[Congressional Bills 103th Congress]
[From the U.S. Government Publishing Office]
[S. 726 Introduced in Senate (IS)]

103d CONGRESS
  1st Session
                                 S. 726

To amend the Social Security Act to create a new program to update and 
  maintain the infrastructure requirements of our Nation's essential 
   urban and rural safety net health care facilities, and for other 
                               purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                April 1 (legislative day, March 3), 1993

 Mr. Daschle (for himself, Mr. Breaux, and Mr. Baucus) introduced the 
 following bill; which was read twice and referred to the Committee on 
                                Finance

_______________________________________________________________________

                                 A BILL


 
To amend the Social Security Act to create a new program to update and 
  maintain the infrastructure requirements of our Nation's essential 
   urban and rural safety net health care facilities, and for other 
                               purposes.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``National Health Safety Net 
Infrastructure Act''.

SEC. 2. FINDINGS.

    The Congress finds that--
            (1) a small handful of urban and rural health care 
        facilities in America today serve as an essential health safety 
        net for many millions of individuals in underserved inner 
        cities and rural areas;
            (2) these safety net health care facilities bear a 
        disproportionate share of the burden of providing care to the 
        Nation's 35,000,000 uninsured, as well as serving as the 
        community hospital and family doctor to millions of other low-
        income urban and rural residents who are covered by medicaid, 
        medicare, and often inadequate private insurance;
            (3) these health care facilities are often also a 
        community's only source of essential, specialized health 
        services, including primary care, emergency and trauma care, 
        burn services, high-risk pregnancy services, and neonatal 
        intensive care;
            (4) due to their geographic location and the lack of any 
        other facilities or services (including physicians) in many 
        inner city and rural communities, these safety net health care 
        facilities will continue to play an essential role in the 
        health system even following the enactment of national health 
        system reform;
            (5) this safety net threatens to unravel due to the capital 
        infrastructure crisis which these health care facilities face;
            (6) the buildings and equipment in which these health care 
        facilities rely to provide high quality medical care have been 
        allowed to deteriorate seriously and have not been able to keep 
        pace with outpatient delivery services, putting in jeopardy the 
        delivery of quality health services to major portions of the 
        Nation's population;
            (7) chronic underinvestment in these health care facilities 
        is evidenced by the fact that the average age of physical plant 
        of urban, public hospitals is nearly 26 years, as compared to a 
        national average of only 7 years for private hospitals;
            (8) the financial picture of rural hospitals in particular 
        has been affected by cutbacks in Federal reimbursement 
        payments, a decline in inpatient utilization, increased growth 
        rate in uncompensated care for inpatient care and expanded 
        services, negative margins, and rural economic problems;
            (9) small rural hospitals find it increasingly difficult to 
        access inexpensive capital markets to maintain and improve 
        their infrastructure to ensure high quality health care 
        services to citizens in rural areas;
            (10) the average capital expenditure for urban public 
        hospitals is $12,600 per bed, as compared to a national average 
        expenditure per bed of $23,500;
            (11) traditional methods of financing rebuilding and 
        renovation projects are either not available to these health 
        care facilities, or are increasingly limited due to fiscal 
        pressures on local governments who issue their bonds or to the 
        high costs of issuing revenue bonds in a bond market that is 
        skeptical regarding the local appropriations made to these 
        health care facilities; and
            (12) the Federal Government can help alleviate this crisis 
        with carefully targeted and highly leveraged resources for 
        those health care facilities in the greatest need of 
        assistance.

   TITLE I--CAPITAL FINANCING ASSISTANCE FOR SAFETY NET HEALTH CARE 
                   FACILITIES PROVIDING INDIGENT CARE

SEC. 101. ESTABLISHMENT OF CAPITAL FINANCING ASSISTANCE PROGRAM.

    (a) In General.--The Social Security Act is amended by adding at 
the end the following new title:

 ``TITLE XXI--CAPITAL FINANCING ASSISTANCE FOR SAFETY NET HEALTH CARE 
                               FACILITIES

                    ``Subtitle A--General Provisions

                  ``payments to health care facilities

    ``Sec. 2101. (a) In General.--The Secretary, with the approval of 
the Health Safety Net Infrastructure Trust Fund Board of Trustees 
described in section 2104(d) (hereafter in this title referred to as 
the `Trust Fund Board'), shall make payments, from amounts in the 
Health Safety Net Infrastructure Trust Fund established under section 
2104(a) (hereafter in this title referred to as the `Trust Fund'), for 
capital financing assistance to eligible health care facilities whose 
applications for assistance have been approved under this title.
    ``(b) General Eligibility Requirements for Assistance.--
            ``(1) Eligible health care facilities described.--
                    ``(A) In general.--A health care facility shall be 
                generally eligible for capital financing assistance 
                under this title if the health care facility--
                            ``(i) receives an additional payment under 
                        section 1886(d)(5)(F) and is described in 
                        clause (i)(II) or clause (vii)(I) of such 
                        section, or is deemed a disproportionate share 
                        hospital under a State plan for medical 
                        assistance under title XIX on the basis 
                        described in section 1923(b)(1);
                            ``(ii) is a hospital which meets the 
                        criteria for designation by the Secretary as an 
                        essential access community hospital under 
                        section 1820(i)(1) or a rural primary care 
                        hospital under section 1820(i)(2) (whether or 
                        not such hospital is actually designated under 
                        such section);
                            ``(iii) is a Federally qualified health 
                        center (as defined in section 1905(l)(2)(B));
                            ``(iv) is a hospital which--
                                    ``(I) is a sole community provider; 
                                or
                                    ``(II) has closed within the 
                                preceding 12 months;
                            ``(v) is a facility which--
                                    ``(I) provides service to ill or 
                                injured individuals prior to the 
                                transportation of such individuals to a 
                                hospital or provides inpatient care to 
                                individuals needing such care for a 
                                period not longer than 96 hours;
                                    ``(II) is located in a county (or 
                                equivalent unit of local government) 
                                with fewer than 6 residents per square 
                                mile or is located more than 35 road 
                                miles from the nearest hospital;
                                    ``(III) permits a physician 
                                assistant or nurse practitioner to 
                                admit and treat patients under the 
                                supervision of a physician not present 
                                in such facility; and
                                    ``(IV) has obtained a waiver from 
                                the Secretary permitting the facility 
                                to participate in the medicare program 
                                under title XVIII; or
                            ``(vi) is a hospital that the Secretary 
                        otherwise determines to be an appropriate 
                        recipient of assistance under this title on the 
                        basis of the existence of a patient care 
                        operating deficit, a demonstrated inability to 
                        secure or repay financing for a qualifying 
                        project on reasonable terms, or such other 
                        criteria as the Secretary considers 
                        appropriate.
                    ``(B) Development of criteria.--For purposes of 
                subparagraph (A)(vi), with respect to rural hospitals 
                which are at risk or critical to health care access, 
                the Prospective Payment Review Commission, not later 
                than January 1, 1994, shall develop criteria to assist 
                the Secretary in deciding if such hospitals deserve 
                assistance, after considering, at a minimum, the 
                following factors:
                            ``(i) At-risk rural hospitals.--In the case 
                        of rural hospitals the closure of which within 
                        the next year is imminent or the continued 
                        operation of which over a 2- to 5-year period 
                        is questionable, such factors as the level of 
                        health resources available in a community as 
                        measured by physician supply, the population 
                        base of the area served by the hospital and 
                        utilization of services by such population as 
                        measured by service area population, and 
                        financial indicators predictive of closure.
                            ``(ii) Rural hospitals critical to health 
                        care access.--In the case of rural hospitals 
                        which provide access to essential health 
                        services within a service area where no other 
                        provider of such essential services exists, 
                        such factors as the market share of the 
                        hospital for an area or population, the number 
                        of outpatient visits, the proximity of the next 
                        closest provider of such services, and the 
                        degree to which the area population is 
                        medically underserved.
            ``(2) Ownership requirements.--In order to be eligible for 
        assistance under this title, a health care facility (other than 
        a health care facility described in clauses (ii) and (v) of 
        paragraph (1)) must--
                    ``(A) be owned or operated by a unit of State or 
                local government;
                    ``(B) be a quasi-public corporation, defined as a 
                private, nonprofit corporation or public benefit 
                corporation which is formally granted one or more 
                governmental powers by legislative action through (or 
                is otherwise partially funded by) the State 
                legislature, city or county council;
                    ``(C) be a private nonprofit health care facility 
                which has contracted with, or is otherwise funded by, a 
                governmental agency to provide health care services to 
                low income individuals not eligible for assistance 
                under title XVIII or title XIX of this Act, where 
                revenue from such contracts constitute at least 10 
                percent of the facility's operating revenues over the 
                prior 3 fiscal years; or
                    ``(D) be a nonprofit small rural health care 
                facility (as determined by the Secretary).
    ``(c) Meeting Additional Specific Criteria.--Health care facilities 
that are generally eligible for assistance under this title under 
subsection (b) may apply for the specific programs described in this 
title and must meet any additional criteria for participation in such 
programs.
    ``(d) Assistance Available.--Capital financing assistance available 
under this title shall include loan guarantees, interest rate 
subsidies, matching loans and direct grants. Health care facilities 
determined to be generally eligible for assistance under this title may 
apply for and receive more than one type of assistance under this 
title.

                      ``application for assistance

    ``Sec. 2102. (a) In General.--No health care facilities may receive 
assistance for a qualifying project under this title unless the health 
care facility--
            ``(1) has filed with the Secretary, in a form and manner 
        specified by the Secretary, with the advice and approval of the 
        Trust Fund Board (as described in section 2104(d)), an 
        application for assistance under this title;
            ``(2) establishes in its application (for its most recent 
        cost reporting period) that it meets the criteria for general 
        eligibility under this title;
            ``(3) includes a description of the project, including the 
        community in which it is located, and describes utilization and 
        services characteristics of the project and the health care 
        facility, and the patient population that is to be served;
            ``(4) describes the extent to which the project will 
        include the financial participation of State and local 
        governments if assistance is granted under this title, and all 
        other sources of financing sought for the project; and
            ``(5) establishes, to the satisfaction of the Secretary and 
        the Trust Fund Board, that the project meets the additional 
        criteria for each type of capital financing assistance for 
        which it is applying.
    ``(b) Criteria for Approval.--The Secretary, with the approval of 
the Trust Fund Board, shall determine for each application for 
assistance under this title--
            ``(1) whether the health care facility meets the general 
        eligibility criteria under section 2101(b);
            ``(2) whether the health care facility meets the specific 
        eligibility criteria of each type of assistance for which it 
        has applied, including whether the health care facility meets 
        any criteria for priority consideration for the type of 
        assistance for which it has applied;
            ``(3) whether the capital project for which assistance is 
        being requested is a qualifying project under this title; and
            ``(4) whether funds are available, pursuant to the 
        limitations of each program, to fully fund the request for 
        assistance.
    ``(c) Priority of Applications.--In addition to meeting the 
criteria otherwise described in this title, at the discretion of the 
Trust Fund Board, the Secretary shall give preference to those 
applications for qualifying projects that--
            ``(1)(A) are necessary to bring existing safety net health 
        care facilities into compliance with accreditation standards of 
        fire and life safety, seismic, or other related Federal, State 
        or local regulatory standards;
            ``(B) improve the provision of essential services such as 
        emergency medical and trauma services, AIDS and infectious 
        disease, perinatal, burn, primary care, and other services 
        which the Trust Fund Board may designate; or
            ``(C) provide access to otherwise unavailable essential 
        health services to the indigent and other needy persons within 
        the health care facility's territorial area;
            ``(2) include specific State or local governmental or other 
        non-Federal assurances of financial support if assistance for a 
        qualifying project is granted under this title; and
            ``(3) are unlikely to be financed without assistance 
        granted under this title.
    ``(d) Submission of Applications.--Applications under this title 
shall be submitted to the Secretary through the Trust Fund Board. If 
two or more health care facilities join in the project, the application 
shall be submitted by all participating health care facilities jointly. 
Such applications shall set forth all of the descriptions, plans, 
specifications, and assurances as required by this title and contain 
other such information as the Trust Fund Board shall require.
    ``(e) Opportunity for Appeal.--The Trust Fund Board shall afford a 
health care facility applying for a loan guarantee under this section 
an opportunity for a hearing if the guarantee is denied.
    ``(f) Applications for Amendments.--Amendment of an approved 
application shall be subject to approval in the same manner as an 
original application.

                   ``public service responsibilities

    ``Sec. 2103. (a) In General.--Any health care facility accepting 
capital financing assistance under this title shall agree--
            ``(1) to make the services of the facility or portion 
        thereof to be constructed, acquired, or modernized available to 
        all persons; and
            ``(2) to provide a significant volume of services to 
        persons unable to pay therefore, consistent with other 
        provisions of this Act and the amount of assistance received 
        under this title.
    ``(b) Enforcement.--The Director of the Office of Civil Rights of 
the Department of Health and Human Services shall be given the power to 
enforce the public service responsibilities described in this section.

             ``health safety net infrastructure trust fund

    ``Sec. 2104. (a) Creation of Trust Fund.--There is established in 
the Treasury of the United States a trust fund to be known as the 
Health Safety Net Infrastructure Trust Fund, consisting of such amounts 
as may be transferred, appropriated, or credited to such Trust Fund as 
provided in this title.
    ``(b) Authorization of Appropriations to Trust Fund.--There are 
authorized to be appropriated to the Trust Fund such sums as may be 
necessary to carry out the purposes of this title.
    ``(c) Expenditures From Trust Fund.--Amounts in the Trust Fund 
shall be available, pursuant to appropriations Acts, only for making 
expenditures to carry out the purposes of this title.
    ``(d) Board of Trustees; Composition; Meetings; Duties.--
            ``(1) In general.--There shall be created a Health Safety 
        Net Infrastructure Trust Fund Board of Trustees composed of the 
        Secretary of Health and Human Services, the Secretary of the 
        Treasury, the Assistant Secretary for Health, and the 
        Administrator of the Health Care Financing Administration (all 
        serving in their ex officio capacities), and 5 public members 
        who shall be appointed for 4 year terms by the President, from 
        the following categories--
                    ``(A) one chief health officer from a State;
                    ``(B) one chief executive officer of a health care 
                facility that meets the general eligibility criteria of 
                this title;
                    ``(C) one representative of the financial 
                community; and
                    ``(D) two additional public or consumer 
                representatives.
            ``(2) Duties.--The Board of Trustees shall meet no less 
        than quarterly and shall have the responsibility to approve 
        implementing regulations, to establish criteria, and to 
        recommend and approve expenditures by the Secretary under the 
        programs set forth in this title.
            ``(3) Managing trustee.--The Secretary of the Treasury 
        shall serve as the Managing Trustee of the Trust Fund, and 
        shall be responsible for the investment of funds. The 
        provisions of subsections (b) through (e) of section 1817 shall 
        apply to the Trust Fund and the Managing Trustee of the Trust 
        Fund in the same manner as they apply to the Federal Hospital 
        Insurance Trust Fund and the Managing Trustee of that Trust 
        Fund.

                            ``administration

    ``Sec. 2105. (a) In General.--The Administrator of the Health Care 
Financing Administration shall serve as Secretary of the Board of 
Trustees and shall administer the programs under this title.
    ``(b) Limitation on Administrative Expenses.--Not more than 5 
percent of the funds annually appropriated to the Trust Fund may be 
available for administration of the Trust Fund or programs under this 
title.

                     ``Subtitle B--Loan Guarantees

  ``provision of loan guarantees to safety net health care facilities

    ``Sec. 2110. (a) In General.--The Safety Net Infrastructure Trust 
Fund will provide a Federal guarantee of loan repayment, including 
guarantees of repayment of refinancing loans, to non-Federal lenders 
making loans to eligible health care facilities for health care 
facility replacement (either by construction or acquisition), 
modernization and renovation projects, and capital equipment 
acquisition.
    ``(b) Purposes.--The loan guarantee program shall be designed by 
the Trust Fund Board with the goal of rebuilding and maintaining the 
essential health services of health care facilities eligible for 
assistance under this title.

                            ``eligible loans

    ``Sec. 2111. (a) In General.--Loan guarantees under this subtitle 
are available for loans made to eligible health care facilities for 
replacement facilities (either newly constructed or acquired), 
modernization and renovation of existing facilities, and for capital 
equipment acquisition.
    ``(b) Loan Guarantee Must Be Essential to Bond Financing.--Eligible 
health care facilities must demonstrate that a Federal loan guarantee 
is essential to obtaining bond financing from non-Federal lenders at a 
reasonably affordable rate of interest.
    ``(c) Additional Eligibility Criteria for Loan Guarantees.--In 
order to be eligible for assistance under this subtitle, a health care 
facility must demonstrate that the following criteria are met:
            ``(1) The health care facility has evidence of an ability 
        to meet debt service.
            ``(2) The assistance, when considered with other resources 
        available to the project, is necessary and will restore, 
        improve, or maintain the financial or physical soundness of the 
        health care facility.
            ``(3) The applicant agrees to assume the public service 
        responsibilities described in section 2103.
            ``(4) The project is being, or will be, operated and 
        managed in accordance with a management-improvement-and-
        operating plan which is designed to reduce the operating costs 
        of the project, which has been approved by the Trust Fund 
        Board, and which includes--
                    ``(A) a detailed maintenance schedule;
                    ``(B) a schedule for correcting past deficiencies 
                in maintenance, repairs, and replacements;
                    ``(C) a plan to upgrade the project to meet cost-
                effective energy efficiency standards prescribed by the 
                Trust Fund Board;
                    ``(D) a plan to improve financial and management 
                control systems;
                    ``(E) a detailed annual operating budget taking 
                into account such standards for operating costs in the 
                area as may be determined by the Trust Fund Board; and
                    ``(F) such other requirements as the Trust Fund 
                Board may determine.
            ``(5) The application includes stringent provisions for 
        continued State or local support of the program, both with 
        respect to operating and financial capital.
            ``(6) The terms, conditions, maturity, security (if any), 
        and schedule and amount of repayments with respect to the loan 
        are sufficient to protect the financial interests of the United 
        States and are otherwise reasonable and in accord with 
        regulation, including a determination that the rate of interest 
        does not exceed such annual percentage on the principal 
        obligation outstanding as the Trust Fund Board determines to be 
        reasonable, taking into account the range of interest rates 
        prevailing in the private market for similar loans and the 
        risks assumed by the United States.
            ``(7) The health care facility must meet such other 
        additional criteria as the Secretary may impose.
    ``(e) State or Local Participation.--Projects in which State or 
local governmental entities participate in the form of first guarantees 
of part or all of the total loan value shall be given a preference for 
loan guarantees under this subtitle.

                         ``guarantee allotments

    ``Sec. 2112. (a) In General.--$150,000,000 shall be annually 
allocated within the Trust Fund to the loan guarantee program 
established by this subtitle in order to create a cumulative reserve in 
support of loan guarantees.
    ``(b) Loan Guarantees for Rural Health Care Facilities.--At least 
20 percent of the dollar value of loan guarantees made under this 
program during any given year shall be allocated for eligible rural 
health care facilities, to the extent a sufficient number of 
applications are made by such health care facilities.
    ``(c) Guarantees for Small Loans.--At least $200,000,000 of the 
annual dollar value of loan guarantees made under the program shall be 
reserved for loans of under $50,000,000, if there are a sufficient 
number of applicants for loans of that size.
    ``(d) Special Rule for Refinancing Loans.--Not more than 20 percent 
of the amount allocated each year to the loan guarantee program 
established by this subtitle may be allocated to guarantee refinancing 
loans during the year.

               ``terms and conditions of loan guarantees

    ``Sec. 2113. (a) In General.--The principal amount of the 
guaranteed loan, when added to any Federal grant assistance made under 
this title, may not exceed 95 percent of the total value of the 
project, including land.
    ``(b) Guarantees Provided May Not Supplant Other Funds.--Guarantees 
provided under this subtitle may not be used to supplant other forms of 
State or local support.
    ``(c) Right To Recover Funds.--The United States shall be entitled 
to recover from any applicant health care facility the amount of 
payments made pursuant to any loan guarantee under this subtitle, 
unless the Trust Fund Board for good cause waives its right of 
recovery, and the United States shall, upon making any such payment 
pursuant to any such loan guarantee be subrogated to all of the rights 
of the recipients of the payments.
    ``(d) Modification of Terms.--Loan guarantees made under this 
subtitle shall be subject to further terms and conditions as the Trust 
Fund Board determines to be necessary to assure that the purposes of 
this Act will be achieved, and any such terms and conditions may be 
modified by the Trust Fund Board to the extent that it determines such 
modifications to be consistent with the financial interest of the 
United States.
    ``(e) Terms Are Incontestable Absent Fraud or Misrepresentation.--
Any loan guarantee made by the Trust Fund Board pursuant to this 
subtitle shall be incontestable in the hands of an applicant on whose 
behalf such guarantee is made, and as to any person who makes or 
contracts to make a loan to such applicant in reliance thereon, except 
for fraud or misrepresentation on the part of such applicant or other 
person.

                     ``premiums for loan guarantees

    ``Sec. 2114. (a) In General.--The Trust Fund Board shall determine 
a reasonable loan insurance premium which shall be charged for loan 
guarantees under this subtitle, taking into account the availability of 
the reserves created under section 2112. Premium charges shall be 
payable in cash to the Trust Fund Board, either in full upon issuance, 
or annually in advance. In addition to the premium charge herein 
provided for, the Trust Fund Board is authorized to charge and collect 
such amount as it may deem reasonable for the appraisal of a property 
or project offered for insurance and for the inspection of such 
property or project.
    ``(b) Payment in Advance.--In the event that the principal 
obligation of any loan accepted for insurance under this subtitle is 
paid in full prior to the maturity date, the Trust Fund Board is 
authorized in its discretion to require the payment by the borrower of 
an adjusted premium charge in such amount as the Board determines to be 
equitable, but not in excess of the aggregate amount of the premium 
charges that the health care facility would otherwise have been 
required to pay if the loan had continued to be insured until maturity 
date.
    ``(c) Trust Fund Board May Waive Premiums.--The Trust Fund Board 
may in its discretion partially or totally waive premiums charged for 
loan insurance under this section for financially distressed health 
care facilities (as described by the Secretary).

               ``procedures in the event of loan default

    ``Sec. 2115. (a) In General.--Failure of the borrower to make 
payments due under or provided by the terms of a loan accepted for 
insurance under this subtitle shall constitute a default.
    ``(b) Assignment of Defaulted Loans.--If a default continues for 30 
days, then, upon the lender's transfer to the Trust Fund Board of all 
its rights and interests arising under the defaulted loan or in 
connection with the loan transaction, the lender shall be entitled to 
debentures which, together with a certificate of claim, are equal in 
value to the amount the lender would have received if, on the date of 
transfer, the borrower had repaid the loan in full, together with the 
amount of necessary expenses incurred by the lender in connection with 
the default.
    ``(c) Foreclosure by Lender.--Subject to the approval of the Trust 
Fund Board, or as provided in regulations, the lender may foreclose on 
the property securing the defaulted loan.
    ``(d) Foreclosure by Trust Fund Board.--The Trust Fund Board is 
authorized to--
            ``(1) acquire possession of and title to any property 
        securing a defaulted loan by voluntary conveyance in 
        extinguishment of the indebtedness, or
            ``(2) institute proceedings for foreclosure on the property 
        securing any such defaulted loan and prosecute such proceedings 
        to conclusion.
    ``(e) Handling and Disposal of Property; Settlement of Claims.--
            ``(1) Payment for certain expenses.--Notwithstanding any 
        other provision of law relating to the acquisition, handling, 
        or disposal of real and other property by the United States, 
        the Trust Fund Board shall also have power, for the protection 
        of the interests of the Trust Fund, to pay out of the Trust 
        Fund all expenses or charges in connection with, and to deal 
        with, complete, reconstruct, rent, renovate, modernize, insure, 
        make contracts for the management of, or establish suitable 
        agencies for the management of, or sell for cash or credit or 
        lease in its discretion, any property acquired by the Trust 
        Fund under this section.
            ``(2) Settlement of claims.--Notwithstanding any other 
        provision of law, the Trust Fund Board shall also have the 
        power to pursue to final collection by way of compromise or 
        otherwise all claims assigned and transferred to the Trust Fund 
        in connection with the assignment, transfer, and delivery 
        provided for in this section, and at any time, upon default, to 
        foreclose or refrain from foreclosing on any property secured 
        by any defaulted loan assigned and transferred to or held by 
        the Trust Fund.
            ``(3) Limitations on authority.--Subsections (a) and (b) 
        shall not be construed to apply to any contract for hazard 
        insurance, or to any purchase or contract for services or 
        supplies on account of such property if the amount thereof does 
        not exceed $1,000.
    ``(f) Regulations.--The Trust Fund Board shall propose and the 
Secretary shall promulgate regulations governing procedures in the 
event of a default on a loan accepted for insurance under this 
subtitle.

                 ``Subtitle C--Interest Rate Subsidies

                 ``provision of interest rate subsidies

    ``Sec. 2121. (a) In General.--The Secretary, with the approval of 
the Trust Fund Board, shall make available interest subsidies to reduce 
the cost of financing qualifying projects.
    ``(b) Purposes.--The interest subsidy program shall provide a 
partial Federal subsidy of debt service payment where State or local 
entities have demonstrated a significant commitment to financing health 
care facility replacement (either by construction or acquisition), 
modernization, and renovation projects by undertaking the issuance of 
bonds.

                            ``eligible loans

    ``Sec. 2122. (a) In General.--Eligible health care facilities 
should have issued or plan to issue bonds for capital projects or be 
responsible for paying debt service on general obligation or revenue 
bonds issued on the eligible health care facility's behalf. To be 
eligible, bonds must have been issued after December 31, 1990.
    ``(b) Non-Federal Participation Requirement.--In order to be 
eligible for assistance under this subtitle, a health care facility 
must receive assistance from non-Federal sources in an amount not less 
than the amount of the assistance provided under this subtitle.

                        ``allotment of subsidies

    ``Sec. 2123. (a) In General.--The Trust Fund Board shall make 
available $220,000,000 in interest subsidies annually.
    ``(b) Qualifying Non-Federal Loans.--Interest subsidy grants will 
be made in the amount of 3 percent for qualifying non-Federal loans.
    ``(c) Qualifying Federal Loans Made Under This Title.--Interest 
subsidy grants in an amount of up to 5 percent will be made for 
qualifying Federal loans made under this title if it is determined by 
the Trust Fund Board that the project would not be otherwise 
financially feasible.
    ``(d) Reserve for Rural Health Care Facilities.--At least 20 
percent of the total value of all interest subsidies awarded in any 
given year shall be awarded to rural health care facilities, provided 
that a sufficient number of applications are approved.
    ``(e) Limitation on Amount of Subsidies Awarded in a Given State.--
The aggregate value of interest subsidies made to health care 
facilities in any State in a given year shall not exceed 25 percent of 
the total value of all interest subsidies made during that year.

                  ``terms and conditions for subsidies

    ``Sec. 2124. (a) State or Local Participation.--No Federal subsidy 
shall be granted unless State or local participation in an amount equal 
to the Federal subsidy is provided.
    ``(b) Issuance of Federal Commitments.--Successful applicants will 
receive a Federal commitment of an interest subsidy grant. Applicants 
will then have 12 months to finalize financing arrangements before 
unobligated funds would be returned to the subsidy program pool. A 
commitment, when issued, shall be valid for as long as a health care 
facility continues to meet the eligibility requirements of this title.

                    ``subsidies for loan refinancing

    ``Sec. 2125. In addition to providing interest rate subsidies for 
new loans, the Trust Fund Board may provide subsidies to assist in 
refinancing if the health care facility presently lacks permanent 
financing at an affordable current market rate.

                  ``Subtitle D--Direct Matching Loans

        ``provision of matching loans to health care facilities

    ``Sec. 2131. (a) In General.--The Secretary, with the approval of 
the Trust Fund Board, shall provide direct matching loans to eligible 
health care facilities unable otherwise to obtain essential financing.
    ``(b) Purposes.--The purpose of this subtitle is to provide 
eligible health care facilities with direct matching loans for 
essential health care facility replacement (either by construction or 
acquisition), modernization, and renovation projects. These loans are 
to be primarily provided for the funding of smaller projects where the 
transaction costs of securing financing from other sources may be 
disproportionately onerous in relationship to the amounts financed.

                          ``eligible projects

    ``Sec. 2132. (a) In General.--Eligible applicants may seek a 
project loan of up to $50,000,000. Not more than 75 percent of the cost 
of the project may come from Federal sources.
    ``(b) Exception for Financially Distressed Health Care 
Facilities.--The Trust Fund Board shall have the discretion to waive 
the 25 percent match requirement for financially distressed health care 
facilities (as described by the Secretary).

                          ``allotment of loans

    ``Sec. 2133. (a) In General.--The Trust Fund Board shall make 
available $200,000,000 in direct matching loans annually. Funded 
projects should be divided between projects designed to achieve 
compliance with accreditation standards, life safety codes, and other 
certification standards, and those standards related to the provision 
of new services.
    ``(b) Reserve for Rural Health Care Facilities.--No less than 20 
percent of the total value of loans made under the program shall be 
made to rural health care facilities, if there are a sufficient number 
of approved applications from such facilities.

                    ``terms and conditions of loans

    ``Sec. 2134. (a) General Term.--Loans will be made for a period 
equal to the construction period plus up to 39 years amortization.
    ``(b) Interest Rate.--The interest rate will be a market rate 
determined by the Trust Fund Board to be no higher than the most recent 
revenue bond index published by the Bond Buyer.

                     ``use of loans for refinancing

    ``Sec. 2135. In addition to providing loans for new projects, the 
Trust Fund Board may grant loans under this subtitle to refinance 
existing loans if the health care facility has been unable to secure 
permanent financing at an affordable current market rate, except that 
the amount of assistance provided under this subtitle during a year for 
refinancing existing loans may not exceed 20 percent of the total 
amount made available for assistance under this subtitle for the year.

                      ``creation of revolving fund

    ``Sec. 2136. In addition to the new amounts made available each 
year, all loan repayments made by health care facilities shall be held 
in a revolving fund in the Trust Fund that may be used for additional 
loans.

                             ``loan default

    ``Sec. 2137. (a) In General.--The failure of the borrower to make 
payment due under or provided by the terms of a loan granted under this 
subtitle shall be considered a default under such loan and, if such 
default continues for a period of 30 days, the Trust Fund Board may 
attempt to negotiate a revised repayment schedule to avoid foreclosing 
on property serviced by such loan before beginning collection 
proceedings against the borrower.
    ``(b) Priority of Federal Interest.--In the case of default, the 
United States shall be paid prior to State or local bonds.

             ``Subtitle E--Grants for Urgent Capital Needs

                         ``provision of grants

    ``Sec. 2141. (a) In General.--The Trust Fund Board shall make 
available $400,000,000 in direct grants annually. The Secretary, with 
the approval of the Trust Fund Board, shall make direct grants to 
eligible health care facilities with urgent capital needs.
    ``(b) Purposes.--Direct grants shall be available to eligible 
health care facilities for 3 types of projects:
            ``(1) Emergency certification and licensure grants would be 
        available to eligible health care facilities that are 
        threatened with closure or loss of accreditation or 
        certification of a facility or of essential services as a 
        result of life or safety code violations or similar facility or 
        equipment failures. Such grants would provide limited funding 
        for repair and renovation where failure to fund would disrupt 
        the provision of essential public health services such as 
        emergency care.
            ``(2) Emergency grants would be available for capital 
        renovation, expansion, or replacement necessary to the 
        maintenance or expansion of essential safety and health 
        services such as obstetrics, perinatal, emergency and trauma, 
        primary care and preventive health services.
            ``(3) Planning grants would be available to eligible health 
        care facilities who require pre-approval assistance to meet 
        regulatory requirements related to management and finance in 
        order to apply for loans, loan guarantees, and interest 
        subsidies under this title.
    ``(c) Priority to Financially Distressed Health Care Facilities.--
Priority for direct grants under this section would be given to 
financially distressed health care facilities (as described by the 
Secretary).
    ``(d) Application Process.--The Secretary, with the approval of the 
Trust Fund Board, shall create an expedited application process for 
direct grants.

                          ``eligible projects

    ``Sec. 2142. (a) Matching Grants.--
            ``(1) Limitation on amount.--Grants for capital 
        expenditures by eligible health care facilities will be limited 
        to $25,000,000.
            ``(2) Matching requirement.--At least half of the projects 
        funded in a year must receive at least 50 percent of their 
        funding from State or local sources. The remaining projects 
        funded during the year could be financed up to 90 percent with 
        a combination of Federal grants and loans.
            ``(3) Reservation for rural health care facilities.--No 
        less than 20 percent of the grant funds in any given year would 
        be reserved for rural health care facilities, provided that a 
        sufficient number of applications are approved.
    ``(b) Planning Grants.--Applicants who can demonstrate general 
qualification for the direct matching loan, loan guarantee, or interest 
subsidy programs under this title or eligibility for mortgage insurance 
under section 242 of the National Housing Act will be eligible for a 
grant of up to $500,000 to assist in implementation of key budgetary 
and financial systems as well as management and governance 
restructuring.''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
take effect October 1, 1993.

SEC. 102. ADJUSTMENT TO PAYMENTS FOR CAPITAL-RELATED COSTS UNDER 
              MEDICARE.

    (a) In General.--Section 1886(g)(1)(B) of the Social Security Act 
(42 U.S.C. 1395ww(g)(1)(B)) is amended--
            (1) by striking ``and'' at the end of clause (iii);
            (2) by striking the period at the end of clause (iv) and 
        inserting ``, and''; and
            (3) by adding at the end the following new clause:
            ``(v) shall provide for adjustments to take into account 
        the extent to which capital-related costs incurred by a 
        hospital are costs with respect to which the hospital received 
        financial assistance under title XXI.''.
    (b) Effective Date.--The amendments made by subsection (a) shall 
apply to cost reporting periods beginning on or after October 1, 1993.

SEC. 103. TAX EXEMPT STATUS OF FEDERALLY GUARANTEED STATE OR LOCAL 
              BONDS.

    (a) In General.--Section 149(b)(3)(A) of the Internal Revenue Code 
of 1986 is amended--
            (1) in clause (ii) by striking ``or'';
            (2) in clause (iii) by striking the period and inserting 
        ``, or''; and
            (3) by adding at the end thereof the following:
                            ``(iv) any guarantee by the Health Safety 
                        Net Infrastructure Trust Fund pursuant to title 
                        XXI of the Social Security Act.''.
    (b) Effective Date.--The amendments made by subsection (a) shall 
take effect on October 1, 1993.

                                 <all>

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