respect to such lines have been filed before November 1,
1985;
"(20) section 601(a)(2), but only with respect to activities
"(21) section 601(b)(2) and (b)(3), but only with respect to
issuance of and transactions in any security of the Corporation
before the sale date;
"(22) section 702(e);
"(23) section 703;
"(24) section 704;
"(25) sections 706(a), 707, and 708(a), but only insofar as they
establish part of the prevailing status quo for the Corporation's
employees' rates of pay, rules, and working conditions, such Securities.
45 use 726.
Post, p. 1908.
Securities.
State and local
governments.
45 use 742.
45 use 743.
45 use 744.
45 use 745.
45 use 748.
45 use 791.
45 use 797a.
45 use 797b.
45 use 797c.
45 use
797e-797g. 100 STAT. 1908 PUBLIC LAW 99-509—OCT. 21, 1986
?: s provisions to continue to apply unless changed pursuant to
section 6 of the Railway Labor Act (45 U.S.C. 156);
45 use 797h. "(26) section 709;
45USC797i. fi "(27) section 710(b)(1); nt. . ,-lo^ .^ .
45USC797J. " "(28) section 711; and
45 use 797m. ' "(29) section 714, but only with regard to disputes or con­
troversies specified in such section that arose before the sale
=.-.t:.-/: -* date.".
SEC. 4033. MISCELLANEOUS AMENDMENTS AND REPEALS.
45 use 701 note. (a) REGIONAL RAIL REORGANIZATION ACT OF 1973 REPEALS.—The
following provisions of the Regional Rail Reorganization Act of 1973
(together with any items relating to such provisions contained in the
table of contents of such Act) are repealed:
(1) Title IV (45 U.S.C. 761 through 769c). ,?
(2) Section 713 (45 U.S.C. 7971).
(b) REGIONAL RAIL REORGANIZATION ACT OF 1973 AMENDMENTS.—
(1) Section 102 of the Regional Rail Reorganization Act of 1973 (45
U.S.C. 702) is amended by inserting after paragraph (17) a new
paragraph as follows:
"(17A) 'sale date' means the date on which the initial public
offering of the securities of the Corporation is closed under the
Conrail Privatization Act;".
(2) Section 217(c) of the Regional Rail Reorganization Act of 1973
(45 U.S.C. 727(c)) is amended by striking ", until the property" and
all that follows, and inserting in lieu thereof "applicable to any
taxable period commencing before January 1,1987.".
(3) Section 217(e) of such Act (45 U.S.C. 727(e)) is amended by
striking "and shall collect".
(c) AMENDMENTS AND REPEALS OF OTHER RAIL LAWS.—(1)(A) Sec­
tion 1152 of the Northeast Rail Service Act of 1981 (45 U.S.C. 1105) is
amended—
(i) by inserting "or part 2 of the Conrail Privatization Act"
after "subtitle" each place it appears; and
;. (ii) in the second sentence of subsection (c), by inserting ", as
the case may be," after the insertion made by clause (i) of this
subparagraph.
– (B) Section 1168(a) of the Northeast Rail Service Act of 1981 (45
U.S.C. 1116(a)) is amended by inserting before the period at the end
the following: "and to the implementation of the sale of the interest
** £/; of the United States in Conrail under the Conrail Privatization
Act".
(C)(i) The following provisions of the Northeast Rail Service Act of
1981 are repealed:
(I) Section 1154 (45 U.S.C. 1107).
r (II) Section 1161 (45 U.S.C. 1110).
(III) Section 1166 (45 U.S.C. 1114).
(IV) Subsection (c) of section 1167 (45 U.S.C. 1115).
(ii) The items relating to such sections 1154, 1161, and 1166 in the
table of contents of such Act are repealed.
" . "' f : (2) Section 501(8) of the Railroad Revitalization and Regulatory
Reform Act of 1976 (45 U.S.C. 821(8)) is amended by striking out
"(A)" and by striking out all that follows "improved asset
utilization;".
(3) Section 505 of the Railroad Revitalization and Regulatory
Reform Act of 1976 (45 U.S.C. 825) is amended— PUBLIC LAW 99-509—OCT. 21, 1986 100 STAT. 1909
(A) in subsection (a)(1), by striking out all after "railroad"
through "1981)"; and
(B) in subsection (b)(2)(C), by striking out all after "costs" the "•
second time it appears through "subsidy".
(4) Subsection (b)(1) of section 509 of the Railroad Revitalization
and Regulatory Reform Act of 1976 (45 U.S.C. 829) is repealed.
(5) Section 511(e) of the Railroad Revitalization and Regulatory
Reform Act of 1976 (45 U.S.C. 831(e)) is amended—
(A) by striking out "(1)" in the first paragraph;
(B) by striking all that follows "time" in the first paragraph . /r
and inserting in lieu thereof a period; and
(C) by striking out paragraph (2).
(6) Section 402 of the Rail Safety and Service Improvement Act of
1982 (45 U.S.C. 825a) is repealed.
(7) Section 10362(b)(7)(A) of title 49, United States Code, is
amended by striking out "by the Consolidated Rail Corporation or".
SEC. 4034. EXEMPTION FROM LIABILITY. 45 USC 1342.
(a) IN GENERAL.—No person referred to in section 216(f)(8)(C)(i),
(ii), or (iii) of the Regional Rail Reorganization Act of 1973 (45 U.S.C.
726(f)(8)(C)(i), (ii), or (iii)) shall be liable, for money damages or ,.,
otherwise, to any party if, with respect to the subject matter of the
action, suit, or proceeding, such person was fulfilling a duty, in
connection with any action taken under this part, which such
person in good faith reasonably believed to be required by law or
vested in such person.
(b) EXCEPTION.—This section shall not apply to claims arising out
of the Securities Act of 1933, the Securities Exchange Act of 1934, or
the Constitution or laws of any State, territory, or possession of the
United States relating to transactions in securities, which claims are
in connection with a public offering under section 4012 of this Act.
SEC. 4035. CHARTER AMENDMENT.
Within 60 days after the date of the enactment of this Act, the
Corporation shall amend its Articles of Incorporation to contain the
following provision, which provision shall not be subject to amend­
ment or repeal:
"It shall be a fundamental purpose of the Corporation to maintain
continued rail service in its service area.".
SEC. 4036. STATUS OF CONRAIL AFTER SALE. 45 USC 1344.
The Corporation shall be a rail carrier as defined in section
10102(19) of title 49, United States Code, notwithstanding this part.
SEC. 4037. EFFECT ON CONTRACTS. 45 USC 1345.
Nothing in this part shall affect any obligation of the Corporation
to carry out its transportation contracts and equipment leases,
equipment trusts, and conditional sales agreements, in accordance
with their terms.
SEC. 4038. RESOLUTION OF CERTAIN ISSUES. 45 USC 1346.
(a) EMPLOYEE ISSUES.—Section 4024 completely and finally—
(1) extinguishes all employee rights, and any obligatioji of the
United States, under section 401(e) of the Regional Rail Reorga­
nization Act of 1973 (45 U.S.C. 761(e)) as in effect immediately
before the date of the enactment of this Act;
^ (2) resolves any and all claims against the Corporation or any Claims,
other person arising under the Definitive Agreement referred to Claims.
Securities.
State and local
governments.
15 USC 77a.
15 USC 78a.
45 USC 1343. 100 STAT. 1910 PUBLIC LAW 99-509—OCT. 21, 1986
Claims.
45 use 156.
Claims.
Claims. "DR in section 4024(d)(1) or any other agreement containing similar
terms and conditions;
sdj (3) resolves all claims to pay entitlements arising out of the
pay increase deferrals by present and former employees of the
• Corporation under the Agreement of May 5, 1981, between
Conrail and Certain Labor Organizations for Labor Contribu­
tions to Self-Sufficiency for Conrail;
(4) resolves all issues raised by notices served by representa­
tives of such employees under section 6 of the Railway Labor
Aqi Act proposing repayment of or compensation for such deferrals;
and
(5) resolves all claims against the Railway Labor Executives'
1c 2 Association or the Corporation by any adviser, consultant, or
other person who has provided services to such association in
connection with any matter referred to in this part.
(b) CORPORATION ACTIONS.—The Corporation shall not be consid­
ered to be in breach, default, or violation of any agreement to which
it is a party, notwithstanding any provision of such agreement,
because of any provision of this part or any action the Corporation is
required to take under this part.
(c) RIGHT To SUE WITHDRAWN.—The United States hereby with­
draws any stated or implied consent for the United States, or any
agent or officer of the United States, to be sued by any person for
any legal, equitable, or other relief with respect to any claim arising
out of, or resulting from, acts or omissions under this part, except
actions brought to require the Secretary of Transportation to per­
form duties or acts required under subpart A.
PART 3—PROMOTION OF RAIL COMPETITION
:-'•<'i 08^,1 oi-
'M.: ';:W
.aliSection 10713(b) of title 49, United States Code, is amended by
inserting "(D" after "(b)"; and by adding at the end a new paragraph
as follows:
"(2)(A) The essential terms of any contract for the transportation
of agricultural commodities to be made available to the general
public in tariff format under this subsection shall include, but shall
not be limited to (i) the identity of the shipper party to the contract;
(ii) the specific origins, transit points and other shipper facilities
subject to the contract, and destinations served under such contract;
(iii) the duration of the contract, including provisions for optional
extension; (iv) the actual volume requirements, if any; (v) whether
any transportation service has begun under a contract before the
date such contract is filed with or approved by the Commission, and
(vi) the date on which the contract became applicable to the
transportation services provided under the contract. The Commis­
sion shall interpret this subsection to provide for liberal discovery to
shippers seeking remedies under subsection (d)(2)(B) of this section.
"(B) Any amendment, supplement, or change to any term or
provision of any contract described in subparagraph (A), including
extensions of such contract, changes of origin, transit points, af­
fected shipper facilities, destination points, or negotiated economic
terms, shall be deemed to be a separate and new contract for the
purposes of this subsection. Such amendments, supplements, or
changes shall be filed separately with the Commission as provided
in paragraph (1). / PUBLIC LAW 99-509—OCT. 21, 1986 100 STAT. 1911
"(C) Within 60 days after the date of the enactment of the Conrail
Privatization Act, the Commission shall issue regulations which
require that essential terms of contracts described in subparagraph
(A) shall be made available to the general public in tariff format as
provided in this paragraph.
"(D) The railroad contract rate advisory service established pursu­
ant to subsection (m) of this section shall assess the impact on
competition among agricultural shippers of variations between con­
tract rates for various shipments and the published single car rates,
and shall submit a report to the Congress not later than 120 days
after the date of the enactment of the Conrail Privatization Act.".
SEC. 4052. BOXCAR PROVISION.
The authority of the Commission to promulgate that portion of
the rule adopted by the Commission in Ex Parte No. 346 (Sub. No.
19) served September 12, 1986, consisting of small railroad protec­
tions, is hereby confirmed.
i>»ti 1' Subtitle B—Economic Development
oseiMiD^ Administration Regulations.
Reports.
SEC. 4101. SALE OF NOTES.
Notwithstanding any other provision of law, the Secretary of
Commerce shall, under such terms as the Secretary may provide,
sell defaulted notes held by the Economic Development Administra­
tion in such amounts as to realize net proceeds of not less than
$50,000,000 from such sales during fiscal year 1987.
A TIiLE V—MARITIME PROGRAMS
Subtitle A—Maritime Loan Guarantees 9 jy^n c»%u
SEC. 5001. LOAN GUARANTEES.
(a) Section 362(b) of title 11, United States Code, is amended—
,c (1) by striking the period in paragraph (11) and inserting in
a lieu thereof a semicolon; and
, V (2) by adding at the end thereof the following:
fi "(12) under subsection (a) of this section, after the date which
hi is 90 days after the filing of such petition, of the commencement
or continuation, and conclusion to the entry of final judgment,
of an action which involves a debtor subject to reorganization
pursuant to chapter 11 of this title and which was brought by
g the Secretary of Transportation under the Ship Mortgage Act,
i 1920 (46 App. U.S.C. 911 et seq.) (including distribution of any
proceeds of sale) to foreclose a preferred ship or fleet mortgage,
or a security interest in or relating to a vessel or vessel under
construction, held by the Secretary of Transportation under
a- section 207 or title XI of the Merchant Marine Act, 1936 (46
X: App. U.S.C. 1117 and 1271 et seq., respectively), or under
£ applicable State law; or
"(13) under subsection (a) of this section, after the date which
is 90 days after the filing of such petition, of the commencement
or continuation, and conclusion to the entry of final judgment,
iii of an action which involves a debtor subject to reorganization State and local
governments.
11 use 1101 et
seq. 100 STAT. 1912 PUBLIC LAW 99-509—OCT. 21, 1986
11 use 1101 et
;hfH]«»H
Reports.
11 use 362 note.
11 use 362 note.
46 use 1271 et
seq.
Aleiska.
16 use 1856
note. pursuant to chapter 11 of this title and which was brought by
the Secretary of Commerce under the Ship Mortgage Act, 1920
(46 App. U.S.C. 911 et seq.) (including distribution of any pro-
c ceeds of sale) to foreclose a preferred ship or fleet mortgage in a
vessel or a mortgage, deed of trust, or other security interest in
-;rt a fishing facility held by the Secretary of Commerce under
section 207 or title XI of the Merchant Marine Act, 1936 (46
App. U.S.C. 1117 and 1271 et seq., respectively).
The provisions of paragraphs (12) and (13) of this subsection shall
apply with respect to any such petition filed on or before Decem­
ber 31, 1989.".
Before July 1, 1989, the Secretary of Transportation and the Sec­
retary of Commerce each shall submit a report to the Committees on
Merchant Marine and Fisheries, and the Judiciary of the House of
Representatives and the Committees on Commerce, Science, and
Transportation, and the Judiciary of the Senate on the effects of this
subsection together with any recommendations for legislation.
(b) The amendments made by subsection (a) of this section shall
apply only to petitions filed under section 362 of title 11, United
States Code, which are made after August 1,1986.
(c) Subsection L of section 30 of the Merchant Marine Act of 1920
(46 App. U.S.C. 952) is amended by adding at the end the following:
"When the Secretary of Commerce or Transportation is a mortgagee
under this Act, the Secretary may foreclose on liens arising from
rights attendant to the creation of mortgages under title XI of the
Merchant Marine Act, 1936, subject to section 362(b) of title 11,
United States Code.".
SEC. 5002. AMOUNT OF GUARANTEE FOR OBLIGATIONS.
Section 1103(a) of the Merchant Marine Act, 1936 (46 App. U.S.C.
1273(a)) is amended by adding at the end thereof the following: "A
guarantee, or commitment to guarantee, made by the Secretary
under this title shall cover 100 percent of the amount of the
principal and interest of the obligation.".
SEC. 5003. AMOUNT OF GUARANTEE FOR OBLIGATIONS RELATING TO
FISHING VESSELS OR FISHERY FACILITIES.
Section 110403)(2) of the Merchant Marine Act, 1936 (46 App.
U.S.C. 1274(b)(2)) is amended by striking "Provided, further. That in
the case of any vessel to be used in the fishing trade or industry,
such obligations may be in an aggregate principal amount which
does not exceed 87 ¥2 per centum of the actual cost or depreciated
actual cost of the vessel:" and inserting in lieu thereof "Provided
further, That in the case of a fishing vessel or fishery facility, the
obligation shall be in an aggregate principal amount equal to 80
percent of the actual cost or depreciated actual cost of the fishing
vessel or fishery facility, except that no debt mav be placed under
this proviso through the Federal Financing Bank:'.
SEC. 5004. FOREIGN FISH PROCESSING IN NORTON SOUND.
For purposes of processing pink salmon within the internal waters
of the State of Alaska, the geographic area bounded on the north by
a parallel of latitude of 64 degrees, 23 minutes, on the south by a
parallel of latitude of 63 degrees, 51 minutes, on the east by the
baseline from which the territorial sea is measured, and on the west
by the outer limit of the territorial sea, shall be considered to be
internal waters of the State of Alaska for the purposes of section PUBLIC LAW 99-509—OCT. 21, 1986 100 STAT. 1913
306(cX4)(B) of the Fishery Conservation and Management Act (16
U.S.C. 1856(cX4XB)) until September 30,1993.
Subtitle B—Load Line and Tonnage
Measurement User Fees
SEC. 5101. AMENDMENTS TO TITLE 46.
Subtitle II of title 46, United States Code, is amended as follows:
(1) The table of chapters at the beginning of the subtitle is
amended by—
*'- (A) striking "[PART C—RESERVED FOR LOAD LINES OF VES­
SELS]" and inserting—
' "PART C—LOAD LINES OF VESSELS
"51. Load lines 5101";
and
(B) striking "[PART J—RESERVED FOR MEASUREMENT OF
VESSELS]" and inserting—
– "PART J—MEASUREMENT OF VESSELS
"141. General 14101
"143. Convention measurement 14301
"145. Regulatory measurement 14501
"147. Penalties 14701"
(2) Immediately after part B, strike "[PART C—RESERVED FOR
LOAD LINES OF VESSELS] and insert the following new part C:
"PART C—LOAD LINES OF VESSELS
"CHAPTER 51—LOAD LINES
Sec.
"5101. Definitions. , ^ ' ''-
"5102. Application. •*"
"5103. Load line requirements.
"5104. Assignment of load lines.
"5105. Load line surveys.
"5106. Load line certificate.
"5107. Delegation of authority.
"5108. Special exemptions.
"5109. Reciprocity for foreign vessels.
"5110. Submersible vessels.
"5111. Providing loading information.
"5112. Loading restrictions.
"5113. Detention of vessels.
"5114. Use of Customs Service officers and employees for enforcement.
"5115. Regulations.
"5116. Penalties. –,..: J
"§ 5101. Definitions '^ 46 USC 5101.
"In this chapter—
"(1) 'domestic voyage' means movement of a vessel between
places in, or subject to the jurisdiction of, the United States,
except movement between— 100 STAT. 1914 PUBLIC LAW 99-509—OCT. 21, 1986
81) taA ^ "(A) a place in a territory or possession of the United
States or the Trust Territory of the Pacific Islands; and
"(B) a place outside that territory, possession, or Trust
Territory.
"(2) 'economic benefit of the overloading' means the amount
obtained by multiplying the weight of the overload (in tons) by
the lesser of—
'(A) the average freight rate value of a ton of the vessel's
cargo for the voyage; or
"(B) $50.
"(3) 'existing vessel' means-si sflr:;
.^ , ,^ '(A) a vessel on a domestic voyage, the keel of which was
laid, or that was at a similar stage of construction, before
January 1,1986; and
"(B) a vessel on a foreign voyage, the keel of which was
laid, or that was at a similar stage of construction, before
July 21,1968.
; i "(4) 'freeboard' means the distance from the mark of the load
line assigned under this chapter to the freeboard deck.
'Eio "(5) 'freeboard deck' means the deck or other structure the
Secretary prescribes by regulation.
"(6) 'minimum safe freeboard' means the freeboard that the
Secretary decides cannot be reduced safely without limiting the
operation of the vessel.
"(7) 'weight of the overload' means the amount obtained by
rl multiplying the number of inches that the vessel is submerged
i« below the applicable assigned freeboard by the tons-an-inch
"^'' immersion factor for the vessel at the assigned minimum safe
freeboard. •,.;.««,… ..«« ……. .-.,-….,,…•:…•… …
46 use 5102. "§ 5102. Application
"(a) Except as provided in subsection (b) of this section, this
chapter applies to the following:
"(1) a vessel of the United States. ' ™ '
"(2) a vessel on the navigable waters of the United States.
"(3) a vessel-
State and local "(A) owned by a citizen of the United States or a corpora-
governments, tion established by or under the laws of the United States
or a State; and
"(B) not registered in a foreign country.
"(4) a public vessel of the United States.
"(5) a vessel otherwise subject to the jurisdiction of the United
States.
"(b) This chapter does not apply to the following:
"(1) a vessel of war.
"(2) a recreational vessel when operated only for pleasure.
"(3) a fishing vessel.
"(4) a fish processing vessel of not more than 5,000 gross tons
that—
"(A)(i) was constructed as a fish processing vessel before
August 16, 1974; or
"(ii) w£is converted for use as a fish processing vessel
nmwit. before January 1,1983; and
,8S3*».t8. "(B) is not on a foreign voyage.
"(5) a fish tender vessel of not more than 500 gross tons that— .lOKOaiTdP PUBLIC LAW 99-509—OCT. 21, 1986 100 STAT. 1915
"(A)(i) was constructed, under construction, or under con-
-^ tract to be constructed as a fish tender vessel before Janu-
5^ ary 1,1980; or
"(ii) was converted for use as a fish tender vessel before
January 1, 1983; and
"(B) is not on a foreign voyage.
"(6) a vessel of the United States on a domestic voyage that
& does not cross the Boundary Line, except a voyage on the Great
Lakes.
"(7) a vessel of less than 24 meters (79 feet) overall in length.
"(8) a public vessel of the United States on a domestic voyage.
"(9) a vessel excluded from the application of this chapter by
li an international agreement to which the United States Govern­
ment is a party.
"(10) an existing vessel of not more than 150 gross tons that is
p on a domestic voyage.
"(11) a small passenger vessel on a domestic voyage.
•g: "(12) a vessel of the working fleet of the Panama Canal
Commission not on a foreign voyage.
"(c) On application by the owner and after a survey under section
5105 of this title, the Secretary may assign load lines for a vessel
excluded from the application of this chapter under subsection (b) of
this section. A vessel assigned load lines under this subsection is
subject to this chapter until the surrender of its load line certificate
and the removal of its load line marks.
"(d) This chapter does not affect an international agreement to
which the Government is a party that is not in conflict with the
International Convention on Load Lines currently in force for the
United States.
"§ 5103. Load line requirements
"(a) A vessel may be operated only if the vessel has been assigned
load lines.
"(b) The owner, charterer, managing operator, agent, master, and
individual in charge of a vessel shall mark and maintain the load
lines permanently and conspicuously in the way prescribed by the
Secretary.
"§ 5104. Assignment of load lines
"(a) The Secretary shall assign load lines for a vessel so that they
indicate the minimum safe freeboard to which the vessel may be
loaded. However, if the owner requests, the Secretary may assign
load lines that result in greater freeboard than the minimum safe
freeboard.
"(b) In assigning load lines for a vessel, the Secretary shall
consider—
"" "(1) the service, type, and character of the vessel;
® "(2) the geographic area in which the vessel will operate; and
^. "(3) applicable international agreements to which the United
States Government is a party.
"(c) An existing vessel may retain its load lines assigned before
January 1, 1986, unless the Secretary decides that a substantial
change in the vessel after those load lines were assigned requires
that new load lines be assigned under this chapter,
"(d) The minimum freeboard of an existing vessel may be reduced
only if the vessel complies with every applicable provision of this
chapter. .dOlft -J',International
agreements.
International
agreements.
46 use 5103.
46 use 5104.
International
agreements.
Mt:: OB: 100 STAT. 1916 PUBLIC LAW 99-509—OCT. 21, 1986
"(e) The Secretary may designate by regulation specific geo­
graphic areas that have less severe weather or sea conditions and
from which there is adequate time to return to available safe
harbors. The Secretary may reduce the minimum freeboard of a
vessel operating in these areas.
46 use 5105. "§ 5105. Load line surveys
"(a) The Secretary may provide for annual, renewal, and other
load line surveys.
"(b) In conducting a load line survey, the Secretary shall consider
whether—
– ' .. • "(1) the hull and fittings of the vessel—
" ^ "(A) are adequate to protect the vessel from the sea; and
"(B) meet other requirements the Secretary may pre­
scribe by regulation;
"(2) the strength of the hull is adequate for all loading
conditions;
iAi "(3) the stability of the vessel is adequate for all loading
conditions;
r -^ «(4) ^jig topsides of the vessel are arranged and constructed to
^ allow rapid overboard drainage of deck water in heavy weather;
^ and
' "(5) the topsides of the vessel are adequate in design, arrange-
11 ment, and equipment to protect crewmembers performing out­
side tasks necessary for safe operation of the vessel.
46 use 5106. "§ 5106. Load line certificate r , ra TIH
"(a) On finding that a load line survey of a vessel under this
chapter is satisfactory and that the vessel's load lines are marked
c.) ,. correctly, the Secretary shall issue the vessel a load line certificate
and deliver it to the owner, master, or individual in charge of the
vessel.
"(b) The certificate shall be maintained as required by the
Secretary.
46 use 5107. "§ 5107. Delegation of authority
"(a) The Secretary shall delegate to the American Bureau of
Shipping or other similarly qualified organizations the authority to
assign load lines, survey vessels, determine that load lines are
marked correctly, and issue load line certificates under this chapter.
"(b) Under regulations prescribed by the Secretary, a decision of
an organization delegated authority under subsection (a) of this
section related to the assignment of a load line may be appealed to
the Secretary.
"(c) For a vessel intended to be engaged on a foreign voyage, the
Secretary may delegate to another country that is a party to the
International Convention on Load Lines, 1966, the authority to
assign load lines, survey vessels, determine that the load lines are
marked correctly, and issue an International Load Line Certificate
(1966).
"(d) The Secretary may terminate a delegation made under this
section after giving written notice to the organization.
46 use 5108. "§ 5108. Special exemptions
"(a) The Secretary may exempt a vessel from any part of this
chapter when— PUBLIC LAW 99-509—OCT. 21, 1986 100 STAT. 1917
International
agreements.
46 use 5109. "(1) the vessel is entitled to an exemption under an inter- International
national agreement to which the United States Government is a agreements,
party; or
"(2) under regulations (including regulations on special oper-
' ations conditions) prescribed by the Secretary, the Secretary
finds that good cause exists for granting an exemption.
"(b) When the Secretary grants an exemption under this section,
the Secretary may issue a certificate of exemption stating the extent
of the exemption.
"(c) A certificate of exemption issued under subsection (b) of this
section shall be maintained as required by the Secretary.
"§ 5109. Reciprocity for foreign vessels
"(a) When the Secretary finds that the laws and regulations of a
foreign country related to load lines are similar to those of this
chapter and the regulations prescribed under this chapter, or when
a foreign country is a party to an international load line agreement
to which the United States Government is a party, the Secretary
shall accept the load line marks and certificate of a vessel of that
foreign country as complying with this chapter and the regulations
prescribed under this chapter. The Secretary may control the vessel
as provided for in the applicable international agreement.
"(b) Subsection (a) of this section does not apply to a vessel of a
foreign country that does not recognize load lines assigned under
this chapter. ~ .
"§ 5110. Submersible vessels 46 USC 5110.
"Notwithstanding sections 5103-5105 of this title, the Secretary
may prescribe regulations for submersible vessels to provide a mini­
mum level of safety. In developing the regulations, the Secretary
shall consider factors relevant to submersible vessels, including the
structure, stability, and watertight integrity of those vessels.
"§ 5111. Providing loading information 46 USC 5111.
"The Secretary may prescribe regulations requiring the owner,
charterer, managing operator, and agent of a vessel to provide
loading information (including information on loading distribution,
stability, and margin of strength) to the master or individual in ^fuirftLi
charge of the vessel in a language the master or individual under­
stands.
"§ 5112. Loading restrictions 46 USC 5112.
"(a) A vessel may not be loaded in a way that submerges the
assigned load line or the place at which the load line is required to
be marked on the vessel.
"(b) If the loading or stability conditions of a vessel change, the Records,
master or individual in charge of the vessel, before moving the
vessel, shall record in the official logbook or other permanent record
of the vessel—
"(1) the position of the assigned load line relative to the water
j surface; and
"(2) the draft of the vessel fore and aft.
"(c) A vessel may be operated only if the loading distribution,
stability, and margin of strength are adequate for the voyage or
movement intended.
"(d) Subsections (a) and (b) of this section do not apply to a
submersible vessel. 100 STAT. 1918 PUBLIC LAW 99-509—OCT. 21, 1986
46 use 5113. "§ 5113. Detention of vessels
"(a) When the Secretary believes that a vessel is about to leave a
place in the United States in violation of this chapter or a regulation
prescribed under this chapter, the Secretary may detain the vessel
by giving notice to the owner, charterer, managing operator, agent,
master, or individual in charge of the vessel.
"(b) A detained vessel may be cleared under section 4197 of the
Revised Statutes (46 App. U.S.C. 91) only after the violation has
been corrected. If the vessel was cleared before being detained, the
clearance shall be withdrawn.
"(c) Under regulations prescribed by the Secretary, the owner,
charterer, managing operator, agent, master, or individual in charge
of a detained vessel may petition the Secretary to review the
detention order.
"(d) After reviewing a petition, the Secretary may affirm, with­
draw, or change the detention order. Before acting on the petition,
the Secretary may require any independent survey that may be
necessary to determine the condition of the vessel.
"(e) The owner of a vessel is liable for the cost incident to a
petition for review and any required survey if the vessel is found to
be in violation of this chapter or a regulation prescribed under this
chapter.
46 use 5114. "§ 5114. Use of Customs Service officers employees for enforcement
"(a) With the approval of the Secretary of the Treasury, the
' i'-. J''> Secretary may use an officer or employee of the United States
Customs Service to enforce this chapter and the regulations pre­
scribed under this chapter.
"(b) The Secretary shall consult with the Secretary of the Treas­
ury before prescribing a regulation that affects the enforcement
responsibilities of an officer or employee of the Customs Service.
46 use 5115. "§ 5115. Regulations
"(a) The Secretary may prescribe regulations to carry out this
part.
46USe5116. "§ 5116. Penalties r r *' ?' . •
"(a) Except as otherwise provided in this section, the owner,
charterer, managing operator, agent, master, and individual in
Slits :)an ai charge of a vessel violating this chapter or a regulation prescribed
under this chapter are each liable to the United States Government
for a civil penalty of not more than $5,000. Each day of a continuing
violation is a separate violation. The vessel also is liable in rem for
the penalty.
"(b) The owner, charterer, managing operator, agent, master, and
individual in charge of a vessel allowing, causing, attempting to
cause, or failing to take reasonable care to prevent a violation of
section 5112(a) of this title are each liable to the Government for a
civil penalty of not more than $10,000 plus an additional amount
equal to twice the economic benefit of the overloading. The vessel
also is liable in rem for the penalty.
"(c) The master or individual in charge of a vessel violating
section 5112(b) of this title is liable to the Government for a civil
penalty of not more than $5,000. The vessel also is liable in rem for
the penalty. . .^ PUBLIC LAW 99-509—OCT. 21, 1986 100 STAT. 1919
Mi w-'f :ii "(d) A person causing or allowing the departure of a vessel from a
place within the jurisdiction of the United States in violation of a
detention order issued under section 5113 of this title shall be fined
not more than $10,000, imprisoned for not more than one year, or
both.
"(e) A person causing or allowing the alteration, concealment, or
removal of a mark placed on a vessel under section 5103(b) of this
title and the regulations prescribed under this chapter, except to
make a lawful change or to escape enemy capture in time of war,
shall be fined not more than $10,000, imprisoned for not more than 2
years, or both.".
(3) Immediately after part I, strike "[PART J—RESERVED FOR
MEASUREMENT OF VESSELS]" and insert the following new part J:
"PART J—MEASUREMENT OF VESSELS
T "CHAPTER 141—GENERAL
"Sec. :j.sS''
"14101. Definitions.
"14102. Regulations.
"14103. Delegation of authority.
"14104. Measurement to determine application of a law.
"§ 14101. Definitions 46 USC 14101.
"In this part—
"(1) 'Convention' means the International Convention on Ton­
nage Measurement of Ships, 1969. TIAS 10490.
"(2) 'existing vessel' means a vessel the keel of which was laid
or that was at a similar stage of construction before July 18,
1982.
"(3) 'Great Lakes' means—
"(A) the Great Lakes; and ^–ii '"^ f'-*-^ • i^'
"(B) the St. Lawrence River west of— '^
"(i) a rhumb line drawn from Cap des Hosiers to West
Point, Anticosti Island; and
'/§*'^* "(ii) on the north side of Anticosti Island, the merid-
'*' ian of longitude 63 degrees west.
"(4) 'vessel engaged on a foreign voyage' means a vessel—
.-}n3 "(A) arriving at a place under the jurisdiction of the
""'* United States from a place in a foreign country;
"(B) making a voyage between places outside the United
States (except a foreign vessel engaged on that voyage);
. J , ^^ "(C) departing from a place under the jurisdiction of the
United States for a place in a foreign country; or
"(D) making a voyage between a place within a territory
or possession of the United States and another place under
0S5 the jurisdiction of the United States not within that terri­
tory or possession.
"§ 14102. Regulations 46 USC 14102.
The Secretary may prescribe regulations to carry out this part.
"§ 14103. Delegation of authority 46 USC 14103.
"(a) The Secretary may delegate to a qualified person the author­
ity to measure a vessel and issue an International Tonnage Certifi­
cate (1969) or other appropriate certificate of measurement under
this part. 100 STAT. 1920 PUBLIC LAW 99-509—OCT. 21, 1986
"(b) Under regulations prescribed by the Secretary, a decision of
the person delegated authority under subsection (a) of this section
related to measuring a vessel or issuing a certificate may be
appealed to the Secretary.
"(c) For a vessel intended to be engaged on a foreign voyage, the
Secretary may delegate to another country that is a party to the
Convention the authority to measure the vessel and issue an Inter-
Infra. national Tonnage Certificate (1969) under chapter 143 of this title.
"(d) The Secretary may terminate a delegation made under this
section after giving written notice to the person.
46 use 14104. "§ 14104. Measurement to determine application of a law
"When the application of a law of the United States to a vessel
depends on the vessel's tonnage, the vessel shall be measured under
this part.
"CHAPTER 143—CONVENTION MEASUREMENT
"Sec.
"14301. Application. • M ,••( > ' J,
"14302. Measurement. " '=> '' '
"14303. International Tonnage Certificate (1969). . •' ' ;'
"14304. Remeasurement. • . o '.^
.; – "14305. Optional regulatory measurement. ^,.. ^^ , . • j
••"'•' "14306. Reciprocity for foreign vessels. ' "'' ** ' -»i >i
"14307. Inspection of foreign vessels. – » ' ,-|"
46 use 14301. "§ 14301. Application
"(a) Except as otherwise provided in this section, this chapter
applies to the following:
"(1) a documented vessel.
"(2) a vessel that is to be documented under chapter 121 of
46 use 12101 et this title.
«^9- "(3) a vessel engaged on a foreign voyage. ^ i
"(b) This chapter does not apply to the following:
"(1) a vessel of war.
"(2) a vessel of less than 24 meters (79 feet) overall in length.
"(3) a vessel operating only on the Great Lakes, unless the
owner requests.
"(4) a vessel (except a vessel engaged on a foreign voyage) the
keel of which was laid or that was at a similar stage of construc­
tion before January 1,1986, unless—
"(A) the owner requests; or
"(B) the vessel undergoes a change that the Secretary
finds substantially affects the vessel's gross tonnage.
"(5) before July 19,1994, an existing vessel unless—
"(A) the owner requests; or
"(B) the vessel undergoes a change that the Secretary
finds substantially affects the vessel's gross tonnage.
"(c) A vessel made subject to this chapter at the request of the
owner may be remeasured only as provided by this chapter.
International "(d) After July 18, 1994, an existing vessel (except an existing
agreements. vessel referred to in subsection (bX5) (A) or (B) of this section) may
retain its tonnages existing on July 18, 1994, for the application of
relevant requirements under international agreements (except the
Convention) and other laws of the United States. However, if the
vessel undergoes a change substantially affecting its tonnage after
July 18, 1994, the vessel shall be remeasured under this chapter. PUBLIC LAW 99-509—OCT. 21, 1986 100 STAT. 1921
"(e) This chapter does not affect an international agreement to
which the United States Government is a party that is not in
conflict with the Convention or the application of IMO Resolutions
A.494 (XII) of November 19, 1981, A.540 (XIII) of November 17, 1983,
and A.541 (XIII) of November 17, 1983.
"§ 14302. Measurement
"(a) The Secretary shall measure a vessel to which this chapter
applies in the way provided by this chapter and the Convention.
"(b) Except as provided in section 1602(a) of the Panama Canal
Act of 1979 (22 U.S.C. 3792(a)), a vessel measured under this chapter
may not be required to be measured under another law.
"(c) Unless otherwise provided by law, the measurement of a
vessel under this chapter applies to a law of the United States whose
applicability depends on a vessel's tonnage, if that law—
"(1) becomes effective after July 18, 1994; or
"(2) is in effect before July 19, 1994, is not enumerated in
section 14305 of this title, and is identified by the Secretary by
regulation as a law to which this chapter applies.
"§ 14303. International Tonnage Certificate (1969)
"(a) After measuring a vessel under this chapter, the Secretary
shall issue, on request of the owner, an International Tonnage
Certificate (1969) and deliver it to the owner or master of the vessel.
"(b) The certificate shall be maintained as required by the Sec­
retary.
"§ 14304. Remeasurement
"(a) To the extent necessary, the Secretary shall remeasure a
vessel to which this chapter applies if—
"(1) the Secretary or the owner alleges an error in its
measurement; or
"(2) the vessel or the use of its space is changed in a way that
substantially affects its tonnage.
"(b) Except as provided in this chapter or section 14504 of this
title, a vessel that has been measured does not have to be
remeasured to obtain another document or endorsement under
chapter 121 of this title.
"§ 14305. Optional regulatory measurement
"(a) On request of the owner of a documented vessel measured
under this chapter, the Secretary also shall measure the vessel
under chapter 145 of this title. The tonnages determined under that
chapter shall be used in applying—
"(1) parts A, B, C, E, F, and G and sections 12106(c) and
12108(c) of this title;
"(2) section 3(d)(3) of the Longshore and Harbor Workers'
Compensation Act (33 U.S.C. 903(d)(3));
"(3) section 4 of the Bridge to Bridge Radiotelephone Act (33
U.S.C. 1203(a));
"(4) section 4(a)(3) of the Ports and Waterways Safety Act (33
U.S.C. 1223(a)(3));
"(5) section 4283 of the Revised Statutes of the United States
(46 App. U.S.C. 183);
"(6) sections 27 and 27A of the Act of June 5, 1920 (46 App.
U.S.C. 883 and 883-1);
i. ., "(7)ActofJulyl4,1956 (46 App. U.S.C. 883a); International
agreements.
46 use 14302. :i
Effective date.
Regulations.
46 use 14303.
46 use 14304.
Post, p. 1923.
46 use 12101 et
seq.
46 use 14305.
Post, p. 1923.
46 use 12106,
12108. 100 STAT. 1922 PUBLIC LAW 99-509—OCT. 21, 1986
isaoiia.fliejiil
46 use 8303,
8304.
16 UST 185.
xms,'. ;j8Ii?;t'
46 use 14306.
International
agreements.
46 use 14307.
,5<^:Vi
Records. ,; '. "(8) sections 351, 352, 355, and 356 of the Ship Radio Act (47
U.S.C. 351, 352, 354, and 354a);
"(9) section 403 of the Commercial Fishing Industry Vessel
,,,; Act (46 U.S.C. 3302 note);
"(10) the Officers' Competency Certificates Convention, 1936,
and sections 8303 and 8304 of this title;
"(11) the International Convention for the Safety of Life at
Sea as provided by IMCO Resolution A.494 (XII) of Novem­
ber 19, 1981;
"(12) the International Convention on Standards of Training,
Certification, and Watchkeeping for Seafarers, 1978, as provided
by IMO Resolution A.540 (XIII) of November 17, 1983;
"(13) the International Convention for the Prevention of
Pollution from Ships, 1973, as modified by the Protocol of 1978
Relating to the International Convention for the Prevention of
Pollution from Ships, 1973, as provided by IMO Resolution
A.541 (XIII) of November 17,1983;
"(14) provisions of law establishing the threshold tonnage
levels at which evidence of financial responsibility must be
demonstrated; or
"(15) unless otherwise provided by law, any other law of the
United States in effect before July 19, 1994, and not listed by
the Secretary under section 14302(c) of this title.
"(b) As long as the owner of a vessel has a request in effect under
subsection (a) of this section, the tonnages determined under that
request shall be used in applying the other provisions of law
described in subsection (a) to that vessel. »» ..M
"§ 14306. Reciprocity for foreign vessels
"(a) When the Secretary finds that the laws and regulations of a
foreign country related to measurement of vessels are similar to
those of this chapter and the regulations prescribed under this
chapter, or when a foreign country is a party to the Convention, the
Secretary shall accept the measurement and certificate of a vessel of
that foreign country as complying with this chapter and the regula­
tions prescribed under this chapter.
"(b) Subsection (a) of this section does not apply to a vessel of a
foreign country that does not recognize measurements under this
chapter. The Secretary may apply measurement standards the Sec­
retary considers appropriate to the vessel, subject to applicable
international agreements to which the United States Government is
a party.
"§ 14307. Inspection of foreign vessels
"(a) The Secretary may inspect a vessel of a foreign country to
verify that—
"(1) the vessel has an International Tonnage Certificate (1969)
and the main characteristics of the vessel correspond to the
information in the certificate; or
"(2) if the vessel is from a country not a party to the Conven­
tion, the vessel has been measured under laws and regulations
similar to those of this chapter and the regulations prescribed
under this chapter.
"(b) For a vessel of a country that is a party to the Convention, if
the inspection reveals that the vessel does not have an International
Tonnage Certificate (1969) or that the main characteristics of the
vessel differ from those stated on the certificate or other records in a PUBLIC LAW 99-509—OCT. 21, 1986 100 STAT. 1923
way that increases the gross or net tonnage of the vessel, the
Secretary promptly shall inform the country whose flag the vessel is
flying.
"(c) For a vessel of a country not a party to the Convention—
"(1) if the vessel has been measured under laws and regula­
tions that the Secretary finds are similar to those of this
I chapter and the regulations prescribed under this chapter, the
vessel shall be deemed to have been issued an International
Tonnage Certificate (1969); and
"(2) if the vessel has not been measured as described in clause
(1) of this subsection, the Secretary may measure the vessel.
"(d) An inspection under this section shall be conducted in a way
that does not delay a vessel of a country that is a party to the
Convention.
"CHAPTER 145—REGULATORY MEASUREMENT
"Subchapter I—General .,:'!'
"Sec. 'Sfidn/'; • , ' • "A '
"14501. Application. • . •
"14502. Measurement. . ^ , .,. .j^
"14503. Certificate of measurement. " J
"14504. Remeasurement.
"Subchapter II—Formal Systems
"14511. Application.
"14512. Standard tonnage measurement.
"14513. Dual tonnage measurement.
'14521. Application.
'14522. Measurement. "Subchapter III—Simplified System
Subchapter I—General
"§ 14501. Application
'•• "This chapter applies to the following:
f "(1) a vessel not measured under chapter 143 of this title if—
^ "(A) the vessel is to be documented under chapter 121 of
-f this title; or
"(B) the application of a law of the United States to the
vessel depends on the vessel's tonnage.
"(2) a vessel measured under chapter 143 of this title if the
owner requests that the vessel also be measured under this
chapter as provided in section 14305 of this title.
"§ 14502. Measurement
"The Secretary shall measure a vessel to which this chapter
applies in the way provided by this chapter.
"§ 14503. Certificate of measurement
"The Secretary shall prescribe the certificate to be issued as
evidence of a vessel's measurement under this chapter,
"§ 14504. Remeasurement
* "(a) To the extent necessary, the Secretary shall remeasure a
vessel to which this chapter applies if^
"(1) the Secretary or the owner alleges an error in its
measurement; •iSI-. D&//J^
'A'. 'XT'
46 use 14501.
Ante, p. 1920.
46 use 12101 et
seq.
Ante, p. 1921.
46 use 14502.
46 use 14503.
46 use 14504. 100 STAT. 1924 PUBLIC LAW 99-509—OCT. 21, 1986
Post, p. 1925;
infra.
Ante, p. 1920.
46 use 12101
et seq.
46 use 14511.
46 use 14512.
Regulations.
Post, p. 1928.
-v>-^ ' "(2) the vessel or the use of its space is changed in a way that
substantially affects its tonnage;
"(3) after being measured under subchapter III of this chap-
• ter, the vessel becomes subject to subchapter II of this chapter
because the vessel or its use is changed; or
"(4) although not required to be measured under subchapter
II of this chapter, the vessel was measured under subchapter II
'^ ' and the owner requests that the vessel be measured under
subchapter III of this chapter.
"(b) Except as provided in this section and chapter 143 of this title,
a vessel that has been measured does not have to be remeasured to
obtain another document or endorsement under chapter 121 of this
title.
IS 15 1 "Subchapter II—Formal Systems ;
"§ 14511. Application
"This subchapter applies to a vessel described in section 14501 of
this title if—
"(1) the owner requests; or , >.
"(2) the vessel is— ••– :^ -' s
"(A) self-propelled;
"(B) at least 24 meters (79 feet) overall in length; and
"(C) not operated only for pleasure.
"§ 14512. Standard tonnage measurement
"(a) The Secretary shall prescribe regulations for measuring the
gross and net tonnages of a vessel under this subchapter. The
regulations shall provide for tonnages comparable to the tonnages
that could have been assigned under sections 4151 and 4153 of the
Revised Statutes of the United States, as sections 4151 and 4153
existed immediately before the enactment of this section.
"(b) On application of the owner or master of a vessel of the
United States used in foreign trade, the Secretary may attach an
appendix to the vessel's register stating the measurement of spaces
that may be deducted from gross tonnage under laws and regula­
tions of other countries but not under those of the United States.
46 use 14513. "§ 14513. Dual tonnage measurement
"(a) On application by the owner and approval by the Secretary,
' • i the tonnage of spaces prescribed by the Secretary may be excluded
f.; 5 ' *;> ill measuring under this section the gross tonnage of a vessel
measured under section 14512 of this title. The spaces prescribed by
the Secretary shall be comparable to the spaces that could have
been excluded under section 2 of the Act of September 29, 1965
46 use 83a. (Public Law 89-219, 79 Stat. 891), as section 2 existed immediately
before the enactment of this section.
"(b) The Secretary shall prescribe the design, location, and dimen­
sions of the tonnage mark to be placed on a vessel measured under
'*' ' 55 J ., this section.
"(c)(1) If a vessel's tonnage mark is below the uppermost part of
the load line marks, each certificate stating the vessel's tonnages
shall state the gross and net tonnages when the mark is submerged
and when it is not submerged. PUBLIC LAW 99-509—OCT. 21, 1986 100 STAT. 1925
"(2) Except as provided in paragraph (1) of this subsection, a
certificate stating a vessel's tonnages may state only one set of gross
and net tonnages.
"Subchapter III—SimpliHed System
"§ 14521. Application 46 USC 14521.
"This subchapter applies to a vessel described in section 14501 of
this title that is not measured under subchapter II of this chapter. Ante, p. 1924.
"§ 14522. Measurement 46 USC 14522.
"(a) In this section, "length" means the horizontal distance of the
hull between the foremost part of the stem and the aftermost part of
the stern, excluding fittings and attachments.
"(b)(1) The Secretary shall assign gross and net tonnages to a citiooB
vessel based on its length, breadth, depth, other dimensions, and
appropriate coefficients.
"(2) The Secretary shall prescribe the way dimensions (except
length) are measured and which coefficients are appropriate.
"(c) The resulting gross tonnages, taken as a group, reasonably
shall reflect the relative internal volumes of the vessels measured
under this subchapter. The resulting net tonnages shall be in
approximately the same ratios to corresponding gross tonnages as
are the net and gross tonnages of comparable vessels measured
under subchapter II of this chapter.
"(d) Under regulations prescribed by the Secretary, the Secretary
may determine the gross and net tonnages of a vessel representative
of a designated class, model, or type, and then assign those gross and
net tonnages to other vessels of the same class, model, or type.
"CHAPTER 147—PENALTIES
"Sec.
"14701. General violation. '
"14702. False statements.
"§ 14701. General violation 46 USC 14701.
"The owner, charterer, managing operator, agent, master, and
individual in charge of a vessel violating this part or a regulation
prescribed under this part are each liable to the United States
Government for a civil penalty of not more than $20,000. Each day
of a continuing violation is a separate violation. The vessel also is
liable in rem for the penalty.
"§ 14702. False statements 46 USC 14702.
"A person knowingly making a false statement or representation
in a matter in which a statement or representation is required by
this part or a regulation prescribed under this part is liable to the
United States Government for a civil penalty of not more than
$20,000 for each false statement or representation. The vessel also is
liable in rem for the penalty.".
SEC. 5102. CONFORMING AND MISCELLANEOUS AMENDMENTS.
^ (a) Title 14, United States Code, is amended as follows:
(1) In the analysis of chapter 17, add the following after item
I 663:
"664. User fees.". a 100 STAT. 1926 PUBLIC LAW 99-509—OCT. 21, 1986
46 use 664.
Uniformed
services.
iit*7fl,~ 'Xp/.l
Reports.
'MJ ak
46 use 3701 et
seq., 4301 et seq.
ante, p. 1913. i (2) In section 651, strike "preceding fiscal year." and sub­
stitute "preceding fiscal year, including amounts collected as
provided under section 664 of this title.".
(3) After section 663, add the following new section:
"§ 664. User fees
"(a) A fee or charge for a service or thing of value provided by the
Coast Guard shall be prescribed as provided in section 9701 of
title 31.
"(b) Amounts collected by the Secretary for a service or thing of
value provided by the Coast Guard shall be deposited in the general
fund of the Treasury as proprietary receipts of the department in
which the Coast Guard is operating and ascribed to Coast Guard
activities.
"(c) Before January 1 of each year, the Secretary shall submit a
report to the Committee on Merchant Marine and Fisheries of the
House of Representatives and the Committee on Commerce, Science,
and Transportation of the Senate that includes—
"(1) a verification of each activity for which a fee or charge is
* • collected stating—
"(A) the amount collected in the prior fiscal year; and
"(B) that the amount spent on that activity in that fiscal
: year is not less than the amount collected; and
'^ "(2) the amount expected to be collected in the current fiscal
year for each activity for which a fee or charge is expected to be
collected.".
(b) Title 46, United States Code, is amended as follows: ^ "'''
(1) In section 2101—
•iH •< (A) between clauses (20) and (21), insert the following new
clause:
"(20a) 'overall in length' means—
"(A) for a foreign vessel or a vessel engaged on a foreign
voyage, the greater of—
"(i) 96 percent of the length on a waterline at 85
percent of the least molded depth measured from the
top of the keel (or on a vessel designed with a rake of
' keel, on a waterline parallel to the designed waterline);
or
"(ii) the length from the fore side of the stem to the
axis of the rudder stock on that waterline; and
>; "(B) for any other vessel, the horizontal distance of the
hull between the foremost part of the stem and the after­
most part of the stern, excluding fittings and attach­
ments."; and
(B) add at the end the following new clause:
"(47) 'vessel of war' means a vessel—
"(A) belonging to the armed forces of a country;
r: ;,:• ' "(B) bearing the external marks distinguishing vessels of
m oi-m i war of that country;
"(C) under the command of an officer commissioned by
the government of that country and whose name appears in
the appropriate service list or its equivalent; and
"(D) staffed by a crew under regular armed forces
discipline.".
(2) Section 2102 is amended by striking "chapters 43" and
substituting "chapters 37, 43, 51,". ^IJti. iiot»il PUBLIC LAW 99-509—OCT. 21, 1986 100 STAT. 1927
(3) In section 2109, strike "This" and substitute "Except as
otherwise provided, this".
(4) In section 2110— M a ,%i IA
— (A) strike "examination of vessels" and substitute "exam-
•! ination of vessels under part B of this subtitle"; and
; (B) strike "measurement or".
r (5) Section 3701 (5) and (6) is repealed.
'^ (6) In section 12102—
*^ , – , (A) insert the subsection designation "(a)" at the begin-
'*^'' ' ning of the text of the section; and
(B) add at the end of the section the following new
subsection: "
"(b) A vessel is eligible for documentation only if it has been
measured under part J of this subtitle. However, the Secretary may Ante, p. 1919.
issue a temporary certificate of documentation for a vessel before it
is measured.".
SEC. 5103. MISCELLANEOUS PROVISIONS. 46 USC note
(a) Laws effective after January 1, 1986, that are inconsistent ^^'
with this subtitle supersede this subtitle to the extent of the
inconsistency.
(b) A reference to a law replaced by this subtitle, including a
reference in a regulation, order, or other law, is deemed to refer to
the corresponding provision of this subtitle.
(c) An order, rule, or regulation in effect under a law replaced by
this subtitle continues in effect under the corresponding provision of
this subtitle until repealed, amended, or superseded.
(d) An action taken or an offense committed under a law replaced
by this subtitle is deemed to have been taken or committed under
the' corresponding provision of this subtitle.
(e) An inference of legislative construction is not to be drawn by
reason of the caption or catch line of a provision enacted by this
subtitle.
(f) If a provision enacted by this subtitle is held invalid, all valid
provisions that are severable from the invalid provision remain in
effect. If a provision of this subtitle is held invalid in one or more of
its applications, the provision remains in effect in all valid applica­
tions that are severable from the invalid application or applications.
(g) The Secretary of Transportation shall— 46 USC 14301
:. (1) before July 19,1990, submit to Congress— . « note-
(A) a study of—
(i) the impact of appl3dng vessel tonnage determined
i* Js« r under chapter 143 of title 46 (as enacted by section 5101
of this subtitle). United States Code, in laws of the
United States that contain provisions based on ton-
. s, ' nage, including an analysis of the number and types of
'ji^, vessels that would become subject to additional laws or
more stringent requirements because of that applica­
tion; and
Ji •"• u (ii) the extent to which the tonnage thresholds in
laws of the United States whose application is based on
; tonnage would have to be raised so that additional
* " i "^ vessels would not become subject to those laws if their
application is based on tonnage determined under
chapter 143; and
(B) a recommendation of the levels to which the tonnage
thresholds in laws of the United States whose application is 100 STAT. 1928 PUBLIC LAW 99-509—OCT. 21, 1986
Ante, p. 1920.
Reports.
46 use note
prec. 2101. •Hi
")81J q^ i i based on tonnage should be raised if a complete conversion
to the International Convention measurement system
under chapter 143 is made;
(2) in conducting the study under clause (1) of this subsection,
consult with representatives of the private sector having experi­
ence with the operation of vessels likely to be affected by laws of
the United States whose application is based on tonnage; and
(3) before July 19, 1988, submit to Congress an interim
'"^- progress report on the study conducted under clause (1) of this
subsection.
SEC. 5104. REPEALS.
(a) The repeal of a law by this subtitle may not be construed as a
legislative implication that the provision was or was not in effect
before its repeal.
(b) The laws specified in the following schedule are repealed,
except for rights and duties that matured, penalties that were
incurred, and proceedings that were begun before the date of enact­
ment of this subtitle:
Revised Statutes
Revised Statutes Section
4148
4149
4151
4153
4154 United States Code
46 App.
46 App.
46 App.
46 App.
46 App. Title Section
71
72
75
77
81
Statutes at Large
Date
1882
Aug. 5
1935
Aug. 27
1965
Sept. 29
1973
Oct. 1
1976
Sept. 10 Chapter or Public
Law
398
747
89-219
93-115
94-406 Section
8 Statutes at
Large
Vol­
ume
22
49
79
87
90 Page
300
888
891
418
1236 United States Code
Title
46 App.
46 App.
46 App.
46 App.
46 App. Section
81
88-88i
72, 74,
77,83-
83k
86-86i
420 PUBLIC LAW 99-509—OCT. 21, 1986 100 STAT. 1929
Subtitle C—Establishment of a Timetable for
Completion of Coast Guard Offshore Safety itg <* vi
Studies
SEC. 5201. REGULATIONS.
(a) DEADLINE FOR EFFECTIVENESS.—The Secretary of the depart­
ment in which the Coast Guard is operating (hereafter in this
subtitle referred to as the "Secretary") shall issue final regulations,
to become effective before September 1, 1987, relating to the evacu­
ation of personnel as provided for in the advance notice of proposed
rulemaking regarding the revision of the regulations on outer Con­
tinental Shelf activities (50 Fed. Reg. 9290 (1985)), published March
7, 1985.
(b) CONSIDERATION OF STANDBY VESSELS FOR EVACUATION.—In
preparing regulations referred to in subsection (a), the Secretary
shall consider requiring standby vessels for the evacuation of
personnel from manned installations on the outer Continental Shelf.
SEC. 5202. REPORTS TO CONGRESS.
(a) PRELIMINARY REPORT.—The Secretary shall, before December
31, 1986, submit to the Congress a report setting forth the progress
made in preparing the regulations referred to in section 5201(a).
0>) FINAL REPORT.—The Secretary shall, before September 1, 1987,
submit to the Congress a report setting forth the justification for the
manned installation evacuation procedures contained in the final
regulations referred to in section 5201(a).
TITLE VI—CIVIL SERVICE, POSTAL SERV­
ICE, AND GOVERNMENTAL AFFAIRS
GENERALLY
-r
Subtitle A—Civil Service and Postal Service
SEC. 6001. ELECTIONS TO CONTRIBUTE TO THE THRIFT SAVINGS FUND.
(a) PARTICIPANTS IN THE FEDERAL EMPLOYEES' RETIREMENT
SYSTEM.—(1) Paragraph (4) of section 8432(b) of title 5, United States
Code (as added by Public Law 99-335), is amended— Ante, p. 541.
(A) by inserting "(A)" after "(4)";
(B) by inserting "continues as an employee or Member with­
out a break in service through April 1, 1987," in the first
sentence after "January 1, 1987,";
(C) by striking out "January 1, 1987." in the second sentence . >>
and inserting in lieu thereof "April 1, 1987.";
gf (D) by striking out "the last day of that election period." in ; .^ . ^
the third sentence and inserting in lieu thereof "the date on
which the employee or Member makes that election."; and
(E) by adding at the end thereof the following new subpara­
graph:
"(B) Notwithstanding subsection (a), the maximum amount that ^.j,. . ,^
an employee or Member may contribute during any pay period
which begins on or after April 1, 1987, and before October 1, 1987,
pursuant to an election made during the election period provided 100 STAT. 1930 PUBLIC LAW 99-509—OCT. 21, 1986
under subparagraph (A) is the amount equal to 15 percent of such
individual's basic pay for such pay period.".
Ante, p. 541. (2) Section 8432(c) of title 5, United States Code, is amended—
(A) in paragraph (1)—
(i) by inserting "(A)" after "(c)(1)"; and
(ii) by adding at the end thereof the following new sub­
paragraphs:
"(B) In the case of each employee or Member who is an employee
or Member on January 1, 1987, and continues as an employee or
Member without a break in service through April 1, 1987, the
employing agency shall contribute to the Thrift Savings Fund for
the benefit of such employee or Member the amount equal to 1
percent of the total basic pay paid to such employee or Member for
that period of service.
"(C) If an employee or Member—
"(i) is an employee or Member on January 1, 1987;
"(ii) separates from Government employment before April 1,
– 1987; and
. i "(iii) before separation, completes the number of years of
civilian service applicable to such employee or Member under
subparagraph (A) or (B) of subsection (g)(2),
the employing agency shall contribute to the Thrift Savings Fund
for the benefit of such employee or Member the amount equal to 1
percent of the total basic pay paid to such employee or Member for
service performed on or after January 1, 1987, and before the date of
the separation."; and
(B) in paragraph (2), by inserting after subparagraph (B) the
following:
"(C) Notwithstanding subparagraph (B), the amount contributed
under subparagraph (A) by an employing agency with respect to any
contribution made by an employee or Member during any pay
period which begins after the date on which such employee or
Member makes an election under subsection (b)(4) and before July 1,
1987, shall be the amount equal to the sum of—
"(i) two times such portion of the total amount of the em­
ployee's or Member's contribution as does not exceed 3 percent
of such employee's or Member's basic pay for such pay period;
., and
"(ii) such portion of the total amount of the employee's or
/ "'*' Member's contributions as exceeds 3 percent, but does not
exceed 5 percent, of such employee's or Member's basic pay for
such pay period.".
5 use 8432 note. (3) The contributions required to be made to the Thrift Savings
Fund under paragraphs (1)(B), (1)(C), and (3) of section 8432(c) of title
5, United States Code, shall be made as soon as practicable during
the 15-day period which begins on April 1, 1987.
5 use 8351 note. (b) PARTICIPANTS IN THE CiVIL SERVICE RETIREMENT AND DISABIL­
ITY SYSTEM.—Section 206(b) of the Federal Employees' Retirement
Ante, p. 593. System Act of 1986 (Public Law 99-335) is amended to read as
follows:
"(b)(1) An election may first be made by an employee of the
Federal Government or a Member of Congress under subsection
(a)(2) of section 8351 of title 5, United States Code (as added by
Ante, p. 593. subsection (a)(1)), during an election period prescribed for the pur­
poses of this subsection by the Executive Director of the Federal
Retirement Thrift Investment Board. Such period shall begin on
April 1,1987. PUBLIC LAW 99-509—OCT. 21, 1986 100 STAT. 1931
"(2) An election made by an employee or Member as provided in Effective date,
paragraph (1) shall take effect on the first day of the employee's or
Member's first pay period which begins on or after the date of such
election.
"(3) Notwithstanding section 8351(b)(2) of title 5, United States Ante, p. 593.
Code (as added by subsection (a)(1)), the maximum amount that an
employee or Member may contribute during any pay period which
begins on or after April 1, 1987, and before October 1, 1987, pursuant
to an election made during the election period provided under
paragraph (1) is the amount equal to 7.5 percent of such individual's
basic pay for such pay period.".
(c) INAPPLICABILITY OF LIMITATION ON NUMBER OF ELECTIONS 5 USC 8432 note.
WITHIN A SIX-MONTH PERIOD.—(1) The requirement to make con­
tributions for a 6-month period after an election, as provided in
subsection (a) of section 8432 of title 5, United States Code, shall not Ante, p. 541.
apply to contributions made pursuant to an election made during
the period provided in subsection (b)(4) of such section or 206(b) of -» * ' «•
the Federal Employees' Retirement System Act of 1986. Ante, p. 1930.
(2) The first election period prescribed under section 8432(b)(1) of
title 5, United States Code, shall commence on July 1, 1987.
(3) Each employee or Member who makes an election referred to
in paragraph (1) may make an election under section 8432(b)(1) of
title 5, United States Code, during the election period that begins on
July 1, 1987.
(d) REGULATIONS.—The Executive Director of the Federal Retire- 5 USC 8432 note,
ment Thrift Investment Board may prescribe regulations to carry
out subsections (a), (b), and (c) and the amendments made by subsec­
tions (a) and (b).
(e) BUDGET OF THE FEDERAL EMPLOYEES' THRIFT INVESTMENT
BOARD.—Section 8472 of title 5, United States Code, is amended by Ante, p. 578.
adding at the end thereof the following:
"(i) The Board shall prepare and submit to the President, and, at
the same time, to the appropriate committees of Congress, an
annual budget of the expenses and other items relating to the Board
which shall be included as a separate item in the budget required to
be transmitted to the Congress under section 1105 of title 31.
"(j) The Board may submit to the President, and, at the same time,
shall submit to each House of the Congress, any legislative rec­
ommendations of the Board relating to any of its functions under
this title or any other provision of law,".
(f) EFFECTIVE DATE.—This section, other than subsection (d), and 5 USC 8432 note,
the amendments made by this section shall take effect on January 1,
1987.
SEC. 6002. CIVIL SERVICE RETIREMENT AND DISABILITY FUND.
(a) INVESTMENT AND RESTORATION OF THE FUND.—Section 8348 of
title 5, United States Code, is amended by adding at the end the
following new subsection:
"(j)(l) Notwithstanding subsection (c) of this section, the Secretary Public debt limit,
of the Treasury may suspend additional investment of amounts in
the Fund if such additional investment could not be made without «!• q : r;
causing the public debt of the United States to exceed the public
debt limit.
"(2) Any amounts in the Fund which, solely by reason of the Public debt limit,
public debt limit, are not invested shall be invested by the Secretary
of the Treasury as soon as such investments can be made A^ithout
exceeding the public debt limit. 100 STAT. 1932 PUBLIC LAW 99-509—OCT. 21, 1986
"(3) Upon expiration of the debt issuance suspension period, the
Secretary of the Treasury shall immediately issue to the Fund
31 use 3101 et obligations under chapter 31 of title 31 that (notwithstanding
*^9- subsection (d) of this section) bear such interest rates and maturity
dates as are necessary to ensure that, after such obligations are
issued, the holdings of the Fund will replicate to the maximum
extent practicable the obligations that would then be held by the
Fund if the suspension of investment under paragraph (1) of this
subsection, and any redemption or disinvestment under subsection
(k) of this section for the purpose described in such paragraph,
during such period had not occurred.
' • "(4) On the first normal interest payment date after the expira­
tion of any debt issuance suspension period, the Secretary of the
Treasury shall pay to the Fund, from amounts in the general fund of
the Treasury of the United States not otherwise appropriated, an
amount determined by the Secretary to be equal to the excess of-
Public debt limit. "(A) the net amount of interest that would have been earned
by the Fund during such debt issuance suspension period if—
* "(i) amounts in the Fund that were not invested during
such debt issuance suspension period solely by reason of the
} public debt limit had been invested, and
< "(ii) redemptions and disinvestments with respect to the
nt : Fund which occurred during such debt issuance suspension
period solely by reason of the public debt limit had not
.;–^a: •'K-IDSO – -m occurred, over
"(B) the net amount of interest actually earned by the Fund
during such debt issuance suspension period.
"(5) For purposes of this subsection and subsections (k) and (1) of
this section—
'; i; AA> ^. "(A) the term 'public debt limit' means the limitation imposed
by section 3101(b) of title 31; and
"(B) the term 'debt issuance suspension period' means any
period for which the Secretary of the Treasury determines for
purposes of this subsection that the issuance of obligations of
the United States may not be made without exceeding the
public debt limit.".
(b) SALES AND REDEMPTIONS BY THE FUND.—Section 8348 of title 5,
United States Code, as amended by subsection (a), is further
amended by adding at the end the following new subsection:
"(kXD Subject to paragraph (2) of this subsection, the Secretary of
the Treasury may sell or redeem securities, obligations, or other
invested assets of the Fund before maturity in order to prevent the
public debt of the United States from exceeding the public debt
limit.
"(2) The Secretary may sell or redeem securities, obligations, or
other invested assets of the Fund under paragraph (1) of this
subsection only during a debt issuance suspension period, and only
to the extent necessary to obtain any amount of funds not exceeding
" >>' ''• ' * the amount equal to the total amount of the payments authorized to
be made from the Fund under the provisions of this subchapter or
Ante, p. 516. chapter 84 of this title or related provisions of law during such
period. A sale or redemption may be made under this subsection
even if, before the sale or redemption, there is a sufficient amount in
' ^ ' the Fund to ensure that such payments are made in a timely
manner.".
(c) REPORTS REGARDING THE OPERATION AND STATUS OF THE
FUND.—Section 8348 of title 5, United States Code, as amended by Securities.
Public debt limit. PUBLIC LAW 99-509—OCT. 21, 1986 100 STAT. 1933
subsections (a) and (b), is further amended by adding at the end the
following new subsection:
"(1)(1) The Secretary of the Treasury shall report to Congress on Reports,
the operation and status of the Fund during each debt issuance
suspension period for which the Secretary is required to take action
under paragraph (3) or (4) of subsection (j) of this section. The report
shall be submitted as soon as possible after the expiration of such ,
period, but not later than the date that is 30 days after the first ,, .„
normal interest payment date occurring after the expiration of such
period. The Secretary shall concurrently transmit a copy of such
report to the Comptroller General of the United States.
"(2) Whenever the Secretary of the Treasury determines that, by Public debt limit,
reason of the public debt limit, the Secretary will be unable to fully
comply with the requirements of subsection (c) of this section, the
Secretary shall immediately notify Congress of the determination.
The notification shall be made in writing.".
SEC. 6003. CHANGE IN METHOD BY WHICH REVENUE FOREGONE IS COM­
PUTED FOR CERTAIN CATEGORIES OF MAIL.
(a) IN GENERAL.—Section 3626 of title 39, United States Code, is
amended by adding at the end the following:
"(i)(l) As used in this subsection—
"(A) 'reduced-rate category' means any class of mail or kind of
mailer for which a rate schedule is established under subsection
(a) of this section; and
"(B) 'regular-rate category' means any class or kind of mail
other than a class or kind referred to in section 2401(c) of this
title.
"(2) This subsection shall be used in determining the costs recov­
ered by revenues plus appropriations for the reduced-rate cat­
egories, for the purpose of distinguishing costs to be recovered from
rates and fees for regular-rate categories under this chapter, and for
the purpose of determining the appropriation requests under section
2401(c) of this title relating to the reduced-rate categories. It shall be
assumed that the combination of postage and appropriations to be
received for each of the reduced-rate categories will bear the same
ratio to the costs attributed as required by section 3622(b)(3) of this
title to such respective categories, as the revenues to be received
from the most closely corresponding regular-rate category, as esti­
mated in determining the rates for such category, bear to the costs
attributed to that regular-rate category as required by section
3622(b)(3) of this title.".
(b) CONFORMING AMENDMENT.—Section 2401(c) of title 39, United
States Code, is amended by striking "3626" and inserting "3626(a)-
(h)".
(c) EFFECTIVE DATE.—The amendments made by this section shall 39 USC 3626
take effect on January 1, 1989, or on the effective date of the next note,
general change in rates and fees under sections 3622 and 3625 of
title 39, United States Code, whichever is sooner.
SEC. 6004. APPLICABILITY OF CERTAIN LIMITATIONS.
Section 315 of the Federal Election Campaign Act of 1971 (2 U.S.C.
441a) shall not apply with respect to any transfer of funds from the
principal campaign committee of the incumbent candidate for the
office of Representative who died on January 20, 1985, to the
principal campaign committee of his surviving spouse, who was a •
candidate for such office. 100 STAT. 1934 PUBLIC LAW 99-509—OCT. 21, 1986
Program Fraud Subtltlc B—Prograiti Fraud Civil Remedies Civil Remedies
^l^USC 3801 SEC. 6101. SHORT TITLE.
^°*^- This subtitle may be cited as the "Program Fraud Civil Remedies
Act of 1986".
31 use 3801 SEC. 6102. FINDINGS AND PURPOSES. , ., . ,
(a) FINDINGS.—The Congress finds that— ^ '
ij0> (1) false, fictitious, and fraudulent claims and statements in
Government programs are a serious problem;
.}hmiMf:r!?iiitk"l vd (2) false, fictitious, and fraudulent claims and statements in
V Government programs result in the loss of millions of dollars
annually by allowing persons to receive Federal funds to which
,, they are not entitled;
(3) false, fictitious, and fraudulent claims and statements in
Government programs undermine the integrity of such pro­
grams by allowing ineligible persons to participate in such
programs; and
«; ' (4) present civil and criminal remedies for such claims and
statements are not sufficiently responsive.
(b) PURPOSES.—The purposes of this subtitle are—
(1) to provide Federal agencies which are the victims of false,
fictitious, and fraudulent claims and statements with an
administrative remedy to recompense such agencies for losses
: resulting from such claims and statements, to permit adminis-
ait trative proceedings to be brought against persons who make,
present, or submit such claims and statements, and to deter the
making, presenting, and submitting of such claims and state­
ments in the future; and
(2) to provide due process protections to all persons who are
subject to the administrative adjudication of false, fictitious, or
fraudulent claims or statements.
SEC. 6103. PROVISION OF ADMINISTRATIVE REMEDIES FOR FALSE
CLAIMS AND STATEMENTS.
(a) ESTABLISHMENT OF REMEDIES.—Subtitle III of title 31, United
States Code, is amended by inserting after chapter 37 the following
new chapter:
"CHAPTER 38—ADMINISTRATIVE REMEDIES FOR
FALSE CLAIMS AND STATEMENTS iy-dic,. ' '••, -• ••.-:'
"Seer • -•– – t:-!i->'r
"3801. Definitions.
^^x "3802. False claims and statements; liability. , – :. ' . •• ;
t"3803. Hearing and determinations. ..,,.^ ,
, "3804. Subpoena authority. , , s .>
"3805. Judicial review. ' ' ' , . '
"3806. Collection of civil penalties and assessments. ^ •''
"3807. Right to administrative offset.
"3808. Limitations. ' " ' ' ' • – •
"3809. Regulations. , , • .
"3810. Reports. "
"3811. Effect on other law. ; ' •
"3812. Prohibition against delegation.' ' " ' .' '^
31 use 3801. "§ 3801. Definitions ,^r,^^ _, .j% «.;
"(a) For purposes of this chapter— «'• " ' ' '» '^^ iiU'i–PUBLIC LAW 99-509—OCT. 21, 1986 100 STAT. 1935
• 'gl J s f "(1) 'authority' means—
"(A) an executive department;
"(B) a military department;
"(C) an establishment (as such term is defined in section
oJiv/ 11(2) of the Inspector General Act of 1978) which is not an 5 USC app.
executive department; and
a :f! "(D) the United States Postal Service;
"(2)'authority head'means—
'to ^1 "(A) the head of an authority; or
"(B) an official or employee of the authority designated,
3di "y in regulations promulgated by the head of the authority, to
act on behalf of the head of the authority;
"(3) 'claim' means any request, demand, or submission—
jiio'ct. "(A) made to an authority for property, services, or
money (including money representing grants, loans, insur­
ance, or benefits);
ro ?i- "(B) made to a recipient of property, services, or money
J ' from an authority or to a party to a contract with an pfe Si iSfi Dc J "
authority—
0 "(i) for property or services if the United States—
"(I) provided such property or services;
1 "(II) provided any portion of the funds for the
J purchase of such property or services; or
"(III) will reimburse such recipient or party for
oi *fie:i3'i the purchase of such property or services; or i*-^' •"-•'"
oi sl-+-
representing grants, loans, insurance, or benefits) if the
j'iirfciio'j United States—
"(I) provided any portion of the money requested SSf]! i A^d
"•'•^' oe or demanded; or
"(II) will reimburse such recipient or party for
sjx.' any portion of the money paid on such request or
demand; or
';c 'r "(C) made to an authority which has the effect of decreas-
' ing an obligation to pay or account for property, services, or
money,
except that such term does not include any claim made in any '=
return of tax imposed by the Internal Revenue Code of 1954; Post, p. 2095.
"(4) 'investigating official' means an individual who—
"(A)(i) in the case of an authority in which an Office of i, t
Inspector General is established by the Inspector General [
Act of 1978 or by any other Federal law, is the Inspector 5 USC app.
General of that authority or an officer or employee of such
Office designated by the Inspector General;
"(ii) in the case of an authority in which an Office of
It- * Inspector General is not established by the Inspector Gen­
eral Act of 1978 or by any other Federal law, is an officer or
&flt' employee of the authority designated by the authority head
to conduct investigations under section 3803(a)(1) of this Post, p. 1939.
title; or
"^ "(iii) in the case of a military department, is the Inspector
5 General of the Department of Defense or an officer or
employee of the Office of Inspector General of the Depart-
• ment of Defense who is designated by the Inspector Gen- laEaoeij ,
eral; and
{Ii b "(B) who, if a member of the Armed Forces of the United
States on active duty, is serving in grade 0-7 or above or, if 100 STAT. 1936 PUBLIC LAW 99-509—OCT. 21, 1986
a civilian employee, is serving in a position for which the
rate of basic pay is not less than the minimum rate of basic
5 use 5331. pay for grade GS-16 under the General Schedule;
"(5) knows or has reason to know', for purposes of establish-
Post, p. 1937. ing liability under section 3802, means that a person, with
respect to a claim or statement—
"(A) has actual knowledge that the claim or statement is
false, fictitious, or fraudulent;
"(B) acts in deliberate ignorance of the truth or falsity of
– > the claim or statement; or
"(C) acts in reckless disregard of the truth or falsity of the
claim or statement,
and no proof of specific intent to defraud is required;
"(6) 'person' means any individual, partnership, corporation,
association, or private organization;
"(7) 'presiding officer' means—
"(A) in the case of an authority to which the provisions of
5 use 551 et seq. subchapter II of chapter 5 of title 5 apply, an administrative
law judge appointed in the authority pursuant to section
3105 of such title or detailed to the authority pursuant to
section 3344 of such title; or
"(B) in the case of an authority to which the provisions of
such subchapter do not apply, an officer or employee of the
authority who—
5 use 3301 "(i) is selected under chapter 33 of title 5 pursuant to
etseq. , the competitive examination process applicable to
administrative law judges;
"(ii) is appointed by the authority head to conduct
Post, p. 1939. ' hearings under section 3803 of such title;
"(iii) is assigned to cases in rotation so far as
t , ) ,. practicable;
-; "(iv) may not perform duties inconsistent with
the duties and responsibilities of a presiding officer;
"(v) is entitled to pay prescribed by the Office of
Personnel Management independently of ratings and
recommendations made by the authority and in accord-
5 use 5101 ance with chapter 51 of such title and subchapter III of
et seq- •.' chapter 53 of such title;
5 use 5331 «(yj) ig jjQ^ subject to performance appraisal pursuant
5 U^ 4301 *° chapter 43 of such title; and
etseq. ' "(vii) may be removed, suspended, furloughed, or
., '. reduced in grade or pay only for good cause established
and determined by the Merit Systems Protection Board
on the record after opportunity for hearing by such
Board;
"(8) 'reviewing official' means any officer or employee of
an authority—
"(A) who is designated by the authority head to make the
f determination required under section 3803(aX2) of this title;
"(B) who, if a member of the Armed Forces of the United
States on active duty, is serving in grade 0-7 or above or, if
a civilian employee, is serving in a position for which the
i rate of basic pay is not less than the minimum rate of basic
5 use 5331. '. pay for grade GS-16 under the General Schedule; and
^'(C) who is—
"! * "(i) not subject to supervision by, or required to
report to, the investigating official; and PUBLIC LAW 99-509—OCT. 21, 1986 100 STAT. 1937
"(ii) not employed in the organizational unit of the
authority in which the investigating official is
employed; and
"(9) 'statement' means any representation, certification,
affirmation, document, record, or accounting or bookkeeping
entry made—
"(A) with respect to a claim or to obtain the approval or
payment of a claim (including relating to eligibility to make
a claim); or
• "(B) with respect to (including relating to eligibility for)—
^^ "(i) a contract with, or a bid or proposal for a contract
with; or
(ii) a grant, loan, or benefit from,
^ an authority, or any State, political subdivision of a State,
or other party, if the United States Government provides
any portion of the money or property under such contract
1 .< or for such grant, loan, or benefit, or if the Government will
reimburse such State, political subdivision, or party for any
portion of the money or property under such contract or for
such grant, loan, or benefit,
except that such term does not include any statement made in
any return of tax imposed by the Internal Revenue Code of
1954. Post, p. 2095.
"(b) For purposes of paragraph (3) of subsection (a)—
"(1) each voucher, invoice, claim form, or other individual
request or demand for property, services, or money constitutes a
separate claim;
"(2) each claim for property, services, or money is subject to
this chapter regardless of whether such property, services, or
money is actually delivered or paid; and
"(3) a claim shall be considered made, presented, or submitted
to an authority, recipient, or party when such claim is actually
5 made to an agent, fiscal intermediary, or other entity, including
any State or political subdivision thereof, acting for or on behalf
of such authority, recipient, or party.
"(c) For purposes of paragraph (9) of subsection (a)—
"(1) each written representation, certification, or affirmation
constitutes a separate statement; and
"(2) a statement shall be considered made, presented, or
submitted to an authority when such statement is actually
made to an agent, fiscal intermediary, or other entity, including
any State or political subdivision thereof, acting for or on behalf ^
of such authority.
"§ 3802. False claims and statements; liability 31 USC 3802.
"(a)(1) Any person who makes, presents, or submits, or causes to
be made, presented, or submitted, a claim that the person knows or
has reason to know—
"(A) is false, fictitious, or fraudulent;
' "(B) includes or is supported by any written statement which
asserts a material fact which is false, fictitious, or fraudulent;
"(C) includes or is supported by any written statement that—
"(i) omits a material fact;
"(ii) is false, fictitious, or fraudulent as a result of such
omission; and 100 STAT. 1938 PUBLIC LAW 99-509—OCT. 21, 1986
sril 'lo "(iii) is a statement in which the person making, present-
gj |<^j-, ing, or submitting such statement has a duty to include
such material fact; or
<( "(D) is for payment for the provision of property or services
which the person has not provided as claimed,
shall be subject to, in addition to any other remedy that may be
prescribed by law, a civil penalty of not more than $5,000 for each
such claim. Except as provided in paragraph (3) of this subsection,
such person shall also be subject to an assessment, in lieu of
damages sustained by the United States because of such claim, of
not more than twice the amount of such claim, or the portion of
such claim, which is determined under this chapter to be in viola­
tion of the preceding sentence.
"(2) Any person who makes, presents, or submits, or causes to be
made, presented, or submitted, a written statement that—
"(A) the person knows or has reason to know—
' >w lit "(i) asserts a material fact which is false, fictitious, or
V iB 10; fraudulent; or
•fii jQ i "(iiXI) omits a material fact; and
"(II) is false, fictitious, or fraudulent as a result of such
nj omission;
-Q "(B) in the case of a statement described in clause (ii) of
.aeos q ,4?Ai^ subparagraph (A), is a statement in which the person making,
presenting, or submitting such statement has a duty to include
l/ji, such material fact; and
£ ». "(C) contains or is accompanied by an express certification or
affirmation of the truthfulness and accuracy of the contents of
the statement,
shall be subject to, in addition to any other remedy that may be
prescribed by law, a civil penalty of not more than $5,000 for each
such statement.
"(3) An assessment shall not be made under the second sentence of
paragraph (1) with respect to a claim if payment by the Government
has not been made on such claim.
"(b)(1) Except as provided in paragraphs (2) and (3) of this
subsection—
Post, p. 1939. ,4„, "(A) a determination under section 3803(a)(2) of this title that
there is adequate evidence to believe that a person is liable
1: under subsection (a) of this section; or
'f! "(B) a determination under section 3803 of this title that a
person is liable under subsection (a) of this section.
Contracts. may provide the authority with grounds for commencing any
administrative or contractual action against such person which is
authorized by law and which is in addition to any action against
-' • ^ such person under this chapter.
"(2) A determination referred to in paragraph (1) of this subsec­
tion may be used by the authority, but shall not require such
authority, to commence any administrative or contractual action
which is authorized by law,
"(3) In the case of an administrative or contractual action to
suspend or debar any person who is eligible to enter into contracts
with the Federal Government, a determination referred to in para­
graph (1) of this subsection shall not be considered as a conclusive
determination of such person's responsibility pursuant to Federal
procurement laws and regulations. PUBLIC LAW 99-509—OCT. 21, 1986 100 STAT. 1939
"§ 3803. Hearing and determinations 31 USC 3803.
"(a)(1) The investigating official of an authority may investigate Reports,
allegations that a person is liable under section 3802 of this title and Ante, p. 1937.
shall report the findings and conclusions of such investigation to the
reviewing official of the authority. The preceding sentence does not
modify any responsibility of an investigating official to report viola­
tions of criminal law to the Attorney General.
"(2) If the reviewing official of an authority determines, based
upon the report of the investigating official under paragraph (1) of
this subsection, that there is adequate evidence to believe that a
person is liable under section 3802 of this title, the reviewing official
shall transmit to the Attorney General a written notice of the
intention of such official to refer the allegations of such liability to a
presiding officer of such authority. Such notice shall include—
"(A) a statement of the reasons of the reviewing official for
the referral of such allegations;
"(B) a statement specifying the evidence which supports such !
^'' allegations;
"(C) a description of the claims or statements for which
'* liability under section 3802 of this title is alleged;
"(D) an estimate of the amount of money or the value of
T property or services requested or demanded in violation of
«*' section 3802 of this title; and
"(E) a statement of any exculpatory or mitigating cir-
^*'* cumstances which may relate to such claims or statements.
"(b)(1) Within 90 days after receipt of a notice from a reviewing
official under paragraph (2) of subsection (a), the Attorney General
or an Assistant Attorney General designated by the Attorney Gen­
eral shall transmit a written statement to the reviewing official
which specifies—
"(A) that the Attorney General or such Assistant Attorney ^'^^ ^^^ S;
"^^ General approves or disapproves the referral to a presiding
officer of the allegations of liability stated in such notice; *'
ill "(B) in any case in which the referral of allegations is ap­
proved, that the initiation of a proceeding under this section
with respect to such allegations is appropriate; and '" ^"'^ •>
"(C) in any case in which the referral of allegations is dis­
approved, the reasons for such disapproval. ^ S*^
"(2) A reviewing official may refer allegations of liability to a JS^
presiding officer only if the Attorney General or an Assistant Attor­
ney General designated by the Attorney General approves the
referral of such allegations in a written statement described in
paragraph (1) of this subsection.
"(3) If the Attorney General or an Assistant Attorney General
designated by the Attorney General transmits to an authority head
a written finding that the continuation of any hearing under this ' "^s if.
section with respect to a claim or statement may adversely affect . ki
any pending or potential criminal or civil action related to such
claim or statement, such hearing shall be immediately stayed and
may be resumed only upon written authorization of the Attorney '•
General. "^^^
"(c)(1) No allegations of liability under section 3802 of this title
with respect to any claim made, presented, or submitted by any
person shall be referred to a presiding officer under paragraph (2) of
subsection Ot>) if the reviewing official determines that—
"(A) an amount of money in excess of $150,000; or 1S©8 '^'O -t
woo 100 STAT. 1940 PUBLIC LAW 99-509—OCT. 21, 1986
"(B) property or services with a value in excess of $150,000,
Ante, p. 1937. is requested or demanded in violation of section 3802 of this title in
such claim or in a group of related claims which are submitted at
the time such claim is submitted.
"(2)(A) Except as provided in subparagraph (B) of this paragraph,
no allegations of liability against an individual under section 3802 of
this title with respect to any claim or statement made, presented, or
submitted, or caused to be made, presented, or submitted, by such
individual relating to any benefits received by such individual shall
be referred to a presiding officer under paragraph (2) of subsection
(b).
"(B) Allegations of liability against an individual under section
3802 of this title with respect to any claim or statement made,
presented, or submitted, or caused to be made, presented, or submit­
ted, by such individual relating to any benefits received by such
individual may be referred to a presiding officer under paragraph (2)
of subsection (b) if—
"(i) such claim or statement is made by such individual in
making application for such benefits;
"(ii) such allegations relate to the eligibility of such individual
f to receive such benefits; and
"(iii) with respect to such claim or statement, the individual—
"(I) has actual knowledge that the claim or statement is
false, fictitious, or fraudulent;
"(II) acts in deliberate ignorance of the truth or falsity of
the claim or statement; or
"(III) acts in reckless disregard of the truth or falsity of
the claim or statement.
"(C) For purposes of this subsection, the term 'benefits' means—
"(i) benefits under the supplemental security income program
42 use 1381. under title XVI of the Social Security Act;
"(ii) old age, survivors, and disability insurance benefits under
42 use 401. title II of the Social Security Act;
42 use 1395 "(iii) benefits under title XVIII of the Social Security Act;
note. ' "(iv) aid to families with dependent children under a State
42 use 602. plan approved under section 402(a) of the Social Security Act;
"(v) medical assistance under a State plan approved under
42 use 1396a. section 1902(a) of the Social Security Act;
42 use 1397. "(vi) benefits under title XX of the Social Security Act;
"(vii) benefits under the food stamp program (as defined in
7 use 2012. section 3(h) of the Food Stamp Act of 1977);
88 use 301 et "(viii) benefits under chapters 11, 13, 15, 17, and 21 of title 38;
seq.-mi et seq., "(ix) benefits under the Black Lung Benefits Act;
801 et seq. "(j^) benefits under the special supplemental food program for
women, infants, and children established under section 17 of the
42 use 1786. Child Nutrition Act of 1966;
42 use 3030f. "(xi) benefits under section 336 of the Older Americans Act;
"(xii) any annuity or other benefit under the Railroad Retire-
45 use 231t. ment Act of 1974;
42 use 1751 "(xiii) benefits under the National School Lunch Act;
^°^- "(xiv) benefits under any housing assistance program for
lower income families or elderly or handicapped persons which
is administered by the Secretary of Housing and Urban Devel­
opment or the Secretary of Agriculture;
"(xv) benefits under the Low-Income Home Energy Assistance
42 use 8621 Act of 1981; and
note. PUBLIC LAW 99-509—OCT. 21, 1986 100 STAT. 1941
"(xvi) benefits under part A of the Energy Conservation in
Existing Buildings Act of 1976, 42 USC 6861.
which are intended for the personal use of the individual who
receives the benefits or for a member of the individual's family.
"(d)(1) On or after the date on which a reviewing official is
permitted to refer allegations of liability to a presiding officer under
subsection (b) of this section, the reviewing official shall mail, by
registered or certified mail, or shall deliver, a notice to the person
alleged to be liable under section 3802 of this title. Such notice shall Ante, p. 1937.
specify the allegations of liability against such person and shall
state the right of such person to request a hearing with respect to
such allegations. ,,
"(2) If, within 30 days after receiving a notice under paragraph (1)
of this subsection, the person receiving such notice requests a
hearing with respect to the allegations contained in such notice—
"(A) the reviewing official shall refer such allegations to a
presiding officer for the commencement of such hearing; and
"(B) the presiding officer shall commence such hearing by
mailing by registered or certified mail, or by delivery of, a
notice which complies with paragraphs (2)(A) and (3)(B)(i) of
subsection (g) to such person.
"(e)(1)(A) Except as provided in subparagraph (B) of this para- Records.
graph, at any time after receiving a notice under paragraph (2)(B) of
subsection (d), the person receiving such notice shall be entitled to
review, and upon payment of a reasonable fee for duplication, shall
be entitled to obtain a copy of, all relevant and material documents,
transcripts, records, and other materials, which relate to such
allegations and upon which the findings and conclusions of the
investigating officigil under paragraph (1) of subsection (a) are based.
"(B) A person is not entitled under subparagraph (A) to review
and obtain a copy of any document, transcript, record, or material
which is privileged under Federal law.
"(2) At any time after receiving a notice under paragraph (2XB) of
subsection (d), the person receiving such notice shall be entitled to
obtain all exculpatory information in the possession of the inves­
tigating official or the reviewing official relating to the allegations
contained in such notice. The provisions of subparagraph (B) of
paragraph (1) do not apply to any document, transcript, record, or
other material, or any portion thereof, in which such exculpatory
information is contained.
"(f) Any hearing commenced under paragraph (2) of subsection (d) Records,
shall be conducted by the presiding officer on the record in order to
determine—
"(1) the liability of a person under section 3802 of this title;
and
"(2) if a person is determined to be liable under such section,
the amount of any civil penalty or assessment to be imposed on
such person.
Any such determination shall be based on the preponderance of the
evidence.
"(gXD Each hearing under subsection (f) of this section shall be
conducted—
"(A) in the case of an authority to which the provisions of
subchapter II of chapter 5 of title 5 apply, in accordance with— 5 USC 551 et seq.
"(i) the provisions of such subchapter to the extent that
such provisions are not inconsistent with the provisions of
this chapter; and 100 STAT. 1942 PUBLIC LAW 99-509—OCT. 21, 1986
"(ii) procedures promulgated by the authority head under
-' paragraph (3) of this subsection; or
"(B) in the case of an authority to which the provisions of
such subchapter do not apply, in accordance with procedures
promulgated by the authority head under paragraphs (2) and (3)
of this subsection.
Regulations. "(2) An authority head of an authority described in subparagraph
(B) of paragraph (1) shall by regulation promulgate procedures for
;f • s the conduct of hearings under this chapter. Such procedures shall
include:
"(A) The provision of written notice of the hearing to any
Ante, p. 1937. person alleged to be liable under section 3802 of this title,
including written notice of—
"(i) the time, place, and nature of the hearing;
"(ii) the legal authority and jurisdiction under which the
hearing is to be held; and
"(iii) the matters of facts and law to be asserted.
"(B) The provision to any person alleged to be liable under
section 3802 of this title of opportunities for the submission
of facts, arguments, offers of settlement, or proposals of
adjustment.
"(C) Procedures to ensure that the presiding officer shall not,
except to the extent required for the disposition of ex parte
matters as authorized by law—
"(i) consult a person or party on a fact in issue, unless on
notice and opportunity for all parties to the hearing to
" participate; or
– ' "(ii) be responsible to or subject to the supervision or
''- direction of the investigating official or the reviewing
•'- " official.
"(D) Procedures to ensure that the investigating official and
the reviewing official do not participate or advise in the decision
required under subsection (h) of this section or the review of the
decision by the authority head under subsection (i) of this
section, except as provided in subsection (j) of this section.
"(E) The provision to any person alleged to be liable under
section 3802 of this title of opportunities to present such per­
son's case through oral or documentary evidence, to submit
rebuttal evidence, and to conduct such cross-examination as
may be required for a full and true disclosure of the facts.
"(F) Procedures to permit any person alleged to be liable
under section 3802 of this title to be accompanied, represented,
and advised by counsel or such other qualified representative as
– • the authority head may specify in such regulations.
"(G) Procedures to ensure that the hearing is conducted in an
– impartial manner, including procedures to—
' "(i) permit the presiding officer to at any time disqualify
himself; and
'dr*o , "(ii) permit the filing, in good faith, of a timely and
sufficient affidavit alleging personal bias or another reason
' ' for disqualification of a presiding officer or a reviewing
official.
Regulations. "(3)(A) Each authority head shall promulgate by regulation proce­
dures described in subparagraph (B) of this paragraph for the
conduct of hearings under this chapter. Such procedures shall be in
addition to the procedures described in paragraph (1) or paragraph
(2) of this subsection, as the case may be. PUBLIC LAW 99-509—OCT. 21, 1986 100 STAT. 1943
"(B) The procedures referred to in subparagraph (A) of this para­
graph are:
"(i) Procedures for the inclusion, in any written notice of a
hearing under this section to any person alleged to be liable
j; under section 3802 of this title, of a description of the proce- Ante, p. 1937.
dures for the conduct of the hearing.
"(ii) Procedures to permit discovery by any person alleged to Records.
,, be liable under section 3802 of this title only to the extent that
I; the presiding officer determines that such discovery is necessary
1, for the expeditious, fair, and reasonable consideration of the
V issues, except that such procedures shall not apply to docu-
f,- ments, transcripts, records, or other material which a person is ,i, . ;
entitled to review under paragraph (1) of subsection (e) or to ' •
information to which a person is entitled under paragraph (2) of
•,, such subsection. Procedures promulgated under this clause
shall prohibit the discovery of the notice required under subsec­
tion (a)(2) of this section.
"(4) Each hearing under subsection (f) of this section shall be
held—
"(A) in the judicial district of the United States in which the
"" person alleged to be liable under section 3802 of this title resides
or transacts business;
"(B) in the judicial district of the United States in which the
claim or statement upon which the allegation of liability under
-'' such section was made, presented, or submitted; or . :^ ^
"(C) in such other place as may be agreed upon by such person .^.„ \
and the presiding officer who will conduct such hearing.
"(h) The presiding officer shall issue a written decision, including
findings and determinations, after the conclusion of the hearing.
Such decision shall include the findings of fact and conclusions of
law which the presiding officer relied upon in determining whether
a person is liable under this chapter. The presiding officer shall
promptly send to each party to the hearing a copy of such decision
and a statement describing the right of any person determined to be
liable under section 3802 of this title to appeal the decision of the
presiding officer to the authority head under paragraph (2) of
subsection (i).
"(i)(l) Except as provided in paragraph (2) of this subsection and
section 3805 of this title, the decision, including the findings and Post, p. 1944.
determinations, of the presiding officer issued under subsection (h)
of this section are final.
"(2)(A)(i) Except as provided in clause (ii) of this subparagraph,
within 30 days after the presiding officer issues a decision under
subsection (h) of this section, any person determined in such decision
to be liable under section 3802 of this title may appeal such decision
to the authority head.
"(ii) If, within the 30-day period described in clause (i) of this
subparagraph, a person determined to be liable under this chapter
requests the authority head for an extension of such 30-day period to
file an appeal of a decision issued by the presiding officer under
subsection (h) of this section, the authority head may extend such
period if such person demonstrates good cause for such extension.
"(B) Any authority head reviewing under this section the decision,
findings, and determinations of a presiding officer shall not consider
any objection that was not raised in the hearing conducted pursuant
to subsection (f) of this section unless a demonstration is made of
extraordinary circumstances causing the failure to raise the oojec-mx-190 STAT. 1944 PUBLIC LAW 99-509—OCT. 21, 1986
tion. If any party demonstrates to the satisfaction of the authority
head that additional evidence not presented at such hearing is
material and that there were reasonable grounds for the failure to
present such evidence at such hearing, the authority head shall
remand the matter to the presiding officer for consideration of such
additional evidence.
"(C) The authority head may affirm, reduce, reverse, compromise,
remand, or settle any penalty or assessment determined by the
presiding officer pursuant to this section. The authority head shall
promptly send to each party to the appeal a copy of the decision of
the authority head and a statement describing the right of any
Ante, p. 1937. person determined to be liable under section 3802 of this title to
Infra. judicial review under section 3805 of this title.
"(j) The reviewing official has the exclusive authority to com­
promise or settle any allegations of liability under section 3802 of
this title against a person without the consent of the presiding
officer at any time after the date on which the reviewing official is
permitted to refer allegations of liability to a presiding officer under
subsection (b) of this section and prior to the date on which the
presiding officer issues a decision under subsection (h) of this sec­
tion. Any such compromise or settlement shall be in writing.
31 use 3804. "§ 3804. Subpoena authority
Records. "(a) For the purposes of an investigation under section 3803(a)(1)
Reports. of this title, an investigating official is authorized to require by
Ante, p. 1939. subpoena the production of all information, documents, reports,
answers, records, accounts, papers, and data not otherwise reason­
ably available to the authority.
"(b) For the purposes of conducting a hearing under section 3803(f)
of this title, a presiding officer is authorized—
"(1) to administer oaths or affirmations; and
"(2) to require by subpoena the attendance and testimony of
witnesses and the production of all information, documents,
reports, answers, records, accounts, papers, and other data and
documentary evidence which the presiding officer considers
relevant and material to the hearing.
"(c) In the case of contumacy or refusal to obey a subpoena issued
pursuant to subsection (a) or (b) of this section, the district courts of
the United States shall have jurisdiction to issue an appropriate
order for the enforcement of any such subpoena. Any failure to obey
such order of the court is punishable by such court as contempt. In
any case in which an authority seeks the enforcement of a subpoena
issued pursuant to subsection (a) or (b) of this section, the authority
shall request the Attorney General to petition any district court in
which a hearing under this chapter is being conducted, or in whkh
the person receiving the subpoena resides or conducts business, to
issue such an order.
31 use 3805. "§ 3805. Judicial review
"(a)(1) A determination by a reviewing official under section 3803
of this title shall be final and shall not be subject to judicial review.
"(2) Unless a petition is filed under this section, a determination
under section 3803 of this title that a person is liable under section
3802 of this title shall be final and shall not be subject to judicial
review. •'=-'*|->?!MW-
PUBLIC LAW 99-509—OCT. 21, 1986 100 STAT. 1945
"(bXlXA) Any person who has been determined to be liable under
section 3802 of this title pursuant to section 3803 of this title may Ante, pp.
obtain review of such determination in— l^^^-
"(i) the United States district court for the district in which
such person resides or transacts business;
"(ii) the United States district court for the district in which
the claim or statement upon which the determination of liabil­
ity is based was made, presented, or submitted; or
"(iii) the United States District Court for the District of
Columbia.
"(B) Such review may be obtained by filing in any such court a
written petition that such determination be modified or set aside.
Such petition shall be filed—
"(i) only after such person has exhausted all administrative
remedies under this chapter; and
"(ii) within 60 days after the date on which the authority head
'^ sends such person a copy of the decision of such authority head
under section 3803(i)(2) of this title.
"(2) The clerk of the court shall transmit a copy of a petition filed Records,
under paragraph (1) of this subsection to the authority and to the
Attorney General. Upon receipt of the copy of such petition, the
authority shall transmit to the Attorney General the record in the
proceeding resulting in the determination of liability under section
3802 of this title. Except as otherwise provided in this section, the
district courts of the United States shall have jurisdiction to review
the decision, findings, and determinations in issue and to affirm,
modify, remand for further consideration, or set aside, in whole or in
part, the decision, findings, and determinations of the authority, and
to enforce such decision, findings, and determinations to the extent
that such decision, findings, and determinations are affirmed or
modified.
"(c) The decisions, findings, and determinations of the authority Records,
with respect to questions of fact shall be final and conclusive, and
shall not be set aside unless such decisions, findings, and determina­
tions are found by the court to be unsupported by substantial
evidence. In concluding whether the decisions, findings, and deter­
minations of an authority are unsupported by substantial evidence,
the court shall review the whole record or those parts of it cited by a
party, and due account shall be taken of the rule of prejudicial error.
"(d) Any district court reviewing under this section the decision,
findings, and determinations of an authority shall not consider any
objection that was not raised in the hearing conducted pursuant to
section 3803(f) of this title unless a demonstration is made of
extraordinary circumstances causing the failure to raise the objec­
tion. If any party demonstrates to the satisfaction of the court that
additional evidence not presented at such hearing is material and
that there were reasonable grounds for the failure to present such
evidence at such hearing, the court shall remand the matter to the
authority for consideration of such additional evidence. ;,
"(e) Upon a final determination by the district court that a person
is liable under section 3802 of this title, the court shall enter a final
judgment for the appropriate amount in favor of the United States.
"§ 3806. Collection of civil penalties and assessments
"(a) The Attorney General shall be responsible for judicial
enforcement of any civil penalty or assessment imposed pursuant to
the provisions of this chapter. 1937,
31 use 3806. 100 STAT. 1946 PUBLIC LAW 99-509—OCT. 21, 1986
"(b) Any penalty or assessment imposed in a determination which
" •'^''' has become final pursuant to this chapter may be recovered in a
civil action brought by the Attorney General. In any such action, no
matter that was raised or that could have been raised in a hearing
Ante, p. 1939. conducted under section 3803(f) of this title or pursuant to judicial
Ante, p. 1944. review under section 3805 of this title may be raised as a defense,
and the determination of liability and the determination of amounts
of penalties and assessments shall not be subject to review.
"(c) The district courts of the United States shall have jurisdiction
of any action commenced by the United States under subsection (b)
of this section.
"(d) Any action under subsection (b) of this section may, without
regard to venue requirements, be joined and consolidated with or
asserted as a counterclaim, cross-claim, or setoff by the United
States in any other civil action which includes as parties the United
States and the person against whom such action may be brought.
"(e) The United States Claims Court shall have jurisdiction of any
. ibtot H action under subsection (b) of this section to recover any penalty or
assessment if the cause of action is asserted by the United States as
a counterclaim in a matter pending in such court.
"(f) The Attorney General shall have exclusive authority to com­
promise or settle any penalty or assessment the determination of
which is the subject of a pending petition pursuant to section 3805 of
this title or a pending action to recover such penalty or assessment
pursuant to this section.
"(g)(1) Except as provided in paragraph (2) of this subsection, any
amount of penalty or assessment collected under this chapter shall
be deposited as miscellaneous receipts in the Treasury of the United
States.
^ ^ .J "(2)(A) Any amount of a penalty or assessment imposed by the
United States Postal Service under this chapter shall be deposited in
the Postal Service Fund established by section 2003 of title 39.
"(B) Any amount of a penalty or assessment imposed by the
Secretary of Health and Human Services under this chapter with
respect to a claim or statement made in connection with old age and
42 use 401. survivors benefits under title II of the Social Security Act shall be
deposited in the Federal Old-Age and Survivors Insurance Trust
Fund.
"(C) Any amount of a penalty or assessment imposed by the
Secretary of Health and Human Services under this chapter with
respect to a claim or statement made in connection with disability
benefits under title II of the Social Security Act shall be deposited in
the Federal Disability Insurance Trust Fund.
"(D) Any amount of a penalty or assessment imposed by the
Secretary of Health and Human Services under this chapter with
respect to a claim or statement made in connection with benefits
42 use 1395c. under part A of title XVIII of the Social Security Act shall be
deposited in the Federal Hospital Insurance Trust Fund.
"(E) Any amount of a penalty or assessment imposed by the
Secretary of Health and Human Services under this chapter with
respect to a claim or statement made in connection with benefits
42 use 1395J. under part B of title XVIII of the Social Security Act shall be
deposited in the Federal Supplementary Medical Insurance Trust
Fund. PUBLIC LAW 99-509—OCT. 21, 1986 100 STAT. 1947
"§ 3807. Right to administrative offset 31 USC 3807.
"(a) The amount of any penalty or assessment which has become Taxes.
final under section 3803 of this title, or for which a judgment has Ante, p. 1939.
been entered under section 3805(e) or 3806 of this title, or any Ante, pp. 1944,
amount agreed upon in a settlement or compromise under section 1^45.
3803(j) or 3806(f) of this title, may be collected by administrative
offset under section 3716 of this title, except that an administrative
offset may not be made under this subsection against a refund of an
overpayment of Federal taxes, then or later owing by the United
States to the person liable for such penalty or assessment.
"(b) All amounts collected pursuant to this section shall be remit­
ted to the Secretary of the Treasury for deposit in accordance with
section 3806(g) of this title.
"§ 3808. Limitations 31 USC 3808.
"(a) A hearing under section 3803(d)(2) of this title with respect to
a claim or statement shall be commenced within 6 years after the
date on which such claim or statement is made, presented, or
submitted.
"(b) A civil action to recover a penalty or assessment under
section 3806 of this title shall be commenced within 3 years after the
date on which the determination of liability for such penalty or • t ';
assessment becomes final.
"(c) If at any time during the course of proceedings brought
pursuant to this chapter the authority head receives or discovers
any specific information regarding bribery, gratuities, conflict of
interest, or other corruption or similar activity in relation to a false
claim or statement, the authority head shall immediately report
such information to the Attorney General, and in the case of an
authority in which an Office of Inspector General is established by
the Inspector General Act of 1978 or by any other Federal law, to 5 USC app.
the Inspector General of that authority.
"§ 3809. Regulations * 31 USC 3809.
"Within 180 days after the date of enactment of this chapter, each
authority head shall promulgate rules and regulations necessary to
implement the provisions of this chapter. Such rules and regulations '
shall— i•':i^^l^•"•i
"(1) ensure that investigating officials and reviewing officials
are not responsible for conducting the hearing required in
section 3803(f) of this title, making the determinations required
by subsections (f) and (h) of section 3803 of this title, or making
collections under section 3806 of this title; and
"(2) require a reviewing official to include in any notice
required by section 3803(a)(2) of this title a statement which
specifies that the reviewing official has determined that there is
i a reasonable prospect of collecting, from a person with respect ?K».7 ; x
to whom the reviewing official is referring allegations of liabil­
ity in such notice, the amount for which such person may be
liable.
"§ 3810. Reports 31 USC 3810.
"Not later than October 31 of each year, each authority head shall
prepare and transmit to the appropriate committees and sub­
committees of the Congress an annual report summarizing actions 100 STAT. 1948 PUBLIC LAW 99-509—OCT. 21, 1986
taken under this chapter during the most recent 12-month period
ending the previous September 30. Such report shall include—
"(1) a summary of matters referred by the investigating
official of the authority to the reviewing official of the authority
Ante, p. 1939. under section 3803(a)(1) of this title during such period;
"(2) a summary of matters transmitted to the Attorney Gen­
eral under section 3803(a)(2) of this title during such period;
"(3) a summary of all hearings conducted by presiding officers
under section 3803(f) of this title, and the results of such hear­
ings, during such period; and
"(4) a summary of the actions taken during such period to
collect any civil penalty or assessment imposed under this
chapter.
31 use 3811. "§ 3811. Effect on other law
"(a) This chapter does not diminish the responsibility of any
44 use 3501 et agency to comply with the provisions of chapter 35 of title 44.
s«9- "(b) This chapter does not supersede the provisions of section 3512
of title 44.
"(c) For purposes of this section, the term 'agency' has the same
meaning as in section 3502(1) of title 44.
31 use 3812. "§ 3812. Prohibition against delegation
"Any function, duty, or responsibility which this chapter specifies
be carried out by the Attorney General or an Assistant Attorney
General designated by the Attorney General, shall not be delegated
to, or carried out by, any other officer or employee of the Depart­
ment of Justice.".
Ob) TECHNICAL AMENDMENT.—The table of chapters for subtitle III
of title 31, United States Code, is amended by inserting after the
item relating to chapter 37 the following new item:
"38. Administrative Remedies for False Claims and Statements 3801".
(c) CONFORMING AMENDMENTS.—Section 5040t))(l)(C) of title 5,
United States Code, is amended—
(1) by striking out "and" before "(ii)"; and
(2) by inserting before the semicolon a comma and "and (iii)
Ante, p. 1934. any hearing conducted under chapter 38 of title 31".
31 use 3801 SEC. 6104. EFFECTIVE DATE.
"° This subtitle and the amendments made by this subtitle shall take
effect on the date of enactment of this Act, and shall apply to any
claim or statement made, presented, or submitted on or after such
date.
TITLE VII—FISCAL PROCEDURES
2 use 907 note. SEC. 7001. COST-OF-LIVING ADJUSTMENTS IN CERTAIN FEDERAL
BENEFITS.
(a) IN GENERAL.—Benefits which are payable in calendar year
1987, 1988, 1989, 1990, or 1991, under programs listed in section
257(1)(A) of the Balanced Budget and Emergency Deficit Control Act
2 use 907. of 1985 (Public Law 99-177), including any cost-of-living adjustment
in such benefits, shall not be subject to modification, suspension, or
reduction in such calendar year pursuant to a Presidential order
issued under such Act. PUBLIC LAW 99-509—OCT. 21, 1986 100 STAT. 1949
(b) DEFINITION.—For purposes of this section, the term "cost-of-
living adjustment" means any increase or change in the amount of a
benefit or in standards relating to such benefit under any provision
of Federal law which requires such increase or change as a result of
any change in the Consumer Price Index (or any component thereof)
or any other index which measures costs, prices, or wages.
SEC. 7002. EXEMPT PROGRAMS AND ACTIVITIES.
(a) IN GENERAL.—Section 255(g)(1) of the Balanced Budget and
Emergency Deficit Control Act of 1985 (2 U.S.C. 905(g)(1)) is amend­
ed by inserting after the item relating to Compensation of the
President the following new item:
"Dual benefits payments account (60-0111-0-1-601);".
(b) APPLICATION.—The amendment made by subsection (a) shall
apply to fiscal years beginning after September 30, 1986.
SEC. 7003. COMPUTATION OF RETIREMENT ANNUITY FOR PART-TIME
EMPLOYMENT.
(a)(1) Subsection Ot)) of section 15204 of the Consolidated Omnibus
Budget Reconciliation Act of 1985 (Public Law 99-272; 100 Stat. 335)
is repealed.
(2) The provision of title 38, United States Code, that was repealed
by such subsection is revived.
(b) Subsection (c) of section 15204 of such Act is redesignated as
subsection Ot)).
(c) This section is effective with respect to individuals who retire
after September 19,1986.
SEC. 7004. REVENUE SHARING PAYMENTS.
Notwithstanding section 6702(b) of title 31, United States Code,
the Secretary of the Treasury shall make the installment payment
of revenue sharing funds under chapter 67 of such title that is
otherwise required to be paid on or before October 5, 1986, by no
later than September 30,1986.
SEC. 7005. HIGHER EDUCATION SAVINGS.
For the purpose of complying with the instructions set forth in the
concurrent resolution on the budget for the fiscal year 1987 (S. Con,
Res. 120, 99th Congress, agreed to June 27, 1986), the provisions of
the bill, S. 1965, as passed by the House of Representatives on
September 24, 1986, as passed by the Senate on September 25, 1986,
and submitted to the President, shall be treated as if they were
included in this Act.
SEC. 7006. MISCELLANEOUS.
(a) Section 20001(d) of the Consolidated Omnibus Budget Reconcili­
ation Act of 1985 is amended—
(1) by striking out "(IXA) above if in paragraph (2) and
inserting in lieu thereof "paragraph (IXA) if the Chairman and
Ranking Minority Member of the Committee on the Budget and
the Chairman and Ranking Minority Member of the Committee
which reported the provision certify that";
(2) by striking out "it is designed to mitigate the" in clause (A
of such paragraph and inserting in lieu thereof "the provision
mitigates";
(3) by striking out "it" in clause (B) of such paragraph and
inserting in lieu thereof "the provision"; and
(4) by adding at the end thereof the following new paragrapn. 2 use 905 note.
38 use 4109.
5 use 8339 note.
Effective date.
38 use 4109
note.
31 use 6701 et
seq.
Ante, p. 1268.
Ante, p. 390. 100 STAT. 1950 PUBLIC LAW 99-509—OCT. 21, 1986
"(3) A provision reported by a committee shall not be considered
extraneous under paragraph (1)(C) if (A) the provision is an integral
part of a provision or title, which if introduced as a bill or resolution
would be referred to such committee, and the provision sets forth
the procedure to carry out or implement the substantive provisions
that were reported and which fall within the jurisdiction of such
committee; or (B) the provision states an exception to, or a special
application of, the general provision or title of which it is a part and
such general provision or title if introduced as a bill or resolution
would be referred to such committee.".
Ante, p. 390. (b) Section 20001(c) of such Act is amended by striking out "Janu­
ary 2, 1987" and inserting in lieu thereof "January 2, 1988".
(c) Senate Resolution 286 (99th Congress, 2d Session) is amended
'" • "^ by striking "section 1201" each place it appears and inserting in lieu
thereof "section 20001"
20 use 1063. SEC. 7007. MODIFICATION OF TITLE III, PART B, HIGHER EDUCATION ACT
ALLOCATION FORMULA.
Section 324 of the Higher Education Act (as amended by the
Ante, p. 1296. Higher Education Amendments of 1986) is amended—
(1) by redesignating subsections (d), (e), and (f) as subsections
(e), (f), and (g), respectively;
(2) by inserting after subsection (c) the following new subsec-
"^ ' tion:
"(d) MINIMUM ALLOTMENT —U) Notwithstanding subsections (a),
'' ' ^ " (b), and (c), the amount allotted to each part B institution under this
section shall not be less than $350,000.
Ante, p. 1307. "(2) If the amount appropriated pursuant to section 360(a)(2)(A) for
any fiscal year is not sufficient to pay the minimum allotment
required by paragraph (1) of this subsection to all part B institu-
, ,. tions, the amount of such minimum allotments shall be ratably
;,, reduced. If additional sums become available for such fiscal year,
such reduced allocation shall be increased on the same basis as they
were reduced (until the amount allotted equals the minimum allot­
ment required by paragraph (1))."; and
(3) by striking out "subsection (a), (b), or (c)" in subsection (e)
,j (as redesignated by paragraph (1) of this subsection) and insert­
ing in lieu thereof "subsection (a), (b), (c), or (d)"; and
(4) by amending subsection (c) to read as follows:
Minorities. "(c) ALLOTMENT; GRADUATE AND PROFESSIONAL STUDENT BASIS.—
From the amounts appropriated to carry out this part for any fiscal
year, the Secretary shall allot to each part B institution a sum
which bears the same ratio to one-fourth of that amount as the
percentage of graduates per institution, who are admitted to and in
attendance at a graduate or professional school in a degree program
" .q 3 fr in disciplines in which Blacks are underrepresented, bears to the
percentage of such graduates per institution for all part B
institutions."
SEC. 7008. USE OF URBAN RENEWAL LAND DISPOSITION PROCEEDS.
Massachusetts. Notwithstanding any other provision of law or other requirement,
the City of Boston in the State of Massachusetts is authorized to
retain any land disposition proceeds from the financially closed-out
Government Center Urban Renewal Project (NO MASS. R-35) not
paid to the Department of Housing and Urban Development, and to
use such proceeds in accordance with the requirements of the
community development block grant program specified in title I of PUBLIC LAW 99-509—OCT. 21, 1986 100 STAT. 1951
the Housing and Community Development Act of 1974. The City of 42 use 530i.
Boston shall retain such proceeds in a lump sum and shall be
entitled to retain and use all past and future earnings from such
proceeds, including any interest.
TITLE VIII—REVENUES, TRADE, AND
RELATED PROGRAMS
Subtitle A—Revenue Provisions
PART I—INCREASES IN CERTAIN PENALTIES
SEC. 8001. INCREASE IN PENALTY FOR UNDERPAYMENTS OF TAX
DEPOSITS.
(a) IN GENERAL.—Subsection (a) of section 6656 of the Internal
Revenue Code of 1954 (relating to underpayment of deposits) is Post, p. 2095;
amended by striking out "5 percent" and inserting in lieu thereof 26 use 6656.
"10 percent".
(b) EFFECTIVE DATE.—The amendment made by subsection (a) 26 use 6656
shall apply to penalties assessed after the date of the enactment of "ote.
this Act.
SEC. 8002. INCREASE IN PENALTY FOR SUBSTANTIAL UNDERSTATEMENT
OF LIABILITY.
(a) IN GENERAL.—Subsection (a) of section 6661 of the Internal 26 use 6661.
Revenue Code of 1954 (relating to substantial understatement of
liability) is amended to read as follows:
"(a) ADDITION TO TAX.—If there is a substantial understatement of
income tax for any taxable year, there shall be added to the tax an
amount equal to 25 percent of the amount of any underpayment
attributable to such understatement."
(b) EFFECTIVE DATE.—The amendment made by subsection (a) 26 use 6661
shall apply to penalties assessed after the date of the enactment of note.
this Act.
(c) REPEAL OF INCREASE IN PENALTY BY TAX REFORM ACT OF 26use666i,
1986.—Section 1504 of the Tax Reform Act of 1986 (relating to 6661 note.
increase in penalty for substantial understatement of liability) is ^^*' P ^^'*^
hereby repealed.
PART II—CERTAIN EXCISE TAX DEPOSITS
ACCELERATED
SEC. 8011. CERTAIN EXCISE TAX DEPOSITS ACCELERATED.
(a) TOBACCO.—
(1) IN GENERAL.—Paragraph (2) of section 5703(b) of the In­
ternal Revenue Code of 1954 (relating to method of payment of
tax) is amended to read as follows: Post, p. 2095;
"(2) TIME FOR PAYMENT OP TAXES.— 26 use 5703.
"(A) IN GENERAL.—Except as otherwise provided in this
' -•'•' paragraph, in the case of taxes on tobacco products and
cigarette papers and tubes removed during any semi­
monthly period under bond for deferred payment of tax, the
last day for payment of such taxes shall be the 14th day
after the last day of such semimonthly period. 100 STAT. 1952 PUBLIC LAW 99-509—OCT. 21, 1986
"(B) IMPORTED ARTICLES.—In the case of tobacco products
and cigarette papers and tubes which are imported into the
United States—
"(i) IN GENERAL.—The last day for payment of tax
shall be the 14th day after the date on which the article
e; is entered into the customs territory of the United
'^ States.
"(ii) SPECIAL RULE FOR ENTRY FOR WAREHOUSING.—
Except as provided in clause (iv), in the case of an entry
for warehousing, the last day for payment of tax shall
not be later than the 14th day after the date on which
the article is removed from the 1st such warehouse,
"(iii) FOREIGN TRADE ZONES.—Except as provided in
clause (iv) and in regulations prescribed by the Sec­
retary, articles brought into a foreign trade zone shall,
notwithstanding any other provision of law, be treated
for purposes of this subsection as if such zone were a
single customs warehouse.
"(iv) EXCEPTION FOR ARTICLES DESTINED FOR EXPORT.—
Clauses (ii) and (iii) shall not apply to any article which
is shown to the satisfaction of the Secretary to be
' ^ destined for export.
"(C) TOBACCO PRODUCTS AND CIGARETTE PAPERS AND TUBES
BROUGHT INTO THE UNITED STATES FROM PUERTO RICO.—In
the case of tobacco products and cigarette papers and tubes
which are brought into the United States from Puerto Rico,
the last day for payment of tax shall be the 14th day after
the date on which the article is brought into the United
States.
"(D) SPECIAL RULE WHERE 14TH DAY FALLS ON SATURDAY,
SUNDAY, OR HOLIDAY.—Notwithstanding section 7503, if, but
for this subparagraph, the due date under this paragraph
would fall on a Saturday, Sunday, or a legal holiday (as
^ defined in section 7503), such due date shall be the imme­
diately preceding day which is not a Saturday, Sunday, or
such a holiday."
(2) TECHNICAL AMENDMENT.—Subsection (c) of section 5704 of
^ such Code (relating to tobacco products and cigarette papers and
tubes released in bond from customs custody) is amended by
striking out "to a manufacturer of tobacco products or cigarette
papers and tubes or",
(b) DISTILLED SPIRITS, WINES, AND BEER.—
(1) IN GENERAL.—Subsection (d) of section 5061 of such Code
(relating to method of collecting tax) is amended to read as
follows:
"(d) TIME FOR COLLECTING TAX ON DISTILLED SPIRITS, WINES, AND
BEER.—
"(1) IN GENERAL.—Except as otherwise provided in this
subsection, in the case of distilled spirits, wines, and beer to
which this part applies (other than subsection (b) of this section)
. ,n which are withdrawn under bond for deferred payment of tax,
the last day for payment of such tax shall be the 14th day after
i the last day of the semimonthly period during which the with­
drawal occurs.
< "(2) IMPORTED ARTICLES.—In the case of distilled spirits, wines,
I and beer which are imported into the United States (other than
in bulk containers)— :»<:*PUBLIC LAW 99-509—OCT. 21, 1986 100 STAT. 1953
"(A) IN GENERAL.—The last day for payment of tax shall
be the 14th day after the date on which the article is
entered into the customs territory of the United States.
"(B) SPECIAL RULE FOR ENTRY FOR WAREHOUSING.—Except
as provided in subparagraph (D), in the case of an entry for
warehousing, the last day for payment of tax shall not be
later than the 14th day after the date on which the article
is removed from the 1st such warehouse.
"(C) FOREIGN TRADE ZONES.—Except as provided in
subparagraph (D) and in regulations prescribed by the Sec­
retary, articles brought into a foreign trade zone shall,
notwithstanding any other provision of law, be treated for
purposes of this subsection as if such zone were a single
customs warehouse.
"(D) EXCEPTION FOR ARTICLES DESTINED FOR EXPORT.—Sub­
paragraphs (B) and (C) shall not apply to any article which
is shown to the satisfaction of the Secretary to be destined
for export.
"(3) DISTILLED SPIRITS, WINES, AND BEER BROUGHT INTO THE
UNITED STATES FROM PUERTO RICO.—In the case of distilled spir­
its, wines, and beer which are brought into the United States
(other than in bulk containers) from Puerto Rico, the last day
for payment of tax shall be the 14th day after the date on which
the article is brought into the United States.
"(4) SPECIAL RULE WHERE 14TH DAY FALLS ON SATURDAY,
SUNDAY, OR HOLIDAY.—Notwithstanding section 7503, if, but for
this paragraph, the due date under this subsection for payment
of tax would fall on a Saturday, Sunday, or a legal holiday
(within the meaning of section 75()3), such due date shall be the
immediately preceding day which is not a Saturday, Sunday, or
such a holiday."
(2) TECHNICAL AMENDMENT.—Paragraph (2) of section 5054(a)
of such Code (relating to determination and collection of tax on
beer) is amended by striking out all that follows "or," and
inserting in lieu thereof "if entered for warehousing, at the time
of removal from the 1st such warehouse".
(c) EFFECTIVE DATES.— 26 use 5061
(1) IN GENERAL.—Except as provided in paragraph (2), the "°t®-
amendments made by this section shall apply to removals
during semimonthly periods ending on or after December 31,
1986.
(2) IMPORTED ARTICLES, ETC.—Subparagraphs (B) and (C) of
section 5703(b)(2) of the Internal Revenue Code of 1954 (as added
by this section), paragraphs (2) and (3) of section 5061(d) of such 26 USC 5703.
Code (as amended by this section), and the amendments made
by subsections (a)(2) and (b)(2) shall apply to articles imported,
entered for warehousing, or brought into the United States or a
foreign trade zone after December 15,1986.
(3) SPECIAL RULE FOR DISTILLED SPIRITS AND TOBACCO FOR SEMI-
MONTHLY PERIOD ENDING DECEMBER 15, 1986.—With respect to
remittances of—
(A) taxes imposed on distilled spirits by section 5001 or
7652 of such Code, and – ^
(B) taxes imposed on tobacco products and cigarette
papers and tubes by section 5701 or 7652 of such Code,
for the semimonthly period ending December 15, 1986, the last
day for payment of such remittances shall be January 14, 1987. 100 STAT. 1954 PUBLIC LAW 99-509—OCT. 21, 1986
– (4) TREATMENT OF SMOKELESS TOBACCO IN INVENTORY ON JUNE
30, 1986.—The tax imposed by section 5701(e) of the Internal
26 use 5701. Revenue Code of 1954 shall not apply to any smokeless tobacco
which—
(A) on June 30, 1986, was in the inventory of the manu-
: . facturer or importer, and
(B) on such date was in a form ready for sale.
PART III—TAX TREATMENT OF CONRAIL PUBLIC
SALE
45 use 1347. SEC. 8021. TAX TREATMENT OF CONRAIL PUBLIC SALE.
(a) TREATMENT AS NEW CORPORATION.—
(1) IN GENERAL.—For periods after the public sale, for pur­
pose, p. 2095. poses of the Internal Revenue Code of 1954, Conrail shall be
treated as a new corporation which purchased all of its assets as
of the beginning of the day after the date of the public sale for
an amount equal to the deemed purchase price.
(2) ALLOCATION AMONG ASSETS.—The deemed purchase price
shall be allocated among the assets of Conrail in accordance
with the temporary regulations prescribed under section 338 of
26 use 338. the Internal Revenue Code of 1954 (as such regulations were in
effect on the date of the enactment of this Act). The Secretary
shall establish specific guidelines for carrying out the preceding
sentence so that the basis of each asset will be clearly ascertain­
able. For purposes of applying the regulations referred to in the
first sentence, accounts receivable and materials and supplies
shall be treated as cash equivalents.
(3) DEEMED PURCHASE PRICE.—For purposes of this subsection,
the deemed purchase price is an amount equal to the gross
amount received pursuant to the public sale, multiplied by a
fraction—
..ynU i^ : (A) the numerator of which is 100 percent, and
Securities. (B) the denominator of which is the percentage (by value)
. of the stock of Conrail sold in the public sale.
The amount determined under the preceding sentence shall be
adjusted under regulations prescribed by the Secretary for
liabilities of Conrail and other relevant items.
(b) No INCOME FROM CANCELLATION OF DEBT OR PREFERRED
STOCK.—No amount shall be included in the gross income of any
person by reason of any cancellation of any obligation (or preferred
S ';!'J stock) of Conrail in connection with the public sale.
(c) DISALLOWANCE OF CERTAIN DEDUCTIONS.—No deduction shall
be allowed to Conrail for any amount which is paid after the date of
the public sale to employees of Conrail for services performed on or
before the date of the public sale.
(d) WAIVER OF CERTAIN EMPLOYEE STOCK OWNERSHIP PLAN PROVI­
SIONS.—For purposes of determining whether the employee stock
ownership plans of Conrail meet the qualifications of sections 401
26 use 401, 501. and 501 of the Internal Revenue Code of 1954—
(1) the limits of section 415 of such Code (relating to limita­
tions on benefits and contributions under qualified plans) shall
not apply with respect to interests in stock transferred pursuant
to this Act or a law heretofore enacted, and PUBLIC LAW 99-509—OCT. 21, 1986 100 STAT. 1955
(2) the 2-year waiting period for withdrawals shall not apply
to withdrawals of amounts (or shares) in participants accounts
in connection with the public sale,
(e) DEFINITIONS.—For purposes of this section—
(1) CoNRAiL.—The term "Conrail" means the Consolidated
f Rail Corporation. Such term includes any corporation which
was a subsidiary of Conrail immediately before the public sale.
(2) PUBLIC SALE.—The term "public sale" means the sale of
stock in Conrail pursuant to a public offering under the Conrail
Privatization Act. If there is more than 1 public offering under Ante, p. 1892.
such Act, such term means the sale pursuant to the initial
public offering under such Act.
(3) SECRETARY.—The term "Secretary" means the Secretary of
the Treasury or his delegate.
PART IV—TAX ON PETROLEUM AND OIL SPILL
LIABILITY TRUST FUND
Subpart A—Tax Provisions if Superfund Amendments
Not Enacted
SEC. 8031. TAX ON PETROLEUM. '
(a) IN GENERAL.—Subsections (a) and (b) of section 4611 of the
Internal Revenue Code of 1954 (relating to environmental tax on
petroleum) are each amended by striking out "of 0.79 cent a barrel" Ante, p. 1761;
and inserting in lieu thereof "at the rate specified in subsection (c)". post, p. 1956.
(b) INCREASE IN TAX.—Section 4611 of such Code is amended by
redesignating subsections (c) and (d) as subsections (d) and (e),
respectively, and by inserting after subsection (b) the following new
subsection:
"(c) RATE OF TAX.—
"(1) IN GENERAL.—The rate of the taxes imposed by this
section is the sum of—
"(A) the Hazardous Substance Superfund financing rate,
^ >' and
'i "(B) the Oil Spill Liability Trust Fund financing rate.
"(2) RATES.—For purposes of paragraph (1)—
"(A) the Hazardous Substance Superfund financing rate
is 0.79 cent a barrel, and
"(B) the Oil Spill Liability Trust Fund financing rate is
1.3 cents a barrel."
(c) CREDIT AGAINST PORTION OF TAX ATTRIBUTABLE TO OIL SPILL
RATE.—Section 4612 of such Code (relating to definitions and special Ante, p. 1761.
rules) is amended by redesignating subsection (c) as subsection (d) i
and by inserting after subsection (b) the following new subsection:
"(c) CREDIT AGAINST PORTION OF TAX ATTRIBUTABLE TO OIL SPILL U
RATE.—There shall be allowed as a credit against so much of the tax
imposed by section 4611 as is attributable to the Oil Spill Liability
Trust Fund financing rate for any period an amount equal to the
excess of—
"(1) the sum of- .iv-[ ^,.. ^.^ t
-f' "(A) the aggregate amounts paid by the taxpayer before
January 1, 1987, into the Deepwater Port Liability Trust
Fund and the Offshore Oil Pollution Compensation Fund,
and 100 STAT. 1956 PUBLIC LAW 99-509—OCT. 21, 1986
"(B) the interest accrued on such amounts before such
date, over
"(2) the amount of such payments taken into account under
this subsection for all prior periods."
(d) CONFORMING AMENDMENTS.—
r, (1) Subsection (e) of section 4611 of such Code (relating to
application of taxes), as redesignated by subsection (b), is
amended to read as follows:
"(e) APPLICATION OF TAXES.—
"(1) SUPERFUND RATE.—The Hazardous Substance Superfund
financing rate under subsection (c) shall not apply after Septem­
ber 30,1985.
"(2) OIL SPILL RATE.—
"(A) IN GENERAL.—Except as provided in subparagraph
(C), the Oil Spill Liability Trust Fund financing rate under
subsection (c) shall apply on and after the commencement
date and before January 1,1992.
"(B) COMMENCEMENT DATE.—
"(i) IN GENERAL.—For purposes of this paragraph, the
term'commencement date'means the later of—
"(I) February 1,1987, or
"(II) the 1st day of the 1st calendar month begin­
ning more than 30 days after the date of the
enactment of qualified authorizing legislation,
"(ii) QUALIFIED AUTHORIZING LEGISLATION.—For pur­
poses of clause (i), the term 'qualified authorizing legis­
lation' means any law enacted before September 1,
1987, which is substantially identical to subtitle E of
title VI, or subtitle D of title VIII, of H.R. 5300 of the
99th Congress as passed the House of Representatives.
"(C) No TAX IF AMOUNTS COLLECTED EXCEED $300,000,000.—
"(i) ESTIMATES BY SECRETARY.—The Secretary as of
the close of each calendar quarter (and at such other
u times as the Secretary determines appropriate) shall
make an estimate of the amount of taxes which will be
>.,! collected under this section (to the extent attributable
to the Oil Spill Liability Trust Fund financing rate)
3 during the period beginning on the commencement
date and ending on December 31,1991.
"(ii) TERMINATION IF $300,000,000 CREDITED BEFORE
JANUARY 1, 1992.—If the Secretary estimates under
clause (i) that more than $300,000,000 will be credited
to the Fund before January 1,1992, the Oil Spill Liabil­
ity Trust Fund financing rate shall not apply after the
., date on which (as estimated by the Secretary)
$300,000,000 will be so credited to the Fund."
(2) Subsection (c) of section 4661 of such Code (relating to
Post, p. 1958. termination of tax on certain chemicals) is amended to read as
follows:
"(c) TERMINATION.—The tax imposed by this section shall not
apply after September 30,1985."
(3) Paragraph (1) of section 221(b) of the Hazardous Substance
Ante, p. 1774. Response Revenue Act of 1980 (relating to transfers to Response
Trust Fund) is amended by adding at the end thereof the
following:
"In the case of the tax imposed by section 4611, subparagraph
(A) shall apply only to so much of such tax as is attributable to PUBLIC LAW 99-509—OCT. 21, 1986 100 STAT. 1957
the Hazardous Substance Superfund financing rate under sec- ^^
tion 4611(c)."
(e) EFFECTIVE DATE,—
(1) IN GENERAL.—Except as provided in paragraph (2), the
amendments made by this section shall take effect on the
commencement date (as defined in section 4611(e)(2) of the
Internal Revenue Code of 1954, as added by this section). Ante, p. 1956.
(2) COORDINATION WITH SUPERFUND REAUTHORIZATION.—The
amendments made by this section shall not take effect if the
Superfund Amendments and Reauthorization Act of 1986 is Ante, p. 1613.
enacted.
Subpart B—Tax Provisions If Superfund Amendments
Enacted
SEC. 8032. INCREASE IN ENVIRONMENTAL TAX ON PETROLEUM.
(a) IN GENERAL.—Subsection (c) of section 4611 of the Internal
Revenue Code of 1954 (relating to environmental tax on petroleum), Ante, pp. 1761,
as amended by the Superfund Amendments and Reauthorization ^^^^•
Act of 1986, is amended to read as follows:
"(c) RATE OF TAX.—
"(1) IN GENERAL.—The rate of the taxes imposed by this
section is the sum of—
"(A) the Hazardous Substance Superfund financing rate,
and
"(B) the Oil Spill Liability Trust Fund financing rate.
"(2) RATES.—For purposes of paragraph (1)—
"(A) the Hazardous Substance Superfund financing rate
is—
"(i) except as provided in clause (ii), 8.2 cents a
barrel, and
"(ii) 11.7 cents a barrel in the case of the tax imposed
by subsection (a)(2), and
"(B) the Oil Spill Liability Trust Fund financing rate is
1.3 cents a barrel."
(b) CREDIT AGAINST PORTION OF TAX ATTRIBUTABLE TO OIL SPILL
RATE.—Section 4612 of such Code (relating to definitions and special Ante, pp. 1761,
rules), as so amended, is amended by redesignating subsection (d) as ^955.
subsection (e) and by inserting after subsection (c) the following new
subsection:
"(d) CREDIT AGAINST PORTION OF TAX ATTRIBUTABLE TO OIL SPILL
RATE.—There shall be allowed as a credit against so much of the tax
imposed by section 4611 as is attributable to the Oil Spill Liability
Trust Fund financing rate for any period an amount equal to the
excess of—
"(1) the sum of—
"(A) the aggregate amounts paid by the taxpayer before
January 1, 1987, into the Deepwater Port Liability Trust
Fund and the Offshore Oil Pollution Compensation Fund,
and
"(B) the interest accrued on such amounts before such
date, over
"(2) the amount of such payments taken into account under
this subsection for all prior periods."
(c) CONFORMING AMENDMENTS.— 100 STAT. 1958 PUBLIC LAW 99-509—OCT. 21, 1986
Ante, pp. 1761, * (1) Subsection (e) of section 4611 of such Code (relating to
^^^^- application of taxes), as so amended, is amended—
(A) in the subsection heading by striking out "TAXES" and
inserting in lieu thereof "HAZARDOUS SUBSTANCE
' SuPERFUND FINANCING RATE",
* ^ (B) in paragraph (1) by striking out "the taxes imposed by
' this section" and inserting in lieu thereof "the Hazardous
i Substance Superfund financing rate under this section",
.J (C) in paragraphs (2) and (3)(A) after "this section" by
inserting "(to the extent attributable to the Hazardous
Substance Superfund financing rate)", and
(D) in paragraph (3XB) by striking out "no tax shall be
imposed under this section" and inserting in lieu thereof
"the Hazardous Substance Superfund financing rate under
this section shall not apply".
(2) Section 4611 of such Code, as so amended, is amended by
adding at the end thereof the following new subsection:
"(f) APPLICATION OF OIL SPILL LIABIUTY TRUST FUND FINANCING
•••. .'• RATE.—
"(1) IN GENERAL.—Except as provided in paragraph (3), the Oil
Spill Liability Trust Fund financing rate under subsection (c)
shall apply on and after the commencement date and before
January 1,1992.
"(2) COMMENCEMENT DATE.—
"(A) IN GENERAL.—For purposes of this subsection, the
term 'commencement date' means the later of—
"(i) February 1,1987, or
"(ii) the 1st day of the 1st calendar month beginning
;i > , more than 30 days after the date of the enactment of
qualified authorizing legislation.
"(B) QUAUFIED AUTHORIZING LEGISLATION.—For purposes
of subparagraph (A), the term 'qualified authorizing legisla­
te tion' means any law enacted before September 1, 1987,
which is substantially identical to subtitle E of title VI, or
subtitle D of title VIII, of H.R. 5300 of the 99th Congress as
passed the House of Representatives.
"(3) No TAX IF AMOUNTS COLLECTED EXCEED $300,000,000.—
"(A) ESTIMATES BY SECRETARY.—The Secretary as of the
close of each calendar quarter (and at such other times as
the Secretary determines appropriate) shall make an esti­
mate of the amount of taxes which will be collected under
this section (to the extent attributable to the Oil Spill
" * Liability Trust Fund financing rate) during the period
beginning on the commencement date and ending on
December 31,1991.
"(B) TERMINATION IF $300,000,000 CREDITED BEFORE JANU­
ARY 1, 1992.—If the Secretary estimates under subpara­
graph (A) that more than $300,000,000 will be credited to
*^ ' the Fund before January 1, 1992, the Oil Spill Liability
Trust Fund financing rate shall not apply after the date on
which (as estimated by the Secretary) $300,000,000 will be
so credited to the Fund."
– — (3) Sections 4661(c) and 4671(e) of such Code (relating to
Ante, pp. 1761, termination of environmental taxes) are each amended by strik-
1956! ing out "no tax is imposed under section 4611(a)" and inserting
in lieu thereof "the Hazardous Substance Superfund financing
rate under section 4611 does not apply". PUBLIC LAW 99-509—OCT. 21, 1986 100 STAT. 1959
(4) Subsection (b) of section 9507 of such Code (relating to Infra; post, p.
transfers to Superfund) is amended by adding at the end thereof i^^^.
the following:
"In the case of the tax imposed by section 4611, paragraph (1) shall
apply only to so much of such tax as is attributable to the Hazardous
Substance Superfund financing rate under section 4611(c)." Ante, pp. 1955,
(d) EFFECTIVE DATE.— O^^^G
(1) IN GENERAL.—Except as provided in paragraph (2), the notY
amendments made by this section shall take effect on the rv '
commencement date (as defined in section 4611(0(2) of the
Internal Revenue Code of 1954, as added by this section). Ante, p. 1958.
(2) COORDINATION WITH SUPERFUND REAUTHORIZATION.—The
amendments made by this section shall take effect only if the
Superfund Amendments and Reauthorization Act of 1986 is Ante, p. 1613.
enacted.
^ ^ Subpart C—Oil Spill Liability Trust Fund
SEC. 8033. OIL SPILL LIABILITY TRUST FUND.
(a) IN GENERAL.—Subchapter A of chapter 98 of the Internal
Revenue Code of 1954 (relating to establishment of trust funds) is Post, p. 2095; 26
amended by adding after section 9506 the following new section: USC 9501.
"SEC. 9507. OIL SPILL LIABILITY TRUST FUND. Post, p. 1962;
"(a) CREATION OF TRUST FUND.—There is established in the Treas­
ury of the United States a trust fund to be known as the 'Oil Spill
Liability Trust Fund', consisting of such amounts as may be appro­
priated or credited to such Trust Fund as provided in this section or
section 9602(b).
"01>) TRANSFERS TO TRUST FUND.—There are hereby appropriated
to the Oil Spill Liability Trust Fund amounts equivalent to—
"(1) taxes received in the Treasury under section 4611 (relat­
ing to environmental tax on petroleum) to the extent attrib­
utable to the Oil Spill Liability Trust Fund financing rate under
section 4611(c),
"(2) amounts recovered, collected, or received under subtitle A
of the Comprehensive Oil Pollution Liability and Compensation
Act,
i: "(3) amounts remaining (on the 1st day the Oil Spill Liability
Trust Fund financing rate under section 4611(c) applies) in the
Deep Water Port Liability Fund established by section 18(0 of
^( the Deep Water Port Act of 1974, 33 USC 1517.
"(4) amounts remaining (on such date) in the Offshore Oil
'K. Pollution Compensation Fund established under section 302 of
b the Outer Continental Shelf Lands Act Amendments of 1978, 43 USC 1812.
and
•; "(5) amounts credited to such trust fund under section 311(s)
of the Federal Water Pollution Control Act. 33 USC 1321.
"(c) EXPENDITURES.—
, … "(1) GENERAL EXPENDITURE PURPOSES.—
"(A) IN GENERAL.—Amounts in the Oil Spill Liability
Trust Fund shall be available, as provided in appropriation
l Acts, only for purposes of making expenditures for—
"(i) the pajrment of removal costs described in the ,. .
Comprehensive Oil Pollution Liability and Compensa­
tion Act, 100 STAT. 1960 PUBLIC LAW 99-509—OCT. 21, 1986
"(ii) the pajrment of claims under the Comprehensive
Oil Pollution Liability and Compensation Act for
damage which is not otherwise compensated,
1^ "(iii) carrying out subsections (c), (d), (i), and (1) of
33 use 1321. – section 311 of the Federal Water Pollution Control Act
with respect to any discharge of oil (as defined in such
section),
"(iv) carrying out section 5 of the Intervention on the
33 use 1474 '* High Seas Act relating to oil pollution or the substan­
tial threat of oil pollution,
"(v) the payment of all expenses of administration
incurred by the Federal Government under the Com­
prehensive Oil Pollution Liability and Compensation
Act, and
"(vi) the payment of contributions to the Inter­
national Fund under such Act.
For purposes of this subparagraph, references to the Com­
prehensive Oil Pollution Liability and Compensation Act
shall be treated as references to qualified authorizing legis-
Ante, pp. 1761, lation (as defined in section 4611).
1955. "(B) SPECIAL RULES.—
"(i) PAYMENTS TO GOVERNMENTS ONLY FOR REMOVAL
COSTS AND NATURAL RESOURCE DAMAGE ASSESSMENTS
.?•-, ^, . AND CLAIMS.—Exccpt in the case of payments described
'•i . ;' in subparagraph (AXv), amounts shall be available
under subparagraph (A) for payments to any govern­
ment only for—
"(I) removal costs and natural resource damage
assessments and claims, and
"(II) administrative expenses related to such
costs, assessments, or claims,
"(ii) RESTRICTIONS ON CONTRIBUTIONS TO INTER­
NATIONAL FUND.—Under regulations prescribed by the
Secretary, amounts shall be available under subpara­
graph (A) with respect to any contribution to the Inter­
national Fund only in proportion to the portion of such
fund used for a purpose for which amounts may be paid
from the Oil Spill Liability Trust Fund.
"(2) LIMITATIONS ON EXPENDITURES.—
"(A) $500,000,000 PER INCIDENT, ETC.—The maximum
amount which may be paid from the Oil Spill Liability
Trust Fund with respect to—
"(i) any single incident shall not exceed $500,000,000,
and
"(ii) natural resource damage assessments and claims
in connection with any single incident shall not exceed
$250,000,000.
"(B) $30,000,000 MINIMUM BALANCE.—Exccpt in the case
of payments described in paragraph (lXA)(i), a payment
may be made from such Trust Fund only if the amount in
such Trust Fund after such payment will not be less than
$30,000,000.
"(d) AUTHORITY To BORROW.—
Appropriation "(1) IN GENERAL.—There are authorized to be appropriatea to
authorization. the Oil Spill Liability Trust Fund, as repayable advances, such
sums as may be necessary to carry out the purposes of such
Trust Fund. PUBLIC LAW 99-509—OCT. 21, 1986 100 STAT. 1961
– "(2) LIMITATION ON AMOUNT OUTSTANDING.—The maximum
aggregate amount of repayable advances to the Oil Spill Liabil­
ity Trust Fund which is outstanding at any one time shall not
exceed $500,000,000.
"(3) REPAYMENT OF ADVANCES.—
"(A) IN GENERAL.—Advances made to the Oil Spill Liabil­
ity Trust Fund shall be repaid, and interest on such ad­
vances shall be paid, to the general fund of the Treasury
when the Secretary determines that moneys are available
for such purposes in such Fund.
"(B) FINAL REPAYMENT.—No advance shall be made to the
Oil Spill Liability Trust Fund after December 31, 1991, and
all advances to such Fund shall be repaid on or before such
date.
"(C) RATE OF INTEREST.—Interest on advances made
pursuant to this subsection shall be—
"(i) at a rate determined by the Secretary of the
Treasury (as of the close of the calendar month preced­
ing the month in which the advance is made) to be
equal to the current average market yield on outstand­
ing marketable obligations of the United States with
remaining periods to maturity comparable to the
anticipated period during which the advance will be
outstanding, and
"(ii) compounded annually.
"(e) LIABILITY OF THE UNITED STATES LIMITED TO AMOUNT IN TRUST
FUND.—
"(1) GENERAL RULE.—Any claim filed against the Oil Spill
Liability Trust Fund may be paid only out of such Trust Fund.
"(2) COORDINATION WITH OTHER PROVISIONS.—Nothing in the
Comprehensive Oil Pollution Liability and Compensation Act
(or in any amendment made by such Act) shall authorize the
payment by the United States Government of any amount with
respect to any such claim out of any source other than the Oil
Spill Liability Trust Fund.
"(3) ORDER IN WHICH UNPAID CLAIMS ARE TO BE PAID.—If at any
time the Oil Spill Liability Trust Fund has insufficient funds (or
is unable by reason of subsection (cX2)) to pay all of the claims
out of such Trust Fund at such time, such claims shall, to the
extent permitted under paragraph (1) and such subsection, be
paid in full in the order in which they were finally determined."
(b) CLERICAL AMENDMENT.—The table of sections for subchapter A v
of chapter 98 of such Code is amended by adding after the item
relating to section 9506 the following new item:
"Sec. 9507. Oil Spill Liability Trust Fund."
(c) EFFECTIVE DATE.— 26 use 9509.
(1) IN GENERAL.—The amendments made by this section shall
take effect on the commencement date (as defined in section
4611 of the Internal Revenue Code of 1954, £is amended by this Ante, pp. 1761,
part). ^^^^•
(2) COORDINATION WITH SUPERFUND REAUTHORIZATION.—If the
Superfund Amendments and Reauthorization Act of 1986 is Ante, p. 1613.
enacted—
(A) subsection (a) of this section shall be applied by
substituting "section 9508" for "section 9506", 100 STAT. 1962 PUBLIC LAW 99-509—OCT. 21, 1986
Ante, p. 1959. , (B) section 9507 of the Internal Revenue Code of 1954, as
added by this section, is hereby redesignated as section 9509
of such Code, and
(C) in lieu of the amendment made by subsection (b), the
table of sections for subchapter A of chapter 98 of such Code
is amended by adding after the item relating to section 9508
the following new item:
V' "Sec. 9509. Oil Spill Liability Trust Fund."
PART V—DENIAL OF CERTAIN TAX BENEFITS
WITH RESPECT TO ACTIVITIES IN CERTAIN
FOREIGN COUNTRIES
SEC. 8041. DENIAL OF CERTAIN TAX BENEFITS WITH RESPECT TO ACTIVI­
TIES IN CERTAIN FOREIGN COUNTRIES.
(a) DENIAL OF FOREIGN TAX CREDIT.—Section 901 of the Internal
Revenue Code of 1954 (relating to taxes of foreign countries and of
possessions of the United States), as amended by the Tax Reform
Post, p. 2095; Act of 1986, is amended by redesignating subsection (j) as subsection
26 use 901. (k) and by inserting after subsection (i) the following new subsection:
"0) DENIAL OF FOREIGN TAX CREDIT, ETC., WITH RESPECT TO CER­
TAIN FOREIGN COUNTRIES.—
"(1) IN GENERAL.—Notwithstanding any other provision of
this part—
"(A) no credit shall be allowed under subsection (a) for
any income, war profits, or excess profits taxes paid or
if'; accrued (or deemed paid under section 902 or 960) to any
' country if such taxes are with respect to income attrib­
utable to a period to which this subsection applies to such
country, and
"(B) subsections (a), (b), and (c) of section 904 and sections
902 and 960 shall be applied separately with respect to
income attributable to such a period from sources within
any country so identified.
"(2) COUNTRIES TO WHICH SUBSECTION APPLIES.—
"(A) IN GENERAL.—This subsection shall apply to any
foreign country—
' * "(i) the government of which the United States does
' '-' '' not recognize, unless such government is otherwise
• eligible to purchase defense articles or services under
22 use 2751 *- the Arms Export Control Act,
note. '._• – "(ii) with respect to which the United States has
severed diplomatic relations,
"(iii) with respect to which the United States has not
,,, severed diplomatic relations but does not conduct such
relations, or
Terrorism. ,. ^ "(iv) which the Secretary of State has, pursuant to
Ante, p. 874. * , ^ , section 6(j) of the Export Administration Act of 1979,
as amended, designated as a foreign country which
,1^^ repeatedly provides support for acts of international
J, ,., ' • terrorisms.
"(B) PERIOD FOR WHICH SUBSECTION APPLIES.—This subsec­
tion shall apply to any foreign country described in
subparagraph (A) during the period—
"(i) beginning on the later of— PUBLIC LAW 99-509—OCT. 21, 1986 100 STAT. 1963
"(I) January 1,1987, or
"(II) 6 months after such country becomes a
country described in subparagraph (A), and
"(ii) ending on the date the Secretary of State cer­
tifies to the Secretary of the Treasury that such coun­
try is no longer described in subparagraph (A).
'< . "(3) TAXES ALLOWED AS A DEDUCTION.—Section 275 shall not
apply to any tax which is not allowable as a credit under
subsection (a) by reason of this subsection.
"(4) REGULATIONS.—The Secretary shall prescribe such regu­
lations as may be necessary or appropriate to carry out the
purposes of this subsection, including regulations which treat
income paid through 1 or more entities as derived from a
foreign country to which this subsection applies if such income
was, without regard to such entities, derived from such
country." , . ^
(b) DENIAL OF DEFERRAL OF INCOME.—
(1) GENERAL RULE.—Section 952(a) of such Code (defining
subpart F income) is amended—
(A) by striking out "and" at the end of paragraph (3), by
striking out the period at the end of paragraph (4) and
. > inserting in lieu thereof ", and", and by inserting imme­
diately after paragraph (4) the following new paragraph:
"(5) the income of such corporation derived from any foreign
country during any period during which section 9010*) applies to
such foreign country.", and
(B) by adding at the end thereof the following sentence:
"For purposes of paragraph (5), the income described
therein shall be reduced, under regulations prescribed by
the Secretary, so as to take into account deductions (includ­
ing taxes) properly allocable to such income."
(2) INCOME DERIVED FROM FOREIGN COUNTRY.—Section 952 of
such Code (defining subpart F income), as amended by the Tax
Reform Act of 1986, is amended by adding at the end thereof the Post, p. 2095.
following new subsection:
"(d) INCOME DERIVED FROM FOREIGN COUNTRY.—The Secretary Regulations.
shall prescribe such regulations as may be necessary or appropriate
to carry out the purposes of subsection (aX5), including regulations
which treat income paid through 1 or more entities as derived from
a foreign country to which section 901(j) applies if such income was,
without regard to such entities, derived from such country."
(c) EFFECTIVE DATE.—The amendments made by this section shall 26 USC 901 note.
take effect on January 1,1987.
PART VI—APPROPRIATIONS FOR IRS
ENFORCEMENT
SEC. 8051. APPROPRIATIONS FOR IRS ENFORCEMENT.
For purposes of reconciliation, in order to provide for an accurate
estimate of revenue raised by increased appropriations for the
Internal Revenue Service, the enacted appropriations measure 't,'.
providing funding for the Internal Revenue Service for the fiscal
{rear ending September 30, 1987, will include the following funding
evels: for "Salaries and Expenses", $95,147,000; for "Processing Tax
Returns", $1,332,902,000; for "Examinations and Appeals",
$1,623,162,000; and for "Investigation, Collection, and Taxpayer ,. . 100 STAT. 1964 PUBLIC LAW 99-509—OCT. 21, 1986
Service", $1,196,581,000: Provided, That the allocation to the Senate
Committee on Appropriations pursuant to section 302(a) of the
Budget Act, as amended, under Senate Concurrent Resolution 120,
the concurrent resolution on the budget for fiscal year 1987, is
increased by $300,000,000 in both new budget authority and outlays.
PART VII—STUDY OF COMMUNICATION SERV­
ICES NOT SUBJECT TO FEDERAL EXCISE TAX
SEC. 8061. STUDY OF COMMUNICATION SERVICES NOT SUBJECT TO
FEDERAL EXCISE TAX.
(a) IN GENERAL.—The Secretary of the Treasury or his delegate
shall conduct a study of communication services which are exempt
from the tax imposed by section 4251 of the Internal Revenue Code
Post, p. 2095; of 1954 by reason of being a private communication service (as
26 use 4251. defined in section 4252(d) of such Code) or by reason of a specific
exemption from such tax under section 4253 of such Code. Such
study shall include an estimate of the reduction in tax revenues by
reason of each such exemption, shall describe the types of persons
which benefit from each such exemption, and a method under which
such tax could be extended to private communication services (as so
defined). In conducting such study, the Secretary of the Treasury or
his delegate shall consult with the Secretary of Commerce and the
Chairman of the Federal Communications Commission.
(b) REPORT.—The report of the study under subsection (a) shall be
submitted, not later than June 30, 1987, to the Committee on Ways
and Means of the House of Representatives and the Committee on
Finance of the Senate.
PART VIII—AMENDMENTS RELATED TO TAX
REFORM ACT OF 1986
SEC. 8071. TREATMENT OF CERTAIN TRUCKS, ETC.
Subsection (a) of section 204 of the Tax Reform Act of 1986
Post, p. 2095; (relating to additional transitional rules) is amended by adding at
26 use 168 note, the end thereof the following new paragraph:
Iowa. "(40) CERTAIN TRUCKS, ETC.—The amendments made by sec­
tion 201 shall not apply to trucks, tractor units, and trailers
I which a privately held truck leasing company headquartered in
Des Moines, Iowa, contracted to purchase in September 1985 but
only to the extent the aggregate reduction in Federal tax liabil­
ity by reason of the application of this paragraph does not
exceed $8,500,000."
SEC. 8072. APPLICATION OF AT-RISK RULES TO LOW-INCOME HOUSING
CREDIT.
(a) IN GENERAL.—Paragraph (1) of section 42(k) of the Internal
Revenue Code of 1986 (relating to low-income housing credit), as
Post, p. 2095; added by the Tax Reform Act of 1986, is amended by striking out
26 use 42. "subparagraph (DXivXD" and inserting in lieu thereof "subpara­
graphs (DXiiXII) and (DXivXD".
26 use 42 note. Ot>) EFFECTIVE DATE.—The amendment made by subsection (a)
shall take effect as if included in the amendment made by secti n
Post, p. 2095. 252(a) of the Tax Reform Act of 1986. PUBLIC LAW 99-509—OCT. 21, 1986 100 STAT. 1965
SEC. 8073. TREATMENT OF CERTAIN RURAL HOUSING FOR PURPOSES OF
TRANSITIONAL RULE FOR LOW-INCOME HOUSING.
(a) IN GENERAL.—Subsection (d) of section 502 of the Tax Reform 26 USC 469 note.
Act of 1986 (defining qualified investor) is amended by adding at the Post, p. 2095.
end thereof the following new paragraph:
"(4) SPECIAL RULE FOR CERTAIN RURAL HOUSING.—In the case
of any interest in a qualified low-income housing project
which—
"(A) is assisted under section 515 of the Housing Act of
1949 (relating to the Farmers' Home Administration Pro­
gram), and 42USC1485.
"(B) is located in a town with a population of less than
10,000 and which is not part of a metropolitan statistical
area,
paragraph (1)(B) shall be applied by substituting '35 percent' for
'50 percent' and subsection Ot))(l) shall be applied by substituting
'5th taxable year' for '6th taxable year'. The preceding sentence
shall not apply to any interest unless, on December 31, 1986, at
least one-half of the number of payments required with respect
to such interest remain to be paid."
(b) EFFECTIVE DATE.—The amendment made by subsection (a) 26 use 469 note,
shall take effect as if included in section 502 of the Tax Reform Act
of 1986 on the date of its enactment.
PART IX—COORDINATION WITH OTHER
PROVISIONS
SEC. 808L COORDINATION WITH OTHER PROVISIONS. 26 USC 1 note.
Nothing in any provision of this Act (other than this title) shall be Taxes,
construed as—
(1) imposing any tax (or exempting any person or property
from any tax),
(2) establishing any trust fund, or
(3) authorizing amounts to be expended from any trust fund.
Subtitle B—Customs Revenues
SEC. 8101. CUSTOMS USER FEES FOR THE PROCESSING OF MERCHANDISE
ENTRIES.
(a) AMOUNT OF FEE.—Subsection (a) of section 13031 of the Consoli­
dated Omnibus Budget Reconciliation Act of 1985 (19 U.S.C. 58c(a))
is amended by adding at the end thereof the following new
paragraphs:
"(9) For the processing of any merchandise (other than an
article that is—
"(A) provided for in schedule 8 of the Tariff Schedules of
the United States, 19 usc 1202
"(B) a product of an insular possession of the United note.
States, or
"(C) a product of any county listed in General Headnote
3(e)(vi) or (vii) of such Schedules)
that is formally entered, or withdrawn from warehouse for
consumption—
"(i) after November 30,1986, and
"(ii) before October 1,1987;
a fee in an amount equal to 0.22 percent ad valorem.
"(10) For the processing of any merchandise (other than an 100 STAT. 1966 PUBLIC LAW 99-509—OCT. 21, 1986
ir
Ante, p. 308.
19 use 1401a.
Federal
Register,
publication. article described in subparagraph (A), (B), or (C) of paragraph
(9)) that is formally entered, or withdrawn from warehouse for
consumption, during any fiscal year occurring after Septem­
ber 30, 1987; a fee in an amount equal to the lesser of—
"(A) 0.17 percent ad valorem, or
"(B) an ad valorem rate which the Secretary of the
Treasury estimates will provide a total amount of revenue
during the fiscal year equal to—
J' "(i) the total amount authorized to be appropriated
– . ' for such fiscal year to the United States Customs Serv­
ice for salaries and expenses incurred in conducting
•" – commercial operations during such fiscal year, reduced
by
"(ii) the excess, if any, of—
. . "(I) the total amount authorized to be appro-
ri.t.= priated for such salaries and expenses for such
• ' fiscal year, over
"(II) the total amount actually appropriated for
>. such salaries and expenses for such fiscal year;
except that if appropriations are not authorized for a fiscal year,
i;i the fee imposed under this paragraph with respect to that year
shall be in an amount equal to 0.17 percent ad valorem.".
(y) REDUCTION IN AMOUNT OF FEE.—Subsection (b) of section 13031
of the Consolidated Omnibus Budget Reconciliation Act of 1985 is
amended by adding at the end thereof the following new
paragraphs:
"(8)(A) The fee charged under subsection (a)(9) or (10) with respect
to the processing of merchandise shall—
"(i) be paid by the importer of record of the merchandise; and
"(ii) be based on the value of the merchandise as determined
under section 402 of the Tariff Act of 1930.
"(B)(i) By no later than the date that is 5 days after the date on
which any funds are appropriated to the United States Customs
Service for salaries or expenses incurred in conducting commercial
operations, the Secretary of the Treasury shall determine the ad
valorem rate of the fee charged under subsection (a)(10) and shall
publish the determination in the Federal Register. Such ad valorem
rate shall apply with respect to services provided for the processing
of entries, and withdrawals from warehouse, for consumption made
after the date that is 60 days after the date of such determination.
"(ii) No determination is required under clause (i) with respect to
an appropriation to the United States Customs Service if the funds
appropriated are available for less than 60 days.
"(9) The Secretary may reduce by an amount he considers equi­
table the fees charged under subsection (a) for the processing of
merchandise entries at facilities at which users reimburse the
United States Customs Service, pursuant to section 9701 of title 31,
United States Code, or section 236 of the Trade and Tariff Act of
1984 (19 U.S.C. 58b), for the services that it provides at the
facilities.".
(c) PROVISION OF CUSTOMS SERVICES.—(1) Subsection (e) of section
13031fe) of the Consolidated Omnibus Budget Reconciliation Act of
1985 is amended by adding at the end thereof the following new
paragraph:
"(4) Notwithstanding any other provision of law, during any
period when fees are authorized under subsection (a), no
charges, other than such fees, may be collected for— PUBLIC LAW 99-509—OCT. 21, 1986 100 STAT. 1967
c "(A) any cargo inspection, clearance, or other customs
service performed (regardless whether performed outside of
normal business hours on an overtime basis); or
e : "(B) any customs personnel provided;
in connection with the arrival or departure of any commercial
vessel, vehicle or aircraft, or its passengers, crew, and cargo, in
the United States.".
(2) Paragraph (2) of such subsection (e), as amended by section . >s<.
1893 of the Tax Reform Act of 1986, is amended by striking out
"Paragraph (1)" and inserting "This subsection".
(d) CUSTOMS USER FEE ACCOUNT.—Subsection (f) of section 13031 of
the Consolidated Omnibus Budget Reconciliation Act of 1985 (19
U.S.C. 58c(f)) is amended by adding at the end thereof the following
new paragraphs:
"(3) Except as provided in paragraph (2), all funds in the
Customs User Fee Account shall only be available, to the extent
provided for in appropriation Acts, for the salaries and expenses
of the United States Customs Service incurred in conducting
commercial operations.
* "(4) At the close of fiscal year 1988 and each even-numbered Reports,
fiscal year occurring thereafter, the Secretary of the Treasury
shall submit a report to the Committee on Ways and Means of
the House of Representatives and the Committee on Finance of
the Senate regarding how the fees imposed under subsection (a)
should be adjusted in order that the balance of the Customs
– User Fee Account approximates a zero balance. Before making
recommendations regarding any such adjustments, the Sec­
retary of the Treasury shall provide adequate opportunity for
public comment. The recommendations shall, as precisely as
possible, propose fees which reflect the actual costs to the
United States Government for the commercial services provided
by the United States Customs Service.".
(e) TERMINATION OF FEES.—Subsection (j) of section 13031 of the 19 USC 58c note.
Consolidated Omnibus Budget Reconciliation Act of 1985 is -^"^^^ P- 310.
amended—
(1) by striking out "provided in paragraph (2)" in paragraph
(1) and inserting in lieu thereof "otherwise provided in this
subsection"; and
(2) by adding at the end thereof the following new paragraph:
"(3) Fees may not be charged under subsection (a) after September
30,1989.".
Paragraph (3) shall not apply to any authorization made by title IX
of this Act.
SEC. 8102. AUTHORIZATION OF APPROPRIATIONS FOR FISCAL YEAR 1987
FOR THE UNITED STATES CUSTOMS SERVICE.
Section 301 of the Customs Procedural Reform and Simplification
Act of 1978 (19 U.S.C. 2075) is amended as follows: Ante, p. 305.
(1) Subsection (a) is amended—
(A) by inserting "(1)" after "(a)"; and
o+ -ft. (B) by adding at the end thereof the following new
paragraph:
"(2) The authorization of the appropriations for the United States
Customs Service for each fiscal year after fiscal year 1987 shall
specify— 100 STAT. 1968 PUBLIC LAW 99-509—OCT. 21, 1986
"(A) the amount authorized for the fiscal year for the salaries
and expenses of the Service in conducting commercial oper­
ations; and
"(B) the amount authorized for the fiscal year for the salaries
<;; and expenses of the Service for other than commercial oper­
ations."; and
(2) Subsection (b) is amended to read as follows:
Appropriation "(b)(1) There are authorized to be appropriated to the Department
authorization. of the Treasury not to exceed $1,001,180,000 for the salaries and
expenses of the United States Customs Service for fiscal year 1987;
of which—
"(A) $749,131,000 is for salaries and expenses to maintain
current operating levels, and includes such sums as may be
necessary to complete the testing of the prototype of the auto­
matic license plate reader program and to implement that
1 program;
"(B) $80,999,000 is for the salaries and expenses of additional
personnel to be used in carrying out drug enforcement activi­
ties; and
"(C) $171,050,000 is for the operation and maintenance of the
' air interdiction program of the Service, of which—
"(i) $93,500,000 is for additional aircraft, communications
enhancements, and command, control, communications,
and intelligence centers, and
"(ii) $350,000 is for a feasibility and application study for
a low-level radar detection system in collaboration with the
Los Alamos National Laboratory.
"(2) No part of any sum that is appropriated under the authority
of paragraph (1) may be used to close any port of entry at which,
during fiscal year 1986—
"(A) not less than 2,500 merchandise entries (including infor­
mal entries) were made; and
"(B) not less than $1,500,000 in customs revenues were
assessed.".
Subtitle C—Public Debt Limit and Related
Provisions
31 use 3101 SEC. 8201. TEMPORARY INCREASE IN PUBLIC DEBT LIMIT.
During the period beginning on the date of the enactment of this
Act and ending on May 15, 1987, the public debt limit set forth in
subsection (b) of section 3101 of title 31, United States Code, shall be
temporarily increased by $189,000,000,000.
SEC. 8202. RESTORATION OF LOST INTEREST TO CERTAIN TRUST FUNDS.
(a) GENERAL RULE.—The Secretary of the Treasury shall pay, from
amounts in the general fund of the Treasury not otherwise appro­
priated, to each qualified fund on the 1st normal interest payment
date after the date of the enactment of this Act an amount equal to
the interest payment shortfall for such fund.
(b) QUALIFIED FUND.—For purposes of this section, the term
"qualified fund" means any fund which is listed in Table III of the
Monthly Statement of Public Debt issued by the Department of the
Treasury for September 30, 1986, and which has an interest pay-PUBLIC LAW 99-509—OCT. 21, 1986 100 STAT. 1969
ment shortfall. Such term shall not include the Department of
Defense Military Retirement Fund.
(c) INTEREST PAYMENT SHORTFALX..—For purposes of this section,
the term "interest payment shortfall" means, with respect to any
fund, the reduction in the interest which would have been earned by
such fund during the period beginning with September 30, 1986, and
ending with the date of the enactment of this Act as the result of
noninvestments, redemptions, and disinvestments with respect to
such fund which occurred during such period and which would not
have occurred if H.J. Res. 668 (99th Congress, 2d Session), as passed
by the House of Representatives on June 26, 1986, had been enacted
into law on September 30, 1986. Such amount shall be reduced by
any payment to such fund under any other provision of law in
respect of such lost interest.
SEC. 8203. RESTORATION OF DEPARTMENT OF DEFENSE MILITARY
RETIREMENT FUND.
The Secretary of the Treasury shall immediately issue to the
Department of Defense Military Retirement Fund obligations under
chapter 31 of title 31, United States Code, which such Secretary, in 31 USC 3101 et
consultation with the Secretary of Defense, determines would have seq.
been issued to such fund on October 1, 1986, if H.J. Res. 668 (99th
CJongress, 2d session), as passed by the House of Representatives on
June 26, 1986, had been enacted into law on September 30, 1986.
Such obligations shall be market-based special obligations issued at
prices, including accrued interest, prevailing for such obligations on
October 1, 1986. Such obligations shall be issued as of October 1,
1986, and the fund shall earn interest on such obligations beginning
on October 1, 1986. Such obligations shall be substituted for obliga­
tions which are held by such fund on the date of the enactment of
this Act (and any uninvested balance on such date in such fund shall
be reduced) in a manner which will ensure that, after such substi­
tution (and reduction), the holdings of such fund will replicate to the
maximum extent practicable the holdings which would have been
held by such fund on such date if such H.J. Res. 668 had been
enacted into law on September 30,1986.
TITLE IX—INCOME SECURITY, MEDI-
CARE, MEDICAID, AND MATERNAL AND
CHILD HEALTH PROGRAMS
Subtitle A—OASDI provisions
Subtitle B—Provisions relating to public assistance
Subtitle C—Older Americans pension benefits
Subtitle D—Provisions relating to medicare
Subtitle E—Medicaid and matemeil and child health
Subtitle F—Provision relating to access to health care
Subtitle A—OASDI Provisions
SEC. 9001. ELIMINATION OF 3-PERCENT TRIGGER FOR COST-OF-LIVING
INCREASES.
(a) EuMiNATiON OF TRIGGER.—Section 215(iXlXB) of the Social
Security Act is amended by striking out "with respect to which the 42 USC 415.
applicable increase percentage is 3 percent or more" and inserting 100 STAT. 1970 PUBLIC LAW 99-509—OCT. 21, 1986
in lieu thereof "with respect to which the applicable increase
percentage is greater than zero".
(b) CONFORMING AMENDMENTS.— :-..-.\'c-
42 use 415. (1) IN CURRENT LAW.—Section 215(i) of such Act is further
amended—
.,… (A)(i) by striking out clause (i) in paragraph (2)(C) and
^'; redesignating clauses (ii) and (iii) of such paragraph as
clauses (i) and (ii), respectively; and
(ii) by striking out "under clause (ii)" in clause (ii) of such
: ^ paragraph as so redesignated and inserting in lieu thereof
*'; • "under clause (i)";
' (B) by inserting "and by section 9001 of the Omnibus
* Budget Reconciliation Act of 1986" after "Social Security
42 use 1305 Amendments of 1983" in paragraph (4); and
^ote. c| i (C) by striking out "because the wage increase percentage
was less than 3 percent" in parg^aph (5XA)(i) and inserting
.-;, in lieu thereof "because there w£is no wage increase
percentage greater than zero".
, ;< (2) IN APPLICABLE FORMER LAW.—Section 215(i) of such Act, as
in effect in December 1978 and applied in certain cases under
the provisions of such Act in effect after December 1978, is
amended—
(A) by striking out ", by not less than 3 per centum," in
paragraph (IXB); and
x^, ? (B) by striking out "(C)(i) Whenever" and all that follows
down through "(ii) Whenever" in paragraph (2)(C) and
inserting in lieu thereof "(C) Whenever".
(c) TECHNICAL AMENDMENT TO SMI PROGRAM.—Section
42 use I395r. 1839(f)(2XA) of such Act is amended to read as follows:
"(A) the monthly premium amount determined under subsec­
tion (aX2) for that January reduced by the amount (if any) by
42 use 402, 423. which the monthly benefit under section 202 or 223 for that
November, after the deduction of the premium (disregarding
subsection (b)) for that individual for that December and after
42 use 415. rounding under section 215(g), would exceed the monthly benefit
under section 202 or 223 for that December, after the deduction
of the monthly premium amount determined under subsection
(aX2) (disregarding subsection 0))) for that individual for that
January and after rounding under section 215(g), or".
42 use 415 note. (d) EFFECTIVE DATE.—(1) Except as provided in paragraphs (2) and
(3), the amendments made by this section shall apply with respect to
cost-of-living increases determined under section 215(i) of the Social
Security Act (as currently in effect, and as in effect in December
1978 and applied in certain cases under the provisions of such Act in
effect after December 1978) in 1986 and subsequent years.
(2) The amendments made by paragraphs (IXA) and (2XB) of
subsection (b) shall apply with respect to months after September
1986.
(3) The amendment made by subsection (c) shall apply with re­
spect to monthly premiums (under section 1839 of the Social Secu­
rity Act) for months after December 1986.
SEC. 9002. DEPOSITS OF SOCIAL SECURITY CONTRIBUTIONS BY STATE
AND LOCAL GOVERNMENT EMPLOYERS.
26 use 3126, (a) RETURNS AND PAYMENTS.—(1) Subchapter C of chapter 21 of
^^^^' „„«. the Internal Revenue Code of 1954 is amended by redesignating
post, p. 2095;
26 use 3121 et
seq. PUBLIC LAW 99-509—OCT. 21, 1986 100 STAT. 1971
section 3126 as section 3127, and by inserting after section 3125 the iiii qa ' t
following new section:
"SEC. 3126. RETURN AND PAYMENT BY GOVERNMENTAL EMPLOYER. Wages.
"If the employer is a State or political subdivision thereof, or an
agency or instrumentality of any one or more of the foregoing, the
return of the amount deducted and withheld upon any wages under
section 3101 and the amount of the tax imposed by section 3111 may
be made by any officer or employee of such State or political
subdivision or such agency or instrumentality, as the case may be,
having control of the payment of such wages, or appropriately
designated for that purpose.".
(2) The table of sections for subchapter C of chapter 21 of such '-' '
Code is amended by striking out the last item and inserting in lieu
thereof the following: –
"Sec. 3126. Return and payment by governmental employer. ' > % r'i >•
"Sec. 3127. Short title.".
(b) TREATMENT OF SERVICE UNDER SECTION 218 AGREEMENTS AS
EMPLOYMENT PERFORMED BY EMPLOYEES.—
(1) SERVICE TREATED AS EMPLOYMENT.—(A) Section 3121(b)(7) of
such Code is amended—
(i) by striking out "; or" at the end of subparagraph (C)
and inserting in lieu thereof a comma;
(ii) by striking out the semicolon at the end of subpara-
> graph (D) and inserting in lieu thereof ", or "; and
(iii) by adding after subparagraph (D) the following new
subparagraph:
"(E) service included under an agreement entered into
pursuant to section 218 of the Social Security Act;". Infra.
-t (B) Section 1402(b) of such Code is amended by striking out
"under an agreement entered into pursuant to the provisions of
section 218 of the Social Security Act (relating to coverage of
State employees), or" in the flush sentence immediately follow­
ing paragraph (2).
(2) INDIVIDUAL PERFORMING SERVICES TREATED AS EMPLOYEE.—
(A) Section 3121(d) of such Code is amended by redesignating
paragraph (3) as paragraph (4), and by inserting after paragraph
(2) the following new paragraph:
"(3) any individual who performs services that are included
'' under an agreement entered into pursuant to section 218 of the
Social Security Act; or".
(B) Section 3306(i) of such Code is amended by striking out
;, "subparagraphs (B) and (C) of paragraph (3)" and inserting in .,'./' '..
i lieu thereof "paragraph (3) and subparagraphs (B) and (C) of paragraph (4)'.
(c) CONFORMING AMENDMENTS IN SOCIAL SECURITY ACT.—(1) 42 use 418.
Subsections (e), (h), (i), (j), (q), (r), (s), (t), and (w) of section 218 of the
Social Security Act are repealed; and subsections (f), (g), (k), (1), (m),
(n), (o), (p), and (u) of such section are redesignated as subsections (e),
(f), (g), (h), (i), (j), (k), (1), and (m), respectively.
(2XA) Section 205(c)(lXDXi) of such Act is amended by inserting 42 USC 405.
"(as in effect prior to December 31, 1986)" after "section 218(e) .
(B) Section 205(cX5XFXiii) of such Act is amended—
(i) by inserting "(as in effect prior to December 31, 1986)"
after "section 218"; and > -/:
^- (ii) by inserting "(as so in effect)" after "subsection (q) of such ' " "
section". 100 STAT. 1972 PUBLIC LAW 99-509—OCT. 21, 1986
42 use 418.
42 use 424a.
Wjiges.
42 use 418 note.
26 use 3101,
3111.
26 use 3402. (C) Section 218(d)(6) of such Act is amended—
(i) by striking out "subsection (f)" in subparagraph (A) and
inserting in lieu thereof "subsection (e)"; and
(ii) by striking out "subsection (f)(1)" in subparagraph (F) and
inserting in Heu thereof "subsection (e)(1)".
(D) Section 218(d)(8)(D) of such Act is amended by striking out
"subsection (p)" and inserting in lieu thereof "subsection (1)".
(E) Section 218(e)(1) of such Act (as redesignated by paragraph (1)
of this subsection) is amended by striking out "Except as provided in
subsection (e)(2), any agreement" and inserting in lieu thereof "Any
agreement".
(F) Section 224(a)(2)(B) of such Act is amended by striking out
"section 218(k)" and inserting in lieu thereof "section 218(g)".
(d) EFFECTIVE DATE.—The amendments made by this section are
effective with respect to payments due with respect to wages paid
after December 31, 1986, including wages paid after such date by a
State (or political subdivision thereof) that modified its agreement
pursuant to the provisions of section 218(eX2) of the Social Security
Act prior to the date of the enactment of this Act; except that in
cases where, in accordance with the currently applicable schedule,
deposits of taxes due under an agreement entered into pursuant to
section 218 of the Social Security Act would be required within 3
days after the close of an eighth-monthly period, such 3-day require­
ment shall be changed to a 7-day requirement for wages paid prior
to October 1, 1987, and to a 5-day requirement for wages paid after
September 30, 1987, and prior to October 1, 1988. For wages paid
prior to Octoljer 1, 1988, the deposit schedule for taxes imposed
under sections 3101 and 3111 shall be determined separately from
the deposit schedule for taxes withheld under section 3402 if the
taxes imposed under sections 3101 and 3111 are due with respect to
service included under an agreement entered into pursuant to
section 218 of the Social Security Act.
Subtitle B—Provisions Relating to Public
^ Assistance
State and local
governments.
42 use 1520b-7.
42 use 1301
note.
Ante, p. 219.
State and local
governments.
42 use 603,
1396b. SEC. 9101. TARGETING UNDER INCOME AND ELIGIBILITY VERIFICATION
SYSTEM.
Section 1137(a)(4)(C) of the Social Security Act is amended by
inserting after "payments" the following: ", and no State shall be
required to use such information to verify the eligibility of all
recipients".
SEC. 9102. ANNUAL CALCULATION OF FEDERAL PERCENTAGE FOR AFDC
PURPOSES.
Section 9528(c) of the Consolidated Omnibus Budget Reconcili­
ation Act of 1985 (as added by section 9421(a) of this Act) is amended
(effective as provided in section 9421(b))—
(1) by striking out "payment to a State under section 1903"
and inserting in lieu thereof "payments to States under sections
403 and 1903"; and
(2) by inserting "with respect to either such section" after
"shall not apply to a State". PUBLIC LAW 99-509—OCT. 21, 1986 100 STAT. 1973
SEC. 9103. REQUIREMENT OF STATUTORILY PRESCRIBED PROCEDURES
TO PROHIBIT RETROACTIVE MODIFICATION OF CHILD SUP-
PORT ARREARAGES.
(a) IN GENERAL.—Section 466(a) of the Social Security Act is
amended by inserting immediately after paragraph (8) the following
new paragraph:
"(9) Procedures which require that any payment or install­
ment of support under any child support order, whether ordered
; through the State judicial system or through the expedited
f processes required by paragraph (2), is (on and after the date it
is due)—
"(A) a judgment by operation of law, with the full force,
effect, and attributes of a judgment of the State, including
the ability to be enforced,
"(B) entitled as a judgment to full faith and credit in such
State and in any other State, and
"(C) not subject to retroactive modification by such State
or by any other State;
except that such procedures may permit modification with re­
spect to any period during which there is pending a petition for
modification, but only from the date that notice of such petition
^ has been given, either directly or through the appropriate
agent, to the obligee or (where the obligee is the petitioner) to
the obligor.".
(b) EFFECTIVE DATE.—(1) Except as provided in paragraph (2), the
amendment made by subsection (a) shall become effective on the
date of the enactment of this Act.
(2) In the case of a State with respect to which the Secretary of
Health and Human Services has determined that State legislation is
required in order to conform the State plan approved under part D
of title IV of the Social Security Act to the requirements imposed by
the amendment made by subsection (a), the State plan shall not be
regarded as failing to comply with the requirements of such part
solely by reason of its failure to meet the requirements imposed by
such amendment prior to the beginning of the fourth month begin­
ning after the end of the first session of the State legislature which
ends on or after the date of the enactment of this Act. For purposes
of the preceding sentence, the term "session" means a regular,
special, budget, or other session of a State legislature.
Subtitle C—Older Americans Pension Benefits
SEC. 920L PROHIBITION AGAINST DISCRIMINATION ON THE BASIS OF
AGE IN EMPLOYEE PENSION BENEFIT PLANS.
Section 4 of the Age Discrimination in Employment Act of 1967
(29 U.S.C 623) is amended by adding at the end the following new
subsection:
"(iXD Except as otherwise provided in this subsection, it shall be
unlawful for an employer, an employment agency, a labor organiza­
tion, or any combination thereof to establish or maintain an em­
ployee pension benefit plan which requires or permits—
"(A) in the case of a defined benefit plan, the cessation of an
employee's benefit accrual, or the reduction of the rate of an
employee's benefit accrual, because of age, or State and local
governments.
42 use 666.
42 use 666 note.
State and local
governments.
42 use 651.
71-194 0 – 89 – 7 : QL. 3 Part3 100 STAT. 1974 PUBLIC LAW 99-509—OCT. 21, 1986
"(B) in the case of a defined contribution plan, the cessation of
allocations to an employee's account, or the reduction of the
rate at which amounts are allocated to an employee's account,
because of age.
"(2) Nothing in this section shall be construed to prohibit an
employer, employment agency, or labor organization from observing
any provision of an employee pension benefit plan to the extent that
such provision imposes (without regard to age) a limitation on the
amount of benefits that the plan provides or a limitation on the
number of years of service or years of participation which are taken
into account for purposes of determining benefit accrual under the
plan.
"(3) In the case of any employee who, as of the end of any plan
year under a defined benefit plan, has attained normal retirement
age under such plan—
"(A) if distribution of benefits under such plan with respect to
£ such employee has commenced as of the end of such plan year,
then any requirement of this subsection for continued accrual of
benefits under such plan with respect to such employee during
• such plan year shall be treated as satisfied to the extent of the
actuarial equivalent of in-service distribution of benefits, and
"(B) if distribution of benefits under such plan with respect to
such employee has not commenced as of the end of such year in
accordance with section 206(aX3) of the Employee Retirement
29 use 1056. Income Security Act of 1974 and section 401(aX14XC) of the
Post, p. 2095. Internal Revenue Code of 1986, and the payment of benefits
under such plan with respect to such employee is not suspended
during such plan year pursuant to section 203(aX3XB) of the
29 use 1053. , Employee Retirement Income Security Act of 1974 or section
411(aX3)(B) of the Internal Revenue Code of 1986, then any
, • ; ^ requirement of this subsection for continued accrual of benefits
under such plan with respect to such employee during such plan
' year shall be treated as satisfied to the extent of any adjustment
in the benefit payable under the plan during such plan year
attributable to the delay in the distribution of benefits after the
attainment of normal retirement age.
Regulations. The provisions of this paragraph shall apply in accordance with
regulations of the Secretary of the Treasury, Such regulations shall
provide for the application of the preceding provisions of this para­
graph to all employee pension benefit plans subject to this subsec­
tion and may provide for the application of such provisions, in the
case of any such employee, with respect to any period of time within
a plan year.
"(4) Compliance with the requirements of this subsection with
respect to an employee pension benefit plan shall constitute compli­
ance with the requirements of this section relating to benefit
accrual under such plan.
"(5) Paragraph (1) shall not apply with respect to any employee
who is a highly compensated employee (within the meaning of
section 414(q) of the Internal Revenue Code of 1986) to the extent
provided in regulations prescribed by the Secretary of the Treasury
for purposes of precluding discrimination in favor of highly com­
pensated employees within the meaning of subchapter D of chapter
1 of the Internal Revenue Code of 1986.
"(6) A plan shall not be treated as failing to meet the require­
ments of paragraph (1) solely because the subsidized portion of any PUBLIC LAW 99-509—OCT. 21, 1986 100 STAT. 1975
early retirement benefit is disregarded in determining benefit
accruals.
"(7) Any regulations prescribed by the Secretary of the Treasury
pursuant to clause (v) of section 411(bXlXH) of the Internal Revenue
Code of 1986 and subparagraphs (C) and (D) of section 411(bX2) of r
such Code shall apply with respect to the requirements of this
subsection in the same manner and to the same extent as such ?; :r •. T
regulations apply with respect to the requirements of such sections
411(bXlXH)and411(bX2).
"(8) A plan shall not be treated as failing to meet the require­
ments of this section solely because such plan provides a normal
retirement age described in section 3(24XB) of the Employee Retire­
ment Income Security Act of 1974 and section 411(aX8XB) of the 29 USC 1002.
Internal Revenue Code of 1986. Post, p. 2095.
"(9) For purposes of this subsection—
"(A) The terms 'employee pension benefit plan', 'defined bene­
fit plan', 'defined contribution plan', and 'normal retirement
age' have the meanings provided such terms in section 3 of the
Employee Retirement Income Security Act of 1974 (29 U.S.C.
1002).
"(B) The term 'compensation' has the meaning provided by , .
section 414(s) of the Internal Revenue Code of 1986.".
SEC. 9202. BENEFIT ACCRUAL BEYOND NORMAL RETIREMENT AGE. i
(a) ERISA AMENDMENTS.—
(1) IN GENERAL.—Subsection (a) of section 204 of the Employee
:; Retirement Income Security Act of 1974 (29 U.S.C. 1054(a)) is
amended to read as follows:
"(a) Each pension plan shall satisfy the requirements of subsec­
tion (bX3), and— '
"(1) in the case of a defined benefit plan, shall satisfy the
requirements of subsection (bXD; and
" "(2) in the case of a defined contribution plan, shall satisfy the
requirements of subsection (bX2).".
^, (2) DEFINED BENEFIT PLANS.—Section 204(bXl) of such Act is ^^,,,. .. ,.
amended by adding at the end thereof the following new
subparagraph:
"(HXi) Notwithstanding the preceding subparagraphs, a defined
benefit plan shall be treated as not satisfying the requirements of
this paragraph if, under the plan, an employee's benefit accrual is J
ceased, or the rate of an employee's benefit accrual is reduced,
because of the attainment of any age.
"(ii) A plan shall not be treated as failing to meet the require­
ments of this subparagraph solely because the plan imposes (without
regard to age) a limitation on the amount of benefits that the plan
provides or a limitation on the number of years of service or years of
participation which are taken into account for purposes of determin­
ing benefit accrual under the plan.
"(iii) In the case of any employee who, as of the end of any plan
year under a defined benefit plan, has attained normal retirement
age under such plan—
"(I) if distribution of benefits under such plan with respect to
such employee has commenced as of the end of such plan year,
^. then any requirement of this subparagraph for continued ac-
^p crual of benefits under such plan with respect to such employee
during such plan year shall be treated as satisfied to the extent 100 STAT. 1976 PUBLIC LAW 99-509—OCT. 21, 1986
of the actuarial equivalent of in-service distribution of benefits,
and
"(II) if distribution of benefits under such plan with respect to
such employee has not commenced as of the end of such year in
29 use 1056. accordance with section 206(a)(3), and the payment of benefits
under such plan with respect to such employee is not suspended
29 use 1053. during such plan year pursuant to section 203(a)(3XB), then any
requirement of this subparagraph for continued accrual of bene­
fits under such plan with respect to such employee during such
– plan year shall be treated as satisfied to the extent of any
adjustment in the benefit payable under the plan during such
plan year attributable to the delay in the distribution of bene­
fits after the attainment of normal retirement age.
' The preceding provisions of this clause shall apply in accordance
with regulations of the Secretary of the Treasury. Such regulations
may provide for the application of the preceding provisions of this
clause, in the case of any such employee, with respect to any period
of time within a plan year.
"(iv) Clause (i) shall not apply with respect to any employee who is
a highly compensated employee (within the meaning of section
Post, p. 2095. 414(q) of the Internal Revenue Code of 1986) to the extent provided
in regulations prescribed by the Secretary of the Treasury for
purposes of precluding discrimination in favor of highly com­
pensated employees within the meaning of subchapter D of chapter
1 of the Internal Revenue Code of 1986.
"(v) A plan shall not be treated as failing to meet the require­
ments of clause (i) solely because the subsidized portion of any early
retirement benefit is disregarded in determining benefit accruals.
Regulations. "(vi) Any regulations prescribed by the Secretary of the Treasury
pursuant to clause (v) of section 411(bXl)(H) of the Internal Revenue
Code of 1986 shall apply with respect to the requirements of this
subparagraph in the same manner and to the same extent as such
regulations apply with respect to the requirements of such section
411(b)(1)(H).".
29 use 1054. (3) DEFINED CONTRIBUTION PLANS.—Section 204(b) of such Act
is further amended—
(A) by redesignating paragraphs (2) and (3) as paragraphs
(3) and (4), respectively; and
(B) by inserting after paragraph (1) the following new
paragraph:
"(2)(A) A defined contribution plan satisfies the requirements of
this paragraph if, under the plan, allocations to the employee's
account are not ceased, and the rate at which amounts are allocated
to the employee's account is not reduced, because of the attainment
of any age.
"(B) Subparagraph (A) shall not apply with respect to any em­
ployee who is a highly compensated employee (within the meaning
of section 414(q) of the Internal Revenue Code of 1986) to the extent
provided in regulations prescribed by the Secretary of the Treasury
for purposes of precluding discrimination in favor of highly com­
pensated employees within the meaning of subchapter D of chapter
1 of the Internal Revenue Code of 1986.
"(C) A plan shall not be treated as failing to meet the require­
ments of subparagraph (A) solely because the subsidized portion of
any early retirement benefit is disregarded in determining benefit
accrueds. J^**-PUBLIC LAW 99-509—OCT. 21, 1986 100 STAT. 1977
"(D) Any regulations prescribed by the Secretary of the Treasury Regulations,
pursuant to subparagraphs (C) and (D) of section 411(b)(2) of the
Internal Revenue Code of 1986 shall apply with respect to the
requirements of this paragraph in the same manner and to the same
extent as such regulations apply with respect to the requirements of
such section 411(b)(2).".
(b) IRC AMENDMENTS.—
(1) DEFINED BENEFIT PLANS.—Section 411(b)(1) of the Internal
Revenue Code of 1986 (relating to accrued benefit requirements) 26 USC 411.
;., is amended—
(A) by striking out "GENERAL RULES.—" and inserting in
lieu thereof "DEFINED BENEFIT PLANS.—"; AND
(B) by adding at the end thereof the following new
subparagraph:
"(H) CONTINUED ACCRUAL BEYOND NORMAL RETIREMENT
AGE.—
"(i) IN GENERAL.—Notwithstanding the preceding
subparagraphs, a defined benefit plan shall be treated
as not satisfying the requirements of this paragraph if,
under the plan, an employee's benefit accrual is ceased,
or the rate of an employee's benefit accrual is reduced, ^^
because of the attainment of any age.
"(ii) CERTAIN LIMITATIONS PERMITTED.—A plan shall
not be treated as failing to meet the requirements of
this subparagraph solely because the plan imposes
(without regard to age) a limitation on the amount of
benefits that the plan provides or a limitation on the
number of years of service or years of participation
which are taken into account for purposes of determin-
^ ing benefit accrual under the plan.
"(iii) ADJUSTMENTS UNDER PLAN FOR DELAYED RETIRE­
MENT TAKEN INTO ACCOUNT.—In the case of any em­
ployee who, as of the end of any plan year under a
defined benefit plan, has attained normal retirement
'''' age under such plan—
"(I) if distribution of benefits under such plan
with respect to such employee has commenced as
'' ' of the end of such plan year, then any requirement
of this subparagraph for continued accrual of bene-
• • fits under such plan with respect to such employee
^' during such plan year shall be treated as satisfied
to the extent of the actuarial equivalent of in-
service distribution of benefits, and
"(II) if distribution of benefits under such plan
with respect to such employee has not commenced
as of the end of such year in accordance with
"''* • section 401(a)(14)(C), and the payment of benefits
under such plan with respect to such employee is
not suspended during such plan year pursuant to
subsection (a)(3)(B), then any requirement of this
subparagraph for continued accrual of benefits
under such plan with respect to such employee
during such plan year shall be treated as satisfied
to the extent of any adjustment in the benefit
payable under the plan during such plan year
attributable to the delay in the distribution of 100 STAT. 1978 PUBLIC LAW 99-509—OCT. 21, 1986
' benefits after the attainment of normal retirement
. ••]'- ••• ' '- ''^ age.
' ^ • The preceding provisions of this clause shall apply in
accordance with regulations of the Secretary. Such
'• ' ' regulations may provide for the application of the
preceding provisions of this clause, in the case of any
such employee, with respect to any period of time
• ^ •=* within a plan year.
• ' "(iv) DISREGARD OF SUBSIDIZED PORTION OF EARLY
RETIREMENT BENEFIT.—A plan shall not be treated as
failing to meet the requirements of clause (i) solely
because the subsidized portion of any early retirement
' ''' " benefit is disregarded in determining benefit accruals.
Regulations. "(v) COORDINATION WITH OTHER REQUIREMENTS.—The
Secretary shall provide by regulation for the coordina­
tion of the requirements of this subparagraph with the
j:^ '/ ' requirements of subsection (a), sections 404, 410, and
415, and the provisions of this subchapter preclud­
ing discrimination in favor of highly compensated
employees.".
Ante, p. 1977. ~ (2) DEFINED CONTRIBUTION PLANS.—Section 411(b) of such Code
is further amended—
(A) by redesignating paragraphs (2) and (3) as paragraphs
(3) and (4), respectively; and
"(B) by inserting after paragraph (1) the following new
paragraph:
"(2) DEFINED CONTRIBUTION PLANS.—
"(A) IN GENERAL.—A defined contribution plan satisfies
the requirements of this paragraph if, under the plan,
.;;,-i – allocations to the employee's account are not ceased, and
. ', the rate at which amounts are allocated to the employee's
g, .^ account is not reduced, because of the attainment of any
, '. .- age.
"(B) DISREGARD OF SUBSIDIZED PORTION OF EARLY RETIRE­
MENT BENEFIT.—A plan shall not be treated as failing to
meet the requirements of subparagraph (A) solely because
the subsidized portion of any early retirement benefit is
disregarded in determining benefit accruals.
Regulations. ? "(C) APPLICATION TO TARGET BENEFIT PLANS.—The SeC-
!;/, retary shall provide by regulation for the application of the
rtl i'-^ requirements of this paragraph to target benefit plans.
"(D) COORDINATION WITH OTHER REQUIREMENTS.—The Sec-
u-yj^ ill retary may provide by regulation for the coordination of the
requirements of this subparagraph with the requirements
of subsection (a), sections 404, 410, and 415, and the provi­
sions of this subchapter precluding discrimination in favor
r •:«- of highly compensated employees.".
(3) CONFORMING AMENDMENT.—The first sentence of section
411(a) of such Code (relating to minimum vesting standards) is
amended by striking out "paragraph (2) of subsection (b), and"
and all that follows through the end thereof and inserting in
lieu thereof "subsection (b)(3), and also satisfies, in the case of a
defined benefit plan, the requirements of subsection (b)(1) and,
& in the case of a defined contribution plan, the requirements of
^ii subsection (b)(2).". [seiiJ-^ PUBLIC LAW 99-509—OCT. 21, 1986 100 STAT. 1979
SEC. 9203. TREATMENT OF INDIVIDUALS HIRED AT AGES NEAR RETIRE­
MENT AGE.
(a) REPEAL OF PROVISIONS PERMITTING CERTAIN PLANS TO EXCLUDE
OLDER EMPLOYEES FROM PLAN PARTICIPATION ON THE BASIS OF
AGE.—
(1) ERISA AMENDMENT.—Section 202(a)(2) of the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 1052(a)(2)) is
amended by striking out "unless—" and all that follows and
'' inserting in lieu thereof a period.
(2) IRC AMENDMENT.—Section 410(a)(2) of the Internal Reve­
nue Code of 1986 (relating to maximum age conditions) is Post, p. 2095;
;' amended by striking out "unless—" and all that follows and 26 USC 410.
inserting in lieu thereof a period.
(b) DELAYED NORMAL RETIREMENT AGE FOR INDIVIDUALS COMMENC­
ING PLAN PARTICIPATION WITHIN 5 YEARS OF ATTAINING NORMAL
RETIREMENT AGE UNDER THE PLAN.—
(1) ERISA AMENDMENT.—Subparagraph (B) of section 3(24) of
the Employee Retirement Income Security Act of 1974 (29
^ U.S.C. 1002(24)(B)) is amended to read as follows:
"(B) the latest of—
"(i) the time a plan participant attains age 65,
"(ii) in the case of a plan participant who commences
participation in the plan within 5 years before attaining
normal retirement age under the plan, the 5th anniversary
r of the time the plan participant commences participation in
the plan, or
J "(iii) in the case of a plan participant not described in
* clause (ii), the 10th anniversary of the time the plan partici­
pant commences participation in the plan.",
(2) IRC AMENDMENT.—Subparagraph (B) of section 411(a)(8) of
the Internal Revenue Code of 1986 (relating to normal retire­
ment age) is amended to read as follows: 26 USC 411.
"(B) the latest of—
"(i) the time a plan participant attains age 65,
* "(ii) in the case of a plan participant who commences
participation in the plan within 5 years before attain­
ing normal retirement age under the plan, the 5th
anniversary of the time the plan participant com­
mences participation in the plan, or
':»!-* "(iii) in the case of a plan participant not described in
clause (ii), the 10th anniversary of the time the plan
participant commences participation in the plan.".
SEC. 9204. EFFECTIVE DATE; REGULATIONS. 29 USC 623 note.
(a) APPUCABIUTY TO EMPLOYEES WITH SERVICE AFTER 1988.—
' (1) IN GENERAL.—The amendments made by sections 9201 and
9202 shall apply only with respect to plan years beginning on or
;. after January 1,1988, and only to employees who have 1 hour of
service in any plan year to which such amendments apply.
(2) SPECIAL RULE FOR COLLECTIVELY BARGAINED PLANS.—In the
•c case of a plan maintained pursuant to 1 or more collective
bargaining agreements between employee representatives and 1
or more employers ratified before March 1, 1986, paragraph (1)
shall be applied to benefits pursuant to, and individuals covered
.3 by, any such agreement by substituting for "January 1, 1988"
the date of the commencement of the first plan year beginning
on or after the earlier of— 100 STAT. 1980 PUBLIC LAW 99-509—OCT. 21, 1986
(A) the later of—
(i) January 1,1988, or
i (ii) the date on which the last of such collective
, .- bargaining agreements terminate (determined without
regard to any extension thereof after February 28,
1986), or
(B) January 1,1990.
(b) APPLICABILITY OF AMENDMENTS RELATING TO NORMAL RETIRE­
MENT AGE.—The amendments made by section 9203 shall apply only
with respect to plan years beginning on or after January 1, 1988,
^ ; ,..- and only with respect to service performed on or after such date.
/ i?' (c) PLAN AMENDMENTS.—If any amendment made by this subtitle
requires an amendment to any plan, such plan amendment shall not
be required to be made before the first plan year beginning on or
after January 1,1989, if—
(1) during the period after such amendment takes effect and
before such first plan year, the plan is operated in accordance
with the requirements of such amendment, and
(2) such plan amendment applies retroactively to the period
after such amendment takes effect and such first plan year.
A pension plan shall not be treated as failing to provide definitely
determinable benefits or contributions, or to be operated in accord­
ance with the provisions of the plan, merely because it operates in
accordance with this subsection.
Regulations. (d) INTERAGENCY COORDINATION.—The regulations and rulings
issued by the Secretary of Labor, the regulations and rulings issued
by the Secretary of the Treasury, and the regulations and rulings
issued by the Equal Employment Opportunity Commission pursuant
to the amendments made by this subtitle shall each be consistent
with the others. The Secretary of Labor, the Secretary of the
Treasury, and the Equal Employment Opportunity Commission
r- ijryi'^ ^ shall each consult with the others to the extent necessary to meet
the requirements of the preceding sentence.
(e) FINAL REGULATIONS.—The Secretary of Labor, the Secretary of
the Treasury, and the Equal Employment Opportunity Commission
shall each issue before February 1, 1988, such final regulations as
may be necessary to carry out the amendments made by this
subtitle.
Subtitle D—Provisions Relating to Medicare
TABLE OF CONTENTS
PART 1—PROVISIONS RELATING TO MEDICARE PART A ONLY
Sec. 9301. Changes in inpatient hospital deductible.
Sec. 9302. Applicable percentage increase in payments for inpatient hospital
services.
Sec. 9303. Payments for hospital capital-related costs.
Sec. 9304. Coverage of hospitals in Puerto Rico under a DRG prospective payment
system.
Sec. 9305. Improving quality of care with respect to part A services.
Sec. 9306. Payments to large rural hospitals serving a disproportionate share of
low-income patients.
Sec. 9307. Technical amendments and miscellaneous provisions relating to part A.
PART 2—PROVISIONS RELATING TO PARTS A AND B
Sec. 9311. Periodic interim payment system (PIP) for DRG hospitals and prompt
payment for medicare providers.
Sec. 9312. Health maintenance organizations and competitive medical plans. PUBLIC LAW 99-509—OCT. 21, 1986 100 STAT. 1981
Sec. 9313. Provisions relating to improvement of quality of care.
Sec. 9314. Direct costs of graduate medical education.
Sec. 9315. Payments for home health services.
Sec. 9316. Establishment of patient outcome assessment research program.
Sec. 9317. Improvements in civil monetary penalty and exclusion provisions.
Sec. 9318. Hospital protocols for organ procurement and standards for organ pro­
curement agencies.
Sec. 9319. Medicare as secondary payer; coverage requirements for certain other
payers.
Sec. 9320. Payment for services of certified registered nurse anesthetists.
Sec. 9321. Technical amendments and miscellaneous provisions relating to parts A
andB.
PART 3—PROVISIONS RELATING TO MEDICARE PART B
Sec. 9331. Payment for physicians' services. ,:,•>.
Sec. 9332. Incentives for physician participation. ^•
Sec. 9333. Limits on reasonable charges.
Sec. 9334. Payment for cataract surgical procedures.
Sec. 9335. Payment rates for renal services and improvements in administration of
end stage renal disease networks and program.
Sec. 9336. Vision care.
Sec. 9337. Occupational therapy services. ;»
Sec. 9338. Services of a physician assistant.
Sec. 9339. Payment for clinical diagnostic laboratory tests.
Sec. 9340. Payment for parenteral and enteral nutrition supplies and equipment.
Sec. 9341. Changing medicare appeal rights.
Sec. 9342. Alzheimer's disease demonstration projects.
Sec. 9343. Payments for ambulatory surgery.
Sec. 9344. Technical amendments and miscellaneous provisions relating to part B.
PART 4—IMPROVED REVIEW OF QUAUTY BY PEER REVIEW ORGANIZATIONS
Sec. 9351. PRO review of hospital denial notices.
Sec. 9352. PRO review of inpatient hospital services and early readmission cases.
Sec. 9353. PRO review of quality of care.
PART l—PROVISIONS RELATING TO MEDICARE
PART A ONLY
SEC. 9301. CHANGES IN INPATIENT HOSPITAL DEDUCTIBLE.
(a) IN GENERAL.—Section 1813(b) of the Social Security Act (42
U.S.C. 1395e(b)) is amended to read as follows:
"(b)(1) The inpatient hospital deductible for 1987 shall be $520.
The inpatient hospital deductible for any succeeding year shall be
an amount equal to the inpatient hospital deductible for the precede
ing calendar year, changed by the applicable percentage increase (as
defined in section 1886(b)(3)(B)) which is applied under section Ante, p. 153.
1886(dX3XA) for discharges in the fiscal year that begins on Octo- Post, p. 1983.
ber 1 of such preceding calendar year, and adjusted to reflect changes
in real case mix (determined on the basis of the most recent case mix
data available). Any amount determined under the preceding sen­
tence which is not a multiple of $4 shall be rounded to the nearest
multiple of $4 (or, if it is midway between two multiples of $4, to the
next higher multiple of $4).
"(2) The Secretary shall promulgate the inpatient hospital deduct­
ible and all coinsurance amounts under this section between
September 1 and September 15 of the year preceding the year to
which they will apply. ' '
"(3) The inpatient hospital deductible for a year shall apply to—
"(A) the deduction under the first sentence of subsection (aXD '*
for the year in which the first day of inpatient hospital services
occurs in a spell of illness, and 100 STAT. 1982 PUBLIC LAW 99-509—OCT. 21, 1986
42 use 1395e
note.
42 use 1395c.
42 use 1395e
note.
Ante, p. 15A; post,
p. 1983.
42 use 1395WW
note.
42 use 1395WW
note.
42 use 1395WW
note. "(B) to the coinsurance amounts under subsection (a) for
inpatient hospital services and post-hospital extended care serv­
ices furnished in that year.".
(b) EFFECTIVE DATE.—The amendment made by subsection (a)
shall apply to inpatient hospital services and post-hospital extended
care services furnished on or after January 1, 1987, and to the
monthly premium (under part A of title XVIII of the Social Security
Act) for months beginning with January 1987.
(c) PROMULGATION OF NEW DEDUCTIBLE.—The Secretary of Health
and Human Services shall provide, within 30 days after the date of
the enactment of this Act, for the publication of the inpatient
hospital deductible, the coinsurance amounts for inpatient hospital
services and post-hospital extended care services and the monthly
part A premiums for 1987, as modified under the amendment made
by subsection (a).
SEC. 9302. APPLICABLE PERCENTAGE INCREASE IN PAYMENTS FOR IN-
PATIENT HOSPITAL SERVICES.
(a) APPLICABLE PERCENTAGE INCREASE.— i .
(1) IN GENERAL.—Subclause (II) of section 1886a))(3)(B)(i) of the
Social Security Act (42 U.S.C. 1395ww(b)(3)(B)(i)) is amended to
read as follows:
"(II) for fiscal year 1987,1.15 percent, and for fiscal year 1988,
the market basket percentage increase (as defined in clause (ii))
minus 2.0 percentage points, and".
(2) CONFORMING AMENDMENTS.—(A) Section 1886(d)(3)(A) of
such Act is amended by striking "and 1986" and inserting
", 1986, 1987, and 1988".
(B) Section 1886(e)(4) of such Act is amended by striking
"determine for each fiscal year (beginning with tiscal year
c 1987)" and inserting "recommend for fiscal year 1988 an appro­
priate change factor for inpatient hospital services for dis­
charges in that fiscal year and shall determine for each subse­
quent fiscal year".
, , (C) Section 1866(e)(5) of such Act is amended by inserting
'' "recommendation or" before "determination" each place it
,^, appears.
(3) EFFECTIVE DATE.—The amendment made by paragraph (1)
shall apply to cost reporting periods beginning on or after
October 1,1986 and, for purposes of section 1886(d) of the Social
*^ Security Act, for cost reporting periods beginning and dis­
charges occurring on or after October 1,1986.
(b) SEPARATE OUTUER OFFSETS FOR URBAN AND RURAL
HOSPITALS.—
(1) IN GENERAL.—Section 1886(d)(3)(B) of such Act is
amended—
,;, (A) by inserting "for hospitals located in an urban area
and for hospitals located in a rural area" after "subpara-
.j^ graph (A)", and
^^.;, (B) by inserting before the period the following: "for
hospitals located in such respective area".
(2) EFFECTIVE DATE.—The amendments made by paragraph (1)
shall apply to discharges occurring on or after October 1, 1986.
(3) MAINTAINING CURRENT OUTLIER POUCY IN FISCAL YEAR
, , 1987.—For payments made under section 1886(d) of the Social
Security Act for discharges occurring in fiscal year 1987— >^
PUBLIC LAW 99-509—OCT. 21, 1986 100 STAT. 1983
^liiti I-. *" (A) the proportions under paragraph (3)(B) for hospitals
located in urban and rural areas shall be established at
such levels as produce the same total dollar reduction
under such paragraph as if this section had not been
enacted; and
' (B) the thresholds and standards used for making addi­
tional payments under paragraph (5) of such section shall
be the same as those in effect as of October 1,1986.
(c) COMPUTING URBAN AND RURAL AVERAGES.—Section 42 USC I395ww
1886(d)(3)(A) of such Act is amended by adding at the end the p..^, .,^. .
following: "With respect to discharges occurring on or after Octo- ""^ "^'^ "'
ber 1, 1987, the Secretary shall compute urban and rural averages
on the basis of discharge weighting rather than hospital weighting, -,,,. ^.j
making appropriate adjustments to ensure that computation on
such basis does not result in total payments under this section that
are greater or less than the total payments that would have been
made under this section but for this sentence, and making appro­
priate changes in the manner of determining the reductions under
subparagraph (C)(ii),".
(d) REGIONAL REFERRAL CENTERS.—
(1) CRITERIA.—
(A) IN GENERAL.—Section 1886(d)(5)(C)(i) of such Act is
. ,. amended—
(i) by inserting "(I)" after "(CXi)", and
(ii) by adding at the end the following new subclause:
"(II) The Secretary shall provide, under subclause (I), for the
classification of a rural hospital as a regional referral center if the
hospital has a case mix equal to or greater than the median case
mix for hospitals (other than hospitals with approved teaching , , j .- ?
programs) located in an urban area in the same region (as defined in
paragraph (2XD)), has at least 5,000 discharges a year or, if less, the
median number of discharges in urban hospitals in the region in
which the hospital is located (or, in the case of a rural osteopathic
hospital, meets the criterion established by the Secretary under
subclause (I) with respect to the annual number of discharges for
such hospitals), and meets any other criteria established by the
Secretary under subclause (I).".
-. * (B) EFFECTIVE DATE.—(i) Subject to clause (ii), the amend­
ments made by subparagraph (A) shall apply to payments
'11 for discharges occurring on or after October 1,1986.
(ii) An appeal for classification of a rural hospital as a
regional referral center, pursuant to the amendments made
by subparagraph (A), which is filed before January 1, 1987,
and which is approved shall be effective with respect to
discharges occurring on or after October 1,1986.
(2) EXTENSION OF REGIONAL REFERRAL CENTER CLASSIFICA-
'[ TiON.—Any hospital that is classified as a regional referral
center under section 1886(dX5XCXi) of the Social Security Act on
the date of the enactment of this Act shall continue to be
classified as a regional referral center for cost reporting periods
beginning on or after October 1, 1986, and before October 1,
1989.
f (3) BUDGET-NEUTRAL IMPLEMENTATION.—Paragraph (2) and the
amendment made by paragraph (IXA) shall be implemented in
a manner that ensures that total payments under section 1886
of the Social Security Act are not increased or decreased by >y'>M
42 USC 1395WW
note.
42 USC 1395WW
note.
42 USC 1395WW
note. 100 STAT. 1984 PUBLIC LAW 99-509—OCT. 21, 1986
Minnesota.
42 use 1395.
42 use 1395c.
42 use 1395WW.
Puerto Rico.
Reports. tK-
42 use 1395WW
note. reason of the classifications required by such paragraph or
amendment.
(4) RURAL SECONDARY SPECIALTY DEMONSTRATION PROJECT.—
(A) ESTABLISHMENT.—The Secretary of Health and
Human Services (in this paragraph referred to as the "Sec­
retary") shall enter into an agreement with Lake Region
, Hospital and Nursing Home at Fergus Falls, Minnesota, for
the purpose of conducting a rural secondary specialty
center demonstration project (in this paragraph referred to
as the "project") under title XVIII of the Social Security
Act.
(B) PURPOSE.—The purpose of this project shall be to
determine the effect that a modified system of making
payments under part A of such title to rural secondary
specialty centers would have on—
(i) total expenditures under such part, and
*"" (ii) the access of medicare beneficiaries located in
' ^ rural areas to quality health care.
(C) PAYMENTS.—During the period of the demonstration
project, payments under part A of such title shall be made
under the project on the basis of average standardized
^ amounts computed for urban areas in the region in which
the project is conducted, as adjusted by a rural wage index.
(D) DURATION.—The project shall be of a maximum dura­
tion of three years.
(E) REPORTS.—The Secretary shall submit a final report
to the Congress on the project not later than six months
after the completion of the project.
(e) MISCELLANEOUS PROVISIONS.—
(1) ANNUAL ADJUSTMENT.—Section 1886(d)(4)(C) of such Act is
amended by striking "in fiscal year 1986 and at least every four
fiscal years" and inserting "in fiscal year 1988 and at least
annually".
(2) CLARIFYING AUTHORITY TO VARY RATES.—Section 1886(e)(4)
of such Act is amended by adding at the end the following new
sentence: "The percentage change shall be the same for all
subsection (d) hospitals and subsection (d) Puerto Rico hospitals,
but may be different from that for other hospitals (and units not
i " included as such hospitals) and may vary among such other
hospitals and units.".
(3) NOTICE OF EARLIER PROMULGATION OF PERCENTAGE IN-
<: CREASE.—Section 1886(e)(3) of such Act is amended—
(A) by inserting "(A)" after "(3)", and
(B) by adding at the end the following new subparagraph:
"(B) The Secretary, not later than April 1, 1987, for fiscal year
1988 and not later than March 1 before the beginning of each fiscal
year (beginning with fiscal year 1989), shall report to the Congress
the Secretary's initial estimate of the percentage change that the
Secretary will recommend or determine under paragraph (4) with
respect to that fiscal year.".
(4) EXTENSION OF SOLE COMMUNITY PROVIDER PROVISION.—Sec­
tion 1886(d)(5)(CXii) of such Act is amended by striking "1986"
and inserting "1988".
(f) PROMULGATION OF NEW RATE.—The Secretary of Health and
Human Services shall provide, within 30 days after the date of the
enactment of this Act, for the publication of the payments rates that
will apply under section 1886 of the Social Security Act, for dis-PUBLIC LAW 99-509—OCT. 21, 1986 100 STAT. 1985
charges occurring on or after October 1, 1986, taking into account
the amendments made by this section, without regard to the provi­
sions of chapter 5 of title 5, United States Code. 5 USC 500 et seq.
SEC. 9303. PAYMENTS FOR HOSPITAL CAPITAL-RELATED COSTS.
(a) IN GENERAL.—Section 1886(g) of the Social Security Act (42
U.S.C. 1395ww(g)) is amended by adding at the end the following
new paragraph:
"(3)(A) Except as provided in subparagraph (B), in determining the
amount of the payments that may be made under this title with
respect to all the capital-related costs of inpatient hospital services
of a subsection (d) hospital, the Secretary shall reduce the amounts
of such payments otherwise established under this title by—
"(i) 3.5 percent for payments attributable to portions of cost
reporting periods occurring during fiscal year 1987,
"(ii) 7 percent for payments attributable to portions of cost
reporting periods or discharges (as the case may be) occurring
during fiscal year 1988, and
"(iii) 10 percent for payments attributable to portions of cost
reporting periods or discharges (as the case may be) occurring
during fiscal year 1989.
"(B) Subparagraph (A) shall not apply to payments with respect to
the capital-related costs of any hospital that is a sole community
hospital (as defined in subsection (d)(5)(C)(ii)).
"(C) If the Secretary provides, under subsection (a)(4), for the
inclusion of other capital-related costs in operating costs of inpatient
hospital services, the Secretary shall provide—
"(i) notwithstanding any other provision of this title, for the
continuation of payment under the reasonable cost methodology
described in section 1861(v)(l) with respect to capital-related 42 USC 1395x.
costs of any hospital that is such a sole community hospital for
cost reporting periods beginning before October 1, 1990, and
"(ii) in the design of such payment system that the aggregate
payment amounts under this title for such other capital-related
costs for payments attributable to portions of cost reporting
periods occurring during fiscal year 1988 and fiscal year 1989
shall approximate the aggregate payment amount under this
title that would have been made (taking into account the provi­
sions of subparagraphs (A) and (B)) during that fiscal year but
for the inclusion of such costs by the Secretary.".
(b) ADDITION OF PUERTO RICO HOSPITALS.—Effective for cost report­
ing periods beginning and discharges occurring (as the case may be)
on or after October 1, 1987, section 1886(gX3)(A) of the Social Secu­
rity Act (as amended by subsection (a)) is amended by inserting "and
a subsection (d) Puerto Rico hospital" after "subsection (d) hospital".
(c) CLARIFICATION OF SECRETARIAL AUTHORITY TO INCORPORATE
PAYMENT FOR OTHER CAPITAL-RELATED COSTS UNDER THE PROSPEC­
TIVE PAYMENT SYSTEM.—Section 1886(a)(4) of such Act is amended Ante, p. 749.
by striking "October 1, 1987" and inserting "October 1 of 1987 (or of
such later year as the Secretary may, in his discretion, select)".
SEC. 9304. COVERAGE OF HOSPITALS IN PUERTO RICO UNDER A DRG
PROSPECTIVE PAYMENT SYSTEM.
(a) IN GENERAL.—Section 1886(d) of the Social Security Act (42
U.S.C. 1395ww(d)) is amended by adding at the end the following
new paragraph: 100 STAT. 1986 PUBLIC LAW 99-509-OCT. 21, 1986
42 use 1395f.
42 use 1395e.
Rural areas.
Rural areas.
Urban areas. "(9)(A) Notwithstanding section 1814(b) but subject to the provi­
sions of section 1813, the amount of the payment with respect to the
operating costs of inpatient hospital services of a subsection (d)
Puerto Rico hospital for inpatient hospital discharges in a fiscal year
beginning on or after October 1, 1987, is equal to the sum of—
"(i) 75 percent of the Puerto Rico adjusted DRG prospective
payment rate (determined under subparagraph (B) or (C)) for
such discharges, and
"(ii) 25 percent of the discharge-weighted average of—
"(I) the national adjusted DRG prospective payment rate
(determined under paragraph (3)(D)) for hospitals located in
h • an urban area, and
"(II) such rate for hospitals located in a rural area,
for such discharges, adjusted in the manner provided in para­
graph (3)(E) for different area wage levels. As used in this
section, the term 'subsection (d) Puerto Rico hospital' means a
hospital that is located in Puerto Rico and that would be a
subsection (d) hospital (as defined in paragraph (1)(B)) if it were
located in one of the fifty States.
a "(B) The Secretary shall determine a Puerto Rico adjusted
DRG prospective payment rate, for each inpatient hospital
discharge in fiscal year 1988 involving inpatient hospital serv­
ices of a subsection (d) Puerto Rico hospital for which payment
may be made under part A of this title. Such rate shall be
js'.; determined for such hospitals located in urban or rural areas
«I. within Puerto Rico, as follows:
"(i) The Secretary shall determine the target amount (as
3 f defined in subsection (b)(3XA)) for the hospital for the cost
reporting period beginning in fiscal year 1987 and increase such
amount by prorating the applicable percentage increase (as
defined in subsection (b)(3XB)) to update the amount to the
midpoint in fiscal year 1988.
"(ii) The Secretary shall standardize the amount determined
under clause (i) for each hospital by—
"(I) excluding an estimate of indirect medical education
costs,
"(II) adjusting for variations among hospitals by area in
the average hospital wage level,
"(III) adjusting for variations in case mix among hos­
pitals, and
"(IV) excluding an estimate of the additional payments to
certain subsection (d) Puerto Rico hospitals to be made
under subparagraph (DXv) (relating to disproportionate
share pajrments).
"(iii) The Secretary shall compute a discharge weighted aver­
age of the standardized amounts determined under clause (ii)
for all hospitals located in an urban area and for all hospitals
located in a rural area (as such terms are defined in paragraph
(2XD)).
"(iv) The Secretary shall reduce the average standardized
amount by a proportion equal to the proportion (estimated by
^' the Secretary) of the amount of pavments under this paragraph
which are additional payments described in subparagraph (D)(i)
(relating to outlier payments).
"(v) For each discharge classified within a diagnosis-related
group for hospitals located in an urban or rural area, respec-PUBLIC LAW 99-509—OCT. 21, 1986 100 STAT. 1987
tively, the Secretary shall establish a Puerto Rico DRG prospec­
tive payment rate equal to the product of—
"(I) the average standardized amount (computed under
clause (iii) and reduced under clause (iv)) for hospitals
i located in an urban or rural area, respectively, and
.ij "(II) the weighting factor (determined under paragraph
(4)(B)) for that diagnosis-related group.
"(vi) The Secretary shall adjust the proportion (as estimated
by the Secretary from time to time) of hospitals' costs which are
attributable to wages and wage-related costs, of the Puerto Rico
DRG prospective payment rate computed under clause (v) for
area differences in hospital wage levels by a factor (established
by the Secretary) reflecting the relative hospital wage level in
the geographic area of the hospital compared to the Puerto
Rican average hospital wage level.
"(C) The Secretary shall determine a Puerto Rico adjusted DRG Urban areas,
prospective payment rate, for each inpatient hospital discharge Rural areas,
after fiscal year 1988 involving inpatient hospital services of a
subsection (d) Puerto Rico hospital for which payment may be made
under part A of this title. Such rate shall be determined for hos- 42 USC 1395c.
pitals located in urban or rural areas within Puerto Rico as follows:
"(i) The Secretary shall compute an average standardized
amount for hospitals located in an urban area and for hospitals
located in a rural area equal to the respective average standard­
ized amount computed for the previous fiscal year under
subparagraph (B)(iii) or under this clause, increased for fiscal
year 1989 by the applicable percentage increase under subsec­
tion (b)(3)(B), and adjusted for subsequent fiscal years in accord­
ance with the final determination of the Secretary under
subsection (e)(4), and adjusted to reflect the most recent case-
mix data available.
"(ii) The Secretary shall reduce each of the average standard­
ized amounts by a proportion equal to the proportion (estimated
by the Secretary) of the amount of payments under this para­
graph which are additional payments described in subpara­
graph (D)(i) (relating to outlier payments).
"(iii) For each discharge classified within a diagnosis-related
group for hospitals located in an urban or rural area, respec­
tively, the Secretary shall establish a Puerto Rico DRG prospec­
tive payment rate equal to the product of— ?." ,
"(I) the average standardized amount (computed under
clause (i) and reduced under clause (ii)) for hospitals located
in an urban or rural area, respectively, and
"(II) the weighting factor (determined under paragraph
(4)(B)) for that diagnosis-related group.
"(iv) The Secretary shall adjust the proportion (as estimated
by the Secretary from time to time) of hospitals' costs which are
attributable to wages and wage-related costs, of the Puerto Rico
DRG prospective payment rate computed under clause (iii) for
area differences in hospital wage levels by a factor (established /
by the Secretary) reflecting the relative hospital wage level in
the geographic area of the hospital compared to the Puerto Rico
average hospital wage level.
"(D) The following provisions of paragraph (5) shall apply to
subsection (d) Puerto Rico hospitals receiving payment under this
paragraph in the same manner and to the extent as they apply to
subsection (d) hospitals receiving payment under this subsection: 100 STAT. 1988 PUBLIC LAW 99-509—OCT. 21, 1986
"(i) Subparagraph (A) (relating to outlier payments).
"(ii) Subparagraph (B) (relating to payments for indirect medi­
cal education costs), except that for this purpose the sum of the
amount determined under subparagraph (A) of this paragraph
and the amount paid to the hospital under clause (i) of this
subparagraph shall be substituted for the sum referred to in
paragraph (5)(B)(i)(I).
"(iii) Subparagraph (C)(iii) (relating to exceptions and
adjustments).
"(iv) Subparagraph (E) (relating to payments for costs of
certified registered nurse anesthetists).
"(v) Subparagraph (F) (relating to disproportionate share pay­
ments), except that for this purpose the sum described in clause
(ii) of this subparagraph shall be substituted for the sum re­
ferred to in paragraph (5)(F)(ii)(I).".
(b) CONFORMING AMENDMENTS.—(1) The first sentence of subclause
(I) of section 1886(d)(5)(C)(i)(I) of such Act, as redesignated by section
42 use I395ww. 9302(d), is amended by inserting "(other than under paragraph (9))"
after "established under this subsection".
(2) The second and third sentences of section 1886(d)(5)(C)(ii) of
such Act are each amended by inserting "(other than under para­
graph (9))" after "payment amounts under this subsection".
(c) BUDGET NEUTRALITY.—Section 1886(e)(1) of the Social Secu­
rity Act is amended by adding at the end the following new
subparagraph:
"(C) For discharges occurring in fiscal year 1988, the Secretary
shall provide for such equal proportional adjustment in each of the
average standardized amounts otherwise computed under subsection
(d)(3) for that fiscal year as may be necessary to assure that—
"(i) the aggregate payment amounts otherwise provided under
subsections (d)(l)(A)(iii), (d)(5), and (d)(9) for that fiscal year for
operating costs of inpatient hospital services of subsection (d)
hospitals and subsection (d) Puerto Rico hospitals,
are not greater or less than—
"(ii) the payment amounts that would have been payable for
such services for those same hospitals for that fiscal year but for
the enactment of the amendments made by section 9304 of the
Omnibus Budget Reconciliation Act of 1986.".
42 use I395ww (d) EFFECTIVE DATE.—The amendments made by this section shall
note. apply to discharges occurring on or after October 1,1987,
SEC. 9305. IMPROVING QUALITY OF CARE WITH RESPECT TO PART A
SERVICES.
(a) REFINEMENT OF PROSPECTIVE PAYMENT SYSTEM.—
(1) DEVELOPMENT OF LEGISLATIVE PROPOSAL.—The Secretary of
Health and Human Services shall develop and submit to Con­
gress a specific legislative proposal to improve the classification
and payment system under section 1886(d) of the Social Security
Ante, p. 1985. Act (and, as appropriate, the system for payment of outliers
under section 1886(d)(5)(A) of such Act) in order to assure that
the amount of payment per discharge approximates the cost
of medically necessary care provided in an efficient manner
for individual patients or classes of patients with similar
conditions.
(2) ACCOUNTING FOR SEVERITY OF ILLNESS.—In developing the
proposal, the Secretary shall account for variations in severity PUBLIC LAW 99-509—OCT. 21, 1986 100 STAT. 1989
of illness and case complexity which are not adequately ac­
counted for by the current classification and payment system.
' (3) DEADLINE.—The proposal shall be submitted to Congress
by not later than 2 years after the date of the enactment of this
Act.
(b) REQUIRING NOTICE OF HOSPITAL DISCHARGE RIGHTS.—
(1) REQUIREMENT FOR HOSPITALS TO PROVIDE STATEMENT.—Sec­
tion 1866(a)(1) of the Social Security Act (42 U.S.C. 1395cc(a)(l)), Post, p. 2025.
as amended by section 1895(b) of the Tax Reform Act of 1986 Post, p. 2931.
and by section 233 of the Veterans' Benefits Improvement and
Health-Care Authorization Act of 1986, is amended—
(A) by striking "and" at the end of the subparagraph (K),
(B) by striking the period at the end of subparagraph (L)
and inserting ", and", and
(C) by inserting after subparagraph (L) the following new
subparagraph:
"(M) in the case of hospitals, to provide to each individual who
is entitled to benefits under part A (or to a person acting on the
individual's behalf), at or about the time of the individual's
admission as an inpatient to the hospital, a written statement
(containing such language as the Secretary prescribes consistent
with this paragraph) which explains—
"(i) the individual's rights to benefits for inpatient hos­
pital services and for post-hospital services under this title,
"(ii) the circumstances under which such an individual
will and will not be liable for charges for continued stay in
the hospital,
"(iii) the individual's right to appeal denials of benefits
for continued inpatient hospital services, including the
practical steps to initiate such an appeal, and
"(iv) the individual's liability for payment for services if
such a denial of benefits is upheld on appeal,
and which provides such additional information as the Sec­
retary may specify."
(2) EFFECTIVE DATE.—The Secretary of Health and Human 42 USC I395cc
Services shall first prescribe the language required under sec- "o*®-
tion 1866(a)(l)(M) of the Social Security Act not later than six
months after the date of the enactment of this Act. The require­
ment of such section shall apply to admissions to hospitals
occurring on such date (not later than 60 days after the date
such language is first prescribed) as the Secretary shall provide.
(c) REQUIRING HOSPITALS TO PROVIDE DISCHARGE PLANNING
PROCESS.—
(1) REQUIREMENT AS CONDITION OF PARTICIPATION.—Section r
1861(e)(6) of the Social Security Act (42 U.S.C. 1395x(e)(6)) is
amended—
(A) by inserting "(A)" after "(6)", and
(B) by inserting before the semicolon at the end the
following: "and (B) has in place a discharge planning proc­
ess that meets the requirements of subsection (ee)".
(2) DISCHARGE PLANNING PROCESS DEFINED.—Section 1861 of
such Act is further amended by adding at the end the following i'
new subsection: 100 STAT. 1990 PUBLIC LAW 99-509—OCT. 21, 1986
42 use 1395x
note.
42 use 1395.
Reports. DISCHARGE PLANNING PROCESS
"(eeXD A discharge planning process of a hospital shall be consid­
ered sufficient if it is applicable to services furnished by the hospital
to individuals entitled to benefits under this title and if it meets the
guidelines and standards established by the Secretary under para­
graph (2).
"(2) The Secretary shall develop guidelines and standards for the
discharge planning process in order to ensure a timely and smooth
transition to the most appropriate type of and setting for post-
hospital or rehabilitative care. The guidelines and standards shall
include the following:
"(A) The hospital must identify, at an early stage of hos­
pitalization, those patients who are likely to suffer adverse
health consequences upon discharge in the absence of adequate
** discharge planning.
"(B) Hospitals must provide a discharge planning evaluation
' for patients identified under subparagraph (A) and for other
patients upon the request of the patient, patient's representa­
tive, or patient's physician.
"(C) Any discharge planning evaluation must be made on a
timely basis to ensure that appropriate arrangements for post-
hospital care will be made before discharge and to avoid
unnecessary delays in discharge.
"(D) A discharge planning evaluation must include an evalua­
tion of a patient's likely need for appropriate post-hospital
services and the availability of those services.
"(E) The discharge planning evaluation must be included in
the patient's medical record for use in establishing an appro­
priate discharge plan and the results of the evaluation must be
discussed with the patient (or the patient's representative).
"(F) Upon the request of a patient s physician, the hospital
must arrange for the development and initial implementation
of a discharge plan for the patient.
"(G) Any discharge planning evaluation or discharge plan
required under this paragraph must be developed by, or under
the supervision of, a registered professional nurse, social
' worker, or other appropriately qualified personnel."
(3) EFFECT OF ACCREDITATION.—The second sentence of section
1865(a) of such Act (42 U.S.C. 1395bb(a)) is amended—
(A) by inserting ", requires a discharge planning process
(or imposes another requirement which serves substantially
the same purpose)," after "the same purpose)", and
; ;>- Ft (B) by inserting "clause (A) or (B) of after "comply also
with".
(4) EFFECTIVE DATE.—The amendments made by this subsec­
tion shall apply to hospitals as of one year after the date of the
enactment of this Act.
(d) REVIEW OF STANDARDS FOR MEDICARE CONDITIONS OF PARTICIPA­
TION FOR ASSURING QUALITY OF INPATIENT HOSPITAL SERVICES,—The
Secretary of Health and Human Services shall arrange for a study
of the adequacy of the standards used for hospitals, for purposes of
meeting the conditions of participation under title XVIII of the
Social Security Act, in assuring the quality of services furnished in
hospitals. The Secretary shall report to Congress on the results of
the study by not later than 2 years after the date of the enactment
of this Act. PUBLIC LAW 99-509-OCT. 21, 1986 100 STAT. 1991
Health care
facilities.
42 use 1395. (e) STUDY OF PAYMENT FOR ADMINISTRATIVELY NECESSARY DAYS.—
(1) IN GENERAL.—The Secretary of Health and Human Serv­
ices shall conduct a study to determine whether a payment
should be made (in a budget-neutral manner under title XVIII
of such Act to hospitals receiving payments under section
1886(d) of such Act) to a hospital for administratively necessary
days, separate from the per-discharge and outlier payments
made under such section.
(2) ADMINISTRATIVELY NECESSARY DAYS DEFINED.—In this
subsection, an "administratively necessary day" is a day of
continued inpatient hospital stay, for an individual entitled to
benefits under part A of title XVIII of the Social Security Act, 42 USC 1935c
necessitated by a delay in obtaining placement for the individ­
ual in a skilled nursing facility.
(3) CONSIDERATIONS IN CONDUCTING STUDY.—In conducting the
study, the Secretary shall consider—
(A) the need for such a payment in order to minimize—
(i) the disproportionate financial impact of current
:- law on certain hospitals (or hospitals in certain loca­
tions) due to difficulties in arranging for appropriate
post-hospital care, such as difficulties resulting from a
shortage of beds in skilled nursing facilities where
those hospitals are located and from the source of
payment for such care, and
/•' ' (ii) the risk of inappropriate discharge to a non-
f • institutional or inappropriate institutional setting of
individuals who need post-hospital services in a skilled
nursing facility, and
(B) the administrative mechanisms that can be used to
prevent inappropriate payments for administratively nec­
essary days.
(4) REPORT ON STUDY.—The Secretary shall report to Congress
on the results of the study not later than January 1, 1989.
(f) EXTENDING WAIVER OF LIABIUTY PROVISIONS TO HOSPICE
PROGRAMS.—
(1) IN GENERAL.—The Secretary of Health and Human Serv­
ices shall, for purposes of determining whether payments to a
hospice program should be denied pursuant to section
1862(a)(1)(C) of the Social Security Act, apply (under section
1879(a) of such Act) a presumption of compliance of 2.5 percent
(based on the number of days of hospice care billed) in a manner
substantially similar to that provided to home health agencies
under policies in effect as of July 1,1985.
(2) EFFECTIVE DATE.—Paragraph (1) shall apply to hospice care
furnished on or after the first day of the first month that begins
at least 6 months after the date of the enactment of this Act and
before November 1, 1988.
(g) EXTENSION OF WAIVER OF LIABIUTY PROVISIONS TO CERTAIN
COVERAGE DENIALS FOR HOME HEALTH SERVICES.—
(1) IN GENERAL.—Section 1879 of the Social Security Act (42
U.S.C. 1395pp) is amended—
(A) in subsection (aXD, by inserting "or by reason of a
c coverage denial described in subsection (g)" after "section
1862(aXl) or (9)";
(B) in the first sentence of subsection (a), by inserting
)1 "and as though the coverage denial described in subsection
lii (g) had not occurred" before the period at the end; 42 USC 1395y
note.
42 USC 1395y.
Infra. 100 STAT. 1992 PUBLIC LAW 99-509—OCT. 21, 1986
(C) in the third sentence of subsection (a), by inserting "or
by reason of a coverage denial described in subsection (g)"
42 use 1395y. after "section 1862(a)(1) or (9)";
(D) in subsection (c), by inserting "or by reason of a
coverage denial described in subsection (g)" after "section
1862(a)(1) or (9)"; and
(E) by adding at the end the following new subsections:
"(f)(1) A home health agency which meets the applicable require­
ments of paragraphs (3) and (4) shall be presumed to meet the
requirement of subsection (a)(2) with respect to any coverage denial
described in subsection (g).
qj "(2) The presumption of paragraph (1) with respect to specific
services may be rebutted by actual or imputed knowledge of the
facts described in subsection (a)(2), including any of the following:
"(A) Notice by the fiscal intermediary of the fact that pay­
ment may not be made under this title with respect to the
services.
"(B) It is clear and obvious that the provider should have
known at the time the services were furnished that they were
excluded from coverage.
"(3) The requirements of this paragraph are as follows:
"(A) The agency complies with requirements of the Secretary
under this title respecting timely submittal of bills for payment
and medical documentation.
"(B) The agency program has reasonable procedures to notify
promptly each patient (and the patient's physician) where it is
determined that a patient is being or will be furnished items or
services which are excluded from coverage under this title.
"(4) The requirement of this paragraph is that, on the basis of bills
submitted by a home health agency during the previous quarter, the
rate of denial of bills for the agency by reeison of a coverage denial
described in subsection (g) does not exceed 2.5 percent, computed
based on visits for home health services billed.
"(5) In this subsection, the term 'fiscal intermediary' means, with
respect to a home health agency, an agency or organization with an
42 use 1395h. agreement under section 1816 with respect to the agency.
"(g) The coverage denial described in this subsection is, with
respect to the provision of home health services to an individual, a
42 use I395f. failure to meet the requirements of section 1814(a)(2)(C) or section
42 use I395n. 1835(a)(2)(A) in that the individual—
"(1) is or was not confined to his home, or
"(2) does or did not need skilled nursing care on an intermit­
tent basis."
42 use I395pp (2) REPORTS.—The Secretary of Health and Human Services
note. shall report to Congress annually in March of 1987 and 1988—
(A) information on the frequency and distribution (by
type of provider) of denials of bills for payment under title
42 use 1395. ' XVIII of the Social Security Act for extended care services,
home health services, and hospice care, by reason of section
1862(a)(1) or (9) of such Act and coverage denials described
Ante, p. 1991. in section 1879(g) of such Act, including—
i (i) the reasons for such denials,
(ii) the extent to which payments were nonetheless
made because of section 1879 of such Act, and
(iii) the rate of reversals of such denials, and
(B) such other information as may be appropriate to
evaluate the appropriateness of any percentage standards PUBLIC LAW 99-509—OCT. 21, 1986 100 STAT. 1993
42 use 1395pp note.
42 use 1395x note. established for the granting of favorable presumptions with
respect to such denials.
(3) EFFECTIVE DATE.—The amendments made by paragraph (1)
shall apply to coverage denials occurring on or after July 1,
1987, and before October 1, 1989.
(h) DEVELOPMENT OF UNIFORM NEEDS ASSESSMENT INSTRUMENT.—
(1) DEVELOPMENT.—The Secretary of Health and Human Serv­
ices shall develop a uniform needs assessment instrument
that—
(A) evaluates—
(i) the functional capacity of an individual,
(ii) the nursing and other care requirements of the
individual to meet health care needs and to assist with
functional incapacities, and
(iii) the social and familial resources available to the
individual to meet those requirements; and
(B) can be used by discharge planners, hospitals, nursing
facilities, other health care providers, and fiscal
intermediaries in evaluating an individual's need for post-
hospital extended care services, home health services, and
long-term care services of a health-related or supportive
nature.
The Secretary may develop more than one such instrument for
use in different situations.
(2) ADVISORY PANEL.—The Secretary shall develop any
instrument in consultation with an advisory panel, appointed
by the Secretary, that includes experts in the delivery of post-
hospital extended care services, home health services, and long-
term care services and includes representatives of hospitals, of
physicians, of skilled nursing facilities, of home health agencies,
of long-term care providers, of fiscal intermediaries, and of
medicare beneficiaries.
(3) REPORT ON INSTRUMENT.—The Secretary shall report to
Congress, not later than January 1, 1989, on the instrument or
instruments developed under this section. The report shall rec­
ommendations for the appropriate use of such instrument or
instruments.
(i) INCLUDING IN ANNUAL REPORTS ON PROSPECTIVE PAYMENT
SYSTEM INFORMATION ON QUALITY OF POST-HOSPITAL CARE.—
(1) IN GENERAL.—Section 603(aX2) of the Social Security
Amendments of 1983 is amended—
(A) by striking "1987" in subparagraph (A) and inserting
"1989", and
(B) by adding at the end the following new subparagraph:
"(E) In each annual report to Congress under subparagraph (A),
the Secretary shall include—
"(i) an evaluation of the adequacy of the procedures for
assuring quality of post-hospital services furnished under title
XVIII of the Social Security Act,
"(ii) an assessment of problems that have prevented groups of
medicare beneficiaries (including those eligible for medical
assistance under title XIX of such Act) from receiving appro- 42 USe 1396
priate post-hospital services covered under such title, and
"(iii) information on reconsiderations and appeals taken
under title XVIII of such Act with respect to pa3rment for post-
hospital services.". 42 use 1395WW
note.
42 use 1395. 100 STAT. 1994 PUBLIC LAW 99-509—OCT. 21, 1986
42 use 1395WW
note.
42 use 1395x
note.
Health care
facilities.
42 use 1395c,
1395J.
Health care
facilities.
Health care
professionals.
42 use 1395.
->
Grants.
Contracts.
42 use 13951.
42 use 1395. (2) EFFECTIVE DATE.—The amendment made by paragraph
(1)(B) shall apply to reports for years beginning with 1986.
(k) PRIOR AND CONCURRENT AUTHORIZATION DEMONSTRATION
PROJECT.—
(1) IN GENERAL.—The Secretary of Health and Human Serv-
:TV ices shall conduct a demonstration program concerning prior
and concurrent authorization for post-hospital extended care
services and home health services furnished under part A or
part B of title XVIII of the Social Security Act.
(2) SCOPE.—The program shall include at least four projects
and shall be initiated by not later than January 1,1987.
(3) CONSULTATION AND MONITORING.—The program shall be
' developed in consultation with an advisory panel that includes
experts in the delivery of post-hospital extended care services,
^ '• home health services, and long-term care services and includes
representatives of hospitals, of physicians, of skilled nursing
facilities, of home health agencies, of long-term care providers,
'' of fiscal intermediaries, and of medicare beneficiaries. The Sec-
•' retary shall monitor the acceptance of individuals entitled to
benefits under title XVIII of the Social Security Act by provid­
ers to ensure that the placement of such individuals is not
, delayed until the results of prior and concurrent review are
known.
(4) EVALUATION AND REPORT.—The Secretary shall evaluate
the demonstration program conducted under this subsection
and shall report to Congress on such evaluation no later than
February 1, 1989. Such evaluation and report shall address—
(A) the administrative and program costs for prior and
concurrent authorization across demonstration projects and
in comparison to administrative and program costs under
the current system of retroactive review, including costs for
uncovered services paid under the waiver of liability
which would not be incurred under prior or concurrent
authorization;
(B) impact of prior or concurrent authorization on access
to and availability of extended care services and home
: . health services in comparison to the current system (includ­
ing costs to providers) and on timely discharge of hospital
inpatients; and
(C) accuracy and associated cost savings of payment
;, determinations and rates of claim reversals under prior or
concurrent authorization versus the current system.
(5) FUNDING.—Expenditures made for the demonstration pro­
gram shall be made from the Federal Hospital Insurance Trust
Fund under section 1817 of the Social Security Act. Grants and
payments under contracts may be made either in advance or by
I • way of reimbursement, as may be determined by the Secretary,
and shall be made in such installments and on such conditions
as the Secretary finds necessary to carry out the purpose of this
subsection.
i 4 (6) WAIVER OF MEDICARE REQUIREMENTS.—The Secretary shall
waive compliance with such requirements of title XVIII of the
Social Security Act to the extent and for the period the Sec­
retary finds necessary for the conduct of the demonstration
program. PUBLIC LAW 99-509—OCT. 21, 1986 100 STAT. 1995
SEC. 9306. PAYMENTS TO LARGE RURAL HOSPITALS SERVING A
DISPROPORTIONATE SHARE OF LOW-INCOME PATIENTS.
(a) QUALIFYING HOSPITALS.—Section 1886(d)(5)(F)(v) of the Social
Security Act (42 U.S.C. 1395ww(d)(5)(F)(v)) is amended by adding at
the end the following new sentence:
"A hospital located in a rural area and with 500 or more beds also
'serves a significantly disproportionate number of low income pa­
tients' for a cost reporting period if the hospital has a disproportion­
ate patient percentage (as defined in clause (vi)) for that period
which equals or exceeds a percentage specified by the Secretary.".
(b) PAYMENT AMOUNT.—Section 1886(d)(5)(F)(iv) of such Act is
amended—
(1) in subclause (I), by inserting "or is described in the second
sentence of subclause (III)" after "100 or more beds", and
(2) in subclause (III), by inserting "and is not described in the
second sentence of clause (v)" after "rural area".
(c) EXTENSION OF DISPROPORTIONATE SHARE PROVISION.—Section
1886(d) of such Act is further amended, in paragraphs (2)(C)(iv),
(3)(C)(ii), (5)(B)(ii), and (5)(F)(i), by striking "1988" each place it
appears and inserting "1989".
(d) EFFECTIVE DATE.—The amendments made by subsections (a)
and (b) shall apply to discharges occurring on or after October 1,
1986.
SEC. 9307. TECHNICAL AMENDMENTS AND MISCELLANEOUS PROVISIONS
RELATING TO PART A.
(a) TEMPORARY WAIVER OF INPATIENT LIMITATIONS FOR THE
CONNECTICUT HOSPICE, INC.—With respect to the Connecticut Hos­
pice, Inc., for hospice care provided before October 1, 1988, the
reference in section 1861(dd)(2)(A)(iii) of the Social Security Act (42
U.S.C. 1395x(dd)(2)(A)(iii)) to "20 percent" is deemed a reference to
"50 percent".
(b) MASSACHUSETTS MEDICARE REPAYMENT.—The Secretary of
Health and Human Services shall not, on or after the date of the
enactment of this section and before January 1, 1988, recoup from,
or otherwise reduce payments to, hospitals in the State of Massachu­
setts because of alleged overpayments to such hospitals under part
A of title XVIII of the Social Security Act which occurred during the
period of the State-wide hospital reimbursement demonstration
project conducted in that State, between October 1, 1982, and
June 30, 1986, under section 402 of the Social Security Amendments
of 1967 and section 222 of the Social Security Amendments of 1972.
(c) PART A COBRA TECHNICAL CORRECTIONS.—(1) Effective as if
included in the enactment of the Tax Reform Act of 1986, if House
Concurrent Resolution 395 (99th Congress, 2d Session) has not been
adopted, section 1895(b) of the Tax Refprm Act of 1986 is amended—
(A) by striking paragraph (1), and
(B) by striking subparagraphs (A) and (B) of paragraph (2).
(2) Effective as if included in the enactment of the Tax Reform Act
of 1986—
(A) section 1895(b) of such Act is amended, in subparagraph
(AXii) of the paragraph relating to "PHYSICIAN PAYMENT", by
inserting before the period the following: "the first place it
appears", and
(B) section 1895(d)(5)(A) of such Act is amended by striking
"162(kX2)" and inserting "162(k)(5)". 42 use 1395WW note.
42 use 1395c.
42 use 1395b-l, 1395//. 86 Stat. 1390. 42 use 1395WW.
Post, p. 2095; 42 use 1395u.
42 use 162. 100 STAT. 1996 PUBLIC LAW 99-509—OCT. 21, 1986
42 use 1395ww.
42 use 1395dd.
Ante, p. 164.
Effective date.
42 use 1395ww
note.
42 use 1395WW
note. (3) If House Concurrent Resolution 395 (99th Congress, 2d Session)
has been adopted, effective for discharges occurring on or after
May 1, 1986, section 1886(d)(5)(F)(vi)(I) of the Social Security Act is
amended—
(A) by striking "supplementary" and inserting "supple-
-U mental", and
(B) by striking "fiscal year" and inserting "period",
(4) Paragraphs (2) and (3) of section 1867(b) of the Social Security
Act are amended by striking "legally responsible".
(d) MISCELLANEOUS ACCOUNTING PROVISION.—Effective on the date
of the enactment of Public Law 99-107, in applying section 5(a) of
such Act, a cost reporting period beginning on September 28, 29, or
30 is deemed to begin on October 1 and any reference to Septem­
ber 30 is deemed also to be a reference to September 27.
PART 2—PROVISIONS RELATING TO PARTS A
SEC. 9311. PERIODIC INTERIM PAYMENT SYSTEM (PIP) FOR DRG
HOSPITALS AND PROMPT PAYMENT FOR MEDICARE
^ PROVIDERS.
(a) PERIODIC INTERIM PAYMENTS.—
(1) IN GENERAL.—Section 1815 of the Social Security Act (42
U.S.C. 1395g) is amended by adding at the end the following new
subsection:
Puerto Rico. "(e)(1) The Secretary shall provide payment under this part for
inpatient hospital services furnished by a subsection (d) hospital (as
42 use 1395ww. defined in section 1886(d)(1)(B), and including a distinct psychiatric
or rehabilitation unit of such a hospital) and a subsection (d) Puerto
Rico hospital (as defined in section 1886(d)(9)(A)) on a periodic
interim payment basis (rather than on the basis of bills actually
submitted) in the following cases:
"(A) Upon the request of a hospital which is paid through an
• • agency or organization with an agreement with the Secretary
42USei895h. V under section 1816, if the agency or organization, for three
"j- consecutive calendar months, fails to meet the requirements of
subsection (c)(2) of such section and if the hospital meets the
• ' " requirements (in effect as of October 1, 1986) applicable to
payment on such a basis, until such time as the agency or
organization meets such requirements for three consecutive
calendar months.
"(B) In the case of hospital that—
.. ', _ "(i) has a disproportionate share adjustment percentage
jr ^ ' (as established in clause (iv) of such section) of at least 5.1
v percent (as computed for purposes of establishing the aver-
'i [ . ~ age standardized amounts for discharges occurring during
fiscal year 1987), and
"(ii) requests payment on such basis,
but only if the hospital was being paid for inpatient hospital
services on such a periodic interim payment basis as of June 30,
1987, and continues to meet the requirements (in effect as of
• October 1, 1986) applicable to payment on such a basis.
"(C) In the case of a hospital that—
Rural areas. "(i) is located in a rural area,
t • "(ii) has 100 or fewer beds, and
"(iii) requests payment on such basis, PUBLIC LAW 99-509—OCT. 21, 1986 100 STAT. 1997
but only if the hospital was being paid for inpatient hospital
services on such a periodic interim payment basis as of June 30,
1987, and continues to meet the requirements (in effect as of
October 1, 1986) applicable to payment on such a basis.
"(2) The Secretary shall provide (or continue to provide) for
payment on a periodic interim payment basis (under the standards
established under section 405.454(j) of title 42, Code of Federal
Regulations, as in effect on October 1, 1986) with respect to—
"(A) inpatient hospital services of a hospital that is not a
subsection (d) hospital (as defined in section 1886(d)(1)(B));
"(B) a hospital which is receiving payment under a State
hospital reimbursement system under section 1814(b)(3) or
1886(c), if payment on a periodic interim payment basis is an
integral part of such reimbursement system;
"(C) extended care services;
"(D) home health services; and
"(E) hospice care;
if the provider of such services elects to receive, and qualifies for,
such payments.
"(3) In the case of a subsection (d) hospital or a subsection (d)
Puerto Rico hospital (as defined for purposes of section 1886) which
has significant cash flow problems resulting from operations of its
intermediary or from unusual circumstances of the hospital's oper­
ation, the Secretary may make available appropriate accelerated
payments.".
(2) EFFECTIVE DATE.—The amendment made by paragraph (1)
shall apply to claims received on or after July 1,1987.
; (3) TRANSITION.—Upon the request of a hospital which—
J (A) as of June 30, 1987, is receiving payments under part
A of title XVIII of such Act for inpatient hospital services
I: on a periodic interim payment basis,
(B) requests continuation of payment on such basis, and
(C) is paid through an agency or organization with an
agreement under section 1816 of such Act,
the Secretary of Health and Human Services shall continue
I payment on such a basis until not earlier than the end of the
first period of three consecutive calendar months (beginning no
earlier than April 1987) during all of which the agency or
organization has met the requirements of section 1816(c)(2) of
such Act (relating to prompt payment of claims).
(b) PROMPT PAYMENT OF CLAIMS UNDER PART A.—Section 1816(c)
of the Social Security Act (42 U.S.C. 1395h(c)) is amended—
(1) by inserting "(1)" after "(c)", and
(2) by adding at the end the following new paragraph:
"(2)(A) Each agreement under this section shall provide that
payment shall be issued, mailed, or otherwise transmitted with
respect to not less than 95 percent of all claims submitted under this
title—
– . "(i) which are clean claims, and
"(ii) for which payment is not made on a periodic interim
payment basis,
within the applicable number of calendar days after the date on
which the claim is received.
"(B) In this paragraph:
J. "(i) The term 'clean claim' means a claim that has no defect
or impropriety (including any lack of any required substantiat-
^ ing documentation) or particular circumstance requiring special 42 use 1395WW.
State and local
governments.
42 use 1395f.
Puerto Rico.
Claims.
42 use 1395g
note.
42 use 1395g
note.
42 use 1395c.
Claims.
42 use 1395h.
Claims. 100 STAT. 1998 PUBLIC LAW 99-509—OCT. 21, 1986
• s.; treatment that prevents timely payment from being made on
,[•'' the claim under this title.
Ui "(ii) The term 'applicable number of calendar days' means—
"(I) with respect to claims received in the 12-month
1 period beginning October 1, 1986, 30 calendar days,
r "(II) with respect to claims received in the 12-month
period beginning October 1,1987, 26 calendar days,
"(III) with respect to claims received in the 12-month
. 'I •< period beginning October 1, 1988, 25 calendar days, and
vw<,^! ; s ,, "(IV) with respect to claims received in the 12-month
period beginning October 1, 1989, and claims received in
any succeeding 12-month period, 24 calendar days.
Claims. "(C) If payment is not issued, mailed, or otherwise transmitted
within the applicable number of calendar days (as defined in clause
(ii) of subparagraph (B)) after a clean claim (as defined in clause (i) of
such subparagraph) is received from a hospital, skilled nursing
facility, home health agency, or hospice program that is not receiv­
ing payments on a periodic interim payment basis with respect to
such services, interest shall be paid at the rate used for purposes of
o.MQi-muH section 3902(a) of title 31, United States Code (relating to interest
penalties for failure to make prompt payments) for the period
beginning on the day after the required payment date and ending on
the date on which payment is made.".
(c) PROMPT PAYMENT OF CLAIMS UNDER PART B.—Section 1842(c) of
the Social Security Act (42 U.S.C. 1395u(c)) is amended—
(1) by inserting "(1)" after "(c)", and
(2) by adding at the end the following new paragraph:
Contracts. "(2XA) Each contract under this section which provides for the
Claims. disbursement of funds, as described in subsection (a)(1)(B), shall
provide that payment shall be issued, mailed, or otherwise transmit­
ted with respect to not less than 95 percent of all claims submitted
under this part—
r,. ? . "(i) which are clean claims, and
.; ic-'' "(ii) for which payment is not made on a periodic interim
pa3mient basis,
within the applicable number of calendar days after the date on
which the claim is received.
"(B) In this paragraph:
"(i) The term 'clean claim' means a claim that has no defect
or impropriety (including any lack of any required substantiat-
r/jci ing documentation) or particular circumstance requiring special
treatment that prevents timely payment from being made on
the claim under this part.
"(ii) The term 'applicable number of calendar days' means—
^ , , , , "(I) with respect to claims received in the 12-month
period beginning October 1,1986, 30 calendar days,
"(II) with respect to claims received in the 12-month
period beginning October 1, 1987, 26 calendar days (or 19
calendar days with respect to claims submitted by partici-
; • pating physicians),
"(III) with respect to claims received in the 12-month
.t, . * period beginning October 1, 1988, 25 calendar days (or 18
calendar days with respect to cleiims submitted by partici­
pating physicians), and
:;;. – "(IV) with respect to claims received in the 12-month
^-pv.-i'. period beginning October 1, 1989, and claims received in
, , H. any succeeding 12-month period, 24 calendar days (or 17 PUBLIC LAW 99-509—OCT. 21, 1986 100 STAT. 1999
calendar days with respect to claims submitted by partici­
pating physicians),
"(C) If payment is not issued, mailed, or otherwise transmitted
within the applicable number of calendar days (as defined in clause
(ii) of subparagraph (B)) after a clean claim (as defined in clause (i) of
such subparagraph) is received, interest shall be paid at the rate
used for purposes of section 3902(a) of title 31, United States Code
(relating to interest penalties for failure to make prompt payments)
for the period beginning on the day after the required payment date
and ending on the date on which payment is made.".
(d) EFFECTIVE DATES.—
(1) Except as provided in paragraph (2), the amendments
made by subsections (b) and (c) shall apply to claims received on
' or after November 1, 1986.
(2) Sections 1816(c)(2)(C)) and 1842(c)(2)(C) of the Social Secu-
'^ rity Act, as added by such amendments, shall apply to claims
received on or after April 1,1987.
(3) The Secretary of Health and Human Services shall provide
for such timely amendments to agreements under section 1816
of the Social Security Act and contracts under section 1842 of
such Act, and regulations, to such extent as may be necessary to
-^ implement the provisions of this Act on a timely basis.
SEC. 9312. HEALTH MAINTENANCE ORGANIZATIONS AND COMPETITIVE
MEDICAL PLANS.
(a) REPEAL OF "2 FOR 1" CONVERSION REQUIREMENT FOR CERTAIN
HEALTH MAINTENANCE ORGANIZATIONS.—Section 114(c)(2) of the Tax
Equity and Fiscal Responsibility Act of 1982 is amended by adding
at the end the following new subparagraph:
"(E) The preceding provisions of this paragraph shall not to apply
to payments made for current, nonrisk medicare enrollees for
months beginning with April 1987.".
(b) REQUIRING THE PROVISION OF AN EXPLANATION OF ENROLLEE
RIGHTS.—
(1) IN GENERAL.—Subsection (c)(3) of section 1876 of the Social
J Security Act (42 U.S.C. 1395mm) is amended by adding at the
^ end the following new subparagraph:
"(E) 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 section, including
an explanation of—
"(i) the enrollee's rights to benefits from the organization,
f "(ii) the restrictions on payments under this title for services
ii furnished other than by or through the organization,
t "(iii) out-of-area coverage provided by the organization,
J "(iv) the organization's coverage of emergency services and
urgently needed care, and
"(v) appeal rights of enrollees.".
':• (2) EFFECTIVE DATE.—The amendment made by paragraph (1)
•; shall take effect on January 1, 1987, and shall apply to enroll­
ments effected on or after such date.
(c) RESTRICTING WAIVER OF REQUIREMENT OF 50 PERCENT NON-
MEDICARE ENROLLMENT.—
-/ (1) RESTRICTION ON NEW WAIVERS.—Paragraph (2) of subsec­
tion (f) of such section is amended by striking all that follows
"only" and inserting a dash and the following: Claims.
42 use 1395h
note.
Claims.
Ante, pp. 1997,
1998.
Claims.
Contracts.
42 use 1395mm
note.
42 use 1395mm
note. 100 STAT. 2000 PUBLIC LAW 99-509—OCT. 21, 1986
42 use 1396.
Contracts.
State and local
governments.
42 use 1395mm
note.
42 use 1395mm. "(A) to the extent that more than 50 percent of the population
of the area served by the organization consists of individuals
who are entitled to benefits under this title or under a State
plan approved under title XIX, or
"(B) 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 section, and only if the
organization has taken and is making reasonable efforts to
enroll individuals who are not entitled to benefits under this
title or under a State plan approved under title XIX.".
(2) SANCTIONS FOR NONCOMPLIANCE.—
(A) SUSPENSION OF ENROLLMENT OR PAYMENT FOR NEW
ENROLLEES.—Such subsection is further amended by adding
at the end the following new paragraph:
"(3) If the Secretary determines that an eligible organization has
failed to comply with the requirements of this subsection, the
Secretary may provide for the suspension of enrollment of individ­
uals under this section or of payment to the organization under
this section for individuals newly enrolled with the organization,
after the date the Secretary notifies the organization of such
noncompliance.".
(B) TERMINATION OF CONTRACT.—Subsection (i)(l)(C) of
such section is amended by striking "and (e)" and insert
"(e), and (f)".
(3) EFFECTIVE DATES.—
(A) NEW RESTRICTION.—The amendment made by para­
graph (1) shall apply to modifications and waivers granted
' ' after the date of the enactment of this Act.
,, (B) SANCTIONS FOR NONCOMPLIANCE.—The amendments
^ , made by paragraph (2) shall take effect on the date of the
enactment of this Act.
(C) TREATMENT OF CURRENT WAIVERS.—In the case of an
eligible organization (or successor organization) that—
(i) as of the date of the enactment of this Act, has
been granted, under paragraph (2) of section 1876(f) of
the Social Security Act, a modification or waiver of the
requirement imposed by paragraph (1) of that section,
' ' but
(ii) does not meet the requirement for such modi­
fication or waiver under the amendment made by
paragraph (1) of this subsection,
the organization shall make, and continue to make, reason­
able efforts to meet scheduled enrollment goals, consistent
with a schedule of compliance approved by the Secretary of
Health and Human Services. If the Secretary determines
• • • that the organization has complied, or made significant
progress towards compliance, with such schedule of compli­
ance, the Secretary may extend such waiver. If the Sec-
• retary determines that the organization has not complied
with such schedule, the Secretary may provide for a sanc­
tion described in section 1876(f)(3) of the Social Security
Act (as amended by this section) effective with respect
to individuals enrolling with the organization after the
date the Secretary notifies the organization of such noncom­
pliance.
(d) REQUIRING PROMPT PAYMENT OF CLAIMS.— ,r{ PUBLIC LAW 99-509—OCT. 21, 1986 100 STAT. 2001
(1) IN GENERAL.—Subsection (g) of such section is amended by
adding at the end the following new paragraph:
"(6)(A) A risk-sharing contract under this section shall require the
eligible organization to provide prompt payment (consistent with
the provisions of sections 1816(c)(2) and 1842(c)(2)) of claims submit­
ted for services and supplies furnished to individuals pursuant to
such contract, if the services or supplies are not furnished under a
contract between the organization and the provider or supplier.
"(B) In the case of an eligible organization which the Secretary
determines, after notice and opportunity for a hearing, has failed to
make payments of amounts in compliance with subparagraph (A),
the Secretary may provide for direct payment of the amounts owed
to providers and suppliers for such covered services furnished to
individuals enrolled under this section under the contract. If the
Secretary provides for such direct payments, the Secretary shall
provide for an appropriate reduction in the amount of payments
otherwise made to the organization under this section to reflect the
amount of the Secretary's payments (and costs incurred by the
Secretary in making such payments).".
(2) EFFECTIVE DATE.—The amendment made by paragraph (1)
shall apply to risk-sharing contracts under section 1876 of the
Social Security Act with respect to services furnished on or after
January 1,1987.
(e) REQUIRING ACCESS TO FINANCIAL RECORDS AND DISCLOSURE OF
INTERNAL LOANS.—
(1) IN GENERAL.—Subsection (iX3)(C) of such section is
amended—
' (A) by striking "and" at the end,
(B) by inserting "(i)" after "(C)", and ^
(C) by adding at the end the following new clauses:
"(ii) shall require the organization to provide and supply
information (described in section 1866(bX2)(C)(ii)) in the manner
such information is required to be provided or supplied under
that section;
"(iii) shall require the organization to notify the Secretary of
loans and other special financial arrangements which are made
between the organization and subcontractors, affiliates, and
related parties; and".
(2) EFFECTIVE DATE.—The amendments made by paragraph (1)
shall apply to contracts as of January 1,1987.
(f) AUTHORITY TO IMPOSE CIVIL MONEY PENALTIES.—Subsection (i)
of such section is amended by adding at the end the following new
paragraph:
"(6XA) Any eligible organization with a risk-sharing contract
under this section that fails substantially to provide medically
necessary items and services that are required (under law or such
contract) to be provided to individuals covered under such contract,
if the failure has adversely affected (or has a substantial likelihood
of adversely affecting) these individuals, is subject to a civil money
penalty of not more than $10,000 for each such failure.
"(B) The provisions of section 1128A (other than subsection (a))
shall apply to a civil money penalty under subparagraph (A) in the
same manner as they apply to a civil money penalty under that
S6ct^ion
(g) STUDY OF AAPCC AND ACR.—The Secretary of Health and
Human Services shall provide, through contract with an appro­
priate organization, for a study of the methods by which— Contracts.
Ante, pp. 1997,
1998.
Contracts.
42 use 1395mm
note.
42 use 1395CC.
Loans.
Contracts.
42 use 1395mm
note.
Contracts.
Post, pp. 2003,
2008.
Contracts.
42 use 1395 mm
note. 100 STAT. 2002 PUBLIC LAW 99-509—OCT. 21, 1986
42 use 1395mm.
42 use 1395mm
note.
42 use 1395mm
note.
99 Stat. 1037.
42 use 406,
1302,1395hh.
42 use 1395pp.
42 use 1395x
note. ' (1) the adjusted average per capita cost ("AAPCC", as defined
in section 1876(a)(4) of the Social Security Act) can be refined to
more accurately reflect the average cost of providing care to
different classes of patients, and
(2) the adjusted community rate ("ACR", as defined in section
1876(e)(3) of such Act) can be refined.
The Secretary shall submit to Congress, by not later than January 1,
1988, specific legislative recommendations concerning methods by
which the calculation of the AAPCC and the ACR can be refined,
(h) ALLOWING MEDICARE BENEFICIARIES TO DISENROLL AT A LOCAL
SOCIAL SECURITY OFFICE.—The Secretary of Health and Human
Services shall provide that individuals enrolled with an eligible
organization under section 1876 of the Social Security Act may
disenroll, on and after June 1, 1987, at any local office of the Social
Security Administration.
(i) USE OF RESERVE FUNDS.—Notwithstanding any provision of
section 1876(g)(5) of the Social Security Act (42 U.S.C. 1395mm(g)(5))
to the contrary, funds reserved by an eligible organization under
such section before the date of the enactment of this Act may be
applied, at the organization's option, to offset the amount of any
reduction in payment amounts to the organization effected under
Public Law 99-177 during fiscal year 1986.
SEC. 9313. PROVISIONS RELATING TO IMPROVEMENT OF QUALITY OF
CARE.
(a) PERMITTING PROVIDER REPRESENTATION OF BENEFICIARIES.—
(1) IN GENERAL.—Section 1869(b)(1) of the Social Security Act
(42 U.S.C. 1395ff(b)(l)) is amended by adding at the end the
following new sentence: "Sections 206(a), 1102, and 1871 shall
'[•' not be construed as authorizing the Secretary to prohibit an
individual from being represented under this subsection by a
person that furnishes or supplies the individual, directly or
indirectly, with services or items solely on the basis that the
person furnishes or supplies the individual with such a service
" or item. Any person that furnishes services or items to an
''• individual may not represent an individual under this subsec­
tion with respect to the issue described in section 1879(a)(2)
unless the person has waived any rights for payment from the
beneficiary with respect to the services or items involved in the
appeal. If a person furnishes services or items to an individual
and represents the individual under this subsection, the person
may not impose any financial liability on such individual in
f, connection with such representation.".
(2) TREATMENT OF COSTS OF UNSUCCESSFUL APPEAL.—Section
1861(v)(l) of such Act (42 U.S.C. 1395x(v)(l)) is amended by
adding at the end the following new subparagraph:
"(R) In determining such reasonable cost, costs incurred by a
provider of services representing a beneficiary in an unsuccessful
appeal of a determination described in section 1869(b) shall not be
allowable as reasonable costs.".
(3) EFFECTIVE DATE.—The amendments made by this para­
graph take effect on the date of the enactment of this Act.
(b) PERMITTING REVIEW OF TECHNICAL DENIALS.—
(1) IN GENERAL.—Section 1869 of such Act is further
amended— WiSf PUBLIC LAW 99-509—OCT. 21, 1986 100 STAT. 2003
(A) in subsection (a), by inserting before "shall" the fol­
lowing: "and any other determination with respect to a
claim for benefits under part A", and
(B) in subsection (b)(1)—
(i) by striking "or" at the end of subparagraph (B),
(ii) by inserting ", or" at the end of subparagraph (C),
and
(iii) by inserting after subparagraph (C) the following
new subparagraph:
"(D) any other denial (other than under part B of title XI) of a
claim for benefits under part A or a claim for benefits with
respect to home health services under part B,".
(2) EFFECTIVE DATE.—The amendments made by this subsec­
tion take effect on the date of the enactment of this Act.
(c) PROHIBITION OF CERTAIN PHYSICIAN INCENTIVE PLANS.—
(1) MAKING CERTAIN PLANS SUBJECT TO CIVIL MONETARY PEN­
ALTIES.—Section 1128A of the Social Security Act (42 U.S.C.
1320a-7a) is amended—
• ' (A) by striking "subsection (a)" each place it appears and
inserting "subsection (a) or (b)",
vs>^ : (B) in subsection (a)(1), by striking "(h)(1)" and "(h)(2)"
and inserting "(i)(l)" and "(i)(2)", respectively,
fc'i • (C) in subsection (f), by striking "subsection (d)" and
inserting "subsection (e)",
– • (D) by redesignating subsections (b) through (h) as subsec­
tions (c) through (i), respectively, and
(E) by inserting after subsection (a) the following new
subsection:
"(b)(1) If a hospital, an eligible organization with a risk-sharing
contract under section 1876, or an entity with a contract under
section 1903(m) knowingly makes a payment, directly or indirectly,
to a physician as an inducement to reduce or limit services provided
with respect to individuals who—
"(A) are entitled to benefits under part A or part B of title
XVII or to medical assistance under a State plan approved
under title XIX,
"(B) in the case of an eligible organization or an entity, are
enrolled with the organization or entity, and
"(C) are under the direct care of the physician,
the hospital or organization shall be subject, in addition to any other
penalties that may be prescribed by law, to a civil money penalty of
not more than $2,000 for each such individual with respect to whom
the payment is made.
"(2) Any physician who knowingly accepts receipt of a payment
described in paragraph (1) shall be subject, in addition to any other
penalties that may be prescribed by law, to a civil money penalty of
not more than $2,000 for individual described in such paragraph
with respect to whom the payment is made."
(2) EFFECTIVE DATE.—The amendments made by paragraph (1)
shall apply to—
V (A) payments by hospitals occurring more than 6 months
after the date of the enactment of this Act, and
(B) payments by eligible organizations or entities occur­
ring on or after April 1, 1989.
v3) STUDY.—The Secretary of Health and Human Services
shall report to Congress, not later than January 1, 1988,
concerning incentive arrangements offered by health mainte-42 use 1320c.
42 use 1395ff
note.
Post, p. 2008.
eontracts.
Ante, p. 1999.
42 use 1396b.
State and local
governments.
42 use 300u.
42 use 1396.
42 use 1320a-7a
note.
Reports.
Health care
professionals.
42 use 1320a-7a
note. 100 STAT. 2004 PUBLIC LAW 99-509—OCT. 21, 1986
nance organizations and competitive medical plans to physi­
cians. The report shall—
(A) review the type of incentive arrangements in common
use,
(B) evaluate their potential to pressure improperly physi­
cians to reduce or limit services in a medically inappropri­
ate manner, and
(C) make recommendations concerning providing for an
exception, to the prohibition contained in section 1128A(b)
Post, pp. 2003, > of the Social Security Act, for incentive arrangements that
^^^^- may be used by such organizations and plans to encourage
efficiency in the utilization of medical and other services
but that do not have a substantial potential for adverse
effect on quality.
42 use 1395// (d) STUDY TO DEVELOP A STRATEGY FOR QUALITY REVIEW AND
^°^- ASSURANCE.—
(1) IN GENERAL.—The Secretary of Health and Human Serv-
: ices shall arrange for a study to design a strategy for reviewing
and assuring the quality of care for which payment may be
42 use 1395. made under title XVIII of the Social Security Act.
(2) ITEMS INCLUDED IN STUDY.—Among other items, the study
shall—
(A) identify the appropriate considerations which should
be used in defining "quality of care";
(B) evaluate the relative roles of structure, process, and
outcome standards in assuring quality of care;
(C) develop prototype criteria and standards for defining
and measuring quality of care;
? ' (D) evaluate the adequacy and focus of the current meth­
ods for measuring, reviewing, and assuring quality of care;
Research and (E) evaluate the current research on methodologies for
development. measuring quality of care, and suggest areas of research
needed for further progress;
(F) evaluate the adequacy and range of methods available
to correct or prevent identified problems with quality of
,t care;
V > (G) review mechanisms available for promoting, coordi­
nating, and supervising at the national level quality review
and assurance activities; and
« • (H) develop general criteria which may be used in
establishing priorities in the allocation of funds and person­
nel in reviewing and assuring quality of care.
(3) REPORT.—The Secretary shall submit to Congress, not later
than 2 years after the date of the enactment of this Act, a report
on the study. Such report shall address the items described in
paragraph (2) and shall include recommendations with respect
to strengthening quality assurance and review activities for
services furnished under the medicare program.
v i *. (4) ARRANGEMENTS FOR STUDY.—(A) The Secretary shall re­
quest the National Academy of Sciences, acting through appro­
priate units, to submit an application to conduct the study
described in this subsection. If the Academy submits an accept­
able application, the Secretary shall enter into an appropriate
arrangement with the Academy for the conduct of the study. If
the Academy does not submit an acceptable application to
conduct the study, the Secretary may request one or more
appropriate nonprofit private entities to submit an application PUBLIC LAW 99-509—OCT. 21, 1986 100 STAT. 2005
42 use 1395WW.
Post, p. 2095.
Health care
facilities. to conduct the study and may enter into an appropriate
arrangement for the conduct of the study by the entity which
submits the best acceptable application.
f (B) In developing plans for the conduct of the study, the
Secretary shall assure that consumer and provider groups, peer
review organizations, the Joint Commission on Accreditation of
Hospitals, professional societies, and private purchasers of care
with experience and expertise in the monitoring of the quality
of care are consulted.
(5) COORDINATION.—The Secretary shall designate an office
with responsibilities for coordinating studies, under this subsec­
tion and other authority, relating to the quality of services
I furnished to medicare and medicaid beneficiaries, in particular
studies relating to the evaluation of the prospective payment
system on the quality of health care provided to medicare
beneficiaries. These responsibilities shall include assessing the
feasibility and costs of alternative studies in relation to their
^ importance, overseeing and coordinating access to needed data,
and maintaining a clearinghouse for both public and private
sector studies.
SEC. 9314. DIRECT COSTS OF GRADUATE MEDICAL EDUCATION.
(a) CLARIFYING COUNTING OF TIME SPENT IN OUTPATIENT SET­
TINGS.—Section 1886(h)(4) of such Act, as amended by section 1895(b)
of the Tax Reform Act of 1986, is amended by adding at the end the
following new subparagraph:
"(E) COUNTING TIME SPENT IN OUTPATIENT SETTINGS.—
Such rules shall provide that only time spent in activities
relating to patient care shall be counted and that all the
^ time so spent by a resident under an approved medical
residency training program shall be counted towards the
determination of full-time equivalency, without regard to
! the setting in which the activities are performed, if the
hospital incurs all, or substantially all, of the costs for the
training program in that setting.".
(b) EFFECTIVE DATE.—The amendments made by subsection (a)
shall apply to payments for approved residency training programs
asof July 1,1987.
SEC. 9315. PAYMENTS FOR HOME HEALTH SERVICES.
(a) LIMITATIONS ON PAYMENT FOR HOME HEALTH SERVICES.—Sec­
tion 1861(v)(l)(L) of the Social Security Act (42 U.S.C. 1395x(v)(lXL))
is amended—
. (1) by inserting "(i)" after "(L)", and
(2) by striking "the 75th percentile" and all that follows
through "as the Secretary may determine." and inserting in
– lieu thereof "for cost reporting periods beginning on or after—
* "(I) July 1, 1985, and before July 1, 1986, 120 percent,
"(II) July 1, 1986, and before July 1, 1987, 115 percent, or .> •^•
"(III) July 1,1987,112 percent,
of the mean of the labor-related and nonlabor per visit costs for free
standing home health agencies.
"(ii) Effective for cost reporting periods beginning on or after Effective date.
July 1, 1986, such limitations shall be applied on an aggregate basis
for the agency, rather than on a discipline specific basis, with
appropriate adjustment for administrative and general costs of
hospital-based agencies.". -42 use 1395WW
note.
71-194 0 – 89 – 8 : (X. 3 Part3 100 STAT. 2006 PUBLIC LAW 99-509—OCT. 21, 1986
42 use 1395x
note.
42 use 1395x
note.
^;j SI-
Health care
professionals,
eontracts.
42 use 1320c.
mvni^ (b) CONSIDERATIONS IN ESTABLISHING LIMITS.—In establishing
limitations under section 1861(vXlXL) of the Social Security Act on
payment for home health services for cost reporting periods begin­
ning on or after July 1, 1986, the Secretary of Health and Human
Services shall—
(1) base such limitations on the most recent data available,
which data may be for cost reporting periods beginning no
t-" earlier than October 1,1983; and
(2) take into account the changes in costs of home health
agencies for billing and verification procedures that result from
the Secretary's changing the requirements for such procedures,
to the extent the changes in costs are not reflected in such data.
Paragraph (2) shall apply to changes in requirements effected
before, on, or after July 1,1986.
(c) GAO REPORT.—The Comptroller General shall study and report
to Congress, not later than February 1,1988, on—
(1) the appropriateness and impact on medicare beneficiaries
of appl3dng the per visit cost limits for home health services
under section 1861(vXlXL) of the Social Security Act on a dis­
cipline-specific basis, rather than on an aggregate basis, for all
home health services furnished by an agency, and
(2) the appropriateness of the percentage limits established
under such section.
SEC. 9316. ESTABLISHMENT OF PATIENT OUTCOME ASSESSMENT RE­
SEARCH PROGRAM.
(a) IN GENERAL,—Section 1875 of the Social Security Act (42
U.S.C. 139511) is amended by adding at the end the following new
subsection:
"(cXD The Secretary shall establish a patient outcome assessment
research program (in this subsection referred to as the 'research
program') to promote research with respect to patient outcomes of
selected medical treatments and surgical procedures for the purpose
of assessing their appropriateness, necessity, and effectiveness. The
research program shall include—
"(A) reorganization of data relating to claims under parts A
*' * and B of this title in a manner that facilitates research with
respect to patient outcomes,
"(B) assessments of the appropriateness of admissions and
, ,^; discharges,
"(C) assessments of the extent of professional uncertainty
regarding efficacy,
"(D) development of improved methods for measuring patient
outcomes,
"(E) evaluations of patient outcomes, and
"(F) evaluation of the effects on physicians' practice patterns
of the dissemination to physicians and peer review organiza­
tions with contracts under part B of title XI of the findings
of the research conducted under subparagraphs (B), (C), (D),
».. and (E).
"(2) In selecting treatments and procedures to be studied, the
Secretary shall give priority to those medical and surgical treat­
ments and procedures—
"(A) for which data indicate a highly (or potentially highly)
variable pattern of utilization among beneficiaries under this
title in different geographic areas, and tlJ
«W'
XG PUBLIC LAW 99-509—OCT. 21, 1986 100 STAT. 2007
•^f "(B) which are significant (or potentially significant) for pur­
poses of this title in terms of utilization by beneficiaries, length
of hospitalization associated with the treatment or pro­
cedure, costs to the research program, and risk involved to the
beneficiary.
"(3) For purposes of carrying out the research program, there are
authorized to be appropriated—
"(A) from the Federal Hospital Insurance Trust Fund
$4,000,000 for fiscal year 1987 and $5,000,000 for each of fiscal
years 1988 and 1989, and
"(B) from the Federal Supplementary Medical Insurance
Trust Fund $2,000,000 for fiscal years 1987 and $2,500,000 for
each of fiscal years 1988 and 1989.
"(4) Not less than 90 percent of the amount appropriated for any
fiscal year to carry out the research program shall be used to fund
grants to, and cooperative agreements with, non-Federal entities to
conduct research described in paragraph (1). The remainder may be
used by the Secretary to provide such research by Federal entities
and for administrative costs.
"(5) The research program shall be administered by the National
Center for Health Services Research and Health Care Technology
established under section 305 of the Public Health Service Act (in
this subsection referred to as the 'Center'). The Center shall estab­
lish application procedures for grants and cooperative agreements,
and shall establish peer review panels to review all such applica­
tions and all research findings. The Center shall consult with the
council on health care technology (established under a grant under
section 309 of the Public Health Service Act) in establishing the
scope and priorities for the research program and shall report
periodically to any such council on the status of the program.
"(6) The Secretary shall make available data derived from the
programs under this title and other programs administered by the
Secretary for use in the research program.
"(7) The Center shall report to the Committees on Finance and
Appropriations of the Senate and the Committees on Ways and
Means, Energy and Commerce, and Appropriations of the House of
Representatives not later than 18 months after the date of the
enactment of this Act, and annually thereafter, with respect to the
findings under the research program. In cooperation with appro­
priate medical specialty groups, the Center shall disseminate such
findings as widely as possible, including disseminating such findings
to each peer review organization which has a contract under part B
of title XL"
(b) PERMITTING SERVICES TO BE PROVIDED UNDER RESEARCH PRO­
GRAM.—Section 1862(a)(1) of such Act (42 U.S.C. 1395y(a)(l)) is
amended—
(1) by striking "and" at the end of subparagraph (C),
,«jr*c (2) by striking the semicolon at the end of subparagraph (D)
and inserting ", and", and
(3) by adding at the end the following new subparagraph:
"(E) in the case of research conducted pursuant to section
1875(c), which is not reasonable and necessary to carry out the
purposes of that section;". Appropriation
authorization.
Grants.
Contracts.
42 use 242c.
Reports.
42 use 242n.
Reports.
Contracts.
42 use 1320c.
Ante, p. 2006. 100 STAT. 2008 PUBLIC LAW 99-509—OCT. 21, 1986
Health care
professionals.
State and local
governments. SEC. 9317. IMPROVEMENTS IN CIVIL MONETARY PENALTY AND EXCLU­
SION PROVISIONS.
(a) COLLATERAL ESTOPPEL EFFECT OF PRIOR FEDERAL CRIMINAL
CONVICTIONS.—Section 1128A(c) of the Social Security Act (42 U.S.C.
1320a-7a(c)), as redesignated by section 9313(c), is amended by
adding at the end the following new paragraph:
"(3) In a proceeding under subsection (a) or (b) which—
"(A) is against a person who has been convicted (whether
upon a verdict after trial or upon a plea of guilty or nolo
contendere) of a Federal crime charging fraud or false state­
ments, and
"(B) involves the same transaction as in the criminal action,
the person is estopped from denying the essential elements of the
criminal offense.".
(b) AUTHORITY OF HEARING OFFICER TO SANCTION MISCONDUCT.—
Such section is further amended by adding at the end the following
new paragraph:
"(4) The official conducting a hearing under this section may
sanction a person, including any party or attorney, for failing to
comply with an order or procedure, failing to defend an action, or
other misconduct as would interfere with the speedy, orderly, or fair
conduct of the hearing. Such sanction shsdl reasonably relate to the
severity and nature of the failure or misconduct. Such sanction may
include—
"(A) in the case of refusal to provide or permit discovery,
drawing negative factual inferences or treating such refusal as
an admission by deeming the matter, or certain facts, to be
established,
"(B) prohibiting a party from introducing certain evidence or
otherwise supporting a particular claim or defense,
"(C) striking pleadings, in whole or in part,
41 "(D) stajdng the proceedings, . '
"(E) dismissal of the action,
"(F) entering a default judgment,
"(G) ordering the party or attorney to pay attorneys' fees and
other costs caiised by the failure or misconduct, and
"(H) refusing to consider any motion or other action which is
not filed in a timely manner.".
(c) CLARIFICATION OF EXCLUSION AUTHORITY FOR CERTAIN OFFEND­
ERS.—Section 1128 of such Act (42 U.S.C. 1320a-7) is amended by
adding at the end the following new subsection:
"(f) For purposes of subsection (a), a physician or other individual
is considered to have been 'convicted' of a criminal offense—
"(1) when a judgment of conviction has been entered against
the physician or individual by a Federal, State, or local court,
regardless of whether there is an appeal pending or whether the
judgment of conviction or other record relating to criminal
conduct has been expunged;
^' "(2) when there has been a finding of guilt against the physi­
cian or individual by a Federal, State, or local court;
"(3) when a plea of guilty or nolo contendere by the physician
or individual has been accepted by a Federal, State, or local
;> 1 court; or
"(4) when the phjrsician or individual h£is entered into partici­
pation in a first offender or other program where judgment of
conviction has been withheld.". Dui PUBLIC LAW 99-509—OCT. 21, 1986 100 STAT. 2009
(d) EFFECTIVE DATES.—(1) The amendment made by subsection (a)
shall take effect on the date of the enactment of this Act, without
regard to when the criminal conviction was obtained, but shall only
apply to a conviction upon a plea of nolo contendere tendered after
the date of the enactment of this Act.
(2) The amendment made by subsection (b) shall apply to failures
or misconduct occurring on or after the date of the enactment of this
Act.
(3) The provisions—
(A) of paragraphs (1), (2), and (3) of section 1128(f) of the Social
Security Act (as added by the amendment made by subsection
(c)) shall apply to judgments entered, findings made, and pleas
entered, before, on, or after the date of the enactment of this
Act, and
(B) of paragraph (4) of such section shall apply to participa­
tion in a program entered into on or after the date of the
enactment of this Act.
SEC. 9318. HOSPITAL PROTOCOLS FOR ORGAN PROCUREMENT AND
STANDARDS FOR ORGAN PROCUREMENT AGENCIES.
(a) IN GENERAL.—Title XI of the Social Security Act is amended by
inserting after section 1137 the following new section: 42 use 1320a-7a
note.
42 use 1320a-7
note.
Ante, p. 2008.
iii,; ^^'
HOSPITAL PROTOCOLS FOR ORGAN PROCUREMENT AND STANDARDS FOR
ORGAN PROCUREMENT AGENCIES
"SEC. 1138. (aXD The Secretary shall provide that a hospital 42 USC 1320b-
meeting the requirements of title XVIII or XIX may participate in 42 USC 1395,
the program established under such title only if— 1396.
"(A) the hospital establishes written protocols for the identi­
fication of potential organ donors that—
"(i) assure that families of potential organ donors are
•;;,,, made aware of the option of organ or tissue donation and , ,
their option to decline, •/-,
'^ "(ii) encourage discretion and sensitivity with respect to
the circumstances, views, and beliefs of such families, and
"(iii) require that an organ procurement agency des­
ignated by the Secretary pursuant to subsection (bXlXF) be
'^ notified of potential organ donors; and ^ .
"(B) In the case of a hospital in which organ transplants are
, performed, the hospital is a member of, and abides by the rules
and requirements of, the Organ Procurement and Transplan­
tation Network established pursuant to section 372 of the Public
r Health Service Act (in this section referred to as the 'Network'). 42 USC 274.
r "(2) For purposes of this subsection, the term 'organ' means a
human kidney, liver, heart, lung, pancreas, and any other human
organ or tissue specified by the Secretary for purposes of this
subsection.
"(bXD The Secretary shall provide that payment may be made
under title XVIII or XIX with respect to organ procurement costs
attributable to payments made to an organ procurement agency
only if the agency—
"(AXi) is a qualified organ procurement organization (as de-
? scribed in section 371(b) of the Public Health Service Act) that is 42 USC 273.
J operating under a grant made under section 371(a) of such Act,
or (ii) has been certified or recertified by the Secretary within 100 STAT. 2010 PUBLIC LAW 99-509—OCT. 21, 1986
?'r mo s^
42 use 273.
42 use 1320b-8
note.
42 use 1395,
1396. usgi IE ) SI ^* the previous two years as meeting the standards to be a quali-
•»• >;i fjgd organ procurement organization (as so described);
"(B) meets the requirements that are applicable under such
title for organ procurement agencies;
"(C) meets performance-related standards prescribed by the
«6T Secretary;
<:iri "(D) is a member of, and abides by the rules and requirements
of, the Network;
"(E) allocates organs, within its service area and nationally,
i. •- in accordance with medical criteria and the policies of the
Network; and
"(F) is designated by the Secretary as an organ procurement
; . organization payments to which may be treated as organ
procurement costs for purposes of reimbursement under such
title.
"(2) The Secretary may not designate more than one organ
procurement organization for each service area (described in section
371(b)(1)(E) of the Public Health Service Act) under paragraph
(IXF).".
(b) EFFECTIVE DATES.—(1) Section 1138(a) of the Social Security
Act shall apply to hospitals participating in the programs under
titles XVIII and XIX of such Act as of October 1,1987.
(2) Section 1138(b) of such Act shall apply to costs of organs
procured on or after October 1,1987.
SEC. 9319. MEDICARE AS SECONDARY PAYER; COVERAGE REQUIRE-
MENTS FOR CERTAIN OTHER PAYERS.
(a) MEDICARE SECONDARY FOR DISABLED EMPLOYEES OF CERTAIN
LARGE EMPLOYERS.—Section 1862(b) of the Social Security Act (42
U.S.C. 1395y(b)) is amended by adding at the end the following new
paragraph:
"(4)(AXi) A large group health plan may not take into account that
an active individual is eligible for or receives benefits under this
title under section 226(b), other than an individual who is, or would
upon application be, entitled to benefits under section 226A.
"(ii) Payment may not be made under this title, except as provided
in clause (iii), with respect to any item or service to the extent that
payment has been made, or can reasonably be expected to be made,
with respect to the item or service as required under clause (i).
"(iii) Any payment under this title with respect to any item or
service to which clause (i) applies shall be conditioned on reimburse­
ment to the appropriate Trust Fund established by this title. In
order to recover payment made under this title for the item or
service, the United States may bring an action against any entity
which is required under this subsection (a) to pay with respect to the
item or service (and may, in accordance with paragraph (5), collect
double damages against that entity), or against any other entity that
has received payment from that entity with respect to the item or
service, and may join or intervene in any action related to the
events that gave rise to the need for the item or service. The United
States shall be subrogated (to the extent of payment made under
this title for an item or service) to any right under clause (i) of an
individual or any other entity to payment with respect to the item
or service. The Secretary may waive (in whole or in part) the
.CT5'. Qb i Si- provisions of this clause in the case of an individual claim if the
Secretary determines that the waiver is in the best interests of
the program established under this title. 42 use 426.
42 use 426-
Claims.
jfT: O'^l; •?!-PUBLIC LAW 99-509—OCT. 21, 1986 100 STAT. 2011
mA
Insurance. ^ "(B) In this paragraph:
"(i) The term 'large group health plan' has the meaning given
such term in section 5000(b) of the Internal Revenue Code of
1986. Post, p. 2095.
"(ii) The term 'active individual' means an employee (as may ,;; j u
be defined in regulations), the employer, an individual associ-
1 ated with the employer in a business relationship, or a member
of the family of any of those persons.
"(C) The provisions of subparagraph (B) of paragraph (3) shall
apply to coordination of payment under this paragraph in the case
of large group health plans in the same manner as they apply to
coordination of payment under paragraph (3) in the case of group
health plans.
"(D) The preceding provisions of this paragraph shall only apply
to items and services furnished on or after January 1, 1987, and
before January 1,1992.".
(b) ESTABLISHMENT OF PRIVATE CAUSE OF ACTION WHERE MEDICARE
SECONDARY.—Such section is further amended by adding at the end
the following new paragraph:
"(5) There is hereby created a private cause of action for damages
(which shall be in an amount double the amount otherwise provided)
in the case of a workmen's compensation law or plan, automobile or
liability insurance policy or plan or no fault insurance plan, group
health plan, or large group health plan which is made a primary
payer under paragraph (1), (2), (3), or (4), respectively, and which
fails to provide for primary payment (or appropriate reimburse­
ment) in accordance with such respective paragraphs."
(c) SPECIAL ENROLLMENT PERIODS.—
(1) Section 1837(iXl) of such Act (42 U.S.C. 1395p(i)(l)) is
amended by adding at the end the following: "In the case of an
individual who has not attained the age of 65, at the time the
^ individual first satisfies paragraph (1) of section 1836, is en­
rolled in a large group health plan as an active individual (as
^ those terms are defined in section 1862(b)(4XB)), and has elected
not to enroll (or to be deemed enrolled) under this section
f during the individual's initial enrollment period, there shall be
'^ a special enrollment period described in paragraph (3)(B).".
(2) Section 1837(i)(2) of such Act (42 U.S.C. 1395p(i)(2)) is
!^' amended by adding at the end the following: "In the case of an
individual who has not attained the age of 65, has enrolled (or
^ has been deemed to have enrolled) in the medical insurance
'' program established under this part during the individual's
initial enrollment period, or is an individual described in the vsesi t^c'
^ second sentence of paragraph (1), has enrolled in such program
" during any subsequent special enrollment period under this
subsection during which the individual was not enrolled in a
^ large group health plan as an active individual (as those terms
are defined in section 1862(b)(4XB)), and has not terminated
enrollment under this section at any time at which the individ­
ual is not enrolled in such a large group health plan as an active
^ individual, there shall be a special enrollment period described , •
^ in paragraph (3XB).".
(3) Section 1837(iX3) of such Act (42 U.S.C. 1395p(iX3)) is Ante, p. 171.
amended—
(A) by inserting "(A)" after "(3)",
(B) by inserting "the first sentences of after "referred to
in ,
(C) by adding at the end the following new subparagraph: :'.>'A
U8^
42 use 1395o.
42 use 1395y. 100 STAT. 2012 PUBLIC LAW 99-509—OCT. 21, 1986
"(B) The special enrollment period referred to in the second
sentences of paragraphs (1) and (2) is the period beginning with the
first day of the first month in which the individual is no longer
enrolled as an active individual in a large group health plan (as such
42 use 1395y. terms are defined in section 1862(b)(4)(B)) and ending seven months
later.".
(4) The second sentence of section 1839(b) of such Act (42
U.S.C. 1395r(b)) is amended by inserting before the period the
following: "or months during which the individual has not
attained the age of 65 and for which the individual can dem­
onstrate that the individual was enrolled in a large group
health plan as an active individual (as those terms are defined
in section 1862(b)(4)(B))".
(d) TAX IMPOSED ON NONCONFORMING PLANS.—
Post, p. 2095. -' (1) Subtitle D of the Internal Revenue Code of 1954 (relating
to miscellaneous excise taxes) is amended by adding at the end
the following new chapter:
"CHAPTER 47—CERTAIN LARGE GROUP HEALTH PLANS
"Sec. 5000. Certain large group health plans.
26 use 5000. "SEC. 5000. CERTAIN LARGE GROUP HEALTH PLANS.
"(a) IMPOSITION OF TAX.—There is hereby imposed on any em­
ployer or employee organization that contributes to a nonconform­
ing large group health plan a tax equal to 25 percent of the
employer's or employee organization's expenses incurred during the
calendar year for each large group health plan to which the em­
ployer or employee organization contributes.
"(b) LARGE GROUP HEALTH PLAN.—For purposes of this section,
the term 'large group health plan' means a plan of, or contributed to
oc ' vSO ^:' "^y* ^^ employer or employee organization (including a self-insured
plan) to provide health care (directly or otherwise) to the employees,
.ft I !¥: i s> former employees, the employer, others associated or formerly asso­
ciated with the employer in a business relationship, or their fami­
lies, that covers employees of at least one employer that normally
employed at least 100 employees on a typical business day during
the previous calendar year.
"(c) NONCONFORMING LARGE GROUP HEALTH PLAN.—For purposes
of this section, the term 'nonconforming large group health plan'
means a large group health plan that at any time during a calendar
year does not comply with the requirements of section
42 use 1395y. 1862(b)(4)(A)(i) of the Social Security Act.
"(d) GOVERNMENT ENTITIES.—For purposes of this section, the
term 'employer' does not include a Federal or other governmental
entity.".
(2) The table of chapters of subtitle D of such Code is amended
by adding at the end thereof the following: .
"CHAPTER 47. Certain large group health plans.".
Reports. (e) STUDY OF IMPACT ON DISABLED BENEFICIARIES AND FAMILY.—
42 use 1395y The Comptroller General shall study and report to Congress, by not
later than March 1, 1990, the impact of the amendments made by
this section on access of disabled individuals and members of their
family to employment and health insurance. The report shall in­
clude information relating to— ^ , , ,^. note. :M PUBLIC LAW 99-509—OCT. 21, 1986 100 STAT. 2013
•p (1) the number of disabled medicare beneficiaries for whom
medicare has become secondary, either through their employ­
ment or the employment of a family member;
(2) the amount of savings to the medicare program achieved
annually through this provision; and
£ (3) the effect on employment, and employment-based health
1 coverage, of disabled individuals and family members.
(- (f) EFFECTIVE DATES.— 42USCl395y
) (1) Except as provided in paragraph (2), the amendments ^°^-
made by this section shall apply to items and services furnished
e on or after January 1,1987.
(2) The amendments made by subsection (c) shall apply to
f! enrollments occurring on or after January 1, 1987.
SEC. 9320. PAYMENT FOR SERVICES OF CERTIFIED REGISTERED NURSE
ANESTHETISTS.
(a) EXTENSION OF PASS-THROUGH FOR COSTS OF CERTIFIED REGIS- -'^-^ i i at; i
TERED NURSE ANESTHETISTS.—Section 2312(c) of the Deficit Reduction
Act of 1984 is amended by striking "October 1, 1987." and inserting 42 USC I395ww
"January 1, 1989. In the case of a cost reporting period that begins ^°^-
before January 1,1989, but end after such date, additional pa3mients
under the amendment made by subsection (a) shall be proportionately
reduced to reflect the portion of the period occurring after such
date.".
(b) COVERAGE OF SERVICES OF A CERTIFIED REGISTERED NURSE
ANESTHETIST UNDER PART B.—Section 1861(s) of the Social Security
Act (42 U.S.C. 1395x(s)) is amended—
(1) by redesignating paragraphs (11) through (14) as para­
graphs (12) through (15), respectively;
I (2) by striking "and" at the end of paragraph (9);
(3) by striking the period at the end of paragraph (10) and
inserting "; and"; and
i (4) by inserting after paragraph (10) the following new para­
graph:
t "(11) services of a certified registered nurse anesthetist (as
– defined in subsection (bb)).".
(c) DEFINITION OF SERVICES OF A CERTIFIED REGISTERED NURSE
ANESTHETIST.—Section 1861 of such Act is amended by inserting
after subsection (aa) the following new subsection:
"SERVICES OF A CERTIFIED REGISTERED NURSE ANESTHETIST
"(bbXD The term 'services of a certified registered nurse anes­
thetist' means anesthesia services and related care furnished by a
certified registered nurse anesthetist (as defined in paragraph (2))
which the nurse anesthetist is legally authorized to perform as such
by the State in which the services are furnished.
"(2) The term 'certified registered nurse anesthetist' means a
certified registered nurse anesthetist licensed by the State who
meets such education, training, and other requirements relating to
anesthesia services and related care as the Secretary may prescribe.
In prescribing such requirements the Secretary may use the same
requirements as those established by a national organization for the
certification of nurse anesthetists.".
(d) DIRECT PAYMENT FOR SERVICES.—Section 1832(a)(2)(B) of such
Act (42 U.S.C. 1395k(aX2XB)) is amended—
(1) by striking "and" at the end of clause (i), * 100 STAT. 2014 PUBLIC LAW 99-509—OCT. 21, 1986
Ante, p. 2013.
Effective date.
42 use 1395u.
Health care
professionals.
Claims.
Contracts. fno ^^ (2) by striking "; and" at the end of clause (ii) and inserting
-V0 ", and ', and
(3) by adding at the end the following new clause:
tevain?f "(iii) services of a certified registered nurse anes­
thetist; and".
(e) AMOUNT OF PAYMENT.—(1) Section 1833(a)(1) of such Act (42
U.S.C. 13951(aXl)) is amended by striking "and" at the end of
subparagraph (E), and by adding at the end the following: "and (H)
with respect to services of a certified registered nurse anesthetist
under section 1861(sXll), the amounts paid shall be 80 percent of the
lesser of the actual charge or the fee schedule for such services
established by the Secretary in accordance with subsection (1),".
(2) Section 1833 of such Act is further amended by adding at the
end the following new subsection:
"(IXD The Secretary shall establish a fee schedule for services of
certified registered nurse anesthetists under section 1861(s)(ll).
"(2) Except as provided in paragraph (3), the fee schedule estab­
lished under pars^aph (1) shall be initially based on audited data
from cost reporting periods ending in fiscal year 1985. The fee
schedule shall be adjusted annually (to become effective on Janu­
ary 1 of each calendar year) by the percentage increase in the MEI
(as defined in section 1842(bX4XEXii)) for that year.
"(3XA) In establishing the initial fee schedule for those services,
the Secretary shall adjust the fee schedule to the extent necessary to
ensure that the estimated total amount which will be paid under
this title for those services plus applicable coinsurance in 1989 will
equal the estimated total amount which would be paid under this
title for those services in 1989 if the services were included as
inpatient hospital services and payment for such services was made
under part A in the same manner as payment was made in fiscal
year 1987, adjusted to take into account changes in prices and
technology relating to the administration of anesthesia.
"(B) The Secretary shall also reduce the prevailing charge of
physicians for medical direction of a certified registered nurse anes­
thetist, or the fee schedule for services of certified registered nurse
anesthetists, or both, to the extent necessary to ensure that the
estimated total amount which will be paid under this title plus
applicable coinsurance for such medical direction and such services
in 1989 and 1990 will not exceed the estimated total amount which
would have been paid but for the enactment of the amendments
made by section 9320 of the Omnibus Budget Reconciliation Act of
1986. A reduced prevailing charge under this subparagraph shall
become the prevailing charge but for subsequent years for purposes
of applying the economic index under the fourth sentence of section
1842(bX3).
"(4) In establishing the fee schedule under paragraph (1), the
Secretary may utilize a system of time units, a system of base and
time units, or any appropriate methodology. The Secretary may
establish a nationwide fee schedule or adjust the fee schedule
for geographic areas (as the Secretary may determine to be
appropriate).
"(5XA) Payment for the services of a certified registered nurse
anesthetist (for which payment may otherwise be made under this
part) may be made on the basis of a claim or request for payment
presented by the certified registered nurse anesthetist furnishing
such services, or by a hospital, physician, or group practice with
which the certified registered nurse anesthetist furnishing such PUBLIC LAW 99-509—OCT. 21, 1986 100 STAT. 2015
services has an employment or contractual relationship that pro­
vides for payment to be made under this part for such services to
such hospital, physician, or group practice.
"(B)(i) Payment for the services of a certified registered nurse
anesthetist under this part may be made only on an assignment-
related basis, and any such assignment agreed to by a certified
registered nurse anesthetist shall be binding upon any other person
presenting a claim or request for payment for such services.
"(ii) Except for deductible and coinsurance amounts applicable
under this section, any person who knowingly and willfully pre­
sents, or causes to be presented, to an individual enrolled under this
part a bill or request for payment for services of a certified reg­
istered nurse anesthetist for which payment may be made under
this part only on an assignment-related basis is subject to a civil
monetary penalty of not to exceed $2,000 for each such bill or
request. Such a penalty shall be imposed in the same manner as
civil monetary penalties are imposed under section 1128A with
respect to actions described in subsection (a) of that section.
"(C) No hospital that presents a claim or request for payment for
services of a certified nurse anesthetist under this part may treat
any uncollected coinsurance amount imposed under this part with
respect to such services as a bad debt of such hospital for purposes of
this title.
"(6)(A) If an adjustment under paragraph (3XB) results in a reduc­
tion in the reasonable charge for a physicians' service and a
nonparticipating physician furnishes the service to an individual
entitled to benefits under this part (subject to subparagraph (D)), the
physician may not charge the individual more than the limiting
charge (as defined in subparagraph (B)) plus (for services furnished
during the 12-month period beginning on the effective date of the
reduction) Vi of the amount by which the physician's actual charges
for the service for the previous 12-month period exceeds the limiting
charge.
"(B) In subparagraph (A), the term 'limiting charge' means, with
respect to a service, 125 percent of the prevailing charge for the
service after the reduction referred to in subparagraph (A).
"(C) If a physician knowingly and willfully imposes charges in
violation of subparagraph (A), the Secretary may apply sanctions
against such physician in accordance with subsection (jX2).
"(D) This paragraph shall not apply to services furnished after the
earlier of (i) December 31, 1990, or (ii) one-year after the date the
Secretary reports to Congress, under section 1845(eX3), on the devel­
opment of the relative value scale under section 1845.".
(3) Section 1842(jX2) of such Act (42 U.S.C. 1395uO*X2)) is amended
by striking "paragraph (1) or subsection (k)" and inserting "this
paragraph".
(f) NOT TREATED AS PART OF INPATIENT HOSPITAL SERVICES.—
Section 1861(bX4) of such Act (42 U.S.C. 1395x03X4)) is amended by
inserting before the semicolon the following: ", anesthesia services
provided by a certified certified registered nurse anesthetist".
(g) CONFORMING AMENDMENTS TO HOSPITAL PAYMENTS.—(1) Sec­
tion 1886(aX4) of such Act (42 U.S.C. 1395ww(aX4)) is amended by
striking ", costs of anesthesia services provided by a certified reg­
istered nurse anesthetist,".
(2) Section 1886(dX5) of such Act (42 U.S.C. 1395ww(dX5)) is
amended by striking subparagraph (E). V.'' .
Ante, pp. 2003,
2008.
Claims.
Health care
professionals.
.a*03tt
Health care
professionals.
Sanctions.
Reports.
Ante, p. 190.
•1 )'• 100 STAT. 2016 PUBLIC LAW 99-509—OCT. 21, 1986
42 use 1395k
note.
42 use 1395k
note.
eontracts.
42 use 1395nn
note.
42 use 1395h
note.
Ante, pp. 1997,
1998.
42 use 1395WW
note. (h) OTHER CONFORMING AMENDMENTS.—(1) Section 1862(a)(14) of
such Act (42 U.S.C. 1395y(aX14)) is amended by inserting before the
period the following: "or are services of a certified registered nurse
(2) Section 1866(aXlXH) of such Act (42 U.S.C. 1395cc(aXlXH)) is
amended by inserting ", and other than services of a certified
registered nurse anesthetist" after "1862(aX14)".
(3) Sections 1864(a), 1865(a), 1902(aX9XC), and 1915(aXlXBXii)(I) of
such Act (42 U.S.C. 1395aa(a), 1395bb(a), 1396a(aX9)(C),
1396n(aXlXBXiiXI)) are each amended by striking "paragraphs (11)
and (12)" and inserting "paragraphs (12) and (13)".
(i) EFFECTIVE DATE.—The amendments made by this section (other
than subsection (a)) shall apply to services furnished on or after
January 1,1989.
(j) CONSTRUCTION.—Nothing in this section or the amendments
made by this section shall contravene provisions of State law relat­
ing to the practice of medicine or nursing or State law requirements
or institutional requirements regarding the administration of
anesthesia and its medical direction or supervision.
SEC. 9321. TECHNICAL AMENDMENTS AND MISCELLANEOUS PROVISIONS
RELATING TO PARTS A AND B.
(a) TREATMENT OF GROUP PURCHASING VENDOR AGREEMENTS.—
(1) IN GENERAL.—Section 1877(bX3) of the Social Security Act
(42 U.S.C. 1395nn(bX3)) is amended—
(A) by striking "and" at the end of subparagraph (A),
(B) by striking the period at the end of subparagraph (B)
and inserting "; and", and
(C) by adding at the end the following:
"(C) 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 this title if—
"(i) 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 fixed
percentage of the value of the purchases made by each such
individual or entity under the contract, and
"(ii) in the case of an entity that is a provider of services,
the person discloses (in such form and manner as the
Secretary 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.".
(2) EFFECTIVE DATE.—The amendments made by paragraph (1)
apply to payments made before, on, or after the date of the
enactment of this Act.
(b) EXTENSION AND CLARIFICATION OF COMPETITIVE CONTRACTING
AUTHORITY.—Section 2326(a) of the Deficit Reduction Act of 1984 is
amended—
(1) by striking "of the fiscal years" and all that follows
through ", the Secretary" and inserting "fiscal year (beginning
with fiscal year 1985 and ending with fiscal year 1989), the
Secretary", and
(2) by inserting "or cost reimbursement provisions under
sections 1816(c) or 1842(c) of such Act" after "such Act" the
second place it appears.
(c) TREATMENT OF CAPITAL-RELATED REGULATIONS.— PUBLIC LAW 99-509—OCT. 21, 1986 100 STAT. 2017
(1) PROHIBITION OF ISSUANCE OF FINAL REGULATIONS ON CAP­
ITAL-RELATED COSTS AS PART OF PAYMENT FOR OPERATING COSTS
BEFORE SEPTEMBER 1, 1987.—Notwithstanding any other provi­
sion of law (except as provided in paragraph (3)), the Secretary
of Health and Human Services may not issue, in final form,
after September 1, 1986, and before September 1, 1987, any
regulation that changes the methodology for computing the
amount of payment for capital-related costs (as defined in para­
graph (4)) for inpatient hospital services under part A of title
XVIII of the Social Security Act. Any regulation published in 42 USC 1395c.
violation of the previous sentence before the date of the enact­
ment of this Act is void and of no effect.
(2) NOT INCLUDING CAPITAL-RELATED REGULATIONS IN BUDGET
BASELINE.—Any reference in law to a regulation issued in final . . ,,
form or proposed by the Health Care Financing Administration '
pursuant to sections 1886(b)(3)(B), 1886(d)(3)(A), and 1886(e)(4) of
the Social Security Act shall not include any regulation issued 42 USC 1395ww
or proposed with respect to capital-related costs (as defined in
paragraph (4)).
(3) EXCEPTION.—Paragraph (1) shall not apply to any regula­
tion issued for the sole purpose of implementing section
1886(g)(3)(A) and (B) of the Social Security Act (as amended by
section 9303(a) of this Act).
(4) CAPITAL-RELATED COSTS DEFINED.—In this subsection, the
term "capital-related costs" means those capital-related costs
that are specifically excluded, under the second sentence of
"operating costs of inpatient hospital services" (as defined in
that section) for cost reporting periods beginning prior to Octo­
ber 1,1987.
(d) LIMITATION ON AUTHORITY TO ISSUE CERTAIN FINAL REGULA- 42 USC I395ww
TiONS AND INSTRUCTIONS RELATING TO HOSPITALS OR PHYSICIANS.— note.
Notwithstanding any other provision of law, except as required to
implement specific provisions required under statute and except as
provided under subsection (c) with respect to a regulation described
in that subsection, the Secretary of Health and Human Services is
not authorized to issue in final form after the date of the enactment
of this Act and before September 1, 1987, any regulation, instruc­
tion, or other policy which is estimated by the Secretary to result in
a net reduction in expenditures under title XVIII of the Social
Security Act in fiscal year 1988 of more than $50,000,000, and which 42 USC 1395.
relates to hospitals or physicians.
(e) 60-DAY NOTICE FOR PROPOSED REGULATIONS.—
(1) IN GENERAL.—Section 1871 of the Social Security Act (42
U.S.C. 1395hh) is amended by inserting "(a)" after "1871." and
by adding at the end the following new subsection:
"(b)(1) Except as provided in paragraph (2), before issuing in final Federal
form any regulation under subsection (a), the Secretary shall pro- Register,
vide for notice of the proposed regulation in the Federal Register publication,
and a period of not less than 60 days for public comment thereon.
"(2) Paragraph (1) shall not apply where—
"(A) a statute specifically permits a regulation to be issued in
interim final form or otherwise with a shorter period for public
comment,
"(B) a statute establishes a specific deadline for the im­
plementation of a provision and the deadline is less than 150
days after the date of the enactment of the statute in which the
deadline is contained, or 100 STAT. 2018 PUBLIC LAW 99-509—OCT. 21, 1986
42 use 1395hh
note.
42 use 1395WW
note.
jfcj Vi. -^ "• "(C) subsection (b) of section 553 of title 5, United States Code,
does not apply pursuant to subparagraph (B) of such
subsection.".
(2) CONFORMING AMENDMENTS.—(A) Section 1886(e)(3XA) of
such Act (42 U.S.C. 1395ww(eX3XA)), as amended by section
9302(eX3XB), is amended by striking "April" and inserting
"March".
(B) Section 1886(eX5XA) of such Act is amended by striking
"June"and inserting "May".
(3) EFFECTIVE DATES.—
(A) The amendments made by paragraph (1) shall apply
to notices of proposed rulemaking issued after the date of
the enactment of this Act.
(B) The amendments made by paragraph (2) shall take
effect beginning with fiscal year 1989.
PART 3—PROVISIONS RELATING TO MEDICARE
PARTE
SEC. 9331. PAYMENT FOR PHYSICIANS' SERVICES.
(a) DETERMINATION OF MAXIMUM ALLOWABLE PREVAILING
CHARGES FOR PHYSICIANS' SERVICES.—
(1) IN GENERAL.—Section 1842(bX4XA) of the Social Security
Act (42 U.S.C. 1395u(bX4XA)) is amended by striking clause (iii)
and inserting the following:
"(iii) In determining the maximum allowable prevailing charges
which may be recognized consistent with the index described in the
fourth sentence of paragraph (3) for physicians' services furnished
on or after January 1, 1987, by participating physicians, the Sec­
retary shall treat the maximum allowable prevailing charges recog­
nized as of December 31, 1986, under such sentence with respect to
participating physicians as having been justified by economic
changes.
"(iv) In determining the prevailing charge level under the third
and fourth sentences of paragraph (3) for a physicians' service
furnished on or after January 1, 1987, by a nonparticipating physi­
cian, the Secretary shall set the level at 96 percent of the prevailing
charge levels established under such sentences with respect to such
service furnished by participating physicians.
"(v) Beginning with 1987, the percentage increase in the MEI (as
defined in subparagraph (EXii)) for each year shall be the same for
nonparticipating physicians as for participating physicians.".
(2) CONFORMING AMENDMENT.—Section 1842(bX4)(C) of such
Act is amended—
(A) by striking "(i)" after "(C)", and
(B) by striking clause (ii).
(3) DEFINITIONS.—Section 1842(bX4) of such Act is further
amended by adding at the end the following new subparagraph:
"(E) In this section:
"(i) The term 'participating physician' refers, with respect to
the furnishing of services, to a physician who at the time of
'• furnishing the services is a participating physician (under
•' subsection (hXD), and the term 'nonparticipating physician'
"' refers, with respect to the furnishing of services, a physician
who at the time of furnishing the services is not a participating
physician. PUBLIC LAW 99-509—OCT. 21, 1986 100 STAT. 2019
"(ii) The term 'percentage increase in the MEI' means, with
respect to physicians' services furnished in a year, the percent­
age increase in the medicare economic index (referred to in the
fourth sentence of paragraph (3)) appHcable to such services
furnished as of the first day of that year.",
(4) EFFECTIVE DATE.—The amendments made by this subsec­
tion shall apply to services furnished on or after January 1,
1987.
(b) GENERAL LIMIT ON ACTUAL CHARGES FOR NONPARTICIPATING
PHYSICIANS.—
(1) IN GENERAL.—Section 1842(j)(l) of such Act is amended—
(A) by inserting "(A)" after "(jXD". and
(B) by adding at the end the following new subparagraph:
"(B)(i) During any period (on or after January 1, 1987, and before
the date specified in clause (ii)), during which a physician is a
nonparticipating physician, the Secretary shall monitor each such
physician's actual charges for physicians' services furnished to
individuals enrolled under this part. If such physician knowingly
and willfully bills for such a service a physician's actual charge (as
defined in subparagraph (C)(vi) in excess of the maximum allowable
actual charge determined under subparagraph (C) for that service,
the Secretary may apply sanctions against such physician in accord­
ance with paragraph (2).
"(ii) Clause (i) shall not apply to services furnished after the
earlier of (I) December 31, 1990, or (II) one-year after the date the
Secretary reports to Congress, under section 1845(e)(3), on the devel­
opment of the relative value scale under section 1845. –
"(C)(i) For a particular physicians' service furnished by a
nonparticipating physician to individuals enrolled under this part
during a year, for purposes of subparagraph (B), the maximum
allowable actual charge is determined as follows: If the physician's
actual charge for that service in the previous year was—
"(I) less than 115 percent of the prevailing charge for the year
involved for such service furnished by nonparticipating physi­
cians, the maximum allowable actual charge for the year in­
volved is the greater of the maximum allowable actual charge
described in subclause (II) or the charge described in clause (ii),
or
* "(II) equal to, or greater than, 115 percent of the prevailing
charge for the year involved for such service furnished by
nonparticipating physicians, the maximum allowable actual
charge is 101 percent of the physician's maximum allowable
actual charge for the service for the previous year.
"(ii) For purposes of clause (i)(I), the charge described in this
clause for a particular physicians' service furnished in a year is the
maximum allowable actual charge for the service of the physician
for the previous year plus the product of (I) the applicable fraction
(as defined in clause (iii)) and (II) the amount by which 115 percent
of the prevailing charge for the year involved for such service
furnished by nonparticipating physicians, exceeds the physician's
maximum allowable actual charge for the service for the previous
year.
"(iii) In clause (ii), the 'applicable fraction' is—
"(I) for 1987, VA,
"(II) for 1988, Va,
"(III) for 1989, ¥2, and
.'. "(IV) for any subsequent year, 1. 42 use 1395u
note.
42 use 1395u.
Sanctions.
Ante, p. 190.
ix^QK ; VI 100 STAT. 2020 PUBLIC LAW 99-509—OCT. 21, 1986
:)8IA !.t»
42 use 1395u.
42 use 1395u note.
42 use 1395u note.
42 use 1395J. "(iv) For purposes of determining the maximum allowable actual
charge under clauses (i) and (ii) for 1987, in the case of a physicians'
service for which the physician has actual charges for the calendar
quarter beginning on April 1, 1984, the 'maximum allowable actual
charge' for 1986 is the physician's actual charge for such service
furnished during such quarter.
"(v) For purposes of determining the maximum allowable actual
charge under clauses (i) and (ii) for a year after 1987, in the case of a
physicians' service for which the physician has no actual charges for
the calendar quarter beginning on April 1, 1984, and for which a
maximum allowable actual charge has not been previously estab­
lished under this clause, the 'maximum allowable actual charge' for
the previous year shall be the 50th percentile of the customary
charges for the service (weighted by frequency of the service) per­
formed by nonparticipating physicians in the locality during the 12-
month period ending June 30 of that previous year.
"(vi) For purposes of this subparagraph and subparagraph (B), a
'physician's actual charge' for a physicians' service furnished in a
year or other period is the weighted average (or, at the option of the
Secretary for a service furnished in the calendar quarter beginning
April 1, 1984, the median) of the physician's charges for such service
furnished in the year or other period.".
(2) PROVISION OF ACTUAL CHARGE INFORMATION BY CARRIER TO
NONPARTICIPATING PHYSICIANS.—Section 1842(b)(3) of such Act is
amended—
(A) by striking "and" at the end of subparagraph (E),
^ ,,,,. , (B) by inserting "and" at the end of subparagraph (F), and
(C) by inserting after subparagraph (F) the following new
subparagraph:
^ ^ "(G) will provide to each nonparticipating physician, at the
beginning of each year, a list of the physician's maximum
allowable actual charges (established under subsection (j)(l)(C))
for the year for the physicians' services mostly commonly fur­
nished by that physician;".
(3) CONFORMING AMENDMENT.—Section 1842(b)(4XD) of such
Act is amended by adding at the end the following new clause:
"(iv) In determining the customary charges for a physicians'
service furnished on or after January 1, 1988, if a physician was a
nonparticipating physician in a previous year (beginning with 1987),
the Secretary shall not recognize any amount of such actual charges
(for that service furnished during such previous year) that exceeds
the maximum allowable actual charge for such service established
under subsection (jXlXC).".
(4) EFFECTIVE DATE.—The amendments made by this subsec­
tion shall apply to services furnished on or after January 1,
1987.
(c) MEDICARE ECONOMIC INDEX.—
(1) FOR 1987.—Notwithstanding any other provision of law, for
purposes of part B of title XVIII of the Social Security Act for
physicians' services furnished in 1987, the percentage increase
in the MEI (as defined in section 1842(b)(4XE)(ii) of the Social
Security Act) shall be 3.2 percent.
(2) PROHIBITING RETROACTIVE ADJUSTMENT OF MEDICARE ECO­
NOMIC INDEX.—The Secretary of Health and Human Services is
not authorized to revise the MEI in a manner that provides, for
any period before January 1, 1985, for the substitution of a v/
PUBLIC LAW 99-509—OCT. 21, 1986 100 STAT. 2021
rental equivalence or rental substitution factor for the housing
component of the consumer price index.
(3) ANNUALIZATION OF MEL—(A) The fourth sentence of sec­
tion 1842(b)(3) of the Social Security Act (42 U.S.C. 1395u(b)(3)) is
amended by inserting after "ending June 30, 1973," the follow­
ing: "or (with respect to physicians services furnished in a year
after 1987) the level determined under this sentence for the
previous year", and inserting "year-to-year" before "economic
changes".
(B) The amendments made by subparagraph (A) shall apply to
physicians' services furnished on or after January 1, 1988.
(4) STUDY.—The Secretary shall conduct a study of the extent
to which the MEI appropriately and equitably reflects economic
changes in the provision of the physicians' services to medicare
beneficiaries. In conducting such study the Secretary shall con­
sult with appropriate experts.
(5) LIMITATION ON CHANGES IN MEI METHODOLOGY.—The Sec­
retary shall not change the methodology (including the basis
and elements) used in the MEI from that in effect as of Octo­
ber 1, 1985, until completion of the study under paragraph (4).
After the completion of the study, the Secretary may not change
such methodology except after providing notice in the Federal
Register and opportunity for public comment.
(6) MEI DEFINED.—In this subsection, the term "MEI" means
the economic index referred to in the fourth sentence of section
1842(b)(3) of the Social Security Act.
(d) DEVELOPMENT AND USE OF HCFA COMMON PROCEDURE CODING
SYSTEM.—
(1) Not later than July 1, 1989, the Secretary of Health and
Human Services (in this subsection referred to as the "Sec­
retary"), after public notice and opportunity for public comment
and after consulation with appropriate medical and other ex­
perts, shall group the procedure codes contained in any HCFA
1 Common Procedure Coding System for payment purposes to
minimize inappropriate increases in the intensity or volume of
services provided as a result of coding distinctions which do not
reflect substantial differences in the services rendered.
(2) Not later than January 1, 1990, each carrier with which
the Secretary has entered into a contract under section 1842 of
1 the Social Security Act shall make payments under part B of
1 title XVIII of such Act based on the grouping of procedure codes
i effected under paragraph (1).
(e) RECOMMENDATIONS.—
: (1) Section 1845(e) of the Social Security Act is amended by
adding at the end thereof the following new paragraph:
"(4XA) In making recommendations with respect to the ap-
5 plication of the relative value scale for purposes of establishing
i a fee schedule, the Secretary shall—
t "(i) develop and assess an appropriate index to be used for
making adjustments to reflect justifiable differences in the
-5'— costs of practice based upon geographic location without
exacerbating the geographic maldistribution of physicians,
and
: "(ii) assess the advisability and feasibility of developing
an appropriate adjustment to assist in attracting and
retaining physicians in medically underserved areas. 42 use 1395u
note.
42 use 1395u
note.
Public
information.
42 use 1395u
note.
42 use 1395u
note.
42 use 1395u
note.
Public
information.
eontracts.
42 use 1395U.
42 use 1395J.
Ante, p. 192.
,3 .
,^.»t:> 100 STAT. 2022 PUBLIC LAW 99-509—OCT. 21, 1986
ii?~k' •g^-rr "(B) In carrying out the requirements of subparagraph (A),
the Secretary shall take into consideration the recommenda­
tions made by the Physician Payment Review Commission.
"(C)(i) The Secretary shall develop an interim index under
subparagraph (A)(i) prior to January 1, 1988, based upon the
most accurate and recent data that are available with respect to
the costs of practice.
"(ii) The Secretary shall collect data with respect to the costs
of practice (including, but not limited to, data on nonphysician
, , v'. , personnel costs, malpractice insurance costs, and commercial
sv.' rents) for the purpose of refining the index under subparagraph
,f,f;^ ,,^ (A)(i) prior to December 31, 1989, and periodically updating the
T^.^o- index thereafter.
"(D) In conjunction with developing an index under subpara­
graph (A), the Secretary shall conduct a study of the advisabil­
ity of redefining the localities designated by carriers for pay­
ment purposes.".
42 use 1395W-1. (2) Section 1845(b)(3) of such Act is amended by inserting "and
„. .. .. respecting the index and the adjustment described in subsection
5">f^ (e)(4)(A)" after "subsection (e)".
(3) Section 1845(e)(3) of such Act is amended—
(A) by striking "July 1, 1987" and inserting in lieu
thereof "July 1,1989", and
(B) by striking "on or after January 1, 1988" and insert­
ing in lieu thereof "after December 31,1989".
SEC. 9332. INCENTIVES FOR PHYSICIAN PARTICIPATION.
(a) RECRUITING.—
(1) CARRIER RESPONSIBILITY.—Section 1842(b)(3) of the Social
Security Act (42 U.S.C. 1395u(b)(3)), as amended by section
9331(b)(2), is further amended—
(A) by striking "and" at the end of subparagraph (F),
(B) by inserting "and" at the end of subparagraph (G),
and
• (C) by inserting after subparagraph (G) the following new
subparagraph:
^5^ "(H) if it makes determinations or payments with respect to
physicians' services, will implement—
"(i) programs to recruit and retain physicians as partici­
pating physicians in the area served by the carrier, includ­
ing educational and outreach activities and the use of
cin: w : professional relations personnel to handle billing and other
problems relating to payment of claims of participating
physicians; and
vci fc'*>; "(ii) programs to familiarize beneficiaries with the
participating physician program and to assist such bene-
A – ' ficiaries in locating participating physicians;".
(2) MEASURING CARRIER PERFORMANCE.—The Secretary of
Health and Human Services shall provide, in the standards and
criteria established under section 1842(b)(2) of the Social Secu­
rity Act for contracts under that section, a system to measure a
carrier's performance of the responsibilities described in sec­
tions 1842(b)(3)(H) and 1842(h) of such Act.
(3) CARRIER BONUSES FOR GOOD PERFORMANCE.—Of the
amounts appropriated for administrative activities to carry out
part B of title XVIII of the Social Security Act, the Secretary of
Health and Human Services shall provide payments, totaling 1 fContracts.
42 use 1395u
note.
42 use 1395U
note.
42 use 1395J. PUBLIC LAW 99-509—OCT. 21, 1986 100 STAT. 2023
biif^i percent of the total payments to carriers for claims processing
in any fiscal year, to carriers under section 1842 of such Act, to
reward such carriers for their success in increasing the propor­
tion of physicians in the carrier's service area who are partici­
pating physicians.
(4) EFFECTIVE DATES.—
(A) CARRIER RESPONSIBILITY.—The amendment made by
paragraph (1) shall be effective for contracts under section
1842 of the Social Security Act as of October 1, 1987.
(B) PERFORMANCE MEASURES.—The Secretary of Health
and Human Services shall provide for the establishment of
the standards and criteria required under paragraph (2) by
not later than October 1, 1987, which shall apply to con-
3 tracts as of October 1,1987.
(C) CARRIER BONUSES.—From the amounts appropriated
.,• for each fiscal year (beginning with fiscal year 1988), the
Secretary of Health and Human Services shall first provide
for pa3mients of bonuses to carriers under paragraph (3) not
later than April 1, 1988, to reflect performance of carriers
during the enrollment period at the end of 1987.
(b) DIRECTORIES OF PARTICIPATING PHYSICIANS.—
(1) REQUIRING DISTRIBUTION TO MEDICARE BENEFICIARIES, UPON
REQUEST.—Section 1842(h) of the Social Security Act (42 U.S.C.
1395u(h)) is amended—
(A) in paragraph (2), by striking period and inserting the
following: "and may request a copy of an appropriate direc­
tory published under paragraph (4). Each such carrier shall,
without charge, mail a copy of such directory upon such a
request.";
(B) in paragraph (5)—
(i) by striking "publication of the directories" and
inserting "the participation program under this subsec­
tion and the publication and availability of the direc­
tories", and
(ii) by adding at the end the following: "The Sec­
retary shall include such notice in the mailing of appro­
priate benefit checks provided under title II."; and
(C) in the second sentence of paragraph (6)—
(i) by inserting before the period the following: "and
that an appropriate number of copies of each such
directory is sent to hospitals located in the area", and
I .;. (ii) by adding at the end the following: "Such copies
shall be sent free of charge.".
(2) ORGANIZATION OF DIRECTORIES.—Section 1842(h)(4) of such
Act is amended by adding at the end the following: "Each
g participating physician directory for an area shall provide an
J alphabetical listing of all participating physicians practicing in
the area and an alphabetical listing by locality and specialty of
such physicians.".
f. (3) EFFECTIVE DATES.—The amendments made by this para­
graph shall first apply to directories for 1987.
(c) PROHIBITING UNASSIGNED BILLING OF SERVICES DETERMINED TO
BE MEDICALLY UNNECESSARY BY A CARRIER.—
(1) IN GENERAL.—Section 1842 of the Social Security Act
is further amended by adding at the end the following new
», subsection:
8, "(IXIXA) Subject to subparagraph (C), if— EBW 42 use 1395u
note.
Contracts. ''
Health care
facilities.
il D81J Sl^
42 use 1395u
note. 100 STAT. 2024 PUBLIC LAW 99-509—OCT. 21, 1986
42 use 1320c.
42 use 1395y.
eontracts.
Sanctions.
42 use 1395u
note.
42 use 1395U.
'4!iu '^"' "(i) a nonparticipating physician furnishes services to an
individual enrolled for benefits under this part,
"(ii) payment for such services is not accepted on an assign­
ment-related basis,
"(iii) a carrier determines under this part or a peer review
organization determines under part B of title XI that payment
may not be made by reason of section 1862(a)(1) because a
service otherwise covered under this title is not reasonable and
necessary under the standards described in that section, and
"(iv) the physician has collected any amounts for such
services,
the physician shall refund on a timely basis to the individual (and
shall be liable to the individual for) any amounts so collected.
"(B) A refund under subparagraph (A) is considered to be on a
timely oasis only if—
"(i) in the case of a physician who does not request reconsider­
ation or seek appeal on a timely basis, the refund is made
within 30 days after the date the physician receives a denial
notice under paragraph (2), or
"(ii) in the case in which such a reconsideration or appeal is
taken, the refund is made within 15 days after the date the
physician receives notice of an adverse determination on
reconsideration or appeal.
"(C) Subparagraph (A) shall not apply to the furnishing of a
service by a physician to an individual if—
"(i) the physician did not know and could not reasonably have
been expected to know that payment may not be made for the
service by reason of section 1862(a)(1), or
"(ii) before the service was provided, the individual was
informed that payment under this part may not be made for the
specific service and the individual has agreed to pay for that
service.
"(2) Each carrier with a contract in effect under this section with
respect to physicians and each peer review organization with a
contract under part B of title XI shall send any notice of denial of
payment for physicians' services based on section 1862(a)(1) and for
which payment is not requested on an assignment-related basis to
the physician and the individual involved.
"(3) If a physician knowingly and willfully fails to make refunds in
violation of paragraph (1)(A), the Secretary may apply sanctions
against such physician in accordance with subsection (j)(2).".
(2) EFFECTIVE DATE.—The amendment made by paragraph (1)
shall apply to services furnished on or after October 1, 1987.
(d) DISCLOSURE OF INFORMATION OF UNASSIGNED CLAIMS FOR CER­
TAIN PHYSICIANS' SERVICES.—
(1) IN GENERAL.—Section 1842 of the Social Security Act, as
amended by subsection (c)(1), is further amended by adding at
the end the following new subsection:
"(m)(l) In the case of a nonparticipating physician who—
"(A) performs an elective surgical procedure for an individual
^^n enrolled for benefits under this part and for which the physi-
*' * cian's actual charge is at least $500, and
"(B) does not accept payment for such procedure on an assign­
ment-related basis,
the physician must disclose to the individual, in writing and in a
form approved by the Secretary, the physician's estimated actual
charge for the procedure, the estimated approved charge under this PUBLIC LAW 99-509—OCT. 21, 1986 100 STAT. 2025
part for the procedure, the excess of the physician's actual charge
over the approved charge, and the coinsurance amount applicable to
the procedure. The written estimate may not be used as the basis
for, or evidence in, a civil suit.
"(2) A physician who fails to make a disclosure required under
paragraph (1) with respect to a procedure shall refund on a timely
basis to the individual (and shall be liable to the individual for) any
amounts collected for the procedure in excess of the charges recog­
nized and approved under this part.
"(3) If a physician knowingly and willfully fails to comply with Sanctions. .-:
paragraph (2), the Secretary may apply sanctions against such
physician in accordance with subsection 0X2).
"(4) The Secretary shall provide for such monitoring of requests
for payment for physicians' services to which paragraph (1) applies
as is necessary to assure compliance with paragraph (2).".
(2) EFFECTIVE DATE.—'The amendment made by paragraph (1) 42 USC 1395u
shall apply to surgical procedures performed on or after Octo- note,
ber 1, 1987.
(e) MAINTENANCE AND USE OF PARTICIPATING PHYSICIAN DIREC- 42 USC I395cc.
TORIES BY HOSPITALS.—
(1) REQUIREMENT OF PARTICIPATION.—Section 1866(a)(1) of the
Social Security Act, as amended by section 9305(b)(1), is further Ante, p. 1989.
amended—
(A) by striking "and" at the end of subparagraph (L),
(B) by striking the period at the end of subparagraph (M)
and inserting ", and", and
; J (C) by inserting after subparagraph (M) the following new
subparagraph:
3 i.|- "(N) in the case of hospitals—
"(i) to make available to its patients the directory or
directories of participating physicians (published under sec­
tion 1842(h)(4)) for the area served by the hospital, and
"(ii) if hospital personnel (including staff of any emer­
gency or outpatient department) refer a patient to a
.J,, ., nonparticipating physician for further medical care on an
outpatient basis, the personnel must inform the patient
r, that the physician is a nonparticipating physician and,
whenever practicable, must identify at least one qualified
participating physician who is listed in such a directory and
J..; • from whom the patient may receive the necessary
services.".
(2) EFFECTIVE DATE.—The amendment made by paragraph (1) 42 USC 1395cc
shall apply to agreements under section 1866(a) of the Social note.
Security Act as of October 1,1987.
SEC. 9333. LIMITS ON REASONABLE CHARGES.
(a) PROCEDURES FOR ESTABLISHMENT OF SPECIAL LIMITS ON REASON- g, „ ^.
ABLE CHARGES FOR PART B SERVICES.—Section 1842(b)(8) of the Social
Security Act (42 U.S.C. 1395u(b)(8)) is amended—
(1) by redesignating subparagraphs (A) and (B) as clauses (i)
T and (ii), respectively;
(2) by inserting "(A)" after "(8)"; and
(3) by adding at the end the following new subparagraphs:
"(BXi) The Secretary may provide for an increase or decrease in Health care
the reasonable charge otherwise recognized under this section with professionals.
respect to a specific physicians' service only in accordance with the 100 STAT. 2026 PUBLIC LAW 99-509—OCT. 21, 1986
criteria set forth in subparagraph (A) and with the succeeding
provisions of this paragraph.
"(ii) The factors described pursuant to subparagraph (A)(i) with
respect to payment for physicians' services shall include, but need
not be limited to, the following:
"(I) Prevailing charges for a service in a particular locality
are significantly in excess of or below prevailing charges in
other comparable localities, taking into account the relative
costs of furnishing the services in the different localities.
42 use 1396. "(II) The programs established under this title and title XIX
are the sole or primary sources of payment for a service.
"(Ill) The marketplace for a service is not truly competitive
because of a limited number of physicians who perform that
service.
"(IV) There have been increases in charges for a service that
mMl tlfjll y cannot be explained by inflation or technology.
.dJC't «|^Y) rpj^g charges do not reflect changing technology,
increased facility with that technology, or reductions in acquisi-
.%.','- ; < ;' tjon or production costs.
"(VI) The prevailing charges for a service under this part are
substantially higher or lower than the payments made for the
M^i' •:< '>, service by other purchasers in the same locality.
"(iii) In applying subparagraph (A), the Secretary may compare—
"(I) the charges and resource costs for related procedures,
"(II) charges and resource costs for the procedure over a
period of time,
"(III) charges for a procedure in different geographic areas,
and
"(IV) the charges and allowed payments for a procedure
under this part and by other payors.
"(iv) The factors considered under subparagraph (A)(ii) shall take
into account regional differences in fees, unless there is substantial
economic justification for a uniform fee or a uniform payment limit.
Such substantial economic justification must be explained by the
Secretary in the notice and final determination required by para­
graph (9).
"(v) An adjustment under clause (i) on the basis of a comparison of
the prevailing charges in different localities may be made only if the
Secretary determines that the prevailing charge allowed in one
locality is out of line with prevailing charges allowed in other
localities after accounting for differences in practice costs.
S:H5?^:^' '?Tj St, «(yj) IJJ ^i^jg subparagraph, 'resource costs' include factors such as
* "" the time required to provide a procedure (including pre-procedure
evaluation and post-procedure follow-up), the complexity of the
procedure, the training required to perform the procedure, and the
risk involved in the procedure.
Claims. "(C) In determining whether to adjust payment rates under
subparagraph (B)(i), the Secretary shall consider the potential im­
pacts on quality, access, and beneficiary liability of the adjustment,
including the likely effects on assignment rates, reasonable charge
reductions on unassigned claims, and participation rates of
physicians.".
(b) INHERENT REASONABLENESS PROCEDURES.—Section 1842(b) of
Post, p. 2035. the Social Security Act (42 U.S.C. 1395u(b)) is amended by
redesignating paragraph (9) as paragraph (11) and inserting after
paragraph (8) the following new paragraphs: -PUBLIC LAW 99-509—OCT. 21, 1986 100 STAT. 2027
"(9)(A) In the case of any physicians' service with respect to which
the Secretary—
"(i) determines, after appropriate consultation with represent­
atives of the physicians likely to be affected by any change in
the reasonable charge, that the application of this subsection
results in the determination of a reasonable charge that, by
reason of its grossly excessive or grossly deficient amount, is not
inherently reasonable, and
"(ii) proposes to establish a reasonable charge that is realistic
and equitable or a methodology for arriving at such a charge,
the Secretary shall publish notice of such proposal in the Federal
Register.
"(B) A notice required by subparagraph (A) shall—
"(i) specify the charge or methodology proposed to be estab­
lished with respect to a service and shall explain the factors and
data that the Secretary took into account in determining the
charge or methodology so specified, and
"(ii) explain the potential impacts described in paragraph
(8)(C).
"(C) After publication of the notice required by subparagraph (A),
the Secretary shall allow not less than 60 days for public comment
on the proposal.
"(D) In addition to carrying out its functions under section 1845,
the Physician Payment Review Commission (in this paragraph
referred to as the 'Commission') shall comment on any such proposal
within the period of comment allowed by the Secretary pursuant to
subparagraph (C).
"(E)(i) Taking into consideration the comments made by the
Commission and the public, the Secretary shall publish in the
Federal Register a final determination with respect to the reason­
able charge or methodology to be established with respect to the
service.
"(ii) A final determination published pursuant to clause (i) shall
explain the factors and data that the Secretary took into consider­
ation in making the final determination, and shall include and
respond to the comments made by the Commission pursuant to
subparagraph (D).
"(10)(A)(i) If an adjustment under paragraph (8)(B) results in a
reduction in the reasonable charge for a physicians' service, and a
nonparticipating physician furnishes the service to an individual
entitled to benefits under this part after the effective date of such
reduction and before the end of the period described in subpara­
graph (C), the physician may not charge the individual more than
the limiting charge (as defined in clause (ii)) plus (for services
furnished during the 12-month period beginning on the effective
date of the reduction) V2 of the amount by which the physician's
actual charge for the service for the previous 12-month period
exceeds the limiting charge.
"(ii) In clause (i), the term 'limiting charge' means, with respect to
a service, 125 percent of the inherently reasonable charge estab­
lished under paragraph (8).
"(B) If a physician knowingly and willfully imposes charges in
violation of subparagraph (A), the Secretary may apply sanctions
against such physician in accordance with subsection 0X2).
"(C) Subparagraph (A) shall not apply to services furnished after
the earlier of (i) December 31, 1990, or (ii) one-year after the date the Health care
professionals.
Federal
Register,
publication.
Ante, p. 190.
Federal
Register,
publication.
Health care
professionals.
'iuxiDo^'
Sanctions.
Reports. ;l.T -^i,
.siio& 100 STAT. 2028 PUBLIC LAW 99-509—OCT. 21, 1986
Ante, p. 192.
42 use 1395u
note.
42 use 1395J.
42 use 1395u
note.
Sanctions.
42 use 1395u
note. Secretary reports to Congress, under section 1845(e)(3), on the devel­
opment of the relative value scale under section 1845.".
(c) REVIEW OF PROCEDURES.—Not later than October 1, 1987, the
Secretary of Health and Human Services shall review the inherent
reasonableness of the reasonable charges for at least 10 of the most
costly procedures with respect to which payment is made under part
B of title XVIII of the Social Security Act (determined on the basis
of the aggregate annual payments under such part with respect to
each such procedure).
(d) EFFECTIVE DATE.—The amendments made by this section shall
take effect on the date of the enactment of this Act.
SEC. 9334. PAYMENT FOR CATARACT SURGICAL PROCEDURES. ^
(a) LIMITATIONS.—Section 1842(b)(ll) of the Social Security Act (42
U.S.C. 1395u(b)(ll)), as redesignated by section 9333(b), is amended—
(1) by redesignating subparagraphs (A) and (B) as clauses (i)
and (ii), respectively, , ,. ..- , ,
(2) by inserting "(A)" after "(11)", and
(3) by adding at the end the following new subparagraphs:
"(B)(i) In determining the reasonable charge under paragraph (3)
for a cataract surgical procedure, subject to clause (ii), the prevailing
charge for such procedure otherwise recognized for participating
and nonparticipating physicians shall be reduced by 10 percent with
respect to procedures performed in 1987 and shall be further
reduced by 2 percent with respect to procedures performed in 1988.
A reduced prevailing charge under this subparagraph shall become
the prevailing charge level for subsequent years for purposes of
applying the economic index under the fourth sentence of para­
graph (3).
"(ii) In no case shall the reduction under clause (i) for a surgical
procedure result in a prevailing charge in a locality for a year which
is less than 75 percent of the weighted national average of such
prevailing charges for such procedure for all the localities in the
United States for 1986.
"(C)(i) In the case of a reduction in the reasonable charge for a
physicians' service under subparagraph (B), if a nonparticipating
physician furnishes the service to an individual entitled to benefits
under this part after the effective date of such reduction (subject to
clause (iv)), the physician may not charge the individual more than
the limiting charge (as defined in clause (ii)) plus (for services
furnished during the 12-month period beginning on the effective
date of the reduction) Vz of the amount by which the physician's
actual charges for the service for the previous 12-month period
exceeds the limiting charge.
"(ii) In clause (i), the term 'limiting charge' means, with respect to
a service, 125 percent of the prevailing charge for the service after
the reduction referred to in clause (i).
"(iii) If a physician knowingly and willfully imposes charges in
violation of clause (i), the Secretary may apply sanctions against
such physician in accordance with subsection (jX2).
"(iv) "This subparagraph shall not apply to services furnished after
the earlier of (I) December 31, 1990, or (II) one-year after the date
the Secretary reports to Congress, under section 1845(eX3), on the
development of the relative value scale under section 1845.".
Qo) RATIFICATION OF REGULATIONS.—
(1) IN GENERAL.—The Congress hereby ratifies the final regu­
lation of the Secretary of Health and Human Services published PUBLIC LAW 99-509—OCT. 21, 1986 100 STAT. 2029
on page 35693 of volume 51 of the Federal Register on October 7,
1986, relating to reasonable charge payment limits for anesthe­
sia services under the medicare program.
(2) PATIENT PROTECTIONS.—In the case of any reduction in the
reasonable charge for physicians' services effected under the
regulation described in paragraph (1), the provisions of section
1842(b)(10) of the Social Security Act (added by the amendment
made by subsection (a)(3)) shall apply in the same manner and
to the same extent as they apply to a reduction in the reason­
able charge for a physicians' service effected under section
1842(b)(8) of such Act.
(c) EFFECTIVE DATE.—The amendments made by this section shall
apply to services furnished on or after January 1, 1987.
SEC. 9335. PAYMENT RATES FOR RENAL SERVICES AND IMPROVEMENTS
IN ADMINISTRATION OF END STAGE RENAL DISEASE NET­
WORKS AND PROGRAM.
(a) COMPOSITE RATES FOR DIALYSIS SERVICES.—
(1) IN GENERAL.—Effective with respect to dialysis services
provided on or after October 1, 1986, and before October 1, 1988,
the Secretary of Health and Human Services shall establish the
base rate for routine dialysis treatment in a free-standing facil­
ity and in a hospital-based facility under section 1881(b)(7) of the
Social Security Act at a level equal to the respective rate in
effect as of May 13,1986, reduced by $2.00.
(2) ASSURING PROMPT CONSIDERATION OF EXCEPTION
REQUESTS.—Section 1881(b)(7) of the Social Security Act (42
U.S.C. 1395rr(b)(7)) is amended—
(A) in the third sentence, by inserting "and of pediatric
' facilities" after "isolated, rural areas", and
,^^ (B) by inserting after the third sentence the following
new sentence: "Each application for such an exception shall
' be deemed to be approved unless the Secretary disapproves
it by not later than 60 working days after the date the
application is filed.".
•i. (3) EFFECTIVE DATE.—The amendments made by paragraph (2)
shall apply to applications filed on or after the date of the
enactment of this Act.
' (b) REPORT ON PAYMENT RATES.—
(1) IN GENERAL.—The Secretary of Health and Human Serv­
ices shall provide for—
(A) a study to evaluate the effects of reductions in the
rates of payment for facility and physicians' services under
'^ the medicare program for patients with end stage renal
disease on their access to care or on the quality of care, and
(B) a report to Congress on the results of the study by not
later than January 1,1988.
^ (2) ARRANGEMENTS WITH INSTITUTE OF MEDICINE.—The Sec­
retary shall request the National Academy of Sciences, acting
5 through appropriate units, to submit an application to conduct
* the study described in paragraph (1). If the Academy submits an
acceptable application, the Secretary shall enter into an appro-
' priate arrangement with the Academy for the conduct of the
study. If the Academy does not submit an acceptable application
5 to conduct the study, the Secretary may request one or more
' appropriate nonprofit private entities to submit an application
* to conduct the study and may enter into an appropriate Health care
professionals.
42 use 1395u.
42 use 1395u
note.
42 use 1395rr
note.
42 use 1395rr.
42 use 1395rr
note.
42 use 1395rr
note.
Health care
professionals.
Reports. 100 STAT. 2030 PUBLIC LAW 99-509—OCT. 21, 1986
no-^q
42 use 1395x
note.
Health care
professionals.
Federal
Register,
publication.
Federal
Register,
publication.
KqaR ' arrangement for the conduct of the study by the entity which
submits the best acceptable application. ; ,; < ,
(c) COVERAGE OF IMMUNOSUPPRESSIVE DRUGS.—
(1) IN GENERAL.—Section 1861(s)(2) of the Social Security Act
(42 U.S.C. 1395x(s)(2)) is amended—
(A) by striking "and" at the end of subparagraph (H)(ii),
(B) by inserting "and" at the end of subparagraph (I), and
(C) by inserting after subparagraph (I) the following new
subparagraph:
"(J) immunosuppressive drugs furnished, to an individual
who receives an organ transplant for which payment is made
under this title, within 1 year after the date of the transplant
procedure;".
(2) EFFECTIVE DATE.—The amendments made by paragraph (1)
shall apply to immunosuppressive drugs furnished on or after
January 1, 1987.
(d) REORGANIZATION OF ESRD NETWORK AREAS AND ORGANIZA­
TIONS.—
(1) IN GENERAL.—Subparagraph (A) of subsection (c)(1) of sec­
tion 1881 of the Social Security Act (42 U.S.C. 1395rr) is
amended to read as follows:
"(A)(i) For the purpose of assuring effective and efficient adminis­
tration of the benefits provided under this section, the Secretary
shall, in accordance with such criteria as he finds necessary to
assure the performance of the responsibilities and functions speci­
fied in paragraph (2)—
"(I) establish at least 17 end stage renal disease network
areas, and
•'' "(II) for each such area, designate a network administrative
organization which, in accordance with regulations of the Sec­
retary, shall establish (aa) a network council of renal dialysis
and transplant facilities located in the area and (bb) a medical
review board, which has a membership including at least one
patient representative and physicians, nurses, and social work­
ers engaged in treatment relating to end stage renal disease.
The Secretary shall publish in the Federal Register a description of
the geographic area that he determines, after consultation with
appropriate professional and patient organizations, constitutes each
network area and the criteria on the basis of which such determina­
tion is made.
"(ii)(I) In order to determine whether the Secretary should enter
into, continue, or terminate an agreement with a network adminis­
trative organization designated for an area established under clause
(i), the Secretary shall develop and publish in the Federal Register
standards, criteria, and procedures to evaluate an applicant
organization's capabilities to perform (and, in the case of an
organization with which such an agreement is in effect, actual
performance of) the responsibilities described in paragraph (2). The
Secretary shall evaluate each applicant based on quality and scope
of services and may not accord more than 20 percent of the weight of
the evaluation to the element of price.
"(II) An agreement with a network administrative organization
may be terminated by the Secretary only if he finds, after applying
such standards and criteria, that the organization has failed to
perform its prescribed responsibilities effectively and efficiently. If
such an agreement is to be terminated, the Secretary shall select a PUBLIC LAW 99-509—OCT. 21, 1986 100 STAT. 2031
successor to the agreement on the basis of competitive bidding and
in a manner that provides an orderly transition. '.
(2) DEADLINE FOR ESTABLISHING NEW AREAS.—The Secretary of
Health and Human Services shall establish end stage renal
disease network areas, pursuant to the amendment made by
paragraph (1), not later than May 1, 1987. The Secretary shall
establish network administrative organizations for such areas
by not later than July 1, 1987.
(3) TRANSITION.—If, under the amendment made by para­
graph (1), the Secretary designates a network administrative
organization for an area which was not previously designated
for that area, the Secretary shall offer to continue to fund the
previously designated organization for that area for a period of
30 days after the first date the newly designated organization
assumes the duties of a network administrative organization for
that area.
(e) PATIENT REPRESENTATION ON COUNCILS AND MEDICAL REVIEW
BOARDS.—Subparagraph (B) of subsection (c)(1) of section 1881 of the
Social Security Act is amended to read as follows:
"(B) At least one patient representative shall serve as a member of
each network council and each medical review board.".
(f) RESPONSIBILITIES OF NETWORK ORGANIZATIONS.—Subsection
(c)(2) of section 1881 of such Act is amended—
(1) in subparagraph (A), by inserting before the semicolon the
following: "and the participation of patients, providers of serv­
ices, and renal disease facilities in vocational rehabilitation
programs";
(2) in subparagraph (B), by inserting before the first semicolon
the following: "and with respect to working with patients,
facilities, and providers in encouraging participation in voca-
– tional rehabilitation programs";
– (3) in subparagraph (D), by inserting before the semicolon the
^ following: "and reporting to the Secretary on facilities and
providers that are not providing appropriate medical care";
' (4) in subparagraph (E), by inserting "and encourag-
^ ing participation in vocational rehabilitation programs" after
"self-care settings and transplantation"; and
^ (5) by redesignating subparagraphs (D) and (E) as subpara-
• graphs (G) and (H), respectively, and inserting after subpara­
graph (C) the following new subparagraphs:
"(D) implementing a procedure for evaluating and resolving
f patient grievances;
"(E) conducting on-site reviews of facilities and providers as
necessary (as determined by a medical review board or the
I Secretary), utilizing standards of care established by the net­
work organization to assure proper medical t are;
I "(F) collecting, validating, and analyzing • such data as are
necessary to prepare the reports required y subparagraph (H)
! and subsection (g) and to assure the mainter ance of the registry
<• established under paragraph (7);".
(g) FACILITY COOPERATION WITH NETWORKS.—1 he first sentence of
subsection (c)(3) of section 1881 of such Act is ariended by inserting
"or to follow the recommendations of the mec ical review board"
after "consistently failed to cooperate with network plans and
goals".
(h) INTENT OF CONGRESS RESPECTING MAXIA;UM USE OF VOCA­
TIONAL REHABILITATION SERVICES.—The first sentence of subsection 42 use 1395rr
note.
42 use 1395rr
note.
.ei'K«<-a
42 use 1395rr.
-Pf.,
Reports.
ijfci 100 STAT. 2032 PUBLIC LAW 99-509—OCT. 21, 1986
42 use 1395rr.
42 use 1395rr.
Reports.
Research and
development.
42 use 1395rr
note.
.«tS'>q^jH
42 use 1395rr
note. (c)(6) of section 1881 of such Act is amended by inserting before the
period the following: "and that the maximum practical number of
patients who are suitable candidates for vocational rehabilitation
services be given access to such services and encouraged to return to
gainful employment".
(i) NATIONAL END STAGE RENAL DISEASE REGISTRY.—
(1) ESTABLISHMENT OF REGISTRY.—Subsection (c) of section
1881 of such Act is further amended by adding at the end the
following new paragraph:
"(7) The Secretary shall establish a national end stage renal
disease registry the purpose of which shall be to assemble and
analyze the data reported by network organizations, transplant
centers, and other sources on all end stage renal disease patients in
a manner that will permit—
"(A) the preparation of the annual report to the Congress
required under subsection (g);
"(B) an identification of the economic impact, cost-effective­
ness, and medical efficacy of alternative modalities of
treatment;
"(C) an evaluation with respect to the most appropriate
.:, allocation of resources for the treatment and research into the
^ cause of end stage renal disease;
, "(D) the determination of patient mortality and morbidity
rates, and trends in such rates, and other indices of quality of
care; and
"(E) such other analyses relating to the treatment and
management of end stage renal disease as will assist the Con­
gress in evaluating the end stage renal disease program under
this section.
The Secretary shall provide for such coordination of data collection
activities, and such consolidation of existing end stage renal disease
data systems, as is necessary to achieve the purpose of such registry,
shall determine the appropriate location of the registry, and shall
provide for the appointment of a professional advisory group to
assist the Secretary in the formulation of policies and procedures
relevant to the management of such registry.".
(2) REPORT.—The Secretary of Health and Human Services
shall submit to the Congress, no later than April 1, 1987, a full
report on the progress made in establishing the national end
;;fti, stage renal disease registry under the amendment made by
paragraph (1) and shall establish such registry by not later than
• January 1, 1988.
(j) FUNDING OF ESRD NETWORK ORGANIZATIONS.—
(1) IN GENERAL.—Subsection (b)(7) of section 1881 of the Social
Security Act is amended by adding at the end the following new
VI sentence: "The Secretary shall reduce the amount of each
composite rate payment under this paragraph for each treat­
ment by 50 cents (subject to such adjustments as may be
required to reflect modes of dialysis other than hemodialysis)
and provide for payment of such amount to the network
administrative organization (designated under subsection
(c)(1)(A) for the network area in which the treatment is pro-
brm vided) for its necessary and proper administrative costs incurred
in carrying out its responsibilities under subsection (c)(2).".
(2) EFFECTIVE DATE.—The amendment made by paragraph (1)
shall apply to treatment furnished on or after January 1, 1987. PUBLIC LAW 99-509—OCT. 21, 1986 100 STAT. 2033
42 use 1395rr
note.
42 use 1395rr
note. (k) PROTOCOLS ON REUSE OF DIALYSIS FILTERS AND OTHER DIALYSIS
SUPPLIES.—
(1) ESTABLISHMENT OF PROTOCOLS.—Paragraph (7) of subsec­
tion (f) of section 1881 of the Social Security Act is amended to 42 USe 1395rr
read as follows:
"(7)(A) The Secretary shall establish protocols on standards and
conditions for the reuse of dialyzer filters for those facilities and
providers which voluntarily elect to reuse such filters.
"(B) With respect to dialysis services furnished on or after Janu­
ary 1, 1988, no dialysis facility may reuse dialysis supplies (other
than dialyzer filters) unless the Secretary has established a protocol
with respect to the reuse of such supplies and the facility follows the
protocol so established.
"(C) The Secretary shall incorporate protocols established under
this paragraph, and the requirement of subparagraph (B), into the
requirements for facilities prescribed under subsection (b)(1)(A) and
failure to follow such a protocol or requirement subjects such a
facility to denial of participation in the program established under
this section and to denial of payment for dialysis treatment not
furnished in compliance with such a protocol or in violation of such
requirement.".
(2) DEADLINE.—The Secretary of Health and Human Services
shall establish the protocols described in section 1881(f)(7)(A) of
the Social Security Act by not later than October 1, 1987.
(1) EFFECTIVE DATE FOR CERTAIN AMENDMENTS.—The amendments
made by subsections (e), (f), and (g) shall apply to network adminis­
trative organizations designated for network areas established
under the amendment made by subsection (d)(1).
® SEC. 9336. VISION CARE.
(a) DEFINING SERVICES AN OPTOMETRIST CAN PROVIDE.—Clause (4)
of section 1861(r) of the Social Security Act (42 U.S.C. 1395x(r)) is
amended to read as follows: "(4) a doctor of optometry, but only with
respect to the provision of items or services described in subsection
(s) which he is legally authorized to perform as a doctor of optometry
^ by the State in which he performs them, or".
(b) EFFECTIVE DATE.—The amendment made by subsection (a)
shall apply to services furnished on or after April 1,1987.
SEC. 9337. OCCUPATIONAL THERAPY SERVICES.
8 (a) COVERAGE.—Subparagraph (C) of section 1832(a)(2) of the Social
Security Act (42 U.S.C. 1395k(a)(2)) is amended to read as follows:
"(C) outpatient physical therapy services (other than
b If services to which the second sentence of section 1861(p)
applies) and outpatient occupational therapy services (other
1 than services to which such sentence applies through the
n operation of section 1861(g));".
n (b) LIMITATION ON PAYMENTS.—Section 1833(g) of such Act (42
e U.S.C. 13951(g)) is amended—
: (1) by striking "next to last sentence" and inserting "second
Si sentence", and
w (2) by adding at the end thereof the following new sentence:
"In the case of outpatient occupational therapy services which
> are described in the second sentence of section 1861(p) through
if the operation of section 1861(g), with respect to expenses in­
curred in any calendar year, no more than $500 shall be consid-42 use 1395x
note. 100 STAT. 2034 PUBLIC LAW 99-509—OCT. 21, 1986
.S>tO0 at?.^ ered as incurred expenses for purposes of subsections (a) and
(b).".
fc) CERTIFICATION STANDARD.—(1) Section 1835(a)(2)(C) of such Act
S* (42 U.S.C. 1395n(a)(2XC)) is amended—
(A) by inserting "or outpatient occupational therapy services"
I >.» after "outpatient physical therapy services",
luif (B) in clause (i), by inserting "or occupational therapy serv­
ices, respectively," after "physical therapy services", and
– (C) in clause (ii), by inserting "or qualified occupational thera­
pist, respectively," after "qualified physical therapist".
(2) The second sentence of section 1835(a) of such Act and section
. 1866(e) of such Act (42 U.S.C. 1395n(a), 1395cc(e)) are each
amended—
(A) by inserting "(or meets the requirements of such section
through the operation of section 1861(g))" after "1861(p)(4)(A)"
i),i, and after "1861(p)(4)(B)", and
1^ ; (B) by inserting "or (through the operation of section 1861(g))
-«<;j J with respect to the furnishing of outpatient occupational ther­
apy services" after "(as therein defined)",
(d) DEFINITION AND INCLUSION WITH OTHER PART B SERVICES.—(1)
Section 1861 of the Social Security Act (42 U.S.C. 1395x) is amended
42 use 1395k note.
42 use 1396d. si5 r OUTPATIENT OCCUPATIONAL THERAPY SERVICES
"(g) The term 'outpatient occupational therapy services' has the
meaning given the term 'outpatient physical therapy services' in
subsection (p), except that 'occupational' shall be substituted for
'physical' each place it appears therein.".
(2) Section 1861(s)(2)(D) of such Act (42 U.S.C. 1395x(s)(2)(D)) is
amended by inserting "and outpatient occupational therapy serv­
ices" after "outpatient physical therapy services".
(3) Section 1861(v)(5)(A) of such Act (42 U.S.C. 1395x(v)(5)(A)) is
amended by inserting "(including through the operation of section
1861(g))" after "section 1861(p)".
(e) EFFECTIVE DATE.—The amendments made by this section shall
apply to expenses incurred for outpatient occupational therapy
services furnished on or after July 1,1987.
SEC. 9338. SERVICES OF A PHYSICIAN ASSISTANT. "
(a) SERVICES COVERED.—Section 1861(s)(2) of the Social Security
Act (42 U.S.C. 1395x(s)(2)), as amended by section 9335(c)(1) of this
subtitle, is amended—
(1) by striking "and" at the end of subparagraph (I),
(2) by adding "and" at the end of subparagraph (J), and
(3^ by adding at the end the following new subparagraph:
'*(K)(i) services which would be physicians' services if fur­
nished by a physician (as defined in subsection (r)(l)) and which
are performed by a physician assistant (as defined in subsection
(aa)(3)) under the supervision of a physician (as so defined) in a
hospital, skilled nursing facility, or intermediate care facility
(as defined in section 1905(c)) or as an assistant at surgery and
which the physician assistant is legally authorized to perform
by the State in which the services are performed, and
"(ii) such services and supplies furnished as an incident to
such services as would be covered under subparagraph (A) if
furnished as an incident to a physician's professional service;". »aj
n^
s^mya PUBLIC LAW 99-509—OCT. 21, 1986 100 STAT. 2035
(b) DETERMINATION OF PAYMENT AMOUNT.—Section 1842(b) of such
Act (42 U.S.C. 1395u(b)), as amended by section 9333(b), is amended
by adding at the end the following new paragraph:
"(12)(A) With respect to services described in section 1861(s)(2)(K)
(relating to a physician assistant acting under the supervision of a
physician)—
"(i) payment under this part may only be made on an assign­
ed ment-related basis; and
(ii) the prevailing charges determined under paragraph (3)
shall not exceed—
r ( ^. . "(I) in the case of services performed as an assistant at
surgery, 65 percent of the amount that would otherwise be
recognized if performed by a physician who is serving as an
if, i'- assistant at surgery, or
!^i:: "(II) in other cases, the applicable percentage (as defined
I ->a . in subparagraph (B)) of the prevailing charge rate deter­
mined for such services performed by physicians who are
not specialists.
"(B) In subparagraph (A)(ii)(II), the term 'applicable percentage'
means—
"(i) 75 percent in the case of services performed (other than as
an assistant at surgery) in a hospital, and
"(ii) 85 percent in the case of other services.
"(C) Except for deductible and coinsurance amounts applicable
under section 1833, any person who knowingly and willfully pre­
sents, or causes to be presented, to an individual enrolled under this
part a bill or request for payment for services described in section
1861(s)(2)(K) in violation of subparagraph (A)(i) is subject to a civil
monetary penalty of not to exceed $2,000 for each such bill or
request. Such a penalty shall be imposed in the same manner as
civil monetary penalties are imposed under section 1128A with
respect to actions described in subsection (a) of that section.".
(c) PAYMENT TO EMPLOYER.—The first sentence of section 1842(b)(6)
of such Act (42 U.S.C. 1395u(b)(6)) is amended—
(1) by striking "except that payment may be made (A)(i)" and
inserting "except that (A) payment may be made (i)";
i'- (2) by striking "or (B)" and by inserting "(B) payment may be
» made"; and
(3) by inserting before the period at the end the following: ",
a and (C) in the case of services described in section 1861(s)(2XK)
H payment shall be made to the employer of the physician assist­
ant involved".
(d) REDUCTION IN PAYMENT TO AVOID DUPLICATE PAYMENT.—Not­
withstanding any other provision of law, the Secretary of Health
and Human Services may reduce the amount of payments otherwise
made to hospitals and skilled nursing facilities under title XVIII of
the Social Security Act, so as to eliminate estimated duplicate
payments for historical or current costs attributable to services
described in section 1861(s)(2)(K) of such Act (for which payment
may be made under the amendments made by this section).
(e) STUDY OF PAYMENT RATES.—The Secretary shall report to
Congress, by not later than April 1, 1988, concerning adjustments to
the amount of payment made, under part B of title XVIII of the
Social Security Act, for services described in section 1861(s)(2XK) of
such Act, to ensure that the amount of such payments reflects the
approximate cost of furnishing the services, taking into account 42 use 1395x.
Ante, p. 2014.
Ante, pp. 2003,
2008.
ct-gl DBl) 'It
Health care
facilities.
42 use 1395x
note.
42 use 1395.
Reports.
42 use 1395x
note.
42 use 1395J. 100 STAT. 2036 PUBLIC LAW 99-509—OCT. 21, 1986
compensation costs and overhead and supervision costs attributable
to physician assistants.
42 use 1395x (f) EFFECTIVE DATE.—The amendments made by this section shall
note. ^.,,. apply to services furnished on or after January 1, 1987.
SEC. 9339. PAYMENT FOR CLINICAL DIAGNOSTIC LABORATORY TESTS.
(a) TREATMENT OF HOSPITAL OUTPATIENT LABORATORIES.—
(1) IN GENERAL.—Section 1833(h) of the Social Security Act (42
,' U.S.C. 13951(h)) is amended—
(A) in paragraph (1)(B), by striking "hospital laboratory"
and inserting "qualified hospital laboratory (as defined in
' . •• • subparagraph (D))",
(B) in paragraph (1)(C)—
(i) in the first sentence, by striking "hospital labora-
!'' tory" and inserting "qualified hospital laboratory (as
– – • ' defined in subparagraph (D))", and by striking ", and
ending on December 31,1987", and
(ii) by striking the second sentence;
(C) by adding at the end of paragraph (1) the following
new subparagraph:
"(D) In this subsection, the term 'qualified hospital laboratory'
means a hospital laboratory which provides some clinical diagnostic
laboratory tests 24 hours a day in order to serve a hospital emer­
gency room which is available to provide services 24 hours a day and
.1" c; i n^ 7 days a week."; and
(D) in paragraph (2), by striking "hospital laboratory"
I– and inserting "qualified hospital laboratory (as defined in
f / paragraph (1)(D))".
42 use 1395/ t (2) EFFECTIVE DATE.—The amendments made by this subsec-
"ote. tion apply to clinical diagnostic laboratory tests performed on or
: Vs*** after January 1,1987.
*- (b) DELAYING FOR 2 YEARS REQUIREMENT OF NATIONAL FEE
SCHEDULE.—
(1) IN GENERAL.—Section 1833(h)(1)(B) of such Act is amended
bii by striking "1987" and "1988" and inserting "1989" and "1990",
respectively.
iis amended by striking "(or, effective January 1, 1988, for the
* United States)".
42 use 1395/ (3) REPORT.—The Secretary of Health and Human Services
note- shall report to Congress, by not later than April 1, 1988, on the
advisability and feasibility of, and methodology for, establishing
national fee schedules for payment for clinical diagnostic lab­
oratory tests under section 1833(h) of the Social Security Act.
(c) PAYMENT FOR TIME AND TRAVEL COSTS TO COLLECT SAMPLES
FROM CERTAIN IMMOBILE BENEFICIARIES.—
(1) IN GENERAL.—Section 1833(h)(3) of such Act is amended—
(A) by inserting "(A)" after "provide for and establish",
• i-":– and
(B) by inserting before the period at the end the following:
'i.;*^ ' ", and (B) a fee to cover the transportation and personnel
.-;; -^ expenses for trained personnel to travel to the location of
an individual to collect the sample, except that such a fee
* may be provided only with respect to an individual who is
> homebound or an inpatient in an inpatient facility (other
than a hospital)". y J PUBLIC LAW 99-509—OCT. 21, 1986 100 STAT. 2037
(2) EFFECTIVE DATE.—The amendment made by paragraph (1)
shall apply to samples collected on or after January 1, 1987.
(d) STATE STANDARDS FOR DIRECTORS OF CLINICAL LABORATORIES.—
(1) IN GENERAL.—If a State (as defined for purposes of title
XVIII of the Social Security Act) provides for the licensing or
other standards with respect to the operation of clinical labora­
tories (including such laboratories in hospitals) in the State
under which such a laboratory may be directed by an individual
with certain qualifications, nothing in such title shall be con­
strued as authorizing the Secretary of Health and Human
Services to require such a laboratory, as a condition of payment
or participation under such title, to be directed by an individual
with other qualifications.
(2) EFFECTIVE DATE.—Paragraph (1) shall take effect on Janu­
ary 1,1987.
(e) EXTENSION OF MORATORIUM ON LABORATORY PAYMENT DEM­
ONSTRATION.—Section 9204(a) of the Consolidated Omnibus Budget
Reconciliation Act of 1985 is amended by striking "January 1, 1987"
and inserting "January 1, 1988".
SEC. 9340. PAYMENT FOR PARENTERAL AND ENTERAL NUTRITION SUP­
PLIES AND EQUIPMENT.
The Secretary of Health and Human Services shall apply the
sixth sentence of section 1842(b)(3) of the Social Security Act to
payment—
(1) for enteral nutrition nutrients, supplies, and equipment
and parenteral nutrition supplies and equipment furnished on
or after January 1,1987, and
(2) for parenteral nutrition nutrients furnished on or after
October 1,1987.
SEC. 9341. CHANGING MEDICARE APPEAL RIGHTS.
(a) REVIEW OF PART B DETERMINATIONS.—(1) Section 1869 of the
Social Security Act (42 U.S.C. 1395ff) is amended—
(A) by inserting "or part B" in subsection (a) after "amount of
benefits under part A",
(B) by inserting "or part B" in subsection (b)(1)(C) after
"part A",
(C) by amending paragraph (2) of subsection (b) to read as
follows:
"(2) Notwithstanding paragraph (IXC), in the case of a claim
arising—
"(A) under part A, a hearing shall not be available to an
individual under paragraph (1)(C) if the amount in controversy
is less than $100 and judicial review shall not be available to the
individual under that paragraph if the amount in controversy is
less than $1,000; or
"(B) under part B, a hearing shall not be available to an
individual under paragraph (1)(C) if the amount in controversy
is less than $500 and judicial review shall not be available to the
individual under that paragraph if the aggregate amount in
controversy is less than $1,000.
In determining the amount in controversy, the Secretary, under
regulations, shall allow two or more claims to be aggregated if the
claims involve the delivery of similar or related services to the same
individual or involve common issues of law and fact arising from
services furnished to two or more individuals.", and 42 use 1395Z
note.
42 use 1395Z
note.
42 use 1395.
42 use 1395WW
note.
Ante, p. 177.
42 use 1395u
note.
Regulations.
Claims. 100 STAT. 2038 PUBLIC LAW 99-509—OCT. 21, 1986
5 use 500 et seq;
ante, p. 2017.
Records. ::'X ~ (D) by adding at the end the following new paragraphs:
"(3) Review of any national coverage determination under section
42 use 1395y. 1862(a)(1) respecting whether or not a particular type or class of
items or services is covered under this title shall be subject to the
3 ' . . , iii following limitations:
"(A) Such a determination shall not be reviewed by any
administrative law judge.
"(B) Such a determination shall not be held unlawful or set
aside on the ground that a requirement of chapter 5 of title 5,
United States Code, or section 1871(b), relating to publication in
the Federal Register or opportunity for public comment, was
irj not satisfied.
"(C) In any case in which a court determines that the record is
:,' incomplete or otherwise lacks adequate information to support
the validity of the determination, it shall remand the matter to
i- the Secretary for additional proceedings to supplement the
vi record and the court may not determine that an item or service
q a*nK is Covered except upon review of the supplemented record.
"(4) A regulation or instruction which relates to a method for
determining the amount of payment under part B and which was
initially issued before January 1, 1981, shall not be subject to
judicial review.".
(2) Section 1842(b)(3)(C) of such Act (42 U.S.C. 1395u(b)(3)(C)) is
amended by striking "$100 or more" and inserting "at least $100,
but not more than $500".
(3) Section 1879(d) of such Act (42 U.S.C. 1395pp(d)) is amended by
striking "section 1869(b)" and all that follows through "part B)" and
inserting "sections 1869(b) and 1842(b)(3)(C) (as may be applicable)".
(b) EFFECTIVE DATE.—The amendments made by subsection (a)
shall apply to items and services furnished on or after January 1,
1987. , . ..
SEC. 9342. ALZHEIMER'S DISEASE DEMONSTRATION PROJECTS.
(a) DEMONSTRATION PROJECTS.—The Secretary of Health and
Human Services (in this section referred to as the "Secretary") shall
conduct at least 5 (and not more than 10) demonstration projects to
determine the effectiveness, cost, and impact on health status and
functioning of providing comprehensive services for individuals enti­
tled to benefits under title XVIII of the Social Security Act (in this
section referred to as "medicare beneficiaries") who are victims of
Alzheimer's disease or related disorders.
(b) SERVICES UNDER DEMONSTRATION PROJECTS.—The services pro­
vided under demonstration projects must be designed to meet the
specific needs of Alzheimer s disease patients and may include—
(1) case management services,
(2) home and community-based services,
(3) mental health services, ^^
(4) outpatient drug therapy,
(5) respite care and other supportive services and counseling
:A for family,
r:: (6) adult day care services, and i- '^ – j ??
(7) other in-home services.
•^iii (c) CONDUCT OF PROJECTS.—The demonstration projects shall—
e! > (1) each be conducted over a period of 3 years;
(2) provide each medicare beneficiary with a comprehensive
Si . medical and mental status evaluation upon entering the project
and at discharge; 42 use 1395ff.
42 use 1395ff
note.
42 use 1395b-l
note.
42 use 1395. PUBLIC LAW 99-509—OCT. 21, 1986 100 STAT. 2039
(3) be conducted by an entity which either directly or by
contract is able to provide such comprehensive evaluations and
the additional services (described in subsection (b)) covered by
the project;
(4) be conducted in sites which are chosen so as to be geo­
graphically diverse and located in States with a high proportion
of medicare beneficiaries and in areas readily accessible to a
significant number of medicare beneficiaries; and
(5) involve community outreach efforts at each site to enroll
the maximum number of medicare beneficiaries in each project.
(d) EVALUATION AND REPORTS.—The Secretary shall provide for an
evaluation of the demonstration projects and shall submit to the
Committees on Energy and Commerce and Ways and Means of the
House of Representatives and the Committee on Finance of
the Senate—
(1) a preliminary report during the third year of the projects,
which report shall include a description of the sites at which the
projects are being conducted and the services being provided at
the different sites, and
(2) a final report upon completion of the projects, which report
shall include recommendations for appropriate legislative
changes.
(0 FUNDING.—Expenditures (not to exceed $40,000,000 for the
projects and $2,000,000 for the evaluation of the projects) made for
the demonstration projects shall be made from the Federal Supple­
mentary Medical Insurance Trust Fund (established by section 1841
of the Social Security Act). Grants and payments under contracts
may be made either in advance or by way of reimbursement, as may
be determined by the Secretary, and shall be made in such install­
ments and on such conditions as the Secretary finds necessary to
carry out the purpose of this section.
(g) WAIVER OF MEDICARE REQUIREMENTS.—The Secretary shall
waive compliance with the requirements of title XVIII of the Social
Security Act to the extent and for the period the Secretary finds
necessary for the conduct of the demonstration projects.
SEC. 9343. PAYMENTS FOR AMBULATORY SURGERY.
(a) AMOUNTS PAYABLE; ANNUAL UPDATING.—
(1)(A) Section 1833(a)(4) of the Social Security Act (42 U.S.C.
13951(a)(4)) is amended to read as follows:
"(4) in the case of facility services described in section
1832(a)(2)(F), and outpatient hospital facility services furnished
in connection with surgical procedures specified by the Sec­
retary pursuant to section 1833(i)(l)(A), the applicable amount
as determined under paragraph (2) or (3) of subsection (i).".
(B) Section 1833(i) of such Act (42 U.S.C. 13951(i)) is amended
by redesignating paragraphs (3) and (4) as paragraphs (4) and
(5), respectively, and inserting after paragraph (2) the following
new paragraph:
"(3)(A) The aggregate amount of the payments to be made under
this part for outpatient hospital facility services furnished in
connection with surgical procedures specified under paragraph
(1)(A) in a cost reporting period shall be equal to the lesser of—
"(i) the amount determined with respect to such services
I under subsection (a)(2XB); or
"(ii) the blend amount (described in subparagraph (B)). Contracts.
State and local
governments.
Grants.
Contracts.
42 use 1395t.
42 use 1395.
Health care
facilities.
42 use 1395k.
Health care
facilities. 100 STAT. 2040 PUBLIC LAW 99-509—OCT. 21, 1986
' ' ' "(B)(i) The blend amount for a cost reporting period is the sum
of—
"(I) the cost proportion (as defined in clause (ii)(I)) of the
amount described in subparagraph (A)(i), and
•' "(ID the ASC proportion (as defined in clause (ii)(II)) of 80
percent of the standard overhead amount payable with respect
to the same surgical procedure as if it were provided in an
ambulatory surgical center in the same area, as determined
under paragraph (2)(A).
"(ii) In this paragraph:
"(I) The term 'cost proportion' means 75 percent for cost
reporting periods beginning in fiscal year 1988, and 50 percent
for other cost reporting periods.
"(II) The term 'ASC proportion' means 25 percent for cost
reporting periods beginning in fiscal year 1988, and 50 percent
for other cost reporting periods.".
42 use 1395/. (2) CONFORMING AMENDMENT.—Section 1833(b)(3) of such Act
is amended by striking "or (i)(4)" and inserting in lieu thereof
"or (i)(5)".
(b) UPDATING ASC RATES.—
(1) RATE UPDATE.—Subparagraphs (A) and (B) of section
1833(i)(2) of such Act are each amended by striking "shall be
*: ; reviewed periodically" and inserting in lieu thereof "shall be
'' '^'' reviewed and updated not later than July 1, 1987, and annually
thereafter".
(2) ASC usT UPDATE.—Section 1833(iXl) of such Act is
''^- '^' ' amended by adding at the end (after and below subparagraph
(B)) the following:
"The lists of procedures established under subparagraphs (A) and (B)
shall be reviewed and updated not less often than every 2 years.".
(c) PREVENTING UNBUNDLING OF HOSPITAL OUTPATIENT
SERVICES ~~~~
(1)'Section 1862(a)(14) of such Act (42 U.S.C. 1395y{a)(14)) is
'"' ' amended by striking "inpatient" and inserting "patient".
(2) Section 1866(a)(1)(H) of such Act (42 U.S.C. 1395cc(a)(l)(H))
is amended—
(A) by striking "inpatient hospital", and
(B) by striking "an inpatient" and inserting "a patient".
'•••*-' (3) Section 1866 of such Act (42 U.S.C. 1395cc) is further
amended by adding at the end the following new subsection:
Health care "(g) Except as permitted under subsection (a)(2), any person who
facilities. knowingly and willfully presents, or causes to be presented, a bill or
request for payment for a hospital outpatient service for which
payment may be made under part B and such bill or request violates
an arrangement under subsection (a)(1)(H), is subject to a civil
monetary penalty of not to exceed $2,000. Such a penalty shall be
imposed in the same manner as civil monetary penalties are
Ante, pp. 2003, imposed under section 1128A with respect to actions described in
2008. subsection (a) of that section.".
(d) PRO REVIEW.—
(1) Section 1154(a)(1) of the Social Security Act (42 U.S.C.
1320c-3(a)(l)) is amended by inserting "and subject to the
requirements of subsection (d)" after "subject to the terms of
the contract".
(2) Section 1154 of such Act is amended by adding at the end
the following new subsection: PUBLIC LAW 99-509—OCT. 21, 1986 100 STAT. 2041
"(d) Each contract under this part shall require that the utiliza­
tion and quality control peer review organization's review respon­
sibility pursuant to subsection (a)(1) will include review of all
ambulatory surgical procedures specified pursuant to section
1833(i)(lXA) which are performed in the area, or, at the discretion of
the Secretary (and except as provided in section 1164(b)(4)) a sample
of such procedures.".
(e) COINSURANCE AND DEDUCTIBLE TO APPLY WITHOUT REGARD TO
SETTING OF AMBULATORY SURGERY.—
(1) Clauses (i) and (ii) of section 1832(a)(2)(F) of the Social
Security Act (42 U.S.C. 1395k(a)(2)(F)) are each amended by
inserting "standard overhead" before "amount".
(2)(A) Section 1833(b) of such Act (42 U.S.C. 13951(b)) is
amended by striking paragraph (3) and redesignating para­
graphs (4) and (5) as paragraphs (3) and (4).
(B) Subparagraphs (A) and (B) of section 1833(i)(2) of such Act
are each amended by inserting "80 percent of before "a stand­
ard overhead amount".
(f) DEVELOPMENT OF PROSPECTIVE PAYMENT METHODOLOGY FOR
OUTPATIENT HOSPITAL SERVICES.—Section 1135 of the Social Security
Act (42 U.S.C. 1320b-5) is amended by adding at the end the
following new subsection:
"(d)(1) The Secretary shall develop a fully prospective payment
system for ambulatory surgical procedures performed on patients in
hospitals on an outpatient basis.
"(2) The system shall, to the extent practicable, provide for an all-
inclusive payment rate for ambulatory surgical procedures per­
formed on patients in hospitals on an outpatient basis, which rate
encompasses payment for facility services and all medical and other
health services, other than physicians' services, commonly furnished
in connection with such procedures.
"(3) The system shall provide for appropriate payment rates with
respect to such procedures.
"(4) Such rates shall take into account at least the following
considerations:
"(A) The costs of hospitals providing ambulatory surgical
procedures.
"(B) The costs under this title of payment for such procedures
performed in ambulatory surgical centers.
"(C) The extent to which any differences in such costs are
justifiable.
"(5) The Secretary shall submit to Congress—
"(A) an interim report on the development of the system by
April 1,1988, and
"(B) a final report on such system by April 1,1989.
The report under subparagraph (B) shall include recommendations
concerning the implementation of the payment system for ambula­
tory surgical procedures performed on or after October 1, 1989.
(6)(A) The Secretary shall develop a model system for the
payment for outpatient hospital services other than ambulatory
surgery.
"(B) The Secretary shall submit to Congress a report on the model
payment system under subparagraph (A) by January 1, 1991.".
(g) REPORTING OF OPD SERVICES USING HCPCS.—Not later than
July 1, 1987, each fiscal intermediary which processes claims under
part B of title XVIII of the Social Security Act shall require hos­
pitals, as a condition of payment for outpatient hospital services Contracts.
42 use 1395/.
42 use
1320C-13.
Reports.
Reports.
Claims.
42 use 1395U
note.
42 use 1395J. 100 STAT. 2042 PUBLIC LAW 99-509—OCT. 21, 1986
42 use-1395/
note.
Contracts.
42 use 1395W-1
note.
42 use 1395q.
42 use 1395q note.
42 use 1395J.
42 use 1395b-l
note.
Ante, p. 194.
Rural areas. under that part, to report claims for payment for such services
under such part using a HCFA Common Procedure Coding System,
(h) EFFECTIVE DATES.—
(1) The amendments made by subsection (a)(1) shall apply to
cost reporting periods beginning on or after October 1, 1987
(2) The amendments made by subsections (b)(1) and (d) shall
apply to services furnished after June 30, 1987.
(3) The Secretary of Health and Human Services shall first
provide, under the amendment made by subsection (b)(2), for the
review and update of procedure lists within 6 months after the
date of the enactment of this Act.
(4) The amendments made by subsection (c) shall apply to
contracts entered into or renewed after January 1,1987.
SEC. 9344. TECHNICAL AMENDMENTS AND MISCELLANEOUS PROVISIONS
RELATING TO PART B.
(a) ADDITIONAL MEMBERS FOR PHYSICIAN PAYMENT REVIEW
COMMISSION.—
(1) 2 ADDITIONAL MEMBERS.—Section 1845(a)(2) of the Social
Security Act (42 U.S.C. 1395w-l(a)(2)) is amended by striking
"11 individuals" and inserting "13 individuals".
(2) APPOINTMENT OF ADDITIONAL MEMBERS.—The Director of
the Congressional Office of Technology Assessment shall
appoint the two additional members of the Physician Payment
Review Commission, as required by the amendment made by
paragraph (1), no later than 60 days after the date of the
enactment of this Act, for terms of 3 years, except that the
Director may provide initially for such terms as will insure that
(on a continuing basis) the terms of no more than five members
expire in any one year.
(b) EFFECTIVE DATE OF VOLUNTARY DISENROLLMENT FROM
MEDICARE.—
(1) IN GENERAL.—The second and sixth sentences of section
1838(b) of the Social Security Act (42 U.S.C. 1395p(b)) are each
amended by striking "calendar quarter following the calendar
quarter" and inserting "month following the month".
(2) EFFECTIVE DATE.—The amendments made by paragraph (1)
shall apply to notices filed on or after July 1,1987.
(c) STUDY ON PROSPECTIVE PAYMENT OF RADIOLOGY, ANESTHESIA,
AND PATHOLOGY SERVICES TO HOSPITAL INPATIENTS.—The Secretary
of Health and Human Services shall study and report to Congress by
July 1, 1987, concerning the design and implementation of a
prospective payment system for payment, under part B of title
XVIII of the Social Security, for radiology, anesthesia, and pathol­
ogy services furnished to hospital inpatients. Such report shall
include data, from a representative sample, showing, for discharges
classified within each diagnosis-related group, the distribution of
total reasonable charges and costs for each inpatient discharge for
such services.
(d) PREVENTIVE HEALTH SERVICES DEMONSTRATION PROGRAM.—
Effective as if included in section 9314 of the Consolidated Omnibus
Budget Reconciliation Act of 1985 when such section was enacted,
such section is amended—
(1) in subsection (c)(2), by inserting "(at least one of which
shall serve a rural area)" after "five sites", and
(2) by striking the last sentence of subsection (f) and inserting
. the following: "Funding for the administrative costs of the PUBLIC LAW 99-509—OCT. 21, 1986 100 STAT. 2043
demonstration program shall not exceed $5,900,000 over the
duration of the program.".
PART 4—IMPROVED REVIEW OF QUALITY BY
PEER REVIEW ORGANIZATIONS
SEC. 9351. PRO REVIEW OF HOSPITAL DENIAL NOTICES.
(a) IN GENERAL.—Section 1154 of the Social Security Act (42 U.S.C.
1320c-3), as amended by section 9343(dX2) of this subtitle, is amended
by adding at the end the following new subsection:
"(e)(1) If-
"(A) a hospital has determined that a patient no longer
requires inpatient hospital care, and
"(B) the attending physician has agreed with the hospital's
determination,
the hospital may provide the patient (or the patient's representa­
tive) with a notice (meeting conditions prescribed by the Secretary
under section 1879) of the determination.
"(2)If—
"(A) a hospital has determined that a patient no longer
requires inpatient hospital care, but
"(B) the attending physician has not agreed with the hos­
pital's determination,
the hospital may request the appropriate peer review organization
to review under subsection (a) the validity of the hospital's
determination.
"(3XA) If a patient (or a patient's representative)—
"(i) has received a notice under paragraph (1), and
"(ii) requests the appropriate peer review organization to
review the determination,
then, the organization shall conduct a review under subsection (a) of
the validity of the hospital's determination and shall provide notice
(by telephone and in writing) to the patient or representative and
the hospital and attending physician involved of the results of the
review. Such review shall be conducted regardless of whether or not
the hospital will charge for continued hospital care or whether or
not the patient will be liable for payment for such continued care.
"(B) If a patient (or a patient's representative) requests a review
under subparagraph (A) while the patient is still an inpatient in the
hospital and not later than noon of the first working day after the
date the patient receives the notice under paragraph (1), then—
"(i) the hospital shall provide to the appropriate peer review
organization the records required to review the determination
by the close of business of such first working day, and
"(ii) the peer review organization must provide the notice
under subparagraph (A) by not later than one full working day
after the date the organization has received the request and
such records.
"(4) If—
"(A) a request is made under paragraph (3XA) not later than
< noon of the first working day after the date the patient (or
patient's representative) receives the notice under paragraph
(1), and
"(B) the conditions described in section 1879(aX2) with respect
to the patient or representative are met. Health care
facilities.
Ante, p. 1991.
.ete-fc-;
:Aa.k
Records. 100 STAT. 2044 PUBLIC LAW 99-509—OCT. 21, 1986
42 use 1320C-3
note.
42 use 1320C-3.
Contracts.
42 use 1320c.
Ante, p. 196.
42 use 1320C-2
note.
Contracts.
42 use 1320C-3
note. the hospital may not charge the patient for inpatient hospital
services furnished before noon of the day after the date the patient
or representative receives notice of the peer review organization's
decision.
"(5) In any review conducted under paragraph (2) or (3), the
organization shall solicit the views of the patient involved (or the
patient's representative).".
(b) EFFECTIVE DATE.—(1) Except as provided in paragraph (2), the
amendment made by subsection (a) shall apply to denial notices
furnished by hospitals to individuals on or after the first day of the
first month that begins more than 30 days after the date of the
enactment of this Act.
(2) Section 1154(e)(4) of the Social Security Act (as added by the
amendment made by subsection (a)) shall take effect on the date of
the enactment of this Act.
SEC. 9352. PRO REVIEW OF INPATIENT HOSPITAL SERVICES AND EARLY
READMISSION CASES.
(a) TIMELY PROVISION OF HOSPITAL INFORMATION.—(1) Section 1153
of the Social Security Act (42 U.S.C. 1320c-2) is amended by adding
at the end the following new subsection:
"(g) The Secretary shall provide that fiscal intermediaries furnish
to peer review organizations, each month on a timely basis, data
necessary to initiate the review process under section 1154(a) on a
timely basis. If the Secretary determines that a fiscal intermediary
is unable to furnish such data on a timely basis, the Secretary shall
require the hospital to do so.".
(2) Section 1816(a) of such Act (42 U.S.C. 1395h(a)) is amended by
adding at the end the following: "As used in this title and part B of
title XI, the term 'fiscal intermediary' means an agency or organiza­
tion with a contract under this section.".
(b) REQUIRING REVIEW OF EARLY READMISSION CASES.—Section
1154(a) of such Act (42 U.S.C. 1320c-3(a)), as amended by section
9401(a) of the Consolidated Omnibus Budget Reconciliation Act of
1985, is amended by adding at the end the following new paragraph:
"(13) Notwithstanding paragraph (4), the organization shall
* perform the review described in paragraph (1) with respect to
early readmission cases to determine if the previous inpatient
hospital services and the post-hospital services met profes­
sionally recognized standards of health care. Such reviews may
be performed on a sample basis if the organization and the
Secretary determine it to be appropriate. In this paragraph, an
'early readmission case' is a case in which an individual, after
discharge from a hospital, is readmitted to a hospital less than
31 days after the date of the most recent previous discharge.".
(c) EFFECTIVE DATES.—(1) The Secretary of Health and Human
Services shall implement the amendment made by subsection (a) not
later than 6 months after the date of the enactment of this Act.
(2) The amendment made by subsection (b) shall apply to contracts
entered into or renewed on or after January 1, 1987, except that in
applying such amendment before January 1, 1989, the term "post-
hospital services" does not include physicians' services, other than
physicians' services furnished in a hospital, other inpatient facility,
ambulatory surgical center, or rural health clinic.
SEC. 9353. PRO REVIEW OF QUALITY OF CARE.
(a) REQUIRING PRO REVIEW OF QUALITY OF CARE.— ^. PUBLIC LAW 99-509—OCT. 21, 1986 100 STAT. 2045
•J '!
Contracts. (1) ALLOCATION OF FUNDS FOR QUALITY CARE REVIEW.—Section
1154(a)(4) of the Social Security Act (42 U.S.C. 1320c-3(a)(4)) is
amended by adding at the end the following: "Each peer review
organization shall provide that a reasonable proportion of its
activities are involved with reviewing, under paragraph (1)(B),
the quality of services and that a reasonable allocation of such
activities is made among the different cases and settings (includ­
ing post-acute-care settings, ambulatory settings, and health
maintenance organizations). In establishing such allocation, the
organization shall consider (i) whether there is reason to believe
that there is a particular need for reviews of particular cases or
settings because of previous problems regarding quality of care,
(ii) the cost of such reviews and the likely yield of such reviews
in terms of number and seriousness of quality of care problems
likely to be discovered as a result of such reviews, and (iii) the
availability and adequacy of alternative quality review and
assurance mechanisms.".
(2) REQUIRING REVIEW OF HEALTH MAINTENANCE ORGANIZA­
TIONS AND COMPETITIVE MEDICAL PLANS.—Such section is further
amended—
(A) by inserting "(A)" after "(4)";
(B) by adding at the end the following new subparagraph:
"(B) The contract of each organization shall provide for the review
of services (including both inpatient and outpatient services) pro­
vided by eligible organizations pursuant to a contract under section
1876 for the purpose of determining whether the quality of such 42 USC 1395inm.
services meets professionally recognized standards of health care,
including whether appropriate health care services have not been
provided or have been provided in inappropriate settings. The pre­
vious sentence shall not apply with respect to a contract year if
another entity has been awarded a contract under subparagraph
(C).";
(C) by adding at the end of such subparagraph the follow- Contracts,
ing: "Under the contract the level of effort expended by the
Ovi u organization on reviews under this subparagraph shall be , >
equivalent, on a per enrollee basis, to the level of effort
expended by the organization on utilization and quality
reviews performed with respect to individuals not enrolled
with an eligible organization."; and
(D) by adding at the end the following additional new
subparagraph:
"(C) The Secretary may provide, by contract under competitive
procurement procedures on a State-by-State basis in up to 25 States,
for the review described in subparagraph (B) by an appropriate
entity (which may be a peer review organization described in that
subparagraph). In selecting among States in which to conduct such
competitive procurement procedures, the Secretary may not select
States which, as a group, have more than 50 percent of the total
number of individuals enrolled with eligible organizations under
section 1876. Under a contract with an entity under this
subparagraph—
"(i) the entity must be, or must meet all the requirements
under section 1152 to be, a utilization and quality control peer 42 USC 1320c-l.
review organization,
"(ii) the contract must meet the requirement of section
1153(bX3), and 42 USC l320c-2. Contracts.
State and local
governments. 100 STAT. 2046 PUBLIC LAW 99-509—OCT. 21, 1986
""'' "(iii) the level of effort expended under the contract shall be,
to the extent practicable, not less than the level of effort that
would otherwise be required under the third sentence of
subparagraph (B) if this subparagraph did not gpply.".
(3) IDENTIFICATION OF METHODS FOR IDENTIFYING CASES
OF SUBSTANDARD CARE.—Section 1154 of such Act (42 U.S.C.
1320C-3), as amended by sections 9343(d)(2) and 9351(a), is
amended by adding at the end the following new subsection:
"(f) The Secretary, in consultation with appropriate experts, shall
identify methods that would be available to assist peer review
organizations (under subsection (a)(4)) in identifying those cases
which are more likely than others to be associated with a quality of
services which does not meet professionally recognized standards of
health care.".
42USC1320C-3 (4) SMALL-AREA ANALYSIS.—The Secretary of Health and
note. Human Services shall provide, to at least 12 utilization and
quality control peer review organizations with contracts under
42 use 1320c. " part B of title XI of the Social Security Act, data and data
processing assistance to allow each of these organizations to
review and analyze small-area variations, in the service area of
the organization, in the utilization of hospital and other health
care services for which payment is made under title XVIII of
42 use 1395. such Act.
42 use 1320C-3 (5) CONFORMING AMENDMENT.—Section 9405 of the Consoli-
^° ' dated Omnibus Budget Reconciliation Act of 1986 is amended by
striking "January" and inserting "April",
eontracts. (6) EFFECTIVE DATES.—(A)(i) Except as provided in clause (ii),
42 use 1320C-3 the amendments made by paragraphs (1) and (2)(D) shall apply
note. to contracts as of January 1,1987.
(ii) The amendment made by paragraph (1) shall not be
construed as requiring, before January 1, 1989, the review of
physicians' services, other than physicians' services furnished
in a hospital, other inpatient facility, ambulatory surgical
center, or rural health clinic,
eontracts. (B) The amendment made by paragraph (2)(B) shall apply to
contracts as of April 1,1987.
(C) The amendment made by paragraph (2)(C) shall apply to
review activities conducted by organizations on or after Janu­
ary 1, 1988.
w if (D) The amendment made by paragraph (3) becomes effective
on the date of the enactment of this Act.
sii : (b) REQUIRING CONSUMER REPRESENTATIVE ON PEER REVIEW
BOARDS.—
(1) IN GENERAL.—Section 1152 of such Act (42 U.S.C. 1320c-l)
is amended—
(A) by striking "and" at the end of paragraph (1),
(B) by striking the period at the end of paragraph (2) and
inserting "; and", and
(C) by adding at the end the following new paragraph:
"(3) has at least one individual who is a representative of
consumers on its governing body.".
eontracts. (2) EFFECTIVE DATE.—The amendment made by paragraph (1)
42 use 1320C-1 shall apply to contracts entered into or renewed on or after
note- January 1, 1987.
(c) IMPROVING PEER REVIEW RESPONSIVENESS TO BENEFICIARY
s.^'M',i :)80 5it COMPLAINTS.— PUBLIC LAW 99-509—OCT. 21, 1986 100 STAT. 2047
rf (1) APPROPRIATE REVIEW OF COMPLAINTS REQUIRED.—Section
1154(a) of such Act (42 U.S.C. 1320c-3(a)), as amended by section
9352(b), is further amended by adding at the end the following
new paragraph:
"(14) The organization shall conduct an appropriate review of
all written complaints about the quality of services (for which
payment may otherwise be made under title XVIII) not meeting
professionally recognized standards of health care, if the com­
plaint is filed with the organization by an individual entitled to
benefits for such services under such title (or a person acting on
the individual's behalf). The organization shall inform the
individual (or representative) of the organization's final disposi­
tion of the complaint. Before the organization concludes that
the quality of services does not meet professionally recognized
standards of health care, the organization must provide the
practitioner or person concerned with reasonable notice and
opportunity for discussion.".
(2) EFFECTIVE DATE.—The amendment made by paragraph (1)
shall apply to complaints received on or after the first day of the
first month that begins more than 9 months after the date of
the enactment of this Act.
(d) SHARING OF INFORMATION BY PEER REVIEW ORGANIZATIONS.—
(1) IN GENERAL.—Subparagraph (C) of section 1160(b)(1) of
such Act (42 U.S.C. 1320c-9(b)(l)) is amended to read as follows:
"(C) to assist appropriate State agencies recognized by the
Secretary as having responsibility for licensing or certifi-
'" cation of providers or practitioners or to assist national
accreditation bodies acting pursuant to section 1865 in
accrediting providers for purposes of meeting the conditions
described in title XVIII, which data and information shall
be provided by the peer review organization to any such
agency or body at the request of such agency or body
relating to a specific case or to a possible pattern of sub­
standard care, but only to the extent that such data and
information are required by the agency or body to carry out
its respective function which is within the jurisdiction of
the agency or body under State law or under section 1865;".
(2) EFFECTIVE DATE.—The amendments made by paragraph (1)
shall apply to requests for data and information made on and
after the end of the 6-month period beginning on the date of the
enactment of this Act.
(e) FUNDING OF ADDITIONAL PRO ACTIVITIES.—
(1) THROUGH AGREEMENTS WITH HOSPITALS, SKILLED NURSING
FACILITIES, AND HOME HEALTH AGENCIES.—Section 1866(a) of SUCh
Act (42 U.S.C. 1395cc(a)) is amended—
(A) in paragraph (1)(F)—
(i) by redesignating clauses (i), (ii), and (iii), as
subclauses (I), (II), and (III), respectively,
(ii) by inserting "(i)" after "(F)", and
(iii) by adding at the end the following new clause:
"(ii) in the case of hospitals, skilled nursing facilities, and
home health agencies, to maintain an agreement with a utiliza­
tion 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 hospital, facility, or agency is located) to perform
the functions described in paragraph (4)(A);"; and
(B) by adding at the end the following new paragraph: 42 use 1395.
42 use 1320C-3
note.
State and local
governments.
42 use 1395bb.
42 use 1320C-9 note.
Contracts.
42 use 1320c. 100 STAT. 2048 PUBLIC LAW 99-509—OCT. 21, 1986
42 use 1320C-3.
^IT,
42 use 1320c.
42 use 1395CC. "(4)(A) Under the agreement required under paragraph (l)(F)(ii),
the peer review organization must perform functions (other than
those covered under an agreement under paragraph (l)(F)(i)) under
the third sentence of section 1154(a)(4)(A) and under section
1154(a)(14) with respect to services, furnished by the hospital, facil­
ity, or agency involved, for which payment may be made under this
title.
"(B) For purposes of payment under this title, the cost of such an
agreement to the hospital, facility, or agency shall be considered a
cost incurred by such hospital, facility, or agency in providing
covered services under this title and shall be paid directly by the
Secretary to the peer review organization on behalf of such hospital,
facility, or agency in accordance with a schedule established by the
Secretary.
"(C) Such payments—
"(i) shall be transferred in appropriate proportions from the
Federal Hospital Insurance Trust Fund and from the Federal
Supplementary 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 serv­
ices provided directly to beneficiaries, and
"(ii) shall not be less in the aggregate for hospitals, facilities,
and agencies for a fiscal year than the amounts the Secretary
determines to be sufficient to cover the costs of such organiza­
tions' conducting the activities described in subparagraph (A)
with respect to such hospitals, facilities, or agencies under
part B of title XL".
(2) THROUGH AGREEMENTS WITH HEALTH MAINTENANCE
ORGANIZATIONS AND COMPETITIVE MEDICAL PLANS.—Section
1876(i) of such Act (42 U.S.C. 1395mm(i)), as amended by section
9312(f) of this subtitle, is amended by adding at the end the
following new paragraph:
"(7XA) Except as provided under section 1154(a)(4)(C), each risk-
sharing contract with an eligible organization under this section
shall provide that the organization will maintain an agreement with
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) under which the peer
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) 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
peer review organization on behalf of such eligible organization in
accordance with a schedule established by the Secretary.
"(C) Such payments—
"(i) shall be transferred in appropriate proportions from the
Federal Hospital Insurance Trust Fund and from the Supple­
mentary 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 PUBLIC LAW 99-509—OCT. 21, 1986 100 STAT. 2049
"(ii) shall not be less in the aggregate for such organizations
for a fiscal year than 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 XL".
(3) EFFECTIVE DATE.—
(A) HOSPITALS, SKILLED NURSING FACILITIES, AND HOME
,, HEALTH AGENCIES.—The amendments made by paragraph
(1) shall apply to provider agreements as of October 1, 1987.
, (B) HMOs AND CMPS.—The amendment made by para­
graph (2) shall apply to risk-sharing contracts with eligible
organizations, under section 1876 of the Social Security Act,
* as ofApril 1,1987. 42 use 1320c.
42 use 1395CC
note.
Contracts.
42 use 1395mm
note.
42 use 1395mm.
Subtitle E—Medicaid and Maternal and Child
Health
TABLE OF CONTENTS OF SUBTITLE
PART 1—COVERAGE OF INDIVIDUALS
Sec. 9401. Optional coverage for poor pregnant women, infants, and children.
Sec. 9402. Optional coverage of elderly and disabled poor for all medicaid benefits.
Sec. 9403. Optional coverage of poor medicare beneficiaries for medicare cost-shar­
ing expenses.
Sec. 9404. Medicaid eligibility for qualified severely impaired individuals.
Sec. 9405. Clarification of eligibility of homeless individuals.
Sec. 9406. Payment for aliens under medicaid.
Sec. 9407. Optional presumptive eligibility period for pregnant women.
Sec. 9408. Respiratory care services for ventilator-dependent individuals.
PART 2—PROVISION OF SERVICES UNDER WAIVER AUTHORITY
Sec. 9411. Permitting States to offer home and community-based services to certain
low-income individuals.
Sec. 9412. Waiver authority for chronically mentally ill and frail elderly.
Sec. 9413. Continuation of "Case-Managed Medical Care for Nursing Home Pa­
tients" demonstration project.
Sec. 9414. New Jersey respite care pilot project.
Sec. 9415. Inapplicability of Paperwork Reduction Act.
PART 3—PAYMENTS
Sec. 9421. Holding States harmless in fiscal year 1987 against a decrease in the
Federal medical assistance percentage.
Sec. 9422. Waiver of certain requirements.
PART 4—OTHER QUAUTY AND EFFICIENCY MEASURES
Sec. 9431. Independent quality review of HMO services.
Sec. 9432. State utilization review systems.
Sec. 9433. Clarification of flexibility for State medicaid payment systems for inpa­
tient services.
Sec. 9434. Financial disclosure requirements for HMOs; civil money penalties.
Sec. 9435. COBRA technical corrections and clarifications relating to the medicaid
program.
Sec. 9436. Payment for certain long-term care patients in hospitals.
– PART 5—MATERNAL AND CHILD HEALTH
Sec. 9441. Authorization and allotment of additional funds.
Sec. 9442. Maternal and child health and adoption clearinghouse.
Sec. 9443. Collection of data relating to adoption and foster care. 100 STAT. 2050 PUBLIC LAW 99-509—OCT. 21, 1986
=.r, PART 1—COVERAGE OF INDIVIDUALS
SEC. 9401. OPTIONAL COVERAGE OF POOR PREGNANT WOMEN, INFANTS,
AND CHILDREN.
' ' '^ (a) CREATION OF NEW OPTIONAL CATEGORICALLY NEEDY GROUP.—
Section 1902(a)(10)(A)(ii) of the Social Security Act (42 U.S.C.
• rt 1396a(a)(10)(A)(ii)) is amended—
(1) by striking ", or" at the end of subclause (VII) and insert­
ing a semicolon,
" '^ (2) by inserting "or" at the end of subclause (VIII), and
(3) by adding at the end the following new subclause:
' ' '" "(IX) subject to subsection (1)(4), who are described in
subsection (1)(1);".
(b) DESCRIPTION OF GROUP.—Section 1902 of such Act is amended
by inserting after subsection (k) the following new subsection: – >
"(1)(1) Individuals described in this paragraph are—
"(A) women during pregnancy (and during the 60-day period
beginning on the last day of the pregnancy),
"(B) infants under one year of age,
"(C) children who have attained one year of age but have not
attained two years of age,
"(D) children who have attained two years of age but have not
attained three years of age,
"(E) children who have attained three years of age but have
not attained four years of age, and
State and local "(F) children who have attained four years of age but have not
governments. ygt attained five years of age,
who are not described in subsection (a)(10)(AXi), whose family
income does not exceed the income level established by the State
under paragraph (2) for a family size equal to the size of the family,
including the woman, infant, or child.
"(2) For purposes of paragraph (1), the State shall establish an
income level which is a percentage (not more than 100 percent) of
the nonfarm income official poverty line (as defined by the Office of
Management and Budget, and revised annually in accordance with
42 use 9902. section 673(2) of the Omnibus Budget Reconciliation Act of 1981)
applicable to a family of the size involved.
"(3) Notwithstanding subsection (aX17), for individuals who are
eligible for medical assistance because of subsection
(aXlOXAXiiXIX)-
"(A) application of a resource standard shall be at the option
of the State;
"(B) any resource standard or methodology that is applied
with respect to an individual described in subparagraph (A) of
paragraph (1) may not be more restrictive than the resource
42 use 1381. sq, standard or methodology that is applied under title XVI;
"(C) any resource standard or methodology that is applied
with respect to an individual described in subparagraph (B), (C),
'*'-' (D), (E), or (F) of paragraph (1) may not be more restrictive than
the corresponding methodology that is applied under the State
42 use 601. plan under part A of title IV;
"(D) the income standard to be applied is the income standard
established under paragraph (2); and
"(E) family income shall be determined in accordance with
the methodology employed under the State plan under part A PUBLIC LAW 99-509—OCT. 21, 1986 100 STAT. 2051
or E of title IV, and costs incurred for medical care or for any
other type of remedial care shall not be taken into account.
Any different treatment provided under this paragraph for such
individuals shall not, because of subsection (a)(17), require or permit
such treatment for other individuals.
"(4)(A) A State plan may not elect the option of furnishing medical
assistance to individuals described in subsection (a)(10)(A)(ii)(IX)
unless the State has in effect, under its plan established under part
A of title IV, payment levels that are not less than the payment
levels in effect under its plan on April 17, 1986.
"(B)(i) A State may not elect, under subsection (a)(10)(A)(ii)(IX), to
cover only individuals described in paragraph (1)(A) or to cover only
individuals described in paragraph (1)(B).
"(ii) A State may not elect, under subsection (a)(10)(A)(ii)(IX), to
cover individuals described in subparagraph (C), (D), (E), or (F) of
paragraph (1) unless the State has elected, under such subsection, to
cover individuals described in the preceding subparagraphs of such
paragraph.".
(c) LIMITED BENEFITS FOR NEWLY EUGIBLE PREGNANT WOMEN.—
Section 1902(a)(10) of such Act (42 U.S.C. 1396a(aX10)) is amended, in
the matter after subparagraph (D)—
(1) by striking "and" before "(VI)", and
(2) by inserting before the semicolon at the end the following:
", and (VII) the medical assistance made available to an individ­
ual described in subsection (1)(1)(A) who is eligible for medical
assistance only because of subparagraph (A)(ii)(IX) shall be
limited to medical assistance for services related to pregnancy
(including prenatal, delivery, and postpartum services) and to
other conditions which may complicate pregnancy".
(d) CONTINUATION OF MEDICAL ASSISTANCE FOR CERTAIN PREGNANT
WOMEN DURING PREGNANCY AND FOR CERTAIN INFANTS AND CHIL­
DREN RECEIVING INPATIENT SERVICES.—Section 1902(e) of such Act
(42 U.S.C. 1396a(e)) is amended by adding at the end the following
new paragraphs:
"(6) At the option of a State, if a State plan provides medical
assistance for individuals under subsection (a)(10)(A)(ii)(IX), the plan
may provide that any woman described in such subsection and
subsection (1)(1)(A) shall continue to be treated as an individual
described in subsection (a)(10)(A)(ii)(IX) without regard to any
change in income of the family of which she is a member until the
end of the 60-day period beginning on the last day of her pregnancy.
"(7) If a State plan provides medical assistance for individuals
under subsection (a)(10)(A)(ii)(IX), in the case of an infant or child
described in subparagraph (B), (C), (D), (E), or (F) of subsection
(1)(1)-
"(A) who is receiving inpatient services for which medical
assistance is provided on the date the infant or child attains the
maximum age with respect to which coverage is provided under
the State plan for such individuals, and
"(B) who, but for attaining such age, would remain eligible for
medical assistance under such subsection,
the infant or child shall continue to be treated as an individual
described in subsection (aX10)(A)(ii)(IX) and subsection (IXD until the
end of the stay for which the inpatient services are furnished.".
(e) CONFORMING AMENDMENTS.— 42 use 670.
State and local
governments.
State and local
governments. 100 STAT. 2052 PUBLIC LAW 99-509—OCT. 21, 1986
^ »":i " – (1) Section 1902(aX17) of such Act (42 U.S.C. 1396(a)(17)) is
amended by inserting "except as provided in subsection (1X3),"
after "(17)".
(2) Section 1903(f)(4) of such Act (42 U.S.C. 1396b(f)(4)) is
amended by inserting "for any individual described in section
1902(aX10)(AXiiXIX) or" after "as medical assistance".
42 use 1396a (f) EFFECTIVE DATES.—
"°^- (1) Except as provided in paragraph (2), the amendments
made by this section shall apply to medical assistance furnished
in calendar quarters beginning on or after April 1,1987.
(2)(A) Subparagraph (C) of section 1902(1X1) of the Social
Security Act, as added by subsection (b) of this section, shall
apply to medical assistance furnished in calendar quarters
beginning on or after October 1,1987.
(B) Subparagraph (D) of section 1902(1X1) of the Social Secu­
rity Act, as added by subsection (b) of this section, shall apply to
• medical assistance furnished in calendar quarters beginning on
or after October 1,1988.
(C) Subparagraph (E) of section 1902(1)(1) of the Social Secu­
rity Act, as added by subsection (b) of this section, shall apply to
medical assistance furnished in calendar quarters beginning on
or after October 1,1989.
(D) Subparagraph (F) of section 1902(1)(1) of the Social Secu­
rity Act, as added by subsection (b) of this section, shall apply to
medical assistance furnished in calendar quarters beginning on
or after October 1,1990.
(3) An amendment made by this section shall become effective
c as provided in paragraph (1) or (2) without regard to whether or
not final regulations to carry out such amendment have been
promulgated by the applicable date.
SEC. 9402. OPTIONAI. COVERAGE OF ELDERLY AND DISABLED POOR FOR
ALL MEDICAID BENEFITS.
(a) CREATION OF NEW OPTIONAL CATEGORICALLY NEEDY GROUPS.—
.> ' _ • (1) IN GENERAL.—Subsection (aXlOXAXii) of section 1902 of the
•"' ' Social Security Act (42 U.S.C. 1396a), as amended by section
9401(a) of this subtitle, is amended—
(A) by striking "or" at the end of subclause (VIII),
(B) by striking the semicolon at the end of subclause (IX)
and inserting ", or", and
(C) by adding at the end the following new subclause:
"(X) subject to subsection (m)(3), who are described in
subsection (m)(l);".
(2) DESCRIPTION OF INDIVIDUALS.—Section 1902 of such Act is
further amended by adding after subsection (1), as added by
section 9401(b) of this subtitle, the following new subsection:
"(m)(l) Individuals described in this paragraph are individuals—
"(A) who are 65 years of age or older or are disabled individ-
42 use 1382c. uals (as determined under section 1614(aX3)),
State and local "(B) whose income (as determined under section 1612 for
governments. purposes of the supplemental security income program) does not
42 use 1382a. exceed an income level established by the State consistent with
paragraph (2XA), and
42 use 1382b. "(C) whose resources (as determined under section 1613 for
purposes of the supplemental security income program) do not
exceed (except as provided in paragraph (2XB)) the maximum PUBLIC LAW 99-509—OCT. 21, 1986 100 STAT. 2053
42 use 1382a. amount of resources that an individual may have and obtain
benefits under that program.
"(2)(A) The income level established under paragraph (1)(B) may
not exceed a percentage (not more than 100 percent) of the nonfarm
official poverty line (as defined by the Office of Management and
Budget, and revised annually in accordance with section 673(2) of
the Omnibus Budget Reconciliation Act of 1981) applicable to a 42 USC 9902. –
family of the size involved.
"(B) In the case of a State that provides medical assistance to State and local
individuals not described in subsection (a)(10)(A) and at the State's governments,
option, the State may use under paragraph (1)(C) such resource level
(which is higher than the level described in that paragraph) as may
be applicable with respect to individuals described in paragraph
dXA) who are not described in subsection (a)(10)(A).".
(b) REQUIREMENT OF COVERAGE OF CERTAIN PREGNANT WOMEN
AND CHILDREN AND OTHER SPECIAL RULES.—Section 1902(m) of such
Act, as added by subsection (a)(2), is further amended by adding at 42 USC 1396a.
the end the following new paragraphs:
"(3) A State plan may not provide coverage for individuals under state and local
subsection (a)(10)(A)(ii)(X), unless the plan provides coverage of some governments.
or all of the individuals described in subsection (1)(1).
"(4) Notwithstanding subsection (a)(17), for individuals described
in paragraph (1) who are covered under the State plan by virtue of
subsection (a)(10)(A)(ii)(X)—
"(A) the income standard to be applied is the income standard
described in paragraph (1)(B), and
; "(B) except as provided in section 1612(b)(4)(B)(ii), costs
incurred for medical care or for any other type of remedial care
shall not be taken into account in determining income.
Any different treatment provided under this paragraph for such
individuals shall not, because of subsection (aX17), require or permit
such treatment for other individuals.".
(c) EFFECTIVE DATE.—The amendments made by this section shall
apply to payments to States for calendar quarters beginning on or
after July 1,1987, without regard to whether or not final regulations
to carry out such amendments have been promulgated by such date.
SEC. 9403. OPTIONAL COVERAGE OF POOR MEDICARE BENEFICIARIES
FOR MEDICARE COST-SHARING EXPENSES.
(a) ELIGIBILITY OF QUALIFIED MEDICARE BENEFICIARY.—Section
1902(a)(10) of the Social Security Act (42 U.S.C. 139a(a)(10)) is 42 USC 1396a.
amended—
(1) by striking "and" at the end of subparagraph (C), i t.
(2) by inserting "and" at the end of subparagraph (D), and
(3) by inserting after subparagraph (D) the following new
subparagraph:
"(E) at the option of a State, but subject to subsection State and local
£ J = (mX3), for making medical assistance available for medicare governments.
cost-sharing (as defined in section 1905(p)(3)) for qualified 42 USC I396d.
medicare beneficiaries described in section 1905(pXl);"
(b) QUALIFIED MEDICARE BENEFICIARY DEFINED.—Section 1905 of
such Act (42 U.S.C. 1396d) is amended by adding at the end the • J-i
following new subsection:
"(p)(l) The term 'qualified medicare beneficiary' means an
individual— State and local
governments.
42 USC 1396a
note. 100 STAT. 2054 PUBLIC LAW 99-509—OCT. 21, 1986
42 use 1395c.
42 use 1395i-2.
State and local
governments.
42 use 1382a.
42 use 1382b.
42 use 9902.
State and local
governments.
42 use 1396a.
42 use 1396d.
42 use 13960.
42 use 13951-2.
42 use 1395e.
42 use 1395Z.
State and local
governments.
42 use 1395mm. : ? r "(A) who is entitled to hospital insurance benefits under part
A of title XVIII (including an individual entitled to such bene­
fits pursuant to an enrollment under section 1818),
"(B) who, but for section 1902(a)(10)(E) and the election of the
State, is not eligible for medical assistance under the plan,
"(C) whose income (as determined under section 1612 for
purposes of the supplemental security income program) does not
exceed an income level established by the State consistent with
paragraph (2)(A), and
"(D) whose resources (as determined under section 1613 for
purposes of the supplemental security income program) do not
exceed (except as provided in paragraph (2)(B)) the maximum
amount of resources that an individual may have and obtain
benefits under that program.
"(2)(A) The income level established under paragraph (1)(C) may
not exceed a percentage (not more than 100 percent) of the nonfarm
official poverty line (as defined by the Office of Management and
Budget, and revised annually in accordance with section 673(2) of
the Omnibus Budget Reconciliation Act of 1981) applicable to a
family of the size involved.
"(B) In the case of a State that provides medical assistance to
individuals not described in section 1902(aX10)(A) and at the State's
option, the State may use under paragraph (1)(D) such resource level
(which is higher than the level described in that paragraph) as may
be applicable with respect to individuals described in paragraph
(1)(A) who are not described in section 1902(aX10)(A).".
(c) LIMITED, MEDICARE GAP-FILUNG BENEFITS.—Section 1902(aX10)
of such Act (42 U.S.C. 1395a(aX10)), as amended by section 9401(c) of
this subtitle and by subsection (a) of this section, is amended, in the
matter after subparagraph (E)—
(1) by striking "and" before "(VII)", and
(2) by inserting before the semicolon at the end the following:
", and (VIII) the medical assistance made available to a quali-
' •'• fied medicare beneficiary described in section 1905(p)(l) shall be
limited to medical assistance for medicare cost-sharing (de­
scribed in section 1905(p)(3)), subject to the provisions of subsec­
tion (n) and section 1916(b)".
(d) MEDICARE COST-SHARING DEFINED.—Section 1905(p) of such
Act, as added by subsection (b), is amended by adding at the end the
following:
"(3) The term 'medicare cost-sharing' means the following costs
incurred with respect to a qualified medicare beneficiary:
"(A) Premiums under part B and (if applicable) under section
1818.
"(B) Deductibles and coinsurance described in section 1813.
"(C) The annual deductible described in section 1833(b).
"(D) The difference between the amount that is paid under
section 1833(a) and the amount that would be paid under such
section if any reference to '80 percent' therein were deemed a
reference to '100 percent'.
Such term also may include, at the option of a State, premiums for
enrollment of a qualified medicare beneficiary with an eligible
organization under section 1876.".
(e) PAYMENT AMOUNTS.—Section 1902 of such Act, as amended by
sections 9401(b) and 9402(aX2) of this subtitle, is further amended by
adding at the end the following new subsection: PUBLIC LAW 99-509—OCT. 21, 1986 100 STAT. 2055
"(n) In the case of medical assistance furnished under this title for
medicare cost-sharing respecting the furnishing of a service or item
to a qualified medicare beneficiary, the State plan may provide
payment in an amount with respect to the service or item that
results in the sum of such payment amount and any amount of
payment made under title XVIII with respect to the service or item
exceeding the amount that is otherwise payable under the State
plan for the item or service for eligible individuals who are not
qualified medicare beneficiaries.".
(f) REQUIREMENT OF COVERAGE OF CERTAIN PREGNANT WOMEN AND
CHILDREN AND OTHER SPECIAL RULES.—
(1) REQUIRING COVERAGE OF CERTAIN PREGNANT WOMEN AND
CHILDREN AND INCOME STANDARD TO BE USED.—Section 1902(m)
of such Act, as added by section 9402(a)(2) of this subtitle, and as
amended by section 9402(b) of this subtitle, is amended—
(A) in paragraph (3), by inserting "or coverage under
subsection (a)(10)(E)" after "subsection (a)(10)(A)(ii)(IX)",
and
(B) by adding at the end the following new paragraph:
"(5^ Notwithstanding subsection (a)(17), for qualified medicare
beneficiaries described in section 1905(p)(l)—
"(A) the income standard to be applied is the income standard
described in section 1905(p)(l)(C), and
"(B) except as provided in section 16120!))(4)(B)(ii), costs in­
curred for medical care or for any other type of remedial care
shall not be taken into account in determining income.
Any different treatment provided under this paragraph for such
individuals shall not, because of subsection (a)(l'7), require or permit
such treatment for other individuals.".
(2) EFFECTIVE DATE OF BENEFITS.—Section 1902(e) of such Act,
as amended by section 9401(d) of this subtitle, is amended by
adding at the end the following new paragraph:
"(8^ If an individual is determined to be a qualified medicare
beneficiary (as defined in section 1905(p)(l)), such determination
shall apply to services furnished after the end of the month in which
the determination first occurs. For purposes of payment to a State
under section 1903(a), such determination shall be considered to be
valid for an individual for a period of 12 months, except that a State
may provide for such determinations more frequently, but not more
frequently than once every 6 months for an individual.".
(g) CONFORMING AMENDMENTS.—
(1) TREATMENT OF BENEFITS.—Section 1902(a)(10)(C) of such
Act (42 U.S.C. 1396a(a)(10)(C)) is amended, in the matter before
clause (i), by inserting "or (E)" after "subparagraph (A)".
(2) PAYMENT OF MEDICARE PREMIUMS AND PART A DEDUCT­
IBLE.—Section 1903(a)(1) of such Act (42 U.S.C. 1396b(a)(l)) is
amended—
(A) by inserting "deductible amounts under part A and"
after "(including expenditures for",
(B) by inserting "(and, in the case of qualified medicare
beneficiaries described in section 1905(p)(l), part A)" after
"premiums under part B", and
1 (C) by striking "or (B)" and inserting "(B) are qualified
medicare beneficiaries described in section 1905(p)(l), or
(C)". State and local
governments.
42 use 1395.
42 use 1396a.
42 use 1396d.
42 use 1382a.
State and local
governments.
42 use 1396b. 100 STAT. 2056 PUBLIC LAW 99-509—OCT. 21, 1986
42 use 1396a
note.
42 use 1396. ;' (3) TIMING OF BENEFITS.—Section 1905(a) of such Act (42
U.S.C. 1396d(a)) is amended, in the matter before subdivision (i),
by inserting "or, in the case of a qualified medicare beneficiary
described in subsection (pXl), if provided after the month in
which the individual becomes such a beneficiary" after "makes
application for assistance".
(4) COPAYMENTS.—
(A) Section 1902(a)(15) of such Act (42 U.S.C. 1396a(a)(15))
is amended by inserting "are not qualified medicare bene-
:niA ficiaries (as defined in section 1905(p)(l)) but" after "older
who".
(fv A (B) Subsections (a) and (b) of section 1916 of such Act (42
U.S.C. 1396o) are each amended by striking "section
1902(a)(10)(A)" and inserting "subparagraph (A) or (E) of
section 1902(a)(10)".
(h) EFFECTIVE DATE.—The amendments made by this section apply
to payments under title XIX of the Social Security Act for calendar
quarters beginning on or after July 1, 1987, without regard to
whether or not final regulations to carry out such amendments have
been promulgated by such date.
SEC. 9404. MEDICAID ELIGIBILITY FOR QUALIFIED SEVERELY IMPAIRED
INDIVIDUALS.
(a) As CATEGORICALLY NEEDY.—Section 1902(a)(10)(A)(i)(II) of the
Social Security Act (42 U.S.C. 1396a(a)(10)(A)(i)(II)) is amended by
inserting "or who are qualified severely impaired individuals (as
defined in section 1905(q))" after "title XVI".
(b) DESCRIPTION OF QUALIFIED SEVERELY IMPAIRED INDIVIDUALS.—
Section 1905 of such Act (42 U.S.C. 1396d), as amended by section
9403(b) of this subtitle, is amended by adding at the end the follow­
ing new subsection:
"(q) The term 'qualified severely impaired individual' means an
individual under age 65—
"(1) who for the month preceding the first month to which
this subsection applies to such individual—
"(A) received (i) a payment of supplemental security
income benefits under section 1611(b) on the basis of
blindness or disability, (ii) a supplementary payment under
section 1616 of this Act or under section 212 of Public Law
93-66 on such basis, (iii) a payment of monthly benefits
under section 1619(a), or (iv) a supplementary payment
under section 1616(cX3), and
"(B) was eligible for medical assistance under the State
plan approved under this title; and
"(2) with respect to whom the Secretary determines that—
"(A) the individual continues to be blind or continues to
'£^1^ have the disabling physical or mental impairment on the
basis of which he was found to be under a disability and,
except for his earnings, continues to meet all non-disability-
A related requirements for eligibility for benefits under title
42 use 1381. XVI,
"(B) the income of such individual would not, except for
his earnings, be equal to or in excess of the amount which
would cause him to be ineligible for payments under section
16110?) (if he were otherwise eligible for such payments), 42 use 1382.
42 use 1382e.
42 use 1382
note.
42 use 1382h.
State and local
governments. PUBLIC LAW 99-509—OCT. 21, 1986 100 STAT. 2057
"(C) the lack of eligibility for benefits under this title
would seriously inhibit his ability to continue or obtain
employment, and
"(D) the individual's earnings are not sufficient to allow
him to provide for himself a reasonable equivalent of the
benefits under title XVI (including any federally adminis­
tered State supplementary payments), this title, and pub­
licly funded attendant care services (including personal
care assistance) that would be available to him in the
absence of such earnings.
In the case of an individual who is eligible for medical assistance
pursuant to section 1619(b) in June, 1987, the individual shall be a
qualified severely impaired individual for so long as such individual
meets the requirements of paragraph (2).".
(c) EFFECTIVE DATE.—(1) The amendments made by this section
apply (except as provided under paragraph (2)) to payments under
title XIX of the Social Security Act for calendar quarters beginning
on or after July 1, 1987, without regard to whether regulations to
implement such amendments are promulgated by such date.
(2) In the case of a State plan for medical assistance under title
XIX of the Social Security Act which the Secretary of Health and
Human Services determines requires State legislation (other than
legislation appropriating funds) in order for the plan to meet the
additional requirements imposed by the amendments made by this
section, the State plan shall not be regarded as failing to comply
with the requirements of such title solely on the basis of its failure
to meet these additional requirements before the first day of the
first calendar quarter beginning after the close of the first regular
session of the State legislature that begins after the date of the
enactment of this Act.
SEC. 9405. CLARIFICATION OF ELIGIBILITY OF HOMELESS INDIVIDUALS.
Section 1902(bX2) of the Social Security Act (42 U.S.C. 1396a(bX2))
is amended by inserting before the semicolon the following: ",
regardless of whether or not the residence is maintained perma­
nently or at a fixed address".
SEC. 9406. PAYMENT FOR ALIENS UNDER MEDICAID.
(a) IN GENERAL.—Section 1903 of the Social Security Act (42 U.S.C.
1396b) is amended by adding at the end thereof the following new
subsection:
"(vXD Notwithstanding the preceding provisions of this section,
except as provided in paragraph (2), no pa3mnent may be made to a
State under this section for medical assistance furnished to an alien
who is not lawfully admitted for permanent residence or otherwise
permanently residing in the United States under color of law.
"(2) Payment shall be made under this section for care and
services that are furnished to an alien described in paragraph (1)
only if—
"(A) such care and services are necessary for the treatment of
an emergency medical condition of the alien, and
"(B) such alien otherwise meets the eligibility requirements
for medical assistance under the State plan approved under this
title (other than the requirement of the receipt of aid or assist­
ance under title IV, supplemental security income benefits
under title XVI, or a State supplementary payment). State and local
governments.
42 use 1381.
42 use 1382h.
42 use 1396a
note.
42 use 1396. -^'
State and local
governments.
•JcU ^•
State and local
governments.
42 use 601.
42 use 1381. 100 STAT. 2058 PUBLIC LAW 99-509—OCT. 21, 1986
42 use 1396a
note. "(3) For purposes of this subsection, the term 'emergency medical
condition' means a medical condition (including emergency labor
and delivery) manifesting itself by acute symptoms of sufficient
severity (including severe pain) such that the absence of immediate
medical attention could reasonably be expected to result in—
i "(A) placing the patient's health in serious jeopardy,
"(B) serious impairment to bodily functions, or
"(C) serious dysfunction of any bodily organ or part.".
State and local (b) CONFORMING AMENDMENT.—Section 1902(a) of such Act (42
governments. U.S.C. 1396a(a)) is amended by adding at the end thereof the follow­
ing new sentence: "Notwithstanding paragraph (10)(B) or any other
,r' provision of this subsection, a State plan shall provide medical
assistance with respect to an alien who is not lawfully admitted for
permanent residence or otherwise permanently residing in the
.T.p United States under color of law only in accordance with section
1903(v).".
(c) EFFECTIVE DATE.—
(1) Except as provided in paragraph (2), the amendments
made by this section shall apply to medical assistance furnished
ii- b. ;>' to aliens on or after January 1, 1987, without regard to whether
^'' or not final regulations to carry out such amendments have
been promulgated by such date.
(2) In the case of a State plan for medical assistance under
42 use 1396. title XIX of the Social Security Act which the Secretary of
Health and Human Services determines requires State legisla­
tion (other than legislation appropriating funds) in order for the
plan to meet the additional requirement imposed by the amend­
ment made in subsection (b), the State plan shall not be re­
garded as failing to comply with the requirements of such title
solely on the basis of its failure to meet such additional require­
ment before the first day of the first calendar quarter beginning
after the close of the first regular session of the State legislature
that begins after the date of the enactment of this Act.
SEC. 9407. OPTIONAL PRESUMPTIVE ELIGIBILITY PERIOD FOR PREG­
NANT WOMEN.
(a) STATE OPTION.—Section 1902(a) of such Act (42 U.S.C. 1396a(a))
is amended—
(1) by striking "and" at the end of paragraph (45),
(2) by striking the period at the end of paragraph (46) and
inserting in lieu thereof "; and", and
., . (3) by adding at the end the following:
*/i c< -^ / "(47) at the option of the State, provide for making ambula­
tory prenatal care available to pregnant women during a
presumptive eligibility period in accordance with section 1920.".
(b) PRESUMPTIVE ELIGIBILITY.—Title XIX of the Social Security Act
is amended by redesignating section 1920 as section 1921 and insert-
42 use 1396s. ing after section 1919 the following new section:
i^ ,^, ^. PRESUMPTIVE ELIGIBILITY FOR PREGNANT WOMEN
42 use 1396r-l. "SEC. 1920. (a) A State plan approved under section 1902 may
provide for making ambulatory prenatal care available to a preg­
nant woman during a presumptive eligibility period.
"(b) For purposes of this section—
"(1) the term 'presumptive eligibility period' means, with
respect to a pregnant woman, the period that— PUBLIC LAW 99-509—OCT. 21, 1986 100 STAT. 2059
atv
Wi I1&: "(A) begins with the date on which a qualified provider
determines, on the basis of preliminary information, that
the family income of the woman does not exceed the
applicable income level of eligibility under the State plan,
and
"(B) ends with (and includes) the earlier of—
"(i) the day on which a determination is made with
respect to the eligibility of the woman for medical
assistance under the State plan,
"(ii) the day that is 45 days after the date on which
the provider makes the determination referred to in
subparagraph (A), or
"(iii) in the case of a woman who does not file an
application for medical assistance within 14 calendar
days after the date on which the provider makes the
determination referred to in subparagraph (A), the
fourteenth calendar day after such determination is
t made; and
"(2) the term 'qualified provider' means any provider that—
"(A) is eligible for payments under a State plan approved
under this title,
«' "(B) provides services of the type described in subpara­
graph (A) or (B) of section 1905(aX2) or in section 1905(a)(9),
"(C) is determined by the State agency to be capable of
making determinations of the type described in paragraph
(1)(A), and
"(D)(i) receives funds under—
zs 3l "(I) section 329 or section 330 of the Public Health
|r!' Service Act, or
"(II) title V of this Act;
tiO' "(ii) participates in a program established under—
"(I) section 17 of the Child Nutrition Act of 1966, or
f "(II) section 4(a) of the Agriculture and Consumer
2 Protection Act of 1973; or
"(iii) participates in a State perinatal program.
"(c)(1) The State agency shall provide qualified providers with—
"(A) such forms as are necessary for a pregnant woman to
I make application for medical assistance under the State plan,
I and
"(B) information on how to assist such women in completing
n and filing such forms.
"(2) A qualified provider that determines under subsection
(b)(1)(A) that a pregnant woman is presumptively eligible for medi­
cal assistance under a State plan shall—
"(A) notify the State agency of the determination within 5
working days after the date on which determination is made,
and
"(B) inform the woman at the time the determination is made
that she is required to make application for medical assistance
under the State plan within 14 calendar days after the date on
which the determination is made.
"(3) A pregnant woman who is determined by a qualified provider
to be presumptively eligible for medical assistance under a State
plan shall make application for medical assistance under such plan
within 14 calendar days after the date on which the determination is
made. 42 use 1396d.
42 use 254b,
254c.
42 use 701.
42 use 1786.
42 use 1446a. 100 STAT. 2060 PUBLIC LAW 99-509—OCT. 21, 1986
Ante, p. 2058.
42 use 1396a
note. "(d) Notwithstanding any other provision of this title, ambulatory
prenatal care that—
"(1) is furnished to a pregnant woman—
"(A) during a presumptive eligibility period,
"(B) by a qualified provider; and
"(2) is included in the care and services covered by a State
plan;
shall be treated as medical assistance provided by such plan for
42 use 1396b. purposes of section 1903.".
(c) CONFORMING CHANGE.—Section 1903(u)(l)(D) of such Act (42
U.S.C. 1396b(uXl)(D)) is amended by adding at the end the following:
"(v) In determining the amount of erroneous excess payments,
there shall not be included any erroneous payments made for
ambulatory prenatal care provided during a presumptive eligibility
period (as defined in section 1920(b)(1)).".
(d) EFFECTIVE DATE.—The amendments made by this section shall
apply to ambulatory prenatal care furnished in calendar quarters
beginning on or after April 1,1987, without regard to whether or not
final regulations to carry out such amendments have been promul­
gated by such date.
SEC. 9408. RESPIRATORY CARE SERVICES FOR VENTILATOR-DEPENDENT
INDIVIDUALS.
(a) REQUIRED SERVICES.—Section 1902(e) of the Social Security Act
(42 U.S.C. 1396b(e)), as amended by sections 9401(d) and 9403(f) of
this subtitle, is further amended by adding at the end the following
new paragraph:
"(9)(A) At the option of the State, the plan may include as
medical assistance respiratory care services for any individual
who—
"(i) is medically dependent on a ventilator for life support
^' at least six hours per day;
iax<., "(ii) has been so dependent for at least 30 consecutive
days (or the maximum number of days authorized under
the State plan, whichever is less) as an inpatient;
— f< "(iii) but for the availability of respiratory care services,
would require respiratory care as an inpatient in a hospital,
skilled nursing facility, or intermediate care facility, and
would be eligible to have payment made for such inpatient
;u^' care under the State plan;
"(iv) has adequate social support services to be cared for
>- •''' at home; and
"(v) wishes to be cared for at home.
"(B) The requirements of subparagraph (A)(ii) may be satis­
fied by a continuous stay in one or more hospitals, skilled
,- nursing facilities, or intermediate care facilities.
"(C) For purposes of this paragraph, respiratory care services
means services provided on a part-time basis in the home of the
individual by a respiratory therapist or other health care
professional trained in respiratory therapy (as determined by
the State), payment for which is not otherwise included within
other items and services furnished to such individual as medical
assistance under the plan.".
(b) WAIVER OF COMPARABILITY.—Section 1902(a)(10) of such Act
(42 U.S.C. 1396a(a)(10)), as amended by sections 9401(c), 9403(a), and 42 use 1396a.
State and local
governments.
Health care
facilities. PUBLIC LAW 99-509—OCT. 21, 1986 100 STAT. 2061
9403(c) of this subtitle, is further amended, in the matter following
subparagraph (E)—
(1) by striking "and" before "(VIII)"; and
(2) by inserting before the semicolon at the end thereof the
following: ", and (IX) the making available of respiratory care
services in accordance with subsection (eX9) shall not, by reason
of this paragraph (10), require the making available of such
services, or the making available of such services of the same
amount, duration, and scope, to any individuals not included
under subsection (eX9XA), provided such services are made
available (in the same amount, duration, and scope) to all
individuals described in such subsection".
(c) CONFORMING CHANGES.—
(1) Section 1905(a) of the Social Security Act (42 U.S.C.
1395d(a)), as amended by section 1895(c)(3) of the Tax Reform
Act of 1986, is further amended— Ante, p. 2931.
(A) by striking "and" at the end of paragraph (19),
(B) by redesignating paragraph (20) as paragraph (21),
and
' ' (C) by inserting after paragraph (19) the following new
paragraph:
"(20) respiratory care services (as defined in section
1902(eX9XC)); and". Ante, p. 2060.
(2) Section 19020") of the Social Security Act (42 U.S.C.
1396a(j)), as amended by section 1895(cX3) of the Tax Reform Act
of 1986, is amended by striking "(20)" and inserting in lieu
thereof "(21)".
(3) Section 1902(aX10XCXiv) of the Social Security Act (42
U.S.C. 1396a(aX10XCXiv)), as amended by section 1895(cX3) of the
Tax Reform Act of 1986, is amended by striking "through (19)"
and inserting in lieu thereof "through (20)".
(d) EFFECTIVE DATE.—The amendments made by this section shall 42 USC 1396a
apply to services furnished on or after the date of the enactment of note.
this Act.
PART 2—PROVISION OF SERVICES UNDER
WAIVER AUTHORITY
SEC. 9411. PERMITTING STATES TO OFFER HOME AND COMMUNITY-
BASED SERVICES TO CERTAIN LOW-INCOME INDIVIDUALS.
(a) WAIVER AUTHORITY.—
(1) Section 1915(cXl) of the Social Security Act (42 U.S.C.
1396n(cXl)) is amended—
(A) by inserting "a hospital or" after "level of care pro­
vided in", and
(B) by striking out all beginning with "or but for"
through "State plan" the third place it appears.
(2) Section 1915(cX2XB) of such Act is amended—
(A) in clause (i) by striking "skilled nursing facility or"
and inserting in lieu thereof "inpatient hospital, skilled
nursing facility, or", and
(B) in the matter following clause (iii) by inserting
1 "inpatient hospital," after "need for".
• (3) Section 1915(cX7) of such Act is amended to read as follows:
"(7) In making estimates under paragraph (2XD) in the case of a
waiver that applies only to individuals with a particular illness or Health care
facilities. 100 STAT. 2062 PUBLIC LAW 99-509—OCT. 21, 1986
State and local
governments.
AIDS.
42 use 1396n.
Ante, pp. 203,
204.
42 use 1396a.
Aj'. ;/i;
42 use 1396n
note.
State and local
governments.
42 use 1396.
Grants. condition who are inpatients in hospitals or in skilled nursing or
intermediate care facilities, the State may determine the average
per capita expenditure that would have been made in a fiscal year
for those individuals under the State plan separately from the
expenditures for other individuals who are inpatients of those
respective facilities.".
(b) PROVIDING CASE MANAGEMENT SERVICES TO PATIENTS WITH
CERTAIN CONDITIONS.—Section 1915(g)(1) of such Act is amended by
adding at the end the following: "A State may limit the provision of
case management services under this subsection to individuals with
acquired immune deficiency syndrome (AIDS), or with AIDS-related
conditions, or with either, and a State may limit the provision of
case management services under this subsection to individuals with
chronic mental illness.".
(c) WAIVER OF COMPARABILITY REQUIREMENT.—The first sentence
of section 1915(c)(3) of such Act is amended by striking all that
follows "statewideness)" and inserting "and section 1902(a)(10)(B)
(relating to comparability).".
(d) PROVIDING CERTAIN OTHER SERVICES TO PATIENTS WITH
CHRONIC MENTAL ILLNESS.—Section 1915(c)(4)(B) of such Act is
amended by inserting before the period at the end the following:
"and for day treatment or other partial hospitalization services,
psychosocial rehabilitation services, and clinic services (whether or
not furnished in a facility) for individuals with chronic mental
illness".
(e) EFFECTIVE DATE.—The amendments made by this section shall
apply to applications for waivers (or renewals thereof) approved on
or after the date of the enactment of this Act.
SEC. 9412. WAIVER AUTHORITY FOR CHRONICALLY MENTALLY ILL AND
FRAIL ELDERLY.
(a) CHRONICALLY MENTALLY III DEMONSTRATION PROGRAM.—
(1) The Secretary of Health and Human Services may, in
accordance with this subsection, waive certain provisions of title
XIX of the Social Security Act in order to allow States to
implement demonstration programs to improve the continuity,
quality, and cost-effectiveness of mental health services avail­
able to chronically mentally ill medicaid beneficiaries.
(2) A waiver shall be granted under this subsection with
' respect to a demonstration program only if—
(A) the demonstration program has been awarded a grant
r K ^: from the Robert Wood Johnson Foundation and the Depart­
ment of Housing and Urban Development under their
"Program for the Chronically Mentally 111",
(B) the State provides assurances satisfactory to the Sec­
retary that under such waiver—
(i) the average per capita expenditure estimated by
the State in any fiscal year for medical assistance for
mental health services provided with respect to individ­
uals covered under the program does not exceed 100
percent of the average per capita expenditure that the
State reasonably estimates would have been made in
that fiscal year for expenditures under the State plan
for such services for such individuals if the waiver had
not been granted, and "Uf^Mt^'^^c: PUBLIC LAW 99-509—OCT. 21, 1986 100 STAT. 2063
^ ' (ii) there will be no reduction or limitation in benefits
to a medicaid beneficiary under the program.
(3) The authority under this subsection extends only to the
following, as they relate to the provision of mental health
services:
(A) A waiver of the requirements of sections 1902(aXl),
1902(aX10)(B), 1902(a)(23), and 1902(a)(30) and clauses (i) and
(ii) of section 1903(m)(2) of the Social Security Act.
(B) Including as "medical assistance" under the State
plan case management services with respect to mentally ill
patients, habilitation services (as defined in section
1915(cX5) of such Act), day treatment or other partial hos-
-af ,; pitalization services, residential services (other than room
and board), psychosocial rehabilitation services, clinic serv­
ices (whether or not furnished in a facility), and such other
services as the State may request and the Secretary may
approve for individuals covered under the demonstration
project.
(4XA) A waiver under this subsection shall be for an initial
term of three years which may be extended for an additional
two-year term. The request of a State for extension of such a
waiver shall be deemed granted unless the Secretary denies
such request in writing within 90 days after the date of its
submission to the Secretary.
(B) The authority to approve a waiver under this subsection
extends only during the five-year period beginning on October 1,
1986.
(5) Subsections (c)(6) and (eXD of section 1915 of the Social
Security Act shall apply to a waiver under this subsection in the
same manner as they apply to a waiver under that section.
(6) The Secretary shall report, not later than January 1, 1993,
to C!ongress on the cost, accessibility, utilization, and quality of
services provided under waivers granted under this subsection,
(b) FRAIL ELDERLY DEMONSTRATION PROJECT WAIVERS.—
(1) The Secretary of Health and Human Services shall grant
waivers of certain requirements of titles XVIII and XIX of the
Social Security Act to not more than 10 public or nonprofit
private community-based organizations to enable such organiza­
tions to provide comprehensive health care services on a
capitated basis to frail elderly patients at risk of institutional­
ization.
(2XA) Except as provided in subparagraph (B), the terms and
conditions of a waiver granted pursuant to this subsection shall
be substantially the same as the terms and conditions of the On
Lok waiver (referred to in section 603(c) of the Social Security
Amendments of 1983 and extended by section 9220 of the
Consolidated Omnibus Budget Reconciliation Act of 1985).
(B) In order to receive a waiver under this subsection, an
organization must be awarded a grant from the Robert Wood
Johnson Foundation.
(C) Subject to subparagraph (B), any waiver granted pursuant
" to this subsection shall be for an initial period of 3 years. The
Secretary may extend such waiver beyond such initial period
for so long as the Secretary finds that the organization complies
with the terms and conditions described in subparagraphs (A)
t' and (B). 42 use 1396a,
1396b.
42 use 1396n.
Reports.
42 use
1396. 1395,
42 use
notes.
Ante, p.
Grants. 1395b-l
183. 100 STAT. 2064 PUBLIC LAW 99-509—OCT. 21, 1986
Massachusetts.
42 use 1395,
1396.
42 use 1315.
Handicapped
persons.
Aged persons.
eontracts.
State and local
governments.
42 use 1396.
42 use 13960. SEC. 9413. CONTINUATION OF "CASE-MANAGED MEDICAL CARE FOR
NURSING HOME PATIENTS" DEMONSTRATION PROJECT.
(a) APPROVAL OF APPLICATION.—The Secretary of Health and
Human Services shall approve any application for a waiver of any
requirement of title XVIII or XIX of the Social Security Act nec­
essary to provide for continuation, from July 1, 1987, through
June 30, 1989, of the "Case-Managed Medical Care for Nursing
Home Patients" demonstration project (#95-P-98346/l-01) carried
out pursuant to section 222 of the Social Security Amendments of
1972, section 402 of the Social Security Amendments of 1967, and
section 1115 of the Social Security Act by the Department of Public
Welfare, Commonwealth of Massachusetts.
(b) TERMS AND CONDITIONS.—The Secretary's approval of an ap­
plication (or renewal of an application) under subsection (a) shall be
on the same terms and conditions as applied to the demonstration
project on July 1,1986.
SEC. 9414. NEW JERSEY RESPITE CARE PILOT PROJECT.
(a) ESTABLISHMENT.—The Secretary of Health and Human Serv­
ices (in this section referred to as the "Secretary") shall enter into
an agreement with the State of New Jersey (in this section referred
to as the "State") for the purpose of conducting a pilot project (in
this section referred to as the "project") under title XIX of the Social
Security Act for providing respite care services for elderly and
disabled individuals in order to determine the extent to which—
(1) the provision of necessary respite care services to individ­
uals at risk of institutionalization will delay or avert the need
for institutional care, and
(2) respite care services enhance and sustain the role of the
family in providing long-term care services for elderly and
disabled individuals at risk of institutionalization.
(b) CONDITIONS.—The agreement with the Secretary under this
section shall—
(1) provide that the project shall be administered by a State
health services agency designated for such purpose by the Gov­
ernor (which may be the State agency administering or respon­
sible for the administration of the State plan for medical assist­
ance under title XIX of the Social Security Act),
(2) provide that if the project imposes any cost sharing
f requirements on participants who are eligible for benefits under
title XIX of the Social Security Act, such requirements shall be
imposed only in accordance with the provisions of section 1916
of such Act,
(3) provide for a system of review to assure that respite care
services are provided only to individuals reasonably determined
to be in need of such services, and
(4) meet such other requirements as the Secretary may estab­
lish for the proper and efficient implementation of the project.
(c) DEFINITION.—For purposes of this section, the term "respite
care services" shall include—
(1) short-term and intermittent—
(A) companion or sitter services (paid as well as
volunteer),
(B) homemaker and personal-care services,
(C) adult day care, and
(D) inpatient care in a hospital, a skilled nursing facility,
or an intermediate care facility (not to exceed a total of 14
days for any individual); and PUBLIC LAW 99-509—OCT. 21, 1986 100 STAT. 2065
(2) peer support and training for family caregivers (using
informal support groups and organized counseling).
(d) PAYMENTS.—The agreement under this section shall be
entered into between the Secretary and the State agency designated
by the Governor. Under such agreement the Secretary shall pay to
the State, as in additional payment under section 1903 of the Social
Security Act for each quarter, an amount equal to 50 percent of the
reasonable costs incurred by such State during such quarter in
providing respite care services under the project for elderly and
disabled individuals who are eligible for medical assistance under
the State plan approved under title XIX of such Act (or who would
be eligible if coverage under such plan was as broad as allowed
under Federal law). The Federal payment shall not exceed
$1,000,000 for fiscal year 1987, and $2,000,000 for each of the fiscal
years 1988, 1989, and 1990. No payments shall be made pursuant to
this section for any fiscal year beginning after September 30, 1990.
(e) DURATION.—The project under this section shall be of a maxi­
mum duration of four years, plus an additional time period of up to
six months for final evaluation and reporting.
(f) REPORTS.—The State shall arrange for an independent evalua­
tion of the project and shall transmit the evaluation to the Secretary
not more than six months after the conclusion of project.
(g) PROVISIONS SUBJECT TO WAIVER.—At the request of the State,
the Secretary shall waive the following provisions of title XIX of the
Social Security Act as they relate to the pilot project: section
1902(a)(1), section 1902(a)(10)(B), section 1902(a)(13), and section
1902(a)(30). The Secretary may not waive any other provision of such
title with respect to the pilot project.
SEC. 9415. INAPPLICABILITY OF PAPERWORK REDUCTION ACT.
Notwithstanding any other provision of law, chapter 35 of title 44,
United States Code, shall not apply to information required to carry
out any provision of this part or the amendments made by this part.
PART 3—PAYMENTS Contracts.
State and local
governments.
Aged persons.
Handicapped
persons.
42 use 1396b.
42 use 1396.
Reports.
42 use 1396a.
44 use 3501 et
seq.
SEC. 9421. HOLDING STATES HARMLESS IN FISCAL YEAR 1987 AGAINST A
DECREASE IN THE FEDERAL MEDICAL ASSISTANCE
PERCENTAGE.
(a) IN GENERAL.—Section 9528 of the Consolidated Omnibus
Budget Reconciliation Act of 1985 is amended by adding at the end
the following new subsection:
"(c) HOLD HARMLESS PROVISION.—Notwithstanding subsection (b),
for calendar quarters occurring during fiscal year 1987 and only for
purposes of making payment to a State under section 1903 of the
Social Security Act, the amendments made by subsection (a) shall
not apply to a State if the effect of the applying the amendments
would be to reduce the amount of payment made to the State under
that section.".
(b) EFFECTIVE DATE.—The amendment made by subsection (a)
shall be effective as though it had been included in the Consolidated
Omnibus Budget Reconciliation Act of 1985 at the time of its
enactment.
SEC. 9422. WAIVER OF CERTAIN REQUIREMENTS.
Notwithstanding the three-month limitation set forth in sections
1902(aX34) and 1905(a) of the Social Security Act, payment may be 42 use 1301
note.
Ante, p. 1972.
42 use 1396b.
42 use 1301
note.
Ante, p. 82.
South Carolina.
42 use 1396a,
1396d. 100 STAT. 2066 PUBLIC LAW 99-509—OCT. 21, 1986
42 use 1396.
42 use 1396a.
Women.
State and local
governments.
^•^
SjXoq^H
eontracts.
State and local
governments.
42 use 1320c.
42 use 1396b.
42 use 1396a
note.
Health care
facilities.
42 use 1396a
note.
42 use 1396. made under title XIX of such Act with respect to care and services
provided by the Medical University of South Carolina, after Septem­
ber 30,1984, and before July 1,1985, to individuals—
(1) who are not described in section 1902(a)(10)(A) of such Act,
(2) who, upon application, would have been eligible as individ­
uals under the age of 18 or pregnant women, for medical
assistance under the State plan approved under such title at the
time such care and services were provided, and
(3) who, not later than six months after the date of the
enactment of this Act, are determined by the State agency
administering or supervising the administration of such plan to
have been so eligible.
PART 4—OTHER QUALITY AND EFFICIENCY
MEASURES
SEC. 9431. INDEPENDENT QUALITY REVIEW OF HMO SERVICES.
(a) IN GENERAL.—Section 1902(a)(30) of the Social Security Act (42
U.S.C. 1396a(a)(30)) is amended—
(1) by inserting "and" at the end of subparagraph (B), and
(2) by adding at the end the following new subparagraph:
"(C) provide a utilization and quality control peer review
organization (under part B of title XI) or a private accreditation
body to conduct (on an annual basis) an independent, external
review of the quality of services furnished under each contract
under section 1903(m), with the results of such review made
available to the State and, upon request, to the Secretary, the
Inspector General in the Department of Health and Human
Services, and the Comptroller General;".
(b) CONFORMING AMENDMENTS.—(1) Section 1902(d) of such Act (42
U.S.C. 1396a(d)) is amended by inserting "(including quality review
functions described in subsection (a)(30)(C))" after "medical or utili­
zation review functions".
(2) Section 1903(a)(3)(C) of such Act (42 U.S.C. 1396b(a)(3)(C)) is
amended by inserting "or quality review" after "medical and utiliza­
tion review".
(c) EFFECTIVE DATE.—The amendments made by this section apply
to payments under title XIX of the Social Security Act for calendar
quarters beginning on or after July 1, 1987, without regard to
whether or not final regulations to carry out such amendments have
been promulgated by such date.
SEC. 9432. STATE UTILIZATION REVIEW SYSTEMS.
(a) IN GENERAL.—The Secretary of Health and Human Services (in
this section referred to as the "Secretary") may not, during the
period beginning with the date of the enactment of this Act and
ending with the date that is 180 days after the day on which the
report required by subsection (b) is submitted to the Congress,
publish final or interim final regulations requiring a State plan
approved under title XIX of the Social Security Act to include a
program requiring second surgical opinions or a program of in­
patient hospital preadmission review.
(b) REPORT.—
(1) The Secretary shall report to Congress, by not later than
October 1, 1988, for each State in a representative sample of
States— PUBLIC LAW 99-509—OCT. 21, 1986 100 STAT. 2067
-¥#i*l
cri,£
ws,o (A) the identity of those procedures which are high
volume or high cost procedures among patients who are
covered under the State medicaid plan,
(B) the payment rates under those plans for such proce­
dures, and the aggregate annual payment amounts made
under such plans for such procedures (including the Federal
share of such payment amounts),
(C) the rate at which each such procedure is performed on
medicaid patients and (to the extent that data are avail­
able) comparisons to the rate at which such procedure is
performed on patients of comparable age who are not
medicaid patients,
(D) with respect to each such procedure—
(i) the number of board certified or board eligible
" physicians in the State who provide care and services
to medicaid patients and who perform the procedure,
and
(ii) in the case of a State with a mandatory second
surgical opinion program in operation, the number of
physicians described in clause (i) who provide second
opinions (of the type described in section 1164 of the
Social Security Act) for the procedure at prevailing
payment rates under the State medicaid plan, and
(E) in the case of a State with a mandatory second
' surgical opinion program or a program of inpatient hospital
preadmission review in operation, a description of—
(i) the extent to which such program impedes access
to necessary care and services, and
(ii) the measures that the State has taken to address
such impediments, particularly in rural areas.
(2) Such report shall also include a list of those surgical
procedures which the Secretary believes meet the following
criteria and for which a mandatory second opinion program
under medicaid plans may be appropriate:
(A) The procedure is one which generally can be post­
poned without undue risk to the patient.
(B) The procedure is a high volume procedure among
patients who are covered under State medicaid plans or is a
high cost procedure.
(C) The procedure has a comparatively high rate of
• nonconfirmation upon examination by another qualified
physician, there is substantial geographic variation in the
rates of performance of the procedure, or there are other
reasons why requiring second opinions for 100 percent of
such procedures would be cost effective.
(3) The representative sample of States required to be
included in the report shall include States with mandatory
second surgical opinion programs in operation, States with
programs of inpatient hospital preadmission review in oper­
ation, and States with neither such program in operation.
(4) In this subsection, the term "medicaid plan ' means a State
plan approved under title XIX of the Social Security Act.
(c) STUDY.—
(1) The Secretary shall conduct a study of the utilization of
selected medical treatments and surgical procedures by medic­
aid beneficiaries in order to assess the appropriateness, neces­
sity, and effectiveness of such treatments and procedures.
(2) The study shall analyze the extent to which there is
significant variation in the rate of utilization by medicaid bene-Health care
professionals.
Ante, p. 196.
Health care
facilities.
Rural areas.
*ic; c&
Health care
professionals.
Health care
facilities.
42 use 1396. 100 STAT. 2068 PUBLIC LAW 99-509—OCT. 21, 1986
Research and
development.
Ante, p. 2006.
42 use 1396a.
42 use 1396a.
Health care
facilities.
Disadvantaged
persons.
42 use 1396a
note.
95 Stat. 357.
eontracts.
42 use 1320a-3.
Reports.
42 use 300e-9.
42 use 300e-17. ficiaries of selected treatments and procedures for different
geographic areas within States and among States.
(3) The study shall also identify underutilized, medically nec­
essary treatments and procedures for which—
(A) a failure to furnish could have an adverse effect on
•u I- health status, and
(B) the rate of utilization by medicaid beneficiaries is
significantly less than the rate for comparable, age-adjusted
populations.
(4) The study shall be coordinated, to the extent practicable,
with the research program established pursuant to section
1875(c) of the Social Security Act, with particular regard to the
relationship of the variations described in paragraph (2) to
patient outcomes.
(5) The Secretary shall report the results of the study to the
Congress not later than January 1,1990.
SEC. 9433. CLARIFICATION OF FLEXIBILITY FOR STATE MEDICAID PAY­
MENT SYSTEMS FOR INPATIENT SERVICES.
(a) IN GENERAL.—Section 2173 of the Omnibus Budget Reconcili­
ation Act of 1981 (Public Law 97-35, 95 Stat. 809) is amended by
adding at the end the following new subsection:
"(d) Section 1902 of such Act is further amended by inserting
before subsection (i) the following new subsection:
" '(h) Nothing in this title (including subsections (a)(13) and (a)(30)
of this section) shall be construed as authorizing the Secretary to
limit the amount of payment adjustments that may be made under a
plan under this title with respect to hospitals that serve a dispropor­
tionate number of low-income patients with special needs.' ".
(b) EFFECTIVE DATE.—The amendment made by subsection (a)
shall apply as though it was included in the enactment of the
Omnibus Budget Reconciliation Act of 1981 (Public Law 97-35).
SEC. 9434. FINANCIAL DISCLOSURE REQUIREMENTS FOR HMOS; CIVIL
MONEY PENALTIES.
(a) DISCLOSURE OF INTERLOCKING RELATIONSHIPS.—
(1) Section 1903(m) of the Social Security Act (42 U.S.C.
^ .. 1396b(m)) is amended—
(A) in paragraph (2)(A)—
(i) by striking "and" at the end of clause (vi),
(ii) by striking the period at the end of clause (vii) and
inserting ", and", and
(iii) by adding after clause (vii) the following new
i''^ clause:
"(viii) such contract provides for disclosure of information in
accordance with section 1124 and paragraph (4) of this subsec­
tion."; and
(B) by adding at the end the following new paragraph:
"(4)(A) Each health maintenance organization which is not a
qualified health maintenance organization (as defined in section
1310(d) of the Public Health Service Act) must report to the State
and, upon request, to the Secretary, the Inspector General of the
Department of Health and Human Services, and the Comptroller
General a description of transactions between the organization and
a party in interest (as defined in section 1318(b) of such Act),
including the following transactions:
••.18 PUBLIC LAW 99-509—OCT. 21, 1986 100 STAT. 2069
"(i) Any sale or exchange, or leasing of any property between
the organization and such a party.
"(ii) Any furnishing for consideration of goods, services
(including management services), or facilities between the
organization and such a party, but not including salaries paid to
employees for services provided in the normal course of their
employment.
"(iii) Any lending of money or other extension of credit
between the organization and such a party.
The State or Secretary may require that information reported
respecting an organization which controls, or is controlled by, or is
under common control with, another entity be in the form of a
consolidated financial statement for the organization and such
entity.
"(B) Each organization shall make the information reported
pursuant to subparagraph (A) available to its enrollees upon reason­
able request.".
(2) Section 1903(m)(2)(A)(iii) of the Social Security Act (42
U.S.C. 1396b(m)(2XAXiii)) is amended by inserting before the
semicolon the following: "and under which the Secretary must
provide prior approval for contracts providing for expenditures
in excess of $100,000".
(3)(A) The amendments made by paragraph (1) shall take
effect 6 months after the date of the enactment of this Act.
(B) The amendment made by paragraph (2) shall take effect
on the date of the enactment of this Act and shall apply to
contracts entered into, renewed, or extended after the end of the
30-day period beginning on the date of the enactment of this
Act.
Ot>) CIVIL MONEY PENALTIES.—Section 1903(m) of the Social Secu­
rity Act, as amended by subsection (a), is further amended by adding
at the end the following new paragraph:
"(5)(A) Any entity with a contract under this subsection that fails
substantially to provide medically necessary items and services that
are required (under law or such contract) to be provided to individ­
uals covered under such contract, if the failure has adversely af­
fected (or has a substantial likelihood of adversely affecting) these
individuals, is subject to a civil money penalty of not more than
$10,000 for each such failure.
"(B) The provisions of section 1128A (other than subsection (a))
shall apply to a civil money penalty under subparagraph (A) in the
same manner as they apply to a civil money penalty under that
section.".
SEC. 9435. COBRA TECHNICAL CORRECTIONS AND CLARIFICATIONS
RELATING TO THE MEDICAID PROGRAM.
(a) MAINTENANCE INCOME STANDARDS.—Section 9502(j)(4) of the
Consolidated Omnibus Budget Reconciliation Act of 1985 is amended
by striking out "on or after" and inserting in lieu thereof "before,
on, or after".
^ (b) HOSPICE CARE FOR DUAL ELIGIBLES.—
(1) Section 1902(aX13XD) of the Social Security Act, as
^ amended by sections 9505(cXl) and 9509(aX4) of the Consolidated
Omnibus Budget Reconciliation Act of 1985, is amended by
inserting before the first semicolon the following: "and for
pa3niient of amounts under section 1905(oX3)". Gifts and
property.
State and local
governments.
Contracts.
Effective date.
Contracts.
42 use 1396b
note.
Contracts.
Ante, pp. 2003,
2008.
42 use 1396n
note.
Ante, p. 202.
42 use 1396a.
Ante, pp. 208,
211.
42 use 1396d. 100 STAT. 2070 PUBLIC LAW 99-509—OCT. 21, 1986
Ante, p. 208.
State and local
governments.
42 use 1395c.
42 use 1395d.
42 use 1396a.
42 use 1395e.
42 use 1396a
note.
Ante, p. 210.
Handicapped
persons.
Ante, pp. 208,
210.
Ante, p. 212.
42 use 1396b
note.
Ante, p. 2931. ,^, (2) Section 1905(o) of the Social Security Act, as amended by
section 9505(a)(2) of the Consolidated Omnibus Budget Reconcili­
ation Act of 1985, is amended by adding at the end the following
new paragraph:
"(3) In the case of a State which elects not to provide medical
^ assistance for hospice care, but provides medical assistance for
skilled nursing or intermediate care facility services with re-
j spect to an individual—
"(A) who is residing in a skilled nursing or intermediate
care facility and is receiving medical assistance for services
in such facility under the plan,
"(B) who is entitled to benefits under part A of title XVIII
and has elected, under section 1812(d), to receive hospice
care under such part, and
"(C) with respect to whom the hospice program under
such title and the skilled nursing or intermediate care
facility have entered into a written agreement under which
y the program takes full responsibility for the professional
management of the individual's hospice care and the facil­
ity agrees to provide room and board to the individual,
^, instead of any payment otherwise made under the plan with
respect to the facility's services, the State shall provide for
payment to the hospice program of an amount equal to the
amounts allocated under the plan for room and board in the
facility, in accordance with the rates established under section
1902(a)(13), and, if the individual is an individual described in
section 1902(a)(10)(A), shall provide for payment of any coinsur­
ance amounts imposed under section 1813(a)(4). For purposes of
this paragraph and section 1902(a)(13)(D), the term 'room and
board' includes performance of personal care services, including
assistance in activities of daily living, in socializing activities,
administration of medication, maintaining the cleanliness of a
resident's room, and supervising and assisting in the use of
durable medical equipment and prescribed therapies.".
(c) MEDICAID QUALIFYING TRUSTS.—Section 9506 of the Consoli­
dated Omnibus Budget Reconciliation Act of 1985 is amended by
adding at the end the following new subsection:
"(c) EXCEPTION.—The amendment made by subsection (a) shall not
apply to any trust or initial trust decree established prior to April 7,
1986, solely for the benefit of a mentally retarded individual who
resides in an intermediate care facility for the mentally retarded.".
(1) Sections 9505(e) and 9508(b) of the Consolidated Omnibus
Budget Reconciliation Act of 1985 are each amended by insert-
• ing before the period at the end the following: ", without regard
to whether or not regulations to carry out the amendments
have been promulgated by that date".
(2) Sections 9510(b) and 9511(b) of the Consolidated Omnibus
Budget Reconciliation Act of 1985 are each amended by insert­
ing before the period at the end the following: ", without regard
to whether or not regulations to carry out the amendment have
been promulgated by that date".
(e) HEALTH INSURING ORGANIZATIONS.—Section 9517(c)(2) of the
Consolidated Omnibus Budget Reconciliation Act of 1985, as
amended by section 1895(c)(4) of the Tax Reform Act of 1986, is
amended by adding at the end the following new subparagraph: PUBLIC LAW 99-509—OCT. 21, 1986 100 STAT. 2071
"(D) Nothing in section 1903(mXlXA) of the Social Security Act
shall be construed as requiring a health-insuring organization to be
organized under the health maintenance organization laws of a
State.".
(f) EFFECTIVE DATE.—The amendments made by this section shall
be effective as if included in the enactment of the Consolidated
Omnibus Budget Reconciliation Act of 1985.
SEC. 9436. PAYMENT FOR CERTAIN LONG-TERM CARE PATIENTS IN
HOSPITALS.
(a) IN GENERAL.—In the case of a State which received a waiver
under the authority of section 402(b) of the Social Security Amend­
ments of 1967 with respect to payment methodology for inpatient
hospital services under title XVIII and XIX of the Social Security
Act during the 3-year period beginning January 1, 1983, notwith­
standing section 1902(a)(13) of such Act, the State may pay under
title XIX of such Act for hospital patients receiving services at an
inappropriate level of care at the rate for hospital patients receiving
an appropriate level of care if the Secretary of Health and Human
Services determines that a sufficient number of hospital beds have
been decertified in the State to reduce the payments to hospitals
under such title in the State by amount equal to or greater than the
amount by which payments to hospitals under such title in such
State will increase as a result of the payment of such higher rates
for patients receiving inappropriate levels of care.
(b) EFFECTIVE PERIOD.—Subsection (a) shall apply to payments for
services furnished during the 3-year period beginning January 1,
1986, after the date the Secretary makes the determination
described in that subsection.
PART 5—MATERNAL AND CHILD HEALTH
SEC. 9441. AUTHORIZATION AND ALLOTMENT OF ADDITIONAL FUNDS.
(a) ADDITIONAL FUNDS.—Section 501(a) of the Social Security Act
(42 U.S.C. 701(a)) is amended by striking "$478,000,000 for fiscal year
1984" and inserting "$553,000,000 for fiscal year 1987, $557,000,000
for fiscal year 1988, and $561,000,000 for fiscal year 1989".
(b) ALLOTMENT OF ADDITIONAL APPROPRIATIONS.—Section 502 of
such Act (42 U.S.C. 702) is amended—
(1) in subsection (a)(1) by striking "amount appropriated
under section 501(a)" and inserting in lieu thereof "amounts
appropriated under section 501(a) for a fiscal year that are not
in excess of $478,000,000";
(2) in subsection (b)—
(A) by inserting "that are not in excess of $478,000,000"
after "fiscal year" the first place it appears, and
(B) by striking paragraph (3); and
(3) by adding at the end the following new subsections:
"(cXD Of the amounts appropriated for a fiscal year in excess of
3,000,000, an amount equal to 7 percent for fiscal year 1987, 8
percent for fiscal year 1988, and 9 percent for fiscal year 1989 shall
be retained by the Secretary for the purpose of carrying out
(through grants, contracts, or otherwise) projects for the screening of
newborns for sickle-cell anemia and other genetic disorders. The
provisions of paragraph (3) of subsection (a) shall apply to projects
authorized by this paragraph to the same extent as such provisions
apply to projects authorized under such subsection. State and local
governments.
42 use 1396b.
42 use 1396a
note.
Ante, p. 82.
State and local
governments.
42 use 1395b-l.
42 use 1395,
1396.
42 use 1396a.
Grants.
Contracts.
Ai 100 STAT. 2072 PUBLIC LAW 99-509—OCT. 21, 1986
"(2)(A) Of the amounts appropriated for a fiscal year in excess of
$478,000,000 that remain after the Secretary has retained the
applicable amount (if any) for such fiscal year under paragraph (1),
an amount equal to 33 Va percent shall be retained and allotted in
the same manner as the amounts retained and allotted under
subsections (a) and (h).
Research and "(B) The amounts retained by the Secretary under this paragraph
development. shall be used for the purpose of carrying out (through grants,
contracts, or otherwise) special projects of regional or national
significance, training, and research to promote access to primary
health services for children and community-based service networks
and case management services for children with special health care
needs.
State and local "(C) The amounts allotted to the States under this paragraph shall
governments. be used to develop primary health services demonstration programs
and projects for children and to promote the development of commu­
nity-based service networks and case management services for chil­
dren with special health care needs.
"(D) For purposes of this paragraph—
"(i) the term 'primary health services' includes—
"(I) any assessment, diagnosis, or treatment service pro­
vided on an outpatient basis that is designed to promote the
health, to prevent the development of disease or disability,
or to treat an illness or other health condition, of a child,
and
"(II) any service designed to promote the access of
children to high quality, continuous, and comprehensive
primary health services, including case management;
"(ii) the term 'community-based service network for children
with special health care needs' means a network of coordinated,
high-quality services that is located in or near the home commu­
nities of children with special health care needs in order to
improve the health status, functioning, and well-being of such
children;
"(iii) the term 'case management services' means services to
promote the effective and efficient organization and utilization
of resources to assure access to necessary comprehensive serv­
ices for children and their families; and
"(iv) the term 'comprehensive services' includes early identi­
fication and intervention services, diagnostic and evaluation
services, treatment services, rehabilitation services, family sup­
port services, and special education services.
"(3) Of the amounts appropriated for a fiscal year in excess of
$478,000,000 that remain after the Secretary has retained the
applicable amount (if any) for such fiscal year under paragraph (1),
an amount equal to 66% percent shall be retained and allotted in
the same manner and for the same purposes as the amounts re­
tained and allotted under subsections (a) and (b).
State and local "(dXD To the extent that all the funds appropriated under this
governments. title for a fiscal year are not otherwise allotted to States either
because all the States have not qualified for such allotments under
42 use 705. section 505 for the fiscal year or because some States have indicated
in their descriptions of activities under section 505 that they do not
intend to use the full amount of such allotments, such excess shall
be allotted among the remaining States in proportion to the amount
otherwise allotted to such States for the fiscal year without regard
to this paragraph. PUBLIC LAW 99-509—OCT. 21, 1986 100 STAT. 2073
Grants.
Contracts.
42 use 679a.
Women.
Education.
State and local
governments. "(2) To the extent that all the funds appropriated under this title
for a fiscal year are not otherwise allotted to States because some
State allotments are offset under section 506(b)(2), such excess shall 42 USC 706.
be allotted among the remaining States in proportion to the amount
otherwise allotted to such States for the fiscal year without regard
to this paragraph.".
SEC. 9442. MATERNAL AND CHILD HEALTH AND ADOPTION CLEARING­
HOUSE.
The Secretary of Health and Human Services shall establish,
either directly or by grant or contract, a National Adoption Informa­
tion Clearinghouse. The Clearinghouse shall—
(1) collect, compile, and maintain information obtained from
available research, studies, and reports by public and private
agencies, institutions, or individuals concerning all aspects of
infant adoption and adoption of children with special needs;
(2) compile, maintain, and periodically revise directories of
information concerning—
(A) crisis pregnancy centers,
(B) shelters and residences for pregnant women,
(C) training programs on adoption,
(D) educational programs on adoption,
(E) licensed adoption agencies,
Bov (F) State laws relating to adoption,
(G) intercountry adoption, and
(H) any other information relating to adoption for preg­
nant women, infertile couples, adoptive parents, unmarried
individuals who want to adopt children, individuals who
have been adopted, birth parents who have placed a child
for adoption, adoption agencies, social workers, counselors,
or other individuals who work in the adoption field;
(3) disseminate the information compiled and maintained
pursuant to paragraph (1) and the directories compiled and
maintained pursuant to paragraph (2); and
(4) upon the establishment of an adoption and foster care data
collection system pursuant to section 479 of the Social Security
Act, disseminate the data and information made available Infra.
through that system.
SEC. 9443. COLLECTION OF DATA RELATING TO ADOPTION AND FOSTER
CARE.
Part E of title IV of the Social Security Act, as amended by section
1883(b)(10) of the Tax Reform Act of 1986, is further amended by
adding at the end thereof the following new section: noqmt
COLLECTION OF DATA RELATING TO ADOPTION AND FOSTER CARE
"SEC. 479. (aXD Not later than 90 days after the date of the
enactment of this subsection, the Secretary shall establish an
Advisory Committee on Adoption and Foster Care Information (in
this section referred to as the 'Advisory Committee') to study the
various methods of establishing, administering, and financing a
system for the collection of data with respect to adoption and foster
care in the United States.
"(2) The study required by paragraph (1) shall—
"(A) identify the types of data necessary to— 42 USC 679. 100 STAT. 2074 PUBLIC LAW 99-509—OCT. 21, 1986
^' ' ' ' "(i) assess (on a continuing basis) the incidence,
characteristics, and status of adoption and foster care in the
# United States, and
"(ii) develop appropriate national policies with respect to
adoption and foster care;
"(B) evaluate the feasibility and appropriateness of collecting
data with respect to privately arranged adoptions and adoptions
arranged through private agencies without assistance from
public child welfare agencies;
Hii "(C) assess the validity of various methods of collecting data
" with respect to adoption and foster care; and
"(D) evaluate the financial and administrative impact of
implementing each such method.
Reports. "(3) Not later than October 1, 1987, the Advisory Committee shall
submit to the Secretary and the Congress a report setting forth the
results of the study required by paragraph (1) and evaluating and
making recommendations with respect to the various methods of
establishing, administering, and financing a system for the coUec-
' tion of data with respect to adoption and foster care in the United
States.
"(4)(A) Subject to subparagraph (B), the membership and organiza­
tion of the Advisory Committee shall be determined by the
Secretary.
State and local "(B) The membership of the Advisory Committee shall include
governments. representatives of—
"(i) private, nonprofit organizations with an interest in child
welfare (including organizations that provide foster care and
adoption services),
"(ii) organizations representing State and local governmental
agencies with responsibility for foster care and adoption
services,
"(iii) organizations representing State and local governmental
agencies with responsibility for the collection of health and
social statistics,
"(iv) organizations representing State and local judicial bodies
with jurisdiction over family law,
"(v) Federal agencies responsible for the collection of health
•\«'' and social statistics, and
"(vi) organizations and agencies involved with privately
arranged or international adoptions.
"(5) After the date of the submission of the report required by
paragraph (3), the Advisory Committee shall cease to exist.
Reports. "(bXl)(A) Not later than July 1, 1988, the Secretary shall submit
to the Congress a report that—
"(i) proposes a method of establishing, administering, and
financing a system for the collection of data relating to adoption
and foster care in the United States,
"(ii) evaluates the feasibility and appropriateness of collecting
data with respect to privately arranged adoptions and adoptions
arranged through private agencies without assistance from
public child welfare agencies, and
"(iii) evaluates the impact of the system proposed under
clause (i) on the agencies with responsibility for implementing
it.
Reports. "(B) The report required by subparagraph (A) shall—
"(i) specify any changes in law that will be necessary to
implement the system proposed under subparagraph (AXi), and PUBLIC LAW 99-509—OCT. 21, 1986 100 STAT. 2075
"(ii) describe the type of system that will be implemented
under paragraph (2) in the absence of such changes.
"(2) Not later than December 31, 1988, the Secretary shall promul- Regulations,
gate final regulations providing for the implementation of—
"(A) the system proposed under paragraph (l)(A)(i), or
"(B) if the changes in law specified pursuant to paragraph
(l)(B)(i) have not been enacted, the system described in para­
graph (l)(B)(ii). , ,,
Such regulations shall provide for the full implementation of the
system not later than October 1, 1991.
"(c) Any data collection system developed and implemented under
this section shall—
"(1) avoid unnecessary diversion of resources from agencies '^^
responsible for adoption and foster care;
"(2) assure that any data that is collected is reliable and
consistent over time and among jurisdictions through the use of
uniform definitions and methodologies;
"(3) provide comprehensive national information with respect
to—
"(A) the demographic characteristics of adoptive and
foster children and their biological and adoptive or foster
parents,
"(B) the status of the foster care population (including the
number of children in foster care, length of placement, type
v^f!, of placement, availability for adoption, and goals for ending
or continuing foster care),
"(C) the number and characteristics of—
"(i) children placed in or removed from foster care,
and
"(ii) children adopted or with respect to whom adop­
tions have been terminated, and
"(D) the extent and nature of assistance provided by State and local
Federal, State, and local adoption and foster care programs governments,
and the characteristics of the children with respect to
whom such assistance is provided; and
"(4) utilize appropriate requirements and incentives to ensure
that the system functions reliably throughout the United
States.". ••)
WSJT
Subtitle F—Provision Relating to Access to Health Care
Sec. 9501. Continuation coverage for retirees in cases of bankruptcies.
SEC. 9501. CONTINUATION COVERAGE FOR RETIREES IN CASES OF BANK-
RUPTCIES.
(a) Loss OF COVERAGE OF RETIREE THROUGH BANKRUPTCY AS
QUALIFYING EVENT.—
(1) IRC AMENDMENT.—Paragraph (3) of section 162(k) of the
Internal Revenue Code of 1986 (relating to qualifying event with
respect to continuation coverage requirements under group
health plans) is amended by adding at the end the following:
"(F) A proceeding in a case under title 11, United States
Code, commencing on or after July 1, 1986, with respect to
the employer from whose employment the covered
employee retired at any time.
In the case of an event described in subparagraph (F), a loss of
coverage includes a substantial elimination of coverage with Post, p. 2095. 26 use 162.
Employment
and
unemployment. 100 STAT. 2076 PUBLIC LAW 99-509—OCT. 21, 1986
Employment
and
unemployment.
Post, p. 2077.
Post, p. 2095;
26 use 162.
Post, p. 2095;
29 use 1162. i>t»j respect to a qualified beneficiary described in paragraph
(7)(B)(iv) within one year before or after the date of commence-
.,ji( ment of the proceeding."
(2) ERISA AMENDMENT.—Section 603 of the Employee Retire­
ment Income Security Act of 1974 (29 U.S.C. 1163) is amended
by adding at the end the following:
"(6) A proceeding in a case under title 11, United States Code,
commencing on or after July 1, 1986, with respect to the
employer from whose employment the covered employee retired
at any time.
In the case of an event described in paragraph (6), a loss of coverage
includes a substantial elimination of coverage with respect to a
qualified beneficiary described in section 607(3)(C) within one year
before or after the date of commencement of the proceeding."
(b) PERIOD OF CONTINUATION COVERAGE.—
(1) LIFE OF COVERED EMPLOYEE OR WIDOW AND ADDITIONAL 36
MONTHS FOR SURVIVING SPOUSE AND DEPENDENTS.—
(A) IRC AMENDMENTS.—Clause (i) of section 162(k)(2)(B) of
the Internal Revenue Code of 1986 (relating to maximum
period), as amended by section 1895(d)(2)(A) of the Tax
-i Reform Act of 1986, is amended—
(i) in subclause (II), by inserting "(other than a
qualifying event described in paragraph (3)(F))" after
"qualifying event" the first place it appears,
– rji r^j (ii) in subclause (III), by inserting "or (3)(F)" after
"(3)(B)",
(iii) by redesignating subclause (III) as subclause (IV),
,'r?sj 'v*" and
(iv) by inserting after subclause (II) the following new
qc»f> i rr. subclause:
"(III) SPECIAL RULE FOR CERTAIN BANKRUPTCY
PROCEEDINGS.—In the case of a qualifying event
described in paragraph (3)(F) (relating to bank­
ruptcy proceedings), the date of the death of the
covered employee or qualified beneficiary
'. . – (described in paragraph (7)(B)(iv)(III)), or in the
case of the surviving spouse or dependent children
of the covered employee, 36 months after the date
of the death of the covered employee."
(B) ERISA AMENDMENTS.—Subparagraph (A) of section
602(2) of the Employee Retirement Income Security Act of
1974 (relating to maximum period), as amended by section
1895(dX2)(B) of the Tax Reform Act of 1986, is amended—
(i) in clause (ii), by inserting "(other than a qualifying
event described in section 603(6))" after "qualifying
event" the first place it appears,
(ii) in clause (iii), by inserting "or 603(6)" after
"603(2)",
(iii) by redesignating clause (iii) as clause (iv), and
(iv) by inserting after clause (ii) the following new
clause:
"(iii) SPECIAL RULE FOR CERTAIN BANKRUPTCY
PROCEEDINGS.—In the case of a qualifying event de­
scribed in 603(6) (relating to bankruptcy proceedings),
the date of the death of the covered employee or quali­
fied beneficiary (described in section 607(3)(CXiii)), or in
the case of the surviving spouse or dependent children 'MM-PUBLIC LAW 99-509—OCT. 21, 1986 100 STAT. 2077
i of the covered employee, 36 months after the date of
the death of the covered employee."
(2) COVERAGE NOT LOST UPON ENTITLEMENT TO MEDICARE
BENEFITS.—
(A) IRC AMENDMENT.—Subclause (II) of section
162(k)(2)(B)(iv) of the Internal Revenue Code of 1986 (relat­
ing to reemployment or medicare eligibility) is amended by 26 USC 162.
inserting "in the case of a qualified beneficiary other than a
qualified beneficiary described in paragraph (7)(B)(iv),"
before "entitled".
(B) ERISA AMENDMENT.—Clause (ii) of section 602(2)(D) of
the Employee Retirement Income Security Act of 1974 (29
"' U.S.C. 1162(2)(D)) is amended by inserting "in the case of a
qualified beneficiary other than a qualified beneficiary de­
scribed in section 607(3)(C)," before "entitled". Infra.
(c) DEFINITION OF QUAUFIED BENEFICIARY MODIFIED IN REORGA­
NIZATION CASES.—
(1) IRC AMENDMENT.—Section 162(k)(7)(B) of the Internal
Revenue Code of 1986, as amended by section 1895(d)(7) of the
Tax Reform Act of 1986 (relating to special rule for termination Post, p. 2095.
and reduced employment in definition of qualified beneficiary),
is amended by adding at the end the following new clause:
' "(iv) SPECIAL RULE FOR RETIREES AND WIDOWS.—In the
case of a qualifying event described in paragraph (3)(F),
the term 'qualified beneficiary' includes a covered em­
ployee who had retired on or before the date of substan­
tial elimination of coverage and any other individual
who, on the day before such qualifying event, is a
beneficiary under the plan—
"(I) as the spouse of the covered employee,
"(II) as the dependent child of the employee, or
"(III) as the surviving spouse of the covered
employee.".
(2) ERISA AMENDMENT.—Section 607(3) of the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 1167(3))
(relating to special rule for termination and reduced employ­
ment in definition of qualified beneficiary) is amended by
adding at the end the following new subparagraph:
"(C) SPECIAL RULE FOR RETIREES AND WIDOWS.—In the case
of a qualifying event described in section 603(6), the term Ante, p. 2076.
'qualified beneficiary' includes a covered employee who had
retired on or before the date of substantial elimination of
coverage and any other individual who, on the day before
such qualifying event, is a beneficiary under the plan—
"(i) as the spouse of the covered employee,
"(ii) as the dependent child of the employee, or
m .Oil- "(iii) as the surviving spouse of the covered
employee.".
(d) NOTICE.—
(1) IRC AMENDMENT.—Subparagraphs (B) and (D)(i) of section
162(k)(6) of the Internal Revenue Code of 1986 (relating to notice
requirements) are amended by striking "or (D)" each place it Post, p. 2095.
appears and inserting in lieu thereof "(D), or (F)".
(2) ERISA AMENDMENT.—Paragraphs (2) and (4)(A) of section
606 of the Employee Retirement Income Security Act of 1974 (29
U.S.C. 1166) (relating to notice requirements) are amended by 100 STAT. 2078 PUBLIC LAW 99-509—OCT. 21, 1986
striking "or (4)" each place it appears and inserting in lieu
thereof "(4), or (6)".
26 use 162 note. (e) EFFECTIVE DATE,—
(1) IN GENERAL.—The amendments made by this section shall
take effect as if included in title X of the Consolidated Omnibus
Ante, p. 222. Budget Reconciliation Act of 1985.
(2) TREATMENT OF CERTAIN BANKRUPTCY PROCEEDINGS.—Not­
withstanding paragraph (1), section 10001(e) of the Consolidated
Omnibus Budget Reconciliation Act of 1985, and section
Ante, pp. 222, 10002(d) of such Act, the amendments made by this section and
227. by sections 10001 and 10002 of such Act shall apply in the case
of plan years ending during the 12-month period beginning
July 1,1986, but only with respect to—
(A) a qualifying event described in section 162(k)(3)(F) of
Ante, p. 2095. '"^ the Internal Revenue Code of 1986 or section 603(6) of the
Ante, p. 2016. '^ Employee Retirement Income Security Act of 1974, and
J (B) a qualifying event described in section 162(k)(3)(A) of
the Internal Revenue Code of 1986 or section 603(1) of the
Employee Retirement Income Security Act of 1974 relating
to the death of a retired employee occurring after the date
of the qualifying event described in subparagraph (A).
(3) TREATMENT OF CURRENT RETIREES.—Section 162(kX3)(F) of
the Internal Revenue Code of 1986 and section 603(6) of the
Employee Retirement Income Security Act of 1974 apply to
covered employees who retired before, on, or after the date of
the enactment of this Act.
(4) NOTICE.—In the case of a qualifying event described in
section 603(6) of the Employee Retirement Income Security Act
Ante, p. 230. of 1974 that occurred before the date of the enactment of this
Ante, p. 2077. Act, the notice required under section 606(2) of such Act (and
Post, p. 2095; under section 162(k)(6XB) of the Internal Revenue Code of 1986)
26 use 162. with respect to such event shall be provided no later than 30
days after the date of the enactment of this Act.
Approved October 21, 1986. .q ,;a-A
LEGISLATIVE HISTORY—H.R. 5300 (S. 2706) (S. 2799):
HOUSE REPORTS: No. 99-727 (eomm. on the Budget) and No. 99-1012 (eomm. of
Conference).
SENATE REPORTS: No. 99-348 accompanying S. 2706 (eomm. on the Budget) and
No. 99-479 accompaning S. 2799 (Comm. on Environment and
Public Works).
eONGRESSIONAL RECORD, Vol. 132 (1986):
Sept. 17-19, S. 2706 considered and passed Senate.
Sept. 24, H.R. 5300 considered and passed House.
Sept. 25, considered and passed Senate, amended, in lieu of S. 2706.
Sept. 27, S. 2799 considered and passed Senate.
Oct. 17, House and Senate agreed to conference report.
WEEKLY COMPILATION OF PRESIDENTIAL DOCUMENTS, Vol. 22 (1986):
Oct. 21, Presidential statement.

Highlights content goes here...

Purpose

The Omnibus Budget Reconciliation Act of 1986 is a comprehensive legislation aimed at balancing the federal budget. The act provides for reconciliation pursuant to section 2 of the concurrent resolution on the budget for fiscal year 1987, marking a significant step towards financial stability and reform.

Key Provisions

The document outlines various key provisions, including:

  • Title I focuses on agricultural programs, with Subtitle A addressing the sale of rural development notes and Subtitle B discussing prepayment of loans.

  • Section 1001 requires the Secretary of Agriculture to sell notes and other obligations held in the Rural Development Insurance Fund, realizing net proceeds of not less than $1 billion in fiscal year 1987 and $552 million and $547 million in fiscal years 1988 and 1989, respectively.

  • Title II deals with banking and housing programs, including the sale of rural housing loans and export-import bank loans.

  • Section 2001 requires the Secretary of Agriculture to sell loans made under title V of the Housing Act of 1949 to the public in amounts sufficient to provide a net reduction in outlays of not less than $1.715 billion in fiscal year 1987.

The amendments made by this section shall apply to payments under title XIX of the Social Security Act for calendar quarters beginning on or after July 1, 1987. An individual who is a qualified severely impaired individual (as defined in section 1905(q)) shall be considered categorically needy. A State plan may provide medical assistance for respiratory care services to ventilator-dependent individuals at home, and the requirements of subsection (e)(9) may be satisfied by a continuous stay in one or more hospitals, skilled nursing facilities, or intermediate care facilities.

Industry Impact

The amendments have significant implications for the healthcare industry, particularly in relation to Medicare. Some of these changes include:

  • The creation of a private cause of action for damages in cases where a large group health plan or other primary payer fails to provide payment for services covered under Medicare Part B.

  • The establishment of special enrollment periods for individuals who have not yet reached age 65 and are enrolled in a large group health plan as an active individual.

  • The imposition of a tax on employers or employee organizations that contribute to nonconforming large group health plans.

Updates/Amendments

The document includes various updates and amendments, including:

  • The creation of a National Adoption Information Clearhouse to collect, compile, and maintain information concerning all aspects of infant adoption and adoption of children with special needs.

  • The establishment of a system for collecting data regarding adoption and foster care, which is to be developed and implemented within 5 years.

  • The authorization and allotment of additional funds for maternal and child health, amounting to $553,000,000 for fiscal year 1987, $557,000,000 for fiscal year 1988, and $561,000,000 for fiscal year 1989.

These updates and amendments aim to promote more transparency and fairness in healthcare billing practices, while also streamlining administrative processes.

Congress.gov

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