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42 USC 1320C-3.

PUBLIC LAW 99-272—APR. 7, 1986 appropriateness of performing the procedure before the performance of the procedure. The Secretary shall develop appropriate measures to ensure that second opinions are only required in situations where a second opinion is needed to resolve outstanding uncertainties as to the medical necessity of the procedure. The organization shall notify, in accordance with section 1154(a)(3), the physician, patient, and hospital or other entity furnishing the service, in the event of a determination under subparagraph (B) or (C) of this paragraph. "(2) PROHIBITION OF PAYMENT IF REQUIRED SECOND OPINION NOT

42 USC 1395c, 1395J.

PROVIDED.—No payment may be made under part A or part B of title XVIII with respect to items or services furnished in connection with a surgical procedure for which there is a determination described in paragraph (1)(C), unless the individual undergoing the procedure obtains the second opinion required under that paragraph. The second opinion need not necessarily agree with the first opinion in order for payment to be made. "(3) EXCEPTIONS FOR ELECTIVE SECOND OPINIONS.—Paragraphs

42 USC 1395mm.

(1)(C) and (2) shall not apply to a surgical procedure if— "(A) a delay in providing the procedure would result in a risk to the patient; "(B) no physician is available (within such reasonable limits as the Secretary shall specify) who is (i) qualified to provide the second opinion, and (ii) a participating physician or a physician who has agreed to accept assignment for the second opinion; or "(C) the procedure is to be performed on a patient who is a member of a health maintenance organization or competitive medical plan having a risk-sharing contract with the Secretary under section 1876. "(d) REFERRAL MECHANISM FOR SECOND OPINIONS.— "(1) ACTING AS REFERRAL CENTER.—Each organization

42 USC I395u.

shall serve as a referral center for second opinions required under this section. "(2) REFERRAL OF PATIENT.—The organization shall maintain a list of physicians qualified to provide a second opinion and shall advise the patient as to which physicians are participating physicians (within the meaning of section 1842(h)) and which physicians have agreed to accept assignment to perform second opinions. The organization shall assist patients in referral to a qualified physician of the appropriate specialty for purposes of providing the opinion. "(3) FORWARDING OF RELEVANT MEDICAL RECORDS.—Each peer review organization shall, if the patient seeking the second opinion so requests, obtain the relevant medical records from the physician who rendered the first opinion that the procedure was necessary, and provide the relevant information to the physician selected by the patient to render the second opinion.

"(e) NOTICE TO PHYSICIANS, HOSPITALS, AND BENEFICIARIES.—The

Secretary shall assure that notice is provided to physicians, hospitals, ambulatory surgical centers, and beneficiaries respecting the activities under this section, including the applicable list of surgical procedures specified under this section.", (b) WAIVER OF DEDUCTIBLE AND COPAYMENTS.—

42 USC 1395Z.

(1) DEDUCTIBLE.—Section 1833(b) of the Social Security Act (42 U.S.C. 13951(b)) is amended by striking out "and" before "(4)",

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and by inserting before the period at the end of the first sentence the following: ", and (5) such deductible shall not apply with respect to items and services furnished in connection with obtaining a second opinion required under section 1164(c)(2) (or Ante, p. 196. a third opinion, if the second opinion was in disagreement with the first opinion)". (2) CoPAYMENTS.—(A) Section 1833(a)(1) of such Act (42 U.S.C. 13951(a)(1)) is amended by striking out "and" before "(F)", and 42 USC 1395/. by adding at the end thereof the following: "and (G) with respect to items and services (other than clinical diagnostic laboratory tests) furnished in connection with obtaining a second opinion required under section 1164(c)(2) (or a third opinion, if the second opinion was in disagreement with the first opinion), the amounts paid shall be 100 percent of the reasonable charges for such items and services;". (B) Section 1833(a)(1)(D) of such Act is amended by striking out "or under the procedure described in section 1870(f)(1)" and inserting in lieu thereof ", under the procedure described in section 1870(f)(1), or for tests furnished in connection with 42 USC 1395gg. obtaining a second opinion required under section 1164(c)(2) (or a third opinion, if the second opinion was in disagreement with the first opinion)". (C) Section 1833(a)(2)(A) of such Act is amended by inserting ", to items and services (other than clinical diagnostic laboratory tests) furnished in connection with obtaining a second opinion required under section 1164(c)(2) (or a third opinion, if the second opinion was in disagreement with the first opinion)," after "(other than durable medical equipment)". (D) Section 1833(a)(2)(D) of such Act is amended by striking out "or to a provider having an agreement under section 1866" and inserting in lieu thereof "to a provider having an agreement under section 1866, or for tests furnished in connection with obtaining a second opinion required under section 1164(c)(2) (or a third opinion, if the second opinion was in disagreement with the first opinion)". (E) Section 1833(a)(3) of such Act is amended by inserting after "1861(s)(10)(A)" the following: "and for items and services furnished in connection with obtaining a second opinion required under section 1164(c)(2), or a third opinion, if the second opinion was in disagreement with the first opinion". (F) The last sentence of section 1866(a)(2)(A) of such Act (42 U.S.C. 1395cc(a)(2)(A)) is amended by inserting after "1861(s)(10)(A)" the following: ", with respect to items and services furnished in connection with obtaining a second opinion required under section 1164(c)(2) (or a third opinion, if the second opinion was in disagreement with the first opinion),". (c) CONFORMING AMENDMENTS.— (1) EXCLUSIONS FROM COVERAGE.—Section 1862(a) of the Social

Security Act (42 U.S.C. 1395g(a)), as amended by section 9307(a) 42 USC I395y. of this title, is amended— (A) by striking out "or" at the end of paragraph (14); (B) by striking out the period at the end of paragraph (15) and inserting in lieu thereof "; or"; and (C) by adding at the end thereof the following new paragraph: "(16) furnished in connection with a surgical procedure for which a second opinion is required under section 1164(c)(2) and has not been obtained.".

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PUBLIC LAW 99-272—APR. 7, 1986

42 USC 1320C-3 note. Contracts.

(d) EFFECTIVE DATES.—The amendments made by subsection (a) shall apply to items and services furnished on or after January 1, 1987. The Secretary of Health and Human Services shall provide for such modification of contracts under part B of title XI of the Social 42 USC 1320c. Security Act that are in effect on that date as may be necessary to effect these amendments on a timely basis. 42 USC 1320C-13 (e) STUDY.—The Secretary of Health and Human Services shall note. conduct a study of the results of the amendments made by this section, and shall report the results of the study to the Congress within 36 months after the date of the enactment of this Act. SEC. 9402. PEER REVIEW ORGANIZATION REIMBURSEMENT.

42 USC 1395CC note. 42 USC 1320C-2 note.

(a) REIMBURSEMENT AMOUNTS.—Section 1866(a)(1)(F) of the Social Security Act (42 U.S.C. 1395cc(a)(l)(F)) is amended— (1) by striking out clause (iii), (2) by inserting "and" at the end of clause (ii), (3) by redesignating clause (iv) as clause (iii), and (4) by striking out "1982" in clause (iii) as so redesignated and inserting in lieu thereof "1986". (b) MONTHLY PAYMENTS.—Section 1153(c)(8) of such Act (42 U.S.C. 1320c-2(c)(8)) is amended to read as follows: "(8) reimbursement shall be made to the organization on a monthly basis, with payments for any month being made not later than 15 days after the close of such month.". (c) EFFECTIVE DATES.—(1) The amendments made by subsection (a) shall become effective on 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 the date of the enactment of this Act. SEC. 9403. DENIAL OF PAYMENT FOR SUBSTANDARD CARE.

42 USC 1320C-3 note.

(a) DENIAL AUTHORITY FOR PRO.—Section 1154(a)(2) of the Social Security Act (42 U.S.C. 1320c-3(a)(2)) is amended— (1) by striking out "subparagraphs (A) and (C)" and inserting in lieu thereof "subparagraphs (A), (B), and (C)"; and (2) by adding at the end thereof (after and below subparagraph (D)) the following: "Determinations that payment should not be made by reason of subparagraph (B) of paragraph (1) shall be made only on the basis of criteria which are consistent with guidelines established by the Secretary.". (b) WAIVER OF LIABILITY.—Section 1866(a)(1) of such Act (42 U.S.C. 1395cc(a)(l)) is amended by striking out "and" at the end of subparagraph (G), by striking out the period at the end of subparagraph (H) and inserting in lieu thereof ", and", and by inserting after subparagraph (H) the following new subparagraph: "(I) not to charge any individual or any other person for items or services for which payment under this title is denied under section 1154(a)(2) by reason of a determination under section 1154(a)(1)(B).". (c) EFFECTIVE DATE.—The amendments made by this section shall become effective on the date of the enactment of this Act. SEC. 9404. HEALTH MAINTENANCE ORGANIZATION MEMBERSHIP ON PEER REVIEW ORGANIZATION BOARDS.

(a) REMOVAL OF ONE-MEMBER LIMITATION.—Section 1153(b)(2)(A) of the Social Security Act (42 U.S.C. 1320c-2(b)(2)(A)) is amended by

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100 STAT. 201

striking out "consists only of one individual member of the governing board" and inserting in lieu thereof "consists only of members of the governing board". (b) EFFECTIVE DATE.—The amendment made by this section shall 42 USC l320c-2 become effective on the date of the enactment of this Act. ^°^^SEC. 9405. PEER REVIEW ORGANIZATION REVIEW OF HEALTH MAINTENANCE ORGANIZATIONS. (a) COMPARABLE REVIEW FOR HEALTH MAINTENANCE ORGANIZATIONS AND COMPETITIVE MEDICAL PLANS.—Section 1154(a)(1) of the

Social Security Act (42 U.S.C. 1320c-3(a)(l)) is amended by inserting "(including where payment is made for such services to eligible organizations pursuant to contracts under section 1876)" after "title 42 USC 1395mm XVIII". (b) EFFECTIVE DATE.—The amendment made by this section shall 42 USC 1320C-3 apply to items and services furnished on or after January 1, 1987. note. SEC. 9406. SUBSTITUTE REVIEW PENDING TERMINATION OF A PEER REVIEW ORGANIZATION CONTRACT.

(a) SUBSTITUTE REVIEW.—Section 1153(d) of the Social Security Act (42 U.S.C. 1320c-2(d)) is amended by adding at the end thereof the following new paragraph: "(4) During the period after the Secretary has given notice of intent to terminate a contract, and prior to the time that the Secretary enters into a contract with another utilization and quality control peer review organization, the Secretary may transfer review responsibilities of the organization under the contract being terminated to another utilization and quality control peer review organization, or to an intermediary or carrier having an agreement under section 1816 or a contract under section 1842.". (b) EFFECTIVE DATE.—The amendment made by this section shall become effective on the date of the enactment of this Act.

42 USC 1395h, 1395u. 42 USC 1320C-2 note.

Subtitle B—Medicaid and Maternal and Child Health SEC. 9501. SERVICES FOR PREGNANT WOMEN.

(a) EXPANDED COVERAGE.—Section 1905(n)(l) of the Social Security Act (42 U.S.C. 1396d(n)(l)) is amended— (1) by striking out "or" at the end of subparagraph (A); (2) by striking out "and" at the end of subparagraph (B) and inserting in lieu thereof "or"; and (3) by adding after subparagraph (B) the following new subparagraph: "(C) otherwise meets the income and resources requirements State and local governments. of a State plan under part A of title IV; and". (b) OPTIONAL EXPANSION OF PREGNANCY-RELATED SERVICES.—Sec-

tion 1902(a)(10) of such Act (42 U.S.C. 1396a(a)(10)) is amended, in the matter after subparagraph (D) thereof^ (1) by striking out "and" before "(IV)" and inserting in lieu thereof a comma; and (2) by inserting before the semicolon at the end thereof the following: ", and (V) the making available to pregnant women covered under the plan of services relating to pregnancy (including prenatal, delivery, and postpartum services) or to any other

42 USC 601.

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PUBLIC LAW 99-272—APR. 7, 1986 condition which may complicate pregnancy 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 other individuals, provided such services are made available (in the same amount, duration, and scope) to all pregnant women covered under the State plan". (c) POSTPARTUM ELIGIBILITY FOR PREGNANT WOMEN.—Section

42 USC 1396a. State and local governments.

42 USC 1396d note. 42 USC 1396.

State and local governments.

42 USC 1396a note. 42 USC 1396a note.

1902(e) of such Act (42 U.S.C. 1396b(e)) is amended by adding at the end the following new paragraph: "(5) A woman who, while pregnant, is eligible for, has applied for, and has received medical assistance under the State plan, shall continue to be eligible under the plan, as though she were pregnant, for all pregnancy-related and postpartum medical assistance under the plan, until the end of the 60-day period beginning on the last day of her pregnancy.". (d) EFFECTIVE DATES.— (1) EXPANDED COVERAGE.—(A) The amendments made by

subsection (a) apply (except as provided under subparagraph (B)) to payments under title XIX of the Social Security Act for calendar quarters beginning on or after the July 1, 1986, without regard to whether or not final regulations to carry out the amendments have been promulgated by that date. (B) In the case of a State plan for medical assistance under title XIX of the Social Security Act which the Secretary of Health and Human Services determines requires State legislation (other than legislation appropriating funds) in order for the plan to meet the additional requirement imposed by the amendments made by subsection (a), the State plan shall not be regarded as failing to comply with the requirements of such title solely on the basis of its failure to meet this additional requirement 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. (2) OPTIONAL SERVICES.—The amendments made by subsection (b) shall become effective on the date of the enactment of this Act. (3) CONTINUED COVERAGE.—The amendment made by subsection (c) shall apply to medical assistance furnished to a woman on or after the date of the enactment of this Act. SEC. 9502. MODIFICATIONS OF WAIVER PROVISIONS FOR HOME AND COMMUNITY-BASED SERVICES. (a) EXPLICIT INCLUSION OF CERTAIN PREVOCATIONAL AND EDUCATIONAL SERVICES.—Section 1915(c) of the Social Security Act (42

U.S.C. 1396n(c)) is amended by adding at the end thereof the following new paragraph: "(5) For purposes of paragraph (4)(B), the term 'habilitation services', with respect to individuals who receive such services after discharge from a skilled nursing facility or intermediate care facility— "(A) means services designed to assist individuals in acquiring, retaining, and improving the self-help, socialization, and adaptive skills necessary to reside successfully in home and community based settings; and

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"(B) includes (except as provided in subparagraph (C)) prevocational, educational, and supported employment services; but "(C) does not include— "(i) special education and related services (as defined in section 602(16) and (17) of the Education of the Handicapped Act (20 U.S.C. 1401(16), (17)) which otherwise are available to the individual through a local educational agency; and "(ii) vocational rehabilitation services which otherwise are available to the individual through a program funded under section 110 of the Rehabilitation Act of 1973 (29 U.S.C. 730).". (b) PERMITTING HOSPITAL LEVEL OF CARE FOR CERTAIN PARTICI-

PANTS.—(1) Section 1915(c)(1) of such Act (42 U.S.C 1396n(c)(l)) is State and local amended by inserting "or but for the provision of such services the governments. individuals would continue to receive inpatient hospital services, skilled nursing facility services, or intermediate care facility services because they are dependent on ventilator support the cost of which is reimbursed under the State plan" before the period at the end thereof. (2) Section 1915(c)(2)(C) of such Act (42 U.S.C. 1396n(cK2XC)) is amended— (A) by inserting "hospital or" after "provided in a"; and (B) by inserting "inpatient hospital services or" after "the provision of. (c) PROHIBITING IMPOSITION OF CERTAIN REGULATORY LIMITS.—

Section 1915(c) of such Act (42 U.S.C. 1396n(c)) as amended by subsection (a), is further amended— (1) in paragraph (2)(D), by inserting "100 percent o f after "does not exceed; and (2) by adding at the end thereof the following new paragraph: "(6) The Secretary may not require, as a condition of approval of a waiver under this section under paragraph (2)(D), that the actual total expenditures for home and community-based services under the waiver (and a claim for Federal financial participation in expenditures for the services) cannot exceed the approved estimates for these services. The Secretary may not deny Federal financial State and local payment with respect to services under such a waiver on the ground governments. that, in order to comply with paragraph (2)(D), a State has failed to comply with such a requirement.". (d) COMPUTATION OF EXPENDITURES FOR CERTAIN DISABLED PA-

TIENTS.—Section 1915(c) of such Act (42 U.S.C. 1396n(c)), as amended by subsection (c), is further amended by adding at the end thereof the following new paragraph: "(7) In making estimates under paragraph (2)(D) in the case of a State and local waiver which applies only to physically disabled individuals who are governments. inpatients in skilled nursing or intermediate care facilities, the State may determine the average per capita expenditure which would have been made in a fiscal year for those individuals under the State plan separately from the expenditure for other individuals who are inpatients of those facilities.'. (e) PERMITTING FLEXIBILITY IN ESTABLISHING INCOME STANDARDS.—Section 1915(c)(3) of such

MAINTENANCE

Act (42 U.S.C. 1396n(c)(3)) is amended by adding at the end the following new sentence: "A waiver may provide, with respect to post-eligibility treatment of income of all individuals receiving services under that waiver, that the maximum amount of the individual's income which

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State and local governments. 42 USC 1396n note.

PUBLIC LAW 99-272—APR. 7, 1986

may be disregarded for any month for the maintenance needs of the individual may be an amount greater than the maximum allowed for that purpose under regulations in effect on July 1, 1985.". (f) WAIVER EXTENSIONS.—The Secretary of Health and Human Services shall extend, upon request of the State, any waiver under section 1915(c) of the Social Security Act which expires on or after September 30, 1985, and before September 30, 1986. Such extension shall be for a period of not less than one year nor more than five years, subject to section 1915(e)(1) of such Act. (g) WAIVER RENEWALS.—Section 1915(c)(3) of the Social Security Act (42 U.S.C. 1396n(c)(3)) is amended— (1) by striking out "additional three-year periods" and inserting in lieu thereof "additional five-year periods"; and (2) by striking out "previous three-year period" and inserting in lieu thereof "previous waiver period". (h) COORDINATED SERVICES BETWEEN M C H PROGRAM AND HOME AND COMMUNITY-BASED SERVICE PROGRAMS.—Section 1915(c) of the

State and local governments. 42 USC 701.

Social Security Act (42 U.S.C. 1396n(c)), as amended by subsection (d) of this section, is further amended by adding at the end thereof the following new paragraph: "(8) The State agency administering the plan under this title may, whenever appropriate, enter into cooperative arrangements with the State agency responsible for administering the program for children with special health care needs under title V in order to assure improved access to coordinated services to meet the needs of such children.". (i) SUBSTITUTION OF PARTICIPANTS.—(1) Section 1915(c) of the Social

State and local governments.

42 USC 1396n note.

Security Act (42 U.S.C. 1396n(c)), as amended by subsection (h) of this section, is further amended by adding at the end thereof the following new paragraph: "(9) In the case of any waiver under this subsection which contains a limit on the number of individuals who shall receive home or community-based services, the State may substitute additional individuals to receive such services to replace any individuals who die or become ineligible for services under the State plan.". (j) EFFECTIVE DATES.— (1) HABILITATION SERVICES.— The amendment made by subsec-

tion (a) shall be effective for services furnished on or after the date of the enactment of this Act. (2) HOSPITALIZED PATIENTS.—The amendments made by subsection (b) shall be effective for services furnished on or after October 1, 1985. (3) PROHIBITION OF REGULATORY LIMITS AND TREATMENT OF CERTAIN PHYSICALLY DISABLED INDIVIDUALS.—The amendments

made by subsections (c) and (d) shall apply to applications for waivers (or renewals thereof) filed before, on, or after, the date of the enactment of this Act and for services furnished on or after August 13, 1981. (4) INCOME STANDARDS.—The amendment made by subsection (e) shall apply to waivers (or renewals thereof) approved on or after the date of the enactment of this Act. (5) WAIVER EXTENSIONS.—Subsection (f) shall apply to waivers expiring on or after September 30, 1985, and before September 30, 1986. (6) WAIVER RENEWALS.—The amendments made by subsection (g) shall become effective on September 30, 1986.

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100 STAT. 205

COORDINATED SERVICES AND SUBSTITUTION OF PARTICI-

PANTS.—The amendments made by subsections (h) and (i) shall become effective on the date of the enactment of this Act. SEC. 9503. THIRD-PARTY LIABILITY. (a)

AMENDMENTS TO STATE PLAN REQUIREMENTS.—(1)

Section

1902{a)(25) of the Social Security Act (42 U.S.C. 1396a(a)(25)) is amended to read as follows: "(25) provide— "(A) that the State or local agency administering such plan will take all reasonable measures to ascertain the legal liability of third parties (including health insurers) to pay for care and services available under the plan, including— "(i) the collection of sufficient information (as speci- Claims. fied by the Secretary in regulations) to enable the State to pursue claims against such third parties, with such information being collected at the time of any determination or redetermination of eligibility for medical assistance, and "(ii) the submission to the Secretary of a plan (subject to approval by the Secretary) for pursuing claims against such third parties, which plan shall— "(I) be integrated with, and be monitored as a part of the Secretary's review of, the State's mechanized claims processing and information retrieval system under section 1903(r), and 42 USC 1396b. "(II) be subject to the provisions of section 1903(r)(4) relating to reductions in Federal payments for failure to meet conditions of approval, but shall not be subject to any other financial penalty as a result of any other monitoring, quality control, or auditing requirements; "(B) that in any case where such a legal liability is found to exist after medical assistance has been made available on behalf of the individual and where the amount of reimbursement the State can reasonably expect to recover exceeds the costs of such recovery, the State or local agency will seek reimbursement for such assistance to the extent of such legal liability; "(C) that in the case of an individual who is entitled to medical assistance under the State plan with respect to a service for which a third party is liable for payment, the person furnishing the service may not seek to collect from the individual (or any financially responsible relative or representative of that individual) payment of an amount for that service (i) if the total of the amount of the liabilities of third parties for that service is at least equal to the amount payable for that service under the plan (disregarding section 1916), or (ii) in an amount which exceeds the lesser of 42 USC l396o. (I) the amount which may be collected under section 1916, or (II) the amount by which the amount payable for that service under the plan (disregarding section 1916) exceeds the total of the amount of the liabilities of third parties for that service; "(D) that a person who furnishes services and is participating under the plan may not refuse to furnish services to

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Page:U.S. Department of the Interior Annual Report 1880.djvu/22

20 will no longer have any charm for him. He will gradually become ashamed of being a beggar, as many of them have expressed themselves already, and feel a pride formerly little known to him, to depend for his own sustenance and that of his family upon his own efforts. This is not a mere fancy picture, for I have myself observed a multitude of examples of this kind, and manifestations of urgent desire in this direction on the part of Indians are coming to this department in constantly increasing numbers. It appears, therefore, of the highest importance that the government should promptly take advantage of this disposition and stimulate it with generous aid until the final solution of the problem is reached.

At the time I rendered my last report, the settlement of the difficulties which had occurred on the Ute Reservation in September, 1879, was still the subject of negotiations between the Ute tribe and the commission appointed for that purpose, consisting of General Hatch, Mr. Adams, and Chief Ouray. Those negotiations resulted in the surrender of Chief Douglass, of the White River Utes, to the authorities of the United States. The commission recommended that a delegation, representing the various bands of the Ute tribe, be permitted to visit Washington for the purpose of effecting such a settlement as would prevent further troubles. Several headmen of the Southern Utes, under the leadership of their chief, Ignacio, and of the Uncompahgre Utes, headed by Ouray, as well as of the White River Utes, were received here, and after prolonged negotiations these representatives of the Ute tribe consented to the surrender of the whole Ute Reservation in Colorado, on condition that the Ute Indians be settled in severalty, with an individual title in fee simple to their farms on certain small tracts of land in that reservation and immediately adjoining it, the White River Utes to go to the Uintah Reservation, and that the annuities due be paid to them, and further annuities be provided for; the Utes thenceforth to be as individuals occupying their farm tracts respectively under the jurisdiction of local laws and courts. This arrangement was considered a measure of great importance, not only for the reason that it would be apt to prevent a costly and destructive Indian war, but also that for the first time in the history of Indian management it provided for the formal discontinuance of the tribal existence of an Indian nation and for their individual settlement as farmers like other inhabitants of the country under the laws of the land. This agreement was not to have binding force until ratified by three-fourths of all the male adult members of the different bands of the Ute tribe, the ratification to be supervised by a commission which, after the completed ratification, was also to make the payments agreed upon and to superintend the settlement of the Indians upon the farm lands designated for them. This agreement was submitted to Congress with the draught of a bill to give it the force of law. Prompt action was repeatedly urged, so that its most important


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42 USC I396d.

42 USC 651.

PUBLIC LAW 99-272—APR. 7, 1986

an individual (who is entitled to have payment made under the plan for the services the person furnishes) because of a third party's potential liability for payment for the service; "(E) that in the case of prenatal or preventive pediatric care (including early and periodic screening and diagnosis services under section 1905(a)(4)(B)) covered under the State plan, the State shall— "(i) make payment for such service in accordance with the usual payment schedule under such plan for such services without regard to the liability of a third party for payment for such services; and "(ii) seek reimbursement from such third party in accordance with subparagraph (B); and "(F) that in the case of any services covered under such plan which are provided to an individual on whose behalf child support enforcement is being carried out by the State agency under part D of title IV of this Act, the State shall— "(i) make payment for such service in accordance with the usual payment schedule under such plan for such services without regard to any third-party liability for payment for such services, if such third-party liability is derived (through insurance or otherwise) from the parent whose obligation to pay support is being enforced by such agency, if payment has not been made by such third party within 30 days after such services are furnished; and "(ii) seek reimbursement from such third party in accordance with subparagraph (B);". (2) Section 1902 of such Act (42 U.S.C. 1396a) is amended by inserting after subsection (f) the following new subsection: "(g) In addition to any other sanction available to a State, a State may provide for a reduction of any payment amount otherwise due with respect to a person who furnishes services under the plan in an amount equal to up to three times the amount of any payment sought to be collected by that person in violation of subsection (a)(25XC).". (b) PERFORMANCE STANDARDS AND REVIEW FOR MECHANIZED CLAIMS PROCESSING AND INFORMATION RETRIEVAL SYSTEMS.—(1) Sec-

42 USC 1396a note.

tion 1903(r)(6)(J) of such Act (42 U.S.C. 1396b(r)(6)(J)) is amended to read as follows: "(J) develop and disseminate performance standards for assessing the State's third party collection efforts in accordance with section 1902(a)(25)(A)(ii).". (2) Section 1903(r)(4)(A) of such Act (42 U.S.C. 1396b(r)(4)(A)) is amended— (A) by striking out "once each fiscal year" and inserting in lieu thereof "once every three years"; and (B) by adding at the end thereof the following: "Reviews may, at the Secretary's discretion, constitute reviews of the entire system or of only those standards, systems requirements, and other conditions which have demonstrated weakness in previous reviews.". (c) REGULATIONS.—The Secretary of Health and Human Services shall promulgate final regulations necessary to carry out sections 1902(a)(25) and 1903(r)(6)(J) of the Social Security Act within 6 months after the date of the enactment of this Act.

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100 STAT. 207

(d) ERISA AMENDMENT.—(1) Section 514(b) of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1144) is amended by adding at the end thereof the following new paragraph: "(8) Subsection (a) of this section shall not apply to any State law mandating that an employee benefit plan not include any provision which has the effect of limiting or excluding coverage or payment for any health care for an individual who would otherwise be covered or entitled to benefits or services under the terms of the employee benefit plan, because that individual is provided, or is eligible for, benefits or services pursuant to a plan under title XIX of the Social Security Act, to the extent such law is necessary for the State to be eligible to receive reimbursement under title XIX of that Act". (2)(A) Except as provided in subparagraph (B), the amendment made by paragraph (1) shall become effective on October 1, 1986. (B) In the case of a plan maintained pursuant to one or more collective bargaining agreements between employee representatives and one or more employers ratified on or before the date of the enactment of this Act, the amendment made by paragraph (1) shall become effective on the later of— (i) October 1, 1986; or (ii) the earlier o— f ^ (I) the date on which the last of the collective bargaining agreements under which the plan is maintained, which were in effect on the date of the enactment of this Act, terminates (determined without regard to any extension thereof agreed to after the date of the enactment of this Act); or (II) three years after the date of the enactment of this Act. (e) CONDITION OF ELIGIBILITY.—Section 1912(a)(1) of the Social Security Act (42 U.S.C. 1396k(a)(l)) is amended by striking out "and" at the end of subparagraph (A), and by adding at the end thereof the following new subparagraph: "(C) to cooperate with the State in identifying, and providing information to assist the State in pursuing, any third party who may be liable to pay for care and services available under the plan, unless such individual has good cause for refusing to cooperate as determined by the State agency in accordance with standards prescribed by the Secretary, which standards shall take into consideration the best interests of the individuals involved; and". (f) DISREGARD FROM ERRONEOUS PAYMENTS.—Section 1903(u)(l)(D) of such Act (42 U.S.C. 1396b(u)(l)(D)) is amended by adding at the end thereof the following new clause: "(iv) In determining the amount of erroneous excess payments, there shall not be included any error resulting from a failure of an individual to cooperate or give correct information with respect to third-party liability as required under section 1912(a)(1)(C) or 402(a)(26)(C).". (g) EFFECTIVE DATES.—(1) Except as otherwise provided, the amendments made by this section shall apply to calendar quarters beginning on or after the date of the enactment of this Act. (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

42 USC 1396. 29 USC 1144 note. Effective dates,

42 USC 602. 42 USC I396a ^°^^-

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 100 STAT. 208

42 USC 1396a.

PUBLIC LAW 99-272—APR. 7, 1986

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. (3) No penalty may be applied against any State for a violation of section 1902(a)(25) of the Social Security Act occurring prior to the effective date of the amendments made by this section. (4) The amendment made by subsection (c) shall become effective on the date of the enactment of this Act. SEC. 9505. OPTIONAL HOSPICE BENEFITS. (a) COVERAGE OF HOSPICE CARE AS AN OPTIONAL MEDICAID BENE-

42 USC 1395x.

42 USC 1395d.

FIT.—Section 1905 of the Social Security Act (42 U.S.C. 1396d) is amended— (1) in subsection (a)— (A) by striking out "and" at the end of paragraph (17); (B) by redesignating paragraph (18) as paragraph (19); and (C) by inserting after paragraph (17) the following new paragraph: "(18) hospice care (as defined in subsection (o)); and"; and (2) by adding at the end thereof the following new subsection: "(o)(l) The term 'hospice care' means the care described in section 1861(dd)(l) furnished by a hospice program (as defined in section 1861(dd)(2)) to a terminally ill individual who has voluntarily elected (in accordance with paragraph (2)) to have payment made for hospice care instead of having payment made for certain benefits described in section 1812(d)(2)(A) and intermediate care facility services under the plan. For purposes of such election, hospice care may be provided to an individual while such individual is a resident of a skilled nursing facility or intermediate care facility, but the only payment made under the State plan shall be for the hospice care. "(2) An individual's voluntary election under this subsection— "(A) shall be made in accordance with procedures that are established by the State and that are consistent with the procedures established under section 1812(d)(2); "(B) shall be for such a period or periods (which need not be the same periods described in section 1812(d)(1)) as the State may establish; and "(C) may be revoked at any time without a showing of cause and may be modified so as to change the hospice program with respect to which a previous election was made.". (b) ELIGIBILITY.— (1) LIMITATION

TO TERMINALLY ILL INDIVIDUALS.—Section

1902(a)(10) of such Act (42 U.S.C. 1396a(a)(10)), as amended by section 9501 of this Act, is further amended, in the matter following subparagraph (D), by striking out "and" before "(V)" and by inserting before the semicolon at the end thereof the following: ", and (VI) with respect to the making available of medical assistance for hospice care to terminally ill individuals who have made a voluntary election described in section 1905(o) to receive hospice care instead of medical assistance for certain other services, such assistance may not be made available in an amount, duration, or scope less than that provided under title

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100 STAT. 209

XVIII, and the making available of such assistance shall not, by 42 USC 1395. reason of this paragraph (10), require the making available of medical assistance for hospice care to other individuals or the making available of medical assistance for services waived by such terminally ill individuals". (2)

HIGHER

INCOME

STANDARD

PERMITTED.—Section

1902(a)(10)(A)(ii) of such Act (42 U.S.C. 1396a(a)(10)(A)(ii)) is amended— (A) by striking out "or" at the end of subclause (V); (B) by striking out the semicolon at the end of subclause (VI) and inserting in lieu thereof ", or"; and (C) by adding at the end the following new subclause: "(VII) who would be eligible under the State plan under this title if they were in a medical institution, who are terminally ill, and who will receive hospice care pursuant to a voluntary election described in section 1905(o);". 42 USC 1396d. (c) PAYMENT FOR HOSPICE CARE.— (1) U S E OF MEDICARE RATES.—Section

1902(a)(13) of such Act

(42 U.S.C. 1396a(a)(13)) is amended— (A) by striking out "and" at the end of subparagraph (B); (B) by redesignating subparagraph (C) as subparagraph (D); and (C) by inserting after subparagraph (B) the following new subparagraph: "(C) for payment for hospice care in the same amounts, and using the same methodology, as used under part A of title XVIII; except that a separate rate may be paid for 42 USC 1395c. hospice care which is furnished to an individual who is a resident of a skilled nursing facility or intermediate care facility, and who would be eligible under the plan for skilled nursing facility services or intermediate care facility services if he had not elected to receive hospice care, to take into account the room and board furnished by such facility; and". (2) LIMITATION ON COPAYMENTS.—Subsections (a)(2) and (b)(2)

of section 1916 of the Social Security Act (42 U.S.C. 1396o) are each amended— (A) by striking out "or" at the end of subparagraph (C); (B) by striking out "; and" at the end of subparagraph (D) and inserting in lieu thereof ", or"; and (C) by adding at the end the following new subparagraph: "(E) services furnished to an individual who is receiving hospice care (as defined in section 1905(o)); and". (d) CONFORMING AMENDMENTS.—

(1) Section 1902(j) of such Act (42 U.S.C. 1396a(j)) is amended by striking out "(18)" and inserting in lieu thereof "(19)". (2) Section 1902(a)(10)(C)(iv) of such Act (42 U.S.C. 1396a(a)(10)(C)(iv)) is amended by striking out "through (17)" and inserting in lieu thereof "through (18)". (e) EFFECTIVE DATE.—The amendments made by this section shall 42 USC I396a apply to medical assistance provided for hospice care furnished on or "°te. after the date of the enactment of this Act.

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 100 STAT. 210

PUBLIC LAW 99-272—APR. 7, 1986

SEC. 9506. TREATMENT OF POTENTIAL QUALIFYING TRUSTS.

PAYMENTS

FROM

MEDICAID

(a) AMOUNTS TREATED AS BEING AVAILABLE FROM GRANTOR

State and local governments. 42 USC 1396a note.

TRUSTS.—Section 1902 of the Social Security Act (42 U.S.C. 1396a) is amended by adding at the end thereof the following new subsection: "(k)(l) In the case of a medicaid qualifying trust (described in paragraph (2)), the amounts from the trust deemed available to a grantor, for purposes of subsection (a)(17), is the maximum amount of payments that may be permitted under the terms of the trust to be distributed to the grantor, assuming the full exercise of discretion by the trustee or trustees for the distribution of the maximum amount to the grantor. For purposes of the previous sentence, the term 'grantor' means the individual referred to in paragraph (2). "(2) For purposes of this subsection, a 'medicaid qualifying trust' is a trust, or similar legal device, established (other than by will) by an individual (or an individual's spouse) under which the individual may be the beneficiary of all or part of the payments from the trust and the distribution of such payments is determined by one or more trustees who are permitted to exercise any discretion with respect to the distribution to the individual. "(3) This subsection shall apply without regard to— "(A) whether or not the medicaid qualifying trust is irrevocable or is established for purposes other than to enable a grantor to qualify for medical assistance under this title; or "(B) whether or not the discretion described in paragraph (2) is actually exercised. "(4) The State may waive the application of this subsection with respect to an individual where the State determines that such application would work an undue hardship.". (b) EFFECTIVE DATE.—The amendment made by subsection (a) shall apply to medical assistance furnished on or after the first day of the second month beginning after the date of the enactment of this Act. SEC. 9507. WRITTEN STANDARDS FOR PROVISION OF ORGAN TRANSPLANTS. (a) DENIAL OF FEDERAL PAYMENTS FOR ORGAN TRANSPLANTS UNLESS PROVIDED UNDER WRITTEN STANDARDS.—Section 1903(i) of

42 USC 1396b note.

the Social Security Act (42 U.S.C. 1396b(i)) is amended by inserting before paragraph (2) the following new paragraph: "(1) for organ transplant procedures unless the State plan provides for written standards respecting the coverage of such procedures and unless such standards provide that— "(A) similarly situated individuals are treated alike; and "(B) any restriction, on the facilities or practitioners which may provide such procedures, is consistent with the accessibility of high quality care to individuals eligible for the procedures under the State plan.". (b) EFFECTIVE DATE.—The amendments made by subsection (a) shall apply to medical assistance furnished on or after January 1, 1987. SEC. 9508. OPTIONAL TARGETED CASE MANAGEMENT SERVICES.

(a) EXEMPTION FROM CERTAIN REQUIREMENTS.—(1) Section 1915 of the Social Security Act (42 U.S.C. 1396n) is amended by adding at the end thereof the following new subsection:

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"(g)(1) A State may provide, as medical assistance, case management services under the plan without regard to the requirements of section 1902(a)(l) and section 1902(a)(10)(B). The provision of case management services under this subsection shall not restrict the choice of the individual to receive medical assistance in violation of section 1902(a)(23). "(2) For purposes of this subsection, the term 'case management services' means services which will assist individuals eligible under the plan in gaining access to needed medical, social, educational, and other services. (2) Section 1915(b) of such Act (42 U.S.C. 1396n(b)) is amended by adding at the end thereof (after and below paragraph (4)) the following: "No waiver under this subsection may restrict the choice of the individual in receiving services under section 1905(a)(4)(C).". (b) EFFECTIVE DATE.—The amendments made by this section shall apply to services furnished on or after the date of the enactment of this Act.

State and local governments. 42 USC 1396a.

42 USC 1396d. 42 USC 1396n note.

SEC. 9509. REVALUATION OF ASSETS.

(a) REVALUATION OF ASSETS.—Section 1902(a)(13) of the Social Security Act (42 U.S.C. 1396a(a)(13)), as amended by section 9505 of this Act, is further amended— (1) in subparagraph (B), by striking out "hospitals, skilled nursing facilities, and intermediate care facilities" and inserting in lieu thereof "hospitals"; (2) by striking out "and" at the end of subparagraph (C); (3) by redesignating subparagraphs (C) and (D) as subparagraphs (D) and (E); and (4) by inserting after subparagraph (B) the following new subparagraph: "(C) that the State shall provide assurances satisfactory to the Secretary that the valuation of capital assets, for purposes of determining payment rates for skilled nursing facilities and intermediate care facilities, will not be increased (as measured from the date of acquisition by the seller to the date of the change of ownership), solely as a result of a change of ownership, by more than the lesser of— "(i) one-half of the percentage increase (as measured over the same period of time, or, if necessary, as extrapolated retrospectively by the Secretary) in the Dodge Construction Systems Costs for Nursing Homes, applied in the aggregate with respect to those facilities which have undergone a change of ownership during the fiscal year, or "(ii) one-half of the percentage increase (as measured over the same period of time) in the Consumer Price Index for All Urban Consumers (United States city average);". (b) EFFECTIVE DATES.—(1) Except as provided in paragraphs (2) and (3), the amendments made by this section shall apply to medical assistance furnished on or after October 1, 1985, but only with respect to changes of ownership occurring on or after such date. (2) The amendments made by this section shall not apply with respect to a change of ownership pursuant to an enforceable agreement entered into prior to October 1, 1985.

State and local governments.

42 USC 1396a note.

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 100 STAT. 212 State and local governments. 42 USC 1396.

42 USC 1396a note.

PUBLIC LAW 99-272—APR. 7, 1986

(3) 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 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 the requirements imposed by the amendments made by this section 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. (c) GAO STUDY.—The Comptroller General shall conduct a study of the effects of the amendments made by this section, and shall report the results of such study to the Congress two years after the date of the enactment of this Act. SEC. 9510. BEGINNING DATE OF OPTIONAL COVERAGE FOR INDIVIDUALS IN MEDICAL INSTITUTIONS.

42 USC 1396a note.

(a) COVERAGE.—Section 1902(a)(10)(A)(ii)(V) of the Social Security Act (42 U.S.C. 1396a(a)(10)(A)(ii)(V)) is amended by inserting "for a period of not less than 30 consecutive days (with eligibility by reason of this subclause beginning on the first day of such period)" after "are in a medical institution". (b) EFFECTIVE DATE,—The amendment made by this section shall apply with respect to payment for services furnished on or after October 1, 1985. SEC. 95n. OPTIONAL COVERAGE OF CHILDREN. (a) STATE OPTION.—Section 1905(n)(2) of the Social Security Act (42

42 USC 1396d note.

State and local governments.

U.S.C. 1396d(h)(2)) is amended by inserting "(or such earlier date as the State may designate)" after "September 30, 1983". (b) EFFECTIVE DATE.—The amendment made by this section shall apply to services furnished on or after April 1, 1986. SEC. 9512. OVERPAYMENT RECOVERY RULES. (a) OVERPAYMENT RECOVERY.-—-Section 1903(d)(2) of the Social Security Act (42 U.S.C. 1396b(d)(2)) is amended— (1) by inserting "(A)" after "(2)"; (2) by designating the second sentence as subparagraph (B), properly indented and aligned below subparagraph (A); and (3) by adding at the end thereof the following new subparagraphs: "(C) For purposes of this subsection, when an overpayment is discovered, which was made by a State to a person or other entity, the State shall have a period of 60 days in which to recover or attempt to recover such overpayment before adjustment is made in the Federal payment to such State on account of such overpayment. Except as otherwise provided in subparagraph (D), the adjustment in the Federal payment shall be made at the end of the 60 days, whether or not recovery was made. "(D) lii any case where the State is unable to recover a debt which represents an overpayment (or any portion thereof) made to a person or other entity on account of such debt having been discharged in bankruptcy or otherwise being uncollectable, no adjustment shall be made in the Federal payment to such State on account of such overpayment (or portion thereof).".

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100 STAT. 213

(b) EFFECTIVE DATE.—The amendments made by this section shall apply to overpayments identified for quarters beginning on or after October 1, 1985.

42 USC 1396b note.

SEC. 9514. REGULATIONS FOR INTERMEDIATE CARE FACILITIES FOR THE MENTALLY RETARDED.

The Secretary of Health and Human Services shall promulgate proposed regulations revising standards for intermediate care facilities for the mentally retarded under title XIX of the Social Security Act within 60 days after the date of the enactment of this Act.

42 USC 1396d note. 42 USC 1396.

SEC. 9515. LIFE SAFETY CODE RECOGNITION.

For purposes of section 1905(c) of the Social Security Act, an intermediate care facility for the mentally retarded (as defined in section 1905(d) of such Act) which meets the requirements of the relevant sections of the 1985 edition of the Life Safety Code of the National Fire Protection Association shall be deemed to meet the fire safety requirements for intermediate care facilities for the mentally retarded until such time as the Secretary specifies a later edition of the Life Safety Code for purposes of such section, or the Secretary determines that more stringent standards are necessary to protect the safety of residents of such facilities.

42 USC 1396d and notes.

SEC. 9516. CORRECTION AND REDUCTION PLANS FOR INTERMEDIATE CARE FACILITIES FOR THE MENTALLY RETARDED.

(a) CORRECTION AND REDUCTION PLANS.—Title XIX of the Social Security Act is amended by adding at the end thereof the following new subsection: CORRECTION AND REDUCTION PLANS FOR INTERMEDIATE CARE FACILITIES FOR THE MENTALLY RETARDED

"SEC. 1919. (a) If the Secretary finds that an intermediate care facility for the mentally retarded has substantial deficiencies which do not pose an immediate threat to the health and safety of residents, the State may elect, subject to the limitations in this section, to— "(1) submit, within the number of days specified by the Secretary in regulations which apply to submission of compliance plans with respect to deficiencies of such type, a written plan of correction which details the extent of the facility's current compliance with the standards promulgated by the Secretary, including all deficiencies identified during a validation survey, and which provides for a timetable for completion of necessary steps to correct all staffing deficiencies within 6 months, and a timetable for rectifying all physical plant deficiencies within 6 months; or "(2) submit, within a time period consisting of the number of days specified for submissions under paragraph (1) plus 35 days, a written plan for permanently reducing the number of certified beds, within a maximum of 36 months, in order to permit any noncomplying buildings (or distinct parts thereof) to be vacated and any staffing deficiencies to be corrected (hereinafter in this section referred to as a 'reduction plan'). "(b) As conditions of approval of any reduction plan submitted pursuant to subsection (a)(2), the State must— "(1) provide for a hearing to be held at the affected facility at least 35 days prior to submission of the reduction plan, with

State and local governments. 42 USC 1396r.

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Rh provisions might be carried out before the winter season should set in; but action was had only after a delay of many weeks. The commission provided for by law, composed of Messrs. George W. Manypenny, John B. Bowman, John J. Russell, Alfred B. Meacham, and Otto Mears, proceeded to the Ute Reservation to carry the law into effect. In order to obtain the ratification of the agreement it was necessary to call together the Indians who were scattered over a large extent of country. The sudden and deplorable death of Chief Ouray, a man of advanced views, great sagacity, remarkable tact and noble impulses, indeed probably the wisest Indian of this generation, whose influence upon his people had always been in favor of peace, good order, and progress, seemed for a time to render the success of the labors of the commission doubtful. But the ratification of the agreement was finally signed by the requisite number of Indians within the limitation of time specified by the act of Congress. The commission reported that the Indians, presumably guilty of the murder of Agent Meeker and the agency employes, had fled beyond the boundaries of the United States. The payment of annuities due has been proceeded with according to law. It would have been possible to make the necessary preparations for the individual settlement of the Ute Indians upon the farm lands designated for them had not the winter season intervened. This delay is to be regretted, and I can only say that it would have been avoided had Congress acted as promptly upon the agreement as was repeatedly and urgently recommended by this department.

A new trouble threatened seriously to disturb peace and quiet on the Ute Reservation again, after the ratification of the agreement had been obtained, and everything seemed to favor a final and prosperous settlement of the trouble. On the evening of the 29th of September, a young Ute Indian, son of a chief, was killed by a young man named Jackson, belonging to a party of freighters. It has been alleged by some that the Indian fired first at the white men, and that Jackson killed him in self-defense. On the other hand, the report of Major Offley, Nineteenth Regiment United States Infantry, represents the conduct of the Indian as friendly and peaceable, and, in the language of Captain Pollock, Third United States Infantry, whom Major Offley quotes, calls the deed “a wanton and unprovoked murder of an Indian by a reckless, halfdrunken teamster.” Jackson was arrested, and, under the escort of three white citizens of Colorado and one Indian, he was to be taken to Gunnison City to be tried; but the party was intercepted on its way, by a number of Indians and white men; the prisoner was taken from them, and his fate is not known, although the probability is that he was killed. In Major Offley's report the opinion is expressed that this was done at the instigation of some white men, possibly freighters, who deemed the killing of the murderer of the young Indian necessary to protect themselves in the pursuit of their business from the possible revenge of the Indians. Captain Pollock calls this “a clear case of lynching, which,


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PUBLIC LAW 99-272—APR. 7, 1986

reasonable notice thereof to the staff and residents of the facility, responsible members of the residents' families, and the general public; "(2) demonstrate that the State has successfully provided home and community services similar to the services proposed to be provided under the reduction plan for similar individuals eligible for medical assistance; and "(3) provide assurances that the requirements of subsection (c) shall be met with respect to the reduction plan. "(c) The reduction plan must— "(1) identify the number and service needs of existing facility residents to be provided home or community services and the timetable for providing such services, in 6 month intervals, within the 36-month period; "(2) describe the methods to be used to select such residents for home and community services and to develop the alternative home and community services to meet their needs effectively; "(3) describe the necessary safeguards that will be applied to protect the health and welfare of the former residents of the facility who are to receive home or community services, including adequate standards for consumer and provider participation and assurances that applicable State licensure and applicable State and Federal certification requirements will be met in providing such home or community services; "(4) provide that residents of the affected facility who are eligible for medical assistance while in the facility shall, at their option, be placed in another setting (or another part of the affected facility) so as to retain their eligibility for medical assistance; "(5) specify the actions which will be taken to protect the health and safety of the residents who remain in the affected facility while the reduction plan is in effect; "(6) provide that the ratio of qualified staff to residents at the affected facility (or the part thereof) which is subject to the reduction plan will be the higher of— "(A) the ratio which the Secretary determines is necessary in order to assure the health and safety of the residents of such facility (or part thereof); or "(B) the ratio which was in effect at the time that the finding of substantial deficiencies (referred to in subsection (a)) was made; and "(7) provide for the protection of the interests of employees affected by actions under the reduction plan, including— "(A) arrangements to preserve employee rights and benefits; "(B) training and retraining of such employees where necessary; "(C) redeployment of such employees to community settings under the reduction plan; and (D) making maximum efforts to guarantee the employment of such employees (but this requirement shall not be construed to guarantee the employment of any employee). "(d)(1) The Secretary must provide for a period of not less than 30 days after the submission of a reduction plan by a State, during which comments on such reduction plan may be submitted to the Secretary, before the Secretary approves or disapproves such reduction plan.

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100 STAT. 215

"(2) If the Secretary approves more than 15 reduction plans under this section in any fiscal year, any reduction plans approved in addition to the first 15 such plans approved, must be for a facility (or part thereof) for which the costs of correcting the substantial deficiencies (referred to in subsection (a)) are $2,000,000 or greater (as demonstrated by the State to the satisfaction of the Secretary). "(e)(1) If the Secretary, at the conclusion of the 6-month plan of correction described in subsection (a)(1), determines that the State has substantially failed to correct the deficiencies described in subsection (a), the Secretary may terminate the facility's provider agreement in accordance with the provisions of section 1910(c). "(2) In the case of a reduction plan described in subsection (a)(2), if the Secretary determines, at the conclusion of the initial 6-month period or any 6-month interval thereafter, that the State has substantially failed to meet the requirements of subsection (c), the Secretary shall— "(A) terminate the facility's provider agreement in accordance with the provisions of section 1910(c); or "(B) if the State has failed to meet such requirements despite good faith efforts, disallow, for purposes of Federal financial participation, an amount equal to 5 percent of the cost of care for all eligible individuals in the facility for each month for which the State fails to meet such requirements. "(f) The provisions of this section shall apply only to plans of correction and reduction plans approved by the Secretary within 3 years after the effective date of final regulations implementing this section.". (b) EFFECTIVE DATE.—(1) The amendment made by this section shall become effective on the date of the enactment of this Act. (2) The Secretary of Health and Human Services shall issue a notice of proposed rulemaking with respect to section 1919 of the Social Security Act within 60 days after the date of the enactment of this Act, and shall allow a period of 30 days for comment thereon prior to promulgating final regulations implementing such section. (c) REPORT.—'The Secretary of Health and Human Services shall submit a report to the Congress on the implementation and results of section 1919 of the Social Security Act. Such report shall be submitted not later than 30 months after the effective date of final regulations promulgated to implement such section.

42 USC 13961. Law enforcement and crime.

42 USC 1396r note.

42 USC 1396r note.

SEC. 9517. MODIFYING APPLICATION OF MEDICAID HMO PROVISIONS FOR CERTAIN HEALTH CENTERS. (a) WAIVING APPLICATION OF 75 PERCENT RULE AND CERTAIN ORGANIZATIONAL REQUIREMENTS.—Section 1903(m)(2) of the Social

Security Act (42 U.S.C. 1396b(m)(2)) is amended— (1) in subparagraph (A), by striking out "(B) and (C)" and inserting in lieu thereof "(B), (C), and (G)"; (2) in subparagraph (F)— (A) by striking out "(F)(i) In the case of a contract with a Contracts. health maintenance organization described in clause (ii)" and inserting in lieu thereof "(F) in the case of a contract with an entity described in subparagraph (G) or with a qualified health maintenance organization (as defined in section 1310(d) of the Public Health Service Act) which 42 USC 300e-9. meets the requirement of subparagraph (A)(ii)"; (B) by striking out "such organization" and inserting in lieu thereof "such entity or organization"; and

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 100 STAT. 216

42 USC 254b, 254c. 40 USC app. 1.

PUBLIC LAW 99-272—APR. 7, 1986

(C) by striking out clause (ii); and (3) by adding at the end thereof the following new subparagraph: "(G) In the case of an entity which is receiving (and has received during the previous two years) a grant of at least $100,000 under section 329(d)(1)(A) or 330(d)(1) of the Public Health Service Act or is receiving (and has received during the previous two years) at least $100,000 (by grant, subgrant, or subcontract) under the Appalachian Regional Development Act of 1965, clauses (i) and (ii) of subparagraph (A) shall not apply.". (b) PERMITTING 6-MONTH CONTINUATION OF BENEFITS.—Section

Ante, p. 215.

42 USC 1396b note.

42 USC 1396n.

1902(e)(2) of such Act (42 U.S.C. 1396a(e)(2)) is amended— (1) in subparagraph (A)— (A) by inserting "or with an entity described in section 1903(m)(2)(G)" after "Public Health Service Act)"; and (B) by inserting "or entity" before the period; and (2) in subparagraph (B)— (A) by striking out "a health maintenance organization" and inserting in lieu thereof "an organization or entity"; and (B) by inserting "or entity" after "the organization". (c) HEALTH INSURING ORGANIZATIONS.—(1) Section 1903(m)(2)(A) of the Social Security Act (42 U.S.C. 1396b(m)(2)(A)) is amended, in the matter before clause (i)— (1) by inserting "(including a health insuring organization)" after "any entity"; and (2) by inserting "(directly or through arrangements with providers of services)" after responsible for the provision' (2)(A) Except as provided in subparagraph (B), the amendments made by paragraph (1) shall apply to expenditures incurred for health insuring organizations which first become operational on or after January 1, 1986. (B) In the case of a health insuring organization— (i) which first becomes operational on or after January 1, 1986, but (ii) for which the Secretary of Health and Human Services has waived, under section 1915(b) of the Social Security Act and before such date, certain requirements of section 1902 of such Act, clauses (ii) and (iv) of section 1903(m)(2)(A) of such Act shall not apply during the period for which such waiver is effective. SEC. 9518. EXTENSION OF MMIS DEADLINE.

42 USC 1396b note.

(a) NEW DEADLINE.—Section 1903(r)(l)(B) of the Social Security Act (42 U.S.C. 1396b(r)(l)(B)) is amended by striking out "the earlier o f and all that follows through the end of subparagraph (B) and inserting in lieu thereof "September 30, 1985.". (b) EFFECTIVE DATE.—The amendment made by subsection (a) shall apply to payment under section 1903(a) of the Social Security Act for calendar quarters beginning on or after October 1, 1982. SEC. 9519. REPORT ON ADJUSTMENT IN MEDICAID PAYMENTS FOR HOSPITALS SERVING DISPROPORTIONATE NUMBERS OF LOW INCOME PATIENTS.

The Secretary of Health and Human Services shall transmit to Congress, not later than October 1, 1986, a report that—

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(1) describes the methodology used by States under section 1902(a)(13)(A) of the Social Security Act, in their making pay- 42 USC 1396a. ments to hospitals, in taking into account the situation of hospitals that serve a disproportionate number of low income patients with special needs; (2) identifies each of those hospitals that have had the amount of their payments under that title adjusted under that section; and (3) for each of those hospitals, describes the proportion of total inpatient-days attributable to low income patients and the proportion of total inpatient-days attributable to patients entitled to medical assistance under that title. SEC. 9520. TASK FORCE ON TECHNOLOGY-DEPENDENT CHILDREN.

(a) APPOINTMENT OF TASK FORCE.—The Secretary of Health and

Human Services, within six months after the date of the enactment of this Act, shall establish a task force concerning alternatives to institutional care for technology-dependent children (as defined in subsection (e)). (b) MEMBERSHIP.—The task force shall include representatives of Federal and State agencies with responsibilities relating to child health, health insurers, large employers (including those that selfinsure for health care costs), providers of health care to technologydependent children, and parents of technology-dependent children. (c) FUNCTIONS OF TASK FORCE.—The task force shall— (1) identify barriers that prevent the provision of appropriate care in a home or community setting to meet the special needs of technology-dependent children; and (2) recommend changes in the provision and financing of health care in private and public health care programs (including appropriate joint public-private initiatives) so as to provide home and community-based alternatives to the institutionalization of technology-dependent children. (d) REPORT.—The task force shall make a final report to the Secretary and to the Congress on its activities not later than two years after the date of the enactment of this Act. (e) DEFINITION.—In this section, the term "technology-dependent child" means a child who has a chronic illness which makes the child dependent upon the continuing use of medical care technology (such as a ventilator).

42 USC 1396a note.

SEC. 9522. EXPANSION OF SERVICES UNDER DEMONSTRATION WAIVERS.

In the case of waivers granted to (or submitted during 1986 by) the Oregon. State of Oregon under section 1915(b) of the Social Security Act, the 42 USC 1396n. Secretary of Health and Human Services may waive the requirements of section 1903(m)(2)(A) of such Act with respect to any entity 42 USC 1396b. providing services under any such waiver if such entity does not provide more than 5 of the services listed in section 1903(m)(2)(A) of such Act, and does not provide inpatient hospital services. SEC. 9523. EXTENSION OF TEXAS WAIVER PROJECT.

(a) RENEWED APPROVAL.—Notwithstanding any limitations contained in section 1115 of the Social Security Act but subject to 42 USC 1315. subsection (b) of this section, the Secretary of Health and Human Services, upon application, shall renew approval of demonstration project number ll-P-97473/6-06 ("Modifications under the Texas System of Care for the Elderly: Alternatives to the Institutionalized

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Aged"), previously approved under that section, until January 1, 1989. (b) TERMS AND CONDITIONS.—The Secretary's renewed approval of

the project under subsection (a)— (1) shall be on the same terms and conditions as applied to the project as of December 31, 1985; and (2) shall remain in effect until such time as the Secretary finds that the applicant no longer complies with such terms and conditions. SEC. 9524. WISCONSIN HEALTH MAINTENANCE ORGANIZATION WAIVER. 42 USC 1396n. 42 USC 1396b. 42 USC 1396a.

The waiver granted to the State of Wisconsin pursuant to section 1915(b) of the Social Security Act relating to the requirements of section 1903(m) of such Act in conjunction with a waiver of the requirements of section 1902(a)(23) of such Act shall, upon request by the State, be reinstated, and shall be renewable for terms of 2 years, subject to the showings required generally under section 1915(b) of such Act. SEC. 9525. NEW JERSEY DEMONSTRATION PROJECT RELATING TO TRAINING OF AFDC RECIPIENTS AS HOME HEALTH AIDES.

42 USC 632a.

The Secretary of Health and Human Services shall continue for one additional year the demonstration project conducted by the State of New Jersey pursuant to section 966 of the Omnibus Reconciliation Act of 1980. Federal matching for such demonstration project shall be 50 percent. SEC. 9526. REFERENCE TO PROVISIONS OF LAW PROVIDING COVERAGE UNDER, OR DIRECTLY AFFECTING, THE MEDICAID PROGRAM.

Title XIX of the Social Security Act is amended by adding at the end thereof the following new section: " R E F E R E N C E S TO L A W S DIRECTLY A F F E C T I N G MEDICAID PROGRAM

42 USC 1396s.

42 USC 602.

42 USC 605.

42 USC 614. 42 USC 1382h.

42 USC 673.

"SEC. 1920. (a) AUTHORITY OR REQUIREMENTS TO COVER ADDITIONAL

INDIVIDUALS.—For provisions of law which make additional individuals eligible for medical assistance under this title, see the following: "(1) AFDC—(A) Section 402(a)(37) of this Act (relating to individuals who lose AFDC eligibility due to increased earnings). "(B) Section 406(h) of this Act (relating to individuals who lose AFDC eligibility due to increased collection of child or spousal support). (C) Section 414(g) of this Act (relating to certain individuals participating in work supplementation programs). "(2) SSL—Section 1619 of this Act (relating to benefits for individuals who perform substantial gainful activity despite severe medical impairment). "(3) FOSTER CARE AND ADOPTION ASSISTANCE.—Section 473(b) of this Act (relating to medical Eissistance for children in foster care and for adopted children). "(4) REFUGEE ASSISTANCE.—Section 412(e)(5) of the Immigra-

8 USC 1522. 42 USC 1396a note.

tion and Nationality Act (relating to medical assistance for certain refu^rees). "(5) MISCELLANEOUS.—(A) Section 230 of Public Law 93-66 (relating to deeming eligible for medical assistance certain essential persons).

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"(B) Section 231 of Public Law 93-66 (relating to deeming eligible for medical assistance certain persons in medical institutions). "(C) Section 232 of Public Law 93-66 (relating to deeming eligible for medical assistance certain blind and disabled medically indigent persons). "(D) Section 13(c) of Public Law 93-233 (relating to deeming eligible for medical assistance certain individuals receiving mandatory State supplementary payments). "(E) Section 503 of Public Law 94-566 (relating to deeming eligible for medical assistance certain individuals who would be eligible for supplemental security income benefits but for costof-living increases in social security benefits). "(F) Section 310(b)(1) of Public Law 96-272 (relating to continuing medicaid eligibility for certain recipients of Veterans' Administration pensions). "(b) ADDITIONAL STATE PLAN REQUIREMENTS.—For other provisions of law that establish additional requirements for State plans to be approved under this title, see the following: "(1) Section 1618 of this Act (relating to requirement for operation of certain State supplementation programs). "(2) Section 212(a) of Public Law 93-66 (relating to requiring mandatory minimum State supplementation of SSI benefits program)..

42 USC 1396a note. 42 USC 1396a note. 42 USC 1396a note. 42 USC 1396a note. 42 USC 1396a note.

42 USC 1382g. 42 USC 1382 note.

SEC. 9527. CHILDREN WITH SPECIAL HEALTH CARE NEEDS.

(a) Section 501(a)(4) of the Social Security Act (42 U.S.C. 701(a)(4)) is amended by striking out "children who are crippled or who are suffering from conditions leading to crippling" and inserting in lieu thereof "children who are 'children with special health care needs' or who are suffering from conditions leading to such status". Ob) Section 501(a) of such Act is amended by striking out "crippled children" in the matter following paragraph (4) and inserting in lieu thereof "children with special health care needs". (c) Section 5010t>Xl)(A) of such Act is amended by striking out "crippled children'services" and inserting in lieu thereof "services for children with special health care needs". (d) Section 502(a)(2)(B) of such Act is amended— 42 USC 702. (1) by striking out "crippled children's programs" and inserting in lieu thereof "programs for children with special health care needs"; and (2) by striking out "crippled children'services" and inserting in lieu thereof "services for children with special health care needs". (e) Sections 504(b)(l) and 5090t)) of such Act are each amended by 42 USC 704, 709. striking out "crippled children" and inserting in lieu thereof "children with special health care needs". SEC. 9528. ANNUAL CALCULATION OF FEDERAL MEDICAL ASSISTANCE PERCENTAGE.

(a) ANNUAL CALCULATION.—Section 1101(a)(8)(P) of the Social 42usei30i. Security Act is amended— (1) by striking out "even-numbered"; and (2) by striking out "eight quarters" and inserting in lieu thereof "four quarters". (b) EFFECTIVE DATE.—The amendments made by this section shall 42 USC 1301 apply to the Federal percentage (and Federal medical assistance note.

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percentage) for fiscal years 1987 and thereafter. Such amendments shall apply without regard to the requirement of section 1101(a)(8)(B) of the Social Security Act relating to the promulgation of the Federal percentage prior to November 30 of the year preceding the year in which the new Federal percentage becomes applicable. The Secretary of Health and Human Services shall promulgate such new percentage for fiscal year 1987 as soon as practicable after the date of the enactment of this Act. SEC. 9529. MEDICAID COVERAGE RELATING TO ADOPTION ASSISTANCE AND FOSTER CARE.

42 USC 673. 42 USC 606. 42 USC 601. 42 USC 1396a note.

(a) STATE OF RESIDENCE.—(1) Section 1902(a) of the Social Security Act (42 U.S.C. 1396a(a)) is amended by adding at the end thereof the following: "For purposes of this title, any child who meets the requirements of paragraph (1) or (2) of section 473(b) shall be deemed to be a dependent child as defined in section 406 and shall be deemed to be a recipient of aid to families with dependent children under part A of title IV in the State where such child resides.". (2) EFFECTIVE DATE.—The amendment made by paragraph (1) shall apply to medical assistance furnished on or after the first calendar quarter that begins more than 90 days after the date of the enactment of this Act. (b) ELIGIBILITY

42 USC 1396d. 42 USC 670.

42 USC 1396a note.

OF CERTAIN

ADOPTED CHILDREN.—(1)

Section

1902(a)(10)(A)(ii) of the Social Security Act, as amended by section 9505 of this Act, is amended— (A) by striking out "or" at the end of subclause (VI); (B) by striking out the semicolon at the end of subclause (VII) and inserting in lieu thereof ", or"; and (C) by adding after subclause (VII) the following new subclause: "(VIII) who is a child described in section 1905(a)(i)— "(aa) for whom there is in effect an adoption assistance agreement (other than an agreement under part E of title IV) between the State and an adoptive parent or parents, "(bb) who the State agency responsible for adoption assistance has determined cannot be placed with adoptive parents without medical assistance because such child has special needs for medical or rehabilitative care, and "(cc) who was eligible for medical assistance under the State plan prior to the adoption assistance agreement being entered into, or who would have been eligible for medical assistance at such time if the eligibility standards and methodologies of the State's foster care program under part E of title IV were applied rather than the eligibility standards and methodologies of the State's aid to families with dependent children program under part A of title IV;". (2) In the case of an adoption assistance agreement (other than an agreement under part E of title IV of the Social Security Act) entered into before the date of the enactment of this Act— (A) the requirements of subdivisions (aa) and (bb) of section 1902(a)(10)(A)(ii)(VIII) of the Social Security Act shall be deemed to be met if the State agency responsible for adoption assistance agreements determines that—

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(i) at the time of adoptive placement the child had special needs for medical or rehabilitative care that made the child difficult to place; and (ii) there is in effect with respect to such child an adoption assistance agreement between the State and an adoptive parent or parents; and (B) the requirement of subdivision (cc) of such section shall be deemed to be met if the child was found by the State to be eligible for medical assistance prior to such agreement being entered into. (3) This subsection, and the amendments made by this subsection, 42 USC 1396a shall apply to adoption assistance agreements entered into before, note. on, or after the date of the enactment of this Act.

Subtitle C—Task Force on Long-Term Health Care Policies SEC. 9601. RECOMMENDATIONS FOR LONG-TERM HEALTH CARE POLICIES. (a) ESTABLISHMENT OF TASK FORCE.—(1) The Secretary of Health

and Human Services (hereinafter in this section referred to as the "Secretary") shall establish a Task Force on Long-Term Health Care Policies (hereinafter in this section referred to as the "Task Force"). The Task Force shall be established not later than 60 days after the date of the enactment of this Act and in consultation with the National Association of Insurance Commissioners. (b) COMPOSITION OF TASK FORCE.—The Task Force shall be composed of 18 members, which shall include— (1) two members representing the National Association of Insurance Commissioners, (2) three members representing Federal and State agencies with responsibilities relating to health or the elderly, (3) three members representing private insurers, (4) three members from organizations representing consumers or the elderly, and (5) three members from organizations representing providers of long-term health care services. The Secretary shall designate a member of the Task Force as chair. (c) DEVELOPMENT OF RECOMMENDATIONS.—The Task Force shall develop recommendations for long-term health care policies, including recommendations designed— (1) to limit marketing and agent abuse for those policies, (2) to assure the dissemination of such information to consumers as is necessary to permit informed choice in purchasing the policies and to reduce the purchase of unnecessary or duplicative coverage, (3) to assure that benefits provided under the policies are reasonable in relationship to premiums charged, and (4) to promote the development and availability of long-term health care policies which meet these recommendations. (d) REPORT.—Not later than 18 months after the date of the enactment of this Act, the Task Force shall report to the Secretary, to the Committee on Energy and Commerce of the House of Representatives and to the Committee on Labor and Human Resources of the Senate respecting—

42 USC 1395b note.

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(1) the recommendations developed under subsection (c), including an explanation of the reasons for their selection, and (2) such recommendations for additional activities respecting long-term health care policies as the Task Force finds appropriate. The Secretary, in cooperation with the National Association of Insurance Commissioners, shall provide for the dissemination of the report to each of the States. (e) TERMINATION OF TASK FORCE.—The Task Force shall terminate 90 days after the date of submission of the report required under subsection (d). (f) REPORTS OF SECRETARY.—The Secretary shall transmit to the Committee on Energy and Commerce of the House of Representatives and to the Committee on Labor and Human Resources of the Senate two reports on— (1) actions taken by the States to implement the recommendations developed under this section and to recommend additional action; and (2) recommendations for legislative and administrative action, if any, needed to respond to issues raised by the Task Force or to improve consumer protection with respect to long-term health care policies. The first report shall be transmitted 18 months after the date the report is made under subsection (d), and the second report shall be transmitted 18 months later. (g) LONG-TERM HEALTH CARE POLICY DEFINED.—In this section, the term "long-term health care policy" means an insurance policy, or similar health benefits plan, which is designed for or marketed as providing (or making payments for) health care services (such as nursing home care and home health care) or related services (which may include home and community-based services), or both, over an extended period of time. (h) ASSURANCE OF STATES' JURISDICTION.—Nothing in this section shall be construed as recommending Federal preemption of the States in overseeing the operation and regulation of insurance carriers in their respective jurisdictions.

TITLE X—PRIVATE HEALTH INSURANCE COVERAGE SEC. 10001. EMPLOYERS REQUIRED TO PROVIDE CERTAIN EMPLOYEES AND FAMILY MEMBERS WITH CONTINUED HEALTH INSURANCE COVERAGE AT GROUP RATES (INTERNAL REVENUE CODE AMENDMENTS). (a) DENIAL OF DEDUCTION FOR EMPLOYER CONTRIBUTION TO PLAN.—

26 USC 162.

Subsection (i) of section 162 of the Internal Revenue Code of 1954 (relating to deduction for trade or business expenses with respect to group health plans) is amended by redesignating paragraph (2) as paragraph (3) and by inserting after paragraph (1) the following new paragraph: "(2) PLANS MUST PROVIDE CONTINUATION COVERAGE TO CERTAIN INDIVIDUALS.—

"(A) IN GENERAL.—No deduction shall be allowed under this section for expenses paid or incurred by an employer for any group health plan maintained by such employer

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Page:Collodi - The Story of a Puppet, translation Murray, 1892.djvu/128

 'I weigh next to nothing. I am as light as a feather.'

And without waiting for more Pinocchio jumped at once on the Pigeon's back, and putting a leg on each side of him as men do on horseback, he exclaimed joyfully:

'Gallop, gallop, my little horse, for I am anxious to arrive quickly! . . .'

The Pigeon took flight, and in a few minutes had soared so high that they almost touched the clouds. Finding himself at such an immense height the puppet had the curiosity to turn and look down; but his head spun round, and he became so frightened, that to save himself from the danger of falling he wound his arms tightly round the neck of his feathered steed.

They flew all day. Towards evening the Pigeon said:

'I am very thirsty!'

'And I am very hungry!' rejoined Pinocchio.

'Let us stop at that dovecot for a few minutes; and then we will continue our journey that we may reach the seashore by dawn to-morrow.'

They went into a deserted dovecot, where they found nothing but a basin full of water and a basket full of vetch.

The puppet had never in his life been able to eat vetch: according to him it made him sick and revolted him. That


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unless all such plans maintained by such employer meet the continuing coverage requirements of subsection (k). "(B) EXCEPTION FOR CERTAIN SMALL EMPLOYERS, ETC.—

Subparagraph (A) shall not apply to any plan described in section 106(b)(2).". (b) DENIAL OF EXCLUSION FOR HIGHLY COMPENSATED INDIVID-

26 USC 106.

UALS.—Section 106 of the Internal Revenue Code of 1954 (relating to contributions by employer to accident and health plans) is amended by inserting "(a) IN GENERAL.—" before "Gross" and by inserting at the end thereof the following new subsection: "(b) EXCEPTION FOR HIGHLY COMPENSATED INDIVIDUALS WHERE PLAN FAILS TO PROVIDE CERTAIN CONTINUATION COVERAGE.—

"(1) IN GENERAL.—Subsection (a) shall not apply to any amount contributed by an employer on behalf of a highly compensated individual (within the meaning of section 105(h)(5)) to a group health plan maintained by such employer unless all such plans maintained by such employer meet the continuing coverage requirements of section 162(k). "(2) EXCEPTION FOR CERTAIN PLANS.—Paragraph (1) shall not apply to any— "(A) group health plan for any calendar year if all employers maintaining such plan normally employed fewer than 20 employees on a typical business day during the preceding calendar year, "(B) governmental plan (within the meaning of section 414(d)), or "(C) church plan (within the meaning of section 414(e)). Under regulations, rules similar to the rules of subsections (a) and (b) of section 52 (relating to employers under common control) shall apply for purposes of subparagraph (A). "(3) GROUP HEALTH PLAN.—For purposes of this subsection, the term 'group health plan' has the meaning given such term by section 162(i)(3).". (c) CONTINUATION COVERAGE REQUIREMENTS.—Section 162 of the

Internal Revenue Code of 1954 is amended by redesignating subsec- 26 USC 162. tion (k) as subsection (1) and by inserting after subsection (j) the following new subsection: "(k) CONTINUATION COVERAGE REQUIREMENTS OF GROUP HEALTH PLANS.—

"(1) IN GENERAL.—For purposes of subsection (i)(2) and section 106(b)(1), a group health plan meets the requirements of this subsection only if each qualified beneficiary who would lose coverage under the plan as a result of a qualifying event is entitled to elect, within the election period, continuation coverage under the plan. "(2) CONTINUATION COVERAGE.—For purposes of paragraph (1),

the term 'continuation coverage' means coverage under the plan which meets the following requirements: "(A) TYPE OF BENEFIT COVERAGE.—The coverage must consist of coverage which, as of the time the coverage is being provided, is identical to the coverage provided under the plan to similarly situated beneficiaries under the plan with respect to whom a qualifying event has not occurred. "(B) PERIOD OF COVERAGE.—The coverage must extend for at least the period beginning on the date of the qualifying event and ending not earlier than the earliest of the following-

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PUBLIC LAW 99-272—APR. 7, 1986 "(i) MAXIMUM PERIOD.—In the case of— "(I) a qualifying event described in paragraph (3)(B) (relating to terminations and reduced hours), the date which is 18 months after the date of the qualifying event, and "(II) any qualifying event not described in subclause (I), the date which is 36 months after the date of the qualifying event, "(ii) END OF PLAN.—The date on which the employer ceases to provide any group health plan to any employee. "(iii) FAILURE TO PAY PREMIUM.—The date on which coverage ceases under the plan by reason of a failure to make timely payment of any premium required under the plan with respect to the qualified beneficiary. "(iv) REEMPLOYMENT OR MEDICARE ELIGIBILITY.—The

42 USC 1395.

date on which the qualified beneficiary first becomes, after the date of the election— "(I) a covered employee under any other group health plan, or "(II) entitled to benefits under title XVIII of the Social Security Act. "(v) REMARRIAGE OF SPOUSE.—In the case of an individual who is a qualified beneficiary by reason of being the spouse of a covered employee, the date on which the beneficiary remarries and becomes covered under a group health plan. "(C) PREMIUM REQUIREMENTS.—The plan may require payment of a premium for any period of continuation coverage, except that such premium— "(i) shall not exceed 102 percent of the applicable premium for such period, and "(ii) may, at the election of the payor, be made in monthly installments. If an election is made after the qualifying event, the plan shall permit payment for continuation coverage during the period preceding the election to be made within 45 days of the date of the election. "(D)

No

REQUIREMENT OF INSURABILITY.—The coverage

may not be conditioned upon, or discriminate on the basis of lack of, evidence of insurability. "(E) CONVERSION OPTION.—In the case of a qualified beneficiary whose period of continuation coverage expires under subparagraph (B)(i), the plan must, during the 180-day period ending on such expiration date, provide to the qualified beneficiary the option of enrollment under a conversion health plan otherwise generally available under the plan. "(3) QUALIFYING EVENT.—For purposes of this subsection, the term 'qualifying event' means, with respect to any covered employee, any of the following events which, but for the continuation coverage required under this subsection, would result in the loss of coverage of a qualified beneficiary: "(A) The death of the covered employee. "(B) The termination (other than by reason of such employee's gross misconduct), or reduction of hours, of the covered employee's employment.

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"(C) The divorce or legal separation of the covered employee from the employee's spouse. "(D) The covered employee becoming entitled to benefits under title XVIII of the Social Security Act. 42 USC 1395. "(E) A dependent child ceasing to be a dependent child under the generally applicable requirements of the plan. "(4) APPLICABLE PREMIUM.—For purposes of this subsection— "(A) IN GENERAL.—The term 'applicable premium' means, with respect to any period of continuation coverage of qualified beneficiaries, the cost to the plan for such period of the coverage for similarly situated beneficiaries with respect to whom a qualifying event has not occurred (without regard to whether such cost is paid by the employer or employee). "(B) SPECIAL RULE FOR SELF-INSURED PLANS.—To

the

extent that a plan is a self-insured plan— "(i) IN GENERAL.—Except as provided in clause (ii), the applicable premium for any period of continuation coverage of qualified beneficiaries shall be equal to a reasonable estimate of the cost of providing coverage for such period for similarly situated beneficiaries which— "(I) is determined on an actuarial basis, and "(II) takes into account such factors as the Secretary may prescribe in regulations. "(ii) DETERMINATION ON BASIS OF PAST COST.—If a plan administrator elects to have this clause apply, the applicable premium for any period of continuation coverage of qualified beneficiaries shall be equal to— "(I) the cost to the plan for similarly situated beneficiaries for the same period occurring during the preceding determination period under subparagraph (C), adjusted by "(II) the percentage increase or decrease in the implicit price deflator of the gross national product (calculated by the Department of Commerce and published in the Survey of Current Business) for the 12-month period ending on the last day of the sixth month of such preceding determination period. "(iii) CLAUSE (ii) NOT TO APPLY WHERE SIGNIFICANT

CHANGE.—A plan administrator may not elect to have clause (ii) apply in any case in which there is any significant difference, between the determination period and the preceding determination period, in coverage under, or in employees covered by, the plan. The determination under the preceding sentence for any determination period shall be made at the same time as the determination under subparagraph (C). "(C) DETERMINATION PERIOD.—The determination of any

applicable premium shall be made for a period of 12 months and shall be made before the beginning of such period. "(5) ELECTION.—For purposes of this subsection— "(A) ELECTION PERIOD.—The term 'election period' means the period which—

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PUBLIC LAW 99-272—APR. 7, 1986 "(i) begins not later than the date on which coverage terminates under the plan by reason of a qualifying event, "(ii) is of at least 60 days' duration, and "(iii) ends not earlier than 60 days after the later of— "(I) the date described in clause (i), or "(11) in the case of any qualified beneficiary who receives notice under paragraph (6)(D), the date of such notice. "(B)

EFFECT OF ELECTION ON OTHER BENEFICIARIES.—

Except as otherwise specified in an election, any election by a qualified beneficiary described in clause (i)(I) or (ii) of paragraph (7)(B) shall be deemed to include an election of continuation coverage on behalf of any other qualified beneficiary who would lose coverage under the plan by reason of the qualifying event. "(6) NOTICE REQUIREMENTS.—In accordance with regulations prescribed by the Secretary— "(A) the group health plan shall provide, at the time of commencement of coverage under the plan, written notice to each covered employee and spouse of the employee (if any) of the rights provided under this subsection, "(B) the employer of an employee under a plan must notify the plan administrator of a qualifying event described in subparagraph (A), (B), or (D) of paragraph (3) with respect to such employee within 30 days of the date of the qualifying event, "(C) each covered employee or qualified beneficiary is responsible for notifying the plan administrator of the occurrence of any qualifying event described in subparagraph (C) or (E) of paragraph (3), and "(D) the plan administrator shall notify— "(i) in the case of a qualifying event described in subparagraph (A), (B), or (D) of paragraph (3), any qualified beneficiary with respect to such event, and "(ii) in the case of a qualifying event described in subparagraph (C) or (E) of paragraph (3) where the covered employee notifies the plan administrator under subparagraph (C), any qualified beneficiary with respect to such event, of such beneficiary's rights under this subsection. For purposes of subparagraph (D), any notification shall be made within 14 days of the date on which the plan administrator is notified under subparagraph (B) or (C), whichever is applicable, and any such notification to an individual who is a qualified beneficiary as the spouse of the covered employee shall be treated as notification to all other qualified beneficiaries residing with such spouse at the time such notification is made. "(7) DEFINITIONS.—For purposes of this subsection— "(A) COVERED EMPLOYEE.—The term 'covered employee' means an individual who is (or was) provided coverage under a group health plan by virtue of the individual's employment or previous employment with an employer "(B) QUALIFIED BENEFICIARY.—

"(i) IN GENERAL.—The term 'qualified beneficiary' means, with respect to a covered employee under a group health plan, any other individual who, on the

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