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Page:United States Statutes at Large Volume 86.djvu/1432

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PUBLIC LAW 92-603~OCT. 30, 1972

[86 STAT.

DKMOXSTKATIOXS AXl) HEPOKTS; rKOSPECTIVE REIMBURSEMENT; EXTENDED C A R E; INTERMEDIATE CARE AND HOMEMAKER SERVICES; AMBULATORY SURGICAL C E N T E R S;

PHYSICIANS'

ASSISTANTS;

PERFORMANCE

INCEN-

TIVE CONTRACTS

42 USC 1395. 701^ "^^ ^^^^'

42 USC 13951. 42 USC i3 95t,

SEC. 222. (a)(1) The Secretary of Health, Education, and "Welfare, directly or through contracts with, or grants to, public or private agencies or organizations, shall develop and carry out experiments and demonstration projects designed to determine the relative advantages and disadvantages of various alternative methods of making payment on a prospective basis to hospitals, skilled nursing facilities, and other providers of services for care and services provided by them under title X VIII of the Social Security Act and under State plans approved under titles X IX and V of such Act, including alternative methods for classifying providers, for establishing prospective rates of payment, and for implementing on a gradual, selective, or other basis the establishment of a prospective payment system, in order to stimulate such providers through positive (or negative) financial incentives to use their facilities and pereonnel more efficiently and thereby to reduce the total costs of the health programs involved without adversely aft'ecting the quality of services by containing or lowering the rate of increase in provider costs that has been and is being experienced under the existing system of retroactive cost reimbursement. (2) The experiments and demonstration projects developed under paragraph (1) shall be of sufficient scope and shall be carried out on a wide enough scale to permit a thorough evaluation of the alternative methods of prospective payment under consideration while giving assurance that the results derived from the experiments and projects will obtain generally in the operation of the programs involved (without committing such programs to the adoption of any prospective payment system either locally or nationally). (3) I n the case of any experiment or demonstration project under paragraph (1), the Secretary may waive compliance with the requirements of titles X VIII, X IX, and V of the Social Security Act insofar as such requirements relate to methods of payment for services provided; and costs incurred in such experiment or project in excess of those which would otherwise be reimbursed or paid under such titles may be reimbursed or paid to the extent that such waiver applies to them (with such excess being borne by the Secretary). No experiment or demonstration project shall be developed or carried out under paragraph (1) until the Secretary obtains the advice and recommendations of specialists who are competent to evaluate the proposed experiment or project as to the soundness of its objectives, the possibilities of securing productive results, the adequacy of resources to conduct it, and its relationship to other similar experiments or projects already completed or in process; and no such experiment or project shall be actually placed in operation unless at least 30 days prior thereto a written report, prepared for purposes of notification and information only, containing a full and complete description thereof has been transmitted to the Committee on Ways and Means of the House of Representatives and to the Committee on Finance of the Senate. (4) Grants, payments under contracts, and other expenditures made for experiments and demonstration projects under this subsection shall be made in appropriate part from the Federal Hospital Insurance Trust Fund (established by section 1817 of the Social Security Act) and the Federal Supplementary Medical Insurance Trust Fund (established by section 1841 of the Social Security Act) and from funds appropriated under titles V and X IX of such Act. Grants and payments under contracts may be made either in advance or by way of

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Page:United States Statutes at Large Volume 86.djvu/1433

 86 STAT. ]

PUBLIC LAW 92-603-OCT. 30, 1972

1391

reimbursement, as may be determined by the Secretary, and shall be made in such installments and on such conditions as the Secretary Hnds necessary to carry out the purpose of this subsection. With respect to any such grant, payment, or other expenditure, the amount to be paid from each of such trust funds (and from funds appropriated under such titles V and X IX) shall be determined by the Secretary, i^g^^^'^ ^°^' giving due regard to the purposes of the experiment or project involved. (5) The Secretary shall submit to the Congress no later than July Report to Con1, 1974, a full report on the experiments and demonstration projects carried out under this subsection and on the experience of other programs with respect to prospective reimbursement together with any related data and materials which he may consider appropriate. Such report shall include detailed recommendations with respect to the specific methods which could be used in the full implementation of a system of prospective payment to providers of services under the programs involved. (b)(1) Section 402(a) of the Social Security Amendments of 1967 si Stat. 930. is amended to read as follows: ^^ ^^^ i395b-i. " (a)(1) The Secretary of Health, Education, and Welfare is authorized, either directly or through grants to public or nonprofit private agencies, institutions, and organizations or contracts with public or private agencies, institutions, and organizations, to develop and engage in experiments and demonstration projects for the following purposes: " (A) to determine whether, and if so which, changes in methods of payment or reimbursement (other than those dealt with in section 222(a) of the Social Security Amendments of 1972) for ^"^e, p. 1390. health care and services under health programs established by the Social Security Act, including a change to methods based on ^^ ^^^- ^^^^ negotiated rates, would have the effect of increasing the efficiency and economy of health services under such programs through the creation of additional incentives to these ends without adversely affecting the quality of such services; " (B) to determine whether payments for services other than those for which payment may be made under such programs (and which are incidental to services for which payment may be made under such programs) would, in the judgment of the Secretary, result in more economical provision and more effective utilization of services for which payment may be made under such program, where such services are furnished by organizations and institutions which have the capability of providing— " (i) comprehensive health care services, "(ii) mental health care services (as defined by section 401(c) of the Mental Retardation Facilities and Community Health Centers Construction Act of 1963), 77 Stat. 296. "(iii) ambulatory health care services (including surgical ^^ ^^^ ^691. services provided on an outpatient basis), or "(iv) institutional services which may substitute, at lower cost, for hospital care; " (C) to determine whether the rates of payment or reimbursement for health care services, approved by a State for purposes of the administration of one or more of its laws, when utilized to determine the amount to be paid for services furnished in such State under the health programs established by the Social Security Act, would have the effect of reducing the costs of such programs without adversely affecting the quality of such services; " (D) to determine whether payments under such programs based on a single combined rate of reimbursement or charge for

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Page:United States Statutes at Large Volume 86.djvu/1434

 1392

PUBLIC LAW 92-603-OCT. 30, 1972

42 USC 1395.

'

" . o '' '

" '

^-'*

' /

42 USC 1305.

,

.: J '•

42 USC i395j,

1396

[86 STAT.

the teaching activities and patient care which residents, interns, and supervisino- physicians render in connection with a graduate medical education program in a patient facility would result in more equitable and economical patient care arrangements without adversely affecting the quality of such care; " (E) to determine whether coverage of intermediate care facility services antl homemaker services would provide suitable alternatives to posthospital benefits presently provided under title X VIII of the Social Security Act; such experiment and demonstration projects may include: " (i) counting each day of care in an intermediate care facility as one day of care in a skilled nursing facility, if such care was for a condition for which the individual was hospitalized, "(ii) covering the services of homemakers for a maximum of 21 days, if institutional services are not medically appropriate, "(iii) determining whether such coverage would reduce long-range costs by reducing the lengths of stay in hospitals and skilletl nursing facilities, and "(iv) establishing alternative eligibility requirements and determining the probable cost of applying each alternative, if the project suggests that such extension of coverage would be desirable; " (F) to determine whether, and if so which type of, fixed price or performance incentive contract would have the effect of inducing to the greatest degree effective, efficient, and economical performance of agencies and organizations making payment under agreements or contracts with the Secretary for health care and services under health programs established by the Social Security Act; " (G) to determine under what circumstances payment for services would be appropriate and the most appropriate, equitable, and noninflationary methods and amounts of reimbursement under health care programs established by the Social Security Act for services, which are performed independently by an assistant to a physician, including a nurse practitioner (whether or not performed in the office of or at a place at which such physician is physically present), and— " (i) which such assistant is legally authorized to perform by the State or political subdivision wherein such services are performed, and " (ii) for which such physician assumes full legal and ethical responsibility as to the necessity, propriety, and quality thereof; " (H) to establish an experimental program to provide day-care services, which consist of such personal care, supervision, and services as the Secretary shall by regulation prescribe, for individuals eligible to enroll in the supplemental medical insurance program established under part B of title X VIII and title X IX of the Social Security Act, in day-care centers which meet such standards as the Secretary shall by regulation establish; and " (I) to determine whether the services of clinical psychologists may be made more generally available to persons eligible for services under titles X VIII and X IX of this Act in a manner consistent with quality of care and equitable and efficient administration.

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Page:United States Statutes at Large Volume 86.djvu/1435

 86 STAT. ]

PUBLIC LAW 92-603-OCT. 30, 1972

1393

For purposes of this subsection, 'health programs established by the Definition. Social Security Act' means the program established by title X V l II of such Act, a program established by a plan of a State approved ^2 USC 1395. under title X IX of such Act, and a program established by a plan ^2 USC 1396. of a State approved under title V of such Act. ^^ use 701. "(2) Grants, payments under contracts, and other expenditures made for experiments and demonstration projects under paragraph (1) shall be made in appropriate part from the Federal Hospital Insurance Trust F u n d (established by section 1817 of the Social Security Act) and the Federal Supplementary Medical Insurance 42 USC 13951, Trust Fund (established by section 1841 of the Social Security Act) 42 USC 1395t. and from funds appropriated under titles V and X IX of such Act. Grants and payments under contracts may be made either in advance or by way of reimbursement, as may be determined by the Secretary, and shall be made in such installments and on such conditions as the Secretary finds necessary to caiTy out the purpose of this section. With lespect to any such grant, payment, or other expenditure, the amount to be paid from each of such trust funds (and from funds appropriated under such titles V and X IX) shall be determined by the Secretary, giving due regard to the purposes of the experiment or project involved." (2) Section 402(b) of such amendments is amended— 42 USC i395b.i, (A) by striking out "experiment" each time it appears and inserting in lieu thereof "experiment or demonstration project"; (B) by striking out "experiments" and inserting in lieu thereof "experiments and projects"; and (C) by striking out "reasonable charge" and inserting in lieu thereof "reasonable charge, or to reimbursement or payment only for such services or items as may be specified in the experiment". (c) Section 1875(b) of the Social S^ecurity Act is amended— _ 42 USC 1395H. (1) by striking out "experimentation" and inserting in lieu thereof "experiments and demonstration projects", and (2) by inserting "and the experiments and demonstration projects authorized by section 222(a) of the Social Security Amendments of 1972" after "1967". ^"'^' "• ^^^°LIMITATIONS OX COVERAGE OF COSTS UNDER MEDICARE

SEC. 223. (a) The first sentence of section 1861(v)(1) of the Social Security Act is amended by inserting immediately before "determined" where it first appears the following: "the cost actually incurred, excluding therefrom any part of incurred cost found to be unnecessary in the efficient delivery of needed health services, and shall be". (b) The third sentence of section 1861(v)(1) of such Act is amended by striking out the comma after "services," where it last appears and inserting in lieu thereof the following: "may provide for the establishment of limits on the direct or indirect overall incurred costs or incurred costs of specific items or services or groups of items or services to be recognized as reasonable based on estimates of the costs necessary in the efficient delivery of needed health services to individuals covered by the insurance programs established under this title,". (c) The fourth sentence of section 1861(v)(1) of such Act is amended by inserting after "services" when it first appears the following: " (excluding therefrom any such costs, including standby costs, which are determined in accordance with regulations to be unnecessary in the efficient delivery of services covered by the insurance programs established under this title)".

42 USC 139Sx.

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Page:United States Statutes at Large Volume 86.djvu/1436

 1394 Ante, p. 1393.

PUBLIC LAW 92-603-OCT. 30, 1972

[86 STAT.

(d) The fourth sentence of section 1861(v)(1) of such Act is further amended by striking out "costs with respect" where it first appears and inserting in lieu thereof the following: "necessary costs of efficiently delivering covered services". 42 USC 139SCC. (c) Section 1866(a)(2)(B) of such Act is amended (1) by inserting " (i) " after " (B) ", and (2) by adding at the end thereof the following new clause: "(ii) Where a provider of services customarily furnishes an individual items or services which are more expensive than the items or services determined to be necessary in the efficient delivery of needed health services under this title and which have not been requested by such individual, such provider may (except with respect to emergency services) also charge such individual or other person for such more expensive items or services to the extent that the costs of (or, if less, the customary charges for) such more expensive items or services experienced by such provider in the second fiscal period immediately preceding the fiscal period in which such charges are imposed exceed the cost of such items or services determined to be necessary in the efficient delivery of needed health services, but only if— " (I) the Secretary has provided notice to the public of any charges being imposed on individuals entitled to benefits under this title on account of costs in excess of the costs determined to be necessary in the efficient delivery of needed health services under this title by particular providers of services in the area in which such items or services are furnished, and " ( II) the provider of services has identified such charges to such individual or other person, in such manner as the Secretary may prescribe, as charges to meet costs in excess of the cost determined to be necessary in the efficient delivery of needed health services under this title." (f) Section 1861(v) of such Act (as amended by section 221(c)(4) Ante, p. 1389. of this Act) is further amended by redesignating paragraphs (4) and (5) as paragraphs (5) and (6), respectively, and by inserting after paragraph (3) the following new paragraph: " (4) If a provider of services furnishes items or services to an individual which are in excess of or more expensive than the items or services determined to be necessary in the efficient delivery of needed health services and charges are imposed for such more expensive items or servSupra, ices Under the authority granted in section 1866(a)(2)(B) (ii), the amount of payment with respect to such items or services otherwise due such provider in any fiscal period shall be reduced to the extent that such payment plus such charges exceed the cost actually incurred for such items or services in the fiscal period in which such charges are imposed." (g)(1) Section 1866(a)(2) of such Act is amended by inserting after subparagraph (C) the following new subparagraph: " (D) Where a provider of services customarily furnishes items or services which are in excess of or more expensive than the items or services with respect to which payment may be made under this title, such provider, notwithstanding the preceding provisions of this paragraph, may not, under the authority of section 1866(a)(2)(B) (ii), charge any individual or other person any amount for such items or services in excess of the amount of the pa^j^ment which may otherwise be made for such items or services under this title if the admitting physician has a direct or indirect financial interest in such proviaer." (2) The last paragraph of section 1866(a)(2) is amended by striking out "clause (iii) of the preceding sentence" and inserting in lieu thereof "subparagraph (C) ". Effective date. (h) The amendments made by this section shall be effective with respect to accounting periods beginning after December 31, 1972.

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Page:United States Statutes at Large Volume 86.djvu/1437

 86

STAT.]

PUBLIC LAW 92-603-OCT. 30, 1972

1395

LIMITS ON PREVAILING CHARGE LEVELS

SEC. 224. (a) Section 1842(b)(3) of the Social Security Act is 42 USC 139Su. amended by adding at the end thereof the following new sentences: "No charge may be determined to be reasonable in the case of bills submitted or requests for payment made under this part after December 31, 1970, if it exceeds the higher of (i) the prevailing charge recognized by the carrier and found acceptable by the Secretary for similar services in the same locality in administering this part on December 31, 1970, or (ii) the prevailing charge level that, on the basis of statistical data and methodology acceptable to the Secretary, would cover 75 percent of the customary charges made for similar services in the same locality during the last preceding calendar year elapsing prior to the start of the fiscal year in which the bill is submitted or the request for payment is made. In the case of physician services the prevailing charge level determined for purposes of clause (ii) of the preceding sentence for any fiscal year beginning after June 30, 1973, may not exceed (in the aggregate) the level determined under such clause for the fiscal year ending June 30, 1973, except to the extent that the Secretary finds, on the basis of appropriate economic index data, that such higher level is justified by economic changes. In the case of medical services, supplies, and equipment (including equipment servicing) that, in the judgment of the Secretary, do not generally vary significantly in quality from one supplier to another, the charges incurred after December 31, 1972, determined to be reasonable may not exceed the lowest charge levels at which such services, supplies, and equipment are widely and consistently available in a locality except to the extent and under the circumstances specified by the Secretary." (b) The Health Insurance Benefits Advisory Council established foreimbursement physicians' under section 1867 of the Social Security Act shall conduct a study services, study. of the methods of reimbursement for physicians' services under Medi- Post, p. 1457. care for the purpose of evaluating their effects on (1) physicians' fees generally, (2) the extent of assignments accepted by physicians, and (3) the share of total physician-fee costs which the Medicare program does not pay and which the beneficiary must assume. The Council Report to Conshall report the results of such study to the Congress no later than gress. January 1, 1973, together with a presentation of alternatives to the present methods and its recommendations as to the preferred method. (c) Section 1903 of such Act is amended by adding at the end thereof 42 USC 1396b. (after the new subsections added by section 207(a.) (1) of this Act) Ante, p. 1379. the following new subsection: " (i) Payment under the preceding provisions of this section shall not be made with respect to any amount paid for items or services furnished under the plan after December 31, 1972, to the extent that such amount exceeds the charge which would be determined to be reasonable for such items or services under the third, fourth, and fifth sentences of section 1842(b)(3)." Supra. (d) Section 506 of such Act is amended by adding at the end thereof 81 Stat. 924. 42 USC 706. the following new subsection: " (f) Notwithstanding the preceding provisions of this section, no payment shall be made to any State thereunder with respect to any amount paid for items or services furnished under the plan after December 31. 1972, to the extent that such amount exceeds the charge which would be determined to be reasonable for such items or services Supra. under the third, fourth, and fifth sentences of section 1842(b)(3)."

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Page:United States Statutes at Large Volume 86.djvu/1438

 1396

PUBLIC LAW 92-603-OCT. 30, 1972

[86 STAT.

LIMITS ON PAYMENT FOR SKILLED NURSING HOME x\ND INTERMEDIATE CARE FACILITY SERVICES

SEC. 225. Section 1903 of the Social Security Act is amended by adding at the end thereof (after the new subsection added by section 224 Ante. p. 1395. (c) of this Act) the following new subsection: " (j) Notwithstanding the preceding provisions of this section— "(1) in determining the amount payable to any State with respect to expenditures for skilled nursing home services furnished in any calendar quarter beginning after December 31, 1972, there shall not be included as expenditures under the State plan any amount in excess of the product of (A) the number of inpatient days of skilled nursing home services provided under the State plan in such quarter, and (B) 105 per centum of the average per diem cost of such services for the fourth calendar quarter preceding such calendar quarter; and "(2) in determining the amount payable to any State with respect to expenditures for intermediate care facility services furnished in any calendar quarter beginning after December 31, 1972, there shall not be included as expenditures under the State plan any amount in excess of the product of (A) the number of inpatient days of intermediate care facility services provided in such quarter under each of the plans of such State approved under 120^1 ^^^s^lssi 13961 ' ' average per diem cost of such services for the fourth calendar quarter preceding such calendar quarter. For purposes of determining the amount payable to any State with respect to any quarter under paragraphs (1) and (2), the Secretary may by regulation increase the percentage specified in clause (B) of each such paragraph to the extent necessary to take account of increases in per diem costs which result directly from increases in the Federal minimum wage, or which otherwise result directly from cost increases which the Secretary determines are attributable to the upgrading of services and facilities required by this Act or from provisions of Federal law enacted (or amendments to Federal law made) after the date of the enactment of the Social Security Amendments of 1972." PAYMENTS TO HEALTH MAINTENANCE ORGANIZATIONS
 * ^^^^ -'•' -^' ^^7' ^^^' ^^^ ^^^' ^".^ (-"^^ '^^^ P^^ centum of the

42 USC 1395.

S E C 226. (a) Title X VIII of the Social Security Act is amended by adding at the end thereof the following new section: " P A Y M E N T S TO HEALTH MAINTENANCE ORGANIZATIONS

r2*'iJsc'i3V5V

^^,,

"SEC. 1876. (a)(1) I n lieu of amounts which would otherwise be Payable pursuant to sections 1814(b) and 1833(a), the Secretary is authorized to determine, by actuarial methods, as provided in this section, but only with respect to a health maintenance organization with which he has entered into a contract under subsection (i), a per capita rate of payment— " (A) for services provided under parts A and B for individuals enrolled with such organization pursuant to subsection (e) who are entitled to hospital insurance benefits under part A and enrolled for medical insurance benefits under part B, and " (B) for services provided under part B for individuals enrolled with such organization pursuant to subsection (e) who are not entitled to benefits under part A but who are enrolled for benefits under part B.

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Page:United States Statutes at Large Volume 86.djvu/1439

 86 STAT. ]

1397

PUBLIC LAW 92-603-OCT. 30, 1972

"(2) An interim per capita rate of payment for each health maintenance organization shall be determined annually by the Secretary on the basis of each organization's annual operating budget and enrollment forecast which shall be submitted (in such form and in such detail as the Secretary may prescribe) at least 90 days before the beginning of each contract year. Each interim rate shall be equal to the estimated per capita cost (based upon types and components of expenses otherwise reimbursable under this title) of providing services defined in paragraph (3)(A) (iii). In the event that the data requested to be furnished by a health maintenance organization are not furnished timely, such reduction in interim payments may be made by the Secretary as is appropriate, until such time as a reasonable estimate of per capita costs can be made. Each month, the Secretary shall pay each such organization its interim per capita rate, in advance, for each individual enrolled with it pursuant to subsection (e). Each such organization shall submit interim estimated cost reports and enrollment data on a quarterly basis in such form and manner satisfactory to the Secretary, and the Secretary shall adjust each interim per capita rate to the extent necessary to maintain interim payments at the level of current costs. Interim payments made under this paragraph shall be subject to retroactive adjustment at the end of each contract year as provided in paragraph (3). "(3)(A) With respect to any health maintenance organization which has entered into a risk sharing contract with the Secretary pursuant to subsection (i)(2)(A), payments made to such organization shall be subject to the following adjustments at the end of each contract year: " (i) if the Secretary determines that the per capita incurred cost of any such organization in any contract year for providing services described in paragraph (1) is less than the adjusted average per capita incurred cost (as defined herein) of providing such services, the resulting difference (hereinafter referred to as 'savings') shall be apportioned following the close of a contract year for such year between such organization and the Federal Hospital Insurance Trust Fund and the Federal Supplementary Medical Insurance Trust Fund (hereinafter collectively referred to as the 'Medicare Trust Funds') as follows: " (I) savings up to 20 percent of the adjusted average per capita cost shall be apportioned equally between such organization and the Medicare Trust Funds; " ( II) savings in excess of 20 percent of the adjusted average per capita cost shall be apportioned entirely to such Trust Funds; "(ii) if the Secretary determines that the per canita incurred cost of any such organization in any contract year for providing services described in paragraph (1) is greater than the adjusted average per capita incurred cost of providing such services, the resulting difference (hereinafter referred to as 'losses'), shall be absorbed by such organization, and shall be carried forward and offset from savings realized in later years, with the apportionment of savings being proportional to the losses absorbed and not yet offset; "(iii) determination of any amounts payable at the close of the contract year to such organization or to the Trust Funds shall be made as follows: " (I) within 90 days after close of a contract year, interim determination of the amount of estimated savings and apportionment thereof shall be made, actuarially, on the basis of interim reports of costs incurred by an organization, and

Interim per capita rate.

Infra.

Interim estimated cost reports-.

Adjustments.

Per capita incurred cost, apportionment.

Losses.

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Page:United States Statutes at Large Volume 86.djvu/1440

 1398

PUBLIC LAW 92-603-OCT. 30, 1972

[86 STAT.

adjusted average per capita costs incurred (as defined herein), and other evidence acceptable to the Secretary and one-half of any amounts deemed payable to such organization or the Trust Funds shall be paid by such organization or the Secretary as appropriate; " ( II) final settlement and payment by the Secretary or organization, as appropriate, of any additional amounts due on basis of such final settlement will be made where adequate data for actuarial computation are available, in timely fashion following submission by such organization of reports specified in subparagraph (C) of this paragraph; and " ( III) where such final settlement is reached more than 90 days following submission of reports specified in subpararaph (C) of this paragraph, any amount payable by the ecretary or organization shall be increased by an interest amount, accruing from the 91st day following submission of such report, equal to the average rate of interest payable on Federal obligations if issued on such 91st day for purchase by the Trust Funds, "(iv) The term 'adjusted average per capita cost' means the average per capita amount that the Secretary determines (on the basis of actual experience, or retrospective actuarial equivalent based upon an adequate sample and other information and data, in the geographic area served by a health maintenance organization or in a similar area, with appropriate adjustment to assure actuarial equivalence, including adjustments relating to age distribution, sex, race, institutional status, disability status, and any other relevant factors) would be payable in any contract year for services covered under this title and types of expenses otherwise reimbursable under this title (including administrative costs incurred by organizations described in sections 1816 and 1842) if such services were to be furnished by other than such health maintenance organization. " (B) With respect to any health maintenance organization which has entered into a reasonable cost reimbursement contract with the Secretary pursuant to subsection (i)(2)(B), payments made to such organization shall be subject to suitable retroactive corrective adjustments at the end of each contract year so as to assure that such organization is paid for the reasonable cost actually incurred (excluding therefrom any part of incurred cost found to be unnecessary in the efficient delivery of health services) for the types of expenses otherwise reimbursable under this title for providing services covered under this title to individuals described in paragraph (1).

§

"Adjusted average per capita cost.*'

79 Stat. 297; Post, p. 1449. 42 USC 1395h, 1395U. Retroactive corrective adjustments.

" (C) Any contract with a health maintenance organization under this title shall provide that the Secretary shall require, at such time following the expiration of each accounting period of a health maintenance organization (and in such form and in such detail) as he may prescribe: " (i) that such health maintenance organization report to him in an independently certified financial statement its per capita incurred cost based on the types and components of expenses otherwise reimbursable under this title for providing services described in paragraph (1), including therein, in accordance with accounting procedures prescribed by the Secretary, its methods of allocating costs between individuals enrolled under this section and other individuals enrolled with such organization; " (ii) that failure to report such information as may be required may be deemed to constitute evidence of likely overpayment on the basis of which appropriate collection action may be taken;

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STAT.]

1399

PUBLIC LAW 92-603-OCT. 30, 1972

"(iii) that in any case in which a health maintenance organization is related to another organization by common ownership or control, a consolidated financial statement shall be filed and that the allowable costs for such organization may not include costs for the types of expense otherwise reimbursable under this title, in excess of those which would be determined to be reasonable in accordance with regulations (providing for limiting reimbursement to costs rather than charges to the health maintenance organization by related organizations and owners) issued by the Secretary m accordance with section 1861(v) of the Social Security Act; and "(iv) that in any case in which compensation is paid by a health maintenance organization substantially in excess of what is normally paid for similar services by similar practitioners (regardless of method of compensation), such compensation may as appropriate be considered to constitute a distribution of profits. "(4) The payments to health maintenance organizations under this subparagraph with respect to individuals described in subsection (a) (1)(A) shall be made from the Federal Hospital Insurance Trust Fund and the Federal Supplementary Medical Insurance Trust Fund. The portion of such payment to such an organization for a month to be paid by the latter trust fund shall be equal to 200 percent of the sum of— " (A) the product of (i) the number of covered enrollees of such organization for such month (as described in paragraph (1)) who have attained age 65, and (ii) the monthly actuarial rate for supplementary medical insurance for such month as determined under section 1839(c)(1), and " (B) the product of (i) the number of covered enrollees of such organization for such month (as described in paragraph (1)) who have not attained age 65, and (ii) the monthly actuarial rate for supplementary medical insurance for such month as determined under section 1839(c)(4). The remainder of such payment shall be paid by the former trust fund. For limitation on Federal participation for capital expenditures which are out of conformity with a comprehensive plan of a State or area wide planning agency, see section 1122. " (b) The term 'health maintenance organization' means a public or private organization which— "(1) provides, either directly or through arrangements with others, health services to individuals enrolled with such organization on the basis of a predetermined periodic rate without regard to the frequency or extent of services furnished to any particular enrollee; "(2) provides, either directly or through arrangements with others, to the extent applicable in subsection (c) (through institutions, entities, and persons meeting the applicable requirements of section 1861), all of the services and benefits covered under parts A and B of this title which are available to individuals residing in the geographic area served by the health maintenance organization; "(3) provides physicians' services primarily (A) directly through physicians who are either employees or partners of such organization, or (B) under arrangements with one or more groups of physicians (organized on a group practice or individual practice basis) under which, each such group is reimbursed for its services primarily on the basis of an aggregate fixed sum or on a -081 O - 73 - 91

42 USC 1395X.

Ante,

p. 1376.

Ante,

p. 1377.

Ante, p. 1386. " Health maintenance organization."

42 USC 139Sx. 42 USC 1395c, 139Sj.

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Page:United States Statutes at Large Volume 86.djvu/1442

 1400

PUBLIC LAW 92-603-OCT. 30, 1972

[86 STAT.

per capita basis, regardless of whether the individual physician members of any such group are paid on a fee-for-service or other basis; "(4) provides either directly or under arrangements with others, the services of a sufficient number of primary care and specialty care physicians to meet the health needs of its members; by«?ria^n"»^ "^'^ ^^^" P^rposes of this section the term 'specialty care physician' physician. means a physician who is either board certified or eligible for board certification, except that the Secretary may by regulation prescribe conditions under which physicians who have a record ., of demonstrated proficiency but who are not eligible for board certification may, on the basis of training and experience, be recognized as specialty care physicians; " (5) has effective arrangements to assure that its members have access to qualified practitioners in those specialties which are generally available in the geographic area served by the health maintenance organization; "(6) demonstrates to the satisfaction of the Secretary proof of financial responsibility and proof of capability to provide comprehensive health care services, including institutional services, efficiently, effectively, and economically; "(7) except as provided in subsection (h), has at least half of its enrolled members consisting of individuals under age 65; "(8) assures that the health services required by its members are received promptly and appropriately and that the services that are received measure up to quality standards which it establishes in accordance with regulations; and "(9) has an open enrollment period at least every year under ,,. which it accepts up to the limits of its capacity and without restrictions, except as may be authorized in regulations, individuals who are eligible to enroll under subsection (d) in the order in which they apply for enrollment (unless to do so would result in failure to meet the requirements of paragraph (7)) or would ,. result in enrollment of enrollees substantially nonrepresentative, as determined in accordance with regulations of the Secretary, of the population in the geographic area served by such health maintenance organization. "(c) The benefits provided under this section to enrollees of an organization which has entered into a risk sharing contract with the Post, p. 1401. Secretary pursuant to subsection (i)(2)(A) shall consist of— "(1) in the case of an individual who is entitled to hospital 42 USC 1395c. insurance benefits under part A and enrolled for medical insur42 USC 1395J. ance benefits under part B— " (A) entitlement to have payment made on his behalf for 79 ^*g'-^^-^all services described in section 1812 and section 1832 which Post, p. 1406. are furnished to him by the health maintenance organization with which he is enrolled pursuant to subsection (e) of this section; and " (B) entitlement to have payment made by such health maintenance organization to him or on his behalf for (i) such emergency services (as defined in regulations.), (ii) such urgently needed services (as defined in regulations) furnished to him during a period of temporary absence (as defined in regulations) from the geographic area served by the health maintenance organization with which he is enrolled, and (iii) such other services as may be determined, in accordance with subsection (f), to be services which the individual was entitled to have furnished by the health

�


text:
Page:United States Statutes at Large Volume 86.djvu/1443

 86

STAT.]

PUBLIC LAW 92^03-OCT. 30, 1972

maintenance organization, as may be furnished to him by a physician, supplier, or provider of services, other than the health maintenance organization with which he is enrolled; and "(2) in the case of an individual who is not entitled to hospital insurance benefits under part A but who is enrolled for medical insurance benefits under part B, entitlement to have payment made for services described in paragraph (1), but only to the extent that such services are also described in section 1832. " (d) Subject to the provisions of subsection (e), every individual described in subsection (c) shall be eligible to enroll with any health maintenance organization (as defined in subsection (b)) which serves the geographic area in which such individual resides. "(e) An individual may enroll with a health maintenance organization under this section, and may terminate such enrollment, as may be prescribed by regulations. " (f) Any individual enrolled with a health maintenance organization under this section who is dissatisfied by reason of his failure to receive without additional cost to him any health service to which he believes he is entitled shall, if the amount in controversy is $100 or more, be entitled to a hearing before the Secretary to the same extent as is provided in section 205(b) and in any such hearing the Secretary shall make such health maintenance organization a party thereto. If the amount in controversy is $1,000 or more, such individual or health maintenance organization shall be entitled to judicial review of the Secretary's final decision after such hearing as is provided in section 205(g). " (g)(1) If tl^6 health maintenance organization provides its enrollees under this section only the services described in subsection (c), its premium rate or other charges for such enrollees shall not exceed the actuarial value of the deductible and coinsurance which would otherwise be applicable to such enrollees under part A and part B, if they were not enrolled under this section. "(2) If the health maintenance organization provides to its enrollees under this section services in addition to those described in subsection (c), election of coverage for such additional services shall be optional for such enrollees and such organization shall furnish such enrollees with information on the portion of its premium rate or other charges applicable to such additional services. The portion applicable to the services described in subsection (c) may not exceed (i) the actuarial value of the deductible and coinsurance which would otherwise be applicable to such enrollees under part A and part B if they were not enrolled under this section less (ii) the actuarial value of other charges made in lieu of such deductible and coinsurance. " (h) The provisions of paragraph (7) of subsection (b) shall not apply with respect to any health maintenance organization for such period not to exceed three years from the date such organization enters into an agreement with the Secretary pursuant to subsection (i), as the Secretary may permit, but only so long as such organization demonstrates to the satisfaction of the Secretary by the submission of its plans for each year that it is making continuous efforts and progress toward achieving compliance with the provisions of such paragraph (7) within such three-year period. "(i)(1) Subject to the limitations contained in subparagraphs (A) and (B) of paragraph (2), the Secretary is authorized to enter into 5 contract with any health maintenance organization which under1 takes to provide, on an interim per capita prepayment basis, the services described in section 1832 (and section 1812, in the case of indi-

1401

42 USC 1395c, 42 USC 1395J. 79 Stat, 302, 42 USC 13 95k,

Hearings; judicial review.

53 Stat. 1368, 42 USC 405.

Nbnapplicability.

contract authority.

42 USC 1395d,

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text:
Page:United States Statutes at Large Volume 86.djvu/1444

 1402 42 USC 1395c. Risk-sharing contract.

Nonurban geographic area.

Prohibition.

Ante, p. 1399.

42 USC 1395X.

Contract term, renewal.

PUBLIC LAW 92-603-OCT. 30, 1972

[86

STAT.

viduals who are entitled to hospital insurance benefits under part A) to individuals enrolled with such organization pursuant to subsection (e). .. . "(2)(A) If the health maintenance organization (i) has a current enrollment of not less than 25,000 members on a prepaid capitation basis and has been the primary source of health care of at least 8,000 persons in each of the two years immediately preceding the contract year, or (ii) serves a nonurban geographic area, has a current enrollment of not less than 5,000 members on a prepaid capitation basis and has been the primary source of health care for at least 1,500 persons in each of the three years immediately preceding the contract year, the Secretary may enter into a risk sharing contract with such organization pursuant to which any savings, as determined pursuant to subsection (a)(3)(A), are shared between such organization and the Medicare Trust Funds in the manner prescribed in such subsection. For purposes of this subparagraph, a health maintenance organization shall be considered to serve a nonurban geographic area if it is located in a nonmetropolitan county (that is, a county with fewer than 50,000 inhabitants), or if it has at least one such county in its normal service area, or if it is located outside of a metropolitan area and its facilities are within reasonable travel distance (as defined by the Secretary) of fewer than 50,000 individuals. No health maintenance organization which has entered into a risk-sharing contract with the Secretary under this subparagraph and has voluntarily terminated such contract may again enter into such a contract. " (B) If the health maintenance organization does not meet the requirements of subparagraph (A), or if the Secretary is not satisfied that the health maintenance organization has the capacity to bear the risk of potential losses as determined under clause (ii) of subsection (a)(3)(A), or if the health maintenance organization meeting the requirements of subparagraph (A) so elects, or if an organization does not fully meet the requirements of section 1876(b) but has demonstrated to the satisfaction of the Secretary that it is making reasonable efforts to meet, and is developing the capability to fully meet, such requirements, and that it fully meets such basic requirements as the Secretary shall prescribe in regulations, the Secretary may, if he is otherwise satisfied that the health maintenance organization or other organization is able to perform its contractual obligations effectively and efficiently, enter into a contract with such organization pursuant to which such organization is reimbursed on the basis of its reasonable cost (as defined in section 1861(v)) in the manner prescribed in subsection (a)(3)(B). "(3) Such contract may, at the option of such organization, proAdde that the Secretary (A) will reimburse hospitals and extended care facilities for the reasonable cost (as determined under section 1861 (v)) of services furnished to individuals enrolled with such organization pursuant to subsection (e), and (B) will deduct the amount of such reimbursement from payments which would otherwise be made to such organization. If a health maintenance organization pays a hospital or extended care facility directly, the amount paid shall not exceed the reasonable cost of the services (as determined under section 1861(v)) unless such organization demonstrates to the satisfaction of the Secretary that such excess payments are justified on the basis of advantages gained by the organization. " (4) Each contract under this section shall be for a term of at least one year, as determined by the Secretary, and may be made automatically renewable from term to term in the absence of notice by either party of intention to terminate at the end of the current term; except that the Secretary may terminate any such contract at any

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text:
Page:United States Statutes at Large Volume 86.djvu/1445

 86 STAT. ]

1403

PUBLIC LAW 92-603-OCT. 30, 1972

time (after such reasonable notice and opportunity for hearing to the health maintenance organization involved as he may provide in regulations), if he finds that the organization (A) has failed substantially to carry out the contract, (B) is carrying out the contract in a manner inconsistent with the efficient and effective administration of this section, or (C) no longer substantially meets the applicable conditions of subsection (b). "(5) The effective date of any contract executed pursuant to this subsection shall be specified in such contract pursuant to the regulations. " (6) Each contract under this section— " (A) shall provide that the Secretary, or any person or organization designated by him— "(i) shall have the right to inspect or otherwise evaluate the quality, appropriateness, and timeliness of services performed under sucfi contract; and "(ii) shall have the right to audit and inspect any books and records of such health maintenance organization which pertain to services performed and determinations of amounts payable under such contract; " (B) shall provide that no reinsurance costs (other than those with respect to out-of-area services), including any underwriting of risk relating to costs in excess of adjusted average per capita cost, as defined in clause (iii) of subsection (a)(3)(A), shall be allowed for purposes of determining payments authorized under this section; and " (C) shall contain such other terms and conditions not inconsistent with this section as the Secretary may find necessary, " (j) The function vested in the Secretary by subsection (i) may be performed without regard to such provisions of law or of other regulations relating to the making, performance, amendment, or modification of contracts of the United States as the Secretary may determine to be inconsistent with the furtherance of the purposes of this title." (b)(1) Notwithstanding the provisions of section 1814 and section 1833 of the Social Security Act, any health maintenance organization which has entered into a contract with the Secretary pursuant to section 1876 of such Act shall, for the duration of such contract, (except as provided in paragraph (2)) be entitled to reimbursement only as provided in section 1876 of such Act for individuals who are members of such organizations. (2) With respect to individuals who are members of organizations which have entered into a I'isk-sharing contract with the Secretary pursuant to subsection (i)(2)(A) prior to July 1, 1973, and who, although eligible to have payment made pursuant to section 1876 of such Act for services rendered to them, chose (in accordance with regulations) not to have such payment made pursuant to such section, the Secretary shall, for a period not to exceed three years commencing on July 1, 1973. pay to such organization on the basis of an interim per capita rate, determined in accordance with the provisions of section 1876(a)(2) of such Act, with appropriate actuarial adjustments to reflect the difference in utilization of out-of-plan services, which would have been considered sufficiently reasonable and necessary under the rules of the health maintenance organization to be provided by that organization, between such individuals and individuals who are enrolled with such organization pursuant to section 1876 of such Act. Payments under this paragraph shall be subject to retroactive adjustment at the end of each contract year as provided in paragraph (3).

Contract termination, notice, hearing.

Inspection authority.

42 USC 1395f, 139SZ. Ante,

p. 1396.

Ante,

p. 1402.

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text:
Page:United States Statutes at Large Volume 86.djvu/1446

 1404 Retroactive adjustment.

Ante, p. 1396.

79 Stat. 294. 42 USC 1395f.

79 Stat. 302. 42 USC 1395/. Ante, p. 1393.

Ante, p. 1396, 42 USC 1396b.

Technical assistance to States,

Effective date.

PUBLIC LAW 92-603-OCT. 30, 1972

[86 STAT.

(3) If the Secretary determines that the per capita cost of any such organization in any contract year for providing services to individuals described in paragraph (2), when combined with the cost of the Federal Hospital Insurance Trust Fund and the Federal Supplementary Medical Insurance Trust Fund in such year for providing out-of-plan services to such individuals, is less than or greater than the adjusted average per capita cost (as defined in section 1876(a)(3) of such Act) of providing such services, the resulting savings shall be apportioned between such organization and such Trust Funds, or the resulting losses shall be absorbed by such organization, in the manner prescribed in section 1876(a)(3) of such Act. (c)(1) Section 1814(a) of such Act is amended by striking out "Except as provided in subsection (d), " and inserting in lieu thereof the following: "Except as provided in subsection (d) and in section 1876,". (2) Section 1833(a) of such Act is amended by striking out "Subject to " and inserting in lieu thereof the following: "Except as provided in section 1876, and subject to". (d) Section 1875(b) of the Social Security Act, as amended by section 222(c) of this Act, is further amended— (1) by inserting "the operation and administration of health maintenance organizations authorized by section 226 of the Social Security Amendments of 1972," after the word "including"; and (2) by striking out "1971" and inserting in lieu thereof "1972". (e) Section 1903 of such Act, as amended by sections 207, 224, and 290 of this Act, is further amended by adding after subsection (j) the following new subsection: " (k) The Secretary is authorized to provide at the request of any State (and without cost to such State) such technical and actuarial assistance as may be necessary to assist such State to contract with any health maintenance organization which meets the requirements of section 1876 for the purpose of providing medical care and services to individuals who are entitled to medical assistance under this title." (f) The amendments made by this section shall be effective with respect to services provided on or after July 1, 1973. PAYMENT UNDER MEDICARE FOR SERVICES OF PHYSICIANS RENDERED AT A TEACHING HOSPITAL

42 USC 1395X.

SEC. 227. (a) Section 1861(b) of the Social Security Act is amended by striking out the second sentence and inserting in lieu thereof the following: "Paragraph (4) shall not apply to services provided in a hospital by— "(6) an intern or a resident-in-training under a teaching program approved by the Council on Medical Education of the American Medical Association or, in the case of an osteopathic hospital, approved by the Committee on Hospitals of the Bureau of Professional Education of the American Osteopathic Association, or, in the case of services in a hospital or osteopathic hospital by an intern or resident-in-training in the field of dentistry, approved by the Council on Dental Education of the American Dental Association; or "(7) a physician where the hospital has a teaching program approved as specified in paragraph (6), unless (A) such inpatient is a private patient (as defined in regulations), or (B) the hospital establishes that during the two-year period ending December 31, 1967, and each year thereafter all inpatients have been

�


text:
Page:United States Statutes at Large Volume 86.djvu/1447

 86

STAT.]

1405

PUBLIC LAW 92-603-OCT. 30, 1972

regularly billed by the hospital for services rendered by physicians and reasonable efforts have been made to collect in full from all patients and payment of reasonable charges (including applicable deductibles and coinsurance) has been regularly collected in full or in substantial part from at least 50 percent of all inpatients." (b)(1) So much of section 1814(a) of such Act as precedes paragraph (1) (as amended by section 226(c)(1) of this Act) is further amended by striking out "subsection (d) " and inserting in lieu thereof "subsections (d) and (g) ". (2) Section 1814 is further amended by adding at the end thereof the following new subsection:

42 USC 1395f.

Ante,

p. 1382.

"Payment for Services of a Physician Rendered in a Teaching Hospital " (g) For purposes of services for which the reasonable cost thereof is determined under section 1861(v)(1)(D), payment under this part shall be made to such fund as may be designated by the organized medical staff of the hospital in which such services were furnished or, if such services were furnished in such hospital by the faculty of a medical school, to such fund as may be designated by such faculty, but only if— "(1) such hospital has an agreement with the Secretary under section 1866, and "(2) the Secretary has received written assurances that (A) such payment will be used by such fund solely for the improvement of care of hospital patients or for educational or charitable purposes and (B) the individuals who were furnished such services or any other persons will not be charged for such services (or if charged, provision will be made for return of any moneys incorrectly collected)." (c) Section 1861(v)(1) of such Act (as amended by section 223 of this Act) is amended— (1) by inserting " (A) " after " (1) "; (2) by striking out " (A) take" and " (B) provide" in the fourth sentence and inserting in lieu thereof "(i) take" and "(ii) provide", respectively; (3) by inserting " (B) " immediately 4)receding "Such regulations in the case of extended care services"; and (4) by adding at the end thereof the following new subparagraphs: " (C) Where a hospital has an arrangement with a medical school under which the faculty of such school provides services at such hospital, an amount not in excess of the reasonable cost of such services to the medical school shall be included in determining the reasonable cost to the hospital of furnishing services— " (i) for which payment may be made under part A, but only if " (I) payment for such services as furnished under such arrangement would be made under part A to the hospital had such services been furnished by the hospital, and " ( II) such hospital pays to the medical school at least the reasonable cost of such services to the medical school, or

Infra.

42 USC 1395CC.

42 USC 1395X.

42 USC 1395c.

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text:
Page:United States Statutes at Large Volume 86.djvu/1448

 1406 42 USC 1395J.

Infra,

42 USC 1395x. Ante, p. 1405; Infra, 42 USC 139SCC.

42 USC 1395k.

Ante, p. 1404.

42 USC i395n.

Ante, p, 1404. Supra. Ante, p. 1405.

PUBLIC LAW 92-603-OCT. 30, 1972

[86 STAT.

"(ii) for which payment may be made under part B, but only if such hospital pays to the medical scliool at least the reasonable cost of such services to the medical school. " (D) Where (i) physicians furnish services which are either inpatient hospital services (including services in conjunction with the teaching programs pf such hospital) by reason of paragraph (7) of subsection (b) or for which entitlement exists by reason of clause ( II) of section 1832 (a)(2)(B)(i) and (ii) such hospital (or medical school under arrangement with such hospital) incurs no actual cost in the furnishing of such services, the reasonable cost of such services shall (under regulations of the Secretary) be deemed to be the cost such hospital or medical school would have incurred had it paid a salary to such physicians rendering such services approximately equivalent to the average salary paid to all physicians employed by such hospital (or if such employment does not exist, or is minimal in such hospital, by similar hospitals in a geographic area of sufficient size to assure reasonable inclusion of sufficient physicians in development of such average salary)." (d)(1) Section 1861(u) of such Act is amended by inserting before the period at the end thereof the following: ", or, for purposes of section 1814(g) and section 1835(e), a fund". (2) So much of section 1866(a)(1) of such Act as precedes subparagraph (A) is amended by inserting "(except a fund designated for purposes of section 1814(g) and section 1835(e))" after "provider of services". Ce)(1) Section 1832(a)(2)(B) of such Act is amended to read as follows: " (B) medical and other health services furnished by a provider of services or by others under arrangement with them made by a provider of services, excluding— " (i) physician services except where furnished by— " (I) a resident or intern of a hospital, or " ( II) a physician to a patient in a hospital which has a teaching program approved as specified in paragraph (6) of section 1861(b) (including services in conjunction with the teaching programs of such hospital whether or not such patient is an inpatient of such hospital), unless either clause (A) or (B) of paragraph (7) of such section is met, and "(ii) services for which payment may be made pursuant to section 1835(b)(2); and". (2)(A) So much of section 1835(a) of such Act as precedes paragraph (1) is amended by striking out "subsections (b) and (c)," and inserting in lieu thereof "subsections (b), (c), and (e),". (B) Section 1835 of such Act is further amended by adding at the end thereof the following new subsection: "(e) For purposes of services (1) which are inpatient hospital services by reason of paragraph (7) of section 1861(b) or for which entitlement exists by reason of clause ( II) of section 1832(a)(2)(B) (i), and (2) for which the reasonable cost thereof is determined under section 1861(v)(1)(D), payment under this part shall be made to such fund as may be designated by the organized medical staff of the hospital in which such services were furnished or, if such services were furnished in such hospital by the faculty of a medical school, to such fund as may be designated by such faculty, but only if—

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text:
Page:United States Statutes at Large Volume 86.djvu/1449

 86

STAT.]

1407

PUBLIC LAW 92-603-OCT. 30, 1972

"(1) such hospital has an agreement with the Secretary under section 1866, and "(2) the Secretary has received written assurances that such payment will be used by such fund solely for the improvement of care to patients in such hospital or for educational or charitable purposes and (B) the individuals who were furnished such services or any other persons will not be charged for such services (or if charged provision will be made for return for any moneys incorrectly collected)/' (8) Section 1842(a) of such Act is amended by inserting after "which involve payments for physicians' services" the following: "on a reasonable charge basis". (f) Section 1861(q) of such Act is amended by striking out the parenthetical phrase "(but not including services described in the last sentence of subsection (b)) " and inserting in lieu thereof "(but not including services described in subsection (b)(6)) ". (g) The amendments made by this section shall apply with respect to accounting periods beginning after June 30, 1978. ADVAXCE APPROVAL OF EXTENDED CARE A X D H O M E H E A L T H U N D E R MEDICARE

42 USC 1395CC.

42 USC 1395u.

42 USC 1395x.

Ante,

p. 1404.

Effective date.

COVERAGE

SEC. 228. (a) Section 1814 of the Social Security Act (as amended by section 227(b)(2) of this Act) is amended by adding at the end thereof the following new subsections:

Ante,

p. 1405.

Post,

p. 1425.

"Payment for Posthospital Extended Care Services " (h)(1) An individual shall be presumed to require the care specified in subsection (a)(2) ((.) of this section for purposes of making payment to an extended care facility (subject to the provisions of section 1812) for posthospital extended care services which are furnished by such facility to such individual if— " (A) the certification referred to in subsection (a)(2)(C) of this section is submitted prior to or at the time of admission of such individual to such extended care facility, " (B) such certification states that the medical condition of the individual is a condition designated in regulations, " (C) such certification is accompanied by a plan of treatment for providing such services, and " (D) there is compliance with such other requirements and procedures as may be specified in regulations, but only for services furnished during such limited periods of time with respect to such conditions of the individual as may be prescribed in regulations by the Secretary, taking into account the medical severity of such conditions, the degree of incapacity, and the minimum length of stay in an institution generally needed for such conditions, and such other factors affecting the type of care to be provided as the Secretary deems pertinent. "(2) If the Secretary determines with respect to a physician that such physician is submitting with some frequency (A) erroneous certifications that individuals have conditions designated in regulations as provided in ^this subsection or (B) plans for providing services which are inappropriate, the provisions of paragraph (1) shall not apply, after the effective date of such determination, in any case in which such physician submits a certification or plan referred to in subparagraph (A), (B), o r (C) of paragraph (1).

42 USC 139Sd.

Erroneous certification, nonapplicability.

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text:
Page:United States Statutes at Large Volume 86.djvu/1450

 1408

PUBLIC LAW 92-603-OCT. 30, 1972 .. j,

42 USC 139Sf. 42 USC 1395d.

Erroneous certification, nonapplicability.

Effective date.

[86 STAT.

"Payment for Posthospital Home Health Services

" (i)(l) An individual shall be presumed to require the services specified in subsection (a)(2)(D) of this section for purposes of making payment to a home health agency (subject to the provisions of section 1812) for posthospital home health services furnished by such agency to such individual if— " (A) the certification and plan referred to in subsection (a)(2) (D) of this section are submitted in timely fashion prior to the first visit by such agency, " (B) such certification states that the medical condition of the individual is a condition designated in regulations, and " (C) there is compliance with such other requirements and procedures as may be specified in regulations, but only for services furnished during such limited numbers of visits with respect to such conditions of the individual as may be prescribed in regulations by the Secretary, taking into account the medical severity of such conditions, the degree of incapacity, and the minimum period of home confinement generally needed for such conditions, and such other factors affecting the type of care to be provided as the Secretary deems pertinent. "(2) If the Secretary determines with respect to a physician that such physician is submitting with some frequency (A) erroneous certifications that individuals have conditions designated in regulations as provided in this subsection or (B) plans for providing services which are inappropriate, the provisions of paragraph (1) shall not apply, after the effective date of such determination, in any case in which such physician submits a certification or plan referred to in subparagraph (A) or (B) of paragraph (1)." (b) The amendment made by subsection (a) and any regulations adopted pursuant to such amendment shall apply with respect to plans of care initiated on or after January 1, 1973, and with respect to admission to skilled nursing facilities and Iiome health plans initiated on or after such date. AUTHORITY OF SECRETARY TO TER3IINA1'E PAYMENTS TO SUPPLIERS OF SERVICES

SEC. 229. (a) Section 1862 of the Social Security Act (as amended Ante, p. 1382. by section 210 of this Act) is further amended by adding at the end thereof the following new subsection: " (d)(1) 'No payment may be made under this title with respect to any item or services furnished to an individual by a person where the Secretary determines under this subsection that such person— " (A) has knowingly and willfully made, or caused to be made, any false statement or representation of a material fact for use in an application for payment under this title or for use in determining the right to a payment under this title; " (B) has submitted or caused to be submitted (except in the ' case of a provider of services), bills or requests for payment under this title containing charges (or in applicable cases requests for payment of costs to such person) for services rendered which the Secretary finds, with the concurrence of the appropriate program Post, p. 1409. review team appointed pursuant to paragraph (4), to be substantially in excess of such person's customary charges (or in applicable cases substantially in excess of such person's costs) for such services, unless the Secretary finds there is good cause for such bills

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text:
Page:United States Statutes at Large Volume 86.djvu/1451

 86

STAT.]

PUBLIC LAW 92-603-.OCT. 30, 1972

or requests containing such charges (or in applicable cases, such costs); or " (C) has furnished services or supplies which are determined by the Secretary, with the concurrence of the members of the appropriate program review team appointed pursuant to paragraph (4) who are physicians or other professional personnel in the health care field, to be substantially in excess of the needs of individuals or to be harmful to individuals or to be of a grossly inferior quality. "(2) A determination made by the Secretary under this subsection shall be effective at such time and upon such reasonable notice to the public and to the person furnishing the services involved as may be specified in regulations. Such determination shall be effective with respect to services furnished to an individual on or after the effective date of such determination (except that in the case of inpatient hospital services, posthospital extended care services, and home health services such determination shall be effective in the manner provided in section 1866(b)(3) and (4) with respect to terminations of agreements), and shall remain in effect until the Secretary finds and gives reasonable notice to the public that the basis for such determination has been removed and that there is reasonable assurance that it will not recur. "(3) Any person furnishing services described in paragraph (1) who is dissatisfied with a determination made by the Secretary under this subsection shall be entitled to reasonable notice and opportunity for a hearing thereon by the Secretary to the same extent as is provided in section 205(b), and to judicial review of the Secretary's final decision after such hearing as is provided in section 205(g). "(4) For the purposes of paragraph (1)(B) and (C) of this subsection, and clause (F) of section 1866(b)(2), the Secretary shall, after consultation with appropriate State and local professional societies, the appropriate carriers and intermediaries utilized in the administration of this title, and consumer representatives familiar with the health needs of residents of the State, appoint one or more program review teams (composed of physicians, other professional personnel in the health care field, and consumer representatives) in each State which shall, among other things— " (A) undertake to review such statistical data on program utilization as may be submitted by the Secretary, " (B) submit to the Secretary periodically, as may be prescribed in regulations, a report on the results of such review, together with recommendations with respect thereto, " (C) undertake to review particular cases where there is a likelihood that the person or persons furnishing services and supplies to individuals may come within the provisions of paragraph (1)(B) and (C) of this subsection or clause (F) of section 1866(b)(2),and " (D) submit to the Secretary periodically, as may be prescribed in regulations, a report of cases reviewed pursuant to subparagraph (C) along with an analysis of, and recommendations with respect to, such cases." (b) Section 1866(b)(2) of such Act is amended by striking out the period at the end thereof and inserting in lieu thereof the following: ", or (D) that such provider has made, or caused to be made, any false statement or representation of a material fact for use in an application for payment under this title or for use in determining the right to a payment under this title, or (E) that such provider has submitted, or caused to be submitted, requests for payment under this title of amounts for rendering services substantially in excess of the

1409

Intra.

Determination, effective date, public notice.

Post,

p. 1427.

J u d i c i a l review.

42 USC 405. Program review teams. Intra.

Report to Secretary.

Report to Secretary.

42 USC 1395CC.

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text:
Page:United States Statutes at Large Volume 86.djvu/1452

 1410

PUBLIC LAW 92-603-OCT. 30, 1972

Ante,

p. 1408.

Ante,

p. 1395.

Ante, p. 1395; Post, p. 1447.

42 USC 1395. Ante, Ante, Ante,

p. 1408. p. 1409. p. 1395.

[86 STAT.

costs incurred by such provider for rendering such services, or (F) that such provider has furnished services or supplies which are determined by the Secretary, with the concurrence of the members of the appropriate program review team appointed pursuant to section 1862(d)(4) who are physicians or other professional personnel in the health care field, to be substantially in excess of the needs of individuals or to be harmful to individuals or to be of a grossly inferior quality." (c) Section 1903(i) of such Act (as added by section 224(c) of this Act) is further amended by striking out "shall not be made" and all that follows and inserting in lieu thereof the following: "shall not be made— "(1) with respect to any amount paid for it€>ms or services furnished under the plan after December 31, 1972, to the extent that such amount exceeds the charge which would be determined to be reasonable for such items or services under the fourth and fifth sentences of section 1842(b)(3); or "(2) with respect to any amount paid for services furnished under the plan after December 31, 1972, by a provider or other person during any period of time, if payment may not be made under title X VIII with respect to services furnished by such provider or person during such period of time solely by reason of a determination by the Secretary under section 1862(d)(1) or under clause (D), (E), or (F) of section 1866(b)(2)." (d) Section 506(f) of such Act (as added by section 224(d) of this Act) is further amended by striking out "no payment shall be made" and all that follows and inserting in lieu thereof the following: "no payment shall be made to any State thereunder— "(1) with respect to any amount paid for items or services furnished under the plan after December 31, 1972, to the extent that such amount exceeds the charge which would be determined to be reasonable for such items or services under the fourth and fifth sentences of section 1842(b)(3); or "(2) with respect to any amount paid for services furnished under the plan after December 31, 1972, by a provider or other person during any period of time, if payment may not be made under title X VIII with respect to services furnished by such provider or person during such period of time solely by reason of a determination by the Secretary under section 1862(d)(1) or under clause (D), (E), or (F) of section 1866(b)(2)." E L I M I N A T I O N OF REQUIREMENT T H A T STATES MOVE TOWARD C O M P R E H E N SIVE MEDICAID PROGRAMS

Repeals. 42 USC 1396b. 42 USC 1396b note.

SEC. 230. Section 1903(e) of the Social Security Act, and section 2(b) of Public Law 91-56 (approved August 9, 1969), are repealed. REPEAL, OF

42 USC 1396a,

SECTION

1902(d)

OF

MEDICAID

SEC. 231. Section 1902(d) of the Social Security Act is repealed. DETERMINATION OF REASONABLE COST OF I N P A T I E N T H O S P I T A L SERVICES U N D E R MEDICAID A N D U N D E R M A T E R N A L A N D C H I L D H E A L T H PROGRAM

81 Stat. 902. 42 USC 1396a.

SEC. 232. (a) Section 1902(a) (13)(D) of the Social Security Act is amended to read as follows: " (D) for payment of the reasonable cost of inpatient hospital services provided under the plan, as determined in

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PUBLIC LAW 92-603-OCT. 30, 1972

accordance with methods and standards which shall be developed by the State and reviewed and approved by the Secretary and (after notice of approval by the Secretary) included in the plan, except that the reasonable cost of any such services as determined under such methods and standards shall not exceed the amount which would be determined under section 1861(v) as the reasonable cost of such services for purposes of title X VIII; ". (b) Section 505(a)(6) of such Act is amended to read as follows: "(6) provides for payment of the reasonable cost of inpatient hospital services provided under the plan, as determined in accordance with methods and standards which shall be developed by the State and included in the plan, except that the reasonable cost of any such services as determined under such methods and standards shall not exceed the amount which would be determined under section 1861(v) as the reasonable cost of such services for purposes of title X VIII; ". (c) The amendments made by this section shall be effective July 1, 1972 (or earlier if the State plan so provides).

42 USC 1395X. 42 USC 1395. 42 USC 705.

Effective date.

A M O U N T OF P A Y M E N T S W H E R E CUSTOMARY CHARGES FOR SERVICES F U R N I S H E D ARE LESS T H A N REASONABLE COST

SEC. 233. (a) Section 1814(b) of the Social Security Act is amended to read as follows:

79 Stat. 294. 42 USC 1395f.

"Amount Paid to Providers " (b) The amount paid to any provider of services with respect to services for which payment may be made under this part shall, subject to the provisions of section 1813, be— "(1) the lesser of (A) the reasonable cost of such services, as determined under section 1861(v), or (B) the customary charges with respect to such services; or "(2) if such services are furnished by a public provider of services free of charge or at nominal charges to the public, the amount determined on the basis of those items (specified in regulations prescribed by the Secretary) included in the determination of such reasonable cost which the Secretary finds will provide fair compensation to such provider for such services." (b) Section 1833(a)(2) of such Act is amended to read as follows: "(2) in the case of services described in section 1832(a)(2)— 80 percent of— " (A) the lesser of (i) the reasonable cost of such services, as determined under section 1861(v), or (ii) the customary charges with respect to such services; or " (B) if such services are furnished by a public provider of services free of charge or at nominal charges to the public, the amount determined in accordance with section 1814(b)(2)." (c) Section 1903(i) of such Act (as added by section 224(c) and amended by section 229(c) of this Act) is further amended by striking out the period at the end of paragraph (2) and inserting in lieu thereof "; or", and by adding after paragraph (2) the following new paragraph: "(3) with respect to any amount expended for inpatient hospital services furnished under the plan to the extent that such amount exceeds the hospital's customary charges with respect to

42 USC 1395e. 42 USC 1395x.

79 Stat. 302. 42 USC 1395Z. 42 USC 1395k.

Supra.

Ante, 1410.

p p. 1395,

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[86 STAT.

such services or (if such services are furnished under the plan by a public institution free of charge or at nominal charges to the public) exceeds an amount determined on the basis of those items (specified in regulations prescribed by the Secretary) included in the determination of such payment which the Secretary finds will provide fair compensation to such institution for such . services." (d) Section 506(f) of such Act (as added by section 224(d) and 1410**' ^^' ^^^^' *^®iid®d by section 229(d) of this Act) is further amended by striking out the period at the end of paragraph (2) and inserting in lieu thereof "; or", and by adding after paragraph (2) the following new paragraph: "(3) with respect to any amount expended for inpatient hospital services furnished under the plan to the extent that such amount exceeds the hospital's customary charges with respect to such services or (if such services are furnished under the plan by a public institution free of charge or at nominal charges to the public) exceeds an amount determined on the basis of those items (specified in regulations prescribed by the Secretary) included in the determination of such payment which the Secretary finds will provide fair compensation to such institution for such services." (e) Clause (2) of the second sentence of section 509(a) of such Ante, p. 1389. Act (as amended by section 221(c)(3) of this Act) is further amended by inserting " (A) " before "the reasonable cost", and by inserting after "under the project," the following: "or (B) if less, the customary charges with respect to such services provided under the project, or (C) if such services are furnished under the project by a public institution free of charge or at nominal charges to the public, an amount determined on the basis of those items (specified in regulations prescribed by the Secretary) included in the determination of such reasonable c»st which the Secretary finds will provide fair compensation to such institution for such services". Effective (f) The amendments made by subsections (a) and (b) shall apply dates. to services furnished by hospitals, extended care facilities, and home health agencies in accounting periods beginning after December 31, 1972. The amendments made by subsections (c), (d), and (e) shall apply with respect to services furnished by hospitals in accounting periods beginning after December 31, 1972. INSTITUTIONAL PLANNING UNDER MEDICARE

Ante, p. 1383.

Post, p. 1413. 42 USC 1395X.

42 USC 1395x.

SEC. 234. (a) The first sentence of section 1861(e) of the Social ggcurlty Act Is amended— (1) by striking out "and" at the end of paragraph (7); (2) by redesignating paragraph (8) as paragraph (9); and (3) by inserting after paragraph (7) the following new paragraph: "(8) has in effect an overall plan and budget that meets the requirements of subsection (z); and". (b) Section 1861(f)(2) of such Act is amended to read as follows: "(2) satisfies the requirements of paragraphs (3) through (9) of subsection (e);". (c) Section 1861(g)(2) of such Act is amended to read as follows: "(2) satisfies the requirements of paragraphs (3) through (9) of subsection (e);". (d) The first sentence of section 1861(j) of such Act is amended— (1) by striking out "and" at the end of paragraph (9); (2) by redesignating paragraph (10) as paragraph (11); and

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PUBLIC LAW 92-603-OCT. 30, 1972

(3) by inserting after paragraph (9) the follo\\'ing new paragraph: "(10) has in effect an overall plan and budget that meets the requirements of subsection (z); and ". (e) Section 1861(o) of such Act is amended— (1) by striking out "and" at the end of paragraph (4); (2) by redesignating paragraph (5) as paragraph (6); and (3) by inserting after paragraph (4) the following new paragraph: "(5) has in effect an overall plan and budget that meets the requirements of subsection (z); and". (f) Section 1861 of such Act is further amended by adding at the end thereof the following new subsection:

Intra, 42 USC 1395x.

79 Stat. 3 1 3. 42 USC 1395x.

"Institutional Planning "(z) An overall plan and budget of a hospital, extended care facility, or home health agency shall be considered sufficient if it— "(1) provides for an annual operating budget which includes all anticipated income and expenses related to items which would, under generally accepted accounting principles, be considered income and expense items (except that nothing in this paragraph shall require that there be prepared, in connection with any budget, an item-by-item identification of the components of each type of anticipated expenditure or income); "(2) provides for a capital expenditures plan for at least a 3-year period (including the year to which the operating budget described in subparagraph (1) is applicable) which includes and identifies in detail the anticipated sources of financing for, and the objectives of, each anticipated expenditure in excess of $100,000 related to the acquisition of land, the improvement of land, buildings, and equipment, and the replacement, modernization, and expansion of the buildings and e<][uipment which would, under generally accepted accounting principles, be considered capital items; "(3) provides for review and updating at least annually; and " (4) is prepared, under the direction of the governing body of the institution or agency, by a committee consisting of representatives of the governing body, the administrative staff, and the medical staff (if any) of the institution or agency." (g)(1) Section 1814(a)(2)(C) and section 1814(a)(2)(D) of such Act are each amended by striking out "and (8) " and inserting in lieu thereof "and (9)". (2) Section 1863 of such Act is amended by striking out "subsections (e)(8), (f)(4), (g)(4), (j) ( 1 0), and (o)(5) " and inserting in lieu thereof "subsections (e)(9), (f)(4), (g)(4), (j) (11), and (o)(6) ". (h) Section 1865 of such Act is amended— (1) by striking out "(except paragraph (6) thereof)" in the first sentence and inserting in lieu thereof "(except paragraphs (6) and (8) thereof)", and (2) by striking out the second sentence and inserting in lieu thereof the following: "If such Commission, as a condition for accreditation of a hospital, (1) requires a utilization review plan as defined in section 1861(k) or imposes another requirement which serves substantially the same purpose, or (2) requires institutional plans as defined in section 1861(z) or imposes another requirement which serves substantially the same purpose, the

42 USC 139Sf. 42 USC 1395Z.

42 USC 139Sbb.

42 USC 1395X. Supra,

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[86 STAT.

Secretary is authorized to find that all institutions so accredited by the Commission comply also with section 1861(e)(6) or 1861(e) 42 USC 1395%. (8), as the case may be." Effective date. (i) The amendments made by this section shall apply with respect to any provider of services for fiscal yeare (of such provider) beginning after the fifth month following the month in which this Act is enacted. P A Y M E N T S TO STATES U N D E R MEDICAID FOR I N S T A L L A T I O N A N D OPERATION OF C L A I M S PROCESSING A N D INFORMATION RETRIEVAL SYSTEMS

42 USC 1396b.

SEC. 235. (a) Section 1903(a) of the Social Security Act is amended by redesignating paragraph (3) as paragraph (4), and by inserting after paragraph (2) the following new paragraph: "(3) an amount equal to— " (A)(i) 90 per centum of so much of the sums expended during such quarter as are attributable to the design, development, or installation of such mechanized claims processing and information retrieval systems as the Secretary determines are likely to provide more efficient, economical, and effective administration of the plan and to be compatible with the claims processing and information retrieval systems utilized 42 USC 1395. in the administration of title X VIII, including the State's share of the cost of installing such a system to be used jointly in the administration of such State's plan and the plan of any other State approved under this title, and "(ii) 90 per centum of so much of the sums expended during any such quarter in the fiscal year ending June 30, 1972, or the fiscal year ending June 30, 1973, as are attributable to the design, development, or installation of cost determination systems for State-owned general hospitals (except that the total amount paid to all States under this clause for either such fiscal year shall not exceed $150,000), and " (B) 75 per centum of so much of the sums expended during such quarter as are attributable to the operation of systems (whether such systems are operated directly by the State or by another person under a contract with the State) of the type described in subparagraph (A)(i) (whether or not designed, developed, or installed with assistance under such subparagraph) which are approved by the Secretary and which include provision for prompt written notice to each individual who is furnished services covered by the plan of the specific services so covered, the name of the person or persons furnishing the services, the date or dates on which the services were furnished, and the amount of the payment or payments made under the plan on account of the services; plus". Effective date. (b) The amendments made by subsection (a) shall apply with respect to expenditures under State plans approved under title X IX 42 USC 1396. of the Social Security Act made after June 30, 1971. P R O H I B I T I O N AGAINST REASSIGNMENT OF CLAIMS TO B E N E F I T S

42 USC 139SU.

S E C 236. (a) Section 1842(b) of the Social Security Act is amended by adding at the end thereof the following new paragraph: "(5) No payment under this part for a service provided to any 42 USC i395gg. individual shall (except as provided in section 1870) be made to anyone other than such individual or (pursuant to an assignment

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STAT.]

PUBLIC LAW 92-^03-OCT. 30, 1972

described in subparagraph (B) (ii) of paragraph (3)) the physician or other person who provided the service, except that payment may be made (A) to the employer of such physician or other person if such physician or other person is required as a condition of his employment to turn over his fee for such service to his employer, or (B) (where the service was provided in a hospital, clinic, or other facility) to the facility in which the service was provided if there is a contractual arrangement between such physician or other person and such facility under which such facility submits the bill for such service." (b) Section 1902(a) of such Act is amended— (1) by striking out "and" at the end of paragraph (30); (2) by striking out the period at the end of paragraph (31) and inserting in lieu thereof "; and"; and (3) by inserting after paragraph (31) the following new paragraph: "(32) provide that no payment under the plan for any care or service provided to an individual by a physician, dentist, or other individual practitioner shall be made to anyone other than such individual or such physician, dentist, or practitioner, except that payment may be made (A) to the employer of such physician, dentist, or practitioner if such physician, dentist, or practitioner is required as a condition of his employment to turn over his fee for such care or service to his employer, or (B) (where the care or service was provided in a hospital, clinic, or other facility) to the facility in which the care or service was provided if there is a contractual arrangement between such physician, dentist, or practitioner and such facility under which such facility submits the bill for such care or service." (c) The amendment made by subsection (a) shall apply with respect to bills submitted and requests for payments made after the date of the enactment of this Act. The amendments made by subsection (b) shall be effective January 1, 1973 (or earlier if the State plan so provides).

1415 Ante, p. 1384; Post, p. 1455.

42 USC 1396a.

Effective dates.

U T I L I Z A T I O N REVIEW REQUIREMENTS FOR H O S P I T A L S A N D SKILLED N U R S I N G H O M E S U N D E R MEDICAID A N D U N D E R M A T E R N A L A N D C H I L D H E A L T H PROGRAM

SEC. 237. (a)(1) Section 1903(i) of the Social Security Act (as added by section 224(c) and amended by sections 229(c) and 233(c) of this Act) is further amended by striking out the period at the end of paragraph (3) and inserting in lieu thereof "; or", and by adding after paragraph (3) the following new paragraph: "(4) with respect to any amount expended for care or services furnished under the plan by a hospital or skilled nursing home unless such hospital or skilled nursing home has in effect a utilization review plan which meets the requirements imposed by section 1861(k) for purposes of title X VIII; and if such hospital or skilled nursing home has in effect such a utilization review plan for purposes of title X VIII, such plan shall serve as the plan required by this subsection (with the same standards and procedures and the same review committee or group) as a condition of payment under this title; the Secretary is authorized to waive the requirements of this paragraph if the State agency demonstrates to his satisfaction that it has in operation utilization review procedures which are superior in their effectiveness to the procedures required under section 1861(k). " 82-081 O - 73 - 92

Ante, pp. 1395, 1410, 1411.

42 USC 1395X, 1395.

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 1416 42 USC 1396a.

Ante, pp. 1395, 1410, 1412.

42 USC 1395X, 1395.

42 USC 1395x. 42 USC 1396.

Effective dates.

PUBLIC LAW 92-603-OCT. 30, 1972

[86 STAT.

(2) Section 1902(a) (30) of such Act is amended by inserting " (including but not limited to utilization review plans as provided for in section 1903(i)(4)) " after "plan" where it first appears. (b) Section 506(f) of such Act (as added by section 224(d) and amended by sections 229(d) and 233(d) of this Act) is further amended by striking out the period at the end of paragraph (3) and inserting in lieu thereof "; or", and by adding after paragraph (3) the following new paragraph: "(4) with respect to any amount expended for services furnished under the plan by a hospital unless such hospital has in effect a utilization review plan which meets the requirement imposed by section 1861(k) for purposes of title X VIII; and if such hospital has in effect such a utilization review plan for purposes of title X VIII, such plan shall serve as the plan required by this subsection (with the same standards and procedures and the same review committee or ^roup) as a condition of payment under this title; the Secretary is authorized to waive the requirements of this paragraph in any State if the State agency demonstrates to his satisfaction that it has in operation utilization review procedures which are superior in their effectiveness to the procedures required under section 1861(k). " (c) Section 1861(k) of such Act is amended by adding at the end thereof the following new sentence: "If the Secretary determines that the utilization review procedures established pursuant to title X IX are superior in their effectiveness to the procedures required under this section, he may, to the extent that he deems it appropriate, require for purposes of this title that the procedures established pursuant to title X IX be utilized instead of the procedures required by this section." (d)(1) The amendments made by subsections (a)(1) and (b) shall apply with respect to services furnished in calendar quarters beginning after June 30, 1973. (2) The amendment made by subsection (a)(2) shall be effective July 1, 1973. NOTIFICATION OF UNNECESSARY ADMISSION TO A HOSPITAL OR EXTENDED CARE FACILITY UNDER MEDICARE

42 USC 1395f.

Effective date.

SEC. 238. (a) Section 1814(a)(7) of the Social Security Act is amended by striking out "as described in section 1861(k)(4) " and inserting in lieu thereof "as described in section 1861(k)(4), including any finding made in the course of a sample or other review of admissions to the institution". (b) The amendment made by subsection (a) shall apply with respect to ^rvices furnished after the second month following the month in which this Act is enacted. USE OF STATE HEALTH AGENCY TO PERFORM CERTAIN FUNCTIONS UNDER MEDICAID AND UNDER MATERNAL AND CHILD HEALTH PROGRAM

42 USC 1396a.

42 USC 1395aa.

SEC. 239. (a) Section 1902(a)(9) of the Social Security Act is amended to read as follows: "(9) provide—• " (A) that the State health agency, or other appropriate State medical agency (whichever is utilized by the Secretary for the purpose specified in the first sentence of section 1864 (a)), shall be responsible for establishing and maintaining health standards lor private or public institutions in which

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